TMI Tax Updates - e-Newsletter
March 31, 2018

Case Laws in this Newsletter:

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

TMI SMS

• Admittedly, no such SCN is found in the file - Order-in-Original Passed after 12 years from the date of the assessment is invalid - HC

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Articles

1. JOB WORK UNDER GST AS PER LATEST CLARIFICATION BY GST POLICY WING

   By: DR.MARIAPPAN GOVINDARAJAN

2. RECTIFICATION OF MISTAKES UNDER GST

   By: Dr. Sanjiv Agarwal

News

1. E-Way Bill System User Manual

2. Public Financial Management System (PFMS) Achieves a Historical Record Breaking Volume of Digital Transactions

Notifications

Companies Law

1. [F. No. 01/01/2009-CL-V(Part VI)] - dated 28-3-2018 - Co. Law

Companies (Indian Accounting Standards) Amendment Rules, 2018

FEMA

2. 21(R)/2018-RB - G.S.R. 280(E) - dated 26-3-2018 - FEMA

Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2018

GST - States

3. FA-3-41/2017-1-V-(36) - dated 24-3-2018 - Madhya Pradesh SGST

Amendment in the Notification No. FA-3-41-2017-1-V (47), dated 30th June 2017 and amended vide Notification No. FA-3-41-2017-1-V-(123), dated 13th October 2017.

4. FA-3-13/2018-1-V-(35) - dated 24-3-2018 - Madhya Pradesh SGST

The Madhya Pradesh Goods and Services Tax Rules, 2017

5. FA-3-12/2018-1-V-(34) - dated 24-3-2018 - Madhya Pradesh SGST

Last date for filling of return in FORM GSTR-3B.

6. FA-3-08/2018-1-V-(37) - dated 24-3-2018 - Madhya Pradesh SGST

Appoints the 1st day of April, 2018, as the date from which the provisions of serial No. 2 (ii) [other than 2(ii)(7)], (iii), (iv), (v), (vi) and (vii) of this department's notification No. F.A-3-08-2018-1-V-(33), dated 7th March 2018.

7. LA Bill XV of 2018 - dated 19-3-2018 - Maharashtra SGST

The Maharashtra Tax Laws (Levy and Amendment) Bill, 2018

8. VAT-1518/C.R. 23/Taxation-1 - dated 23-2-2018 - Maharashtra SGST

The criteria for Selection (on the basis of probable revenue earning) of the cases for Assessment Scheme-2018.

9. CT/LEG/GST-NT/12/17/1996-003/2018 - dated 23-3-2018 - Nagaland SGST

Time limit for Filing of GSTR-3B (Apr,May & June,2018)

10. FIN/REV-3/GST/1/08(Pt-1)/079 - dated 2-2-2018 - Nagaland SGST

Rescission, in the Notification No. F.NO. FIN/REV-3/GST/1/08(Pt-1)/19 dated the 29th December, 2017 - Seeks to postpone the coming into force of the e-waybill rules.

11. FIN/REV-3/GST/1/08(Pt-1)/080 - dated 1-2-2018 - Nagaland SGST

Corrigendum - Government of Nagaland, Finance Department (Revenue Branch), F.NO.FIN/REV-3/GST/1/08 (Pt-1)/39 dated the 25th January, 2018.

12. F.12(46)FD/Tax/2017-Pt.-III-210 - dated 28-3-2018 - Rajasthan SGST

Corrigendum in RGST Notification F.12(46)FD/Tax/2017-Pt.III-202 dated 07.03.2018

13. F.12(46)FD/Tax/2017-Pt.-II-207 - dated 23-3-2018 - Rajasthan SGST

Notification to notify the date from which E-Way Bill Rules shall come into force

14. F.12(46)FD/Tax/2017-Pt.-II-206 - dated 23-3-2018 - Rajasthan SGST

The Rajasthan Goods and Services Tax (Third Amendment) Rules, 2018

15. F.12(46)FD/Tax/2017-Pt.-II-205 - dated 23-3-2018 - Rajasthan SGST

Amendment in Notification no. F.12(56)FD/Tax/2017-pt-I-46 dated 29.06.2017 regarding exempting payment of tax under section 9(4) of the RGST Act, 2017 till 30.06.2018.

16. 07/2018-C.T./GST - dated 29-3-2018 - West Bengal SGST

Seeks to extend the due dates for the furnishing of FORM GSTR-1 for those taxpayers with aggregate turnover of more than ₹ 1.5 crores.

17. 390-F.T.-17/2018-State Tax (Rate) - dated 28-3-2018 - West Bengal SGST

Seeks to prescribe the due date for quarterly furnishing of FORM GSTR-1 for those taxpayers with aggregate turnover of upto ₹ 1.5 crore.

18. 357-F.T.-10/2018-State Tax (Rate) - dated 23-3-2018 - West Bengal SGST

Seeks to exempt payment of tax under section 9(4) of the WBGST Act, 2017 till 30.06.2018

19. 356-F.T.-15/2018-State Tax - dated 23-3-2018 - West Bengal SGST

Notifies the date from which e-way bill rules shall come into force

20. 355-F.T.-14/2018-State Tax - dated 23-3-2018 - West Bengal SGST

The West Bengal Goods and Services Tax (Third Amendment) Rules, 2018.

Circulars / Instructions / Orders

GST - States

1. 01/2018-State Tax - dated 28-3-2018

Extension of date for submitting the statement in FORM GST TRAN-2 under rule 117(4)(b)(iii) of the West Bengal Goods and Service Tax Rules, 2017

2. 06/2018 - dated 28-3-2018

e-WAYBILL FOR INTER-STATE MOVEMENT OF GOODS UNDER GST WITH EFFECT FROM the 1st DAY OF APRIL, 2018

Highlights / Catch Notes

Income Tax

• High Court Upholds ITAT Decision Allowing Depreciation Claim on Truck with Annual Hire Charges of Rs. 24,000.

  Case-Laws - HC : Disallowance of assessee's claim of depreciation on truck - assessee has shown hire charges of ₹ 24,000/per truck per annum and also claimed depreciation - HC confirmed the order ITAT allowing the claim of assesse.
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• Court Rules Bogus Purchases in Jewelry Case: No Cash Transactions Without Prior Cheques, Diamonds Not Bought in Grey Market.

  Case-Laws - AT : Addition of bogus purchases - jewellery business - it is highly impossible for M/s Vitrag Jewels to first hand over the cash even without receiving the cheques from the assessee. Hence no cash could be available with the assessee to make purchase of diamonds from unknown parties in the grey market - AT
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• Penalty u/s 271B Not Imposed Due to Undisturbed Position u/s 44AD Despite Exceeding Turnover Limit.

  Case-Laws - AT : Levy of penalty u/s 271B - not getting the accounts audited u/s 44AD - having not disturbed the said position u/s 44AD, it cannot be said that the assessee has failed to get his books of accounted where undisclosed business receipts of are brought to tax during the course of assessment proceedings and whereby the prescribed turnover threshold has been breached - AT
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• Income Accumulation to be Calculated on Net Receipts, Not Gross, u/s 11(1)(a) of Income Tax Act.

  Case-Laws - AT : Accumulation of income of 15% u/s. 11(1)(a) - AO directed to consider the net receipt (not the gross receipt) for the purpose of computation of accumulation of income of 15% u/s. 11(1)(A) - AT
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• West Bengal Government Finds No Irregularities in Assessee's Transactions u/s 68; No Income Additions Made.

  Case-Laws - AT : Unexplained cash credit u/s 68 - the transactions made by the assessee are controlled by the Government of West Bengal. No infirmity has been reported by the State Government with the regard to the transactions carried out by the assessee during the year - no additions - AT
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• Liability Not Sustainable u/s 41(1) If Shown in Books and Repaid Later by Assessee.

  Case-Laws - AT : Addition u/s 41 - remission or cessation of liability proof - when the assessee is showing the liability in the books of account and has repaid in the subsequent years then the addition under section 41(1) of the Act is not sustainable. - AT
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• Cancellation of Registration u/s 12AA(3) Overturned Due to Lack of Evidence on Unaccounted Money Transactions.

  Case-Laws - AT : Cancelling Registration u/s 12AA(3) - No evidence on record to show that assessee received or paid any commission for indulging in any unaccounted money. Therefore, cancellation of registration in the matter is merely on presumption only. - AT
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Customs

• Order-in-Original Invalid Without Show Cause Notice After Long Delay, Violating Section 18 Requirements.

