TMI Tax Updates - e-Newsletter
August 31, 2017

Case Laws in this Newsletter:

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

TMI Short Notes

1. What is the taxability of opening balance as on 1st day of April 2016 of Foreign Currency Translation Reserve (FCTR) relating to non-integral foreign operation, if any, recognised as per Accounting Standards (AS) 11.

  Income Tax:

2. Since section 43A is applicable for a foreign currency liability in respect of an asset acquired from a country outside India, then how the exchange difference is recognised in case of a foreign currency liability for purchase of an asset in India.

  Income Tax:

3. How are foreign exchange differences to be recognized.

  Income Tax:

4. How to recognise the exchange difference In respect of transactions that are settled beyond the end of the previous year.

  Income Tax:

5. What is the manner in which foreign currency transactions are to be recorded.

  Income Tax:

Articles

1. PRINTING OF TELEPHONE BILLS – BUSINESS AUXILIARY SERVICE?

   By: DR.MARIAPPAN GOVINDARAJAN

2. Delivery Challan under GST

   By: CA.VINOD CHAURASIA

News

1. Apprehensions on GST proved unfounded: PM

2. Cabinet approves promulgation of the Goods and Services Tax (Compensation to States) Ordinance, 2017

3. Queries relating to GST received from various sectors have been scrutinised and developed into short FAQs

4. Queries relating to GST received from various sectors have been scrutinised and developed into short FAQs

5. GST revenue at ₹ 92,283 cr gets a bumper start

6. GST Revenue Figures – July 2017

7. Rajaswa Gyan Sangam, 2017 – Curtain Raiser

8. FDI Proposals

9. RBI Reference Rate for US $

10. Atal Pension Yojana surges ahead with 62 lacs enrolment

Notifications

Customs

1. 41/2017 - dated 29-8-2017 - ADD

Seeks to continue anti-dumping inforce concerning imports of "Metronidazole" originating in exported from China PR

GST - States

2. G.O. (P) No. 74/2017/TAXES - dated 30-6-2017 - Kerala SGST

Notifies the categories of supply of services on reverse charge basis.

3. G.O. (P) No. 71/2017/TD - dated 30-6-2017 - Kerala SGST

Exemption intra-State supplies of second hand goods.

4. G.O. (P) No. 70/2017/TAXES - dated 30-6-2017 - Kerala SGST

Exempttion intra-State supplies of goods or services or both received by a deductor under section 51

5. G.O. (P) No. 69/2017/TAXES - dated 30-6-2017 - Kerala SGST

Exempts intra-State supplies of goods or services or both.

6. G.O. (P) No. 68/2017/TAXES - dated 30-6-2017 - Kerala SGST

Exemption on supply to CSD/Unit Run Canteens.

7. G.O. (P) No. 67/2017/TAXES - dated 30-6-2017 - Kerala SGST

Canteen Stores Department claim a refund of fifty per cent. of the applicable state tax paid by all inward supplies of goods.

8. G.O. (P) No. 66/2017/TAXES - dated 30-6-2017 - Kerala SGST

No refund of unutilised input tax credit Sec. 54(3)(ii).

Circulars / Instructions / Orders

Customs

1. 44/2017 - dated 10-8-2017

Subject: Leviability of Integrated Goods and Service Tax (IGST) on High Sea Sales of imported goods and point of collection thereof -reg.

2. FACILITY CIRCULAR NO. 13/2017 - dated 9-8-2017

Procedure for grant of self-sealing permission to the exporters in GST regime consequent to CBEC Circular no 26/2017-customts dated 01.07.2017

3. 38 /2017 - dated 20-7-2017

Subject: Export procedure and sealing of containerized cargo-regarding.

4. 13 /2017 - dated 6-7-2017

Sub: Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017- Implementation thereof— Reg.

Highlights / Catch Notes

GST

• GST Revenue Hits Rs. 92,283 Crore Mark by August 29, 2017.

  News : GST Revenue Figures – The total revenue of GST paid under different heads upto 29th August, 2017 (10 a.m) is ₹ 92,283 crore.
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Income Tax

• Dispute Over Long-Term Capital Gain: Authorities Reject Inaccurate DVO Report, Adopt Registered Valuer's Fair Market Value u/s 50C.

  Case-Laws - AT : Computation of the long term capital gain by applying the provisions of sec. 50C - When this DVO’s report is proved as wrong, then it is open to the authorities to reject it and adopt other methods for arriving at the fair market value - the fair market value arrived at by the Registered Valuer adopted.
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• Clarification on Limitation Periods in Income Tax Act Section 254: "Passed," "Initiated," and "Served/Received" Are Distinct Terms.

  Case-Laws - AT : Rectification of mistake u/s 254 - period of limitation - the expressions “passed” “initiated” and “served/received” are not interchangeable - the expression “passed” cannot be stretched to mean that the period of limitation should be reckoned from the date of receipt of the order.
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• Assessment Reopening Denied: Later Permission Date Not Enough to Contest Project Start u/s 80-IB(10) Deduction.

  Case-Laws - AT : Reopening of assessment - Deduction u/s 80-IB(10) - merely because the permission was given later, cannot, by itself, be a basis to entertain a belief that the date of commencement of project adopted in the original assessment proceedings is incorrect.
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• Section 68: Confirmation Letters Insufficient to Prove Credit Legitimacy Under Income Tax Act. Identity Not Enough for Genuineness.

  Case-Laws - AT : Unexplained Cash Credit - addition u/s 68 - Mere furnishing of a confirmation letter by a creditor, as it again well settled, does not prove the credit; the same would at best only establish the identity of the creditors.
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• Clarification needed on "employment for substantial part of the year" u/s 80IB(2)(iv) including foreman's role.

  Case-Laws - HC : Benefit u/s 80IB(2)(iv) - interpretation of the term “employment for substantial part of the year” - ten or more workers - foreman is to be treated as a part of the manufacturing process or not - tribunal is not required this issue - HC
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• Income Tax Re-assessment Annulled by CIT(A); Case to be Reconsidered on Its Merits by Assessing Officer.

  Case-Laws - AT : CIT(A) set aside the re-assessment on ground which was not existed as the AO has considered that ground and given effect to - CIT(A) direct to reconsider the case afresh on merit.
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• Transfer Pricing Adjustments Limited to International Deals; No Adjustments for Transactions with Non-Associated Enterprises.

  Case-Laws - AT : Legally transfer pricing adjustment should be limited to the international transactions only. No additions to be made on the basis of transactions with non AE's.
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Customs

• CBEC Issues Guidelines for Exporters on Electronic Sealing of Containers Using RFID Tags and Tamper-Proof Seals.

  Circulars : Implementing Electronic Sealing for Containers by exporters under self-sealing procedure prescribed - CBEC prescribes guidelines for procuring and using RFID tags / RFID tamper proof one-time-bolt seal
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• Korean Ginseng Tablets Classified Under Tariff Item 13021914 as Extracts; Includes Liquid, Powder, Tablet Forms.

  Case-Laws - AT : Classification of goods - Korean Ginseng tablets - Tariff item 13021914 specifically mentions extracts of Ginseng (including powder) - Admittedly, vegetable extracts like the present one, can be in various forms, liquid, powder or compacted tablet. As long as the item is only extract of Ginseng plant, there can be no reason for exclusion of such item from the said tariff entry.
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• Platinum/Rhodium Wire Classified Under Tariff Heading 71101900; Concessional Duty Rate Exemption Valid for Importer.

  Case-Laws - AT : Concessional rate of duty - The Platinum/Rhodium wire imported by the appellant/assessee has been classified as Platinum (wires) under the Tariff Heading 71101900 and, as such, the exemption claimed by the appellant/assessee is rightly available.
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Service Tax

• Foreign Clients' Business Auxiliary Services Classified as 'Export of Service', Exempt from Service Tax Liability.

  Case-Laws - HC : Business Auxiliary Services - if services were rendered to such foreign clients located abroad, then, the act can be termed as 'export of service'. Such an act does not invite a Service Tax liability. - HC
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• Service Tax on C&F Agency Services Includes Reimbursement of Expenses Like Rent and Telephone Charges.

  Case-Laws - AT : Valuation - includibility of reimbursement of expenses - C&F Agency Service - various expenses such as rent, postage and stationary, telephone charges etc. - service tax is chargeable on such reimbursement.
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• Reverse Charge Mechanism: Receiving Certificate in India Doesn't Mean Service Performed Locally, Not Taxable Under RCM.

  Case-Laws - AT : Classification of services - reverse charge mechanism (RCM) - Merely because appellant receiving certificate in India does not mean service was partly performed in India - not taxable
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• Site Formation Services: No Restriction on Cenvat Credit for Exemption Under Notification No. 1/2006-ST and Works Contract Scheme.

  Case-Laws - AT : Site Formation Services - benefit of abatement - The allegation prima facie incorrect as there is no restriction in availing Cenvat credit on capital goods in order to avail exemption N/N. 1/2006-ST or under works contract composition scheme
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• Appellants Eligible for Service Tax Notification N/N. 24/2004-S.T. on Commercial Training Services Like Auto CAD and Call Centers.

  Case-Laws - AT : Commercial Training or Coaching Services in the field of Auto CAD/CAM, computer networking, multi-media, DTP, computer repair and maintenance, call centre training, etc. - Scope of of N/N. 24/2004-S.T. - the appellants are rightly eligible for the said notification
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Central Excise

• CENVAT Credit Covers Service Tax on Courier Services for Samples, Documents, Finished Goods, Pre and Post Amendment.

  Case-Laws - AT : CENVAT credit - scope of input services - Service Tax paid on the Courier Services for various purposes viz., Sending Samples, Documents, finished goods etc., would be eligible to Cenvat Credit before and even after amendment to the definition to the Input Services
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• Motor Vehicle Sale Exemption Denied: Claim for Seventh Tyre Rejected Due to Only Six Fitted at Sale.

  Case-Laws - AT : Exemption from Special Excise Duty (SED) - At the point of sale of the motor vehicle, only six tyres have been found fitted on the chassis. Such being the case, the contention of the appellant that the seventh tyre also has been used in the motor vehicle cannot be appreciated
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• Miniature cars with gold plating classified under Chapter 71, not Chapter 95, due to minor gold content.

  Case-Laws - AT : Classification of the miniature cars (Electro plated with Gold over FRP mould) - Taking into consideration the proportion of the gold content in the miniature car with regard to plastic content, it can be said that gold content is minor constituent. - To be classified under chapter 71 and not under chapter 95.
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• Exported Goods Rejected by Buyer Not Subject to Duty; No Obligation to Retrieve or Destroy under Law.

  Case-Laws - AT : Benefit of exports - once the goods have been exported even though the goods were rejected by the buyer side, duty cannot be demanded as there is no condition provided under the law that once the goods is exported and if it is rejected the same should be brought back by the assessee or should be destroyed
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Case Laws:

• GST

• 2017 (8) TMI 1194
  Constitutional validity of the Goods and Services Tax (Compensation to States) Act, 2017 - Clean Energy Cess progressively increased and stood at Rs. 400 per tonne from @ Rs. 100 per tonne - Clean Energy Cess that was already paid by the Petitioner under the FA 2010 - no input credit - new GST regime Held that:- For the purpose of providing compensation to States for loss of revenue arising out of the implementation of the GST regime, Section 8 contemplates the cess being collected in such a manner as may be prescribed. This has led to the enactment of the Goods and Services Tax Compensation Cess Rules, 2017. Notification No.1/2017-Compensation Cess (Rate), dated 28th June 2017 issued by the Ministry of Finance, Department of Revenue has re-introduced the cess @ Rs. 400 per tonne of coal. If the Act is vulnerable to being challenged for lack of legislative competence then the Rules can fare no better. The Court, at this stage, is of the view that, the Petitioner has made out a prima facie case for partial ad interim relief subject to conditions. As far as the additional levy on the stocks of coal on which it has already paid the Clean Energy Cess in terms of FA Act, 2010, the Petitioner should not be required to make any further payment. However, on stocks of coal on which no Clean Energy Cess under the FA, 2010 was paid, any payment made in terms of the impugned Act would be subject to the result of this petition. It is ordered accordingly. It is made clear that, in the event of the Petitioner succeeding in the present petition, the Petitioner would be entitled to a refund of amounts of Clean Energy Cess paid under the Act and on such terms as the Court may determine in the final order. It is made clear however, that on those stocks for which the Petitioner is not able to produce a satisfactory proof of already having paid the Clean Energy Cess under the FA, 2010, the Petitioner will be required to pay the cess under the impugned Act. This would be subject to the directions issued hereinbefore.

