TMI Tax Updates - e-Newsletter
August 5, 2017

Case Laws in this Newsletter:

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

TMI SMS

• Valuation - combination pack - detergent powder & detergent cake - the item declared to be sold free need not be separately assessed to duty

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• The criminal proceeding after lapse of three years against the petitioner is mere harassment to assessee & abuse of process of the Court

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Articles

1. PROCEDURE FOR CALLING OF ANNUAL GENERAL MEETING

   By: DR.MARIAPPAN GOVINDARAJAN

2. OIDAR services under GST Laws - A Complicated Compliance

   By: Anuj Bansal

News

1. Sale of Products after Introduction of GST

2. Constitution of Sectoral Groups on GST

3. GST to impact welfare schemes: TRS MP

4. Charter of Functions assigned to Directorate General of Goods and Service Tax on introduction of Goods and Services Tax

5. GST Rates - HSN Code - Queries relating to GST rates received from various sectors have been scrutinised and developed into snort FAQs.

6. Appointment of Actuaries

7. Performance of Non Banking Financial Companies (NBFCs)

8. Recapitalization of Banks

9. Government revises the base year of All-India Wholesale Price Index (WPI) from 2004-05 to 2011-12

10. 39 Debt Recovery Tribunals (DRTs) functioning in the country; 6 new DRTs started functioning in the financial year 2016-17

11. NABARD: 85.77 lakh Self Help Groups (SHGs) have saving deposits of over ₹ 16,114 crore with banks as on 31.3.2017 that cover more than 10 crore rural households

12. The Finance Minister, Shri Arun Jaitley Announces a New Exchange Traded Fund (ETF) by the Name “BHARAT 22”

13. Opening of Income Tax Offices on 05th August, 2017 for receipt of returns

14. India signs loan agreement with the Asian Infrastructure Investment Bank (AIIB) for Financing of US$ 329 million for Gujarat Rural Roads Project

15. RBI Reference Rate for US $

16. Government disinvests 6.83% of equity in Hindustan Copper Limited: Likely to raise ₹ 400 crore from this Offer for Sale (OFS).

Notifications

GST - States

1. FTX.56/2017/047 (No.18/2017) - dated 12-7-2017 - Assam SGST

Amendment in Notification No. FTX.56/2017/14 Dt. 29-06-2017.

2. 7/2017-State Tax - dated 30-6-2017 - Sikkim SGST

Sikkim Goods and Services Tax (Amendment) Rules, 2017

3. 5/2017-State Tax (Rate) - dated 30-6-2017 - Sikkim SGST

Specifying supplies of Goods in respect of which no refund of unutilized input tax credit shall be allowed U/s 54(3) of the Sikkim Goods and Services Tax Act, 2017

4. 16/2017-State Tax - dated 30-6-2017 - Sikkim SGST

Refund to UN,Diplomats,etc

5. 11/2017-State Tax (Rate) - dated 30-6-2017 - Sikkim SGST

Notifies the state tax, on the intra-State supply of services

6. 10/2017-State Tax - dated 30-6-2017 - Sikkim SGST

Sikkim Goods and Services Tax (Second Amendment) Rules, 2017

7. 1/2017-StateTax (Rate) - dated 30-6-2017 - Sikkim SGST

U/s 9(1) of the Sikkim Goods and Services Tax Act, 2017 notifies the rate of the state tax

8. 519/2017 - dated 29-6-2017 - Uttarakhand SGST

Exemption to supplies of goods from CSD to Canteens

9. 517/2017 - dated 29-6-2017 - Uttarakhand SGST

Provisions of Exempted Intra-state supplies of Second hand goods

10. 515/2017 - dated 29-6-2017 - Uttarakhand SGST

Regarding applicability of Reverse Charge

11. 513/2017 - dated 29-6-2017 - Uttarakhand SGST

Regarding Composition Levy in Uttarakhand GST Act,2017

12. 510/2017 - dated 29-6-2017 - Uttarakhand SGST

Regarding Sections of Uttarakhand GST Act, will apply from 01.07.2017

13. 1141-F.T.-17/2017-State Tax (Rate) - dated 28-6-2017 - West Bengal SGST

The categories of services the tax on intra-State supplies of which shall be paid by the electronic commerce operator.

14. 1140-F.T.-16/2017-State Tax (Rate) - dated 28-6-2017 - West Bengal SGST

Specialised agencies entitled to claim a refund of taxes paid on the notified supplies of goods or services or both received by them under SGST [section 55]

15. 1139-F.T.-15/2017-State Tax (Rate) - dated 28-6-2017 - West Bengal SGST

Non-availability of refund of unutilized ITC for supply of service specified in item 5(b) of Schedule II of SGST (construction of building, complex etc.) [section 54(3)]

16. 1138-F.T.-14/2017-State Tax (Rate) - dated 28-6-2017 - West Bengal SGST

Supplies which shall be treated neither as a supply of goods nor a supply of services under SGST [section 7(2)]

17. 1137-F.T.-13/2017-State Tax (Rate) - dated 28-6-2017 - West Bengal SGST

Categories of services on which tax will be payable on reverse charge mechanism under SGST [section 9(3)].

18. 1136-F.T.-12/2017-State Tax (Rate) - dated 28-6-2017 - West Bengal SGST

Exempt services notified under section 11(1).

19. 1135-F.T.-11/2017-State Tax (Rate) - dated 28-6-2017 - West Bengal SGST

Rate Schedule of services and value of construction services and lottery [sections 9(1), 11(1), 15(5), 16(1)]

20. 1134-F.T.-10/2017-State Tax (Rate) - dated 28-6-2017 - West Bengal SGST

Exemption for dealers operating under Margin Scheme notified intra-State supplies of second hand goods under section 11(1).

21. 1133-F.T.-09/2017-State Tax (Rate) - dated 28-6-2017 - West Bengal SGST

Notification exempting supplies to TDS deductor by a supplier, who is not registered, under section 11(1)

22. 1132-F.T.-08/2017-State Tax (Rate) - dated 28-6-2017 - West Bengal SGST

Exemption from reverse charge upto ₹ 5000/- per day under section 11(1)

23. 1131-F.T.-07/2017-State Tax (Rate) - dated 28-6-2017 - West Bengal SGST

Exemption from SGST supplies by CSD to Unit Run Canteens and supplies by CSD/Unit Run Canteen to authorised customers under section 11(1)

24. 1130-F.T.-06/2017-State Tax (Rate) - dated 28-6-2017 - West Bengal SGST

Notification prescribing refund of 50% of SGST on supplies to CSD under section 55

25. 1129-F.T.-05/2017-State Tax (Rate) - dated 28-6-2017 - West Bengal SGST

Notification specifying supplies of goods in respect of which no refund of unutilized input tax credit shall be allowed under section 54(3).

26. 1128-F.T.-04/2017-State Tax (Rate) - dated 28-6-2017 - West Bengal SGST

Notification prescribing reverse charge on certain specified supplies of goods under section 9(3)

27. 1127-F.T.-03/2017-State Tax (Rate) - dated 28-6-2017 - West Bengal SGST

2.5% concessional rate for intra-state supplies of goods as listed therein required in connection with petroleum operations like exploration.

28. 1126-F.T.-02/2017-State Tax (Rate) - dated 28-6-2017 - West Bengal SGST

Exempt intra-State supplies of goods.

29. 1125-F.T.-01/2017-State Tax (Rate) - dated 28-6-2017 - West Bengal SGST

SGST Rate Schedule of goods notified.

30. 1124-F.T. - dated 28-6-2017 - West Bengal SGST

Effective date of W.B.G.S.T. Ordinance, 2017- Second Notification (w.e.f. 01.07.2017)

31. 1078-F.T. - dated 21-6-2017 - West Bengal SGST

Territorial jurisdiction of areas of different Charges, Circles and other offices

32. 1077-F.T. - dated 21-6-2017 - West Bengal SGST

Administrative set-up under WBGST

33. 1076-F.T. - dated 21-6-2017 - West Bengal SGST

Appointment of other officers of State Tax.

34. 1075-F.T. - dated 21-6-2017 - West Bengal SGST

Appointment of the Additional Commissioner of State Tax.

35. 1074-F.T. - dated 21-6-2017 - West Bengal SGST

Appointment of the Special Commissioner of State Tax.

36. 1073-F.T. - dated 21-6-2017 - West Bengal SGST

Appointment of the Commissioner of State Tax.

37. 1072-F.T. - dated 21-6-2017 - West Bengal SGST

Appointment of classes of officers for carrying out the purposes of the WBGST Ordinance, 2017 (State specific)

38. 1071-F.T. - dated 21-6-2017 - West Bengal SGST

Methods of authentication for taxable persons following modes of verification.

39. 1070-F.T. - dated 21-6-2017 - West Bengal SGST

Exemption from registration to those whose supplies are exclusively liable to be taxed under reverse charge basis.

40. 1069-F.T. - dated 21-6-2017 - West Bengal SGST

The GST Common Portal www.gst.gov.in (w. e. f. 22.06.2017)

41. 1068-F.T. - dated 21-6-2017 - West Bengal SGST

The West Bengal Goods and Services Tax Rules, 2017.

42. 1067-F.T. - dated 21-6-2017 - West Bengal SGST

Effective date of W.B.G.S.T. Ordinance, 2017- First Notification (w. e. f. 22.06.2017)

Income Tax

43. 78/2017 - dated 3-8-2017 - IT

Central Government notifies the countries and specified territories - in the case of an eligible investment fund, the fund management activity carried out through an eligible fund manager acting on behalf of such fund shall not constitute business connection in India of the said fund.

44. 77/2017 - dated 3-8-2017 - IT

Conditions specified in clauses (e), (f) and (g) of Section 9A(3) shall not apply in case of an investment fund set up by a Category-I or Category-II foreign portfolio investor registered under the SEBI (Foreign Portfolio Investors) Regulations, 2014, made under the SEBI Act, 1992

Circulars / Instructions / Orders

Customs

1. 05/2017-CUS - dated 30-6-2017

Launch of Indian Customs EDI System- (ICES 1.5) for Imports and Exports, at Air Cargo Complex (ACC) Nagpur (INNAG4), Dr. Babasaheb Ambedkar International Airport, Nagpur-440005-reg.

2. 13/2017 - dated 30-6-2017

Launch of Indian Customs EDI System- (ICES 1.5) for Imports and Exports, at Redi Port (INRED1), Redi Village, Taluka : Vengurla, Redi - 416 517, Maharashtra – reg.

Highlights / Catch Notes

Income Tax

• Section 9A(3) Exemptions for Investment Funds by Category-I & II Foreign Portfolio Investors under SEBI Regulations 2014.

