TMI Tax Updates - e-Newsletter
September 1, 2018

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws FEMA PMLA Service Tax Central Excise

TMI SMS

• GST (Amendment) Acts, 2018 to amend CGST Act, IGST Act, Compensation to States Act and UTGST Act, got Presidential assent as on 29.8.2018

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• Transfer pricing - Section 92 is not an independent charging section to charge tax on income which is otherwise not chargeable under the Act

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• Receipt of monthly licence fee form the traders/dealers against land in the Flower Mandi is taxable as Renting of Immovable property service

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News

1. GST (Amendment) Acts, 2018 to amend CGST Act, IGST Act, Compensation to States Act and UTGST Act, got Presidential assent as on 29.8.2018

2. ​CBDT Releases 2nd Annual Report of its APA Programme

3. Repayment of 5.69% Government Stock 2018

4. CCI imposes penalty on Karnataka Film Chamber of Commerce (KFCC), and others for anti-competitive conduct

5. India Pavilion at Food and Drink Technology Africa Trade Show in South Africa

6. Monthly Review of Union Government of India up to the month of July 2018 for the Financial Year 2018-19

7. Banks will remain open and banking activity will continue unimpeded in the first week of September

8. Demonetisation and its impact on Tax collection and Formalisation of the Economy - Arun Jaitley

Notifications

GST - States

1. F-10-42/2018/CT/V (69)-34/2018-State Tax - dated 10-8-2018 - Chhattisgarh SGST

Extend the furnishing return in FORM GSTR-3B of the said rules for each of the months from July, 2018 to March, 2019.

2. F-10-42/2018/CT/V (68)-33/2018-State Tax - dated 10-8-2018 - Chhattisgarh SGST

Time period for furnishing details in FORM GSTR-1.

3. 38/1/2017-Fin(R&C)(18/2018-Rate)(Corri.) - dated 20-8-2018 - Goa SGST

Corrigendum - Notification No. 38/1/2017-Fin(R&C)(18/2018-Rate)(Corri.)

4. 38/1/2017-Fin(R&C)(15/2018-Rate)(Corri.) - dated 20-8-2018 - Goa SGST

Corrigendum - Notification No. 38/1/2017-Fin(R&C)(15/2018-Rate)(Corri.)

5. 38/1/2017-Fin(R&C)(13/2018-Rate)(Corri.) - dated 20-8-2018 - Goa SGST

Corrigendum - Notification No. 38/1/2017-Fin(R&C)(13/2018-Rate)(Corri.)

6. EXN-F(10)-24/2018-35/2018-State Tax - dated 27-8-2018 - Himachal Pradesh SGST

Amendment in the Notification of the Government of Himachal Pradesh, No. 34/2018-State Tax, dated the 9th August, 2018.

7. F.A-3-41-2017-1-V-(73) - dated 21-8-2018 - Madhya Pradesh SGST

Amendment in this department's Notification No. FA-3-41-2017-1-V(47)-2017, dated 30th June, 2017 and No. F A-3-41-2017-1-V(56), dated 29th June 2018.

8. F.A-3-89-2017-1-V-(72) - dated 20-8-2018 - Madhya Pradesh SGST

Madhya Pradesh Appellate Authority for advance ruling to hear the appeals against the advance ruling pronounced by the Madhya Pradesh Authority for Advance Ruling.

9. 35/2018-State Tax - dated 23-8-2018 - Maharashtra SGST

To extend the due date for filing of FORM GSTR-3B for the month of July, 2018.

10. 33/2018-State Tax - dated 20-8-2018 - Maharashtra SGST

To prescribe the due dates for quarterly furnishing of FORM GSTR-1 for those taxpayers with aggregate turnover of upto ₹ 1.5 crores for the period from July, 2018 to March, 2019.

11. 34/2018-State Tax - dated 13-8-2018 - Maharashtra SGST

To prescribe the due dates for filing FORM GSTR-3B for the months from July, 2018 to March, 2019.

12. 32/2018-State Tax - dated 13-8-2018 - Maharashtra SGST

To prescribe the due dates for furnishing of FORM GSTR-1 for those taxpayers with aggregate turnover of more than ₹ 1.5 crores for the months from July, 2018 to March, 2019.

13. ERTS(T) 65/2017/Pt.I/137-35/2018-State Tax - dated 21-8-2018 - Meghalaya SGST

Amendment in the Notification of the Government of Meghalaya in Notification No. 34/2018-State Tax issued vide No. ERTS(T)65/2017/PT/304, dated 10-08-2018.

14. ERTS(T) 65/2017/Pt/304-34/2018-State Tax - dated 10-8-2018 - Meghalaya SGST

Seeks to prescribe the due dates for filing FORM GSTR-3B for the months from July, 2018 to March, 2019.

15. ERTS(T) 65/2017/Pt/303-33/2018-State Tax - dated 10-8-2018 - Meghalaya SGST

Seeks to prescribe the due dates for quarterly furnishing of FORM GSTR-1 for those taxpayers with aggregate turnover of upto ₹ 1.5 crores for the period from July, 2018 to March, 2019.

16. ERTS(T) 65/2017/Pt.I/133-31/2018-State Tax - dated 6-8-2018 - Meghalaya SGST

Seeks to lay down the special procedure for completing migration of taxpayers who received provisional IDs but could not complete the migration process.

17. ERTS(T) 65/2017/Pt.I/132-22/2018-State Tax (Rate) - dated 6-8-2018 - Meghalaya SGST

Amendment in the Notification No. ERTS(T) 65/2017/8 dated 29.06.2017.

18. 34/2018-State Tax - dated 24-8-2018 - Mizoram SGST

Extend the furnishing return in FORM GSTR-3B of the said rules for each of the months from July, 2018 to March, 2019.

19. 33/2018-State Tax - dated 24-8-2018 - Mizoram SGST

Seeks to prescribe the due dates for quarterly furnishing of FORM GSTR-1 for those taxpayers with aggregate turnover of upto ₹ 1.5 crores for the period from July, 2018 to March, 2019.

20. 31/2018-State Tax - dated 14-8-2018 - Mizoram SGST

Seeks to lay down the special procedure for completing migration of taxpayers who received provisional IDs but could not complete the migration process.

21. 22/2018-State Tax (Rate) - dated 14-8-2018 - Mizoram SGST

Amendment in the Notification of the Government of Mizoram, No. 8/2017 – State Tax (Rate), dated the 7th July, 2017.

Income Tax

22. 42/2018 - dated 30-8-2018 - IT

Income-tax (9th Amendment), Rules, 2018.

23. 41/2018 - dated 30-8-2018 - IT

Central Government specifies the “The Press Trust of India Limited, New Delhi” as a news agency set up in India solely for collection and distribution of news for three assessment years 2019-2020 to 2021-2022 for the purpose of section 10(22B)

24. 40/2018 - dated 27-8-2018 - IT

MIs C.B.C.I. Society for Medical Education, Bengaluru notified within the category of 'university, college or other institution', engaged in research activities u/s 35(1)(ii) & 35(1)(iii)

Circulars / Instructions / Orders

FEMA

1. 06 - dated 30-8-2018

Exim Bank's Government of India supported Line of Credit of USD 500 million to Ecowas Bank for Investment and Development

2. 07 - dated 30-8-2018

Exim Bank's Government of India supported Line of Credit of USD 90.3 million to Banco Exterior De Cuba

3. 08 - dated 30-8-2018

Exim Bank's Government of India supported Line of Credit of USD 70 million toBanco Exterior De Cuba

Customs

4. 29/2018 - dated 30-8-2018

Pilot Implementation of Paperless Processing under SWIFT-Uploading of Supporting Documents (eSANCHIT) in Exports - reg.

Highlights / Catch Notes

GST

• GST Amendments of 2018 Approved: Changes to CGST, IGST, Compensation to States, and UTGST Acts.

  : GST (Amendment) Acts, 2018 to amend CGST Act, IGST Act, Compensation to States Act and UTGST Act, got Presidential assent as on 29.8.2018
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Income Tax

• New Tax Rules Revamp Filing Procedures and Compliance, Aiming for Transparency and Accuracy Under Income-Tax (9th Amendment) Rules, 2018

  Notifications : Income-tax (9th Amendment), Rules, 2018.
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• Court Shocked by Misleading Statement from Revenue in Delayed Appeal by Union of India's Commissioner of Income Tax.

  Case-Laws - SC : Despite delayed filing of appeal, the petitioners (revenue) have given a totally misleading statement before this Court. - We are shocked that the Union of India through the Commissioner of Income Tax has taken the matter so casually.
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• Section 201(1)/201(1A) prohibits dual liability for single default under Income Tax Act, ensuring fairness in tax enforcement.

  Case-Laws - HC : Assessee in default - Provisions of section 201(1)/201(1A) do not authorize the Department to treat the same default under two provisions.
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• Tax Exemption: Own Only One Residential House to Qualify u/ss 54/54F, Spouse's Property Excluded.

  Case-Laws - AT : Exemption u/s 54/54F - The assessee should not own more than one residential house, other than the new asset. The word used in the section is the residential house but not the commercial property. - Similarly, the property, of the wife cannot be attached to the assessee for the purpose of disallowing the deduction u/s 54F
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• Interest from nationalized bank investments is not deductible under Income Tax Act Section 80P(2)(a)(i) for cooperatives.

  Case-Laws - AT : Deduction u/s 80P(2)(a)(i) - interest earned from investment made in nationalized bank by a cooperative society engaged in providing credit facilities to its members, is not eligible for deduction under section 80P - However, any expenditure incurred by the assessee for earning such income could be allowed to it, if not already allowed.
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• Dispute Over Rebate Claim Under Income Tax Act Section 88E: AO Cannot Rectify Mistake Due to Doubtful Interpretation.

  Case-Laws - AT : Rectification of mistake - Rebate claim u/s 88E - as per AO assessee has also earned income by way of short term capital gains on which the assessee has paid STT and therefore, while computing the rebate, income from such short term capital gains should have to be reduced - The issue has two plausible views and once, it is doubtful issue, the AO cannot resort to section 154 of the Act i.e. rectification of mistake apparent from record.
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• Discrepancy in Receipts: Deduction Still Eligible u/s 80P of Income Tax Act.

  Case-Laws - AT : Addition on account of difference in the total receipts shown in the Form No. 26AS as against the receipts shown in the books of account - even if additions so made, the said amount would be eligible for deduction U/s 80P
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• Court Upholds Additions u/s 68; Assessee Fails to Explain Cash Transactions Despite Bank Account Presence.

  Case-Laws - AT : Addition u/s 68 - evidences about the receipt of the cash and repayment of the cash despite those persons having proper bank account - whole explanation of the assessee lacks credibility - additions confirmed.
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• Income Tax Act Section 92: Transfer Pricing Ensures Arm's Length Transactions, Doesn't Create New Taxable Income Categories.

  Case-Laws - AT : Transfer pricing - ALP - Section 92 is not an independent charging section to bring in a new head of income or to charge tax on income which is otherwise not chargeable under the Act.
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• Exemption Granted: Section 11 Claim Approved as Assessee's Objectives Not Commercial; No Business Activities Proven.

  Case-Laws - AT : Denial of claim for exemption u/s 11 - Merely came into existence of provision of Section 2(15) of the Act nowhere makes the object of the Assessee commercial in nature. Instances of business and profession are also not on record. - Exemption allowed.
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Customs

• Remission of Duty Granted u/s 23 of Customs Act for Destroyed Coconut Milk Not Meeting Shelf Life.

  Case-Laws - AT : Remission of duty - section 23 of Customs Act, 1962 - goods destroyed while in custody of the custodian - coconut milk - goods were not in compliance with the shelf life prescription - It was incumbent upon the original authority to have ordered remission of duty along with the order of destruction - Demand set aside.
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Service Tax

• CENVAT Credit Allowed for Service Tax on Reimbursed Expenses; Jurisdictional Overreach by Assessment Officers Addressed.

  Case-Laws - HC : CENVAT Credit - service tax paid on Reimbursement of expenses - Department and CESTAT denied the credit as no service was being provided by the the person claiming reimbursement of expenses - If the impugned orders are allowed to stand, then it would in effect mean that the jurisdictional assessment officers of the assesses are sitting in the judgment over the assessment made on BIL, over which, they have no jurisdiction. - Credit allowed.
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• Gazipur Market Yard Land Allocation to Dealers Classified as Renting, Service Tax Demand Confirmed Under Immovable Property Services.

