Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
June 4, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Articles
News
Notifications
Highlights / Catch Notes
GST
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GST - Valuation of a supply - Goods transferred to branches in another state - recipient eligible for full input tax credit - assessee has the option to choose the value declared in the invoices shall be deemed to be the open market value of the goods. - AAR
Income Tax
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Benefit of deduction u/s 80IC - proof of income derived from business - interest income had nothing to do with the carrying on assessee’s business of manufacture, same would not be entitled to benefit of deduction under section 80IC - AT
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Penalty u/s 271(1)(c) - As against the assessee’s stand of claiming such amount as a revenue expenditure, the Tribunal has adopted another route of allowing such deduction in the computation of capital gain by treating it as cost of improvement. These facts do not warrant imposition of penalty
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Higher rate of depreciation - The appellant's argument that since ‘main machinery' used by it is 'injection moulding machine', all the items should qualify for depreciation @30% is devoid of merits since lab equipments, electrical fittings, vehicles etc. form separate block of assets on which different rates of depreciation are applicable.
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Accrued interest on loans classified under ‘non performing assets’- overdue interest not realized during the year and credited to suspense interest account cannot be taken to be the income of the assessee. - AT
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Interest on Refund u/s 244A - inordinate delay in grant of refund - in absence of any specific provisions in the Income tax Act, for allowance of interest on refund or compensation for the delayed period of refund of interest, we are constrained to hold that the appeal of the assessee cannot be allowed.
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Interest u/s.234B can be levied only on the returned income and not on the assessed income - AT
Customs
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Anti-dumping duty imposed on imports of "Hydrogen Peroxide" originating in or exported from Bangladesh, Taiwan, Korea RP, Indonesia, Pakistan and Thailand by amending the notification No. 28/2017-Customs (ADD) dated 14th June, 2017
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Interest on delayed Refund - finalization of assessment - When the statute does not provide to pay interest, the Tribunal which is a creature of the statute cannot grant any amount in the nature of compensation. - AT
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Benefit of exemption - Import of 'second hand diesel engine with turbocharger' - The description in the exemption notification must be read in its entirety and harmoniously in accordance with which, all parts of dredgers, including engines, must be accorded the benefit of exemption.
Service Tax
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Interest on delayed refund - relevant date - When the refund itself is not matured prior to the date of Appellate Tribunal’s order, there is no question of interest for the period prior to the date of order.
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Period of Limitation - Refund of CENVAT credit - Relevant date for the purposes of deciding the time limit for consideration of refund claims has to be taken the end of the quarter in which the FIRC is received and not the date of invoice - AT
Central Excise
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Goods re-exported under bond - failure to produce proof of export - the contentions of the appellant that they are not responsible for failure to comply with procedure on the part of the merchant-exporter is tenable
Case Laws:
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GST
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2018 (6) TMI 72
Valuation of a supply - Goods transferred to branches in another state - recipient eligible for full input tax credit - Optical Lenses and Frames for Spectacles and Accessories - transfer from the Head Office in West Bengal to its branches in other states - Section 97(2)(c) of the CGST/ WBGST Act, 2017 - whether such goods supplied to the branches in states other than West Bengal can be valued in terms of the Cost Price under the Second Proviso to Rule 28 of CGST Rules, 2017, instead of 90% of MRP as required under the First Proviso of the same Rule? Held that:- The First Proviso to Rule 28, thus, is clear that where goods are supplied to a recipient for further supply as such, the valuation of these goods when transferred from the supplier to the recipient may, at the option of the supplier, be determined at 90% of the price that will be charged by the recipient to its customer, not being a related person - Whether or not the Supplier avails of this option is solely the discretion of the Supplier. The Second Proviso is applicable for both, goods further supplied to non related customers and to goods used in and for the course of business. It is stated that the value declared in the invoices shall be deemed to be the open market value of the goods. The expression “where the recipient is eligible for full input tax credit”, is to be considered in the light of Section 17(1) of GST Act, to mean that the recipient will be eligible to take full input tax credit of the amount of tax paid by the suppler as mention in the respective invoice or any other document valid under Section 16(2)(a) of GST Act. Ruling:- The Applicant has the option of not supplying goods to its branches under the First Proviso of Rule 28 and is eligible to value these goods by applying the terms of the Second Proviso to Rule 28 of GST Act. The expression “where the recipient is eligible for full input tax credit”, as used in the Second Proviso to Rule 28 of CGST Rules, 2017, means that the recipient will be eligible to take full input tax credit of the amount of tax paid by the suppler as mentioned in the respective invoice or any other document valid under Section 16(2)(a) of GST Act.
