TMI Tax Updates - e-Newsletter
April 21, 2018

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy Law of Competition Service Tax Central Excise CST, VAT & Sales Tax

TMI SMS

• Kerala GST Rules, 2017 - Petitioners should not be prevented from the sale of lottery for non compliance of Rules 56(19) and 56(20A) - HC

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• Incomplete E-Way bill - Section 129(1) of UP GST - There is no illegality in seizing goods for violation of provision of the Act - HC

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Articles

1. Canteen services- analysis of Advance Ruling Authority, Kerala

   By: Suriyanarayanan Iyer

2. Doing Mango Business with Australia

   By: Kishan Barai

News

1. Two day Regional Conference on “Urban Development: Technological Solutions and Governance Challenges” concludes in Ahmedabad today ;

2. Pension Fund Regulatory and Development Authority prescribes New NPS Subscriber Registration Form – Additional Mandatory Requirements

3. Shri Subhash Chandra Garg , Secretary ,Economic Affairs participates in the BRICS Finance Ministers and Central Bank Governors Meeting in Washington D.C

4. RBI Reference Rate for US $

5. MoS P.P. Chaudhary to embark on a 10-day visit to St Vincent & Grenadines, Barbados, Washington DC and New York

Circulars / Instructions / Orders

Customs

1. 09/2018 - dated 19-4-2018

Classification of remnant fuel & oils -reg.

2. 61/2018 - dated 17-4-2018

Subject: Selection of a food-items for FSSAI NOC, efforts to reduce unintended selection and also to reduce time taken to obtain NOC / Test Reports- reg.

3. 60/2018 - dated 17-4-2018

Subject: Duty payment through various duty credit scrips issued under Chapter 3 of FTP- reg.

4. 59/2018 - dated 13-4-2018

Subject: - Procedure (revised) to be followed for scanning of DPD containers selected for scanning- reg

5. 58/2018 - dated 13-4-2018

SUB: Implementation of the Track and Trace system for export of Pharmaceuticals and drug consignments.–reg.

6. 57/2018 - dated 10-4-2018

Sub: Procedure in relation to delivery of DPD containers from port terminals of JNCH, Nhava Sheva to CFSs, if not cleared beyond prescribed 48 Hours period and under certain other circumstances, Designation of CFSs; reg.

7. 54 /2018 - dated 31-3-2018

Subject: - Mandatory implementation of e-SANCHIT w.e.f. 01.04.2018- reg.

8. 56/2018 - dated 29-3-2018

Subject: Compliance of Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016 - reg.

Highlights / Catch Notes

GST

• Kerala High Court Invalidates Rule 56(20A)(iii)(d), Protecting Lottery Businesses from Unwarranted Police Interference Under GST Act 2017.

  Case-Laws - HC : Right to carry lottery business - Use of Kerala GST Act, 2017 and police power to interfere into the lottery business - practical difficulty - The petitioners should not be prevented from the sale of lottery for non compliance of Rules 56(19) and 56(20A) of the Kerala State GST Rules - Rule 56(20A)(iii)(d) of the Kerala State GST Rules is struck down - HC
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• High Court Rules Seizure of Goods Legal u/s 129(1) of UP GST Act Due to Incomplete E-Way Bill.

  Case-Laws - HC : Seizure of goods - incomplete E-Way bill - Section 129(1) of UP GST - Apparently there is a convention of the provision of the Act which mandates that the E-Way bill should be accompany the goods in transit - There is no illegality in seizing goods for violation of provision of the Act. - HC
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Income Tax

• Sections 153A and 153C of Income Tax Act override Sections 136, 147-149, 151, and 153, but not Sections 142(2) or 143(2).

  Case-Laws - HC : The nonobstante provisions in both Sections 153A and 153C are identical; they override Sections 136, 147, 148, 149, 151 and 153. However, they do not override the mandatory provisions of Sections 142 (2) or 143 (2). This legislative design is taken further by Section 153 (2) (a) to (c) which are relatable to the satisfaction under Section 153C (1) notice - HC
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• Deemed Annual Letting Value Applies to Unsold Flats Held as Stock; Assessed as Rent Income Under Tax Rules.

  Case-Laws - AT : Income from House Property - Addition of deemed ALV of vacant flats which are lying in the stock in trade of the assessee’s books of account - even in the case of unsold flats held in stock in trade the income has to be assessed by way of deemed rent. - AT
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• Assessee Not Required to Deduct TDS on Freight Payments Handled by Consignment Agents Due to Lack of Transporter Info.

  Case-Laws - AT : TDS on freight payments - freight payments are made by the Consignment Agents only and even the assessee may not aware of different transporters, shipping agents, therefore, it would impossible for assessee to deduct TDS on such payments - AT
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• Court Rules Sales Estimation Unsustainable Without Basis in Section 44AD Case; Assessee's Books Not Maintained.

  Case-Laws - AT : Estimation of sales and net profit - filing return u/s 44AD - AO estimated the actual sales of ₹ 86 lacs instead of ₹ 19 lacs - when no books of accounts are maintained by the assessee and return is filed under section 44AD of the Act, we are not in a position to sustain the order estimating the sales which has no basis at all. - AT
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• Assessee Cleared of Liability in Broker Manipulation Case; All LTCG Transactions Properly Recorded and Traded via Stock Exchange.

  Case-Laws - AT : Long Term Capital Gains (LTCG) being earned on the sale of scrips - Assuming that the brokers may have done some manipulation but the assessee cannot be held liable for the Act of the brokers when the entire transactions have been done through banking channels duly recorded in the Demant accounts with a Government depository and traded on the stock exchange. - AT
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Customs

• Remnant Fuels and Oils Imported Before May 20, 2015, Exempt from Chapter 27 Policy Conditions Per Board Circular 37/96.

  Circulars : Classification of remnant fuel & oils - import of remnant fuels referred to in para 2(d) of Board circular 37/96-customs would not be subject to any policy condition under chapter 27 prior to 20th May 2015.
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• Court Upholds Safeguard Duty on Solar Cells; Petitioners Can Present Submissions to Relevant Authority for Review.

  Case-Laws - HC : Imposition of safeguard duty - import of Solar Cells - validity of preliminary findings notice - no prejudice would be caused to the petitioner for the reason that they will be given opportunity to make their submission before the Authority on the issues involved in the matter. - HC
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• IEIS under FTP demands detailed scrutiny of export values by Regional Authority, issuing reasoned orders for transparency.

  Case-Laws - HC : Foreign Trade Policy (FTP) - Incremental Export Incentivisation Scheme (IEIS) - value would be subjected to greater scrutiny by the Regional Authority - In terms of clause (ii), the Regional Authority was required to pass a reasoned order after application of mind on the contents of the applications. - HC
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• Export Unit Can Sell Used Drums Without Duty in Domestic Market Under Notification 4(c) Provisions.

  Case-Laws - AT : 100% EOU - Empty drums after use of the inputs were sold by the appellants in DTA - suitable for repeated use - the impugned goods are only in the nature of used packing material of a kind of unsuitable for repeated use which then should be allowed to be cleared without payment of any duty, as per provisions of 4(c) of the same notification. - AT
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Service Tax

• Authorities Must Adhere to VCES 2013 Guidelines; No Alterations or Interpretations Allowed for Easier Compliance.

  Case-Laws - AT : Voluntarily Compliance Encouragement Scheme, 2013 - Since the authorities functioning under the statue are guided by the dictates under the statue, they cannot interpret the provisions of the statutory scheme differently, in order to relax the conditions prescribed in the scheme - rejection of the VCES declaration upheld. - AT
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• Time Limit for Refund Claims u/r 5 CCR: End of Quarter When ARC Received Determines Deadline.

  Case-Laws - AT : Refund claim - relevant date - the relevant date for purposes of deciding the time limit for consideration of refund claims under Rule 5 of the CCR may be taken as the end of the quarter in which the ARC is received, in cases where the refund claims are filed on a quarterly basis. - AT
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• CENVAT Credit Approved for Diesel Transport to Mobile Towers; Recognized as Essential Input Service for Maintenance.

  Case-Laws - AT : CENVAT credit - transportation of diesel to the telephone towers of the clients - the said services are an essential input service for rendering the output service of maintenance of mobile towers - credit allowed - AT
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• Service Tax Demand Overturned for Plot Developers in Madhya Pradesh Slum Project: No Residential Construction Involved.

  Case-Laws - AT : Construction of Residential Complex Service - Development of plots for accommodation of people in slum locality - the appellants are not engaged in any construction of residential units. They were mainly engaged in development of plots in the slum locality in terms of an arrangement with main contractor for Government of Madhya Pradesh - demand set aside. - AT
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• Service Tax Demand on Aditya Cement Guest House Construction Overturned; Not Classified as Commercial Service.

  Case-Laws - AT : Industrial or Commercial Construction Service - construction of the guest house - It is not used for commercial occupation of any guests other than the employees of M/s.Aditya Cement. Such building is neither used for commercial purpose nor for industrial purpose - demand set aside - AT
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Central Excise

• Excess Duty Adjustment Allowed Against Short Payment; Larger Bench Decision Sets Binding Precedent on CENVAT Credit Claims.

  Case-Laws - AT : Adjusting of excess paid duty against short payment cannot be denied even if the assessee’s sister concern have taken the CENVAT Credit of the excess duty paid by the assessee - the majority decision has to be considered as Larger Bench decision and a binding precedent. - AT
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• CENVAT Credit Approved for Corporate, HR, Legal, E-Auction, and Medical Services Under Central Excise Rules.

  Case-Laws - AT : CENVAT credit - input services - Corporate service - Human resource - Legal and secretarial services - professional fees paid for conducting e-auction - ambulance service - medical treatment - health check up of the employees - civil works - credit allowed on different grounds - AT
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Case Laws:

• GST

• 2018 (4) TMI 1009
  Right to carry lottery business - Use of Kerala GST Act, 2017 and police power to interfere into the lottery business - practical difficulty in following of 56(20A)(d) of the Kerala State GST Rules - Production of unsold lotteries before the authority within 48 hours - Challenge to the GST Rules, 2017 on a premise that these rules are colourable exercise of delegated legislation to interfere with rightful conduct of lottery business in the State - Held that:- Rule 56(20A)(d) refers to satisfaction entered by the authority as to the violations of the Lotteries (Regulation) Act. This Court is of the view that the above Rule has to be struck down as the State has no power to constitute one more authority under the Kerala State GST Rules to enter satisfaction as to the violations of the lottery. The Indian Constitution do not recognise police power as such. The police cannot act merely based on the information given by the Tax officials. The police power in relation to the violation of the provisions of Lotteries Regulation can be exercised only in accordance with the Lotteries Regulation. The petitioners pointed out the practical difficulty in complying Rule 56(20A)(II) within 48 hours. Explanation as above, certainly, is meritorious. The Court cannot brush aside such an explanation. How far an action can be initiated for non compliance is a vexing question to be decided by this Court. The petitioners should not be prevented from the sale of lottery for non compliance of Rules 56(19) and 56(20A) of the Kerala State GST Rules, in respect of which they have explained their practical difficulty in complying the same. In respect of the other Rules, the petitioners having expressed their willingness to comply the same in the writ petition itself, I need not advert to the consequence and non compliance of such Rules. Rule 56(20A)(iii)(d) of the Kerala State GST Rules is struck down holding that the State has no legislative competence to formulate such Rule.

