TMI Tax Updates - e-Newsletter
April 6, 2018

Case Laws in this Newsletter:

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

TMI SMS

• Payment was in the nature of commission paid to the advertisement agencies to secure more business - TDS liability u/s 194H confirmed - SC

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• Cenvat Credit - outdoor catering service is not eligible for ITC after 1.4.2011, since it is for personal consumption of the employee

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Articles

1. INCORPORATION OF A COMPANY THROUGH ‘SPICe’ FORM

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Exchange Rate of Foreign Currency Relating To Imported and Export Goods Notified

2. Clarification regarding applicability of standard deduction to pension received from the former employer

3. 56 new airports will become functional in the next few years, said Suresh Prabhu at Global Logistics Summit

4. First Bi-monthly Monetary Policy Statement, 2018-19

5. RBI Reference Rate for US $

6. Process to be followed for registration as Registered Valuer with Insolvency and Bankruptcy Board (IBBI) of India under the Companies (Registered Valuers and Valuation) Rules, 2017

7. Cabinet approves MoU between India and Iran on the establishment of an expert group on trade remedy measures

8. Cabinet approves rightsizing the Competition Commission of India

Notifications

Customs

1. 31/2018 - dated 5-4-2018 - Cus (NT)

Exchange Rates Notification No.31/2018-Custom(NT) dated 5.4.2018

GST - States

2. 07/2018 - dated 2-4-2018 - Telangana SGST

Extension of date for submitting the statement in FORM GST TRAN-2.

3. 06/2018 - dated 2-4-2018 - Telangana SGST

Extends the time limit for furnishing the return by an Input Service Distributor in FORM GSTR-6

4. 05/2018 - dated 2-4-2018 - Telangana SGST

Extension of time limit for filing the details of outward supplies in FORM GSTR-1.

5. G.O.Ms.No. 68 - dated 31-3-2018 - Telangana SGST

Appointed date for notifying E-way bill Rules.

6. G.O.Ms.No. 67 - dated 31-3-2018 - Telangana SGST

The Telangana Goods and Services Tax (Second Amendment) Rules, 2018.

7. G.O.Ms.No. 66 - dated 31-3-2018 - Telangana SGST

Notifying the Common Goods and Service Tax Electronic Portal - Under Section 146 of the Act

8. 04/2018 - dated 29-3-2018 - Telangana SGST

Last date for filing of return in FORM GSTR-3B.

9. 03/2018 - dated 10-2-2018 - Telangana SGST

Way bill, shall come into force with effect from 10-02-2018

10. F.1-11(91)-TAX/GST/2018(Part) - dated 29-3-2018 - Tripura SGST

Notification regarding furnishing of Form GSTR-1 effected during the quarter April to June, 2018 till 31.07.2018.

11. F.1-11(91)-TAX/GST/2018(Part-I) - dated 28-3-2018 - Tripura SGST

No e-way bill is required to be generated in respect of intra-state movement of goods within the entire State of Tripura.

12. F.1-11(91)-TAX/GST/2018(Part-I) - dated 23-3-2018 - Tripura SGST

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

13. F.1-11(91)-TAX/GST/2018(Part-I) - dated 23-3-2018 - Tripura SGST

Notification regarding appointment of E-Way Bill Rules.

14. F.1-11(91)-TAX/GST/2018(Part-I) - dated 23-3-2018 - Tripura SGST

Last date for filing of return in FORM GSTR-3B

15. 10/2018-State Tax (Rate) - dated 23-3-2018 - Tripura SGST

Amendment in the Notification No. 8/2017-State Tax (Rate), dated the 29th June, 2017 and Notification No. 38/2017- State Tax (Rate), dated the 2nd November, 2017.

16. F.1-11(91)-TAX/GST/2018(Part) - dated 22-3-2018 - Tripura SGST

Rescinds the Notification of the Government of Tripura in the Department of Finance, No. F.1-11(91)-TAX/GST/2018, dated the 22nd February, 2018

17. KA.NI.-2-498/XI-9(42)/17 - dated 27-3-2018 - Uttar Pradesh SGST

NOTIFICATION REGARDING E-WAY BILL

18. KA.NI.-487/XI-9(42)/17 - dated 26-3-2018 - Uttar Pradesh SGST

THE UTTAR PRADESH GOODS AND SERVICES TAX (FOURTEENTH AMENDMENT) RULES, 2018.

Income Tax

19. 16/2018 - dated 3-4-2018 - IT

Income-tax (Second Amendment) Rules, 2018

Circulars / Instructions / Orders

GST - States

1. F.1-11(91)-TAX/GST/2018(Part)/2448-54 - dated 29-3-2018

Extension of date for submitting the statement in FORM GST TRAN-2 under rule 11 of the Tripura State Goods and Service Tax Rules, 2017.

2. 04/2018-GST (State) - dated 28-3-2018

Clarifications on refund related issues.

FEMA

3. 21 - dated 5-4-2018

Exim Bank's Government of India supported Line of Credit of USD 4.50 billion to the Government of the People’s Republic of Bangladesh

DGFT

4. Policy Circular No. 05/2015-20 - dated 4-4-2018

Clarification regarding export policy of Roasted Gram - Removal of packing restriction

Highlights / Catch Notes

GST

• Court Directs First Respondent to Act Promptly on Advance Ruling u/s 97(1) of Kerala GST Act.

  Case-Laws - HC : Inaction on the part of the first respondent in taking a decision - advance ruling u/s 97(1) of the Kerala State Goods and Services Tax Act - HC issued the directions.
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Income Tax

• Court Examines TDS Applicability on Advertising Agency Payments as "Commission" u/s 194H of Income Tax Act.

  Case-Laws - SC : TDS u/s 194H - payments made by the appellant to the advertising Agencies - The payment in question was in the nature of "commission" paid by the appellant to the advertisement agencies to secure more business for the appellant. - SC
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• Exemption Decisions u/s 10(22)/(23C) Don't Impact Section 11 Application in Income Tax Act.

  Case-Laws - HC : The grant or refusal to grant exemption under Section 10(22) and/or (23C) of the Act cannot govern the application of Section 11 of the Act. - HC
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• Revenue Authorities Criticized for Accepting Bogus Purchases as Genuine Despite Overwhelming Evidence of Fraudulent Transactions.

  Case-Laws - AT : Addition of bogus purchases - There is no doubt that these parties are non-existent - purchase bills from these non-existent the/bogus parties cannot be taken as cogent evidence of purchases, in light of the overwhelming evidence the revenue authorities cannot put upon blinkers and accept these purchases as genuine. - AT
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• Assessee faces penalties for submitting forged bank statement; additions made u/s 68 and penalties u/s 271(1)(c).

  Case-Laws - AT : Addition u/s 68 - Penalty u/s 271(1)(c) - the assessee has submitted the forged bank statement of the depositors before the ld Assessing Officer to prove the creditworthiness and genuineness of the transaction - additions with penalty confirmed - AT
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• Assessee not required to withhold tax u/s 195 for lease line charges; not 'royalty' per DTAA.

  Case-Laws - AT : TDS u/s 195 - in view of the definition of ‘royalty’ under DTAA, the assessee is not liable to withhold tax on the payments made to its associated enterprise on account of lease line charges. - AT
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• Interest Expenses Disallowed Due to Unjustified Financial Arrangements u/ss 36(1)(iii) and 40A of Income Tax Act.

  Case-Laws - AT : Disallow the interest u/s. 36(1)(iii) read with section 40A - assessee had advanced money at lower rate of interest or free of interest out of the funds borrowed by the assessee at higher rate of interest - assessee failed to explain the business expediencies - additions confirmed - AT
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• Tax Exemption for Agricultural Land Transfers: "Gair Mumkin" Lands with Irrigation May Qualify u/s 10(37) of Income Tax Act.

  Case-Laws - AT : Benefit of section 10(37) - “gair mumkin” lands - scope of the agriculture land - in view of the irrigation facilities available, and the benefit of section 10(37) of the Act is available - AT
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• Software-Hardware Bundles Sold as One Are Fully Business Income, Not Royalties, per Explanation 4 in Tax Rules.

  Case-Laws - AT : Supply of software embedded in the hardware - when a software is embedded in hardware and there is one composite price, the entire amount remains as Business income and a part of the same cannot be considered as royalty within the Explanation 4 - AT
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Customs

• Imported Multimedia Speakers Classified Under Chapter Heading 8518 22 00; Impacts Tax Treatment Based on Case Laws and Regulations.

  Case-Laws - AT : Classification of imported goods - Multimedia Speakers - goods in question are properly classifiable under Chapter Heading 8518 22 00 - AT
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Service Tax

• Refund Claim Examined: Recording in Books Doesn't Prove Tax Burden Wasn't Transferred to Others.

