Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
April 13, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Transitional credit - Transferring CENVAT credit u/s 174(1) & 174(3) of CGST Act, 2007 - validity of conditions imposed - transitional arrangements have clear nexus, therefore, with the object sought to be achieved. They cannot be struck down as having no such relation or nexus. - HC
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Levy of GST IGST - high sea sale - supply from one country to another country without bringing the goods into India - The applicant is neither liable to GST on the sale of goods procured from China and directly supplied to USA nor on the sale of goods stored in the warehouse in Netherlands, after being procured from China - AAR
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Scope of the term supply - The recovery of food expenses from the employees for the canteen services provided by company would come under the definition of 'outward supply' as defined in Section 2(83) of the Act, 2017, and therefore, taxable as a supply of service under GST. - AAR
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Rate of tax - standing rubber trees - rubber trees are agreed to be severed before supply and hence, comes under the definition of 'goods' - There is no differentiation between soft wood and hardwood in GST - AAR
Income Tax
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Reopening of assessment - failure of the AO to apply the mind during the regular assessment - the power under Section 147/148 of the Act is not to be exercised to correct mistakes made during the regular assessment proceedings. - HC
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Withdrawal of the LTCG in the return filed in response to the notice u/s 148 - Reopening of assessment - When there is no transfer and there is no capital gain arising to the assessee, the same cannot be brought to tax even if the assessee offered it for taxation in his return of income - withdrawal of income justified - AT
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Addition u/s 68 - The PAN of the companies only prove their existence, and nothing else which is required u/s 68 of the Act - It does not does not prove the creditworthiness and the genuineness of the transactions - AT
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Not allowing the claim for deduction of loss on account of foreign exchange fluctuation as on the last date of the previous year - addition on the ground that the loss in question was only contingent and hence cannot be allowed - The forward contracts are in respect of consideration for exports proceeds, which are revenue items. There is an actual contract for sale of merchandise - claim of loss allowed - AT
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Set off of brought forward non speculative loss against the current years speculative income - Set off of loss from one head against income from another - there is no bar in adjustment of unabsorbed business losses from speculation profit of the current year, provided the speculation losses for the year and earlier has been first adjusted from speculation profit - AT
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Since, the assessee has failed to get the registration U/s 12AA of the Act, therefore, the appeal for exemption U/s 80G(5)(vi) of the Act is also failed. - AT
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The concept of prior period expenses cannot be applied in the instant case, since the assessee has acquired the rights over the IPR over a period. Under revenue cost matching principle, all the expenditure incurred in acquiring IPR have to be treated as revenue expenditure irrespective of the year in which it was incurred and has to be allowed against sales revenue of IPR. - AT
Indian Laws
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Recognition of an eligible entity as startup - revised policy - Notification
Service Tax
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Applicable rate of service tax - date of rending of rendering of service or date of receipt of amount - n respect of the taxable service provided prior to 10/09/2004, the appellant had claimed service tax at the prevailing rate of 8% - differential duty cannot be demanded. - AT
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Service provided by one division to another - GTA service - From the SCN, it is apparent that the ground of demand was that the Appellant has taken trucks from trucking division and there was no demand on the ground of trucks taken from third party - the demands has been confirmed beyond the scope of SCN and hence not sustainable - AT
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Classification of services - shifting of Mineral Ore - The service is not mining service but goods transportation service on which service tax is payable under reverse charge basis by the service recipient - appellant is not liable to pay service tax - AT
Central Excise
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Liability of service tax or VAT - packaged software - The demand is on services rendered by the Appellant post sales and the demand on the same under the category of “Information Technology Software Services” has been correctly made - AT
Case Laws:
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GST
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2018 (4) TMI 585
Transitional credit - Transferring CENVAT credit u/s 174(1) and 174(3) of CGST Act, 2007 - validity of conditions imposed - transitional credit - right to aval the credit has already accrued under Rule 4(7) of the CENVAT Credit Rules, 2004 - argument is that the right to avail CENVAT credit is a matter of right accrued under the repealed Act, namely, the Central Excise Act, 1944. Once the right is accrued, the new enactment or repeal of the old Act cannot debar or disentitle the petitioner of the accrued right - Section 174 of the CGST Act, 2017. Held that: - The repeal of the Acts mentioned in subsection (1) of Section 174 would not affect any right, privilege, obligation, or liability acquired, accrued or incurred under the amended Act or repealed Acts or orders made under such repealed or amended Acts. That is saved and except the proviso below subsection (2) of Section 174 - It is too well settled that right to take advantage of a statutory provision cannot be said to be an accrued right and similarly a right which would, if allowed to be asserted, will affect adversely the larger public interest that cannot be permitted to be enforced. Whether rights are flowing from the Cenvat Credit Rules, 2004 - Held that:- the learned Additional Solicitor General is right in his contention that a CENVAT credit is a mere concession and it cannot be claimed as a matter of right. If the CENVAT Credit Rules under the existing legislation themselves stipulate and provide for conditions for availment of that credit, then, that credit on inputs under the existing law itself is not a absolute but a restricted or conditional right. It is subject to fulfilment or satisfaction of certain requirements and conditions that the right can be availed of. The scheme of the new law that the object and purpose sought to be achieved after its introduction of the new law is of not permitting the existing law arrangement to continue endlessly. Some day or some time has been stipulated as appointed day for the new regime to come into force. For it to come into force and function effectively, the transitional arrangements have been made. They have clear nexus, therefore, with the object sought to be achieved. They cannot be struck down as having no such relation or nexus. We cannot also by any comparative analysis of the Central and State Law hold that this condition, as imposed, is unreasonable. Petition dismissed.
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2018 (4) TMI 583
Levy of GST IGST - high sea sale - supply from one country to another country without bringing the goods into India - goods sold to the company in USA, where goods sold are shipped directly from China to USA without entering India - On the sale of goods to the company in USA, where goods sold are shipped directly from China to USA without entering India - goods procured from China not against specific export order - sale of goods from Netherlands warehouse to their end customers in and around Netherlands, without entering India. Held that:- the integrated tax on goods imported into India shall be levied and collected at the point when duties of customs are levied on the said goods under Section 12 of the Customs Act, 1962 i.e.-on the date determined as per provisions of Section 15 of the Customs Act, 1962. Circular 33/2017-Customs dated 01.08.2017 has clarified that IGST on high sea sale (s) transactions of imported goods, whether one or multiple, shall be levied and collected only at the time of importation i.e. when the import declarations are filed before the Customs authorities for the customs clearance purposes for the first time. Further, value addition accruing in each such high sea sale shall form part of the value on which IGST is collected at the time of clearance - The clarification given by the CBEC in the above Circular regarding the leviability of IGST and the point of collection thereof in respect of high sea sales of imported goods is, mutatis mutandis, applicable in the case of the applicant. Ruling:- The goods are liable to IGST when they are imported into India and the IGST is payable at the time of importation of goods into India - The applicant is neither liable to GST on the sale of goods procured from China and directly supplied to USA nor on the sale of goods stored in the warehouse in Netherlands, after being procured from China, to customers, in and around Netherlands, as the goods are not imported into India at any point.
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2018 (4) TMI 582
Scope of the term supply - whether recovery of food expenses from employees for the canteen service provided by the applicant / company comes under the definition of outward supplies and are taxable under Goods & Service Tax Act? - Held that: - From the plane reading of the definition of "business", it can be safely concluded that the supply of food by the applicant to its employees would definitely come under clause (b) of Section 2(17) as a transaction incidental or ancillary to the main business - Even though there is no profit as claimed by the applicant on the supply of food to its employees, there is "supply" as provided in Section 7(1 )(a) of the GST Act, 2017. The applicant would definitely come under the definition of "Supplier" as provided in sub-section (105) of Section 2 of the GST Act, 2017. The recovery of food expenses from the employees for the canteen services provided by company would come under the definition of 'outward supply' as defined in Section 2(83) of the Act, 2017, and therefore, taxable as a supply of service under GST.
