TMI Tax Updates - e-Newsletter
June 7, 2017

Case Laws in this Newsletter:

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

Articles

1. PLACE OF SUPPLY OF SERVICES UNDER GST REGIME – PART II

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Cabinet Secretary asks the different Ministries/Departments and Public Sector Undertakings (PSUs) under these Ministries to set-up and activate a GST Facilitation Cell to provide all possible support to the business and industry sector for the smooth roll-out of GST with effect from 1st July, 2017

2. 24 States pass the State GST (SGST) Act While 7 States viz. Meghalaya,Punjab,Tamil Nadu, Kerala, Karnataka, Jammu & Kashmir and West Bengal have yet to pass the SGST Act

3. The Union Minister of Finance, Defence and Corporate Affairs leaves on a 4-day official visit to Paris to attend OECD Meetings among others

4. CBDT notifies transactions for which the condition of chargeability to STT for claiming exemption under Section 10(38) of the Income Tax Act, 1961 shall not apply

5. RBI Reference Rate for US $

6. Leading Importers and Exporters participate in the Mango Buyer Seller Meet

7. Auction for Sale (Re-issue) of Government of India Floating Rate Bonds 2024 and other Government Stocks

8. India Signs Loan Agreement with the World Bank for USD 39.2 Million for the project “Assam Citizen Centric Service Delivery”

Notifications

Customs

1. 25/2017 - dated 5-6-2017 - ADD

Seeks to levy provisional anti-dumping duty, on 'Toluene Di-Isocyanate' (TDI) originating in or exported from China PR, Japan and Korea RP for a period of six months (unless revoked, superseded or amended earlier) from the date of imposition of the provisional anti-dumping duty, that is, 5th June, 2017

Income Tax

2. 43/2017 - dated 5-6-2017 - IT

U/s 10(38) of IT Act 1961 - Central Government notifies all transactions of acquisition of equity share entered into on or after the 1st day of October, 2004

VAT - Delhi

3. F. 3(14)/Fin (Rev.-I)/2012-13/ DS-VI/289 - dated 2-6-2017 - DVAT

Appointment of Assistant Commissioner cum VATO

Circulars / Instructions / Orders

Companies Law

1. 07/2017 - dated 5-6-2017

Clarification regarding transmission of Securities by Operation of Law - Reg.

Highlights / Catch Notes

Income Tax

• Income Cannot Be Double Taxed: Revenue Must Allow Deduction for Another Taxpayer if Recognized as Capital Gains Income.

  Case-Laws - AT : The same income cannot be charged to tax twice. Once the revenue accept the income offered by another assessee as income under the head ‘income from capital gains’, the same has to be allowed as deduction in the hands of assessee. - AT
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• Court Rules in Favor of Taxpayer: Mistake in Deduction Section Does Not Affect Revenue Interests, Vacates Section 263 Order.

  Case-Laws - AT : Claim for deduction u/s.54 or u/s 54F - , mentioning of the wrong section in the return of income while claiming deduction cannot be considered as prejudicial to the interest of the Revenue - order of CIT u/s 263 vacated - AT
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• Court Rules No Accrued Right for Assessee to Claim Final 10% Payment Due to Contractual Terms.

  Case-Laws - AT : Accrual of income - retention money - When the assessee had no right to receive the money by virtue of the contract between the parties and the assessee also had no right to enforce payment, it could not be said that the right to receive payment of the remaining 10 per cent of the value of job had accrued - AT
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• Section 271(1)(c) Penalty Not Applicable for Undisclosed Foreign Income After Accepted Revised Return Filed u/s 153A.

  Case-Laws - AT : Penalty u/s 271(1)(c) - undisclosed foreign income - revised return filed u/s 153A after search - the same income has been accepted which was returned by the assessee, therefore, the penalty u/s 271(1)(c) was not leviable. - AT
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• Capital Gains Assessment: Commissioner of Income Tax (Appeals) Uses BSE Prices from Sep-Nov 2000 for Fair Valuation.

  Case-Laws - AT : Determining the market price of the share - capital gain computation - CIT-A has rightly taken into consideration the price of the shares quoted on the Bombay stock exchange for the month of September and November, 2000, which is the period just after completion of the acquisition of the undertaking. - AT
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• Potential Rent Income Excludes Interest from Tenant's Fixed Deposit u/s 23(1); Not Taxable as Business or Property Income.

  Case-Laws - AT : Section 23(1) contemplates the possible rent that the property might fetch but certainly not the interest in the fixed deposit that may be placed by the tenant with the landlord in connection with the letting out of such property. The notional interest was not assessable either as business income or as income from house property. - AT
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• Transfer Pricing Error: Incorrect Income Imputation Due to Non-Existent Agreement u/s 92(1) of Income Tax Act.

  Case-Laws - AT : TP - Reimbursement of expenses / out of pocket expenses - Transfer Pricing Officer erred in proceeding to infer a non-existent understanding between assessee and its associated enterprises so as to impute income qua the instant transaction in terms of section 92(1) - AT
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• No Penalty for Delay in e-TDS Returns Due to Reasonable Cause u/s 272A(2)(K.

  Case-Laws - AT : Levy penalty u/s 272A(2)(K) - delay in submitted e-TDS returns - the fact that there were large number of deductees spread throughout the country and efforts were made by the assessee to obtain their PANs numbers, the fact that taxes have been deducted and deposited, hence no loss to the Revenue - assessee has a reasonable cause for delayed filing of its e-TDS returns - no penalty - AT
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Customs

• Refund Claim for Excess Duty Paid on Imports Valid Despite Uncontested Bill of Entry Assessment Under Concessional Duty Notification.

  Case-Laws - AT : Refund claim of excess duty paid - The assessment was done on standard rate of duty whereas as per the said notification concessional rate of basic duty at the rate of 10% was available to the imported goods - The refund is not liable to be denied on the basis that the assessment of bill of entry was not challenged - AT
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• Appellant Loses Right to Challenge Valuation After Mis-Declaration; Revenue's Valuation and Duty Stand Firm.

  Case-Laws - AT : Once mis-declaration is established, the appellant loses its right to challenge the valuation further. Therefore, the valuation adopted by Revenue for adjudication remained unchallenged and duty is leviable thereon. - AT
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Service Tax

• Royalty for Technical Knowhow Not Subject to Service Tax Under "Intellectual Property Service" Category.

  Case-Laws - AT : Royalty - whether royalty received by the appellants for providing technical knowhow for manufacture is liable to service tax under the category of “Intellectual Property service”? - Held No - AT
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Central Excise

• Assessee's Duty Calculation Post-Unit Closure Valid if Offset Correctly, Complies with Statutory Scheme.

  Case-Laws - AT : Valuation - pan masala - closure of the unit - if the assessee has correctly calculated the proportion of duty and set off the same against the duty payable for the next month, it cannot be said that the said action is contrary to the statutory scheme. - AT
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• CENVAT Credit Approved: Fabrication, Nursing, Travel, and Membership Services Deemed Related to Manufacturing Activities.

  Case-Laws - AT : CENVAT Credit - input services - Miscellaneous Fabrication and Erection Service - Male Nurse Service - Service for Traveling expenses - Membership subscription service - denial on account of nexus - thease services either related to manufacturing or business as such - credit allowed - AT
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Case Laws:

• Income Tax

• 2017 (6) TMI 251
  Amount seized u/s 132 utilized for the purpose of discharging the liability already determined on completion of the assessment proceedings - Held that:- The amount seized can only be utilized for the purpose of discharge of liability with regard to tax liability already determined and not paid by the assessee and for nothing more. In this case, the Department is only entitled to retain the amount of tax determined, as contained in para 8 of the counter affidavit, i.e. the tax liability for the assessment year 2004-2005 as admitted by the petitioners. Apart from the aforesaid, no further amount can be retained by the petitioners as the provisions to sub section (3) of Section 132B That being the position, we are of the considered view that with regard to the amount in question, at best the respondents can retain the amount so far as it pertains to discharge of tax liability of the petitioners for the year 2002-2003. 2003-2004 and 2004-2005, out of which according to petitioners showing for the assessment year 2002-2003 and for the year 2004-2005 certain amount has already been paid by them as is detailed in para 5 of their rejoinder along with documents Annexures 8/A and 8/B. The amount of Rs. 30 lacs retained by the Department cannot be permitted any further. They are liable to return the same after adjusting the liability for the years 2002-2003 and 2004-2005 that also after causing an enquiry with regard to the amount already paid by the petitioners as deailed in para 5 of the rejoinder. The remaining amount should be returned back to the petitioners after causing an enquiry with regard to the averments made in para 5 of the rejoinder within a period of one month from the date of receipt of a copy of this order.

