TMI Tax Updates - e-Newsletter
March 7, 2018

Case Laws in this Newsletter:

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

TMI SMS

• Merely by accounting the commitment charges as guarantee commission, service tax can not be levied since it is interest of unused credit

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Articles

1. Tax department must have respect of taxpayers -estimated disallowance of expenses in case of professionally managed companies- a serious issue.

   By: DEVKUMAR KOTHARI

2. INVESTOR EDUCATION AND PROTECTION FUND AUTHORITY

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Participation of States in E-Way Bill System

2. Partial Withdrawal under NPS

3. Beneficiaries under DBT

4. Agreement with other Countries on Money Laundering Information

5. Opening of bank branches in villages

6. “Make in India” campaign

7. Pradhan Mantri Mudra Yojana (PMMY)

8. 199 companies face penalty for non-compliance of CSR norms

9. NFRA to have power to impose penalty on audit firms

10. RBI Reference Rate for US $

Notifications

GST - States

1. F-10-4/2018/CT/V (16)-09/2018-State Tax (Rate) - dated 25-1-2018 - Chhattisgarh SGST

Seeks to amend Notification No.45/2017-State (Rate)

2. F-10-4/2018/CT/V (15)-08/2018-State Tax (Rate) - dated 25-1-2018 - Chhattisgarh SGST

Reduction of State tax on intra-state supply of certain old and used motor vehicle

3. F-10-4/2018/CT/V (14)-07/2018-State Tax (Rate) - dated 25-1-2018 - Chhattisgarh SGST

Seeks to Amend Notification No. 2/2017- State Tax (Rate) dated the 28th June, 2017

4. F-10-4/2018/CT/V (13)-06/2018-State Tax (Rate) - dated 25-1-2018 - Chhattisgarh SGST

Seeks to amend Notification No. 1/2017- State Tax (Rate), dated the 28th June, 2017

5. F-10-3/2018/CT/V (12)-05/2018-State Tax (Rate) - dated 25-1-2018 - Chhattisgarh SGST

Seeks to exempt State Government’s share of Profit Petroleum from State tax

6. F-10-3/2018/CT/V (11)-04/2018-State Tax (Rate) - dated 25-1-2018 - Chhattisgarh SGST

Seeks to provide special procedure with respect to payment of tax by registered person supplying service by way of construction against transfer of development right

7. F-10-3/2018/CT/V (10)-03/2018-State Tax (Rate) - dated 25-1-2018 - Chhattisgarh SGST

Seeks to amend Notification No. 13/2017- state Tax (Rate)dated 28th June, 2017

8. F-10-3/2018/CT/V (09)-02/2018-State Tax (Rate) - dated 25-1-2018 - Chhattisgarh SGST

Seeks to amend Notification No. 12/2017- State Tax (Rate), dated the 28hJune, 2017

9. F-10-3/2018/CT/V (08)-01/2018-State Tax (Rate) - dated 25-1-2018 - Chhattisgarh SGST

Seeks to amend Notification No. 11/2017- State Tax (Rate), dated 28th June 2017

10. G.O. (Ms) No. 013 - dated 25-1-2018 - Tamil Nadu SGST

Amendments in the Notification No.II(2)/CTR/532(d-15)/2017, dated the 29th June, 2017.

11. G.O. (Ms) No. 012 - dated 25-1-2018 - Tamil Nadu SGST

Amendments in the Notification No.II(2)/CTR/532(d-14)/2017, dated the 29th June, 2017.

12. G.O. Ms. No. 006 - dated 23-1-2018 - Tamil Nadu SGST

The Tamil Nadu Goods and Services Tax (Amendment) Rules, 2018.

13. F.1-11(91)-TAX/GST/2018(Part-I) - dated 23-2-2018 - Tripura SGST

Notification regarding rescinding the Notification dated the 5th January, 2018, published in the Tripura Gazette vide No.6, dated 5th January, 2018.

14. F.1-11(91)-TAX/GST/2018 - dated 22-2-2018 - Tripura SGST

The Tripura State Goods and Services Tax (Amendment) Rules, 2018.

15. F.1-11(91)-TAX/GST/2018 - dated 22-2-2018 - Tripura SGST

Reduction of late fee in case of delayed filing of FORM GSTR-6.

16. F.1-11(91)-TAX/GST/2018 - dated 22-2-2018 - Tripura SGST

Reduction of late fee in case of delayed filing of FORM GSTR-5A.

17. F.1-11(91)-TAX/GST/2018 - dated 22-2-2018 - Tripura SGST

Reduction of late fee in case of delayed filing of FORM GSTR-5.

18. F.1-11(91)-TAX/GST/2018 - dated 22-2-2018 - Tripura SGST

Reduction of late fee in case of delayed filing of FORM GSTR-1.

19. F.1-11(91)-TAX/GST/2018 - dated 22-2-2018 - Tripura SGST

Notifyng e-way bill web.

Circulars / Instructions / Orders

GST - States

1. F.17(134 )ACCT/GST/2017/2974 - dated 1-1-2018

Regarding clarification about the rate of tax on items of HSN 6802

2. F.17(134)ACCT/GST/2017/2968 - dated 26-12-2017

Corrigendum of the english version of the GST Circular 04/2017 number F.17(134)/ACCT/GST/2017/2923 Dated 12.12.17.

DGFT

3. 64/2015-2020 - dated 5-3-2018

Amendments in Appendix 4J of Hand Book of Procedures 2015-20 - reg.

Highlights / Catch Notes

Income Tax

• High Court Rules: Withdrawal of Section 197 Certificate Invalid Due to Lack of Reasons Provided.

  Case-Laws - HC : Cancellation/withdrawal of the Certificate issued u/s 197 - non furnishing of copy of the reasons recorded was a flaw in the decision making process. - Thus, making the impugned order unsustainable. - HC
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• Trust's 12A Registration Denied: Benefits Limited to 'SAMAJ Families,' Not General Public Charity or Religious Purposes.

  Case-Laws - AT : Registration u/s. 12A - As most of the expenditure is held for the benefit of a particular community or a religious group called ‘SAMAJ families’ and so, we are of the opinion that the Trust is not created for charitable or religious purposes for general public. Accordingly, it is not entitled for registration. - AT
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• Income from Share Trading Must Be Clearly Separated from Capital Gains with Proper Records for Accurate Reporting.

  Case-Laws - AT : Income from share trading - since long and major source of income is from trading in shares only and if such assessee subsequently opts to show transactions of purchase and sale of shares as capital gains and simultaneously also shows trading in shares then both the things cannot go together unless otherwise demarketed with proper records - AT
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• Assessee Avoids Penalty for Late Tax Audit Submission Due to Health Issues; Granted Immunity u/s 273B.

  Case-Laws - AT : Levy of penalty u/s 271B - delay in submission of the tax audit report - ill health leading to acute physical trouble - assessee has indeed adduced proper reasons and is entitled for immunity in terms of Section 273B - AT
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Customs

• Transfer of Ship Stores to New Vessel Valid u/ss 86 and 87; Duty Recovery Argument Unfounded.

  Case-Laws - AT : Transshipment of ship stores - Merely because as on the date of transfer of ship stores to the newly built vessel SV Shivam, which was not ready for voyage, the transfer of ship stores under Section 86 and later consumed on board as per Sec. 87, becomes incorrect and duty could be recovered on the ship stores, cannot be sustained. - AT
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• Sections 112(a) and 114AA: Penalties Need More Than Filing Bill of Entry; Involvement in Importation Required.

  Case-Laws - AT : CHA - Penalties u/s 112(a) and 114AA of CA, 1962 - for penalty under the Customs Act, 1962, it is apparent that mere filing of Bill of Entry without the knowledge or a role in the importation of cargo is not sufficient. - AT
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State GST

• Tax Rate Clarification: HSN 6802 Items Taxed at 12% or 18%, Excluding Slate.

  Circulars : Clarification about the rate of tax on items of HSN 6802 - Some items would be levied @12% and others @18% - WORKED MONUMENTAL OR BUILDING STONE (EXCEPT SLATE) AND ARTICLES THEREOF
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Service Tax

• Service Tax Not Applicable on Commitment Charges Seen as Interest on Unused Credit, Not Guarantee Commission.

  Case-Laws - AT : Levy of service tax - receipt of commitment charges - commitment charges are in the nature of interest on unutilized portion of credit facilities - merely by accounting the same as guarantee commission, the amount received cannot be subjected to levy of service tax if the nature of the amount received is not a commission but interest of unused credit. - AT
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• Franking Charges Misclassified Under Business Auxiliary Service, Section 65(19)(vi); Challenges to Service Tax Validity Arise.

  Case-Laws - AT : Business Auxiliary Service - receipt of franking charges - The depiction of the latter as a client is not consistent with this reality and the categorisation under Section 65(19)(vi) fails the test of rationality. - AT
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• Service Tax Not Applicable on Airline Cargo Booking Commissions and Mark-Up Freight Charges, Clarifies Rule.

