TMI Tax Updates - e-Newsletter
August 14, 2018

Case Laws in this Newsletter:

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

Articles

1. Manifesto of being a straight arrow

   By: Kishan Barai

2. EXEMPTION TO E-WAY BILL REQUIREMENT – PART II

   By: DR.MARIAPPAN GOVINDARAJAN

Notifications

GST - States

1. F.A-3-47-2017-1-V-(60) - dated 27-7-2018 - Madhya Pradesh SGST

Amendments in the Notification No. FA-3-47-2017-1-V(59) dated 30th June 2017.

2. F.A-3-35-2017-1-V-(61) - dated 27-7-2018 - Madhya Pradesh SGST

Amendments in the Notification No. FA-3-35/2017/1/V(63) dated 30th June, 2017.

3. F.A-3-33-2017-1-V-(65) - dated 27-7-2018 - Madhya Pradesh SGST

Amendments in the Notification No. FA-3-33/2017/1/V(42) dated 29th June, 2017.

4. F.A-3-32-2017-1-V-(64) - dated 27-7-2018 - Madhya Pradesh SGST

For the purpose of clarifying the scope and applicability the term 'business' shall not include any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities.

5. F.A-3-32-2017-1-V-(63) - dated 27-7-2018 - Madhya Pradesh SGST

Amendments in the Notification No. FA-3-32/2017/1/V(41) dated 29th June, 2017.

Indian Laws

6. THE CONSTITUTION (ONE HUNDRED AND SECOND AMENDMENT) ACT, 2018 - dated 11-8-2018 - Indian Law

The Constitution (One Hundred and Second Amendment) Act, 2018.

Circulars / Instructions / Orders

Income Tax

1. F.No. ITBA/188/2018-19 - dated 31-7-2018

Launch of functionality for Demand Analysis in Income Tax Business Application (ITBA)

Customs

2. Instruction No. 12/2018-Customs - dated 13-8-2018

Safeguard duty on Solar cells whether or not assembled in modules or panels regarding.

Highlights / Catch Notes

Income Tax

• Land Sale by Co-Owners Is Capital Gain, Not Business Income: No Trade Adventure in Joint Plot Sale.

  Case-Laws - AT : Nature of sale of land - adventure in the nature of trade or not - The very fact that each co-owner separately purchases their lands but only combined for the purpose of sale, does not show any element of carrying out any business for joint profits. - To be taxed as capital gain only.
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• Taxpayer Wins: Loss Set-Off Allowed Against Income u/s 115BBE Before 2017 Amendment.

  Case-Laws - AT : Assessment u/s 115BBE - Additions u/s 68 - AO denied the current year loss will not be set off against income assessed u/s 115BBE - The amendment brought by the Finance Act, 2016 in section 115BBE(2) is effective from assessment year 2017-18 and is not applicable for the impugned assessment year.
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• Assessee's Claim Allowed: NSE Confirms No Trading Activity for F&O Losses; Off-Market Transactions Validated.

  Case-Laws - AT : Additions on account of F & O (Future & Options) loss - loss on derivatives - NSE reported that no trading were found for the combination of member and client code during the period - since the transaction were off market transaction, claim of the assessee allowed.
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• Assessee Justifies Expense Allocation During Construction by Nature and Purpose, Ensuring Proper Apportionment.

  Case-Laws - AT : Treatment of expenditure and revenue during Construction period - The assessee has rightly apportioned the expenses depending upon the nature and purpose of expenses with adequate reasoning.
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• Resident Held Liable for Not Deducting TDS on Property Transfer by Non-Residents u/s 195, Despite Nil Capital Gains Declared.

  Case-Laws - AT : TDS liability u/s 195 - transfer of immovable property by the non-residents to resident - all the three non-residents have filed their return of income in India for the relevant assessment year declaring nil capital gains - AO has rightly held the as assessee in default for non deduction of tax at source u/s 201(1).
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• Court Overturns Pr.CIT Order: Insufficient Evidence Linking Laptop Printouts to Business Activities in Section 263 Case.

  Case-Laws - AT : Revision u/s 263 - Additions on the basis of printouts taken from the laptop - Since the department has failed to bring any evidence to hold that the printouts of computer related to the business of the assessee, we are unable to uphold the order of the Ld.Pr.CIT on this issue.
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• Assessee's Inclusion of Written-Off Creditors u/s 41 Not Added to Income, Chartered Accountant's Conduct Questioned.

  Case-Laws - AT : Addition u/s 41 - Assessee added the amount towards written off of sundry creditors in the amount of sales and shown the gross profit @6.46% - The action of the concerned C.A. is wholly in appropriate and we do not approve his conduct in preparing such a Trading Account. - However, no addition in the hands of assessee.
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• Expenses Claim u/s 37(1) for Litigation and Settlement Disallowed; Transition to Lawyer Not Sufficient Justification.

  Case-Laws - HC : Claim of expenses u/s 37(1) - litigation and settlement expenses - during the legal proceedings, the appellant switched gear and became a lawyer in order to settle the dues of the company and discharge his personal guarantee. - claim of expenditure not allowed.
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• Penalty Imposed u/s 271(1)(c) Despite Expired Limitation; Section 275 Scenarios Not Applicable in Officer Transfer Case.

  Case-Laws - HC : Levy of penalty u/s 271(1)(c) - Extension of Period of limitation which has otherwise expired - transferred from one officer to another officer - the three situations envisaged in Section 275 of the Act clearly do not cover the situation in the present case.
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• Section 158BC(a) Proviso: No Revised Income Return Before Assessing Officer, But Additional Claims Allowed on Appeal.

  Case-Laws - HC : The prohibition in Second Proviso to Section 158BC(a) of the Act of filing a revised return of income before the Assessing Officer would not prohibit a Assessee from raising the additional claim before Appellate Authorities.
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• Income from Abroad in NRE Account Non-Taxable for Non-Residents under Income Tax Act, 1961, Section 6.

  Case-Laws - HC : Taxability of income / salary received from outside India - receipt of the sum in the assessee’s NRE account - during that year, the assessee had the status of non-resident u/s 6 of the Income Tax Act, 1961. - Extended the benefit of circular, the income held as not taxable to income tax.
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• Commission Upholds Settlement: Respondent's Disclosure u/s 245D Found True, Complete Despite Additional Income at 245D(4) Stage.

  Case-Laws - HC : Settlement of case u/s 245D - Disclosure of additional income at the stage of 245D(4) - the Commission itself records a finding that the disclosure made in the application for settlement is true and full, notwithstanding the offering of further income by the Respondent - order sustained.
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• Penalty Imposed for Concealment of Income as Assessee's Explanation Deemed Fabricated u/s 271(1.

  Case-Laws - HC : Levy of penalty u/s 271(1) - allegation of concealment of income - The assessee could not furnish any explanation except setting up a cooked up story for loss of the books of account - Levy of penalty confirmed.
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• Tahbazari Not Liable for Tax Collection at Source; Not Classified as Parking Lot, Toll Plaza, or Mining per Section 206C(1C.

  Case-Laws - HC : Scope of the person u/s 2(31) - Collection of Tax (TCS) on Tahbazari u/s 206C(1C) - Whether the term "Parking Lot", "Toll Plaza", "Mining and quarrying" include "Tahbazari" - Held No - No TCS liability.
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• Appellants Denied Section 80IB Deduction Due to Job Work Classification, Not Manufacturing Electronic Computer Products.

  Case-Laws - HC : Deduction u/s 80IB - manufacturing activity or not of electronics computer - Job work / outsourcing - Appellants were not carrying out manufacturing activity of electronic computer products within the meaning of Section 80 IB of the Act - Deduction u/s 80IB not allowed
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Customs

• Strict Interpretation of Import Notification: Exemption for Plastic Boxes Doesn't Cover 'Tag Pins' or 'Loops' Import.

  Case-Laws - AT : Benefit of Exemption - import of plastic boxes - Notification does not permit the import of ‘tag pins’ or ‘loops’. Any Notification giving the benefit of exemption is required to be construed strictly and the person invoking the exemption provision to relieve him of the tax imposed establish that he has exempted by the said Notification
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Indian Laws

• Appellant Proves Cheque Dishonor Beyond Doubt; Trial Court's Acquittal of Respondent Overturned Due to Evidence Support.

  Case-Laws - HC : Dishonor of Cheque - presumption to debts / liability - It is clear that the appellant was able to prove its case beyond reasonable doubt against the respondent and that the trial Court committed an error in acquitting the respondent.
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Service Tax

• Railway Coach Cleaning by Appellant Not Taxable Under Pre-Negative List Era Due to Rolling Stock Classification.

  Case-Laws - AT : Cleaning services - appellant providing cleaning of coaches services to Indian Railways - No doubt, railways is a commercial concern but it is already been settled that the coaches are rolling stock of railways and hence, they were not covered strictly under the definition in pre-negative list era.
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• Appellant's Payments for Ad Display Confirmed as Service Taxable, Not Property Rental, Per Invoices.