  Notifications : Conditions specified in clauses (e), (f) and (g) of Section 9A(3) shall not apply in case of an investment fund set up by a Category-I or Category-II foreign portfolio investor registered under the SEBI (Foreign Portfolio Investors) Regulations, 2014, made under the SEBI Act, 1992
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• Fund Management Activities by Eligible Managers Won't Establish Business Connection in India for Eligible Investment Funds.

  Notifications : Central Government notifies the countries and specified territories - in the case of an eligible investment fund, the fund management activity carried out through an eligible fund manager acting on behalf of such fund shall not constitute business connection in India of the said fund. - Notification
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• Delayed Tax Offense Charge u/s 276B Sparks Claims of Harassment and Court Process Abuse.

  Case-Laws - HC : Cognizance of the offence u/s 276B - after lapse of about three years from the date of deposit of due tax - continuance of the criminal proceeding against the petitioner is mere harassment to him and abuse of process of the Court. - HC
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• Revaluation of Satellite Rights by Partnership Firm Avoids Capital Gains Tax Due to No Asset Transfer.

  Case-Laws - HC : Capital gain - revaluation of the satellite rights - The revaluation of the assets by the partnership firm would not attract any capital gain - There was no transfer - HC
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• Loss from Error Trade by Assessee on Client's Behalf Recognized as Business Loss.

  Case-Laws - HC : If the loss is found to have occurred on account of error trade conducted by assessee on behalf of clients, then the claim will have to be accepted as business loss. - HC
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• Commissioner of Income Tax (Appeals) Oversteps by Replacing Assessing Officer's Judgment u/s 144.

  Case-Laws - AT : Best judgement assessment u/s 144 - CIT(A) wrongly substituted the best judgement of the AO with his own judgement contrary to the provisions of section 144 of the Act
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• Charitable Entities Can Retain Tax-Exempt Status u/s 12A Despite Surplus, If Funds Further Charitable Goals.

  Case-Laws - AT : Generation of surplus while carrying out charitable activities would not disentitle the assessee for registration u/s. 12A of the Act
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• Defective Show-Cause Notice u/s 274 Renders Penalty u/s 271(1)(c) Invalid for Lack of Specific Grounds.

  Case-Laws - AT : Penalty u/s 271(1)(c) - show-cause notice issued under section 274 read with section 271 of the Act is defective as it does not speak about the grounds on which the penalty has been imposed.
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• Department Rep's Effort to Expand Assessment Scope on Loss Set-Off Denied; Issue Not Raised by Assessing Officer.

  Case-Laws - AT : Set off of brought forward losses and depreciation against surrendered income - Departmental representative is only attempting to enlarge the scope of assessment by raising an issue not dealt with by the Assessing Officer which is not permissible at the stage.
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• Entity's Minimal Educational Engagement May Not Qualify for Tax Exemption u/s 11 of Income Tax Act.

  Case-Laws - AT : Eligibility to exemption u/s 11 the engagement with the educational institutions is on the fringe, though, as it appears, is slated to be expanded in future. Its operations as aforesaid are primarily as that carried out by the industrial/professional association/body - not to be construed as the word "education" as occurring in section 2(15).
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• Interest Earned by Company Must Reduce Project Capital Cost, Not Taxable as Income on Capital Account.

  Case-Laws - AT : Interest earned should only go to reduce the capital cost of the project to be set up by the respondent company and it should not be brought to tax, as the interest is earned on capital account.
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• Urban Development Authority's Section 12A(a) Charitable Status Challenged Due to Profit Motive in Activities.

  Case-Laws - AT : Grant of registration u/s 12A (a) - charitable activities - urban development authority engaged in the object of "advancement of any other object of general public utility‟ - it is apparent that the activities of the assessee has "profit motive" and therefore it is carrying on the business.
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Customs

• Toyota Land Cruiser Prado confiscated for illegal import under Customs Act, 1962, Section 2(39); assessable value rejected.

  Case-Laws - AT : Confiscation - rejection of assessable value - Toyota Land Cruiser Prado - Car imported unlawfully contravening provisions of Customs Act, 1962 become smuggled goods as defined by Section 2(39) thereof.
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• Discreet Lustre Master Station Classified as Color Corrector Under Heading 85438960 Due to its Specific Functionality.

  Case-Laws - AT : Classification of Discreet Lustre Master Station, consisting of computer system, storage devices, PCB cards the imported goods will then have to be considered as a machine intended to contribute together to a clearly defined function covered by heading 85438960 as a colour corrector.
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Central Excise

• Refund Denied Due to Unjust Enrichment: Claimant Passed Costs to Buyers, Central Excise Laws Applied.

  Case-Laws - AT : Refund Claim - unjust enrichment - As the entire amount has been recovered from the ultimate buyers including the duty element, unjust enrichment is attracted.
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• Combo Pack Valuation: Free Items in Detergent Packs Don't Need Separate Duty Assessment under Central Excise Regulations.

  Case-Laws - AT : MRP based Valuation - combination pack - detergent powder and detergent cake - As a marketing strategy one of the product in such combo pack is declared to be free. However, the details printed on the combination pack makes it clear that the MRP is for detergent cake also - the item declared to be sold free need not be separately assessed to duty
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Case Laws:

• Income Tax

• 2017 (8) TMI 197
  Eligibility to benefit of Sections 80HH, 80-I and 80-IA - whether bottling of LPG is an activity which amounts to production or manufacturing for the purposes of the aforesaid provisions of the Act - Held that:- No distinction was drawn between manufacture and production and the matter was not looked into from the angle as to whether the aforesaid process would amount to production or not. Other reason which prevailed with the AO and which was also the argument of for the Revenue was that, on identical facts, the Gujarat High Court in the case of State of Gujarat v. Kosan Gas Company (1991 (6) TMI 226 - GUJARAT HIGH COURT) had held that refilling the LPG after purchasing from M/s. HPCL into small cylinders would not amount to manufacture. That was a case which was decided in the context of the Gujarat Sales Tax Act, 1969. The Court held that transfer of LPG from bulk containers into cylinders did not amount to process of manufacture. It is pertinent to point out that Section 2(16) of the Gujarat Sales Tax Act, 1969 defines manufacture and, therefore, the entire case was examined keeping in view the said definition of manufacture and the issue was as to whether the process amounted to manufacture or not. As pointed out above, the question as to whether it amounts to production as well did not arise for consideration. The AO committed manifest error in relying upon the said decision inasmuch as the provisions with which we are concerned in the instant case use the words manufacture or production and are not limited to manufacture alone. Here, the case set up by the assessees is not that bottling of LPG is processing as distinguished from manufacture or production . We may, at this juncture, refer to the judgment of this Court in Commissioner of Income Tax, Madras v. Vinbros and Company (2012 (9) TMI 802 - SUPREME COURT) where bottling and blending of alcohol is held to be manufacture or production for the purpose of Section 80-IB of the Act. - Decided in favour of assessee.

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• 2017 (8) TMI 196
  Cognizance of the offence u/s 276B - after lapse of about three years from the date of deposit of due tax and interest - Held that:- Petitioner immediately deposited the amount of tax along with interest in the year 2010 itself. Section 278AA specifically says that no person shall be punished for any failure referred to under the said provisions if the assessee proves that there was reasonable cause for such failure. Reasonable cause would mean a cause which prevents a reasonable man of ordinary prudence acting under normal circumstances, without negligence or inaction or want of bonafides. Oversight on the part of the Accountant, who was appointed to deal with Accounts and Income Tax matters, can be presumed to be a reasonable cause for not depositing the tax within time. The petitioner immediately after noticing the aforesaid defects by the Statutory Auditors of the petitioner-company deposited the amount of 1,43,029/- along with interest amounting to 23,595/- as required under Section 201(1A) of the Act in the year 2010 itself. Instant prosecution has been launched against the petitioner on 14.05.2013 after lapse of about three years from the date of deposit of due tax along with interest by the petitioner under Section 201(1A) of the Act, which is contrary to the instructions bearing F. No.255/339/79-IT (Inv.) dated 28.05.1980 (Annexure-1 to the Counter Affidavit) issued by the CBDT in this regard. Moreover, Section 278 AA clearly states that no person for any failure referred to under Section 276 B of the Act shall be punished under the said provisions if he proves that there was reasonable cause for such failure. This Court on the basis of explanation submitted by the petitioner, as mentioned above, is of the view that the petitioner has been able to prove the reasonable cause for not depositing the aforesaid tax amount within the specified time limit. This Court is of view that continuance of the criminal proceeding against the petitioner is mere harassment to him and abuse of process of the Court.

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• 2017 (8) TMI 195
  Revision u/s 263 - applicability of Section 35D - Held that:- Assessing Officer sought clarification from the assessee about the correctness of the amount of one-fifth of the total expenses incurred under Section 35D of the Act. The assessee under letter dated 26.10.2004 gave specific explanation on the issue raised by the AO and thereafter, the assessment order was passed. To substantiate his claim, the assessee has placed reliance upon Malabar Industrial Co. Ltd. (2000 (2) TMI 10 - SUPREME Court). The possible view, it appears, was taken by the Assessing Officer. The Tribunal on the said count has held that the revisional jurisdiction ought not to have been exercised by the CIT(A). Only because the Commissioner thought that other view is a better view, would not enable Commissioner of Income Tax to exercise power under Section 263 of the Act. It would not be a reopening of assessment or reassessment. We are not inclined to entertain the present appeal. It is made clear that we have not given any finding in regard to the applicability of Section 35D vis-a-vis the assessee so also have not considered the observations of the Tribunal with regard to exercise of revisional powers only on his own accord and not an application by the Assessing Officer. - Decided against revenue.

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• 2017 (8) TMI 194
  Disallowances of bogus purchases - Tribunal adopting the gross profit rate of 8% as against 25% adopted by the CIT(Appeals) - Held that:- When additions are made on the basis of gross profit rates, a limited amount of estimation and gross work is always inbuilt. The assessee had pointed out that without the additions, the gross profit for the year under consideration was approximately 7%. The Tribunal therefore, did not commit any error in accepting the gross profit rate of 8% on the purchases which was otherwise found not genuine. No question of law arises. The disclosure of 61.05 lakhs made by the assessee in his statement pertained to the bogus purchases and was therefore rightly assessed by the Commissioner of Income Tax (Appeals) and the Tribunal - Decided against revenue

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• 2017 (8) TMI 193
  Treating the receipts from the lease of its hotel - business income OR house property income - Held that:- It has been observed that the business was handed over by the respondent assessee to KHIL in the year 1994 and since the assessment year 1995-96 till the assessment year 2005-06, the income from the same was assessed as a business income. The assessment for the year 1995-96 was completed under Section 143(3) of the Income Tax Act. So also, for the assessment year 2003-04 and assessment year 2005-06, the assessment was completed under Section 143(3) of the Income Tax Act. The claim of the assessee of the said income being a business income was accepted. The assessee is not receiving any rent amount but is receiving 1% of the total revenue earned by KHIL and does not get any fix amount as rent. These aspects are considered by the Tribunal.

