TMI Tax Updates - e-Newsletter
August 26, 2017

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws PMLA Service Tax Central Excise CST, VAT & Sales Tax Wealth tax Indian Laws

TMI Short Notes

1. What is the treatment of incidental income that arises from construction contract.

  Income Tax:

2. Does proviso to section 36(1)(iii) apply on construction contract i.e. interest paid on capital borrowed for acquisition of an asset is not allowable as deduction if the same relates to a period beginning from the date of borrowing till the date on which such asset is first put to use.

  Income Tax:

Articles

1. How to adjust GSTR-3B tax liability with ITC available

   By: CA.VINOD CHAURASIA

2. Composite Supply – Naturally Bundled Supply

   By: RAMESH PRAJAPATI

3. Final rate of GST @12% on Government Works Contracts

   By: CASanjay Kumawat

News

1. Guidance for taxpayers in relation to GST

2. THE INTEGRATED GOODS AND SERVICES TAX (EXTENSION TO JAMMU AND KASHMIR) ACT, 2017 NO. 27 OF 2017

3. THE CENTRAL GOODS AND SERVICES TAX (EXTENSION TO JAMMU AND KASHMIR) ACT, 2017 NO. 26 OF 2017

4. Commerce and Industry Minister Sets up Task Force on Artificial Intelligence for Economic Transformation

Notifications

Companies Law

1. F. No. 1/30/2013-CL-V - G.S.R. 1061(E) - dated 23-8-2017 - Co. Law

National Company Law Appellate Tribunal (Amendment) Rules, 2017

Customs

2. 82/2017 - dated 24-8-2017 - Cus (NT)

Appointment of Commissioners, Additional or Joint Commissioners and Deputy or Assistant Commissioners of Customs

GST - States

3. F.1-11(100)-TAX/GST/2017 - dated 19-8-2017 - Tripura SGST

The Tripura State Goods and Services Tax (Fifth Amendment) Rules. 2017.

4. F.1-11(100)-TAX/GST/2017 - dated 19-8-2017 - Tripura SGST

Last date of furnishing of return in FORM GSTR-3B

5. 19/2017-State Tax (Rate) - dated 19-8-2017 - Tripura SGST

Amendment in the Notification No.01/2017-State Tax (Rate) dated the 29th June 2017. - Reduction of Rate of tax on Tractor Parts.

6. F.IV-3(15)-TAX/2017/7237-52 - dated 16-8-2017 - Tripura SGST

Order regarding Designation of proper officers under various sections of TSGST Act,2017

7. F.IV-3(15)-TAX/2017/7221-36 - dated 16-8-2017 - Tripura SGST

Assign of proper officers under different section under TSGST Act.

8. F.IV-3(15)-TAX/2017/7205-20 - dated 16-8-2017 - Tripura SGST

Order regarding Classes of officers with their jurisdiction under TSGST Act,2017

9. KA.NI.-1158/XI-9(52)/17 - dated 18-8-2017 - Uttar Pradesh SGST

Amendment in Notification No. 1014 dated 21/07/2017.

10. 05–C.T./GST - dated 17-8-2017 - West Bengal SGST

Notification regarding furnishing the return in FORM GSTR-3B.

Circulars / Instructions / Orders

DGFT

1. TRADE NOTICE NO. 14 /(2015-2020) - dated 24-8-2017

Consideration of applications for grant of authorization for import of gold-dore - reg.

Highlights / Catch Notes

Income Tax

• Resale Price Method Approved for Arm's Length Pricing in International Goods Transactions Due to Direct Reselling Involvement.

  Case-Laws - AT : TPA - international transaction of ‘Purchase of finished goods’- Whether RPM is the most appropriate method? - - As the assessee in the instant case is directly engaged in reselling the goods the RPM is the most appropriate method in the given circumstances.
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• High Court Upholds Reopening of Assessment Based on New Material from Investigation Wing, Justifies Re-assessment Proceedings.

  Case-Laws - HC : Reopening of assessment - Assessing Officer relies on material which was not part of the assessment proceedings and which material was provided by the investigation wing unearthed during the course of investigation - Re-assessment proceedings sustained - HC
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• Stamp Duty Charges on Rent Agreement Deemed Revenue Expenses, Not Capital, for Appellant Company.

  Case-Laws - AT : Disallowance of stamp duty charges paid at the time of registration of rent agreement - the same were in the nature of revenue expenses in the absence of any capital asset coming into existence in the hands of the appellant company as such
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• Invoking Section 147 to Reopen Assessment Without Completing Section 143(2) Inquiry Deemed Irregular and Illegal.

  Case-Laws - AT : Reopening of assessment - AO has invoked the jurisdiction u/s 147 of the Act without completing original enquiry initiated u/s 143(2) - such proceeding is irregular and illegal
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Customs

• Appeal Allows Refund of Special Additional Duty; Invoices Issued Pre-Customs Clearance Not Proof of Sale or Delivery.

  Case-Laws - AT : Refund of SAD - the invoices have been raised prior to issuance of out of charge order issued by the customs authorities - mere issue of invoice itself does not prove that the goods have been sold and delivered to the buyers - appeal allowed
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Central Excise

• High Court Confirms CENVAT Credit for Capital Goods Used Outside Factory Premises, Upholds Broader Interpretation for Eligibility.

  Case-Laws - HC : CENVAT credit - capital good - Merely because SPM system is not specifically within the factory, but it is outside the factory, still required to be treated as “capital goods” used for manufacturing of final products - HC
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• Appellant's Refund Claim Protected from New Department Objections After Initial Success in Litigation.

  Case-Laws - AT : Refund claim - The adjudication cannot be done in piece meal and the appellant having succeeded in the first round of litigation, the Department cannot raise, subsequently, another objection for rejection of the refund claims
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• Interleaved Carbon Papers Classified Under Chapter Heading 4901, Not Chapter Heading 48 or 49.

  Case-Laws - AT : Classification of goods - Manifold Business Forms & Interleaved Carbon Papers - whether classified under CTH 48 or CTH 49? - Interleaved with Carbon was classifiable under Chapter Heading 4901
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• Controller and Field Interface Board Classified Under Chapter Heading 8537 per Note 2(a) of Section XVI, Central Excise Tariff.

  Case-Laws - AT : Classification of Controller and Field Interface Board - - since for the control panel there is an independent tariff entry under Chapter Heading 8537, it will merit classification under its specific head, i.e. under Chapter Heading 8537 in terms of Note 2(a) of Section Notes to Section XVI of the Central Excise Tariff
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• High Court Stresses Importance of Substantive Compliance in Duty Remission Under Chapter 18 of Central Excise Manual.

  Case-Laws - HC : Remission of duty - What is provided under Chapter 18 of the C.B.E. & C.’s Central Excise Manual cannot be said to be procedural condition of technical nature. It is substantive condition, and therefore, non-observance of the same is not condonable and is likely to facilitate the commission of fraud and administrative inconvenience - HC
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Case Laws:

• Income Tax

• 2017 (8) TMI 963
  Taxability in hands of society - fund transferred to ‘Distribution Pool Fund Account’ - respondent – Society assessed to tax on its income as ‘person’ as defined under Section 2(31) - entitlement to claim exemption over its profits paid to its members and claim it as expenditure in the accounts before offering the profit for tax - Held that:- No merit in this special leave petition. It is, accordingly, dismissed. HC order confirmed [2016 (12) TMI 237 - KARNATAKA HIGH COURT] wherein said the very fact that the Bye-laws permit the Society to recover the ‘manufacturing expenses’ and ‘other dues’ from its members is a sufficient and a robust indication that the ownership of the Salt to the extent of their respective share of each individual member continues to remain with the respective member himself. This inference is fortified by Clause 80 of the Bye – laws, which permits the members to raise loan on the ‘security’ of their proportional interest in the ‘Agar’ and ‘Salt produced’. Income of the Society cannot be anything beyond the scope of Chapter XVI of the Bye – laws. Therefore, logically the amount transferred to the ‘Distribution Pool Fund Account’ cannot be brought within the umbrella of Chapter XVI. Hence, it is not taxable in the hands of the Society. In the premise, the substantial question of law deserves to be answered against the appellant – Revenue.

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• 2017 (8) TMI 962
  Disallowance under Section 14A - Failure of the AO to record satisfaction - Held that:- On the aspect of administrative expenses being disallowed, since there was a failure by the AO to comply with the mandatory requirement of Section 14 A (2) of the Act read with Rule 8D (1) (a) of the Rules and record his satisfaction as required thereunder, the question of applying Rule 8D (2) (iii) of the Rules did not arise. What is plain from the explanation offered by the Assessee, which was not discarded by the AO on facts, was that there was no part of the interest expenditure which did not bear a direct nexus to a loan that was already borrowed in some earlier year. As explained by this Court in Principal Commissioner of Income Tax v. Bharti Overseas Pvt. Ltd. (2015 (12) TMI 1423 - DELHI HIGH COURT) if there is no interest expenditure “which is not directly attributable to any particular income or receipt”, then “the question of applying the formula” under Rule 8D (ii) of the Rules will not arise. In other words, one of the pre-requisites for the applicability of the formula Rule 8 D (2) (ii) of the Rules for determining the extent of disallowance of interest, is that there must some interest expense which is not attributable to any particular income or receipt. In the present case, the AO does not indicate which part of the interest expense falls in the above category. ITAT erred in remanding the matter concerning deletion of disallowance of any interest under clause (ii) of Rule 8D (2) of the Act to the AO for fresh determination in light of the decision in Commissioner of Income Tax v. Taikisha Engineering India Limited (2014 (12) TMI 482 - DELHI HIGH COURT ) AO failed to record proper satisfaction in terms of Section 14A (2) of the Act read with Rule 8D (1) (a) of the Rules and therefore, erred in calculating the disallowance at 0.5% on overall value of the investments as per the Rule 8D (2) (iii) of the Rules.

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• 2017 (8) TMI 961
  Reopening of assessment - reasons to believe - bogus purchases - non-supply of documents on the ground of confidentiality - Held that:- What is required is reason to believe but not the established fact of escapement of income. At the stage of issuance of notice, the only question is whether there was relevant material on which a reasonable person could have formed the requisite belief. Whether material would conclusively prove escapement of income was not the concern at that stage. This is so because the formation of the belief is within the realm of the subjective satisfaction of the Assessing Officer. At this stage therefore, what we have on record and emerging from the reasons recorded is that there is strong prima facie material to suggest that the purchases shown to have been made by the assessee from M/s. Shiyon Enterprises were bogus. The fact that the assessee's sales and purchases came up for scrutiny during the original assessment would be of no consequence since now the Assessing Officer relies on material which was not part of the assessment proceedings and which material was provided by the investigation wing unearthed during the course of investigation in case of Shri Chandrakant Patel. - Decided against the assessee.

