TMI Tax Updates - e-Newsletter
April 15, 2017

Case Laws in this Newsletter:

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

TMI SMS

• AO has no power to change the status of the assessee u/s 143(1) intimation - AO directed accept the return and issue refund as claimed - Tri

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Articles

1. Composition Tax under CGST Bill,2017

   By: Sanjeev Singhal

News

1. Draft GST Rules - Assessment and Audit

2. Draft GST Rules - e-Way Bill

3. BHIM-Aadhar –a digital payment platform launched by the Prime Minister on Ambedkar Jayanti in Nagpur

4. Lucky winners of 1 crore,50 lakh, 25 lakh, 12 lakh embracing digital payments felicitated by the Prime Minister in Nagpur

5. Digital Payment Revolution : Facts & Figures

6. Over 60,000 persons, including 1300 high risk persons, identified for investigation into claims of excessive cash sales under Central Board of Direct Tax (CBDT)’s Operation Clean Money (OCM)

7. CBDT’s Operation Clean Money Reins in the Black Economy

8. Commerce Minister emphasises the potential for synergies between India and Japan

9. INDIA’S FOREIGN TRADE: March, 2017

Notifications

Central Excise

1. 10/2017 - dated 13-4-2017 - CE (NT)

CENVAT Credit (Second Amendment) Rules, 2017

Companies Law

2. F. No. 1/37/2013 CL.V - dated 13-4-2017 - Co. Law

Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2017

3. F. No. 1/37/2013 CL V - dated 13-4-2017 - Co. Law

Commencement of section 234 of Companies Act 2013

4. F. No. 1/28/2013-CL.V - dated 12-4-2017 - Co. Law

Companies (Removal of Names of Companies from the Register of Companies) Amendment Rules, 2017

DGFT

5. 02/2015-2020 - dated 13-4-2017 - FTP

TRQ for Raw Sugar: Amendment in import policy of raw sugar classified under Exim Code 170114 of Chapter 17 of ITC (HS), 2017–Schedule–1 (Import Policy)

Service Tax

6. 16/2017 - dated 13-4-2017 - ST

Service Tax (Third Amendment) Rules, 2017

7. 15/2017 - dated 13-4-2017 - ST

Seeks to Amend Notification No. 30/2012-Service Tax, dated the 20th June, 2012 - Reverse Charge Mechanism

8. 14/2017 - dated 13-4-2017 - ST

Point of Taxation (Amendment) Rules, 2017

Circulars / Instructions / Orders

DGFT

1. Trade Notice No. 02/2018 - dated 13-4-2017

Allocation of additional quantity (non-country specific) for port of sugar to USA under Tariff Rate Quota (TRQ)

2. 01/2015-2020 - dated 13-4-2017

Amendments in Product Description in MEIS Schedule- Table 2 of Appendix 3B

Highlights / Catch Notes

Income Tax

• High Court Dismisses Petition to Extend Tax Payment Deadline under Income Declaration Scheme, 2016.

  Case-Laws - HC : Petition to Accept amount of 25% tax payable on declared undisclosed income under the Income Declaration Scheme, 2016 even after the specified date to make the payment - the dates of payment were known at the time of filing the declaration - HC dismissed the petition
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• Tribunal's Income Estimation Method for Assessee Found Valid; No Errors Detected, Order Stands Unchanged.

  Case-Laws - HC : Estimation of income - N.P. determination - the method adopted to make the estimate of income of the assessee cannot be said to be based on no evidence or basis. No error in the same or need to interfere with such an order of the Tribunal. - HC
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• Newly Incorporated Companies Subject to Section 68 Income Tax Act Inquiries in First Year.

  Case-Laws - HC : Addition in the hands of a company can be made u/s 68 in its first year of incorporation - The mere fact that the assessment year is the year of commencement of business of the assessee cannot insulate it from an inquiry directed towards steps contemplated u/s 68 of the 1961 Act - HC
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• Income tax authorities disallow commission to sole agent due to lack of services, citing Section 40A(2)(a) discretion.

  Case-Laws - HC : Commission to sole selling agent disallowed - Reasonableness - There was no service provided by the partners of M/s. Laxmi & Co. in respect of manufacture and sale of production to justify huge commission - income tax authorities correctly exercised the discretion u/s 40A(2)(a) - HC
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• Court Upholds Addition of Undisclosed Cash Credits from Relatives; Decision Based on Proven Creditworthiness, Not Suspicion.

  Case-Laws - HC : Undisclosed cash credit - receipt from the close relatives of the Assessee - creditworthiness and source - additions have not been made based on mere suspicion, surmises and/or conjectures, as alleged by the Assessee - additions confirmed - HC
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• Section 41(1) Confirms Tax Additions: Misrepresented CENVAT Credit as Government Liability, Not Payable to Suppliers.

  Case-Laws - AT : Additions u/s 41(1) when the liability is no longer payable - CENVAT credit appears on the liability side and this amount was apparently payable to the parties from whom goods were received for job work - assessee has tried to misrepresent the facts by showing it as liability towards Government - additions confirmed - AT
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• Tax Officer Cannot Change Taxpayer Status from AOP to Individual u/s 143(1) Intimation; Original Return Stands.

  Case-Laws - AT : Intimation u/s 143(1) by changing the status of the assessee which consequently enhanced the tax liability of the assessee - from an AOP to a person taxable in terms of section 139(4A) - AO has no power to change the status u/s 143(1) intimation - AO directed accept the return of income of the assessee as it is and issue refund as claimed by the assessee - AT
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• Tax Consistency: Prior Period Expenses Must Be Allowed if Income is Taxed for Same Period.

  Case-Laws - AT : Prior period expenditure - when prior period income is taxed prior period expenditure cannot be disallowed - AT
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• Court Rules Assessee Not Liable for Tax u/s 194C for Facilitating Lignite and Coal Delivery.

  Case-Laws - AT : Addition u/s 194C r.w.s 40(a)(ia) - When the assessee has been alleging that he was only extending facility to his client for delivery of lignite and coal, he has not acted as an agent between client and truck owners - the assessee should not be burdened with tax liability - AT
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Customs

• Appellant Entitled to Refund After Overpaying 5% Customs Duty Instead of Applicable 1% Basic Duty.

  Case-Laws - AT : Refund claim - excess duty paid at 5% instead of 1% - the appellant is liable to pay Basic Customs duty at the rate of 1% and have paid the excess duty. Therefore, the appellant is entitled for refund of claim of excess duty paid by them. - AT
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Corporate Law

• Court Rules No Authority to Excuse 135-Day Delay in Company Application, 60-Day Limit Stands Despite Doctor's Note.

  Case-Laws - HC : Condonation of delay - Company application - this Court has no power to condone delay beyond the period of 60 days and admittedly in this case delay is 135 days, Doctor's certificate produced by the applicant in support of his case is not help - HC
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Indian Laws

• Dishonoured Advance Payment Cheque Not Criminally Liable u/s 138 of Negotiable Instruments Act.

  Case-Laws - HC : When cheque towards advance payment is dishonoured, it will not give rise to criminal liability u/s 138 of the Act. Issuance of cheque towards advance payment could not be considered as discharge of any subsisting liability. - HC
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• High Court Rules Musical Concert with High Entry Fees Liable for Entertainment Tax.

  Case-Laws - HC : Entertainment tax on the musical concert performed / organized by the petitioner - It is an admitted position that same is having commercial element and even they charge also very high entry fee ranging from ₹ 500/above and may be upto to ₹ 5000/per entry - Not exempted from tax - HC
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Service Tax

• Service Tax (Third Amendment) Rules, 2017: Changes in Composite Levy for Goods Transported by Vessel to Indian Customs Station.

  Notifications : Service Tax (Third Amendment) Rules, 2017 - Composite levy in case of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India - where services to be provided by a person located in non-taxable territory to a person located in non-taxable territory
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• Amendment Clarifies Tax Obligations for Cross-Border Services Between Non-Taxable Territories Under 2017 Rules.

  Notifications : Point of Taxation (Amendment) Rules, 2017 - Determination of point of taxation in case of services provided by a person located in non-taxable territory to a person in non-taxable territory.
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• Amendment to Notification No. 30/2012 updates reverse charge mechanism in service tax regulations, altering application and collection processes.

