Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 7, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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GST - Transition of KKC Credit as ITC - Whether accumulated credit by way of Krishi Kalyan Cess (KKC) as appeared in the Service tax return of Input Service Distributor (ISD) ON June 30, 2017 which is carried forward in the electronic credit ledger maintained by the company under CGST Act 2017, will be considered as admissible input tax-credit? - Held No - AAR
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Incomplete E-way bill - GST - Seizure of goods with vehicle - detention on the ground that Part-B of e-way bill was incomplete - Merely of none mentioning of the vehicle no. in Part-B cannot be a ground for seizure of the goods - Seizure order and SCN issued u/s 129(3) quashed - HC
Income Tax
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Reopening of assessment - reason to believe that income on account of EDC had escaped assessment - there would be no occasion for the petitioner to argue that merely because the said issue has not been discussed in the assessment order, it will not mean that it was not considered. - HC
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Genuineness of the gift - Addition undisclosed income - assessee himself admitted in his statement before the Income Tax Authorities that he had paid money to buy these gifts - ITAT deleted the additions - matter referred to the larger bench - HC
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Rate of Depreciation on vehicles 15% or 30% - commercial vehicles - There was no evidence to show that the vehicles were used for running them on hire - the assessee is not entitled for higher rate of depreciation and entitled for only at normal rate of depreciation. - AT
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Depreciation of claim - asset put to use - assessee got the ownership during the subsequent years - even if an asset is put to use for a single day, the same is eligible for depreciation. - AT
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Penalty u/s 271AAB where search has been initiated - commodity profit recorded in the other document maintained by the assessee which was retrieved during search cannot be termed as “undisclosed Income” in the definition given u/s. 271AAB of the Act. - AT
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Diversion of income by an overriding title - the payment made to ex-partners or to the spouses of the deceased partners was not application of money - it was a case of diversion of income by an overriding title - No tax liability - AT
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Disallowance u/s 14A - expenses towards exempted income - AO could not have straightaway resorted to Rule 8D(2)(iii) of the Rules in order to compute the disallowance u/s 14A - AT
Customs
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Rejection of settlement application - The petitioner is entitled to maintain the application before the Commission as there is a SCN for confiscation and it would fall within the definition of caseas defined u/s 127-A(b) of the Act. - HC
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Misdeclaration of imported goods - Crude Palm Stearin (Non-edible industrial grade) - when the appellant came to know that the goods were not Palm Stearin, had opted for re-export of the goods - The redemption imposed for the purpose of re-export is hideously harsh - reduced to 20% - AT
Indian Laws
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Scope of the Award of the arbitrator - the respondent cannot claim reimbursement of excess of minimum wages on account of hike due to the Notification of the Government of Haryana. If any departure would be allowed from the terms and conditions of the contract, then it would destroy the basic purpose of the contract provided such conditions shall not be arbitrary. - SC
Service Tax
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Development of software and services on software - POPS Rules, 2012 - the place of provision of service is the location of the recipient of the service.
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Scope of service tax inquiry proceedings - Issue of summons and notices does not mean that the authorities have formed any opinion or decided that show cause notice has to be issued. The queries raised have to be answered and depending upon the explanation given, the authorities would decide whether or not to proceed. - HC
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Nature of activity - sale or service? - business of purchase/ sale of Sim Cards - the Appellant is not providing any telecommunication service to any person or subscribers. Hence in such case there is no principal service or dominant service to which the sale of sim card can be related - demand of service tax set aside - AT
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CHA service - incentives received from various airline / shipping liners @ 2% of the basic freight, in the name of brokerage - the amount received cannot fall within the category of ‘commission’ so as to be subjected to levy of service tax. - AT
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Intellectual property service - royalty - demerging of units - Since in this case, the appellant has not raised invoice for the royalty amount on AVL and accordingly has not received the amount, therefore, as per the provisions contained in Rule 6 of Service Tax Rules, 1994, the appellant is not liable to pay service tax on this amount. - AT
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BSS - collection of monthly licence fee - sell eatables in the bar and to collect the empty liquor bottles in terms of statutory provisions and license - Appellants will be exigible to service tax liability in respect of the impugned activities only for the period 1.7.2012 to 28.03.2013 as ‘taxable service’ under Section 65B (44) of the Finance Act, 1994 - There will not be any service tax liability during the period of dispute from 29.03.2013 onwards. - AT
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The activities undertaken by M/s. Xerox under various contracts in question for Maintenance and Repair and XGS i.e. 'Business Support Service'/‘Business Auxiliary Service’ do not qualify as taxable service under Works Contract service, under Section 65 (105) (zzzza) of Finance Act, 1994, during the period - AT
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Reduction of Credit to claim refund u/Rule 5 - The only amount which can be reduced is the amount which is reversed in terms of Sub-rule (5C) of Rule 3 during the relevant period. Therefore no amount which was utilized for payment of service tax in respect of domestic provision of service from cenvat amount is required to be reversed as per formula. - AT
Central Excise
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Classification of goods - printed computer stationery - items do not fall under Chapter 48.20 but would only fall under Chapter 49 - AT
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Credit is allowed not only on the input received in the factory of the manufacturer of the final product but also the input used in the manufacture of intermediate product by a job-worker availing the benefit of exemption - AT
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Deemed export - The benefit of deemed export will be available to the supply of one Diesel Generator set made by the appellant to ONGC under Project Authority Certificate issued by the competent authority - AT
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Manufacture - engines/pump/frames - The activity of inspection and alignment of the pumps, engines and base frame makes marketable as pump set, in that circumstances, the process undertaken by the appellant amounts to manufacture - AT
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CENVAT credit - receipt of goods from first state dealer who obtained the goods from a person not having manufacturing facility - in case of bonafide purchase, credit cannot be denied - it would be impracticable to require the assessee to go behind the records maintained by the first stage dealer - AT
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Refund claim - choice available to the claimant when more than one exemption is available on the same goods - the appellant is entitled to avail the benefit of any of the notifications which is more beneficial to the appellant - AT
Case Laws:
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GST
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2018 (5) TMI 460
Vires of Notification dated 21.07.2017 and the circulars dated 09.08.2017 and 10.08.2017 - various documents and the forms of the documents liable to be carried along with the goods in transit for a temporary phase till the E-Way bill system is developed - Held that: - The formats of Form 38 and Form 21 have been adopted and prescribed as a format for E-Way Bill 01 and E-Way Bill 02. This has been done and permitted as an interim measure so that the trading activity and the transit of goods may not be affected till E-Way bill system is developed and approved by the council which is likely to take some time. The prescription of the forms under the impugned notification is only for temporary purpose and the notification itself is for an interim period till E-Way bill system is developed and approved by the council. The notification as stated earlier is not in violation of any statutory provision or Rule 138 of the Rules. The challenge to the notification and the circulars therefore has no merit - petition dismissed.
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2018 (5) TMI 458
Whether accumulated credit by way of Krishi Kalyan Cess (KKC) as appeared in the Service tax return of Input Service Distributor (ISD) ON June 30, 2017 which is carried forward in the electronic credit ledger maintained by the company under CGST Act 2017, will be considered as admissible input tax-credit? Held that: - The enumerated list of items in respect of which CENVAT credit is available makes no reference to the KKC. By the Notification No. 28/ 2016 - Central Excise (N.T.), the 26th May, 2016, the Central Government made the rules, which came into force on 1st of June, 2016, to amend the CENVAT Credit Rules, 2004 - in respect of these rules, CENVAT credit was available in respect of KKC. KKC would be utilised towards payment of KKC only, Further, it was expressly provided that the list of items in respect of which CENVAT credit is available, as enumerated above, would not be utilized for payment of KKC. Thus, there was a clear demarcation of the credit in respect of KKC. Under GST, there is no levy of KKC. In the present case, KKC is to be utilized for payment of KKC only. Therefore, KKC cannot be treated as excise duty or service tax. in view thereof, the CENVAT credit as referred to in sub-section (1) of section 140 would not include the credit in respect of KKC. The non-availability of carry forward of credit with respect to KKC has been clarified to the Trade - accumulated credit by way of Krishi Kalyan Cess (KKC) as appeared in the Service tax return of Input Service Distributor (ISD) on June 30, 2017 which is carried forward in the electronic credit ledger maintained by the company under CCST Act 2017, will not be considered as admissible input tax-credit. The question in the present case is answered in negative.
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2018 (5) TMI 457
Reopening of portal to revise the filed FORM TRAN- 1 - Circular No.39/13/2018- GST dated 03.04.2018 - Held that: - instead of dwelling upon the grievance raised in present petition, the petitioner is set at liberty to avail the remedy as is provided vide circular dated 03.04.2018 - petition disposed off.
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2018 (5) TMI 456
Initiation of recovery proceedings, even though the appeal and application for stay are pending - Held that: - Taking note of the similar orders passed by this Court in analoguous situations, the petitioner can be given some respite from the rigor of recovery, at least until such time as the stay petition is considered by the appellate authority - recovery proceedings are to be kept in abeyance till the time the 2nd respondent passes an order on the stay petition, and communicates the same to the petitioner - petition disposed off.
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2018 (5) TMI 455
Seizure of goods with vehicle - detention on the ground that Part-B of e-way bill was incomplete - contention of the petitioner before the authority below was that there was no intention on the part of the petitioner to evade payment of tax during the course of intra-state sale of the goods - Held that: - no ill intention at the hands of the petitioner nor the petitioner was supposed to fill up Part-B giving all the details including the vehicle number before the goods are loaded in a vehicle, which is meant for transportation to the same to its end destination. In the present case, all the documents were accompanied the goods, details are duly mentioned which reflects from the perusal of the documents. Merely of none mentioning of the vehicle no. in Part-B cannot be a ground for seizure of the goods. Seizure order do not sustain - goods with vehicle are directed to be released - petition allowed - decided in favor of appellant.
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Income Tax
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2018 (5) TMI 446
Orders passed u/s 201(1)/201(1)(A)- two demand notices called upon the petitioners to pay the demands for the AY 2016-17 and 2017-18 consequent to the orders within a period of seven days. This without giving any reasons for curtailing the statutorily available period of 30 days in terms of Section 220 - Revenue objects to the petition being entertained as the impugned orders dated 7th February, 2018 are appeallable to the Commissioner of Income Tax (Appeals) Held that:- The petitioner would file the two Appeals to the Commissioner of Income Tax (Appeals) from the two orders dated 7th February, 2018 within a period of 2 weeks from today. The impugned orders dated 7th February, 2018 had been stayed by the order of this Court dated 15th February, 2018. Thus, the 30 days period to file an Appeal would not have expired. In any event, in case the petitioners do file Appeals within a period of 2 weeks from today, the Commissioner of Income Tax (Appeals) will entertain the same on merits.
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2018 (5) TMI 445
Reopening of assessment - Reasons to believe - Held that:- We have found that the reasons recorded by the AO justify the initiation of proceedings under Sections 147 and 148. As the Principal Commissioner agreed with these reasons, it was not necessary for him in his order according sanction to reiterate the reasons furnished by the AO. There is nothing that indicates that he did not apply his mind to the reasons furnished by the AO. Reasons to believe are there. The reasons are based on tangible material. The return and account books of assessee had not undergone scrutiny at the time of assessment. The information is specific and not vague. A reasonable person can form an opinion on the basis of the material. The information received could form the basis of reason to believe that income has escaped assessment and the re-opening is not on mere suspicion. Hence, the assumption of jurisdiction is in accordance with law. - Decided in favour of revenue.
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2018 (5) TMI 444
Reopening of assessment - reason to believe that income on account of EDC had escaped assessment - Held that:- There was material even outside the record with the AO which requires consideration. There are detailed provisions regarding the EDC. The Act deals with the liabilities to pay EDC. It also deals with the nature of the charge. The statutory agreements to be entered into and declarations to be filed with the authorities also referred to the payment of the EDC. EDC has been the subject matter of litigation before this Court. None of this was before the Assessing Officer in the assessment proceedings. Thus apart from the material on record, there was other tangible material that was not considered during the assessment proceedings. There is no question in the facts of the present case of the re-opening being on account of a change of opinion. The issue of change of opinion could only arise if the issue had been dealt with or the material with regard to EDC was there before the A.O. at the time of framing the assessment. As is apparent from the record, the issue was not considered at the time of assessment. There was no occasion for the A.O. to make further inquiry with regard to EDC. There cannot be any quarrel with the proposition that the assessee has no control over the framing of an assessment order. There can be cases where after discussion the A.O. may be satisfied on the issue and does not find it appropriate to discuss the same in the assessment order. This is not the case here. The petitioner has failed to establish that there was any discussion or adjudication on the said issue. In such circumstance, there would be no occasion for the petitioner to argue that merely because the said issue has not been discussed in the assessment order, it will not mean that it was not considered.
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2018 (5) TMI 443
Deduction u/s 80HHC - Excise duty paid exclusion from the total turnover for purposes of computation of deduction - Held that:- It is an agreed position between the parties that this question stands concluded in favour of the applicant assessee and against the respondent Revenue by the decision of this Court in Commissioner of Income Tax Vs. Sudarshan Chemicals Industries Ltd. [2000 (8) TMI 73 - BOMBAY High Court]. Entitlement to deduction u/s 35AB as against under Section 37(1) - assessee had acquired the ownership rights in the technical knowhow included in the agreement - Held that:- As on the application of law to the facts in the present facts, the expenditure on account of technical knowhow incurred under the Agreement dated 19th June, 1984 is classifiable under Section 35AB of the Act and not under section 37 of the Act. Therefore, question no.(ii) is answered in the affirmative in favour of the respondent Revenue and against the applicant assessee.
