TMI Tax Updates - e-Newsletter
April 7, 2017

Case Laws in this Newsletter:

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

TMI SMS

• The restriction on cash transaction (an amount of two lakh rupees or more) shall not apply to withdrawal of cash from a bank or post office

  ---

Articles

1. GST in India – Is it really a “One Nation One Tax”

   By: Rakesh Garg

2. GST - COMPOSITION LEVY

   By: DR.MARIAPPAN GOVINDARAJAN

News

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

2. First Bi-monthly Monetary Policy Statement, 2017-18

3. RBI Reference Rate for US $

4. Budget 2017 takes Steps to discourage Cash transactions & curb Black Money

Notifications

Customs

1. 12/2017 - dated 5-4-2017 - Cus

Seeks to amend Notification No.12/2012-Customs, dated the 17th March, 2012, so as to allow duty free import of raw sugar upto a quantity of 5 lakh MT under Tariff Rate Quota (TRQ) upto and inclusive of 12th June 2017

2. 33/2017 - dated 6-4-2017 - Cus (NT)

Rate of exchange of conversion of the foreign currency with effect from 7th April, 2017

DGFT

3. 01/ 2015-2020 - dated 5-4-2017 - FTP

TRQ for Raw Sugar: Amendment in import policy of raw sugar classified under Exim Code 170114 of Chapter 17 of ITC (HS), 2011-Schedule-I (Import Policy)

Income Tax

4. 28/2017 - dated 5-4-2017 - IT

Central Government notifies provision of section 269ST shall not apply to receipt by any person from an entity referred to in sub-clause (b) of clause (i) of the proviso to section 269ST

5. 27/2017 - dated 5-4-2017 - IT

Income –tax (Seventh Amendment) Rules, 2017

Circulars / Instructions / Orders

VAT - Delhi

1. 1/2017-18 - dated 3-4-2017

Guidelines relating to downloading of Statutory Forms

Highlights / Catch Notes

GST

• Rajya Sabha Greenlights GST Rollout Starting July 1, Following Lok Sabha Approval for Major Tax Reform.

  : Rajya Sabha today cleared the decks for the rollout of the historic Goods and Services Tax (GST) from July 1 - Lok Sabha has already cleared these bills
  Visit to Get Source

  ---

Income Tax

• Section 269ST Cash Transaction Limits Exempt for Specified Entities by Government Notification.

  Notifications : Central Government notifies provision of section 269ST shall not apply to receipt by any person from an entity referred to in sub-clause (b) of clause (i) of the proviso to section 269ST - Notification
  Visit to Get Source

  ---

• Income Tax Act Section 31: Expenses for Repair or Replacement of Old Machinery Not Deductible as Current Repairs.

  Case-Laws - SC : Claim of deduction as Current repairs u/s 31 - when each of the Department/Division perform different functions, repair/substitution of an old machine will not come within the definition of the word “current repairs” and deduction cannot be claimed thereunder - SC
  Visit to Get Source

  ---

• Loaner Sets Expenditure: Not Capital; Aligns with Revenue Despite Amortization Over 36 Months.

  Case-Laws - AT : Capital expenditure or revenue expenditure - The ‘loaner’ sets have been found to have average life of 36 months. In such circumstances, merely because the assessee has amortized the expenditure, it does not warrant the conclusion that such expenditure is capital expenditure. - AT
  Visit to Get Source

  ---

• Assessee's Sham Rent Transaction with Mother Denies HRA Exemption Claim u/s 10(13A) of Income Tax Act.

  Case-Laws - AT : HRA exemption u/s 10(13A) - assessee was claiming loss from self occupied property and also claiming exemption u/s.10(13A) - The whole arrangement of rent payment by the assessee to her mother is a sham transaction which was undertaken by the assessee - AT
  Visit to Get Source

  ---

• Tax Liability Falls on Individual Assessee for Interest Income and Contracts Executed in Their Name, Not Partnership Firm.

  Case-Laws - AT : Liability to pay tax - Taxable in the hands of partner or Partnership Firm - the assessee has received interest and executed contracts in his name and TDS made on the interest is credited in the name of the assessee - to be taxed in his hand - AT
  Visit to Get Source

  ---

• Cash Withdrawal Exemption: Transactions Over Rs. 2 Lakh from Banks or Post Offices Not Restricted by Income-tax Act Sections 269ST, 271DA.

  News : The restriction on cash transaction (an amount of two lakh rupees or more) shall not apply to withdrawal of cash from a bank, co-operative bank or a post office savings bank - Sections 269ST & 271DA to the Income-tax Act.
  Visit to Get Source

  ---

Customs

• Amendment Allows Duty-Free Import of 5 Lakh Metric Tons of Raw Sugar Until June 12, 2017, Under TRQ.

  Notifications : Seeks to amend Notification No.12/2012-Customs, dated the 17th March, 2012, so as to allow duty free import of raw sugar upto a quantity of 5 lakh MT under Tariff Rate Quota (TRQ) upto and inclusive of 12th June 2017 - Notification
  Visit to Get Source

  ---

• Settlement Commission's March 27, 2015 Order Deemed Invalid Based on Case Facts.

  Case-Laws - HC : Validity and legality of order passed by Settlement Commission - rejection of the application - looking to the totality of the facts of the present case, there is no hesitation in holding that the impugned order passed by the Settlement Commission dated 27th March, 2015 cannot be sustained. - HC
  Visit to Get Source

  ---

• Engineering Fees Excluded from Customs Value: Post-Import Services Not Part of Assessable Value.

  Case-Laws - AT : Valuation - inclusion of fees for engineering services - fee for technical services which are related to post-importation activities are not liable to be included in the assessable value even if connected with the goods under import- AT
  Visit to Get Source

  ---

• Appellant Denied Key Evidence in Apple Juice Valuation Case, Breaching Natural Justice Principles and Hindering Defense Efforts.

  Case-Laws - AT : Valuation - 'apple juice concentrate' - documentary evidence of contemporaneous import not furnished - there is a gross contravention of the principles of natural justice, as the appellant were denied access to the document of contemporaneous import - AT
  Visit to Get Source

  ---

Indian Laws

• High Court Rules Writ Petition Not Maintainable for Termination in Private Company Under SEZ Act.

  Case-Laws - HC : A Private limited company is not discharging any public or governmental functions in carrying on its business as per the provisions of the SEZ Act - writ petition challenging the order of termination of petitioner who was working as a Senior Director is not maintainable - HC
  Visit to Get Source

  ---

Service Tax

• Spare Parts Costs Excluded from Service Tax Valuation for Authorized Service Stations per Tax Guidelines.

  Case-Laws - AT : Valuation - For authorized service stations, the cost of the spare parts and cost of handling of spare parts are not to be included in the value of the services rendered - AT
  Visit to Get Source

  ---

• Court Drops Tax Demands on Reimbursable Costs for Stationery, Confirms They Are Actual Expenses, Not Taxable Income.

  Case-Laws - AT : Valuation - the reimbursable amount sought to be taxed by revenue are in fact actual cost of stationery etc., hence adjudicating authority was correct in dropping demands on this count. - AT
  Visit to Get Source

  ---

• CENVAT Credit Allowed for Setting Up Research Labs if Used for Output Services, Input Services Contribute to Establishing Premises.

  Case-Laws - AT : CENVAT credit - input services - setting up of Research Laboratory premises - if the premises are used for providing the output service, the credit of input services used for setting up the premises of service provider must be allowed. - AT
  Visit to Get Source

  ---

Central Excise

• Appellant Denied Refund of Voluntarily Reversed Cenvat Credit Despite Extended Limitation Period Being Inapplicable.

  Case-Laws - AT : Refund - the cenvat credit had reversed by the appellant voluntarily without any protest. In that circumstances, although the extended period of limitation is not invokable, the appellant is not entitled to claim refund of the same. - AT
  Visit to Get Source

  ---

• CENVAT Credit Allowed for Exempt Goods as Duty Payment Acts as Credit Reversal on Inputs.

