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TMI Tax Updates - e-Newsletter
June 14, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Central Goods and Services Tax (Fifth Amendment) Rules, 2018
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Goods which may be disposed off by the proper officer after its seizure under the Central Goods and Services Tax Act
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Supply of services - Works Contract - credit of material bought in pre-GST era - post-implementation situation - The applicant is not entitled under Section 140(6) of the CGST Act, 2017 and the GGST Act, 2017 to avail input tax credit.
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Supply of services - The work of laying of underground pipeline network falls under the definition of “works contract” provided under Section 2(119) under the CGST Act, 2017 and the GGST Act, 2017
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Rate of GST - poly propylene non-woven fabrics - since the sale value of non-woven carry bags made of polypropylene is less than ₹ 1,000/- per piece, it will attract tax @ 5% vide entry No. 224 of schedule 1 of both CGST and SGST notification.
Income Tax
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Additions u/s 41(1) - cessation of liabilities - written off / remitted liabilities - the claim has been filed before BIFR and therefore the same cannot be considered to have been ceased.
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Addition in respect to labour expenses and piece work charges - adhoc estimated addition - genuineness of labour expenses - cash payments - Assessee's profits have not been rejected. The profit shown by the assessee during the current year is better than that disclosed in earlier year. - Claim of expenses allowed.
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Deduction of bad-debts relating to running and terminated chits - the claim of the assessee for deduction of bad debts written off is also allowable alternatively as business loss u/s 28(i)
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Fixed Place PE - essential ingredients of a Service PE - services rendered to the Applicant company by its Indian affiliate - Aramco India is a separately incorporated legal and taxable entity, and by virtue of para (8) of Article 5 of the DTAA, it does not automatically become a PE of the Applicant.
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CSR expenditure - Assessee had incurred CSR expenses to comply with the directions of Govt. of India the expenditure incurred is incidental to the assessee’s business and ought to be allowed as deduction u/s 37 - amendment is prospective in nature, not applicable in the present case.
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Exemption u/s 11 - set up a school in pursuance of its main object of educational activity - trust run by one family - No bar under the Act for registration u/s 12AA even if the trust is run by only one family and perform charitable activity.
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Penalty u/s. 274 r.w.s. 272(2)(c) - not furnishing the information called for u/s 133(6) - As the assessee has not offered any valid reason for not furnishing the information called for u/s 133(6) and many of the notices issued by the ITO were never responded - Penalty confirmed.
Customs
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Refund of Customs Duty paid - unjust enrichment - case of appellant is that their final product price is also LME based and has no relation to the cost of the raw materials including the customs duty paid by them - Refund allowed.
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CVD on the basis of MRP based assessment - BSNL is procuring modems in bulk from the appellant after import. Consequently, they fall within the definition of institutional consumers as above, to whom the provisions of Section 4A will not be applicable.
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Return of the goods in the same condition, in which they were seized or pay the market value of the diamonds, as on the date of the filing of the writ petition - At one stage, for the purpose of redeeming the goods, the appellant had accepted the value of diamonds as ₹ 4,27,000/-, which decision cannot be retracted, by filing a writ petition.
Service Tax
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Levy of service tax - reverse charge - appellant has deducted TDS, being the part of royalty - whether the appellant is liable to pay service tax on the alleged deducted portion of TDS from the royalty paid to the foreign company? - Held No
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Refund of service tax paid - Export of services - Production of FIRCs being a procedural requirement and if the appellant is able to establish the receipt of foreign exchange with the invoices, the appellant cannot be denied substantive benefit of refund
Case Laws:
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GST
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2018 (6) TMI 560
Rate of GST - poly propylene non-woven fabrics - Held that:- The Test Report of the Centre for Biopolymer Science & Technology reveals that the product of the applicant i.e., non woven carry bag is made of polypropylene. In Customs Tariff Act, sacks and bags made of polypropylene strip or the like is classified under Chapter 63 of the Act. In the present case, since the sale value of non-woven carry bags made of polypropylene is less than ₹ 1,000/- per piece, it will attract tax @ 5% vide entry No. 224 of schedule 1 of both CGST and SGST notification. Ruling:- Carry bags made of polypropylene non-woven fabrics is classified under entry 224 of Schedule 1 of the Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017 and State Notification 360/2017 dated 30.06.2017, and hence taxable @ 5% [SGST -2.5%; CGST-2.5%].