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• Income Tax

• 2017 (8) TMI 1255
  Reopening of assessment - reason to believe - claim of R&D expenses u/s 35 - Assessee has also claimed deduction u/s. 80IC by apportioning R & D expenses amongst various units. AO declined apportionment and reduced quantum of deduction u/s.80IC - trading sales - Held that:- CIT(A) has deleted the addition / disallowance merely by stating that issue of allocation of R & D expenses was subject matter of appeal, hence as per the proviso to Section 147 of the Act. - order is CIT(A) is not correct as per the facts of the case. During the course of re-assessment proceedings, AO found that trading sales has no connection with the R & D expenses so incurred by the assessee, accordingly he directed that the apportionment of R & D expenditure should be made after excluding the sales. However, in the course of original assessment which was subject matter of appeal before the CIT(A) only apportionment was declined by AO, whereas in the re-assessment proceedings, AO has precisely excluded the trading sales before apportionment of R & D expenditure. However, in the instant appeal before us, the CIT(A) has not decided the issue on merit. Moreover, the judgment relied on by learned AR in case of ICICI Bank Ltd. [2012 (7) TMI 521 - BOMBAY HIGH COURT] are distinguishable on facts in so far as Bombay High Court was dealing with the 2nd proviso to Section 147 whereas assessee is arguing on third proviso to Section 147. In the interest of justice, we restore the matter back to the file of the CIT(A) for deciding the issue on merit. - Decided in favor of revenue.

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• 2017 (8) TMI 1254
  Denying the exemption to the Appellant u/s 54F - Property is purchased in the wife's name and amount paid for purchase is from loan sanctioned jointly in assessee and his wife's name in the loan sanction letter - whether the investment in the new property can be treated as investment made by the assessee - Held that:- We find that the wife of the assessee is an independent taxpayer having her own sources of income. - it cannot be said that the assessee has made investment for purchase of the property due to the reason that loan has been primarily sanctioned to the wife of the assessee, who is having title over the property and the assessee has been joined in the loan for the purpose of repayment of the loan. The repayment of loan by the assessee is a transaction different from the transaction of investment in the property. Moreover, the assessee has not submitted any evidence of repayment of loan by him. - Benefit of exemption denied - Decided against the assessee. Payments towards construction/renovation in the new property - Held that:- For verification of the fact that payments of Rs. 10 lakh and 20 lakh paid respectively on 07/01/2008 and 13/01/2008 were towards construction or renovation of the new property, we feel it appropriate to restore the issue to the file of the Assessing Officer, with the direction to the assessee to produce / furnish all necessary evidence in support that construction/renovation work as mentioned in finishing agreement was carried out by seller of the property. In this regard, the assessee should furnish copy of return of income of the seller and income expenditure account showing such receipts from contract work and expenses incurred by her for carrying out construction/renovation work on the property or any other evidences which could establish that work of construction/renovation was actually carried out in the property and the said payment of Rs. 10 lacs and 20 lacs were towards such construction/renovation. If the amounts are found to be towards construction of the new property, then the Assessing Officer is directed to consider the deduction u/s 54F of the Act in accordance with law. Exemption under section 54F in respect of the consideration of Rs. 2 Lacs received by the assessee in cash - Held that:- there is no dispute that the amount of Rs. 2 lacs is part of sale consideration and the long-term capital gain on sale of the property. Since we have partly restored the issue of deduction under section 54F of the Act, in respect of the investment of Rs. 30 Lacs, we also restore the issue of claim of deduction u/s 54F of the Act against the sale consideration of Rs. 2 lacs to the file of the Assessing Officer for consideration in accordance with law.

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• 2017 (8) TMI 1253
  Computation of the long term capital gain by applying the provisions of sec. 50C - dual valuation reports one by Departmental Valuation Officer and other by Registered Valuer of Income Tax Department - determination of Fair Market Value - Held that:- When the DVO’s report has not taken into account vital facts, it cannot be a basis for substituting the stamp duty valuation fixed by the registration authority of the State Govt. It is open to the appellate authorities to examine both the valuation reports and come to a conclusion as to which report gives the fair market value of the property. The contention of the ld. DR that the valuation made by the DVO cannot be looked into or interfered with by the appellate authorities is not correct. The issue of determination of 'Fair Market Value' is a finding of a fact and the report of the DVO is an opinion in arriving at this fact. The report of the DVO or the registered valuer is an expert opinion and it can be challenged and questioned by the parties before the authorities. When this DVO’s report is proved as wrong, then it is open to the authorities to reject it and adopt other methods for arriving at the “ fair market value . Sub-sec.(3) of Sec.50C provides for adoption of the value ascertained under sub-sec. (2) as the full value of consideration. In the case on hand, on facts, the fair market value arrived at by the Registered Valuer and accepted by the ld. CIT(A) has not been controverted by the ld. DR. The order of the ld. CIT(A) is a reasoned order. Hence we uphold the same. - Decided against revenue

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• 2017 (8) TMI 1252
  Disallowance u/s 40A(2) - payment to specified persons / wives of the directors - Ground Handling Charges is doubtful and unjustified - Held that:- Disallowances was made on surmises and conjectures and without considering the relevant information / evidences. The said evidences and letters were not considered by the CIT(A) as well. Therefore, the case laws referred by the Ld. AR are applicable in the present case and the contentions of the assessee are accepted. Though the AO has not referred to section 40A(2) yet it seems that the disallowance was made under this section because his emphasis for disallowance is only on the fact that the recipients are wives of the directors. Section 40A(2) can be invoked only if the amount paid is excessive or unreasonable w.r.t. the fair market value of the services rendered. Since the AO has not given any such finding, he could not make any disallowance u/s 40A(2). Reimbursement of conveyance expenses to its directors as per the Board Resolution - reason-ability of expenses - 3.36 times increase in expense - Held that:- The explanation given by the Ld. AR that the assessee company does not own vehicles despite huge turnover, only to avoid various overhead expenses was thereon record before the Assessing Officer. The AO has made the disallowance on the ground that the amounts are not shown as perquisites. The Ld. AR’s contention that payments of Conveyance expenses by way of fixed reimbursement cannot be treated as perquisites is just and proper and whether the same is exempt or taxable has to be examined in the case of directors and not the company. Moreover, there is no dispute about the genuineness of payment or its verifiability. Thus, the appeal of the assessee on both the issues is allowed.

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• 2017 (8) TMI 1251
  Transfer pricing adjustment - determining the ALP of the international transaction - TNMM method or RPM method - taking operating income into consideration - adjustment made with reference to the Comparables available of non-AE transactions change from one method to another method - Held that:- the assessee is engaged in purchasing and reselling the same goods without any value addition, and as such, the RPM is the most appropriate method in such circumstances. Secondly, the Tribunal in earlier years has upheld the RPM as the most appropriate method. In the absence of any change in the facts and circumstances of the instant year vis-à-vis the earlier years, we cannot order the switch over from the RPM to the TNMM. On going through the Annual accounts of the assessee-company, it is lucid that the transfer pricing adjustment has been made with reference to the figures which also include non-AE transactions. Also legally transfer pricing adjustment should be limited to the international transactions only. The Hon'ble Delhi High Court in CIT vs. Keihin Panalfa Ltd. (2016 (5) TMI 203 - DELHI HIGH COURT), has held that the transfer pricing adjustment can be made only with reference to the international transactions and not the transactions with the non-associated enterprises. Similar view has been espoused by the Hon'ble Bombay High Court in CIT vs. Thyssen Krupp Industries India Private Ltd. (2015 (12) TMI 1076 - BOMBAY HIGH COURT). Thus, it is clear that the transfer pricing adjustment cannot be made with reference to the non-AE transactions, but, the same has to be confined only to the international transactions. Since the TPO/AO has made the addition on the basis of transactions even with non-AEs, we direct to restrict the addition only qua the international transactions. Thus we set aside the impugned order and remit the matter to the file of the Assessing Officer/TPO for accordingly redetermining the ALP of the international transaction afresh after allowing a reasonable opportunity of being heard to the assessee. Appeal is partly allowed for statistical purposes. The appeal is partly allowed for statistical purposes.

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• 2017 (8) TMI 1250
  Rectification of mistake - period of limitation - Unexplained investment - assessee seeks recall of the order on the ground that the Tribunal erred in holding that the assessee did not furnish any evidence with regard unexplained investment, overlooking the fact that written submissions were filed with contained detailed explanation - Held that:- Section 254(2) of the Act refers to the period of limitation reckoning from the end of the month in which the order is “passed” and not from the ‘date of receipt of the order’. As rightly pointed out by the Ld. DR, the expressions “passed” “initiated” and “served/received” are not interchangeable and the legislature in its wisdom expressly used the phraseology depending on the intention. In the instant case, the expression “passed” cannot be stretched to mean that the period of limitation should be reckoned from the date of receipt of the order. The assessee has not followed due diligence. It was also referred that even the date of order is not placed on record. In such an event we are afraied that we have no authority to interpret the expression “passed” as being akin to the ‘receipt of the order’. Since, the MA is filed beyond the period of limitation even reckoned from the date of uploading in website, we have no other alternative except to dismiss the application as being barred by limitation. - Decided against assessee.

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• 2017 (8) TMI 1249
  Reopening of assessment - Deduction under section 80 IB(10) denial - date of seeking approval or permission for development from the local authority - as per the Assessing Officer the date of 05/05/1999 is incorrect for the reason that the development permission given by CIDCO is dated 04/06/1998, which is before 01/10/1998 therefore, assessee is ineligible for the benefit of section 80IB(10) - Held that:- The date of seeking approval or permission for development from the local authority is of no relevance to decide about the correctness or incorrectness of the date of commencement of the project, which has been taken at the time of original assessment as 05/05/1999. Even if the date of approval is before 01/10/1998, it does not disentitle the assessee because the requirement of the section is that the eligible housing project has to be approved before 31/03/2007. The significance of 01/10/1998 is to examine the date of commencement of development and construction of the housing project, and in the present case it has been canvassed at 05/05/1999. The reasons recorded reflect that the Assessing Officer has confused the date of approval by the local authority with the date of commencement of development and construction of the housing project which are two different aspects. In any case, merely because the permission was given by CIDCO on 04/06/1998 cannot, by itself, be a basis to entertain a belief that the date of commencement of project adopted in the original assessment proceedings as 05/05/1999 is incorrect. In our considered opinion, there is no information or material referred by the Assessing Officer in the reasons recorded which can, even on prima-facie basis, establish that the date of commencement of development and construction of the project taken as 05/05/1999 is incorrect. Therefore, in this context it has to be factually inferred that there was no material with the Assessing Officer form a valid belief that income had escaped assessment on account of incorrect allowance of deduction under section 80IB(10) of the Act. - Decided in favour of assessee.

