TMI Tax Updates - e-Newsletter
June 27, 2018

Case Laws in this Newsletter:

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

TMI SMS

• Addition confirmed on the basis of certified Balance-sheet & P&L A/c prepared on estimate basis to avail bank loan.

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News

1. RBI Reference Rate for US $

Notifications

Customs

1. 34/2018 - dated 25-6-2018 - ADD

seeks to provide for provisional assessment of new/unused pneumatic tyres originating in or exported from People s Republic of China by M/s Shandong Haohua Tire Co. Ltd. (Haohua) (Producer) through Guangzhou Exceed Industrial Technology Co. Ltd. (exporter) or H K Trade Wing Trading Limited (exporter) till the final findings of New Shipper Review in this regard are received

GST - States

2. GST/50/2017/396 - dated 23-4-2018 - Arunachal Pradesh SGST

Notified the State Government hereby rescinds, Arunachal Pradesh Department of Tax and Excise dated 29th March 2018, published in the Arunachal Pradesh Extra-ordinary Gazette.

3. F-10-31/2018/CT/V (49) - dated 19-6-2018 - Chhattisgarh SGST

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

4. 24/2018-STATE TAX - dated 28-5-2018 - Chhattisgarh SGST

Notified Authority To Conduct Examination Of Gst Practitioners.

5. 11/2018-STATE TAX (RATE) - dated 28-5-2018 - Chhattisgarh SGST

Amendments in the Notification No. 4/2017-State Tax (Rate), No. F-10-43/2017/CT/V (72) dated the 28th June, 2017.

Highlights / Catch Notes

Income Tax

• Assessee proves genuineness of share transactions u/s 68; no income addition made.

  Case-Laws - AT : Addition u/s. 68 - cash credit - assessee's onus to prove genuineness of the transaction - share capital and share premium - the source of source of source is proved by the assessee in the instant case though the same is not required to be done - No additions.
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• Cash Payments for Old Gold u/s 40A(3) Disallowed; Assessee Fails to Meet Criteria, Additions Confirmed.

  Case-Laws - AT : Disallowance u/s.40A(3) - cash payment against purchase of old gold ornaments under auction - As per the assessee, identity of the person to whom he had made the payments were established and genuineness of the purchases were not doubted - assessee failed to pass the test - additions confirmed.
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• Taxpayer's Investment Income via Kotak Securities Classified as 'Capital Gains', Not 'Business Income'.

  Case-Laws - AT : Income earned by the assessee out of investments in securities using specialized professional services of PMS – Kotak Securities Ltd., such income becomes taxable under the head ‘Capital Gains’ and the same should not be construed as ‘Business Income’
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• MFN Clause Applies to India-Sweden DTAA for Withholding Tax on Technical Service Fees Without Notification Requirement.

  Case-Laws - AT : Withholding of tax u/s 195 - fee for technical services (FTS) - the protocol itself makes it clear that the said ‘MFN’ clause “shall apply” in India-Sweden DTAA. - Issuance of a notification has nowhere been stipulated as a condition precedent therein.
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• Assessee Challenges Income Addition Based on Estimated Financials for Loan; ITAT Criticized for Not Reporting CA to ICAI.

  Case-Laws - HC : Addition to income - Whether any addition to income can be made on the basis of balance-sheet and profit and loss accounts certified to have been prepared on estimate basis to avail bank loan and having no relation with the actual?” - assessee could no longer resile from such position - ITAT faulted in not reporting the conduct of CA to the ICAI.
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• Mark to Market Loss from Forex Fluctuations Allowed; DRP Directions Binding on Assessing Officer Under IT Act Section 144C(10).

  Case-Laws - AT : Disallowance of foreign exchange fluctuation loss - mark to market loss - There is hardly any quarrel on such DRP’s directions are binding on an Assessing Officer u/s 144C(10) - the assessee’s impugned mark to market loss incurred on foreign exchange fluctuation to be allowable.
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• Penalty u/s 271(1)(b) Requires Valid Authority Satisfaction, Not Just a Proposal to Initiate Proceedings.

  Case-Laws - AT : Penalty u/s. 271(1)(b) - validity of notice - non recording of satisfaction - a proposal to initiate penalty proceedings is not equivalent to recording a satisfaction which is the post failure and not with the a preposition “if failed to”.
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• Section 68 Proviso Not Retrospective; Assessee Must Bear Burden of Proof Under Income Tax Act.

  Case-Laws - AT : Addition made u/s 68 - onus to discharge the burden so cast upon assessee - The legislature did not introduce the proviso to section 68 of the Act with retrospective effect nor does the proviso so introduce states that it was introduce ‘for removal of doubts’ or that it is ‘declaratory’, therefore, it is not open to give it to retrospective effect.
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• Petitioner Challenges Assessing Officer's Order u/ss 201(1), 201(1A), and 254 of Income Tax Act; Appeals Possible.

  Case-Laws - HC : Challenge the order passed by the Assessing Officer u/s 201(1) and 201(1A) r/w 254 after receipt of recovery notice u/s 156 - the petitioner is not remedy less as appeals are maintainable against the orders passed under Section 201(1) and 201(1A) r/w 254 of the Act.
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IBC

• Dispute Over Default: Application and Account Statements Show Different Principal Amounts in Corporate Insolvency Case.

  Case-Laws - Tri : Corporate Insolvency Resolution Process - existence of default - dispute concerning the Principal amounts shown in application as are different from amount given in account statements cannot conceded.
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Service Tax

• Consolidated Invoice Rule: No Different Service Tax for Banks in Merchant vs. Bank Transactions u/r 6 (7B) Service Tax Rules.

  Case-Laws - AT : Rule 6 (7B) of the Service Tax Rules, 1994 - consolidated invoice issued covering all the transactions in a particular month - Whether law permits different service tax liability of the banks in case of its transaction with a merchant or with another scheduled bank? - No demand can sustain.
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• Infrastructure Sharing Between Clinics and Doctors Not Taxable Under Business Support Services.

  Case-Laws - AT : Business Support Service - sharing of infrastructure with doctors - There is no legal justification to tax the share of clinical establishment on the ground that they have supported the commerce or business of doctors by providing infrastructure
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• Penalty Imposed u/s 78: Lack of Mens Rea Not Proven Due to Non-Cooperation and Missing Records in Service Tax Case.

  Case-Laws - AT : Penalty u/s 78 - absence of mens rea or not? - Had the appellant acted under bonafide belief, then they ought to have cooperated in the investigation. But it has come on record that they did not corporate with the department nor produced the record for quantification of service tax liability - demand confirmed.
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Central Excise

• Bio Gas Project's Weighing Machines and Conveyors Qualify for Tax Exemption as Non-Conventional Energy Devices.

  Case-Laws - AT : Benefit of exemption - The weighing machines and conveyors being integral part of Bio Gas Combustion Co-Generation Power Project as certified by the Managing Director of NCEDCAP has to be treated as non-conventional energy device - Benefit of N/N. 6/2002-CE allowed.
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VAT

• Taxpayers Can Revise Returns After Deadline Under KVAT Act 2003, If No Penal Actions Started.

  Case-Laws - HC : Revision of returns - KVAT Act, 2003 - At the risk of repetition, it has to be stated that there is no prohibition in attempting a revision of return after the time specified, if no penal proceeding is initiated.
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Case Laws:

• GST

• 2018 (6) TMI 1265
  Detention of goods - E-way bill not produced - Evasion of duty or not - Held that:- The goods were transported on payment of tax; but, however, the dealer intends to re-sell the goods from his dealership. In such circumstances, suspicion of evasion cannot be brushed aside at this stage. The interim order set aside and goods released on execution of a simple bond for the value of goods in the prescribed form and furnishing of security in the form of Bank Guarantee equivalent to the amount of applicable tax and penalty payable as has been demanded in Exhibits P17 and P18 orders. Appeal disposed off.

