TMI Tax Updates - e-Newsletter
July 18, 2019

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise

TMI SMS

• Interest subvention income received to reduce the effective interest rate to the final customer is a supply & chargeable to GST @18%

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• Deduction u/s 54 allowed purchase of one residential property consisting 3 flats on diff. floor of the same society and 1 in diff. location

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Articles

1. Finance (no.2) Bill 2019- clause 13 – scope of S.43B increased to cover interest payable to two types of NBFC. As per author it is time to delete S.43B- there is loss to revenue by way of income-tax due to S.43B.

   By: DEVKUMAR KOTHARI

2. Treatment of agricultural income vs. Transfer of agricultural land under Income Tax

   By: Sandeep Rawat

3. Transaction in which quoting pan is mandatory wef 1 April 2019

   By: Sandeep Rawat

News

1. SEZs in Karnataka

2. Change in Import Tariff by US

3. Export of Marine Products

4. Export of Perfume

5. Export Promotion Scheme

6. Rubber Growers

7. Selected areas for SEZs

8. Industrial Clusters

9. Policy for Digital Economy

10. Slow Growth in Manufacturing Sector

11. Exemption for india’s food stock holding from WTO subsidy rules

12. National Retail Trading and E-Commerce System

13. Welfare of Tea Growers

14. Setting Up of Industries on Agricultural Land

15. Trade with China

16. Tobacco Export to China

17. Tea Garden Workers

18. Agri Export Zones

19. Cabinet approves Implementation of the Cabinet’s decision dated 28.12.2016 regarding pharmaceutical companies in the public sector – seeking modification therein

20. Cabinet approves Amendment in the Terms of Reference for the Fifteenth Finance Commission

21. Cabinet approves extension of the term of the Fifteenth Finance Commission up to 30th November, 2019

22. Survey for child labour rehabilitation

23. Inclusion, Investment & Innovation key areas of partnership between India & UK: Piyush Goyal

24. Boost to Rail Connectivity in Uttar Pradesh

25. Boost to Railway Connectivity between Allahabad and Mughalsarai

26. Boost to Rail connectivity in Assam

27. Enhancing Infrastructure in Arunachal Pradesh

28. Repayment of 10.03% Government Stock 2019

29. Joint Statement of 13th Meeting of India-UK Joint Economic and Trade Committee

30. India and Italy set up Fast –Track Mechanism to Facilitate investors and Companies

31. PSBs Branches in Rural Areas for Success of PMJDY

32. Amending Secrecy Clause to Disclose the Borrowers Name

33. Formation of National Rural Bank

34. CBDT issues clarification on incorrect reports in social media pertaining to difficulty in filing of Income Tax Returns

Notifications

Customs

1. 30/2019-Customs (N.T./CAA/DRI) - dated 11-7-2019 - Cus (NT)

Appointment of CAA by Pr. DGRI.

2. 29/2019-Customs (N.T./CAA/DRI) - dated 11-7-2019 - Cus (NT)

Appointment of CAA by Pr. DGRI.

FEMA

3. FEMA 5 (R) 2 /2019-RB - dated 16-7-2019 - FEMA

Foreign Exchange Management (Deposit)(Amendment) Regulations, 2019

GST - States

4. 29/2019-State Tax - dated 15-7-2019 - Delhi SGST

Seeks to prescribe the due date for furnishing FORM GSTR-3B for the months of July, 2019 to September, 2019.

5. 28/2019-State Tax - dated 15-7-2019 - Delhi SGST

Seeks to extend the due date for furnishing FORM GSTR-1 for registered persons having aggregate turnover of more than 1.5 crore rupees for the months of July, 2019 to September, 2019

Income Tax

6. 53/2019 - dated 16-7-2019 - IT

The approved ‘Scientific Research Association’ shall be to undertake scientific research.

Circulars / Instructions / Orders

Customs

1. TRADE NOTICE NO. 14/2019 - dated 13-6-2019

Sub:- Simplified auto-registration of beneficiuries (IEC holders) on ICEGATE for eSANCHIT and other benefits - reg.

2. TRADE FACILITY: 12/2019 - dated 31-5-2019

Budget 2019-20 — Views and Suggestions for formulating Tax Proposals in the forthcoming Budget

3. TRADE FACILITY: 11/2019 - dated 24-5-2019

Manufacturing and other operations undertaken in bonded warehouses under section 65 of the Customs Act -Ease of doing business

4. PUBLIC NOTICE NO. 29/2019 - dated 1-5-2019

Issue relates to carriage of coastal cargo from one Indian Port to another Port in Foreign going vessels/Coastal vessels through Foreign territory

5. TRADE NOTICE NO. 01/2019 - dated 29-4-2019

Shipping Bill (Electronic Integrated Declaration and Paperless Processing) Regulations, 2019

Highlights / Catch Notes

GST

• Rajasthan Co-op Society Exempt from TDS Obligations, Not Registered Under Societies Registration Act 1860.

  Case-Laws - AAR : Liability of TDS - Whether the applicant being a cooperative society registered under the Rajasthan Co-operative Societies Act, 1965 - Not liable to TDS since, applicant is not established under Societies Registration Act, 1860
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• Transmission Line Shifts by NHAI in Highway Projects Exempt from GST; Classified as Immovable Property.

  Case-Laws - AAR : Levy of GST - Asset Transfer - work of shifting & raising of transmission lines owned by RVPNL by NHAI in the course of widening, modification & diversification of its highways after completion of this work - The assets as created being an immovable property does not fall within the purview of GST
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• 99-Year Lease Not a Property Sale; GST Applies Due to Lack of Absolute Transfer Rights and Conditional Terms.

  Case-Laws - AAR : Levy of GST - 99 years Lease agreement - Transaction is in the nature of Sale of immovable property and outside GST and is exempt from levy of GST? - Held NO - There is no absolute transfer of property - there is no right to further sale - Agreement is subject of various conditions - Liable to GST
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• EPC contract for Fluids Servicing System not a composite supply under CGST Act; treated as supply of service.

  Case-Laws - AAR : Composite supply or not - Whether supply of Engineering, Procurement and Construction (EPC) contract for establishment of Fluids Servicing System where in both goods and services are supplied can be construed to be a composite supply in terms of Section 2(30) of CGST Act, 2017? - Held No - The activity is resulted in immovable property - To be treated as supply of service - Not entitled for benefit of concessional rate of GST
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• Automatic and Manual Filter Coffee Makers Classified as Non-Domestic Machines, Subject to 18% GST Rate Under Code 8419.

  Case-Laws - AAR : Classification of goods - Automatic Electric Filter Coffee Maker - Manual/ Traditional Filter Coffee Maker - the products are machines covered under 8419 and non-domestic (commercial use), not of a kind used for domestic purposes - Liable to GST @18% and not @28%
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• Interest Subvention Income for Effective Rate Reduction is GST Chargeable, Classified as 'Supply' Under CGST Act Section 7.

  Case-Laws - AAR : Levy of GST- Whether the interest subvention income received to reduce the effective interest rate to the final customer is chargeable to GST? - Held Yes - this transaction between DFSI and MB India is a ‘Supply’ under Section 7 of CGST Act.
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• Indian Navy Pumps for Vessels and Warships Classified with 5% GST Rate as Parts of Marine Equipment.

  Case-Laws - AAR : Classification of goods - parts of vessels or not - Forced Lubrication Pumps, Emergency Lube Oil Pumps, DG Lub Oil Transfer Pumps and Triple Screw Pumps supplied to the Indian Navy for commissioning in its Vessels and Warships are parts of 'All types of Vessels & Warships' - Taxable @5% of GST
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• Advance Ruling on Monthly Returns and E-Way Bills Dismissed Due to Procedural Scope Limitations u/s 97(2) CGST Act.

  Case-Laws - AAR : Advance Ruling - applicability of monthly return and e-way bill - issue involved are procedural and do not come under the purview of Advance Ruling as per section 97(2) of CGST Act - hence not answered
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• Dairy machinery supply and repair deemed composite supply under GST, taxed at 18% for single quote.

  Case-Laws - AAR : GST rate - supply and erection of diary machinery - the materials which are to be replaced/required are also included in the work order but the amount/quote is for the entire repairing/replacement work. Thus, it is clear that the supply made is 'Composite Supply' - GST @18%
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Income Tax

• Section 195 TDS: Overseas Agent Commission Payments Not Classified as Technical Services, No Extra Tax Liabilities.

  Case-Laws - HC : TDS u/s 195 - payment of commission charges to overseas agents - fees for technical services does not contemplate commission which is order specific and computable at a small percentage of the order value - No additions.
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• Taxpayer's Income from Amenities Agreement Rightly Classified Under House Property Category.

  Case-Laws - AT : Rental income - Amenity charges received - amount received by the assessee for providing the amenities/facilities to the licensee as per the “Amenities agreement”, was rightly shown by the assessee as its income under the head “house property”.
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• Design Expenses Essential for Project Start, Not Deferred Revenue; No Extra Tax Adjustments Needed.

  Case-Laws - AT : Disallowance of design expenses - deferred expenditure - When the design is approved only then the execution of the work would start, therefore, design charges shall have to be incurred once for start of the execution of the project. Therefore, it could not be treated as deferred revenue expenditure in nature - No additions.
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• TMB Spare Parts Costs Classified as Revenue Expenditure Due to Consumable Nature in Income Tax Context.

  Case-Laws - AT : Expenditure on TMB spare parts - Considering the nature of the machine and the items replaced in the machinery, it is clear that the TMB spare parts are consumable in nature, therefore, assessee rightly claimed it to be revenue expenditure.
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• Show Cause Notice Invalid: Section 263 Revision Issued by Unauthorized Officer, Proceedings Dismissed Due to Procedural Defect.

  Case-Laws - AT : Revision u/s 263 - notice not signed by CIT - SCN was issued by Income Tax Officer (Technical) - as per Section 263 CIT cannot delegate his powers to the subordinate Officer or lower officer and, therefore, this defect is non-curable defect and the Show Cause Notice itself is bad in law - revision proceedings does not survive
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• Penalty u/s 158BFA(2) Dropped Due to Valuation Differences in Gold and Diamonds, No Willful Default Found.

  Case-Laws - HC : Penalty u/s 158BFA(2) - no willful default - additions made were only due to the difference in estimate - It is never the case of the Revenue that the undisclosed income was on account of any transaction, which was out of books but, the entire case arose out of valuation of the gold jewellery and the diamonds - no penalty
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• Section 43CA Addition Inapplicable: No Transfer of Land or Building, Only Rights in Construction Transferred. No Addition Warranted.

  Case-Laws - AT : Addition u/s 43CA on account of suppression of sales - difference between agreement value and stamp duty value - section 43CA are applicable only when there is transfer of land or building or both - what the assessee had transferred pursuant to registration of the agreement was only the rights in the flat/office (which is under construction) and not the property per se - no addition
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• Tribunal's Decision on Section 154 and Section 80P Needs Reconsideration After Larger Bench Overturns Initial High Court Order.

  Case-Laws - AT : Rectification of mistake u/s 154 - deduction u/s 80P - appeal of assessee was allowed following order of High Court, subsequently, that decision was reversed by the decision of larger bench - In the light of the Larger Bench judgment, the Tribunal order dated 29.11.2018, suffers from a mistake apparent on record and the same needs to be recalled
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• Section 148 Notice Invalid: Approval Granted After Issuance Date, Renders Notice Void from Start.

  Case-Laws - HC : Validity of notice u/s 148 - AO has issued notice on 28.03.2014 though he has applied for approval which was granted on 29.03.2014 - very foundation for issuance of notice u/s 148 is the approval from the competent authority - in the absence of approval, such notice is void ab initio
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• Pre-operative expenses for enhancing production capacity classified as revenue expenditure, not capital, hence tax-deductible.

  Case-Laws - AT : Addition of pre-operative expenditure - revenue or capital expenditure - expenses are only to enhance the existing portfolio of the assessee and to increase its existing production capacity - even there is no denial of the fact that the expenditure claimed by the assessee is otherwise revenue in nature and not relating to the set up of the plant - duly allowable
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• Assessee Can Claim Deduction for Four Residential Properties u/s 54, Including Multiple Flats in One Society.

  Case-Laws - AT : Deduction u/s 54 - Purchase of one residential property consisting 3 flats on different floor of the same society and 1 in different location - Accepting the interpretation of word ‘a’ as occurring in Section 54, the assessee would be eligible to claim deduction u/s 54 on all the four residential houses.
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• Unexplained Investments: Diary Notes Insufficient for Income Addition u/s 69B Without Corroborative Evidence.

  Case-Laws - AT : Addition of unexplained investments u/s 69B - alleged cash payment for purchase of land - alleged purchase value noted in the diary found in search - it does not contain any information as to what was the cheque amount or cash amount and what was the date of the transaction - on record is a mere noting of the diary which in the absence of any other corroborative evidence cannot be utilized for making addition
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• No Notice Needed u/s 143(2) for Last-Minute Tax Return; Assessment Valid u/s 144.

  Case-Laws - AT : Non-issue of notice u/s. 143(2) - return filed on fag end of proceedings on the date order was also filed - The filing of the return by the assessee on 20.3.2013 is mischievous; in fact, an abuse of the process of law - the instant assessment is an assessment u/s. 144 - the assessee’s legal challenge is without merit - no need to issue of notice u/s. 143(2)
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• Loan Waiver: Taxable if Used for Business; Not Taxable if Used for Capital Assets Acquisition.

  Case-Laws - AT : Addition towards loans waived off - If on an enquiry and verification, it transpires that the assessee had utilized the loan for the purpose of its business activity or trading activity, the amount of loan to the extent it has been waived by the Directors/shareholders shall be deemed to be income chargeable to tax - if utilized for purpose of acquiring any capital asset then on its waiver is not taxable
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• Set-top boxes classified as electrical equipment, eligible for 15% depreciation, not 80%, u/r 8(ix)(E)(k).

  Case-Laws - AT : Depreciation on Set Top Boxes (STB) - @80% OR 15% - STB’s are energy saving devices OR electrical equipment - Set Top Box is a device connected to a TV and which allows a subscriber to receive in unencrypted and descrambled form subscribed channels through an addressable system - STB’s does not comes within Rule 8(ix)(E)(k) to claim depreciation @ 80% - depreciation is allowable @ 15% only
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• Assessee Discharges Burden on Share Capital with Proof of Identity, Genuineness, and Creditworthiness; Addition Unsustainable Without AO Evidence.

  Case-Laws - AT : Addition of the share capital - Once the assessee has furnished the adequate evidence/material, the burden of the assessee is discharged in proving identity of shareholders, genuineness of transaction and creditworthiness of shareholder - in a case, wherein the shareholders have neither denied the investment nor any enquiry has been made by AO or adverse material was brought on record - addition not unsustainable in law
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Customs

• Royalty and Franchise Fees Included in Valuation of Imported Goods Under Customs Act, 1962.

  Case-Laws - AT : Valuation of imported goods - inclusion of royalty charge and franchisee fees - Once the goods have been cleared from the Customs area the same is not required to be treated as imported goods and all the activities of the management, consultation etc. is relatable to the goods which is ceased to be imported goods in terms of the Customs Act, 1962.
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• Determination of Transaction Value in Related Party Import: Rule 3(3)(a) Applies, Rule 3(3)(b) Inapplicable.

  Case-Laws - AT : Valuation of imported goods - related party transaction - the relationship did not influence the price - Rule 3(3)(a) & 3(3)(b) provide different means of establishing the acceptability of a transaction value - Rule 3(3)(b) cannot be made applicable while deciding the transaction value in the present case
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FEMA

• FEMA 2019 Amendments: Streamlined Rules for Non-Resident Deposits, Revised Interest Rates & Repatriation Norms in India.

  Notifications : Foreign Exchange Management (Deposit)(Amendment) Regulations, 2019
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IBC

• Corporate Debtor's Insolvency Petition Admitted; Financial Creditors Had Time for Objections, Two Report None.