  Notifications : Seeks to Amend Notification No. 30/2012-Service Tax, dated the 20th June, 2012 - Reverse Charge Mechanism - Notification
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• Amendment to Service Tax Settlement Rules 2017: Streamlined Procedures for Faster, Transparent Dispute Resolution.

  Notifications : Service Tax (Settlement of Cases) Amendment Rules, 2017 - Notification
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• Optical Fibre Cable Installation Exempt from Service Tax When Laid Alongside or Under Roads.

  Case-Laws - AT : Laying optical fibre cable alongside or under the road - the word “cable” will include all types of cables including electrical cables as well as optical fibre cables - service not taxable - AT
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• Consolidated Certificate for Invoice Refund Claims Accepted Under Notification No. 41/2007-S.T. Instead of Individual Certification.

  Case-Laws - AT : Refund claim - N/N. 41/2007-S.T. - Instead of certifying each and every invoice individually and separately, if a consolidated certificate giving details of the invoices, stand given by the assessee, the same would fulfill the notification criteria - AT
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Central Excise

• CENVAT Credit Rules Amended for Input Services on International Goods Transportation by Vessel to India.

  Notifications : CENVAT Credit (Second Amendment) Rules, 2017 - Amendments relating to Input services - transportation of goods by a vessel from a place outside India up to the customs station of clearance in India
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• Artwork Costs Must Be Included in Assessable Value Under Central Excise Valuation Rules, 2000, Effective July 1, 2000.

  Case-Laws - AT : Valuation - cost of design and development of art work - as per the clear provision made in the Central Excise Valuation Rules, 2000 w.e.f 01/07/2000 - for the entire period involved in the present case, the cost of art work provided by the customers to the appellant is includable in the assessable value. - AT
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• Cenvat Credit Approved for Cement Used in Setting Up Machinery Vital for Producing Taxable Goods.

  Case-Laws - AT : Cenvat credit - cement has been admittedly used in the erection of capital goods, being machinery, without which manufacture of dutiable goods is not possible - credit allowed - AT
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• Excise Duty Calculation: Cash Discounts Excluded from Assessable Value, Even if Later Recovered via Debit Notes.

  Case-Laws - AT : Assessable value - deduction towards cash discount on excise duty payable realized back through debit notes - There will be no need to add back the discounts to the assessable value, even if the same are subsequently recovered. - AT
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• EOU Entitled to Duty Refund on Furnace Oil for Exported Goods; Unjust Enrichment Principle Not Applicable.

  Case-Laws - AT : Refund - the appellant is a 100% EOU and exporting 100% of their final product. The duty was paid on the furnace oil which was used in the manufacture of exported goods. Therefore, by virtue of above sub-clause (a) the unjust enrichment is not applicable in the fact of the present case. - AT
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Case Laws:

• Income Tax

• 2017 (4) TMI 626
  Short term capital gain on sale of land - nature of land - distance of more than 8 kilometers from the municipal area - Held that:- We noticed that the sold land was situated at village Jani Vankad, Nani Daman. We have further noticed that Jani Vankad and Nani Vankad were not the same village and both the villages were distinct from each other belonging to greater area called Nani Daman. We have also noticed that the certificate produced before the assessing officer by the asssessee from the Daman Municipal Corporation stating that above referred agriculture land situated in village Jani Vankad was at distance of more than 8 kilometers from the municipal area of Daman Municipal Council and population of village Jani vankad was less than 10,000 persons. We find that these facts and evidences were not disproved by the assessing officer and the Ld.CIT(A) made his decision on the basis that the assessing officer made analysis on the basis of information mainly pertaining to the the Sarpanch of Bhimpore Group Gram Panchayat, Bhimpore, Nani Daman stating that Jani Vankad was a revenue Village and the Moti Vankad and Nani Vankad was a villages under the said Saja(revenue circle) We find that Sarpanch of Bhimpore Group Gram Panchayat, Bhimpore, Nani Daman has not stated that jani Vankad and Nani Vankad were the same village but they stated that Jani Vankad was a revenue village and the Moti Vankad and Nani Vankad was a villages under the said Saja (revenue circle). In view of the above mentioned facts and findings, we considered that the assessing officer has not substantiated his findings with concrete evidences and made his decision on the basis of conclusion arrived on observation basis and failed to disprove the facts and evidences furnished by the assessee. Therefore, we find that the decision of the ld. CIT(A) is not justified to sustain the addition made by the assessing officer. - Decided in favour of assessee

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• 2017 (4) TMI 625
  Levy of penalty u/s. 271(1)(C) - addition was made on disputed point of share of profit exempt in the hand of partner u/s. 10(2A) - Held that:- Addition has been made due to the reason that assessee has claimed exemption for the entire share of income of the partnership form. However, the revenue has found that the act only postulates exemption of the share of profit of the firm. Hence, assessee’s claim of exemption qua the rental income of the firm was denied. In this factual scenario we are of the considered opinion that assessee can be considered to be under a bona fide belief that the entire income from the firm is exempt. Such a belief of the assessee cannot be held to be contumacious warranting levy of penalty u/s. 271 (1) C. See Hindustan Steel Ltd. vs. State of Orissa [1969 (8) TMI 31 - SUPREME Court] - Decided in favour of assessee.

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• 2017 (4) TMI 624
  Addition on account of sale of tickets - Held that:- We find that the addition of 7,02,750/- confirmed by the learned CIT(A) out of total addition of 35,84,200/- made by the AO is based on evidence and proper evaluation as assessee could not provide evidence of free tickets amounting to 3,15,000/- related to ‘Lokmat News Paper’. Also in respect of two confirmations i.e. one in the name of Kalidas Natyagraha and another in the name of Parasuram Saikhed, the confirmations do not bear stamp and seal of the party and therefore, are not reliable. The amounts mentioned against these parties are 1,28,000/- and 1,23,000/- respectively. Therefore, the learned CIT(A) has not accepted the assessee’s explanation in respect of returned tickets amounting to 3,87,750/- (Rs. 2,51,000/- plus 1,36,750/-). Addition on account of discrepancies in TDS certificate - Held that:- As per the TDS certificate of Sapat International Pvt. Ltd. and Kotak Mahindra Mutual Fund, the payment made / credited are shown at 5,00,000/- and 9,21,157/-. However, in the P 3,00,000/- and 2,71,157/- respectively. It is the contention of the revenue that the learned CIT(A) should not have deleted the above addition made by the A.O. on the basis of additional evidence filed before him. We believe that the TDS certificate issued by Sapat International Pvt. Ltd. and Kotak Mahindra Mutual Fund need verification at the level of A.O. Therefore, we set aside the order of the learned CIT(A) only in respect of ground no 4 of the present appeal and restore the matter back to the file of the AO for verification and then passing an order as per the provisions of the Act

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• 2017 (4) TMI 623
  TP adjustment using the CUP method - Held that:- As both assessee as well as the revenue agree that AFDC and ICF, USA are associated enterprises, the transaction between them cannot be considered as comparable uncontrolled transaction in terms of Rule 10B of the IT Rules. As per Rule 10A(ab), uncontrolled transaction means a transaction between enterprises other than associated enterprises, whether resident or non-resident. In the present case, it is an agreed fact that both AFDC and ICF, USA are associated enterprises. Thus, transactions between them cannot be considered as the uncontrolled transaction. Consequently, the entire basis of TP adjustment is incorrect and bad in law. The TP adjustment using the CUP method is accordingly deleted. However, the tribunal being the final fact finding authority, has to necessarily examine whether the international transaction entered by the assessee with its AE is at Arms Length using the other methodology prescribed under Rule 10B of the IT Rules. Moreover, the assessee has filed additional ground of appeal regarding computation of ALP under TNMM, hence, we remit this issue to the file of TPO for computation of ALP of international transactions as per TNMM and in accordance with law.

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• 2017 (4) TMI 622
  TPA - selection of comparable - Held that:- Companies functionally different and segmental details are not available further have fluctuating margins cannot be selected for final list of comparable.