  Case-Laws - AT : Advertising agency services - the appellant has taken the plea that those payments are made in lieu of renting the property to both the advertising agency companies to display the advertisements of their clients but the perusal of the invoice of appellant falsifies the said submission as those amounts are mentioned to have been received for displaying the advertisements - demand of service tax confirmed.
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• Tax Exemptions for Principals Extend to Agents, Ensuring Consistency in Service Tax Applications.

  Case-Laws - AT : Demand of service tax - Exemption to the principal would be available to the agent also.
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• Appellants Seek Tax Exemptions Similar to Reserve Bank of India for Performing Sovereign Functions.

  Case-Laws - AT : Banking and other Financial Services - The appellants are working as an agent of RBI in the discharge of sovereign functions, therefore, whatever exemption is applicable to RBI, that should also be applicable to the appellants who are working as an agent in the discharge of statutory/sovereign functions.
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• Reclassification of Services from C & F Agents to Business Auxiliary Service Leads to Order Being Set Aside.

  Case-Laws - AT : The initial show-cause notice demanded service tax under the category of C & F Agents. While passing the Review order, the Commissioner has held that the services rendered by the appellants fall under ‘Business Auxiliary Service’. For this reason itself, the impugned order is fit to be set aside.
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• Banks' Dormant Account Fees Are Penalties, Not Taxable Services Under Banking Regulations.

  Case-Laws - AT : Banking and Other Financial Services - dormant account charges - By levying “dormant account charges’ such account holders are not getting any additional services or benefits that they were not getting earlier. This being so, levy of such charges are nothing but a penalty imposed on such account holders for keeping their account inoperative. - Not liable to service tax.
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• CENVAT Credit Approved for Input Services; Appellant's Claims Supported by Invoices and Precedent Decisions.

  Case-Laws - AT : CENVAT Credit - various input services - All the services have been held to be input service in various decisions relied upon by the appellant and the details of the invoices have also been given along with the appeal memorandum - credit allowed.
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• Government-Controlled Entity's Misunderstanding on Tax Exemption Affects Extended Limitation Period for Service Tax Obligations.

  Case-Laws - HC : Extended period of limitation - CSIDC was under bona fide impression that being an entity under the control of Government it was not liable to pay service tax - mere non registration under Section 65 or non payment of service tax on the maintenance charges collected from industries would not amount to wilful supression or mis-statement of fact.
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• Service Tax Demand Set Aside in Case of Newspaper Distribution Services Due to Classification Uncertainty.

  Case-Laws - AT : Classification of services - assessee collected newspaper bundled and distributed them to various agents for a consideration - the Department itself is not sure under which head the appellant is liable for service tax - demand set aside.
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Central Excise

• Department Fails to Prove Appellants Availed CENVAT Credit on Waste and Scrap Items; Burden of Proof Unmet.

  Case-Laws - AT : Having alleged that the appellants have availed CENVAT credit on the items removed as waste and scrap, the onus is on the department to prove that such credit was availed by the appellants. This burden has not at all been discharged by the department.
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Case Laws:

• Income Tax

• 2018 (8) TMI 729
  Deduction u/s 80IB - manufacturing activity or not of electronics computer - whether the term manufacturer under Section 80 IB would include manufacturing activity being carried out outsourced to another party - Held that:- the assessee could not even produce the primary evidence in the shape of books of accounts, resolutions, even to suggest that it had deployed its manpower at the factory premises of M/s. Kobian ECS India Pvt. Ltd. and had retained the control over the manufacturing activity. The Appellants could not produce particulars like attendance register, qualifications of the employees in spite of being asked to do so by the Assessing Officer. - In fact, it appears even the packaging material was supplied to contract manufacturer by the Appellants-Company for finished products at Silvassa. Appellants were not carrying out manufacturing activity of electronic computer products within the meaning of Section 80 IB of the Act - Deduction u/s 80IB not allowed - Decided against the assessee.

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• 2018 (8) TMI 728
  Scope of the person u/s 2(31) - Collection of Tax (TCS) on Tahbazari u/s 206C(1C) - Whether the term Parking Lot , Toll Plaza , Mining and quarrying include Tahbazari - Whether the Apar Mukhya Adhikari, Zila Panchayat was responsible for collecting the tax at source under Section 206C(1C) of Income Tax Act - Held that:- The Tahbazari is not an item which is provided under this Section for collecting TCS. If a licence or lease is issued in favour of any other person for collecting the Tahbazari, it cannot be said that lessee is collecting toll on such licence or lease, as the case may be. We are required to construe the taxing provisions strictly and cannot give liberal interpretation to a taxing provision. The Tahbazari has different connotation and it is not a toll as held by the Tribunal. We do not agree with the view taken by the Tribunal that Tahbazari is nothing but a toll or it is not different from Toll Plaza. - Decided in favor of assessee.

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• 2018 (8) TMI 727
  Levy of penalty u/s 271(1) - allegation of concealment of income - the accounts filed by the appellant was audited by the Chartered Accountant and the assessment was completed by applying flat rate on the turn over disclosed by the appellant - application of explanation 1A to Section 271(1)(c) - Held that:- The AO while finalising the assessment under Section 143(3) of the Act did not believe the story set up by the assessee for loss of books of account and invoked the provisions of Section 145(3) of the Act. CIT(A) also specifically rejected the contention of the assessee for loss of books of account and hold that it was a cooked up story of the assessee and did not find any merit in the appeal. The assessee could not furnish any explanation except setting up a cooked up story for loss of the books of account. It was admitted case that the books of account were maintained in the computer. The assessee did not even furnish the computer generated copies of the books of account. Levy of penalty confirmed - Decided against the assessee.

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• 2018 (8) TMI 726
  Transfer pricing adjustments - Assessee is aggrieved only by the directions of the learned Tribunal for remanding the case back to the TPO/AO for undertaking the Transfer Pricing Analysis with regard to Royalty payments made by the Assessee-Indian company to its Associated Enterprise M/s.Toyota Motors Corporation, Japan and other associated companies. No substantial question of law arises out of the said order with remand directions of the learned Tribunal. The exercise of Transfer Pricing Analysis on the Combined Transaction Approach and not on different segment basis, deserves to be undertaken and in our opinion, the learned Tribunal was justified in remanding the case back to the TPO/AO for undertaking such Transfer Pricing Analysis for determining the ALP of the Royalty payments made by the Assessee-Indian company to the Associated Enterprises of Japan. - Decided against the assessee.

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• 2018 (8) TMI 725
  Filing of ITR - linking of PAN with AADHAR - Held that:- the petitioner is allowed to file return of income for the year under consideration before the Department in hard copy. The Department may accept the same without the petitioner linking his PAN card with AADHAR card or having to make a declaration that he has applied for one. It would not be obligatory for the Department to process such return. In other words, the assessment on such return shall stand stayed. It is clarified that mere filing of the return would not create any equity in favour of the petitioner and this arrangement would be subject to further final order that may be passed in this petition.

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• 2018 (8) TMI 724
  Set-off of carried forward unabsorbed depreciation - Held that:- We are informed that the Revenue has filed an SLP to the Apex Court, challenging the order of this Court in M/s. Hindustan Unilever Ltd., (2016 (7) TMI 1245 - BOMBAY HIGH COURT). However, mere filing of an SLP would not by itself make the decision in Hindustan Unilever Ltd., (supra) not binding. Needless to state that in case the Revenue is aggrieved by this order, it is always open to challenge the same before the Apex Court and tag it along with the pending SLP in case of Hindustan Unilever Ltd. - Decided against the revenue.

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• 2018 (8) TMI 723
  Settlement of case u/s 245D - Disclosure of additional income at the stage of 245D(4) - failure to make a true and full disclosure in its application for settlement - genuineness of labour charges claimed - Genuineness of receipt of consideration in the absence of evidence of providing any service - Held that:- This finding of the Commission has not been shown to be perverse in any manner. In the context of the finding of the Commission merely because the Applicant has offered some further amount as income voluntarily at the stage of 245D(4) of the Act, would not ipsofacto lead to a conclusion that there was failure to fully and truly disclose the income in its application for settlement. This move so when the Commission itself records a finding that the disclosure made in the application for settlement is true and full, notwithstanding the offering of further income by the Respondent. Where the view taken by the Commission is a possible view then interference under Article 226 of the Constitution of India in our extraordinary jurisdiction is not warranted. - Decided against the revenue.

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• 2018 (8) TMI 722
  Power of ITAT to extend the stay of demand - combined period of stay has exceeded 365 days - Whether the order of the ITAT be treated as void ab initio in light of Third Proviso to Section 254 (2A) of the Income Tax Act, 1961, which provides that stay of demand stands vacated after expiry of a period of 365 days, even if delay in disposal of appeal is not attributable to the assessee? Held that:- The matter is no longer res integra. While interpreting the provisions of Section 35C(2A) of the Central Excise Act, 1944 which is pari materia to section 254(2A) of the Act, this Court in [2016 (1) TMI 1101 - PUNJAB & HARYANA HIGH COURT] after considering the relevant case law on the point concluded that wherever the appeal could not be decided by the Tribunal due to pressure of pendency of cases and delay in the disposal of the appeal is not attributable to the assessee in any manner, the interim protection can continue beyond 365 days in deserving cases. Accordingly, we do not find any error in the impugned order passed by the Tribunal. Thus, no substantial question of law arises. - Decided against the revenue.

