TMI Tax Updates - e-Newsletter
March 21, 2017

Case Laws in this Newsletter:

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

TMI SMS

• Addition u/s 68 by the AO - Amount credited to bank account - CIT(A) confirmed the additions u/s 69 when the question was not before him

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• Tooth paste Sensodent-K & Sensodent-KF having active ingredient namely Potassium Nitrate - classifiable as medicated dentist paste (3003.10)

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Articles

1. HOW TO MIGRATE INTO GST GOODS AND SERVICE TAX) REGIME

   By: CSSANJAY MALHOTRA

2. Presumptive Income Computation System for Professionals (Analysis of Section 44ADA of The Income Tax Act, 1961)

   By: ANIL ANIKHINDI

News

1. The Union Cabinet chaired by the Prime Minister Shri Narendra Modi approves the four Goods and Services Tax (GST) related bills today

2. Cabinet approves four GST Bills

3. Chinese investment undermake in India

4. India-EU Free Trade Negotiations

5. Review of implementation of SEZ Policy

6. Concessions under APTA

7. RBI Reference Rate for US $

Notifications

Companies Law

1. F. No. 01/01/2009-CL-V(Part VI) - dated 17-3-2017 - Co. Law

Companies (Indian Accounting Standards) (Amendment) Rules, 2017

FEMA

2. 384/RB-2017 - dated 17-3-2017 - FEMA

Foreign Exchange Management (Foreign Exchange Derivative Contracts) (Amendment) Regulations, 2017

Income Tax

3. 2/2017 - dated 9-3-2017 - IT

Procedure of PAN application through Simplified Profoma for Incorporating Company Electronically (SPICe)(Form No. INC-32) of Ministry of Corporate Affairs

Highlights / Catch Notes

Income Tax

• Machinery Depreciation Cost Stands Unchanged: No Supplier Contribution at Purchase Time, Says Court.

  Case-Laws - AT : Depreciation - determination of cost - At the time of purchase of machineries there was no whisper about the meeting of the cost directly or indirectly by the machine supplier. Therefore, in our considered view the question of reducing the actual cost of machinery does not arise. - AT
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• AO Cannot Impose Fees u/s 234E for TDS Defaults Before June 1, 2015, via Section 200A Intimation.

  Case-Laws - AT : Defaults in furnishing of TDS statements - AO is not empowered to charge fees under section 234E of the Act by way of intimation under section 200A of the Act in respect of defaults before 01.06.2015 - AT
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• Prl. CIT to Review Tax Demand Order After Failing to Assess Excessiveness and Hardship in Initial Evaluation.

  Case-Laws - HC : Refusal to stay the collection of demand - Asst. CIT directed the petitioner to deposit 15% of the disputed demand - Prl. CIT confirmed the order - it has failed to consider the issue whether the assessment orders suffers from being "unreasonably highpitched", or whether "any genuine hardship would be caused to the assessee" - Prl. CIT directed to review the order - Tri
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• Income Tax Additions u/s 68 Confirmed by CIT Appeals; Section 292B Inapplicable Due to No Error by AO.

  Case-Laws - AT : Addition u/s 68 by the AO - CIT(A) confirmed the additions u/s 69 - The provisions of Section 292B of the I.T. Act, 1961 are not applicable because there is no mistake, the AO has made the addition u/s. 68 with the clear mind and after satisfaction - Additions stands deleted - AT
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• Liability for Interest u/ss 234A, 234B: Earlier Assessment Valid, No New Interest Imposed Without Income Change.

  Case-Laws - AT : Liability towards interest u/s 234A & 234B - assessment u/s 153A - The earlier regular assessment in the instant case survives and does not stands abated - liability towards interest under s.234-B & 234-C could not have been raised without disturbing the assessed income assessed earlier - AT
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Corporate Law

• NCLT Finds No Intentional Financial Mismanagement but Orders Resolution Due to Oppression and Mismanagement Among Parties.

  Case-Laws - Tri : As a whole, as discussed above, we find no financial mismanagement with malafide intention of siphoning off company's funds - But certainly, if examined cumulatively in the discordant environment created by Petitioner and Respondent, would amount to oppression and mismanagement - NCLT passed an order giving change to resolve the issues
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• Directors Misuse Digital Signature, Keep Holding Company Uninformed About Subsidiary Affairs, Violating Company Law Governance Standards.

  Case-Laws - Tri : Misuse of position by Directors - misuse of digital signature - the respondent nos.2 to 4 have misused their position and the petitioner company in spite of being holding company of R-1 company is completely kept in dark regarding the affairs of the subsidiary company. - Tri
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Finance Act / Amendment Acts

• GST Rules 2017: Key Procedures for Registration, Filing, Input Tax Credit, and Composition Scheme for Small Businesses

  : Goods and services Tax Rules, 2017 (GST Rules)
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Service Tax

• CENVAT Credit Allowed: Centralized Payments Validate Credit Despite Invoices Addressed to Unregistered Branches.

  Case-Laws - AT : CENVAT credit - denial on the ground that invoices bearing the addresses of the branches which are not registered - even though the said services have been received at branches but payments were made from Mumbai office Centralised accounting system - credit allowed - AT
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• Rebate Claim for Export Services: One-Year Limitation u/s 11B Not Applicable, Refund Allowed u/r 5, Notification 11/2005-ST.

  Case-Laws - AT : Rebate claim - time limitation - Rule 5 of CCR, 2004 read with N/N. 11/2005-ST - export of services - in the case of claim of rebate the prescription of one year u/s 11B will not apply as it is governed by another set of provisions - refund allowed - AT
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• CENVAT Credit Approved for Input Services Used at R&D Centers Transferred to Factory via Input Service Distribution &D.

  Case-Laws - AT : CENVAT credit - input services utilised at the R&D centres of the appellant company and transferred to factory through input service distribution mechanism - the services in question have been admittedly used by the manufacturer indirectly in relation to manufacture of final dutiable products - credit allowed - AT
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• EOU Secures Refund Claim for Unutilized Cenvat Credit Despite Lack of Notification at Relevant Time.

  Case-Laws - AT : 100% EOU - refund claim - encashment of unutilized Cenvat Credit of input services used in the manufacture of the final product - Just because the notification has not been issued at that time; we cannot deny the benefit provided in the Rule - AT
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• CENVAT Credit Approved for Cargo Handling Structures and Tippers as Capital Goods under Relevant Tax Rules.

  Case-Laws - AT : CENVAT credit - supporting structures for capital goods - Since, cargo handling is specified under the definition of capital goods, the appellant will be entitled to the cenvat credit claimed on tippers - AT
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• CENVAT Credit Allowed Despite Minor Procedural Lapses in ISD Invoices; PAN and Address Details Not Mandatory.

  Case-Laws - AT : CENVAT credit - procedural lapses - whether credit of Cenvat taken on the basis of ISD Invoices issued by the Head Office of the appellant units is deniable for curable or procedural lapses like non-mention of PAN based registration number, address of service provider etc.? - Procedural lapse, being minor, ignored - credit allowed - AT
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• UK Magazine Ad Classified as 'Book,' Exempt from Service Tax for Sale of Space or Time for Advertisement.

  Case-Laws - AT : Import of services - An advertisement in “Fertilizer Focus”, a magazine published from U.K. - the magazine ‘Fertilizer Focus’ will be covered under the definition of ‘Book’ and an advertisement placed by the appellant in the magazine being in print media is excluded from the service tax liability under the category of sale of space or time for advertisement - No service tax liability - AT
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• Refund Claim Rejected Without Show Cause Notice Breaches Natural Justice u/r 5 of Cenvat Credit Rules 2004.

  Case-Laws - AT : Refund claim - Rule 5 of CCR, 2004 read with N/N. 27/2012 CE (NT) dated 08.06.2012 - Natural justice - rejection of refund without issuing a Show Cause Notice is highly harsh and violation of principles of natural justice. - AT
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Central Excise

• Rule 16: Clarification on CENVAT credit reversal and duty payment for returned and processed goods, including scrapped items.

  Case-Laws - AT : Returned goods - Rule 16 - Reversal of CENVAT credit or payment of appropriate duty on goods processed - such goods / vehicles undergo a process of manufacture and become part of process of production of new vehicle is settled and undisputed - payment of appropriate duty on scrapped goods is correct - AT
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• Freight and insurance costs excluded from assessable value for central excise; no customer site inspection condition.

  Case-Laws - AT : Valuation - place of removal - in transit insurance is taken by the appellant - there is no condition related to the issue whether the inspection is carried out at site and therefore, held that the goods was not sold at customer’s premises. The freight and insurance from place of removal is excludible from the assessable value - AT
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• Sensodent-K Toothpaste Classified as Medicated Dental Paste u/s 3003.10 Due to Potassium Nitrate Content.

  Case-Laws - AT : Classification of tooth paste - Sensodent-K and Sensodent-KF having active ingredient namely Potassium Nitrate - classifiable under Chapter 3003.10 as medicated dentist paste or as tooth paste under sub-heading 3306.10 - classification under sub-Heading 3003.10 was correct - AT
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• CENVAT Credit Issue on Exempted Goods: Duty Demand Upheld for Body Structure Fabrication u/r 6(3)(b) of 2001 Rules.

  Case-Laws - AT : CENVAT credit availed on goods exempted by notification - fabrication of body / structure on motor vehicle chassis - assessee has not paid the correct amount under Rule 6(3)(b) of Cenvat Credit Rules, 2001 - demand of duty alongwith interest upheld - AT
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• Central Excise Exemption Denied for Non-Compliance with Notification No. 44/2001-CE(N.T.) Conditions, Effective Tax Consequences Follow.

  Case-Laws - AT : Exemption subject to conditions - Benefit of N/N. 44/2001-CE(N.T.), dt.26.06.2001 - when the conditions have not been fullfilled, necessary consequences are to be faced by the Assessee - exemption deined - AT
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VAT

• Cancellation Date of Registration Certificate Post-Invoice Doesn't Affect Valid Transactions Made Before Cancellation.