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• 2017 (8) TMI 192
  Capital gain - transfer u/s 2(47) - revaluation of the satellite rights - Held that:- There is neither distribution of assets nor any realization of assets. There is no dissolution of the firm nor distribution of assets of the firm amongst the partners. No transfer of assets has taken place. It is further observed that the partnership firm was converted into a private limited company and the satellite rights thereafter vests with the company. The revaluation of the assets by the partnership firm would not attract any capital gain. There was no transfer as defined under Section 47 of the Act.

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• 2017 (8) TMI 191
  AMP expenses - International transaction between the Assessee and its AE - Held that:- This Court is of the view that the ITAT was not justified in remanding the matter to the AO/TPO for determining the ALP of the alleged international transaction involving AMP expenses, when in fact, the Revenue was unable to show that there existed an international transaction between the Assessee and its AE in the first place.- Decided in favour of the Assessee

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• 2017 (8) TMI 190
  Addition u/S 68 and u/s 69C - Held that:- In the present case the burden was not discharged by the Assessee. According to him, the CIT (A) failed to notice that the AO had in fact conducted the enquiry and it is the Assessee who is unable to furnish a satisfactory explanation for the credit entries in his account. The Court is unable to agree with the submissions of Mr. Chaudhary. The order passed by the CIT (A) is a reasoned one. It correctly notes that once the Assessee produced the agreement to sell entered into with CCRP, the onus shifted to the AO to make a further enquiry by summoning the directors of CCRL to determine whether the explanation offered by the Assessee was tenable. As further noted by the CIT (A), the AO failed to furnish to the Assessee a copy of the statement of Mr S. K. Gupta, which formed the main basis for making the additions. Mr Gupta was not even offered for cross-examination.

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• 2017 (8) TMI 189
  Cash seized from the bank lockers of the company - assessment in whose hands - correct assessee to be taxed - deceleration to Settlement Commission - double taxation - Held that:- As seen that the sum of 74 lakhs was offered to tax by Bhikhubhai N. Padsala, Director, in his settlement application. Such application has been granted by the Settlement Commission by passing order of settlement. By very statutory scheme of provisions, acceptance of such income in the hands of Bhikhubhai N. Padsala would have to be preceded by payment to tax. We have therefore proceeded on the basis that the Settlement Commission accepted the said sum as income of Bhikhubhai N. Padsala and the department has already received the tax and interest on such income. That being the position, it would not be possible for the department to tax the same income once again in the hands of the present assessee. There is nothing on record to suggest that before the Settlement Commission, the declaration of Bhikhubhai N. Padsala in this respect was opposed by the Revenue. Secondly, the Settlement Commission having accepted such settlement, with or without the opposition by the Revenue, finality of the conclusions of the Settlement Commission would attached in terms of section 245I of the Act. Thirdly, the department concedes that the order of Settlement Commission has not been challenged further. Under the circumstances, allowing the department's appeal, levying tax on the same amount from the assessee would be wholly impermissible. In fact, it also would be opposed to the observations of the Assessing Officer and those of the Tribunal that under no circumstances, the same income would be subjected to tax twice. - Decided in favour of the assessee

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• 2017 (8) TMI 188
  Addition of excise duty - valuation of closing stock made u/s 145A - special audit scope - Held that:- Order of Tribunal, deleting the addition of excise duty is concerned, the same appears to be on the basis of report of the Comptroller & Auditor General of India. The special audit was done under Section 142(2A) of the Act. The special auditor in his report also stated that the tax impact is nil. The Tribunal has considered the tax report. The tax audit report of the statutory auditor and the audit report of the Comptroller & Auditor General of India shows that the impact of inclusion of excise duty in the value of closing stock stands nil. - No additions - Decided against the revenue.

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• 2017 (8) TMI 187
  Addition u/s 14A - whether Tribunal has erred in holding that 10% of the tax free dividend income disallowed by the Appellant is not in accordance with the provisions of section 14A ? - Held that:- Upon perusal of the grounds of appeal before the Tribunal, so also before the Commissioner, it no way transpires that the appellant herein had raised any specific ground that the Assessing Officer had not arrived at the satisfaction about disallowance made by the appellant-company under Section 14A of the Act is improper, the same is being sought to be raised for the first time in the present appeal, the same would not be permissible. The findings have been arrived concurrently by the authorities in this regard. Section 14A applicable on dividend income/on which dividend distribution tax has already been paid - Held that:- the same is covered by the case of Godrej & Boyce Manufacturing Co. Ltd.(2017 (5) TMI 403 - SUPREME COURT OF INDIA). Appeal admitted on question (b): Whether on the facts and circumstances of the case the Tribunal erred in holding that the strategic investment in its group companies namely Punjab Chemicals & Corp Protection Limited, Transmetal Limited and Transpek Silox Limited are to be considered for computing the disallowance under section 14A of the Act?

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• 2017 (8) TMI 186
  Loss incurred on sale and purchase of shares treated as a business loss - nature of income - Held that:- It is not disputed that the assessee carries on the business of brokerage and his income is shown from brokerages. The Commissioner (Appeals) and the Tribunal have come to the conclusion that the impugned loss has occurred to the assessee in respect of error trade. The loss is not on the account of assessee's own trading in shares. In the case of M/s. HSBC Securities & Capital Markets (India) P. Ltd. (2015 (5) TMI 122 - BOMBAY HIGH COURT) this Court was considering the Appeal against order of Tribunal, wherein the Tribunal observed that if the loss is found to have occurred on account of error trade conducted by assessee on behalf of clients, then the claim will have to be accepted as business loss. This Court has accepted the said finding in M/s. HSBC Securities & Capital Markets (India) P. Ltd. (2015 (5) TMI 122 - BOMBAY HIGH COURT). Same view is taken in the case of Commissioner of Income Tax Vs. Anush Shares and Securities Pvt. Ltd. (2015 (7) TMI 1224 - MADRAS HIGH COURT). Loss is on account of error trade, the Judgment of the Tribunal cannot be faulted with.

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• 2017 (8) TMI 185
  Disallowing interest under Section 36(1)(iii) - Held that:- A perusal of the order passed by the Tribunal shows that relying upon the judgment of this Court in Bright Enterprises Private Limited Vs. Commissioner of Income Tax (2015 (11) TMI 342 - PUNJAB & HARYANA HIGH COURT) it was recorded that commercial expediency in advancing loans does not arise only on account of there being transactions directly between the holding company and the subsidiary company or between the group companies inter se. The two companies may even be in a different line of business. It would make no difference. It would still be commercially expedient for one group company to advance amounts to another group company. In the present case, the impugned advance had been made out of interest free funds available with the assessee and, therefore, there was no question of disallowing interest under Section 36(1)(iii) of the Act. After considering the entire evidence on record and the case law on the point, it was concluded by the Tribunal that disallowance of interest under Section 36(1)(iii) of the Act pertaining to the sister concerns was not justified. - Decided in favour of assessee.

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• 2017 (8) TMI 184
  Penalty under Section 271(1)(c) - addition on account of sundry balances written off which was not suo motto offered for taxation even though the same was taken into consideration for claiming deduction under Section 80IB - Held that:- After examining the entire evidence on record that the assessee on realizing the mistake that sundry debtors written off had not been added in the computation of total income, submitted before the Assessing Officer to make the addition of the same amount in the computation of income for the year under consideration. The assessee, thus, offered explanation to the Assessing Officer. It was further noticed that the amount of sundry balances written off had already been added back in the computation of income of Baddi Unit of the assessee company on which deduction under Section 80IC of the Act had been claimed. The assessee explained that due to inadvertent mistake, the same was omitted to be added back in the computation of its income. Thus, the Tribunal concurred with the findings recorded by the CIT(A) and dismissed the appeal filed by the revenue. - Decided in favour of assessee.

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• 2017 (8) TMI 183
  Restoration of registration under Section 12A - Held that:- In view of restoration of registration under Section 12A, Assessing Officer has now to compute income as per Section 11 and 12 of Act, 1961 and if Assesses is able to establish that 85 percent or more of the income of Assessee has been utilized for the purpose of Assessee then income of Assessee should be exempted.

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• 2017 (8) TMI 182
  Reopening of assessment - Held that:- As the petitioners have challenged the jurisdiction of the Assessing Officer to proceed to issue a notice under section 142 of the Income-tax Act without passing a speaking order on the objections raised by the petitioners of the intended reopening of the assessment, it would itself vitiate the further proceedings by the Assessing Officer to proceed to pass the assessment order. It is also to be noted that considering that admittedly December 19, 2016 was a public holiday for the State of Goa, the petitioners are justified to assume that the hearing fixed on such date would not take place though it was contended by the learned counsel appearing for the respondents that such holiday did not apply to the respondents-Revenue.

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• 2017 (8) TMI 181
  Principles of mutuality - Denying the exemption claimed by the assessee with respect to an representing Transfer fee from incoming members - Co-operative Housing Society - Held that:- Income by way of Transfer fee received from the members was exempt - see Sind Co-op Housing Society (2009 (7) TMI 15 - BOMBAY HIGH COURT) - Direct the Assessing Officer to allow relief to the assessee with regard to the income received by way of Transfer fee from the incoming members.

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• 2017 (8) TMI 180
  Revision u/s 263 - source of funds resulting in capital infusion in the assessee company - Held that:- As decided in (M/s.Pragati Financial Management Pvt. Ltd. Vs. The Commissioner of Income Tax Officer – II [2017 (3) TMI 1242 - CALCUTTA HIGH COURT] asking for source of source can be relevant inquiry. - Decided against the assessee

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• 2017 (8) TMI 179
  Depreciation clubbing of the two block of assets - Computation of short term capital gains u/s 50(1) - A.O. calculated short term capital gain on sale of plant and machinery @ 60% and plant and machinery @ 15% - as per assessee rate of depreciation on plant and machinery and motor cars are same (i.e. 15%) thus clubbing of the two block of assets is correct - Held that:- Be it stated that a “block of assets” includes assets of all units of the assessee having the same rate of depreciation and not assets of only one unit. Block 5 on Plant machinery – Any plant or machinery (not covered by Block 6, 7, 8, 9, 10, 11 & 12) and motor cars (other than those used in a business of running them on hire) acquired or put to use on or after April 1, 1990 says rate @ 15% We find that the issue in the instant case is covered by the judgment by the Hon'ble Delhi High Court in Ansal Properties and Infrastructure Ltd. (2012 (4) TMI 469 - DELHI HIGH COURT) and M/s Filmkarft Productions (I) Ltd. (2015 (7) TMI 1193 - ITAT MUMBAI). We follow the above decisions and allow the appeal filed by the assessee.

