TMI Tax Updates - e-Newsletter
May 6, 2017

Case Laws in this Newsletter:

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

TMI SMS

• Non deduction of TDS - the word payable u/s 40(a)(ia) also covers the cases where the amount is actually paid during the year - SC

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• Claim of small scale exemption - renting of immovable property - all the joint owners can claim the benefit of Ntf/No. 6/2005 of service tax

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Articles

1. IMPACT OF GST ON AUTOMOBILE DEALERS

   By: Dr. Sanjiv Agarwal

News

1. 'State check posts will go under GST; excise point may stay'

2. The Union Minister of Finance, Defence and Corporate Affairs Shri Arun Jaitley will be leaving on a three day official visit to Japan tomorrow to participate in the Annual Meeting of Board of Governors’ of Asian Development Bank (ADB) and the Spring Meeting of the Institute of International Finance (IIF) among others

3. The promulgation of Banking Regulation (Amendment) Ordinance, 2017 will lead to effective resolution of stressed assets, particularly in consortium or multiple banking arrangements

4. Request for stakeholder’s comment on draft rules relating to valuation of unquoted equity share for the purposes of section 56 and section 50CA of the Income-tax Act, 1961.

5. Draft rules relating to valuation of unquoted equity share for the purposes of section 56 and section 50CA of the Income-tax Act, 1961

6. RBI Reference Rate for US $

Notifications

SEZ

1. S.O. 1399(E) - dated 2-5-2017 - SEZ

Central Government notifies an additional area of 0.97 hectares at Village Manjari Budruk, Taluka Haveli, District Pune, in the State of Maharashtra

2. S.O. 1398(E) - dated 2-5-2017 - SEZ

Central Government notifies 11.35 hectares area at Village Koorgalli, Itwala, Hobli, Mysore Taluk, Mysore District, in the State of Karnataka and constitutes an Approval Committee

3. S.O. 1132(E) - dated 31-3-2017 - SEZ

Central Government notifies 1.16 hectares area at 141 & 142, Nanakramguda Village, Serilingampally Mandal, Renga Reddy District in the State of Telangana and constitutes an Approval Committee

4. S.O. 1131(E) - dated 31-3-2017 - SEZ

Central Government notifies the 2.34 hectares area at Byatarayanapura Village, Yelahanka Hobli, Bengalaru North, Bangalaru in the State of Karnakata and constitutes an Approval Committee

Highlights / Catch Notes

Income Tax

• Supreme Court Clarifies Section 40(a)(ia) of Income Tax Act: "Payable" Includes Paid and Unpaid Amounts in Transactions.

  Case-Laws - SC : Interpretation of Section 40(a)(ia) - it cannot be held that the word 'payable' occurring in Section 40(a)(ia) refers to only those cases where the amount is yet to be paid and does not cover the cases where the amount is actually paid - SC
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• Assessee Avoids Penalty for Cash Loan Violation; Explanation Accepted u/s 271D, Supported by Section 273B.

  Case-Laws - AT : Penalty proceedings u/s. 271D - assessee had received loans in cash - violation of provisions u/s 69SS - Explanation given was accepted in assessment proceedings, so the same can be considered as reasonable for accepting cash for the purpose of section 271D read with section 273B - AT
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• Assessee Proves Lender's Credibility u/s 68; No Need to Establish Sub-Creditor's Genuineness or Creditworthiness.

  Case-Laws - AT : Addition u/s 68 - assessee has discharged its onus to prove the creditworthiness and genuineness of the lender, there was no requirement in law for the assessee to prove the genuineness and creditworthiness of the sub-credito - AT
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• Disallowance of Brokerage and Commission for Non-Deduction of TDS Applies Only to Business Income, Not Capital Gains.

  Case-Laws - AT : Disallowance of brokerage and commission - non deduction of TDS u/s 40(a)(ia) - section 40(a)(ia) of the Act only applies when income is computed under the head ‘profit & gains’ from business or profession, but not under the head ‘income from capital gains’ - AT
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• Trust Amendments Expanding Scope in India Won't Affect Tax Exemption u/s 11 If Aligned with Charitable Objectives.

  Case-Laws - AT : Exemption u/s 11 - So long as the amendments in objects is restricted to the such scope expansion in India and large number Indians are roped in to reap the benefits of the charitable objects of the Trust, in our opinion, such amendments, if any, ought not work detrimental to the trust in any way - AT
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• Section 41(1) of Income Tax Act: Unpaid Debts Over Time Don't Imply Liability Ceased or Remitted.

  Case-Laws - AT : No addition u/s 41(1) can be made merely on the ground that the debts remained unpaid in the appellants’ books for a number of years and no presumption can be made that the said liability had ceased or had been remitted - AT
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• DVO's Valuation Overruled: Excessive Use of CPWD Rates, Ignored Self-Supervision Deduction, Unjustified Construction Period.

  Case-Laws - AT : Addition of undisclosed investment - the valuation done by the DVO by adopting the CPWD rate instead of State PWD rates and not allowing 10% for self supervision is held as excessive. Further the period of construction adopted by the DVO was also not justified - AT
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Customs

• Customs Authority Rejects Coconut Import Value Due to Lack of Evidence; Importance of Supporting Declared Values Highlighted.

  Case-Laws - AT : Valuation - import of desiccated coconut from Sri Lanka - transaction value - appellant could not produce any material evidences to support the declared value - rejection of transaction value upheld - AT
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Service Tax

• Co-owners of immovable property eligible for Rs. 10 lakh exemption under Notification No. 6/2005-ST.

  Case-Laws - AT : Claim of small scale exemption upto ₹ 10 Lakhs - immovable property has been jointly owned by six co-owners - Each owner is eligible to avail the exemption under N/No. 6/2005-ST, dt.1.3.2005 as amended - AT
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Central Excise

• CENVAT Credit Approved for Consultancy Services on Pipeline Project Supplying Water to Dariba Mines.

  Case-Laws - AT : CENVAT credit - eligible input service - consultancy service with respect to laying of pipelines for supply of water from dams to the Dariba Mines of the appellant - credit allowed - AT
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• Revenue Can't Deny CENVAT Credit to Recipient Due to Manufacturer's Excise Duty Payment Error.

  Case-Laws - AT : CENVAT credit - whether the Revenue can deny credit of the said duty paid in the hands of the recipient of such goods, on the premise that no such excise duty ought to have been paid by the manufacturer-supplier? - Held No - AT
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• CENVAT Credit Approved for Consultancy Services on Pipelines Used in Manufacturing Process Related to Water.

  Case-Laws - AT : CENVAT credit - eligible input service - water is essential in the manufacturing process - The service tax paid is on services received w.r.t. pipelines - service tax paid under subject service viz. consultancy service is eligible for Cenvat credit by the appellant - AT
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Case Laws:

• Income Tax

• 2017 (5) TMI 242
  Interpretation of Section 40(a)(ia) - Disallowance due to non deduction of tax at source (TDS) - Amount payable at the end of FY or any time during the year - Whether the provisions of Section 40(a)(ia) shall be attracted when the amount is not 'payable' to a contractor or sub-contractor but has been actually paid? - Held that:- When the entire scheme of obligation to deduct the tax at source and paying it over to the Central Government is read holistically, it cannot be held that the word 'payable' occurring in Section 40(a)(ia) refers to only those cases where the amount is yet to be paid and does not cover the cases where the amount is actually paid. If the provision is interpreted in the manner suggested by the appellant herein, then even when it is found that a person, like the appellant, has violated the provisions of Chapter XVIIB (or specifically Sections 194C and 200 in the instant case), he would still go scot free, without suffering the consequences of such monetary default in spite of specific provisions laying down these consequences. The Punjab & Haryana High Court [2015 (5) TMI 617 - PUNJAB & HARYANA HIGH COURT] has exhaustively interpreted Section 40(a(ia) keeping in mind different aspects. Allahabad High Court [2013 (7) TMI 622 - ALLAHABAD HIGH COURT], while interpreting Section 40(a)(ia), did not deal with this aspect at all, even when it has a clear bearing while considering the amplitude of the said provision. - No doubt, the Special Leave Petition thereagainst was dismissed by this Court in limine. However, that would not amount to confirming the view of the Allahabad High Court. The view taken by the High Courts of Punjab & Haryana, Madras and Calcutta is the correct view and the judgment of the Allahabad High Court in CIT v. Vector Shipping Services (P) Ltd., did not decide the question of law correctly. - Decided in favor of revenue.

