Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
June 28, 2018
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
-
Exemption u/s 11 - microfinance activity - By collecting interest at such a higher rate the assessee has deviated from its objective of doing charity - the action of the lower authorities in denying exemption u/s. 11 confirmed.
-
TDS u/s 194C - liability to deduct tax at source on the payments made to developers/contractors - the payments for the purchase of the sites was calculated on sq. ft. area of the property - contract for purchase of property cannot be equated with works contract.
-
Addition of unverifiable purchase - The onus is on the assessee to explain when & how the cash has been paid for purchase from gray market and it is for the assessee to explain availability of cash in books of account.
-
Benefit of Section 11 & 12 - the assumption of the AO that the expenditure incurred through credit card was personal, is not correct.
-
Addition u/s 68 - non independent application of mind - accommodation entries - share application money - Mere non production of Director of said share holder company cannot justify adverse inference u/s 68
-
Penalty proceedings u/s.271(1)(c) - This judgment of Hon'ble Supreme Court had come after the closure of the financial year 31st March, 2009. Thus, at the time of filing of return of income assessee did have a bonafide belief - No penalty.
-
Default in issue of notice - Notice deemed to be valid in certain circumstances. 292BB - what is contemplated under Section 149 is “issuance of notice” under Section 148 and not the service thereof on the assessee and further held that the “service of notice” under Section 148 is only required before the assessment, reassessment or re- computation.
-
TDS u/s 195 - tds laibility on commission charges to overseas agents - it is apparent that fees for technical services does not contemplate commission which is order specific and computable at a small percentage of the order value - No TDS liability - No addition u/s 40(a)(i)
-
Reopening of assessment - change of opinion - if the stand of the Revenue is to be accepted, the sanctity/finding attached to the proceedings u/s 143(3) would be done away with and it would be open to the Revenue to do piecemeal assessments by re-opening the same.
-
TPA - comparable selection - ALP - substantial question of law or facts - mere dissatisfaction with the findings of facts arrived at by the learned Tribunal is not at all a sufficient reason to invoke Section 260-A of the Act before this Court.
Customs
-
Interest on delayed refund - Refund of SAD - It does not matter whether the refund is sanctioned by the Assistant Commissioner himself or on an appeal by the Commissioner (Appeals), Appellate Tribunal or any Court.
Service Tax
-
CENVAT credit - duty paying invoices - the appellant is entitled to avail Cenvat credit on the invoices initially issued in the name of Head Office which were rectified and certified that the services actually received by the appellant - credit allowed.
-
CENVAT credit - non-registered dealers - the appellant has violated CENVAT Credit Rules, 2004 by availing credit on the basis of an ineligible documents and the same is recoverable from them
-
Commercial training or coaching service - Service tax liability - Despite the inclusion of ‘commercial’ in the description of the taxable service, the absence of a profit motive, does not, of itself, alter the tax liability.
Central Excise
-
‘Place of Removal’ under Section 4 of the Central Excise Act, 1944, the CENVAT Credit Rules, 2004 and the CENVAT Credit Rules, 2017 - Clarification issued by the CBIC - special focus on GTA service.
-
Clandestine removal - Even if there were some finished goods in excess in the factory there is no presumption of clandestine removal and thus the provisions of Rule 25 of Central Excise Rules read with Section 11 AC of the Act are not attracted
Case Laws:
-
Income Tax
-
2018 (6) TMI 1330
Reopening of assessment - Unexplained cash credit u/s 68 - Held that:- In the instant case no enquiries which have been confronted to the appellant despite specific request and as such, there is no material which could enable the learned Assessing Officer to form an opinion that income of assessee has escaped assessment so as to allege that share capital represented accommodation entries. As there is no tangible material and therefore, action under section 148 of the Act is invalid. Even on merits, it is noted that the issue is squarely covered by order of the Tribunal in the case of ACIT vs. M/s. Kapis Impex Pvt. Ltd [2018 (3) TMI 1607 - ITAT DELHI]. The findings of the CIT(A) remain unrebutted and the conclusion of the CIT(A) to delete the addition by holding that once shareholders do exist, have their own independent identity, source of income, maintain books of accounts, carry on their business and earn income from investments not only in assessee but also shares of other companies, then the inevitable conclusion is that they are not paper companies is upheld and the addition in dispute is deleted - Decided in favour of assessee.
-
2018 (6) TMI 1329
Denial of exemption u/s.10(38) - Long Term Capital Gains in respect of the sale of the shares - Held that:- A perusal of the facts in the present case admittedly given room for suspicion. However, assessments are not to be done on the basis of mere suspicion. It has to be supported by facts and the facts are unfortunately not forthcoming in the Assessment Order, in the order of the Ld.CIT(A) nor from the side of the assessee. The main foundation of the assessment in the present case is the statement of one Shri Ashok Kumar Kayan who has admitted to have provided bogus Long Term Capital Gains to his clients. The said Shri Ashok Kumar Kayan also allegedly seems to have provided the assessee’s name and PAN as one of the beneficiaries. However, this statement given by Shri Ashok Kumar Kayan cannot be the foundation for the purpose of assessment in so far as Shri Ashok Kumar Kayan has not been provided to the assessee for cross-examination. In the absence of opportunity of cross-examination, the statement remains mere information and such information cannot be foundation for assessment. A perusal of the Assessment Order at Para No.7.1 shows that in the Written Submissions, the assessee states that he has purchased 15000 shares of M/s.BPL from M/s.ABPL, Kolkata. However, in Para No.8.3, it is mentioned that the assessee in good faith has purchased the shares of M/s.BPL from a sub-broker in his friends circle. What is the true nature of the transaction? From whom did the assessee actually purchase the shares? Did the assessee take possession of the shares in its physical form? In Para No.8.1 of the Assessment Order, it is mentioned that the assessee is an investor and has been regularly trading in shares. If this is so, does the demat account show such transactions being done by the assessee or is this the only one of transaction. Thus, clearly the facts required for adjudicating the appeals are not forthcoming - we are of the view that the issues in this appeal must be restored to the file of the AO for re-adjudication after granting the assessee adequate opportunity to substantiate its case and we do so. - Decided in favour of assessee for statistical purposes.