  Case-Laws - AT : Renting of immovable property Services - appellant have allotted land in the Gazipur market yard which is known as flower marketing committee to various dealers/traders on the basis of a monthly licence fee - Demand of service tax confirmed.
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• Appellant's Earnings from Designing Jodhpuri and Blazers Classified as Fashion Designing Services.

  Case-Laws - AT : Fashion Designing service. - amounts recovered by the appellant towards the activity of designing such as design of Jodhpuri, blazer etc, which was carried out by the appellant at the request of the customers will squarely be covered within the category of fashion designing.
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• Government-Sponsored Organization Cleared of Intent to Evade Taxes; SCN Partially Time-Barred by Limitation Period.

  Case-Laws - AT : Extended period of limitation - the appellants being a Government-sponsored organization cannot be alleged to have intent to evade payment of duty. Understandably, no personal benefit or for that matter, no benefit whatsoever across the organization for such non-payment of tax - also, a major part of the SCN is hit by limitation.
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• Tax Exemption for Erection, Installation, and Commissioning Services Clarified; No Power Distribution Authorization Needed.

  Case-Laws - AT : Erection Installation & Commissioning service - For availing the benefit of the exemption under N/N. 11/2010-ST the service provider need not be a distribution licencee, a distribution franchisee, or any other person by whatever name called, authorized to distribute power under the Electricity Act, 2003(36 of 2003).
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• Cable Operator Faces Service Tax Demand for Poor Record-Keeping on Subscriber Connections and Charges.

  Case-Laws - AT : Cable Operator Service - the assessee had not properly maintained the record of number of connections and charges collected from the subscribers - demand confirmed.
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Central Excise

• Commissioner (Appeals) Remand Deemed Unjustified as Revenue Didn't Appeal Merits of Original Order.

  Case-Laws - AT : The Commissioner(Appeals) has allowed the appeals of the appellant on merits but still remanded the matter back to the original adjudicating authority for de novo adjudication which is not legally justified because the Revenue has not filed appeal against the impugned order on merit.
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• Mosquito Repellent Coils Confirmed Under Chapter Heading 38081091 for Central Excise Classification Purposes.

  Case-Laws - AT : Classification of goods - mosquito repellants coils - whether mosquito repellants coils manufactured by the respondent are liable to be classified under Chapter Heading 38081091 “Repellants for insects such as flies and mosquitoes”? - Held Yes
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Case Laws:

• GST

• 2018 (8) TMI 1736
  Transitional credit - grievance of the petitioner is that even though they are entitled to claim transitional credit as per Section 140 of the CGST Act, 2017 r/w Section 140 of the TNGST Act, 2017, such input tax credit fails to appear in the electronic credit, despite the fact that the petitioner duly complied with the requirements for transition of credit on input tax. Held that:- It is not in dispute that a circular has already been issued on 03.04.2018 by the Central Board of Indirect Taxes, by setting up a Grievance Redressal Mechanism to address certain grievance of the Assesses, which contemplates the appointment of a Nodal Officer to address the problem faced by the tax payers in the GST portal during the transitional period - it is for the petitioner/Assessee, to submit their application ventilating their grievance in accordance with the said circular, before the concerned Nodal Officer - petition disposed off.

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• 2018 (8) TMI 1735
  Unable to upload FORM GST TRAN-1 within the stipulated time - Held that:- The Government of India issued a circular for “setting up an IT Grievance Redressal Mechanism to address the grievances of taxpayers due to technical glitches on GST Portal - the petitioner may apply to the Nodal Officer. The petitioner applying, the Nodal Officer will look into the issue and facilitate the petitioner’s uploading FORM GST TRAN-1, without reference to the time-frame - petition disposed off.

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• Income Tax

• 2018 (8) TMI 1734
  Revision u/s 263 - assessee not eligible to claim deduction u/s 80P on the income derived from trading and consequently the assessment order is erroneous and pre-judicial to the interests of Revenue - Held that:- We are of the considered opinion that the AO has passed this order without inquiry into the issue of the claim of deduction by the assessee u/s 80P of the Act. When there is no application of mind to an issue in the assessment order, such order is erroneous and in this case, it is also pre-judicial to the interest of the Revenue also. In these circumstances, we find no infirmity in the order of Pr.CIT who has set aside this issue for fresh adjudication denovo, only to the extent of examining the claim of deduction u/s 80P of the Act - We uphold the order of the Ld. Pr.CIT and dismiss the appeal of the assessee.

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• 2018 (8) TMI 1733
  Condonation of delay - delay of 596 days - Held that:- despite delayed filing of appeal, the petitioners (revenue) have given a totally misleading statement before this Court. - We are shocked that the Union of India through the Commissioner of Income Tax has taken the matter so casually. Under the circumstances, we dismiss the petition with costs of 10 lacs to be paid to the Supreme Court Legal Services Committee within four weeks from today. The amount be utilized for juvenile justice issues.

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• 2018 (8) TMI 1732
  Late contributions made to the Employees State Insurance Corporation (ESIC) - disallowance u/s 43B - Held that:- The Special leave Petition is dismissed only on the ground of low tax effect.

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• 2018 (8) TMI 1731
  Service of notice - as aggrieved petitioner was not put on notice before passing the impugned order - Held that:- No material is placed before this Court to substantiate the service of such notice to the petitioner, before passing the impugned order. It is only stated in the counter affidavit that the present impugned order was served on the petitioner. However, when the impugned order referred to the issuance of a show cause notice to the petitioner, proving such service of notice is on the respondent, which in my considered view, they miserably failed. Therefore, solely on the ground of violation of principles of natural justice, the impugned order has to go. Invalid demand - assessment order itself was set aside by the Tribunal and in the absence of any fresh order of assessment, the question of making a demand does not arise - Held that:- order passed by the Tribunal would clearly indicate that it has set aside the assessment order itself and remitted the matter back to the file of the Assessing Officer. Therefore, it is not correct to say that the impugned demand is valid even in the absence of any fresh assessment order passed by the Assessing Officer in pursuant to such remand. Therefore, I find force in the submission made by the learned counsel for the petitioner that in the absence of any fresh order of assessment, the impugned demand cannot be sustained. Therefore, on this ground also, this Court is inclined to interfere with the impugned proceedings. Maintainability of the proceedings under Section 179 against the petitioner, a Director in a Public Limited Company - Held that:- this Court is not inclined to go into such issue as this Court is satisfied to set aside the impugned order on the above said other two grounds. Moreover only when an order of assessment is passed, issuance of demand would arise. Only when a demand is made preceded by an assessment, the question of considering the validity of such demand issued under Section 179 of the said Act would arise. As this Court finds that such situation has not arisen in this case, it is not necessary to go into the third issue touching upon the maintainability of demand under section 179 of the said Act and give any finding on the same

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• 2018 (8) TMI 1730
  Reopening the assessment u/s 147 - no scrutiny assessment done - existence of fresh tangible materials or reasons for reopening - proof of change of opinion - Held that:- There was no scrutiny assessment done for the relevant assessment year and the assessment itself was under Section 143(2). The petitioner requested time to produce documents and for varied other reasons and the respondent came to a conclusion that adequate opportunity has been given and issued a notice under Section 144. The earlier Writ Petition was filed and it appears that there was no interim order and by then, the assessment order was passed under Section 144 read with Section 147. In such circumstances, the assessee cannot claim that reopening cannot be done, as there were no fresh tangible materials or reasons for reopening. If the original assessment was a scrutiny assessment under Section 143(3) of the Act, the Court might have examined as to whether there were fresh tangible material for reopening the assessment or it is a case of change of opinion. Since there was no scrutiny assessment, the question of change of opinion does not arise and therefore, the contention raised by the petitioner that the reopening of assessment is bad in law, cannot be countenanced. For the first time, the assessee has placed an explanation in respect of the information which was secured by the department, based on the annual information return received from the Bank and Sub-Registrar's office, which shown deposit of cash and purchase of immovable property. In addition there to, the return disclosed the receipt of agricultural income for which documents have been called for etc. Thus, the reopening of the assessment under Section 147 of the Act is perfectly legal and valid. - decided against assessee

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• 2018 (8) TMI 1729
  Eligibility to deduction u/s 80IA - manufacturing of goods - Held that:- In the instant case, the requirement of the Assessee to furnish the fixed deposit was a pre-condition to enable the Assessee to open a foreign Letter of Credit for the purpose of import of critical components for the manufacture of wind mill. This incidentally had earned some interest. As pointed out by the Hon'ble Supreme Court in Shree Rama Multi Tech Limited [2018 (4) TMI 1374 - SUPREME COURT] it is not the Assessee's surplus money, which was deposited by way of fixed deposit, which had earned interest; on the contrary, it was a pre-condition for the purchaser/Assessee to enable him to import the critical component for the purpose of manufacturing. Furthermore, it is not the case of the Revenue that the amount was deposited in fixed deposit solely for the purpose of earning interest nor it is the case of the Revenue that the amount, which was deposited in fixed deposit was a surplus money, which was lying idle in the hands of the Assessee. Therefore, whatever income accrued is merely incidental and not the prime purpose of doing the act in question, which resulted into accural of some additional income and therefore, the said income is not liable to be assesseed and is eligible to be claimed as deduction. We are of the clear view that the Assessee is entitled to deduction and the Tribunal erred in applying the decision of the Pandian Chemicals [2003 (4) TMI 3 - SUPREME COURT], which is distinguishable, for the reasons set out by us above.

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• 2018 (8) TMI 1728
  TDS u/s 194H or 194C - payments to regional distributors towards advertisement and sales promotion of its products sold by them - assessee in default - applicability of Provisions of section 201(1)/201(1A) - Held that:- As during the assessment proceedings the Department had treated the default of the assessee in not deducting the tax at source on the payment made to its regional distributors for advertisement and brand promotion etc. as default under Section 194-C and the assessment proceedings were finalized. The assessment order has been upheld by this Court. Now in the proceedings under Section 201 of the Act, the Department is treating the same as default under Section 194-H of the Act. Provisions of section 201(1)/201(1A) do not authorize the Department to treat the same default under two provisions. The proceedings under Section 201(1)/201(1A) of the Act for treating the default of the respondent-assessee under Section 194-H amounts to reviewing the assessment order which had attained finality. The inconsistent stand of the Department in assessment proceedings and the proceedings under Section 201 of the Act is wholly erroneous and bad in law - decided in favour of assessee

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• 2018 (8) TMI 1727
  Direction for special audit u/s 142(2A) - Request for amendment in the terms of reference [2018 (3) TMI 1629 - DELHI HIGH COURT] - simultaneous special audit for all years - Held that:- Terms and Reference modified

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• 2018 (8) TMI 1726
  Maintainability of appeal under Section 260A - True and proper construction of section 254(1) - question not raised before the Tribunal nor independently opined on by the Tribunal - Tribunal justification in confirming the disallowance u/s 14A - Held that:- It is an undisputed position before us that, the aforesaid alternate contention was not urged before the Tribunal. In the above view, we pointed that in view of the decisions of this Court in CIT v/s. Tata Chemicals Pvt. Ltd. [2002 (4) TMI 42 - BOMBAY HIGH COURT] and CIT v/s. Smt. Lata Shantilal Shah [2009 (1) TMI 436 - BOMBAY HIGH COURT] an appeal under Section 260A of the Act, can only be in respect of issues which were raised before the Tribunal. Admittedly, the issue of the disallowance in excess of the total exempt income was not an issue urged before the Tribunal. Therefore, it would be not possible for us to entertain this appeal as the issue being urged before us now, is not, an issue of jurisdiction. The question of law not raised before the Tribunal would not be allowed to be urged before the High Court in appeal under Section 260A of the Act. This, of course, does not preclude this Court from entertaining an appeal on issue of jurisdiction even if the same has not been raised before the Tribunal. However, in this case, admittedly, the proposed question is not one of jurisdiction.