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• Income Tax

• 2018 (6) TMI 1286
  Addition to income - Whether any addition to income can be made on the basis of balance-sheet and profit and loss accounts certified to have been prepared on estimate basis to avail bank loan and having no relation with the actual?” - Held that:- The balance-sheet and profit and loss accounts of an assessee accompanied by a certificate as to its fairness, notwithstanding the caveat as noticed in paragraph 2(A) thereof, cannot be tailor-made to suit a particular purpose or window-dressed to make it attractive for bankers to rely thereupon and all the gloss and sheen removed thereafter when it was the time to pay tax. When the assessee presented the financial position of the assessee as in the balance-sheet of July 18, 2005, the assessee could no longer resile from such position. It was then open to the Assessing Officer and the income tax authorities to pin the assessee down on the basis of the assessee’s representation contained in the earlier balance-sheet and the reasoning indicated in the quoted paragraph by the Appellate Tribunal does not call for any interference. Appellate Tribunal may only be faulted for not reporting Roy Ghosh and Associates to the Institute of Chartered Accountants for having apparently abetted in the commission of a colossal act of misrepresentation which the appellant assessee undertook before his bankers for the purpose of obtaining credit facilities by indicating a financial position that was not warranted by the books of the assessee. Appeal dismissed with costs assessed at Rs. 10,000/- to be paid to the Department within four weeks from date.

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• 2018 (6) TMI 1285
  Challenge the order passed by the Assessing Officer u/s 201(1) and 201(1A) r/w 254 after receipt of recovery notice u/s 156 - Held that:- Petitioner having not questioned the order passed under Sections 201(1) and 201(1A) r/w Section 254 of the Act and the consequential demand notice issued under Section 156 of the Act, both dated 30.03.2014, cannot at this stage of the matter impugned a communication sent by the respondent granting a final opportunity to the petitioners to pay the demand. Therefore, it is contended that unless and until the petitioner has filed an appeal against the order dated 30.03.2014, the question of entertaining a Writ petition against the impugned communication does not arise. As pointed out earlier, the stand taken by the Revenue is perfectly justified and is in order. Therefore, this Court cannot entertain the Writ petition challenging the impugned communication, which is a consequence upon the assessment order passed dated 30.03.2014. However, the petitioner is not remedy less as appeals are maintainable against the orders passed under Section 201(1) and 201(1A) r/w 254 of the Act.

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• 2018 (6) TMI 1284
  Reopening of assessment - reopen Held that:- This is not a case in which additions made, on the issues not originally recorded under Section 148(2) could be deleted, merely on the ground of original reasons recorded having not concluded in an assessment of escaped income. Two of the reasons recorded did conclude in assessment of escaped income. It definitely cannot be a preposition that only if all the recorded reasons ended in assessment of escaped income, could there be assessment made on issues of escapement; detected during the course of re-opening. We, hence, answer the questions of law framed in favour of the Revenue and against the assessee. In the present case, which is a reassessment proceeding, quite surprisingly, the Assessing Officer proceeded to assess the escapement of income in the following manner: “The assessee has not explained why there is discrepancy in the sales as per the old statement and the new statement except for the discrepancy in Trichur. After due consideration this year making a departure from the old method and allocating the sales as per the old statement as the sales but with certain changes”(sic). This definitely is not permissible and falls foul of the principles of reassessment for reason of it being a mere change of opinion. The power conferred under Section 147 is not one of review and is of reassessment for reasons recorded. These reasons recorded has to emanate from some material coming to the notice of the Assessing Officer after the original assessment; which is absent at this instance. On the ground of binding precedents, inter-parties, in the other assessment years as also on the ground of the reassessment proceedings being incompetent, we are of the opinion that the direction of the First appellate Authority on the issue of Section 80(IA), need not be touched. We affirm the order to that extent and the consequences flowing from the said directions necessarily follow. Hence there would be no purpose served in remanding those two issues. What remains is the expense incurred for maintaining Mammen Mappilai Hall. The expenses is in the nature of salary paid to a sweeper for cleaning the premises. Though the Hall is in the name of the founder of the assessee, it is not owned by the assessee. The claim is that in keeping the Hall clean the assessse's business gets enhanced good will. A similar claim for business expenditure, was held to be not permissible in a binding precedent in the assessee's own case for another assessment year; reported Malayala Monorama Co.Ltd. v. CIT [2005 (12) TMI 67 - KERALA HIGH COURT]. The amount is also only Rs. 2,45,33/- and there can be no dispute on quantum looking at the facts pleaded. Hence there is no reason for a remand. We answer the questions of law as framed by the Revenue in favour of the Revenue and against the assessee on the reasoning above. But the additions under Section 80(IA) will be as directed in the first appellate authority's order and the addition on deemed dividend stands reversed. The addition on the expenses incurred for Mammen Mappillai Hall stands sustained. The Income Tax Appeal is partly allowed.

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• 2018 (6) TMI 1283
  Disallowance under Section 14A - Expenditure incurred to earn exempted income - Held that:- 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. Since no such exercise has been undertaken by the assessing authority, the case calls for a remand - matter is remanded back to the Assessing Authority for re-computing the disallowance of expenditure, if any, under Section 14A of the Act, in accordance with law. Disallowance under Section 36(1)(viii) - profits and gains of business or profession for the purpose of claiming deduction of 20% thereof under Section 36(1)(viii) - Held that:- Section 36(1)(viii) of the Act talks of "profits and gains of business or profession" before making any deduction under this Clause and therefore, the amortization and depreciation in SLR investments already deducted from the profit earned by the assessee for the said year cannot be added back for the limited purpose of computing profits and gains of business or profession for the purpose of Section 36(1)(viii) so as to claim a higher deduction of 20% under the said provisions. The artificial increase of the profits by adding back amortization and depreciation in SLR investments by the assessee as done by it before the assessing authority was not justified and therefore, the authorities below appear to be justified in reducing the said deduction, ignoring the said adding back of the amortization and depreciation in SLR investments. The said deduction has to be restricted to 20% of profits of banking business as computed by the assessing authority. Therefore, the contention raised by the assessee in this regard in the present appeals before us is not sustainable.

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• 2018 (6) TMI 1282
  Addition made u/s 68 - onus to discharge the burden so cast upon assessee - Held that:- The proviso to section 68 of the Act was introduced by the Finance Act, 2012 w.e.f. 01/04/2013, thus, it would be effective only from Assessment Year 2013-14 onwards and not to the earlier years. The legislature did not introduce the proviso to section 68 of the Act with retrospective effect nor does the proviso so introduce states that it was introduce ‘for removal of doubts’ or that it is ‘declaratory’, therefore, it is not open to give it to retrospective effect by proceeding on the bases that the addition of proviso to section 68 is immaterial. Thus, we find merit in the argument of the ld. counsel for the assessee. All documents submitted neither disproved by AO nor any evidence was brought on record to falsify the claim of the assessee or the authenticity of these documents. Thus, it can be said that the assessee discharged its onus as provided under section 68 of the Act. The interest was paid through banking channel by the assessee on such loans. It is also noted that so far as the disallowance of interest portion is concerned, the same was deleted by the ld. FAA and has not been challenged before this Tribunal by the Revenue further fortifies the case of the assessee. The loans were repaid along with interest before the date of survey i.e. 17/10/2014 and no cash was found during survey further fortifies the claim of the assessee. All the concerned parties appeared before AO during remand proceedings, AO recorded their statement and nothing adverse was pointed out even Shri Pravin Jain himself appeared before the Ld. Assessing Officer and even during remand proceedings enquiries were carried out and no adverse remark was made by the ld. Assessing Officer. The assessee as well as the other parties furnished all possible documents evidencing that the loans are not bogus. No cash was found deposited in the accounts of alleged six parties, thus in the presence of plausible explanation by the assessee, relevant material, and requirement of fulfillment of ingredients, enshrined in section 68 of the Act, we find that onus cast upon the assessee has been duly discharged - decided in favour of assessee

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• 2018 (6) TMI 1281
  Penalty u/s. 271(1)(b) - validity of notice - non recording of satisfaction - Held that:- In case of any failure to submit desired details, penalty would be levied but the necessary statutory satisfaction u/s. 271(1) of the I.T. Act that the assessee has failed to comply with the notices and the AO was satisfied to initiate the penalty proceedings has not been recorded anywhere. As further submitted that a proposal to initiate penalty proceedings is not equivalent to recording a satisfaction which is the post failure and not with the a preposition if failed to . Also on perusing the order sheets entries do not show issuance of any notice u/s. 274 read with Section 271(1) of the Act or of recording of any such satisfaction. The penalty imposed by the AO and confirmed by the Ld. CIT(A) is not sustainable in the eyes of law, hence, the same is deleted and appeal of the Assessee stands allowed. Following the consistent view taken in assessment year 2008-09 as aforesaid, the penalty involved in other appeals in respect of assessment years 2009-10 to 2014-15 also stand deleted - Decided in favour of assessee.

