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TMI Tax Updates - e-Newsletter May 20, 2019 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Articles STATUTORY DUES AMOUNT TO ‘OPERATIONAL DEBT’ TAXABILITY OF ‘RENT’ FOR ‘HEALTH CARE’ SERVICES Notifications GST - States FIN/REV-3/GST/1/08 (Pt-1) (Vol.1)/117 - dated 29-3-2019 - Nagaland SGST Amendment in Notification No. FIN/REV-3/GST/1/08 (Pt-1) (Vol. 1)/78 dated the 7th March, 2019 FIN/REV-3/GST/1/08 (Pt-1) (Vol.1)/116 - dated 29-3-2019 - Nagaland SGST Seeks to amend notification No. F.NO.FIN/REV3/GST(Pt-1) “D”, 30th June,2017 FIN/REV-3/GST/1/08 (Pt-1) (Vol.1)/115 - dated 29-3-2019 - Nagaland SGST Seeks to notify certain services to be taxed under RCM under section 9(4) of SGST Act FIN/REV-3/GST/1/08 (Pt-1) (Vol.1)/114 - dated 29-3-2019 - Nagaland SGST Seeks to notify certain class of persons by exercising powers conferred under section 148 of NGST Act, 2017. FIN/REV-3/GST/1/08 (Pt-1) (Vol.1)/113 - dated 29-3-2019 - Nagaland SGST Seeks to amend notification No F.NO.FIN/REV-3/GST/I/08 (Pt-I) “P”, 30th June,2017 FIN/REV-3/GST/1/08 (Pt-1) (Vol.1)/112 - dated 29-3-2019 - Nagaland SGST Seeks to amend notification No. F.NO.FIN/REV3/GST/1/(Pt-1) “O”,30th June,2017 F.1-11(91)-TAX/GST/2019(Part-II) - 10/2019-State Tax (Rate) - dated 10-5-2019 - Tripura SGST Amendments in the Notification of the Government of Tripura, in the Finance Department, No. 11/2017- State Tax (Rate), dated the 29th June, 2017. GST-2018-19/F.No. 509/39/Commercial Tax - dated 7-3-2019 - Uttar Pradesh SGST Prescribe the due dates for furnishing of FORM GSTR-3B for the months of April, May and June, 2019 GST-2018-19/F.No. 509/38/Commercial Tax - dated 7-3-2019 - Uttar Pradesh SGST Prescribe the due dates for furnishing of FORM GSTR-1 for those taxpayers with aggregate turnover of more than ₹ 1.5 crores for the months of April, May and June, 2019 SEBI SEBI/LAD-NRO/GN/2019/18 - dated 17-5-2019 - SEBI NSE IFSC Clearing Corporation Limited, Gandhinagar for one year, commencing on the 29th day of May, 2019 and ending on the 28th day of May, 2020 SEZ S.O. 1751(E) - dated 14-5-2019 - SEZ Central Government notifies an additional area of 10.178 hectares, as a part of above Special Economic Zone, thereby making total area of the Special Economic Zone as 27.298 hectares at Plot No. 3, Rajiv Gandhi Infotech Park, Hinjewadi, Phase II, Village Marunji, Taluka Mulshi, District Pune in the State of Maharashtra Circulars / Instructions / Orders GST - States 20/2019-GST (State) - dated 2-5-2019 List of circulars issued by the GST Policy Wing during 2017 & 2018. Circular No. 67/2019-TNGST - dated 26-4-2019 Clarification regarding exercise of option to pay tax under notification No.2/2019 - CT (R) dt.07.03.2019. Circular No. 66/2019-TNGST - dated 23-4-2019 Clarification in respect of transfer of input tax credit in case of death of sole proprietor. DGFT TRADE NOTICE No. 16/2019-20 - dated 16-5-2019 Prohibition on direct or indirect import and export from/to DPRK (Democratic People’s Republic of Korea) in terms of UNSC Resolutions concerning DPRK – Para 2.17 of the Foreign Trade Policy 2015-20 Highlights / Catch Notes GST Levy of GST - Khadi fabric - The readymade garments of khadi does not fall under the entry 130A of Notification No. 02/2017 and hence not exempted. Visit to Get Source Classification of goods - Kalava Raksha Sutra (Sacred Thread) - The items are not by themselves Kalva raksha sutra sold directly to consumers but long lengths of thread of various composition sold in loose rolls to the Applicant’s buyers who need to be further cut to individual sizes to make them Kalava Sutra. Visit to Get Source Classification of goods - rate of tax - Polypropylene Mat which are plaited using Polypropylene Straw - the mats are made of Polypropylene, which are definitely not of vegetable materials - classifiable under CTH 46019900 - Different rates are applicable for different periods as per amended notification. Visit to Get Source Scope of Advance Ruling Authority u/s 97 of the CGST Act/TNGST - question relates to charging of IGST or SGST & CGST on such sales for which appellant get orders from overseas customers, but delivery is made locally (within Tamil Nadu) and payment is received in foreign currency - since issue for which Advance Ruling is sought depends on the ‘Place of Supply’ of the goods, which is not in the ambit of this authority Visit to Get Source Classification - rate of tax - Frozen Chicken sold in packaged form - applicant fulfill the conditions mentioned in amended Notification No. 01/2017 dated 28.06.2017 i.e. goods are branded, frozen and supplied in a unit container and will attract GST @5% (CGST 2.5% + SGST 2.5%). Visit to Get Source Income Tax Allowable business expenditure u/s 37 - AO was in error in taking all the selling and market expenses to WIP ignoring the guidance note of ICAI as regards accounts of real estate transactions - both by the CIT (A) as well as the ITAT has been correctly applied guidance note of the ICAI - No substantial question of law arises Visit to Get Source Exemption u/s 11 - advancing of loan to another trust registered u/s 12A should be treated as application of income towards the objects of the trust and did not violate either Section 13(1)(c) or 13(2)(g) Visit to Get Source Exemption u/s 11 - taxability of anonymous donation u/s 115BBC - CBDT not yet prescribed particulars which is required to be maintained by the assessee trust - it is apparent that at present the simple requirement is maintaining the name and address of the donors which assessee maintained with other particulars - donation received by the assessee do not falls into the definition of anonymous donation Visit to Get Source Search u/s 132 - right to cross examination - It is a settled position that where a request for cross examination is made prior to completion of assessment proceedings and in the event that the said statement is intended to be relied upon by the AO, full opportunity be afforded in this regard prior to completion of assessment proceedings Visit to Get Source Penalty u/s 271(1)(b) - non compliance of notice in the assessment proceedings - Assessment orders have been framed u/s 143(3), it proves that the assessee had cooperated in the assessment proceedings - no penalty Visit to Get Source Penalty u/s 271FA r.w.s. 274 - non filing of AIR return without considering reasonable cause - penalty will be justified and it will be a message to the government authorities, so that in future such casual approach should not be taken and compliance to the statutory requirements including reply of notices by Income Tax Department should be adhered to Visit to Get Source Discrepancy in the online filing of Form ITR- 6 - software of the Department did not permit the Petitioner’s claim u/s 10AA without setting off the loss of the ineligible unit - direction is issued to the department to either accept the manual return or alter the software to permit it to again to file online its returns for the AYs in question on or before 31st May, 2019. Visit to Get Source Power of Central Government u/s 85 & 86 - Black Money Act, 2015 - ultravirus of notifications issued making them effective prior to 01.04.2016 - A fortiori the Central Government further could not have, prior to the said Act coming into force i.e. 01.04.2016, altered the date by exercising the powers available to it u/ss 85 and 86 by advancing it to 01.07.2015 - a good prima facie case for grant of interim relief Visit to Get Source Deduction u/s 54 /54F - investment was made in a residential house outside India in AY 2013-14 - the legislative intent has been made explicit by inserting the amendment to require to purchase/construction of the residential property in India only with effect from 1st April 2015 - applicable prospectively - deduction allowed Visit to Get Source Reassessment notice u/s 148 - “reason to believe" must be interpreted that the AO on receipt of any such new material or materials in relation to the non furnishing of fact by the assessee has made out a prima facie opinion that it is the case for reopening of the assessment - in the absence of having knowledge about the reasons, the petitioners cannot come to the conclusion that there is no new material or reason to reopen the assessment - writ dismissed Visit to Get Source Customs Levy of penalty - it is the Department which took a U-turn in the matter after a very long period, when the Department was permitting the respondent/importer to clear the goods by classifying the same under chapter heading 8542, it is not a case where penalty could have been imposed Visit to Get Source Concessional rate of customs duty - Original Equipment (OE) parts - diversion of goods - Having imported the parts for the specified end-use, assessee has, thereafter, diverted them for some other use. Clearly, such diversions are not covered by the exemption notification.. Visit to Get Source Denial of benefit of exemption based on test reports for consignment cleared in the past - The test results of the samples cannot be extrapolated to the consignment cleared in the past Visit to Get Source Violation of import conditions - actual user condition - the imported Bulk Drugs has not been utilized by the appellant in his own factory for further manufacture of Polio Drop. Instead the Bulk Drugs stands sold by them to another private party who have though used the same for intended purposes for manufacture of Polio Drops only and further supplied them to the Ministry of Health. - the demand is hopelessly barred by the period of limitation. Visit to Get Source Release of seized Foreign Currency - conversion of Foreign Currency into Indian Currency - Notification dated 14th February 2006 requires notice to be issued to the owner of the goods prior to its disposal, no such notice to petitioner - directed to pay the Indian rupees equivalent by applying the conversion rate as of today Visit to Get Source Corporate Law Oppression and mismanagement - not permitted/given sufficient opportunity to be involved in the affairs/board meetings - allotment of shares at par without premium to Respondent and at premium to the Petitioners and no action was taken to rectify it - pending investigation with ROC & DIT(I) - sufficient to hold acts of oppression and mismanagement - appointed interim arrangement by appointing independent Chairman to see the affairs of the Company Visit to Get Source IBC Liquidation of Corporate Debtor - rejection of resolution plans - no Resolution Plan having been approved by the CoC within the period of CIRP of 180 days as well as the extended period of 90 days - only recourse is to press the liquidation mode as provided u/s 33 of IBC, 2016 Visit to Get Source Service Tax Classification of services - advertising agency services or not - production of design given by the client on chosen material such as cloth, PVC sheet etc. would not amount to providing any service taxable under the category of advertising agency. Visit to Get Source Recovery of refund already granted - Commissioner (appeals) had set aside the refund order - the appellant not only received the refund but also gave it back to the customers. Both sides agree that in this particular case, there is no net loss to the exchequer or gain to the appellant. Visit to Get Source CENVAT Credit - Cargo Handling Services - input services relates to repair and renovation of the premises are essential for maintenance and upkeep of the premises which is used for storing imported goods and to render the service of cargo handling at the customs station - credit duly allowable Visit to Get Source CENVAT Credit - common input services used for taxable and non taxable/exempted services - If the appellant had been reversing the credit u/r 6(3)(ii) but had erroneously not shown the said bifurcation in the ST-3 returns - the failure to not to claim the option at the start of FY by filing the intimation with the range superintendent is nothing but a procedural violation and needs to be condoned Visit to Get Source Central Excise Refund claim - Supply to SEZ unit - 100% EOU located outside SEZ, constitutes DTA as far as SEZ Act is concerned. Sec.51 of SEZ Act also makes it clear that this Act prevails over any other law. - refund of accumulated Cenvat Credit is available when goods are cleared from DTA to SEZ. Visit to Get Source CENVAT Credit - trading (high sea sales) as well as manufacturing of goods - sale of goods-be it made in the high sea or within the territorial boundary of India in which Finance Act, 1994 has its force, cannot be called a service to impose tax liability or deny the credit under Rule 6 of Cenvat Credit Rules. Visit to Get Source Levy of penalty - 100% EOU - it is mistake of calculation of availment of Cenvat credit which the appellant has reversed the credit on pointing out by the Department. In that circumstance, the penalty is not imposable on the appellant Visit to Get Source Case Laws: GST 2019 (5) TMI 1073 Classification - rate of tax - Frozen Chicken sold in packaged form - Whether frozen chicken as sold by the company is exempt under Entry No. 9 of Notification No. 02/2017-CT(R)? - HELD THAT:- Frozen chicken in meat form is covered under Chapter 2 of Section I heading Live Animals, Animal Products of Customs tariff Act, 1975 - The gallus domesticus is a technical name for chicken and is type of domesticated fowl. Thus frozen meat of chicken is covered under entry 0207 of the Customs tariff Act, 1975. The carcass of the chicken supplied by the applicant in a HDPE bag is frozen and is also branded thus fulfills two of the three necessary conditions. The same has also been accepted by the applicant in his submissions - As such for the purpose of applicability of GST, the only contention left to be ascertained is whether the HDPE bag used by the applicant for supply of goods qualifies as a unit container. The HDPE bags are designed to hold a predetermined quantity or number, so as to carry carcass weighing between 10 to 20 kgs, as is evident from the document submitted by the applicant i.e. Specification No. 209D of Defence Food Specifications-2016, Secretariat of the Technical Standardiation Committee (Food Stuffs) (Directorate general of Supplies and transport) - After the goods are packed in the HDPE bags, the actual weight is mentioned on each bag before the supply of goods, which is also evident from the remark printed on the bags (sold on actual weight basis). Thus it is clear that the goods supplied in the HDPE bags are of predetermined quantity hence qualifies to be a unit container. The supply of goods by the applicant fulfill the conditions mentioned in Notification No. 01/2017 dated 28.06.2017 (as amended from time to time) i.e. goods are branded, frozen and supplied in a unit container and will attract GST @5% (CGST 2.5% + SGST 2.5%). 