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• 2017 (8) TMI 178
  Disallowance for non-production of the evidence on expenditure claimed - assessee maintains the regular books of account audited under section 44AB - Held that:- When the return of income has been filed with supporting account and audit report in Form No. 3CB duly signed by the chartered accountant, the audited profit and loss account cannot be ignored and the Assessing Officer/Commissioner of Income-tax (Appeals) are not permissible to proceed to disallow the expenses on the basis of the artificial estimation only self-estimation of the Assessing Officer/Commissioner of Income-tax to disallow the expenditure claimed by the assessee is not sustainable in the eyes of law particularly when the audited books account and the balance-sheet have not been rejected by the Assessing Officer so the addition on the basis of estimation is not permissible on the flimsy ground that some of the bills and vouchers were handmade and most of the payments were made in cash particularly when all these documents have been duly audited and have not been disputed by the Assessing Officer. As the assessee himself had shown profit at 9.9 per cent. and has been regularly maintaining the books of account in the regular course of business duly audited under section 44AB, the Assessing Officer as well as the Commissioner of Income-tax (Appeals) have exceeded their powers to disallow the deductions claimed by the assessee in the face of the books of account duly audited under section 44AB, having been accepted by the Assessing Officer - Decided in favour of assessee.

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• 2017 (8) TMI 177
  Best judgement assessment u/s 144 - Held that:- The interference by the Ld. CIT(A) with the assessment order made by the AO on the basis of additional evidences admitted by the Ld. CIT(A) was not warranted in view of the facts and circumstances of this case. We have also already held in the foregoing paragraph (G) of this order that there was reasonable basis for the additions made by the AO. This is a best judgement assessment u/s 144 of the Act and the application of section 144 of the Act was not disputed by the assessee before the CIT(A). Even before us, the invocation of s.144 of the Act by the AO is not a matter in dispute. In any case, the protracted non-compliances by the assessee to various statutory notice u/s 142(1) and 143(2) of the Act and further non-compliance with the hearings fixed from time to time make this a fit case for best judgement assessment u/s 144 of the Act. On cumulative consideration of the facts and circumstances and the legal position and on further guidance from decided cases in CST vs H.M.Esufali H.M. Abdulali (1973 (4) TMI 49 - SUPREME Court) and CIT vs Rayala Corporation P.Ltd. (1995 (1) TMI 42 - MADRAS High Court), we are of the view that the CIT(A) wrongly substituted the best judgement of the AO with his own judgement contrary to the provisions of section 144 of the Act. Therefore, we set aside the order of the CIT(A) and restore the order of the AO. Appeal of the Revenue is allowed.

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• 2017 (8) TMI 176
  Unexplained cash credit u/s. 68 - reopening of assessment - Held that:- The reason to believe formed by AO on the basis of alleged accommodation entries of 24,03,100/-, as contained in the information, stands collapsed, having been formed without any material on record and application of mind and accordingly, the addition so made on the basis of such unsustainable belief has rightly been deleted by the ld. CIT(A). The Coordinate Bench of Tribunal in the case of Mahadev Trading Co. (2011 (8) TMI 867 - ITAT AHMEDABAD) has held that where the Assessing Officer proceeded for reopening of assessment on non-existent and factually incorrect reasons and he did not apply independent mind on information received from DDIT(Inv.) prior to recording of reasons, the reopening of assessment in such a case was clearly invalid. We are, therefore, of the considered opinion that once it is found that the income, for which the AO had initially formed a reason to believe that it had escaped assessment, has not escaped assessment, it is not open to the AO to assess some other income. Appeal of the Revenue is dismissed

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• 2017 (8) TMI 175
  Grant of registration u/s. 12AA(1)(b)(ii) - quantum of surplus generated by the assessee during the course of charitable activities - Held that:- Deemed registration has already been granted to the assessee in view of the fact that the original application made by the assessee was not disposed of by the Commissioner of Income Tax. The Commissioner of Income Tax while considering second application of the assessee for grant of registration, should have examined the objects of the trust and the activities being carried out by the assessee to achieve those objects. The Commissioner of Income Tax misdirected the course of enquiry and concentrated on the surplus generated, leaving aside the objects and activities carried out by the assessee. Generation of surplus while carrying out charitable activities would not disentitle the assessee for registration u/s. 12A of the Act. We set aside the impugned order and direct the Commissioner of Income Tax to grant registration u/s. 12AA of the Act to the assessee. Appeal of the assessee is allowed.

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• 2017 (8) TMI 174
  Revision u/s 263 - addition u/s 40A(3) - Held that:- It is an admitted fact that notice u/s 263 of the Act does not contain any such violation. However, in the order passed u/s 263 of the Act, the ld. CIT has considered this possible violation on the part of the assessee as one of the ground for cancelling the assessment by invoking power u/s 263 of the Act. It is held in various decisions that an order u/s 263 of the Act passed on the ground not taken in notice as invalid. Since the assessee in the instant case has filed adequate details regarding sundry creditors and the A.O after examining such details has accepted such sundry creditors as genuine, therefore, merely because the A.O has not conducted enquiry in a particular way as per the desire of the ld. CIT cannot be a ground to invoke jurisdiction u/s 263 of the Act. This is a case of inadequate enquiry, but it cannot be said that no enquiry has been conducted by the A.O. In this view of the matter, we are of the considered opinion that the ld. CIT was not justified in invoking the provisions of section 263 of the Act. Thus we set aside the order passed u/s 263 of the Act by the ld. CIT and grounds raised by the assessee are allowed.

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• 2017 (8) TMI 173
  Reopening of assessment - Held that:- Since in the instant case it is an admitted fact that the A.O has not disposed of the objections raised by the assessee to such reopening of the assessment u/s 148 of the Act by passing a speaking order, therefore, such reassessment order is liable to be quashed. So far as the argument of the ld. DR that the matter should be restored to the file of the A.O with the direction to dispose of the objections raised by passing a speaking order, in the case of Smt Kamlesh Sharma [2006 (12) TMI 83 - SUPREME COURT] and that the assessment order need not be quashed is concerned, we do not find any merit in the same since the later decision of the Hon'ble High Court will prevail over the previous decision. Appeal filed by the assessee is according allowed.

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• 2017 (8) TMI 172
  Penalty under section 271(1)(c) - legality of notice under section 274 - Held that:- At the time of issuing notice under section 274 of the Act the learned Assessing Officer initiated the proceedings without being certain as to whether it is for furnishing of inaccurate particulars of income or concealment of particulars of income ; whereas commonly for all the four years, in the assessment order under section 153C read with section 153A(1)(b) read with section 144 of the Act, penalty was initiated for furnishing inaccurate particulars of income ; whereas in the penalty order, it was alleged that the assessee has concealed its particulars of income. Thus all the four years from the assessment years 2001-02 to 2004-05, show-cause notice issued under section 274 read with section 271 of the Act is defective as it does not speak about the grounds on which the penalty has been imposed. We, therefore, hold that the orders imposing penalty in all the four assessment years are invalid - Decided in favour of assessee.

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• 2017 (8) TMI 171
  Addition on surrendered income - not satisfactorily explained the nature and source of the surrendered income - business income v/s deemed income - Held that:- As the present case are identical to that in Gaurish Steels Pvt. Ltd. (2015 (11) TMI 631 - ITAT CHANDIGARH) the surrender having been made by the assessee on account of investment made in the build-operate-transfer project which was the business of the assessee, the decision rendered by the Income-tax Appellate Tribunal in the said case will squarely apply in the present case, following which we hold that the income surrendered by the assessee of 1.75 crores is assessable under the head "Income from business and profession. - Decided in favour of assessee Set off of brought forward losses and depreciation - Held that:- As find that the business losses and depreciation losses, which the assessee had sought to set off against its surrendered income have never been questioned by the Assessing Officer. We are in agreement with the learned counsel for the assessee that by raising this issue before us the learned Departmental representative is only attempting to enlarge the scope of assessment by raising an issue not dealt with by the Assessing Officer which is not permissible at the stage. Thus we reject the above contention of the learned Departmental representative. Thus we hold that the surrendered income of the assessee amounting to 1.75 crores is assessable under the head "income from business and profession" and the set off of business losses and depreciation is accordingly allowed against the same. - Decided in favour of assessee

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• 2017 (8) TMI 170
  Eligibility to exemption u/s 11 - charitable purpose u/s 2(15) - whether assessee does not conduct any formal educational courses nor is affiliated or registered with any authority - Held that:- The assessee has not shown to have the capacity for educational activity in regular manner, i.e., as a principal activity, the essence of which is scholastic instruction, howsoever executed, imparted in a systematic manner. As pointed out by the Revenue, there is no income or expenditure with reference to this activity in its statement. This is only understandable as the academic institutions are only one among the various stake-holders with which the assessee engages, so that even a receipt from this activity during the year would have no material impact. In fact, as we observe, the engagement with the educational institutions is on the fringe, though, as it appears, is slated to be expanded in future. Its operations as aforesaid are primarily as that carried out by the industrial/professional association/body. Commissioner of Income-tax (Appeals) has in our view misguided himself to construe the word "education" as occurring in section 2(15) in its widest sense. It is only the actual conduct of educational courses, where accredited, conducted under the auspices of a formal set up, so as to be recognised in the field of education, which would stand to be regarded as so. The assessee's objects and activity thus only fall within the purview of the residuary category of section 2(15), i.e., advancement of any other object of general public utility, so that the first proviso thereto shall apply, clearly debarring the assessee on account of its receipt for the year for being subject to exemption under section 11 of the Act. - Decided against assessee.