  Case-Laws - AT : CENVAT credit - the appellant cannot be denied Cenvat Credit as final goods which are exempt has been cleared by the appellant on payment of duty. The said payment of duty shall amount to reversal of Cenvat Credit on inputs - AT
  Visit to Get Source

  ---

• Equal Penalty for Illegal CENVAT Credit Invalid Without Invoking Section 11AC in Show Cause Notice.

  Case-Laws - AT : Imposition of equal penalty - availment of illegal CENVAT credit - when Section 11AC of CEA, 1944 has never been invoked by the Revenue in the SCN, the plea by the Revenue for imposing equivalent penalty is not legally tenable and cannot be accepted - AT
  Visit to Get Source

  ---

Case Laws:

• Income Tax

• 2017 (4) TMI 304
  Commission considered for determining the deduction under section 80HHC - Held that:- High Court following its earlier decision in the case of Commissioner of Income-Tax Vs. P.R. Prabhakar [2004 (5) TMI 26 - MADRAS High Court] dismissed the appeal holding Tribunal is not right in law in holding that commission and brokerage for procuring export contracts for other exporters is exempt under section 80HHC on the ground that the same is export profits. As brought to notice that the decision in P.R. Prabhakar (Supra), has been reversed by this Court in the case of P.R. Prabhakar Vs. Commissioner of Income-Tax [2006 (7) TMI 121 - SUPREME Court] has been reversed by this Court in the case of P.R. Prabhakar Vs. Commissioner of Income-Tax,(2006)6 SCC 86, wherein this Court has said that the commission is also to be considered for determining the deduction under section 80HHC of Income Tax Act, 1961. Since the decision relied upon by the High Court dismissing the appeal has been reversed by this Court, the impugned order cannot be sustained and the same is set-aside. The matter is remanded back to the High Court for deciding the same on merits, in accordance with law.

  ---

• 2017 (4) TMI 303
  Valuation - reference to the Departmental Valuation Officer - Local Public Works Department rates applied - Held that:- From the order of the Tribunal we find that the Tribunal has even though held that the reference to the Departmental Valuation Officer in question is not valid, in view of the decision of this Court in the Case of Amiya Bala Paul v. CIT (2003 (7) TMI 4 - SUPREME Court) but it has also held that it is s settled principle of law that in place of Central Public Works Department rates local Public Works Department rates are to be applied and adopted to determine the cost of construction. In view of the fact that Section 142A was inserted by Finance (No.2)Act, 2014 (23 of 2004) w.e.f. 15th November, 1972 and subsequently again substituted by Finance Act, 2010 (14 of 2010) w.e.f. 1st July, 2010 and Finance (No.2) (225 of 2014) w.e.f. 1st October, 2014, as the proviso to sub-section (3) of Section 142A as it existed during the relevant period, reference to the Departmental Valuation Officer can be made because assessment in the present case had not become final and conclusive because the appeal preferred by the Revenue under Section 260A of the Income Tax Act, 1961 was pending before the Rajasthan High Court. In view of the finding recorded by the Tribunal that the local Public Works Department rates are to be applied and adopted in place of Central Public Works Department rates, we do not find any good ground to interfere in the impugned judgment on this issue on merits

  ---

• 2017 (4) TMI 302
  Liability to pay tax for capital gains - Held that:- It is not in dispute that M/s Annamalaiar Textiles (P) Ltd. did not pay any amount to the shareholders who ultimately got the shares transferred in their names. The respondent was holding 100 per cent shares of M/s Annamalaiar Textiles (P) Ltd., before it was transferred to Group B. No payment was made to the shareholders belonging to Group B and, therefore, the question of there being any capital gains at the hands of the respondent herein does not arise. Needless to mention that the transaction of payment of Rs. 42.45 lakhs had been subjected under the Gift Tax Act and the Department cannot claim both under the Gift Tax Act and also levy tax under the Income Tax Act.

  ---

• 2017 (4) TMI 301
  Entitlement to deduction on account of revenue expenditure incurred on machineries replaced - Held that:- Each items for which deduction under the head “current repairs” was sought is a machine by itself and therefore deduction under Section 31(i) cannot be allowed. As in the case of Sarvana Spinning Mills (P) Ltd. [2007 (8) TMI 16 - SUPREME COURT OF INDIA] held that if the current repairs relate to independent machines itself instead of repair of a part of that machine, deduction cannot be granted under Section 31(i) of the Income Tax Act, 1961. Also in a textile mill there are several departments/divisions. In each department/division there are several machines and perform different functions. Therefore, when each of the Department/Division perform different functions, repair/substitution of an old machine will not come within the definition of the word “current repairs” and deduction cannot be claimed thereunder. Respondent is not entitled for any deduction under the head “current repairs” as claimed and allowed by the two authorities. - Decided against assessee

  ---

• 2017 (4) TMI 300
  Conversion of the trading shares into investment shares - treating the long term capital gain arising from the sale of those shares as profit of trading in shares and bringing the same to tax - Held that:- Section 45(2) of the Act provides for conversion by the owner of a capital asset into or its treatment by him as stock-in-trade of a business carried on by him as chargeable to income-tax as income of his previous year in which such stock-in-trade is sold or otherwise transferred by him and fair market value of the asset on the date of such conversion or treatment shall be deemed to be the full value of the consideration received or accruing as a result of the transfer of a capital asset. The Act however does not provide for the conversion of stock-in-trade into capital asset. In Dhanuka & Sons (1978 (7) TMI 22 - CALCUTTA High Court) the same situation was contemplated where on stock transferred in investment account, the question of capital loss or capital gain, was held, would arise if such shares be disposed of at a value other than the value at which it was transferred from the business stock. We, on noticing that the Tribunal did not really hold otherwise but had held against the assessee on the point of resjudicata, had formulated the above question. Nevertheless for the reasons aforesaid we answer the question suggested by the assessee in the affirmative and in its favour. In that regard the said circular dated 29th February, 2016 has no application because the assessee’s stand was not accepted by the Revenue - Decided in favour of the assessee.

  ---

• 2017 (4) TMI 299
  Revision u/s 263 - Held that:- On a careful perusal of the record, it is apparent that the Commissioner of Income Tax as well as the Income Tax Appellate Tribunal both have recorded a finding to the effect that though the records were filed before the Assessing Officer and a detailed questionnaire was also issued to the appellant by the Assessing Officer to which a reply was filed by the appellant in that regard, the Assessing Officer did not apply his mind nor did he conduct an enquiry into the matter although he has recorded in the note-sheet that the reply filed by the appellant was not satisfactory and did not explain all the facts. The Income Tax Appellate Tribunal on the basis of this finding of fact correctly recorded by it has held that the present case is one of total lack of enquiry and by placing reliance on the decisions rendered by the Supreme Court in the cases of Malabar Industrial Co. Ltd. (2000 (2) TMI 10 - SUPREME Court) has recorded a conclusion that such an order is erroneous and prejudicial to the interest of revenue - Decided against assessee.

