TMI Tax Updates - e-Newsletter
March 29, 2017

Case Laws in this Newsletter:

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

TMI SMS

• Skillful grafting to deceive the tribunal by Revenue authorities - In the most polite terms; it can only be described as a matter of shame

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• Sale of shares - tax planning by not paying STT to avoid exemption u/s 10(38) to arrest the loss - cannot be called as colourable devise

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• De-husking of the paddy is covered in relation to the agricultural activity hence, the service tax is not applicable on such activity

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• Exemption u/s 11 - asylum to old, maimed, sick and disabled cows - mere selling of milk, would not be hit by the proviso to Sec. 2(15) - HC

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Articles

1. GST Bills – CGST, IGST, UTGST and Compensation Cess, introduced in Lok Sabha

   By: Bimal jain

2. HANDLING CESTAT APPEALS

   By: Dr. Sanjiv Agarwal

News

1. Jaitley briefs MPs about GST bills introduced in Lok Sabha

2. GST Bills in present form not acceptable: Cong

3. Govt wants to pass GST bills through consensus: Jaitley

4. FREQUENTLY ASKED QUESTIONS (FAQs)- GST Migration

Notifications

Customs

1. 10/2017 - dated 28-3-2017 - Cus

Amendment to Notification No.12/2012-Customs, dated the 17th March, 2012, so as to impose basic customs duty of 10% on wheat and Tur, with immediate effect

DGFT

2. 43/2015-2020 - dated 27-3-2017 - FTP

Amendment in export policy of edible oils

Law of Competition

3. F. No.5/20/2011-CS - dated 21-3-2017 - Competition Law

Central Government exempts the Vessels Sharing Agreements of Liner Shipping Industry for a period of three months with effect from the 21st March, 2017

Circulars / Instructions / Orders

Income Tax

1. F.No.225/86/2017-ITA.II - dated 28-3-2017

Petitions seeking condonation of delay in making payment of first instalment under the Income disclosure Scheme, 2016

DGFT

2. 63/(2015-2020) - dated 27-3-2017

Amendment in para 2.54 of the Handbook of Procedures, 2015-2020

Highlights / Catch Notes

Income Tax

• High Court Allows Tax Refund Adjustment for 2012-13 Against Demands for 2013-14 and 2014-15 u/ss 220(6) and 245.

  Case-Laws - HC : Adjustment of amount refundable for the Assessment Year 2012-13 against the tax demands raised for the Assessment Years 2013-14 and 2014-15 - The order u/s 220(6) as well as the intimation u/s 245 was issued by the same Assessing Officer - There was no say from the superior authority - set off allowed - HC
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• Taxpayer's Stock Losses Not Speculative: Valuation Method Aligns with Section 73 of Income Tax Act.

  Case-Laws - AT : Speculation loss u/s.73 - assessee had in the normal course of business purchased the shares - Because of the turmoil in the share market in the year under consideration the assessee suffered huge loss.It was valuing its stock on cost or market price whichever was lower and had accordingly valued the shares - cannot be considered speculative loss - AT
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• Court Rules Professional Fees to Non-Resident Non-Taxable in India u/s 40(a)(ia) and U.K. DTAA.

  Case-Laws - AT : TDS u/s 195 - Disallowance u/s.40(a)(ia) - non deduction of TDS on professional fee - U.K. DTAA - There is no iota of evidence on record to which it can be assumed that Mr. Arnold Allen was having fixed place in India - this payment is not liable to be taxed in India - AT
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• Tax Tribunal Upholds Taxpayer's Choice to Forego STT for Business Strategy, Not Tax Evasion, u/s 10(38.

  Case-Laws - AT : Sale of long term shares - tax planning by not paying STT for not to claim exemption u/s 10(38) - The decision taken by the assessee to arrest the loss arising on account of liability to pay interest on the loan raised from BVHPL cannot be doubted. It is a business decision taken by the assessee to arrest the losses and the same cannot be called as colourable devise - AT
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• Co-op Credit Society Avoids Penalty for Cash Deposits Violation; Penalty Waived Due to Reasonable Cause u/s 273B.

  Case-Laws - AT : Levy of penalty u/s. 271D - violating the provisions of section 269SS - Assessee is a Co-operative credit society and has accepted cash deposits from its members - assessee has been able to show reasonable cause for inadvertent violation of provisions of section 269SS - Penalty waived u/s 273B - AT
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• Assessee's Tax Deduction Eligibility Unaffected by Municipal Delay in Issuing Occupancy Certificate for 128 Flats u/s 80IB(10.

  Case-Laws - AT : Benefit of deduction u/s. 80IB(10) - The assessee had applied for grant of completion/occupancy certificate in respect of entire 128 flats well before due date. Delay caused in issuance of completion/occupancy certificate by PMC cannot be attributed to the assesse - AT
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• Goodwill from Slump Sale Classified as Intangible Asset, Depreciation Claim Allowed for Assessee.

  Case-Laws - AT : The balance consideration out of slump sale consideration after adjusting the value of asset and liabilities is, the value of goodwill in the hands of the assessee, which is intangible assets, on which the assessee is eligible to claim the depreciation - AT
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• AO Lacked Authority to Impose Fees u/s 234E for TDS Delays Before June 1, 2015; Demands Invalidated.

  Case-Laws - AT : Delay in furnishing of TDS return - AO while processing the TDS statements / returns in the present set of appeals for the period prior to 01.06.2015, was not empowered to charge fees u/s 234E - the demand raised by way of charging the fees u/s 234E of the Act is not valid and the same is deleted - AT
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• Section 40A(2)(b) Disallowance: No penalty for excessive salary to related person if taxed higher without evasion.

  Case-Laws - AT : Disallowance u/s 40A(2)(b) - excessive salary to related person - no disallowance of expense can be made when the person to whom the payment is made is also assessed at higher rate and there is no evasion of tax - AT
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Customs

• Review Committee Accused of Deceptive Practices in Customs Case; Calls for Accountability by CBEC.

  Case-Laws - AT : Skillful grafting to deceive the tribunal - it does not do credit to the integrity or the expertise of officials who constituted this particular Review Committee. In the most polite terms; it can only be described as a matter of shame and it is expected the Central Board of Excise & Customs take steps to ensure that the incompetence and ineptitude is reflected in their records - AT
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• Freight Forwarder Not Liable for Penalty u/s 114 of Customs Act Due to Goods Substitution En Route.

  Case-Laws - AT : Imposition of penalty u/s 114 of CA, 1962 on freight forwarder - Since upon completion of the formalities of factory stuffing, the container was sealed in presence of Central Excise Officers - substitution of goods en-route to the port cannot held the appellant responsible for imposition of penalty - AT
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Indian Laws

• Section 138: Reminder Notices for Dishonored Cheques Not Barred; No Admission of Non-Service of Initial Notice Required.

  Case-Laws - SC : Conviction u/s 138 of the Negotiable Instruments Act - dishonoured cheques - generally there is no bar under the N.I. Act to send a reminder notice to the drawer of the cheque and usually such notice cannot be construed as an admission of non-service of the first notice by the appellant as has happened in this case. - SC
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Service Tax

• Construction Services Under "Rajiv Gandhi Basti Vikas Karyakram" Exempt from Service Tax per Circular No.125/2010-ST.

  Case-Laws - AT : Levy of tax - Construction services - the said construction was made under “Rajiv Gandhi basti Vikas karyakram” which was the Central sponsored scheme and the same is exempted from service tax as per Circular No.125/2010-ST dated 30th July 2010- AT
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• Service Tax Confirmed for Training Provider Without Recognized Diplomas; Exclusions in Section 65(27) Not Applicable.

  Case-Laws - AT : Commercial Training and Coaching services - the appellant itself does not issue any kind of diploma or degree, which is recognised by law for the time being in force. In other words, the appellant is not covered in the exclusions mentioned in Section 65(27) - demand confirmed for the normal period of limitation of one year - AT
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• Exempt Services Valuation Method for CENVAT Credit Reversal u/r 6(3A) Upheld Due to Lack of Statutory Formula (3A.

  Case-Laws - AT : Reversal of CENVAT credit - Rule 6(3A) of CCR - the value of exempted service was arrived at by the Original Authority as difference between sale price and cost of goods sold or 10% of the cost of goods sold whichever is more - in the absence of any other statutory formula to arrive at the quantum of Cenvat credit to be reversed on common input services, we find no impropriatory in the decision of the Original Authority - AT
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Central Excise

• Appellant Loses SSI Exemption for Using "Autopal" Brand Registered to Group Entity "Autolite India Ltd.

  Case-Laws - AT : SSI exemption - use of brand name of others - The appellant is fixing the brand name “Autopal” on the said goods, though the said brand name is registered in the name of another entity of their group companies, which is known as “Autolite India Ltd.” - demand of duty sustained - AT
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• Court Overturns Demand Due to Lack of Evidence in SCN; Rule 14 of Cenvat Credit Rules Not Justified.

  Case-Laws - AT : Reversal of credit on input services proportionate to the trading activity - there is no allegation in the said SCN that the appellants had taken credit of any inadmissible Cenvat credit - SCN did not make out a case for invocation of provisions of Rule 14 of Cenvat Credit Rules, 2004 - demand set aside - AT
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• Revenue Proves Clandestine Removal Allegation Against Appellant Without Needing Precise Evidence Due to Evasion Tactics.

  Case-Laws - AT : The allegation of clandestine removal has been established by the Revenue against the appellant. While the onus is on the Revenue to establish clandestine removal, they are not required to prove the case with mathematical precision as such a case involves deliberate and well thought out modus-operandi to evade duty. - AT
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• Penalty u/r 26 of Central Excise Rules 2002 Set Aside Due to Lack of Evidence Against ICICI Bank.

  Case-Laws - AT : Imposition of penalty u/r 26 of CER, 2002 - there is nothing on record to evidence the fact that ICICI Bank has played any role in getting the forged certificate - penalty set aside - AT
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Case Laws:

• Income Tax

• 2017 (3) TMI 1338
  Penalty u/s 271(1)(c) - Held that:- Claim made by Assessee which was not accepted by AO, that itself would not attract penalty under Section 271(1)(c) and if such an interpretation as forwarded by Revenue is accepted, whenever return filed by Assessee is not accepted, in all such cases Assessee would be liable for penalty under Section 271(1)(c) and that would render specific requirement of Section 271(1)(c) redundant, hence such an interpretation cannot be accepted. - Decided in favour of assessee.

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• 2017 (3) TMI 1337
  Revision u/s 263 - additional depreciation under Section 32(1)(iia) on windmill - Held that:- The aforesaid issue is now not res integra and the same is concluded by the Division Bench of this Court against the revenue in view of the decision of the Division Bench of this Court in the case of Diamines 10000 or less were debited only at the time of consumption. The learned tribunal has rightly held that the Assessing Officer is justified in accepting he claim of the assessee in debiting 92,66,211/- from the Profit and Loss Account. Under the circumstances, the learned tribunal has observed that the order passed by the Assessing Officer cannot be said to be prejudicial to the interest of the revenue, and therefore, the Commissioner was not justified in interfering with the order passed by the Assessing Officer in exercise of powers under Section 263 of the Act.

