Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
March 6, 2018
Case Laws in this Newsletter:
Income Tax
Corporate Laws
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Joint Venture - taxable services provided by the members of the Joint Venture (JV) to the JV and vice versa and inter se between the members of the JV-reg.
Income Tax
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Computation of Capital Gain - AO was of the opinion that since the interest in question on housing loan, had already been claimed as deduction u/s 24(b), the same could not be taken into consideration for computation u/s 48 - AO should not have reduced brokerage and interest on loan from WIP - AT
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Registration u/s 12AA - Rejection of earlier application and further not filing appeal before higher authorities cannot be held to be reason for assessee not to file a fresh application when its is permitted by the law - AT
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Transfer pricing - arm’s length price - Adjustment to the income of the assessee on account of interest on receivables - since the assessee earned significantly higher margin than the comparable companies, which have been accepted by the TPO, therefore, there was no justification to charge interest on outstandings. - AT
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Disallowance of expenses on temporary suspension of the business - mere non conduct of hotel business in the previous year due to the temporary suspension thereof by the assessee cannot be a ground to deny the deduction of the interest expense on the borrowed capital - AT
Central Excise
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Valuation - inclusion of cost of free supply of drawings - as per Rule 6 of Central Excise Valuation Rules, 2000 the value of free of cost drawing used for the manufacture of final product for the customer must be included in the value of automobile parts - AT
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Classification of goods - Printed Plastic Cards - the products coming into existence were held to be printing industry products - products are classifiable under chapter sub heading 4901.90 and the demand made under chapter sub heading 39 is not sustainable - AT
Case Laws:
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Income Tax
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2018 (3) TMI 84
Application for registration u/s 12AA rejected - as per CIT-A objective clauses of the Trust are for the mutual benefit of Corrugated Box manufacturing persons - no “advancement of any other objects of general public utility” by the assessee as required u/s 2(15) - Held that:- Andhra Pradesh Corrugated Box Manufacturers Association from which the assessee has been carved out, has similar objectives and has already been granted registration u/s 12AA which has since been not rescinded. The assessee has been formed on the bifurcation of the State of Telangana and is having the same objectives and therefore, it is also entitled for registration u/s 12AA of the Act on this ground alone. The objectives of the assessee are for the benefit of a particular trade. Whether restricting the benefit to the members of a particular trade disentitles it from registration u/s 12AA of the Act. This issue has first been examined in detail by the Constitution Bench of the Hon'ble Supreme Court in the case of Surat Art Silk Cloth Manufacturers Association (1979 (11) TMI 1 - SUPREME Court). The Hon'ble Supreme Court held that where the dominant and primary object of the assessee is to promote commerce and trade in art silk yarn etc., it is charitable and the other benefits which are incidental in carrying out the main or primary purpose of the assessee, would not make it not charitable. Also in the case of CIT vs. Andhra Chamber of Commerce (1964 (10) TMI 19 - SUPREME Court) held that the Chamber of Commerce did not cease to be charitable merely because the members of the chamber were incidentally benefitted in carrying out its main charitable purpose. - Decided in favour of assessee
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2018 (3) TMI 83
Validity of proceeding u/s 153C - Held that:- As per the provisions u/s 153C where AO is satisfied that any money, bullion, jewellery or other valuable article on thing or books of account or documents seized or requisitioned belongs to a person other than the person referred to in Section 153A, then the books of account or documents or assets requisitioned shall be handed over to the Assessing Officer who shall proceed against such other person and issue such person notice and assess or reassess income of such other person in accordance with the provisions of Section 153A. The said MoU does not bear the signature of the assessee. Thus, finding of document in the premises of Amrapali Group does not constitute that the document to be belonging to the assessee. AO cannot merely on presumption states that the seized documents are that of assessee. Firstly, the Assessing Officer has to establish that the seized documents belong to the assessee which the Assessing Officer as well as CIT(A) failed to looked into. - Decided against revenue
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2018 (3) TMI 82