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• 2017 (8) TMI 1248
  Penalty u/s 271(1)(c) - assessee furnishing NIL income by claiming deduction u/s 80P which is not allowable to it as per IT law - furnishing of inaccurate particulars of income - Held that:- The explanation offered by the assessee bank though not accepted finally but at the same time, has not been found devoid of any basis. It is not a case that the language of the amended statute was held so clear that the assessee was not eligible for claim of deduction on prima facie reading of the amended statute. The language involved in the statute involves interpretation and even the CBDT has admitted the same in its circular no. 6/2010 dated 20.09.2010 and has therefore, vide the said circular, has clarified that regional rural bank, such as the assessee in the present case, will not be eligible for deduction under section 80P from assessment year 2007-08. The assessee thus has some reasonable basis for claim of deduction u/s 80P of the Act even after the amendment by the Finance Act, 2006 and it has thus established its bonafide of such claim in its return of income. It is also a fact that the said explanation has not been finally accepted and disallowance of claim of deduction u/s 80P has been sustained by the Coordinate Bench and the assessee has not filed any further appeal, however the same cannot be a basis for levy of penalty which calls for strict interpretation as we have held above. Thus respectfully following the decision of the Hon’ble Supreme Court in case of Reliance Petroproducts [2010 (3) TMI 80 - SUPREME COURT] saying mere making of a claim which is not sustainable in law, by itself, does not amount to furnishing of inaccurate particulars of income, the fact that necessary disclosure has been made in the return of income in respect of claim of deduction under section 80P, the assessee has offered the necessary explanation and the basis in support of the said claim establishing its bonafide and the said explanation has not been found totally devoid of any basis, mere disallowance of claim of deduction u/s 80P of the Act cannot form the basis for levy of penalty for furnishing inaccurate particulars of income. We accordingly confirm the order of ld CIT(A) deleting the levy of penalty and the ground taken by the Revenue is hereby dismissed. - Decided in favour of assessee.

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• 2017 (8) TMI 1247
  Addition to the sales tax payment - proof of actual payment u/s 43B - Held that:- AO made the addition of the remaining amount and the Ld. CIT(Appeals) has confirmed the addition made by the assessing officer. During the appeal hearing also the assessee did not produce any evidence to show that the balance amount of Rs. 3,90,032/- was paid by the assessee before due date of filing return of income. The sales tax payment required to be allowed on actual payment basis as per section 43B of IT Act. During the appeal hearing also, the assessee did not furnish any evidence. Therefore, we do not find any infirmity in the order of the Ld.CIT(Appeals) and the same is upheld. This ground of appeal is dismissed. Addition towards staff salaries - genuineness of payment - proof of maintaining the acquittance register for payment of salaries and deduct PF/ESI - Held that:- The assessee is carrying on two divisions i.e. RMC and the civil contracts. The AR argued that the assessing officer has allowed the entire expenditure relating to the civil contracts, but stated to be disallowed the entire expenses relating to ready mix contract business. This fact was not supported by any tangible evidence. The assessee has to maintain the acquittance register for payment of salaries and deduct PF/ESI etc. to establish the genuineness of salaries. In this case assessee has not produced any evidence with regard to payment of salaries and contribution to PF/ESI etc. Therefore we don t find any infirmity in the order of the Ld.CIT(A) and the same is confirmed. On this ground, appeal of the assessee is dismissed. Disallowance of 10% of labour charges - Held that:- It is undisputed fact that the assessee has failed to furnish the registers and muster rolls relating to the payment of labour charges and did not produce any evidence before us also. The assessee did not produce the details of payment of PF, ESI etc., in support of the labour employed. Therefore, we do not find any reason to interfere with the order of the CIT(Appeals) and the same is upheld. The appeal of the assessee on this ground is dismissed. Addition towards the creditors for expenses - Held that:- The assessee did not submit the details and confirmations from the respective sundry creditors for expenses. The Ld. A.R argued that the income is admitted on estimation basis and the expenditure also required to be allowed on estimation basis following the matching concept. This argument is not acceptable since the assessee has to establish the genuineness of expenditure as well as outstanding amount. The assessee failed to substantiate the genuineness of outstanding amount with the tangible evidence such as confirmation from the creditors, details of party wise outstanding with names, addresses and the amount outstanding with PAN No. etc. Therefore, we do not find any reason to interfere with the order of the Ld.CIT(A). However, with respect to the bonus outstanding, the assessee required to submit the details with the name, and date of payment and the evidence for payment since the bonus is allowable on actual payment basis u/s 43B of IT Act in the year in which it is actually paid. Therefore, we remit the matter back to the file of the assessing officer to verify the payment of bonus and decide the issue afresh on merits. In the result, out of the total addition made by the assessing officer amounting to Rs. 21.40 lakhs a sum of Rs. 11,40,000/- is confirmed and the addition relating to bonus is remitted back to the file of the assessing officer Addition under the head "labour charges" - Held that:- Whether the expenditure disallowed under head labour charges debited to the P&L account and the outstanding labour charges (Balance Sheet item) are one and the same or different is not clarified in the assessment order. If the outstanding labour charges in the Balance Sheet and the labour charges debited to the P&L account, both are one and the same this amounts to double taxation of the same amount which is not permissible. In case, both are different, in the absence of non production of vouchers and non furnishing the details of outstanding liabilities the disallowance is justified. Therefore, we remit the matter back to the file of the assessing officer and direct the assessing officer to verify the outstanding expenses and the labour charges and decide the issue a fresh on merits Disallowance made u/s 40(A)(3) - Held that:- assessing officer disallowed the entire payments made in cash without identifying the specific payments which exceeded Rs. 20,000/- per person, per day. As per the provisions of Section 40A(3) of the I.T. Act, where the assessee incurred such expenditure in respect of which the payment is made to a person in aggregate exceeds Rs. 20,000/-, is not an allowable expenditure. Therefore, it is the obligation on the part of the assessing officer to identify each payment which exceeds Rs. 20,000/- per day and make the disallowance. In this case, no such exercise has been done by the assessing officer. Instead, the assessing officer disallowed the entire cash payments. Therefore, we set aside this ground to the file the assessing officer to identify the payments made in cash or otherwise than by a crossed cheque exceedingRs.20,000/- per day per person and disallow the resulting amount after giving opportunity to the assessee to explain the reasons for making such payments. Accordingly, this issue is remitted to the file of the assessing officer. Disallowances under the various heads including some balance sheet items as well as the expenses - Estimation of income reasonably - Held that:- The assessee has maintained the books of accounts which are audited by the qualified CA. As per 44AB of the IT Act, the assessee is required to maintain the regular books of accounts and the income is to be computed in accordance with the books of accounts maintained. As rightly argued by the AO, the assessee is requesting for estimation of income when the AO detected the defects in the books of accounts and failed to furnish the necessary evidence in support of its claim and the same is not permissible. Therefore, we do not find any merit in argument of the Ld.AR to resort for estimation of income. Appeal filed by the assessee is partly allowed.

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• 2017 (8) TMI 1246
  Suppression of the receipts - N.P. determination - Held that:- Net profit rate declared for the year under consideration was better than the earlier year i.e. for the A.Y. 2010-11, it was 17.43% and for the year under consideration, it was 18.93%. The Assessing Officer has not specified the defects in the books of account and he has simply stated that the labour charges vouchers were self made and quantitative and qualitative consumption of raw material could not be worked out or verified in absence of day to day stock register, therefore, he made a lump sum addition. When the assessee has declared better NP rate than the earlier year then the Assessing Officer was not justified in making lump sum trading addition without giving specific defects in the expenses debited in the P&L account or specific finding with regard to the suppression of the receipts. The assessee claims that his books of account were audited and nothing specific is qualified by the auditor in the audit report, therefore, mere suspicion should not be made a basis for addition. Also agree with this view that an allegation remains allegation unless it is proved. Suspicion may be strong but it cannot take place of reality, therefore, direct to delete this addition. - Decided in favour of assessee. Non-deduction of tax on payment of interest paid to creditors - TDS on paid or payable - amount payable at the end of FY or any time during the year - Held that:- Controversy regarding TDS on paid and payable has been settled down by the decision of the Hon'ble Supreme Court in the case of M/s Palam Gas Services Vs. CIT [2017 (5) TMI 242 - SUPREME COURT] wherein held it cannot be held that the word 'payable' occurring in Section 40(a)(ia) refers to only those cases where the amount is yet to be paid and does not cover the cases where the amount is actually paid. If the provision is interpreted in the manner suggested by the appellant herein, then even when it is found that a person, like the appellant, has violated the provisions of Chapter XVIIB (or specifically Sections 194C and 200 in the instant case), he would still go scot free, without suffering the consequences of such monetary default in spite of specific provisions laying down these consequences. - Decided in favor of revenue.

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• 2017 (8) TMI 1245
  Eligibility to claim benefits of section 11 and 12 - No claim was made in the original return nor any revised return was filed - registration was granted during the assessment proceedings - Held that:- Similar issue has come up in assessee’s own case for AY 2011-12 where we have taken a view that where during pendency of appeal before the ld CIT(A), the assessee was granted registration under section 12AA, it would be a case of pendency of assessment proceedings and the assessee would be eligible to claim benefits of section 11 and 12 of the Act. In the instant case, the facts are on a better footing as registration was granted during the pendency of assessment proceedings before the AO itself. Further, we agree with the view of the ld CIT(A) that the decision of Hon’ble Supreme Court in case of Goetze India [2006 (3) TMI 75 - SUPREME Court] relates to powers of the AO and not to the powers of the appellate authorities and hence, the said decision doesn’t support the case of the Revenue. The assessee has made the necessary claim for exemption u/s 11 during the course of assessment proceedings and the ld CIT(A) has rightly allowed the same. Depreciation is held admissible to the assessee society registered under section 12AA and held eligible for exemption under section 11 and 12 of the Act. TDS u/s. 194C - defect in vouchers under the head building construction account which was not claimed as revenue expenses but capital expenses - Held that:- It is assessee’s contention that the expenses disallowed and partly sustained by the ld CIT(A) have not been claimed as revenue expenditure during the year. There is no finding recorded by the AO or ld CIT(A) in this regard. We accordingly set aside this matter to the file of the AO to examine the said contention of the assessee and decide the matter a fresh as per law. In the result, both the grounds of revenue and assessee are allowed for statistical purposes. Invoking the provisions of section 13(1)(c)(ii) r.w.s 13(2)(g) - Held that:- What is relevant to examine is the year in which the money has been invested or shares have been brought otherwise than in the prescribed mode and income arising therefrom during the previous year. In absence of any finding of the AO in this regard, the matter is accordingly set-aside to the file of the AO to examine the same afresh taking into consideration the above discussions. Similarly, the matter relating to transaction with Nirmal Panwar Finance Pvt Ltd is also set aside to the file of the AO where the AO has invoked the similar provisions. In the result, ground no. 1 of the assessee’s appeal is partly allowed for statistical purposes. Addition sustained u/s 40(a)(ia) - Held that:- Since the assessee is held eligible for deduction u/s 11 and 12 of the Act as we have discussed above, the provisions of section 40(a)(ia) of IT Act are not attracted as the same are restricted to income chargeable under the head “profit and gains from business or profession”.

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• 2017 (8) TMI 1244
  Unexplained Cash Credit - addition u/s 68 - Loans and Advances received - Held that:- There is nothing on record toward establishing the creditworthiness of the creditors and/or genuineness of the impugned credits. None of the confirmations in the present case bear the Permanent Account Numbers (PAN) of the creditors. Mere furnishing of a confirmation letter by a creditor, as it again well settled, does not prove the credit; the same would at best only establish the identity of the creditors, i.e., given that the Revenue has not required the assessee to prove the signatures on the confirmation letters, so that the same may be regarded as accepted. There is completely in contrast with the unsecured loans and advances furnished by the assessee during the course of assessment proceedings and as reflected in his Balance Sheet. No doubt, the ledger accounts of the relevant creditors are on record, and which are in agreement with the breakup of the loans as provided subsequently, but then it is only the assessee who can explain as to how its balance sheet, which purports to reflect its state of its affairs as at the year-end per its accounts, discloses a separate and different set of figures, including their profiling. In this regard, it is notable that all the loans/advances are received in cash, without as much as a cash receipt being issued, so the assessee could, at any time, change a creditor, or the amount ascribed to him, to suit himself. The Revenue is equally to blame for not questioning the assessee in this respect, which clearly undermines, nay, castigates, the assessee’s case, who only could explain the said differences. Assessee’s appeal is dismissed.