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• 2017 (6) TMI 250
  Denial of assessee’s claim for allowance of expenditure incurred for perfecting title and taking possession of the property sold - Held that:- In a related case viz., Smt. Farida Alladin Vs. ACIT [2014 (1) TMI 101 - ITAT HYDERABAD] on an identical issue allowed the claim of the assessee for similar allowance directing the A.O. to allow the deduction claimed by the assessee under section 48 on account of payment made for release of lease hold rights created by her ancestors/predecessors - Decided in favour of assessee. Denial of assessee's claim for allowance of consideration paid to confirming party as cost of acquisition - Held that:- It is clear from the records that the assessee along with the other family members allowed Mr. Karim Nawaz Alladin as party in the negotiation and be a assigning party. The relevant agreement is placed on record. It is fact that the assessee has shown the sale consideration and declared this payment as application on the sale consideration. The same was also confirmed by Mr. Karim Alladin. The same amount of sale consideration was declared by Mr. Karim in his return of income and sale consideration from Assignment right and declared as capital gains. The same was accepted by revenue. As far as revenue is concerned, the whole sale consideration was declared and charged for capital gains. There cannot be any revenue loss. Moreover, the same income cannot be charged to tax twice. Once the revenue accept the income offered by Mr. Karim as income under the head ‘income from capital gains’, the same has to be allowed as deduction in the hands of assessee. Accordingly, ground raised by the assessee is allowed.

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• 2017 (6) TMI 249
  Addition made on account of capitalization of amount in respect of contract awarded - Held that:- We find that the amalgamation of the JSW(E)Ratnagiri took place on 01.04.2010, that before that date Ratnagiri Unit was an independent entity, that the alleged bogus bills were obtained by JSW(E)Ratnagiri.If any addition in that regard had to be made it could be made in the hands of Ratnagiri Unit or successor to that unit. The FAA has deleted the addition as the bills were not taken by the assessee in the year under consideration. In our opinion the order of the FAA does not suffer from any legal or factual infirmity.Therefore, confirming the same the Ground is decided against the AO. Disallowance u/s. 14A r.w. Rule 8D - Held that:- AO had not given any justification for enhancing the disallowance to Rs. 44 crores (approx.),that the FAA had restricted the disallowance to Rs. 9.14 crores only, that the assessee itself had offered the disallowance in the return filed in response to notice u/s. 153A of the Act. Considering the above, we are of the opinion that there is no need to disturb the order of the FAA. Deduction u/s. 80IA in respect of the total disallowance u/s.14A - Held that:- Issue was adjudicated in favour of the assessee by the Tribunal while deciding the appeal for AY 2008- 09 wherein held whatever income was enhanced on account of disallowance computed u/s 14A of the Act, it has been offset by the exemption available on such enhanced profit in terms of section 80IA of the Act. Thus, on facts it is quite clear that the disallowance u/s 14A of the Act does not impact the net taxable profits as assessee becomes eligible to higher exemption u/s 80IA of the Act Treatment given to sale proceeds of CER and reduction of a sum on account of de-merger of investment division while computing the book profit - Held that:- While deciding the appeal for the AY.2008-09 Tribunal had dealt with the issue restoring back the issue to the file of the AO for fresh adjudication

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• 2017 (6) TMI 248
  TDS u/s 194C - payments made to the manufacturers without TDS deduction - Disallowance invoking section 40(a)(ia) - whether the payees are not “sub-contractors” ? - leviability of interest u/s.234A/234B/234D - Held that:- Consedring the assessee's submission that the assessee is not a contractor as prescribed u/s.194C(2) of the Act and the previous year involved is 2004-05 relevant to assessment year 2005-06 and the provisions of the section 40(a)(ia) of the act brought into statute book on 10.09.2004. Being so, it cannot be applied to the entire assessment year. Further, it was submitted that each payment is less than Rs. 20,000/- and aggregate payment is less than Rs. 50,000/- to each party in the assessment year under consideration. Being so, Sec.194C(2) of the Act cannot be applied. As these facts were not examined by the Ld.CIT(A), though raised before him and prayed the issue may be remitted to the file of AO for considering all the facts.

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• 2017 (6) TMI 247
  Revision u/s 263 - Claim of loss on account of forfeited amount - Held that:- AO has accepted the claim of assessee in respect of loss on account of forfeited amount of Rs. 5 lakhs, only on the basis of submissions of assessee without conducting further enquiry with regard to the genuineness and nature of the loss. Perusing the submissions of assessee, it does not prove the nature of loss as revenue expenditure. Being so, it is to be examined by the AO. At this point, we make it clear that the ld. CIT in his order clearly mentioned that there is no proper enquiry made by the AO and he is required to cause further enquiry regarding this expenditure as the AO stopped the enquiry after receiving the submissions from the assessee. In view of this, we do not find any infirmity on the findings of the ld.CIT with reference to the claim of loss of advance paid to M/s.Volvo India Pvt Ltd. Claim for deduction u/s.54 or u/s 54F - mentioning of the wrong section - Held that:- Our opinion on allowability of deduction u/s.54F of the Act is an alternative claim of assessee and not a fresh claim so as to file the revised return. The assessee has already filed the revised return and has made a claim in its return under wrong section. At the time of assessment, the assessee clarified that claim of deduction u/s.54 of the Act is wrong and it should be claimed u/s.54F as the assessee has used the capital gains of sale of property for purchase of residential house within a due date. Hence, mentioning of the wrong section in the return of income while claiming deduction cannot be considered as prejudicial to the interest of the Revenue. Accordingly, no merit in the order of ld.CIT in invoking the provisions of the section 263 on this issue. Accordingly, the findings of the ld.CIT to make proper enquiry by the AO is vacated. Appeal of the assessee partly allowed.

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• 2017 (6) TMI 246
  TDS u/s 194C - disallowance u/s. 40(a)(ia) - hire charges payment - whether the second proviso is prospective or retrospective in nature? - Held that:- The second proviso to section 40(a)(ia) has retrospective effect from 01.04.2005 and in case the recipients of the amount have taken into account for computation of their income offered to tax in the return of income then no disallowance can be made u/s. 40(a)(ia). Hence we set aside this issue to the record of the AO for limited purpose of verification of the facts whether the recipients have considered the amount in question for computation of their income offered to tax. Whether this payment is sharing of the revenue at source and therefore the provisions of section 194C are not applicable? - Held that:- It is pertinent to note that this is more of a question of fact than law as to whether the payment in question are sharing of revenue or are in the nature of hire charges. We find that though the assessee filed the affidavits of the recipients in support of the claim however neither the AO nor the CIT(A) have conducted a proper enquiry to verify this fact rather the evidence produced by the assessee was rejected at threshold. Even the decisions relied upon by the assessee before us were also not considered by the authorities below. Therefore we have already set aside the issue of non-applicable of provisions of section 40(a)(ia) by virtue of second proviso to said section we deem fit and proper that this issue of nature of payment also requires a proper verification and examination at the level of the AO. Accordingly, we set aside this issue to the record of the Assessing Officer for proper examination - Appeal of the assessee allowed for statistical purposes.