-
2018 (6) TMI 1328
Addition u/s. 36(1)(viia) - HC [2017 (11) TMI 916 - GUJARAT HIGH COURT] has held that interest on non performing assets is not taxable on accrual basis looking to the guidelines of the Reserve Bank of India - Held that:- No ground to interfere with the impugned order. The special leave petition is, accordingly, dismissed.
-
2018 (6) TMI 1327
TPA - comparable selection - ALP - substantial question of law or fact - Held that:- A substantial quantum of international trade and transactions depends upon the fair and quick judicial dispensation in such cases. Had it been a case of substantial question of interpretation of provisions of Double Taxation Avoidance Treaties (DTAA), interpretation of provisions of the Income Tax Act or Overriding Effect of the Treaties over the Domestic Legislations or the questions like Treaty Shopping, Base Erosion and Profit Shifting (BEPS), Transfer of Shares in Tax Havens (like in the case of Vodafone etc.), if based on relevant facts, such substantial questions of law could be raised before the High Court under Section 260-A of the Act, the Courts could have embarked upon such exercise of framing and answering such substantial question of law. On the other hand, the appeals of the present tenor as to whether the comparables have been rightly picked up or not, Filters for arriving at the correct list of comparables have been rightly applied or not, do not in our considered opinion, give rise to any substantial question of law. The present appeals filed by the Revenue do not give rise to any substantial question of law and the suggested substantial questions of law do not meet the requirements of Section 260-A of the Act and thus the appeals filed by the Revenue are found to be devoid of merit and the same are liable to be dismissed. The same yardsticks and parameters will have to be applied, even if such appeals are filed by the Assessee, because, there may be cases where the Tribunal giving its own reasons and findings has found certain comparables to be good comparables to arrive at an ‘Arm’s Length Price’ in the case of the assessee with which the assessee may not be satisfied and have filed such appeals before this Court. Therefore we clarify that mere dissatisfaction with the findings of facts arrived at by the learned Tribunal is not at all a sufficient reason to invoke Section 260-A of the Act before this Court. Appeals filed by the Revenue dismissed.
-
2018 (6) TMI 1326
Reopening of assessment - change of opinion - Held that:- In this case, primafacie the petitioner has shown absence of any new facts or law coming to the notice of the Assessing Officer after passing of assessment orders in regular assessment proceedings. In the present facts, (particularly the claim made in computation of income) prima-facie if the stand of the Revenue is to be accepted, the sanctity/finding attached to the proceedings under Section 143(3) of the Act would be done away with and it would be open to the Revenue to do piecemeal assessments by re-opening the same. Therefore, the reasons in support of the notice, prima-facie indicates a change of opinion. We are prima-facie of the view, that the impugned notices are without jurisdiction. Therefore, there shall be interim stay in terms of prayer clause (d) in both the petitions.
-
2018 (6) TMI 1325
Condonation of delay - condonation of 389 days delay in seeking to set aside the self operating order - Held that:- No particulars of the date and the manner in which the Assessing Officer became aware of the dismissal of the rejection of the appeal is mentioned in the affidavit in support of the motion. The affidavit further records that “advocate on record thus, somehow managed to contact the concerned person of the Income Tax Department and the status of the present appeal came to be disclosed to the Income Tax Department”. We are unable to understand the above statement as it is from an Assessing Officer and not from the person who claims not to have been able to contact the person in the Income Tax Department. No bonafide explanation to condone the undue delay.
-
2018 (6) TMI 1324
TDS u/s 195 - tds laibility on commission charges to overseas agents - fees for technical services - additions u/s 40(a)(i) - Held that:- The expression fees for technical services has been defined in Explanation (2) of Section 9(1)(vii) of the Income Tax Act to mean any consideration (including any lumpsum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personal) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration, which would be income of the recipient chargeable under the head salaries. Explanation (B) to Section 40(a)(i) provides that the expression fees for technical services in Section 40(a)(i) shall have the same meaning as in Explanation 2 to Clause (vii) of sub-section (1) of Section 9. On a reading of Explanation (2) to Section 9(1)(vii), fees for technical services means consideration, including lumpsum consideration for rendering any managerial, technical or consultancy services. In the instant case, the Assessing Officer has, in the assessment order, accepted that the appellant assessee has paid commission charges to overseas agents. It is not the case of the Assessing Officer that any lumpsum consideration has been made for any specific managerial, technical or consultancy services. On a overall reading of the Explanation, it is apparent that fees for technical services does not contemplate commission which is order specific and computable at a small percentage of the order value. Section 40(a)(i) does not contemplate order wise commission based on the order value. - Decided in favour of the assessee
-
2018 (6) TMI 1323
Revision u/s 263 - dissolution of a partnership and the partners taking the assets of the firm in accordance with their individual shares - capital gain on dissolution of partnership - Held that:- The share of the assessee which he received exclusively on dissolution being relatable to a pre-existing right he had, as one of the partners; to the extent of such share, the assessee's claim for exemption from long term capital gains for reason of the deposit made to UTI under Section 54EA has to be allowed. However, on the value of the shares in which the other partner had a pre-existing right; which was released in favour of the assessee, the right over it can be claimed only from the date of release and if subsequent sale falls within the 36 month period, necessarily the assets are to be assessed as short term capital gains to that extent. The Tribunal has not gone into the facts and has proceeded on the basis that the allotment of shares on dissolution would not result in a transfer, which, according to the Tribunal, is a legally permissible option available to the assessee. On the correct law applied to the peculiar facts, do not agree with the Tribunal on the acceptance of the claim raised by the assessee for long term capital gains to be a permissible view at least to the extent of the value of the assets released in his favour by the other partner on dissolution. To that extent, the finding of the Assessing Officer in the original order was an erroneous finding, which was also prejudicial to the interest of the revenue. Commissioner was perfectly justified in invoking the powers under Section 263. To the extent of the share the assessee had prior to dissolution and the valuation of that share, which was allotted to his share on dissolution; we concur with the order of the Tribunal insofar as allowing the exemption available from long term capital gains for reason of compliance with Section 54EA. There is no ground for a suo motu revision to that extent since the Assessing Officer's finding on that count is not erroneous. The provision only enables assessment at the hands of the firm and does not deem the allotment of capital assets in proportion to the share on dissolution or otherwise as a transfer. Herein, we are not concerned with whether the firm was assessed at the time of dissolution and are only concerned with the erstwhile partners assessment as an individual; that too of the consideration received from the sale of the assets he held exclusively after the dissolution of the firm, which sale was also subsequent to the dissolution. Answer the questions of law partly in favour of the Revenue and partly in favour of the assessee. As we noticed at the outset, the exact shares of the partners are not placed before us and the valuation is also a question to be decided on facts. We hence remand the matter to the Tribunal, before whom the assessee shall produce the deed of dissolution and release executed in the year 1997-98.