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• 2018 (8) TMI 1725
  Denying the claim of deduction u/s 80P(2)(a)(i) - Held that:- As per section 3 of the Banking Regulation Act, 1949, the provisions of Banking Regulation Act shall not apply to Primary Agricultural Credit Societies. The explanation to section 80P(4) states that 'Primary Agricultural Credit Society' and 'Co-operative Bank' will have the same meaning as provided in Part V of the Banking Regulation Act, 1949. The explanation provided after clause (ccvi) of section 5 r. w. s 56 of the Banking Regulation Act specifically provides that if any dispute arises as to the primary object or principal business of any co-operative society referred to in clauses (cciv), (ccv) and (ccvi), a determination thereof by the Reserve Bank shall be final. The Reserve Bank of India, which is the competent authority as per the Banking Regulation Act, treats assessee society and similar societies as only "Primary Agricultural Credit Society" not falling within the ambit of Banking Regulation Act. The Reserve Bank of India has given letters to the societies similar to assessee stating that they are Primary Agricultural Credit Societies and therefore in terms of section 3 of the Banking Regulation Act are not entitled for banking license; (Copies of such letter from RBI are placed on record). That being the case, the Assessing Officer was not competent and did not possess the jurisdiction to resolve / decide the issue as to whether the assessee was a 'Primary Agricultural Credit Society' or a 'Cooperative bank', within the meaning assigned to it under the provisions of the Banking Regulation Act and to take a contrary view especially in view of the Explanation provided after the clause (ccvi) of section 5 r. w. s Section 56 of the Banking Regulation Act. We hold that the CIT(A)’s are justified in directing the A. O. to grant deduction u/s 80P(2)(a)(i) of the I. T. Act - Decided against revenue

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• 2018 (8) TMI 1724
  Computation of capital gains adopting the fair market value (FMV) - value claimed by the assessee as on 01/04/1981 - Held that:- CIT(A) found that the value of the property sold in S. No. 161/3 in 1986 was at 75, 000/- per acre. Another evidence brought out by the Ld. CIT(A) was in the case of Tegala Murali, PAN : ACPPM7787G at 20, 000/- per acre as on 01. 04. 1981 in respect of 5. 45 acres of land situated in Survey No. 26/1 in Vepagunta area. Considering all the evidences and information, the Ld. CIT(A) determined the fair market value as on 01. 04. 1981 at 40, 000/- per acre. During the appeal hearing, the Ld. AR could not place any evidence to show that the FMV of the property sold by the assessee as on 01. 04. 1981 was more than 40, 000/- per acre. Therefore, we hold that the FMV determined by the Ld. CIT (A) is fair and reasonable, therefore we do not find any reason to interfere with the order of the Ld. CIT(A) and the same is upheld. The appeal of the assessee on this ground is dismissed. Deduction u/s 54F - Held that:- The facts show that the property at 53&54, Priya Gardens, Simhachalam was registered in the name of the assessee’s wife and the property was enjoyed by the assessee’s wife and the same is not disputed by the department. Once the property was registered in the name of the assessee’s wife, the same should not be considered in the hands of the assessee and reject the claim of the assessee for deduction u/s 54F of the Act. It is for the department to establish that the property No. 53 and 54, Priya Gardens is constructed from the sources of the assessee and it was the property of the HUF. The same exercise was not done by the AO. Therefore, we are unable to accept the argument of the department to hold that the property was belonging to the assessee. Accordingly, the said argument is untenable and rejected. The next issue is property at D. No. 9-33/1, Gopalapatnam, Visakhapatnam as per the evidence available on record, the second property at Gopalapatnam is commercial property, but not a residential property - one property belonged to the assessee’s wife and the second property was a commercial property and the assessee owns only one residential house. As per Section 54F for claiming the deduction u/s 54F, the assessee should be either individual or HUF. The long term capital gains should result in transfer of capital asset not being a residential house. The assessee should acquire property within one year before or two years after the transfer of the property in case of purchase and three years after the date of transfer in case of construction. The assessee should not own more than one residential house, other than the new asset. The word used in the section is the residential house but not the commercial property. The property at D. No. 9-33/1, Gopalapatnam is being used and assessed as commercial property, the same cannot be treated as residential house. Similarly, the property, of the wife cannot be attached to the assessee for the purpose of disallowing the deduction u/s 54F. Therefore, the assessee has satisfied all the conditions laid down in Section 54F hence, we hold that the assessee is entitled for deduction u/s 54F - Decided partly in favour of assessee.

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• 2018 (8) TMI 1723
  Estimation of income - additional income declared by the assessee during the assessment proceedings and computation of gross receipts by the CIT(A) and estimation of income on the said gross receipts @ 12% by the Ld. CIT(A) - Held that:- There is no dispute that the entire receipts of 2. 13. 21000/- represent the business receipts against the admission of turnover of 1, 20, 00, 000/- in the return of income. Though the assessee canvassed for exclusion of receipts of 40. 00 lacs from the turnover of the year under consideration no supporting evidence was placed by the assessee to show that the receipts were received in advance before completion of the work. The agreements placed before us support that the receipts were business receipts required to be assessed in the impugned assessment year. Therefore, we hold that the entire receipts worked out by the Ld. CIT(A) to the extent of 2, 13, 21, 000/- rightly assessed by the Ld. CIT(A) as gross contract receipts for the year under consideration. CIT(A) estimated the income @12% and the Ld. AR did not bring any tangible evidence to show that the profit of the assessee was less than 12%. The assessee has neither submitted the details of expenditure relatable to the additional gross contract receipts admitted by the assessee nor the advances received by the assessee as per bank account. The assessee has not declared the true and correct receipts and the income earned there from. Only after the case was selected for scrutiny and called for the details, the assessee had admitted the additional gross receipts of 50, 44, 750/- before the AO. Though the assessee stated that the Sum of 40. 00 lacs represent the advance but not established the same with any evidence. Therefore, we hold that the Ld. CIT(A) has rightly rejected the books of accounts and estimated the income fairly @12% and we do not find any reason to interfere with the order of the Ld. CIT(A). CIT(A) has not given an opportunity for rebuttal of the gross receipts and consequent estimation of income - Held that:- As during the appeal hearing, we have given an opportunity to the Ld. AR to place the relevant material to show that the turnover was less than the sum computed by the ld. CIT(A) and the income estimated was less than 12% but the Ld. AR did not make out a case with tangible evidence to establish that the contract receipts were less than 2, 13, 21, 000/- and the profit of the assessee was less than 12%. Therefore, we do not find any infirmity in the order of the Ld. CIT(A) and the same is upheld. Accordingly the appeal of the assessee on this ground is dismissed. - Decided against assessee

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• 2018 (8) TMI 1722
  Claim of deduction u/s 80P(2)(a)(i) disallowed - Held that:- We find that Assessee is a cooperative society registered under Gujarat Cooperative Societies Act, 1961 and engaged in providing credit facilities to its members. We find that in the case of State Bank of India Co-operative Society [2016 (7) TMI 516 - GUJARAT HIGH COURT] has held that interest earned from investment made in nationalized bank by a cooperative society engaged in providing credit facilities to its members, is not eligible for deduction under section 80P. The Tribunal in earlier occasions on similar issue has taken a consistent view by following above judgment of the Hon’ble jurisdictional High Court. Any expenditure incurred by the assessee for earning such income could be allowed to it, if not already allowed. AO has to determine the net interest income as well as misc. income earned by the assessee, and only thereafter that income has to be excluded from the admissibility of deduction under section 80P(2) of the Act. Appeal of the assessee is partly allowed for statistical purpose.

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• 2018 (8) TMI 1721
  Revision u/s 263 - AO framed the assessment without conducting proper enquiries in respect of the utilisation of borrowed funds for making investment in subsidiary companies and expenditure incurred in relation to exempt income - Held that:- AO did raise queries which were complied by the assessee. It is a settled position of law that powers u/s 263 of the Act can be exercised by the Commissioner on satisfaction of twin conditions, i.e., the assessment order should be erroneous and prejudicial to the interest of the Revenue. By 'erroneous' is meant contrary to law. Thus, this power cannot be exercised unless the Commissioner is able to establish that the order of the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. Thus, where there are two possible views and the Assessing Officer has taken one of the possible views, no action to exercise powers of revision can arise, nor can revisional power be exercised for directing a fuller enquiry to find out if the view taken is erroneous. This power of revision can be exercised only where no enquiry, as required under the law, is done. It is not open to enquire in case of inadequate inquiry. The assessment was framed u/s 143(3) of the Act after detailed enquiries and verification and merely because the assessment order is silent, the same cannot be considered as erroneous and prejudicial to the interest of the Revenue as held by the Hon'ble Bombay High Court in the case of Gabriel India Ltd [1993 (4) TMI 55 - BOMBAY HIGH COURT].

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• 2018 (8) TMI 1720
  Benefits of deduction u/s 54 restricting to the extent of investment in new assets only upto the due date of filing of Return u/s 139(1) and not granting relief which was invested subsequently - Held that:- Keeping in view the fact the assessee has not deposited the amount in notified bank account maintained under capital gain bank account scheme as provided u/s 54 before the due date of furnishing of return of income, deduction of 1. 76 lakh on account of investment made in said residential flat being constructed by DLF at Bangalore cannot be allowed to the assessee u/s 54 of the 1961 Act as the said payment of 1. 76 lacs was made on 01-10-2013 while return of income was filed by the assessee on 31. 07. 2011. So far as investments of 6. 00 lakh made on 09. 09. 2010 is concerned, the same is to be allowed by AO in accordance with law after verification of the records and the matter need to be set aside and restored to the file of the AO for necessary verifications of the claim of the assessee for deduction u/s 54 wrt this payment of 6 lacs - matter is set aside and restored to the file of the AO for necessary verification and adjudication as indicated above. - Decided partly in favour of assessee for the statistical purposes

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• 2018 (8) TMI 1719
  Rectification of mistake - Rebate claim u/s 88E - computation of rebate u/s 88E was allowed by the AO while framing assessment under section 143(3) - as per AO assessee has also earned income by way of short term capital gains on which the assessee has paid STT and therefore, while computing the rebate, income from such short term capital gains should have to be reduced - Held that:- Section 88E of the Act provides where the total income of the assessee in previous year includes any income chargeable under the head of “profits and gains of business or profession” arising from transaction chargeable to securities transaction tax, he shall be allowed deduction of an amount equal to the securities transaction tax paid by him in respect of transactions chargeable to securities transactions tax entered into in the course of business during that previous year. From the amount of income tax on such income arising from such transaction. An assessee is eligible for deduction from the amount of income tax on such income arising from such transactions computed in the manner provided in section 88E of the Act i.e. an equal amount to the securities transaction paid by him in respect of taxable securities transaction entered into in the course of business during the previous year. It means that the issue has two plausible views and once, it is doubtful issue, the AO cannot resort to section 154 of the Act i.e. rectification of mistake apparent from record. Accordingly, we reverse the orders of the lower authorities and allow the appeal of the assessee. - decided in favour of assessee.

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• 2018 (8) TMI 1718
  Bogus purchases - addition on purchases disallowed under section 69 - Held that:- The purchases made are genuine and supported by bills and vouchers, transportation receipts, payment made by cheque and in support of the same copies of bank statements were filed. Even the sale made to other parties of the items purchased from Depuy Medical Pvt Ltd is not doubted. Once, this is the fact the purchases cannot be doubted as unexplained and hence has rightly deleted the addition and we confirm the same. This issue of Revenue’s appeal is dismissed. Disallowance at 10% on account of staff welfare and salary and incentive expenses and sundry labour charges - Held that:- CIT(A) has discussed in detail and restricted the disallowance on both the disallowance at 10%. We find that even CIT(A) admits that for supporting bills and vouchers the disallowance is restricted at 10%. Going by the facts and circumstances of the case, we restrict the disallowance at 5% on both the expenses and direct the AO accordingly.

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• 2018 (8) TMI 1717
  FBT - Claim of the assessee towards fringe benefit expended for the purpose of levy of FBT - Held that:- ITAT passed in the case of Gujarat Energy Transmission Corpn. Ltd. (2018 (6) TMI 1520 - ITAT AHMEDABAD) and GUJARAT URJA VIKAS NIGAM Ltd. (2013 (10) TMI 1502 - ITAT AHMEDABAD), we are of the view that the CIT(A) has rightly confirmed the value of fringe benefit expended by the assessee for the purpose of levy of FBT. Counsel himself admitted that there is no merit in this appeal. Therefore, it is dismissed.