  Case-Laws - HC : Input Tax Credit (ITC) - If, the effective date of cancellation of registration certificate follows the date of invoice, then, the fact the registration certificate was valid on the date, when, the transaction took place, is an aspect, which attains criticality - The petitioner's/assesse's transaction cannot be impacted by subsequent cancellation of registration. - HC
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Case Laws:

• Income Tax

• 2017 (3) TMI 820
  Addition on account of advance against share capital received in FY 2003-04 - Held that:- The facts are undisputed that the assessee had received the impugned amount on account of share application money which has been written-back as the shares were not allotted. This issue is no more res-integra as Hon’ble Bombay High Court in the cases of Softworks Computers Pvt Ltd (2013 (1) TMI 89 - BOMBAY HIGH COURT ) wherein it is held that the amount received on account of share capital can neither be treated as taxable either u/s 41(1) or u/s 28(iv) if the same is written-back in the books of account. It is further noted that similar view has been taken by Hon’ble Madras High Court in the case of Skraemeco Regent Ltd (2010 (11) TMI 43 - Madras High Court ) wherein detailed discussion was made on section 28(iv) as well as section 41(1) and it was held that amount received for the purpose of acquiring capital asset did not constitute trading liability, and therefore, the same was not taxable u/s 41(1) or section 28(iv) of the Act. - Decided against revenue

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• 2017 (3) TMI 819
  Disallowance of 5% of the expenses disclosed under the head ‘Financial and Administrative expenses’ - Held that:- The total expenses incurred by the assessee towards ‘Financial and Administrative Expenses’ were Rs. 56,42,384/-. The A.O. has made disallowance of 5% of the total expenses towards ‘Financial and Administrative Expenses’ which led to the disallowance of Rs. 2,82,119/-, which was later upheld by the ld. CIT(A) by dismissing the appeal of the assessee on not being pressed. In our considered view, this matter need to go back to the file of learned CIT(A) who shall adjudicate the same based on merits after hearing the assessee. Needless to say that proper and adequate opportunity of being heard shall be provided by learned CIT(A) to the assessee in accordance with law and the assessee shall be allowed by learned CIT(A) to produce cogent material/ evidences in its defense which shall be admitted by learned CIT(A) in the interest of justice. Bogus purchases - Revenue has received information from Maharashtra Sales Tax Department as well Information was received by the AO from DGIT (Inv.), from where it was unraveled that these three parties were accommodation entry providers issuing bogus bills - Held that:- No attempt has been even made before us to prove genuineness of purchases to prove genuineness of the material purchased and that the said material been used wholly and exclusively for the purpose of the manufacturing/business activities of the assessee nor any effort has been made even before us to co-relate quantitative reconciliation of quantities of sale with purchases so made nor the assessee could prove , correlate and reconcile the consumption of material so purchased with the manufacturing/ business activity of the assessee. We do not find any merit in the contentions of the assessee. In the absence of quantitative reconciliation of material so allegedly purchased with sale, consumption or stock in hand held by the assessee, the plea of the assessee to adopt gross profit ratio is devoid of any merits and is hereby repelled. - Decided against assessee

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• 2017 (3) TMI 818
  Undisclosed sales on account of difference in closing stock of previous year and opening stock of current year - Held that:- During remand proceedings, the assessee vide letter dated 23/12/2014, submitted the details like copy of ledger of cocoa powder GP-250 and GP-100 for Financial Year 2008- 09 and 2009-10 along with copy of purchase and sales invoices of cocoa powder GP-100 for Assessment Year 2008- 09 and 2009-10 along with the relevant pages of register maintained in form RG-23D under Rule 52AA maintained as purchase and sale register for Central Excise Department and the copy of the audit report from the office of Central Excise. On perusal of this details, the same were found tallying as per the claim of the assessee regarding the sales made during the Financial Year 2009-10 as submitted the during the assessment proceedings for Assessment Year 2010-11. In reply to the remand report, the assessee again took the plea that the item wise closing stock was wrongly submitted during assessment proceedings for Assessment Year 2009-10 and the correct itemwise closing stock is as per the opening stock submitted during assessment proceedings for Assessment Year 2010-11 and the purchases of GP-100 were sold in Financial Year 2008-09 itself. We find that, value wise closing stock as on 31/03/2009 was similar to opening stock of 01/04/2009 and it was merely a error, which either inadvertently occurred due to non-updation of the software. Otherwise, valuewise, there is no difference, therefore, this ground of the assessee is allowed. Commission paid to husband of the assessee - Held that:- The commission was paid out of business expediency and further was made through banking channel. The statement of husband was recorded who confirmed of getting the commission. The husband of the assessee duly declared the commission in his return and paid taxes thereon, thus, there is no loss to the Revenue. Even the Ld. Assessing Officer has not denied the factum of payment of commission. It was merely a business transaction, thus, this ground of the assessee is allowed. Identical is the situation in the case of payment of commission amounting to Rs. 5,25,000/- to Mr. Nagesh Hatim, employee of the assessee. The amount was paid through banking channel and even during recording of statement, Mr. Hatim accepted that he received the commission. The payment of commission was for business expediency, thus, the payment of commission to the employee is also found to be genuine - Decided in favour of assessee Reopening of assessment - non furnishing reasons to believe - Held that:- As decided in CIT vs Trend Electronics [2015 (9) TMI 1119 - BOMBAY HIGH COURT ] assessee had sought for reasons for reopening notice from the Assessing Officer but reasons were not furnished to the assessee before the completion of the reassessment proceedings then the reassessment proceedings were bad in law. Uncontrovertedly, in spite of asking by the assessee, as mentioned earlier, no reasons were supplied to the assessee for reopening the assessee, thus, the reassessment proceedings are held to be bad in law. - Decided in favour of assessee

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• 2017 (3) TMI 817
  Disallowance u/s 14A - as per assessee disallowance as per Rule 8D to be made by taking into consideration only those shares which have yielded dividend income in the year under consideration - Held that:- There was no documentary evidence submitted to prove that no borrowed fund was used in the impugned investments. Therefore, the submission made by the assessee with regard to the interest expenses. We find that no material was furnished before the AO at the time of assessment proceedings. It was the duty of the assessee to provide necessary information to justify that there is no borrowed fund utilized in the impugned investments. Thus, in such circumstances the AO had no option except to resort to the provisions of section 14A read with rule 8D of Income Tax Rules. As relying on REI Agro Ltd. v. Dy. CIT [2013 (9) TMI 156 - ITAT KOLKATA] we direct the Assessing Officer to compute the disallowance as per Rule 8D by taking into consideration only those shares, which have yielded dividend income in the year under consideration. The alternative contention of the assessee is accordingly accepted. Reducing compensation received from the actual cost of the plant & machinery - allowing depreciation thereon though the receipt is capital in nature & consequently not chargeable to tax - Held that:- In the instant case before us compensation was given due to non-performance of the machineries at desired level. Therefore the compensation in the instant case before us cannot be treated as capital receipts. Similarly the finding of the ld CIT(A) that the compensation received by the assessee should be reduced from the actual cost is not based on correct law. It is because the cost of the machine has not been met directly or indirectly by the government or any other person as required in Explanation 10 to section 43(1) of the Act. In fact the compensation was given with the sole purpose of reducing the loss which might have incurred by the assessee due to non-performance of the machineries at desired level. At the time of purchase of machineries there was no whisper about the meeting of the cost directly or indirectly by the machine supplier. Therefore, in our considered view the question of reducing the actual cost of machinery does not arise. Hence the ground of appeal of the revenue is allowed Addition on the basis of additional evidence - Held that:- At the outset, we find that the necessary details were filed by the assessee at the time of assessment as evident from letter submitted to the AO which is placed at page 14 of the paper book along with sample supporting documents. Therefore the ground of the Revenue that the fresh evidences were submitted is not tenable. Thus we are of the view that no fresh evidences were submitted before the ld. CIT(A). Accordingly we find no infirmity in the order of ld. CIT(A). Hence the ground raised by the Revenue is hereby dismissed.

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• 2017 (3) TMI 816
  Fees u/s 234E in respect of defaults in furnishing of TDS statements levied in the intimation under section 200A for the period prior to 01.06.2015 while processing TDS returns - Held that:- Following the decision in the case of Kash Realtors Pvt. Ltd. & Others [2016 (8) TMI 63 - ITAT MUMBAI] we hold that the amendment to section 200A(1) of the Act is prospective in nature and therefore the Assessing Officer (AO), while processing the TDS statements/returns in the case on hand for the period prior to 01.06.2015, was not empowered to charge fees under section 234E of the Act. Therefore, the intimation issued by the AO under section 200A of the Act in this appeal is unsustainable and the demand raised by way of charging of fees under section 234E of the Act not being valid, is deleted. In this view of the matter, we hold that the AO is not empowered to charge fees under section 234E of the Act by way of intimation under section 200A of the Act in respect of defaults before 01.06.2015 and consequently set aside the orders of the learned CIT(A) and decide the issue in favour of the assessee.

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• 2017 (3) TMI 815
  Fees u/s 234E in respect of defaults in furnishing of TDS statements levied in the intimation under section 200A for the period prior to 01.06.2015 while processing TDS returns - Held that:- Following the decision in the case of Kash Realtors Pvt. Ltd. & Others [2016 (8) TMI 63 - ITAT MUMBAI] we hold that the amendment to section 200A(1) of the Act is prospective in nature and therefore the Assessing Officer (AO), while processing the TDS statements/returns in the case on hand for the period prior to 01.06.2015, was not empowered to charge fees under section 234E of the Act. Therefore, the intimation issued by the AO under section 200A of the Act in this appeal is unsustainable and the demand raised by way of charging of fees under section 234E of the Act not being valid, is deleted. In this view of the matter, we hold that the AO is not empowered to charge fees under section 234E of the Act by way of intimation under section 200A of the Act in respect of defaults before 01.06.2015 and consequently set aside the orders of the learned CIT(A) and decide the issue in favour of the assessee.

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• 2017 (3) TMI 814
  Eligibility to claim deduction u/s 80IB(10) on the housing project developed - Held that:- We concur with the view taken by Ld. CIT(A) that assessee was authorised to start construction of the project only on issuance of commencement certificate by the local authority, i.e. on 05-10- 2006. Therefore, it is actual approval letter, as is envisaged u/s 80IB(10)((a)(iii) of the Act. We find that the findings recorded by Ld. CIT(A) are well reasoned and in accordance with law and facts in this case. It is further noted by us that this issue is also covered in favour of the assessee by the judgements of the Tribunal as have been referred to by Ld. CIT(A) and also relied upon by the Ld. Counsel before us, wherein it has been held that date of approval as envisaged in section 80IB(10)((a)(iii) would be the date when assessee would be entitled to commence the construction of the project as per local law applicable. Thus, in view of the aforesaid discussion and facts of the case, the decision taken by the Ld. CIT(A) is hereby upheld. - Decided in favour of assessee

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• 2017 (3) TMI 813
  Bogus purchases - Held that:- The assessee has failed to place on record any material evidence to controvert the findings of the learned CIT(A). In this view of the matter, we uphold the order of the CIT(A) on these issues of deleting the addition made on account of consideration for bogus purchases and in bringing to tax in the assessee’s hands the profits embedded in the bogus purchases @ of 12.5% of the cost of the said purchases amounting to Rs. 28,07,058/- since the direct one to one relationship /nexus between the said purchases and utilisation thereof have not been established by the assessee either before us or the learned CIT(A). Addition under section 41(1) - Held that:- In the case on hand, admittedly there were 25 creditors of the assessee to whom Rs. 1,52,29,070/- was outstanding for more than three years and in some cases 8-9 years. According to the assessee, it was unable to pay these creditors due to certain liquidity problems, but the said amounts were undoubtedly acknowledged by the assessee as payable to these parties as reflected in its Balance Sheet as on 31.03.2011. It is seen that many of the creditors had also initiated legal proceedings for recovery of their outstanding amounts and in some cases there was disputes as to the amounts payable/receivable. In our view, in this factual matrix of the case on hand it is clear that it was neither a case of cessation nor remission of liability and therefore the AO had wrongly invoked the provisions of section 41(1) of the Act. Prior period expenses - Held that:- No reason to interfere with the finding rendered by the learned CIT(A) in allowing the assessee’s claim for allowing its claim of prior period expenses as the appellant's business of construction and this has to be treated as normal business practice which appellant was following in the earlier years

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• 2017 (3) TMI 812
  Violation of the provision of Section 43B - Held that:- On examination of the order of the lower authorities and other records available before us we find that the amount disallowed by the AO pertains to the A.Y. 2007-08 and 2008-09, as evident from the assessment order which are placed on pages 207 to 209 and 214 to 217. As the impugned amount does not pertain to the year under consideration, therefore, the same cannot be disallowed under the provisions of Section 43B of the Act. In view of the above we find no infirmity in the order of the Ld. CIT(A) and we uphold the same. Non-payment of interest within the stipulated time as envisaged u/s 43B - whether the LIC mutual fund in the instant case is the public financial institution or not - Held that:- The interest expenses claimed by the assessee to the LIC Mutual Fund are covered under the provisions of section 43B of the Act. Accordingly the assessee was required to make the payment of the interest before the due date of filing income tax returns as specified under section 139(1) of the Act. Hence we have no hesitation to reverse the order of ld CIT(A). Hence, this ground of appeal raised by the Revenue is allowed. Additional depreciation - AO has disallowed the additional depreciation on the ground that the assessee failed to provide the requisite documents in support of his claim of additional deposition - Held that:- It is nowhere clear what was the manufacturing activity of the assessee and whether it was actually engaged in some manufacturing activity or not as required under the Act. It is because on perusal of Tax Audit Report of the assessee in form number 3CD we find that the assessee has mentioned its nature of the business as under :- “Chain of retail showrooms dealing in wide variety of retail merchandise etc.” In view of above, we find that the issue of additional deposition has not been examined by the AO and therefore the same needs to be examined again in the light of above stated facts. Therefore we are inclined to restore this issue to the file of AO for fresh adjudication in accordance with the law. Hence, this ground of appeal of the assessee is allowed for the statistical purposes.