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• 2018 (4) TMI 1007
  Seizure of goods - incomplete E-Way bill - Section 129(1) of Uttar Pradesh Goods and Service Tax Act, 2017 - Held that: - In the present case admittedly, all the above details were not filled up or disclosed in the E-Way Bill - the E-Way Bill was incomplete and improper. Any E-Way Bill which is not duly filled up cannot be construed to be a valid document and it would be treated as if the goods are not accompanied by appropriate / valid E-Way bill. Apparently there is a convention of the provision of the Act which mandates that the E-Way bill should be accompany the goods in transit - There is no illegality in seizing goods for violation of provision of the Act. Petition dismissed.

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• 2018 (4) TMI 1006
  Transition of CENVAT credit to ITC under GST - condition contained in clause (iv) of subsection (3) of section 140 of the Central GST Act - With introduction of GST, the petitioners could avail their CENVAT credit of the stock of goods lying with the petitioners, on which, the purchases were made not earlier than one year - NOTICE issued.

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• Income Tax

• 2018 (4) TMI 1005
  Assessment u/s 153C r.w.s.143(3) or only under Section 143(3) - function served by a satisfaction note under Section 153C - Held that:- The failure of the AO to record a specific satisfaction as to how the recovered material belonged to the assessee in the note that preceded the notice issued under it, vitiates the assessments. As far as the pending assessment year is concerned, the return was filed on 29.09.2009. No notice in terms of Section 143 (2) had been issued to the assessee, and the time provided by law had expired by the time its AO received the papers from the searched party. Notice issued, necessarily, in terms of Section 153C (2) had to be in the light of the satisfaction that the books of account or materials seized - fulfillment of the preconditions, clearly, the option provided by Section 153C (2) to proceed against pending or assessments cannot be made recourse to The nonobstante provisions in both Sections 153A and 153C are identical; they override Sections 136, 147, 148, 149, 151 and 153. However, they do not override the mandatory provisions of Sections 142 (2) or 143 (2). This legislative design is taken further by Section 153 (2) (a) to (c) which are relatable to the satisfaction under Section 153C (1) notice, i.e. that if notice for pending assessments have not been issued, to take further proceedings, and the time has lapsed, the only condition when they can be taken forward, is if the satisfaction with respect materials seized are relatable to the assessee is through application of mind and not a mechanical one - Decided against revenue

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• 2018 (4) TMI 1004
  Addition u/s 68 - Held that:- Revenue urge that the money has been received from bogus shareholders then it is for the Revenue to proceed against them in accordance with law would not entitle the Revenue to invoke Section 68 while assessing the respondent for not explaining the source of its source. The impugned order of the Tribunal has raised a finding of fact that the respondent had discharged the onus which is cast upon it in terms of the pre-amended Section 68 of the Act by filing the necessary confirmation letters of the creditors, their Affidavits, their full address and their pan. The Tribunal has rendered a finding of fact which is not shown to be perverse. In any event, the question as proposed in law of the obligation to explain the source of the source prior to 1st April, 2013, Assessment Year 2013-14, stands concluded against the Revenue by the decision of this Court in Gangadeep Infrastructure (2017 (3) TMI 1263 - BOMBAY HIGH COURT).

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• 2018 (4) TMI 1003
  Disallowance u/s. 14A restricted to the extent of 10% of dividend - Held that:- The issue of applicability of Rule 8D of the Income Tax Rules 1962 (Rules) as sought by the Revenue for the Assessment Year 2007-08 would have no application. This is so, as this Court in Godrej & Boyce Manufacturing Co. Ltd., v/s. DCIT [2010 (8) TMI 77 - BOMBAY HIGH COURT] has held that Rule 8D of the Rules would be applicable only from the AY 2008-09 onwards. Prior thereto, the disallowance, if any, would have to be on the reasonable basis. In the present facts, the CIT(A) and the Tribunal have restricted the disallowance to the extent of 10% of the dividend on a reasonable basis i.e. for Assessment Year 2007-08.

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• 2018 (4) TMI 1002
  TPA - comparable selection - Held that:- The assessee was engaged in ITES segment thus companies functionally dissimilar with that of assessee need to be deselected from final list. Appeal admitted on the substantial question of law at (b)- Whether on the facts and in the circumstance of the case and in law, the Tribunal was justified in ignoring the comparable company on the ground that the assessee company is functionally not comparable, has accepted Bodhtree Consulting Ltd., as comparable company and also that the said company was selected as a comparable by the assessee itself for the A. Y. 2008-09?

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• 2018 (4) TMI 1001
  Maintainability of Writ petition - alternate remedy of appeal - manner in which objection considered - Held that:- There appears to be no allegation of the violation of principles of natural justice, as the petitioner has been given an opportunity to file their objections to the draft assessment order. What is now agitated before this Court is with regard to the manner, in which, the objections were considered and it is alleged that the finding rendered by the respondent in the impugned assessment order is purely based on surmises and conjectures. However, this challenge is only in respect of two issues, which have been mentioned in the impugned assessment order, as, in respect of other issues, the petitioner itself is in the process of filing an appeal before the Commissioner of Income Tax (Appeals). Thus a piecemeal challenge to the impugned order should not be encouraged, more particularly when factual issues are involved and it is but proper for the petitioner to avail the statutory appeal remedy and not to by-pass the same. This Court finds that this is not a fit case where the discretionary jurisdiction under Article 226 of The Constitution of India should be exercised - writ petition is held to be not maintainable and the petitioner is granted liberty to avail the alternate remedy of appeal before the Appellate Authority

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• 2018 (4) TMI 1000
  Re–opening of assessment u/s 147 - payment of Octroi to BMC allowability - change of opinion - Held that:- While completing the original assessment AO after examining the tax audit report has formed an opinion that the deduction claimed by the assessee on account of Octroi payment is allowable. Thus, in the absence of any fresh tangible material coming to the possession of AO, the re–opening of assessment on re–examination of the very same material on the basis of which the original assessment was completed amounts to re–opening of assessment on a mere change of opinion resulting in review of the decision taken by the AO in the original assessment year is beyond the scope of section 147 - the impugned assessment order passed under section 143(3) r/w section 147 deserves to be quashed. Relying upon the tax audit report, AO has concluded that the amount of 10,50,058 is in the nature of penalty paid to the BMC. However, on a perusal of the tax audit report submitted in the paper book we have noticed that the amount of 10,50,058 has been shown as Octroi payment to BMC and an amount of 11,18,335, has been shown as penalty. Admittedly, the assessee itself has disallowed the penalty of 11,18,335, in its computation of income. Therefore, the material on record clearly establish that the amount of 10,50,058 claimed as deduction by the assessee is not in the nature of penalty. As regards the observations of the Commissioner (Appeals) that the payment pertains to earlier period and secondly assessee in the earlier year has debited the amount to its Profit & Loss account, in our opinion such finding of the learned Commissioner (Appeals) is irrelevant for the impugned assessment year. When the assessee has brought material on record to demonstrate that the demand for Octroi and penalty have been raised by the BMC in the impugned assessment year and assessee has also made such payment in the impugned assessment year, there is no reason why assessee’s claim of deduction should not be allowed in the impugned assessment year. If the assessee has claimed any deduction wrongly in the earlier assessment year then the issue has to be dealt with in the said assessment year and not in the impugned assessment year. Therefore, the deduction claimed by the assessee on account of payment of Octroi to BMC is allowable. - Decided in favour of assessee.

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• 2018 (4) TMI 999
  Treatment to the sales tax subsidy - nature of receipt - revenue or capital receipt - Held that:- As we examine the U.P. Government subsidy scheme under which the assessee has received the sales tax incentive it is to be noted that the purpose of the subsidy scheme is to attract people to invest and take part in industrialization of certain areas in the State. The subsidy scheme nowhere states that it is for the benefit of generating product purchase from the town / district of U.P. As held in case of Ponni Sugars (2008 (9) TMI 14 - SUPREME COURT), if the object scheme was to enable the assessee to set–up a new unit or to expand the unit then the receipt of subsidy was on capital account. The same is the case with the assessee as the U.P. Government subsidy scheme was for enabling the assessee to expand / modernize its existing unit. Therefore,we hold that the sales tax subsidy received by the assessee being a capital receipt is not taxable. This ground is allowed. Disallowance of depreciation on payment made to MSEB for allowing 132KV electric transmission line - Held that:- Initially assessee had claimed expenditure incurred towards payment made to MSEB as revenue expenditure which was disallowed by the Assessing Officer holding it as capital expenditure Commissioner (Appeals) allowed the claim of the assessee. While deciding Revenue’s appeal against the order of the learned Commissioner (Appeals), the Tribunal restored the order of the Assessing Officer on the issue. The learned Commissioner (Appeals) has rejected assessee’s claim of depreciation simply on the reasoning that Tribunal has not issued any such direction. In our view, there is no necessity of Tribunal in directing the Assessing Officer to allow depreciation. Once a particular expenditure is held as capital, consequential benefits attached to such expenditure should automatically follow. That being the case, we direct the Assessing Officer to consider assessee’s claim of depreciation on the payments made to MSEB. Grant of interest under section 244A - Held that:- We find that the learned Commissioner (Appeals), in fact, has directed the Assessing Officer to calculate interest allowable to the assessee under the provisions of the Act. Be that as it may, considering the submissions made before us, we direct the Assessing Officer to verify assessee’s claim and decide the issue in accordance with the relevant statutory provisions. Ground is allowed for statistical purposes. Disallowance of expenditure for allowing transmission line and construction of access road in factory premises at Vizag - Held that:- No reason to interfere with the decision of the learned Commissioner (Appeals) on the issue, since, the nature of expenditure incurred by the assessee has attained finality in view of the decision of the Tribunal holding expenditure as capital in nature. So far as allowability of assessee’s claim of depreciation, the Assessing Officer is directed to comply to the directions of the Tribunal as above.

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• 2018 (4) TMI 998
  Disallowance u/s. 40A(3) - payment to each Trucker, i.e., for each consignment, on any single day, exceeded the prescribed threshold limit - payment shown as made in installments - Held that:- The assessee’s claim that the payment has been made, in each individual case, over the time actually taken to effect delivery (for that consignment), valid in principle, would require being proved by it. This is as it is untenable and nobody’s case that a truck is held up, i.e., after delivery, only to enable discharge of the balance amount in installments, so as to eschew section 40A(3). The arrival of a truck at the assessee’s site or, as the case may be, point/station from where it is routed to its destination, co-opting assessee’s employee in crew (to oversee delivery and make payments in cash installments); its journey across varies tolls/octroi posts/check points on the way; arrival at its’ destination (and weighment - gross and tare); unloading at site; journey back to the assessee’s premises/work station, etc. would all stand to be evidenced. Subject to this factual verification, we approve the assesee’s claim, i.e., in principle. The burden to prove its’ return, and the claims preferred thereby, is only on the assessee (CIT v. Venkataswamy Naidu - (1956 (2) TMI 3 - SUPREME Court). AO shall, accordingly, adjudicate the matter, issuing definite findings of fact, on the basis of the material on record, and after allowing the assessee a reasonable opportunity to substantiate its’ case. Disallowance being 1/7th of the total expenditure under several heads of expenditure, viz. entertainment; langer; festival expenses; labour welfare; etc., incurred in cash and supported by self-made vouchers - Held that:- We find some merit in the case of either party. An expenditure does not become un-genuine merely because it stands incurred in cash. At the same time, cash expenditure per self-made vouchers is not amenable to verification. The two considerations are to be balanced, and the Revenue’s case, as we understand, is one of inflation (of expenditure), which it estimates at 1/7th of the total expenditure. We direct it at 1/10th, and the Revenue gets part relief. Disallowance at the rate of 1/5th of expenditure on vehicles, viz. repair and maintenance, depreciation, etc., on account of personal, i.e., non-business user, which could not be denied in the absence of log records - CIT(A) has reduced it to 1/10th - no cause for interference.

