TMI Tax Updates - e-Newsletter
May 24, 2017

Case Laws in this Newsletter:

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

Articles

1. E-way Bill - movement of goods under GST

   By: Pradeep Jain

2. TAKE CARE OF YOUR TRANSACTIONS WHICH ARE TO BE REPORTED BY OTHERS IN ANNUAL INFORMATION AND REPORTABLE TRANSACTIONS REPORT UNDER S.285BA OF INCOME TAX ACT

   By: DEVKUMAR KOTHARI

News

1. Entertainment, cable, DTH to attract lower taxes under GST

2. Lower Tax Incidence on Entertainment Services under Goods and Services (GST) Tax

3. Goods and Services Tax (GST) will lead to lower tax burden in several commodities including packaged cement, Medicaments, Smart phones, and medical devices, including surgical instruments

4. Third lecture in the series ‘NITI Lectures: Transforming India’ on May 25th by renowned business strategist, economist and author, Dr. Michael Porter

5. Prime Minister Gives a Clarion Call for Further Strengthening of Cooperation between India and African Countries

6. Bilateral meetings - Ecuador and Colombia (16-19 May, 2017)

7. Finance Secretary Shri Ashok Lavasa holds investor meetings at the India Financial Conference in New York City

8. RBI Reference Rate for US $

Notifications

DGFT

1. 08/2015-2020 - dated 23-5-2017 - FTP

Export of Red Sanders wood by Government of Andhra Pradesh, Directorate of Revenue Intelligence (DRI), Government of Maharashtra and Tamil Nadu-Extension of time regarding

Income Tax

2. 40/2017 - dated 18-5-2017 - IT

Authority under the Prohibition of Benami Property Transactions Act, 1988

Highlights / Catch Notes

Income Tax

• Court Rules on Section 245D(2C) Applications: No Disclosure Failure Without Consolidated Cash Flow Statement for Undisclosed Income.

  Case-Laws - HC : Applications before the Income Tax Settlement Commission (ITSC) u/s 245D(2C) - the failure to disclose the manner of earning undisclosed income. Merely because the consolidated cash flow was not in respect of four Petitioners could not mean that they had not disclosed the manner of earned undisclosed ncome. - HC
  Visit to Get Source

  ---

• University Retiree Payments Subject to TDS u/s 192, Not Section 194J, Due to Employment Contract Nature.

  Case-Laws - AT : TDS u/s 194J - payments made to retired professors, doctors, teaching personnel’s etc. - the relationship between the teachers so employed and the employer is seen to have the rigidity of “contract of employment” and not the flexibility seen in “contracts for employment.” Thus it is held that the University’s liability for TDS is u/s 192 and not 194J - AT
  Visit to Get Source

  ---

• Tax Case: Appropriated Capital Gains for Home, Missed Construction Deadline; Debate on Section 54 Exemption Interpretation.

  Case-Laws - AT : Exemption u/s 54 - the assessee had already appropriated the capital gains for the purpose of construction of residential unit. However, construction was not completed within the stipulated period. In our opinion, liberal interpretation to be considered while granting exemption u/s.54 of the Act as it is a beneficial provision - AT
  Visit to Get Source

  ---

• CIT's Use of Section 263 Deemed Unjustified for Offsetting Business Losses Against Unexplained Income u/s 71.

  Case-Laws - AT : Revision u/s 263 - business loss cannot be set off against other sources as per sec.71 - there is a divergent view on the issue of set off of business loss out of unexplained income u/s. 71 while computing the income of assessee - CIT is not justified in exercising the jurisdiction u/s. 263 - AT
  Visit to Get Source

  ---

• Assessee Pays Due Taxes on Unaccounted Income, Avoids Penalty u/s 271AAA(2) After Search Proceedings.

  Case-Laws - AT : Penalty u/s 271AAA(2) - assessee has admitted to have earned unaccounted commission income during the course of search proceedings - he has paid due taxes along with interest - no penalty - AT
  Visit to Get Source

  ---

• Income Classification for Tax Deductions: Section 80-IAB Focuses on Source, Not Business Income Limitation.

  Case-Laws - AT : Deduction u/s. 80-IAB - The head of income under which the said income is assessable, which is on the basis of the source – from amongst the specified sources under the Act, most appropriate for the said income, so that it is not assessable as business income but as income from house property, would not be a limiting or debilitating factor. - AT
  Visit to Get Source

  ---

Customs

• Imported PC Accessories Classified Under Chapter 8473 as Parts of Personal Computer per Customs Regulations.

  Case-Laws - AT : Classification of imported goods - accessories for computer system (PC cabinet with built in audio, key board, mouse pad, external port, USB Camera) - goods are parts/ accessories of PC, therefore, the classification of the goods will be under Chapter heading 8473. - AT
  Visit to Get Source

  ---

Service Tax

• Service Tax Demand on DMRC Metro Rail Project Set Aside as It Falls Under "Railways" Category per Tax Rules.

  Case-Laws - AT : Composite works contract - the tax entry “works contract service” excluded the services of works contract in respect of railways. - DMRC Metro Rail Project is covered by the scope of the term “railways” - demand of service tax set aside - AT
  Visit to Get Source

  ---

• Service tax and interest settled before Show Cause Notice; penalties under Finance Act Section 73(3) deemed unnecessary.

  Case-Laws - AT : Penalty - Construction of residential complex - entire service tax liability and the interest is paid before the issuance of SCN - provisions of Section 73(3) of the FA, 1994 would apply and the revenue authorities should not have issued any SCN to the appellant for the demand of imposition of penalties - AT
  Visit to Get Source

  ---

• Tax Demand Limited to One Year for Subvention Account Services; Demand Exceeds Permissible Period u/s 73(1) Finance Act.

  Case-Laws - AT : Non-payment of tax - commission received under the head subvention account for providing the services to its customers - demand should be confined to the normal period of one year - demand under proviso to sub-section (1) of Section 73 of the FA, 1994 is barred by limitation of time. - AT
  Visit to Get Source

  ---

Central Excise

• Court Denies SSI Exemption: Three Units Classified as Interconnected Due to Shared Resources and Operations u/r Violation.

  Case-Laws - AT : SSI exemption - clubbing of clearances - dummy units - having common use of machinery between the three units, having common marketing arrangements and free flow of finance between three units, cumulatively establishes the appellants inter-relationship and interdependence with each other. - AT
  Visit to Get Source

  ---

• Refund Denied: Cenvat Credit on Deemed Exports to 100% EOU Not Eligible Per Post-March 2015 Regulations.

  Case-Laws - AT : Refund claim - unutilised Cenvat credit - goods cleared to 100% EOU - deemed exports - The appellant is however not eligible for any refund claimed on such deemed exports for the clearances made from 01.03.2015, if any, since such deemed export would not fall within the ambit of export - AT
  Visit to Get Source

  ---

• CENVAT Credit Applicable for Insurance Services Linked to Manufacturing: Property, Marine, D&O Liability, and Product Liability.

  Case-Laws - AT : CENVAT credit - input services - nexus with manufacturing activity - Property Insurance Services - Marine Policy - Directors & Officers liability - Product Liability Insurances - all the services have nexus with business - credit allowed - AT
  Visit to Get Source

  ---

• Valuation Dispute Over Inter-Unit Transfers: Rule 8 vs. Former Rule 4 of Central Excise Valuation Rules 2000.

  Case-Laws - AT : Valuation - goods manufactured by the assessee used by its another unit for captive consumption - Applicability of Rule 8 - upto 30.11.2013, appellants were required to discharge duty on the impugned clearances only as per erstwhile Rule 4 of the said Central Excise Valuation Rules 2000 - AT
  Visit to Get Source

  ---

VAT

• High Court Overturns VAT Officer's Decision; Allows Input Tax Credit Refund u/s 9(2)(g) of DVAT Act.