Disallowance u/s 14A - Held that:- It is a settled law that the disallowance cannot be more than exempt income. The Hon’ble High Court decision in case of CIT Vs. Sam Global Securities Ltd. (2013 (9) TMI 876 - DELHI HIGH COURT) held that the disallowance cannot be more than exempt income. The computation of the income was before the Assessing Officer as well as CIT(A) and the same should have been taken into consideration by the Revenue authority and appellate authority. In present assessee’s case, the assessee has demonstrated that the assessee has not incurred any expenses to earn a dividend income in this particular Assessment Year and the Assessing Officer did not find any ambiguity regarding any expenditure directly or indirectly attributable to the investment made by the assessee. AO as well as the CIT(A) both have ignored this fact. Hence, the additional ground raised by the assessee is allowed. DR relied on various decisions and submitted that the assessed income cannot be below the return income especially when assessee has computed disallowance suo moto and paid tax in self assessment. The Ld. AR could not controvert the aove contentions of the Ld. DR. We therefore, direct the Assessing Officer to take congnizance of the same and accordingly compute the income of the assessee - Decided in favour of assessee for statistical purpose
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2018 (3) TMI 81
Penalty u/s 271(1)(c) - disallowance of prior period expenditure on electricity charges to DVC - defective notice - Held that:- The show cause notice issued in the present case u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income. The show cause notice u/s 274 of the Act does not strike out the inappropriate words. In these circumstances, we are of the view that imposition of penalty cannot be sustained. See Jeetmal Choraria Versus A.C.I.T., Circle-43 [2017 (12) TMI 883 - ITAT, KOLKATA] - Decided in favour of assessee.
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2018 (3) TMI 80
Disallowance of expenditure u/s 40A(3) - Held that:- As per the copy of ledger of Boulders & Murram, the daily cash payment is more than ₹ 20,000/- but single payment towards individual suppliers or parties has not been exceeded the specified limit of ₹ 20,000/-. The original vouchers have been produced by the assessee which were verified. - Decided against revenue TDS u/s 194C - Addition u/s 40a(ia) - tds liability on Earth Digging Charges, stone cutting charges and cartage/carriage heads - Held that:- This expenditure was incurred by the appellant by hiring individual labour at its remote sites or villages and daily payments though its site supervisor or employees. These labours were not regular labour. Also temporary labours were deployed at multiple remote sites, therefore, the assessee or his supervisors have withdrawn money from bank accounts for payment to the labour. Therefore, there is no liability for TDS u/s 40(a)(ia). There is no any agreement with any agency or subcontractor for cartage or supply of goods. Also there is no single payment to individual party more than ₹ 50,000/- during the year under consideration. Therefore, the provision of section 194C is not applicable. The original vouchers have been produced by the assessee for verification. - Decided against revenue
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2018 (3) TMI 79
Registration u/s 12AA rejected - there was no cogent or corroborative evidence to prove the genuineness of activities - Held that:- The fact remains that the assessee had filed copies of audited balance sheet and income and expenditure account as at 31st March, 2016 and had also filed copies of income tax return which clearly establish that assessee was rendering the services which are charitable in nature. Therefore, this finding of CIT (Exemptions) that genuineness of the activities could not be verified is not based upon the facts. The argument of Learned D. R. that books of account and vouchers were not produced does not carry any force in view of the specific letters written by assessee on 02/11/2016, 10/10/2016 whereby the assessee had produced books of account and vouchers etc. In the present case, undoubtedly the objects of the assessee are charitable in nature and the assessee is rendering services for achievement of its objects as given in the Memorandum and Articles of the Samiti. Therefore, the registration cannot be denied by holding that the activities of the assessee were not genuine. In view of the above, CIT (Exemptions) is directed to grant registration to the assessee u/s 12AA of the Act. - Decided in favour of assessee.
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2018 (3) TMI 77
Estimation of income on account of bogus/unverifiable purchases - matter set aside to the file of the AO to decide the same afresh - Tribunal has set aside the assessment to decide the issue of estimation of income to the file of the AO for fresh assessment after the judgment is delivered in the case of Anuj Kumar Varshney and others [2015 (4) TMI 533 - ITAT JAIPUR] - Decision in the case of Anuj Kumar Varshney was challenged before the HC and still pending - Held that:- From the perusal of material available on record, it is noted that the issue involved in the assessment proceedings related to unverified purchases amounting to ₹ 59,88,350. The Co-ordinate Bench vide its order has set aside the matter to the file of the AO to decide the same afresh after the judgement in the case of Anuj Kumar Varshney & Others vs. ITO (Supra) is delivered. From the perusal of records, it is also noted that the provisions of Section 153(2A) of the Act were not brought to the notice of the Coordinate Bench. We accordingly recall the order passed by the Coordinate Bench dated 7.4.2016 and direct the Registry to fix the matter for fresh hearing in due course.