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• 2018 (6) TMI 1280
  Income from house property - Enhancing the ALV of the let out property - claim deduction of service tax from rental income - deduction of expenses towards professional charges against processing of loan application - Held that:- The claim of assessee has been supported by opinion/report of M/s. Atharva Land Developers who have determined fair rent against which Ld. CIT(A) has not brought any report of expert. So, it could not be disputed. In the case of assessee and lessee, the rent paid in earlier year have not been disputed by the Revenue Authorities - we are of the view that the lessee has paid fair reasonable rent to the assessee. Therefore, there were no basis to enhance the fair rent paid by lessee to the assessee-company. We, accordingly, set aside the orders of the Ld. CIT(A) and delete enhancement in rent made CIT(A) while enhancing rental income, did not decide the issue of service tax paid by assessee. Ld. CIT(A) admitted the additional evidences which are service tax paid by the assessee through challan and service tax returns filed for assessment year under appeal. It would support the explanation of assessee that assessee paid service tax for assessment year under appeal, out of rent received from the lessee because there were no mention of the service tax in the rent agreement. Since the service tax is a liability upon the assessee-company which have been discharged as per Service Tax Act, therefore, it is an allowable deduction in favour of assessee, because in the service tax, assessee has no right to claim it as a rent. The authorities below were, therefore, not justified in making addition - decided in favour of assessee Disallowance of interest on borrowed funds - Held that:- Assessee has given complete details before CIT(A) to show how much own funds are available to assessee and how much amounts have been borrowed from the Bank and other institutions. The assessee claimed that the borrowings as on 31.03.2010 were only Rs. 25,13,58,904/-, on which, above interest have been paid. The assessee has invested a sum of Rs. 43,46,57,917/- in the school land and building. This itself proves that assessee utilized the entire borrowed funds for construction of school building. Learned Counsel for the Assessee also referred to page-10 of the synopsis to show bifurcation of the land and building of the demise property and other assets and submitted that the other net addition on other assets in assessment year under appeal is only Rs. 60,35,902/- which is not disputed by the CIT(A), because, such Schedule-5 of the fixed assets was also filed before authorities below. He has, therefore, rightly contended that the entire borrowed funds have been used for the purpose of acquisition and construction of the school building. Similar deduction of interest claimed in earlier year not disputed by authorities below. Therefore, interest is allowable - decided in favour of assessee Addition on account of professional charges paid to IDFC - assessee claimed professional charges paid to IDFC for processing of loan application - disallowed as business expenditure - Held that:- CIT(A) confirmed this addition because assessee has not filed any evidence to show that professional charges claimed were towards loan which was actually utilized for assets yielding rental income. Learned Counsel for the Assessee submitted that the service fees or other charges falls in the definition of interest under section 2(28A) of the I.T. Act. Therefore, it is an allowable deduction under section 24(b) of the I.T. Act. However, it is a fact that assessee has not filed any evidence to show that professional charges claimed were towards loan which was actually utilized for assets yielding rental income. There is no infirmity in the orders of the authorities below. This ground of appeal of assessee is dismissed.

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• 2018 (6) TMI 1279
  Disallowance of foreign exchange fluctuation loss - mark to market loss - Held that:- Scope of the Assessing Officer’s verification in the instant consequential round of proceedings was very much a limited one. He had only to verify the impugned mark to market loss as not to have arisen from derivatives or in capital field. There is hardly any quarrel on such DRP’s directions are binding on an Assessing Officer u/s 144C(10) - DR to pin point any specific material on record indicating the assessee either to have claimed the loss in question from derivatives or in capital field. There is no such cogent material in the case file. Emerges that the assessee’s above extracted heads of foreign financial instruments are in revenue field. It appears to have already followed netting method in computing the impugned losses. Conclude that the CIT(A) has rightly held the assessee’s impugned mark to market loss incurred on foreign exchange fluctuation to be allowable. TDS u/s 194H - non deduction of tds - Held that:- The fact remains that the DRP had issued a clear cut direction that TDS in question had to be deducted @ Rs. 17 per card coming to Rs. 33,71,771/- only which has already been upheld. The said findings have attained finality. No reason to interfere with the CIT(A) action deleting the impugned disallowance in tune thereof. The Revenue’s latter substantive ground is also rejected accordingly.

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• 2018 (6) TMI 1278
  Withholding of tax u/s 195 - section 40(a)(i) disallowance - scope of taxation of fee for technical services - Benefit of Most Favoured Nation (MFN) in the absence of correspondence notification - entitled to claim benefit of India Portugal Double Taxation avoidance agreement restricting the scope of taxation of fee for technical services to be automatically applicable in Indo-Sweden DTAA - whether or not the CIT(A) has rightly held the relevant restricted assessment of fee for technical services in India-Sweden DTAA as stipulated in India Portugal DTAA even in absence of a corresponding notification? - Held that:- A coordinate bench in DCIT vs ITC Ltd [2001 (12) TMI 196 - ITAT CALCUTTA-A] has already held that a protocol to DTAA is indispensable part of the treaty in question with same binding force as the main clauses carry Hon’ble Delhi high court’s recent decision in Steria (India) Ltd vs CIT [2016 (8) TMI 166 - DELHI HIGH COURT rejects Revenue’s similar grievance in terms of India and France DTAA importing relevant corresponding articles of Indo-UK DTAA regarding taxation fee for technical services. The Revenue’s plea therefore that such benefits can be imported from Indo-Portugal DTAA to Indo-Sweden DTAA only after necessary notification u/s 90(1) of the Act is devoid of merit since the protocol itself makes it clear that the said ‘MFN’ clause “shall apply” in India-Sweden DTAA. Issuance of a notification has nowhere been stipulated as a condition precedent therein. Section 90(1) is very clear that only a DTAA would be notified and not the application of such a ‘MFN’ clause. The Revenue’s next argument seeking to place reliance on section 9(1)(vii) Explanation does not carry any substance since the assessee is already covered under the relevant beneficial provisions of a DTAA . The Revenue has therefore failed to prove that assessee’s recipient was assessable to tax in India qua the impugned payments under Chapter-XVII of the Act. Hon’ble apex court’s landmark decision in GE India Technology Centre Pvt. Ltd. Vs CIT [2010 (9) TMI 7 - SUPREME COURT OF INDIA] settles the law that liability to deduct TDS applies only in case the payment in question is assessable to tax in overseas recipient’s hands in India under the provision of the Act. CIT(A) has rightly deleted the impugned disallowance u/s 40(a)(i) of the Act. - decided in favour of assessee

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• 2018 (6) TMI 1277
  Penalty levied u/s 271(1)(c) - addition after rejecting the books of accounts u/s 145(3) on estimated net profit @ 8% - Held that:- When the assessee has not been specifically made aware of the charges leveled against him, as to whether there is a ‘concealment of income or furnishing of inaccurate particulars of income’ on his part, the penalty u/s 271(l)(c) of the Act is not sustainable. Assessing Officer has failed to make out his case by proving on record that the assessee has concealed particulars of income or has furnished inaccurate particulars of such income, rather proceeded to levy the penalty merely on the basis of addition made by the Assessing Officer while framing u/s 143(3) on the basis of estimated net profit of 8% by rejecting the books of accounts. So, we find that penalty levied by the AO and confirmed by the Ld. CIT(A) is not sustainable, hence ordered to be deleted. See Commissioner of Income Tax Kanpur vs. M/s Dee Control and Electric Pvt. Ltd. [2018 (1) TMI 454 - ALLAHABAD HIGH COURT]

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• 2018 (6) TMI 1276
  TDS u/s 195 - withholding of tax - payments made for installation and commissioning of certain equipment purchased by the assessee - fees for technical services under section 9(1)(vii) - services provided by Teems Electric Co Inc USA - whether the TEI, i.e. the US entity to which the payments were made by the assessee company, was entitled to the benefits of Indo US tax treaty? - Held that:- The matter should be remitted to the file of the CIT(A) for fresh adjudication, inter alia, after (i) giving the assessee a fresh opportunity of furnishing evidences not limited to, but including, the tax residency certificate under section 90(4), in support of US entity’s entitlement to the benefits of Indo US tax treaty benefits; (ii) taking into account the information furnished by the assessee with respect to the time spent by the representatives of the US entity and all such other information and submissions as may be filed by the assessee; and (iii) giving the assessee yet another opportunity of hearing while giving effect to these directions. As the matter is being remitted to the file of the CIT(A) for fresh adjudication, inter alia, on the fundamental aspect of treaty entitlement, it would not be appropriate for us to deal with other questions with respect to the treaty provisions which seem to academic as on this stage. We cannot address ourselves to such academic issues.

