Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
June 13, 2017
Case Laws in this Newsletter:
Income Tax
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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State Goods and Services Tax Acts (SGST Acts, 2017)
Income Tax
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Since no proceedings were pending before AO when he issued the letter of enquiry to the assessee, therefore such enquiry letter was not valid in eyes of law. The assessee was not required to respond to this invalid and non est letter of inquiry issued by the AO. - AT
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Following are the major highlights of the Hon'ble Supreme Court of India's Judgement on Aadhar PAN Linkage:
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Addition u/s 40A(3) - payment of expenditure in cash - Cash payments made to West Bengal State Electricity Distribution Company Limited (WBSEDCL) is covered by the exception Rule 6DD(b) and as such no disallowance u/s. 40A(3) - AT
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Accrual of income - Cancellation of recovery of the interest - Where the income can be said not to have resulted at all, there is obviously neither accrual nor receipt of income, even though an, entry to that effect may, in certain circumstances, have been made in the books of accounts. - AT
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Addition of deemed dividend u/s 2(22)(e) - the assessee being a Public Ltd. Company has taken loan from a subsidiary which is also a public Ltd. - there is no dispute that the provisions of section 2(22)(e) will not attract to the present case of the assessee - AT
Service Tax
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Cargo Handling Service - A commodity becomes a cargo and thereafter only, loading and unloading in a freight terminal becomes a cargo handling service. Further, the service provider must incidentally be involved in loading or unloading or packing, unpacking of the cargo. These conditions are not met in the present case. - AT
Central Excise
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Refund claim - adjustment of excise duty paid against duty short paid - Assessee, in this case is a manufacturer, had to necessarily demonstrate that the burden of duty had not been passed on to the ultimate customer - once, the sanction of refund is reversed, there can be no squaring off - HC
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CENVAT credit - electricity - captive consumption - CENVAT Credit on inputs and input services proportionate to the power transferred to sister concerns through the Central electricity grid, need not be reversed - AT
Case Laws:
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Income Tax
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2017 (6) TMI 498
Disallowance of depreciation to assessee trust - Held that:- Depreciation is the exhaustion of the effective life of a fixed asset owing to 'use' or obsolescence.It cannot be held that double benefit is given in allowing claim for depreciation for computing income for purposes of section 11. The questions proposed have, thus, to be answered against the Revenue and in favour of the assessee. See Director of Income-tax, Exemptions v.Al- Ameen Charitable Fund Trust [2016 (3) TMI 462 - KARNATAKA HIGH COURT] Net receipts v. gross receipts in computation of application of income - Accumulation at 15% on gross receipts should be considered u/s.11(1)(a), and not on net receipts. See Jyothy Charitable Trust Versus The DCIT [2015 (11) TMI 1295 - ITAT BANGALORE] Treatment of unutilised grants as income - Held that:- The conclusion recorded by the CIT (A) do not clearly suggest that the inference was drawn by the CIT (A) based on the material already existing on record with the AO. In our view, it would always be advisble hat the first appellate authority should seek a remand report, in case the factual matrix are not clear from the records, from the AO. In the light of the above, we remand the matter to the file of the CIT (A) with a direction to seek a remand report from the AO on this issue, i.e., whether the grants received from other agencies including AICTE, were utilised for the specific purposes or not and whether the assessee has kept the said grants received by it in a separate bank account and has not merged the same with the regular account of the assessee. Claim for acquisition of capital assets from the borrowed fund - investment in fixed asset by using the loan - Held that:- Section 11 only contemplates the application of income and if the said income is applied for the aims and objectives of the trust, then the trust is entitled for exemption under the provision. The said analogy cannot be extended to acquisition of assets from the borrowed funds. If we hold so, then we would be equating the borrowed fund with the income of the trust. Under the law, it is the application of income and not of the fund that is required to be seen for the purpose of granting the exemption. In fact, the assessee would be entitled to exemption in view of the judgment in the matter of Janmabhoomi Press Trust (1999 (12) TMI 51 - KARNATAKA High Court), as and when the loan is repaid to the financial institutions. In view thereof, if the claim of the assessee that the borrowed funds were utilised for the objects of the trust, is entertained and accepted at this stage, it would tantamount to double benefit which cannot be the intention of the statute. CIT (A) erred in allowing the claim for acquisition of capital assets from the borrowed fund. - Decided in favour of revenue
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2017 (6) TMI 497