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• 2017 (8) TMI 169
  Approval under section 12AA - Held that:- It is noticed that the assessee has taken a different plea that the amount accumulated during the earlier years were not distributed to various temples for the reason that approval under section 12AA for the Annadhanam Scheme of such temples were rejected and on appeal, registration was granted later. However, before the learned Commissioner of Income-tax (Appeals) taken a different contention stating that the assessee constituted as a central fund and act as a facilitator to disburse the funds from the service centre to the deficiency centre and until such disbursement act as a custodian of the funds due to the deficient centres. Hence, such funds are not exigible to the tax in the hands of the custodian. However, the assessee has not presented the details of utilisation of accumulated funds related to the assessment year 2005-06 and subsequent assessment years. Hence, we are inclined to set aside the order of the lower authorities and remit the issue in dispute to the file of the Assessing Officer for fresh consideration. It is needless to say that an opportunity of hearing to be given to the assessee to the present assessee's case. With this observation, the issue raised by the assessee in its appeal is partly allowed for statistical purposes.

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• 2017 (8) TMI 168
  Interest income earned during the construction period on bank deposits made out of share application money received - taxable as "Income from other sources" or reduce the capital cost of the plant which is being set up by the assessee-company - Held that:- Interest earned should only go to reduce the capital cost of the project to be set up by the respondent company and it should not be brought to tax, as the interest is earned on capital account. See CIT v. Karnataka Power Corporation [2000 (7) TMI 72 - SUPREME Court] and CIT v. Karnataka Urban Infrastructure and Development and Finance Corporation and [2006 (2) TMI 114 - KARNATAKA High Court]. The appeal of the Revenue is dismissed.

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• 2017 (8) TMI 167
  Disallowance of unrealised exchange loss - speculation loss OR business loss - Held that:- The similar issue came for consideration before this Tribunal in the case of Majestic Exports v. Joint CIT [2015 (7) TMI 936 - ITAT CHENNAI] wherein the issue stands covered in favour of the assessee. However, we make it clear that total transaction considered for determining this business loss from derivative transactions cannot be more than the total export turnover of the assessee for the assessment year under consideration and if the derivative transaction is in excess of export turnover, then that loss suffered in respect of that portion of excess transactions to be considered as speculative loss only as that excess derivative transaction has no proximity with export turnover and the Assessing Officer is directed to compute accordingly. This ground is allowed as indicated above. Respectfully following the aforesaid order of the Tribunal, we remit this issue to the file of the Assessing Officer with a direction to pass fresh order Disallowance exchange fluctuation loss - Held that:- Packing credit foreign currency borrowings which is in the nature of working capital borrowings and the exchange fluctuation on this count to be considered as a revenue expenditure and to be allowed Disallowance u/s 40(a)(i) - leased telephone lines on the reason that there was no deduction of TDS - as per assessee reimbursement of expenditure towards leased telephone lines does not include any profit element being, so, there cannot be any TDS on this payment - Held that:- The assessee has to demonstrate that this impugned payment does not include any profit element so as to deduct TDS and it is only reimbursement of actual expenses. Before us, the learned authorised representative was not able to demonstrate that it does not include any profit element. Accordingly, we remit this issue to the file of the Assessing Officer and the assessee is directed to show that this is only reimbursement on cost to cost and it does not include any element of profit. This ground is allowed for statistical purposes for both the assessment years. Disallowance of additional depreciation under section 32(1)(iia) - Held that:- Same issue was decided against the assessee by the Tribunal in the assessee's own case for the assessment year 2007-08 as held that a perusal of the provisions of section 32 as applicable for the relevant assessment year clearly shows that additional depreciation is allowable on the plant and machinery only for the year in which the capacity expansion has taken place which has resulted in the substantial increase in the installed capacity. In the assessee's case this took place in the assessment year 2005-06 and the assessee has also claimed the additional depreciation during that year and the same has also been allowed. Each assessment year is separate and independent assessment year. The provisions of section 32 of the Act do not provide for carry forward of the residual additional depreciation, if any. In the circumstances disallowance confirmed. - Decided against assessee. Disallowance u/s 14A read with rule 8D - Held that:- We direct the Assessing Officer to disallow the expenditure under section 14A to the extent of exempted income only. This ground of appeal of assessee is partly allowed. Allocation of research and development expenditure between the eligible unit under section 10B and the non-eligible unit under section 10B unit - Held that:- The facts and circumstances of the present case are exactly identical to those involved in the assessment year 2007-08, where the Tribunal directed the Assessing Officer to examine certain factual details and apportion the research and development expenses if the research and development results are being used by the said 100 per cent. export oriented units. Respectfully following the aforesaid decision of the Tribunal this issue is remitted to the file of the Assessing Officer on similar directions. Disallowance of weighted deduction under section 35(2AB) - Held that:- In view of the decision in the case of USV Ltd. v. Deputy CIT [2012 (9) TMI 43 - ITAT MUMBAI] we are inclined to hold that this section excludes from weighted deduction only cost of land and building and not any charges and expenses related to land or building. The repairs, rent, etc., the expenditure incurred relating to research and development premises cannot form part of cost of land or building. Accordingly, the Assessing Officer is directed to pass a fresh order in the light of the above order of the Tribunal after giving opportunity to the assessee. This ground of appeal is partly allowed for statistical purposes. Non-giving of TDS credit - Held that:- If the assessee is remitted the TDS, the same credit should be given to the assessee in respective assessment years. Accordingly, we remit this issue to the file of the Assessing Officer to give due TDS credit to these assessment years and the assessee is directed to file necessary details to the Assessing Officer. This ground of appeals of the assessee is partly allowed for statistical purposes. Addition made towards corporate guarantee - Held that:- The identical issue came for consideration for the assessment year 2010-11 in the case of Redington (India) Ltd. v. Addl. CIT [2015 (8) TMI 40 - ITAT CHENNAI] to hold that the corporate guarantee given by the assessee to its associated enterprises does not involve any cost to the assessee, therefore, it has no bearing on the profits, income, loss or assets of the assessee and outside the ambit of the international transaction to which the arm's length price adjustment has to be made. According, the orders of the lower authorities are set aside and the Assessing Officer is directed to delete the addition. Reduction of claim u/s 10B - apportionment of exempt income and accordingly reducing the business profit for the purpose of computation of deduction under section 10B of the Act - Held that:- The similar issue came for consideration in the assessee's own case in Brakes India Ltd. v. Deputy CIT (LTU)[2013 (9) TMI 192 - ITAT CHENNAI ] wherein held that it is allowed to set off of loss in the 10B units with profits in other non-10B units by putting reliance upon the above named case – Decided in favour of Assessee. TDS u/s 195 - Addition u/s 40(a)(i) - agency commission, professional consultancy charges, warehousing charges, emballage cost, tool development charges etc. - Held that:- Similar issue came for consideration in the assessee's own case as held the services rendered by the said parties related to clearing, warehousing and freight charges, outside India. The logistics service rendered was essentially warehousing facility. In our opinion, this cannot be equated with managerial, technical or consultancy services. Even if it is considered as technical service, the fee was payable only for services utilised by the assessee in the business or profession carried on by the said non-residents outside India. Such business or profession of the non-residents, earned them income outside India. Thus, it would fall within the exception given under sub-clause (b) of section 9(1) of the Act. As under section 195 the assessee is liable to deduct tax only where the payment made to the non-residents is chargeable to tax under the provisions of the Act. In the circumstances mentioned above, the assessee was justified in having a bona fide belief that the payments did not warrant application of section 195 of the Act. It could not have been saddled with the consequences mentioned under section 40(a)(i) of the Act. Depreciation on printers and UPS - Held that:- Similar issue came for consideration in the assessee's own case in Brakes India Ltd. v. Deputy CIT (LTU)[2013 (9) TMI 192 - ITAT CHENNAI ] wherein Assessing Officer is directed to grant the assessee higher rate of depreciation on the UPS, which is an energy saving device.

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• 2017 (8) TMI 166
  Reopening of assessment - Violation of the principle of natural justice - Held that:- We find considerable cogency in assessee’s counsel contention that lower authorities have not given proper opportunity to the assessee to substantiate its case as assessee is having all the papers and documents with him which he filed in the shape of Paper Book before us, as aforesaid, needs to be examined at the level of the Ld. CIT(A) afresh alongwith other related documents / evidence. Therefore, in the interest of justice, we set aside the issues in dispute to the file of the Ld. CIT(A) for fresh consideration.

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• 2017 (8) TMI 165
  Addition of gift - unexplained source - ingenuity of transaction - Held that:- The assessee has filed complete details in respect of the gift of 1,00,000/-, which was received by the assessee from the donor Shri. Sanjay Jethava by account payee cheque. It is also a fact that the assessee as well as the donor Shri. Sanjay Jethava both are assessed to tax and this gift is reflected in the respective capital account and balance sheet, which are enclosed with the return of income filed in with the department. Once this is the position the issue is clearly covered in favour of assessee and against the Revenue by the decision of Hon’ble Bombay High Court in the case of Continental Warehousing Corporation (Nhava Sheva) Ltd. (2015 (5) TMI 656 - BOMBAY HIGH COURT ). Unexplained investment/expenditure in renovation /purchasing of Flat - Held that:- Almost profit to the extent of 14,00,000/- is earned in A.Y. 2004-05 because the year mentioned is 2004 while distributing the profit as per the capital account seized. Anyhow, the assessee has earned the total profit of 30,25,282/- in a benami firm M/s Nimbeshwar Creation and admittedly, the assessee’s share to the extent of 67% and the profit accordingly workout is 20,26,938/-. The assessee admitted and offered a sum of 15,26,938/- in the relevant A.Y. 2004-05 and remaining sum of 5,00,000/- in A.Y.2005-06. As the facts gathered from seized material, we are of the view that a reasonable view is to be adopted and reasonable view seems that the profit of 15,26,939/- declared by assessee is to be assessed in 2004-05 and this is to be telescoped against the investment in renovation/ acquisition of house property of 15,00,000/- i.e. House No. 601, 6th Floor, A-Wing, Suparshava Apts., opp. Orbit Towers, Raamchandra Sudkoji Sawant Chowk, Elphistone Road, Mumbai. Accordingly, we direct the AO to re-compute the income and assessee the income as declared by the assessee being profit earned from M/s Nimbeshwar Creation amounting to 15,26,939/- and give telescoping effect to the same against the investment in purchase / renovation of House. This issue of assessee’s appeal is allowed. Undisclosed jewelry found from the assessee - Stridhan of the wife - Held that:- There is a small amount of jewelry of 1,79,560/-. Value of total jewelry found is 1,79,560/- which is much less than 500 gram of the jewelry according to the value as on the date of search. The assessee claimed that this is Stridhan, and we have no reason to disbelieve the same for the reason that the quantum of jewelry is very less. Accordingly, we delete the addition in entirety and allowed this issue of assessee’s appeal.