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• 2017 (3) TMI 1336
  Adjustment of amount refundable for the Assessment Year 2012-13 against the tax demands raised for the Assessment Years 2013-14 and 2014-15 - Held that:- In respect of an argument that demand for the Assessment Year 2013-14 was stayed by the Assessing Officer in exercise of powers conferred under Section 220(6) of the Act, we do not find any merit. A perusal of the order of stay passed by the Assessing Officer on 12.09.2016 in terms of Section 220(6) of the Act shows that even in the said order, an amount of 144,08,49,460/- has been adjusted. After adjustment, the balance amount was stayed for a period of 6 months or upto the decision of the first appeal, whichever is earlier. After passing of such order, the assessment for the Assessment Year 2014-15 was finalized on 28.12.2016. The order under Section 220(6) of the Act as well as the intimation under Section 245 of the Act was issued by the same Assessing Officer. Therefore, the argument of the learned counsel for the petitioner that the Assessing Officer should have modified its order of 12.09.2016 before the order of adjustment is not tenable as the order of stay was not passed by any other superior authority but by the Assessing Officer himself. Quashing of the order results in restoration of the position as stood on the date of passing of the order which has been quashed but the stay of operation of the order does not however lead to such a result. In view thereof, the order of Assessing Officer not to recover the demand for the Assessment Year does not lead to setting aside of the demand itself. The said demand could very well be adjusted against the refund due for the previous year 2012-13. Section 245 of the Act infact permits the Revenue to set off any demand from the amount to be refunded but the only condition is of intimation in writing to such person against whom action is proposed to be taken. We find that demand having been raised against the petitioner for the Assessment Years 2013-14 and 2014-15 and intimation having been sent to the petitioner on 05.01.2017, the mandate of Section 245 of the Act was satisfied by the Revenue before making adjustment from the refund due to the assessee from the tax due to the assessee for the subsequent years. In view thereof, we do not find any merit in the writ petition, the same is dismissed.

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• 2017 (3) TMI 1335
  Disallowance of depreciation on Wind Energy Generators - Held that:- A decided in assessee' own case for previous AY It is an undisputed fact that the income from lease has been considered by Assessee as income It is an undisputed fact that the AO has considered the lease entered by the Assessee to be a Finance lease to arrive at the conclusion that the assessee is not entitled to depreciation. We find that the issue of depreciation on leased assets has been decided by Honourable Apex Court in the case of ICDS Ltd [2013 (1) TMI 344 - SUPREME COURT ] - Decided in favour of assessee Addition u/s 14A - Held that:- As mentioned elsewhere, the assessee was having sufficient own funds to meet out the tax free investment. Thus we do not find any merit in considering the interest expenses for the computation of disallowance u/s. 14A of the Act. To this extent, we set aside the findings of the ld. CIT(A) and direct the A.O. to delete the addition of 29,35,41,415/-.However, in our considered opinion, administrative expenses need to be disallowed and since the assessee has made suo moto disallowance of 63,84,525/-, in our considered opinion, this should meet the ends of justice. We, accordingly, confirmed the suo moto disallowance of 63,84,525/-. Securitization gains amortised as per RBI guidelines and non-allowance of such realized gains - Held that:- The amortization merely represents a timing difference and since the bank is consistently making profits and paying tax at the highest rate without claiming any tax holiday benefit, it can be safely concluded that the method followed is revenue neutral. Disallowance of bad debts - Held that:- As decided in assessee’s own case for A.Y. 2002-03, 2001-02 & 2003-04 Non-convertible debentures are in the type of advancing funds to various companies and the income which is taken as interest and assessable as business income. For the banks, giving of loans is part of its business and any bad debt arising therein is covered u/s 36(l)(vii) as bad debt, whether it is loan or nonconvertible debentures. - Decided in favour of assessee Advertisement expenditure - Allowance as business expenditure - expenditure on advertisement and publicity to change the Bank’s name from UTI Bank to Axis Bank - Held that:- It is not possible to agree with the appellant-Revenue that the advertisement expenses incurred by the respondent-assessee at the time of installation of additional machinery in the existing line of business resulted in any enduring benefit, so as to be treated as capital in nature. A special advertisement campaign driven by the assessee to bring public awareness to the change in the name from UTI Bank to Axis Bank - Decided in favour of assessee.- Decided in favour of assessee

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• 2017 (3) TMI 1334
  Denial of exemption under section 11(1) - non charitable activity - adding the income received towards the corpus fund -addition of voluntary contributions and training programme fee which was not received by the appellant - Held that:- We agree with the submissions made by the assessee that mere charging of fee from members or non-members for rendering services like training, conducting seminars would not ipso facto lead to denial of exemption. The dominant object of the assessee remains charitable and the aforesaid activities are only incidental to the main activity of the assessee. The activities of the assessee are benefiting the public at large at submitted by the assessee. Furthermore, it is not the case of the department that any change in objects had taken place in the relevant year so as to take the assessee outside the ambit of section 2(15). The effect of the amendment has been discussed elaborately by the Hon’ble Delhi High Court in ITPO Case (2015 (1) TMI 928 - DELHI HIGH COURT) as well Andhra Pradesh Chamber of Commerce (1964 (10) TMI 19 - SUPREME Court ) wherein held the expression object of general public utility would not necessarily mean that the object should be to benefit the whole of mankind and the test of dominant object has not been altered even after the said amendment. We therefore hold that the denial of exemption under section 11 and 12 in the case of the assessee is not in accordance with law and accordingly the additions made by the AO and confirmed by the CIT(A) are deleted. - Decided in favour of assessee

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• 2017 (3) TMI 1333
  TPA - ALP adjustment on the payment of interest on Fully Convertible Debentures (FCD)/External Commercial Borrowings (ECB) - DR adopted 500 bps instead of adopting 200 bps as adopted by TPO - Held that:- Assessee has borrowed the loan from its AEs in terms of FCD and ECB. For the purpose of “FCD”, the bench marking has to be done considering the internal as well as external “CUP”. Obviously, the interest charged is better than internal “CUP”. We found that there is no basis for adopting one spread of 200 bps nor it is prudent in the banking sector. We cannot adopt the 200 bps as universal rate for all types of loan. The loans are categorized as long term and short term i.e. working capital loan. We observe that the banks are adopting the 200 bps on working capital loans as spread and higher rates beyond 500 bps on the long term loans such as term loans. The Pricing of Interest on term loans are determined based on the security, net worth, ratings, term of loan etc. The more risk involved, the pricing decision of the banks will change. The RBI in its prudential norms has given windows for the pricing of interest and the spread. Based on the RBI guidelines, the term up to 5 years, can have spread of 300 bps and beyond 5 years, it can be 500 bps. Taking the clue from this guideline, we can come to understand that the assessee has properly allowed its AEs to adopt the spread of 500 bps. In our considered view, the relevant issue is to charge the interest on international transaction based on the LIBOR or any other rates which are the basis for negotiation between the contracting parties and the rates of interest or spread cannot be the same for all the international loans irrespective of their terms, risk etc. No infirmity in the order of the DRP in deleting the adjustment made on interest on ECB/FRD and accordingly, we uphold the order of the DRP and dismiss the grounds raised by the revenue. - Decided in favour of assessee.

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• 2017 (3) TMI 1332
  Addition u/s 68 - Held that:- Since the credit edition has been made without any evidence by only to protect the revenue leakage, there does not arise any verification of the creditors for assessment year 2003-04 and 2004-05.Accordingly appeal filed by assessee on Limited grounds remanded stands allowed and appeal filed by the revenue stands dismissed. Addition u/s 68 -Assessment year 2006-07 to 2009-10 - assessee either offers no explanation for the credit entries in the books of accounts, or explanation offered by it, is found to be unsatisfactory - Held that:- We are of the considered opinion that might have Ld. AO the Ld.CIT (A) has made any enquiry towards the amount credited in the books of the either as share capital or as sale of shares which is in the profit and loss account. The Ld.Counsel and Ld. CIT. DR, agreed that such enquiries can only be conducted at the level of Ld. AO. Therefore we set aside the issue for examination of cash credits either as share capital and premium or as sale of shares from back to the file of Ld. AO. The Ld. AO shall 1st grant an opportunity to assessee to discharge its initial onus by providing the identity, creditworthiness and most importantly genuineness of the transactions as per section68 of the act. After the discharge of initial onus by assessee, the Ld. AO may conduct any enquiry that he may deem fit and proper to inquire about the veracity of the evidences/information submitted by the assessee in respect of the credit entries. Ld. AO may take all necessary steps in order to identify, examine the creditors and decide the issue on merits neatest say that adequate opportunity may be granted to the assessee to support the case.

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• 2017 (3) TMI 1331
  Sale of shares - capital gain or business income - Held that:- When the share sold in the current year was carried forward and the substantial gain was earned by the assessee only from sale of two scripts. And for earlier years the Revenue has accepted the STCG on similar transaction, in our considered opinion, the income earned by assessee can only be taxed as “Capital Gain”. Hence, the ground no.1 raised by assessee is allowed. Disallowance u/s 14A - Held that:- CIT(A) concluded that assessee could not establish the nexus between the capital invested in securities and the borrowed loan. All the funds were hotchpotch and confirmed the disallowance. Considering the peculiarity of the fact that the assessee earned only a sum of 1,10,518/- as exempt income. The assessee has sufficient funds and earned interest income of 3,55,692/-. Thus, we respectfully following the decision of coordinate bench in Vahanvati Consultants P. Ltd. vs. DCIT (2016 (8) TMI 365 - ITAT MUMBAI), restrict the disallowance u/s 14A to 1,10,518/-.

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• 2017 (3) TMI 1330
  Levy of penalty u/s 271 (1) (c) - non mentioning charges for levy of penalty - Held that:- A perusal of the satisfaction recorded by the Assessing Officer at the time of assessment and while passing penalty order for both the assessment years, makes it evident that the Assessing Officer is not sure about the charge for levy of penalty. In the notice issued u/s 274 r.w.s 271 (1) (c ) of the Act again the Assessing Officer has erred in mentioning both the charges for levy of penalty. It would be relevant to mention here that in the notice both the charges i.e ‘concealment of income’ and ‘furnishing inaccurate particulars of income’ are linked by conjunction ‘or’. Thus, the notice does not clearly specify the charge for levy of penalty. On merits, the ld. AR has pointed that similar additions were made in assessment year 2009-10 and penalty proceedings u/s 271 (1)(c) were initiated. However, the penalty proceedings were subsequently dropped. This fact has not been controverted by the ld. DR. The assessee has also furnished copy of the order dated 31.03.2014 passed u/s 271 (1) (c) of the Act for assessment year 2009-10 dropping penalty proceedings. Under such circumstances, it would not be logical to uphold the penalty in assessment year under appeal. - Decided n favour of assessee.

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• 2017 (3) TMI 1329
  Disallowance u/s 80IB(10) - lack of completion certificate - AO noted that the appellant firm has allotted more than one unit to an individual and his spouse which is violated to section 80IB(10)(f) - Held that:- As regards the evidences in support of completion of the project in time the assessee has submitted evidences from the Gram Panchayat. The Gram Panchayat has been accepted as competent authority in several case laws including that from Hon’ble jurisdictional High Court. As examined the evidences submitted by the assessee regarding the completion of the project find that the evidences duly established that the project has been duly completed for the deduction being claimed. Hence find that adverse inference drawn on account of lack of completion certificate cannot be sustained. Another adverse inference has been drawn on account of allotment of one flat to spouse of existing allottee. In this regard it is the contention of the learned counsel of the assessee that the said provision is not applicable in the case of the assessee inasmuch as the concerned provision was not applicable. Further more learned counsel has contended that the payments for the said flats were duly received prior to the applicability of the concerned provision. Alternatively learned counsel of the assessee has placed reliance upon the decision of Hon’ble High Courts where it has been held that in all fairness the claim of the assessee with regard to proportionate relief has to be read into the provisions so that deduction provisions are sustained and denial of the entire claim on the basis of some units which had not complied with the conditions is not justified. Direct the AO to examine the contentions of the assessee and if required, disallow the exemption qua the sale of flat which is attracted by the concerned provisions. - Decided in favour of assessee for statistical purposes.