  Case-Laws - AT : Refund claim - unjust enrichment - even though the amount of refund was shown as expenditure in their books of accounts, it cannot be construed that the incidence of tax has not been passed on to others - AT
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• Service Providers in SEZ Cannot Claim Service Tax Refund; Only Service Receivers Eligible for Refunds.

  Case-Laws - AT : Refund of service tax - Repair & Maintenance Service to various units situated in SEZ - It is the receiver, who is entitled to refund and not the service provider - The claimant of refund is not the service receiver, but, the service provider, and not entitled for refund - AT
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Central Excise

• Credit Allowed Due to Courier Bill of Entry Issued Without Original Invoices for Multiple Consignees.

  Case-Laws - AT : Since, the Courier Bill of Entry has been issued by the courier agency in favour of various parties/consignees, there was no scope for issuing the original invoice in favour of each and every party - credit allowed - AT
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• Enzymes in Scientific Instruments Exempt from Excise Duty Under Notification 10/97 for Research Use by Institutes.

  Case-Laws - AT : The Enzymes which are used in the scientific and technical instruments, would be eligible for the benefit of the exemption of excise duty as per the N/N. 10/97 as they are consumed during the research conducted by such various institutes. - AT
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• Finacle Software Classified as Packaged, Not Customized, Impacting Excise Duty Liability.

  Case-Laws - AT : Classification of software - liable to duty excise or not - Since Finacle software is not developed, ab initio, for supply to each and every customer, such software falls within the category of packaged or canned software. Such software cannot be considered as customized software designed and developed for a specific user. - AT
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• Cenvat Credit Denied for Canteen Services; Exclusion Under Notification No. 3/2011 Effective April 1, 2011.

  Case-Laws - AT : Cenvat Credit - input services - The canteen provided in the company is mainly for the personal consumption of the employee and it cannot be interpreted in any other way. - the "outdoor catering service" is not eligible for input service credit post amendment dated 1.4.2011 vide Notification No.3/2011 dated 18.3.2011. - AT
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• Manufacturer Faces Double Taxation on Recycled Goods if Duty is Paid Twice on Rejected Clearances.

  Case-Laws - AT : CENVAT credit - The appellant being a manufacturer is paying duty on clearances effected by the recycling rejected goods and if the appellants are asked to pay the duty on the rejected goods once again, then it amounts to double duty. - AT
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VAT

• Form C Usage Unaffected by GST: No Restriction to Six Items Under CST Act Section 8 & Rule 12.

  Case-Laws - HC : The provisions of Section 8 of the CST Act, Rule 12 of CST (R&T) Rules and declaration Form C have not undergone any amendment after the implementation of the GST laws. There cannot be any occasion to restrict the usage of ‘C’ Form only for the purposes of re-sale of the six items mentioned in the amended definition of ‘goods’ in Section 2 (d) of the CST Act. - HC
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Case Laws:

• GST

• 2018 (4) TMI 206
  Levy of GST and other state levies / cess - main contention in this Petition is that on the last date for submitting the bids, the rate of GST was 18 %, and therefore, the Petitioner offered his bid by taking into consideration the rate of GST as 18 % - fifth respondent submitted his bid by taking into consideration the rate of GST at 12 % - Held that: - Once the tender condition No.2 specifies in what manner the lowest bidder (L-1) will be determined, the Municipal Corporation was under an obligation to determine the lowest bidder only in the manner provided in the tender notice and not in any other manner. Modified condition No.38 specifically provides that the tenderer shall quote inclusive of all taxes including GST - Admittedly the quote by the Petitioner inclusive of GST was higher than the quote of the fifth Respondent. There is no challenge in the Petition to clause 2 of the tender notice. Going by the clause 2, the case of the Petitioner that he is the lowest bidder cannot be accepted. Petition dismissed - decided against petitioner.

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• 2018 (4) TMI 205
  Release of detained goods - Rule 140(1) of the Kerala Goods and Services Tax Rules, 2017 - Held that: - the writ petition is disposed of directing the competent authority to complete the adjudication provided for under Section 129 of the statutes - petition disposed off.

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• 2018 (4) TMI 204
  Detention of goods - case of the petitioner is that the driver of the vehicle in which the goods were carried omitted to hand over the documents when the goods were intercepted and the same were though furnished later, the detaining authority did not accept the same - Held that: - The correctness of the contentions raised by the petitioner cannot be decided in the proceedings under Article 226 of the Constitution of India - the first respondent is directed to complete the adjudication provided for u/s 129 of the statutes - petition disposed off.

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• 2018 (4) TMI 203
  Inaction on the part of the first respondent in taking a decision - advance ruling u/s 97(1) of the Kerala State Goods and Services Tax Act - Held that: - first respondent directed to take a decision on Ext.P1 application preferred by the petitioner for advance ruling, after affording the petitioner an opportunity of hearing - petition disposed off.

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• 2018 (4) TMI 202
  Release of detained goods - Section 129 of the Central Goods and Services Tax Act - Held that: - identical matter has been disposed of by a Division Bench of this Court in The Commercial Tax Officer And The Intelligence Inspector Versus Madhu. M.B. [ 2017 (9) TMI 1044 - KERALA HIGH COURT] , directing expeditious completion of the adjudication of the matter and permitting release of the goods detained pending adjudication, in terms of Rule 140(1) of the Kerala Goods and Services Tax Rules, 2017 - the competent authority is directed to complete the adjudication provided for u/s 129 of the statutes - petition disposed off.

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• Income Tax

• 2018 (4) TMI 201
  TDS u/s 194H - payments made by the appellant to the advertising Agencies - assessee in default - Held that:- High Court was right in holding that the provisions of Section 194H are applicable to the appellant because the payments made by the appellant pursuant to the agreement in question were in the nature of payment made by way of commission and, therefore, the appellant was under statutory obligation to deduct the income tax at the time of credit or/and payment to the payee. The payment in question was in the nature of commission paid by the appellant to the advertisement agencies to secure more business for the appellant. Once it is held that the provisions of Section 194H apply to the transactions in question, it is obligatory upon the appellant to have deducted the income tax while making payment to the advertisement agencies. The non-compliance of Section 194H by the assessee attracts the rigor of Section 201 which provides for consequences of failure to deduct or pay the tax as provided under Section 194H of the Act. Thus the provisions of Section 201 were, therefore, rightly invoked in this case against the appellant by the assessing authority once having held that the appellant failed to comply with the provisions of Section 194H of the Act. - Decided against assessee.

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• 2018 (4) TMI 200
  Validity of the action initiated u/s 201(1) and 201(1A) - non-deduction of tax at source for periods earlier than four years prior to 31st March, 2011 - Held that:- SLP dismissed. HC order confirmed [2016 (8) TMI 509 - DELHI HIGH COURT] HC has held Circular 5 of 2010 of CBDT clarifying that the proviso to Section 201(3) of the Act was meant to expand the time limit for completing the proceedings and passing orders in relation to ‘pending cases’. The said proviso cannot be interpreted to initiate proceedings for declaring an Assessee to be an Assessee in default under Section 201 for a period earlier than four years prior to 31st March, 2011. The notices impugned in the present petitions issued by the Department seeking to initiate proceedings against the Petitioners for declaring them to be Assessee in default under Section 201(3) hereby quashed. - Decided in favour of assessee.

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• 2018 (4) TMI 199
  Deduction u/s 80IB - Held that:- SLP dismissed. HC order confined [2017 (7) TMI 498 - MADRAS HIGH COURT] HC has held the mere fact that nut blanks were purchased from Unit I cannot be a reason to deny deduction under Section 80IB, vis-a-vis Unit II. The deduction is made available to the Assessee, vis-a-vis Unit II, as it fits the attributes of an industrial undertaking and not to the Assessee per se. As long as the Assessee has invested a substantial amount in setting up an industrial undertaking, which is separate and distinct, it is entitled to claim the said deduction. CIT(A)s as well as the Tribunal were wrong in concluding that the Assessee could not claim deduction under Section 80IB of the 1961 Act vis-a-vis Unit II. For Computation made in respect of deduction claimed by the Assessee under Section 80IA in computing the deduction claimed by the Assessee under Section 80 IA of the 1961 Act, the Assessing Officer ought to have treated the two power divisions as a separate undertakings and furthermore, desisted from setting off the losses of earlier years against the profits of the Assessment Years in issue, by bringing them forward notionally, despite the fact that they had already been set off, as claimed by the Assessee in the earlier years.

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• 2018 (4) TMI 198
  Disallowance u/s 37 - benefit of presumption under Section 132 (4A) - documents seized at the time of search - Held that:- As argued by the petitioner that though the entire order passed by the High Court [2017 (12) TMI 1170 - KERALA HIGH COURT] have gone in favour of the petitioner herein, however, while giving directions in para 14 the High Court has stated that the allowance of expenditure would be confined to the amounts revealed from the seized documents, whether it be cash or cheque payments and in this manner has denied the relief partially which has been granted by ITAT. Issue notice.