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• 2017 (4) TMI 621
  Payment of the compounding fee - Held that:- The CBDT cannot arrogate to itself, on the strength of Section 279 or the Explanation thereunder, the power to insist on a 'pre-deposit' of sorts of the compounding fee even without considering the application for compounding. Indeed Mr Kaushik was unable to deny the possibility, even if theoretical, of the application for compounding being rejected despite the compounding fee being deposited in advance. If that is the understanding of para 11(v) of the above Circular by the Department, then certainly it is undoubtedly ultra vires Section 279 of the Act. The Court, accordingly, clarifies that the Department cannot on the strength of para 11(v) of the Circular dated 23rd December 2014 of the CBDT reject an application for compounding either on the ground of limitation or on the ground that such application was not accompanied by the compounding fee or that the compounding fee was not paid prior to the application being considered on merits. The question of payment of the compounding fee, if any, would arise, only if upon considering the application on merits, the Department is of the view that the prayer should be allowed subject to terms that are reasonable and subserve the object of Section 279 of the Act. Whether in the garb of a Circular the CBDT can prescribe the compounding fee in the absence of such fee being provided for either in the statute or prescribed under the rules? - However, at this stage when the Petitioner's application is yet to be decided afresh, the said question may be academic. The Court, accordingly, while directing the CCIT to consider afresh the Petitioner’s application for compounding of offence under Section 279 of the Act and communicate to the Petitioner the decision thereon in writing consistent with the present judgment, within a period of six weeks from today, leaves it open to the Petitioner to urge the larger question which has not been decided in this writ petition in the event that the Petitioner is aggrieved by the fresh order passed by the CCIT.

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• 2017 (4) TMI 620
  Reopening of assessment - reasons to believe - Held that:- From perusal of the notice, it is apparent that the reason to believe that the income chargeable to tax has escaped assessment, is not mere suspicion but is based on good faith. The Assessing Officer has given complete details of the documents which were not taken into consideration earlier. The documents referred in the notice are also sufficient to show the direct nexus between the information in possession and conclusion withdrawn by the Assessing Officer. The Assessing Officer though was not having fresh material for the purpose of formation to believe that the income of any particular assessment year has escaped assessment, but with all bonafides he noticed that certain documents escaped consideration and that resulted into escape of income chargeable to tax. Learned Single Bench in detail has considered the entire law relating to pre-conditions for reassessment under Section 147/148 of the Act of 1961, but in our considered opinion has not looked into the notices under Section 148 of the Act of 1961 so minutely. Paras 3, 4, 5, 6, 7, 8 and 9 of the notice in specific terms indicate the material to arrive at a conclusion to have bonafide belief that a huge part of income which may be chargeable to tax was escaped. Looking to the document aforesaid we are of considered opinion that the Assessing Officer had adequate reason to believe to issue notice under Section 148 of the Act of 1961. Learned Single Bench failed to appreciate the notice concerned in light of the scope and spirit of the pre- conditions for issuing a notice under Section 148 of the Act of 1961. The appeals, thus, deserves acceptance, hence, are allowed n favour of revenue

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• 2017 (4) TMI 619
  Petition to Accept amount of 25% tax payable on declared undisclosed income under the Income Declaration Scheme, 2016 even after the specified date to make the payment - Held that:- We asked the petitioner whether there is any provision under the Scheme or in the Rules made thereunder, which would permit the Authorities acting under the Scheme to accept payment made consequent to the declaration filed under the Scheme even after specified date to make a part payment of tax has passed. We were informed there is no such provision. Therefore, the direction sought from us is that the Commissioner of Income Tax, Thane act dehors the provisions of the Income Declaration Scheme, 2016. We will not issue any such directions as the Authorities are obliged to act in accordance with the Income Declaration Scheme, 2016 which is a part of the Finance Act, 2016. It must be borne in mind that the Scheme was optional, the dates of payment were known at the time of filing the declaration and above all it is a facility which has been made available to parties who have failed to disclose their income and pay the appropriate tax under the Income Tax Act, 1961, to come clean. In the above view, we see no reason to exercise our extraordinary writ jurisdiction in these facts.

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• 2017 (4) TMI 618
  Unexplained loan addition u/s 68 - Held that:- Assessing Authority on the CIT (Appeals) as well as the Tribunal have disbelieved the case of the assessee having taken interest free loans after recording finding that the persons claimed to be the creditors of the assessee had no creditworthiness inasmuch as the total family income of those persons was found to be 1,00,000/- per annum and the interest free loans given out of such persons had been claimed and have been made out of tax bearing FDRs that have been got encash pre-mature. Tribunal has also disbelieved the case on both counts of genuineness of transaction as well as creditworthiness. The finding recorded by the Tribunal are well considered and conclusive based on due appraisal of the material on record. The above concluded findings of the fact do not suffer from any infirmity. - Decided against assessee.

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• 2017 (4) TMI 617
  Estimation of income - N.P. determination - ITAT legally correct in upholding the findings of the CIT (A)- Held that:- It is an admitted case between the parties that the books of account have not been produced at the stage of assessment. Consequently, a best judgement assessment was made. While the assessing officer adopted a gross profit rate to estimate the income of the assessee. The CIT (Appeals) had adopted a net profit rate of 10% considering the comparable cases of other persons engaged in similar business in respect of income arising from contracts. In respect of liquor business the CIT (Appeals) adopted a net profit rate of 2% on the basis of comparable case of one Ram Kumar, Shiv Kumar Shivhare that had travelled up to the tribunal and been approved at that rate. The estimation of income involves certain guess work and the fact finding authorities are in the best position to make the estimation. The net profit rate method is also an acceptable method to estimate the income of an assessee.In the instant case, the net profit rate has been approved by the Tribunal by relying on the comparable cases of other assessees engaged in similar business. Thus, the method adopted to make the estimate of income of the assessee cannot be said to be based on no evidence or basis. No error in the same or need to interfere with such an order of the Tribunal. - Decided in favour of the assessee

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• 2017 (4) TMI 616
  Benefit of Section 80HH - Held that:- It was the duty and onus on the shoulder of the assessee to show that he was also engaged in manufacturing activities and the gross total income declared by it also include income from manufacturing activity and on the basis of foregoing discussion we have held that the assessee is entitled for deduction u/s 80HH and 80I of the Act on the part of income earned from manufacturing activities. However, for want of adequate material on the record of the Tribunal, it is not possible for us to calculate quantum of deduction and thus we find it appropriate to send the issue for limited purposes i.e. for calculation of deduction u/s 80HH on the income earned from manufacturing activities during the relevant periods under consideration for all five assessment years. This Court is of the opinion that the pointed and specific nature of the directions of the ITAT was sufficient to allay any doubt of the Revenue as to the nature of the remit which the Assessing Officer is expected to address himself to. In the circumstances, no substantial question of law arises

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• 2017 (4) TMI 615
  Deemed dividend addition u/s 2(22)(e) - HUF - Held that:- There is no dispute that the assessee did receive capital advance from Indev Logistics Pvt. Ltd. There is also no dispute that there are common shareholders both in the assessee-company and Indev Logistics Pvt. Ltd. Therefore, quite correctly, as noted by the Tribunal, though, the advance received by the assessee company may have been for the benefit of the aforementioned registered shareholders, it could only be assessed in the hands of those registered shareholders and not in the hands of the assseeee-company. In our view, on a plain reading of the provisions of Section 2 (22) (e) of the Act, no other conclusion can be reached. The question of law considered in the case of Gopal and Sons (2017 (1) TMI 331 - SUPREME COURT ) was different from the issue which arises in the present matter. The question of law which the Supreme Court was called upon to consider was whether loans and advances received by a HUF could be deemed as a dividend within the meaning of Section 2(22)(e) of the Act. The assessee in that case was the HUF and the payment in question was made to the HUF. The shares were held by the Karta of the HUF. It is in this context that the Supreme Court came to the conclusion that HUF was the beneficial shareholder. In the instant case, however, both the registered and beneficial shareholders are two individuals and not the assessee-company. Therefore, in our view, the judgment of the Supreme Court does not rule on the issue which has come up for consideration in the instant matter. - Decided in favour of assessee.

