Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 1, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Due date of filing of Tran-1 return - extension till 10th May, 2018 - given that only 25th, 26th and 27th April, 2018 are the working days available before 30th April, 2018 and 30th April, 2018 is declared to be a public holiday, interest of justice would be served if we extend this date of 30th April, 2018 in relation to filing of TRAN-1 and which filing was not possible due to technical glitches / IT related glitches. - HC
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Error in GST registration number of petitioner - migration from VAT to GST - there are no reason why the authorities are not opening the portal to enable the petitioner to correct the particulars which are wrongly reported in the registration - HC
Income Tax
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Refund of TDS - Condonation of delay in filing the returns u/s 119 - non-resident not having taxable income - Sufficient cause shown by the petitioner for condoning the delay is acceptable and the same cannot be rejected out-rightly on technicalities. - HC
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Treatment of loss - fund under the pension scheme - exemption u/s 10(23AAB) - if there is a loss from pension business, the same has to be allowed to be carried forward and set off. - AT
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Interest expense u/s 36(1)(iii) - investment in the holding company - The investment of the borrowed funds by the assessee in MHICL is for business purpose, as such, the interest expense is allowable u/s 36(1)(iii) of the Act. - AT
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Addition u/s. 69 - difference in the actual sale value and circle rate for stamp duty purposes - Once the assessee makes a request for reference to DVO, it is necessary to refer the matter to DVO as per 3rd proviso to sec.56 (2) (vii) r/w sec.5OC (2). - AT
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Deduction u/s 80P(2)(d) - interest on deposits - mutual cooperative society - A.O. directed to examine the nature of receipts which are exempt on principle of mutuality basis and taxable receipts such as interest received from Karnataka Bank and any other receipts and determine the true and correct income as per law. - AT
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House property income - Vacancy allowance - property is let under clause (c) of section 23(1) does not mean that the property should have been actually let in the relevant previous year or during any time prior to the relevant previous year. But it will mean the property is intended to be let out. - AT
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Grant of registration u/s 12AA - Exemption u/s 11 - In case hefty fees is being charged by the assessee society and at the same time, it is providing free education to the needy students and free medical aid to the needy patients, it cannot change its nature from charitable society to profit making society. - AT
Customs
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Recovery of dues - first charge on property - Sale of property mortgaged with bank - Insofar as the recovery as contemplated under the Central Excise Act or the Customs Act, there is no such provision to provide for precedence as has already been filed by this Court. - HC
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Extension of time limit for issuance of SCN - confiscation of seized goods - obligation on the part of Commissioner to record satisfaction - Merely because investigation is delayed, that is no ground for grant of extension of time so as to defeat the right created under sub-section (2) of Section 110. - HC
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Import of crude palm oil - Benefit of exemption - beta-carotene content - The conformity of impugned goods with crude palm oil as per the prescribed parameters at the time of import is not in question - exemption allowed - AT
Corporate Law
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Relaxation of additional fees and extension of last date of filing of AOC-4 XBRL E-Forms using Ind AS under the Companies Act, 2013 - reg. - Circular
Service Tax
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Valuation - Renting of immovable property service - inclusion of amount towards Repair and Maintenance services - The issue of inclusion of the consideration/ expenditure made on repairs and maintenance cannot be included for demand of tax - the said expenditure cannot be considered as extra consideration towards the lease rent. - AT
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Adjustment of the Service Tax paid in excess - Rule 6(3) of Service Tax Rules, 1994 - denial on the ground that the said adjustment does not fall within the ambit of Rule 6(4B) of Service Tax Rules - adjustment cannot be denied - AT
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Liability of service tax on sale of electricity - The appellant is not liable to pay service tax on the sale of electricity either received from the Electricity Department or supplied from its D.G. Sets and also regarding sale of other consumer goods to the tenants. - AT
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Classification of services - skilled employees were required to function under supervision of the appellant and as per the work allocated by these service recipients - the activity of the appellant would not fall within the fold of “Manpower Recruitment or Supply Agency Service” under Section 65 (105) (k) of the Finance Act, 1994. - AT
Central Excise
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Manufacture - activity of metalizing - metalized polypropylene film and metalized polyester film - the activity undertaken by the assessee amounts to manufacturer, therefore, the assessee is entitled to refund of Cenvat credit under Rule 5 of Cenvat Credit Rules, 2004 which remains unutilized in the Cenvat credit account on export of goods - AT
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Manufacture - there was process of conversion of aluminium foil into pharma foil by lamination or coating resulting into new and different product and the said activity amounts to manufacture - AT
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CENVAT credit - input service - services of disposal of effluents arising during the course of manufacture - CENVAT credit of service tax paid on the activity of waste disposal by service provider allowed - AT
Case Laws:
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GST
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2018 (4) TMI 1546
Due date of filing of Tran-1 return - Reference to Nodal Officer - glitch on the common portal (GST portal) in relation to an identified issue due to which the tax payer could not comply with the provisions of law - time limitation - Held that: - We are not disturbing the date which has been determined for filing of GSTR-3B for that is prescribed as 31st May, 2018 - However, given that only 25th, 26th and 27th April, 2018 are the working days available before 30th April, 2018 and 30th April, 2018 is declared to be a public holiday, interest of justice would be served if we extend this date of 30th April, 2018 in relation to filing of TRAN-1 and which filing was not possible due to technical glitches / IT related glitches. We extend it to 10th May, 2018 - petition disposed off.
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2018 (4) TMI 1545
Error in GST registration number of petitioner - migration from VAT to GST - Held that: - there are no reason why the authorities are not opening the portal to enable the petitioner to correct the particulars which are wrongly reported in the registration - necessary steps should be taken to redress the grievance of the petitioner - writ petition disposed off commanding the respondents to carry out necessary correction in the form of the petitioner.
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Income Tax
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2018 (4) TMI 1537
Unexplained cash creditors - suppression of sale - application of net profit rate of 1.5% on the estimated sales - Held that:- The assessee has discharged his onus of proof regarding the identity, creditworthiness and genuineness of the transaction. There is no evidence against the creditors to prove that they were providing accommodation entries. Therefore, mere deposit of money by the creditor on the same day does not establish that the loan is not genuine. It is an undisputed fact that while estimating the income, the AO has not based his estimate on any comparable case, or the past history of the case. Further, legally, he could not have added the entire difference between the estimated and declared sales as income; only the profit element ought to have been brought to tax. While the estimate of sales does not call for any interference, the reasonability of estimate of profit has to be judged in the light of comparable cases. - Decided against revenue
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2018 (4) TMI 1536
TPA - Comparable selection criteria - functional dissimilarity - Held that:- Assessee is engaged in Business Process Outsourcing – BPO services (transaction services) thus companies functionally dissimilar with that of assessee need to be deselected from final list.
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2018 (4) TMI 1535
Reopening of assessment - official authorized by law initiating reopening - Held that:- As annexed a copy of the AO’s reasons, prior to the issuance of the notice under Section 148 it clearly reveals that the concerned authority authorized by statute i.e. the Joint Commissioner, had clearly stated that the proceedings may be initiated under Section 147. Having regard to these facts, we are of the opinion that Soyuz (2015 (3) TMI 278 - DELHI HIGH COURT) has no application. The appeal is without merit and consequently, it is dismissed. - Decided against assessee.
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2018 (4) TMI 1534
Nature of expenditure - software expenses - revenue expenditure or a capital expenditure? - Held that: - mere circumstance that the depreciation rate is spelt out in the Schedule to the Income-tax Act, is not conclusive as to the nature of the expenditure and whether it resulted an enduring advantage to a particular assessee - Taking these into account and that the software itself would have run its course or life span as it were, given that the earlier assessment year in question is 2008-09, the question of law framed is to be answered in favor of the assessee and against the revenue - appeal allowed.
