TMI Tax Updates - e-Newsletter
June 9, 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. Provisions for supply of Goods to Job Worker under CGST Act,2017

   By: Sanjeev Singhal

2. RECOGNITION OF VALUATION PROFESSIONAL ORGANIZATIONS UNDER DRAFT COMPANIES (REGISTERED VALUERS AND VALUATION) RULES, 2017

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Daily Consumer goods being used by the common man among others to become cheaper after GST

2. The Union Minister of Finance, Defence and Corporate Affairs, Shri Arun Jaitley thanks all the political parties for their cooperation and contribution in making it possible to launch GST with effect from 1st July, 2017;

3. Central Board of Direct Taxes (CBDT) notifies new Safe Harbour Regime

4. The Union Finance Minister to inaugurate the one week Teachers Workshop on Contemporary Themes in India’s Economic Development and the Economic Survey

5. India Signs the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting at Paris

6. RBI Reference Rate for US $

Notifications

Customs

1. 26/2017 - dated 7-6-2017 - ADD

Seeks to extend the ADD imposed on the imports of "Plain Gypsum Plaster Boards" originating in or exported from China PR, Indonesia, Thailand and UAE for a period of one year upto and inclusive of 06.06.2018

Income Tax

2. 46/2017 - dated 7-6-2017 - IT

Income-tax (12th Amendment) Rules, 2017

Circulars / Instructions / Orders

DGFT

1. Trade Notice: 08/2018 - dated 8-6-2017

Constitution of GST Facilitation Cell - reg.

Customs

2. Instruction No. 07/2017 - dated 6-6-2017

Classification of Dioctyl Orthophthalate (DEPH)- Reg.

Highlights / Catch Notes

Income Tax

• Taxpayer Can Choose to Claim Revenue Expenditure in One Year or Spread Over Multiple Years Based on Benefit.

  Case-Laws - AT : Once the expenditure is accepted as “Revenue Expenditure”, then it is upto the assessee that whether to claim the expenditure in one year or to spread over the said expenditure as per the enduring benefit available with them - AT
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• Non-Compete Fees Ineligible for Depreciation: Not Classified as Intellectual Property Under Tax Rules.

  Case-Laws - AT : Depreciation disallowed on non-compete fee - an agreement not to compete is purely personal - cannot be considered as the intellectual property right - no depreciation - AT
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• Assessee Cannot Claim "Mark to Market" Losses on Forward Contracts Settled by Actual Delivery Using Export Receivables.

  Case-Laws - AT : When the contention of the assessee that all the forward contracts were settled by way of actual delivery through dollars received on export receivables, the assessee cannot be allowed “mark to market” losses on such forward contract - AT
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• Taxpayer's Sale of Development Right Not Subject to Capital Gains Tax Under Development Control Regulations.

  Case-Laws - AT : The consideration received by the assessee on sale of development right which was acquired under Development Control Regulations is not assessable for capital gain tax. - AT
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• Deduction Allowed u/s 80P(2) as Registrar Confirms Assessee as Primary Agricultural Credit Society.

  Case-Laws - AT : Claim of deduction u/s 80P(2) - Since there is a certificate issued by the Registrar of Cooperative Societies, stating that the assessee is a primary agricultural credit society - exemption allowed - AT
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Customs

• Refund Granted for SAD Due to NIL VAT Rate Under Rajasthan VAT Act 2003, Meeting Notification No. 102/2007 Conditions.

  Case-Laws - AT : Refund of SAD - no VAT was charged - NIL rate of VAT in terms of the notification issued under Rajasthan VAT Act 2003 is to be considered as appropriate sales tax/VAT - the condition prescribed in N/N. 102/2007 is satisfied - refund allowed - AT
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Service Tax

• Refund Approved for Service Tax on GTA Services under Notification No. 41/200 ST; Documentation Linked to Shipments.

  Case-Laws - AT : Refund claim - service tax towards the GTA services - Notification No. 41/200 ST - the transport documents contained the details of export goods along with exporter’s invoice numbers and container number - these details can be connected with the shipment details - refund allowed - AT
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• Refund Denied: Appellants Not Entitled to Tax Refund u/r 5 of Cenvat Credit Rules Due to Mistake.

  Case-Laws - AT : Even if the appellants have paid or suffered tax liability by mistake, they cannot claim the refund thereof under Rule 5 of cenvat credit rules but, under other facilitating provisions in the law - refund rightly rejected. - AT
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• EOU Eligible for Refund on Services Exported to SEZ: Accumulated Credit Refund u/r 5 of Cenvat Credit Rules.

  Case-Laws - AT : 100% EOU - refund claim - export of such services to SEZ will necessarily have to be treated as deemed export and will be eligible for refund of accumulated credit under Rule 5 of CCR - AT
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Central Excise

• Nonferrous Metal Conversion to Alloys is Manufacturing per Section 2(f) of Central Excise Act, 1944.

  Case-Laws - AT : Manufacture - whether conversion of nonferrous metals into metal alloys would amount to manufacture in terms of the section 2(f) of the CEA 1944? - Held Yes - AT
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• CENVAT Credit Allowed for Duty Paid by Job Worker on Reconditioned Cylinders u/r 4(5) of CENVAT Credit Rules.

  Case-Laws - AT : CENVAT credit - job-work - The cylinders were sent to the job worker under Rule 4(5) of the CENVAT Credit Rules and the job worker paid the duty on reconditioned cylinders on the value of reconditioned cylinders. On receipt of the cylinders, the appellants availed CENVAT Credit of duty paid by the job worker - credit allowed - AT
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• CENVAT Credit Allowed for Steel Structures Fabricated On-Site under Chapter 84, Product Description as Support Irrelevant.

  Case-Laws - AT : CENVAT credit - steel structural items fabricated at site - when the classification is held to be under Chapter 84, the description of a product being support or a part loses relevance - AT
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• Interest Not Required on CENVAT Credit Reversal Without Delay in Duty Payment u/r.

  Case-Laws - AT : Liability of interest on reversal of cenvat credit - that there is no delay in payment of duty. The delay is in reversal of cenvat credit, therefore interest not liable - AT
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Case Laws:

• Income Tax

• 2017 (6) TMI 353
  Addition on account of unutilized revenue grant - deemed income as referred u/s.11(1) of the Act?" Held that:- As decided in CIT Versus Gujarat Safai Kamdar Vikas Nigam [2011 (5) TMI 815 - Gujarat High Court] adetailed provisions were made for allotment of funds to the respondent assessee. It was a scheme envisaged for implementation of certain Government programmes in particular, to uplift the living condition of manual scavengers and other Safai Kamdars involved in similar activities. The assessee Corporation was not sole trustee. The Scheduled Caste Development Board was also liable for implementation of the scheme to be supervised by a Committee headed by the Deputy Minister which included other Government officials. To our mind, the Tribunal committed no error in holding that the grant in question fulfills the requirement of section 11(d)(1) read with section 12(1) of the Act. - Decided against revenue

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• 2017 (6) TMI 352
  Addition on account of accrued interest on NPAs - Tribunal confirming the order of the CIT(A) which held that assessee bank is not liable to be taxed on the notional interest on non performing assets based upon the accrual accounting theory - interest on NPAs non taxable on accural basis - Held that:- This very question came to be considered at length and decided by the Division Bench of this Court in the case of Principal Commissioner of Income-tax-5 v. Shri Mahila Sewa Sahakari Bank Ltd. [ 2016 (8) TMI 377 - GUJARAT HIGH COURT ] holding that interest on non performing assets is not taxable on accrual basis looking to the guidelines of the Reserve Bank of India - Decided in favour of assessee.