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• 2018 (4) TMI 197
  Eligibility for deduction u/s 11 - whether assessee is a charitable organization? - whether activity carried out by the assessee is in the nature of running Coaching Classes or Center and therefore the benefit of Section 11 cannot be extended to the respondent? - Held that:- We find that this objection/grievance of the Revenue has been taken up for the first time across the bar. There is no such objection taken before the authorities by the Revenue. Besides, nothing has been shown to us why it should be considered as a coaching class. The impugned order of the Tribunal has only applied the decision of this Court in Samudra Institute of Maritime Studies Trust (2014 (9) TMI 575 - BOMBAY HIGH COURT) to conclude that the activities which are run by the respondent-institute is an educational activity and not in the nature of running a Coaching Center or a Class. The Revenue is not able to point why it would not apply. We may also point out that the grant or refusal to grant exemption under Section 10(22) and/or (23C) of the Act cannot govern the application of Section 11 of the Act. In any case, we are informed that no appeals in respect of Section 10(22) and/or (23c)(vi) of the Act are pending disposal. No substantial question of law.

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• 2018 (4) TMI 196
  Reopening of assessment - assets viz., Wind Energy Generators were commissioned and put up to use only during the financial year 2012-13 - Held that:- In the absence of any material to disbelieve the Certificate issued by TANGEDCO stating that the Generators were commissioned on 29.03.2012, the present attempt to reopen the assessment is a clear change of opinion. The respondent could not have reopened the assessment when the Certificate and materials were considered by the Assessing Officer while completing the assessment and passing the order dated 13.03.2015. The petitioner produced the Commissioning Certificate issued by the Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO), there would have been no reason for reopening the assessment. Now that the petitioner had produced the Certificate from the Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO) and inspite of receiving the same, reopening of the assessment cannot be sustained. The present attempt to reopen the assessment is a clear change of opinion and therefore, the impugned order dated 22.08.2017 is liable to be set aside - Decided in favour of assessee.

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• 2018 (4) TMI 195
  Stay application - CIT-A instead of disposing of the appeal, seeks to set the clock back and pass an order on the petitioner’s stay application - Held that:- There is no power bestowed upon the CIT(A) under the Act to stay the demand arising consequent to the order in appeal before him. In fact the power to stay such a demand has been bestowed upon the Assessing officer under Section 220(6) of the Act by not treating the Assessee in default where an appeal is awaiting final disposal before the CIT(A) on such conditions as the facts and circumstances of the case may warrant. Nevertheless, the CIT(A) as an appellate authority, has inherent powers of an Appellate Authority to do all things necessary to make the appellate powers effective. Entire exercise of taking up stay application, even after the appeal was heard, was only done so as to collect some revenue before 31st March, 2018. Therefore, this appears to be a blatant attempt to retrace his steps by the CIT(A) only to collect revenue before 31st March, 2018. In fact, even if an order is passed on the appeal by the CIT(A) finding the submission of the Petitioner not acceptable, either wholly or partly, it would result in the demand being sustained wholly or in part, which could then be collected in accordance with law. But the entire exercise, here, appears to be only to assist the Revenue to collect some amount of taxes prior to 31st. March 2018. This is certainly not expected of an Appellate Authority such as the CIT(A) who adjudicates disputes between the Revenue and the Assessee on a regular basis. The CIT(A) must not only be fair but appear to be so, in a country governed by Rule of law. In the absence of the above, the alternative remedy provided under the Act would be illusory leading to our entertaining writ petitions, even if an alternative remedy is provided under the Act. We set aside the order dated 23rd March, 2018 passed by the CIT(A) on the Petitioner's stay application. We direct the Respondent-Revenue not to initiate any recovery proceedings against the Petitioner till such time as the CIT(A) – Respondent No.3 disposes of the Petitioner's appeal from the order dated 31st December, 2017 of the Assessing Officer Respondent No.2 and for a period of two weeks after the communication of the order of the CIT(A) to the Petitioner.

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• 2018 (4) TMI 194
  Reopening of assessment - excessive grant of deduction u/s 10B - Held that:- Petitioner was asked to submit Form 56G, i.e., claim for deduction under Section 10B duly certified by Chartered Accountant. The same was submitted and it records profits on account of foreign exchange gain is Rs. 2.97 Crores. Besides, by communication dated 5.10.2012, the Petitioner was asked during the regular assessment proceedings to submit necessary documents in evidence in support of deduction claim under Section 10B of the Act. The Petitioner placed reliance on Form 56G, which discloses all particulars in support of its claim under Section 10B of the Act. Thus, prima-facie, there has been full disclosure of all material facts in relation to foreign exchange gain. Further, in view of the queries during regular assessment proceedings was taken into account while allowing the claim for deduction under Section 10B of the Act in respect of its Export Oriented Unit. Thus, impugned notice prima-facie appears to be without jurisdiction. - Decided in favour of assessee.

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• 2018 (4) TMI 193
  Method of computing the exemption u/s 10-A - whether the expenses excluded from the export turnover are also to be excluded from the total turnover for the purpose of Section10-A? - Held that:- The method of computing the exemption under Section 10-A and precisely, the question as to whether the expenses excluded from the export turnover are also to be excluded from the total turnover for the purpose of Section10-A of the Act, has been dealt with by this Court in the case of TATA ELXSI LTD. [2011 (8) TMI 782 - KARNATAKA HIGH COURT] as held if the export turnover in the numerator is to be arrived at after excluding certain expenses, the same should also be excluded in computing the export turnover as a component of total turnover in the denominator. The reason being the total turnover includes export turnover. The components of the export turnover in the numerator and the denominator cannot be different.

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• 2018 (4) TMI 192
  Exemption from income tax to the local authority - whether Appellant is not a ‘local authority’ as contemplated u/s 10(20)? - Held that:- It is true that the functions which are carried out by the assessee are statutory functions and carry on for the benefit of the State Government for urban development therefore, in our considered opinion, the functions carried out by the authority is a supreme function and fall within the activity of the State Government. The reliance placed by counsel for the department regarding 10(20) and explanation A will not make any difference. Taking into consideration income of authority is under constitution of India vide order enacted either for the purpose of dealing with or setting up the housing scheme for the purpose of planning and development of the improvement of the cities, town and villages or both for which the authority are created to carry out the function of State which are sovereign whereas the urban development and calculation of development charges will fall under the development charges. Deletion of 20A will not make difference in case of assessee. In our considered opinion, Clause-3 will come in the help of the assessee. In that view of the matter, we are considered opinion, that the authority assessee is a local authority for the purpose of carrying out of the improvement and development function of the State. - Decided in favour of assessee.

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• 2018 (4) TMI 191
  Penalty u/s 271(1)(c) - individual disallowances especially when it is being taxed under Section 115JB of the Act - The matter is no longer res-integra. The question regarding levy of penalty under Section 271(1)(c) of the Act where tax was paid on the basis of book profits determined under Section 115JB of the Act was decided by this Court in M/s Vardhman Acrylics Limited’s case (2014 (8) TMI 1144 - PUNJAB & HARYANA HIGH COURT) holding that no penalty under Section 271(1)(c) of the Act was leviable on any amount of expenses claimed by the assessee - Decided against revenue.