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2018 (4) TMI 1533
Refund of TDS - Condonation of delay in filing the returns u/s 119 - non-resident not having taxable income - Held that:- There is some lapse on the part of the petitioner, that itself would not be a factor to turn out the plea for filing of the return, when the explanation offered was acceptable and genuine hardship is established. Sufficient cause shown by the petitioner for condoning the delay is acceptable and the same cannot be rejected out-rightly on technicalities. Considering all the delay of 1232 days in filing the returns for the relevant assessment years in question is condoned subject to denial of interest for the delayed period if found to be entitled for refund. Respondent No.3 is permitted to scrutinize the returns in accordance with law subject to the condition that petitioner gives an undertaking before this Court that she will not raise objections on the aspect of limitation in the event any demand has to be made by the department rather than making refund, as claimed, if found so, on concluding the assessments.
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2018 (4) TMI 1532
Reassessment / Income escaping assessment - land was agricultural land or not - Notice issued after four years - originally scrutiny assessment passed u/s 143(3) - Held that:- It is nobody's case that the income chargeable to tax had escaped assessment for the assessment year in question by reason of the failure on the part of the assessee to make a return under Section 139 or in response to a notice under sub-section (1) of Section 142 or Section 148 of the said Act. Where the assessee discloses all primary facts, but still income escapes assessment because of the failure on the part of the Assessing Officer to draw the correct inference in law, initiation of reassessment proceedings after expiry of 4 years from the end of the relevant assessment year cannot be justified, in view of the clear language appearing in proviso to section 147. This view finds support from the judgment of the Supreme Court in Gemini Leather Stores v. ITO, [1975 (5) TMI 1 - SUPREME Court] In number of cases, the Courts held that there could be no justification in law in initiation of reassessment proceedings on the basis of facts and materials already disclosed in course of the original proceedings. First of all, the materials on record relied upon by the Appellate Commissioner and the Appellate Tribunal clearly indicate that the question whether the land was agricultural land or not was considered at the time of initial assessment. The Appellate Commissioner as also the Appellate Tribunal clearly held that there was an opinion found at the time of initial assessment. Appeal dismissed - Decided against the revenue.
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2018 (4) TMI 1531
Assessment ex-parte without affording due and reasonable opportunity of being heard to the assessee - no notice for hearing was served upon the assessee - Held that:- It is not clear that when the Postal Authorities returned the notice with the postal remark “No such firm at the given address” and “Left” then how the notice was served by Speed Post on the same address. It is also noticed that the time given by the ld. CIT(A) for hearing was not sufficient i.e. notice issued on 13.09.2017 for hearing on 18.09.2017. In the present case, nothing was brought on record that the notice for hearing was served upon the assessee. It is well settled that nobody should be condemned unheard as per the maxim “audi alteram partem”. We, therefore, considering the totality of the facts of the case, deem it appropriate to remand the case to the file of the ld. CIT(A) to be decided afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee. We also direct the assessee to cooperate and not seek unwarranted or unreasonable adjournment. Appeal of the assessee is allowed for statistical purposes
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2018 (4) TMI 1530
Addition towards unexplained cash credit - claim of the assessee is that the creditor admitted that he has sold his agricultural land and utilised the said amount for giving loans to friends and relatives - Held that:- In the instant case, the volume of evidence filed by the assessee-company really shows that genuineness, identity and creditworthiness of the creditors was explained by the assessee in which event addition, in my humble opinion, cannot be made u/s 68 of the Act. CIT(A) observed that the cash transactions between Smt. Jyothi and Mr. Raghuram is violative of the provisions of section 269SS of the Act. However, no such proceedings were taken. We are not concerned with the provisions of section 269SS. If the evidence is not sufficient or if Shri Raghuram has no means to pay the sum, the same can be considered in the hands of Shri Raghuram; but in the instant case, the Tax Authorities have not made any efforts in that direction. - Decided in favour of assessee
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2018 (4) TMI 1529
Reopening of assessment - LTCG addition - whether the transfer is completed - Held that:- the assessee’s have never objected to the reopening of the assessment either before the AO or before the CIT (A). The assessee’s have also not raised any grounds of appeal in writing much less the additional grounds of appeal against the reopening of the assessment. Rule 27 of the ITAT Rules, only permits the respondents to support the orders appealed against any of the decision against him and Rule 29 also provides that the parties to the appeal shall not entitled to file additional evidence either oral or documents before the Tribunal unless it is required by the Tribunal or if the Income Tax authorities have decided the case, without giving sufficient opportunity to the assessee, to adduce evidence either on points specified by them or not specified by them Tribunal may allow such documents to be produced or witnesses to be examined or affidavit to be filed. The assessee’s are the petitioners/appellants before us and not the respondents. Further, they cannot raise a ground orally at the time of final hearing, as it would be against the principles of natural justice as the Revenue would not be in a position to defend itself again without proper records. In view of the same, we are not inclined to accept the argument of the assessee against the reopening of the assessment u/s 148 of the Act. As regards the LTCG being brought to tax by the AO, we find that the vendee himself has given a declaration, by a registered deed, that the sale deeds have been executed only in order to enable him to safeguard the properties and to settle all the legal disputes and that they shall be cancelled thereafter. In fact the assessee’s have also filed the suits for cancellation of the sale deed which are pending before the Hon'ble Civil Courts. The transfer is not complete and the capital gain therein will not arise. However, the outcome of the civil suits will determine the question of transfer and if the Civil Courts hold the transfer to be final, then in that year, the assessee’s will be liable to pay the tax on the capital gain. In view of the same, we are inclined to allow the assessee’s appeals with the above observations.
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2018 (4) TMI 1528
Bad debts - Additions made towards sundry balances written off - as per AO the said write off is not in accordance with the provisions of Section 36(1)(vii) r.w.s. 36(2), as the assessee has failed to prove that such debits are arisen out of the sales made in the earlier year - Held that:- No merit in the finding of the AO for the reason that, when the AO has accepted credit side of the Balance Sheet, there is no reason for the AO to reject the sundry balances written off appearing in the debit side of the Balance Sheet only on the ground that the assessee has failed to file necessary evidence to prove that such debts are arisen out of the sales made in the previous financial year. When the assessee has written off debit as well as credit balances, the net result of which may be debit or credit, it has to be treated either as income or expenses. The assessee has filed certain evidences to prove that such advances are outstanding for more than six years and are arisen out of normal course of business like advances for expenses and other advances which are irrecoverable. Therefore, AO was incorrect in disallowing sundry balances written off and claimed as bad debt under Section 36(1)(vii) - Decided in favour of assessee. Additions towards difference in valuation of closing stock - AO has considered the prevailing market rate in Indian market as on valuation date and then adopted cost to determine the cost or market rate whichever is less for valuing the closing stock - Held that:- For valuation of closing stock the assessee has to follow cost or market rate whichever is less and such market rate has to be determined on the basis of the prevailing market rate in Indian market as on the valuation date. If the assessee has considered the prevailing rate in Indian market to arrive at cost or market rate whichever is less, then there is no reason for the AO to deviate from the said method. But, the fact remains that as per the finding of the AO the assessee has determined a different market rate by adopting GJEPC rate to arrive at market rate which in our opinion is not in accordance with the prescribed method for valuation of closing stock. Therefore we set aside the issue to the file of the AO and direct him to determine the value of closing stock by adopting the cost or market rate whichever is less method as prescribed under Accounting Standard-2 for valuation of closing stock. - Decided in favour of assessee for statistical purposes.
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2018 (4) TMI 1527
Initiation of re-assessment proceeding U/s 147 - reasons not furnished to the assessee - Held that- When a notice under Section 148 of the Income Tax Act is issued, the proper course of action for the noticee is to file return and if he so desires, to seek reasons for issuing notices. The assessing officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the noticee is entitled to file objections to issuance of notice and the assessing officer is bound to dispose of the same by passing a speaking order. In the assessee’s case under consideration, the reasons were not furnished to the assessee therefore, the reassessment order cannot be upheld - decided in favour of assessee.