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• 2017 (5) TMI 218
  Adding leave salary u/s.43B(f) - Held that:- The assessee failed to file the necessary evidence in course of the impugned consequential proceedings. It did not provide / file permanent addresses of the concerned employees so as to prove genuineness of the leave salary expenses in question. Both the lower authorities therefore repeat the impugned disallowance. Learned senior counsel/Authorized Representative is very fair in informing the bench that the very factual position continues herein as well. We thus find no reason to interfere in the impugned disallowance. This first substantive ground decided against assessee. Disallowance of interest expenses - non charging of interest on loans given to partner - CIT(Appeals) noted that if no loan or advance is given to Shri R.P.Singh in the assessment year in question, there is no question of any diversion of borrowed funds, thus restore this issue to the file of Assessing Officer with a direction to verify, if any interest is charged, in the earlier assessment year or not - Held that:- We sought to know from Shri Shah as to whether the assessee has filed any supportive evidence in furtherance to the above extracted directions or not. His reply is in negative. We therefore affirm the second disallowance as well by following the above extracted detailed discussion. - Decided against assessee. Disallowance to contribution made towards provident funds paid before the due date of filing of the return - Held that:- There is no dispute that the assessee did not file the requisite details in light of the above extracted directions that the same had been paid before the due date. The fact remains that the law on this issue is very much against the assessee as of now. The assessee fails in its third substantive ground as well.

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• 2017 (5) TMI 217
  Reopening of assessment - as per the TDS certificate dated 29.5.2003 issued by ONGC at Rs. 15,64,92,615/- should be considered and the figure on which earlier assessment has been framed is not correct - Held that:- From the perusal of the said TDS certificate and details of the payment mentioned therein, we find that there is one payment of Rs. 4,64,73,960/- has been mentioned to be relating to 31.03.2002, i.e., pertaining to A.Y. 2002-03. This amount as pointed out by the Ld. Sr. Counsel, stands assessed by the Assessing Officer in the A.Y. 2002-03 in the order passed u/s 143(3) dated 18.10.2004. Once, the amount outstanding as on 31.3.2002 as mentioned in the TDS certificate has been taxed in the A.Y. 2002-03, then there remains no basis for holding that this amount has been left to be taxed in the A.Y. 2003-04 at the time of passing of the original assessment order. Thus, on this ground alone, we find that there cannot be any ‘reason to believe’ for reopening the assessment u/s 147 and taxing the additional revenue which already stands assessed and taxed in the earlier assessment year. Accordingly, the ground raised by the revenue is dismissed.

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• 2017 (5) TMI 216
  Disallowance u/s.36(1)(iii) - assessee has given interest free advances to the persons referred u/s.40A(2)(b) - Held that:- Fom the facts of the present case and the decision of Hero Cycles (P.) Ltd. Versus CIT [2015 (11) TMI 1314 - SUPREME COURT OF INDIA] essentially there has to be a commercial expediency or there has to be interest free funds with the assessee and the decision of Abhishek Industries is not a good law in view of the decision of Hon’ble Apex Court referred to hereinabove. Since, the earlier year advances have been accepted in the preceding years and no interest on the same has been disallowed, therefore, no disallowance in the impugned year can be made in view of the decision of Hon’ble Karnataka High Court in the case of Sridev Enterprises [1991 (1) TMI 52 - KARNATAKA High Court] wherein held that a debt which had been treated by the Revenue as a good debt in a particular year cannot subsequent be held by it have become bad prior to that year. - Decided in favour of assessee

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• 2017 (5) TMI 215
  Revision u/s 263 - income under the head “income from capital gain” wrongly calculated - Held that:- It is the case of the assessee that a valuation report was submitted showing year wise construction and that the sale deed also mentions the construction of property. However, the ld. Pr.CIT has given a finding, no such evidence, books of account or balance sheet for the year in which the construction has been made, filed to prove actual construction and its recording in the books of account. The assessee was required to file evidences in support of the construction for making a claim in respect of cost of acquisition of the property by furnishing the evidence of expenditure incurred. However, the assessee has filed a valuation report by a registered valuer enclosed at pages No. 11 and 12 of the paper book. The valuer has reported that cost of construction is calculated as per the standing order of the department of Public Works, Government of Rajasthan. Under these facts, we deem it appropriate to modify the impugned order and direct the Assessing Officer while deciding the issue of cost of property would call for a valuation report from the departmental valuer and also make enquiry with regard to the cost of construction of the property. - Appeal of the assessee allowed for statistical purposes only.

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• 2017 (5) TMI 214
  Penalty u/s 271(1)(c) - Undisclosed investment in mutual funds - deduction u/s 80C and 80G denied - Held that:- As assessee failed to substantiate her claim before the AO by producing cogent and convincing evidence. So also even before the Ld. CIT (A) no such exercise was undertaken. Observing that there is no material in support of the claim of the assessee, the authorities below concluded that the assessee is not entitled to the benefits claim. However, since such material is produced now which according to the Counsel on either side requires verification at the end of the AO to reach a just conclusion, we find it just and proper to set aside the matter to the file of the AO for consideration of the matter afresh in the light of the documents now produced or that will be produced before the AO. Since, we are setting aside the matter relating to the quantum additions to the file of the AO, the penalty proceedings do not survive and they shall follow a fresh consideration of the matter by the AO

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• 2017 (5) TMI 213
  Review petitions - Rejection of books of accounts - SC confirmed [2017 (5) TMI 193 - SUPREME COURT] that Appellant-assessee had failed to produce the Registers indicating Production, Issuance and Consumption. Thus the view to reject books of account for the Assessment Years 2006-07 and 2007-08 is a possible view on facts - Held that:- We do not find any merit in the review petitions and the same stand dismissed.

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• 2017 (5) TMI 212
  Deemed dividend addition - Held that:- ITAT was justified in setting aside the addition under Section 2(22)(e) made by the AO on account of payments by Raj Homes Pvt. Ltd to Shri Arun Sahlot and his proprietary concerns Arun Associates and Raj Industries, with the direction to examine such aspects as commercial exigency of the loan and terms of loan even though these aspects are not relevant u/s 2(22)(e). Apart from this, the tribunal has only made remand to the Assessing Officer. It is well settled principle of law that if remand order has been passed, then there is no substantial question of law involved for determination because all the questions are open before the authority after remand. Validity of assessment u/s 153A - Held that:- Section 153 A of the Income Tax Act prescribes that the Assessing officer has authority to re-assess the tax liability of a person on the basis of material received in search operation. Clearly, this section stipulates that it is the duty of the Assessing Officer to verify the information received from the sources, if the information and the facts are not correct in accordance with law. We answer the second substantial question of law accordingly that the ITAT has not committed any error of law in remanding the matter to the Assessing Officer. We do not find any merit in this appeal, it is hereby dismissed

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• 2017 (5) TMI 211
  Claim of depreciation on building u/s 32 - period of use of premises by assessee - Held that:- We find that the bill was issued in the name of BNS, though he was not in possession of the property after August, 2010 and that the bill was raised for the period for July,2010 to December,2010. As the sale of the flats was also in possession of the property during the said period, so, the bill was issued in his name.But, during the intervening period, he had handed over the possession to the assessee. It is also a fact that society maintenance charges,amounting Rs. 2.37 lakhs were paid by the assessee. In these circumstances, we are of the opinion that the FAA was not justified in holding that BNS was the owner of the property till October,2010. The possession letter clearly establishes the fact of ownership of the flats by the assessee in the month of August, 2010. Therefore, reversing the order of the FAA we hold that the assessee was entitled to depreciation of Rs. 23.68 lakhs.First ground of appeal is decided in favour of the assessee. Disallowance of professional fees paid for compilation of Share Purchase Agreement - Held that:- We find that the FAA has mentioned that the AR of the assessee had stated that there was no objection if the disputed amount was treated as capital expenditure, that accordingly he held that expenditure was capital in nature. Before us, the assessee has not produced any evidence to show that its AR has made no concession before the FAA.There was no reason for the FAA to treat the expenditure in question as capital expenditure,if the AR had not made the concession. Therefore, in our opinion, second ground raised by the assessee deserves to be dismissed. Disallowing a sum being the difference between interest and amount credited in the P&L account based on the information from the AIR database - Held that:- After considering the available material, we are of the opinion that matter needs further verification by the AO. Therefore, in the interest of Justice, we are restoring that the issue to the file of the AO for fresh adjudication. He is directed to afford a reasonable of urgency of into the assessee.Third ground is decided in favour of the assessee, in part