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• 2017 (6) TMI 351
  Addition u/s 68 - assessee had sold certain shares, the very purchasers were found to be bogus - Held that:- As facts recorded by the Tribunal would suggest, the shares were purchased by the assessee during the period relevant to the Assessment Year 2005-2006. The return for the said year was scrutinized by the Revenue. The Assessing Officer did not disturb the investment. It would therefore later on not be open to the Assessing Officer to make addition with the aid of Section 68 of the Act when such shares were sold on the premise that the purchasers themselves were bogus. - Decided in favour of assessee Treatment to the income earned by the assessee on sale of shares - capital gain or business income - ITAT holding the share transaction as investments - Held that:- Clause (b) of circular of the CBDT dated 29.2.2016 thereof in particular provides that in respect of listed shares and securities held for a period of more than 12 months immediately preceding the date of its transfer, if the assessee desires to treat the income arising from the transfer thereof as Capital Gain, the same shall not be put to dispute by the Assessing Officer. In other words, the Revenue would not pursue this issue if the necessary ingredients are satisfied, only rider being the stand taken by the assessee in a particular year would be followed in the subsequent years also and the assessee would not be allowed to adopt a contrary stand in such subsequent years. Tribunal took the relevant facts into consideration and referred to the circular of the CBDT dated 29.2.2016 and correctly held that the return should be taxed as capital gain, be it long term or short term, as the case may be, and not as a business income.- Decided in favour of assessee

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• 2017 (6) TMI 350
  Checking the veracity of Operating Profit (OP)/Total Costs (TC) of the comparable Datamatics Limited only if the Assessee succeeds in providing the relevant data of the said company - Held that:- The Court is in the view that the ITAT could not possibly have placed a restriction on the Assessee to the effect that it had to place before the AO/TPO only "the relevant data of the said company for the concerned financial year on the basis of the information available from their annual reports, without making any calculations at its own." Such a restriction was contrary to what is envisaged in the proviso to Rule 10 B (4) of the Rules. Consequently, the question framed is answered in the negative i.e. in favour of the Assessee and against the Revenue. It is clarified, for checking the veracity of the OP/TC of Datamatics Ltd. as a comparable, the AO/TPO will consider the relevant data consistent under Rule 10 B(4) of the Rules read with first proviso thereto.

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• 2017 (6) TMI 349
  Penalty u/s 271(1)(c) - non specification of charge - defective notice - Held that:- The perusal of the assessment order reveals that the AO has only stated that the penalty proceedings under section 271(1)(c) of the Act are initiated separately without specifying or mentioning any specific charge under which the assessee is being proposed to be penalized i.e. whether the assessee has concealed a particulars of income or furnished inaccurate particulars of income. We also find from the show cause notice dated 28.12.2007 issued under section 271(1) (c) r.w.s.274 of the Act extracted hereinbelow, the AO did not mention or struck off the one of the two limbs under which the penalty was being proposed to be imposed. The imposition of penalty u/s 271(1)(c) of the Act where the AO had not specified or mentioned the charge on which the penalty has been imposed is not correct and cannot be sustained. In view of the foregoing discussion we set aside the order of CIT(A) and direct the AO to delete the penalty levied u/s 271(1)(c) of the Act. - Decided in favour of assessee.

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• 2017 (6) TMI 348
  Allowance of expenditure in the form of processing fees paid to bank for obtaining loan from the Bank for five years - assessee has claimed 1/5th of the expenditure in the preceding Assessment Year 2010-11 and was allowed but in the current year denied - Held that:- The issue under consideration is covered by the decision of Gujarat High Court in the case of Gujarat State Fertilisers and Chemicals Ltd.[2013 (7) TMI 701 - GUJARAT HIGH COURT] wherein held that financial consultants for professional services in connection with corporate debt restructuring by negotiating with banks and financial institutions are to be allowed in the year in which it was incurred. The Court further observed that where the assessee has spread over the expenditure for six years and 1/6th is claimed, the department should not have objected such spreading over. Thus once the expenditure is accepted as “Revenue Expenditure”, then it is upto the assessee that whether to claim the expenditure in one year or to spread over the said expenditure as per the enduring benefit available with them. - Decided in favour of assessee. Disallowance u/s.14A - Held that:- As found that the assessee has earned dividend income from one company only, the assessee does not require to incur any specific expenditure to maintain the investment portfolio, we direct AO to restrict the disallowance to the extent of 5% of the dividend income so earned from a company. We direct accordingly.

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• 2017 (6) TMI 347
  Addition on sale of land - unexplained investment - evidence of cash deposits in the bank account - Held that:- In view of the circumstantial evidence collected by the Assessing Officer during the course of assessment proceedings and both the examination by the Assessing Officer and the cross-examination of Shri Rajansingh undertaken by the assessee, wherein he admitted to the cash receipts on the sale of his agricultural land, no further queries were raised by the assessee, then the said “Kararnama” and the circumstantial evidence of cash deposits in the bank account establishes the case of Revenue. The affidavit of assessee as to not having paid any other amount other than Rs. 2 lakhs mentioned in the sale deed is a self serving document and cannot be relied on especially in view of statement of purchasers having accepted cash against the sale of his land. The said land was admittedly sold for Rs. 30 lakhs and now after period of two months, the same cannot be sold only for Rs. 2 lakhs in the agreement. There is no merit in the plea of assessee in this regard. Reliance placed upon the other sale transactions in the area is not correct, especially where the case under consideration is of cash payment over and above the price declared in the sale deed. The CIT(A) has elaborately referred to each of the issues raised by the assessee and has also made reference to the statements in the cross-examination of various persons and the affidavit of assessee. Upholding the order of CIT(A) the claim of assessee is dismissed. One aspect which needs to be emphasized is the receipt of Rs. 5 lakhs along with “Kararnama” which is a document found and considered by the authorities below as against the statement of Shri Ayub that he did not pay anything. In case, he was not party to the transaction, then there was no necessity for him to bgrounds of appeal raised by the assessee are thus, dismissed.ecome consenting party to the sale deed between Shri Rajansingh and the assessee. In the totality of the above said facts and circumstances, addition of Rs. 28,88,125/- is upheld. - Decided against assessee.

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• 2017 (6) TMI 346
  Reopening of assessment under section 148 - Held that:- The proceedings under section 148 of the Act were initiated against the assessee. However, where the assessee had failed to furnish any return of income in response to the said notice issued under section 148 of the Act and in response to 142(1) /143(2) of the Act then, the assessee at this juncture cannot raise issue against re-opening of assessment. Hence, the ground of appeal No. 1 raised by the assessee is dismissed. Unexplained investment u/s 69 - Held that:- Addition of Rs. 5,00,000/- on account of unexplained investment for purchase of plot u/s 69 of the Act is upheld in the hands of the assessee, as the said plot is purchased in the name of two persons. The Ld. AR for the assessee has fairly conceded that balance sum of Rs. 5,00,000/- is to be added in the hands of other partner, Shri Arun Chachad. In the said case, appeal is pending before the CIT(A). Accordingly, addition of Rs. 5,00,000/- is upheld in the hands of the assessee. Disallowance of transport charges - Held that:- There is no merit in the plea of the assessee in this regard wherein the Ld. AR of the assessee had already accepted 5% of disallowance out of total lorry hire charges paid. Upholding the order of CIT(A), ground No. 3 raised by the assessee in appeal is dismissed. Disallowance out of total expenses on vehicles and telephone expenses - Held that:- Assessing Officer had disallowed 1/3rd of the expenditure of car and telephone totaling Rs. 76,413/-. The CIT(A) restricted the disallowance to 10% of the total expenses i.e Rs. 22,924/-. There is no merit in the ground of appeal No. 4 raised by assessee and hence, the same is dismissed. Addition on account of cash introduced in the firm’s account by the partners - Held that:- In appeal herein above, in the case of Jagatsingh Pratapsingh Jadhav, addition of Rs. 5,00,000/- on the same ground is upheld and accordingly, no other addition on the same transaction is to be made in the hands of the firm and the same is deleted. In respect of other partner, Shri Arun Chachad, addition of Rs. 5,00,000/- has been made and appeal is still pending before the CIT(A). The Ld. AR for the assessee has proposed that the addition made in the hands of the partners on account of their cash contribution be upheld. In case no addition is confirmed in the hands of Shri Arun Chachad, the balance addition of Rs. 5,00,000/- would be upheld in the hands of the assessee’s firm. Otherwise, in case it is added in the hands of the partner, no addition in the hands of the assessee, is valid. The Assessing Officer is directed to decide the ground No. 2 accordingly.

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• 2017 (6) TMI 345
  Disallowance of expenses u/s 14A - necessity of recording of satisfaction - Held that:- AO while proceeding with disallowing the expenses has not recorded any satisfaction as required u/s 14A(2) of the Act. As per Sec.14A(2), for invocation of Rule 8D, the AO has to record satisfaction about the correctness of the claim of the assessee, in respect of the expenditure incurred in relation to the income which does not form part of total income. In the present case, we find that no satisfaction has been recorded by the AO while disallowing the expense u/s 14A of the Act, thus disallowance u/s 14A r.w.r. 8D was unjustified. See Punjab Tractors Ltd., Vs. CIT [2017 (2) TMI 647 - PUNJAB AND HARYANA HIGH COURT] - Decided in favour of assessee.