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2018 (6) TMI 71
Prayer to reopen the online portal - GST filing - filing of Trans-1 return - availment of Input Tax Credit (ITC) being the transitional credit - credit the Input Tax Credit (ITC) being the transitional credit as the same was filed within the time but could not be uploaded and accepted due to technical error - for the relief claimed, the petitioner has sent the letters dated 8.3.2018 and 1.3.2018 (Annexures P-5 and P-6, respectively) to respondents No.2 and 3, but no action has so far been taken thereon - Held that:- We dispose of the present petition by directing respondent No.2 to take a decision on the letter dated 8.3.2018 (Annexure P-5), in accordance with law by passing a speaking order and after affording an opportunity of hearing to the petitioner within a period of one week from the date of receipt of the certified copy of the order.
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Income Tax
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2018 (6) TMI 69
Penalty u/s 271(1)(c) - rejection of books of accounts - addition of 25% on unverifiable/bogus purchases - Held that:- As decided in DEEPAK DALELA, VERSUS I.T.O., WARD-6 (3) , JAIPUR. [2017 (2) TMI 412 - ITAT JAIPUR] in making computation of total income where the income returned has been rejected by rejecting the trading results, finding some discrepancy in the books of account and substituting the same by an estimated figure, in the strict sense, can neither be said to be addition of any amount in the returned income nor disallowance of any amount as deductions claimed. The word ‘‘amount’’ of which additions made or deductions disallowed also denotes reference to specific item of amount added or disallowed as deduction in contrast to substitution of altogether a new estimated sum in place of the income returned. It is a case neither of addition or disallowance but a case of substitution - Accordingly, we delete the penalty levied - Decided in favour of assessee
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2018 (6) TMI 68
Unexplained jewellery - reason given by the CIT (A) for not accepting the assessee’s contention is that, the wealth tax return was filed 19 years earlier and it is difficult to believe that the same jewellery continued till the date of search - assessee filed reconciliation statement to show that most of the jewellery as was disclosed earlier in the wealth tax return still continued to be in possession and some of them were reconverted over the period of time - Held that:- Even if there was a reconversion then if the overall quantity of jewellery is available with the assessee, then presumption goes in favour of the assessee that same quantity which stood disclosed earlier is available with the assessee and hence nothing can be treated as unexplained. Similarly would be in case of jewellery bequeathed upon assessee after partition of bigger HUF, because bigger HUF had jewellery which was duly disclosed in the wealth tax return. Thus, availability of jewellery with HUF also stands proved. Accordingly, the addition partly sustained by the ld. CIT (A) stands deleted. Unexplained cash - Held that:- We find that though there is no proper explanation given by the assessee as per the availability of the cash, because the bank withdrawal and household expenditure and the contribution made by the wife is not subject to proper verification. In any case, some availability of cash with house wife with old savings and some with the assessee cannot be ruled out. We hold that out of 5,25,000/-, sum of ₹ 2,25,000/- may be treated as explained in view of cash withdrawals and availability of some cash with his wife who is elderly lady. Thus, assessee gets a part relief of ₹ 2,25,000/- and the balance is ₹ 3 lacs is confirmed. - Appeal of the assessee is partly allowed.
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2018 (6) TMI 67
Allowability of commission expenses paid to its sister concern - allowable busniss expenses - Held that:- The supply of iron ore is from altogether new parties qua the parties in the preceding assessment year. This fact also gives considerable strength to the existence of services towards procurement of crucial supply. It will not be correct to view the claim in a petty foggy manner and put heavy burden on the assessee to discharge onus disproportionately. The volatility in the price, the fall in the quantity of purchase, the existence of global recession and uncertainty, supply from altogether new parties on a regular basis gives strong indicator for acceptance of services albeit from sister concern. Thus claim towards commission expenses is bonafide and deserves to be allowed. - Decided in favour of assessee Validity of action of the CIT(A) on apportionment of certain expenses of Sponge Iron Unit to power plant unit - reduction of deduction claimed u/s.80IA to the extent of ₹ 40,17,406/- was reversed by the CIT(A) - Held that:- In parity with the view taken by the co-ordinate bench in assessee’s own case, we do not see any reason to interfere with the decision of the CIT(A) in this regard. Therefore, we decline to interfere with the order of CIT(A). - Decided against revenue
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2018 (6) TMI 66
Delay in filing petition - Condonation of delay Petition not filled - Held that:- There was a delay in filing the appeal before the CIT(A). However, there was no valid condonation petition filed by the assessee and also the assessee has not given good and sufficient reason to condone the delay. As such, the CIT(A) rejected the appeal of the assessee. In our opinion, the appeal of the assessee is to be decided by the CIT(A) as to whether it is duly signed in terms of section 140(c) and also if he finds that it is a valid appeal, then he has to decide the issue of condonation of delay and to decide the appeal on the merits of the issue raised by the assessee, if required. With this observation, we remit the appeal to the file of the CIT(A) de nova.
