Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 19, 2018
Case Laws in this Newsletter:
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI Short Notes
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Disallowance of business expenditure - business activity not commenced - In absence of any income generation, it was difficult to understand how the staff was paid bonus as claimed by the assessee. - HC
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Exemption u/s 11 - charitable purposes u/s 2(15) - providing sports facilities to general public without restriction of any caste, creed, religion or profession is eligible for exemption under section 11. - AT
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A perusal of this long disclaimer clearly shows that the merchant banker did not do anything reflecting their expertise, except mere applying the formula to the data provided by the assessee. - AT
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Long term capital gain (LTCG) - relinquishment of right in property in favor of brother in lieu of cash - arrangement as per the family settlement - Such transaction cannot to be treated as transfer within the meaning of section 2(47) - not liable to income tax - AT
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Penalty u/s 271(1)(b) - non-compliance with notices u/s 142(1) - assessee was given very little time to furnish long list of requirements and there was reasonable cause on the part of the assessee for being unable to file the details on the given data in the notice - Penalty set aside - AT
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Addition u/s.68 - unexplained share application money - The mere fact that “assessee” company chooses to show the receipt of the money as capital does not preclude the ITO from going into the question whether this is actually so. - AT
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Revenue recognition - Royalty income - as per the revenue recognition prescribed under AS-9 of ICAI in respect of royalties, the same has to be recognized only over the validity of tenure of the agreement which has been rightly done by the assessee. - AT
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Addition u/s 56(2)(vii)(b) - difference between Stamp duty Valuation and purchase consideration as per registered sale deed of immovable property - whether on date of transfer of immovable property i.e. on 31-03-2013, provisions of Sec. 56(2)(vii)(b) were not in force? - Held No - AT
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Transfer pricing adjustments - Merely because the assessee is supplying a product for a new vehicle, when assessee is in the same line of business for a long time, coupled with the fact that products have been imported from the sister concern for onward supply to the principle and later on of prices stabilized, does not make assessee to say that these cost are extra ordinary cost - additions confirmed - AT
Customs
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Import of Hazardous goods - old and used picture tubes - Picture tubes being the Cathode Ray Tubes - The goods have been opined by the MoEF as hazardous e-waste, and such goods have rightly been held as prohibited goods u/s 110 of the Customs Act, and as such, there seems no infirmity or illegality in ordering the absolute confiscation of the said goods. - AT
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Penalty on the courier company - merely because the appellant failed to cross-check the declared value, importer's name, IEC and identity of the person who had submitted the documents for the purpose of filing of courier bill of entry, penalty cannot be imposed - AT
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Penalty on CHA - in the absence of any evidence to show that there was active involvement of the appellant in concealment of controlled substance in its export consignment, penalty set aside - AT
Indian Laws
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Extension of date for filing return in FORM GSTR-3B for the month of April, 2018
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As a species of arbitrations, it is of recent origin and its jurisprudence cannot be said to be settled or written in stone; far from it. Investment Treaty jurisprudence is still a work in progress - As the present case is not a commercial arbitration, the Act, 1996 shall not apply. This Court is of the view that in a situation where the Act, 1996 does not apply, its inherent powers are not circumscribed by anything contained in the Act. - HC
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The doctrine of abuse of rights is founded upon the notion that a party may have a valid right, including a procedural right, and yet exercise it in an abnormal, excessive or abusive way, with the sole purpose of causing injury to another or for the purpose of evading a rule of law, so as to forfeit its entitlement to rely upon it. The theory of abuse of rights has its origins in private law and is recognized in the great majority of national legal systems. - HC
Service Tax
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Business Auxiliary Services (BAS) - multilevel marketing (MLM) - service tax would be chargeable on the commission received by a Distributor from Amway on the products purchased by his sales group. - AT
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Manpower recruitment and supply agency services or not - the assessee is providing services by way of engaging their own skilled and unskilled manpower to carry out various - demand of service tax set aside - AT
Central Excise
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Valuation - SSI Exemption - Determination of turnover - the value of chassis would not be included in the aggregate value of the clearances of the assessee of all excisable goods for home consumption - HC
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CENVAT creidt - common inputs/input services used for dutiable as well as exempt goods - once the entire CENVAT credit on the common inputs services is reversed the question of confirmation of demand of an amount equivalent to 6% of the value of the goods does not arise - AT
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CENVAT credit - input services - the services were utilised for picking and dropping of the employees from the nearest railway station to the manufacturing factory - credit cannot be denied. - AT
VAT
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Input Tax credit - transfer of inputs to other state - such raw material is sent by the assessee to its factory situated at District Hoshiarpur, Punjab - It was transfer of the goods for manufacturing activity and the goods were returned back to the assessee's principal place of business in the form of finished product - credit cannot be denied - HC
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Transfer of right to use or not? - providing specialized lights and equipments for public functions- There is no element of transferring the controlled possession and ultimately the right of the user of the equipments. If at all the assessee was engaged in providing service which may invite service tax at the prescribed rate - Not liable to VAT - HC
Case Laws:
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Income Tax
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2018 (5) TMI 1101
TPA - Preoperative expenditure treated as deferred revenue expenditure to be written off over a period of five years - Held that:- Tribunal was influenced by the fact that the assessee had started commercial production in the month of January 2002. The assessee had incurred preoperative expenditure of ₹ 5.29 crores upto 31.12.2001, which was prior to the commencement of commercial production. Out of this amount, an expenditure of ₹ 3.54 crores was nonoperating in nature. It was accounted as deferred revenue expenditure for the year under consideration, which came to ₹ 70.98 lakhs (rounded off). Since the expenditure was non-operating in nature, the assessee had disallowed the same while computing the income in order to claim markup on such operating costs. The Tribunal, therefore, was of the opinion that the issue was in tune with Para4 of the Agreement, under which the associate enterprise had agreed to reimburse the assessee the operational costs and besides others, 05% markup on such operational costs. We are partly in agreement with the view of the Tribunal and no question of law arises in this respect and therefore, they are not considered.
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2018 (5) TMI 1100
Allowing deduction u/s. 10B on export profit of EOU before setting off carried forward unabsorbed depreciation of earlier years as provided u/s. 32(2) - Held that:- We record the statement of counsel for the assessee that there was no question of set off of unabsorbed depreciation during the year under consideration and all that the assessee had proposed before the Assessing Officer was that the deduction under section 10B has to be granted without setting off of the carry forward losses. We notice that the Karnataka High Court in case of Yokogawa India Ltd (2011 (8) TMI 845 - Karnataka High Court) had examined the provisions of section 10A of the Act (in which, similar exemption provisions have been made) before and after the amendments. The Court was of the opinion that the said provision provided for an exemption and it was not a deduction provision since section 10A is continued in Chapter III of the Act which carries the title “incomes which do not form part of total income”. The Court was of the opinion that if the Parliament intended to grant the relief under section 10A by way of a deduction, it would have placed such a provision in Chapter VI-A which contains deduction sections 80HHC and 80-IA etc. The fact that, even after its recast, relief was retained in Chapter III indicates that the intention of the Parliament is to grant exemption and not a deduction. Somewhat similar issue reached the Supreme Court in case of Yokogawa India Ltd [2016 (12) TMI 881 - SUPREME COURT]
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2018 (5) TMI 1099
Order u/s 254 - ex-parte order - violation of principles of natural justice - Held that:- Article 226 of the Constitution of India does not impose any limitation on the power of the High Court to issue writs, even when there is an alternative remedy. Where there is an efficacious alternative remedy this Court refrains from exercising its extra ordinary jurisdiction. This Court would not reject an application under Article 226 of the Constitution of India, where the remedy, if any, of appeal is uncertain as in the case of an appeal under Section 260A of the 1961 Act which depends on the subjective satisfaction of the Division Bench of the High Court, of existence of a substantial question of law. In any case, there are at least 3 exceptions to the rule of alternative remedy. A writ application might be entertained where the order is in violation of principles of natural justice, where the order has been passed under a law which is ultra vires or is otherwise without jurisdiction or in case of an order which is perverse. The order impugned is patently repugnant to Section 254 of the 1961 Act read with Rule 24 of the 1963 Rules. The writ petition is allowed and the impugned order cannot be sustained and the same is set aside - writ petition is allowed and the impugned order cannot be sustained and the same is set aside
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2018 (5) TMI 1098
Treatment to income from six transactions of sale of plots - capital gain or business income - Held that:- Material on record would show that the assessee had entered into multiple agreements to sale with various developers for developing its open land for putting up construction thereon. All these agreements for some reason or the other failed. Having cancelled such agreements, finally, the assessee during the said year, sold six of the open plots. It was on the basis of such facts that CIT [A] and the Tribunal believed that the Assessing Officer was wrong in holding that the assessee was in the business of development of land. Analysis of the agreements entered by the assessee with the developers suggest that the assessee had at no point of time agreed to take any risk in the process. The conclusion drawn by the CIT [A] as well as the Tribunal are based on factual material.
