Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
March 6, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Companies Law
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F. No. 05/23/2016-IEPF - G.S.R. 178(E) - dated
28-2-2017
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Co. Law
Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Amendment Rules, 2017
Customs
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20/2017 - dated
3-3-2017
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Cus (NT)
Appointment of Commissioner of Customs
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19/2017 - dated
3-3-2017
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Cus (NT)
Amendments in Notification No.384/86-Customs, dated the 23rd July, 1986
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18/2017 - dated
3-3-2017
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Cus (NT)
Amendments in Notification No. 31/97-Customs, dated the 7th July, 1997
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17/2017 - dated
3-3-2017
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Cus (NT)
Appointment of Common Adjudicating Authority
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16/2017 - dated
3-3-2017
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Cus (NT)
Courier Imports and Exports (Clearance) Amendment Regulations, 2017
SEZ
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S.O. 687(E) - dated
22-2-2017
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SEZ
Central Government notifies 3.95 hectares (9.76 acres) area at Nanakramguda Village, Serilingampally Mandal, Ranga Reddy District, in the State of Telangana and constitutes a Approval Committee
VAT - Delhi
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F. 3(14)/Fin (Rev.-I)/2012-13/ DS-VI/90 - dated
1-3-2017
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DVAT
Appointment of Assistant Value Added Tax Inspector
Highlights / Catch Notes
GST
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Goods and Services Tax GST) Council approves the Central Goods and Services Tax (CGST) Bill and the Integrated Goods and Services Tax (IGST) Bill
Income Tax
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Tds U/S 195 - Grant of license - The amount paid by the appellant to NPL is not in the nature of royalty within the meaning of the DTAA between India - Admittedly NPL did not have a PE in India - there was no obligation on the part of the appellant to deduct tax at source u/s.195 - AT
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Deduction of expenditure incurred in earning income u/s 56 - assessee is a Thrift and Credit Society - the source is inextricable to the nature of the expenditure - deduction allowed - HC
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Eligibility of exemption u/s 54G - deposit of unutilized capital gain that was deposited in a specified account as laid down in Sec.54G(2) on 30.3.2010 by the Assessee - if deposit of unutilized capital gain is made within the time limit made in Sec.139(4) of the Act, the deduction cannot be denied to an Assessee. - AT
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Prior period expenditure - Contribution to superannuation fund - the contribution cannot be considered as prior period expenses in view of the specific provision of section 36(1)(iv) r.w.s. 43B and deduction on the basis of payment is permissible in law - AT
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Claim of deduction due to loss of Cash in the fire in July 2010 - The entry relating to the loss of cash having been made in the books of account of the assessee only on 31.03.2010 is not a very vital circumstance. Thus the claim of the assessee for loss on account of cash destroyed by fire ought to have been allowed as deduction - AT
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Rental income - there is no justification of allowing expenses against the house property income other than that provided as deduction under the scheme of computation of house property income. - AT
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Levy of fees u/s 234E for default in TDS return - AO is not empowered to charge fees under section 234E of the Act by way of intimation issued u/s 200A in respect of defaults before 01.06.2015 and consequently allow the ground of appeal raised by the assessee - AT
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Revision u/s 263 - The absence of the word “erroneous order” is not very fatal as reading of the entire order of the CIT would go to show that he was of the view that order of the AO was erroneous because the AO failed to make proper enquiries which were warranted in the facts and circumstances of the case - AT
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Computation of capital gain - three amounts are in the nature of cost of improvement and do not fall in the realm of repair and maintenance - the computation of capital gain should be done treating these three amounts as 'Cost of improvement’ - AT
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Penalty u/s 271(1)(c) - non disclosure of income earned by way of Director Sitting Fee - merely because the assessee is not maintaining books of accounts, he cannot get rid of offering the income earned by him during the year - Levy of penalty confirmed - AT
Customs
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Revocation of CHA licence - right to prefer an appeal to the Tribunal under Sec. 129A of the Customs Act, 1962 against an order passed under Regulation 21 or 23 is available only to the CHA - Revenue's appeals dismissed as not maintainable - AT
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Incorrect import manifest - There is no doubt that goods have been unloaded, whether inadvertently or otherwise, but there is no allegation that these were not inventorised in the records of the duly appointed custodian. In the absence of any such evidence, invoking of section 111(g) for confiscation is not in accordance with law - AT
Service Tax
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Extended Period of Limitation - commercial or industrial construction service / works contract service - the matter is resolved only by the decision of Hon'ble Supreme Court by order dated 20/08/2015 - Demand set aside - AT
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Scope of SCN - SCN proposed demand of Service tax under the category of 'cargo handling services', however, first appellate authority without prior notice to the appellant, changed the category of taxable services and confirmed part of the demand under the new categories - demand set aside - AT
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Classification of taxable services - When 99% of the commission is towards underwriting services, remaining 1% commission will not determine the essential nature of commission service - said services of underwriting cannot be taxed under Banking and Financial Services - AT
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Commercial training or coaching service - deduction in respect of study materials - Procurement of Various goods and materials and their cost being reflected in the balance-sheet is not a sufficient documentary proof to fulfil the condition of the Notification - benefit of N/N. 12/2003-ST not allowed - AT
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Valuation of taxable services - deduction of cost of material as 80% based on contract - Notification 12/2003-ST dated 20.06.2003 - Benefit of exemption allowed - AT
Central Excise
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CENVAT credit - Aluminium Sheets, Flush Partition, Flush Door, Ceiling etc - since the goods in question does not qualify either as input or capital goods the cenvat credit is not admissible - AT
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CENVAT credit - photo copy of courier Bill of Entry - bill of entry in case of courier is filed consolidated in respect of various importers, if that is so then it is not possible to every importer in a particular of bill of entry to possess the original bill of entry - credit allowed - AT
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CENVAT credit - shortage of input - merely for smaller quantity found short by the internal auditor and reported in 3CD report, credit cannot be denied - AT
VAT
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Input Tax credit - denial on the ground that the transactions were reflected in retail invoices and not tax invoices and, therefore, did not qualify for credit - the strict interpretation of Section 50(2) in the facts of this case was unwarranted - credit allowed - HC
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When the constitutional validity of a subordinate legislation is challenged which infringes the rights of the citizen of trade in the sale of liquor, it is not possible for us to accept the contention that the petitioner cannot be said to have any locus standi to prefer the main writ petition - HC
Case Laws:
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Income Tax
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2017 (3) TMI 150
Expenditure of privilege fee treated as allowable expenditure Excise duty addition to closing stock - applicably of provisions of section 145A - Held that:- Under Section 145A only the tax duty, cess or fees actually paid or incurred by the assessee to bring the goods to its place of location forms part value of stock. Unpaid excise duty on goods in stock that have not left the premises/factory/bonded warehouse, could not be added to the value of closing stock. Addition on account of depositing the PF/ESI payment beyond the prescribed time - Held that:- If PF/EPF/CPF/GPF etc., if paid after due date under the respective Act but before filing of the return of income under Section 139(1) of the IT Act, the same cannot be disallowed. - HC order [2016 (5) TMI 1326 - RAJASTHAN HIGH COURT] confirmed
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2017 (3) TMI 149
Estimation of yield of sugar - Held that:- While the Commissioner of Income Tax Appeals has looked at the assessment in the context of the evidence specific to the year in question namely excise records and thereafter proceeded to delete the additions, but the tribunal has not returned any finding as to the correctness of the figure recorded in the excise record and has proceeded on an independent reasoning namely of the similar results achieved by the assessee in different years. While each assessment year is an independent unit and findings are required to be returned specific to the evidence i.e. adduced by the parties on year to year basis, the reasoning given by the tribunal de hors the evidence existing on record is not sustainable inasmuch as specific evidence and reasoning that had been considered by the C.I.T. (Appeal) was required to be weighed first and if the same any estimation was to be made thereafter, other evidence may have been relevant. We are therefore of the opinion that the matter requires to be examined afresh by the tribunal especially in view of the excise record produced by the assessee before the C.I.T. (Appeal) as also before the tribunal.
