TMI Tax Updates - e-Newsletter
July 26, 2017

Case Laws in this Newsletter:

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

Articles

1. The Ground Reality regarding Purchases being made by SEZ Units

   By: CASeetharaman KC

2. A NOTE ON THE FUNCTIONS OF NATIONAL COMPANY LAW TRIBUNAL

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. The Union Finance Minister, Shri Arun Jaitley releases a Case Study on the Birth of the Goods and Services Tax (GST) in India – “The GST Saga: A Story of Extraordinary National Ambition” in national capital today

2. GST Council forms a Selection Committee under the Chairmanship of Cabinet Secretary to identify and recommend eligible persons for appointment as the Chairman and Members of the National Anti-profiteering Authority under GST

3. RBI Reference Rate for US $

4. Tax base widens to 6.26 cr in 2016-17: CBDT

5. Optional reporting of details of one foreign bank account by the non-residents in refund cases

6. Income Tax Department celebrates Aaykar Diwas 2017; FM calls for expansion of the tax base in a non-intrusive manner and prompt redressal of the grievances of the tax payers

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

Notifications

Customs

1. F. No. 354/119/2017-TRU - G.S.R. 943(E) - dated 22-7-2017 - Cus

Corrigendum – Notification No. 46/2017-Customs, dated the 30th June, 2017

2. F. No. 354/119/2017-TRU - G.S.R. 942(E) - dated 22-7-2017 - Cus

Corrigendum – Notification No. . 45/2017-Customs, dated the 30th June, 2017

3. F. No. 354/119/2017-TRU - G.S.R. 941(E). - dated 22-7-2017 - Cus

Corrigendum – Notification No. 43/2017-Customs, dated the 30th June, 2017

4. F. No. 354/119/2017-TRU - G.S.R. 940(E) - dated 22-7-2017 - Cus

Corrigendum – Notification No. 38/2017-Customs, dated the 30th June, 2017

5. [F. No. 354/119/2017-TRU - G.S.R. 944(E) - dated 22-7-2017 - Cus

Corrigendum – Notification No. 47/2017-Customs, dated the 30th June, 2017

GST - States

6. ORDER No. (02)-17 - dated 21-7-2017 - Madhya Pradesh SGST

Extension of time limit for filing intimation for composition levy under sub-rule(1) of rule 3 of the Madhya Pradesh Goods and Service Tax Rule, 2017

7. FA-3-53/2017-1-V-(73) - dated 21-7-2017 - Madhya Pradesh SGST

Notifies the following modes of verification of any document.

8. FA-3-50/2017-1-V-(69) - dated 6-7-2017 - Madhya Pradesh SGST

Amendment in notification No. F-A-3-33-2017-V(42), dated 29th June, 2017

9. FA-3-49/2017-1-V-(68) - dated 3-7-2017 - Madhya Pradesh SGST

Notifies that all the registered persons having annual turnover as specified of HSN Codes.

10. FA-3-48/2017-1-V-(58) - dated 30-6-2017 - Madhya Pradesh SGST

United Nations or a specified international organisation.

11. FA-3-47/2017-1-V-(59) - dated 30-6-2017 - Madhya Pradesh SGST

Goods and Services Tax Act, 2017 State Government on the recommendations of the council shall be paid on reverse charge basis by the recipient.

12. FA-3-45/2017-1-V-(56) - dated 30-6-2017 - Madhya Pradesh SGST

Exempts intra-State supplies of goods is not liable to be registered otherwise.

13. FA-3-44/2017-1-V-(57) - dated 30-6-2017 - Madhya Pradesh SGST

Exempts intra-State supplies of second hand goods.

14. FA-3-43/2017-1-V-(55) - dated 30-6-2017 - Madhya Pradesh SGST

Intra-State supplies shall be paid by the electronic commerce operator.

15. FA-3-40/2017-1-V-(64) - dated 30-6-2017 - Madhya Pradesh SGST

Madhya Pradesh Goods and Services Tax (Amendment) Rules, 2017.

16. FA-3-37/2017-1-V-(65) - dated 30-6-2017 - Madhya Pradesh SGST

Supply of goods state tax shall be paid on reverse charge basis by the recipient of the intra-State supply of such goods.

17. FA-3-36/2017-1-V-(66) - dated 30-6-2017 - Madhya Pradesh SGST

Goods and Services Tax Act, 2017 in respect of which no refund of unutilised input tax credit shall be allowed.

18. FA-3-35/2017-1-V-(63) - dated 30-6-2017 - Madhya Pradesh SGST

Goods and Services Tax Act, 2017 exempts intra-State supplies of goods, from the whole of the state tax leviable.

19. FA-3-34/2017-1-V-(67) - dated 30-6-2017 - Madhya Pradesh SGST

Exempts intra-State supplies of goods,as is in excess of the amount calculated at the rate specified in the corresponding.

20. FA-3-31/2017-1-V-(61) - dated 30-6-2017 - Madhya Pradesh SGST

Supplies of taxable goods or services or both, total tax on which is liable to be paid on reverse charge basis.

21. FA-3-29/2017-1-V-(62) - dated 30-6-2017 - Madhya Pradesh SGST

Input tax credit of rent-a-cab, life insurance and health insurance.

22. FA-3-32/2017-1-V-(41) - dated 29-6-2017 - Madhya Pradesh SGST

Scheme of Classification of Services.

23. G.O.Ms. No. 19/CT/2017-18 - dated 15-7-2017 - Puducherry SGST

Corrigendum - G.O Ms. No. 02/2017- Puducherry GST (Rate), dated the 29th June, 2017

24. G.O.Ms. No. 18/CT/2017-18 - dated 15-7-2017 - Puducherry SGST

CORRIGENDUM - G.O. Ms. No. 01/2017- Puducherry GST (Rate), dated the 29th June, 2017

25. G.O.Ms. No. 17/CT/2017-18 - dated 15-7-2017 - Puducherry SGST

Corrigendum - G.O Ms. No. 01/2017- Puducherry GST (Rate), dated the 29th June, 2017

26. G.O.Ms. No. 13 /A1/CT/2017 - dated 29-6-2017 - Puducherry SGST

Mentioning of HSN Codes in invoices.

27. G.O.Ms. No. 12/A1/CT/2017 - dated 29-6-2017 - Puducherry SGST

Rate of interest per annum under various Sections.

28. G.O.Ms. No. 11/A1/CT/2017 - dated 29-6-2017 - Puducherry SGST

The Puducherry Goods and Services Tax (Second Amendment) Rules, 2017

29. G.O.Ms. No. 10/A1/CT/2017 - dated 29-6-2017 - Puducherry SGST

Appointed date for sections w.e.f. 01-07-17

30. G.O.Ms. No. 09/A1/CT/2017 - dated 29-6-2017 - Puducherry SGST

Turnover limit for Composition Levy.

31. G.O.Ms. No. 08/A1/CT/2017 - dated 29-6-2017 - Puducherry SGST

The Puducherry Goods and Services Tax (Amendment) Rules, 2017.

32. G.O.Ms. No. 02/2017- Puducherry GST (Rate) - dated 29-6-2017 - Puducherry SGST

Intra-State supply of goods - Exemption.

33. G.O.Ms. No. 01/2017-Puducherry GST (Rate) - dated 29-6-2017 - Puducherry SGST

Rate of state tax on the intra-State supply of goods

34. G.O.Ms. No. 06/A1/CT/2017 - dated 21-6-2017 - Puducherry SGST

Common Electronic Portal for facilitating registration, payment of tax, furnishing of returns.

