TMI Tax Updates - e-Newsletter
March 23, 2018

Case Laws in this Newsletter:

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

TMI SMS

• Rates of interest on small savings schemes i.e. Saving Deposits, Public Provident Fund, Kisan Vikas Patra and Sukanya Samriddhi A/s Scheme

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• Constitution of National Financial Reporting Authority (NFRA) - came into force w.e.f. 21-3-2018 - Section 132 of the Companies Act, 2013

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News

1. Clarity on E-Way Bill

2. States Exempted from Tax Refund after GST

3. GST on Skill Development, Start-Ups and Tourism

4. Merger of State-owned General Insurance Companies

5. Rates of small savings schemes

6. Linking of SWIFT to the Core Banking System

7. 31.20 crore accounts opened under Pradhan Mantri Jan-Dhan Yojana (PMJDY) with aggregate deposit balances ₹ 75,572.09 crore as on 28.2.2018

8. Non-Compliant NBFCs which have not fulfilled their obligations under PML Rules asked to do so

9. RBI Reference Rate for US $

10. Cabinet approves North-East Industrial Development Scheme (NEIDS) 2017

11. Cabinet approves revision of the Agreement between India and Qatar for the avoidance of double taxation and for the prevention of fiscal evasion with respect to taxes on income

12. Stakeholder engagement by the Task Force drafting the new Direct Tax Law

13. Insolvency and Bankruptcy Board of India invites comments on the Draft Syllabus of Limited Insolvency Examination

Notifications

Companies Law

1. File No. 1/4/2016-CL.I - dated 21-3-2018 - Co. Law

Central Government appoints the 21st March, 2018 as the date on which the provisions of sub-sections (3) and (11) of section 132 of the Companies Act 2013 shall come into force

2. File No. 1/4/2016-CL.I - dated 21-3-2018 - Co. Law

The National Financial Reporting Authority (Manner of Appointment and other Terms and Conditions of Service of Chairperson and Members) Rules, 2018

Customs

3. 14/2018 - dated 21-3-2018 - ADD

Seeks to impose anti-dumping duty on imports of 'Monoisopropylamine' originating in or exported from China PR

4. 13/2018 - dated 21-3-2018 - ADD

Seeks to impose anti-dumping duty on imports of 'Resorcinol' originating in or exported from China PR and Japan

SEZ

5. S.O. 1216(E) - dated 14-3-2018 - SEZ

Central Government notifies the 3.4659 hectares area at Information Technology and Information Technology Enabled Services (IT/ITES) Survey No. 129 (P), 130 (P), 131 (P) Near Rajiv Gandhi Infotech Park, Hinjewadi, Phase-I, Pune, in the State of Maharashtra and constitutes a Approval Committee

Circulars / Instructions / Orders

DGFT

1. 67/2015-2020 - dated 22-3-2018

Processing of Merchandise Exports from India Scheme (MEIS) applications for SEZs Exports

2. Corrigendum to Public Notice No. 66/2015-2020 - dated 22-3-2018

Correction in Entry No. 8019 of Table 2 of the Appendix 3B Merchandise Exports from India Scheme (MEIS)

3. 66/2015-2020 - dated 21-3-2018

Merchandise Exports from India Scheme (MEIS) benefit for 'Bengal-gram' under ITC (HS) code 07132000 upto 20.06.2018

Highlights / Catch Notes

GST

• GST Changes Impact Skill Development, Start-Ups, and Tourism: Rate Adjustments and Compliance Tips to Maximize Benefits

  News : GST on Skill Development, Start-Ups and Tourism
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Income Tax

• Court Allows Pharma Company's "Freebies" to Doctors as Business Expense Under 'Sales Promotion' Claims.

  Case-Laws - AT : Disallowance of expenses claimed under the head of ‘Sales Promotion’ - assessee company paid such amount as “Freebies” to the doctors for prescribing pharmaceutical product of the assessee company - as the expenses were incurred by the assessee for the purpose of business, claim of the assessee allowed - AT
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• Section 54F Amendment: Adjacent Properties No Longer Count as Single House for Tax Deductions Post-2015.

  Case-Laws - AT : LTCG - Prior to the amendment of the provisions of section 54F vide Finance Act 2014 with effect from 01.04.2015, the two adjacent properties would be considered as single residential house for the purpose of deduction u/s 54F - AT
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• Taxpayer Penalized for Unexplained Expenses u/s 69C; 100% Penalty on Evaded Tax Upheld by CIT(A.

  Case-Laws - AT : Addition made u/s 69C was due to the reason that the assessee failed to explain the source of said expenses. Accordingly, we concur with the view of ld. CIT (A) to restrict the penalty to 100% of the tax to be evaded of such income - AT
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• Assessing Officer Criticized for Inconsistent Dual Additions of Cash Sales and Trade Creditors u/s 68.

  Case-Laws - AT : Addition of trade creditors u/s 68 - unexplained cash credits - AO cannot blow hot and cold at the same time for the reason he has made twin additions out of the trading results i.e., treating the cash sales as cash credit and adding the same u/s 68. - AT
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• Assessee accused of reducing property rental value to evade taxes; no justification found for lower Annual Lettable Value.

  Case-Laws - AT : Annual Value of House Property determination - as per AO assessee has taken the rent in cash and to avoid the tax liability the rental value has been substantially reduced - There is no merit in the case of assessee in justifying any reduction in the ALV of the property. - AT
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• Notional Letting Value Exemption for Business-Used Properties: Active Use Qualifies as Occupation, Avoids Tax Assessment.

  Case-Laws - AT : Addition of notional Annual Letting Value on closing stock of flats / spaces - The intention of the lawmakers was that occupation of one’s own property, in the course of business, and for the purpose of business, i.e. an active use of the property, (instead of mere passive possession) qualifies as “own” occupation for business purpose. - AT
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• Transmission and Wheeling Charges Not Technical Services; No Tax Deduction Needed u/s 194J.

  Case-Laws - AT : TDS u/s 194J - transmission and wheeling charges paid by the assessee does not come within the purview of fees for technical service as defined under Explanation 2 to sec 9(1)(vii) of the Act and accordingly no tax is required to be deducted by the assessee u/s. 194J therefrom. - AT
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• Court Rules in Favor of Assessee: Section 80IC Deduction Allowed for Substantial Unit Expansion Under Income Tax Act.

  Case-Laws - AT : Entitlement to deduction u/s 80IC on account of substantial expansion of the unit - The restrictive meaning given by the lower authorities to deny the deduction u/s 80IC of the Act to the assessee on account of substantial expansion cannot be held to be justified. - AT
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• Court Rules Long Term Capital Gains Not Undisclosed Income as Revenue Fails to Prove Fraudulent Share Transactions.

  Case-Laws - HC : Treatment of Long Term Capital Gains as undisclosed income - if the shares were of some fictitious company which was not listed in the Bombay Stock Exchange/National Stock Exchange, the shares could never have been transferred to demat account - revenue failed to prove that transaction were bogus - HC
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• Court Rules "On-Money Transactions" Finding Baseless; Books of Account Rejection Unjustified Under Regular Business Practices.

  Case-Laws - HC : Rejection of books of accounts - The finding of "on-money transactions" in the appellant's case by the authorities below is found without any basis and found perverse on facts. It, therefore, could not be a reason for rejecting the books of account maintained by the assessee in regular course of business. - HC
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• Petitioners Entitled to Interest on TDS Refund as per Section 244-A; Supreme Court Dismisses Revenue's Appeal.

  Case-Laws - SC : Interest on refund of TDS - HC has held that right of receiving interest is available to the petitioners as per the statute and nothing of any estoppel could be considered operating against the petitioners over the statutory provisions contained in Section 244-A of the Act. - SC dismissed the revenue appeal
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Customs

• Customs Act, Section 80: Detained Goods to be Returned to Passenger for Re-exporting Upon Departure from India.

  Case-Laws - AT : Benefit u/s 80 of CA, 1962 - Re-export of gold - prohibited goods - proper officer may at the request of the passenger detained such articles for the purpose of being returned to him on his leaving India - Department directed to return the goods to the appellant - AT
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• Court Dismisses Authority's Findings on Goods Diversion Due to Lack of Evidence and Unsupported Assumptions.

  Case-Laws - AT : Diversion of imported goods into local market - violation of actual user condition - clandestine removal - onus of proof - Admittedly, the observations and findings of the adjudicating authority are in the nature of assumption and presumption, which cannot be upheld - AT
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DGFT

• MEIS Applications for SEZ Exports Processed Per DGFT Guidelines to Boost India's Global Export Competitiveness.

  Circulars : Processing of Merchandise Exports from India Scheme (MEIS) applications for SEZs Exports - Public Notice
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• MEIS Benefit Announced for 'Bengal-gram' Exports Under ITC (HS) Code 07132000, Valid for Three Months.

  Circulars : The MEIS benefit is notified for 'Bengal-gram' under ITC (HS) code 07132000 for a period of 3 months for exports made
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Corporate Law

• NFRA Rules, 2018: Transparent Appointment and Service Terms for Chairperson and Members to Enhance Financial Reporting in India.

  Notifications : The National Financial Reporting Authority (Manner of Appointment and other Terms and Conditions of Service of Chairperson and Members) Rules, 2018 - Notification
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• NFRA Established u/s 132 of Companies Act, 2013 to Regulate Financial Reporting Standards Since March 21, 2018.

  Act-Rules : Constitution of National Financial Reporting Authority (NFRA) - Provisions came into force w.e.f. 21-3-2018 - Section 132 of the Companies Act, 2013
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• Winding up petition dismissed due to arbitration clause: Arbitration remedy must be used for debt disputes.

  Case-Laws - HC : Winding up petition - eligible debt - Once an Arbitration Clause is provided under the agreement executed between the parties, Arbitration remedy available under the contract has to be invoked rather than pressurizing the respondent to make the payment of dues as claimed, by filing company petition for winding up of the company. - HC
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Indian Laws

• Interest Rates Updated for Saving Deposits, PPF, Kisan Vikas Patra, and Sukanya Samriddhi Accounts to Reflect Economic Conditions.