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2018 (4) TMI 1526
Addition in Biri Account by applying an adhoc rate of profit/commission of 2% on the purchase of Biri - non rejection of books of accounts - Held that:- AO had not rejected the books of accounts by invoking the provisions of Section 145. He made the addition by presuming that the assessee might have earned the commission @ 2% on the purchases. At the same time, he had not doubted the sales made by the assessee from the purchases. Even, the AO had considered that the gross profit amounting to ₹ 2,96,758/- was earned by the assessee from the sale of Biri. Thus when the sales has been accepted as genuine then the AO was not justified in presuming that the assessee earned commission on the purchases of goods (Biri) - neither the AO nor the ld. CIT(A) had given any basis for adopting the rate of Commission/Profit at 2%, therefore, the addition made by the AO and sustained by the CIT(A) was not justified. Accordingly, the same is deleted. - Decided in favour of assessee.
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2018 (4) TMI 1525
Levying of penalty u/s. 271(1)(c) - defective notice - non specification of charge - Held that:- We are of the view that notice issued by the AO u/s. 271(1)(c) read with Section 274 of the Act is bad in law as it does not specify which limb of section 271(1)(c) of the Act, the penalty proceedings had been initiated i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars. Therefore, the penalty in dispute is not sustainable in the eyes of law, hence, we cancel the penalty in dispute. See CIT & Anr. Vs. M/s SSA’s Emerald Meadows – 2016 (8) TMI 1145 – Supreme Court - Decided in favour of assessee.
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2018 (4) TMI 1524
Deemed income - Taxability of interest received from the Land Acquisition Officer u/s 28 of the Land Acquisition Act on enhanced compensation - assessed as income from other sources u/s 57(iv) r/w sections 56(viii) read with Section 145A (b) - as an alternate plea, the assessee has claimed that the compensation/interest was not received in his individual capacity but the same had accrued to the HUF which was comprised of him, his wife and his four sons - Held that:- During the course of proceedings before us, no documentary evidence was placed before us to corroborate this claim of the assessee. As adjudication of this issue is germane to the entire controversy, it is essential that it is established beyond doubt as to who were the actual recipients of the compensation/interest and in whose hands would this amount be assessed. Therefore, without going into the merits of the case, in the interest of justice, we restore the file to the office of the Assessing Officer with the direction to examine the issue afresh after determining as to who was the recipient of the compensation/interest i.e. whether the assessee was the recipient or whether it was the HUF who had received the compensation/interest. - Decided in favour of assessee for statistical purposes.
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2018 (4) TMI 1523
Registration u/s 12AA rejected - Whether the assessee Vijayawada Machinery Merchants Association is a charitable association? - proof of charitable activities - assessee-society as existed to protect the interest of the members - Held that:- The assessee is existed for the purpose to protect the interest of its members, i.e. specified individuals, who are the members of the association and contribute subscription and the same is utilized for their benefit. The assessee is not carrying on any useful activity towards public at large or at least a class of the people. The case of the assessee is not covered advancement of any other general public utility. We find that the assessee is not carrying out any activity for promotion of trading. It is existed only for specified individuals, who are the members of the association. Therefore, assessee is not entitled for registration under section 12AA as has rightly been observed by the ld.Commissioner that the assessee is a mutual association. The assessee-society is only existed to protect the interest of the members of The Vijayawada Machinery Merchants Association and is only related to the members of the association and not doing anything towards promotion of trading. We are of the opinion that the ld. CIT(A) rightly rejected the registration under section 12AA - Decided against assessee.
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2018 (4) TMI 1522
Treatment of loss - fund under the pension scheme - Computation of income of the assessee u/s 10(23AAB) - CIT-A allowing inclusion of loss arising from fund under the pension scheme in the "assessed loss" from remaining sources - Held that:- CIT(A) correctly directed AO to follow the direction given by the ITAT in assessee’s own case. We found that the Tribunal by following the order of the Bombay High Court in case of Life Insurance Corporation of India Ltd., [2011 (8) TMI 47 - BOMBAY HIGH COURT] wherein held even if the Income from pension business of an insurance company is exempt u/s. 10(23AAB) of the Act, if there is a loss from pension business, the same has to be allowed to be carried forward and set off. The Court held that the object of inserting section 10(23AAB) of the Act was to promote insurance companies to offer attractive terms of the contributors - Thus direction to the AO to consider the plea raised by assessee afresh is correct. - Decided against revenue
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2018 (4) TMI 1521
Reopening of assessment by issuance of notice u/s.148 - validity of reasons to believe - Held that:- A perusal of the recorded reasons shows that nowhere it records any fresh tangible information, which came to the notice of the Assessing Officer after completion of assessment under section 143(3) on 31.12.2011 for the assessment year 2009-10 and before recording of aforesaid reasons. Rather, the recorded reasons show that the reasons have been recorded based on very same materials which were already available before the Assessing Office prior to completion of assessment u/s.143(3) on 31.12.2011. Hon’ble Supreme Court in the case of CIT vs. Kelvinator of India Ltd., (2010 (1) TMI 11 - SUPREME COURT OF INDIA ) has held that the concept of “change of opinion” must be treated as an in-built test to check abuse of power by the Assessing Officer. Hence, after 1st April, 1989, the Assessing Officer has power to reopen an assessment, provided there is "tangible material" to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief. - Decided in favour of assessee
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2018 (4) TMI 1520
Interest expense as allowable u/s 36(1)(iii) - scope of investment in MHICL - Investment for busniss purposes - Held that:- In the absence of any dispute as to the fact of MHICL is the holding company of MMCL, MMCL having the same line of the business as that of the assessee, by such an investment in MHICL, the assessee sought to have controlling interest in MMCL and the said strategy yielded fruits in the form of increase in sales by ₹ 1,84,00,390/- during the assessment year, by no stretch of imagination, could it be said that the investment is not for the strategic for the purpose of expansion of the business simply because the holding company does not do the same business as that of the assessee. There is nothing material on record to brush aside the submission of the assessee that through MHICL the assessee acquired controlling interest in MMCL for furtherance of their business interest. The investment of the borrowed funds by the assessee in MHICL is for business purpose, as such, the interest expense is allowable u/s 36(1)(iii) of the Act. With this view of the matter, we hold that the interest expense claimed by the assessee is allowable u/s 36(1)(iii) and the AO will delete the same. - Decided in favour of assessee.
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2018 (4) TMI 1519
Addition u/s. 69 - difference in the actual sale value and circle rate for stamp duty purposes on sale of five immovable properties and circle rate for stamp duty purposes on sale of five immovable properties - absence of reference to DVO - Held that:- Because section 50C(2) read with clause c of section 56(vii)(b) inter alia provides that where the assessee claims before any AO that the value adopted or assessed or assessable by stamp valuation authority under sub section 1 of section 50C exceeds the fair market value of the property, the AO have to refer the valuation of capital asset to the Valuation Officer, which in this case has not been done by the AO. Once the assessee makes a request for reference to DVO, it is necessary to refer the matter to DVO as per 3rd proviso to sec.56 (2) (vii) r/w sec.5OC (2). In the absence of reference to DVO, the declared value cannot be disturbed. Hence, in the interest of justice, we set aside the issue in dispute to the AO with the directions to refer the matter to the DVO for valuation and DVO should allow full opportunity of hearing to the assessee, as per law and submit the Report to the AO. Thereafter, the AO shall decide the matter in dispute afresh, after considering the Report of the DVO and give adequate opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes.
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2018 (4) TMI 1518
N.P. determination - CIT-A restricting the net profit rate of 37. 97% on estimation basis - Held that:- CIT(A) relied on the NABARD report, to restrict the net profit at 37. 93%, which according to us is not solely a determinative factor to work out net profit of the assessee company because it is only a report and not a comparable financial statement in assessee’s similar business. AO as well as ld. CIT(A) has failed to bring on record, the outside comparable cases of the similar business, as the assessee is running. AO has not worked out a detailed report on the pasthistory and profitability of the assessee company and if the past profitability of the assessee company is not available, the Assessing Officer should bring on his record the comparable businesses where the similar business or activities were carried on, to adopt the net profit ratio. Therefore, we are of the view that it would be appropriate to remit the said issue back to the file of the Assessing Officer with a direction to work out the assessee’s past profitability history and also the comparable of the similar business entities working in similar products and similar environment. - Appeal allowed for statistical purposes.