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• 2018 (6) TMI 1275
  Chargeability of gains earned on sale of securities under the head ‘Capital Gains’ or ‘Business Income’ - Port Folio Management Services are availed by the assessee in earning such gains - Held that:- The volume and frequency of transactions sought to be made out by the Assessing Officer with regard to the impugned activity stands on an entirely different footing and is quite distinct from the activity of trading in shares carried out by the assessee. In fact, it is notable that in the share trading business carried on by the assessee, he has carried out certain speculative and trading activities and that in the case of a PMS provider, such activities are prohibited in law. Having regard to the aforesaid discussion by the Commissioner of Income-tax (Appeals), which is borne out of the record, we, therefore, find no reasons to uphold the plea of the Assessing Officer on the basis of the volume and frequency of transactions. It is undisputed that the assessee has been consistently employing the services of PMS – Kotak Securities Ltd. for augmenting the value of securities and the same are shown under the head ‘Capital Gains’. The pattern of investment is one and the same in this year also. Assessing Officer disturbed the assessee’s claim by treating the said income as taxable under the head ‘Profits and Gains from Business or Profession’. On similar facts, relying on the Pune Bench decision in the case of Shri Apoorva Patni Vs. Addl.CIT [2012 (9) TMI 828 - ITAT, PUNE], the CIT(A) granted relief to the assessee by holding that when the income earned by the assessee out of investments in securities using specialized professional services of PMS – Kotak Securities Ltd., such income becomes taxable under the head ‘Capital Gains’ and the same should not be construed as ‘Business Income’. - Decided against revenue

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• 2018 (6) TMI 1274
  Denial of deduction u/s 54 - income offered in the revised return of income - Held that- There is no dispute to the fact that both the conditions imposed under section 139(5) stood complied in case of revised return of income filed by the assessee. There is no bar / restriction in the provisions of section 139(5) of the Act that the assessee cannot file a revised return of income after issuance of notice under section 143(2) of the Act. It is trite law, the assessee can file a revised return of income even in course of the assessment proceedings, provided, the time limit prescribed under section 139(5) of the Act is available. That being the case, the revised return of income filed by the assessee under section 139(5) of the Act cannot be held as invalid. When the assessee has made a claim of deduction under section 54 of the Act, it is incumbent on the part of the Departmental Authorities to examine whether assessee is eligible to avail the deduction claimed under the said provision. The Departmental Authorities are not expected to deny assessee’s legitimate claim by raising technical objection. In view of the aforesaid, we set–aside the impugned order of the learned Commissioner (Appeals) and restore the issue to the file of the Assessing Officer for examining and allowing assessee’s claim of deduction under section 54 of the Act subject to fulfillment of conditions of section 54 of the Act. Grounds raised are allowed for statistical purposes.

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• 2018 (6) TMI 1273
  Disallowance u/s.40A(3) - cash payment against purchase of old gold ornaments under auction - As per the assessee, identity of the person to whom he had made the payments were established and genuineness of the purchases were not doubted. - Held that:- No doubt if an assessee is able to demonstrate a situation which compelled it to make payments in cash, then application of Section 40A(3) of the Act might be excused. However as mentioned by us, assessee before us has been unable to demonstrate any such situation, which could convince us to exempt him from application of rigours of Section 40A(3) of the Act. We therefore do not find any reason to interfere with the orders of the lower authorities. - Decided against assessee.

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• 2018 (6) TMI 1272
  Scrutiny assessment - whether notice u/s. 143(2) was issued within time or not for selection of scrutiny, in these batch of appeals? - special audit u/s. 142(2A) - Both the parties have referred to the interim orders of the Hon'ble High Court dt. 23-02-2012 and also orders of the Hon'ble High Court dt. 10-06-2014 to submit that the proceedings are stayed limitedly u/s. 142(2A), as per assessee and all the proceedings including proceedings u/s. 143 by the Revenue. - Held that:- CIT(A) has only gone by the issuance of notice probably on a remand repsort sent by AO. Revenue has not raised the contentions of stay granted by the Hon'ble High Court and period that has to be excluded before the Ld.CIT(A). Consequently, Ld.CIT(A) had no opportunity to examine this issue. It is necessary to examine the prayer made before the Hon'ble High Court in the writ petitions, the orders of the Hon'ble High Court and also to examine whether the period of stay granted by the Hon'ble High Court will apply to the proceedings absolutely or not. Since these contentions have not been raised before the CIT(A) and raised for the first time before this forum, in order to examine these issues afresh on the basis of the record, we deem it fit to set aside the orders of the CIT(A) and restore the appeals to him to decide afresh - Grounds of Revenue as allowed for statistical purposes.

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• 2018 (6) TMI 1271
  Disallowance of freight charges - Held that:- Since the disallowance was made on estimate basis without any basis and as assessee could prove the genuineness of expenditure, we do not see any reason to differ from the findings of Ld.CIT(A). There is no merit in the contentions of Revenue. The grounds are dismissed. Addition of notional gain on freight expenses - Held that:- In the present case there is no denial that the amount of Rs. 85.23 crores borrowed was utilized for acquisition of capital assets. This being admitted position the exchange fluctuation can only be adjusted to the asset accounts by reducing the carrying amount of the fixed assets. It cannot be taxed as income - It is to be noted that in the next A.Y. 2009-10 there was a loss due to fluctuations in foreign exchange on the loans borrowed for acquisition of assets. The AO has not allowed this loss as deduction. There cannot be one method if the fluctuations result in reduction of liability and a different treatment if the fluctuations result in a higher liability. The fact that the liability increase due to exchange fluctuations in the next year has not been treated as allowable expenditure is relevant, for the purpose of determining whether the reduction in liability due to exchange fluctuations on amounts borrowed for acquisition of assets could be assessed as income in the year under appeal. The treatment in terms of taxation has to be uniform at all times - AO is directed to delete the disallowance Issue of Prorata premium - Held that:- Similar issue was considered by the Hon'ble Supreme Court in the case of Madras Industrial Investment Corporation Limited Vs. CIT [1997 (4) TMI 5 - SUPREME COURT] as held that since the entire liability to pay the discount had been incurred in the accounting year in question, the assessee was entitled to deduct the entire amount in that accounting year. This conclusion was not justified looking to the nature of the liability. It was true that the liability had been incurred in the accounting year. But the liability was a continuing liability which stretched over a period of 12 years. It was, therefore, a liability spread over a period of 12 years. In fact, allowing the entire expenditure in one year might give a very distorted picture of the profits of a particular year. Issuing debentures at a discount is another such instance where, although the assessee has incurred the liability to-pay the discount in the year of issue of debentures, the payment is to secure a benefit over a number of years. There is a continuing benefit to the business of the company over the entire period. The liability should, therefore, be spread over the period of the debentures. The appellant, therefore, had, in its return, correctly claimed a deduction only in respect of the proportionate part of discount over the relevant accounting period in question. - decided against revenue

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• 2018 (6) TMI 1270
  Addition of interest expenses under the provision of Section 14A r.w.r. 8D.- sufficiency of own funds - Held that:- As the owned funds of the assessee exceed the amount of investment. In such facts and circumstances, a presumption can be drawn that the investment has been made out of the owned funds of the assessee. See THE COMMISSIONER OF INCOME TAX VERSUS RELIANCE UTILITIES & POWER LTD. [2009 (1) TMI 4 - BOMBAY HIGH COURT] -no disallowance of interest expense claimed by the assessee can be made under the provision of Section14A of the Act r.w.r. 8D of IT Rules - Decided in favour of assessee Addition on account of professional fees - services availed from Chartered Accountant about its investments activities - AO was of the view that such expenses are unreasonable as per the market rate - Held that:- The genuineness of the expenses has not been doubted. The payment was made through banking channel. However, as per the lower authorities, the expenses claimed by the assessee were unreasonable and exceeding market rate. However, before us, none of the lower authority has brought on record to justify the prevailing market rate for such consultancy fees. Thus, it appears that the disallowance has been made on the estimated basis on the surmises and conjuncture of the AO. In these circumstances, we are of the view that the estimated disallowance is not sustainable in the eyes of the law. See ANIMESH SADHU, C/O. SHRI SOMNATH GHOSH, ADVOCATE, VERSUS ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, AAYAKAR BHAWAN, DIST. HOOGHLY [2014 (11) TMI 1170 - ITAT KOLKATA] - we delete the addition made by the lower authorities - Decided in favour of assessee.