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2018 (6) TMI 559
Supply of services - Works Contract - determination of time of supply of services - scope of the word 'supply' - Transitional Credit - credit of material bought in pre-GST era - post-implementation situation - Held that:- A contract for any immovable property wherein transfer of property in goods is involved in the execution of such contract fall within the definition of ‘works contract’ - The underground pipeline network created by joining the pipes either by lamination or welding cannot be dismantled without substantial damage and thus cannot be reassembled, therefore the pipeline network so created would be considered as immovable. As the applicant is engaged in the activity of construction of pipeline network which becomes immovable property wherein transfer of property in goods is involved, the said activity falls within the definition of “works contract” under the CGST Act, 2017 and the GGST Act, 2017. Admissibility of input tax credit on pipes used in pipeline network - Held that:- The work of supply of pipes at the location specified by the Rajkot Municipal Corporation and the work of underground laying of pipes had already been completed before the appointed date and the work of testing and commissioning of network of pipeline was pending - Only the work of Testing and Commissioning of network of pipeline was pending on the appointed date, for which no input in stock was required to be used on or after the appointed date. Therefore, the condition prescribed at clause (i) of sub-section (6) of Section 140 ibid is not fulfilled. Testing and Commissioning of network of pipeline being part of the contract, Goods and Service Tax is leviable, however, since no input / material is required for such Testing and Commissioning of network of pipeline, transitional Input Tax Credit is not allowable - Applicant is not entitled to avail input tax credit under Section 140(6) of the CGST Act, 2017 and the GGST Act, 2017. Ruling:- The work of laying of underground pipeline network falls under the definition of “works contract” provided under Section 2(119) under the CGST Act, 2017 and the GGST Act, 2017. In respect of that part of supply wherein time of supply is on or after the appointed date, Goods and Services Tax is required to be paid. Transitional credit - The applicant is not entitled under Section 140(6) of the CGST Act, 2017 and the GGST Act, 2017 to avail input tax credit.
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2018 (6) TMI 558
Appealable Order or not? - seizure of vehicle passed by the authorities exercising jurisdiction under Section 129(3) of the Central Goods and Services Tax Act, 2017 - Section 107 of the Act - Held that:- Section 107 of the Act allows any person aggrieved by any decision or order passed under the Act of 2017 or the State Goods and Services Tax Act to file an appeal before the appellate authority as may be prescribed. It appears that, the State has prescribed the appellate authority who is the senior Joint Commissioner (Appeals) as the appellate authority - Section 121 is an exception to Section 107 of the Act. While Section 107 of the Act makes every decision or order passed under the Act of 2017 to be appealable, Section 121 makes an exception thereto and states that, few which are recognized in Sub-section (a) to (d) would not be appealable. The petitioner has a statutory alternative remedy available. It would be appropriate to permit the petitioner to prefer an appeal from the impugned order before the designated appellate authority, either electronically or otherwise, in terms of Rule 109 of the West Bengal Goods and Serves Tax Act, 2017. Petition disposed off.
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2018 (6) TMI 557
Release of detained goods - Section 129 of the CGST Act as also the Kerala SGST Act - Held that:- An identical matter has been disposed of by a Division Bench of this Court in THE COMMERCIAL TAX OFFICER AND THE INTELLIGENCE INSPECTOR VERSUS MADHU. M.B. [2017 (9) TMI 1044 - KERALA HIGH COURT], directing expeditious completion of the adjudication of the matter and permitting release of the goods detained pending adjudication, in terms of Rule 140(1) of the Kerala Goods and Services Tax Rules, 2017 - petition disposed off.
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Income Tax
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2018 (6) TMI 556
Fixed Place PE - essential ingredients of a Service PE - services rendered to the Applicant company by its Indian affiliate viz. Aramco India - India and Kingdom of Saudi Arabia DTAA - ALP determination - appellant owned oil company of the Kingdom of Saudi Arabia - Held that:- The Revenue has indeed laboured hard to point out each of the clauses of the services to be rendered under the original Services Agreement and the Proposed Addendum, to make out its case that Aramco India was acting as an agent of the Applicant in India. Two things work against this position taken by the Revenue. Firstly, that Aramco India is a separately incorporated legal and taxable entity, and by virtue of para (8) of Article 5 of the DTAA, it does not automatically become a PE of the Applicant, and secondly, Clause 3 of the Proposed Addendum expressly excludes such activities from being carried out by Aramco India that can make it an agent of the Applicant. Based on the nature of business support / marketing support activities proposed to be undertaken by the Indian affiliate entity viz. Aramco Asia India Private Limited (Aramco India), as listed in the Statement of relevant facts (Annexure III) Aramco India would not create a Permanent Establishment (PE) for the Applicant in India under Article 5 of Double Taxation Avoidance Agreement between India and Kingdom of Saudi Arabia, where such activities of Aramco India are duly compensated on an Arm’s Length basis in accordance with the Indian transfer pricing laws and regulations.