-
2018 (6) TMI 1322
Unexplained cash credit under Section 68 - Held that:- Advances received from the parties at Bhiwandi for supply of yarn is not acceptable. This is particularly in view of the facts as indicated hereinabove while recording its findings the Tribunal particularly found that the return of money was made not to the creditors concerned but to the sister concerns of the Appellant and thereafter the amounts were also withdrawn from the partners and family members of the sister concern. Remand report indicating that the letter similar or identical in nature by all the parties who responded is that reason is similar i.e. the amounts were received for purchase of yarn as an Advance. Thereafter, yarn was not supplied and consequently refund was given. Thus, view taken on the remand report is not perverse. View taken by the authorities under the Act is on the basis evidence before is leading to a finding of fact which is not shown to be perverse. Therefore, the question raised would not give rise to substantial question of law.
-
2018 (6) TMI 1321
Income escaping assessment - default in issue of notice - Notice deemed to be valid in certain circumstances. 292BB - Held that:- In Mayawati's case [2009 (2) TMI 17 - DELHI HIGH COURT] in the context of Section 143(2) of the Income Tax Act, held that the word “issuance of notice” and “service of notice”, are not synonymous and interchangeable, and accordingly, Delhi High Court held that notice under this section would lose all its legal efficacy, if it had not been actually served on the assessee, within the scheduled and stipulated time. The Delhi High Court held that in this dialectic, a fortiori, since the word, “served” is conspicuous by its absence in Section 149 and that the legislature has deliberately used the word “issue”, actual service within the period of four and six years specified in the section, would not be critical. In Commissioner of Income-Tax v. Three Dee Exim [2011 (3) TMI 543 - DELHI HIGH COURT], was is in complete agreement with the reasoning of the Hon'ble Division Bench judgment in the aforesaid case of Mayawati (supra) and held that what is contemplated under Section 149 is “issuance of notice” under Section 148 and not the service thereof on the assessee and further held that the “service of notice” under Section 148 is only required before the assessment, reassessment or re- computation. - Decided against the assessee
-
2018 (6) TMI 1320
Disallowance u/s 36(1)(iii) - Held that:- CIT(A) has held that out of ₹ 11.14 crores the loan given by the assessee out of overdraft account is only ₹ 2.61 crores which can be considered as sourced out of loan funds available in earlier years. The ld CIT(A) has held that out of ₹ 11.14 cores for advance given by the assessee a sum of ₹ 10.82 crores out of interest free funds. Further it was noted by the ld CIT(A) that in that year only car loans were borrowed by the assessee and those funds were used for buying the cars. In view of this, he stated that on ₹ 10.82 crores there is no interest expenditure attributable hence, he deleted the interest disallowance on the above sum. We do not find any reason to disturb the finding of the ld CIT(A) which is reasonable and logical. - decided against revenue Disallowance u/s 14A - Held that:- Substantial force in the argument of the ld AR that if there is no exempt income earned by the assessee then no disallowance can be made u/s 14A of the Act - above facts needs a proper examination that whether assessee has earned exempt income during the year or not. This fact is not available on record we have also verified only the documents available before us in the form of the balance sheet and profit and loss account. The copy of the computation was not placed before us. In view of this, we set aside this ground back to the file of the ld AO for proper verification that whether the assessee has earned any exempt income or not, if he finds that there is no exempt income earned by the assessee, disallowance deserves to be deleted Disallowance of interest on advance - held that:- In the present case, the CIT(A) has stated that interest on earlier loan was paid on car loans. However on examination of the balance sheet as at , for 31.03.2009 we find that the assessee has debited the financial expenses of ₹ 7.70 crores and where there was no disallowance was made u/s 36(1)(iii) on account of interest expenditure. Assessment order passed u/s 143(3) of the Act was placed before us, which confirmed above fact - we direct the ld AO to delete the interest expenditure on advance of ₹ 2.61 crores given to M/s. Saurya Promoters Pvt Ltd.
-
2018 (6) TMI 1319
Penalty proceedings u/s.271(1)(c) - addition made on enhanced compensation on acquisition of land - Held that:- Firstly, at the time of filing of original return of income assessee’s claim for non taxability of Long Term Capital Gain was not bonafide as already a dispute was going on; and secondly, the investment in NABARD bonds was duly disclosed at the time of original return of income. Thus, it cannot be held that assessee has concealed any particulars of income or has furnished inaccurate particulars of income. We agree with the observation of the ld. CIT (A) that prior to judgment of Hon'ble Supreme Court in the case of Ghanshyam (HUF) (2009 (7) TMI 12 - SUPREME COURT) there were many decisions of the Hon'ble High Court wherein the year of taxability of enhanced compensation was highly debatable. This judgment of Hon'ble Supreme Court had come after the closure of the financial year 31st March, 2009. Thus, at the time of filing of return of income assessee did have a bonafide belief and therefore, we do not find any infirmity in the order of the CIT (A) in deleting the penalty. Accordingly, the appeal filed by the Revenue is dismissed.