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• 2018 (8) TMI 721
  Benefit of Income Declaration Scheme, 2016 - Review petition - earlier HC dismissed the petition of the assessee on the ground that, although the order dated 24.10.2016 does not refer to prosecution under Section 420 of IPC but of Corruption of Prevention Act, but since prosecution is going on against the petitioner for an offence which comes under Chapter XVII of the IPC, petitioner is not liable to be granted benefit of the said Scheme. Now a review application has been filed by the applicant/petitioner for reviewing the order dated 02.05.2018 on ground that certain facts could not be brought before this Court at the relevant time, such as, there is a scheme called “Income Declaration Scheme, 2016”, where an assessee can declare his undisclosed assets/income. This cannot be a ground for review. Under Order XLVII Rule 1 of the Code of Civil Procedure, grounds for review are very limited and such grounds are not available with the applicant/petitioner. Decided against the assessee.

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• 2018 (8) TMI 720
  Taxability of income / salary received from outside India - receipt of the sum in the assessee’s NRE account - during that year, the assessee had the status of non-resident u/s 6 of the Income Tax Act, 1961. - The assessee had received the said sum from his two employers in a Non-Resident (external) bank account, commonly referred to NRE account. Held that:- the interpretation be given to sub Section (b) of Section 5(2) of the Act would also apply to Section 5(2)(a) of the Act. The Circular is clarificatory in nature and is applicable for construing the aforesaid provision for the relevant assessment year. In our opinion the authorities under the Income Tax Act did not properly apply the provisions of law to the case of the assessee. We are of the view that the Assessing Officer was wrong in adding the aforesaid sum to the income chargeable to tax of the assessee for the relevant assessment year.

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• 2018 (8) TMI 719
  Disallowance u/s 40(a)(ia) in respect of labour charges and sales commission for non-deduction of tax at source (TDS) - Amount was not outstanding as on 31st March as payable - Held that:- Section 40(a)(ia) covers not only those cases where the amount is payable but also when it is paid. - The Supreme Court has pointed out that Section 194C mandates a person to deduct tax at source not only on the amounts payable but also when the sums are actually paid to the contractor, and any person who does not adhere to such a statutory obligation has to suffer the consequences stipulated in the Act of 1961. The issue stands squarely settled in favour of the Revenue - Decided in favor of Revenue.

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• 2018 (8) TMI 718
  Block Assessment u/s 158BC - exclusion/ reduction of lease rentals from the depreciation offered to tax - undisclosed income - Held that:- the prohibition in Second Proviso to Section 158BC(a) of the Act of filing a revised return of income before the Assessing Officer would not prohibit a Assessee from raising the additional claim before Appellate Authorities - the substantial question of law is answered in favour of the Appellant Assessee.

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• 2018 (8) TMI 717
  Levy of penalty u/s 271(1)(c) - Extension of Period of limitation which has otherwise expired - transferred from one officer to another officer - it was the contention of the department that the period of limitation was to be calculated from 05.10.2005, the date on which the C.I.T. (Central), who had assumed jurisdiction later, had received the order. Held that:- this Court finds that such a situation where the case was transferred to another officer is not included in the situations where limitation can be extended. No explanation has been given by the Tribunal as to how it has applied the provision of Section 275 of the Act to the present case. - the three situations envisaged in Section 275 of the Act clearly do not cover the situation in the present case. Decided in favor of assessee.

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• 2018 (8) TMI 716
  Conduct of the revenue in pursuing and prosecuting its appeals before the High Court - appeal against settled issues - Held that:- we were assured by the Revenue that proper steps would be taken to ensure that the State takes a consistent view and decisions on any issue which are already taken by this Court would be informed to their Advocates who would also be continuously updated of the decisions taken by this Court on the questions of law. This is to ensure that there is consistency in the view taken by this Court. However, it appears that the Revenue has not carried out the assurance which was made to the Court. On the next occasion, we would expect a proper response from the Revenue and explanation as to why assurance given to us earlier that consistent view would be taken by the Revenue is not being followed. It is time, responsibility is fixed and the casual approach of the Revenue in prosecuting its appeals is stopped. We would also request the Additional Solicitor General to assist us on the next date.

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• 2018 (8) TMI 715
  Claim of expenses u/s 37(1) - litigation and settlement expenses - during the legal proceedings, the appellant switched gear and became a lawyer in order to settle the dues of the company and discharge his personal guarantee. - He entered into One Time Settlement with the bankers and paid up the agreed amount - Held that:- The discharge of that liability was claimed by him to be business expenditure in relation to subsequent income generated through legal profession. In our opinion, such claim is clearly inadmissible. The kind of expenditure which a legal professional can legitimately and justly claim is entirely different from the basic expenditure which a commercial entity can claim. Moreover, the commonality sought to be urged, i.e. the persona of the assessee that obscures the fact is that the hat donned by the assessee in the past was of a business entrepreneur whereas he is now a legal professional; crossing of line is impermissible as the law stands today. - Decided against the assessee.

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• 2018 (8) TMI 714
  Compounding of offense u/s 276B - failure to deposit the compounding amount - Failure to deposit the amount of TDS, after collection to the government account - initiation of prosecution proceedings under the provisions of Chapter XVIIB of the Income Tax Act, 1961 - The main grievance of the petitioners is that when there is a genuine dispute about the quantum of compounding fee payable by them, it was not open to the respondents to reject the application for compounding, without first resolving the dispute. Held that:- The amount of compounding fee is statutorily fixed. The question of raising any dispute on the same does not arise. Actually, the dispute with regard to the quantum raised by the petitioners was on the basis of a CBDT Circular - But these guidelines are applicable only to compounding applications filed after 01-01-2015. The application of the petitioners in this case was filed on 26-8-2014. Therefore, the compounding fee was liable to be calculated at the rate of 5%, as per the guidelines existing as on the date of filing of the compounding application. It appears that the compounding fee was stipulated at 5% at the time when the petitioners filed their application for compounding. It was reduced to 3%, after 01-01-2015. Today, the petitioners want to apply the CBDT guidelines to their case, taking the date of acceptance of the application for compounding as the basis. - But the above claim of the petitioners is an argument of convenience. Every proposition of law could prove to be a double edged weapon, but it can never be invoked or condemned depending upon convenience or consequences. Therefore, the 1st respondent was right in applying the guidelines that were in existence as on the date of the filing of the compounding application and the petitioners cannot question the correctness of the same. It is not too late for the petitioners to mend their ways. - the petitioners could be permitted to pay the compounding fee and get the offence compounded. - Decided partly in favor of assessee.

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• 2018 (8) TMI 713
  Rejection of application for registration u/s 10(23C)(vi) - educational university - non-commencement of activity - examination of of application of funds while considering the application for registration - The assessee is formed in pursuance to Special Act of the Legislative Assembly of Odisha. - Held that:- It is a settled position that while collecting the amount applied towards objects under third proviso to section 10(23C)(vi), both the revenue application as well as application in capital field are to be taken into consideration. Once the entire amount applied during the year is taken into consideration, it cannot be held by any stretch of imagination that the application for educational purposes during the year under consideration was less than 85% of income. We agree that the assessee has not violated the provisions of third proviso to section 10(23C)(vi) of the Act. Thus, we find that apart from surmises, conjectures and erroneous inference of fact, no positive reason could be cited by the learned Pr. CCIT to deny the approval under section 10(23C)(vi) of the Act to the assessee University, which was created by the Special Act of the Legislature solely for the purpose of education. Pr. CCIT directed to grant approval u/s.10(23C)(vi) - Decided in favor of assessee.

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• 2018 (8) TMI 712
  Transfer pricing - selection of comparable - determination of arm’s length price - The AO referred the matter to the Transfer Pricing Officer (TPO) to determine the arm’s length price of the international transactions u/s 92CA(3) of the Act. - The TPO also noticed that the arm’s length price of the international transactions representing IT enabled services provided to the AEs was determined by the assessee by applying transactional net margin method (TNMM) and the operating profit to total cost ratio (OP/OC) was taken as the profit level indicator (PLI) in the TNMM analysis. He also noticed that the PLI of the company was arrived at 17.36% on cost whereas the average PLI of the comparables was arrived at 14.13% as per the analysis in the TP documents and that the PLI of the comparable companies had been worked out by adopting weighted averages for the current year and the immediately preceding periods. Held that:- Since, the facts in assessee’s case are similar to the facts involved in the case of [2016 (9) TMI 1392 - ITAT DELHI]. So, respectfully following the said order, we direct the AO to exclude the aforesaid comparable while working out the arm’s length price. Regarding exclusion of certain comparable, decision of DRP sustained. - Decided in favor of assessee and revenue partly.

