TMI Tax Updates - e-Newsletter
June 26, 2018

Case Laws in this Newsletter:

Income Tax Customs Service Tax Central Excise CST, VAT & Sales Tax Wealth tax

News

1. Livestock export from Nagpur airport to begin this month

2. Group of Eminent Personalities to study the SEZ Policy holds its first meeting

3. Sale (Re-issue) of Government Stocks

4. India to look forward for investments in 9 more projects from Asian Infrastructure Investment Bank (AIIB), says the Union Minister of Railways, Coal, Finance and Corporate Affairs, Shri Piyush Goyal

5. Government of India simplifies the process for permission of Additional Fiscal Deficit Limit over and above 3 per cent of Gross State Domestic Product for the States (GSDP)

6. RBI Reference Rate for US $

7. India is the largest borrower from Asian Infrastructure Investment Bank: Shri Subhash Chandra Garg, Secretary, Department of Economic Affairs

8. The Union Minister of Railways,Coal, Finance & Corporate Affairs, Shri Piyush Goyal inaugurates India Infrastructure Expo 2018 at the NCPA, Mumbai

Notifications

GST - States

1. F.12(56)FD/TAX/2017-PART.II-17 - dated 14-5-2018 - Rajasthan SGST

Notified Waiver Of Late Fee Payable For All Class Of Registered Persons.

2. F.12(30)FD/TAX/2018-18 - dated 14-5-2018 - Rajasthan SGST

Notified Appoints the officers as the officers under the Act.

3. NO.09/2018 [RC.46/2018/TAXATION/AI - dated 31-5-2018 - Tamil Nadu SGST

Notified E-Way Bill Applicable For Intra-State Movement Of Goods.

4. NO.08/2018 [RC.46/2018/TAXATION/AI - dated 31-5-2018 - Tamil Nadu SGST

Notified Rescind, Except As Respects Things Done Or Omitted To Be Done Before Such Rescission, Notification No.6/2018/Al/Taxation, Dated The 28th March, 2018.

5. NO.07/2018 [RC.46/2018/TAXATION/A1 - dated 25-5-2018 - Tamil Nadu SGST

Notified Authority To Conduct Examination Of Gst Practitioners.

6. G.O.Ms. NO.108 - dated 1-6-2018 - Telangana SGST

Notified Telangana Goods and Services Tax (Fourth Amendment) Rules, 2018.

7. NO.F.1-11(91)-TAX/GST/2018(PART)] (TRIPURA), - dated 20-6-2018 - Tripura SGST

Notified Tripura State Goods and Services Tax (Sixth Amendment) Rules. 2018.

8. NO.KA.NI.-2-1093/XI-9(42)/17- - dated 13-6-2018 - Uttar Pradesh SGST

Notified Reverse Charge On Certain Specified Supplies Of Goods.

Highlights / Catch Notes

Income Tax

• Income from Vessel Supply for Mineral Oil Activities Taxed u/s 44BB of Income Tax Act.

  Case-Laws - AT : Applicability of Section 44BB - the supplying of vessels for the said purposes is inextricably connected with the prospecting, production of mineral oil - any activity relating to exploration, prospecting, extraction, production of mineral oil would be covered u/s.44BB
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• Income Tax Assessment Proceedings Invalid Due to Backdated Satisfaction Note u/s 158BD Quashed.

  Case-Laws - AT : Assessment u/s 158BC / 158BD - No satisfaction note has been recorded on the date of issue of notice under section 158BD - The satisfaction note supplied to the assessee on 27.01.2006 is thus, anti-dated - the proceedings u/s 158BD held to be invalid and quashed.
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• Interest from Bank Fixed Deposits Complying with Section 11(5) is Tax-Exempt u/s 11; Section 2(15) Proviso Not Applicable.

  Case-Laws - AT : Exemption u/s 11 - The interest earned on fixed deposit with banks complying with the provisions of Section 11 (5) is exempt and the proviso to Section 2( 15) has no application
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• Taxpayer's Explanation of Cash Deposits From Traveler Cheques Must Be Considered Before Dismissal.

  Case-Laws - AT : Unexplained cash deposits in Bank account - The explanation given by assessee cannot be simply rejected when he states that he encashed the traveler cheques and deposited cash in the bank account.
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• Penalty for Late e-TDS Filing u/s 272A(2)(k) Upheld; Staffing Issues Not Justified for Delay.

  Case-Laws - AT : Penalty u/s 272 A(2)(k) - delay in filing e-TDS return - the change /lack of staff with the assessee-organization does not constitute to be a reasonable cause to file the TDS statements with such an inordinate delay - levy of penalty confirmed.
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• Court Rules Sum Not a Deemed Dividend u/s 2(22)(e) of Income Tax Act; Part of Mutual Account Transactions.

  Case-Laws - HC : Deemed dividend u/s 2(22)(e) - nature of receipt of sum from a company in which assessee is having 25.24% holding - assessee’s case that the same formed part of transactions in mutual or current account - assessee claimed that it was not loan or advance - the contention of the assessee accepted.
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• Taxable Income Calculation Error: Project Expenses Misclassified as Capital Expenditure, Corrected to Revenue Expenditure by AO.

  Case-Laws - HC : Claim of deduction / loss relating to the 'project expenses' in the computation of taxable total income - AO fell in error in going by the fact that the expenditure was incurred from the capital account forgetting that the test to be applied to ascertain as to whether the expenditure is revenue or capital is not based on where the funds were drawn from. - allowed as revenue expenditure.
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• Assessing Authority Wrongly Shifted Disallowance Calculation Duty to Assessee u/r 8D, Violating Section 14A.

  Case-Laws - HC : Disallowance 14A read with Rule 8D - The assessing authority also could not have called upon the Assessee himself to undertake the exercise of computing the disallowance under Section 8D of the Rules. Such abdication of duty in not permissible in law.
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Customs

• Lead Concentrate Import Classification Under Code 26070000: Waste and Scrap in Powder Form.