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2018 (5) TMI 1097
Provision for doubtful debt and provision for doubtful advances - Tribunal setting aside the matter to adjudicate afresh ? - Held that:- Tribunal merely remanded the issue before the Assessing Officer for deciding it afresh in light of the Full Bench judgment of this Court in case of Commissioner of IncomeTax v. Vodafone Essar Gujarat Ltd. [2017 (8) TMI 451 - GUJARAT HIGH COURT] . The judgment of full bench was not available when the issue was decided by the Assessing Officer and Commissioner of Income Tax (Appeals). We see no error in the order of the Tribunal and therefore, there is no question of asking the Assessing Officer to decide it again in light of the said judgment. No question of law in this respect arises Allowability of claim of depreciation on goodwill - Held that:- Referring to Explanation 3 to subsection (1) of section 32 which contains two clauses (a) and (b) explaining the expression 'asset' and 'block of asset'. Tribunal was of the view that goodwill would be included as an asset under Explanation3( b) to subsection (1) of section 32 of the Act and also held that in the present case, the difference was paid for acquisition of such goodwill. The Tribunal referred to the judgment of the Supreme Court in case of Smifs Securities Ltd. (2012 (8) TMI 713 - SUPREME COURT) and held the issue in favour of the assessee. The Tribunal had come to the correct conclusion that excess payment was towards goodwill and that by settled law, goodwill would also be a depreciable asset. - Decided against revenue
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2018 (5) TMI 1096
Recovery proceedings - stay on demand seeked - Held that:- As assessee has so far deposited ₹ 76.87 Crores. Under the circumstances, further coercive recovery arising out of the judgment of the Tribunal would be stayed on condition that the applicant deposits a further sum of ₹ 23.13 Crores with the Department latest by 20th April 2018. This would make the total deposit by the applicant including so far made, to ₹ 100 Crores which would be approximately 20% of the outstanding tax demand. Application stands disposed of accordingly. The Corporate Guarantee which has been provided by the parent company to cover the unpaid amount would continue with this adjustment.
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2018 (5) TMI 1095
Income on sale of shares of VEOL - to be treated as capital gain OR business income - Held that:- The materials on record would suggest that the shares in question were of one Vishal Exports Overseas Ltd. [“VEOL”] which was a limited company. The assessee had been strenuously arguing that it was not possible to rig the prices of the shares through small trading. CBDT circular in question lays down certain directives for limiting the disputes arising out of the issue at hand. In this context, in the said circular it is noted that despite earlier directions, disputes continued to exist on the application of the principles laid down in the said circulars and the individual tax buyers find it difficult to prove the intention in acquiring the shares and securities in question. There are no universal principles which could be applied uniformly. This exclusion clause would apply where the genuineness of transaction itself is questionable. In cases such as bogus claims of long term capital gain or short term capital loss or sham transactions, the instructions of CBDT would not apply. It is not even the case of the Revenue that the transactions in question were sham. The observations of the Assessing Officer and CIT (Appeals) about the rigging of the shares could be at best seem to be more of suspicion than establishing the necessary conclusions. Appellate Tribunal is right holding the income shown by the assessee on sale of shares of VEOL is to be treated as capital gain instead of business income - Decided against revenue
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2018 (5) TMI 1094
Estimation of additional income at the rate of 25% of the unaccounted sales - Held that:- Assessee's offer was 20% of the unaccounted sales be treated as the assessee's additional income. The Appellate Commissioner examined this offer in proper prospective and estimated the assessee's additional income at the rate of 25% of the unaccounted sales as against 30% assessed by the Assessing Officer. Thus, the Commissioner committed no error at all. In fact, the Tribunal also examined the entire issue and concurred with the view of the Commissioner (Appeals) by giving reasons. When the Tribunal has confirmed the view of the Commissioner of Income Tax (Appeals), this by itself should not create any difficulty for the assessee
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2018 (5) TMI 1093
Addition made u/s 206C(1) - non collection of TCS on sale of scrap - interest charged under Section 206C[7] - the assessee was trader of scrap and the provision of Section 206[1] was applicable to the assessee - Tribunal deleted the addition - Held that:- Tribunal has come to the factual finding that there was no doubt about genuineness of the declarations and co-relation between the goods sold. There was no mismatch between the goods sold and those covered under such declarations. Revenue, however, submitted that in the case of inordinate time taken by the assessee in producing such declarations, it would be very difficult for the Revenue to make inquiries; if found necessary. In a given situation, this may give rise to a further probe or even total denial of the relief from the operation of sub-section [7] of Section 206C of the Act; if necessary facts are not on record. However, in the present case, no such element is brought on the record by the Revenue. - Decided against revenue
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2018 (5) TMI 1092
Additions u/s 68 - Disallowance of interest income - loan transaction itself was not genuine - Held that:- AO and CIT(Appeals) had correctly come to the conclusion that loan transaction itself was not genuine, the question of recognizing interest expenditure on such loan transaction would not arise. Had the Tribunal disturbed such findings and thereafter given the relief to the assessee, the issue would stand on a different footing. Instead the Tribunal merely proceeded on its declaration for the earlier assessment years that the addition under section 68 would not survive since it was not relatable to any material found during the search. Tribunal's findings and conclusions for the earlier years concerning the assessments under section 153A were independent and severable from the exercise undertaken by the AO for the current assessment year 2010-2011 during the course of scrutiny assessment under section 143(3). AO had come to independent findings which were confirmed by CIT(Appeals). The Tribunal had not disturbed these findings. Deletion of disallowance of interest was therefore, not correct. - Decided in favour of revenue
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2018 (5) TMI 1091
Disallowance of business expenditure - business activity not commenced - Held that:- Primarily, the assessee had carried out market survey and made certain general inquiries about source of the commodity and prospective buyers. As correctly noted by the AO, even between the letters written by the assessee to the buyer and seller and annual culmination of any transaction of sale or purchase, there was substantial time gap of over one year in almost every case and in some cases over two years. AO therefore refused to link said letters written by the assessee to the actual transaction of sale or purchase. In absence of any income generation, it was difficult to understand how the staff was paid bonus as claimed by the assessee. Tribunal further recorded that there was no evidence on record to suggest that the assessee has registered itself as a trading concern or had procured statutory licenses from the State or the local authorities. There is nothing on record to suggest that the assessee had actively solicited business and the negotiations in the parlance buyers and sellers were at advance stage or were at any concrete form. There was significant time gap in such correspondences and actual sale and purchase transaction. - Decided against assessee.
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2018 (5) TMI 1090
Exemption u/s 11 - whether assessee performs a charitable purposes within the meaning of proviso to section 2(15) as providing sports facilities - Held that:- Respectfully following the decision of Hon’ble Bombay High Court in assessee’s own case for assessment year 2003-04 [2012 (4) TMI 214 - BOMBAY HIGH COURT] as held that providing sports facilities to general public without restriction of any caste, creed, religion or profession is eligible for exemption under section 11. Thus we are of the considered view that the assessee is eligible for exemption under section 11 of the Income Tax Act, 1961. Therefore, we direct the AO to allow the benefit of exemption under section 11 of the Income Tax Act, 1961. - Decided in favour of assessee
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2018 (5) TMI 1089
Re-opening of case after 4 years - Bringing to tax the capital gains arising in the hands of his mother in the re-assessment proceedings - Held that:- We are unable to understand on what basis the assessment was reopened by the AO after four years from the end of the assessment year when a scrutiny assessment has already been completed which was also subject matter of appeal before the Ld.CIT(A). The issue of adoption of valuation of property sold by assessee during the year has already crystalised by the Ld.CIT(A) order in the earlier round. AO was prevented in re-valuing the sale consideration as the matter was already crystalised and has become final. Not only that AO also went beyond his jurisdiction to re-workout the cost of acquisition also which was not even disputed in the original order by the AO or by the assessee. Consequently, the addition of ₹ 3,92,869/- is not correct and should have been deleted by the Ld.CIT(A). We order it to be deleted. Assessee’s ground on this issue stands allowed. Assessee has raised objections regarding assessing the capital gains arisen in the hands of the mother, the same was also not answered properly, except stating that she has gifted the part of consideration to assessee. On what basis this conclusion was drawn is also not available from the record, as two of the properties were sold in the next assessment year and there was a running account between the mother and son. Whether it is in the hands of assessee or in the hands of mother, the working of the capital gain is same and AO order indicates that she has filed return and paid taxes, the return of which is the basis for re-opening this assessment. In these facts of the case, we are of the opinion that the capital gains in the hands of assessee as he has gifted the property to his mother, which was accepted by the AO in first round of assessment. In view of that we hold that even the proceedings initiation u/s. 147 are bad in law. AO is directed to delete the addition so made. - Decided in favour of assessee.
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2018 (5) TMI 1088
Determine the FMV of the shares - Reliance on the report of Merchant banker with long list of disclaimer - Reference to Matter to the Income Tax Department Valuation Officer for a determination of price market value of such capital asset - Held that:- It is not possible even for the Departmental Valuation Officer to conduct any exercise of verification of the acceptability of the value determine by the merchant banker. This is more particularly in view of the long disclaimer appended by the merchant banker at page no. 16 & 17 of the paper book which clearly establishes that no independent enquiry is caused by merchant banker to verify the truth or otherwise the figures furnished by the assessee at least on test basis. The merchant bankers solely relied upon an assumed without independent verification, the truthfulness accuracy and completeness of the information and the financial data provided by the company. A perusal of this long disclaimer clearly shows that the merchant banker did not do anything reflecting their expertise, except mere applying the formula to the data provided by the assessee. We, therefore, are unable to brush aside the contention of the Revenue that the possibility of tailoring the data by applying the reverse engineering to the pre determined conclusions. There has not been any possibility of verifying the correctness or otherwise of the data supplied by the assessee to the merchant banker, in the absence of which the correctness of the result of DCF method cannot be verified. This left no option to the AO but to reject the DCF method and to go by NAV method to determine the FMV of the shares. Without such evidence, it serves no purpose even if the matter is referred to the Department’s Valuation Officer. We, therefore, do not find any illegality or irregularity in the approach of conclusions are by the authorities below. While confirming the same, we dismissed the appeal as devoid of merits. - Decided against assessee
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2018 (5) TMI 1087
Long term capital gain determination - relinquishment of right in property to be treated as transfer within the meaning of section 2(47) - gift made in the family as a family arrangement - Held that:- The assessee has gifted her 50% share in the property in favour of her brother in law in pursuance of family arrangement between the family members for acquiring separate property for each family member. The said transactions cannot be considered as transfer within the definition of section 2(47) of the Income Tax Act, 1961. Although the assessee has received cash gift of ₹ 68,50,000/- from the person who received gift from the assessee, such an arrangement is as per the family settlement between the members. Therefore, the AO was erred in bringing the above two gift transactions within the purview of definition of transfer as defined under section 2(47) of the Income Tax Act, 1961. CIT(A) without appreciating the facts simply confirmed additions made by the AO. Direct the AO to delete additions made towards computation of long term capital gain for relinquishment of 50% share in property by way of gift. - Decided in favour of assessee.