  Case-Laws - AT : Levy of Service tax - commission paid to them by airlines for booking cargo space - commission earned by the assessee while acting on behalf of the exporter and mark-up value was of freight charges are not to be considered as commission - AT
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• CENVAT Credit Eligibility Expanded: Broad Definition of Input Services Covers Business-Related Activities for Output Services.

  Case-Laws - AT : CENVAT credit - The definition of input services during the period had wide ambit as it included the words activities relating to business. The credit is eligible on the said services if the same are used for providing output services - credit allowed. - AT
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Central Excise

• Software Loaded Separately on Machines Not Classified as Integral for Central Excise; Affects Taxation and Classification.

  Case-Laws - AT : Classification of software - computerized equipment / machinery - software which is supplied separately for loading cannot be considered as part and parcel of the machines / equipments - AT
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• Notional Profit Deduction Allowed in Assessable Value for Central Excise if Bought-Out Items' Make is Unjustified.

  Case-Laws - AT : Valuation - deduction of notional profit where value of bought out items is included - Since there is no justification to include the make of bought out item, there can be no objection to the notional profit being deducted from the assessable value. - AT
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• Party Entitled to Suo Moto Credit for Excess Duty Payment, Considered a Deposit, Not Duty.

  Case-Laws - AT : Re-credit of amount of duty paid in excess through PLA - suo moto credit can be taken if duty is paid twice as excess duty paid is not a duty and same is deposit - AT
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Case Laws:

• Income Tax

• 2018 (3) TMI 156
  Rejection of stay application - demand on account of the adjustment of Royalty payment on the basis of Arm’s Length Price (ALP) - Held that:- It appears to this Court that since the difference between the cut off date for payment of Rs. 50 lakhs on 30.11.2017 and the date of hearing on 14.12.2017 of the appeal itself is bare minimum of 15 days, an indulgence can be granted to the petitioner though not as a matter of right. The observation of the Tribunal that the other incidental grounds may result in substantial reduction in demand raised, though indicates that a prima-facie case of the assessee exists but the extent of that could not naturally have been deferred and computed precisely by the learned Tribunal. The adjudication and determination of such incidental grounds would also depend upon the final decision of the learned Tribunal itself after hearing both the sides. Since the gap of time period between the two dates as aforesaid is only about 15 days, this Court is inclined to grant indulgence to the petitioner-assessee, as this Court feels that the interest of revenue will not be seriously prejudiced, if the payment of balance amount may await the final decision of the Tribunal for a period of 15 days more. This petition is disposed of with a slight modification in the impugned interlocutory order passed by the learned Tribunal by substituting the amount of Rs. 30 lakhs in place of Rs. 50 lakhs in the order dated 06.11.2017 passed by the learned Tribunal. No further modification is required or made in the said order.

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• 2018 (3) TMI 155
  Revision u/s 263 - Held that:- In the present case the facts narrated in the subject order would disclose that the assessee was issued with notice with respect to the specific head i.e. the warranty claimed on the ground that the AO had not conducted proper enquiries. The assessee replied to the notice. In the course of the revisional proceedings, the CIT furnished a copy of a ledger extract to the assessee. The other documents indicated that ledger extract was based upon the existence of statement of one Mr. Praveen Aggarwal. Having regard to these materials the assessee demanded that the copy of the statement be provided to it. Concededly that statement was not provided. The order to that extent cannot be sustained. The matter is accordingly directed to be gone into afresh by the Commissioner who will in the remanded proceedings provide a copy of the statement of Mr. Praveen Aggarwal and any other material that he chooses to rely upon and after hearing the objections of the assessee, proceed to make the final order. It is clarified that if the statement (of Mr.Praveen Aggarwal or anyone else) is denied and a cross examination is demanded, that can be the appropriate subject matter of enquiry by the AO.

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• 2018 (3) TMI 154
  Grant registration u/s 12AA - denial of grant on ground that Assessee has consistently had surplus income thus cease to be an educational Institution - Tribunal held the assessee as an educational institution - Held that:- The impugned order of the Tribunal records the fact that it is an undisputed position that the Respondent-Institution had education as its stated object and did carry out the same. The generation of surplus is not the test which by itself will disallow Registration under Section 12AA. The only quantifications to be considered for Registration under Section 12AA, is the objects of the trusts/ institution and its genuineness. Once the two conditions are satisfied, no occasion to refuse Registration under Section 12(AA) can arise. It further held that the question of available surplus, if any, and the manner of its user is an issue which would arise during assessment proceedings while considering the applicability of Section 11 of the Act. No substantial question of law.- Decided in favour of assessee.

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• 2018 (3) TMI 153
  Reopening of assessment - reason recorded for reopening the assessment under section 147 itself does not survive - Held that:- It is not in dispute that the issue involved in this case is squarely covered by the jurisdictional High Court judgment in Govindaraju [2015 (8) TMI 271 - KARNATAKA HIGH COURT] as held if notice has no sufficient reason or is invalid, no proceedings can be initiated. But the same can be checked at the initial stage by challenging the notice. If the notice is challenged and found to be valid, or where the notice is not at all challenged, then in either case it cannot be said that notice is invalid. As such, if the notice is valid, then the foundation remains and the proceedings on the basis of such notice can go on. We may only reiterate here that once the proceedings have been initiated on a valid notice, it becomes the duty of the Assessing Officer to levy tax on the entire income (including ‘any other income’) which may have escaped assessment and comes to his notice during the course of the proceedings initiated under section 147 of the Act - Decided in favour of revenue

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• 2018 (3) TMI 152
  Cancellation/withdrawal of the Certificate issued u/s 197 - Held that:- We find that in this case, as in Tata Teleservices (Maharashtra) Limited (2018 (2) TMI 192 - BOMBAY HIGH COURT), an order canceling a certificate issued under Section 197 of the Act, was passed on the ground that the aspect of pending demand has not been considered in the context of Rule 28AA of the Income Tax Rules, 1961 while granting the certificate under Section 197 of the Act. This, without furnishing a copy of the reasons recorded at the time of issuing the certificate under Section 197 of the Act. This non furnishing of copy of the reasons recorded was held by us to be a flaw in the decision making process. Thus, making the impugned order unsustainable. In the above view, the impugned order dated 11 October 2017 passed by the Respondent No. 1, which cancels the Certificate dated 18 May 2017 is quashed and set aside

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• 2018 (3) TMI 151
  Penalty u/s 271(1)(c) - whether the sales tax refund figures should be adopted based on the view taken by the Assessee to compute its profits dehors orders of sales tax authorities or it should be based on order of the sales tax authorities? - tribunal deleted penalty - Held that:- We note that it is an undisputed fact that the practice adopted by the Assessee in the subject assessment year has been consistently followed by it in the earlier and subsequent assessment year i.e. offer the sales tax refund as a part of its income when the refund is sanctioned by the Authorities under the Sales Tax Act. Assessee has also pointed out to the authorities during the penalty proceedings, that provisions for sales tax refund, which it had reduced, from its profits to determine taxable income, was in fact offered to tax as income in a subsequent assessment year 2000-01 i.e. on passing of orders of refund by the sales tax authorities. It is particularly to be noted that the above amounts were offered to tax for assessment year 2000-01 i.e much prior to initiation of reopening proceedings by the Assessing Officer for subject assessment year 1998-99. Therefore, in the present facts, the view taken by the Tribunal is a reasonable and possible view.

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• 2018 (3) TMI 150
  Entitled to claim deduction u/s 80HH and 80I - profit derived by the assessee from the processing of cashew in the factories owned by outsiders - Held that:- Section 80I would not be applicable in the case of processing done in other factories not belonging to the assessee and the deduction granted by the Assessing Officer was only with respect to the assessee's own factories. The interference made by the first appellate authority was only to verify whether the assessee's own factories, with respect to which the deduction was disallowed are new industrial undertakings. The claim of the assessee for deduction, with respect to profits and gains derived from the industrial undertakings of its sister concerns, under Section 80I was declined by the AO and affirmed by the first appellate authority. There was no appeal to the Tribunal by the assessee. We are of the opinion that no question of law arises under Section 80I. The assessee is engaged in the processing of cashew nuts and such processing is done in its own factories and also in the factories of other assessee, who are sister concerns. The derivation of income of the assessee is from such processing and it cannot be said to be income which is derived other than from the activity of processing. We find from the order of AO that the rejection was made for the following reason: “For claiming deduction u/s 80HH, the material factor is the industrial undertaking and not the assessee”. We agree with the statement, but it would not result in the dis-allowance. On the contrary, the benefit being conferred on the industrial undertakings within backward areas; the assessee who entrusts the processing to third parties would be entitled to claim the deduction for the profits and gains arising from the processing, if the factory is in a backward area. The emphasis is on “the profits and gains derived from an industrial undertaking in backward areas” whether it be the assessee's own industrial undertaking or of another. As has been held by the first appellate authority, an assessee carrying on processing of another will not be able to claim such benefit. But an assessee who carries on processing in an industrial undertaking belonging to another, but situated in a backward area would be entitled to claim the benefit under Section 80HH. - Decided in favour of the assessee.