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• 2017 (3) TMI 811
  Disallowance of bogus purchases - estimated profit rate at 12.5% - Held that:- We find that admittedly the assessee has made sales but could not produce the parties before the AO or before CIT(A) from whom the purchases were made. Even during an inquiry the Revenue could not trace these parties i.e. either the transporters or the sellers. Admittedly these parties from whom the assessee has made bogus purchases are hawala dealers declared by sale tax department of Maharashtra. In such circumstances we are of the view that the CIT(A) has reasonably estimated profit rate on bogus purchases and rightly estimated at 12.5% of the bogus purchase. We confirm the order of CIT(A) and appeal of assessee is dismissed.

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• 2017 (3) TMI 810
  Penalty u/s 271(1)(c) - payment under the head ‘management service charges to shareholders' treated it as capital expenditure - Held that:- As per the decision of Reliance Petroproducts (P) Ltd. ( 2010 (3) TMI 80 - SUPREME COURT) we find that for penalty for concealment of income if the assessee has made a claim of expenditure which was not accepted or was not acceptable to revenue by disallow not attract the penalty u/s 271(1)(c) of the Act for imposing the penalty there has to be concealment of particulars of income of the assessee secondly assessee must for furnish inaccurate particulars of this income. It is admitted fact that no information given in the return of assessee was found to be incorrect or inaccurate. The statement given by the assessee was not found to be factually incorrect hence prima facie assessee could not be held guilty for furnishing inaccurate particulars. Therefore, in this case the claim of the assessee was partly allowed by the CIT(A) and Tribunal has submitted the finding of CIT(A). Therefore, we are of the view that CIT(A) has rightly justified in following the decision of Hon'ble Supreme Court. Whenever there is a debatable issue the penalty cannot be levied. - Decided in favour of assessee.

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• 2017 (3) TMI 809
  Rectification of order u/s 154 - Corporation tax received from the tenants - AO stated that the income that the municipal taxes should have been formed part of the annual value of the let out properties thus rectified the order of ld. CIT passed u/s 264 - Held that:- There was no direction in the order of the ld. CIT u/s 264 of the Act for adding the municipal taxes in the annual value of the properties. When there was no such direction then the view of the AO assuming the apparent mistake in the order of the ld. CIT u/s 264 of the Act is not sustainable in the eyes of law. The provisions of section 154 of the Act are very clear and the same can be resorted by the AO only in a case where the mistake is apparent from the records. While doing so, we find support and guidance from the judgment of the Hon’ble Supreme Court in the case of ITO Vs. Vokart Bros [1971 (8) TMI 3 - SUPREME Court ] Thus we hold that there was no mistake apparent from the record in the order of the ld. CIT passed u/s 264 of the Act. Also in case the AO wishes to rectify its original order u/s 147 of the Act then also the same needs to be rectified within four years as contemplated under the provision of section 154 of the Act. In the instant case the AO has rectified the order after the expiry of four years which is also not valid in the eyes of law. - Decided in favour of assessee

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• 2017 (3) TMI 808
  Transaction of shares - capital gain or business income - Held that:- CIT(A) has accepted the contentions of the assessee with regard to the investment, which were not made through Smt. Rupal Naresh Panchal and Sudgandh Estate & Investment Pvt. Ltd. We find that in the accounts, the assessee has shown the shares under the head “investment” and not “stock-in-trade”. We also find that at the end of the year, the assessee has not valued the shares in the manner stock is being valued. The assessee has paid security transaction tax. The finding of the ld. CIT(A) are based on the facts that the assessee has financed more than 20 crores to Smt. Rupal Naresh Panchal and Sugandh Estate and Investment Pvt. Ltd. group with the intention that this group would make multiple application in the IPOs of certain companies. The second reason assigned by the ld. CIT(A) is that the assessee did not take any kind of security from these persons. However, we do not find any material brought on record by the revenue which could substantiate the apprehensions made by the First Appellate Authority. There is no evidence with the revenue to establish the nexus between the assessee and the group of two persons namely Rual Naresh Panchal and Suandh Estate & Investment Pvt. Ltd. There is nothing on record to suggest that the assessee has colluded with Smt. Rupal Naresh Panchal and Sugandh Estate & Investment Pvt. Ltd. in a manner that would indicate that shares were acquired for the purpose of trade. Such nexus has not been established. The observation of the First Appellate Authority are only inferential without any concrete material in the possession of the A.O./CIT(A). The revenue has grossly failed to establish that the assessee was trading in shares. On the contrary, the ld. Senior Counsel has successively proved the assessee is an investor. Therefore, the surplus of Rs. 3,93,54,700/- has to be taxed as Short Term Capital Gain. - Decided in favour of assessee

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• 2017 (3) TMI 807
  Interest paid to NOSTRO account - disallowance of claim as interest paid can be claim only by the head office of the Bank - Held that:- The disallowance of interest paid on account of NOSTRO not sustainable, the assessee Bank has to maintain an account abroad, this is to be denominated in foreign currency. The bank charged with interest if the NOSTRO account has overdrawn balances. Thus, we are fully convinced with the submission of ld AR of the assessee that the interest on NOSTRO account overdraw maintained with foreign Bank i.e. Bank of New York U.S.A. is pertains to Branch in India. The alternative plea of the ld AR for the assessee is also acceptable one as deduction has to be allowed in view of the Ground No.1 allowed in favour of assessee. Hence, the ground No. 2 raised by assessee is allowed. Disallowance of provision for standard asset written back - Held that:- We have seen that the assessee bank have been consistently offering to tax the provisions made for standard asset and claiming as deduction the provision written back. The ld AR for the assessee made the submission that provision written back during the year represents amounts which were disallowed in earlier years and therefore should be allowed in the year of written back. In our view the contention raised by the assessee require consideration by assessing officer, therefore, this ground of appeal is remanded to the assessing officer to appreciate and consider the above fact and pass the order afresh in accordance with law. In the result this ground of appeal is allowed for statistical purpose. Entrance fees paid for Corporate Club membership - Held that:- The ground of appeal under consideration is squarely covered by the decision in case of CIT Vs United Glass MGF Ltd [2012 (9) TMI 914 - SUPREME COURT] wherein it was held that Club membership fees for employees incurred by the assessee is business expenses under section 37 of the Income Tax Act. Taxability of Capital Gain pertaining to DBS FII operation in India as business income - Held that:- As considered the contention of ld AR of the assessee that DRP vide order dated 16 September 2010 held that Capital Gain arising on the sale of securities by DBS FII is not taxable in India as per Article 13 India-Singapore DTAA. Further, the revenue has not tax the Capital Gains on sale of securities by DBS FII for Assessment Year 2006-07 to 2012-13. Considering, the factual position narrated above, we direct the assessing officer to allow the similar relief to the assessee after verification if the Capital Gain on sale of securities by DBS FII is not tax for Assessment Year 2006-07 to 2012-13. Hence, this ground of appeal is allowed in favour of assessee. Revaluation of unmatured forward foreign exchange contracts - Held that:- Considering the decision of Tribunal in assessee’s own case for AY 2003-04 and keeping in view the principle of consistency the ground No.6 of assessee’s appeal is allowed as held issue is covered by the judgment in case of CIT versus Woodward Governor India Private Limited (2009 (4) TMI 4 - SUPREME COURT ) in which it has been held that adjustments on account of foreign exchange fluctuation can be made on each balance-sheet in respect of any forward foreign exchange contract pending actual payment and any loss arising therefrom has to be allowed as an item of expenditure under section 37(1). We, therefore, see no infirmity in the order of CIT(A) in allowing the claim of loss of the assessee. Applicability of provisions of section 44C in allowing head office expenses - Held that:- Similar disallowance was allowed in favour of assessee for assessment year 1999- 00 & 2001-02.The assessing officer and the ld CIT(A) have not benefit of the finding of the Tribunal. Thus, in all fairness the assessing officer is directed to verify the fact and decide the issue in accordance with law. Needless, to order that the assessing officer shall grant the opportunity to assessee before passing the order. Thus, this ground of appeal is allowed for statistical purposes. Appeal of the revenue is partly allowed.

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• 2017 (3) TMI 806
  Restricting the Minimum Alternative Tax (‘MAT’) credit - confirmation of demand - scope and ambit of section 143(1) - application for rectification u/s. 154 - Held that:- Section 143(1)(a) provides for adjustment to be made to the income or loss declared in the return, however same is circumscribed to arithmetical errors in the return, accounts or documents accompanying the return of income which can be rectified. What could be prima facie admissible or inadmissible has to be decided on the basis of information available in the return of income or the documents accompanying the said return of income and not from the other records. The record should pertain to the assessment year in question and not the earlier assessment years, as has been understood by the AO while denying the MAT credit to the assessee. In the return of income the assessee has sought MAT credit of Rs. 70,48,67,942/- which has been reduced to Rs. 34,38,72,162/- on the ground that assessment was made under the normal provisions of the Act for the A.Ys. 2006-07 to 2009- 10 and, therefore, no MAT credit is available to the assessee for these years. If the AO had this information on record, then it was incumbent upon the AO to select the return of income for scrutiny u/s. 143(2), because this was a record pertaining to earlier years on the basis of which he could have reason to believe that assessee’s claim in the return of income qua the MAT credit was excessive. Thus, we hold that the AO could not tinker with the return of income under the scope and ambit of section 143(1), because there was no arithmetical error or any mistake to make any adjustment while processing the return of income. In any case, now it has already been brought on record that in the A.Ys 2006-07 to 2009-2010 the additions made under the normal provisions, which was the ground to make the adjustments by the AO, stands deleted and, therefore, the assessee’s computation in those years would be made under the MAT provisions and consequently, the assessee would be eligible for MAT credit u/s. 115JAA. Accordingly, the ground raised by the assessee is allowed.