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2018 (4) TMI 581
Rate of tax - standing rubber trees - applicant contends that the tax liability of timber and firewood/fuel wood is explained under HSN code 4401 and there is no direction to collect GST for standing trees of rubber trees which fall under HSN code 06. But, the State Farming Corporation is demanding 18% on live rubber trees - Held that: - under the contract of supply, growing crops, i.e., rubber trees are agreed to be severed before supply and hence, comes under the definition of 'goods'. Thus, standing rubber trees no longer remain as such. Therefore, it can only be treated as 'wood in rough form'. In GST, firewood is exempted as per HSN Code 4401. There is no differentiation between soft wood and hardwood in GST. The rate of tax on rubber wood in the aforesaid transaction is 18% under the HSN 4403.
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2018 (4) TMI 580
Release of detained goods - Section 129 of the Central Goods and Services Tax Act - Held that: - identical matter has been disposed of by a Division Bench of this Court in The Commercial Tax Officer And The Intelligence Inspector Versus Madhu. M.B. [2017 (9) TMI 1044 - KERALA HIGH COURT], directing expeditious completion of the adjudication of the matter and permitting release of the goods detained pending adjudication, in terms of Rule 140(1) of the Kerala Goods and Services Tax Rules, 2017 - the competent authority is directed to complete the adjudication provided for u/s 129 of the statutes - petition disposed off.
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2018 (4) TMI 579
Detention of goods - it was alleged that the goods were being transported without the requisite documents - Section 129 of the CGST Act as also the Kerala SGST Act - the requisite documents were subsequently furnished - Held that: - the writ petition disposed off directing the second respondent to complete the adjudication provided for under Section 129 of the said statutes within seven days.
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Income Tax
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2018 (4) TMI 578
TPA - comparable selection criteria - functional similarity - Held that:- The appellant is engaged in providing software and BPO services to its AE, thus companies functionally dissimilar with that of assessee need to be deselected from final list.
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2018 (4) TMI 577
Notice under section 226(3) - disallowance of additional depreciation -attachment orders - Held that:- In the instant case, the petitioner is in the position of filing an appeal and they seek to set aside the finding rendered by the Commissioner of Income Tax (Appeals)-III, Coimbatore only on one issue, viz., with regard to the disallowance of additional depreciation, totalling ₹ 66,35,246/- on building, plant and machinery in respect of two milk chilling plant commissioned at Aayilpatti and Karur and the Assessing officer disallowed the same observing that the assets were not put to use during the year. Thus, following the factual position, this court is inclined to grant interim protection to the petitioner till they approach Income Tax Appellate Tribunal (ITAT) by way of an appeal and such interim protection shall be subject to a condition. The impugned notice shall remain stayed subject to the condition that the petitioner pays 20% of the the disputed tax on the additional depreciation claimed under section 32(1)(iia) of the Act on the sum of ₹ 66,35,246/- and such payment shall be made, within one week from the date of receipt of a copy of this order. Subject to compliance of the said condition, attachment of the the petitioner's bank account shall stand lifted.
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2018 (4) TMI 576
Reopening of assessment - failure of the AO to apply the mind during the regular assessment - allowing deduction u/s 80IC in respect of component of “other income” which was not derived from industrial undertaking - Held that:- In this case the Assessing Officer consciously considered the claim for deduction under Section 80IC of the Act as is admittedly evident from the issues raised during the regular assessment proceedings. This by itself would be evidence of the fact that the Assessing Officer had occasion to apply his mind to the claim for deduction under Section 80IC of the Act during the regular assessment proceedings and had taken a view on the claim of deduction under Section 80IC of the Act. The reasons in support of the impugned notice is not premised on the fact that he had not applied his mind to the claim for deduction under Section 80IC during the regular assessment proceedings in respect of the income/receipts which were not derived from its paper and pulp unit to claim benefit under Section 80IC of the Act. It proceeds to exclude the above income from the claim for deduction on account of omission by the Assessing Officer during the regular assessment proceedings. This is different from non-application of mind to claim for deduction under Section 80IC of the Act. As held by this Court in Hindustan Lever v. Wadkar (2004 (2) TMI 42 - BOMBAY High Court) the reasons in support of the reopening notice has to be read as it is. No additions and/or inferences are permissible. Moreover, the power under Section 147/148 of the Act is not to be exercised to correct mistakes made during the regular assessment proceedings. - Decided against revenue.
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2018 (4) TMI 575
Addition on account of unsecured loans - transaction shown as gift - Held that:- CIT (A) has rightly observed that this is not a gift and taking into consideration that the donor has a sufficient fund and that is not in dispute that the amount which has been paid by the HUF was not having sufficient fund. In that view of the matter, we are confirming the order of CIT (A) and the Tribunal. - Decided in favour of assessee
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2018 (4) TMI 574
TDS not paid to the credit of Central Government within the prescribed time limit and was deposited after due date - offences punishable under Sections 276B & 278 B - Submission is that the applicants in continuation to their business, have always deposited TDS to the credit of Central Government within time except for financial year 2009-10 and 2010-11 and hence, the action taken by the opposite party on the basis of technical grounds is actually the harassment of bonafide tax payers - Held that:- Contentions raised at the bar require detailed hearing on law and facts both. Notice on behalf of opposite party No.1 has been accepted by learned AGA. Issue notice to the opposite party no.2 returnable within four weeks. Opposite party no.2 may file counter affidavit within three weeks after the service. Learned AGA may also file counter affidavit within the same period. Rejoinder affidavit may be filed within two weeks thereafter. List this matter immediately after expiry of the aforesaid period before the appropriate Bench. Proceedings under Sections 276B & 278 B shall remain stayed.
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2018 (4) TMI 573
TPA - comparable selection - functional dissimilarity - Held that:- The exclusion or inclusion of one or the other comparable would by itself not constitute a question of law unless it is shown that there are important functional dissimilarities or that vital material facts which go to the route of profitability or other material circumstances are involved. In the present case, the comparables as well as the assessee are all manufacturers of medical/surgical equipments and, therefore, inclusion of three comparables is based upon appreciation of findings of fact; they do not call for interference. The appeal is, therefore, dismissed.
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2018 (4) TMI 572
Withdrawal of the LTCG in the return filed in response to the notice u/s 148 - Reopening of assessment - transfer of property - Held that:- It is seen that the assessee, under a mistaken understanding, that there is a transfer of property has offered the LTCG. However, Article 265 of the Constitution of India mandates that the tax can be collected only in accordance with law. When there is no transfer and there is no capital gain arising to the assessee, the same cannot be brought to tax even if the assessee offered it for taxation in his return of income. Revenue’s objection that the assessee cannot claim a benefit in a return filed in response to the notice u/s 148 is not sustainable, because the assessee is not making a claim in the return filed in response to the notice u/s 148 of the Act but is withdrawing a mistaken claim already made in the original return of income. Further, the AO and the CIT (A) have not disallowed the assessee’s withdrawal of LTCG on this ground. Therefore, such an objection cannot be raised before this Tribunal in the second appeal and in the second round of litigation. In view of the same, we are of the opinion that the assessee’s withdrawal of the LTCG in the return filed in response to the notice u/s 148 is justified as there is no transfer of property and therefore, there is no long term capital gains be brought to tax. - Decided in favour of assessee.