  Case-Laws - Tri : Admission of petition under I&B code - petition filed by corporate debtor - there was sufficient time provided to the Financial Creditors to file their objections if any - counsel on behalf of two FC reported that the they have no objection to admit the petition - Petition is admitted
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Service Tax

• Appellant's Credit on Common Input Services Not Counted for Exempted Services Under Proportionate Method.

  Case-Laws - AT : Reversal of cenvat credit - Once the appellant has followed the proportionate method for availment of credit on common input services, it cannot be said that appellant has availed any credit on input services used in providing exempted services.
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• Employee Deputation Not Classified as Manpower Supply, Affects Service Tax Applicability.

  Case-Laws - AT : Classification of services - Employees on Deputation / secondment - The arrangement is that of the continuous control and the direction of the company to whom the holding company has deputed the employee such as an arrangement is out of the ambit to be called manpower supply service.
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• Service Tax Not Applicable on In-Room Food Service, Classified as Sale, Not Service.

  Case-Laws - AT : Demand of service tax on food served in the room - The element of service is not involved and it amounts to sale and does not attract service tax.
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• Forfeited Hotel Booking Payments Not Subject to Service Tax u/s 66 E(e) of Finance Act.

  Case-Laws - AT : Taxability - forfeiture of advance received from a customer for booking of a room in a hotel - the retention amount (on cancellation made) by the appellant does not undergo a change after receipt - no service tax is attracted under the provisions of Section 66 E(e) of the Finance Act.
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• Export Service Tax Refunds: Gateway Port is Key for Cenvat Credit Claims on Pre-Export Services.

  Case-Laws - AT : Refund/Exemption of Service tax - The place of removal in the case of export is the gateway port, and all the expenses incurred by way of services received by the appellant, they are entitled to cenvat credit.
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Central Excise

• CENVAT Credit Allowed: Goods from Second Stage Dealer, Not Third; Classification Clarified Under Invoice Issuance.

  Case-Laws - AT : CENVAT Credit - second stage dealer or third stage dealer - goods procured through consignment agent (against F form under CST) of the second stage dealer cannot be treated as third stage dealer - invoice was issued through second stage dealer - credit allowed.
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• Court Denies CENVAT Credit on Clean Energy Cess for Imported Coal, Upholds 'Polluter Pays' Principle u/r 3.

  Case-Laws - AT : CENVAT Credit - clean energy cess on coal imported by them for use in their factory - If the CEC collected by the Government is returned to the assessee through the backdoor in the form of CCR, 2004, we will be doing a great disservice to the country by replacing the principle of ‘Polluter pays’ with ‘Pollution pays’ - the assessees are not entitled to Cenvat credit under Rule 3 of CCR, 2004.
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• No Interest on Unused Cenvat Credit; Required Only If Credit Is Utilized. Interest Demand Overturned.

  Case-Laws - AT : Interest on reversal of cenvat credit - Wherever Cenvat credit has been availed but not utilized, the interest need not be paid but it has to be paid in cases where the Cenvat credit has been taken as well as utilized - demand of interest set aside.
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• Appeal Dismissed to Avoid Inconsistent Orders on Similar Issues; Reference to Res Judicata Principle Explained.

  Case-Laws - AT : Revenue Appeal against one order of Commissioner Appeal whereas Commission has decided two cases simultaneously on similar issues - Though res judicata may not strictly apply to the orders passed by the Commissioner (Appeals), but the aid of such principles can be taken. In the present case if this appeal is allowed, two inconsistent orders will come into existence. The present appeal, therefore, is liable to be dismissed for this reason.
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• CENVAT Credit on Capital Goods Allowed u/r 6(4) During SSI Exemption, Utilization Suspended Per SSI Notification.

  Case-Laws - AT : CENVAT Credit - capital goods - Rule 6(4) of CCR, provides that an assessee is entitled to take cenvat credit on capital goods even during the period, they were availing SSI exemption but under Clause (IV) in para 2 of the SSI exemption notification, the utilisation is suspended during the period of enjoying the SSI exemption - CENVAT credit was rightly availed by the appellants
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• Goods Valuation Based on Ex-Factory Value Excludes Freight and Insurance Costs, Ownership Transfers at Manufacturer's Location.

  Case-Laws - AT : Valuation - goods valued on the ex-factory value - supply of goods was on FOR basis - only possible criteria for the purpose is as to whether the property in goods stands transferred to the buyer at the time when the goods are cleared at manufacturer place or not - dept. has been acknowledged that all the verifications, approvals by buyer got conducted at factory itself - assessable without freight and insurance
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• Rule 8(3A) of Central Excise Rules, 2002, is substantive and applies prospectively, not retrospectively. No procedural nature.

  Case-Laws - HC : Applicability of Rule 8(3A) of the CER, 2002 - prospective or retrospective - the rule is substantive in character since it relates to payment terms regarding duty and the effects of default in payment thereof and it is not at all procedural - only prospective operation - nothing in the said Rule suggest that it would have retrospective effect
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• CENVAT Credit Allowed for Minimal Use of Neutral Filter Cake as Input in Dutiable and Exempted Products.

  Case-Laws - HC : CENVAT Credit - use of intermediate goods (Neutral Filter Cake) as inputs - engaged in the production of dutiable as well as exempted product - the finding of fact that the input used is only minimal(1%) is not controverted - it is also beyond controversy that the said input has been treated as a separate final product and the duty thereon has been paid adjusting the duty paid as input - input allowable
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Case Laws:

• GST

• 2019 (7) TMI 817
  Liability of TDS - Whether the applicant being a cooperative society registered under the Rajasthan Co-operative Societies Act, 1965, now consolidated to Rajasthan State Co-operative Society Act, 2001 is liable to deduct tax at source (TDS) under GST from payment made to it by vendors for providing/ procuring taxable goods and services for making its supplies? HELD THAT:- While going through the Section 51 of GST Act, 2017 read with Notification No. 50/2018 (Central Tax) dated 13.09.2018, we find that the applicant is neither established under Societies Registration Act, 1860 (21 of 1860) nor it is established/constituted by any government (viz. Central Government/ State Government/ Local Authority). The applicant thus does not fall under any category of Section 51 of the GST Act, 2017. Therefore provisions of TDS are not applicable in accordance with Section 51 of the GST Act, 2017. The applicant is not covered under the provisions of Section 51 of GST Act, 2017 therefore not liable to deduct tax at source.

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• 2019 (7) TMI 816
  Classification of goods and services - rate of GST - creation of Video Conference software/ network - applicant is an inter-state supplier of various goods and services to the state of Karnataka - composite supply or mixed supply? - HELD THAT:- The essential element of whole supply is Video Conference software/ network. All other goods and services are involved in carrying out of smooth fixture and operation of video conference, therefore, the principal supply of the whole supply is Video Conference software/ solution. The supply falls under HSN 998316 to Notification No. 11/2017(Central Tax-Rate) dated 28.06.2017 (amended from time to time) and rate of GST is 18% (SGST 9% + CGST 9%).

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• 2019 (7) TMI 815
  Levy of GST - Asset Transfer - work of shifting raising of transmission lines owned by RVPNL by NHAI in the course of widening, modification diversification of its highways after completion of this work - HELD THAT:- The applicant is a Central Government entity whose primary work is building roads and bridges. Shifting, dismantling and raising of transmission lines is done by the applicant as and when required for safe electrical clearances during the widening of the National Highways, which is an ancillary to its main work. In the process of the activity, nowhere any assets are transferred to the applicant and therefore ownership lies with the RVPNL. It is merely an activity where just shifting of power transmission towers/ lines is done to widening of the National highways. Liability of GST - if there is an Asset transfer which is a Supply under GST, then who is liable to pay GST? - HELD THAT:- The assets created by the applicant being an immovable property does not fall under the definition of goods as mentioned in the GST Act, 2017 - the element of consideration is not involved in the activity and therefore the said activity is not a supply under the Section 7 of GST Act, 2017. Levy of GST - exemption vide Entry 4 of Notification no. 12/2017- Central Tax (rate) dated 28.06.2017 - HELD THAT:- While going through the above provision of Schedule II, it provides a transfer of business assets where goods form part of the assets. As the constructed power transmission lines are not goods as explained above, the said schedule is not applicable - in relation to definition of goods, supply and consideration under GST act, 2017 we find that assets constructed by the applicant do not fall under category of goods, thus no supply is involved. Therefore, the applicability of GST does not arise.

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• 2019 (7) TMI 814
  Levy of GST - 99 years Lease agreement of a private property - Whether the Lease Agreement between the Applicant Company i.e. the lessor and the Lessee for a period of 99 years is a Sale of immovable property and outside GST and is exempt from levy of GST? - HELD THAT:- The agreement made between the applicant and the lessee for long term of 99 years is for lease agreement with many restrictions and has no right to further sale the allotted plot. In the sale deed purchaser becomes the absolute owner of the plot and is not dependent on the lessor for renewal or extension of the lease period - the stamp duty charged by the Registration and Stamp department of the state govt. varies from one state to another. Rate of tax - If the present transaction of giving land on lease of 99 years is taxable under GST, then at what rate and what HSN Code is applicable? - HELD THAT:- Leasing of a private property (land, building etc.) are classifiable under HSN 997212 heading Rental or leasing services involving own or leased non-residential property attracting GST @18% (SGST 9% + CGST 9%) of Annexure to Notification No. 11/2017 dated 28.06.2017.

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• 2019 (7) TMI 813
  Classification of services - service provided in accordance with Notification No. 11/2017-CT (Rate) dated 28.06.2017 read with annexure attached to it by the State of Rajasthan to M/S Vinayak Stone Crusher for which royalty is being paid - HELD THAT:- The service provided by the State of Rajasthan to the applicant for which royalty is being paid is classifiable under 997337. Rate of GST - services provided by State of Rajasthan to M/S Vinayak Stone Crusher for which royalty is being paid - HELD THAT:- The rate of GST on service provided by the State of Rajasthan to the applicant for which royalty is being paid is 18% (SGST 9%+CGST 9%). Whether services provided by State Government of Rajasthan is governed by applicability of Notification No 13/2017-CT (Rate) dated 28.06.2017 under entry number 5 and whether M/S Vinayak Stone Crusher is taxable person in this case to discharge GST under reverse charge mechanism or whether given service is covered by exclusion clause number (1) of entry no 5 and State Government of Rajasthan is liable to discharge GST on same? - HELD THAT:- As the applicant is recipient of the services provided by the State of Rajasthan he is liable to pay GST on reverse charge basis under entry number 5 of the Notification No 13/2017-CT (Rate) dated 28.06.2017 and is not covered by exclusion clause number (1) of entry No.5 of the said Notification. Whereas the Excess Royalty Collection Contractor (ERCC) by way of assigning the right to collect royalty on behalf of the State Government on the mineral dispatched by the-mining lease holders. However as per the Notification No 14/2018-CT (Rate) dated 28.07.2018 the services supplied by State Government to ERCC for collection of Royalty became exempt - whether M/s. Vinayak Stone Crusher is taxable person in this case to discharge GST under reverse charge mechanism? - HELD THAT:- The services supplied by State Government of Rajasthan to Excess Royalty Collection Contractor (ERCC) by way of assigning the right to collect royalty on behalf of the State Government is exempted with certain restrictions by way of Notification No. 12/2017-Central Tax (Rate) dated 28-6-2017 as amended by Notification No. 14/2018-CT (Rate) dated 26.07.2018, However, the applicant is liable to discharge GST on reverse charge basis.

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• 2019 (7) TMI 812
  Classification of supply - composite supply or not - Whether supply of Engineering, Procurement and Construction (EPC) contract for establishment of Fluids Servicing System where in both goods and services are supplied can be construed to be a composite supply in terms of Section 2(30) of CGST Act, 2017? - Establishment of Fluids Servicing System (FSS) - principal supply or not - rate of tax. Whether their supply to the ISRO under contract for establishment of FSS can be construed to be a Composite supply; on the applicability of Notification No. 45/2017-Central Tax (Rate) dated 14/11/2017 to the supply provided to ISRO; and the rate of GST applicable to the entire transaction? HELD THAT:- TPL is contracted with IPRC to provide Fluid Servicing systems to supply propellants (ISROSENE, Liquid Oxygen) and service fluids (Liquid Nitrogen, Gaseous Nitrogen, Gaseous Helium, Water) to the test bed facility for semi-cryogenic engine at IPRC , Mahendragiri. Each of these systems (for each fluid) involves various tanks, pressure, and venting, cooling/heating, circulation, collection drain circuit. TPL should erect these fluid systems at the site along with their piping circuits and instrumentations by means of minor civil works done with concrete, brick masonry, grouting, bolts etc. TPL should fabricate and procure the relevant materials, instruments and equipment as defined in the contract. Along with these, TPL should also manage the complete project, plan, review the design, and give detailed engineering drawing for all these systems. They should also ensure inspection, transportation, construction and commissioning of the FSS, though various activities are to be done with assistance of IPRC. TPL supplies Goods and Services as required in the contract. It is to determine if the supply of goods and services by the applicant under contract to ISRO can be considered as a composite supply. Mere supply of the equipment, instruments, pipes and fluid tanks is not enough, the same has to be integrated and erected and finally commissioned at the test - bed facility. The Contract itself shows that the supply of these equipment and instruments are necessarily to be given with a host of services such as designing, engineering, inspection, construction, commissioning. Further, the payment schedule in the contract also shows that the billing / invoicing is indivisible. Thus, the whole contract for Establishment of Fluid Servicing System(FSS) of Semi-Cryo Integrated Engine Test (SIET) Facility at ISRO Propulsion Complex (IPRC), Mahendragiri is a composite contract as various supplies of goods and services are naturally bundled together. In the case at hand, the applicant has a contractual obligation to supply the materials and also to Erect the entire FSS including the various tanks, piping systems, instruments, electrical circuits etc. Such erection and installation is to be done to the test bed facility for testing the semi cryogenic engine system by means of minor civil works done with concrete, brick masonry, grouting, bolts etc. It involves the transfer of ownership of these goods involved in the erection, construction and installation of the fluid systems. The test-bed facility itself is an immovable structure erected at the site in Mahendragiri. The fluid systems and piping circuits provided by TPL are to erected, fixing them to the test-bed facility which is embedded in earth. The erection of the System at site makes the system a permanent fixture, i.e. immovable property. Thus it is clear that in the case at hand, the applicant supplies materials and in conjunction provides the service of erection of the System into at the test-bed facility making all the FSS together as an immovable property. Therefore, the whole contract for Establishment of Fluid Servicing System (FSS) of Semi-Cryo Integrated Engine Test (SIET) Facility at ISRO Propulsion Complex (IPRC), Mahendragiri is also a Works Contract . The present supply is a composite supply to be treated as a supply of services. As it is a supply of service, Notification No .45/2017- Central Tax (Rate) dated 14/ I I / 2017 and corresponding SGST notification G.O. (Ms) No. 161, dated 14.11.2017 which provides for concessional rate of tax for a supply of goods is not applicable. The applicable rate of tax for the supply will be the rate of tax of applicable for this supply of works contract.