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2018 (5) TMI 1086
Penalty u/s 271(1)(b) - non-compliance with notices u/s 142(1) - proceedings u/s 153C initiated - Held that:- No search and seizure operation was conducted on the assessee and proceedings u/s 153C of the Act were initiated and the assessee filed the return in compliance with the notice u/s 153C of the Act and also furnished the reply to various queries raised by the Assessing Officer. The assessee was given very little time to furnish long list of requirements and there was reasonable cause on the part of the assessee for being unable to file the details on the given data in the notice. However, the assessee duly complied with the requirements on the subsequent dates because of which the assessment was completed u/s 153C r.w.s. 143(3) of the Act. Therefore both the lower authorities were not justified in levying and confirming the penalty u/s 271 (1) (b) of the Act at ₹ 10,000/- in each case. - Decided in favour of assessee.
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2018 (5) TMI 1085
Addition u/s.68 - unexplained share application money - Held that:- The mere fact that “assessee” company chooses to show the receipt of the money as capital does not preclude the ITO from going into the question whether this is actually so. Where, therefore, the assessee company represents that it has issued shares on the receipt of share application money, then the amount so received would be credited in the books of account of the company. The ITO would be entitled to enquire, and it would indeed be his duty to enquire, whether the alleged shareholders do in fact exist or not. If the shareholders exist then, possibly, no further enquiry need be made. Set aside the orders of lower authorities and delete the addition of share application money of ₹ 12,58,000/- received from Ajit Keshari and ₹ 13,50,000/- received from Sri Aman Agarwal aggregating to ₹ 26,08,000/-. Thus, this part of the ground of appeal is allowed. With regard to share application money of ₹ 40,00,000/- received from four Private Limited Companies, we find that the findings of the Assessing Officer is that the Directors of said companies did not appear in response to summons issued u/s.131 of the Act All the corporate shareholders are assessed to income tax and have PAN Numbers. The CIT(A) could have made enquiries from the respective Assessing Officers and ascertained the current addresses. This has not been done. Further, as noted above, the Assessing Officer categorically accepts in the assessment order that summons issued u/s.131 of the Act was received by four share applicants. Thus, there is contradiction in the findings of the Assessing Officer and the CIT(A). It shall be in the interest of justice to set aside the orders of lower authorities and remand the matter back to the file of the Assessing Officer with a direction to make necessary enquiries from four corporate share applicants after allowing reasonable and proper opportunity of hearing to the assessee. The assessee is directed to co-operate with the Assessing Officer in verifying the four corporate share applicants. With these directions, this part of the ground is allowed for statistical purposes
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2018 (5) TMI 1084
Disallowance u/s 14A r.w.r. 8D - non recording of satisfaction by AO - Held that:- The issue of investments in group companies, subsidiary companies, strategic investments etc vis a vis the applicability of provisions of section 14A of the Act are now settled in favour of the revenue by the recent decision of the Hon’ble Supreme Court in the case of Maxopp Investment Ltd vs CIT reported in (2018 (3) TMI 805 - SUPREME COURT OF INDIA). Applicability of computation mechanism provided in Rule 8D of the Rules cannot be ruled out in the instant case. But we find that the total dividend earned by the assessee was only ₹ 88,75,687/- and hence the disallowance u/s 14A cannot exceed the dividend income. Reliance on the case of Joint Investments (P) Ltd vs CIT reported in (2015 (3) TMI 155 - DELHI HIGH COURT). Since the assessee itself had voluntarily disallowed a sum of ₹ 1,37,25,202/-, we direct the ld AO not to make further disallowance beyond that amount under normal provisions of the Act. Accordingly, the grounds 1 to 2 raised by the assessee on non-recording of satisfaction by the ld AO are dismissed. The Grounds 3 and 4 raised by the assessee are allowed. Disallowance u/s 14A while computing the book profits u/s 115JB - Held that:- As relying on ACIT vs Vireet Investment (P) Ltd [2017 (6) TMI 1124 - ITAT DELHI] the computation under clause (f) of Explanation 1 to section 115JB(2). is to be made without resorting to the computation as contemplated u/s 14A read with Rule 8D of the Income-tax Rules, 1962. We find that the assessee had worked out the disallowance u/s 14A based on the actual figures from its profit and loss account. By respectfully following the special bench decision supra, we direct the ld AO to make disallowance of ₹ 1,37,25,202/- while computing the book profits u/s 115JB of the Act. Accordingly, the grounds raised by the revenue are partly allowed. Addition towards liabilities written back - scheme of amalgamation seeked - Held that:- Though the deduction was claimed by the amalgamating company in the earlier years, now pursuant to the merger, the entire assets and liabilities of amalgamating company got merged at book values with the amalgamated company. This issue of claiming deduction in earlier years had already been duly factored in the scheme of amalgamation and the consideration fixed accordingly. The scheme of amalgamation has been approved by the Hon’ble Calcutta High Court. In these circumstances, if the assessee having written back the liabilities brought forward from amalgamating company as no longer payable and by crediting the same to its profit and loss account, cannot have any escape route from offering the same to tax in its hands. Authorities below had rightly brought the same to tax in the hands of the assessee company during the year under appeal. - Decided against assessee.
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2018 (5) TMI 1083
Addition u/s. 36(1)(iii) - interest free loans / advances to sister concerns - Held that:- We note that the advance in dispute were given to the sister concerns as on 31.3.2011 and 31.3.2012 and the audited balance sheet for the year ending 31.3.2011 and 31.3.2012 exhibits that the assessee has sufficient interest free funds (own funds / interest free loan/sundry creditors) to provide loan / advance to sister concerns. We note that as on 31.3.2011 the assessee has given interest free advances to sister concern amounting to ₹ 1,98,64,866.85 out of own funds amounting to ₹ 38,01,36,440.98 which is far in excess of advances to sister concerns. We further note that assessee has given fresh advances amounting to ₹ 48,50,000/- to M/s SK Enterprises & ₹ 14,50,000/- to M/s Pride Sales Corporation (Totaling ₹ 63,00,000/-) during the impugned AY 2012-13 out of own funds amounting to ₹ 18,60,06,299.47 (Rs. 18.60 cr.) which too is far in excess of advances to sister concerns and the interest free advances are from own funds as the loan amount as on 31.3.2012 has been reduced by ₹ 11,34,102/-. On going through the AO’s assessment order in assessee’s own case for the preceding year i.e. AY 2011-12 it was noted that no addition u/s. 36(1)(iii) has been made in the assessment passed u/s. 143(3) of the Act and also on perusal of the CIT(A)’s order in AY 2013-14, we note that Ld. CIT(A) Rohtak vide his order dated 11.4.2017 has allowed the assessee’s appeal for the succeeding assessment year i.e. AY 2013-14, on the same issue of Section 36(1)(iii) relating to same parties considering assessee’s submissions. Following the principle of consistency, the addition in dispute is deleted. - Decided in favour of assessee. Addition on account of telephone expense we note that no specific finding has been made to indicate that the expenses incurred could have been of a personal nature, therefore, we delete the same. - Decided in favour of assessee.
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2018 (5) TMI 1082
Addition on account of income not offered to tax - revenue recognition - AS -9 issued by ICAI - Held that:- The relevant clause relied upon by the ld. AO from AS-9 on revenue recognition pertains to the sale of goods where the risk and reward incidental to the ownership of the product has been transferred by the seller to the buyer. But in the instant case, the assessee has not made any sale of goods instead it only received a consideration in the form of royalty for enabling the usage of its trade mark “ Vibes”. Hence as per the revenue recognition prescribed under AS-9 of ICAI in respect of royalties, the same has to be recognized only over the validity of tenure of the agreement which has been rightly done by the assessee. Hence we have no hesitation to direct the AO to delete the addition - Decided in favour of assessee.
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2018 (5) TMI 1081
Exclusion of proportionate unbilled revenue from the export turnover while computing deduction under section 10A - Held that:- The assessee has duly accounted for the said work done following the revenue recognition as per the accounting standard 9 issued by ICAI. Moreover, the assessee is consistently following the practice of revenue recognition of unbilled revenue in its business which is accepted by the revenue in the past. The case of the assessee is also squarely covered by the decision of co-ordinate bench of the Tribunal in the case of M/s. iNautix Technologies India Pvt. Ltd. vs. ACIT (2012 (12) TMI 615 - ITAT CHENNAI) wherein a similar issue has been decided that the amount of unbilled revenue should be included in the export turnover and also in the total turnover for the purpose of calculating deduction u/s 10A of the Act - Decided in favour of assessee. Excluding the proportionate revenue earned from onsite work subcontracted to its associated enterprise while computing under section 10A of the Act - Held that:- The case of the assessee is squarely covered in the case of CIT vs. M/s. Mphasis Software and Service India Pvt. Ltd. (2015 (10) TMI 2062 - KARNATAKA HIGH COURT) wherein it has been held that profit is attributable to onsite work of development of software through sub-contracting of certain operation to AEs is part of the net profit for the purpose of claiming deduction under section 10A. We set aside the order of Ld. CIT(A) and direct the AO to allow the deduction in respect of sub-contracting amount - Decided in favour of assessee.