  Case-Laws - AT : Classification of imported goods - Lead Concentrate - waste and scrap of lead in powder form - the item falls under the classification of Heading ‘Concentrate’ under 26070000
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• Duty-Free Goods Diversion in 100% EOU: Confiscation and Penalty Invalid When Duty Recovery Legitimacy is Questioned.

  Case-Laws - AT : 100% EOU - diversion of duty free goods - When the recovery of duty itself is questionable, confiscation and imposition of penalty will not survive.
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Central Excise

• Goods like books, magazines, and stationery fall under Chapter Heading 49.01 for central excise classification.

  Case-Laws - AT : Classification of goods - printing of the items such as Books, Magazine, Posters, Letter Head, Letter Pad, Envelop, Calender, Flayers Receipt Book, Product Folders, News Letter, Invitation Cards, Officer Stationary, Pad, Scriber Pad, Lebel, Stickers, Non-Corrugated Box, Diary etc. - the product comes under Chapter Heading 49.01 which pertains to printing.
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Case Laws:

• Income Tax

• 2018 (6) TMI 1238
  Treatment of a subsidy pursuant to a scheme promulgated by the State Government - revenue receipt or a capital receipt - Held that:- As decided in Principal Commissioner of Income Tax Vs. Shyam Steel Industries Limited [2018 (5) TMI 702 - CALCUTTA HIGH COURT] since the scheme provided for an incentive for enlarging the manufacturing facility or acquiring more equipment, however the money may have been paid or adjusted in terms of the scheme, the same had to be regarded as a capital receipt. The distinction that was made was that a revenue receipt would be when money is received for the day to day running of an assessee but a capital receipt would be one which goes towards funding the capital assets of a company like the enhancement of its manufacturing facility or the acquisition of more advanced equipment and the like. - Decided in favour of assessee Deduction of the interest paid on obtaining a loan u/s 36 - Held that:- Both the Commissioner (Appeals) and the Appellate Tribunal noticed an agreement between the assessee, the National Dairy Development Board and the West Bengal Cooperative Mill Producers Federation Limited to set up a joint venture company for the production of milk. The assessee is engaged in the business of the manufacture and sale of fruit juice and like products. The setting-up of a joint venture company with a Central Government agency and a State Government entity cannot be said to be beyond the purview of the business operations of the assessee. Thus the amount of interest paid in respect of the funds borrowed by the assessee had to be regarded as a payment made for the purpose of the business of the assessee and a permissible deduction under Section 36(1)(iii) of the Act.

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• 2018 (6) TMI 1237
  Disallowance 14A read with Rule 8D - non recording of satisfaction - Held that:- The disallowance under Section 14A cannot be a wild guesswork bereft of ground realities. It has to have a reasonable and close nexus with the factually incurred expenses. It is not deemed disallowance under Section 14A of the Act but an enabling provision for assessing authority to compute the same on the given facts and figures in the regularly maintained Books of Accounts. The assessing authority also could not have called upon the Assessee himself to undertake the exercise of computing the disallowance under Section 8D of the Rules. Such abdication of duty in not permissible in law. See THE COMMISSIONER OF INCOME TAX, THE DEPUTY COMMISSIONER OF INCOME TAX VERSUS M/S MICROLABS LTD. [2016 (4) TMI 219 - KARNATAKA HIGH COURT] - decided against revenue

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• 2018 (6) TMI 1236
  Claim of deduction / loss relating to the 'project expenses' in the computation of taxable total income - expenditure incurred by the assessee was revenue in nature and not capital - Whether the Tribunal is correct in concluding that the expenses were capital in nature even though such expenses were incurred for 'possible expansion' of the existing business? - Whether the Tribunal is correct in concluding that the expenses were capital in nature even though such expenses were incurred for 'possible expansion' of the existing business? - Held that:- The assessee though had entered into arrangement with the banks and co-promoters and took action for acquisition of land, import of machineries, etc., no new venture was established by the assessee. The venture, which was to be taken over by the assessee and operated did not fructify, not on account of the conduct of the assessee, but on account of the decision of the Government of Tamil Nadu. In our considered view, the decision of the Government of Tamil Nadu to sell the project is a very important fact, which has to be borne in mind to decide as to whether the expenditure incurred by the assessee was capital or revenue in nature. The Assessing Officer fell in error in going by the fact that the expenditure was incurred from the capital account forgetting that the test to be applied to ascertain as to whether the expenditure is revenue or capital is not based on where the funds were drawn from. The broad parameters and tests, which have been laid down by various decisions are that there should be an enduring benefit, which should accrue to the assessee and there should be a creation of a new asset. In the instant case, both these parameters remain unfulfilled. - Decided in favour of assessee

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• 2018 (6) TMI 1235
  Deemed dividend u/s 2(22)(e) - nature of receipt of sum from a company in which assessee is having 25.24% holding - assessee’s case that the same formed part of transactions in mutual or current account - assessee claimed that it was not loan or advance - Held that:- there is a clear finding of fact by the two statutory appellate fora that the assessee was beneficiary of the sums given by the company at some point of time and the company was beneficiary of the sums given by the assessee at another point of time. This finding given by the two statutory appellate fora distinguishes the present case from the factual basis of the decision in the case of Mukundray K. Shah [2007 (4) TMI 201 - SUPREME COURT]. The ratio of that decision thus does not apply in the facts of the case giving rise to this appeal. In this factual and legal perspective, in our opinion payment of the aforesaid sums to the assessee cannot be treated as dividend out of profit. No perversity has been pointed out on behalf of the Revenue so far as such a concurrent finding of fact is concerned by the two statutory appellate fora. We are not inclined to disturb such finding of fact, which the Tribunal has backed with detailed analysis. - Decided in favour of assessee.

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• 2018 (6) TMI 1234
  Gross profit rate of 8% on construction activities - principle of peak balance on undisclosed receipts and payments - assessee engaged in trading of land, development and construction activities - Held that:- Cash transactions concerning the assessee's construction business the Tribunal noted that not the entire receipt but the profit element suggested at the rate of 8% Gross Profit ratio should be taxed. Rent receipts Tribunal confirmed the additions in entirety in absence of any contrary evidence. Assessee's rotation of money for advances on interest Tribunal was of the opinion that only the peak credit and not the entire aggregate of the receipts could be taxed. This the Tribunal held by referring to the judgment of Division Bench of this Court in case of CIT v. Tirupati Construction Co. reported in (2014 (11) TMI 806 - GUJARAT HIGH COURT). No substantial questions of law.