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• 2019 (7) TMI 811
  Classification of goods - Automatic Electric Filter Coffee Maker - Manual/ Traditional Filter Coffee Maker - whether the Automatic Electric Filter Coffee Maker is a machinery not meant for domestic use and will therefore be classified under CTH 8419 and charged to GST at the rate of 18% effective from 14.11.2017 as per Notification No. 41/ 17 CTR dated 14.11.2017 with corresponding SI.No.220 of G.O. Ms. No. 157 dated 14.11.2017, issued under provisions of TNGST Act? - Whether the Manual/ Traditional Filter Coffee Maker, being not meant for domestic use and falling under CTH 8419 and charged to GST at the rate of 18% effective from 14.11.2017 as per Notification No. 41/17 CTR dated 14.11.2017 with corresponding Sl.No.220 of G.O. Ms. No. 157 dated 14.11.2017, issued under provisions of TNGST Act? HELD THAT:- Chapter 85 covers all machines and machinery other than those classified under chapter 84 which remain classified there even if they are electric. Chapter 8516 covers Other electro-thermic appliances of a kind used for domestic purposes under which coffee makers are classified under 85167100. This means that coffee makers used for domestic purposes are classified under chapter 8516. This is also stated in the explanatory notes that only electro-thermic machines, including coffee makers, normally used in the household are covered under this heading. The notes also specifically excludes thermo-electric appliances which are not normally used in the household which are to be classified under heading 8419 - Therefore, Gemini Modern Auto Coffee Filter and Gemini Modern Traditional Coffee Filter are specifically excluded from heading 8516 and should be classified under chapter 8419 and specifically under 84198190. Whether Sl.No. 320 of Schedule III to Notification no. 41/17 C.T.(Rate) dated 14.11.2017 is applicable and the products are liable to tax at the rate of 18% GST? - HELD THAT:- Prior to the amendment vide Notification no. 41/17 C.T.(Rate) dated 14.11.2017, CTH 8419 is mention only in Sl.no. 320 of Schedule III and Sl. No 121 of Schedule IV. However, only specific machinery were covered under these Sl.Nos which do not include Coffee makers for non domestic use. Therefore, for the period 01.07.2017 to 14.11.2017, the applicable rate on Gemini Modern Auto Coffee Filter and Gemini Modern Traditional Coffee Filter is CGST 9% as per Sl.No. 453 of Schedule-III of Notification No. 01/2017-C.T.(Rate) dated 28.06.2017 and SGST 9% as per Sl.No. 453 of Schedule -III of Notification vide G.O. (Ms) No. 62 dated 29.06.2017. Machinery, for the treatment of materials by process involving a change of temperature such as cooking, other than machinery of a. kind used for domestic purpose , falling under the tariff item 8419 is covered under the said entry. In the case at hand as discussed in para 7.4 above, the products are machines covered under 8419, not of a kind used for domestic purposes, therefore are squarely covered under the said entry. Hence, the products under consideration are taxable to CGST 9% and SGST 9% as per Sl. No. 320 of Schedule IIII to Notification no. 01/2017-C.T.(Rate) dated 28.06.2017 as amended by Notification No. 41/2017 dated 14.11.2017 and SI.No. 320 of Schedule III to Notification No.II(2)/CTR/532(d-4)/2017 vide G.O, (Ms) No. 62 dated 29.06.2017 effective from 15.11.2017.

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• 2019 (7) TMI 810
  Levy of GST- Whether the interest subvention income received by Daimler Financial Services India Private Limited (DFSI) from Mercedes-Benz India Private Limited (MB India) to reduce the effective interest rate to the final customer is chargeable to GST? - HELD THAT:- In the instant case of the agreement titled Mercedes-Benz Financial , the rate of interest for this loan is specified in Annexure I to this agreement. The methodology of arriving at this rate of interest is given in the Annexure itself as the Net Applicable Fixed Interest Rate after deducting the Applicable Fixed Interest Rate Gross less the Interest subsidy from MB India (ref Para 4.2). The buyer has to pay the Loan Amount (SI no 3 of (B) Financial details) specified in the Annexure I with interest at the Rate of Interest per Annum (Sl.no. 4 of (B) Financial details Annexure I) specified therein: There is no obligation of the buyer to pay back the principal at the Applicable Fixed Interest Rate Gross . There is no obligation on part of the buyer in this agreement to pay any further amount beyond the amount calculated as per the Rate of Interest per Annum . Hence, the stand of the applicant that the interest subvention amount given by MB India to DFSI is a part of the consideration for the transaction between DFSI and buyer is not correct as the buyer is under no obligation to pay this amount equivalent to the interest subvention to DFS as per the terms of the agreement between FSI and the buyer. In the instant case, there is an MOU / agreement between DFSI and MB India for an amount determined by the agreement interest subvention amount for each loan taken by buyer of MB India s vehicles. This amount is part of the consideration in this transaction and as per the definition in Section 2(31); this is the amount payable by MB India to DFSI and receivable by DFSI from MB India which is recorded as such in the audited financials of DFSI. As DFSI and MB India are related parties, the value of this supply may be different from the transaction value here. This agreement between DFSI and MB India is for the furtherance of the business of lending of DFSI as they are the preferred financiers of MB India s vehicles. Customers buying MB India s vehicle would prefer to take out a loan from DFSI because of their lower interest rates offered as a consequence of their agreement with MB India. Therefore, this transaction between DFSI and MB India is a Supply under Section 7 of CGST Act. In the instant case, DFSI is agreeing to provide vehicle loan to buyers of MB India s vehicles at a lower interest rate as decided between DFSI and MB India and also to provide better customer luxury experience, structured insurance products offerings with claims processing within minimum turnaround time, tailor made products, quick loan approvals, maintain customer relation etc. as per the MOU between FSI and Mb India. Hence, the supply of service by DFSI to MB India is covered under SAC 999792 as Other miscellaneous Services, agreeing to do an act. The interest subvention income received by Daimler Financial Services India Private Limited(DFSI) from Mercedes-Benz India Private Limited (MB India) to reduce the effective interest rate to the final customer is chargeable to GST as a supply under SAC 999792 as Other miscellaneous Services , agreeing to do an act, to 9% CGST and 9% SGST as per Sl no 35 of Notification No 11/2017 Central Tax (Rate) dt. 28.06.2017 as amended are chargeable as per Sl no 35 of Notification No. II(2)/CTR/532(d-14)/2017 vide G.O. (Ms) No. 72 dated 29.06.2017 as amended.

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• 2019 (7) TMI 809
  Classification of goods - dairy machinery - whether the dairy machinery works is liable to tax at 12% (HSN 8434) or (HSN 8413)? - HELD THAT:- The Jurisdictional Authority has remarked that the goods are classified under CTH 8434 attracting 12% GST. However, the applicant has not furnished the details of the said contract, such as purchase order, Work Order etc to consider and clarify - therefore no ruling is furnished. In Diary machinery works, they have taken milk processing, Milk chilling Refrigeration system, milk handling equipment s and milk packing equipment s and milk allied product making machinery. For such supply and erection of diary machinery it involves service charges also - what will be the tax rate of service charges component? - composite supply or otherwise? - HELD THAT:- In both the works, the applicant undertakes Repair/replacement services related to the Cooling Structures (Ice Bank Tanks) in the diary units of the Coop. Milk Producers Union Ltd. The materials which are to be replaced/required are also included in the work order but the amount/quote is for the entire repairing/replacement work. Thus, it is clear that the supply made is Composite Supply . The applicable rate of tax is 9% GCST under Sl. No. 25(ii) of Notification No. 11/2017-C.T. (Rate) dated 28-06-2017 as amended and at 9% SGST under Sl. No. 25(ii) of Notifiation No. II (2)/CTR/532(d-14)/2017 vide G.O. (Ms) No. 72 dated 29-06-2017 as amended. Nature of activity - Works Contract or not - rate of tax and HSN code - details of entries to be made in monthly return GSTR1? - HELD THAT:- It is seen from the work order submitted by the applicant that the work undertaken by the applicant is related to repair/replacement/installation of pipelines, alteration in the liquid separator by using necessary pipelines and fittings and also maintenance and repair services for the ice bank liquid separator in pipeline which are part of machinery used in dairy industry. The work undertaken by the applicant is not relating to any immovable property - the activity undertaken by the applicant does not fall under the category of Works contract. Details of entries to be made in monthly return GSTR1 - HELD THAT:- The issue involving details of entries to be made in the monthly return are procedural and do not come under the purview of Advance Ruling as per section 97(2) of CGST Act - the question hence not answered. Applicability of e-way bill procedures for business activities - HELD THAT:- The issue is procedural and do not come under the purview of Advance Ruling as per section 97(2) of CGST Act - the question hence not answered.

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• 2019 (7) TMI 808
  Classification of goods - parts of vessels or not - Triple Screw Pumps Parts - whether falling under Chapter Heading 8413 can be treated as Parts of HSN 8901, 8902, 8904, 8905, 8906, 8907 or otherwise? - levy of IGST or CGST? - scope of supply - HELD THAT:- Equipment supplied under the above purchase Orders are meant for Parts of Vessels / Warship and it is also seen from the purchase order, invoices that the Forced Lubrication Pumps, Emergency Lube Oil Pumps, DG Lub Oil Transfer Pumps and Triple Screw Pumps with spares and parts are parts of vessels of the Indian Navy to be installed on the Navy vessels. The goods supplied by the applicant are covered under chapter 8413 and as per explanatory notes parts of such pumps are also covered under the same heading - Chapter 8906 of Customs Tariff covers Other Vessels, Including Warships and Lifeboats Other Than Rowing Boats. Even when the goods supplied by the applicants are meant as parts of vessels, they are to be classified under their respective chapter. i.e 8413. Whether the goods under consideration is covered under the entry No. 250 or 252 of Schedule I of Notification no. 01/2017-central GST (RATE) Dated: 28.06.2017 and Notification No. vide G.O. (MS) No. 62 dated 29.06.2017? - HELD THAT:- Forced Lubrication Pumps, Emergency Lube Oil Pumps, DG Lub Oil Transfer Pumps and Triple Screw Pumps with spares and parts are parts of vessels classifiable under 8906 and themselves classifiable under chapter 8413. Therefore, they are covered under entry at Sl.No. 252 of Schedule I of the Notification No. 01/2017-C.T. (Rate) dated 28.06.2017 as amended at 2.5% CGST and at Sl.No. 252 of Schedule I of the Notification No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017 as amended at 2.5% SGST and at SI. No 252 of Schedule I of Notification No. 1/2017-lntegrated Tax (Rate) dated 28.06.2017 as amended at 5% IGST.

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• Income Tax

• 2019 (7) TMI 807
  Validity of reopening notice u/s 148 - no approval from the competent authority - addition on account of bogus purchase - ITAT treating the notice u/s. 148 as void ab initio - HELD THAT:- No doubt in the present case, AO has applied for such approval which was granted on 29.03.2014, but before grant of approval, the AO has already issued notice on 28.03.2014 which is without any jurisdiction. He can issue notice only after getting approval. Thus, the ld. CIT(A) has rightly quashed the assessment because the very foundation for issuance of notice u/s 148 is the approval from the competent authority, i.e. Commissioner of Income Tax, and in the absence of such, such notice is void ab initio Thus so far as the date of grant of approval and the date of issue of notice u/s 148 is concerned, and in the absence of any contrary evidence on record, we would not like to interfere with this appeal. - Decided against revenue

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• 2019 (7) TMI 806
  Reopening of assessment u/s 147 - Validity of reasons to believe - notice issues beyond period of four years - HELD THAT:- Initiation of reassessment proceedings under Section 143(3) of the Act had been made beyond the period of four years by issuing notice under Section 148 of the Act without any allegation that the income chargeable to tax had escaped assessment for such assessment year by reason of the failure on the part of the assessee to disclose fully and truly all the material facts necessary for his assessment for that assessment year. The Tribunal, while concurring findings recorded by the CIT(A) clearly held that the initiation of reassessment proceedings under Section 147 of the Act was bad in law. - Decided in favour of assessee.

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• 2019 (7) TMI 805
  TDS u/s 195 - payment of commission charges to overseas agents - disallowance u/s 40(a)(i) - HELD THAT: - As decided in M/S. EVOLV CLOTHING COMPANY PVT LTD. VERSUS THE ASSISTANT COMMISSIONER OF INCOME TAX [ 2018 (6) TMI 1324 - MADRAS HIGH COURT] on a reading of Explanation (2) to Section 9(1)(vii), fees for technical services means consideration, including lumpsum consideration for rendering any managerial, technical or consultancy services. In the instant case, the AO has, in the assessment order, accepted that the appellant assessee has paid commission charges to overseas agents. It is not the case of the Assessing Officer that any lumpsum consideration has been made for any specific managerial, technical or consultancy services. On a overall reading of the Explanation, it is apparent that fees for technical services does not contemplate commission which is order specific and computable at a small percentage of the order value. Section 40(a)(i) does not contemplate order wise commission based on the order value. - Decided in favour of assessee.

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• 2019 (7) TMI 804
  Levy of penalty u/s 158BFA(2) - difference between the returned income and the assessed income - valuation of the gold jewellery and the diamonds - HELD THAT:- On a reading of the penalty order u/s 158BFA(2) dated 19.7.2005, in which the assessment order has been referred to, we find that the difference is on account of the valuation of the gold jewellery and the diamonds. Thus, it was the consistent case of the assessee that the difference between the returned income and the assessed income was not willful, but it was voluntary and requested for dropping the penalty proceedings. These factors were rightly taken into consideration by the Tribunal while passing the impugned order. Though the decision in the case of Apex Metchem (P) Ltd. [ 2014 (5) TMI 11 - RAJASTHAN HIGH COURT] arose u/s 158BFA, it is not applicable to the case on hand, because, on facts, in the said case, it was found by all the three Authorities that the assessee was involved in undisclosed transactions on the basis of overwhelming evidence and all those transactions were out of books. It is never the case of the Revenue that the undisclosed income was on account of any transaction, which was out of books. But, the entire case arose out of valuation of the gold jewellery and the diamonds. Thus, for the above reasons, we find that the Revenue has not made out any ground to interfere with the order passed by the Tribunal. - Decided against revenue.

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• 2019 (7) TMI 803
  Reopening of assessment u/s 147 - survey u/s 133A was conducted in the business premise - reassessment based on documents sized/obtained in survey - assessee contend that documents obtained have no evidentiary value under the Evidence Act - not pressed the substantive prayers made in the writ petition - HELD THAT:- The respondent has set in motion the steps for reassessment upon reopening the assessment orders. The petitioner is afforded opportunity to substantiate its return. The petitioner by praying for a writ of mandamus or direction as noted above, would virtually lay the path on which the proceedings u/s 148 are to be undertaken and concluded. This Court is of the view that now that the proceedings u/s 148 are initiated, the commencement as well as conclusion are very well defined by the procedure under the Income Tax Act. AO is seized of the issue and the prayer now made if is considered the same amounts restricting the discretion by this Court and in the peculiar facts of this case, this Court is of the view that such directions amount to intercepting the otherwise duly regulated power of AO and substituting the view of this Court. This Court is not persuaded to accept the request of petitioner. Therefore, no ground is made out warranting the issuance of a direction to the limited extent noted above. Writ petition fails and dismissed. However, Mr. Anil D Nair apprehends that the objections that are available in this behalf may also be shut out by understanding the order of this Court in a different way, to avoid such eventuality he requests the Court to permit the petitioner to file additional comprehensive reply to the notices impugned in the writ petition. Mr. Christopher Abraham submits that three weeks time from today can be considered and given to petitioner.