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• 2017 (5) TMI 210
  Disallowance of business expenditure - Cessation of business by the assessee - Held that:- As submitted by the assessee that assessee has shown substantial income in assessment year 2007-08 and 2008-09. Also there was a temporary lull in the business activity. However he has claimed that subsequently the business has picked up and in financial year 2015-16 and financial year 2016-17 assessee has shown substantial business income. We note that the balance sheet for the financial year 2015-16 was not before the authorities below. Furthermore the submission that there was a temporary lull and the business has subsequently picked up, was also not before the authorities below. However the proposition that when there is a temporary lull in the business, it cannot be said that there is a cessation of business by the assessee, is supported by the decision of Hon’ble High Court decision as cited above. When there is no cessation of business, assessee is engaged in doing business and the business expenditure as appropriate deserves to be allowed. However since we note that the additional evidence and the new submissions were not before the authorities below, hence in the interest of justice we remit this issue the file of the A.O. The A.O shall examine the issue afresh in light of the additional submissions of the assessee. Appeal of the assessee allowed for statistical purposes.

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• 2017 (5) TMI 209
  Disallowance under section 14A r.w. Rule 8D - Held that:- No disallowance under section 14A of the Act can be made in the case on hand for the year under consideration since the assessee has not earned any exempt income. We, therefore, set aside the decision of the authorities below and direct the AO to delete the disallowance of expenditure under section 14A of the Act. See Cheminvest Limited Versus Commissioner of Income Tax-VI [2015 (9) TMI 238 - DELHI HIGH COURT] Whether investments have been made in the subsidiary company for the purposes of having strategic control therein and not for the purposes of earning of exempt income ? - Held that:- Entire strategic investments made by the assessee in the shares of its subsidiary company, M/s. Shreeniwas Cotton Mills Ltd. is to be excluded while computing the disallowance under section 14A r.w. Rule 8D. See Vakrangee Ltd. vs. ACIT [2016 (8) TMI 1148 - ITAT MUMBAI]

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• 2017 (5) TMI 208
  Transfer pricing adjustment - Corporate guarantee addition - Held that:- The difference in interest charged on the loan cannot be considered as a guarantee commission fee as the parameter for obtaining a loan at a particular interest rate is different from providing Corporate guarantee. Thus there is no basis for determining @ 6% by the DRP. In the above referred case of Asian Paints Ltd [2014 (5) TMI 880 - ITAT MUMBAI], after analyzing the various guarantee Commissions charged by banks and also relying on the order for the A.Y 2006-07 in that Assessee’s case, the ITAT has held that the guarantee commission can be charged at 0.25%. Respectfully following the same, we also direct the TPO/AO to restrict the adjustment to 0.25% of the amount. Disallowance u/s 14A - Held that:- Considering the submissions made by the Assessee we notice that the dividend income earned by Assessee was not exempt from tax and offered as income, therefore the provisions of Sec. 14A of the IT Act does not apply to these investments. AO is directed to delete the disallowance on the above issue Addition towards excise duty on closing stock - Held that:- We are of the opinion that the A.O has not followed the directions of the DRP stating that the contentions of the Assessee appears to be correct and if such contentions are correct there is no double deduction of Excise duty in view of the above submission of the Assess, the A.O is directed to verify the claim. Thus A.O is directed to examine the details furnished by Assessee and if the contentions are found correct as stated by the DRP the amount has to be deleted. Interest on loan to AE - Held that:- As the loan was given in foreign currency outside India and accordingly the LIBOR rate should be the basis for calculation of interest rate. Since Assessee has charged more than of the LIBOR rate at 8%, we are of the opinion that no adjustment is required to be made and accordingly the amount confirmed by the DRP stands deleted. Addition on Reimbursement of Expenditure - Held that:- No ALP adjustments can be made to the reimbursement expenditure, which is only reimbursement of traveling and other miscellaneous expenditures and is not charged to profit and loss account. Accordingly grounds of the Assessee on this issue are allowed. Disallowance of expenditure on sales promotion, office maintenance, corporate expenses and site maintenance - Held that:- A.O is correct in the disallowing certain expenditure as the vouchers are not verifiable, being self-made. However, we are of the opinion that 5% of the said expenditures can be disallowed as A.O has adopted 10% on certain expenditure and 5% on certain other expenditure. We direct the A.O to disallow the expenditure uniformly at 5% on sales promotion expenses of 53,13,003/-, office maintenance expenses of Rs. 28,74,687/-, out of pocket expenses of 20,71,280/-. 5% on site maintenance expenses of Rs. 4,93,27,915/- does not require any modification. The grounds are accordingly considered partly allowed.

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• 2017 (5) TMI 207
  Penalty proceedings u/s. 271D - assessee had received loans from various individual- Directors in cash in excess of the limits prescribed u/s. 269SS - Held that:- The company has accepted amounts from the directors and the explanations from the directors was considered in the assessment proceedings and accepted. There is truth in the contention of the assessee that on the same explanation given in the assessment proceeding, the penalty proceedings cannot be initiated. Further, assessee has given a reasonable explanation that the amounts were taken in cash for i) for payment to the court in lieu of directions given by the court to pay the amount in Bengaluru. Assessee in fact has purchased a DD in Andhra Bank Bengaluru and paid to the creditor as per the directions of the court, ii) an amount of Rs. 80,024/- was paid to ICICI Bank for car instalments in small amounts, iii) an amount of Rs. 6,90,000/- was spent for day to day running expenses of the office as the company is having financial difficulties. Further substantial amount was deposit in Bank Account directly. Explanation given was accepted in assessment proceedings, so the same can be considered as reasonable for accepting cash for the purpose of section 271D read with section 273B. Thus it is of the view that the assessee has shown reasonable cause within the meaning of section 273B, therefore, the penalty order is to be set aside. - Decided in favour of assessee.

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• 2017 (5) TMI 206
  Penalty under section 271(1)(c) - Held that:- As the quantum issues on the basis of which penalty under section 271(1)(c) of the Act for these years was levied do not now survive for consideration and, therefore, the said orders levying penalty under section 271(1)(c) of the Act being unsustainable, we cancel the same. Consequently, we allow the assessee’s appeals for assessment years 2001-02 to 2004-05 seeking the deletion of penalty levied under section 271(1)(c) of the Act. - Decided in favour of assessee.

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• 2017 (5) TMI 205
  Addition u/s 68 - loans creditors admitted to the fact of having advanced the loan to the assessee - Held that:- It is not the case of the assessee that the loan creditors had advanced the money out of the income of the year alone and no positive material has been brought on record to show that loan creditors could not have any other source like his capital i.e. saving of earlier years or receipt from any other person from which the loan creditors could not have advanced the loan. The Assessing Officer observed that the loan creditors have deposited the amount in cash before issuing cheque to the assessee. In our view where a borrowing or a credit is shown to have come from the person other than the assessee, there is no further responsibility for the assessee to show that it has come from the accounted source of the lender. As decided in case of CIT vs. Shiv Dhooti Pearls & Investment [2015 (12) TMI 1291 - DELHI HIGH COURT] held that where the assessee has discharged its onus to prove the creditworthiness and genuineness of the lender, there was no requirement in law for the assessee to prove the genuineness and creditworthiness of the sub-creditor. Thus we delete the addition made by the Assessing Officer u/s.68 of the Act as unexplained cash credit. - Decided in favour of assessee Denying deduction u/s.54F claimed out of long term capital gain on sale of land - Held that:- We are of the considered view that if during the course of assessment proceedings, the assessee filed details of claim of exemption of the same u/s.54F of the Act, the Assessing Officer is duty bound to entertain those details and verify the same and if the assessee is found eligible otherwise as per the conditions u/s.54F of the Act, he is bound to allow deduction to the assessee. Our view finds support from the circular of CBDT No.014(XL)-35) dated 11.4.1955. Further, we find that the assessee has filed all details for claim of deduction u/s.54F before the CIT(A), who held against the assessee on the ground that the assessee had not claimed deduction in the return of income. We find that Hon’ble Supreme Court in the case of Goetz (India) Ltd (2006 (3) TMI 75 - SUPREME Court ) has categorically held that the decision does not impinge upon the power of the appellate authority. Thus we feel it would be just and fair to remand back the issue of allowability of deduction u/s.54F to the file of the Assessing Officer for adjudication afresh as per law after considering all the details and evidence filed by the assessee in support of the claim. - Decided in favour of assessee for statistical purposes.