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• 2017 (6) TMI 245
  Deemed dividend - Held that:- When the assessee’s premises and premises of PMPL are located in the same street, there is no requirement to hire lorry for carrying the goods. AR has invited my attention towards stock register of PMPL, a copy at page 42 of the paper book, which shows the corresponding receipt of goods from the assessee. It can be seen from the account of M/s PMPL in the assessee’s books for preceding and succeeding years, that similar type of trade transactions were carried out between the two entities in these years as well. Since the receipt of Rs. 18,10,000/- was on account of advance from the company, for which supply was made during the year itself, such receipts of advance cannot be construed as a dividend u/s 2(22)(e) of the Act. Therefore, order for the deletion of this addition. Enhancement u/s 2(22)(e) - Held that:- It is observed that the combined account was filed by the assessee with the ld. CIT(A) on 21.11.2016, which happens to be the last date of hearing as recorded on the titles of the impugned order. This shows that the ld. CIT(A) got the details and closed the hearing without making any further enquiries from the assessee about the nature of transactions. It was obligatory on his part to confront the assessee about his point of view and seek explanation before making any addition, which course of action has not been followed in the instant case. In my considered opinion, the ends of justice would meet adequately if the impugned order on this score is set aside and the matter is restored to the file of ld. CIT(A) for deciding this aspect of the matter afresh, after allowing an opportunity of hearing to the assessee.

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• 2017 (6) TMI 244
  Disallowance of claim for deduction being the provision for warranty quantified at 2% of the total sales in the computation of taxable total income - Held that:- In our opinion, the warranty based on the actionable basis or scientific basis, it is to be allowed. This fact was not demonstrated by the assessee before the Ld.CIT(A). If the methodology followed to make such warranty provisions in the books of accounts is on notional basis, then notional provisions cannot be allowed. The assessee is duty bound to explain the basis on which it was provided in the books of accounts of the assessee. Accordingly, the issue in dispute is remitted to the file of ld. Assessing Officer for fresh consideration. Disallowance of foreign exchange fluctuation loss - Held that:- In our opinion, the loss incurred by the assessee on account of foreign exchange fluctuation is arisen on depositing of export proceeds in EEFC account based on RBI guidelines. Being so, the loss on this count to be allowed as a revenue loss in view of the judgment of Supreme Court in the case of Woodward Governor India (P) Ltd. in [2009 (4) TMI 4 - SUPREME COURT]. Accordingly, this ground of assessee is allowed TDS u/s 195 - Disallowance u/s.40(a)(i)- commission paid without deducting TDS - Held that:- A similar issue came for consideration before this Tribunal in assessee's own case for assessment year 2008-09 as held that the non-resident agent did not provide technical services for the purposes of running of the business of the assessee in India. Therefore, the commission paid to the nonresident agents would not fall within the definition of “fees for technical services” and the assessee was not liable to deduct tax at source on payment of commission. - Decided in favour of assessee Addition on account of retention money - Held that:- As decided in CIT vs East Coast Constructions and Ind. Ltd, [2006 (1) TMI 77 - MADRAS High Court] the assessee was entitled to receive the retention money after completion of the contract. On the date of the bills, no enforceable liability had accrued or arisen. When the assessee had no right to receive the money by virtue of the contract between the parties and the assessee also had no right to enforce payment, it could not be said that the right to receive payment of the remaining 10 per cent of the value of job had accrued - Decided in favour of assessee Addition made towards forfeited trade advances - Held that:- CIT(A) deleted the addition without calling for a remand report from the AO and the submissions of the assessee is not at all verified by the AO. Hence, this issue in dispute is remitted to the file of AO for fresh consideration.

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• 2017 (6) TMI 243
  Addition being replacement of some portion of the machinery to the income of assessee - nature of expenditure - revenue or capital - Held that:- ITAT in[2012 (3) TMI 581 - ITAT CHENNAI] already settled this issue and the Tribunal has given a categorical finding that the expenditure is capital expenditure and the assessee is only entitled for depreciation on it. Now, the ld.A.R cannot re-argue the settled issue and this Tribunal has no power to review the earlier Order of Tribunal, which was reached the finality. Accordingly, this ground raised by the assessee is rejected.

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• 2017 (6) TMI 242
  Penalty u/s 271(1)(c) - undisclosed foreign income - revised return filed u/s 153A after search - Held that:- the income returned by the assessee u/s 153A of the Act has been accepted by the AO and once the AO accepts the revised return filed u/s 153A of the Act, the original return u/s 139 of the Act abates and becomes non-est. Therefore, in view of case of Pr. CIT Vs Sh. Neeraj Jindal and Others [2017 (2) TMI 1002 - DELHI HIGH COURT ] the concealment has to be seen with reference to the return which has been filed by the assessee for the purpose of levying penalty u/s 271(1)(c) of the Act, what has to be seen is whether there is any concealment in the return filed by the assessee u/s 153A and not vis-à-vis the original return filed u/s 139 of the Act. In the present case, the same income has been accepted which was returned by the assessee, therefore, the penalty u/s 271(1)(c) of the Act was not leviable.- Decided in favor of assessee.

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• 2017 (6) TMI 241
  Rejecting application seeking registration u/s 12AA - Held that:- As gone through the objects of the trust, a bare reading of the objectives makes it clear that objectives of the trust are essentially for the purpose of benefit of a particular religious community as per Clause 5 of the objects states oppose the laws which effect the Jain Community and Religion. CIT has rightly rejected the application. We also find that the dominant objectives of the assessee in the form of the other clauses of the objectives is for the purpose of safeguarding and benefiting the interest of the Jain Community. Therefore, we do not see, any reason to interfere into the decision of the Ld. CIT(E) same is hereby affirmed, this application is dismissed - Decided against assessee.

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• 2017 (6) TMI 240
  Sale of land - capital asset - exemption from tax on sale of agricultural land calimed - LTCG on sale of land - nture of land sold - land beyond 8 kms from any municipality - Held that:- Respectfully following the decision of the Hon’ble Punjab and Haryana High Court in the case of Smt. Anjana Sehgal [2011 (3) TMI 695 - PUNJAB AND HARYANA HIGH COURT] we hold that for claiming the agriculture land as not a capital asset, the land in question should be beyond 8 kms from any municipality and not only from the jurisdictional municipality. Accordingly, the order of the Ld. CIT-A on the issue in dispute is set aside and ground of the appeal of the Revenue is allowed.

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• 2017 (6) TMI 239
  Addition on unexplained cash credits – recovery from existing & accepted sundry debtors as on 31.03.2005 - Held that:- Assessing Officer has not only verified the source of the deposit in the bank account of the assessee, but has also verified the source of said amount of Rs. 50,00,000/- in the hands of Mrs. Janak Gupta. The assessee has discharged its onus in respect of the credit of Rs. 50,00,000/- as far as requirements of Section 68 of the Act are concerned. In such circumstances no addition could have been made in the hands of the assessee. In our opinion, the finding of the Ld. CIT-(A) on the issue in dispute is well reasoned and no interference on our part is required, accordingly we uphold the same. - Decided against revenue

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• 2017 (6) TMI 238
  Determining the market price of the share - capital gain computation - Held that:- The assessee has filed share price on Bombay Stock Exchange for the month of June to August, 2000 as additional evidences, but we find that the Tribunal in the order [2007 (7) TMI 342 - ITAT DELHI-C ] has already considered the market price quoted on the stock exchange for the month of June and July, 2000, and the Tribunal was not convinced and restored the matter to the Assessing Officer for determining the market price of shares keeping in view the acquisition of shares in bulk as well as transfer of controlling stake. CIT-A has taken into consideration the price of the shares quoted on the Bombay stock exchange for the month of September and November, 2000, which is the period just after completion of the acquisition of the undertaking. The Ld. CIT-A has taken into consideration both the aspect of acquisition of shares in bulk and transfer of controlling stake to the assessee. The Ld. CIT-A has also justified the reference by the Assessing Officer to the valuation officer in view of the direction of the Tribunal (supra) to take assistance of expert valuer. In our view, the Ld. CIT-A has complied with the direction of the Tribunal(supra) for determining the market value of the shares. Before us, the learned counsel of the assessee failed to bring any material to contradict above finding of the learned CIT(A). On the issue of net worth of the undertaking, there is no dispute between the parties. The order of the Ld. CIT-A on the issue in dispute is comprehensive and well reasoned, which do not require any interference on our part. - Decided against assessee.