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• 2018 (3) TMI 149
  Penalty u/s 271(1)(c) - period of limitation - Held that:- The impugned penalty notices having issued well beyond the period of limitation fixed in the first limb of Section 275(1) (a) of the Act, are held to be barred by limitation. However, the respondent is at liberty to initiate penalty proceedings after the order is passed by the CIT (A) before whom the matters are pending.

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• 2018 (3) TMI 148
  Eligible for exemption u/s 10(23C)(vi) - Denying the benefit of exemption to the assessee and u/s 11(1)(a) - Held that:- We find that the CBDT vide Circular No. 07/2010 dated 27.10.2010 clarified that any approval issued on or after 1.12.2006 under sub-clause (vi) or (via) of section 10(23C) would also be a one-time approval which would be valid till it is withdrawn. AO while denying the claim of the assessee, has relied on the order of the CCIT who rejected the application filed by the assessee for exemption u/s 10(23C)(vi) of the Act. As the assessee continues to be eligible for exemption u/s 10(23C)(vi) of the Act vide order of the competent authority dated 15.6.2009 and the Assessing Officer framed the assessment merely denying the benefit of exemption to the assessee and its u/s 11(1)(a) of the Act, we find no reason to interfere in the findings of the Commissioner of Income Tax (Appeals) and accordingly uphold the same. - Decided against revenue.

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• 2018 (3) TMI 147
  Disallowance of interest being a notional interest on the interest free advance - Held that:- The assessee has stated that it was having sufficient amount to give advance free loans to Mrs. Preeti Sharma and Mr. Rijwan Khan. In support of this, the assessee has drawn our attention to the paper book page no.11, where the balance sheet as on 31.3.2009 is enclosed. On the said balance sheet, it is evident that the assessee was having sufficient balances to make such advances. Therefore, we direct the AO to delete these disallowances.- Decided in favour of assessee.

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• 2018 (3) TMI 146
  Addition on account of interest on Non Performing Assets - assessee is following the mercantile system of accounting - Held that:- As decided in assessee's own case [2016 (2) TMI 36 - ITAT PUNE] No disallowance of interest accrued on NPAs is warranted. The provisions for dividend made earlier was not a charge action profits but it was appropriation of the profits available post taxation. Assessee bound by Reserve Bank of India directions to treat deposit as non-performing asset – Interest does not accrue - Decided in favour of assessee

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• 2018 (3) TMI 145
  Levy of penalty u/s. 272A(2)(k)/274 r.w.s. 200(3) - delay of 380 days in filing of quarterly return of TDS - furnishing e-TDS for first quarter in Financial Year 2010-11 belatedly - Held that:- The reasonable cause for filing belated return of levy of penalty u/s. 272A(2)(k) of the Act can be considered u/s. 273B of the Act. Nothing has been brought on record before us by the Department that in the subsequent quarters of Financial Year 2010-11 the assessee has furnished e-TDS return belatedly. Thus, in the facts of the case and the decision of Co-ordinate Bench in Nav Maharashtra Vidyalaya Vs. Addl. Commissioner of Income Tax (TDS) Range, Pune [2017 (1) TMI 722 - ITAT PUNE] the penalty levied u/s. 272A(2)(k) is deleted and the appeal of assessee is allowed.

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• 2018 (3) TMI 144
  Penalty proceedings u/s 271(1)(c) - non specification of charge for the propose of the levy of penalty in the notice - 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 143
  Depreciation on estimated income - Held that:- In this case the income was computed estimating the income @ 8% on total receipts. CIT(A) has directed the A.O. to make the addition of depreciation as per law after giving opportunity to the assessee. Therefore, the CIT(A) has followed the law laid down by the higher judicial forum allowed the appeal of the assessee. In the assessee’s case for the assessment year 2008-09, the jurisdictional Tribunal has allowed the depreciation from the estimated income. In the case of Y. Ramachandra Reddy (2014 (9) TMI 205 - ANDHRA PRADESH HIGH COURT) held that the depreciation is required to be allowed from the estimated income. Therefore, the CIT(A) has followed the order of this Tribunal in assessee’s own case, hence, we do not find any reason to interfere with the order of the Ld. CIT(A) and the same is upheld. The appeal of the revenue on this ground is dismissed. Addition towards unproved loan creditors - Held that:- As per the information available from the CIT(A)’s order, the assessee has submitted the complete information to the A.O. with regard to both the credits. Copies also submitted to the CIT(A) the Ld. CIT(A) after verifying the PAN card, bank account, IT return and all the relevant details held that the loans were not squared up and the assessee has established the identity of creditors, capacity and the genuineness of the transactions. Therefore, we do not see any reason to interfere with the detailed and well reasoned order of the Ld. CIT(A). Accordingly, the order of the Ld. CIT(A) is upheld and the appeal of the revenue is dismissed.

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• 2018 (3) TMI 142
  Levy of penalty u/s 271(1)(c) - non specification of charge for the propose of the levy of penalty in the notice - 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 141
  Profit earned on the sale of impugned property - capital gain or busniss property - Held that:- In assessment year 2008-09 the land devolved on the assessee from his father has already been accepted as a ‘capital asset’. The entire conspectus of facts on record also bring out that there is nothing to suggest that assessee has undertaken any business activity vis-à-vis the impugned plot of land, so as to construe the profit on its sale as ‘business income’. Therefore, in our considered view, having regard to the facts and circumstances of the case there is no justification to treat the plot of land in question as ‘stock-in-trade’ and that the assessee was justified in treating the gain on sale of the plot to be assessable under the head ‘capital gain’. Thus, on this aspect assessee succeeds. Denying the deduction being expenses claimed to have been incurred as cost of improvement of the property sold - Held that:- In this case, cost of improvement is claimed by the assessee on account of expenditure incurred on leveling of land and construction of boundary wall. Undoubtedly, for a claim to be admissible, the same is required to be verified and for that matter the onus is on the assessee to produce necessary evidence to justify the incurrence of the impugned expenditure, especially considering the fact that in the instant year complete payment for the expenditure has not been made. The Remand Report of the Assessing Officer, which has been reproduced by the CIT(A) also brings out that the attempt to issue summons to the party did not fructify as Mr. Nelson A. D’cruz was not available at the given address. Considering the entirety of facts and circumstances of the case, in our view, it would be in the fitness of thing that this aspect is required to be examined by the Assessing Officer afresh and for that matter the onus shall be on the assessee to justify the incurrence of the impugned expenditure on levelling and construction of boundary wall on the land in question.

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• 2018 (3) TMI 140
  Revision u/s 263 - Eligibility to deduction claimed u/s 10B - Held that:- On verification of the assessment order, it is observed that the assessing officer has examined the issue whether the assessee is carrying on consultancy work or engaged in the manufacturing of computer software. In the reply submitted by the assessee before the A.O. which was reproduced above, the assessee submitted that the it is engaged in the Data processing and Remote Maintenance which is information technology enabled products or services covered u/s 10B of the Act as per the notification issued by the vide CBDT vide Notification No.11521 dated 26.9.2000. Since the issue has been considered by the assessing officer and taken a conscious decision that the assessee is engaged in the computer software after conducting necessary enquiry and analyzing the information filed by the assessee, the Ld. CIT is not permitted to revisit the same issue which was already examined by the assessing officer and allowed the deduction. The issue with regard to the approval from the Board constituted by Central Government was also examined by the assessing officer. The A.O. has conducted enquiries with the Director, Software Technology Parks of India, VSEZ, Duvvada, Visakhapatnam who has clarified vide letter dated 5.12.2012 that once the Director, STPI approves the unit, no further ratification of approval from the inter-ministerial standing committee is required and the income tax benefits should not be denied on the ground that the approval of units have been granted by the Director of STPI. Hence, it is evident from the assessment order passed u/s 143(3) r.w.s. 147/143(3) that the A.O. has examined the issue of requirement of approval from the Board also. - Decided in favour of assessee.