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• 2018 (4) TMI 190
  Disallowance of deduction u/s 80IC - Held that:- The assessment year under appeals, the A.O. relied upon the survey conducted in the premises of the assessee prior to assessment year under appeal, which may not be relevant for this year. Further, Inspector has visited the premises of the assessee-company in assessment year under appeals on 29th December, 2010 and A.O. on 26th November, 2011 and gave report against the assessee-company. But, according to the Learned Counsel for the Assessee, such reports were not confronted to the assessee-company and was not given right to challenge the same. Therefore, such report cannot be read in evidence against the assessee-company. The Ld. CIT(A) in the impugned order allowed the carry forward of the business losses which was also allowed by him in A.Y. 2010-2011. It would mean that assessee-company was doing manufacturing/ business activity. Therefore, all these matters clearly support the contention of Learned Counsel for the Assessee that the matter should be re-investigated by the A.O. - Decided in favour of assessee for statistical purposes

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• 2018 (4) TMI 189
  Addition on account of professional expenses/charges - Held that:- The amount in question is paid to temporary data entry operators. It would support the explanation of assessee that small amount was paid to different data entry operators at different times, which were below the prescribed limit for deduction of TDS. So, there is nothing wrong in the explanation of assessee for not deducting TDS on the amounts in question. Nothing is mentioned in the assessment order, as to on which date, A.O. asked the assessee to produce the said data entry operators when temporary data entry operators were engaged time to time. It was not possible to assessee to produce them before the A.O. that too without giving any show cause notice in this regard. It is, therefore, clear that findings of the A.O. are merely based on doubts, surmises and conjectures without bringing any concrete material against the assessee. The professional charges have been incurred wholly and exclusively for the purpose of business of assessee. Therefore, there is nothing wrong in the order of the Ld. CIT(A) in deleting the addition - Decided against revenue

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• 2018 (4) TMI 188
  Write off the entire amount on CWIP - Treat the CWIP as a revenue expenditure as the write off was made on the ground of commercial expediency - CIT- A dismissed the claim solely on the ground that CWIP was disallowed in the return filed by the assessee - Held that:- High Court in the case of C.I.T Chennai Vs. Abhinitha Foundations (P.) Ltd. (2017 (6) TMI 604 - MADRAS HIGH COURT) and Ramco Cements Ltd. Vs. DCIT (2014 (11) TMI 447 - MADRAS HIGH COURT) held even if a claim made by assessee- company does not form part of original return or even revised return, it can still be considered by AO as well as appellate authorities in case relevant material is available on record. Thus the issue is remitted back to the file of ld. Assessing Officer for a fresh examination. The AO after giving due opportunity to the assessee would decide this issue in accordance with law.

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• 2018 (4) TMI 187
  Reopening of assessment - Addition of bogus purchases - Held that:- Addition of bogus purchases - reopening of assessment - Held that:- Tangible and cogent incriminating material were received by the AO which clearly showed that the assessee was beneficiary of bogus purchase entries from bogus entry providers which formed the reason to believe by the AO that income has escaped assessment. The information so received by the AO has live link with reason to believe that income has escaped assessment. On these incriminating tangible material information, assessment was reopened. At this stage there has to be prima facie belief based on some tangible and material information about escapement of income and the same is not required to be proved to the guilt. Uphold the order of the Ld. CIT(A) on the issue of reopening. Assessee has not been able to produce any of the parties. The assessing officer has noted that there is no cogent evidence of the provision of goods. Neither the assessee has been able to produce any confirmation from these parties. There is no doubt that these parties are non-existent - purchase bills from these non-existent the/bogus parties cannot be taken as cogent evidence of purchases, in light of the overwhelming evidence the revenue authorities cannot put upon blinkers and accept these purchases as genuine. The overall consideration of facts and circumstances and following the decision of Hon’ble Gujarat High Court in the case of CIT vs Simit P. Sheth [2013 (10) TMI 1028 - GUJARAT HIGH COURT] hold that a disallowance of 12.5% of the bogus purchase would meet the end of justice. - Decided partly in favour of assessee.

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• 2018 (4) TMI 186
  Addition of bogus purchases - reopening of assessment - Held that:- Tangible and cogent incriminating material were received by the AO which clearly showed that the assessee was beneficiary of bogus purchase entries from bogus entry providers which formed the reason to believe by the AO that income has escaped assessment. The information so received by the AO has live link with reason to believe that income has escaped assessment. On these incriminating tangible material information, assessment was reopened. At this stage there has to be prima facie belief based on some tangible and material information about escapement of income and the same is not required to be proved to the guilt. Uphold the order of the Ld. CIT(A) on the issue of reopening. Assessee has not been able to produce any of the parties. The assessing officer has noted that there is no cogent evidence of the provision of goods. Neither the assessee has been able to produce any confirmation from these parties. In such circumstances, there is no doubt that these parties are non-existent - purchase bills from these non-existent the/bogus parties cannot be taken as cogent evidence of purchases, in light of the overwhelming evidence the revenue authorities cannot put upon blinkers and accept these purchases as genuine. The overall consideration of facts and circumstances and following the decision of Hon’ble Gujarat High Court in the case of CIT vs Simit P. Sheth [2013 (10) TMI 1028 - GUJARAT HIGH COURT] hold that a disallowance of 12.5% of the bogus purchase would meet the end of justice. - Decided partly in favour of assessee.

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• 2018 (4) TMI 185
  Application for the grant of registration made by the assessee u/s 12AA and approval u/s 80G(5)(vi) rejected - Held that:- The undisputed fact is that the objects of the trust have not been doubted by the learned CIT(Ex). The allegation of the CIT(Ex) is that the trust has not started any activity and therefore it was not possible for him to satisfy about the objects and genuineness of activities before granting the registration in pursuance to the provisions of section 12AA of the Act. The law is now well settled that if the activities of the trust are at the commencement stage then the Ld CIT(Ex) cannot refuse the registration u/s 12AA of the Act without finding out any defect in the objects of the trust. The powers of CIT(Ex) are limited to the aspect of examining whether the objects of trust are charitable in nature or not. It should be kept in mind that at the stage of commencement of institution/ assessee Trust, it is not relevant to decide whether the Trust has actually carried out the charitable activities because in this case it is at the infant stage only i.e. within 6 months of its incorporation the relevant applications were moved by the appellant. In view of above, we are inclined to direct the Ld. CIT(E) to consider the applications for registration u/s 12AA of the Act and u/s 80G of the Act afresh - Decided in favour of assessee.

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• 2018 (4) TMI 184
  Deduction u/s.80IA(4) - whether the assessee was only a contractor as the said work was awarded? - Held that:- We hold that the assessee having executed development of dam, was entitled to the claim of deduction under section 80IA(4) of the Act. See ACIT, Circle-1, Kolhapur Versus Mahalaxmi Infraprojects Ltd. [2018 (1) TMI 1103 - ITAT PUNE]. - Decided in favour of assessee.

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• 2018 (4) TMI 183
  Income derived from sale of land - to be assessed under the head business or long term capital gain - whether the assessee is eligible for indexation benefit and deduction under section 54 of the Act? - Held that:- Reasonings on which the learned Commissioner (Appeals) has treated the land as business asset of the assessee are not at all relevant for deciding whether the land in question was held as investment or business asset. It appears from record, in assessment year 2006–07, the Assessing Officer had assessed the money received from Samir Bhojwani in pursuance to the development agreement in respect of the same land as income of the assessee. Though, the issue was set aside to the Assessing Officer by the Tribunal, however, it needs to be seen under which head the Assessing Officer treated it as income and the reason for doing so. In this regard, the Balance Sheets of earlier years are also required to be examined. Considering the overall facts and circumstances of the case, we are of the opinion that the issue whether the land in question was held as an investment or business asset requires to be examined afresh taking into consideration all material facts including the intention of the assessee at the time of purchase of land. Assessee’s appeal is allowed for statistical purposes.

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• 2018 (4) TMI 182
  Reopening of assessment - whether AO has issued the said notice on the basis of information received from third party and without application of mind? - non-allowance of cross-examination - AO has not summarily rejected the objections raised against reasons recorded for the notice issued u/s. 148 by speaking order - information received from the Sales Tax Department in respect of parties who had issued sale bills but had not paid sales tax 0 addition on account of bogus purchases - Held that:- Where the assessee had sought cross-examination of the witnesses at the earliest stage i.e. while objecting to the reasons recorded for reopening the assessment, which duly has been acknowledged by the Assessing Officer in his order disposing of objections raised by the assessee against reopening of assessment. But the Assessing Officer though asked the assessee to collect the statement but failed to allow cross-examination though he admitted that the same would be allowed in due course of time. On a later date, AO concludes that the letters sent under section 133(6) of the Act to the dealer were returned back. But the same cannot be reason for denying cross-examination. In the absence of allowing cross-examination of witnesses used against the assessee, where the addition was made in the hands of assessee on the basis of aforesaid statements recorded by the Sales Tax Department, we hold that no addition on account of bogus purchases can be made in the hands of assessee. The assessee had also established factum of trail of goods. Accordingly, we delete the addition made on account of bogus purchases. - Decided in favour of assessee.