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2018 (5) TMI 442
Jurisdiction of the AO to commence proceedings u/s 179 (1) - proceedings against the Director of a delinquent company for a recovery of the tax dues of the delinquent company - Held that:- Jurisdiction to commence proceedings against the Director of a delinquent company for a recovery of the tax dues of the delinquent company, would require the notice to the Directors/ former Directors, itself, indicating what steps had been taken to recover the dues from the delinquent company and the failure thereof. Only when the above exercise has been done and is indicated in the show cause notice that the AO and can claim to have satisfied the condition precedent for commencing proceedings under Section 179(1) of the Act. The Respondent very fairly states that the issue stands concluded against the Revenue in the present facts, by the decision of this Court in Madhavi Kerkar (2018 (1) TMI 749 - BOMBAY HIGH COURT) and Mehul J. Shah (2018 (4) TMI 646 - BOMBAY HIGH COURT). The impugned order dated 15th February, 2018 is quashed and set aside.
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2018 (5) TMI 441
Reopening of assessment - disallowance of expenditure incurred on inhouse research and development resorting to Sec. 35(2AB) - period of limitation for issuing the notice - relevant material on which reasonable person could have formed a requisite belief - Held that:- The recording of reasons while issuing the notice U/Sc. 148 of the I. T. Act and while rejecting objection of the petitioner is with regard to the effect of the petitioner's not possessing Form No. 3CM and the fact that the petitioner had not disclosed this fact at the time of scrutiny assessment U/Sec. 143(3) of the I. T. Act. The petitioner had failed in its duty to report to the assessing officer the Form No. 3CM being available only upto 2009 and thereafter not possessing the said Form No. 3CM and same is again issued only from the year 2016. It cannot be said that the reopening of assessment is only based on change of opinion. However, it is observed that, the petitioner failed to fully and truly disclose the fact that it did not possess Form No. 3CM U/Sec. 35(2AB) of the I. T. Act. If the petitioner would have disclosed said fact at the time of scrutiny assessment U/Sec. 143(3) of the I. T. Act and still the assessing officer would have allowed the deduction, then the petitioner would have been justified in challenging the reopening of the assessment. However, the same is not the fact as observed supra. Thus we decline to exercise our writ jurisdiction. However, we make it clear that, we have not dealt with the merits of the contentions qua the requirement of Form No. 3CM to claim deduction U/Sec. 35(2AB) of the I. T. Act. The same would be decided by the assessing officer on its own merit - Decided against assessee.
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2018 (5) TMI 440
Exemption of State Bar Council of Madhya Pradesh under Section 10(23A) - applicability to State Bar Council of Chhattisgarh - Held that:- The notification dated 9-8-1966 is a law within the meaning of Section 2(f) of the Act of 2000 which was in existence in the erstwhile State of M.P. exempting the State Bar Council of Madhya Pradesh under Section 10(23A) of the IT Act and would also be applicable to the State Bar Council of Chhattisgarh till it is modified or altered by the competent authority by virtue of the provisions contained in Sections 78 and 79 of the Act of 2000. In present case, it is quite vivid that the notification dated 9-8-1966 issued by the Central Government exempting the State Bar Council of M.P. from taxation of income other than those specifically excluded under Section 10(23A) of the IT Act, was applicable and was in force in the new State of Chhattisgarh with effect from 1-11-2000 and would fall within the meaning of law under Section 2(f) of the Act of 2000 and by virtue of that, the State Bar Council of Chhattisgarh was entitled to have exemption under Section 10(23A) of the IT Act from the operation of IT Act, but that was not understood properly by the Income Tax Authorities and holding that the petitioner Council is not entitled for the said exemption, the petitioner Council was assessed to income tax imposing tax liability to the extent indicated herein-above ignoring the law in force at the time of assessment and the order of recovery was passed. Petitioner Council was entitled and eligible to be exempted by virtue of the notification dated 9-8-1966 read with Sections 2(f), 78 and 79 of the Act of 2000 with effect from 1-11-2000, as it was not modified or altered by the Central Government upon reorganisation of the State of Chhattisgarh with effect from 1-11-2000 by the Act of 2000 and therefore the assessing authority has committed grave jurisdictional error in not holding so and proceeded to assess the tax liability of the petitioner Council under the IT Act
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2018 (5) TMI 439
Genuineness of the gift - Addition undisclosed income - assessee himself admitted in his statement before the Income Tax Authorities that he had paid money to buy these gifts - voluntary transfer of existing movable or immovable property made without consideration by the person called donor to another called the donee - regular/normal assessment in terms of sub-section (6) to Section 153 - Held that:- In the present case, Revenue would submit that papers and documents were found, which indicated that the assessee had not disclosed income from six benami concerns. Books of account would also include the pass-books or statement of bank accounts. It is in this context we would have to read and understand the questions and answers given by the respondent /assessee in his statements under Section 132(4). Oral statement was and should not be read in isolation, as respondent/assessee at the first and initial stage had accepted that the gift of ₹ 50,00,000/- was not genuine, and was a subterfuge. Oral evidence and documentary material was collected during the course of search regarding the undisclosed income. It is relevant that the respondent/assessee in his block return had declared undisclosed income, i.e. unaccounted income, to the tune of ₹ 86.82 lacs. In view of the aforesaid conflict and divergence, having recorded our prima facie reservation on the view expressed on "books of accounts" and more particularly on "oral statement " not being evidence found, we are inclined to refer the question of interpretation of the term “undisclosed income” for the purpose of block assessment to a larger bench to resolve and iron out differences and bestow and bring clarity. While examining the questions, the view expressed in Harjeev Aggarwal (2016 (3) TMI 329 - DELHI HIGH COURT) on whether a statement recorded under Section 132(4) cannot be treated as evidence found during the course of search could be considered and re-appraised. Larger bench could so examine the issue and question whether it would be appropriate and proper, when addition made in block assessment is deleted and knock down for "technical" grounds, for the Tribunal and Court to direct that the addition should have been made in regular/normal assessment in terms of sub-section (6) to Section 153 of the Act. The appeals would be accordingly placed before Hon’ble the Acting Chief Justice for being referred to a Larger Bench for deciding the issues and questions hereinbefore noticed. The questions of law can be thereafter answered by the Larger Bench or on the basis of opinion given and expressed by the Larger Bench, on the appeals being listed before the roster Bench.
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2018 (5) TMI 438
Rectification of mistake u/s 154 - claim of depreciation - Held that:- As perused the order impugned in which the ITAT held that the assessee is having two vehicles which were purchased and used only for the transportation and against the said service assessee firm charged transportation charges from customers in their sale bills as it is evident from the ledger account submitted that transport outward and inward have been maintained commonly and net balance of ₹ 4,48,172/- has been shown in profit and loss account as an expense. The assessee is justified in charging the depreciation as claimed because no mistake has been pointed out by the AO himself and as per Section 154(2) of the Act the income tax authority can rectify the mistake apparent from the records on its own and in this case, the order has been passed under Section 154 rectifying the mistake on the basis of objection by the audit party which is not an income tax authority as per law. No error has been committed by the learned ITAT.
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2018 (5) TMI 437
Interest paid to the members without TDS - Co-operative Society engaged in the activities of Co-operative Bank failed to deduct tax at source under the provisions of Section 194A (1) of the Income Tax Act, 1961 from the interest paid to its member over ₹ 10,000/- - Held that:- The said issue is no longer res-integra in view of the CBTD Circular No.19/2015 holding that such Co-operative Banks are not required to deduct tax at source an interest paid on one time deposits by its members, paid or credited on or before 01.06.2015. Also confirmed in CIT vs. Karnataka Vikas Grameena Bank [2017 (6) TMI 1218 - KARNATAKA HIGH COURT]. Taxability of the interest on the bad debts/doubtful debts or NPA (Non- Performing Assets) - interest being actually credited in the Profit and Loss Account of the respondent-Assessee - Held that:- The provisions of Section 43D of the Act itself excludes the taxability of the such interest income. Even without recourse to the concept of non- taxability of interest in such cases under Section 43D of the Act, the Division Bench in the case of CIT vs. Canfin Homes Limited (2011 (8) TMI 178 - KARNATAKA HIGH COURT ) on the basis of the interpretation given to Section 145 providing for “Method of Accounting” in the Act held that such interest income on bad debts/doubtful debt cannot be taxed, unless it is actually received or credited in the Profit and Loss Account of the assessee concerned in that year.
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2018 (5) TMI 436
Addition u/s 69C - Cost of production of per quintal of rice - difference in cost of production as unaccounted in terms of Section 69 (C) - Held that:- The finding of the Tribunal in this case appears to be primarily based on human probabilities, inferences from surrounding circumstances what are the human probabilities or surrounding circumstances has not been spelt out. Further, the Tribunal accepts that there is no direct evidence, hence it has to go by inferences. We cannot accept such reasoning. Taxing statute does not proceed on vagueness, ambiguity or on human probabilities. Inference from surrounding circumstances will lead to arbitrariness in the assessment. This is nothing but conjectures and surmises. Such a reasoning is untenable in law. The very same A.O. has accepted the per quintal rate of expenditure for the assessee for the assessment year 2002-2003, 2004-2005 and 2005-2006. There cannot be any departure from this method, unless there is a new and substantial material to the contrary. Radhasoami Satsang’s case to be followed [1991 (11) TMI 2 - SUPREME Court] There is no relevant material to justify the findings of the A.O. only for the present assessment year. The authority has accepted the per quintal rate of cost of production in respect of other assessment years as indicated above. Therefore, the demand and the assessment order in terms of Section 69(C) is not justified. It is an arbitrary determination based on irrelevant parameter and, therefore, on this issue we find that the Tribunal has proceeded on a wrong premise - Decided in favour of assessee. Packing material addition - cost of packing material with regard to the assessee Unit as well as two other Units i.e., M/S New Kashmir Rice Mills and M/s Kashmir Rice and Oil Mills differs - Held that:- Appellant’s claim is not supported by inventory details of the assessee-Unit to substantiate the plea that some of the bags were left out from paddy purchases and, therefore, the cost of packing material has come down - In the absence of material and a clear explanation from the assessee there cannot be two opinions that the cost of packing material should differ from one Unit and the other Unit, more so when it is dealing with the same kind of packing material for the same good i.e., rice. Assessing Officer was justified in his demand under Section 69 (C) in respect of packing material which has been rightly confirmed by the appellate authority and by the Tribunal. - Decided against assessee.
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2018 (5) TMI 435
Rate of Depreciation on vehicles 15% or 30% - commercial vehicles - assessee has used the vehicles for the purpose of his own business - evidence to prove that the vehicles used for running them on hire - Held that:- The vehicles were put to use for the assessee’s business purposes. As per Rule 5 and the schedule of depreciation, the allowable depreciation in the case of vehicles used for the business purpose was 15% but not 30%. D.R. relied on the decision of N.D. Joseph Vs. CIT (2010 (1) TMI 382 - KERALA HIGH COURT), wherein held that where the trucks and JCBs were mainly used for assessee’s own business and partly let out to other purpose, since items are predominantly used in the assessee’s own business, assessee was entitled for depreciation only at normal rates. There was no evidence to show that the vehicles were used for running them on hire, therefore, we hold that the assessee is not entitled for higher rate of depreciation and entitled for only at normal rate of depreciation. We uphold the order of the CIT(A) and dismiss the appeal of the assessee on this ground. Disallowance u/s 14A r.w. Rule 8D - Held that:- No disallowance is called for u/s 14A of the Act in the absence of exempt income. Accordingly, the order of the Ld. CIT(A) on this issue is set aside and this ground of appeal of the assessee is allowed. Credit for TDS - Held that:- A.O. allowed the TDS to the extent of income admitted in form No.26AS as per section 199 read with rule 37BA of the Act and disallowed the balance amount of TDS. The assessee filed appeal requesting to allow the entire credit for TDS. As per section 199 read with rule 37B of the Act, the credit for tax is allowed only on the income admitted relatable to the TDS. Therefore, in the absence of the receipt not being admitted for the assessment year under consideration, we do not find any error in the order of the CIT(A) and the same is upheld. Alternate ground with regard to TDS claim restricted by the A.O. A.O. allowed TDS of ₹ 12,12,924/- in the assessment year under consideration out of the TDS amount of ₹ 70,61,000/- made by the DGNP Visakhapatnam. The assessee has requested as an alternate ground to allow the credit for TDS of the balance amount in the subsequent year as and when the income is admitted. A.O. is directed to allow the credit for TDS in the subsequent years as and when the income is admitted as per law. This ground is allowed for statistical purposes.
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2018 (5) TMI 434
Addition on account of diversion fund - amount of interest expense claimed by the assessee corresponding to the investment made in its sister concern was not eligible for deduction u/s. 36(1)(iii) - Held that:- In the instant case, the AO has alleged that assessee has diverted its interest bearing fund by giving non-interest bearing advances to its sister concerns. AO made the disallowance of interest expenditure as claimed by assessee corresponding to the interest free advance made by it to its sister concerns. AO was reversed by Ld. CIT(A) by observing that own fund of assessee exceeds the amount invested in its sister concerns. It is undisputed fact that the own fund of assessee exceeds the amount of investment made in sister concerns as discussed in the order of CIT-A. Therefore, the presumption can be inferred that the own fund has been used in making the investment in sister concern. None of the investments in sister concerns had been made by the assessee out of borrowed funds. The ld. DR has also not brought anything on record contrary to the finding of ld. CIT-A. Therefore, there is no reason to make disallowance of the interest expense. - Decided against revenue.