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2018 (6) TMI 65
Penalty u/s 271AAA - inability to explain certain seized documents - Held that:- When the assessee has failed to specify the manner and substantiate the manner in which the undisclosed income was derived rather embark upon the mercy plea that he is making surrender to buy peace of mind and avoid litigation, he is not entitled for benefit of section 271AAA(2). Following the decision in case cited as Pr.CIT vs. Smt. Ritu Singal (2018 (3) TMI 593 - DELHI HIGH COURT) we are of the considered view that CIT (A) has erred in deleting the penalty u/s 271AAA, hence appeal filed by the Revenue is hereby allowed.
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2018 (6) TMI 64
Interest for default in payment of advance tax leviable u/s 234B - adjustment of the cash seized against the liability of advance tax request ignored - Held that:- Department seized the cash to the tune of ₹ 1,83,45,000/- and deposited in the in the P.D. Account of the company. The assessee made a request in writing dated 10.04.2012 for the adjustment of the cash seized against the liability of advance tax but the Department neither replied nor adjust the said amount of ₹ 8,45,000/-. The amount of ₹ 8,45,000/-, no doubt, it was available with the Department, and the same could have adjusted against the advance tax, therefore, the interest for default in payment of advance tax is not leviable u/s 234B for the reason that assessee had already made a request for adjustment of the amount against the advance tax which was already in the custody of the Department. Similarly, interest under section 234C is not attracted as there was no deferment. The assessee is entitled to adjustment of the seized cash against advance tax liability, therefore, no interest should be charged u/s 234A, 234B, and 234C of the Act, especially when the Department has assessee's money in the P.D. account. - Decided against revenue
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2018 (6) TMI 63
Claim of expenditure towards Interest on PDCs paid in Cash - Direction to compute the interest on post dated cheques from the date after the six months of issue of such post dated cheques i.e. from the date of execution of sale-deed - Held that:- Assessee was used to pay part payments of the sale consideration in respect of the land purchased at the time of execution of the sale-deed and the payments of balance sale consideration were invariably made through post dated cheques (PDCs) and for the intervening period )i.e. period between the date of sale deed and the date of encashment of PDCs), interest was paid in cash to the vendors of the land by the vendee company on monthly basis @ 1.25% p.m. on the amount of PDCs and this cash payment of interest by the vendee company, was not accounted for by it, in its books of account. The addition on the ground has been made in the several group companies of the BPTP group during the course of earlier assessment proceedings u/s 143(3)/148/153A in consequence to search carried out on 15/11/2007. - Decided against revenue Additional payment made to the owners of the land as allowable u/s 37 - Held that:- Payment for acquiring land cannot be said disbursement of expense or not claimed as expense. In case of owner i.e. assessee effectively the owner of the land is purchasing the same and selling all the rights in said land at a cost of land plus ₹ 35,000 per acre. Therefore, the cost of land plus ₹ 35,000 per acre is the sale cost which effectively claimed but due to accounting entries, such transaction gets squared up to the extent of cost of land, as such owner including the assessee is directly crediting ₹ 35,000 per acre in its P&L account. - Revenue appeal dismissed.
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2018 (6) TMI 62
Rejection of approval u/s 10(23C)(vi) - proof of charitable activities - proof of existence solely for educational purposes - Held that:- In the instant case the assessee is having objects other than educational objects and during hearing the ld.AR could not controvert that the said objects are non-educational and primary objects. Therefore, we do not find any error in the order of the Ld. CIT(E) in rejecting the application of the assessee for grant of approval u/s 10(23C) of the Act. Accordingly, we uphold the order of the Ld. CIT(E) and dismiss the appeal of the assessee.
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2018 (6) TMI 61
Estimation of profit - AO estimated the profit @2.5% on the total turnover but CIT(A) enhanced the estimate of profit to 5.88% on the ground that the assessee must have made higher profit since all expenditures were considered while computing the book profit - Held that:- CIT(A) enhanced the addition made by the AO without giving sufficient opportunity of being heard and prayed for one more opportunity to substantiate its claim before the CIT(A). Considering the submission of the assessee and the facts and circumstances of the case as well as in the interest of substantial justice and fairplay, we provide one more opportunity to the assessee to substantiate its claim before the CIT(A) and remit the matter back to the file of CIT(A) Charging of interest u/s.234B - Held that:- Interest u/s.234B can be levied only on the returned income and not on the assessed income. See Ajay Prakash Verma case [2013 (1) TMI 140 - JHARKHAND HIGH COURT].