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• 2018 (8) TMI 1716
  Addition as unexplained cash credit, which was capital introduced by the partner - Held that:- It is well settled that if there are cash credit entries in the books of a firm, in which the accounts of the individual partners exist, and it is found as a fact that cash was received by the firm from its partners, then, in the absence of any material to indicate that they were the profits of the firm, it could not be assessed in the hands of the firm. No material has been brought on record by the Revenue to show that the amount of 11 lakhs shown as capital introduced by the partner Smt. Lalita Jain was the profits of the firm. Therefore, in view of the decision of Hon’ble Allahabad High Court in the case of Jaiswal Motor Finance (1983 (2) TMI 47 - ALLAHABAD HIGH COURT), no addition in the hands of the firm can be made as unexplained cash credit u/s.68 of the Act. We, therefore, set aside the orders of lower authorities and delete the addition of 11 lakhs and allow this ground of appeal of the assessee. Not allowing deduction for partner’s remuneration u/s.40(b)- Held that:- We find that above clause of the partnership deed provides for payment of remuneration to partners which would be as per the provisions of the Act, which meant that the remuneration payable to partners would be quantified as per the provisions of the Act and shall not exceed the maximum remuneration provided. It is not in dispute that the partners were paid remuneration, which was less than the maximum provided by the Act. None of the authorities have disputed the payment of remuneration and has accepted the books of account of the assessee as correct and, therefore, the remuneration was deductible while computing the income of the assessee firm. We, therefore, set aside the orders of lower authorities and delete the disallowance. Adhoc disallowance of 20% out of salary paid to employees by the firm - Held that:- No material has been brought on record by the revenue to show that the expenses claimed on account of salary expenses to staff is excessive or inflated. The disallowance made by the AO is only on the ground that in his opinion, the expenses claimed are not corroborated with justifiable facts. Merely on the basis of surmises and conjectures of the AO, no disallowance of expenditure made by him out of genuine business expenditure of the assessee can be sustained in law without any material being brought on record to show that either the expenses are not genuine or they are inflated. Therefore, set aside the orders of lower authorities and vacate the disallowance - decided in favour of assessee

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• 2018 (8) TMI 1715
  Addition on account of difference in the total receipts shown in the Form No. 26AS as against the receipts shown in the books of account - eligibility of deduction U/s 80P(2) - Held that:- The assessee has brought on record the material to show that the correct figure of receipts as per the amended Form No. 26AS is 19,14,066/- as against 41,62,389/- out of which the amount of 5,18,392/- was already declared by the assessee and not in dispute and hence the difference comes to about 14 lacs. As we have already noted that the amount at about 15 lacs was received by the assessee from the receivables as on 31/3/2008 and the balance of receivables shown as on 31/3/2009 is 13,15,501/-. Hence the Assessing Officer is directed to consider the amended Form No. 26AS as well as these balances shown by the assessee as on 31/3/2008 as well as on 31/3/2009 on account of commission receivables and then to compute the difference, if any, to be added in the income of the assessee. Even if any addition to be made on account of difference between the receipts shown in the books and the receipts shown in the Form No. 26AS, the said amount would be eligible for deduction U/s 80P of the Act in view of the decision of this Tribunal in assessee’s own case for the A.Y. 2005-06. Accordingly, we set aside the orders of the authorities below and remit the matter back to the record of the Assessing Officer for limited purpose of computing the differences if any after reconciliation of the balances. Appeal of the assessee is partly allowed

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• 2018 (8) TMI 1714
  Addition on account of provision made for unascertained Royalty liability - maintainability towards claim on account of royalty expenses - Held that:- A perusal of the order of the CIT(A) provides an apparent justification for allowability of royalty expenses in the subsequent assessment year as and when the payment is made. The action of the CIT(A) is manifestly in tune with the law and thus, the Revenue cannot be said to be aggrieved on this score. We therefore do not seek to reiterate the findings of the CIT(A) while endorsing the same. We thus decline to interfere. TDS u/s 194A - Addition in respect of interest paid to a NBFC without deduction of tax - Scope of amendment to Section 40(a)(ia) - whether the proviso inserted by Finance Act 2012 with effect from 1.7.2012 is not applicable for AY 2011-12 but for next assessment year onwards only - Held that:- We find that similar issue was under consideration before the co-ordinate bench in the case of Dipak r. Gondaliya vs. ITO [2016 (3) TMI 1316 - ITAT AHMEDABAD] amendment of second proviso to Section 40(a)(ia) which has been held to have a retrospective effect by the Hon'ble High Court of Delhi in the case of Ansal Landmark Township Pvt. Ltd.[2015 (9) TMI 79 - DELHI HIGH COURT] - in the interest of justice and fair play, we restore this issue to the files of the A.O. The assessee is directed to furnish necessary evidences to show that the payee has filed returns and offered the sum received to tax. The A.O is directed to verify the same and decide the issue

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• 2018 (8) TMI 1713
  Nature of expenditure - expenses on implementing the “Project Disha” and “Project Eagle” - revenue or capital expenditure - purpose of the project - Held that:- The object of the project ‘EAGLE’ was identical to one project ’DISHA’ and the expenditures were incurred by way of legal and professional fee paid to Accenture and consultancy a leading firm in that field. The purpose of the project was to achieve excellence in the promotion of the company on a transformable basis so that the company becomes leader in the formulation business. CIT(A) has passed a very reasoned order treating the same as revenue in nature and we therefore do not find any reason to deviate from the findings of Ld. CIT(A)- decided against revenue

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• 2018 (8) TMI 1712
  TPA - comparable selection - Held that:- Assessee company is primarily engaged in data processing and data entry services which are rendered to overseas affiliated and unrelated entities. Data Processing work is also out sourced in the market, thus companies functionally dissimilar with that of assessee need to be deselected from final list.

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• 2018 (8) TMI 1711
  Addition u/s 68 - evidences about the receipt of the cash and repayment of the cash despite those persons having proper bank account - Held that:- ‘Bayana Slip’ was not produced. Further, the earlier letters written to the Assessing Officer as claimed by the assessee were also not found on the record by the ld CIT (A). In another person’s case, the same reasons were found which were explained by the assessee with respect to the third person who is son of the assessee also did not remember any reference of cash receipt from the assessee. In absence of any such evidences about the receipt of the cash and repayment of the cash despite those persons having proper bank account and absence of any purchase of land by the assessee, whole explanation of the assessee lacks credibility. With respect to the agricultural income, the reasons given by the CIT (A) are sound. Merely possession of land does not entitle assessee to claim any amount of income as agricultural income. The agricultural income is also required to be demonstrated by proper evidences which assessee has failed to show. No infirmity in the order of the Ld. CIT(A) in confirming the addition u/s 68 Addition u/s 69B - Held that:- Most of the properties are merely backed by agreement to sell and therefore there cannot be any document price for sale. However, the argument of the assessee with respect to property which were purchased in the auction from the debt recovery tribunal the valuation of same cannot be different from the value shown by the assessee. However, such facts were not produced by the assessee before the assessing officer. In view of this to the extent of the valuation of property purchased by the assessee in auction cannot have different market value. The addition made by AO for that property is 5, 15,000/- as assessee has shown the purchase consideration of 14.85 Lacs whereas the assessing officer has valued at 20 lakhs cannot be sustained. Therefore we direct AO to delete the addition of 5, 15, 000/– out of the total addition of 2 6, 15, 000. For the balance addition of 21 Lacs, We do not find any infirmity in the order of the Ld. CIT(A). Hence, the addition made by the Ld. Assessing Officer is confirmed to the extent of 21 lakhs only.

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• 2018 (8) TMI 1710
  Levy of penalty u/s. 271(1)(c) - disallowance u/s 14A - Held that:- When the A.O. has himself said that the assessee had borrowed huge amounts and it has made huge investments in shares and securities which did not yield any income and the interest so incurred is liable to disallowance u/s.14A where the question of disallowance on the premise that the assessee has not conducted “any business” arises. Conspicuously, the A.O. himself has not mentioned that the penalty is being initiated for this aspect of the disallowance. Disallowance u/s. 14A in this regard is itself not sustainable on the touch stone of the Hon'ble jurisdictional High Court decision in the case of Ballarpur Industries Ltd. (2016 (10) TMI 1039 - BOMBAY HIGH COURT). In this view of the matter also in the facts and circumstances of the case, the penalty in this case is not at all leviable. Hence, in our considered opinion, the penalty levied u/s. 271(1)(c) in this case is liable to be deleted. We set aside the orders of the authorities below and delete the levy of penalty. We note that the assessee has also raised that the penalty is not leviable inasmuch as penalty notice did not specify the charge on which the penalty was being levied. We note that various case laws in this regard have also been mentioned in their respective favours by the ld. Counsel of the assessee and the ld. DR also. - Decided in favour of assessee

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• 2018 (8) TMI 1709
  Granting one more opportunity before the CIT(A) - assessee failed to put in appearance before the CIT(A) and comply with his requisition so that the appeals of the assessee could be disposed of by him on merits considering the submissions of the assessee - Held that:- To render substantial justice to the assessee, an opportunity should be granted to him. However, we are alive to the fact that the assessee did not avail the opportunities allowed to him by the Assessing Officer as well as the CIT(A). Hence, we impose a cost of 5,000/- for each year on the assessee. The assessee is directed to deposit the cost within 15 days from the date of this order and file copy of the challan with the CIT(A) and also a copy of the same to the Tribunal. The CIT(A) is directed to dispose of the appeals of the assessee as early as possible. With these directions, the grounds of appeal of the assessee are allowed for statistical purposes.

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• 2018 (8) TMI 1708
  Addition on account of transfer pricing adjustment made on the basis of Share Purchase Agreement ('SPA'/'Agreement') - Held that:- We have already rebutted the Ld. DR's reliance on Instrumentarium's case above in detail, therefore the same are not applicable to the facts of the present case and we are of the view that since chapter 10 pre-supposes the existence of "income" and lays down machinery provison to compute ALP of such income, if it arises from an "International transaction". Section 92 is not an independent charging section to bring in a new head of income or to charge tax on income which is otherwise not chargeable under the Act. Accordingly, since no income had accrued to or received by the assessee u/s 5, no notional income can be brought to tax u/s 92 of the Act. We direct the AO to deleted the additions.

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• 2018 (8) TMI 1707
  Denial of claim for exemption u/s 11 - Held that:- The claim of the assessee u/s 11 of the I.T. Act, 1961 was declined in the year of 1989- 90 15,000/-. AO disallowed the same on the ground of claim of depreciation on the said amount. There is no claim of depreciation. Since there is no plausible reason on record to decline the claim of the assessee, therefore, we set aside the finding of the CIT(A) on this issue and restored this issue before the AO to decide the issue afresh in accordance with law.

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• 2018 (8) TMI 1706
  Addition to the total income of the assessee on account of recoveries from abroad for which the assessee has already claimed expenditure in the earlier years - Held that:- Since the facts of the case before us are identical with that of the earlier years, we therefore following the decision of the co-ordinate bench of the Tribunal held that CIT(A) has categorically noted the fact that during the previous year relevant to the assessment year 2009-10 [2016 (2) TMI 157 - ITAT MUMBAI], the assessee after identifying the exporters has paid back the substantial amount which were collected on their behalf and whatever amount could not be identified, the same has been offered as an income in that year. Thus, the whole of the amount has now been accounted for and income has also been offered by the assessee in the assessment year 2009-10. On these facts, we do not find any reasons to deviate from the finding and the direction given by the CIT(A).- decided against revenue Addition on account of changes in the method of estimation of recoveries of claim paid - Held that:- Whatever profit is disclosed in the P & L Account has to be accepted by the AO unless the expenditure is inadmissible under the provisions of section 30 to 43B of the Act. The case of the assessee is also find support from the decision of the Apex Court namely CIT vs. Calcutta Hospital and Nursing Home Benefits Association Ltd. [1965 (4) TMI 12 - SUPREME COURT] wherein it has been held that AO is bound to accept the profit as disclosed in the annual accounts that are filed before the Regulatory body subject to adjustments as prescribed in Clauses (a), (b) and (c) of Rule 5 to the First Schedule. The Hon’ble Supreme Court in the case of General Insurance Corporation of India vs. CIT [1999 (9) TMI 3 - SUPREME COURT] has also held that adjustment is permissible qua an expenditure or allowance which is not permissible under section 30 to 43B of the Act. - Decided against revenue. Accrual of income - Addition on account of revision in the pay-scales of the employees having accrued in the hands of the assessee in the current year - Held that:- In the present case, the revision of pay scale was proposed in December 2005 on the lines of revision of pay scales of LIC by the Govt. of India and thus finally was approved in August 2006 by the Ministry of Commerce, Govt. of India. In our opinion, the Ld. CIT(A) has fully and comprehensively considered the facts of the case and passed a very detailed and reasoned order by holding that the liability provided was ascertained one and was correctly provided for during the year. The case of the assessee is also supported by the decision of the Hon’ble Bombay High Court in the case of CIT vs. United Motors India Ltd. [1989 (9) TMI 73 - BOMBAY HIGH COURT] and Bharat Earth Movers Ltd. vs. CIT [2000 (8) TMI 4 - SUPREME COURT] wherein the similar issue has been decided in favour of the assessee. Addition on account of ISO certification expenses - nature of expenses - revenue or capital expenditure - Held that:- A perusal of the Ld. CIT(A)’s order reveals that the same is very well reasoned order passed after taking into account all the facts and legal aspects of the case. We concur with the conclusion drawn by the Ld. CIT(A) that the expenditure incurred by the assessee for ISO certification in connection with the certification of processing and procedures adopted by the assessee to be in accordance with the prevailing standards in the industry as a whole has not resulted into creation of assets or acquiring any fixed assets. We, therefore, uphold the order of Ld. CIT(A) by dismissing the ground raised by the Revenue.