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• 2018 (8) TMI 711
  Addition u/s 41 - cessation of liability towards sundry creditors - Assessee added the amount towards written off of sundry creditors in the amount of sales and shown the gross profit @6.46% - Held that:- the C.A. who has prepared the Trading A/c for the assessee for assessment year under appeal, has not prepared the accounts property and as such, the Income Tax Authorities are required to be vigilant to see that such type of practice should not have followed in future. The action of the concerned C.A. is wholly in appropriate and we do not approve his conduct in preparing such a Trading Account. The assessee maintained books of account which are audited and the A.O. has not pointed out any specific defect in maintenance of the books of account by the assessee. The book results of the assessee have not been rejected under section 145(3) of the I.T. Act. There was no justification to disbelieve the purchases made by assessee in earlier year. Therefore, there is no reason to make such addition against the assessee on account of loss considering the same as undisclosed income of the assessee. Ultimately, assessee has declared income on account of written off creditors. Therefore, the claim of assessee should not have been rejected by the A.O. No additions - Decided against the revenue.

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• 2018 (8) TMI 710
  Revision u/s 263 - Additions on the basis of printouts taken from the laptop - laptop was recovered from part time accountant - CIT observed that AO has not examined certain issues properly at the time of making the assessment - Held that:- since the issues under consideration was not related to assessment year in question but were related to earlier years, CIT the Ld.Pr.CIT is not permitted to invoke jurisdiction u/s 263 for examination of the issues. Further, where assessing authority had already considered all details mentioned in computation statement which was taken from books of account maintained by assessee, revision was not justified. Additions on the basis of printouts taken from the laptop - The assessee denied ownership of the extracts taken from the laptop stating that the laptop does not belong to their firm at the time of survey itself. - Held that:- The fact that the laptop does not belong to the assessee was not disputed by the AO. The contention of the assessee that the part time accountant maintained the books of accounts of many other customers was also not disputed. During the assessment proceedings, the assessee stated that the assessee has not maintained books of accounts and admitted the income as per section 44AF of the Act. The AO has not brought on record any material to establish that the turnover recorded in the computer extract belonged to the assessee. Since the department has failed to bring any evidence to hold that the printouts of computer related to the business of the assessee, we are unable to uphold the order of the Ld.Pr.CIT on this issue. Regarding non-examination of issues by the AO - the responsibility cast upon the Ld.Pr.CIT to establish that the issues were not examined by the AO. Mere non mentioning or not recording the findings in the assessment order, does not establish that the AO has not examined the issues especially when the material is available to the AO at the time of assessment. Therefore, we hold that assessment order passed by AO is neither erroneous nor prejudicial to the interest of the revenue. Hence, we set aside the order of the Ld.Pr.CIT and allow the appeal of the assesse

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• 2018 (8) TMI 680
  Addition on the ground of unexplained construction and working in progress expenses - profit estimation - no books of accounts and supporting bills/vouchers were maintained by the assessee at the time of search - SC dismissed the revenue appeal both on ground of delay and merit.

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• 2018 (8) TMI 679
  Validity of reopening of assessment - objections by the petitioner against the reopening rejected - Held that:- In our view, the interest of the appellant is adequately protected and, therefore, it is not necessary to interfere with the order of the High Court in exercise of our power under Article 136 of the Constitution. The appeals are accordingly dismissed.

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• 2018 (8) TMI 678
  TDS liability u/s 195 - transfer of immovable property by the non-residents to resident - all the three non-residents have filed their return of income in India for the relevant assessment year declaring nil capital gains from the transfer of immovable property to the assessee - Held that:- In respect of the nonresidents, the deduction of tax at source is more stringent since the person who receives the payment would be leaving the country and the recovery of tax is impossible or remotely possible. There is a clear distinction between the residents and the non residents. That is the reason why section 195(2) allows the assessee to furnish non deduction certificate and the Board has come up with instruction No.2/2014. Proviso to Section 201 also allows exceptions on sums paid to residents in different situations not to treat the assessee default for the principal amount in the specific situations whereas the said concessions are not extended to the nonresidents. AO has rightly held the as assessee in default for non deduction of tax at source u/s 201(1) of the Act - Decided against the assessee. Since the assessees have filed the returns of income, the assessments must be completed u/s 143(3) or have been accepted u/s 143(1) and determined the tax liability. Therefore, we direct the AO/ITO international Taxation to treat the assessee in default to the extent of actual tax liability instead of estimation. Accordingly, the appeal of the assessee is partly allowed.

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• 2018 (8) TMI 677
  Exemption u/s 10B - 100% EOU - splitting/reconstruction of an existing business - principal of consistency - the assessee applied for registration under Software Technology Park of India as 100% EOU in the month of August 2009 for which approval was granted by STPI in the month of September 2009 in favour of assessee . It was submitted that in the month of December 2009, the assessee relocated its unit to another location for which NOC was received from STPI approving relocation of the unit. Hon’ble Karnataka High Court in the case of CIT v. Sasken Communications Tech Ltd.(2011 (8) TMI 613 - KARNATAKA HIGH COURT) has held that deduction u/s. 10B of the 1961 Act shall be allowed in case of shifting of the undertaking from one State to another State with due permissions and after shifting if the undertaking has maintained integrity, identity and continuity. Thus , keeping in view our detailed discussions and reasoning, we hold that keeping in view factual matrix as is emanating from records before us, the deduction shall be allowable to the assessee u/s. 10B of the 1961 Act - Benefit of deduction allowed - Decided in favor of assessee.

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• 2018 (8) TMI 676
  Levy of penalty u/s 271(1)(c) - defective notice issued u/s. 274 - Held that:- when there are two views on the issue, one in the favouring of assessee should be adopted - the notice issued u/s. 274 r.w.s 271 of the Act, placed on record does not specify the charge of offence committed by the assessee viz whether had concealed the particulars of income or had furnished inaccurate particulars of income. Hence the said notice is to be held as defective. No penalty - Decided in favor of assessee.

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• 2018 (8) TMI 675
  Treatment of expenditure and revenue during Construction period - Nature of sale of machines - revenue receipt or capital receipt - determination cost of Capital Work in Progress (Product Development Expenditure (RCS)) - Indirect Expenditure - Overhead expenditure - sale was made of trial/demo machines and the rent was received when the project was in the development stage - assessee is engaged in the development of Machine 2 Machine (M2M) and Register Control System (RCS) and whatever expenses incurred were debited to Capital Work-in-progress including the Project Development Expenses. Held that:- Revenue has not doubted the development of products by the assessee and allowed capitalization of expenses but at the same time the Revenue has chosen to treat the sale of demo machines to the tune of Rs. 59, 20, 849/- and recovery of rent amounting to Rs. 64, 200 as revenue receipt and added the same to the income of the assessee after allowing the expenses of Rs. 14, 75, 553/-. The case of the assessee also finds support from the Guidance Notes issued by the Institute of Chartered Accountants of India on treatment of expenditure during construction period, which provides that if any revenue is realized during the trial run or product development stage, the same should be set off against the expenditure incurred in connection with the said project/products. - No addition - Decided in favor of assessee. Disallowance of certain sum paid treating the expenses as relatable to Capital Work-in-progress - Held that:- the assessee has explained with reasons the apportionment of expenses into revenue and capital account in which no defects or deficiencies were pointed out. After perusing the said reply we certainly feel that the apportionment of expenses were made correctly. Moreover there is no materials brought before us by the revenue to take a view supporting the order of CIT(A). The Assessing Officer has also treated the expenditure as capital in nature without giving any reasons which is highly subjective and whimsical. The assessee has rightly apportioned the expenses depending upon the nature and purpose of expenses with adequate reasoning. - Decided in favor of assessee.

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• 2018 (8) TMI 674
  Benefit of DTAA - double taxation - Validity of assessment order passed u/s 143(3) r.w.s. 144C - Jurisdiction u/s 172(4) - failure to communicate had server draft assessment order - Held that:- Learned counsel for the assessee has raised certain fundamental legal and factual issues, particularly with respect to double non taxation and the scheme of the India Singapore DTAA, which have neither been examined at the stage of the authorities below nor learned Departmental Representative is in a position to offer much assistance on the same in the absence of discussions thereon by the authorities below. Held that:- In the light of the above discussions, bearing in mind entirety of the case and following the above observations of this Tribunal in the case of the LR2 Management K/S (2015 (11) TMI 274 - ITAT RAJKOT), we deem it fit and proper to remit these matters to the file of the Assessing Officer for framing fresh assessment under section 172(4). - Matter remanded back.