  Case-Laws - HC : Validity of SCN - Admittedly, no such SCN is found in the file. Once, there is no such SCN found in the file, then, there was no sanction in law to make an Order-in-Original, particularly, after the period of nearly 18 years from the date of filing of the Bill of Entry and 12 ½ years from the date of the assessment, as contemplated by Sub-sections (1) and (2) of Section 18. - HC
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• India's Lesser Duty Rule: CV and AD Duties Below Injury Margin, Despite Higher Dumping Margin; No Issues Found.

  Case-Laws - AT : It is seen that the CV duty and AD duty put together did not exceed the injury margin though the dumping margin is higher. The same principle of Lesser Duty Rule is followed in India also - there is no infirmity in the final findings of the DA and customs Notification imposing CV duty with reference to subsidy on the subject goods. - AT
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• Imported Bentonite Clay classified under CTH 3802 90 19 due to structural changes, per Chapter 25 Note 1.

  Case-Laws - AT : Classification of imported goods - Bentonite Clay - from 1-1-2007 onwards, when there is no specific inclusion, in view of Note 1 to Chapter 25 which excludes products whose structure has undergone a change, the said product merits classification under CTH 3802 90 19. - AT
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Indian Laws

• Bar Association Leaders Face Court Appearance Ban for Strike Resolutions Until Contempt is Purged by High Court Chief Justice.

  Case-Laws - SC : Office bearers of the Bar Association/Bar Council who passed the resolution for strike or abstaining from work, are liable to be restrained from appearing before any court for a specified period or until such time as they purge themselves of contempt to the satisfaction of the Chief Justice of the concerned High Court based on an appropriate undertaking/conditions. - SC
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Service Tax

• Cenvat Credit Allowed: Inputs Used for Taxable Services Through Railway Siding Construction Qualify u/r 2004.

  Case-Laws - HC : Cenvaat Credit - the 'Inputs' have been used for providing output services which is taxable, therefore, by erecting the Railway Siding, the respondent is providing a taxable service for providing an output service, therefore, it is entitled to avail Credit under Rule, 2004. - HC
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• Fire Security Services Classified Under "Security Agency Services" Definition, Covering All Property Types.

  Case-Laws - AT : The appellant are providing services for security of their customer's property from fire. The same would get covered under "Security Agency Services" inasmuch as the definition of the said services nowhere specifies a particular type of security of the property and further it does not excludes any particular type of service relating to security of the property - AT
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Central Excise

• Kashyog Oil and Keshyog Herbal Powder Classified as Ayurvedic Medical Preparations Under Chapter 30.

  Case-Laws - HC : Classification of goods - Kashyog Oil and Keshyog Herbal Powder Hair Wash/Shampoo - the product in question has to be classified under Chapter 30 as Ayurvedic Medical Preparation. - HC
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Case Laws:

• Income Tax

• 2018 (3) TMI 1531
  Stay application filed under Section 220(6) - Held that:- We directed the petitioners to once more serve the respondent-Commissioner of Income-Tax and place the matter for consideration at 5.00 p.m. When the petition was taken up at 5.00 p.m. the respondent-Revenue was represented by Mr. Sharma. We are informed by Mr. Sharma the Learned Counsel appearing for the Revenue that he had no occasion to examine the papers and therefore seeks time. At his request, time is granted and the petition is fixed on Monday, 2nd April, 2018 as First on Board. In the meantime, the respondent-Revenue is directed to deposit the amounts withdrawn from the attached bank accounts on the next bank working day. We are informed that the banks are working on 31st March, 2018. Stand over to 2nd April, 2018 as First on Board.

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• 2018 (3) TMI 1530
  Addition u/s 69 - unexplained source of investment - Held that:- In the present matters, the assessee are running their business. The nature of investment in the bank accounts has not been explained. On the contrary, inconsistent explanations were given, which were not found satisfactory by all the authorities. As the same was unexplained investments, the authorities were right in deeming the same to be the income of the assessee. Whether they had maintained the books of account was never an issue before the authorities below, as the same was never raised. It would not be permissible for the appellants to contend it for the first time in the present appeals, as these appeals can only be considered on the substantial questions of law. - Decided against assessee.

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• 2018 (3) TMI 1529
  Nature of expenses - discount given in respect of the SAR (Stock Appreciation Rights) – similar to Employee Stock Option (ESO) offered by the employer to the work force - revenue or capital - Held that:- In PVP Ventures Ltd.case [2012 (7) TMI 696 - MADRAS HIGH COURT] held the assessee had to follow SEBI direction and by following such direction, the assessee claimed the ascertained amount as liability for deduction - the expenditure on issue of shares under the Employees Stock Option could be allowed as staff welfare expenditure - Decided in favour of assessee.

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• 2018 (3) TMI 1528
  Exemption u/s 10(34) eligibility - additional tax under Section 115(O) - deemed dividend u/s 2(22) - Held that:- Exemption available from total income, as per Section 10(34), is on 'any income by way of dividends referred to in Section 115(O)'. Section 115(O) specifically speaks of an additional income tax being levied on the amounts disbursed as dividend by a Company. What is exempted from being included in the total income is that amount disbursed by a Company as dividend, which has been taxed under Section 115(O). The explanation puts it beyond any pale of doubt and excludes sub-Clause (e) of Section 2(22) from the expression of dividend for the purposes of Chapter XII-D [containing Section 115(O) to 115(Q)]. Prior to sub-section (34) of Section 10 dividend was taxable as income in the hands of the recipient. Only in the context of non-additional tax being levied on the Company, declaring and paying dividend, that exemption was granted to the recipient-shareholder. Deemed dividends are not exempted since there is no payment of additional tax under Section 115(O). The revenue is right in contending that the exclusion under Section 10(34) would be applicable only for the amounts, which has suffered tax under Section 115(O). The question of law hence has to be answered in favour of the Revenue

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• 2018 (3) TMI 1527
  Addition made on account of accrued interest on loans treated as “Non Performing Assets” - violation of Section 145 - Held that:- As relying on case of Shri Siddeshwar Co-operative Bank Limited [2016 (6) TMI 1129 - KARNATAKA HIGH COURT] mere nomenclature adopted with reference to the bad loans and advances receivable, would refer to all non-performing assets of any nature, of whatever category placed as a non-performing asset and therefore, the contention of the Revenue that in respect of non-performing assets even though it does not yield any income as the assessee has adopted a mercantile system of accounting, he has to pay tax on the Revenue which has accrued notionally is without any basis. In that view of the matter, the substantial question o law is answered against the Revenue and in favour of the assessee. Co-operative Bank is not required to deduct tax while paying interest under Section 194A. See Bagalkot District Central Co- op. Bank . See CIT v/s Bagalkot District Central Co-op. Bank [2016 (7) TMI 748 - KARNATAKA HIGH COURT] Securities categorized and accounted as “held to maturity” were stock-in-trade and could not be considered as investments and accordingly answered the said question against the Revenue. See Karnataka Vikas Grameen Bank [2015 (12) TMI 1420 - KARNATAKA HIGH COURT]

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• 2018 (3) TMI 1526
  Disallowance of assessee's claim of depreciation on truck - assessee has shown hire charges of Rs. 24,000/per truck per annum and also claimed depreciation - Held that:- The Commissioner Appeals and the Tribunal have concurrently held that, hire charges were low was not relevant since assessee had received substantial interest free huge deposits for hire of truck. The assessee owned fifteen trucks, nine from Akola unit and six from Daman unit. The Tribunal has observed that, the assessing officer could not have termed the transaction of hire of trucks as sale of truck. It is observed that, the hire charges were less was not relevant since assessee has received substantial interest free deposit, which helped assessee to reduce his dependence from the interest bearing funds. The reasonings adopted by the Commissioner Appeals and the Tribunal is plausible one - No substantial question of law.