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2017 (3) TMI 148
Reopening the assessment - procedure prescribed by in the case of GKN Drive Shafts (India) Ltd. V. Income Tax Officer (2002 (11) TMI 7 - SUPREME Court) had not been followed - Held that:- In our view, the judgment of Supreme Court in the matter of GKN Drive Shafts (India) Ltd. V. Income Tax Officer, with regard to the obligation placed on the Revenue to dispose of the objections once they are filed before it by the Assessee, would be binding on the Revenue in so far the procedure prescribed therein for reopening an assessment is concerned, even though, there is no specific reference to the judgment of the Supreme Court rendered in the matter of GKN Drive Shafts (India) Ltd. V. Income Tax Officer. To our mind, the Revenue, would have no other option, but to follow the prescribed procedure.
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2017 (3) TMI 147
Reopening of assessment - investigation conducted by the Central Excise authorities - Held that:- The petitioner is approaching this Court in a second inning. Its previous attempt to seek an order quashing the reassessment notice failed as this Court was satisfied that the reasons furnished as well as the consequential order dated 08.08.2016, could stand the scrutiny of law. In the circumstances, its reiteration and regurgitation as it were on the grounds assailing the reassessment notice are precluded. The reliance on the decisions in the opinion of the Court is not appropriate because none of them disclose that the petitioner had approached the Court on an earlier occasion and were permitted to reiterate the same grounds at the completion of the assessment. As far as the validity of the assessment goes, the Court notices that a number of hearings took place before the AO, who called for the documents not at one go, but at least at two separate occasions. The proceedings completed on 15.11.2016 and in the circumstances, the petitioner’s complaint that it was deprived of an opportunity to cross examine is hardly a matter for this Court to exercise its writ jurisdiction. It is not in every case where violation of natural justice is complained of that the Court exercises its special jurisdiction to intervene in the proceedings; nothing was shown that the existing appellate remedy of an appeal to the Commissioner would in any manner be inadequate to address the situation. Similar complaints are made before the Commissioner in several cases, in a routine manner - i.e., of denial of natural justice, denial of opportunity of cross-examination etc. Thus there is no special feature warranting exercise of discretion
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2017 (3) TMI 146
Deduction of expenditure incurred in earning income under Section 56 - assessee is a Thrift and Credit Society - ITAT allowed clam - Held that:- This Court is of the opinion that the ITAT’s reasoning cannot be faulted. Concededly the nature of the activities i.e. that which resulted in income under Section 80P and that which resulted in income from other sources are identical. This involves the collection, deposits and management of funds from the assessee’s subscribers/members. In other words, the source is inextricable to the nature of the expenditure. In the circumstances, all that the AO could have possibly done was to scrutinize the returns to find whether, having regard to the income derived under Section 56, the expenses claimed were extraordinary or seemingly disproportionate. In the present case, the very nature of the expenditure i.e. inextricability would, in the absence of any factual inquiry, lend credence to the assessee’s claim. Thus ITAT’s reasoning is sound and does not call any interference - Decided against revenue
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2017 (3) TMI 145
Eligibility of exemption u/s 54G - deposit of unutilized capital gain that was deposited in a specified account as laid down in Sec.54G(2) on 30.3.2010 by the Assessee - Held that:- As decided in case of CIT vs Jagriti Agarwal [2011 (10) TMI 279 - PUNJAB AND HARYANA HIGH COURT] Sec.139(4) which is akin to Sec.139(5) of the Act in the present case, was part of Sec.139(1) and therefore if deposit of unutilized capital gain is made within the time limit made in Sec.139(4) of the Act, the deduction cannot be denied to an Assessee. The ratio laid down by the Hon’ble Punjab & Harayana High Court will hold good in the context of a revised return filed u/s.139(5) of the Act as well. Hence the deposit made by the Assessee in the present case has to be held to be within the time limit specified in Sec.54G(2) of the Act and therefore the Assessee is entitled to exemption u/s.54G of the Act. Period of six months for making deposit u/s. 54EC of the Act should be reckoned from the dates of actual receipt of the consideration, because if the assessee receives part payment as on the date of transfer and receives part payment after six months then it would lead to an impossible situation by asking assessee to invest money in specified asset before actual receipt of the same. We are of the view even on this basis the order of the CIT(A) deserves to be upheld. - Decided against revenue
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2017 (3) TMI 144
Interest claimed as deduction u/s 24(b) - Held that:- It is clear from the facts available on record that the sum of ₹ 11.63 crores was utilized for repayment of the original borrowing from M/s. Patton International Ltd is erroneous, which was admitted a loan borrowed for the purpose of acquisition of the property. In the light of the such admitted factual position, we are of the view that the deduction claimed by the Assessee has to be allowed as laid down in the proviso to Sec.24(b) of the Act.