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• 2019 (7) TMI 802
  Deduction u/s 54 - Purchase of one residential property consisting 3 flats on different floor of the same society and 1 in different location - Scope of amendment via The Finance Act, 2014 substituting the expression a residential house property with the words one residential house with effect from 01/04/2015 - Profit on sale of property used for residence - flats were acquired under different agreement - HELD THAT:- As decided in M/S. TILOKCHAND AND SONS VERSUS ITO [ 2019 (4) TMI 713 - MADRAS HIGH COURT] wherein held so long as the same Assessee (HUF) purchased one or more residential houses out of the sale consideration for which the capital gain tax liability is in question in its own name, the same Assessee should be held entitled to the benefit of deduction u/s 54 subject to the purchase or construction being within the stipulated time limit in respect of the plural number of residential houses also. The said provision also envisages an investment in the prescribed securities which to some extent the present Assessee also made and even that was held entitled to deduction from Capital Gains tax liability by the authorities below. Accepting the interpretation of word a as occurring in Section 54 as made by Hon ble Madras High Court in Tilokchand Sons V/s ITO [supra] , we hold that on the facts and circumstances, the assessee would be eligible to claim deduction u/s 54 on all the four residential houses. Condonation of delay of 326 days - concern CA of a CA firm who was handling assessee s matter, left the organization without handing over the papers - HELD THAT:- Keeping in view the principle of natural justice and ratio of decision of Hon ble Apex Court in Collector, Land Acquisition Vs. Katiji, [ 1987 (2) TMI 61 - SUPREME COURT] the bench formed an opinion that the delay deserve to be condoned

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• 2019 (7) TMI 801
  Rectification of mistake u/s 154 - Tribunal had directed to grant deduction u/s 80P by merely perusing the certificate issued by the Registrar of Co-operative Societies characterizing the assessee s as co-operative societies as primary agricultural credit societies - HELD THAT:- The Hon ble Kerala High Court in the case of Kil Kotagiri Tea Coffee Estates Co. Ltd. v. ITAT [ 1988 (7) TMI 54 - KERALA HIGH COURT] had held that when an authority has decided on the basis of a decision of the High Court which is subsequently reversed, there would be a rectifiable mistake coming within the section 154. The Larger Bench of the Hon ble Kerala High Court in THE MAVILAYI SERVICE CO-OPERATIVE BANK LTD [ 2019 (3) TMI 1580 - KERALA HIGH COURT] has reversed the dictum laid down by the judgment in the case of Chirakkal Service Co-operative Bank Ltd. [ 2016 (4) TMI 826 - KERALA HIGH COURT] by holding that the activities of the assessee has to be examined to determine whether the assessee s are Co-operative societies or cooperative banks. In the light of the Larger Bench judgment of the Hon ble Kerala High Court, the Tribunal order dated 29.11.2018, suffers from a mistake apparent on record and the same needs to be recalled. The contentions of the assessees that these rectification applications have not been filed within a reasonable date and hence barred by limitation is legally untenable. The order of the Tribunal is dated 29.11.2018 and the miscellaneous applications have been filed within six months from the date of receipt of the Tribunal order by the Commissioner. Hon ble Supreme Court in the case of Sree Ayyanar Spinning and Weaving Mills Ltd. v. CIT [ 2008 (5) TMI 22 - SUPREME COURT] had categorically held that it would be sufficient that a miscellaneous application is filed within the period mentioned u/s 254(2) and the same need not be disposed off within the time limit mentioned. The department cannot be faulted for the delay in disposal of the M.A. In the result, the miscellaneous applications filed by the Revenue are allowed.

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• 2019 (7) TMI 800
  Rental income - Amenity charges received by the assessee in terms of the Amenities agreement - income from house property or income from other sources - HELD THAT:- We find that the Hon ble High Court of Calcutta in the case of CIT Vs. Sambhu Investments Pvt. ltd. 2001 (3) TMI 77 - CALCUTTA HIGH COURT] had observed that where the prime object of the assessee was to let out the portion of the property to various occupants by giving them additional right of using the furniture fixtures and other common facilities for which rent was being paid, the income derived therefrom would be assessable under the head house property . Also confirmed by SC [ 2003 (1) TMI 99 - SC ORDER] . Accordingly, on the basis of our aforesaid observations, we are of the considered view that the amount received by the assessee for providing the amenities/facilities to the licensee as per the Amenities agreement , dated 07.08.2012 was rightly shown by the assessee as its income under the head house property . At the same time, we may herein observe that the assessee had claimed to have received gross rent of 2,17,21,200/- on letting out of the aforesaid property. However, we find that the receipts from the letting out of the aforesaid property and provision of amenities as per the respective Agreements works out to an aggregate of 1,79,26,200/- viz. (i) rental receips: 67,62,000/- (i.e @ 5,63,500/- per month); and (ii) compensation/amenity charges: 1,11,64,200/- (i.e @ 9,30,350/- per month). We thus in terms of our aforesaid observations restore the matter to the file of the A.O, with a direction to assess the amenity charges received by the assessee in terms of the Amenities agreement , dated 07.08.2012 under the the head house property . Also, the A.O in the course of the set aside proceedings shall verify the reason for the discrepancy in the amount of the gross rental shown - Ground of Appeal No. 1 is allowed for statistical purposes Disallowance u/s 14A r.w.r. 8D - suo motto disallowance shown by the assessee - HELD THAT:- In case the self owned funds of the assessee viz. profit, reserves, surplus and current account deposits are found higher than the investments made in the exempt income yielding assets, then no disallowance under Sec.14A r.w. Rule 8D(2)(ii) would be called for in the hands of the assessee. Our aforesaid observation is fortified by the judgement of CIT Vs. HDFC Bank Ltd. [ 2014 (8) TMI 119 - BOMBAY HIGH COURT] Accordingly, in terms of our aforesaid observations, we direct the A.O to readjudicate the issue pertaining to disallowance under Sec.14A r.w. Rule 8D(2)(ii), keeping in view the judgment of the Hon ble High Court of Bombay in the case of HDFC Bank Ltd.(supra). A.O shall in the course of the set aside proceedings afford a reasonable opportunity of being heard to the assessee.- Ground of appeal No. 2 is allowed for statistical purposes.

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• 2019 (7) TMI 799
  Capitalization of software expenses and allowing of depreciation - HELD THAT:- As decided in assessee s own case for the assessment year 2008-09 [ 2014 (11) TMI 1202 - ITAT BANGALORE] we deem it proper to restore this issue back to the file of the AO to examine and reappraise the additional evidence filed by the assessee in respect of expenditure incurred on purchase of software of 10 lakhs and above and decide the issue in accordance with the decisions in the case of Toyota Kirloskar Motors P. Ltd. [ 2013 (2) TMI 108 - KARNATAKA HIGH COURT] and Amway India Enterprises [ 2011 (11) TMI 4 - DELHI HIGH COURT]. Disallowance u/s 40(a)(ia) - AMC expenses - assessee contended that it has purchased software, hence TDS provision not applicable - HELD THAT:- AR filed material and explained that the company has not been granted any Rights in the software purchase and only obtained limited Rights for usage. We found that these aspects and information were not dealt in the assessment proceedings. Therefore, we remit this issue to the file of the AO to verify and examine the applicability of TDS provisions with material evidence filed and judicial decisions and the ground of appeal is allowed for statistical purposes. Marked to Market ( M2M ) loss - disallowance on the basis that the said loss is notional and contingent in nature - HELD THAT:- As contention of the AR is that this is allowable whereas we are of the opinion that hedging should not be more than the receivables. Whereas the AR submitted that it is within limits of exports and substantiated with material in the paper book - DR submitted that these facts are to be verified and the matter has to be examined whether export proceeds have been received within time allowed for filing of return by the Income-tax Act. Accordingly, we are of the substantive opinion that the matter has to be restored back to the file of the AO for verification of facts and receipt of export proceeds as envisaged in the course of hearing. Accordingly, this ground of appeal is allowed for statistical purposes. Charging of interest u/s 234B and 234C are consequential and direct the AO accordingly. Deduction u/s 10A on the capitalization of software expenses - HELD THAT:- As perused the order of the CIT(A), dealt where the CIT(A) has considered the alternative submission of the assessee that in case disallowance in regard to capitalization of software expenditure, the same has to be considered for deduction u/s 10A and the AO was directed to re-work. Whereas the learned DR supported the order of the AO and no new material was filed to controvert the observations of the CIT(A). Accordingly, we uphold the order of the CIT(A) on this issue and dismiss the ground of appeal of the revenue. Deduction u/s 80JJA in respect of additional wages paid to software engineer - HELD THAT:- We are of the opinion, that the matter requires a fresh look by AO. The CIT(A) had given relief to the assessee, despite the remand report of the AO in which he had mentioned the non-eligibility of the assessee in view of the notification issued by Government of Karnataka under Industrial Employment Act. We therefore, set aside the order of the authorities below and remit this issue to the file of the AO for fresh consideration afresh in accordance with law. Deduction u/s 10A - directing the AO to exclude data link charges and other expenditure both from export turnover as well as total turnover - HELD THAT:- We found that the CIT(A) has considered the decision of the Hon ble Karnataka High Court in the case of Tata Elxsi [ 2011 (8) TMI 782 - KARNATAKA HIGH COURT] and passed a reasoned order which cannot be interfered and uphold the same and dismiss the ground of appeal.

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• 2019 (7) TMI 798
  Deduction u/s 80P(a)(i) - interest income attributable to its business - AO s rejection of the assessee s claim for deduction in respect of interest received from other investments and deposits which was to be assessed under the head Income from Other Sources - HELD THAT:- On the similar issue, the ITAT, Bangalore Bench, in the case of Jyoti Co-operative Credit Society Ltd., Vs. ITO [ 2019 (5) TMI 1654 - ITAT BANGALORE] , after considering the decision of the Hon ble Apex Court in the case of Citizens Co-operative Society Ltd., [ 2017 (8) TMI 536 - SUPREME COURT] has restore matter back to his tile for a fresh decision with the direction that sufficient opportunity should be provided by him to both sides and the assessee should provide complete detail with cogent evidence in respect of business carried out by the assessee with nominal members and general public, if any. The assessee should also demonstrate about the difference in facts of the present case and facts in the case of Citizen Co -Operative Society Limited vs. ALIT (Supra). Respectfully following the decision of the ITAT, Bangalore Bench, (supra) restoring the matter to the file of the AO for fresh examination and adjudication Eligible of persons to be members under the Karnataka State Co-operative Societies Act, 1959 - classification / restriction under the Act - HELD THAT:- On similar facts, the Co-ordinate Bench of this Tribunal in its decision in the case of Chatrapati Sivaji Co-operative Credit Society Ltd., Vs. ITO [ 2018 (12) TMI 1662 - ITAT BANGALORE] restored this issue back to the file of the AO O for fresh adjudication after examination / verification of the facts in the light of the judgments of Totgars Co-operative Sale Society Ltd., Vs. ITO [ 2010 (2) TMI 3 - SUPREME COURT] and case of Tumkur Merchants Souharda Co-operative Ltd. [ 2015 (2) TMI 995 - KARNATAKA HIGH COURT] - the assessee s appeal is allowed for statistical purposes.