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2018 (5) TMI 1080
Addition u/s 56(2)(vii)(b) - difference between Stamp duty Valuation and purchase consideration as per registered sale deed of immovable property @ 8% share of the appellant - whether on date of transfer of immovable property i.e. on 31-03-2013, provisions of Sec. 56(2)(vii)(b) were not in force? - Held that:- The transfer was effected on the date on which the document was copied out in the books of Registrar will not be date of transfer. In this case, stamp papers were purchased on or before 30.03.2013 transferor and transferee both put signature on the sale deed on 30.03.2013. Therefore, in our considered opinion, Section 56(2)(vii)(b) of Income Tax Act will not be applicable in case of the appellant. - Decided in favour of assessee
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2018 (5) TMI 1079
Rectification application filed U/s 154 dismissed - application barred by limitation being filed after expiry of 4 years from the date of order dated 10.09.2004 - Held that:- No material/evidence to establish it beyond doubt that the assessee has filed alleged application u/s 154 of the Act on 08.09.2008. Even at the time of this miscellaneous application the assessee has not produced any document or record to prove that the alleged application u/s 154 of the Act dated 08.09.2008 was filed before the ld. CIT(A). The claim of the assessee was verified from the letter received register and appeal received register maintained in the office of the ld. CIT(A). Therefore, when the alleged application was not found to be received in the office as per the record maintained by the ld. CIT(A) then, in the absence of any evidence to establish beyond that the said application was filed by the assessee, the decision taken by the Tribunal on the basis of fact of the case cannot be said to have suffered from any error merely on the basis of the contentions and submissions which is nothing but assumption of facts - application rejected.
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2018 (5) TMI 1078
TPA - Reduction of Product recall expenses of Honda Seil Car India Limited - Held that:- We concur that the assessee over and above the direct expenditure as reimbursement to the customer has other expenditure also in the form of goods lying at the factory. Infact the claim of the assessee is ₹ 13.26 crores out of which the ld Transfer Pricing Officer allowed ₹ 6.11 crores and CIT(A) enhanced the deduction to ₹ 10.72 crores. The above facts shows that there is an extraordinary event which has resulted into impacting the overall cost of the assessee. Further, with respect to the overall expenditure the certificate of the appellant shows the total cost at ₹ 10.72 crores at page No. 12 of the order of the ld CIT(A) which remains undisputed. Therefore, to this extent no infirmity can be found in the order of the ld CIT (A) in granting the above reduction. - Decided against revenue Transaction of purchases of import of goods at higher price and its resale to the principal at lower prices - Held that:- Merely because the assessee is supplying a product for a new vehicle, when assessee is in the same line of business for a long time, coupled with the fact that products have been imported from the sister concern for onward supply to the principle and later on of prices stabilized, does not make assessee to say that these cost are extra ordinary cost . It is merely a transaction of purchase and sales of goods which has resulted in to lesser profit to the assesee in its business. Assessee has also stated that it is increased cost of production only. Cost of production is the normal activity. No such disclosure is also made in the annual accounts to this effect also. This is a result of normal business risk of the assessee and hence same cannot be reduced from the total cost. Hence, the reduction granted by the ld CIT (A) of ₹ 10.73 crores is not proper. The action of ld CIT (A) is reversed and order of TPO is restored to that extent. In the result Ground no 1 of the appeal of the revenue is allowed Adjustments of the value of the inventory - Held that:- Differential prices were also calculated by applying the rates of the prouct and not identifying each of the components, which is mandatory at the time of valuation of goods. Assessee before TPO has stated that due to this profit is lowered by 0.79 %. The ld TPO has also given his reason in para no 5.3.3. of his order. He held that no such adjustment was made in Rule 10 D documentation. As the complete fact of the issue, identifying each products and its valuation and consequential shortfall and whether it is an extra ordinary items as per TP documentation is not coming out, Hence this issue is set aside to the file of the ld TPO/AO to decide afresh. Ground no 2 of the appeal is allowed for statistical purposes. Regarding capacity utilization level in the case of the assessee as well as the comparable company, we do not find any infirmity in the order of the ld CIT (A) who allowed it only with respect to depreciation. Hence, Ground no 3 is dismissed.
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2018 (5) TMI 1077
Additions of interest waiver by National Textile Corporation Ltd. and interest on raw material as chargeable to tax u/s 41(1) - cessation of liability in proceedings u/s 143(3) - Held that:- No merit in the instant argument as section 19(2) of the SICA Act makes it clear that a deemed consent can very well be assumed in case no consent is received qua the “DRS” in question from the parties concerned. This is not the Revenue’s case that it had not received a copy of the “DRS” in question as per the provision of SICA Act. Hon'ble Delhi High Court’s decision in Government of India, Department of Revenue vs. Appellate Authority for Industrial & Financial Reconstruction [2011 (9) TMI 1166 - DELHI HIGH COURT] considers all the CBDT’s circulars in this issue as issued from time to time and holds that deemed consent can very well be inferred in case no objection is received within the specified period of 60 days of the date of circulation of the “DRS” in question. We therefore conclude that both the learned lower authorities have erred in law as well as on facts in making the two additions u/s 41(1). The same are accordingly deleted. - Decided in favour of assessee.
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2018 (5) TMI 1076
Non prosecution of appeal by assessee - noncompliance of notices and not furnishing the required details - Held that:- The assessment order was framed u/s 143(3) of the Act due to noncompliance of notices and not furnishing the required details. On appeal by the assessee, the ld. CIT(A) passed the ex parte order due to noncompliance of notices for hearings. The ld. CIT(A) fixed the date for hearings on 24/06/2016, 21.07.2016, 30.08.2016, 26.10.2016 & 22.12.2016 but the assessee neither appeared nor filed any adjournment petition on those dates. The law assists those who are vigilant and not those who sleep over their rights; i.e. “vigilantibus non dormientibus, jura subveniunt”. Appeal of the assessee is dismissed for non-prosecution.
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2018 (5) TMI 1075
Addition u/s 68 - unexplained partners capital investment - Held that:- CIT-A examined the individual source of income in the hands of the each of the four partners vis-ŕ-vis capital introduced and has given a finding that Shri Om Prakash is a only partner who has the adequate agricultural income to cover the investment in the share capital and as far as other three partners are concerned, there is a short fall of ₹ 3,90,137/-, the source of which remain unexplained. It was accordingly held by the Ld. CIT(A) that the partners capital investment to the extent to ₹ 44,09,863/- has been explained. The balance amount of ₹ 3,90,137/- remains unexplained and to that extent the addition made by the AO u/s 68 was sustained. There is nothing on record to controvert the said findings of the ld CIT(A). - Decided against assessee. Disallowance of various expenses - CIT(A) while confirming the said disallowance held that the telephone and travelling expenses do have an element of personal expenses and he therefore, confirmed the same - Held that:- No infirmity in the said findings of the Ld. CIT(A) and the same is hereby affirmed. - Decided against assessee
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2018 (5) TMI 1036
Assessment u/s 153C - non recording of satisfaction by AO - Held that:- As can be seen from the satisfaction recorded by the AO while initiating proceedings u/s. 153C, there is neither any linking up of the documents nor any finding that certain seized documents pertain to assessee. Moreover, AO also has not recorded any satisfaction while initiating proceedings u/s. 153C. In view of this, we are of the opinion that there is no satisfaction recorded by the AO, as required under the provisions. - Decided in favour of assessee
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2018 (5) TMI 1035
Disallowance u/s 14A - dividend income earned - Held that:- Referring to submission that dividend income earned from domestic companies to an extent of ₹ 8,41,48,000/-has been claimed exempt under section 10(34) and that these dividends have been earned from strategic investments made by assessee, this issue now stands settled against assessee by the decision of Hon’ble Supreme Court in the case of Maxopp Investments Ltd vs. CIT (2018 (3) TMI 805 - SUPREME COURT OF INDIA). Accordingly we reject this argument raised by assessee in respect of excluding the investments made in domestic companies which has yielded dividend income under rule 8 D(2) (ii). Coming to the 2nd part of the argument in respect of interest expenditure that is attributed under R 8D (2) (iii) is concerned, it is observed from the financial statements placed in the paper book that assessee does not have bifurcations of interest in the profit and loss account. As the entire interest is kept in a common pool, it is very difficult to bifurcate interest expenditure that is attributable to earning of exempt income. It is observed that assessee during the year has taken loans and advances to the tune of ₹ 59.96 crores. Further in Schedule 18 to the profit and loss account assessee is paying interest on loan of ₹ 118.99 crores, bank charges to an extent of ₹ 265.57 crores and other charges to an extent of ₹ 4.81 crores. As this issue has already been set aside by this Tribunal to be recomputed by Ld.AO, we also set aside this issue back to ld. AO. Assessee shall file all relevant details in order to establish its claim regarding interest expenditure not to be attributable for the purposes of earning the dividend income. Assessee shall furnish all the details in respect of interest expenditure before Ld. AO - Decided partly in favour of assessee as partially remanded.
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Customs
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2018 (5) TMI 1072
Classification of Bituminous coal and Steam coal - appeal dismissed on ground of pre-deposit - Held that: - it would be open for the appellants to request for revival of their appeals before the Tribunal. Such appeals would stand revived from the stage of meeting with the predeposit requirement - impugned orders passed by the Tribunal dismissing the appeals of the present appellants on the question of predeposit would not survive.