2019 (5) TMI 1072 Scope of Advance Ruling Authority - Levy of IGST or SGST CGST? - sale of Hand-made Cutting Knives for Shoe industries - inter-state supply or intra-state supply? - appellant get orders from overseas customers, but delivery is made locally (within Tamil Nadu) and payment is received in foreign currency - HELD THAT:- Section 97 of the CGST Act / Tamil Nadu GST Act (TNGST) has given the scope of Advance Ruling Authority, i.e., the question on which the Advance Ruling can be sought. The Act limits the Advance Ruling Authority to decide the issues earmarked for it under Section 97 (2) and no other issue can be decided by the Advance Ruling Authority. The issue for which Advance Ruling is sought depends on the Place of Supply of the goods, which is not in the ambit of this authority. The Application is therefore rejected without going into the merits of the case, on the issue of lack of jurisdiction. Application dismissed. 2019 (5) TMI 1071 Constitutional validity of Section 174 of the KSGST Act - Time limitation - HELD THAT:- The issue decided in the case of M/S. SHEEN GOLDEN JEWELS (INDIA) PVT. LTD. VERSUS THE STATE TAX OFFICER (IB) -1, AND OTHERS [ 2019 (2) TMI 300 - KERALA HIGH COURT ] where it was held that the petitioner's plea is rejected that the State lacks the vires to graft Section 174 into KSGST Act, 2017. It is appropriate to remit the matter for a fresh consideration and disposal by the Single Judge, on the question of limitation provided under Section 25(1) of the KVAT Act. 2019 (5) TMI 1041 Levy of GST - Khadi fabric, sold through Khadi and Village Industries Commission (KVIC) and KVIC certified institutions/ outlets - N/N. 02/2017 Central Tax (Rate) dated 28.06.2017 further amended vide Notification No. 28/2017-Central Tax (Rate) dated 22.09.2017 - HELD THAT:- Heading 50 to 55 includes only khadi fabrics and not readymade garments of khadi. The readymade garments of khadi does not fall under the entry 130A of Notification No. 02/2017 -Central Tax (Rate) dated 28.06.2017 and hence not exempted. The entry for readymade garments is mentioned at Serial No. 170 (GST @ 5%) and Serial No. 223 (GST @12%) (GST of Schedule-I and Schedule-II respectively of Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017 (as amended from time to time) subject to price cap. 2019 (5) TMI 1040 Classification of goods - rate of tax - items made of vulcanized rubber like Rubber Ring/ GASKET/ Seal, Rubber Foot Batten Washer and Rubber Grommets - whether classified under the heading 4016 are taxable as specific rubber items having a GST rate of 18% or as components of sprinkler/ Drip irrigation system having a tax rate of 12% under heading 84249000? HELD THAT:- While going through the Entry No. 195B of Schedule II of Notification No.01/2017 dated 28.06.2017 read with Circular number 81/55/2018-GST dated 31st December, 2018, it is observes that the Sprinkler Irrigation System/ drip irrigation system including laterals only will be covered under the said notification and attract GST @12%. If individual rubber parts of the Sprinkler Irrigation System/drip irrigation system are supplied separately viz. Rubber Ring/ Gasket/ Seal, Rubber Foot Batten Washer and Rubber Grommets, will not be covered under Entry No. 195B of Schedule II of Notification No. 01/2017 dated 28.06.2017. Even otherwise also rubber parts will be classifiable under chapter heading 4016. The goods manufactured and supplied by the applicant viz. Rubber Ring/ Gasket/ Seal, Rubber Foot Batten Washer and Rubber Grommets are classifiable under Chapter Heading 4016 and attract GST@ 18% (CGST 9% + SGST 9%). 2019 (5) TMI 1039 Classification of goods - parts of sprinkler system sold by us like Latch Clamp, C-Clamp, Foot Batten, Riser Pipe, Aluminum Rivet and Mini Sprinkler Rod etc. exclusively meant for use in Sprinklers and drip irrigation system but sold in isolation as parts and not as a complete system - whether classified under the heading 8424? - rate of tax when such components/ parts when sold separately and not as a part of the sprinkler/ drip irrigation. HELD THAT:- While going through the Entry No. 195B of Schedule II of Notification No.01/2017 dated 28.06.2017 read with Circular number 81/55/2018-GST dated 31st December, 2018, we observe that the Sprinkler Irrigation System including laterals only will be covered under the said notification and attract GST @ 12% - If individual metal parts of the Sprinkler Irrigation System/ drip irrigation system are supplied separately viz. Latch Clamp, C- Clamp, Foot Batten, Riser Pipe, Aluminum Rivet and Mini Sprinkler Rod etc. will not be covered under Entry No. 195B of Schedule II of Notification No. 01/2017 dated 28.06.2017. 2019 (5) TMI 1038 Classification of goods - Kalava Raksha Sutra (Sacred Thread) - N/N. 1 /2017-Central Tax (Rate) dt. 28-06-2017 - HELD THAT:- The commodity manufactured by the Applicant is a braided yarn made by a braiding machine which takes in dyed yarn of multiple numbers (8 or 12 or 16). The items are not by themselves Kalva raksha sutra sold directly to consumers but long lengths of thread of various composition sold in loose rolls to the Applicant s buyers who need to be further cut to individual sizes to make them Kalava Sutra. As per Section Note (B)(1) and (2) to Section XI covering Chapter 50 to 63, braided textile yarn are not included in chapter 50 to 55, but in Chapter Heading 5607, if they are tightly plaited. The commodity manufactured is liable to be classified based on the raw material as braided textile yarn under CTH 5607 i.e. made of polypropylene yarn under 56074900, made of other synthetic yarn under 56075090, made of cotton under 56079090. 2019 (5) TMI 1037 Classification of goods - rate of tax - Polypropylene Mat which are plaited using Polypropylene Straw - Whether HSN Code for Polypropylene Mat which are plaited using Polypropylene Straw falls under Chapter Heading 4601 or 3902? - HELD THAT:- In the case at hand as per the manufacturing process furnished, it is seen that pellets on application of heat air on an extruder machine are converted into the polypropylene tubes(straws)which is used as plaiting material. These are then woven or bound together in sheet form by placing them parallel to each other. After weaving the mats are cut into market size requirement. The subject goods are not classifiable under the chapter 39 as per Chapter Note 2 to chapter 39. Further, they are covered under chapter 46 and more specifically under CTH 46019900. Whether Polypropylene Mats fall under Chapter 39 or Chapter 46 of Central Excise Tariff is considered by the CBEC in Circular F.No. 93/24/87-CX-3 dated 16/06/1987? - HELD THAT:- The Central Excise Tariff was aligned with Customs Tariff after the enactment of the Central Excise Tariff Act 1985 which are in alignment with the HSN. Further, in the case at hand the process of manufacture of the Propylene Mat is similar to that considered in the Circular. Therefore we hold that the Polypropylene Mats supplied by the applicant is classifiable under CTH 46019900 - It is pertinent to note that the classification of the Propylene Mats under CTH 4601 is in line with the classification in the Drawback Schedule in respect of Polypropylene Mats . Applicable rate of tax - HELD THAT:- The product in hand is classified under CTH 4601 - CTH 4601 covers plaits and similar products, whether or not being finished articles but made of vegetable materials such as of Bamboo, of rattan, of Other Vegetable materials. In the case at hand, the mats are made of Polypropylene, which are definitely not of vegetable materials and therefore are not covered under SI.No. 103 of Schedule - II above. As the Polypropylene mats are not specified elsewhere in the rate schedules, the applicable rate CGST @ 9% as per Sl.No. 453 of Schedule - III of Notification No. 01/2017-C.T.(Rate) dated 28.06.2017 and SGST @ 9% as per Sl.No. 453 of Schedule -III of Notification No. vide G.O. (Ms) No. 62 dated 29.06.2017. The applicable tax rate from 1.7.2017 to 24.1.2018 is 9% CGST as per Sl.No. 453 of Schedule -III of Notification No. 01/2017-C.T. (Rate) dated 28.06.2017 as amended and 9% SGST as per SI.No. 453 of Schedule -III of Notification No. II (2)/CTR/532 (d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017 as amended. The rate from 25.01.2018 to 31.12.2018 is 2.5% CGST as per Sl No 198A of Schedule I of Notification No. 01/2017-C.T. (Rate) dated 28.06.2017 as amended and 2.5% SGST as per SI No 198A of Schedule I of Notification No. II (2)/CTR/532 (d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017 as amended. The rate from 01.1.2019 onwards is 2.5% CGST as per SI.No.198AA of Schedule I of Notification No. 01/2017-C.T. (Rate) dated 28.06.2017 as amended and 2.5% SGST as per Sl No 198AA of Schedule 1 of Notification No. II (2)/CTR/532 (d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017 as amended. Income Tax 2019 (5) TMI 1070 Power of Central Government u/s 85 86 - Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 - to promulgate the impugned Notifications, pursuant to which the subject proceedings have been initiated against the petitioner, prior to the said Act itself coming into force and that the same are consequently without the sanction of law.? - Act, it shall come into force on the 01.04.2016 - whether notifications issued making them effective prior to 01.04.2016 are ultravirus? - Grant of interim relief - Seeking stay of the operation - HELD THAT:- Parliament in its wisdom enacted the said Act and expressly provided therein that save as otherwise provided in the said Act, it shall come into force on the 1st day of April, 2016. There is, therefore, no gainsaying the legal position that, the power to make Rules or remove difficulties under the provisions of Sections 85 and 86 of the said Act, could only be exercised by the Central Government, once the said Act came into force on the 1st April, 2016, the date expressly stipulated by Parliament in this behalf, and not prior thereto. A fortiori the Central Government further could not have, prior to the said Act coming into force, altered the date on which the enactment came into force i.e. 1st April, 2016 by exercising the powers available to it under Sections 85 and 86 of the said Act by advancing it to 1st July, 2015. At this stage we are prima facie of the considered view that, the official respondents could not have exercised powers granted to it under the provisions of Sections 85 and 86 of the said Act, prior to the enactment itself coming into force, in terms of the provisions of sub-Section (3) of Section 1 of the said Act. In this view of the matter, we are of the opinion that, the petitioner has made out a good prima facie case for grant of interim relief; and that grave prejudice will be caused to him if the official respondents are not restrained at this stage from proceeding further and taking action against the petitioner, under the provisions of the said Act. The respondents are, therefore, restrained from taking and/or continuing any action against the petitioner, pursuant to the impugned order dated 22.01.2019, passed by the respondent No.2, till the next date of hearing. Renotify on 04.07.2019. 2019 (5) TMI 1069 Transfer Pricing Adjustment for staffing segment - exclusion of the comparables suggested by the Assessee and in approving the TP adjustment as proposed by the TPO only on the basis of one comparable objected to by the Assessee on account of it being functionally different from the Assessee - HELD THAT:- Since the entire TP Adjustment has hinged only on one comparable, viz., HCCA the objection to the inclusion of which by the Assessee required a detailed consideration, the Court is of the view that the impugned order dated 11th July 2018 of the ITAT cannot be sustained in law. The question of law is accordingly answered in the negative i.e. in favour of the Assessee and against the Revenue. The Court notes that in the impugned order, the ITAT has remanded to the TPO the consideration of one of the comparables proposed by the Assessee viz., Ma Foi Management Consultants Ltd. and one other as suggested by the DRP i.e. Nirbhay Management Services Pvt. Ltd. The Court is of the view that the entire issue of determining the TP adjustment if any in respect of the transactions in the staffing segment of the Assessee should be considered afresh by the TPO uninfluenced by his earlier order. Accordingly this Court remands the entire issue of determining the TP adjustment if any in respect of the transactions in the staffing segment of the Assessee to the TPO for a fresh determination. The TPO will examine afresh the question of inclusion and/or exclusion of comparables as proposed by the Assessee and the Revenue. 