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2018 (4) TMI 1517
Revision u/s 263 - applicability of Section 50C of I.T.Act for computation of capital gains - Held that:- The assessee had agreed for transfer of property at ₹ 4 lakhs per acre at the time of reaching the understanding for development agreement and due to delay in pursuing the document for registration, there was a change of method in collection of stamp duty and accordingly collected excess stamp duty has no relevance since the assessee has not agitated this issue before any of the appellate authorities and the assessee has accepted the value of stamp duty adopted by the sub registrar office. No merit in the argument of the assessee and we hold that the Pr.CIT has rightly rejected the submission made by the assessee. As gone through the assessment order and observed that though the AO has examined the computation of short term capital gains, the AO has not examined the issue with regard to the stamp duty value assessed by the Sub Registrar Office and applicability of provisions of Section 50C of I.T.Act. In this case, the assessee has transferred the land for development and the registering authority has assessed the value of the land at ₹ 3,90,58,800/-. The assessee has not disputed the stamp duty value fixed by the Registering authorities. This issue was not examined by the AO and the assessment order is completely silent on this issue, hence we hold that there is no application of mind by the AO during the assessment proceedings. Therefore, the Ld.AR’s argument that the AO examined the issue with regard to the applicability of Section 50C of I.T.Act for computation of capital gains has no basis, accordingly the same is rejected. Though the assessee has transferred the undeveloped land and the developer has given physical possession of the developed plots as per the development agreement dated 28.06.2010, the fact remains that the assessee had retained 50% of the land and only 50% of the land was transferred to the developer, therefore, we are of the considered view that the capital gains has to be computed on 50% of the land transferred to the developer, but not on the entire developed land as contended by the CIT. However, the issue needs to be verified by properly examining the development agreement with regard to the transfer of land and retention of the land by the assessee and capital gains required to be taxed on that part of the land which was transferred to the developer. Therefore, prima facie, we hold that the Pr.CIT has rightly invoked the jurisdiction u/s 263 - We remit the matter back to the file of the AO with a direction to verify the development agreement and assess the capital gains on the land transferred to the developer, but not on the entire land. Accordingly appeal of the assessee is allowed partly.
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2018 (4) TMI 1516
Deduction u/s 80P(2)(d) - interest on deposits made with the Bank - mutual cooperative society - assessee has filed the return of income after conducting the survey - income escaping assessment u/s 147 - Held that:- In the instant case, the assessee has made deposits with the Karnataka Bank Limited, which is not member of the society and the same is not to be allowed as a deduction u/s 80P(2)(d) of the Act. Therefore, the entire interest income derived by the assessee from the Karnataka Bank Limited is taxable. This view is supported in M/s. The Totgars´ Cooperative Sale Society Limited case [2010 (2) TMI 3 - SUPREME COURT] and M/s. BANGALORE CLUB [2013 (1) TMI 343 - SUPREME COURT] The assessee in the paper book furnished in the returns of income but not furnished the actual amount of interest received by the assessee from the Karnataka Bank Limited. A.O also has not given any finding on the interest received by the assessee from the banks. Even though the interest received on mandatory deposits the same is taxable. The case should be remitted back to the file of the A.O. to examine the nature of receipts which are exempt on principle of mutuality basis and taxable receipts such as interest received from Karnataka Bank and any other receipts and determine the true and correct income as per law. Appeals filed by the assessee allowed for statistical purposes.
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2018 (4) TMI 1515
Income accrued in India - fixed place PE in India - Income taxable in India - place of business in India - assessee has paid arm’s length remuneration/commission to its agent in India - Held that:- since transactions between the assessee and its AE have been found at arm’s length prices no further income chargeable to tax in India can be said to be attributable for the PE of the assessee. See Assistant Director of Income Tax-I, New Delhi Versus M/s E-Funds IT Solution Inc. [2017 (10) TMI 1011 - SUPREME COURT OF INDIA] - Hence this ground is decided in favour of the assessee.
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2018 (4) TMI 1514
E-Filing of appeal - Non maintainability of appeal as filled manually as a paper appeal - Appeal filed by the Assessee manually and not electronically - Held that:- In the present case, admittedly the assessment order has been passed before 01.03.2016, so the claim of the assessee that the said Circular as mandated appeals before the ld. Commissioner of Income Tax (Appeals) to be filed electronically is applicable to assessment orders passed after 01.03.2016, cannot be brushed aside summarily. In the above CBDT Circular, admittedly there is no discussion about the date of assessment order, with respect to which the said Circular is applicable. A construction that the said Circular is not applicable to assessment orders passed prior to 01.3.2016, cannot be said to be totally unsustainable The Hon’ble Apex Court in the case of CIT v. Vegetable Products Ltd. [1973 (1) TMI 1 - SUPREME Court] has expounded that if two constructions are possible, one in favour of the assessee should be applied. On the facts of the present case, and on the touch stone of the above said Hon’ble Apex Court decision, it is of considered opinion that the assessee’s plea that the appeal filed manually for assessment order passed prior to 01.03.2016, should be admitted by the ld. Commissioner of Income Tax (Appeals), is cogent. More so, when the ld. Commissioner of Income Tax (Appeals) in his earlier paragraph has accepted that the appeal is well within time. Accordingly direct the ld. Commissioner of Income Tax (Appeals) to admit the aforesaid appeal of the assessee.
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2018 (4) TMI 1513
Determination of annual letable value (ALV) of the house property - flat remained vacant during the relevant previous year - Held that:- Where any part of the property is let out and was vacant during the whole or any part of the previous year and due to such vacancy rent received / receivable by the owner is less than the ALV determined under section 23(1)(a) in that case the actual rent received or receivable is to be treated as the ALV. The submissions of the DR, since the properties in dispute were not let out earlier, the assessee will not be eligible to avail the benefit of section 23(1)(c) is not acceptable. The expression ―the property or any part of the property is let as used in clause (c) of section 23(1) does not mean that for availing the benefit of the said sub–clause the property must have been let out earlier. The Tribunal, Mumbai Bench, in Premsudha Exports Pvt. Ltd. (2007 (5) TMI 348 - ITAT MUMBAI) has also held that the expression ― property is let under clause (c) of section 23(1) does not mean that the property should have been actually let in the relevant previous year or during any time prior to the relevant previous year. But it will mean the property is intended to be let out. Thus we hold that the learned Commissioner (Appeals) was justified in directing the Assessing Officer to allow the deduction under section 23(1)(c) to the assessee - Decided against revenue
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2018 (4) TMI 1512
Grant of registration u/s 12AA rejected - assessee society is controlled by one family for profit purpose and ordinary public is restricted from membership - Proof of charitable activities - Held that:- Charitable nature of any society cannot be determined on this sole fact only rather all the aims and objects are required to be examined in entirety. Rather in case charitable society is run by a single unit may be member of one family, they can carry out the charitable activities more effectively to avoid any type of unnecessary hindrances. As in case of Maa Saraswati Education Society vs. CIT [2016 (12) TMI 1076 - ITAT DELHI] while dealing with the identical issue held that a society controlled by close family members cannot be debarred from registration as society is a separate entity from its members having been governed by the Societies Registration Act, 1960. So, when we read the trust deed particularly aims and objects of the assessee society in entirety, it leads to the conclusion that the assessee society has been set up for carrying out the charitable activities under the Act. In case hefty fees is being charged by the assessee society and at the same time, it is providing free education to the needy students and free medical aid to the needy patients, it cannot change its nature from charitable society to profit making society. When the surplus funds are further being utilized to carry out the aims and objects of the society, a society cannot be denied registration u/s 12AA of the Act. Section 12AA provides for procedure for registration as to how the ld. CIT will provide the registration after getting satisfied about the aims and objects of the society and not to sit on the matter like the AO as all these facts are to be taken care of by the AO at the time of assessment. So, merely earning profit out of which only 15 – 16% are lying surplus with the assessee society cannot be a ground for refusal of registration in this case. CIT has not disputed the fact that aims and objects of the assessee society are charitable he cannot dispute the genuineness of the activities of the Trust on the basis of surmises only. - Decided in favour of assessee.