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• 2017 (6) TMI 344
  Addition on account of difference between 26-AS & return of income - Held that:- We take notice of the persistent claim of the assessee that the differential receipt of Rs. 15,24,175/- has been duly and correctly recorded in the hands of the Pvt.Ltd.Co. which has ultimately taken over the business of the present assessee. If that is so, the department ought to have taxed the receipt in the hands of one person who is rightful and legitimate claimant of the receipt. We find that the CIT(A) is merely influenced by the claim of TDS by Assessee herein without declaring the corresponding receipt which, in our view, cannot be seen in isolation to the other attendant facts. The CIT(A), in our view, has accordingly committed error in not appreciating the facts in perspective. We consider it just and expedient to remitting the matter back to the file of the AO for de novo adjudication of the issue in accordance with law after examining the attendant facts for rightful taxation of differential receipts in question. - Decided in favour of assessee for statistical purposes. Claim towards purported cost of improvement disallowed - computation of capital gains - Held that:- We find that in support of the cost of improvement so claimed, the assessee has failed to adduce any proper evidence. The assessee has only relied on its claim on the basis of two loans of Rs. 3 lacs and Rs. 1,98,000/- as noted above. However, there is no evidence on record to establish that the aforesaid loans were actually spent on improvement of house. There is nothing on record to suggest that any payment was made through banking channels. No bills, vouchers etc. relating to purported cost of improvement were produced before the lower authorities or before us. Thus, the assessee has failed to establish the veracity of impugned claim. The loan statement is extraneous for determination of issue. Consequently we find no reason to interfere with the order of the CIT(A) in disallowing the claim of the expenditure toward cost of improvements. - Decided against assessee.

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• 2017 (6) TMI 343
  Unexplained money u/s 69A - Held that:- Assessing Officer in remand proceedings called the three purchasers and recorded their statement. AO however, did not accept explanation of the assessee and also alleged that against the cheque deposits on cancellation of agreement, cash was withdrawn and repaid to the assessee. However, no such evidence is available with the Assessing Officer in this regard. The allegation is merely on surmise and conjecture. The assessee has discharged the onus by producing the persons and specially where the assessee has produced the parties who have accepted that they had made advances to the assessee against agreement to sell and such agreement has been cancelled and amount has been repaid by cheque; the assessee having discharged his onus then the explanation of the assessee merits to be accepted. In the gamut of evidence filed by the assessee i.e ‘Visar Pavati’ issued at the initial stage, thereafter legal notice issued, cancellation of agreement and statement recorded of the parties, the onus upon assessee has been discharged and the plea of the assessee merits to be accepted. No addition is warranted on account of said cash deposits in the bank accounts on the surmise that cash has been withdrawn from bank account of the said persons. - Decided in favour of assessee. Addition made on account of two loan receipts by the assessee as advance from two different persons - Held that:- The amounts were received through cheques and deposits in the bank account of the assessee. The onus was upon the assessee to prove the identity of the persons, creditworthiness of the persons and genuineness of the transactions. However, the assessee was unable to discharge his onus in this regard. In the absence of the same, there is no merit raised by the assessee.

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• 2017 (6) TMI 342
  Addition made in the hands of assessee, his brother and mother on account of the alleged foreign gifts received - plea of the assessee was that the set off of the said addition may be given against the income from undisclosed source assessed in the hands of the Shri G.R.Madhyan, who is the father of the assessee - Held that:- There is a finding on record in the case of Shri G R Madhyan, no issue was raised against the order of Commissioner of Income Tax (Appeals) in the case of Shri G.R.Madhyan, giving a finding that the alleged gifts in question should be assessed in the hands of the recipients as income from undisclosed sources. The issue that the impugned gifts are assessable in the hands of the assessee has thus become final. This is the finding of the Commissioner of Income Tax (Appeals) given vide para 3.12 at page 11 of the appellate order which has been reproduced by us in the paras here in above. In view thereof, we find no merit in the plea of the assessee that the addition made in the hands of the assessee be set off against the income assessed in the hands of the Shri G.R.Madhyan. We reject the same and uphold the addition in the hands of assessee. The grounds of appeal raised by assessee are thus dismissed.

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• 2017 (6) TMI 341
  Sale of land - nature of land - authorities below justification in treating the agricultural land as business asset - use of land - Held that:- It is decided proposition of law that the use of land for agricultural activities is not a relevant factor for determining the nature of land as Agricultural in nature. However, the fact cultivation of medicinal plants on the land suggests the intention of the assessee. In this case, assessee gave the required details on the purchase and sale transaction, details of the buyer, details of the 7/12 extracts showing the details of crop grown (medicinal plants) in the said lands, details of original intention to use the said land for growing the medicinal plants, reasons for sale etc., whereas the Assessing Officer merely disbelieved the assessee and Assessing Officer does not bring any iota of evidence to the records to substantiate his disbelief. In our view, the onus has shifted to the side of the Revenue/Assessing Officer. It is settled legal proposition in law that, for holding a particular transaction as an ‘Adventure in the nature of Trade’, the intention of the assessee at the time of purchase of land is a crucial factor. Subsequent genesis of intention, which led to the sale transfer of land, does not help the Assessing Officer to hold a particular transaction as the transaction as an “Adventure in the nature of Trade’. It is the case of genesis of intention to trade the asset subsequent to the timing of purchase of land. Therefore, we are of the opinion, despite the assessee’s background as businessman, this particular transaction is outside the scope of an ‘Adventure in the nature of Trade. Thus, the core issue raised by the assessee in the appeal stand allowed in favour of the assessee.

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• 2017 (6) TMI 340
  Reopening of assessment - reasons to believe - depreciation on Government Authorization - Held that:- We find that after the submission of the assessee that no fixed assets more than Rs. 10 lakh was acquired by the company during the year, no further query was raised by the Assessing Officer on the issue of depreciation on Government Authorization and thus no question of failure in applying the legal provisions on the facts arises.The fact whether the assessee claimed depreciation on the Government Authorization, was not stated truly by the assessee to the Assessing Officer and thus issue of application of law did not arise. In the instant case the Assessing Officer was prevented to examine the issue because of hiding the information by the assessee, we cannot say that Assessing Officer applied his mind and formed opinion to allow the depreciation on the Government Authorization. Discovery of the facts that the assessee claimed depreciation on government authorization constitute an information, and this information came to the Assessing Officer after the original assessment by fresh facts revealed later on. In such circumstances the issue of change of opinion in the reassessment proceedings cannot arise, when no opinion was framed on the issue of depreciation on government authorization in the original assessment proceeding. Whether the Government authorization/approvals falls under the category of intangible assets mentioned in section 32(1)(ii)? - Held that:- Government authorization/approvals are neither license nor the rights of business or commercial nature in the hands of M/s. KOAL, which could be transferred to the assessee and therefore no depreciation on the value assigned to government organizations/approvals by the assessee, could be allowed to the assessee. The ground of appeal is accordingly dismissed. Depreciation disallowed on non-compete fee - Held that:- As relying on Sharp business system versus Commissioner of income tax-III, (2012 (11) TMI 324 - DELHI HIGH COURT) and issue is covered in favour of the Revenue as held Every species of right spelt-out expressly by the Statute - i.e. of the intellectual property right and other advantages such as know-how, franchise, license etc. and even those considered by the Courts, such as goodwill can be said to be alienable. Such is not the case with an agreement not to compete which is purely personal. As a consequence, it is held that the contentions of the assessee are without merit - Decided against assessee. Disallowance of depreciation on goodwill - Held that:- The claim of the depreciation on goodwill cannot be allowed in the year under consideration. The alternative plea for allocating the value of government authorization towards goodwill is not accepted as the valuation has been carried out by the assessee from a valuer and the assessee is claiming the same as independent valuer, the assessee is bound to accept the value assigned to government authorizations. This alternative plea of the assessee, is accordingly rejected. The ground of the assessee is dismissed. Validity of assessment proceeding under section 147 - for AY 2006-07 - Held that:- The requirement of any fresh tangible material for reasons to believe, where return is processed under section 143(1) of the Act, is no longer required. In the instant case, the return is processed under section 143(1) of the Act and thus it is not necessary to have a fresh tangible material to form “reason to believe” that income has escaped. Thus assessment has been reopened validly. Accordingly, we uphold the finding of the Ld. CIT-(A) on the issue of dispute and the ground of the appeal is dismissed.