Rectification of mistake u/s 154 - tax payable u/s 115JB is higher than the tax liability under normal provisions - Held that:- No doubt the AO has applied the provisions of section 115JB treating the assessee as company as per section 2(17)(iii) of the Act. Whereas the assessee is a banking company as per the Banking Regulation Act, as the issue was debatable prior to amendment in Finance Act, 2012. The provisions of section 115JB, during that period before amendment, is applicable to those companies which prepares its P&L A/c in accordance with the provisions of Part - II of Schedule - VI of the Companies Act, 1956. It is a fact that assessee has never followed Part - II of Schedule - VI to the Companies Act, 1956 and also its financial statements are not placed before Annual General Meetings. Accordingly, provisions of section 115JB are not applicable to the assessee. The same view was confirmed by various judicial pronouncements and also in assessee's own case for AY 2007-08 by the coordinate bench of this Tribunal. Rectification is possible when other parties agrees that it has no two possible views. Hence, rectification order passed by the AO is wrong considering the fact that the issue involved is disputed one as various Tribunals has given finding that provisions of section 115JB are not applicable to a banking company prior to amendment in finance Act, 2012. Prior to amendment of Finance Act, the issue was settled in favour of the assessee, even though, the issue was raised by the AO in the original assessment order. As issue involved in the rectification order is a debatable issue, accordingly, rectification order passed by the AO is not proper. - Decided against revenue
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2017 (6) TMI 496
Purchase of sales tax exemption certificates - revenue or capital expenditure - Held that:- We find that in the present case the assessee claimed expenditure from purchasing Certificates from third party under the scheme introduced by the Govt. of Maharshtra and with the permission of the concerned department. In such circumstances, we are of the view that the CIT-A was justified in deleting same. We uphold the order of the CIT-A. Therefore, the ground raised by the revenue is dismissed. Disallowance of set off on unabsorbed depreciation carried forward from A.Y 1998-99 - Held that:- We find that the CIT-A by following ecision rendered by the Hon’ble High Court of Gujarat in the case of General Motors (India) Pvt. Ltd [2012 (8) TMI 714 - GUJARAT HIGH COURT] wherein it held that if any unabosrbed depreciation or part therein could not set off and it would be carried forward till the time of set off against profit and gains of subsequent years without any limit whatsoever - Decided in favour of assessee.
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2017 (6) TMI 495
Assessment u/s 153A - addition u/s 14A - Held that:- Assessing Officer straightway asked the assessee vide letter dated 09.08.2011 that vide Rule 8D shall not be applied in the case of the assessee. According the provisions of section 14A(2) the AO is duty bound to examine the claim of the assessee having regard to the accounts of the assessee should record his satisfaction about the correctness of the claim. In the present case we do not find any such satisfaction recorded by the ld Assessing Officer. In absence of any satisfaction recorded by the ld AO as provided u/s 14A(2) of the Act the disallowance u/s 14A applying provisions of Rule 8D cannot be sustained. In view of this we reverse the order of the ld CIT(A) we direct the ld Assessing Officer to delete the disallowance - Decided in favour of assessee.
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2017 (6) TMI 494
Addition of provision for certain doubtful debts u/s 36(i)(vii) - Held that:- Upon perusal of statutory provisions, we find that any expenditure laid out or expended wholly and exclusively for the purposes of business shall be allowed provided that same is not personal expenditure or capital expenditure and not of the nature covered by Section 30 to 36. However, prime condition to claim the same is that the expenditure, at the first instance, must have crystallized during the impugned AY before which the same could be claimed by the assessee and this factor, in our opinion, is missing in the instant case. Upon perusal of documents placed on record, we find that the assessee could not produce any evidence to show that the suppliers refused to pay the outstanding amount or denied their liability in any manner which can lead to a conclusion that the impugned provision crystallized during the year. The expenditure to be admissible, at the threshold, must be capable of being classified as an expenditure at the first instance and deduction of mere provisions / estimation could not be allowed to the assessee unless provided by the statute. On the same analogy, the same is not admissible either under Section 28(i). Therefore, to conclude, we hold that the impugned expenditure, being mere provisions, were not allowable to the assessee which results into dismissal of all grounds of assessee’s appeal.
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2017 (6) TMI 493
Reopening of assessment - receipt of share application money - Held that:- Since original return was processed u/s 143(1), only one conditions viz. reasons to believe that the income has escaped assessment was required to be fulfilled by the AO and nothing more. However, it is also well settled principle that the AO must be in possession of some tangible material so as to justify the reopening and that material should lead to formation of belief on the part of the AO that certain income has escaped assessment and also the material should have live link with the formation of the belief, which in our opinion is missing in the instant case. From the material on record, it is clear that the assessee has not received any share application money from the said group rather it has received share application money from two persons namely B.P.Choudhary and Saroj Choudhary. The revenue could not bring on record any linkage of these two persons with G.V. and his group. The only basis of initiating reassessment proceedings seems to be the statement made by G.V. who admitted to having advanced accommodation entries to the assessee in exchange for cash against commission. But, we find no nexus between the statements of the G.V. vis-à-vis assessee’s share applicants. Therefore, prima facie the primary condition of initiating reassessment proceedings in the instant case is not fulfilled. - Decided in favour of assessee.