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• 2018 (6) TMI 1269
  Addition u/s. 68 - cash credit - assessee's onus to prove genuineness of the transaction - share capital and share premium - according to AO, the assessee has no track record or asset and has a nearly zero balance sheet with no visible future prospect, and wondered as to how it is asking for significantly high premium per share. - Held that:- the source of source of source is proved by the assessee in the instant case though the same is not required to be done by the assessee as per law as it stood/ applicable in this assessment year. The share applicants have confirmed the share application in response to the notice u/s 133(6) of the Act and have also confirmed the payments which are duly corroborated with their respective bank statements and all the payments are by account payee cheques. In this case on hand, the assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants, thereafter the onus shifted to AO to disprove the documents furnished by assessee cannot be brushed aside by the AO to draw adverse view cannot be countenanced. In the absence of any investigation, much less gathering of evidence by the Assessing Officer, we hold that an addition cannot be sustained merely based on inferences drawn by circumstance. To sum up section 68 provides that if any sum found credited in the year in respect of which the assessee fails to explain the nature and source shall be assessed as its undisclosed income. Both the nature & source of the share application received was fully explained by the assessee. The assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants. The PAN details, bank account statements, audited financial statements and Income Tax acknowledgments were placed on AO's record. Accordingly all the three conditions as required u/s. 68 i.e. the identity, creditworthiness and genuineness of the transaction was placed before the AO and the onus shifted to AO to disprove the materials placed before him. Without doing so, the addition made by the AO is based on conjectures and surmises cannot be justified. No addition was warranted under Section 68. - Decided against revenue.

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• 2018 (6) TMI 1268
  Addition u/s 68 - unexplained cash credit in the form of share capital issued by the assessee - CIT(A) has allowed the appeal of the assessee by holding that the assessee has discharged its onus by establishing the identity, creditworthiness and genuineness with regard to the transactions for allotment of shares - Held that:- The assessee had furnished complete details to the AO regarding the transactions in question, which include confirmation, share application form, copy of bank account and their permanent account number. These companies (except M/s Chhoti Leasing & Finance Pvt. Ltd.) are also not covered in the list given by Sh. Aseem Gupta in his statement as being used for providing accommodation entries. As per the statement of Shri Aseem Gupta, the bank account no. 252 of Corporation Bank of M/s Chhoti Leasing & Finance Pvt. Ltd. was used for providing accommodation entries whereas assessee has received the amount from bank a/c no. 5043 on 08.09.2005 as evident from his bank statement placed at page No. 62 of the paper book. By filing number of identity of these share applicants and the assessee has specifically requested the Assessing Officer to enforce the attendance of Director of these companies. The assessee has prima facie discharged the onus on it. Further the statement of Shri Aseem Kumar Gupta was not provided to the assessee and no opportunity to cross examine was also given in spite of the specific request of the assessee. Thus, not providing the opportunity to cross examine, there is a violation of principles of nature justice. The Hon'ble Supreme Court in the case of Andaman Timber Industries Vs. CCE [2015 (10) TMI 442 - SUPREME COURT] has clearly held that denial of opportunity to the assessee to cross examine the witnesses whose statements were made the sole basis of the assessment is a serious flaw rendering the order a nullity. - Decided in favour of assessee.

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• 2018 (6) TMI 1267
  Head Office Expenditure disallowance - undisclosed markup on the cost incurred by the Head Officer in UK - claim u/s 44C - Held that:- So far as addition made by the Assessing Officer on account of undisclosed markup on the cost incurred by the Head Office in UK is concerned, we are of the opinion that the income, if any that accrues on account of expenditure incurred by the Head Office, it will be the income of the Head Office and not the Indian Branch Office in view of the decision of the Delhi Bench of the Tribunal in the case of Education Australia Limited ( 2012 (11) TMI 89 - ITAT DELHI). For disallowance on account of section 44C Mumbai Bench of the Tribunal in the case of British Bank of Middle East (2005 (6) TMI 476 - ITAT MUMBAI) under similar circumstances has held that non-debiting of the expenditure in the books of account of India operations is not relevant for allowability of the same in the light of the law laid down in the case of Kedarnath Jute Mills Co. Ltd. (1971 (8) TMI 10 - SUPREME COURT). It has been held that as long as the expenditure is really incurred and is otherwise deductible, the deduction cannot be declined on the ground that it has not been debited in the books of account. Since in the instant case there is no dispute to the fact that the head office has incurred the expenditure for the Branch office, the genuineness of which has not been doubted and since the assessee has claimed the deduction u/s 44C of the I.T. Act in the computation statement, therefore, Assessing Officer is not justified in disallowing the claim merely for not debiting the same in the Profit & Loss Account - direct the Assessing Officer to allow the claim of expenditure u/s 44C and delete the addition on account of undisclosed mark up on the costs incurred by the HO in UK - Decided in favour of assessee

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• 2018 (6) TMI 1266
  TPA - selection of MAM - functional comparability - Held that:- The assessee in the present case has also applied internal TNMM method of comparison of operating margins for international transactions of purchase of raw material and components from associated enterprises as well as sale of finished goods effected to associated enterprises. On the basis of aforesaid benchmarking, the profitability under the AE segment was 6.31% which was higher than profitability of transactions under third party segment. Accordingly, we hold that no adjustment on account of arm's length price is required to be made in the hands of assessee. The grounds of appeal No.2 to 6 raised by the assessee are thus, allowed. Arm's length price of international transaction of payment made to the associated enterprises for availing IT services at Nil - held that:- We hold the international transactions of information technology services availed has to be aggregated with other transactions being intrinsically linked to other international transactions undertaken by the assessee during the year and the same has to be benchmarked applying internal TNMM method as in the case of other international transactions. Further, we also reverse the order of TPO in holding that the assessee has not availed any services in view of various documents filed by the assessee and also certificate of Eaton China, which was filed during the course of TP proceedings evidencing not only the availment of services but also the basis of cost for such services. Similar services were availed by other Eaton group entities from Eaton China and its certificate that the same has also charged at the same rates as charged to the assessee. In the entirety of the above said facts and circumstances, we reverse the order of TPO / Assessing Officer in taking the value of international transactions of Information Technology Services availed at Nil and delete the adjustment made. Allowing the claim of assessee, the ground of appeal No.8 raised by the assessee is thus, allowed.