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2018 (5) TMI 1071
SAD Refund - N/N. 102/2007-Customs dated 14.09.2007 - Whether transformation of the imported rough logs into sawn timber in different sizes and length by the importer before subsequent sale to domestic market would vitiate the condition of subsequent sale prescribed in exemption N/N. 102/2007-Customs dated 14.09.2007? Held that: - the issue is covered by the judgement of Division Bench of this Court in case of Commissioner of Customs vs. M/s. Variety Lumbers Pvt. Ltd [2013 (11) TMI 1013 - GUJARAT HIGH COURT] in which, identical issue came up for consideration, where it was held that whether the conditions are to be satisfied or not, has to be viewed from attending facts and circumstances of the case. The words "when imported into India for subsequent sale" or "the sale of said goods", cannot be seen in isolation. Before transportation of timber, they were required to reduce its size since the RTO rules did not permit transportation of logs longer than 40 feet. If only for cutting length of the logs, which were in excess of 40 feet, sawing operations were carried out and after some cleaning and scaring was done, timber logs of smaller pieces were sold, we do not see how respondents can be stated to have breached any of the conditions of the exemption notification dated 14.9.2007. The benefit of notification is to be allowed - appeal dismissed - decided against Revenue.
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2018 (5) TMI 1070
Validity of SCN - Time limitation - Regulation 20 (1) of CBLR 2013 - penalty - the time limits specified under Regulation 20(1) as well as Regulation 20(7) has not been complied with. Held that: - The more significant issue to be considered is whether the proceedings initiated under CBLR 2013 will be vitiated if the time limits are not strictly observed - it was seen that the proceedings cannot be held to be vitiated only for the reason that the time limits specified in the CBLR 2013 have not been strictly observed. Penalty - Held that: - the CHA has filed the shipping bills on the basis of the documents made available to him by the exporter. In the facts and circumstances of the case, there is nothing on record to hold that the appellant/CHA was aware of the mis-declaration and over-valuation of the goods in the export consignment - penalty not warranted. Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1069
Import of Hazardous goods - old and used picture tubes - Absolute Confiscation - penalty. Held that: - Picture tubes being the Cathode Ray Tubes can well be categorized under the MoEF Rules as hazardous waste. It, therefore, stands established on record that the description of the goods imported is misdeclared and once these are proved to be old and used goods, their import is restricted export in accordance with the provisions of FTP, ITC and the permission of MoEF as in the present case - The appellant importer could not produce any such compliance or permission, nor could produce any license for the import of the subject goods. The goods have been opined by the MoEF as hazardous e-waste, and such goods have rightly been held as prohibited goods u/s 110 of the Customs Act, and as such, there seems no infirmity or illegality in ordering the absolute confiscation of the said goods. Penalty - Held that: - fines and penalties imposed by the original authorities, unless and until there is any aberrant reason to observe element of unreasonableness or arbitrariness may not the inferred with - Rather, the Commissioner (Appeals) has reduced the penalty imposed upon the appellant to a great extent. There is no statutory restriction also that the penalty should not be reduced by the appellant authority. In the totality of the above observations, there is no infirmity or illegality in the order of Commissioner, Customs (Appeals) under challenged - penalty upheld. Appeal dismissed - decided against appellant.
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2018 (5) TMI 1068
Penalty u/s 112(a) and 117 of the Customs Act, 1962 on appellant-courier company - mis-declaration of the chattons imported for various importers and fictitious company - Held that: - the role played by the appellant herein, does not indicate that they had wilfully or knowingly, made wrong declarations in the courier bills of entry, The only findings which the adjudicating authority relies for imposing penalty, is that the appellant failed to cross-check the declared value, importer's name, IEC and identity of the person who had submitted the documents for the purpose of filing of courier bill of entry - penalty u/s 112(a) of the CA 1962 not warranted. Penalty u/s 117 of CA - Held that: - the said provisions are validly invoked in the said case as there is definitely a contravention of the provisions of Customs Act, 1962 on the part of the appellant herein - The contravention has to be viewed in holistic manner to hold against the appellant herein as there are violations of the Customs Act - penalty upheld, but quantum of penalty reduced. Appeal allowed in part.
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2018 (5) TMI 1067
Penalty on CHA - Regulation 20(7) and 18 of Customs Brokers Licensing Regulations (CBLR), 2013 - illegal export of suspected ‘ephedrine hydrochloride' a controlled substance under NDPS Act in two consignments concealed in ladies purses and wallets - Held that: - investigation has not brought forth any clinching evidence to show that the appellant herein who is a customs broker was aware of the concealment of controlled substance or abetted the exporter in the concealment - in the absence of any evidence to show that there was active involvement of the appellant in concealment of controlled substance in its export consignment, penalty set aside - appeal allowed - decided in favor of appellant.
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Insolvency & Bankruptcy
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2018 (5) TMI 1074
Appeal received in the office of FAA Insolvency and Bankruptcy Board of India under the Right to Information Act, 2005 - whether 10 years of experience prescribed in said Regulation will include a member of any professional bodies mentioned in the said regulation, who is enrolled only as a member of professional body mentioned in the said regulations, for more than 10 years but neither having certificate of practice of that profession nor anywhere in employment (i.e. without any experience)”. Held that:- The information sought by the appellant are in the nature of seeking advice/opinion, therefore, it does not fall under the definition of the information under section 2(f) of the Right to Information Act, 2005. The Insolvency and Bankruptcy Code, 2016, all Rules and Regulations made thereunder are placed on the website- ‘www.ibbi.gov.in’/public domain accessible to all. Once the information is available in the public domain, it cannot be said to be ‘held’ or ‘under the control of’ the public authority and thus ceases to be an information accessible under the RTI Act.
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2018 (5) TMI 1073
Appeal received in the office of the FAA Insolvency and Bankruptcy Board of India under the Right to Information Act, 2005 - Held that:- The information sought by the appellant under the points 1,2, 3 and 4 are neither ‘held’ by the Insolvency and Bankruptcy Board of India which is a public authority, nor such information is under its ‘control’. The information solicited by the appellant under point 5 amounts to obtaining the opinion and advice of the Insolvency and Bankruptcy Board of India which does not fall under section 2(f) of the Right to Information Act, 2005.
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PMLA
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2018 (5) TMI 1066
Offence under PMLA - attachment orders - Held that:- From the entire gamut of the above mentioned three appeals with regard to the two properties which were purchased by S.V. Srinivas for a total sum of ₹ 9,30,000/- which were given by him to his mother and wife. The allegation made against him is that he has declared in the Income tax Return for the period 2007-08 was only ₹ 5,17,888/- whereas the two properties, the declared value is ₹ 9,30,000/-. The appellant has furnished the details in order to show that he has the sufficient amount at the time of purchasing the above mentioned two properties. Taking the face value of the allegation of the respondent without expressing anything, as alleged, he was only having ₹ 5,17,888/- whereas the value of two properties are ₹ 9,30,000/-, in order to strike balance, the difference of the same i.e ₹ 4,12,112/- is directed to be deposited by S.V. Srinivas with the respondent by way of Fixed Deposit Receipt for initial period of two years within four weeks and the same be renewed by S.V. Srinivas until the final order is passed in the prosecution complaint in the name of respondent. As far as the other allegation of the amount spent by him to purchase the property of ₹ 7,00,000/- is concerned, the same is not correct as entire payment was paid by his father, who is the husband of Saraswati ( one of the appellants) . The appellant shall also file an Undertaking by way of affidavit that in case the appellant is finally held guilty in the prosecution complaint, he shall deposit a sum of ₹ 10.0 lac (ten lac only ) with the respondent as the said amount was spent by him for renovation of his father’s property as per alleged allegation made in the prosecution complaint. Once the Fixed Deposit Receipt and Undertaking are filed by the appellant with the respondent within the time granted, the above named two properties shall stand released. The said directions are passed without prejudice and I may also clarify that in case the prosecution complaint is decided in favour of S.V. Srinivas and his wife Reshma, the said amount shall be released to them by the respondent immediately.
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Service Tax
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2018 (5) TMI 1062
Classification of services - respondent is engaged in the work of providing/ laying/jointing/ replacement of water pipelines for Delhi Metro Rail Corporation (DMRC), Delhi Jal Borad (DJB) and other similar companies - Revenue have argued that the activity undertaken for DMRC is not exclusively pertaining to laying of pipeline and the said activity will fall within the definition of Erection Commission or Installation Service - whether the activity would be classified as Works Contract Service or as Erection Commission or Installation Service? Held that: - the relevant contracts executed by the respondent with DMRC will need to be scrutinized for taking a definitive view whether such activities will be liable to Service Tax under the category of Section 65 (39a) of the Act. Since the relevant agreements have not been produced for our perusal, we are left with no option but to remand the matter to the Adjudicating Authority for de novo decision after perusing the relevant contracts with DMRC. It is made clear that the dropping of Service Tax in respect of Delhi Jal Board has not been challenged by Revenue. Appeal allowed by way of remand.
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2018 (5) TMI 1061
Demand of service tax - amount received as royalty - the entire case has been made on the basis of the data retrieved from laptops, CPUs and pen drives seized from the secret office in Gurgaon - Held that: - the Department had instituted separate proceedings against the appellant under the Central Excise Act alleging evasion of central excise duty. The present proceedings relating to demand of service tax also stands initiated on the basis of the same search such proceedings and the documents recovered - The Adjudication Order passed by the Commissioner in the Central Excise case was challenged before this Tribunal and the said Order-in-Original was set aside and the matter was remanded for de novo adjudication in the case of C.G. ST C & C. E-ALWAR Versus KAMDHENU ISPAT LTD and Kamdhenu Ispat Limited Versus C.C.E. & S.T. -Jaipur-I [2018 (5) TMI 905 - CESTAT NEW DELHI]. Since the findings of the Commissioner in the above proceedings will have a direct bearing on the present case, also we are of the view that the present matter also needs to be remanded with similar directions, since the demand of service tax is entirely based on the GEQD report. Appeal allowed by way of remand.