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2017 (3) TMI 143
Reopening of assessment - Prior period expenditure - disallowance contribution to superannuation fund - Held that:- As seen the question whether contribution to superannuation fund ought to be disallowed or not has already been gone into by the AO while concluding the original assessment proceedings. The Tax Audit Report which was referred to by the AO in the reasons recorded before issuing notice u/s 148 was very much available when the original assessment proceedings were concluded. As appears that on the very same material which was available when the original assessment proceedings u/s 143(3) of the Act were completed, the AO has sought to reopen the assessment proceedings u/s 148 of the Act merely on the basis of change of opinion. There was no tangible materials coming into the possession of the AO after conclusion of the assessment proceedings u/s 143(3) of the Act on the basis of which he formed a belief regarding escapement of income chargeable to tax. AO has come to a different conclusion on the material already available on record while concluding the assessment proceedings u/s 143(3) of the Act and merely on the change of opinion on the same set of facts. Such action of the AO has been held to be illegal and not valid in law by the decisions referred to by the assessee before CIT(A). We, therefore, hold that the initiation of proceedings u/s 147 of the Act was not valid and therefore order of reassessment has to be annulled and is accordingly annulled. We are of the view that the contribution cannot be considered as prior period expenses in view of the specific provision of section 36(1)(iv) r.w.s. 43B and deduction on the basis of payment is permissible in law. We are of the view that order of CIT(A) in this regard does not call for any interference. - Decided against revenue
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2017 (3) TMI 142
Tds U/S 195 - Grant of license - P.E. in India - whether the sums paid by the Appellant to NPL is in the nature of “Royalty” chargeable to tax in India has to be decided - Whether the definition of ‘Royalty’ as provided under the Income Tax Act is to be taken or that which has been provided in the DTAA between India and Singapore? - Held that:- We have to clarify that Explanation-4 to Sec.9(1)(vi) of the Act was inserted by the Finance Act, 2012 w.r.e.f 1-6-1976 which enlarges the definition of “Royalty” and therefore not beneficial to NPL in so far as it treats mere “right for use” or “right to use” a computer software as distinct from the definition in Article 12(3) of the DTAA which refers to ‘use of’ or the ‘right to use’ ‘any copyright of literary, artistic, scientific work including. In view of Sec.90(2) of the Act NPL can opt to be governed by the DTAA which is more favourable rather than Explanation-4 to Sec.9(1)(vi) of the Act which imposes a tax burden on NPL. The question whether Explanation-4 to Sec.9(1)(vi) which was enacted after the DTAA can override the provisions of the DTAA is another question which will be discussed later. Therefore the definition of “Royalty” as given in the DTAA has to be adopted. whether the term ‘literary work’ as mentioned in the definition of royalty in the treaty would include ‘software’ or not? - Held that:- We are of the view that the view expressed by the Hon’ble Delhi High Court in the case of DIT Vs. Ericsson AB, New Delhi (2011 (12) TMI 91 - Delhi High Court), which is favourable to the Assessee, should be followed and therefore we hold that the consideration received by the Assessee for software was not royalty. The receipts would constitute business receipts in the hands of the NPL. Admittedly NPL does not have a permanent establishment and therefore business income of the NPL cannot be taxed in India in the absence of a permanent establishment. In the present case there is no dispute raised by the revenue that NPL was not a tax resident of Singapore and that the benefits of DTAA between India and Singapore cannot therefore be available to the appellant. The amount paid by the appellant to NPL is not in the nature of royalty within the meaning of the DTAA between India and Singapore and therefore the amount received by NPL would be in the nature of business income which would be chargeable to tax in India under Article 7(1) of the DTAA only if NPL has a Permanent Establishment (PE) in India. Admittedly NPL did not have a PE in India and therefore the payment in question is not chargeable to tax in India and therefore there was no obligation on the part of the appellant to deduct tax at source u/s.195 of the Act. Consequently, the Assessee could not be treated as an Assessee in default u/s.201(1) of the Act nor could interest be levied on tax not deducted at source on tax not deducted at source till date of payment to the account of the Central Government u/s.201(1A) - Decided in favour of assessee
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2017 (3) TMI 141
Addition of minor traffic violations and Distribution Charges - Held that:- It is clear from the statutory provisions of the MV Act payments made for any purpose which is an offence or which is prohibited by law and which are not compensatory in nature cannot be allowed as a deduction u/s.37(1) read with Explanation thereto. Perusal of the various statutory provisions of the MV Act under which the payment in question were made were for offences committed by the employees of the Assessee for which the Assessee was vicariously liable. These payments were not compensatory in nature. Therefore these sums cannot be allowed as a deduction. We uphold the order of the CIT(A) to this extent. Admittedly the sample vouchers in which the AO found defects had registered vehicle numbers that were hired by the assessee for carriage of goods. This provided enough information for the AO to make further enquiries. In the circumstances under which the carriage was hired by the assesee it is not possible to insist on all details being given in the voucher. The explanation of the assessee has not been found to be incorrect by the AO or CIT(A). We therefore direct that the addition sustained by CIT(A) to the extent it relates to disallowance of 10% of total expenditure of ₹ 17,07,826/- excluding the sums paid by way of penalty, be deleted. Addition under the head "Cash Destroyed by Fire" - Held that:- As in connection with the assessee’s right to enter the warehouse after the incident of fire that the assessee has clearly set out the fact that it had kept cash collections also in the godown that suffered fire accident though the writ petition had been filed by the assessee in the month of July, 2010. In the given circumstances the best evidence that the AO could have obtained regarding the correctness of the claim of the assessee for destruction of cash in fire would have been to make enquiries from the persons from whom the assessee claimed to have received cash. Admittedly the AO did not take recourse to such an action but merely rejected the explanation offered by the assessee. This approach of the AO in our view was not proper. The entry relating to the loss of cash having been made in the books of account of the assessee only on 31.03.2010, in our view, is not a very vital circumstance. Thus the claim of the assessee for loss on account of cash destroyed by fire ought to have been allowed as deduction - Decided in favour of assessee.