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• 2018 (3) TMI 1525
  Addition of bogus purchases - jewellery business - allegation that jewellery was purchased from unexplained cash - Held that:- The primary allegation of the ld AO that the assessee had received the cash back in lieu of account payee cheques issued from M/s Vitrag Jewels ( based on the statement of Shri Rajendra Jain) and used the said cash for purchasing diamonds from unknown parties in the grey market, gets defeated on this count also, in as much as, the ld AO had accepted the fact that factum of purchases of diamonds indeed has been made by the assessee in the Asst Year 2007-08 (i.e the year under appeal) and whereas the payments were made to Vitrag Jewels only in next Asst Year i.e AY 2008-09. It is highly impossible for M/s Vitrag Jewels to first hand over the cash even without receiving the cheques from the assessee. Hence no cash could be available with the assessee to make purchase of diamonds from unknown parties in the grey market in Asst Year 2007-08. Hence the allegation of the ld AO only leads to impossible situation. - Decided in favour of assessee

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• 2018 (3) TMI 1524
  Addition u/s 68 - amount credited in bank account unexplained - Held that:- Additional amount credited in the bank account in the sum of Rs. 71,00,000/- could not have emanated to the assessee out of some undisclosed sources but rather would have emanated only out of sale proceeds of the property requires to be believed and no addition could be made thereon u/s 68 of the Act, when the assessee had considered the entire sum of Rs. 2,21,00,000/- as sale consideration for the purpose of computation of capital gains. Hence the question nos. 1 & 2 raised above is answered in favour of the assessee. Entitled for deduction towards cost of construction and subject to indexation benefits - Held that:- Assessee having purchased the land in the financial year 1999- 2000 had carried out construction during the financial year 2001-02 which is supported by the registered valuation report . The value as per registered valuation report (enclosed in pages 55 to 76 of the paper book ) is Rs. 64,31,517/-. It is not in dispute that the assessee was a non-resident even during the financial year 2001-02 which is also evident from the fact that the passport was issued to her in London on 2.5.2000. Hence out of her earnings in London, the construction cost could have been met by the assessee. In any case, there is no dispute with regard to the source for cost of construction carried out by the assessee. Hence we hold that the assessee is entitled for deduction towards cost of construction at Rs. 64,31,517/- and subject to indexation benefits. - Decided in favour of assessee. Claim of deduction u/s 54 - Held that:- As we have already held that the assessee having reinvested a sum of Rs. 1,60,16,103/- before 31.3.2009 is entitled for claim of exemption u/s 54 of the Act.- Appeal of assessee allowed.

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• 2018 (3) TMI 1523
  Levy of penalty u/s 271B - not getting the accounts audited u/s 44 AD - Held that:- In the instant case, the assessee has not made any such claim in his return of income. Further, the Revenue has accepted the claim of the assessee as being eligible for such presumptive taxation where the assessee has reported a net profit of 8.09% on total reported turnover of Rs. 48,98,269. In such a situation, having not disturbed the said position under section 44AD, it cannot be said that the assessee has failed to get his books of accounted where undisclosed business receipts of Rs. 43,34,064/- are brought to tax during the course of assessment proceedings and whereby the prescribed turnover threshold has been breached. What has been referred in section 44AB is the books of accounts maintained in the regular course of business and where an admission is made by the assessee based on third party statement during the course of survey that the amount found deposited in the bank account belongs to the assessee, it cannot be said that regular books of accounts are maintained even in respect of unaccounted sales or business receipts and the penalty can be levied under section 271B of the Act. See Brij Lal Goyal vs. ACIT [2003 (10) TMI 274 - ITAT DELHI-D] as held the record carrying entries from which the appellant admits of additional sales are not the accounts as referred to under s. 44AB of the Act. On that basis it was not open to the AO to hold that the sales of the assessee as referred in s. 44AB of the Act have exceeded to Rs. 40 lakhs and by not getting such accounts audited from an accountant, the appellant has committed a default. - Decided in favour of assessee

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• 2018 (3) TMI 1522
  Non-application of funds accumulated u/s 11(2) - Non utilization of the accumulated funds within a period of 5 years from the date of accumulation as provided u/s. 11(2) - as per revenue construction of the building did not started before 2013 and hence the said payment cannot be allowed as application of accumulated funds - Held that:- The drafts were made by the assessee on 30.03.2011 by debit to its bank account on 30-03-2011 and the builder has issued receipt on 05.04.2011. The AO has not brought on record any evidence/material to prove that the said receipt dated 05.04.2011 were bogus/non-genuine. The enquiry conducted by the AO u/s. 133(6) as well as report of the inspector deputed to conduct field enquiries were not made available to the assessee and no cross examination was allowed to the assessee of the builder or of the inspector who conducted enquiries. It is not the case of the revenue that these demand drafts were subsequently cancelled at the behest of the assessee and also it is also not the case of the Revenue that the said commercial space was ultimately cancelled by the assessee and in fact the assessee got the possession of the said premises in the year 2016. Under these circumstances bona-fide of the assessee could not be doubted and more so there is no incriminating material on record to prove/show that said drafts were cancelled later on or the said booking was cancelled. Assessee on the other hand made statement before the bench that the assessee got the premises in 2016 after building was completed by M/s. Deal-Well Developers. The contentions of Revenue that since construction of the building did not started before 2013 and hence the said payment cannot be allowed as application of accumulated funds can also not be accepted and is a fallacious argument as the spaces / flats/floors in commercial/residential building has two elements namely building as well proportionate land underneath the said space/floors/flats. The purchaser has to pay for not only the constructed area but also towards the proportionate land underneath said flats/floor/space. We are inclined to accept the contentions of the assessee based on the material on record and the appeal of the assessee stood allowed and the benefit of an application of the income be allowed to the assessee. - Decided in favour of assessee.

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• 2018 (3) TMI 1521
  Addition of unexplained cash credit u/s 68 - Revision u/s 263 - Held that:- As assessee did not get fair opportunity to present the evidences before the AO so, there was a lack of opportunity as aforesaid, therefore, it has to go back to AO. Hon'ble Supreme Court in three judges bench in the case of Tin Box, (2001 (2) TMI 13 - SUPREME Court), has held that since there was lack of opportunity to the assessee at the assessment stage itself, the assessment needs to be done afresh - Appeal of assessee is allowed for statistical purposes

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• 2018 (3) TMI 1520
  Determination of receipt for the purpose of accumulation of income of 15% u/s. 11(1)(a) - whether one has to take the gross receipt or the net receipt after reducing the expenditure incurred for charitable purposes from the gross receipts - Held that:- Having carefully examined the order of the CIT(Appeals) in the light of the order of the Tribunal in the case of Jyothy Charitable Trust ( 2015 (11) TMI 1295 - ITAT BANGALORE) and Tribunal in the case of in the case of Bai Sonabai Hirji Agiary Trust Vs. ITO (2004 (9) TMI 300 - ITAT BOMBAY-E) we find that though the CIT(Appeals) has made a reference to this order, but he has not specifically pointed out any reasons for not following the same. When the Tribunal has taken a particular view, the CIT(Appeals) is supposed to follow the same instead of taking a contrary view. We are therefore of the considered opinion that the impugned issue is squarely covered by the aforesaid order of the Tribunal, therefore by following the same, we direct the AO to consider the net receipt for the purpose of computation of accumulation of income of 15% u/s. 11(1)(A) Claim of depreciation to assessee trust to be allowed. - Assessee appeal allowed.

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• 2018 (3) TMI 1519
  Disallowance u/s 40A(3) on account of purchases made in cash from M/s. Hanuman Traders - addition u/s 68 - Held that:- For considering the issue of peak credit, the authorities below have to laid-out the foundation that it was unaccounted money of the assessee having both debit and credit which assessee did not agree. It could not be taken into consideration for making such addition under section 68 in the hands of the assessee for making any alleged transaction with M/s. Hanuman Traders, which, according to the authorities below, did not exist and that no such entries appear in the books of account of the assessee. Some entries appeared in the books of account of the assessee regarding M/s. Hanuman Traders, according to the findings of the authorities below, such books of account of the assessee are not reliable. Therefore, the authorities below cannot rely upon the same entries in books of account for the purpose of making the addition of the nature of peak against the assessee. Thus, there is no justification for the authorities below to make addition of Rs. 6,92,25,000/- under section 40A(3) of the I.T. Act and addition under section 68 of the I.T. Act.