  Case-Laws - HC : Refund claim - denial of input tax credit - Section 9(2) (g) of the DVAT Act - what the VATO has done is clearly an abuse of the powers conferred to him under the DVAT Act - refund allowed - HC
  Visit to Get Source

  ---

Case Laws:

• Income Tax

• 2017 (5) TMI 1055
  Applications before the Income Tax Settlement Commission (ITSC) under Section 245D(2C) - Held that:- A perusal of the applications filed, copies of which have been placed on record, shows that the manner of deriving disclosed and unearned income was indeed disclosed. To what extent this can be verified would be a matter for more detailed examination. There appears to be no rational basis for according a differential treatment to the four Petitioners. As a result of the impugned order, while the regular assessment in respect of the four Petitioners will proceed, the case of the six other companies forming part of the same group would be decided by the ITSC. Obviously, the differential treatment to four of the companies forming part of the same group results in differential treatment which does not appear to be warranted in the instant case. While indeed the scope of this Court under Article 226 of the Constitution is limited, the Court finds that as far as the impugned order of the ITSC is concerned, it does not spell out any rational criteria for distinguishing between six companies of the Bindal Group and the four Petitioners. Further, the ITSC proceeded to reject the settlement application of the four Petitioners on a ground that was not urged by the Revenue viz., the failure to disclose the manner of earning undisclosed income. Merely because the consolidated cash flow was not in respect of four Petitioners could not mean that they had not disclosed the manner of earned undisclosed income. In the considered view of the Court, the impugned order of the ITSC according a different treatment to the four Petitioners does not appear to be justified in the facts and circumstances of the case. If allowed to stand, the impugned order might defeat the very purpose of the companies of the Bindal Group applying to the ITSC for an early settlement of disputes. The Court is unable to sustain the impugned order dated 13th May 2016 passed by the ITSC declining the prayers of the Petitioners that their applications before the ITSC should be proceeded in accordance with law. While setting aside the impugned orders, the Court directs that the applications of the four Petitioners would be entertained and proceeded with by the ITSC on the same basis as the six other companies in the Bindal Group. The Petitioners’ applications shall be permitted to be proceeded with. Writ petitions are allowed.

  ---

• 2017 (5) TMI 1054
  Issuance of the certificate under Section 197(1)/195 - contracts between NPCC and ONGC - Held that:- There is no justification for Respondent No.1 not to accept the alternative and 'without prejudice' plea of the Petitioner that in respect of only the inside India activities there may be a deduction of TDS @ 4%. Accordingly, the Court sets aside the certificate issued by Respondent No.1 dated 31st January, 2017 insofar as it requires deduction of TDS @ 4% on the entire payments made by the ONGC to the Petitioner, both on the outside India and the inside India activities. Respondent No.1 is now directed to consider the matter afresh, and within a period of four weeks from today, issue a fresh certificate under Section 197(1) of the Act, accepting the alternative plea of the Petitioner, without prejudice to its right to contest the said deduction in accordance with law, that the ONGC would deduct tax @ 4% + surcharge+ education cess on the revenues in respect of only the inside India activities of the Petitioner

  ---

• 2017 (5) TMI 1053
  Addition u/s 69C - Held that:- As has been noted by the CIT(A) in the order dated 11th February 2013, there was an unsigned note which was recovered neither from the office of the M/s. AMR Infrastructure Ltd., which had accepted the application of the Assessee for the booking of space or the office of the Assessee. The CIT(A) has referred to the two Memorandum of Understanding (MoUs) entered into between the Assessee and M/s. AMR Infrastructure Ltd. with regard to the two areas, i.e., plot of 5000 sq. ft. and another of 1000 sq. ft., both being booked @ 1,500 sq. ft. through the documents placed before the CIT(A), which were also before the AO, the Assessee was able to demonstrate that it had not paid any sum over and above what was reflected therein. Consequently, there was no occasion to make any addition under Section 69 C of the Act. - Decided in favour of assessee.

  ---

• 2017 (5) TMI 1052
  Disallowance of depreciation - assessee claimed 15% depreciation on the electrical installations used for manufacturing activity - ITAT allowed claim - Held that:- This Court is of the opinion that the ITAT’s findings are sound. As noticed by CIT(A), steel and power ingots manufacturing is power- intensive, necessitating continuous power generation. For this purpose, the assessee had installed certain electrical sub-stations, towers etc. and other supporting equipment. These were an integral and critical part of its manufacturing process and cannot be compared with electrical fittings which have been defined in Note 5 to Appendix 1(E) wherever electricity generation or continuous power supply is essential for the basic industrial activity of an assessee or unit, the heavy equipments so used cannot fall within the rubric of fitting such as fans, switches etc. as to disqualify for depreciation - Decided against revenue

  ---

• 2017 (5) TMI 1051
  Interest paid allowable as business expenditure - Held that:- It is not in dispute before us that the facts and circumstances under which the disallowance was made by AO and deleted by CIT(A) in A.Y.2003-04 and 2004-05 are identical to the facts and circumstances as it prevailed in A.Y.2001-02. The decision of the Tribunal for A.Y.2001-02 would therefore equally apply to two assessment years 2003-04 and 2004-05. In this circumstance we are of the view that CIT(A) was fully justified in coming to the conclusion that the addition made by the AO cannot be sustained in the light of the decision rendered in A.Y.2001-02. In these circumstances we are of the view that there is no merit in this appeal filed by the revenue. Accordingly both the appeals of the revenue are dismissed.

  ---

• 2017 (5) TMI 1050
  Assessment framed u/s 153C - absence of satisfaction note - Held that:- From the plain reading of the Circular No. 24/2015 dated 31.12.2015 issued by the Central Board of Direct Taxes, it is crystal clear that even if the AO of the searched person and of the other person is one and the same then he is required to record his satisfaction in the case of searched person. In the present case, it is an admitted fact that the AO of the searched person has not recorded any satisfaction rather the satisfaction is recorded by the AO of the other person i.e. the assessee which is evident from the satisfaction note, copy of which is placed at page no. 21 of the assessee’s paper book. Therefore, the assessment framed in the hands of the assessee was not valid. Moreover, from the observation of the AO in the satisfaction note also it is crystal clear that no incriminating material was found, the addition was made only on the basis of the copy of balance sheet, profit and loss account and schedule of advances against supplies pertaining to the assessee, those documents were already in the knowledge of the department as the same were furnished alongwith the regular return of income. Therefore, those documents by no stretch of imagination can be said to be incriminating as those were made out of the regular books of accounts of the assessee and the return of income was filed on the basis of those documents only. - Decided in favour of assessee.

  ---

• 2017 (5) TMI 1049
  Reopening of assessment - Deduction u/s 10A without setting off the brought forward unabsorbed depreciation and brought forward business loss - Held that:- In the present case, it is noticed that the case of the assessee is that there was no fresh tangible material in the possession of AO at the time of recording of reasons for initiating proceedings u/s.147 of the Act. A perusal of the ‘Reasons’ recorded by the AO in this case reveals that at the time of recording of these ‘Reasons’ the AO had examined original assessment records only and no fresh material had come in the possession of the AO. In response to our specific query also, Ld DR could not point out any fresh material available with the AO at the time of reopening of the case of the assessee. Thus, assertion of the assessee that there was no fresh material with AO for reopening of this case, remained uncontroverted. In the case of CIT vs. Orient Craft Ltd. [2013 (1) TMI 177 - DELHI HIGH COURT] it was held reasons for reassessment disclosed that AO reached belief that there was escapement of income "on going through the return of income" filed by assessee after he accepted return u/s. 143(1) without scrutiny, and nothing more. In these facts, it was held by the Hon’ble High Court that it was nothing but review of earlier proceedings and abuse of power by AO. It was further held that since there was no whisper in reasons recorded, of any tangible material which came to possession of AO subsequent to issue of intimation, therefore, it was an arbitrary exercise of power conferred u/s 147. Thus, reopening was held to be invalid on this ground itself. - Decided in favour of assessee.

  ---

• 2017 (5) TMI 1048
  Income from share transactions - capital gain or business income - Held that:- The Assessing Officer was not justified in changing the treatment of income of the appellant from short term capital gains to income from business. We uphold the order of the Ld.CIT(A) as far as treatment of aforesaid amount of 45,51,746/- as short term capital gain is concerned. As far as the balance amount of 45,761/- is concerned, the assessee has accepted its treatment as business income and there is no dispute before us regarding this amount. Hence, there is no need for us to adjudicate on the amount of 45,761/-. For statistical purposes, first ground of appeal is dismissed Income from undisclosed sources - amount shown as long term capital gain by assessee - Held that:- To substantiate his claim for long term capital gain on sale of shares; the assessee needs to furnish conclusive evidence that the shares (of Reliance Capital ) claimed to have been sold are exactly the same shares (of Reliance Capital ) having regard to corresponding distinctive numbers of shares. Convincing materials can also be presented with the help of corresponding order no., order time, trade no. and trade time. From the materials presently available before us, it is not possible to conclude whether the shares claimed to have been sold by the assessee are exactly the same as the shares claimed to have been purchased by the assessee as far as assessee s claim of long term capital gain is concerned. As relevant facts for adjudication of this issue are not presently available; in the fitness of things, we set aside the orders of Ld.CIT(A) and AO on this issue and restore the issue in dispute in the second ground of appeal to the file of the AO with the direction to pass a fresh order denovo after carrying out necessary inquiries and after providing opportunity to the assessee. For statistical purposes, the second ground of appeal is partly allowed.