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• 2017 (3) TMI 805
  Allowable business expenditure - temporary lull in the business - Held that:- Since the assessee was harping on the point of temporary lull in the business and claiming the said expenses as business expenses even before the Ld. CIT(A), there was no occasion for him to make out his case on this point. He has urged that one more opportunity may, therefore, be given to the assessee to put forth his case by sending the matter back to the Assessing Officer. I find merit in this argument of the Ld. Counsel for the assessee and since the Ld. DR, has not raised any objection in this regard, I set aside this issue to the file of the AO for the limited purpose of giving the assessee an opportunity to support and substantiate its case for deduction of the impugned expenses u/s 57 (iii). FBT expenses assessed - allowance of expenses - Held that:- Expenses cannot be allowed as deduction merely on the basis that FBT has been paid by the assessee on the said expenses especially when there is no income earned by the assessee under the head “income from business”. The entire income having been offered by the assessee company itself, under the head “income from other sources”, only those expenses which are laid out or expended wholly or exclusively, for the purpose of making or earning of such income are liable to be allowed u/s 57(iii) and not otherwise merely on the basis of payment of FBT Addition u/s 14A r.w. Rule 8D - as per assessee disallowance as worked under Rule 8D, is after taking into consideration the entire investment made by the assessee in shares instead of only that investment which has given rise to the exempt dividend income - Held that:- Since this contention of the Ld. Counsel for the assessee is duly supported by the decision of the co-ordinate bench of this Tribunal in REI Agro Ltd. Vs. DCIT Central Circle-XXVII (2013 (9) TMI 156 - ITAT KOLKATA ), restore this issued to the file of the Assessing Officer, for the limited purpose of re-computing the disallowance u/s 14A by applying Rule 8D by excluding the investment on which no exempt income was actually received by the assessee during the year under consideration.

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• 2017 (3) TMI 804
  Penalty proceedings under section 271(1)(c) - Held that:- The order of the CT(A) upholding the imposition of penalty u/s 271(1)(c) of the Act where the AO had not specified or mentioned the charge on which the penalty has been imposed is not correct and cannot be sustained. In view of the foregoing discussion we set aside the order of CIT(A) and direct the AO to delete the penalty levied u/s 271(1)( c ) of the Act. - Decided in favour of assessee

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• 2017 (3) TMI 803
  Disallowance of interest - Held that:- Keeping in view the similar stand taken by the assessee in assessment year 2005-06, a direction was given by the learned CIT(A) to the Assessing Officer to verify the exact amount of interest expenditure incurred by the assessee with respect to the residential building at Ramoji Film City and make a disallowance to that extent. In his impugned order for assessment year 2006-07, the learned CIT(A) has followed his own order for the assessment year 2005-06 and has given a similar direction to the Assessing Officer to verify the exact amount of interest expenditure claimed by the assessee with respect to the residential building at Ramoji Film City and make disallowance to that extent. We therefore, find no infirmity in the impugned order of the learned CIT(A) on this issue and upholding the same, we dismiss ground of the assessee’s appeal Disallowance of the written off expenditure - Held that:- In this remand report, during appeal proceeding appellant almost reiterating the submissions and enumerating the developments before the Assessing Officer on this issue, filed a letter purportedly filed by Sri Raj Kumar Santoshi, wherein it was claimed that the appellant failed to adhere to the time schedule agreed upon for making the film and in the same letter a passing remark was made by the said Santoshi “The amount of Rs. 2,20, 00,000/- which was paid / was due to me as per the terms of the arrangements between us and………" From the contents of the above letter, apparently no conclusive finding can be made that the appellant had actually given an advance of Rs. 2.20 crores. Thus, the appellant fails on all fronts to prove the claim of even the major amount of Rs. 2.20 crores. Accordingly, I am not inclined to accept that amount of Rs. 3.20 was advanced to technicians and that the same was written off. As such, the disallowance made by the Assessing Officer is upheld Disallowance of expenditure written off during the year - Held that:- As there is no doubt about that payment of the amount, we are not sure why Revenue has not accepted the same and CIT(A) doubts the same that no conclusive finding can be made. The contents of the letter is very clear that assessee has entered into an agreement for production of film ‘Mahabharat’ to be directed by Shri Raj Kumar Santoshi and as a part of that, paid Rs. 2.20 Crores and incurred incidental expenditure, ultimately due to delay in start of the shooting of the picture, the project was abandoned. Since assessee has furnished evidence before the authorities, we do not find any reason to disbelieve the same. Accordingly, the ground raised by assessee with reference to expenditure of Rs. 3.20 Crores is considered allowable and AO is directed to allow the same Expenditure written-off towards production cost of feature film ‘In the shadow of Cobra’ - Held that:- Assessee supports the expenditure by various payments made through banks or through other concerns and the evidences were furnished before the AO in the remand. However, neither the AO nor the CIT(A) examined the same in correct perspective. However, assessee also has not furnished the complete details before us to examine whether such expenditure was incurred except that the balances are shown in the annual reports every year. This requires verification by the AO. Assessee is directed to furnish necessary evidences of production of film, persons employed or contracted, schedules of shooting etc, necessary agreements if any, in support of claim of incurring of the expenditure, if not the actual vouchers of the earlier period and AO is directed to examine and allow the claim after due verification.

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• 2017 (3) TMI 802
  Refusal to stay the collection of demand - Asst. CIT directed the petitioner to deposit 15% of the disputed demand - Prl. CIT confirmed the order - Held that:- Assessing Officer has relied upon Instruction No.4(B)(b) of the Circular dated 29.2.2016, and has concluded that since the petitioner's case does not fall within the two illustrations given therein, therefore, it is not entitled to seek the relief that less than 15% should be demanded to be deposited by it. Moreover, the Assessing Officer has jumped to the conclusion that the petitioner's finances do not indicate any hardship in this case. However, the Assessing Officer has not given a single reason for drawing the said conclusion. Since the petitioner has been constantly claiming that it has suffered loss from the very inception of its business, from 2011 to 2016, the least that the Assessing Officer was required to do was to elaborately discuss as to whether "genuine hardship" would be caused to the petitioner in case the petitioner were directed to pay 15% of the disputed demand amount or not? Yet the Assessing Officer has failed to do so. Therefore, this part of the order, naturally, suffers from being a non-speaking order. Hence, the said orders are legally unsustainable. A bare perusal of the order dated 25.1.2017 also reveals that the Prl. CIT has failed to appreciate the co-relation between Circular No.1914, and Circular dated 29.2.2016. The Prl. CIT has failed to notice the fact that the latter Circular has only "partially modified" the former Circular, and has not totally superceded it. The Prl. CIT has also ignored the fact that Instruction No.2-B(iii) contained in Circular No.1914 continues to exist independently of and in spite of the Circular dated 29.2.2016. Therefore, it has failed to consider the issue whether the assessment orders suffers from being "unreasonably highpitched", or whether "any genuine hardship would be caused to the assessee" in case the assessee were required to deposit 15% of the disputed demand amount or not? Thus, the Prl. CIT has failed to apply the two important factors mentioned in Circular No.1914. This Writ Petition is, hereby, allowed. The twin orders dated 23.11.2016, and the order dated 25.1.2017, are set aside. The case is remanded back to the Prl. CIT to again decide the Review Petitions filed by the petitioner. The Prl. CIT is further directed to decide the Review Petition within a period of two weeks from the date of receipt of the certified copy of this order.

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• 2017 (3) TMI 801
  Deduction u/s 80IB(10) eligibility - whether housing project undertaken on behalf of SRA was a contract awarded by the State Government and therefore not eligible for deduction under section 80IB(10)? - Held that:- The assessee was a developer in common parlance as well as legal parlance and could not be regarded as works contractor and accordingly the explanation to section 80IB inserted w.e.f. 1.4.2001 has no application as the project is not a works contract. Further the assessee was, in part performance of the agreement to sell was given possession of the land and had also carried out construction of housing project, it has to be deemed as owner u/s 2(47)(v) r.w.s. 53A of the Transfer of Property Act even though no formal title deed was executed. In the case of Unity Infra projects V/s DCIT(ITAT Mum) (2014 (10) TMI 930 - ITAT MUMBAI) held that the profit from sale of TDR from SRA is eligible u/s 80IB(10) of the Act. - Decided in favour of assessee.

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• 2017 (3) TMI 800
  Addition u/s 68 - cash deposits in the bank account - deposit of amount withdrawn earlier - Held that:- As gone through all the bank statements together with the cash book and the cash flow statement clearly depicting the available cash balance on each day of deposit and we find that the assessee has got sufficient sources for cash deposits made in the bank accounts and no part of the same is unexplained. The cash flow statement is admittedly prepared taking assistance from the bank statements. It is not the case of the revenue that the cash withdrawals made by the assessee were utilized for some other purpose so as to prove that the said cash is not available to meet the subsequent deposits. We find that the explanation offered by the assessee that he had resorted to circulation in bank transactions only to reflect the higher banking turnover in order to avail higher credit facilities from banks is acceptable. In any case, there is no element of income involved therein as the cash deposits are duly explained. Hence we hold that the lower authorities had erroneously invoked the provisions of section 68 in the instant case and we hold that the additions made in this regard are hereby directed to be deleted - Decided in favour of assessee TDS u/s 194J - non deduction of tds on accounting charges - Held that:- We find lot of force in the argument advanced by the ld AR that the payment made for accounting charges does not fall under the ambit of ‘fee for professional services’ u/s 194J of the Act as the said person rendering accounting services does not possess any professional qualification for rendering the said accounting services. Accordingly, we direct the ld AO to delete the disallowance made in this regard u/s 40(a)(ia) of the Act. - Decided in favour of assessee

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• 2017 (3) TMI 799
  Addition u/s 68 by the AO - CIT(A) confirmed the additions u/s 69 - nature of deposit / credited into the bank account - unaccounted money - Held that:- The assessee is right when he says that the provisions of section 68 cannot be applied to amount credited in the bank account. Also further note from the same para that Ld. CIT(A) was wrong in observing that the provisions of section 69 would quite clearly apply to amounts deposited into the assessee’s bank account, which was not under the grounds of appeal or cause of action. The provisions of Section 292B of the I.T. Act, 1961 are also not applicable because there is no mistake, the AO has made the addition u/s. 68 with the clear mind and after satisfaction. - Decided in favour of assessee

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• 2017 (3) TMI 798
  Liability towards interest u/s 234-A & 234-B - assessment u/s 153A - whether interest liability on tax under s.234A & 234B can be fastened on the assessee on the income already assessed in the course of regular assessment in the garb of fresh proceedings under s.153A of the Act when the income assessed earlier remains unaltered in section 153A proceedings also? - Held that:- A bare reading of the text of both the sections, similarly worded unravel that the liability towards interest under s.234-A & 234-B would arise under s.153A only on the amount by which the tax on total income determined under s.153A exceeds tax amount on total income determined in any earlier assessment. Therefore, in our view, the fresh liability towards interest under s.234A & 234-B shall arise in pursuance of order under s.153A of the Act only upon increase in the total income determined qua the earlier assessment. The earlier regular assessment in the instant case survives and does not stands abated. The interest liability already determined thereon under s.234-A & 234-B survives and is an enforceable recovery as per law. Merely because fresh assessment has been carried out pursuant to search, the interest liability on the assessed income earlier cannot resurface on the same amount already assessed earlier in view of the scheme of the Act. Resultantly, in our view, liability towards interest under s.234-B & 234-C could not have been raised without disturbing the assessed income assessed earlier. As a result, we are inclined to agree with the case of the assessee seeking relief towards interest liability under s.234A & 234-B of the Act. - Decided in favour of assessee