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• 2018 (4) TMI 181
  Addition u/s 68 - unexplained share capital and share premium - Held that:- As whole exercise carried out by the assessee is simply a devise to introduce unaccounted money through various shell companies in the form of share capital at a premium. The manner of issue of the shares through these companies, the manner of providing confirmation on the letter pad, the manner of maintaining the annual accounts and the manner of submitting the bank accounts on the letter pad or on a computerized print out to give it a semblance of originality to defraud the revenue, proves much more than what is under challenge before us. It shows the whole picture how the accommodation entries are routed through shell companies as share capital to evade the taxes. The whole façade created by assessee shows the real purpose of introducing the unaccounted money of the assessee without payment of taxes. The finding of the ld CIT(A) also demonstrates this fact. We do not want to interfere in the findings of the lower authorities in confirming the above addition of Rs. 50 lacs. Therefore, the findings of the lower authorities are confirmed the ground No. 4 to 10 of the appeal of the assessee are dismissed. Penalty u/s 271(1)(c) - Held that:- No infirmity in the order of the ld CIT(A) in confirming the penalty u/s 271(1)(c) of the Act. The facts of the present case are similar to the issue decided by the Hon'ble Supreme Court in case of Makdata Pvt. Ltd vs. CIT [2013 (11) TMI 14 - SUPREME COURT] wherein, when certain documents with respect to the share applicants were found and the assessee surrendered that amount even then Hon'ble Supreme Court confirmed the penalty u/s 271(1)(c) of the Act. In the present case before us the assessee has submitted the forged bank statement of the depositors before the ld Assessing Officer to prove the creditworthiness and genuineness of the transaction. Therefore, the case of the assessee was in much worse situation then the issue before Hon'ble Supreme Court, therefore, we confirm the orders of the ld CIT(A) confirming the penalty u/s 271(1)(c) levied by AO - Decided against assessee.

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• 2018 (4) TMI 180
  TDS u/s 195 - Disallowance u/s 40(a)(i) - payment to its associated enterprise towards lease line charges without deduction of tax - whether payment was in the nature of royalty and also in the nature of Fees for Technical Services (FTS), because of amendment to section 9(1)(v) of the Act? - DTAA with USA - reimbursement of charges not subject to tax in India - Held that:- Though definition of ‘Royalty’ under the Act had been amended, but the term ‘Royalty’ under the DTAA between India and USA is not amended. In the absence of the same, we hold that in view of the definition of ‘royalty’ under DTAA, the assessee is not liable to withhold tax on the payments made to its associated enterprise on account of lease line charges. Applying the principle laid down by the Hon’ble High Court of Delhi in DIT Vs. New Skies Satellite BV (2016 (2) TMI 415 - DELHI HIGH COURT), we hold that where the provisions of DTAA overrides the provisions of Income-tax Act and the definition of ‘royalty’ having not been undergone any amendment in DTAA, the assessee was not liable to withhold tax on the lease line charges paid by it. The amended provisions of section 9(1)(vi) of the Act brought into force by the Finance Act, 2012 are applicable to domestic laws and the said amended definition cannot be extended to DTAA, where the term has been defined originally and not amended. We have already decided this issue in the paras hereinabove that under the provisions of DTAA, the term ‘royalty’ is defined and it does not cover any such services availed and payment made and hence, there is no merit in the stand of Revenue in this regard and the same is dismissed. In any case, the privity of contract is between Qwest Communications Inc, the service provider and T-3, USA, who in turn had received bandwidth and passed on the services to various entities of group on cost to cast basis. The assessee as recipient of services had reimbursed the same and in the absence of profit / income element, there is no liability to deduct tax at source. Hence, the assessee cannot be held to be in default. Acceptance of international transactions to be at arm's length price by the TPO in its order passed under section 92CA(3) - Once the nature of expenses has been so accepted by the TPO, the Assessing Officer cannot sit in judgment of the TPO order since under the provisions of the Act, the order passed by the TPO is binding upon the Assessing Officer. The Assessing Officer at best could have invoked the provisions of Income Tax Act perse and not question the nature of expenditure i.e. after the TPO accepted to be reimbursement of expenses, the Assessing Officer challenged the same and held it to be ‘royalty’. We find no merit in the order of Assessing Officer in this regard and hence, the assessee succeeds on the alternate plea also. Accordingly, we hold that there is no merit in the disallowance of Rs. 20,47,432/- being payment to associated enterprise towards reimbursement of lease line charges by invoking provisions of section 40(a)(i) of the Act. Payment which relates to the preceding year - Admittedly, the said expenditure was booked in the preceding year and has been allowed in the hands of assessee. Once the same has been so allowed, there is no merit in making the disallowance again in the year under appeal. The said expenditure was reported in TP study report being reimbursement of lease line charges relating to the preceding year, but the same was paid in the year under consideration. The provisions of section 40(a)(i) of the Act are attracted at the first stage i.e. when booked on account of accrual basis or paid, whichever is earlier. If the said provisions had to be applied, then the same at best could be applied in the preceding year and not in the year under consideration. Accordingly, we reverse the order of Assessing Officer in this regard - Assessee appeal allowed

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• 2018 (4) TMI 179
  Levy of penalty u/s 271(1)(c) - addition on account of surrender of professional receipts - Held that:- Language used in the end of the assessment order and even while levying the penalty, the A.O. mentioned the same facts. Same facts are mentioned in the show cause notice. The show cause notice issued by A.O. under section 274 r.w.s. 271(1)(c) of the I.T. Act, is bad in law as it did not specify which limb of Section 271(1)(c) of the I.T. Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or for furnishing inaccurate particulars of income. Therefore, penalty is liable to be cancelled because the notice itself is vitiated. The issue is covered in favour of the assessee by the order in the case of Sunstar Exposition Pvt. Ltd., New Delhi (2017 (8) TMI 75 - ITAT DELHI). - Decided in favour of assessee.

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• 2018 (4) TMI 178
  Unexplained cash credit - addition u/s 68 - Held that:- Assessee filed copies of the acknowledgments of I.T.returns, audited accounts, bank statements, ROC Certificate, PAN of the creditor, confirmation of the accounts of the creditor, copy of the bank statement with ledger account of the creditor before the authorities below. Copies of the same are filed in the paper book. The documents filed on record have not been disputed by the authorities below. The credit have been taken through banking channel and creditor was having sufficient amount with them to make investment in assessee-company. The assessee, therefore, discharged its initial onus to prove identity of the creditor, creditworthiness of the creditor, genuineness of the transaction in the matter. A.O. suspected the transaction between the assessee and the creditor because the creditor has received the credits from Company controlled by Jain brothers but it would not prove that credit received by assessee was not genuine. A.O. cannot ask the assessee to prove the source of the source. None of the statements recorded during the course of search as are referred to in assessment order prove that assessee has received any accommodation entry from any person despite the fact that same were not confronted to the assessee at assessment stage. Therefore, it is proved on record that assessee has been able to explain the identity of the creditor, its creditworthiness and genuineness of the transaction in the matter - Decided in favour of assessee Annual letting value determination - assessee submitted that it is co-owner with others and that the same is used for the purpose of business for the assessee and for part period it was let-out for which rental income has already been shown - Held that:- In the case of other co-owners similar addition have been deleted when allegation have been made that it is used by Gambhir brothers for residence only. The statement of Shri Vinay Subhikhi (supra), was recorded at the back of the assessee without confronting the same to the assessee. Therefore, it cannot be read in evidence against the assessee. The A.O. in present case initiated the re-assessment proceedings under section 148 of the I.T. Act at the same address in dispute i.e., 48-Friends Colony (East), New Delhi and all the other documents also have the same address. Even the assessment order has been passed at the same address. Therefore, the contention of assessee is acceptable that the property in question have been used by the assessee for its business purpose, therefore, no annual letting value to be computed for same property. No justification to enhance the annual letting value, the addition is therefore, liable to be deleted. - Decided in favour of assessee

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• 2018 (4) TMI 177
  Disallow the interest u/s. 36(1)(iii) read with section 40A - assessee had advanced money at lower rate of interest or free of interest out of the funds borrowed by the assessee at higher rate of interest - Held that:- The assessee was required to explain firstly that the money was advanced by the assessee to its sister concerns or its subsidiary companies either at lower rate of interest or free of interest; that if it is so, how and for what purpose the money advanced by the assessee were utilized by the borrowers; and that what were the business expediencies under which the assessee had advanced the money at lower rate of interest or free of interest. In the present case, as already stated, the aforesaid conditions do not stand established cumulatively to dislodge the disallowance made by the authorities below. The other decisions relied on by the assessee are also found distinguishable on facts. No justification to interfere with the order of the ld. CIT(A) finding no infirmity therein, which has been reached after following the ratio laid down in various decisions mentioned in the impugned order. Accordingly, the appeal of the assessee deserves to fail being devoid of merits.