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2017 (3) TMI 140
Advertisement and selling expenses - treatment of the expenses in the books of SCL and the Assessee cannot be different - Held that:- As rightly contended by the assessee, the treatment of the expenses by SCL was not conclusive in the matter. Admittedly the sum capitalized by SCL in its books of account had been reimbursed to the assessee and to this extent the parties agreed that the expenditure created brand enhancement of brand SPENCER’S of SCL. The expenditure to the extent claimed by the assessee as a deduction, was never the subject matter of treatment in the books of accounts by SCL. Moreover, the treatment of the very same expenses by one of parties to a transaction in it’s books of account cannot bind the other party. The nature of expenses incurred by the Assessee was given (though it was a general description) and not disputed by the AO. The conclusion of the CIT(A) in this regard is not based on any material. Even otherwise, the question whether expenditure promoted the brand of SCL or was incurred to promote the sales of the Assessee becomes academic. The decision of the Hon’ble Mumbai Bench of ITAT in the case of Brightest Circle Jewellery (P)Ltd., (2012 (10) TMI 238 - ITAT, MUMBAI ) clearly supports the plea of the assessee that the expenditure incurred by a person who is not the owner of the trade mark but which is used by an assessee had to be regarded only as a revenue expenditure. We are therefore satisfied that the claim of the assessee for deduction as revenue expenditure deserves to be accepted. - Decided in favour of assessee Disallowance under section 14A read with Rule 8D - Held that:- As the assessee had not earned or received any dividend income during the previous year, we are of the view that there can be no disallowance u/s 14A of the Act. Accordingly the addition made u/s 14A of the Act is directed to be deleted. See Commissioner of Income Tax Versus M/s. REI. Agro Ltd. [2014 (4) TMI 713 - CALCUTTA HIGH COURT]- Decided in favour of assessee
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2017 (3) TMI 139
Compensation received from tenanted premises - treated as income from House property OR business income - Disallowance of Expenses incurred against the other operating income - Held that:- The amount received by the assessee on account of subletting the property is only income from house property and has to be treated as such. In such circumstances there is no justification of allowing expenses against the house property income other than that provided as deduction under the scheme of computation of house property income. Accordingly the order's of the learned CIT-A is a reasonable one and doesn't need any interference on our part. - Decided against assessee
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2017 (3) TMI 138
Revision u/s 263 - genuineness of the transaction of the receipt of share capital and the capacity and identity of the persons who were investors in the share capital of the assessee not checked by AO - Held that:- From a reading of the entire of the CIT it is clear that the main plank of the case of CIT is that mere sending notices u/s 133(6) of the Act to the various share applicants and getting their replies was not sufficient, in the given facts and circumstances of the case, namely the receipt of huge premium by a company which was a newly formed company. It is for this reason of lack of proper inquiry that proceedings u/s 263 of the Act had been invoked by the CIT. The absence of the word “erroneous order” is not very fatal as reading of the entire order of the CIT would go to show that he was of the view that order of the AO was erroneous because the AO failed to make proper enquiries which were warranted in the facts and circumstances of the case. Apart from the above, we also find from para-16 of the impugned order that the CIT has clearly observed that order of the AO was erroneous and prejudicial to the interest of the revenue. The reference in the impugned order regarding existence of nine share holders when in fact there are only six share holders, in our view is not very material. What is material is the quality of enquiry that was made by the AO. This enquiry was not proper and had not been carried to its logical conclusion. The fact that proceedings initiated in the case of the share applicants u/s 263 of the Act were dropped is not very material and that fact ipso facto cannot be the basis to conclude that proceedings u/s 263 ought not to have been invoked by the CIT in the case of the case of the assessee. Reference made by the ld. Counsel for the assessee to Instruction No.2 of 2015 of CBDT dated 29.01.2015 is thoroughly misplaced as those instructions of CBDT was given in the context of transfer pricing provisions u/s 92 of the Act and has no relevance to the present case. We therefore hold that jurisdiction u/s 263 was properly exercised by the CIT and his action does not call for any interference. - Decided against assessee.
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2017 (3) TMI 137
Levy of fees under section 234E in intimation issued under section 200A(1) - scope of amendment to section 200A(1) - Held that:- Following the referred decision in the case of Gajanan Constructions and others [2016 (11) TMI 1247 - ITAT PUNE] we hold that the amendment to section 200A(1) is prospective in nature and therefore the AO, while processing the TDS statements/returns in the present appeal for the period prior to 01.06.2015, was not empowered to charge fees under section 234E of the Act. Therefore the intimations issued by the AO under section 200A of the Act in this appeal are unsustainable and the demand raised by way of charging of the fees under section 234E of the Act not being valid is deleted. AO is not empowered to charge fees under section 234E of the Act by way of intimation issued under section 200A of the Act in respect of defaults before 01.06.2015 and consequently allow the ground of appeal raised by the assessee.
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2017 (3) TMI 136
Validity of Assessing Officer’s assumption of jurisdiction u/s 153A - non recording of satisfaction notes - Held that:- We drew support from the clarifications issued by CBDT in its circular No. 25/2015 dated 31.12.2015 which is binding on Revenue to withdraw and not press such cases, as in the case on hand, where the AOs concerned, i.e. transferor and transferee have not recorded satisfaction note for proper assumption of jurisdiction for issue of notice under section 153C. In this view of the factual and legal matrix of this case, we hold that since the AOs concerned (i.e. transferor/transferee AOs) have not recorded any satisfaction notes for proper assumption of jurisdiction for issue of notices under section 153 the said notices issued under section 153C of the Act are held to be invalid - Decided in favour of assessee.
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2017 (3) TMI 135
Tds u/s 194C - non deduction of TDS on packaging material and cloth bags payments - addition u/ Section 40(a)(ia) - Held that:- CIT(A) takes note of the Assessing Officer’s finding that the assessee had been deducting TDS on other payments made to the same party. They nowhere specifically reject assessee’s contention as not to have purchased any printing made on the relevant plastic bags. We observe in these peculiar facts that the Assessing Officer has put a negative burden on the assessee to prove a negative fact which the CIT(A) has upheld after concluding that it had indeed deducted TDS on other bills without comparing the nature of payments therein. We thus accept assessee’s arguments qua former disallowance on packaging material made u/s.40(a)(ia) of the Act. Disallowance on purchase of cloth bags done from M/s. Desai Brothers herein as well the Assessing Officer quoted assessee’s failure in proving as to have no printing made for the plastic bags in question. The CIT(A)’s findings are also on identical lines that the assessee had deducted TDS to payments made to the very party on other bills. We reiterate our relevant findings in preceding paragraph to delete this disallowance as well. Correctness of interest disallowance - Held that:- As the assessee could not submit any evidence in support of its claim that the money in question received from M/s. Pharmalab India Pvt. Ltd. was in the nature of return of advance given for machines. He seeks one more innings by stating that the assessee is very much ready and willing to file all necessary evidence before the assessing authority. After arguing for sometime against this contention, learned Departmental Representative does not oppose the assessee’s prayer seeking to remit the issue back to the Assessing Officer. We appreciate this fair stand and direct the assessing authority to decide the instant issue afresh after affording adequate opportunity of hearing to the assessee.
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2017 (3) TMI 134
Addition on unexplained bank deposits - Held that:- As noticed from the assessment order itself that the assessee withdrew a sum of ₹ 74 lac from her savings bank account in the second half of the calendar year 2010. A sum of ₹ 36 lac was re-deposited in the month of March, 2011 and the assessee’s claim is that the remaining amount was re-deposited in the next financial year. The AO has made an addition of ₹ 36 lac by treating the amount of deposits in the bank as unexplained. It is strange that when the assessee categorically submitted details of cash withdrawals from the same bank account which was redeposited, the AO did not get convinced and made addition on extraneous issues, being, the non-submission of details of property which was sought to be purchased, but, finally not purchased. The assessee has specifically contended that the amount was withdrawn from the bank for the purpose of purchase of some property, which transaction did not materialize. The AO has not shown that the cash so withdrawn was used elsewhere and was not available for re-deposit. Thus the presumption has to be that the amount withdrawn a few months before its re-deposit is out of earlier withdrawals, which does not call for any addition. Therefore, order to delete the addition - Decided in favour of assessee. Computation of capital gain - Held that:- Sum incurred for sanitary fittings etc., done by the assessee as a fresh exercise to renovate the premises and POP ceiling is, again, not in the nature of repairs and maintenance and has to be treated as cost of improvement. Expenditure on door and window is also a case of replacement of the earlier window and door and not its repair. As the assessee was intending to sell the property, she considered it expedient to improve the property before sale, so that a handsome price could be received. Since these three amounts are in the nature of cost of improvement and do not fall in the realm of repair and maintenance, thus hold that the computation of capital gain should be done treating these three amounts as 'Cost of improvement’. Computation of capital gain determination of 'Full value of consideration’ - Held that:- The assessee sold this property for a sum of ₹ 1,75,000/-, which was taken as a full value of consideration. Circle rate for stamp duty purpose was mentioned at ₹ 2,66,049/- in the sale deed itself. The AO adopted this figure for computing capital gain, which came to be affirmed in the first appeal. The assessee is aggrieved against adoption of such amount as full value of consideration. Thus no reason to disturb the adoption of this amount as full value of consideration in terms of section 50C of the Act. This action is approved. The AO is directed to recompute the amount of capital gain on transfer of this property in the terms indicated above. Addition on ‘Income from house property’ - Held that:- The contention of the assessee about the receipt of house rent of ₹ 1,08,000/- is unsubstantiated inasmuch as neither any rent agreement was placed on record nor the rent payment was received through cheque. It is seen that the AO has adopted annual value of the property at ₹ 2,25,996/- which has been disputed by the assessee as not in accordance with the Rules of House Tax Department. Under these circumstances, set aside the impugned order and remit the matter to the file of the AO for deciding this issue afresh as per law, after allowing a reasonable opportunity of being heard to the assessee.