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• 2017 (8) TMI 960
  Claim of interest and administrative charges under section 57(iii) - claim of interest expenditure in respect of loans taken from various banks - revision petition u/s 263 - Held that:- Section 57(iii) of the Act allows deduction while computing the income chargeable under the head “Income from other sources”, any other expenditure laid out or expended wholly and exclusively for the purpose of making or earning such income. It was in this context the Assessing Officer had accepted the assessee's contention that if the investment is treated as not having been expended in the assessee's business in USA and therefore, wholly and exclusively for the purpose of business, the same should be treated as one for earning income from other sources. The view adopted by the Assessing Officer was after proper scrutiny of relevant facts and clearly a plausible view and therefore, not open to revision at the hands of the Commissioner. The Supreme Court in case of Malabar Industrial Co. Ltd.(2000 (2) TMI 10 - SUPREME Court) which has been referred to time and again, held and observed that the order of assessment would be open to revision provided twin conditions of same being erroneous and prejudicial to the interest of Revenue are satisfied. It is also well settled that if after proper inquiries, the Assessing Officer has adopted a view which is a plausible one, the view would not be open to revision by the Commissioner. The additional contention of the petitioner of the very jurisdiction of the Commissioner to revise an order of assessment passed after the draft order is placed before DRP in terms of section 144C of the Act is an interesting contention. However, we do not find it necessary in the present petition to enter into such an issue, since on facts we find that the Commissioner could not have invoked revisional powers.

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• 2017 (8) TMI 959
  Revision u/s 263 - requirement of deducting tax at source while the petitioner made remittances of translation charges to the recipient who were non-residents - Held that:- In facts of the case, where the Commissioner of Income Tax has merely issued a notice for taking the order of assessment in revision, we are not inclined to thrash out all these issues leaving it open for both sides to raise all contentions before the Commissioner and thereafter, take the matter further as may be found necessary. At a stage, where we are dealing only with the notice of the Commissioner taking the order of assessment in revision, we would be well advised not to enter into such legal arena and lay down any proposition of law. This is not to suggest that in a given case, the Commissioner's notice would not be amenable to scrutiny by the High Court in a writ jurisdiction if it can be demonstrated ex facie that the Commissioner lacks jurisdiction and it would therefore, not be proper to subject the assessee to the entire gamut of submitting to the jurisdiction of the Commissioner in exercise of his revisional powers. We may refer to the decision of Supreme Court in case of Commissioner of Income Tax and ors vs. Chhabil Dass Agarwal [2013 (8) TMI 458 - SUPREME COURT] in which the Court observed that barring some exceptions, the rule would be that the jurisdiction under Article 226 of the Constitution should not be invoked where there is availability of an equally efficacious alternative remedy under the statute. It was emphasized that this would be more so in taxation statute where the statute statute provides complete machinery for assessment, re-assessment of tax, imposition of penalty and appeals.

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• 2017 (8) TMI 958
  Additions made in the course of proceedings under Section 153A/143(3) - reopening of assessment - Held that:- The decision in Commissioner of Income Tax v. Kabul Chawla (2015 (9) TMI 80 - DELHI HIGH COURT) is still good law. That decision explicitly holds that there has to be incriminating material to justify the assumption to jurisdiction under Section 153A of the Act qua each of the AYs for which assessment is sought to be reopened. The categorical factual findings by the ITAT, which have not been shown by the Revenue to be perverse, are inter alia that the material seized does not show inflation of the profit of the eligible undertakings; or that the eligible undertakings are not carrying out manufacturing activities or that the material transferred to the eligible undertakings is less than the market value and that "none of the material relates to the purchases from sister concerns." All of this is de hors the fact that the material pertains only to FY 2010-11. If, even for FY 2010-11, what was seized did not constitute incriminating material, then the essential jurisdictional fact for justifying the assumption of jurisdiction under Section 153A of the Act did not exist. In the present case there was no incriminating material seized qua each of the AYs the assessments for which were sought to be reopened. - Decided in favour of assessee.

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• 2017 (8) TMI 957
  Alternate remedy - constitutional validity of Section 144C - Held that:- Since this is a writ petition directly filed in this Court challenging the order passed by the First Appellate Authority as above and there is a complete remedy of approaching the Income Tax Appellate Tribunal against such an order and which remedy is of appeal, where both question of law and fact can be raised, then, we do not entertain this writ petition. The writ petition is disposed of on the ground of availability of alternate, equally efficacious remedy of an appeal to the Tribunal. However, we clarify that in the event the petitioner still wishes to raise the larger issue of the constitutional validity of Section 144C of the Income Tax Act, 1961, that issue is kept open for being raised at an appropriate stage and in appropriate proceedings.

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• 2017 (8) TMI 956
  Application of the provisions of section 50C - Addition on account of suppression of sale value of flats - gross variation in the sale price of the flats even on the same floor in the same direction - invoking section 50C to arrive at full consideration of sale of business asset - ITAT deleted the addition - Held that:- It is self evident from reading of section 50C of the Act that it would not have any application while determining 'Profits and gains of business or profession'. This is so as its application is only limited to computation of income chargeable under the head 'Capital gains' as is evident from specific reference in sub-section (1) of section 50 of the Act to section 48 of the Act i.e. mode of computation of capital gains. In fact section 50C of the Act as observed by the impugned order is placed as part of the Chapter IV-E under the head 'capital gains', it can only govern the valuation of the property to determine capital gains and cannot govern valuation of transfer of assets (other than a capital asset) i.e. stock in trade. This view is further strengthened by the fact that section 43CA has been introduced into the Act w.e.f. 1st April, 2014 which governs taking of full value of consideration for transfer of assets other than capital assets on the basis of stamp duty valuation. This section 43CA of the Act finds a place as a part of Chapter IV-D - Profits and gains of business or profession. Therefore, with effect from 1st April, 2014 the stamp duty valuation of assets sold could be taken as full value of consideration. Our above view that section 50C of the Act has no application to value stock in trade is also a view taken by Allahabad High Court in CIT v. Ken Construction and Colonizers (P.) Ltd. [2012 (5) TMI 145 - ALLAHABAD HIGH COURT]. So far application of section 56(2)(vii)(b)(ii) of the Act is concerned, it is self evident that it only applies to individuals and Hindu Undivided Family. Moreover, it seeks to tax the transferee of the property for having given consideration for which is less than the stamp value by Rs. 50,000/- or more for purchase of the property. Thus, the observations of the Tribunal that it has no application is unexceptional. Lastly, the finding of Tribunal that the Assessing Officer did not deal with explanation offered by the assessee justifying the difference in prices of similar flats, is a finding of fact. This has not been shown to be perverse. - ITAT truly deleted the addition - Decided in favour of assessee. Stock computation - Unsold area at end of previous year considered as part of closing stock of the respondent - assessee - liability towards MHADA on the assessee - Tribunal holding that stock was not included in stock in trade - Held that:- The impugned order of the Tribunal has on the basis of facts available before it held that it is not disputed that the respondent - assessee was obliged to handover 1797 sq. mtrs. of area to MHADA in lieu of permission to develop the project. Therefore, it was obligation of the respondent - assessee to make aforesaid area available/allotted to MHADA. Consequently, the cost incurred in making this area 1797 sq. mtrs. available to MHADA free of cost would have the effect of reducing the value of its closing stock. Consequently the cost incurred on this area of 1797 sq. mtrs. could not be valued as stock in trade of the respondent - assessee. As observed by the Tribunal, in any view of the matter the area of 1797 sq. mtrs. never belong to the respondent - assessee as it had to be given free of cost to MHADA. In case the above 1797 sq. mtrs. is to be offered in another building, then its cost of such area will reduce its profits from this project because of the existing liability attached to this project. Impugned order of the Tribunal has taken a possible view

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• 2017 (8) TMI 955
  Reopening of assessment - Non recording of reasons and furnishing of reasons to the assessee - failure to furnish reasons recorded - Held that:- There is no proof of the reasons having been furnished to the assessee. Quite clearly the assessee in the present case had sought for the reasons recorded and there is no material on record to say that the same have been furnished to him before completion of assessment. Therefore, following the judgment of the Hon'ble Bombay High Court in Trend Electronics [2015 (9) TMI 1119 - BOMBAY HIGH COURT] the impugned assessment is held to be bad in law. In so far as the plea of the Ld. Departmental Representative based on the provisions of section 292BB of the Act is concerned, the same in my view, is of no consequence as it is inserted by the Finance Act, 2008 w.e.f 01/04/2008 and is, therefore, prospective in operation, and is thus, not applicable for the instant proceedings.- Decided in favour of assessee.

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• 2017 (8) TMI 954
  Additional accumulation of income u/s. 11(2)(a) - failure to produce any documentary proof for expenditure of Rs. 21 lacs on specific purpose of research activity for which it has been accumulated - Held that:- The matter requires verification of the contentions raised by the assessee before the revenue authorities as well as before me i.e. about the utilization of accumulated income in dispute for the purpose of establishing its plea before the AO and AO is at liberty to decide the issue in dispute, after verification of the same, as per law after giving adequate opportunity of being heard to the assessee.

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• 2017 (8) TMI 953
  Addition for interest earned from the fixed deposit of share application money before commencement of business - Held that:- The undisputed facts of the case are that the funds were raised by way of share application money by the assessee and when the same were not required immediately in the construction activity, the money was put into the Corporation Bank and Kotak Mahindra Bank in short term deposits which yielded an interest of Rs. 34,40,144/- and Rs. 59,67,424/- respectively. The said interest of Rs. 94,07,568/- was reduced from the capital work in progress as on 31.3.2009 and thus capitalized on the ground that the interest was received out of own money and not out of the borrowed funds. Whereas in the case of the assessee the decision in the case of Tuticorin Alkali Chemicals and Fertilizers Ltd [1997 (7) TMI 4 - SUPREME Court] the facts were distinguishable and therefore not applicable to the present case. - Decided in favour of assessee. Disallowance u/s 14A - Held that:- We find that there is question of disallowance by application of provisions of section 14A r.w.r 8D as the assessee has not claimed any expenditure as the entire expenditure has been capitalized under the head work in progress. We are in agreement with the conclusion drawn by the ld.CIT(A) that the assessee has neither claimed any exempt income as the same was reduced from the capital work in progress and all the expenses were capitalized in the capital work in progress thereby not claiming any expenses out of taxable income and accordingly uphold the same by dismissing the ground taken by the revenue.

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• 2017 (8) TMI 952
  Revision u/s 263 - proof of order passed u/s 143(3) as erroneous and prejudicial to the interest of the revenue - Held that:- We find that in this case the assessee has been receiving rental income from the six properties which are being shown under the head income from house property and has been accepted by the department in the earlier years. In some cases, the agreements were executed in the earlier years. We further find that the ld. CIT assumed the jurisdiction u/s 263 of the Act without pointing out as to how the conditions precedents to invoking the revisionary power have been satisfied. How the order of AO is erroneous and prejudicial to the interest of revenue. The ld. CIT has simply stated that the AO should have examined the issue whether the income from property was assessable under the head income from house property or business income. The CIT was also completely failed to point out as to how the assessment u/s 143(3) of the Act was erroneous so as to be prejudicial to the interest of the revenue and therefore the power exercised by the Commissioner u/s 263 of the Act was without any valid reason or justification. Moreover, the details of the rents along with the agreements with the tenants were called for by the AO during the course of assessment proceedings and only after examining the same the assessment order u/s 143(3) was framed. - Decided in favour of assessee.