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2018 (5) TMI 433
Disallowance under the provision of Section 40A(3) - relationship between assessee and SMS Auto - Held that:- On perusal of other supporting evidence such as sale invoice issued by the SMS Auto wherein it was clearly recorded sale through China Automobile suggest that sale was directly made by SMS Auto to the parties. But, it was routed through its agent i.e. China Automobile. Similarly, we also note that the assessee has been registered under the West Bengal VAT under the category of agency business, which also suggest that assessee is acting as agent of SMS Auto. In view of above, we note that the situation of assessee is doubtful whether assessee is an agent of SMS Auto but AO was very much empowered under the provision of law to ascertain the facts that whether assessee is an agent of SMS Auto. But he failed to exercise his power given under the statute. In our considered view the benefit of doubt goes in favour of assessee. In view of the above, we have no hesitation to reverse the orders of Authorities Below. - Decided in favour of assessee.
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2018 (5) TMI 432
Penalty u/s 271 (1) (c) - non specification of charge - Held that:- AO is required to specify which limb of Section 271 (1)(c) the penalty proceedings had been initiated, i.e., whether for concealment of particulars of income or for furnishing of inaccurate particulars of income. From the perusal of the notice u/s.274 r.w.s. 271 in the present appeal, it is very much obvious that the Assessing Officer has not specified the same. The notice in fact is in standard pro forma without the irrelevant clauses therein being struck off. This indicates non application of mind on the part of the Assessing Officer while issuing the penalty notice. The penalty proceedings initiated by the Assessing Officer are bad in law and accordingly the penalty so initiated is directed to be deleted - Decided in favour of assessee.
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2018 (5) TMI 431
Default for non deduction of tax from payment of tips u/s 192 - Tax liability u/s 201 (1) and interest u/s. 201 (1A) - Held that:- We find the issue has now been decided in favour of the assessee by the decision of Hon’ble Apex Court in the case of ITC Vs. CIT (2016 (4) TMI 1055 - SUPREME COURT) been decided in favour of the assessee by the Hon’ble Apex Court as well as decision of the Tribunal for the immediately proceeding assessment year, therefore, following the same we set aside the order of the CIT (A) and direct the Assessing Officer to delete the tax levied u/s 201 (1) and interest u/s 201 (1A) of the IT Act. - Decided in favour of assessee.
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2018 (5) TMI 430
Depreciation of claim - asset put to use - Held that:- There is also a certificate issued by the engineers in respect of power generated between 27/03/2008 and 31/03/2008 which is a proof of the asset having been put to use during the year under consideration. The lower authorities have not brought any material on record which could be used as a basis for rejecting the assessee’s claim that the asset was put to use during the year under consideration. It is settled law that even if an asset is put to use for a single day, the same is eligible for depreciation. Therefore, we find that the lower authorities have misdirected themselves in disallowing the assessee’s claim of depreciation on the ground that the assessee was allegedly not the owner of the asset during the year under consideration and that the asset had not been put to use during the year under consideration. We reject the findings of both the lower authorities on this issue. Valuation of the wind turbines on the ground that the written down value in the books of the seller was much-much less than the value at which they were sold to the assessee company - Held that:- The sale price at which the seller had transferred these wind turbines to the assessee company was in fact paid by the assessee company to the seller company in the subsequent assessment year and the same had duly been reflected in the return of income of the seller company. Thus, we are of the considered opinion that in view of these evidences both the lower authorities were patently incorrect in disallowing the assessee’s claim of depreciation in respect of the wind turbines. Accordingly, we deem it fit to hold that the benefit of depreciation on wind turbines should be allowed to the assessee and we order accordingly by setting aside the order of the CIT (Appeals) and direct the AO to allow the benefit of depreciation on wind turbines to the assessee company.
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2018 (5) TMI 429
Disallowance on account of gross profit estimated @ 2% of the turnover - Held that:- Assessee in order to achieve higher turnover has reduced its margin on sale. There is no dispute that the turnover of the assessee has gone high from ₹ 60,26,520/- to ₹ 4,67,58,142.55 which resulted higher amount of gross profit in absolute figures. There is cut throat competition in the market and therefore to survive in the market the assessee has to drive profit as per the prevailing market rate. Thus, it appears that assessee to achieve higher amount of sale and customers base has worked during the year at very low margin which resulted reduction in the gross profit ratio but higher amount of gross profit in absolute figures. We are inclined to estimate the profit @ 1% of the turnover. Thus, the ground of assessee is partly allowed in terms of above. Disallowance u/s 68 on account of capital introduction by the partners - Held that:- It is undisputed fact that fresh capital was introduced by the partner of assessee-firm and in such case no addition can be warranted in the hands of assessee. It is because the fresh capital was introduced by the partner of the assessee-firm if any addition used to be made then it has to be added in the hands of partner. Therefore we reverse the order of Authorities Below. This ground of appeal assessee is allowed. Disallowance on account of non-existence creditors - Held that:- Profit was determined on estimated basis due to the fact that assessee failed to produce books of account during the assessment proceedings. Once then profit has been determined on estimated basis then in our considered view no disallowance can be made on account of sundry creditors. It is undisputed fact that these sundry creditors were arising from the purchases made by assessee and therefore the same cannot be added without disturbing the purchases. Moreover in the instant case the profit has been determined on estimated basis. Thus in our considered view there cannot be any disallowance of sundry trade creditors. Therefore we reverse the order of Authorities Below. This ground of appeal of assessee is allowed.
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2018 (5) TMI 428
Adjusting the unabsorbed business loss against the capital income - Held that:- It is undisputed fact that the assessee has the earned the long term capital income by way of transfer of the business assets such as factory building, Plant & Machinery, electric installation under the head slum sale. Thus the nature of LTCG is in the nature of business profit & gains which is liable to be taxed under the head capital gain by virtue of the provisions of law. But the nature of LTCG is business only as discussed above in the case of Digital Electronics Ltd.(2010 (10) TMI 722 - ITAT, Mumbai). We direct the AO to set off the business loss against the business income and the remaining loss should be set off against the LTCG. Assessee’s appeal is partly allowed.
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2018 (5) TMI 427
Disallowance of bad debt written off - Held that:- All the necessary details were filed by assessee before Ld. CIT(A) showing the amount of bad debt and corresponding sales. This fact is evident from the observation of Ld. CIT(A) which was rejected on the ground that it is a general reply but no specific defect was pointed out by Ld. CIT(A). On perusal of the details filed in paper book on pages 1 to 8 we note that the details of bad debts & corresponding income were available with the AO during assessment proceedings. DR has also not brought anything on record contrary to the arguments advanced by the ld. AR for the assessee. Therefore, we hold that all the necessary details with regard to bad debt and its corresponding income was duly shown by assessee before Ld. CIT(A) Disallowance against the Short Term Capital Gains (STCG) - Held that:- Assessee is entitled to claim the deduction for the expenditure incurred wholly and exclusively in connection with the transfer of capital assets but on perusal of the above expense we note that these expenses were incurred by assessee in relation to its activity of carrying on investment. The provision of Sec. 48 of the Act requires that the deduction will be available for those expenses incurred wholly and exclusively in connection with the transfer of capital assets. Above expenses had not incurred wholly and exclusively in connection with transfer as capital asset. No reason to interfere in the order of CIT(A). This ground of assessee is dismissed. Not giving direction to AO for adjusting the STCG - whether the assessee can make a fresh claim during the assessment proceedings which was not claimed in the return of income? - Held that:- The law is fairly settled by the judgment in the case of Goetze (India) Ltd. [2006 (3) TMI 75 - SUPREME Court] has prohibited the Assessing Officer to entertain any claim / deduction of the assessee otherwise than claimed in the return / revised return. This restriction was not imposed by Hon'ble Supreme Court in the case of appellant authority. It can be concluded that the appellant authority are very much entitled to admit the fresh claim of the assessee which was not made in the income tax return. We direct the AO to adjudicate the issue raised by the assessee during the assessment proceedings. Thus the ground of appeal of the assessee is allowed for statistical purposes.
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2018 (5) TMI 426
Denial of Exemption u/s. 11 - investments were made in wholly owned subsidiary company and therefore it is hit by the provisions of section 11(5) r.w.s. 13(1)(d)(iii) - Held that:- We find that identical issue came up before the Coordinate Bench in the immediately preceding Assessment Years 2010-11 & 2011-12 wherein Coordinate Bench considering the facts and circumstances for which the investments were made in the subsidiary company, it was held that there is no violation of the provisions of section 11(5) r.w.s. 13(2) and 13(3) of the Act. It was held that the investments were made in its wholly owned subsidiary company in accordance with the directions of the SEBI and therefore there is no violation of provisions of the Act. Thus the assessee is entitled for the exemption u/s. 11 of the Act. This ground of appeal is allowed. Not allowing the setoff of earlier years loss against current year’s income - Held that:- Excess of expenditure in earlier years can be adjusted against income of subsequent years and such adjustment would be application of income for subsequent years and therefore we direct the Assessing Officer to allow the claim of the assessee for set off of excess expenditure of earlier years against current year’s income following case of CIT v. Institute of Banking Personnel Selection [2003 (7) TMI 52 - BOMBAY High Court ] Not allowing the quantum of depreciation as claimed - Held that:- On a perusal of the Assessment Order, we find that, there is neither discussion nor any finding recorded by the Assessing Officer regarding denial of depreciation to the assessee. Further we also find that assessee has raised ground before the Ld.CIT(A) on this issue but the Ld.CIT(A) by simply following the order of his predecessor for the Assessment Year 2011-12 dismissed the appeal for A.Y. 2012-13 with a direction to follow the order for the Assessment Year 2011-12. As stated by the Ld.CIT(A) that in so far as the issue of carry forward of set off of deficit is concerned he is in agreement with the view taken by the Assessing Officer. Ld.CIT(A) further recorded that no submissions were made with reference to other issues raised in grounds of appeal. Therefore, there was no discussion either in the Assessment Order or in the Ld.CIT(A) order regarding disallowance of depreciation on assets. In the circumstances, we feel it appropriated to restore this matter to the file Assessing Officer for fresh examination
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2018 (5) TMI 425
Levy of late fee u/s 234E - Assessee filed E-statements of TDS u/s 200(3) with a delay of 212 days for the quarter ending September, 120 days for the quarter ending December and 196 days for the quarter ending March-2013 - Held that:- In the instant case, the TDS returns were filed before 1.6.2015 and processed before 1.6.2015. The late fee was related to the assessment year 2013-14, therefore, the case of the assessee is squarely covered by the decision of SRI. FATHERAJ SINGHVI AND OTHERS Versus UOI [2016 (9) TMI 964 - KARNATAKA HIGH COURT] we hold that the A.O. is not empowered to levy late fee prior to 1.6.2015 and accordingly, the late fee levied by the A.O. is cancelled. The orders of the A.O. levying the late fee for both the A.Y 2013-14 and 2014-15 are cancelled and the appeals of the assessee are allowed.
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2018 (5) TMI 424
Penalty u/s. 271(1)(c) - AO has just ticked on the option of concealment of income or furnishing inaccurate particulars of such income - non specification of charge - Held that:- After perusing the contents of the Notice dated 30.11.2012, we are of the view that the AO has initiated the penalty for concealment of particulars of income or furnishing of inaccurate particulars, which is contrary to the provisions of law. Notice issued by the AO u/s. 271(1)(c) read with Section 274 is bad in law as it does not specify which limb of section 271(1)(c) of the Act, the penalty proceedings had been initiated i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars. The penalty in dispute is not sustainable in the eyes of law. See CIT & Anr. Vs. M/s SSA’s Emerald Meadows – 2016 (8) TMI 1145 – Supreme Court - Decided in favour of assessee.
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2018 (5) TMI 423
Penalty u/s 271(1)(c) - non specification of charge - Held that:- We are of the view that the AO has initiated the penalty for concealment of particulars of income or furnishing of inaccurate particulars, which is contrary to the provisions of law. We are of the view that notice issued by the AO u/s. 271(1)(C) read with Section 274 of the Act is bad in law as it does not specify which limb of section 271(1)(C) of the Act, the penalty proceedings had been initiated i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars. Therefore, the penalty in dispute is not sustainable in the eyes of law - See CIT & Anr. Vs. M/s SSA’s Emerald Meadows – 2016 (8) TMI 1145 – Supreme Court - Decided in favour of assessee.
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2018 (5) TMI 422
Penalty imposed u/s. 271AAB - Penalty where search has been initiated - Held that:- Respectfully following the decision of the coordinate bench of this Tribunal in the case of the other assessee’s [2018 (2) TMI 972 - ITAT KOLKATA] who were subjected to search and who had offered undisclosed income from commodity profit cannot be levied penalty u/s. 271AAB of the Act, in the facts and circumstances of this case, we confirm the order of the Ld. Ld. CIT(A) stating commodity profit recorded in the other document maintained by the assessee which was retrieved during search cannot be termed as “undisclosed Income” in the definition given u/s. 271AAB of the Act. - Decided in favour of assessee.
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2018 (5) TMI 421
Penalty u/s. 271(1)(c) - defective notice - Held that:- The show cause notice issued in the present case u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income. The show cause notice u/s 274 of the Act does not strike out the inappropriate words. We are of the view that imposition of penalty cannot be sustained. - Decided in favour of assessee.