35. G.O.Ms. No. 05/A1/CT/2017 - dated 21-6-2017 - Puducherry SGST

Seeks to exempt persons only engaged in making taxable supplies, total tax on which is liable to be paid on reverse charge basis

36. G.O.Ms. No. 04/A1/CT/2017 - dated 21-6-2017 - Puducherry SGST

The Puducherry Goods and Service Tax Rules, 2017

37. G.O.Ms. No. 03/A1/CT/2017 - dated 21-6-2017 - Puducherry SGST

Appointed date for sections wef 22-06-17

Income Tax

38. 68/2017 - dated 20-7-2017 - IT

U/s 10(46) of the Income-tax Act, 1961 Central Government notifies National Biodiversity Authority’, Chennai, an authority established under the Biological Diversity Act, 2002 (18 of 2003), in respect of the specified income arising to that Authority

39. 67/2017 - dated 20-7-2017 - IT

U/s 10(46) of the Income-tax Act, 1961 Central Government notifies National Council of Science Museums Kolkata, an autonomous body established under the Ministry of Culture, Government of India, in respect of the specified income arising to that Council

Circulars / Instructions / Orders

Income Tax

1. 24/2017 - dated 25-7-2017

Clarifications on computation of book profit for the purposes of levy of Minimum Alternate Tax (MAT) under section 115JB of the Income-tax Act, 1961 for Indian Accounting Standards (Ind AS) compliant companies

Customs

2. 31/2017 - dated 25-7-2017

Extending the Single Window Interface for Facilitation of Trade (SWIFT) in Exports with WCCB to all EDI locations- reg.

Highlights / Catch Notes

Income Tax

• Court Sets Aside Order Against Director for Unpaid Taxes Due to Lack of Notice u/s 179(1.

  Case-Laws - HC : Recovery of dues u/s 179(1) - seeking recovery of unpaid tax of the said company and penalty under section 271(1)(c) of the Act of the same company from the director - A director of a company would discharge his responsibility of establishing necessary facts only when he is put to notice that the authority proposes to pass order u/s 179(1) - order set aside - HC
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• GIDC Granted Tax Exemption: High Court Rules Activities as Charitable Purpose u/s 11 of Income Tax Act.

  Case-Laws - HC : Gujarat Industrial Development Corporation (GIDC) shall be entitled to exemption under Section 11 of the Act, as the activities of the assessee is for advancement of any other object of general public utility, the same can be for “charitable purpose” - HC
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• Court Rules No Addition for Fictitious Cash Credits in Assessee's Books; No Real Money Changed Hands.

  Case-Laws - AT : Addition on unexplained cash credit - the entire entries in the books of accounts of the assessee were found to be fudged and fictitious. - no addition should be made on the basis of fictitious credit entries where no real money was found to be involved.
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• Investments in NSC u/s 80C can exceed earned income; not required to match income source.

  Case-Laws - AT : Deduction u/s 80C - The Income-tax Act does not require that the investment in NSC should be made from the same amount which an assessee had earned by way of income. It is always open to an assessee to either spend the amount earned by him as an income which is more than the amount invested under section 80C. The investment in NSC can be said to be out of income of the previous year.
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Customs

• SWIFT Expands to Include Wildlife Crime Control Bureau at All EDI Locations for Streamlined Export Processes.

  Circulars : Extending the Single Window Interface for Facilitation of Trade (SWIFT) in Exports with WCCB to all EDI locations- reg. - Circular
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• Misdeclared Export Goods Must Be Confiscated Despite Re-export at Lower Value; Initial Violation Stands.

  Case-Laws - AT : Misdeclaration of quantity and value - The fact that they have been allowed to be re-exported at a lower value to a different buyer will not automatically redeem or erase the act of attempting to export those goods initially by misdeclaration of quantity and value and accordingly, they should have been confiscated
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• High Court Rules in Favor of EOU Claiming CST Reimbursement for Purchases from Another EOU, Not Limited to Domestic Tariff Area.

  Case-Laws - HC : 100% EOU - Reimbursement of CST paid in respect of the purchases made from an EOU - denial on the ground that the reimbursement of CST vis-a-vis purchases made by an EOU was restricted to the supplies received from an unit located in a Domestic Tariff Area - HC rejected the contention of the revenue.
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Indian Laws

• Non-residents in India can report one foreign bank account for smoother tax refund processing. Streamlines ITR filing.

  News : Optional reporting of details of one foreign bank account by the non-residents in refund cases - a clarification regarding information sought while Filing of ITR
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Service Tax

• CENVAT Credit Allowed on Input Services Even if Availed Before Registration; Includes Setup and Modernization Costs.

  Case-Laws - AT : CENVAT credit - input services - credit was availed prior to registration - Input services includes the services used in relation to settingup, modernization, renovation of premises of provider of output services - credit allowed.
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Case Laws:

• Income Tax

• 2017 (7) TMI 823
  Estimation of profit - Held that:- There is no legal position which is debatable. Equally, no settled position of law has been misapplied by the authorities in answering the material questions either. Therefore, we have no hesitation whatsoever in coming to the conclusion that no substantial question of law arises in the instant appeal. As stated supra, we have tested the questions proposed by Revenue in the backdrop of the factual matrix of the instant case. As a matter of abundant caution, we also applied our minds independently and examined / searched if any other substantial question of law arises, but in vain. Owing to all that have been stated supra, there is no merit whatsoever in the appeal filed by the Revenue as the addition of income on estimate basis for certain projects has admittedly / concededly (as admitted / conceded by the Revenue before ITAT) been done without scrutiny and without rejecting the Books of Accounts. Equally, no substantial question of law arises.

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• 2017 (7) TMI 822
  Reopening of assessment - deductions under Section 80-IA - revision order u/s 263 - Held that:- The Court is unable to accept the plea of the Revenue in the present case that: (i) The Assessee here did not fulfill the eligibility condition for the initial AY i.e., 1997-98; and (ii) That notwithstanding that it may have fulfilled the eligibility conditions in the initial AY, it nevertheless had to fulfill the such eligibility condition for every one of the ten consecutive AYs inclusive of the initial AY in order to be eligible for the deduction. In the present case, the assessment was completed under Section 143(3) of the Act for AY 1998-99 onwards. There was no error as such committed by the AO in allowing the deductions under Section 80-IA since the correct interpretation of the said provision was open to debate. The twin conditions of (i) the order having to be erroneous and (ii) prejudicial to the interest of the Revenue cannot be said to have been be cumulatively satisfied in the present case. That the power under Section 263 cannot be exercised to revisit debatable issues is well settled. The re-opening of assessment under Section 147 of the Act was only on account of the orders passed by the CIT under Section 263 of the Act and for no other reason. This Court having held that there is no justification for the CIT to have invoked Section 263 of the Act, the re-opening of the assessments under Section 147 of the Act in AY 1998- 99, which is the only year for which the question was framed, was not justified.- Decided in favour of assessee.

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• 2017 (7) TMI 821
  Claim of bad debts - whether the ITAT was in error in proceeding on the basis that the above sum claimed by the Assessee as bad debt was its speculative loss? - Held that:- ITAT appears to have misconstrued the nature of the transaction involving the Assessee and the broker Kamlesh Kamal & Co. It also overlooked the basic fact that the Assessee was a finance and investment company. This is evident from its observation in the impugned order that: “Since the assessee himself was not engaged in dealing of shares, it cannot be said to have been engaged in trading of shares.” This was plainly contrary to the factual position. Thirdly, it was not the Assessee’s case to begin with before the AO, that the amount written off by it was a ‘speculative loss’. AO’s analysis of what really the transaction was, was based on the correct understanding of the legal position emanating from Section 36 (1) (vii) of the Act. Revenue is right in the contention that what was not shown to be part of the income of the Assessee for an earlier previous year could not possibly be written off as a debt in the year in question. The failure by the broker to return the aforementioned sum was at the highest a business loss and nothing more. It was not even the Assessee’s case that it was a speculative loss. The observations of the AO have been taken out of context. It was observed by the AO, in the process of negativing the claim of the Assessee that it was a bad debt, that “it may be cost of shares purchased, speculation loss of the Assessee or may assume any other form.” This could not be construed as the AO holding it to be a speculative loss. - Decided in favour of the Revenue