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2017 (3) TMI 133
Addition on bogus purchase - information received from the Sales Tax Department that the assessee was one of the beneficiary of the hawala entries - Held that:- The assessee filed a copy of ledger account, purchase bills, delivery challans, proof of payments through banking channels and stock tally which proved beyond doubt that the assessee has received materials which were consumed in manufacturing process of pharmaceuticals and the AO did not point out any defects or deficiency in the books of account except basing his conclusion qua bogus purchase on the basis of information received from the Sales Tax Department, GOM. In our opinion the assessee has discharged the onus cast upon it and now the burden shifts to the revenue to disprove the contentions of the assessee by carrying out further inquiries which was not done in the present case. Moreover, the assessee was not confronted with the statements recorded by the VAT department of GOM from the hawala dealers which itself is in violation of principle of natural justice. AO has wrongly made addition on account of bogus purchase from the hawala parties. We are therefore not in agreement with the conclusion drawn by the FAA that the suppressed GP/NP being more than the hawala purchases for sustaining the additions. Accordingly we set aside the order of CIT(A) and direct the AO to delete the additions - Decided in favour of assessee
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2017 (3) TMI 132
Penalty u/s 271(1)(c) - non disclosure of income earned by way of Director Sitting Fee - Held that:- Merely because AO has mentioned alternate charges at the stage of issue of notice u/s 274 r.w.s. 271(1)(c) of the Act which is a preliminary stage of initiating penalty proceedings, the proceedings cannot be held to be vitiated, as in the instant case, the AO has clearly recorded detailed satisfaction after application of mind in the assessment order dated 20-02-2014 as in the instant appeal the assessee was confronted and cornered by the Revenue to have not disclosed the income earned by way of Director Sitting Fee of ₹ 4,00,000/- and short term capital gains on redemption of HDFC Mutual Funds to the tune of ₹ 12,23,642/- in the return of income filed by the assessee with the Revenue, to which the assessee admitted and immediately after being confronted by Revenue filed revised computation of income and paid due taxes to the Revenue. By no stretch of imagination it can be held that the assessee was not aware of the charge as framed by the AO in the assessment order dated 20-02-2014 framed u/s 143(3) of the Act with which he was burdened for initiating penalty proceedings u/s 271(1)(c) of the Act. We have also observed that in the order dated 26-08-2014 passed by the AO u/s 271(1)(c) of the Act levying penalty on the assessee, the AO after considering the explanation of the assessee has clearly recorded the charge on which penalty had been levied on the assessee u/s 271(1)(c) as held that merely because the assessee is not maintaining books of accounts, he cannot get rid of offering the income earned by him during the year. Thus penalty confirmed - Decided against assessee
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2017 (3) TMI 131
Addition u/s 14A - non-recording of satisfaction by the AO - Held that:- We order deletion of the additions made by the AO as confirmed by the learned CIT(A) on the same grounds for the assessment year 2009-10 that no satisfaction was recorded by the AO u/s 14A(2) of the Act as to the incorrectness of the claim/explanation of the assessee as to the disallowance made by the assessee of expenditure of ₹ 2,50,000/- having incurred in relation to the earning of the exempt income, before invoking Section14A of the Act r.w.r. 8D of Income-tax Rules, 1962 , excluding the suo motu disallowance of ₹ 2,50,000/- as voluntarily offered by the assessee u/s 14A of the Act which disallowance u/s 14A of the Act to the tune of ₹ 2,50,000/- stood confirmed/sustained. We order accordingly.
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Customs
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2017 (3) TMI 163
Natural justice - Imposition of redemption fine and penalty - import of second hand photo copiers - restricted item - appellant claim that they were not given a chance to contest the market price - Held that: - the appellant has not challenged the enhanced valuation before this Tribunal. The value thus arrived on the basis of the Chartered Engineer certificate has attained finality. The contention of the appellant that he was not given a chance to challenge the market enquiry done by Department does not appear to be attractive - no merits in the contention of the appellant that there is violation of natural justice as he was not given a chance to contest the market price while conducting market enquiry - appeal dismissed - decided against appellant.
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2017 (3) TMI 162
Revocation of CHA licence - the interpretation that the respondent was under an obligation to physically verify the particulars, was misplaced - Held that: - This Court notices that the CESTAT construed the provisions of Regulation 11 and the Board Circular of 08.04.2010 and found that the partnership firm involved in the import of consignment was an existing concern, duly registered under a partnership deed and two existing partners and that its IEC copy, PAN Card, telephone bill of the firm, Voter ID of the partners, copy of the partnership deed have been verified by the respondent - appeal dismissed.
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2017 (3) TMI 161
Imposition of penalty in de novo adjudication - originally when the order was passed on 30.05.2000, the third respondent has not imposed any penalty. Subsequently, the appellate authority has remitted the matter by order dated 17.05.2002 for de novo adjudication. In the de novo proceedings, penalty was imposed by the second respondent. The matter was remitted only for the purpose of de novo adjudication, in such facts of the case, whether the imposition of penalty justified? - Held that: - reliance was placed in the case of M/s.The Mehta Fine Arts vs. The Customs, Excise and Service Tax Appellate Tribunal [2015 (9) TMI 975 - MADRAS HIGH COURT], where it was held that There is no bar on the adjudicating authority, in a de-novo proceedings, to determine the quantum of fine or penalty. The fine and penalty imposed has been set aside and the matter is live for re- adjudication. Hence earlier order imposing fine or penalty does not have any relevance - appeal dismissed - decided against appellant.
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2017 (3) TMI 160
Jurisdiction of Commissioner of Customs - the Commissioner is relying upon an order in original passed with regard to the importer to be the investigating report - whether the Commissioner is entitled to do so? - Held that: - An quasi judicial order can be set aside if it is found to be passed in violation of the principles of natural justice, unreasoned, perverse, without jurisdiction or to be in violation of the fundamental rights of the petitioner - In the present case, none of those grounds are substantiated. The order has not been demonstrated to be passed in violation of the principles of natural justice or unreasoned or perverse. The Authorities are within their jurisdiction to pass the impugned order. No right of the petitioner, for less a fundamental right, has been established to be violated by the order impugned - petition dismissed - decided against petitioner.