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• 2017 (5) TMI 204
  Claim of deduction under Section 80IB(10) - fulfillment of conditions - as per AO assessee was unable to get approval of the housing project by the Municipal Corporation as separate building plans for each of the units - Held that:- As relying on in assessee’s own case for AY 2011-12 and case of B.M. and Brothers [2013 (10) TMI 290 - GUJARAT HIGH COURT ] wherein observed that as the assessee has taken the approval in respect of the housing project more than once and it shall be deemed to have been approved on the date on which the building plan of such housing project is first approved by the local authority and accordingly held that assessee was eligible to avail the claim of deduction under Section 80IB(10) of the Act. - Decided in favour of assessee

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• 2017 (5) TMI 203
  Bogus purchases - invoices were incomplete with respect to details of transportation etc. - Held that:- Prima facie, it appears that the addition has been made solely on the basis of information received from the Sales Tax department and statement made u/s 133A by the MD of assessee company during survey operations. Therefore, we find lapses on both the sides. The Tribunal, invariably, in all such cases, have taken a stand that even if presuming that all purchases were bogus, entire addition thereof was not warranted for particularly when the sales were not in dispute and the accounts of the assessee were audited and the assessee provided quantitative details to a reasonable extent and the addition, if any, which has to be made in all such cases is to account for profit element embedded in such purchase transactions. Therefore, after due discussion with both the representative, we estimate the addition @12.5% of bogus purchases of Rs. 6,72,98,528/- which comes to Rs. 84,12,316/-. Hence, addition to that extent is confirmed. - Decided partly in favour of assessee Addition on account of Service Tax Liability u/s 43B - Held that:- Respectfully following the jurisdictional High Court in CIT Vs. Ovira Logistics Private Limited [2015 (4) TMI 684 - BOMBAY HIGH COURT ] Rigor of Section 43B do not apply in case the liability to pay service tax did not arise as per the relevant Service Tax Rules notwithstanding the fact that the same was shown as outstanding in the books of accounts and remained unpaid. Therefore, in principle, we agree with the contentions of the Ld. AR and therefore, deem it fit to restore the matter back to the file of Ld. AO for limited purpose of verification of the fact that the service tax liability shown as outstanding at year end and remaining unpaid was actually not payable as per service tax rules. If so, the impugned additions shall stand deleted.

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• 2017 (5) TMI 202
  Addition u/s 68 - Held that:- Assessee filed the supporting documents on 21.12.2009 and the assessment order was framed on 31.12.2009 without any further communication. After considering the facts and circumstances of the case, we find that proper opportunities have not been provided by the Assessing Officer in this case and the submissions made by the assessee were not fully considered. Therefore, we set aside this issue to the file of the ld. Assessing Officer to decide the same afresh after providing the assessee due opportunity of being heard. Disallowance of vehicle running expenses to the extent of 10% - Held that:- We find that the assessee was not maintaining log book towards the running of vehicles for the office purposes. Therefore, the action of ld. CIT(A) in restricting the addition to 10% of these expenses is found justifiable. Thus, the order of ld. CIT(A) does not require any interference Disallowance of telephone mobile expenses and vehicle fuel expenses - Held that:- We find that the ld. CIT(A) was justified in upholding the disallowance made by the ld. Assessing Officer for want of verification of proper supporting vouchers/evidences which could not furnished by the assessee to substantiate its claim. Thus, we do not find any infirmity in the order of the ld. CIT(A)

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• 2017 (5) TMI 201
  Disallowing the cost of improvement - adoption of FMV - A.O. has re-worked cost of land mainly on the ground that as per the books of accounts, the cost of land is much below the cost of land claimed by the assessee as on 1.4.1981 - Held that:- We do not find any merits in the findings of the A.O., for the reason that the impugned property was purchased in the year 1962. We further observed that as per provisions of section 48 of the Act, the assessee can adopt either cost of the land or fair market value as on 1.4.1981 when the land was purchased prior to 1.4.1981. In this case, admittedly, the land was purchased prior to 1.4.1981. Therefore, we are of the view that there is no error in adopting the fair market value of the land as on 1.4.1981, as against the cost of land in the books of accounts. The assessee has adopted cost of acquisition based on the certificate issued by the SRO. On the other hand, the A.O. has adopted cost of acquisition as per the purchase cost of the land, which was purchased prior to 1.4.1981. Therefore, we are of the view that the A.O. was erred in working out indexed cost of land based on the purchase cost of the property, ignoring the provisions of section 48 of the Act, as well as the SRO value fixed by the State Government. The CIT(A) after considering relevant provisions of the Act, has rightly directed the A.O. to allow cost of acquisition of the land as on 1.4.1981. We do not find any error in the order of the CIT(A). Hence, we uphold the CIT(A) order and reject the ground raised by the revenue. Indexed cost of building - Held that:- The assessee has incurred an amount of Rs. 1,77,624/- towards construction of building for the financial year 1988-89 which was declared in the books of accounts. The A.O. never doubted the source of expenditure incurred for construction of building. But, he doubted the genuineness of the expenditure for failure to file the return of income by the assessee. Therefore, we are of the view that the A.O. was incorrect in disallowing the cost of building, despite the assessee has proved the cost of building with necessary evidences and also which was further supported by the sale deed wherein the existence of building was recorded in the schedule of the property. The CIT(A) after considering relevant provisions of the Act, has rightly directed the A.O. to allow cost of building. We find no error in the order of the CIT(A). Hence, we uphold CIT(A) order and reject ground raised by the revenue. Disallowance of cost of development and improvement to the building - A.O. disallowed cost on the ground that the assessee failed to prove the cost of development with necessary evidences - Held that:- A.O. was erred in disallowing cost of improvement/development merely on the ground that the assessee has not filed return of income. The filing of return of income is based on the taxable income for the relevant assessment years,. In case the assessee does not have taxable income, the assessee need not to file the return of income. Just because return of income was not filed it cannot be held that the assessee has not proved the expenditure. In this case, the assessee has filed balance sheets filed with the ROC, wherein the amount incurred for construction of building has been disclosed. The assessee also disclosed the existence of building in the sale deed. Therefore, we are of the view that the A.O. was completely erred in disallowing expenses incurred towards improvement of building. The CIT(A) after considering relevant facts has rightly directed the A.O. to allow cost of development/improvement. Disallowance of brokerage and commission - non deduction of TDS u/s 40(a)(ia) - contention of the assessee that the A.O. was erred in disallowing brokerage and commission u/s 40(a)(ia) of the Act, as the said section requires disallowance only in the case of computation of income from profits and gains of business or profession, but not under the head ‘income from capital gains’ - Held that:- We find force in the arguments of the assessee, for the reason that the section 40(a)(ia) of the Act only applies when income is computed under the head ‘profit & gains’ from business or profession, but not under the head ‘income from capital gains’. Therefore, we direct the A.O. to allow expenditure claimed under the head ’brokerage and commission’. Disallowance of expenses on transfer being compensation paid for property dispute - A.O. disallowed claim on the ground that the assessee failed to substantiate the expenditure with necessary evidences - Held that:- CIT(A) after considering the relevant documents has directed the A.O. to allow a sum of Rs. 22 lakhs out of Rs. 24,70,000/- claimed by the assessee towards expenses of transfer being compensation paid for resolving dispute and also expenses of litigation. We do not find any error in the order of the CIT(A). Hence, we inclined to uphold the CIT(A) order and reject the ground raised by the revenue.