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• 2017 (8) TMI 164
  Grant of registration u/s 12A (a) - charitable activities - claim of the assessee that it is an urban development authority engaged in the object of "advancement of any other object of general public utility - scope of amendment made w.e.f. 01.04.2009 in provisions of section 2(15) - Held that:- Assessee placed list of various work which has been done by the assessee most of them are with respect to development of roads, lighting and sewage etc. It has also submitted the details of various area development and guidelines. At page 79 of the paper book it is submitted certain basic principles of charging price of the property which is based on market rate. It has also specified at page No. 80 of its paper book regarding acquisition of land which is also at prevailing circle rate. Therefore it shows that it acquires the land for development at market rate and also sales the same after development at market rate. In fact it is doing similar objects which an infrastructure company does by acquiring the land in similar fashion. Therefore, there is no difference between the activity carried out by the assessee compared to activity carried out by any other private organization for profit. Therefore on reading the financials presented before us and the various projects demonstrated it is apparent that the activities of the assessee has "profit motive" and therefore it is carrying on the business. Order of High Court of Jammu and Kashmir in case of Jammu Development Authority Vs. CIT [2013 (11) TMI 1578 - JAMMU AND KASHMIR HIGH COURT] is the only decision of the High Court which deals with the provisions of section 2(15) amended w.e.f. 01.04.2009 applicable to the persons carrying on objects of general public utility. Therefore, we respectfully following the decision of the Hon ble Jammu and Kashmir High Court hold that the assessee M/s. Mussoorie Dehradun Development Authority is not formed for “charitable purposes” as defined u/s 2(15) of the Income Tax Act and hence is not entitled to registration u/s 12A (a) of the Act. - Decided against assessee.

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• 2017 (8) TMI 134
  Tax appeal is admitted for consideration of following substantial question of law: Whether the Income Tax Appellate Tribunal was justified in remanding the proceedings before the Assessing Officer for fresh consideration of disallowance under Section 14A of the Act with a direction that if finally disallowance under Section 14A is to be made then the amount thereof in no case shall exceed the exempt income earned by the assessee during the year under consideration?

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• Customs

• 2017 (8) TMI 146
  Absolute confiscation of vehicle - smuggling of Gold - claim of appellant is that she had no knowledge of the alleged offense. Further, she was not available at the time of seizure, imposition of penalty is not justified - whether the appellants had any knowledge of the seized gold recovered from the vehicle for the purpose of imposition of penalty under section 112 of the Act? - Held that: - The enquiry officers proceeded on the basis of probability of the knowledge of the appellant No.1 and there is no attempt to prove it at all. It is well settled that the penalty cannot be imposed merely on the basis of suspicion unless there is sufficient material available on record. There is no evidence on record to show that the appellants were actually in possession of the seized goods. It is noted that there were co-occupants in the seized vehicle - penalty set aside. The Tribunal in the case of Jai Narain Verma v. Collector of Customs, New Delhi [1994 (2) TMI 171 - CEGAT, NEW DELHI], set aside the penalty on the appellant and observed that burden of establishing appellant s involvement in offence not discharged by department beyond doubt, there being no evidence to link appellant with the contraband gold. The imported gold bars were recovered from the vehicle and, therefore, confiscation of the conveyance and imposition of redemption fine under section 115 of the Act is justified - penalties set aside. Appeal allowed - decided partly in favor of appellant.

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• 2017 (8) TMI 145
  Conversion of shipping bills - free Shipping Bills to DEPB Shipping Bills - case of appellant is that conversion of free shipping bills into DEPB Shipping Bills cannot be denied to them as on the basis of same set of export documents the request was made as per Section 149 of the Customs Act,1962 - Revenue's contention on the other hand is that it is difficult to correlate the items exported with the imported items as there was no physical examination of the goods, hence, the conversion of free shipping bills into DEPB shipping bills cannot be accepted - interpretation of statute. Held that: - the principle relating to allowing conversion of free shipping bill into DEPB ,DFRC etc. shipping bill and from one promotion scheme to another promotion scheme has been laid down by the Hon ble Delhi High Court in the case of Terra Films Pvt. Ltd. v. C.C. [2011 (4) TMI 13 - DELHI HIGH COURT]. Their Lordships after considering the Board s Circular No.4/2004 dated 16.1.2004, observed that amendment of the shipping bill after the goods have been exported, cannot be considered as mere amendment, when the request is for conversion of free shipping bills into DEPB or for conversion of shipping bills from one export scheme to another. In the present case are that the appellant had applied for conversion of free shipping bills into DEPB Shipping Bills four to five years after export i.e. on 1.12.2003. Also, at the time of clearance of the goods it was specifically not disclosed in the free shipping bills nor in the ARE-1 export document by declaring thereunder specifically their intention to claim any of the export benefit i.e. benefit under DEPB scheme, therefore, the consignment was not opened for physical examination by the Customs and the export was allowed. Hence, it is difficult to appreciate the argument of the appellant that it was a question of mere amendment to the shipping bills, which is contrary to the Circular No.4/2004 dated 16.1.2004 issued by the Board and was in force during the relevant time. The request for conversion of free shipping bills to DEPB Scheme cannot be considered, as the said scheme is strictly on actual user basis exemption and no transferability is allowed pre or post export. Hence, strict interpretation need to be applied - appeal dismissed - decided against appellant.

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• 2017 (8) TMI 144
  Confiscation - rejection of assessable value - Toyota Land Cruiser Prado - misdeclaration of offended car - smuggling - Appellant's submission is that there can neither be seizure nor confiscation since the car has already been released. Neither the first buyer nor the subsequent buyers were involved in the import alleged to be made in violation of law - Held that: - It is admitted fact on record that there was deliberate mis-declaration of year of manufacture as well as chassis number. It is also admitted fact that there was an attempt to get higher rate of depreciation on the imported car under the Transfer of Residence (TR) Rules, 2002 . When the appellants could not come out with clean hands to discard the allegations as well as purchased the offending car imported without any inquiry into the law applicable to such import, they cannot be said to be stranger to the deal. Car imported unlawfully contravening provisions of Customs Act, 1962 become smuggled goods as defined by Section 2(39) thereof. The fraudulent mis-declaration and active as well as conscious involvement not being appreciated, the parties therein got relief. But, in the present case, it is the case of deliberate mis-declaration and commitment of fraud against Customs abusing the benefit of the Transfer of Residence (TR) Rules, 2002 , there shall be no escape from the penal consequence of law by these appellants. Appeal dismissed - decided against appellant.

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• 2017 (8) TMI 143
  Classification of goods - Discreet Lustre Master Station, consisting of computer system, storage devices, PCB cards - whether the lower appellate authority's order upholding of classification of Discreet Lustre Master Station imported by the appellant under CTH, 85438960 is correct or whether the goods are required to be classified under CTH, 87413090 as claimed by appellant? Held that: - in the case of a machine involving a combination of machines or a combination of individual components which together perform a clearly defined function, then the whole machine will require to be classified in the heading appropriate to that function - the item under import is designed for a specific functionality relating to grading of digital intermediates in digital cinema. The features of this system include primary and selective colour correction, continual grading and grade editor, vector shapes and tracking effects, animation, playback, video capabilities - pan and scan, conforming and editing - As correctly observed by the lower appellate authority, M/s. Autodesk had specifically designed the generic panel device for the above purposes, Similarly DVS Centaurus audio video devices were designed to perform a specific function which a normal data processing machine would not contain. Hence the impugned goods will necessarily go out of the scope of CTH 84713090. Though the imported goods may well have a high performance IBM CPU (server) with advanced key boards and although the equipment may have many of the elements of an automotive data processing machine, nonetheless, they are specifically designed to perform a specific function other than data processing, namely, that of performing high end task of colour gradation/correction. Hence the classification of the goods will then be governed by Section notes 3 & 4 of the first Schedule to CTA read with Chapter Note 5E of Chapter 84, and the imported goods will then have to be considered as a machine intended to contribute together to a clearly defined function covered by heading 85438960 as a colour corrector. Classification of the impugned goods under CTH 85438960 having the primary function of colour corrector upheld - appeal dismissed - decided against appellant.

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• 2017 (8) TMI 142
  Mis-declaration of goods - import of of CDRs by misdeclaring as DVDRs - it was alleged that the goods were mis-declared to avoid payment of Anti Dumping Duty - Section 111 of the Customs Act - Held that: - On plain reading of Section 111 (m), it is clear that any imported goods which do not correspond to any particular Bill of Entry shall be liable for confiscation. In the present case, undisputedly, there is mis-declaration of goods with the Bill of Entry and therefore, the confiscation would be followed. There are twin Sections, Section 112 and Section 114, to impose penalty for improper import of goods and penalty for attempt to export goods improperly, respectively. Apart from that, Section 114 AA would be invoked in a situation where a person knowingly had given a false declaration. The expression where no express penalty is elsewhere provided for "such contravention", in Section 117 makes it clear that it is a penalty of residuary nature - In the present case, the facts narrated in the Show-cause notice would show that M/s Santosh Radio Products and its Partner Shri Kishan Kumar Kejriwal had knowingly made incorrect declaration, which is covered under Section 114 (AA) of the Act. Penalty on M/s Santosh Sales Pvt. Ltd. and its Managing Director u/s 117 - Held that: - the imposition of penalty on the person for merely purchasing and selling of the goods, is excessive. And therefore, the penalty imposed on them is unjustified. Appeal allowed - decided partly in favor of appellant.

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• Corporate Laws

• 2017 (8) TMI 138
  Seeking compounding of an offence allegedly committed under Section 297 of the Companies Act, 1956 - Held that:- Since the violation pertains to years 2007-2011 therefore the applicable provisions will be under the Companies Act, 1956 and accordingly we are inclined to compound the violation under Section 297 in terms of provisions of Section 621A of the Companies Act, 1956 with the following directions. (a) All the Applicants are directed to pay a sum of 6,20,000/- (Rupees Six Lakhs Twenty Thousand only) each towards Compounding Fee. The first transaction of the Company under the provisions of Section 297 of the Companies Act, 1956 was on 16.10.2007 and the same was made good on 31.03.2011. (approx 1230 days X 500 = 6,15,000 +5000=6,20,000). (b) All the Applicants are also required to pay the Compounding fee within a period of three weeks from the date of receipt of copy of the order and report compliance of the same to the Registry. (c) All the Applicants are warned to be careful in future and not to repeat any violation of the provisions of the Companies Act or else serious view will be taken by the Tribunal.