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2018 (6) TMI 60
Claim of deduction u/s.80IC - proof of manufacturing activities - as per revenue the assessee was doing job work for packaging of products in small and large boxes for which it was paid job work charges from M/s. Gillette India and hence such packaging does not amount to manufacturing - Held that:- The initial claim of 80IC has been allowed after due inquiry and examination of facts on record and such allowability of deduction has attained finality, because as stated by the learned counsel no appeal has been filed by the Revenue against the said order dated 17.11.2009. Whence it has been accepted that assessee firm has been carrying out manufacturing activities and its claim of deduction u/s.80IC has been allowed, then in the subsequent year such a claim cannot be disallowed. Assessee firm has been categorized under the Central Excise Tariff Act as a manufacturer, because it manufactures dyes and moulds for making and designing the packaging materials. It has also granted approval from District Industries Center, Solan.- If assessee is making packaging material as per the requirement of the product with the aid and help of various kinds of machines as incorporated above and it is also registered as manufacturer under the various laws, then such a general inference based on statement of employees cannot be given much credence. Thus, we do not find any substantial merits in the grounds raised by the Revenue that assessee is not engaged in the manufacturing of packaging material - Decided in favour of assessee
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2018 (6) TMI 59
Addition of accrued interest on loans classified under ‘non performing assets’ - Held that:- This issue is squarely covered in favour of assessee by order of co-ordinate bench in assessee’s own case for assessment year 2008-09 [2013 (10) TMI 1291 - ITAT DELHI] wherein held rightly held that overdue interest not realized during the year and credited to suspense interest account cannot be taken to be the income of the assessee. Thus the Ld. CIT (A) has thus rightly deleted the addition in question - there is no substance in the contention of the Ld. DR that the assessee was having no objection to this addition - Decided in favour of assessee Addition to provision created for CA audit fee - allowable expenditure - Held that:- We find that the CIT (A) has given categorical finding that this expenditure has actually been incurred by the assessee. It is further seen that even the provision was created keeping in mind the audit fee prescribed by the NABARD and after taking into account the number of branches which the assessee was operating. Therefore, on this issue also there is no need for any interference by us. - Decided against revenue
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2018 (6) TMI 58
Disallowance of expenses u/s.40A(3) - double expenditure - Held that:- We find that the CIT(A) while dealing with the disputed issue of disallowance u/s.40A(3), observed that the disallowance by the AO u/s.40A(3) of the Act pertaining to the same expenses already disallowed by the tax auditor will lead to double taxation. No good reason to interfere with the order of CIT(A) on this issue and the same is upheld. - Decided in favour of assessee. Unexplained expenditure - Held that:- CIT(A) while dealing with the disputed issue has observed that the assessee has proved from the evidences of its regular cash book and bank statement that all the transactions as per seized cash panna are duly recorded in the regular books of accounts and deleted the addition - DR could not bring any new facts on record to controvert the above findings of the CIT(A). - Decided in favour of assessee.
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2018 (6) TMI 57
Deemed dividend addition u/s.2(22)(e) - appellant had taken loan from his closely held company - Held that:- On perusal of the contention of the AR that M/s Khatore Earthmovers Pvt. Ltd. had opening balance of ₹ 83,71,112/- as on 01.04.2011 with the assessee and the total reserve of the company was less than the amount of advance given. The fresh loan of ₹ 25,000/- and ₹ 3,68,000/- by account payee cheque was for the purposes of business. M/s Khatore Earthmovers Pvt. Ltd. had earned profit of ₹ 15,376/- for financial year 2011-12, as such, advance of ₹ 28,68,000/- cannot be considered as deemed dividend and CBDT Circular No.19/2017, dated 12th June, 2017 we find that the matter needs further verification at the end of AO and accordingly, we remit the entire issue to the file of AO - Decided in favour of assessee allowed for statistical purposes.
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2018 (6) TMI 56
Interest on Refund u/s 244A - inordinate delay in grant of refund - interest on interest on refund - Held that:- Referring to case of Umang Agrawal vs CIT [2015 (6) TMI 142 - ALLAHABAD HIGH COURT] High Court has not laid down that the assessee is entitled to interest on interest for delay in payment of interest. On the other hand, Hon’ble Allahabad High Court has granted compensation to the assessee for the prejudice caused to the assessee in an inordinate delay in grant of refund on the amount of interest. The said compensation was not granted under any provisions of Income tax Act but in exercise of inherent power which is vested with the Hon’ble High Court. Thus in absence of any specific provisions in the Income tax Act, for allowance of interest on refund or compensation for the delayed period of refund of interest, we are constrained to hold that the appeal of the assessee cannot be allowed.