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• 2018 (4) TMI 176
  Validity of assessment u/s 153C - as per assessee ‘satisfaction’ has not been recorded in the case of the person who was searched u/s.132(1), that is, in whose case assessment was to be framed u/s.153A - Held that:- There is no dispute with regard to the fact that the ‘satisfaction’ in terms of Section 153C has not been recorded in the case of the person searched in whose case assessment has been framed u/s.153A, albeit the ‘satisfaction’ has been recorded by the Assessing Officer in the case of the assessee. This is also apparent from the clear cut finding of the ld. CIT (A) that the ‘satisfaction note’ has been recorded in the assessee’s file and not in the file of the person searched. See SSP Aviation Ltd. vs. DCIT [2012 (4) TMI 335 - DELHI HIGH COURT] and CIT vs. Meghna Organics (2011 (4) TMI 1329 - GUJARAT HIGH COURT) - Decided against revenue

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• 2018 (4) TMI 175
  Disallowance of Business Promotion Expenses - Held that:- AO has made disallowance without disputing the business promotion expenses, claimed by the assessee company, on estimation basis which is otherwise not permissible under law, particularly when expenditure which have admittedly been incurred through credit card. Moreover, ld. CIT (A) has rightly recorded the finding that the expenditure is less than 0.5% of the profit of the company and negligible as compared to the turnover of the business. So, we find no illegality or perversity in deletion of the business promotion expenses - Decided against revenue. Addition on account of foreign travel expenses - two staff members who have travelled were related to the Directors of the assessee company - Held that:- Merely because of the fact that such disallowance cannot be made merely on the ground that two of the staff members, who have travelled for business purpose, were related to Director of the assessee company, the same cannot be disallowed merely on the basis of estimation without going into the detail and purpose of expenses by the AO. So, we are of the considered view that ld. CIT (A) has merely restricted the addition to 50% instead of 25% made by the AO following his own order passed in AY 2008-09 in assessee’s own case which is stated to have not been challenged further. So, again, we find no illegality or perversity in the findings returned by the CIT (A). Ground determined against the Revenue. Income from undisclosed sources on sale of flat at Charmwood Village, Faridabad - Held that:- In the face of a specific document that when sale deed of the property in question has been registered in the name of a different company, namely, M/s. Quantum Vinimay Pvt. Ltd., the addition, if any, that can be made in the hands of M/s. Quantum Vinimay Pvt. Ltd.. CIT (A) after examining all these facts has corectly deleted the addition and finding no illegality or perversity in the impugned order, ground no.4 is also decided against the Revenue.

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• 2018 (4) TMI 174
  Benefit of section 10(37) - “gair mumkin” lands - scope of the agriculture land - Assessee received the compensation but the originally awarded compensation was enhanced twice - Held that:- The provision of section 10(37) are applicable to the amount received by the assessee after 01.04.2004 in respect of the “gair mumkin” lands which the Revenue official certified to be the agricultural lands in view of the irrigation facilities available, and the benefit of section 10(37) of the Act is available in such cases. - Decided against revenue.

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• 2018 (4) TMI 173
  Penalty u/s 271(1)(c) - addition on account of denial of benefit u/s 10(38) in respect of LTCG and addition on account of discrepancies in valuation of closing stock - whether the assessee has concealed particulars of income or has furnished inaccurate particulars of income? - Held that:- Following the law laid down by Hon’ble Supreme Court in Reliance Petro Products Pvt. Ltd. (2010 (3) TMI 80 - SUPREME COURT ), in case any claim put forth by the assessee is found to be not allowable, it would not amount to concealment of income rather it is a case of interpretation of the provisions which issue is otherwise a debatable one as of now the appeal having been admitted in the Hon’ble High Court. So, finding no illegality or perversity in the findings returned by the ld. CIT (A), present appeal filed by the Revenue is dismissed.

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• 2018 (4) TMI 172
  Supply of software embedded in the hardware - whether it result in to royalty income? - allowable business income - attribution to the income of PE in India - Held that:- The transfer of all or any rights in respect of any right, property or information includes and has always included transfer of all or any right for use or right to use a computer software (including granting of a licence) irrespective of the medium through which such right is transferred.’ This insertion of the Explanation has the effect of including supply of computer software within the ambit of `Royalty’. However, when a software is embedded in hardware and there is one composite price, the entire amount remains as Business income and a part of the same cannot be considered as royalty within the Explanation 4. Payment received for software, which is embedded in the hardware, has to be treated as business profits, which is of the same nature as from the supply of hardware. The impugned order is set aside to this extent and the AO is directed to compute the income of the assessee afresh by considering income from supply of software embedded in hardware as Business profits.

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• 2018 (4) TMI 171
  Reopening of assessment - denial of natural justice - Held that:- AO has not passed any order whether speaking or non speaking disposing of the objections as is evident from the record and thereby violated the principles of natural justice in terms of the decision of the Hon’ble Apex Court in the case of GKN Driveshaft’s India P. Ltd. vs ITO [2002 (11) TMI 7 - SUPREME Court] - the impugned reopening proceedings are bad in law and not sustainable. - Decided in favour of assessee.

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• 2018 (4) TMI 143
  Higher rate of depreciation on Cash Dispenser, ATM and its related accessories and UPS batteries - Held that:- We find that the assessee is eligible for depreciation @ 60% on ATM and other related accessories. As regards depreciation @ 60% on UPS is concerned, we find that though the UPS can independently function without the assistance or integration with a computer and is an alternate mode of supply of power and does not depend on any assistance from a computer, the computer can function only on a power supply and when there is no power supply, it is connected to UPS so that it can work uninterruptedly and without losing the unsaved data when the power goes off. Therefore, in our opinion, UPS also can be considered as a computer if it is connected to the ATM Machine or a Computer and depreciation thereon is allowable at 60%. AO is directed to verify if the UPS are used for the functioning of the ATM and allow depreciation accordingly. Interest on non-performing assets/sticky loan is to be recognized only when it is received or credited to the P&L A/c. - Held that:- We direct the AO to consider the interest on NPAs as income only in the year of receipt. The addition is accordingly deleted

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• Customs

• 2018 (4) TMI 170
  Furnishing of Bank Guarantee - release of seized vessel - Held that: - in the facts and circumstances of the case and only not to cause a breach of the contractual obligations as also to allow the petitioner to argue its case on merits as and when a show cause notice is issued, the seized vessel can be released. Each of these undertakings and reproduced are accepted as undertakings given to this court. In these circumstances, we modify the order of the tribunal. We modify it only to the extent of furnishing the bank guarantee in the sum of Rs. 10 crores - bank guarantee need not be furnished, but the vessel should be released provisionally to the petitioner on the express undertakings given to this court. Petition disposed off.

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• 2018 (4) TMI 169
  Demand of interest - whether the appellant is required to discharge interest for the period from 13.02.2007 to 23.10.2007 on the duty free imported goods to SEZ on its clearance to DTA on payment of duty of Rs. 3,20,52,673/- as assessed under section 30 of SEZ Act, 2005? Held that: - on clearance/removal of the goods from the SEZ to DTA, the Applicable duties of Customs as levied under the CTA, 1975 are required to be paid and the rate of duty and tariff valuation, if any applicable would be the rate as in force on the date of its removal or payment of duty as the case may be . No where under the said provision there is any mention of the payment of interest on clearance of the goods from SEZ to DTA. Under the SEZ Act and the Rules made thereunder, there is no substantive provision for charging interest. In the event, the bill of entry is returned to the importer after assessment by the proper officer, the duty shall be required to be paid and in the event he fails to pay the duty within the specified period then interest would be leviable on the amount of duty for the delayed period - In the present case, it is not in dispute that the bill of entry was filed on 23.10.2007 and after assessment, within five days, i.e. on 24.10.2007, the duty was paid. Thus, there was no delay in discharging the duty after assessment under Section 47 of the Customs Act, 1962 - interest cannot be levied for the period 13.02.2007 to 23.10.2007. Appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 167
  100% EOU - Refund of customs duty - expiry of warehouse period - case of appellant is that there was no requirement under law to pay duty as the goods would have been destroyed as per para 6.15(b) of the Foreign Trade Policy 2004-09 - Held that: - the refund claim has only been rejected on the ground that warehousing period has been expired whereas the fact of the matter is the Customs licence granted to the appellant had been renewed and the goods were still in the bonded warehouse. Further, the claim for refund under Section 27 of the Customs Act, 1962 has not been considered at all since the impugned order gives finding beyond the scope of the proceedings - also it was found that both the authorities have not considered the provisions of foreign Trade Policy 2004-2009 which by para 6.15(b) allows the appellant for destruction of the goods under intimation to the Department In view of the infirmities, the matter needs to be remanded to the original authority to consider the claim of refund - appeal allowed by way of remand.