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• 2018 (8) TMI 1705
  Applicability of provisions of section 50C - Long term capital gains addition after invoking section 50C - Held that:- There is no dispute that the assessee had acquired / transferred his right a unfurnished flat which was never registered in his name. It was therefore only in the nature of an allotment right what was transferred in the relevant previous year forming subject-matter in the instant lis. This tribunal’s decision in case of M/s Baniaria Eng. Pvt. Ltd. Vs. ITO [2018 (8) TMI 1560 - ITAT KOLKATA] holds that section 50C of the Act does not apply except in a case involving transfer of land and building forming the relevant capital asset for the purpose of determination of fair market value in the statutory reference. Learned Departmental Representative fails to pin point any exception on facts or law. We thus accept assessee’s additional ground to delete the impugned long term capital gains addition - decided in favour of assessee

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• Customs

• 2018 (8) TMI 1703
  Delay in filing petition - Section 28 of Customs Act - Penalty u/s 114 (i) of the Customs Act, 1962 - imposition of penalty beyond a period specified under Section 28 of the Act - Held that:- In the present case, there is a period of limitation which has been provided under the Act and whether the same applies only for demand of customs duty or extends to imposition penalty, is a question which would entirely depend upon the interpretation of the Act by the Authorities under the Act. Therefore, it is not a case where the authorities under the Act are required to determine the issue outside the four corners of the Act. This Petition cannot be entertained on account of laches and, more particularly, also on account of fact that Petitioner has alternative remedy available under the Act of filing an Appeal to the Appellate Authorities - petition dismissed - decided against petitioner.

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• 2018 (8) TMI 1702
  Release of seized goods - metal scraps mixed with plastic canes, pet bottles and other non metallic waste - the second respondent, without considering the petitioner request for release, has passed the confiscation order and further directed for reexport of the entire cargo - Held that:- Considering the limited relief sought for by the petitioner, this Court, without going into the merits of the case, directs the first respondent to consider the representation of the petitioner, dated 18.07.2018, in the light of the order passed by the second respondent in Order-In-Origi9nal No.13/2018, dated 08.05.2018 and pass appropriate orders on merits and in accordance with law within a period of one week from the date of receipt of a copy of this order - petition disposed off.

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• 2018 (8) TMI 1701
  Import of restricted goods - second-hand goods, other than capital goods - Confiscation - redemption fine - penalty - Held that:- Though the importer had declared the goods to be secondary and defective , the examination report indicates that these were also not new goods. Furthermore, the report of the Chartered Engineer is categorical in taking note of the welding on several pipes which would indicate that these had been previously utilized before export. Therefore, there can be no doubt that the goods are used as contemplated for restriction in para 2.31 of the Foreign Trade Policy 2015-2020. However, the import of the goods does not pose any threat to the safety of the citizenry of the country, these are also not prohibited goods. Accordingly, while upholding the confiscation of the imported goods, the same is allowed to be redeemed to be cleared for home consumption on payment of fine of 50,000/- - penalty is also reduced to 25,000/-. Appeal allowed in part.

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• 2018 (8) TMI 1700
  100% EOU - benefit of exemption of N/N. 52/2003-Cus dated 31st March 2003 - Duty free imports - Mis-declaration of quantity of goods - Demand of differential duty with interest - confiscation - redemption fine - penalty - Held that:- To the extent that the imported goods are utilised for export, the quantity imported is irrelevant; nor is it of relevance in the context of the manufactured goods being cleared into the domestic tariff area. Even if the goods are found to be in excess of that declared, benefit of exemption notification should not have been denied. The recovery of duty ordered in the order of the adjudicating authority, as upheld by the appellate authority, is therefore, not correct in law. It is amply clear from the contents of the various documents that there has been no mis-declaration inasmuch as the gross weight and the netted weight have been detailed. The goods cannot, therefore, be said to have been mis-declared and the confiscation thereof is also without authority of law. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 1699
  Refund Claim - unjust enrichment - finalization of provisional assessment - Held that:- Test of unjust enrichment was introduced for refund arising from finalization of assessment with effect from 13th July 2006 and the failure to pass muster should have resulted in transfer of the sanctioned amount to the Consumer Welfare Fund as envisaged in section 18(5) of Customs Act, 1962 - Such an exercise does not appear to have been undertaken by the original authority and the first appellate authority has merely confirmed the rejection without ascertaining this aspect - rejection of the refund claim is patently improper - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 1698
  Refund of Revenue Deposit - rejection on the ground of unjust enrichment - provisional assessment - Held that:- The provisional assessment was finalized after 14.07.2006. The doctrine of unjust enrichment will apply in the appellant’s case, more so in this case of refund of revenue deposit. As the appellants have reflected the amount in the balance sheet on the asset side as amount receivables from the revenue department and they have also explained the reason for less claim being made which has escaped the attention of the Court below leading to erroneous observation on the Chartered Accountant certificate and refund claim - appellant is entitled to refund. Refund allowed - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 1697
  Refund of SAD - rejection of refund on the ground that the appellant was not able to produce the original copy of the Bills of Entry - rejection also on the ground of Chartered Accountant Certificate - Held that:- The Tribunal in the case of M/s. WIPRO Ltd. [2018 (4) TMI 1468 - CESTAT CHENNAI] considered the issue with regard to non-production of originals of Bills of Entry. Upon verification of records, there is no dispute with regard to the import of goods and payment of CVD - The appellant cannot be insisted to produce the original bills of entry - matter remanded to the original authority who shall verify the documents and decide the issue on the basis of the decision in WIPRO Ltd. - matter remanded. Rejection of the Chartered Accountant’s certificate - Held that:- The appellant has produced a copy of the Chartered Accountant’s certificate as well as various letters issued to the department in regard to the refund claim. In those letters, documents are produced along with details - It is also accompanied by VAT returns / challans as well as details of the VAT paid - the issue whether the Chartered Accountant certificate can be accepted or not has to be reconsidered by the adjudicating authority. Appeal allowed by way of remand.

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• 2018 (8) TMI 1696
  Refund of CVD paid - the CVD amount was paid under protest - rejection of refund claim on the ground of time limitation - Held that:- The issue has now been laid to rest by the Hon’ble High Court in their own case Tinna Rubber & Infrastructure Ltd. Vs Union of India [2017 (5) TMI 183 - DELHI HIGH COURT], where it was held that imposition of 12% CVD under Section 3(1) of the CTA on cut pieces of used tyres and used tubes is unlawful and ultra vires the CTA - refund allowed - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 1695
  Penalties - Principles of Natural Justice - the original authority has recorded that the noticees had not used the opportunity of being heard in person and of cross-examination granted to them - Held that:- It is difficult to understand how cross-examination could have been conducted when the witnesses who were to be subject to cross-examination were not made available. The findings against the appellant, therefore, appear to have been made on the basis of inadequate and untested evidence. The matter requires to be remanded back to the original authority yet again for a fresh decision on the role of the appellant before determination of liability to penalty - appeal allowed by way of remand.

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• 2018 (8) TMI 1694
  Remission of duty - section 23 of Customs Act, 1962 - goods destroyed while in custody of the custodian - revocation of Customs bonded warehousing licence - recovery of duty along with interest thereon - confiscation of goods - imposition of penalty - Held that:- The goods had been destroyed in April 2017. It was incumbent upon the original authority to have ordered remission of duty along with the order of destruction. Recovery of duty, along with interest thereon, ordered by the original authority is, therefore, not proper - The appellant had, of their own accord, reported the non-conformity with the prescribed shelf-life at the time of import. There is no evidence on record to sustain the contention that the appellant had imported the goods even though aware that it was contrary to Foreign Trade Policy. Demand set aside - appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2018 (8) TMI 1704
  Order passed by the Tribunal in the capacity of ‘judicial authority’ under Section 45 of the Arbitration Act, 1996 - Arbitration proceedings - Held that:- Under Section 420 of the Companies Act, 2013, the National Company Law Tribunal passes an order as a ‘Tribunal’, whereas under the provisions of Section 7 or Section 9 or Section 10 or sub-section (5) of Section 60, the same very Tribunal passes an order as an ‘Adjudicating Authority’ and the same Tribunal in the capacity of ‘judicial authority’ passes order under Section 8 or Section 45 of the Arbitration Act, 1996. As the Tribunal is empowered to pass orders in different capacities under different provisions of the Act, we are of the view that the appeal will lie before the competent forum under the said very Act under which the Tribunal passes the order. If it passes order under Section 420 of the Companies Act, the appeal will lie under section 421 before the National Company Law Appellate Tribunal. If the Tribunal passes order under the capacity of the ‘Adjudicating Authority’ under the ‘I&B Code’, the appeal will lie under section 61 of the ‘I&B Code’ before the National Company Law Appellate Tribunal. If the Tribunal passes order in the capacity of ‘judicial authority’ under Section 45 of the Arbitration Act, 1996, the appeal will not lie under Section 421 of the Companies Act but before an appropriate forum. The impugned order dated 20th April, 2017 having passed by the Tribunal in the capacity of ‘judicial authority’ under Section 45 of the Arbitration Act, 1996, the present appeal under Section 421 of the Companies Act, 2013 is not maintainable before this Appellate Tribunal.

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• 2018 (8) TMI 1653
  Prayer for interim relief - Held that:- In order to accommodate Ms. Acharya, this case is specially fixed at 12 noon tomorrow. In the event that Ms. Acharya is unable to conclude her arguments by 12:45 pm tomorrow, she can continue at 2:15 pm. Ms. Acharya states on instructions that the Respondents will not press an application which is listed tomorrow before the Special Judge in which permission has been sought by the Serious Fraud Investigation Office (‘SFIO’) to record the statement of the Petitioner.

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• 2018 (8) TMI 1652
  Oppose grant of any interim relief stating that the Respondents may be permitted to place their version in writing before this Court - Held that:- Although both of them pray that time should be granted till 24th August 2018 for that purpose, learned Senior counsel for the Petitioner point out that it involves the issue of the Petitioner's liberty and further that 22nd August, 2018 is a holiday. List on 21st August, 2018 at 2.15 pm to consider the question of interim relief. The Respondents are permitted to tender on that date their written reply to the prayer for interim relief. The Respondents will also bring the relevant records for perusal by the Court on the next date.

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• FEMA

• 2018 (8) TMI 1693
  Tribunal wholly misdirected itself in failing to follow the settled law in relation to the imposition of penalty by ignoring the settled principle - Held that:- At the hearing of these Notices of Motion, both sides agree that the order of the Tribunal impugned in these appeals suffers from non-consideration of crucial and vital materials. The matter would have to be decided in accordance with law and particularly in the light of what has been observed by this Court on 21st January, 2015, in a detailed order passed in the FEMA Appeals. Hence, without assigning any reasons, but by keeping all contentions open, the orders impugned in these appeals are quashed and set aside. The appeals are restored to the file of the Tribunal for a decision afresh on merits and in accordance with law. The decision be rendered, uninfluenced by any earlier observations, findings and conclusions. We keep open all contentions and clarify that no opinion is expressed thereon. The appeals are allowed accordingly. In the light of this order, nothing survives in the Notices of Motion and they are all disposed of.