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• 2018 (4) TMI 997
  Penalty u/s 271(1)(C) - unexplained cash credit - Held that:- It is not logical to make addition only in respect of deposits without giving credit to the withdrawals made earlier. Particularly in the absence of any other material suggests that the earlier withdrawals have been spent away. AO has given a credit to the extent of 77,43,204/- relating to the sales amount. On appeal, the Ld.CIT(A) adopted the methodology of amounts deposited within 3 days and withdrawals and accordingly deleted the further addition to the extent of 54,45,920/-. On appeal, the ITAT further granted relief on the basis of estimation and directed the AO to make addition of 5,00,000/-. Ultimately the addition sustained in this case only on the basis of estimation. Therefore, the AO is not able to establish in this case the assessee concealed income by furnishing inaccurate particulars. It is not a fit case to impose penalty u/s 271(1)(C) of the Act. Accordingly, the penalty is deleted and the appeal filed by the assessee is allowed.

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• 2018 (4) TMI 996
  Revision u/s 263 - addition pertaining to expenditure incurred by the assessee - Held that:- AO while passing the order u/s 143(3) has passed the order without calling for the relevant material, without conducting any enquiry simply accepted the income returned by the assessee for the assessment year 2007-08 to 2010-11 and the Ld.Commssioner directed the AO to examine the relevant material and conduct enquiry and passed order in denovo in accordance with law - CIT directed the AO to examine the issue and passed orders accordingly. The AO has examined the issue passed the orders denovo in accordance with law. We find infirmity in the order passed by the AO confirmed by the CIT(A) and accordingly this ground of appeal of the assessee is dismissed. Estimation of income at 12.5% made by the Ld.CIT(A) - Held that:- AO has estimated the income at 27,00,437/- i.e. at 12.5% on 2,16,03,500/-. On appeal, the Ld.CIT(A) has only considered the amounts towards the site purchase payments of 18,87,500/- for the assessment year 2010-11 and estimated at 2,35,938/- at 12.5% on 18,87,500/-. We find infirmity in the order passed by the Ld.CIT(A), this appeal filed by the assessee is dismissed.

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• 2018 (4) TMI 995
  TDS credit - unadmitted accrued income from the scheme - reopening of assessment - method of accounting followed - expenditure claim corresponding to the receipt - Held that:- Assessee has corresponding expenditure on the scheme, which was claimed in the respective assessment years. In case the receipts accounted by assessee in AY. 2006-07 is to be shifted to AY. 2004-05 (impugned assessment year), then the corresponding expenditure has to be correspondingly shifted to AY. 2004-05. Without doing so, it is not correct on the part of the AO to bring gross receipts to tax just because assessee has claimed the TDS on the amounts. Since there is no escapement of any receipts or income over a period of three years and as there is no dispute with reference to the amounts claimed to have been paid to the dealers in the schemes, we cannot appreciate the action of the AO, as confirmed by the Ld.CIT(A), in bringing to tax the gross receipts in this year, without giving benefit of corresponding expenditure. Since assessee has accounted for the amounts over a period of three years on the method of accounting consistently being followed by her, we are of the opinion that there is no need to disturb the P&L A/c. The expenditure claim corresponding to this receipt was more than the income brought to tax, which may result in reducing the originally declared income. Therefore, we are of the opinion that the addition per se is not required to be made - Decided in favour of assessee.

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• 2018 (4) TMI 994
  Calculation of capital gain - cost of acquisition - indexed cost of acquisition - Held that:- Since the property sold is in the vicinity, direct the AO to adopt 900/- per Sq. Yd as cost of land as on 01-04-1981 and deduct ‘indexed cost of acquisition’ thereon to arrive at the Long Term Capital Gain on transfer of 50% of the land in Plot No. 67, admeasuring 327 Sq. Yds. Entitled for deduction u/s. 54F - Multiple units - whether a 'residential house' would include multiple flats/residential units as well? - Held that:- As decided in ITO Vs. Late K. Jaipal, L/R. of Smt. K. Manjula [2015 (11) TMI 1443 - ITAT HYDERABAD] merely because a residential house consists of several independent residential units, deduction under S.54/S.54F could not disallowed. Assessee is entitled for deduction u/s. 54F on all the three flats. Therefore, AO is directed to allow the amount and rework out the capital gains accordingly. Grounds are considered allowed. Working of capital gain - Held that:- Assessee became entitled to three flats, when the development agreement was entered, on which date capital gains on transfer of land was also brought to tax by the AO. Therefore, the rights under the agreement, having been crystalised, the sale of any flat would become Long Term Capital Gain. Not only that, as already discussed in the earlier appeal, for the cost of acquisition as on 01-04-1981, the land value as on 01-04-1981 has been directed to be taken at 900/- per Sq. Yd. Consequently, the sale of undivided share of land would be calculated taking 900/-per Sq. Yd., as the value as on 01-04-1981 and giving ‘cost of indexation’ benefit as per the rules. Even the cost of apartment would be 1/3rd of the cost adopted for transfer of 50% of the land. The value adopted in AY. 2006-07 should be adopted as cost of value and that should be considered while computing the capital gain on the sale of one flat in the impugned year. AO is directed accordingly and assessee’s grounds on this are considered allowed.

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• 2018 (4) TMI 993
  Disallowance of sales tax demand - allowable busniss expenditure - Held that:- We are of the opinion that the amount of sales tax is not in the nature of ‘penalty’ and is allowable as ‘business expenditure’. As relying on Chemical Constructions case [1998 (11) TMI 52 - MADRAS High Court] we are of the opinion that sales tax so levied on assessee is not in the nature of penalty and is an allowable expenditure as per the provisions of the Act. AO is directed to allow the amount. - Decided in favour of assessee Disallowance of bad debts written off - AO disallowed the amount stating that assessee has not taken any genuine effort in collecting the outstanding debts like - writing letters to the above Debtors frequently and sending legal notices - Held that:- The orders of the authorities cannot be upheld on this issue. The provisions of Section 36(1)(vii) have been amended w.e.f. 01-04-1989. The provision has been amended to state that any amount of bad debt or part thereof which is written off as irrecoverable in the accounts of assessee for the previous year is allowable as a deduction. See case of T.R.F. Ltd., Vs. CIT [2010 (2) TMI 211 - SUPREME COURT] - since the amount is written off in the books of account as irrecoverable, we direct the AO to allow the amount.- Decided in favour of assessee Addition towards bad debts provision written back - MAT computation - Held that:- Neither the AO nor the CIT(A) has examined the issue in the correct perspective. If the provision for bad and doubtful debts is not allowed as a deduction in the year in which the provision was made, the same cannot be considered as income in the year in which the provisions were written back. The accounting under the company law stands on a different footing from the computation of income in the income tax proceedings. Since the statement given by assessee and extracted above has not been examined by the AO and CIT(A) [even though they are provided before them], we are of the opinion that this aspect should be examined by the AO and in case the provisions are not allowed in the respective years in the respective computations as explained before us, then, AO is directed not to treat the amounts as income in the year under consideration to that extent. The issue under MAT provisions also is directly covered by Explanation-1 of Section 115JB. Therefore, AO is directed to exclude the amounts from both normal computation and MAT computations, subject to verification that so much of the amount has not been allowed in the year of making the provision. Ground is considered allowed for statistical purposes.

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• 2018 (4) TMI 992
  Reopening of assessment - denying the exemption claimed u/s. 10A and sec.10AA - Authorities below not considering the audit report furnished by the assessee in Form No. 56F during the course of re-assessment order on the premise that the said report was not filed alongwith the return or upto the original assessment order - Held that:- The requisite audit report in form No. 56F was admittedly filed by the assessee in reassessment proceedings, though the assessee has claimed that the said report was also filed in original assessment proceedings, as deposed in the affidavit. The ld. Authorities below appear to have not taken cognizance of the audit report in Form No. 56F, furnished by the assessee in the reassessment proceedings in support of its claim, stating that the assessee failed to furnish any evidence to substantiate that any such audit report was filed in the original assessment proceedings. It is also an undisputed fact that the claim made by assessee stood accepted in original assessment order. This issue is squarely covered in favour of the assessee by the decision of G.S. Pharmbutor Pvt. Ltd. vs. ACIT 2011 (11) TMI 808 - ITAT DELHI) - Decided in favour of assessee

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• 2018 (4) TMI 991
  TDS u/s. 195 - assessee in default - order passed u/s. 201(1) and 201(1A) as barred by limitation - Held that:- The assessee was liable for withholding tax u/s. 195 of the Act in respect of payment made by it for managerial services fees. In the instant case, the financial year concerned is 2006-2007 and notice for initiating proceedings u/s 201(1) / 201(1A) was issued on 30.04.2014, i.e. more than seven years from the end of the financial year. The orders u/s 201(1) / 201(1A) was finally passed on 30.05.2016, which is more than eight years from the end of the financial year. Therefore, it cannot be stated in facts of this case, the order u/s 201(1) / 201(1A) was passed within a reasonable time and the prescription of limitation mentioned u/s 201(3) and (4) - the order passed u/s 201(1)/ 201(1A) was barred by limitation in the facts and circumstances of the case. - Decided in favour of assessee

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• 2018 (4) TMI 990
  Condonation of delay - reasons for delay - sufficient cause for delay - Held that:- Whenever the reasons assigned by an applicant for explaining the condonation of delay, then such reasons are to be construed with a justice oriented approach If we look the explanation of the assessee, it reveals that the assessee could not afford to make its appeal time-barred knowingly. The delay in filing the appeal happened on account of communication gap between the management as well as part-time accountant, who has collected copy of the order from the tax consultant office and subsequently left the job. In the present case, by making the appeal time barred, the assessee would not achieve anything. It is also to be seen that a possible human negligence will put the assessee with tax liability of substantial sum along with penalty. In view of the above, we condone the delay in filing the appeals before the learned CIT(A) and set aside the impugned orders. We, therefore, remit these proceedings before learned CIT(A) for adjudication on merits. - Decided in favour of assessee.