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• 2017 (5) TMI 200
  Reopening of assessment - Held that:- We find that the Departmental Valuation Officer’s report is an opinion which has come to the knowledge of the AO during the assessment proceedings for the A.Y 2008-09 and the same was examined and an addition was made during the A.Y 2008-09. It is pursuant thereto, that the assessments for the relevant A.Ys have been reopened. We find that the AO for the A.Y 2008-09 has observed that the construction of the hospital building has taken place in two phases and has brought the proportionate cost to the tax in the A.Y 2008-09 and formed a belief that the cost of construction in the first phase has also been under reported by the assessee. Thus the re-assessment proceedings have been validly initiated. Valuation of cost of construction of the property - Held that:- DVO has valued the property as on 31.3.2008. The DVO has adopted the CPWD rate and not the State PWD rate, and he has adopted plinth area indexation method for valuation of the property. We also find that he has not given any rebate for self supervision, whereas it is the case of the assessee that her husband is an Architect and he himself has supervised the construction of the hospital. We find that for the A.Y 2008-09, the CIT (A) has considered the issue at length and has observed that the State PWD rates are to be considered and also the self supervision rebate is to be given. Since the construction of the building has started in financial year 2003-04 and has been partially completed in the financial year 2007-08, the rates adopted for financial year 2007-08 may be higher than the rates for the A.Ys 2004-05 and 2005-06. We find that the order of the CIT (A) for the A.Y 2008-09 has attained finality as no appeal has been filed by the Revenue. Therefore, we are of the opinion that the AO for the A.Ys 2004-05 and 2005-06 also has to adopt the valuation as per the State PWD rates for the relevant period and also has to grant discount for the self supervision. Therefore, the issue of valuing the cost of construction of the hospital building for the A.Ys 2004- 05 and 2005-06 is remitted to the file of the AO for consideration in accordance with law and our observations above. Addition on gift received - Held that:- While the assessee has filed confirmations of the gifts from her father and brother, no evidence whatsoever for the agricultural income and internal accruals have been filed. Since the confirmations have been filed, we are inclined to accept the gift from assessee’s father and brother, who out of love and affection might have given the gift of cash for construction of the hospital building and we are also inclined to accept a sum of Rs. 22,200 to be out of internal accruals as the assessee is a medical professional. However, as regards the agricultural income of Rs. 55,000, we confirm the addition as no evidence whatsoever of holding of agricultural land and carrying on of agricultural activities has been filed by the assessee. Therefore, the addition of Rs. 55,000 is confirmed. Similarly, addition of Rs. 1,60,800 is also confirmed as the assessee herself agreed for the addition during the assessment proceedings.

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• 2017 (5) TMI 199
  Reopening of assessment - AO reopened the case only on the basis of the investigation record - Held that:- There is no dispute to the fact that the Assessing Officer has acted upon the basis of investigation report as is evident from the reasons recorded hereinabove and no independent application of mind was made. There is no statement on oath and letters of admission which were given to the assessee in spite of repeated request made and also the learned DR could not produce such statement on oath and letters of admission. In such circumstances and facts of the case, Assessing Officer does not acquire any jurisdiction to make assessment / re-assessment u/s.147/148 of the Act. See Signature Hotels P. Ltd. vs. Income Tax Officer [2011 (7) TMI 361 - Delhi High Court] - Decided in favour of assessee

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• 2017 (5) TMI 198
  Disallowance of bad debts -Held that:- As the assessee demonstrated in writing that the assessee follows project completion method. Regarding interest receipts, it is the submission of the assessee that the interest received from the debtors was reduced from the total expenses and balance is considered as WIP thereby the said interest receipts are assessed to tax under the head “profits and gains from business or profession”. On examining the WIP accounts of the assessee for various years, we find the claim of the assessee is proper and the assessee entitled to relief on this part of the bad debts too. We direct the AO grant relief as per the law - Decided in favour of assessee Adjustment to the WIP account - DR opposed the admittance of the additional ground and the papers filed before us - Held that:- We are of the view that it is in the interest of justice the assessee must not be put to difficulty for no mistake of him. In our view it is the duty of the AO to make proper assessment. AO should have examined the past assessments for the details of the altered WIP figures before he complete the current assessment. Considering the above, we are of the view that the AO must remove the mistakes in the assessment and adopt the correct WIP considering the changes made in the past to the said account. In the remand proceedings, AO shall grant reasonable opportunity of being heard to the assessee. Accordingly, relevant grounds and additional grounds are allowed, in principle, for statistical purpose. Taxation of the exempt Share Income - Held that:- In the computation of income, there is mistake and the said income is not claimed as exempt. Such income is exempt as per the provisions of section 10(2A) of the Act. In the assessment the AO charged such exempt income tax ignoring the said provisions. In this back ground of these facts, the assessee raised the said additional ground. On hearing both the parties, we find that the assessment order of the AO is not sustainable on merits. Who can AO subject such exempt income to tax? No failure from assessee side shall justify such decision of the AO. AO is under statutory obligation to make proper assessment granting all eligible deductions and exemptions as the case may be. Admitting the additional ground considering the principles of natural justice, we direct to AO to examine the claim on this share income amend the assessment if the same is improper

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• 2017 (5) TMI 197
  Entitlement to claim of exemption u/s 11 - excess income over the expenditure - alteration /amendments made to the objects of the trust - Held that:- So long as the amendments in objects is restricted to the such scope expansion in India and large number Indians are roped in to reap the benefits of the charitable objects of the Trust, in our opinion, such amendments, if any, ought not work detrimental to the trust in any way. They merely expand the operational scope geographically to various states in India only.As such, it is on records that the CCIT approved the ‘charitable nature of the Object of the Trust’ during the proceedings u/s 10(23)(vi) of the Act. All the allegations of the AO ie change in name of the trust, and non-utilisation of the 85% of the total receipts, are ill-conceived. As stated earlier, it is a settled legal proposition that the utilization of receipts for ‘capital expenditure’ needs to be considered for the purpose of working out the said 85%. Further also, it is an undisputed fact that, during the year, the assessee has not earned any commercial receipts relatable to the said amendments / alteration of the objects and no new projects of that nature were initiated by the trust in this year for earning such ineligible income for AO to deny the benefits of the provisions of section 11 of the Act. It is very important to note that the AO/DIT(E) have not disturbed the existing Registration granted u/s 12A of the Act. Therefore, while the registration u/s 12A is in force and while the objects and the activities of the trust are genuine, denying the benefits of the provisions of section 11 of the Act constitutes premature and unsustainable. In our view, the CIT(A) as discussed in his order vide para 4.9 extracted above is very categorical that the amendments are inapplicable to the year under consideration. Revenue has not given any contrary arguments or decisions that necessitate the reversal of the finding of the CIT(A) by us. Thus, we confirm the CIT (A)’s findings and order for restoring the claim of deduction in favour of the assessee. - Decided against revenue

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• 2017 (5) TMI 196
  Reopening of assessment - claim of deduction u/s 80HHC - Held that:- We find from the facts of the case that the assessee has claim deduction u/s 80HHC of the Act at Rs. 97,06,022/- as disclosed in the audit report in form No.10 CCAC. The assessee has considered profits and gains in business amounting to Rs. 3,24.40 lakhs which includes income on account of exchange rate difference amounting to Rs. 2.58 crore and an amount of Rs. 4.47 lakhs on account of interest from bank and insurance claim etc. The AO during the course of original proceeding examine the working of the claim of deduction u/s 80HHC of the Act and framed assessment u/s 143(3) of the Act. Admittedly, the AO reopened the assessment after expiry of four years from the end of relevant AY by issuing notice u/s 148 of the Act dated 14-12-2010. It was claimed that there was no failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment of the assessee. There is no allegation in the reasons recorded that there is any failure on the part of the assessee to disclose any material fact, fully and truly, necessary for the assessment of the assessee. Once there is no failure on the part of the assessee to disclose the material facts, the assessment could not be reopened by invoking the provisions of section 147 r.w.s. 148 of the Act as that will tantamount the change of opinion. Accordingly, we confirm the order of CIT(A) quashing the re-assessment for the reason that the assessee s case falls under proviso to section 147 of the Act. - Decided in favour of assessee