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• 2017 (6) TMI 237
  Assessment of interest income - income from profits and gains of business or profession or income from other sources - Held that:- As in immediately preceding year i.e. AY 2009-10, the Tribunal in Assessee’s own case [2015 (5) TMI 305 - ITAT MUMBAI ] on the very same issue dismissed Revenue’s appeal by holding that the interest income earned by assessee on the security deposits with the bank as per the common loan agreement is to be assessed as income from profits and gains of business or profession and not under the head income from other sources.The facts and circumstances of the case are exactly identical in this year also and interest income earned by the assessee is on the same security deposits with the bank as per the common loan agreement in earlier years - Decided against revenue. Disallowance of claim of depreciation on Toll Road - Held that:- As relying on Assessee’s own case [2015 (5) TMI 305 - ITAT MUMBAI ] the assessee is entitled to the claim of depreciation on the road to collect toll being an intangible asset falling within the purview of section 32(1) (ii) of the Act. Assessment of notional interest on the delayed payment of grants - Held that:- Hon’ble Delhi High Court in the case of CIT vs. Asian Hotels Ltd. (2007 (12) TMI 274 - DELHI HIGH COURT) has held considering the provisions of section 28 (iv) the question of any notional interest on an interest free deposits being added to the interest of the assessee on the basis that it may have earned by assessee if placed in a fixed deposit, does not arise. The provisions of section 23(1)(a) of the Act, which is for determining the income from house property and concerns determination of annual letting value of such property. This contemplates the possible rent that the property might fetch but certainly not the interest in the fixed deposit that may be placed by the tenant with the landlord in connection with the letting out of such property. The notional interest was not assessable either as business income or as income from house property. Thus the lower authorities in the present case erred in assessing the notional interest on the delayed payment of O&M grants received by assessee. We delete the addition and allow this issue of assessee’s appeal.

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• 2017 (6) TMI 236
  Transfer pricing adjustment - Reimbursement of expenses given by AE to the assessee - adjustment made by AO while passing the order u/s.92CA(1) - Held that:- Tribunal in assessee’s own case for the immediate preceding AY 2011-12 wherein exactly similar issue was dealt by the Tribunal and the addition so made was deleted as held in the entire transaction involving payment of expenditure by the assessee, its recovery from the associated enterprises, which-in turn recovers it from the end clients, there is no involvement of any profit-element in the hands of the associated enterprises. Therefore, it would be wrong on the part of the income tax authorities to take a position and infer notionally about recovery of mark-up or profit element in the hands of assessee. It has also been brought out that it is a standard practice in the I.T. Industry to recover out of pocket expenses incurred during the course of providing services for the clients on a cost to cost basis. Under these circumstances, in our view, the Transfer Pricing Officer erred in proceeding to infer a non-existent understanding between assessee and its associated enterprises so as to impute income qua the instant transaction in terms of section 92(1) of the Act. - Decided in favour of assessee.

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• 2017 (6) TMI 235
  Exemption u/s 11 - application of income - which the income is being accumulated or set apart - assessee requirement to intimate the A.O. before the date of filing of the return u/s 139(1) - Held that:- Income from trust property will be exempt from tax if 85% thereof is applied for the purpose of the trust. If the application of income falls short of 85% for the reason of non-receipt of income assessee may defer utilization of 85% of the income to another year. For this assessee was required to give notice in writing with the Assessing Officer in the prescribed manner explaining the purpose for which the income is been accumulated and set apart and the period for which the income is to be accumulated and set apart. It has further been provided that the money so accumulated and set apart is to be invested and deposited in specified manner. We find that admittedly assessee has not exercised any such option. Assessee has been all along been claiming that the said income has not accrued. Hence there was no occasion for the Assessing Officer to consider the same. Furthermore, the provisions of the act envisage that the assessee has to explain in the said notice the purpose for which the income is being accumulated or set apart. There is no whisper whatsoever in the assessee's submissions in this regard. Hence we are in full agreement with the learned CIT(A) that there was no occasion for the Assessing Officer to consider this aspect of assessee's plea. As clear from the above discussion, such a plea was not prima facie tenable also. - Decided against assessee.

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• 2017 (6) TMI 234
  Levy penalty u/s 272A(2)(K) - failure to deliver a copy of the statement within the time specified in section 200(3) or proviso to section 206C (3) - Held that:- In the instant case, there is no such factual situation before us rather there is a delay in filing of quarterly e-TDS returns which is covered under the provisions of section 272A(2)(C) of the Act. Hence, on this ground itself, where the Assessing Officer is not clear about basis of the charge, the levy of penalty cannot be sustained. The taxes have deducted and deposited at the prescribed rate with delay of few days. Hence, there is no loss to the Revenue which is caused due to the delay in filing of the e-TDS returns which is totally unintentional. Further, our attention was drawn to the decision of the Coordinate Benches in case of Collector Land Acquisition[2012 (5) TMI 50 - ITAT CHANDIGARH], UCO Bank (2013 (11) TMI 205 - ITAT CUTTACK) and SBI (2013 (10) TMI 1461 - ITAT CUTTACK) wherein non availability of PAN was held to be a reasonable cause for delay in filing of the e-TDS return. Given the pecularity of the facts in the present case where there was a change effected in the IT system for mandatory requirement of PANs of all deductees before the returns can be validated and uploaded, the fact that there were large number of deductees spread throughout the country and efforts were made by the assessee to obtain their PANs numbers, the fact that taxes have been deducted and deposited, hence no loss to the Revenue, we find that assessee has a reasonable cause for delayed filing of its e-TDS returns in terms of section 273B and the penalty under section 272(A)(K) is hereby deleted. - Decided in favour of assessee.

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• 2017 (6) TMI 233
  Addition of short term capital gain - transfer of development rights - Held that:- The amount of adjustment made by the AO as short term capital gains is merely on the basis of the ledger account provided by M/s. V.K. Developers. The Appellant has no corroborated the same with the facts of the case or the agreements governing this transaction. Being a development project, all the receipts and payments are duly recorded through agreements only. In the instant case, the land FSI cost is not covered by any agreement. Also the amount is outstanding for more than 3 years now. Accordingly, CIT-A correctly directed the AO to delete the additions in the absence of any substantive evidences - Decided in favour of assessee TDS u/s 194C - invoking the provisions of section 40a(ia) - non deduction of tds - Held that:- We find that the assessee before CIT(A) for the first time taken plea that the assessee is not covered under the tax audit under section 44AB of the Act in earlier years and accordingly, it is not required to comply that the provision of section 194J of the Act. We find that this is a fact that the assessee is not liable to TDS but this needs verification at the level of the AO. Hence, we remit the issue back to the file of the AO for verification purpose only. Accordingly, this issue of Revenue’s appeal is set aside and allowed for statistical purposes. Addition of indirect expense - Held that:- We find that the AO has disallowed on the basis that the assessee could not produce the bills and vouchers or like other evidences. The assessee before us could not produce the evidences of expenses; hence, we feel that 10% of disallowance will meet the end of justice. Accordingly, we direct the AO to disallow 10% of the expense. This issue of Revenue’s appeal is partly allowed.