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• 2018 (4) TMI 989
  TDS liability on management charges paid - additions u/s 40(a)(i) - fee for technical services - Held that:- The tribunal in assessee's own case had decided the issue in favour of the assessee by following the judgment of Hon’ble Delhi High Court in the case of Herbalifc International India P.Ltd. (2016 (5) TMI 697 - DELHI HIGH COURT) as held Section 40 (a) (i) of the Act is discriminatory and therefore, not applicable in terms of Article 26 (3) of the Indo-US DTAA. The object of article 26(3) of the Double Taxation Avoidance Agreement was to ensure non-discrimination in the condition of deductibility of the payment in the hands of the payer where the payee is either a resident or a non-resident. That object would gel defeated as a result of the discrimination brought about qua non-resident by requiring the tax to be deducted at source while making payment of fees for technical services in terms of section 40(a)(i) of the Act - decided in favour of assessee

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• 2018 (4) TMI 988
  TDS liability to be deductible u/s 194J or 194C - short deduction of tds on administrative fee - assessee in default - Held that:- AO while framing the order under section 143(3) read with section 144C dated 31.03.16 disallowed the payments to Lobo Staffing Solutions Pvt. Ltd. under section 40(a)(ia) and added the same to the income of the assessee. The Dispute Resolution Panel directed the AO to make the deletion by holding that the payments to Lobo Staffing Solutions Pvt. Ltd. were a contractual payments and not professional fee and therefore TDS is not required to be made under section 194J. Merit in the contention of the A.R. that even if the payment to the said company by way of administrative fee of 45,42,411/-was liable for TDS u/s 194J of the Act, the assessee has deducted TDS of 44,17,617/- which constitute 97% of the administrative fee. Hence, there is no short deduction of TDS from administrative fee. Thus as regards non deduction of TDS on the reimbursement of expenses, we are inclined to set aside the order of Ld. CIT(A) and hold that there is no short deduction of TDS and hence there is no default under section 201(1) of the Act. Consequently, there can not be interest under section 201(1A) of the Act. - Decided in favour of assessee

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• 2018 (4) TMI 987
  Addition u/s 40(a)(ia) - non deduction of TDS on the payments made to non banking finance companies towards interest on loans - Held that:- The provisions of tax deduction at source are applicable to the interest payments made to NBFCs as these companies are not excluded from the application of provisions of section 193 and 194 of the Act. However, in view of the 2nd proviso to section 40(a)(ia) of the Act, we are of the view that if the payees of the interest i.e. the above stated NBFCs have disclosed the said income in their respective returns of income and paid income tax as per the applicable provision of law then there was no requirement of deduction of tax at source as the payees have paid the tax on the said receipts and the assessee can not be treated as assessee in default. Thus this matter needs further examination and verification at the level of the AO whether the payees have disclosed these payments as receipts in their respective returns of income. - Decided in favour of assessee for statistical purposes. Addition u/s 40A(3) on account of cash payments exceeding 20,000/- - Held that:- Having examined the issue in depth and after looking to the facts and circumstances and nature of purchases, we are of the view that assessee should be given one more opportunity to bring out and forth circumstances necessitating the cash payments for the purchase of sand/water and the issue should be decided denovo. Accordingly, we set aside the issue to the file of the AO with a direction to decide the matter - Decided in favour of assessee for statistical purposes. Expenditure on account of refundable deposit to BMC and MHADA - revenue or capital exp - Held that:- CIT(A) has examined the issue at great length and reached a conclusion that the said deposits were given wholly and exclusively for the purpose of business of the assessee and are not capital of nature and covered under the provision of section 37(1) of the Income Tax Act. Having perused and examined the materials on record, we are in complete agreement with the Ld. CIT(A) that the said finances/deposits are wholly and exclusively for the purpose of business and are admissible. Therefore, we are inclined to affirm the order of Ld. CIT(A) on this issue - Decided against revenue Accepting the loss incurred by proprietary concern namely, S.D. Hospitality (Restaurant) - assessee does not maintain consumption register and has shown different ratio of consumption of materials for different restaurants - Held that:- Perusal of assessment order reveals that AO has not pointed out any specific defect in the consumption but made a general observation that in absence of consumption records, the consumption can not be relied. The issue has been examined in depth by the Ld. CIT(A) and recorded a conclusion that entire purchases were vouched and therefore, the consumption of materials cannot be doubted and thus allowed the appeal. Since there is no infirmity in the order of the Ld. CIT(A), the same is hereby affirmed on this issue by dismissing the ground raised by the Revenue. Bogus and non genuine purchases - CIT-A deleted the addition admitting additional evidence - Held that:- Addition was deleted by the Ld. CIT(A) after verifying the evidences filed by the assessee which were not filed before the AO despite sufficient opportunities being given to the assessee. The Revenue has also challenged that this has caused a contravention of rule 46 and AO has not been afforded opportunity to examine these documents as furnished by the assessee. Under these circumstances, we are of the view that the CIT(A) clearly erred in not confronting the evidences to the AO and therefore of the view that AO should be given an opportunity to examine these records and documents as filed before the Ld. CIT(A). - Decided in favour of revenue for statistical purposes. Addition on adhoc basis in respect of various expenses incurred in cash when the assessee failed to produce the necessary supporting evidences - Held that:- Disallowances to the tune 8,52,725/- on account of various expenses were made purely on adhoc basis without pointing out any specific defect in the books of accounts except the general observation that there were no bills and vouchers for some expenses. We find that a general observation made by the AO that cash bills in respect of various expenses were not produced by the assessee is not sufficient to justify the adhoc disallowance. - Decided against revenue Applicability of section section 40(a)(ia) on assessee trust registered under section 12A and 80G - Held that:- As in view of the 2nd proviso to section 40(a)(ia) of the Act, we are of the view that if the trust has shown the receipts in its income and dealt with this income as per the provision, then the assessee can not be treated as assessee in default as regards non deduction at source are reached and the payment has to be allowed to the assessee but the same requires verification at the end of AO. Accordingly, we restore the issue to the file of the AO with a direction to see whether the case is covered under 2nd proviso to section 40(a)(ia) of the Act and decide the issue afresh Addition of deemed ALV of vacant flats which are lying in the stock in trade of the assessee’s books of account - Held that:- The issue is squarely covered in favour of the Revenue by the decision of Hon’ble Delhi High Court in the case of Ansal Housing Finance & Leasing Co. Ltd. (2013 (7) TMI 776 - DELHI HIGH COURT) wherein it has been held that even in the case of unsold flats held in stock in trade the income has to be assessed by way of deemed rent.

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• 2018 (4) TMI 986
  Revision u/s 263 - fault in share capital raised by the assessee company - assessment u/s 153A - Held that:- The sheet anchor on which the Principal CIT based his foundation to find fault with the AO is emanating from the second search which happened on 02.03.2016 based on which investigation report has been made wherein the share capital raised by the assessee company for Assessment Year 2009-10 is under suspicion/cloud. Principal CIT refers to the second search which happened on 02.03.2016 and the investigation report thereafter made by the investigation wing which is subsequent and obviously a development after framing the assessment order by the Assessing Officer dated 30.03.2015. AO cannot be said to be a clairvoyant, who could have forecasted or foreseen that a second search would take place on 02.03.2016 and thereby some material/oral/evidence would be collected by the investigation wing a year before i.e. on 30.03.2015 when the assessment order was framed by AO after the fallout of first search conducted on 29.05.2012. It is not the case of the Principal CIT that Assessing Officer failed to take into consideration any incriminating material unearthed during first search on 29.05.2012 and has failed to make any investigation on it or make any additions / disallowances thereon. The case of the Principal CIT is simply that during second search on 02.03.2016, the investigation wing has found fault with the share capital raised by the assessee company for Assessment Year 2009-10. It should be noted that the Assessing Officer has framed assessment u/s 153A on 30.03.2015 as per the law laid down by the Hon ble Delhi High Court in the case of CIT vs. Kabul Chawla (2015 (9) TMI 80 - DELHI HIGH COURT) and other High courts/Apex Court as stated above which according to us is the correct view or at the most can be definitely termed as a plausible view. Therefore, the view taken by the Assessing Officer cannot be held to be erroneous order and prejudicial to the interest of the revenue as held by the Hon ble Supreme Court in the case of Malabar Industries vs. CIT (2000 (2) TMI 10 - SUPREME Court). - Decided in favour of assessee