  ---

• 2017 (5) TMI 1047
  Deemed dividend addition u/s. 2(22)(e) - assessment u/s 153A - Held that:- The additions made by the AO are beyond the scope of section 153A of the Income Tax Act, 1961, because no incriminating material or evidence had been found during the course of search so as to doubt the transactions. It was noticed that as on the date of search i.e. 09.9.2010, no assessment proceedings were pending for the year under consideration and the AO was not justified in disturbing the concluded assessment without there being any incriminating material being found in search. AO has not referred to any seized material or other material for the year under consideration having being found during the course of search in the case of assessee, leave alone the question of any incriminating material for the year under appeal. Therefore, in our considered opinion, the action of the AO is based upon conjectures and surmises and hence, the additions made is not sustainable in the eyes of law. See CIT vs. Kabul Chawla (2015 (9) TMI 80 - DELHI HIGH COURT ) - Decided in favour of assessee.

  ---

• 2017 (5) TMI 1046
  Penalty levied under section 271(1)(c) - bad debts written off - Held that:- We find that issue in dispute in the quantum appeal has already been restored to the file of the Assessing Officer, the penalty levied by the Assessing Officer and sustained by the Ld. CIT-A cannot survive, and while deciding the issue the Assessing Officer, may take action for initiation of penalty proceeding in accordance with law . Accordingly all the grounds raised by the assessee in respect of the penalty levied on the issue of bad debts written off are allowed accordingly. Allowability of the claim under section 36(1)(vii) - Held that:- Assessing Officer has not examined the allowability of the claim under section 36(1)(vii) of the Act and rejected the claim merely with the finding that claim of the assessee for reducing the accrued income on a sticky loans in the computation of income for earlier years was sub-judice before the Ld. CIT(A) and the ITAT. In the circumstances, in our opinion the finding of the Ld. CIT(A) that claim made by the assessee was incorrect, is not justified and therefore the finding of the Ld. CIT(A) that the assessee has filed inaccurate particulars to the extent of the claim, cannot be accepted. In our opinion, once the principle debt has already been written off in the books of accounts, the interest due on said loans also was eligible for written off and therefore we do not find any incorrectness in making this alternative claim by the assessee. Accordingly, the penalty sustained by the Ld. CIT(A) is directed to be deleted and the grounds of the appeal are accordingly allowed.

  ---

• 2017 (5) TMI 1045
  Computation of disallowance u/s 14A - exclusion of investments made by the assessee for working out the amount of average and investment for the purpose of computation of disallowance - Held that:- From the records it can be seen that the investment was made prior to this assessment year. Therefore, it cannot be doubted that the investment was not a genuine investment. There is no nexus between the interest paid by the assessee and investment made in these companies there was no sufficient evidence brought on record by the Assessing Officer as well while investing the dividend income and interest them merely doubting the investing because it is interest free loan cannot be under the provisions of Section 14A read with Rule 8D. Out of the existing investments, investments in M/s Munjal Kiriu Industries (P) Ltd., M/s Hero Chassis System (P) Ltd. and M/s Hero Global Design Ltd. were made in earlier years when the assessee had transferred its undertakings on slump sale basis., under which equity shares as per the approved scheme of de-merger were allotted to it. The assessee had made investments in equity shares of M/s Satyam Computers Ltd., which have been valued at 73,26,582, as on 31.03.2010 and also had made investments in Hero MVL Alternate Fuel (P) Ltd., a sister concern in the F.Y.2008-09. These investments held for yielding tax exempt dividend income. The assessee has not disallowed the expenses incurred for earning exempt income out of such investments and there is no evidence that working capital loan may not have been deployed for making such investment, therefore, the lack of satisfaction of the AO with the claim of the assessee that no expenses were incurred for earning dividend income from such investments. The AO while disallowing this has not brought on record anything to establish that the assessee had incurred any expenses while earning this exempt income and he has not given any finding in this respect. Therefore, the action of the AO in disallowing the dividend income u/s 14A read with Rule 8D is not just and proper. - Decided against revenue

  ---

• 2017 (5) TMI 1044
  TDS u/s 194J - payments made to retired professors, doctors, teaching personnel’s etc. - whether the contractual teaching personnel are not covered under the definition of “profession” for the purpose of Section 194J ? - existence of employers employee relationship - CIT(A) held that the payments made to GRFs & SRFs are exempt u/s 10(16) - Held that:- As per Notification no. 88/2008 dated 21.08.2008 the professions notified are: sports persons, umpires and referees, coaches and trainers, team physicians and physiotherapists, event managers, commentators, anchors and sports columnists. Thus, the finding of the CIT(A) is just and proper that the scope of this section includes specified personnel or services and leaves very little scope for reading in between the lines to include professions, such as teaching, at will. Secondly, in the case of the assessee University the payments to such teachers are made from their salary head and the appointments religiously follow the State’s policy on reservation, etc. Also the university exercises significant control over the teachers almost at par with regular employees. See case of Max Muller Bhawan, New Delhi (2004 (5) TMI 61 - AUTHORITY FOR ADVANCE RULINGS) wherein it has been ruled that such engagements are covered u/s 192 for the purposes of TDS. Also the relationship between the teachers so employed and the employer is seen to have the rigidity of “contract of employment” and not the flexibility seen in “contracts for employment.” Thus it is held that the University’s liability for TDS is u/s 192 of the Act and not 194J of the Act. The CIT(A) has rightly arrived at the conclusion and allowed the appeal of the assessee.

  ---

• 2017 (5) TMI 1043
  Reopening of assessment - non-issuance of notice u/s.143(2) before completion of assessment - addition u/s 36 - Held that:- AO is within this jurisdiction to initiate the provisions of the section 143(3) of the Act only on satisfying the first condition noted above and failure to take steps u/s.143(3) of the Ace will not render the AO powerless to initiate the re-assessment proceedings. See CIT Vs. Rajesh Jhaveri Stock Brokers P. Ltd in [2007 (5) TMI 197 - SUPREME Court] wherein held that the Assessing Officer had jurisdiction to issue notice under section 148 for bringing to tax income escaping assessment in an intimation under section 143(1)(a) on the ground that the claim for bad debts by the assessee was not acceptable as the conditions for allowance specified in section 36(1)(vii) and (2) were not fulfilled. Accordingly, re-opening is valid in law. Regarding nonissue of notice u/s.143(2) of the Act where was no return filed by the assessee in response to notice u/s.148 of the Act and the return was not pending for assessment, there is no question of issuing of notice u/s.143(2) of the Act. Being so, we are of the opinion that the nonissue of notice u/s.143(2) of the Act does not make the assessment bad in law. - Decided in favour of revenue Disallowance of advertisement expenses - Held that:- Similar issue came for consideration before this Tribunal in assessee's own case for assessment year 2012-13 wherein held that the expenditure incurred on advertisement being a revenue expenditure was allowable in full Disallowance u/s.40(a)(ia)- non-deduction of TDS on interest paid bythe assessee on the loan availed from the MBFC - Held that:- Similar issue came for consideration before the Hon’ble supreme Court in M/s.Palam Gas Agencies Vs. CIT [2017 (5) TMI 242 - SUPREME COURT] wherein held that the provisions of the section 40(a)(ia) is applicable to both paid and payable. Hence, we allow the ground taken by the Revenue.

  ---

• 2017 (5) TMI 1042
  Depreciation on non-compete fee and brand equity - whether they are not in the nature of intangible asset listed u/s.32 namely know-how, copy rights, patents? - Held that:- This issue is squarely covered by the order of Tribunal in assessee’s own case in earlier assessment years wherein held that the assessee is entitled for depreciation on non-competent fee and brad equity. - Decided in favour of assessee. Addition of notional interest income charged at the rate of 12% on the interest free lease deposit paid by the company - Held that:- The interest free deposit has been given to Smt. A.Radhika on account of business expediency and the Learned Assessing Officer cannot decide what the businessman can do for the purpose of business. He cannot decide on behalf of the assessee. Being so, we do not find any infirmity in the order of ld. Learned Commissioner of Income Tax(A) in deleting the disallowance of notional interest at 24 lakhs. Hence, this ground raised by the Revenue is rejected. Addition made towards provision for bad and doubtful debts - scope of rectification of mistake orders - Held that:- The assessee made a claim before the Learned Assessing Officer though revised computation of income as bad debt. This claim was allowed by the Learned Assessing Officer while framing the assessment u/s.143(3). Later, the AO took up the proceedings U/s.154 of the Act and disallowed the same and added it to the income of the assessee. Thus it cannot be said that there is a mistake apparent from record so as to rectify u/s.154 by the Assessing Officer. The claim of assessee as bad debt vide letter dated 04.10.2006 and the Assessing Officer has taken a conscious decision to allow as bad debt. Now, the issue which is very debatable, cannot be considered by the Learned Assessing Officer u/s.154 so as to disallow the claim of assessee. As in the present case, the Assessing Officer has examined as to whether the debt has, in fact, been written off, in the accounts of the assessee. This exercise has been undertaken by the Assessing Officer with regard to treatment of bad debt. Being so, we do not find any infirmity in the order of ld. Learned Commissioner of Income Tax(A) in deleting the addition towards bad debts - Decided in favour of assessee.