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2018 (4) TMI 1511
Disallowance u/s 14A read with Rule 8D - suo moto disallowance - Held that:- We find that the assessee itself has disallowed ₹ 30,57,783/- u/s 14A by duly considering the direct expenditure and also indirect expenditure in terms of Rule 8D(2)(iii) of the Rules. Against the disallowance deleted by the Ld. CIT(A) under Rule 8D(2)(ii), the revenue is not in appeal before us. AO had not looked into the workings given by the assessee having regard to the accounts and had to record satisfaction as to why the calculation made by the assessee is incorrect and as to why he is ignoring the same and proceeding to invoke the computation mechanism provided in Rule 8D(2) of the Rules. Thus we hold that no disallowance is to be made u/s 14A over and above ₹ 30,57,783/- which has already been disallowed by the assessee. - Decided in favour of assessee Denial of deduction u/s 80IE - assessee is engaged in the business of growing and manufacturing of tea, manufacturing chemical and fertilizers, trading of tea, warehousing and development of real estate - substantial expansion - Held that:- As find that the expression ‘substantial expansion’ is also defined in 80IE(7)(iii) wherein, it should result in increase in investment of plant and machinery by at least 25% of the book value of plant and machinery. This factual aspect as to whether the assessee had indeed invested in plant and machinery more than 25% of the book value of plant and machinery (before depreciation in any year); as on the first day of the previous year in which substantial expansion is undertaken, was not verified by the authorities below. Thus remand this issue to the file of the AO, for this limited purpose of verification of quantum of investment in plant and machinery so as to satisfy the definition of substantial expansion within the meaning of 80IE(7)(iii) of the Act. - Decided in favour of assessee for statistical purposes.
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2018 (4) TMI 1510
TPA - Comparable selection criteria - excluding the two comparables i.e. Keynote Corporate Service Ltd. and Motilal Oswal Investment Advisors Pvt. Ltd. - Held that:- This Court notices that for AY 2007-08, undoubtedly, there were some special reasons inasmuch as Keynote Corporate Service Ltd had undergone amalgamation with another entity. In these circumstances, the question whether Keynote Corporate Service Ltd figures are to be included or not, requires fresh determination, having regard to the specific issue of functional similarity; the matter is therefore, remitted to ITAT. It is open to the ITAT to consider the findings with respect to the preceding years after the amalgamation. ITAT will record its appropriate findings year-wise on the issue of functional similarity. With respect to the inclusion of Motilal Oswal Investment Advisors Pvt. Ltd. ITAT appears to have adopted the formula of percentage of RPT being equal to expenses paid to related parties divided by total expenditure multiplied by 100, only in the case of this entity. While doing so, the ITAT followed its previous ruling in SunGard Solutions (India) (P) Ltd. vs. Dy. DIT, (2014 (12) TMI 429 - ITAT PUNE). This Court is of the opinion that adopting one procedure for only one entity and adopting another for all other entities or comparables can lead to a distorted picture. In these given circumstances this issue too is remanded to the ITAT for fresh consideration.
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Customs
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2018 (4) TMI 1544
Concurrence of the sentence awarded in the original complaint case u/s 135 of the Customs Act along with the sentence undergone by him following his second conviction - case of petitioner is that he was not released on bail or parole in either of the cases post-conviction - Held that: - the prayer of the petitioner appears to be justified and in order, since it is a matter of record that his conviction is not in two separate cases under the NDPS Act alone - As such, he is found to be entitled to the concurrence of the sentences awarded to him in the first as well as the second complaint cases - prayer allowed.
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2018 (4) TMI 1543
Recovery of dues - first charge on property - Sale of property - whether the right of the petitioner would be protected only if the mortgage was registered as has been held in the impugned order? Held that: - The equitable mortgage in the instant case is created in favour of the petitioner-Bank on 2-7-1997 by depositing the original documents relating to the property owned by them. In that regard respondent No. 4 has written a letter to the Bank on 6-6-1998 confirming the deposit of title deeds with an intention to create mortgage by way of deposit of title deeds. If that be the position, it is clear that in the instant case there is no deed executed between the parties which required a registration as contemplated under Section 17 of the Registration Act, but actual delivery of the original title deeds relating to the property is completed and the letter was addressed to the Bank. Insofar as the recovery as contemplated under the Central Excise Act or the Customs Act, there is no such provision to provide for precedence as has already been filed by this Court. If that be the position the Order-in-Original and the order passed in an appeal as at Annexures ‘J’ and ‘K’ in the present context would not be sustainable. Petition disposed off.
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2018 (4) TMI 1542
Penalty u/s 112(b) of the Customs Act, 1962 - smuggling of betel nuts - Held that: - The Tribunal specifically did not address culpability of the respondent No. 1 as opinion of the Tribunal was that the entire consignment was not proved to have been smuggled - The allegations against the respondent No. 1 do not attract the mischief contemplated in the aforesaid provision - penalty set aside - appeal dismissed - decided against Revenue.
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2018 (4) TMI 1541
Principles of Natural Justice - cross-examination - whether the petitioner is entitled as of right to cross-examine the DRI officials and panchas even if they have not been led as witnesses by the Revenue? - Held that: - if the Revenue has led the evidence of any DRI officer or pancha witness, the petitioner will be entitled to cross-examine that witness and this opportunity cannot be denied on the ground that it is “unnecessary”. The petitioner may also be make out the sufficient cause to interpose the cross-examination of a DRI official or pancha (whose evidence was led by the Revenue) before resuming the cross-examination of the witness Sahu. Finally, there is a question of documents and materials seized by the DRI during his search and seizure operation. If DRI intends to rely on any of these documents, the petitioner and his counsel are entitled to inspection of all these materials and to use them in a manner permissible in law during the cross-examination or arguments. Petition disposed off.
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2018 (4) TMI 1540
Penalty - confiscation of the excess quantity of the cut and polished diamonds of 299.33 carats - respondent’s grievance was that penalty was not imposed by the adjudicating authority - Held that: - there is finding of fact that, there has been a misdeclaration under clause (m) of Section 111 - It is also held that as required by Section 46, the importer has not declared true description, contents and value in the Bill of Entry - The Appellate Tribunal has rightly observed that it was a mitigating factor as observed by the adjudicating authority. There is no one to one co-relation with the consignments (consignment export) and the consignment of 299.33 carats imported which was not declared by the appellant at the time of import. Had there been complete co-relation between the export invoice and the import consignment, there could have been some justification for waiver of penalty. Penalty upheld - appeal dismissed - decided against appellant.
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2018 (4) TMI 1539
Extension of time limit for issuance of SCN - confiscation of seized goods - Section 110 of the Customs Act, 1962 - Held that: - Proviso to sub-section (2) lays down that period of six months cannot be mechanically extended but it can be extended only if the Commissioner of Customs is satisfied that sufficient cause is shown by the Customs Officer. There is no finding recorded by the Commissioner that he was satisfied that investigation is being pursued seriously and there is a need for grant of more time for taking the investigation to its logical conclusion. There is no finding recorded that sufficient cause was made out by the Customs Officer - in view of the express words used in proviso to sub-section (2) of Section 110, the Commissioner could not have extended the time without recording his satisfaction on basis of the material on record that investigation is being pursued seriously and there is a need for more time for taking it to its logical conclusion. Merely because investigation is delayed, that is no ground for grant of extension of time so as to defeat the right created under sub-section (2) of Section 110. Grant of extension of time as provided in the proviso affects the right which is created under sub-section (2) of Section 110 in favour of the person from whom the goods have been seized. If no notice under Section 124 is issued within a period of six months from the date of the seizure, the persons from whom goods are seized is entitled to return of goods as a matter of right. Appeal dismissed.