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• 2018 (3) TMI 1518
  Disallowance u/s. 14A - AO rejected the suo motto disallowance - Held that:- CIT(A) has considered the issue in right perspective. The contention of the Assessing Officer that no claim of assessee could be accepted otherwise by way of revised return has also been properly met out by the ld. CIT(A) by relying on various decisions, wherein the findings in Goetze (India) (2006 (3) TMI 75 - SUPREME Court) has been considered, inasmuch as the decision of Hon’ble Supreme Court was limited to the power of Assessing Officer and did not impinge to the powers of Tribunal. CIT(A) in this regard has also taken into account CBDT Circular No. 1955 as reproduced in the impugned order, against which there is nothing on record from the side of Revenue. Hon’ble Delhi High Court in CIT vs. Sam Global Securities Ltd. [2013 (9) TMI 876 - DELHI HIGH COURT] after considering the decision in Goetze India (supra) has decided this issue in favour of the assessee. CIT(A) has also relied on the decision of Hon’ble jurisdictional High Court in Joint Investment Pvt. Ltd. vs. CIT [2015 (3) TMI 155 - DELHI HIGH COURT] for restricting the addition to the extent of exempt income earned by the assessee. - Decided in against revenue

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• 2018 (3) TMI 1517
  Unexplained cash credit under section 68 - AO treats the amount of sale as unexplained cash credit - Held that:- There can be several business transactions which have not been matured during the year under consideration but that cannot lead an inference of unexplained cash credit under section 68 of the Act. Accordingly, no adverse inference can be drawn against the assessee is such circumstances. Also the sugar comes under essential commodities Act and West Bengal sugar dealers licensing order 2009 and accordingly it regulated by State food & supply Department and enforcement branch. Therefore, we observe that the transactions made by the assessee are controlled by the Government of West Bengal. No infirmity has been reported by the State Government with the regard to the transactions carried out by the assessee during the year. It is undisputed fact that there is no dispute with regard to the Audited Balance Sheet, Books of Account, Sales Register, Purchase Register and Stock register. In view of the above and after considering the facts in totality we reverse the order of authorities below. Hence the grounds of appeal filed by the assessee are allowed. Addition in respect of motor car expenses including depreciation and telephone expenses on account of personal use of the assessee - Held that:- It is our settled provision of law that no expense can be disallowed on ad-hoc basis. From the order of the AO it is clear that the AO has not pointed out any specific details in the expenses claimed by the assessee which is personal in nature. In these circumstances, we are of view that the estimated disallowance is not sustainable in the eyes of law. Thus we delete the addition made by the lower authorities. - Decided in favour of assessee

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• 2018 (3) TMI 1516
  Provision for contingency of standard assets claimed by the assessee u/s 36(1)(viia) - Held that:- The assessee, which is a cooperative bank carrying on banking business, we find that the assessee is eligible to claim “provision for bad and doubtful debts” to the extent of 7.5% of the total income before making any deduction under this clause and under Chapter VIA. Further in the profit and loss account except for the alleged “provision” for Rs. 2 lacs, no other provision for bad and doubtful debts has been claimed. The phrase “contingency provision for standard assets” is basically a provision for bad and doubtful debts only which is in general a regular feature of the banking business. It is also pertinent to mention that even though the assessee was eligible to claim much higher amount as an expenditure of “provision for bad and doubtful debts”, it only claimed Rs. 2 lacs. In the instant appeal the contingency provision for standard assets is basically in the nature of bad and doubtful debts only and the assessee has rightly claimed the expenditure u/s 36(1)(viia) of the Act. - Decided in favour of assessee

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• 2018 (3) TMI 1515
  Addition u/s 41 - remission or cessation of liability proof - Held that:- Addition under section 41(1) cannot be made simply by doubting the creditor or his creditworthiness or his identity. Further, no addition can be made simply because the creditors are very old. In view of the above facts as well as the various binding precedents, we are of the considered opinion that no addition can be made under section 41(1) of the Act merely on the basis of doubting the genuineness of the creditor without establishing the actual cessation of liability. Hence when the assessee is showing the liability in the books of account and has repaid in the subsequent years then the addition under section 41(1) of the Act is not sustainable. - Decided in favour of assessee.

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• 2018 (3) TMI 1514
  Addition on account of low gross profit rate - Held that:- The accounts of the Assessee cannot be rejected merely based on the perception of the AO that the Assessee has declared low profit margin for certain projects when Books of Accounts have not been rejected. - Decided in favour of assessee. Disallowance of expenses on samples - expenditure incurred towards distribution of free samples to doctors/medical practitioners - Held that:- Hon'ble Delhi Tribunal in the case of Eli Lilly & Co. (India) Ltd. vs. ACIT [2015 (12) TMI 1172 - ITAT DELHI] has examined the provisions of Medical Council of India and after analyzing the same Hon'ble Tribunal has held that there is a clear distinction between the free samples, gifts, travel facilities, hospitality and cash or monetary grants. The disallowance made by the authorities below should be deleted. Allowability of expenses on business promotion expenses - Held that:- We delete the addition of Rs. 18,45,317/- whereas we sustain the disallowance of Rs. 1,27,924/- which the assessee has debited under the head marketing and business promotion expenses but which in fact are installments for repayment of loan. In view of the above, ground No. 8 is partly allowed. Disallowance of advertisement expenses - Held that:- From the ledger account of such expenses, it is apparent that all the payments have been made through cheques and not even a single payment has been made in cash. Therefore, the findings of the Assessing Officer that the expenses were not genuine, are not correct and in view of the above, we allow ground taken by the assessee. Addition u/s 68 - Held that:- Such payments received from sister concern which have been credited in the assessee’s account and similarly debited in the books of account of the sister concern, cannot be said to be ingenuine and unexplained credits. Therefore, the addition u/s 68 is not at all justified

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• 2018 (3) TMI 1513
  Rejection of loss by treating the same as speculative loss - Held that:- Both trading of shares and derivative transactions are not coming under the purview of section 43(5) of the Act which provides definition of “speculative transaction” exclusively for purposes of section 28 to 41 of the Act. Again, the fact that both delivery based transaction and derivative transactions are non-speculative as far as section 43(5) is concerned goes to confirm that both will have same treatment as regards application of the Explanation to section 73 is concerned, which creates a deeming fiction. Now before application of the said Explanation, aggregation of the business profit/loss is to be worked out irrespective of the fact, whether it is from share delivery transaction or derivative transaction. We remit the issue to the file of the Assessing Officer to bifurcate speculative loss and normal business loss as indicated above. In the case of Baljit Securities Pvt. Ltd. [2014 (6) TMI 475 - CALCUTTA HIGH COURT], the issue stands covered in favour of the assessee.This ground of appeal of the assessee is partly allowed for statistical purposes. Disallowance made u/s. 14A - Held that:- Rule 8D was inserted in Income Tax Rules with effect from 24/03/2008 by Income Tax (5th Amendment) Rules, 2008. Being so, Rule 8D cannot be applied for the assessment year 2007-08. However, there is every chance to incur certain administrative expenditure. Accordingly, we direct the AO to disallow 2% of the exempt income as expenditure incurred for the purpose of earning exempt income. This ground of appeal of the assessee is partly allowed Treatment of income as income from other sources OR busniss income - interest received on cancellation of the plots - Held that:- the plot allotted to the assessee is the business asset of the assessee. However, interest received on cancellation of the plots is a step removed from the business activities of the assessee. The derivation of interest from GIDA cannot be said that it is emanating from the business activities carried out by the assessee. On the other hand, it was emanating from the amount paid by the assessee and not directly from the business activities of the assessee. Therefore, in our opinion, that interest cannot be considered as business income of the assessee. It should be treated as income from other sources. - Decided against assessee Treatment of interest income earned on margin money paid by GIDA - nature of income - Held that:- Interest derived from deposits in Bank which was given for getting bank guarantee cannot be treated as capital receipt or business income and it is to be treated as interest income to be assessed under the head income from other sources in view of the judgment of the Supreme Court in the case of Pandian Chemicals Ltd. vs. CIT (2003 (4) TMI 3 - SUPREME Court). Accordingly, this ground raised by the Revenue is allowed.

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• 2018 (3) TMI 1512
  Assessment u/s 153C - non satisfaction recorded by AO - Held that:- We are of the view that the satisfaction in the case is not recorded by the AO of the searched party, which is a pre-condition for invoking jurisdiction u/s 153C of the Act and hence, the assessment framed u/s 153C read with Section u/s 143(3) of the Act is bad in law and hence, quashed. The jurisdictional issue of the assessee’s cross objection is allowed.