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• 2017 (8) TMI 1243
  Rectification petition u/s 154 - declining the claim of exemption to the assessee u/s 10 & 11(1)(a) - Held that:- From a bare reading of Section 297(2)(k) of the Act is evident that any agreement entered into, appointment made, approval given, recognition granted, direction, instruction, notification, order or rule issued under any provision of the repealed Act, shall, so far it is not inconsistent with the corresponding provisions of this Act, be deemed to have been entered into, made, granted, given or issued under the corresponding provision aforesaid and shall continue in force accordingly. AO was required to examine whether firstly exemption granted under the repealed Act was saved by Section 297 of the Act and secondly, whether it was consistent with the corresponding provisions of Law under the new Act. Thus we are of the considered view that by not adverting these issues. The AO has committed mistake apparent from the record and needs fresh consideration. According the AO is directed to decide the issue of availability of exemption afresh. The Assessee also argued that the rent was accrued when this was ordered by the Hon’ble Supreme Court in the year 2002, we find no such issue was raised before the Assessing Officer hence could not be rectified. We find even no such ground was raised before the Ld. CIT(A). Therefore, this issue is not arising out of the order under Section 154 of the Act. Under these facts, this plea of the assessee that the receipts cannot be taxed under the year under appeal is devoid of any merit hence rejected. - Appeal of the Assessee is partly allowed for statistical purpose

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• 2017 (8) TMI 1242
  Benefit under Section 80IB(2)(iv) - interpretation of the term “employment for substantial part of the year” - foreman is to be treated as a part of the manufacturing process or not - question of fact - Held that:- the Tribunal to have independently formed an opinion, based on correct, complete and proper appreciation of entire material, that the assessee had in fact employed more than ten workers for substantial part of the year. Findings of fact cannot be said to be arbitrary, illegal, erroneous or unreasonable. As to whether foremen were employed in the process of manufacture or not was not an issue either before the Assessing Officer or before the CIT (A). The only issue being as to whether Foremen were employed in the undertaking or not. It is in this backdrop, the Tribunal found it appropriate not to answer the contention of the revenue that in fact foreman is not treated as a part of the manufacturing process. In fact, Tribunal was not even required to answer the same, for there was no dispute as to whether the undertaking of the assessee is engaged in the activity of manufacture or that foremen were not employed for the process of manufacture, in the particular undertaking of the assessee, for which, benefit under Section 80IB(2)(iv) was sought. Though this Court, after having gone through the material adduced on record by appellant-department vis-a-vis impugned order passed by the learned Appellate Tribunal, is of the view that no substantial question of law arises for determination of this Court, but otherwise also, as has been discussed hereinabove, learned Tribunal has correctly dealt with each and every aspect of the matter, taking into consideration law laid down by Hon’ble Apex Court Kondiba Dagadu Kadam vs. Savitribai Sopan Gujarat [1999 (4) TMI 600 - SUPREME COURT OF INDIA] as well as the rule occupying the field. This Court, after having carefully examined the text of questions of law formulated in the appeal vis-a-vis findings recorded by learned Appellate Tribunal, finds that questions framed by the appellant-department are pure questions of fact, which definitely cannot be looked into in the present proceedings, and as such present appeal deserves to be dismissed. - Decided against the revenue.

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• 2017 (8) TMI 1241
  Disallowance of interest u/s 40(a)(ia) - to non deduction of tax - Held that:- CIT(A) deleted the dis-allowance by observing that, "the AO had already applied his mind in disallowing the entire interest at the time of original assessment and therefore now he cannot resort to reopening u/s 147 to disallow the amount same, though on a different premise, which he had not resorted to at the time of original assessment." In the first assessment proceedings u/s 143(3) of the Act the entire amount of interest of Rs. 1,84,91,00,000/- has already been disallowed by the A.O. we feel there is no need for any further disallowance u/s 40(a)(ia) of the Act to the same amount again. Therefore, the A.O. is not justified to add back the same to the total income of the assessee. In the result the grounds of appeal of the Revenue are dismissed.

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• 2017 (8) TMI 1240
  Levy of penalty u/s 271(1)(c) - deduction under Section 80HHC disallowance - AO computed the deduction under Section 80HHC by excluding the sale of scrap from the total turnover and the proportionate profit from the profits of the business - Held that:- The issue has now been finally decided by the Hon’ble Supreme Court in Commissioner of Income Tax-VII, New Delhi Vs. Punjab Stainless Steel Industries [2014 (5) TMI 238 - SUPREME COURT] wherein held that the proceeds generated from the sale of scrap would not be included in the total turnover. It was observed that the intention behind the enactment of Section 80HHC of the Act was to encourage export so as to earn more foreign exchange. It was concluded that once the Government decides to give some benefit to someone who is helping the nation in bringing foreign exchange, the revenue should also make all possible efforts to encourage such traders or manufacturers by giving such business units more benefits as contemplated under the provisions of law. Thus the question regarding inclusion of sale of scrap in the total turnover is required to be examined afresh by the Assessing Officer in the factual matrix of the case. We set aside and the matter be remanded to the Assessing Officer for deciding the issue regarding penalty afresh after the decision in quantum proceedings in accordance with law.

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• 2017 (8) TMI 1239
  Exemption u/s 54 denied - purchase of property in apartment - to be treated as purchase or construction of residential property - eligibility period of 2 years or 3 years - possession was not taken till filing of return - Held that:- As per CBDT Circular No. 471 dated 15/10/1986 read with Circular No. 672 dated 16/12/2993 the terms of scheme of allotment and construction of new apartment as provided in apartment buyers agreement are similar to those as mentioned in para 2 of CBDT Circular No. 471 dated 15/10/1986. The reliance of the assessee on various case laws supports the case of the assessee. The assessee has complied with all the conditions for making investment of capital gains in asset which cannot be termed as new asset as the old asset was sold on 11/4/2008 and time limit for investing capital gains in construction of new asset would have expired on 10/4/2011 but the assessee prior to that had entered into an apartment buyers agreement on 3/1/2007. Thus, the assessee has proved its stand along with the documentary evidence which was totally ignored by the Assessing Officer as well as by the CIT(A). Treating the interest expense on borrowed funds towards cost of acquisition of residential house as transferred the assessee had not claimed such interest expense as a deduction on such self occupied property under any Section like that of Section 24(B) or Section 57 of the Act. Therefore, the assessee is entitled to claim it as part of cost of acquisition of such house. The same is supported by the Karnataka High Court judgment in case of CIT Vs. Maithrevi Pai [1983 (11) TMI 43 - KARNATAKA High Court] wherein it is held that interest paid on borrowings for acquisition of a capital asset must fall for deduction u/s 48 of the Act provided the same has not been claimed as a deduction under other heads like those u/s 57 of the Act. Thus, the order of CIT(A) is set aside. - Appeal of assessee allowed.

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• 2017 (8) TMI 1238
  Deduction u/s 10B - duty drawback - business income or not - Held that:- Sub-section (4) of section 10A/10B of the Act is a complete code providing the mechanism for computing the "profits of the business" eligible for deduction u/s 10B of the Act. Once an income forms part of the business of the income of the eligible undertaking of the assessee, the same cannot be excluded from the eligible profits for the purpose of computing deduction u/s 10B of the Act. In the assessee's own case in the preceding years, after considering the decision in the case of Liberty India [2009 (8) TMI 63 - SUPREME COURT ] held that provisions of section 10B are different from the provisions of section 80IA wherein no 77 formula has been laid down for computing the eligible business profit. Thus question is answered, in affirmative and in favour of the assessee. Accordingly, the assessee is eligible for claim of deduction on export incentive received by it in terms of provisions of section 10B(1) read with section 10B(4) of the Act.

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• 2017 (8) TMI 1237
  Penalty u/s 271(1)(c) - addition on account of purchase of coal outside the books of accounts and on account of Kattha business - quantum proceedings altered by the CIT(A) - notice issued under section 153A - penalty u/s 271AAA or u/s 271(1)(c) Held that:- It is an admitted fact that the addition of Rs. 9,26,640/- made by the AO on account of unaccounted purchases outside the books of accounts has been reduced substantially by the Ld.CIT(A). Thus the order in the quantum proceedings has been altered by the Ld.CIT(A) in a significant way. Therefore, in view of the decision of Hon’ble Delhi High Court in the case of Principal CIT vs. Fortune Technocomps P.Ltd.(2016 (5) TMI 859 - DELHI HIGH COURT), the very basis of initiation of penalty proceedings has been rendered as nonexistent. Further find the search in the instant case took place on 30.06.2009. Provision of section 271 AAA speaks of penalty leviable in case of searches conducted on or after 1.6.2007 but before 1.7.2012. Thus penalty should have been levied u/s 271AAA and not u/s 271(1)(c) of the Act. Since the penalty has been levied u/s 271(1)(c) instead of S.271AAA and considering the fact that the Ld.CIT(A) in the instant case in the quantum proceedings has altered the assessment order in a significant way, therefore, in view of the decision cited (supra), the very basis of initiation of penalty proceedings has to be treated as nonexistent - Decided in favour of assessee.

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• 2017 (8) TMI 1236
  Initiation of proceedings under section 153C - property sold at a lesser price - satisfaction as required in law was recorded by the assessing officer being the person searched under section 153A - proof of assessee has received anything other than what has been disclosed - Held that:- It is an admitted fact that while the assessee and Radico Khaitan Ltd. belong to the same group, however, the company M/s Mackson Creations Pvt.Ltd. does not belong to the same group and is an outsider company. No evidence whatsoever was found during the course of search to show that the assessee has in fact received something extra than what has been shown to have been received on account of sale of the property. The assessee also has given justifiable reasons as to why the agreement with Radico Khaitan was not acted upon on the ground that the employees of Radico Khaitan Limited resisted to go to the new place because of inconvenience in transport. Further the A.O. had verified u/s 131 (1) and 133(6) of the Act in case of M/s Mackson Creations P.Ltd. and others according to which they have purchased the property “Corenthem” from M/s Shivraj Properties Pvt.Ltd. in the Financial Year 2009- 10 at Rs. 8.15 crores. The DVO vide his report has also ascertained the value of the property at Rs. 8,31,07,000/- as on 30th October,2009. Under these circumstances and in absence of any incriminating material found during the course of search to establish that the assessee has received anything other than what has been disclosed, we do not find any merit in the order of the Ld. CIT(A) in enhancing the income of the assessee by Rs. 6,66,93,021/-. Accordingly, the same is directed to be deleted. Applicability of Section 50C - capital gain - value determination of property sold - reference to DVO - property as a capital asset - computation of total income - Held that:- Value determined by the AO is concerned it is an admitted fact that as against the sale consideration of Rs. 8.15 crores the DVO had determined the value of the property at Rs. 8,31,07,000/-. Although the assessee had agreed to sell the property to M/s Mackson Creations Pvt.Ltd. at Rs. 8.5 crores, however, the property was finally sold at Rs. 8.15 crores. No reason whatsoever has been given as to why the property was sold at a lesser price. There is also no reason given by the assessee so as to justify that the value adopted by the DVO is erroneous. Under these circumstances we hold that the provisions of S.50C will be applicable and the value adopted by the A.O. at Rs. 8,31,07,000/- as against Rs. 8.15 crores adopted by the assessee as sale consideration is justified. So far as the argument of the assessee that the property is its stock in trade and therefore provisions of S.50C are not applicable is concerned, we find that the assessee in its computation of total income has declared the income from “Corenthum” as income from house property. Therefore, although the said property has been shown in the balance sheet as stock in trade, but the conduct of the assessee while computing the taxable income shows that the property is a capital asset since rental income is offered to tax from such property as “income from house property”. Therefore the arguments of the assessee that provisions of S.50C are not applicable to the facts of the case is incorrect. In this view of the matter the addition sustained by Ld. CIT(A) is restricted to Rs. 16,07,000/- as determined by the A.O. and the income enhanced by Ld. CIT(A) is deleted. The grounds raised by the assessee are accordingly partly allowed.