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2018 (6) TMI 555
Taxability of foreman dividend on Company’s chit - principles of mutuality - Held that:- CIT(A), who had upheld the action of the AO by relying on the decision of the ITAT in assessee’s own case [2002 (1) TMI 271 - ITAT HYDERABAD-B] for earlier years that there is no principles of mutuality and that there is not complete identity between the foreman and other participators - since the ground raised in AYs 2013-14 and 2014-15 are materially identical to that of earlier years, following the decision therein, we uphold the order of CIT(A) - thus ground of assessee is dismissed. Deduction of bad-debts relating to running and terminated chits - Held that:- On perusal of earlier year orders of ITAT in assessee’s own case, we find that the ITAT has allowed the assessee’s claim of bad debts in AY 2011-12 wherein it is said, that the claim of the assessee for deduction of bad debts written off is also allowable alternatively as business loss u/s 28(i) - thus we uphold the order of CIT(A) - ground of revenue is dismissed. Commission on cancelled chits and royalty payment - Held that:- Getting directions of ITAT in assessee’s own case as above, we uphold the order of the CIT(A) in allowing the claim of assessee with regard to commission on cancelled chits and claim on royalty payment - thus ground of revenue is dismissed.
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2018 (6) TMI 554
Revision u/s 263 - Orders prejudicial to revenue - Tribunal concluded that, it could not be said that the revisional order passed by the CIT was valid - Held that:- Tribunal has examined each and every head as questioned by the Commissioner and has answered in respect of every issues raised by him whether it was a question of difference of pairs of footwears manufactured during the year or whether it was the travelling expenses of the partner or whether it was the health expenses and insurance expenses of the partner of the firm, has come to the conclusion that A.O. had made no error in passing the orders on these issues. There is no quarrel with the settled law that it is always open to the CIT under the provisions of Section 263 of the Act to make a detailed inquiries with regard to any issue that may seem doubtful, but while passing the order under Section 263 of the Act he has to make a clear and firm decision that the order passed by the A.O. is either erroneous or to be prejudicial to the interest of the revenue. Neither has been found in the present. - Decided in favor of assessee.
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2018 (6) TMI 553
Addition in respect to labour expenses and piece work charges - adhoc estimated addition - genuineness of labour expenses - cash payments - Held that:- We note that assessee is engaging/executing government contracts, It's area of work is spread far and wide. Hundred percent external watchers in case of such labour payments are not possible to be maintained. The piece rate payment are duly documented and corroborated by VAT audit report. Assessee's profits have not been rejected. The profit shown by the assessee during the current year is better than that disclosed in earlier year. There is no justification for any ad hoc disallowance in this regard. Accordingly, we delete the disallowance made by the CIT (Appeals). Addition on account of VAT refund - account on case receipt basis - Held that:- The approach of the authorities below in this regard is erroneous. By no stretch of imagination, mercantile system of accounting mandates that contingent amounts should be accounted for. This is more apparent by the instance mentioned by the learned counsel of the assessee where in the assessment order a demand of ₹ 404.6 lakh was raised against the assessee and thereafter on appeal the assessee was granted refund. Hence, the assessee's plea that the VAT refund accrues in the financial year in which the assessment attains finality is cogent. In the case of Nuchem Ltd. [2011 (2) TMI 159 - PUNJAB AND HARYANA HIGH COURT] where similar claim of excise duly refund was there and the addition was deleted on the ground that the same was not to be accounted for till the matter attains finality. - Decided in favour of assessee.
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2018 (6) TMI 552
Deduction for CSR expenditure - Allowable deduction u/s 37 - revision u/s 263 - Held that:- Since, the assessee had incurred CSR expenses to comply with the directions of Govt. of India the expenditure incurred is incidental to the assessee’s business and ought to be allowed as deduction u/s 37 of the I.T.Act. It was specifically mentioned in the notes on clauses explaining the Finance Bill 2014, that the “Explanation 2” is applicable only from the assessment year 2015-2016. This also implies that CSR expenditure incurred by the assessee upto the assessment year 2014-2015 is an allowable business expenditure u/s 37 of the I.T.Act. A.O. had taken a possible view and the assessment order cannot be stated to be erroneous or prejudicial to the interest of the Revenue, warranting interference u/s 263 of the I.T.Act. Therefore, we set aside the impugned order of the CIT passed u/s 263 of the I.T.Act. - Decided in favour of assessee.
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2018 (6) TMI 551
Income estimation on the liquor put to sale - assessee is an individual deriving income from retain trading in IMFL - Held that:- We direct the AO to consider 3% of the income of assessee subject to the above amount not being less than the profit already disclosed by assessee. In that event, the income disclosed by assessee should be accepted. Unexplained cash deposit - addition u/s 68 - Held that:- Confirmation by the CIT(A) is not proper whether the account is used for business purposes or not. The deposits in the bank account pertain to assessee. Assessee had substantial income during the year and that too he is doing retain business in IMFL. There is no allegation that these amounts also pertain to the business by the AO. Since the deposits are through-out the year in small amounts and since the corresponding credits in the books of account are not verified by the AO and the books of account having been rejected, we are of the opinion that the deposits can be telescoped to the income estimated on the business - deposits in the bank account need not be separately assessed, when income was estimated more than what assessee has disclosed - direct the AO to delete the addition
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2018 (6) TMI 550
Registration u/s 12AA denied - trust run by one family - charitable object - set up a school in pursuance of its main object of educational activity - Held that:- There was not bar under the Act for registration u/s 12AA even if the trust is run by only one family and perform charitable activity - thus there exists no material no record to suggest that the activities of the assessee trust are not genuine - it is admitted fact, that the assessee society is running a school which falls within the purview of scope of education, which has been declared as charitable purpose as per provisions of section 2(15) - since assessee trust has just started its activity and it is at inception stage and at this stage, it is the objects of the society that are to be seen - hence the order of the CIT (E) is hereby set aside and he is directed to grant registration to the Society - Decided in favor of assessee.