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• 2017 (8) TMI 951
  Capital gain - reference to DVO for determining fair market value of the property as contemplated u/s 50C(2) - Held that:- Claim of the assessee to make reference to DVO for determining fair market value of the property as contemplated u/s 50C(2) of the 1961 Act can be raised at an appellate stage as taxes are required to be computed in accordance with and authority of law. Section 50C(2) and 50C(3) of the 1961 Act clearly allows the reference to DVO if the assessee dispute ready reckoner as adopted by stamp duty valuation authorities of the State Government, the assessee has challenged the ready reckoner rates by giving cogent reasons detailed above. In our considered view, this issue also needs to be set aside and restored back to the file of A.O. for de-novo determination of the issue on merits, the AO shall refer the matter to the DVO for determining fair value of market as contemplated u/s 50C(2) and 50C(3) of the 1961 Act, wherein the AO shall compute short term capital gains arising from sale of property after considering valuation report of DVO. The assessee is directed to produce all relevant evidences/ explanations before the AO as well before DVO to support its contentions, which shall be admitted by the AO/DVO in the interest of justice and adjudicated on merits in accordance with law. Needless to say that the AO/DVO shall provide sufficient and adequate opportunity of being heard to the assessee in accordance with principles of natural justice in accordance with law.

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• 2017 (8) TMI 950
  Interest on borrowed capital - making advances for purchase of fixed assets cannot be allowed u/s 37(1) or 36(1){iii) - whether these advances sought to be made to equipment suppliers were genuine or were these colorable devices adopted by the assessee to evade taxes and were part of sham transactions? - Held that:- The onus is on the assessee to prove the genuineness of the said transaction of granting advances to equipment suppliers. The assessee is also directed to produce the details/project report of various machinery/equipment required for the upgradation/improvement in quality of services as approved by ITI Limited, which ultimately did not materialized and got cancelled and the amount was refunded by the supplier parties. Thus, for proper verification and enquiry and establishing genuineness of the said transactions, the matter is set aside to the file of the A.O. and assessee is directed to produce all cogent evidences as detailed above before the A.O. to establish the genuineness of the transaction in context of the claim of the assessee for upgradation of the quality of service w.r.t. data center entered set up by the assessee in JV with ITI Limited. The onus is on the assessee to prove that these interest expenses are allowable in accordance with the provisions of the 1961 Act. The assessee shall be allowed by the AO to file all relevant evidences/ explanations in its defense, which shall be admitted by the AO in the interest of justice. Needless to say that the A.O. shall provide adequate and sufficient opportunity to the assessee of being heard in accordance with principles of natural justice in accordance with law.

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• 2017 (8) TMI 949
  Addition of processing charges - as per AO turnover of the assessee had increased only 10% whereas the processing charges had increased multiple time - Held that:- We have observed that the A.O. has not brought on record any cogent incriminating material, reasons or justifications while making adhoc disallowance of 10% of processing charges except taking a view that turnover of the assessee increased by 10% while processing charges increased in multiples which is not sufficient to sustain disallowance and fasten tax liability on the assessee, which additions in our considered view was rightly deleted by learned CIT(A) vide appellate order dated 19-09-2011. Thus, under these circumstances, we do not find any reason to deviate from the decision taken by the ld. CIT(A) vide appellate order dated 19-09-2011 with which we concur and appellate order of learned CIT(A) is hereby confirmed. We, therefore, dismiss the ground raised by the Revenue. Thus, Revenue fails on this ground. Disallowance of ice charges - Held that:- Upward movement of turnover is not indicative of any overt attempt by the assessee to conceals his income, inflate expenses or to defraud revenue calling for adhoc disallowance in the absence of incriminating material brought on record by the AO for which onus was on the AO as the assessee discharged its primary onus by bringing on record the relevant material. We have observed that the A.O. has not brought on record any cogent incriminating material, reasons or justifications while making adhoc disallowance of 25% of ice charges except taking a view that turnover of the assessee increased by 10% while ice charges increased in multiples which is not sufficient to sustain disallowance and fasten tax liability on the assessee, which additions in our considered view was rightly deleted by learned CIT(A) Disallowance of chemical expenses - Held that:- We have observed that the A.O. has not brought on record any cogent incriminating material, reasons or justifications while making adhoc disallowance of 10% of chemical expenses except taking a view that turnover of the assessee increased by 10% while chemical expenses increased in multiples which is not sufficient to sustain disallowance and fasten tax liability on the assessee, which additions in our considered view was rightly deleted by learned CIT(A) Disallowance being paid by the assessee to workmen under the head ‘employees death’ - Held that:- We are inclined to agree with the appellate order of learned CIT(A) with whom we concur and find no reason to deviate from a view taken by learned CIT(A) deleting the addition made by the AO. The AO has given a reasoning that since employee family will get compensation under PF and ESIC Act’s, hence the compensation paid by the assessee is not an business expenses calling for disallowance u/s 37(1) of the 1961 Act is a view which is totally unsustainable view in the eyes of law as this expenses in infact is an expenses which is incurred wholly and exclusively for the business of the assessee within mandate of provisions of Section 37(1) of the 1961 Act, because firstly the compensation is paid to family of any employee who died in an accident in factory premises occurred which occurred during conducting business of the assessee during the previous year relevant to the impugned assessment year secondly the liability has arisen under the statute i.e. Workmen Compensation Act which the assessee is obliged under law to discharge, thereby fulfilling mandate of Section 37(1) of the 1961 Act from which ever angle it is seen, as it is a business expenses incurred wholly and exclusively for the purposes of business. We affirm well reasoned order of learned CIT(A) and refused to take a different view Disallowance of terminal handling charges and documentation handling charges - sec 172 applicability - tds liability - Held that:- We have observed that with respect to these 22 parties, evidences w.r.t. only six parties have been enclosed in the paper book filed with the tribunal to claim that these payouts were to nonresident shipping companies and/or their agents which are covered by provisions of Section 172 of the 1961 Act and no disallowance is called for u/s 40(a)(ia) of the 1961 Act, and this claim of the assessee requires proper verification and examination both on facts and on law, by the AO. Thus, we deem it fit to set aside and restore the matter back to the file of the A.O. for de-novo determination of the issue on merit in accordance with law. The assessee is directed to appear before the A.O. and produce all cogent and relevant evidences to justify the claim that these amounts are not covered by 194C & 195 of the Act and thus, no disallowance is called for by filing details w.r.t. all twenty two parties which shall be evaluated/examined by the AO on merits both on facts and in law. The AO shall admit all evidences / explanations submitted by the assessee in the interest of justice and shall adjudicated the same on merits in accordance with law. Disallowance of interest expenses treating the same to be capital in nature - Held that:- The assesee submitted the detail before the ld. CIT(A) as to the dates on which the fixed assets were put to use and the interest capitalized by the assessee. We have observed that details were not furnished before the AO and these details require verification by the A.O. as the said details were not filed before the A.O. as is emerging from records. The ld. CIT(A) has not called for any remand report from the AO nor these details were forwarded by learned CIT(A) to the AO for verification/examination, as is contemplated by Rule 46A of the Income-tax Rules, 1962. In our considered view, this matter is to be set aside and restored to the file of the A.O. for de-novo determination of the issue on merits after verification / examination of the details filed by the assessee . Needless to say proper and adequate opportunity of being heard shall be provided by the AO to the assessee in accordance with principles of natural justice in accordance with law. This ground raised by Revenue is allowed for statistical purposes

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• 2017 (8) TMI 948
  Disallowance u/s 40A(3) - cash purchases - stock in trade of land - business expediency - disallowing purchases on the one hand, addition into stock on the other hand - Held that:- AO as well as Ld. CIT(A) has not denied the genuineness and bonafide transactions made by the assessee but has added the payment made for the purchase of the land to the income of the assessee which is not sustainable in the eyes of law. Further find that it was accepted by the authorities below that the purchases as appearing in the balance sheet as a closing stock and on the other hand addition of payment made for purchase of land is bad at law. The assessee has shown the short term loss in the computation of income which has been carried forward in the subsequent year. However authorities below failed to give the credit against income of the assessee neither they have carried forward the same in spite of full details on record and as well as the ITO called the information u/ s 131(6) from the respective companies, the act of the authorities below is erroneous and unwarranted and the credit of the short term loss against the income of the assessee need to be allowed.

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• 2017 (8) TMI 947
  Disallowance of expenses incurred towards the two foreign travels - expenses related to business - Held that:- Submissions made by the Ld. AR that the assessee has shown the evidence by way of copy of email from John Abernethie regarding meeting to new business opportunities at Abernethie Trading, USA on 8-9/10/2007 and the other e-mails shows the participation of Rakesh Jindal in respect of future/prospective business with USA. The said evidence was produced before the Assessing Officer as well as before the CIT(A). The said e-mail was addressed to B M Garg by stating initial B M. Also it is clearly mentioned that the parties in the US was communicating for the new business and for new products and range development with Shri Rakesh Jindal who was representing Garg Industries. These documents were though on record not taken into cognizance by both the Revenue authorities. Thus, the travel expenses as related to Rakesh Jindal amounting to Rs. 6,56,593/- has to be considered as the expenses towers the business expansion. TDS u/s 194C - trade fair expenses - obligation to deduct TDS - amount below the threshold limit of TDS specified - Held that:- Hon’ble Delhi High Court in case of CIT Vs. DLF Commercial Project Corporation (2015 (7) TMI 576 - DELHI HIGH COURT) wherein it has been held that obligation to deduct TDS is only with respect to income as amounts paid as reimbursement of expenses do not have the character of income. In-fact, the effective amount paid towards handling charges was only Rs. 4,477/- including taxes which is much below the threshold limit of TDS specified in Section 194C of the Act. Therefore, the Ld. AR’s contention that this amount was not liable to TDS and no disallowance under Section 40(a)(ia) can be made is accepted. Disallowance of certification fees over a period of 5 years - Held that:- CIT(A)’s finding that the CC Certification was valid for 5 years but in the manner which the CIT(A) has directed to allow 20% of the said expenses in each of the 5 years by stating that the expenses are revenue in nature is not proper. If it is Revenue expense then the same should be allowed in full in the year of incurrence even though it provides long term benefit. Once, it is stated that it is a Revenue expenditure the assessee is entitled for the said claim. Therefore, the same is allowable in full in this year even though certification has been provided for 5 years. Appeal of the assessee is allowed.

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• 2017 (8) TMI 946
  Addition invoking the provisions of section 145(3) r.w.s. 144 - Held that:- It is not known from the order of the ld AO that before holding that the ld CIT(A) not justifying in making assessment u/s 144 of the Act requisite details of the assessment was called for or verified or not. When the summons were issued to the partnership u/s 133 of the Act and they did not appear before the ld AO as per para NO. 4 of the order of the ld CIT(A), how the ld CIT(A) has reached to a particular decision without examining the partners of the assessee and deleting the additions. In view of the above facts and on reading of the order of the ld CIT(A) it is apparent that he has merely believe the version of the assessee without even confronting the AO or calling for remand report. It is also the claim of the assessee that not proper opportunity was given to the AO therefore, in the interest of justice we set aside the issue back to the file of the AO to make the assessment de novo after carrying out proper examination.