  ---

• 2017 (5) TMI 1041
  Non-granting of exemption u/s.54 in respect of sale of the residential property - whether the assessee can be considered to have constructed or acdquired residential property within 3 years from the sale of residential property i.e. 21.06.2014? - Held that:- the present case, the assessee had already appropriated the capital gains for the purpose of construction of residential unit. However, construction was not completed within the stipulated period. In our opinion, liberal interpretation to be considered while granting exemption u/s.54 of the Act as it is a beneficial provision. The judgement in the case of CIT Vs. Smt. V.S.Shantha Kumari in (2015 (8) TMI 274 - KARNATAKA HIGH COURT ) wherein held that completion of construction within three years was not mandatory and was necessary was that the construction should be commenced. That cannot be disputed. When the commencement of the construction of the residential unit which is evidenced by construction agreement cited supra and also sale deed cited supra, in our opinion, assessee over and above satisfied the conditions laid down by Sec.54 of the Act and demonstrated his intention to invest the capital gains in residential house. In our opinion, assessee ought not to have denied the claim of deduction u/s.54 of the Act. Accordingly, we are of the opinion that the assessee is entitled for exemption u/s.54 - Decided in favour of assessee.

  ---

• 2017 (5) TMI 1040
  Claim of bad debts disallowed - Held that:- We fail to understand as to how the AO could state so when he has not made any findings on examining the books of accounts of the assessee. It is not the case of the Revenue that the assessee has not maintained books of accounts or produced the books of accounts before the Ld.A.O. All the books of accounts were very much available before the revenue. The ledger accounts maintained by the assessee will have the details of all the debtors. The debts that are considered bad are also written off in the books of accounts and the same is not disputed. Further by examining those books of accounts of the assessee it can be easily verified whether the brokerage charges was booked as income on the earlier occasion and whether the assessee has incurred loss on the sale of shares purchased by it on behalf of its clients against whom payment has become irrecoverable/partly irrecoverable. The opening balances of those debtors are also verifiable. Since the Revenue has not rejected the books of accounts and found out any discrepancies with respect to the claim of the assessee, the disallowance in the hands of the assessee is not warranted only on the pretext of the lame finding of the Revenue that the details with respect to the claim of deduction is not provided - Decided in favour of assessee. Addition u/s 14A read with Rule 8D - Held that:- The assessee has not convinced the Revenue authorities with respect to the expenses attributable for earning exempt income by apportioning all such expenses. Therefore the Revenue has no other option but to compute the disallowance in accordance with Rule 8D of the Rules. Moreover the Ld.AO has only invoked Rule 8D(iii) of the Rules and thereby computed the disallowance at 62,904/-, on which we are of the view that no interference is necessary in the order of the Revenue authorities. However at the same time we find that the Ld.AO has stated in his order that the disallowance U/s.14A is to be made for 2,23,019/- It appears there is a mistake in the order of the Ld.AO. Therefore we hereby correct the order of the Ld.AO by sustaining the addition at 62,904/- towards disallowance U/s.14A r.w.r 8D of the Rules.

  ---

• 2017 (5) TMI 1039
  Income from sale of land - classification of the land in revenue records - whether it was agricultural land sold? - fixing value of land - Held that:- AO has conclusively established that the lands sold by the assessee in the previous year relevant to the assessment year were not agricultural in nature, but, on the other hand, they are non-agricultural land. Therefore, it definitely comes under the category of “capital asset”. Further, the assessee has converted it into stock-in-trade and also the assessee during the financial year 2006-07, obtained NOC from Tahsildar, Sriperumpudur on 18.12.2006 and applied for plot approval from Chengalpet local authorities in the month of January,2007. The assessee received said approval for converting his land into housing plots on 06.02.2007 from Deputy Director of Urban Development and housing plot was developed and sold by assessee. When the basic nature of the land itself found to be nonagricultural, the arguments regarding status of the property, whether within metropolis or outside the limit of the metropolis, is irrelevant. A non-agricultural property, whether inside the municipality or outside the municipality or even in a remote village is a “capital asset” or stock-in-trade and transfer of the same may generate income liable for capital gains taxation or business income as the case may be. Regarding fixing the value as on 01.01.2007 by the CIT(A) at 53/- per sq. ft., which is based on the sale incidence of the property situated at Novaloor village located next to Nattarasampattu village vide Sale deed June, 2007 for 23,100/- per cent at 53/- sq. ft. In our opinion, when the assessee sold the property in the A.Y 2010-11 at 351 sq. ft., it cannot be said that the value of that property as on 01.04.2009 be at 53/- per sq. ft.. Considering the sale value at 351 sq. ft., we direct the AO to work out the value of opening stock as on 01.04.2009 by applying the reverse indexation method. Accordingly, this issue is remitted to the file of AO for his fresh consideration on this direction only. Disallowance of 10% value expenditure incurred - Held that:- When the assessee has not produced the bills and vouchers, there is every chance of inflating the expenditure by the assessee. Accoridngly, we direct the AO to disallow at 5% instead of 10% of the total expenditure of 19,60,530/-. This ground is partly allowed for statistical purposes.

  ---

• 2017 (5) TMI 1038
  Revision u/s 263 - business loss cannot be set off against other sources as per sec.71 - Held that:- We are of the opinion that there is a divergent view on the issue of set off of business loss out of unexplained income u/s.71 of the Act while computing the income of assessee. Being so, the AO had taken one of the possible views, which is supported by the judgement in the case of Chensign Ventures (2007 (4) TMI 204 - MADRAS High Court) and we are of the opinion that the ld.CIT is not justified in exercising the jurisdiction u/s.263 of the Act on this issue. Accordingly, the order of Learned Commissioner of Income Tax u/s.263 of the Act is quashed. - Decided in favour of assessee.

  ---

• 2017 (5) TMI 1037
  Penalty under Section 271(1)(c) - addition on account of unexplained expenses for earning agricultural income - Held that:- Nowhere any details filed by the assessee has been held to be incorrect by the lower authorities with the support of any evidence which can show that the assessee has concealed any particulars of income or furnished inaccurate particulars of income. It is evident that if an assessee who is holding agricultural land and has earned income and if such net agricultural income is not disputed, then certainly some expenses must have been incurred to earn the agricultural income. It is well known fact that the agriculturists are not so well-versed in keeping the regular accounting of day-to-day expenses of agricultural operations, but that does not mean that the expenses have not been incurred. In the case of assessee for all the three assessment years, an ad-hoc disallowance has been made by AO and some relief has been granted by the ld. CIT(A). Certainly, in these circumstances, assessee do not deserve to be visited with penalty under Section 271(1)(c) for concealment of particulars of income or furnishing of inaccurate particulars of income. We accordingly delete the penalty imposed under Section 271(1)(c) for all the three years calculated on the sustained addition on account of unexplained expenses for earning agricultural income. Unaccounted profit/unexplained investment in share business - Held that:- Most of the additions which have been scaled down by the CIT(A) were on the basis of verification of bank statement showing amount received from other parties which were enough to cover the unaccounted investment. In these total series of facts, there is no firm conclusion drawn by the AO in order to satisfy the conditions for imposing penalty under Section 271(1)(c). We are, therefore, of the considered view that the assessee, in the given case, has furnished details which were mostly found correct by ld. CIT(A) and the additions of concealed income was mainly made on hypothetical basis and also not firmly concluded by giving set off of the loss in share trading business appearing in the seized documents. We are, therefore, of the view that the penalty imposed under Section 271(1)(c) of the Act on the sustained additions for AYs 2004-05 and 2009-10 related to unaccounted profit and unexplained investment at 5,00,000/- and 6,50,000/- respectively need to be deleted. We order accordingly. Penalty u/s 271AAA(2) - Held that:- It is well established that the AO has not taken the basis of undisclosed income surrendered during the course of search a 25,00,000/- as the basis for computing the penalty under Section 271AAA of the Act. He has rather taken the basis of sustained addition of 2,93,000/-. Once the Assessing Officer has missed the starting point provided in Section 271AAA(2) of the Act relating to admission of undisclosed income under Section 132(4) of the Act, then the amount disclosed by the assessee in the return of income should be taken as basis. In the case of assessee, the assessee has admitted to have earned unaccounted commission income during the course of search proceedings and has declared 3,00,000/- has commission earned from the land deal specified above and has paid due taxes along with interest, then in our considered view, as he has satisfied all the three conditions of Section 271AAA(2) then he does not deserve to be visited with penalty under Section 271AAA of the Act at 29,300/-. We accordingly delete the same. In the result, this appeal of the assessee is also allowed.