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• 2017 (3) TMI 797
  Disallowance of cash deposit in the bank - assessee failed to furnish the necessary details to the AO at the time of assessment with regard to the source of cash - Held that:- As at the time of appellate stage we find that sufficient information with regard to the source of cash deposited with the bank was explained by the assessee However, we also find that the AO in the remand report has clearly stated the jeweler to whom the assessee has sold her jewelleries was not traceable. Similarly, the parties who have given loan to the assessee failed to appear before the AO. But in our view sufficient details were furnished by the assessee with regard to the jeweler as it was registered with the Sales Tax Department and no verification with the sales tax department was carried out. But the lower authorities had not brought anything on record that the jeweler was not in existence at the relevant time when the jewellery was sold. Similarly, in our view considered view that the additions cannot be sustained in the hands of the assessee just the parties failed to appear before the AO. - Decided in favour of assessee

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• 2017 (3) TMI 796
  Addition of peak of cash deposited in bank account - Held that:- We note that against the cash deposits of Rs. 15.48 lacs, the assessee has sought to explain a part of it to the extent of Rs. 6.84 lacs to be out of own accumulated capital and out of wife’s past and current savings and loan from relatives etc. combined together. We simultaneously note that the explanation of the assessee is generic without any substantive corroboration of cash flow generated and deposited after changing hands. The own accumulated capital in cash of Rs. 2,40,525/- on the ground that the assessee is in practice for long does not cut ice. The assessee being a professional and an educated person is expected to explain the cash deposits meticulously. The assessee has miserably failed in doing so and is seeking to take refuge of generic and bald possibilities. The whole explanation is completely bizarre and is tainted with conjectures. We are not inclined to be drifted by the case made out by the assessee based on vague possibilities. In the absence of cogent evidence, we are not willing to disturb additions made by the AO by adopting peak credit theory which is quite just and fair. The assessee is taking shelter of a designed theory to merely fill up the explanation of cash deposits by roping in theory of deposits out of past savings etc. as an afterthought which is quite fluid without any supporting evidence. It does not augur well to common sense that a person reporting meager income of less than 2 lakhs p.a. would retain idle cash in hand of Rs. 9.56 lakhs (5 time of annual earning) at the beginning of the year as claimed. - Decided against assessee Alternative plea of the assessee that while computing the peak amount, certain cheque entries of Rs. 1,34,308/- has been wrongly included if found to be true, deserves acceptance. This aspect is untested before the lower authorities. Accordingly, the assessee shall be at liberty to explain this aspect to the AO and seek suitable relief thereon on AO being satisfied on such contentions. To this limited extent, the relief is granted to the assessee subject to verification by the AO as considered expedient.

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• 2017 (3) TMI 795
  TDS u/s 194C - non TDS on freight and forwarding expenses - Held that:- On the similar facts and circumstance this Hon’ble Tribunal in the case of Vas Electronics v. ACIT [2015 (11) TMI 1528 - ITAT KOLKATA] restored the file to the AO for fresh adjudication in the light of amended provisions of the Act and to verify whether the recipients have included the income in their respective returns and also paid taxes on the same. Bogus purchases - Held that:- As observed that the assessee has shown excess purchases from the party M/s. Heritage. The ld. AR before us submitted that the effect of credit note was not given therefore the difference arose in the balance of the parties. Thus we are inclined to restore this issue to the file of the AO for fresh adjudication in accordance with law. This ground of appeal is allowed for statistical purposes

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• Customs

• 2017 (3) TMI 834
  Non-imposition of redemption fine - Revenue is aggrieved that the adjudicating authority having held that the goods which were exported were ordered to be confiscated, but has not imposed any redemption fine in lieu of confiscated goods - Held that: - It is undisputed that the goods against 69 shipping bills were exported long back and the goods were not available for confiscation. It is settled law that in the absence of goods available for confiscation redemption fine u/s 125 of the CA, 1962 is not imposable as the said redemption fine is in lieu of confiscation - the impugned order is correct, legal and does not require any interference - appeal dismissed - decided against Revenue.

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• 2017 (3) TMI 833
  Imposition of penalties u/s 114(i) of the CA, 1962 - imposition on the ground that appellant had abetted M/s. Shree Khatoo Exports Ltd. in defrauding the Government by issuing shipping bills for Africa but unloaded the consignments at Dubai, which enabled M/s. Shree Khatoo Exports Ltd. to claim ineligible drawback - Held that: - the adjudicating authority has sought to impose penalty under surmises - the provisions of Section 114(i) of the CA, 1962, is not attracted - appeal allowed - decided in favor of appellant.

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• 2017 (3) TMI 832
  Imposition of penalties u/s 114A or 114AA of the CA, 1962 - difference in valuation - wilful suppression of facts and misstatement or not? - Held that: - though the respondent has not declared the fact from the department that they are 100% subsidiary of the supplier of the cranes and the goods i.e. cranes were meant only as transfer of assets, the acceptance of the fact that the goods are liable for confiscation u/s 111(m) of the CA, 1962, he imposed penalty on the respondent u/s 112(a) of the CA. The adjudicating authority has quite correctly held in para 51 and 52 that penalty u/s 114A of the CA, 1962 on the respondent is not levied as he has levied the penalty on the respondent u/s 112(a) of the CA, 1962 - also, Revenue in this appeal have not brought out any factual position that there was wilful suppression of facts and misstatement for imposition of penalties u/s 114A or 114AA of the CA, 1962 - penalty set aside - appeal dismissed - decided against Revenue.

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• 2017 (3) TMI 831
  Jurisdiction of Commissioner (Appeals) - power to remand - Held that: - the Commissioner (Appeals) had no option but to direct the assessing officer to pass a speaking order as he on his own cannot pass a speaking order at appellate stage - there is no bar on this Tribunal to send the matter to the assessing authority for passing a fresh order. Reliance was placed in the case of Commissioner of Service Tax Versus Versus Associated Hotels Limited [2014 (4) TMI 406 - GUJARAT HIGH COURT ], where it was held that Sub-section (4) of section 85 itself contains the width of the power of the Commissioner (Appeals) in hearing the proceedings of appeal u/s 85 - ROM application dismissed - decided against Assessee.

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• 2017 (3) TMI 830
  Redemption fine - penalty - import of second hand Multi-Functional Device (MFD) Copiers cum printers - imposition on the ground that the import was made without license and in contravention of the condition laid in para 2.17 of the Foreign Trade Policy, 2009-2014 - Held that: - In the Order-in-Original the adjudicating authority has stated that market enquiry was conducted. No further discussions are seen made in this respect. The margin of profit is taken as 37.8 to impose the Redemption Fine and penalties. In view thereof, the Redemption Fine and penalty imposed are highly excessive. Reducing the Redemption Fine to Rs. 13 lakhs and the penalty to Rs. 6 lakhs would meet the ends of justice - appeal allowed - decided partly in favor of appellant.

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• 2017 (3) TMI 829
  Imposition of penalty u/s 114(iii) of CA, 1962 - DEPB scheme - The allegation raised against the appellant is that they have mentioned wrongly the serial no. of the product code in the shipping Bill - Held that: - This would not tantamount to mis-classification of the goods. Further the Ld. Counsel has stated there is no column in the shipping Bill to mention the serial no. of the product code of DEPB schedule. This indicates that it is not a vital material to be stated in the shipping bill. Therefore the provision contained in Section 113(i) also would not entirety be applicable to the facts of the case. There is no dispute with regard to the value declared or the classification of the goods. Therefore, neither Section 113(i) nor Section 113(d) are attracted in the above case and therefore the penalties imposed requires to be set aside - appeal allowed - decided in favor of appellant.

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• 2017 (3) TMI 828
  Restricted item - import of MFD copiers - redemption fine - penalty - Held that: - the appellant had placed the purchase order as well as received the goods in the port prior to 05.06.2012. Only after receipt of the goods in India the amendment of para 2.17 of FTP happened to be introduced which restricted the import of such goods. Therefore, imposition of such high penalty is not warranted in the circumstances of the case - reduction of penalty to an amount of Rs. 15,000/- would meet the ends of justice - an amount of Rs. 3,15,000/- as redemption fine would meet the ends of justice - appeal allowed - decided partly in favor of appellant.

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• 2017 (3) TMI 827
  Scope of SCN - Benefit of N/N. 13/81-Cus - appellant was required to utilise the imported goods for manufacture of products which were to be exported, which the appellant failed to fulfill - Held that: - the SCN dated 5th April 1995 required the appellant to pay the amount of duty chargeable and imposition of penalty solely on account of retention of the goods in the warehouse beyond the periods specified in the warehousing licence - The impugned order has solely considered non-compliance with N/N. 13/81-Cus dated 9th February 1981 for upholding the order of the original authority as the detriment to the appellant has been determined on the basis of a finding that has travelled beyond the show cause notice - Appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2017 (3) TMI 825
  Oppression and mismanagement - increasing of the authorised share capital - misuse of borrowed funds - Held that:- Examining the case on hand, we find no pleading made by the Petitioner to the effect that increasing of the authorised share capital was with a malafide view of reducing the petitioner to minority. Therefore, that circumstance, in our considered view, does not amount to oppression. Whether Change of name of the Company is without following the procedure? - Held that:- Mere change of the name of the company does not ipso facto amount to oppression or mismanagement as such unless it is established by the Company Petitioner that thereby, the interest of the members or the Company has been prejudicially affected. Such prejudice is observably absent. The Petitioner did not explicate acceptably as to what is the loss or prejudice sustained by the petitioners or the Company. On the other hand, his own affidavit given to the Bank shows that in the best interests of the Company in order to get loan sanctioned to the company to complete the project, he has declared that there is no 'conspiracy' in the difference in the name of the company appearing in the sale deed and the certificate of incorporation. At the instance of the petitioner, therefore, there is no evidence of prejudice caused to the members or to the company by the change of the name. Whether the change will be approved by the Government or not is not an issue before us. We therefore hold that change of the company's name does not amount to oppression or mismanagement. Whether the Respondent No. 2 has resorted to financial mismanagement prejudicial to the company? - Held that:- what is appearing to us from the circumstances on record is that both the Directors who are at the helm of affairs of the company are not pulling the cart in one direction, losing mutual confidence in each other. Conceivably, for that reason only, the Petitioner in CP 54/16 instead of calling for a Board meeting to discuss the misusing of borrowed funds by the Respondent, rushed to make a complaint in utter haste to the Syndicate Bank that has resulted in adversely affecting the business of the company, besides damaging its goodwill in the records of the financing institution. This will also lead to leave distrust in the investors who wanted to book/purchase flats in the project as they will entertain a doubt whether the project will be completed in time or not. It will frustrate the very purpose of incorporation of the Company. As a whole, as discussed above, we find no financial mismanagement with malafide intention of siphoning off company's funds. But certainly, if examined cumulatively in the discordant environment created by Petitioner and Respondent, would amount to oppression and mismanagement for compelling the Tribunal ordering liquidation of the company which is the perquisite of sections 397 and 398 of the Act - instead of ordering liquidation, by virtue of powers vested in the Tribunal under Sec. 402 of the Companies Act, 1956 read with Sec. 242 of the Companies Act, 2013, we have to pass appropriate order for the future progression of the Company. Keeping the interest of stake holders, NCLT passed the order with specific direction to the company to resolve the issue in specified manner.