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2018 (3) TMI 76
Exemption u/s 11 eligibility - proof of charitable activities - assessee trust while calculating 2% of the Gross Billing has excluded the doctor’s fees which has resulted in shortfall in the transfer to Indigent Patient Fund (IPF Account)- Held that:- As decided in assessee’s own case for AY 2010-11 and AY 2011-12 [2017 (2) TMI 1324 - ITAT MUMBAI] non-compliance of one of the statutory stipulations should not nullify its efforts made towards achieving its charitable objectives. The same can be observed from the fact that it has appropriated 88% of its Income towards achieving the objectives of the trust. Further, the assessee has not altogether shrugged off its responsibility towards the Indigent and Weaker Section Patients. There is a difference of opinion w.r.t the amount of funds to be transferred to the Indigent Patient's Fund (IPF). It is noteworthy, that the assessee has not simply waited for the clarification and stalled the appropriation of funds to the IPF and its utilization towards the requisite purpose. Rather, until clarification on such matter, the assessee has chosen to transfer 2% of the total hospital billing net of doctor’s' fees to the IPF and has utilized the same towards the medical treatment of the Indigent and Weaker Section Patients. There is no single evidence which would suggest otherwise. The rationale behind the same being that the doctor’s fees is not a part of the hospital's earnings, but rather a reimbursement to the hospital. The hospital merely acts as a collecting agent between the two for this particular aspect. Neither is there any evidence which would suggest the assessee’s status of that of a "Charitable Trust registered under the Bombay Public Trusts Act, 1950" being revoked by the Charity Commissioner. In such a scenario, we are of the view that the AO has no role in law by usurping the role of the Charity Commissioner and declaring that the assessee has breached the covenants of the Scheme. Hence, in light of the above, we confirm the order of CIT(A) and the appeal of Revenue is dismissed.
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2018 (3) TMI 75
Reopening of assessment - validity of reasons to believe - suppression of receipts - unexplained cash deposits - Held that:- On perusal of the reasons demonstrate that the assessing officer did form a reasonable belief that income of the assessee which is subject to tax of the assessee, has escaped assessment, as the entire receipts from Godfrey Philips (I) Ltd., may have been suppressed. Though the wording “escaped assessment” has not been used, the sum and substance of the reasons demonstrate that the assessing officer had reason to believe based on the tangible material that income chargeable to tax has escaped assessment. Thus, this argument of the ld. counsel for the assessee is dismissed as devoid of merit and the re-opening of assessment is upheld. The second argument that, no addition has been made on the issue on which the assessment was reopened and hence the other addition which have no relation or nexus with the reasons recorded are bad in law, the assessment was reopened on the ground that there was cash deposits of ₹ 89,10,640/-, in one savings bank account maintained in Canara bank, Siliguri Branch and that no evidence was produced by the assessee in support of the contentions that these deposits were out of sale proceeds of cigarettes. AO has come to a conclusion that the undisclosed cash receipts was ₹ 48,82,702/-, which he treated as income at Para 6(i) of his order. Thus, irrespective of the fact, whether this addition is ultimately made in the same manner or not, the fact remains that an addition was made on the issue on which the re-opening has been done. Thus, this argument of the assessee fails. On merits we find when the deposits in a Savings Bank Account, are the subject matter of enquiry, we do not understand how there can be a presumption of withdrawal of a huge amount of ₹ 48,82,702/-, in cash from business. M/s. Godfrey Philips India Ltd., issued to the assessee, credit notes, totalling to ₹ 73.56.250/-. Out of this, display and scheme receipts, was a figure of ₹ 55,57,483/-. The surplus from the same was ₹ 22,39,198/-, after meeting the expenses. This was credited to the Profit & Loss Account of the assessee under the head “Display & Scheme” receipts. Under the head “Distribution of Subsidy”, the assessee received credit notes of ₹ 17,83,767/-. The surplus from this account was ₹ 2,34,350/-, after expenses. This was credited to the profit and loss account under the head “Miscellaneous Income”. These facts and figures have not been controverted by the ld. D/R. Whether the Assessing Officer can made separate additions of items of expenditure reflected in the P & L A/c, when he rejects the books of accounts and estimate the profit as a percentage of turnover - Held that:- Applying the propositions of law laid down in the case of Income-Tax Officer vs Kenaram Saha And Subhash Saha (2008 (3) TMI 350 - ITAT CALCUTA) we uphold the contention of the assessee that, once the books of account have been rejected and the net profit has been estimated as a percentage of turnover by AO, no further additions on account of unverifiable expenditure and of items claimed in the profit and loss account etc., can be made. Gross receipts from M/s. Godfrey Philips (I) Ltd., cannot be treated as income of the assessee. Such action is against the facts of the case. Hence, this argument of the assessee is upheld and the addition estimated at 2 per cent of the turnover as determined by the Assessing Officer, is sustained. The balance of the additions are hereby deleted. - Decided partly in favour of assessee.