-
2018 (6) TMI 1318
Allocating indirect expenses against "commission income from other group companies" based upon sales made by other group companies in India - Held that:- Allocation key should be accepted for determination of indirect expenses to be deducted from the gross income to arrive at the net income. The assessee has stated that the allocation of indirect expenses should be made based upon commission income. The assessee has also relied upon the cost accounting standard 3 issued by ICWA and emphatically relied upon on para No. 5 of that standard. The assessee has relying on the old cost accounting standard which was revised in 2011, and further revised in 2015. Assessing Officer has without assigning the detailed reason rejected the contention of the assessee and referred straightway for the guidance of the Addl Commissioner. In fact the assessee took an additional ground before the coordinate bench who allowed grant of relief by allowing expenses against commission income earned from group companies and other income earned by its branch office. ITAT merely accepted the claim of the assessee in principle that gross income cannot subjected to tax and assessee must be granted deduction of the expenses from the gross income and tax only net income. To determine the net income the issue was set aside to the file of the ld AO at the request of both the parties which is evident from the order of the coordinate bench. In the interest of justice, we set aside the issue of determination of indirect expenditure to be reduced from gross total income back to the file of the AO with a direction to him to first examine the claim of the assessee, give reasons why the same is not proper and then if he is not satisfied with the explanation of the assessee give his reasons for adopting an alternative method and after giving opportunity of hearing to the assessee decide the issue afresh. Assessee is also directed to substantiate its claim with proper reasoning. Therefore, ground No. 1 of the appeal of the assessee is rejected for the reasons given above and ground No. 2 of the appeal is allowed with above direction.
-
2018 (6) TMI 1317
Reopening of assessment - borrowed satisfaction - addition u/s 68 - non independent application of mind - accommodation entries - share application money - Held that:- It looks from cursory reading from the impugned assessment order passed by AO that same is passed on merely borrowed satisfaction of investigation wing without independent application of mind by AO which is completely wrong and incorrect as AO u/s 148 while passing final order and before making addition of unexplained income under deeming provisions of section 68 etc cannot put cart before the horse and cannot pass the final assessment order just reproducing from investigation wing report which are made basis to reopen the case. The fact that present order is passed on mere basis of borrowed satisfaction only is evident if one compares the reasons recorded, show cause notice issued and final order as impugned before this Tribunal. At all three stages same and similar allegations are made dehors the evidences filed by assessee. Mere non production of Director of said share holder company cannot justify adverse inference u/s 68 of the Act. Even if there was any doubt if any regarding the creditworthiness of the share applicants was still subsisting, then AO should have made enquiries from the AO of the share subscribers as held by Hon’ble High Court in CIT vs DATAWARE (2011 (9) TMI 175 - CALCUTTA HIGH COURT) which has not been done, so no adverse view could have been drawn. 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 and in my view it cannot be brushed aside by the AO to draw the adverse view which here in present facts cannot be countenanced. Therefore addition made by AO and sustained by Ld CIT(A) are hereby deleted. - Decided in favour of assessee.
-
2018 (6) TMI 1316
Benefit of Section 11 & 12 - scope of the activities of the trust within the purview of section 2(15) - violation of provision of Section 13 (1) (c) by providing the financial benefit to the persons specified u/s 13(3) - Held that:- The society is an educational institution. It has made payment through credit card of only ₹ 16,19,243/-. AO has considered the entire training expenses of ₹ 99,21,943/- and disallowed 60% of the same as being personal in nature. The society had submitted details of the same before the AO and AO has not been able to point out any particular item of the expenditure which can be considered to be personal in nature. A survey was conducted. Nothing adverse to the assessee emerged during survey on this account. The assessee has given an explanation that the expenses incurred through credit card were meant for the society. It organized various seminars and conferences, through which an eminent faculty was invited. Thus, the assumption of the AO that the expenditure incurred through credit card was personal, is not correct. The CIT(A) has correctly held that the facility of the credit card is a facility like that of a bank. The credit card has been used to incur expenses for and on behalf of the assessee society. We are in agreement with the CIT(A) that the objects of the assessee Society are educational in nature and hence, they fall within the meaning of 'charitable purpose' under Section 2(15) of the Act. The assessee is a Society registered under Section 12A of the Act - the assessee is eligible for exemption under Section 11 - decided in favour of assessee.
-
2018 (6) TMI 1315
Share capital as unexplained credit - addition u/s. 68 - Held that:- The appellant's claims with regard to the subscription of share capital are duly supported by necessary evidence. On the other hand, there is no evidence with the revenue to indicate that the share capital subscribed / loans raised is not genuine. Even in the search and seizure conducted on the appellant, no such evidence could be unearthed. Thus the addition of share capital as unexplained credits is not legally sustainable and is deleted- decided in favour of assessee.
-
2018 (6) TMI 1314
Penalty u/s. 271(1)(c) & 271AA - additions made on account of profits attributable to PE and IPLC charges (Taxable@10%) - CIT(A) while deleting the penalty levied by the Assessing Officer u/s 271(1)(c) has observed that the Hon'ble High Court has admitted the substantial question of law - Held that:- the issue is subject to different interpretation. No infirmity in the order of the ld. CIT(A). As mentioned earlier, the Hon'ble High Court has already admitted the substantial question of law which has already been reproduced in the preceding paragraphs. Therefore, in view of the decision in the case of Liquid Investment and Trading Co. (2010 (10) TMI 1021 - DELHI HIGH COURT), according to which, penalty cannot be levied when substantial question of law has been framed and admitted, therefore, in absence of any contrary material brought to our notice. - decided against revenue.
-
2018 (6) TMI 1313
Addition of unverifiable purchase - Held that:- The cash corresponding to the RTGS payment must have been received back by the assessee after date of payment i.e. after 21/10/2010 and therefore goods for supplying to sales parties were purchased (i.e. 21/6/2010 to 25/06/2010) from other persons, utilizing cash. The onus is on the assessee to explain when & how the cash has been paid for purchase from gray market and it is for the assessee to explain availability of cash in books of account. In such circumstances generally cash purchases are made at lower price than normal, and the gross profit of the taxpayer also becomes higher. Cash investment in purchases has not been examined by the Ld. Assessing Officer and consequently the assessee also did not get opportunity to explain its stand, we feel it appropriate to restore the issue of unverifiable purchases to the file of the Assessing Officer for deciding afresh in view of our observations above and in accordance with law after providing adequate opportunity of being heard to the assessee accordingly, this ground of Revenue’s appeal is allowed for statistical purposes. Disallowance on account of leave encashment under section 43B - Held that:- In the instant case it is evident from the order of the Ld. CIT(A) that the assessee has not made actual payment of the said amount of leave encashment. As per the provisions of the section 43B of the Act, claim of leave encashment is allowed only in payment basis. If the assessee has not made the actual payment, it is not entitled for deduction under section 43B. We do not find any error in the order of the Ld. CIT(A) and accordingly we uphold the same. The ground of the appeal of the assessee is rejected. Disallowance under section 14A - Held that:- The contention of the assessee of utilization of owned interest free funds for investment in shares of sister concern will become relevant only when the disallowance of interest attributable to investment in assets capable of yielding exempted income has been made, while computing the disallowance of ₹ 1,39,462/-. Since no such details have been furnished before us by either of the party, thus in the interest of Justice, we feel it appropriate to restore this issue to the file of the Assessing Officer for deciding afresh in accordance with law.