  News : Rates of interest on small savings schemes including Saving Deposits, Public Provident Fund, Kisan Vikas Patra and Sukanya Samriddhi Accounts Scheme
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• Cabinet Approves North-East Industrial Development Scheme 2017 to Boost Investment and Growth in Northeastern India.

  News : Cabinet approves North-East Industrial Development Scheme (NEIDS) 2017
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• Company Officers Not Automatically Liable for Offenses; Vicarious Liability Only u/s 17(1) Conditions.

  Case-Laws - HC : Vicariously liability - In case of offence committed by the company its officers cannot be made vicariously liable for commission of offence on the part of the company. Vicarious liability gets attracted in case of the officers of the company only when condition precedent laid down in Section 17(1) of the Act gets satisfied. - HC
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• Karnataka Money Lenders and Pawn Brokers Act Amendments Upheld; Retrospective Provisions from 1985 Invalid.

  Case-Laws - SC : Constitutional validity of amendments made to the Karnataka Money Lenders Act, 1961 and the Karnataka Pawn Brokers Act, 1961 in the year 1998 - Section 7-A & 7-B of the M.L. Act and 4-A & 4-B of the P.B. Act are valid from the date of their enactment - That the provisions making these amendments retrospective from 1985 are illegal and invalid. - SC
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Service Tax

• Service Tax Demand Overturned Due to Failure in Determining Specific Service Characteristics, a Key Liability Requirement.

  Case-Laws - AT : Demand of service tax - assessing authority failed to determine the specific characteristic of the service which is a necessary pre-requisite for fastening liability - demand set aside - AT
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• Letter from 2013 Not an Enquiry, Respondents Eligible for Voluntary Compliance Encouragement Scheme Says Commissioner (Appeals.

  Case-Laws - AT : Rejection of VCES Scheme - the Commissioner (Appeals) has rightly observed that the letter dated 08/02/2013 issued by the Range Superintendent cannot be construed as enquiry or investigation which debar the respondents from VCES scheme. - AT
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Central Excise

• Transfer of CENVAT Credit Allowed u/r 10 Without Matching Credit to Available Inputs for Greater Flexibility.

  Case-Laws - AT : Transfer of the unutilized accumulated CENVAT Credit - Rule 10 of the CCR - There is no requirement under the rule that the assessee can transfer credit corresponding to the availability of quantum of inputs - transfer of credit allowed - AT
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• Notional Interest on Advance Deposits Excluded from Assessable Value for Tax on Goods Supply.

  Case-Laws - AT : Valuation - includibility - notional interest - whether the notional interest on the advance deposit collected by the appellant against the supply of goods is includible in the assessable value of the final product or otherwise? - Held no - AT
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• Court Confirms Excise Duty on MS Specials in Water Projects; Production Process Unchanged, Tax Law Applies.

  Case-Laws - HC : Exemption to Clearance of MS Specials to the water supply projects - The production is the same, manufacturing and the process is the same and excise duty is liable on the manufacturing, merely because in the certificate there is no mention of MS Special, the taxing statute will not be different - HC
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• Court Rules Settlement Commission Application Rejected; Section 32(O)(1)(i) Covers Orders with Concealment Penalties Retrospectively.

  Case-Laws - HC : Rejection of application for Settlement Commission - The Explanation is clarificatory and applies retrospectively. Even absent the Explanation we would interpret Section 32(O)(1)(i) to include the orders of settlement which provides for imposition of penalty on the ground of concealment of particulars of duty liability from the Central Excise Officer - HC
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VAT

• Court Affirms Authority to Withhold C Declaration Forms Over Pending Dues, Validating Statutory Power in VAT, Sales Tax Matters.

  Case-Laws - HC : Issuance of C declaration Forms - pending government dues - this Court upheld the power of the respondent to withhold the C Form declarations, as the respondent is statutorily empowered to do so - HC
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Case Laws:

• GST

• 2018 (3) TMI 1075
  Corrigendum to bring the original notification dated 28th June, 2017 in confirmity with the recommendations of the GST Council - a corrigendum on the same lines will be issued by the GNCTD as well list on 15th November 2017.

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• 2018 (3) TMI 1074
  Detention of consignment with vehicle - requirement of security deposit for release of goods and vehicle - Held that: - it is established that the documents used by the petitioner would not suffice to cover the transportation of the goods - the detention cannot be said to be un-justified - the respondent is directed to release the goods and the vehicle covered by Ext.P3 detention notice, to the petitioner, on his furnishing a bank guarantee to cover the security deposit amount demanded in the Ext.P3 notice, before the respondent - petition disposed off.

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• Income Tax

• 2018 (3) TMI 1100
  Claim of deduction in the computation of income in respect of reversal of NPA interest credited to Profit 246891000/- in P 144090700/- which is much lesser than actual provision made. Therefore as per CBDT circular instructions and judicial pronouncements there should not be any reason to disallow the claim of the assessee. This further clarify the intention of Government that due to hardships in granting rural advances by banks, Government as an incentive wants to allow the deduction to scheduled as well as non scheduled banks. We find from the facts of the case that the area of operation of the assessee bank is restricted to Buldhana District, having 106 branches in rural areas. The loans and advances are given to farmers residing in rural areas. - Decided in favour of assessee

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• 2018 (3) TMI 1099
  Disallowance of expenses claimed under the head of ‘Sales Promotion’ - assessee company paid such amount as “Freebies” to the doctors for prescribing pharmaceutical product of the assessee company - expenses admissible as per instruction No.5/2012 issued by the CBDT - Held that:- During the remand proceedings the assessee submitted nine photographs of medical camps, five certificates and seven hotel bills in support of medical camp organized by it and we note that assessing officer did not find any mistake or irregularity therein. During the remand proceedings, the assessee also explained to the AO that medical camps organized by the assessee required large expenditure inter alia for cost of travelling, reimbursement of cost of conveyance, reimbursement of lodging cost, reimbursement of paramedical persons who attended the camps, cost of chemicals, hire charges of certain equipments and cost of free samples of medicines etc, and the assessing officer failed to bring any evidence that these expenses were not genuine. We note that even otherwise the expenses were not covered by the CBDT Circular No.05/2012, as the expenses were incurred by the assessee for the purpose of business. We note that assessing officer was not justified in applying the guidelines as laid down by CBDT in aforesaid circular in respect of A.Y 2012-13. We note that in subsequent assessment years i.e. in A.Y 2013-14 and in A.Y 2014-15, the assessing officer has allowed the similar claims of the assessee. That being so, we decline to interfere with the order of ld CIT(A) deleting the aforesaid addition. - Decided against revenue

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• 2018 (3) TMI 1098
  LTCG - Disallowing benefit of investment made u/s 54F for purchase of residential house - two adjacent properties purchased - non deposition of sale consideration in capital gain account scheme in accordance with scheme of section 54F(2) - Held that:- Prior to the amendment of the provisions of section 54F vide Finance Act 2014 with effect from 01.04.2015, the two adjacent properties would be considered as single residential house for the purpose of deduction under section 54F. Similar view has been taken in the case of CIT vs. D. Ananda Basappa (2008 (10) TMI 99 - KARNATAKA HIGH COURT) and held that two flats purchased side by side are eligible for deduction u/s 54F of the Act. As in the case of Abhijit Bhandar vs. CIT (2017 (6) TMI 602 - MADRAS HIGH COURT) has held that benefit under section 54 for purchase of two adjacent flats as single residential unit cannot be denied. Accordingly, we are of the considered view that in the absence of denial of fact that these two properties are adjacent to each other and to be used by the assessee for his residential purposes, the benefit under section 54F cannot be denied merely because the assessee has purchased two houses. As regards the non deposit of the amount in the Capital Gain Account Scheme, we note that the assessee has sold the agricultural land on 30th November, 2012 and the house was purchased on 30.10.2014. Therefore, the investment made by the assessee is within two years from the sale of the existing asset and is not beyond the stipulated period as provided under section 54F of the Act. When the assessee has invested the amount within the stipulated period as provided under the provisions of section 54F, then the substantial requirement as per section 54F(1) is satisfied. - Decided in favour of assessee

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• 2018 (3) TMI 1097
  Penalty imposed u/s 271(1)(c)- deliberate attempt to conceal the income by filing inaccurate particulars of income - undisclosed sales and the addition made under section 69C - CIT-A reducing penalty to 100% from 200% - Held that:- We note that the assessee disclosed the income of 46,00,000/- only after the survey proceedings, thus we up hold the levy of penalty and reversed the order of ld. CIT (A) qua this issue in respect of the income disclosed by the assessee. Penalty in respect of undisclosed sales though the addition made by the AO was sustained by this Tribunal and the same has attained the finality, however, we find that the penalty equivalent to 100% of tax to be evaded on this amount is a reasonable and proper decision taken by the ld. CIT (A) which does not require any interference. Accordingly, we uphold the finding of the ld. CIT (A) qua this issue. Penalty in respect of disallowance made under section 40(a)(ia) - Held that:- The disallowance was made only because of non deduction of TDS by the assessee. When the claim of expenditure other-wise not found to be bogus or patently impermissible the disallowance made by the AO by invoking the provisions of section 40(a)(ia) would not lead to conclusion that the assessee has either concealed the particulars of income or furnished inaccurate particulars of income. Once the case of disallowance under section 40(a)(ia) does not fall under the category of concealment of particulars of income or inaccurate particulars of income, the mere disallowance because of non compliance of the provisions of the Act ipso facto would not lead to levy of penalty. No error or illegality in the order of the ld. CIT (A) in deleting the penalty. Addition made under section 69C was due to the reason that the assessee failed to explain the source of said expenses. Accordingly, we concur with the view of ld. CIT (A) to restrict the penalty to 100% of the tax to be evaded of such income. The order of ld. CIT (A) is upheld. Penalty on the addition/disallowance made under section 24(a) - Held that:- The said addition was deleted by the Tribunal in the appeal filed by the assessee against the revision order. This fact of deletion of the addition has not been disputed by the revenue. Accordingly when the Tribunal has already deleted the addition, then the penalty under section 271(1)(c) has no leg to stand. Accordingly, we do not find any error or illegality in the order of the ld. CIT (A) qua this issue. - Appeal of revenue partly allowed.