  ---

• 2017 (4) TMI 298
  Disallowance u/s 14A - as per Revenue he could disallow the expenditure even there is no income i.e., dividend by taking recourse to Rule 8D - Held that:- In the instant case, there is no dispute that no income i.e., dividend, which did not form part of total income of the Assessee was earned in the relevant assessment year. Therefore, to our minds, the addition made by the Assessing Officer by relying upon Section 14 A of the Act, was completely contrary to the provisions of the said Section. According to us, Rule 8D, only provides for a method to determine the amount of expenditure incurred in relation to income, which does not form part of the total income of the Assessee. Rule 8 D, in our view, cannot go beyond what is provided in Section 14 A of the Act. - Decided in favour of assessee

  ---

• 2017 (4) TMI 297
  Exemption u/s 80(P)(2) eligibility - assessee a Primary Agricultural Credit Co- operative Society registered under the Kerala Co-operative Society Act - Held that:- Respectfully following the judgment in the case of Chirakkal Service Co-operative Bank Ltd ( 2016 (4) TMI 826 - KERALA HIGH COURT) CIT(A) is justified in directing the Assessing Officer to grant benefit of section 80P(2) of the Act wherein held that the primary agricultural credit society registered under the Kerala Cooperative Societies Act, 1969, is entitled to the benefit of deduction u/s 80P(2). - Decided in favour of assessee

  ---

• 2017 (4) TMI 296
  Levy of penalty under section 271(1)(c) - disallowance of loss arising on account of assignment of bad debts - Held that:- Where the assessee had filed full and complete particulars in the audit report itself and had tried to justify the admissibility of the said expenditure being revenue, but merely because the said expenditure has not be allowed in the hands of assessee, does not warrant the levy of penalty under section 271(1)(c) of the Act It is not the case of Revenue that the details which were supplied by the assessee in the return of income, are not accurate, not exact or correct or not according to the truth or erroneous. In the present set of facts also, the assessee had furnished the particulars of its income and had also made a declaration with regard to its claim of expenditure which was found to be not admissible and the expenditure claimed was disallowed in the hands of assessee. However, such disallowance of expenses cannot tantamount to furnishing of inaccurate particulars of income. Accordingly, we hold so. In the absence of the same, no penalty under section 271(1)(c) of the Act could be levied. No penalty is leviable under section 271(1)(c) of the Act on the ground that the quantum appeal filed by the assessee is admitted by the Hon’ble High Court on substantial question of law. Since the appeal on substantial question of law is admitted and pending before the Hon’ble High Court, the issue is debatable and on disallowance of such debatable issue, there is no merit in levy of penalty under section 271(1)(c) of the Act. Accordingly, we delete penalty levied under section 271(1)(c) of the Act in respect of disallowance - Decided in favour of assessee

  ---

• 2017 (4) TMI 295
  Eligibility to claim the deduction under section 80IB(10) -whether the assessee can claim such deduction in the return of income filed under section 153C - Held that:- DVO during the course of appellate proceedings has given physical report of various flats constructed by the assessee and it has been reported that 33 flats out of total 156 flats have, after merger were beyond area of 1000 sq.ft. Accordingly, the assessee is not entitled to claim the deduction under section 80IB(10) of the Act in respect of such merged 33 flats. Since the assessee is not entitled to the benefit of deduction under section 80IB(10) of the Act in respect of such flats, the additional income, if any, offered on account of on-money in respect of said 33 flats is to be brought to tax in the hands of assessee, and the assessee is not entitled to claim the deduction under section 80IB(10) of the Act in respect of such on-money on 33 flats. The amendment brought in by insertion of 80IB(14) of the Act is w.e.f. 01.04.2005 and accordingly, is applicable for such projects which are approved after 01.04.2005. The project of the assessee was approved on 24.03.2005 and consequently, the amendment brought in on 01.04.2005 is not applicable to the project of assessee. Where the assessee has received sanction on 24.03.2005 and the local authority has even issued the completion certificate on 08.06.2007 for construction of the said flats, then in order to determine the built up area of the flats, the area of balcony and terrace is to be excluded and since in respect of balance flats after such exclusion, the area is less than 1000 sq.ft., the assessee is entitled to prorata deduction under section 80IB(10) of the Act. Further, the assessee is also entitled to prorata deduction under section 80IB(10) of the Act in respect of on- money received on such flats which are entitled to the claim of deduction The search was carried out against the assessee on 16.10.2008 and the assessee had filed the original return of income on 14.09.2008, hence as per provisions of section 153C r.w.s. 153A of the Act , the proceedings relevant to the year under consideration would abate. Hence, the assessee while filing the return of income in response to notice issued under section 153C r.w.s. 153A of the Act is entitled to make a fresh claim of such deduction and the same is to be allowed in the hands of assessee, if in accordance with law. Accordingly, we hold so. Relying on the ratio laid down in Malpani Estates Vs. ACIT (2014 (2) TMI 944 - ITAT PUNE), we hold that the assessee could make the claim under section 80IB(10) of the Act with regard to enhanced income which was well within the scope and ambit of assessments under section 153A of the Act. The additional income when received during the course of carrying on the business activity of developing housing project is derived from the housing project, which is eligible for claiming deduction under section 80IB(10) of the Act, hence the assessee is eligible to claim the deduction on such additional income. Following the same parity of reasoning, we hold that the assessee is entitled to claim the deduction under section 80IB(10) of the Act on such additional income which is in relation to the project which is entitled to the aforesaid deduction. However, in respect of 33 flats, the assessee is not entitled to claim the deduction under section 80IB(10) of the Act and hence, is not eligible to claim the deduction under section 80IB(10) of the Act in respect of additional income arising from sale of such 33 flats.

  ---

• 2017 (4) TMI 294
  Unexplained cash credit under section 68 - whether the cash deposits in bank account are the sales receipt of the business carried on by the assessee - Held that:- This issue has been examined by the Tribunal in assessment year 2009-10 in view of the facts that the assessee was not having any sales tax or VAT number or any details of purchaser or seller etc. We have observed that all those facts are in existence in the year under consideration also. Therefore, the issue that the income declared in the year under consideration is under presumptive scheme of taxation, is not relevant for deciding issue in dispute raised in grounds before us. If the assessee has not complied the provision of section 44 AF of the Act, then there are other measures under the Act available before the Assessing Officer. Further, the issue whether the return of income was defective or not, cannot be racked before us at this stage after accepting the return of income and completing the assessment. Further, the contention of the Ld. DR that money was deposited in bank account at outstations, itself shows that the amount deposited in Bank account, cannot be the assessee’s own money alleged to be routed through bank account . In view of above, we do not find any error on the part of the Ld. CIT-A to have followed the order of the Tribunal for assessment year 2009-10. The Ld. DR has also contended that apart from the trading addition, the Ld. CIT-A ought to have examined the issue of unexplained investment as this was the first year of bank account which was not the case for AY 2009-10. However, in absence of any ground or any material to support the above contention, we reject the same. - Decided against the revenue.