2019 (5) TMI 1068 Deduction under Section 54 /54F - investment was made in a residential house outside India - Assessee is a non-resident settled in the United States of America - HELD THAT:- The legislative intent has been made explicit by inserting the amendment to require to purchase/construction of the residential property in India only with effect from 1st April 2015. As rightly held in LEENA JUGALKISHOR SHAH VERSUS ASSTT. COMMISSIONER OF INCOME TAX. [ 2016 (12) TMI 351 - GUJARAT HIGH COURT] prior to amendment to Section 54F of the Act, the only condition stipulated was investment in a residential house. When the Section 54F of the Income-tax Act was clear and unambiguous, there is no scope for importing into the statue the words which are not there. Such important would be not to construe but to amend the statute. If there is any defect in the Act, it can be remedied only by the legislation and not by judicial interpretation . Assessee further points out that the above decision of the Gujarat High Court has been accepted by the Department, as is noted by the Authority for Advance Ruling in Dipankar Mohan Gupta, In re AAR [ 2018 (1) TMI 947 - AUTHORITY FOR ADVANCE RULINGS, NEW DELHI] Thus Court finds that the ITAT has committed no legal error in allowing the appeal of the Assessee. 2019 (5) TMI 1067 Discrepancy in the online filing of Form ITR- 6 - software of the Department did not permit the Petitioner s claim u/s 10AA without setting off the loss of the ineligible unit - seeking direction to the Respondents to accept the Petitioner s return of income for AY (AY) 2017-18 manually - HELD THAT:- The issues arising from transiting to an online system have been dealt with earlier by the Courts. In each such instance, when faced with the situation of a software glitch that prevents an Assessee from either filing a return or claiming a benefit, the Courts have repeatedly had to permit the manual filing of return/claims and have directed the Respondents to act on such manual filing of returns. Once such instance is in Tara Exports vs. Union of India [ 2018 (9) TMI 1474 - MADRAS HIGH COURT] In the present case, since it is not in dispute that prior to AY 2018-2019 the computation of the Profits and Gains of the eligible unit by giving the deduction under Section 10AA would have to be independent of the computation of Profit and Gains of the ineligible unit, it is obvious that in the present case which concerns AY (AY) 2017-2018, the Petitioner should be permitted to carry forward the losses of its ineligible unit. Accordingly, a direction is issued to the Respondent to either accept the manual return of the Petitioner or alter the software to permit it to again file online its returns claiming the carry forward of losses of its ineligible unit for the AYs in question. Either of these two options should be completed by 31st May, 2019. 2019 (5) TMI 1066 Allowable business expenditure u/s 37 - advertisements and business proportion as indirect revenue expenditure - project completion method for recognition of revenue - AO taking all the selling and market expenses to WIP as project had been completed to an extent of less than 30%, the revenue receipts were shown as advance from customers under the head current liability - CIT-A agreed with the Assessee by following the guidance note of ICAI as regards accounts of real estate transactions and held that the AO was in error in taking all the selling and market expenses to work in progress - HELD THAT:- Test adopted by the CIT (A) was the right one. Further, the guidance note of the ICAI which lays down the accounting standards to be followed in such circumstances has been correctly applied, both by the CIT (A) as well as the ITAT. These are purely indirect not related to the cost of the project and therefore, same could not have been taken the project as workin- progress. Such an advertisement expenditure on account of brand promotion advertisement, etc are indirect revenue expenditure which are otherwise allowable as business expense u/s 37 (1). As per the . guidance note of accounting for real estate issued by lCAI, selling cost is not included in the cost of construction and development and since it is an indirect cost, therefore, it has to be allowed irrespective of any link with the construction of work in-progress. - Decided against revenue 2019 (5) TMI 1065 TPA - determination of ALP of the international transactions - additional 5% mark-up on the free on board value of exports to third parties - assessee is in business of rendering support services in relation to facilitation and market support to its AEs in order to facilitate sourcing transactions of its AEs with prospective sellers - application of TNMM - HELD THAT:- As in Li Fung India Pvt. Ltd. [ 2014 (1) TMI 501 - DELHI HIGH COURT] this Court set aside the approach of the TPO for proposing an additional 5% mark-up on the free on board value of exports to third parties as the same would tantamount to application of TNMM in an erroneous manner. This Court has already held that including the FOB value of the AE s contract in the operating cost in order to determine its margin not to be sustainable in law. The ITAT has rightly held that the TPO has artificially enhanced the cost base of the taxpayer and proposed a mark up of the FOB value of goods sourced by AEs and as such this approach is not available in TNMM under Rule 10 B(1) (e). Further, the observation of the ITAT that the TPO has wrongly recharacterized the business function of the taxpayer from a business support service provider to a trader also suffers from no legal infirmity. - No substantial question of law arises 2019 (5) TMI 1064 Exemption u/s 11 - interest-free loan advanced to other charitable trusts RKSCT - violation of Section 13(3) - CIT (A) who held that RKSCT was itself registered u/s 12A and that the advancing of a loan by one charitable trust to another should be treated as application of income towards the objects of the trust - ITAT held that this advancing of loan to another trust did not violate either Section 13(1)(c) or 13(2)(g) - HELD THAT:- The issue appears to be no longer res integra. In CIT v. Shri Ram Memorial Foundation [ 2004 (5) TMI 44 - DELHI HIGH COURT] the donation of income to another charitable trust was held to be in consonance with the objects of the trust. Subsequently, in Director of Income-Tax v. ACME Educational Society [ 2010 (7) TMI 159 - DELHI HIGH COURT] this Court again upheld the advancing of a loan by one charitable trust to the other. The Court referred to an earlier decision of Director of Income-Tax v. Pariwar Sewa Sansthan [ 2001 (5) TMI 13 - DELHI HIGH COURT] in this regard. In view of the decision in Director of Income Tax (Exemption) v. Bagri Foundation [ 2010 (7) TMI 85 - DELHI HIGH COURT] which has considered the above explanation to Section 11(2) of the Act the Court, the Court finds that no substantial question of law arises in this appeal. 2019 (5) TMI 1063 TP Adjustment - ITAT deleting Genesys International Corporation Ltd. (GICL) from the final list of comparables for the transfer pricing exercise on the ground that it was not functionally similar to the Assessee - HELD THAT:- Although GICL had been included by the Assessee itself earlier in the list of comparables submitted by it, later it was noticed that GICL was engaged in diversified operations providing high-end and complex services such as GIS Consulting, 3D Mapping, Navigation Maps, Remote sensoring, etc. On the other hand the Assessee was engaged only in providing back office IT enabled services. GICL operated as a full-fledged risk taking entrepreneur whereas the Assessee was not. Therefore, apart from the functionality aspect, the comparison failed even on the basis of the scale of risk. From the Annual Report of GICL, it was noticed that it had significant intangibles in the form of computer software and GIS data base whereas the Assessee did not own any significant intangibles. It depended entirely on the intellectual property rights owned by the holding company. The reasons given by the DRP, concurred with ITAT, for excluding GICL as a comparable appears to be justified. No substantial question of law arises that calls for interference by this Court. No substantial question of law 2019 (5) TMI 1062 Search u/s 132 - Proceedings completed without affording opportunity for cross examination - prayer in the Writ Petition is for the issuance of a mandamus directing the respondent to produce the said Mr.K.Srinivasalu for cross examination in the proceedings for assessment failing which, there should be a direction to the respondent not to rely on the sworn statements. HELD THAT:- The prayer, couched as it is, is not acceptable. There can be no direction to the Income Tax Department to produce any person for cross examination. At best a request may be made by the petitioner for cross examination, which will be considered in the light of the principles of natural justice and fair play. In the present case, the petitioner has vide letter dated 01.04.2019 filed before the AO furnishing various details called for for completion of assessments, referred to the sworn statement recorded from Mr.K.Srinivasalu specifically seeking an opportunity for cross examination of the said individual, prior to completion of assessment. It is a settled position that where a request for cross examination is made prior to completion of assessment proceedings and in the event that the said statement is intended to be relied upon by the Assessing Officer, full opportunity be afforded in this regard prior to completion of assessment proceedings. Thus, seeing as a request has been made before the Assessing Authority, the same will be considered by the respondent in accordance with law. Nothing further need be said in this regard. This Writ Petition is disposed of in the above terms 2019 (5) TMI 1061 Reassessment notice u/s 148 - original assessment u/s 143(3) - period of limitation - assessee on receipt of the notices filed returns and requested for the reasons which was rejected by AO - reason to believe - quoting of reasons with notice - HELD THAT:-The Court cannot come to the conclusion that non quoting of the reasons by the Assessing Officer in the impugned notice will vitiate the entire proceedings. If such a proposition is adopted, then it would be certainly difficult for the executives to reopen the cases as per the provisions of the Act. The procedures are contemplated under the Act, enabling the assessee to avail the opportunity and defend their respective cases in accordance with the provisions contemplated. The exercise of judicial review in such matters regarding the initiation of the proceedings are to be exercised cautiously and in order to ensure that the taxations are done properly and the assessees are made to pay the income tax in accordance with the provisions of the Income Tax Act. The amended phraseology of reason to believe must be interpreted that the Assessing Officer on receipt of any such new material or materials in relation to the non furnishing of fact by the assessee has made out a prima facie opinion that it is the case for reopening of the assessment, then he can issue notice u/s 148 and thereafter, the procedure of furnishing the reasons, receiving objections and conducting scrutiny and all other procedures contemplated under the provisions of the Act will suit as follow. As the present case falls u/s 149(1)(b), the period of limitation prescribed is six years. In view of the fact that the notice has been issued within a period of six years, the ground of limitation raised on behalf of the writ petitioners, fails. As far as the ground in relation to the change of opinion, it is premature on the part of the writ petitioners to come to such a conclusion whether it is a change of opinion or the reopening is made based on the new or additional material available with the Income Tax Department, the same can be ascertained only after furnishing objections to the Income Tax Department by the assessee. In the absence of having knowledge about the reasons, the writ petitioners cannot come to the conclusion that there is no new material or reason to reopen the assessment already closed. Such a ground raised is not only presumptive but premature. The Income Tax Department has to furnish the reasons to the writ petitioners and on receipt of the reasons, if the writ petitioners are of the opinion and there are no additional material or new materials are available then they can submit their objections in respect of the change of opinion or reason to believe. The objections to be submitted in this regard may contain all such explanations or grounds raised in the present writ petitions before the Assessing Officers. This being the legal principles settled by the Hon'ble Supreme Court [ 2002 (11) TMI 7 - SUPREME COURT] as well as by this Court [ 2018 (11) TMI 1617 - MADRAS HIGH COURT] [ 2018 (10) TMI 811 - MADRAS HIGH COURT] , as per the judgment cited supra, this Court has no hesitation in holding that the writ petitioners are not