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2018 (6) TMI 55
Benefit of deduction u/s 80IC - proof of income derived from business - income earned by way of interest - interest received from Bank on FDRs pledged as security deposit/performance guarantee with the Government Department in lieu of tender of contracts. - Held that:- As relying on case of Conventional Fastners vs. CIT, Dehradun [2017 (12) TMI 129 - UTTARAKHAND HIGH COURT] as held in the case of assessee held that interest income had nothing to do with the carrying on assessee’s business of manufacture and sale of electric meters, same would not be entitled to benefit of deduction under section 80IC - Decided against assessee
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2018 (6) TMI 54
Penalty u/s 271(1)(c) - payment of retrenchment compensation to employees - Held that:- Assessee initially claimed such amount as revenue expenditure. The Tribunal, vide its order in the second round, has accepted the assessee’s alternate plea for allowing such expenditure as an improvement cost u/s 48 of the Act. It is obvious that the genuineness of payment of retrenchment compensation is not disputed. As against the assessee’s stand of claiming such amount as a revenue expenditure, the Tribunal has adopted another route of allowing such deduction in the computation of capital gain by treating it as cost of improvement. These facts do not warrant imposition of penalty Attributed sale consideration of ₹ 1 lac to building with cost of acquisition at ₹ 70,085/- and computed capital gain at ₹ 29,912/- - Held that:- It is only a case of estimation of sale consideration of super structure. Admittedly, no separate sale consideration of super structure was assigned in the sale deed. Whereas the assessee estimated ₹ 1 lac as sale consideration of building sold, the Assessing Officer estimated the same at ₹ 32.70 lac, which got finally settled by means of appellate order at ₹ 16.35 lac. These facts indicate that penalty is based on mere estimate. As in CIT vs. Aero Traders Pvt. Ltd.[2010 (1) TMI 32 - DELHI HIGH COURT] has held that no penalty u/s 271(1)(c) can be imposed when income is determined on estimate basis - Decided in favour of assessee.
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2018 (6) TMI 53
Addition u/s 40A - adjustment by way of book entry - payment to creditors in cash - Held that:- As per the assessee’s own case [2017 (8) TMI 1377 - ITAT KOLKATA] as held assessee has paid to Shivam Enterprises on the instruction of its creditor M/s Charco Electronics Pvt. Ltd. through account payee cheque. There is no cash payment at all. Therefore, we are of the view that addition made needs to be deleted. - thus there is no violation of provisions u/s 40A(3) - Decided in favor of assessee.
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2018 (6) TMI 52
Penalty u/s 271AAA - manner of undisclosed income derived - Held that:- The issue contested in the present appeal is identical with the case of the bother of the assessee as well as the Hon’ble High Court decision in case Emirates Technologies Pvt. Ltd. [2017 (8) TMI 387 - DELHI HIGH COURT] wherein the penalty imposed u/s 271AAA of the Act is deleted. It is pertinent to note that the penalty provision u/s 271AAA has particularly given the requirement of specifying the manner in which such income has been derived to obtain the immunity. The manner in which such income was derived was not challenged by the Revenue Authorities. Thus, the penalty imposed u/s 271AAA of the Act is deleted. - Decided in favour of assessee.
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2018 (6) TMI 51
Denial of claim of deduction u/s 10B - eligibility as busniss income - incomes on account of duty drawback, exchange rate fluctuation and sales tax refund - Held that:- Pertinently, in so far as the incomes on account of duty drawback, exchange rate fluctuation and sales tax refund are concerned, there is no dispute that the same has been treated by the Assessing Officer as "business income". The said aspect is clearly emerging from the assessment order. Thus as AO accepts the aforesaid three elements of income as forming part of the "business income" of the assessee's eligible undertaking, the same cannot be excluded for the purpose of computing deduction under section 10B of the Act. SEE Maral Overseas Ltd. v. Addl. CIT [2012 (4) TMI 345 - ITAT INDORE] In so far as the amount of other income is concerned, the same has been assessed as "income from other sources" and there is no material before us to distract from the same. Therefore, the said element of income, in our view, is not entitled for claim of deduction under section 10B of the Act. - Decided partly in favour of assessee
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2018 (6) TMI 50
Higher rate of depreciation on “injection Molding Machine” - CIT-A allowing depreciation @ 30% as against 15% allowed by the AO - Held that:- Since the appellant is engaged in the manufacture and printing of laminated pouches and plastic bags, the 'injection moulding machine' used in such manufacturing can only be termed as moulding machine and, therefore, the same shall qualify for higher rate of depreciation (@30%) instead of 15% as allowed by the A.O. The remaining equipment e.g. office equipments, electrical fittings, lab equipments etc. shall not come under this block and no higher rate of depreciation shall be applicable on these assets. The appellant's argument that since ‘main machinery' used by it is 'injection moulding machine', all the items should qualify for depreciation @30% is devoid of merits since lab equipments, electrical fittings, vehicles etc. form separate block of assets on which different rates of depreciation are applicable. - Decided against revenue
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2018 (6) TMI 49