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• 2018 (8) TMI 673
  Levy of penalty u/s 271(1)(c) - defective notice - concealment of income or furnishings of inaccurate particulars - During the assessment proceedings, AO has made the addition by bifurcating the capital gain into capital gain and business income and thereafter recomputed the capital gain on the basis of the cost of acquisition adopted by the AO. The AO has also disallowed the claim of deduction U/s 80C of the Act of Rs. 16,000/- for want of required evidences. Held that:- It is pertinent to note that in the show cause notice, the Assessing Officer has mentioned the charge as the assessee furnished inaccurate particulars of income or concealed the particulars of income whereas in the order passed U/s 271(1)(c), the Assessing Officer has stated that the assessee has furnished inaccurate particulars of income and concealed his income, therefore, the charge in the show cause notice is not certain whereas the levy of penalty in the impugned order is for both the limbs which is inconsistent with the charge as mentioned in the show cause notice. The findings of the Assessing Officer in the order passed U/s 271(1)(c) holding the assessee guilty of charge of furnishing inaccurate particulars of income and concealment of income is also contrary to the facts of the case. This action of the Assessing Officer bifurcating is based on the premises that the development work on the land and carving out of plots amount to converting the capital asset into stock in trade. Therefore, it is not a case of suppression of particulars or details of income but it is only different of view on the matter before the Assessing Officer. Hence it is not a case of concealment of particulars of income but at the most can be a case of furnishing inaccurate particulars of income. The claim of deduction U/s 80C of the Act regarding the tuition fee and LIC premium is also not a bogus claim and disallowance of same for want of payment receipt can only be considered as furnishing the inaccurate particulars of income but not as concealment of income when the fact regarding the children of assessee studying and the assessee is having LIC policy is not found to be false. Levy of penalty deleted - Decided in favor of assessee.

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• 2018 (8) TMI 672
  Levy of penalty u/s 271(1)(c) - assessment u/s 153A - assessee withdrew the claim of deduction u/s. 54F of the Act during the course of assessment proceedings conducted u/s 153A r.w.s. 143(2)/143(3) of the 1961 Act, which ultimately led to the additions being made in the assessment order - Held that:- Despite assessee offering an explanation that it was due to bonafide reasons as detailed below which enabled the assessee to have belief that assessee was entitled to claim of deduction u/s. 54F of the 1961 Act , none of the authorities below have verified the said contentions on the touchstone of accuracy of the said claim on facts as well on law. None of the authorities have gone into deliberations as to the merit of the claim of the assessee as to bonafide explanation and reasonable cause both on merits and on law as no findings/conclusions are amenable from the orders of the authorities below. The assessee is directed to produce all necessary evidences to prove that the averments made by it are correct to come to conclusion/belief that the assessee was entitled for deduction u/s 54F of the 1961 Act and it constituted bonafide explanation and reasonable cause to take it out of the penal provisions as are contained in Section 271(1)(c) of the 1961 Act read with Explanation 1. - Matter remanded back - appeal of the assessee is allowed for statistical purposes.

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• 2018 (8) TMI 671
  Disallowance u/s 14A r.w.r 8D - expenditure towards exempted income i.e. Dividend income - revenue contended that assessee cannot earn dividend income without systematic management and that dividend income can be earned by incurring no or nominal expenditure - Assessee contended that it has not received any dividend or exempted income during the relevant year - Held that:- The learned CIT(A) has given relief to the assessee based upon the proposition that if no exempt income has been received during the relevant year, no disallowance can be made u/s. 14A of the Act. If no exempt income is received during the previous year relevant to the impugned assessment year, no disallowance of expenditure u/s 14A of the Act of 1961 is warranted. - Decided against the revenue.

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• 2018 (8) TMI 670
  Additions on account of expenses for low recovery of chromium - AO observed that, an arrangement was made with the assessee company to reduce its taxable income - Held that:- The Assessing Officer has doubted the deduction claimed on the ground that the assessee is a sister concern of Tata Steel Limited and according to him, the agreement entered into with the assessee company was a ploy to reduce the income of the assessee. It is trite law that suspicion howsoever grave cannot takes place of proof. The Hon’ble Supreme Court in [1954 (10) TMI 12 - SUPREME COURT] has held that “As regards the second contention, we are in entire agreement with the learned Solicitor-General when he says that the Income Tax Officer is not fettered by technical rules of evidence and pleadings, and that he is entitled to act on material which may not be accepted as evidence in a Court of law, but there the agreement ends; because it is equally clear that in making the assessment under sub-section (3) of section 23 of the Act, the Income Tax Officer is not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all. There must be something more than bare suspicion to support the assessment under section 23(3). The rule of law on this subject has, in our opinion, been fairly and rightly stated by the Lahore High Court in the case of Seth Gurmukh Singh vs. CIT” There is no material brought on record by the revenue to show that the agreement between the assessee and M/s. Tata Steel Limited for manufacture of high carbon ferro chrome is sham. - No disallowance can be made - Decided in favor of assessee.

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• 2018 (8) TMI 669
  Assessment u/s 153C - Deemed dividend u/s 2(22)(e) - additions account of unexplained credit - claim of exemption u/s 10(38) towards long term capital gains from sale of shares - The issue involved in the cross objections is that where the addition made is not based on any incriminating material found during search, such addition made u/s 153C of the IT Act is not legally sustainable. - Held that:- Contentions of the assessee found to be valid - No additions - Decided against the revenue.

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• 2018 (8) TMI 668
  Additions on account of F & O (Future & Options) loss - loss on derivatives - NSE reported that no trading were found for the combination of member and client code during the period from April 01, 2009 to March, 31, 2010 in Future & Options segment” - Held that:- The said transactions have been duly reflected in the financial account in the books of broker of M/s. SSPL. Due to off market transaction, the assesse did not enter into the transaction and the broker of SSPL did not inform the NSE and in support of this, filed ledger account of assesse and records of M/s. SSPL showing the 1) Order No. 2) Date & 3) Trading Time etc. The CIT-A examined the books of account, ledger account of assesse and records of broker of M/s. SSPL and found satisfied that the transaction in respect of share i. e order date, trading and time etc were recorded. - No additions - Decided against the revenue.

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• 2018 (8) TMI 667
  Levy of penalty u/s 271(1)(c) - validity of notice issued u/s 274 - Additions were made u/s 68 on account of sundry deposits - Held that:- In the facts of the present case, undisputedly, the notice issued under section 274 read with section 271(1)(c) doesn’t specify the exact charge against the assessee as to whether it relates to concealing the particulars of income or furnishing inaccurate particulars of income. The factum of non- striking off of the irrelevant clause in the notice issued under section 274 read with section 271(1)(c) is hereby held as reflective of non- application of mind by the AO, the penalty imposed U/s 271(1)(c) is deleted. - Decided in favor of assessee.

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• 2018 (8) TMI 666
  Additions u/s 68 - genuineness of creditors - Additions solely on account of non service/ reply of notice sent to them u/s 133(6) and the report of the Inspector - It is the contention of the ld AR that various documents in support of the purchase transactions were duly submitted during the course of assessment proceedings were not considered by the AO and even during the appellate proceedings, the ld CIT(A) has not taken cognizance of the said documents. Held that:- There is no finding which has been recorded by the lower authorities examining these documents so submitted by the assessee in support of his purchase transactions. Further, we note that there seems to be some confusion on the correct address of these two concerns and their proprietors and as a result, the notices issued by the AO u/s 133(6) were not complied with and even the Inspector could not locate their business premises. In the entirety of facts and circumstances of the case, we deem it appropriate that the matter is remanded back to the file of the AO to examine the same afresh, after providing reasonable opportunity to the assessee. - the appeal filed by the assessee is allowed for statistical purposes.

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• 2018 (8) TMI 665
  Assessment u/s 115BBE - Additions u/s 68 - unexplained cash credit - genuineness of commission income - AO denied the current year loss will not be set off against income assessed u/s 115BBE - Held that:- By virtue an amendment has been brought in by the Finance Act, 2016 in Section 115BBE(2) of the IT Act, the words “or set off of any loss” were inserted w.e.f. 01.04.2017. The said amendment has been made w.e.f. assessment year 2017-18 as also clarified by the CBDT Circular No. 3/2017 dated 20-01-2017. In the instant case, it is not disputed by the Revenue that the assessee has current year business losses including current year depreciation excluding a part of the business income declared as commission income which has been reclassified by the Assessing Officer and brought to tax under the head “income from other sources”. In our view, the assessee is eligible to claim set off of current year business loss including current year depreciation against current year income assessed under the head “income from other sources” under section 71 of the Act. The amendment brought by the Finance Act, 2016 in section 115BBE(2) is effective from assessment year 2017-18 and is not applicable for the impugned assessment year. Decided partly in favor of assessee.

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• 2018 (8) TMI 664
  Revision u/s 263 - Revenue Recognition - valuation of stock - an order erroneous in as much as it is prejudicial to the interests of the revenue - The assessee duly placed the clarification in the form of letter dated 14.7.2015 from a chartered accountant along with the reply to section 154 notice before the ld AO stating that there was a clerical typing error in the notes on accounts point no. 2.6. “Revenue Recognition”. Held that:- There is no dispute that the TCS collected by the assessee from the buyer of liquor from the assessee, had been duly remitted to the account of the Central Government by the assessee. Hence we have no hesitation in holding that there is absolutely no error committed either by the assessee with regard to TCS, sales tax and excise duty or by the ld AO. Hence the order of the ld AO cannot be treated as erroneous warranting revisionary jurisdiction u/s 263 of the Act. Regarding valuation of stock - Held that:- there is neither a debit towards excise duty in the profit and loss account ( in respect of goods lying in closing stock) for consequential inclusion of the same in the valuation of closing stock as per section 145A of the Act. Hence we hold that there is no violation of section 145A of the Act. All these details were duly available before the ld AO himself which has been duly appreciated by the ld AO while framing the assessment by not making any addition towards the same. The order of the ld AO is neither erroneous nor prejudicial to the interests of the revenue warranting revisionary jurisdiction u/s 263 of the Act. - Decided in favor of assessee.