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• 2018 (4) TMI 985
  TDS u/s 194C - Non deduction of tds on Inland Haulage for export consignment payment - Held that:- Payments are in the form of reimbursement and no payments have been made directly by the assessee to shipping companies, therefore, assessee is not liable to deduct TDS. The assessee produced documentary evidences in support of the same contention which have not been rebutted by the authorities below. Since the amount in question were towards the reimbursement of the exact amount which have been paid to the shipping companies and others, therefore, assessee is not liable to deduct TDS. - Decided in favour of assessee Disallowance of freight payments to Consignment Agents without deduction of TDS - Held that:- These payments are freight payments to Consignment Agents. The services of various Consignment Agents are undertaken by assessee who incurred the expenses in connection with sales which are then reimbursed to them or deducted from the gross amount of sales. The actual payment of freight charges are made by the Consignment Agents. The assessee would get the sale proceeds net of these expenses. The Ld. CIT(A) was, therefore, justified in holding that freight payments are made by the Consignment Agents only and even the assessee may not aware of different transporters, shipping agents, therefore, it would impossible for assessee to deduct TDS on such payments. - Decided in favour of assessee Disallowance of certain expenditure claimed as revenue expenditure - Held that:- Since the cost of the packing was not included in the cost of D.G. set and it was spent for bringing the generator set to the premises of the assessee, it was incurred wholly and exclusively for the purpose of business. Therefore, it was rightly held to be revenue in nature. Further, out of packing no assets have been created in favour of the assessee. The other amount was incurred by assessee for upgradation of software or installation charges or better internet connectivity for business purposes. Therefore, same are revenue in nature. The Ld. CIT(A) on proper appreciation of facts and material on record, correctly deleted the addition - Decided in favour of assessee Disallowance of prior period expenses - Allowable expenditure - Held that:- The assessee has given details of entire expenses which is reproduced in the appellate order which shows that the bills have been received in assessment year under appeal and settled. The liabilities to pay these expenses have, therefore, crystalized during assessment year under appeal. Same practice has been followed in earlier year, on which, expenses have been allowed by the Department. Therefore, rule of consistency also applies against the Revenue. Further, whether expenses are allowed in this year or in earlier year, it is not reported as to if revenue has been deprived of any tax. Therefore, it is a mere tax neutral exercise and such expenditure are allowable in assessment year under appeal. - Decided in favour of assessee Disallowance of general repair and maintenance expenses - Held that:- No merit in this ground of Revenue. the Ld. CIT(A) correctly appreciated the fact that for repair and maintenance, assessee has to engage labour for which details are maintained. Learned Counsel for the Assessee pointed out to various documents in the paper book to show that same are properly vouched. Since the expenditure were incurred wholly and exclusively for the purpose of business, therefore, the same were correctly allowed as deduction. - Decided in favour of assessee Disallowance of bad debts - Held that:- the loss is incidental to the business of the assessee which were written off in the books of account as irrecoverable. Therefore, it was correctly allowed as business loss by the Ld. CIT(A). - Decided in favour of assessee Addition on account of unexplained, unsecured loans/trade deposits received by assessee and disallowance of interest relating thereto - A.O. made the addition because income of these parties were very less and assessee has failed to establish the genuineness of the transaction - Held that:- We find that out of these six creditors, two are common in the preceding assessment years, in which, Ld. CIT(A), deleted the addition. It is not reported if the order of the Ld. CIT(A) for earlier year have been reversed. The A.O. merely did not accept the explanation of assessee because of the income of the parties are very less. However, the A.O. has forgot to note that some of the parties are trade creditors from whom security have been taken for making sales to them and in other cases, the assessee has specifically pleaded that they have sufficient amount in their books of account and bank to make investment in assessee-company. Therefore, the Ld. CIT(A), on proper appreciation of facts and material on record, correctly deleted the addition because assessee has proved the identity of the creditors, their creditworthiness and genuineness of the transaction in the matter. - Decided in favour of assessee Disallowance of expenses incurred through credit cards - Held that:- The assessee explained that credit card facilities were provided to the Directors only facilitating payment of expenses to be made on behalf of the company. The details of same were filed, which have not been disputed by the authorities below. The expenses are, therefore, incurred wholly and exclusively for the business of the assessee-company. Copy of the ledger account is also filed in the paper book to support the findings of the Ld. CIT(A). In earlier year, the Ld. CIT(A), deleted the similar addition on which nothing is brought to our notice if the findings of the Ld. CIT(A) in earlier year have been reversed.- Decided in favour of assessee Disallowance of interest on bank held same to be capital in nature - Held that:- The proviso to Section 36(1)(iii) is applicable only to interest paid in respect of capital borrowed for acquisition of asset for extension of existing business. The generator by nature itself is always ready for functioning. Therefore, Learned Counsel for the Assessee, rightly contended that generator was for running the existing business more efficiently. Thus, generator cannot be for the extension of the business. Therefore, disallowance was wholly unjustified. The assessee, thus, paid interest on Bank loan for capital borrowed for business purpose. Therefore, the same was an allowable deduction. We, therefore, set aside the orders of the authorities below and direct the A.O. to allow deduction of the interest under section 36(1)(iii) - Decided in favour of assessee Disallowance of expenditure booked on account of writing-off of security deposit paid to Haryana State Electricity Board (“HSEB”) - Held that:- When the amount is adjusted against the electricity bill, it was clearly revenue in nature. Since the Electricity Board intimated to assessee of the adjustment in this assessment year under appeal, therefore, the expenditure is crystalized in assessment year under appeal. Therefore, it was correctly treated as revenue expenditure by making relevant book entries in the books of account. The Ld. CIT(A), therefore, correctly deleted the addition. - Decided in favour of assessee Disallowance of excess depreciation - Held that:- No merit in this ground of appeal of the Revenue. The assessee pointed out to the Ld. CIT(A) that there is a mistake in calculation of disallowance which was accepted by the Ld. CIT(A) after verifying the facts. No material is produced before us to show any infirmity in the finding of the Ld. CIT(A) to that extent. As regards the depreciation claimed on SS Pipe Plant, assessee pleaded that it was installed on 29.02.2008 and was put to use and same facts could be verified from Excise record. No material is produced before us to rebut the finding of fact recorded by Ld. CIT(A). - Decided in favour of assessee Addition on account of sales tax incentive receivable - Held that:- The assessee received letter from Sales Tax authorities on 10.11.2008 intimating the assessee that he was entitled for refund. The assessee, thereafter, made a claim of refund on 21.09.2009 and according to the explanation of assessee, the amount of refund depends upon various calculations like rebate/interest etc., which may change the quantum of refund. Therefore, assessee would be knowing of the exact amount of refund due to assessee only on actual calculation made in this behalf. Therefore, the refund would depend upon the claim made by the assessee which was made in subsequent A.Y. 2010-2011. The receipt of the amount in question is finally crystalized in A.Y. 2010-2011 which have been correctly offered for tax in A.Y. 2010-2011 which have been assessed by the A.O. also in the order under section 143(3) of the I.T. Act. Therefore, no double addition should be made against the assessee.- Decided in favour of assessee Addition of discount allowed to foreign buyer - Held that:- Both the parties conducted the transaction through their respective Bankers and the genuineness of the transaction have not been doubted. The assessee produced confirmation from the party as well as other material on record to support the transaction that because of the discount offered, the assessee was able to sell the goods and to receive the payment. Therefore, there were nothing unusual in the transaction. No evidence of any collusive transaction have been brought on record. Merely because no formal agreement or MOU to offer discount has been filed, would not disentitle the assessee to claim the discount.- Decided in favour of assessee Disallowance of labour and staff welfare expenses - assessee has made payment to Hindustan Refrigeration for purchase of water cooler which were debited to labour and staff welfare expenses - Held that:- The purchase of water cooler is office equipment and was correctly treated as capital in nature. The assessee has not explained as to how the purchase of water cooler would be considered as business expenditure. The assessee failed to explain that it was a business expenditure incurred wholly and exclusively for the purpose of business. Therefore, Ground of the cross objection of the assessee is dismissed.

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• 2018 (4) TMI 984
  Bogus purchases - profit determination - Held that:- Following the order of the Tribunal for the Assessment Year 2011-12, we sustain the order of the Ld.CIT(A) for the Assessment Years 2009-10 and 2012-13 in adopting the profit element at 8% on Garden Item Trading segment and 12.5% on Garden Maintenance Contract segment in estimating the profit element on the purchases made by the assessee. Thus the addition as estimated by the Ld.CIT(A) is confirmed. Grounds raised by the Revenue are rejected.

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• 2018 (4) TMI 983
  Estimation of sales and net profit - filing return u/s 44AD - non maintenance of books of accounts - Held that:- Assessee filed its return of income under section 44AD and therefore, is not required to maintain any books of accounts qua his proprietary business done by M/s. Riddhi Sidhi Textiles as the total sales were less than 18,61,745/-. The assessee also filed the bank statements before the authorities below and the authorities below have failed to bring anything on record which proved that the assessee has actually made the sales of 86,71,625/- though the profit in the immediately preceding year was much higher. AO also failed to rebut the contentions of the assessee that the said stock was duly showed in the subsequent years and also the sales thereof. When no books of accounts are maintained by the assessee and return is filed under section 44AD of the Act, we are not in a position to sustain the order of Ld. CIT(A) estimating the sales which has no basis at all. Moreover, the AO has also not brought on record any evidences that assessee’s income was more than 8% during the year. - Decided against revenue.

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• 2018 (4) TMI 982
  Granting deduction u/s 10B - scope of manufacturing activities - Held that:- The assessee was given deduction u/s 10B of the Act by the revenue commencing from Asst Years 2003-04 to 2010-11. In fact based on the assessment framed for the Asst Year 2011-12, the assessments for the earlier years were reopened wherever possible, based on the same reasoning given in Asst Year 2011-12, and in the re-assessments completed, the ld AO had granted deduction u/s 10B of the Act to the assessee. Hence we hold that the very basis on which the ld AO had held that assessee is not a manufacturer and consequentially not eligible for deduction u/s 10B of the Act stands nullified by his own re-assessment orders passed for the Asst Years 2007-08, 2008-09 and 2010-11. For the Asst Year 2009-10, though the AO again took a different stand and denied the benefit of deduction u/s 10B of the Act to the assessee, the same was duly granted to the assessee by the ld CITA vide his order dated 24.6.2016. The ld AR stated that this order of ld CITA has been accepted by the revenue by not preferring further appeal to this tribunal. Hence the very basis or foundation on which the ld AO denied the benefit of deduction u/s 10B of the Act stood nullified by his own orders or the order of his higher authority. These facts were not controverted by the revenue before us. The facts for the year under appeal are not different from the earlier years wherein relief was granted to the assessee. Assessee is indeed entitled for deduction u/s 10B of the Act for the Asst Year 2011-12 also and the same has been rightly granted by the ld CITA and accordingly we do not deem it fit to interfere with the order of the ld CITA. Accordingly, the grounds raised by the revenue are dismissed.

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• 2018 (4) TMI 981
  Long Term Capital Gains being earned on the sale of scrips disallowed - sale considered as a sham transaction and the LTCG was treated as income from undisclosed sources - Held that:- It is an admitted fact that the brokers replied to the notices sent by the A.O. and confirmed the impugned transactions. Moreover, Pravin Kumar Agrawal of P.K. Agrawal & Co. (broker) in his affidavit dated 19.12.2006 has solemnly affirmed the transaction which are exhibited at pages 141 of the paper book. A.O. has not said anything adverse insofar as the affidavit of Shri P.K. Agrawal is concerned, nor the A.O. has made any specific enquiry in respect of the share transactions done by the assessee. The A.O. has simply relied on the survey report which was in context of survey u/s. 133A of the Act conducted in the case of Ahilya Commercial Pvt. Ltd. and P.K. Agrawal on 28.12.2004 by the revenue authorities of Kolkata. Assuming that the brokers may have done some manipulation but the assessee cannot be held liable for the Act of the brokers when the entire transactions have been done through banking channels duly recorded in the Demant accounts with a Government depository and traded on the stock exchange. The entire assessment is based upon the conclusion of the DDIT (Inv.) Kolkata and there is no application of mind by the A.O. Moreover, the A.O. had no access to the materials impounded by the Investigation Wing of Kolkata, the A.O. was simply carried away by the reports of the DDIT (Inv.), Kolkata without making any independent decision. There is also nothing on record which could suggest that the assessee gave cash and purchase cheque from the alleged brokers. The entire assessment is based on conjectures and surmises and therefore cannot stand on its own leg. - Decided against revenue

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• Customs

• 2018 (4) TMI 980
  Recommendation for Imposition of safeguard duty - import of Solar Cells - validity of preliminary findings notice - Maintainability of petition - Jurisdiction of High Court to entertain the petition - Principles of Natural Justice - Held that: - it cannot be contended that this Court has no jurisdiction to entertain the Writ Petition. The petitioner has also established that they are having their office at Chennai. Further, the respondents were not in a position to establish that the petitioner is not having any office at Chennai. Therefore, it cannot be stated that this Court is not having jurisdiction to entertain the present Writ Petition - the Writ Petition filed by the petitioner is maintainable before this Court. Section 8B of the Customs Tariff Act, empowers the Central Government to impose Safeguard Duty. The imposition of duty vests with the Central Government and not with the 2nd respondent. On a reading of Section 8B(1) and 8B(2), it is clear that the provisions does not contemplate taking of the views from any party and it is based on the subjective satisfaction of the Central Government and the preliminary findings given by the 2nd respondent will only constitute a material, based on which the provisional duty is imposed. The respondents themselves have stated that the duty of the 2nd respondent, with regard to the provisional Safeguard Duty as well as the definite Safeguard Duty, is only recommendatory and is not binding on the Central Government. By the impugned notice dated 05.01.2018, the 2nd respondent had made certain preliminary findings and forwarded the same to the Government. Further, in the impugned proceedings dated 05.01.2018, the 2nd respondent has stated that a public hearing will be held in due course before making a final determination, for which the date will be informed separately - no prejudice would be caused to the petitioner for the reason that they will be given opportunity to make their submission before the Authority on the issues involved in the matter. At the time of making a final determination, the petitioner's views should be obtained and an opportunity of personal hearing should be given to them to make their submissions - petition dismissed.