-
2018 (6) TMI 1312
Revision u/s 263 - Omission to consider by AO the disallowance on belated payments of employees contribution of EPF and ESI as envisaged u/s. 2(24)(x) r.w.s. 36(1)(va) - Held that:- Admittedly, the issue of disallowance of payment of employees’ contribution to EPF and ESI after the specified date prescribed under the respective Act, was held in favour of the assessee in assessee’s own case for the assessment years 2003-04 and 2004-05 The payment of employees’ contributions to EPF and ESI after the due date prescribed under the respective Act but before the due date of filing of the return u/s. 139(1) of the Act is to be allowed. Hence, this ground of appeal of the assessee is allowed. Dormant scheme of spraying on coconut trees - Held that:- CIT was of the opinion that there is no proper enquiry by the Assessing Officer and he accepted the claims of the assessee without making any enquiry with regard to the claims of the assessee. The Assessing Officer has not gathered any information and evidence to suggest that the claims of the assessee were right. Assessing Officer is required to cause enquiries with regard to the claims of the assessee. As such, the CIT is justified in remitting this issue to the file of the Assessing Officer for de novo consideration by invoking the provisions of sec. 263 of the Act. Accordingly, this ground of appeal of the assessee is dismissed.
-
2018 (6) TMI 1311
Penalty order passed under section 271AAB - undisclosed income - non maintaining the books of account - Held that:- When the assessee is not required to maintain the books of account as per section 44AA, then the matter is required to be examined whether the alleged undisclosed income is recorded in the other documents maintained in the normal course as per clause (c) to Explanation to section 271AAB. Undisputedly the alleged income was found recorded in the diary which is nothing but the other record maintained in the normal course, thus the same would not fall in the definition of undisclosed income. Once the said income is found as recorded in the other documents maintained in the normal course, then it cannot be presumed that the assessee would not have disclosed the same in the return of income to be filed after about one year from the date of search. We hold that the penalty levied under section 271AAB is not sustainable and the same is deleted. See case of Shri Ravi Mathur [2018 (6) TMI 1128 - ITAT JAIPUR] - Decided in favour of assessee.
-
2018 (6) TMI 1310
Exemption u/s 11 - microfinance activity - charging higher rate of interest from the poors - Held that:- Assessee was charging 29% interest which is far above the rate prescribed by the law i.e. The Kerala Money Lenders Act. This shows that the assessee is in the business of lending at 29% per annum to the poor, which is not as envisaged in the assessee-Trusts’s objects. By collecting interest at such a higher rate the assessee has deviated from its objective of doing charity, especially in view of the fact that the difference of interest over deposits and disbursement in cases of banks and non banking financial companies is less than 10%. Micro finance activity conducted by the assessee is strictly commercial in nature and with profit motive. The assessee had even collected penal interest from their defaulter which clearly shows that the trust was not even considerate with the poor loanees and was purely acting just as any money lender. From the above the activity of the assessee is business in nature and there is no element of charity involved in the activities of the assessee and it is purely commercial. In view of this, the action of the lower authorities in denying exemption u/s. 11 of the Act is confirmed. Disallowance u/s. 36(1)(vii) - Held that:- Going into the merit of the issue raised by the assessee, in our opinion under section 36(1)(vii) of the Act, only debts which were written off as irrecoverable in the books of accounts of the assessee in the previous year relating the assessment year is to be claimed as deduction as bad debts while computing the income of the assessee. There is no question of granting any relief towards provision for bad and doubtful debts while computing the business income of the assessee. No merit in the above ground raised by the assessee in both the years. This ground of appeals of the assessee is dismissed. Disallowance towards donations and gifts - Held that:- Since the donations/gifts are not expended wholly and exclusively for the purpose of business of the assessee and it is in the nature of charities, it cannot be allowed while computing the income of the assessee. Accordingly, the disallowance made by the Assessing Officer and confirmed by the CIT(A) is justified. Hence, this ground of appeal of the assessee for the assessment year 2009-10 is dismissed. Disallowance of remuneration paid - Held that:- There is no authorization in the Trust Deed to pay remuneration to Mr. Jayson Joy and Mr. Job M Joy. These unauthorized remunerations paid by the Trust to the employees have not been sanctioned in the Trust Deed. Hence, we find no infirmity in the order of the CIT(A) and confirm the same. Disallowance on self made vouchers - Held that:- The expenditure was disallowed on the basis of self made vouchers to the extent of ₹ 5 lakhs. In a normal trade practice, it is not possible to prove 100% bills and receipts from the recipients and there is every chance of making payments by way self made vouchers. However, there is every chance of inflating the expenditure by way of self made vouchers. Hence, we direct the Assessing Officer to disallow only 20% of ₹ 5 lakhs, i.e. ₹ 1 lakh towards self made vouchers. Hence, this ground of appeal of the assessee is partly allowed. Disallowance u/s. 40A(3) being 20% of ₹ 6,50,000/- paid as cash for land purchase - Held that:- The payment is made towards purchase of land. The capital expenditure is not charged to P&L account as expenditure. Being so, section 40A(3) have no application to the assessee’s case. Hence, this ground of the assessee is allowed.