  ---

• 2017 (4) TMI 293
  Capital expenditure or revenue expenditure - purchase of ‘loaner’ and ‘demo’ sets - AO treated them as capital asset against claim of the assessee as same were part of ‘inventory’ - Held that:- Hon’ble Apex Court in the case of Empire Jute Company Limited Vs. CIT (1980 (5) TMI 1 - SUPREME Court) held that expenditure even if incurred for obtaining advantage of enduring benefit, may nonetheless, be on revenue account and the tests of enduring benefit may breakdown. It was held that if the advantage consists merely in facilitating, the assessee’s trading operation or enabling the management and conduct of the assessee’s business to be carried on more efficiently and more profitably while leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. In the case of the assessee, we find that admittedly ‘loaner’ sets are made available to the doctors for the purpose of encouraging sale of implants and therefore, advantage to the assessee is to facilitate the trading operation of the implants. The ‘loaner’ or ‘demo’ sets are not instruments of earning income so as to qualify as capital asset but those are for encouraging the use of assessee’s products in doctor community, which in turn would recommend for the sale of the products of the assessee. The ‘loaner’ sets have been found to have average life of 36 months. In such circumstances, merely because the assessee has amortized the expenditure, it does not warrant the conclusion that such expenditure is capital expenditure. The assessee has consistently disclosed the said loaner sets as ‘inventory’ and valued the same in accordance with the Accounting Standard-2 of ICAI, which prescribes an assessee to value the ‘inventory’ at cost or net realizable value, whichever is lower. Moreover, the finding of the Ld. CIT-A that the claim of assessee is based on the principle of deferred revenue expenditure, is not correct. It is a case of valuation of inventory and the method of valuation has been consistently accepted by the Revenue. Moreover even otherwise expenditure on purchase of ‘loaner’ sets is not capital expenditure and therefore eligible for deduction as revenue expenditure, which at the option of the assessee can be amortized over a period of years. Thus the amount treating loaner sets expenditure as capital expenditure was not in accordance with law - Decided in favour of assessee. Disallowance under the head ‘advertisement and promotional’ expenses - Held that:- We find that neither the Assessing Officer nor the Ld. CIT-A has disputed the genuineness of the expenditure. In such circumstances, once the genuineness of the expenditure is not in dispute, the commercial expediency cannot be rejected on the ground of suspicion. No material was led by the revenue to allege that the expenditure incurred in the course of business is not an eligible expenditure. We accept the contention of the Ld. counsel that it is not possible to get receipt of keychains either from the doctors or distributors distributed for the purpose of development of the business of the assessee . The entire action of the authorities below is based on suspicion and therefore found untenable.- Decided in favour of assessee. Disallowance expenditure under the head ‘selling commission’ by treating it as prior period expenses - Held that:- Since the aforesaid issue in dispute has already been allowed by the Ld. CIT-A subject to verification by the Assessing Officer, we are not inclined to interfere with the finding of the Ld. CIT-A and the ground of appeal is therefore rejected. TDS u/s 195 - Disallowance invoking section 40(a)(ia) - expenditure incurred on payment made by the assessee company to overseas education foundation for participation of selected Indian doctors for advance training course outside India - Held that:- No such judicial interpretation exits that payments made to non-residents for rendering of services in India is taxable in India in absence of any business connection in India or PE in India and in the absence of any clearcut law, assessee cannot be held to be liable to deduct TDS. We observed that the payment was made to ‘Overseas Education Foundation’ (OEF) for providing training to doctors. The OEF is a medically guided non-profit organization education body led by an international group of surgeons specialized in the treatment of trauma and disorders of the musculoskeletal system. The doctors attended the training in independent capacity, though the expenditure on such training was incurred by the assessee on account of commercial expediency, which aspect has not been disputed in this appeal. The payment was not paid for rendering any managerial, technical or consultancy services. In such circumstances, the expenditure incurred towards payment to the overseas education foundation, cannot be held as fee for technical services provided to the assessee - Decided in favour of assessee. Disallowance expenses on training of doctors in India - Held that:- We find that the Assessing Officer has made disallowance on ad-hoc basis at the rate of 25% of the total expenses of Rs. 34,08,154/-. We also find that the assessee has claimed of reimbursing the expenses incurred by the doctors on their stay in hotels etc, while attending the conference seminars organized by the assessee or other organizers. However, we find that the assessee has not linked all the expenses with any particular conference or training course for the doctors or any specific event related to the business of the assessee. In such circumstances, we feel it appropriate to restore the issue to the file of the Assessing Officer directing the assessee to produce all necessary evidence in support of its contentions of incurring expenses for the purpose of business of the assessee company. With regard to the disallowance Ld. CIT-A observed that the assessee made general observation and submissions that the expenses were towards hotels stay and other expenses for the foreign faculty, and the Ld. AR of the assessee failed to justify the name of the person against whom the bill was raised. Before us, the Ld. counsel submitted that the assessee has already filed copy of receipts etc. and if required further documentary evidence in support of contention of incurring expenses for business purpose may be filed. In such circumstances, we restore the issue for reconsideration. Disallowance on account of recruitment and training expenditure - Held that:- CIT-A has clearly held that no asset was created by incurring expenditure on recruitment and training and, therefore, there was no reason for treating this expenditure as capital expenditure. The finding of the Assessing Officer has not been found by the Ld. CIT-A in accordance with accounting principles. He also found the disallowance made by the Assessing Officer against the principle of consistency. In view of above, in our opinion, the order of the Ld. CIT-A on the issue in dispute is well reasoned and we find no justification to interfere with the aforesaid finding of the Ld. CIT-A - Decided against revenue.

  ---

• 2017 (4) TMI 292
  Disallowance of labour charges paid by invoking provisions of Sec. 40(a)(ia) - Held that:- It is quite clear that Sec. 40(a)(ia) of the Act can be invoked only in the event of non-deduction of tax at source, but not in cases involving short-deduction of tax at source. Therefore the impugned disallowance made by the income-tax authorities is unsustainable and is hereby directed to be deleted. - Decided in favour of assessee.

  ---

• 2017 (4) TMI 291
  Capital gain - STCG OR LTCG - Held that:- As already even though clause 4 of the agreement indicates that possession will be handed over at the time of registration, there is no registration so far, but possession was handed over according to Assessee. If clause 6 is to be considered, as another one restricting the possession, then entire consideration, barring small amount, was received by August 2007, which is within the 36 months period, to consider the capital gain as long term capital gain. The agreement itself indicates, by clause 12, that Assessee has handed over position as on 02-04-2007, which was relied on by the Ld. CIT(A). Considering the principles laid down in the case of Potla Nageswar Rao [2014 (8) TMI 636 - ANDHRA PRADESH HIGH COURT] relied on by the CIT(A), it is of the opinion that Assessee did indeed handed over the possession as on 02-04-2007 or deemed to have been handed over on that day. Accordingly, the orders of the A.O and CIT(A) treating the capital gain as short term capital gain has to be accepted and the orders are accordingly confirmed. Whether the capital gain cannot be treated in this year? - Held that:- Since Assessee himself has offered the capital gain during the year, by filing the revised return, which was later regularized u/s 148 of the IT Act, there is no merit in Assessee’s contention on that issue. Since A.O noticed that Assessee did sell property, which was reflected by the company in their books of account, the revised return filed itself is the basis for reopening of the assessment. In view of that, the grounds raised by Assessee on these issues are accordingly rejected.

  ---

• 2017 (4) TMI 290
  Penalty u/s 271(1)(c) - accommodation entries - post search enquiries - no independent enquiry - Held that:- When the assessee has not been specifically made aware of the charges leveled against him as to whether there is a concealment of income or furnishing of inaccurate particulars of income on his part, the penalty u/s 271(1)(c) of the Act is not sustainable. Penalty proceedings are independent of assessment proceedings and that a mere confirmation of addition cannot be the sole ground to levy penalty. In the penalty orders, the AO has himself observed that the entire proceedings of assessments were based on a) post search enquiries b) statement of Shri Tarun Goyal, which have been the key factors to impose the penalty u/s 271(1)(c). In the present appeals, it is undisputed that no incriminating material was unearthed during assesssee’s search u/s 132 of the Act, that no independent enquiry and examination took place during assessment proceedings qua Shri Tarun Goyal and Micro Infotech Ltd, that only post search enquiries were made the basis of the entire assessment and penalty proceedings/orders, that no cross examination of Shri Tarun Goyal took place, that no effort was made to find out the status of the supplier independently, that the assessee’s contention that software purchase was genuine was discounted on the basis of preponderance of probabilities and inferences, that no material was brought on record to establish that cash found its way back to the coffers of the assessee. It is apparent that no independent inquiry was made from the concerned party by issuing notices u/s 133(6)/131 and the entire foundation is laid on post search enquiries, search and seizure operation of Shri Tarun Goyal and statement of Shri Tarun Goyal. On an overall consideration of all these facts, we are inclined to agree with the Ld. AR’s argument that the present case may lie in the realm of “facts not proved” but cannot fall in the realm of “facts disproved”. Since the scales are different in penalty and quantum proceedings and penalty cannot be automatic to the confirmation of addition in the quantum proceedings, we are disinclined to agree with the contention of the department that the confirmation of the quantum by the ITAT would automatically result in confirmation of the penalty. - Decided in favour of assessee