  ---

• 2017 (5) TMI 1036
  Reopening of assessment - addition on account of accommodation entries - Held that:- The matter requires reconsideration at the level of the Assessing Officer. The assessee claimed that sufficient documentary evidences were filed before Assessing Officer to prove that assessee company took genuine loan from both the said companies and in support of the explanation assessee filed their ITR, bank statement and confirmation. However, AO has not discussed anything in the assessment order with regard to filing of these documentary evidences in support of explaining genuine loans. The Assessing Officer has not mentioned anywhere if the report of investigation wing or copy of statement of Shri Aseem Kumar Gupta was provided to the assessee at reassessment stage. Similarly there is no mention if the assessee also asked for the copies of the same or requested the Assessing Officer to produce Shri Aseem Kumar Gupta for cross examination on his behalf. The assessee however made such statement before Ld. CIT(A) that documentary evidences were filed and assessee has not been afforded to cross examine the statement of Shri Aseem Kumar Gupta Hon'ble Supreme Court in the case of Kishinchand Chellaram vs. CIT [1980 (9) TMI 3 - SUPREME Court] held that when any incriminating material collected at the back of the assessee, the same cannot be read in evidence against the assessee unless same is confronted to assessee and right to cross examination have been provided to the assessee. In the absence of any details mentioned in the assessment order and that no finding to that effect have been given, therefore, in my view the matter requires reconsideration at the level of the Assessing Officer- Appeal of assessee is partly allowed for statistical purpose.

  ---

• 2017 (5) TMI 1035
  Assessments made on a non-existent company - amalgamation of company - Held that:- The assessments were made in the name of DSP Merrill Lynch Securities Trading Ltd. which is a non-existent entity as this company was amalgamated with DSP Merrill Lynch Ltd. w.e.f. 1.4.2010 and therefore when the assessments were completed on 15.3.2013 and 27.2.2013 on this company for the assessment years 2009-10 and 2010-11, this company is no more in existence. In these circumstances, we hold that the assessments made on a non-existent company are invalid and void ab initio and therefore the assessments are set aside as void ab initio. Since we have set aside the assessments as void ab initio, we need not go into the other grounds raised on merits. - Decided in favour of assessee.

  ---

• 2017 (5) TMI 1034
  Rectification of mistake - depreciation on “self-generated assets” disallowed - period of limitation - Held that:- From the facts of the case, it is apparent that the assessment order was passed U/s.143(1) of the Act on 06.11.2008. Therefore, the order U/s.154 of the Act has to be passed within 4 years from the end of the financial year 2008-09, i.e., before 31.03.2013. Since in the case of the assessee the assessment order U/s.154 of the Act was passed on 28.01.2014 which is well beyond 4 years from the end of the financial year in which the assessment order was passed viz., 2008-09, the order passed by the Ld.A.O is time barred and therefore requires to be quashed. Accordingly, we hereby quash the assessment order passed by the Ld.AO dated 28.01.2014. Since we have quashed the assessment order by holding it to be time barred, it is not necessary for us to adjudicate the merit of the case as it would be only academic. - Decided in favour of assessee.

  ---

• 2017 (5) TMI 1033
  Deduction u/s. 80-IAB - eligibility criteria - house property income of a developer of a SEZ - Held that:- Surely, leasing of house property, inasmuch as the lessees (who are to be, or presumably so, in info-tech business) would be able to undertake their businesses only on the developed property being made available to them, could not therefore but be regarded as the principal activity yielding income from the development of a SEZ. In fact, even the income (to the assessee) from providing ancillary and maintenance services to these businesses arises or stands to arise only on account of, or by virtue of, their being lessees. The lease rental income, on the lease of the house property thereto, would thus, in our view, notwithstanding the use of the words ‘profits and gains’ and ‘business’ in section 80-IAB(1), qualify to be eligible for deduction there-under. That is, the lease rental is within the contemplation of the profits derived by a developer of a SEZ from the ‘business’ of developing it, eligible for deduction u/s. 80-IAB. The head of income under which the said income is assessable, which is on the basis of the source – from amongst the specified sources under the Act, most appropriate for the said income, so that it is not assessable as business income but as income from house property, would not be a limiting or debilitating factor. We decide accordingly, and the assessee succeeds qua it’s alternate ground, i.e., in principle. The assessee’s eligibility for deduction u/s. 80 IAB, to which the house property income of a developer of a SEZ has been opined by us as exigible. In this regard, we observe no finding by the assessing authority on the assessee satisfying the condition/s of s. 80-IAB. True, it has been allowed deduction in assessment in respect of the income assessable as business income, so that the said conditions are impliedly met. We yet consider it necessary that a definite finding in the matter should precede the allowance of the said deduction/s. The reason is that, firstly, the units in the info tech park should presumably be set up by firms engaged in IT/IT enabled services, while one of them, as afore noted, is a bank (SBI). Two, the lease period as per the SEZ Rules, 2006 (r. 11(5)), as mentioned in Coimbatore Hitech Infrastructure Pvt. Ltd. (2012 (7) TMI 464 - ITAT CHENNAI ), to which reference was made by the assessee, is to be for a period of five years while the lease agreement with TCS Ltd. is for three years. This gives rise to a doubt if the assessee qualifies for deduction u/s. 80IAB on its lease rental income and, further, in its entirety, i.e., including the units for which the lease period may be five years or more. We have already expressed a view of eligibility of the house property income to deduction u/s. 80IAB. Subject to therefore a positive finding, which the AO shall cause upon been satisfied, per a speaking order, and after allowing the assessee a reasonable opportunity to present its case, recording his reasons either way, we allow the assessee’s claim for deduction u/s. 80IAB

  ---

• 2017 (5) TMI 1032
  Block assessment u/s 158BC - Genuineness of purchase transactions - claim of deduction u/s 80HHC - Held that:- A large portion of the impugned order of the ITAT is a mere reproduction of the order passed by this Court in Commissioner of Income Tax, Delhi –XVI Versus Arun Malhotra [2013 (11) TMI 1493 - DELHI HIGH COURT] whereby the earlier order of the ITAT was set aside and the matter was remanded to the ITAT for a fresh consideration. Prima facie, there appears to be no application of mind afresh by the ITAT particularly in the context of the specific directions issued by this court in its earlier order.

  ---

• Customs

• 2017 (5) TMI 1072
  100% EOU - confiscation - penalty - demand on the ground that permission was not sought for export - Held that: - It is also not in dispute that the appellant was not of aware of the fact that the goods supplied by the overseas supplier was of Indian origin and not of Chinese origin. Later, realizing the mistake, the overseas supplier agreed to take back the material and on the request of the appellant, the ld. commissioner of Customs allowed export of the said goods which in fact was exported on 23.2.2008 against Shipping Bill No.6045064 dated 18.2.2008 - the finding of the ld. Commissioner of Customs that no permission for export of the said goods was accorded to the appellant, is thus incorrect and therefore, the conclusion reached by the ld. Commissioner also becomes erroneous - appeal allowed - decided in favor of appellant.

  ---

• 2017 (5) TMI 1071
  Penalty u/s 114 of CA, 1962 - abetting or exporting of foreign currency - Held that: - there is nothing indicative that these appellants had abetted the doing or omission of an Act which would render the goods liable for confiscation u/s 113 - there is no concrete evidence against appellants as to come to the conclusion that they had in fact provided foreign exchange which was sought to be illegally exported and the entire case is built upon the statement of Shri Mohd. Aziz who is co-accused - penalties not sustainable - appeal allowed - decided in favor of appellant.

  ---

• 2017 (5) TMI 1070
  Condonation of delay - It is the case of the Revenue that the appellants did not follow the case with due diligence and as such the application of condonation is devoid of merit - Held that: - While we are aware that there is a delay of more than 375 days in filing the appeal, we note that substantial responsibility for such long delay rest with the counsels representing the appellant - the substantial appellate remedy available to the appellant should not be jeopardized due to the actions of the appellant’s counsel which admittedly resulted in long delay - the substantial appellate remedy available to the appellant should not be jeopardized due to the actions of the appellant’s counsel which admittedly resulted in long delay - appeal allowed - decided in favor of appellant.