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• PMLA

• 2018 (8) TMI 1651
  DoE not complied with the requirements of the law - endorsement by the Petitioner’s husband on the arrest memo to the effect that he has been informed of the grounds of his arrest - Held that:- The legal position as on date is governed by the decision of this court in Moin Akhtar Qureshi v. Union of India (2017 (12) TMI 289 - DELHI HIGH COURT). It cannot therefore be held that the DoE has not complied with the requirements of the law. Consequently, this Court is not inclined to entertain ‘Prayer A’ made in the present petition. It shall however be open to the Petitioner to urge any other ground concerning the legality of the arrest of the Petitioner's husband arrest before the Roster Bench which will examined prayer B. ‘Prayer B’ of the petition challenges the validity of the order dated 6th August 2018 passed by the learned Additional Sessions Judge (PMLA), New Delhi whereby the custody of the Petitioner’s husband has been extended by seven more days. To consider that prayer, the present petition be renumbered as a Criminal Revision Petition and be listed before the Roster Bench on 13th August 2018.

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• Service Tax

• 2018 (8) TMI 1692
  Export of services - Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that the Respondent-Assessee had exported services in respect of activities carried out in India? - Held that:- It is an agreed position that this case stands concluded by the decision of this Court in SGS India Pvt. Ltd.,[2014 (5) TMI 105 - BOMBAY HIGH COURT] which has been followed by the Tribunal, no substantial question of law would arise for our consideration in this appeal - appeal dismissed.

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• 2018 (8) TMI 1691
  CENVAT Credit - Jurisdiction - Whether the department as well as Tribunal could have held what was availed by the assesseess as credit is only a reimbursement and it is an attempt of BIL to pass costs incurred by them towards Multi Protocol Label Switching (MPLS)? - The department alleged that the services are rendered by BSNL and Reliance Communications Limited and received by BIL, whereas the BIL have raised the bill on the assessees claiming reimbursement of the above said MLPS charges with the Service Tax. The department pointed out that the invoice was raised for reimbursement of expenses incurred and it appears that no service was rendered by BIL and the availment of credit on the said Service Tax based on the invoices issued by BIL by the assessees is incorrect. Thus, the department opined that the assessees have contravened the provisions of Rule 3 of the Cenvat Credit Rules, 2004, inasmuch as the services were not received by the assessees. Held that:- In the instant cases, it is not in dispute that whatever the portion of Service Tax component which was collected from the assessees by BIL was only the amount on which the CENVAT credit has been claimed by the assessees. Therefore, unless and until the assessment made on BIL was revised, which obviously could have been done, at this juncture, on account of the expiry of the period of limitation, the interpretation given by the Commissioner (Appeals) as well as the Tribunal with regard to the nature of invoice raised on the assesses is unsustainable - If the impugned orders are allowed to stand, then it would in effect mean that the jurisdictional assessment officers of the assesses are sitting in the judgment over the assessment made on BIL, over which, they have no jurisdiction. Appeal allowed - decided in favor of assessee.

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• 2018 (8) TMI 1690
  Invocation of section 80 of FA for setting aside penalties - bonafide belief - extended period of limitation. Whether the learned CESTAT is correct in holding that where relief from penalties is granted by giving the benefit under Section 80 of the Act of 1994 (on the basis of bonafide belief on the part of the Assessee, the extended period of limitation cannot be invoke for confirmation of service tax demand on the basis of the allegations of willful missstatement, suppression of facts or deliberate contravention of Rules with an intention to evade the duty payment? Whether the learned CESTAT was correct in holding that the ingredients of Section 80 of the Act of 1994 are same as that of the Act of 1994 are same as that of the ingredients which are required for invoking extended period of limitation provided in the proviso to Section 73(1) of the Act of 1994? Held that:- Reliance placed by appellant in the case of M/S. SANKHLA UDYOG VERSUS CCE & ST, JAIPUR [2014 (12) TMI 614 - CESTAT NEW DELHI], where it was held that the adjudicating authority has clearly stated that there was interpretation of law involved and the extended the benefit of Section 80 of Finance Act, 1994 for not imposing and penalty. It clearly shows that the ingredients required for invoking extended period are not present in this case. Indeed in the entire adjudication order there is no word as to how the extended period is invocable - the decision which was relied upon by the Tribunal was never challenged by the department and in view of the consistent practice that the decision which has been accepted by the department should be accepted for every assessee. The issues are answered in favor of assessee against the department - appeal dismissed - decided against Revenue.

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• 2018 (8) TMI 1689
  Renting of immovable property Services - appellant have allotted land in the Gazipur market yard which is known as flower marketing committee to various dealers/traders on the basis of a monthly licence fee - Held that:- It is a matter of record that the appellant have provided phars/tin sheds on charging of a licence fee in the flower marketing yard at Gazipur. The licence fee for Phars /Tin Sheds is chargeable on monthly basis and they have not paid any service tax on the amounts recovered as lease fee/rent from the various traders using the premises of the appellant. For an activity or service to be covered under the definition of renting of immovable property, following ingredients need to be satisfied: (i) That service must be provided by any person to any other person by renting of the immovable property; (ii) That such renting is for use in the course of or for furtherance of the business or commerce - It can be seen that both the conditions are being fulfilled in the present case. Negative list - Section 66D of the Finance Act, 1994 - case of appellant is also that their activity are also covered by Section 66D of the Finance Act, 1994 which covers the negative list of items which are exempted from the levy of service tax - Held that:- The activities which are covered under Section 66D (a) are of the nature which are purely in the public interest and undertaken as a mandatory and statutory function. We find that the appellant is a body which is not a local authority and therefore the exemption under Section 66D (a) is not available to them - the shops which are rented by the appellant for business does not fall under the negative list under Section 66D (d) of Finance Act, 1994. The provisions of Section 66D (d) (iv) of the Finance Act, 1994 only provides when the agriculture land is used for agriculture or for its producers but not for shops which are used for carrying out business or commerce - thus, the activity of renting of phars/tin sheds/shops for marketing/trading of flowers etc. by the traders is taxable under the category of renting of immovable property. Leviability of service tax under the extended time - Section 73 (1) of the Finance Act, 1994 - penalty u/s 78 - Held that:- The ingredients of intention to evade service tax are certainly missing in this case and there have been genuine confusion regarding the leviability of service tax on the rents collected by the various agricultural produce marketing boards/committees in this regard - The extended time proviso in this case is not legally invokable in this case - penalty under Section 78 of the Finance Act, 1994 is also not invokable in this case. The appeals are therefore allowed by way of remand to the Original Adjudicating Authority with the direction that demand of service tax need to be confirmed for all the show cause notices for the normal period of demand - no penalty under Section 78 need to be imposed - appeal allowed by way of remand.

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• 2018 (8) TMI 1688
  Liability of Service Tax - stitching/ tailoring charges under the category of Fashion Designing - Time Limitation - Circular No. F. No. B/1/2002/TRU of the Finance Act, 2002 dated 01/08/2002 - Held that:- In view of the clarification as above by the CBEC, it is evident that no Service Tax can be charged on stitching/ tailoring charges under the category of Fashion Designing. Consequently, no Service Tax is payable on the stitching charges. The cost of raw materials used by the appellant and recovered from their customers also cannot be included for payment of Service Tax. Under the category of Fashion Designing However, amounts recovered by the appellant towards the activity of designing such as design of Jodhpuri, blazer etc, which was carried out by the appellant at the request of the customers will squarely be covered within the category of fashion designing and Service Tax is liable to be paid for amounts recovered towards this - demand upheld. Time Limitation - Section 11B of CEA - Held that:- Larger Bench of the Tribunal in the case of Veer Overseas Ltd V/s Commissioner [2018 (4) TMI 910 - CESTAT CHANDIGARH], where it was held that the time limit prescribed under Section 11B of the Central Excise Act, 1944 will govern claim for refund of service tax - With reference to part of refund falling within the time limit under Section 11B, the issue is required to be remanded to the Original Authority for restricting the same only to the stitching charges recovered as well as the cost of raw materials. Appeal decided partly against appellant - part matter on remand.

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• 2018 (8) TMI 1687
  Liability of Service Tax - It was alleged in the SCN that the appellants have rendered taxable services as management consultants; commercial training or coaching centres and Mandap Keeper and therefore are eligible to pay Service Tax for the period 2000-2001 to 2004 to 2005 - extended period of limitation - Held that:- In the case of the appellants, no such positive act or willful suppression, willful mis-statement and an intention to evade Service Tax is established - What is required is that suppression should be willful; the appellants being a Government-sponsored organization cannot be alleged to have intent to evade payment of duty. Understandably, no personal benefit or for that matter, no benefit whatsoever across the organization for such non-payment of tax - also, a major part of the SCN is hit by limitation. The appellants are liable to pay Service Tax in the normal period i.e. after 20.04.2005 - demand restricted to normal period - appeal allowed in part.

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• 2018 (8) TMI 1686
  Business Auxiliary Services - the assessee has received some income as commission from M/s. Al bright International Ltd. - export of services or not - case of appellant is that appellant is a commission agent based in India who is procuring orders for the manufacturers who are based outside of India - Held that:- The catena of judgements has held that the services provided from India and used outside India have to be treated as export of services. This issue has been clarified by the Department itself also vide their CBEC Circular No.111/05/2009-ST dated 24th February, 2009 - the absence of the agreement which is though annexed with the present appeal memo is not making any difference as far as the issue for treating such a transaction to be that of export service is concerned. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 1685
  Erection Installation & Commissioning service - N/N. 1/2006-ST dated 01.03.2006 - Distribution of electricity or not? - taxability. Held that:- Undisputedly in present case the respondents were providing the services under the category of “Erection Installation & Commissioning” service to Maharashtra State Electricity Distribution Company Limited (MSEDCL), which is a company engaged in distribution of electricity - vide various related notifications issued, it is quite evident that all the taxable services provided by any person in relation to the distribution of electricity and the taxable services provided by the distribution company for the distribution of electricity have been exempted from the payment of service tax since inception. The notification No 11/2010-ST and 32/2010-ST have been rescinded by the Notification No 34/2012-ST dated 20.06.2012 and hence service tax in respect of these service tax was payable from the said date. In view of the exemption contained in the notification No 11/2010-ST, the taxable services provided by the respondents to the M/s MSEDCL continue to remain exempted. For availing the benefit of the exemption under N/N. 11/2010-ST the service provider need not be a distribution licencee, a distribution franchisee, or any other person by whatever name called, authorized to distribute power under the Electricity Act, 2003(36 of 2003). The said conditions are necessary only in case if the exemption was being allowed under notification No 32/2010-ST. Appeal dismissed - decided against Revenue.

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• 2018 (8) TMI 1684
  Condonation of delay of 55 days in filing the appeal - Held that:- The appellant has given plausible explanation for the delay in the condonation applications - Delay of 55 days in filing the appeal condoned - COD Application allowed.

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• 2018 (8) TMI 1683
  Cable Operator Service - appellant has suppressed the number of Cable TV connections - Held that:- From the fact verified on record, it is evident that the appellant has suppressed the number of subscribers from whom the subscription charges have been collected. The amount paid to the link operator depended on the total number of connections given by the appellant - there is no doubt that the appellant had not properly maintained the record of number of connections and charges collected from the subscribers - appeal dismissed - decided against appellant.