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• 2018 (3) TMI 139
  Non granting the registration u/s. 12A - change of objects - proof of charitable activities - purpose of establishing the ‘SAMAJ’ - Held that:- As can be seen there is difference only re numbering the aims and objects originally formed. The main aim of achieving alround welfare and unity among the families residing in Hyderabad had been renumbered as (A) so as to make it only as one of the objects by the revised draft. However, as approved in the case of Gangabai Charities Vs. Commissioner of Wealth Tax [2001 (2) TMI 130 - SUPREME Court] the General Body cannot modify the trust deed so as to make a variation in the trust objects. In these circumstances, it is to be considered that there is no change in the aims and objects of assessee-trust which is mainly established for the purpose of establishing the ‘SAMAJ’ to achieve all round welfare and unity among Visa Vadnagar Vanik families residing in Hyderabad. This clearly indicates that the trust was created for the purpose of a secluded group of persons who has their loyalty to a particular God i.e., Hatkeshwer Mahadev Temple and not general public. As most of the expenditure is held for the benefit of a particular community or a religious group called ‘SAMAJ families’ and so, we are of the opinion that the Trust is not created for charitable or religious purposes for general public. Accordingly, it is not entitled for registration. The community is identified with a religious belief and royalty to a particular deity and that too for families residing in Hyderabad. Even the receipts are from the Members [very few amounts of donation and except the other receipts and the expenditure is also seems to be within the community]. - Decided against assessee.

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• 2018 (3) TMI 138
  Reopening of assessment - gain on arising on transfer of capital asset - period of holding - Held that:- Assessee filed return of income without admitting any capital gain nor there is any mention in the return about the development agreement entered by assessee. The information has come to the knowledge of the AO consequent to the survey proceedings in M/s. Diamond Infra which led to the reopening of assessment u/s. 147 not only in assessee’s case but also in other cases, where all the owners have entered into development agreement with the said party. After examining the facts, I am of the opinion that the AO correctly invoked the provisions of Section 147 and therefore, the proceedings are valid in law. As far as the issue of bringing to tax the capital gains during the year, it is the common agreement by many people, who has purchased lands/plots in the developed area. It is also noticed that the said assessee went to construct the apartments and hand over the flats as per the schedule to the respective persons, including assessee. Some of the agreement holders also sold the flats in semi-finished condition or in fully developed condition, whereas few like assessee retained the flats as such. Therefore assessee did hand over the possession and provisions of Section 2(47) regarding transfer certainly get attracted. Since there is part performance of the contract in the nature referred to in Section 53 of Transfer of Property Act, 1882, Clause(v) of Section 2(47) is clearly attracted. Therefore, I agree with the stand of AO that the capital gains did arise during the year under consideration as the agreement was entered on 12-05- 2008. Accordingly, the issue of bringing to tax the capital gains during the year is to be upheld. Arguments raised by the Ld. Counsel is that new Section 45(5A) has been introduced which defers the capital gains to the year of completion of the project by the Finance Act, 2017. This being substantive provision, I am of the opinion that this cannot be applied to the development agreement entered into earlier, in which 2(47)(v) would certainly get attracted. Whether property is held for sufficient period so as to attract Short Term Capital Gain or Long Term Capital Gain - Held that:- It is the contention of assessee that they have paid advances much earlier and took possession also whereas registration was completed on 10-08-2005. It is not correct on the part of AO to consider the date of registration alone as the date of obtaining the property. There are various judicial principles supporting the contentions that registration is only a conclusive evidence but ownership can be obtained much earlier also. As seen from the purchase deed also, there are recitals that Shri Bala Swamy, father of vendor has himself developed the property and then obtained permissions but later on made four gift settlements to his son and after obtaining HUDA permissions, has registered the property on that date. Even though the receipt of sale consideration date-wise has not mentioned, it is the contention that assessees have paid the amounts much earlier also. This aspect has not been examined by the AO at all. Thus the issue of having possession of the property at the time of purchase of property by assessee, before registration is to be examined in the light of the payments made by assessee, permissions obtained from HUDA etc., so that the issue can be finally concluded on facts whether the property has to be considered as long term capital asset or short term capital asset. Full value of consideration, for computation of capital gains - Held that:- AO has taken the cost of construction of the properties which are given in lieu at the time of completion of the project and gave certain discount so that the value is fixed at 1097 per Sft. This is not a correct method. Since the agreement was entered into in May, 2008 either the cost of the land [at 50% of 266.66 Sq. Yds.,] should have been considered for sale consideration or the probable value of the cost of construction on that date has to be considered. It is not proper on the part of the AO to consider the subsequent cost which may involve escalation of cost from 2008 to 2013. Direct the AO to consider the probable cost of construction as on May 2008 or the SRO Value of the land-in-question on the date of agreement should be considered as full value of consideration for the purpose of computation of capital gains on the transfer of 50% of the land holding for development.

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• 2018 (3) TMI 137
  Disallowance u/s 14A - Held that:- The assessee has earned dividend income of Rs. 13,51,268/-. There is an investment in equity shares of Rs. 3,80,35,247/-. There have been regular transactions of purchase and sale of shares and no specific expenditure has been disallowed suo moto in the return of income. It is beyond imagination that the assessee has not incurred any expenditure. Even through the method provided in Rule 8D read with rule 14A has been brought into effect from the assessment year 2008-09 but still, in our view, minor disallowance of Rs. 2,39,108/- is justified at the end of the Assessing Officer. We find no infirmity in the findings of the Commissioner of Income Tax (Appeals) confirming the impugned disallowances. - Decided against assessee Income from share trading - treatment as short term capital or business income - nature of income - Held that:- In normal parlance if the assessee is indulged in some regular activity, which may be of providing service, earning salary, any business other than that of equity shares and along with this regular activity, if it occasionally deals in equity shares then such gain is normally shown ca capital gain but in the case of the assessee it has no other source of income and is engaged in trading of shares and securities consistently since long and major source of income is from trading in shares only and if such assessee subsequently opts to show transactions of purchase and sale of shares as capital gains and simultaneously also shows trading in shares then both the things cannot go together unless otherwise demarketed with proper records. No reason to interfere with the findings of the Commissioner of Income Tax (Appeals) treating as business income relying in the case of Wallfort Financial Services (2010 (6) TMI 510 - ITAT, MUMBAI) and Puran Associates Pvt. Ltd., (2012 (4) TMI 266 - ITAT DELHI ) - Decided against assessee

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• 2018 (3) TMI 136
  Addition u/s.69A - unexplained cash - Held that:- Admittedly, there were cash deposits of Rs. 10,08,900/- in the bank account of the appellant. The source of major part of cash deposits i.e. Rs. 8,50,000/- has been explained as withdrawals from the bank account of unmarried working daughter. In order to verify, this claim of the appellant, appellant was directed by the officer of the department to submit bank account copies of the daughter for three years. On verification of the entries in her bank account, it was noticed that she has withdrawn entire amount of cash through ATM facility. there were frequent small withdrawal ranging into few thousand rupees. Sometimes there are many cash withdrawal in the single day. Appellant had not submitted the detail of income earned by her daughter. We just fail to understand as stated by the ld. AR that appellant and her daughter both are working in bank, if any person is working in the bank why they will keep such a huge amount in cash at home. Therefore, this kind of explanation is hard to believe. Ld. AR stated that appellant’s sister has given her cash of Rs. 54,054/- for charity work and further stated that she donated Rs. 72,072/- through account payee cheque No.447453 dated 29/09/2010. We can see that same is reflecting in the bank statement of the appellant. For rest of the amount appellant could not give any plausible explanation to prove her case. Thus we would like to give relief of Rs. 54,054/-, which was given by sisters of the appellant for charity work and remaining addition is confirmed u/s.69A. - Decided partly in favour of assessee

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• 2018 (3) TMI 135
  Penalty u/s 271(1)(c) - addition on unrecorded sales - validity of 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 does not strike out the inappropriate words. In these circumstances, we are of the view that imposition of penalty cannot be sustained. The plea of the ld AR which is based on the decisions referred to in the earlier part of this order has to be accepted. We therefore hold that imposition of penalty in the present case cannot be sustained and the same is directed to be cancelled. - Decided in favour of assessee.

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• 2018 (3) TMI 134
  Section 54EC deduction claim disallowed - Assessee jointly sold the capital asset in question in the relevant previous year on 26.10.2010 for Rs. 6,60,00,000/-. His 1/3rd share therein was of Rs. 2,20,00,000/-. He thereafter invested Rs. 1crore (supra) in NHAI bonds to claim Section 54EC deduction - decline of deduction as the said statutory provision caps the re-investment amount to Rs. 50lacs only, therefore restrict assessee’s claim to Rs. 50lacs to disallow the remaining equal amount - Held that:- We find no force in this approach above of revenue. Hon’ble Madras high court’s judgment in CIT vs. C. Jaichander (2014 (11) TMI 54 - MADRAS HIGH COURT) has admittedly upheld a co-ordinate bench’s decision that such a deduction claim of Rs. 50 lacs each spread over to two financial years but falling within six months of the capital asset’s transfer in question is very much allowable. The legislature has inserted second proviso to Section 54EC (1) introducing the above cap on re-investment quantum by the Finance (Act No.2), 2014 w.e.f. 01.04.2015 whereas we are dealing with assessment year 2011-12. This is not the Revenue’s case that the above amendment carries any retrospective operation. We therefore reject Mr. Kabra’s vehement contentions supporting the impugned disallowance. - Decided in favour of assessee.