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• 2018 (3) TMI 1096
  TDS u/s 194H - Validity of order passed u/s 201(1) and 201(1A) being passed beyond limitation period specified under section 201(3) - liability to deduct tax at source on discount extended to its distributors of pre-paid SIM cards and talktime (by way of recharge vouchers, e-top up, etc.) - Held that:- The present section 201(3) of the Act provides the limit for passing the order to be within seven years from the end of financial year in which the payment was made or credit was given. Accordingly, we hold that order passed by the Assessing Officer raising the demand under section 201(1) of the Act is beyond the limit provided in sub-section (3) of the Act for quarter Nos.1 to 3. The return for quarter No.4 was filed on 15.06.2009 i.e. in financial year 2009-10 and the order raising the demand under section 201(1) of the Act is passed on 15.03.2012 i.e. before expiry of two years from the end of financial year in which TDS return was filed and hence, the same has been filed within time. Thus, we direct the Assessing Officer to delete the demand raised for quarter Nos.1 to 3 and sustain the demand for quarter No.4. However, under section 201(3) of the Act, no limit is provided for passing order charging interest under section 201(1A) of the Act, hence the assessee is liable to pay interest under section 201(1A) of the Act and the said order of Assessing Officer is upheld. - Decided partly in favour of assessee

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• 2018 (3) TMI 1095
  Exemption under Section 80P(2)(a)(i) allowability - interest on the deposits earned in the course of the activity of the Appellant-Society and the income was attributable to the said activity - Held that:- If it is found that the facts of the present case are similar to the facts in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO (2015 (2) TMI 995 - KARNATAKA HIGH COURT), then issue should be decided in favour of the assessee. If the facts of the present case are similar to the facts in the case of PCIT and Another Vs. Totagars Co-operative Sale Society (2017 (7) TMI 1049 - KARNATAKA HIGH COURT) then the issue should be decided against the assessee. On a specific query from the bench, as submitted by assessee that necessary facts on this aspect are not readily available and there is no finding of any of the authorities below on this aspect. Under these facts, feel it proper to restore the matter back to the file of AO for fresh decision after examining this aspect of the facts of the present case in the light of these two judgments and in the light of above observations. Hence set aside the order of CIT (A) and restore the matter back to the file of AO for fresh decision - Decided in favour of assessee for statistical purposes.

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• 2018 (3) TMI 1094
  Addition of trade creditors u/s 68 - unexplained cash credits - also making additions of gross profit after rejecting the book results u/s 145(3) - Held that:- AO admits these cash sales as unexplained in the absence of confirmation by the parties. Admittedly, these are trade creditors and not cash creditors because the assessee has deposited the cash in its trading bank account out of the proceeds of sales, although those are not verified. It means that these have relation with trading entries and these are not independent cash credits. On the other hand, the Assessing Officer is also rejecting the books of account u/s 145(3) and applied profit rate and making addition by enhancing the income of 6,09,366/- to 19,57,569/-. We find from the above facts in entirety that the Assessing Officer cannot blow hot and cold at the same time for the reason he has made twin additions out of the trading results i.e., treating the cash sales as cash credit and adding the same u/s 68. AO is very well within the power of rejecting the book results u/s 145(3) and we confirm the action of the Assessing Officer. However, we find that the Assessing Officer has applied profit rate of more than 8% and assessee’s nature of business is trading in steel and iron, which does not give this much profit and assessee’s regular profit is assessed at the rate of 2.5% to 3% and it varies from year to year in between the same. In view of the above position, we are of the view that a reasonable profit rate at the rate of 5% should be estimated on the above sales and not at the rate of 8% or above 8% Not allowing the claim of deduction of LIC etc. under Chapter VIA of the Act - Held that:- We direct the Assessing Officer to take evidences from the assessee and accordingly allow the claim of the assessee as per law.

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• 2018 (3) TMI 1093
  Addition on account of negative cash balance - Held that:- This issue needs reconsideration at the level of the Assessing Officer for the reason that the assessment is to be made on the basis of negative cash balances by adopting the method of peak credit but peak credit has to be taken on daily basis and not on monthly basis as taken by the CIT(A). Before us, learned counsel for the assessee stated that entire details have been filed in respect to peak credit on daily basis even which were filed before the Assessing Officer and the CIT(A). We are of the view that we have no mechanism to verify each and every entry to ascertain the position of negative cash balance on the basis of peak credit on daily basis. Disallowance of discount on commission received from BSNL to retailers - Held that:- From the figures submitted by the assessee regarding details of discount, it is clear that around 5% commission was given by the assessee but Assessing Officer has wrongly worked out the percentage as 6.10%. We find that even the CIT(A) has restricted the discount at 80%, which, in our view, is not the right procedure. In view of above facts and details submitted by the assessee, we are of the view that nothing is to be disallowed because the working given by the assessee regarding commission at 5% on recharge coupons is within the perfect limits. Accordingly, we delete the addition completely and allow this issue of the cross-objection of the assessee. This issue of Revenue’s appeal is dismissed. Application of provisions of Section 40A(3) in respect to purchase of sim cards, recharge coupons - Held that:- Issue to be decided in favour of assessee as relying on case of Vodafone Essar Cellular Ltd. Vs. Asstt.CIT [2010 (8) TMI 691 - KERALA HIGH COURT] as held relationship of principal/agent is there and appellant is getting only commission out of it. Hence, there is no sale purchase and section 40A(3) is not attracted. Not allowing credit for income surrendered during the course of survey - Held that:- As appellant has himself credited unaccounted income in books of account after surrendering it during survey, A.O. should have given credit of such disclosure to appellant vis-a-vis undisclosed income determined by A.O. for the current assessment year. But appellant has already taken cash and deposited it in its books and all the additions made by A.O. in this order are on issues not related to survey viz., stock difference or any specific defect to be given set off amongst this suomoto crediting of cash of five lakhs. Hence, I do not find any reasons to telescope the addition made by A.O. to the extent of 5 lakhs surrendered by the appellant and immediately credited in cash book that is separate undisclosed income offered by the appellant not related to issues raised by A.O. in assessment.

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• 2018 (3) TMI 1092
  Disallowance on account of interest attributable to the interest free advance given by the assessee - Held that:- We find merit in the contention of the learned counsel for the assessee and direct the A.O. to compute the interest to be disallowed as per the direction of the CIT(A) given in the impugned order @ 13% instead of 15%. Disallowance made by the A.O. on account of interest accordingly was sustained in A.Y. 2009-10 to the extent it was attributable to the balance amount of 51,00,000/- advanced to M/s. Phool Commercial Pvt. Ltd. Since the said amount which remained outstanding in the immediately preceding year was paid by the assessee during the year under consideration before 14.10.2009, the disallowance on account of interest attributable to the said amount was liable to be made for the period from 01.04.2009 to the time when the said amount had been returned back by M/s. Phool Commercial Pvt. Ltd. to the assessee company during the year under consideration. We, therefore, find no infirmity in the impugned order of the Ld. CIT(A) directing the A.O. to disallow interest attributable to the amount of 51,00,000/- advanced by the assessee company to M/s. Phool Commercial Pvt. Ltd. for the period from 01.04.2009 till the date when such amount has been refunded by M/s. Phool Commercial Pvt. Ltd. in the year under consideration @ 13% P.A.

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• 2018 (3) TMI 1091
  Annual Value of House Property determination - as per AO assessee has taken the rent in cash and to avoid the tax liability the rental value has been substantially reduced - Held that:- As per the normal practice in the rental arrangement and as proposed in the show cause notice, AO assessed the monthly rental of the assessee company at 2,99,475/- and made the addition of 23,05,950/- to the taxable income of the assessee and in Appeal Ld. CIT(A) has partly allowed the appeal of the assessee. There is no merit in the case of assessee in justifying any reduction in the ALV of the property. The assessee has contended that any tenant would like to buy a property at the value taken by the AO than taking it on rent. But the very fact that property was let out @ 30,00,000/- / 2,000/- i.e. 1500 per sqmtrs. and rent was also paid for the period of 01.4.2008 for certain months, the claim is belied. The very receipt of rent justifies ALV to be based on such rent, in absence of anything to the contrary. CIT(A) has rightly observed that the property was again let out on resumption of activity @ 17 lakhs per month, the annual value was taken at that rate, if evidence to that effect is produced. CIT(A) held that the AO may give necessary relief in re-computation of rental income, subject to verification of such rental receipt in later years, which does not need any interference on our part, hence, we uphold the action of the Ld. CIT(A). - Decided against assessee.

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• 2018 (3) TMI 1090
  Interest on refund of TDS - Held that:- No ground to interfere with the impugned order. The special leave petition is accordingly dismissed. HC order confirmed [2017 (6) TMI 1158 - MEGHALAYA HIGH COURT] HC has held that right of receiving interest is available to the petitioners as per the statute and nothing of any estoppel could be considered operating against the petitioners over the statutory provisions contained in Section 244-A of the Act. Thus, we are clearly of the view that the impugned orders in so far the respondent No.1 had declined the payment of interest over the refundable amount of tax and consequential denial of interest in the impugned assessment orders cannot be approved and in modification of the impugned orders, the petitioners deserve to be allowed interest on the refundable amount of tax w.e.f. 26.02.2008.