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• 2018 (6) TMI 1233
  Penalty u/s 272 A(2)(k) - delay in filing e-TDS return u/s 200(3) - genuine reason for delay in filing e- TDS return - Held that:- Simply because the assessee deposited the amount to the Government account, it will not go to mitigate the rigors of assessee’s failure to file the TDS statements within the stipulated time. Moreover, the assessee being a Government Organization is supposed to make strict compliance of law. The contention of the assessee is further not tenable that there is no loss to revenue due to the delay in filing the TDS statements, as the requisite TDS was deposited to the Govt. account in time. Such an inordinate delay may cause loss to Revenue while processing the refunds, if any, to the deductees which fetches substantial amount of interest to be paid by the Government on such refunds, if paid with delay. Moreover, the change /lack of staff with the assessee-organization is not found substantiated by any evidence on record and such a reason, in our considered opinion, does not constitute to be a reasonable cause to file the TDS statements with such an inordinate delay. No reasonable cause for filing the TDS statements with delay. - Decided against assessee.

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• 2018 (6) TMI 1232
  TPA - MAM selection - TPO proceeded to apply an indirect method i.e. TNMM as the MAM over the direct method RPM - Held that:- It is an admitted fact that in this case the assessee is merely purchasing and selling the products without adding any value to the core product. Further, Ld. TPO did not dispute the characterisation of the assessee as in the TP document and also accepted the functional profile of the assessee as a routine distributor. Ld. DRP, however, recorded that the assessee has incurred substantial AMP, and other expenses, in relation to its turnover, and is therefore, not a simple distributor in terms of the requirement of using RPM. In respect of the observations of the Ld. DRP that the assessee has incurred substantial AMP, and other expenses, in relation to its turnover, and is therefore, not a simple distributor in terms of the requirement of using RPM, Ld. AR has rightly placed reliance on the decision reported in Nokia India Private Limited vs. DCIT [2014 (11) TMI 101 - ITAT DELHI] wherein it was held that the incurring of high advertisement and marketing expenses by the assessee vis-avis the other comparable companies does not in any manner affect the determination of ALP under the RPM Thus the RPM is the most appropriate method in the facts and circumstances of this case and accordingly direct the Ld. TPO to adopt the RPM as the most appropriate method for benchmarking the international transaction. - Decided in favour of assessee.

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• 2018 (6) TMI 1231
  Disallowance of car running and maintenance expenses - Held that:- Insofar as the continuity of these facts over the years is concerned, revenue does not dispute the same. When the facts continue to be similar, we do not find any reason to take a different view. We, therefore, respectfully following the consistent view taken by the tribunal for the assessment years 2006-07 to 2008-09 answer the issue in favour of the assessee and a direct the AO to delete the addition made on account of disallowance of car running and maintenance expenses. Additional amount being offered to tax in the written of income erroneously - Held that:- Inasmuch as factual verification is necessary on this aspect, we direct the AO to verify whether the assessee had reversed the provision to the extent of 2,04,88,269/-in the financial year 2007-08 itself, but by mistake of the automatically procedures reversed the entire amount of 4,09,81,176/-thereby an additional amount of rupees 2,04,88,269/-was offered to tax erroneously, and to pass order in accordance with law. These grounds are, accordingly are restored to the file of the Ld. AO for the purpose of verification and passing orders a fresh. Benchmarking of 'Provision Of Market Support Services' (MSS) - Comparable selection - Held that:- As a matter of fact even for the assessment year 2008-09 Ld. DRP recorded that for preceding years also it was held that the services rendered by the assessee were not high-end ones, as such Ld. DRP accepted the view taken for the earlier years and held for the assessment year 2008-09 that the services rendered by the assessee was not of high-end. It is not the case of the revenue that such a finding of fact was disturbed by any appellate authority. Such a finding of fact has attained finality - company M/s. Basiz Fund Services Private Limited is functionally dissimilar to the assessee inasmuch as such a company is involved in the fund accounting services, possessing significant intangible assets, the different employees profile, very significant growth in the revenue at 57.61% and earning of profits at 46.75% at supernormal level.company M/s. Basiz Fund Services Private Limited is functionally dissimilar to the assessee inasmuch as such a company is involved in the fund accounting services, possessing significant intangible assets, the different employees profile, very significant growth in the revenue at 57.61% and earning of profits at 46.75% at supernormal level.

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• 2018 (6) TMI 1230
  Undisclosed income of the assessee u/s 69 - seizure of the gold - carrying gold bars and jewellery - contradictory statements - gold claimed as not belong to the assessee - Held that:- AO has made necessary inquiries and found that though Mr. Meer Ahmed Ali has shown the sources for purchase of the gold as the withdrawal of the money in the months of November, 2011 and January, 2012 and has produced the invoices from M/s. Anushri Commodities Trading Pvt. Ltd, the AO has verified the said vouchers and found that there is a difference between the buyer and sales bills. Further, he has also noticed that with the same voucher No., there was another bill given by ACPTL in favour of Shri Krishna Jewellers for the same quantity except for the description i.e. 2 bars of 1000g each. Therefore, the contention of the assessee was not being substantiated/supported by the documents produced by him. VAT returns for the relevant month of 2012 is filed between 5th June, 2011 to 15th February, 2012, i.e. after the denial of Mohd. Khan Jewellers (P) Ltd of any transaction with the assessee. Therefore, the subsequent statement of the assessee that the gold belongs to Mr. Meer Ahmed Ali and the documents relied upon by him in support of such statements are not reliable. Contention of the assessee has always been that the entire gold does not belong to him and only part of the gold belongs to him and his family members. Even with regard to the gold which he stated to be belonging to Mohd. Khan Jewellers, he failed to prove the same and it is only thereafter, that he took a stand that it belonged to Mr. Meer Ahmed Ali. - decided against assessee.