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• 2018 (3) TMI 133
  Disallowance of license fee/royalty paid by the appellant in pursuant to agreement for use of Brand Name “ARA LAW” - Held that:- In the absence of any material to repudiate the ‘Name Licence’ agreement dated 18.03.2004 or challenge its bona fide, the disallowance is unsustainable. Secondly, the fact that the Annual Accounts have been drawn and in the Profit & Loss Account, the payment of royalty to the founder partner has been claimed as a deduction and such accounts have been adopted by the partners is a factum which demonstrates the consent of the partners to incur such expenditure, which is in consonance with the agreement dated 18.03.2004 between the assessee-firm and the founder partner. Therefore, under these circumstances, we are unable to uphold the disallowance sustained by CIT(A), which is hereby directed to be deleted.- Decided in favour of assessee Ad hoc disallowance of 5% sustained by the CIT(A) out of various expenses, viz., business promotion expenditure, travelling expenditure and telephone expenditure - Held that:- We note that in the assessment order as well as in the order of CIT(A), the disallowance has been made on mere surmises without establishing that any particular expenditure has been incurred for non-business purposes. Therefore, the ad hoc disallowance made is hereby directed to be deleted. - Decided in favour of assessee

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• 2018 (3) TMI 132
  Grant of registration u/s 12AA and u/s 80G(5)(vi) rejected - Held that:- As stated by the assessee before us that at the time of filling applications, the Assessee annexed the following documents with duly filled Form No. l0A and Form No. 10G: (i) Complete sets of Audited Balance Sheet and Audit Report for the Assessment Years 2012-13,2011-12 and 2010-11; (ii) Memorandum of Association and Rules (iii) Certificate of Registration of Societies; and (iv) List of Governing Body Members. Taking note of the fact that ultimately the eligibility of the assessee for registration u/s 12AA of the Act and approval u/s 80G(5)(vi) of the Act has to be decided on merits rather than on the basis of default by the assessee, we are of the view that the impugned orders of the CIT should be set aside and the issue with regard to the grant of registration u/s 12AA of the Act and the approval u/s 80G(5)(vi) of the Act should be directed to be considered afresh by CIT - Decided in favour of assessee for statistical purposes

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• 2018 (3) TMI 131
  Undisclosed contract receipts - Held that:- CIT(A) has analyzed the relevant record and found that the claim of the assessee is not correct as all these expenses on account of direct purchase and sales tax deduction and interest have already been taken under consideration while preparing the profit and loss account. Once the claim of the assessee that the difference is on account of books adjustment entry is found to be wrong and contrary of the facts then the addition made by the AO of the differential amount is proper and justified. It is further noted that when the assessee has booked all the corresponding expenses in the books of accounts then, even the contention of the assessee that only net profit of these contract receipt can be added to the income of the assessee is not acceptable. - Decided against assessee.

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• 2018 (3) TMI 130
  Levy of penalty u/s 271B - delay in submission of the tax audit report - filing return of income belatedly - Held that:- We find that in the instant case, the assessee had indeed given substantial reasons for the delay in submission of the tax audit report, even though the said report was duly obtained within time on 30.09.2008. Reasons adduced by the assessee for the delay are not reiterated herein for the sake of brevity. Authorities that the reasons adduced by the assessee were not disbelieved by the Revenue and taking into account the past conduct of the assessee in filing his return in time voluntarily and the difficulty faced by him during the financial year 2008-09 due to his ill health leading to acute physical trouble thereby making him immobile, we find that the assessee has indeed adduced proper reasons and is entitled for immunity in terms of Section 273B. We find that in the case of CIT vs. A.N. Arunachalam [1994 (1) TMI 65 - MADRAS High Court] had held that the audit report for claiming deduction u/s 80J though not filed along with return of income but was furnished before the AO before the completion of assessment proceedings, the deduction u/s 80J of the Act could not be denied. It was further held that the stipulation that the audit report is to be filed along with return of income shall not be construed as a mandatory condition for granting deduction u/s 80J of the Act, provided the same was furnished and made available to the Ld. AO before the completion of assessment proceedings. - Decided in favour of assessee.

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• 2018 (3) TMI 85
  Registration u/s 12AA refused - as per CIT-A there was no cogent or corroborative evidence to prove the genuineness of activities - Held that:- In the present case, undoubtedly the objects of the assessee are charitable in nature and the assessee is running a school for achievement of its objects as given in the bye-laws. 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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• Customs

• 2018 (3) TMI 129
  Benefit of duty drawback - time limitation - Condonation of delay in filing appeal - case of petitioner is that it was unaware of the fact that it could have availed duty drawback benefits - Held that: - Since, the appeal which the petitioner intends to file is beyond the period of 45 days prescribed under Section 15 of the 1992 Act, the Appellate Authority will condone the delay qua the period spent by the petitioner, in this court as well as the period spent before the PRC - petition allowed.

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• 2018 (3) TMI 128
  Transshipment of ship stores - Whether the appellants are required to discharge the customs duty on the transshipment of the ship stores from the vessel MSV Sundaram to SV Shivam belonging to the same owner? Held that: - A plane reading of the Sec.86 of the Customs Act,1962 reveals that it is not required that the ship stores at the time of transfer is necessarily be to another foreign going vessel only, but, on the contrary, it would suffice if the vessel later undertakes foreign voyage and the Ship stores transferred to it is consumed on board as per Sec.87 of the Customs Act,1962 - It is not in dispute that after necessary certification by the proper authorities, the new vessel SV Shivam commenced sailing on foreign voyage and there is no dispute of the fact that the ship stores transferred earlier had been used in the said vessel on board as prescribed under Section 87 of CA, 1962. Merely because as on the date of transfer of ship stores to the newly built vessel SV Shivam, which was not ready for voyage, the transfer of ship stores under Section 86 and later consumed on board as per Sec. 87, becomes incorrect and duty could be recovered on the ship stores, cannot be sustained. Appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 127
  Mis-declaration of value and description of imported goods - M.S. Turning Boring - Held that: - the impugned goods had been mis-declared by the appellant, which was detected at the time of examination of goods. The report of Chartered Engineer and the United Solutions Laboratory has brought out the percentage of both categories of goods namely the turning and boring scrap and the iron powder - the adjudicating authority is required to re-determine the value of iron dust powder in the consignment under the Customs Valuation Rules, 2007 and re- adjudicate the matter afresh after assessing the iron powder at its re-determined value - appeal allowed by way of remand.

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• 2018 (3) TMI 126
  Confiscation of imported vehicle - import of one unit of second hand used Mitsubishi Pajero Vehicle with engine capacity of 2835 CC and 1993 model under Transfer of Residence facility - allowance of Depreciation - Held that: - the Tribunal had given directions to grant 70% depreciation on the value of the car while determining its assessable value. Since that Tribunal order has not been stayed or set aside by a higher appellate forum, the order became final for all purposes and the Commissioner (Appeals) was bound to comply the directions therein in toto - the Commissioner (Appeals) has granted only 52% depreciation which is not in consonance with the directions of the Tribunal. The 70% depreciation has to be allowed on the value of the vehicle - quantum of redemption fine and penalty reduced - appeal allowed in part.