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• 2018 (6) TMI 1240
  Disallowing the claim of expenditure by applying section 40A(3) - Held that:- The source of cash payments is clearly identifiable in form of the withdrawals from the assessee’s bank accounts and the said details were submitted before the lower authorities and have not been disputed by them. It is not the case of the Revenue either that unaccounted or undisclosed income of the assessee has been utilised in making the cash payments. Identity of the persons from whom the various plots of land have been purchased and source of cash payments as withdrawals from the assessee’s bank account has been established. The genuineness of the transaction has been established as evidenced by the registered sale deeds and lastly, the test of business expediency has been met in the instant case. In case of Harshila Chordia [2006 (11) TMI 117 - RAJASTHAN HIGH COURT], the consequences, which were to befall on account of non-observation of sub-section (3) of section 40A must have nexus to the failure of such object. Therefore the genuineness of the transactions and it being free from vice of any device of evasion of tax is relevant consideration. The intent and the purpose for which section 40A(3) has been brought on the statute books has been clearly satisfied in the instant case. Therefore, being a case of genuine business transaction, no disallowance is called for by invoking the provisions of section 40A(3) - Decided in favour of assessee

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• Customs

• 2018 (6) TMI 1258
  Classification of imported goods - Marble Slabs - Benefit of N/N. 4/2006-CE dated 01.03.2006 and N/N. 78/2006-Cus dated 08.08.2006 - Whether the goods are classifiable under Tariff Item No. 68022190 of CTA or under CTH 68022110? - Held that:- The Ministry of Finance, Department of Revenue vide DOF No.334/1/2012-Tru dated 16.03.2012 clarified that the benefit of CVD is available to Polished Marble Slabs of Chapter sub-heading No.6802 21 90 under N/N. 4/2006-CE. It is also clarified that the relevant exemption entry is being amended to specifically include Chapter sub-heading No.6802 21 90 vide N/N. 12/2012-Central Excise dated 17.03.2012. The N/N. 4/2006-CE dated 01.03.2006 extended concessional rate of CVD @ Rs. 30/- per square mtr. on marble slabs and it is classified under Chapter sub-heading No. 68022110. Appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2018 (6) TMI 1264
  Winding up of the company - bonafide defence to the claim of the petitioner - Held that:- Supreme Court, in the case of Madhusudan Gordhandas and Co.-vs.-Madhu Wollen Industries Pvt. Ltd. [1971 (10) TMI 49 - SUPREME COURT OF INDIA], held that the Court can refuse a petition for winding up of the company when the claim of the petitioner is bona fide disputed by the company. In other words, in the first place when the defence of the company is in good faith and one of substance, secondly, the defence is likely to succeed in point of law and thirdly, the company adduces prima facie proof of the facts on which the defence depends, the Court should refuse to admit the winding up application against the company. Considering the facts of the present case as find that the company has not been able to make out any bona fide defence to the claim of the petitioner, nor has it adduced any prima facie proof of the facts on which its defences depend. For all the foregoing reasons, this winding up application is admitted for Rs. 12,12,815/-. However, since the rate of interest claimed by the petitioner at the rate of 21%, per annum appears to be exorbitantly high and, as such, the same is reduced to 9%, per annum. Hence, hold that petitioning creditor is entitled to the sum of Rs. 12,12,815/-, together with interest at the rate of 9%, p.a. The winding up application shall be advertised once in the English newspaper, “the Statesman” and once in the Bengali newspaper, “Bartaman” by May 22, 2018. Publication in the Official Gazette is dispensed with

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• 2018 (6) TMI 1263
  Struck off the name of appellant company from the Registrar of Companies - non issue of notice - Held that:- Notices were issued to the appellant and two of its directors by speed post and sufficient proof has been submitted. As regards the argument of the appellant that no notice was served on 3rd director who was appointed on 1.3.2017 and duly intimated to ROC on 14.3.2017 is concerned, it is established that the notices has been issued on 17.3.2017 to the appellant company and on 30.3.3017 to two of its directors. The appellant who has appointed third director on 1.3.2017 and intimated ROC on 14.3.2017 that even if the company and its two directors having received the notices did not bother to respond to the notice so as to save the company rather than taking a plea that the third director who has been appointed only on 1.3.2017 and notified on 14.3.2017 had not been given a notice. When company has been served it is Notice to the Directors. Additionally, 2 of the 3 Directors had been served. It is substantial compliance and knowledge can be assumed. A notice on STK-5 under Section 248(1) of Companies Act, 2013 has been issued to 24338 companies including the appellant company intimating them the reasons for striking off/removal of their name from the register of companies and dissolve them unless a cause is shown to the contrary, within thirty days from the date of notice. Appellant company was given thirty days’ time to file their objection from the date of publication of notice. No objection has been filed by the company. A Public Notice in Form No.STK-5A was published in the English and Telugu newspapers for the information of the general public and concerned companies including the appellant company intimating them the reasons for striking off/removal of their name from the register of companies and dissolve them unless a cause is shown to the contrary, within thirty days from the date of notice. Appellant company was given thirty days’ time to file their objection from the date of publication of notice. The company having failed to respond to the opportunity which is in the public domain, therefore, the ROC in absence of any explanation received from the company or its directors had no alternative except to take consequent action i.e. to strike off the name of the company from the register of the companies. We find there was substantial and actual Notice. There is no reason to interfere. Appeal dismissed.

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• Insolvency & Bankruptcy

• 2018 (6) TMI 1262
  Corporate Insolvency Resolution Process - existence of default - petition filled by person authorized - Held that:- Clause 24 clearly authorized the power of attorney to act on behalf of the Bank in all matters incidental to or arising out of the bankruptcy or insolvency or any compromise or arrangement with the creditors. In pursuance thereof, he has signed power of attorney, pleadings and other papers. Even otherwise the general Power of Attorney is a widely worded document and it has various clauses empowering the attorney to file any proceedings before Courts or Tribunal. Therefore, it is established that the petition has been filed by a person authorized in accordance with law. The affidavit and the vakalatnama have also been signed by the aforesaid officer. In view thereof, we do not find any substance in the objection raised on behalf of respondent. In order to ascertain whether the default has occurred it will be profitable to read Section 3(12) of the Code which states that default means non-payment of debt when whole or any part of the instalment of the debt has become due & payable and that the same has not been repaid by the ‘Corporate Debtor’. In the present case, it has come on record eminently that the ‘default’ has occurred many a times. Therefore, it would not be such a substantial and a material factor warranting the dismissal of the application. The Resolution Professional shall have to proceed in accordance with the statement of accounts and other supporting evidence. The argument pressed to oppose the admission of the petition advanced on behalf of the Corporate Debtor cannot be accepted because the amount of default and unpaid debt as per the Statement of Accounts has been proved. Such a piece of documentary evidence result into a binding presumption. The Corporate Debtor has failed to rebut that legally binding presumption by producing any cogent documentary evidence to the contrary on record. Therefore, dispute concerning the Principal amounts shown in application as are different from amount given in account statements cannot conceded. The other arguments of the Corporate Debtor would also not cut any ice because during pendency of present application as well as after hearing the final arguments we have granted ample time to the Corporate Debtor to come forward and prevail upon the Financial Creditor to accept its offer. However, nothing could be achieved. We reserved the order and even during this interregnum period no fruitful result has come forward. Secondly the object of the ‘Code’ to resolve the insolvency issue and it could not be achieved merely by refusing to admit the petition. The resolution as against liquidation would only be possible if the Corporate Insolvency Resolution Process is triggered and efforts in that direction are made. Therefore, admission of the petition cannot be successfully resisted on such a flimsy ground.

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• 2018 (6) TMI 1261
  Initiation of Corporate Insolvency Resolution Process - existence of Pre-existing dispute - Held that:- A perusal of record shows that Corporate Debtor has not annexed any evidence which shows that they were unsatisfied with this visualization provided by Operational Creditor and it is the first time during reply to demand notice Corporate Debtor have stated that Operational creditor has not performed the work as per Agreement. Corporate Debtor failed to point out single evidence/correspondence email prior to reply to Demand Notice where this Tribunal could establish that there was Pre-Existing Dispute between the Operational Creditor and Corporate Debtor for non-performance of the work as per Agreement. There has been no pre-existing dispute before the issuance of demand notice between Operational Creditor and Corporate Debtor. The Operational Creditor had not received the outstanding Debt from the Corporate Debtor, and the requirements as prescribed under IB Code have been completed by the Petitioner thus we are of the view that this Petition deserves 'Admission'. We admit the petition u/s. 9 of the code declaring a moratorium for the purpose referred to in section 14 of the Code