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• 2018 (3) TMI 1089
  Rejection of books of accounts - non presenting true and correct picture - Held that:- This court in the case of same assessee [2018 (3) TMI 313 - RAJASTHAN HIGH COURT] the perusal of the impugned order reveals that this was only a prima facie view which the assessing authority entertained before issuing a show cause notice to the assessee for rejecting its accounts by invoking provisions of section 145(3). He has not been able to point out as to which of these payments in respect of direct expenses could not be verified by him nor the Assessing authority is shown to have required the assessee to get payment of any specific amount of direct expenses verified. Merely for saying it could not be taken a lacuna in the books of account of the assessee and take the same as a reason for rejecting the books of account that were maintained by assessee in regular course of its business. The finding of "on-money transactions" in the appellant's case by the authorities below is found without any basis and found perverse on facts. It, therefore, could not be a reason for rejecting the books of account maintained by the assessee in regular course of business. The same, therefore, could not be taken a valid basis for change of method regularly employed by the appellant. The Income-tax Authority, therefore, has no option or jurisdiction to meddle in the matter either by directing the assessee to maintain its account in a particular manner or adopting a different method for valuing work-in-progress. It also cannot recompute income by adopting any method other than that regularly employed by the appellant in a case like this nor make the same as basis to reject its accounts. - Decided in favour of assessee.

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• 2018 (3) TMI 1088
  Penalty u/s 271(1)(c) - waiver of loan - disallowance being software expenses. - Held that:- Tribunal found that the parent company of the assessee waived a loan of 3.41 crores which the assessee reduced from the gross value of assets from the schedule of fixed assets under the Companies Act, 1956. The Tribunal noted that all the facts in relation thereto were disclosed by the assessee. The assessee took a position which the Tribunal held was a possible one. The Tribunal further held that merely because the judgements ultimately took a contrary view it would not warrant the imposition of penalty. There were no mala-fides found on the part of the assessee. Tribunal held that the penalty was also imposed on a disallowance being software expenses. The issue related to the purchase of software by the assessee to carry out its business activities in a more efficient manner. The assessee claimed the same to be revenue expenditure, whereas the Assessing Officer treated the same as capital in nature. The Tribunal noted that a judgement of the Division Bench of the Delhi High Court in CIT Vs GE Capital Services Ltd. (2007 (7) TMI 185 - DELHI HIGH COURT) supported the assessee’s view. The Tribunal found that it was a debatable question and held, therefore, that the imposition of penalty was not justified. - Decided against revenue

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• 2018 (3) TMI 1087
  Stay of demand - Penalty u/s 271(1)(c) - Held that:- Referring to Office Memorandum dated 31.07.2017 in which it has been stated that where the outstanding demand was disputed before the Appellate Authority, the assessing officer shall grant stay of demand till the disposal of the first appeal on payment of 20% of the disputed demand. In this case, a simple arithmetic calculation would show that more than 20% of the disputed demand has already been recovered and adjusted by the Department. In view of the same, the impugned notices shall be kept in abeyance and it shall abide by the outcome of the appeals filed by the petitioner herein.

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• 2018 (3) TMI 1086
  Unaccounted income disclosed by the respondent assessee during survey proceedings under Section 133A - business income OR undisclosed income under Section 69 - Held that:- Tribunal noted that the assessee was engaged in the business of development of housing projects. The amount in question was received by way of bookingamount for Vraj Dham Housing Scheme which was duly reflected in the assessee's audited accounts. The assessee followed the project completion method for income recognition and the Assessing Officer was therefore not right in taxing such amount under Section 69 of the Income-tax Act, 1961. Since the view of the Tribunal is based on materials on record and in consonance with the legal principles and accounting standards, no question of law arises. Allowability of the deduction under Section 80IB [10] - ITAT concurring with the CIT [A] in holding the issue relating to allowability of the deduction under Section 80IB [10] of the Income Tax Act as premature - Held that:- The Tribunal was of the opinion that the allowability of such deduction would be considered by the Assessing Officer when such receipt by the assessee on completion of the project comes up for consideration. - Decided against revenue

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• 2018 (3) TMI 1085
  Unexplained cash credit u/s. 68 - explanation to prove the source of the source - Held that:- The assessee had produced all details of advances made by the said lenders. The transfers were made through banking channels. Thus, the assessee had established the identity of the lenders, the genunuiness of the transaction and creditworthiness of the lenders. - Decided in favour of assessee

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• 2018 (3) TMI 1084
  Treatment of Long Term Capital Gains as undisclosed income - addition appreciating the fact that the assessee had not carried out share transactions through stock exchange and those transactions were carried out off market - statement of Shri Mukesh M. Chokshi taken on oath u/s. 132(4) of the Act and is binding as evidence or not? - Held that:- As decided in Principal Commissioner of Income Tax-5 v. Dhwani Mahendra Shah [2017 (2) TMI 463 - ITAT AHMEDABAD] the shares were thereafter transferred to demat account. The demat account was in the name of the assessee, from where the shares were sold. In our understanding of the facts, if the shares were of some fictitious company which was not listed in the Bombay Stock Exchange/National Stock Exchange, the shares could never have been transferred to demat account. Shri Mukesh Choksi may have been providing accommodation entries to various persons but so far as the facts of the case in hand suggest that the transactions were genuine and therefore, no adverse inference should be drawn. - Decided in favour of assessee

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• 2018 (3) TMI 1083
  Applicability of section 44BB - non-resident earning income from the business of exploration etc. of mineral oils - Held that:- The assessee in the instant case has, admittedly, opted for the provisions of sub-section (3). In such a situation, income under the head ‘Profits and gains of business and profession’ is required to be computed with reference to the provisions contained in Chapter IV-D of the Act. It becomes eminent that all the revenue receipts of the assessee including the sum of 1.63 crore received from DDL on account of crew salary and related expenses of employees seconded and assigned to DDL, were required to be considered in the computation of business income and, then, the deduction for actual expenses was to be allowed. Assessee did not include 1.63 crore in its total income and claimed benefit of TDS from such receipts. We cannot countenance this type of treatment, when the assessee has opted to be governed by the mandate of section 44BB(3) of the Act, but all the revenue receipts and related expenses are not reflected. We, therefore, set aside the impugned order and remit the matter to the file of AO for deciding this issue afresh. In such fresh proceedings, the AO will, inter alia, take 1.63 crore as revenue receipt with corresponding deduction of actual expenses incurred by the assessee.- Decided in favour of revenue foe statistical purposes.

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• 2018 (3) TMI 1082
  Disallowance of additional depreciation u/s 32(1)(iia) - assessee has started production in the succeeding year, but assets were purchased in the previous year and the assessee was not engaged in the business of manufacturing profits when new machinery and plant were acquired - Held that:- The assessee is entitled to additional depreciation in case of new machinery or plant which are acquired and installed after 31.03.2005 by the assessee engaged in the business of manufacture or production of any article or thing. In the present case, the assessee has acquired the plant and machinery in the year prior to the previous year relevant to current assessment year. In that year, the said plant and machinery was under capital work-in-progress. The plant has started from 01.07.2011 and all the capital assets purchased by 31.3.2011 and shown as capital work-in-progress were transferred to respective assets on 31.03.2012. CIT (Appeals) has himself given a clear finding that the plant and machinery purchased in the financial year 2010-11 which is subsequent to the date specified for the allowance of the additional depreciation in the Act, i.e., 31.03.2005. We do not find any reason why the assessee should be denied additional depreciation. It is clear that the machineries in dispute were acquired after the date specified in the Act and their use was commenced from the current assessment year. Hence, the claim of additional depreciation is fully justified. - Decided in favour of assessee

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• 2018 (3) TMI 1081
  Entitlement to deduction u/s 80IC on account of substantial expansion of the unit - benefit of deduction on account of investment - eligibility criteria - Held that:- The special provisions of section 80IC of the Act are enacted for promoting investment activity in certain undertaking or enterprises in the special category of states including state of Himachal Pradesh. The Eco-tourism unit including the hotel has been specifically allowed in the list eligible for deduction as per special provisions which otherwise does not involve installation of plant and machinery. If the original investment made for setting up of such unit is eligible for deduction u/s 80IC of the Act, then certainly the further investment in the same infrastructure for the purpose of expansion cannot be denied, merely because the investment does not involve setting up / installment of plant and machinery. The restrictive meaning given by the lower authorities to deny the deduction u/s 80IC of the Act to the assessee on account of substantial expansion cannot be held to be justified. We, accordingly set aside the order of the lower authorities on this issue and hold that the investment in building, furniture, fixture in the case of a hotel will qualify to be treated as investment in plant and machinery for the purpose of section 80IC and, therefore, hold that the assessee will be entitled to deduction u/s 80IC of the Act on account of substantial expansion of the unit - Decided in favour of assessee

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• 2018 (3) TMI 1080
  TDS u/s 194J - disallowance u/s 40(a)(ia) for non-deduction of tax on payment of transmission and wheeling charges - Held that:- Disallowance under Section 40(a)(ia) for non-deduction of tax on payment of transmission charges the same is covered in favour of the assessee by the decision of the Tribunal in assessee’s own case [2017 (12) TMI 911 - ITAT DELHI] as held AO has completely failed to bring relevant materials, whatsoever, on record to prove the existence of human interface/element in the present case. Thus such transmission and wheeling charges paid by the assessee does not come within the purview of fees for technical service as defined under Explanation 2 to sec 9(1)(vii) of the Act and accordingly no tax is required to be deducted by the assessee u/s. 194J therefrom. Hon’ble Delhi High Court in case of CIT vs. Delhi Transco Ltd. (2015 (8) TMI 378 - DELHI HIGH COURT) considering the provisions of section 194J of the Act held that wheeling charges paid for transportation of electricity cannot be characterized as fee for technical service - Decided in favour of assessee