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2018 (3) TMI 73
Disallowance of depreciation to assessee trust - Held that:- The issue of allowability of depreciation in the case of Charitable Trust has been decided by the Hon’ble Gujarat High Court in the case of CIT vs. Sheth Monilal Ranchhuddas Vishram Bhavan Trust [1992 (2) TMI 51 - GUJARAT High Court] wherein as observed that the computation under the different categories or heads arises only for the purpose of ascertaining the total income for the purposes of charge. That provisions cannot be introduced to find out what the income derived from the property held under trust to be excluded from the total income is, for the purpose of the exemptions under Chapter III. Following the aforesaid decision in the instant case the Tribunal was justified in holding that having regard to the scheme of the Act, 'income' referred to in section 11(1)(a) was not to be computed not in accordance with the provisions of the Act but in accordance with the normal rules of the accountancy under which the depreciation has to be allowed while computing such income under section 11(1)(a) - Decided in favour of assessee
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2018 (3) TMI 72
Addition invoking the provisions of section 145(3) - Held that:- CIT(A) has considered all genuine pleadings and reconciliation in right perspective and allowed part relief. The other grounds of reconciliation are bald assertion not supported by any independent and positive evidence. These are simply afterthought which have no weightage in the eyes of law. It is undisputed fact that the books of accounts of the assessee were incomplete as on the date of survey, therefore the same cannot be accepted as such. The provisions of section 145(3) were rightly invoked by the AO. Further, the details with evidences filed by assessee were considered by the CIT(A) and partly accepted. The genuine claims of the assessee as made in reconciliation were accepted and those which were afterthought and unsupported by any positive evidence were rejected. Under these circumstances, in our considered view the part addition so sustained by ld. CIT(A) was justified.
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2018 (3) TMI 71
Penalty u/s 271(1)(c) - defective notice - non forming a charge against assessee - non recording of satisfaction - Held that:- In the present case, it is noticed that the AO in the assessment order dated 29.12.2008, simply stated that the penalty proceedings u/s 271(1)(c) of the Act have been initiated separately. He did not mention as to whether the penalty proceedings were initiated for furnishing of inaccurate particulars of income or concealment of income, so, there was no satisfaction of the AO. Moreover, the estimated additions which were made by the AO were deleted by the ld. CIT(A) and the only addition sustained was on account of scrap sales which was disclosed by the assessee itself. From show cause notice it is not clear as to whether the penalty proceedings u/s 271(1)(c) of the Act were initiated by the AO on account of concealment of income or furnishing of inaccurate particulars of income. Therefore, charge framed was not clear. - Decided in favour of assessee.