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2018 (5) TMI 1060
Business Auxiliary Services - whether the activity of the appellant which is in the form of, business auxiliary service', as claimed by Revenue, in the multilevel marketing is taxable or otherwise? - Held that: - the issue is now settled by the judgment of this Tribunal in the case of Charanieet Singh Khanuja v. Commissioner of Service Tax, Indore/Lucknow/Jaipur [2015 (6) TMI 585 - CESTAT NEW DELHI], where it was held that service tax would be chargeable on the commission received by a Distributor from Amway on the products purchased by his sales group. For quantifying the Service tax demand on the commission received from Amway on the volume of purchase made by the distributors sponsored /enrolled by a particular distributor i.e. the Distributor's sales group, these matters would have to be remanded to the Original Adjudicating Authority. Following the same, the matter is remitted back to the adjudicating authority to reconsider the issue in the light of the direction given by the Tribunal in the case of Charanjeet Singh Khanuja - appeal allowed by way of remand.
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2018 (5) TMI 1059
Manpower recruitment and supply agency services - demand of service tax - Held that: - respondent depute their employees to work under their directions and supervisions - the first appellate authority was correct in coming to such conclusion and it is undisputed that the work orders which are issued to the respondent by M/S Exide Industries Ltd, indicates that the respondents are providing services by way of engaging their own skilled and unskilled manpower to carry out various - impugned order upheld - appeal dismissed - decided against Revenue.
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Central Excise
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2018 (5) TMI 1058
Interest on delayed payment of duty - Section 11AA of the CEA 1944 - assessee contested the demand of interest and failed before the appellate authority. Before the Appellate Tribunal, it was noticed that no steps had been taken by the Department under Section 11A of the Act - Held that: - there has to be a determination under Section 11A(2) of the Act preceding any measures taken under Section 11AA thereof - Since the Appellate Tribunal found, as a matter of fact, that there was no determination under Section 11A(2) of the Act, the matter has to be allowed to rest there - appeal dismissed.
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2018 (5) TMI 1057
Rebate claim - revision applications under Section 35EE - time limitation - Held that: - respondent no. 2 has proceeded to apply the provisions of sub-Section 3 of Section 35EE of the Act which contemplates and requires that a revision application ought to have been accompanied by a fees of ₹ 1000/- when the amount of duty, interest demanded, fine or penalty levied by any of the authority in the case to which the application relates is more than ₹ 1,00,000/-. In the instant case, it is not a case where the amount of duty and interest is demanded or fine and penalty is levied as such in the instant case the petitioner has claimed the rebate of excise duty. There is no dispute that the requirement of payment of fee before or at the time of filing of revision application is mandatory but in the instant case, the appeals were filed before the respondent no. 2 on 13.05.2014 against the order of the Commissioner (Appeals) dated 09.12.2013, the deficiency of the amount has been cleared as soon as the petitioner has received the notice dated 02.06.2014. The order impugned has been passed by the respondent no. 2 after a gap of more than about three and half years from the date of filing of the appeal and while passing the said order the respondent no. 2 has not looked into the contends of the notice dated 02.06.2014 which clearly stipulates a marginal period allowed to the petitioner to pay the short fee, for each of the revision applications @ ₹ 800/- within a period of 15 days. Impugned order do not sustain - petition allowed - decided in favor of petitioner.
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2018 (5) TMI 1056
Revision petition u/s 35 EE of the CEA 1944 - the revisional authority (respondent no.4) dismissed the revision petition only on the ground of delay of 8 years in filing revision petition - Held that: - petitioner preferred revision petitions after delay of 8 years knowingly well that revision is not maintainable, preferred appeal before CESTAT and CESTAT Commissioner specifically apprised the counsel for the petitioner in his order dated 9.8.2005 that in case petitioner is aggrieved with the order, he should file revision application to the Joint Secretary, Government of India, Ministry of Finance, New Delhi but the petitioners over looked the Commissioner’s advise and perused the appeal before the CESTAT for 8 years and in between said period some revision petition were field in other matter, meaning thereby, it is not a fit case in which a bonafide mistake has been committed by the petitioners, more so, it is a case in which with open eyes the petitioners preferred appeal before CESTAT and after 8 years when appeals were dismissed on the ground of maintainability, the petitioners preferred revision petition, in which impugned orders were passed by the revisional authority. It is not a fit case in which delay of 8 years can be condoned to entertain revision petition or to direct the revisional authority to decide the revision petition on merit because all the facts submitted before the revisoinal authority for condonation of delay were considered objectively and, thereafter, the revision petitions were dismissed. Petition dismissed - decided against petitioner.
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2018 (5) TMI 1055
Valuation - SSI Exemption - Determination of turnover - whether the value of chassis which the respondent assessee uses for fitting bodies upon manufactured vehicles should be included for ascertaining the assessee's value of aggregate clearances for the purpose of exemption as a Small Scale Industrial unit? Held that: - When one is ascertaining the aggregate value of clearances of all excisable goods for home consumption for the purpose of clause( vii) of para 2 of the said notification, in terms of clause( b) of para 3 thereof, the value of clearances of specified goods which are used as inputs for further manufacture of any specified goods within the factory of production would be excluded - the Tribunal is correct in coming to the conclusion that the value of chassis would not be included in the aggregate value of the clearances of the assessee of all excisable goods for home consumption - appeal dismissed - decided against Revenue.
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2018 (5) TMI 1054
Clandestine manufacture and removal - Cigarettes - the allegation of the Department is that unaccounted cut tobacco (raw material) was purchased from M/s Deccan Tobacco Processors Ltd. (DTPL), Hyderabad, which was used by M/s Kanpur Cigarettes Ltd. (KCL) to manufacture cigarettes which were clandestinely removed without payment of excise duty - penalty - Held that: - the allegation of clandestine removal of cigarettes from the factory is not sustainable as the cigarettes were manufactured by undertaking, a process involving raw material of different types i.e CTP, cut tobacco etc. procurement of which are fully controlled under the supervision of the Excise Officers who maintains the XT- 1 diary. Further, the clandestine manufacture/removal of the goods requires use of extra machinery, extra consumption of power, employment of extra labour and transporter and/or buyer will also have to be identified. The supply of the extra raw- material will also have to be established to prove the clandestine removal of the cigarettes. But, in the instant case, it appears that the Department has not collected corroborative evidence to substantiate their claim of clandestine removal of cigarettes. Neither any incriminating material was found from franchisee factory at the time of search nor any statement even of single worker of the factory was recorded to prove allegation of clandestine removal. For clandestine removal, which is a serious charge, the strict evidence is required like supply of the raw-material, consumption of extra-electricity, transportation of the confiscated goods and sale of the finished goods. Unfortunately, no evidence has been collected by the Department pertaining to these aspects. Penalty u/r 209A of CER on various persons - Held that: - When there is no clandestine removal, then no penalty can be imposed under Rule 209A. It may also be mentioned that the show cause notice was issued on 30.09.1995 and the impugned adjudication order was passed on 06.03.2014, almost after 19 years. It is the allegation of the assessee-Appellants that no relied upon documents (RUDs) or cross-examination were provided - Held that: - No useful purpose will be served after the lapse of more than two decades to ask the authorities to re-examine the issues especially when the matter was remanded earlier. Appeal allowed - decided in favor of appellant-assessee.
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2018 (5) TMI 1053
CENVAT credit - duty paying documents - moisture loss of 1302 MT iron ore pellets - Held that: - there is nothing to indicate that the appellant had short-received 1302 MTs of iron ore during the period nor there is any allegation in the show cause notice indicating the appellant has to show cause for they received 1302 MTs of iron ore or not - appellant indicated that they had received entire quantity of iron ore pellets as indicated in the duty paying documents - credit cannot be denied - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1052
CENVAT/MODVAT credit - interest - penalty - Central Excise duty paid on 10 moulds during the period prior to 21/07/1995 were factually installed in the factory and subsequently removed to the job-workers - Held that: - the appellant herein was unable to at forth any evidence that the 10 moulds in question were in fact received in the factory and subsequently removed to job-worker post 21/071995 - demand of MODVAT credit upheld. Interest and penalty - Held that: - the period involved in this case is being prior to 1995 and the issue being disputed, which could have been argued on limitation, the question of imposing equivalent amount of penalty does not arise - interest also set aside. Appeal allowed in part.
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2018 (5) TMI 1051
CENVAT credit - input services - dispose of hazardous waste and chemicals - It is the case of Revenue that CENVAT credit availed is incorrect when the hazardous waste is not disposed off in the factory premises but at the premises of the service provider - Held that: - an identical issue came up before the Tribunal in the case of India Pesticides v Commissioner of Central Excise & Service Tax [2016 (8) TMI 724 - CESTAT ALLAHABAD] wherein it was held that CENVAT credit can be ailed of the service tax paid by such service providers - credit allowed - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1050
Liability of duty - scrap generated at the job-worker's premises - Held that: - the issue came up before the Tribunal in respondent assessee's own case M/s VE Commercial Vehicles Ltd. Versus Commissioner of Central Excise, Thane-I [2016 (2) TMI 554 - CESTAT MUMBAI], and has decided in their favor by holding that there is no liability of the assessee sending in the inputs for job work in respect of scrap generated at job workers end - appeal dismissed - decided against Revenue.