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2018 (4) TMI 571
Addition u/s 14A - Held that:- Disallowance 14A cannot be made where there is no exempt income during the relevant A.Y. See case of Cheminvest Ltd [2015 (9) TMI 238 - DELHI HIGH COURT]. Addition u/s 68 - Held that:- CIT (A) has deleted the same by accepting the contentions of the assessee without any verification. We find that before us the assessee has not filed the copies of any of the documents which are referred in CIT (A)’s order. We are not able to accept the contentions of the assessee about the creditworthiness and the genuineness of the transactions. The PAN of the companies only prove their existence, and nothing else which is required u/s 68 of the Act - remit this issue also to the file of the AO with a direction to reconsider the issue in the light of the evidence filed by the assessee in support of the investment made by the four companies in the assessee’s company.
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2018 (4) TMI 570
Disallowance of expenses - AO observed that rate of commission paid by the assessee is higher than the commission earned by the assessee. - Held that:- AO failed to comprehend that receipt as well as payment of commission could be in two different situations; how the receipt at a lower rate would justify the disallowance of commission payment at an higher rate. His order is without any logic. Similar is the position with regard to other disallowances. CIT(A) examined the issue with all possible angles and in detail. We do not see any reason to interfere in the order of the ld.CIT(A) on these issues. It is upheld. Appeal of the Revenue is dismissed.
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2018 (4) TMI 569
Disallowance the cost of improvement of the land while computing the capital gain on sale of the said land - Held that:- AO estimated the cost of work at ₹ 25,000/- Though the assessee has not produced the complete supporting evidence in support of the claim however, the Assessing Officer has not denied the work done by the assessee on the ground therefore, the issue is only a proper and reasonable estimation of the cost of the work done by the assessee. Since, the land was already under gone for plotting and construction of road and the work was carried out more than 4 years prior to the date of inspection therefore, cost of work done cannot be properly ascertained without making a proper enquiry from the persons concern. We find it just and proper to estimate this expenditure incurred by the assessee on the improvement of land at ₹ 6 lacs. Hence, the order of the authorities below qua this issue is modified and the claim of the assessee is allowed to the extent of ₹ 6 lacs as against ₹ 3 lacs allowed by the ld. CIT(A). Deduction u/s 54F for investment in the new asset in the name of the wife - claim denied merely on the ground that the said house was constructed in the plot of land purchased in the name of his wife - Held that:- We have carefully gone through the relevant record including transfer documents by which the assessee purchase this land in the name of wife but no description of constructed area has been given in the said document though the map site plan attached to the sale document show some construction on the plot of land. There is no scheduled of property in the sale document, therefore, it is not possible to ascertain that the plot of land in question was purchased in the name of wife along with the constructed area or it was plain plot of land. Hence, in these facts and circumstances of the case when the construction of the house is disputed by the AO then, the claim of the assessee to the extent of the purchase consideration of ₹ 20 lacs is allowable. As regards the cost of construction since it is not ascertainable from record available before us therefore, in the absence of any supporting documents to show the construction of the house carried out by the assessee we restrict the claim of the assessee u/s 54F to ₹ 20 lacs. We may clarify that since, the AO has already accepted the purchase of land with house for consideration of ₹ 20 lacs therefore, as per the accepted position the said investment will be considered for purchase of new house for the purpose of Section 54F of the Act.
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2018 (4) TMI 568
Deduction u/s.10A - exclusions from the export turnover and total turnover - reimbursement of telecommunication expenses and Insurance expenses incurred in foreign currency - Held that:- Taking into consideration the decision rendered by the Hon’ble High Court of Karnataka in the case of CIT v. Tata Elxsi Ltd [2011 (8) TMI 782 - KARNATAKA HIGH COURT], we are of the view that the order of the CIT(A) directing the Assessing Officer to exclude communication charges and travelling and conveyance expenses both from export turnover and total turnover, is just and proper and calls for no interference. The only grievance of the Revenue is that the decision of Hon'ble High Court of Karnataka in Tata Elxsi (supra) has not attained finality and a SLP by the department is pending before the Hon'ble Supreme Court. We are of the view that as of today, law declared by the Hon'ble High Court of Karnataka which is the jurisdictional High Court is binding on us Excluding interest income derived from fixed deposits from “income from business” while computing deduction u/s.10A - Held that:- Tribunal in Assessee’s own case in AY 2011-12 on identical issue held that interest income arose from fixed deposits that were made out of profits generated from export business and therefore the Assessee was entitled to deduction u/s.10A of the Act on interest income treating the same as part of business income. We are of the view that the source of fixed deposit has to be examined in this AY and since this exercise has not been done by the revenue authorities, we deem it fit to remand the issue to the AO for fresh consideration in the light of the decisions of the Tribunal referred to above. Deduction of loss on account of foreign exchange fluctuation as on the last date of the previous year - addition on the ground that the loss in question was only contingent and hence cannot be allowed - Held that:- a contract has been concluded and a liability has crystallized. In this factual matrix, from the wordings of the Instruction of CBDT, it follows that the loss arising out of the forward contract is not notional. In such a case, the CBDT Instruction requires the Assessing Officer to examine whether such a loss is on account of a speculative transaction as contemplated in section 43(5). As discussed earlier, in the case on hand there has been an existing contract with a binding obligation accrued against the assessee when it entered into for ex forward contracts. The forward contracts are in respect of consideration for exports proceeds, which are revenue items. There is an actual contract for sale of merchandise. In this factual matrix, it is clear that the transaction in question will not qualify to be called as speculative transaction. In view of the facts and circumstances of the case on hand, as discussed above, the provision for losses on derivative contracts is allowable as expenditure. See Quality Engineering & Software Technologies (P) Ltd. [2015 (1) TMI 869 - ITAT BANGALORE]
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2018 (4) TMI 567
Eligibility for deduction u/s.10A on profits and gains as are derived from the export of computer software - Held that:- Taking into consideration the decision rendered in the case of CIT v. Tata Elxsi Ltd [2011 (8) TMI 782 - KARNATAKA HIGH COURT] we are of the view that the order of the CIT(A) directing the AO to exclude communication charges and travelling and conveyance expenses both from export turnover and total turnover, is just and proper and calls for no interference. Addition made consequent to determination of Transfer Price by the Transfer Pricing Officer(TPO), which addition was deleted by the DRP in its directions on the adjustment to Arm’s Length Price (ALP) - Held that:- Assessee in into providing software development services by the Assessee to its AE thus companies functionally dissimilar with that of assessee need to be deselected from final list.
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2018 (4) TMI 566
Unaccounted excess stock of raw materials - stock found during the course of the survey action for tax - Held that:- Once the assessee had came forth with a disclosure of additional income in respect of unaccounted excess stock of raw material of ₹ 51,25,042/-, thereupon it was incumbent on its part to have credited the amount of such additional income in its profit and loss account for the year under consideration. However, we find that the assessee had credited the corresponding value of the unaccounted excess stock of raw material in the capital accounts of the partners in their respective profit sharing ratios. We are unable to persuade ourselves to subscribe to the aforesaid methodology adopted by the assessee Basis of showing the net profit of ₹ 53,98,134/- by the assessee during the year under consideration and the fact as to whether the disclosure of additional income of ₹ 51,25,042/- made in respect of the unaccounted excess stock of raw material during the course of the survey proceedings was offered for tax by the assessee, or not, requires thorough verification, therefore, in all fairness restore the matter to the file of the A.O. Before parting, we may further observe that the A.O while adjudicating afresh the issue under consideration shall take cognizance of the proviso of Sec. 69C which debars allowability of deduction of any unexplained expenditure which is deemed to be the income of the assessee - Decided in favour of revenue for statistical purpose.