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• 2019 (7) TMI 797
  Addition on account of negative inventory - assessee has been following the percentage of completion method while recognizing the revenue - HELD THAT:- As revised contract value which would require incurring of substantial amount towards cost. Therefore, it would not be possible to assessee to earn income of 297.18 crores in assessment year under appeal as is computed by the A.O. in the assessment order. The entirety of the facts and circumstances and total cost of the project shall have to be seen and considered by the authorities below. Since the POCM is pleaded for the first time which have an impact on this addition and other project completion expenses disallowed by the authorities below and these additions are left with academic discussion only, therefore, we are of the view that the matter requires reconsideration at the level of the A.O - thus set aside the Orders of the authorities below and restore the matter in issue to the file of A.O. with directions - Ground No.1 of the appeal of Assessee is allowed for statistical purposes. Addition on account of mismatch in the physical and book balance of diesel - as mentioned that in the Special Audit Report [ SAR ] there is a difference of 8610.86 litres of diesel which was unexplained - HELD THAT:- After considering the rival submission and in the light of documents available on record i.e., PB-A1/172 and 173 it is clear that assessee has been able to reconcile the difference of 4283 litres, therefore, to that extent addition is liable to be deleted. However, for the remaining amount, Learned Counsel for the Assessee did not press this ground for a sum of 2,40,160/-. We, accordingly, set aside the part addition and restrict the addition of 2,40,160/-. Ground of appeal of Assessee is partly allowed. Addition on account of mismatch in physical and book balance of steel - A.O. made this addition on the ground that there is a difference in the balance of TMT as per stock statement given by the Special Auditor and as per physical verification, the detail of which is given by the A.O. in the assessment order - HELD THAT:- The assessee also explained that TMT is not used in the same length in which it is supplied, rather it was cut into various sizes as per requirements. This process result in some of the permitted wastage. The above explanation of assessee have not been rebutted by the authorities below or the Special Audit. Even by the nature of the item i.e., TMT used in construction would also supports the explanation of assessee that TMT could not be used in the same shape as have been supplied by the supplier. The assessee also explained that TMT bar suppliers given the weight of supplies with 2 to 5% margin in actual weight. Since all these facts have not been controverted by the authorities below, therefore, it appears to be an adhoc addition without any basis or material on record. Further, the A.O. merely presumed that there is an excess issue of stock in the books of the assessee resulting in excess expenditure by the assessee for which no evidence has been brought on record. Further any excess quantity in physical stock cannot automatically lead to conclusion that there is excess consumption of material to inflate expenses. Therefore, it appears that the addition is based on merely on presumptive reconciliation which is not justified. We, accordingly, set aside the Orders of the authorities below and delete the addition Addition on account of alleged stock of scrap determined based on theoretical consumption - A.O. made the above addition as the Special Auditor has identified in SAR that there is a difference of 88.50MT on physical verification report of TMT submitted before Special Auditor - HELD THAT:- This ground is co-related with Ground No.3 above in which we have deleted the addition on account of theoretical and actual stock which is the basis for making this addition as well. The assessee has produced sufficient evidence on record to prove that in subsequent year assessee has sold further scrap which have been accounted for as income in subsequent year. The A.O. has given contradictory finding on Ground Nos. 3 and 4 on the identical issue. The A.O. has merely relied upon audit report for making the addition without bringing any evidence or material on record. Therefore, no addition could be sustained of this nature. Disallowance of amortization expenses - as assessee was amortizing the assets like T.Vs, Refrigerators, Air- Conditioners, furnitures etc., @ 5% per month i.e., 60% per annum against the normal depreciation rate which was to be allowed @ 10% per annum and difference of the same was added by the A.O - HELD THAT:- the matter requires reconsideration at the level of the A.O. because the A.O. shall have to verify the exact item and exact depreciation allowable as per rules. The assessee has filed complete details in the paper book which requires verification at the end of the A.O. as to on which item specific depreciation is allowable to the assessee as per rules. We, accordingly, set aside the orders of the authorities below and restore this issue to the file of A.O. with a direction to consider each item on which depreciation is claimed and allow depreciation to assessee as per rules Disallowance of depreciation on account of excess payment for acquiring fixed assets - HELD THAT:- There was a difference between the installation of machinery and commissioning as Shanghai Pudong specially manufacture TBM for assessee s requirements. The details of all invoices/bills etc., are brought on record which clearly reveal that assessee has paid reasonable price for purchase of TBM to M/s. Shanghai Pudong. The assessee has, therefore, been able to explain that assessee has paid reasonable price for purchase of TBM. The authorities below have not brought any evidence or material on record to justify their finding. The findings of the authorities below are based on mere presumption and surmises. The A.O. cannot step into the shoes of a businessman to determine the price. The assessee also explained that TBM was purchased in preceding assessment year in which assessment u/s 143(3) have already been completed. Therefore, such an item could not be disputed in assessment year under appeal. CIT(A) without any basis or justification held that assessee has paid excess payment for purchase of TBM. CIT(A) without any justification has disallowed depreciation @ 25%. Expenditure on TMB spare parts - expenditure on replacing consumable spares - allowable revenue expenditure or not? - HELD THAT:- The assessee filed details of TBM consumable spare parts which gives item description which were claimed as consumables which are bolt, stock sensor, hydro cylenders, belt, pipe, cable, single disc cutter etc., The nature of these items thus shows that these are consumable in nature and need for day-to-day wear and tear. The nature of tunnel boring machine itself shows that it is doing a specified job of cutting the ground, removing the excavated material and make a tunnel. In this process, the back-up consumable items are frequently required for completing the operation related to the business activity of the assessee. The assessee did not remove the original spares from the block of assets, therefore, replacement of the items have been rightly claimed as revenue expenditure in nature. Considering the nature of the machine and the items replaced in the machinery, it is clear that the TMB spare parts are consumable in nature, therefore, assessee rightly claimed it to be revenue expenditure. Disallowance of amortization expenses - A.O. made this addition which is the difference between depreciation claimed by assessee as per books and depreciation calculated as per Income Tax Rules. - HELD THAT:- CIT(A) has already directed the A.O. to look into the alternate claim of assessee and allow depreciation to assessee as per Income Tax Act and Rules. Therefore, no further interference is required in the matter. A.O. is, therefore, directed to verify the items on which depreciation is claimed and also decide application u/s 154 as per Law and allow depreciation as per I.T. Act and Rules. Addition on account of foreign exchange gain - HELD THAT:- Assessee made a book entry at the end of the year with reference to capital asset on account of foreign exchange fluctuation gain which was capitalized. Thus the gain on transaction of foreign currency liability was in respect of capital asset which should have been considered as capital receipt only. Further even if Section 43A would not apply to the matter in issue because no actual settlement of liability has happened during the assessment year under appeal, therefore, book entries would not be relevant to determine the income of assessee. It is well settled Law that book entries are not determinative of income of assessee whether income of assessee is taxable or not, it has to be decided as per Law. We rely upon Judgment of Sutlez Cotton Mills Ltd., vs. CIT [ 1978 (9) TMI 1 - SUPREME COURT] and Tuticorn Alcali Chemicals Fertilizers Ltd [ 1997 (7) TMI 4 - SUPREME COURT] - Even if in this case assessee has made an entry of gain on transaction of foreign currency liability in respect of capital asset at the year end, which would not be income of the assessee, therefore, no addition could be made against the assessee of this nature. We, accordingly, set aside the Orders of the authorities below and delete the entire addition Disallowance of design expenses - A.O. disallowed the above amount towards design charges as the Special Auditor has observed that certain expenses of deferred nature were charged fully to Profit Loss Account such as design charges are in the nature of deferred revenue expenditure and this expenses has to be spread over the life of the project which was fully claimed in the initial year of the operation of the JV. - HELD THAT:- The assessee claimed that amount was incurred on account of design charges which is approved by DMRC in the initial stage. When the design is approved only then the execution of the work would start, therefore, design charges shall have to be incurred once for start of the execution of the project. Therefore, it could not be treated as deferred revenue expenditure in nature - we delete the entire addition Disallowance of bank guarantee expenses - HELD THAT:- The assessee has explained all the reasons, under which, the amount have been spent for business purposes. The Ld. CIT(A) allowed part relief to the assessee for sum of 37,59,867/-. Still the entire amount of 2.22 crores had been disallowed which was total amount consisting of two parts as explained above. The assessee has referred to JV Agreement which clearly provide that any fronting guarantee cost paid to the local Bank shall be paid directly by the JV, therefore, there was no justification to sustain any of the addition on this issue. It is well settled Law that guarantee expenses paid by the assessee was a revenue expenditure and an allowable deduction. Judgment in the case of Sivakami Mills Ltd. vs. CIT [ 1979 (2) TMI 51 - MADRAS HIGH COURT] clearly apply to the facts of this case. Following the same, we set aside the Orders of the authorities below and delete the entire addition. Disallowance of prior period expenditure - HELD THAT:- No justification to sustain the addition. It is a fact that it is practically first year of business of assessee when revenue was recognised under POCM. Therefore, there could not be any prior period expenses as explained by the assessee. The assessee also explained method of accounting which has no impact on revenue recognition. Thus, there was no basis by the authorities below to make or sustain any addition. We, accordingly, set aside the Orders of the authorities below and delete the entire addition Non deduction of tds - Disallowance in respect of expenses incurred on four items i.e., Food expenses for staff outside Office, staff mess expenses, rent, co-lease BUNG project related, rent guest house and car hire charges - expenses spent by the assessee on Chinees expats as per the observation of the Special Auditor which is in the nature of perquisites in the hands of the employees and should have been added to the salary for computation of TDS liability - HELD THAT:- It may also be noted here that the Special Auditor has admitted that these are allowable as business expenses, therefore, it should have been pointed out in the Orders as to how these were perquisite in nature. It is also observed by the Special Auditor that these perquisites should be added to the salary of the employees for computation of TDS liability. In Section 40(a)(ia) the word salary have not been used so as to make disallowance on account of non-deduction of TDS. Therefore, there was no justification for the authorities below to make adhoc addition Addition on account of mismatching balance confirmation of vendor - HELD THAT:- The assessee produced copies of bills and vouchers along with bank statements to explain that entries in the books of account of assessee are correct. However, the party has filed the confirmation in which there was a difference but ultimately entries have been made in the subsequent year. The explanation of assessee appears to be plausible to show that there may not be any mismatch, but, we are of the view that the matter requires reconsideration because of the two different confirmations have been filed by the party. In case, any need the A.O. could have also examined the concerned party for verification of all the entries in the books of account of assessee. We, accordingly, set aside the Orders of the authorities below and restore the matter in issue to the file of A.O. with a direction to re-decide this issue Addition u/s 68 - HELD THAT:- CIT(A) considered each and every case specifically and in the case of Shanghai Pudong, confirmation was given which is supported by bills, invoices and bills of entries of custom clearance. Commissioner of Customs (Import) has also verified all the entries and confirmed all the transactions as genuine between the parties in which no doubts have been raised by the A.O. Therefore, there was no basis to consider the discrepancies in that case, therefore, addition of 74.09 crore was correctly deleted. Assessee has claimed depreciation only on this item, therefore, there could not be any discrepancy in their account. As regards other difference of 3.36 crores, it was mainly on account of RBI rate which have been clarified by the RBI through their website, in which, no discrepancy have been pointed out by the Ld. D.R. CIT(A) has also considered the cases of 26 vendors specifically in his findings and found that credit balance shown by the assessee was less than the balance shown by these vendors in their confirmations. This fact is also not disputed through any evidence or material on record. On the basis of these finding of fact recorded by the Ld. CIT(A), we are of the view that Ld. CIT(A) correctly deleted the substantial addition Unexplained investment - addition on the ground that investment shown by the assessee from its Member L T is 13 crores, whereas, investment shown by the L T in J.V. is of 12.66 crores and on this account the Special Auditor has proposed the addition - HELD THAT:- There were no bar for the assessee to explain the issue by filing confirmation of the difference. Therefore, the matter requires reconsideration at the level of the A.O. We, accordingly, set aside the Orders of the authorities below and restore this issue to the file of A.O. with a direction to re-decide this issue in the light of confirmation filed by assessee from L T to explain the above issue. Addition on account of notional interest - A.O. made this addition which is the notional interest on the ground that one of the member of JV i.e., L T has provided initial investment of 13 crores, whereas the capital contribution which were required to be made by other member SUCG of 5,95,86,471/- has not been made - HELD THAT:- The assessee explained before the authorities below that it is for the Supervisory Board as per JV Agreement to see that funds are made available by both the members of the JV. The entire proceedings are supervised by the Supervisory Board, therefore, merely because one member of the JV has not contributed their capital in the JV is no ground of charging notional interest on the capital which is not contributed by the member of the JV. There is no provision under the Income Tax Act to charge notional interest in such circumstances. Learned Counsel for the Assessee also demonstrated that in fact assessee has declared negative expenditure of 2,26,95,787/- on account of interest (PB A1/26). Therefore, there is no justification of charging notional interest which were not due or collected by the assessee. Addition on account of customary gift - customary gift given to the clients and business associates at the time of Diwali - no documentary evidences have been filed for Diwali gifts so purchased - HELD THAT:- Some bills and vouchers were produced before the authorities below copies of which are also filed in the paper book. The Diwali gifts have been purchased through banking channel. The Diwali gifts given to the clients and other associates for business purposes are allowable expenditure. We, therefore, set aside the Orders of the authorities below and delete the entire addition Determination of ALP in respect of transaction with AE - Assessee has been following the POCM method - HELD THAT:- Since this issue relates to the main contract work awarded to the assessee, therefore, addition of this nature should not have been sustained by the authorities below because assessee has been following the POCM method consistently. Ultimately, everything is settled in subsequent year when the entire contract work have been completed by the assessee. We may further note that considering the total amount of the contract along with revised contract value, it is difficult to accept the department s contention that assessee would earn huge profit out of the same. It appears that Special Auditor without looking the entirety of the facts and circumstances of the case made the addition in haste without going through the composite work of the assessee in the light of POCM method adopted by the assessee. We, accordingly, do not find any justification to sustain even the part addition on this issue because authorities below have failed to make out a case as to how determination of ALP was justified in this case. In view of the above discussion, we set aside the Orders of the authorities below and delete the entire addition. Unexplained stock - addition on the ground that Special Auditor has mentioned in SAR that no physical verification actually took place regarding stock in the case of the assessee - HELD THAT:- CIT(A) correctly deleted the addition. The assessee explained before the Ld. CIT(A) that regular physical verification of stock was made and assessee has already credited 16.66 crores as closing entry in P L A/c, therefore, it would be double addition. CIT(A) found that there were no basis for the A.O. or Special Auditor to make the addition. It was an adhoc addition merely on presumption. D.R. could not produce any evidence or material to contradict the finding of fact recorded by the Ld. CIT(A) Unexplained sub-contract - A.O. made the addition on the ground that Special Auditor has observed that assessee has sub-contracted few activities like catering, travelling, etc. to small individual contractors and bills of these subcontractors was not produced - HELD THAT:- The assessee produced complete details before the authorities below on which no enquiry have been made by the A.O. The Ld. CIT(A) after going through the details on record found that assessee made the payment through account payee cheques and identity of all the parties have been established. This adhoc addition was made merely on surmises and presumptions. D.R. did not produce any evidence or material to contradict the finding of fact recorded by the Ld. CIT(A), therefore, correctly deleted the addition

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• 2019 (7) TMI 796
  Disallowance of interest paid - interest on unsecured loans - HELD THAT:- We find that this tribunal in assessee s own case for the Asst Year 2013-14 had held the loans received from aforesaid parties to be genuine and deleted the additions made u/s 68. We hold that once the loans were held to be genuine, the interest paid on such loans are also allowable expenditure. It is not the case of the revenue that the borrowed funds from aforesaid parties were diverted by the assessee for non-business purposes. The assessee is a builder and developer and deriving business income from such projects. The borrowings were utilized only for the purpose of business which fact remain undisputed by the revenue. - We direct the ld AO to grant deduction of interest paid on such loans - Ground Nos. 2 and 3 raised by the assessee are allowed. Disallowance of depreciation claimed on motor car - AO state that assessee is not the owner of the said motor car as it was in the name of director of assessee company - HELD THAT:- We find that the assessee company had given reasonable explanation for registering the vehicle in the name of the individual director to reduce the incidence of indirect taxes , levies etc. This does not hinder in any way to allow the claim of depreciation in the hands of the assessee company, as the motor car was reflected in the balance sheet of the assessee company and that the vehicle loan was also borrowed for the same by the assessee - See M/S. BANGLORE SHIRT COMPANY PVT. LTD., [ 2018 (8) TMI 1849 - ITAT MUMBAI] company. - Decided in favour of assessee Addition u/s 43CA on account of suppression of sales - difference between agreement value and stamp duty value - allotment had been made prior to 31.3.2013 - section 43CA of the Act are applicable only from Asst Year 2014-15 - HELD THAT:- We are conscious of the fact that the provisions of section 43CA of the Act are applicable only when there is transfer of land or building or both. All the documentary evidences clearly go to prove that the assessee had not completed the construction of the office during the relevant year. It could also be inferred that pursuant to registration of agreement with the stamp duty valuation authorities, a right is created in favour of the flat buyer. Hence what the assessee had transferred pursuant to registration of the agreement was only the rights in the flat/ office (which is under construction) and not the property per se. Hence it could be safely concluded that there was no transfer of any land or building or both by the assessee in favour of the flat buyers pursuant to registration of the agreement in the year under appeal. Hence we hold that the provisions of section 43CA of the Act cannot be made applicable to the same. We find that the decision in case of SHRI YASIN MOOSA GODIL, [ 2012 (4) TMI 380 - ITAT, AHMEDABAD] are directly applicable to the facts of the case before us hence, we hold that the provisions of section 43CA of the Act could not be made applicable to the issue in dispute before us. Accordingly, the grounds raised by the assessee are allowed.

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• 2019 (7) TMI 795
  Addition of pre-operative expenditure - nature of expenditure - revenue or capital expenditure - expenses are only to enhance the existing portfolio of the assessee and to increase its existing production capacity - HELD THAT:- The decision of the Hon ble Delhi High Court in the case of Jay Engineering Works Ltd. [ 2007 (10) TMI 286 - DELHI HIGH COURT] is found applicable wherein it has held that where a new unit set up is only an expansion of the business of the assessee, the pre-operative revenue expenditure incurred by the assessee on the said project will be allowable expenditure. The facts of the case are squarely covered by the aforesaid decision of the Hon ble Delhi High Court. DR could not bring any contrary decision to the above proposition of law laid down by the Hon ble Delhi High Court. Even there is no denial of the fact that the expenditure claimed by the assessee is otherwise revenue in nature and not relating to the set up of the plant. In view of this, this ground of appeal is hereby allowed and disallowance made by the A.O. on this issue is ordered to be deleted. Disallowance of interest on adhoc basis - HELD THAT:- Assessee already capitalized the interest expenditure as per actual utilization, there was no justification for adhoc disallowance made by the A.O., which even exceeds the actual interest expenditure incurred by the assessee. In view of this, the disallowance on this issue is restricted to the extent of suo moto capitalized by the assessee and the addition made by the A.O. is ordered to be deleted. Addition of provision for warranty - HELD THAT:- The CIT(A) has given a categorical finding that the method adopted by the assessee was a scientific method. Moreover, the provision for warranty created by the assessee has been accepted by the Department till assessment year 2007-08. Hence, based on the principle of consistency as well as considering that the provision was calculated by adopting a consistent method, we do not find any infirmity in the order of the CIT(A) in deleting the disallowance made by the A.O. on this issue. Addition of bad debts written off - Government dues - HELD THAT:- Some times due to certain difficulties/impediments, it is not possible to complete the requisite formalities and even sometimes it is beyond the control of the assessee to get the necessary approval and further that sometimes the value of the required time and efforts applied for the recovery of dues is more than the actual amount recoverable and hence, in the overall business interests, it is deemed prudent to write off such debts. The assessee in this case has written off bad debts as there was no likelihood of recovery of the aforesaid outstanding amount. No justification on the part of the A.O. to make the impugned disallowance merely because the recovery was outstanding against the Government. This ground of appeal of the Revenue is, therefore, dismissed. Addition u/s 145 by including excise duty in closing stock of WIP - HELD THAT:- In the case in hand, the assessee has not paid any excise duty on the closing work in progress and hence there was no question of loading any excise duty on estimation basis. Even otherwise, if the value of excise duty has to be included in the closing stock then the value of excise duty has also to be included in the opening stock and in that event there would be no difference in the result of the value of the opening stock and closing stock.