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2018 (5) TMI 1049
CENVAT credit - insurance policy obtained under Workmen's Compensation Scheme - appellant is a manufacturer of explosives - Held that: - the appellant being a manufacturer of explosives required to take out insurance policy under the Workmen's Compensation Scheme - identical issue in respect of similarly placed industry, i.e. M/s Economic Explosives Ltd. [2018 (5) TMI 1034 - CESTAT MUMBAI] was considered by the Bench and was held in favor of assessee, by holding that Insurance service availed to protect workmen has direct nexus to the manufacturing activity of the appellant since appellant is engaged in the manufacture of explosives - credit allowed - appeal allowed - decided in favor of appellant-assessee.
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2018 (5) TMI 1048
CENVAT creidt - common inputs/input services used for dutiable as well as exempt goods - non-maintenance of separate records - rule 6 (3) of CCR - Held that: - respondent having reversed the entire CENVAT credit attributable to the common inputs and input services, the question of confirmation of an amount under Rule 6(3) does not arise - issue covered by the decision in the case of JOST´S ENGINEERING CO. LTD. Versus COMMISSIONER OF CENTRAL EXCISE, MUMBAI-III [2013 (8) TMI 463 - CESTAT MUMBAI], where it was held that once the entire CENVAT credit on the common inputs services is reversed the question of confirmation of demand of an amount equivalent to 6% of the value of the goods does not arise - appeal dismissed - decided against Revenue.
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2018 (5) TMI 1047
CENVAT credit - input services - rent-a-cab service - insurance service - waste management service - Held that: - As regards 'rent-a-cab service', it is undisputed that the services were utilised for picking and dropping of the employees from the nearest railway station to the manufacturing factory - credit cannot be denied. Insurance service - Held that: - it is undisputed that the insurance is in respect of factory premises and plant machinery - similar issue decided in the case of Commissioner of Central Excise, Delhi -III v. Suzuki Motorcycle India Pvt Ltd [2016 (9) TMI 576 - CESTAT CHANDIGARH] wherein the bench has held that such credit of service tax is eligible to be availed by the manufacturer - credit allowed. Waste management/disposal service - Held that: - there is no reason to disallow such credit to the appellant herein as the provisions of the Environment Act if not met then the factory would be closed down - credit allowed. Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1046
Refund claim - unjust enrichment - it was alleged that appellant did not supply all the documents with the authorities - Held that: - there is an inordinate delay in adjudication proceedings - The order-in-original dated 18/02/2008 by which the refund claim has been rejected on the ground that the appellant is not able to produce few documents, which to my mind, seems to be incorrect, as much time has elapsed after the refund claim has been availed. Due to efflux of time the entire proceedings needs to be given a finality - impugned order set aside - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1045
CENAVT credit - inputs - welding electrodes received in the factory, consumed and used for the activity of fabricating of machinery of machinery - Held that: - welding electrodes consumed in the factory of the appellant wherein manufacturing activity took place, credit cannot be denied - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1044
CENVAT credit - duty paying documents - whether appellant have received 6440 MTs of iron ore or not? - Held that: - there is nothing to indicate that the appellant had short-received 6440 MTs of iron ore during the period nor there is any allegation in the show cause notice indicating that the appellant has to show cause for whether they received 6440 MTs of iron ore or not. Since in view of the fact that there is nothing on record to show that the appellant had received short-quantity of 6440MTs of iron ore pellets, the impugned order denying credit of ₹ 1,38,449/-is incorrect and the impugned order to that extent needs to be set aside - appeal allowed.
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2018 (5) TMI 1043
CENVAT credit - input service distribution - excess credit which was distributed by their I-lead Office - penalty - Held that: - there is absence of malafide intention on the part of the respondent in distributing the CENVAT credit as input service distributor and mens rea does not stand established in the present case. Penalties - Held that: - if the CENVAT Credit is passed on as are ISD and that there was no evidence to show that it was done in malafide intention, the first appellate authority was correct in setting aside the penalties imposed by the adjudicating authority. Appeal dismissed - decided against Revenue.
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2018 (5) TMI 1042
Excess availment of CENVAT credit - transfer of an amount from basic customs duty to Education Cess/Secondary & Higher Education Cess without debiting the same in BED account - demand of interest and penalty - Held that: - Education Cess/Secondary & Higher Education Cess were debited as paid without an amount in credit in respect of two cess, inasmuch as transfer of credit from basic excise duty to Education Cess/Secondary & Higher Education Cess is not complete unless there is debit in the BED account Undisputedly, the appellant had not debited the BED with an amount which has been used for payment of Education Cess/Secondary & Higher Education Cess - demand of interest upheld. Penalty - Held that: - this act of non-debiting the basic excise duty would not attract stringent imposition of equal penalty under section 11AC or under rule 15(2) of Cenvat Credit Rules, 2004 inasmuch that there is no intention to evade duty and the clearances of the goods were effected by showing debit in Education Cess/Secondary & Higher Education Cess account - there is no warrant to visit the appellant with penalties under any provisions of Central Excise Act and the Rules made there under - penalties set aside. Appeal allowed in part.
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2018 (5) TMI 1041
CENVAT credit - input services - Tours and travels service - construction services - Held that: - the chart which is produced by the learned Counsel before the Tribunal, specifically indicates that the employees concerned had travelled for official work. If the employees have travelled for official work, and period being prior to 01-04.2011, CENVAT Credit needs to be allowed as covered in the definition of input services during the period in question, as the inclusive portion of definition indicates any services used in relation to business activity and the service tax paid on such services are eligible for CENVAT Credit - credit allowed. CENVAT Credit of ₹ 5,16,557/- on construction services - denial on the ground that these services were rendered for the housing complex and the residential colony - Held that: - in order to meet ends of justice, appellant is extended an opportunity to substantiate their claim that the cost of these construction services was considered for arriving at the final price of the goods manufactured - matter remitted back to the adjudicating authority to reconsider the issue afresh after following due process law. CENVAT Credit of ₹ 25,20,383/- and ₹ 2,08,821/- in respect of construction services - denial on the ground that the service tax is paid on construction services which are excluded from the definition of input services - Held that: - he definition of input services, post 01.04.2011, indicates that CENVAT Credit of the service tax paid on construction services used for construction of building or civil work or part thereof is excluded as also the services rendered for making structure to support of capital goods - The exclusive clause in definition of input service under rule 2(l) of Cenvat Credit Rules, 2004 post 01.04.2011 will not be attracted in the case in hand as factually it is noticed that these services were used for repair and renovation of the factory - credit allowed. Penalty - Held that: - the issue involved in this case is regarding interpretation of the provisions, appellant need not to be visited with any penalty under any provisions. Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1040
CENVAT credit - fake invoices - invoices raised but goods not delivered - confiscation - redemption fine - penalties. Held that: - the partnership firm M/s Sunrise Metal Corporation and M/s Prathmesh Steel were registered dealers; they have issued invoices to M/s Harisons Steel Ltd., on which description of the goods was steel scrap while factually the vehicle contained bazaar scrap, which may have enabled Harisons Steel Ltd, to avail ineligible CENVAT credit that an investigation was carried out in the factory premises of Harisons Steel Ltd. and various registered dealers were engaged in the similar modus operandi. Penalties on the partnership and on the individuals - Held that: - M/s Sunrise Metal Corporation and M/s Prathmesh Steel being registered dealer would be covered under the provisions of Rule 25 (1) (d) of Cenvat Credit Rules, 2004, as they have contravened the provisions of Central Excise Acts and Rules made thereunder by issuing an invoice which was not accompaning by the goods as indicated on the documents - Upholding the of imposing penalty on the said firm, interest of justice can be met if penalty imposed on M/s Sunrise Metal Corporation is reduced to ₹ 70,000/- from ₹ 1,31,168/- and in the case of and M/s Prathmesh Steel to ₹ 25,000/- from ₹ 67,677/-. Personal penalty imposed on the partnership firm - Held that: - the penalty imposed is almost equivalent of duty liability which is sought to be demanded and reversed in order to meet ends of justice, the personal penalty imposed on Shri Vikram Mehta, partner of M/s Sunrise Metal Corporation is reduced to ₹ 60,000/- from ₹ 1,31,168/- and in case of Jitendra to ₹ 25,000/- from ₹ 67,677/-. Confiscation - redemption fine - Held that: - The finding of the first appellate authority that the consignments in the trucks were cleared as per invoices but were replaced with goods with intention to mislead Revenue by suppressing the facts, hence liable for confiscation at par with the goods meant for concealing, is the finding which are very assumptive and presumptive in nature and being so needs to be set aside - confiscation and redemption fine set aside. Appeal allowed in part.
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CST, VAT & Sales Tax
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2018 (5) TMI 1039
Condonation of delay of 541 days in filing the tax appeals - satisfactory explanation as to delay was reasonable - it is contended that that delay is inordinate and has remained unexplained in two affidavits filed by the State authority - Held that: - there is sufficient explanation covering the entire period of delay. It is ofcourse true that much of the period is sought to be explained on the ground that the papers were unavailable in GP office. Only when it was noticed that despite instructions, appeal was not filed, attempts were made to reconstruct the set and file the appeal after drafting and vetting. In absence of any averments to the contrary or any evidence of mala fide intentions at the level of GP office, delay should be condoned, ofcourse subject to payment of cost. In somewhat similar circumstances in a recent judgment in case of State of Gujarat v. GAIL India [2018 (5) TMI 1033 - GUJARAT HIGH COURT], the delay was condoned by holding that Considering the explanation rendered for the delay caused in filing appeal and the tax implications involved, we are inclined to condone the delay. The delay in filing the tax appeal is condoned, however, subject to condition that the applicant shall pay cost of ₹ 25,000/to the respondent latest by 30.4.2018 - application allowed.