  ---

• 2017 (4) TMI 289
  Addition u/s 69 and 68 - Held that:- CIT(A) has taken into cognizance all the documentary evidence. The absence of the same during the assessment proceeding which prevented by sufficient cause from filing this documentary evidence before the A.O. was also rightly considered by the CIT(A). Thus additional evidence filed by the assessee was rightly admitted by the CIT(A). The asssessee’s bank accounts and copies of mutual fund redemption statements placed in the paper book, various investments made in mutual funds during the year under consideration are out of either redemption of the old investments in mutual funds or out of auto sweep FDR maturity. Therefore, these investments are genuine and was fully explained by the assessee. In support of the loan of Rs. 3,50,000/- from CITI Bank, the assessee filed a copy of the sanctioned letter from the CITI Bank. With regard to loan amount of Rs. 75,000/- given by the assessee and received back on 14/2/2006(Rs. 25,000/-) and on 17/3/2006 (Rs. 50,000/-) a confirmation from Sh. S. Madhusudan was filed to this effect giving his complete address, PAN and the ward where he assessed to tax. Both these amounts were received in the HSBC account of the assessee through cheques. While explaining the source of these cash deposits the assessee submitted before the CIT(A) that these cash deposits had been made out of cash in hand available as on 1/4/2005 amounting to Rs. 2,50,000/-. This explanation of the assessee was rightly not accepted by the CIT(A) because the assessee did not maintain any book of account. No cash flow statement was available on record to show that the assessee actually had cash in hand of Rs. 2,50,000/- as on 1/4/2005. Therefore, amount of Rs. 1,00,000/- deposited in cash on different dates in ICICI Bank as mentioned above was rightly added to the assessee’s income as unexplained cash credits in the assessee’s bank accounts was restricted to Rs. 1,00,000/-. Thus, the CIT(A) has correctly arrived at the finding after verifying all the documents. There is no need to interfere with the order of the CIT(A).

  ---

• 2017 (4) TMI 288
  House Rent Allowance (HRA) exemption u/s 10(13A) - assessee was claiming loss from self occupied property and also claiming exemption u/s.10(13A) - Held that:- The assessee could not produce any evidence arising in the normal course of happening of transaction of hiring of premises such as leave and license agreement, letter to society intimating about her tenancy, payment through bank, cash payments backed with known sources, electricity bill payments through cheque, water bill payments through cheque , some correspondence coming during that period of alleged tenancy to prove that transaction of hiring of premises was genuine and was happening during the said period. The assessee was in-fact staying in her own flat at ‘Tropicana’ with her husband which is emanating from various evidences which are on record such as ration card, bank statements, return of income filed with Revenue etc which is also in consonance with normal human conduct of Indian married women living with her husband and daughter in a residential flat owned by the assessee jointly with husband , the assessee also did not bring any cogent evidence to substantiate that she had taken the residential flat at ‘Neha Apartment’ on rent from her mother. The mother of the assessee has also not filed return of income since last six assessment years and said rental income was not brought to tax in the hands of mother of the assessee . The assessee could also not able to bring on record any cogent evidence to prove that her un-married sister Ms Vimla was living at Bhayander. The whole arrangement of rent payment by the assessee to her mother is a sham transaction which was undertaken by the assessee with the sole intention to claim exemption of HRA u/s 10(13A) of 1961 Act in order to reduce tax liability and hence in our considered view, exemption u/s 10(13A) of the Act cannot be allowed to the assessee as the payments towards rent are not genuine payment . The evidences on record are speaking loudly which is just opposite to what the assessee is contending.- Decided against assessee

  ---

• 2017 (4) TMI 287
  Sales tax incentives receipts - whether a capital receipt and hence not chargeable to tax - Held that:- The purpose of granting incentive is clearly only to provide an incentive for establishment of new industries in the undeveloped regions or to expand its existing units of the State of Maharashtra. The variation in methodology of availment of various incentives under the scheme will not alter the character of receipt being capital in nature. The ratio laid down by the various binding judicial pronouncements discussed hereinabove squarely applies to the facts of the case. Respectfully hold that the amount received by the appellant during the year under consideration as promotional subsidy under the PSI of Maharashtra in the capital field and not liable to tax. In view of the above facts, the action of the Ld. AO of treating the said amount of Rs. 91,13,000/- as revenue receipts is erroneous and consequently the addition made by the Ld. AO in this regard is therefore hereby deleted. - Decided in favour of assessee.

  ---

• 2017 (4) TMI 286
  Validity of assessment u/s 153C - requisite satisfaction was not recorded - Held that:- Recording of requisite satisfaction in the case of a searched party is a sine qua non for assuming jurisdiction for the issue of notice u/s 153C even if the AO of the searched person and the assessee are same. It is abundantly clear from the satisfaction note recorded in the case of the searched person that there is no requisite satisfaction granting the AO jurisdiction for issuing notice to the assessee u/s 153C of the I.T. Act. The satisfaction note as emanated from files of searched persons, namely, M/s Mukesh Gupta and Gupta Industries Ltd. does not show at all that that the AO in their case has recorded a satisfaction that any of the seized material is belonging to the assessee has been found, and is incriminating in nature which is to be handed over to the AO of the assessee. In such circumstances, in our considered opinion, the assessee deserves to succeed on this account and the assessments are liable to be quashed on account of lack of validity of jurisdiction. Accordingly we set aside the orders of learned CIT(Appeals) on this aspect of jurisdiction and quash the assessments by holding that requisite satisfaction was not recorded before the issue of notice u/s 153C. - Decided in favour of assessee

  ---

• 2017 (4) TMI 285
  Liability to pay tax - Taxable in the hands of partner or Partnership Firm - Interest Income and income from contract business as technical entrepreneur license holder - Arrangement of pooling turnover and business between the firm and its partner Karta - double taxation - Held that:- The assessee is a partner in the firm M/s. Jagannath Choudhury is false and misleading as has been found by the Assessing Officer in the remand report. The assessee is not under contractual obligation to transfer any business to the firm M/s. Jagannath Choudhury. Hence, the contract receipts in the name of the assessee have to be considered in the hands of the assessee. It is not the case that the firm M/s. Jagannath Choudhury has executed the contract taken in the name of the assessee. The assessee has received interest from banks in respect of various deposits in his name and he is not under contractual obligation to transfer such income to the firm M/s. Jagannath Choudhury. It is also found that TDS has been made in respect of interest paid in the name of the assessee as per 26AS statement. The agreement between the firm and the partner Arun Kumar Choudhury (HuF) cannot be binding on the assessee. The record shows that the assessee has received interest and executed contracts in his name and TDS made on the interest is credited in the name of the assessee. In view of the same, there is no reason that interest of Rs. 12,93,062/- should not be assessed in the hands of the assessee. Since the contract receipts of Rs. 12,93,062/- has been received by the assessee for the contract works executed by him and no accounts have been submitted for the same, the Assessing Officer is justified in estimating income of Rs. 38,365/- @ 8% which is reasonable. - Decided against assessee

  ---

• Customs

• 2017 (4) TMI 266
  Respondents to the appeal - the applicants had submitted representations to the Designated Authority and were an integral part of the investigation, whether the applicants can be said to be necessary parties to the captioned petitions? - Held that: - Rule 5 of the rules makes provision for procedure for filing appeals and who may be joined as respondents. Sub-rule (2) of Rule 5 enumerates the persons who are required to be joined as respondents to the appeal. The category of persons under clause (c) thereof is “Interested persons who submitted representations to the designated authority in the course of investigation” - the applicants had submitted representations to the Designated Authority and were an integral part of the investigation, the applicants can be said to be necessary parties to the captioned petitions - application allowed - decided in favor of applicant.