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• 2017 (7) TMI 820
  Income deductible u/s 36(1)(viii) - Held that:- Section 36(1)(viii) of the Act provides for the deduction in respect of any reserve created and maintained by a specified entity of an amount not exceeding twenty per cent of the profit derived from eligible business computed in the heads of profit and losses of the business or profession which is carried to its reserve account. Term 'longterm finance' has been explained in clause( e) of the explanation as to mean any loan or advance where the term for which the moneys are loaned or advanced provided for repayment along with interest thereof during a period of not less than five years. The fact that the assessee company is a financial corporation which is engaged in providing longterm finance including for residential purposes is not in dispute. However, with respect to the loan portfolio which the assessee company held for less than five years for transferring, in our opinion, after such transfer, the assessee would cease to be engaged in the business of longterm finance with respect to such loan accounts. The income arising out of such activity would therefore not be the assessee's income from the business of providing longterm finance. As noted, counsel for the assessee had sought to press in service the principle of consistency by producing certain returns and assessment orders for the earlier years. However, no such documents were produced before the lower authorities, no attempt was made to advance and develop these arguments. For the first time before the High Court, we would not permit raising of such a ground which would essentially require examination of basic facts. Whether in earlier assessment years such a precise question had come up, whether the returns filed by the assessee were accepted after scrutiny or otherwise and whether in such scrutiny assessments, this issue was considered by the Revenue, are issues which cannot without proper examination of facts, be gone into. At this stage therefore, we do not enter into this arena.

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• 2017 (7) TMI 819
  Deduction of tax at source made by petitioner HUF - Held that:- In the present case, the petitioner could have applied to RBI in terms of subrule 2 of Rule 37BA and completed the procedure envisaged therein. However, one can gather that there is no dearth of power with the department to grant credit of tax deducted at source in such a genuine case. We are not suggesting that the requirements of sub-rule 2 are not to be followed before such benefit can be granted. Invariably in all cases such procedure would have to be completed before a person can rightfully claim credit of tax deducted at source where the TDS certificate shows the name and PAN of some other person. In the present case, however, many years have passed since the event arose. The facts are not seriously in dispute. The HUF has already offered the entire income to tax. The department has also accepted such declaration and taxed the HUF. In view of such special facts and circumstances, we direct the department to give credit of the said sum of 5,42,800/- to the petitioner HUF deducted by way of tax at source upon Shri Naresh Bhavanji Shah filing an affidavit before the department that the sum invested by the RBI does not belong to him, the income is also not his and that he has not claimed any credit of the tax deducted at source on such income for the said assessment year.

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• 2017 (7) TMI 818
  Recovery of dues u/s 179(1) - seeking recovery of unpaid tax of the said company and penalty under section 271(1)(c) of the Act of the same company from the director - Held that:- In the present case, we do not find a single notice on record issued to any of the directors why order under sub section (1) of section 179 should not be passed for whatever reasons that may be available at the command of the income tax authority. The notices, which we have referred to, are all issued to the company. These notices are in the form of recoveries or reminders of unpaid tax or penalty. None of these notices contain even a reference to any recoveries being made personally from the directors for the failure of the company to discharge its tax dues. If one reads the order, it seems to be suggesting that the sole requirement of applicability of section 179(1) is that the tax dues of a private company have remained unpaid. To the later requirement of the same not attributable to any gross negligent, misfeasance or breach of duty on part of director in relation to the affairs of the company is totally lost sight of. The language used in sub section (1) of section 179 may be in the negative covenant casting primary duty on the director to establish such facts, nevertheless, it is one of the essential requirements. The statute, at best, may be seen as giving rise to rebutable presumption which is required to be rebutted by the concerned director. It does not, in any manner, provide for a deemingfiction, a natural and inevitable consequence or an irrebutable presumption. A director of a company would discharge his responsibility of establishing necessary facts only when he is put to notice that the authority proposes to pass order under section 179(1) of the Act.In the result, impugned orders under section 179(1) of the Act are set aside.

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• 2017 (7) TMI 817
  Depreciation claim - holding the Capital Expenditure incurred by the Assessee on leased premises as Revenue Expenditure - Held that:- This Court has observed that in order that Explanation I is attracted, it is necessary that any capital expenditure is incurred by the assessee. It is necessary to emphasise that what Explanation I brings about is a deeming fiction by which expenditure of a capital nature incurred by the assessee for the purposes stipulated therein including inter alia for the construction of any structure or the work of renovation, extension or improvement can form the basis of a claim for depreciation as if the structure or work is a building owned by the assessee. But for the Explanation, an assessee would not be entitled to the benefit of depreciation even if the expenditure which was incurred was of a capital nature and the effect of the Explanation is to entitle the assessee to the benefit of the provisions of Section 32. It is trite that explanation cannot read dehors the provision. The explanation is in aid to the provision. The expenses as are culled out in the order of the Tribunal are sufficient to imply that same are Revenue in nature and not capital. The expenses are in the nature of building maintenance charges to the society, labour charges, charges for carpenter work, plumbing work, masonry work, pending labour charges and provisional fees. Tribunal has rightly considered the expenses as Revenue in nature

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• 2017 (7) TMI 816
  Reopening of assessment - Deduction under Section 80HHC without taking into account the trading loss - Held that:- In case of M/s.Allana Sons Ltd. [2015 (2) TMI 992 - BOMBAY HIGH COURT] this court has observed that the amendment to Section 80 HHC(3) is with retrospective effect and the same was decided in favour of M/s.Allana Sons Ltd. M/s.Allana Sons Ltd. has been granted the benefit of deduction and these petitioners being supporting manufacturers also would be entitled for the same. view of the above, the very basis for issuance of notice is on an erroneous premise. - Decided in favour of assessee.

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• 2017 (7) TMI 815
  Income derived by the assessee from letting out the shops in the "Atlantis Mall" - income from house property OR income from business - Held that:- In the present case according to Memorandums of Association and Articles of Association the Assessing Officer as well as the tribunal have categorically found that the main object of the business of the assessee is to construct Mall and to derive income from letting out the shops therein. Therefore, the income so derived by the assessee may be the income from house property but would ultimately be the business income and as such the Assessing Officer has not committed any error in determining the taxable income of the assessee under the head income from business. In view of the above question no. 1 is answered in favour of the assessee and against the Income Tax Department and it is held that the income derived by the assessee from letting out the shops in the "Atlantis Mall" is income from business for the purposes of assessment of income tax. - Decided in favour of the assessee Revision u/s 263 - as per CIT-A AO had only made the assessment of the taxable income of the assessee on the basis of the income as disclosed by it under the head income from business without considering the other aspects of the matter whether it would fall under the head Income from house property - Held that:- For the proposes of revising an order under Section 363 of the Act two conditions need to be satisfied namely that the order of the Assessing Officer sought to be revised is erroneous and it is prejudicial to the interest of the revenue. The Supreme Court went ahead in holding that it has no power to correct each and every mistake or error committed by the Assessing Officer. Therefore, interpreting the expression "prejudicial to the interest of revenue" it held that the order of the Assessing Officer can not be termed as prejudicial simply because the Assessing Officer adopted one of the courses permissible in law resulting in loss of revenue or where two views were possible if the Assessing Officer has taken one view, the Commissioner has no power to interfere. It was accordingly held that in such circumstances, the assessment order can not be treated as an order erroneous and prejudicial to the interest of revenue. In the present case two views were possible before the Assessing Officer and on the basis of the main objects and the nature of income derived by the Assessee, if he had taken one view of the matter, it could not have been said that it was erroneous in law or was likely to cause prejudice to the revenue so as to permit any interference in exercise of revisional jurisdiction by the Commissioner. - Decided against revenue