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2018 (3) TMI 70
Levying the penalty u/s 271(1)(c) - addition u/s 41(1)(a) - Held that:- In case in hand the fact that the addition was made by the AO because the difference of the outstanding liability shown in the original return of income and in the revised return of income. However, the assessee has disclosed the relevant facts which was subjected to the verification of the AO and it was also brought on record that out of the opening balance of the liability of ₹ 5,14,409/- the creditor has confirmed the receipt of ₹ 3 lacs but deny the balance amount of ₹ 2,14,309/-. Therefore, the explanation of the assessee may not be acceptable however, the same is bonafide explanation then the penalty on such addition made by the AO is not leviable. Addition made u/s 41(1)(a) of the Act. Addition on account of interest income since the assessee has not contested this addition in the quantum appeal and also has not furnished any explanation for not offering the said income to tax, therefore, in the facts and circumstances of the case, we do not find any error or illegality in the orders of the authorities below levying the penalty against the said addition made by the AO. - Decided partly in favour of assessee.
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2018 (3) TMI 69
Disallowance of deduction on account of payment of service charges - genuineness of expenditure - Held that:- When the purchases have been accepted as genuine, the payment of service charges cannot be disallowed by raising the bogey of business expediency or lack of evidence to show rendering of services. When the assessee has submitted documentary evidences to establish that the payment of service charges were in terms with contractual obligation and parties to the contract have also confirmed payment of service charges, such evidence cannot be ignored on flimsy ground. As far as the business expediency relating to payment of such service charges is concerned, it has to be seen from the perspective of the businessman. AO certainly cannot step into the shoes of the businessman to decide whether such expenditure was for the purpose of business or not. From the details furnished by the assessee towards payment of service charges it is seen that Golden Tobacco Co. Ltd. was not only involved as an intermediary arranging supply of palm kernel fatty acid to the assessee through other importers but it has itself directly effected sales to the assessee. Notably, in respect of palm kernel fatty acid directly supplied by the Golden Tobacco Co. Ltd. to the assessee service charges have been paid to two intermediaries viz. PPL Plastics Ltd. and Raigarh Papers Ltd. amounting to ₹ 12.50 lakh and ₹ 5.59 lakh. When Golden Tobacco Co. Ltd. itself is providing all ancillary and incidental services to the assessee in procuring palm kernel fatty acid through other importers, in case of direct supply of such material by Golden Tobacco Co. Ltd. Why service charges have to be paid to other intermediaries is not understood. When the Golden Tobacco Co. Ltd. itself is capable of providing such service, there is no necessity of paying service charges to others. In case of direct supply of goods by Golden Tobacco Co. Ltd., the payment of service charges to other parties acting as intermediaries is not in the business interest of the assessee. Therefore, service charges paid of ₹ 12.50 lakh and ₹ 5.59 lakh, totalling to ₹ 18.09 lakh, to PPL Plastics Ltd. and Raigarh Papers Ltd. should not be allowed as deduction. We direct the AO to allow the balance amount of service charges paid as deduction - Decided partly in favour of assessee.
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2018 (3) TMI 68
Registration u/s 12AA denied - Only reason recorded by learned CIT (Exemptions) for rejection of claim of the assessee is that vide earlier order its application was already rejected and assessee had not filed appeal against that order - Held that:- As we have gone through the order dated 03/08/2015 and noted that the order was passed ex-parte qua assessee. Learned A. R. has stated the reason for non appearance to be non receipt of specific notice. Rejection of earlier application and further not filing appeal before higher authorities cannot be held to be reason for assessee not to file a fresh application when its is permitted by the law. Therefore, we do not agree with learned CIT (Exemptions) as regards this finding. As regards other finding relating to remuneration drawn by the assessee and violation of section 13(1)(c), we find that during the financial year 2013-14 the assessee was a commercial company and taking of remuneration from the company was permitted as during that year admittedly the assessee was not registered u/s 12A of the Act. The arguments of Learned D. R. that the assessee had not produced books of account and vouchers is not having any force. At the time of registration, the CIT (Exemptions) is required to examine the objects of the assessee which in the present case are entirely charitable as the company is section 25 company As in the case of CIT vs. Red Rose School [2007 (2) TMI 575 - ALLAHABAD HIGH COURT] as held that CIT (Exemptions) has to satisfy himself about the genuineness of the activities of the trust and also the objects of the trust or institution. CIT (Exemptions) is empowered to make inquiries, as he thinks fit, to verify as to whether the activities are genuine or not but on mere presumption and surmises that income derived by the trust or institution will be misused or that there is some apprehension that the same would not be used in a proper manner, cannot be made a basis for rejection of registration. The genuineness of the activities of trust or institution has to be seen keeping in mind the objects thereof which necessarily means that the CIT (Exemptions) shall satisfy himself about the fact that the activities are genuine and in consonance with the objects of the trust or institution. Thus we direct the CIT (Exemptions) to grant registration to the assessee u/s 12A of the Act. - Decided in favour of assessee.