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• 2018 (3) TMI 1079
  Assessment u/s. 153A - Held that:- Apparently in this case the search took place at the premises of the assessee society on 31.07.2013. As on that dated for impugned assessment year 2008-09 the return of income was filed by the assessee on 12.03.2009 and time limit for issue of notice u/s 143(2) of the Act was expired on 30.09.2009. In view of this the assessment year 2008-09 was not pending on the date of search. Further notice u/s 153A was issued on 26.03.2015 in response to which the return of income was filed on 30.04.2015. Hon'ble Delhi High Court in case of CIT Vs. Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] has held that in case of completed assessment the addition can be made only on the basis of incriminating material found during the course of search. In the present case while looking at the order passed by the ld AO we do not find that addition is based on any „incriminating material found during the course of search. No such reference is also made of such documents. The ld DR also could not produce any material to show that these additions are based on incriminating material. - Decided in favour of assessee Determination of alleged surplus on account of hostel and mess facilities treated as business income of the assessee - provisions of section 11(4A)applicability - Held that:- The hostel, mess facility and transport facility etc carried out by the society are incidental to the main object of the assessee trust of education and therefore, provisions of section 11(4A) of the Act do not apply to the assessee as it cannot be said that by running the hostels or transport facility for student its educational activities is a separate business altogether. In view of this ground No. 1 to 3 of the appeal of the assessee are allowed and consequently, the ld AO is directed to grant the assessee benefit of section 11 and 12 of the Income Tax Act with respect to the all income of the trust including hostel and transportation receipts. Claim of the deprecation disallowed to assessee trust - double deduction - Held that:- The above issue has already been decided by Hon'ble Supreme Court in case of CIT Vs. Rajasthan and Gujarati Charitable Foundation [2017 (12) TMI 1067 - SUPREME COURT] wherein it has been held that up to the assessment year 2015-16 the assessee is entitled to claim the cost of acquisition of fixed assets as application of income and further deprecation thereon in subsequent years. In view of this we direct the ld Assessing Officer to delete the disallowance on account of depreciation.- Decided in favour of assessee

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• 2018 (3) TMI 1078
  Addition of notional Annual Letting Value on closing stock of flats / spaces - deemed to to be let out or used for own occupation - Held that:- As decided in case of CIT Vs. Ansal Housing Finance & Leasing Co. Ltd. [2012 (11) TMI 323 - DELHI HIGH COURT] ALV is a method to arrive at a figure on the basis of which the impost is to be effectuated. The existence of an artificial method itself would not mean that levy is impermissible. Parliament has resorted to several other presumptive methods, for the purpose of calculation of income and collection of tax - While there can be no quarrel with the proposition that “occupation” can be synonymous with physical possession, in law, when Parliament intended a property occupied by one who is carrying on business, to be exempted from the levy of income tax was that such property should be used for the purpose of business. The intention of the lawmakers was that occupation of one’s own property, in the course of business, and for the purpose of business, i.e. an active use of the property, (instead of mere passive possession) qualifies as “own” occupation for business purpose. - Decided is answered in favour of the revenue.

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• 2018 (3) TMI 1077
  Addition on account of suppressed sale - Held that:- CIT(A) has rightly deleted the addition in the absence of any cogent or convincing evidence that the assessee has surpassed i ts sales. The assessee has explained about var ious factors contributing for the low yield. Even otherwise, in our view, in the absence of any incriminating evidence, it cannot be assumed that the assessee might have suppressed the sales - Decided against revenue Capitalization of interest - AO disallowed the capitalization of the above interest on the ground that the machinery was not put to use during the year - Held that:- As the assessee has submitted that the machinery was put to use as a trial run was done prior to first April, 2012 but the above contention of the assessee is not supported with any cogent and convincing evidence. - Decided against assessee Deprecation on building disallowed - building was not completed at the end of the financial year i.e. by 31st March, 2012 - Held that:- Admittedly, the bricks and cement was purchased in the month of March itself, which was used for the construct ion of the aforesaid building. In view of this, in our view, lower authorities have rightly held that the building was not competed at the close of the year i.e 31st march of the relevant year. There is no evidence brought to our knowledge that the building was put to use during the year. - Decided against assessee Disallowance of part of expenditure on foreign trip of the Director on the ground that the family of the director accompanied him - Held that:- As assessee could not explain as to how the family of the director contributed in procuring business for the assessee company. Hence, in our view, the lower authorities have rightly disallowed the expenses relating to the foreign trip of the family of director of the assessee - Decided against assessee Disallowance of 50% of sales promotion expenses claimed to have been incurred on purchase of costly gifts - allowable business expenditure - Held that:- The assessee could not explain about the justification in incurring of the expenses on the gifts and also could not correlate with evidence that the said expenditure were relating to the business activity of the assessee - Decided against assessee Disallowance of expenditure incurred on consumables - Held that:- The lower authorities have not doubted the incur ring of expenditure on the basis of any incriminating evidence found against the assessee. The disallowance has been made merely on conjecture and surmises. We agree with the content ion of the Ld. Counsel for the assessee that there cannot be an est imation of a f ix amount regarding the consumption of consumables in manufacturing products, which may vary owing to various circumstances as explained by the assessee. The above disallowance has been made by the lower authorities only on a presumption basis which, in our view, is not sustainable - Decided in favour of assessee.

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• 2018 (3) TMI 1076
  Capital Gains - Valuation - determination of cost of acquisition - AO did not accept the fair market value and indexed cost applied by the assessee and obtained the D.L.C. Rates for village Kanakpura, Jaipur as on 19/12/1991 at 39,000/- per bigha as against the rate adopted by the assessee at 1 lacs per bigha. Accordingly, the AO applied reverse indexation method of D.L.C. rate of 39,000/- per bigha and worked out the fair market value as on 01/04/1981 at 20,000/- in round figure. Held that: - The D.L.C. Rates are not representing the indexed cost over the years and therefore when the rates are revised by the Government on the basis of the prevailing fair market value of the land then there is no point in applying the reverse indexation - the AO is directed to compute the indexed cost by applying forward indexation from 1991 to till the date of sale on the fair market value of 70,000/- and then compute the capital gain - appeal allowed in part.

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• Customs

• 2018 (3) TMI 1101
  Authorization under the Export Promotion Capital Goods (EPCG) Scheme and the Foreign Trade Policy (FTP) 2015-20 to import three Grab Type Ship Unloaders (GTSU) from Shanghai Zhenhua Heavy Industries Co. Ltd., China for installation at its port located at the mouth of river Dhamra in the State of Odisha - Port of registration - Port of import - It is averred that the intent behind import was to provide import facility for import of lime stone and thermal coal and various other cargo which require deep draught berths, equipped with mechanized handling and for such purpose, the essential sophisticated handling equipments like ship loaders, unloaders were required for the purpose - effect of Special Order issued by the Commissioner, whether prospective or retrospective? whether the Commissioner of Customs was right in rejecting the petitioner’s-company application under Proviso to Para-10 of the N/N. 16/2015-Cus dated 01.04.2015? Held that: - It is clear from the Notification as well as the Customs Act that any “Special Order” issued by the Commissioner would only, obviously be prospective and cannot be retrospective, in any event. Therefore, in the present case, it appears that the learned Commissioner has acted on an understanding that since the goods in question being imported under the EPCG Scheme had already been “unloaded” at Dhamra Port, the “Special Order” that he would issue would have to be retrospective to cover the date of unloading. This in our considered view is not consistent with the requirements of the Customs Act, 1962 nor with the relevant Notification No.16/2015- Cus dated 01.04.2015. The Notification No.16/2015-Cus dated 01.04.2015 has been issued by the Government of India in the Ministry of Finance (Department of Revenue) and the Central Board of Excise and Customs. There can be no doubt that the Commissioner of Customs has been vested with the necessary authority under the Proviso to Para-10 above to permit import through any other sea-port within his jurisdiction not covered under Table-2 - the Commissioner of Customs, Odisha has the necessary jurisdiction to issue “special order” for permitting import through any other sea-port (other than though sea-port mentioned in Table 2) subject to such sea-port being within his territorial jurisdiction. Even though the petitioner’s imported goods have been unloaded at Dhamra port, any “special order” by the Commissioner of Customs would obviously be effective from the date of such grant of permission, since it is only after the Commissioner grants such “special order”, that the petitioner can seek customs clearance of the goods and until such clearance is sought for and granted, the goods remain “in course of import” though physically located at Dhamra port but without obtaining the necessary clearances from the Customs Authorities as mandated under the Customs Act. The petitioner-company i.e. Dhamra Port is admittedly a “customs port”, at the relevant time through the Dhamra Port did not find mention in Table-2 to the Notification dated 01.04.2015 and, consequently, even in its EPCG License had mentioned Paradeep Port (as the port of registration). Accordingly, when the imported goods under the EPCG License arrived at the outer harbour of Dhamra port, necessary permission were sought for from the Customs Authority for berthing of the vessel and necessary permissions were obtained. Thereafter, the “import manifest” was placed with the Dhamra Customs Authorities and necessary permission was granted. In the meantime, the Customs Authorities at the port of registration i.e. Paradeep had granted the necessary TRA for the imported cargo and the cargo commenced unloading on 09.05.2016 (evening) i.e. admittedly, the very same day the Commissioner of Customs claims to have received the petitioner’s application for grant of “special order” as contemplated under Proviso to Para-10 of the notification No.16/2015-Cus dated 01.04.2015. The Union of India should issue necessary guidelines to the Authorities vested with such quasi judicial power to take decisions on such applications within a minimum period which the Government of India would consider appropriate. Since in the case at hand, the petitioner-importer having been saddled with such huge financial liability has not been granted permission to clear the goods and utilize in any manner, which this Court is of the considered view is nothing less than national waste by itself, whereas, the goods lie at the port site and have not been utilized by the petitioner, in the absence of a “special order” as contemplated as noted hereinabove. The situation remains in limbo for more than fifteen (15) months and now at this belated stage there is no way in which the petitioner can be compensated. Therefore, this Court calls upon the Finance Ministry of the Union of India to take note of the fact situation that arises in the present case and pass necessary instructions/guidelines either through the Ministry or the CBEC as it may deem appropriate, in order to ensure that such large scale wastage of time and public money does not occur in future cases. The impugned order dated 11.08.2017 under Annexure-1 stands quashed with a further direction to the Commissioner of Customs to issue the necessary “special order” in favour of the petitioner forthwith - Application allowed.