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• 2017 (3) TMI 824
  Misuse of position by Directors - misuse of digital signature - Held that:- Appears from the record that the respondent nos.2 and 3 were nominees of the holding company in R-1 company, and they misused their position and that the R-1 company has reached to the stage of striking off and they have not disclosed this to the holding company and kept it completely in the dark regarding the affairs of the subsidiary company. It is also clear from the record that the petitioner company is a holding company of R-1 which holds more than 90% shares but does not have any management and control over the R1 company. It is evident that the respondent nos.2,3 and 4 were misusing their position and the company has reached to the stage of being struck off. This is also a clear case of mismanagement by Respondent nos.2 to 4, in R1 company which is a subsidiary company of the petitioner company. Therefore, the petitioner has sought the relief against the subsidiary company for restraining the respondent nos. 2 to 4 from using their digital signature in MCA portal and restraining them to represent themselves as Directors of R-1 company. On the basis of records available, it is clear that the respondent nos.2 to 4 have misused their position and the petitioner company in spite of being holding company of R-1 company is completely kept in dark regarding the affairs of the subsidiary company. Therefore, the Company Petition deserves to be allowed. Company Petition is hereby allowed and the respondent nos. 2,3 and 4 are restrained from representing themselves as Directors of the company and the Registrar of Companies is also directed to delete the names of the respondent nos. 2 to 4 from the Signatory details of MCA portal of R-1 company and further direction is being issued to allow the four Directors nominated by the holding company to file the form no.32/DIR-12 using the digital signature of any of them and to reflect the correct position in the Signatory details of MCA portal by showing the names of all four nominee directors of the holding company. The respondent nos.2,3 and 4 are also being directed to hand over the register, records, returns, books, documents pertaining to the affairs of the company which are in their possession. The respondent nos. 2,3 and 4 are further restrained from dealing with, disposing of, encumbering, alienating and/or transferring the properties, assets, investments of the company in any manner whatsoever.

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• 2017 (3) TMI 823
  Permission for withdrawing the suit with liberty to file a fresh suit - proviso to section 634A of the Companies Act, 1956 provides that the said section shall not apply on or after the commencement of the Companies (Second Amendment) Act, 2002 and he claims that he has filed the Company Petition under provisions of Section 634A of the Companies Act, 1956 - Held that:- Petitioner's claim that he had filed the petition under Section 634A of the Companies Act, 1956, which was effective only till the implementation of the Companies (Second Amendment) Act, 2002. Since Companies (Second Amendment) Act, 2002 was never implemented and corresponding provisions of Section 634A of the Companies Act, 1956 is Section 465 of the Companies Act 2013, which has been repealed with certain enactments and savings. As per provisions of savings clause of Section 465 of the Companies Act, 2013 Part IXA of the Companies Act, 1956 shall be applicable mutatis mutandis in a manner as if the Companies Act, 1956 has not been repealed. Therefore, the ground which the petitioner has taken, that he is withdrawing the petition because he has filed the petition under Section 634A of the Companies Act, 1956, which has become ineffective on the ground of implementation of 2013 Act, is incorrect. It is also true that a person is entitled to withdraw a petition, but the ground which the petitioner has taken and on which he has sought liberty to file fresh petition is not justified. Therefore, there is no justification for allowing the petitioner to withdraw this petition with liberty to file fresh petition. The prayer of the petitioner for withdrawal of Company Petition deserves to be allowed.

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• Service Tax

• 2017 (3) TMI 874
  CENVAT credit - insurance service - real agent service - event management services - denial on the ground that these expenses are for personal benefit of the employees and not in relation to the business in any way - Held that: - the assessee-appellant had taken group medical claim policy for the employees and availed CENVAT credit of service tax paid for such insurance company - CENVAT credit cannot be rejected on the Group Insurance Health Policy taken by the employer - credit allowed. Real estate agent services - Held that: - these services are contracted by appellant in order to scout and procure residential accommodation for a particular class of their employees to whom they are obligated to give free accommodation due to the posts held by them - CENVAT credit of service tax paid on the services of real estate agent who help in finding residential accommodation for their employees is permitted - credit allowed. Event management services - Held that: - the services which are received by assessee-appellant as per the invoices produced before the lower authorities and before us, we find that these events are organized by assessee-appellant in order to attract more business from high network customers. The events organized are offering tickets of film shows to the said customers or organizing get to-gather to attract more capital from these high network clients - the CENVAT credit taken/availed by assessee-appellant of service tax paid for even management services cannot be denied. Credit allowed - appeal allowed - decided in favor of appellant.

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• 2017 (3) TMI 873
  CENVAT credit - denial on the ground that invoices bearing the addresses of the branches which are not registered - Held that: - there is no dispute as to the fact that the branch offices of the respondent were receiving the input services and were utilized for providing output services which is of multi transport system. It is also undisputed that the invoices of service provider indicated all the particulars to enable the availment CENVAT credit and that the name and addresses of the respondent branch offices were indicated on the invoices - the adjudicating authority has not erred in extending the benefit of CENVAT credit of the service tax paid on the input service on the invoices which are in the name of the branches of the respondent, as even though the said services have been received at branches but payments were made from Mumbai office Centralised accounting system - credit allowed - appeal rejected - decided against Revenue.

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• 2017 (3) TMI 872
  Rebate claim - time limitation - Rule 5 of CCR, 2004 read with N/N. 11/2005-ST - rejection on the ground that the said rebate claim have been filed beyond the period of one year as prescribed in Section 11B of the CEA, 1944 which is adopted for sanctioning of rebate claim under the FA, 1994 - Held that: - An identical issue came up before the Hon'ble High Court of Madras in the case of CCE vs. Dorcas Market Makers Pvt. Ltd. [2015 (4) TMI 118 - MADRAS HIGH COURT] where it was held that in the case of claim of rebate the prescription of one year u/s 11B will not apply as it is governed by another set of provisions - refund allowed - appeal allowed - decided in favor of appellant.

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• 2017 (3) TMI 871
  Finance broker - whether covered under Business Auxiliary Services or not? - Held that: - an identical issue stand decided by the Tribunal in the case of Fulchand Tikamchand [2016 (2) TMI 772 - CESTAT MUMBAI], where it was held that in view of an equation that is devoid of an agency relationship with the financier and rules out the provision of a service on behalf of the borrower from whom the appellant receives consideration, the activities of the appellant are outside the ambit of “business auxiliary service” - demand set aside - appeal allowed - decided in favor of appellant.

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• 2017 (3) TMI 870
  CENVAT credit - input services utilised at the R&D centres of the appellant company and transferred to factory through input service distribution mechanism - Held that: - the appellant have rightly taken Cenvat credit as permissible u/r 3 read with Rule 2(i) of CCR, 2004 as the services in question have been admittedly used by the manufacturer indirectly in relation to manufacture of final dutiable products - also, there is no dispute with regard to the distribution of the credit as permitted in the scheme of the Act and the Rules - credit allowed - appeal allowed - decided in favor of appellant-assessee.

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• 2017 (3) TMI 869
  100% EOU - refund claim - encashment of unutilized Cenvat Credit of input services used in the manufacture of the final product which was exported during the period 10.09.2004-31.03.2005 - Held that: - rule 5 itself provides for the utilisation of the input credit and input service credit and where such input service credit or input credit cannot be utilized, then the same can be given as refund. So, there is indeed a provision. Just because the notification has not been issued at that time; we cannot deny the benefit provided in the Rule - appeal allowed - decided in favor of appellant.

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• 2017 (3) TMI 868
  CENVAT credit - supporting structures for capital goods - Held that: - the service of cargo handling stands provided by the appellant. However, the Service Tax has been paid under BAS by considering the total service rendered by the appellant as a composite service, whose essential character is that of crushing of iron ore, which is an activity under BAS. Since, cargo handling is specified under the definition of capital goods, the appellant will be entitled to the cenvat credit claimed on tippers - appeal allowed - decided in favor of appellant.

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• 2017 (3) TMI 867
  CENVAT credit - procedural lapses - whether credit of Cenvat taken on the basis of ISD Invoices issued by the Head Office of the appellant units is deniable for curable or procedural lapses like non-mention of PAN based registration number, address of service provider etc.? - Held that: - the appellants have made substantial compliance with the provisions of taking Cenvat credit read with the provisions for Input service distribution. Whatever, minor infarction of the Rules has occurred, it appears to be due to the bulk nature of the data and there appears to be no deliberate disobedience of law - the appellants are entitled to Cenvat credit from their Head Office/input service distributor - there is no contumacious conduct or deliberate defiance of law and accordingly the extended period of limitation is not attracted - appeal allowed - decided in favor of appellant.

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• 2017 (3) TMI 866
  Import of services - An advertisement in “Fertilizer Focus”, a magazine published from U.K. - Whether the amount paid by appellant for advertisement in a foreign magazine is liable to be taxed under the category of “sale of space or time for advertisement” under reverse charge mechanism or not? Held that: - the said magazine ‘Fertilizer Focus’ gives the information regarding various machineries and the products and also various articles in respect of fertilizers and fertilizer industry. Hence the magazine ‘Fertilizer Focus’ will be covered under the definition of ‘Book’ and an advertisement placed by the appellant in the magazine being in print media is excluded from the service tax liability under the category of sale of space or time for advertisement - appeal allowed - decided in favor of appellant.

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• 2017 (3) TMI 865
  Franchise Service - Reverse charge mechanism - effective date for levy of tax u/s 66A - Held that: - tax liability u/s 66A will indeed arise from 18.04.2006 only - tax paid for the period prior to this period is to be refunded to assessee alongwith interest - Appeal allowed - decided in favor of assessee.

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• 2017 (3) TMI 864
  Refund claim - Rule 5 of CCR, 2004 read with N/N. 27/2012 CE (NT) dated 08.06.2012 - Natural justice - Department has not issued a SCN proposing to reject the refund claim - Held that: - The department cannot reject the refund claim without issuing a SCN - This Tribunal in the judgment rendered in the case of M/s. D E Shaw India Software Pvt. Ltd., [2016 (7) TMI 91 - CESTAT HYDERABAD] had observed that the rejection of refund without issuing a SCN is highly harsh and violation of principles of natural justice. Also, on perusal of records it was found that for all services, refund is eligible - rejection of refund is unjustified - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2017 (3) TMI 863
  SSI Exemption - clubbing of clearances - The Original Authority adjudicated the two SCN without taking into consideration submissions by the present appellants and confirmed the demand and imposed equal penalty - Held that: - the said Order-in-Original dated 28/11/2005 nowhere makes any mention of any grounds of defence submitted by the appellant for arriving at decision which was passed through said Order-in-Original dated 28/11/2005. Therefore, the Original Authority did not follow the principles of natural justice - matter remanded back to the Original Authority with a direction that the Original Authority shall allow the appellants to submit their defence reply and thereafter offer them opportunity of personal hearing and on hearing decide the matter as per law - appeal allowed by way of remand.

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• 2017 (3) TMI 862
  Returned goods - Rule 16 - Reversal of CENVAT credit or payment of appropriate duty on goods processed - whether the appellant-assessee is required to discharge/reverse the entire CENVAT credit on the equipment which were received back for reconditioning/repair or otherwise? - The laboratory equipment from where parts are removed are discarded as scrap on payment of duty - Held that: - the issue is no more res integra - the Tribunal in the case of Maruti Udyog Ltd v. Commissioner of Central Excise, New Delhi - III [2002 (8) TMI 155 - CEGAT, COURT NO. II, NEW DELHI] on identical issue, has held that manufacturing means put into the process of utilization of salvaged parts. When the vehicle is brought back to the factory for the intended purposes as stipulated under Rule 16(1) the credit of duty paid on such vehicle is available to the appellant. That such vehicles undergo a process of manufacture and become part of process of production of new vehicle is settled and undisputed - appeal allowed - decided in favor of appellant.