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• 2018 (8) TMI 1682
  Business Auxiliary Services - Steamer Agents Services - During the course of audit, Revenue found that there was a huge difference between the total receipts and the amounts on which service tax was paid - Revenue was of the view that the amounts are liable to payment of service tax under the category of BAS - Held that:- Most of the amounts received by the appellant for which no service tax has been paid are in the nature of reimbursements by the customers to cover the expenses incurred by the appellant for activities carried out on behalf of the customers such as obtaining the services abroad, clearance of goods from port and transporting the same to the customer’s premises, CFS charges, CHA charges, Fumigation charges etc. Reliance placed in the Apex Court decision in the case of UOI Vs. Intercontinental Consultants and Technocrats Pvt. Ltd. [2018 (3) TMI 357 - SUPREME COURT OF INDIA], where it was held that service tax is to be paid only on the services actually provided by the service provider - in the present case, amounts reimbursed to the appellant for various miscellaneous services in India as well as abroad which were contracted by the appellant on behalf of the customers cannot be levied to service tax - demand set aside. Amounts recovered by the appellant from the customers towards ocean freight payable to the foreign shipping lines - Held that:- The levy of service tax on the freight elements, in respect of the discounts enjoyed by the appellant in payment of freight charges set aside - reliance placed in the case of CCE, TIRUNELVELI VERSUS M/S. DIAMOND SHIPPING AGENCIES PVT. LTD. [2018 (1) TMI 169 - CESTAT CHENNAI] - demand of service tax made on the portion of freight and discounts set aside. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 1681
  Penalty - delay/default in making payment of Service Tax - Business Auxiliary Services - Held that:- The facts reveal that the default was only for a short period. The appellant had filed the service tax returns disclosing their liability. Further, demand has been computed by the department basing on the documents furnished by the appellants like invoices, balance sheet etc. maintained by them in the ordinary course of their business. All this would go to show that the failure to pay the service tax was only due to the financial stringencies. It is very much clear that the non-payment of service tax was not by fraud, collusion or suppression of facts with intention to evade payment of service tax. There was only a default/delay in making the payment that too only to financial stringency. A substantial amount is paid much before the visit of the officers. Even then, Show Cause Notice has been issued raising demand for the entire period and the adjudicating authority has confirmed equal penalty on the demand for the entire period - Even then, Show Cause Notice has been issued raising demand for the entire period and the adjudicating authority has confirmed equal penalty on the demand for the entire period. When the demand or the service tax liability for the disputed period is paid by the appellant alongwith interest and ST-3 returns having been filed accompanied by late fee, the department ought not to have issued show cause notice, as provided in Section 73 (3) of Act ibid, since, as found above, the ingredients of sub-section (4) of the same section 73 cannot be alleged. Penalty u/s 78 is unjustified - the penalty imposed u/s 78 of the Finance Act, 1994 set aside, without disturbing the demand of service tax or the interest thereon or the penalty imposed u/s 77 of the Act ibid - appeal allowed in part.

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• 2018 (8) TMI 1680
  Refund of unutilized CENVAT Credit - Rule 5 of CCR, 2004 and N/N. 27/2012-CE (NT) dated 18.06.2012 - Rejection on the ground of non-compliance of Section 11 B of the Central Excise Act, 1944 - Held that:- There is weight in the submissions of the ld. Counsel for the appellant that it has not availed double benefit, but has reversed the credit in its St-3 returns which has been filed even before the issuance of SCN which is dated 28/06/2016 which proves that the appellant itself has reversed the credit, but however, a verification is required to be made to the satisfaction of the Revenue also - appeal allowed by way of remand.

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• 2018 (8) TMI 1679
  Levy of Service Tax - excess income earned out of Ocean freight amount - Held that:- The issue is covered in the decision BAX GLOBAL INDIA LTD. VERSUS COMMISSIONER OF SERVICE TAX, CHENNAI [2017 (9) TMI 1264 - CESTAT CHENNAI], where it was held in appellant favor. Taxability - Commission/ brokerage paid to the shippers - Held that:- The said Commission/ brokerage paid to the shippers not taxable - issue held in favor of appellant. CENVAT credit - credit availed on the basis of Debit Notes - Held that:- This issue is also now well settled in the appellant’s favour in a plethora of decisions. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2018 (8) TMI 1678
  Whether on the facts and in the circumstances of the case the CESTAT was right in dismissing the appeal when the orders challenged before it have travelled beyond show cause notice and were bad in law and were passed in violation of principles of natural justice? Whether, on the facts and in the circumstances of the case, the CESTAT was justified in holding that the benefit of deemed credit under order No.TS/36/94TRU dated 1.3.1994 will not be available to the rerollers whose value of clearances have crossed 75 lakhs in a particular financial year? Whether on the facts and in the circumstances of the case, the CESTAT was right in holding that whatever interpretation was put on Notification No.1/93 would affect the availment of the benefit of the deemed credit order No.TS/36/94TRU dated 1.3.1994? Held that:- Division of this Court by its judgment VINUBHAI STEEL CO. PVT. LTD VERSUS COMMISSIONER OF CENTRAL EXCISE [2015 (3) TMI 746 - GUJARAT HIGH COURT] allowed the appeal and set aside the judgment of the Tribunal - the present appeal is also allowed - decided in favor of assessee.

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• 2018 (8) TMI 1677
  MODVAT Credit - Whether MODVAT Credit can be availed on the inputs used in manufacture of goods exempted by virtue of Rule 57F(3) and Notification 214/86-CE dated 01.3.1986? - Whether the Customs, Excise and Service Tax Appellate Tribunal was correct in law in applying the ratio of the Larger Bench decision in M/s.Sterlite Industries Limited [2004 (12) TMI 108 - CESTAT, MUMBAI] to this case? Held that:- In Kyungshin Industrial Motherson Ltd., [2015 (11) TMI 899 - MADRAS HIGH COURT] an identical issue came up for consideration wherein also, the Tribunal relied the decision in the case of Sterlite Industries (I) Ltd. [2004 (12) TMI 108 - CESTAT, MUMBAI] - The Hon ble Division Bench noted that the decision of the Larger Bench of the Tribunal in the case of Sterlite Industries (I) Ltd., was approved by the Hon ble Division Bench of the Bombay High Court in the case of Commissioner Vs. Sterlite Industries (I) Ltd. [2008 (8) TMI 783 - BOMBAY HIGH COURT]. Appeal dismissed - decided against Revenue.

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• 2018 (8) TMI 1676
  Valuation - captive consumption - addition of notional margin of profit of 10% - rule 6(b)(ii) of Central Excise (Valuation) Rules, 1975 - Held that:- The valuation to be adopted for such captive consumption poses problems which led to the incorporation, within the rules, of a notional profit on the cost of production. Therefore, irrespective of whether the goods are sold or used entirely for captive consumption, it is not just the cost of production but the profits that would have been earned had the goods been sold outside that was required to be included for the purpose of assessment of duty. The goods being entirely consumed within the factory does not have a comparison basis with sales made by the appellant or, by anybody else, of like goods. At the same time, the appellant is unable to show that the assessable value adopted by the lower authorities does not reflect the cost of production and the profit that might have been earned even if these goods have been sold by the assessee or purchased by the assessee from outside. A loss on the product that is cleared finally using the impugned goods as an input is not relevant for determining the notional profit envisaged in rule 6(b)(ii) of Central Excise (Valuation) Rules, 1975. Appeal dismissed - decided against appellant.

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• 2018 (8) TMI 1675
  CENVAT credit - input services - courier services availed for import of inputs and export of finished goods - rent paid on job workers premises - demand along with interest and penalties. Remand of matter by Commissioner(Appeals) - power of Commissioner(Appeals) to remand - Held that:- The Commissioner(Appeals) has allowed the appeals of the appellant on merits but still remanded the matter back to the original adjudicating authority for de novo adjudication which is not legally justified because the Revenue has not filed appeal against the impugned order on merit - further, the Commissioner has still the power of remand in exceptional circumstances where it is required for the purpose of quantification of the demand or where the original authority has passed orders without complying with the principles of natural justice. But the Commissioner(Appeals) should not have exercised the power of remand in the circumstances as prevailing in the present case - the power of remand exercised by the Commissioner(Appeals) is not legally sustainable in the present case. Courier services availed for import of inputs and export of finished goods - Held that:- The courier service availed by the appellant fall in the definition of input service as contained in Rule 2(l) of CCR 2004 - credit allowed. Rent paid on job workers premises - Held that:- CENVAT Credit on rent paid on job worker premises has been allowed on the ground (a) Rule 3(1) of the CENVAT Credit Rules, 2004 specifically provided for availment of CENVAT Credit by a manufacturer or producers of final products in respect of any, discharge of duties or taxes or cess paid on any input or input services used in the manufacture of intermediary products, by a job worker availing benefit of exemption specified in the N/N. 214/86-CE - Further, the rent paid is essential service directly in relation to the manufacture and once the Commissioner(Appeals) himself allowed it on merit, then thereafter remanding the case back to the original aurhority is not legally sustainable. The impugned order remanding the matter back to the original authority is not sustainable in law - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 1674
  Reversal of Cenvat Credit - Exempted service or not? - CENVAT Credit on common input services and goods reversed u/r 6(3A) - Whether the value of the goods which they procured from the sister units and sold in the market should be reckoned as exempted services for calculating the CENVAT credit to be reversed or not? - Held that:- This issue has been settled by the Hon’ble High Court of Gujarat in the case of Sintex Industries Ltd., [2013 (6) TMI 178 - GUJARAT HIGH COURT] that as far as the CENVAT credit is concerned, what is relevant is not whether assesses are a single legal entity or not and whether they have a common PAN or not even whether the two units share a common area. What is relevant is whether they are separate registrants under the Central Excise. In the present case, an appellant is procuring bottlers from their sister units on excise invoices issued in their name along with the stock transfer challans. Thereafter, the assessee is selling the goods to their customer - no element of trading is missing when the appellant procures bottlers from their sister units and sells them. It is at par with the procurement of bottles from bottlers and selling except from the fact that they are not directly paying their suppliers for the bottles supplied - the appellant is required to reverse the CENVAT credit as per Rule 6(3A) of CENVAT Credit Rules, 2004 including the value of these bottles procured from the sister units and sold in the market. Whether the credit to be reversed should be taken as the proportion of “the total credit availed” or only proportion of “the common input service credit” availed? - Held that:- A perusal of the formula for reversal shows that the amount of credit to be reversed is proportionate to the value of exempted goods and services to the total value of goods and services (both exempted and dutiable or taxable) to the “total CENVAT credit taken on input services”. In view of the plain language in which the Rule is drafted, there is no scope to read the words “total CENVAT credit taken on input services” as “total CENVAT credit taken on common input services” - Further, Rule 6 of CENVAT Credit Rules, 2004 itself gives several options for the assessee to choose from and they chose this option. If this did not suit them, they could have taken another option. Extended period of limitation - Held that:- The short payment made by the assessee came to light only during the verification of the course by the Departmental officers. The assessee profited by not reversing the CENVAT credit correctly in terms of the option they choose and thereby gained CENVAT credit and to that extent evaded payment of duty which they would have had to pay in cash - extended period rightly invoked. Appeal dismissed - decided against appellant.

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• 2018 (8) TMI 1673
  Principles of Natural Justice - relied upon documents not provided to appellant to defend their case - SSI Exemption - Held that:- It is the contention of the appellant that they have not been served with the relied upon the documents along with show cause notice so that they can defend their case - the matter must be remanded back to the Original Authority to reconsider the issue afresh after following the principles of natural justice - appeal allowed by way of remand.

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• 2018 (8) TMI 1672
  Classification of goods - mosquito repellants coils - whether mosquito repellants coils manufactured by the respondent are liable to be classified under Chapter Heading 38081091 “Repellants for insects such as flies and mosquitoes” or not? - Held that:- It is a well established principle of classification that the chapter and section titles are only for ease of reference and do not determine the classification of the products. After classifying the products under various chapters, this chapter covers miscellaneous chemical products. In fact, this chapter contains several items such as animal black including spent animal black (3802.90.20), Wood Tar Oils etc (3807), Gum, Wood or Sulphate Turpentine and other Terpenic oils (3805), Culture media for Development or Maintenance of Micro-organisms or of Plant, human or animal cells (3821), Bio-diesel and mixtures thereof (3826) none of which are synthetic chemical products. The contention of the First Appellate Authority that simply because coils contain essential oils they do not fall under chapter 3808 is incorrect and based on wrong appreciation of the facts and ignoring that the chapter titles do not determine classification - there is a separate heading tariff item 3808 to cover insecticides and fungicides etc., which includes not only those which kills insects but also those which repel them. In the Bombay Chemicals Pvt. Ltd., [1990 (3) TMI 179 - CEGAT, NEW DELHI] mosquito repellant coils have been held to be insecticides and this decision has been upheld by the Hon’ble Apex Court COLLECTOR VERSUS BOMBAY CHEMICALS (P) LTD. [1994 (2) TMI 319 - SUPREME COURT]. The First Appellate Authority has erred in holding that the mosquito coils in question are not classifiable under 38081091 - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 1671
  CENVAT Credit - MS Bar - Department proceeded to deny the CENVAT Credit by taking the view that the appellant, in the process of manufacture, have not used the goods, “MS Bars” - Held that:- Revenue has proceeded to deny the credit only on the presumption that “MS Bars” cannot be used in the manufacture of the transformer tanks rather than on the basis of any documentary evidence - the denial of Cenvat Credit on the inputs procured by the appellant and used in the manufacture of the final product, i.e. transformer tank cannot be justified - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 1670
  CENVAT credit - inputs used in manufacture of both exempted goods and dutiable goods - Remand order - determination of value of ‘chloroquine’ at 115% of the cost of manufacture for discharge of liability at 8% under rule 57AD of the erstwhile Central Excise Rules 1944 - Held that:- That ‘chloroquine phosphate’ is an exempted product is not in dispute. Payment of duty on exempted products does not, in any way, take it out of sphere of the definition of the ‘exempted goods’ in the Central Excise Rules, 1944 or the successor rules carved out for administration of CENVAT Credit Rules, 2004. Accordingly, to the extent that ‘chloroquine phosphate’ is an exempted goods and that in the manufacture of those, and other dutiable goods, the appellant has utilized common inputs taking credit thereof, without distinguishing between utilization on exempted goods and on dutiable goods, the liability under rule 57AD of Central Excise Rules, 1944 cannot be avoided. The appellant has claimed that duty liability has been discharged on both ‘chloroquine phosphate’ and ‘bulaquine’ by adopting a value which takes into account both these products. If that is so, the duty discharged on ‘chloroquine phosphate’ is liable to be set off against liability under rule 57AD owing to the exempt nature of the ‘chloroquine phosphate’. That is an aspect that needs to be ascertained by the lower authorities. Matter remanded for ascertaining (i) to ascertain if duty liability has been discharged on ‘chloroquine phosphate’ at 16% of the value; (ii) determine the value of ‘chloroquine phosphate’ for the purpose of liability under rule 57AD of Central Excise Rules, 1944; and to compute the resultant duty liability that remains - appeal allowed by way of remand.