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• 2017 (6) TMI 232
  Validity of revision order passed u/s 263 - taxability of capital gain arising on transfer of land upon entering into the development agreement - Principal CIT has taken the view that the two events resulting in generation of capital gains, viz., (a) conversion of capital asset into stock in trade and (b) transfer of such asset has been completed as per the provisions of sec. 2(47)(v)have been completed during the instant year - Held that:- Ld Principal CIT has failed to show that the tax which was lawfully exigible has not been imposed, since we are of the view that there is merit in the contention of the assessee that the provisions of sec. 2(47)(v) will not apply to an asset held as “Stock in trade”, since the said provision very clearly states that it would apply only to “Capital assets”, i.e., the asset should have been held as Capital asset. Further it is the submission of the assessee that the possession of the asset has not been given to the developer, which is the main condition for applying the provisions of sec. 2(47)(v). We notice that the Ld Principal CIT has failed disprove the said claim of the assessee. Hence, in our view, the AO has taken a possible view in this matter and further the Ld Principal CIT has failed to show that the tax which was lawfully exigible has not been imposed. It cannot also be said that the AO has applied the provisions on an incorrect way or there was incomplete interpretation of the provisions, since the view taken by the AO is a possible view. Hence CIT has assumed jurisdiction u/s 263 on this issue without properly complying with the mandate of the section, i.e., he has failed to show that the assessment order was erroneous on this issue causing prejudice to the revenue. Weighted deduction u/s 35(1)(ii)- Held that:- We notice that the assessing officer has failed to examine the same at all. Further the Ld Principal CIT has also observed that the weighted deduction is allowed upon compliance of certain conditions, which require examination. Under these set of facts, we are of the view that the Ld Principal CIT was justified in invoking revision provisions on this issue. Appeal decided partly in favour of assessee.

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• 2017 (6) TMI 231
  Deduction under section 80P eligibility - whether the assessee, being a co-operative society register under the Maharashtra State Co-operative Act 1960, enables its members to obtaining loans and to make deposits as per the bye laws of the society, can be equated to be engaged in the banking business or with the co-operative bank so as to be treated under exclusionary clause of sub-section 4 of section 80IP? - Held that:- We find that this issue has been decided in the case of Quepem Urban Co-Operative Credit Society Ltd vs. ACIT [2015 (6) TMI 573 - BOMBAY HIGH COURT] wherein held that the contention of the revenue that the appellant is not entitled to the benefit of Section 80P(2)(a)(i) of the Act in view of the fact that it deals with non-members cannot be upheld. This for the reason that Section 80P(1) of the Act restricts the benefits of deduction of income of co-operative society to the extent it is earned by providing credit facilities to its members. Therefore, to the extent the income earned is attributable to dealings with the non-members are concerned the benefit of Section 80P of the Act would not be available. In the above view of the matter, at the time when effect has been given to the order of this Court, the authorities under Act would restrict the benefit of deduction under Section 80P of the Act only to the extent that the same is earned by the appellant in carrying on its business of providing credit facilities to its members. - Decided in favour of assessee.

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• 2017 (6) TMI 230
  Addition on account of profit @ 10.11% on alleged non-genuine purchases - Held that:- Assessee has demonstrated sale of the purchases so alleged by the AO as bogus. Keeping in view the nature of assessee’s business vis-à-vis over all facts and circumstances of the case, addition of 5% of such purchases will serve the end of justice.

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• 2017 (6) TMI 229
  Revision u/s 263 - disallowance u/s 14A - order erroneous and prejudicial to the interest of Revenue - Held that:- For the purpose of revision under section 263 of the Act, what is relevant is to decide whether the view adopted by the AO in the order of assessment, while considering the issue of disallowance under section 14A r.w. rule 8D of the Rules, was a possible view, notwithstanding the fact that the learned CIT entertains a different view/opinion on the same set of facts. CIT has not controverted the factual aspects of the AO’s finding that no disallowance of interest on loans debited by the assessee is called for thereon (ostensibly under rule 8D(2)(ii) of the Rules) since almost the entire investment was made strategically in group concerns for the purposes of the assessee’s business, but proceeded beyond the show cause notice he issued to the assessee by directing inquiry to be carried out under section 57(ii) of the Act also alongwith the disallowance to be made under rule 8D(2)(ii) of the Rules. We are of the opinion that, since it is clear to us that inquiry in respect of the requirement of disallowance of interest under section 14A r.w. rule 8D of the Rules was conducted by the AO in the assessment proceedings, as is evident from the order of assessment for A.Y. 2011-12, and he took a possible view that no disallowance was called for on interest expenditure, ostensibly in respect of rule 8D(2)(ii) of the Rules and that disallowance was called for under rule 8D(2)(iii) of the Rules; the mere fact that the CIT is not in agreement with the view adopted by the AO, would not render the order of assessment erroneous and prejudicial to the interest of Revenue - Decided in favour of assessee.

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• 2017 (6) TMI 228
  Disallowance of expenditure u/s 14A read with Rule 8D - Held that:- No disallowance can be made u/s.14A in case there is no exempt income. As in the present case it is not in dispute that assessee was not in receipt of any exempt income during the year under consideration, accordingly on this proposition also, no disallowance is warranted u/s.14A r.w.r. 8D - Decided in favour of assessee Disallowance made u/s.36(1)(iii) - difference between the interest expenditure and compensation so received from Urban Transport Infrastructure Pvt. Ltd was disallowed - CIT(A) has deleted the disallowance by recording a finding of fact that amount was borrowed for the purpose of business and utilized for the purpose of business only - expression "for the purpose of business" interpretation - Held that:- All the following three conditions for allowing deduction u/s.36 (1)(iii) was satisfied. (i) The money, i.e., capital has been borrowed by the assessee. (ii) It must has been borrowed for the purpose of business. (iii) The assessee has paid interest on the borrowed amount i.e., he has shown the same as an item of expenditure. Further in the case of CIT v, Dalmia Cement (B) Ltd.(2001 (9) TMI 48 - DELHI High Court ) it has been held that, if all the requisite conditions for allowance of interest are fulfilled, it is not possible and open to the Revenue to make a part disallowance, unless there is a positive finding recorded that a part of the amount borrowed was not used for the purposes of the business. No infirmity in the order of CIT(A) for deleting the disallowance of interest in respect of funds borrowed for the purpose of business.- Decided in favour of assessee

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• Customs

• 2017 (6) TMI 260
  Refund claim of excess duty paid - The assessment was done on standard rate of duty whereas as per the said notification concessional rate of basic duty at the rate of 10% was available to the imported goods - benefit of N/N. 21/02 - denial of refund on the ground that a refund claim is not maintainable when the assessee did not challenge the assessment order, which became final - Held that: - there is no lis between the department and the appellants as regards the eligibility of the concessional duty in terms of exemption N/N. 21/02. Even when the appellants have filed the refund claim the Asstt. Commissioner could have very well decided the eligibility of N/N. 21/02 instead of returning the refund claim - reliance was placed in the case of COLLECTOR OF CENTRAL EXCISE, KANPUR Versus FLOCK (INDIA) PVT. LTD. [2000 (8) TMI 88 - SUPREME COURT OF INDIA], where it was held that the refund in respect of the duty paid on their own by the assessee can be claimed u/s 27 particularly when there is no lis between the assessee and the department. The refund is not liable to be denied on the basis that the assessment of bill of entry was not challenged - matter remanded for reconsideration for the claim of refund - appeal allowed by way of remand.