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2018 (5) TMI 420
Disallowance u/s 14A r.w.r. 8D - sufficiency of own funds - Held that:- We find that the own funds of the assessee are sufficient to make the cost of the investments which yielded exempt income. The A.O. has not brought anything on record which proves that the investment was made out of the borrowed funds. We are, therefore, of the view that the investment made out of the assessee’s own funds and accordingly the addition made by the A.O. and confirmed by the Ld. CIT(A) under section 14A read with rule 8D(2)(ii) is to be deleted Disallowance made under rule 8D(2)(iii)- Held that:- Remand this issue to the file of A.O. with the direction to consider only the investment which yielded dividend income to the assessee for computing the disallowance under section 14A of the Act read with Rule 8D(2)(ii) of the Rules. Also after re-working the gross disallowance of Rule 8D in terms of the discussion and direction given above, the A.O. shall reduce the sum of ₹ 10,00,000/- already suo-moto disallowed by the assessee under section 14A and the net sum so computed alone shall be added back to the total income. However, in case the revised disallowance under section 14A work out at a sum lower than the amount of ₹ 10,00,000/- suo-moto disallowed by the assessee, then the A.O. shall restrict the disallowance under section 14A to ₹ 10,00,000/-. - Decided partly in favour of assessee for statistical purposes. Addition on account of advances written off - Held that:- We note that the issue under dispute is squarely covered by the decision of this Tribunal in assessee’s own case for A.Y. 2005-06 [2016 (3) TMI 731 - ITAT KOLKATA] as held that the deposits and advances were given in the ordinary course of business and were lying in the books of the assessee company for quite a long time. The some were considered irrecoverable by the assessee and had written off the same in Asst Year 2005-06 and hence the same is to be considered as a trading loss u/s 28 of the Act. We hold that the Learned CITA) had rightly deleted the addition made in this regard - Decided against revenue Allowance of further depreciation u/s 32 - application under section 154 rejected - Held that:- Decision of this Tribunal in A.Y. 2000-01 to 2002-03 wherein allowed the claim and directed the A.O. to grant depreciation on such enhanced WDV of the block of assets, we find no infirmity in the order of the Ld. CIT(A) in following the decision of this Tribunal deleting the disallowance of depreciation. Ground No. 2 of the Revenue’s appeal is dismissed. Claim for considering the market value of electricity for the purpose of section 80IA - whether it should be the average landed cost of electricity at which the assessee procured electricity from the respective State Electricity Boards - Held that:- Following Gujarat High Court case of CIT Vs Milton Laminates Ltd (2013 (3) TMI 192 - GUJARAT HIGH COURT ) we direct the A.O. to allow the deduction under section 80IA(4) by adopting the weighted average landed cost of electricity at the rates of ₹ 6.35, ₹ 3.72 and ₹ 4.90 in respect of CPPs at Karnataka, Orissa and West Bengal respectively. The A.O. shall compute gross sale / transfer price of CPP, taking into account foregoing rates and accordingly re-work the profitability of each CPP and thereafter allow the deduction under section 80IA of the Act. Before the A.O. works out the deduction permissible, an opportunity of being heard shall be afforded to the assessee. Power of CIT(A) to entertain revised claim or an additional claim - CIT-A restricting the claim of deduction u/s 80IA to the extent as claimed in the return filed u/s 139(1) - A.O. in his remand report relied on the provisions of Section 80AC to deny the benefit of higher quantum of deduction u/s 80IA - Held that:- As far as the power of CIT(A) to entertain revised claim or an additional claim raised by the assessee is concerned, we find that the law is now well settled that the appellate authorities have the power to entertain a new claim by the assessee even in the absence of a revised return of income. The decision of Calcutta High Court in the case of CIT Vs Britannia Industries Ltd (2017 (7) TMI 502 - CALCUTTA HIGH COURT) squarely supports the assessee’s case. Once the procedural requirement of Section 80AC was satisfied and the return of income was filed within the time limit in Section 139(1), then not only the AO but even the assessee was legally entitled to revise or for that matter re-compute the eligible deduction under Section 80IA so to arrive at the correct sum permissible in law. The sum so recomputed can be a figure higher or lower than the sum claimed in the return of income. Section 80AC therefore had no application in quantification of the deduction permissible under Section 80IA of the Act quantum of which the AO was legally obliged to determine keeping in view applicable legal provisions and decisions of the judicial precedents on the subject. CIT(A)-17 erred in holding that his predecessor did not direct the A.O. to allow the deduction u/s 80 IA at a sum higher than the one claimed in the return furnished u/s 139(1). Once the Ld. CIT(A)-VI ‘s order specifically laid down the manner and mode of calculation of selling rate of power and also annexed the computation sheets to the appellate order, subject to verification of figures by the A.O. with reference to original bills; in our considered view the A.O. was legally obliged to carry out such directions in letter & spirit. CIT(A) erred in upholding the order u/s 250/143(3) of the A.O by restricting the claim of deduction u/s 80IA to the extent as claimed in the return filed u/s 139(1). We are of the considered view that there is no estoppel in law that the assessed income cannot go below the income returned by the assessee. We therefore direct the A.O to modify the deduction allowable u/s 80IA by re-computing the income /profits of the eligible power generating undertakings by adopting power tariff /rates as specified Claim of depreciation on the plant & machinery which was put to trial run during the year - Held that:- he assets of the Clinker plant were used to conduct trial run on 12th March 2009. The disclosure of such fact was made in the audited accounts. The assessee also furnished relevant details and documents supporting purchase of the plant and machinery before the A.O. and also substantiated that the said plant was used for conducting trial run on 12th March 2009. The A.O. has not shown any infirmity in the factual matrix. In the A.O.’s opinion however the use of clinker plant for conducting trial run did not satisfy the condition of the “asset being used for business purpose” as provided in S 32 of the Act. We however find that the view canvassed by the A.O. was contrary to the views expressed by Hon’ble jurisdictional Calcutta High Court in the case of CIT Vs Union Carbide (I) Ltd (2002 (2) TMI 95 - CALCUTTA High Court ) wherein allowed the depreciation claims of the assessee even though the plant and machineries were used during the relevant previous year only for the purpose of conducting trial runs and commercial production had not begun during the relevant previous years. - Decided in favour of assessee.
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2018 (5) TMI 419
Section 50C applicability - transfer of leasehold rights by the appellant - Held that:- The issue under consideration is squarely covered by the decision in the case of Greenfield Hotels and Estates Pvt. Ltd. [2016 (12) TMI 353 - BOMBAY HIGH COURT] as held Section 50C is not applicable while computing capital gains on transfer of leasehold rights in land and buildings. - Decided in favour of assessee Addition u/s 41 - Held that:- Following the order of Tribunal in assessee’s own case no infirmity in the order of CIT(A) deleting addition made u/s.41(1) as held there is no remission or cessation of liability of the sundry creditors appearing in the books of assessee in the impugned assessment year- Decided in favour of assessee
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2018 (5) TMI 418
TDS u/s 195 - professional fee paid - DTLL AUS rendered professional services outside India - income accrued in India - PE In India - India-Australia DTAA - Held that:- The professional fees paid by the assessee to DTLL AUS was not taxable in India, that the FAA and the AO were not justified in invoking the provisions of 40(a)(i)of the Act. - Decided in favour of the assessee. Difference between information gathered from Annual Information Return(AIR)and the professional receipts as per the books of account - Held that:- Major amount under the head professional fee received is from Encorn Win Farms (India) Ltd. , that the payer had, in response to section 13(6)notice, admitted that it had not paid any amount to the assessee, that it also ascertained that no professional services were availed from the assessee. We find that the FAA had brushed aside such an important piece of evidence only on the ground that the figure was appearing in the AIR. Mistakes in the information in AIR is not uncommon. In these circumstances and after considering the Pg-53 of the PB, we are of the opinion that we are of the opinion the FAA was not the justified in confirming the addition - Decided in favour of the assessee. Assessee was not liable to deduct tax at source for the payment made to the Netherland entity and that provisions of section 40(a)(ia)of the Act were not applicable. Payment made by the assessee to Sri Lankan entity - Held that:- We find that before signing of the DTAA of 2014 there was no provisions in the Indo-Sri Lankan DTAA for charging FTS. The non-resident entity had no PE in India and professional fees was to taxed as per Article 14 of the treaty. Considering the facts of the matter, we hold that the FAA was not justified in upholding the order of the AO with regard to the payments made to Sri Lankan entity. - Decided in favour of the assessee. Addition on account of payment to retired partners - diversion of income by an overriding title - Held that:- FAA had taken note of the relevant clauses of the partnership deed, that he followed the judgments delivered in the case of C C Choksi (2008 (7) TMI 1055 - BOMBAY HIGH COURT), that in that matter the Hon’ble Court had, in the identical situation, held that the payment made to ex-partners or to the spouses of the deceased partners was not application of money, that the FAA had following the judgments had held that it was a case of diversion of income by an overriding title - the order of the FAA does not suffer from any legal or factual infirmity. - Decided against revenue
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2018 (5) TMI 417
Reopening of assessment - deduction u/s 36(1)(viii) allowed in the original assessment was in excess of the amount permissible in law - Interplay between the provisions of Sec. 36(1)(viia)(c) of the Act vis-a-vis Sec. 36(1)(viii) - Held that:- The history of the dispute clearly bring out that the stand of the assessee has been accepted by the Revenue inasmuch as the decisions of the CIT(A) for Assessment Years 2010-11 and 2011-12 have been accepted, and for the two assessment years of 2014-15 and 2015-16, even the assessing authority has accepted the position. Though, the principle of res judicata is not applicable to income-tax proceedings, yet, it is a trite law that consistency and uniformity in approach on an issue which permeates in more than one assessment year deserves to be ensured by the income-tax authorities. In this context, one may gainfully refer to the parity of reasoning laid down in the case of Radhasoami Satsang, Saomi vs CIT [1991 (11) TMI 2 - SUPREME Court]. Thus, without dilating further on the rival stands, and with a view to ensuring consistency and uniformity in approach on the same issue for different assessment years, we deem it fit and proper to uphold the stand of the assessee on this aspect. Thus, Ground of appeal no. 2 is hereby allowed. Manner of computing the deduction u/s 36(1)(viii) - whether AO erred in allowing the deduction by grossing-up the profit derived from long term financing operations, i.e. after making deduction under the said clause - Held that:- It was a common point between the parties that similar issue was in the case of CIT vs Kerala State Ind. Development Corporation,(1998 (2) TMI 6 - SUPREME Court) wherein the issue has been decided in favour of the assessee. In terms of the said decision, the Assessing Officer is directed to calculate the deduction allowed u/s 36(1)(viii) of the Act on the total income before deduction of the amount allowable under the section. Thus, on this aspect, assessee succeeds. Deduction on account of amortisation of amount of lease premium paid to MMRDA in respect of leasehold land rejected - Held that:- Ostensibly, having regard to the precedents in assessee’s own case, the lease premium paid by assessee to MMRDA in respect of leasehold land cannot be allowed as a revenue expenditure and accordingly, the issue is decided against the assessee. Disallowance u/s 14A - Addition sustained primarily on the ground that the same was suo moto made by the assessee-bank - Held that:- The plea of the assessee to examine the efficacy of the disallowance has been wrongly rejected by both the authorities below. This is especially so if we consider the assessment position of AY 2004-05 wherein, under similar circumstances, the decision of CIT(A) in restricting the disallowance to 5% of the exempt income has been accepted by the Assessing Officer as no appeal is stated to have been filed against such a decision. Therefore, considering all these aspects, we deem it fit and proper to set-aside the order of CIT(A) and direct the Assessing Officer to evaluate the plea of assessee afresh and, in any case, the disallowance, if any, retained by him shall not exceed 5% of the exempt income, as was the position in Assessment Year 2004-05. Claim for deduction representing contribution to Credit Guarantee Fund Trust for Micro and Small Enterprises disallowed - Held that:- Lower authorities have erred in not entertaining the claim of the assessee under a misconception. Before us, assessee has referred to the position in Assessment Year 2004-05 where similar claim stands accepted by the Assessing Officer himself in the order passed u/s 250 of the Act dated 01.06.2012 (supra). Therefore we find enough justification to accept the plea of the assessee for allowing deduction of ₹ 50 crores representing contribution made to Credit Guarantee Fund Trust for Micro and Small Enterprises. Accordingly, order of the CIT(A) is set-aside and the Assessing Officer is directed to allow the claim Claim for calculating the deduction eligible u/s 36(1)(viii) without reducing the profits derived from the business of long term financing operations by the amount of Provision for bad and doubtful debts allowable u/s 36(1)(viia)(c) is upheld. Interest levied u/s 234C - Held that:- A mistake has occurred on account of the fact that the levy of interest has been calculated by taking into consideration ‘assessed tax’ instead of ‘tax due on the returned income’. On this aspect, we deem it fit and proper to restore the matter back to the file of the Assessing Officer, who shall verify the factual aspects and thereafter charge interest u/s 234C of the Act if so permissible as per law and pass a speaking order in this regard. Thus, on this aspect, assessee succeeds for statistical purposes. Disallowance u/s 14A - Held that:- AO could not have straightaway resorted to Rule 8D(2)(iii) of the Rules in order to compute the disallowance u/s 14A of the Act. Moreover, we find that the assessee has explained the basis of computing the disallowance of ₹ 21,69,490/- before the Assessing Officer as well as the CIT(A), and we do not find any reasons advanced by them to doubt its veracity. Therefore, considered in this light, in our view, resort to Rule 8D of the Rules made by the Assessing Officer to enhance the disallowance u/s 14A of the Act is not merited in the instant case. Thus, the enhancement of disallowance made u/s 14A of the Act by the Assessing Officer by a sum of ₹ 1,80,96,335/- is not tenable and is hereby directed to be deleted.