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2017 (6) TMI 492
Deduction u/s. 54EC - non accepting the actual consideration received by the assessee on account of sale of the impugned property - Held that:- The provisions for Section 54EC require to make investment in the specified securities on the basis of actual sale consideration and not on the basis of deeming amount of consideration as envisaged in section 50C of the Act. Whereas the provision of Sec. 50C provides for deemed value of consideration adopted as per the Stamp Valuation Authority for the purpose of capital gain. In the instant case the impugned property was sold at a value lesser than the value adopted for the purpose of stamp duty. Therefore the valuation determined for the purpose of stamp valuation is taken as sale consideration. However, such deeming provision cannot be applied to the provision of law as specified Section 54EC of the Act. Accordingly, the deduction u/s 54EC in the instant case shall be limited to the amount of ₹ 18 lakh i.e. actual investment. However, for the computation of capital gain the provision of deeming sale consideration shall be applied as specified under section 50C i.e. ₹ 35,76,180/-. In view of the above, the AO is directed to compute the capital gains after taking the sale consideration at ₹ 35,76,180.00 as per the provisions of section 50C of the Act. But for the purpose of deduction u/s. 54EC, the sale value would be taken at ₹ 18.99 lacs which is the actual sale consideration. Calculation of cost of acquisition - Held that:- Authorities Below have not considered the valuation report given by the registered valuer though the assessee’s claim to have filed the same before the Authorities Below. Similarly, we also find that assessee has declared the valuation of the impugned property @ ₹ 2030.00 per sq. ft. in the immediate preceding year as evident from the supporting documents which are placed on record. But on perusal of the same, we find that no scrutiny assessment was carried out by the Department in the earlier assessment year. Therefore in our considered view, the matter has not been adjudicated on the basis of merit. We also find that the valuation report showing the cost of acquisition of the assessee as submitted by the ld. AR was never verified by the Revenue. Therefore, we are not inclined to accept the same view taken by the Authorities Below. In view of the above, we are of the opinion that the issue of cost of acquisition as on 01.04.1981 needs to be re-verified in the light of above facts and circumstances. Therefore we remit the issue to the file of AO with the direction to re-verify the cost of acquisition as on 01.04.1981 and after providing reasonable opportunity of being heard to assessee as per law. This ground of assessee’s appeal is allowed for statistical purpose.
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2017 (6) TMI 491
Assumption of jurisdiction u/s 147 to 151 - unexplained bank deposits - Held that:- AO did not apply in his independent mind to the information received from AIR. Since no proceedings were pending before AO when he issued the letter of enquiry to the assessee, therefore such enquiry letter was not valid in eyes of law. The assessee was not required to respond to this invalid and non est letter of inquiry issued by the AO. The AO in the absence of reply from the assessee presumed that income to the extent of deposits had escaped assessment. The deposit in the bank accounts per se cannot be the income of assessee. It was mere suspicion of the AO based on incorrect facts that income chargeable to tax has escaped assessment. The belief of the AO should be based upon some specific and tangible material for the purpose of reopening of the assessment. The course adopted by the AO was wholly unjustified in recording the incorrect facts in the reasons for reopening of the assessment. - Decided in favour of assessee.
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2017 (6) TMI 490
Penalty u/s 271(1)(c) - MAT applicability - Held that:- As already observed that in the present case the income of the assessee was charged under the MAT provisions and there is no doubt in this regard. Thus, there is no question for levying the penalty u/s 271(1)(c) for the additions made under the normal provisions of law. We are of the view that imposition of penalty cannot be sustained. The plea of the ld. Counsel for the assessee which is based on the decisions referred to in the earlier part of this order has to be accepted. We therefore hold that imposition of penalty in the present case cannot be sustained and the same is directed to be cancelled. - Decided against revenue
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2017 (6) TMI 489
Tds u/s 194A - interest payment to Non Banking Financial Corporations (NBFCs) - addition u/s. 40(a)(ia) - applicability of the second proviso to section 40(a)(ia) retrospectively - Held that:- Having held that the second proviso to section 40(a)(ia) shall have retrospective effect the question arises that if the recipients of interest in question have already considered the same for computing their income offered to tax then the disallowance u/s. 40(a)(ia) is not attracted. In this case though the assessee did not file the relevant material before the AO in this regard however, it is a fact which existed right from the beginning and the relevant details are available with the revenue regarding the income offered by these NBFCs. Therefore, if the certificates filed in support of the claim that the NBFCs have included this amount of interest in computation of their income offered to tax are found to be correct then the compliance u/s. 40(a)(ia) is deemed to have been made and no disallowance is called for. Therefore this issue is set aside to the record of the AO for verification of the fact that the recipient NBFCs have already taken into account the amount of interest received by them for computing the income in their return of income. Appeal of the assessee is allowed for statistical purposes.
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2017 (6) TMI 488
Revision u/s 263 - addition u/s 40A(3) - cash payments made to West Bengal State Electricity Distribution Company Limited (WBSEDCL) - CIT assumed his jurisdiction only on the ground that the said cash payments were made on different dates and the same do not fall under any of the exceptions of Rule 6DD of the IT Rules - Held that:- Admittedly, the assessee paid such cash payments towards power charges to West Bengal State Electricity Distribution Company Limited (WBSEDCL) and debited the same to its P & L account on different dates from April‘09 to Feb’10. Cash payments made to West Bengal State Electricity Distribution Company Limited (WBSEDCL) is covered by the exception Rule 6DD(b) of the IT Rules and as such no disallowance u/s. 40A(3) of the Act can be made. Therefore, the grounds raised by the assessee are allowed.