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• Customs

• 2017 (8) TMI 1235
  ADD - declining to initiate a Sun Set Review (SSR) - Held that: - Considering that the date of expiry of the ADD in the present case is 29th August 2017, the Court directs the Respondents to initiate the SSR in the Petitioner’s case not later than 29th August, 2017. The SSR notification shall clearly state that the proceedings would be subject to the final outcome of the writ petition. As regards the question of continuation of the ADD, the Respondents seeks time for instructions. - Matter adjourned.

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• 2017 (8) TMI 1207
  Refund claim - denial on the ground of time limitation - Benefit of import under DEEC Scheme - import of White Paper Board - Held that: - the appellant had addressed a letter on 19.11.98 to the Assistant commissioner, Customs intimating that since they require the consignment urgently for their product they would be clearing the goods on payment of duty under protest for the same. I find that the said plea of the appellant has not been disputed by the lower authority. If the duty has been paid under protest, there is no vacation of the protest, on adjudication having been done against the assesse. Such protest lodged by the assesse would remain till the disputed issue is settled finally by the higher appellate forums. I also note that such deposits were made by the appellant even prior to the adjudication, when there was no confirmed demand against them. As such, the same has to be treated to be deposits - Such deposits would be refunded to the assesse on the ultimate success of their case, without attracting any limitation aspect - appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 1206
  Classification of goods - Korean Ginseng tablets - assessee classified the goods under CTH 13021914, whereas Revenue entertained a view that the said product cannot be called as vegetable extracts and the same is correctly classifiable under CTH 21069099 as “food preparations not elsewhere specified or included – other than protein and concentrates textured protein substances – other" - whether the goods classified under CTH 13021914 or under CTH 21069099? - Held that: - Tariff item 13021914 specifically mentions extracts of Ginseng (including powder). It is clear that if Ginseng extract is imported in powder form, there could be no question about its classification. However, in the present case, the objection came only because it is in tablet form. Admittedly, vegetable extracts like the present one, can be in various forms, liquid, powder or compacted tablet. As long as the item is only extract of Ginseng plant, there can be no reason for exclusion of such item from the said tariff entry. Even otherwise, the classification proposed by the Revenue is completely unconnected to the product in question. A perusal of main tariff entry 2106 will show that the said heading deals with food preparations not elsewhere specified or included. A perusal of open source information available in public domain indicates that the said Ginseng extract is considered as traditional medicine, for centuries. Extract is widely used as a generic health supplement and for various other specific requirement like muscle strength, improved concentration etc. ‘Korean Ginseng tablets’ are correctly classifiable under tariff item 13021914 as vegetable extracts of Ginseng (including powder) - appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 1205
  Concessional rate of duty - N/N. 12/2012-CUS - classification of imported goods - pure platinum wire, semi-finished platinum wire, platinum – rhodium (10%) wire and platinum/rhodium (13%) wire - classified under CTH 71101900 or otherwise? - Held that: - Admittedly, the product mentioned in the notification as well as the product as imported by the appellant/assessee are to be classified as Platinum under Heading 71101900. The Platinum/Rhodium wire imported by the appellant/assessee has been classified as Platinum (wires) under the Tariff Heading 71101900 and, as such, the exemption claimed by the appellant/assessee is rightly available. Exemption from Additional Duty of Customs - rejection on the ground that the exemption benefit is available only to Platinum in primary form and will not be available to Platinum alloys - Held that: - the Appellate Authority erred in examining the description of the goods mentioned in column 3 of the entry in the notification. First of all, the description clearly states that Platinum, Palladium, Rhodium etc. in their primary form, that is to say, any unfinished or semi-finished form including, ingots, foils and wires it is very clear that Platinum/ Rhodium wires are eligible for such concession. The notification borrows the language of Heading 71.10 itself and, as such, we find no reason for denial of the exemption. Exemption from Special Additional Duty - Held that: - Exemption from Special Additional Duty is claimed in terms of Sl. No.77 of Notification 21/2012-CUS. The said entry is granting exemption for goods falling under Chapter 71 (Except 7113) with a description “all goods (other than articles of jewellery)”. Admittedly, the product imported are falling under Chapter 71 and not covered by any exclusion made in the said entry. Accordingly, we find that the exemption claimed by the appellant/assessee is available to them. Appeal allowed - decided in favor of assessee.

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• 2017 (8) TMI 1204
  Imposition of penalty - section 114 of CA - correctness of imposition/non-imposition of penalty - Smuggling - export of Red Sanders - penalty on Shri Ravinder Kumar Gupta, noticee no. 1 - Held that: - the noticee no. 1, Shri Ravinder Kumar Gupta, is not a culprit. He did all the formalities which were required under the law for the export of the Insulators. Hence, the lower authorities has rightly not imposed penalty on him - penalty rightly not levied. Penalty on Shri A.T. Maideen, noticee no. 2 - Held that: - it appears that he is neither the exporter of the goods nor in any manner connected with the present export consignment. He was an accused in a different case and that too was retracted by him at the earliest available opportunity. His statement was recorded on 27.11.2011 before the DRI Officers where he had disclosed his old business of Red Sanders Wood. Be that as it may. But the fact remains that he is neither the exporter nor any beneficiary. Hence, the lower authority has rightly not imposed any penalty on him - penalty rightly not levied. Penalty on Shri Sanath Kumar, noticee no. 3 - Held that: - it appears that Shri A.T. Maideen has given his (Shri Sanath Kumar) number to his old business friend. As per the direction of Shri Sanath Kumar, in the past, he used to supply the Red Sanders at the given place. But the fact remains that, Shri Sanath Kumar, who was actively involved in the smuggling of Red Sanders was not involved in the instant case. He too is neither exporter nor active conspirator in the instant case, so the lower authority has rightly not imposed penalty on him - penalty rightly not levied. Penalty on Shri Suresh Kumar, noticee no. 4 - Held that: - it appears that he was a middleman/agent of the foreign buyer of Red Sanders, who had contacted Shri Ravinder Kumar Gupta, Proprietor of M/s RR Industries - When Shri Ravinder Kumar Gupta asked for the advance payment on phone, then Shri Suresh Kumar agreed for it and entire payment was made through letter of credit (L/C). Shri Suresh Kumar is not traceable. The address given by Shri Suresh Kumar was found fake. When Shri Suresh Kumar is not traceable, then the lower authority has rightly kept the imposition of penalty in abeyance against Shri Suresh Kumar as the same cannot be recovered until he is traced - penalty rightly not imposed. Penalty on Shri Chander Pal Pathak, noticee no. 5 - Shri Anil Supervisor of M/s Atul Cargo, noticee no. 6 - Shri Babloo, Driver, noticee no. 7 - Shri Munni Yadav @ Kamlesh, Driver, noticee no. 8 - Held that: - it appears that they were involved in the transportation of the containers. Shri Chander Pal Pathak, is the owner of both the trailers which were used for the transportation of the containers from factory to ICD, Tuglakabad, New Delhi - Penalty of Rs. 10,000/- each on Shri Anil Supervisor of M/s Atul Cargo, noticee no. 6; Shri Babloo, Driver, noticee no. 7; and Shri Munni Yadav @ Kamlesh, Driver, noticee no. 8, was rightly imposed by the lower authority for the acts of omission and commission on their part for carrying out the illegal export of the Red Sanders - penalty rightly imposed. Impugned order upheld in toto - appeal dismissed - decided against Revenue.

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• Corporate Laws

• 2017 (8) TMI 1200
  Breach of principles of natural justice - non-observance of Principles of Natural Justice - whether CLB did not give any opportunity to make submissions to the appellant on the main company petition? - Held that:- No reason to interfere with the impugned order passed by the High Court of Karnataka at Bangalore [2016 (8) TMI 826 - KARNATAKA HIGH COURT] as held until the party approaches before the Civil Court, appropriate interim order could have been considered by CLB but, in our view, when no motion was made before CLB, all such aspects shall be a mere academic exercise but, suffice it to observe that as and when such contingency arises in law, the parties may move before CLB or may be before Civil Court as the case may be and at that stage, rights and contentions of both the sides would remain open. We do not find that the decision of CLB is against any law or is based on any irrelevant material or omission to consider the relevant material. Thus the appeal fails Accordingly, the Special Leave Petition stands dismissed. Having regard to the facts and circumstances of this case, the question of law with regard to Section 58 of the Companies Act is kept open. We make it clear that the observations made by the High Court in its impugned order shall not stand in the way of the final adjudication of the Company Petition pending before the learned Company Board.

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• 2017 (8) TMI 1199
  Oppression and mismanagement - Petitioner satisfying the requirement of Section 399 of the Companies Act, 1956 in order to maintain the petition - Held that:- In the absence of any prima facie evidence to sustain the plea of the petitioner in relation to the shareholding in the lst respondent company and to corroborate the plea of equal participation and shareholding of the petitioner, the only document which is required to be considered in relation to shareholding is the Form 2 as filed with the Registrar of Companies, NCT of Delhi & Haryana by the petitioner himself and which has been categorized by the said authority as under “Management Dispute”. The consistent refrain of the petitioner in the entire petition has been that as between himself and the second respondent there was an understanding of equal shareholding. However, even assuming that the enhanced authorized capital and the allotment of equity capital on 30.03.2010, suo moto, by the petitioner to himself and to his nominees are taken into consideration the same is clearly in excess of the understanding as it almost comes to 74.5% of the capital of the 1st respondent company and in clear violation of the same demonstrating that the petitioner has not come before this Tribunal with clean hands which is also a pre-requisite for invoking the equitable jurisdiction of this Tribunal. Further it is seen that along with the petitioner, Mr Narayan Ladu Mandrekar, his associate seems to have been also allotted shares to the extent of 1,60,000 equity shares of Rs.l0 each. However, the said Mr. Narayan Ladu Mandrekar, claimed by the petitioner initially to be his acquaintance had given an affidavit (Annexure XXVI) dated 28.12.2011 filed by the respondents in their typed set to the effect that the deponent therein never had any interest in the Delhi based company, A. R. Plaza Pvt Ltd. (the first respondent company) either as a director or a shareholder or in any other capacity. Thus dismiss the petition on the issue of maintainability arising out of Section 399 of the Companies Act, 1956