  ---

• 2017 (4) TMI 265
  Validity and legality of order passed by Settlement Commission - petitioner's case is that the Settlement Commission completely fell in error in dismissing the Settlement Applications of the Petitioners as being inadmissible in view of the fact that by virtue of the provisions of section 127C(1) read with its proviso, the Applications filed by the Petitioners were deemed to have been allowed to be proceeded with. Petitioner laid great stress on the proviso to section 127C(1) which stipulates where no notice has been issued or no order has been passed under section 127C(1) within a period of 14 days as stipulated therein, then the Application shall be deemed to have been allowed to be proceeded with. Held that: - an order that is passed u/s 127C(5) is the final order after the Settlement Application is either allowed to be proceeded with or deemed to be allowed to be proceeded with. If that contingency happens, there is no question of passing any final order u/s 127C(5) rejecting the Application on the ground that it is inadmissible u/s 127B. This scheme is clear from an ex-facie reading of the provisions of section 127C - it is not in dispute that the Settlement Applications of the Petitioners were filed on 27th May, 2014. The first notice as contemplated u/s 127C(1), was issued by the Settlement Commission on 10th June, 2014 to remove the defects and to show cause why the Applications of the Petitioners should be allowed to proceed with. After this notice was issued, there was no order passed on the admissibility of the Settlement Applications filed by the Petitioners up and until the passing of the impugned order on 27th March, 2015. This alone was in violation of the statutory provisions as set out in section 127C(1) which contemplates that an order either allowing the Application to be proceeded with or rejecting the same ought to be passed within a period of 14 days from the date of issuance of the notice. If this is not done, then the Settlement Applications are deemed to be allowed to be proceeded with. In any event, if the Settlement Commission was to reject the Settlement Applications of the Petitioners on the ground that they are not admissible, there was absolutely no need to pass a detailed order on merits of the case and that too taking into account the Corrigendum/Addendum that was issued by the Revenue to the show cause notice even after the Settlement Applications were filed by the Petitioners. Therefore, looking to the totality of the facts of the present case, there is no hesitation in holding that the impugned order passed by the Settlement Commission dated 27th March, 2015 cannot be sustained. Impugned order of Settlement Commission is quashed and is set aside - appeal allowed - decided in favor of appellant.

  ---

• 2017 (4) TMI 264
  Classification of imported goods - PVC inflatable toys - denial of benefit of preferential duty under the Asia-Pacific Trade Agreement - Held that: - The description in the catalogue makes it amply clear that the imported goods are reduced models - the imported goods are classifiable under heading 950330 of the First Schedule to the CTA 1975 - appeal allowed - decided in favor of appellant.

  ---

• 2017 (4) TMI 263
  Abandonment of goods - refund claim rejected on the ground of limitation - Held that: - Revenue has relied on the decision of the Tribunal in the case of Miles India [1983 (1) TMI 280 - CEGAT NEW DELHI], which has been upheld by the Hon'ble Apex Court, where it was held that wherein the principle that statutory authorities are bound by the time limit provided by the Statute was approved and confirmed, we do not find any ground to interfere in the present appeal - the limitation prescribed u/s 27 would be applicable in this case - appeal dismissed - decided against appellant.

  ---

• 2017 (4) TMI 262
  Valuation - import of second hand machinery - assessment has been done after granting depreciation of 70% - no reason has been given to discard the declared invoice value in terms of Rule 4 of the Customs Valuation Rule - Held that: - None of the authorities advert to this Rule or say for what reasons as provided under Rule 4(2) the transaction value will have to be rejected - It is clear that in the absence of any ground for rejecting the invoice value it is not open to the Revenue to adopt any other value under any Rule subsequent to Rule 4 of the Customs Valuation Rules - appeal allowed - decided in favor of appellant.

  ---

• 2017 (4) TMI 261
  Valuation - fees for engineering services - includibility - Held that: - there is no evidence to support the contention that the said amount of DM6,00,000 was in the nature of technical know-how fee linked to the sale of the said items covered under the bill of entry - fee for technical services which are related to post-importation activities are not liable to be included in the assessable value even if connected with the goods under import - demand related to the technical services agreement set aside - appeal dismissed - decided against Revenue.

  ---

• 2017 (4) TMI 260
  Valuation - 'apple juice concentrate' - documentary evidence of contemporaneous import not furnished - Held that: - to assign cogent reasons for disallowance of the declared value, for the purposes of computation of customs duty, by resort to rule 10A(1) of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988. This we find to be lacking except for an observation that there appeared to be a contemporaneous import at a different port at a higher price - there is a gross contravention of the principles of natural justice, as the appellant were denied access to the document of contemporaneous import - the rejection the declared value has not followed the prescription of natural justice and that the enhancement thereon is not in accord with law - appeal allowed - decided in favor of assessee.

  ---

• 2017 (4) TMI 259
  Imposition of penalties u/s 114 0f CA - Held that: - the goods can be subject to confiscation if value is found to have been misdeclared. Penalty is imposed only if it is established that, in relation to the offending goods, some act is committed or is omitted to be done that leads to confiscation. Such act or omission has not been brought on record. Mere filing of bills or presentation of goods that were found to be liable to confiscation does not constitute act or omission referred to in section 114 because these are procedural requirements. None of the statements establish that the appellants were aware or participated in the procurement, packing or transportation of the goods - imposition of penalties not justified - appeal allowed - decided in favor of appellant.

  ---

• 2017 (4) TMI 258
  Condonation of delay - a delay of 56 days in filing the appeals and the appeal itself is delayed beyond the normal deadline from the date of receipt of the order - Held that: - the applications for condonation of delay is conspicuously bereft of any cogent justification for the delay. An affidavit dated 6th April, 2016 was filed by an authorized officer to explain the delay all of which relate to non-traceability of the file and the delay in receiving inputs from the assessing group. From this affidavit it would appear that the Committee of Commissioners left it to the lower authorities to ascertain and prepare the grounds for appeal against the impugned order - the competent Committee of Commissioners did not appear to have had knowledge of the delay. The exercise of jurisdiction to review is to be taken up with full cognizance of the circumstances connected with the appeal. Lack thereof, including that of delay, vitiates the review proceedings as the competent committee has not been enabled to apply its mind to the issue - appeal dismissed - delay not condoned - decided against Revenue.

  ---

• 2017 (4) TMI 257
  Whether the goods imported and declared as components/parts are to be considered as a complete unit in disassembled form and accordingly to be assessed as per the value for the complete unit and whether the value declared by the appellant needs to be enhanced based upon the prices of the original manufacturer? Held that: - The appellant cleared the goods provisionally at the enhanced value. Subsequent adjudication proceedings had confirmed enhancement of the value and imposed a penalty of Rs. 4.25 lakhs which was reduced by the first appellate authority to Rs. 3 lakhs - We find no reason to interfere in the impugned order passed by the first appellate authority as Revenue is able to produce evidence to dislodge the price declared by the appellant-importer. The appellant-importer is not able to justify or lead any contrary evidence that the prices of goods which are imported by the original manufacturer, are incorrect and in the absence of any such controversion, the impugned order is correct and legal and does not require any interference - appeal dismissed - decided against appellant.

  ---

• Service Tax

• 2017 (4) TMI 284
  Penalty u/s 76 and 78 of FA, 1994 - on merits the demand is not sustainable, in that circumstances, the penalty can be imposed on the appellant or not? - Held that: - Admittedly, on merits, the demand against the appellant cannot be confirmed in the light of the decision of this Tribunal Seva Automotive Pvt. Ltd. [2013 (7) TMI 265 - CESTAT MUMBAI] wherein this Tribunal held that For authorized service stations, the cost of the spare parts and cost of handling of spare parts are not to be included in the value of the services rendered, thus they will not form part of the services rendered - as demand not confirmed, penalty also set aside - appeal allowed - decided in favor of appellant.

  ---

• 2017 (4) TMI 283
  Liability of service tax - transport of goods by road services - Revenue's case is that the sugar cane has been transported by Truck Operator Union from the collection center up to their factory and they have received transportation charges from the respondent therefore, in terms of Rule 2 (1) (d) (v) of the STR, 1994, the respondent is liable to pay service tax - Held that: - the transportation of sugar cane to the factory of the appellant is the duty of the farmers who supplied the sugar cane at the collection center set up by the respondent. From the collection center, the sugar cane was supplied by Truck Operator Union. The Truck Operator Union is not a commercial concern therefore, the same is not covered under Goods Transport Agency, therefore, the provisions of Section 65(105)(zzp) are not applicable to the facts of the this case - appeal dismissed - decided against Revenue.