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• 2017 (6) TMI 339
  Disallowance of losses on account of re-measuring of forward contracts - assessee characterized the said losses as “marked to market” ( MTM) losses - Held that:- Hedging forward contracts of foreign currency cannot be “marked to market” (MTM) on balance sheet date as already there is a underlying asset and there is no extra outgo for settlement of the forward contract other than already determined in the contract and thus there is no additional liability or benefit to the assessee on the settlement date. Once there is no liability or benefit on the settlement date, there is no possibility of liability or benefit to the assessee on balance sheet date also. It is contested by the Revenue that in certain forward contracts, there was no underlying asset as on the date of balance sheet and, therefore, it need to be examined whether same were forward contract transaction in the nature of hedging or in the nature of speculation. However, in our opinion, when the contention of the assessee that all the forward contracts were settled by way of actual delivery through dollars received on export receivables, the assessee cannot be allowed “mark to market” losses on such forward contract and therefore it is not required to examine whether those forward contract transactions were speculative in nature. In view of above we hold that the loss claimed by the assessee on account of mark to market losses on account of fluctuation in foreign currency in respect of hedging forward contract is not allowable. - Decided against assessee.

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• 2017 (6) TMI 338
  Consideration received on transfer of development right - whether is not assessable to capital gain? - Held that:- It is well settled proposition of law that there is estoppel against the provisions of law and hence acceptance of the assessee before the Assessing Officer for assessing long term capital gains on the amount received by way of sale of development rights would not bound upon the assessee. In the cases relied upon by learned AR, the Coordinate Benches are held that the development rights is acquired by the assessee under the Development Control Regulations and hence sale of development rights is not exigible for capital gain computation. Consistent with the view taken by the Coordinate Benches, we hold that the consideration received by the assessee on sale of development right which was acquired under Development Control Regulations is not assessable for capital gain tax. - Decided in favour of assessee. - Decided in favour of assessee.

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• 2017 (6) TMI 337
  Rejection of books of accounts - Held that:- We confirm the order of the FAA and hold that there was no justification for rejecting the books of accounts and making ad hoc addition on account of alleged low GP.We want to mention that though the AO had alleged violation of rule 46A, yet,it was not mentioned as to which documents were produced before the FAA that were not made available to the AO.We decide first effective ground of appeal (GOA-1 secondly, some of the commission agents are also the relatives of the assessee. Such a basis drawn by the AO for making the disallowance cannot be sustained for the reason that, CIT(A) has clarified that overall rate of commission paid is @ 3% on the total turnover and not 3.25% and the commission has been paid uniformly to all the parties including the relatives. Out of 11 party, only 2 are relatives, therefore, it cannot be held that any unreasonable payment have been made to the relatives as compared to the outsiders. Such an ad-hoc disallowance of payment of commission made by the AO cannot be sustained and finding of the CIT(A) is thus, affirmed. - Decided against revenue.

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• 2017 (6) TMI 336
  Penalty u/s 272A(2)(K) - violation of late submission of TDS monthly statements - Held that:- As relying on case of State Bank of India vs. JCIT [2015 (5) TMI 753 - ITAT CUTTACK] there is reasonable cause in submitting the TDS statement which ultimately became delayed due to the fact that the assessee was not having PAN No. of deductees. Hence, we delete the penalty and allow the appeal of the assessee

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• 2017 (6) TMI 335
  Reworking the disallowance u/s 14A - Held that:- Since the investment was made out of surplus funds, no further disallowance is required to be made u/s 14A of the Act as section 14A provides for disallowance of expenditure incurred “in relation to” income which does not form the part of the total income, meaning thereby, there should be direct nexus between the actual expenditure incurred for the purpose of earning tax free income. No doubt, the word “in relation to” appears to be broad at firm impression but on deeper examination and read in conjunction with the word “incurred” it seems that these are restrictive words, restricting the power of Assessing Officer to estimate a part of expenditure, incurred by the assessee, to produce nontaxable income. To elaborate further, the word “incurred” refers to factual spending of expenditure in relation to exempt income and does not refer to deemed spending or assumed spending for the purpose. While applying the section, there is no authority conferred by the section upon Assessing Officer to deem or assume certain expenditure to have been incurred in relation to tax free income. The proximity cause of disallowance u/s 14A is its relationship with the tax exempt income. Wherever the expenses incurred has no relationship with the income not includible in the total income, there cannot be any occasion to invoke the provision for making the disallowance u/s 14A of the Act. Thus it can be concluded that at best further disallowance of Rs. 28,815/-, as agreed by the assessee, can be made. Thus, this ground of the assessee is partly allowed. Reworking of disallowance towards administrative expenses of Rs. 50,000/-, ad-hoc basis is concerned, during hearing the Ld. counsel for the assessee, claimed that no long term capital gain was earned by the assessee. The Ld. Assessing Officer made disallowance of Rs. 1 lakh on account of salary, printing and stationary, bank charges and general expenses, which were reduced to Rs. 50,000/- by the Ld. Commissioner of Income Tax (Appeal). Considering the totality of facts and the circumstances narrated before us, the disallowance on account of administrative expenses is reduced to Rs. 25,000/- as against Rs. 50,000/-, sustained by the Ld. Commissioner of Income Tax (Appeal), thus, this ground of the assessee is partly allowed.