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• 2017 (3) TMI 1328
  Additional disallowance u/s 14A - Held that:- Since then no new investment in shares has been made by the appellant and various loans obtained by the appellant have been utilized for specific purpose of business working capital requirement. We note that Ld. CIT(A) has rightly observed that the assessee’s argument have force and it is undisputed that the AO had determined in AY.2006-07, the loan amount of 857.04 lac utilized for investment in shares out of total borrowings of 4612.12 lac and same has been followed in AY 2007-08 as the quantum of investment in shares remained unchanged. The facts being the same during the year under consideration and the amount of disallowance has already been disallowed by the appellant under Rule 8D(2)(i) of IT Rules as directly attributable expenditure; there remains no justification for making further disallowance under Rule 8D(2)((ii) of IT Rules. Thus, total disallowance u/s 14A of the Act comes at 1,11,21,08l/-. Thus, out of total addition on account of disallowance of 5,35,65,500/- made by the AO uls 14A of the Act, an amount of 92,88,538/- (Rs. 1,11,21,08l - 18,32,543) only was rightly sustained and the assessee gets the consequential relief, which does not need any interference on our part, hence, we uphold the order of the Ld. CIT(A) on the issue in dispute and accordingly, we dismiss the ground nos. 1 12,32,814/- out of total addition of 51,81,578/-, which does not need any interference on our part, therefore, we uphold the order of the Ld. CIT(A) on the issue in dispute and accordingly, we dismiss the ground no. 3 raised by the Revenue.

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• 2017 (3) TMI 1327
  Upholding valuation loss on stock of shares as speculation loss u/s.73 - Held that:- We find that the assessee had claimed loss on account of valuation of closing stock on the last date of AY, that the AO invoked the provisions of section 73 and held that the transactions entered into by the assessee were of speculative nature, that the FAA confirmed his order, that both the authorities did not consider the argument about the exception to the explanation to section 73, that the assessee had earned profit of 2,20,67,126/-, that it had STCG on sale of mutual funds to the tune of 2.68 crores. It is a fact that shares traded by the assessee were not of any of the good companies.The assessee had in the normal course of business purchased the shares. Because of the turmoil in the share market in the year under consideration the assessee suffered huge loss.It was valuing its stock on cost or market price whichever was lower and had accordingly valued the shares.The resultant loss, in these circumstances, cannot be considered speculative loss as held by AO and confirmed by FAA.In our opinion facts of Lokmat case [2010 (2) TMI 94 - BOMBAY HIGH COURT ] are applicable to the facts of present case. - Decided in favour of assessee Penalty u/s 271(1)(c) - Held that:- While deciding the appeal filed by the assessee we have held that transaction entered into by the assessee were not of speculative nature that the loss was allowable as business loss. Therefore, penalty order would not survive.- Decided in favour of assessee

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• 2017 (3) TMI 1326
  Reopening of assessment - disallowance u/s. 80IB - failure to issue notice - Held that:- There is no dispute to the fact that the assessments were reopened after the end of four years from the relevant assessment year. There is also no dispute that the order u/s. 143(3) was passed after duly examining the claim of 80IB(10) as can be seen from the report of the ITI, extracted by the ITO in the assessment orders. Thus, there is no dispute that assessee had placed all the information relevant for completion of assessment before the AO. Provisions of Section 147 do allow the AO to reopen the assessment, if he has reason to believe that income has escaped assessment, but that power is limited by various other provisos. The contention of CIT(A) that assessee has not filed return of income, therefore, there is no need for issuance of notice u/s. 143(2) has no legal basis. Since there is failure on the part of the AO in issuance of notices u/s. 143(2) within the time limits prescribed, subsequent proceedings of assessment becomes bad in law. - Decided in favour of assessee

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• 2017 (3) TMI 1325
  Disallowance made u/s. 14A r.w.r. 8D - Held that:- There is no finding given by the AO or CIT(A) that any of the borrowed funds have been diverted for investments in shares. Eventhough the Ld.CIT(A) discussed the principles of law, he did not examine whether any of the borrowed funds have been diverted for investment. Unless the funds were out of the borrowed funds, no disallowance is warranted under rule 8D(2)(ii) It was the contention that borrowed funds were utilised in the business of assessee. Assessee’s contention that AO has not disallowed any amount u/s. 36(1)(iii) has a valid point. Invoking Rule 8D(2) will only come with reference to ‘other interest’ which was not directly related to the business. Since there is no finding by the AO that the interest claim is not for the purpose of business, in my opinion, invoking section 14A and disallowance on on a proportionate basis is not correct. As seen from the record also, most of the funds were borrowed in earlier years, substantial amount was also invested in earlier years. There seems to be no disallowance in earlier years u/s. 14A. In view of that, the disallowance u/s. 8D(2)(ii) cannot be sustained. Coming to the issue of disallowance u/s. 8D(2)(iii) i.e., 0.5% on the average investments, assessee’s contention was that no such disallowance was warranted, as no income was earned during the year. However, it cannot be stated that assessee has not utilised its personnel and efforts to make investments in the shares. There will be some expenditure involved, which cannot be quantified. Therefore, Rule 8D(2)(iii) provides for estimation of expenditure for 0.5% of average investments.

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• 2017 (3) TMI 1324
  Capitalization of expenditure under repair and maintenance account - whether entire expense is incurred to maintain existing assets and no new asset has come into existence ? - Held that:- It is not in dispute that the assessee was already having the asset which was reconstructed and repaired. The matter of controversy has duly been covered by the above said law in which such kind of repair has been treated as revenue in nature. In view of the said circumstances we are of the view that the finding of the CIT(A) on this issue is wrong against law and facts and is not liable to be sustainable in the eyes of law, therefore, finding of the CIT(A) on this issue has been ordered to be set aside and the expenditure incurred by the assessee on account of repair and renovation etc. of the Mumbai office and the amount of which was paid to M/s. Romi Interior has been allowed as revenue expenditure. Accordingly, this issue is decided in favour of the assessee against the revenue. TDS u/s 195 - Disallowance u/s.40(a)(ia) - non deduction of TDS on professional fee - non taxability in India under India - U.K. DTAA - Held that:- On appraisal of the Article 17 we are of the view that the same is nowhere applicable in the present case being Mr. Arnold Allen nowhere received the said amount in the capacity as a member of Board of Director of the company. He received the said amount on account of service rendered by him which is professional in nature. There is no iota of evidence on record to which it can be assumed that Mr. Arnold Allen was having fixed place in India. No doubt the said payment falls in view of Article 15 of the Double Taxation Avoidance Agreement and accordingly, this payment is not liable to be taxed in India. Accordingly, this issue is decided in favour of the assessee against the revenue.

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• 2017 (3) TMI 1323
  Additions made u/s 153A - addition u/s 40A - Held that:- AO has completed the assessment and made the addition in dispute without any incriminating material found during the search and seizure operation and the addition in this case was purely based on the material already available on record. Hence, the addition in the case is deleted. See Commissioner of Income Tax (Central) -III Versus Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT ] - Decided in favour of assessee

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• 2017 (3) TMI 1322
  Disallowance of deduction u/s 10A - reduce communication charges, insurance & professional charges both from the Export turnover as well as total turnover - Held that:- Internet charges have to be excluded both from the export turnover as well as from the total turnover while computing deduction u/s 10A of the Act. The Hon’ble Bombay High Court in case of CIT vs. Gem Plus Jewellery (2010 (6) TMI 65 - BOMBAY HIGH COURT ) held that communication charges attributable directly to the export of article or thing outside India has to be excluded both from export turnover as well as total turnover while computing exemption u/s 10A of the Act. In view of the above, we uphold the order of the CIT(A) and dismiss the ground raised by the revenue. TP adjustment - selection of comparable - Held that:- As the revenue is objecting to exclusion of these 8 companies as comparables while the assessee is insisting to inclusion of four companies as comparables, we revert this issue back to the file of the TPO to re-do the issue after considering the submissions of the assessee and the assessee may be given opportunity of being heard in the matter. Accordingly, ground allowed for statistical purposes.

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• 2017 (3) TMI 1321
  Vladity of assessment u/s 153A - Held that:- AO has completed the assessment and made the addition in dispute without any incriminating material found during the search and seizure operation and the addition in this case was purely based on the material already available on record. Hence, the addition in the case is deleted and the ground raised by the assessee in the appeal is allowed.

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• 2017 (3) TMI 1320
  Nature of receipt received on leasing of the immovable property - "Income from House Property" OR "Profits and Gains from Business" - Held that:- In the Leave and License Agreement, the total consideration has been stipulated for letting out the properties and whatever amenities mentioned in para 26 of this agreement, nothing can be worked out as to how much money was to be received for providing these facilities. Therefore, whatever consideration was received on account of Lease and License Agreement, the entire receipt can only be treated as income from house property and not as income from business. So far as the income received by virtue of another agreement i.e., Agreement for Hire of Amenities, it can only be called to be business income. Therefore, we are partly modifying the order of the CIT(A) and direct the Assessing Officer to recompute the income from house property as well as the business income of the assessee for providing certain amenities in terms indicated above.

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• 2017 (3) TMI 1319
  Disallowance made u/s 14A - whether the assessee has not earned any exempt income during the relevant Assessment Year? - Held that:- The investments were made purely on account of commercial necessity and as no exempt income was earned from the investment so made, the provisions of Section 14A will not applicable to the case of assessee. CIT(A) has not erred in deleting the disallowance made under Section 14A of I.T. Act holding that the assessee has not earned any exempt income during the relevant Assessment Year. - Decided in favour of assessee

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• 2017 (3) TMI 1318
  Revision u/s 263 - Applicability of section 11(4) - disallowance of provision for gratuity - Held that:- In the instant case, the assessee is running a hospital and medical college, both of which fall under the terms ‘charity’ within the definition of charitable purposes as defined in section 2(15) of the I T Act. Section 11(4) is attracted only in a situation where the “property held under trust” includes a “business undertaking”. Since the assessee is not having any ‘business undertaking’, section 11(4) will not be attracted to the facts and circumstances of the case. Hence, the CIT erred in invoking the provisions of section 11(4) of the I T Act. Sub-section (4) of section 11 can be invoked only if the income determined by the Assessing Officer is in excess of the income as shown in the accounts of the undertaking. Any disallowance of expenditure is not hit by subsection 4 of section 11. Section 11 (4) is attracted only in a situation where the income determined by the Assessing Officer is in excess of the income as shown in the accounts of the undertaking; i e; only if there any income which is hidden from the books of accounts. In assessee’s case, issue in question is disallowance of provision for gratuity. The provision for gratuity has already disclosed in the books of account. The total income to be determined even after disallowance of provision for gratuity is Nil. Disallowance of provision for gratuity will not result in a situation where income determined by the Assessing Officer is in excess of the income as shown in the accounts of the assessee. Commissioner of Income Tax has erred in invoking section 263 since the order passed by the Assessing Officer u/s 143(3) was not prejudicial to the interest of the revenue. In the return of income, the assessee had declared total income at Nil. Even after disallowance or provision for gratuity, the total income is Nil as there is already excess utilization or 16.32 crorcs. Hence, the order passed by the Assessing Officer cannot be said to be prejudicial to the interest or the revenue. - Decided in favour of assessee

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• 2017 (3) TMI 1317
  Validity of reopening of assessment - Audit Objection relied upon - Held that:- Neither the AO nor the CIT(A) has mentioned which material facts necessary for the assessment of the assessee were not fully and truly disclosed by the assessee. There may be an Audit Objection raised by the Revenue Audit but even the Audit Objection itself is based on the material already available to the AO at the time when he passed assessment order dated 19.12.2007 u/s 143(3) of the Act/ Rectification order dated 10.03.2008 u/s 154 of the Act. It is not the case of the AO or the CIT(A) that the Audit Objection was based on any fresh material which was not already disclosed by the assessee. On perusal of the orders of the lower authorities and on consideration of materials available on record, we do not find any fresh material, not already disclosed by the assessee that led to the objection raised by Revenue Audit or which resulted in initiation of re-assessment proceedings. Revenue has failed to make a case that there was failure on the part of the assessee to disclose all material facts fully and truly.