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• 2018 (8) TMI 663
  Revision u/s 263 - claim of weighted deduction u/s 35(2AB) - CIT observed that the assessee did not submit any details in Form 3CM and 3CL report. Further, as per clause 15 of the 3CD, Auditor has not certified any admissible deduction u/s 35(2AB) - Held that:- It is to be admitted that the A.O. has enquired during the assessment proceedings about the recognition of R & D unit and claim at 200% as per the provisions. Assessee had filed necessary expenditure details and recognition of the R & D unit by DSIR upto 31.03.2015. Thus the finding of Ld CIT that A.O. has not enquired is not factually correct as Form 3CM is on record (even though not stated as 3CM but a registration by DSIR as prescribed). We are satisfied that the A.O. has correctly allowed the deduction and there is no “error” in the order passed by A.O. u/s 143(3). Once a research facility is approved, entire expenditure incurred on Department of R & D has to be allowed weighted deduction as provided u/s 35(2AB). Filing of Form 3CL by assessee does not arise. - Revision order quashed - Decided in favor of assessee.

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• 2018 (8) TMI 662
  Nature of sale of land - adventure in the nature of trade or not - Liable to be taxed as capital gain or as business profit - Exemption u/s 54F - genuineness of expenditure on land development expenditure - Held that:- It is not in dispute that assessee purchased the land in his own name which is proved by purchase deed executed in his favour. There were no material available on record to show that land was acquired as stock in trade. It was a solitary transaction entered into by the assessee with an intention of earning profit on accretion. The assessee is not a dealer in land. The assessee entered into the solitary transaction of purchase of land which could not be treated as subject matter of trading. The land was not acquired for the purpose of dealing in land. The length of period of ownership was from 1995-97 to 2005 which speaks that assessee purchased the property to make investment in capital asset. The very fact that each co-owner separately purchases their lands but only combined for the purpose of sale, does not show any element of carrying out any business for joint profits. The expenditure on acquisition of land, its improvements were separately incurred by respective owners and sale proceeds were also separately received by respective co-owners, therefore, it is a case of capital gains only and assessee is entitled for exemption under section 54F of the I.T. Act. Order of CIT(A) sustained - Decided against the revenue.

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• Customs

• 2018 (8) TMI 709
  Benefit of Exemption N/N. 21/2002-Cus dated 01.03.2002 - import of 10,800 boxes declared as plastic boxes - denial of benefit on the ground that the appellants have not fulfilled the conditions of the Notification and goods imported by them are not covered under the Notification - Whether the imported product is covered under the Notification? - Held that:- Notification does not permit the import of ‘tag pins’ or ‘loops’. Any Notification giving the benefit of exemption is required to be construed strictly and the person invoking the exemption provision to relieve him of the tax imposed establish that he has exempted by the said Notification as held by the Hon’ble Supreme Court in the case of M/s. Perfect Machine Tools Vs. CC [1997 (10) TMI 66 - SUPREME COURT OF INDIA] - the appellants did not import ‘tags’. Items imported by them ‘tag loops or pins’ are not eligible for exemption under Sl. No. 140 of the N/N. 21/2002-Cus Whether the importers are qualified to be bonafide exporters? - Held that:- The show-cause notice or the Order-in-Original or Order-in-Appeal have not examined the claim of the appellants that they are bona fide exporters in a proper perspective. No finding has been given as to whether the appellants have not exported at all even in the past contrary to their claims - however, as the goods in question are not eligible for exemption we do not intend to go further into the aspect whether the appellants were bona fide exporters or otherwise. It is a settled law that there is no estoppel in matters relate to taxes. Only due to the reason that such imports were permitted in previous years, the same cannot be continued once the Department has come to know about the wrong practice. Appeal allowed in part.

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• 2018 (8) TMI 708
  Refund of SAD - rejection on the ground that the appellant was unable to establish that the incidence of duty had not been passed on to their customers - Held that:- It is seen from the tax invoice that no portion of the price recovered from the customers was stated to include special additional duty collected as countervailing duty at the time of import. It is also clear that there is a Chartered Accountant's certificate to the effect that the incidence of duty has not been passed on. It is but natural that proceeds of sale would be reflected in the books as receipts earned from sale. The impugned order has erred in upholding the rejection of the refund claim without adequate justification - appeal allowed - decided in favor of appellant.

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• Service Tax

• 2018 (8) TMI 704
  Extended period of limitation - Section 73 of the Finance Act, 1994 - the fact of rendering of taxable service by the Respondent came to the notice of the Appellant while conducting Audit of the books and accounts of a third party - Held that:- The issue as to what would amount to wilful mis-statement or supression of fact has been dealt with by the Supreme Court in Uniworth Textiles Ltd. v CCE, Raipur [2013 (1) TMI 616 - SUPREME COURT] wherein it has been held that mere non payment of duties is not equivalent to collusion or wilful mis-statement or supression of facts, otherwise there would be no situation for which ordinary limitation period would apply. Inadvertent non-payment is to be dealt within the normal limitation period and the burden is on Revenue to prove allegation of wilful mis-statement. In the case at hand also, the CSIDC is an entity under the control of the Government of Chhattisgarh. It does not belong to an individual who would evade tax to corner profit in its business activity - The explanation putforth by the CSIDC that it was under bona fide impression that being an entity under the control of Government it was not liable to pay service tax appears to be reasonable explanation, therefore, mere non registration under Section 65 or non payment of service tax on the maintenance charges collected from industries would not amount to wilful supression or mis-statement of fact, hence, the CESTAT has rightly held that the present is a case where the Revenue is not entitled to invoke the extended period of limitation - decided against Revenue. Maintainability of the cross-objection filed by the respondent - appeal to High Court against an order passed in appeal by the Appellate Tribunal - Section 35G(9) of the Act, 1944 - Held that:- In appeal under Section 35G of the Act, 1944 the provisions of the CPC relating to appeals to the High Court shall apply, therefore, by necessary consequence the provisions contained in Order 41 Rule 22 of the CPC would also apply because the said provision otherwise applies to appeals to the High Court under the CPC. - cross-objection filed by the respondent is maintainable. Appeal dismissed - decided against appellant.

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• 2018 (8) TMI 703
  CENVAT Credit - various input services - Travel Expenses - Transport of Household goods - Insurance - Rent. Travel expenses - Held that:- The credit is allowed on this service - credit allowed. Transport of Household goods - Held that:- Ld. Consultant is not pressing the above issue and requests that the same may be dismissed. Insurance Service - Employees’ Group Mediclaim and Personal Accident Policy - Assets of the company, which include furniture, leasehold assets, office equipment, plant and machinery, computers, servers, electrical equipment, laptops, etc., against fire, burglary, peril, fidelity, cash in transit period - Held that:- I am unable to accede to the contentions of the Ld. DR for the reason that it is only an interim order based on the facts of that particular case which do not possess any binding value - the denial by the lower authorities is bad - credit allowed. Rental service - Held that:- The Bangalore Bench of the Tribunal in the case of M/s. Microsoft Global Services Centre (India) Pvt. Ltd. Vs. Commissioner of Central Excise, Customs and Service Tax, Bangalore-I [2017 (12) TMI 1496 - CESTAT BANGALORE] has held that All the services have been held to be input service in various decisions relied upon by the appellant and the details of the invoices have also been given along with the appeal memorandum - credit allowed. Appeal disposed off.

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• 2018 (8) TMI 702
  Banking and Other Financial Services - dormant account charges - It appeared to the department that such charges would be required to be part of the gross amount of value of taxable service for purposes of discharging service tax liability - Held that:- There is no service being provided to the customer in the course of levying such charges. The customer in any case was not operating his account for quite some time, only for which reason the account has been declared dormant or inoperative by the bank. By levying “dormant account charges’ such account holders are not getting any additional services or benefits that they were not getting earlier. This being so, levy of such charges are nothing but a penalty imposed on such account holders for keeping their account inoperative. Banks need a constant rolling of money and deposits, and inoperative or dormant account will not help this purpose. The dormant account charges are therefore nothing but a charge in the nature of penalty. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 701
  Scope of SCN - Held that:- The order passed by the Commissioner in Order-in-Review in terms of Section 84 of the Finance Act, 1994, clearly transgressed the scope of the initial show-cause notice. The initial show-cause notice demanded service tax under the category of C & F Agents. While passing the Review order, the Commissioner has held that the services rendered by the appellants fall under ‘Business Auxiliary Service’. For this reason itself, the impugned order is fit to be set aside. The impugned order does not survive on merits either. The learned Commissioner while holding the service to be ‘Business Auxiliary Service’ has held that exemption as per N/N. 13/2003-ST is not applicable. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 700
  Classification of services - assessee herein has a contract with M/s Ushodaya Enterprises Ltd., under which they collected newspaper bundled and distributed them to various agents for a consideration - whether to be classified under Business Auxiliary Service or under Clearing and Forwarding services - Held that:- As observed by the First Appellate Authority in his Order No. 10/2009 dated 26.02.2009 at the time show cause notice was issued, the Department itself is not sure under which head the appellant is liable for service tax. For this reason, we find that these appeals need to be decided in favour of the assessee. Before issuance of show cause notice, the Department could have collected necessary information and come to a conclusion, as to the classification of services rendered and issued a more specific show cause notice which would have been sustainable. Appeal dismissed - decided against Revenue.