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• 2018 (3) TMI 125
  Revocation of CHA License - forfeiture of security deposit - 200 cartons of foreign brand cigarettes were found concealed behind the declared goods - Held that: - DRI had intercepted the consignment covered under Bill of Lading dt. 29.09.2015 imported by M/s.Prince Traders even before filing of Bill of Entry. This aspect has been taken note of in the Inquiry Report dt. 08.04.2016 pursuant to proceedings under Regulation 20 of the CBLR, 2013 - the Inquiry Officer, appointed under CBLR 2013, has opined that there is no substantive case to level charges violation of Regulation 11(a), (b), (n), (e) & (k) of the CBLR, 2013. The Inquiry Officer has in fact clearly stated that he has not found anything substantial that can merit proposing revoking the license of the appellant or imposing the penalty. The Inquiry Officer has categorically reported that at the most, appellant may be given a strict warning. This Tribunal in the case of Parekh Cargo Logistics [2016 (11) TMI 339 - CESTAT MUMBAI] has held that it cannot be a ground for revocation of CHA broker license which results in denial of right to livelihood. But in the instant case, even such an infraction is not forthcoming. Revocation of License and forfeiture of deposit is not warranted - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 124
  Benefit of N/N. 46/2011-Cus. - rejection of benefit on the grounds that the goods had been exported by M/s. Panasia International Limited, Dubai under Invoice Nos. 0361/13-14, 0362/13-14, 0392/13-14 all dated 31.3.2014, who however are in no way connected with the AIFTA certificates - Whether the AIFTA certificates produced by the appellant can be accepted for the purpose of availing duty exemption benefits under N/N. 46/2011, when the related commercial invoices have not been issued from the originating country but have been issued from third parties? Held that: - the appellants have adduced sufficient proof to establish that the impugned goods, though invoiced by Panasia International, UAE, to the appellant, are of very same ones which have been originally invoiced by Myanmar Timber Enterprises, Myanmar to Concorde Commodities, Singapore and then to M/s. Panasia Agro India Limited. The appellants have been also able to sufficiently establish the seminal connection and linkage with the imported goods invoiced at M/s. Panasia International Limited, Dubai and the AIFTA certificates submitted by them - the AIFTA certificates very much covers the impugned goods which have been imported by the appellant - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 123
  Penalties u/s 112(1) of the CA 1962 - it was alleged that the appellant has imported the goods in question having cigarettes and eatables which are not permissible - absolute confiscation - Held that: - it is not coming out that the appellants have claimed themselves to the owner of the said goods although bill of lading is in the name of the M/s Dev International. But it is not coming from the fact that M/s Dev International has imported the said goods or not. The importer is a person who filed the bill of entry. Admittedly, no bill of entry is filed. In that circumstances, Shri Amit Nagi cannot be held of be an importer of the said goods - penalty not imposable - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 122
  Confiscation - Gold Bars - contraband item - Baggage Rules - Held that: - the appellant vide his statement under Section 108 of Customs Act, 1962 has conceded that he brought the gold bars for one Mr. Habeeb who has paid him Rs. 25,000/- in addition to his travel expenses - the appellant was searched in the presence of the Gazetted officers and he was found concealed this gold bars in his socks which he was wearing and was trying to exit from the green channel without any declaration. Further, the statement made under Section 108 of Customs Act, 1962 by the appellant has not been retracted till now. Further, the appellant has failed to discharge the burden of proof that the gold is licit. In the customs declaration, the appellant has stated as nil which means that he had nothing to declare. In view of the cogent and convincing evidences against the appellant regarding the smuggling of the gold bars, there is no infirmity in the impugned order which is upheld by dismissing the appeal of the appellant. Penalty - Held that: - Keeping in view the acts and omission on the part of appellant, the quantum of penalty is reduced. Appeal allowed in part.

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• 2018 (3) TMI 121
  CHA - Penalties u/s 112(a) and 114AA of CA, 1962 - illegal import of goods - Held that: - since the penalty u/s 114AA is dropped against the main importer and there is no material evidence against the present appellant Shri Ajith P to impose penalty u/s 114AA, I also drop the penalty against him. There should be a clear evidence to come to the conclusion that the appellants by their specific act or omission or any act abetted the illegal importation of offending goods. Therefore I find that in the impugned order, no such cogent evidence has been recorded. Further for penalty under the Customs Act, 1962, it is apparent that mere filing of Bill of Entry without the knowledge or a role in the importation of cargo is not sufficient. The penalty imposed under Section 112(a) on the three appellants as well as penalty under Section 114AA imposed on Shri Ajith P, Chartered Engineer is not sustainable - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 120
  Refund claim - unjust enrichment - bank guarantees have been encashed effecting recovery - Held that: - in the judgment of the Hon’ble Gujarat High Court order dt 28.4.2016, the appellants were allowed to furnish further documents to cross the hurdle of unjust enrichment before the Adjudicating Authority - the matter needs to be remanded to the Adjudicating Authority to decide the issue on the basis of the outcome of the pending SLP before Hon’ble Supreme Court - appeal allowed by of remand.

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• FEMA

• 2018 (3) TMI 119
  Violation of provisions of FEMA - cross-examination of the witnesses other than the IO - Held that:- The application made to the Special Director in the course of proceedings in this case (dated 21.12.2017), is part of the record. No doubt, the appellant sought the Investigating Officer’s cross-examination inasmuch as, according to him, examination as to the conclusion in his report was necessary. The appellant, at the same time requested for cross-examination of the other witnesses, whose statements were on record by the Directorate of Enforcement. So far as statements of these witnesses or individuals are concerned, the order of the Special Director is absolutely silent. In this given situation, the Single Judge’s conclusion that cross-examination cannot be sought as a matter of right in respect of witnesses is correct. At the same time, what appears to have been overlooked in the impugned order is that, apart from the Investing Officer, other witnesses’ examination too, was sought. The Special Director did not deal with that aspect in any manner. In the circumstances, the appellant shall approach the Special Director within three weeks spelling out the reasons why the cross-examination of the witnesses other than the IO is needed.

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• Service Tax

• 2018 (3) TMI 116
  Levy of service tax - commitment charges - Board vide Circular dated 10.9.2004 - Held that: - It is brought out from the records that while paying commitment charges the subsidiary companies deduct TDS considering it to be payment of interest. The Board vide its Circular dated 10.9.2004 has clarified that no service tax is leviable on interest in the category of Banking and Financial service. The respondent is receiving 2% as guarantee commission and 1% as commitment charges. The term interest has not been defined in the Finance Act, 1994. However, interest on loans has been specifically excluded from the ambit of service tax which has been clarified by the Board vide Circular dated 10.9.2004. It is clarified that commitment charges are in the nature of interest on unutilized portion of credit facilities. The department has proceeded to demand service tax only for the reason that the respondent has accounted it as guarantee commission. When the charges have been received separately under the head of guarantee commission as well as commitment charges, merely by accounting the same as guarantee commission, the amount received cannot be subjected to levy of service tax if the nature of the amount received is not a commission but interest of unused credit. The commitment charges being in the nature of interest cannot be subject to levy of service tax - appeal dismissed - decided against Revenue.

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• 2018 (3) TMI 115
  Air Travel Agent Service - activity included in booking of air tickets for their customers - whether the appellants are liable to pay service tax on the incentives received for using Computer Reservation System? - penalties. Held that: - the issue decided in the case of D. Pauls Consumer Benefit Ltd. Versus CCE, New Delhi [2017 (3) TMI 1019 - CESTAT NEW DELHI], where it was held that These computers are connected worldwide to the GDS/CRS, which linked to ticket sales offices of various airlines, hotels and car rental agencies spread across the world. They are by using these GDS/CRS for booking tickets, receiving incentives from the said companies for every segment booked by them. Appellants have given reasonable explanation for the failure to discharge the service tax, the imposition of penalties is unwarranted. Appeal allowed in part.

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• 2018 (3) TMI 114
  Business Auxiliary Service - whether the franking charges and the rebate received by the appellant can be subject to levy of service tax? Held that: - the issue stands covered by the decision in the case of United Mailing Services, Sai Mailing Services Versus Commissioner of Service Tax, Mumbai [2016 (3) TMI 572 - CESTAT MUMBAI], where it was held that the transaction of franking or usage of the postal service is solely between the appellants and the post office with the former as the customer of the latter. The depiction of the latter as a client is not consistent with this reality and the categorisation under Section 65(19)(vi) fails the test of rationality. Appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 113
  Levy of Service tax - commission paid to them by airlines for booking cargo space - whether the appellants are liable to pay service tax on the rebate / incentive received from exporters / clients for booking space for cargo? - Held that: - similar issue decided in the case of M/s. Skylift Cargo (P) Ltd. Versus Commissioner of Service Tax, Chennai And (Vice-Versa) [2018 (2) TMI 320 - CESTAT CHENNAI], where it was held that mere sale and purchase of cargo space and earning profit in the process is not a taxable activity and that commission earned by the assessee while acting on behalf of the exporter and mark-up value was of freight charges are not to be considered as commission - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 112
  Clearing and Forwarding Agency Service - abatement - Whether the service rendered by the appellant is a composite service under C F Agency Service or whether these are separate services so as to levy service tax separately? Held that: - The name of the consignee is shown as M/s. HUL. Thus the appellant has furnished necessary document before the authorities below to show that HUL has discharged service tax liability on GTA service. In that case the ancillary charges of loading and unloading as well as halting charges which are part and parcel of GTA service cannot be included in C F Agency service - the loading and unloading charges as well as halting charges have been subject to levy of service tax in GTA services. Appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 111
  Valuation - reimbursement charges - Board Circular dated 21.12.2009 - whether the exclusion sought as reimbursable expenses from the gross received is legally correct or not? - Held that: - The Tribunal in the case of International clearing & Shipping Agency Pvt. Ltd. Vs. CST, Chennai [2011 (5) TMI 100 - CESTAT, CHENNAI], has held that reimbursable expenses is not to be included in the total value of taxable services - appeal dismissed - decided against Revenue.

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• 2018 (3) TMI 110
  Classification of services - The stand of the Revenue is that such activities will fall under the category of Event Management Services w.e.f. 01.10.2002 and further under the BAS with effect from 01.07.2003 - Held that: - There is no dispute that the activities of the appellant are squarely covered within the definition of Public Relation Services , which was made taxable w.e.f. 01.05.2006 - the activity of the respondent does not fall within the categories of Event Management Service as well as Business Auxiliary Service - appeal dismissed - decided against Revenue.