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• 2017 (8) TMI 945
  Validity of the assessment under section 153A - proof of incriminating material - Held that:- We find that no addition in respect of unexplained jewellery was made during the year and the addition made in respect of assessment year 2011-12 has already been deleted by the Tribunal. The Ld. CIT(DR), however, contested that fact of benefit in respect of pension was unearthed during search proceedings, however he could not substantiate his statement with documentary evidence. The Assessing Officer has also not mentioned any document found during the course of search evidencing that assessee obtained benefit of pension out of the salary income. We observe that the fact of deduction reduced out of the gross salary was came to the notice of the Assessing Officer in assessment proceeding only and thus it cannot be said that addition made in respect of deductions claimed by the assessee, was on the basis of any incriminating material unearthed during the course of search. Thus, respectfully following the decision of the Hon’ble Delhi High Court in the case of Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT], no addition could have been made in the year under consideration. The ground No. 1 of the appeal is accordingly allowed. Addition for various deductions claimed by the assessee out of gross salary - Held that:- Regarding the pension, the Ld. CIT-A held that it will give direct benefit to the employee as deduction cannot be called as diversion of income, accordingly upheld the addition in respect of deduction towards pension. Regarding the other deductions like cantonal tax, insurance etc, the Ld. CIT-A has directed the Assessing Officer to examine whether those deductions will directly benefit the employee and decide accordingly whether it is diversion of income. The ld. CIT-A has laid benefit test to determine the diversion of income and directed the AO to verify the facts and decide the matter accordingly. In our opinion, finding of the Ld. CIT-A on the issue in dispute is well reasoned and no further interference on our part is required. Moreover, the finding of the Ld. CIT-A on the issue in dispute in assessment year 2011-12 has not been challenged by the assessee before the Tribunal. Thus, the rule of consistency also demands that assessee should not contest this issue on merit in other years. Charging of interest under section 234B - Held that:- The finding of the Ld. CIT-(A) are in accordance with the provisions of section 234B(1) of the Act and accordingly, he has directed the Assessing Officer to charge the interest under section 234B(1) of the Act on the revised income after giving effect of his order. We do not find any infirmity in the order of the Ld. CIT-(A) on the issue in dispute

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• 2017 (8) TMI 944
  Transfer pricing addition - international transaction of ‘Purchase of finished goods’- Whether RPM is the most appropriate method? - Held that:- It is apparent from the nomenclature of the method, that is, ‘Resale price method’ and the modus operandi given in Rule 10B(1)(b) that where the goods purchased by an enterprise are resold as such, without making any value addition, the RPM is the most appropriate method as it specifically deals with the situations of resale of the goods purchased by an enterprise from its AE. In contrast to that, the TNMM is a method of last resort. When none of the specified methods out of the given methods in section 92C(1) can be applied, then, the TNMM is applied for determining the ALP of an international transaction. As the assessee in the instant case is directly engaged in reselling the goods, in our considered opinion, the RPM is the most appropriate method in the given circumstances. The same is directed to be applied for benchmarking the international transaction of ‘Purchase of finished goods’. Comparability - Held that:- As reminded of the prescription of section 92(1) of the Act, which provides that any income arising from an international transaction shall be computed having regard to the ALP. When this position was confronted, it was fairly admitted by both the sides that in the given circumstances, it would be appropriate if the question of finding suitable comparables is restored to the file of the TPO. We agree with the same and order accordingly. The impugned order to this extent is set aside and the matter is restored to the file of Assessing Officer/TPO for selecting a fresh set of comparables after due opportunity to the assessee and then determining the ALP of the international transaction of purchase of goods. Addition on account of business promotion expenses - Held that:- It is visible from the details of business promotion expenses that some of the expenses do not have any relation with enhancing the value of brand owned by the foreign AE. Such expenses cannot be considered as leading to the brand promotion. Further, some of the expenses like training customers and entertainment, etc., have no relation whatsoever with the brand promotion. In our considered opinion, the ends of justice would meet adequately if the impugned order on this issue is also set aside and the matter is restored to the file of Assessing Officer. We order accordingly and direct him to examine details of the items extracted above. The expenses which are not in the nature of advertising, marketing and promotion, not leading to the enhancement in value of the brand owned by the AE, should be excluded. The remaining amount should be considered for seeing firstly, if there is an international transaction and if yes, then, to compute the ALP of such international transaction Depreciation on computers, UPS and printers, etc., @ 60% allowed. See CIT vs. BSES Yamuna Powers Ltd [2010 (8) TMI 58 - DELHI HIGH COURT] Addition being the amount of testing material purchased - revenue or capital expenditure - Held that:- We find that this expenditure includes cost of empty tins, test cards, colour panels for checking the colour shades and developing variant colour formulae. This expenditure has been incurred to check the quality, coverage and shade of colours dealt with by the assessee in its business. After use, the testing material becomes waste product having no value. This shows that the expenditure on such testing material is in the nature of revenue field and, hence, cannot be disallowed as a capital expenditure. It has been brought to our notice that the Assessing Officer has consistently allowed deduction of such expenses in earlier years. We, therefore, countenance the view taken by the ld. CIT(A) on this issue Working capital adjustment in the computation of ALP of the ‘Contract R&D’ segment - Held that:- CIT(A) agreed with the assessee for grant of working capital adjustment in ‘Contract R&D’ segment. In our considered opinion, this issue is no more res integra in view of several orders passed by the Tribunal permitting the grant of working capital adjustment in case of comparables finally shortlisted. We, therefore, uphold the action of the ld. CIT(A) in principle that the working capital adjustment should be considered. However, it would have to be decided afresh only after the fresh comparables are chosen by the TPO which are really similar.

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• 2017 (8) TMI 943
  Addition u/s 68 - sum received by the appellant through banking channels from Mr. Patrick Brian Joseph Curran (an UK citizen) and Mr. Gregory Douglas Strohfeldt (an Australian citizen) against fresh allotment of preference shares - Held that:- AO/CIT(A) did not bring any evidence to rebut the evidences furnished by the assessee and made the addition on suspicion and speculations. It is settled law that, no addition can be made on the basis of surmises, suspicion and conjectures. It is well settled law by the judgment of the Apex Court in the case of ITO vs. Ch. Atchaiah reported in (1995 (12) TMI 1 - SUPREME Court) that the assessing officer has to only assess right person instead of wrong person. The appellant even at the cost of repetition, seeks to submit that despite appellant having discharged its initial onus to establish that the identity of the creditors, creditworthiness of the transaction and genuineness of the transaction, the addition has been sustained primarily on the ground the assessee has failed to establish the source of the source. In the instant case, the assessee has established even the source of the source by furnishing additional evidences, however, same has been rejected purely on technical consideration and the addition has been made and sustained on the aforesaid ground which is wholly unsustainable. - Decided in favour of assessee. Addition on expenditure on rent holding the same to be excessive - Held that:- The appellant has furnished the complete details of the expenditure, which expenditure has been incurred for the purpose of its business and there is not even any allegation that expenditure incurred by the appellant not genuine, as such, disallowance made by the AO and sustained by the learned CIT(A) is directed to be deleted.- Decided in favour of assessee. Addition of notional amount on the ground of nondisclosure of correct rental income - Held that:- As before the CIT(A), appellant filed its submissions and also enclosed the letter dated 31.08.2011 however learned CIT(A) without considering the aforesaid letter, merely on suspicion that agreement with Magnum did not provide for variation of rent, upheld the addition. In fact he has failed to appreciate that no such income accrued to the appellant as has been taxed. In view of the letter dated 31.08.2011, appellant has accepted the proposal of reduced rent receivable from the sister concern on account of commercial expediency and it is not a case that appellant has received a higher sum but has not declared the correct sum. Since the appellant has declared the actual rent received by it, and there is no material that appellant has received the higher sum over and above the declared sum, as such, addition made by the AO and sustained by the learned CIT(A) without taking cognizance of the factual substratum of the case and ignoring the commercial exigency be deleted. - Decided in favour of assessee. TDS u/s 194J - Addition made on account of alleged failure to deduct tax at source from amount of ‘goodwill' - appellant did not claim any deduction for the aforesaid amount in the books of accounts - Held that:- The appellant did not claim any deduction for the aforesaid amount in the books of accounts or return of income for the relevant previous year, since the same was capitalized as intangible assets. Therefore, even assuming on the aforesaid sum, appellant was required to deduct tax at source, no addition can be made and at best a disallowance can be made by invoking section 40(a)(ia) of the Act, however such provision is wholly inapplicable, as aforesaid provision presupposes a deduction should have been claimed by the assessee on which expenditure no TDS has been deduction under chapter XVI1-B of the Act. Accordingly, the aforesaid addition made by the AO and sustained by the learned CIT(A) for alleged failure to deduct tax at source is beyond jurisdiction, and is directed to be deleted. - Decided in favour of assessee. Disallowance of stamp duty charges paid at the time of registration of rent agreement - Held that:- Appellant had leased office premises at Kalkaji and Patparganj and sub-let part thereof to sister concerns. That learned disallowed the aforesaid sums by holding that such an expenditure is capital expenditure. Learned CIT(A) though admitted that registration charges paid on lease agreements cannot be held to be capital expenditure, however arbitrarily uphold the addition. It was submitted that since the stamp duty charges were payable in connection with the rental agreement, the same were in the nature of revenue expenses in the absence of any capital asset coming into existence in the hands of the appellant company as such, disallowance made by the AO and sustained by the ld. CIT(A) is directed to be deleted.- Decided in favour of assessee. Unabsorbed depreciation brought forward - Held that:- The provisions relating to set off, carry' forward and set off of unabsorbed depreciation are contained in Section 32(2) provides that where full effect cannot be given to depreciation allowance as per sub-section (1) in any previous year, then the allowance or part of such allowance, which cannot be so set off, is deemed to be part of the depreciation allowance for the subsequent year(s) and is accordingly allowed as deduction in such succeeding previous year and so on for the succeeding year(s). In view of the aforesaid statutory' provision, the unabsorbed depreciation relating to assessment year 2009-10 which remained unadjusted on 01.04.2011, would merge with the depreciation of previous year relevant to the assessment year 2012-13 and the aggregate of such unabsorbed depreciation would be carried forward to succeeding years for indefinite period. Thus nabsorbed depreciation relating to assessment year 2009-10 is directed to be allowed to be carried forward. - Decided in favour of assessee.

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• 2017 (8) TMI 942
  Reopening of assessment - non completing original inquiry initiated u/s 143(2) - Held that:- In the paper book submitted by the assessee notice u/s 142(1) of the Act is placed for AY 2009-10 asking the assessee to remain present on 27.08.2010. The page No. 18 of PB is a notice u/s 143(2) dated 29.09.2010 asking the assessee to remain present on 18.10.2010. On the same date the notice u/s 142(1) was also issued. The assessee also replied the notice u/s 142(1) which was submitted before the ld Assessing Officer on 15.10.2010. Meanwhile, without disposing off this notices or passing any order the ld Assessing Officer straightway proceeded to issue notice u/s 148 and ultimately passed an order u/s 147 of the Act. The issue is apparent that AO has invoked the jurisdiction u/s 147 of the Act without completing original enquiry initiated u/s 143(2) of the Act. The above issue is squarely covered by the decision in KLM ROYAL DUTCH AIRLINES Versus ADIT [2007 (1) TMI 138 - DELHI High Court] holding that initiation of proceeding u/s 147 under such situation is irregular and illegal - Decided in favour of assessee.