substituted any acceptable legal ground for the purpose of interfering with the notices issued u/s 148. Thus, the writ petitioners are bound to face the reopening proceedings by availing the opportunities to be provided by the Income Tax Department. Income Tax Department is directed to furnish the reasons for reopening of the assessment for the years referred in the impugned notices to the writ petitioners, within a period of four weeks from the date of receipt of a copy of this order. On receipt of the reasons from the Income Tax Department, the writ petitioners are directed to submit their objections/explanations and the documents if any, within a period of four weeks from the date of receipt of the reasons from the Income Tax Department. The Assessing Officer shall adjudicate the matter by providing opportunity to all the parties concerned and take a decision and pass assessment orders on merits 2019 (5) TMI 1060 Addition of unexplained cash - assessee was searched u/s 132 being part of the Regal Group in which assessee s husband was one of the partner - HELD THAT:- Out of cash balance of ₹ 9,51,605/- as on 31.1.2014, a sum of ₹ 6,86,000/- is claimed to have been deposited which in our view was sufficient enough to cover up the alleged cash deposits. Revenue authorities has not doubted the genuineness of the cash in hand as on 1.4.2012 as well as 1.8.2012 as no addition have been made during the assessment year 2013-14. Cash has been withdrawn from the bank account. There is no finding of revenue authorities for any allegation for the genuineness of the amount credited in the bank accounts other than cash. Keeping the cash in hand idle for almost a year ranging from ₹ 4,91,005/- from February, 2013 to ₹ 9,51,605/- at the end of January, 2014 cannot be a basis to reject the claim of the assessee. There is no bar under the Income Tax Act which restricts a person from keeping cash in hand idle for a certain period. Cash flow statement clearly depicts that the assessee was having sufficient cash in hand from genuine sources which was used to make deposits totaling to ₹ 6,86,000/- during February, 2014 and March, 2014. As the assessee has been successful to explain the source of cash deposit in the bank account no addition was called for unexplained cash deposit. We accordingly delete the addition - Decided in favour of assessee. 2019 (5) TMI 1059 Penalty u/s 271FA r.w.s. 274 - non filing of AIR return without considering reasonable cause - HELD THAT:- Assessee has not given any reply to the numerous notices issued by the Income Tax Department deleting total penalty will not be a good message to the various government departments who are bound to supply the information to the ITD which per se helps in checking the tax evasion as well as assessing the correct income of various persons. Assessing authority has computed the penalty @₹ 500/- per day which was changed from ₹ 100/- to ₹ 500/- w.e.f. 1.4.2018, therefore the penalty if any has to be computed @₹ 100/- per day. When the assessee did not appear on 15.12.2015 why the action was not taken against the assessee, the reason is best known to the revenue authorities who waited for almost 2 years to compute the penalty. From 10.9.2015 to 15.12.2015 a total number of days for the failure on the part of the assessee is 97 days. In our considered view, totality of the facts and in the interest of justice and fair to both the parties we hold that sustaining the penalty of ₹ 9700/- (97 days x ₹ 100/- per day) on the assessee will be justified and it will be a message to the government authorities, so that in future such casual approach should not be taken and compliance to the statutory requirements including reply of notices by Income Tax Department should be adhered to. We accordingly sustain penalty of ₹ 9,700/- and delete the remaining amount of penalty of ₹ 3,41,800/- and partly allow the assessee s appeal. - Appeal of the assessee is partly allowed. 2019 (5) TMI 1058 Penalty levied u/s 271(1)(b) - non compliance of notice u/s 271(b) as the assessment were framed u/s 143(3) showing that necessary co-operation was given by the assessee for completing the assessment proceedings - HELD THAT:- Assessment orders have been framed u/s 143(3) of the Act, it proves that the assessee had cooperated in the assessment proceedings and therefore we delete the penalty of ₹ 10,000/- levied u/s 271(1)(b) of the Act. Penalty was not leviable for non compliance of notice u/s 271(b) as the assessment were framed u/s 143(3) of the Act showing that necessary co-operation was given by the assessee for completing the assessment proceedings. 2019 (5) TMI 1057 Exemption u/s 11 - normal donation OR corpus Donation - assessment of trust - Addition u/s 68 r.w.s 115BBC - HELD THAT:- If a normal donation is doubted by the AO about its genuineness, and identity of the donors, the addition cannot be made u/s 68 in the case of the trust as it has already been offered as an income. The identical issue arose before the Hon‟ble Delhi High Court in the director of income tax exemption vs Keshav social and charitable foundation [ 2005 (2) TMI 84 - DELHI HIGH COURT] wherein the Court held that when an income is credited to the income and expenditure account by the assessee trust then provisions of section 68 does not apply. Honourable High Court recognized that the situation may be different in case of corpus donation. As in the present case the amount of donation as held by the CIT A is normal income already offered by the trust, these fact has never been controverted by the DR, respectfully following the decision of the Hon‟ble Delhi High Court, we uphold the decision of the learned CIT A that the addition u/s 68 of the above donation cannot be made. Whether a normal donation or a corpus donation, cannot be termed as anonymous donation u/s 115BBC? - HELD THAT:- Sub-section (3) defines anonymous donation to mean any voluntary contribution referred to in section 2(24)(iia), where a person receiving such contribution does not maintain a record consisting of the identity of the person making such contribution indicating the name and address of the person and such other particulars as may be prescribed. We asked whether the central board of direct tax as prescribed any particulars which is required to be maintained by the assessee trust, the answer was no. We also did not find any such prescription about what kind of particulars the assessee trust is required to maintain. Therefore, it is apparent that at present the simple requirement is maintaining the name and address of the donors. In the present case, the assessee has already given much more detail then the name and address of the donors. Therefore with respect to the donation from 1038 persons the assessee has shown their name and address along with other particulars. It is not the case of the revenue that assessee has not maintained and provided these details to the assessing officer. We do not find that the donation received by the assessee falls into the definition of anonymous donation. Hence on the applicability of the provisions of section 115BBC we find that the learned CIT A has correctly reached the conclusion that the donation received by the assessee is not an anonymous donation as provided u/s 115BBC. - Decided in favour of assessee 2019 (5) TMI 1056 Penalty levied u/s 271(1)(c) - additions made while framing the assessment u/s 153A was deleted - HELD THAT:- The facts on record show that the assessment was completed on an income of ₹ 2,03,35,310/-. When the assessment was assailed before the CIT(A), the assessee could get only a relief of ₹ 31,320/- and the matter travelled upto the Tribunal. The Tribunal in D ART FURNITURE SYSTEMS P. LTD. VERSUS DCIT, CENTRAL CIRCLE 8, NEW DELHI [ 2019 (2) TMI 334 - ITAT DELHI] set aside the findings of the CIT(A) and deleted the addition by allowing the appeal of the assessee. None of the provisions confine the enquiry of the AO to evaluating incriminating materials. When the foundation [assessment] is removed, the super structure [penalty] must fall. - Decided in favour of assessee. 2019 (5) TMI 1055 Penalty u/s. 271(1)(c) - concealed income from cash deposits - CIT(A) felt that the estimation of income is unreasonable and, accordingly, reduced the same to 10% and confirmed the addition partly - HELD THAT:- The assessee has concealed the particulars of income because the assessee did not file return of income and also did not file the details as called for by the Assessing officer. Accordingly, concur with the findings of the lower authorities and confirm the levy of penalty and dismiss the ground of appeal of the assessee. Penalty u/s 271A - non-maintenance of books of account in violation of section 44AA - reasonable cause - HELD THAT:- Assessee has shown a reasonable cause that due to disturbance among the partners, the books of account were not maintained. Hence, in view of provisions of section 273B of the Act, no penalty shall be imposable and allow the ground of appeal of the assessee. Consequently, the appeal of the assessee is allowed. Penalty u/s. 271F - assessee has failed to furnish return of income on or before 31.3.2014 without a reasonable cause - HELD THAT:- The disturbance caused among the partners steps compelled to closure of the business could not constitute a valid ground for the delay in furnishing the return of income, as income from the said concern, a partnership firm, if any, is exempt under s. 10(2A) of the Act. In other words, the assessee could well have filed his return of income, clearly stating that the income from the partnership firm, if any, is tax exempt, is not being disclosed, being indeterminate, if indeed so at the relevant date - the assessee has not been able to show any reasonable cause(s) for not furnishing the return of income by 31st March, 2004 and, thus, the levy is not saved by s. 273B. As such, the impugned default can only be considered as a conscious disregard of one s statutory obligations, and therefore, the penalty levied by the Assessing Officer is confirmed. - Decided against assessee. 2019 (5) TMI 1054 Addition u/s 14A read with rule 8D - HELD THAT:- AO has failed to establish any expenses out of total expenses claimed by the assessee to be relating to the exempt income and in absence of any direct nexus between expenditure and exempt income, the AO can not invoke provisions of section 14A of the Act to disallow the said expenses as has been held in the case of Leena Kasbekar vs. ACIT [ 2017 (8) TMI 845 - ITAT MUMBAI] . It would be reasonable if a reasonable disallowance is worked out by applying the percentage on the total expenses of ₹ 67,35,894/- as has been calculated hereinabove. A.R. during the course of hearing prayed before the Bench to apply a percentage of 2% to 5% of the said expenses, however, we are not convinced with the arguments of A.R. on this issue. 10% of the said expenses would be reasonable disallowance u/s 14A r.w.r. 8D(2)(iii) in this case. Accordingly, a sum of ₹ 6,73,589/- is sustained by reversing the order of Ld. CIT(A) and AO is directed to delete the remaining disallowance. Appeal of the assessee is partly allowed. 2019 (5) TMI 1053 Penalty u/s 271(1)(c) - defective notice - non specification of charge - penalty was initiated for furnishing of inaccurate particulars of income but finally levied for concealment of income - notice u/s 274 read with section 271 issued in a mechanical manner without application of mind as the AO has not specified one the two limbs on which penalty was proposed to be levied - HELD THAT:- AO in not striking off the inappropriate limb in the notice and initiating the penalty on one limb and imposing penalty finally on the other limb is clear cut in violation of principle of natural justice as the assessee was deprived of reasonable opportunity to respond and deal with the particular charge on which the penalty was levied. In our view, the penalty order in such a scenario is clearly bad in law and can not be sustained. The case of the assessee is clearly supported by the decision relied upon by the assessee as stated hereinabove in the case of Shri Samson Perinchery vs. CIT [ 2017 (1) TMI 1292 - BOMBAY HIGH COURT] and CIT vs. Mrs. Piedade Perinchery [ 2017 (1) TMI 1458 - BOMBAY HIGH COURT] has held that where the AO has failed to state particularly the one of the two limbs on which the penalty was proposed to be levied then the penalty order would be bad in law as the assessee was not given proper opportunity to respond to the charge on which the penalty was levied. We hereby direct the AO to delete the penalty. - Decided in favour of assessee. 2019 (5) TMI 1052 Deduction u/s 80P(2)(a)(i) - interest income earned on deposits with banks - HELD THAT:- As decided in the assessee s own case for Assessment Years 2009-10 [ 2019 (1) TMI 1564 - ITAT BANGALORE ] the assessee s claim for deduction under section 80P(2)(a) in respect of interest income earned from out of bank deposits is restored to the file of the AO for denovo adjudication after examining the facts in the light of the judgments in the case of The Totagars Cooperative Sale Society Ltd., [2010 (2) TMI 3 - SUPREME COURT] and in the case of Tumkur Merchants Souharda Co-operative Ltd., [2015 (2) TMI 995 - KARNATAKA HIGH COURT ] - AO shall afford the assessee adequate opportunity of being heard and to file submissions / details required, which shall be duly considered before deciding the issue. - Decided in favour of assessee for statistical purposes. 