Deduction u/s 80-IC - development of a software, which automatically controlled the inbuilt generators installed beneath the telephone towers for communication - Revenue has contended that the manufacturing unit of the assessee was not in existence - Held that:- In immediately preceding assessment year, the assessee has filed sufficient evidence of existence of unit at the address i.e. village Salempur, Rajputana, Roorkee, district Hardwar (Uttaranchal), and accordingly the Tribunal accepted the finding of the learned Commissioner of Income-tax (Appeals)-I, Dehradun for holding that the unit was in existence during relevant period. Since in the year under consideration, the identical issue of denying deduction under section 80-IC of the Act on the allegation of non-existence of the unit is involved, respectfully following the decision of the Tribunal (supra), we uphold the finding of the learned Commissioner of Income-tax (Appeals) on the issue in dispute and dismiss the grounds of the appeal of revenue
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Customs
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2018 (6) TMI 48
Interest on delayed Refund - finalization of assessment not done within time frame - litigation pending before various forums for entire period till finalization of assessment - contention of the appellant is that there has been inordinate delay in finalizing the assessment and granting refund which resulted in withholding of legitimate amount causing monetary loss and hardships to the appellant which has to be compensated by way of paying interest on the sanctioned refund. Held that:- On facts, it is brought out that the refund has been sanctioned within three months from the date of finalization of provisional assessment - Section 18(4) provides to pay interest only when the refund is delayed beyond three months after finalization of assessment. For the entire period till the finalization of assessment, there were litigations pending before various forums and after the finalization of assessment, refund has been sanctioned within a period of three months. When the statute does not provide to pay interest, the Tribunal which is a creature of the statute cannot grant any amount in the nature of compensation. The claim of the appellant for interest on delayed refund cannot sustain - appeal dismissed - decided against appellant.
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2018 (6) TMI 47
Import of 'second hand diesel engine with turbocharger' - Benefit of N/N. 21/2002-Cus dated (at sl. no. 357) denied - whether Capital Goods or not? - 'parts of dredger' - Confiscation orders - redemption fine - Penalty - Held that:- The exemption claimed by the appellant was restricted to 'parts of dredger' and the original authority relied upon the note in section XVII (within which chapter 89 of the First Schedule to Customs Tariff Act, 1975 is contained), which excludes coverage of goods falling under heading 8401 to 8479 of the First Schedule to Customs Tariff Act, 1975 therefrom, to deny connection with 'dredgers' to parts classified under heading 8412 of the First Schedule to Customs Tariff Act, 1975 - The description in the exemption notification must be read in its entirety and harmoniously in accordance with which, all parts of dredgers, including engines, must be accorded the benefit of exemption. There is no dispute that it was an engine, that was imported and not a 'generator'. Capital goods are not restricted to manufacturing activity; they find use in rendering of services or other activity that contributes to rendering of service. Dredging is a service and dredger cannot function without an engine - engines are, therefore, undoubtedly capital goods. There is no requirement of license for import of used capital goods - Confiscation order fails - appeal allowed - decided in favor of appellant.
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Service Tax
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2018 (6) TMI 46
Commercial training or coaching services - Commercial Concern or not? - Liability of service tax - conducting of training programmes under the phrase “continuing education and training programme” which included short term programmes of basic subjects, sophisticated technologies and on topics of specialization of contemporary relevant subjects - Held that:- The definition of “Commercial Coaching and Training Services” is added with an explanation to give the definition of the word “commercial” means to include charitable institutions or any other institution registered under Societies Act, like the appellant herein. During the period in question i.e. 1.07.2003 to 31.03.2006, the definition of “Commercial Coaching and Training Services” did indicate that if an assessee is issuing degree or certificate or diploma, if it is recognised by the law, the service tax liability does not arise - Since this plea that their Institution has been recognised by AICTE, the same was raised but was not considered by the adjudicating authority, the matter needs reconsideration by the adjudicating authority. Appeal allowed by way of remand.
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2018 (6) TMI 45
Period of Limitation - Refund of CENVAT credit - Relevant Date - whether the relevant date is the date shown in the invoice or the date when the FIRC is received in India in the case of refund claim filed with respect of export of services? - Held that:- The Larger Bench of the Tribunal in the case of Commissioner of Central Excise Vs. Span Infotech (India) Pvt. Ltd. [2018 (2) TMI 946 - CESTAT BANGALORE] has held that the relevant date for the purposes of deciding the time limit for consideration of refund claims under Rule 5 of CENVAT Credit Rules has to be taken the end of the quarter in which the FIRC is received and not the date of invoice - the rejection of refund on the ground of time-bar is unjustified - appeal allowed - decided in favor of appellant.