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2018 (3) TMI 67
Computation of total income - whether the order of the AO reducing the amount of brokerage and interest on loan from the WIP is correct or not? - AO was of the opinion that since the interest in question on housing loan, had already been claimed as deduction u/s 24(b), the same could not be taken into consideration for computation u/s 48 - Held that:- Both AS 10 and Ind AS 16 define elements of cost in an identical manner and contain several examples of costs that are includible or excludible in the determination of cost of assets. Having examined the relevant documents, we find that the claim of the appellant that the AO should not have reduced brokerage and interest on loan from WIP has not been examined either by the AO or the Ld. CIT(A) on the basis of parameters as narrated at para 7.3,7.4&7.5. In view of the above facts, we set aside the order of the Ld. CIT(A) and restore the matter to the file of the AO to make a de novo order in the light of our observation at para 7.3,7.4 &7.5 hereinbefore after giving reasonable opportunity of being heard to the appellant. We direct the appellant to file the relevant accounts/documents before the AO.
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2018 (3) TMI 66
Disallowance of expenses on temporary suspension of the business - Held that:- As during the financial year 2006-07 the assessee was unable to cater the needs of the customers, the business was not yet commenced. We also do not agree with the theory of estoppel proposed by the learned CIT(A) that since the assessee did not claim the expenses relatable to AY 2002-03 for the period subsequent to 31.10.2002, by their own conduct they are estopped from claiming the same for any period subsequent thereto. The assessee purchased the business that had already been commenced and conducted business operations till 31.10.2002, from which date the assessee suspended the business operations till April 2009 for renovation of the hotel building. The period between November 2002 and April 2009 is only the temporary suspension of the Lodhi Hotel business of the assessee, but as a matter of fact, as a business entity, the assessee did not cease to exist or permanently shut down the business. Allowability of interest expense - it is the case of the assessee that in order to expand their business in hospitality in NCR region, it was necessary for them to invest in GGGRL, which was owning and operating a premium 18 hole golf course - Held that:- The reasons for disallowance of the expense by the learned AO is that during the relevant previous year the assessee did not carry on any business and that is the reason why such an expense cannot allowed - Held that:- where there is nexus between expenditure and purpose of business, interest on borrowed capital whether it is for investment of acquire controlling interest in a subsidiary or towards loan in view of the business expediency, interest on the borrowed capital cannot be disallowed, we hold that the investment in GGGRL and to lend amounts to them for the purpose of strengthening the hospitality business, mere non conduct of hotel business in the previous year due to the temporary suspension thereof by the assessee cannot be a ground to deny the deduction of the interest expense on the borrowed capital - Decided in favour of assessee.