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• Insolvency & Bankruptcy

• 2017 (8) TMI 139
  Initiating corporate insolvency resolution process - Held that:- The figures extracted indicate the losses with continued fall in revenue, therefore, it seems that the applicant has fallen into debt trap and is competent to set in motion the insolvency resolution process as contemplated under the 'Code'. On the basis of the aforesaid statements of the affairs of the company, the outstanding amount as per the books of the company towards financial creditors is 114.20 crores and the amount in default towards financial creditors is 117.22 crores. It is represented that the total amount of operational creditors (Raw Material Suppliers) is 12.18 crores and the amount in default is 02.15 crores. The total amount of operational creditors (Government dues) is 00.17 crores and the amount in default is 00.10 crores. The total amount of operational creditors (Worker Employees) is 00.24 crores and the amount in default is nil. The total amount of operational creditors (Service providers) is 00.24 crores and the amount in default is 0.11 crores. In view of the above, the instant petition deserves to be admitted. It is, however, observed that the applicant company save some sketchy particulars has not given any road map as to how it is going to keep itself afloat as a going concern. However, keeping in perspective the objects for which the 'Code' has been brought into force and to balance the interest of all stakeholders, the instant application warrants to be admitted to prevent further erosion of capital and to safeguard the assets of the Applicant Company/Corporate Debtor. Also declare a moratorium in relation to the matters as contemplated under Section 14 of the 'Code'.

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• PMLA

• 2017 (8) TMI 135
  Prevention of Money Laundering Act, 2002 - attachment orders - Held that:- The offences allegedly committed by the first and second petitioners prior to 1.7.2005, the Prevention of Money Laundering Act was not in force. Even after 1.7.2005, the offences were not included in the scheduled offences till 1.6.2009. Since the charge sheet dated 13.1.2009, even on that date, Prevention of Corruption Act has not included in the scheduled list of offences. Therefore, this court is of the view that if retrospective effect is given to any statute of any penal nature, it will be directly in conflict with the fundamental rights of the citizen enshrined in Article 20(1) of the Constitution of India. Admittedly, 2nd respondent filed the case only based on the charge sheet of the CBI, who have not conducted any enquiry on their own. In fact, all the documents are original documents of the alleged proceeds of crime, which are in the custody of the CBI Court. When the entire documents are in the custody of the Court, there cannot be any reason to believe that the properties will be dealt with in any other manner. The impugned order was as if 1st petitioner not able to offer any satisfactory explanation during examination. Therefore, the attachment officer has passed an order without a reason to believe that the proceeds of crime are likely to be transferred or disposal. In the absence of any sufficient reason, arriving to such conclusion by mere reproducing the words reason to believe it cannot be stated that the order has been passed after considering the entire gamut of materials. Admittedly, in this case, entire documents are available and the properties are in the custody of the court. Therefore, the order of attachment is not maintainable.

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• Service Tax

• 2017 (8) TMI 163
  Validity of order-in-original - service of SCN - natural justice - Held that: - It appears that the final order in appeal has been passed by the Tribunal after the filing of the present appeal. The present appeal was filed against the order passed by the Tribunal directing the appellant to deposit of amount. Be that as it may, the appeal was filed against the order in original on contentious issues. The main contention of the appellant is that even the service of Showcause Notice was not made. The order in original is an exparte order. To test the bona fides of the appellant, on the last date we had asked the learned Counsel for the appellant as to whether the appellant is ready to deposit the amount as directed by the Tribunal. The learned Counsel, on instructions, states that the amount as was directed by the Tribunal by way of predeposit would be deposited by the appellant within a reasonable time - Considering the bona fides shown by the appellant, we are inclined to exercise discretion in favour of the appellant - appeal allowed.

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• 2017 (8) TMI 162
  Demand on the ground that the appellant has not complied with the direction of the Tribunal in submission of the documents - demand - Held that: - Since the present appeal is for the limited purposes i.e. for submission of the relevant documents, which admittedly were not produced by the appellant before the adjudicating authority, I am of the view that the impugned order passed by the ld. Commissioner (Appeals) cannot be interfered with at this juncture - appeal dismissed - decided against appellant.

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• Central Excise

• 2017 (8) TMI 161
  Refund of pre-deposits made by appellant - time limitation - Section 11B of the Central Excise Act - Held that: - the issue of applicability of Section 11B on deposits made under Section 35F is no longer res integra and has been decided by Hon'ble Bombay High Court in the case of SUVIDHE Ltd. Vs. UOI [1996 (8) TMI 521 - SUPREME COURT], where it was held that the provisions of Section 11B of the Act are not applicable to refund of pre-deposits made by the assessee - refund allowed. Interest on delayed refund - Section 11BB - Held that: - interest on refund under Section 11BB is not applicable in the present case as the SCN dt. 16.12.2011 for rejection of refund claim of the appellant was issued within three months of its receipt. Appeal allowed - decided partly in favor of appellant.

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• 2017 (8) TMI 160
  Refund Claim - unjust enrichment - Rule 7 of Valuation Rules - whether the appellant have realized excess duty which they have kept with themselves without passing it further to the consumers? - Held that: - the excise duty element has nowhere been separately mentioned in the sale invoices being issued from the depot. Hence, it cannot be ascertained whether the duty element was not borne by the ultimate buyers. Since the ultimate buyers have paid the entire amount mentioned in the invoices, it is evident that the entire duty element has been borne by the ultkmate buyers. As the entire amount has been recovered from the ultimate buyers including the duty element, unjust enrichment is attracted. It is not the case of the appellant that excise duty does not for part of the value of clearances from depot. In the present case, there is no provisional assessment but final duty payment. Appeal dismissed - decided against appellant.

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• 2017 (8) TMI 159
  CENVAT credit - inputs - Ms. Angles, Channels, and Beams, TMT Bars, Cements etc., used in the fabrication of storage tanks as well as structures which support capital goods - Held that: - the issue has been recently considered by the Principal Bench at Delhi in Singhal Enterprises Pvt. Ltd's case [2016 (9) TMI 682 - CESTAT NEW DELHI], where it was held that applying the “User Test” to the facts in hand, we have no hesitation in holding that the structural items used in the fabrication of support structures would fall within the ambit of ‘Capital Goods’ as contemplated under Rule 2(a) of the Cenvat Credit Rules, hence will be entitled to the CENVAT Credit. Time limitation - Held that: - the demand is barred by limitation, since on the very same issue, responding to the objection raised by the Audit, the appellant way back in the year 2007 submitted that these items are eligible to CENVAT credit and no demand notice was issued to the appellant for recovery of the credit. Appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 158
  Classification of motor vehicle - Car Carrier Trailers - Held that: - The show cause notice after considering all the documents and detailed investigation come to the conclusion that the goods in question is Car Carrier Trailers, however as submitted by the Ld. Counsel, in the record itself, it can be found out that what is the nature of the goods which is a primary requirement for deciding the classification, it cannot be said that the facts available in the records, if it is raised before the Tribunal is a fresh evidence - Therefore in the interest of justice, it is necessary to re-consider the aspect of nature of motor vehicle that how many vehicles are actually car carrier trailers and how many are car carrier trucks - appeal allowed by way of remand.

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• 2017 (8) TMI 157
  Clandestine Removal - the charge of clandestine removal is mainly based on a note-book recovered from the premises of the appellant. In the Show-cause notice, it has been alleged that the said note-book appears to be maintained by Shri Arun Kr.Das, Manager (Operations) of the Appellant Company - Held that: - the appellant from the very beginning disowned the said note-book. It is noticed that the handwriting of the said note-book is of Shri Arun Kumar Das, as claimed by the visiting Central Excise Officers, could have been examined by the handwriting expert, which was not done. Further, the Commissioner (Appeals) observed that Shri Arun Kumar Das was summoned under Section 14 of the Central Excise Act, 1944, to give evidence, but he did not turn up. It is seen from the order of the Commissioner (Appeals) that Shri Arun Kumar Das was summoned by Summon dated 21.05.2004 and thereafter, neither any further summon was issued nor any proceeding was initiated against the said person under the provisions of law. It is not clear as the investigating officer recovered the said Note-book from the appellant's factory, then why there was no attempt to record statement of the said person. The appellant disowned the seized Note-book. There is no material available on record that the said Note-book was maintained by Shri Arun Kumar Das and no further investigation was conducted - appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 156
  CENVAT credit - duty paying documents - Department was of the view that such credit availed was improper inasmuch as GAR-7 was not a prescribed document for availing the CENVAT credit - Held that: - reliance placed in the case of CORDS CABLE INDUSTRIES LTD. Versus COMMR. OF C. EX. & SERVICE TAX, JAIPUR-I [2015 (10) TMI 1317 - CESTAT NEW DELHI], where it was held that appellant has correctly taken the Cenvat credit of inputs attributed to export goods cleared in domestic market by way of debit entry in RG 23A Part II register - appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 155
  Refund of amount deposited by Shri Ramdas Gupta against the stay order - tobacco business - amount was deposited by Shri Ramdas Gupta, who died and now refund claimed by Shri Mithai Lal Gupta, who claimed to inherit the tobacco business - Held that: - I have also perused the vasiyatnama which is said to have been executed by Shri Ram Das Gupta. Even though the vasiyatnama mentions that Shri Mithai Lal Gupta will inherit the tobacco business of Shri Ram Das Gupta after his death, I find that the appellant has failed to produce the probate certificate issued by the appropriate court in his favour confirming the fact that he is the legitimate successor of Shri Ram Das Gupta for the purpose of claiming the refund amount - appeal dismissed - decided against appellant.

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• 2017 (8) TMI 154
  Sale of scrap - excisability - Department was of the view that Central Excise duty is required to be paid on the consideration received at the time of sale of such used moulds - Held that: - these moulds were manufactured within the factory of the appellant and used for further manufacture within. Hence they retain the characteristic of manufactured goods and satisfy the requirements of Section 2(f) - The explanation inserted after excisable goods in Section 2(d) makes the statute clear that such goods are deemed to be marketable - excise duty is liable to be paid at the time of their clearance on the transaction value - appeal dismissed - decided against appellant.