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• 2018 (6) TMI 1260
  Corporate Insolvency Resolution Process - Whether there is an existing dispute between the parties before the present petition filed under I&B Code, 2016 - Held that:- There is no document to prove that there was a dispute between the parties, therefore while answering: Issue (i) - as conclude that the there is not any dispute between the Applicant and the Respondent in relation to the above said transaction. Issue (ii) - With regard to the application of principle of Res-Judicata to the present proceedings, it is on record that the Applicant has filed a winding up petition before the High Court and the same was transferred to this Tribunal on its constitution. It is also on record that on the failure of the Applicant (the petitioner therein) in submitting required information, the petition was abated as per the notification of Ministry of Corporate Affairs No. GSR 732(E) dated 29.06.2017 and in the same notification the parties are given liberty to file fresh petition under I & B Code, 2016, therefore, the submission that the principle of Res-Judicata is applicable to the present proceeding is unsustainable. Issue (iii) - With regard to the submissions of applicability of limitation to the present proceedings, it is on record that the Applicant has issued demand notice dated 24.05.2017 and thereafter the Respondent raised the dispute. In considered view, the notice has been issued within the period of three years of limitation i.e. from 13.08.2014, and there was a payment of Rs. 20,00,000/- on that day, and it was replied by the Respondent and therefore the submission that the present proceeding is barred by limitation is not accepted and unsustainable. In view of that answer the question above in negative. Issue (iv) - with regard to the question as to whether the Applicant has made out a case to invoke the jurisdiction of this Tribunal under I & B Code, it is on record that the Respondent owes money to the Applicant and the Respondent never disputed the same till the issuance of the demand notice dated 24.05.2017. The quality of the coal was never disputed by the Respondent and there is no document filed by the Respondent before this Tribunal. Therefore conclude that the Applicant has made out a case to initiating insolvency proceeding against the Respondent under I&B code 2016. Thus inclined to admit the petition as the Applicant has made out a case and also satisfied this Adjudicating Authority for admitting the petition. It is also proved that there is a debt due payable by the Respondent/CD and they have defaulted in making payments. The objections raised by Counsel for the Respondent are not convincing and valid ground for rejection of the instant petition and case laws are also not applicable to the facts and circumstances of the present case. The instant petition is admitted and order commencement of the Corporate Insolvency Resolution Process which shall ordinarily get completed within 180 days, reckoning from the day this order is passed - direct the Registry to take up the matter with the Insolvency & Bankruptcy Board of India (IBBI) for appointing a Interim Resolution Professional (IRP) as the Applicant has not proposed any name of the IRP to be appointed.

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• 2018 (6) TMI 1259
  Corporate insolvency process - 'existence of dispute’ - Application was not filed directly by the ‘Operational Creditor’ but by its Company Secretary - Held that:- As the Appellant requested to allow the Appellant to file another Application under Section of 9 ‘I&B Code’, however, permission cannot be granted as the application filed by the Appellant has been dismissed also on the ground of existence of a dispute, even prior to the issuance of the demand notice sub-Section (1) of Section 8 of the ‘I & B Code’. Respondents brought to the notice of the Adjudicating Authority certain disputes which were also supported by e-mail dated 13th May, 2015 which were marked as Annexure R-4. Other documents were also brought to the notice to the Adjudicating Authority. In reply, learned Counsel for the Appellant referred to a letter dated 2nd April, 2016 issued by an Advocate on behalf of the Appellant but such stand has been disputed by the Respondent. Even after dispute of the amount if certain amount is admitted by the Respondents but has not paid such amount the Appellant may prefer application under Section 9 after notice to the Respondent under Sub-Section (1) of Section 8 of the I & B Code giving a reference to such undisputed debt, if defaulted - Allow the Appellant to move before the appropriate forum in respect of the admitted dues if any.

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• Service Tax

• 2018 (6) TMI 1257
  Penalty u/s 78 - absence of mens rea or not? - appellant has neither paid service tax nor filed statutory ST-3 returns - Held that:- Merely the payment of service tax by the appellant before the filing of appeal before the Commissioner (Appeals) did not establish the absence of mensrea on the part of the appellant. Had the appellant acted under bonafide belief, then they ought to have cooperated in the investigation. But it has come on record that they did not corporate with the department nor produced the record for quantification of service tax liability - appellant also failed to produce any document to prove their bonafide believe or to show that they did not collect the amount of service tax from their clients - penalty upheld - appeal dismissed - decided against appellant.

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• 2018 (6) TMI 1256
  Business Support Service - sharing of infrastructure with doctors - portion of the fee collected by the appellant and retained by them - Held that:- The issue herein have been decided in favor of the appellant for the previous period in the case of M/S SIR GANGA RAM HOSPITAL, BOMBAY HOSPITAL & MEDICAL RESEARCH CENTRE, APPOLLO HOSPITALS, M/S MAX HEALTH CARE INSTITUTE LTD VERSUS CCE DELHI-I, CCE&ST INDORE, CCE&ST RAIPUR, CST NEW DELHI AND CST DELHI VERSUS M/S INDRAPRASTHA MEDICAL CORPORATION LTD [2017 (12) TMI 509 - CESTAT NEW DELHI], where it was held that There is no legal justification to tax the share of clinical establishment on the ground that they have supported the commerce or business of doctors by providing infrastructure - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1255
  Services for Transmission of electricity - Benefit of N/N. 11/2010 dated 27/02/2010 - denial on the ground that the appellant is also setting up infrastructure under the supervision of engineer of the contracted – MPPKVV Company Ltd. for transmission of electricity - Held that:- The work done by the appellant is admittedly exempt under N/N. 32/2010-ST readwith N/N. 45/2010-ST and N/N. 11/2010-ST. - Tribunal in the case of Noida Power Co. Ltd. [2013 (8) TMI 746 - CESTAT NEW DELHI], held that any activity or service like erection, commissioning and installation of transmission towers and meters as also technical testing and analysis would constitute the activity of transmission and distribution by the service provider to the service receiver. And such service would be squarely covered under exemption provided under this notification. The appellant is entitled to the exemption benefit under the Notification, in question, and the work done by them being in the nature of work towards transmission of electricity, they are not liable to service tax for the same - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1254
  Rectification of Mistake Application - As the appellant had not been provided upon documents by the court below, no reply to the show cause could be filed. The Original Authority have passed practically ex parte order in clear violation of principles of natural Justice. Thus they were not given proper opportunity for hearing and for explaining the case - Held that:- In the impugned order-in-original, which are been passed ex parte, the learned Commissioner did not provide the relied upon documents and further without providing adequate opportunity of hearing have passed the impugned order-in-original in hot haste, thus violating the principles of natural Justice - Accordingly, we recall the Final Order dated 1.11.2017 and allow this miscellaneous application for rectification of mistake - ROM application allowed.

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• 2018 (6) TMI 1253
  Interpretation of Statute - Rule 6 (7B) of the Service Tax Rules, 1994 - consolidated invoice issued covering all the transactions in a particular month - Whether law permits different service tax liability of the banks in case of its transaction with a merchant or with another scheduled bank? Held that:- It is seen that the CBEC, vide their Circular dated 05/06/2015, has instructed the field formations, for the period 16/05/2008 to 06/07/2009, to accept the consolidated invoice for purposes of levy of Service Tax. Since this is a beneficial clarification to the respondent, the benefit of such clarification is extendable to the respondent even for the disputed period. There is no infirmity in the order passed by the lower Authority in taking the view that the consolidated invoice shows the amount of consideration on which Service Tax has been paid - appeal dismissed - decided against Revenue.

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• Central Excise

• 2018 (6) TMI 1252
  Maintainability of appeal - refund of unutilized CENVAT Credit - tribunal remanded back the matter to examine the facts - 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 1251
  Refund of additional duty of Excise - duty paid under protest - entire facts not discussed - principles of Natural Justice - Held that:- The Ld.Commissioner (Appeals) has passed a purfuctionery order without discussing the complete facts in the background of the judicial precedence in the matter. Therefore, the entire matter needs to be looked into by the adjudicating authority - Appeal allowed by way of remand.