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• 2018 (3) TMI 1073
  Diversion of imported goods into local market - violation of actual user condition - clandestine removal - onus of proof - Held that: - The negative onus cannot be cast on the assessee that they have not procured the goods from the advance license holders - Revenue has admitted in the present case that there is no direct evidence but has referred to the circumstantial evidence on record, by submitting that since part of the goods were found to be out of the duty free imports made against advance license, it has to be held that the balance quantity was also out of the very same kind of imports. Admittedly, the observations and findings of the adjudicating authority are in the nature of assumption and presumption, which cannot be upheld - No evidence stand produced by the Revenue to substantiate its stand - The entire case of the Revenue is based upon doubt which cannot take the place of the legal evidence. Appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 1072
  Benefit u/s 80 of CA, 1962 - Re-export of gold through Sonauli Customs land station - Held that: - any passenger entering into India is empowered to make a declaration of his baggage before entering into India as provided under Section 77 of Customs Act, 1962. Further, if it is found that goods accompanying him which are also called as baggage import of which is prohibited and in respect of which true declaration has been made under Section 77 of Customs Act, 1962 proper officer may at the request of the passenger detained such articles for the purpose of being returned to him on his leaving India under Section 80 of Customs Act, 1962 - the appellant was entitled for the benefit of provisions of Section 80 of Customs Act, 1962. The respondent directed to return goods confiscated to the appellant at Land Customs Station Sonali at Indo Nepal border to be carried out into India by the appellant. Appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 1071
  Classification of semi-finished goods - spectacle lenses - eligibility for exemption N/N. 6/2006-CE dated 1.3.2006 providing for exemption to spectacle lens - Whether the goods are classifiable under CTH 9001.90.90 of the Customs Tariff Schedule or otherwise? - Held that: - this Tribunal in appellant’s own case Essilor India Pvt Ltd Versus Commissioner Of Customs And Service Tax, Bangalore-Cus [2018 (3) TMI 974 - CESTAT, BANGALORE] has allowed the appeals of the appellant, holding that there is no change in the tariff rate or in the nomenclature of various entries in the earlier notifications which were of tariff heading of 8 digits - appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2018 (3) TMI 1070
  Violation of the provisions of the Companies Act, 1956 - Held that:- The respondent-SEBI initiated action under Section 19 of the Securities and Exchange Board of India Act, 1992 read with Sections 11(1), 11(4), 11A and 11B thereof against Suraksha Agrotech Industries Limited for its having issued Redeemable Preference Shares in violation of the provisions of the Companies Act, 1956. Since the appellant was held to be the director of the said company at the relevant point of time an order was passed against him, in pursuance of which his bank account(s) were attached. The said order has been upheld by the Securities Appellate Tribunal, Mumbai. We find that the appellant had tendered his resignation on 10th March, 2009 which was duly accepted by the said company. The courts below erred in not accepting this position.

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• 2018 (3) TMI 1069
  Winding up petition - eligible debt - Held that:- Admittedly, the debt is bonafide disputed. Though the learned counsel for the petitioner submits that the defence is not a substantial one that cannot be countenanced for the reason that the dispute has arisen in relation to the agreement dated 21.01.2011. Series of transactions have taken place. The purchase orders, invoices placed by the petitioner though relates to a restricted period, it cannot be held to be an independent transaction other than the transactions relating to the agreement. Admittedly the contract dated 21.01.2011 contains an Arbitration Clause. Once an Arbitration Clause is provided under the agreement executed between the parties, Arbitration remedy available under the contract has to be invoked rather than pressurizing the respondent to make the payment of dues as claimed, by filing company petition for winding up of the company. It is settled law that the company cannot be wind up when there is bonafide dispute as enunciated by the Hon'ble Apex Court in the case of MADHUSUDAN GORDHANDAS & CO. [1971 (10) TMI 49 - SUPREME COURT OF INDIA]. In such circumstances, no ground made out by the petitioner to wind up the company which is functioning and the defence is a substantial one.

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• 2018 (3) TMI 1068
  Condonation of Delay Scheme, 2018 - Held that:- In order to facilitate this exercise, operation of the impugned list, insofar as it concerns the petitioners, will remain stayed till 31.3.2018 or, till such time the respondents take requisite decision with regard to the request of the petitioners made to them in consonance with the provisions under Section 248 (2) of the Companies Act, 2013 and under the Condonation of Delay Scheme, 2018. Needful will be done by the petitioners within two weeks from today. In addition thereto, for the moment, respondent no.2/Registrar of Companies will also activate the petitioners' DIN and DSC.

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• FEMA

• 2018 (3) TMI 1067
  Working of Special Investigation Team (‘SIT’) questioned - As submitted SIT especially the Directorate of Enforcement (‘ED’) is acting in contravention and beyond the orders of this Court which was supposed to investigate the dispute of M/s International Customer Related Management Services Pvt. Ltd. (for short, ‘ICRMS’) and rather it has plunged into third party disputes - Held that:- In the light of unison shown by the learned counsel representing various parties that the officer from CBI would be heading the SIT to look into the investigations, facilitate collecting of evidence, recording of the statements and similar functions to enable the SIT to collect and compile the evidence. Thus, the very purpose of passing orders (Annexure P1) by this Court by virtue of which different constituents formed part of the SIT for a specialized investigation into every angle of running of the affairs of ICRMS. During the course of hearing, Mr. Roopesh Kumar, Assistant Director from the Directorate of Enforcement has made statement undertaking that their agency would not order attachment of the bank accounts of ICRMS, affairs of which are under investigation by the SIT. As during the course of proceedings that the various constituents of the SIT, somehow or the other, are not working in unison and in tandem with each other and are trying to carry on individually which is quite contrary to and in violation of the directions of this Court contained in order (Annexure P1) dated 16.09.2015 thus, necessitates issuance of directions to the constituents of the SIT to follow investigations and carry on the same strictly in accordance with all the orders of this Court enumerated above and to ensure that all these agencies so formed part of the SIT, act cohesively in unison towards attaining the purpose and goal of the orders of this Court, else there is every likelihood if these agencies are allowed to carry on individually would certainly defeat the very intent and purpose for which the SIT has been constituted. These constituents are directed not to go beyond the directions of this Court issued from time to time . Thus, it necessitates and flows from it that the SIT and its constituents in the light of orders (Annexure P1) shall ensure by all means that their investigations do not go haywire and rather than following and pursuing the policy of pick-and-choose, the goals for which it has been constituted are achieved by all means and shall not in any manner plunge into third party dispute of the petitioner with others and further that the SIT shall not use any coercive means against the petitioner, his family members or relatives regarding their own personal businesses/avocations and would strictly adhere to their assignment and task.

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• 2018 (3) TMI 1066
  Application of FEMA for a contravention in the FERA issue - Held that:- The present appeal instead of being preferred before the Special Director (Appeals) under Section 17 of FEMA has being filed this Tribunal for Foreign Exchange under section 19 FEMA is not maintainable and thus the same is liable to be dismissed.

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• PMLA

• 2018 (3) TMI 1065
  Offence under PMLA - Provisional Attachment Order - Held that:- During the course of the hearing, the learned counsel appearing on behalf of the respondent has stated that as far as the calculation of the Judgement of property is concerned this Appellate Tribunal has to give the final findings and in case the allegations against the appellants are proved in the complaint under the scheduled offence in Prevention of Money Laundering Act then the movable and immovable property would be vested with the state. In case we go through the Judgement of Hyderabad High Court [2016 (3) TMI 1289 - ANDHRA PRADESH HIGH COURT] which is sub-judice before the Hon’ble Supreme Court, it would not be appropriate for us to give the final findings about the merits of the case as well as the clarification of the movable and immovable properties. Under these circumstances, we are of the view that without going into the merit of the appeals and without expressing opinion about the rival submissions of the parties on merit, it would be appropriate to await the decision of the Supreme Court. After the said decision, an appropriate order would be passed

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• Service Tax

• 2018 (3) TMI 1060
  Rejection of VCES Scheme - learned Commissioner (Appeals) held that the letter dated 8th February 2013 by the Range Superintendent is not an enquiry or an investigation for the purpose of Section 106(2) of the Voluntary Compliance Encouragement Scheme 2013, and thus the respondent is eligible for VCE Scheme, 2013 - invocation of proviso to Section 106(2) (iii) of VCES Act, 2013 - whether the issuance of letter dated 08/02/2013 by the Range Superintendent seeking some information will construe a part of the investigation which bar the respondent from opting from VCES scheme? Held that: - if the investigation under Section 14 of Central Excise Act, 1944 and 72 of Finance Act, 1994and Rule 5A of Service Tax Rules, 1994 is conducted then only the case falls under the category whether of enquiry or investigation as envisaged under Section 106(2)(a)(iii) of Finance Act, 2013 - In the present case the letter issued by the Range Superintendent seeking information does not fall in any of the provisions of Section 14 of Central Excise Act, 1944 and 72 of the Finance Act, 1994 and/or Rule 5A of Service Tax Rules, 1994 - the Commissioner (Appeals) has rightly observed that the letter dated 08/02/2013 issued by the Range Superintendent cannot be construed as enquiry or investigation which debar the respondents from VCES scheme. Appeal dismissed - decided against Revenue.

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• 2018 (3) TMI 1059
  Business Auxiliary services - appellant contends that despite depositing the tax amount during investigation they challenge the taxability as they do not provide any taxable service - Held that: - the Port Trust has engaged the services of the appellant and that appellant is in receipt of consideration from the Port Trust. In these circumstances, the existence of third party in transaction, which is a necessary element for coverage u/s 65 (105) (zzb) read with section 65(19) of Finance Act, 1994, is questionable - Tribunal in Golden Handling Works [2017 (12) TMI 165 - CESTAT NEW DELHI] is categorical in requiring the assessing authority to determine the specific characteristic of the service which is a necessary pre-requisite for fastening liability - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 1058
  Maintainability of appeal - delay in filing appeal - time limitation - Held that: - It is apparent that there is no lapse on the part of the appellant. Nevertheless, the law prescribes that appeal should be filed within a period of two months from the date of receipt of the order that is impugned and that a delay of thirty days beyond that is condonable at the discretion of the appellate authority. As the appellant was led to believe that there was no delay, the scope for exercise of condonation did not exist. The appeal filed before the Commissioner (Appeals) stands restored - appeal allowed.