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• 2018 (6) TMI 1229
  Unexplained cash deposits in Bank account - Held that:- Amount of 5 Lakhs has been withdrawn from account of assessee’s NRE A/c, to that extent amount should have been given credit by the authorities. An amount of 10,78,800/- was deposited out of the so called traveler cheques and out of assessee’s own funds, assessee being NRI and having substantial withdrawals from the US and also on the fact that he is a globe trotter being a senior employee. The explanation given by assessee cannot be simply rejected when he states that he encashed the traveler cheques and deposited cash in the bank account. The amounts are explained and hence the addition is not warranted. We are surprised to note that while Ld.CIT(A) accepts that the provisions of Section 68 cannot be invoked, he invokes Section 69 of the Act, which does not apply to the facts of the case. AO has not made out any case of unexplained investments made by assessee. These are simply deposits in the bank account which are generally considered as ‘cash credits’ and provisions of Section 68 are correctly invoked by AO. For the reasons best known to the CIT(A), he invokes Section 69 which does not apply to the facts of the case. Since assessee has given proper explanation, we are of the opinion that no addition is warranted. - Decided in favour of assessee.

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• 2018 (6) TMI 1228
  Exemption u/s 11 - assessee trust has been carrying out substantial percentage of activities with non members - Taxing the bank interest as income from other sources - Section 2(15) application - Held that:- As decided in assessee's own case [2016 (5) TMI 1179 - ITAT MUMBAI] activity of the assessee depositing money in the bank does not constitute trade, commerce or business. The Assessing Officer has in fact gone much beyond and held that the interest itself constitutes taxable income falling foul of the proviso to section 2(15). These Sections require an entity seeking the shelter of Sections 11 to 13 to deposit its surplus funds in specified assets and it cannot be that the mandate requirement and object of Section 11 (5) which serves to put in place a mechanism to regulate the funds of the charitable institutions are overcome, overridden and nullified by an interpretation so that the very mandate of Section 11 (5) if complied with results in the institutions being declared to be non-charitable. This is a contradiction in terms and therefore must be rejected. The interest earned on fixed deposit with banks complying with the provisions of Section 11 (5) is exempt and the proviso to Section 2( 15) has no application to the facts of the assessee's case. - Decided in favour of assessee.

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• 2018 (6) TMI 1227
  Applicability of Section 44BB - AO denied the applicability of section 44BB in the draft assessment order on the ground that assessee had supplied the vessel to M/s. CGG Marine which was not a party to the production sharing contract with ONGC, instead he treated the entire receipt as royalty - interpretation of the so called ‘second leg contract’ so as to deny the applicability of the section to the assessee - Held that:- This Tribunal in assessee’s own case for the Assessment Year 2007-08 has decided this issue in favour of the assessee and held that provision of Section 44BB would be applicable. Now this issue stands settled in the case of ONGC vs. CIT [2017 (10) TMI 322 - SUPREME COURT OF INDIA], wherein after analyzing the various kinds of contracts by different foreign companies with whom ONGC executed various contracts for services to be rendered in connection with prospecting, extraction or production of mineral oil by ONGC and after detail analysis and discussion, held that any activity relating to exploration, prospecting, extraction, production of mineral oil would be covered u/s.44BB. They have also taken note into account various kinds of works which has been set out in detail in the judgment. Here also the supplying of vessels for the said purposes is inextricably connected with the prospecting, production of mineral oil and therefore, the order of the learned DRP is in consonance with the judgment of the Hon’ble Supreme Court, accordingly, the same is confirmed. - Appeal of revenue dismissed.

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• 2018 (6) TMI 1226
  TPA - comparable selection criteria - Held that:- Assessee is engaged in the business of import and distribution of the Marlboro brand of cigarettes, export of tobacco leaves to its associated enterprises and provision of market support services. The market support services segment of Indian branch office provides the services like representation services to associated enterprises, carrying out market research work and sharing market related information with AEs and logistic support to AEs for supply of goods to other countries, apart from rendering services in respect of the operations in Nepal and Bangladesh thus companies with difference in business structures and functionally not to be selected as comparable 5 companies, namely, Apitco Ltd., Cameo Corporate Services, Global Procurement Consultants Ltd, Killik Agencies and Marketing Ltd and TSR Darashaw Ltd. opposed by the assessee before the authorities below are not good comparables to the assessee and they are liable to be deleted. We therefore direct the Ld. TPO to delete all these companies can define a list of comparables for benchmarking the international transaction of Market Support Services rendered by the assessee to AEs., and to recompute the Arm’s Length Price of the international transaction of Market Support Services. Disallowance u/s 40 (i)(a) - assessee had incurred certain expenditure in foreign currency on various accounts - admission of additional evidence - Held that:-The very submission of the learned Counsel that the assessee had to file additional evidence to furnish the alleged Agreement, lends any amount of support to the observations of the Ld. AO that such an Agreement was not available during the assessment proceedings so that the Ld. AO could have returned a finding after appreciating the contentions of the assessee. Further the matter is pending before the Ld. AO for consideration of the very same issue in respect of the assessment year 2008-09, as was remanded by this Tribunal. In the circumstances, we deem it just and proper to remand this issue to the file of the Ld. AO for consideration

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• 2018 (6) TMI 1225
  Disallowance u/s 14A - sufficiency of own funds - Held that:- Assessee’s own funds in the form of share capital, reserves and surplus were 434.47 crore whereas the investments were only to the tune of 282.75 cr. which included the investments in subsidiary companies from strategic point of view. Thus, the interest free funds available with the assessee and therefore, the presumption has to be made that investments in the shares and securities were made out of interest free funds available with them. - Decided in favour of assessee. Disallowance u/s.14A while computing book profit u/s.115JB - Held that:- This issue is covered in favour of assessee by the decision of M/s. Vireet Investment Pvt. Ltd. [2017 (6) TMI 1124 - ITAT DELHI] wherein it has been held that the computation under clause (f) of Explanation 1 to section 115JB(2) is to be made without resorting to the computation as contemplated under section 14A read with Rule 8D of the Income Tax Rules. Thus respectfully following the said decision we restore this ground to the AO who shall decide the issue