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• 2017 (6) TMI 259
  Valuation - export goods - manmade fibres, polyster, knitted gents t-shirts and 65% cotton + 35% polyster boys shirts - market enquiries were conducted from two manufacturer exporters who opined that the export goods were overvalued to the extent of about 35%. The Department also obtained the opinion of the Chartered Engineer Shri R.K. Agarwal, who suggested that the goods were overvalued to the extent of about 45% - Held that: - it is seen that neither of these facts have been cited in the adjudication proceedings against the appellant. The value of the export goods have been re-determined essentially on the basis of the revised cost sheet which the appellants were not contesting the reduction in value - we find no reason to interfere either with the reduction in the declared value or in the restriction imposed on the drawback. In the present case, there are no valid reasons for rejection of the transaction value. There is no justification for confiscation of the export goods as also imposition of penalties u/s 114 and Section 114 (AA). Appeal allowed - decided partly in favor of appellant.

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• 2017 (6) TMI 258
  Restoration of appeal - appeal was dismissed for non prosecution - case of Revenue is that In spite of giving sufficient opportunities, appellant's prayer for adjournment one after another, the appellant and Counsel have remained absent on 03.10.2016. The same is abuse of the process of law which cannot be entertained - case of appellant is that the miscellaneous order dated 26.09.2016 adjourning the case to 03.10.2016 was not received by the Counsel and it was received by the Id. Counsel only on 05.10.2016. That for this reason the Counsel could not appear for hearing on 03.10.2016. - Held that: - Instead of passing a docket order granting adjournment and posting the next date of hearing of the case, the Tribunal, in order to make it clear that the appeal will be positively taken on the next date passed the above miscellaneous orders. So the ground put forward by the appellants that they received the copy of the miscellaneous orders on 05.10.2016 and therefore could not appear on 03.10.2016 is baseless and impermissible - In the present case, especially when the Tribunal directed the appellants to get ready with the matter, there was a strong responsibility on the part of Counsel for appellants to follow up the hearing date of the appeals - there is no ground to interfere in the order passed by the Tribunal, for the reason that the appellants have been given sufficient chances for arguing their case on merits - appeal cannot be restored - decided against applicants.

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• 2017 (6) TMI 257
  Misdeclaration of description and classification of goods - CHQ Wire Rods - denial of exemption benefit claimed by appellant - Held that: - There is no rebuttal to the NML report leading any cogent evidence to show that the goods of the description stated by in the NML report was not imported - Revenue’s stand on the mis-declaration of the goods is established. So far as the valuation is concerned, once mis-declaration is established, the appellant loses its right to challenge the valuation further. Therefore, the valuation adopted by Revenue for adjudication remained unchallenged and duty is leviable thereon. Redemption fine and penalty upheld - appeal dismissed - decided against appellant.

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• 2017 (6) TMI 256
  Imposition of penalty on Inspectors of Customs u/s 117 of the CA, 1962 - appellant failed to discharge their duties properly as laid down u/s 117 and 51 of the Act, 1962, for the purpose of scrutiny of Bill of Export and examination of the goods - Held that: - similar issue decided in the case of Suvasis Banerjee, Samir Kumar Das, Dipak Kumar Sardar, Ajoy Nath Versus Commissioner of Customs, (P) W.B. [2016 (8) TMI 874 - CESTAT KOLKATA], where it was held that if protection to officers against proceedings in courts can be given, there is no reason why such a protection cannot be given to proceedings before quasi judicial authorities. Also, held that protection under Section 155 of the Customs Act is available even in respect of adjudication proceedings - the imposition of penalty under Section 117 on the appellants is not justified - appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2017 (6) TMI 253
  Oppression and mismanagement - Whether petitioner is eligible to file CP 15 of 2016? - Held that:- CP 15 of 2016 is filed by Viral L. Vaishnav who is holding 5% of the paid up share capital of the first respondent company. According to petitioner, there are only five members in the first respondent company as on the date of filing of the petition and, therefore, he is eligible to file this petition. Even according to the second respondent, there are only five shareholders in the first respondent company. Therefore, petitioner being one among five shareholders in the first respondent company is eligible to file CP 15 of 2016 Whether second respondent in CP 15 of 2016 is eligible to file petition CP 6 of 2016? - Held that:- Second respondent in CP 6 of 2016 is claiming reliefs under sections 397 and 398 of the Companies Act, 1956. Admittedly, shareholding of the second respondent in the first respondent company is 9.90 lacs shares which comes to 49.50% of the shareholding of the first respondent company. Moreover, second respondent is one among the five members of the first respondent company. Therefore, second respondent is also eligible to file CP 6 of 2016. Whether petitioner committed acts of oppression and mismanagement as alleged by second respondent? Whether second respondent committed acts of oppression and mismanagement as alleged by petitioner? - Held that:- In both the petitions, there are no acts of oppression or mismanagement. However, there appears to be a dispute between the petitioner and second respondent. There appears to be some difficulty in the functioning of the first respondent company because of the conduct and attitude of the petitioner in CP 15 of 2016. Fact remain that the petitioner also invested amount in the first respondent company. It is to be noted that petitioner was also removed from the employment of the first respondent company Thus it may not be possible for the petitioner in CP 15 of 2016 to continue as a member of the first respondent company. Therefore, petitioner in CP 15/16 if he is willing, he can sell his shares to other shareholders in the first respondent company for a fair value as on the date of filing of the petition CP 6/16 determined by mutual agreement or by an independent valuer appointed by the Tribunal. Respondents 2,3,5 & 8 shall purchase the shares of petitioner in CP 15/16 for a fair value fixed by mutual understanding or by an independent valuer appointed by the Tribunal. Therefore, petitioner and second respondent are directed to come to an understanding about the fair value of the shares of the first respondent company as on the date of filing of CP 6 of 2016 within two months from the date of this order. In case the petitioner and second respondent are not able to come to an understanding in respect of the fair value of the shares of the first respondent company, and in case if petitioner in CP 15/16 is willing to sell his shares he may file a petition before this Tribunal for appointment of independent valuer to fix fair value of the shares as on date of fling of CP 6/2016 and to fix mode and manner in which transfer of shares shall take place.

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• Insolvency & Bankruptcy

• 2017 (6) TMI 254
  Initiation of insolvency resolution process - Incomplete application - Held that:- As a judicial authority, in case the application is incomplete, it is also empowered to decide whether to grant 7 days' time to rectify the defects. In case the applications are admitted and resolution process starts, the Adjudicating Authority is required to pass judicial order under sections 13 and 14 of the 'Code' and may order for public announcement in terms section 15 and then to oversee the resolution process and finally, if so required, to pass order for liquidation. The time period of 14 days prescribed under sub-section (4) of section 7, sub-section (5) of section 9 and sub-section (4) of section 10 are to be counted from the date of receipt of application. The word 'date of receipt of application' cannot be treated to be 'date of filing of the application'. We have noticed that the Registry is required to find out whether the application is in proper form and accompanied with such fees as may be prescribed. So, the Registry will take certain time and during such period, the applications are not brought to the notice of the 'Adjudicating Authority'. Therefore, 14 days' period granted to the Adjudicating Authority under the provisions of the Code cannot be counted from the 'date of filing of the application' but from the date when such application is presented before the Adjudicating Authority i.e. 'the date on which it is listed for admission/order. In the present scenario, the Insolvency Bankruptcy Code do not bar or render the Adjudicating Authority powerless to admit an application or rejecting the application. We hold that the proviso to sub-section (5) of section 7 or proviso to sub-section (5) of section 9 or proviso to sub-section (4) of section 10 to remove the defect within 7 days are mandatory, and on failure applications are fit to be rejected. Further, we find that the application was defective, and for the said reason the application was not admitted within the specified time. Even if it is presumed that 7 days additional days time was to be granted to the operational creditor, the defects having pointed out on 16th February 2017 and having not taken care within time, we hold that the petition under section 9 filed by respondent/operational creditor being incomplete was fit to be rejected. For the reasons aforesaid, we direct the Adjudicating Authority to reject and close the Petition preferred by Respondents. After we reserved the judgment if any order has been passed by the Adjudicating Authority, except order of dismissal, if any, are also declared illegal.