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• 2019 (7) TMI 794
  Best Judgement assessment u/s 144 - Non-issue of notice u/s. 143(2) - unexplained bank deposit/s - assessment completed u/s 144 without notice - return filed on fag end of proceedings on the date order was also filed - HELD THAT:- The filing of the return by the assessee on 20.3.2013 is mischievous; in fact, an abuse of the process of law. It is, as observed, after the close of the hearing in the assessment proceedings. Sh. Kalia could not, on being asked during hearing about the provision of law under which the said return was filed on 20.3.2013, state any. No cognizance in law could be placed on such a return of income . The income, voluntarily returned , is, in any case, a source of information with the AO, which could without doubt be taken into account by him in framing the assessment. Further still, the obligation on the AO to issue a notice u/s. 143(2) is only if he intends to verify the return. Being not in a position to verify the return; a notice u/s. 143(2) cannot be regarded as an empty formality, he may in an appropriate case, as indeed the instant case, choose not verify the same and, consequentially, not issue notice u/s. 143(2). The ensuing assessment, as also observed in Hotel Blue Moon [ 2010 (2) TMI 1 - SUPREME COURT] is an assessment u/s. 144. The instant assessment is an assessment u/s. 144, and not, as stated, u/s. 143(3). Rather, a return is not filed has to be supplemented by physical return, of which there is no mention or contention, in the absence of which the same cannot be said to have been filed. In fact, the completion of the said procedure after 20.03.2013, the date of assessment, even if so, is to moment, as the assessment stand already completed on that date. The assessment in the instant case, is accordingly, to be regarded as u/s. 144 r/w s. 147, and the AO is incorrect stating it to be u/s. 143(2) r/w s. 147. Considered whichever way, the assessee s legal challenge is without merit, both on facts as well as, and for that reason as well, in law. In fact, the assessment as framed is in u/s. 144, and the Revenue authorities, were in law, under no obligation to accept the additional evidences sought to be furnished by the assessee in the appellate proceedings. An appellate authority, when he so does, converts a s. 144 assessment into a s. 143(3) assessment, which is impermissible, as explained in CIT v. Rayala Corporation (P.) Ltd . [ 1995 (1) TMI 42 - MADRAS HIGH COURT] Taxability of lease rent for the agricultural land - HELD THAT:- For merits of addition assessee s explanation with regard to lease rental of agricultural land, has been accepted by the ld. CIT(A), implying acceptance of the assessee s claim of agricultural income to that extent. The same has, accordingly, been incorporated in the cash flow statement at 4 lacs (on 15.02.2005), as agricultural income. Taxability of cash gift - received from S. Jagjit Singh, the assessee s father-in-law, on the occasion of the golden jubilee of the assessee s marriage - HELD THAT:- There is also no evidence of the stated donor, S. Jagjit Singh, owning 21.82 acres of agricultural land, or his income, on record. Why, nobody keeps cash in such a high amount at home, and there is nothing to show of cash being withdrawn from bank on or before 03.04.2004. Rather why should the gift, which could easily be so from his bank account, be in cash, i.e., if it was from accounted income, i.e., assuming the source to be the said gift. In the absence of any corroborative material; rather, even as to the assessee s marriage date being unstated, the 50th anniversary of which forms the occasion for the gift, is not stated, the explanation of cash gift has, in my view, been rightly not accepted by the Revenue. Unexplained income - cash deposit in account - as per cash flow statement it was deposited out of withdrawal from assessee as well as from that of his wife and son account - HELD THAT:- Surely, the cash withdrawals and deposits in all the bank accounts (of all these three persons), is to be taken into account, to arrive at the availability of cash at any particular date during the year. Again, assuming no adverse circumstance/s, the said cash flow statement being prepared toward explanation of cash deposit of 20.61 lacs in the assessee s bank account during the year, cannot be regarded as an evidence of 16 plus lacs cash with the family on 31.3.2005. The same, in fact, is without deducting 3 lac toward household expenses. Any adverse finding by the AO, needless to add, shall be preceded by due opportunity of hearing to the assessee and, further, per definite findings of fact (by the AO). The assessee shall cooperate in the matter lest the AO draw adverse inference as admissible under the circumstances. The AO shall complete the said verification in a time bound manner, being also required to observe the time limit u/s. 153 of the Act, as specified after 01.06.2016. - assessee s appeal is partly allowed on the afore-said terms

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• 2019 (7) TMI 793
  Revision u/s 263 - Notice not signed by CIT - Exemption u/s 11 denied - assessee was not eligible for exemption u/s 11 in view of the amended provisions of S.2(15) - HELD THAT:- The initial issuance of notice, which has not been signed by the competent authority as the finding has been recorded by Tribunal therein that notice was issued under the signature of Income Tax Officer (Technical) whereas in view of provisions of powers of s.263(1) it is only the CIT to issue notice. In the present assessee s case also show cause notice was issued by Income Tax Officer (Technical) and signed by the said Officer on behalf of the CIT. As per Sec. 263, the CIT cannot delegate his powers to the subordinate Officer or lower officer and, therefore, this defect is non-curable defect and the Show Cause Notice itself is bad in law. Besides this, after going through the assessment order, the AO has also taken cognizance of the material available and has arrived at a proper conclusion. There order u/s 263 is merely a second opinion which is not permissible under the provisions of the Income Tax Act, 1961. Therefore, order u/s 263 of the Act does not survive. - Decided in favour of assessee.

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• 2019 (7) TMI 792
  Validity of Proceedings u/s 158BD/158BC - unexplained deposits in bank accounts - no search u/s 132(1) but a requisition was made u/s 132A - cheque books seized by the Enforcement directorate in a search and seizure operation u/s 37 of the Foreign Exchange Regulation Act - HELD THAT:- It was highlighted in CIT v. Ravi Kant Jain [ 2001 (3) TMI 52 - DELHI HIGH COURT] how the procedure of Chapter - XIV-B is intended to provide a mode of assessment of undisclosed income, which has been detected as a result of search. The scope and ambit of a block assessment is limited to materials unearthed during search and the assessment for the block period can only be done on the basis of evidence found as a result of search or requisition of books of account or documents and such other materials or information as are available with the AO. After looking to the facts and circumstances of the case, documents and material placed before us, we are of the opinion that there is no material which suggest that the cheque books belong to the M/s Mittal Consul Co, as appellant has established that such cheque books belong to the clients of M/s Mittal Consul Co. In such circumstances, action of the revenue to bring to tax the deposits made in such accounts in the hands of the appellant is devoid of any merit. Hence, addition made in respect of the deposits in such bank accounts and sustained by the CIT(A) are deleted. In fact, the revenue had not filed any appeal against the order of CIT(A) deleting the additions. The details of such additions have already been tabulated in foregoing para 13 above. In the result, we hold that the additions sustained by CIT(A) of 1,06,23,044/- in the case of M/s Mittal Consul Co. on substantive basis is deleted. - We further hold that the additions sustained on protective basis in the assessments made in the cases of M/s Tushar Stock Share Brokers Pvt. Ltd. and that of Shri R. K. Mittal are also unsustainable, hence are deleted. Addition in respect of the receipt of the share capital - HELD THAT:- Once the assessee has furnished the adequate evidence/material, the burden of the assessee is discharged in proving identity of shareholders, genuineness of transaction and creditworthiness of shareholder, and hence addition made by the AO and sustained by the CIT(A) without rebutting such material or without bringing any adverse material is unsustainable in law. It is not a case, wherein the shareholders have denied the investment made in the assessee company nor any enquiry has been made from such shareholders to prove that share capital received by the assessee is not genuine. Therefore, addition made in respect of the receipt of the share capital is deleted. In our opinion further as stated above, such an addition was otherwise unsustainable as it did not represent any undisclosed income within the meaning of section 158B(b). Disallowance of 1/10th of the expenses - on account of the purported personal user of Telephone Cars - personal use in case of the corporate entity - HELD THAT:- The issue is covered by the judgment of the High Court of the Gujarat in the case of Sayali Iron Engineering Co. Vs. CIT. [ 2001 (7) TMI 70 - GUJARAT HIGH COURT] wherein it has been held that in the case of a company, which is a corporate entity there cannot be any personal element involved no disallowance of any expenditure can be made for possible personal use. Further as has been observed by us as aforesaid, otherwise too the aforesaid disallowance made was outside the pale of Chapter XIVB of the Act. In such circumstances, aforesaid disallowance made is deleted. - Decided in favour of assessee.

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• 2019 (7) TMI 791
  Addition of unexplained investments u/s 69B - alleged cash payment for purchase of land - search proceedings - purchase value varies from the figures noted in the diary found in search - HELD THAT:- Revenue while recording the statement u/s 132(4) even at the time of search and at the time of assessment could not bring out anything on record to prove are corroborate the diary noting. It has been the consistent stand of the assessee that these are estimates in the statements recorded. No evidence of cash payment or generation of cash or physical cash pertaining to the assessee found at the time of search. Revenue did not enquire on the side of sellers of the plots to prove anything contra as put forward by the assessee. Thus, what we have on record is a mere noting of the diary which in the absence of any other corroborative evidence cannot be utilized for making addition u/s 69B. As far as the Revenue is concern there are no evidences on record to prove unexplained investments. The paper in question does not indicate that in the transaction cash payment has ever taken place because it does not contain any information as to what was the cheque amount or cash amount, what was the date of the transaction, what did the figure noted on the piece of paper represent, and whether in any manner the paper in question has any relevance to the determination of the income in the hands of the assessee. No evidence has been brought on record to corroborate the allegation that the assessee had paid cash. As find from the returns of the assessee, filed for the assessment year 2011-12 and 2012-13 and also the 143(3) order for the assessment year 2012-13 that the Revenue itself has accepted the capital gains declared by the assessee taking into consideration the amount declared in the registered documents. No action has been taken by the Revenue to dispute the cost of acquisition pertaining to the properties in question. By accepting the capital gains declared by the assessee the Revenue has made a self goal pertaining to the addition made in the earlier years (though this is not the only reason to delete the addition). - Decided in favour of assessee.

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• 2019 (7) TMI 790
  MAT - Addition of writeback of Provision for NPA in the computation of book profit u/s 115JB - assessee being NBFC company is stated to be engaged in the business of credit card operations and financing payments through credit cards and debit card management - Provisions of card receivables was not added back in the computation of Book Profits u/s 115JB in earlier years i.e. A.Ys. 2007-08 to 2010-11 when the provision was made - scope of amendment by the Finance (No.2) Act, 2009 HELD THAT:- It is undisputed fact that the assessee had filed return of income for AY 2007-08 much before the date of the said amendment and therefore, the said amendment could not be given effect to by filing revised return of income u/s 139(5) which already expired on 31/03/2009. It is also an undisputed fact that the write-back of 363.37 Lacs has been made out of provisions of 3449.82 Lacs made in AY 2007-08. Nothing on record controvert the aforesaid fact. We find that in AY 2007-08, the assessee had book losses of 4601.10 Lacs and even after adding back the said provisions as envisaged by the amendment, the resultant figure would have still been a negative figure and the assessee would not have any liability to pay tax u/s 115JB. Therefore, we find substantial force in these arguments raised by Ld. AR before us. As evident from assessment order dated 27/01/2014 of immediately preceding AY 2011-12 that similar treatment given by the assessee to write-back of 1899.12 Lacs in that year has been accepted by the revenue since no computation of Book Profit has been made in the assessment order. Therefore, following the principle of consistency, the assessee s claim was to be accepted, there being no change in factual matrix. Assessee was entitled for deduction of writeback while computing Book Profits u/s 115JB for the impugned AY. Ground No. 1 stand allowed.

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• 2019 (7) TMI 789
  Depreciation on Set Top Boxes (STB) - @80% OR 15% - assessee has also raised an alternative contention that expenditure incurred on purchase of STB should be allowed as a revenue expenditure - STB s are energy saving devices OR electrical equipment - HELD THAT:- In our opinion, it transpires that the expenditure incurred for acquisition of set top boxes and not for trading it. In other words, it was incurred for securing tangible asset on which the assessee collected annual maintenance charges. The acquisition brought into existence a new asset and the assessee obtained a new advantage. It is to be noted that not only advantage flowed from such acquisition and the investment is in the capital field but the expenditure has also effected the fixed capital of the assessee. In our opinion, expenditure was incurred in connection with the profit earning apparatus which generated permanent source of income for the assessee by way of annual service maintenance charges. Thus, we are of the opinion that the expenditure incurred by the assessee was capital in nature and it cannot be said that it is revenue expenditure. Accordingly, the assessee is entitled for depreciation on the same. As per TRAI regulations dated 01.04.2015, the depreciation on the price of customer premises equipment (which included Set Top Box and remote control for Set Top Box) shall be calculated using straight line method at the rate not exceeding 1.7% for every completed calendar month or part thereof. Therefore, the rate of depreciation at the rate of 15% allowed by the AO treating the same as Plant and Machinery is in tune with TRAI regulations. Set Top Box is a device connected to a TV and which allows a subscriber to receive in unencrypted and descrambled form subscribed channels through an addressable system and unless assessee proves that STB s comes within Rule 8(ix)(E)(k), it cannot claim higher depreciation of 80%. We uphold the order of the lower authorities and direct the AO to allow depreciation on STB at 15% only. - Decided in favour of revenue.

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• 2019 (7) TMI 788
  Addition towards loans waived off - loans were taken from the shareholders / directors - failure to prove source of loan taken from shareholder / director - Whether loans waived were not taken for the purpose of acquisition of capital assets and waiver of principal portion of loan is not taxable - Assessing Officer found that the outgoing shareholders had taken over some of the assets and liabilities of the company to effect the takeover of the Company by the existing Directors. - set off the accumulated loss of the company against their loan outstanding HELD THAT:- Following the decision Solid Containers Ltd. vs. DCIT [ 2008 (8) TMI 156 - BOMBAY HIGH COURT] where the principle enunciated in the case of CIT vs T.V. Sundaram Iyengar Sons Ltd. [ 1996 (9) TMI 1 - SUPREME COURT] has been applied, we held that the principal amount of loan, which is taken for the purpose of business or trading activity, on its waiver by the creditor, would constitute income chargeable to tax under the Act - if the loan is utilized for the purpose of acquiring any capital asset, the same, on its waiver, would not constitute income chargeable to tax as held in the case of Mahindra Mahindra Ltd. vs CIT [ 2018 (5) TMI 358 - SUPREME COURT] and CIT vs. Tosha International Ltd [ 2008 (9) TMI 31 - HIGH COURT DELHI] either under section 41(1) or 28(iv) or 2(24). In the instant case, it would be the duty of the assessee to prove and establish that the amount of loan taken from the Directors/shareholders was utilized for the purpose of business. If on an enquiry and verification, it transpires that the assessee had utilized the loan for the purpose of its business activity or trading activity, the amount of loan to the extent it has been waived by the Directors/shareholders shall be deemed to be the assessee s income chargeable to tax as per the decision in the case of Solid Containers Ltd. vs DCIT (supra) where the principle laid down by the Supreme Court in the case of CIT vs. T.V. Sundaram Iyengar Sons Ltd.(supra) has been applied and followed. It was found that there was no details furnished by the assessee as to how the loan amount was utilized or applied or for the purpose for which the loan was raised. Hence, we remit this issue to the file of the Assessing Officer for fresh consideration.- Appeal filed by the revenue is treated to be allowed for statistical purposes.

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• Customs

• 2019 (7) TMI 779
  Maintainability of appeal - valuation dispute between the parties - whether the imported goods can only be allowed to be imported duty free if the CIF value is declared to be 110/- or more or can be imported irrespective of the value declared by the importer both subject to assessment and payment of duty? HELD THAT:- This is clearly a valuation dispute between the parties - This Court has no jurisdiction over the matter. The appellants have proceeded bonafide in a Court not having jurisdiction which may be taken into account for the purpose of limitation under Section 14 of the Limitation Act.

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• 2019 (7) TMI 778
  Valuation of imported goods - inclusion of royalty charge and franchisee fees paid to the foreign supplier in assessable value - Rule 10(1) and Rule 10(1)(e) of the Customs Valuation (Determination of Value Imported Goods) Rules, 2007 - HELD THAT:- From the perusal of the Customs Act and the Valuation rules, it is evident that only if royalty payable is for pre-importation activity, as a condition of sale from the supplier to buyer then only it is to be added for the purpose of calculation of Customs duty in terms of Rule 10(1)(c ) of the Customs Valuation Rules read with Section 14 of the Customs Act. A perusal of the agreement along with side letter indicate that the franchise/royalty fee is paid for provisions of management, consultation, advice service and training provided to the appellant in connection with use of Body shop products and the proprietary Marks of M/s Body shop. The condition of payment of the royalty, which is contingent upon the volume of sale in the domestic market after importation of the goods has no connection with the import of goods. Once the goods have been cleared from the Customs area the same is not required to be treated as imported goods and all the activities of the management, consultation etc. is relatable to the goods which is ceased to be imported goods in terms of the Customs Act, 1962. While a large number of consignments which has been adjudicated upon in the impugned order, is provisionally assessed and the Commissioner has ordered the finalization thereof in terms of Section 18 of the Customs Act, but also imposed a penalty of equivalent amount under Section 28(4) of the Customs Act. This is clearly not permissible as per Section 18 of the Customs Act, on the ground that the relevant date for payment of duty has yet to arrive after finalization of the assessment by the proper officer in terms of the impugned order. Similarly, in case of demand pertaining to the Bills of Entry which has been finally assessed has not been re-determined by any assessment and also not permissible without filing appeal against the assessment order. Time Limitation - HELD THAT:- It is on record that earlier show cause notice has been issued to the appellant on the similar set of facts and circumstances and in respect of same agreement and side letters. The case was adjudicated upon and the same was settled by the order of Settlement Commission dated June 2014. This indicates the fact that both the department and the appellant were aware of the entire fact regarding non-inclusion of royalty/franchise fee in the assessable value for the purpose of payment of customs duty - when the facts are known to both the parties there cannot be any suppression of facts requiring invocation of extended period of limitation. Appeal allowed - decided in favor of appellant.