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• 2017 (8) TMI 941
  N.P. determination - best judgment assessment - Held that:- CIT(A) has confirmed the income from Brick Kiln Hanuman Gram Udyog Mandal of assessee without any evidence or any material as the AO computed the income arbitrarily by estimating, the same without confronting the material for such estimate ignoring the principles applied in best judgment assessment and section 44AD for estimating the production and price of bricks. The computation the income by estimation, without any basis, ignoring the principle of best judgment method, which in my considered opinion should have been estimated by applying net rate of profit @8% as provided u/s. 44AD as is applied in no books case and also done in the cases of other Brick Kiln in the locality. Keeping in view as explained above, the Net profit @8% is quite reasonable and genuine, because Ld. DR could not produce any contrary order of the higher Court.

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• 2017 (8) TMI 940
  Quantum of assessment passed u/s 153A - unexplained cash found from the residential premises of the assessee - Held that:- We find that the Tribunal in assessee’s case has set aside this matter to the file of the Learned CIT(Appeals) to the extent of sustaining 50% on this issue and restore the issue of 50% of sustaining the addition shall not be subject matter of reconsideration because there is no departmental appeal preferred in this regard. Since the same has been set aside to the file of the Ld. CIT (Appeals), we are therefore, of the opinion that the balance amount of cash of 50% which has been deleted by the Ld. CIT (Appeals) on ad-hoc manner also deserves to be remanded back to on same reasoning and should be decided afresh after considering the assessee’s explanation as well as the material on record. Thus, following the Tribunal order in assessee’s appeal, ground no. 1 is remanded back to the file of the Ld. CIT (Appeals) which decide afresh. Addition on protective basis - CIT-A has deleted the addition made on protective basis on the ground that the same has been confirmed by him in his appellate order in the case of Smt. Kiran Jain and Shri Vikram Jain - Held that:- The matter should be restored back to the file of the Ld. CIT (Appeals) who shall decide the same after taking into consideration the Tribunal’s order in assessee’s case and decide accordingly. If the addition has been deleted on merits, then ostensibly, no addition can be made here in this case of the assessee. Ground no. 2 is also set aside to the file of Ld. CIT

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• 2017 (8) TMI 939
  we proceed to admit this appeal on the substantial questions of law which read as under. “1) Whether on the facts and in the circumstances of the case and in law, the Tribunal was right in holding that, indirect expenses which were not directly relatable to the power units had to be reduced in arriving at the profits of the power units for the purpose of computing deduction under Section 80IA of the Act? 2)Whether on the facts and circumstances of the case and in law, the Tribunal ought to have adjudicated the Appellant's claim for deduction under Section 80JJA of the Act?”

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• Customs

• 2017 (8) TMI 985
  Benefit of N/N. 16/2000-Cus dated 01.03.2000 (Sl.No. 158) - Concessional Rate of Duty - The case of the department is that the appellant has imported re-melting Ingots and that these goods falling under 7204.50 is altogether different category of goods - whether the re-melting Ingots classifiable under CTH 7204.50 is eligible for the benefit of concessional rate of duty under N/N. 16/2000-Cus dated 01.03.2000? Held that: - It is pertinent to mention that the Chapter Heading mentioned in the notification is only 7204 and does not expressly exclude 7204.50. Further, 7204 which is the main heading pertains to Ferrous waste and scrap; re-melting scrap ingots of iron or steel. Thus the main heading 7204 which is mentioned in the notification pertains to re-melting scrap ingots of iron or steel. Though the description of goods in the notification mentions only melting scrap of iron or steel, since the goods fall under the Chapter sub-heading 7204, which takes in re-melting scrap ingots, the appellants are eligible for the benefit of concessional rate of duty in terms of the notification. The appellants have produced end use certificate issued by the concerned Central Excise officer, which supports this contention that they have complied the condition. Demand set aside - appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 984
  Jurisdiction - power of DRI to issue SCN - Held that: - the DRI is not a competent authority - I set aside the impugned orders and remand the matter to the original authority to decide the matter keeping in view the decision of Hon’ble Delhi High Court in the case of M/s Mangali Impex Ltd., M/s Pace International And Others Versus Union of India And Others [2016 (5) TMI 225 - DELHI HIGH COURT] - appeal allowed by way of remand.

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• 2017 (8) TMI 983
  Refund of SAD - jurisdiction - case of Revenue is that when the Refunds department does not have jurisdiction over the subject refund claim, it does not have any authority/locus standi to take up such a claim for processing - Held that: - When the department finds that the refund claim had been made before the incorrect authority, the proper course and the reasonable approach that should have been adopted is to forward the papers to the proper officer with due intimation to the petitioner. Unfortunately, that was not done in the instant case. Therefore, this Court is inclined to issue appropriate directions - the impugned order is set aside, by directing the petitioner to re present the refund claim dated 30.10.2016, which was returned to the petitioner and received by them on 25.01.2017 to the Assistant/Deputy Commissioner of Customs Chennai VII Air Cargo Commissionerate - petition allowed.

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• 2017 (8) TMI 982
  Confiscation of cut Betel Nuts - penalty u/s 112(b) of the Act - misdeclaration of description and quantity of goods - concealment of readymmade garments under the consignment of betel nuts - seizure of goods - Natural Justice - Held that: - The language as contained in Section 124 clearly reveals that no order confiscating any goods or imposing any penalty on any person can be made under this Chapter unless the owner of the goods has been given a reasonable opportunity of being heard in the matter. This Court is of the considered opinion that the aforementioned provision is thus mandatory and cannot be bypassed by the authority concerned. With regard to the contention advanced by the learned counsel for the Customs that the goods were of foreign origin, the findings which have been arrived at by the adjudicatory authority, clearly state that there is no evidence on record to suggest that the consignment in question had been smuggled from Nepal. Thus, in view of such finding arrived at by the authority itself, the second ground urged also fails as the onus to prove the goods to be of foreign origin lay on the Department, which has made such a seizure. So far as the violation of Sections 46 and 47 of the Act are concerned, as has been alleged against the petitioner, in view of the findings arrived at that there was no evidence that it was of foreign origin, the said provision could be attracted only in the case of goods coming in from a third country. It has been further observed in the impugned order itself that as per Notification No. 9/96-Cus., dated 22-1-1996, issued under Section 11 of the Act, the goods are freely importable on payment of applicable Customs duty after following the procedures prescribed under the Act and, therefore, it having been asserted by the Customs Department that they had no information that the consignment in question had been smuggled from Nepal, there is no scope of invocation of the provisions of Sections 46 and 47 of the Act - confiscation not sustainable. Petition allowed - decided in favor of petitioner.

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• 2017 (8) TMI 981
  Misappropriation of reward money - reward to informer - smuggling of gold - contraband item - it was the case of the prosecution that a sum of Rs. 80 lakh in all, which was said to have been disbursed to a fictitious informer No. 1 was actually misappropriated by Accused Nos. 1 to 3 on the basis of forged payment vouchers and gross suppression of facts at various points of time - it is alleged that the accused had thereby committed offences punishable under Sections 409, 467, 471, 477A read with Section 120B and Section 34 of the IPC and under Sections 5(1)(c) & 5(2) of the PC Act, and under Sections 13(1)(c) and 13(2) of the PC Act - Held that: - Though there has been some controversy raised as to the validity of the order of sanction to prosecute the accused, the counsel for the appellants have not dwelt on the same with any great emphasis and hence the issue is ignored. This significant circumstance that the original DRI-1 was never a part of the record would weigh heavily against the prosecution. For the reason, that the crux of the case of the prosecution is of destruction, falsification and substitution of the original DRI-1, with a concocted document, by the accused. It is significant to note that PW-13 confirms in para 8 of his deposition that Exhibit P-40 and D-1 are all the same. This has also been accepted by PW-48 the Investigating Officer in para 18 of his deposition by stating “It is true that the document Ex.P.40, Ex.D.1 and Ex.D2(a) and Ex.P.51(h-1) are Photostat copies of same document.” It would be relevant that PW-13 had also confirmed in his cross-examination that it was pursuant to Exhibit P-40 that the proposal for Advance Reward and Final Reward had been based. It cannot be lost sight of and would gain importance and significance that Exhibit P-40 was received by PW-13 on 12-4-1988 and further handed over to PW-15 on 13-4-1988 and entered into the Inward Register as per Exhibit P-40(e) on 20-4-1988. Consequently, the destruction of or falsification of DRI-1 is not established. By production of Ex.P.40 and Exhibit D-1 and by deposition of PW-13, PW-15 and PW-48 the document Exhibit P-40 as being the only DRI-1 stands established. It is also to be noticed that from a plain examination of the document, it is physically impossible to tamper with the document. It is typed on a manual typewriter. And it is not possible to add a letter or substitute a word subsequently, to obtain a perfect alignment without distorting the spacing between the typed words to make alterations. Or rather to effect changes in such a manner to change the tenor of the document to read as if it was with reference to a plurality of informers, rather than the alleged original text, which according to PW-10 and PW-11, was with reference to a single informer. According to them the letter “s” was added to the word “informer” and the words “they” and “were”, were inserted in the place of the words “he “ and “was”. This was not possible. It is significant that this document was not examined by any handwriting expert nor was it sent for any forensic examination - If the Minutes of the Advance Reward Committee could not be found fault with, the subsequent meeting of the Final Reward Committee and the release of the final reward also cannot be faulted. In so far as the evidence of the finger print expert (PW-24) is concerned, the following particulars emerge from the evidence. The investigating officer (PW-48) had referred the thumb impressions of the informers taken on the information slip (Exhibit-21) at the time of recording of the information, as well as their thumb impressions taken at the time of disbursement of the advance reward and the final reward to them. It is an admitted fact that the identity of the informers is completely concealed. This is indeed confirmed by the several witnesses for the prosecution itself (PW-33, PW-34 & PW-46). The identity of the informer being known only to Accused No. 3 is hence not an unusual circumstance - the conspiracy as between the accused in the disbursement of the reward amount to a fictitious informer, cannot be said to have been established on the basis of the evidence on record. There is also no incriminating material to indicate that any part of such ill-gotten wealth had found its way to the hands of the accused - the charges against the accused are not established. Appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 980
  Refund of SAD - N/N. 102/2007-Cus dated 14.09.2007 - denial on the ground that the invoices have been raised prior to issuance of out of charge order issued by the customs authorities - Held that: - the authorities below had acknowledged that the appellant had fulfilled all the conditions laid down under N/N. 102/2007-Cus dated 14.09.2007, therefore, denial of refund only on the ground that the sales invoices was raised prior to out of charge, is contrary to the principle of law laid down by this Tribunal in the case of Radius Infotech vs. Commissioner of Customs, New Delhi [2016 (3) TMI 189 - CESTAT NEW DELHI], where the refund was allowed by holding that the appellant submitted delivery challan and the other evidence along with the terms of agreement to establish that the issue of invoice 5 days before the release of the goods by the Customs by itself does not prove that the goods have been sold and delivered to the buyers - appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 979
  Classification of ‘LCD Panels for CTV - classified under CTH 9013 80 10 or under CTH 8529 90 90 - Held that: - this Tribunal in the case of appellant have decided the classification of impugned LCD Panels to be under Tariff Item No.9013 80 10 of Customs Tariff Act, 1975 - appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 978
  DEPB benefit - Processing of Shrimps exported - Perishable Commodity - Revenue says that default to use the respective chemicals/preservatives as per the SION prescribed by DGFT shall make the goods perishable and thereby disrepute the country in view of the WTO norms - Held that: - the appellant has not brought out any evidence to suggest that the job work carried out on behalf of the appellant was using the chemical norm prescribed by the DGFT which is popularly known as SION norms. Once the evidence do not exist, the claimant has no case to make a higher claim of DEPB. Therefore, without going into the other details it can irresistibly be concluded that allegation of Revenue was reasonable for which the appeal is dismissed - decided against appellant.