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• 2018 (3) TMI 1511
  Credit of TDS claimed without showing corresponding income - CIT-A deleted the addition admitting additional evidence - Held that:- The amount was duly offered to tax in the immediate preceding assessment year. This fact was brought to the notice of AO during assessment proceedings vide letter dated NIL. No additional evidence as alleged by Revenue was admitted by Ld. CIT(A). Thus, we do not find any infirmity in the order of Ld. CIT(A). Accordingly, we uphold the same. Consequently, ground raised by Revenue is dismissed. Addition u/s 43B - allowability of employees and employers contribution to the provident fund account - belated payment of employees' contributions to PF - Held that:- No distinction between employees' and employer contribution to PF, and if the total contribution is deposited on or before the due date of furnishing return of income u/s 139(1) of the Act, then no disallowance can be made towards employees' contribution to provident fund. Hence, we are inclined not to interfere in the order of ld. CIT(A). Therefore, the ground of appeal filed by the Revenue is dismissed. Disallowance of repairing expenses to the extent 1/4th - Held that:- As necessary details were duly filed by assessee at the time of assessment proceedings but AO was not satisfied with the same, therefore he disallowed the same on ad hoc basis. In view of above proposition we note that if assessee has not furnished necessary documents then AO should have disallowed all the expenses claimed by it under the head “repairs”. It is settled law that the disallowance on account of ad hoc basis is not permissible under the provision of the Act. If the AO is not satisfied with the submission of assessee then he has to make the disallowance after making specific reference to such documents / vouchers. AO cannot just make the disallowance on ad hoc basis without pointing out any defect / error in the submission of assessee. As the entire amount of repairing charges was deducted by TML and the complete addresses of TML was in the possession of AO during the assessment proceedings, no addition to be made.

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• 2018 (3) TMI 1510
  Recovery of late fees U/s 234E - late filing of tds return - Held that:- There is no valid reason or justification to interfere with the compensatory fees imposed for late filing of TDS return. Accordingly the order of the ld. CIT(A) is hereby upheld. See Dundlod Shikshan Sansthan Vs. Union of India [2015 (9) TMI 807 - RAJASTHAN HIGH COURT] and Rashmikant Kundalia Vs. Union of India [ 2015 (2) TMI 412 - BOMBAY HIGH COURT ]- Decided against assessee.

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• 2018 (3) TMI 1509
  Receipt from warehousing activities - busniss income or income from house property - Held that:- The lower authorities have erred in assessing the receipts from warehousing activity as ‘income from house property’ instead of treating it as ‘business income’. Accordingly, we set-aside the order of the CIT(A) and direct the Assessing Officer to recompute the income by treating the receipt from warehousing activity as ‘business income’. Thus, on this aspect, assessee succeeds. Reopening of assessment - Held that:- When the Assessing Officer recorded the reasons to reopen the assessment for Assessment Year 2008-09, he was conscious that for Assessment Years 2006-07 and 2007-08, assessments have been completed u/s 143(3) of the Act and such income has been accepted as ‘business income’. Under these circumstances, it was imperative for the Assessing Officer to record the reasons as to why such assessments were not correct, especially considering the fact that the judgmen in the case of Shambhu Investment (P) Ltd. (2001 (3) TMI 77 - CALCUTTA High Court) was all along available to the assessing authority at the time of assessments made u/s 143(3) for Assessment Years 2006-07, 2007-08 and 2008-09. There is no attempt made by the Assessing Officer to refer to any new tangible material say as to why the departure from the accepted stand of assessing the receipts from godown rent and facilities as ‘business income’, was required to be made - onus has not been discharged by the Assessing Officer inasmuch as he does not make out any case for making a departure from the earlier accepted stand in the scrutiny assessments. - Decided in favour of assessee.

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• 2018 (3) TMI 1508
  Rectification of mistake U/s 254(2) - addition u/s section 40(a)(ia) - Held that:- As uphold the grievance of the assessee principally and direct that the AO shall give due and fair opportunity of hearing to the assessee and decide the matter afresh in accordance with law by way of a speaking order after carrying out necessary verification regarding impugned payments having been taken into account by the recipients in the computation of their respective income, regarding payment of taxes in respect of such income and regarding filing of related income tax return by the recipients. Hon'ble Supreme Court in the case of Palam Gas Service Vs CIT (2017 (5) TMI 242 - SUPREME COURT) is not at all applicable to the facts of the assessee’s case, therefore, the M.A. filed by the revenue has no merit and the same is dismissed. - Decided against revenue

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• 2018 (3) TMI 1507
  Cancelling Registration u/s 12AA(3) - proof of charitable activities - Held that:- Assessee has been carrying out scientific research activities as per its objects. The donation received by the assessee have been used for the scientific research purpose only. There is no legal admissible evidence on record against the assessee that assessee received any donation from any company as alleged in the report of the Investigation Wing. No evidence of any unaccounted cash transactions conducted by the assessee were found. No evidence on record to show that assessee received or paid any commission for indulging in any unaccounted money. Therefore, cancellation of registration in the matter is merely on presumption only. In the case of Sharda Educational Trust v. CIT [2013 (5) TMI 832 - ITAT AGRA] it was held that in the absence of any examination of any student and their parents about payment of any money/capitation fees to the assessee trust and there being no corroborative evidence to prove receipt of any such amount, registration of assessee trust, could not be cancelled on the basis of paper seized during search. The Tribunal set aside the cancellation of registration and restored the registration. - We restore the registration under section 12AA in favour of the assessee.

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• Customs

• 2018 (3) TMI 1506
  Validity of SCN issued after 12 ½ years from the date of the assessment - Time limitation - The allegations of the petitioner are that, after 18 years from import and provisional assessment order, the Assistant Commissioner, Customs, issued a letter, in which it is stated that the petitioner should attend the personal hearing for finalizing the subject Bill of Entry - case of Revenue is that what the authorities have done is a continuation of the action initiated under Section 18. Held that: - the process under Section 18 was finalized as per the endorsement and orders of 24th September, 2004, reproduced above. Thereafter no SCN was issued when the duty allegedly became due and payable and within the time stipulated by law. Thus, if the duty was not levied, but, leviable, then, the requirement in law and particularly Subsection (1) of Section 28 was to issue the SCN and within a period of six months from the relevant date - Admittedly, no such SCN is found in the file. Once, there is no such SCN found in the file, then, there was no sanction in law to make an Order-in-Original, particularly, after the period of nearly 18 years from the date of filing of the Bill of Entry and 12 ½ years from the date of the assessment, as contemplated by Sub-sections (1) and (2) of Section 18. Throughout the petitioner has been demanding and issuance of the show-cause notice and furnishing a copy thereof to him. That requirement in law being not fulfilled, we do not think that we should relegate the petitioner to any alternate remedy to challenge the impugned order. The impugned order is ex-facie illegal and without jurisdiction - petition allowed - decided in favor of petitioner.

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• 2018 (3) TMI 1505
  Counterveiling Duty (CVD) - Valuation - certain hot rolled and cold rolled stainless steel flat products - import from China PR - Following the Lesser Duty Rule, the DA recommended CV duty equal to the lesser of margin of subsidy and marginal injury, from the date of issue of notification by the Government, so as to remove injury to the DI. The duty amount recommended is 18.5 % of landed value - Held that: - there is no legal requirement of internal homogeneity within the subject goods or for inter-se substitutability of various types of subject goods - Even the Customs Tariff main heading did not specify the products for classification separately. It was also noted that substantial cost of production is on raw materials and utilities upto the stage of steel melting. Expenses involved at rolling stage, whether hot or cold, and are not so significant. The DI produces both HR and CR products in a wide range of shape, size and metallurgical composition as per requirement of the customer. Imposition of CV duty and AD duty on the same subject goods - Held that: - various other countries including EU follow the practice of imposing CV duty and AD duty on the same subject goods. However, the duties together never exceed the injury margin. In other words, if the dumping margin, as established in the investigation, is 30% with subsidy margin worked-out at 10%, injury margin at 25%, the duty imposed are 10% CV duty to offset subsidy and 15% AD duty. It is seen that the CV duty and AD duty put together did not exceed the injury margin though the dumping margin is higher. The same principle of Lesser Duty Rule is followed in India also - there is no infirmity in the final findings of the DA and customs Notification imposing CV duty with reference to subsidy on the subject goods. Appeal dismissed.

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• 2018 (3) TMI 1504
  Benefit of N/N. 39/1996 (Sl. No. 10) (vi), (viii) dated 23.07.1996 - denial on the ground that the original purchase order issued by DRDO has later been cancelled - Held that: - though at the time of import, the appellant claimed the exemption and were supported by due documents provided by DRDO, the later development created situation for dispute regarding the eligibility of the appellant for such exemption - the arbitration proceedings are yet to be concluded. In such situation, the matter regarding the validity of purchase order placed by RCI is still to be resolved by a due process. The present proceedings confirming the duty liability is pre-mature - matter remanded to the Original Authority to decide afresh after the outcome of the arbitration as ordered by the Defence Ministry - appeal allowed by way of remand.