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2018 (6) TMI 44
Interest on delayed refund - relevant date - maturity of refund as per the Tribunal order - appellant claims that they are entitled for the interest right from the date of deposit of the amount - Section 11 BB of CEA - principle of restitution not applicable - Held that:- As per Section 11BB, the interest is payable from three months from the date of application. Except the provision of Section 11BB, there is no provision by which the interest can be granted from the date of deposit - This Tribunal, being a creature under the statute of Central Excise Act, cannot go beyond the statutory provision made under that Act. The interest is not payable from the date of deposit, but it is payable only after three months of filing the application - As per provision of Section 11B(5)(B)(ec), the refund becomes matured only as a consequence of the Appellate Tribunal’s order. When the refund itself is not matured prior to the date of Appellate Tribunal’s order, there is no question of interest for the period prior to the date of order. The Apex Court decision in the case of ONGC Ltd. vs. CC [2007 (8) TMI 346 - SUPREME COURT OF INDIA] are factually different and do not apply to the present case. The Hon’ble Supreme Court, under the inherent power of the apex court on the principle of restitution, granted the interest from the date of deposit. However, the statutory provision under the Customs Act i.e. Section 27 of the Customs Act, 1962 has not been considered. The entire case was decided on the principle of restitution - therefore, the facts of the case are entirely different. Larger Bench of this Tribunal in the case of Indian Thermoplastics (P) Ltd. [2003 (12) TMI 84 - CESTAT, NEW DELHI] has held that the relevant date for completion of period for grant of interest is from the date of expiry of three months from the date of receipt of final order of the Tribunal till the date of payment. Therefore, the interest is not payable from the date of deposit. The appellant is not entitled for the interest from the date of deposit of the demand amount - appeal dismissed - decided against appellant.
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Central Excise
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2018 (6) TMI 43
Cenvat Credit wrongly availed - Demand of Interest and penalty - reversal of ineligible credit on being pointed out, prior to its utilization - Rule 6 of CCR - Held that:- Since the credit had been reversed by the respondent prior to its utilisation, the Tribunal rightly held the demand of interest unsustainable. Penalty - intent to evade duty - Held that:- since there was no intention to evade payment of duty on the part of the respondent, the same was also held to be unwarranted. Appeal dismissed - decided against appellant.
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2018 (6) TMI 42
Works contract services received after 01.04.2011 - Service tax credit denied - period Jan 2013 to March 2013 - services used for setting up of factory after 01.04.2011, which is after amendment of CCR 2004 - Held that:- Post 01.04.2011 the services were excluded from the purview of input services in terms of Rule 2(l) (ii) of CENVAT Credit Rules - credit rightly denied. GTA service - Input service credit - period June 2011 to March 2012 - denial on the ground that Sample invoices perused by the Commissioner (A) have not indicated that the applicant was under obligation to deliver the goods at customers place - Held that:- These services are for the period June, 2011 to March, 2012 i.e. post 01.04.2008 - credit denied following the decision of Commissioner of Central Excise & Service Tax Vs. Ultra Tech Cement Ltd. [2018 (2) TMI 117 - SUPREME COURT OF INDIA] wherein, it was held that outward transportation of goods from place of removal to buyer’s premises post 01.04.2008 is ineligible for availment of CENVAT credit - credit denied. CENVAT credit - inputs - washer blanks, foundation bolts and nuts - period September 2010 to April 2011 - appellant have admitted that they were used for foundation work of storage tank, machinery and other civil work - Held that:- The CENVAT credit availed on foundation bolts, washer blanks, etc., are ineligible as they are for the purpose of structural construction on shed/ building etc., however, CENVAT credit of the Central Excise duty paid on dust collection bags made from 100% Polyester Nonwoven Needle felt supplied by Genuine Filters & Fabrics are to be held has eligible for availment of CENVAT credit - credit allowed in part. CENVAT credit - duty paying documents - renting of immovable property service - period January, 2013 to August, 2013 - credit denied as the invoices were raised on their unit in sedam, Karnataka and not on the address of the appellant. Invoices didn’t have all the particulars as required under CCR 2004 - Held that:- The definition of the inputs and input services indicates that there should be directly or indirectly, in or in relation to the manufacture of the final products. In the case in hand, appellants were manufacturing cement at their Bollaram unit; even though production at Bollaram factory was suspended they had continued to maintain the lease premises with them, in anticipation that the Bollaram unit will start manufacturing after labour trouble is sorted out - the findings of the lower authorities that production was not taking place at Bollaram unit, hence, the CENVAT credit needs to be denied is incorrect proposition - credit allowed. CENVAT credit - period January, 2013 - Liaison Services, labour charges for erection, laying of cables from Jayasudha Enterprises and Scientific and Technical Consultancy Services from Bureau of Indian Standards, invoices of which were raised in their Sedam unit in Karnataka - Held that:- These invoices were raised on their another unit, but the renewal was for various licences at Bollaram unit and the labour charges were paid for laying cables and various other activities in spite of the unit at Bollaram suspended - credit allowed. Penalty - Held that:- Penalty seems to be unwarranted as the most of CENVAT credit availed by the appellants are allowed and denied by the Bench on the question of interpretation of eligibility to avail credit and the appellant had informed the Revenue Authorities by filing the returns regularly. Appeal allowed in part.