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2017 (3) TMI 159
Revocation of CHA licence - whether the Revenue has right to appeal against the order of Commissioner? - Held that: - the Customs House Agent Licensing Regulations, 2004 is a complete code of Regulation by itself and are not being governed by the general provisions of Customs Act - reliance placed in the case of COMMISSIONER OF CUS., MUMBAI Versus IMPEX CLEARING & SHIPPING AGENCY [2002 (5) TMI 811 - CEGAT, MUMBAI], where it was held that the right to prefer an appeal to the Tribunal under Sec. 129A of the Customs Act, 1962 against an order passed under Regulation 21 or 23 is available only to the CHA - Revenue's appeals dismissed as not maintainable.
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2017 (3) TMI 158
Delay in finalisation of assessment - valuation in dispute - Section 17(5) of the Customs Act, 1962 - Held that: - Whilst the expression “shall” has been used in Section 17(5) of the Act, the absence of any discernible consequence spelt out by the statute, would constrain the Court from adopting an interpretation that would result in finalization of the assessment on the basis of the declared value, thus clipping the wings, as it were, of the Adjudicating Body - the respondents are directed to complete the process and pass final adjudication orders - appeal allowed.
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2017 (3) TMI 157
Contravention of section 30 and 32 of Customs Act, 1962 - incorrect import manifest - confiscation - Held that: - There is no doubt that goods have been unloaded, whether inadvertently or otherwise, but there is no allegation that these were not inventorised in the records of the duly appointed custodian. In the absence of any such evidence, invoking of section 111(g) for confiscation is not in accordance with law. The goods were intended for unloading at Mumbai port. The purpose of section 30 and section 32 is to ensure that only such goods as are, and can be, cleared from that port on payment of duty shall alone be unloaded - The impugned consignment is not alleged to have been intended for any other port - goods have been unloaded, whether inadvertently or otherwise, but there is no allegation that these were not inventorised in the records of the duly appointed custodian. In the absence of any such evidence, invoking of section 111(g) for confiscation is not in accordance with law - appeal dismissed - decided against Revenue.
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Insolvency & Bankruptcy
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2017 (3) TMI 151
Default in payment of the amount of "Assured Returns" - Insolvency process by invoking Section (7) of the Insolvency and Bankruptcy Code, 2016 - how the Applicants would be covered by the expression 'Financial Creditor' and the expression 'Financial Debt' within the meaning of the term used in Section 7 and Section 5(7) & (8) of the IBC.Held that:- When we examine the nature of transactions in the present case, we find that it is a pure and simple agreement of sale or purchase of a piece of property. The agreement to sell a flat or office space etc. Merely because some "assured amount" of return has been promised and it stands breached, such a transaction would not acquire the status of a 'financial debt' as the transaction does not have consideration for the time value of money, which is a substantive ingredient to be satisfied for fulfilling requirements of the expression 'Financial Debt'. Essentially in the case in hand 'Assured Returns' is associated with the delivery of possession of the aforementioned properties and has got nothing to do with the requirement of sub-section (8) of section 5. It is the consideration for the time value of money which is mercifully missing in the transaction in hand. The classical transaction which would cover the definition of financial debts is illustrated in sub-clause (a) of sub-section (8) of Section 5 i.e. the money borrowed against the payment of interest. Learned Counsel of Applicants has not been able to show from any material on record or otherwise that it is a financial transaction in which a debt has been disbursed against the consideration for the time value of money and he being the Financial Creditor is entitled to trigger the insolvency process against the Respondent in accordance with Section 7 of the IBC. Even otherwise the present petition would not be maintainable as many winding up petitions have been filed before Hon'ble Delhi High Court. Even the Official Liquidator has been appointed as a provisional liquidator although the matter is presently pending before the Appellate Bench with interim directions. As a sequel to the above discussions, we are unable to persuade ourselves to accept that the applicants are covered by the expression "Financial Creditor" in term. The arrears of "assured returns" would also not be covered by the expression 'financial debt'. Therefore the applicants do not answer the description of Section 7 read with Section 5(7) & 5(8) of IBC. The application is accordingly dismissed. The remedy of the Applicant may lie elsewhere. We make it clear before parting that any observations made in this order shall not be construed as an expression of opinion on the merit of the controversy as we have refrained from entertaining the application at the initial stage itself when the Respondents have not entered appearance and are not present before us. Therefore the right of the Applicants before any other forum shall not be prejudiced on account of dismissal of instant application.
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Service Tax
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2017 (3) TMI 182
Waiver of penalty imposed u/s 70, 76, 77, 78 of FA, 1994 - renting of immovable property - taxability was under dispute under various litigation on various forum - Section 80(1) - Held that: - Section 80(1) is general provision for waiver of penalty if the appellant is able to show reasonable cause for non payment of service tax in time - issue was not free from doubt and it involves grave interpretation of law, in such a situation it was sufficient cause for non payment of service tax - appellant is entitle for waiver of penalties in terms of Section 80 (1) of the FA - penalties waived - appeal allowed - decided in favor of appellants.
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2017 (3) TMI 181
Scope of SCN - SCN proposed demand of Service tax under the category of 'cargo handling services', however, first appellate authority without prior notice to the appellant, changed the category of taxable services and confirmed part of the demand under the new categories - Held that: - the tax entry of each type of service has got legal implications with reference to tax liability, classification, quantification, exemption, abatement etc. It is for this reason, the assessee should be put to notice about the correct classification under which the demand was sought to be made, so that defence can be made to reply for such allegation - in the present proceeding, no such proposal to demand Service tax in GTA services or manpower supply service has been made by the department - the impugned order which travelled beyond the scope of show cause notice is not sustainable on this legal ground alone - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 180
Classification of taxable services - Banking and other financial services - mobilization of funds in foreign exchange by issuing convertible bonds by using the services of foreign Merchant Banks - reverse charge mechanism - Held that: - underwriting commission constitutes 99%. The finding of the original authority that in composite contract the essential nature of the contract will decide the obligation of service. This principle has not been appropriately applied to the facts of the present case. When 99% of the commission is towards underwriting services, remaining 1% commission will not determine the essential nature of commission service - reliance was placed on the decision of Tribunal in the case of Jubilant Life Sciences Ltd. vs. CCE Noida [2013 (5) TMI 393 - CESTAT NEW DELHI] where identical set of facts were examined and the Tribunal held that said services of underwriting cannot be taxed under Banking and Financial Services - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 179
Extended Period of Limitation - commercial or industrial construction service / works contract service - Penalty - Held that: - the clear facts about the intimation given by the appellant and various communications in which the activities have been brought to the notice of the Department on more than one occasion, there is no justification to invoke the proviso to Section 73 (1) of the Finance Act, 1994, in the present facts of the case. We also note that all the work executed by the appellants are in the nature of composite works contracts - As pointed out by the learned Counsel by the appellant, the matter is resolved only by the decision of Hon'ble Supreme Court by order dated 20/08/2015 in Larsen & Toubro [2015 (8) TMI 749 - SUPREME COURT] - Appeal allowed.