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2018 (5) TMI 416
Addition on the basis of such loose papers found from his premises - Held that:- Since the assessee in the instant case was also denying from the very beginning that the assessee does not own any property at Byculla and documents relating to addition of ₹ 3,00,000/- and ₹ 4,02,000/- do not mention the name of the assessee nor are in the handwriting of the assessee, therefore, following the decision of the Tribunal in assessee’s own case on the basis of similar seized papers which has been upheld by the Hon'ble High Court and in absence of any contrary material brought to our notice, we are of the considered opinion that the addition made by the Assessing Officer and upheld by the ld. CIT(A) is not justified. Accordingly, the same is directed to be deleted. The grounds raised by the assessee are accordingly allowed.
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Customs
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2018 (5) TMI 454
Principles of natural justice - main grievance of the Writ Petitioner before the Writ Court is that they were not given an opportunity to cross-examine any witness - under-valuation - Held that: - When the show-cause notice was issued with certain allegations of mis-declaration of the value, reply to the show-cause notice should meet the such allegations and state specifically as to how such allegations are factually and legally not correct or sustainable - In this case, the Adjudicating Authority has pointed out that no such contention was raised in the reply to the show-cause notice as well as in the written submission made during the personal hearing. Whether the contentions raised by the Petitioner before Adjudicating Authority are sufficient and consequently, based on those reply and the written submission whether the Petitioner is entitled to cross-examination of witnesses is certainly a matter for the next fact finding authority viz., The Tribunal to consider and decide and not for this court while exercising the discretionary jurisdiction of Article 226 of the Constitution of India - the question of violation of principles of natural justice as raised in this case, cannot be decided without going into the merits of the matter, more particularly, without appreciation of the materials placed before the Adjudicating Authority and hence, the contention of the writ petitioner that, in this case, there is a clear-cut violation of principles of natural justice, cannot be accepted. Maintainability of petition - alternative remedy - Held that: - It is well settled that in a case involving fiscal nature, availing of statutory appellate remedy has to be first exhausted and hence, the party cannot come to this Court directly and file a petition under Article 226 of the Constitution of India - the filing of the very writ petition itself against the order of the Adjudicating Authority is not maintainable, as the appellant/writ petitioner is having statutory and efficacious appellate remedy before the appellate Tribunal, in this case, CESTAT. Appeal disposed off.
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2018 (5) TMI 453
Principles of Natural Justice - Whether the fact that only because statements recorded under section 108 of the Customs Act, 1962 are admissible in evidence, ipso facto immune the investigating authority or its officers from examination / cross-examination by the noticees? - Held that: - the company, i.e. M/s Alliance Strategies Limited, thereafter did not file any contempt or another application stating that the documents or photocopy of eight files were not furnished. Neither this plea was raised before the CESTAT. Even copy of the order dated 13th August, 2014 passed by the Ld. Single Judge of this High Court in Writ Petition (Civil) No. 4494/2014 was not filed before the CESTAT. Findings of the CESTAT affirming the order-in-original are factual, do not require re-examination or reappraisal, as the findings in the order dated 5th May, 2014 are clear and categoric - The factual findings on forgery are not perverse or illogical. Appeal dismissed - decided against appellant.
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2018 (5) TMI 452
Smuggling - Gold - Baggage Rules - provisional release of seized gold - Held that: - considering the fact that the petitioner is an Indian National and her husband is stated to be working in Bangkok for more than 11 years and has a valid Indian passport and the gold, not being a prohibited item, this court is of the view that Gold jewellery can be directed to be provisionally released by the respondent. There will be a direction to the third respondent to release the gold jewellery to the petitioner subject to payment of 50% of the duty as computed by the third respondent - petition disposed off.
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2018 (5) TMI 451
Rejection of settlement application - rejection on the ground that proceedings initiated under the show cause do not propose to assess, levy and collect any differential duty and therefore, it is not a case as defined u/s 127-A(b) of the CA 1962 - Held that: - In the instant case, admittedly, a SCN has been issued to the petitioner dated 18.03.2004. In the SCN, there is an allegation that the petitioner/importer have grossly undervalued the goods imported and the goods were allowed to be provisionally released on payment of the full duty as determined by the Department - SCN proposes to reject the value declared by the petitioner and fix the actual value of the goods and also confiscate the same in terms of Section 111(d) & (m) of the Act and proposes to impose penalty against the importers. The petitioner is entitled to maintain the application before the Commission as there is a SCN for confiscation and it would fall within the definition of caseas defined u/s 127-A(b) of the Act. The matter is remanded to the Settlement Commission for fresh consideration - petition allowed.
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2018 (5) TMI 450
Penalty u/s 112(a) of Customs Act, 1962 - bogus and forged DEPB License - Held that: - There is nothing brought out from records that the appellant had indulged in any conscious act while dealing with the DEPB scrips. The department has failed to establish that the appellant had prior knowledge that the DEPB scrips / license were fraud at the time of transfer of such scrips by him to the importer. Further, the immediate reaction of the appellant in reimbursing the money received itself would show that he had no knowledge of the fake nature of the scrips. In fact, we have to say that the appellant has become a victim of the dealings as he did not know about the fake nature of the scrips. The penalties imposed on the appellant cannot sustain - Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 449
Valuation - rejection of declared value - Such rejection has been ordered on the basis of market enquiry as well as the opinion regarding such local market value by CMFRI - Held that: - In the present case, we note that the transaction values have been rejected only on the basis of a market enquiry carried out with a trader and on the basis of the inputs given by CMFRI. The Principal Scientist of CMFRI has deposed in the cross examination that the prices indicated by them were on the basis of enquiries made in the local market. The CBEC vide Circular No. 56/2002-Cus. dated 09.09.2002 has directed that the present market value shall be the basis for granting DEPB benefit. But we are of the view that such a situation cannot be used to reject the transaction value. The circular can only be used for calculating/restricting the DEPB benefit. The evidence gathered by the department can at best raise doubt about the declared value. But such evidence cannot be used to reject the transaction value and redetermine the same in the case of the present case - confiscation and penalties set aside - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 448
Misdeclaration of imported goods - Crude Palm Stearin (Non-edible industrial grade) - the department was of the view that the importer misdeclared the goods and the same are liable for confiscation under Section 111 (m) of the Customs Act, 1962 and also liable for penalties under Section 112 (a) of the Act - Held that: - All the documents such as purchase order etc. show that the goods for which the they had placed order was only Palm Stearin. On coming to know that the goods did not conform to the description in the documents, the appellant has requested for re-export of the goods. The goods imported were warehoused and to be cleared by following various procedures and therefore when the appellant came to know that the goods were not Palm Stearin, had opted for re-export of the goods. The redemption imposed for the purpose of re-export is hideously harsh and requires to be interfered. Redemption fine reduced from ₹ 25,00,000/- to ₹ 5,00,000/- - the penalty imposed of ₹ 5 lakhs is also on the higher side and is reduced from ₹ 5,00,000/- to ₹ 1,00,000/-. Appeal allowed in part.
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2018 (5) TMI 447
Provisional Release of detained goods - goods not tallying with the description - Held that: - the impugned goods have been subjected to 100% examination, once by the Customs assessing officers on 26.10.2017 and subsequently by the D.R.I on 1.11.2017. However, no discrepancy emerged vis-a-vis declared description and quantity of the items. Further, although in the first instance the Customs assessing officers had no quibbles with the value of ₹ 43,58,498/- declared, the seizure memo dt. 18.12.2017 of DRI, Zonal Unit, Ahmedabad has alleged that value to be misdeclared and that the actual value should be ₹ 1,45,44,653/-. When the enhancement of value has been made by the D.R.I. Ahmedabad, Zonal Unit only on statements and data purported to have been retrieved from a hard disc, surely the final word is not yet out in respect of the valuation of the impugned goods. In such a scenario, we are at loss to understand why the High Court’s directions have not been given the respect that they deserve and instead very peremptory orders of provisional release has been issued putting conditions which are onerous and oppressive. Appeal disposed off.
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Corporate Laws
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2018 (5) TMI 415
Maintainability of appeal - invoking jurisdiction of the Hon’ble Company Law Board - time barred - Held that:- Since the acts complained of in the Petition have not occurred at a time when the Petitioners would have been eligible to invoke the jurisdiction of the Hon’ble Company Law Board and the delay in coming to the Company Law Board in the year 2013 clearly debars the right to the Petitioners to invoke the jurisdiction u/s 397 and 398. The view taken by the Hon’ble National Company Law Tribunal in the matter of M/s. Esquire Electronics Inc. v. Netherlands India Communications Enterprises Ltd. [2016 (10) TMI 1107 - NATIONAL COMPANY LAW TRIBUNAL] is squarely applicable to the present case also. Thus, we hold that the Company Petition is hopelessly time barred and the Petitioners have not explained any reason as to why there has been lot of delay in filing the Company Petition at the relevant point of time. The acts complained of in the Company Petition are not continuous in nature or which can be attributable to the period that would have enabled the Petitioners to invoke its jurisdiction of the Company Law Board under Section 397 and 398 of the Companies Act, 1956. Therefore, the issue (a) is decided in favour of the Respondents. A careful reading of the entire material on record alone reveals the whole game plan of the Petitioners to invoke the jurisdiction of Hon’ble Company Law Board. It can also be seen that the Petitioners have resorted to repetition of agitating the issues and carefully drafted this Petition to suit the requirements of Sections 397 and 398 of Companies Act, 1956. The reliefs claimed therein are moderately changed and then this Petition came to be filed. Therefore, the issue (b) is decided in favour of the Respondents. The entire case is based on a private agreement dated 7th September, 1991, which was executed between the parties even before the Respondent Company is incorporated. The Petitioners are seeking to enforce the terms and conditions of the said agreement against the Company and Directors, which is impermissible under law. In view of the above, we hold that the issue (c) is decided in favour of the Respondents. It can also be seen some proceedings before the Civil Courts have been dismissed against the Petitioners or some of them pending at the Appellate stage. We are of the view that the parties to this Company Petition and the parties in the other litigations, either before Civil Court or High Court, are more or less or at least partially the same. The underlying principle of res judicata is that a decision once rendered by a competent authority on a matter in issue between the parties after a full enquiry should not be permitted to be re-agitated. We, therefore, hold that the principle of res judicata is squarely applicable to the present case and the issue (d) is decided against the Petitioners. The provisions of Sections 397 and 398 of the Companies Act, 1956 will certainly come to the rescue of the Petitioners if the allegations made against the Respondents are such that unless with the intervention of the Tribunal the affairs of the Company cannot be conducted in a fair manner wherein the rights of the parties against the Company are properly upheld and the statutory duties are complied with in a proper manner. But the present case is completely devoid of any merits in so far as Sections 397 and 398 are concerned. It also gives an impression, the manner in which the Petitioners filed cases one after another in various Forums, that they are habitual litigants who are interested in unjust enrichment at the cost of litigation and are not at all interested in the welfare of the Company. Therefore, we are of the opinion that the Petitioners have not come to the Court with clean hands and the issue (e) is decided in favour of the Respondents.
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Insolvency & Bankruptcy
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2018 (5) TMI 459
Initiating of insolvency resolution process - Committee decided with 100% votes that the resolution process of the corporate debtor hereby fails and committee resolved for liquidation of the corporate debtor - replacement of resolution professional by the Committee of Creditors - Held that:- Committee of Creditors has unequivocally decided that the corporate debtor be liquidated. The resolution professional intimated the Adjudicating Authority in this regard vide his final report dated 22.01.2018 (Diary No.233 dated 22.01.2018). In view of these circumstances, the corporate debtor is to be liquidated in the manner laid down in Chapter III of the Code. The further resolutions clearly bring out that all the members of the committee of creditors resolved to replace and not to go ahead with the existing resolution professional Shri Amit Sharma for liquidation process. The resolution was also for taking fresh consent from another registered insolvency professional to act as liquidator. In these circumstances, the replacement of the resolution professional is not being sought for the corporate insolvency resolution process. Section 27 of the Code is therefore not applicable. The request for replacement of the resolution professional for acting as liquidator cannot be accepted. The conditions prescribed by Section 34(4) of the Code for replacement of resolution professional are not satisfied in the present case in as much as no resolution plan has been submitted by the resolution professional under section 30 and therefore, its rejection for failure to meet the requirements mentioned in Section 30(2) of the Code does not arise and neither has the Board recommended the replacement of resolution professional to the Adjudicating Authority. We pass the order requiring the corporate debtor M/s Tirupati Ceramics Ltd. to be liquidated and appoint Shri Amit Sharma, resolution professional as the liquidator for the purposes of liquidation. The ‘Liquidator’ shall publish public announcement in accordance with Regulation 12 of the IBBI (Liquidation Process) Regulations, 2016 and in Form B of Schedule II of these Regulations within five days from today calling upon the stakeholders to submit their claims as on liquidation commencement date and provide the last date for submission of claim which shall be 30 days from the liquidation commencement date. The liquidator shall exercise the powers and perform the duties as prescribed under various provisions and the Code, Regulations and the applicable Rules.