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• 2017 (8) TMI 977
  Release of Confiscated goods - Misdeclaration of goods - enhancement of value based on contemporaneous import - the imported goods were declared as PDO which is in fact base oil - Held that: - the Assistant Commissioner, Shri Gurmail Singh is deliberately avoiding compliance of the order of this Tribunal dated 12-7-2016 and not releasing the goods in question. In that circumstance, Assistant Commissioner, Shri Gurmail Singh is issued a show cause notice to file reply as to why the contempt of court proceedings should not be initiated against him before the Hon’ble Punjab and Haryana High Court and according for taking proper action against him. The notice is returnable on 25-2-2017.

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• 2017 (8) TMI 976
  Quantum of redemption fine and penalty - designated port for import of cable scrap “ISRI Barley (Millbery) - Held that: - the only offence committed by the respondent is that they have imported the scrap at ICD, Rewari which cannot be imported through ICD, Rewari. As ICD, Rewari is not designated port to that such goods and for that mistake of the respondent, the adjudicating authority has already imposed redemption fine of Rs. 1,50,000/- and penalty of Rs. 25,000/- which is sufficient in the facts and circumstances of the case, as there is no major fault of the respondent for importation of said goods - appeal dismissed - decided against Revenue.

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• Corporate Laws

• 2017 (8) TMI 970
  Suit for specific performance, declaration and permanent injunction - ex parte ad-interim injunction - Held that:- Examining the case on hand and three cardinal principles enshrined in Order 39, Rule 1 of the Code of Civil Procedure i.e. prima facie case, balance of convenience and irreparable loss is concerned, it is a matter of record that respondent Nos.1 and 2 have entered into MOU with the applicant for the land bearing Survey Nos.373 and 58/p1. It is also brought on record, which prima facie shows that the pipeline has been laid down in the month of December, 2016 and no sale deed, index or extract or any revenue records in favour of respondent No.3 has been produced on record and therefore, the applicant has very good prima facie case. The applicant being paper manufacturing unit has to keep flow of treated effluents discharged from its manufacturing unit, so as to reach into CETP in regular manner without any obstruction and therefore, the balance of convenience is in favour of the applicant. Similarly, if interim relief is not granted, the applicant will suffer irreparable loss. The facts of the case clearly establishes that it falls within the ambit of Rule 3, Order 39 of Code of Civil Procedure. The aspect whether the applicant has any easement right or not is to be examined by the learned Trial Court when the application Exh:5 is taken up for hearing threadbare. The present Appeal from Order arising out of non-grant of interim relief, present appeal is maintainable, and therefore the appeal is admitted . In the facts and circumstances of this case, in opinion of this Court, present case falls in the category of rarest of the rare case where ex parte ad-interim injunction is required to be granted to protect the subject matter of the suit at least application Exh:5 is decided by the learned Trial Court. The parties shall complete their pleadings before the learned Trial Court latest by 31st August, 2017.

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• 2017 (8) TMI 969
  Liquidation proceedings - dissolution process - Held that:- This Court vide its order dated 03.02.2016 permitted the Official Liquidator to publish notice of dissolution for inviting no objection(s) for dissolution of Company in ‘Jansatta’ (Hindi) and ‘Hindustan Times’ (English). In terms of order dated 03.02.2016 of this Court dissolution notice has been published in ‘Jansatta’ (Hindi) and ‘Hindustan Times’ (English) on 11.06.2016. Till date no objection has been received against the dissolution of above said company. No fruitful purpose will be served to continue the Liquidation proceedings. Thus, this is a fit case for the dissolution of the company. In the circumstances M/s SMX Technologies (India) Ltd. (in liquidation) is directed to be dissolved under Section 481 of the Companies Act, 1956 and the Official Liquidator is discharged from the liquidation proceedings of the company. The Official Liquidator is permitted to close the books of accounts of the company in liquidation after appropriating the negative funds in the company fund from the company pool fund.

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• PMLA

• 2017 (8) TMI 966
  Attachment of orders - PMLA - legality of order passed by the Judicial Member - Held that:- It is settled law if any order is without jurisdiction, the same is nullity and its validity could be set up even in the collateral proceedings. It is clear that directions have been passed by the Sikkim High Court, have not been complied with impugned order has been without jurisdiction as the impugned order has not been decided by the Judicial Member. Thus the impugned order dated 01.12.2015 is liable to be setaside on the ground that it has been passed by officers of the Authority without jurisdiction.

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• 2017 (8) TMI 965
  Prevention of Money-Laundering - Provisional Attachment - Held that:- In the present case, the Adjudicating Authority did not understand the implication of the Order dated 04.02.2012 passed by the Ld. Ist Additional Judicial First Class Magistrate, Kadapa whereby the Ld. Court handed over custody of the money to the Appellant. The Ld. Adjudicating Authority erred in holding that "The temporary custody of cash given to the Bank does not entitle them to any right unless it is finally proved that the amount relates to the fraud committed by the first defendant.". The Respondent failed to understand that the Ld. Magistrate has granted custody to the Appellant only after prima facie satisfaction of the Appellant's ownership of the money. Adjudicating Authority erred in holding that "Defendant counsel has not submitted any such proof which would determine that cash money is entirely out of the cash siphoned off by defendant No. 1". The said finding is totally contrary to the record because it is the finding of the investigating agency in FIR No. 291/2011 that the sum of Rs. 57,00,000/-(Rupees fifty seven lacs only) is part of the sum of Rs. 1,30,00,000/-(Rupees one crore thirty lacs only) siphoned by Mr. Arun Kumar Kajjayam. The investigation agency has never disputed the said fact. The order passed by the Special Court has not been challenged. The trial in the matter is pending. The request of the respondent to release the moveable and immoveable properties was not allowed by the Special Court even upon filing of an application. It is also a matter of fact that Mr. Arun Kumar Kajjayam in his statements recorded U/s. 50 of PMLA does not in any manner state that the Appellant was involved in the commission of the offence. On the contrary he admits to his wrong doing. He never denied that said money does not belong to the appellant rather he has confirmed that the money in question belonged to the Appellant. A mere perusal of the charge sheet filed by the police in FIR No. 291/2011 and the statements of Mr. Arun Kumar Kajjayam recorded U/s. 50 of PMLA shows that neither he nor his immediate family members had the means to purchase the immoveable property or the gold jewellery or have the capacity to be in possession of Rs. 57,00,000/-(Rupees fifty seven lacs only). The Adjudicating Authority has simply passed the mechanical order without applied its mind that the money so embezzled is public money being held by the Bank on behalf of the account-holders in the Bank.It is rightly argued on behalf of the appellant that if the duty of the bank to safeguard such money. Therefore, we are of the view that attachment of the same by the Respondent and confirmation by the Ld. Adjudicating Authority would amount to gross violation of law.

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• 2017 (8) TMI 964
  PMLA - attachment of property - taking custody of the vehicle - Held that:- Rule 7 of PMLA is very clear that the authorized officers of the respondent has to file the application before Spl. Court providing the order passed under section 5 & 8 (3) of the Act. In the present case the said procedure has not been followed by the respondent. No application for seeking the leave has been filed. No different interpretation can be given once the language of the Rule is clear. The respondent may be entitled to take the possession of the confirmed attachment property only if the leave of the court is granted who is having the custody of the vehicle. Therefore, if so required authorized officers has to make a application to such court by providing the copy of the Provisional Attachment Order and confirmation order by the Adjudicating Authority. Nothing of that sort has happened in the present case. In the present case, we are of the view that the custody taken by the respondent is unauthorized without following the procedure of Rule-7, even without informing the Court. The respondent, therefore, shall handover the possession of the vehicle to the appellant forthwith who shall not dispose of the said vehicle in any manner directly or indirectly during the pendency of the appeal. The respondent is at liberty to move such application as provided under sub rule 7 of PMLA before the Special Court. If such application is filed it would be decided accordingly.

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• Service Tax

• 2017 (8) TMI 1009
  Validity of SCN - interest - penalty - Extended period of limitation - Held that: - Admittedly the petitioner has not submitted their objection to the show-cause notice, but have filed this writ petition challenging the SCN itself. The challenge to the SCN is not on the ground of lack of jurisdiction of the second respondent to issue the notice. What is sought to be canvassed before this Court is that the Service Tax can be levied only with regard to the retreading aspect excluding the cost of materials/goods. However, this aspect cannot be examined at this stage since the petitioner has not submitted themselves to the process of adjudication of the SCN - Therefore, the petitioner has to necessarily submit their objection to the impugned SCN - The writ petitioner is directed to submit their reply to the show-cause notice within a period of 30 days - petition dismissed - decided against petitioner.

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• 2017 (8) TMI 1007
  Classification of services - appellants are engaged in carrying out loading of AC sheets and its accessories at M/s. Visaka Industries as per the agreement entered with M/s. Visaka Industries - The main reason for the department to hold that the activity would not be mere man power recruitment and supply agency services but cargo handling services is that there is a condition that the appellant s representatives should be present while loading. That there is supervisory control and therefore would be cargo handling services - whether the services would be classified under Cargo Handling Service or under Man Power Recruitment & Supply Agency Services? - Held that: - In The Deputy Commissioner, Central Excise & Another Versus Sushil & Company [2016 (4) TMI 987 - SUPREME COURT] the Hon’ble Apex Court had considered whether the activity of supplying workers for loading/unloading cement as per the agreement would amount to Cargo Handling Service, and it was held that the service does not amount to Cargo Handling Service - the subject services would not fall under Cargo Handling Services - appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 1006
  Taxability - commission received as sub-broker - Held that: - the facts of the appeal before us are similar to the facts in respect of the said case law in the case of Commissioner of Central Excise, Kanpur Vs P.K. Khandelwal & Company and others [2016 (1) TMI 391 - CESTAT ALLAHABAD], where it was held that the sub-broker who received commission from the main broker while main broker has paid the service tax on commission received by him cannot be once again subjected to service tax - appeal dismissed - decided against Revenue.

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• 2017 (8) TMI 1005
  Condonation of delay in filing appeal - Section 14 of the Limitation Act - Held that: - so far the delay in filing this appeal before the Tribunal is concerned the limitation is adequately explained and accordingly, I hold that the time taken before the Hon'ble High Court is required to be excluded under the provisions of Limitation Act and on such exclusion the appeal seems filed within time - delay condoned. As the classification of service is also in dispute in the present appeal, the appeal is transferred to Division Bench for final hearing - appeal allowed in part and part matter on remand.