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2017 (6) TMI 487
Accrual of income - Cancellation of recovery of the interest - assessee calculated the interest on the delayed payments and served the debit notes to the allottee’s for not making the payment - customers refused to pay the interest and threatened to cancel the bookings thus the company cancelled the recovery of the interest in order to realize the principal amounts under the circumstances, the company had to reverse the income by debiting the profit and loss account - Held that:- Income Tax Act takes into account two points of time at which the liability to tax is attracted, the accrual of income or its receipt, but the substance of the matter is the income. If the income does not result at all, there cannot be a tax, even though in accounts, an entry is made about the "hypothetical income" which does not materialise. Where income has, infact, been received and is subsequently given up, in such circumstances it remains the income of the recipient, even though given up, the tax may be payable. Where, however, the income can be said not to have resulted at all, there is obviously neither accrual nor receipt of income, even though an, entry to that effect may, in certain circumstances, have been made in the books of accounts. In the instant case the assessee raised the debit notes to the allottee's and booked the income in the books of accounts. The entry which was initially made as interest was reversed in the next year because in fact the nature of the transaction was changed and the assessee did not receive any real income. Therefore, the addition made by the Assessing Officer was rightly deleted, which does not need any interference on our part - Decided against revenue
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2017 (6) TMI 486
Disallowance under section 14-A - genuineness of the expenditure - Held that:- Considering Cheminvest Limited Versus Commissioner of Income Tax-VI [2015 (9) TMI 238 - DELHI HIGH COURT] assessee earned only exempted income in a sum of ₹ 1,75,063/- which is already added to the income of the assessee. Therefore, no further disallowance should be made on the matter in issue. We accordingly set aside the orders of the authorities below and delete the entire addition. In the result appeal of assessee is allowed and departmental appeal is dismissed. We may note that the assessee is at liberty to raise other contentions in other years as per law if so advised in accordance with law. These appeals have decided only on sole contention raised by Ld. Counsel for assessee as recorded in this order. With these observations, we allow the appeal of assessee and dismiss the departmental appeal.
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2017 (6) TMI 485
Addition u/s 69C - unexplained expenditure in respect of bogus purchases - G.P. determination - Held that:- We find that the assessee has raised the issue in the cross-objection that the addition sustained towards GP on bogus purchases at the rate of 12% over and above, the GP of 7.5% already declared by the assessee. The AR submitted before the Bench that the CIT(A) has erred in sustaining 12% of GP on such bogus purchases without allowing any credit towards gross profit rate already declared by the assessee in the books of accounts included in the so called bogus purchases and prayed that GP of 4.7% should be sustained which worked out by subtracting 7.25% of the GP declared by the assessee from 12% of GP applied by the CIT(A). We find that it would be reasonable if GP instead of 4.75% as prayed by the assessee, the GP of 8% is applied in place of 12%. We, therefore, direct the AO to apply to GP 8% on the bogus purchases. The cross-objection filed by the assessee is partly allowed.
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2017 (6) TMI 484
Assumption of jurisdiction u/s 147 / 148 - reasons to believe - lower net profit - Held that:- The very basis of initiation of reassessment proceedings for which reasons to believe were recorded were income escaping assessment in respect of lower net profit, the same having not been escaped, the AO proceeded to make additions on account of disallowance of rent and electricity charges and additions made on account of share application money was not permissible u/s 148 of the I.T. Act. In humble view if no additions were made in respect of the reasons i.e. lower net profit, it was not open to the AO to make additions on other grounds such as disallowance of expenses and addition on account of share capital money without first issue a notice 148 of the I.T. Act. The AO was therefore not justified in reopening of the assessment when the reasons for the initiation of reassessment proceedings ceased to survive/exist. - Decided in favour of assessee.
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2017 (6) TMI 483
Penalty u/s. 271(1)(c) - non application of individual mind by AO - Held that:- Assessing Officer did not apply his mind at the time of initiation of penalty proceedings and hence impugned penalty proceeding is liable to be quashed. We order accordingly. In this view of the matter, we set aside the order passed by the tax authorities. - Decided in favour of assessee.
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2017 (6) TMI 482
Addition u/s 68 - ingenuity of deposits - Held that:- As assessee has not furnished any details in respect of alleged applicants for the period under consideration, which could discharge initial onus cast upon assessee u/s 68 of the Act. We feel that it will not serve any purpose to set aside issue again for verification to Ld. AO, as assessee has already admitted in its reply dated 14.11.2011, that these applicants are no longer share holders of assessee and will not be possible to produce their current details. Under above noted facts and documents placed on record, we therefore, do not hesitate to up hold order of Ld. CIT(A). Accordingly, grounds raised by assessee stands dismissed.