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2018 (6) TMI 549
Additions u/s 41(1) - cessation of liabilities - written off / remitted liabilities - Held that:- Assessee has gone into BIFR - the claim has been filed before BIFR and therefore the same cannot be considered to have been ceased - it is only a matter of timing that as the issue is pending before BIFR, the creditors remain suspended but there has been no notice which could extinguish the existing right except to the extent that they become part of the sanctioned scheme - hence addition made by AO is unjustified - Decided in favor of assessee. Initiation of penalty u/s 271(1)(c) - Held that:- As per CIT(A), fact that the appellant had not filed appeal against the assessment proceeding is not an unequivocal evidence that it had filed 'inaccurate particulars of income' - thus there is no merit in the action of the AO of levying penalty - since we have already deleted the addition made by AO, which forms basis of levy of penalty, we do not find any infirmity in the penalty being deleted by Ld. CIT (A) - hence appeal of revenue is dismissed.
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2018 (6) TMI 548
Disallowance u/s 43B - Addition in respect of late payment of PF - Held that:- Assessee had paid the PF beyond the grace period after the due date under the relevant Act but well before the due date for filing the return of income u/s 139(1) - the issue is covered in favor of assessee by the decision of the jurisdictional High Court in the case of CIT Vs Ghatge Patil Transport Ltd (2014 (10) TMI 402 - BOMBAY HIGH COURT) in which it has been held that the employers as well as the employees contribution were subject to the provisions of section 43B and the assessee was entitled to the deduction in respect thereof - hence we delete the disallowance made by AO - Decided in favor of assessee. Power of CIT(A) to enhance the assessment - Exercise of power u/s 251(2) - Held that:- While enhancing the assessment learned Commissioner (Appeals) has acted strictly in accordance with the statutory mandate as provided u/s 251(1)(a) and (2) - hence contention of the assessee that the exercise of power of enhancement is without jurisdiction cannot be accepted - thus dismissed. Under valuation of closing stock of diamond jewellery - Held that:- Assessee has not furnished any details to substantiate its claim that the purchases and sales shown in the stock statement include diamond jewellery set in gold and platinum and opening and closing stock consist of only lose diamond - thus to provide an opportunity to the assessee to justify the valuation of closing stock of diamond jewellery we restore the issue to the AO for fresh adjudication after due opportunity of being heard to the assessee - allowed for statistical purpose.
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2018 (6) TMI 547
Disallowance u/s 14A - Held that:- In the absence of any exempt income earned during the year no disallowance under section 14A of the Act can be made - thus we direct AO to verify assessee’s claim that no exempt was earned during the relevant previous year and in case aforesaid claim of the assessee is found to be correct no disallowance under section 14A r/w rule 8D should be made - allowed for statistical purpose. TDS u/s 194H - disallowance under section 40(a)(i) for non deduction of tax on payment of commission - Held that:- Identical issue arose in assessee’s own case [2017 (10) TMI 539 - ITAT MUMBAI] wherein it is held that TDS provisions are applicable u/s 194H in case it is held that the nature of the transaction entered into between the assessee and the distributor is that of commission but in case if it is decided that the nature of transaction is not commission but discount given on sales it cannot be regarded to be commission which is hit by the provisions of Section 194H - hence we restore the issue to the file of the AO for fresh adjudication - allowed for statistical purpose. Disallowance u/s 40(a)(i) and (ia) in respect of various payments - short deduction of tds - deduction of tax at source at a lower rate - Held that:- As decided CIT vs. S.K. Tekriwal [2012 (12) TMI 873 - CALCUTTA HIGH COURT] where tax was deducted by the assessee, though under a bonafide wrong impression under wrong provisions, the provisions of Section 40(a)(ia) could not be invoked and if there was any shortfall due to any difference of opinion as to the taxability of any item or the nature of payments falling under various tax deduction at source provisions, the assessee could be declared to be an assessee in default under section 201 but no disallowance could be made invoking the provisions of Section 40(a)(ia) - hence we uphold the deletion of disallowance made by the AO. Disallowance u/s 40(a)(ia) in respect of linking fees - Tax deducted at lower rate - Held that:- Following our reasoning in above para we uphold the deletion of disallowance made under section 40(a)(ia) Withholding tax under section 195 - Payment of up–linking fees to a non–residence entity - Held that:- As could be seen from the material placed before us, Income Tax Officer (TDS), International Taxation, Noida, vide order dated 7th February 2014, passed under section 201(1) / 201(1A) for assessment years 2009–10, 2010–11 and 2011–12, has held that assessee was not liable to deduct tax at source on the payment made to this company as such payment was towards services rendered outside India. In view of the aforesaid, the disallowance made under section 40(a)(ia) of the Act deserves to be deleted. Therefore, we uphold the decision of the Commissioner (Appeals) on the issue, though, on our own reasoning. Payment of transponder fees - TDS u/s 194C OR 194J - Disallowance under section 40(a)(ia) - Held that:- it is a case of short deduction of tax at source and not a case of failure to deduct tax at source. No disallowance to be made.