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2018 (4) TMI 565
Disallowance on account of foreign travel expenditure - Held that:- It is noticed that the assessee failed to furnish any details of expenditure nor explained business exigency to visit South Africa before both the authorities below. It is noticed from the order of CITA that he specifically asked to provide supporting evidence regarding the urgency of foreign travel. We find no details were filed except making a submission that the visit was to negotiate with supplier in South Africa for purchase of new machinery. We find no such evidence is before us also. CIT-A was correct in confirming the impugned disallowance made by the AO and it is justified. - Decided against assessee Addition on account of interest paid on late deposit of TDS - Held that:- Interest paid on delayed deposit of TDS is an allowable deduction by placing reliance on the decisions of Bharat Commerce Industries Ltd Vs. CIT reported in (1998 (3) TMI 2 - SUPREME Court). - Decided in favour of assessee.
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2018 (4) TMI 564
Addition of share application/premium u/s 68 - identity, genuineness and creditworthiness of the investor entity Held that:- Assessee has been able to prove all three components of identity, genuineness and creditworthiness of impugned share application/premium amount of ₹ 9,99,99,900/- to have come from its group company M/s. General Capital and Holding Company Pvt. Ltd. Coupled with this, we must also observe that it has successfully produced its common Director Mr. Shah (supra) before AO alongwith all necessary details and confirmation despite the fact that such a personal appearance is required as per Section 68 (First proviso) inserted by the Finance Act, 2012 applicable w.e.f. 01.04.2013 only whereas we are dealing with assessment year 2010-11. We thus affirm the CIT(A)’s findings under challenge. - Decided against revenue
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2018 (4) TMI 563
Transfer pricing addition in the international transaction of ‘Rendering of marketing support services.’- comparable selection - Held that:- The assessee rendered marketing support services with focus on carrier and noncarrier segments. The assessee acts as a channel of communication between the group companies and distributors/customers for providing product related information like technical specifications and features etc. and is also engaged in the provision of sales services to support the core activities, thus companies functionally dissimilar with that of assessee need to be deselected from final list.
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2018 (4) TMI 562
Not allowing the set off of brought forward non speculative loss against the current years speculative income - Set off of loss from one head against income from another - Held that:- There is no blanket bar as such in adjustment of carry forward non speculation business loss against current year speculation profit. These provisions provide that loss in speculation business cannot be set against any income under the head “Business or profession” nor against income under any other head, but it can be set off only against profits, if any, of another speculation business. Section 73 effects complete segregation of speculation losses, which stand distinct and separate and can be mixed for set off purpose, only with speculation profits. The said circular of the Board (which has been held by the Hon’ble High Court to be still holding the field) provide that if speculation losses for earlier years are carried forward and if in the year of account a speculation profit is earned by the assessee, then such speculation profits for the current accounting year should be adjusted against carried forward of speculation losses of the earlier year, before allowing any other losses to be adjusted against those profits. Hence, it is clear that there is no bar in adjustment of unabsorbed business losses from speculation profit of the current year, provided the speculation losses for the year and earlier has been first adjusted from speculation profit. In the present case, no case has been made out by the Revenue that the current or earlier speculation losses have not been adjusted from the speculation profit. Addition made on account of mismatch of AIR data with income offered by the assessee - assessee had claimed the TDS on the same and had not offered the income for taxation - Held that:- When the assessee contradicts the AIR information, the Assessing Officer should verify the same. Here we find that though the assessee is contradicting the AIR information by stating that these transactions do not relate to it, the assessee has duly taken credit of the concerned TDS. Thus, the assessee cannot blow hot and cold and shift the onus to the Revenue. The assessee having taken credit of the TDS has to prove that the transaction did not belong to him if it claims that the relevant income do not relate to it. Hence, we remit this issue also to the file of the Assessing Officer. Assessing Officer is directed to give the assessee an opportunity to prove that the credit for the said TDS has been wrongly taken and these incomes do not belong to it. Needless to add, the assessee should be granted adequate opportunity of being heard. Mark to market loss in this case is allowable.
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2018 (4) TMI 561
TDS u/s 194H - payments made by the appellant to various customers on account of 'Rate difference, discounts and Incentives' - tds liability - principal to principal relationship - Held that:- We find the sole basis for the treatment for the claim of discount and incentives given by the assessee to be commission payments is that the assessee has not produced the agreement with customers or the scheme of incentive/rebates. We find that the assessee in its submissions before the ld. Commissioner of Income Tax (Appeals) which he has also recorded in his appellate order has duly contested that the Assessing Officer never required the assessee to produce such documents. Despite such submissions of the assessee, the ld. Commissioner of Income Tax (Appeals) himself never asks the assessee to produce these documents but proceeded to hold that in the absence of any such documents, adverse view was to be taken. In this view of the matter, in our considered opinion, this issue needs to be remitted to the file of the Assessing Officer. The Assessing Officer is directed to consider the issue afresh after giving the assessee proper opportunity of being heard.
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2018 (4) TMI 560
Reopening of assessment - depreciation claim - validity of reason to believe - Held that:- Once the original assessment were completed after considering all details filed by the assessee, unless there is tangible material which is outside of what was filed by the assessee which can justify a reopening there cannot be a valid reopening. As for Explanation 1 to Sec.147 of the Act, assessee having produced profit and loss account, in which it had claimed depreciation, we cannot say that any specific diligence was required in verifying the correctness of the claim of depreciation or correctness of the receipts shown by the assessee in such profit and loss account vis-ŕ-vis its TDS certificates. We are of the opinion that in such cases, Explanation 1 to Section 147 of the Act will not help the Revenue. We thus find that reopening for all the years were invalid. - Decided in favour of assessee.
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2018 (4) TMI 559
Interest income assessment - whether to be considered under the head business income and allowing the expenditure exclusively incurred for earning such income? - Held that:- Non charging of interest from few persons to whom assessee had advanced loans would not be a sufficient enough a reason to hold that assessee was not doing a finance and investments business. Assessment order for assessment year 2009-2010 placed by the assessee clearly show that AO had accepted the business of the assessee as one of finance and investment. DR could not point out any difference in facts or any change of facts from what existed for assessment year 2009-2010, vis-a-vis the impugned assessment year. Commissioner of Income Tax (Appeals) was justified in taking a view that interest income of the assessee had to be considered under the head business income and allowing the expenditure exclusively incurred for earning such income. - Decided against revenue Dividend income received by Minor V. Prateek and Minor V.Palak - exemption u/s.10(34) r.w.s. 115O allowed - Held that:- DR fairly admitted that assessee had produced records which demonstrated payment of dividend distribution tax by the concerned companies from which dividends were received by Minor V. Prateek and Minor V.Palak. In our opinion, dividend distribution tax under Section 115O of the Act, having been paid by the companies concerned, ld. Commissioner of Income Tax (Appeals) was justified in holding that dividend income received by Minor V. Prateek and Minor V.Palak were exempt u/s.10(34) of the Act - Decided against revenue Addition claimed by the assessee u/s.35AC - claim of deduction u/s.35AC is not an allowable expenditure as the assessee has no business income - Held that:- A reading of the above ground clearly show that it is raised as corollary to ground No.2 regarding treatment of the interest income earned by the assessee. We have already upheld the order of the ld. Commissioner of Income Tax (Appeals) that interest received by the assessee was rightly treated as business income of the assessee. Disallowance of unrealized rent while computing its income from house property for a warehouse premise - Held that:- We find that none of the lower authorities had examined the issue based on the Section and Rule mentioned supra. Issue in our opinion requires a revisit by the ld. Assessing Officer. We therefore set aside the orders of the lower authorities and remit this issue back to the file of the ld. Assessing Officer for consideration afresh.