  ---

• 2017 (5) TMI 1069
  Refund of SAD - denial on the ground that there is no co-relation of the goods imported and the goods sold in the case in hand - whether the importer/respondent is eligible for the refund of SAD paid by them at the time of importation of the goods TTR in jumbo rolls and sale of the same after slitting and cutting in the local market on payment of applicable VAT or otherwise? - Held that: - the records produced establish that importer/respondent has produced the domestic sales invoices of the details of the relating to bills of entry under which the goods have been imported and SAD have been paid - appeal rejected - decided against appellant.

  ---

• 2017 (5) TMI 1068
  Confiscation - redemption fine - penalty - import of jack-up drilling rigs - unauthorised import - clandestine clearance - The impugned order held that the duty liability of 85,90,07,461 crystallised upon entry of the rigs in designated areas, that these had been wrongly declared as cargo in the manifest, that the customs procedures had not been complied with, that the certificates furnished by the importers were forged, that, in the light of questionability of the certificate, there was no necessity to carry out verification of handwriting, that the failure of witness to appear for cross-examination would not vitiate the proceedings - impugned order challenged on three grounds, jurisdictional incompetence, the applicability of bar of limitation in section 28 of Customs Act, 1962 and the dutiability of rigs at the time of import. Held that: - None other than Commissioner of Customs, Mumbai or any authority vested with all-India jurisdiction is empowered to exercise powers under section 111 or to assess and recover duty in relation the goods that were imported and deployed in the designated areas. Amenability of section 12 of Customs Act, 1962 for recovery of short-paid or unpaid duty - Held that: - There can be no doubt that decisions of courts are precedents that may lay the foundation for demand of duty in adjudication orders but it is, indeed, doubtful if a show cause notice can rely upon judicial decisions as authority for demanding duty. The reasons are not far to seek: the peculiarities, singularities and angularities that characterise a particular dispute which may find judicial settlement that may not necessarily be replicated in another; it is only upon hearing the person served with the notice, and upon taking note of the defence, that a reasonable conclusion can be drawn of similarity with or distinction from another dispute. It is, therefore, inappropriate to cite the authority of an order or decision to raise a demand. There could be no more weighty evidence of pre-judgement, prejudice and bias - The adjudicating authority is, therefore, on a footing that is entirely unsound in seeking to invoke section 12 of Customs Act, 1962; section 28 is the only perceptible provision for recovery of duty that has not been paid or has been short-paid on imported goods - The demand for duty is, therefore, without authority of law and is liable to be set aside. Scope for recovery of duty by recourse to section 125 of Customs Act, 1962 - Held that: - In view of the specific prescription in section 125 that the person redeeming the confiscated goods was also liable to pay the duty, the liability crystallises as a condition of redemption. It needs noting that neither does section 125 of Customs Act specify the authority to determine the duty nor does it vest the obligation in a ‘proper officer’; consequently, section 125 of Customs Act, 1962 does not empower determination or assessment and cannot be resorted except when duty has been already been assessed but foregone at the time of import. Needless to state, the liability to pay the duty is a condition of redemption and is not enforceable when the goods are, themselves, not available for confiscation. It is acknowledged that the imported platform rigs was no longer available at the time of commencement of investigations and was never seized; nor was it available for confiscation. Naturally, redemption on payment of fine was beyond the realm of the possible and no longer is it possible to insist upon liability to pay the duty. The confiscation and demand of duty set aside as having been exercised without authority of law - penalties also fail - appeal allowed - decided in favor of appellant.

  ---

• 2017 (5) TMI 1067
  Classification of imported goods - accessories for computer system (PC cabinet with built in audio, key board, mouse pad, external port, USB Camera) - whether classified under CETH 8473 30 99 as claimed by assessee or CETH 8529 10 29 as claimed by Revenue? - Held that: - The PC, in conjunction with an optical reader projector lights on the interactive whiteboard through a medium of projector. The teaching aid comprise of PC, projector as well as interactive electronic whiteboard. The impugned goods are parts which can be used into PC by addition of suitable parts such as processor, HDD, RAM etc - impugned goods are parts/ accessories of PC, therefore, the classification of the goods will be under Chapter heading 8473. They do not become part of the Interactive Electronics Whiteboard even if the computer itself is used to project on to the whiteboard. Appeal dismissed - decided against Revenue.

  ---

• 2017 (5) TMI 1066
  Penalty u/s 114(iii) of the CA, 1962 - without having Let Export Order (LEO) and before completion of the assessment of the shipping bill filed, the container was loaded on the vessel and shipped on 23.11.2006 - Held that: - there is nothing on record to indicate involvement of the CHA in export of the container before assessment of the shipping bill or LEO issued by the Custom Department - in absence of a positive role of CHA for export of cargo without LEO or before assessment of the shipping bill penalty cannot be imposed on them u/s 114(iii) of the CA, 1962 - penalty set aside - decided in favor of appellant-CHA.

  ---

• 2017 (5) TMI 1065
  Refund of ADD - unjust enrichment - Appellant submitted before the Commissioner(Appeals) that opportunity may be given to explain their case on basis of various of documents despite amount accounted in profit and loss account, incidence of duty has not been passed on - Held that: - It is settled law that every litigant should be given ample opportunity for defending their case - appellant should get one more opportunity to substantiate their case that the incidence of duty has not been passed on - matter remanded for giving one more opportunity to appellant - appeal allowed by way of remand.

  ---

• Corporate Laws

• 2017 (5) TMI 1059
  Application of the petitioner under Section 420(2) of the Companies Act, 2013 - revision petition - Held that:- In the present case, it remains undisputed by the opposite parties that while passing the order dated January 30, 2017 the Tribunal did not record the contentions raised on behalf of the present petitioner through oral argument and by filing the written note of submissions. Therefore, the Tribunal ought to have entertained and disposed of the application of the petitioner under Section 420(2) of the Act of 2013, but once again the Tribunal failed to discharge its duty to remove the mistake in passing the order dated January 30, 2017 which is apparent from the record. In the facts of the case as already discussed find substance in the contention raised on behalf of the petitioner on the strength of the Supreme Court decisions in the cases of Shalini Shyam Shetty (2010 (7) TMI 877 - SUPREME COURT ) that the impugned order dated April 11, 2017 passed by the Tribunal is vitiated by patent perversity resulting in gross and manifest failure of justice. For all the foregoing reasons, the revisional application succeeds.

  ---

• 2017 (5) TMI 1058
  E-auction - SARFAESI Act - Held that:- The petitioner in the present case purchased the property in e-auction under Section 13(9) of the SARFAESI Act being the highest bidder, believing that the property was free from all encumbrances and charges. Thus, there was no obligation on the part of the petitioner to discharge liability of the outstanding dues towards the previous owner.

  ---

• Service Tax

• 2017 (5) TMI 1090
  Penalty - Commission without extending cum tax price - reverse charge mechanism - Held that: - Once the amount which has been ascertained and informed by the departmental officer to an assessee and paid by the assessee before issuance of SCN, the provision of Section 73(3) of FA, 1994 gets attracted in situation like this - Provision of Section 73(3) categorically mandates that no SCN be issued to any assessee under sub section (1) in respect of amount so paid - penalty set aside - appeal allowed - decided in favor of appellant.

  ---

• 2017 (5) TMI 1089
  Penalty - appellant's plea is that as they have discharged service tax alongwith applicable interest for the whole period, the matter should have been closed. Proceedings initiated after almost 18 months of their payment is not legally justifiable - Held that: - the bar of Section 73 (4) was not discussed in the impugned order, it would appear that the tax liability being spread over extended period has prompted the proceedings to be initiated against the appellant. We note that the longer duration of tax liability by itself will not bar closure of case u/s 73 (3). The bar for closure of case u/s 73 (3) will arise only in case where the ingredients like mis-statement, suppression of act, intention to evade tax or evidence are present. Such ingredients have not been categorically established in the impugned order - the case was fit for closure under the provisions of Section 73 (3) of the Act - appeal allowed - decided in favor of appellant.

  ---

• 2017 (5) TMI 1088
  Composite works contract - Consulting engineering service - erection, commissioning and installation service - tax liability for the period 01/01/2007 to 31/03/2011 - Held that: - For the period post 01/06/2007, the tax entry “works contract service” excluded the services of works contract in respect of railways. DMRC Metro Rail Project is covered by the scope of the term “railways” - demand set aside - appeal allowed - decided in favor of appellant.