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• 2017 (5) TMI 195
  Trading addition - rejection of books of accounts - CIT-A reducing trading addition - Held that:- CIT(A) has taken into account the increase in the turn over which is not controverted by the Revenue. Therefore, there is no infirmity into the order of Ld. CIT(A), same is hereby affirmed. Thus, this ground of the Revenue’s appeal is dismissed. Addition on account of ceased liability u/s 41(1) - Held that:- We find merit in the contention of the appellant as the AO neither had made any inquiries nor brought any material on record that the creditors either had written off the said liabilities in their book of accounts or denied to own these amounts. In considered opinion, no addition u/s 41(1) can be made merely on the ground that the debts remained unpaid in the appellants’ books for a number of years and no presumption can be made that the said liability had ceased or had been remitted. It is noted from the assessment order that out of the 4 invoiced, the payments for which outstanding as on 31.03.2012, the 2 were pertaining to the AY 2012-13 i.e. the year under consideration and 1 each was pertaining to AY 2010-11 and 2011-12, and thus as on 31.03.2012, these debts were not even barred by limitation. Thus AO was not justified in making addition u/s 41(1) of the Act - Decided against revenue

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• 2017 (5) TMI 194
  Addition of undisclosed investment in construction of house on the basis of report of the Departmental Valuer - validity of matter refereed to the D.V.O. - Held that:- The assessee has disclosed expenditure incurred in the construction of the house in various years starting from F.Y. 2007-08 to 2012-13. The assessee also submitted a valuation report with regard to the construction work done in the F.Y. 2007-08 and work done up to 2010 and on that basis the valuer has valued at Rs. 15,07,744/- for A.Y. 2007-08 and Rs. 2,82,655/- up to 2010. The survey team who visited assessee’s premises in the month of Feb, 2008 have accepted the investment in home at Rs. 15,00,000/- and the same was also accepted by assessee and disclosed in return of income. Thus, the valuation by DVO for F.Y. 2007-08 was excessive with regard to the assessee’s claim that the State PWD rate should have been adopted in place of CPWD rate or appropriate deduction should have been given out of CPWD rates as held in various cases by ITAT. ITAT in various cases have allowed reduction up to 20% from the CPWD rates. As also find merit in the plea of AR that 10% deduction should be allowed for self supervision. It is a justified claim. Thus the valuation done by the DVO by adopting the CPWD rate instead of State PWD rates and not allowing 10% for self supervision is held as excessive. Further the period of construction adopted by the DVO was also not justified in view of various documentary evidences filed by the assessee. Thus hold that the valuation report submitted by the assessee reflects the true affairs on the issue of period of construction and the cost of construction, therefore, direct to delete the addition made on the basis of DVO’s report, which is defective on many counts. - Decided in favour of assessee

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• Customs

• 2017 (5) TMI 226
  Valuation - import of desiccated coconut from Sri Lanka - transaction value - fixation of value on the basis of evidence received from Sri Lankan authorities - appellant claims that from the copies of documents procured by DRI from Sri Lankan Customs, it cannot be reasonably inferred that the goods covered by the documents are the same goods which were received by the importer, accordingly he prayed that the transaction value should be accepted - Held that: - It is seen from the proceedings before the lower authorities that copies of these documents were made available to the importer which clearly indicated the bill of lading number, container number, supplier name, quantity and description of goods, etc., which exactly match with the respective details in the Bills of Entry - The appellant could not produce any material evidences to support the declared value - rejection of transaction value upheld - appeal dismissed - decided against appellant.

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• 2017 (5) TMI 225
  Export of contraband item - the case of the petitioner is that, his employee, Srinivas Anjaneya has indulged in attempting to export the alleged contraband by using the IE code of the partnership firm of which the petitioner was a partner; and that the petitioner had no knowledge with regard to the contraband - scope of petition - Held that: - Section 37 of NDPS Act is not applicable, this petition is considered within the parameters of Section 439 Cr.P.C. The investigation is complete and complaint has been lodged. The accused No.2, has admitted that he was receiving monetary consideration from the alleged supplier of contraband Subair. He has admitted in his statement recorded under Section 67 of the NDPS Act that he was transacting with one Subair and the said transactions were not known to anybody else in the office. He has been enlarged on bail by the Sessions Court. Petitioner has been in custody since December 2, 2016. The offences alleged against him are not punishable with death or life imprisonment - petitioner deserves to be enlarged on bail with stringent conditions - petition allowed - decided partly in favor of petitioner.

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• 2017 (5) TMI 224
  Jurisdiction of Commissioner (Appeals) - Revenue is on the ground that the Commissioner (Appeals) have erred in remanding the matter to Adjudicating Authority - appellant imported consignments declaring the contents as waste paper office waste in the impugned Bills of Entry - mutilation of rags - Rule 5 of the Central Excise (Appeals) Rules, 2001 - Held that: - Commissioner (Appeals) have rightly remanded to the adjudicating authority for a fresh decision considering the facts and additional evidence produced before him. In this view the matter, the impugned order in appeal is upheld, directing the adjudicating authority to pass a fresh order as directed - appeal dismissed with directions by way of remand to the adjudicating authority.

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• 2017 (5) TMI 223
  Import of Waste and scrap - misdeclaration - examination had revealed the said goods to be, though old and used, serviceable wire rope and secondary/defective wire rope/rolls - Held that: - conformity with the definition of waste and scrap, the object of its ultimate usage, the origin and the value to be adopted for determining the duty liability have not been examined in the impugned order. These are matters vital to determination of classification as well as valuation of the goods. In the absence of determination that would meet the test of legality and propriety, the impugned order is incomplete - it is only proper that the submissions made by the appellant be given appropriate consideration before arriving at a decision on confiscation of the goods and determination of duty liability - appeal allowed by way of remand.

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• Corporate Laws

• 2017 (5) TMI 220
  Conversion from public to private company - Held that:- Petitioner has complied with provisions of Section 14 to be read with Rule 68 of NCLT Rules, 2016. Therefore, having regard to all the circumstances, the conversion from public to private is in the interest of the Company which is being made with a view to comply efficiently with the provisions of Companies Act, 2013 causing no prejudice either to the members or to the creditors of the Petitioner. Therefore, the conversion is hereby allowed. The Petitioner is hereby directed to give effect of the conversion by requisite alteration in its Articles which is hereby addressed and communicate the altered Articles within a period of 15 days to the Registrar.

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• 2017 (5) TMI 219
  Enforcement of order of Company Law Board - entitled to file the application under Section 634A of Companies Act - Held that:- Bare reading of Section 634A of Companies Act, 1956 it is clear that the power was vested with the Company Law Board (now National Company Law Tribunal) to enforce its order in the same manner as if it were a decree made by a Court in a suit pending therein, and it shall be lawful for that Board to send, in the case of its inability to execute such order, to the Court within the local limits of whose jurisdiction. It is only in the case the Board is unable to execute its own order, the Company Law Board was liable to enforce the order through the Court where the registered office of the company is situated. Now sub-section (3) of Section 424 of the Companies Act, 2013 empowers the Tribunal to get its order executed. The provision does not confine itself only to the beneficiary of the order. If any of the party to the Company Petition whether petitioner or the respondent brings it to the notice of the Company Law Board (now Tribunal) that the order passed by it has not been enforced, it is always open to the Company Law Board (now Tribunal) to get the same executed in the same manner as if it were a decree made by a court in a suit, and it is lawful for the Company Law Board or this Tribunal to send the order for execution to the competent court within the local limits of whose jurisdiction the registered office of the company is situated. In view of the aforesaid provision of law, we hold that the Tribunal by the impugned order dated 20.1.2017 has rightly held that the application preferred by 1st Respondent/applicant (6th Respondent in Company Petition) is entitled to file the application under Section 634A of Companies Act yet the application is pre-mature. However, the applicant/Respondent No.6 has been granted liberty to file the Company Application at the time when the order of Company Law.