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• 2017 (7) TMI 814
  Reopening of assessment - notice issued to the petitioner on the ground that the items on account of interest and royalty, which are allowed as revenue expenditure in the assessment order, are on wrong premise - Held that:- It has been consistently held by the Apex Court and this Court that mere change of opinion cannot be the 'reason to believe' to reopen the assessment. This Court in a case of GKN Sinter Metals Ltd. (2015 (1) TMI 832 - BOMBAY HIGH COURT) has extensively dealt with the law in this regard and after referring to the various judgments of the Apex Court and this Court observed that mere change of opinion cannot be the basis of reopening the assessment. In the said case also, the Assessing Officer had raised the query with regard to allocation of expenditure. The petitioner gave its reply. The Assessing Officer accepted the reply and assessment order was passed. Thereafter, notice for reopening the assessment was issued. In the present case the Assessing Officer before passing the assessment order, had raised queries precisely with regard to the interest and royalty being shown as revenue expenditure. The Assessing Officer was satisfied with the reply and thereafter passed assessment order. Notice u/s 148 is issued merely because another Assessing Officer has different opinion. It is not the case that any income has escaped assessment. The notice is issued merely upon the change of opinion of the Assessing Officer, which is not permissible. - Decided in favour of assessee.

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• 2017 (7) TMI 813
  Assessment under Section 153A - Held that:- On perusal of Section 153A of the Act, it is manifest that it does not make any distinction between assessment conducted under Section 143(1) and 143(3). This Court had occasion to consider the scope of Section 153A of the Act in case of The Commissioner of Income Tax v. Gurinder Singh Bawa and in the case of The Commissioner of Income Tax v. Continental Warehousing Corporation & Anr.(2015 (5) TMI 656 - BOMBAY HIGH COURT). It has been observed that Section 153A cannot be a tool to have a second inning of assessment either to the Revenue or the Assessee. It has been observed that Section 153A cannot be a tool to have a second inning of assessment either to the Revenue or the Assessee. Even in case of The Commissioner of Income Tax v. Gurinder Singh Bawa (referred to supra) the assessment was under Section 143(1) of the Act and the Court held that the scope of assessment after search under Section 153A would be limited to the incriminating evidence found during the search and no further. In the said Judgment, the Judgment of this Court in The Commissioner of Income Tax v. Continental Warehousing Corporation & Anr. (referred to supra) has been followed.

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• 2017 (7) TMI 812
  TPA - selection of MAM - TNMM OR CUP - Held that:- CIT(A) and the Tribunal have concurrently accepted the case that there are difference in functions performed so also the risk undertaken by the assessee with respect to the transaction between related and unrelated parties. It is further considered that the rates charged by the assessee to related and unrelated parties cannot be the same and by making appropriate adjustments to the rates charged by the assesses to the related and unrelated parties, the CUP method can be used. The CIT(A) and the Tribunal accepted that the difference in rates with regard to the transactions with the related and unrelated parties are on account of various factors. The efforts of research personnel in the case of related parties based on time spent was approximately 20% lower than that of unrelated parties. The sales trading efforts for related parties was 20% of the efforts required for unrelated parties since no sales persons were dedicated towards building and fostering clients relationship. The additional cost incurred in transaction with unrelated parties vis-a-vis related parties was accepted inter alia difference in brokerage charged to related and unrelated parties. The findings arrived at by the CIT(A) on appreciation of facts and record, are the findings of fact which the Tribunal has also accepted. The said concurrent findings arrived at by the CIT(A) and the Tribunal are based on appreciation of factual matrix and the same does not give rise to any substantial question of law. The provisions of Section 92C r/w Rule 10B of the Act have been considered and applied in a plausible manner. No substantial question of law

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• 2017 (7) TMI 811
  Denying the benefits of Section 11 and 12 - Non charitable activities - AO observed that, the assessee is involved in commercial activities, and it also maintains its accounts in the spirit of a commercial organization and as the assessee is enjoying income from business of developing land for industrial purposes and allotting land to industrialists on lease and is also charging consideration for land transferred to them. Held that:- Considering the objects and purpose for which the assessee-Corporation is established and constituted under the provisions of the Gujarat Industrial Development Act, 1962 and collection of fees or cess is incidental to the object and purpose of the Act, and even the case would not fall under the second part of proviso to Section 2 [15] of the IT Act. As the activities of the assessee is for advancement of any other object of general public utility, the same can be for “charitable purpose” and therefore, the assessee Corporation shall be entitled to exemption under Section 11 of the Act. No error has been committed by the learned Tribunal in holding so. - Decided in favour of assessee.

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• 2017 (7) TMI 810
  Addition on unexplained cash credit - assessment framed u/s. 144 - non granting permission for special audit u/s. 142(2A) - non-acceptance of the special Audit Report neither by the Assessing Officer nor by the First Appellate Authority - Held that:- A.O. admits that he has been directed to inform the auditors that they have been appointed to carry out special audit u/s. 142(2A) of the Act. The ITO further writes that the remuneration has been fixed by the Commissioner. This proves that sufficient compliance of the relevant provision has been made by the ITO. Coming to the other objections of the ld. D.R., we find that all the objections relate to the violation of the relevant provisions of the companies act. We fail to understand how the violation of the provisions of companies act will come in the way of Income Tax assessment proceedings A perusal of the re-casted accounts qua the special auditor’s report shows that the original set of accounts were doctored and subsequently the fictitious entries were erased to bring back the real account of the assessee company. It is a settled proposition of law that Income Tax is imposed on real income. As mentioned elsewhere, the entire entries in the books of accounts of the assessee were found to be fudged and fictitious. In our understanding of the law, no addition should be made on the basis of fictitious credit entries where no real money was found to be involved. Considering the nature of the original set of books of accounts and the recasted books of accounts and the observations of the special auditors appointed u/s. 142(2A) of the Act and also considering the factual matrix in totality, we do not find any merit in the impugned additions made solely on the basis of the fictitious entries admitted. We, accordingly, set aside the findings of the ld. CIT(A) and direct the A.O. to delete the addition - Decided in favour of assessee.

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• 2017 (7) TMI 809
  Reopening of assessment - reasons to believe - Held that:- Assessing Officer has not applied his mind so as to come to the independent conclusion that he has reason to believe that income escaped assessment for the impugned year has escaped assessment. The reasons are vague and accordingly the assessment/reassessment so made is directed to be quashed. Appeals of the assessee are allowed.

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• 2017 (7) TMI 808
  Expenses on account of repair and maintenance - Held that:- Genuineness of expenses has not been doubted because the Assessing Officer has allowed depreciation after capitalizing these expenses. He produced copy of ledger account of repairs and maintenance (building) from which it is evident that the payments were made for purchase of cement, tiles etc.. The Assessing Officer concluded that the expenses were in capital filed primarily because in the fixed assets schedule the value of building was shown at 2,46,672/-. No justification in the reasoning of Assessing Officer confirmed by ld. CIT(A) because value of building as per books primarily represented written down value of building. The assessee had explained that the building was more 10-15 years old. The assessee had incurred these expenses throughout the year and since the building was old, therefore, it required regular repairs. Under these circumstances,the expenses incurred by assessee were only for the purposes of repair and maintenance of building and, therefore, allowable as revenue expenditure. In the result, this ground is allowed. Expenses on account of vehicle running and maintenance - Held that:- In the present set of facts, the Assessing Officer primarily doubted that the payment was made in one go but was split over different dates because payment had been made against two bills of M/s Harsh Auto Care of 83,519/- plus 87,835/-. The credibility of assessee’s regular books of account could be rejected only by bring on record a concrete evidence from M/s Harsh Auto Care by Assessing Officer. It is true that the onus lies on assessee to substantiate its claim but at the same time if assessee has discharged its primary onus then it is for the Assessing Officer to bring evidence on record to contradict the assessee’s claim. It is well settled law that suspicion, howsoever strong, cannot replace the evidence. Therefore, do not find any reason for rejecting the assessee’s claim of payment being made for less than 20,000/- over the period as per ledger account. In the result, this ground is also allowed.