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• Service Tax

• 2017 (6) TMI 280
  Validity of order of CESTAT remanding the order - whether the petitioner was liable to pay service tax on the value of SIM cards sold to the subscribers or not? - Held that: - The Tribunal noted that the issue had been settled by the decision of the Supreme Court in the petitioner’s case IDEA MOBILE COMMUNICATION LTD. Versus CCE. & C., COCHIN [2011 (8) TMI 3 - SUPREME COURT OF INDIA] and, therefore, held that the petitioner was liable to pay service tax. The Tribunal, however, held that the extended period of limitation is not invokable - It is for the assessing authority to ascertain whether there were any taxable services or not - matter rightly remanded - petition dismissed - decided against petitioner.

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• 2017 (6) TMI 279
  Maintainability of appeal - time limitation - delay in collection of pre-deposit - Held that: - The petitioner is a creature of a statute and is bound to provide security to Government Institutions. Petitioner has also relied upon various decisions of different Tribunals where the petitioner was not liable to pay service tax. Considering the nature of service being provided by the petitioner, the learned counsel for the petitioner Sri Aditya Kumar, would argue that he has a very good case on merit and the reason for filing the appeal belatedly was that there is a statutory provision of depositing 7.5% of the amount, which could not be collected in time - the delay was bonafide - matter is remanded back to the concerned authority, to consider the matter afresh - petition allowed by way of remand.

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• 2017 (6) TMI 278
  Consulting Engineers Service - operation of power plant - Maintenance and Repair Services - whether charges received by the appellant for operation of the power plant would fall under management or repair services or otherwise? - Held that: - this very Bench of the Tribunal in the case of M/s. Shapoorji Pallonji Infrastructure Capital Company Limited, M/s. Operational Energy Group of India Pvt. Ltd. Versus Commissioner of Service Tax, Chennai [2017 (6) TMI 225 - CESTAT CHENNAI], held that the demand of service tax on operation charges (i.e. 55% of the fees paid to the appellant) is not sustainable - demand set aside - appeal dismissed - decided against Revenue.

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• 2017 (6) TMI 277
  Penalties u/s 77 and 78 - bargain discounts given to the dealers were not included in the assessable value - Held that: - the exemption from service tax had just been removed on the commission agent service in July, 2004 and the appellants were paying income tax on the basis of net commission fee after deducting bargain discounts, the plea of bonafide belief appears to be convincing. Their bonafides are also strengthened by the fact they paid entire short levy much before the issuance of SCN - penalties set aside - appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 276
  Royalty - whether royalty received by the appellants from M/s. MDB Chemicals for providing technical knowhow for manufacture of 1,2-Methylenedioxybenzene is liable to service tax under the category of “Intellectual Property service”? - Held that: - the right that is transferred is the technical know-how which may be a service but is not in relation to intellectual property service which pertains to intellectual property rights - The enforceability of the right vis-a-vis the recipient is protected by the law of contract for the limited purpose that the statute has been legislated for. That enforceability does not subsist against any other entity in the absence of registration under the patent, trademark or design protection laws of the country - demand set aside - appeal allowed - decided in favor of assessee.

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• 2017 (6) TMI 275
  Transportation of sugarcane - GTA service - Held that: - it is admitted fact that for the transportation of sugarcane by truck and tractor owners, no consignment note was issued, therefore, the transportation service does not fall under the category of GTA. Accordingly service tax is not chargeable on such transportation. On identical case, the Tribunal has held that no service tax is chargeable on the sugar mills for transportation of sugarcane. Appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 274
  Service tax credit - duty paying documents - denial on the ground that credit had been taken/utilized on debit notes - scope of SCN - Held that: - I am unable to comprehend why and how both the authorities chose to adjudicate on areas not covered in the SCN. I am also surprised that they have done so in the case of an assessee who is the member of the Larger Tax Payer's unit, a special vehicle of the department intended for the purpose of extending highest service standards and facilitate low compliance cost. Also, it is held that the debit notes will be valid documents for the purpose of availment of CENVAT credit. Appeal allowed - decided in favor of petitioner.

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• 2017 (6) TMI 273
  Delay in payment of service tax - telephone services - suo moto discharge in violation of Section 73 read with Section 70 & 67 of the FA 1994 - rent and call charges - Held that: - in these cases, Committee on disputes has denied the permission to the department to file the appeals before this tribunal - both these appeals are not maintainable and consequently both are being dismissed as not maintainable - appeal dismissed - decided against appellant.

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• Central Excise

• 2017 (6) TMI 272
  Valuation - pan masala - duty liability of the appellant is fixed as per the number of packing machines operated during a particular month - Revenue entertained a view that irrespective of the closure of the unit and sealing of the machines, for more than 15 days in a month, the appellant /assessee is liable to pay full duty liability for all the machines by 5th of the given month and thereafter, obtain abatement of duty for closed period, from the jurisdictional officer - Held that: - The appellant could not pay duty by 5th of the same month as they have closed for operation during the period stipulated for payment of duty. By the end of the month, they were aware of the number of days for which the unit operated and also their exact duty liability on prorata basis. This duty liability was discharged subsequently in the next month. This will necessarily bring the liability for interest, which is admitted by the appellant also. We are not able to accept the view of the Revenue that the appellant have to first pay full duty liability for the all days, as determined by the jurisdictional officers and thereafter, after the end of the month, ascertaining the number of days closed, they should claim the excess paid amount, as abatement from the Department. No such procedure has been laid down in the said rules. Reliance also placed in the case of The Commissioner Versus M/s Thakkar Tobacco Products P. Ltd. [2015 (11) TMI 319 - GUJARAT HIGH COURT], where it was held that when the duty stands reduced to the extent provided in the rule, there is no liability to pay the same, inasmuch as, to that extent the duty stands abated. Therefore, if the assessee has correctly calculated the proportion of duty and set off the same against the duty payable for the next month, it cannot be said that the said action is contrary to the statutory scheme. The demand of full duty liability from the appellant not justified - appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 271
  SSI exemption - denial of benefit of exemption N/N. 8/2003-CE dated 01/03/2003 - denial on the ground that the appellant have availed CENVAT credit of duty paid on inputs in respect of one unit and whereas in another unit they have availed SSI exemption and cleared goods without payment of duty - Held that: - the respondents had manufactured and cleared gods both for export as well as for domestic use. There can be no dispute regarding treatment of export goods and the credit available to such manufacture - Regarding domestic clearances, we find that clearances with brand name of another person are not within the ambit of the SSI notification - the credit availed for manufacture of goods with other’s brand name as well as for export is of no consequence, to decide the eligibility of the respondent in respect of domestic clearances in terms of the said notification. The Hon’ble Supreme Court in CCE, Chennai vs. Nebulae Health Care Ltd. [2015 (11) TMI 95 - SUPREME COURT], held that Availment of such credit will not disentitle the SSI units, the exemption for goods manufactured on their own account. Appeal dismissed - decided against Revenue.

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• 2017 (6) TMI 270
  Natural justice - procedure as envisaged u/s 9D of CEA, 1944 - cross-examination - Held that: - provisions of Section 9D are to be followed. It has been repeatedly held that when the statement is relied upon the test of Section 9D has to be applied. There is no substantial difference between the proceedings before the Adjudicating Authority or before a court as specifically mentioned under Section 9D (2) of the Act - at the time of adjudication, the Adjudicating Authority has to follow the procedures with reference to admission of such statements and consequent requirements of law upon such admission - Appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 269
  CENVAT credit - input - furnace oil - The case of the Department is that the CENVAT Credit in respect of furnace oil is admissible only to the quantity attributed to the excisable goods and not for the entire hotel - time limitation - Held that: - the CENVAT Credit availed of the furnace oil, which was used as a fuel in boiler for generating steam, the said fact was completely in the knowledge of the department inasmuch as the appellant declared all the information in their application for registration and ground plan - entire information regarding availment of CENVAT Credit on the furnace oil was in the knowledge of the department. Therefore, there is absolutely no case of suppression of facts on part of the appellant in availing the CENVAT Credit on the furnace oil - demand is time barred - appeal allowed on limitation - decided in favor of appellant.