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2018 (4) TMI 558
Revision u/s 263 - additional income out of the on-money component - identical sum as offered for taxation before the Assessing Officer was offered before the Settlement Commission - Held that:- Assessing Officer has not done any enquiry whatsoever. There is no material on record to show that the settlement commission’s order was there before him. The Assessing Officer has not enquired as to how the sum of ₹ 60,31,047/- was offered as against the larger amount offered at the time of survey. Moreover, as rightly been pointed out by the ld. Departmental Representative, for assessment year 2005-06, the Settlement Commission has accepted the plea that income out of on-money, should be considered @ 20.14% which is totally different from approx 12% rate offered in the present case for the assessment year. Hence, it is clear that by no stretch of imagination, it can be said that the Assessing Officer has made an application of mind on the issue at hand or that he had referred to the Settlement commission order. In these circumstances, in our considered opinion, acceptance of the return by the Assessing Officer at a figure of ₹ 60,31,047/- as against on money receipt of ₹ 1,65,62,330/- is erroneous so as to be prejudicial to the interest of the Revenue. CIT has observed that there are no details available about the unaccounted expenditure by the assessee in earning on money receipt - there is lack of clarity in the final direction given by the ld. Commissioner of Income Tax. The ld. Commissioner of Income Tax has directed the Assessing Officer to pass the order afresh after affording reasonable opportunity of being heard to the assessee and after taking into consideration the entire on-money receipt of ₹ 1,65,62,330/- as income by the assessee. Here we find that a confusion can arise as to whether the ld. Commissioner of Income Tax is directing that no opportunity should be given to the assessee to prove that the actual income out of ₹ 1,65,62,300/- is only ₹ 60,31,047/-. Hence, in order to remove any such ambiguity, we modify the order of the ld. Commissioner of Income Tax and direct that while considering on money receipt of ₹ 1,65,62,330/- it will be open to the assessee to prove by cogent means that the actual income out of it was only ₹ 60,31,047/-. - Appeal by the assessee stands partly allowed.
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2018 (4) TMI 557
Disallowance under section 14A r.w. Rule 8D - Held that:- We have noted that the assessee earned exempt income of ₹ 28,380/- in the form of dividend income. The Hon'ble Delhi High Court in case of Joint Investment Pvt. Ltd. (2015 (3) TMI 155 - DELHI HIGH COURT) held that the window for disallowance indicated in section 14A is only to the extent of disallowing expenditure incurred by assessee in relation to tax exempt income. These proposition or portion of tax exempt income surely cannot swallow the entire amount. Thus, the disallowance under section 14A is restricted to the exempt income/dividend income of ₹ 28,830/-. The Assessing Officer is directed accordingly. Transfer Pricing Adjustment in relation to non-interest bearing shareholder deposit - Held that:- Considering the decision of Tribunal in assessee s own case in identical grounds of appeal was allowed in favour of assessee on the same amount of share-holder deposits the Associate Company. Long Term Capital Gain on sale of investment not considered - application of the assessee filed under section 154 - Held that:- CIT(A) has already given direction to the Assessing Officer for disposing of the application under section 154 of the Act, filed by assessee which has not been disposed of so far. The Assessing Officer is directed to consider the claim of assessee and pass the order in accordance with law. Needless to say that the Assessing Officer shall grant necessary opportunity of hearing before passing the order. In the result, appeal of the assessee is allowed. Transfer Pricing Adjustment towards this involve in guarantee on loan and advances to Associate Enterprises - Held that:- As decided in assessee's own case when the guarantee has been given by the assessee results in a direct or indirect benefit to the assessee itself, then there arises no need to charge any commission on the same. Thus, following the decisions of the co-ordinates benches of the Tribunal we, in the present case are of the view that the above transaction does not fall within the purview of international transaction as defined under section 92B of the Act and hence, the orders of the lower authorities are reversed.
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2018 (4) TMI 556
Disallowing deduction u/s 80IB(5) - addition based on the assessment made for A.Y. 2011-12 wherein similar disallowance was made by the AO - Held that:- On appeal the learned CIT(A), following the order of his predecessor for assessment years 2010-11 and 2011-12 allowed the claim of the assessee. On a perusal of the order of the Tribunal for assessment years 2010-11 and 2011-2 we find that the Tribunal allowed the claim of the assessee - we uphold the order of the learned CIT(A) in allowing the claim for deduction under Section 80IB(5) of the Act to the assessee. - Decided in favour of assessee.
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2018 (4) TMI 555
Granting registration U/s 12AA denied - no original documents regarding establishment of the society for verification given - Held that:- As gone through the written submissions and find that none of the original documents regarding registration of the society and the rules and regulations have been filed, therefore, the compliance as per law still remain to be complied. The assessee has miserably failed to comply with the requirement of law for granting registration U/s 12AA of the Act, therefore, the Bench sustain the order of the ld. CIT(E) on this issue. Since, the assessee has failed to get the registration U/s 12AA of the Act, therefore, the appeal for exemption U/s 80G(5)(vi) of the Act is also failed. - Decided against assessee.