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• 2017 (4) TMI 614
  Revision u/s 263 - Held that:- The revisional proceeding was commenced within the limitation period prescribed under Section 263(2) of the Act. The Tribunal has rightly held in the order impugned that limitation period for passing the order is to be counted from the date of passing the order under Section 147 read with Section 143(3) of the Act and not the date of intimation issued under Section 143(1) of the Act. Tribunal was justified in holding that addition in the hands of a company can be made under section 68 in its first year of incorporation - The mere fact that the assessment year is the year of commencement of business of the assessee cannot insulate it from an inquiry directed towards steps contemplated under Section 68 of the 1961 Act. No notice to show cause before passing the order under Section 263 - Held that:- We are of the view that service by post, which had been returned with the endorsement “addressee not found”, followed by an attempt at personal service and subsequent affixture would constitute substantial compliance of the provisions of Section 282 of the Act. Tribunal, being the highest fact finding body, has already come to the finding that there has been proper service. Furthermore, we find from the order of Tribunal that the appellant was heard at length on factual as well as legal issues. We do not consider it necessary to go into the question as to whether Section 282 of the Act requires compliance or not for effecting service of notice in respect of a proceeding under Section 263 of the Act as we are of the opinion that substantial compliance of the provision of Section 282(1) has been effected in the case of the assessee. We do not find any perversity on the finding of the Tribunal on this issue upholding the proceedings under section 263. first proviso to Section 68 inserted by the Finance Act, 2012 w.e.f 1.4.2013 applies to the Assessment Year:2008 – 2009 as held by ITAT - Held that:- Question is already covered by our judgment in the case of Pragati [2017 (3) TMI 1242 - CALCUTTA HIGH COURT] as specifically held that the exercise which is contemplated by the impugned order of the Commissioner was permissible under Section 68 of the 1961 Act, as it stood prior to its amendment by the Finance Act, 2012. We found, in that judgment, that it was not necessary to deal with the question of retroactivity of the said provision.

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• 2017 (4) TMI 613
  Commission to sole selling agent disallowed - Reasonableness of payment of specified persons - additions u/s 40A(2)(a) - Held that:- As decided for for the assessment years 1990-91 and 1991-92 [2013 (11) TMI 1247 - ALLAHABAD HIGH COURT] the constitution of M/s. Laxmi & Co shows Sri L.C. Gupta (HUF) and others were ladies and house wives representing the interest of HUF, they were not in a position to offer any professional advise on matters relating to production, market survey or procurement of orders etc. Sri L.C. Gupta was engaged as Manager (Finance) with the assessee firm - Assessee has taken substantial amount as loan from the relatives including partners of Commission Agent M/s. Laxmi & Co, and had paid a high rate of interest - There was no service provided by the partners of M/s. Laxmi & Co. in respect of manufacture and sale of production to justify huge commission. Also the questions whether assessment of commission was excessive or unreasonable is subject of discretion of the income tax authorities to be exercised under section 40A (2) (a) of the Act on the basis of material on records. In the present case, the findings have been recorded on the basis of material produced before the income authorities - Decided against assessee.

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• 2017 (4) TMI 612
  Undisclosed cash credit - receipt from the close relatives of the Assessee - creditworthiness and source - Held that:- while the Assessee has not been able to discharge what he claims is the initial onus, satisfactorily, the observations made by the authorities below are findings of fact based upon appreciation of evidence. The onus, in this case, according to us, did not shift to the Revenue. The reason being that while, the Assessee was able to identify the source for whatever it was worth, he definitely failed to establish the creditworthiness of his source. We have ourselves examined the explanation given by the Assessee and are satisfied that there is no fundamental error committed by the authorities below in the appreciation of evidence. Each of the relatives identified as source, clearly, lacked the capability of lending funds to the extent attributed to them by the Assessee. While, the Assessee is not expected to establish the means, by which, funds are generated by the source. In other words, look to the "source of the source" - the capability of the source to generate funds is an exercise, which needs to be carried. In the instant case, an exercise in that behalf was, in fact, carried out, which led to the conclusion that each source identified by the Assessee did not have the necessary wherewithal to provide funds to the Assessee. We are persuaded to hold that in this case, additions have not been made based on mere suspicion, surmises and/or conjectures, as alleged by the Assessee. - Decided against assessee.

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• 2017 (4) TMI 611
  Additions u/s 41(1) when the liability is no longer payable - Liability towards Excise CENVAT Credit - proof of liability exists or still payable - Held that:- CIT(A) has explained the issue categorically. It was observed that the assessee was working as processing house. It used to receive goods from clients. On receipt of such goods, it debits and credits client’s account in respect of process charges paid and CENVAT available corresponding to the goods received by them for processing. Any excise duty paid on behalf of the clients was debited to their account and any CENVAT credit receivable in respect of goods of clients was credited in the client’s account. It is for this reason that CENVAT credit appears on the liability side and this amount was apparently payable to the parties from whom goods were received for job work. According to the ld.CIT(A) the assessee has tried to misrepresent the facts by showing it as liability towards Government. The ld.CIT(A) has rightly observed that liability is not payable and the assessee-company has failed to establish that this liability exists or still payable. After perusal of well reasoned finding of the ld.CIT(A) we see no reason to interfere in it. Hence, the appeal of the assessee is dismissed being devoid of any merit. - Decided against assessee

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• 2017 (4) TMI 610
  Disallowance of interest paid from personal Account - Held that:- Assessee could have taken loan for commodity business and should not have utilized loan taken in personal capacity. I find that this adverse inference is devoid of cogency. Assessee has raised loan and used it for business purpose. Revenue authorities cannot sit into the shoes of the businessman and direct as to from where he should raise the loan. Secondly the assesse has interest bearing as well as interest free funds. In the said circumstances it is the settled law that it is up to the assessee to attribute the source of investment if interest free and interest bearing funds are available. The assessee can very well attribute the interest free funds for other purpose and interest bearing funds for the business purpose. Hence adverse inference drawn by the authorities below is not also sustainable on this issue. It is not the case of the revenue that interest free funds were not sufficient to meet the amount spent on acquisition of other assets. Hence attribution of the authorities below that interest bearing funds were not used for business purpose cannot be sustained. Accordingly, set aside the order of the authorities below and decide the issue in favour of the assessee. 15% disallowance out of various expenses debited in Profit & Loss Account - addition on the ground that all the expenditures were not supported by complete expenditure bills and vouchers hence he made an adhoc disallowance of 15% - Held that:- Assessing Officer has made the disallowance on adhoc basis. He has not brought on record specific vouchers and the defects therein. However this fact also cannot be ruled out that the expenditures were not fully backed by proper external vouchers. In these circumstances in my considered opinion the disallowance of 5% of the expenditure involved would serve the end of justice. Learned counsel of the assessee fairly agreed to this proposition. Accordingly, direct that disallowance be restricted to 5% of the expenditure. - Decided partly in favour of assessee

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• 2017 (4) TMI 609
  Intimation u/s 143(1) by changing the status of the assessee which consequently enhanced the tax liability of the assessee - AO adopted the status of the assessee from an AOP to a person taxable in terms of section 139(4A) - Held that:- The change of status as done by the AO does not fall within any of the clauses from (a) to (e) of section 143(1) of the Act. It cannot also be said that change of status of an assessee would fall within the meaning of the expression “an incorrect claim apparent from any information in the return” as laid down in Explanation (a) to section 143(1) of the Act. There was no inconsistency entries in the return of income. There was no entry on which information was required to be furnished under this act which was omitted to be furnished. There was no deduction claimed beyond the statutory limit by the assessee. Therefore hold that the intimation issued by the AO u/s 143(1) of the Act changing the status of the assessee was not in accordance with the provisions of law. The AO is therefore directed to modify the intimation u/s 143(1) of the Act accepting the return of income of the assessee as it is and issue refund as claimed by the assessee. - Decided in favour of assessee.

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• 2017 (4) TMI 608
  Grant of registration under section 12AA denied - genuine educational society - non-furnishing of agreement between Heralds of Good News and the assessee - Held that:- As gone through the objects of the assessee-society and find that assessee-society mainly existed to carry the educational activities, particularly in rural under developed area. The Heralds of Good News society is running educational institutions at Yernagudem, by resolution dated 05/04/2009, three schools namely, St.Joseph E.M. Private School, St. Joseph E.M. Elementary School & St. Joseph E.M. High School have been transferred to the assessee-society i.e. M/s. St.Paul Province Society, Yernagudem, West Godavari District. The assessee has filed assessment order of Heralds of Good News wherein it is declared NIL income by claiming exemption. It is clear from the assessment order that Heralds of Good News school enjoying registration under section 12A of the Act. The Assessing Officer has clearly mentioned in the assessment order that the society is registered under section 12AA in the Assessment Year 2006-07. The assessee also filed income tax returns of the Heralds of Good News educational society, income & expenditure and also receipts upto 31/03/2010. The assessee also filed its details of opening balance, receipts, payments and balance in school during the year 2011-12 and also filed balance sheet before the Commissioner of Income Tax. CIT-A is of the opinion that the assessee-society is not a genuine society. The order passed by the CIT is without looking into the objects of the society and without any basis. The CIT is not able to point out what is the violation committed by the assessee-society and how the society is not eligible for grant of registration under section 12AA of the Act. Therefore the assessee is eligible for registration under section 12AA. - Decided in favour of assessee.