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• Insolvency & Bankruptcy

• 2017 (8) TMI 1198
  Initiation of corporate insolvency resolution process - Insolvency Bankruptcy process - existence of 'dispute', within the meaning of Section 8 read with sub-section (5) of Section 5 of I&B Code - Held that:- In this case, we find that the Certificate dated 6th March 2017 attached by Respondents has not been issued by any 'financial institution' as defined in sub-section (14) of Section 3 of the I&B Code, 2016 but has been issued by Misr Bank which is a foreign bank and is not recognised as a 'financial institution'. The said Certificate has been issued by 'collecting agency' as distinct from “Financial Institution” and genuity of the same can not be verified by the Adjudicating Authority. We also find that the affidavit in support of insolvency application, as prescribed in Form-5 of the 'Adjudicating Authority Rules' has not been filed, which mandates that 'no notice of dispute received to be returned or it is returned when dispute was raised', has to be enclosed by the 'operational creditor'. In absence of such certificate from 'notified Financial Institution', and as Form-5 is not complete, we hold that the application under Section 9 of the I&B Code, was not maintainable. In view of provisions of I&B Code, read with Rules, as referred to above, we hold that an 'Advocate/Lawyer' or 'Chartered Accountant' or 'Company Secretary' in absence of any authority of the Board of Directors, and holding no position with or in relation to the Operational Creditor cannot issue any notice under Section 8 of the I&B Code, which otherwise is a lawyer's notice' as distinct from notice to be given by operational creditor in terms of section 8 of the I&B Code. In the present case as an advocate/lawyer has given notice and there is nothing on record to suggest that the lawyer has been authorised by 'Board of Directors' of the Respondent - 'DF Deutsche Forfait AG' and there is nothing on record to suggest that the lawyer hold any position with or in relation with the Respondents, we hold that the notice issued by the lawyer on behalf of the Respondents can not be treated as a notice under section 8 of the I&B Code and for that the petition under section 9 at the instance of the Respondents against the Appellant was not maintainable. In view of the decision of “Kirusa Software (P.) Ltd's case (2017 (6) TMI 984 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, MUMBAI), as a notice of winding up dated 8th December 2016, was issued by Respondents and the claim was disputed by Appellant by detailed reply dated 3rd January 2017 i.e., much prior to purported notice under Section 8, issued by Lawyer and a suit between the parties is pending, we hold that there is an existence of 'dispute', within the meaning of Section 8 read with sub-section (5) of Section 5 of I&B Code and, therefore, the petition under Section 9 preferred by Respondents against the Appellant was not maintainable. In view of detailed reasons and finding recorded above, we hold the impugned order is illegal and set aside the impugned order

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• 2017 (8) TMI 1197
  Insolvency Resolution Process - pending suits or proceedings against the 'Corporate Debtor' - Held that:- There is no dispute existing in the present case as tried to be set up by the respondent and the petition which complies with various requirements, deserves to be admitted. The petition, therefore, is admitted declaring the moratorium with the following directions: i) That the Bench hereby prohibits the institution of suits or continuation of pending suits or proceedings against the 'Corporate Debtor' including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; transferring, encumbering, alienating or disposing of by the Corporate Debtor any of its assets or any legal right or beneficial interest therein; any action to foreclose, recover or enforce any security interest created by the 'Corporate Debtor' in respect of its property including any action under the Securitization and Reconstructs of Financial Assets and Enforcement of Security Interest Act, 2002; the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the Corporate Debtor. ii) That the supply of essential goods or services to the 'Corporate Debtor', if continuing, shall not be terminated or suspended or interrupted during moratorium period iii) That the provisions of sub-section (1) shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator. iv) That the order of moratorium shall have effect from the date of this order till completion of the corporate insolvency resolution process or until this Bench approves the resolution plan under sub-section (1) of Section 31 or passes an order for liquidation of Corporate Debtor under Section 33 as the case may be. Since the name of Interim Resolution Professional has not been proposed by the Applicant, we direct that a reference be made to the Insolvency and Bankruptcy Board of India for recommending an Insolvency Professional, who may act as Interim Resolution Professional in terms of sub-section (3) and (4) of Section 16 of the Code.

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• PMLA

• 2017 (8) TMI 1193
  Attachment orders - properties in question under the PMLA - possibility of revising, reversing or setting aside the said confirmatory order of attachment passed by Respondent No.2. - Held that:- In the facts of the present case Respondent No. 2 was duty bound to take cognizance of the proceedings pending before the Hon’ble Bombay High Court which was disclosed and the orders passed therein before the impugned order dated 25th March 2015 was passed by the Jt. Director, Enforcement Directorate, Hyderabad Zonal Office resulting in Final Attachment of the property which property was Custodia Legis in light of the orders passed by the Hon’ble Bombay High Court. As Respondent No. l had been made party to the Section 9 proceedings before the Hon’ble Bombay High Court and the same is sub judice, the Order passed by Respondent No.2 confirming the attachment is not sustainable. The impugned order passed by the Respondent No.2 is bad in law, contrary to the provisions of the Act and without appreciating the material on record and thus the same is liable be set aside. The appeal is accordingly allowed. The application filed by the appellant in view of order dated 12th January, 2016 is allowed. Even the provisional attachment order is also set aside. In case, the respondent no. 1 & 2 still wish to attach the properties in question under the PMLA as canvassed by them before us, they are at liberty to approach the Bombay High Court to seek liberty, where the properties are in the possession of the Court Receiver. However such application, if filed, will have to be decided on merit.

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• Service Tax

• 2017 (8) TMI 1233
  Business Auxiliary Services - Whether the services provided by the Respondent herein, in accordance with various contracts entered into with overseas manufacturers, is classifiable under “Business Auxiliary Services” as defined under section 65(105)(zzb) of the Finance Act, 1994 and if so, whether the said services provided are to be treated as export of services or not? - Held that: - reliance placed in the case of Commissioner of Service Tax, Mumbai-III Versus M/s. SGS India Pvt. Ltd. [2014 (5) TMI 105 - BOMBAY HIGH COURT], where it was held that the benefit of the services accrued to the foreign clients outside India. This termed as 'export of service'. In these circumstances, the Tribunal takes a view that if services were rendered to such foreign clients located abroad, then, the act can be termed as 'export of service'. Such an act does not invite a Service Tax liability. The consideration by the Tribunal about service by the respondent-assessee to a foreign recipient being outside the purview of the collection of service tax, can seldom be flawed - as there is no case made out by the appellant, so also there is no question of law so stated to be involved in the matter - appeal dismissed - decided against appellant.

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• 2017 (8) TMI 1232
  Valuation - includibility of reimbursement of expenses - Clearing and Forwarding Agency Service - various expenses such as rent, postage and stationary, telephone charges etc, under claim that these expenses are incurred by them for or on behalf of their principals - taxability - Held that: - For providing service minimum input services are required such as rent, postage and stationary, telephone charges etc, without these input services, Clearing and Forwarding service cannot be provided, therefore these services are required for providing Clearing and Forwarding service and has to be part and parcel of the gross value of the service i.e. Clearing and Forwarding Agency - service tax is chargeable on such reimbursement. Penalties - Held that: - the issue was contentious and various decisions were given by this Tribunal, the matter also reached to the Larger Bench - It is also fact that appellant is otherwise discharging the service tax on the commission received towards providing Clearing and Forwarding Agency service - it cannot be said that appellant had intention to evade service tax, therefore appellant have made out a fit case for waiver of penalties invoking Section 80 of the Finance Act. Appeal allowed - decided partly in favor of appellant.

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• 2017 (8) TMI 1231
  Classification of services - reverse charge mechanism - whether the service of testing and certification are classifiable as Technical Inspection Certification Services falling under Section 65(105)(zzi) of Chapter V of Finance Act, 1994 and is liable to service tax in the hand of recipient under reverse charge mechanism as provided under Section 66A read with Rule 2(1) (d) (iv) of Service Tax Rules, 1994? - Held that: - service i.e. Inspection and Certification and testing of food colour sample was performed by USA Government Agency in the country of USA, therefore service wholly performed in USA only. Merely because appellant receiving certificate in India does not mean service was partly performed in India, therefore the service of Inspection and Certification covered under clause (zzi) is falling under Rule 3(ii) of Taxation of Services(provided from outside India and Received in from outside India and Received in India)Rules, 2006 and hence not taxable under Section 66A read with Rule 2(1) (d)(iv) of Service Tax Rules, 1994 - The Tribunal while deciding the case of Intas Pharmaceuticals Limited [2009 (5) TMI 73 - CESTAT, AHMEDABAD] held that Technical Testing Analysis service fully rendered outside India, recipient of service in India is not liable to pay service tax - appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 1230
  Site Formation Services - abatement under N/N. 1/2006-ST - denial of notification on the ground that appellant have availed the Cenvat credit in respect of capital goods - Held that: - the appellant have prima facie discharged the entire service tax liability as applicable in accordance with. law. Ld. Commissioner has not carefully perused contract document and billing made by the appellant in respect of site formation service and construction service - matter needs to be re-considered in the light of actual fact available on record. As regard the abatment notification, appellant have admittedly not availed Cenvat credit either in respect of input or input service. The show cause notice alleges that they have availed credit in respect of capital goods, therefore Notification No.1/2006-ST is not available to them. The allegation prima facie incorrect as there is no restriction in availing Cenvat credit on capital goods in order to avail exemption N/N. 1/2006-ST or under works contract composition scheme, therefore appellant not violated any condition, hence the abatment availed by them is correct and legal. 100% CENVAT credit availed on capital goods - Held that: - as per the provision, the appellant was supposed to take credit of Cenvat credit of only 50%, however in the subsequent financial year remaining 50% credit was available - In the present case Cenvat credit of 50% was wrongly availed from date of taking credit till first day of subsequent financial year, therefore during such period appellant is liable to pay interest. Appeal allowed by way of remand.

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• 2017 (8) TMI 1229
  Pre-deposit - security agency service - Held that: - the appeal has been dismissed only because of certain circulars issued by the department, which mandate that the pre-deposit of 10% of the adjudicated liability should be paid before decision of the appeal on merits. In this case, the assessee is the Superintendent of Police of District Burhanpur and he claims the benefit based on certain judgments already rendered by the same Tribunal where the appeal was pending - it was a fit case where by granting exemption from deposit of the pre-deposit amount, the appeal could be considered on merits - we remand the matter back to the Tribunal for reconsideration and to decide the appeal on merits without insisting upon payment of pre-deposit amount - appeal allowed by way of remand.

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• 2017 (8) TMI 1228
  Jurisdiction - revisionary power of Commissioner (Appeals) - Held that: - Section 84 empowers the Commissioner of Central Excise to revise the orders passed by the lower Authorities and for this purpose the section grants a period of two years from the date of the original order - in the present case, the assessee had challenged the order-in-original before Commissioner (Appeals), who in turn passed the order-in-appeal - On the date on which the Commissioner issued SCN initiating proceedings under Section 84, the original order had already got merged with the order of the Commissioner (Appeals). As such, Commissioner did not enjoy the powers for passing an order-in-revision under Section 84 on such date - appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 1227
  Principles of Ejusdem Generis - Technical Inspection and Certification Service - demand on the ground that the appellants are certifying the process undertaken by the appellant’s client’s labs and as such are covered by the tax entry - Held that: - the matter requires to be placed for final resolution of the scope of the tax entry “technical inspection and certification” for service tax purpose, during the relevant period before the Larger Bench of this Tribunal - matter referred to Larger Bench.

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• 2017 (8) TMI 1226
  Commercial Training or Coaching Services - the appellants were providing coaching and training services in the field of Auto CAD/CAM, computer networking, multi-media, DTP, computer repair and maintenance, call centre training, etc. - whether these activities of coaching and training will fall under the category of “Vocational Training” or not? - Held that: - Going by nature of the training imparted by the appellants, we have no doubt that these are covered under the category of “Vocational Training or Coaching Services” - The N/N. 24/2004 exempts taxable services provided in relation to the Commercial Training or Coaching Services by the Vocational Training Institute. In terms of the scope of the training imparted by the appellant and the coverage of N/N. 24/2004-S.T., the appellants are rightly eligible for the said notification - appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 1225
  Business Auxiliary Services - bonafide belief of non-liability to service tax - time limitation - Held that: - there is a bona fide belief on the part of the appellant being an “individual” is not covered by the tax category of “Commercial Concern” during the relevant period - in such a situation invoking the charge of suppression, fraud, collusion, etc., is not sustainable. The appellant has made out a case against the demand on the question of time bar - the whole of the demand confirmed by the lower authority is falling within the extended period - demand set aside - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2017 (8) TMI 1224
  Condonation of delay of 1825 days in filing appeal - Held that: - the indulgence of the Court cannot be granted to a litigant who is far from diligent in pursuing his remedies. It is plain that, at every stage, the Appellant did not care to follow up the matter diligently and, in such circumstances, the Court is not inclined to condone the extraordinary delay of 1825 days in filing the present appeal - delay not condoned - COD application dismissed.