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• 2018 (6) TMI 1224
  Assessment u/s 153A - Additions made to the income of the assessee based on the loose sheets found in search - estimation of net profit at @ 6% of sales - Held that:- A.O and CIT(A), have rejected the books of account for all the six years and have estimated the profit @ 6% of sales and this issue was considered by the Coordinate bench of this Tribunal in the assessee’s own case for the A.Ys 2006-06 & 2007-08 and has deleted the addition as held in the absence of any incriminating material suggesting that book results should be rejected the addition cannot be made on estimate basis in the assessment made u/s 153A - Respectfully following the same, the grounds of appeal allowed and the addition after estimation of income @ 6% by the A.O and CIT(A) is deleted. Alleged loan given to Sri Rajeswar Rao has not been proved. Receipt of alimony - Held that:- assessee has stated that he has received the money from his daughter, Smt. Deepa, who in turn has received the same from her divorced husband, towards her sons maintenance and permanent alimony. Though, the assessee has filed the copy of the court order in support of the contention that Smt. Deepa has received the money, as rightly pointed out by the Ld. A.O and CIT(A), the assessee has not been able to prove with substantial evidence that this is the money advanced by Smt. Deepa, particularly when the conditions of granting alimony have not been fulfilled by Smt. Deepa. In view of the same, the grounds are rejected. Deduction claimed u/s 80U denied.

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• 2018 (6) TMI 1223
  Block assessment completed u/s 158BC r.w.s 158BD - Whether neither objection was raised against legal validity of proceedings before the A.O. nor any remedy was sought at any other level? - non recording of satisfaction - Held that:- There were no positive material found to arrive at satisfaction that undisclosed income has been earned by assessee. In the absence of any material, no satisfaction as is required under section 158BD could have been recorded. A.O. has failed to initiate valid proceedings against the assessee. The satisfaction note is an afterthought and ante- dated and prepared after submissions made by the assessee. No explanation have been given in this regard by the department. No satisfaction have been recorded by the A.O. in the case of the person searched. Therefore, no interference is called for in the matter. PB-365 is submission of the assessee in detail which have not been rebutted by the department in which the assessee has similarly explained that there were no incriminating material found during the course of search against the assessee in the case of Vatika Group of Companies and satisfaction note is anti dated. No satisfaction note has been recorded on the date of issue of notice under section 158BD of the Act dated 31.05.2005. The satisfaction note supplied to the assessee on 27.01.2006 is thus, anti-dated and had not been recorded on the date purported i.e., 31.05.2005. Our findings are based mainly on reasons that in the case of person searched, no incriminating material was found against the assessee, therefore, there were no reason to record satisfaction under section 158BD of the Act in the case of the person searched. - Decided in favour of assessee

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• 2018 (6) TMI 1222
  Disallowance of LTCG on the ground of difference between sale price and stamp duty valuation - additions u/s 50C - Held that:- In the judgement of Hon’ble ITAT in the case of the Sudhir Kumar G Patel (HUF) and others where ITAT has directed the AO to charge the capital gain income in the year assessment 2008-09 - thus we respectfully following the same restore the matter to the file of AO for fresh adjudication regarding the direction issued by the Hon’ble Tribunal.

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• Customs

• 2018 (6) TMI 1221
  100% EOU - diversion of duty free goods - Formal SCN not issued - N/N. 15/2003-Cus. Dated 31.3.2003 and Central Excise N/N. 22/2003 dated 31.3.2003 - Condition of notification not complied with - Confiscation - Penalty - Principles of Natural Justice - Held that:- In the instant case, there was some correspondence between the department and the respondent and the respondent has duly paid up the duty along with interest in response to the query of the department - No formal show-cause notice was issued. It is very clear that the respondents have transferred the goods under IUT as permitted by the Foreign Trade Policy and by following due process of law. When the recovery of duty itself is questionable, confiscation and imposition of penalty will not survive. Appeal dismissed - decided against Revenue.

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• 2018 (6) TMI 1220
  Rectification of Mistake Application - at para 4 of the said order, there was no mention of the said fact of non applicability of interest for the period of provisional assessment, from 02.06.2008 to 30.10.2010, which is an error apparent oh the order - Held that:- Correcting the mistake, in para 4 of the order at line 2, after expression differential value, it should be read as and also since no interest is payable on the differential duty of 9,17,646/- for the period of provisional assessment i.e. from 02.06.2008 to 30.10.2010 as the entire amount of the said differential duty was paid at the time of provisional assessment, in view of the settled principles of law and accepted by this Tribunal, and accordingly prays for withdrawal of the Appeal.” The mistake being apparent, is accordingly rectified - ROM application allowed.

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• 2018 (6) TMI 1219
  Classification of imported goods - waste and scrap of lead in powder form - Appellant claimed in the bill of entry that it was Lead Concentrate and classified the item under Heading 26070000 but the department considered the same as waste and classify the same under Chapter Heading 78020090 - Held that:- Facts remains that in the past and future the said item was treated by the Department as Concentrate , only this time this treatment has been denied. Regarding the Polution Certificates, it is evident that this is not a case of production, this is a case of import. Appellant may be engaged in primary or secondary production, we are not concerned, we are concerned with the impugned imported item only. So, the Certificate of Pollution will not have much relevance. By looking the test report and other material, we are of the view that the item falls under the classification of Heading Concentrate under 26070000 - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1218
  Benefit of N/N. 21/2002-Cus dated 12th March 2002 - denial on the ground of beta-carotene content in the crude palm oil imported by M/s Ruchi Soya Industries Ltd. being below the prescribed to disentitle them from the privilege - Held that:- The test result relied upon by Revenue is that of the remnant by the Central Revenue Control Laboratory after the samples drawn on board on 6th June 2004 and from shore tank on 9th June 2004 had shown contradictory levels of beta carotene. The samples of both tested at Kandla on 3rd July 2004 was in favour of importer while samples tested at Vadodara on 30th July 2004 was marginally below the threshold in the notification. The various tests of the samples were effected over a period of four months and there is a consistent decline in the distinguishing content. Furthermore, the first test at Kandla passes muster. No evidence to establish that carotene content was never above the threshold of 500 mg/kg has been placed on record. Appeal dismissed - decided against Revenue.