  ---

• 2017 (4) TMI 282
  Deduction - Services provided to SEZ - Other income like dividends, interest etc. - Service Tax on job-work done - Purchase of stationery, etc. - whether the cum-tax benefits allowed in respect of above services justified or not? - Held that: - it is settled law that no service tax liability arises in respect of services provided to SEZ units or SEZ unit developers, hence there is no merits in the revenue's appeal on this point. We also note that the reimbursable amount sought to be taxed by revenue are in fact actual cost of stationery etc., hence adjudicating authority was correct in dropping demands on this count. As regards service tax liability on job-work involved, it is the claim of the learned counsel for the respondent that they have already discharged service tax liability. This particular point needs further clarification - the adjudicating authority needs to reconsider the issue in respect of the cum-tax benefit claimed, as also the job-work issue - appeal allowed by way of remand.

  ---

• 2017 (4) TMI 281
  CENVAT credit - input services - setting up of Research Laboratory premises - That department is of the view that since the services relate to immovable property, the credit cannot be allowed - Held that: - the disputed services have been received by the appellant and credit taken prior to 01.04.2011 - the Board vide circular No: 943/04/2011-CX, dated 29.04.2011 has clarified that the credit is eligible if the services have been availed before 01.04.2011. Needless to say that prior to 01.04.2011, the definition of input services included the services relating to setting up of factory/premises of output service provider. The credit is sought to be denied stating that it relates to immovable property - reliance placed in the case of Maharashtra Cricket Association Versus Commissioner of Central Excise, Pune-III [2015 (11) TMI 910 - CESTAT MUMBAI], where it was held that It is very pertinent that legislators knowing fully that there is no tax or excise duty on the constructing premises of the output service provider, included services used for setting up of the premises of provider of output services, for the simple reason that if the premises are used for providing the output service, the credit of input services used for setting up the premises of service provider must be allowed. The credit has been wrongly disallowed - appeal allowed - decided in favor of appellant.

  ---

• 2017 (4) TMI 280
  Refund claim - Chit Fund Business - During the relevant period there was confusion whether Chit Fund activities are taxable services or not. Therefore, the appellants applied for registration and also paid service tax, and thereafter refund claim was filed - Held that: - The appellant has paid the tax on the belief that Chit Fund business-activities is a taxable service. They have obtained registration for all taxable services other than in the negative list, because the appellants were not sure under which category the said services would fall - it would be proper to have verification whether the appellant was engaged in any activities other than Chit Fund business during the relevant period which would fall under taxable services. The matter is therefore remanded - appeal allowed by way of remand.

  ---

• Central Excise

• 2017 (4) TMI 279
  CENVAT credit - the case of appellant is that without bringing any positive evidence on record for diversition of the goods GP sheets and procurement of HR/CR sheets, the impugned orders, denying CENVAT credit are not sustainable - Held that: - identical issue decided in the case of Silence Auto [2014 (6) TMI 306 - CESTAT NEW DELHI] wherein this Tribunal has held that the adjudications are made against the appellants on the basis of surmises and conjectures without any corroborative evidence therefore, the demand is not sustainable - In view of these observations, the credit on GP sheets cannot be denied to the appellants without corroborative evidence - appeal allowed - decided in favor of appellant.

  ---

• 2017 (4) TMI 278
  Transfer of credit from one unit to another - demand - extended period of limitation - whether the appellant is having manufacturing activity at Faridabad or not in the knowledge of the department therefore, the extended period of limitation is invokable? - Held that: - the appellant itself has intimated in 2006 that they have shifted their manufacturing activity to Palwal and the same was received by the department that the appellant has shifted their manufacturing activity in 2006, itself. It is also fact on record by way of service tax returns filed by the appellant. They have availed cenvat credit on service tax paid by them, therefore, as all the facts in the knowledge of the department. The SCN was issued to the appellant by invoking extended period of limitation is not sustainable in the eyes of law. Accordingly, the impugned order is not sustainable. Further, the cenvat credit had reversed by the appellant voluntarily without any protest. In that circumstances, although the extended period of limitation is not invokable, the appellant is not entitled to claim refund of the same. The matter is remanded back to the adjudicating authority for verification purpose whether the cenvat credit transferred to Palwal Unit is correct or not? - appeal allowed by way of remand.

  ---

• 2017 (4) TMI 277
  CENVAT credit - manufacture of Homatropine Methyl Bromide (HMB) - denial on the ground that as goods manufactured by the appellant are exempt under N/N. 4/2006 dt. 01.03.2006, therefore, appellant is not required to pay duty, consequently, the appellant is not entitle to avail Cenvat Credit on inputs used in manufacture of final exempted goods - Held that: - the appellant cannot be denied Cenvat Credit as final goods which are exempt has been cleared by the appellant on payment of duty. The said payment of duty shall amount to reversal of Cenvat Credit on inputs. Therefore, appellant is entitle for input which has been used in manufacturing of final goods cleared on N/N. 4/2006 ibid on payment of duty - credit allowed - appeal allowed - decided in favor of assessee.

  ---

• 2017 (4) TMI 276
  N/N. 67/95, dated 16-3-1995 - intermediate goods, aluminium slabs - captive consumption - Held that: - the exclusion made under sub-clause (vii) of sub-rule (6) of Rule 6 of CCR, 2004 read with proviso to N/N. 67/95 makes it clear that the exemption for captive consumption of intermediate products has been correctly claimed by the appellant in the present case - appeal allowed - decided in favor of appellant.

  ---

• 2017 (4) TMI 275
  Imposition of penalty - Rule 15(2) of CCR, 2004 read with Section 11AC of CEA, 1944 - it is the case of petitioner that premature availment of Cenvat credit was an inadvertent mistake and was not on account of any mala fide intention, thus penalty to be set aside - Held that: - The fact that such credit entry were only made in the Cenvat credit accounts, but the credit so availed was not utilized before the actual validation period, I am of the view that such premature availment cannot be on account of any mala fide. If that be so, the appellants would not attract any penalty - appeal allowed - decided in favor of appellant.

  ---

• 2017 (4) TMI 274
  CENVAT credit - The Department viewed that the appellants did not take correct amount of credit as the duty paid excess should be considered as a deposit in terms of Section 11D not eligible for credit u/r 3 of CCR, 2004 - Held that: - When the payment of duty by the appellants has not been disputed and the Department entertained a view that there could be some possible refunds at the supplier’s side, it is for the Department to verify the facts of the case at the supplier’s end. It is not for the appellant to establish sanction or otherwise of any refund to the suppliers. We find that the lower Authorities misdirected themselves and passed legally unsustainable orders. Accordingly, the impugned order is set aside and the matter is remanded back to the Original Authority to verify the facts and pass fresh orders - appeal allowed by way of remand.

  ---

• 2017 (4) TMI 273
  Imposition of equal penalty - availment of illegal CENVAT credit - Section 11AC of CEA - Held that: - Revenue never invoked the provisions of Section 11AC of CEA, 1944 in the SCN dated 3-5-2002 issued to the respondent viz., M/s. Bellary Steels and Alloys Ltd. In the SCN, Revenue invoked Rules 25 and 27 of CER, 2002 along with Rule 13 of CCR, 2002 for imposing the penalty on the respondent - when Section 11AC of CEA, 1944 has never been invoked by the Revenue in the SCN, the plea by the Revenue for imposing equivalent penalty is not legally tenable and cannot be accepted - appeal dismissed - decided against Revenue.

  ---

• 2017 (4) TMI 272
  CENVAT credit - Rule 6(3) of CCR - demand on the ground that the appellant did not pay the amount of 5% on clearance of Char/Dolachar from the factory - During the course of manufacture of Sponge iron, Char/Dolachar emerges as by-product/waste which are removed from the factory without discharging any Central Excise duty liability - Held that: - The embargo created in Rule 6 has the application, only when the manufacturer manufactures both dutiable as well as exempted final product. Char/Dolachar involuntarily generated during the course of manufacture of sponge iron, cannot be considered as exempted goods as defined in Rule 2(d) of the CCR, 2004 inasmuch as the said goods are neither exempted by issuance of any notification by the Central Government nor attract nil rate of duty in the Tariff Act. Since, Char/Dolachar are seized to be exempted goods, the stipulation contained in Rule 6 shall have no application for payment of amount on clearance of said goods from the factory - demand not sustainable - appeal allowed - decided in favor of appellant.