  ---

• 2017 (5) TMI 1087
  Business Auxiliary Service - Export of services - the appellant did not pay service tax on the ground that the service provided are categorized u/r 3(1)(iii) of Export of Service Rule, 2005 - Held that: - the respondent had under taken various activities pursuant to the contract entered into with the holding company, who is located abroad and that the benefit of the services provided by the respondent have been availed and consumed by such company located outside India - thus, such services should fall u/r 3(1)(iii) of the Export Service Rule, 2005 - demand set aside - appeal dismissed - decided against Revenue.

  ---

• 2017 (5) TMI 1086
  Manpower recruitment or supply agency services - deemed consideration - tripartite agreement - Held that: - identical issue came up before this Bench in the case of Raje Vijaysingh Dafale SSK Ltd. [2015 (3) TMI 874 - CESTAT MUMBAI], where it was held that it cannot be said that the appellant has provided any service by way of manpower supply to the lessee. In any case, the salaries/wages were paid directly to the employees/workers and the appellant has not received any consideration for any services rendered - demand not justified - appeal dismissed - decided against Revenue.

  ---

• 2017 (5) TMI 1085
  Penalty - Construction of residential complex - entire service tax liability and the interest is paid before the issuance of SCN - applicability of provisions of Section 73(3) of the FA, 1998 - Held that: - There is nothing on record to indicate that appellant was aware of the liability to pay service tax and were not discharged willfully - there is no dispute as to the fact that the appellant has discharged the service tax liability and the interest thereof before the issuance of SCN - Identical issue came up before the Hon'ble High Court of Karnaraka in the case of CCE & ST., LTU, Bangalore v. Adecco Flexione Workforce Solutions Ltd. [2011 (9) TMI 114 - KARNATAKA HIGH COURT], where it was held that after the payment of service tax and interest is made and the said information is furnished to the authorities, then the authorities shall not serve any notice under Sub-Sec.(1) in respect of the amount so paid - provisions of Section 73(3) of the FA, 1994 would apply and the revenue authorities should not have issued any SCN to the appellant for the demand of imposition of penalties - demand of tax with interest upheld - appeal allowed - decided partly in favor of appellant.

  ---

• 2017 (5) TMI 1084
  Penalty u/s 76 of FA - appellant collected the tax but could not deposit the same to Revenue - appellant pleaded that due to the accident of the proprietor in 2007-08 though they have collected the Service Tax but could not deposit with the Govt - Held that: - Though they have been registered with the Dept., they have failed to file necessary Returns nor informed the Dept., about their inability to deposit Service Tax though collected from customers. Therefore, their explanation that they are innocent and their approach is bonafide cannot be acceptable to a man of ordinary prudence - However, confirmation of penalty u/s 76 as well u/s 78 in the case of appellant is bad in law - decided partly in favor of appellant.

  ---

• 2017 (5) TMI 1083
  Refund claim - the refund claim was returned on 16.9.2009 by the Asst. commissioner as it was not filed in the prescribed proforma and pointing out other deficiencies. The appellant removed the deficiencies and filed revised claim on 22.4.2009 - time limitation - Held that: - in the Annexure attached to the prescribed proforma the details of invoices, shipping bills, value, Service Tax paid etc. alongwith classification of service on which refund was claimed has been mentioned - appeal remanded to the Adjudicating authority for the purpose of verification of the documents on record and that would be produced by the appellant at the time of de novo proceeding to establish the claim - appeal allowed by way of remand.

  ---

• 2017 (5) TMI 1082
  Non-payment of tax - commission received under the head subvention account for providing the services to its customers - time limitation - sub-section (1) of Section 73 of the FA - Held that: - receipt of subvention/manufacturer discount in the nature of interest was reflected by the appellant in the periodical ST-3 Returns, the charges of fraud, collusion, wilful mis-statement, suppression of facts etc. cannot be levelled against the appellant, justifying invocation of the extended period of limitation for issuance of SCN - demand should be confined to the normal period of one year - demand under proviso to sub-section (1) of Section 73 of the FA, 1994 is barred by limitation of time. Issuance of second SCN on 23.10.2009 is clearly barred by limitation of time, having been issued beyond the period of one year from the relevant date. Appeal allowed - decided partly in favor of appellant.

  ---

• Central Excise

• 2017 (5) TMI 1081
  SSI exemption - clubbing of clearances - dummy units - N/N. 175/86-C.E. dated 1.3.86 - it was found that stock of raw materials and finished goods of these units were lying in the premises of other units - whether on the basis of the facts on record the two units could be deemed as one and the same entity? Held that: - SSI Exemption is subject to conditions specified in it. One condition for this exemption notification is that where a manufacturer clears specified goods from one or more factories, the Exemption in his case shall apply for the total value of clearances mentioned against each of the serial numbers in the said table and not separately for each factory - Another condition of the Notification is that the aggregate value of clearances of all excisable goods for home consumption by a manufacturer from one or more factories during the preceding financial year does not exceed a particular threshold limit, as mentioned in the Notification. Raw materials belonging to these units were stored in common premises. It is seen that some of them were availing Modvat and when credit of inputs is taken such movement of goods is not permissible without proper documentation and/or permissions and without reversal of credit. Such free movement of inputs without following due procedure is not permissible in law - Similarly in case of finished goods and intermediates manufactured by them such movement was not permissible without payment of duty and without proper documentation. If any finished or intermediate goods manufactured out of duty paid goods are to be removed outside manufacturing premises the duty is required to be paid. In case the credit is taken, the same is required to be reversed. No such activity was being done and the manufactured goods being moved from premises to another is illegal unless the factory is one registrant. Simply, it is seen in the said case that there was no allegation of free usage of machine of other units. The decision of the Hon’ble Supreme Court in the case of SUPREME WASHERS (P) LTD. Versus COMMISSIONER OF CENTRAL EXCISE, PUNE [2002 (12) TMI 82 - SUPREME COURT OF INDIA] applies where on similar issue it was held that there is mutuality of interest between the appellants. The reliance was placed by the Tribunal on facts like the three companies having common management under Shri S.L. Raheja, having common procurement of raw material having common stock accounting and planning, having interdependence in manufacturing operations, having common stock of raw materials and semi finished goods, having common use of machinery between the three units, having common marketing arrangements and free flow of finance between three units cumulatively indicates interdependence of the three units with each other as also inter-relationship, cumulatively establishes the appellants inter-relationship and interdependence with each other. Extended period of limitation - Held that: - Failure to obtain due permissions amounts to suppression - the actual operations of movement of goods and material, use of common machines without any costs, common purchase and storing of raw material, common electricity and chilling plan, was not known to the revenue. Had it all been disclosed or permission needed for movement of goods between premises sought the revenue would have come to know of the facts - the extended period of limitation has rightly been involved. CENVAT credit - duty paying invoices - Held that: - It is seen that there is prima facie case made by the appellants that the Commissioner has not dealt with the same in detail - It is seen that there is no in depth examination of these documents at the level of Commissioner - denial of credit is set aside and the matter remanded to the Commissioner for re-examination. Appeal disposed off - part matter decided against assessee and part matter on remand.

  ---

• 2017 (5) TMI 1080
  Refund claim - unutilised Cenvat credit which was availed on inputs and input services and finished goods cleared to 100% EOU - deemed exports - Held that: - Although Rule 5 of CCR does not explicitly provide for deemed exports, there is no ground to interpret that the deemed exports are excluded from the purview of Rule 5 of CCR and the Notification issued there under for the material period. When the deemed exports would be eligible to be considered for working out the Net Foreign Exchange Earning (NFEE) and for all other export benefits, I do not see any reason why the deemed exports should be ignored for the purpose of the refund u/r 5 of CCR read with Notification issued there under - refund allowed - The appellant is however not eligible for any refund claimed on such deemed exports for the clearances made from 01.03.2015, if any, since such deemed export would not fall within the ambit of export - decided partly in favor of appellant.

  ---

• 2017 (5) TMI 1079
  CENVAT credit - input services - nexus with manufacturing activity - Property Insurance Services - Marine Policy - Directors & Officers liability - Product Liability Insurances - Held that: - property insurance is in respect of the insurance of factory premises including plant & machinery and service tax paid - Marine Policy is in relation to the inward and outward movement of manufactured goods and the service tax paid by the insurance authorities is in respect of finished goods hence Cenvat Credit was eligible - Directors and Officers liability insurance is in respect of the insurance cover taken by the appellant assessee in respect of the liability that may arise on directors and officers during discharge of their duties towards appellant company - product liability is an insurance of the products for which services were provided by insurance company - all the services have nexus with business - credit allowed - appeal allowed - decided in favor of assessee.