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• Central Excise

• 2018 (3) TMI 1057
  Rejection of application for Settlement Commission - maintainability of petition - section 32(O)(1)(i) of the Central Excise Act, 1944 - The Customs and Central Excise Settlement Commission by the impugned order dated 23. 12. 2015 rejected the application holding that it had no jurisdiction to entertain the application as it was barred under section 32(O)(1)(i) of the 1944 Act. Held that: - It is not necessary to consider whether it can be said that the explanation has retrospective or retroactive effect. The Explanation to section 32(O)(1)(i) was proposed to be inserted by Clause 94 of Bill No. 35 of 2014- a Bill to give effect to the financial proposals of the Central Government for the financial year 2014-15 - The Explanation is, therefore, clarificatory. This is clear from the Statement of Objects and Reasons. Being clarificatory, it has retrospective effect. Further even apart from the Statement of Objections and Reasons, it is clear that the explanation to Section 32(O)(1)(i) is clarificatory. Section 32(O)(1)(i) does not exclude from its ambit cases where penalty is imposed on the person on the ground of concealment of particulars of his duty liability before the Central Excise Officer. The plain language of the section does not warrant an interpretation to the effect that concealment of particulars only before the Settlement Commission and not before the Central Excise Officer is contemplated. The legislative intent is quite clearly to bar a party from making an application under section 32E of the 1944 Act for settlement if he has concealed particulars of his duty liability. It is difficult to appreciate why concealment of particulars before the Central Excise Officer ought to be treated more lightly than the concealment before the Settlement Commission. The Explanation is clarificatory and applies retrospectively. Even absent the Explanation we would interpret Section 32(O)(1)(i) to include the orders of settlement which provides for imposition of penalty on the ground of concealment of particulars of duty liability from the Central Excise Officer - Petition dismissed.

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• 2018 (3) TMI 1056
  Clandestine removal - Penalty - Admissibility of statement - Whether the Tribunal was correct in allowing the appeals of the assessee, solely by holding that there is no Sufficient corroborative evidence to statement tendered by partner of assessee, even when Statement tendered by Central Excise Officer is admissible before court of law as piece of evidence and thereby deleting the penalty of 2,00,000/-? Held that: - the controversy involved in the appeals is covered by the decision of this Court in case of Commissioner of Central Excise vs. Tara Chand Naresh Chand [2018 (1) TMI 209 - RAJASTHAN HIGH COURT], where reliance placed in the case of Continental Cement Company vs. Union of India [2014 (9) TMI 243 - ALLAHABAD HIGH COURT], where it was held that unless there is clinching evidence of the nature of purchase of raw materials, use of electricity, sale of final products, clandestine removals, the mode and flow back of funds, demands cannot be confirmed solely on the basis of presumptions and assumptions. Appeal dismissed - decided against Revenue.

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• 2018 (3) TMI 1055
  Clearance of MS Specials to the water supply projects - benefit of N/N. 47/2002-CE dated 06.09.2002 & N/N. 6/2006-CE dated 01.03.2006 - Whether the ld. CESTAT was right in law in setting aside the demand determined on the basis of non-fulfillment of the conditions of exemption Notification No.47/2002-CE dated 06.09.2002 & Notification No.6/2006-CE dated 01.03.2006 for the clearance of finished goods i.e. MS Specials to the water supply projects without payment of Central Excise Duty? - sub section (3) & (5) respectively of Section 35G of the Central Excise Act, 1944. Held that: - the Tribunal has rightly observed that t is not the case of the Department that MS Special were supplied somewhere other than projects in hand. The MS Special are connected with the water pipes before they are used, sometimes as a bend to divert the flow. When the MS Specials were used in the project pertaining to the water supply then the same is allowable as Department has already allowed in 4 certificates. Hence, for technical mistake on the part of the appellant, we cannot deny the substantial justice. The production is the same, manufacturing and the process is the same and excise duty is liable on the manufacturing, merely because in the certificate there is no mention of MS Special, the taxing statute will not be different - the view taken by the Tribunal is just and proper and no interference is required. Appeal dismissed - decided against Revenue.

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• 2018 (3) TMI 1054
  Abatement - closure of the factory from 10.12.2015 to 31.12.2015 - Rule 10 of the Chewing Tobacco and unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) - Held that: - in the event the factory did not produce the notified goods for a continuous period of 15 days or more, the duty calculated on proportionate basis, shall be abated provided the manufacture of such goods files intimation to this effect to the Dept. at least before 3 working days from the commencement of the said period of closure - In the present case, there is no dispute of the fact that the intimation was filed on 4.12.2015 and the machines was sealed under the supervision of the Range Superintendent on 09/10.12.2015. In absence of any other condition, rejecting the appellant’s claim of abatement of duty paid during the period of closure of the factory on proportionate basis, on the ground that 8 gms/ 10 gms the pouches with MRP of 5.00, manufactured on trial run but, without disclosing the same to the Dept., is untenable in law - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 1053
  Valuation - physician samples which are distributed free as part of marketing strategy, or as a gift or donation to doctors - applicability of Rule 11 of the Central Excise (Valuation) Rules - appellants are seeking to apply Rule 11 read with Rule 8 whereas Revenue is seeking to apply Rule 11 read with Rule 4 of the Central Excise Rules - Held that: - it is seen that the physician samples are not sold by the appellants but are cleared free cost. It is not the appellants case that any of the Rule 4 to 10 of the Central Excise Valuation (determination of price of excisable goods) Rules 2000 are directly applicable. Since no transaction value available, the assessment cannot be done under Section 4 (1) (a) and the assessment has to be done under Section 4 (1) (b). The assessment cannot be done under Section 4A as the said goods are not marked with MRP. It is apparent that neither Rule 4 nor Rule 8 of the Central Excise Valuation (determination of price of excisable goods) Rules, 2000 are directly applicable to the situation and both the rules have to be applied as reasonable alternatives with suitable adjustments in terms of Rule 11 of the Central Excise Valuation (determination of price of excisable goods) Rules, 2000 - it is seen that identical goods different only in respect of size of packing and marking of MRP, are being assessed under Section 4A of the Central Excise Act and such comparable value after suitable adjustments can be adopted for the purpose of assessment of physician samples in terms of Rule 4 of Central Excise Valuation (determination of price of excisable goods) Rules, 2000. This does not amount to application of Section 4A of the Central Excise Act to physician samples. This is only a measure of taking an alternate value of similar goods for the purpose of Central Excise (Valuation) Rules, 2000 in terms of Rule 11 thereof. Appeal dismissed - decided against appellant.

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• 2018 (3) TMI 1052
  CENVAT credit - input services - outdoor catering service - Employees transport service - Hotel stay charges and travel agent charges - Construction service - Held that: - service tax paid on outdoor catering service (canteen service), extended to the employees is eligible to credit in view of the judgment of the Hon ble Gujarat High Court in Ferromatik Milacron India Ltd. s case [2010 (4) TMI 649 - GUJARAT HIGH COURT] - credit allowed. Employees transport service - Held that: - the matter is remanded to the adjudicating authority to scrutinize the evidences in the light of the changes in law and its applicability to the facts of the present case. Hotel stay charges - travel agent charges incurred by the appellant in relation to sales/marketing of their product Held that: - services is admissible to credit in view of the judgment of this Tribunal in Honda Motorcycle s case [2016 (8) TMI 308 - CESTAT CHANDIGARH] - credit allowed. Construction service - Held that: - the Ld. Commissioner(Appeals) has already remanded the matter to the adjudicating authority, hence, the said issue for the earlier period is also remanded to the adjudicating authority for verification. Further the appellant had availed credit of 2,53,452/- but could not explain it properly before the authorities below against on which particular input service it was availed. The Ld. Advocate claims that now they are in possession of documents accordingly, they could establish the eligibility of the credit of the service tax paid on various services. Thus, this issue is also remanded to the adjudicating authority. Appeal allowed by way of remand.

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• 2018 (3) TMI 1051
  Valuation - includibility - notional interest - whether the notional interest on the advance deposit collected by the appellant against the supply of goods is includible in the assessable value of the final product or otherwise? - Held that: - there is no dispute in the fact that the goods supplied by the appellant are not uniform/standard, every machine is a tailor made machine. Therefore if the advance deposit is not collected and at the time of supplies if the buyer refuses to purchase the machine there will be no security to the appellant therefore the reason of taking advance deposit towards the supply of tailor made machine is justified - The department also could not adduce any evidence to establish that the price of the machineries are influenced by taking the advance deposit - notional interest should not be included - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 1050
  Transfer of the unutilized accumulated CENVAT Credit - Rule 10 of the CCR - Held that: - Rule 10 permitted the assessee to transfer the available credit along with inputs and capital goods in stock at the factory at a new location. There is no requirement under the rule that the assessee can transfer credit corresponding to the availability of quantum of inputs - transfer of credit allowed - appeal dismissed - decided against Revenue.

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• 2018 (3) TMI 1049
  CENVAT credit - issuance of invoices without receipt of inputs - fake invoices - Held that: - identical issue has been considered by the Hon'ble High Court of Allahabad in the case of Commissioner of Central Excise & Service Tax Vs. Juhi Alloys Ltd. [2014 (1) TMI 1475 - ALLAHABAD HIGH COURT]. It stands observed by the Hon'ble High Court that in the absence of any alternate source of procurement of raw materials, Revenue’s case of non-receipt of inputs, on the basis of untenable evidence cannot be upheld - appeal dismissed - decided against Revenue.

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• 2018 (3) TMI 1048
  CENVAT credit - time limit - The case of the department is that as per N/N. 21/2014-CE (NT) dt.11.7.2014, the six months period prescribed for taking credit from the date of issue of invoices. Therefore the credit taken in the present case is after six months from the date of invoices issued in the month of March and April 2014. Held that: - As per the facts of the case credit was taken in respect of the invoices issued in the month of March & April 2014 in November 2014. On going through the notification No. 6/2015-CE (NT) dt. 1.3.2015 the period available for taking credit is 1 year in terms of the notification, the invoices issued in the month of March and April 2014 become eligible for cenvat credit - in respect of those invoices the limitation of six months cannot be made applicable - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 1047
  Employee of 100% EOU - signing the documents of 100% EOU which indulged in mis-using the EOU scheme and diversion of the goods in domestic market - Held that: - the appellant is merely an employee and the issue on merits in respect of the company involved is of various provisions of 100% EOU and interpretation of overall EOU. It cannot be expected from an employee of the company to understand the entire provisions of EOU - penalty of 1 lakhs imposed on the appellant is harsh. Therefore, the same deserve reduction - penalty reduced to 10000/- - appeal allowed in part.