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• 2017 (3) TMI 1316
  TPA - working capital adjustment - Held that:- The working capital adjustment is required to be provided for bringing the comparables and the assessee at par for benchmarking the international transactions otherwise rationale behind the comparability for the purpose of benchmarking would get frustrated. However, in order to provide the working capital adjustment to the assessee vis-à-vis comparables, assessee shall provide the complete audit pertaining to the working capital deployed to identify the difference to the margins earned by the assessee and the comparables. And the assessee shall also be at liberty to bring on record the evidence to demonstrate the difference in working capital deployed for working out further difference in the margin earned by assessee vis-à-vis comparables. So, we set aside the order passed by TPO/DRP denying the working capital adjustment to the assessee to decide afresh by the TPO by providing an opportunity of being heard to the assessee. Treating foreign exchange gain/loss as non-operating in nature - Held that:- DRP treated foreign exchange gain/loss as non-operating in nature by relying upon Notification of CBDT issued on 18.09.2013, which is a notification on ‘Safe Harbour Rules’. As it is apparent from the date of Notification of the Rule relied upon by the ld. DRP dated 18.09.2013, the same is not applicable to the case of the assessee which is qua Assessment Year 2009-10. So, in view of the matter, order passed by TPO/DRP in not considering the foreign exchange gain / loss as operating in nature is not tenable in the eyes of law, hence hereby set aside. Ld. TPO is directed to treat the foreign exchange gain / loss as operating in nature in calculating the operating margin of the assessee as well as final comparable companies Selection of comparable - Held that:- The assessee being a hardware designer, a captive service provider involved at the design and development stage only with a limited scope of work and is not involved in the process of conceptualization of any products or works and works only on the specification provided by the STE Group for the implementation of IC design, its maintenance, verification and software development. So, the role of STE is that of a contract captive design centre and as such, the findings of the TPO in this regard cannot be interfered with. Basis of high risk profile, nature of services, number of employees, ownership of branded products and giant status of the company need to be matched with that of assessee to be selectied for final list of comparable. Expenditure on time based licences - revenue v/s capital - Held that:- When the aforesaid fixed licences were rented for a limited period only which is less than one year, no enduring benefit accrues to the assessee nor any ownership right vests in the assessee. So, these expenses, to our mind, are in the nature of revenue expenses incurred for the purpose of business. Moreover, one time expenditure to purchase time based software licenses cannot be deferred and as such, are revenue expenses to run the business. So, the AO is directed to re-examine the issue accordingly and as such, this ground is determined in favour of the assessee. Depreciation on goodwill - Held that:- It has not been disputed by both the ld. Representatives of the parties that the judgment cited as Goetze (India) Ltd. [2006 (3) TMI 75 - SUPREME Court] as relied upon by DRP is not applicable to the facts and circumstances of the case and when the issue has been raised during assessment proceedings, though no depreciation was claimed in the return of income, AO was duty bound to decide this issue. So, we hereby restore this ground to the AO to decide afresh after providing an opportunity of being heard to the assessee. Accordingly, this ground is determined in favour of the assessee

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• 2017 (3) TMI 1315
  TPA - selection of comparable - Held that:- We find merit in the claim of the assessee that the margins of concerns with such huge turnover are not comparable with the margins of the assessee which is a limited risk entity. Accordingly, we direct the Assessing Officer to exclude the margins of Infosys Systems Ltd. from the final set of comparables in order to benchmark the international transaction undertaken by the assessee Pre-operative cost included as part of the operating cost while determining the PLI of the assessee - Held that:- The date of registration in the present case is 17-06-2005 and the Associated Enterprise has compensated the assessee for the services provided on cost plus markup basis w.e.f. 01-07-2005. The earlier costs incurred by the assessee for setting up of the business, i.e. for rent, employee cost and administrative expenses cannot form part of the operating cost of the assessee, as the understanding between the parties decide the date from which the assessee would be reimbursed the cost with markup. Accordingly, we hold that the cost of 39,14,814/- which is the pre-operative expenditure incurred by the assessee, i.e. before starting its activity of providing services to its Associate Enterprise is to be excluded from the operating cost while computing the operating profits. We find before the Hyderabad Bench of the Tribunal in M/s. Market Tools Research Pvt. Ltd. Vs. DCIT [2014 (2) TMI 312 - ITAT HYDERABAD] similar issue of pre-operating expenses arose, where the assessee was incorporated on 04-06-2004 and the agreement was entered with the Associated Enterprise on 01-09-2004. The question was in respect of the pre-operative expenses prior to the date of the agreement and it was held that there is no question of considering the preoperating expenses as part of the operating cost. Similar proposition has been laid down by the Bangalore Bench of the Tribunal in KHF Components Pvt. Ltd. Accordingly, we direct the Assessing Officer to exclude the pre-operative expenditure from the operating cost and also similarly make adjustments, if any, in the case of comparable companies finally selected, to benchmark the international transaction of the assessee

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• 2017 (3) TMI 1314
  Reference made u/s 142(2A) - special audit - non-granting of pre-decisional hearing on pre- decisional stage to the assessee before making reference u/s 142(2A) - Held that:- We find that the issue raised in the present appeal is squarely covered by the ratio laid down by the Tribunal in the case of ITO Vs. Vilsons Particle Board Industries Ltd. (2017 (1) TMI 263 - ITAT PUNE ) and in the absence of any opportunity given to the assessee to show cause as to why special audit under section 142(2A) of the Act should not be carried out in the case of assessee i.e. at the pre-decisional stage, by the Assessing Officer, the special audit conducted in the case is without jurisdiction and consequently, the assessment order passed is beyond the stipulated date, because time taken for special audit, is invalid. Since assessment order is passed beyond period of limitation and hence, is invalid and bad in law. Accordingly, we hold so - Decided in favour of assessee

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• 2017 (3) TMI 1313
  Addition u/s 50C - valid transfer through a registered deed by the assessee (through its power of attorney holder) in favour of Shri Ratan Singh - Held that:- In the present case, the facts are on a stronger footing as the capital contribution is evidenced by a deed of partnership and the same would be considered as a transfer in relation to capital asset in terms of Section 2(47) read with section 45(3) of the Act. Therefore, we agree with the finding of the ld CIT(A) that the liability to pay tax on capital gains, if any, arises in the hands of the appellant, when the property (purchased by the appellant) was transferred to the books of the partnership firm. Thus, the capital gains, if any, in the hands of the appellant would arise in FY 2006-07 under the provisions of section 45(3) of the IT Act i.e. in the year when such property is transferred to the books of the firm as capital contribution. Hon’ble Bombay High Court in case of CIT vs. A.N. Naik Associates (2003 (7) TMI 46 - BOMBAY High Court ) wherein the Hon’ble Court have examined the provisions of Section 45(4) of the Act. It held that the expression “otherwise” used in section 45(4) has to be read with the words transfer of capital assets by a distribution of capital assets, if so read, it becomes clear even when a firm is in existence and there is a transfer of capital assets, it comes within the expression “otherwise” as the object of the amending Act was to remove the loophole which existed whereby capital gain tax was not chargeable. In the instant case, the firm continue to exist and the subject land has been transferred by the firm (as we have held above) in favour of one of the partners of the firm, Shri Ratan Singh. Therefore, it is for the Revenue to decide whether such transfer in favour of Ratan Singh is taxable in hands of the firm under section 45(4) of the Act or not. To that extent, the above findings of ld CIT(A) stand modified. In light of above discussion taking into consideration the entirety of facts and circumstances of the case, it is the firm in whose name the asset stood prior to the date of the transfer which has transferred the asset (and not the assessee) vide the sale deed dated 12.05.2009. Therefore, it is clear that the assessee cannot be brought to tax in respect of such transfer.

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• 2017 (3) TMI 1312
  Non-adjustment of long term capital loss on sale of listed shares against taxable long term capital gains of sale of unlisted shares - STT was not paid and the transactions were outside the purview of section 10(32) - Held that:- The exercise undertaken by the assessee in selling the listed shares of its group concern GGDL in off market transaction is acceptable mode of selling the shares. Once the transaction has been undertaken by the assessee as business decision, then simply because the said transaction could be routed through Stock Exchange does not justify the stand of authorities below in not allowing the set off of loss arising from off market transaction on which no STT was paid against the gain arising on sale of unlisted group companies, on which also no STT is to be paid. Applying the rule of li teral interpretation to the provisions of the Act i.e. section 10(38) of the Act and section 88 of the Finance (No.2) Act, 2004, it is clear that STT is to be paid on such transaction which are entered into through recognized Stock Exchange. The Section does not provide that each transaction of sale of listed transaction is to be routed through Stock Exchange. Applying the said principle to the facts of the case, where the shares of group entity which was a listed company i.e. GGDL were sold in off market transaction, then no STT is to be paid and the provisions of section 10(38) of the Act are not to be applied and consequently, set off of loss arising on sale of GGDL against the income from long term capital gains arising on sale of unquoted shares cannot be denied. Whether the transaction to be a colourable device adopted by the assessee in order to adjust the loss against the gain arising in its hands during the year, wherein the shares were sold to sister concern? - Held that:- We have already referred to the factual aspects of the issue where the shares of GGDL were sold to sister concern BVHPL in order to settle the loan raised from the said concern, the said concern was not 100% subsidiary of the assessee but the assessee had only 24% shareholding in the said group company. In order to maintain the shares of listed group concern GGDL within group, the decision taken by the assessee to arrest the loss arising on account of liability to pay interest on the loan raised from BVHPL cannot be doubted. It is a business decision taken by the assessee to arrest the losses and the same cannot be called as colourable devise. Accordingly, we reverse the findings of Assessing Officer and CIT(A) in this regard. Colourable device - whether by selling the shares to its own subsidiary, at prices above or below the book value, the assessee was manipulating the income to reduce its tax liability? - Held that:- First of all, as decided in the paras hereinabove, the shares have not been sold to subsidiary of the assessee but to a concern from whom the assessee has raised loan to the extent of 18 crores and the decision was taken to repay the loan and arrest the payment of interest on such loans, the shares of the group concern were sold in off market transaction to BVHPL. The said transaction is not a colourable device. Further, the assessee has sold the shares on the market price prevailing on the date of sale and no fault can be found with such transactions undertaken by the assessee. In case as against the market value, the other concern had purchased the shares at a higher value, then it would be questionable, but it is not so, in the present case and hence, we find no merit in the orders of authorities below in holding that the loss claimed by selling the shares of GGDL to its 100% subsidiary below the book value should be ignored while setting it off against the other income, if any, in current year or for carry forward and set off in subsequent years. The loss was worked out at (-) 2,75,83,524/-. We reverse the orders of Assessing Officer and CIT(A) in this regard and hold that the total loss arising on the said transaction can be adjusted against the gain arising on sale of unquoted shares during the year and balance loss can be carried forward and set off against any other gain arising in the subsequent years. Assessee appeal allowed.