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• 2017 (6) TMI 334
  Addition on account of depreciation on plant and machinery, building, furniture and fixtures - addition on the basis of discontinuity of manufacturing operation of the assessee and also holding that the same have not been used during the year - Held that:- With the introduction of concept of WDV of block of assets, the depreciation is allowable not on individual items but depending upon date of acquisition and put to use of the asset. Also section 38(2) deals with usage of assets for non-business purposes and does not refer to assets partly used during the year for business purposes. Depreciation is allowable on the plant and machinery, building, furniture and fixture and office equipment of INR 1,22,84,477 and the disallowance made by the AO was not justified. Thus, there is no merit for the disallowance so made. Respectfully, following the order of the Tribunal in assessee’s own case, we delete the disallowance of depreciation so made by the AO. - Decided in favour of assessee. Disallowance of depreciation on goodwill - existence of no provisions in act to provide for the depreciation on goodwill - Held that:- From the record we found that the Hon'ble Mumbai ITAT, in the assessee's own case for AY 2002-03, has allowed depreciation on goodwill by placing reliance on the ruling of the Supreme Court in case of CIT vs Smifs Securities Limited (2012 (8) TMI 713 - SUPREME COURT ) wherein held in no uncertain terms has held that goodwill is in the nature of "any other business or commercial right of similar nature", hence, eligible for depreciation.- Decided in favour of assessee. Disallowance of contribution made to group gratuity scheme - Held that:- The gratuity payments totalling to INR 53,48,822 should be allowed under section 36 (1)(v) of the Act as the assessee has made payment to approved gratuity fund.- Decided in favour of assessee. Disallowance of legal and professional fee - Held that:- These expenses are incurred wholly and exclusively for the purpose of business and hence be allowed as a deductible expense under section 37(1) of the Act except an amount of INR 6,20,150 should be disallowed during the year under consideration. As the assessee has suo moto reversed and offered to tax an amount of INR 5,62,492 in AY 2006-07, we direct the AO that in respect of the reversal of the amount in the books of accounts to the extent of INR 5,62,492, not to treat the same as income of AY 2006-07 as offered by assessee in the return of income as it would amount to double taxation. Disallowance of sale commission - AO disallowance assessee’s claim of commission payment on the plea that notices issued u/s.133(6) to the payee were returned unserved - Held that:- The amount of INR 11,19,811 was not payable to Radical Health Tech. Accordingly, assessee had written back and offered to tax the said amount in A.Y.2004-05. In view of the above, we confirm the action of the AO for disallowance of sales commission during the Assessment Year 2003-04. - Decided against assessee. Disallowance of amount of difference in ledger accounts - Held that:- The difference sought to tax is the difference between amounts as per GL module and AR / AP module. As the assessee failed to reconcile the difference ever after giving various opportunities, we confirm the addition made on account of difference in ledger account.- Decided against assessee. Disallowance of expenditure incurred on foreign trip - Held that:- Foreign trips were undertaken for the purpose of business, therefore, keeping in view nature of commercial expediency and the decision of Supreme Court in case of Sassoon J David (1979 (5) TMI 3 - SUPREME Court ), we do not find any merit for the disallowance so made by the AO. Assessee being an artificial juridical person cannot have personal expenses. The expenditure so incurred by the company has to be for the purpose of business of the company. Accordingly, AO is directed to allow the same. - Decided in favour of assessee. Disallowance of sales expenses - Held that:- The expenditure were incurred in normal course of business to keep cordial relations with existing and potential clients. Out of the total expenses Rs. 9201/- was not paid to Dr. Krishna. Accordingly, we confirm the disallowance of Rs. 9201/- out of the total expenses of Rs. 9,17,951/-. Disallowance of convention and perfusion expenses - Held that:- Expenditure for convention and perfusion was incurred for business purpose and same was substantiated with supporting documents (refer paper book page number 251 to 284). The learned AO and Hon'ble CIT(A) nowhere doubted the genuineness of the expenditure. The 50 percent disallowance on contention that Assessee failed to justify the real intent behind the expenditure incurred is not tenable. Accordingly, we direct the AO to allow the entire expenditure incurred - Decided in favour of assessee. Expenditure on renovation of conference room - revenue or capital expenditure - Held that:- We found that during the year under consideration, the Assessee claimed INR 1,09,828 (INR 87,464 + INR 22,464) on account of renovation of conference room as revenue expenditure. However, the amount of INR 22,464 was written back in the books of accounts on 22 August 2002. The Department has not filed an appeal against the allowance of INR 87,464 made by the learned AO. As the expenditure is revenue in nature, we do not find any justification for disallowance of the same. Disallowance of staff welfare expenditure - Held that:- CIT (A) granted a relief of INR 80,000 and disallowed INR 20,000 contenting that the expenses on Ganpati festival, birthday celebrations, Diwali, marrage gifts, etc. ensures cordial employer-employee relationship, though the entire amount cannot be said to be incurred wholly and exclusively for business purpose. The Department has not filed an appeal against the relief granted by the CIT(A) of INR 80,000. Since the expenditure was incurred wholly and exclusively for the purpose of business, we do not find any merit for the disallowance of Rs. 20,000/-. Disallowance of non-compete fees - Held that:- Respectfully following the decision of the Tribunal in assessee’s own case, we hold that assessee is eligible for consequential depreciation on non-compete fees in the AY 2003-04. Not allowing consequential adjustment in opening stock of AY 2003-04 - Held that:- The assessee had changed the method of valuation of closing stock of manufactured goods from actual cost method to standard cost method of valuation and closing stock of trading items from weighted average cost method to standard cost method of valuation in AY 2002-03. The said change in the method of valuation resulted into a decrease in the profit for the captioned AY by INR 36,34,884. The Assessing Officer made an addition of INR 36,34,884 to the total income of Appellant for AY 2002-03 (reassessment proceedings). However, the Commissioner of Income tax Appeals while upholding the addition made by the Assessing Officer for AY 2002-03 (reassessment proceedings), has directed to adjust the opening stock for AY 2003-04 to that effect as per the order dated 25 October 2007. Thus we direct the AO to allow consequential adjustment in the opening stock of AY 2003-04 amounting to Rs. 36,34,884/-. Addition of notional commission income while determining the arms' length price under the transfer pricing regulation - Held that:- As relying on assessee's own case we are inclined to restore the issue to the file of the Assessing Officer/ Transfer Pricing Officer with a direction to adjudicate the issue afresh and if in reality the assessee is in any way involved in international transaction in relation to supply of medical devices by the overseas entity to hospitals in India, he shall determine the arm's length price after selecting an appropriate method as provided under section 92C of the Act and keeping in view all other facts and materials on record and after providing due opportunity of being heard to the assessee. Disallowance of expenditure incurred on purchase of catalogues and brochures - Held that:- This expenditure has been incurred under the commercial expediency. See Dhanarajgirji Raja Narsingirji [1973 (3) TMI 6 - SUPREME Court ] Disallowance of 50% of expenditure incurred for sponsoring the foreign trips of doctors - Held that:- We found that expenditure were incurred wholly and exclusively for the purpose of business. A company being an artificial juridical person cannot have personal expenses. All the expenses incurred by the company has to be for the purpose of the business of the company. Accordingly no adhoc disallowance can be mad. Thus direct the AO to delete the disallowance of expenditure incurred on foreign trips of doctors.- Decided in favour of assessee. Disallowance of expenditure incurred in respect of in-house IT resources Centre for abandoned project - Held that:- Expenditure incurred was not for new business, but was essentially a new venture undertaken by the existing business, accordingly same is liable to be allowed as revenue expenditure. The AO is directed to allow the same.- Decided in favour of assessee. Expenditure on software development - revenue or capital - depreciation claim - Held that:- CIT(A) has already allowed 60% depreciation on the amount so incurred. We do not find any valid reason to interfere in the order of CIT(A).

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• 2017 (6) TMI 333
  Reopening of assessment - reasons to believe - proof of omission or failure of the assessee - Held that:- It is a necessary prerequisite that ingredients of Sec. 147 of the Act have to be fulfilled for initiating proceedings u/s.147 of the Act. At the stage of issue of notice, there has to be some relevant material on which a reasonable person could have formed a belief of escapement of income. No doubt where the original assessment was completed u/s.143(1) and where an original assessment was not done at all, the condition regarding omission or failure of the assessee and /or condition regarding change of opinion will not apply. The first condition that there should be a reason for believing escapement of income is necessary ingredient. A reading of the reasons reproduced by us above do not indicate how there could have been escapement of income in assessee’s hand where the property was settled in favour of the assessee by her husband, income from which was assessable in the hands of her husband. In my opinion, therefore the reasons cited for reopening the assessment had no legs to stand and smack of total non-application of mind. Exconsequenti the reassessments done for the impugned assessment years are set aside.- Decided in favour of assessee.

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• 2017 (6) TMI 332
  Cancelling the registration granted u/s. 12AA - as per CIT-A Assessee is involved in the process of making black money into white money by making bogus donations - survey u/s. 133A - statement given by Smt. Moumita Raghavan, Treasurer, during the survey operation u/s. 132 of the Act on the said School of Human Genetics and Population Health relied upon - Held that:- We find that the statements together with the letter of confirmation filed by the concerned person of School of Human Genetics & Population Health remained not rebutted to the fact that the Assessee is indulged in money laundering against to the objects of the Assessee, in such circumstances and on an analysis of finding in the impugned order and taking into consideration the answer of Assessee to question no-16 at page no-22 of paper book, though it was not argued before us and in the interest of justice, we are of the view the issue shall be remanded to the CIT-E for affording an opportunity to Assessee for cross examination in respect of admission made by School of Human Genetics and population health in the survey operation. Payment of commission B-Tech said to have been paid by Assessee to Susanta Vaidya A/c Biswajit Das - Held that:- Assessee could not bring on record the details in support of his contention that the disputed amount was paid in relation to land development work, therefore, in view of the decision rendered on first point, in the interest of justice, we remand the 2nd point to the file of CIT-E for giving an opportunity to the Assessee to substantiate its claim with a liberty file any evidence, if any. Appeal of the Assessee is allowed for statistical purposes.

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• 2017 (6) TMI 331
  Reopening of assessment - prayer of the Id AR that the department having collected the material at the back of the assessee and made the addition - Held that:- Simply because the assessee did not ask for the material in possession of the Assessing Officer and did not object to the initiation of proceedings u/s 147 at the assessment stage, cannot be a reason to conclude that the assessee has waived its rights for all times to come. It is well settled that the jurisdictional issue being a foundational issue has to be justified whenever it is challenged by the affected party. The law does not contemplate that the foundational fact and challenge thereto can be said to be waived in the peculiar facts of the present case. The assessee is within his rights to challenge the jurisdiction before the CIT(A). The challenge having been posed has to be addressed by the tax authorities. Accordingly, the impugned order is set aside and the issue is restored back to the file of the Id. CIT(A) with a direction to confront the assessee within the material relied upon and decide the jurisdictional issue which the assessee has raised and thereafter to proceed to decide the issue on merits if so warranted. - Appeal of the assessee is allowed for statistical purposes only.