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• 2017 (8) TMI 1223
  Jurisdiction - impleadment in an appeal under Section 35G of the Central Excise Act - Whether the Commissioner of Central Excise, Delhi-I had territorial jurisdiction to issue a show cause notice to M/s. Florida Electrical Industries Limited? - Held that: - the submission of the applicant with respect to them not being impleaded cannot be accepted. Not only were they impleaded in the memo of parties but also served with notice. The appeal is clearly directed against a common order so far as it concerns all the seven matters that were decided by the CESTAT - there can be no doubt in the context of the right to appeal premised upon statutory provision, the mandate of the statute is to be followed. However, in the facts of the present case, the Court discerns no infirmity fatal or otherwise to say that the judgment finally disposing of the appeal in any manner prejudices the assessees/respondents, all of whom had notice and knowledge of the proceedings. Whether on the facts and circumstances of the case, the Customs, Excise and Service Tax Appellate Tribunal was right in law, in concluding that duty demand against M/s. Modern Industrial Enterprises could not be confirmed since it was not possible to arrive at the value of clearances separately between M/s. Florida Electrical Industries Limited and M/s. Modern Industrial Enterprises? - Held that: - the second question of law formulated by this Court clearly shows that the Court was aware and conscious of the fact that two entities, i.e., M/s Modern Industrial Enterprises and M/s Florida Electrical Industries Ltd. were involved. The Court’s findings that the CESTAT should have analyzed the materials before it, which had been taken into account by the Commissioner in this regard in order to carry out the exercise of segregation, precisely addresses this issue. Here too, the Court does not discern any prejudice because the respondents who are parties/appellants before the CESTAT were before the Court and most of them were represented. Application for impleadment in an appeal dismissed - decided against applicant.

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• 2017 (8) TMI 1222
  Jurisdiction - revisional power of the Joint Secretary to the Government of India, Ministry of Fincance (Department of Revenue) - whether the respondent authority has the jurisdiction to act as a revisional authority over the order passed by the Appellate authority? - Held that: - the Punjab and Haryana High Court has considered the issue in the case of M/s NVR Forgings Versus Union of India and others [2016 (5) TMI 7 - PUNJAB AND HARYANA HIGH COURT], where it was held that the order in appeal as well as revisionary order had been passed by the officers of the same rank which is not permissible as per law - impugned order set aside - petition allowed - decided in favor of petitioner.

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• 2017 (8) TMI 1221
  Clandestine removal - medicines - it was alleged that the appellant has cleared the above mentioned medicines clandestinely during the period March, 2003 to July, 2004 without reversing the Cenvat Credit @ 8% as required under Rule 6 (3)(b) of the Cenvat Credit Rules, 2002 - Held that: - on the exempted medicines namely Allopurinol & Mica clear during the March, 2003 to July, 2004, the appellant has already reversed the Cenvat Credit attributable to the inputs used in manufacturing of the said medicines along with interest, therefore, no demand is sustainable against the appellant on that ground. We further find that the remaining medicines which are exempted as per the Notification No. 5/99-CE and Notification No. 06/2002, the appellant has already paid the duty @ 8%/16%. The case of the Revenue is that the said duty is required to pay to the Department under Section 11D of the Act. In fact, it is fact on record that the amount which has recovered by the appellant from the buyers towards the duty has already been paid to the Department. This fact is not in dispute, therefore, under Section 11D of the Act, no demand is sustainable against the appellant. As regards the issue that the appellant is required to reverse the 8% of the value of the exempted goods, As it is fact on record that the appellant whatever duties they recovered from the buyers have been paid to the Department, therefore, no demand is sustainable under Section 11D of the Act. Accordingly, the said demand is also set aside. Penalty - Held that: - the appellant was under bona-fide belief and availed the Cenvat Credit. As there is no mala-fide intention, therefore, no penalty is imposable on the appellants - penalty set aside. Appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 1220
  Entitlement to interest - delay in refund of duty - area based exemption - N/N. 32/99-CE dated 08.07.1999 - Held that: - reliance placed in the case of AMALGAMATED PLANTATIONS (P) LTD. Versus UNION OF INDIA [2013 (11) TMI 589 - GAUHATI HIGH COURT], where it was held that From a conjoint reading of Sections 11B and 11BB of the Central Excise Act, 1944, it is apparent that if any refund of excise duty is ordered under Section 11B(2), the same has to be refunded within three months from the date of receipt of application under sub-section (1) of that section, failing which interest will have to be paid - assessee is entitled to interest - appeal dismissed - decided against Revenue.

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• 2017 (8) TMI 1219
  CENVAT credit - various Iron & steel articles like Angles, Channels, Joints, Beams, Plates etc. - denial on the ground that these items were used as capital goods and construed to be components or parts of capital goods - It was alleged that the said items were used for fabrication of construction materials required for stationing machineries on concrete foundations and were thus in the nature of immovable property to be taken as non-excisable goods - Held that: - the usage of these items in various capital goods/parts and components of such capital goods fabricated inside the plant of the respondent, has been examined by the original authority. In fact, the original authority taken into consideration the basic objection against the credit raised in the SCN. Admittedly, in large number of cases, the Tribunal as well as various High Courts allowed credit in similar set of facts - credit allowed - appeal dismissed - decided against Revenue.

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• 2017 (8) TMI 1218
  Valuation - whether the cost of production of captively consumed goods for which CAS-4 standards had been notified vide CBEC Circular No. 629/8/2003 dt. 13.2.2003 can be applied in pending matters for earlier periods also as held in the case of National Aluminium Co. Ltd. [2005 (3) TMI 186 - CESTAT, NEW DELHI]? - Held that: - Admittedly, the overhaul of the Section 4 of the Central Excise Act and that of the Valuation Rules was effected in 2000 as a response to the large number of disputes that had been festering in respect of valuation of final products and valuation of captive consumption of goods etc. The Board s circular dt. 13.2.2003 has issued the advisory to follow CAS-4 standards for determining the assessable value in respect of captive consumption goods. Ostensibly, this has been done with an intent to ensure that cost is determined in line with universally acceptable standards of costing expressing CAS-4 standards. In such a situation, in respect of disputes on valuation of captive consumption goods, which have been pending even after 2000, the adoption of a more scientific and transparent method of costing would indeed do no harm to either parties since the said standard greatly reduces the scope for dispute - in respect of disputes on valuation of captive consumption goods, which have been pending even after 2000, the adoption of a more scientific and transparent method of costing would indeed do no harm to either parties since the said standard greatly reduces the scope for dispute. On the peculiar facts of this case and taking note of the circumstances by which the appellant paid excess duty on three products which all revolves around the application of CAS-4 cost construction method which was under much dispute and confusion during the relevant period, we are of the view that the plea of the appellant for adjustment of the excess paid duty towards the demand requires to be allowed. Penalty - Held that: - there can be no allegation of suppression of facts, fraud or collusion that could be held against the assessee, especially considering that they are seeking resolution of the dispute by adoption of CAS-4 costing introduced by the department in 2003 - imposition of penalty of Rs. 20 lakhs imposed under Rule 173Q (1) of the CER 1944 cannot then sustain - penalty set aside. Appeal partly allowed and part matter on remand.

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• 2017 (8) TMI 1217
  CENVAT credit - scope of input services - Courier Service - whether the appellants are eligible to CENVAT credit of the Service Tax paid on Courier Services? - Held that: - on perusal of the amended definition of Input Service prescribed at Rule 2(l) of CCR,2004 with effect from 01.4.2011, makes it clear that though the expression activities relating to business, such as has been deleted, but the illustrative services viz., Accounting, Auditing, Financing, Recruitment and quality control, Coaching/training, Computer Networking, Credit Rating, Share Registry, Legal Services, Security, Business Exhibition etc., even though directly not related to manufacturing activity, being not used inside the factory premises, but continued to remain in the said definition of input service. Needless to mention that these services are even though not directly linked to the manufacturing activity in the factory premises of the assessee but connected or related to the business of manufacturing activity which also involve marketing/sale of the manufactured goods - It cannot be denied that Courier Service involves a host of uses relating to the activity of manufacture and sale of goods. Service Tax paid on the Courier Services for various purposes viz., Sending Samples, Documents, finished goods etc., would be eligible to Cenvat Credit before and even after amendment to the definition to the Input Services with effect from 01.4.2011 - credit allowed - appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 1216
  Price Variation Clause - Refund claim of duty excess paid - rejection on the ground of Time Bar - Held that: - there is no case of goods returned to make up the fresh goods, manufactured and cleared by the appellant as such. The relevant date will be the date of duty payment, as provided in clause (f) to explanation (B) under Section 11B of the Act - there is no question of unjust-enrichment, as the buyers of the goods have not paid anything more than the settled/reduced price of goods, including reduced amount of duty - matter remanded to the adjudicating authority to re determine the amount of refund by taking the relevant date as date of duty payment - appeal allowed by way of remand.

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• 2017 (8) TMI 1215
  Exemption from Special Excise Duty (SED) - N/N. 6/2002-CE dated 1.3.2002 - It was alleged that some motor vehicles, after clearance from the factory are sold to the ultimate customers through Regional Sales Offices (RSO)/Depots of M/s. Ashok Leyland Ltd without the seventh tyre. The said seventh tyres get retained at the RSOs/depots. Therefore such seventh tyre cannot be said to be used in the manufacture of excisable goods in terms of N/N. 6/2002-CE dated 01.03.2002 rendering them ineligible for the exemption - Held that: - The Motor Vehicle Act has statutorily required motor vehicles to have seven tyres - six tyres fitted to the chassis and seventh as a spare tyre. At the point of sale of the motor vehicle, only six tyres have been found fitted on the chassis. Such being the case, the contention of the appellant that the seventh tyre also has been used in the motor vehicle cannot be appreciated - The contention of the appellant that they have complied with the provisions of Motor Vehicles Act is also misplaced - appeal dismissed - decided against appellant.

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• 2017 (8) TMI 1214
  Jurisdiction - power of Commissioner (Appeals) to refix ACP - Held that: - it cannot be overlooked that the statutory power for refixing such ACP is not with the Commissioner (Appeals) but with jurisdictional Commissioner. He alone can determine and fix the ACP - the impugned order needs to be set aside and remanded to the jurisdictional Commissioner with the direction to refix the ACP of the factory of the assessee as per the revised application submitted by them - appeal allowed by way of remand.

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• 2017 (8) TMI 1213
  Refund of AED (GSI) so paid on the inputs that went into the manufacture of the exported goods - rejection on the ground that the appellants are not entitled to take Cenvat credit of AED (GSI) paid on the grey fabrics as the final product is exempted from AED (GSI) - Held that: - the situation has changed by the Notification introducing amendment of Cenvat Credit Rules, 2002 retrospectively whereby the utilization of credit of AED(GSI) has been restricted to the period prior to 31.03.2000 also which is the period pertaining to the refund claims of the present appeal - due to the introduction of the amendment restricting the utilization of credit of AED (GSI), refund not allowed - appeal dismissed - decided against appellant.