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• 2018 (3) TMI 1503
  Issuance of detention certificate - request for issue of detention certificate for the said period was rejected by Deputy Commissioner of Customs on the ground that the goods had not been subject to detention by Nhava Sheva Customs - Held that: - it is seen that there is no provision therein for issue of detention certificate and the circular itself forwarns the logistics service provider not to collect any rent or demurrage in specified circumstances. There is no dispute that the goods were not seized or confiscated and it is questionable whether the goods had actually been detained when the appellant was at liberty to clear their goods on payment of duty. Detention follows on order issued to a custodian not to release goods without the approval of the competent authority. Such an order is not seen on the record, nor has it been produced by the appellant. Considering the trouble visited and the delays incurred by the appellant owing to the wrong re-determination on the part of the proper officer it would appear only proper that a detention certificate should be issued by the Customs authorities which may be produced before the custodian of the cargo to seek relief from the demurrage from detention charges already paid. Appeal allowed in part.

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• 2018 (3) TMI 1502
  Penalty u/s 112 of CA, 1962 - smuggling of Gold - Held that: - there is no statement of the appellant and the penalties stand imposed upon him only on the basis of incriminating statements of the co-noticee. It is well settled law that such statement of the co-noticee cannot be made the sole basis for penalizing a person - penalty set aside - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 1501
  Classification of imported goods - Bentonite Clay - classified under CTH 38029019 or under CTH 250810? - Held that: - even if the Revenue’s stand that the goods in question are ‘Activated Bentonite’ is accepted even then the same has to be held as classifiable under CTH 250810 till the period 31.12.2006, as held by the Tribunal in the case of Komal Trading Co. v. CC [2014 (5) TMI 754 - CESTAT MUMBAI], where it was held that for the period prior to 1-2-2003 and from 1-1-2007 onwards, when there is no specific inclusion, in view of Note 1 to Chapter 25 which excludes products whose structure has undergone a change, the said product merits classification under CTH 3802 90 19. The issue was not free from doubt and was the subject matter of litigation before the Tribunal, in which no malafide can be attributed to the assessee. Otherwise also the goods were cleared by the Customs authorities after examination, in which case appellant cannot be held guilty of any suppression. Appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 1500
  Advance licence scheme - N/N. 203/92-Cus dated 19.05.1992 - CENVAT credit - Held that: - no documentary evidence was relied upon in support of the allegation made in the SCN. Therefore, whatever allegation made by Revenue is made on assumption and presumption and on that ground itself the proceeding was supposed to be dropped - In the case of export, the AR-4s was signed by the jurisdictional officer therefore, whatever declaration was made was found correct and accepted by the jurisdictional officer. Therefore, there is no material contrary on record to dispute the factual position of non-avaiment of CENVAT credit - appeal dismissed - decided against Revenue.

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• 2018 (3) TMI 1499
  Mis-declaration of export goods - Smuggling - Phensedyl Cough Linctus were packed inside the Cartoons under mis-declaration of Potatoes - N/N. 35/2008-Custom (N.T.) dated 02.04.2008 - Held that: - the appellant s herein are acting on behalf of the Syndicate of smuggling of Phensedyl Cough Linctus and Recodex Cough Syrup - there are no reasons to interfere with the Order of the Adjudicating authority - appeal dismissed - decided against appellant.

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• 2018 (3) TMI 1498
  Export of prohibited goods - Smuggling - export of Pulses to Nepal - confiscation of seized goods with vehicle - penalties - Held that: - There is no dispute that Shri Panna Lal Shah claimed as the owner of the goods as it was returned by Shri Lal Babu Prasad. It is noted that the Department had not disputed these transactions. In this transaction there is no material available on record that the appellant attempted for illegal export of goods to Bangladesh. In any event, the goods were covered with the documents. Hence, the onus lies with the department to establish that goods are of smuggled nature as it is non notified items. The Tribunal in the case of Mohd. Tahir Vs. Commissioner of Customs (Lucknow) [2013 (4) TMI 60 - CESTAT NEW DELHI] held that statement of co-accused cannot be made the sole basis for arriving at a decision against the other accused - In the present case, it is noted that the statement of Driver is uncorroborative in nature. The impugned Orders cannot be sustained - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 1497
  Redemption of goods - contention of the Revenue is that since the goods are already sold through E-auction valued at Rs. 23,72,999/- to M/s. Daksh International, Mumbai, it does not appear to be feasible for the department to return the goods to the party, if he agrees to pay the Redemption Fine - Held that: - the seized goods are sold in auction and the Department would return the sale proceeds of goods in Indian currency - imposition of Redemption Fine is justified which would be adjusted against the sale proceeds. Penalty - Held that: - The appellant referred the name of one Sri S.K. Pappu of Khidirpur area, who engaged him for carrying of these goods. On investigation, the Customs officers did not find the whereabouts of S.K. Pappu. Hence, the contention of the Respondent that he had no knowledge, cannot be accepted - the Respondent had not disclosed the proper facts to the investigating officers - penalty justified. The quantum of redemption fine and penalty reduced. Appeal allowed in part.

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• Service Tax

• 2018 (3) TMI 1494
  Maintainability of petition - Delay in filing appeal - principles of natural justice - Classification of services - Held that: - a discretionary and equitable relief can be granted only when a litigant is diligent and does not exhibit utter callousness or negligence. If the cause shown does not lack bona fides, then, the litigant can seek discretionary relief - This is a clear case where the authorities called upon the petitioner to remain present and repeatedly. They also called upon the petitioner to produce documents and file reply to the show cause notices - none of these authorities acted perversely or in contravention of the principles of natural justice. Their orders, therefore, cannot be interfered in the writ jurisdiction. Petition dismissed.

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• 2018 (3) TMI 1493
  CENVAT credit - service provider - input service tax - whether an assessee who is not engaged in the process of manufacturing but is only providing services can avail CENVAT Credit? - Held that: - Reverting back to the definition and the nature of construction activity carried on by the respondent company for erecting the facility of “Cargo Handling Services” it is to be kept in mind that the 'Inputs' have been used for providing output services which is taxable, therefore, by erecting the Railway Siding, the respondent is providing a taxable service for providing an output service, therefore, it is entitled to avail Credit under Rule, 2004. Reliance placed in the case of Commissioner of Central Excise, Vishakhapatnam-II v. Sai Sahmita Storage (P) Limited, [2011 (2) TMI 400 - ANDHRA PRADESH HIGH COURT], wherein it has been held, with reference to definition of 'Input' in Rule 2 (k) that all the goods used in relation to manufacture of final product or for any other purpose used by a provider of taxable service for providing output service are eligible for CENVAT Credit. Credit allowed - appeal dismissed - decided against Revenue.

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• 2018 (3) TMI 1492
  Security Agency Services - whether the comprehensive fire services provided by the appellant to M/s Tata Motors Limited would attract service tax under the category of "Security Agency Services" - Held that: - "Security Agency Services" are basically and primarily related to the security of any property. The use of the expression "in any manner", widens the scope of the said services. If the services provided relates to the security of the property, they would attract service tax under the said category - Admittedly, in the present case, the appellant are providing services for security of their customer's property from fire. The same would get covered under "Security Agency Services" inasmuch as the definition of the said services nowhere specifies a particular type of security of the property and further it does not excludes any particular type of service relating to security of the property - demand upheld. Extended period of limitation - Penalty - Held that: - the appellant was aware of the fact that the comprehensive fire services being provided by them would attract service tax liability under "Security Agency Services" The appellant have not given any valid reason that whey the service tax was being paid in respect of the services offered by them to M/s HAL where they were discharging service tax in respect of services provided to M/s TML - the malafides on part of appellant justified - extended period of limitation rightly invoked - penalty upheld. Appeal dismissed - decided against appellant.

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• 2018 (3) TMI 1491
  Valuation - inclusion of reimbursable expenses - EPF and ESI contribution - whether the appellant is liable to pay service tax on the amount of EPF and ESI contribution which are reimbursed to them in the course of providing security agency services to their clients? - Held that: - the PF and ESI contributions are statutory contributions and/or statutory levy and the same are deductible under the provisions of Section 67 (3) of the Finance Act, 1994 - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 1490
  Non-payment of service tax - belated filing of returns - interest - penalty - Held that: - having sufficient balance of CENVAT credit, non-debiting of the service tax liability cannot be said to be with mala fide intention to evade payment of service tax - appellant have made out a case for waiver of penalty imposed under Section 78 invoking the provisions of Section 80 of the Finance Act, 1994 - penalty set aside. Penalty u/s 77 - Held that: - the appellant have paid late fees for delay in filing of the returns - in terms of Rule 7(C) of Service Tax Rules, 1994, penalty under Section 77 is also not imposable. Interest - Held that: - since there is admitted delay in payment of service tax irrespective of whether it is payable from CENVAT credit account or in cash, interest is payable for the reason that interest is a picky bag of the service tax liability - Once the service tax liability is confirmed interest will come into force automatically - interest upheld. Appeal allowed in part.