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2018 (6) TMI 546
Unexplained investments in construction - assessee explained source through withdrawals from the accounts of the partners from various concerns - Held that:- There is no evidence found during the course of survey operation to disprove the claim of the assessee that the source of funds were from the amount withdrawn by the respective partners from various concerns - assessee also filed reconciliation statement - thus AO is not justified in making any addition on the basis of the statement said to be recorded by Shri Jayaprakash Narayanan - hence we do not find any reason to interfere with the order of the lower authority - Decided against revenue
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2018 (6) TMI 545
Best judgment assessment u/s 144 - Estimation of profit - whether the works are executed as a contractor or a sub-contractor? - Held that:- Very work order mentions that the work is that of the State of Nagaland and the assessee got the work from UAN Max Infra Ltd - this shows that assessee is only sub-contractor - as per CIT(A) assessee executed all the works in the capacity of sub-contractor, the income returned by the assessee i.e. 5.99% appears to be reasonable since assessee itself submitted that 6% of profit is acceptable, the CIT(A) directed the AO to reduce the estimation of profit at 6% as against 8% - Decided in favor of assessee. Sale of scrap - Held that:- Generally, scraps are generated in the normal course of business and it should be treated as part of business income only - since assessee has already offered 6% of profit, which includes scrap sales - thus appeal of revenue is dismissed.
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2018 (6) TMI 544
Reopening of assessment - no returns of income were filed by the appellant - appellant had complied with notices u/s 142 by filing information called for before the AO - best judgement assessment u/s 144 - unexplained cash deposits in bank accounts - Held that:- Assessee had filed information before the AO in support of explaining sources for cash deposits in bank accounts - in the order of the ld.CIT(A) there is nothing indicating that these material was considered by the AO/ld.CIT(A) - hence the matter is remanded back to the file of the ld.CIT(A) for considering information/material filed by the appellant before the AO and pass the order after giving due opportunity of hearing to the appellant - thus allowed for statistical purposes.
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2018 (6) TMI 543
Levy of fees u/s 234E - delay in furnishing the statement of tax deduction at source - validity of order u/s 200A - Held that:- There is no dispute that the issue in appeal is covered against the assessee by Hon’ble jurisdictional High Court’s judgment in the case of Rajesh Kourani vs. Union of India [2017 (7) TMI 458 - GUJARAT HIGH COURT] - Limited prayer of the assessee is to keep the matter pending till “Hon’ble Gujarat High Court judgment is reversed either by larger bench or the Supreme Court - thus merely because some other appeal on similar ground could be pending before the Hon’ble Courts the assessee has a chance to get a favourable verdict in future, we cannot keep these appeals pending forever - Appeals are devoid of any merit and we accordingly reject the same.
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2018 (6) TMI 542
Validity of the notice u/s 148 - non deduction of tds - Change of opinion - Held that:- AO during the original assessment proceedings u/s 143(3), had called for details of the expenditure and the assessee has furnished the details and thus regular assessment was completed - AO was satisfied with the explanation and no addition was made - thus relying on the judgement of Hon'ble Delhi High Court in the case of CIT vs. Usha International Ltd [2012 (9) TMI 767 - DELHI HIGH COURT] wherein it is held that reopening of the assessment on the very same ground on which an inquiry was made during the assessment proceedings would amount to reopening on change of opinion - hence re-assessment proceedings are not valid - Decided in favor of assessee. Disallowance u/s 40(a)(ia) for non deduction of TDS - Held that:- The advance received by the assessee towards his professional fee, when it is returned, is not covered by any of the provisions of Chapter XVIIB requiring TDS - also re-assessment proceedings are not valid, the grounds against the disallowance u/s 40(a)(ia) of the Act need no adjudication.
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2018 (6) TMI 541
Transfer pricing addition - comparable selection criteria - comparability of Government companies - Held that:- Undisputedly, Government companies are ordinarily established by the Government in order to accelerate its public welfare policy and growth of the core sector and to generate employment and it is also not in dispute that invariably, the Government companies get contracts by getting preferential treatment from the Government as in the case of NBCC, a public sector undertaking, which is getting most of its construction contract from the Government of India. In view of the matter, we are of the considered view that the TPO to reexamine the comparability of aforesaid Government companies vis-à-vis assessee for benchmarking the international transaction by analyzing the factors if these companies are getting grants/subsidy, preferential treatment in getting contracts from the Government working in controlled environment, impacting their profit.