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2018 (4) TMI 1538
Import of crude palm oil - Benefit of exemption under N/N. 21/2002-Cus dated 12th March 2002 - denial on the ground that beta-carotene content in the crude palm oil imported by M/s Radha Vansapati Ltd being below the prescribed to disentitle them from the privilege - Held that: - It is not in dispute that the palm oil under import was in crude form and requires refining, bleaching and deodorizing before release for human consumption. The primary purpose of prescribing a broad range of beta carotene content in the exemption notification is to ensure that it is applicable only to palm oil that is intended to be subjected to value addition in India. The various tests of the samples were effected over a period of four months and there is a consistent decline in the distinguishing content. Furthermore, the first test at Kandla passes muster. No other evidence to establish that the consignment did not, at any stage, comply with threshold requirement is placed on record. The conformity of impugned goods with crude palm oil as per the prescribed parameters at the time of import is not in question - appeal dismissed - decided against Revenue.
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Insolvency & Bankruptcy
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2018 (4) TMI 1547
The time granted to Mr. Pawan Shree Agrawal, learned amicus curiae to prepare a projectwise chart, as indicated in the previous order dated 21st May 2018, is extended till the next date of hearing. Permission to travel to United Kingdom between 14th April 2018 and 30th April 2018 - additional affidavit has been filed in the said I.A. wherein the applicant has sought to reschedule the dates of his travel to U.K. He now intends to travel to U.K. between 30th April 2018 and 23rd May 2018 - Prayer, in terms of the additional affidavit, stands allowed.
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Service Tax
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2018 (4) TMI 1508
Mandap keeper services - appellant also providing food and / or catering services separately for which separate bills were raised - liability of service tax on food and beverage charges - N/N. 12/2003-ST dated 20.06.2003 - Held that: - the identical issue has come up before the Tribunal in the case of Narmada Jackson Hotel vs. CCE, Bhopal [2016 (2) TMI 872 - CESTAT NEW DELHI], where it was held that the appellant’s claim that the entire charges relating to buffet dinner should be excluded from the assessing value in terms of N/N. 12/2003-ST is clearly not sustainable - demand upheld - appeal dismissed - decided against appellant-assessee.
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2018 (4) TMI 1507
Scope of SCN - Classification of services - advertisement in print media - Held that: - The demand was raised under the category of Renting of Immovable Property Service but the services were classified under Sale of Space in print media which is non- taxable for the period under consideration - When the service is for sale of space for advertisement in print media then it can not be treated as renting of immovable property - demand do not sustain. Penalty - service tax with interest paid before issuance of SCN - Held that: - the respondent has already paid the Service Tax along with the interest before issuing of the show cause notice - When it so, then penalty is not leviable as per the ratio laid down in Commissioner V/s Rashtriya Ispat Nigam Ltd. [2003 (5) TMI 509 - SUPREME COURT] - penalty set aside. Appeal dismissed - decided against Revenue.
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2018 (4) TMI 1506
Penalty - tax demand paid before issuance of SCN - invocation of section 80 - Held that: - the benefit of section 80 of the Finance Act is available to the appellant as per the ratio laid down in Union of India vs. M/s. Rajasthan Spinning & Weaving Mills [2009 (5) TMI 15 - SUPREME COURT OF INDIA], where it was held that the assessees had made payment of the demands simply in order to buy peace and to avoid any litigation. In those circumstances the imposition of penalty was wholly unjust, unwarranted and unauthorised in law - penalty set aside by invoking section 80 - appeal dismissed - decided against Revenue.
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2018 (4) TMI 1505
Renting of Immovable Property Services - cum tax benefit - case of appellant is that they have not collected tax separately along with the renting charges - Held that: - this plea is a reasonable one and the benefit should be extended to the assessee - matter remanded to adjudicating authority who shall rework the demand giving benefit of cum tax to the assessee. Penalties u/s 78 - Held that: - The assessee being a local self-government running for the welfare of the public cannot be said to have any intention of suppressing facts to evade payment of service tax - penalty has to be set aside. Part appeal allowed by way of remand - partly decided against Revenue.
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2018 (4) TMI 1504
Classification of services - appellants herein, were providing technically qualified employees / man power to IT companies like TCS, Infosys for development of software projects - whether the activities of appellant would fall within the scope of “Manpower Recruitment and Supply Agency Service” or whether it can be said that they provide Information Technology (IT) service? - Held that: - appellant was involved only in supply of man power to TCS, Infosys etc. Such man power may well have been technical personnel and highly qualified in information technology too. But the fact remains that such personnel were only supplied by appellant to Infosys etc. And that they were required to function under supervision of the latter and as per the work allocated by these service recipients. The facts are very much pari materia with the facts of Future Focus Infotech India (P) Ltd.Vs CST Chennai [2010 (3) TMI 190 - CESTAT, CHENNAI], wherein the Tribunal has clearly laid down that appellants therein had undertaken only supply of skilled man power. There is no infirmity in the impugned order concluding that the activity of the appellant would fall within the fold of “Manpower Recruitment or Supply Agency Service” under Section 65 (105) (k) of the Finance Act, 1994. Services provided outside India and to SEZ - Held that: - the contentions of the appellant that services provided to SEZ units would be exempt vide Notification No.4/2004-ST have been brushed aside by the Commissioner - the matter requires reconsideration. Extended period of limitation - suppression of facts - Held that: - The facts came to light only when the department conducted scrutiny of the annual reports, possibly during audit. In such circumstances, the department is fully justified in invoking the extended period of limitation of five years - while the demand has been made from 16.6.2005, for the period 1.4.2005 to 15.6.2005 the demand is erroneous since the impugned Manpower Recruitment of Supply Agency Services was made taxable only w.e.f. 16.5.2005. Penalty - Held that: - benefit of doubt can be given to the appellant that they were under bonafide belief that no tax is required to be deposited by them on the services provided - penalty set aside by invoking section 80. The matter is remanded to the adjudicating authority for recalculation of tax liability, to reconsider the appellant’s submissions in respect of the services provided outside India and accord benefit under the provisions of Export of Service Rules, to consider benefit under Notification No.4/2004-ST - appeal allowed in part.
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2018 (4) TMI 1503
Liability of service tax - sale or service - sale of electricity - whether the appellants are liable to pay service tax on the sale of electricity by way of sub seller and also whether they are liable to pay service tax on the sale of electricity originated from DG Set? Held that: - admittedly on electricity VAT is charged on the sale of electricity by the Sales Tax Department - Further, distribution of electricity is not a taxable activity under Service Tax, as clarified by N/N. 45/2010–ST. As per the facts noticed in the SCN, it is revenue's case that the appellant have sold electricity and not given the service tax of electricity - the activity is also in the nature of pure agent, being done by the appellant. The appellant is not liable to pay service tax on the sale of electricity either received from the Electricity Department or supplied from its D.G. Sets and also regarding sale of other consumer goods to the tenants. Appeal allowed - decided in favor of appellant.
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2018 (4) TMI 1502
Management, Maintenance or Repair Services - After rectification and repair, the repaired assembly were supplied back to LMW who dealt with the same later on - Held that: - the tax liability of the sub-contractor for the taxable service cannot be denied as per the legal provisions. The provisions of CCR 2004 is clear to the effect that tax liability will arise on value addition. The concept that the ultimate service provider who used the input service alone is liable to pay tax is against the very principle of Value Added Tax. The appellant shall be liable for service tax for the repair and maintenance charges undertaken by them even in case such labour charges form part of service tax paid by LMW. Appeal allowed in part.