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• 2017 (6) TMI 330
  Disallowance on account of peak credit - addition confirmed by the ld. CIT-A after rejecting the plea of the assessee i.e. the cash deposit entries in IDBI bank also belongs to the father of the assessee - Held that:- Though the assessee in support of his claim has demonstrated the business payments made by the father of the assessee from the IDBI bank account for which the affidavit was filed by the assessee. Therefore we find that there is force in the argument of the ld. AR which has not been adjudicated without adducing any reason thereon. It is also not disputed that the father of the assessee was joint holder in IDBI bank account and from this account the business payments were made by the father of the assessee. Therefore in the interest of justice & fair play we are of the opinion that the instant issue needs to be reconsidered in the light of the affidavit submitted by the father of the assessee. In our considered view the affidavit given by the father of the assessee cannot just be brushed aside. Therefore, we are inclined to restore the issue to the file of the AO for fresh adjudication in accordance with the law de-novo. - Decided in favour of assessee for statistical purpose

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• 2017 (6) TMI 329
  Claim of deduction u/s 80P(2) - denial of claim as assessee is primarily engaged in the business of banking and in view of section 80P(4) of the Act, the assessee is not entitled to deduction - Held that:- In the instant case, the assessee is a primary agricultural credit society registered under the Kerala Cooperative Societies Act, 1969. The certificate has been issued by the Registrar of Cooperative Societies to the above said effect and the same is on record. The Hon’ble High Court, in assessee’s own case and other batch of cases, had held that primary agricultural credit society, registered under the Kerala Cooperative Societies Act, 1969, is entitled to the benefit of deduction u/s 80P(2). Since there is a certificate issued by the Registrar of Cooperative Societies, stating that the assessee is a primary agricultural credit society, thus hold that the assessee is entitled to the benefit of deduction u/s 80P(2) of the Act. - Decided in favour of assessee.

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• Customs

• 2017 (6) TMI 361
  Closure of deposit on payment of differential customs duty along with 25% of penalty - Section 28(5) of the CA, 1962 - Original Authority proceeded to adjudicate the case and did not close the proceedings stating that the seized goods were liable for confiscation and as such, the case cannot be closed - Held that: - the respondents have right to close the matter without further adjudication - It is a well settled legal position that all proceedings arising out of the same matter shall stand closed upon fulfillment of the conditions mentioned therein - reliance placed in the case of M/s Mona Steels Versus CC, Amritsar [2017 (3) TMI 540 - CESTAT CHANDIGARH], where on similar issue, it was held that closure of proceedings in terms of Section 28 is correct - appeal dismissed - decided against Revenue.

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• 2017 (6) TMI 360
  Refund of SAD - no VAT was charged on these supplies in terms of notification dated 06.10.2010 issued by Rajasthan Government exempting the goods from payment of VAT - whether in such circumstances, the appellant will be eligible for payment of refund of SAD? - Held that: - an identical issue came up before the Tribunal in the case of Gazal Overseas [2015 (12) TMI 427 - CESTAT NEW DELHI] in which the Tribunal allowed payment on refund of SAD - NIL rate of VAT in terms of the notification issued under Rajasthan VAT Act 2003 is to be considered as appropriate sales tax/VAT. Accordingly, the condition prescribed in N/N. 102/2007 is satisfied and the appellant will be eligible for the refund of the SAD paid at the time of input - appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 359
  Natural justice - some of the vital documents relied upon by the department have not been provided to the appellants herein - confiscation of goods - Held that: - there is definitely merit in the Id. Advocate's contentions that they have not been given copies of important documents relied upon and that retraction letters have not been taken into cognizance and in the process the principles of natural justice have been violated - all the appeals are remitted back to the original authority for denovo consideration, where all documents relied upon in the SCN shall be provided to them - appeal allowed by way of remand.

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• Corporate Laws

• 2017 (6) TMI 355
  Names of petitioners wrongly removed from the list of respondent company inspite of their obtaining succession certificate - rectification of list of members - transmission of shares - Held that:- Section of law applicable is 59 of the Companies Act, 2013. No specific period of limitation is provided for transmission of shares under section 59 of the Companies Act, 2013. However, section 433 of the Companies Act, 2013 says that, for any proceeding or appeal before the Tribunal, provisions of the Limitation Act are applicable. There is no specific provision in the Limitation Act which governs in respect of transmission of shares. Therefore, Articles 113 and 137 of Limitation Act provides for three years' limitation from the date on the right to sue accrue. In the case on hand, the right to sue the respondent company is 11.06.2012 on which date respondent company wrote a letter to the first petitioner. This petition was filed on 22nd October, 2013. Therefore, this petition is within time and it is not barred by limitation. In view of the above discussions, there shall be direction to the respondent company for transmission of first batch of 36 shares in the name of the petitioners 1 and 3 and second batch of 36 shares in the name of petitioners 3 and 4. In the result, this petition is allowed with following directions: - (a) The respondent company shall transmit 25 equity shares which originally stand in the name of deceased Mukundbhai Saheba and second petitioner in the name of petitioner 1 and 3. (b) The respondent company before transmitting the 11 equity shares (58032153 to 58032163) which are originally in the name deceased Mukundbhai Saheba and 2nd petitioner shall give notice to Jitendra Sankalchand Gandhi and in case if no reply is received and if no objection is raised by Jitendra Sankalchand Gandhi within one month, transmission of those 11 shares also in the name of petitioners 1 and 3 can be effected. In case, Jitendra Sankalchand Gandhi raises any objection, the company shall inform him that he can resolve the dispute regarding the above said eleven equity shares of the respondent company in Civil Court, if it is within time.

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• Insolvency & Bankruptcy

• 2017 (6) TMI 356
  Commencement of the corporate insolvency resolution process - outstanding debt - Held that:- It is also an admitted fact that the outstanding amount payable by the corporate debtor to the operational creditor is not under 'dispute'. We have perused the contents of the application along with the supporting documents placed on record the reply filed by the corporate debtor and considered the submissions of both of the counsels. After having satisfied that all the requirements under law have been fulfilled, we hereby allow the application of the operational creditor and order the commencement of the corporate insolvency resolution process which ordinarily shall get completed within 180 days, reckoning from the day this order is passed. We also appoint Shri V. Mahesh as interim insolvency professional who has been proposed by the operational creditor. He is directed to take charge of the corporate debtor immediately. He is also directed to cause public announcement as prescribed under Section 15 of the Code within three days from the date the copy of this order is received, and call for submissions of claim under section 15 of IBC 2016 in the manner as prescribed. We declare the moratorium which shall have effect from the date of this order till the completion of corporate insolvency resolution process, for the purposes referred to in Section 14 of the IBC 2016. The supply of essential goods or services to the corporate debtor as specified shall not be terminated or suspended or interrupted during moratorium period. It is further made clear that the provisions of sub-section (1) of Section 14 of the Code shall not apply to such transactions as notified by the Central Government in consultation with any financial sector regulator.

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• Service Tax

• 2017 (6) TMI 381
  Refund claim - service tax towards the GTA services - Notification No. 41/200 ST - rejection on the ground that the details of linkage between transported goods and exported goods was not available and also on the ground that the tax paid on movement of empty containers from ICD/port to the appellant’s factory is not admissible - Held that: - It is seen that the transport documents contained the details of export goods along with exporter’s invoice numbers and container number. Apparently, these details can be connected with the shipment details available in the shipping bill to find proper linkage. On verification of such linkage, the claimed refund is available to the appellant - On the issue regarding movement of empty containers from the yard/ port to the factory of the appellant, it is seen that it is by now a well settled position that such movement is with reference to export of goods and service tax paid for the same is eligible for refund - refund allowed. Refund claim - services rendered by foreign commission agents - rejection on the ground of limitation - Held that: - The conditions mentioned in the notification are to be read harmoniously so that they will not result in conflict with each other - As the refund will rise only on payment of service tax, the claims filed within the period of limitation calculated from such payment, should be considered as filed in time - refund allowed. Refund claim - Terminal Handling Charges (THC) and documentation charges etc - denial on the ground that the appellants failed to produce evidence to the effect that these are attributable to port services - it was held claimed that THC was not a listed service prior to 07/07/2009 - Held that: - it is a well settled legal position that THC and documentation charges incurred by the appellant within the port area for the services relating to the export of goods, are to be considered as services eligible for refund of service tax - refund allowed. The matter has to go back to the Original Authority for a fresh decision - appeal allowed by way of remand.