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• 2018 (3) TMI 1489
  Outdoor Catering Service - food was supplied to the said college as Tiffin service till financial year 2007-2008 and that food was prepared at appellant's premises, packed and supplied to hostel - Held that: - circular no.332/82/97-TRU dated 24.09.1997 also clarifies that sale of food across the counter, as in fast food joints/restaurants or serving of foods in a restaurant/ hotels do not fall within the ambit of outdoor catering, nor does mere free delivery (or delivery at a nominal cost to cover transportation charges) of food by a fast food joint, restaurant etc. shall be subject to Service Tax as in such cases there is no service element and only a mere sale of food. Taking into consideration the terms of agreement, activities of the appellant and CBEC Circular dated 24.09.1997 referred by Original Authority, Original Authority's order needs to be restored, since the same is sustainable - appeal allowed.

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• Central Excise

• 2018 (3) TMI 1488
  CENVAT credit - inputs/capital goods - welding electrodes - Whether in the facts and circumstances of the case credit of excise duty paid on welding electrodes is eligible to be taken as inputs and/or capital goods, under the Cenvat Rules in respect of its use in repair and maintenance of capital goods and also installation of new machines used in the factory for manufacture of excisable final products? Held that: - it will be necessary to refer to the decision of the Apex Court in the case of J.K. Cotton Spinning and Weaving Mills Company Limited vs. Sales Tax Officer, Kanpur [1964 (10) TMI 2 - SUPREME COURT OF INDIA] which is by a Bench of three Hon'ble Judges - it was held in the case that We are not prepared to agree with the High Court that in order that "electrical equipment" should fall within the terms of Rule 13, it must be an ingredient to the finished goods to be prepared, or "it must be a commodity which is used in the creation of goods." Merely because one issue is referred to the Larger Bench in the case of Ramala Sahakari Limited [2010 (11) TMI 34 - SUPREME COURT OF INDIA], it cannot be said that the law which prevails today should not be followed. The Appellate Tribunal has not denied relief to the appellant on the ground that the definition of inputs is restricted only six categories mentioned therein. Appeal allowed in part.

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• 2018 (3) TMI 1487
  Classification of goods - Kashyog Oil and Keshyog Herbal Powder Hair Wash/Shampoo - whether these impugned goods should be classified either as Ayurvedic medicine or cosmetic / toilet preparation? - whether or not the processes undertaken by GTM will amount to manufacture? - Held that: - The learned Tribunal relying on the decision of Himtaj Ayurvedic Udyog Kendra V/s. Commissioner of Central Excise Allahabad, [2001 (12) TMI 250 - CEGAT, NEW DELHI], came to the conclusion that the products in question are rightly questionable under Chapter 30 as Ayurvedic medical preparation - the Appellate Authority rightly classified the product in question under Chapter 30 as Ayurvedic Medical Preparation. Whether the process of labeling packing undertaken by the appellant will amount to manufacture or not? - Held that: - the learned Tribunal upheld the finding that the process undertaken by the appellant amounts to manufacture. Appeal dismissed.

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• 2018 (3) TMI 1486
  Appeal admitted for hearing on substantial questions of law - Also heard on interim relief - As an interim measure, we direct that until further orders, no coercive steps be taken against the appellant for recovery of the amount.

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• 2018 (3) TMI 1485
  Refund claim - unjust enrichment - differential duty arising from disallowance of certain deductions claimed in the 'price lists' in 1991 - Held that: - the goods were cleared before the differential duty was crystallized in adjudication proceedings and the goods had been cleared on challans reflecting the declared price and declared duty liability. The burden of differential duty would not have been passed on - refund allowed - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 1484
  Additional consideration - sales tax collected by the appellant on sale of goods and payable under deferred payment scheme but not paid to State Government due to availment of facility under advance payment of deferred tax scheme at Net Present Value, provided by State Government - Section 4 of the CEA 1944? Held that: - Tribunal having ruled in favor of the assessee, reflects upon the fact that the issue is capable of two different interpretations. In such scenario, assessee cannot be held to be having any malafide intention for adopting the interpretation which the Tribunal has also upheld - extended period cannot be invoked. Appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 1483
  Clandestine removal - penalty - principles of natural justice - Held that: - The Original Authority had not followed the principles of natural justice. He has decided the issue against the present appellant without hearing them. One of the principles of natural justice is that nobody should be condemned unheard - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 1482
  Doctrine of merger - waiver of penalty - CENVAT credit on welding electrodes - Held that: - as per the doctrine of merger after the Hon’ble Supreme Court having dismissed Civil appeal filed against this Tribunal’s decision in the case of Birla Jute & Industries ltd., [2000 (10) TMI 145 - CEGAT, NEW DELHI] this Tribunal’s finding that Cenvat Credit was admissible on electrodes has reached finality - there is no merit in the appeal filed by Revenue - appeal dismissed - decided against Revenue.

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• 2018 (3) TMI 1481
  CENVAT credit - whether appellant are eligible for CENVAT Credit in respect of MS angles, channels, beam, HR coils etc. which according to them except for use of a very small quantity in fabrication of supporting structure have been used for fabrication of capital goods? - Held that: - Hon'ble Gujarat High Court's decision' in the case of Mundra Ports & Special Economic Zone Ltd. v. CCE & Cus [2015 (5) TMI 663 - GUJARAT HIGH COURT] was applicable to appellant, where it was held that The definition of Rule 2(k) was applicable and Explanation 2 did not provide that cement and steel would not be eligible for input credit. The appellant is neither having any factory nor he is manufacturer. The appellant is a service provider of port. Remaining quantity was used for fabrication of capital goods - reliance placed in the case of Union of India v. Associated Cement Co. Ltd, [2010 (10) TMI 1142 - CHHATTISGARH HIGH COURT], wherein it has been held that Cenvat Credit was admissible as inputs on MS plates, channels, angles etc., if they are used in the manufacture or fabrication of capital goods which are used within the factory for manufacture of final product. Credit allowed - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 1480
  Penalty - Central Excise duty with interest paid before issuance of the SCN - CENVAT credit - deemed exports - fake invoices - Held that: - the issue involved was a bonafide issue of interpretation of provision of law - in respect of the clearances made to hotels, the issue involved interpretation of N/N. 34/2006 - it is not a case of any malafide on the part of the respondent, thus justifiably calling for any imposition of penalty - penalty rightly set aside - appeal dismissed - decided against Revenue.

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• 2018 (3) TMI 1479
  Clandestine removal - It has been alleged that the appellant company had cleared the goods using Tax Invoice of M/s. V. S. Ispat. It has further alleged that they have cleared the finished goods using the Tax Invoice and Challans of the Trading unit situated at Dankuni Hooghly - Held that: - the Adjudicating authority mainly proceeded on the basis of the clarification of the Palsit Toll Plaza. It is seen that the Investigating Officers had not made any enquiry from the Transporter - There are demand of duty on the basis of loose slips on removal of goods to Guwahati DLF Limited, M/s. Super Diamond Nirman Limited, M/s. B. G. Shirke, Pune etc. The Tribunal in the case of North West Switch Gear Ltd Vs. Commissioner of Central Excise, Delhi [2014 (3) TMI 50 - CESTAT NEW DELHI] held that the charge of clandestine removal is a serious allegation. Thus, it has to be established by some positive and cogent evidences. The demand of duty along with interest and imposition of penalty, cannot be sustained and it is set aside - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 1478
  CENVAT credit - capital goods - C R Coil, HR Coil, MS Flats etc. - the Revenue had not disputed the User Test of the goods in question as observed by the Commissioner (Appeals) - It is seen that the items in questions were used as supporting structure of ESP Conveyor Support System etc. The Tribunal in recent decision in the case of Commissioner of Customs and Central Excise, Raipur Vs. Bhilai Ispat Private Limited [2017 (4) TMI 206 - CESTAT NEW DELHI] dismissed the appeal filed by the Revenue on the identical issue and held that the allegation in show cause notice is very vague and without any support. Appeal dismissed - decided against Revenue.

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• 2018 (3) TMI 1477
  CENVAT credit - duty paying documents - time limitation - Held that: - the Revenue had not disputed the fact that the Assessee s name was shown as Consignee in the Invoices - also, the Revenue had not challenged the Order on limitation - credit rightly allowed - appeal dismissed - decided against Revenue.