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• 2017 (4) TMI 607
  Estimation of profit in respect of IMFL business - Held that:- Direct the A.O. to re-compute the income of the assessee at 5% of purchase price. Accordingly, this ground of appeal raised by the assessee is allowed. Addition on account of unsecured loans - Held that:- As in the assessment order, the Assessing Officer already made an addition of 11,53,178/- as assessee’s investment made out of unexplained source and the same has been added as income from other sources. The Assessing Officer in the assessment order specifically mentioned that during the assessment year, the assessee found to have been accepted unsecured loan of 1,22,000/- . When Assessing Officer has treated the amount of 11,53,178/- as unexplained source again making addition of 1,22,000/- as unsecured loan, in my opinion, is not justified. Accordingly, the Assessing Officer is directed to delete the addition of 1,22,000/- made under section 68 of the Act. - Decided in favour of assessee.

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• 2017 (4) TMI 606
  Claim of TDS allowed as deduction only if it is deducted and paid before the due date - Held that:- Set aside the order of learned CIT(A) and restore the matter to the file of the AO with a direction to verify whether the payee is identifiable and the amount payable to him is ascertainable. Then the assessee would be required to deduct tax at source in respect of such provision. However, in case payee is not identifiable, the provision of Chapter XVII – B i.e. tax deduction at source cannot be pressed into service and, therefore, the assessee is not required to deduct tax at source in such a case. The AO will adjudicate the issue afresh after examining the above facts. Liaison work fee - whether in the nature of business income, the same was liable to be assessed on accrual basis? - Held that:- As reflected in Form 26AS, the assessee has been paid 4,40,000/- on 31.03.2011 on which TDS of 44,000/- was deducted. The AO has rightly brought to tax 4,40,000/- during the impugned assessment year. In view of the above, we set aside the order of the learned CIT(A) and restore the order of the AO.

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• 2017 (4) TMI 605
  Prior period expenditure disallowed - Held that:- In Saurashtra Cement [1994 (10) TMI 30 - GUJARAT High Court] it has been held by the Hon'ble Gujarat High Court that though the expenditure relates to prior period, if the liability has accrued during the year, then the expenditure has to be allowed as deduction. Also in CIT vs. Exxon Mobil Lubricants P. Ltd[2010 (9) TMI 36 - DELHI HIGH COURT] it has been held by the Hon'ble Delhi High Court that when prior period income is taxed prior period expenditure cannot be disallowed. Claim of forex derivative loss - Held that:- CIT(A) in her order dated 30.06.2014 has directed the AO to obtain from the assessee the details of swap arrangements and arrive at a finding after verification. The learned CIT(A) has not allowed the forex derivates loss of 2,89,00,000/- as made out in the 2nd ground of appeal filed by the revenue. As the learned CIT(A) has specifically set aside the above issue to the file of the AO, the 2nd ground of appeal is dismissed. Claim of depreciation @ 80% by the assessee on energy efficient devices - Held that:- CIT(A) correctly having examined the Certificate dated 31st March, 2008 given by the Chartered Engineers held that the assessee rightly claimed depreciation @ 80% on these devices. Claim of depreciation on building given on rent - Held that:- CIT(A) has given a specific direction to the AO to examine the accounts and arrive at a finding after verification. The learned CIT(A) has not allowed the claim of depreciation of 1,06,53,231/- as made out in the 4th ground of appeal of the revenue. Therefore, the 4th ground of appeal filed by the revenue is dismissed. Allowability of interest in respect of capital WIP - Held that:- CIT(A) has not allowed the interest pertaining to capital WIP as made out in the 5th ground of appeal. Rather the learned CIT(A) has given a specific direction to the AO to examine the accounts and then arrive at a finding after verification. In view of the above, the 5th ground of appeal is dismissed. Deduction u/s 24 for repairs in respect of house property - Held that:- There is a contradiction in the version of appellant as during assessment proceedings they themselves admitted that these repair expenses are incurred for leave and license basis premises where as now during the appellate proceeding submitted that these repair expenses do not pertain to the lease out premises. In absence of any supporting evidence for the same, the reply of appellant cannot be relied upon. The appellant have not negated the observation made by the AO in the assessment order that they did reply so during the assessment proceedings by their letter dated 8.12.2010. In view of this it is of the opinion that appellant has switched over from their earlier stand without negating the facts that they did admit so before AO. In absence of any contradiction made to the same, I am of the view that action of AO to disallow proportionate expenses, looking into the fact that appellant have already deducted by making a claim under section 24 also, the addition made is upheld. - Decided against assessee.

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• 2017 (4) TMI 604
  Addition on cash deposits in the said bank account - Held that:- CIT(A) thereafter made reference to other materials produced before the AO to point out that this bank account was used for the purpose of business and sale proceeds were deposited in this bank account. On the other hand, the ld.AO did not make any such investigation. He simply treated the deposits made in the bank account as unexplained cash credits. Contrary to this, the Revenue has not brought any evidence on record to demonstrate the fact that opinion formed by the ld.CIT(A) is contrary to the details available on record. In words, it has not brought to our notice that inference drawn by the ld.CIT(A) are factually incorrect. The ld.CIT(A) has right observed that total amount appearing as a deposit in the account was not cash credits, rather sale proceeds of the assessee. Turnover of the assessee is to be computed on the basis of all these details and at the most, an estimated net profit can be computed as an income of the assessee. Accordingly, the ld.CIT(A) has confirmed an addition of 3,50,208/-. We do not find any error in the detailed reasoning of the ld.CIT(A), and accordingly, the appeal of the Revenue is dismissed.

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• 2017 (4) TMI 603
  Disallowance of the liability shown by the assessee - addition u/s 41 - Held that:- Either liability is genuine or non-genuine. It cannot be disallowed at the rate of 20%. Apart from the above, section 41(1) of the Income Tax Act has been incorporated to cover a particular fact situation. The section applies where a trading liability was allowed as a deduction in an earlier year in computing the business income of the assessee and the assessee has obtained a benefit in respect of such trading liability in a later year by way of remission or cessation of the liability. In such a case the section says that whatever benefit has arisen to the assessee in the later year by way of remission or cessation of the liability will be brought to tax in that year. The principle behind the section is that the provision is intended to ensure that the assessee does not get away with a double benefit - once by way of deduction in an earlier assessment year and again by not being taxed on the benefit received by him in a later year with reference to the liability earlier allowed as a deduction. The assessee has shown outstanding liability in his accounts. The ld.Revenue authorities nowhere demonstrated as to how this liability has ceased. The AO simply believed that 20% of the liability must have been ceased. We fail to appreciate this approach. When the assessee has shown the liability in the account, unless it is established that this liability has ceased, it cannot be added in the income of the assessee - Decided in favour of assessee Addition u/s 194C r.w.s 40(a)(ia) - non deduction of tds on transportation charges to the transporters - Held that:- Revenue authorities have assumed existence of a contractor-ship between transporters and the assessee. They assumed that the assessee has taken contract from factory owners for supply of lignite and coal, and it has carried out this activity with the help of truck owners. Therefore, there is subcontractor- ship between him and the truck owners, he was required to deduct TDS on the payment made to truck owners. In our opinion, there is no evidence with the AO for harping on such a belief. The AO has not collected evidence of transportation. He has not examined ultimate suppliers of lignite and coal. Nor he has examined truck operators. When the assessee has been alleging that he was only extending facility to his client for delivery of lignite and coal, he has not acted as an agent between client and truck owners. Therefore, in our opinion, merely on assumption basis, the assessee should not be burdened with tax liability. Adhoc disallowance on this magnitude cannot be sustained. We allow this ground of appeal and delete disallowance.- Decided in favour of assessee