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• 2017 (6) TMI 380
  Rectification of mistake - invocation of proviso to Section 73 of the FA, 1994 - Held that: - prior to 9.7.2004 the applicant had not taken registration under Service Tax Act. Taking registration is a mandatory requirement especially in view of the fact that there was no doubt regarding the liability to pay service tax - The only conclusion that can be reached in this circumstance is that the failure to take registration and file return was deliberate act with intention to evade payment of taxes - ROM application disposed off.

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• 2017 (6) TMI 379
  Refund claim - the service provided by the respondent is covered under Commercial Training & Coaching Services or Business Auxiliary Service? - benefit of N/N. 14/2004-S.T. dated 10.09.2004 - classification of services - Held that: - the services in the field of education training provided by programme implementing agency on behalf of central/state government would be classified under Business Auxiliary Service - the respondent are not providing any service to the trainee but they are providing service to central/state government, it is apparent the service provided by them is correctly classified under Business Auxiliary Service, as service provided on behalf of their client. Benefit of N/N. 14/2004-S.T. - Held that: - It is seen that the activities conducted by the respondent are in nature of training for a particular purpose like repairing of air conditioner, agri-tourism, aquarium making etc. In these circumstances, it cannot be denied that these activities are related to education. Thus the benefit of notification 14/04-S.T. cannot be denied to the respondent. Appeal dismissed - decided against Revenue.

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• 2017 (6) TMI 378
  Levy of service tax - commission earned by the appellant acting as foreman conducting the chit funds - Held that: - During the period of dispute, there were two streams of decisions - one stream holding that the activity is liable to levy of service tax and the other stream holding the opposite view. It is also on record that the matter is pending before the apex court for a final view in the matter - the issue requires reconsideration and that this is a fit case to be heard in its turn without insisting upon pre-deposit of the duty demand - appeal allowed by way of remand.

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• 2017 (6) TMI 377
  Penalty u/r 78 of the FA, 1994 - SISL had not paid any service tax, under the mistaken impression that the services related to erection and installation of wind mill were not taxable - subsequent payment of tax - Held that: - it is not disputed that the appellants have paid up the entire tax liability along with interest even before the issue of SCN. In the circumstances, penalty imposable on them should be restricted to 25% as per the Section 73 (1A) - penalty u/r 78 of the FA, 1994, imposed on the appellants is required to be reduced to 25% of the total tax liability of Rs. 23,45,419/- - appeal allowed - decided partly in favor of appellant.

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• 2017 (6) TMI 376
  Refund claims - Rule 5 of CCR, 2004 - Renting of Immovable Property service - Commercial Training or Coaching service - Telecommunication Services - Management or Business Consultancy service - rejection of refund on the ground that these input services were ineligible for the purpose of availing input service credit - Held that: - appellants have admitted that they have paid the service tax liability in respect of renting of immovable property by mistake - even if the appellants have paid or suffered tax liability by mistake, they cannot claim the refund thereof under Rule 5 ibid but, under other facilitating provisions in the law - refund rightly rejected. Commercial training or coaching services - Held that: - this relates to training of nominated employees - this would be an eligible input service, and in particular, they are also not barred by exclusion clause of Rule 2 (l) of CCR, 2004 - refund allowed. Tele-communication service - Held that: - concerning landline/mobile telephones installed at the residence of the employee, I am of the considered opinion that the credit should be permitted - there is no allegation that they have not been used for the purpose of the appellant's business or for that matter, only for the personal use and consumption of an employee - refund allowed. Management or business consultancy service - Held that: - What has been denied is the additional charges for transportation claimed by the consultancy - Appellant has not produced any contract or agreement wherein such transport charges are required to be paid, in addition to the consultancy charges - the credit availed in respect of such transport charges will not be eligible for the purpose of refunds under Rule 5 ibid - refund rejected. Appeal allowed - decided partly in favor of appellant.

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• 2017 (6) TMI 375
  CENVAT credit - excise duty paid on various items used in or as towers and shelters - denial on the ground that these items are not capital goods or inputs - Held that: - the issue of admissibility of CENVAT Credit has been decided against the assessee by the Larger Bench - the demand for the extended period and penalties have been set aside - matter remanded to the Commissioner only for quantification of demand - appeal allowed by way of remand.

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• 2017 (6) TMI 364
  100% EOU - refund claim - rejection on the ground that services rendered to SEZ and such services are only exempted and not export of services - Held that: - As per Section 53 of SEZ Act, 2005, the SEZ territory is to be treated as territory outside the customs territory of India. Further, according to the SEZ Act 2005, supply of goods from DTA to SEZ constitutes exports - for the purposes of Rule 6 A of Service Tax Rules, the SEZ will necessarily have to be treated as territory deemed to be located outside India and the provision of any services provided by a DTA unit to an unit located in such SEZ shall be treated as export of service provided all other conditionalities of the said Rule 6 A are satisfied - further, there is no distinction in Rule 5 of the CCR 2004, between exports and deemed exports - export of such services to SEZ will necessarily have to be treated as deemed export and will be eligible for refund of accumulated credit under Rule 5 of CCR and notifications issued thereunder. The matter is remanded back to the original authority only to the limited purpose of verifying whether the payment received towards such services have been received in convertible foreign exchange or otherwise - appeal allowed by way of remand.

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• Central Excise

• 2017 (6) TMI 374
  Valuation - Quantity discount - includibility - Held that: - quantity discount will not be allowable for determination of duty liability u/s 4A - the appellant assessee has been following the long standing practice of granting such quantity discount to their traders. This was being mentioned in ER-1, RG-1 and invoices regularly. The records of the assessee were also being periodically audited by the Department. Consequently, any allegation of willful suppression of facts with intention to evade payment of duty cannot be held against the appellant - demand restricted for normal period. Classification of goods - black phenyl - classified under CTH 3808.90 or CTH 3808.10? - Held that: - the classification of these goods have been decided by the Hon’ble Supreme Court in the appellants own case for an earlier period under 3808.10 - the classification of the goods under 3808.10 which will be entitled to abatement of 35% is upheld. Clandestine removal - Seizure of goods at dealers premises - goods were received from the appellant’s factory without payment of duty - Held that: - The seized goods are claimed to be those supplied free along with invoiced quantity. Consequently we do not find any justification for confiscation of the same at the dealer’s premises - confiscation, redemption fine and penalty set aside. Clandestine removal - Production as per input-output ratio - demand on the ground that production of goods, was suppressed when it is estimated in terms of the input output ratio - Held that: - The allegations of clandestine production and clearance are grave and hence is required to be backed by tangible evidence. The onus is on the Revenue to establish on the basis of evidences, the quantity of goods alleged to have been clandestinely manufactured and cleared - In the present case, other than the mathematical projection of the possible production, no corroborative evidence has been produced by Revenue to support the charge of clandestine manufacture and clearances - without tangible evidence, charge of clandestine clearances cannot be upheld - demand set aside. Clandestine removal - seizure at factory - Held that: - the goods said to be excess were found within the factory - since the goods remained within the factory there is no justification for seizure and confiscation of such goods - confiscation, redemption fine and penalty set aside. The case is remanded to the adjudicating authority for the limited purpose of re-quantifying the demand and to re-determine penalties - appeal allowed by way of remand.

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• 2017 (6) TMI 373
  Manufacture - whether conversion of nonferrous metals into metal alloys would amount to manufacture in terms of the section 2(f) of the CEA 1944? - whether the goods viz. Nickel, lead and tin alloys made by the appellant were liable to Central excise duty during the disputed period? - Held that: - similar question came up before the Hon’ble Supreme Court in the case of Commissioner Central Excise Jaipur vs Mahavir Aluminum Ltd [2007 (5) TMI 2 - SUPREME COURT OF INDIA] in which the Apex Court considered a question whether aluminum in ingots when converted into billets would amount to manufacture. Modvat credit of inputs and capital goods - SSI exemption - Held that: - It is a settled position of law that the demand cannot be sustained unless all the relied upon documents have been furnished to the appellant to enable them to defend themselves fairly - wherever the relied upon documents have not been supplied to the appellant, the demand of excise duty is liable to be set-aside. Matter remanded to the original adjudicating authority who will recompute the demand after excluding the demands attributable to the documents whose copies have not been made available to the appellant - Appeal allowed by way of remand.