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• 2017 (6) TMI 268
  CENVAT Credit - input services - Miscellaneous Fabrication and Erection Service - Male Nurse Service - Service for Traveling expenses - Membership subscription service - denial on account of nexus - Held that: - The Miscellaneous Fabrication or Erection service is used for repair and maintenance of the plant and machinery. Therefore, the same is directly related to the manufacturing activity - credit allowed. Male Nurse Service - Held that: - this service is provided by male nurse appointed in the In-house Dispensary of the factory of the appellant. This health service is under statutory obligation and this health service is provided for emergency such as accident, injury to the employees during the production activity. Therefore, it is directly related to the manufacturing activity - credit allowed. Travelling services - Held that: - it is related to the travel agent for ticket booking of the staff of the appellant. The staff travels at various location in connection to business activity of the appellant, such as supply of raw material, sale of finished goods, marketing and promotion etc. Therefore, the travelling service is directly related to the business activity of the appellant - credit allowed. Membership subscription - Held that: - it is in respect of chemical magazine for up to date knowledge on the technical issue of chemical. It is necessary for the concerned technical staff to have the day to day knowledge, which in turn contributes in better performance of manufacturing activity in the appellant's factory - this membership subscription is not for any personal use but directly for the overall activity of the appellant's business - credit allowed. Appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 267
  CENVAT credit - deemed manufacture - denial of credit on the ground that Rule 12 B of CER, 2002, which prescribed special procedure for textile deemed manufacturers, was omitted vide N/N. 11/2004-CE (NT) dated 9.7.2004, and the credit availed in the status of non-manufacturer is not admissible - Held that: - even if it is accepted that the appellant was no more governed by Rule 12B but the fact remains that appellant though taken the CENVAT Credit but have discharged the excise duty on the processed goods and it was observed that the excise duty paid was more than the CENVAT Credit availed - It is a settled law that once the excise duty is paid even on the non-excisable goods, the CENVAT Credit should be allowed. Similar issue decided in the case of MARKFED HDPE SACKS PLANT Versus COMMISSIONER OF C. EX., LUDHIANA [2011 (4) TMI 984 - CESTAT, NEW DELHI], where it was held that the assessee is required to pay amount equal to credit availed by them u/r 16(2). Consequently, the CENVAT Credit was admissible. Appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 266
  CENVAT credit - cancellation of invoices - Revenue has denied such recredit only on the reason that the credit has been taken after a lapse of as much as 16 months - Held that: - the decision of the Tribunal in the case of Coromandel Fertilizers Ltd. [2008 (8) TMI 333 - CESTAT, BANGALORE], is on identical facts, where it was held that When the law is settled on the issue, there is no justification to deny the credit on the ground that it is availed after a long time - appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 265
  Refund claim - The grievance of the appellant is that the original adjudicating authority, before rejection of the refund, never issued a show-cause notice detailing the grounds for proposed rejection of refund claim so that the appellant would have the opportunity to give their submissions - Held that: - the original authority did not issue a SCN detailing the grounds under which the refund claim is proposed to be rejected - He has also failed to extend an opportunity to the appellant to make good any omissions such as furnishing copies of relevant agreements and other documents - matter remanded back to the original authority with the direction to issue a consolidated SCN detailing all the grounds under which the refund claim is proposed for rejection - appeal allowed by way of remand.

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• 2017 (6) TMI 264
  CENVAT credit - write off of inputs - Held that: - the inputs for which the provision write off was partially made was subsequently used in the manufacture as per the provisions of Rule 3(5B) which provides that in that situation the appellants are entitled to take back the credit in terms of the provisions to Rule 3(5B) - the amended provision of Rule 3(5B)was bought into from 01.03.2011 and the period of dispute involved in the present case is prior to 01.03.2011 in one case and therefore the appellants are not required to reverse the cenvat credit - appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 263
  CENVAT credit - the appellant had made provision for value of Rs. 46,35,057/- in respect of raw-materials in their financial records as on 31.03.2008 but failed to pay an amount equivalent to the cenvat credit taken in respect of the said inputs and therefore it appeared that they were liable for payment of an amount equivalent to the cenvat credit availed by them - Held that: - under Rule 3 of Cenvat Credit Rules there was no recovery mechanism prior to 01.03.2013 and therefore demanding the cenvat credit is not sustainable in law - the entire demand is time-bar because the show-cause notice was issued on 01.01.2010 for the provision to write off which was created in the financial records of the appellant as on 31.03.2008 which is beyond the period of limitation of one year - appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 262
  ROM application - submissions of the appellant were not dealt by the adjudication authority - natural justice - prayer of the appellant today is to remand the matter back to the adjudicating authority to re-adjudicate the matter considering entire evidence on record as well as the submission of the appellant - Held that: - It appears that the matter has travelled for more than 12 years from its initiation and pending in Tribunal for 11 years. At this stage appellant is required to justify whether remand is necessary with the background of the case - Appellant is directed to provide details to the Learned AR by 10/05/2017 and learned AR. shall forward the same to the Adjudicating for his reply, if any, because he is the ultimate authority who shall adjudicate the matter in the event of remands - appeal allowed by way of remand.

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• 2017 (6) TMI 261
  Penalty u/r 25 of CER, 2002 - It has been alleged that the Respondent violated the provisions of Rule 12 of Rules 2002 read with Chapter 70 of CETA, 1985, in as much as they have shown unit quantity in pieces and sets instead of Kgs. in their monthly ER-1 Returns - Held that: - CBEC by Ministry of Finance (D.R.) letter F.No. 4/7/2005-CX-I dated-31/03/2005 clarified that the standard units of quantity mentioned in the Central Excise tariff have not been made mandatory - penalty set aside - appeal dismissed - decided against Revenue.

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• CST, VAT & Sales Tax

• 2017 (6) TMI 255
  Jurisdiction of Assistant Value Added Tax Officer (AVATO) - reopening of assessment during pendency of a refund application - Section 9(2)(g) of the DVAT Act - Held that: - Creation of such a demand when refund is overdue is clearly contrary to the order of this Court in I Smart Mobile Technology Private Limited vs. Commissioner of VAT [2017 (5) TMI 656 - DELHI HIGH COURT] - the notice dated 22nd May, 2017 of default assessment of tax and interest u/s 32 of the DVAT Act issued by the AVATO is hereby set aside - petition allowed - decided in favor of petitioner.

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• Indian Laws

• 2017 (6) TMI 252
  Proof of juvenility - Grant of regular bail in complaint case registered under Sections 21, 23, 25, 27-A, 28 and 29 of the NDPS Act read with Customs Act, 1962 and Arms Act, 1959 - Held that:- In view of Section 37 of the Act, petitioner is stated to be in the age group of 16-18 years as on the date of commission of offence. The child between the aforesaid age group cannot be treated to be juvenile keeping in view the amended provisions of Juvenile Justice (Care and Protection of Children) Act, 2015 for which an assessment is to be made by the Magistrate in respect of mental faculty of the accused. The grant of bail to Chanan Singh @ Channa is in no way entitles the petitioner for the said relief. The confessional statement of the petitioner ultimately led the DRI officers to arrest Prakash Singh @ Mintu along with huge consignment of narcotic drugs weighing 30.498 Kgs of heroin, one pistol, 61 live cartridges and 4 empty magazines. There are no reasonable ground for believing that the petitioner is not involved in the offence and there is no likelihood of his committing any offence while on bail at this stage. The juvenility of the petitioner is yet to be determined, therefore, keeping in view the involvement of the petitioner and taking into consideration, the recovery of huge quantity of heroin, at this stage, petitioner is not entitled to concession of regular bail. The present petition stands dismissed.

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