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2018 (4) TMI 1501
Commercial Training or Coaching Service - Appellants were conducting training courses viz., B.Sc. Degree course in Hotel Management and Catering and Diploma Course in Hotel Management and catering - these courses were neither approved by the competent authority nor affiliated with any University/deemed University - whether appellant is an independent entity to whom the SCN has been issued? - Held that: - from the facts, it is not clear whether the appellants are conducting B.Sc. degree course in two streams ie., one which is affiliated to the University of Madras and the other which is affiliated to SRM deemed University. The same requires verification. It is necessary to verify whether the income on which demand is raised in regard to conduct of B.Sc. Degree course relates to the degree course affiliated to Madras University alone or whether appellant is also conducting B.Sc. Degree Course under Deemed University (SRM University) - matter on remand for verification. Demand made in respect of diploma course - case of appellant is that the course being the vocational course, the appellants are eligible for exemption as per the N/N. 9/2003 - Held that: - The Tribunal in similar set of facts, in the case of Ashu export Promoters Pvt. Ltd. [2011 (11) TMI 387 - CESTAT, NEW DELHI] had held that the exemption is eligible - the demand in respect of diploma course cannot sustain and the same requires to be set aside. Partly decided in favor of appellant - part matter on remand.
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2018 (4) TMI 1500
Adjustment of the Service Tax paid in excess - Rule 6(3) of Service Tax Rules, 1994 - denial on the ground that the said adjustment does not fall within the ambit of Rule 6(4B) of Service Tax Rules - Held that: - there is no dispute as to the fact that the amount of amount of ₹ 2,71,84,170/- has been paid in excess, adjustment thereof is possible under provisions of Rule 6 of the Service Tax Rules. Similar issue came up before the Tribunal in the case of Central Mine Planning and Design Institute [2014 (7) TMI 830 - CESTAT NEW DELHI], wherein the Bench recorded that Rule 6(3) is applicable not only to the case of excess payment of service which can be made good in subsequent period and but also to the case where taxable values are not ascertainable for longer period. It was also held that sub-rule 6(3) is not dependent on provision of sub-rule 6(4). Appeal allowed - decided in favor of appellant.
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2018 (4) TMI 1499
Valuation - Renting of immovable property service - inclusion of amount towards Repair and Maintenance services - whether the value of repair and maintenance, which was incurred by RBPSSK, on the sugar factory needs to be included on the value, as received for renting of immovable proper or otherwise; and whether consequential interest and penalties on demand on such value needs to be upheld? Held that: - the adjudicating authority in the impugned order has specifically recorded that the lessee RBPSSK had undertaken the repair and maintenance of the plant and machinery of the sugar factory before it was put to use for manufacturing purpose - the said value/ consideration is not towards the lease rent, which is collected by the appellant from various lessees towards the loan taken by the principal sugar factory YSSK. The issue of inclusion of the consideration/ expenditure made on repairs and maintenance cannot be included for demand of tax under Renting of property services is now settled by the Bench in the case of Maharashtra State Co-op Bank [2017 (9) TMI 298 - CESTAT MUMBAI], where it was held that the said expenditure cannot be considered as extra consideration towards the lease rent. Lease rent is the only amount which is received by the appellant on account of lease of the premises to the lessee. Therefore, the demand on expenditure towards repair and maintenance is not sustainable. Liability of interest - Held that: - the interest liability arises on the appellant in respect of amount received as lease rent and that needs to be discharged if not done so. Penalty - Held that: - the amounts spent towards repair and maintenance cannot be included in the value for calculating tax liability, penalty imposed by the adjudicating authority on the appellant herein needs to be set aside. Appeal allowed in part.
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Central Excise
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2018 (4) TMI 1498
Condonation of delay in filing appeal - whether the Commissioner has no power to condone the delay beyond the period of 30 days in terms of Section 35(1) of the Central Excise Act, 1944, which provides for a period of 60 days for filing an Appeal? - Held that: - since the impugned adjudication order suffers from illegality, the delay deserves to be condoned by this Court in exercise of the extraordinary jurisdiction under Article 226 of the Constitution of India - this Court is of the opinion that the delay deserved to be condoned by the Commissioner of Appeals. In view of the statutory limit on his powers, this Court exercising its extraordinary jurisdiction is of the opinion that the said delay deserves to be condoned - the delay of 32 months as stated in the impugned order in filing the appeal is condoned and the appeal is restored to the file of the Respondent-Commissioner of Appeals, with a direction to the said Authority to decide the appeal on merits in accordance with law. Petition allowed.
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2018 (4) TMI 1497
CENVAT credit - duty paid under protest - Whether the learned CESTAT was correct and justified in ignoring that the amount of ₹ 3,53,171/- besides having paid through PLA was also debited from CENVAT credit? - Whether the learned CESTAT was justified and correct in holding that the payment of the same duty paid out of PLA from the payment of ₹ 4 lac per treasury challan TR-6 “under protest” is without any indicate of protest from PLA extract?. Held that: - pursuant to the order passed by the authority suspending CENVAT Credit on 19-2-2001 (Annexure-4) was period of two months - the amount of ₹ 400000/- which was deposited vide TR-6 Challan (Annexure-5), there cannot be two duplex of payment of tax. The limitation period would start not from the date of deposit but from the date of the decision by Commissioner (Appeals) which was decided on 21-4-2006 (Annexure-3). Even on limitation, the appellant has good case - The appellant will be given CENVAT Credit and if the application is made, immediately effect will be given. Appeal allowed - decided in favor of assessee.
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2018 (4) TMI 1496
Clandestine removal - excesses of final products - confiscation - redemption fine - penalty - Held that: - As regards, the seizure and confiscation of their goods even from the premises of M/s. Shivaji Industries, the appellants total clearances, as reflected in their records was to the extent of around ₹ 27 lakh. As such, even if the goods seized at the time of visit of the officers, totally valued at ₹ 42 lakh are taken into consideration, the goods seized from M/s. Shivaji Industries along with the goods found in the premises of M/s. Sippy Auto Manufacturing Company, the same would be much below the small scale exemption limit of ₹ 1.5 crores - also by appreciating the fact that there is no evidence indicating that goods in question were meant for clandestine activity, I find no justifiable reason for confiscation of the same - confiscation - set aside. Penalty - Held that: - the appellants have admitted their duty liability and even if the total clearance fall under ₹ 1.5 crore exemption limit, in terms of N/N. 8/2003, they have accepted the clandestine activity - penalty upheld - quantum reduced from ₹ 5 lakh to ₹ 2,00,000/-. Seizure and confiscation of the goods, at the premises of M/s. Sippy Auto Manufacturing Company - Held that: - as per the admission of appellant themselves, the said goods were manufactured and cleared from the premises of M/s. Shivaji Industries without payment of duty - appreciating the fact that no duty liability is fastened upon M/s. Sippy Auto Manufacturing Company inasmuch as he is only the trader, the redemption fine reduced from ₹ 4 lakh to ₹ 1,00,000/- and penalty from ₹ 2.50 lakh to ₹ 50,000/-. Appeal allowed in part.
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2018 (4) TMI 1495
Recovery of excess refunds - CENVAT credit - area based exemption - N/N. 56/2002-CE dated 14.11.2002 - revenue was of the view that the appellant should have availed the credit in their books and paid duty by cash only on the excess - Liability of interest - penalty - In view of the non-compliance with the mandatory condition of Notification No. 56/2002-CE, the demand of wrongly availed refund by way of self-credit should be upheld but no interest and penalty be imposed? - difference of opinion - majority order. Held that: - It is seen that though initially the appellant did not follow the stipulated procedure by first entering the credit, utilizing the same and availing self-credit on only excess payment, however, later in order to rectify the said mistake, the said amount which was already availed as self-credit was entered into in the Cenvat credit books. This was utilized for payment of duty on final products. The net result is on this subsequent utilization of credit the payment by cash got reduced resulting in less refund to the appellant - denying and demanding the wrongly availed self-credit on first instance is not sustainable. Admittedly, the appellant followed the correct procedure on the second time though on the first instance they have wrongly taken direct self-credit. Interest and penalty - Held that: - the inadvertent mistake in the first instance was rectified later by following due procedure - interest and penalty also do not sustain. Appeal allowed - the appeal file is returned back to the regular bench for further action.