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• 2017 (6) TMI 372
  Valuation - advertisement and publicity expenses - includibility - whether expenses incurred by the dealers of the appellant on advertisement and publicity activities undertaken by them is includible in the assessable value of finished goods manufactured by appellant or not? - Held that: - the above issue is no longer res-integra and has been settled in favour of the appellant in appellants own case in the case of the Honda Seils Power Products Ltd. Vs. CCE [2013 (10) TMI 450 - CESTAT NEW DELHI], where it was held that there is nothing in their agreements from which it can be concluded that appellants had enforceable legal right against the dealers to insist on incurring of certain amount of expenses on advertisement and publicity of the appellants products, and hence amount not included - appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 371
  CENVAT credit - base paper and blister PVC films - manufactured goods exported as such - Held that: - the CBEC’s Manual of Instructions and CBEC’s Circular F No. 345/2/2000- TRU dated 29.08.2000, states that the appellant is entitled to CENVAT credit for the goods exported as such - appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 370
  CENVAT credit - job-work - The cylinders were sent to the job worker under Rule 4(5) of the CENVAT Credit Rules and the job worker paid the duty on reconditioned cylinders on the value of reconditioned cylinders. On receipt of the cylinders, the appellants availed CENVAT Credit of duty paid by the job worker - Held that: - It is an admitted fact that the job worker has paid the duty on job worker goods and payment of duty by the job worker has not been objected by the Revenue. In that circumstances, CENVAT Credit cannot be denied to the appellants in terms of Rule 3 of CCR, 2004 - the appellants have correctly taken the CENVAT Credit on the invoices issued by the job worker for job worked goods - appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 369
  CENVAT credit - fake invoices - manufacturer supplier stated that they have issued only invoices and not supplied the goods to the appellant - Held that: - the Revenue has failed to prove as from where the goods have been received in their factory. In that circumstances, benefit of doubt goes in favor of the appellant - credit allowed - appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 368
  Manufacture - printing of laminated and un-laminated poly rolls - validity of SCN - Held that: - the said SCN nowhere established that printing amounted to manufacture - wherever the appellant is undertaking only printing of polyfilms that activity is not attracting Central Excise duty - the appellant is also laminating printed film, the goods which are laminated after printing do not attract Central Excise duty till 09.05.2008. For the period subsequent to 10.05.2008, goods which are laminated after printing are covered by definition of manufacture. The printed poly films do not attract Central Excise duty, further till 09.05.2008 laminated printed poly films did not attract Central Excise duty. Further, wef. 10.05.2008, printed laminated poly films fall under Tariff Item No.4911 and attract nil rate of duty. Demand set aside - appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 367
  CENVAT credit - components of boiler under CETH 8402 - The original authority held that the steel structural items fabricated by M/s. Thyssenkrupp Industries India Pvt. Ltd. at site cannot be called as parts of boilers and they are more appropriately classifiable as Columns/ beams, channels under Chapter 73 of the Central Excise Tariff Act, 1985, and credit was denied - Held that: - The Tribunal in the case of M/s. Monnet Ispat Ltd. & M/s. Cether Vessels Pvt. Ltd. Versus C.C.E. & S.T. Raipur [2017 (3) TMI 544 - CESTAT NEW DELHI] elaborately examined the issue and held that the denial of credit is not justified. In fact, the Tribunal held that even goods such as angles, channels, sections etc. which are classifiable under Chapter 73 and are used for fabrication in the factory for manufacture of support structures which ultimately become part of the boiler would also be eligible for cenvat credit. The Circular dated 18.05.2012 reiterates the Circular dated 02.04.2012 and further clarifies that whether certain structural components were to be treated as boiler parts or as goods for making structures to support the boilers is a question of fact, which requires examination, on a case to case basis. The clarification is to the effect that structural components used for laying foundation or for support of capital goods is not available. We find that when the classification is held to be under Chapter 84, the description of a product being support or a part loses relevance. The re-classification and consequent denial of CENVAT credit on the disputed items are not legally sustainable - appeal allowed - decided in favor of appellant.

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• 2017 (6) TMI 366
  Refund claim - appellant supplied the berths to various organs of the Railway as well as various state transport authorities, their invoice values were reduced by them after deducting the amount on account of liquidated damages - price variation clause - Held that: - the issue in whether the amount deducted by the buyer on account of liquidated damage should be allowed as deduction on transaction value has been settled by this Tribunal in the case of Victory Electricals Ltd. [2013 (12) TMI 81 - CESTAT CHENNAI], where it was held that The value payable in a case where liquidated damages is applied would therefore be the consequent value and this would constitute the "transaction value". - the appellant are entitled to refund on merits. The burden is on the appellant to produce necessary evidence that the incidence of duty has not been passed on by the appellant to any person - appeal allowed by way of remand.

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• 2017 (6) TMI 365
  Input tax credit - input services - services rendered by the Tamil Nadu Waste Management Ltd. (TWML) for collection and transportation of the waste to land filing facility at Gummudipoondi - Held that: - these services availed by appellant are very much essential to run manufacturing process and hence are very much used by them in relation to the manufacture of their final products. Such services had necessarily to be availed as per the requirement of Pollution Control Board - the said input service availed is also not barred by exclusion provisions of said Rule 2 (l) - credit allowed - appeal allowed - decided in favor of assessee.

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• 2017 (6) TMI 363
  Reversal of CENVAT credit - recovery the 10% of the value of the exempted goods - appellants were using common inputs/input services and capital goods in the manufacture of goods cleared on payment of duty as well as goods cleared to SEZ Developers under exemption without payment of duty and were not maintaining separate accounts - clearance to SEZ - Held that: - In terms of sub-rule (6) of Rule 6 of CCR, the provision of sub-rule (1), (2), (3) & (4) of Rules 6 are not applicable in respect of the goods cleared to SEZ Developers - In this case, the goods were cleared to contractor of the Developers of SEZ. The amendment including the Developer of SEZ for inserting or to a developer of special economic zone for their authorized operations was made on 31.12.2008 - the amendment in Rules 6 (6) (i) of Cenvat Credit Rules was clarificatory in nature and will apply retrospectively - the provision of Rules 6 (1), (2), (3) & (4) of CENVAT Credit Rules are not applicable in the instant case. Appeal dismissed - decided against Revenue.

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• 2017 (6) TMI 362
  Liability of interest - whether interest was payable on the amount of CENVAT credit which was contained in the inputs used in finished goods and work in progress for the period of 24 days after obtaining the exemption? - Held that: - the issue is squarely covered by the judgment of Hon’ble High Court of Karnataka in the case of C.C.E., Bangalore-I vs. Aravind Brands Ltd. [2011 (7) TMI 258 - Karnataka High Court], where it was held that there is no delay in payment of duty. The delay is in reversal of cenvat credit, therefore interest not liable - the question of interest to be charged, on the amount which has actually been reversed, is not sustainable - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2017 (6) TMI 358
  Natural justice - reasonable opportunity of contest is denied to the State - release of seized goods on deposit of cash/security of 10% - Held that: - law permits release of goods upon deposit of cash/security to the extent of 40% of the value of goods - this Court has granted relief to the assessee for the reason that the assessee is a registered dealer, but now goods are sought to be released in favor of the transporter pursuant to subsequent orders passed - matter requires consideration - matter on remand.

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• 2017 (6) TMI 357
  Shortage of stock - principles of natural justice - Held that: - The Court finds that this is virtually the third tier of appeal after the assessment order. The Court finds that in the memo of appeal, the Appellant has not set out precisely which document, according to it, which was already on record before the authorities below was not considered by it and, if considered, would have altered the decision in the appeal before the AT. Nowhere in the memo of appeal is it averred that such documents despite being produced were overlooked by the OHA and the AT, the Court is not inclined to grant any more indulgence to the Appellant. Further, if indeed there were any such documents, they should have been described in the memo of appeal and copies thereof enclosed. That has not been done. The impugned order of the AT does not suffer from any legal infirmity - appeal dismissed - decided against appellant.

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• Indian Laws

• 2017 (6) TMI 354
  Lower Court jurisdiction to decide the complaint - complainant of a dishonour cheque - Negotiable Instruments Act - Held that:- The place of collecting bank also gives jurisdiction to maintain a complaint. Thereby, the order of the lower Court returning the complaint in not entertaining at the fag end of the trial is since unsustainable it is liable to be set aside. Accordingly, the Criminal Revision Case is allowed holding that the lower Court got jurisdiction to decide the complaint on merits, with a direction to receive without insisting for any delay in representation if represented within one week from the date of receipt of copy of this order and issue fresh summons to the accused so as to proceed further in accordance with law. Miscellaneous petitions, pending if any, shall stand closed.

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