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• Service Tax

• 2017 (5) TMI 241
  100% EOU - CENVAT credit - commission paid to foreign agents - pre-removal expense or not? - Whether the CESTAT, Chennai erred in its decision which is based solely on the judgment of the CCE, Jallandhar VS Ambika Overseas [2010 (7) TMI 330 - CESTAT, NEW DELHI] and that of Ms.Cadila Health Care Ltd., Vs. CCE, Ahmedabad [2009 (8) TMI 172 - CESTAT, AHMEDABAD] which has not reached finality as the department has gone on appeal to High Court? - Held that: - Given the fact, that one judgment i.e., the judgment rendered in Ambika Overseas has been confirmed by the Punjab and Haryana High Court, whereas, the other judgment i.e., Cadila Healthcare Limited has been reversed by the Gujarat High Court, we are of the view that the matter would have to be remanded to the Tribunal, for a fresh adjudication, on merits. Whether the decision of CESTAT is correct in law as it had not gone into the facts and circumstances of the case in hand in detail and passed the order without discussing in detail the merits of the case which appears to be different than the facts of the case that were relied upon? - Held that: - the impugned judgment and order is set aside, with a direction to the Tribunal to decide the matter, on merits, as expeditiously as possible Appeal allowed by way of remand.

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• 2017 (5) TMI 240
  Claim of small scale exemption upto Rs. 10 Lakhs - Association of persons - N/N. 6/2005-ST, dt.1.3.2005 as amended - immovable property has been jointly owned by six co-owners - Alleging that the services provided by the respective owners are indivisible and the property being collectively owned, for the purpose of Service Tax, all the owners be considered as an association of persons, and be treated as single service provider, hence, the benefit of said N/N. 6/2005-ST, dt.1.3.2005 as amended, would not be available to each of the co-owner - whether each of the co-owner, holding immovable property jointly, but receive the lease rent separately in proportion to the share in the property, is eligible to the benefit of threshold exemption limit as prescribed under N/N. 6/2005-ST, dt.1.3.2005, as amended, separately? Held that: - the service Tax Registration of individual assessees for collection of service tax is PAN based, hence, collection of service tax from one of the co-owners, against his individual Registration for the total rent received by all co-owners separately, is neither supported by law nor by laid down procedure. Thus, it is difficult to accept the proposition advanced by the Revenue that all the co-owners providing the service of renting of immovable property be considered as an association of persons and the service tax on the total rent be collected from one of the co-owners. Conceptually service tax is levied on the service provided, which is an intangible thing and hence it is not necessary to be identified with physical demarcation of the immovable property given on rent against individual co-owners. Once the value of service provided by a service provider is ascertainable service tax is accordingly charged - This Tribunal in similar facts and circumstances in the cases of Commissioner of Central Excise, Nasik Versus Deoram Vishrambhai Patel [2015 (9) TMI 790 - CESTAT MUMBAI] after considering the issues raised, rejected the contention of the Revenue and allowed the benefit of exemption Notification No.6/2005-ST, dt.1.3.2005 as amended to individual co-owners who jointly owned the property and provided the service of renting of immovable property, and received the rent in proportion to the shares in the immovable property. Appeal allowed - decided in favor of appellant.

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• 2017 (5) TMI 239
  Imposition of penalty u/s 76, 77 and 78 of the FA, 1994 - appellant claim that there was no mala fide intention to evade service tax in the present case, hence the penalties imposed upon them may be waived in terms of Section 80 of the FA, 1994 - Held that: - The intention of appellant is evident from the fact that the appellant has not recovered the service tax from the service receivers. In spite of that, they have come forward to pay the full service tax dues along with applicable interest thereon - due to misunderstanding and ignorance of law, appellant have neither collected any service tax on the various service tax income nor paid the service tax to the Government. This fact clearly establishes the fact that the appellants had no mala fide intention to evade payment of service tax - this is a fit case to invoke the provisions of Section 80 and waive the penalties imposed - appeal allowed - decided in favor of appellant.

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• 2017 (5) TMI 238
  Jurisdiction - power of Commissioner (Appeals) to restore an appeal - Pre-deposit - VCES scheme - insufficiency of the amount of pre-deposit u/s 35F of the CEA, 1944 - Held that: - there has been failure on the part of ld. Commissioner (Appeals) to exercise the jurisdiction vested in him, as an appellate court. Section 151 Code of Civil Procedure, 1908 provides nothing in this code shall be deemed to limit or otherwise affect the inherent power of the court to make such orders as may be necessary for the ends of Justice to prevent abuse of the process of the Court - the ld. Commissioner have inherent jurisdiction, as provided in Section 151 Code of Civil Procedure, 1908, which he is failed to exercise - this appeal is allowed by way of remand with the directions to ld. Commissioner (Appeals) to give opportunity of hearing to the appellant on merits - appeal allowed by way of remand.

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• 2017 (5) TMI 237
  Franchisee service - Invocation of extended period of limitation - whether the appellant gave to the distributors representational right to sell its products i.e. products identified with it - the decision in the case of Amway India Enterprises Pvt. Ltd. Versus Commissioner [2017 (4) TMI 510 - SUPREME COURT] contested - Held that: - there is no merit in the review petitions and the same are accordingly dismissed.

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• Central Excise

• 2017 (5) TMI 236
  Duty demand - Shortage of goods - Seizure of goods - Fraudulent availment of MODVAT Credit - Non receipt of actual goods - the decision in the case of Bhanu Iron & Steel Co. Ltd. Versus Commissioner [2017 (4) TMI 155 - SUPREME COURT] contested - Held that: - We find no merit in the review petitions and the same are accordingly dismissed - petition dismissed - decided against petitioner.

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• 2017 (5) TMI 235
  Classification of goods - revitalizing hair nutrient - antidandruff hair vitaliser - whether the goods manufactured and cleared by the appellant are to be classified as perfumed hair oils under 3305.10 or as other preparations for use in the hair under 3305.99? - Held that: - the product which undoubtedly is made for use on hair also contains several ayurvedic ingredients which are said to have properties to promote hair growth, etc. The product has been added with perfume only to get rid of unpleasant odour and make it acceptable to the customer. From the above, it is evident that it is not in the nature of perfumed hair oil but more in the nature of other preparations for use on hair with unique medicinal properties - an issue similar to the present one was considered by the Tribunal in the case of Vasu Pharmaceuticals [1999 (4) TMI 180 - CEGAT, MUMBAI], where it was held that Trichup oil cannot be considered as ayurvedic medicament. It is admittedly a product meant for use on the hair. However, it is neither a perfumed hair oil nor hair fixture and therefore it appropriately gets covered in the category of other under sub-heading 3305.99 of the Schedule - the product classified under 3305.99 of the CETA as prevailed at the relevant time - appeal allowed - decided in favor of Revenue.

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• 2017 (5) TMI 234
  CENVAT credit - job-work - machined/ finished forgings received from the job worker - The Revenue objected to such credit on the ground that the appellants attempting to take double benefits on the inputs which is not permitted by the law - Revenue felt that the job worker should have followed the procedure under N/N. 214 of 86-CE and availed exemption - Held that: - the appellants paid central excise duty, both at the stage of procuring rough forgings and also at the time of receiving back the machined forgings from the job worker. When the duty has been paid the entitlement for credit follows - similar issue decided in the case of M/s. Bharat Heavy Electricals Ltd. Versus CCE & ST. - Meerut-I [2014 (3) TMI 203 - CESTAT NEW DELHI], where it was held that There is no condition in Rule 4(5)(a) of the CCR, 2004 that job worker should necessarily avail of full duty Exemption under N/N. 214/86-CE. This exemption being a conditional exemption, is not required to be compulsorily availed by job-workers - appeal allowed - decided in favor of appellant.