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2018 (6) TMI 540
Penalty u/s. 274 r.w.s. 272(2)(c) - not furnishing the information called for u/s 133(6) - Held that:- The assessee has not offered any valid reason for not furnishing the information called for u/s 133(6) - many of the notices issued by the ITO were never responded to by the assessee - thus following the judgement in case of Kakoor Service Co- operative Bank Ltd. [2018 (1) TMI 548 - ITAT COCHIN] Tribunal has decided the issue in favour of the Revenue and has held that the order passed u/s.272A(2)(c) of the Act is valid - Decided against the assessee.
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2018 (6) TMI 539
Eligibility of deduction u/s 80P(2) - assessee is a primary agricultural credit society registered under the Kerala Co-operative Societies Act - Held that:- Hon’ble jurisdictional High Court in the case of Chirakkal Service Co-operative Bank Limited & Ors [2016 (4) TMI 826 - KERALA HIGH COURT] held that when a primary agricultural credit Society is registered as such under the Kerala Co-operative Societies Act, 1969, such society is entitled to the benefit of deduction u/s 80P(2) - hence we hold that the CIT(A) is justified in directing the AO to grant deduction u/s 80P(2)(a)(i) - Decided in favor of assessee.
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2018 (6) TMI 538
Contribution of State Renewal Fund - Allowable expenses u/s 37(1) - Held that:- CIT (Appeals) has allowed the claim of the assessee by following the earlier orders for the assessment years 2011-12 and 2012-13 [2017 (8) TMI 1382 - ITAT JAIPUR] as held State Renewal Fund was set up to provide safety to the employees working under the state owned entities in case of restructuring/wind-up/closure of the undertaking Disallowance of employees’ contribution to PF and ESI - delayed payment - Held that:- This issue is now covered by the decision of CIT vs. State bank of Bikaner & Jaipur [2014 (5) TMI 222 - RAJASTHAN HIGH COURT] as well as the decision in case of CIT Jaipur Vidyut Vitran Nigam Ltd. [2014 (1) TMI 1085 - RAJASTHAN HIGH COURT] as held where Contribution were paid by the assessee before filing of the return and proof of payment was submitted before the Assessing Officer, the amounts were deductible as deduction - Decided in favour of assessee. Contribution of Energy Conservation Fund - Held that:- Identical issue has been considered by this Tribunal in assessee’s own case for the assessment year 2008-09 [2017 (8) TMI 1382 - ITAT JAIPUR] wherein disallowance on account of contribution to energy conservation fund made by the Assessing Officer is directed to be deleted as held contribution to the fund set up for products which was also the business of the assessee has direct nexus to the advancement of the assessee business - Decided in favour of assessee Addition on account of Publicity and Advertisement expenses - Held that:- As decided in assessee's own case one of the business objects of the assessee company is to promote and facilitate energy conservation and popularize the usage of renewable energy sources & encourage companies to set up renewable energy plants. As part of its activities, the assessee company has incurred the publicity and advertisement expenditure during the year. CIT(A) has given a findings on perusal of ledger account that these expenditure largely related to payment to advertising agencies and printing and publishing agencies. The said finding of the ld CIT(A) remain uncontroverted before us. - Decided in favour of assessee
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Customs
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2018 (6) TMI 535
Confiscation - Diamonds - appellant prays for return of the goods in the same condition, in which they were seized or pay the market value of the diamonds, as on the date of the filing of the writ petition - Held that:- This Court is not inclined to accept the said contention for the reason that the appellant had already accepted the value of the diamonds, fixed by CEGAT at ₹ 4,27,000/- and also paid the redemption fine. Appellant cannot approbate and reprobate. At one stage, for the purpose of redeeming the goods, the appellant had accepted the value of diamonds as ₹ 4,27,000/-, which decision cannot be retracted, by filing a writ petition. Having accepted the same, contrary contention of the appellant that at the time of seizure, the value of diamonds, was ₹ 40 Lakhs, cannot be accepted - appeal dismissed.
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2018 (6) TMI 534
Maintainability of appeal - statutory remedy available - Revocation of CHA License - principles of natural justice denied - time limitation - the enquiry report was not furnished - the time limit prescribed not adhered to - Held that:- We do not want to deal with the same on merits, inasmuch as there is no manifest illegality in directing the writ petitioner to approach, the forum provided under the Customs Act, 1962 - the Hon'ble Supreme Court, as well as this court, held that, ordinarily, writ petitions should not be entertained when the statutes provide for an effective and alternative remedy, moreso, in revenue matters. Reliance can be placed in the case of Union of India v. T.R.Verma, [1957 (9) TMI 41 - SUPREME COURT], where the Hon'ble Supreme Court held that it is well settled that when an alternative and equally efficacious remedy is open to a litigant, he should be required to pursue that remedy and not to invoke the special jurisdiction of the High Court to issue a prerogative writ. It will be a sound exercise of discretion to refuse to interfere in a petition under Article 226 of the Constitution, unless there are good grounds to do, otherwise. Where hierarchy of appeals is provided by the statute, the party must exhaust the statutory remedies before resorting to writ jurisdiction. We permit the writ petitioner to prefer a statutory appeal, within a period of one month from the date of receipt of a copy of this order - appeal dismissed - decided against appellant.