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• 2017 (8) TMI 1004
  Classification of services - contribution made by members which are sugar Mills - taxability - Held that: - the issue is no longer res-integra and the same is squarely covered by the decision of a Coordinate Bench ruling of this Tribunal in the case of Punjab State Federation of Cooperative Sugar Mills Ltd. Vs Commissioner of Central Excise, Chandigarh [2014 (8) TMI 56 - CESTAT NEW DELHI], where it was held that no service tax would be chargeable on the amount being received by the appellant from its Member Sugar Mills - appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 1003
  Penalties u/s 76 and 78 - appellant had received External Commercial Borrowings (ECB) during 2006-07 for their Windmill Project in India - reverse charge mechanism - payment of duty with interest on being pointed out - Held that: - The levy of service tax on reverse charge mechanism during the period in question had been an area of dispute between the Revenue and the assesse, and it became clear only after the decision of the Hon’ble Bombay High Court in the case of Indian national Ship Owners Association Vs. UOI [2008 (12) TMI 41 - BOMBAY HIGH COURT] - delay in payment of service tax cannot be attributed to the mala fide intention of the Appellant, but due to the delay of response of the ICICI Bank - penalty set aside by invoking section 80 - appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 1002
  100% EOU - Refund claim - CENVAT credit - refund denied on the ground that credit is not admissible - Held that: - it is an admitted fact that no notice or show cause notice within the meaning of Rule 14 of CCR, 2004 read with Section 73 (D) of the Finance Act was issued. In such circumstances, it is not permissible to deny Cenvat credit, already availed - the disallowance of Cenvat credit and consequent disallowance of refund in part, is bad without issue of any notice under Section 7 (1) of Finance Act, read with Rule 14 of CCR, 2004 - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2017 (8) TMI 1008
  NCCD - whether NCC duty is exempted under N/N. 32/99-C.E? - whether Cenvat credit under the Cenvat Credit Rules can be utilised towards payment of NCC duty? - Held that: - the issue is pertaining to the levy of the education cess and secondary higher education cess while the exemption from the payment of duty was granted as per N/N. 9/09 dated 3rd March, 2009 - the issue is squarely covered by our earlier order in the case of Hero Honda Motors Vs. Commr. of Central Excise [2017 (2) TMI 716 - CESTAT NEW DELHI], where it was held that NCCD, Education Cess, Secondary Higher Education Cess which are levied under separate statutory enactments cannot be granted exemption under the notification - Once the final products manufactured are exempted goods, then there is a bar in availing cenvat credit on the inputs/ input services in terms of Rule 6 of the CCR, 2004. Appeal dismissed - decided against appellant.

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• 2017 (8) TMI 1001
  CENVAT / MODVAT credit - capital goods - “Single Point Mooring system” - Rule 57Q of the Central Excise Rules, 1944 - Held that: - It is an undisputed fact that part of the pipelines and SPM are integrally connected with the equipments and tanks within the factory through the pipelines and instrumentation. It is necessary to run the refinery of the size in question without installation of SPM used in connection with the import of crude by giant crude tankers. SPM and all connected and related items “ capital goods” used & usable. The Appellants, in the present case, is not claiming that items used in making those SPM system to manufacture it. The scheme is that SPM system and its integrated part which is on going mechanism supported by the spares and accessories. Therefore, the Supreme Court judgment in Saraswati Sugar Mills vs. Commissioner of Central Excise, Delhi III [2011 (8) TMI 4 - SUPREME COURT OF INDIA], cannot be extended to deny the claim of the Appellants. The case of M/s. Bharati Airtel Limited is also not applicable in the facts and circumstances of the case, as in the present case actual SPM system is in use and required to be used for specific purpose. This is keeping in mind, the nature of business and final product produced/processed after obtaining this raw material through SPM system. In Vikram Cements vs. CCE, [2006 (1) TMI 130 - SUPREME COURT OF INDIA], the Supreme Court has specifically held that explosives in the mines are used for manufacture of final products and hence modvat credit cannot be denied even though not used in the factory. The impugned order, therefore, based upon the overruled judgment required to be set aside on this ground also as this case goes to the root of reasoning given by the learned Authority while rejecting the claim of the Appellant. We are inclined to observe that the expression “used in the manufacture of goods” take within its ambit in integral process and equipments connected with its ultimate production of goods. The material, equipments, in question are integral part of the manufacturing process and hence falls within the ambit of “capital goods”. Merely because SPM system is not specifically within the factory, but it is outside the factory, still required to be treated as “capital goods” used for manufacturing of final products, in the facts and circumstances of the case. Appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 1000
  Scope of SCN - CENVAT credit - job-work - goods sent to job-worker not received back after the expiry of the statutory period of 180 days - penalty - Held that: - The SCN does not anywhere propose the imposition of penalty in relation to non-receipt of goods from job worker within 180 days. Ld. AR was specifically asked to show the same but could not do so. It is evident that invocation of penal provisions in concluding Para 18 of show cause notice is based on the justification in Para 10-17, which are entirely based on the question of wrongful availment of Cenvat Credit of Rs. 38,23,069/-, which has been dropped by the adjudicating authority. Hence the belaboured effort of Ld. Commissioner (Appeals) in para 8 and 9 to arrive at a finding that the penalty was proposed on the appellants in relation to non-receipt of goods within 180 days as well is clearly not supported by the facts enumerated in the SCN. Considering the conduct of the appellants who reversed the Cenvat Credit on the spot on 23.06.2004 and paid the interest long before the issue of the show cause notice and the absence of any ground in the show cause notice for the penalty on the appellant in relation to non-receipt of goods within 180 days, the order of Ld. Commissioner (Appeals) is clearly unsustainable and is therefore, set aside. Appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 999
  CENVAT credit - Manpower Supply Services - Security Services - Revenue objected to the same on the ground that the services stand utilized by Unit-II & III and the credit stand availed by Unit-I and IV and Unit-II & III who were not registered with the department under Central Excise - Held that: - reliance placed in the Tribunal's decision in the case of S.G. Zaveri Pharmapack Vs. CCE, Mumbai [2007 (3) TMI 156 - CESTAT, MUMBAI], where it was observed that Cenvat credit in respect of captive goods cannot be denied to the manufacturing unit if the same is installed at the job working premises - In as much as admittedly all the four units belong to the same assesse, their admissibility to the credit is required to be adjudged in the light of the above decision of the Tribunal, for which purpose I set aside the impugned order and remand the matter to the original adjudicating authority. Extended period of limitation - two SCNs stand issued on 23.03.2015 pertains to the period April 2011 to December 2014 and the third SCN dated 18.01.2016 pertains to the period January 2015 to October 2015. As such, all the three SCNs stand issued by invoking the extended period of limitation - Held that: - the extended period was not available to the Revenue, however, a part of the demand also falls within the limitation period. As the matter is being remanded, the adjudicating authority would examine the appellants liability to pay tax, if at all only for the period falling under the limitation. Appeal allowed by way of remand.

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• 2017 (8) TMI 998
  Refund claim - Valuation - includibility - value of tin metal containers, used for packing - whether the appellant's refund claims which were the subject matter of the first round of litigation right upto the Hon’ble Supreme Court are required to be sanctioned or the lower authorities were right in rejecting the same on the ground of non-submission of documents? - principle of res-judicata - Held that: - The appellant having succeeded right upto the Supreme Court, a subsequent issuance of SCN, for the second time, in respect of the same refund claims cannot be appreciated. The adjudication cannot be done in piece meal and the appellant having succeeded in the first round of litigation, the Department cannot raise, subsequently, another objection for rejection of the refund claims. The appellants have rightly contended that in such cases the principles of res judicata will apply - appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 997
  Interest - penalty - delayed payment of duty - Held that: - the interest for delay of payment of duty is required to be paid under Section 11AB - the interest is to be calculated @ 24% and accordingly intimated to the appellants. Penalty - Held that: - the appellant failed to discharge monthly payment of duty under Rule 8 of the CCR, 2002. Thus, the entire transaction is duly recorded in the statutory records. It is already stated that due to delay of discharging duty on monthly basis of Rule 8 of the CER, the appellant is liable to pay the duty alongwith interest as indicated above. Hence, there is no requirement to impose penalty under Rule 25 of the Rules. Appeal allowed - decided partly in favor of appellant.

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• 2017 (8) TMI 996
  Valuation - job-worker - deduction claimed in respect of outward transportation charges freight and hundi discount given to the principal manufacturer - includibility - Whether the outward transportation charges are required to be included in the assessable value of the goods cleared by the appellant as job worker or not? - Held that: - Admittedly, the outward freight charges have been paid on the goods after the goods have been cleared from their factory - in view of the decision of the Hon ble Supreme Court in the case of Ujagar Prints, we hold that outward freight includible in the assessable value in the facts and circumstances of the case - demand set aside. Whether hundi charges given to the principal manufacturer is admissible deduction to the appellant being job worker or not? - Held that: - in an identical set of facts in the case of Indian Pistons Ltd. vs. CCE, Chennai [2007 (9) TMI 89 - CESTAT, CHENNAI], it was held that Since appellant is not involved in buyer’s settings with bank, then interest paid by buyer to bank for delay in remittances are not includible in assessable value - the hundi charges are not included in the assessable value. Appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 995
  Valuation - manufacture of Pan Masala - Kamla Pasand - new Retail Sale Price Product getting manufactured on the existing machine - interpretation of statute - Held that: - Id. Commissioner (Appeals) has interpreted that first proviso to Rule 8 of PMPM Rules, 2008 indicates that single operating pouch packing machine should be treated as two machines only if product with new MRP is manufactured and duty in respect of two operating pouch packing machines for the two months in view of said first proviso to Rule 8 of PMPM Rules, 2008 shall be payable - the interpretation given by Id. Commissioner (Appeals) in the impugned Order-in-Appeal dated 19/04/2011 is correct interpretation of the provision of said proviso to Rule 8 of PMPM Rules, 2008 - appeal dismissed - decided against Revenue.

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• 2017 (8) TMI 994
  Penalty - non-maintenance of RG-1 Register - SSI exemption - Held that: - in the impugned order there is no allegation against the appellant that they have contravened the provisions of Section 11AC of the Act. In that circumstances, the provisions of Rule 173Q of the CER, 1944 cannot be invoked in the facts of the case. In that circumstances, I hold that the redemption fine and penalty are not imposable on the appellant - Appeal allowed - decided in favor of the assessee.

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• 2017 (8) TMI 993
  Manufacture - job-work - appellant has given the broken glass/cullets to the job worker to abstract silver sludge from that cullets - Held that: - the silver sludge has not been manufactured by the appellant but by the job workers, therefore the duty is not payable by the appellant. Admittedly, when the appellant has not done any activity of manufacture of silver sludge, the appellant is not liable to pay duty - appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 992
  Penalty - Held that: - sub-rule (3A) was inserted in Rule 8 vide Notification No. 17/2005-C.E. (N.T.), dated 31-3-2005 which is effective from 1-4-2005, whereunder the provision for forfeiture of monthly payment of duty was provided. I find that the Asstt. Commissioner has passed order for forfeiture of the monthly facility to pay duty on monthly instalment invoking sub-rule (3A) of Rule 8 of Central Excise Rules, 2002. Since sub-rule (3A) inserted and become effective from 1-4-2005, no action could have been taken for period prior to 1-4-2005 under sub-rule (3A) of Rule 8 therefore the order for the forfeiture of facility passed by the Asstt. Commissioner is ab initio illegal and without authority of law - Appeal allowed - decided in favor of the assessee.

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• 2017 (8) TMI 991
  Classification of goods - Manifold Business Forms & Interleaved Carbon Papers - whether classified under CTH 48 or CTH 49? - Held that: - following the classification by the learned Chief Commissioner office, the Commissioner of Customs, Central excise Kanpur vide communication dated 9th March, 2010 clarified to the respondent-assessee that in respect of the finished products manufactured by them namely money receipts for Sahara Parivar - Interleaved with Carbon was classifiable under Chapter Heading 4901 - appeal dismissed - decided against Revenue.