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• Service Tax

• 2018 (6) TMI 1217
  Refund of service tax paid - The appellant has paid the service tax and later on realized that service tax is not leviable and thereafter filed the refund application - denial on the ground of time limitation and also on the ground of unjust enrichment - Section 11B of Central Excise Act read with Section 83 of the Finance Act - Held that:- Since the amount claimed as refund by the appellant can be refunded only under Section 11B, the limitation provided in the said section shall also be applicable for sanction of refund. There is no other provision for refund of service tax/excise duty except Section 11B of the Act. Therefore, limitation is applicable - reliance paced in the case of LNG Security Services Pvt Ltd. Vs. CST, Delhi [2017 (5) TMI 466 - CESTAT NEW DELHI], where it was held that provision of Section 11B of the Central Excise Act, 1944 dealing with refund/rebate have been made applicable to service tax by virtue of Section 83 of the Finance Act, 1994. Any application for refund of tax must be filed before the expiry of one year from relevant date. Principle of unjust enrichment - Held that:- Though the appellant has produced certain letters, which have been written by BSNL to them claiming the refund of service tax paid by them but the same has not been refunded to them so far and therefore the principle of unjust enrichment is applicable in the present case since the appellant has collected the service tax from BSNL. Appeal dismissed - decided against appellant.

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• 2018 (6) TMI 1216
  Validity of Remand orders of the Ld. Commissioner (Appeals) - refund claim - export of services - denial mainly on the ground that the overseas company and their Indian arm that is the appellant are merely different establishments and not separate legal entities - Held that:- The Ld. Commissioner (Appeals) has not examined the issue whether both the companies are mere establishments or separate legal entities and consequently, service provided by the appellant would qualify as export service and accordingly the appellant are eligible to refund of the service tax paid on specified services used in the export of service or otherwise. The issue of taxability was never raised in the SCN nor in the order of the adjudicating authority, therefore, the remand order of the Ld. Commissioner (Appeals) to examine the issue of taxability, is beyond the scope of the brief and cannot be sustained. Appeals are allowed by way of remand to the Ld. Commissioner (Appeals).

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• 2018 (6) TMI 1215
  Validity of SCN - First appellate authority has simply proceeded on the premise that the demand was based on the assumptions and presumptions and no serious efforts appears to have been made to reconcile the figures in the SCNs and the documentation of the respondent - Held that:- Ld. Commissioner (Appeals) has given no findings on the reconciliation aspect. During the hearing, the Ld. Advocate argued that the receipts in the balance sheets were entirely from another advertising agency having service tax registration and not from the advertiser - Though the Ld. Commissioner (Appeals) has dealt with the legal aspect of this issue but did not make any attempt to reconcile the total receipts from this agency or any other advertising agency with the figures mentioned in the SCN and its annexures. The figures in the books of accounts and the ST-3 returns require proper reconciliation and the same requires to be done at the level of the adjudicating authority. The matter requires to be remanded back to the adjudicating authority to reexamine the documentations and the submissions of the respondents explaining the receipts in their ledger and books of accounts and to reconcile the same with the returns filed by the Respondent - appeal allowed by way of remand.

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• 2018 (6) TMI 1202
  Maintainability of appeal - No question of law involved in remand order - Refund of unutilized CENVAT Credit - Denial on account of nexus - Held that:- Division Bench of this Court in the case of Principal Commissioner of S.T., Bangalore V/s. Broadcom India Research Pvt. Ltd., [2016 (6) TMI 877 - KARNATAKA HIGH COURT], has held that in these circumstances, no substantial question of law arises for consideration by this Court and therefore the appeal filed by the Revenue was dismissed. There is no substantial question of law in the remand the order of the Tribunal - appeal dismissed.

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• 2018 (6) TMI 1201
  Refund claim - rejection on the ground that the export turnover during the claim period was nil - Held that:- There is an export of service in the present case - the original authority has rejected the refund only on the ground that the export turnover has not been shown in the ST-3 return and that there was clubbing of quarters for claiming the refund - both these grounds on which the original authority has rejected the refund is not sustainable in law - appeal dismissed - decided against Revenue.

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• 2018 (6) TMI 1200
  Principles of Natural Justice - Statement of Demand dt. 03/03/2015 was issued on the ground that the appellant has wrongly availed CENVAT credit as per the facts mentioned in para 7 of show-cause notice dt. 30/10/2013 - Held that:- Since there is no finding with regard to the material issue raised by the appellant, this case needs to be remanded back to the original authority to pass a fresh order considering the allegations in the Statement of Demand dt. 03/03/2015 as the same is necessary for the final disposal of the case - appeal allowed by way of remand.

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• 2018 (6) TMI 1199
  Condonation of delay of 56 days in filing appeal - personal leave of concerned officer - Held that:- The concerned Officer, Shri Devendra J. Dalal, was on personal leave and certainly during his leave period somebody must have looked the affairs of the business entity. Personal leave is not a sufficient ground as per Section 5 of the Limitation Act, 1963 - delay cannot be condoned - COD application dismissed.