-
2018 (6) TMI 1309
TDS u/s 194C - liability to deduct tax at source on the payments made to developers/contractors - Held that:- CIT(A) on perusal of the clauses of the agreement has arrived at the conclusion that the payments for the purchase of the sites was calculated on sq. ft. area of the property and the amount was paid for the purchases of completed property and not for development work carried out. CIT(A) found that the agreements were only for purchase of sites and does not involve any ‘works contract’. The aforesaid conclusion/finding of the CIT(A) cannot be faulted and the same is a correct reading of the scope of the agreements; which has to be treated as a whole and not in piece meal manner. The mere fact that the contractor/developer were required to layout roads and undertake other activities before the delivery of the completed sites cannot be either determinative of the facts or need to mean that the agreements entered into by the assessee society is a composite contract and amounts to a works contract. The case of the assessee is squarely covered by the decisions in the case of Karnataka State Judicial Department Employees House Building Cooperative Society Ltd.[2010 (3) TMI 1211 - KARNATAKA HIGH COURT] - Decided against revenue
-
Customs
-
2018 (6) TMI 1308
Interest on delayed refund - Refund of SAD - section 27A of the Customs Act - Interest denied on the ground that refund was sanctioned within the time period - Held that:- Section 27A of this Act provides for payment of interest if the refund is not made within 3 months from the date of application of refund. There is no amendment to Section 11B of the Central Excise Act which allowed greater latitude to the appellant to file a refund claim will have a bearing on Section 27A of the Customs Act. In fact, Section 11BB of the Central Excise Act as well as Section 27A of the Customs Act are similarly worded and both provide for payment of interest if the refund is not given within three months of an application. It does not matter whether the refund is sanctioned by the Assistant Commissioner himself or on an appeal by the Commissioner (Appeals), Appellate Tribunal or any Court. Appeal allowed - decided in favor of appellant.
-
2018 (6) TMI 1307
Condonation of delay of 751 days in filing appeal - Section 129A of the Customs Act, 1962 - delay occurred due to non-submission/ non-filing of bill of export - Held that:- Admittedly the impugned order was received by the applicant on 28.1.2016 and the appeal could have been filed within three months from the date of communication of the Order-in-Appeal but the applicant filed the appeal only on 18.5.2018 and the only reason for such an inordinate delay in filing the appeal is that he was pursuing his matter before the JDGFT and DGFT authorities for obtaining the EODC certificate. There is no reason as to why he did not file the appeal in time when he can pursue his matter before JDGFT and DGFT then he could have filed the appeal in time before this Tribunal also - delay cannot be condoned - COD application dismissed.
-
2018 (6) TMI 1306
Waiver of penalties - manufacture of tracks type combine harvester - interpretation of the terms of the notification - concessional rate of duty in terms of N/N. 21/2002-Cus dated 01/03/2002 - duty liability with interest was paid - Held that:- The language of the notification is very much clear stating that these are to be used for manufacture of combine harvester but the same has not been used for manufacture of combine harvester but the appellant used them as spare parts - the appellant is not entitled for concessional rate of duty in terms of exemption N/N. 21/2002-Cus dated 01/03/2002, which was amended by N/N. 12/2012-Cus dated 17/03/2012.. Penalty - Held that:- As the language of the notification is clear, which does not allow for benefit of exemption notification and the same has been admitted by the appellant. Therefore, the penalty on the main appellant, namely, Claas India Pvt. Ltd. is rightly imposed - As the entire amount of duty along with interest has been paid prior to issuance of the show-cause notice, therefore, the penalty is reduced to 25% of the duty confirmed. Penalty on Shri Saurabh Gupta, Manager of the appellant company - Held that:- The manager is not going to gain anything by claiming of benefit of notification. In that circumstances, the penalty of Shri Saurabh Gupta is not imposable - penalty setaside. Appeal allowed in part.
-
2018 (6) TMI 1305
Valuation of imported goods - Non Textured Polyester PA Coated Fabric - no rejection of value - enhancement of value - valuation based on similar goods - Rule 9 of the Customs Valuation (Determination of value on Imported Goods) Rules, 2007 - Held that:- The transaction value is the basis for assessment unless proved to be wrong or affected by extraneous considerations. The Revenue has not rejected the transaction value first. The Appellate Authority has referred to precedent decisions holding to that effect - In the absence of rejection of the transaction value, Revenue cannot proceed ahead to re-determine the value in terms of the subsequent rules of Customs Valuation Rules. Appeal dismissed - decided against Revenue.
-
Service Tax
-
2018 (6) TMI 1304
Validity of interim order of stay - auction of property for realization of dues - the order was challenged after a long period of 7 years - Held that:- Considering the fact that the writ petitioner has chosen to challenge the Order-in-Original after a period of seven years and considering the fact that the same was entertained by granting an interim order without assigning any reason, we are fully satisfied that the appellants have made out a case to interfere with the order passed by the writ Court, even though the same was made at the admission stage - the properties of the writ petitioner were already under attachment from the year 2011 onwards and such properties were brought for public auction as early as on 28.02.2018 and the same was purchased by a successful bidder on 16.03.2018 and in whose favour, a delivery order has also been issued on 20.03.2018, we do not find any reason or justification to sustain the interim order of stay granted by the writ Court. The interim order of stay granted by the writ Court is set aside - appeal allowed.
-
2018 (6) TMI 1303
Commercial training or coaching service - Scope of 'Vocational Training' - fees charged from candidates registered for the ‘Masters in Business Administration’ programme - case of appellant is that the liability to tax does not arise as they are not in the business of providing education but are a public institution in which Government of India and its insurance undertakings are owners - Held that:- It is seen that the consideration received from students enrolled for education are, owing to legislative intent, indeed taxable and that, to the extent of specific exclusion in the taxable entry, conformity with the description therein has to be strictly adhered to. That the appellant is a provider of training and coaching service is not disputed. Despite the inclusion of ‘commercial’ in the description of the taxable service, the absence of a profit motive, does not, of itself, alter the tax liability. It suffice that earnings are received for an activity to be commercial. Non- availability of an affiliation for the award of a degree at the end of the course it takes the activity out of the exclusion. As far as ‘management and business consultancy service’ is concerned, it is seen that the consideration was received by them for various reports submitted by their students to outside bodies on conclusion of various projects as part of curriculum of the course. Undoubtedly, these may be of use to the outside entity but they are not the product of a professional business consultant. Accordingly, the tax as provider of ‘management and business consultancy’ may not sustain. Time Limitation - Held that:- The appellant themselves having made a full disclosure of these circumstances to the service tax authorities and they were guided entirely about the tax liability exists; it cannot, by any stretch, be found that appellant had misrepresented to the competent authority - extended period of limitation cannot be invoked - duty liability restricted for normal period. Appeal allowed in part.