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• 2017 (3) TMI 1311
  Long Term Capital Gain - nature of land - Held that:- Appellant had declared agricultural income in earlier years and the same has been accepted by the department also; Sale deed produced by the assessee clearly shows that the land sold is an agricultural land and Tehsildar certificate was also produced by the assessee confirming the fact that land is beyond 8 kms from the outer limit of Municipal Corporation. It is case where assessee has submitted all the information and evidences in support of its contention and these evidences also stand confirmed by the independent enquiry by the AO even in the remand proceedings and there is nothing adverse, hence, the action of the ld. CIT(A) in deleting the addition in dispute is correct one which does not need any interference on our part. Therefore, in the background of the aforesaid detailed discussions, we are of the view that Ld. CIT(A) has passed a well reasoned order, hence, we uphold the same. Accordingly, the grounds raised by the Revenue stands dismissed.

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• 2017 (3) TMI 1310
  Waiver of penalty u/s 273B - Levy of penalty u/s. 271D - violating the provisions of section 269SS - Assessee is a Co-operative credit society and has accepted cash deposits from its members exceeding 20,000/- in single transaction - Held that:- It was a widespread, even if erroneous, belief that the provisions of Section 269 SS do not apply to the credit cooperative societies, and it is also evident from the fact that even the CBDT has taken notice of imposition of resultant penalties in large number of cases, and issued a circular highlighting that these penalties should not be imposed indiscriminately and without considering the scheme of Section 273 B. Such a widespread belief, by itself, can be viewed as a reasonable cause for assessee's bonafide belief. Having said that, we may also add that it is not a case where even after the assessee after having come ' to know of the correct legal position due to income tax department's action against him continues to follow the same practice. Once the assessee comes to know as to what is the correct legal position or at least the revenue's stand on that issue, there is no question of his having bonafide but incorrect belief about the legal position. That is a different situation and we are not at all concerned with such a situation in the present case. This decision cannot have any precedence value in such a situation. In view of the totality of the facts and explanation offered, we are of the considered view that the assessee has been able to show reasonable cause for inadvertent violation of provisions of section 269SS of the Act. Accordingly, the impugned order is set aside and the appeal of the assessee is allowed.

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• 2017 (3) TMI 1309
  Addition u/s 14A - Held that:- We direct the ld. AO to consider disallowance in terms of Rule 8D(2)(iii) of the I.T Rules by considering only those investments, which had yielded dividend income. Hence, the ground raised by the revenue is partly allowed.

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• 2017 (3) TMI 1308
  Addition u/s 68 - Held that:- The assessee has fully proved its burden and discharged the onus upon the Department, however, no contrary evidence was shown by the AO which will prove that the transactions were not genuine, therefore, the addition made by the AO and confirmed by the Ld. CIT(A) is totally unwarranted and the same needs to be deleted. Accordingly, we delete the addition in dispute and allow this ground of appeal of the assessee.

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• 2017 (3) TMI 1307
  Benefit of deduction u/s. 80IB(10) - assessee could not furnish occupancy/completion certificate from the competent authority before the due date i.e. 31-03-2012 - Held that:- It is an undisputed fact that the assessee received commencement certificate from PMC in respect of its housing project on 27-07-2006. However, till that time permission for use of land for nonagriculture purpose was not received from the Collector. As per the provisions of section 42 of Maharashtra Land Revenue Code, 1966 the land used for agricultural purpose cannot be used for any nonagricultural purpose unless permission is granted by the Collector. Under such circumstances even if the housing project of the assessee is approved by the PMC, the assessee could not have started construction of the project unless NA permission is received from the Collector. In the present case, since, the permission from Collector was received subsequent to the issuance of commencement certificate by PMC, the later date shall be deemed to be the date of approval of project and accordingly the period of 5 years for completion of project as envisaged u/s. 80IB(10)(a)(iii) shall be computed from the date NA permission is granted. Accordingly, for claiming deduction u/s. 80IB(10) the due date of completion of assessee’s housing project is 31-03-2013. Thus, in view of our above findings ground raised in the appeal by the Department is dismissed. The housing project of the assessee was approved for total 128 flats. 72 flats in Building A (Wings A and B) and 56 flats in Building B (Wings C and D). Architect under whose supervision housing project is constructed, had certified that 36 flats in Wing A and equal numbers of flats in Wing B including lower and upper parking are complete. Thus, it is evident that the assessee had applied for issuance of occupancy certificate in respect of 72 flats of Building A, well before the due date. The PMC granted partial occupancy letter in respect of 40 flats, i.e. 26 flats in Wing A and 14 flats in Wing B on 27-07-2012. Again vide communication dated 27-12-2013 the PMC granted occupancy letter in respect of 19 flats, i.e. 3 flats in Wing A and 16 flats in Wing B. Thus, out of 128 flats, the assessee received completion/occupancy certificate in respect of 115 flats. The final occupancy certificate in respect of 13 flats was withheld by the PMC for non-handing over of amenity space. There is no document on record to show that occupancy/completion certificate was not issued by the PMC on account of incomplete flats. The assessee had applied for grant of completion/occupancy certificate in respect of entire 128 flats well before due date. Delay caused in issuance of completion/occupancy certificate by PMC cannot be attributed to the assessee. - Decided against revenue

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• 2017 (3) TMI 1306
  Eligibility for deduction u/s l0A - Held that:- STPI approval was received by the assessee company on 23.09.2008 in the middle of the previous year relevant to the AY 2009-10. We further note that in the AY 2009-10 it was held that profits derived from the export of computer software from and after the date of approval of the STP unit on 23/09/2008 will be eligible for deduction u/s l0A. In the A Y 2009-10 the disallowance of deduction u/s l0A was confirmed because the assessee failed to provide details before the AO to prove that the profits derived during the A Y 2009-10 are from software exports after the date of approval. Since, STPI approval was received in the previous year relevant to A Y 2009-10, therefore, the profits derived from export of computer software during the previous year relevant to AY 2010-11 will be eligible for deduction u/s l0A provided other conditions of sec. l0A are fulfilled by the assessee company. In the instant AY 2010-11 there is no dispute that the other conditions of see lOA are fulfilled by the assessee. We further note that that in the A Y 2011-12 the AO has allowed the assessee’s claim of deduction u/s 10A. Thus AO is not justified in disallowing the claim of deduction u/s 1OA. - Decided in favour of assessee

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• 2017 (3) TMI 1305
  Reopening of assessment - accommodation entries - Held that:- In the reasons recorded by the AO there is no mention of names of the persons who are alleged to have given the accommodation entries. It simply says that "the concern party" has provided the accommodation entries to various parties. However, it does not specify as to which concerned party has provided the accommodation entries. The reasons recorded also does not mention as to who are the persons whose statement was recorded and what those persons have stated in their statements and whether they have stated anything specifically against the appellant. We further find that the name of the entry provider is not mentioned in the reasons recorded by the A.O. We further find that the AO has mentioned that as per the information available, the amount of RS.30,OO,000/- was an accommodation entry. Hon'ble Delhi High Court in the case of Haryana Acrylic Manufacturing Co. Vs. CIT [2008 (11) TMI 2 - DELHI HIGH COURT] has held that if in the reasons supplied to the assessee, there was no allegation that it had failed to disclose full and truly all material facts necessary for assessment and because of its failure there had been escapement of income Chargeable to tax, reopening of assessment after expiry of four years' from end of relevant assessment year was without jurisdiction. - Decided in favour of assessee

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• 2017 (3) TMI 1304
  Penalty u/s 271(1)(c) - Held that:- Since the very addition which is the basis for levy of penalty has been deleted by the Tribunal in the quantum appeal, therefore, the penalty does not survive. We, therefore, do not find any infirmity in the order of CIT(A) cancelling the penalty levied by the Assessing Officer u/s 271(1)(c) of the Income Tax Act. Accordingly, the order of the CIT(A) cancelling the penalty is upheld and the grounds raised by the Revenue are dismissed. - Decided in favour of assessee.

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• 2017 (3) TMI 1303
  Disallowance of depreciation on goodwill - slump sale - Held that:- The balance consideration out of slump sale consideration after adjusting the value of asset and liabilities is, the value of goodwill in the hands of the assessee, which is intangible assets, on which the assessee is eligible to claim the depreciation. Accordingly, we hold so. See Triune Energy Services Private Limited & Ors. Vs. DCIT [2015 (11) TMI 1218 - DELHI HIGH COURT ] - Decided in favour of assessee

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• 2017 (3) TMI 1302
  TPA - selection of comparable - Held that:- Assessee is a part of Siemens Worldwide Group and engaged in the business of ITES services relating to back office operation on contract basis to its Associated Enterprises (AEs). Thus the assessee is a BPO and providing data services in respect of accounts and finance to its overseas group companies and companies having different business model of dissimilar functionality as that of assessee need to be excluded from final list of comparable. Exclusion of expenditure incurred in foreign currency from export turnover while computing deduction under Section 10A - Held that:- We direct the AO to exclude the above mentioned expenses both from the export turnover as well as from the total turnover while calculating deduction u/s 10A of the Act. SEE CIT v. Tata Elxsi Ltd. [2011 (8) TMI 782 - KARNATAKA HIGH COURT] Carry forward of losses of STPI unit denied before computing the deduction of the other STPI unit under Section 10A -Held that:- By following the decision in the case of Yokogawa India Ltd. (2011 (8) TMI 845 - Karnataka High Court) as well as the decision Mindteck India Ltd. ( 2015 (4) TMI 56 - ITAT BANGALORE), we decide this issue in favour of the assessee and direct the Assessing Officer to allow the carry forward of losses of the one unit without setting off against the profit of the other unit for the purpose of computing the deduction under Section 10A of the Act.

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• 2017 (3) TMI 1301
  Levy of fees under section 234E in intimation issued under section 200A(1) - default in furnishing the TDS statements - Held that:- As decided in Maharashtra Cricket Association Vs. DCIT(CPC)-TDS, Ghaziabad [2016 (10) TMI 104 - ITAT PUNE] the amendment to section 200A(1) of the Act is procedural in nature and in view thereof, the Assessing Officer while processing the TDS statements / returns in the present set of appeals for the period prior to 01.06.2015, was not empowered to charge fees under section 234E of the Act. Hence, the intimation issued by the Assessing Officer under section 200A of the Act in all these appeals does not stand and the demand raised by way of charging the fees under section 234E of the Act is not valid and the same is deleted. The intimation issued by the Assessing Officer was beyond the scope of adjustment provided under section 200A of the Act and such adjustment could not stand in the eye of law. - Decided in favour of assessee

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• 2017 (3) TMI 1300
  G.P. addition - no rejection of books of accounts - Held that:- There is no finding by any of the authority below about any specific defects in the books of account, and yet an addition has been made to the profit disclosed by the assessee. The business situations can never be so static as to permit a uniform gross profit rate over the years. The gross profit rate being too low cannot be reason enough to reject the books of account, and make gross profit addition. Cannot, therefore, uphold the action of the authorities below in adding the value of debit notes of 4,19,175/- only on the ground that such an addition will result in reasonable gross profit. There is no reason to doubt genuineness and bonafides of these debit notes. - Decided in favour of assessee

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• 2017 (3) TMI 1299
  Addition of bogus purchases - Held that:- AO has noted that despite various opportunities, the assessee did not produce the parties for verification nor has produced any details to support the purchases made. Ld. CIT(A) has also noted that assessee was not able to furnish details regarding the address of the parties as well as confirmations even during the Appellate Proceedings. Before us also assessee has not been able to furnish any evidence with respect to purchases. In view of the aforesaid facts, we find no reason to interfere with the order of ld. CIT(A) and thus, the ground of the assessee is dismissed. Disallowance u/s 40A(2)(b) - Held that:- In the present case out of total salary of 16,80,000/-, AO has disallowed 50% of the salary holding to be excessive and disproportionate. Before us, it is assessee’s submission that Mrs. Divya Kharbanda has been paid similar salary in earlier years and she has been drawing same salary since F.Y. 2007-08 and also in subsequent years and in none of the earlier or subsequent years the disallowance on account of salary being excessive has been made by the Revenue authorities. We further find that Hon’ble Bombay High Court in the case of CIT Vs. Indo Saudi Services (Travel) P. Ltd (2008 (8) TMI 208 - BOMBAY HIGH COURT) after considering the CBDT Circular No.6-P, Dt. 6th July, 1968 has held that no disallowance of expense can be made when the person to whom the payment is made is also assessed at higher rate and there is no evasion of tax. Thus we are of the view that in the present case, no disallowance of expenses u/s 40A(2)(b) is called for and therefore direct its deletion. - Decided in favour of assessee