2019 (5) TMI 1051 Disallowance of interest computed in terms of Rule 8D(2)(ii) u/s 14A - ex parte order passed by the CIT(A) - HELD THAT:- We find merit in the plea raised on behalf of the assessee that the disallowance under s.14A cannot surpass the quantum of exempt income in view of the long line of judicial precedents prevailing in this regard including the decision referred and relied upon by the assessee in State Bank of Patiala [ 2017 (5) TMI 843 - PUNJAB AND HARYANA HIGH COURT] against which the SLP of the Revenue stands dismissed by the Hon ble supreme Court of India [ 2018 (10) TMI 509 - SC ORDER]. Accordingly, we set aside the order of the CIT(A) in this regard and direct the AO to restrict the disallowance to the extent of the exempt income - we set aside the order of the CIT(A) in this regard and direct the AO to restrict the disallowance to the extent of the exempt income. Appeal of the Assessee is partly allowed. 2019 (5) TMI 1050 Disallowance u/s 14A r.w.r. 8D(2)(iii) - HELD THAT:- Disallowance u/s 14A read with rule 8D can not exceed the amount of exempt income as has been held in the case of Pr. CIT vs. Ballarpur Industries in [ 2016 (10) TMI 1039 - BOMBAY HIGH COURT] wherein it has been held that the disallowance can not exceed the amount of exempt income. Accordingly, we direct the AO to restrict the disallowance under section 14A read with rule 8D(iii) . MAT computation - Disallowance made u/s 14A read with rule 8D to the book profit the same has been decided by the Special Bench in the case of ACIT vs. Vireet Investments Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] wherein it has been held that while computing the book profit under clause (f) of Explanation 1 to section 115JB no addition can be made in respect of disallowance under section 14A read with rule 8D. Accordingly, we direct the AO to delete the disallowance while computing the book profit. The appeal of the assessee is allowed. Disallowance under rule 8D2(ii) - assessee s own interest free funds were more than the investment made - HELD THAT:- CIT(A) has deleted the disallowance by following the decision in the case of CIT vs. HDFC Bank Ltd. [ 2014 (8) TMI 119 - BOMBAY HIGH COURT] on the ground that assessee s surplus funds were more than the investments in the shares. Therefore, we do not find any infirmity in the order of Ld. CIT(A) and accordingly the same is upheld by dismissing the appeal of the Revenue. Customs 2019 (5) TMI 1049 Release of seized Foreign Currency - Commissioner of Customs (A) by permitted redemption of the foreign currency against payment of fine which was also reduced - conversion of Foreign Currency into Indian Currency - Notification dated 14th February 2006 issued by CBEC - requirement of notice - HELD THAT:- The fact of the matter is that the foreign currency seized from the Petitioner, no longer exists as such. Learned counsel appearing for the DRI states on instructions that the said foreign currency has been disposed of by conversion into Indian currency in terms of Section 150 of the Customs Act, 1962. He has produced a copy of the notification dated 14th February 2006 issued by the Central Board of Excise and Customs - the said notification requires notice to be issued to the owner of the goods prior to its disposal. In the present case, the case of the Petitioner is that no such notice was received by him before disposal of the foreign currency by conversion into Indian rupees. Requirement for fresh/second application for release of the Indian rupees equivalent of the foreign currency seized from him - HELD THAT:- The Court fails to understand why the Petitioner should be made to file repeated applications for this purpose. The orders already passed in the matter are abundantly clear. The Petitioner having complied with his obligations in depositing the redemption fine and penalty, there can be no excuse from the Respondents for not releasing the Indian rupee value of the foreign currency seized from the Petitioner, now that the foreign currency originally seized no longer exists in that form - The Court directs that the present petition itself will be treated by the Respondents as the application by the Petitioner for release of the Indian rupee equivalent of the foreign currency. Date of conversion of the foreign currency - Nothing has been shown to this Court to dispute the contention of the Petitioner that he did not receive any notice prior to the conversion of the foreign currency into Indian rupees - The Court finds the plea of the Petitioner that he should be paid the Indian rupees equivalent by applying the conversion rate as of today to be entirely justified in the facts and circumstances of the case. The Court accordingly directs that the Petitioner will appear before Dr. Amandeep Singh, the Additional Commissioner of Customs, IGI Airport, New Delhi on 28th May 2019 at 11:00 a.m. The amount payable will be worked out by applying the conversion rate as of today and paid to the Petitioner in the manner prescribed by law i.e. whether by Demand Draft or a Banker s Cheque. Petition allowed. 2019 (5) TMI 1036 Provisional release of imported goods - Circular bearing No.35/2017-Customs, dated 16.08.2017 - HELD THAT:- The revenue need not have any apprehension that as the respondent writ petitioner has a import and export code and even assuming that he does not co-operate with the adjudication by the appellant in Chennai, he can be traced anywhere in the Country and proper legal action can be initiated against him. It is needless to state that the respondent writ petitioner should co-operate in the adjudication process. Thus, considering the peculiar facts and circumstances of the case, we find that there is no error in the discretion exercised by the learned Writ Court and the direction issued therein. Considering the peculiar facts and circumstances of the case, we decline to interfere with the order and direction issued by the learned Writ Court. Accordingly, the writ appeal fails and is dismissed. No costs. Consequently, connected miscellaneous petition is closed. Appeal dismissed. 2019 (5) TMI 1035 Waiver of Penalty u/s 111(d) of Customs act, 1962 and redemption fine - Whether the CESTAT has been vested with the discretion to waive the imposition of fine and penalty under mandatory provisions of Section 112(a) and 125 of Customs Act in a case of misdeclaration and misclassification of goods especially when it has upheld that duty liability of the first respondent on such misdeclaration/misclassification? HELD THAT:- It is not in dispute that the order dated 17.04.2003 was passed by the Commissioner as a de nova proceedings pursuant to an order passed by the Tribunal remanding the matter for fresh consideration, vide order dated 14.12.2000. Therefore, it has to be seen as to whether there was any proposal at the first instance for levy of redemption fine. Admittedly, there was no such proposal for levy of redemption fine, as in the understanding of the original authority, the goods were not liable for confiscation, since the goods were not available and having been cleared and duty having been paid, no order of confiscation is possible - the Tribunal rightly deleted the redemption fine imposed on the respondent/importer. Imposition of penalty - HELD THAT:- Admittedly, maximum penalty equivalent to the amount of duty payable has been imposed - taking note of the peculiar facts and circumstances of the case and the dispute being one of a classification dispute, and it is the Department which took a U-turn in the matter after a very long period, when the Department was permitting the respondent/importer to clear the goods by classifying the same under chapter heading 8542, it is not a case where penalty could have been imposed - penalty rightly deleted. The appeal filed by the Revenue stands dismissed and the substantial questions of law are answered against the Revenue. 2019 (5) TMI 1034 Concessional rate of customs duty - Original Equipment (OE) parts - Notification No. 222/87-Cus dated 01.03.1987, 146/92-Cus dated 26.03.1992 and 72/93 dated 28.02.1993 - benefit of notification in respect of those parts which the appellant, after import, diverted to their spare parts division. HELD THAT:- Having imported the parts for the specified end-use, assessee has, thereafter, diverted them for some other use. Clearly, such diversions are not covered by the exemption notification. There is no scope for such diversion or even of loaning of the goods for some other purpose with the understanding that a corresponding quantity of the goods will be returned after some time. Therefore, as far as the exemption notification is concerned, they are NOT entitled to the benefit of exemption notification on such quantity of the goods as were diverted from OE to their spare parts division. The appellant s contention that they were not the manufacturers during the relevant period who had imported the goods but had taken over the firm subsequently also does not carry their case any further. Once they have taken over the unit from the previous owners, they necessarily take on all the assets and liabilities including contingent liabilities of the unit. Therefore, they are fully liable to pay differential duty. Demand u/s 28B - HELD THAT:- The demand is based on the presumption that the appellant has collected some amount as representing customs duty by incorporating such amount in their cost calculations. Clearly, there is no evidence that the customer was charged some amount as representing customs duty. Section 28B does not provide for recovery of any amount included in the cost calculation as element of Customs Duty. Therefore, the demand on this count is not sustainable. Confiscation - redemption fine - penalty - HELD THAT:- A small quantity of the goods valued at ₹ 2,10,000/- were confiscated by the impugned order under Sec.111(o) of the Customs Act for violation of the conditions of the customs notification. An option to redeem the same has been given under Sec.125 by paying redemption fine of ₹ 25,000/- only. There is no reason to interfere with either confiscation or the reasonable amount of fine imposed for redemption of the goods on this count. In the impugned order a penalty of ₹ 40 lakhs has been imposed under Sec.112 (a) (b) of the Customs Act upon the appellant for noncompliance of the conditions of the customs notification and clandestine clearance of OE parts to their spare parts division - penalty imposed on the appellant under Sec.112 (a) (b) for non-compliance of the customs notification and clandestine removal of parts reduced. Appeal allowed in part. 2019 (5) TMI 1033 Revocation of customs broker License - non-compliance with the time-frame - regulation 20 of Customs Broker Licensing Regulations, 2013 - principles of natural justice - HELD THAT:- There is no evidence of any delay on the part of the appellant in the enquiry proceedings. There is a record of inability of the presenting officer to proceed with the enquiry. The further delay in submission of the enquiry report is not justifiable - the very statements that were relied upon by the enquiry authority, and the licensing authority as well as the adjudicating authority, who imposed penalties under Customs Act, 1962, were found to be exculpatory in proceedings against the appellant for penalty under Customs Act, 1962 before the Tribunal. There is no hesitation in setting aside the impugned order - appeal allowed. 2019 (5) TMI 1032 Denial of benefit of exemption based on test reports for the present consignment and consignments cleared in the past - import of Fruit Grape Guard Packaging Paper in sheet form coated with Sodium Meta Bi Sulphite - Benefit of N/N. 21/2002 Cus. Dt. 01.3.2002 - benefit of notification denied on the basis of test report of samples relating to few consignments could be applied to the consignments imported and cleared in the past be denied. HELD THAT:- Not only on the basis of chemical test report but also relying upon the statement of Shri Dilip Patel, authorised signatory of the Appellant, the Adjudicating authority had concluded that the sample of imported papers when subjected to chemical test, found to be free from Sodium Meta Bi Sulphite. Consequently, he has held that the Appellants are not eligible for benefit of exemption Notification No.21/2002- Cus, dt.1.3.2002. Also, reading the opinion of UDCT, Mumbai, there is no contra report to the test results of CRCL, New Delhi. In the said report, the method of testing of samples has been narrated. There is no opinion about the contents of the samples. Therefore, the said reports also would not be of any help to the Appellant. The learned Commissioner extrapolated the test results of the samples to the consignments which were imported and cleared in the past. In absence of any adverse test report of the samples relating to past consignment, there is no merit in the order of the Adjudicating authority, to apply the test results of the samples drawn to the past consignments in directing confiscation and denying the benefit of exemption N/N. 21/2002-Cus, dt.1.3.2002. Consequently, the test report, be restricted to the consignment of packing papers whose samples were drawn and tested and found to be free from Sodium Meta Bi Sulphite. However, since there is mis-declaration of the description of the imported goods, in order to avail the benefit of exemption Notification No.21/2002-Cus, dt.1.3.2002, the goods which were seized and released provisionally are liable to confiscation and the importer and the persons associated are liable for penalty. The Appellants are not eligible to the benefit of N/N. 21/2002-Cus, dt.1.3.2002 relating to the imported consignments whose samples were drawn and test results found to be free from Sodium Meta Bi Sulphite. The test results of the samples cannot be extrapolated to the consignment cleared in the past - The Appellants are liable for discharging differential duty relating to the consignment whose test results were found to be free from Sodium Meta Bi Sulphite and also seized goods are liable for confiscation, and penalty attracted against the importer-Appellant and other Appellants. Since the quantum of demand to be recalculated as above, therefore, to compute the duty, fine and penalty relating to the consignment whose samples were tested, and found to be free from Sodium Meta Bi Sulphite, the matter is remanded to the Adjudicating authority. Appeal allowed by way of remand. 