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• 2018 (3) TMI 109
  CENVAT credit - advertising agency service - inputs/capital goods - Held that: - Admittedly, the display panels stainless steel box, power meter, electrical equipment, steel framework, mobile toilets, police booth are all clearly items which are specifically will fall under input used by the provider of output service. These cannot be considered as immovable capital goods. As such, there could be no legal or factual basis for denial of credits on such electrical equipments, display panels, stainless steel box, power meter, steel framework, mobile toilets, police booth which are essential materials for display of advertisement by the appellant. All the items which are now disputed for credit are essentially used to create such structures for display of advertisement. In fact many of these items are themselves used for display without any further elaborate fabrication. In such situation, there could be no reason for denial of credit holding that these items cannot be considered as inputs for such output service. Time limitation - Held that: - there is no allegation of willful suppression or mis-statement with intention to evade payment of tax - extended period and penalty cannot be invoked. Appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 108
  CENVAT credit - various input services - improperly availed CENVAT credit - Held that: - identical issue has attained finally in the hands of4 the Tribunal in the appellant's own case Excellence Data Research Pvt. Ltd. Versus Commissioner of Central Excise, Customs and Service Tax Hyderabad [2017 (5) TMI 1300 - CESTAT HYDERABAD], where it was held that the period involved is prior to 01/04/2011. The definition of input services during the period had wide ambit as it included the words activities relating to business. The credit is eligible on the said services if the same are used for providing output services - credit allowed. Improperly availed CENVAT credit - Held that: - in the reply to the show cause notice appellant had consistently taken a plea that this amount has been reversed by them in August 2011 itself. Despite such a clear submission by the appellant, I find that the first appellate authority as well as adjudicating authority have not recorded any findings on this issue - matter needs reconsideration. Appeal allowed in part and part matter on remand.

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• 2018 (3) TMI 107
  Refund claim - denial on the ground that the services for which they have claimed refund are not input service in terms of Rule 2(l) of CCR 2004 - Held that: - no SCN has been issued to the appellant to deny CENVAT credit on the services in question at the time of availment - in the light of the decision in their own case M/s EXL Service. Com (India) Pvt. Ltd. Versus Commissioner of Central Excise, Noida [2017 (8) TMI 1002 - CESTAT ALLAHABAD], the refund claim cannot be denied to them - refund allowed - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 106
  CENVAT credit - common input services used for providing both the category of services - Rule 6(3) of the CCR 2004 - Held that: - upon appreciation of the records maintained by the appellant, the adjudicating authority has dropped the SCN and also confirmed /appropriated the amount which was subsequently paid by the appellant. Thus, the original order passed upon appreciation of facts on record cannot be ignored to arrive at the conclusion that the appellant did not maintain separate accounts in terms of Rule 6(3A) of the rules. Since the Commissioner (Appeals) has not properly gone through the submissions of the appellant and did not scrutinise the documents submitted by the appellant in their proper prospective, the demand confirmed on the appellant in the impugned order cannot be sustained - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 105
  Short payment of service tax - advertising agency services - CBEC circular dated 31.10.1996 - Held that: - the adjudicating authority while analysing the Board Circular No.341/43/63-TRU dated 31.10.1996 has completely misread the said circular. Para 4 of the circular clearly lays down that the amount paid by the advertising agency for space and time in getting advertisement published and broadcast in print/electronic media will not be included. Valuation - includibility - service of Rs. 35,31,947/- provided to the client CHI Limited based in Nigeria - Held that: - the service recipient M/s.CHI Limited is located in Nigeria and has no establishment/office in India. The services provided by the appellant have been used outside India and payment of service has been received in foreign convertible currency - demand not sustainable. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2018 (3) TMI 104
  Recovery proceedings through garnishee proceedings - Rule 8(3A) of the Central Excise Rules, 2002 - Held that: - this Court is of the opinion that the petitioner- Company, ought to have kept the lis alive by filing the regular appeal before the Tribunal u/s.35 B of the Central Excise Act, 1944 against the impugned order passed by the first appellate authority namely, learned Commissioner of Central Excise (Appeals), Mysore - Petition disposed off.

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• 2018 (3) TMI 103
  Classification of software - whether the software falling under Tariff Heading 85.24 has to be assessed to duty along with the computerized equipment / machinery or whether it has to be assessed under Tariff Heading 85.24 separately? - Held that: - the issue has been decided in the case of M/s. Siemens Ltd Versus CCE & ST, Pondicherry [2018 (1) TMI 1315 - CESTAT CHENNAI], where it was held that the software which is supplied separately for loading cannot be considered as part and parcel of the machines / equipments - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 102
  CENVAT credit - various input services related to dumping of waste- denial on the ground of nexus - Held that: - as the waste which arises during the course of manufacture of the final product is required to be dumped by the appellant. Without dumping the waste, no further manufacturing activity can take place and it is essential to dump the said waste as per the direction of Pollution Control Board - although said service has been availed by the appellant post manufacturing, but the same is an integral part of their manufacturing activity - credit allowed - decided in favor of appellant.

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• 2018 (3) TMI 101
  CENVAT credit - capital goods - drums/barrels - Held that: - inputs used in any activity pertaining to manufacturing process would be entitled to CENVAT credit and likewise the definition of ‘capital goods’ is of sufficiently wide coverage to include storage tanks - There is no dispute that the drums /barrels procured by the appellant and are mobile storage tanks for transporting raw materials from the supplier to the appellant. While this may not conform to the definition of ‘inputs’, it is undeniable that these are, therefore, capital goods - credit allowed - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 100
  CENVAT credit - case against the appellant is that common input services for trading which, with effect from 1st April 2011 was incorporated as exempt service in rule 2(c) of CENVAT Credit Rules, 2004 should not have been availed of in CENVAT credit account - Held that: - No attempt has been made in the SCN to isolate the value of the service on which alone liability under rule 6(3) (i) of CCR 2004 could be applied - It is certainly not the intention of the provision of law to recover an amount of Rs. 4,01,224/- when the benefit derived is limited to Rs. 5,551/- and which was already reversed by the appellant on 26th March 2014. It is now settled law that reversal of CENVAT credit is no different from non-availment of the credit. Appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 99
  CENVAT credit - M.S. Flats used for earthing and connecting of 66KV Switch yard - pre-fabricated windows and doors used in the factory - Hardener chemicals used mainly for flooring in the factory for holding structural of capital goods - machines tools and accessories for fabrication of capital goods in the factory - Held that: - identical issue decided in the case of Singhal Enterprises Pvt. Ltd. Vs. Commissioner of Central Excise & Customs, Raipur [2016 (9) TMI 682 - CESTAT NEW DELHI], where it was held that applying the “User Test” to the facts in hand, we have no hesitation in holding that the structural items used in the fabrication of support structures would fall within the ambit of ‘Capital Goods’ as contemplated under Rule 2(a) of the Cenvat Credit Rules, hence will be entitled to the Cenvat Credit - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 98
  100% EOU - Clandestine removal - case of Revenue is that the documents have not been verified properly - Held that: - for limited purpose to examine the genuineness of the documents, we set aside the impugned order and remand the matter to the Original Authority - appeal allowed by way of remand.

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• 2018 (3) TMI 97
  Valuation - deduction of notional profit where value of bought out items is included - Department was of the view that the appellant was required to pay duty on the price arrived at after deducting the landed cost of the bought out items and post removal expenses i.e. transportation, insurance, packing, forwarding, stacking, loading and unloading charges - Held that: - Since this material is not manufactured by the appellant but only supplied alongwith pipes, we are of the view that there is no mandate for including the value of such joining material - Since there is no justification in the first place, to include the make of bought out item, there can be no objection to the notional profit being deducted from the assessable value. Valuation - Includibility - cost of packing and loading charges - Held that: - the split up of various elements of cost are not available on record. Hence, for purposes of re-quantification on the basis of above observation, we remand the matter to the adjudicating authority after setting aside the impugned order who shall redecide the issue denovo. Appeal allowed by way of remand.

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• 2018 (3) TMI 96
  Clandestine removal - excess stock - Ceramic Glazed Floor Tiles - goods not accounted in the RG-1 register - Held that: - In the Panchnama as well as in the statement though it has been recorded that these goods were found in excess, however nowhere the appellant nor the representative has admitted to have stored this excess quantity of goods meant to be cleared clandestinely without payment of duty, nor any evidence in this regard brought on record by the Revenue. Penalty u/s 11AC - Held that: - in absence of suppression of facts, mis-declaration etc. penalty cannot be confirmed under the said Provision - penalty set aside. Appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 95
  Valuation - includibility - bought out items known as “BPL Kits” - Held that: - identical issue decided in the case of M/s TGL Enterprises Pvt Ltd Versus Principal CCE, Delhi And (Vice-Versa) [2018 (1) TMI 108 - CESTAT NEW DELHI], where it was held that there is no ‘BPL Kit’ commercially known and marketed. The clearances made by the appellant-assessee to the various clients as per their requirement are not any new manufactured product, commercially identifiable as ‘BPL Kit.’ - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 94
  Valuation - abatement of duty - Held that: - It is an admitted fact that the Revenue has not filed any appeal against decision of the Tribunal dt. 03/10/2006 which became final as far as appellants are concerned - further, the Commissioner(Appeals) has wrongly held that determination of ACP was not an issue before the lower authority whereas it was an issue and the commissioner (Appeals) within a period has determined the capacity on provisional basis vide orders dt. 15/06/2198 and 10/10/1999 - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 93
  100% EOU - Refund claim - rejection on the ground of time limitation and also on the ground that the appellant has not fulfilled the conditions laid down under para 3(a) of N/N. 05/2006 - Held that: - in the absence of submission of Shipping Bills/Bill of Export it is not possible to grant the refund as the relevant date for one year of period of limitation has to be computed from the date of Shipping Bill/Bill of Export which has not been done in this case - the case is required to be remanded to the original authority with a direction to the appellant to produce the relevant documents proving the exports for the purpose of claiming the refund - appeal allowed by way of remand.