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• 2017 (3) TMI 1298
  Reopening of assessment - addition made on account of excess stock found in the year under appeal (after setting off income offered by the assessee in the asst. year 2011-12) - Held that:- As per the sworn statement of Sri E.V. Subbiah, partner of the assessee firm which was recorded during the course of survey conducted on 14.6.2011, he had voluntarily agreed that ‘the total book stock was 48276.885 gms, but, as per physical inventory taken, it was 50963.82 gms. The excess stock of 2686.935 gms was voluntarily admitted as unexplained investment and offered as additional income [Rs.45,67,900/-] for the assessment year 2011-12. which shall be in addition to the regular book profit. The above additional income of 45,67,900/- was quantified by the assessee on the basis of adopting the rate at 1700/gms at the time of survey operation. Based on the established scheme of valuation of stock, the AO was of the view that the value of gold should have been adopted at the then prevailing market value in Bangalore on the date of survey i.e., on 14.6.2011 which was around 2105/gm as against the valuation adopted/agreed upon by the partner of the assessee firm at 1700/gm at the time of survey (supra). Accordingly, the AO had valued the excess stock found at the time of survey at 2105/gm which worked out to Rs,56,55,999/- [2686.9354 x 2105] and the same was brought to tax as additional income of the assessee for the AY 2012.13. However, while concluding the assessment, the AO took care and also fair in giving a deduction of 45,67,790/- [being the income declared by the assessee for the AY 2011-12 in adopting the value of excess stock of 2686.9354 gms only at the rate of 1700/gm]. This very fact has not been refuted by the assessee either. Thus, we are of the view that the stand taken by the AO and, subsequently, confirmed by the CIT (A) doesn’t require any interference by this Bench. With regard to the assessee’s objection to the effect that the reopening of the assessment u/s 148 of the Act was bad in law and requires to be quashed etc., we find that the issue has been elaborately deliberated upon by the CIT (A) in his impugned order which, in our view, doesn’t warrant any intervention. In essence, this ground of the assessee firm is dismissed.

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• Customs

• 2017 (3) TMI 1349
  Rectification of Mistake application - DEPB scrips were obtained on the basis of forged documents and the appellants were the bona fide transferee of the said scrips - Held that: - a rectification of mistake application can be entertained in the case the apex court has laid down in law, even if the said decision is subsequent to the decision in which the rectification of mistake application has been filed - the statement that ROM has been filed against the decision of the Tribunal in the case of Alpha Chemie Sapthagiri in appeal No. C/1122/04 has not been substantiated by learned AR. It is seen that in the order dated 17.10.2016, no reliance was placed on the decision of the Tribunal in the case of Alpha Chemie Sapthagiri solely on the ground that a rectification of mistake application has been filed. Since learned AR has not been able to produce any rectification of mistake application, it is apparent that there has been a mistake in the order dated 17.10.2016 - ROM application allowed - decided in favor of appellants.

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• 2017 (3) TMI 1348
  Skillful grafting to deceive the tribunal - Valuation of imported goods - advance royalties - related party transaction - non-inclusion of advance royalties paid to overseas supplier, a related person, and suppression of this fact at the time of import - confiscation - redemption fine - penalty - Held that: - a skilful grafting has been attempted with intent to deceive the Tribunal or that a master of the sleight, for reasons best known to such person, has inveigled the review committee into raising this ground incorrectly. In either situation, it does not do credit to the integrity or the expertise of officials who constituted this particular Review Committee. In the most polite terms; it can only be described as a matter of shame and it is expected the Central Board of Excise & Customs take steps to ensure that the incompetence and ineptitude is reflected in their records and that other officers are impressed upon the need to guard against such demonstrated deceit. Confiscation is a proceeding that follows the determination of goods having offended specific provisions of the Customs Act, 1962. With such confiscation, and consequent redemption, the offending goods lose that pejorative qualification and are regularised. When goods are subject to confiscation for misdeclaration of value, the offence of misdeclaration and its attendant tentacles get erased. Payment of duty is, thereby, on goods that are no longer offending and, hence, cannot be imposed with another penalty u/s 114A. Adjudicating authorities should be mindful of this position and choose the penalty that they wish to impose. With the mandatory nature of section 114A in the circumstances enumerated therein, the imposition of penalty u/s 112 would compromise recourse to section 114A - In the present instance, only one of the penalties could have been imposed and the adjudicating authority has, by adopting section 112, regularised the offence of misdeclaration to foreclose imposition of penalty under section 114A - penalty u/s 114A is mandatory and, by setting aside the penalty on the importers u/s 112, remand the matter back to original authority to determine the imposition of penalty afresh. Appeal allowed by way of remand.

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• 2017 (3) TMI 1347
  Benefit of N/N. 159/90-Cus dated 30th March 1990 - actual user condition - DEEC scheme - denial of notification on the ground of failure to use 'sodium cyanide' and 'dimethyl urea', imported without payment of duty, in manufacture of specified export goods - confiscation - penalty - interest - Held that: - Normally, such diversion to uses that are not permitted are a consequence of the premium commanded in the domestic market for such imported inputs - The penalty should have been of such magnitude as to erase any benefit accrued by the appellant-importer from the liberal regime of import under the two notifications. This has apparently not been borne in mind while imposing the penalties that were upheld in the impugned order. Likewise, the penalty on the Managing Director is equally harsh and must be tempered - Any offence relating to misuse of the imported goods is regularised by confiscation and release of confiscated redemption fine. The non-availability of the imported goods renders this impossible requiring recourse to the penalties for appropriate corrective - matter is remanded back to the original authority for reconsideration of the charging of interest and imposition of penalty - appeal allowed by way of remand.

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• 2017 (3) TMI 1346
  Imposition of penalty u/s 112 of the CA, 1962 - penalty on Shri Binod Kumar Yadav on the basis of the statement of a co-accused - smuggling - Betel-nuts - Held that: - it was found that the place of loading was Kuwari, which is not a Betel nut growing/trading area. And it was concluded that the goods were smuggled from Indo-Nepal border. It is significant to note that nobody claimed the ownership of the seized Betel nuts - there is no dispute that Shri Binod Kr.Yadav is the proprietor of Yadav Transport. The investigating officer recovered various documents, which has been discussed at length above. The ld.Counsel has not refuted the findings of the adjudicating authority except that the statement of the co-accused has no value in the eye of law. There are various materials available on record apart from the statements to implicate the appellant, therefore, the imposition of penalty is warranted - penalty on Shri Binod Kumar Yadav upheld - appeal dismissed - decided against appellant.

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• 2017 (3) TMI 1345
  Imposition of penalty u/s 114 of CA, 1962 on freight forwarder - During the course of movement of goods from the factory to the port of export, the seals of the container were broken and the refractory bricks were substituted by Red Sanders and fake seals were placed - Held that: - the department has not brought on record any specific evidence against the appellant to show the role played by him in substituting the goods en-route to the port of export. Since upon completion of the formalities of factory stuffing, the container was sealed in presence of Central Excise Officers, the appellant in the capacity of freight forwarder has complied with its obligation - substitution of goods en-route to the port cannot held the appellant responsible for imposition of penalty - penalty set aside - appeal allowed - decided in favor of appellant.

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• 2017 (3) TMI 1344
  Classification of imported goods - goods declared as “Nylon knitted fabric” and classified under CTH 60063100 - Revenue claims that the goods were not in the nature of “knitted fabrics” but were actually “Net fabrics” made out of Nylon (Polyamide) and was classified under CTH 58041090 - confiscation - penalty - Held that: - the re-classification of the goods was done on the basis of test report of the specific samples drawn for the consignment, the same is required to be upheld. The Original classification of the goods stands over ruled because the goods have been found to be not Knitted fabric but is “Net fabric”. The confiscation of the goods is sustainable only in respect of the goods covered under the Bill of Entry No. 5301915, dated 26.11.2011. The goods covered under this Bill of Entry were seized and provisionally released pending adjudication of the case. The imposition of redemption fine amounting to 12,50,000/- for this consignment u/s 125 of the CA, 1962 is upheld. It cannot be said that the mis-declaration was willful with intention to evade customs duty. Consequently, in the facts and circumstances of the case, the penalty imposed on the appellant is also reduced from 10 lakhs to 5 lakhs u/s 112 A read with Section 114 AA of the CA. Appeal allowed - decided partly in favor of appellant.

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• Service Tax

• 2017 (3) TMI 1371
  Levy of tax - Construction services - The pradhikaran under Rajiv Awas Yojna and Jawaharlal Nehru Urban Renewal Mission had provided the small units to the juggi dwellers without any cost or highly subsidised cost - the M.P Government has constructed the accommodation for the gandi basti people under the Central sponsored scheme which is attempted to clean India as per Prima Minister’s mission - Held that: - N/N. 28/2010-ST dated 22nd June, 2010, clarified that the services is provided to Jawaharlal Nehru National Urban Renewal Mission and Rajiv Awaas Yojana are exempted from the clutches of service tax - Further, vide F. No. 137/26/206-CX-4 dated 5th July, 2006, it was clarified that service tax would not be leviable on construction of complexes under question if their lay out does not require approval by an authority under any law for the time being in force - From the letter dated 30.1.2004 issued by the M.P. Urban Development department, it appears that the said construction was made under “Rajiv Gandhi basti Vikas karyakram” which was the Central sponsored scheme and the same is exempted from service tax as per Circular No.125/2010-ST dated 30th July 2010 - tax not levied - appeal allowed - decided in favor of appellant.

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• 2017 (3) TMI 1370
  Valuation - works contract - whether the free of cost material provided by the service receiver is required to be included in assessable value? - Held that: - an identical issue has come up before the Larger Bench of this Tribunal in the case of Bhayana Builders (P) Ltd. vs Commissioner of Service Tax, Delhi, [2013 (9) TMI 294 - CESTAT NEW DELHI (LB)], wherein the free material supplied by the service receiver was not included in the cost of the works contract. Disallowance of Composition Scheme for works contract service - Held that: - the issue has come up for consideration before this Tribunal in the case of Ahluwalia Contracts (I) Ltd. vs Commissioner of Central Excise, [2015 (7) TMI 855 - CESTAT NEW DELHI], wherein the Tribunal has remanded the matter to the adjudicating authority for de novo adjudication. Denial of exemption to the services provided to the SEZ Unit - Held that: - exemption under N/N. 4/2004-ST dated 31.03.2004 requires the approval of the SEZ developer/unit. The said approval was submitted by the assessee-Appellants, but the lower authorities have not taken any cognizance - matter needs remand for reconsideration. Appeal allowed by way of remand.

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• 2017 (3) TMI 1369
  Works contract - non-payment of service tax - the appellant has not been given the cum tax benefit, as no service tax was collected from service recipient M/s Jaya Jyothi Cements Pvt. Ltd. - Held that: - In the case of KNR Contractors [2010 (10) TMI 438 - CESTAT, BANGALORE], it is observed by the Tribunal that before proceeding to impose penalty the authority Is expected to ascertain whether the assessee has established reasonable grounds for failure/ default of the assessee. The matter was then remanded for considering the issue whether the benefit of Section 80 can be extended - In the present case, even after the conduct of investigation the appellant has not discharged the service tax liability along with interest, even though they were aware they are liable to pay the service tax. When the appellant contends that they have to be given cum tax benefit, they cannot raise the contention that the service tax has not been received from the service recipient The matter is remanded to the adjudicating authority to consider the issue of cum duty benefit only and revise the demand accordingly if eligible for the benefit. The penalties will then stand revised accordingly - appeal allowed in part by way of remand.