2019 (5) TMI 1031 Classification of goods - household type refrigerator - appellant claimed under CTSH 841821 and Revenue propose to re-classify under 84181090 - exemption under N/N. 85/04-Cus dated 31.08.2004 - HELD THAT:- The identical issue of classification as well as consequential exemption notification in the appellant s own case has been decided against them in the judgment of HITACHI HOME AND LIFE SOLUTION LTD VERSUS COMMISSIONER OF CUSTOMS (IMPORT), NHAVA SHEVA [ 2012 (12) TMI 554 - CESTAT, MUMBAI] according to which the classification was held under CTH 84181090. Appeal dismissed - decided against appellant. 2019 (5) TMI 1030 Violation of import conditions - actual user condition - Benefit of N/N. 21 of 2002-Cus dated 01.03.2002, Serial No.83 of the said Notification - Government of India entity engaged in the manufacture of Polio Drops - import of bulk polio vaccine as prepared by World Health Organization - denial of benefit on the ground that appellant did not use the imported bulk drugs for the intended purpose of manufacture of Polio Drops in their factory - time limitation. HELD THAT:- The Notification grants exemption to the Bulk Drugs subject to the conditions that the procedure as laid down in 1996 Rules is followed by the appellant. The said Rules are detailed Rules requiring importer to follow a detailed elaborate prescribed procedure. As already noticed, the said Rules provided concessional rate of duty subject to the conditions that the importer would use the goods in his own factory for further manufacture of the final product - Admittedly in the present case the imported Bulk Drugs has not been utilized by the appellant in his own factory for further manufacture of Polio Drop. Instead the Bulk Drugs stands sold by them to another private party who have though used the same for intended purposes for manufacture of Polio Drops only and further supplied them to the Ministry of Health. Time Limitation - HELD THAT:- The imports took place during the period April to October, 2007 and the sale of the imported goods was during the financial year 2007-08. In terms of the Rules in question the importer is required to maintain the detailed records of the use of the imported goods, which appellant had been undisputedly maintaining By considering the date of sale of bulk drugs as the relevant date, the proceedings initiated by show cause notice dated 27 March, 2015 are even beyond the period of 5 years, as provided in Section 28 of the Customs Act, 1962 - also the appellant is a Government enterprise and according to the well settled law, there cannot be any mala fide intention on the part of the Government to evade any duty - the demand is hopelessly barred by the limitation and is in fact even beyond maximum period prescribed under the law. Demand is set aside on the point of time bar - appeal allowed - decided in favor of appellant. Corporate Laws 2019 (5) TMI 1048 Oppression and mismanagement - whether the actions of the contesting Respondents are oppressive in nature? - allotment of shares - rectification of Register of Members - validity of Board Meetings and General Meeting that are held without issuing notices to the Petitioner Directors - HELD THAT:- The affairs of the Company are not being conducted in accordance with law as the Petitioners are out of the Country and they are not permitted/given sufficient opportunity to be involved in the affairs of the Company. The contention of the Respondent that they were given due notices and they have participated in all the meetings is not born out of the record. It is true that the Petitioners were given notice for some of the meetings. However, the Respondent failed to substantiate their averments by producing substantial evidence except some emails, which has little evidentiary value. The 2nd Respondent has not given any suitable explanation as to why the Respondent No.2 was allotted shares at par without premium and allot shares to the Petitioners at premium except simply stating that it is a mistake and unintentional but no action was taken to rectify it so far. The Respondents are resorting to acts of oppression and mismanagement which are further to be investigated by the Registrar of Companies and Principal Director of Income Tax (Investigation) with whom the complaints are already pending submitted by the Petitioner. It would be just and proper to prevent the present management to perpetuate further acts of oppression and mismanagement and to prevent misuse of funds, by making an interim arrangement by appointing independent Chairman as to see the affairs of the Company should be conducted in accordance with law. Prof. (Dr.) O.V. Nandimath, Professor of Law Registrar, National Law School of India University, Nagarbhavi, Bangalore-560242, are appointed as independent Chairman for M/s. World Schools Private Limited to look after the affairs of the Company, till the investigations are completed by the Statutory Authorities - Petitioners are hereby granted liberty to file a fresh Company Petition, if they are ultimately aggrieved by action taken by the Statutory Authorities viz. Registrar of Company (ROC), Principal Director of Income Tax (Inv.). Registrar of Companies (ROC), Principal Director of Income Tax (Inv.) are directed to expedite the investigations and take appropriate action in accordance with law. 2019 (5) TMI 1029 Maintainability of present application - HELD THAT:- This disposed of company application has been listed under heading To Be Mentioned at instance of valuer. 2019 (5) TMI 1028 Oppression and mismanagement - person who has failed to subscribe capital and failed to extend personal guarantee in accordance with an agreement entered into between the promoters, finally captured the Company with the help of banks and FIs - HELD THAT:- While the petitioners would now argue that the acts are oppressive in nature and what was before the civil courts was not the oppressive nature of the acts but only the legality thereof, I am not inclined to accept this fine distinction that is now sought to be created. The erstwhile Company Law Board did enjoy the same powers in substance as the National Company Law Tribunal constituted in its place now does. However, not once did the petitioners approached the Company Law Board complaining of oppression and mismanagement in the said affairs. They have raised this issue for the first time in this petition in 2017 only. The R1 in its note on submissions with reference to Guarantee Commission has stated that after completion of trial in the suit, when the suit was coming up for final hearing, the petitioners have sought liberty to withdraw the suit pending in the civil court. The petition to withdraw the civil suit was filed before this Tribunal, when it ought to have been filed before the civil court. The R1 has stated that this is contrary to the procedure prescribed in Order 23 Rule 1 CPC. Further, no liberty was granted to the petitioners. As per section 424(1) of the 2013 Act, the Tribunal shall not, while disposing of any proceeding before it, be bound by the procedure laid down in the Code of Civil Procedure but shall be guided by the principles of natural justice and, subject to the other provisions of this Act, shall have power to regulate their own procedure. Experience of other Tribunals and quasi-judicial bodies whose parent Acts carry similar provisions as section 424(1) of the 2013 Act, shows that while the provisions of CPC may not fully apply but parts of it apply in substance so long as it satisfies the contours of natural justice. Whether the P1 to P3 are entitled for guarantee commission as per the resolution passed by the Company? - Whether the act of the Company reversing the payment of guarantee commission and not making provisions for making payment of guarantee commission is in order or not? - HELD THAT:- The resolution passed by the R1 Company for not making payment of guarantee commission and reversing the entries which stood in the financials of the company from 1994 to 2002, are made only to deprive the petitioners of their legitimate entitlement. The said act is nothing but act of oppression on minority by the majority - the issues are answered in favour of the petitioners and the R1 is directed to calculate the payment of guarantee commission from the date of extending the personal guarantee till the date of release of personal guarantee and make payment to the Petitioners within one month from the date of communication of copy of this order. Whether withholding the unsecured loan provided by the petitioners to the Company is in order and whether the reversal of making interest on the unsecured loan is in order or not? - HELD THAT:- In the absence of any order from any court which may still be in force, withholding and reversing the entries with regard to making payment of unsecured loan is also an act of oppression against the minority shareholders by the majority shareholder - the R1 Company is directed to calculate and make payment of the outstanding unsecured loan with agreed percentage of interest within one month from the date of communication of copy of this order. Whether there is any ground for declaring the voting rights exercised by IDBI at the AGM and EOGM of 14.02.2005 based on pledged shares of the petitioners without invoking the pledge as contended by the petitioners? - HELD THAT:- The petitioners are blowing hot and cold at the same time. While on page 19 of the written synopsis, the P1 to P3 have stated that the Petitioners are not seeking any relief in relation to the bidding but are brining on record to demonstrate how the petitioners have been oppressed, on page 21 of the written synopsis, the Petitioners have stated that dismissal of writ petition challenging bid of POAL and its approval by ARCIL or challenge to scheme of rearrangement under section 391 of 1956 Act cannot be construed that the issue of oppression and mismanagement was decided. Therefore, this argument cannot be accepted. Whether the petitioners have made out any cases for ordering investigation of the affairs of the Company under section 213 of the 2013 Act? - HELD THAT:- I am not satisfied that there exist any circumstances that would justify making an order for investigation of the affairs of the R1 Company. Hence, there is no order for the investigation of the affairs of the R1 company. Petition disposed off. Insolvency & Bankruptcy 2019 (5) TMI 1047 Initiation of Corporate Insolvency Resolution Process (CIRP) - Corporate Debtor - Default in repayment of amount - proposal for restructuring of financial assistance availed by the Corporate Debtor on 30.12.2014 - HELD THAT:- On 13.04.2017, the Financial Creditor cancelled the restructuring arrangement since the Corporate Debtor has continuously defaulted in repayment obligations beyond the allowed cure period. On this ground, the Corporate Debtor cannot claim that restructuring period is still persistent. However, for the purpose of IBC 2016, in the case of Financial Creditor, it has to be proved by them that there is an outstanding debt and default has occurred in payment towards the loan. This has been clearly established by the various agreements among the Financial Creditor, Corporate Debtor and the Guarantors to the Corporate Debtor. The documents enclosed with the petition clearly proved that the outstanding loan is due to the Financial Creditor and there has been a default in servicing of the debt by the Corporate Debtor. This Tribunal hereby admit application and order initiation of Corporate Insolvency Resolution Process against the Corporate Debtor - moratorium declared. 