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• 2019 (7) TMI 777
  Valuation of imported goods - related party transaction - goods imported by M/s. Baxter India Pvt. Ltd. Gurgaon from their related suppliers M/s. Baxter USA and associated companies - Sub-Rule 3 (3) (a) of Rule 3 CVR for Determination of Value Rules ignored and jumping upon Rule 3 (3) (b) thereof - HELD THAT:- In case of import by any person from an overseas related party the valuation of goods for the purpose of assessment of Customs duty is examined by Special Valuation Branch (SVB) in Custom House to find out the influence of relationship on import valuation and whether any addition in import value is required to bring it at par with third party independent prices, as is apparent from Rule 3 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. The admitted fact of the present case is that the import of the appellant since the year 2002 has regularly been examined by SVB after every expiry of 3 years and based upon the declaration to the effect that there is no change in the terms of the agreement with the foreign related party, mode of invoicing etc. the said SVB s order is being successively reviewed after every 3 years since 2002 till 2015. From Rule 3 it is apparent that where the buyer and seller are related, transaction value is acceptable for the customs purposes under the provisions of Rule 3 (3) (a) - rule 3 (3) (a) provides that where the buyer and seller are related, the transaction value shall be accepted provided that the examination of the circumstances of the sale of the imported goods indicate that the relationship did not influence the price. It is not intended that there should be an examination of the circumstances in all cases where the buyer and the seller are related. In this case the valuation of goods imported by M/s. Baxter from the related Companies has been examined number of times since 2002 and it was found that the relationship has not influenced the price, hence the declared value will be accepted under Rule 3 (3) (a). The examination of valuation of goods under subsequent Rules (4) to (9) is not applicable. Rule 3 (3) (a) 3 (3) (b) provide different means of establishing the acceptability of a transaction value - Rule 3 (3) (b) cannot be made applicable while deciding the transaction value in the present case - There is nothing on record nor even a finding that the relationship of importer and exporter has influenced the price. Thus, jumping to Rule 3 (3) (b) was not at all relevant. We are of the opinion that order to that extent is not sustainable. Commissioner (Appeals) has committed an error, while ignoring Sub-Rule 3 (3) (a) of Rule 3 CVR for Determination of Value Rules and while jumping upon Rule 3 (3) (b) thereof - appeal allowed - decided in favor of appellant.

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• Insolvency & Bankruptcy

• 2019 (7) TMI 787
  Admissibility of petition - Initiation of Corporate Insolvency Resolution Process - Section 9 of the Insolvency and Bankruptcy Code, 2016 - service of notice - HELD THAT:- On perusal of the record it is found that the registry has also issued notice to corporate debtor twice i.e. on 29.01.2019 and 19.03.2019 and as per track report the notice was delivered on 04.02.2019. As such service upon the corporate debtor is complete. The records available shows that the amount due to the Applicant from the Respondent is in respect of Service provided to the respondent. Therefore, the amount claimed by the Applicant from the Respondent is operational debt within the meaning of Section 5, sub-section (21) of the Code. The operational debt is due to the Applicant. Therefore, Applicant is an Operational Creditor within the meaning of sub-section (5) of Section 20 of the Code. From the aforesaid material on record, it is established that there exists debt as well as there is occurrence of default. The Application filed by the Applicant is complete in all respects - petition admitted - moratorium declared.

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• 2019 (7) TMI 786
  Admissibility of petition - Initiation of Corporate Insolvency Resolution Process - default in repayment of loans borrowed from various financial creditors - section 10 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- There was sufficient time provided to the Financial Creditors to file their objections if any. However, on 6.3.2019 the counsel on behalf of Kotak Mahindra Bank and Capital First Limited Financial Creditors reported that the they have no objection to admit the petition filed by the Corporate Applicant under Section 10 of Insolvency and Bankruptcy Code, 2016. The current petition is applicable to be admitted - moratorium declared.

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• 2019 (7) TMI 776
  Initiation of Corporate Insolvency Resolution Process - Section 10 of the I B Code - cost of payment of fees in relation to the Authorised Representatives appointed, as well as to defray the costs of Resolution Professional - who is liable to pay - HELD THAT:- There have been default against the purchasers of the Plans, who otherwise do not come within the meaning of Financial Creditors or Operational Creditors . However, the Adjudicating Authority having seen some discrepancies raised doubt about the genuineness of the Corporate Debtor and the application as has been filed. The Resolution Professional also claims that financial irregularities have also been committed by the Corporate Debtor . The order regarding expenses of Resolution Professional was not required to be determined at this stage, we are also of the view that considering the record, the Adjudicating Authority should also seen whether the application under Section 10 of the I B Code was filed with fraudulently or with malicious intention for any purpose other than for the resolution of the insolvency or liquidation as defined under Section 65 of the I B Code and if so necessary, it may request the Central Government for reference to the SFIO under Sections 212 and 213 of the Companies Act, 2013 and other provisions of the Insolvency Bankruptcy Code including Part II Chapter VII wherein Offences and Penalties has been prescribed. Appeal disposed off.

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• Service Tax

• 2019 (7) TMI 775
  Taxability - Business Advertising Agency - Business Auxiliary Service - Mandap Keeper Service - HELD THAT:- We find that perusal of the Instadia Advertisement Agreement entered into with M/s. Sporting Frontiers (India) Pvt. Ltd., the appellant has granted them the right to use the advertising sites, right to exhibit advertising of any kind and right to use advertising signs during the cricket matches and extra matches but the appellant is not providing any service connected with the making, preparation, display or exhibition of advertisement activity thereby appellant does not fit into Advertising Agency as defined in Section 65(3) of the Act rather the said activity appropriately fall under sale of space for advertisement which is taxable in terms of Section 65(105)(zzzm) of the Act w.e.f. 01.05.2006 whereas the period involved in the present case is from October 2005 to March 2006. Further, we find that prior to 1.05.2006, the definition of Advertising Agency consists the word commercial concern and it was substituted by any person in the definition of Advertising Agency w.e.f. 01.05.2006 - During the disputed period, the appellant did not fall in the definition of commercial concern because there is no profit motive of the appellant and the appellant is registered under Karnataka Societies Registration Act as a charitable institution - the appellants are not liable to pay service tax under Advertising Agency and the demand of service tax confirmed under Advertising Agency is not sustainable in law - demand set aside. Sponsorship service - HELD THAT:- As per the agreement entered with the brand owners, the appellants have received sponsorship amount towards teams and in turn the appellant has allowed the brand owners to display their brands on all the clothing worn by the team on the field during matches. This activity of displaying the sponsors logo and brand name or trade name fall under the head of Sponsorship Service which is taxable only from 01.05.2006 whereas the period involved in the present case is prior to 01.05.2006 - This issue has been decided in favour of the appellant in the case of BCCI Vs CST [2007 (5) TMI 24 - CESTAT, MUMBAI] therefore the demand of service tax under BAS is also not sustainable in law - demand set aside. Mandap Keeper Service - amount received for fund raising activity - HELD THAT:- The appellants have let out its ground to one Sangamitra Foundation for a fund raising activity for a consideration of 17,50,000/- but the appellant did not get the service tax from the said organization on the bona fide belief that fund raising activity is not business or official or social function - After considering the definition of Mandap Keeper Service , it is found that that this activity of the appellant fall under the category of Mandap Keeper Service and the appellant is liable to pay the service tax amounting to 1,78,500/- - further, the appellants have not collected the service tax on this activity from the service recipient under a bona fide belief otherwise the appellants have regularly been paying service tax wherever they have charged the same under the category Mandap Keeper Service from the service recipient. Therefore, the appellants are not liable to penalty under Section 78 but they are liable to pay interest on this service. The demand of service tax under Advertising Agency Service and Business Auxiliary Service is set aside - the demand under Mandap Keeper Service along with interest is upheld - original authority will calculate the interest which the appellant is liable to pay on this service - case remanded back to the original authority who will quantify the interest on this service which the appellant will be liable to pay. Appeal allowed in part and part matter on remand.

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• 2019 (7) TMI 774
  Abatement claim - short term accommodation services - restaurant services - appellant was alleged to have evaded an amount of 83,59,428/- during the period from October, 2013 to March, 2014 on the ground that since the appellant has availed the cenvat credit on input services, the benefit of abatement to Notification No. 26/2012 ST dated 20.06.2012 is not available to them - benefit was also denied on the basis of Rule 2C of Service Tax (Determination of Value) Rules, 2006 - HELD THAT:- The condition for availment of abatement qua the services of short term residence/ lodging the credit on inputs and capital goods should not have been availed. Admittedly, the said credit has not been availed. The condition is absolutely silent about availment of credit on input services. Hence, we are of the opinion that the Adjudicating Authority below has committed an error while considering the availment of credit on input services as the condition for denial of the benefit of said Notification. Rule 2(c) of Service Tax (Determination of Value) Rules, 2006 - services provided by the restaurant - HELD THAT:- Perusal of rule makes it clear that 40% abatement on total amount is availed in case of restaurant services. Explanation 2 thereof clarifies that the provider of taxable service shall not take the cenvat credit of duties or cess paid on any goods classifiable under Chapters 1 to 22 of the Central Excise Tariff Act, 1985 i.e. the availment of credit only on goods as mentioned above is the condition for availment of the said abetment qua restaurant services. Apparently and admittedly, cenvat credit was availed on input services hence denial of the benefit of the impugned Notification qua restaurant services is also held as unreasonable rather illegal. Proportionate availment of cenvat credit - HELD THAT:- Once the appellant has followed the proportionate method for availment of credit on common input services, it cannot be said that appellant has availed any credit on input services used in providing exempted services. The same is otherwise permissible in terms of Rule 6 of Cenvat Credit Rules, 2004. The Commissioner has committed an error while not referring any findings qua the said issue. Appeal allowed - decided in favor of appellant.

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• 2019 (7) TMI 773
  Exemption from service tax - various services provided - benefit of N/N. 18/2009-ST dated 07/07/2009 which was superseded by Notification No. 42/2012-ST dated 29/06/2012 - benefit of Notification has been denied to the appellant on the ground that the appellant has not filed the return in form EXP-4 in due time - HELD THAT:- Mere procedure lapse which admittedly is on account of non-availability of shipping bills that too due to delay on the part of customs cannot be the ground to deny the substantial benefit of the Notification. Though one copy of such shipping bill remains with the exporter which could have been annexed with EXP-4 to be filed within time. But delay of 15 days then the prescribed time limit is opined to be insignificant to deny the benefit of the notification especially when all other conditions of the notification are duly complied with by the appellant. The possibility of bonafide belief, that custom copy of shipping bill only has to be annexed, also cannot be ruled out. The delay does not appear to be arising out of malafide intent. Appeal allowed - decided in favor of appellant.

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• 2019 (7) TMI 772
  Classification of services - Employees on Deputation / secondment - Supply of manpower supply service or not? - Department observed that the appellant has paid tax, on the expenses as were being paid by them to the Japanese experts/expatriates, who were deputed in their premises by their holding company M/s Yamaha Motors Company, Japan under reverse charge mechanism - demand relating to the period from 1 April, 2012 to 1 July, 2012 i.e. pre negative list period - HELD THAT:- From the facts of the present case apparently and admittedly the holding company of M/s Yamaha in Japan is not a manpower supply agency. This particular observation is sufficient for us to hold that the adjudicating authority below has wrongly concluded for the impugned arrangement to be the service of manpower recruitment and supply service. Also for the reason that the contract of employment between the appellant and the Japanese experts is clear enough to express that same is a contract of employment/appointment letter calling upon the said experts into the employment of the appellant whose reporting officer has to be employee of the appellant itself. Appellant only is disbursing the Provident Fund contributions and is also deducting tax at source. These observations are sufficient to corroborate the above observations of the impugned arrangement between the appellant and the Japanese experts to be that of a service and to not to be of manpower supply service. The circular as relied upon by the department is perused to be a draft circular. There is nothing on record about the same being ever notified. For the post negative list period - HELD THAT:- When the arrangement is that of relationship of employer and employee that the same is expressly excluded from the ambit of taxability. The Hon ble High Court Gujarat in the case of COMMISSIONER OF SERVICE TAX VERSUS ARVIND MILLS LTD. [ 2014 (4) TMI 132 - GUJARAT HIGH COURT] has held that even if the actual cost incurred by appellant in terms of salary remuneration and perquisites is only reimbursed by group of companies, there remains no element of profit or finance benefit. The arrangement is that of the continuous control and the direction of the company to whom the holding company has deputed the employee such as an arrangement is out of the ambit to be called manpower supply service. Appeal allowed - decided in favor of appellant.

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• 2019 (7) TMI 771
  Liability of Service Tax - the activities carried out under transport agreement - Mining Services or not? - period involved in all these appeals is 2012-13 - HELD THAT:- The issue have been settled in the case of M/S JOGINDER COAL TRANSPORT PVT. LTD., M/S SAKSHAM COAL CARRIER PVT. LTD., M/S ANUPAMA COAL CARRIER PVT. LTD. AND M/S NISHANT COAL CARRIER PVT. LTD. VERSUS CCE ST, RAIPUR [ 2018 (8) TMI 1106 - CESTAT NEW DELHI ] where it was held that post negative regime w.e.f. 01/07/2012 the appellants are entitled for abatement on the value of services provided by them and since the service tax has already been paid by the service recipient after availment of the abatement and, therefore, no service tax liability remains with the appellant - appeal allowed - decided in favor of appellant.

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• 2019 (7) TMI 770
  Demand of Interest on delayed refund - relevant date for payment of interest - whether interest under Section 11BB is payable from the date when three months expires from the date of refund application or from the date that when the appellate authority have allowed the rejected refund application? - HELD THAT:- The issue herein is squarely covered by the ruling of Hon ble Supreme Court in the case of RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. [ 2011 (10) TMI 16 - SUPREME COURT] where it was held that Liability of the revenue to pay interest under Section 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) of the Act and not on the expiry of the said period from the date on which order of refund is made. Appeal allowed - decided in favor of appellant.

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• 2019 (7) TMI 769
  GTA Services - taxability - whether the appellant, a manufacturer of steel items having their Head Office and factory at Kolkata, having sent their finished goods from Kolkata to Jaipur Branch and have paid the service tax on GTA service at Kolkata, whether service tax can be again demanded at Jaipur? - HELD THAT:- Service tax being a central tax, though normally required to be deposited within the jurisdiction of the Commissionerate where the assessee is registered and the same has been deposited at the Head office at Kolkata which have paid the freight charges and accounted for the same, and have also deposited the service tax, which is in accordance with the scheme of the provisions of Service Tax Act and Rules. The SCN is mis-conceived and not maintainable - appeal allowed - decided in favor of appellant.

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• 2019 (7) TMI 768
  CENVAT Credit - input services - input transport/GTA paid by them, for receiving motor vehicles and spare parts being motor vehicles manufactured by Tata Motors - extended period of limitation - HELD THAT:- In view of the precedent decisions of this Tribunal, which related prior to the period 1.4.2011 as in the case of CCE, TIRUPATHI VERSUS SHARIFF MOTORS [ 2009 (3) TMI 155 - CESTAT, BANGALORE] , and in view of the amendment in Rule 2(e) w.e.f. 1.4.2011, there was no malafide on the part of the appellant in taking cenvat credit of input transport service/GTA. The extended period of limitation is not available to Revenue. It is held that the demand is imposable for the normal period with interest - Penalty also set aside - appeal allowed in part.