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• 2018 (3) TMI 1476
  Recovery of duty with interest and penalty - It has been alleged that the assessee cleared duty paid inputs and finished goods without excisable invoices, without payment of duty and did not reverse the amount equal to credit availed on inputs - Held that: - the assessee undertook before the Adjudicating Authority to produce the documents, which they failed to do so. In such situation, the Commissioner (Appeals) should have allowed the assessee to produce the documents before the Adjudicating Authority for verification as the same documents were not before the Adjudicating Authority - the Adjudicating Authority should decide the matter afresh taking into account the points raised by the Revenue in their grounds of appeal - appeal allowed by way of remand

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• 2018 (3) TMI 1475
  CENVAT credit - capital goods - perlite - Held that: - Perlite powder was used in the storage tank to control the temperature as an insulating material - The CBEC vide Circular No.276/110/96-TRU dated 02.12.1996 clarified that the credit was available on components/spares and accessories of the specified capital goods irrespective of their classification. The denial of credit on the basis of classification of the goods is not justified - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2018 (3) TMI 1474
  Release of seized goods - dismissal of revision application - Held that: - this Court is of the considered view that no proceedings for rectification as envisaged and recognised in law was adopted by the Department. If applications for rectification came to be made in the manner as evidenced by the facts of this case and were to be entertained and countenanced, it would give rise to pernicious possibilities - The course adopted by the respondents cannot possibly be approved by the Court since the application itself appears to have been made without due care and circumspection as was warranted. Revision dismissed.

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• 2018 (3) TMI 1473
  Recovery of sugarcane purchase tax and arrears of sales tax - legality and validity of the attachment order - auction - SARFAESI Act - Held that: - Admittedly, respondent No.3 had no licence to run Sugar Factory. It is not the case of any of the respondents that it was being run by respondent No.3 for manufacturing sugar until issuance of public notice for auction sale on 16th January, 2012 and even thereafter till it was given in possession of the petitioner on 22nd November, 2012. If the petitioner makes such defunct factory functional and starts manufacturing sugar under its own licence, it cannot be said that the petitioner purchased the business interest of respondent no. 4. It is, thus, clear that the petitioner has not purchased and succeeded the business interest of respondent NO. 4. Respondent NO. 2 cannot recover the dues payable from respondent No. 4 by enforcing any charge against the secured assets purchased by the petitioner in the auction - The issue of priority between the Sales Tax Authorities and respondent No. 3 shall be decided in appropriate proceedings before the appropriate forum in accordance with law - petition allowed.

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• 2018 (3) TMI 1472
  Recovery of sales tax dues of the period prior to the cut of date fixed by the Board for Industrial and Financial Reconstruction - Held that: - Section 22 of the SICA clearly provides that no proceedings for distress or like against any of the properties of the company and no suit for recovery of money shall lie or be proceeded with except with the consent of the Board or the appellate authority if in respect of that company an inquiry under Section 16 is pending or any scheme referred to under Section 17 is under preparation or a sanction scheme is under implementation. As the request of the petitioner company for waiver/deferment of tax dues in the wake of it being declared sick and the subsequent abandonment of it and the repeal of the SICA is under consideration, there appears to be no justification on part of the respondents to proceed and recover any past tax dues from the petitioner company at this stage. Petition disposed off.

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• Wealth tax

• 2018 (3) TMI 1471
  Levy of interest u/s 17B in respect of the period between the due date and the date of the notice u/s 17 - date of filling Wealth tax return - Held that:- Considering the facts and circumstances of the present case, we are of the considered view that the assessment made for the assessment years 2007-08 and 2008-09 is made for the first time under Section 17, the same is a regular assessment and therefore attracts Section 17B(1) of the Act and not otherwise. Hence the Assessee is liable to pay interest u/s 17B(1) from the due date u/s 14(1) to the date of filing of the return u/s 17. We reject the argument advanced by the learned counsel for the assessee that the assessee could not be asked to do the impossible, as the due date for filing of the wealth tax returns expired and the assessee had not filed his return within the due date and there was no provision for the assessee to file his returns beyond the due date and the assessee had to await the issuance of notice u/s17 of the Act and therefore the assessee must be exempted from the levy of interest u/s 17B in respect of the period between the due date and the date of the notice u/s 17 of the Act.

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• Indian Laws

• 2018 (3) TMI 1496
  Time Limitation - whether Section 14 of the Limitation Act, 1963, has no impact in view of the provisions contained in Punjab Limitation (Custom) Act, 1920 and, if so, will it be applicable in the facts of this case? Held that: - There is no dispute that the issue of suit being barred by limitation will have to be answered with reference to the special law as applicable i.e. the 1920 Act. The said Act was enacted to amend and consolidate the law governing the limitation of suits relating to alienations of ancestral immovable property and appointments of heirs by persons who follow custom in the area to which the Act would apply. Section 8 of the 1920 Act postulates that when any person obtains a decree declaring that an alienation of ancestral immovable property or appointment of an heir is not binding on him according to custom, the decree shall enure for the benefit of all persons entitled to impeach the alienation or the appointment of an heir. For such a declaratory suit, the limitation is provided in the schedule. Article 2 of the Schedule also envisages that the period of limitation for a suit for possession of ancestral immovable property which has been alienated, on the ground that alienation is not binding on the plaintiff according to custom, inter alia, within three years from the date the declaratory decree is obtained. As in the present case, even though the declaratory judgment was pronounced by the Court in the previous suit on 20th August, 1963, on the basis of compromise entered into by Mohinder Singh (original plaintiff) and Rura Singh (original defendant), that declaration could be given effect to only after the death of Ujjagar Singh. The decree as passed was enforceable only thereafter. Suffice it to observe that the decree sheet having been made ready on 19th August, 1972 and the suit for possession filed three years thereafter on 11th June, 1974, was thus within the prescribed period of limitation in terms of Article 2(b) of the Schedule to the 1920 Act. A proper approach will have to be adopted and the provisions will have to be interpreted so as to advance cause of action rather than abort the proceedings, inasmuch as the section is intended to provide relief against bar of limitation in cases of mistaken remedy or selection of a wrong forum. Both the Trial Court and the Appellate Court were right in decreeing the suit in favour of the original plaintiff (predecessor of the appellants) by rejecting the objection regarding the suit being barred by limitation - Appeal allowed.

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• 2018 (3) TMI 1495
  Speedy disposal of appeal - stricture against the office bearers of the Bar Association/Bar Council who passed the resolution for strike or abstaining from work, - Bail application - appellant along with the co-accused caused the murder of one Shahid - prayer for bail, pending disposal of criminal appeal against life sentence has been declined though the appellant has been in custody for more than ten years - case of appellant is that the appellant had been in custody for more than ten years and the remedy of appeal will be meaningless if he has to remain in custody for the full term of sentence. Held that: - from the data available it is clear that all the steps taken by the Central Government so far have not significantly improved the situation of speedy disposal of criminal appeals. The steps taken are set off by increased volume of work or otherwise - the Union of India ought to consider whether it is viable to have criminal appeals and other matters before the High Courts decided within reasonable time as per existing system. If not, whether it is possible to provide any other suitable forum for such appeals so as to ensure enforcement of fundamental right of speedy justice or how else the situation can be remedied. The steps which need immediate consideration include timely filling up of vacancies at all levels with the best available talent. There is need to consider in the light of observations hereinabove and all other relevant considerations whether there should be a body of full time experts without affecting independence of judiciary, to assist in identifying, scrutinizing and evaluating candidates at pre-appointment stage and to evaluate performance post appointment. The Government may also consider what changes are required in the process of evaluation of candidates at its level so that no wrong candidate is appointed. What steps are required for ensuring righteous conduct of Judges at later stage is also an issue for consideration. We consider it necessary, with a view to enforce fundamental right of speedy access to justice under Articles 14 and 21 and law laid by this Court, to direct the Ministry of Law and Justice to present at least a quarterly report on strikes/abstaining from work, loss caused and action proposed. The matter can thereafter be considered in its contempt or inherent jurisdiction of this Court. The Court may, having regard to the fact situation, hold that the office bearers of the Bar Association/Bar Council who passed the resolution for strike or abstaining from work, are liable to be restrained from appearing before any court for a specified period or until such time as they purge themselves of contempt to the satisfaction of the Chief Justice of the concerned High Court based on an appropriate undertaking/conditions. Appeal disposed off.

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