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2018 (4) TMI 554
Addition to interest income - computation of differential interest income - Held that:- The tax authorities are justified in computing interest income by adopting higher rate of interest. Since, the assessee has borrowed loans at interest rate of 9% & 10%, we are of the view that the differential interest rate should be computed by adopting “cost of funds” to the assessee, which in our view may be taken as 9.5% - perusal of the balance-sheet would show that the assessee has also made investments in other assets and further the assessee has also failed to prove the nexus between the own funds and amount advanced. Accordingly, we are unable to agree with this contention of the assessee. We modify the order passed by the learned CIT(A) and direct the Assessing Officer to compute differential interest income by adopting interest rate at 9.5%. Disallowance of expenses relating to IPR - Held that:- We agree with the contentions of the assessee that concept of prior period expenses cannot be applied in the instant case, since the assessee has acquired the rights over the IPR over a period. Under revenue cost matching principle, all the expenditure incurred in acquiring IPR have to be treated as revenue expenditure irrespective of the year in which it was incurred and has to be allowed against sales revenue of IPR. With regard to the remaining disallowance, the learned AR submitted that the assessee would be in a position to satisfy the Assessing Officer with relevant evidences, if opportunity is given. We find merit in the said plea of learned AR. Accordingly, we set aside the order passed by the learned CIT(A) on this issue and restore the same to the file of the Assessing Officer with the direction to examine various evidences furnished by the assessee
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2018 (4) TMI 553
Reopening of assessment - assessee had claimed the deduction for premium payments to LIC Gratuity fund of its employees in violation of the provisions of section 36(1)(v) & section 40A(7)(b) - Held that:- A.O. has reopened the assessment since the assessee has not taken the approval for gratuity fund/trust and the deduction is not allowable for contributions made to unapproved gratuity fund/trust, as per section 36(1)(v) of the Act and section 40A(7)(b) - During the appeal hearing assessee did not bring any other decision supporting the assessee’s case. The assessment has been reopened within four years, having material to show that the assessee has made incorrect claim leading to escapement of income. Therefore, no reason to interfere with the order of the Ld. CIT(A) and we uphold the order of the Ld. CIT(A) and dismiss the assessee’s ground on reopening of assessment. Addition towards gratuity premium payable/paid to LIC of India Limited - Held that:- The assessee has made the payments to the LIC towards group gratuity scheme directly in approved schemes. The assessee has also obtained the policy in favour of the bank. The assessee has no control over the funds contributed to LIC towards the gratuity. The assessee is receiving the gratuity payment directly from the LIC of India as per the scheme which is paid to the employee on happening of the event i.e. retirement or death or resignation. See Warner Hindustan Ltd.[1987 (8) TMI 52 - ANDHRA PRADESH High Court]. Since the facts are identical, respectfully following the view taken by the coordinate benches, we hold that the assessee is entitled for the deduction for payment of gratuity to LIC and accordingly, we set aside the order of the lower authorities and allow the appeal of the assessee. TDS on advertisement expenses - Held that:- In this case, it is an undisputed fact that the payments made by the assessee towards advertisement and professional charges attract the TDS and assessee failed to deduct the tax at source. Therefore, we do not have any hesitation to uphold the order of the Ld. CIT(A) and the assessee’s appeal on this ground is dismissed. Overdue interest on Non performing assets - accrual of income - Held that:- Respectfully following the view taken by the decision of Hon’ble Gujarat High Court in the case of Sri Mahila Sewa Sahakari Bank Limited (2016 (8) TMI 377 - GUJARAT HIGH COURT), we hold that the interest on NPA is to be recognized on actual receipt basis but not on accrual basis. Accordingly, we set aside the orders of the lower authorities and delete the addition. The appeal of the assessee on this ground is allowed. Disallowance of prior period expenses - Held that:- Since the expenditure was not debited in the year under consideration, we uphold the order of the Ld.CIT(A) and dismiss the appeal of the revenue on this ground. Disallowance of amortization expenditure - A.R. argued that the expenditure was relatable to the internal furnishings in the leased premises and the A.O. has neither allowed depreciation nor allowed the amortization of expenditure - Held that:- no details were furnished either before the A.O. or before the CIT(A). During the appeal hearing also, the assessee has not furnished any details. Therefore, we set aside this issue to the file of the A.O. to examine the issue with regard to the nature of expenditure and allow the depreciation as per law. Addition u/s 40(a)(ia) - assessee had paid interest of ₹ 13,50,831/- to the Income Tax Department for different defaults - Held that:- On verification, the disallowance made by the A.O., the payment is related to the Income Tax payment relating to interest on income tax, which is not allowable expenditure. Therefore, we do not find any infirmity in the order of the CIT(A) and the same is upheld.
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Customs
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2018 (4) TMI 552
Misdeclaration of description and quantity of imported goods - import of second hand goods - restricted goods - the original authority has not given the calculation for margin of profit either in the notice or in the order and remanded the matter to enable such calculation - Held that: - The import pertains to September 2006. At this point more than 11 years have elapsed. After such a gap of time, it would not be possible to cause cross verification of the appellant’s claim concerning the reconditioned nature of the imported goods - the Chartered Engineer’s Certificate did not mention about the claimed recondition of the impugned goods but that the goods were mentioned as used, hence would require license for import. When actual freight and insurance was available that should have been taken instead of a notional quantum. Appeal dismissed - decided against appellant.
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2018 (4) TMI 551
Renewal of the CB license - an inquiry is pending in the parent Custom House - Regulation 7 (2) of the CBLR 2013 - Form C - Held that: - although there is no bar for verification of particulars given in Form “C” however these should not be used as a “means” of operating or denying the right of the CHA to operate in that Commissionerate. The rejection of the permission to continue to operate at Kakinada Customs is therefore a peremptory one and is not supported by law. Appeal allowed - decided in favor of appellant.
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2018 (4) TMI 550
Valuation of imported goods - computer hard disks - rejection of declared value - Held that: - the lower authority has rejected the transaction value without nay valid grounds. He has arrived at his decision going by the presumption that the goods were second hand in nature - There is a catena of judicial pronouncements to the effect that the department cannot reject the transaction value in an arbitrary manner - appeal dismissed - decided against Revenue.
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Corporate Laws
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2018 (4) TMI 549
Breach of MOU - transfer of shares of ATS Estate Pvt. Ltd. - bar on contracts - Held that:- Arbitral Tribunal noted that petitioner no.1, in his crossexamination, had stated that the shares of ATS Estate Pvt. Ltd would have been transferred to the respondent whenever a buyer for the same was found. However, the MOU did not stipulate that transfer of shares of ATS Estate Pvt. Ltd. to the respondent would be contingent upon the investor(s) being located in advance. Clause 3 mentions that the petitioners would ensure on best effort basis that the respondent realizes with the net exit amount of ₹150 crores, the obligations to procure transfer of shares of ATS Estate Pvt. Ltd. to the petitioner is unqualified. Clause 4 of the MOU further provided that in the event the respondent is unable to realize the minimum amount of ₹150 crores as further enhanced, the petitioners would also ensure that additional shares of ATS Estate Pvt. Ltd. are transferred to the petitioners. Further, in terms of Clause 6 of the MOU, in the event the petitioners were unable to locate investors before the specified date, the respondent would be entitled to sell the shares of ATS Estate Pvt. Ltd. Thus, the MOU also provided for the eventuality, where despite best efforts, the petitioners were unable to ensure realization of the exit amount on or before 31.05.2008. In view of the above, this Court finds no infirmity with the Arbitral Tribunal’s finding that the petitioners had breached the MOU. In terms of Section 297(1) of the Companies Act, 1956, a Director of a company is, inter alia, prohibited from entering into a contract with the company in which he is a director for sale, purchase or supply of any goods, materials or services except with the consent of the Board of Directors of the said company. In certain cases, prior approval of the Central Government is also required. It is, thus, apparent that there is no absolute bar on such contracts and it merely requires the consent of the Board of Directors of the company. Further, in terms of the proviso to Section 297(1) of the Companies Act, 1956, prior approval of the Central Government may also be required. MOU was between individuals and required the petitioners to procure the transfer of shares of ATS Estate Pvt. Ltd. by ATS Infrastructure Ltd. to the respondent. In the event, the respondent or the concerned companies were required to ensure any regulatory compliance, it is obvious that the petitioners were also required to ensure the same. Arbitral Tribunal also noted that ATS Infrastructure Ltd. had transferred the first tranche of 90,00,000 shares of ATS Estate Pvt. Ltd. and none of the parties had challenged the said transaction. Thus, the contention that the MOU is void or that the impugned award is unsustainable, is unmerited. Petition dismissed.
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2018 (4) TMI 548
Removal of director - reconstitution of Board of the Directors of the Respondent Company alleging that the affairs of the Company are being mismanaged and conducted in a manner oppressive to other member - Held that:- Bare perusal of the order dated 12.5.09 reveals that the parties agreed that the Appellant herein shall go out of the company for total consideration of ₹ 3.25 crores to be paid by the Respondents. But at the same time, the time frame given by the Respondents was not accepted by the Appellant herein and therefore, as a matter of fact, no agreement of binding nature could be arrived at between the parties and the CLB while advising the Respondents to compress the period to the shortest possible minimum period, adjourned the matter while directing payment of ₹ 50 lakhs in the meantime to work out the terms once the period of payment is agreed to. Thus, from the tenor of the order dated 12.5.09, in no manner, it could be inferred that the terms of compromise between the parties were finally settled vide order dated 12.5.09. As a matter of fact, while considering the binding nature of the terms of compromise incorporated in the order dated 8.9.09, there was no occasion for the CLB to refer to the failure of compromise intended between the parties in terms of order dated 12.5.09 and thus, the finding arrived at by the CLB that the compromise between the parties arrived at vide order dated 8.9.09 had not attained finality and the same had failed in the same manner as the earlier compromise entered into between the parties covered by order dated 12.5.09, is ex facie erroneous and perverse. Undoubtedly, Section 634-A confers power on CLB to enforce its orders in the same manner as if it were a decree. A compromise or a consent order is also executable by the CLB in exercise of the power conferred under Section 634-A. Thus, the Respondents cannot wriggle out from the compromise arrived at and the terms thereof, which have attained finality and binding on the parties for the reasons aforementioned. Appeal succeeds, it is hereby allowed. The order impugned dated 4.11.10 passed by the Company Law Board, New Delhi Bench, New Delhi in Company Petition is set aside. The Company Law Board is directed to enforce the order dated 8.9.09 treating the terms thereof regarding the Appellant going out of the Company on payment of ₹ 2.85 crores in one go and giving away of the Haveli premises by the Respondents to the Appellant as binding upon the parties.