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2018 (4) TMI 1494
Principles of Natural Justice - case of appellant is that without taking any cognizance of documentary evidence submitted, the appeal has been dismissed which is against law - Held that: - appellant have submitted the chart showing credit balances and credit available as per ledger for the period 2012-13 and 2013-14 along with copy of documents - the Lower Authorities have not properly appreciated the above documents and submission made by the appellant as far as admissibility of Cenvat credit is concerned - matter is remanded to Original Adjudicating Authority to re-adjudicate the case - appeal allowed by way of remand.
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2018 (4) TMI 1493
Adjustment of excess amount paid - whether the appellant is entitled to adjustment of any sums which they claimed to have been paid in excess and which is available for credit pursuant to being successful in appeal out of the demand of ₹ 12,78,372/-? - Held that: - there is error of fact as demand of ₹ 4,58,444/- with interest and penalty which was confirmed under the provisions of Rule 8(3A) and upheld by Order-in-Appeal dated 28th November, 2013 have been set aside by Final Order of this Tribunal dated 19/05/2016 in Appeal No. E/53260/2014 wherein demand under Rule 8(3A) from July, 2011 to September, 2011 was set aside by this Tribunal and held show cause notice was not maintainable. There have been mis-carriage of justice - matter remanded to the Adjudicating Authority who shall pass an order and issue adjustment sheet to the appellant after hearing and considering the adjustment being claimed by them out of demand of ₹ 12,78,372/- - appeal allowed by way of remand.
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2018 (4) TMI 1492
Manufacture - whether the activity of metalizing undertaken by the assessee amounts to manufacture or not? - Held that: - After metallization process the polypropylene film is no longer a film with insulting properties but a metalized film with conducting properties ready to be used in capacitors. Therefore, the raw material has been transformed into something new i.e. Electronic Capacitor Grade Aluminium Metalized Dielectric Plastic Film which can be used for manufacturing electronic capacitors and the Ministry of Communication and Information Technology clarified that there is a great deal of difference between the plastic film and the metalized film manufactured by the assessee. Benefit of N/N. 25/99-Cus dated 28.2.1999 and N/N. 25/2002-Cus dated 01.03.2002 - Held that: - There is great deal of difference between description of imported goods and description of finished goods. If the description of imported goods and description of finished goods are same, then the notifications become redundant , it is not intention of the legislation - From the tenor of the notification, it is clear that inputs procured by the assessee are altogether different from the goods manufactured by the assessee. Refund claim of Cenvat credit - denial on the ground that the activity undertaken by the assessee does not amount to manufacture - Held that: - in the present case, the activity undertaken by the assessee amounts to manufacturer, therefore, the assessee is entitled to refund of Cenvat credit under Rule 5 of Cenvat Credit Rules, 2004 which remains unutilized in the Cenvat credit account on export of goods. Appeal allowed - decided in favor of assessee.
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2018 (4) TMI 1491
Reversal of CENVAT credit - while clearing the repacked GI wires they discharged Central Excise duty approximately to the tune of ₹ 32 lakhs while the CENVAT credit availed was approximately ₹ 38 lakhs - Held that: - The law on this issue is settled by the Hon’ble High Court of Bombay in the case of Ajinkya Enterprises [2012 (7) TMI 141 - BOMBAY HIGH COURT], which is, if any amount is paid as Central Excise duty considering the goods as manufactured and if CENVAT credit is sought to be reversed on the same, the duty disallowed is as good as reversal of the same is equal or more to such credit availed and no demand arises. Liability of interest on amount reversed - Held that: - the appellant is not required to pay interest on the amount which has been reversed, but only on the amount of ₹ 6,31,590/- which was paid during the proceedings before the first appellate authority. Penalty u/r 15 of CCR - Held that: - there is no contravention of the provisions of CENVAT Credit Rules as well as Central Excise Rules - the penalty of ₹ 50,000/- imposed would be sufficient to meet the ends of justice. Appeal allowed in part.
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2018 (4) TMI 1490
Manufacture - activity of laminating and coating and cutting and slit: aluminium foil - Held that: - there was process of conversion of aluminium foil into pharma foil by lamination or coating resulting into new and different product and the said activity amounts to manufacture - appeal allowed - decided in favor of appellant.
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2018 (4) TMI 1489
CENVAT credit - input service - services of disposal of effluents arising during the course of manufacture in the appellant’s premises or otherwise - Held that: - the issue is no more res integra, as it has been made mandatory that the wastes of any kind waste needs to be treated before disposing them as per the directions and guidelines of Ministry of Environment and Forest; the State Pollution Control Boards are required to supervise/monitor the said disposal being done as mandated. In the case in hand, the waste disposal arising in the appellant’s factory is being monitored and disposed of as per the guidelines by authorised agencies of Andhra Pradesh State Pollution Control Board. CENVAT credit of service tax paid on the activity of waste disposal by service provider allowed - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2018 (4) TMI 1488
Interpretation of statute - Section 18A of the CST Act, 1956 - recovery of tax pending the appeal - Held that: - in the light of the exposition of law, the issue is answered in favor of the petitioners - Once this concession is given and even otherwise we do not find any point surviving in this petition after this judgment - petition allowed.
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2018 (4) TMI 1487
Whether the amendment carried out in Section 2(24) Explanation (b) of the Act by the Maharashtra Act No. XIV of 2005 resulted in deletion of the words “shall be deemed to be a sale”, being part of paragraph No.(vii) of the said Explanation to the Clause 24 of Section 2 of the Act? Held that: - it is an agreed position between the parties that the question raised herein be restored to the Tribunal for fresh consideration after taking into account the Gazette published in Marathi and English of Act IX of 2005 to determine whether or not there is any conflict between the English and Marathi Gazette publication - In case, it is found to be so, then decide on the correct interpretation after deciding which of the two translation's correctly represent the will of the Legislature. The issue is restored to the Tribunal for fresh disposal.
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2018 (4) TMI 1486
Valuation - inclusion of depot charges - whether the depot charges i.e. handling and warehouse charges collected by the appellant would be a part of the sales price of Motor Vehicles chargeable to tax under the Act? - Held that: - Admittedly, depot charges are recovered for things done before delivery of the Motor Vehicles. The decision in the case of The Additional Commissioner of Sales Tax VAT-III, Mumbai Vs. Sehgal Autoriders Pvt. Ltd [2011 (7) TMI 55 - BOMBAY HIGH COURT] would not apply to the present case as the case admittedly dealt with registration charges and not depot charges, whereas the present case deals with depot charges which are not post sale activity. The depot charges are recovered for things done before delivery of the Motor Vehicles and would be included in the meaning of 'sale price' under Section 2(25) of the Act. This is self-evident from the plain meaning of the definition of 'sale price' - appeal dismissed - decided against appellant.
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Indian Laws
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2018 (4) TMI 1509
Compounding of offences - reference to Lok Adalat for settlement of the case - Held that: - Perusal of the record reveals that from the very inception, the petitioner was not interested for reference of the matter for settlement to Lok Adalat as he was apprehensive of the respondent’s intention not to make the payment; it happened true. Despite recording statements before the National Lok Adalat where he agreed to pay certain payments on two dates, the respondent without any plausible reason avoided to make the said payment - Till date, the petitioner has been deprived of the compensation amount awarded by the Trial Court despite the respondent being held guilty for commission of offence punishable under Section 138 Negotiable Instruments Act. The impugned order cannot be sustained as the National Lok Adalat had not passed any ‘award’ on the basis of the statements recorded by both the parties. Lok Adalat had only recorded the terms and conditions whereby the matter was to be compounded before the court concerned on making payment of the amount stated therein. Revision petition allowed.
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