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• 2018 (4) TMI 166
  Time limitation - revocation of CHA License - forfeiture of security deposit - even though the Enquiry Report was submitted on 25/01/2017, the Adjudicating Authority passed this order only on 26/09/2017 i.e. after the mandatory time limit of 90 days - Held that: - it has been consistently held by the Hon'ble High Courts as well as Tribunals that violation of the time limits strictly specified in the CBLR as well as the successor Regulations are to be viewed seriously. The adjudicating authority has passed the impugned order without strictly following the time limits specified in the Customs Brokers License Regulations, 2013 - impugned order set aside - Appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 165
  Classification of imported goods - Multimedia Speakers - whether classified under CTH 8519 8100 and 8527 9990 or otherwise? - Held that: - Tribunal in the appellant's own case Logic India Trading Co Versus Commissioner of Customs [2016 (3) TMI 5 - CESTAT BANGALORE], where it was held that the goods in question are properly classifiable under Chapter Heading 8518 22 00 - appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2018 (4) TMI 164
  Winding up petition - whether company petitions were not maintainable, for the reason that the respondent had received the amounts due and payable by the company from its insurers “KSure-­Korea”? - Held that:- If there is subrogation in favour of the insurer, the insurer as subrogee can file a complaint under the Consumer Protection Act either in the name of the assured as his attorney­holder or in the joint names of the assured and the insurer, for recovery of the amount due from the service provider. It was held that the insurer cannot in its own name maintain a complaint before a Consumer Forum under the Act, even if its right is traced to the terms of a letter of subrogation-­cum­-assignment executed by the assured. Even assuming that there was a subrogation applying the principles of law as laid down by the Constitution Bench in Economic Transport Organization, Delhi Vs. Charan Spinning Mills Pvt. Ltd. & Anr. (2010 (2) TMI 1264 - SUPREME COURT) needs to be held that the company petitions at the behest of the respondent were nevertheless maintainable.

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• 2018 (4) TMI 163
  Winding up petition - proof of debt as due under section 433(e) of the Companies Act - winding up petition has been filed as pending claim for a sum of Rs. 1,10,467/- and the second is the outstanding C-Forms for the year 2011-12 - Held that:- Despite several orders of this court the respondent has failed to supply the said C-Forms. Alongwith CA 1840/2013 the respondent had also placed on record photocopies of C-Forms. Despite this, the original C-Forms have not been handed over to the petitioner. Consequent liability would obviously will fall on the respondent. The respondents have disputed the liability saying that some of the goods were not delivered as noted in one of the delivery challans. It has also been pleaded that the rates have never been finalised as is sought to be claimed in the invoices. On the face of the facts on record, it is not possible to conclude that any debt is due to the petitioner. In my opinion the debt is bona fidely disputed by the respondent. It is settled legal position there where is a genuine dispute on the debt claimed no winding up petition would lie. A Company Court retains discretion and is not expected to hold a full trial of the matter. In the facts of this case in my opinion the present winding up petition for the claim of Rs. 1,10,0000 would not lie. Direct that on the petitioner filing an affidavit stating that on account of the assessment by the statutory authorities, a liability of Rs, 1,08,000/- has been imposed on the petitioner due to non receipt of C-form which the respondent was to supply, the sum of Rs. 1,10,000/- deposited in court by the Respondent be released alongwith accumulated interest to the petitioner which will be in full and final settlement of the dues claimed on account of non-receipt of the C-Forms

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• FEMA

• 2018 (4) TMI 162
  Order passed by an officer coram non judice - gross violation of the principles of natural justice. These orders have been passed without complying with the statutory requirements - Held that:- Though a writ of certiorari can be issued by this court despite the presence of alternate and equally efficacious remedy, that is not a prohibition or rule, but a matter of prudence, still, whether to issue such a writ or not depends upon the facts and circumstances of each case. No general rule can be laid down. Eventually, this court's jurisdiction under Article 226 of the Constitution of India is extraordinary, discretionary and equitable. One who invokes this jurisdiction must approach this court with clean hands. Once we have noted that the petitioner never disputed the power of the authority to issue the show cause notice, the competence to adjudicate it and pass a final order thereon and that the notice refers to both enactments, namely, FERA and FEMA, all the more we are not inclined to grant any relief in writ jurisdiction.

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• Service Tax

• 2018 (4) TMI 168
  Refund claim - unjust enrichment - the amount of refund not shown as receivables in their books of accounts - crux of the argument of the Revenue is that since the amount of service tax paid has been shown as an expenditure in their books of accounts, therefore, being a part/cost of the service, accordingly, recovered from the customers, hence the incidence of duty has been passed on to others - Held that: - even though the amount of refund was shown as expenditure in their books of accounts, it cannot be construed that the incidence of tax has not been passed on to others - appeal dismissed - decided against appellant.

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• 2018 (4) TMI 161
  Voluntary Compliance Encouragement Scheme - rejection on the ground of failure to deposit the balance amount on or before December 31, 2014 - appellant applied for extension of the time limit, but there was no response and later on the scheme for applicant was rejected - Held that: - While there can be no dispute about the fact that VCES Scheme, 2013 is in the nature of an Amnesty Scheme and its provisions have to be strictly interpreted and the time limit prescribed therein has to be strictly adhered to - However learned Advocate appearing for the appellant has drawn my attention to the provision of Section 110 of the scheme. In terms of the said section, it deals with a situation where a declarant fails to pay the tax dues, either fully or in part, as declared by him, such dues alongwith interest therein shall be recovered under the provisions of Section 87 of the chapter. Section 110 is a stand alone section and makes no reference to Section 107 (4) which only deals with a situation of non-payment of dues from 01/07/2014 to 31/12/2014. Section 110 deals with the situation where there is no payments even after 31/12/2014 - the applicability of the said Section 110 is required to be examined independently by the lower authorities, for which the matter is being remanded for re-consideration. Appeal allowed by way of remand.

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• 2018 (4) TMI 160
  Refund of service tax - denial on the ground that the exemption from payment of service tax of services used in SEZ is allowed by way of refund to the service receiver situated in SEZ - whether the appellant are entitled to refund of service tax of Rs. 5,94,225/- paid during the period 03.03.2009 to 20.05.2009 in providing Repair & Maintenance Service to various units situated in SEZ? - Held that: - There is no room for any intendment in the interpretation of the said exemption Notification, which has to be strictly interpreted. The only exception carried out in the said notification is that in the event the service provider and service receiver are one and the same person, the service provider could claim the refund of service tax paid on the specified services used in the SEZ. It is the receiver, who is entitled to refund and not the service provider - The claimant of refund is not the service receiver, but, the service provider, and not entitled for refund - rejection upheld - appeal dismissed - decided against Revenue.

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• 2018 (4) TMI 159
  Penalty - non-payment of service tax - Held that: - the appellant is a small contractor who was new to the service tax and was not aware of the Service Tax procedure - further, he has not charged nor collected the service tax from his customer and has paid the service tax more than what was due from him under the provisions of the Act. There was a reasonable cause for the failure to pay the service tax - penalty set aside by invoking section 80.

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• 2018 (4) TMI 158
  100% EOU - Refund of unutilized CENVAT credit - Rule 5 of the CENVAT Credit Rules - denial on the ground that the original invoices were not produced - Held that: - the certificate of the Chartered Accountant was produced by the appellant and it is certified that the services covered by the invoices were used for providing export of services for the relevant period and a consolidated statement of invoices was filed which was certified by the Chartered Accountant also - there is no need of signature on the computer generated invoices - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2018 (4) TMI 157
  Interest on delayed refund - the refund amount was sanctioned to the appellant on 30.04.1996 by the Adjudicating Authority, but, transferred to the Consumer Welfare Fund, as the appellant failed to establish that the burden of duty has not been passed on to others. The said order was reversed on appeal and the amount was paid to the appellant on 27.10.1999 - whether the appellant would be entitled to interest on delayed refund? Held that: - Consequent to the principle laid down by the Hon’ble Supreme Court in the case of UOI Vs. Solar Pesticides (P) Ltd. [2000 (2) TMI 237 - SUPREME COURT OF INDIA], observing that the principle of Unjust enrichment is applicable to refund of duty on goods captively consumed, this Tribunal remanded the matter to the Adjudicating Authority with the liberty to the appellant to produce evidences to establish that the incidence of duty has not been passed on to others - Consequently, the appellant produced the evidences before the Adjudicating Authority and established that the incidence of duty has not been passed on to others. There was no basis for denying interest on delayed refund to the appellant - appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 156
  Refund claim - principles of natural justice - pre-deposit made by assessee - Held that: - any amount deposited during the investigation will be in the nature of pre-deposit made by the assessee and principle of unjust enrichment will not be applicable in such cases - impugned order not sustainable - appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 155
  CENVAT credit - input service - building/PR construction services - Held that: - the construction of the factory in the present case was completed in June 2009 and the definition of input service was amended only w.e.f. 01/04/201 1 excluding the credit in respect of setting up of a factory building - also, during the relevant time, the setting up and modernization of the factory building was included in the definition of input service - credit allowed - appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 154
  CENVAT credit - duty paying documents - denial on the ground that the courier bill of entry is not included as a prescribed documents - Held that: - credit has rightly been taken on courier bill of entry - reliance placed in the case of Precision Electronics Ltd. Versus Commissioner of Central Excise, Noida [2015 (7) TMI 1228 - CESTAT NEW DELHI], where it was held that Since, the Courier Bill of Entry has been issued by the courier agency in favour of various parties/consignees, there was no scope for issuing the original invoice in favour of each and every party - credit allowed - appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 153
  Benefit of N/N. 10/97-C.E. dt. 1-3-1997 - Bio-technology products such as Enzymes - Revenue's case is that only items which are used as consumables to various machineries specified in the Notification are only eligible for exemption - whether the Enzymes supplied by the appellants would be eligible for exemption under the category of 'consumables'? Held that: - the Enzymes are used by the research institutes for the purpose of research in the field of DNA or RNA. It is common knowledge that the said Enzymes are used in the scientific instruments installed in the premises of the institutes - the Enzymes which are used in the scientific and technical instruments, would be eligible for the benefit of the exemption of excise duty as per the N/N. 10/97 as they are consumed during the research conducted by such various institutes. It is also seen that the conditions which are laid down by the said notification have been complied with by the appellant. The Enzymes which are cleared by the appellant to the research institutes, on the strength of the certificates issued by such institutes, are to be considered as consumables used in the scientific and technical instruments - appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 152
  CENVAT credit - quantum of reversal - capital goods removed after use - whether instead of payment of duty on the transaction value, whether the respondent is required to reverse in entirety the credit which was originally taken? Held that: - similar issue was considered by the Larger Bench in the case of CCE H derabad Vs. Navodhaya plastic industries ltd. [2013 (12) TMI 82 - CESTAT CHENNAI]. The Larger Bench observed that there is no justification for insisting on reversal of entire credit availed. Appeal dismissed - decided against Revenue.