2019 (5) TMI 1046 Liquidation of Corporate Debtor - rejection of resolution plans - mandatory period of CIRP - HELD THAT:- Since the resolution plan as submitted by the resolution applicants stand rejected by the CoC and we do not find any legal infirmity in rejecting the resolution plan by the CoC as it is seen that the CoC has repeatedly considered the case of the promoters of the CD, this Tribunal is of the view that liquidation process in relation to the CD is required to be initiated as contemplated under Section 33 of IBC, 2016 with all the attendant consequences. In view of no Resolution Plan having been approved by the CoC within the period of CIRP of 180 days as well as the extended period of 90 days, recourse is to only press the liquidation mode as provided under the provisions of Section 33 of IBC, 2016 of which the relevant is sub-section 1 of Section 33 In view of lack of any Resolution Plan meeting the criteria fixed being received, the scope of resolving the insolvency is not in existence and in the circumstances taking into consideration the provisions under Section 33(1) of IBC, 2016, as extracted above, the only recourse available is liquidating the CD in view of the CoC in their meeting having unanimously rejected the only Resolution Plan available before it thereby effectively approved for the liquidation of the Corporate Debtor and there being no Resolution Plan being placed before it, this Tribunal orders for liquidation of the Corporate Debtor and in the circumstances the CD stands liquidated and the incidence of liquidation to follow, on and from the date of this order in terms of provisions of IBC, 2016 and more particularly as given in Chapter-III of IBC, 2016 and also in terms of Insolvency and Bankruptcy (Liquidation Process) Regulations, 2017 - Further in terms of the said Regulations, the Liquidator shall file his report to this Tribunal as mandated therein. The present RP, namely Mr. Vijender Sharma shall act as the liquidator based upon his consent expressed, as the liquidator of the CD. He shall issue the public announcement that the CD is in liquidation. In relation to officers/employees and workmen of the CD, taking into consideration Section 33(7) of IBC, 2016, this order shall be deemed to be a notice of discharge - The Liquidator appointed being the Resolution Professional during the CIRP period shall follow up and continue to investigate the financial affairs of the CD particularly, in relation to preferential transactions/under valued transactions and such other like transactions including fraudulent preferences. The Corporate Resolution Process of the Corporate Debtor comes to a close and moratorium granted under Section 14 of IBC, 2016 at the time of admission is also lifted but the provisions of Sections 33(5) 33(6) shall apply. Service Tax 2019 (5) TMI 1045 CENVAT Credit - common input services used for providing both taxable and non taxable/ exempted services - non-maintenance of separate records - rule 6(3) of CCR - benefit of Rule 6(3) Option II - period October 09 to March 10, April 10 to September 10 October 10 to March 11 - penalty u/r 76 and 77 of FA. HELD THAT:- CENVAT Credit Rules, 2004 are rules prescribing the procedure for payment to Central Excise duty/ Service Tax on the finished products/ output taxable services. These rules are self contained and provide for the mechanism to avoid tax pyramiding/ cascading effect of the tax paid on input/ input services. We do not agree with the approach of the commissioner that just because appellants had failed to comply with certain procedural requirements, the entire credit should be denied to them. The purpose of adjudication in such cases is to find out the truth and determine the actual credit that is admissible. In our view there is no doubt in respect of eligibility to taxable services received by the appellant getting qualified as input services under Rule 2(l) ibid. Applicability of Rule 6 of CENVAT Credit Rules, 2004 - major service provided by the appellant i.e. providing/ imparting education is exempted service - HELD THAT:- Undisputedly appellants have not followed the procedure prescribed for availing the options provided under Rule 6(3A) of the CENVAT Credit Rules, 2004, to the extent that they have not filed any intimation to the Range Superintendent, with the prescribed particulars for availing the second option of reversal of the credit determined on proportionate basis. However appellants have claimed that during the relevant period they had reversed the CENVAT Credit attributable to exempted services. From the perusal of the various charts available the errors/ mistakes in depicting the amounts reversed while filing the ST-3 returns appear to b quite obvious. However we are not in position to verify the correction of the same. If it is factually the case of appellant that they had been reversing the credit under Rule 6(3)(ii) but had erroneously not shown the said bifurcation in the ST-3 returns, the failure of the appellants just not to claim the said option at the start of Financial Year by filing the intimation about availing the said option with the range superintendent is nothing but a procedural violation and needs to be condoned. However in case it is not so, and the appellants have not been reversing the credit in their book of account as required under Rule 6(3)(ii) then the appellants have failed to comply with the substantial requirements of the said rules. Commissioner has not recorded any findings in this regards in her order. Penalty u/r 76 and 77 of FA - HELD THAT:- Since the issue is being remanded back in respect of verification of the claim that they had reversed the CENVAT Credit as required under Rule 6(3)(ii) of CENVAT Credit Rules, 2004 we are not recording any findings on the issues of imposition of penalty and interest. These issues too should be decided by the Commissioner after recording his findings after verification of ST-3. Appeal allowed by way of remand. 2019 (5) TMI 1044 CENVAT Credit - input service - Cargo Handling Services - Storage and Warehouse Service - Airport Services under the Head Airport Services by Airport Authority on Civil Work, Cement Laying Work, Floor Tilling Work, etc. - scope of exclusion clause - HELD THAT:- The impugned order denying the CENVAT credit mainly relying upon the exclusion clause as provided in Rule 2(l) is not sustainable in law because the input service involved in the present case relates to repair and renovation of the premises of the appellant who is the service provider. Further, the CENVAT credit on repair or renovation is included in the definition of input service as provided in Rule 2(l) - Further, the Board vide its circular dated 29.4.2011 has also clarified the issue that credit on input services used for repair or renovation of a factory or office is allowed. The modernization, renovation or repair of the premises of the service provider has been held to be input service by various decisions of the Tribunal. Further, these input services are essential for maintenance and upkeep of the premises which is used for storing imported goods and to render the service of cargo handling at the customs station. CENVAT Credit - input services - renting of motor vehicles is concerned - HELD THAT:- The CENVAT credit on input service relating to servicing of motor vehicle is also not excluded under Rule 2(l)(B) of CCR and therefore, denial of the CENVAT credit is not tenable under law. Credit allowed - appeal allowed - decided in favor of appellant. 2019 (5) TMI 1027 Classification of services - advertising agency services or not - printing of flags with the advertising material - time limitation - HELD THAT:- Mere payment of Service Tax in respect of such supply to M/s.Vodafone, who were not disputing the same, would not make the appellant s activity as taxable. The issue is required to be decided independently - Tribunal in the case of M/S AVON AWNING (PROPRIETOR LATE NAND KISHORE CHADDHA, THROUGH LEGAL HEIR SMT. KRISHNA CHADDHA) VERSUS COMMISSIONER OF CENTRAL EXCISE S. TAX, GHAZIABAD [ 2016 (10) TMI 683 - CESTAT ALLAHABAD] has held that production of design given by the client on chosen material such as cloth, PVC sheet etc. would not amount to providing any service taxable under the category of advertising agency. The issue stands fully covered by the said decision of the Tribunal. Time Limitation - HELD THAT:- The balance sheet and profit and loss account has been held to be public documents by various decisions and it stands concluded that when the income arising from various activities stand reflected in the said public documents, it cannot be said that there was any suppression or misstatement on the part of the assessee so as to invoke the longer period of limitation. Appeal allowed - decided in favor of appellant. 2019 (5) TMI 1026 Recovery of refund already granted - Commissioner (appeals) had set aside the refund order - Principles of unjust enrichment - Refund of service tax paid - passing of refunds to the service recipient - incidence of tax borne by whom - unjust enrichment - Section 11B of the Central Excise Act, 1944 made applicable to Service Tax under Section 83 of the Finance Act, 1994 - HELD THAT:- Parliament has made a specific provision under Section 11B to ensure that the unjust enrichment does not take place by making a rebuttable presumption that the burden of tax has been passed on to the customer and hence the same needs to be credited to the consumer welfare fund. In this case, it is not in dispute that the burden has been passed on to the customer. The Assistant Commissioner, in his order-in-original, replaced this scheme provided for by the Parliament in Section 11B with his own scheme, viz., despite passing on the burden to the customers, refund will be granted and after taking the refund, you may return it to the customers within 30 days. There is clearly no provision for such a scheme and the Assistant Commissioner cannot arrogate to himself the powers of the Parliament and modify such a scheme. Correctly, the First Appellate Authority set aside such an order. However, he has not ordered recovery of the amount so refunded. Undisputedly, the appellant not only received the refund but also gave it back to the customers. Both sides agree that in this particular case, there is no net loss to the exchequer or gain to the appellant - appeal allowed. 2019 (5) TMI 1025 Renting of Immovable Property Service - liability of service tax - demand of service tax alongwith Interest and penalty - whether the service tax is payable on the amount of ₹ 3,27,478/- which the appellant has claimed as abatement on account of payment of service tax but it has not been paid in cash but has been adjusted by the municipal authorities? - HELD THAT:- It is evident that the amount paid as property tax was ₹ 7,79,734/-and not merely ₹ 4,52,256/-. Accordingly, the demand on this account needs to be set. Consequently, the amount of demand confirmed in the order of the lower authority and upheld by the first appellate authority stands reduced from ₹ 3,22,191/- to ₹ 2,25,815/-. Interest is payable on this account and the amount of ₹ 60,251/- paid as interest by the appellant vide challan dated 23.04.2015 gets appropriated towards interest amount. As the appellant has already paid the amount of demand within 30 days from the issue of show cause notice, the penalty under section 76 needs to be set aside as per clause (i) of the first proviso to Section 76(1). Penalty u/s 77(2) of Finance Act, 1994 - failure to file service tax returns - HELD THAT:- There are no sufficient reason to invoke Section 80 to set aside the penalty imposed upon the assessee under section 77(2) of Finance Act, 1994 for their failure to file service tax returns. Accordingly, the penalty under section 77(2) is upheld. Appeal allowed in part. 2019 (5) TMI 1024 Condonation of delay of 1274 days of filing appeal - applicant claims that the order appealed against was not received by them earlier and the present appeal has been filed within three months from the date of receipt of the order - HELD THAT:- In absence of any date delivery of order dispatched by speed post earlier, we hold that the order was for the first time received by the applicant on the date as indicated by them. The order was for the first time received on 16th August 2018 and the applicant has filed the appeal on 16th November 2018 which is within the period prescribed for filing the appeal. The date of order is not relevant for computing the period of limitation for filing appeal - As per Section 86(3) of Finance Act, 1994 appeal has to be filed within three months from the date of receipt of order. The application of condonation of delay itself is not required in this matter as appeal has been filed within three months from the date of receipt of the order and is well within the time - application for COD dismissed. 2019 (5) TMI 1023 Imposition of penalty u/s 77 and 78 of FA - Receipt of man power supply service - reverse charge mechanism - HELD THAT:- In the present case, admittedly, the provider of service is a limited company and hence, the appellant is not liable to pay service tax on the Manpower Service received under Revere Charge Mechanism. The penalty is not imposable under Section 77 and 78 of the Finance Act only for the reason that the appellant has deposited the tax on being so pointed out by the Revenue in good faith - appeal allowed - decided in favor of appellant. 2019 (5) TMI 1022 Service of notice - medium of service - section 37C(1)(a) of Central Excise Act, 1944 - HELD THAT:- Revenue could not produce any acknowledgement obtained by Revenue from the appellant of having served on appellant impugned order any time before 19-8-2018. Registry is directed to process the appeal for assigning appeal number and take further action for further processing. After completing the processing, registry may list the matter at the earliest before the Division Bench. 2019 (5) TMI 1021 Non-payment of service tax - amount paid to foreign commission agents - reverse charge mechanism - HELD THAT:- Appellants has not been able to bring any documentary evidence on record to show that such outward remittances were on account of the claim made by the foreign buyers on account of substandard quality - On being questioned as to whether there is any correspondence between the buyer and the seller and any claim made by the foreign customers, learned Chartered Accountant fairly agrees that there is no such documentary evidence either in the shape of papers or in the shape of electronic evidence. Appeal dismissed - decided against appellant. 