-
2018 (6) TMI 1302
CENVAT credit - non-registered dealers - whether the assessee can claim CENVAT on the basis of invoices issued by dealers who are not registered at the time of issuing the invoices? - penalty - Held that:- The appellant is not entitled to CENVAT Credit on the basis of invoices issued by the unregistered dealers in view of the restrictions under Rule 9 of the CENVAT Credit Rules. Therefore, the appellant has violated CENVAT Credit Rules, 2004 by availing credit on the basis of an ineligible documents and the same is recoverable from them - By taking credit of ineligible document the appellant have rendered themselves liable to penalty. Abatement of value - N/N. 1/2006/ST - If the assessee is not entitled to the CENVAT Credit whether he can claim the benefit of abatement of value under N/N. 1/2006/ST by virtue of the fact that they have not availed CENVAT Credit? - Held that:- The Learned Commissioner (Appeals) has held that there is no provision in the notification to allow retrospectively of the abatement of value and he cannot modify the provisions of this notification. There is nothing in the appeal in which the appellant has countered this argument and explained how they were eligible for benefit of abatement under N/N. 1/2006/ST retrospectively. Appeal dismissed - decided against appellant.
-
2018 (6) TMI 1301
SEZ Unit - Refund of service tax paid - time limitation - N/N. 17/2011-ST dated 01.03.2011 and 40/2012-ST dated 20.06.2012 - case of appellant is that it took time to collect necessary documents and file the refund claim - Held that:- Whenever a notification is issued all relevant factors are considered by the Government before issuing it. As the process of collecting documents may take time, this notification provided one complete year from the date of payment of service tax for the applicant to file the refund claim. The notification further allowed by the Assistant Commissioner or the Deputy Commissioner discretion is beyond one year if he has reasons to do so. In this case the appellant could not put forth in satisfactory reasons for filing the refund claim after more than one year of delay - there is no reason for the refund claim to be filed so late. Appeal dismissed - decided against appellant.
-
2018 (6) TMI 1300
100% EOU - Refund of Interest made on the pre-deposit - Section 35FF of CEA - pre-deposit of ₹ 32,62,000/- was made on 9.2.2016 - Held that:- Pre-deposit of ₹ 32,62,000/- does not pertain to the appeal of 2014. Other set of appeals in the above mentioned Final order pertain to the period after 6.8.2014 for which the appellant claim to have made pre-deposit and have stated so in their refund application. This aspect has been completely ignored by the adjudicating authority as well as first appellate authority for the purpose of refund of interest - The finding given by the first appellate authority on pre-deposit pertaining to period before the Finance Act 2014 therefore appears to be clearly erroneous. The matter is therefore remanded back to the adjudicating authority to reconsider the claim of interest of the appellant after verifying that the appellant has made pre-deposit pursuant to their appeal against order dated 30.10.2015 in terms of Section 35FF - appeal allowed by way of remand.
-
2018 (6) TMI 1299
CENVAT credit - duty paying invoices - denial on the ground that the invoices are not in the name of the appellant - input services - event management service - Held that:- As the appellant has shown their bonafide that the service has been received by them and the same has not been denied by the Revenue with the help of cogent evidence. Therefore, the appellant is entitled to avail Cenvat credit on the invoices initially issued in the name of Head Office which were rectified and certified that the services actually received by the appellant - credit allowed. Event management service - input service or not? - Held that:- The appellant is the recipient of the service and the same has not been considered by the adjudicating authority - It is evident from ST-3 Returns that appellant is engaged in selling of space for time slot for advertising and on the said service the appellant is paying service tax. It is not alleged in the show cause notice that appellant is not paying service tax - appellant is entitled to avail Cenvat credit on event management service as Input service. Appeal allowed - decided in favor of appellant.
-
2018 (6) TMI 1298
Service or sale - contractors engaged by appellant for construction of residential flats and subsequent slae of these flats - Construction of Residential Complex Services - whether the activity of subsequent sale of flats would be treated as service or not? - Held that:- The Hon'ble Gauhati High Court in the case of Magus Construction Pvt. Ltd.vs. UOI And Other [2008 (5) TMI 18 - HIGH COURT OF GAUHATI] dealt with identical situation and observed that transaction between the petitioner and the flats purchasers are purely a transaction for sale of the flats/premises and cannot be treated as contract for rendering of services of any nature whatsoever In the present case also, the appellant has engaged contractors for construction of residential flats and paid the entire service tax liability falling upon them. There is no dispute about the said fact. Appeal allowed - decided in favor of appellant.
-
Central Excise
-
2018 (6) TMI 1297
Valuation - CNG - inclusion of services charges paid to private parties (PP) in the transaction valuation - whether price charged for sale of CNG to OMCs can be considered as transaction value for the purpose of payment of duty under Section 4(1)(a) of CEA - the decision in the case of MAHANAGAR GAS LIMITED VERSUS CCE, MUMBAI - V [2016 (9) TMI 782 - CESTAT MUMBAI] contested - Held that:- the decision in the above case upheld - there is no merit in the present appeal - appeal dismissed.
-
2018 (6) TMI 1296
CENVAT credit - input services used in or in relation to excisable goods meant for export - denial on the ground of nexus - place of removal - ISO Certification for the Unit - Held that:- The term “place of removal” has been defined in Rule 2 (qa) of the CENVAT Credit Rules, 2004 in a manner similar to the definition in Section 4 of the Central Excise Act and neither includes the port of export - The CBEC had issued circular No. 999/6/15-CX dated 28.02.2015 holding that “in case of clearance of goods for export by Manufacturer Exporter the transfer of property can be set to have taken place at the port with the shipping bill is filed by the Manufacturer Exporter and place of removal would be this Port/ICD/CFS. Needless to say, eligibility to CENVAT credit shall be determined accordingly - credit allowed. Services of ISO Certification - Held that:- Certification is essential component of manufacturer ensuring quality of the product and the manufacturer reassuring their customer about it. Hence, it can be treated as, services incurred in or in relation to the manufacture of the final product - service tax paid on input services up to the point of export is allowable. Appeal allowed - decided in favor of appellant.