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• 2017 (5) TMI 233
  CENVAT credit - eligible input service - consultancy service with respect to laying of pipelines for supply of water from dams to the Dariba Mines of the appellant - Held that: - matter is covered by the ratio of the CESTAT decision in the appellant’s own case [2016 (7) TMI 1064 - CESTAT NEW DELHI], where it was held that water is essential in the manufacturing process, the pipelines are exclusively used for transport of water for the said purpose. The service tax paid is on services received w.r.t. pipelines - service tax paid under subject service viz. consultancy service is eligible for Cenvat credit by the appellant - appeal allowed - decided in favor of appellant.

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• 2017 (5) TMI 232
  Rule 8 (3A) of the Central Excise Rules, 2002 - the amount through PLA was not deposited by the due date - Held that: - reliance placed in the case of Jayaswal Neco Ltd. [2015 (8) TMI 404 - SUPREME COURT], wherein it has been interpreted the terms pay excise duty for each consignment by debit to Account Current held that it could not be said to be the only mode of payment of duty during this period. Payment through Cenvat credit is also a valid mode of payment - demand under Rule 8 (3A) of the Central Excise Rules, 2002 set aside - appeal allowed - decided in favor of appellant.

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• 2017 (5) TMI 231
  Clandestine manufacture and removal - laminated pouch - Held that: - the Cross Examination of Shri Bhupesh Bansal clearly indicate that there is no sufficient grounds for confirmation of demand of Rs. 9,18,613/- against M/s Kashi Laminators Pvt. Ltd. - Revenue also did not establish as to how the raw materials were procured for manufacture of goods in question which were alleged to have been cleared clandestinely, Original Authority could not establish the unaccounted manufacture and clandestinely clearance of laminated pouch. Therefore, we hold that the confirmation of demand of Rs. 9,18,613/- is not sustainable - appeal rejected - decided against Revenue.

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• 2017 (5) TMI 230
  Imposition of penalty of equal amount - Section 11A(1A) - denial of benefit of reduced penalty on the ground that the respondent has not paid entire amount within a period of one month from the date of receipt of the SCN - Held that: - respondent have paid entire duty, interest and 25% penalty imposed under Section 11AC up to 3-5-2008 and adjudication order was passed on 17-7-2008 which shows that respondent paid duty, interest and 25% penalty not only within 30 days from the date of the order but much before that - respondent’s case is squarely covered by above clause (c) of Section 11AC(1) therefore under any circumstances the department’s proposal to impose penalty of 100% of the duty does not hold good - even as per Section 11AC(1)(c) penalty of 25% is only payable and not 100% - appeal dismissed - decided against Revenue.

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• 2017 (5) TMI 229
  Rectification of mistake - reversal of modvat credit - job-work - goods cleared for job-work not received back within 60 days - Held that: - we find that Commissioner has already confirmed the amount which was admittedly reversed therefore there is no relief as regard this particular amount. We therefore maintain the demand of Rs. 1,39,418/- reversed by the respondent. Interest on MODVAT reversed - Revenue claims that interest was not confirmed by the adjudicating authority in the order-in-Original which was chargeable in terms of Rule 57 I(5) of erstwhile Central Excise Rules, 1944 therefore order may be corrected - assessee claims that the said rule is applicable in case of wrong availment of credit by reason of fraud, mis-statement, suppression of facts etc. In the present case no such ingredient is available therefore the interest which is chargeable in terms of Rule 57 I(5) is not applicable in the present case - Held that: - there is no proposal in the SCN for demand of interest. In absence of such proposal in the SCN ground cannot be made by way of Revenue's appeal - Respondent admittedly reversed the Cenvat credit. This is not the case of wrong availment of credit by reason of fraud, misstatement, suppression of facts etc. Therefore interest provision of Rule 57 I(5) is not applicable, hence, no interest is payable on the amount of modvat reversed. ROM application disposed off - decided partly in favor of Revenue.

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• 2017 (5) TMI 228
  CENVAT credit - whether the Revenue can without reassessing the Central Excise duty paid at the end of the manufacturer-supplier, deny credit of the said duty paid in the hands of the recipient of such goods, on the premise that no such excise duty ought to have been paid by the manufacturer-supplier? Held that: - the appeals can be disposed of only on the ground that the Revenue was not entitled to question the correctness of the duty paid by the manufacturer, at the end of the recipient of the goods, without there being any challenge to the assessment to duty at the end of the manufacturer - reliance placed in the case of The Commissioner, Central Excise Goa, Versus M/s. Nestle India Ltd., [2011 (6) TMI 164 - BOMBAY HIGH COURT], where it was held that the appeals by the Revenue to the contrary are clearly not maintainable. Appeal dismissed - decided against Revenue.

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• 2017 (5) TMI 227
  CENVAT credit - Rule 3(4) of CCR, 2002 - assessee have claimed depreciation from time to time of these capital goods - whether the cenvat credit, which was availed by the appellants’ predecessor in respect of capital goods, which were cleared by the appellants after procuring from the predecessor, is liable to be reversed by the appellants? - Held that: - after procuring these capital goods, the appellants had used these goods for manufacture of their final product. Hence the applicability of Rule 3(4) of CCR, 2002 is in question because the capital goods were not being cleared as such - The question of liability of duty on capital goods after their use was considered by Hon’ble Karnataka High Court in the case of CCE vs. Solectron Centum Electronics Ltd. [2014 (10) TMI 596 - KARNATAKA HIGH COURT] where Hon’ble High Court has analysed the term “as such” in the context of Rule 3(4) of CCR, 2004 and concluded that The assessee having validly availed cenvat credit, same is required to be reversed only if goods were cleared in the same position without payment of excise duty. The goods were not cleared in the same position but after having been used and in such situation Rule 3(4) of the Rules will not apply - the period in the present case is before 13.11.2007 - there is no liability to pay duty on clearance of impugned capital goods. The premise that transfer of ownership of these goods to M/s Kamko Food Products, fastens the liability of reversal of credit availed by the seller of the goods in the absence of sale of running unit is not legally sustainable. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2017 (5) TMI 222
  Stock transfer - inter state sale - Form-F - acceptance of Form-F which was not submitted in the original assessment proceeding or before the first appellate authority and was submitted later - Held that: - specific reason has not been assigned in Section 12-B application for belated filing of Form-F, but that would not be a material consideration. It was on record before Tribunal that these forms had been issued during the pendency of second appeal before Tribunal. The Tribunal, therefore, was required to have examined such forms, and it ought not to have been discarded, merely because it was filed for the first time before the Tribunal. So far as claim with regard to stock transfer of Rs. 28,06,523.73 is concerned, it is apparent that the assessee from the very initial stages has pressed its claim of stock transfer on the basis of documents on record - It was open for the assessee to have established with reference to other materials brought on record that the stock transfer had taken place. The specific case of the assessee of stock transfer backed by bill and other materials, which have been brought on record, have also not been taken note of by the Tribunal in its order - The order of Tribunal, therefore, on such count also cannot be sustained, and the matter is required to be reconsidered by the Tribunal on such facts. Appeal allowed by way of remand.

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• 2017 (5) TMI 221
  Deduction of tax at source - Works contract service - interstate sale - Form "S" - Section 13(1) of the Tamil Nadu Value Added Tax Act, 2006 - Held that: - every person responsible for paying any sum to any dealer for execution of works contract shall deduct an amount calculated at the rates specified therein. The proviso to Section 13(1) gives exemption where the deduction shall not be made. The dealer has neither shown that he is a party to the works contract as shown in the agreement entered into between the Head Office and the Indian Railways; not has purchased any materials within the State of Tamil Nadu and suffered tax. They have not shown that they actually moved the goods from various places to the warehouses of the second and third respondents; lastly, the petitioner has not shown any connection to the works contract that has executed by the Head Office at Rajasthan through them. The petitioner has filed NIL returns every month. In the absence of accrual of right to raise a cause of action by the petitioner, this Court is not inclined to delve into the merits of the matter. In the absence of any details, it cannot be presumed that those goods were actually moved from various places as specified in the details, to the petitioner, at Tamil Nadu. The writ petitions are disposed of with a direction to the petitioner to approach the revisional authority under the Act to substantiate his case for the entitlement of Certificate of No Liability - decided partly in favor of petitioner.

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