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2018 (4) TMI 547
Oppression and mismanagement - Appointment of Ms. Rakhi Pandey as Director of the Company - no notice was given to the first Respondent and the Appellant no.2 herein was the only Director present in the meeting and thus, for want of proper quorum - illegal transfer of the shares - Held that:- There is no evidence on record showing that notice of Extra-ordinary General Meeting held on 9.10.09 was given to the first respondent, wherein the paid up share capital of the Company was increased from ₹ 1 lac to ₹ 3 lac but the Form No.5 was filed with the Registrar of Companies on 12.10.09 under the digital signature of the first respondent. There was nothing on record suggesting that the digital signature of the petitioner was misused and thus, the CLB rightly arrived at the finding that there appears proper acquiescence on the part of the petitioner in respect of the increase of authorised capital of the Company from ₹ 1 lac to ₹ 3 lacs. The alleged transfer of the shares by the first respondent in favour of the appellant no.2 herein, has been declared illegal by the CLB while deciding a separate petition preferred by the first respondent. Though the first respondent had contended before the CLB that special notice dated 14.8.10 under Section 284 read with Section 190 of the Act of the Board Meeting held on 30.9.10, was served upon the first respondent but no documentary evidence was produced to establish the factum of service of the notice as alleged. Apparently the petitioner was not given an opportunity to explain his position against the proposed removal from directorship. Violation of mandatory provisions of Section 284 of the Act, the removal of the first respondent from directorship of the Company has rightly been held illegal by the CLB. It is also not in dispute that Smt. Rakhee Panday, the appellant no.4 herein, was appointed as Director of the Company in the Board Meeting held on 30.9.10 wherein the first respondent was removed from directorship. No notice of Board Meeting was given to the first respondent and therefore, he was absent in the meeting, thus the appellant no.2 herein, being the only Director present in the meeting, there was lack of proper quorum. In this view of the matter, the finding arrived at by the CLB holding the appointment of appellant no.4 herein, as Director of the Company was not validly done, cannot be faulted with. The first respondent had already been removed as Director of the Company w.e.f. 30.9.10 and therefore, no notice of the Board Meeting held on 6.1.10 wherein Shri Mohit Kumar Panday, the appellant no.3 herein, was appointed as Director, was issued to the first respondent. The shareholdings of the first respondent being restored and his removal from the directorship of the Company being found illegal, for parity of the reason i.e. non service of the notice of the meeting held on 6.1.10, has rightly been held invalid for want of quorum. The shares originally held by the first respondent stand restored by the order of the CLB and thus, on account of non allotment of the shares to the first respondent proportionately, his shareholdings in the Company stand considerably reduced. As observed by the CLB, the increased 60,000 shares of ₹ 10 each have been allotted to individuals of Panday Group having same residential address, which has resulted in absolute majority of the Group and thus, the same is rightly been treated to be an act oppressive against the first respondent. Respondent had filed the petition before the CLB on the basis of continuing acts of mismanagement and oppression on the part of the appellants herein. That apart, subscribed and paid up capital was further increased on 27.8.12 with the issuance of 60,000 shares and Form No.2 in this regard was filed with the Registrar of Companies, Jaipur on 15.9.12. The Company Petition was filed by the first respondent before the CLB on 23.7.13 and therefore, it cannot be said that the petition filed suffered from inordinate delay and laches. Moreover, the first respondent had challenged transfer of 2500 shares by way of separate petition before the CLB, which was allowed vide order dated 19.3.14. Other acts of oppressions as alleged were consequential in sequence. In any case, the CLB exercising discretion having entertained and decided the same on merits, this court does not find any justifiable reason to entertain the objection raised on behalf of the appellants at this stage. Appeal dismissed.
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Insolvency & Bankruptcy
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2018 (4) TMI 584
Corporate insolvency process - Power supply was disconnected while moratorium in force - Held that:- Disconnection of the electricity by the DVC, while the moratorium is in force, is quite, illegal and against the provisos of the Code. None of the contentions taken by the DVC are found sustainable under law. Considering the peculiar nature and circumstances of the case in hand and considering that the disconnection is illegal and despite personal effort made by the Ld. IRP the DVC was reluctant to restore the Power supply, this CA deserve to be allowed upon the following directions : (i) DVC is directed to restore the electricity supply with immediate effect and provide continuous electricity supply at the Barjora Plant of the Corporate Debtor; (ii) DVC is further directed to issue bills on month to month basis upon restoring the electricity supply by granting 60 days’ time to pay the billed amount; (iii) In case the Corporate Debtor fails in paying the bill amount, as directed above, it is left open to DVC to issue appropriate disconnection notice in accordance with the rules and law applicable but DVC, cannot disconnect without issuing prior notice to the Corporate Debtor.
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Service Tax
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2018 (4) TMI 545
Liability of service tax - Foreman Commission - Department was of the view that such commission is liable to payment of service tax under the category of Financial Service falling under Section 65(12) (v) of the Finance Act 1994 - Held that: - the Hon'ble Apex Court in the case of Union of India and others Vs, M/S Margadarshi Chit Funds Pvt. Ltd. [2017 (7) TMI 224 - SUPREME COURT OF INDIA], concluded that term 'cash management' in its common parlance will not include chit fund business. The Supreme Court set aside the demand for service tax on the foreman commission for the disputed period - appeal allowed - decided in favor of appellant.
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2018 (4) TMI 544
Applicable rate of service tax - date of rending of rendering of service or date of receipt of amount - appellant is a Chartered Accountant firm, undertaking various professional activities in audit, accounting, taxation, etc. for its clients - POPOS Rules - Held that: - in respect of the taxable service provided prior to 10/09/2004, the appellant had claimed service tax at the prevailing rate of 8% - differential duty cannot be demanded. CENVAT credit - service tax paid by other Chartered Accountant firm - input services - Held that: - the phrases such as, accounting, auditing and financing are specifically finding place in the inclusive part of the definition of input service, for the purpose of Cenvat credit - Since, the appellant had availed the Chartered Accountant service for accomplishing the purpose of its business, the same should be considered as input service - credit allowed. Appeal allowed - decided in favor of appellant.
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2018 (4) TMI 543
Levy of service tax - turnover charges paid by the assesse to the Stock Exchanges which was collected from the clients - Held that: - this Tribunal following the judgment in LSE Securities Limited case [2012 (6) TMI 364 - CESTAT, New Delhi] decided the issue in favor of the assessee - demand set aside. Valuation - inclusion of reimbursement expenses - Computer Linkage Charges collected from the sub broker and paid to the Commodity Exchange in the value of Forward Contract Service Charges - Held that: - the said issue is no more res-integra, in view of the principle laid down by the Hon’ble Supreme Court in Intercontinental Consultants and Technocrats Pvt. Ltd. s case [2018 (3) TMI 357 - SUPREME COURT OF INDIA], where it was held that the service tax is to be paid only on the services actually provided by the service provider - demand set aside. Appeal allowed - decided in favor of appellant.