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2017 (3) TMI 178
Commercial training or coaching service - deduction in respect of study materials - liability on Franchise Service - benefit of N/N. 12/2003-ST - Held that:- Procurement of Various goods and materials and their cost being reflected in the balance-sheet is not a sufficient documentary proof to fulfil the condition of the Notification. - In the absence of documentary proof of sale of goods or materials, the exemption claim cannot be admitted. Franchisee Service - Held that: - the periodical statutory returns filed by the appellant assessee did not disclose full taxable value. Though the appellant was registered with the department and were discharging the service tax they chose to pay service tax only on part of the value received by them. The claim for bonafide belief is not tenable in the facts and circumstances of the present case. Accordingly, no merits found in the plea of the appellant assessee on this account. Appeal allowed - decided in favor of Revenue.
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2017 (3) TMI 177
Waiver of pre-deposit - Restoration of appeal - Held that: - Allahabad High Court in the case of Bihariji Packaging [2011 (9) TMI 503 - Allahabad High Court ] have held that for non-compliance of the direction of pre-deposit under Section 35F, the appeal can be dismissed without going into the merits of the case - Appeal dismissed.
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2017 (3) TMI 176
Valuation of taxable services - deduction of cost of material as 80% based on contract - Denial of exemption - Notification 12/2003-ST dated 20.06.2003 - The only ground on which the present appeal is preferred by Revenue is that sufficient documentary evidences were not produced in support of the claim of exemption under notification 12/2003-ST, by the Respondent - Held that: - Tribunal in Gogia Brothers 2017 (1) TMI 163-CESTAT New Delhi and Raj Engineering 2016-TIOL-3359-CESTAT-DeI., where the Tribunal allowed the said exemption on almost similar set of facts - Appeal dismissed.
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Central Excise
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2017 (3) TMI 175
Additional duty of excise(GSI) - time limitation - Held that: - the fact of non-payment of (GSI) were disclosed by the appellant to the department and the fact that the appellant in the various financial year had started paying Basic Excise Duty and (GSI) after the crossing of exemption limit of ₹ 1 crore has also been declared in the periodical return. Therefore, the entire facts related to non-payment of (GSI) was very much in the knowledge of the department and nothing prevented the department to issue SCN within the normal period of one year - appeal allowed on limitation.
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2017 (3) TMI 174
Condonation of delay - composite appeal - time bar - penalty - The appellant has filed composite appeal within the time prescribed by law. There after realising the mistake, appellant, who is the Executive Director of the company has filed a separate appeal which came to be filed with delay of one month beyond the condonable period of delay of the Commissioner (Appeals) - Held that: - the appellant has filed the composite appeal within the prescribed time limit, I am of the view that the appellant can be given a chance to contest the case on merits rather than take a technical approach and deny justice to a litigant - appeal allowed by way of remand.
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2017 (3) TMI 173
CENVAT credit - forged invoices - credit taken on components, spares and accessories without establishing connection to identifiable capital goods - Held that: - denial of credit was erroneous as the duty paying documents were available on record - In view of the sketchy finding and conclusion by the original authority, and the appellant not being put to prejudice from the remand, no infirmity found thereon - matter remanded for consideration afresh - appeal allowed by way of remand.
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2017 (3) TMI 172
Refund claim - time bar - denial on the ground that activity of repacking, relabeling is amount to manufacture which was not disclosed to the department - Held that: - appellant was maintaining RG 23 D register and issuing invoices in respect of repacking and relabeling of goods and same was being submitted to the department. The Ld. Commissioner(Appeals) taking into consideration this undisputed facts held that there is no suppression of facts on the part of the assessee - the demand of extended period was dropped - order reversing the sanction of refund claim was illegal - appeal allowed - decided in favor of assessee.
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2017 (3) TMI 171
CENVAT credit - Aluminium Sheets, Flush Partition, Flush Door, Ceiling etc. - denial on the ground that all the goods on which credit was taken are falling under heading 7610 whereas credit is allowed on the capital goods of Chapter Heading No. 82,84, 85 and 90 - Held that: - since the goods in question does not qualify either as input or capital goods the cenvat credit is not admissible - the goods falling under Chapter 7610 is not covered under the definition of Capital goods. Even the goods of chapter heading 7610 was not used for manufacture of any component or part of any machine prescribed under the definition of capital goods - credit rightly denied - appeal dismissed - decided against assessee.
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2017 (3) TMI 170
CENVAT credit - whether appellant is entitle for the Cenvat Credit taken on the strength of photo copy of courier Bill of Entry or otherwise? - Held that: - it is not possible for each and every importer to have original Bill of Entry for the reason that this is acceptable position by the department that bill of entry in case of courier is filed consolidated in respect of various importers, if that is so then it is not possible to every importer in a particular of bill of entry to possess the original bill of entry, therefore, credit cannot be denied on the photocopy of the courier bill of entry - both the lower authority have not examined this factual matrix therefore for this purpose matter needs to be remanded - appeal allowed by way of remand.
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2017 (3) TMI 169
Refund claim - N/N. 32/99-CE dated 8th July 1999 - units situated in specified industrial zones of North-East India - refund restricted by splitting of the claim on the basis of the two rates applicable to the two products and assuming that the duty paid on the last date from account current should be attributed to crates that are deemed to have value added of 26% against 36% available for furniture - Held that: - once the eligibility is restricted to the actual payment through account current, being less than that entitled by application of the lower rate on the entire duty paid, artificially determined segregation without any evidence to support the assumption made by the first appellate authority is beyond the authority of law - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 168
Imposition of penalty u/r 25(1)(a) of the CER, 2002 - default in payment of duty for the period from 05.12.2011 to 30.08.2012 in terms of Rule 8(3A) of the CER, 2002 - Section 11A(2) applicable in the case or not? - Held that: - in the case of CC Versus Powerica Ltd. [2011 (9) TMI 665 - Karnataka High Court], it was held that if the duty is paid along with interest, then the assessee is not liable to pay the penalty - imposition of penalty u/r 25 not sustainable - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 167
Imposition of penalty u/r 25(1)(a) of CER, 2002 - rule 8(3A) ibid - Held that: - Appellant has admitted to utilisation of CENVAT credit for discharge of duty liability during the period of withdrawal of privilege. As the debit was effected only on the normal date of payment that is an entitlement restricted to the withdrawn privilege, the appellant has cleared the goods without payment of duty which is an offence under CEA, 1944 warranting recovery of duty and imposition of penalty - appeal dismissed - decided against appellant.