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• 2017 (4) TMI 602
  Claim for bad debt written off u/s 36(1)(vii) - Held that:- In relation to the decision for write off, viz the relation with the concerned trade customer on an ongoing basis; the cost - direct or indirect, of recovery, etc In fact, but for it becoming irrecoverable, there was no question of any loss to the assessee, being a debt due from the Government Rather, being due from the Government, but for the law, a claim for bad debt in its respect would ordinarily invite an objection, being almost a contradiction The irrecoverability is thus an integral aspect of the claim for bad debt written off u/s 36(1)(vii) and, thus, nothing turns on the irrecoverability having set in on the lapse of the stipulated time period for its recovery If nothing, it only proves the claim to be genuine and bona fide The impugned claim is thus only qua a bad debt liable for deduction u/s 36(1)(vii) and not qua a loss u/s 28 of the Act In view of the foregoing, the assessee shall therefore be entitled to the impugned loss subject to the satisfaction of the conditions of s 36(1)(vii) That is, the relevant debt/s: a) must have become irrecoverable, i.e., the 180 day period expired qua the same as at the year-end; b) must be written off in accounts for the relevant year The matter, accordingly, is restored to the file of the AO, who shall per a speaking order give effect to this order after allowing the assessee a reasonable opportunity to exhibit it’s case The assessee shall also reconcile the difference between the amount claimed ( 25.44 lacs) and that for which the order stands passed by the VAT authority ( 23.91 lacs) Further, to the extent not written off, the claim in its respect would have to necessarily await the same, i.e., a write off in accounts, a condition precedent for a claim qua the same, and which shall incidentally also ensure that there is not double claim qua the same sum.

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• Customs

• 2017 (4) TMI 635
  Classification of Imaging Plates, IP Cassettes and FCR Capsula - benefit of N/N. 21/2002 dated 01.03.2002 - Held that: - the learned Tribunal seems to have found a case which was not even urged by any of the parties before it, namely, that Imaging Plates and IP Cassettes merit classification under Chapter 37 - the order of the learned Tribunal should be interfered with and the matter be remitted for a decision de novo - matter on remand.

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• 2017 (4) TMI 634
  Refund claim - excess duty paid at 5% instead of 1% - denial on the ground that in terms of Section 149 of the CA, 1962, the amendment in the Bill of Entry is not permissible as the documents on which the refund claim has been filed was not available with the appellant at the time of clearance of the goods - Held that: - there is no issue of interpretation of notification and the matter is based on fact finding. If the appellant has produced the certificate of country of origin then there is no dispute between the parties. The appellant is required to pay Basic Customs duty at the rate of 1% Adv. and excess duty paid by the appellant is to be refunded. Whether the refund claim filed by the appellant can be rejected on the ground that, at the time of clearance of the goods, certificate as prescribed in format was not produced by the appellant? - Held that: - The invoices shows the country of origin as North Korea and the certificate produced at the time of clearance was not in prescribed format but as per the agreement, for claiming preferential tariff treatment, certificate of origin can be produced later-on but with the words ISSUED RETROSPECTIVELY in remarks column. The appellant has produced the said certificate and the same has not been disputed. The appellant has produced the certificate of origin in the prescribed format later on, is not disputed. It is also not disputed that in the bill of entry, the country of original is North Korea. In view of the fact that the goods are of Korean origin, the appellant is liable to pay Basic Customs duty at the rate of 1% and have paid the excess duty. Therefore, the appellant is entitled for refund of claim of excess duty paid by them. Appeal allowed - decided in favor of appellant.

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• 2017 (4) TMI 633
  Import of Prohibited goods - gun cartridges imported by M/s Nanda Armed Corporation as well as M/s Nanda Shastralaya, Lucknow - the case of the Revenue is that the import license produced by the importers did not cover the imported goods - Held that: - The crucial issue on which the case can be decided is whether .32 rifle cartridges, which are permitted for import with import licence, will cover the .32 revolver cartridges imported in the present case. Such an issue can be laid to rest only by drawing a sample from the imported consignment and sending it for expert opinion from the Authorised Armourer of the Police Department or any other technical expert who is authorised to examine such goods and give opinion. Whether the goods described as S&B .25 Auto Pistol cartridges, in the Bill of Entry are the same as S&B 7.65 pistol cartridges, as found on physical examination of the imported goods? - Held that: - the controversy can be decided by getting a sample of the imported cartridges with 7.65 bore goods examined and certified by a competent authority such as the Armourer of the Police Department. Appeal allowed by way of remand.

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• Corporate Laws

• 2017 (4) TMI 630
  Claim made by the Regional Provident Fund Commissioner for employer's contribution as well as towards employees' contribution from the official liquidator - Held that:- Claim thus made by the Regional Provident Fund Commissioner for employer's contribution as well as towards employees' contribution from the official liquidator is totally untenable and is rightly rejected by the official liquidator. In my view, there is thus no substance in this demand of the Regional Provident Fund Commissioner against the official liquidator and is accordingly rejected. A perusal of Ann.1 to the affidavit dated 23rd February 2017 filed by the Regional Provident Fund Commissioner, Kandivali clearly indicates that the claim of the said office included claim towards the employees as well as employers share of provident fund in respect of 350 employees and also various other claims which were dealt with by the Official Liquidator and also by this court in this judgment. The learned Official Liquidator has rightly rejected some of the claims and has rightly adjudicated the claims in the sum of 5,54,64,810/- vide report dated 31st July, 2013 under Section 529A of the Companies Act, 1956 as against the claim of 20,60,61,287/-. A perusal of paragraph 8 of the said affidavit indicates that the Regional Provident Fund Commissioner, Kandivali has settled the provident fund claims along with pension/death claims as on 19th January 2017 in respect of 298 employees for an amount of 4,82,24,677/- and has only disbursed the said amount to the respective employees out of the amount of 6,67,57,281/- paid by the Official Liquidator to the Provident Fund Authorities as against the amount of 5,54,64,810/- which was adjudicated amount in the said report dated 31st July 2013. I am thus not inclined to accept the submission of Mr.Sureshkumar, learned counsel for the Regional Provident Fund Commissioner, Kandivali that excess amount of 5,05,057/- over and above the amount of 6,67,57,281/- is to be paid by the Department to the respective employees and establishment. The said statement made in paragraph 7 of the affidavit is contrary to the other paragraphs of the said affidavit and also contrary to the details furnished in Ann.2 to the said affidavit. In my view, it is thus clear that the Official Liquidator has made excess payment of 1,12,93,011/- to the Regional Provident Fund Commissioner, Kandivali which is liable to be refunded by the Regional Provident Fund Commissioner, Kandivali to the Official Liquidator. Therefore pass the following order :- (i) Official Liquidator' Report is made absolute in terms of prayer clause (a). (ii) Statement of the learned counsel for the Provident Fund Authorities that upon receipt of payment in terms of prayer clause (a) of the Official Liquidator's Report, the amount shall be disbursed amongst the employees in accordance with law expeditiously is accepted. The Provident Fund Authorities are directed to disburse the payment to the employees as stated aforesaid expeditiously. (iii) The official liquidator's report is made absolute in terms of prayer clause (b). Employees Provident Fund Office, Kandivali is directed to deposit the said amount with the official liquidator within four weeks from today.

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• 2017 (4) TMI 629
  Company application barred by limitation provided under section 10-F of the Companies Act, 1956 - condonation of delay - Held that:- There is no dispute about the proposition that the appeal under section 10-F of the Companies Act, 1956 against the order of the Company Law Board can arise and can be entertained by the Company Court only if the questions of law arises and not otherwise. The questions of law if any arises in Company Appeal however, can be considered only if such appeal under section 10-F is within the time prescribed under the provisions of section 10-F and only upon the Company Court condoning the delay upto the period of 60 days, if sufficient cause is made out by the appellant and not otherwise. In my view, even if the applicant makes out a sufficient cause for delay beyond the grace period of 60 days, the Court has no power to condone such delay. There is thus no substance in the submission made by the learned counsel for the applicant. Insofar as the Doctor's certificate annexed at Exhibit “A” to the company application is concerned, in my view since this Court has no power to condone delay beyond the period of 60 days and admittedly in this case delay is 135 days, Doctor's certificate produced by the applicant in support of his case that he was prevented from sufficient cause from filing appeal within the period of 60 days is of no assistance to the applicant and no cognizance thereof can be taken by this Court. The company application is barred by limitation provided under section 10-F of the Companies Act, 1956 which is a self-contained provision. The company application is accordingly dismissed.