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• 2018 (6) TMI 1198
  Valuation - Authorised service station service - Free services during warranty period - reimbursement or not? - inclusion of the amount received as reimbursement in assessable value - Held that:- The SCN as well as the orders of both the lower authorities are based on Clause 4.4 of the dealership agreement, which is not related to free warranty. Free warranty is provided in terms of clause 7.3 of the agreement. The said clause does not provide for any reimbursement. The issue of liability to service tax for free services provided to car purchasers by the authorised dealers is already settled in favour of the assessee by this Tribunal in the case of Jabalpur Motors Ltd. [2015 (1) TMI 1140 - CESTAT NEW DELHI], where it was held that the respondents have not provided the service of authorised service station to them (i.e. M/s. MUL). Accordingly this amount cannot be made liable to service tax under the category of authorised service station service. Appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1197
  CENVAT credit - whether the appellant are entitled to Cenvat credit of service tax paid on ‘Garden Maintenance Service’ and ‘Environment Protection Service’ during the period October 2013 to March 2015? - Held that:- The Garden Maintenance Service and Environment Protection Service are in compliance with pollution control laws and relates to their manufacturing unit - This Tribunal in the case of M/s Gmm Pfaulder Ltd [2016 (12) TMI 334-CESTAT Ahmedabad] held that service tax paid on such service is admissible to credit - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2018 (6) TMI 1214
  Maintainability of appeal - appellant-Revenue submits that the present appeal may be dismissed as this case is covered by the decision of this Court in COMMISSIONER OF SERVICE TAX & ANOTHER –VS- MISYS SOFTWARE SOLUTIONS (INDIA) PVT. LTD., & OTHERS [2018 (6) TMI 1202 - KARNATAKA HIGH COURT], where Division Bench of this Court in the case of Principal Commissioner of S.T., Bangalore V/s. Broadcom India Research Pvt. Ltd., [2016 (6) TMI 877 - KARNATAKA HIGH COURT], has held that in these circumstances, no substantial question of law arises for consideration by this Court and therefore the appeal filed by the Revenue was dismissed - Held that:- The present appeal of the appellant-Revenue is dismissed in the same terms.

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• 2018 (6) TMI 1213
  Classification of goods - printing of the items such as Books, Magazine, Posters, Letter Head, Letter Pad, Envelop, Calender, Flayers Receipt Book, Product Folders, News Letter, Invitation Cards, Officer Stationary, Pad, Scriber Pad, Lebel, Stickers, Non-Corrugated Box, Diary etc. - whether the product manufactured were classified under Chapter 49 of CETA, 1985 or under Chapter 48 of CETA, 1985? - Held that:- The decision in the case of Commissioner of Central Excise, vs. Gopsons Papers Ltd. [2015 (10) TMI 443 - SUPREME COURT], is squarely applicable to the facts of the present case, where it was held that As per the assessee, it is essentially printing work which is done by the assessee relating to the product in question and, therefore, the product comes under Chapter Heading 49.01 which pertains to printing. It is apparent in the instant case also the appellants are engaged solely in the activity of printing. In the case of Gopsons Papers Ltd, the items manufactured were partly printed and balance was to be printed by the user just like in the instant case in respect of all the forms. Appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1212
  CENVAT credit - input services - appellant had engaged the services of M/s. Chettinad Builders (P) Ltd. and M/s. Navanirman Technobuild India Pvt. Ltd. towards construction of various structures and buildings, laying of foundations and making of structures for support of capital goods in the factory premises and construction services in the residential colony and availed cenvat credit on the services tax paid - principles of Natural Justice. Held that:- The appellant has produced various work orders issued to M/s. Navanirman Technobuild which are the subject matter of present dispute and the perusal of these various work orders, copies of which are annexed with the appeal memorandum, shows that the scope of work relates to supply of DG sets operator with required tools for O&M work like fuel filling , coolant top-up, start & stop of DG set, battery checking etc. in the Kallur factory - the Commissioner(Appeals) has not considered all these documents and the invoices produced by the appellant in support of his submission that the services availed by the appellant are integrally connected with the manufacture of final product of the appellant and all the services even after the amendment in the definition of input service fall in the definition of input service because the same has not been specifically excluded. Since these work orders and the invoices issued by the service providers have not been specifically considered by the Commissioner(Appeals) while disposing of the appeal, the matter requires re-examination - appeal allowed by way of remand.

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• 2018 (6) TMI 1211
  Maintainability of appeal - Non-compliance with pre-deposit - Section 35F of the Central Excise Act, 1944 - utilization of CENVAT credit for payment of pre-deposit amount - Held that:- When the appeal was filed, the assessee along with appeal documents has annexed the letter written by them to the Commissioner of Central Excise dt 17/08/2015 wherein he has mentioned that they will be using the CENVAT account for payment of mandatory predeposit and accordingly they have informed the Deputy Registrar of Tribunal also vide their letter dt 18/09/2015. No objection was raised by the Department on his letter dt. 17/08/2015 and the appeal was validly and legally filed. As far as the question of entitlement of the appellant to the CENVAT credit on the inputs is concerned, the same will be examined while deciding the case on merits. But at this stage, for the purpose of Section 35F, they can use the CENVAT credit lying in their CENVAT account and we do not find any infirmity in the said utilization at this stage. Appeal held to be maintainable.

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• 2018 (6) TMI 1210
  Penalty u/s 11AC of CEA, 1944 - SSI Exemption - Valuation of aggregate clearances - inclusion of value of exempted goods for computing the aggregate value of goods of excisable goods - Held that:- The appellant is a wholly owned public sector undertaking of the Government of Karnataka and the Department conducted audit for the period June 2003 to Jun3 2005 and all the documents were supplied to the audit part and the audit party did not find that the appellant has wrongly availed the exemption. The appellant paid the entire duty when they realized that they are not entitled to the exemption - Further the appellant has not suppressed any facts from the Department and they have filed all the documents including the balance sheet, Profit & Loss Account and other documents. Since they have paid the duty and there was no intention to evade and demand is also within the normal period of limitation and the provision to Section 11AC(1) has not been invoked in the instant case - the ingredients of Section 11AC of the CEA are not present to impose penalty equal to duty. Penalty not warranted - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1209
  Rectification of mistake application - It is the contention of Revenue that the order disposing the appeal of M/s VIP Industries to be recalled, as both the appeals were not heard together - Held that:- Merely because both the appeals are not heard together, cannot be considered as a mistake apparent on the face of the order of this Tribunal dated 28.05.2015, and hence to be recalled and heard again, in absence of any mistake pointed out by the Revenue in the said order - ROM application dismissed.