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2018 (5) TMI 1038
Input Tax credit - inputs - Caprolactum - denial on the ground that such raw material is sent by the assessee to its factory situated at District Hoshiarpur, Punjab, for converting into nylon filament yarn before it is returned to the assessee in Gujarat, from where it is sold to its different customers within and outside the State - assessee contends that the tax credit is available in terms of section 11 of the VAT Act - Whether in facts and circumstances of the case, tax credit entitlement of the dealer was required to be reduced in terms of clause(b) of subsection (3) of section 11 of the Value Added Tax Act? Held that: - The present is not a case either of branch transfer or transfer to a consignment agent. Undoubtedly, the raw material was transported to the assessee's branch situated outside the State but it can still not be treated as a branch transfer. It was transfer of the goods for manufacturing activity and the goods were returned back to the assessee's principal place of business in the form of finished product. It is this finished product which was eventually sold by the assessee either within the State or by way of interState sale and prescribed duty at the prescribed rates was paid - clause(b) of subsection( 3) of section 11 did not apply so as to allow the department to reduce the assessee's tax credit by prescribed percentage. Subclause (iii) of clause(a) of subsection( 3) of section 11 is made specifically subject to the provision of subclause( b). Correspondingly subclause( b) starts with a nonobstante clause providing, that notwithstanding anything contained in the said section, the amount of tax credit would be reduced in the manner provided therein. However, this would not change our opinion on the correct interpretation of the said provision. The question is answered in favour of the assessees and against the department.
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2018 (5) TMI 1037
Transfer of right to use or not? - assessee is engaged in providing specialized lights and equipments for public functions - Whether Tribunal is justified in holding that, the transaction of the Opponent does not amount to a transaction of transfer of right to use, hence is not taxable under the Gujarat Value Added Tax Act, 2003? Held that: - the task of the assessee was not merely of fitting lights on special occasions and winding up the paraphernalia once the event is over. The assessee undertook the task of providing special lighting for the stage for organizers to hold programs and events. This would require special equipments, installation and operation by technically trained staff and constant supervision by such staff all throughout the program - There is no element of transferring the controlled possession and ultimately the right of the user of the equipments. If at all the assessee was engaged in providing service which may invite service tax at the prescribed rate. Tribunal concluded that the assessee never parted with that control of the apparatus in favour of the organizers or the hotel management. The transaction of the Opponent does not amount to a transaction of transfer of right to use, hence is not taxable under the Gujarat Value Added Tax Act, 2003 - appeal dismissed - decided against appellant-Revenue.
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Indian Laws
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2018 (5) TMI 1065
Interim bail - Sections 21/25/29 NDPS Act - smuggling of heroin - bail is sought on the ground that the wife of the petitioner is unwell and the family of the petitioner comprises of his aged father, wife and eight children - Held that: - States report has been filed, which though does not confirm that the wife of the petitioner has tuberculosis, however, confirms the structural picture of the parental house of the petitioner. The picture depicts the house in a completely dilapidated house and complete disrepair - the petitioner has made out a case for grant of interim bail for a period of four weeks from the date of his release, on furnishing of bond as required - petition allowed.
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2018 (5) TMI 1064
Bilateral investment treaty arbitrations - Jurisdiction and approach of National Courts or on the nature of arbitrations under such treaties - As the number of investment treaty arbitrations have grown, concerns over the investment treaty system have arisen. These concerns include a perceived deficit of legitimacy given that States are being judged on their conduct by private non-elected individuals. Concerns have also arisen in respect of inconsistent arbitral awards, the independence and impartiality of arbitrators, and the delays and costs of arbitral procedures. Whether there is a threshold Bar or inherent lack of Jurisdiction with this Court to deal with bit arbitration? - Held that: - It is settled law that the jurisdiction of the Civil Courts in India is all embracing except to the extent it is excluded by an explicit provision of law or by clear intendment arising from such law. The ouster of the jurisdiction of a Civil Court is not to be lightly inferred and can only be established if there is an express provision of law or is clearly implied. Though Article 253 of the Constitution empowers the Indian Parliament to make a law to give effect to International Treaties, yet the Parliament has not passed any specific legislation to give effect to BIPA Agreements. However, there is no statutory bar or case law relating to treaty obligation which creates an ouster of jurisdiction or threshold bar for Indian courts in relation to a bilateral investment treaty arbitration. Accordingly, there is no explicit or implicit ouster of jurisdiction of National Courts. This Court is of the opinion that the agreement to arbitrate between an investor and the host State which results by following the treaty route is not itself a treaty but falls in a sui generis category. In the present BIPA Arbitration, a contractual obligation and a contractual right is involved and therefore, there is no bar as to the subject matter of the dispute or as to the jurisdiction of the court to hear the present case. This Court is of the view that the intent of the BIPA is to afford protection to investors and such a purpose is better served if the arbitration agreement is subjected to international law rather than the law of the State. After all the rationale behind the bilateral investment treaty is primarily to afford protection to private investor from expropriation by the foreign State (which normally takes place through State Legislation). The treaty also involves a deliberate attempt to ensure for private investors the benefits and protection of consensual arbitration; and this is an aim to which the National Courts should, in an internationalist spirit and because it has been agreed at an international level, aspire to give effect - the agreement to arbitrate between an investor and a host State is contractual inasmuch as it is not itself a treaty but flows from the treaty provisions which is justiciable in accordance with the principles of international law and there is no threshold bar or inherent lack of jurisdiction in the court to deal with BIPA Arbitrations. Whether the Courts in India can restrain Bilateral Investment Arbitration, which are oppressive, vexatious, inequitable or an abuse of the legal process? - Held that: - there is no unqualified or indefeasible right to arbitrate. The National Courts in India do have and retain the jurisdiction to restrain international treaty arbitrations which are oppressive, vexatious, inequitable or constitute an abuse of the legal process. As pointed out by the learned Amicus Curiae, the concepts of ‘oppression, ‘vexation’, ‘inequity’ and ‘abuse of process’ have been known to the common law and equity for centuries, being the primary theories used by the court to regulate its process pursuant to its inherent jurisdiction - the doctrine of abuse of rights is founded upon the notion that a party may have a valid right, including a procedural right, and yet exercise it in an abnormal, excessive or abusive way, with the sole purpose of causing injury to another or for the purpose of evading a rule of law, so as to forfeit its entitlement to rely upon it. The theory of abuse of rights has its origins in private law and is recognized in the great majority of national legal systems. Whether filing of multiples claims by entities in the same vertical corporate chain with regard to the same measure is per se an abuse of the legal process or vexatious? - Held that: - There is no presumption or assumption that filing of multiple claims by entities in the same vertical corporate chain with regard to the same measure is per se vexatious - Proceedings could be vexatious where they are absurd. For instance, if having lost a BIPA arbitration on merits, the same investor invokes another BIPA arbitration for the same claim without having made any investment through the second foreign State; but it would not be so held where there are substantial reasons to bring the two sets of proceedings simultaneously - Since it is the case of the Plaintiff-Union of India that the claim under the Netherlands-India BIPA is without jurisdiction, invocation of another treaty by the parent company cannot be regarded as an abuse per se. The investment treaty arbitration between a private investor and the host State, which results by following the treaty route is not itself a treaty, but is sui generis and recognized as such all over the world. It has its roots in public international law, obligations of States and administrative law. As a species of arbitrations, it is of recent origin and its jurisprudence cannot be said to be settled or written in stone; far from it. Investment Treaty jurisprudence is still a work in progress - As the present case is not a commercial arbitration, the Act, 1996 shall not apply. This Court is of the view that in a situation where the Act, 1996 does not apply, its inherent powers are not circumscribed by anything contained in the Act. Tribunal while deciding the said issue will take into account the Defendants' undertaking to this Court that if the Plaintiff-Union of India gives its consent, it would agree to consolidation of the two BIPA arbitration proceedings before the India-United Kingdom BIPA Tribunal.
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2018 (5) TMI 1063
Surrender of license to sell Liquor - Recovery of 'licence fee' in addition to the 'basic licence fee' consequent to surrender of licence for country made liquor by the petitioner - contention of the learned counsel for the petitioner is that as a result of surrender of such licence all that can be forfeited/ recovered from the petitioner is the basic licence fee and security amount and not the fee payable by him in respect of the ''Monthly Minimum Guaranteed Quantity' - Section 36 of United Provinces Excise Act, 1910. Held that: - the 'fee' for the licence in question as referred in Section 36 of the Act, 1910 comprises of the 'basic licence fee' and a 'licence fee'. The 'licence fee' is the excise duty leviable on the AMGQ which the licensee guarantees to lift for his retail shop during an excise year for the purpose of retail sale. This is a guarantee given by the Licensee at the time of grant of licence and he is bound by it, it being a contractual obligation entered into by him with open eyes. This is in addition to the ''basic licence fee' and is remaining part of the consideration for the licence - MMGQ is nothing but 1/12th part of the AMGQ and the ''monthly installment of licence fee' is nothing but 1/12th of the part of the ''licence fee' in addition to the ''basic licence fee' and is payable every month. This in nutsell is the ''fixed fee system' referred in the long title of the Rules, 2002 and Rule 3 thereof which was accepted by the petitioner while accepting the licence and is the fee referred in Section 36 of the Act, 1910 - Rules 12 and 14 are not attracted in the present case. The petitioner is liable to pay the 'basic licence fee' and 'licence fee' in terms of Section 2(d) and 2(m) of the Rules, 2002 read with Section 36 of the Act, 1910 and Rule 19 of the Rules, 2002, which includes the monthly installment licence fee in respect of MMGQ which was part of AMGQ, which the petitioner had guaranteed to lift at the time of grant of licence and was also very well aware about the said facts - As regards the consequence of surrender of licence and cancellation as far as the State is concerned, they are similar, as, they entail a going back by the licence on the contractual obligation accepted by him. Petition dismissed - decided against petitioner.
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