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2017 (6) TMI 481
Addition u/s 68 - peak credit theory - Held that:- In the case of assessee also cumulative peak credit theory should be applied because the movement of fund are intermingled as evident from going through the details provided in the order of Ld.CIT(A) as well as chart showing working of peak credit placed on page 133 and 134 of paper book. As per this chart peak credit is on 25/03/2008 at ₹ 45,22,452/- We accept the working of peak credit of ₹ 45,22,452/- shown by the assessee and sustain addition u/s.68 of the Act to ₹ 45,22,452/- as against total individual peal credit of ₹ 61,09,368/- Allow assessee’s ground no.2 of applying global method of peak credit for the five parties at ₹ 45,22,452/- and dismiss ground no.1 and 3 of the assessee. Similarly as we have sustained addition of ₹ 45,22,452/- u/s.68 of the Act Revenue’s ground no.1a is partly allow and ground no.1b relating to admitting the additional evidence stands dismissed. TDS u/s 194J - disallowance made u/s.40(a)(ia) - retrospectivity - Held that:- Respectfully following the judgment of Hon’ble Delhi High Court in CIT V/s. Ansal Land Mark Township (P) Ltd.(2015 (9) TMI 79 - DELHI HIGH COURT) and examining the fact of the case before us, we find that issue is squarely covered by this judgment and are of the view that if the impugned interest expenditure on which tax has not been deducted u/s.194A and if they have been offered to income by the recipient and due taxes has been paid, then no disallowance is called for in the hands of assessee. We accordingly set aside this issue to the file of Ld.AO and direct the assessee to produce necessary evidence including certificate from Chartered Accountant of the non banking finance company’s certifying that the interest received from assessee is forming part of the gross revenue of these non banking finance company which have been duly offered to tax in their return of income. Needless to mention that Ld.AO will provide sufficient opportunities of being heard to the assesse. In the result this ground of assessee is allowed for statistical purpose.
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2017 (6) TMI 480
TDS u/s 194C - amount of freight charges paid by the assessee were disallowable u/s 40(a)(ia) on non deduction of tds - Held that:- None of the parties before us produced copies of Bilty or any other documentary evidence from where it could be conclusively established whether the assessee acted as the main transport operator or merely as a transport agent. Further, with regard to the claim of the assessee that in each case, wherever the amount of payment in aggregate per payee exceeded ₹ 50,000/-, PAN was provided, it was noted by us that though detailed charts were submitted, but from these charts it was not possible to decipher the aggregate amount of payment made to one person. The charts have been prepared truck number-wise and not person-wise. Under these circumstances, in absence of supporting ledger accounts and in absence of proper re-tabulations of these charts, it is not possible to decide how much payment has been made to a particular person. Thus, under these circumstances, we find it appropriate to send the matter back to the file of the AO where the AO shall give adequate opportunity of hearing to the assessee to give complete details to establish whether the assessee is a transport operator or a transport agent and how much amount has been made per payee during the year to each payee. Appeal filed by the Revenue is treated as allowed, for statistical purposes.
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2017 (6) TMI 479
Addition of deemed dividend under section 2(22)(e) - Held that:- As find from the above provisions of the Companies Act 1956, the amended provisions, that the assessee taken inter corporate deposit from its subsidiary named Balkrishna Paper Mills Ltd. and AO assessed the same as deemed dividend under section 2(22) (e) of the Act. We find that in view of the amended provisions of Companies Act 1956, the assessee being a Public Ltd. Company has taken loan from a subsidiary which is also a public Ltd. Company, by virtue of the amended provisions and therefore, the assessee falls within the provisions of section 2(18) read with relevant provisions of the Companies Act and hence, there is no dispute that the provisions of section 2(22)(e) will not attract to the present case of the assessee. - Decided in favour of assessee. Addition made on non reconciled AIR data - Held that:- This issue can be sent back to the file of the AO for fresh reconciliation statement of the assessee so that he can verify vis-àvis AIR information relevant reconciliation and accordingly, decide the issue. We direct the AO accordingly. Addition of valuation of closing stock by treating the change in method of closing stock as ‘sham’ - Held that:- We find that the assessee has followed a bonafide system of accounting and once the system is bonafide no interference can be done by Revenue in the valuation of stock. None of the authorities below have doubted the bonafide of the assessee in regard to change in method of valuation of closing stock, we delete the addition and allow the appeal of the assessee on this issue. See Melmould Corporation Versus CIT [1993 (2) TMI 82 - BOMBAY High Court]- Decided in favour of assessee.
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Corporate Laws
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2017 (6) TMI 499
Oppression or mismanagement - Held that:- Quarrels between two brothers who happens to be members of the first respondent company cannot be by any stretch of imagination be concluded as the acts of oppression and mismanagement under section 241 and 242 of the Companies Act, 2013. In view of the above discussion, in both the petitions, there are no acts of oppression or mismanagement. However, there appears to be a dispute between the petitioner and second respondent. There appears to be some difficulty in the functioning of the first respondent company because of the conduct and attitude of the petitioner in CP 15 of 2016. Fact remain that the petitioner also invested amount in the first respondent company. It is to be noted that petitioner was also removed from the employment of the first respondent company. Taking into consideration the overall facts and circumstances, it may not be possible for the petitioner in CP 15 of 2016 to continue as a member of the first respondent company. Therefore, petitioner in CP 15/16 if he is willing, he can sell his shares to other shareholders in the first respondent company for a fair value as on the date of filing of the petition CP 6/16 determined by mutual agreement or by an independent valuer appointed by the Tribunal. Respondents 2,3,5 & 8 shall purchase the shares of petitioner in CP 15/16 for a fair value fixed by mutual understanding or by an independent valuer appointed by the Tribunal. Therefore, petitioner and second respondent are directed to come to an understanding about the fair value of the shares of the first respondent company as on the date of filing of CP 6 of 2016 within two months from the date of this order.