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• 2017 (7) TMI 807
  Penalty u/s 271(1)(c) - Held that:- The simple reason that notice u/s 274 cannot be read de-hors the assessment order. From reading of the assessment order, if it is evident that under which particular limb of section 271(1)(c), the penalty has been initiated then merely because in the notice u/s 274 the Assessing Officer does not specify the specific limb of section 271(1)(c), it cannot be concluded that the Assessing Officer failed to pinpoint the actual limb in which said penalty was levied. In the assessment order, the Assessing Officer had clearly concluded, after confirmation of each of the two additions that assessee had furnished inaccurate/ incorrect particulars of his income. Therefore, merely because in the penultimate para, he observed that assessee has concealed/ furnished inaccurate particulars of income, cannot be the basis for holding that the Assessing Officer wrongly and mechanically initiated the penalty. Therefore, it cannot be said that the penalty proceedings initiated by the Assessing Officer were bad in law for want of pinpointing the exact limb in which subject penalty was initiated. Claim of deduction of HRA made in the original return - Held that:- As far as deduction for HRA was claimed by assessee, the same was denied only for the reason that actual payment had not been made by assessee. It is not disputed that the assessee was residing in the house of his mother to whom the rent was payable. Therefore, at best, it can be said to be a wrong claim in view of Explanation B to section 10(13A) but that does not imply that the assessee furnished any inaccurate particulars of its income. The amount was payable to mother and not to any outsider. This goes to show assessee’s bona-fide. Therefore, do not find any reason to saddle the assessee with penalty on account of claim of deduction of HRA made in the original return. Non-disclosure of interest on FDR - Held that:- As far as assessee’s non-disclosure of interest on FDR is concerned, the assessee’s explanation was, as reproduced earlier, that the assessee was of the view that he was filing return on cash basis. It is pertinent to mention that the assessee had not claimed the TDS on interest of FDR in its original return of income because he had not included the interest on FDR. This shows assessee’s bona-fide inadvertent mistake of not including interest in his income. Had the assessee claimed TDS but not returned the interest income different consequences could follow. Under such circumstances, the assessee explanation cannot be said to be bona-fide. In the result, the penalty levied is directed to be deleted.

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• 2017 (7) TMI 806
  Non-granting of tolerance band of +/(-) 5% from the arm’s length price (ALP) in accordance with the proviso to section 92C(2) - Held that:- After making certain adjustments to make it compatible with the international transaction, the adjusted price is taken as arm’s length price in respect of property transferred or services provided in the international transaction. Thus it can be noticed that what is determined under this method is the price. When we refer to plus minus 5% of the value determined under this method as per proviso to section 92C(2), it inevitably refers to the figure determined under this method, which is price and not profit embedded in the price. If an assessee has sold goods to its AE worth 100 and the ALP in respect of such goods sold under CUP method is say 103 or 98, then no adjustment is required because it is within 5% of 100, being the price at which goods were sold to associated enterprises in the international transaction. Irrespective of the fact whether the profit component in the sale value of 100 is 4 or 8 or 10, it is, in fact, the comparison of the price charged or paid for property transferred which is the subject matter of proviso to section 92C(2). Thus it can be seen that the plus minus 5% is required on the value of international transaction, being the purchase price in the instant case and not on the profit element in such transactions. We, therefore, direct that +-5% should be given effect in the calculation of the transfer pricing adjustment from the international transaction, if any. It is however, clarified, that this +-5% is not a standard deduction. This benefit is to be given only if the ALP falls within +-5% range of the price and not otherwise.

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• 2017 (7) TMI 805
  Addition being unproved sundry creditors - whether the assessee failed to prove their genuineness? - Held that:- CIT appeal has deleted the above addition with respect to for parties in whose case the notices were issued and were returned on served as the party could not be traced by the postal authorities for the addresses given were in complete. He further held that without rejecting the books of accounts of the assessee the additions made by the AO holding that the purchases and sales were bogus. He was further of the view that when the jewellery purchases have been sold it cannot be said that purchases were bogus. Even during the course of hearing before him he has also got confirmation of the parties and also put it across before the assessing officer and then after obtaining the remand report deleted the addition. Ld. DR could not point out any infirmity in the order of the learned 1st appellate authority, in view of this we confirm his finding in deleting the addition under section 68 of the act to the total income of the assessee in respect of sundry creditors. - Decided against revenue Addition being bogus purchases - Held that:- CIT appeal deleted the addition on the expression that all the such purchases were fully supported by purchase vouchers and the payments made substantially through account payee cheques. With respect to the 22 parties he has examined the details as furnished by the assessee wide Annexure 3 of the submission dated 12/09/2013 which was also put for the examination of the Ld. assessing officer also. He further obtained the conformation out of those 22 parties whereas the purchases from them were in excess of 10 Lacs and same was also forwarded to the Ld. assessing officer for his comments. In absence of specific comments from the AO he deleted the addition. Ld. departmental representative could not submit that when the full purchases, which were objected to by the Ld. assessing officer, were confirmed and also put for remand report by the assessee what infirmity in the order of the Ld. CIT appeal contained. This question could not be replied except relying upon the order of Ld. assessing officer. In view of this we confirm the finding of the Ld. CIT appeal in deleting the above addition - Decided against revenue Addition on account of non-reconciliation of purchases - Held that:- CIT appeal has deleted the above addition holding that the difference between the transactions recorded by the assessee with one of the party and as reported by that party there was a difference. However the conformation inadvertently provided by that party was in respect of change the Prashar Jeewan la jewellers private limited and not the assessee company and therefore after obtaining the fresh conformation of that party and putting before the assessing officer in remand proceedings the Ld. CIT appeal has deleted the addition. In view of this we do not find any infirmity in the order of the Ld. CIT (A) in deleting the above addition - Decided against revenue Disallowance on account of expenditure under the various head maintained by the assessee - Held that:- Departmental representative could not point out any infirmity in the order of the Ld. CIT (A) in deleting the above addition. He also could not point out any instances reported by the Ld. assessing officer where the expense was not supported by proper vouchers. In view of this we confirm the finding of the Ld. CIT (A) in deleting the addition of various shades. In the result we confirm the finding of the ld. CIT appeal in deleting the above disallowance.- Decided against revenue

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• 2017 (7) TMI 804
  Unexplained investment - unexplained jewellery - Held that:- In view of the fact that assessee has received gold jewellery on occasion of his marriage which is confirmed by the persons who gifted the same and further looking to the family status of the assessee who is belonging to a business man family residing at Sainik Farms and wife of the assessee belonging to non-resident Indian family based in Nairobi and whose father is garment exporter and grandfather was in the Ministry of Himachal Pradesh, it is not unreasonable to have the quantity of gold in his possession. Further, it was unexpected to reject the contention of the assessee merely for non-filing of return of wealth tax as well as the statement of affairs under the income tax act when assessee is not legally obliged to. In view of this, we delete the addition made by the ld AO and reverse the order of Ld CIT (A). In the result ground of the appeal of the assessee is allowed. Disallowance of claim of deduction u/s 80C - nexus between income earned and income invested - Held that:- It is normal behaviour of an individual's private life that all incomes are amalgamated and spent. The Income-tax Act does not require that the investment in NSC should be made from the same amount which an assessee had earned by way of income. It is always open to an assessee to either spend the amount earned by him as an income which is more than the amount invested under section 80C. The investment in NSC can be said to be out of income of the previous year. See Rajkumar Dewan & Sons V CIT [2005 (2) TMI 80 - ALLAHABAD High Court ] We allow the claim of the assessee fully for deduction u/s 80 C of the act reversing the orders of lower authorities. - Decided in favour of assessee.