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• 2018 (3) TMI 92
  CENVAT credit - manufacture of taxable as well as exempt goods - time limitation - Held that: - it is surprising to note both the lower authorities has recorded the findings on limitation against the appellant, only on a very flimsy reasoning that the audit party may not have produced all the records - It is tantamount to nothing but reaching a conclusion that the impugned order is incorrect and liable to set aside. Penalty - Held that: - the appellant on being pointed by the audit has appropriated since the appellant has reversed on being pointed out by the audit party alongwith interest, no penalty requires to be imposed. Appeal allowed in part.

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• 2018 (3) TMI 91
  Recredit/refund - Re-credit of amount of duty paid in excess through PLA - it was alleged that amount wrongly restored as credit without proper authority - Held that: - identical issue decided in the case of M/s. Pushp Enterprises Versus Commissioner of Central Excise Jaipur I [2015 (10) TMI 1651 - CESTAT DELHI], where it was held that suo moto credit can be taken if duty is paid twice as excess duty paid is not a duty and same is deposit - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2018 (3) TMI 90
  Rectification of mistake - specific case of the petitioner is that the determination of the amount payable by them made in terms of Ext.P2 order is incorrect - Held that: - In so far as the correctness of Ext.P5 order is the subject matter of the appeal preferred by the petitioner against the same, it may not be appropriate for this Court to go into the merits of the matter. But, on the materials on record, it appears prima facie to this Court that the computation of the liability of the petitioner in terms of Ext.P5 order is incorrect - petition allowed.

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• 2018 (3) TMI 89
  Maintainability of petition - Input tax credit - Fleet Management Charges - Held that: - this Court is of the opinion that the writ petition against the re-assessment order under Section 39(1) of the KVAT Act, 2003 directly cannot be filed before this Court under Article 226 of the Constitution of India by-passing the effective alternative remedies by way of Appeals available to the assessee under the provisions of the KVAT Act, 2003 - petition dismissed being not maintainable.

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• 2018 (3) TMI 88
  Validity of Re-assessment proceedings - Section 39(2) of the KVAT Act, 2003 - time limitation - Held that: - this Court is of the opinion that the Re-assessment proceedings u/s 39(2) of the Act on further evidence and information coming to the notice of the prescribed authority is permitted by Section 39(2) of the Act, which clearly envisages of a second or multiple Re-assessments after the initial Re-assessment order is passed u/s.39(1) of the Act. The overlapping proceedings of Re-assessment envisaged u/s 39(2) of the Act, whether it can be dissected for the purpose of Section 40(3) of the Act or not is a mixed question of facts of law. What is effect of the stay order granted by the Tribunal on 23.01.2013 on such further Re-assessment proceedings is a question which is yet to be adjudicated by the concerned authorities of the Department, the Assessing Authority being at the first instance and the two Appellate Authorities being the later two levels of Appellate forums provided in the Act. Petition disposed off as pre-mature.

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• 2018 (3) TMI 87
  Condonation of delay in filing appeal - Delay has occurred due to the process of getting opinion from the Commissioner's Office - Held that: - the appeal has been filed well beyond the further period of 90 days over and above the initial 90 days period, as provided under Section 60 (1) of the Tamil Nadu Value Added Tax Act, 2006 - tax case revision dismissed.

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• Wealth tax

• 2018 (3) TMI 86
  Wealth Tax Act provision applicability - question of attracting ‘Deemed Gift’ provision under Section 4(1) of the Gift Tax Act - Given that M/s Dua Engineering Pvt. Ltd. merely held investments in the industrial plot, at a value that was at the book value, the CIT (A) felt that it needed to be treated as an industrial investment company and proceeded to do so. This approach was affirmed by the ITAT - Held that:- In the opinion of this Court both the lower authorities and the AO fell into error in proceeding to apply III Schedule to the Wealth Tax Act (by reason of Rule 11), which is applicable to the investment company, when clearly the findings pointed out to the fact that the necessary pre-conditions of treating M/s Dua Engineering Pvt. Ltd., as an investment company did not exist. If rule was inapplicable, the other mechanism of applying the value of a non-investment company, was to apply. This meant that the book value of the share (Rs.6.86) had to be applied. Therefore, Rs. 10/- value at which the assessee sold her shares to her husband in 1993 could not be treated as inadequate consideration. The findings of the lower authorities are, therefore, in error of law. The question of law is answered in favour of the assessee.

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• Indian Laws

• 2018 (3) TMI 118
  Recovery of Loan amounts - validity of actions taken by the appellant against the contesting respondents under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - arbitration clauses - doctrine of election - rejection of applicability of the doctrine of election by holding that simply because remedy under the provisions of the DRT Act was availed would not mean that the financial institution was precluded from taking steps under SARFAESI Act. Whether the arbitration proceedings initiated by the respondent can be carried on along with the SARFAESI proceedings simultaneously? - Held that: - merely because remedy under the Arbitration Act was invoked was no ground to debar the respondent from taking recourse to the SARFAESI Act. Whether resort can be had to Section 13 of the SARFAESI Act in respect of debts which have arisen out of a loan agreement/mortgage created prior to the application of the SARFAESI Act to the respondent? - whether the lender can invoke the SARFAESI Act provision where its notification as financial institution under Section 2(1) (m) has been issued after the account became an NPA under Section 2(1)(o) of the said Act? - Held that: - the SARFAESI Act was retroactive in nature and, therefore, once this Act came into force, the respondent in the said case had right to invoke the provisions of the Act even if loan agreement was entered into and mortgage created prior to the coming into force the SARFAESI Act. The loan was given by IBFSL which was not a financial institution covered by the SARFAESI Act when the loan was given. However, this entity has got merged with the appellant and appellant is a SARFAESI company. In this backdrop, the entire thrust of the argument of the respondent is that as a successor company, the appellant cannot take advantage. In order to deal with this aspect, we will have to first taken into consideration, the effect of such a merger scheme as approved by the High Court. It is to be kept in mind that the loan/debts/financial assets stood vested in the appellant pursuant to the amalgamation scheme filed by the two companies under Sections 391 and 394 of the Companies Act, 1956 whereunder the predecessor company, IBFSL got amalgamated with the appellant - on sanction of the scheme of amalgamation, all loans, recoveries, security, interest, financial documents, etc. in favour of IBFSL got transferred to and stood vested in the appellant including the loans given by IBFSL to respondent borrowers, debts recoverable by IBFSL from respondent borrowers in favour of IBFSL, security documents executed by respondent borrowers in favour of IBFSL, etc. On the sanctioning of the scheme, the respondent borrowers became the borrower of the appellant as if the financial assistance was granted by the appellant to the respondent borrowers. Respondent No.1 would be treated as ‘borrower’ within the meaning of Section 2(1)(f) of the SARFAESI Act; the arrangement would be classified as ‘security arrangement’ under Section 2(1) (zb); the agreements created ‘security interest’ under Section 2(1) (zf); and the appellant became ‘secured creditor’ within the meaning of Section 2(1)(zd) of SARFAESI Act. Appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 117
  Recovery of dues - contractual dispute between parties - notice dated 22.04.2015 under Section 87 of the Finance Act, 1994 which requires the petitioner- RSMML to pay an amount of Rs. 2,74,81,739/- in discharge of the petitioner’s liability under Section 87 of the Finance Act, 1994 - due to this liability, what will be impact of the notice dated 22.04.2015 given by the Central Excise Division concerned to the present petitioner-RSMML? Held that: - Since the liability under Section 87 of the Finance Act, 1994 in terms of the notice dated 22.04.2015 is absolute against the petitioner on behalf of the private respondents, in light of the cheque deposited by the petitioner on 30.04.2012, therefore, this Court disposes of the present writ petition directing that petitioner shall pay a sum of Rs. 2,74,81,739/- in lieu of the aforementioned notice dated 22.04.2015 with the Central Excise Division concerned within a period of two weeks from today - petition disposed off.

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