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Insolvency & Bankruptcy
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2017 (6) TMI 500
Section 9 of Insolvency and Bankruptcy Code, 2016, (hereinafter referred to as Code) praying for initiating Corporate Insolvency Resolution process against the Respondent/Corporate Debtor - Held that:- As per the provisions of 5(6) of the Code “dispute” has defined to include a suit or arbitration proceedings relating to (a) The existence of the amount of debt; (b) The quality of goods or service; or (c) The breach of a representation or warranty. The terminology “Dispute” cannot be given a rigid interpretation or be limited to pendency of a suit or an arbitration proceeding. The justification of withholding the entire outstanding amount is not within the scope and jurisdiction of the Bench to appreciate, as the invoking the provision of this Code is not for a Recovery of Debt. Whether the Corporate Debtor is entitled to adjust liquidated damages without actually proving is also not for this Bench to consider. Suffice it to say that there is some material placed before us to reflect the dissatisfaction of the work awarded. A sum of ₹ 63,99,062/- has already been paid by the corporate debtors. The Corporate Debtor has claimed adjustment towards removal of the snags by third parties during the defect liability period, liquidated damages and payment of rent without being operational for want of the project being completed on time. The facts of the case do not call for Initiation of Insolvency Resolution Process to be set in motion against the corporate debtor.
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Service Tax
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2017 (6) TMI 513
CENVAT credit - input services - services utilized for trading activity that is sale of motor vehicles - Held that: - during the relevant period CENVAT credit for the input services utilized for taxable and exempted services was admissible as per provisions of rule 6(5) of CENVAT Credit Rules, 2004, which was deleted by N/N. 3/2011-CN (NT) dated 01/03/2011 with effect from 01/04/2011 - When the period involved is from 2005-06 to 2009-10, there cannot be liability of reversal of CENVAT credit against the respondent - credit allowed - appeal dismissed - decided against Revenue.
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2017 (6) TMI 512
Mandap Keeper Services - the hotel rooms hired by the persons at the time of hiring the mandap/garden area to conduct marriage etc - taxability - Held that: - similar issue decided in the case of M/s. Taj Hari Mahal Versus C.C., Jaipur And (Vice-Versa) [2017 (4) TMI 948 - CESTAT NEW DELHI], where Tribunal has held that letting out of the rooms in the hotel cannot be included in the “Mandap Keeper Services” for service tax liability - appeal allowed - decided in favor of appellant.
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2017 (6) TMI 511
Business Auxiliary Services - liability of tax - case of appellant is that they have shared some expenditure for common facilities like electricity, canteen, transport of employees etc., with the sister concern. Some portion of the expenditure attributable to the other company was collected and shown in their income. In an arrangement of sharing of facilities, there can be no element of promotion of business - Held that: - It is not clear as to what type of service is being provided by the appellant and on whose behalf. There is no third party involved at all, in the whole transaction. Certain common expenditure towards various facilities like canteen, transportation, etc. were shared among group companies. Such arrangement cannot be considered as activities taxable under Business Auxiliary Services - The impugned order did not discuss the legal scope of tax entry applicable to the case in hand and the same is not sustainable. Cargo Handling Service - appellant claims that they are not a Cargo Handling Agency - Held that: - it is seen that nowhere in the proceedings before the lower authorities, the exact nature of work carried out by the appellant has been elaborated and applied to the statutory definition - there are two conditions to be satisfied. There must be a cargo accepted by the transporter for carrying the goods from one place to another. A commodity becomes a cargo and thereafter only, loading and unloading in a freight terminal becomes a cargo handling service. Further, the service provider must incidentally be involved in loading or unloading or packing, unpacking of the cargo. These conditions are not met in the present case. As such, the impugned order confirming the service tax liability is without merit. Manpower Recruitment and Supply Agency - case of appellant is that they are not acting as Manpower Supply Agency - Held that: - the appellant have deputed some staff to their group companies for certain specific work for the limited period. The appellants are not engaged in the business of Manpower Recruitment or Supply Agency Services . The provisions of Section 65(105)(K) is not applicable to the present situation - the impugned order had confirmed the service tax liability only on the ground that certain considerations have been received with reference to deputation of staff and hence, service tax liability. In view of the factual and legal position recorded above, the summary finding of the impugned order is not sustainable. Demand not sustainable - appeal allowed - decided in favor of appellant.