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• Service Tax

• 2017 (4) TMI 651
  Refund claim - rejection on account of Time Bar - Held that: - the respondent, filed an appeal for refund u/s 11-B of the Act, which was not necessary in view of the order of the Appellate Authority which had attained finality. The Commissioner (Appeals) also by mistake considered the appeal independently and by an order dated 31.03.2009, rejected the appeal - The Tribunal has imposed a cost of 10,000/- on the Assessing Officer personally for not having complied with the said order of the Appellate Authority dated 16.11.2001. There do not appear to be any mala fides on the part of the Officer. He passed an order which is incorrect. A mere incorrect order ought not to invite penal consequences if made bona fide - appeal dismissed being not maintainable.

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• 2017 (4) TMI 650
  Works contract - Payment of service tax - the petitioner has already moved an application before the concerned authority which is pending - Held that: - Since the application of the petitioner is pending, let the same be decided, provided the petitioner complies with the notice dated 15.03.2017 inasmuch as the petitioner shall submit the entire details of the relevant financial year as mentioned in the notice with the department - petition disposed off - decided in favor of petitioner.

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• 2017 (4) TMI 649
  Condonation of delay - there was a delay of 5 days in presenting the appeal and inasmuch as the appeal was not annexed with the proper documents - maintainability of appeal - Held that: - there was utter lapse on the part of the appellant to remove the defects and to file the appeal again, but keeping in view that the appellant is a partnership firm and appreciating their stand that the said fact was not brought to their notice by the advocates and appreciating that the appellant was initially filed with the delay of 5 days only and in the interest of justice, the delay is condoned in filing the appeal - as there has been admitted lapse on the part of the assessee, it is fit to impose a cost of 5,000/- - COD application allowed.

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• 2017 (4) TMI 648
  Works contract - whether the appellant, who were working under works contracts with the Indian Oil Corporation for construction of petrol pump, were required to pay the service tax for the period prior to 1-6-2007? - Held that: - there was a reasonable cause on the part of the assessee to entertain a bona fide belief about non-taxability of service being provided by them - The circumstances of the invocation of Section 80 as also invocation of extended period of limitation relate to mala fide on the part of the assessee, with an intent to evade payment of duty. Once that mala fide has not been found for the purpose of Section 80, the same would not be available to the Revenue for invocation of extended period of limitation - demand for the entire period is barred by limitation - appeal allowed - decided in favor of appellant.

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• 2017 (4) TMI 647
  Laying optical fibre cable alongside or under the road - Site Formation and Clearance, Excavation and Earthmoving or not? - taxability - Held that: - The C.B.E. & C. Circular No. 123/05/2010-ST, dated 24-5-2010 has specifically clarified in Sl. No. 2 of the Table under Para 3 that such activity will not be liable to service tax under any of the sub-clause of sub-section (105) of Section 65 of the FA, 1994 - It stands further clarified later that the word “cable” will include all types of cables including electrical cables as well as optical fibre cables - service not taxable - appeal rejected - decided against Revenue.

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• 2017 (4) TMI 646
  Refund claim - N/N. 41/2007-S.T., dated 6-10-2007 - refund claim rejected on the grounds that notification requires submission of original invoices, duly certified - Held that: - The intention and idea in getting every invoice certified is to establish that such services were used by the assessee for export purposes and in fact stands paid for by them. Instead of certifying each and every invoice individually and separately, if a consolidated certificate giving details of the invoices, stand given by the assessee, the same would fulfill the notification criteria - the invoice number mentioned in the Chartered Accountant certificate are required to be verified - appeal allowed by way of remand.

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• Central Excise

• 2017 (4) TMI 645
  Maintanability of appeal - what is subject matter of challenge in the petition is an Order-In-Original dated 28.12.2016 passed by the adjudicating authority - Held that: - When there is an efficacious alternative remedy available under the statute, this court, would not ordinarily exercise powers under article 226 of the Constitution India unless it is pointed out that the order impugned is without jurisdiction, in excess of jurisdiction or that the authority has failed to exercise the jurisdiction vested in it or if the order has been passed in violation of the principles of natural justice. Before this court nothing has been pointed out to establish that this case relates to any of the above referred circumstances. Another notable aspect of the matter is that the impugned Order-In-Original has been passed against one M/s. Roma Industries and not against the petitioners - Even if that be so, the remedy lies by way of appeal under the provisions of the Central Excise Act, inasmuch in the absence of any jurisdictional error or violation of the principles of natural justice being pointed out in the impugned Order-In-Original passed by the Assistant Commissioner, the question of exercising powers under article 226 of the Constitution of India would not arise - Petition dismissed.

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• 2017 (4) TMI 644
  Clandestine manufacture and removal - Retrofit Assemblies - Department alleged that the appellant had manufactured Retrofit Assemblies and had cleared them under the guise of trading, without payment of Central Excise duty - Held that: - said observations were made by the appellate authority based on analysis of the documentary evidences available before him. Further the ld. Commissioner (Appeals) has relied on various authoritative decisions rendered by the judicial forums to hold that the charges leveled against the appellant for manufacture of Retrofit Assemblies and removal of the same clandestinely cannot be sustained - appeal dismissed - decided against Revenue.

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• 2017 (4) TMI 643
  Waiver of penalty - appellant case is that the mistake for non-payment of duty is a bona fide mistake on the part of the person, who was in-charge for looking into this matter and they had no intention to evade payment of duty - Held that: - it is clear that had the Audit not detected the case, the duty would not have been paid by the assessee. Thus, there is clear intent to evade. There is no case for waiver of penalty as there was a positive act on the part of the appellant, which led to evasion of duty - appeal dismissed - decided against appellant.

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• 2017 (4) TMI 642
  CENVAT credit - H.R. Plates, Channels, H.R. sheet plates, H.R. coil, MS Channels, Flat bars, NAS EQ angles, GP Coil sheets, MS Beams, Prime Hot Rolled non-alloy, MS Joist etc. - credit was confirmed placing reliance in the case of Vandana Global Ltd. [2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)] - Held that: - The entire basis of the Department's case is Larger Bench's decision in the case of Vandana Global. In the present case, the fact is different from the facts involved in the Vandana Global case. In the Vandana Global case, the fact was that the steel material was used for making the structure which was used for erection of plant and machine. In the present case, the steel material was used in fabrication of part of Boiler and DM plant. For this reason, ratio of Vandana Global case is not applicable. Also, the amendment made on 7.7.2009 in the definition of inputs cannot be applied retrospectively - the Vandana Global judgment which has applied the amendment retrospectively is not applicable in the facts of the present case. Appeal dismissed - decided against Revenue.

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• 2017 (4) TMI 641
  Penalty u/r 96ZQ of erstwhile CER, 1944 - short payment of duty - demands were confirmed with interest, but no penalty was imposed on the Respondent by the Adjudicating Authority - Held that: - the issue of levy of penalty u/r 96ZQ of erstwhile CER, 1944 is no more res integra. The Hon'ble Supreme Court in the case of Shree Bhagwati Steel Rolling Mills Vs CCE [2015 (11) TMI 1172 - SUPREME COURT], has held that the interest and penalty provisions under the Rules 96ZO, ZP, and ZQ of the CER, 1994 are invalid - appeal rejected - decided against Revenue.

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• 2017 (4) TMI 640
  Valuation - cost of design and development of art work - includibility - case of the department is that the cost of design and development of the art work, which is used on behalf of the customers should be included in the assessable value of the packing materials manufactured by the appellant - Held that: - the design and development charges for art work charged by TPCIL to the customers and such art work was used by Tetra Pack India Ltd. is clearly includable in the assessable value of the appellant, as per the clear provision made in the Central Excise Valuation Rules, 2000 w.e.f 01/07/2000 - for the entire period involved in the present case, the cost of art work provided by the customers to the appellant is includable in the assessable value. As regards the use of 335 drawings out of 2200 drawings for manufacture of goods, we are of the view that if all the drawings were not used, the value of 2200 drawings cannot be included in the manufacture of goods, which were claimed to have been manufactured out of 335 drawings. As regards the limitation, both the lower authorities have not properly examined the fact whether there is a suppression of facts or otherwise. Accordingly, the issue of limitation was also not considered properly. Appeal allowed by way of remand.