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• 2018 (8) TMI 1669
  MODVAT/CENVAT credit - bought out items (components, assemblies) - export of the items under bond as inputs / capital goods cleared ‘as such’ - Department was of the view that the bought out items such as components and assemblies procured from other manufacturers were not used for manufacture or even intended for use in manufacture within the factory of appellant and therefore appellants are not eligible to avail credit on bought out items which were merely exported as such. Whether appellants are eligible for MODVAT / CENVAT credit on the bought out items which were later exported as such being parts / components / assemblies of Sugar Plant Machinery to be installed at Vietnam? Held that:- Indubitably, the appellants have exported the entire Sugar Plant to Vietnam with core machineries manufactured by the appellant along with other bought out duty paid items brought into the factory; thereafter both categories of goods cleared and agglomerated together for the purpose of export. There is also no allegation that the combined value of both manufactured as well as bought out items have not been included in the export price declared by the appellants. There also appears to be no dispute that the assemblage of goods at the point of export was an omnium gatherum gathered of both self-manufactured and bought out items, all duty paid by the respective manufacturers, which was intended to constitute a complete sugar plant in Vietnam. The show cause notice dated 29.3.1996 at para 2.0, also narrates that the disputed bought out goods were “used only for receipt and export, as such”. The taxes cannot be exported; that it is not the intention or policy of the Government otherwise; that in such cases where the manufacturer procures some of the parts from other manufacturers and removes them along with the remaining self-manufactured goods, the clearances for all practical purposes has to be treated as effected from factory gate. The undeniable fact is that the earlier order of this Bench, in the appellant’s own case [2003 (5) TMI 166 - CEGAT, CHENNAI] had concluded, “that bought out items both inputs and capital goods in question cannot be considered as eligible capital goods for availing MODVAT credit …..”. The remand directions given by the Tribunal in that order dated 2.5.2003 was only for ‘computing and confirming the amount of irregularly availed MODVAT credit …. etc.” based on the above conclusion reached by them. This decision has been upheld by the Hon’ble Supreme Court in [2013 (9) TMI 98 - SUPREME COURT]. As a lower court, here it is definitely required to follow the precedent on an issue, when it is already decided by Apex Court, as it has been in this case. Appeal dismissed - decided against assessee.

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• 2018 (8) TMI 1668
  Non-payment of Interest for duty paid belatedly - Rule 8(3A) of Central Excise Rules, 2002 - demand with penalty - Held that:- The Tribunal in S.V.M. Auto Products Versus Commissioner of Central Excise, Chennai-III [2016 (10) TMI 1223 - CESTAT CHENNAI] had remanded a similar matter to the adjudicating authority for denovo consideration after decision of Apex Court in the case of M/s. Indsur Global Ltd. Vs. Union of India [2014 (12) TMI 585 - GUJARAT HIGH COURT] - the matter remanded to the adjudicating authority with direction for denovo consideration based on the outcome of the decision of the Hon’ble Supreme Court - appeal allowed by way of remand.

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• 2018 (8) TMI 1667
  Appropriation of rebate against the dues - Held that:- In an identical case M/S. CHEMPLAST SANMAR LTD. VERSUS COMMISSIONER OF GST & CENTRAL EXCISE, TRICHY [2018 (5) TMI 1763 - CESTAT CHENNAI], where the appeal was held in favor of appellant - the appropriation made by the order impugned herein cannot sustain - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 1666
  Rectification of mistake - Held that:- The Tribunal after careful consideration of the two alternate classifications for the products under Chapter 38 and Chapter 31 has ordered classification of the product under CETH 3101 0099. Since the above CETH carries 'nil' rate of duty during the disputed period, no liability is cast upon the appellant for the disputed period irrespective of the benefit of Notification No. 23/2003-CE - the final order is modified as: after the first sentence the following portion may be deleted:- “The claim for exemption under Notification No. 23/2003-CE, wherever duty is payable is not sustainable in view of violation of condition No. 3 (i) of the notification as discussed. Demand for differential duty, if any, will be applicable only for normal period.” ROM Application allowed.

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• 2018 (8) TMI 1665
  CENVAT credit - excesses and shortages of stock - duty demand along with interest and equal penalty has been imposed under section 11AC of the Act - Time Limitation - Held that:- It is very much clear from the records that there was no actual shortage and only was an error in the accounting which was later rectified. Department does not have a case that the appellant has diverted the raw materials - disallowance of credit cannot sustain on merits. Time limitation - Held that:- SCN for the period February 2011 has been issued only on 23.4.2015 invoking extended period alleging suppression of facts. There is absolutely no evidence to establish suppression of facts with intent to evade payment of duty. Hence the demand is time-barred. Appeal allowed on merits as well as on limitation.

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• 2018 (8) TMI 1664
  Valuation - inclusion of handling charges in the assessable value - demand raised in SCN alleging that the appellant has received additional consideration in the form of handling charges and that such amount has to be included in the assessable value - Scope of SCN - Held that:- The authorities below have categorically held that such charges are nothing but transportation charges from the assessee’s factory to the consignment agent. The place of removal being the premises of the consignment agent, the transportation charges if any, from the factory to the consignment agent cannot form part of the assessable value. Since there is a fundamental difference in the allegation raised in the show cause notice as well as the confirmation of demand, the demand cannot sustain - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 1663
  Waiver of penalty u/s 11AC of CEA 1944 - revenue neutral situation - clearances made to sister units - Held that:- Undisputedly, the clearances are made to the sister unit and the appellant would be eligible to avail the credit of the duty, if any, by paying them - the situation is revenue neutral one. There being no malafide intention to evade payment of duty, the Commissioner (Appeals) has rightly set aside the penalties imposed - appeal dismissed - decided against Revenue.

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• 2018 (8) TMI 1662
  CENVAT credit - common input credit availed for use in manufacture of exempted product - appellant reversed the proportionate credit attributable to the exempted products - The only allegation on which the demand has been confirmed is that the appellant has not filed the declaration as contemplated under Rule 6(3) of CCR, 2004 - Held that:- In various decisions, the Tribunal has held that the said requirement to file a declaration intimating the option excised by the appellant is only a procedural one - demand unjustified - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 1661
  Refund of excess excise duty paid - price variation clause - rejection of the refund claim on the ground that the appellants did not opt for provisional assessment even though they were aware of the price variation clause in the agreement - Held that:- Similar issue was considered by Tribunal in the case of PTC Industries Ltd. [2016 (8) TMI 200 - CESTAT NEW DELHI], where it was held that If there is a subsequent reduction in price, based on price variation clause in rate contract, the assessment has to be considered as provisional. Non observance of procedure under Rule 7 of Central Excise Rules, 2004 will not render the assessment as final assessment and refund can be granted in such a situation - refund allowed - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 1660
  Valuation - clearance of goods Air Handling Unit, Fan Coil Unit and Packaged Split Air Conditioners to another unit - It appeared that the appellant had sold the said goods for a higher value through the branch for which they have not discharged the central excise duty - Held that:- It is seen that at the time of removal of the goods from the factory, the appellant knew the value at which the goods were to be sold by their branches would be higher than that mentioned in the invoices. The very same product which has been cleared from the factory is sold from the branch office at a higher price - The allegations in the show cause notice as well as the basis for which the differential duty demand is very much clear from the show cause notice as well as the order passed by the adjudicating authority - demand upheld - appeal dismissed - decided against appellant.

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• 2018 (8) TMI 1659
  Appropriation of amount from deposits made during the course of the proceedings for finalization of assessment - Held that:- It is seen that the duty liability, as well as the refund arising in consequence of the finalization of provisional assessment, has been computed correctly; there is no dispute by the appellant on this aspect. However, the interest liability is disputed. It is seen that the appellant had made detailed submissions and furnished computation before the first appellate authority which had not been taken into account or considered - matter requires reconsideration - appeal allowed by way of remand.

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• 2018 (8) TMI 1658
  CENVAT Credit - Input Service Distributor - rent-a-cab service - denial on the ground of non-registration - gardening service - Held that:- As far as the requirement of prior registration for availing of input service distributor is concerned the law is well settled and the impugned order is not sustainable to that extent - credit on rent-a-cab service cannot be denied on this count. Gardening service - Held that:- The statutory requirement under the law relating to pollution control mandate such and, therefore, by no stretch can it be termed to be covered by the exclusionary provision - credit allowed. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 1657
  Adjustment of rebated against pending duty liability - Held that:- It is clear that the amounts sanctioned as rebate should not have been adjusted against demands that had been stayed by order of the Tribunal dated 12th November 2012 - appeal of Revenue dismissed.

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• 2018 (8) TMI 1656
  CENVAT Credit - Appellant-assessee is alleged to have availed credit of duty paid on ‘heavy melting scrap’ purportedly received from M/s S B International, second stage dealer, on invoices that did not correspond with the receipt of stock by the appellant - Held that:- In the absence of evidence to controvert the allegation, there is no ground to interfere with the order of the first appellate authority - Appeals are dismissed - decided against appellant.

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• 2018 (8) TMI 1655
  Clandestine removal - clearance of cheese cotton yarn in the guise of hank yarn - the main documentary evidence is the brokers commission file alleged to have been recovered from the factory premises - non-production of persons for cross-examination - Held that:- The said document cannot be relied and does not support the allegations raised in the show cause notice - Without producing the persons for cross-examination, the adjudicating authority has relied on the statements of these persons. The law is settled in this regard that as per section 9B of Central Excise Act, when the appellant has requested for examination/cross-examination, the same has to be considered and the statement without examination cannot be relied. Though it is alleged that appellant manufactured and cleared 156700 Kgs. of yarn in the form of cheese / cone without accounting and removed without payment of duty, no evidence is adduced to establish the purchase of cotton, payment made to suppliers for cotton, transportation, payment of freight, consumption of electricity etc. - when it is alleged that appellant cleared without accounting, the department has equal responsibility to adduce evidence as to the procurement of the raw materials as well as evidence for clandestine manufacture and clearance which is not brought to light, from the records of the case. The statement of Shri Elango, which was recorded on 16.11.1998 has been heavily relied by the department. It is seen that he has retracted his statement immediately on 24.12.1998 by filing a sworn affidavit. The department has not been able to establish the clandestine clearance or clearance of cotton yarn in the guise of hank yarn - demand cannot sustain - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 1654
  Monetary limit involved in appeal - amount involved is less than 10,00,000/- - Held that:- In partial modification of the Board’s Circular F.No. 390/Misc./163/2010-JC dated 17.12.2015, the monetary limit for filing of appeals in the Tribunal has been increased from 5,00,000/- to 10,00,000/-. Recently, the CBE 10,00,000/- and as per the litigation policy of the Government vide Board’s letter F.No. 390/Misc./163/2010-JC dated 17.8.2011, appeal is not maintainable.

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