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2017 (6) TMI 510
Refund claim - N/N. 41/2007-ST - rejection on the ground that the provider of service was registered with the Department as C & F Agent and as such, refunds towards service tax paid for availing CHA services are not admissible - Held that: - the Board vide clarification dated 12.03.2009 specifically mentioned that the above mentioned notification provides for exemption by way of refund. Such refund does not require verification of the registration certificate of the provider of service - refund granted. Rejection of ₹ 1,67,616/- and ₹ 72,601/- on the ground that no evidence was available that the said service tax was deposited by the service provider under the category of “port services” - Held that: - It is by now a well settled proposition that THC, bill of lading charges, documentation charges, etc. are covered under port services and tax paid on such services are eligible for refund under the said notification - The Original Authority should verify the supporting documents and sanction the amount - refund allowed by way of remand. Rejection of ₹ 84,558/- on the ground of limitation - lower authorities held that the claim was filed beyond 60 days from the last date of the quarter during which the goods were exported out of the country - Held that: - The Tribunal in the case of CCE Vs Pacific Leather Finishers, [2016 (2) TMI 727 - CESTAT ALLAHABAD] held, in a similar set of facts dealing with limitation under the same notification, that the right to claim refund under N/N. 41 of 2007 ST crystallized when the service tax was paid by the exporter. Accordingly, the limitation should be referred to that date - As the refund will rise only on payment of service tax, the claims filed within the period of limitation calculated from such payment, should be considered as filed in time. Rejection a part of refund also on the ground that the appellants failed to furnish some of the invoices for scrutiny - Held that: - As the goods were cleared from their Kota unit, they are eligible for service tax paid on CHA services. The documents will support the linkage of payment of service tax to the clearance of export goods from their Kota unit - refund allowed subject to verification. An amount of ₹ 3,16,261/- was rejected on the ground that the said export was not made by the appellant but the same was made by Merchant Exporter, M/s. Surya Vinayak Industries Ltd. - Held that: - The port services were actually paid by Merchant Exporter and for which, the appellants did not claim any refund. The bills raised by CHA will indicate that the service tax for the services have been paid by the appellants - as long as the appellants’ goods were exported and the appellants suffered service tax on the specified services, they are entitled for refund. Service tax paid on inspection and certification service and technical testing and analysis services were rejected on the ground that the appellants did not file supporting evidences in terms of the said notification - Held that: - appellants have supporting documents linking up the service tax payment with the export cargo - refund allowed subject to verification. In respect of services availed from M/s. Liladhar Passo Forwarders Pvt. Ltd. as Customs House Agent, the claim was rejected on the ground that the details required for processing claim is not available in the documents submitted by the appellants - Held that: - the appellants have supporting evidence to indicate that the charges paid by CHA are with reference to their export cargo only - The documents can be linked to export made by the appellants - refund allowed subject to verification. The Original Authority has not examined the claims in right perspective before rejecting them. It is fit and proper to set aside the impugned orders and to remand the matter back to the Original Authority to decide the claims of the appellants afresh - appeal allowed by way of remand.
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Central Excise
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2017 (6) TMI 509
Refund claim - adjustment of excise duty paid against duty short paid - unjust enrichment - whether the methodology of credit notes would be countenanced to revise the final price payable by the customer? - Held that: - it was incumbent upon the Assessee to demonstrate, as contemplated under Section 11B of the 1944 Act that the amount of duty of excise, in relation to which, refund was claimed, had not been passed on by him to any other person. Clause (e) appended to the proviso to Section 11B(2), which enabled even the customer or buyer to seek refund, assessee could claim refund, provided one was able to demonstrate that the incidence of duty had not been passed on to any other person. Similarly, a third category, that is, a class of applicant, who could claim refund was also noticed. These are applicants referred to in clause (f) to the proviso appended to Section 11B(2). This class of applicants, in terms of the said clause, would emerge as claimants of the refund, only upon the Central Government issuing the notification in that behalf, in the official gazette. Pertinently, though, Central Government's, mandate in that behalf is circumscribed to the extent that it cannot issue such a notification, unless it forms an opinion that the applicants, so notified had not passed on the duty to any other person. No refund can be claimed, unless the Assessee satisfies the conditions set forth in Section 11B of the 1944 Act - The Assessee, in this case is a manufacturer, had to necessarily demonstrate that the burden of duty had not been passed on to the ultimate customer - The Assessee, clearly, has not discharged its burden, as set forth in Section 11B. Appeal dismissed - decided against assessee.
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2017 (6) TMI 508
Valuation - Internal Transfer Orders - Inter Plant Transfer - Rule 8 of the Valuation Rules - Held that: - the certificate issued by the Chartered Engineer was not produced to the adjudicating authority. He assured that same can be produced at the time of hearing. When it is so, then we remand the matter to the original authority by setting aside the impugned order - appeal allowed by way of remand.