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• 2017 (3) TMI 1368
  Rectification of mistake - The applicant s claim that the mistake that have crept into the order is that even though the applicant is entitled to the benefit prescribed under the first proviso to Section 78 of the FA, 1994, the Tribunal in its order has not extended the said benefit to the applicant - Held that: - such claim has never been raised since the proceeding for recovery of service tax initiated against the Appellant. Undisputedly also, the issue was neither raised before any of the forums nor before this Tribunal and sought to be raised for the first time through this rectification application - The present relief, which the applicant seeks through the rectification application, would be possible only in exercise of the power to review the order, by reassessing/reappreciation of the evidence and undertaking detail examination of the records - ROM application rejected.

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• 2017 (3) TMI 1367
  Demand of tax under "Commercial Training and Coaching” services - extended period of limitation - Held that: - the appellant is mainly running courses leading to awarding of degrees by University of London and Allahabad Agriculture Institute, and which are recognised by certain Universities in India as mentioned in the brochure of AIU. However, the appellant itself does not issue any kind of diploma or degree, which is recognised by law for the time being in force. In other words, the appellant is not covered in the exclusions mentioned in Section 65(27) of the Act. Extended period of limitation - Held that: - the Department has not been able to produce any substantial evidence to indicate that there has been wilful suppression with intent to evade the service tax on the part of the appellant. Consequently, the liability of service tax against the appellant cannot be confirmed beyond the period of one year preceding the date of SCN. Appeal allowed by way of remand.

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• 2017 (3) TMI 1366
  Business Auxiliary Services - liability of tax - export of service - Held that: - when the services were provided as per the instruction of a person located abroad, the destination of service has to be treated abroad. The destination has to be decided on the basis of place of consumption and not place of performance - the services have been provided to foreign entities as per the agreement entered into and the beneficiary is such foreign entities. The amount as consideration for such services was also paid by the said foreign entities in convertible foreign exchange. Therefore, the services rendered by the appellants are squarely covered by the Export of Service Rules and there is no service tax liability on them. Reversal of CENVAT credit - Rule 6(3A) of CCR - Held that: - the value of exempted service was arrived at by the Original Authority as difference between sale price and cost of goods sold or 10% of the cost of goods sold whichever is more - in the absence of any other statutory formula to arrive at the quantum of Cenvat credit to be reversed on common input services, we find no impropriatory in the decision of the Original Authority in this regard - Regarding the contention of the Revenue that the appellant/assessee should not be allowed to utilize more than 20% of the total duty liability we note that there is no legal backing for such assertion. Appeal allowed - decided in favor of assessee.

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• 2017 (3) TMI 1365
  Mining work - appellant have undertaken the work of prospecting mineral deposit, de-watering of mineral, removal of over burden, raising of china clay exposed after removal of over burden and loading china clay - whether the activity of appellant will be classified under mining services or under Cargo Handling Service? - after the introduction of tax entry for ‘mining service’ the appellant were registered with the department and were discharging service tax applicable - Held that: - Having examined the scope of work undertaken by the appellant as mentioned in the SCN, we find that the same is covered under the tax entry under Section 65(105)(zzzy) of the Finance Act, 1994. The clarification dated 28.02.2007 issued by CBEC states that mining service covers cite formation and clearance, excavation and earth moving and various outsourced activities provided for mining - appeal allowed - decided in favor of appellant.

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• 2017 (3) TMI 1364
  Refund claim - Rule 5 of CCR, 2004 - CENVAT credit lying unutilised - Call centre services - Back office data processing services - denial on the ground that Revenue could not identify the specific classification of services rendered by the appellant to the foreign affiliates and as such these services were held as non-taxable - Held that: - on the same set of facts the Department sanctioned refund claims for the subsequent periods and accepted the fact that the appellants are providing taxable service for foreign clients and the accumulated Cenvat credit availed on input services are to be refunded to them. On this ground alone, the stand taken by the lower Authorities in the impugned order is liable to be set aside - matter is remanded back to the Original Authority who will examine the claim for sanction - appeal allowed by way of remand.

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• Central Excise

• 2017 (3) TMI 1363
  CENVAT credit - service tax in respect of GTA services for the transportation of traded goods - - Since the same truck is used for both, manufactured as well as traded goods, CENVAT credit of service tax on GTA is availed for the same truck and that no separate credit on GTA is availed by them for transport of traded goods - extended period of limitation - Held that: - it cannot be stated that the appellant has not cooperated with the Department and has suppressed facts - prior to inclusion of trading in the definition of exempted service, there was confusion as to whether it would fall under exempted service and whether the credit can be availed on input services used for trading activity - reliance was placed in the case of Krishna Auto Sales vs. CCE&ST, Chandigarh-l [2015 (10) TMI 979 - CESTAT NEW DELHI], where it was held that the issue was an interpretational one and extended period is not invokable - extended period not sustainable - The demand along with interest thereon for the normal period is sustained and the appellant is liable to pay the same - appeal disposed off - decided partly in favor of appellant.

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• 2017 (3) TMI 1362
  SSI exemption - use of brand name of others - The appellant is fixing the brand name “Autopal” on the said goods, though the said brand name is registered in the name of another entity of their group companies, which is known as “Autolite India Ltd.” - appellant claims that they were under bonafide beleif that the brand name can be used by them as M/s Autolite India Ltd. is a group company - Held that: - When the appellant has not informed the department/revenue that they were using the brand name of other group company, this is clearly a suppression of the fact - It makes no difference that M/s Autolite India Ltd. is a group company. In law it is differen entity - even after coming to know that the law does not permit them to take benefit of N/N. 08/2003, the appellant has not paid the duty of Central Excise confirmed against them. Therefore, their bonafides cannot be pronounced as beyond doubt - demand upheld - appeal dismissed - decided against appellant.

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• 2017 (3) TMI 1361
  Clandestine removal - mis-declaration - demand of duty with penalties - Held that: - It is on record that goods were lying in premises of the appellants un-accounted and they were manufactured without obtaining any Central Excise registration - there are confessional statements of partner(s) of the appellant-assessee that the appellant-assessee was engaged in unaccounted manufacturing and clearing of subject excisable/dutiable branded goods affixed with the brand name of some other person making said goods ineligible for SSI exemption benefit. Such goods were being cleared clandestinely without accountal instatutory records with effect from 1.6.2006 despite knowing that duty of Central Excise was imposed on packing/ repacking, labeling/ re-labelling of parts of automobiles w.e.f. June 1, 2006 - demand upheld - appeal dismissed - decided against appellant.

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• 2017 (3) TMI 1360
  CENVAT credit - denial on the ground that the said credit not used in or in relation to the manufacture of finished products in their Bharuch plant - Held that: - the issue is no more res integra and covered by the decision of Hon'ble Gujarat High Court in the case of Sintex Industries Ltd, Tribunal below rightly applied the above decision of the Supreme Court in the case of Maruti Suzuki Ltd. [2009 (8) TMI 14 - SUPREME COURT] to the facts of the present case as the assessee is entitled to credit on the eligible inputs utilized in the generation of electricity to the extent to which it is using the produced electricity within its factory which is registered for that purpose but not to the extent supplied to a factory which is registered for a different unit - penalty set aside - appeal allowed - decided partly in favor of assessee.

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• 2017 (3) TMI 1359
  SEZ unit - refund claim - N/N. 17/2011, dt.01.03.2011 - whether the subsequent approval of the legal service by the UAC could be held to be eligible to for refund of service tax paid on such service being sufficient compliance of the condition laid down under N/N. 17/2011-ST - Held that: - the issue is no more res integra as settled by the judgment of this Tribunal in Makers Mart’s case [2016 (2) TMI 258 - CESTAT NEW DELHI], where it was held that Refund cannot be denied merely for procedural lapse - appeal allowed - decided in favor of appellant.

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• 2017 (3) TMI 1358
  HSD - removal of duty free Diesel from EOU to DTA unit - penalty - request for waiver of penalty on the ground that the duty liability with interest having been discharged before the issue of SCN - Held that: - On a specific query from the bench, as to whether the appellant had informed to the departmental authority as to the existence of underground pipelines, the ld. Counsel admits fairly that it was not informed to the department - the adjudicating authority was correct in imposing equivalent amount of penalty on the appellant - appeal dismissed - decided against assessee.

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• 2017 (3) TMI 1357
  Interpretation of statute - Evasion of duty - Determination of annual capacity - Held that: - Section 3A(2) only embodies a rule of evide The presumption created under Rule 5 is similar to the one contained in illustration (d) (Illustration (d) – That a thing or state of things which has been shown to be in existence within a period shorter than that within which such things or state of things usually cease to exist, is still in existence) to Section 114 of the Evidence Act. nce which command the department to presume certain facts. Such presumptions are not unknown to law - Whereas presumptions are rules of evidence for determining the existence or otherwise of certain facts in issue in a litigation. Whether an assessee who chooses once to pay duty in terms of Rule 96ZP(3) can be compelled to pay duty calculated in accordance with the said rule for all times to come without any regard to the actual production? - Held that: - The only similarity between Rules 96ZO(3) and 96ZP(3) is that both the Rules seek to eliminate the benefit of the procedure under Section 3A(4) of THE ACT in cases of those assessees who choose to opt for levy and collection of excise duty in accordance with the sub-rules (3) which are exceptions to the general Rules of levy and collection of duties provided under Rules 96ZO and 96ZP. Appeal allowed - decided in favor of petitioner.

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• 2017 (3) TMI 1356
  SSI exemption - clubbing of clearances - natural justice - Held that: - though the case was made out on the basis of panchanama and statement of various persons but for making the defence by the appellant they are seeking to release the documents, the request of the appellant is very legitimate. Non supply of the documents tantamount to violation of principle of natural justice - appeal allowed by way of remand.

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• 2017 (3) TMI 1355
  Reversal of credit on input services proportionate to the trading activity - common input services were used for trading of goods as well as for manufacture. It appeared to Revenue that Rule 6 of CCR, 2004 was applicable only when the manufacturer or output service provider as the case may be is engaged in both manufacture of excisable goods and exempted goods or in providing output service and exempted services as the case may be and that trading activity was neither manufacture nor taxable service, and further that the Credit of Service Tax paid on Services attributable to trading was void ab-initio and there was no application of Rule 6 to trading activity - recovery u/r 14. Held that: - It is very clear that for recovery of Cenvat credit under said Rule 14 first it is to be established that Cenvat credit has been either taken wrongly or utilized wrongly. Further, the said Rule 14 has also been provided for recovery of amount mentions in Sub-rule (3) of Rule 6 of CCR under Explanation 2 under Sub-rule 3 of said Rule 6. The provision at Explanation 2 under Sub-rule (3) of said Rule 6 provide for recovery of Cenvat Credit which was admissible at the time of taking credit In the present case, admittedly, there is no allegation in the said SCN that the appellants had taken credit of any inadmissible Cenvat credit. Further the SCN dated 09/05/2011 states that Rule 6 of CCR, 2004 is not applicable in the present case. Therefore, the said SCN did not make out a case for invocation of provisions of Rule 14 of Cenvat Credit Rules, 2004. Therefore, SCN was not sustainable for the reasons that the contention in the SCN did not allow recovery of Cenvat Credit u/r 14 of CCR, 2004. Appeal allowed - decided in favor of appellant.