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• 2018 (8) TMI 699
  Banking and other Financial Services - Benefit of N/N. 6/2006- ST dated 01.03.2006 - appellant, agent of RBI - It was contended by the Department that CBEC vide its Circular No. 356/53/2007 TRU has clarified that service is leviable on the taxable services provided irrespective of status of the consumer of service - Held that:- The appellants are working as an agent of RBI in the discharge of sovereign functions, therefore, whatever exemption is applicable to RBI, that should also be applicable to the appellants who are working as an agent in the discharge of statutory/sovereign functions. Issue is squarely covered by the decision in the case of M/S. CANARA BANK VERSUS CST, BANGALORE [2012 (6) TMI 274 - CESTAT, AHMEDABAD], where it was held that Exemption to the principal would be available to the agent also. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 698
  Business Auxiliary Services - It has been case of the Department that the appellant was not paying Service Tax on the commission received by him from M/s Amway - Held that:- The matter is no longer re-intergra as this Tribunal in the case of MR. CHARANJEET SINGH KHANUJA AND OTHERS VERSUS CST, INDORE/LUCKNOW/JAIPUR/LUDHIANA AND OTHERS [2015 (6) TMI 585 - CESTAT NEW DELHI] has already laid down the principles with regard to the facts as involved in the present appeal and numerous appeals on the same issue were remanded back to the Original Authorities for deciding the matter afresh. Matter remanded back to the Original Adjudicating Authority to decide the issue afresh in view of the findings of this Tribunal in the above mentioned order. Appeal allowed by way of remand.

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• 2018 (8) TMI 697
  CENVAT Credit - RCC pipe RCC Main pillar HR Sheet Conical Manhole, Cement HRC sheet etc used in fabrication of Structural support - Held that:- The issue is decided in favor of Maruti Suzuki Ltd. Vs. CCE, Delhi-III [2009 (8) TMI 14 - SUPREME COURT], where it was held that assessee is entitled to credit on the eligible inputs utilized in the generation of electricity to the extent to which they are using the produced electricity within their factory (for captive consumption) - credit allowed. Advertising agency services - The case of appellant is that since the appellant is not a advertising agency and has not rendered the advertisement agency service which otherwise has been rendered by M/s. Prime Site and M/s. Grphis Ads, neither he is the sub contractor of both the said companies as such appellant is not liable to pay the service tax on that account - Held that:- The appellant contracted with both the advertising agency to arrange or prepare or design the advertisements for their clients to be approached by them but for said advertisement to be displayed by the appellant at the sites to be constructed by him under the agreement with the MCD in his favour. Thus those two companies are rather the sub contractors of the appellant - the appellant has taken the plea that those payments are made in lieu of renting the property to both the advertising agency companies to display the advertisements of their clients but the perusal of the invoice of appellant falsifies the said submission as those amounts are mentioned to have been received for displaying the advertisements - The argument of the appellant to that effect is, therefore not sustainable. Levy of the proportionate interest and the penalties - Held that:- It is an apparent and admitted fact that the appellant has discharged his liability for the period 2007-2008 and 2010-11 qua the amount received for rendering the services of renting of immovable property but only after the issuance off the show cause notice to him that too without the payment of interest. From Section 75, of the Act payment of interest is a mandate in case there is delay in discharge of the tax liability. In view of said settled provision and the apparent and admitted delay on part of the appellant we hold that there is not infirmity in confirming the demand of the interest from the appellant - the proportionate penalties have been confirmed. Appeal dismissed - decided against appellant.

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• 2018 (8) TMI 696
  Rectification of mistake - Time limitation - the ROM rejected on the ground that the application of the Revenue is hopelessly time barred - Held that:- Admittedly, this ROM has been filed beyond the period of six months or 180 days from the date of receipt of the final order by Revenue at Alwar Commissionerate on 9.6.2017. Even if the time taken by the Revenue before the Hon'ble High Court is excluded i.e. the period from 4.12.2017 to 21.02.18, still the present ROM is filed beyond the period of 180 days. Admittedly, the ROM application is filed beyond the period of limitation - ROM Application dismissed.

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• 2018 (8) TMI 695
  Refund of accumulated CENVAT Credit - Rule 5 of Cenvat Credit Rules, 2004 read with notification - refund rejected on the ground that the activity of the appellant does not amount to export of services - Held that:- The activity of the appellant amounts to export of service - matter remanded back to the file of the Assistant Commissioner /Deputy Commissioner for consideration of their refund in accordance with law - appeal allowed by way of remand.

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• 2018 (8) TMI 694
  Condonation of delay in filing appeal - Held that:- It cannot be said that any misstatement is made in the COD. The petition also reveal that the management took immediate action upon the fact of such order in appeal was brought to its notice by their Chartered Accountant. When substantial justice and technical consideration are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay and there is no presumption that delay was occasioned deliberately. Delay of 38 days in filing appeal before this Tribunal is condoned - appeal is admitted for hearing.

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• 2018 (8) TMI 693
  Extended period of limitation - Commercial Training or Coaching Services - Held that:- No case for suppression and/or malafide conduct is made out against the Appellants. Accordingly, the demand for the extended period is not sustainable and also that the Appellant is not liable to pay Service Tax for the period prior to 27.02.2010. Penalty u/s 78 set aside - As far as penalty imposed under Section 76 is concerned, the matter remanded to the adjudicating authority to recalculate the demand for the period after 27.02.2010 and also to recalculate the penalty under Section 76 - the penalty imposed under Section 77 is reduced to Rs. 5,000/-. Appeal allowed in part.

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• 2018 (8) TMI 692
  Cleaning services - appellant providing cleaning of coaches services to Indian Railways for a period with effect from 1.4.2011 to 31.3.2011 - Held that:- Since the period in dispute is prior to 2012 i.e. prior to incorporation of the concept of negative list when onwards these services have been covered under Section 65(105)(zzzd) and made taxable. Hence, the definition of cleaning service as was existing prior to year 2012, is relevant for the present adjudication. A mere perusal of the definition and interpretation thereof makes it clear that it is not merely an object or premise but the object or premise of commercial or industrial building or premises thereof. No doubt, railways is a commercial concern but it is already been settled that the coaches are rolling stock of railways and hence, they were not covered strictly under the definition in pre-negative list era. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 691
  CENVAT Credit - common input services used in trading activity - Department is of the view that the appellant have wrongly utilised Cenvat Credit of input services pertaining to services used in trading of automobile cars - Rule 6 (3a) of Cenvat Credit Rules, 2004. Held that:- It is a matter of record that the appellant has been engaged in trading of automobile cars along with servicing of the cars and other automobile from the same premises and they have availed Cenvat Credit of various common input services which has been utilised towards both taxable services as well as for trading activity - trading activity abinitio cannot be considered as a “service” because the trading in the cars only involves transfer of property on financial consideration from the appellant dealer to various buyers of automobile cars. The Cenvat Credit facility of input services is only available to the output services rendered by any assessee and thus the Cenvat Credit of input services used in Trading activity is not allowable as per Cenvat Credit Rules, 2004. The appellant are not entitled for Cenvat Credit of common input services taken for trading of cars - Appeal dismissed - decided against appellant.

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• 2018 (8) TMI 690
  Condonation of delay in filing appeal - difference of opinion - Held that:- There was admitted delay of 79 days inclusive of 30 days condonable period available with the Commissioner but the ground cited by the appellant that the person in charge of Excise matter left the job and the matter could not go to the commercial head of the company who was out of station in connection with audit in Chennai plant appear to be reasonable. The delay of 79 days is condoned and the order passed by the Commissioner (Appeals) is set aside. The matter is remanded back to the Commissioner (Appeals) for fresh adjudication.

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• Central Excise

• 2018 (8) TMI 689
  Reversal of CENVAT Credit - credit reversed on the input removed as such, is lesser than the CENVAT Credit taken on such inputs - Held that:- It cannot be disputed that the goods were removed only to the sister unit of the appellant. In a plethora of decisions, higher appellate forums have consistently held that in such situations there would be revenue neutrality, since even if the credit had been reversed or the duty paid, the sister unit would well have been able to take the same amount as input credit. The ingredients attracting imposition of penalty under Section 11AC of the Act are not present in this case - the imposition of equal penalty of Rs. 2,85,27,320/- under Rule 15 of the CENVAT Credit Rules, 2004 read with Section 11AC of the Act, cannot sustain and requires to be set aside. As this submission only relates to the method and manner of calculation of interest, the matter is remanded to the adjudicating authority only for the limited purpose of ascertaining the correctness and interest worked out after taking the contentions of the appellants into consideration - appeal allowed by way of remand.