2019 (5) TMI 1020 Refund claim - Period of limitation - Service Tax paid erroneously on Foreign Commission Agent Service - rejection of refund on the ground that it was filed beyond the time limit prescribed under the provisions of Section 11 B of Central Excise Act, 1944 made applicable to service tax law - HELD THAT:- It is admitted by the appellant that important documents could not be located by them and therefore, they took time from 2010 to 2013 to resubmit application for refund along with required documents. Therefore, the date of filing of refund claim has to be treated as 25.11.2013 and since the date of payment of service tax is 10.09.2009, the refund is hit by limitation. Appeal dismissed - decided against Appellant. Central Excise 2019 (5) TMI 1019 Clandestine removal - iron and steel goods - goods dispatched on the basis of Kacha Parchi - shortage of raw material and finished goods - HELD THAT:- Identical issue decided in the case of M/S SADA SHIV STEEL MILLS, M/S SADA SHIV CASTINGS LTD., M/S SADA SHIV ISPAT LTD, SHRI SUNNY GARG, SHRI KEWAL GARG, M/S RAGHAV ENTERPRISES (PROP. SURESH AGARWAL) VERSUS CCE, CHANDIGARH-I [ 2016 (10) TMI 951 - CESTAT CHANDIGARH] where it was held that nothing has been brought on record with corroborative evidence to allege clandestine removal against the appellant and was decided in favor of assessee. Following the same, appeal s dismissed in present case also - appeal dismissed. 2019 (5) TMI 1018 Valuation - inclusion of transportation cost in assessable value - place of removal/ delivery of the finished goods was the premises of their customers - recovery of cost of transportation from the buyers and had taken insurance under open marine policy to cover the loss in transit and safe delivery of goods up to the customer s place - HELD THAT:- There is no dispute as regards the facts of the present case according to which the appellant have charged transportation charges in the invoices showing separately from their customers. The goods were cleared for sale from the factory premises of the appellant. The insurance of the goods was covered by the appellant up to the place of delivery of the goods. As per the impugned order, the entire emphasis was given that the place of removal is the place of delivery, which is the premises of the buyer of the goods therefore, all the expenses including the insurance, freight etc are includable in the transaction value. When the facts were clear that goods cleared from the factory for sale, even though on FOR basis, the place of buyer cannot be the place of removal in such case the factory from where the goods were cleared for sale is the place of removal. Accordingly, the freight charges is not includable in the assessable value in terms of Rule 5 of Central Excise Valuation (Determination of Price of Excisable goods) Rules, 2000. The transportation charges is not includable in the assessable value - appeal allowed - decided in favor of appellant. 2019 (5) TMI 1017 100% EOU - Refund claim - supplies made by them from their 100% EOU to a unit in the SEZ - export of goods/deemed exports - case of the revenue is that Rule 5 of CCR, 2004 provides for refund of Cenvat Credit when the goods are exported - HELD THAT:- Rule 5 of CCR, 2004 specifically indicates what export goods would mean and it requires such goods to be exported out of India . However, the question is what is exported out of India would mean. In the normal cases, India includes the territorial waters of India and the export requires goods to be moved to a place outside territorial waters of India. As far as SEZs are concerned, the definition of DTA under SEZ Act includes everything located outside SEZs. Therefore, 100% EOU located outside SEZ, constitutes DTA as far as SEZ Act is concerned. Sec.51 of SEZ Act also makes it clear that this Act prevails over any other law. It has also been clarified by the CBEC in their Circular dated 20.04.2015 (supra) that refund of accumulated Cenvat Credit is available when goods are cleared from DTA to SEZ. The appellant was eligible for refund of accumulated Cenvat Credit under Rule 5 of CCR, 2004 - Appeal allowed - decided in favor of appellant. 2019 (5) TMI 1016 Payment of 10% of the value of exempted goods - amount reversed under Rule 6(3)(b) of CENVAT Credit Rules, 2004 - Whether the amount reversed under Rule 6(3)(b) of CENVAT Credit Rules, 2004 and subsequently, recovered from their customers would form part of the total price of the exempted goods? - Time Limitation - HELD THAT:- What can only be inferred from the show-cause notice is that the appellants have recovered 10%, of the amount representing value of exempted goods, from their customers. The appellants are showing value of the exempted goods and 10% of the value separately - We do not find that in the instance case it is established that the appellants are treating this 10% as duty and are arriving that cum-duty price of the exempted goods. Applicability of decision of Larger Bench in the case of M/S KRITI INDUSTRIES (I) LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE INDORE [ 2017 (5) TMI 603 - CESTAT NEW DELHI (LB)] - HELD THAT:- Larger Bench has concluded that payment of an amount at the rate of 8% or 10% under Rule 6(3)(b) of CENVAT Credit Rules, 2004 is not a duty, not a tax and hence, cannot be deducted from the price of the exempted goods cleared by consuming cenvated inputs. It follows from this decision that the said 8% or 10%, as the case may be, cannot be deducted from the price of exempted goods - As long as it is not proved that the amount recovered from the customers is not a cum-duty value that is arrived after deducting the said 10% from the total value, facts of the instance case are different from the one dealt by the Larger Bench - We do not find anything in the show-cause notice or the orders of the lower authorities that the issue being discussed in the instance case is about the arriving of cum-duty value or the applicability of provisions of Section 11D. Time Limitation - HELD THAT:- There are no reason that an intention on the part of the appellant can be adduced in view of the facts of the facts and also in view of the fact that the demanded amount is only ₹ 13,686/-. Therefore, without going into the merits of the case, the show-cause notice is held to be barred by limitation and thus, needs to be set aside. Appeal allowed - decided in favor of appellant. 2019 (5) TMI 1015 Clandestine manufacture and Removal - shortage of stock of 18480 poly packs of Gutkha - no corroborative evidences - sole basis to allege clandestine manufacture and clearance of the goods is the document resumed from Shri Manoj Rajouria and statement of Shri Manoj Rajouria which has already been discarded by this Tribunal while remanding the matter to the Adjudicating Authority on 08/11/2016 - HELD THAT:- It is settled principal that no demand can be confirmed on the basis of third party evidences as has been the case in the impugned order -This Tribunal in various decision has categorically held that the third party record can be the sole evidence to confirm the evasion of central excise duty - reliance placed in the case of M/S. JAI MATA INDUSTRIES LTD. VERSUS CCE, ROHTAK [ 2013 (11) TMI 1121 - CESTAT NEW DELHI]. There is no material on record or any documentary admissible evidence to prove that the appellants are engaged in clandestine manufacture and clearance of the goods, therefore, the impugned demand is not sustainable in the absence of any evidence. Demand set aside - penalty also set aside - appeal allowed - decided in favor of appellant. 2019 (5) TMI 1014 CENVAT Credit - trading (high sea sales) as well as manufacturing of goods - trading as an exempt services - Rule 6(3) of CENVAT Credit Rules 2004 - Invocation of extended period and penalty - suppression of facts or not - HELD THAT:- A pure sale, unassociated with delivery of goods and services together, is not to be considered as service - sale of goods-be it made in the high sea or within the territorial boundary of India in which Finance Act, 1994 has its force, cannot be called a service to impose tax liability or deny the credit under Rule 6 of Cenvat Credit Rules. Trading is not at all a service, as it is a sale of goods for which vat is applicable and as because it is not a service, it is put in the exempted category as an example that trading is not a service for which exemption is also applicable. Likewise audit report cannot be the sole consideration for invocation of extended period to demand duty and impose of penalty under Section 11AC of the Central Excise Act. Moreover, application of formula for computation and arrival at a figure varies on the basis of understanding of the formula and its proper application that cannot be considered as wilful violation of the provision of the Act or Rule only on the ground that re-computation of the previous period on one occasion was accepted by the respondent and duty demand was met, since rule of acquiescence pre-supposes repeated acceptance of the same thing. It cannot be said that only because audit party had found some credit availed as inadmissible, suppression of fact is made out. Appeal dismissed - decided against Revenue. 2019 (5) TMI 1013 Levy of Interest - price escalation clause - whether interest is payable when the value of the goods has been increased subsequent to the clearance of the goods due to cost escalation? - HELD THAT:- It has been decided by the Apex Court in the case of M/S. STEEL AUTHORITY OF INDIA LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIPUR [ 2019 (5) TMI - SUPREME COURT] that interest is payable when there is a cost escalation and consequently additional duty is to be paid. Appeal dismissed - decided against appellant. 2019 (5) TMI 1012 100% EOU - wrongful availment of Cenvat credit on capital goods - imposition of penalty under Rule 13(2) and Rule 15(2) of Cenvat Credit Rules, 2002/2004 - Difference of opinion - Majority Order. HELD THAT:- It is fact on record that the appellant has availed excess credit in terms of formula given in Rule 3(7) (a) of Cenvat Credit Rules, 2004, therefore it is mistake of calculation of availment of Cenvat credit which the appellant has reversed the credit on pointing out by the Department. In that circumstance, the penalty is not imposable on the appellant in the facts and circumstances of the case - the view entertained by the Hon ble Member (Judicial) is agreed upon. The Registry is directed to place matter before the Referral Bench for further proceedings. 2019 (5) TMI 1011 Imposition of penalty u/r 26 of the Central Excise Rules - - HELD THAT:- An identical issue was the subject matter of the Tribunal decision in the case of Atlas Pharamchem Indus, Pvt Ltd. vs Commissioner of C, Ex, Ahmedabad-I, [ 2018 (2) TMI 547 - CESTAT AHMEDABAD ]. The Tribunal observed that in the absence of any doubt of duty paid character of the goods and actual supply of the goods by the third stage dealer by mis-representing as second stage dealer, would invite penalty in terms of the Rule 27 of the Central Excise Rules which provides minimum penalty of ₹ 5,000/-. The order of the Original Authority which imposed penalty of ₹ 5,000/- on each of the appellant is restored - appeal disposed off. CST, VAT & Sales Tax 2019 (5) TMI 1043 Refund of pre-deposit alongwith interest - interest from date of refund OR from date of filing Form DVAT-21 - HELD THAT:- Issue decided in the case of SHAILA ENTERPRISES VERSUS COMMISSIONER OF VALUE ADDED TAX [2016 (8) TMI 426 - DELHI HIGH COURT] , where it was held that refund is to be allowed - Accordingly, as far as the refund by the Revenue in the sum of ₹ 2 lacs of the Petitioner is concerned, it is directed that it shall be done forthwith, and in any event, not later than 31st May, 2019. Interest on refund - HELD THAT:- It is directed that simple interest will be paid by the Respondents on the aforementioned sum of ₹ 2 lacs for the period from 15th February, 2019, till the date of actual refund @ 6% per annum - As regards the interest for the period 4th July, 2018 till 15th February, 2019, it will await the decision of the Supreme Court in THE COMMISSIONER OF TRADE AND TAXES ANR. VERSUS M/S MRF LIMITED [2018 (12) TMI 592 - SC ORDER] . Petition disposed off. 2019 (5) TMI 1042 Condonation of delay in filing appeal - Validity of assessment order - the Assistant Commissioner (Appeals) rejected the appeal on two grounds: the petitioner did not file any delay condonation petition; nor has the petitioner appeared before the appellate authority on the appointed date to explain the delay - HELD THAT:- The Ext.P6 cannot be treated as an order suffering from any legal infirmity. The only ameliorating factor here is that the matter has not been decided on merits though it involves huge amounts; perhaps the petitioner may have to blame substantially itself for this. Ext.P3 seems to be an application for delay condonation, but it does not contain any details. And for the petitioner's absence on the appointed date, the counsel pleads his own reasons-ill health. It only serves the interest of justice if this Court sets aside the Ext.P6 and provides one last opportunity to the petitioner to set out in detail the grounds for the delay and then invite a speaking order from the appellate authority. Matter remanded to the appellate authority on the condition that the petitioner should pay 20% of the disputed tax in one month's time - appeal allowed by way of remand.
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