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2018 (6) TMI 533
Provisional release of imported goods - pending adjudication - rejection of release on the ground that the appellant is not the owner of the goods and one Sh. Amardeep is the actual owner of the goods - Held that:- The fact that the goods are lying with the Customs for more than 1½ years and incurring detention charges is also to be appreciated. The best action in this case could have been early finalisation of the show cause notice - the matter should be adjudicated within one month - appeal allowed by way of remand.
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2018 (6) TMI 532
Condonation of delay in filing appeal - request for issuance of relied upon documents, which were not provided - Held that:- As the documents requested was not issued, appeals could not be filed within time - the delay is condoned - COD application allowed.
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2018 (6) TMI 531
Misdeclaration of imported goods - semi-finished paragon wax with 3-5% oil content - enhancement of assessable value - the allegations of misdeclaration of the goods already stand upheld by the Tribunal in the earlier order, and the matter was remanded for ascertaining the correct assessable value - Held that:- It is seen that during the de novo proceedings also, the adjudicating authority has mainly relied upon the NIDB data, by rejecting the evidences produced by the importer to show that even fully refined paraffin wax was being imported at USD 700 to 775 PMT - Apart from the NIDB data, there is no other evidences on record to show that the appellant had paid more consideration for the said goods to the supplier of the same, there are no justifiable reason to enhance the assessable value - Inasmuch as, there was misdeclaration on the part of the assessee, the confiscation of the goods is warranted and penalty is required to be imposed on the importer - however, the quantum of redemption fine and penalty on Shri M. Sahul Hameed reduced. Penalty on Shri R.K. Aggarwal - Held that:- there are no reasons stand spelt out in the impugned order for imposing penalty upon him or his role, nowhere stands discussed by the adjudicating authority - penalty set aside. Appeal allowed in part.
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2018 (6) TMI 530
CVD on the basis of MRP based assessment - Supply of modems to an institutional buyer - certain models of ADSL Modems - case of appellant is that the imported items are not for sale but are to be supplied to BSNL who in turn rent out the same to the customers on rental basis - whether in such a scenario the CVD is required to be charged on the basis of MRP assessment under Section 4A of the Central Excise Act? - Held that:- Rule 2 (b) of the Standards of Weights and Measurements (Packaged Commodities) Rules 1997, was amended with effect from 17.07.2006 excluding institutional consumers. The institutional consumers have been defined to mean those consumers who buy packaged commodities directly from the manufacturers/packers for service industry such as transportation, hotel or any other similar service industry. The provisions of Standards of Weights and Measurement Rules are not applicable to institutional consumer In the present case, BSNL is procuring modems in bulk from the appellant after import. Consequently, they fall within the definition of institutional consumers as above, to whom the provisions of Section 4A will not be applicable. Appeal allowed - decided in favor of appellant.
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2018 (6) TMI 529
Refund of SAD - N/N. 102/2007 dated 14.09.2007 - rejection on the ground that the invoices under which they were sold, did not bear the endorsement to the effect that no CENVAT credit would be admissible to the buyer - Held that:- The Larger Bench decision of the Tribunal in the case of Chowgule & Company Pvt. Ltd. vs. CCE [2014 (8) TMI 214 - CESTAT MUMBAI (LB)], has held that non-declaration the commercial invoice is only a procedural lapse in as much as such an invoice is, in any case ineligible under Rule 9 (2) of Cenvat Credit Rules, 2004, for the purpose of availing of credit - appeal allowed - decided in favor of appellant.
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2018 (6) TMI 528
Refund of Customs Duty paid - unjust enrichment - case of appellant is that their final product price is also LME based and has no relation to the cost of the raw materials including the customs duty paid by them - whether grant of such refund would result in unjust enrichment to the assessee or not? - Held that:- The said issue stands considered by the Hon'ble Supreme Court in the case of State of Rajasthan & Others Vs. Hindustan Copper Ltd., [1997 (11) TMI 516 - SUPREME COURT OF INDIA], laying down that where the price of the copper is fixed by MMTC on the basis of the prevailing price fixed by the LME, the unjust enrichment angle will not be involved - appeal allowed - decided in favor of appellant.