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2018 (3) TMI 65
Transfer pricing - Adjustment to the income of the assessee on account of interest on receivables - Not charging interest from A.Es and non-A.Es - Held that:- All international transactions were accepted by the TPO to be at arm’s length, except, payment of interest on loan. The authorities below have treated the delayed payment beyond 30 days as loans. In fact, no loan have been extended by the assessee. It was the amount ‘due’ against the A.Es. as well as non-A.E. on which interest have been charged by considering the deemed loans. Therefore, the decision of ITAT, Delhi Bench in the case of M/s. Kusum Healthcare Pvt. Ltd., (2015 (4) TMI 180 - ITAT DELHI), squarely apply in the case of the assessee, since the assessee earned significantly higher margin than the comparable companies, which have been accepted by the TPO, therefore, there was no justification to charge interest on outstandings. The assessee also explained that there are similar delays in collection of outstanding receivables from both A.Es and non-A.Es which is due to business and commercial reasons. Therefore, there is uniformity in act of assessee in not charging interest from A.Es and non-A.Es. Considering the nature of business of assessee and the facts explained above, we are of the view that there was no justification for the authorities below to make adjustment to the income declared by assessee. Adjustment to the income of the assessee is wholly unjustified on account of interest on receivables - Decided in favour of assessee
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2018 (3) TMI 64
Registration u/s 12AA cancelled - appellant is not engaged in activities which are covered within the meaning of charitable purpose appearing in section 2(15) - jurisdiction of DIT(E) for cancellation of registration already granted - Held that:- The Circular No.21/2016 issued by CBDT clearly provides that mere receipt on account of business receipt in excess of limit in the proviso would not result in cancellation of registration granted under section 12AA, unless there is change in the nature of activities of the assessee. DIT(E) has not given any finding as to whether there is change in the nature of activities of the assessee during the relevant Assessment Year, except placing reliance on the proposal of ADIT(E). Decision relied by Revenue in DIT(E) vs. North India Association (2017 (3) TMI 37 - BOMBAY HIGH COURT) is in favour of assessee wherein while dismissing the appeal of Revenue, the Hon’ble jurisdictional High Court held that merely because in one year income of assessee-trust exceeded prescribed limit provided under section 2(15), by itself could not warrant the cancellation of registration of Trust. The appeal of the assessee is allowed, the ld. DIT(E) is directed to restore the registration certificate granted under section 12AA dated 08.09.2009. - Decided in favour of assessee.
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Corporate Laws
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2018 (3) TMI 78
Production of the certificates on completion of the project - Corporate Debtor exercise the 'right of unpaid vendor lien' - Held that:- Arbitral Tribunal is conscious of the fact that in case the Corporate Debtor departs with the certificates of the completion of the Project, there may be financial implications. The Arbitral Tribunal while passing the order observed that "an interim direction is to avoid any controversy on the aspect, whether all the certificates obtained and in the custody of the claimant are made available. Further, the question whether any condition regarding the payment of the amounts said to be due to the claimant, after the initiation of Arbitration Proceedings, has to be imposed, may have also to be considered". In view of these observations, the Applicant may raise the issue before the Arbitral Tribunal for consideration.
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Central Excise
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2018 (3) TMI 63
Valuation - includibility - value of coating - Held that: - the appellant had paid duty on metalized polyester film which was cleared for further coating thereon. In that circumstances, as activity of coating does not amount to manufacture and the appellant has already paid duty on metalized polyester film, therefore, the value of coating is not required to be added in the assessable value of the metalized polyester film - appeal allowed - decided in favor of appellant.
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2018 (3) TMI 62
Recovery of Excise Duty - parts of transformers, cleared under returnable gate passes, but not returned to the factory - Held that: - it is prudent to remand the matter to the adjudicating authority to ascertain the fact whether the items cleared under returnable gate passes and not returned to the factory being used for replacement of worn out pats, are either manufactured by the appellant or credit has been availed on the same. CENVAT credit - input services - Erectioning and Commissioning charges - clearing and forwarding charges - Held that: - the issue is covered in Alidhara Textile Engg. Pvt. Ltd.’s case [2009 (1) TMI 129 - CESTAT AHMEDABAD] and Clearing and Forwarding service is covered by the judgment of Hon’ble High Court in the Inductotherm Ltd.’s case [2014 (3) TMI 921 - GUJARAT HIGH COURT] - in these cases the services has been held to be input services - credit on both items allowed. Penalty on the Director - Held that: - the Ld. Advocate submits that no statements has been recorded by the department from him, hrnvr his involvement has not been established, consequently no personal penalty is imposable on him. Appeal allowed in part and part matter on remand.
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2018 (3) TMI 61
Interest u/s 11AB of CEA 1944 read with rule 14 of CCR 2004 - CENVAT credit availed prematurely - Held that: - This contingency is relatable not to the time of availment but to the eligibility for availment. In the scheme that is primarily intended to set off the cascading effects of taxation by permitting the drawal from such a pool of credit for discharge of duty/tax obligation, there can be no other interpretation - there is no justification for demand of interest which, under rule 14 of CCR 2004, is recoverable only on wrongly taken/utilized credit - appeal allowed - decided in favor of appellant.