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• 2017 (8) TMI 153
  Speed of the machines which is manufacturing Pan Masala - monthly capacity of production of Chewing Tobacco - Held that: - It is admitted position at the time of visit of Chartered Engineer the speed of machine was found 696.5 pouches per minute. These facts are not in dispute. The Chartered Engineer has opined that the speed of machines can be increased and depend on the Servo Motor. The observations made by the Chartered Engineer that the capacity of each machine could be operated to run at a speed of beyond 1000 pouches per minute provided the locking i.e. presetting for maximum number of pouches which the machines could be produced to higher value by the company or manufacture of the machines through password and logical sequencing is without any positive evidence. Moreover, if the speed of the machines is increased in that situation that can be examined by the Authorities from time to time. The maximum speed at which machine declared by the appellant in Form-I and Form-II can operate in terms of Rule 6 of the Rules is about 696.5 pouches per minute at present, till any deviation/alternation is not done in the machine. The appellant is also directed under Rule 6 of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2015, to inform at least 3 days in advance to the Divisional Deputy Commissioner of Central Excise or Assistant Commissioner of Central Excise, as the case may be, as and when any alteration in machines regarding maximum speed at which machines can be operated is to be carried out by the appellant. Appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 152
  CENVAT credit - M.S Flats - denial on the ground that the appellant is not having facility of slitting or get slited on job work the M.s Flats in question - Held that: - As per the report 19.09.2012, it is fact on record that the appellant is having facility of slitting more than 600 mm M.S Flats in their factory, therefore, cenvat credit on M.S Falts classified under chapter 7208 cannot be denied to the appellant - appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 151
  Valuation - advertisement expenses - includibility - Held that: - Admittedly, the expenses have been incurred by the appellant themselves and they have been debited in their Profit and Loss account and no part of these expenses have been recovered from the buyers - the assessable value declared by the appellant is correct and these expenses have already formed of the part of assessable value - appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 150
  CENVAT credit - procurement of capital goods from 100% EOU - lower authorities held that the appellants are not eligible to take credit of basic custom duty, as the same is not one of the listed duties in terms of Rule 3 of CCR, 2004 - Held that: - There is no provision to take credit of basic customs duty, though the same would have been part of aggregate duty paid by EOU at the time of clearance of capital goods to the appellants - The second proviso is inserted under Rule 3 (7) (a) of the CCR w.e.f. 7.9.2009 vide notification 22 of 2009 CE(NT). It makes the position clear regarding credit availability in the present case - credit not allowed. Penalty - Held that: - there is no reason for imposition of penalty on the appellant for availing such credit. The issue involved is one of interpretation of the legal provisions of technical nature. The credits availed were reflected in the records as well as returns filed by the appellant - penalty imposed on the appellants is set aside. Appeal allowed - decided partly in favor of appellant.

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• 2017 (8) TMI 149
  Method of Valuation - combination pack - detergent powder and detergent cake - MRP based valuation - Revenue entertained a view that the duty liability of such retail package containing powder and cake is to be computed by taking MRP of individual items, when sold separately - Held that: - Admittedly, the appellants sold combination pack, in retail, containing 1 kg. of detergent powder with 160 gm. detergent cake. The sale price of the combination retail pack is printed on the pack. The retail pack clearly indicated the MRP as 36/- which includes the price of detergent cake. In such situation, we find no justification in further adding up the value or for demand of any differential duty. In the present case, we are dealing with the combination pack of consumer product sold with a single MRP. As a marketing strategy one of the product in such combo pack is declared to be free. However, the details printed on the combination pack makes it clear that the MRP is for detergent cake also. Appeal allowed - the item declared to be sold free need not be separately assessed to duty - decided in favor of appellant.

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• 2017 (8) TMI 148
  CENVAT credit - MS angles, channels, Cable tray, MS tower, copper anode, hanger bar and aluminum plate of electrolysis, etc - Held that: - the Cenvat Credit was allowed on various items like MS plates, channels, angles, beams, joist, iron sheets, angle plates, etc. for fabrication / manufacturing of various capital goods by the Tribunal in the case of Hindustan Zinc [2016 (3) TMI 346 - CESTAT NEW DELHI] - the Cenvat Credit was also allowed on the electrolysis plates as per the ratio laid down in the case of Cominco Binani Zinc Ltd. Vs. CCE [1990 (1) TMI 184 - CEGAT, MADRAS] - On anodes, the MODVAT was also allowed in the case of CCE Vs. Travancore Cochin Chemicals Ltd. [1994 (9) TMI 206 - CEGAT, MADRAS]. Appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 147
  Interpretation of statute - meaning and scope of the expression place of removal employed in the definition of input service under Rule 2(l)of CCR,2004, in the context of admissibility of CENVAT Credit on outward freight (GTA service), when the manufactured goods are cleared and delivered at the place of buyer - Held that: - by virtue of Rule 2(t) of CENVAT Credit Rules, 2004 the meaning of expression not defined therein has been borrowed from the Central Excise Act and the Rules made thereunder, but it has to be read in the context in which it has been used - It is well settled that all statutory definitions or abbreviations must be read subject to the qualification variously expressed in the definition clauses which created them and it may be that even where the definition is exhaustive inasmuch as the word defined is said to mean a certain thing, it is possible for the word to have a somewhat different meaning in different sections of the Act depending upon the subject or context. That is why all definitions in statutes generally begin with the qualifying words, similar to the words used in the present case, namely unless there is anything repugnant in the subject or context. The CENVAT Credit Rules extends credit of the duty/tax paid on various services incurred in or in relation to manufacture of goods, enumerated under the definition of input service which includes outward transportation up to the place of removal - Even though the meaning of place of removal has to be considered to be factory gate, however, the Courts while interpreting the meaning of input service laid emphasis on the condition of sale so as to ascertain whether the services rendered by the assessee was in relation to delivery of the manufactured/finished goods at the place of the buyer. Ascertainment of place of removal - two circulars of the Board namely 37B order no 59/1/2003, dated 3-3-2003 and Circular No. 97/8/2007, dated 23-8-2007 - Held that: - no specific finding has been recorded analyzing the evidences as to whether sale of the manufactured goods is at the factory gate or at the premises of the buyer as per the agreement for sale, purchase Order, invoice etc. Thus, all these appeals need to be remanded to the original authority to examine the said aspect and then consider the eligibility of CENVAT Credit on outward freight (GTA services) by ascertaining the place of sale in the light of above observation and the circulars issued by the Board. The impugned orders are set aside and the appeals are remanded to the adjudicating authority - Appeal allowed by way of remand.

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• CST, VAT & Sales Tax

• 2017 (8) TMI 141
  Stock transfer of inter-state sale - The specific case of the petitioner is that the goods which are in semi finished condition are stock transferred to their branch factory at Haryana where local purchases are made and the product is made into finished product and sold to the customers in Haryana who are three automobile giants in India - The allegation against the petitioner is that purchase orders are placed by the purchasers in Haryana, the entire manufacturing activities are carried out in Coimbatore transferred to Haryana where there is no manufacturing done and the goods are sold in Haryana and it is not a case of stock transfer but a case of interstate sale and the State of Tamil Nadu is eligible to tax the transaction. Held that: - mere mentioning of the words that the particulars were incorrect or untrue is not sufficient and what is required to be done is to conduct an enquiry and unless details are found to be writ with fraud, misrepresentation or collusion or suppression of material facts, on a mere change of opinion, the findings could not be disturbed under Section 16 of the Act. The Appellate Authority applying the legal position in the case of Ashok Leyland Limited [2004 (1) TMI 365 - SUPREME COURT OF INDIA] held that re-assessments were illegal and without jurisdiction. The Appellate Authority made an observation that there is a need to re-look at the contents of Form F and the provisions of Section 6(A)(2) of the CST Act, especially in view of the interpretation placed by the Hon'ble Supreme Court in the case of Ashok Leyland Limited. This has led to the incorporation of sub-section (3) in Section 6(A) of the CST Act. However, the impugned assessments are much prior to the said amendment. The impugned re-assessment proceedings are without jurisdiction. In the light of the said conclusion, it is not necessary for any other exercise much less a fact finding exercise - petition allowed - decided in favor of petitioner.

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• 2017 (8) TMI 140
  Reversal of Input Tax Credit - The petitioner's contention is that inspite of earlier direction issued by the Division Bench to examine as to whether the petitioner was issued with certificate of registration within time and whether the petitioner was prevented from filing online returns or manual returns, as the case may be, has not been examined - natural justice - Held that: - the respondent in the impugned order has not gone into the aspect as directed by the Division Bench. The petitioner would not be able to file a return electronically as it is admitted by the respondent that the password was given belatedly and for that matter, registration was also done beyond the time limit stipulated under the Act. Whether the petitioner was prevented from filing the manual return? - Held that: - There is no definite observation made by the Assessing Officer in this regard. If the petitioner's registration had been delayed, obviously he cannot file a manual return. Above all, the petitioner is not a new dealer, they have taken over an existing business and their vendor had a valid registration with the respondent. Therefore, it is only a transition which required to be done so far as the concerned business. Probably, the verification aspect required to be done was with regard to the solvency of the petitioner and other related requirements. Condonation of delay - Held that: - though the registration certificate might have been despatched to the petitioner during April 2014, the petitioner was justified in seeking to file online return as the Department is insisting and compelling dealers to adopt the online procedure and discouraging the filing of manual returns. Therefore, even assuming there is a fault on the part of the dealer in not immediately filing the manual return, on account of the delay by the Department in activating the facility for filing e-return by giving the password, the delay in filing the manual return has to necessarily be condoned. Petition allowed - decided in favor of petitioner.

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• Indian Laws

• 2017 (8) TMI 137
  Judgment of acquittal - offence under Section 138 of the Negotiable Instruments Act - Held that:- It is significant to note that the complainant alleged that the respondent agreed to repay 5,00,000/- with 24% interest. However, she has not produced any acceptable material to show that the respondent agreed to pay interest. Except the disputed document, namely, the cheques Ex.P.1 there is no reliable evidence to show that the complainant has lent 10,00,000/- to the respondent. The mere oral evidence of D.W.1 is not sufficient to hold that she had lent money to the respondent. The complainant has not been able to show any material to indicate that he has got so much money on the relevant dates to lend as claimed by her. Thus the complainant has not proved that the cheques in question were issued for the discharge of legally enforceable debt. The appellant has not proved his case for an offence under Section 138 of the Negotiable Instruments Act. The view taken by the Trial Court is permissible on the evidence on record. The appreciation of evidence by the Trial Court is not perverse. The reluctance on the part of the appellate court in interfering with such conclusions is fully justified. There is no ground to interfere with the judgment of acquittal.

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• 2017 (8) TMI 136
  Offence under Sec.138 of the Negotiable Instruments Act - Held that:- On a perusal of the joint compromise application for compounding of the offence, it is ordered that the impugned judgments of both the courts below will stand set aside and the offence under Sec.138 of the Negotiable Instruments Act, alleged against the petitioner will stand compounded and the petitioner is acquitted of the above said offence. In view of the belated plea for compounding the offence, the petitioner will pay cost of 3,000/- before the Kerala State Legal Services Authority (High Court Legal Service Committee). Sri.Thomas Abraham, learned counsel appearing for the revision petitioner submits that cost will be paid by tomorrow.

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