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• 2018 (4) TMI 979
  Foreign Trade Policy (FTP) - Incremental Export Incentivisation Scheme (IEIS) - N/N. 43(RE-2013)/2009-2014 dated 25th September, 2013 - whether clause (i) incorporated in paragraph 3.14.5.(c) poses an upper limit of benefit under the IEIS for the year 2013-14 or in view of clause (ii), and on interpretation of paragraph 3.14.5.(c) claims in excess to this value would be subjected to greater scrutiny by the Regional Authority? Held that: - A Division Bench in the case of T.T. Ltd. Vs. Union of India & Anr. [2016 (1) TMI 418 - DELHI HIGH COURT] had upheld constitutional validity of the Notification Nos.43(RE-2013)/2009-2014 and 44(RE2013)/2009-2014 both dated 25th September, 2013 adding sub-para to paragraphs 3.14.5 (c) and 3.14.4 (c) to the Foreign Trade Policy 2009-14, albeit had stated that in view of sub-paras (ii), added to paragraph 3.14.4 (c) and 3.14.5 (c) vide Notification Nos. 43(RE-2013)/2009-2014 and 44(RE-2013)/2009-2014 the claims could not have been rejected without assigning any reason - In terms of clause (ii), the Regional Authority was required to pass a reasoned order after application of mind on the contents of the applications. Direction was accordingly given to the Regional Authority to pass a speaking order within 8 weeks. Petition allowed with a direction to the Regional Authority to examine the case of the petitioner for grant of export incentive and pass a reasoned and speaking order.

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• 2018 (4) TMI 978
  Maintainability of refund claim - doctrine of unjust enrichment - denial on the ground that it did not fulfill the conditions contained in the N/N. 46/2011 - whether refund claim is maintainable, without challenging the order of assessment passed by the assessing authority? - whether the doctrine of unjust enrichment is applicable to the facts of this case, for denying the refund benefit to the appellant? Held that: - rejection of refund application by the authorities below, on the ground that the assessment order has not been challenged, cannot be sustained - there is specific mention that the appellant had shown the excess paid customs duty in its books of account, under the head “Excess Custom Duty Paid – Refundable”. There is no ambiguity in the said statutory provision, in vogue at present, that order of assessment has to be challenged and thereafter, as a consequence of favourable adjudication, the refund claim has to be filed and to be entertained by the Department - It transpires from the said findings of the original authority that the doctrine of unjust enrichment is not applicable in the case of the appellant, for denying the refund benefit to it. Appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 968
  100% EOU - Empty drums after use of the inputs were sold by the appellants in DTA - suitable for repeated use - Department took the view that such clearances will attract customs duty in view of condition No.4(b) N/N. 52/2003-Cus. as amended - whether the drums in which the inputs have been imported are suitable for repeated use? - Held that: - the empty drums have been sold only as scrap to merchants and to their employees. For the purpose of the notification the test of being suitable for repeated use , in our view, is whether the drums are being reused for containing and transporting the very same goods in which they had initially arrived. There is no such allegation or evidence brought forth. Benefit of notification remains allowed - appeal allowed - decided in favor of appellant.

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• Insolvency & Bankruptcy

• 2018 (4) TMI 1008
  Corporate Insolvency Resolution Process - winding up initiated already - Held that:- Learned counsel appearing on behalf of Appellant accepts that Hon’ble High Court has already initiated winding up proceedings by admitting the application under Section 433(e) of the Companies Act, 1956. In view of such positon and observations made by this Appellate Tribunal in aforesaid appeals, we hold that the application under Section 9 was not maintainable. For the said reason we are not inclined to interfere with the order passed by the Adjudicating Authority.

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• Service Tax

• 2018 (4) TMI 976
  Writ of mandamus directing the respondents herein to issue a certified copy of the order-in-original No.47 of 2011 dated 26.05.2011, so as to enable the appellant to file an appeal under the provisions of the Central Excise Act, 1944 - non service / communication of the order-in-original - Held that: - Order-in-original is of the year 2011. No prejudice would be caused to the respondents, if a fresh certified copy of the same is furnished. Inasmuch as the appellant had already received the copy of the order-in-original No.47 of 2011 dated 26.05.2011, as early as on 15.09.2011, it is made clear that limitation would commence only from 15.09.2011 and not from the date of receipt of another certified copy of the order-in-original No.47 of 2011 dated 26.05.2011. In the light of availability of an alternate remedy, order-in-original No.47 of 2011 dated 26.05.2011, cannot be set aside - appeal dismissed - decided against appellant.

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• 2018 (4) TMI 975
  Pre-deposit - appeal dismissed as time barred - Held that: - the petitioner effected the predeposit on 01.7.2016, which is admittedly within the period of 30 days from the date, on which, the petitioner received the copy of the Order in Original. That apart, the appeal was filed on 06.7.2016 before the wrong forum - The stand taken by the petitioner stood vindicated after the office of the Commissioner of Central Excise and Service Tax (Appeals), Large Tax Payers Unit realized that the appeal has been presented before the wrong forum and hence, forwarded the same to the respondent. Thus, for all practical purposes, the date of filing should be taken as 06.7.2016. If the same is reckoned, the appeal is well within the period of limitation. The matter is remanded to the respondent to decide the appeal on merits - appeal allowed by way of remand.

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• 2018 (4) TMI 974
  Voluntarily Compliance Encouragement Scheme, 2013 - rejection of declaration on the ground that there is no power vested with the authorities for weaving or relaxing the condition of payments stipulated under Section 107 of the Finance Act, 2013, for obtaining the benefits provided therein - Held that: - It is an admitted fact on record that the appellant did not comply with the conditions provided in the VCES, 2013 inasmuch as the tax due alongwith interest was not deposited within the stipulated time frame provided therein. Since the authorities functioning under the statue are guided by the dictates under the statue, they cannot interpret the provisions of the statutory scheme differently, in order to relax the conditions prescribed in the scheme - rejection of the VCES declaration upheld. Demand of interest - Held that: - Since the retrospective Validation amendment to levy the service tax on the taxable service on renting of immovable property was introduced by the Finance Act, 2010, w.e.f 01.07.2010, the interest demand should only be confined to the date of introduction of such levy i.e. 01.07.2010 - the interest charged by the designated authorities from 01.06.2007 cannot be sustained and the appellant will be liable to pay interest only from 01.07.2010. Appeal allowed in part.

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• 2018 (4) TMI 973
  Adjustment of excess service tax - main allegation in the SCN is that the appellants are not entitled to adjust the excess amount of service tax paid - time limitation - Held that: - the appellant vide the said letter dated 3.3.2006 has specifically stated that the excess payment of service tax of 40,02,782/- shall be adjusted against their future liability on taxable services during the current financial year. The department was fully aware that the appellant have adjusted the payment of service tax excess paid by them during the subsequent month but inspite of that the department did not issue any show-cause notice for more than three years and finally a SCN was issued on 21.12.2009 seeking demand of service tax for the period from 01.04.2006 to 31.03.2008 by invoking the extended period. The entire demand in the present case is barred by limitation of time - appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 972
  Refund claim - relevant date - whether the relevant date is the date of invoice, date of Foreign Inward Remittance Certificate (FIRC) or the ends of the quarter for which the refund pertains? - Held that: - This issue has been considered by the Larger Bench of this Tribunal in the case of Commissioner of Central Excise & Service Tax, Bengaluru Vs. Span Infotech India Pvt. Ltd. [2018 (2) TMI 946 - CESTAT BANGALORE], where it was held that in respect of export of services, the relevant date for purposes of deciding the time limit for consideration of refund claims under Rule 5 of the CCR may be taken as the end of the quarter in which the ARC is received, in cases where the refund claims are filed on a quarterly basis. For the purpose of refund under Rule 5 of CENVAT Credit Rules, the relevant date should be taken from the end of the quarter for which the refund pertains. Appeal dismissed - decided against Revenue.

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• 2018 (4) TMI 971
  Simultaneous Penalty u/s 76 and 78 - non-discharge of service tax due to ignorance - whether the appellant was liable for penalty under Sections 76 & 78 of the Finance Act, 1994? - Held that: - Section 78 was amended by Finance Act, 2008 w.e.f. 10.5.2008. If the penalty is imposed under 78, no penalty should be imposed under Section 76 - the appellant is only liable for penalty under Section 78 and not under Section 76 simultaneously - appeal allowed in part.

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• 2018 (4) TMI 970
  Rectification of Mistake - Tribunal in final order dated 18/08/2017 in paragraph No. has recorded that the first appellate authority has recorded in paragraph No. 8 that appellant had not filed any reply to the notice but also did not appear to lead defence in spite of several opportunities granted - Held that: - There seems to be error an apparent on the face of the record in final order No. A/89451/17/ SMB dated 18/08/2017 - The application filed by the Revenue for recall of the order, needs to be allowed and the final order dated 18/08/2017 recalled and direct the Registry to list the appeal to its original number and list the same for final disposal - Application for rectification of mistake is allowed.

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• 2018 (4) TMI 969
  Validity of SCN - time limitation - whether the Commissioner (Appeals) have rightly held that the show cause notice was bad for invoking of extended period of limitation? - Held that: - Section 9 of the General Clauses Act 1897 provides section applies to all Central Acts made after 3 January, 1868 and to of regulations made after the 14th day of January, 1887 - this ground is not tenable as there are provisions in the Finance Act for the purpose of calculation of limitation. The learned Commissioner (Appeals) have set aside the Order-in-Original both on the ground of limitation and also finding the same to be non-speaking and cryptic. Appeal dismissed - decided against Revenue.

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• 2018 (4) TMI 967
  CENVAT credit - input services - Rent a cab service - Courier service - Mandap keeper service - Catering service - Held that: - any activity relating to business of manufacture would fall within the definition of input service. Rent a Cab services were availed for picking up and dropping of the employees of the company - catering services were used for providing Canteen facilities for the employees. These services were not excluded prior to 01.04.2011 - Mandap keeper services were availed to conduct the programs of the Company - Courier services were availed for the dispatch of the goods upto the depot or to dispatch the goods directly to the customer’s premises. Credit allowed - appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 966
  CENVAT credit - input services - insurance service (health insurance policy and the group mediclaim insurance policy of the company staff and employees) - Held that: - Whether the policy covers the entire family with the single premium or whether separate premium has been paid for each dependent has to be verified. The ld. counsel has not been able to produce any document in this regard - it is fit to remand the matter to the adjudicating authority to analyse the issue afresh after verification of the documents produced by the appellant - appeal allowed by way of remand.