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2018 (4) TMI 542
Extended period of limitation - penalty - Classification of services - vehicles given by them on hire - whether GTA Service or Supply of Tangible goods services? - Held that: - the Appellant even before the coming into effect of levy of service tax under the category of “Supply of Tangible Goods Services’ were registered under the category of “Goods Transport Agency” and were discharging the service tax liability - it is absolutely clear that the Appellant had no intention to evade service tax or to suppress any fact with the department. The demand raised by invoking extended period of limitation is not sustainable - penalties also not imposable - appeal allowed in part.
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2018 (4) TMI 541
Service provided by one division to another - GTA service - scope of SCN - Held that: - From the SCN, it is apparent that the ground of demand was that the Appellant has taken trucks from trucking division and there was no demand on the ground of trucks taken from third party - the demands has been confirmed beyond the scope of SCN and hence not sustainable - appeal allowed - decided in favor of appellant.
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2018 (4) TMI 540
Manpower recruitment or Supply Agency service - appellant submits that the services rendered by the Appellant were for various jobs and not for supply of labor - time limitation - Held that: - since none of the amount received by the Appellant is, on the basis of number of persons or number of manhours, therefore it cannot be said that the Appellant has supplied manpower - reliance placed in the case of SS. Associates Versus Commissioner of Central Excise, Bangalore [2009 (12) TMI 152 - CESTAT, BANGALORE] - demand set aside - appeal allowed - decided in favor of appellant.
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2018 (4) TMI 539
Sale of liquor - demand raised on the ground that the Respondent did not produce the documentary evidence in support to show that the amount pertains to sale of liquor - service tax on rent - Held that: - the required documentary evidences towards sale of liquor was presented by the Respondent and there is no reason to doubt the authenticity of said documents - the demand of service tax on rent has also been rightly set aside - appeal dismissed - decided against Revenue.
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2018 (4) TMI 538
Classification of services - shifting of Mineral Ore from the Mining Pit head to the Stock yard within the mining area - whether the activity is of transportation service or mining services? - reverse charge mechanism - Held that: - in case of Singh Transporter [2017 (7) TMI 494 - SUPREME COURT] the Hon’ble Supreme Court held that the transportation of coal from pit heads to railway sidings is an activity of goods transport and not mining service. Liability of tax - reverse charge mechanism - Held that: - the Appellant were charging separately for service of screening and transportation by raising separate bills - In case of Jai Jawan coal Carriers [2014 (6) TMI 393 - CESTAT NEW DELHI] this tribunal has held that when in purchase orders different separate charges for transportation are defined in that case the transportation is treatable as separate contract and the liability of payment of service tax is on recipient of Service. The service is not mining service but goods transportation service on which service tax is payable under reverse charge basis by the service recipient - appeal dismissed - decided against Revenue.
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2018 (4) TMI 537
Liability of service tax or VAT - packaged software - Extended period of limitation - Held that: - It is not the issue that the revenue is demanding service tax on sale of software. The demand is on services rendered by the Appellant post sales and the demand on the same under the category of Information Technology Software Services has been correctly made. There was no attempt on the part of the Appellant to suppress the facts of services in question - the demand raised by invoking extended period is not sustainable. Appeal allowed in part.
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Central Excise
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2018 (4) TMI 536
CENVAT credit - capital goods - the appellant had availed 100% credit on capital goods during FY 2010-11 instead of 50% cenvat credit on capital goods available during one Financial year and remaining 50% of the credit was in the subsequent years - Rule 4(2) (a) of CCR 2004 - time limitation - Held that: - the provisions of Rule 3 (6) provides for removal of used capital goods on reversal of credit and availment of such reversed credit by recipient - the invoice vide which the old capital asset was shifted to the new factory clearly shows that the goods on which credit has been availed are used capital goods and they have been removed from one location to another location on payment of duty and thereafter cenvat credit was taken - appellant has also proved that he has availed the credit but the same has not been used as sufficient balance was there in their cenvat credit account and therefore there is no question of demanding interest and imposing penalty Extended period of limitation - Held that: - invoking the extended period is not justified in the present case because there was no intention to evade payment of duty, Appeal allowed - decided in favor of assessee.
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2018 (4) TMI 535
Clandestine removal - shortage of stock - Held that: - apart from the shortages read with the statement of Shri Balasubramaniam, which is also not a confessional statement, the finding of clandestine removal cannot be upheld against the appellant. CENVAT credit - denial on the ground that the appellant was purchasing bazaar/quality scrap from the market and was arranging Central Excise invoices separately for the purpose of availment of CENVAT Credit - Held that: - contention of the learned AR that the in the present case, the invoices relates to the same supplier, which were the subject matter of the earlier proceedings and as such it should be assumed that the credit was availed by the appellant without actually receiving the material covered by the said invoices, cannot be appreciated, inasmuch as the facts of each and every case are required to be appreciated independently and no assumption can take place of legal evidence. Appeal allowed - decided in favor of appellant.
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2018 (4) TMI 534
SSI Exemption - use of Brand Name - case of revenue is that the appellant had manufactured processed mineral water in pet bottles with brand name "RAMA"; while it is the case of the appellant that the brand name is not belonging to them and not anyone else - N/N. 8/2003-CE? - Held that: - the appellant herein, by a specific "Buyer Seller Agreement" agreed to supply processed water bearing brand "RAMA"; logo had to be embossed on the cap of the bottle and hologram stickers of the same brand has to be fixed on the bottles and the agreement provides that in the absence of these three requirements, the products would be treated has duplicate items by the purchasers. There is clear indication that the goods manufactured by the appellant had brand name of "RAMA" which was not belonging to them - appeal dismissed - decided against appellant.
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CST, VAT & Sales Tax
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2018 (4) TMI 533
Reassessment - occurrence of mismatch - Held that: - identical issue decided in the case of M/s. JKM Graphics Solutions Private Limited Versus The Commercial Tax Officer [2017 (3) TMI 536 - MADRAS HIGH COURT], where The Court has directed the Assessing Officer to evaluate a centralised mechanism exclusively to deal with the cases of mismatch and to do some exercise, before issuing a notice. The matter is remitted back to the Assessing Officer to re-do the assessment commencing from the stage of issuing notice of proposal - petition allowed by way of remand.
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Indian Laws
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2018 (4) TMI 546
Revision petition - Compounding of offence - offence under Section 138 of the Negotiable Instruments Act, 1881 - dishonor of certain cheques for insufficiency of funds - case of Revenue is that although offence under Section 138 of the Act is compoundable but after verdict of learned appellate Court, it may not be appropriate to grant indulgence to the petitioner - whether revisional powers can be exercised by this Court to compound the offence under Section 138 of the Act after conviction of the petitioner by appellate Court? Held that: - applying the ratio decidendi of Damodar S.Prabhu [2010 (5) TMI 380 - SUPREME COURT OF INDIA] and the guidelines framed therein, on the strength of compromise being arrived at between petitioner and the complainant, I feel persuaded to exercise revisional jurisdiction for doing real and substantial justice in the matter for the administration of which alone the Courts exist. I prefer to give priority to the compensatory aspect of remedy over the punitive aspect in the matter in the wake of settlement of dispute and compromise being arrived at between the rival parties. Revision petition allowed.
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