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• 2017 (8) TMI 1212
  SSI exemption - clubbing of clearances - N/N. 8/2003-CE, dated 01.03.2003 as amended by N/N. 30/2003-CE, dated 01.04.2003 - whether the clearances made from Pondicherry, Bangalore Units with MEDIMIX brand, cleared at 'nil' rate of duty under Tariff rate will be excludible? - Held that: - When the scheme of the SSI notification is considered as a whole, it is seen that branded goods which are not eligible for the benefit of the notification are to be cleared on payment of full duty without availing such exemption. Para 2 (vii) enforces a cap of Rs. 300 lakhs in the preceding financial year, for the aggregate value of clearances of all excisable goods. It is evident, by reading the notification as a whole that the limit of Rs. 300 lakhs is to include clearance of even exempted goods (subject to exclusion of Rule 3A). By concomitant reading of 3A(b) with para 4, the picture which emerges is that if branded goods are cleared on payment of duty without exemption, such value of clearances are not includible in para 2 (vii), but it should include value of all goods cleared under exemption or at 'nil' rate of duty. To determine the aggregate value of all clearances for the year 2002-03, the value of clearances of MEDIMIX soap from Pondicherry and Bangalore Units at 'nil' rate of duty will need to be included for the purposes of para 2 (vii) - appeal dismissed - decided against appellant.

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• 2017 (8) TMI 1211
  Classification of the miniature cars (Electro plated with Gold over FRP mould) - Assessees have classified the same under Chapter 71 and claimed the exemption benefit under N/N. 6/2002 dt. 1.3.2002. Department is of the view that these items are classifiable under Chapter Heading 95.03 and therefore the assessees not being eligible for exemption as per the notification - Held that: - The miniature cars are made out of FRP (Fibreglass Reinforced Plastics) mould coated with gold constituent of 200 gms and FRP mould weighing 300 gms. Taking into consideration the proportion of the gold content in the miniature car with regard to plastic content, it can be said that gold content is minor constituent. For the same reason, the said items would not fall under Chapter Heading 95.03 - It is very evident from the notification as well as the chapter heading that subject goods are classifiable under Chapter 71 and the N/N. 6/2002-CE dt. 1.3.2002 is applicable to such goods - demand unsustainable - appeal allowed - decided in favor of assessee.

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• 2017 (8) TMI 1210
  Intermediate goods - Compound rubber - captive consumption - benefit of N/N. 74/94 dated 28.3.1994 - Held that: - the Hon’ble Apex Court in the case of M/s. Ralson (India) Ltd. Versus Commissioner of Central Excise, Chandigarh-I [2015 (4) TMI 74 - SUPREME COURT], has held that in view of consistent policy of the Government, by granting exemption of compound rubber, withdrawal of exemption by N/N. 64/94 dated 1.3.1994 was an inadvertent error. That Government realizing this mistake had reintroduced exemption which had to be treated as correction / clarification having retrospective effect. Thus, it was held that for the interim period, the compound rubber was not exigible to duty - appeal dismissed - decided against Revenue.

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• 2017 (8) TMI 1209
  Defective/Rejected goods - In respect of such rejected quantity the foreign buyer has not remitted the foreign exchange to the appellant - N/N. 42/2001-CE(NT) - Rule 19 of Central Excise Rules, 2002 - Held that: - there is no condition of payment of foreign remittance against the export of goods, in the rules and notification mentioned - once the goods have been exported even though the goods were rejected by the buyer side, duty cannot be demanded as there is no condition provided under the law that once the goods is exported and if it is rejected the same should be brought back by the assessee or should be destroyed - reliance placed in the case of COMMISSIONER OF CENTRAL EXCISE, DELHI-III Versus SHYAM TELECOM LTD. [2015 (10) TMI 1783 - CESTAT NEW DELHI], where it was held that the condition regarding receipt of export proceeds cannot be imposed to demand duty foregone in respect of the goods cleared for export under bond/LUT. The duty on the goods can be demanded only if the goods have not been exported out of India within the stipulated period - demand set aside - appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 1208
  Clearances to SEZ developer - Rule 6 of CCR, 2004 - whether the demand under Rule 6 of Cenvat Credit Rules, 2004 is legal and correct in respect of final product cleared to SEZ developer? - Held that: - similar issue decided in the case of SUJANA METAL PRODUCTS LTD. Versus COMMISSIONER OF C. EX., HYDERABAD [2011 (9) TMI 724 - CESTAT, BANGALORE], where it was held that the definition of the term “export” under the SEZ Act shall prevail over the definition of term “export” under the Customs Act. Therefore, supplies made to SEZ from DTA units shall be treated as export.supplies made to SEZ are held to be “export”, provisions of Rule 6 of CCR does not arise at all - demand set aside - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2017 (8) TMI 1203
  Interpretation of statute - Refund of input tax credit - proviso to Section 19 (2) (ii) of TNVAT Act - Held that: - the State is in the process of preferring Appeals by re-presenting the Appeal papers and the Appeals are yet to be numbered. The settled legal position being that, mere pendency of the Appeal without interim order will not amount to the grant of stay of the order passed by the Lower Court or Lower Forum. In the instant case, it appears that the Appeals filed by the State are yet to be numbered - similar issue decided in the case of M/s. Everest Industries Limited Versus The State of Tamil Nadu, The Deputy Commissioner (CT) (FAC) [2017 (3) TMI 279 - MADRAS HIGH COURT], where it was held that A plain reading of the provisions of sub-section (1) and sub-section (2) of Section 19 of the 2006 Act would show that, as long as specified goods, which suffer tax are used for any of the purposes set out in clauses (i) to (vi) of sub-section (2) of Section 19, the assessee should be able to claim the ITC, with a caveat in so far as clause (v) is concerned. The caveat being, the limitation, which is encapsulated in the proviso to Section 19(2) of the 2006 Act - respondent are directed to consider the petitioner's letter/representation, dated 04.07.2017 - petition allowed by way of remand.

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• 2017 (8) TMI 1202
  Attachment of Bank Account - case of petitioner is that the first respondent cannot unilaterally pass an unreasonable and cryptic order stating that there is no excess entry tax available and attach the petitioner's bank account for the recovery of the entry tax - Held that: - The petitioner filed a reply affidavit to the counter affiavit stating that the said allegations is false and there is excess entry tax available in their account. Not only reply affidavit has been filed, statement of accounts have been produced which prima facie shows that excess entry tax is available to the credit of the petitioner - In the light of the above factual position and the documents and accounts produced by the petitioner, it is prima facie clear that there is excess entry tax to the tune of Rs. 23,04,986/- available to the credit of the petitioner as of 01.04.2013. Therefore, the impugned proceedings are liable to be set aside - petition allowed - decided in favor of petitioner.

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• 2017 (8) TMI 1201
  Validity of order passed by Deputy Commissioner (CT), Chennai - Penal interest under Section 24(3) - it was alleged that the petitioner has not reported the sales turnover of REP licence and the transaction is liable to be taxed at 8% - Held that: - When I perused the order passed by the first revisional authority namely, the Deputy Commissioner (CT), Chennai, dated 03.11.2004, it appears that the said Officer has not approached the matter in a proper manner, as while setting aside the order of the Assessing Officer and remanding the matter for fresh consideration, virtually issued a positive direction to the Assessing Authority to levy penal interest under Section 24(3) of the TNGST Act - the matter is to be remanded for being considered afresh. Section 14 of the TNGST Act, would have no application to the facts of this case, as the revised return dated 31.03.2000, is not within the period of five years from the date of the original assessment, which is dated 30.09.1994. Though Section 14 speaks of re-assessment still there is an embargo on the part of the Assessing Officer to invoke Section 14 of the TNGST Act and obviously such power could not have been invoked in the instant case. Appeal allowed by way of remand.

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• 2017 (8) TMI 1192
  Detention of goods - quality of the sago transported whether there was any impurity or any unauthorized bleaching done using acidic substances - Held that: - In terms of the test report, it is evident that the sago conforms to the standards for the test carried out under Regulation 2.4.14(2) of the Food Safety and Standards (Food Products Standards and Food Additives), Regulations, 2011 r/w 4(31) 2016/Tamilnadu/Enf/FSSAI, New Delhi, dated 28.03.2017 - the first respondent is directed to release the goods - petition allowed - decided in favor of petitioner.

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• Wealth tax

• 2017 (8) TMI 1234
  Properties/assets chargeable to tax as claimed under the WT Act - Understanding of the AO to bring certain transaction within the purview of the WT Act - notice u/s 17 issued to the assessee reopening the wealth tax assessment - Held that:- Recourse to Section 17 of the WT Act was not justified in this situation. The Tribunal felt that it could be justified in a situation where the Assessing Officer has reason to believe that the asset ought to be brought to wealth tax and should be chargeable as such, but in praesentia. The reason must be present and live and based on which he could have issued the notice. It could not be based on certain stand of the assessee before the Assessing Officer assessing him to income tax. Merely because capital gains tax was levied, assessed and sought to be charged on certain understanding or stand of the assessee, that does not mean that the Assessing Officer under the WT Act can issue a notice under Section 17 of the said Act. The ingredients, based on which the satisfaction can be recorded under Section 17, were clearly lacking. Once they were found to be lacking, then, we do not think that the Tribunal was required to refer to any wider principle of law or decide a larger issue or controversy. On facts, the Tribunal's view can be sustained, as it is eminently possible.

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• Indian Laws

• 2017 (8) TMI 1196
  Cost of installation of CCTV cameras - proceedings in Court captured on the CCTV camera - Held that:- We direct that this aspect may now be taken up by learned Additional Solicitor General with the concerned authorities so that an appropriate direction is issued by the concerned authority for installation of CCTV cameras in Tribunals in same manner as in Courts and an affidavit filed in this Court. We find from the report that there is a variance about the cost of installation of CCTV cameras and no uniform technical specifications have been prescribed. We direct the Union of India, Ministry of Information and Technology in consultation with E-Committee of this Court to lay down technical specifications and other modelities, including price range and sources of supply for installation of CCTV cameras in Courts. This may be done within a period of one month from today and such information may be provided to all the High Courts. The duration for which audio and video recordings may be retained may normally be three months, unless otherwise directed by any High Court. Though our earlier direction was to install CCTV cameras in two districts in every State/Union Territory, with the experience now gained, it is desirable that CCTV cameras are installed in all subordinate courts in such phased manner as may be considered appropriate by the High Courts. Schedule for the purpose may be laid down within one month and information furnished to this Court within two months. Audio recording may also be done. Similar directions may be issued by the Government for Tribunals.

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• 2017 (8) TMI 1195
  Guilty for committing offenses punishable under Sections 21(c) and 29 of NDPS Act - proof of commission of offence - Held that:- The sole testimony of the Investigating Officer - PW-10 (Jyothimon Dethan) is not enough to prove the case of the prosecution beyond reasonable doubt. The offences under the NDPS Act are punishable with stringent sentence and the prosecution is required to establish its case beyond reasonable doubt irrespective of the weakness of the appellant’s case. All the proceedings were conducted at the DRI office so much so the panchnama dated 17.08.2007 is computer typed. Notices under Section 50 NDPS Act (Ex.PW-10A they seem to have been prepared in advance. PW-10 (Jyothimon Dethan) disclosed in the cross-examination that he had not recorded the statement of any other official of the DRI who had participated in this case; their statements under Section 67 of NDPS Act were not recorded. All the witnesses of the prosecution are located at same office premises. The Court notices in various cases that the officials merely change their roles while carrying out different investigations. The investigation conducted by the investigating agency is not up-to-the-mark and suffers from apparent defects and material irregularities. Appellant’s conviction on the solitary statement of the Investigating Officer who is interested in the success of his case cannot be sustained in the absence of any independent corroboration. In the light of above discussion, the appeal is allowed. Conviction and sentence recorded by the Trial Court are set aside. The appellant shall be released forthwith if not required in any other case.

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