-
2018 (6) TMI 1295
CENVAT credit - common input services which are used for trading activities - Rule 6 (3) (1) of CENVAT Credit Rules, 2004 - Held that:- It is well settled that when an assessee manufactures both dutiable and exempted goods and the credit taken on inputs used in the manufacture of exempted goods and is reversed with interest, then the question of payment of amount of 8%/6%/7% of the value as per Rule 6(3)(i) of the CENVAT Credit Rules does not arise in law. The appellants have not even taken the CENVAT credit on that portion of input services which were attributable to trading/exempted category and the same is evident from the intimation letter dated 27.08.2014 and the calculation sheets attached thereto - the question of paying amount as per Rule 6(3)(i) does not arise in law and the impugned order is not sustainable in law. Appeal allowed - decided in favor of appellant.
-
2018 (6) TMI 1294
Rectification of mistake - In the said application, the applicants were the Respondents whereas they have been shown as applicants - Held that:- The said application, which has been decided by this Tribunal vide order dated 05.03.2018 was filed by the Revenue and Revenue was the applicant. Therefore, the application for rectification of mistake is allowed and the title of the application is rectified. The order dated 30.08.2017 was final order and against the said order, the Revenue have filed application for rectification of mistake and the same was disposed of on 05.03.2018. Against the said application also, the applicant moved application for rectification of mistake - Held that:- As there is no final order passed in the show cause notice issued to the applicant for entertaining the refund claim, in that circumstance, this Tribunal has no jurisdiction to entertain the miscellaneous application filed by the applicant. Therefore, the miscellaneous application filed by the applicant is dismissed. Application disposed off.
-
2018 (6) TMI 1293
Penalties - Valuation - inclusion of value of chassis in the value of goods - Held that:- In the case of Audi Automobiles vs. CCE, Indore [2009 (5) TMI 426 - CESTAT, NEW DELHI], it was held that in such a circumstances, no penalty is imposable. Therefore, penalties imposed on M/s. Sita Singh & Sons Pvt. Limited are set aside. Penalty on on M/s. Swaraj Mazda - Held that: - As in the case of M/s. Sita Singh & Sons Pvt. Limited, the penalty has been set-aside therefore, penalty on M/s. Swaraj Mazda is not imposable - penalty set aside. Appeal disposed off.
-
2018 (6) TMI 1292
CENVAT credit on goods brought back in the factory - returned cigarettes - applicability of Rule 16(1) of the Central Excise Rules, 2002 - Held that:- Rule 16 allows taking of credit of duty paid at the time of the removal of the goods, which are subsequently brought back to the factory for any reason - The respondent was entitled to the credit of the duty paid by them at the time of clearance of the cigarettes. In as much as, there is no dispute about the duty paid nature of the goods as also the subsequent bringing back of the same in the assessee factory, there is no infirmity in the impugned order of Commissioner (Appeals), requiring any interference in the same - appeal dismissed - decided against Revenue.
-
2018 (6) TMI 1291
Clandestine removal - whether the appellant, who is manufacturer of Diesel Engine Pump set etc., was having excessive stock of finished goods in their factory on the day of inspection 07.03.2014 so as to remove the same clandestinely within the meaning of Rule 25 Central Excise Rules, 2002 read with Section 11 AC of the Central Excise Act, 1944? - maintainability of petition - Held that:- Even if there were some finished goods in excess in the factory there is no presumption of clandestine removal and thus the provisions of Rule 25 of Central Excise Rules read with Section 11 AC of the Act are not attracted - the Annexure-A to the Panchnama is erroneous. The SCN is vitiated and not maintainable - appeal allowed.
-
2018 (6) TMI 1290
Invocation of extended period of limitation - issue was of interpretation - Held that:- The learned Commissioner have erred in observing that there was neither any ambiguity nor the situation is fluid as regards inclusion of the cost/price of moulds/dies etc., in the final product. Under the facts and circumstances, the issue was only of interpretation and there were conflicting views taken by this Tribunal - the SCN is bad for invocation of extended period of limitation - appeal allowed - decided in favor of appellant.
-
CST, VAT & Sales Tax
-
2018 (6) TMI 1289
Permission for Revision of return - time limitation - application filed beyond time limit - sub-rule (4A) of Rule 22 of the Kerala Value Added Tax Rules - Change in turnover - Circular No.14 of 2017 - Held that:- Ext P1 is an application preferred out of time. It is seen that a circular has also been issued by the competent authority under the Act as Circular No.8 of 2018 for proper implementation of the amended provision - The applicability of the amendment made to sub-section (2) of Section 42 of the Act to the case of the petitioner is a matter for the competent authority under the Act to consider at the first instance. The first respondent is directed to pass fresh orders on Ext.P1 application preferred by the petitioner in the light of subsection (2) of Section 42 of the Act, as amended in terms of the Finance Act, 2018 and Circular No.8 of 2018 - Ext P6 order is quashed.
-
Wealth tax
-
2018 (6) TMI 1288
Determination of net wealth liable to be taxed - Deduction in respect of loan availed by the assessee - Admission of additional evidence in respect of property at Banjara Hills, Hyderabad - Held that:- During the appeal hearing, the assessee furnished evidence before the CWT(A), relating to housing loan availed by her from ICICI Home Finance Ltd. The same was not made available to the AO. In fact, the assessee had not responded to the notices issued by the AO during the assessment proceedings. The evidence which was furnished before the CWT(A) first time for allowing the deduction and the Ld.CWT(A) has not called for the remand. Therefore, we are of the considered view that the issue should be remitted back to the file of the AO to consider the deduction in respect of loan availed by the assessee relating to the Banjara Hills property
-
2018 (6) TMI 1287
Maintainability of appeal - orders passed under section 55A r.w.s. 16A(5) of the Wealth-tax Act - assessee had transferred his ancestral agricultural land and declared income from Long Term Capital Gain - appeal filed by the assessee against the order of AVO in estimating the value of property as on 01.04.1981 - Held that:- The said valuation report was called for by the Commissioner of Income Tax (Appeals) during the pendency of quantum Income Tax proceedings and applying the said valuation, the income has been computed under the head income from capital gains. The quantum appeals are filed before the Tribunal by the assessee independently. The present appeals filed by the assessee against order of AVO in determining the value of property under section 55A of the Act, are not maintainable and hence, the same are dismissed. Since, the appeals are not maintainable then mentioning the same as Wealth Tax Appeals does not affect the maintainability of the appeals. - Decided against assessee.
|
9911796707