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• 2017 (3) TMI 1354
  CENVAT credit - scope of SCN - in the SCN even though the eligibility of Cenvat credit was proposed to be denied solely on the ground of delay in availing credit, but in the impugned order, the Ld Commissioner exceeded the brief by examining the eligibility of Cenvat Credit in light of the N/N. 102/2007-CUS dt 14.9.2007 - Held that: - In the SCN the only ground on which the Cenvat Credit was proposed to be denied and recovery proceeding initiated was that non availment of Cenvat Credit immediately after receipt of goods in their factory - raising the issue which is neither alleged in the SCN nor raised in any other manner would result into exceeding the brief which is not permitted - the impugned order is set aside to the extent of denial of credit beyond one year period - appeal allowed - decided partly in favor of appellant.

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• 2017 (3) TMI 1353
  Clandestine removal - The Revenue’s main case is that the appellant M/s Om Fragrance were engaged in manufacturing excisable goods namely ‘India Gold’ gutkha without obtaining any central excise registration - Held that: - the Commissioner during the adjudication proceedings has not taken into account the submissions of the appellants that there have not been direct or indirect corroborative evidences in the form of purchase/utilisation/consumption of raw materials, sale of finished goods and so on - also, appellants were not given the opportunity of cross examination of the concerned persons whose statements and evidences are having bearing on the outcome of their case - When it is so, the impugned order set aside and matter remanded to the original adjudicating authority to examine and decide afresh - appeal allowed by way of remand.

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• 2017 (3) TMI 1352
  CENVAT credit - GTA service - duty paying document - denial on the ground that CENVAT credit availed on that part of the service tax paid on the GTA on the basis of TR-6 challan is not available as TR-6 challan is not the correct document to avail the CENVAT credit - reverse charge - Held that: - The issue is decided by the Hon’ble High Court Bombay in the case of Commissioner of Central Excise, Goa v. Essel Propack Ltd [2015 (5) TMI 529 - BOMBAY HIGH COURT], where The Authorities below, as such, have rightly accepted the said Challan as proof of payment of service tax and, as such, no infirmity can be found in the orders passed by the Authorities below - credit allowed - appeal dismissed - decided against Revenue.

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• 2017 (3) TMI 1351
  Imposition of penalty u/r 26 of CER, 2002 - penalty on bank for abetting offence - The case of the Department is that the requisite certificate issued by the Executive Head of the Project Implementing Authority is not countersigned by the Joint Secretary to the Government of India - N/N. 8/2007-CE(NT) dated 1.3.2007 - Held that: - the penalty has been imposed on the appellant Bank for abetting evasion of excise duty by indulging in abetting forgery of the requisite certificate which conduct falls within the purview of Rule 26 (2) of CER, 2002, which provision was inserted in the Rules vide N/N. 8/2007-CE(NT) dated 1.3.2007 - But the period in dispute in the instant matter is much prior to 1st March 2007. In any case there is nothing on record to evidence the fact that ICICI Bank has played any role in getting the forged certificate - penalty set aside - appeal allowed - decided in favor of appellant.

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• 2017 (3) TMI 1350
  Clandestine removal - M/s. HSAL cleared 3419.491MT of SS Flats cleared clandestinely valued at 8.25 Crores involving Central Excise duty of 1.19 Crores - Held that: - though the statement of Shri Bijendra Kumar Arya stands retracted, its reliability should be evaluated on the basis of corroborating evidences and the conduct of the party. The statement given by him cannot be brushed aside simply because it has been retracted. The investigation has established the modus-operandi adopted for evasion of duty i.e. to use their own trucks to transport the accounted as well as unaccounted and clandestinely cleared goods to the transshipment centre at Wazirpur Industrial Area, New Delhi where Shri Bijendra Kumar Arya will receive all the goods. He then further arranges to dispatch these with the help of various transporters and consignment agents. From the recovered note-books (diaries) it is evident that Shri Bijendra Kumar Arya has been unloading both accounted as well as clandestinely cleared goods. The record of cash receipts indicates that the sale proceeds of unaccounted goods are received in cash. The allegation of clandestine removal has been established by the Revenue against the appellant. While the onus is on the Revenue to establish clandestine removal, they are not required to prove the case with mathematical precision as such a case involves deliberate and well thought out modus-operandi to evade duty. Appeal dismissed - decided against appellant.

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• CST, VAT & Sales Tax

• 2017 (3) TMI 1343
  Benefit of Sales-tax exemption or Sales-tax Deferment Eligibility Fixed Capital Investment - Section 49 [2] of the Gujarat Sales Tax Act, 1969 - extension of the period of Sales Tax Eligibility Certificate for a further period of five years for un-utilized amount of 57.82 Crores out of 188.15 Crores, and to consider the expenses of 257.55 Crores which were incurred and paid upto 12th April 2007 instead of 213.58 Crores, being the period of eighteen months from the date of commencement of commercial production ie., 12th October 2005 - whether the petitioner-Company is entitled to incentive/ sales tax exemption under the Scheme on investment/expenditure incurred after 31st December 2005, but within a period of 18 months from the date of commencement of commercial production? Held that: - it is required to be noted that in case of Small Scale Industrial Units, Medium and Large scale Industrial Units, the assets acquired upto the period of six months or within 1 year from the date of commencement of commercial production or till the date of completion of the said Scheme ie., 31st December 2005; whichever is earlier between the two, shall be considered eligible for the purpose of Incentives. However, in the Gujarati version of the Incentive Scheme, the expression “whichever is earlier between the two” is missing in case of Industrial Units having project cost exceeding 10 Crores. The aforesaid seems to be an inadvertent mistake in publication/typing - Nobody can be permitted to take undue advantage/ disadvantage of the beneficial Scheme due to inadvertent mistake in publication. In case of Industrial Units having project cost exceeding 10 Crores, it is mentioned that the assets acquired within a period of 18 months form the date of commencement of production, or till the completion of the said Scheme, shall be considered eligible for the purpose of incentives. Therefore, the submissions made on behalf of the petitioners that the assets acquired upto 11th April 2007 are required to be considered eligible for the purpose of incentive; if is accepted, in that case, the words/expressions “till the completion of the said Scheme” shall be meaningless. When the petitioners and all other Industrial Units/ Undertakings/Projects [105 in number] understood the Scheme, the manner in which the State Government had pleaded and all are treated equally and in case of all Industrial Undertakings/Projects, the assets acquired only upto 31st December 2005 are considered eligible for the purpose of incentive, the petitioners are not entitled to incentive on the assets acquired subsequently after commencement of commercial production or after 31st December 2005. The present writ petition with respect to claim of the petitioners for incentive/sales tax exemption on the investment made/assets acquired after 31.12.2005, but made on or before 11.04.2007 ie., within a period of 18 months from the date of commencement of commercial production ie., 257.55 Crores is hereby rejected. It is held that the petitioners are not entitled to the incentive/sales tax exemption on the total expenses/investment of 257.55 crores as claimed and are entitled for incentive/sales tax exemption on the investment made/assets acquired upto the date of commencement of commercial production ie., 12th October 2005. Petition dismissed - decided against petitioner.

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• 2017 (3) TMI 1342
  Imposition of condition of stay - Held that: - This Court in M/s.Mangalam Foundation's case [2017 (3) TMI 1296 - MADRAS HIGH COURT] has given an option to the assessees' to furnish a personal bond, where 50% of the disputed tax has been paid - the impugned order is modified to the extent that instead of furnishing a Bank Guarantee, the petitioner would place on record a personal bond for the balance amount of disputed tax and penalty, within two (2) weeks from the date of receipt of a copy of the order - petition allowed - decided partly in favor of petitioner.

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• Indian Laws

• 2017 (3) TMI 1341
  Jurisdiction of the High Court - Defamatory newspaper article - Permanent injunction restraining the defendants from publishing and reporting any Article/news of defamation - Held that:- this suit does not deserve to be entertained and deserves to be thrown out at the threshold to save the defendants, who do not appear to be persons with much monetary means, from travelling to Delhi, engaging an Advocate, appearing and contesting this suit at Delhi. This Court would not have the territorial jurisdiction to entertain the suit as no part of the cause of action has accrued within the jurisdiction of this Court as the defendants are not stated to be selling their newspaper at Delhi and their website is not interactive and the article concerned is in Bengali language with which very few Delhiites would be conversant with and the plaintiff has not pleaded that any one at Delhi understood the said article but I refrain from returning a final finding on the said aspect being of the view that the suit of the plaintiff is otherwise not maintainable.

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• 2017 (3) TMI 1340
  Conviction u/s 138 of the Negotiable Instruments Act - dishonoured cheques - undelivered notice - It was contended that:- Notice demanding payment of the amount arising from the two dishonoured cheques in question was on 04-05-1991, whereas the intimation regarding dishonour of the said cheques was given by the appellant’s bank on 08-04-1991. Therefore, the notice was beyond 15 days. - Held that:- generally there is no bar under the N.I. Act to send a reminder notice to the drawer of the cheque and usually such notice cannot be construed as an admission of non-service of the first notice by the appellant as has happened in this case. First notice sent by appellant on 12-04-1991 was effective and notice was deemed to have been served on the first respondent. Further, it is clear that the second notice has no relevance at all in this case at hand. Second notice could be construed as a reminder of respondent’s obligation to discharge his liability. As the complaint, was filed within the stipulated time contemplated under Clause (b) of Section 142 of the N.I. Act, therefore Section 138 r/w 142 of N.I. Act is attracted. In the view of the matter, we set aside the impugned judgment of the High Court. However, during the course of hearing, learned counsel for first respondent, as agreed by appellant herein, submitted that first respondent was willing to pay 2,00,000/- (Rupees two lakhs only) in lieu of suffering simple imprisonment of three months as imposed by the Trial Court, as confirmed by the first Appellate Court, and endorsed by this Court. In view of the undertaking given by the learned counsel, we direct the first respondent to deposit the said amount of 2,00,000/- (Rupees two lakhs only) before the Judicial First Class Magistrate-II at Alappuzha on or before 30.04.2017. Out of the said amount of 2,00,000/- (two lakhs only) so deposited, 1,30,000/- (one lakh thirty thousand) shall be paid to the appellant as compensation.In the event, first respondent fails to deposit the said amount of 2,00,000/- within the stipulated period as indicated above, the conviction and sentence of three months awarded by the Ld. Trial Court and affirmed by the Appellate Court shall stand restored and bail granted to the first respondent shall stand cancelled.

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• 2017 (3) TMI 1339
  Whether the guarantor/ mortgagor could be proceeded against under Section 13 for recovery of the secured debt? - Held that:- The Court finds that when the stand taken by respondent No.1 is that advancing financial assistance of 10 crore to the borrower was not independent loan given to the borrower but was part of the restructured loan which was made for restructuring of dues/ financial assistance, it is a stand taken contrary to the stand taken by the petitioner and gives rise to a dispute which could be resolved only on considering or appreciating the evidence including documentary evidence and this Court under Article 226 of the Constitution of India may not go into disputed questions of fact. Since statutory remedy of appeal is available to all the petitioners under Section 17 of the Act against the actions impugned in the petitions, the petitions are not entertained and are rejected, leaving it open to the petitioners to avail of alternative remedy before appropriate forum. Rule discharged. At this stage, learned advocates appearing for the petitioners request to continue the interim relief for a period of four weeks to enable them to approach the higher forum. Such request is opposed by learned advocates appearing for the respondents. The Court however finds that since the interim relief has remained in operation till these matters are finally decided, no prejudice would be caused to the respondents if interim relief is extended for a period of three weeks from today. Hence, it is directed that no coercive steps shall be taken against the petitioners in connection with their secured assets for a period of THREE WEEKS from today to enable them to approach the higher forum.

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