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2017 (6) TMI 507
Refund of duty paid on clearance from refinery - appellant received ATF which is duty paid from the refinery. During the storage, the goods became unfit for supply as ATF and hence they were suitably dyed and cleared as SKO by filing exemption at nil rate of duty in terms of N/N. 04/2006 - refund in terms of Rule 5 - Held that: - in terms of Rule 5 of the CER 2002, the rate of duty applicable to any excisable goods shall be as prevalent on the date when such goods are removed from the factory or the warehouse. Refund of duty in terms of Rule 16 - Held that: - Refund of such duty can be considered only if such goods are returned to the factory of the same manufacturer or any other manufacturer. This condition prescribed in Rule 16 of the Central Excise Rules is not applicable to the appellant since the goods i.e. ATF has not been returned to the factory. Remission of duty u/r 21 - claim of remission on the ground that the goods have become unfit for consumption - Held that: - such remission of duty is applicable only to the manufacturer where such goods have been manufactured - In the present case, since the ATF has not been manufactured in the appellants premises, Rule 21 is not applicable to the appellant. Refund of duty paid on the ATF cannot be considered in terms of Rule 5, Rule 16 or even Rule 21 - appeal dismissed - decided against appellant.
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2017 (6) TMI 506
CENVAT credit - scope of inputs - cement and structural steel items such as angles, channels, TMT bars, etc - turnkey contract - Held that: - Rule 2(k) (ii) is relevant for any service provider providing any output services. It is also without doubt that Explanation (2) is applicable only to the factory of manufacturer - In the present case the appellant has functioned as service provider to execute the turnkey contract for erection, commission and installation of coke oven battery. Since he did not function as a manufacturer, there is no applicability for Explanation (2) to the appellant even for the period after 07.07.2009. Ld. Commissioner was clearly in error in taking the view that the Explanation (2) Rule 2(k) would be applicable irrespective of the fact where the goods have been used by the manufacturer or the service provider. There is no bar for service provider to avail the full credit on cement and steel structural items used for provision of erection, commissioning and installation services - appeal allowed - decided in favor of appellant.
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2017 (6) TMI 505
Classification of goods - whether the goods described viz. Switches, relays, fuses, plugs, lamps belong to the Tariff heading 85.13 and 85.36 or any other entry for levy of duty under Third Schedule to the Central Excise Act, 1944? - Held that: - Description of goods in tariff entry may depend on the technical literature as well as various technicalities of the goods, which learned adjudicating authority shall have advantage to examine better - to grant fair opportunity of hearing to both sides to place their case before adjudicating authority for his determination of classification and decide leviability, matters are remanded to the Ld. Authority - appeal allowed by way of remand.
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2017 (6) TMI 504
Input service credit - admissibility - credit on outward transportation to the destination of the buyers - denial on the ground that transportation and clearance are entirely separate activities and post sale transport of manufactured goods cannot be considered as input for manufacture - Held that: - these were on FOR destination basis. The transit insurance covers taken by the respondent for these contracts were upto the respective destination. The FOR destination price is inclusive of excise duty, insurance and freight charges - reliance placed in the decision in the case of Ambuja Cements Ltd. Vs. UOI [2009 (2) TMI 50 - PUNJAB & HARYANA HIGH COURT], where it was held that since sales is based on basis of “FOR destination”, transit insurance and freight charges are borne by appellant, so credit is admissible on outward freight - credit allowed - appeal dismissed - decided against Revenue.
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2017 (6) TMI 503
Validity of SCN - classification of goods - It appeared to Revenue that the goods were cleared under SKD condition by the appellant and they should have been classified as color television sets under said sub heading no.8528.00 - time limitation. Held that: - This SCN covered period from January 2002 to March 2003 whereas the same is issued on 29.01.2007 by invoking proviso to Sub Section (1) of Section 11 A of Central Excise Act 1944 and the entire evidence used for issue of SCN admittedly reflected in the ER-1 returns filed by the appellant. Therefore, there was no suppression and therefore extended period was not invokable. The SCN dated 29.01.2007 is not sustainable, as hit by time limitation - appeal allowed - decided in favor of appellant.
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2017 (6) TMI 502
CENVAT credit - electricity - captive consumption - power generated but transferred to sister concerns - Department was of the view that the CENVAT Credit availed on inputs and input services proportionate to the electricity wheeled out to the sister units is required to be reversed by the units where CPPs are located - Held that: - in an identical issue, in respect of very same assessee, but situated at Chittorgarh, Rajasthan, this bench in the case of M/s Hindustan Zinc Limited Versus CCE & ST, Jaipur - II [2016 (6) TMI 402 - CESTAT NEW DELHI] held that Considering that the electricity has been used in the manufacture of dutiable final products and also the fact that all units belong to the appellant the denial of credit is not justifiable in the present case - CENVAT Credit on inputs and input services proportionate to the power transferred to sister concerns through the Central electricity grid, need not be reversed - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2017 (6) TMI 501
Natural justice - cancellation of registration without assigning any reasons for such cancellation - Held that: - a perusal of the impugned order does not show as to on what reasons the cancellation was effected even though some reasons were stated in the SCN - Assuming that the petitioner has received such notice and has not responded to the same, still the respondent is duty bound to state the reasons and his independent finding, justifying the cancellation. In this case, it has not been done so - the matter has to go back to the respondent for passing a fresh order - petition allowed by way of remand.
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