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2018 (6) TMI 41
Benefit of reduced penalty - Ineligible CENVAT credit - invoices issued prior to 01.09.2014 - N/N. 21/2014 dated 11.07.2014 - whether reduced penalty to the tune of 25% as per section 11AC (1)(b) of Central Excise Act, 1944, is allowed to be paid by the appellant herein or otherwise? - Held that:- if an adjudicating authority imposes penalty post 14.05.2015 under the provisions of Rule 15(1) of the CENVAT Credit Rules, 2004, an assessee has an option to pay 25% penalty as per the provisions of Section 11AC (1)(b) of the Central Excise Act, 1944, if he does so within 30 days. In the present case, the Order-in-Original is passed on 30.06.2016, it is very clear from the records, it was received by the appellant on 12.07.2016 as per the copy of acknowledgment produced by Counsel. If the appellant has paid 25% of the amount of the penalty of ₹ 1,53,273/- within 30 days of the receipt of the Order-in-Original, which in this paid on 09.08.2016, the benefit of Section 11AC(1)(b) of the Central Excise Rule needs to be extended - the case stands closed for the appellant herein, he need not pay any further penalty. Appeal allowed - decided in favor of appellant.
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2018 (6) TMI 40
Denial of CENVAT credit - fake invoices without receipt of raw material - diversion of raw material - demand of amount alongwith interest and penalty - Held that:- Revenue has come to a finding of non receipt of raw material on the ground that the said two traders who have supplied the raw material to the appellant, under the cover of their invoices, never purchased the rounds of standard specifications from RINL, which was the requirement of the contract. Even if the above allegation of the Revenue are accepted, this will lead to one factor that the appellant did not use the standard specifications material, as specified in the contract. The said fact will not lead to inevitable conclusion that no raw material was ever received by the assessee. The Revenue has not produced any evidence that if the raw material was not received by the present appellant, where was the same diverted - The Revenue has neither alleged nor produced any evidence to show any alternate source of procurement of said raw material. CENVAT credit allowed - appeal allowed - decided in favor of appellant.
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2018 (6) TMI 39
Valuation - clearance of paper in reels form but not on sale basis - short payment of duty - galvanization on the pipe - precedent cases - Held that:- The identical matters have been decided by Tribunal in the case of Ballarpur Industries Ltd. v. CCE [2018 (1) TMI 162 - CESTAT MUMBAI] where it was held that since, the price of paper reels at the depot at the time of removal was available and the duty had been paid only on that price, there is no short payment of duty. It is an admitted position that there is no resjudicata in the Revenue matter but precedent needs to be followed unless there is any logical and legal reason to differ from - the decision in the case of Sidhartha Tubes Ltd. v. Collector of Central Excise [2005 (12) TMI 92 - SUPREME COURT OF INDIA] wherein it has been held that concept of valuation is different from the concept of manufacture. In the case, it is noted that the galvanization on the pipes has been done within the factory and place of removal was factory gate. In these circumstances, the facts being different, the decision does not support the case of Revenue. Decided in favor of appellant.
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CST, VAT & Sales Tax
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2018 (6) TMI 70
Stay on Recovery of assessed tax - recovery actions initiated inspite of pending appeals and the applications for stay - Held that:- Taking note of similar orders passed by this Court in analoguous situations, it is of the view that the petitioner can be given some respite from the rigor of recovery, at least until such time as his stay petition is considered by the 2nd respondent - the 2nd respondent are directed to take up, consider and pass orders on Exts.P3, P3(a) and P3(b) stay petitions preferred by the petitioner, within a period of one month from the date of receipt of a copy of this judgment - Until such time as the 2nd respondent passes an order on the stay petition, and communicates the same to the petitioner, all steps for recovery of amounts against the petitioner shall be kept in abeyance.
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