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• 2018 (4) TMI 965
  Construction of Complex Service - construction of residential houses for Rajasthan Housing Board, Jodhpur - extended period of limitation - Held that: - There were divergent views with regard to tax ability of works contract service and matter was finally resolved by the judgment of Hon’ble Supreme Court in the case of Larsen & Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT]. The period of dispute is from 2006-07 to 2009 -10 and the SCN was issued on 20.10.2011 - The allegation cannot be leveled against the appellant that it had indulged into the activities of fraud, collusion, willful, mis - statement etc., with intent to evade payment of Service Tax. Since, the said ingredients mentioned in proviso to Section 73 (1) of the Finance Act, 1994 are absent, the adjudged demand should only be confined to normal period only and the extended period of limitation cannot be invoked for confirmation of the said adjudged demand. Demand set aside - appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 964
  CENVAT credit - duty paying documents - denial for the reason that taxpaying documents relating to the period prior to taking centralized registration, for the period during which are particular branch was not registered - Held that: - in the case of Manipal Advertising Services Versus CCE, Mangalore [2009 (10) TMI 434 - CESTAT, BANGALORE], wherein the Division Bench of this Tribunal held under the similar facts and circumstances, where credit was availed on invoices issued in the name of branch offices, denied by Revenue as the assessee had not included the same under centralized registration. It was held that there being no dispute that assessee having centralized billing and accounting system at Manipal and said office was registered and Service Tax liability was discharged from the centralized registered office and the documents on which Cenvat credit was taken and payment was made from the premises of centralized registration. It was held that the credit was allowable - credit allowed. CENVAT credit - Documents (telephone and mobile bills) in the name of others/ or other address - Rule 4A of Service tax Rules read with Rule 9 of Cenvat credit Rules, 2004 - Held that: - the telephone services relating to the necessity of business of the appellant, thus Service Tax paid by the appellant by way of reimbursement to its employees, the credit was properly allowable - credit allowed. CENVAT credit - denial on the ground that appellant did not produce the relevant documents in support of the credit - Held that: - this ground is vague as there is no list of invoices and/or entries in the Cenvat credit register, which are sought to be denied - this ground is allowed by way of remand with a direction to the Adjudicating Authority to give the list of relied upon documents in support of this amount and/ or the details relating to this amount, so that the appellant can meet the objection of the Revenue - matter on remand. CENVAT credit - credit being taken on E-bills/Xerox Copies of Bills - Rule 9 of Cenvat Credit Rules, 2004 - Held that: - From perusal of Rule 9 of Cenvat Credit Rules, 2004, it states that the Cenvat credit shall be taken by the manufacturer or the provider of output service or input service distributor, as the case may be, on the basis of any of the named documents like invoices, a supplementary invoice, bill or challan issued by a provider of output service in terms of provisions of Service Tax Rules, 1994 - rules does not mandate that credit can only be availed in respect of original bills - credit allowed. CENVAT credit - transportation of diesel to the telephone towers of the clients - Held that: - The appellant is entitled to reimbursement of such amount from the principal being expenses incurred for carrying the diesel from the petrol pumps to the mobile towers - the said services are an essential input service for rendering the output service of maintenance of mobile towers - credit allowed. CENVAT credit - No correlation/ improper Bills for Maintenance of Xerox Machine/ Outdoor catering Taxi - Held that: - whole issue of 37,882/- remanded to the Adjudicating Authority, to be considered after giving adequate opportunity to the appellant in accordance with law. Appeal allowed in part and part matter on remand.

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• 2018 (4) TMI 963
  Penalty - service tax with interest paid on being pointed out - benefit u/s 80 - Held that: - there is no contumacious conduct on the part of the appellant - the appellant has deposited, on being pointed out, as early as 07.02.2011 amount of 32,10,487/- which was more than the tax demand of 26.62 lakhs - there is reasonable cause for not depositing of service tax and as such the appellant is entitled to the benefit under Section 80 of the Finance Act - appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 962
  Time Limitation - Business Auxiliary Service - whether the activity of multilevel marketing should fall under the taxable category of Business Auxiliary Service? - Held that: - the issue as to whether, the activity of multilevel marketing should fall under the taxable category of Business Auxiliary Service was highly contentious and the issue was finally resolved - Since the issue relates to interpretation of the taxability of service, the extended period of limitation cannot be invoked for confirmation of the service tax demand. In this case, since the show cause notice was issued beyond the normal period of limitation, the same is barred by limitation of time - demand do not sustain - appeal allowed.

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• 2018 (4) TMI 961
  Construction of Residential Complex Service - construction of residential units for Indore Municipal Corporation under Jawaharlal Nehru National Urban Renewal Mission Scheme for ecomically weaker sections - Held that: - the construction of residential units for EWS JNNURM for Indore Municipal Corporation is clearly covered by exemption N/N. 28/2010 ST dated 22/06/2010 - demand set aside. Development of plots for accommodation of people in slum locality under Valmiki Awas Mission- Baba Saheb Ambedkar Yojana for economically weaker sections as developed by Government of Madhya Pradesh - Held that: - the appellants are not engaged in any construction of residential units. They were mainly engaged in development of plots in the slum locality in terms of an arrangement with main contractor for Government of Madhya Pradesh - demand set aside. Appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 960
  Industrial or Commercial Construction Service - construction of the guest house for M/s. Aditya Cement - Held that: - It is not used for commercial occupation of any guests other than the employees of M/s.Aditya Cement. Such building is neither used for commercial purpose nor for industrial purpose - appeal allowed.

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• 2018 (4) TMI 957
  Business Auxiliary Services - Commission on selling Agent - N/N. 13/2003-ST dated 20.06.2003 - Held that: - Notification No. 13/2003-ST dated 20.06.2003 granted exemption to Business Auxiliary Service provided by a “Commission Agent”. For the purpose of this Notification, “Commission Agent” was defined as “commission agent” means a person who causes sale or purchase of goods, on behalf of another person, for a consideration which is based on the quantum of such sale or purchase.” - the appellant’s activity will be liable to payment of Service Tax during the disputed period but will not be eligible for the benefit of the Notification No.13/2013. Extended period of limitation - Held that: - the appellant has failed to file the statutory return under Section 70. The details of commission and other details were also submitted only during investigation - Revenue was justified in raising a demand within the period of five years. Appeal dismissed.

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• Central Excise

• 2018 (4) TMI 959
  Whether the Customs Excise & Service Tax Appellate Tribunal, Allahabad is correct in setting aside the order in original dated 12.11.2010 and the order in appeal dated 29.09.2011 on the basis of Circular No.964/07/2012-CX dated 02.04.2012.? Held that: - On being confronted, learned counsel for the respondents could not satisfy the Court nor sustain the impugned order in view of this ground of challenge, therefore, in this view of the matter, we are of the view that the Tribunal has erred on the aforesaid count - The adjudicating authority order could not have been set aside by the Tribunal without dealing with and setting aside the findings and reasoning given by him in support of his order. Matter remitted back to the Tribunal to consider and decide afresh in accordance with law.

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• 2018 (4) TMI 958
  Writ of Mandamus - adjustment of tax already paid under correct accounting code, or refund of the tax paid inadvertently by the petitioner forthwith, along with interest paid therein - Held that: - Mr. Jetly, on instructions from the Commissioner of Goods and Service Tax and Central Excise-respondent No.5 states that within one week from today, the necessary action will be taken and the amount would be refunded to the petitioner. The process in that behalf is already initiated - petition disposed off.

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• 2018 (4) TMI 956
  Clandestine removal - corroborative evidences - Department has demanded the duty for the reason that there was high electricity consumption and on the basis of invoices / vouchers recovered during the period of search. Held that: - Apart from electricity consumption, no other corroborative evidence was collected by the department. No buyer of the finished goods was found or examined. No vouchers pertaining to raw material supply or inputs was found during the course of search. Other evidence regarding inputs, labour, transport were also not collected by the department - the clandestine removal is a very serious charge for which substantial evidence is required. Since, the department has not proved the clandestine removal of the finished goods with any corroborative evidence and made out a full proof case, demand cannot be confirmed - appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 955
  Valuation - includibility - incentive amounts received by the appellant from the Madhya Pradesh Government as part of the scheme for setting up of new industrial units in backward areas - Held that: - Since no part of the VAT collected is retained by the appellant, such amounts cannot be included in the assessable value. Identical issue decided in the case of Khanna Polyware (P) Ltd. Versus CCE, Jabalpur [2018 (3) TMI 177 - CESTAT NEW DELHI], where similar issue has come up before the Tribunal in the case of Shri Cement Ltd. V/s Commissioner [2018 (1) TMI 915 - CESTAT NEW DELHI], where it was held that There is no justification for inclusion in the assessable value, the VAT amounts paid by the assessee using VAT 37B Challans. Appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 954
  Scope of SCN - Adjustment of shortage and excesses - Held that: - admittedly the SCN was for denial of adjustment of shortage and excess and never questioned the valuation aspects and as such, the original adjudicating authority has gone beyond the SCN, which is not permissible. Adjustment - Held that: - Reference can be made to the Tribunal's decision in the case of Hindustan Zinc Ltd. v. Commissioner of Central Excise, Jaipur [2015 (11) TMI 953 - CESTAT NEW DELHI (LB)], wherein there was originally difference of opinion between two Members as regards the adjustment of excess and short paid duty, which dispute was resolved by third Member. By majority order, it was held that adjusting of excess paid duty against short payment cannot be denied even if the assessee’s sister concern have taken the CENVAT Credit of the excess duty paid by the assessee - the majority decision has to be considered as Larger Bench decision and a binding precedent. Appeal dismissed - decided against Revenue.

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• 2018 (4) TMI 953
  Clandestine removal - shortage of raw material and finished goods - spurious entries in CENVAT credit account - Held that: - the submissions made by the appellant have not been examined for acceptability. Undoubtedly, circumstantial evidence may exist for the investigators to conclude that action for recovery needs to be initiated under Central Excise Act, 1944. Nevertheless, the findings of the original authority appeared to flow from inferences that need to be subject to the test of ascertainment against the submissions made by the appellant. The matter remanded to the original authority for re-determination after considering the submissions of the appellant - appeal allowed by way of remand.

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• 2018 (4) TMI 952
  Valuation - related party transaction - mild steel ingots - alloy steel ingots - rule 8 of Central Excise (Determination of Price of Excisable Goods) Rules, 2000 - mutuality of interest - share capital investment in each other - Held that: - this narrow view of insistence on share capital investment in each other being the sole criteria for determination of mutuality of interest has been contested by reiterating the evidences highlighted in the show cause notice and the common ownership - reliance is placed in the decision of the Hon'ble Supreme Court in Calcutta Chromotype Ltd v. Collector of Central Excise, Calcutta [1998 (3) TMI 138 - SUPREME COURT OF INDIA] as precedent. In Commissioner of Central Excise, Delhi-I v. Ever shine Engineering Works [2000 (4) TMI 366 - CEGAT, NEW DELHI] the necessity of applying ratio of precedent decision in analogous circumstances has been highlighted. For such an exercise to be completed, it is necessary that the impugned order be set aside and the matter remanded back to the first appellate authority for reconsideration of the facts of mutuality of interest and, thereafter, decide on the application of the relevant valuation provision. Appeal allowed by way of remand.

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• 2018 (4) TMI 951
  Scope of SCN - classification of goods - henna powder cleared in unit packs of 25/50/100 grams - disregard of case law relied upon in the orders of the lower authorities - Held that: - It would appear that the end use has not been considered by the original authority despite relying upon the earlier decision of the Tribunal in relation to presentation in unit packs - Moreover, the two lower authorities have classified the goods under a heading that was not contemplated in the SCN. Admittedly, the SCN itself has been disregarded by the lower authorities and the issue raised by the appellant on the scope of classification requires reconsideration - the matter requires to be considered afresh - appeal allowed by way of remand.