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Service Tax
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2018 (5) TMI 413
Short payment of service tax - Section 73(4A) of the Finance Act, 1994 - Petitioner had accepted short payment of service tax of ₹ 20,92,42,010/-, which was voluntarily deposited along with appropriate interest and penalty - Held that: - the petitioner is entitled to raise all these contentions and issues in response to the summons/notices, which are in the form of letters calling upon the petitioner to give and file their response - Issue of summons and notices does not mean that the authorities have formed any opinion or decided that show cause notice has to be issued. The queries raised have to be answered and depending upon the explanation given, the authorities would decide whether or not to proceed. The petitioner is entitled to raise the legal contention relying on their interpretation to sub-sections (4) and (4A) of Section 73 of the Finance Act, 1994. The authority would examine factual aspects and legal contention including the question whether conditions of sub-section (4) of Section 73 of the Finance Act, 1994 are satisfied - Presently, no show cause has been issued to the petitioner. Proceedings under sub-section (4) of 73 of the Finance Act have not been initiated. Counsel for the respondents states that authority would not normally have any objection to appearance by an authorized representative. However, in case any distinct issue and query is required to be answered by a specific person then notices/summons would be issued to the concerned person.
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2018 (5) TMI 412
Demand of service tax - Technical Inspection and Certification Service - third party inspection in respect of projects viz. Ghatprabha, Zambre, Arjuna of the works done by the Civil Wings i.e Statutory Corporations which are part of Water Resources Department - Held that: - the issue is no more disputed as in Appellant's own case i.e EXECUTIVE ENGINEER (MECHANICAL) [2014 (3) TMI 734 - CESTAT MUMBAI], where it was held that activity undertaken by the appellant falls outside the purview of service tax, and therefore, the appellant is not liable to pay any service tax - demand of service tax not sustainable - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 411
CENVAT credit - input services - construction service in respect of residential colony - construction of guest house and construction of school building - Rule 2(l) of CENVAT Credit Rules, 2004 - Held that: - any service used by the manufacturer whether directly or indirectly in or in relation to the manufacture of the final products and clearance of final products upto the place of removal would be an input service. The includes part is worded in such a way that it takes in a large number of services which includes services used not only directly or indirectly, in or in relation to manufacture of final products and their clearance. After 1.4.2011, the legislature has deleted the services of settling up of factory and also activities relating to business. The services of motor vehicle repair and maintenance as well as vehicle insurance has been excluded. The period being prior to 1.4.2011, the services of construction of residential colony and repair and maintenance of vehicle as well as insurance services are eligible for credit - The appellant is eligible for credit in respect of construction service used for setting up of residential colony in the factory premises - However, the very same view cannot be applied in the case of guest house and school constructed by the appellant inside the factory premises as the construction of school for providing education to the children of the employees of the factory will fall wholly as a welfare activity and it has no nexus or relation to the activity of manufacture. The credit allowed in respect of construction of residential complex and services relating to vehicle maintenance and repair service and vehicle insurance are eligible for credit whereas the credit availed on construction of school building and guest house cannot be allowed. Appeal allowed in part.
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2018 (5) TMI 410
Nature of activity - sale or service? - business of purchase/ sale of Sim Cards to various distributors across the country under an agreement with such persons - Appellant were called upon to pay service tax alongwith interest and penalty on the ground that the sale of Sim cards is taxable communication services provided to the customer as said service has been provided on behalf of M/s RCOM. Held that: - the Appellant are engaged in the activity of providing Business Support Service to M/s RCOM under which it is providing billing and collection services to RCOM under an agreement. In addition to same they are also engaged in separate activity of selling of SIM cards and other hardware to the distributors who are selling it onwards to customers - the Appellant is not providing any telecommunication service to any person or subscribers. Hence in such case there is no principal service or dominant service to which the sale of sim card can be related. In the present case the Appellant has separately sold the Sim cards to the distributors and therefore cannot be considered as rendering of services to subscribers of RCOM. Further such transactions having been accepted to be liable for VAT cannot be subjected to service tax under the category of Telecommunication Services . The adjudicating authority has not given any findings as to how the sale of sim cards by the Appellant is part of the telecommunication services of RCOM when the sale of sim cards is a separate transaction. In such case we find that in absence of any cogent reasons the demands is not sustainable. Time limitation - penalty - Held that: - there is no deliberate attempt on the part of Appellant to evade payment of tax - extended period of limitation and penalty cannot be invoked. Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 409
Demand of service tax - CHA service - incentives received from various airline / shipping liners @ 2% of the basic freight, in the name of brokerage - Held that: - identical issue decided in the case of Lee & Muir Head Pvt. Ltd. Vs. Commissioner of Service Tax, Bangalore [2008 (10) TMI 131 - CESTAT, BANGALORE], where it was held that the brokerage commission of 2% paid for booking of export cargo cannot be taxed under the category of Business Auxiliary Services. It is also seen that the activity of the appellant as a custom house agent is to provide services to importers/exporters and the disputed activity was only a facility arranged by them to their clients. The appellant has no obligation to arrange transport of cargo through a particular shipping liner - the amount received cannot fall within the category of ‘commission’ so as to be subjected to levy of service tax. Demand not sustainable - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 408
Intellectual property service - royalty - demerging of units - It was alleged in the show-cause notice that royalty is recoverable not only on the income from operation but from miscellaneous income like sundry balance written back, liquidated damages, fines and penalty charges, foreign exchange difference, sale of scrap, transfer and cancellation fees etc. Held that: - AVL was earlier part of the appellant but demerged from the appellant in the year 2008 by a scheme of arrangement and as per the scheme of arrangement, AVL is required to pay royalty to the appellant for use of 'Sahara' brand @ 5% of the annual turnover. - though SITV is separately registered with the Service Tax Department, but it is not a separate legal entity rather it is a division of the appellant who has discharged the service tax liability on behalf of the appellant and this does not tantamount to discharging the service tax liability of another company because the appellant and SITV form part of the same company and it is only a division of the appellant. The division of a company is not a separate company and the payment of service tax by the division would be deemed to be the payment by the company. The demand of ₹ 16,25,553/- is on account of miscellaneous income for which the appellant has not charged any royalty - Held that: - the appellant had not raised any invoice for royalty on this amount We also find that during the relevant period 2007-08 and 2008-09, the tax was payable only when the service provider has received the amount as provided in Rule 6 of Service Tax Rules, 1994 - Since in this case, the appellant has not raised invoice for the royalty amount on AVL and accordingly has not received the amount, therefore, as per the provisions contained in Rule 6 of Service Tax Rules, 1994, the appellant is not liable to pay service tax on this amount. Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 407
Demand of service tax - Business Auxiliary Service - classification in dispute, which was not raised at all - Held that: - the classification issue is the root of the entire demands therefore it is necessary to first decide the classification - However as accepted by the Ld. Counsel the issue of classification was neither before the Commissioner (Appeals) nor has he decided the same. Therefore we are of the view that the first issue of classification needs to be decided only thereafter the demand could be finalized - appeal allowed by way of remand.
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2018 (5) TMI 406
Valuation - Banking and other Financial Service - Held that: - the Commissioner has not dealt with the any of the judgments cited above and the position of the taxability decided - the matter should go back to the adjudicating authority to decide the show-cause notices afresh - appeal allowed by way of remand.
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2018 (5) TMI 405
Construction of Residential Complex Service - period from 16.6.2005 to 31.12.2007 - whether construction of quarters for police personnel would fall within the taxable service of construction of complex service u/s 65(30a) r/w section 65(105)(zzzh) of Finance Act, 1994? - Held that: - part of the demand is for the period prior to 1.6.2007. By applying the decision in the case of Larsen & Toubro [2015 (8) TMI 749 - SUPREME COURT], the demand for the period prior to 1.6.207 is not sustainable and requires to be set aside. The appellants have entered into an agreement with TNPHCL for providing services in relation to construction of residential complex. However, these are meant for use of police personnel - similar issue decided in the case of Nitesh Estates Vs. Commissioner of Central Excise [2015 (11) TMI 219 - CESTAT BANGALORE], where it was held that If the land owner enters into a contract with a promoter/builder/developer who himself provided service of design, planning and construction and if the property is used for personal use then such activity would not be subject to service tax. The levy of service tax cannot sustain. Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 404
Business support services - collection of monthly licence fee - With effect from 1-2-2005, TASMAC granted permission to contractors to sell eatables in the bar and to collect the empty liquor bottles left in the bars for a monthly license fee payable by such contractors to it - It appeared to the department that the contractors can conduct their business only after issue of a licence by TASMAC, on payment of licence fee; that without the support of TASMAC in the form of giving permission to sell eatables and to collect empty bottles, contractors would have no business; therefore upto 30-06-2012, the services rendered by TASMAC is a taxable service under ‚Support Service of Business or Commerce‛ under Section 65 (104c) read with Section 65 (105) (zzzq) of the Finance Act, 1994; that after 1.7.2012, the services are continued to be taxable since they are not covered under the negative list or otherwise exempted. Held that: - An analysis of the definition in Section 65 (104c) indicates that while it is indeed an inclusive definition, the type of services sought to be taxed are those of the genre and outsources services normally prevalent in business and commerce like evaluation of prospective customers, telemarketing, processing of purchase orders and fulfilment services, information and tracking of delivery schedules etc. In our view, the intention of the legislature to bring within the ambit of ‘Business Support Services’ only outsourced activities relating to management, logistics and customer relations etc. is vindicated by the Explanation to the said definition which exemplifies ‚infrastructural support services‛ as providing office along with office utilities, lounge, reception with competent personnel to handle messages, secretarial services, internet etc. There, then is no doubt, in our mind, that all these examples indicated in the definition are those relating to outsourcing of business, commerce, strategy planning, logistics planning and management, customer services, marketing assistance etc. We are unable to fathom how permission to run a bar adjacent to TASMAC wine shop along with a responsibility cast on the successful contractor to sell eatables and collect empty bottles, albeit for a fee, can be said to be analogous and in immediate connection with the type of activities exemplified in the inclusive definition of ‚Support Services of Business or Commerce‛ - For the period October 2008 to 30.06.2012, the demand of service tax on the appellant under ‚Support of Business and Commerce Services‛ is not sustainable and is set aide W.e.f. 1-7-2012, all services except those excluded by Section 65B (44), in particular, transfer of title in goods, deemed sale, transaction in money etc. will be liable to service tax or those falling in the negative list of services under Section 66D ibid or those which were specifically exempted otherwise, would be exigible to service tax levy. Appellants will be exigible to service tax liability in respect of the impugned activities only for the period 1.7.2012 to 28.03.2013 as ‘taxable service’ under Section 65B (44) of the Finance Act, 1994 - There will not be any service tax liability during the period of dispute from 29.03.2013 onwards. Penalty - Held that: - the entire dispute is one of interpretation and even from the record, we find that there are at least two circulars before introduction of negative list regime and one subsequent to that, which have found it necessary to dwell upon the liability to service tax in respect of such activities performed by instrumentalities of the State - Penalty set aside. Appeal allowed in part.
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2018 (5) TMI 403
Classification of services - respondent being Octroi Agents engaged in compliance of Octori duty payment on behalf of the various parties - whether taxable under the category of Business Auxiliary Service or otherwise? - Held that: - this Tribunal in various decisions consistently held that the said service provided by the octroi agents is not liable to service tax under business auxiliary service - appeal dismissed - decided against Revenue.
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2018 (5) TMI 402
Whether the activity undertaken by M/s. Xerox for various contracts for Maintenance and Repairs do qualify as Maintenance or Repair Service, or not? - Held that: - It is a fact that appellant is engaged in the activity of Maintenance and Repair of equipments supplied by them under various contracts. M/s. Xerox is required to replace the parts and accessories at the time of repair or maintenance - these are the Works Contracts and M/s. Xerox is paying VAT on the portion of materials supplied, therefore in the light of the decision in the case of Wipro GE Medical Systems Limited [2008 (8) TMI 207 - CESTAT, BANGALORE] M/s. Xerox is liable to pay service tax only on Labour Portion. Whether the service namely, XGS shall qualify under 'Business Support Service' or ‘Business Auxiliary Service’ or under Works Contract service? - Held that: - the appellant is engaged in the activity of printing of bill and not ‘Billing’. Therefore, the said printing of bill is altogether a different activity from the billing and cannot be termed as ‘Billing’ - the services in question do not qualify under the category ‘Business Auxiliary Service’ - appeal of Revenue dismissed. Whether the activity undertaken by M/s. Xerox are properly classifiable under Works Contract or not? - Held that: - for the period prior to 01.06.2007, no demand is sustainable under the category of ‘Maintenance and Repair Service/ Business Support Service/ Business Auxiliary Service for the activity undertaken by M/s. Xerox as the services of Business Support Service and Maintenance and Repair along with material and the agreement cannot vivisect the amount of material supplied by M/s. Xerox - The activities undertaken by M/s. Xerox under various contracts in question for Maintenance and Repair and XGS i.e. 'Business Support Service'/‘Business Auxiliary Service’ do not qualify as taxable service under Works Contract service, under Section 65 (105) (zzzza) of Finance Act, 1994, during the period - M/s. Xerox is not liable to pay service tax under the category of Maintenance and Repair service/ 'Business Support Service'/‘Business Auxiliary Service’. Whether interest can be demanded and penalty can be imposed against M/s. Xerox? - Held that: - As no demand is sustainable on M/s. Xerox therefore demand of interest and penalties are also set-aside. Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 401
Refund claim - contention of the Revenue is that the service provider of the respondent was not registered under the category of port service and was registered only for Business Auxiliary Service and Business Support Service - Held that: - no finding has been given by Commissioner (Appeals) to analyse averments made by the assessee and to test the grounds on which the adjudicating authority rejected the refund and to that extent, the order of Commissioner (Appeals) shows no application of mind - the matter is remanded back to the Ld. Commissioner (Appeals) for re-adjudication on the issue of refund of THC charges, BL charges, IHC & administrative charges etc. after giving proper opportunity to the respondent to defend their case - matter on remand. Refund claim of ₹ 1,50,396/- - Held that: - the adjudicating authority has gone by presumption in arriving at the amount for transport of empty containers from ICD to the factory for export goods - refund cannot be denied on presumption - refund allowed - decided against Revenue. Part matter on remand - partly decided against Revenue.