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• 2017 (8) TMI 990
  Cenvat credit - Channels, Beams, Angles, etc - Explanation 2 to definition of inputs under Rule 2(k) of Cenvat Credit Rules, 2004 - Held that: - it is very clear that through Installation Certificate the items used on which Cenvat credit was taken were used for increasing the strength of Storage Tanks. Therefore, I hold that they were used in relation to the manufacture of capital goods and therefore as per definition of inputs and capital goods they were eligible for Cenvat credit - Appeal allowed - decided in favor of the assessee.

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• 2017 (8) TMI 989
  Waste and scrap were cleared without payment of duty - Held that: - the paper waste is import of waste paper and the same was cleared as such. As regard the steel scrap, it is scrap generated from the maintenance of plant and machinery. On the both items appellant has not availed Cenvat credit. The Excise duty can be charged on the waste and scrap only (i) where waste and scrap is generated during the course of manufacture of excisable goods; and (ii) such waste and scrap of such excisable goods has been classified dutiable goods in the Central Excise Tariff, which is not the case here - Appeal allowed - decided in favor of the assessee.

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• 2017 (8) TMI 988
  Classification of goods - Controller and Field Interface Board - whether the product namely Controller and Field Interface Board manufactured by the appellant for use in lift/elevator is classifiable under Chapter Heading 8431 as lift parts as claimed by the appellant or classifiable as control panel under Chapter Heading 8537.00 as claimed by the Revenue? - Held that: - the appellant’s product is control panel but without the motherboard and or the processor. Even, though the control panel is without motherboard but having all other components, it will be treated as control panel, for the reason that a particular product even if it is semi processed or partially processed, it will merit classification under the head of fully finished product only - since for the control panel there is an independent tariff entry under Chapter Heading 8537, it will merit classification under its specific head, i.e. under Chapter Heading 8537 in terms of Note 2(a) of Section Notes to Section XVI of the Central Excise Tariff - appeal dismissed - decided against appellant.

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• 2017 (8) TMI 987
  Valuation - whether the “physicians sample” not meant for sale shall be valued under Section 4 or 4A of Central Excise Act, 1994? - Held that: - The Circular No. 813, dated 25-4-2005 says that the provision contained in Rule 4 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 shall apply to value the “physicians sample” - In view of the Board’s clarification that the goods of above kind shall be governed by Rule 4 of the Valuation Rules, it follows that the physicians sample shall be governed by Section 4 of Central Excise Act, 1944 for valuation - appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 986
  Remission of duty - destruction of goods - presence of competent authority - Whether the learned Tribunal was justified in not granting the remission of duty for P.P. Medicaments which were admittedly not fit for human consumption as being expired and which were destroyed in presence of Food and Drugs Administrative Authority and consequently demanding duty on the destroyed goods from the appellant? - Held that: - It is an admitted position that in the present case the aforesaid procedure has not been followed by the appellant and without any approval/permission from the appropriate authority, drugs have been destroyed and that too not in presence of any of the Officers of the appropriate authority. It is the case on behalf of the appellant that as the goods/drugs were destroyed in the presence of the Food and Drugs Administrative Department on 11-1-2006, the appellant is entitled to remission of duty on such goods/drugs. However, the goods/drugs destroyed in presence of the Officers, other than appropriate authority/Officer of the Central Excise Department, cannot be said to be in compliance of Chapter 18 of the C.B.E. & C.’s Central Excise Manual. If the appellant is claiming remission of duty on destruction of the drugs under Rule 21 of the Central Excise Rules, 2002, the appellant is required to follow the procedure as required as per Chapter 18 of the C.B.E. & C.’s Central Excise Manual. It is required to be noted that on facts it cannot be said that there was inordinate delay on the part of the appropriate authority in not responding to the application submitted by the appellant. What is provided under Chapter 18 of the C.B.E. & C.’s Central Excise Manual cannot be said to be procedural condition of technical nature. It is substantive condition, and therefore, non-observance of the same is not condonable and is likely to facilitate the commission of fraud and administrative inconvenience It cannot be said that the learned Tribunal has committed any error, which calls for the interference of this Court - appeal dismissed - decided against appellant.

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• CST, VAT & Sales Tax

• 2017 (8) TMI 975
  Classification of manufactured products - Shower to Shower - Listerine Mouthwash - Savlon - whether the products could be classified as drugs or not? - the decision in the case of M/s Johnson And Johnson Ltd. Versus CTO Anti-Evasion, Rajasthan-III, Jaipur, The Deputy Commissioner (Appeals) -II, Commercial Taxes, Jaipur, The Rajasthan Tax Board, Kar Bhawan, Ajmer And Vice-Versa [2016 (1) TMI 1230 - RAJASTHAN HIGH COURT] contested - Held that: - Application for exemption from filing official translation is allowed - Permission to file additional documents is granted - Issue notice insofar as 'Shower to Shower Prickly Heat Powder' is concerned.

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• 2017 (8) TMI 974
  Classification of product - interpretation of statute - Whether the product of the petitioner as vegetable fat spread can be said as included in Entry No.32 of the III Schedule or not? - the decision in the case of M/s. 3F Industries Ltd., (earlier known as M/s. Foods Fats and Fertilisers Limited) Versus Commissioner of Commercial Taxes, Karnataka [2016 (12) TMI 959 - KARNATAKA HIGH COURT] contested, where it was held that If the market parlance test is considered, we do find that the product as vegetable fat spread is having separate marketability and different use hence cannot be said as same as that of the edible oil - Held that: - the decision in the above case upheld - SLP dismissed.

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• 2017 (8) TMI 973
  Courier service provider - logistics Agreement - inspection of premises - presence of various goods which had not entered the State of U.P on the strength of certain Forms 38/39 - seizure of goods - power of seizure - the decision in the case of M/s Ecom Express Pvt. Ltd. Versus The Commissioner, Commercial Tax [2016 (10) TMI 784 - ALLAHABAD HIGH COURT] contested, where it was held that The power to seize goods is not dependent upon the bonafides or characteristics of a past transaction or perceived course of business. It has to be necessarily exercised in the backdrop of whether the goods which are being seized fall within the mischief of Section 48 or not - Held that: - the decision in the above case upheld - SLP dismissed.

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• 2017 (8) TMI 972
  Exemption of Rotary Tiller from Levy of VAT - whether the petitioner is entitled for exemption, as their equipment has been described in Part B - Sl.No.1(ii)(17), being classified as Rotavator? - Held that: - What is required to be seen by the Assessing officer is whether the Rotavator is a trade name or a trade mark and whether it is equivalent to a Rotary Tiller. A steel Almirah is colloquially referred to as Godrej, which infact is a trade mark of a premier company producing Steel Almirah - matter is remanded to the respondent for fresh consideration, who shall extend the benefit of exemption granted for the agricultural implement Rotavator - appeal allowed by way of remand.

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• 2017 (8) TMI 971
  Levy of tax - sale of coffee - tax levied on the ground that the petitioner has not produced the certificate obtained from the Auctioneers to prove that the coffee sold by them has suffered tax - Held that: - this Court is convinced that the respondent has failed to discharge his statutory obligation in considering the petitioner's representation enclosing the tax-paid certificates issued by the Coffee Board / Autioneers. For such reason, the matter requires to be remanded to the respondent for fresh consideration - appeal allowed by way of remand.

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• Wealth tax

• 2017 (8) TMI 1010
  Whether Section 13(b) of the Indian Partnership Act, 1932, could be invoked by the Revenue in the context of clause-7 of the Partnership Deed of the firm, M/s Saraf Trading Corporation - Held that:- In the absence of any specification in clause-7 of the Partnership Deed regarding the percentage of profit or loss per partner, the Revenue was entitled to take recourse to Section 13(b) of the Indian Partnership Act. Having considered this submission, we confess our inability to accept the contention. This is for the reason that there is no provision in the Partnership Act requiring that the Partnership Deed should contain the ratio of profit and loss per partner. If that be so, the partners are free to have a provision similar to clause-7, leaving the manner of apportionment to be decided by the partners. So long as this clause reflects an agreement between the partners, irrespective of its vagueness, Section 13(b) cannot be invoked. The upshot of the above discussion that the question of law raised as to whether the Revenue could rely on Section 13(b) of the Indian Partnership Act has to be answered against the Revenue and in favour of the assessee.

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• Indian Laws

• 2017 (8) TMI 968
  Permit the defendants to prosecute the foreign arbitration - Held that:- This Court is of the prima facie opinion that as the claimants in the two arbitral proceedings form part of the same corporate group being run, governed and managed by the same set of shareholders, they cannot file two independent arbitral proceedings as that amounts to abuse of process of law. This Court is further of the prima facie view that there is a risk of parallel proceedings and inconsistent decisions by two separate arbitral tribunals in the present case. In the prima facie opinion of this Court, it would be inequitable, unfair and unjust to permit the defendants to prosecute the foreign arbitration. Consequently, defendant No.1 and 2, their servants, agents, attorneys, assigns are restrained from taking any action in furtherance of the notice of dispute dated 15th June, 2015 and the notice of arbitration dated 24th January, 2017 and from initiating arbitration proceedings under India-UK Bilateral Investment Protection Agreement or continuing with it as regards the dispute mentioned by the defendants in the Notice of Arbitration dated 24th January, 2017.

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• 2017 (8) TMI 967
  Violation of copyright - stealing the ‘source code’ of a software known as ‘Quick Recovery’ developed by the complainant’s company - Offence under various provisions of the IPC, Information Technology Act as well as the Copyright Act - whether the approach of the courts below is correct in refusing to supply the hard disk and compact disk to the appellant herein? - Supply to the accused of copy of police report and other documents - Held that:- The appellant, when given the cloned copy of the hard disk, is not able to erase or change or remove the same. If that can be achieved by putting some safeguards, it would be the ideal situation inasmuch as provisions of Section 207 of the Code which ensure fair trial by giving due opportunity to the accused to defend himself shall be fulfilled and the apprehension of the prosecution would also be taken care of. We find that CBI, under similar circumstances in the case of Rupesh Kumar, accepted the order of the trial court whereby directions were given to the CBI to supply the hard disk. In the said case, the trial court found that there was no answer from the CBI whether the software in question was unique and there was no other software in the market for the recovery of lost data from the logical cracked hard disk. Number of softwares are available in the market which negated the arguments of CBI that by supplying the mirror image of the documents, the complainant will lose its money and it will be in violation of the Copyright Act, 1957. In that case, the Court took undertaking from the appellant that he would not misuse the copy of cloned CD. We, thus, are of the opinion that in order to comply with the provision of Section 207 of the Code, the hard disks marked Q-2, 9 and 20 be supplied to the appellant subject to the following conditions : (a)Before supplying the said CDs, the contents thereof shall be recorded in the Court, in the presence of complainant as well as the appellant and both of them shall attest the veracity thereof by putting their signatures so that there is no dispute about these contents later thereby removing the possibility of tempering thereof by the appellant. (b)The appellant shall not make use of the source code contained in the said CDs or misuse the same in any manner and give an affidavit of undertaking to this effect in the trial court.

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