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• 2018 (4) TMI 950
  Penalty u/r 173Q of Central Excise Rules, 1944 - failure to record production and availment of ineligible credit - Held that: - the provision u/r 173Q makes it amply clear that these are liable to be invoked in specified circumstances, of which the failure to record production of excisable goods and availment of ineligible credit are relevant to the present proceedings. At the same time, it also must be noted that the Tribunal had remanded the matter to the original authority to re-determine liability after ascertainment of sufficiency of credit. It was thereupon that the duty liability was erased on the manufactured goods and the appellant directed to reverse the credit available. In the context of there being no detriment to Revenue, that remoteness of the alleged infraction and the consigning of duties of central excise to history, the balance should be allowed to tilt towards the proposition that subsequent reversal of credit immunises assessee from detriment. Confiscation and penalty set aside - appeal allowed.

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• 2018 (4) TMI 949
  Clandestine removal - allegation based on certain statements of third party i.e. Transporter and CHA - Held that: - The director of appellant-company has categorically denied the receipt of unaccounted imported scrap. In this circumstances the adjudicating authority should have considered the submissions made by the appellant when the Director of the appellant company has denied and given contrary statements to statements given by the transporter and CHA - Appeals disposed of by way of remand to the adjudicating authority.

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• 2018 (4) TMI 948
  CENVAT credit - input services - Corporate service - Human resource - Legal and secretarial services - professional fees paid for conducting e-auction - ambulance service - medical treatment - health check up of the employees - civil works - Held that: - As per the details of corporate service, it includes the services related to finance, human resource, information technology services and legal and secretarial services, all these services are essential for running manufacturing unit - credit allowed. Human resource - Held that: - without this service manufacturing activity cannot be carried out and IT service in the present trade scenario has become backbone for running industry and commerce therefore it is essential service - credit allowed. Legal and secretarial services - Held that: - these are must for carrying out industrial unit for the reason that industry has to deal with the various acts therefore legal services and secretarial services is required invariably for running overall manufacturing of the final product. Therefore there is no doubt that all these service are essential services for running a factory - credit allowed. E-auction service - Held that: - as per the fact, e-auction services was used for purchase of raw material - As per the definition of input service in the inclusion clause ‘procurement of input’ is one of the service mentioned therein - e-auction service which is used for procurement of the input is clearly covered under the definition of input service - credit allowed. The services namely, ambulance, health check up, medical treatment for employees - Held that: - these services are under statutory obligations under the factory and industry act to provide such medical facility to the employees in order to run the factory therefore these services used in relation to the manufacturing of final product even though indirectly - credit allowed. Civil work - Held that: - no documents were provided by the appellant in regard to the nature of the service and use thereof therefore denial of cenvat credit in respect of civil work is upheld - credit on civil works denied. Appeal allowed in part.

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• 2018 (4) TMI 947
  CENVAT credit - removal of waste and scrap arising after cutting/ slitting the H. R. Coils - Revenue has demanded reversal of Credit by treating the removal of said waste and scrap (H. R. Side Slitting, H. R. End Cuttings, Side trimming, etc.) as removal of input as such - Held that: - in appellant's own case, COMMISSIONER OF CENTRAL EXCISE Versus BHUSHAN STEELS AND STRIPS LTD. [2006 (3) TMI 307 - SUPREME COURT], the Apex court has held that said end cutting/ side cutting would be classified under appropriate tariff heading. As a result of which the stand of assessee as scrap and stand of Revenue as removal of inputs as such, was not agreed with - credit remains allowed - appeal dismissed - decided against Revenue.

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• 2018 (4) TMI 946
  Rectification of mistake - Tribunal has dismissed the appeal on pecuniary jurisdiction - Held that: - at the admission stage appellant was represented by Jr. Manager (Excise & Customs) and he did not indicate to the bench that the issue is of recurring nature - The bench has exercised its discretion for non-maintaining the appeal as per the provisions of Section 35B(l)of the Central Excise Act, 1944 - there is no error apparent on the face of the records - ROM application dismissed.

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• 2018 (4) TMI 945
  Imposition of penalty - Held that: - there are no findings or reference or recording or there is any communication as to whether the Tribunal has upheld the penalty on Shri Jitendra Gandhi or set it aside. In the absence of any such findings, Learned Counsel was correct in bringing to my notice the error in respect this applicant - the order needs to be recalled and the appeal reheard - appeal restored to its original number.

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• 2018 (4) TMI 944
  Restoration of appeal - compliance with pre-deposit - whether the said circumstances of the case, the appeal can be restored or not? - Held that: - In this case against the order of dismissal of appeal by this Tribunal, the appellant made pre-deposit and came for restoration of appeal as directed by the BIFR. Although the Hon ble Apex Court in the case of Kisaan Gramodyog Sansthan [2015 (4) TMI 962 - SUPREME COURT] has observed that the order itself that the said order shall not be treated as precedence in any other case but the ratio of the said order is required to be follows by the courts below. The main thrust of the Hon ble Apex Court is that of the statutory right of the appeal should not be defeated. Thus, as the applicant has complied with the direction of the Tribunal for pre-deposit. In the circumstances merit and statutory right of the appeal should not be defeated for other circumstances. Appeal restored to its original number.

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• 2018 (4) TMI 943
  Refund claim - education/ higher education cess - appellant was enjoying area based exemption under N/N. 56/2002-CE dated 14/11/2002 - Held that: - the assessee is eligible for such refund which is paid alongwith the excise duty once the excise duty itself was exempted - refund allowed. Valuation - inclusion of outward freight up to the place of delivery of their finished goods - Held that: - the impugned order records that the appellant/assessee have not produced anything on record which would show that they had cleared the goods from the factory gate to a warehouse, any other premises, a depot, consignment agents premises etc. from where such excisable goods were sold. Admittedly, the goods sold by the appellant/assessee delivered at the buyers premises will not make the place of removal as buyers premises - there is no justification for the appellant/assessee to consider the assessable value with inclusion of freight element after the goods were sold/removed from the factory. The appeal by the appellant/assessee regarding assessable value with inclusion of freight element are dismissed. Appeal allowed in part.

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• 2018 (4) TMI 942
  N/N. 67/95 CE dated 16.3.95 - clinker manufactured by the appellants and captively consumed in the manufacture of cement that was removed without payment of duty to the units situated in SEZ - Held that: - issue stands covered by the decision in the case of Ultratech Cements Ltd, vs CCE and ST, Tiruchirapalli [2015 (10) TMI 1058 - CESTAT CHENNAI], where it was held that appellants are eligible for exemption under Notification 67/95-CE on clinker captively consumed for manufacture of cement cleared to SEZ units/developers without payment of duty for both the periods prior to and after the amendment of SEZ Act - appeal dismissed - decided against Revenue.

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• 2018 (4) TMI 941
  Penalty u/r 15 read with Section 11AC of the Act - it was alleged that appellant had taken excess credit on the basis of dealer’s invoice - Held that: - the appellant had reversed the excess credit before the issuance of SCN - the case is squarely covered by the precedent decision of this Tribunal in the case of M/s Prayas Casting Ltd. [2012 (7) TMI 2 - CESTAT, AHMEDABAD], where it was held that Having reversed the ineligible availmaint of the CENVAT Credit on being pointed out by the Audit party, the appellant has shown their bonafide on admitting the error, penalty set aside - penalty not warranted - appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 940
  Whether the appellant have rightly taken Cenvat Credit on input service and whether they are entitled to refund under Rule 5 of CCR read with Notification No. 27/2012? Held that: - the learned Commissioner (Appeals) have rightly held that the provisions of Rule 6(6) of CCR, 2004 overruled the provisions of and/or have an overriding effect over sub Rule (1), (2), (3) and (4) of Rule 6 of CCR., 2004 - it is admitted fact that the respondent had cleared the goods from their works/ factory under the bond for export and there is no dispute regarding the factum of export - refund allowed - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2018 (4) TMI 939
  Liability of VAT - the amount received by the assessee/appellant for supply of parts to the customers as a part of the warranty agreement - whether the Presiding Members of Hon'ble Tribunal was justified in applying the ratio laid down in Mohd. Ekram Khan and Sons V/s. Commissioner of Tax Trade, U.P. [2004 (7) TMI 341 - SUPREME COURT OF INDIA], decided by Hon'ble Supreme Court on 21.07.2004 to the appellant's case ? Held that: - in Mohd. Ekram Khan [2004 (7) TMI 341 - SUPREME COURT OF INDIA] as observed by our Court in Navnit Motors Pvt. Ltd. [2011 (11) TMI 614 - Bombay High Court], the relationship was that on a principal to principal basis and not on the basis of the agency which forms the foundational difference according to the Rajasthan High Court in Marudhara Motors [2009 (3) TMI 956 - RAJASTHAN HIGH COURT] for not applying the decision of the Apex Court in Mohd. Ekram Khan. Appeal dismissed.

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• Law of Competition

• 2018 (4) TMI 977
  Penalty u/s 43A of the Competition Act, 2002 - noncompliance of provisions contained in section 6(2) of the Act - notification of various transactions. Held that: - Once a particular transaction or a series of transactions falls within the purview of combination, it is obligatory to report the same to the Commission under section 6 of the Act - Section 6 (2) makes it clear that no combination shall come into effect until 210 days have elapsed from the date on which notice has been given to the Commission under section 6(2) and the Commission has passed orders under section 30(1), whichever is earlier. And once mandatory notice is given under section 6(2), the Commission has to deal with the same in accordance with the provisions contained in sections 29, 30 and 31. It is apparent that between the three respondent companies demerger of the resort of SHRIL on timeshare basis took place. It was to be transferred to TCISIL in view of the equity shares of TCIL were to be issued to shareholders of SHRIL as per the ratio provided in the scheme - It is apparent that in the notification made under section 6(2) on 14.2.2014 notifiable transactions were shown regarding merger and amalgamation. It was also mentioned that parties have also contemplated certain other transactions in view of the notifiable transactions, they were the substitution of equity shares, SPA, open offer and market purchase. It is crystal clear from the aforesaid application itself that all these transactions were part of the same transactions and even before notifying the transactions of purchase from the market on 14.2.2014, it was consummated between 10.2.2014 to 12.2.2014. It is crystal clear that market purchases being a part of the composite combination was consummated before giving notice to the Commission. Market purchases having been consummated between 10.2.2014 to 12.2.2014, which is almost after finalizing the composite combination clearly suggested that market purchases would not have taken place in the absence of scheme and the other acquisitions. In case they were not part of the same scheme that would not have been referred to in the notice filed by them with the Commission on 14.2.2014. Thus, in our considered opinion market purchases were not independent and were intrinsically related to the scheme and other acquisitions. The imposition of penalty under section 43A is on account of breach of a civil obligation, and the proceedings are neither criminal nor quasicriminal; the penalty has to follow. Only discretion in the provision under section 43A is with respect to quantum of penalty - penalty upheld - appeal allowed.

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