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2018 (5) TMI 400
Refund claim - relevant date - whether refund claim under Rule 5 of Cenvat Credit Rules, 2004 is barred by limitation should be reckoned from the date of receipt of foreign exchange as held by the Commissioner (Appeals) or it should be considered from the date of export of service or raising of invoices? - Held that: - issue of limitation is no longer res integara as has been held in various judgements that in case of export of service relevant date for computing the limitation is date of receipt of convertible foreign exchange against the service exported and not from the date of invoice issued for providing the export service. Whether the Commissioner (Appeals) is right in holding that the eligible refund amount will not be reduced due to the assessee having utilized part of the cenvat credit balance for payment of service tax on domestic output services during the relevant period? - Held that: - amount of refund claimed by the respondent shall not be more than the amount lying in balance at the end of the quarter or at the time of filing of the refund whichever is less - As per the fact narrated by the Ld. Counsel the refund claim amount is lesser, both the amount and cenvat credit balance at the end of the quarter as well as cenvat credit balance at the time of filing the refund and therefore the condition envisaged under clause (g) of para 2 of the notification is scrupulously complied with. The only amount which can be reduced is the amount which is reversed in terms of Sub-rule (5C) of Rule 3 during the relevant period. Therefore no amount which was utilized for payment of service tax in respect of domestic provision of service from cenvat amount is required to be reversed as per formula. Whether the Commissioner was right in allowing the cenvat credit on certain input services which were rejected, by the lower authorities on various grounds? - Held that: - the issue of admissibility of input service was raised in disposal of the refund claim filed under Rule 5 of the Cenvat Credit Rules. There cannot be two yardsticks i.e. one for allowing the credit and other for deciding the refund and therefore the refund claim cannot be rejected on the ground of admissibility of the input service at the stage of processing of refund claim. Appeal dismissed - decided against Revenue.
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2018 (5) TMI 376
CENVAT credit - trading activity - allegation in the SCN is that the appellants had wrongly used input service credit on services which were used both in respect of taxable services of authorized service station and for trading activities - Held that: - Admittedly, the trading has been categorized as an exempted service only w.e.f. 01.04.2011. The trading activity not being a service at all, the appellants was not required to maintain separate account as the provisions of sub-rule 3 of the Rule 6 of the CCR, which could not be applied prior to 01.04.2011 - Also, credit could not be allowed against trading activities since it was neither a service falling under Finance Act, 1994, nor “manufacture” under the Central Excise Act, 1944. Therefore, the portion of input service credit availed for trading activity is not admissible - the credit would not be admissible as is attributable to the trading activity. Time limitation - penalty - Held that: - the appellants have admittedly argued that the issue was clearly of interpretation, which was finally settled by way of insertion of explanation under N/N. 3/2011-CE (NT) dt. 01.03.2011 - extended period and penalty not invocable. Appeal allowed in part.
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Central Excise
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2018 (5) TMI 399
CENVAT credit - repair and maintenance service used for Windmills located outside the factory - Held that: - in the appellant's own case M/s Maharashtra Seamless Ltd. Versus Commissioner of Central Excise, Raigad [2011 (7) TMI 505 - CESTAT, MUMBAI], the CENVAT Credit on the same service has been allowed by this Tribunal, where it was held that the definition of input service read as a whole makes it clear that the said definition not only covers services, which are used directly or indirectly in or in relation to the manufacture of final product, but also includes other services, which have direct nexus or which are integrally connected with the business of manufacturing the final product - credit allowed - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 398
Valuation - captive consumption or not? - sample drawn for testing, the same are cleared on payment of duty as scrap - case of the department is that the samples drawn is a finished goods and the same was used captively, therefore, such clearances should be made following the valuation principles in terms of Rule 4 by virtue of Rule 11 of Central Excise Valuation (Determination of price of Excisable Goods) Rules, 2000. Held that: - the appellant have drawn the sample captively within the factory for testing purpose, since the goods were not cleared from the factory, no duty was required to be paid and as and when the sample was cleared, the same was cleared in the form of waste and scrap and excise duty was paid on the transaction value of such waste and scrap. In this fact, there is no question of demanding duty on the captive consumption of sample for testing. The appellant's case is on the better footing that the sample tested were subsequently cleared as waste and scrap on payment of duty. The duty on the sample drawn for testing is not sustainable - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 397
CENVAT credit - denial on the ground of delay in taking the credit - in respect of the inputs received during the period from 1.4.2002 to 31.3.2006 availed the CENVAT Credit in September, 2006 and October, 2006 - Held that: - the reason for non-availing the CENVAT Credit immediately is due to the confusion regarding the quantum of credit to be availed, which is attributed to the dutiable goods. There was involvement of exempted activities also - it cannot be said that the appellant have not made claim for the CENVAT Credit. It is obvious that when input is received, the same is entered in the records. Therefore, it cannot be said that the appellant have availed the credit belatedly or there is no claim of the CENVAT Credit by the appellant. CENVAT Credit cannot be denied only due to the delay in taking the credit, however, the facts regarding receipt and use of the inputs needs to be verified, which can be done on the basis of private records and the Books of Account maintained by the appellant - appeal allowed by way of remand.
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2018 (5) TMI 396
Benefit of N/N. 6/2002-CE dated 1.3.2002, 3/2004-CE dated 8.1.2004, 108/95-CE dated 28.8.1995 and 10/97-CE dated 1.3.1997 - denial of exemption on the ground that there are discrepancy in the documents - Held that: - there is a minor discrepancy in the documents - Learned Counsel took us to all the relevant documents wherefrom we find that the description of the goods clearly tallied between the certificate issued by the Project Authority and the description appeared in the invoices issued by the appellant. Therefore, the correlation between the details appearing in the certificate and details appearing in the invoice is clearly established. As regards the address of the Chinchwad Unit, it is immaterial whether the address of their office or manufacturing unit is mentioned - so long the certificate bears the name of the appellant, a different address of the appellant mentioned in the certificate does not debar the appellant from availing the exemption notification. There are no serious discrepancy, which establishes that the goods have not been supplied for the intended purpose - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 395
Valuation - inclusion of Predelivery Inspection (PDI) charges incurred by the dealers of 2/3 wheeled motor vehicles and thereafter reimbursed by the appellants - Held that: - Pre-Delivery Inspection charges is the outflow expenses of the appellant therefore the same by any stretch of imagination cannot be said that the same is on account of any additional consideration - issue is decided in appellant own case COMMR. OF C. EX. CUS., AURANGABAD Versus BAJAJ AUTO LTD. [2014 (7) TMI 229 - CESTAT MUMBAI], where it was held that In the absence of any flow-back from the dealer to the respondent-assessee, the question of including PDI and after-sale service charges in the assessable value of the goods sold does not arise at all - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 394
Classification of goods - printed computer stationery - Department was of the view that printed computer stationery falls under Chapter Heading 48.20 attracting duty while the appellant classified the said goods under Chapter Heading 49 to hold that the goods are not chargeable to duty - Held that: - An identical issue was considered by the Tribunal in the case of Data Processing Forms Pvt. Ltd. [2011 (9) TMI 921 - CESTAT AHMEDABAD] wherein the forms have been scanned and made part of the said judgment, it was held in the case that the products in the current appeal would definitely fall under category of product of printing industry and gets classified under Chapter 49 of the second Schedule of Customs Excise Tariff Act, 1985, as the pre-printed forms contain motifs, characters or pictorial representations which are not merely incidental to the primary use of the product. The impugned items do not fall under Chapter 48.20 but would only fall under Chapter 49 - Demand do not sustain - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 393
Valuation - inclusion of value of pre-supply inputs used in the manufacture of job-work goods - The case of the department is that the value of such two types of critical raw material supplied by Ranbaxy should be added in the assessable value of the goods manufactured by the appellant - Held that: - Merely because the certain raw material was supplied by the principal under Rule 57F or 57 AC of erstwhile Central Excise Rules, 1944, the inclusion of cost of such raw material cannot be avoided. Since the appellant have opted to job-work on payment of excise duty then the correct assessable value has to be arrived at i.e. cost of all the raw materials used in the manufacture + job charges and nothing can be excluded from such value. The proposal of the department is to include actual cost of the raw material on which cum duty value should not be further taken, hence the same cannot be allowed on this count. Appeal dismissed - decided against appellant.
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2018 (5) TMI 392
CENVAT credit - According to department, as per definition of 'first stage dealer' given in CCR 2004, the dealer should purchase the goods directly from the manufacturer and that the appellants are not eligible for the credit availed on the Aluminium scrap which were resold to them - Held that: - the appellants are not the manufacturer of Aluminium scrap and they have only imported the scrap for manufacture of Aluminium ingots. They cleared certain quantity of scrap "as such" under Rule 3 (5) of CCR 2004 to a first stage dealer who availed credit on the same and thereafter resold to the appellant who availed credit on the said goods being inputs. According to department, the first stage dealer cannot avail credit on the aluminium scrap as the goods having removed as such. We do not find any sum or substance in such a proposition - For the purpose of Rule 2, the dealer is one who purchases “goods” from the manufacturer, and is not limited to somebody who only purchases goods “manufactured” by the manufacturer. Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 391
Valuation - goods sold to other customers on principal to principal basis for arriving at the value of these goods, cleared to their own unit for repacking - case of department is that since the goods are not cleared for sale from the factory, the valuation should be done under Rule 8 of the Central Excise Valuation Rules, 2000 - Held that: - in respect of the same goods since part of the said goods was sold independently to unrelated buyer, the transaction value of the said goods is available - Therefore, the said transaction value will prevail over the value in terms of Rule 8 of Central Excise Valuation Rules, 2000. The valuation adopted by the respondent i.e. the transaction value of the same goods sold to independent buyer is a correct value. Hence, the valuation under Rule 8 of Central Excise Valuation Rules, 2000 is not applicable in the facts of the present case Appeal dismissed - decided against Revenue.
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2018 (5) TMI 390
CENVAT credit - input was received in the factory of the job-worker but not in the factory of the appellant manufacturer - Held that: - CENVAT Credit is allowed not only on the input received in the factory of the manufacturer of the final product but also the input used in the manufacture of intermediate product by a job-worker availing the benefit of exemption under N/N. 214/86-CE dated 25.3.1986 - in respect of the inputs used in the premises of the job-worker, the CENVAT Credit is admissible - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 389
CENVAT credit - inputs/input services have been commonly used in the manufacture of Gabapentine, which was cleared in DTA on payment of duty and also by availing full exemption - non-maintenance of separate records - Held that: - The impugned goods Gabapentine are dutiable and cannot be said to be unconditionally exempted products. They are allowed to be cleared to DTA without payment of duty only as per Notification No. 23/2003. The goods are leviable to nil rate of duty on application of Notification No. 23/2003. In view of the clarification by circular dated 16.09.2016, the contentions put forth by the Revenue in the grounds of appeal will no longer have any relevance. Appeal dismissed - decided against Revenue.
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2018 (5) TMI 388
Refund of excess duty paid - time limitation - power of Commissioner (Appeals) to remand the case for the purpose of quantification of duty - Held that: - Though we agree with the proposition of law that Commissioner (Appeals) has no powers to remand the matter, we find that the remand was only for a limited purpose - In any case, the Tribunal has powers to remand and therefore, we direct the original authority to re-quantify the duty as confirmed by the Commissioner (Appeals) for the normal period - Appeal disposed off.
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2018 (5) TMI 387
100% EOU - N/N. 22/2003-CE - inputs procured by them for manufacture of the impugned Diesel Generator sets - appellants had cleared the goods at nil rate of duty by availing exemption under N/N. 12/2012-Cus., and hence denied benefit of N/N. 22/2003 - CBEC Circular No. 268/01/2016-CX dated 16/09/2016. Held that: - CBEC vide a Circular No. 268/01/2016-CX dated 16/09/2016 has clarified that the second proviso to para 6 of the N/N. 22/2003-CE dated 31.03.2003 and the proviso to para 3 of N/N. 52/2003-Cus dated 31.03.2003 would not be applicable, in case of supply of manufactured goods by EOU to Advance Licence/Authorisation holder in DTA, without payment of Central Excise duty. This CBEC Circular will apply mutatis mutandis to supply of deemed exports covered by the category (f) of para-8.2 of FTP which covers supply of goods to a project of purpose for which the MoF, by a notification, permits import of such goods at zero customs duty - It is also clarified in para-8.2 that benefit of deemed export shall be available under para 8.2 (f) only if the supply is made under the procedure of International Competitive Bidding. The benefit of deemed export will be available to the supply of one Diesel Generator set made by the appellant to ONGC under Project Authority Certificate issued by the competent authority - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 386
CENVAT credit - various input services - Outdoor catering and canteen related service - House keeping at Guest House - Transit house - Hostels - Manpower and Security Services at the township and various installations outside factory premises - AC Maintenance at Hospital & upkeep of medical dept. - Garden Maintenance Service - Postal Services (Speed Post) - Tyre retreading - Hospitality Service. Held that: - the definition of input service not only covers services which fall under the means part, but also covers services which are covered under the inclusive part of the definition. In CCE & St, LTU, Chennai vs Rane TRW Steering Systems Ltd, the Hon’ble jurisdictional High Court held that gardening services where an employer spends money to maintain their factory premises in an eco-friendly manner is eligible for credit. The credit in respect of postal services has been disallowed for the reason that the document issued by the postal department does not contain a few details. The department has no dispute with regard to the service tax paid on such document and also with regard to the availment of postal services. The department cannot then deny the credit. Credit on all services allowed - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 385
Manufacture/deemed manufacture - printing of name of customers - benefit of N/N. 8/2003 - Held that: - the respondents were not merely printing the names of the customers on the bags but were also undertaking the packing of the sacks. The activity fully falls under deemed manufacture and therefore the respondents have rightly availed the SSI exemption benefit under Notification No. 8/2003. The Hon’ble Supreme Court in the case of Fitrite Packers [2015 (10) TMI 1047 - SUPREME COURT] has held that The printing, therefore, is not merely a value addition but has now been transformed from general wrapping paper to special wrapping paper. In that sense, end use has positively been changed as a result of printing process undertaken by the assessee. The order passed by the Commissioner (Appeals) requires no interference - appeal dismissed - decided against Revenue.