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Insolvency & Bankruptcy
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2018 (6) TMI 537
Corporate Insolvency Resolution Process - Held that:- It is not the case of the Appellant- Mr. Aditya Kumar Jajodia that they do not owe any debt to the ‘Financial Creditor’ or there is no default. The Adjudicating Authority being satisfied that a default has occurred admitted the application which was complete. Another ground taken by the Appellant is that the Form 7 was not signed by the authorised person. However, we are not inclined to set aside the impugned order on such ground as the application under Section 7 (in Form-1) was filed by the authorised employees of the ‘Financial Creditor’.
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2018 (6) TMI 536
Corporate Insolvency Resolution Process - Held that:- Once the ‘Resolution Process’ reaches finality and the ‘Committee of Creditors’ reject the ‘Resolution Plan’ in view of Sections 30 & 31 of the ‘I&B Code’, the Adjudicating Authority had no other option but to order for initiation of Liquidation Process. In such case, there is no occasion to grant further extension of time, as all the procedural has been followed in letter and spirit. No merit in these appeals.
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Service Tax
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2018 (6) TMI 527
Rectification of Mistake - it was wrongly held by the Tribunal that interest will be applicable only when the right to refund arose - wrong interpretation - scope of rectification of mistake - Held that:- Whether the interpretation was wrongly made is no ground for entertaining an application for rectification of mistake. If such an application is entertained, then in every case, wherever the interpretation may be not suitable to the assessee, to unsettle the legal position application will be filed before every bench. That scope is not available under the provisions of rectification of mistake - there is no apparent error in the order. The only remedy lies is with the Hon'ble High Court and the applicant has liberty to approach the High Court with an appeal filed under Section 35G of the Central Excise Act, ROM Application dismissed.
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2018 (6) TMI 526
Refund of service tax paid - Export of services - Time Limitation - Rule 5 of CCR 2004 r/w N/N. 27/2012-CE(NT) - Whether the relevant date for computing the period of limitation of one year for filing the refund claim is to be taken as the date in the invoice or the date of the receipt of foreign exchange? - Held that:- In case of export of services, the relevant date is the date of receipt of foreign remittance - the rejection of refund claim on the ground of limitation is unjustified. Refund claim - rejection for the reason that the appellant has not been able to produce the FIRCs - Held that:- Production of FIRCs being a procedural requirement and if the appellant is able to establish the receipt of foreign exchange with the invoices, the appellant cannot be denied substantive benefit of refund - For the limited purpose of verification of these remittances with the invoices, the matter is remitted to adjudicating authority. Appeal allowed in part and part matter on remand.
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2018 (6) TMI 525
Penalty - renting of immovable property service - interpretational issue - bona fide belief - Held that:- the issue involved is interpretational issue, and also there was bona fide belief on the part of assessee, the imposition of penalty is unwarranted - Further, the appellant had discharged substantial part of the service tax much prior to the issuance of the SCN - penalty not warranted - appeal allowed.
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2018 (6) TMI 524
Business Auxiliary Services - services to airlines - additional amount received as incentives based on the volume of transaction for the activity of forwarding cargo through the airlines - whether the respondent is liable to pay service tax for the activity of booking space and selling the same to the client for air cargo goods? - Held that:- The Tribunal in the case of Commissioner of Service Tax Vs. Continental Carriers [2017 (11) TMI 1109 - CESTAT NEW DELHI] has held that the commission received from the airlines prior to 10.9.2004 cannot be subjected to service tax under Business Auxiliary Service - appeal dismissed - decided against Revenue.
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2018 (6) TMI 523
Levy of service tax - reverse charge - appellant has deducted TDS, being the part of royalty - whether the appellant is liable to pay service tax on the alleged deducted portion of TDS from the royalty paid to the foreign company? - Held that:- The Mumbai Bench of the Tribunal in Magarpatta Township Dev. & Construction Co. Ltd. [2016 (3) TMI 811 - CESTAT MUMBAI] has held that the demand of service tax on the TDS portion cannot sustain when there is no evidence to indicate that such amount was consideration for services received from the service provider - appeal allowed - decided in favor of appellant.
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2018 (6) TMI 522
Rectification of mistake - dismissal of appeal based on litigation policy - Held that:- Firstly the issue of refund arises only due to the respondent paying services tax under a wrong assessee code. Therefore, the issue is of not recurring in nature or legal issue relating to the refund or classification was involved, only in such cases the exclusion provided in clause (c) will be applicable - this case does not' fall under the clause (c) of para 3 of the instruction dated 17/08/2011 - ROM application dismissed being not maintainable.
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Central Excise
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2018 (6) TMI 521
Restoration of appeal - appeal was dismissed for non-appearance of appellant - denial of SSI exemption by clubbing the clearances - Held that:- The present appeal is of the year 2003 and the matter has been adjourned several times. The appeal in respect of Unit-I was disposed in 2005. The said matter is still pending before the Hon’ble High Court - On the date of hearing there was no representation on the part of appellant or counsel. Even a request for adjournment was not made. The appellant has not put forward sufficient reason for non-appearance and therefore the application for restoration of the appeal is devoid of merits - application for restoration of appeal is dismissed.
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