  ---

• 2017 (4) TMI 271
  Imposition of penalty u/r 25 of CER, 2002 - the appellants have issued invoice without accompanied the goods - Held that: - to impose penalty u/r 25, the goods are required to be held liable for confiscation. Admittedly, in the impugned order the goods were not held to be liable for confiscation - penalty u/r 25 can be imposed if ingredients of section 11AC of the Act has been complied with. Admittedly, in the impugned order the adjudicating authority itself has held that the cenvat credit was availed wrongly. If the credit is availed wrongly, therefore, mala-fide intents of assessee are missing. As the mala-fide intent is missing, the provisions of section 11AC of the Act are not attracted. Consequently, the provisions of Rules 25 of the CER, 2002 are not invokable - penalty set aside - appeal allowed - decided in favor of assessee.

  ---

• 2017 (4) TMI 270
  Validity of SCN - CESTAT had held that the notice issued to the assessee is beyond the period of limitation and hence has quashed the same - Held that: - Section 11A(3) of the CEA, 1944 provides limitation of one year to the Central Excise Officer to issue notice to the assessee. However, sub-section (4) provides that when there is fraud; collusion; any wilful misstatement; suppression of fact and contravention of any of the provisions of this Act or the rules made thereunder with intent to evade payment of duty, the period of limitation will be five years. The assessee has not withheld any fact; the assessee has not misstated any fact; the assessee has not suppressed any facts. The assessee may have been guilty of claiming wrong Cenvat credit but as pointed out by the CESTAT, there continues to be divergence of opinion with regard to the issue whether Cenvat credit can be claimed on the inputs used for setting up the factory in which goods were manufactured. Therefore, it cannot be said to be a fraudulent claim or a claim which has an aspect of dishonesty attached to it. In this view of the matter, limitation would only be one year. Appeal dismissed - decided against Revenue.

  ---

• 2017 (4) TMI 269
  Whether the incentives granted to the appellant permit them to collect excise duty, more than they had themselves paid, from their customers, if they collected by way of excise more than what they had paid, then by virtue of Section 11D of CEA, 1944 were they bound to deposit that amount with the Govt? Held that: - The questions involved in the present case have been answered by a Division Bench’s decision of the Uttarakhand High Court in the case of Commissioner Customs and Central Excise, Meerut-I Versus M/s Apco Pharma Ltd. & Others, M/s Janardhan Plyboard Industries Ltd. [2011 (10) TMI 38 - UTTARAKHAND HIGH COURT], where the Court has taken a view that a manufacturer obtains credit for the Excise duty paid on raw material to be used by him in the production of an excisable product immediately and there is no provision in the Rules which provide for a reversal of the credit by the excise authorities - appeal dismissed - decided against Revenue.

  ---

• 2017 (4) TMI 268
  Valuation - whether Section 4 as amended would apply and hence the clearance at the depot was to be taken for the purpose of the liability to pay the Central Excise duty? - Held that: - this is not a proper approach for the Tribunal did not set out the facts in details, the nature of demand and there is absolutely no discussion as to how the question of paying the differential duty does not arise in spite of the amended Section 4 - As a result of the cryptic and virtually non-reasoned order of the Tribunal, it would not be proper to go into all the details - appeal allowed - decided in favor of appellant.

  ---

• 2017 (4) TMI 267
  Benefit of exemption under N/N. 12/94 dated 1/3/1994 - SSI exemption - Clubbing of clearances - the decision in the case of M/s. Devi Lal Kutir Soap, M/s. Wash Well Soap (P) Ltd., M/s. Kaushalya Devi Somani, Director, Shri Ladu Ram Somani And Devi Lal Somani, Director Versus CCE, Jaipur-II [2015 (5) TMI 974 - CESTAT NEW DELHI] contested, where the demand was set aside - Held that: - we see no reason to interfere with the order passed by the Customs, Excise & Service Tax Appellate Tribunal - appeal dismissed.

  ---

• CST, VAT & Sales Tax

• 2017 (4) TMI 256
  Declaration Form ST-17 - the Assessing Officer came to the conclusion on perusal of the declaration Form ST-17 that the assessee purchased “Marble Kareji” of Rs. 26,18,400/- from one M/s. Anupam Marble Pvt. Ltd., Kishangarh and the assessee nowhere disclosed the said purchases - It was contended on behalf of the respondent-assessee that the said declaration Form ST-17 was stolen by someone and the same was misused by M/s. Anupam Marble Pvt. Ltd., Kishangarh - levy of tax, interest and penalty - Held that: - The Income Tax Officer as aforesaid was satisfied that the assessee did not make any purchases from M/s. Anupam Marble Pvt. Ltd and it is a finding of fact that M/s. Anupam Marble Pvt. Ltd had misused the declaration Form ST-17 and shown Bogus sales for generating cash in its books of account - Admittedly, the assessee informed the Assessing Officer and filed an FIR simultaneously about misuse of declaration Form ST-17 and it is only thereafter on the information that the Assessing Officer started investigation. The Assessing Officer did not chose to verify from M/s. Anupam Marble Pvt. Ltd about the factum of purchases i.e. sale by M/s. Anupam Marble Pvt. Ltd to the assessee which ought to have been done but that having not been done, the Assessing Officer failed to justify his stand. Merely blaming the assessee may not be sufficient & it was for the Assessing Officer to verify from M/s. Anupam Marble Pvt. Ltd about such abnormal transactions. Petition dismissed - decided against petitioner-Revenue.

  ---

• 2017 (4) TMI 255
  Whether on the facts and in the circumstances of the case, the Tribunal was justified in rejecting the exemption from tax available u/s 16(4) of Maharashtra Act XXII of 1997 dated 24.4.1997? - interest charged u/s 36(3)(b) - Held that: - the dealer was entitled to take the benefit of the exemption. Even the argument of the dealer's representative before the First Appellate Authority and the Tribunal has been noted and to be on the above lines. The Tribunal agrees with him that the appeal being a continuation of the proceedings commencing from the Assessment Order, even at the second appellate stage the ground could have been raised and highlighted. In such circumstances and when the argument on the benefit of this amended provision and available to the dealer was clearly ignored, then, a hypertechnical view of the matter was not justified at all - there was no warrant in denying the benefit of the amended provisions to the applicant/dealer before us - appeal allowed - decided in favor of appellant.

  ---

• Indian Laws

• 2017 (4) TMI 254
  Termination of petitioner who was working as a Senior Director - respondent-company discharges public function is on the strength of the provisions contained in SEZ Act and the rules framed thereunder - whether the respondent-company can be held to be discharging public function which is otherwise required to be discharged by the Government or its instrumentality so that a writ petition under Article 226 of the Constitution of India could be maintained against its action of termination of service of its officer? Held that:-In the instant case, the respondent-company is engaged in carrying on its business which is purely its economic activity. In that process its actions are governed by the statute namely, SEZ Act. Certain rights and obligations are conferred on the units established under SEZ. If they effectively function, it will not only further their economic interest, but also helps the economy of the nation. That does not mean that each unit permitted to be established under SEZ by private entrepreneurs/companies shall be regarded as bodies enjoined with public functions. Therefore, the inescapable conclusion is that present writ petition filed seeking relief against a private company cannot be held to be maintainable. Respondent-Company being a private company is involved in its business and economic activities. It is not discharging any public or governmental functions in carrying on its business. Statutory regulation of its business as per the provisions of the SEZ Act will not make its activities in carrying on its business a public duty. Hence, writ petition challenging the order of termination of petitioner who was working as a Senior Director is not maintainable. Petitioner has to seek remedy under the Civil Law.

  ---