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2018 (5) TMI 384
Condonation of delay in filing ROA Application - Held that: - the reason stated for delay is very reasonable, accordingly we condone the delay in filing the ROA application. Hence, the COD application is allowed. Restoration of appeal - Held that: - the order was submission only on the argument of the learned AR, however the grounds of appeal made by the appellant was not touched upon. Therefore the order does not appear to be speaking order - the order passed by this Tribunal without considering the grounds of appeal is required to be recalled - appeal restored.
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2018 (5) TMI 383
SSI exemption - benefit of N/N. 8/2003-CE dated 01.03.2003 - denial on the ground that the respondent has not reversed the cenvat creit prior to opting of exemption 01.04.2008 - Held that: - whatever cenvat credit lying in their cenvat credit account have been reversed by the respondent on 08.04.2008. In that circumstance, it cannot be said that the respondent is not entitled for benefit of exemption N/N. 8/2003-CE dated 01.03.2003 - demand set aside - appeal dismissed - decided against Revenue.
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2018 (5) TMI 382
CENVAT credit - inputs - HR Sheets - Whether in the facts and circumstances of the case, the Cenvat credit can be denied to the appellant for contravention of Rule 57AB of the Cenvat Central Excise Rules, 1944 and Rule 3 of Credit Rules, 2002/2004 or not? - Difference of opinion - majority order. Held that: - there was no investigation to have been conducted in respect of procuring of inputs for manufacture of final product on which duty was collected by Revenue - also, there was no investigation from the transporter and also in respect of payment made to the supplier. It is settled in the law that for taking Cenvat credit on the inputs, the inputs should be received in the factory and they should be duty paid and used in the final product. The allegation in the SCN that the inputs on which Cenvat credit was availed was not received in the factory is not sustainable - credit allowed. In view of the majority decision, the appeals are allowed.
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2018 (5) TMI 381
CENVAT credit - engines/pump/frames - denial on the premises that the process undertaken by them does not amount to manufacture - Whether the activity of inspection and testing in respect of the parts for proper alignments of pump set on engines, pump and base frames and packing thereof in master box amounts to manufacture as held by the Member - Difference of opinion - majority order. Held that: - the view expressed by Brother Member (Judicial) are agreed upon, that the process of manufacture is involved in the subject goods - the facts are not in dispute that the appellant are procuring engines, pumps and base frames from various suppliers. These items were inspected by the appellant for proper alignment of engine, pump and base frames and all these items are sold all together. As all these items are sold by the appellant together as pump sets, therefore, engine, pump and base frames are not sold as such by the appellant, therefore, the new product has come into existences after inspection and alignment done by the appellant, therefore, we hold that the activity undertaken by the appellant amounts to manufacture. The activity of inspection and alignment of the pumps, engines and base frame makes marketable as pump set, in that circumstances, the process undertaken by the appellant amounts to manufacture. In view of the majority decision that the activity undertaken by the appellant amount to manufacture, the appeal filed by the appellant is allowed.
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2018 (5) TMI 380
CENVAT credit - receipt of goods from first state dealer who obtained the goods from a person not having manufacturing facility - Whether in the facts and circumstance of the case and evidences placed on record, Member (Judicial) is correct in holding that the appellant namely M/s. JSL Stainless Limited has correctly taken Cenvat credit on the invoices issued by M/s. National Udyog and therefore, proceedings against the appellant are not sustainable? - Difference of opinion - majority order. Held that: - the show cause notice is silent on the investigation in respect of the documents on the basis of which the appellant have availed Cenvat credit which was sought to be denied by Revenue, and that Revenue have not carried out any investigation regarding the goods which were transported from M/s National Udyog Limited to the appellant. The show cause notice is silent on the name of the manufacturer who supplied the said goods to the first stage dealer which were intern received by the appellant - The said show cause notice only discussed about the transaction between M/s. AIP Industries Limited and M/s. National Udyog. M/s. National Udyog is first stage dealer and any first stage dealer is not required to receive the goods only from one manufacturer. Had there been any investigation establishing that the inputs on which Cenvat credit was availed, as entered in the invoices issued by the first stage dealer, were the same goods which were involved in the investigation about the transaction between M/s AIP Industries and M/s National Udyog, then only this show cause notice could have sustained. In the present case, the assessee is found to have duly acted with all reasonable diligence in its dealings with the first stage dealer - the ruling in the case of CCE vs. Juhi Alloys Limited [2014 (1) TMI 1475 - ALLAHABAD HIGH COURT] squarely applies to the present case, where it was held that Admittedly, in the present case, the assessee was a bona fide purchaser of the goods for a price which included the duty element and payment was made by cheque. The assessee had received the inputs which were entered in the statutory records maintained by the assessee, credit remains allowed. In view of the majority decision the appeals are allowed.
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2018 (5) TMI 379
Benefit of N/N. 56/2002-CE dated 14.11.2002 as amended - it was alleged that as the appellant paid duty on their own, they were not entitled to claim refund by way self-credit - difference of opinion - majority order. Whether the provisions of Section 5A(1A), which have primacy over notifications, were binding on the appellant and the benefit under Notification No.56/2002-CE dt. 14.11.2002 was not available because of statutory provisions? Whether in terms of Notification No.10/10-CE dt. 17.02.2010, the appellant is not required to pay duty and he has paid duty whether the provisions of Section 11A of Central Excise Act, 1944 are applicable or not? Held that: - it is incorrect to say that what is being paid and what is being refunded does not have the character of duty - Section 11A of the Act will apply. The payment of duty on value added portion is a specific requirement to avail Notification 56/2002-CE. In other words, such payment is clearly for claiming the same back to the appellant. As already stated this is the mechanism evolved for applying the exemption. Having noted that both are exemption notifications issued under exemption 5A, I am in agreement with the findings recorded by Member (Judicial) based on the ratio of various decisions of the Hon'ble Apex court regarding the choice available to the claimant when more than one exemption is available on the same goods - It is settled law that the statutory provisions have primacy over the delegated legislation as has been held by the Hon'ble Supreme Court in the case of Corporation Bank Vs. Saraswati Abharansala [2008 (11) TMI 387 - SUPREME COURT OF INDIA]. The views expressed by Member (Judicial) regarding availability of exemption under Notification 56/2002-CE to the appellant is sustainable - Since, the said issue has been settled in favour of the view expressed by Member (Judicial), the second question is not found relevant, since, the same is with reference to recovery of amount from the appellant on denying the exemption under Notification 56/2002-CE. Appellant is entitled to benefit of Notification No. 56/2002-CE dated 14.11.2002 - appeal allowed.
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2018 (5) TMI 378
Condonation of delay in filing appeal - the only reason given for delay is that they came to know about the Order-in-Appeal on 23.11.2017, when department initiated recovery proceedings - Held that: - As rightly pointed out by the Ld. A.R. that even if the present delay is condoned, the matter is covered against the assesee by the Hon’ble Supreme Court judgment in the case of Singh Enterprises vs. CCE, Jamshedpur [2007 (12) TMI 11 - SUPREME COURT OF INDIA] - the plea of non-receipt of the impugned order at their registered factory address is not convincing - delay cannot be condoned - appeal dismissed.
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2018 (5) TMI 377
CENVAT credit - mobile phone bills - Commission paid to their selling agents - Held that: - Admittedly, the phones were registered in the name of the appellant firm and the payment of the bills inclusive of the service tax was being made by the appellant. The expenditure incurred by the assessee was duly reflected in their books of accounts - the breakup of the telephone bills into private and official calls is an irrelevant exercise and denial of credit on that basis is untenable - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2018 (5) TMI 375
Stay of Recovery proceedings - petitioner prays that the recovery against him be interdicted at least until such time as the stay petition is considered by the Appellate Tribunal - Held that: - the petitioner can be given some respite from the rigor of recovery, at least until such time as his stay petition is considered by the Appellate Tribunal - Until such time as the Appellate Tribunal passes an order on the stay petition, and communicates the same to the petitioner, all steps for recovery of amounts against the petitioner, confirmed through Ext.P1 assessment order, shall be kept in abeyance - petition allowed.
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2018 (5) TMI 374
Stay of Recovery proceedings - petitioner prays that the recovery against him be interdicted at least until such time as the stay petition is considered by the Appellate Tribunal - Held that: - the petitioner can be given some respite from the rigor of recovery, at least until such time as his stay petition is considered by the Appellate Tribunal - Until such time as the Appellate Tribunal passes an order on the stay petition, and communicates the same to the petitioner, all steps for recovery of amounts against the petitioner, confirmed through Ext.P1 assessment order, shall be kept in abeyance - petition allowed.
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2018 (5) TMI 373
Validity of revision notice - inter-state sales - petitioner's apprehension is that in spite of giving a detailed reply to the enforcement officials explaining that the stand taken by them is wholly incorrect, the first respondent has mechanically issued the impugned notices - Held that: - the matter is yet to be concluded and assessment proceedings are yet to commence - Though it may be true that revision of assessments have occurred earlier, as and when Form C declarations are filed, the first respondent is bound to take note of the same and if the forms are found to be in order, he should revise the assessment. Though the revision notices are consequent upon a VAT Audit conducted in the business premises of the petitioner, that by itself will not be a reason for not submitting objection to the notice. Writ petitions are disposed of by directing the petitioner to submit comprehensive reply to all the revision notices received by them within a period of 15 days' from the date of receipt of a copy of this order - Petition disposed off.
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2018 (5) TMI 372
Lifting of attachment over the property - Held that: - the liability of the first petitioner under the Act is only about ₹ 21,00,000/-, the said liability of the first petitioner has not become conclusive, the property of the second petitioner which the petitioners are offering as a security for the liability is more than ₹ 40,00,000/- and the fact that the fifth respondent is prepared to purchase the property of the first petitioner subject to the charge of the State - The second petitioner shall execute appropriate documents before the third respondent to furnish her property referred to in the writ petition as security for the amounts due from the first petitioner and surrender the original title deed of the property - On compliance the third respondent shall lift the attachment over the property of the first petitioner - petition disposed off.
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2018 (5) TMI 371
Input Tax Credit - Section 10(3) of the KVAT Act, 2003 - denial on the ground that the claim of Input Tax Credit against the Output Tax Liability of the assessees did not pertain to the same ‘Tax period’ for which Output Tax Liability and Net Tax Liability was to be determined in accordance with Section 10(3) of the Act - interpretation of statute. Held that: - the controversy involved in these writ petitions is squarely covered by a decision in the case of Kirloskar Electric Co. Ltd. And Others Versus The State of Karnataka [2018 (2) TMI 524 - KARNATAKA HIGH COURT], where it was held that The substantive provision of Section 10(3) of the KVAT Act, 2003, did not lay down any such restrictive time frame for allowing the deduction of ITC against the OPT in a particular tax period to determine the net tax payable for that tax period and therefore there is no justification whatsoever to accept such an interpretation put forth by the learned counsels for the Respondent State. Such contentions had not only been negatived and with great respects. It was also held in the case that the machinery provisions cannot be allowed to override and defeat the substantive claim of the Input Tax Credits under Section 10(3) of the KVAT Act, 2003, which without any restriction of the time frame, allowed such deduction or credit of the ITC against the OPT liability of the Dealer in question - The matters would stand restored to the file of the Respondent Assessing Authorities to pass fresh orders in accordance with law. Petition disposed off.
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Indian Laws
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2018 (5) TMI 414
Whether the Award of the arbitrator and the findings of the High Court are contrary to the express provision of Clause 19, according to which no escalation is permissible to the contractor for, inter alia, increase in wages of labour due to statutory hike, which the contractor may have to incur during the execution of the work on any account? Held that: - On a plain reading of Clause 6.3 read with Clause 19, it is evident that it was particularly made clear that no escalation would be reimbursed even in the case of Regulation. Hence, in the presence of such clauses, which respondent voluntarily agreed before accepting the contract, any departure cannot be allowed - the respondent cannot claim reimbursement of excess of minimum wages on account of hike due to the Notification of the Government of Haryana. If any departure would be allowed from the terms and conditions of the contract, then it would destroy the basic purpose of the contract provided such conditions shall not be arbitrary. It is a settled law that the process of interpretation is based on the objective view of a reasonable person, given the context in which the contracting parties made their agreement. On a perusal of the said two paragraphs of the impugned judgment, we fail to understand that on what parameters the High Court has interpreted Clause 19 in light of Clause 25 of the Contract. The respondent-Contractor in the present case is not entitled to claim any escalation in minimum wages as it would be against the condition of Clause 19 read with Clause 6.3 - appeal allowed.
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