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2018 (3) TMI 60
Classification of goods - Printed Plastic Cards - whether classified under Chapter 39 or Chapter 49? - Board Circular No.141/52/95 - CX dt. 14.08.95 - Held that: - the impugned goods are printed plastic cards having printed matter as per the requirement of customer. The sample produced before us also to the same effect and further there is no dispute about the identity of the cards. In such case when it is not a plain card, it shall be governed by Section Note 2 of Section VII to the Central Excise Tariff - The Hon’ble Apex Court judgment in case of Metagraphics Pvt. Ltd. v. CCE, Bombay - 1996 (88) ELT 630 (SC) and Tribunal’s judgment in case of Bharat Metal Decorators - 2005 (185) ELT 397 (TRI), Sai Security Printers Ltd. 2006 (199) ELT 121 and CCE, Aurangabad v. Adhunik Plastic Inds. [1998 (1) TMI 129 - CEGAT, NEW DELHI] are absolutely applicable in the given controversy. In all the aforesaid cases the products coming into existence were held to be printing industry products. The impugned products are classifiable under chapter sub heading 4901.90 and the demand made under chapter sub heading 39 is not sustainable - appeal allowed - decided in favor of appellant.
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2018 (3) TMI 59
Valuation - inclusion of cost of free supply of drawings - Section 4 of the Central Excise Act, 1944 - Held that: - In principle, as per Rule 6 of Central Excise Valuation Rules, 2000 the value of free of cost drawing used for the manufacture of final product for the customer must be included in the value of automobile parts - However, it is observed that the Adjudicating Authority has taken 0.90% which is overall R & D expenses of M/s Mahindra & Mahindra Ltd. which obviously cannot be the cost of drawing supplied by M/s Mahindra & Mahindra Ltd. It is also fact that the appellant also did not make any effort to provide the cost of drawing either by obtaining from M/s Mahindra & Mahindra Ltd. or Chartered Engineer certificate, therefore dispute cannot be resolved at this stage in the given facts - the appellant must obtain Chartered Engineer certificate for certifying the cost of each drawing and on that basis the demand can be determined on the cost of such drawings. Appeal allowed by way of remand.
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2018 (3) TMI 58
Short payment of duty - Whether for calculation of excise duty on the amounts of sales appearing on the credit side of the balance sheet/books of accounts, is to be adjusted with the amount of excise duty shown on the debit side for the calculation of liability of excise duty for the period of assessment under the Central Excise Act read with the Rules and whether duty of ₹ 12,85,084/- is short paid? Whether the appellant have short paid Excise Duty of ₹ 62,652/- during the period from 2000-01 and 2001-02? Held that: - the appellant have provided a plausible and correct conciliation as regards the amount of ₹ 12,85,084/- - it is evident from the reconciliation that the appellant have shown correctly the clearance value in their returns, as is evident from Annexure-B to the SCN, at ₹ 4,55,87,015/-. Whereas the clearance value as per the reconciliation is coming at ₹ 4,53,65,172/-. Thus, the appellant have shown correct value of clearance in their excise returns, which does not call for an adverse inference. There is no error and/or mistake has been pointed out in the calculation submitted by the appellant as per the invoice(s). Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2018 (3) TMI 74
Principles of Natural Justice - order passed after the death of the assessee / appellant - The case of the first petitioner is that she had no knowledge about Exts.P1 to P3 orders and the decision taken by the appellate authority on the appeals preferred by K.F.Francis against the said orders - KVAT Act - Held that: - Rule 76 of the Rules says that since nobody got himself/herself impleaded as additional appellant in the appeals preferred by K.F.Francis on his death within the time stipulated, the said appeals were abated. Rule 77 of the Rules provides for application to set aside the abatement in a case of this nature. The said Rule also provides that provisions contained in Section 5 of the Limitation Act applies to the application under Rule 77 of the Rules - in the absence of any material to indicate that the first petitioner was aware of the pendency of the appeals at the time of the death of her husband, the first petitioner shall be given an opportunity to file applications to get herself impleaded and set aside the abatement of the appeals preferred against Ext.P1 to P3 orders. Petition allowed permitting the first petitioner to prefer applications for impleading and set aside the abatement of the appeals preferred against Exts.P1 to P3 orders - the first petitioner shall be given an opportunity to file applications to get herself impleaded and set aside the abatement of the appeals preferred against Ext.P1 to P3 orders.
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