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• 2017 (4) TMI 639
  CENVAT credit - Manpower Services towards loading and unloading of finished goods at the customer’s premises - Alleging that the service rendered at the customer’s premises having no nexus with the manufacturing activity as its cost is not included in the assessable value, credit denied - Held that: - service tax paid on service rendered for loading and unloading the goods as a condition of sale is eligible to credit - However, only the fact needs be ascertained whether the appellant by the condition of sale is required to deliver goods at the premises of the customer and the charge is included in the price of the goods - detail scrutiny of the evidences is required to ascertain the eligibility of CENVAT credit on the said service - appeal allowed by way of remand.

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• 2017 (4) TMI 638
  Cenvat credit - cement used in the foundation of machineries erected - Held that: - the ld. Commissioner (Appeals) have erred in relying on the ruling of Hon’ble Rajasthan High Court in the case of Union of India Versus Hindustan Zinc Limited [2007 (8) TMI 127 - HIGH COURT, RAJASTHAN as the said ruling was in respect of Cenvat Credit Rules, 2002 which have been replaced by Cenvat Credit Rules, 2004 - In the facts and circumstances of this case, cement has been admittedly used in the erection of capital goods, being machinery, without which manufacture of dutiable goods is not possible - Appeal allowed with consequential benefit.

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• 2017 (4) TMI 637
  Assessable value - deduction towards cash discount on excise duty payable realized back through debit notes - Held that:- the issue is squarely covered by the assessee-Appellants own case for the previous period in Excise Appeal No.629/2008 dated 15.6.2016 where the Tribunal has also relied upon the ratio laid down by the Hon’ble Supreme Court in the case of Purolator India vs. C.C.E., Delhi III, [2015 (8) TMI 1014 - SUPREME COURT] wherein it was held that “transaction value” as defined in sub-clause (3)(d) of Section 4 has to be read along with the expression “for delivery at the time and place of removal”. It is clear, therefore, that what is paramount is that the value of the excisable goods even on the basis of “transaction value” has only to be at the time of removal, that is, the time of clearance of the goods from the appellant’s factory or depot as the case may be. There will be no need to add back the discounts to the assessable value, even if the same are subsequently recovered. Similar views were taken by the Tribunal in the assessee-Appellants’ own case in Excise Appeal No.400 of 2011 dated 20.12.2016 - Appeal allowed - decided in favor of the assessee.

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• 2017 (4) TMI 636
  100% EOU - Refund claim - time limitation - the amount of excise duty was not paid with the jurisdictional in charge of the 100% EOU whereas it was paid as excise duty in the Excise Commissionerate - unjust enrichment - Held that: - refund arose only after the demand issue of duty on furnace oil has been settled by the Commissioner (Appeals) in Order-in-Appeal dated 10.03.2004, therefore the refund was supposed to be filed within one year from the date of Commissioner (Appeals)'s order, which the appellant has filed on 10.05.2004. Therefore, the refund is well within the prescribed time limit provided u/s 11B - refund is not time bar. As regards the jurisdiction issue, since the 100% EOU is under the control of one particular jurisdiction i.e. Asst. Commissioner of Customs, Export Processing Zone, the refund has to be processed by the same jurisdiction as the appellant has no other jurisdiction except the Asst. Commissioner of Customs, EPZ. Therefore the refund could not have been rejected on the point of jurisdiction. As regards the difference in the name of the company, it is the same appellant company whose name was changed as per the authority of certificate issued by the Registrar of Company, Delhi & Haryana. Therefore, it cannot be said that the challan was deposited by different company and refund was claimed by another company. Therefore, the refund is not liable to be rejected on this ground also. Unjust enrichment - Held that: - the appellant is a 100% EOU and exporting 100% of their final product. The duty was paid on the furnace oil which was used in the manufacture of exported goods. Therefore, by virtue of above sub-clause (a) the unjust enrichment is not applicable in the fact of the present case. The appellant is entitled to refund - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2017 (4) TMI 632
  Mismatch of turnover with figures recorded - applicant submits that it was only 734 containers, which had not matched with the figures disclosed in exhibit-3, viz-a-viz sales of M/s Golden Agro Products and at best, sales to that extent alone could be added in the turnover of the assessee. Submission is that the entire quantity mentioned in exhibit-3 could not be relied upon to increase turnover - Held that: - it is only to the extent figures had not matched with the figures of sale disclosed by M/s Golder Agro Products, viz-a-viz the details mentioned in exhibit-3 that any addition in turnover of sale could be allowed by the Tribunal. The containers which had already been accounted for in the form of sales figures of M/s Golder Agro Products, could not have been treated to be the sales made by the assessee - such factual issues require consideration by the Tribunal, and it is only to the extent of undisclosed figures shown in exhibit-3 that turnover of sale of assessee could have been enhanced - appeal allowed by way of remand.

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• 2017 (4) TMI 631
  Taxability of flavoured milk - classification of the product - case of Revenue is that flavoured milk being in the nature of soft beverages, is liable to tax under circular dated 12.10.1983 - flavoured milk, whether milk or milk product? - Held that: - what is sold by the assessee is flavoured milk in sealed container. The department itself has issued a circular clearly holding that flavoured milk is covered by the entry 'milk'. Once it be so, the first part of the entry 973, which deals with 'milk', would apply and entry 'milk products', would have no applicability. The Tribunal, therefore, was justified in holding that the flavoured milk is not liable to tax, as the product itself is not liable to be taxed - revision dismissed - decided against Revenue.

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• Indian Laws

• 2017 (4) TMI 628
  Criminal complaint under Section 138 of Negotiable Instrument Act - cheque in question was a blank signed cheque handed over to the complainant by way of security - Held that:- On the own showing of the complainant, the cheque was a security cheque, which came to be deposited on 8th March 2016. The law in this regard is wellsettled. In the case of Sampelly Satyanarayan Rao vs. Indian Renewable Energy Development Agency Limited [ 2016 (9) TMI 867 - SUPREME COURT] wherein decision of this Court in Indus Airways Private Limited versus Magnum Aviation Private Limited [2014 (4) TMI 464 - SUPREME COURT] discussed saying that while the purchaser may be liable for breach of the contract, when a contract provides that the purchaser has to pay in advance and cheque towards advance payment is dishonoured, it will not give rise to criminal liability under Section 138 of the Act. Issuance of cheque towards advance payment could not be considered as discharge of any subsisting liability. In view of the above, this application succeeds and is hereby allowed. The proceedings of the Criminal Case pending in the Court of the learned Additional Chief Metropolitan Magistrate, Court No.36, Ahmedabad are hereby quashed.

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• 2017 (4) TMI 627
  Entertainment tax on the musical concert performed / organized by the petitioner - Held that:- As for purpose of Amendment Act, 1998 and Section 3, 3A and schedule are read together with Section 29 r/w budget speech of the Hon'ble Finance Minister there can be only one conclusion that entertainment / activities mentioned in Schedule III, if they are performed in commercial manner and for profit making and which has no element of educational, medical, charitable, philanthropic or such other purposes, are not entitled to exemption from payment of entertainment tax like musical concert performed in the present case which has commercial element and the sole purpose is for profit making and all those activities mentioned in Schedule III shall be entitled to exemption from entertainment tax if there is an element of educational, medical, charitable, philanthropic or such other purposes and element is non commercial and non profit making. Therefore, the submission on behalf of the petitioner that for all the activities / entertainment mentioned in Schedule III irrespective of whether they are performed for any educational, medical, charitable, philanthropic or such other purposes or irrespective of fact whether they are performed for commercial purpose or not and / or there is a commercial element on such activities / entertainment, they shall be exempted from payment of entertainment tax cannot be accepted. As in the present case it is an admitted position that the live musical concerts organized by the petitioner on 24.12.2016 was admittedly not for any educational, medical, charitable, philanthropic or such other purposes. It is an admitted position that same is having commercial element and even they charge also very high entry fee ranging from 500/above and may be upto to 5000/per entry. Under the circumstances it cannot be said that the action of the respondent can be said to be in any way illegal and / or contrary to the legislative intent of Section 3A and Schedule III of the Entertainment Tax Act.

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