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• 2018 (6) TMI 1208
  CENVAT credit - Reverse Charge Mechanism - whether the appellant the service recipient is entitled to avail Cenvat Credit of Service Tax paid on Man Power Services and Security Services, where the burden of payment of Service Tax on recipient service under reverse charge mechanism is 75% and on the provider of service is 25%? - Held that:- The admissibility of CENVAT Credit in the relation to the Service Tax paid on Man Power Supply Service by the service provider has been considered by the Tribunal in the case of M/s Gurudev Dyestuff (India) Pvt. Limited. Vs. C.C.E Ahmedabad-II [2018 (2) TMI 1399 - CESTAT AHMEDABAD], where it was held that even if the entire amount Service Tax was paid by the service provider, on man power service, the Service recipient of said services is entitled to CENVAT Credit of the total amount. Appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1207
  Valuation - inclusion of quantity discount given to the customers subsequent to the clearance of goods in assessable value - Held that:- Identical issue decided in the case of M/S. BIOCHEM PHARMACEUTICAL INDUSTRIES VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI-III [2016 (3) TMI 664 - CESTAT MUMBAI]. where it was held that the actual amount that the buyer is liable to pay at the time of sale or at any other time shall be the transaction value, and excluding the discount value is the correct transaction value and duty cannot be charged on the discount amount which is neither paid nor payable in the case of sale of the goods. The quantity discount was rightly claimed by the assessee-Appellants as the same was claimed at the time of sale of the goods - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1206
  Penalty u/r 26(2) of the CER 2002 - issuance of bogus invoices without actual supply of goods - Held that:- The adjudicating authority as well as the Ld. Commissioner (Appeals), after analyzing the statements and evidences on record arrived that the conclusion of the appellants had an active role in facilitating the clandestine removal as well as wrong availment of CENVAT Credit - The appellants have not produced any contrary evidences, to rebut the findings of the authority below. Appeal dismissed - decided against appellant.

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• 2018 (6) TMI 1205
  Principles of Natural Justice - Ld. Commissioner (Appeals) has not properly investigated the matter - Clandestine removal - It is the grievance of appellant is that there was repetition of demand of the duty involved on the seized goods - Held that:- The Ld. Commissioner (Appeals) has not discussed the details of evidences relating to confirmation of demand of duty of 2,05,526/-, but based the finding on clearance of 10.630 MT without payment of duty seized by the department. It is necessary to remand the matter to the Ld. Commissioner (Appeals) to records the findings on evidences relating to the clandestine clearance resulting into short payment of duty of 2,05,526/-, as alleged by the department and the issue of duplication of demand raised by the Appellant - appeal allowed by way of remand.

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• CST, VAT & Sales Tax

• 2018 (6) TMI 1239
  Jurisdiction - Validity of VAT Audit report - consequential notice issued calling upon the petitioner to produce records on a particular date - Challenge to the VAT Audit is on the ground that it is without jurisdiction, as the VAT Audit has been authorised by the Joint Commissioner and not the Commissioner - principle of delegates non potest delegate. Held that:- Mere usage of the expression authorised by the Joint Commissioner in his proceedings, does not mean that the Joint Commissioner has commenced the audit on his own accord. It has to be borne in mind that the statute uses the expression order , and does not use the expression authorise . Thus, what is required under Section 64(4) is an order of the Commissioner and if there is an order to the said effect, then authorisation of lower level officers, by officers subordinate to the Commissioner, cannot be termed as ordering an audit, but it is a proceedings by which the order passed by the Commissioner, is implemented or carried forward. The factual matrix in the present case is different from that of the case dealt with by the Court in Jeevan Buy N.Save [2017 (2) TMI 180 - MADRAS HIGH COURT], in the sense that the name of the petitioner finds place in the proceedings of the Commissioner. The Commissioner has exercised his power under Section 64(4) of the TNVAT Act and it is he who has authorised the VAT Audit. Petition dismissed - decided against petitioner.

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• 2018 (6) TMI 1204
  Principles of Natural Justice - Validity of assessment order - case of petitioner is that neither the objections or documents given by the petitioners were considered by the Assessing Officer nor the explanation given by them before the Inspecting Team have taken note off - Jurisdiction - authorization by the Joint Commissioner - Held that:- The Assessing Officer did not consider the reply given by the petitioner, which is noted in the sworn statement. Therefore, when the respondent issued show cause notice, he should have also taken note of what the petitioner had stated before the Enforcement and cannot mechanically issue a show cause notice. This is a fundamental error committed by the Assessing Officer - The respondent did not consider the objections given by the petitioner in an effective manner - The court has pointed out only one issue by way of illustration and it can be safely stated the similar is the approach of the Assessing Officer in the other issues as well. The Assessing Officer failed to note that he is an independent statutory authority and no person can dictate as to in what manner he has to pass orders. The report of the Enforcement Officer can at best be treated as starting point for issuance of show cause notice. But, once the dealer submits a reply, the Assessing Officer is expected to independently apply his mind and take a decision in the matter. Since such approach has not been made in the instant case, the impugned orders suffer from infirmity calling for interference. Matters are remanded to the respondent for fresh consideration - appeal allowed by way of remand.

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• Wealth tax

• 2018 (6) TMI 1203
  Penalty u/s. 18(1)(c) - reopening u/s. 17 - deliberately concealed the particulars of wealth - Held that:- As seen from the satisfaction recorded and the order of the AO, there is no information with AO about the wealth of assessee. It was only when AO made roving enquiries about assets held, assessee disclosed the jewellery received on gift at the time of her marriage (20-05-2003). The explanation given was that she is not aware about the wealth tax liability on that jewellery to be accepted as bonafide, as she has no other assets either immovable or movable, as can be seen from the computations filed. Even though the proceedings were initiated and finalized u/s. 17 in AY. 2005-06 and AY. 2006-07, no penalty u/s. 18(1)(c) was levied by the AO. Thus, the reopening u/s. 17 has no relevance for levy of penalty. As the explanation was bonafide, this being first year of wealth tax in her case, we are of the opinion that the facts do not warrant penalty u/s. 18(1)(c) of the Wealth Tax Act. - Decided in favour of assessee

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