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• 2018 (3) TMI 1046
  Interest on delayed payment of duty - penalty u/r 25 of CER - clearance of goods to Depot - Held that: - this is not the case of demand of duty evaded by the appellant. As per the fact, due to sale through depot/consignment agency there arising differential duty which the appellant suo motu paid - This is a case of at the most of delay of payment of duty, accordingly only interest is chargeable therefore the demand of interest is upheld - penalty not warranted - appeal allowed in part.

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• 2018 (3) TMI 1045
  Time limitation - CENVAT credit - duty paying documents - credit availed on the basis of dealer's invoices issued by one M/s Alakh Poly films - Held that: - It is on records that main appellant had during relevant period had filed monthly returns to the jurisdictional authorities also no query were raised - This filing of returns being undisputed, the decision in the case of Prayagraj Dyeing & Printing Mills Pvt. Ltd [2013 (5) TMI 705 - GUJARAT HIGH COURT] would apply, where it was held that Cenvat Credit availed and if returns are filed demand cannot be issued by invoking extended period - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2018 (3) TMI 1044
  Levy of turnover tax - export sale - purchases of raw materials, against Form XVII - concessional rate of tax - violation of Section 3(4) of the Tamil Nadu General Sales Tax Act, 1959 - Held that: - reliance placed in the decision in the case of Tube Investments of India Ltd. (Formerly known as M/s. TI Diamond Chain Ltd.) Versus The State of Tamil Nadu, represented by the Commercial Tax Officer [2010 (10) TMI 938 - MADRAS HIGH COURT], where it was held that Section 3(4) of the Act will have no application since situs of the export sales of the petitioners for the purpose of said Section was the State of Tamilnadu and by virtue of the said factual position, the applicability of Section 3(4) stands excluded for the exigibility of tax. Tax Case Revisions are dismissed.

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• 2018 (3) TMI 1043
  Issuance of C declaration Forms - pending government dues - unlocking the facility in the corresponding tax payer identification number and the general sales tax number - Penalty u/s 18(3) of the said Act - Held that: - the writ petition is disposed of by directing the respondent to release the C Form declarations, to which, the petitioner is eligible - Simultaneously, there will be a direction to the Puducherry Value Added Tax Act Appellate Tribunal, Puducherry to take up for hearing the stay petition in I.A.No.1419 of 2017 and pass orders on merits and in accordance with law, within a period of three weeks from the date of receipt of a copy of this order - this Court upheld the power of the respondent to withhold the C Form declarations, as the respondent is statutorily empowered to do so and the Hon'ble Division Bench of this Court has also upheld the said power - petition disposed off.

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• 2018 (3) TMI 1042
  Validity of assessment order - TNGST Act - The impugned order appears to be a very reasoned order, but however, on a closer scrutiny, it is seen that upto paragraph-7, the assessing officer has verbatim repeated the proposal in the notice dated 04.04.2005, extracted the entire explanation given by the petitioner, and the finding rendered by the respondent is only in paragraph-8, that too a single line - Held that: - the stand taken in the impugned order that they are bogus dealers / bill traders, appears to be factually incorrect and inconsistent with the averments in the counter affidavit and in particular, paragraph-7 of the counter affidavit. The other paragraphs in the counter affidavit deals with the burden of proof and on whom it lies etc. A reference has been made to Sections 10(2) and 3(2) of the TNGST Act in this regard. This Court has no hesitation to hold that the impugned proceedings is wholly vitiated on account of total non-application of mind and being devoid of reasons. The matter is remitted to the respondent for fresh consideration who shall afford adequate opportunity to the petitioner to cross-examine the third parties and after examining all the records, the respondent shall redo the assessment in accordance with law - Petition allowed by way of remand.

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• Indian Laws

• 2018 (3) TMI 1064
  Constitutional validity of amendments made to the Karnataka Money Lenders Act, 1961 and the Karnataka Pawn Brokers Act, 1961 in the year 1998 providing that the security deposit furnished by the money lenders and pawn brokers in terms of Sections 7-A and 4-A of the Acts respectively shall not carry interest. What is the scope, ambit and effect of the judgment of the Karnataka High Court in Manakchand Motilal’s case [1991 (3) TMI 395 - SUPREME COURT OF INDIA], where the Division Bench upheld the validity of Sections 7-A & 7-B of the M.L. Act and Sections 4-A & 4-B of the P.B. Act? - Held that: - It would also be apposite to mention that after making the aforesaid observation, the Division Bench again noted that in the absence of any prohibition in the provisions of the Acts, regarding payment of interest, in view of Article 14, the Government while making rules must provide for payment of interest. This itself was a clear indicator that the Court decided the issue in Manakchand Motilal’s case mainly on the ground that there was no provision prohibiting the payment of interest - the observation made in Manakchand Motilal’s case that a provision prohibiting payment of interest would be arbitrary and violative of Article 14 of the Constitution of India was a passing observation in the nature of obiter not arising for decision in the said case. Whether the effect of the judgment in Manakchand Motilal’s case can be undone by bringing out amendments in question? - Held that: - the Legislature has the power to enact validating laws including the power to amend laws with retrospective effect. However, this can be done to remove causes of invalidity. When such a law is passed the Legislature basically corrects the errors which have been pointed out in a judicial pronouncement. Resultantly, it amends the law, by removing the mistakes committed in the earlier legislation, the effect of which is to remove the basis and foundation of the judgment. If this is done, the same does not amount to statutory overruling - However, the Legislature cannot set at naught the judgments which have been pronounced by amending the law not for the purpose of making corrections or removing anomalies but to bring in new provisions which did not exist earlier - When the decision was rendered in Manakchand Motilal’s case (supra) there was no provision providing for payment of interest or prohibiting payment of interest. The Court had observed that even if such a provision prohibiting payment of interest had been there in the statute such provision would be illegal - However, since we have clearly held that the observations made in Manakchand Motilal’s case (supra) that if the provision prohibits payment of interest then such a provision would be violative of Article 14 of the Constitution, is obiter, the issue whether such an amendment is valid or not will have to be decided on its own merits. Whether the provisions providing that no interest is payable are arbitrary and hence violative of Article 14 of the Constitution of India? - Held that: - Contracts providing for non-payment of interest on earnest money and security deposits have been considered in the context of the Arbitration Acts. The Courts have held that in view of the agreement entered into between the parties, the arbitrator cannot award interest prior to the date of passing of the award. In fact, this Court has clearly held that the arbitrator cannot award pendente lite interest - the impugned provisions prohibiting payment of interest on the amount of security deposits cannot be said to be arbitrary or violative of Article 14 of the Constitution of India. Section 7-A & 7-B of the M.L. Act and 4-A & 4-B of the P.B. Act are valid from the date of their enactment - That the provisions making these amendments retrospective from 1985 are illegal and invalid. Appeal allowed in part.

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• 2018 (3) TMI 1063
  Delay in filing appeal - time limitation - Exemption from payment of court fee - whether the delay of 3 years and 192 days, in filing the appeal, ought to be condoned, or not? - Held that: - Not for nothing is the statute of limitation referred to as a statute of repose. Limitation, it is trite, does not eviscerate the right; it merely extinguishes the remedy. It serves to sheath the sword of Damocles and is, as such, imperative and unrelenting. Subject to the relaxations statutorily provided, periods of limitation cannot be ignored, thereby revitalising claims which have been put to sleep with the passage of time. Jurisprudentially, the concept of limitation“is founded on public policy that an unlimited and perpetual threat of litigation leads to disorder and confusion and creates insecurity and uncertainty.” The total delay on the part of the appellant, in preferring the present appeal, is 3 years and 192 days, which stands candidly admitted, by the appellant itself, in the present Miscellaneous Petition, filed by it for condonation thereof. That this delay is exorbitant, goes without saying - There is no justification or explanation advanced, which could convince us that, in the interests of justice, the delay of 3 years and 192 days, on the appellant’s part, deserves to be condoned. No ground, whatsoever, justifying condonation of the inordinate delay of 3 years and 192 days, on the part of the appellant in preferring the present appeal is made out - petition dismissed on the ground of delay.

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• 2018 (3) TMI 1062
  Interest on repayment of loan - appellant submits that the impugned order is erroneous because it directs private individuals/directors for repayment of loan taken by respondent no. 2 which is a corporate entity - Held that: - the appellants were directed to deposit an amount of 85 lacs within 30 days failing which the defence shall stand struck off. While, it is not in dispute that the loan was taken by the corporate entity/respondent no. 2 and the loan would have ordinarily to be repaid by it, but something more transpired regarding the repayments - the appellant nos. 1 and 2 admitted and undertook to repay the loan amount. There is a clear admission by the appellants to repay the loan on behalf of their corporate entity. Insofar as there is an acknowledgement and undertaking on behalf of two individuals – appellant nos. 1 & 2 to repay the loan on behalf of their corporate entity/respondent no. 2, and the appellants would fall within the purview of Order 39 Rule 10 CPC. The impugned order directing them to deposit the said monies cannot be faulted - appeal dismissed - decided against appellant.

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• 2018 (3) TMI 1061
  Vicariously liability - Misbranding in terms of Section 2(ix)(j) role in the management of the company rather all Directors and others have been made accused not even a particular managing Director or any Director by name has been made accused with the specific allegation regarding the specific role in the management of the company. As the company, namely, Reckitt Benckiser (India) Pvt. Ltd, has not been arraigned an accused as per Section 17(1) of the Act, so its all officers including Managing Director, all Directors, Chairman, Production Incharge in absence of specific name of any officers of the company with allegation of being responsible for the conduct of business of the company, cannot be held vicariously liable for the alleged offence. Application allowed.

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