  ---

• 2017 (5) TMI 1078
  Area based exemption - N/N. 50/2003-CE dated 10.06.2003 - manufacture of plastic film printed and laminated in roll form and plastic film printed and laminated in pouch form - denial on the ground that declaration not filed by assessee - Held that: - in the assessee’s own case, the matter has come up before the Tribunal PACKAGING INDIA PVT. LTD. Versus COMMISSIONER OF C. EX., MEERUT [2012 (2) TMI 424 - CESTAT NEW DELHI], where it was held that The requirement of filing a declaration is a procedural condition, and exemption cannot be denied on this basis - appeal dismissed - decided against Revenue.

  ---

• 2017 (5) TMI 1077
  Restoration of appeal - pre-deposit - Held that: - If the appellant fails to comply with the interim order the Tribunal should have vacated the interim order and rejected the stay application but non compliance of interim order cannot be a ground to reject the appeal of appellant - appeal restored - decided in favor of applicant.

  ---

• 2017 (5) TMI 1076
  Sub-contract - clearances made on sub-contract for the mega power project- Benefit of N/N. 6/2006-CE dated 01.03 2006 - denial on the ground that the end use certificate is not signed by the CEO of the Project but by the Group Head, Finance - Held that: - Since, the Project has been amended including the appellants and also the said document has been amended duly authorising the Group Head, Finance to issue the Project Authority Certificate, the appellants have sufficiently complied with the condition laid in the Notification - denial of benefit is unjustified - appeal allowed - decided in favor of appellant.

  ---

• 2017 (5) TMI 1075
  Communication of the order - Section 37C of CEA, 1944 - Held that: - It is not in dispute that the order was sent by Regd Post with acknowledgment due and it has been delivered/communicated to the appellant on 10.10.2014. Needles to emphasize that the appellants’ factory has been functional at the relevant time and also the order had been delivered by the Postal Authorities on a working day during office hours - the service of the order is in accordance with the Provision of Section 37C of CEA 1944 - appeal dismissed - decided against appellant.

  ---

• 2017 (5) TMI 1074
  CENVAT credit - denial on the ground that receipt of inputs could not be established - Held that: - as far as the credit against Bill of Entry No.775377, dt.26.06.2008 is concerned, the same is admissible to them. But, since they failed to establish receipt of the inputs against Bill No.461582, dt.19.02.2008, the same is not admissible to them - appeal allowed - decided partly in favor of appellant.

  ---

• 2017 (5) TMI 1073
  Valuation - goods manufactured by the assessee used by its another unit for captive consumption - Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules 2001 - N/N. 14/2014-CE(NT) dated 22.11.2013 - Held that: - In view of the changes in Rule 8, w.e.f. 01.12.2013, differential duty only for the period January 2012 to March 2013 and April 2013 to November 2013 has been demanded. For the period prior to that date, however, the earlier provisions of Rule 8 will therefore apply, which envisages entire quantity of goods manufactured to be used for consumption by the assessee or on its behalf. If this conditionality was not satisfied, value necessarily would have to be determined under Rule 4 of the Central Excise Valuation Rules as it existed during the period under dispute - upto 30.11.2013, appellants were required to discharge duty on the impugned clearances only as per erstwhile Rule 4 of the said Central Excise Valuation Rules 2000. Penalty - Held that: - there is no bonafide reason for resorting to undervaluation, that appellants instead deliberately suppressed and misstated material facts with intent to evade payment of duty liability - penalties justified. Appeal dismissed - decided against appellant.

  ---

• CST, VAT & Sales Tax

• 2017 (5) TMI 1064
  Refund claim - demand order has been passed in 2017, more than five years after the filing of the return - time limitation - Held that: - The Court hereby sets aside the notices of default assessment of tax and interest dated 11th January 2017 and 24th January 2017 under Section 32 of DVAT Act for the second, third and fourth quarters of 2012 respectively - petition allowed - decided in favor of petitioner.

  ---

• 2017 (5) TMI 1063
  Refund claim - denial of input tax credit - Section 9(2) (g) of the DVAT Act - Held that: - what the VATO has done is clearly an abuse of the powers conferred to him under the DVAT Act. It is in utter disregard of his statutory obligation of processing the refund claim in accordance and within the time stipulated for that purpose under the DVAT Act. The Court, therefore, has no hesitation to quash the default assessments of tax and interest dated 17th December, 2016 u/s 9 (2) of the CST Act and the default assessment of penalty dated 10th January, 2017 u/s 33 of the DVAT Act - refund orders will be issued by the VATO concerned in favour of the Petitioner - petition allowed - decided in favor of petitioner.

  ---

• 2017 (5) TMI 1062
  Levy of tax on the exempted inter State Sales effected to SEZ Units - Form-F - Held that: - Form VAT 240 submitted by the petitioner which was inclusive of the sales made to SEZ unit and by mistake the 1st respondent had once again estimated the interstate sales to SEZ Unit without declaration forms and subjected the same to turnover to tax twice. But despite the lapse of two months neither of the rectification applications have been decided either by respondent No.1 or by respondent No.2 - petition dismissed - decided against petitioner.

  ---

• 2017 (5) TMI 1061
  Refund claim - C-Form in original - demand of documents was not for the purpose to frame fresh default assessments of tax and interest - Held that: - The Court clarifies that if no further documents from the side of the Petitioner are required to be submitted, then the DVAT Department should proceed to pay the amount of refund together with interest for the undisputed period to the extent it is not disputed and does not relate to the statutory forms - petition disposed off.

  ---

• 2017 (5) TMI 1060
  Legality of assessment order - works contract - Section 38 - Held that: - since on previous occasion the petitioner had not responded to the notice served by the department, this court directs the petitioner to appear before the Revenue Department along with the books of accounts, and other related documents, on 27-03-2017 - assessment order dated 11-04-2016 is hereby set aside - matter allowed by way of remand.

  ---

• Indian Laws

• 2017 (5) TMI 1057
  Conviction under Section 138 of the Negotiable Instrument Act, 1881 - Held that:- The issue with regard to dismissal of an employee solely on the basis of conviction and without holding a regular inquiry is no longer resintegra. In the instant case, a perusal of the impugned order would show that dismissal from service is simplictor on the ground of conviction under Section 138 of the Act being upheld by this Court. Therefore, any adverse order passed without holding a regular inquiry, as envisaged under the Rules, is not sustainable and deserves to be set aside. Consequently, the writ petition is allowed, the impugned order of removal from service is set aside. The petitioner would be deemed to be in service with all consequential benefits. The respondents, however, would be at liberty to take a decision with regard to the period of suspension and emoluments admissible to the petitioner, as per rules.

  ---

• 2017 (5) TMI 1056
  Suit for recovery of damages and compensation for malicious prosecution from the defendant - Held that:- This suit for compensation for malicious prosecution filed during the pendency of the appeal against the order of acquittal is held to be premature and the plaint liable to be rejected. All prosecutions ending in an acquittal cannot be said to be malicious. There is no presumption in law of a prosecution ending in an acquittal being malicious. Thus a plaint in a suit for compensation for malicious prosecution merely stating that the plaintiff was prosecuted by or at the instance of the defendant and was acquitted, would not disclose a cause of action. There can be manifold reasons for acquittal. Every acquittal is not a consequence of the prosecution being malicious. It cannot be lost sight of that the remedy of compensation has been provided for “malicious prosecution” and not for “wrongful or uncalled for or failed prosecution”. The tort of malicious prosecution requires proof of (a) initiation or continuation of a lawsuit; (b) lack of probable cause; (c) malice; and, (d) and favorable termination of lawsuit. The plaintiff in a suit for malicious prosecution has to necessarily disclose in the plaint the ulterior reason or purpose for which the defendant prosecuted him. The plaintiff in the present case has not disclosed any such particulars whatsoever. Though it is pleaded that the defendant is the son of the younger brother of the plaintiff but there is no averment as to the purpose sought to be achieved by the defendant by so prosecuting the plaintiff. As in this context enquired from the counsel for the plaintiff, whether not the dishonoured cheques were drawn on the bank account of the plaintiff.The counsel for the plaintiff replied in the affirmative.There is absolutely no averment in the plaint as to how the said cheques landed in the hands of the defendant and as to what motive the defendant was seeking to attain by prosecuting the plaintiff. Thus hold the plaint to be not disclosing a cause of action for the relief claimed of compensation for malicious prosecution. Thus the suit is misconceived and is dismissed with costs of 20,000/- to the defendant.

  ---