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• 2017 (7) TMI 803
  Assessment u/s 153C - Held that:- CIT(A) clearly mentioned that the assessment order nowhere mentions any part of seized material belonged to Assessee Company, but the seized material is that of associates/group companies of BPTP Group. The assessee is also group company of the BPTP Group. This fact was never denied by the assessee at any point of time. The reliance by the Ld. AR on the order of M/s. Westline Developers Pvt. Ltd. is of no help to the assessee as the distinguishing factor has been pointed out by the Revenue. The present case is regarding Section 143(3) thus the facts are different from the ratio laid down in case of Westline Developer Pvt. Ltd.. The CIT (A) has rightly made observations that there is concrete evidence in form of seized material to show that interest is paid and received by seller on the extension of PDCs while analysing the seized documents. The CIT(A)’s order is upheld.

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• Customs

• 2017 (7) TMI 788
  Misdeclaration of quantity and value - it was alleged that inferior quality cotton garments were being exported with inflated values for obtaining excess drawback fraudulently - confiscation - Held that: - the impugned goods of inferior quality have been found to be mis-declared in terms of quantity, and also overinvoiced to claim ineligible amount of drawback. In these circumstances, when the lower authority has arrived at such findings and conclusions, by corollary, the goods also became liable for confiscation under Section 113 (d) and (i) of the Customs Act, 1962 - The fact that they have been allowed to be re-exported at a lower value to a different buyer will not automatically redeem or erase the act of attempting to export those goods initially by misdeclaration of quantity and value and accordingly, they should have been confiscated in terms of Section 113 of the Act and if found proper, given the exporter an option to redeem the goods in lieu of confiscation on imposition of fine under Section 125 ibid - confiscation upheld. Redemption fine - Held that: - for the limited purpose of arriving at the quantum of redemption fine, keeping in mind the facts and circumstances of the case, the matter is being remanded to the adjudicating authority. Appeal allowed by way of remand.

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• 2017 (7) TMI 787
  Amendment and conversion in shipping bills - It appears that the Assessee had, inadvertently, in the Shipping Bills filed at the time of exports only adverted to the EPCG Scheme. It is the Assessee's case that the invoices filed along with the Shipping Bills carried both the EPCG License Number as well as the Advance License Number - Held that: - there is an inconsistency with regard to the facts as found by the Adjudicating Authority and those found by the Tribunal with regard to whether or not Advance license numbers were referred to in the invoices filed by the Assessee along with the shipping bills. The Tribunal being the final fact finding authority, we would have accepted the finding returned by it but for the fact that the Revenue has placed an invoice before us to which we have made a reference above which clearly does not advert to the Advance License Number - the Assessee has also placed on record its certificate, dated 13.01.2009 issued by the Superintendent of Central Excise to demonstrate that the aforementioned goods, imported under the Advance License were used in the manufacture of excisable goods which in turn were exported by the Assessee. The Adjudicating Authority will on facts reexamine all the relevant invoices and return a finding of fact as to whether or not the Advance License Numbers were adverted to on the said invoices - appeal allowed by way of remand.

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• 2017 (7) TMI 786
  100% EOU - Reimbursement of CST paid in respect of the purchases made from an EOU - denial on the ground that the reimbursement of CST vis-a-vis purchases made by an EOU was restricted to the supplies received from an unit located in a Domestic Tariff Area - Held that: - A plain reading of clause (a) and (c) of paragraph 6.11 of 2009 FTP shows that an EOU is entitled to various benefits. In so far as clause (a) to paragraph 6.1 is concerned, the supplies received from DTA by the EOU are regarded as "deemed exports" and, accordingly, the supplier is eligible for relevant entitlements under Chapter 8 of the FTP. Besides this, even an EOU on production of a suitable disclaimer from a DTA supplier would be eligible for obtaining entitlements specified in chapter 8 of FTP. It has been specifically stated in clause (a) that for claiming deemed export duty draw back, they shall be given brand rates fixed by the Development Commissioner, wherever All Industry Rates of Drawback are not available - in so far as the other entitlements are concerned, these are set out in clause (c) of paragraph 6.11 of the 2009 FTP. Sub-clause (i) speaks about reimbursement of CST; sub-clause (ii) speaks about exemption from Central Excise Duty on goods procured from DTA on goods manufactured in India. Sub-clause (iii) provides for reimbursement of duty paid on fuel procured from domestic oil companies/depots of domestic oil Public Sector Undertakings, as per drawback rate, notified by DGFT from time to time. It also provides for reimbursement of additional duty of excise levied on fuel under the Finance Act, and lastly, clause (iv) provides for cenvat credit on service tax paid. In chapter 6, there are provisions for other entitlements, such as, those given in paragraph 6.12. A holistic reading of the Scheme of Chapter 6 is, indicative of the fact that, there are several entitlements available to an EOU unit, none of which seems to suggest that it is either prohibited from purchasing goods from a DTA unit or from making a domestic sale, subject to it fulfilling the threshold NFE, fixed qua the concerned unit. Both in law and on facts, it cannot be contended by the appellants that goods manufactured by EOU units are not goods manufactured in India and, thus, do not fulfill the conditionality for reimbursement of CST, as contained in sub-clause (i) of clause (c) of paragraph 6.11 of the 2009 FTP. Aplain reading of the provisions of paragraph 6.11 (c)(i), would have us hold that notwithstanding the fact that the respondent company/Writ Petitioner made purchases from an EOU as against DTA unit, it would be entitled to seek reimbursement of CST. Appeal dismissed - decided against Revenue.

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• 2017 (7) TMI 785
  Imposition of ADD - PVC paste resin, CTH 3904 - classification of goods after sunset review - Held that: - similar issue decided in the case of M/s Leather Cloth & Plastics Manufacturers Association Versus Designated Authority, Directorate General of Anti-Dumping and Allied Duties/Ministry of Finance [2016 (10) TMI 444 - CESTAT NEW DELHI], where it was held that when the notification mentions and identifies the subject goods by name and specific tariff classification, any change in such parameters ought to be done within the ambit of law - appeal dismissed - decided against appellant.

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• 2017 (7) TMI 783
  Classification of imported coal - whether it was bituminous coal or steam coal? - Held that: - the impugned order in this appeal is set aside and the matter is remanded back to the adjudicating authority to reconsider the issue afresh after following the principles of natural justice. The appellant is at liberty to raise all the issues alleged in the show cause notices and defend them - appeal allowed by way of remand.

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• Corporate Laws

• 2017 (7) TMI 780
  Scheme of Amalgamation - amalgamation of Wholly Owned Subsidiary Companies with a Holding Company - Held that:- In the Companies Act, 2013, in fact for amalgamation of Wholly Owned Subsidiary Companies with a Holding Company, the Companies need not approach this Tribunal and they can approach the Regional Director after holding Meetings of shareholders of the respective Companies, as provided under Section 233 of the Companies Act, 2013. But, the Applicant Companies opted to file the Application before this Tribunal obviously invoking sub-section (14) of Section 233. Invoking sub-section (14) of Section 233 means, that the Applicant Companies are submitting to the procedure as laid down in Sections 230 to 232 of the Act. The proposed Scheme, in view of the said provisions, needs approval of the shareholders and creditors of the Applicant Transferee Company and, therefore, this Tribunal is not inclined to dispense with the procedure laid down under Section 230 to 232 of the Companies Act, in case of Transferee Company, Applicant No. 4. The Meeting of Equity Shareholders of Applicant Companies No. 1 to 3 (Transferor Companies), Unsecured Creditors of the Applicant Companies No. 1 to 3 (Transferor Companies), Equity Shareholders of the Applicant No. 4 Transferee Company, Secured Creditors of the Applicant No. 4 Transferee Company, Unsecured Creditors of the Applicant No. 4 Transferee Company is dispensed with. Applicant Transferee Company is required to provide facility of Postal Ballot and E-Voting by the shareholders. Accordingly, voting by equity shareholders of the Applicant Transferee Company to the Scheme shall be carried out through (i) Postal Ballot; (ii) e-Voting; and (iii) electronic voting system or ballot or polling paper at the venue of the meeting to be held on 09.06.2017. All the other rules and procedures related to notice, appointments and conduct of meetings, Voting by Proxy/Authorised Representative need to be adhered to.