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• 2019 (7) TMI 767
  Taxability - activity of agreeing to the obligation to refrain from an act, or to tolerate an act - forfeiture of advance received from a customer for booking of a room in a hotel, on the cancellation of the booking, by way of cancellation charges - Section 66 E(e) of Finance Act, 1994 - HELD THAT:- Admittedly, the customers pay an amount to the appellant in order to avail the hotel accommodation services, and not for agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act; and chargeable on full value and not on abated value. The amount retained by the appellant is for, as they have kept their services available for the accommodation, and if in any case, the customers could not avail the same, thus, under the terms of the contract, they are entitled to retain the whole amount or part of it - the retention amount (on cancellation made) by the appellant does not undergo a change after receipt - no service tax is attracted under the provisions of Section 66 E(e) of the Finance Act. Taxability - service tax on food served in the room - HELD THAT:- The service tax can be levied if there is an element of Service involved which would typically be the case where the food is served in restaurant. The element of service is not involved and it amounts to sale and does not attract service tax - Admittedly, it is the case of the Department that the appellant has provided food in the rooms, which is not included in the room service - amount not taxable. Appeal allowed - decided in favor of appellant.

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• 2019 (7) TMI 766
  Extended period of limitation - proviso to Section 73 (1) of Finance Act - imposition of penalty u/s 78 - HELD THAT:- It is found that the appellant has taken suo moto registration after being pointing out by the service receiver. It is only after they suo moto complied, it was found that they have not deposited the tax for earlier period though it was payable - Further, the admitted facts is that the appellants were under the belief that they are not liable for tax nor they were so advised by the service receiver, M/s. Hindustan Zinc Ltd. nor they have been approached by the Department about their liability to pay tax in the earlier point of time. It is also admitted fact that they have not charged the service tax from the service receiver, nor they have collected with any bills. Further, on being asked by the Department, they have approached the Hindustan Zinc Ltd. and again deposited the tax substantially - there is no case of any suppression or mis-statement of facts or contravention of any of the provisions of the Act or Rules made out against the appellant. Neither the extended period of limitation is available to the Revenue nor imposition of penalty under Section 78 is justified - Appeal allowed - decided in favor of appellant.

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• 2019 (7) TMI 760
  Refund/Exemption of Service tax - benefit of N/N. 17/2009-ST - services received by the appellant being railway freight from ICD Tuklakabad to Gateway Port, terminal handling charges, LDDTSC charges to Container Corporation of India and Gateway Rail Freight Ltd. - place of removal - HELD THAT:- The place of removal includes any other place or premises from where the excisable goods are to be sold after the clearance from the factory. In the course of foreign trade, an exporter is entitled to payment of his goods, only on producing evidence that the goods as mentioned in the bill of lading have been loaded on the vessal. Thus, it is the primary responsibility of the manufacturer-exporter to bring the goods to the gateway port - It is only in the scheme of foreign trade, by way of facilitation that from the ICD the goods are with the custodian for transport to the Gateway port, however, the appellant as a manufacturer-exporter incurs the expenditure till the time the goods are put on the vassal at the Gateway port. The place of removal in the case of export is the gateway port, and all the expenses incurred by way of services received by the appellant, they are entitled to cenvat credit. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2019 (7) TMI 785
  CENVAT Credit - use of intermediate goods (Neutral Filter Cake) as inputs - Rule 57CC of the Central Excise Rules, 1944 - HELD THAT:- The finding of fact that the input used is only minimal is not controverted. At this stage, when we are hearing the appeal on a substantial question of law, we are not minded to reopen that finding of fact, no matter how compelling may be the argument of Mr. Maity. It is also beyond controversy that the said input has been treated as a separate final product and the duty thereon has been paid adjusting the duty paid as input. The learned tribunal has taken a very realistic and plausible view of the matter. We affirm the said impugned order of the tribunal dated 23rd March, 2007, answer all the questions framed by the Court in favour of the respondent assessee and against the revenue and dismiss the appeal.

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• 2019 (7) TMI 784
  Applicability of Rule 8 (3A) of the Central Excise Rules, 2002 - whether the operation of this Rule was prospective or retrospective? - whether the CESTAT substantially erred in law in reversing decision of the Commissioner, who in its turn affirmed the order of the Deputy Commissioner passed invoking provisions of Rule 8 (3A) of the Central Excise Rules, 2002? - HELD THAT:- The tribunal proceeded on correct principles of law. The said rule is substantive in character since it relates to payment terms regarding duty and the effects of default in payment thereof. It is not at all procedural. Therefore, this Rule had to have only prospective operation as we do not find anything stated expressly in the said Rule to suggest that it would have retrospective effect. The question for decision in this appeal is answered in favor of the assessee.

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• 2019 (7) TMI 783
  Valuation - goods valued on the ex-factory value whereas their contract for supply of goods was on FOR basis - inclusion of cost of freight and insurance in assessable value - Place of removal - Rule 5 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 read with Section 4 of Central Excise Act, 1944 - HELD THAT:- Whether the FOR prices are inclusive or not at the time of clearances is not the criteria for assessing the transaction value. The only possible criteria for the purpose is as to whether the property in goods stands transferred to the buyer at the time when the goods are cleared whether from the factory of the manufacturer, its depot or warehouse or from any other place. No doubt the place can be the buyer s place as well but the criteria still remains the conclusion of sale. From the adjudicating authorities order itself it is apparent that except for inclusion of freight prices in the price of purchase, every other formality of completing the sale got concluded at the time of clearance itself. It has been acknowledged in the Order as well as in the show cause notice that all the verifications, approvals as were agreed to be required by the buyer also got conducted at the manufacturers factory itself - In the given circumstances, the sale of impugned goods got completed prior the goods got cleared form the manufacturers factory. Appeal dismissed - decided against Revenue.

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• 2019 (7) TMI 782
  CENVAT Credit - capital goods - credit for the period when the goods manufactured by the appellant are taxable and whether the same lapses subsequently when the appellant had availed SSI exemption? - period March, 2003 to June 2004 - HELD THAT:- On a cogent or harmonious reading of various provisions, it is evident that what lapses on the date the asssessee avails SSI exemption, is only cenvat credit related to input or input services - This view was fortified by the provisions of Rule 6(4) of CCR, which provides that an assessee is entitled to take cenvat credit on capital goods even during the period, they were availing SSI exemption. However, under Clause (IV) in para 2 of the SSI exemption notification, the utilisation of such cenvat credit taken on capital goods during the period of enjoying the SSI exemption is suspended. The CENVAT credit of capital goods does not lapse and was rightly availed by the appellants and subsequently, utilised when they stopped availing the SSI exemption. Appeal allowed - decided in favor of appellant.

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• 2019 (7) TMI 781
  Valuation of goods - short payment of excise duty - place of removal - Revenue was of the view that the appellant has not followed the provisions of Rule 2, 3, 4 and 7 of Central Excise Valuation (Determination of Price of Excisable Goods), Rules, 2000, at the time of removal of goods to its depot, resulting a short payment of Central Excise duty of 66,907/- for the period February to March, 2015 - Silicon Manganese is simultaneously sold from the factory/place of manufacture itself that too the major portion of the manufacture and it is only the part produced which has been shifted to Depot for further sale to the buyers HELD THAT:- The issue decided in the case of M/S. VANDANA GLOBAL LIMITED VERSUS C.C.E., RAIPUR [2018 (11) TMI 969 - CESTAT NEW DELHI] where on identical facts it was held that The transaction value in the present case is the value at which the Silicon Manganese has been sold by the appellant at its factory gate, while transferring the unsold portion thereon to the Depot. There is no question of short payment of duty - appeal allowed - decided in favor of appellant.

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• 2019 (7) TMI 780
  Short payment of Excise Duty - removal of the alleged capital goods, as waste and scrap - Rule 3(5A) of Credit Rules - restrospective application of the rule by way of issuance of notification - It is the contention of the Department that during the relevant period Rule 3(5A) of Credit Rules has been amended by issue of Notification 03/2013-CE NT dated 1/03/2013, which was further amended by Notification dated 27/09/2013 which restored the previous position as prevalent under Rule of 1994, and erstwhile Credit Rules - HELD THAT:- The perusal of the history Rule 3(5A) indicates that barring the period 17/03/2012 to 26/09/2013, the provision existed for reversal of credit on the transaction value. As the amendment was made to mitigate the hardships caused to the trade, this is a beneficial piece of legislation and thus required to given the retrospective effect. Further, the issue involved interpretation of provisions of Rule 3(5A), and therefore, the Ministry has to clarify the issue subsequently by issuance of amended notification - there were a widespread confusions in the trade regarding modality to be adopted for the reversal of the credit. Even if it is assumed that the appellant has removed capital goods, although the same is being contested. There has been evidence of series of communication regarding on the issue of reversal of Cenvat Credit between, the department and the appellant as it is evident from the various communications exchanged between them which is manifested from the letters dated 23.09.2013, 22.01.2014, 12.02.2014, 19.05.2014, 09.12.2014, 29.12.2014, 06.02.2015, 09.04.2015, 11.05.2015. 09.10.2015 and 20.11.2015 - the extended period of limitation for raising the demand is not available with the department. The impugned order is not sustainable both on merits and limitation - appeal allowed - decided in favor of appellant.

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• 2019 (7) TMI 765
  CENVAT Credit - duty paying invoices - credit denied alleging that the appellant has taken cenvat on the strength of invoices issued by the third stage dealer - HELD THAT:- In the reply to the show cause notice, the appellant had submitted that as per the agreement between M/s Gupta Impex and M/s Ess Vee Udyog, M/s Ess Vee Udyog is a consignment agent and procured the goods from M/s Gupta Impex on the strength of F Form. The said evidence has not been considered by the Revenue while passing the impugned order. On going through the F Form as well as agreement produced by the appellant, it has been established by the appellant that M/s Ess Vee Udyog, Plot No. 5-6, Ram Bagh Colony, Jalandhar is the consignment agent of M/s Gupta Impex, Delhi as they have procured the goods on the strength of F Form placed herein above. As M/s Ess Vee Udyog, Jalandhar is the consignment agent, therefore, M/s Bala Ji Udyog is only a second stage dealer who has issued invoices to the appellant and supplied the goods to the appellant - Therefore, the appellant has rightly availed the cenvat credit on the basis of the invoices issued by Shri Bala Ji Udyog, Jalandhar as second stage dealer. The appellant has rightly availed cenvat on the strength of invoices issued by the second stage dealer, therefore, the cenvat credit cannot be denied - Penalty also not imposable. Appeal allowed - decided in favor of appellant.

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• 2019 (7) TMI 764
  CENVAT Credit - clean energy cess on coal imported by them for use in their factory - It is the case of the appellants that they are entitled to the Cenvat credit on the CEC paid by them while it is the case of the revenue that no Cenvat credit can be granted for the Clean Energy Cess as it is not covered under Rule 3 of CCR, 2004 - HELD THAT:- Although it is now settled that taxing statutes must be literally interpreted, we have also examined the spirit and purpose of levying the CEC. It is evident from Section 83 of Finance Act, 2010 that CEC has been levied on coal to discourage use of the polluting forms of energy and encourage use of cleaner forms of energy. This is based on the principle of Polluter pays . If the CEC collected by the Government is returned to the assessee through the backdoor in the form of CCR, 2004, we will be doing a great disservice to the country by replacing the principle of Polluter pays with Pollution pays . We will be encouraging use of polluting forms of energy by undoing the very purpose for which CEC has been levied. Where there is a conflict between the constitutional provisions and the laws made or the parent act and the subordinate legislations vires of such act and rules are tested and decided by the Hon ble Supreme Court and Hon ble High Courts under Article 32 and 226 of the Constitution of India. The Tribunals (including this Tribunal) are created under Article 323B of the Constitution of India which was inserted by the 42nd amendment to the Constitution - this Tribunal can also examine the vires of the Act and Rules with the condition that the Statute under which this Tribunal was created (Customs Act, 1962) cannot be questioned by this Tribunal. Further, the power of this Tribunal to decide on the vires of the Act or Rules is subject to scrutiny by Division Bench of the High Courts. Thus, the assessees are not entitled to Cenvat credit under Rule 3 of CCR, 2004. Demand of Interest - HELD THAT:- Wherever Cenvat credit has been availed but not utilized, the interest need not be paid but it has to be paid in cases where the Cenvat credit has been taken as well as utilized - demand of interest set aside. Imposition of penalties - HELD THAT:- This is an interpretational issue and it is possible for the assessees to have held a genuine belief that they are entitled for Cenvat credit of CEC and hence have taken Cenvat credit. Therefore, we find that the imposition of penalty under Rule 15 of CCR, 2004 is not justified - Penalty set aside. Appeal allowed in part.

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• 2019 (7) TMI 763
  CENVAT Credit - denial of credit on the grounds that address of the appellant mentioned in the input invoices was not that of factory of manufacturing to qualify as valid duty paying documents and that payment of value of service and Service Tax was paid by the CHA sub-contractor and not by CHA itself - period April, 2014 to March, 2015 - HELD THAT:- In view of the decision of this Tribunal reported in OM TEXTILES VERSUS COMMISSIONER OF CENTRAL EXCISE, NEW DELHI [ 2006 (1) TMI 385 - CESTAT, NEW DELHI ], the invoices showing wrong address, if subsequently corrected, are eligible documents for availment of credit which precedent is followed till date as found from the decision in BHALLA TECHTRAN INDUSTRIES LTD. VERSUS CCE, NOIDA [ 2015 (7) TMI 1175 - CESTAT NEW DELHI ] credits on the basis of those decisions can t be held to be inadmissible. Appeal allowed - decided in favor of appellant.

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• 2019 (7) TMI 762
  Maintainability of appeal - whether the present appeal should be dismissed for the reason that the two Appellate orders deciding the same issue between the same parties, had attained finality? HELD THAT:- In this connection it would be pertinent to refer to the decision of the Supreme Court in SHEODAN SINGH VERSUS SMT. DARYAO KUNWAR [ 1966 (1) TMI 77 - SUPREME COURT] - The Supreme Court held where the trial court decides two suits having common issues on merits and two appeals are filed out which one appeal is dismissed on a preliminary ground like limitation or default in printing, the result would be that the Trial Court decision stands confirmed and so the decision of the Appellate Court will then operate as res-judicata and the remaining appeal would have to be dismissed. Thus, for this reason the remaining two appeals were rightly dismissed by the High Court because the Trial court had decided all the four suits on merits, including the decision on the common issues. It would also be useful to refer to the decision of the Supreme Court in NARAYANA PRABHU VENKATESWARA PRABHU VERSUS NARAYAN PRABHU KRISHNA PRABHU ORS. [ 1977 (1) TMI 163 - SUPREME COURT] . Two suits were filed in this case and thereafter two appeals were filed against the decrees of the Trial Court. The High Court heard both the Appeals together and decided the common issue resulting in two decrees, but only one appeal was filed in the Supreme Court. It is in this context that the plea of res judicata was raised. The Supreme Court dismissed the appeal that was filed on the ground of res judicata. In the present case, the Commissioner (Appeals) decided three appeals by a common order in favour of the assessee. The Revenue initially assailed all the three orders but by filing one appeal before the Tribunal. Subsequently, in view of the application filed by the Revenue, two appeals were dismissed as withdrawn. The present appeal before the Tribunal is confined to only one order passed by the Commissioner (Appeals) - Though res judicata may not strictly apply to the orders passed by the Commissioner (Appeals), but the aid of such principles can be taken. In the present case if this appeal is allowed, two inconsistent orders will come into existence. The present appeal, therefore, is liable to be dismissed for this reason. The appeal filed by the Revenue is dismissed.

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• 2019 (7) TMI 761
  Extended period of limitation - SCN issued by way of Change of opinion - Suppression of facts or not - excise duty on galvanization charges - HELD THAT:- There is no case of any mis-representation or deliberate suppression or contravention of the provisions on the part of the appellant. Further, we find that the appellant has cleared their goods to Registered manufacturer with the Department. Whatever duty the appellant would have paid additional would have been available as cenvat credit to those manufacturers. Thus, situation is also revenue neutral in the facts and circumstances. The extended period of limitation is not available to the Revenue - appeal allowed - decided in favor of appellant.

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