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• 2018 (4) TMI 151
  CENVAT credit - duty paying documents - endorsed Bills of Entry consigned to M/S. Sanofi Synthelabo (India) Ltd. - Held that: - issue decided in the case of Commissioner of Central Excise Bhopal Versus M/s. S.S. Cropcare Ltd. [2016 (7) TMI 1140 - CESTAT NEW DELHI], where it was held that No reference stand made to any of the provisions of law to bar availment of cenvat credit on the basis of endorsed Bill of Entry and credit allowed - credit allowed - appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 150
  Classification of software - Finacle Software developed and customized for banks - whether the Finacle software supplied by the applied to various banks, merits to be classified under 8523 8020 as Information Technology Software and charged to Excise duty? - Held that: - for the period from March 2006 upto 15.05.2008 excise duty is to be paid only for the value of the Finacle software in packaged form i.e. recovered in the form of licence fee - w.e.f. 16.05.2008 the appellant is liable to payment of service tax under the definition of ITSS. The definition of ITSS under Section 65(105) (zzze) includes the transfer of right to use as well as other services carried out by the appellant. Since the service tax has been paid by the appellant w.e.f. 16.05.2008, the appellant is required to make payment of excise duty on the value of the software but the same, if paid, can be allowed as cenvat credit of input services for discharge of service tax on ITSS. Whether such software is in the nature of customised software i.e. designed, developed for a specific user or client OR whether it is in the nature of packaged software or canned software i.e. software developed to meet the needs of a variety of users and which is intended for sale or capable of being sold off the shelf? - Held that: - in respect of Finacle software, there is an element of supply of software developed to meet the needs of a variety of users. Since Finacle software is not developed, ab initio, for supply to each and every customer, such software falls within the category of packaged or canned software. Such software cannot be considered as customized software designed and developed for a specific user. Benefit of N/N. 22/2009 dt. 07.07.2009 - Held that: - the software licence only allows the purchaser of the software to use the Finacle software. Since the transfer of licence is not for the purposes cited in the notification, the appellant will not be eligible for the benefit of the notification. Time limitation - Held that: - department was not aware of the fact since 16-05.2008, demand not hit by time limitation. The issue is remanded to the adjudicating authority for requantifying the demand - appeal allowed by way of remand.

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• 2018 (4) TMI 149
  Cenvat Credit - input services - outdoor catering services - scope of the service post 1.4.2011 - Held that: - primarily the service should be first covered under the definition of input service and once the service is not covered due to exclusion clause irrespective of the fact whether the cost of service has been taken as expenditure in the books of accounts does not render the services as an admissible for CENVAT credit. The food is always mainly for personal consumption only. The canteen provided in the company is mainly for the personal consumption of the employee and it cannot be interpreted in any other way. Therefore, once such services are excluded, whether the employer or employee bears the cost partially or fully, has no bearing on the amendment. The outdoor catering service is not eligible for input service credit post amendment dated 1.4.2011 vide N/N. 3/2011 dated 18.3.2011. Matter reverted to the regular Bench for deciding the respective appeals.

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• 2018 (4) TMI 148
  CENVAT credit - demand on the ground that the rejected goods were not reprocessed as required under Rule 16 of Central Excise Rules, 2002 - Held that: - the demand has been confirmed on the basis of assumptions and presumptions and by taking the average of the last 5 years - no investigation was conducted by the Department and there is no allegation that the appellant has removed the rejected goods as such. The appellant being a manufacturer is paying duty on clearances effected by the recycling rejected goods and if the appellants are asked to pay the duty on the rejected goods once again, then it amounts to double duty. Appeal allowed - decided in favor of appellant.

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• 2018 (4) TMI 147
  Liability of duty - printed material used as an advertisement for the products - Department is of the view that it is packed material and falls under Chapter 48 and hence, liable for duty - Held that: - identical issue has come up before the Calcutta High Court in the case of CCE, Kolkata-Ill Vs. Harbans Lal Malhotra [2008 (8) TMI 232 - CALCUTTA HIGH COURT] where it was held that the material used by the respondent cannot be said to be advertising materials - appeal dismissed - decided against appellant.

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• CST, VAT & Sales Tax

• 2018 (4) TMI 146
  Refusal to issue Form-C - natural gas purchased by petiitoner in the course of inter- state trade or commerce and used by it for the generation of electricity - whether after the amendment of the CST Act, the petitioner is entitled to be issued C Forms in respect of the natural gas purchased by it in the course of inter-state sales and used by it for the generation of electricity? Held that: - A reading of Section 8 of the CST Act and Rule 12 of the CST (R T) Rules along with Rule 7 of the CSTH Rules shows that C Form is to be issued by the tax authorities of the State in which the purchaser of goods is based. The C Form would be given to the seller who would in turn furnish the same to the prescribed authority for claiming a lower rate of tax. In the present case, the petitioner purchased natural gas from the Oil Companies from Gujarat. The sales occasioned the movement of natural gas from Gujarat to Haryana. The petitioner is a registered dealer in the State of Haryana. The Haryana authorities had been issuing C Forms to the petitioner which were given to the Oil Companies in Gujarat who produced the same before the Gujarat tax authorities and were assessed at a reduced rate of tax - even after the implementation of the CGST Act, the items mentioned in amended entry 54 are governed by the CST Act. Further, a notification under Section 9 (2) of the HGST Act, 2017 not having been issued natural gas continues to be covered under the CST Act. The provisions of Section 8 of the CST Act, Rule 12 of CST (R T) Rules and declaration Form C have not undergone any amendment after the implementation of the GST laws. There cannot be any occasion to restrict the usage of C Form only for the purposes of re-sale of the six items mentioned in the amended definition of goods in Section 2 (d) of the CST Act. The purchase of the said goods for purposes of re-sale, use in the manufacture or processing of goods for sale, in the tele-communications network or mining or in generation or distribution of electricity or any other form of power would qualify the purchaser for registration under Section 7 (2) of the CST Act. Section 7 (2) does not stipulate that only a dealer liable to pay tax under the sales tax law of the appropriate State in respect of any particular goods is entitled to apply for registration. Nor does section 7 (2) stipulate that an application for registration can be made or C Form can be issued only in respect of the sale of the same goods prescribed in the course of an inter-state sale. A dealer liable to pay tax under the sales tax law of the appropriate State in respect of any goods would be covered by Section 7 (2) of the Act. The respondents are liable to issue C Forms in respect of the natural gas purchased by the petitioner from the Oil Companies in Gujarat and used in the generation or distribution of electricity at its power plants in Haryana - petition allowed - decided in favor of petitioner.

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• 2018 (4) TMI 144
  Revision of assessment - Whether the Tribunal is correct in accepting the books of accounts of the dealer/assessee at the time of hearing of appeal when the same was not produced before the Assessing Authority for passing order of assessment? - Held that: - Appellate Authority and Tribunal are the final fact finding authorities and when the books of accounts were produced, the Appellate Authority has analysed the same. Turnover is found in the books of accounts. Both the Appellate Authority and the Tribunal have properly analysed the facts and evidence and accordingly answered the issues in favour of the assessee. There is no perversity in the finding. Revision dismissed - decided against petitioner.

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