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2017 (3) TMI 166
Natural justice - classification of Corespun Sewing Thread - classified under CETH 5606.00 by Revenue without giving any opportunity to assessee - Held that: - Law is well settled that when a proceeding is ill founded denying the course of natural justice to the aggrieved, that is unsustainable - Revenue did not even go into detail to examine the character, nature as well as composition of such thread. In absence of any reason stated to the assesse to disturb the classification, the proceeding is devoid of merit - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 165
CENVAT credit - shortage of input - denial of credit on the input of 6 MTs found short - Held that: - merely for smaller quantity found short by the internal auditor and reported in 3CD report, credit cannot be denied - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 164
CENVAT credit - wrongful availment - penalty - purchases from EOUs who are charging duties after availing exemption in terms of Sl. No.2 of N/N. 23/2003-CE dated 31.03.2003 - credit has to be availed as per the formulae prescribed u/r 3(7)(a) of CCR, 2004 - Held that: - the excess credit happened to be availed by the credit only because of the wrong application of formulae - there were divergent views with regard to the interpretation and the application of the formulae. The appellants have reversed the credit immediately on pointing out the same by the department. Therefore there is no evidence to establish any suppression of facts with an intention to evade payment of duty - penalty set aside - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2017 (3) TMI 156
Interpretation of statute - Sections 50(2) and 9(8) - Input Tax credit - denial on the ground that the transactions were reflected in retail invoices and not tax invoices and, therefore, did not qualify for credit - Held that: - the strict interpretation of Section 50(2) in the facts of this case was unwarranted - Section 9(2) is the only provision which spells negative conditions or disqualifications for a dealer as it were in claiming credit. To read the provisions of the enactment as strictly as the VATO did in the present case where all the substantial and essential details existed in the document and choosing not to overlook the description (in other words, preferring form over substance) justify the ultimate conclusion of the VAT Tribunal. It is significant that a retail invoice has per se not been defined and is conditional upon the prescription by the rule or other notifications under Section 50(5) - appeal dismissed - decided against appellant.
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2017 (3) TMI 155
Reassessment proceedings for assessment year 2009-10 - Rule 9(3) of the Rules - extended period of limitation - works contract on turn key basis - separate components for supply and labour work under the contracts - wrongful allowance on account of labour charges - whether reassessment permissible? - Held that: - It is settled law that the jurisdiction to initiate reassessment proceedings arises only after the assessing authority records his reason to believe that any turnover has escaped assessment Thus, not only is the belief of escapement essential but more importantly, it is necessary for the Assessing Authority to record his reason/s as to existence of the belief of such escapement - the belief of escapement has not been shown to exist on record. Mere statement that the deduction towards labour charges is allowable under Rule 9 (3) of the Rules, even if accepted to be absolute does not automatically, give rise to the necessary belief of escapement of any part of the turnover for which reassessment proceedings may be initiated. To claim jurisdiction to reassess the petitioner, the burden was solely on the assessing authority to categorically bring on record such information or material as may establish presence of the pre-condition for application of Rule 9 (3) of the Rules. In the context of reassessment proceedings initiated by the Assessing Authority, it was mandatory to record such a fact by way of a reason (based on some material or evidence) that one of the three statutory pre-condition for application of Rule 9 (3) existed - In absence of any material it was not open to the authorities to assume existence of such facts for the purpose of acquiring jurisdiction and to later, in the course of reassessment proceedings to conduct an inquiry as to its existence or otherwise. The petitioner's Assessing Authority had not fulfilled the requirement of recording a reason to believe to apply Rule 9 (3) of the Rules. The assessing authority is clearly wrong in treating it to be a mandatory rule of normal application and not a rule of exception. In absence of any fact or reason recorded to establish existence, of either three mandatory pre-conditions for applicability of Rule 9 (3) of the Rules, the Assessing Authority could never assume jurisdiction to compute the deduction on account of labour and service charges and profit thereon in accordance with Rule 9 (3). This is a clearly impermissible course and the action of the Assessing Authority is without jurisdiction. Moreover, even if Rule 9 (3) were to be applied, even then, at this stage, there is complete absence of any belief and reason or application of mind as to the amount, which in the opinion of the assessing authority has escaped assessment. Thus, the reassessment proceedings initiated at present appear to be an exercise merely to conduct an inquiry, by way of review of the original assessment order, which is clearly impermissible on account of lack of jurisdiction. Petition allowed - decided in favor of petitioner.
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2017 (3) TMI 154
Infringement of rights of citizens - marks quota for backward classes - Annual fees for licences for the persons belonging to Scheduled Caste/Scheduled Tribe - Clause 7-D in Rule 3 of the Karnataka Excise (Sale of Indian and Foreign Liquors) Rules, 1968 and the amendment made in Rule 8 - Held that: - when there is violation of Article 19(1)(g) of the Constitution, the State has to justify by acceptable evidence inevitable consequences or sufficient material that the restriction as sought to be imposed is in the public interest and contains quality of reasonableness - the onus of proving that the restrictions are in the public interest or reasonable has to be amply discharged once class classification made is infringing the quality of the rights by a particular legislation. The Division Bench of this Court found that by addition of 10% marks to the Rural candidates, the urban backward classes, Scheduled Castes and Scheduled Tribes are deprived to get the appointment though they get similar marks and therefore it amounts to further classification or mini-classification and was held to be impermissible and violative of Article 14 of the Constitution. The original petitioners namely Federation through its Secretary cannot be said to be a third party to the impugned legislation when they are in the business of selling of liquor in the State of Karnataka. Further more when the constitutional validity of a subordinate legislation is challenged which infringes the rights of the citizen of trade in the sale of liquor, it is not possible for us to accept the contention that the petitioner cannot be said to have any locus standi to prefer the main writ petition and hence said contention fails. Appeal dismissed - decided against appellant.
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2017 (3) TMI 153
Maintainability of appeal - whether the appeal deserves to be decided on merits, when the alternative remedy is available? - Held that: - when the appeal is not to be entertained on the ground of availability of alternative statutory remedy, this Court would refrain from making any observation on merits, for the simple reason that any observations made by this Court on merits would prejudice the rights of the parties before the Appellate Authority having appellate power - If the observations are made and the appellant herein is to be relegated to the statutory remedy of preferring the appeal, it would be illusory remedy, since when the matter is already considered by this Court and Appellate Authority which is lower forum is in normal circumstance bound by the observations made on merits by this Court - appeal disposed off.
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2017 (3) TMI 152
Detention of goods - Aircompressor transported from Pondicherry to Tiruchengode - detention on the ground that consignees TIN. No. not mentioned in the invoice. Further the consignor Tvl. ATLAS COPCO (India) Pondicherry has not raised any sale invoice - Held that: - perusal of the tax invoice would show that the requisite Central Sales Tax has been paid - the transaction in issue is an Inter-State sale transaction and hence, is not amenable to local tax - goods ordered to be released on furnishing of Bank guarantee - petition allowed - decided in favor of petitioner.
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