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• 2017 (3) TMI 861
  Waiver of penalties u/r 15(2) of CCR, 2004 - N/N. 6/2006-CE dated 1.3.2006 - as the appellant has availed the cenvat credit on inputs used in the manufacture of electrical goods supplied to M/s. Suzlon Energy Ltd., the appellant is not entitled to avail the credit on the inputs used so - whether imposition of penalties justified in view of the fact that on pointing out by the department, the appellant reversed the cenvat credit alongwith interest? - Held that: - The appellant did not verify whether the said project is obtained by M/s. Suzlon Energy Ltd., against international competitive bidding or not. Such mistake of the appellant was bonafide and on pointing out by the department, the appellant has reversed the credit alongwith interest - there is no specific allegation against the appellant that they have availed cenvat credit with malafide intention - the penalty is not imposable - appeal allowed - decided in favor of appellant.

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• 2017 (3) TMI 860
  Imposition of interest and penalty - delayed payment of tax - appellant claims that they were working under N/N. 8/2003 they were entitled to make payment of duty on monthly basis by 15th of the following month, no interest should be demanded - Held that: - appellants were entitled to N/N. 8/03 dated 01.03.2003. However, they have not availed this exemption and opted for payment of full duty on goods which were eligible for SSI exemption - In terms of rule 8 second proviso,, it is very clear that if the assessee is eligible for exemption and avail SSI exemption then only he is entitled for payment of duty by 5th of following month. In the present case, even though the appellant was entitled for SSI exemption they have not availed the exemption. Therefore this relaxation in the second provision to Rule 8(1) of CER, 2002 is not available to the appellant, they were supposed to pay duty by 5th of following month - the interest demanded is absolutely legal and correct, since the appellant has contravened the provisions of rule 8 by making delayed payment of duty - penalty of Rs. 5000 imposed by the lower authorities is in terms of Rule 27 of CER, 2002 - appeal dismissed - decided against appellant.

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• 2017 (3) TMI 859
  CENVAT credit - denial on the ground that the appellants have claimed the depreciation on the capital goods as well as cenvat credit, accordingly they availed double benefit - Held that: - appellant says that they have claimed the depreciation in the books of accounts the same was reversed in the income tax return. If this is so, the appellant has not claimed depreciation - However, both lower authorities have not considered properly the document submitted by the appellant to justify that the depreciation was not claimed on the amount of cenvat credit availed by them - appeal allowed by way of remand.

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• 2017 (3) TMI 858
  Classification of goods - whether the tooth paste namely Sensodent-K and Sensodent-KF having active ingredient namely Potassium Nitrate is classifiable under Chapter 3003.10 or as tooth paste under sub-heading 3306.10? - Held that: - the product is in the form of tooth paste but it is for special need and marketed as use for sensitive teeth. For that purpose the main ingredient is Potassium Nitrate, therefore it is different from the normal tooth paste - In the case of IND Swift Ltd. [2008 (6) TMI 165 - CESTAT NEW DELHI] the product was medicated dental paste in the brand name of Toss and Toss-K. Toss-K contains Potassium Nitrate B.P. 5% w/w, Principal Bench of this Tribunal held that classification held under sub-Heading 3003.10 was correct - appeal allowed - decided in favor of appellant.

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• 2017 (3) TMI 857
  CENVAT credit - Business Auxiliary Service/Business Support Service - Insurance Auxiliary Service - Outdoor Catering Service - Construction Service - Held that: - In the relevant period, the definition of ‘Input Services’ under Rule 2(l) of CCR, 2004, in the inclusive part, input services used in relation to business such as accounting, auditing, training etc. are specifically included. The definition is itself very wide to include the services used by the manufacturer by directly/indirectly in relation to final product and clearance of final product - credit allowed - appeal allowed - decided in favor of appellant.

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• 2017 (3) TMI 856
  Valuation - place of removal - whether the freight and insurance is excludable from the assessable value in a case where insurance is taken by the appellant? - denial on the ground that since the insurance is taken by the respondent, the ownership of the goods continues with the appellant till it is delivered to the buyer s premises and actual sale takes place at the premises of the buyer -Held that: - the learned Commissioner has examined the purchase orders, acceptance orders, consignment notes and found that there is no condition related to the issue whether the inspection is carried out at site and therefore, held that the goods was not sold at customer’s premises. The freight and insurance from place of removal is excludible from the assessable value - in the respondent's own case [2015 (10) TMI 613 - SUPREME COURT] on the identical facts, the Hon’ble Supreme Court has held that the place of removal is the factory gate of the assessee. Accordingly, the freight is not includible in the assessable value in the light of the judgement of the Hon’ble Supreme Court in the respondent's own case - appeal dismissed - decided against Revenue.

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• 2017 (3) TMI 855
  Reversal of cenvat credit - Benefit of N/N. 3/2001-CE dated 1.3.2001 and N/N. 6/2002-CE dated 1.3.2002 - CENVAT credit availed on goods exempted by notification - violation of condition of notification - Held that: - the exemption is available to the respondent if the vehicles are manufactured out of chassis's falling under chapter heading 87.06 on which the duty of excise has been paid and no the credit of duty paid on other inputs for fabrication of bodies of that chassis has been taken. Admittedly in this case the respondent has taken the credit on inputs, therefore, the respondent is not entitled for exemption. Moreover, the case of the Revenue is that the respondent has availed exemption, in that circumstance, the goods to be treated as exempted goods and the respondent is liable to pay 8% of the value of the exempted goods which means chassis plus body. Admittedly, in this case, the respondent has not paid the amount of 8% of the value of chassis at the time of clearance of motor vehicle, therefore, the respondent has not paid the correct amount under Rule 6 (3) (b) of Cenvat Credit Rules, 2001 - demand of duty alongwith interest upheld. Penalty - Held that: - As there is a difference opinion on the issue of imposing penalty on the respondent, therefore the matter be placed before the Hon’ble President to appoint third Member. Appeal disposed off - matter on remand.

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• 2017 (3) TMI 854
  Rectification of mistake - time limitation - Held that: - the Members have signed the order on 23.9.2015 but the order was dictated on the Bench on 10.9.2015. Therefore, according to the rule, the date of the final order of Tribunal shall be 10.9.2015. Accordingly, limitation counted from that date expired on 9.3.2016. The present application having come to the Registry on 6.4.2016 that is time-barred - ROM dismissed - decided against applicant.

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• 2017 (3) TMI 853
  CENVAT credit - job work - waste and scrap generated in job-work - denial on the ground that job workers are availing SSI Exemption and not clearing the scrap on payment of duty - Held that: - similar issue came up before this Tribunal in the case of Mahindra Hinoday Industries ltd. [2015 (1) TMI 26 - CESTAT MUMBAI] wherein it was held that it is immaterial if the scrap has been generated at the end of job worker who is availing SSI exemption on the scrap - the appellant is entitled for cenvat credit on inputs which contained in waste and scrap generated at the end of job worker who is availing the benefit of SSI Exemption - credit allowed - appeal allowed - decided in favor of appellant.

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• 2017 (3) TMI 852
  Waste and scrap - liability of duty - whether the appellant is required to reverse 10% of the value of waste and scrap generated during the course of manufacturing wire and cables or not? - Held that: - the appellant is engaged in the manufacturing of wire and cables and during the course of manufacturing of wire and cables some waste and scrap generated which is not a manufactured the goods as per Section 2(d) of the Central Excise Act, 1944. A similar issue came up before this Tribunal in appellant's own case for the earlier period wherein this Tribunal held that the appellant is not required to reverse 10% of value of exempted goods or to pay duty on waste and scrap cleared by the appellant - the amount of @ 10% of the value of exempted final goods is not payable by the appellant - appeal allowed - decided in favor of appellant.

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• 2017 (3) TMI 851
  CENVAT credit - House Keeping Services - denial on the ground that the same is neither an input service nor is used directly or indirectly in relation to the manufacture of final product - Held that: - these services are essential for maintaining cleanliness in order to ensure healthy surroundings and proper working conditions for the employees, which has an effect on production. Besides, without its compliance, being a statutory requirement, manufacturing operations are not possible - the cenvat credit on House Keeping Services is admissible - appeal allowed - decided in favor of appellant.

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• 2017 (3) TMI 850
  Refund claim - unjust enrichment - Revenue contends that the Divisional Asstt. Commissioner had not sent the verification report which was required to be taken into consideration while deciding the issue of unjust enrichment - Held that: - As the Respondent has able to prove that the higher duty paid by them at the time of provisional assessment recovered from the buyers wherein all the amount shown in the balance amount recoverable from the department - the respondent has complied with the condition of CBEC Circular 23.06.2004 and after examining all these issues the Ld. Commissioner (A) has sanctioned the refund claim same is in accordance with law - appeal dismissed - decided against Revenue.

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• 2017 (3) TMI 849
  Refund claim - Rule 5 of CCR, 2004 - N/N. 27/2012-CE (NT) dt.18.6.2012 - CENVAT credit lying unutilised due to closure of factory - Held that: - unutilized credit lying in the books of account on account of closure of factory should not be denied only on account of that they did not meet other procedural requirements of Rule 5 of the Rules read with N/N. 27/2012 - matter remanded back to the original authority only for the limited purpose of ascertaining the correct amount of eligible accumulated credit that remained unutilized on account of such closure - appeal allowed by way of remand.

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• 2017 (3) TMI 848
  CENVAT credit - Outdoor Catering Service - Rent-a-cab service - denial on the ground that the said Input Service credit as it was not used in relation to manufacture of their finished goods or used beyond the place of removal and hence not covered under the definition of “Input Service” as per Rule 2(l) of CCR, 2004 - Held that: - Service Tax paid in relation to “Outdoor catering Service” is covered under the scope of “Input Services” as defined u/r 2(l) of the CCR 2004 as held in the case of M/s Ultratech Cements Ltd [2010 (10) TMI 13 - BOMBAY HIGH COURT] - credit was allowed in the case of Rent-a-cab service in the case of Principal Commissioner Vs. Essar Oil Ltd. [2015 (12) TMI 1062 - GUJARAT HIGH COURT] - credit allowed - appeal allowed - decided in favor of appellant.

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• 2017 (3) TMI 847
  Valuation - Captively consumed goods - wire - blends flux - appellant claims that the goods are not intermediate goods for the purpose of valuation u/r 8 of Central Excise (Valuation) Rules, 2000. To invoke the Rule, the goods should be first excisable. If that is not excisable, there shall be no application of that Rule. In addition to this condition, there should be marketability of the goods - Held that: - the goods manufactured by the appellant having consumed captively failing the test of excisability and marketability by Revenue, invoking of Rule 8 is inconceivable - having noticed the non-excisability character of the goods, it is considered redundant to make further exercise on the valuation of the non-exicisable goods - appeal allowed - decided in favor of appellant.

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• 2017 (3) TMI 846
  Benefit of N/N. 6/2006-CE - classification of goods - atraumatic needled sutures - Held that: - an identical issue has come up before the Tribunal in the case of Sutures India Pvt. Ltd. Vs. CCE Bangalore [2009 (1) TMI 630 - CESTAT, BANGALORE] where the same issue was involved, where it was held that the law is clearly settled as to the claiming of classification of the goods and claiming exemption under particular notification is a matter of belief and would not amount to mis-declaration - demand set aside - appeal allowed - decided in favor of appellant.