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• 2018 (6) TMI 1250
  Clandestine removal - demand primarily based upon consumption of electricity - The entire case of the Revenue is based upon the records recovered from M/s Monu Steels and based upon the statement of the representative of M/s Monu Steels as also the appellant’s Director - Held that:- The law i.e. as to whether the third party records can be adopted as an evidence for arriving at the findings of clandestine removal, in the absence of any corroborative evidence, is well established - Reference can be made to Hon’ble Allahabad High Court decision in the case of Continental Cement Company Vs. Union of India [2014 (9) TMI 243 - ALLAHABAD HIGH COURT], where it was held that the findings of clandestine removal cannot be upheld based upon the third party documents, unless there is clinching evidence of clandestine manufacture and removal of the goods - demand cannot be upheld. A part of the demand stands confirmed on the basis of shortages in the stock of the final product detected by the officers during the course of their visit to the factory on 6.6.2008 - Held that:- The law is settled that such shortages, by themselves, cannot lead to the findings of clandestine removal in the absence of any evidence to show the manufacture and transportation and clearance as also the identification of the buyers - demand set aside. Penalty on Director - Held that:- Inasmuch as the demands confirmed against the manufacturing unit stands set aside along with setting aside of penalty, the penalty on the Director is also required to be set aside - penalty set aside. Appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1249
  Reversal of CENVAT credit - writing off of raw materials/packing materials - case of Revenue is that admittedly the order of the Assistant Commissioner, in the operative part, has nowhere specified dropping of the demand in respect of reversal of Cenvat credit in respect of written off of raw materials and packing list - Held that:- The adjudicating authority, may verify the figures again. If according to the ld. Advocate, the figures are correct, the adjudicating authority would pick up the same figures again and there is no harm in verification of the same - It is also a fact that in the operative part of the order, the original adjudicating authority has not referred to dropping of demand. In such a scenario, I deem it fit to uphold the impugned order of Commissioner (Appeals) vide which he has remanded the matter for fresh verification of the figures. Penalty - Held that:- It is not a case of any mala fide and the said demand stands arisen on account of calculation errors. In such a scenario, imposition of penalty upon the appellant is not justified. Appeal disposed off.

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• 2018 (6) TMI 1248
  Reversal of CENVAT Credit - Rule 6(3) of CCR, 2004 - manufacture of taxable as well as exempt goods - non-maintenance of separate records - Held that:- It is admitted fact that the appellants have reversed the proportionate Cenvat credit attributable to the turnover of natural gas an exempt product on 1st Sept. 2014 and 24th Jan. 2015. As regards the retrospective effect of the amended provisions under Rule 6(3), with effect from 1.3.2016, which enables an assessee to reverse the proportionate credit attributable to exempt turn over, the same stands adjudicated in favour of the assessee by Hon’ble Gujarat High Court in CCE Vs. Rituraj Holdings Pvt. Ltd. [2013 (2) TMI 34 - GUJARAT HIGH COURT], wherein the Hon’ble High Court have held that the provisions for reversal are retrospective or sub-rule 7 of Rule 6 have got retrospective effect. Demand set aside - penalty set aside - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1247
  CENVAT credit - input services - port Services - General Insurance Business Service - Commercial/Industrial Construction Service - Rent-a- cab service - Works contract service - extended period of limitation - Held that:- As regards port services, Admittedly, the availment of cenvat credit has been shown by the appellant in their regular ER-1 returns and there is no separate column for segregating the cenvat credit availed by them service vice - extended period not invokable - demand set aside. General Insurance Business Service - place of removal - Held that:- Admittedly, the said service has been availed by the appellant for transportation of goods from their factory gate to port of export and in case of export, the port of export is the place of removal - credit allowed. For remaining services, the appellant has already reversed the cenvat credit, therefore, the same is not considered by this Tribunal at this stage for denial or availment of cenvat credit. Penalties are set aside. Appeal disposed off.

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• 2018 (6) TMI 1246
  CENVAT Credit - credit availed on the basis of the invoices only issued by the registered dealer without actually receiving the inputs - the entire case of the revenue is based upon the sole fact that the goods/ inputs were described in the dealer’s invoice as ‘polythene film’ whereas the same was mentioned in the appellants material receipt advice as ‘HDPE cloth’ - Held that:- Admittedly, the appellants final products are cleared in packed condition either in HDPE cloth or in polythene film. The appellants by producing invoices for earlier periods have established that their final product was being packed in cloth prior to the period in question. The revenue has not advanced any evidence of purchase of HDPE cloth during the relevant period so as to establish that it was cloth which was being used for packing even subsequent to 2008 - Admittedly, the appellants were also entitled to credit in respect of HDPE cloth and as such there could be no malafide motive on their part to receive the cloth in the guise of polythene film. Appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1245
  Clandestine removal - no detailed investigation carried out - principles of Natural justice - Held that:- No detailed investigations have been carried out against the Appellant by the department other than a statement recorded against V.P. Goswami, Senior Manager, Sales - Since the entire proceedings against M/s Devi Industries stands already set aside, the case made against the Appellant cannot be sustained only on the basis of the confessional statement of Shri Goswami. Clandestine removal is a very serious charge and is required to be supported by the department with tangible evidence - In the present case, no tangible evidence has been gathered by the department. It is a settled position of law that in the absence of detailed supporting evidence, the charge of clandestine removal cannot be upheld. Appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1244
  SSI Exemption - demand for duty has been raised by Revenue by working out the total turn-over in various years on the basis of the copies of invoices, as well as the kacha parchies recovered during search - The main grievance of the appellant is that a flat discount at the rate of 30% has been extended from the MRP found in the price-list of the appellant. It is argued that benefits in the range of 30-80% has been extended by the appellant in respect of various products. Held that:- The appellant has submitted only a table indicating discounts ranging from 30 to 80% claiming to be extended for various clearances made under kacha parchies. In the absence of any other documents evidencing the grant of such discounts, we are unable to accept the argument of the appellant - appeal dismissed - decided against appellant.

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• 2018 (6) TMI 1243
  Benefit of N/N. 6/2002-CE dated 01.03.2002 serial no. 237 read with list no. 9 under serial no. 16 and 21 of the said list - manufacture of weighing machines and conveyors - case of Revenue is that as per notification, the exemption is available only if the parts are captively consumed, therefore appellant not eligible for benefit of notification - Held that:- Since the show-cause notice has no allegation relating to Sl.No.16 of List 9 ibid and only seeks to deny exemption in terms of Item No.21 of the List 9 ibid, the allegations in the show-cause notice are not sustainable since the claim of the appellant on the basis of certificate issued by NCEDCAP is for exemption under Sl. No. 16 of List 9 of the said notification. This Tribunal in the case of Rachitech Engineers Pvt. Ltd. [2015 (6) TMI 823 - CESTAT NEW DELHI] had examined the question whether the chimneys manufactured by the appellant in that case and meant for bio-mass burning boiler were a part or device in the context of N/N. 6/2002-CE, where it was held that the device is a thing made for a particular purpose and as such the chimney meant for biomass fired boiler has to be treated as non-conventional energy device and hence benefit of notification allowed. The weighing machines and conveyors being integral part of Bio Gas Combustion Co-Generation Power Project as certified by the Managing Director of NCEDCAP has to be treated as non-conventional energy device in terms of item No.16 of list 9 of Sl.No.237 of N/N. 6/2002-CE. - appeal allowed - decided in favor of appellant.

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• 2018 (6) TMI 1242
  Valuation - mention of two MRPs - intimation/declaration filed with Department or not? - demand of duty with interest and penalty - time limitation - Held that:- The appellant had filed two price declarations: one for clearance at MRP of Rs. 471/- all over India and the second for clearance at MRP of Rs. 390/- for some states in Northern Region. The second declaration for clearance at MRP of Rs. 390/- has been acknowledged by the Inspector of the Dept on 8.3.2001 - the allegation of the Dept. that there was no intimation or declaration filed with the Dept. is incorrect. Since there were two price declarations, one for all India and another for Northern states at the MRP of Rs. 471/- and Rs. 390/- w.e.f. 8.3.2001 respectively, the authorised signatory had mentioned the facts correctly - there is no substance in the Revenue’s contention that there was mala fide intent. Demand not sustainable both on merit and on limitation - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2018 (6) TMI 1241
  Revision of returns - KVAT Act, 2003 - The assessee's application for revision was kept without any action and hence the assessee was before this Court - Held that:- The sole prohibition as available in the various Sections is only against revision of returns when the dealer has been proceeded against for a defalcation or offense. This is specifically to not enable a dealer who had by his contumacious conduct attempted evasion, to wriggle out of the consequences of penalty. When there is a penal proceeding initiated, permission of revision of return, incorporating such figures in the return, which would efface the offense thus absolving the dealer from the liability of penalty, is alone prohibited. The other provisions above referred, which permits revision of returns, are enabling provisions facilitating such revision on specified contingencies within a time limit. Merely based on the said enabling provision, there cannot be inferred an interdiction or prohibition from filing a revised return in circumstances where a mistake is detected after the period specified. The enabling provision mandates that on a revision of return being attempted to as provided therein, the Assessing Authority is obliged to accept it. At the risk of repetition, it has to be stated that there is no prohibition in attempting a revision of return after the time specified, if no penal proceeding is initiated. Appeal dismissed.

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