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• 2018 (8) TMI 688
  MODVAT/CENVAT credit - Department contended that they have cleared the waste and scrap of inputs and capital goods and rejected/damaged inputs on which they had availed CENVAT credit and have not reversed the credit availed on such inputs while clearing such wastes and scraps from the factory in contravention of CENVAT Credit Rules, 2004 - Held that:- The Department has not adduced any evidence to show that the credit has been availed by the appellants. Having alleged that the appellants have availed CENVAT credit on the items removed as waste and scrap, the onus is on the department to prove that such credit was availed by the appellants. This burden has not at all been discharged by the department. On perusal of the documents, the items cleared by the appellants appear to be in guise rubber, washer, scrap of MS angles, plastic scrap, mixed metals scrap, CS pipe cut pieces, etc. When the appellants have given elaborate list of items cleared by them as alleged in the show-cause notice, it was incumbent upon the department to verify whether credit was availed or not. There are no reasons to disbelieve the claim of the appellants that they have not availed CENVAT credit. The appellants being public sector undertaking, a fact which is not disputed by the department, it cannot be alleged that they have a mala fide intention in availing the CENVAT credit and have removed the capital goods or inputs in the guise of waste and scrap. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 687
  Rectification of mistake - applicant has stated that the submissions made by it in the grounds of appeal and the relied upon decisions have not been considered - Held that:- The submissions of the appellant and relied upon decisions have not been considered by the Tribunal - In the interest of justice, the appeals can be relisted for consideration of the submissions made by the applicant - ROM application allowed.

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• 2018 (8) TMI 686
  SSI Exemption - clubbing of Clearances - common Directors - it has been argued that the appellant M/s Pharma Chem Services and M/s Sanj Pharma Engineering Pvt. Ltd are both separate legal entity and they cannot be treated as a one person for the purpose of SSI exemption - Difference of opinion. Held that:- There is difference of opinion on the matter: Whether the appeals are to be rejected as held by Learned Member (Technical) or the same are to be allowed as held by Learned Member (Judicial)?

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• 2018 (8) TMI 685
  Rectification of Mistake - The applicant contended that the issue raised before the Tribunal regarding admissibility of the disputed goods for the purpose of Cenvat benefit have not been addressed, while passing the order dated 23.10.2017 - Held that:- Since the submissions made by the appellant were adequately dealt with by the Tribunal vide order dated 23.10.2017, it cannot be said that there is a mistake apparent on the face of such order which can be rectified - ROM application dismissed.

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• 2018 (8) TMI 684
  Rectification of Mistake - case of applicant is that since the Tribunal has not considered the instruction/circular issued by the CBEC in respect of the litigation policy and allowed the appeal of the Revenue on merits, the order dated 17.11.2017 should be recalled and should be decided in terms of the litigation policy issued by the CBEC - Held that:- Since the entire order was dictated in presence of both the sides, it cannot be said that some of the arguments placed by the respondent therein was not considered by the Tribunal - Further, on perusal of the instructions dated 17.12.2015 by the CBEC, it is found that vide paragraph 2 therein, it has been clarified that the monetary limit of Rs. 10 lakhs would not to be considered in case of refund issue and of recurring in nature. Both sides agree that on identical set of facts, proceedings have already been initiated by the department in rejecting the refund application filed by the applicant for earlier period. ROM application dismissed.

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• 2018 (8) TMI 683
  Rectification of Mistake - Held that:- In the former order, the Tribunal has recorded different observations, than that observed in the second order. There is an apparent mistake in the order dated 20.12.2017 passed by this Tribunal, which can be rectified in the interest of justice. The ROM application filed by the applicant is considered and for appreciating the issue involved in this case, the appeal is relisted for final hearing on 27th July, 2018.

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• 2018 (8) TMI 682
  CENVAT Credit - fake invoices - non supply of material - Held that:- In the same investigation in another case of Neosym Industry Ltd. and others by order No. A/86911-86914/16/SMB dated 01.04.2016 wherein M/s Wind Industries was also made a noticee, this tribunal while disposing the appeal remanded the matter to the adjudicating authority - the Ld. Bench has found that the case of the Wind Industries is not yet finalised, and the matter was remanded. Since there is a common investigation in the case of Neosym Industry Ltd. and Others including the Wind Industry as well as the present case, I have no option except to follow the finding of the Ld. Coordinate bench of this Tribunal - appeal allowed by way of remand.

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• CST, VAT & Sales Tax

• 2018 (8) TMI 681
  Stay application - condonation of delay in filing appeal - Held that:- The Special Leave Petitions are dismissed on the ground of delay, leaving the question of law open.

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• Indian Laws

• 2018 (8) TMI 707
  Dishonor of Cheque - presumption to debts / liability - original accused has been acquitted by the trial Court for offence punishable under Section 138 of the Negotiable Instruments Act, 1881 - trial court found that although the respondent had not adduced any direct evidence, the material that came on record in cross-examination of the appellant was sufficient to support the defence of the respondent. Held that:- the appellant was clearly able to establish existence of transactions between it and the respondent and further that the cheque in question was indeed issued in respect of purchase of items reflected in the bills. There was no dispute about the fact that the signature on the cheque was that of the respondent. Therefore, the presumption under Sections 118 and 139 of the aforesaid Act operated in full force against the respondent. It has also come on record that the respondent neither sent any reply to the notice issued by the appellant on dischonour of the cheque, nor did he file any submissions or reply to the complaint filed by the appellant. The respondent also did not enter into the witness box to adduce any direct evidence to dispute the case sought to be made out by the appellant before the trial Court. It is clear that the appellant was able to prove its case beyond reasonable doubt against the respondent and that the trial Court committed an error in acquitting the respondent. - the respondent is convicted for offfence punishable under Section 138 of the aforesaid Act.

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• 2018 (8) TMI 706
  Dishonor of cheque - Section 138 of the Negotiable Instruments Act, 1881 - case of petitioner is that the trial Court had taken cognizance of the complaint without taking recourse to inquiry under Section 202 of the Code of Criminal Procedure - Held that:- In the case of Dr.(Mrs.) Rajul Ketan Raj [2016 (2) TMI 1140 - BOMBAY HIGH COURT], this Court after taking into consideration several decisions, has taken a view that it is not mandatory to hold the inquiry contemplated under Section 202 of Cr.P.C. The object of Section 200 of Criminal Procedure Code is to test whether the complaint makes out sufficient ground for the purpose of issuing process. The amended Sub-section (1) of Section 202 of Cr.P.C. makes it obligatory upon Magistrate that before summoning the accused residing beyond his jurisdiction he shall enquire into the case himself or direct investigation to be made by a police officer or such other person as he thinks fit, for finding out whether or not there is sufficient ground to proceed against the accused. Upon considering and analysing the object and ambit of Section 138 of N.I. Act vis-a-viz the objection of Sub-section (1) of Section 202 of Cr.P.C., the Court had observed that the provision may not apply to the provisions under Section 138 of Negotiable Instruments Act, and, merely because accused reside outside the jurisdiction of the Court, in each and every case it is not necessary for the Court to postpone the issue of process. In the present case, the trial Court has issued process on the basis of averment in the complaint, documents therein and the verification statement which do not require interference - petition is without any merit and is dismissed.

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• 2018 (8) TMI 705
  Professional misconduct - Disciplinary Proceedings against the Chartered Accountant (member of ICAI) - CIT (A) has reviewed all statements recorded, documents seized and the statement of the Appellant before the Income Tax and found the Appellant involved in arranging the bogus bills through bogus concerns promoted by him and charged commission for that. - Board of Discipline held him guilty under Clause (10) of Part-I and Clause (2) of Part-IV of the First Schedule to the Chartered Accountants Act, 1949 and awarded punishment of removal of name of the Appellant from Register of Members for a period of one month besides a fine of Rs. 50,000/- (Rupees Fifty Thousand Only) Held that:- Pursuantly, we have noted that all Cheque books of the said bogus concerns were lying with the Appellant and the said bogus bills were made on the computer of the Appellant. We also find that there is admission of Appellant himself before the Income Tax Department that he arranged bogus bills for commission. The said statement remained uncontroverted till now. The learned CIT (A) upheld the addition of said commission in the hands of the Appellant. No order of Tribunal was produced before us to reverse the same but it was said that the appeal is pending. Even copy of appeal was not filed before us. It is also relevant to record here that the Appellant stated that the statement recorded by the Income Tax Department was under coercion. However, when we inquired from him that the statement was recorded on 23rd October, 2009 and for the last Nine years why he has not retracted or disputed the same, for which, no answer at all was given by the Appellant. Consequently, when the Appellant has himself admitted charging commission at every stage of proceedings, there is no scope to challenge the findings and the Order passed by the Board of Discipline. On the careful perusal and consideration of the materials on record, we do not find any ground to reduce the punishment awarded to the Appellant as well. - Decided against the appellant CA.

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