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• Insolvency & Bankruptcy

• 2017 (7) TMI 781
  Initiating Corporate Insolvency Resolution Process - Insolvency and Bankruptcy Code, 2016 - Held that:- There is no dispute sufficiently raised with regard to quality of service. All that could be made out from the perusal of the emails is that some dispute with regard to Dehradun hoarding/advertisement bills have been raised. After the date of the email transactions between the parties continued. There was no cessation of relationship. We are not impressed with the argument that there is an actual dispute and the quality or quantity of service were seriously doubted in such a manner that it may constitute a basis for defeating the initiation of Corporate Insolvency Resolution Process. It is well settled that one swallow does not a summer make. In other words, a small lapse will not be sufficient to decline the relief of initiation of Corporate Insolvency Resolution Process as claimed in the application. Accordingly, we reject the defence as moonshine particularly when Corporate Debtor has chosen to maintain silence to the statutory notice of demand issued by the Operational Creditor. This petition is admitted and the matter be referred to Insolvency and Bankruptcy Board of India for appointment of Corporate Insolvency Resolution Professional and other procedures need to be followed. A moratorium would come in operation from today prohibiting relevant acts but would not affect the supply of essential goods or services to the Corporate Debtor and the same may be specified by the Insolvency Professional. It shall also not apply to transactions which might have been notified by the Central Government in consultation with any financial sector regulator.

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• Service Tax

• 2017 (7) TMI 802
  Subscription fee - taxability - case of the department is that the appellant is liable to pay service tax on the subscription fee, annual subscription rate of monthly/annual publications for magazines etc. and value of medical treatment books - whether subscription from the members of the forum is chargeable to service tax under the service of club and association service? - Held that: - This issue in the appellant's own case Sakal Papers Ltd. Versus Commissioner of Central Excise [2015 (8) TMI 1396 - CESTAT MUMBAI], has been decided by this Tribunal, where it was held that rendering of services by the club to its members is not taxable under the category of Club or Association Service - the members subscription received by the forum is not chargeable to service tax - appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 801
  Refund of CENVAT credit - rejection on the ground that few services of which refund claims are filed cannot be co-related - Held that: - the First Appellate Authority in the impugned order has categorically recorded that the CENVAT credit of the service tax paid on these services are eligible and refund needs to be allowed, based on the various decisions of the Tribunal. The impugned services have been held admissible for credit/refund in several pronouncements. Following judicial discipline, the matter pertaining to the rejected input services is decided. In terms of the findings, the denial of credit and therefore, of the refund, is set aside in respect of all items - appeal dismissed - decided against Revenue.

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• 2017 (7) TMI 800
  Refund claim - rental income from the residential premises - rejection on the ground of time bar - Held that: - the appellant being registered with the departmental authority should have considered of the provisions before discharging the service tax liability and having not claimed the benefit of available notification and after discharging the service tax liability, cannot now claim that the department has withheld the tax which they are not supposed to collect - the first appellate authority has categorically recorded how the appellant is eligible for part of the refund claim - appeal dismissed - decided against appellant.

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• 2017 (7) TMI 799
  CENVAT credit - input services - denial on the ground that the invoices being not in the name of the appellant and CENVAT credit was availed prior to registration - whether the service tax paid on Works Contract Services, Project Management and Architectural Professional Services can be considered as input services for the appellant when these services are used for construction of hotel? - Held that: - It is undisputed that the services are utilized for brining to existence building which is used by the appellants for hospitability business and is used for rendering output services like mandap keeper and health club and fitness centre and dry cleaning service and internet cafe services. It is an unimaginable that a hotel can render these services without a building in its place - the input services are availed by the appellant in respect of Works Contract Services, Project Management Services and Architectural Professional Services used for construction of a building, which subsequently is put into use for rendering taxable output services. Input services includes the services used in relation to settingup, modernization, renovation of premises of provider of output services. Avaliment of CENVAT credit on the input services which are used for brining into existence of immovable property are also eligible for availment of CENVAT credit - appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 798
  Works contract - commercial or industrial construction services - whether construction activity undertaken by the appellant prior to 01.06.2007 for construction of quarters for CRPF, office building for HAL, administrative building for BSNL, convention hall for APTDC whether liable to be taxed under commercial or industrial construction services or construction of complex services or otherwise? - Held that: - In respect of the construction activities undertaken prior to 01.06.2007, we find that the adjudicating authority has clearly recorded that these construction activities were undertaken by the appellant under EPC contract; there being such a clear finding not contested by revenue as an admitted fact, then in our considered view the same needs to considered on works contract services. Whether post 01.06.2007 the above construction would be taxable under works contract or otherwise? - Held that: - Post 01.06.2007, the construction activity undertaken by the appellant for the Government organizations are not taxable, is the claim of the appellant which has been rejected by the adjudicating authority on a finding that appellant had undertaken this activity of construction of quarters as a sub-contractor for Central Public Works Department (CPWD). Whether construction activity undertaken by appellant for private parties is taxable prior to and post 1.6.2007 or otherwise and whether the penalty is imposable on the appellant on the amount of tax not paid in respect of activity undertaken for private parties? - Held that: - As regards service tax liability in respect of work of construction executed of various private parties prior and post 01.06.2007, we find that it is the claim of the Ld. Counsel for appellant that they have discharged the service tax liability in toto along with interest; it is also the claim of the appellant that they had not collected any service tax from these private parties prior to 01.06.2007 while the adjudicating authority has recorded a finding that they have collected the tax from private parties. Since it is the claim of the appellant that they have not collected any tax prior to 01.06.2007 and discharged tax liability post 01.06.2007, claims needs to be verified by the lower authorities from the documents that may be produced by the appellant. The question of visiting the appellant with any penalty does not arise even in the case of tax liability in respect of the works executed for private parties. Appeal allowed in part and part matter on remand.

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• 2017 (7) TMI 797
  Penalty - case of Revenue is that the credit, so availed by the appellant, was not available inasmuch as the imported capital goods were not being used by them in the manufacture of the final products and were being hired out - Held that: - the assessee is not disputing the fact that the imported Hydraulic system was not at all used by them in their manufacturing activities and was hired out - It is also a fact that the credit of more than 10 lakhs was availed during the long period of June, 2009 to June, 2011 and was detected by the Prevantive Officers during the course of their visit in November, 2011 only. As such, it can be safely concluded that the appellants adopted the system of availing credit of duty paid on capital goods used in the manufacturing activities with an intention to avail credit not available to them and may be to take a chance. It is also a fact that as soon as the objection was raised by officers, the appellants paid back the entire credit immediately along with interest. Taking into consideration that the appellants paid back the credit immediately on being pointed out by the Revenue along with payment of interest and keeping in mind the fact that the penal proceedings were initiated against them, after a gap of three years, I deem it fit to restrict the penalty to 25% of the total duty amount in terms of proviso to section 78 of the Finance Act, 1994 - appeal allowed - decided partly in favor of appellant.