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• 2017 (3) TMI 845
  CENVAT credit - GTA service - services used for export of goods - denial on the ground that the service not covered under the scope of “input service” as defined u/r 2(l) of the CCR, 2004 - Held that: - Service Tax paid in relation to ‘GTA Service’ used for exported goods is covered under the scope of “input service” as defined u/r 2(l) of the CCR, 2004, in view of the ratio laid down by the Hon’ble Gujrat High Court in Dynamic Industries Ltd’s case [2014 (8) TMI 713 - GUJARAT HIGH COURT], where under it is held that the place of removal in case of export of goods on FOB basis, is at the place of export i.e., Port, hence the credit availed on all export related services is admissible - appeal allowed - decided in favor of appellant.

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• 2017 (3) TMI 844
  CENVAT credit - Outdoor Catering Service - denial on the ground that the said Input Service credit as it was not used in relation to manufacture of their finished goods or used beyond the place of removal and hence not covered under the definition of “Input Service” as per Rule 2(l) of CCR, 2004 - Held that: - Service Tax paid in relation to “Outdoor catering Service” is covered under the scope of “Input Services” as defined u/r 2(l) of the CCR 2004 as held in the case of M/s Ultratech Cements Ltd [2010 (10) TMI 13 - BOMBAY HIGH COURT] - credit allowed - appeal allowed - decided in favor of appellant.

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• 2017 (3) TMI 843
  CENVAT credit - Business Auxiliary Service - Business Support Service - Photography Service - credit denied without finding relevancy of such service to the business of the appellant - Held that: - Both the authorities below did not ask for the evidence from the appellant which shall satisfy them to examine relevancy of the service - Since they have recorded that the evidences were not produced in spite of the specific ground raised by the appellants, the authorities acted whimsically. Therefore, it is high time that the adjudicating authority should appreciate relevancy of the claims on examination of the evidence that shall be produced by the appellant on the date fixed by the adjudicating authority during January 2017 - appeal allowed by way of remand.

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• 2017 (3) TMI 842
  CENVAT credit - Cleaning service - Agri-Horticulture services - servicing of Cars - denial on the ground that it cannot be assumed that cars are used only for activities which have nexus with the manufacture and that they could have been used for transporting personal effects of employees and for their personal use etc - Held that: - such a conclusion is peremptory and based on assumptions and presumptions and without any evidence in the face of appellant’s averments that the said vehicles have been used only for purposes which have nexus with the manufacturing or business activities - the said service is very much an eligible “input service” for the purpose of Rule 2(l) ibid. Cleaning service - Held that: - The list of eligible input services given in Rule 2(l) ibid being inclusive, it is only in the nature of examples of the type of services that would be permissible and therefore, can include many more of its genre. Further, cleaning service is also not specifically excluded from Rule 2(l) as it existed during the relevant period - credit allowed. Agri-Horticulture services - Held that: - credit remain allowed. Appeal allowed in toto - decided in favor of appellant.

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• 2017 (3) TMI 841
  CENVAT credit - outward transportation availed by the appellant - Held that: - matter remanded to the original adjudicating authority to reconsider the matter based on the guidelines contained in the Board’s Circular No. 97/8/2007 dated 23.08.2007 and other related subsequent circulars as applicable - appeal allowed by way of remand.

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• 2017 (3) TMI 840
  CENVAT credit - Rent-a-cab service - Mandap Keeper/Hotel services - and Courier Service - denial on the ground that these services are not covered under the definition of “Input Service” as per Rule 2(l) of CCR, 2004 - Held that: - Service Tax paid in relation to Rent-a-cab, Courier service, Mandap Keeper/Hotel services, are held to be input service as defined u/r 2(l) of the CCR 2004 by the Hon’ble Gujrat High Court in as held in the case of M/s Essar Oil Ltd [2015 (12) TMI 1062 - GUJARAT HIGH COURT], and Tribunal in the case of M/s WNS Global Service [2016 (10) TMI 135 - CESTAT MUMBAI] - However, it is not clear from the records whether the appellant has recovered the service charges from their employees in providing the said rent-a-cab service. For the limited purpose of verification of the said fact, the matter is remanded to the Adjudicating Authority - appeal allowed in part and part matter on remand.

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• 2017 (3) TMI 839
  Clandestine removal under the guise of second sale - Evasion of the duty - Penalty - Held that: - the investigation has more than adequately established the questionable modus operandi adopted by the appellants. We further find that the adjudicating authority has analytically and objectively dealt with the matter at hand and reached to judicious conclusion each of the appellants committing breach of law. It is seen that Revenue discharged burden of proof. But, appellants failed to demolish the stand taken and evidence adduced by Revenue against appellants. From the facts on record the active roles of the Bill traders, Brokers, Transporters and Kerala buyers etc., causing evasion being conduits of the racket have come out very clearly and established by Revenue. They were instrumental for clearance of goods by M/s. Nav Steel clandestinely to the Kerala buyers and route the sale proceeds from the latter to the brokers. Both documentary and oral evidence gathered demonstrated scientific evasive method followed by the racket to cause subterfuge to Revenue - Documents recovered from the witnesses including the Kerala buyers proved the ill intent of appellant manufacturer and that remained intact, proving against appellant. Clandestinely removed goods were cleared under cover of dummy invoices to Bill traders/brokers and the latter receiving payments thereof in their name by demand drafts were encashed and amount in cash handed over to the appellant manufacturer after deducting their commission - Appeal dismissed - decided against the assessee.

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• 2017 (3) TMI 838
  Liability of interest - reversal of credit - whether interest in liable to be paid till such time the credit is reversed? - Held that: - reliance placed in the decision in the case of Shree Cement Ltd. Vs. CCE Jaipur [2016 (12) TMI 582 - CESTAT NEW DELHI], where it was held that even when the Cenvat Credit has not been utilized, though taken wrongly the liability of interest would arise for the period when it was lying in the account of the assessee - appeal dismissed - decided against appellant.

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• 2017 (3) TMI 837
  Exemption subject to conditions - Benefit of N/N. 44/2001-CE(N.T.), dt.26.06.2001 - denial on the ground that the Assessee had not mentioned relevant Central Excise Notification in their E.R.-1s as well as in ARE-3s for availing exemption from Central Excise duty - failure to to comply with the provisions of Rule 3(7) and Rule 4(1) of Central Excise (Removal of Goods at Concessional Rate of Duty for manufacture of Excisable Goods) Rules, 2001 - Held that: - when the conditions have not been fullfilled, necessary consequences are to be faced by the Respondent-Assessee - in the case of Indofil Chemical Co. [2002 (11) TMI 214 - CEGAT, MUMBAI], the CESTAT holds that the Assessee has no choice but to follow the condition(s) given in the rules and the notification - appeal allowed - decided in favor of Revenue.

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• 2017 (3) TMI 836
  Unjust enrichment - refund claim - refund sanctioned, but was transferred to Consumer Welfare Fund observing that the appellant had not discharged the burden that the incidence of duty had not been passed on to their buyers/ others - Held that: - during the relevant period, Gate Pass( GP-1) was the relevant document, wherein the duty paid used to be shown and subjected to assessment by the Revenue officer in-charge of the factory - In the present case, the appellant though enclosed sample copies of commercial invoices, the relevant gate passes (GP-1s) and other evidences are vital documents so as to establish that the duty element is not passed on to others - the evidences/ documents placed before him are not sufficient to establish that the incidence of duty has not been passed on to the customers/ others - appeal rejected - decided against appellant.

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• 2017 (3) TMI 835
  CENVAT credit - various input services - denial on the ground that the services do not satisfy the definition of “input service” u/r 2(l) of CCR,2004 - Held that: - admissibility of CENVAT credit on all these services had been considered by the Mumbai Bench of this Tribunal, in the assessee-Appellant’s own case, [2016 (8) TMI 123 - CESTAT MUMBAI], albeit for the subsequent period - After analysing the principle of law laid down by various High Courts and by this Tribunal, the Bench held that credit on each of these services is admissible being satisfies the definition of input service prescribed under 2(l) of CCR,2004 - credit allowed - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2017 (3) TMI 826
  Input Tax Credit - denial on the ground that the information concerning the selling dealers did not match with the information provided by the petitioner - retrospective cancellation of the registration certificate of seller - Held that: - neither the pre assessment notices nor the assessment orders advert to the sellers qua whom there is a mismatch in the available information. Clearly, there is an absence of material particulars both in the pre-assessment notices, and, in the assessment orders - the matter requires re-examination. Cancellation of registration certificate of the sellers - Held that: - the effective date of cancellation of registration certificate, precedes the date of the invoice, while in other cases, the effective date follows the date of the invoice. If, the effective date of cancellation of registration certificate follows the date of invoice, then, the fact the registration certificate was valid on the date, when, the transaction took place, is an aspect, which attains criticality - The petitioner's/assesse's transaction cannot be impacted by subsequent cancellation of registration. Petition disposed off - The respondent/Assessing Officer will, thereafter, redo the assessment - petition allowed by way of remand.

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• Indian Laws

• 2017 (3) TMI 822
  Charge against 2nd respondent under Section 138 of the N.I. Act - Held that:- We find that the 2nd respondent in his deposition categorically stated that to satisfy the terms of agreement (Ext.D2), on 7.9.2000 he had arranged to the appellant Rs. 75,000/- in cash and a cheque for Rs. 2,25,000/-. It is on record that the appellant/complainant himself admitted in the cross examination that till 6.9.2000 the balance in his bank account was less than Rs. 1,000/- and on 7.9.2000 (the date of agreement, Ext. D2) he made a fixed deposit of Rs. 70,000/-. Significantly, a copy of the fixed deposit receipt is available with the 2nd respondent also giving scope to the presumption that the appellant made the fixed deposit of Rs. 70,000/- out of the cash arranged by 2nd respondent. There is also no justifiable reason shown by the appellant to deem that the fixed deposit was made out of any other source. An argument was, however, advanced on behalf of the appellant that even if the cheque in question was issued by the 2nd respondent for settling the disputes between the appellant and M.M. Basheer, the 2nd respondent would be still binding under Section 138 of the N.I. Act. On this aspect, we observe that the material on record explicitly shows that the disputes between the appellant and M.M. Basheer were not settled amicably in terms of agreement (Ext.D2). Moreover, the appellant nowhere claimed fulfillment of performance of his part of the agreement. Taken into consideration all aspects of the case, we are of the opinion that the entire evidence has been properly evaluated by the Trial Court to reach the just conclusion that the appellant/complainant has failed to prove his case beyond reasonable doubt. Thus, there is no perversity or illegality in the impugned order passed by the High Court calling for our interference, particularly in the absence of proof of legally enforceable debt existing between the parties.

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• 2017 (3) TMI 821
  Offence punishable under Section 138 of the Negotiable Instruments Act - Held that:- We have been informed that Rs. 40000/- has been deposited by the appellant in the Courts below in the following manner:- (i) Rs. 25000/- was deposited by the appellant on 16-11-2000 vide Voucher No.287890; (ii) Rs. 15000/- was deposited by the appellant on 30-1-2002. The balance amount of Rs. 35000/- has been deposited by the appellant in the Registry of this Court. It is ordered that both these amounts shall be handed over by the respective Registries to the respondent within a period of four weeks from today. Further, the appellant is granted a period of two weeks from today within which he is directed to pay a fine of Rs. 5000/-. The appeal is disposed of in the afore-stated terms.

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