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• 2017 (7) TMI 784
  Commercial coaching and training services - Amount charged for training under Abacus - taxability - SSI exemption - Penalty - Held that: - the taxability of the amount charged for training under Abacus is still before the Hon'ble Supreme Court for the final decision and subsequently various Benches of Tribunal have come to a conclusion that an amount collected Abacus training is not taxable with effect from 2012. As regards the issue for demand of service tax liability on training of English Language finding the said taxability was contested before various matters before the Tribunal, the Bench finally decided the English Language training is covered under the Head of Commercial Coaching in Training Class Services. Since this issue settled by the Tribunal we are of the view these would a bonafide belief in the mind of appellant as to non-taxability of the amount received by them. In view of this, we hold that provisions of Section 80 can be invoked in the case in hand penalties liable to be imposed on the appellant in respect of the Abacus and English Language training can be set aside. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2017 (7) TMI 796
  CENVAT credit - time limitation - Section 11A of the Act - whether the Tribunal has rightly allowed the appeal on the ground of limitation, taking into account Section 11A of the Act? - Held that: - A similar question was considered by Hon'ble Supreme Court in the case of Cosmic Dye Chemical Vs. Collector of Central Excise, Bombay [1994 (9) TMI 86 - SUPREME COURT OF INDIA], where it was held that the allegation of willful suppression with intent to evade was not established, the Tribunal was justified in allowing the appeal. In the present case the show cause notice cum demand issued by the respondent is certainly time barred - appeal dismissed - decided against Revenue.

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• 2017 (7) TMI 795
  Maintainability of appeal - Held that: - there is no dispute to the fact that the appeal involves the determination of the question having relation to the rate of duty of excise which inter-alia includes the exemption of the duty. A Division Bench of this High Court in the case of Commissioner of Custom and Central Excise Vs. Eco Products (I) Pvt. Ltd., [2013 (6) TMI 120 - ALLAHABAD HIGH COURT], in relation to Section 35 (G) and 35 (L) of the Central Excise Act held that where a question is based on the eligibility of the goods manufactured by the manufacturer for exemption under any notification, such question of exemption is directly and proximately related to the rate of duty for the purpose of assessment of excise duty payable and as such is excluded from the purview of appeal before the High Court under Section 35 (G) of the Act and the remedy is to file an appeal before the Apex Court under Section 35 (L) of the Act. Appeal dismissed being not maintainable.

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• 2017 (7) TMI 794
  Clandestine manufacture and removal - there was receipt of about 55 MTs of MS Ingots which were not accounted in their records - Held that: - there is nothing which indicates that the Respondent had engaged himself into manufacturing clandestinely on the goods received from his suppliers and cleared the said finished goods clandestinely. On a specific query from the Bench it was pointed out that none of allegations in the show-cause notice considered the issue as to how a final product can be manufactured clandestinely without the receipt of raw-material. In my view the entire demand which has been worked out in the show-cause notice under allegation that there was clandestine removal is based upon presumptions and assumptions which cannot stand scrutiny of the law - appeal dismissed - decided against Revenue.

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• 2017 (7) TMI 793
  Restoration of appeal on production of necessary clearance from COD - applicant could not get COD clearance in respect of two appeals - Held that: - though the fact of denial of clearance was not brought to the notice of the Tribunal, the liberty to apply for restoration granted in such final orders become nullity as it was clearly recorded that such restoration will be on production of necessary clearance. In respect of these two appeals, we find no merit at all in the present applications to recall the order of the Tribunal. Regarding Appeal No.E/1288/2006, the appellants submitted that they have got COD clearance on 18.12.2007. In spite of repeated queries by the Bench, the applicant could not submit any reason for delay of more than 10 years, after the COD clearance was given by the competent authority. Even considering that on 17.02.2011 the Hon’ble Supreme Court recalled the earlier order and dispensed with the COD clearance mechanism, for another 6 years, the applicant did not take any action regarding the dismissal orders passed in 2006. Here again, no reasons were putforth for such attitude of the applicant. The matter, which are considered and decided by the Committee of Disputes and permission specifically denied, cannot be re-opened. As such, in the present case, two appeals cannot be even considered for recalling. On the third appeal, we note that 10 years delay, after the COD permitted the applicant to file an appeal, has not been explained at all. Appeal dismissed - decided against applicant.

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• 2017 (7) TMI 792
  Refund claim - Rule 5 of the CCR, 2004 read with N/N. 27/2012-CE (NT) dated 18.06.2012 - rejection on the ground of time limitation - Section 11B of the CEA, 1944 - Held that: - while entertaining the refund claim filed by the appellant, the same was rejected as time barred because the refund claim was required to be filed within one year of the date of export. In fact, the adjudicating authority is required to ascertain the date on which the goods have been exported and corresponding date of filing the refund claim and if the refund claim is filed within time limit prescribed under the Act of the date of export as defined under Section 11B of the Act, in that circumstances, the refund claim cannot be rejected as time barred. The fact is to be ascertained by the adjudicating authority on production of relevant documents by the respondent - appeal allowed by way of remand.

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• 2017 (7) TMI 791
  Whether storage of finished and semi-finished goods, raw materials outside factory premises is permissible or not? Held that: - In the present case, the appellant stored the goods outside of the factory premises without the permission of the Commissioner in violation of the provisions of the Notification. The ld.Counsel for the appellant mainly argued that they informed the Range Superintendent. Admittedly, he is not competent authority to allow the storage outside of the factory premises - confiscation justified - In any event there is no suppression of facts with an intent to evade payment of duty and therefore, imposition of penalty under section 11A of the Central Excise Act, 1944 and Rule 15 of Cenvat Credit Rules, 2004 would not be warranted. Redemption fine reduced to 25,000/- - a general penalty imposed of 10,000/- - other penalties set aside. Appeal allowed - decided partly in favor of appellant.

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• 2017 (7) TMI 790
  Classification of goods - it was alleged that the appellant is giving a specified shape and also cutting them into required length, as per specifications of the customer after cold rolling for use as fabrication of shutters, therefore, it was alleged that the said products is classifiable under chapter Heading 7308.90 of the CETA, 1985 - Held that: - As the process of manufacturing has been examined by this Tribunal in the case of Nav Durga Steel Products [2015 (10) TMI 37 - CESTAT NEW DELHI] it is held that the resultant product is classifiable under section 7216.20 of the Tariff Act - the items in question manufactured by the appellant are more appropriately classifiable under chapter heading 7216.20 of the Tariff Act - appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 789
  SSI exemption - clubbing of clearances - The allegation is that the appellant unit is the main unit and Sri R.D. Pandian who is proprietor is controlling all the other three units which were floated by Sri R.D. Pandian in the name of his wife and other family members - Held that: - The fact that all the three units are situated at one place which is separated by passages; that all the four units belong to the same family members; that account of one unit is seen reflected in the account of another unit; that the raw materials are used in common or being diverted to the other unit; the use of machineries commonly by all the four units as well as the workers in all the four units being the same; the conclusion reached by the adjudicating authority, in our view is right and proper - the department has been able to sufficiently establish that there existed flow back of funds and mutuality of interest among four units - appeal dismissed - decided against appellant.

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• CST, VAT & Sales Tax

• 2017 (7) TMI 782
  Natural justice - reasonable opportunity required to be provided under Section 82 of the VAT Act, was denied - inter-state sale - Held that: - There can be a situation where the Revisional authority considers an assessment order to be incorrect. But when the assessment order is passed lawfully in due process and payable tax is determined, just because there is disagreement with the decision of the primary authority, the exercise of suo-motu power of revision is not permitted by law - it is not a case of concealment nor the Revisional power is exercised on account of some manipulation of figures by the Assessee. In fact, the turnover in the return was supported by all requisite bills and invoices. Even then, a higher turnover was assessed by the Primary Authority with reference to the market price of the goods and this was accepted by the Assessee and demanded tax on the determined turnover was paid. The exercise of Revisional power under Section 82 of the VAT Act in such circumstances is found to be untenable and the same stands quashed - appeal allowed - decided in favor of appellant.

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