Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
September 10, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
Indian Laws
Articles
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Provision for warranty expenses - contingent liability - there has been no material placed before the AO to establish that the provision in the accounts for the warranty charges was based on any scientific basis or based on the past experience - Additions confirmed.
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Reopening of assessment - No re-assessment proceedings can be opened based on the Audit objections sans application of mind. It is manifest that the AO had no ‘reason to believe’, any escapement of income to assessment. Hence, assumption of jurisdiction by the AO to invoke section 147 is unjustifiable.
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TDS u/s 194C - expenditure under the head “wages” - Assessee is not liable to deduct ITDS on the amounts which are purely in the nature of reimbursement to the payee u/s.194C of the Act when the payment to the payee does not involve any taxable income of the payee.
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Portfolio Management Services (PMS) fees paid is eligible for deduction while computing Short Term Capital Gain
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Addition of sale proceeds of the shares as undisclosed income of the assessee u/s 68 - rejecting the claim of the assessee exemption u/s 10(38) - Claim cannot be rejected on the basis of suspicion, surmises and conjectures. It is to be kept in mind that suspicion how so ever strong, cannot partake the character of legal evidence.
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Addition u/s 68 - All the three conditions as required u/s. 68 i.e. the identity, creditworthiness and genuineness of the transaction were placed before the AO and the onus shifted to the ld AO to disprove the materials placed before him. Without doing so, the addition made by the ld AO is based on conjectures and surmises cannot be justified
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Stay on demand - Since the Order of the Tribunal is not complied with and the disposal of appeals are delayed on the default of the assessee because assessee has been seeking adjournment continuously, therefore, in our view, it is not a fit case for grant of stay - stay order vacated.
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Depreciation claimed at the rate of 60% on design software - Once the Ld.CIT(A) has himself held the purchase made by the assessee company is a design software, we wonder as to how it cannot be treated as a computer software.
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Valuation of the shares - there cannot be any scope of introduction of assessee’s unaccounted income through allotment of shares at unreasonably high priced shares. Therefore, observations of the AO is not relevant and a mere suspicion. - AO is not permitted to interfere in the valuation, once done in accordance with the method prescribed in the Rule 11UA(2).
Customs
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Refund of the Terminal excise duty (TED) - Deemed Export - Any subsequent amendment made to the existing policy liberalizing the Scheme and exempting payment of TED cannot be a reason to deny the refund of payment already made by the petitioner.
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Refund of CVD paid - period of limitation - The respondents’ apprehension that if the petitioner’s submission is accepted, there would be no period of limitation is not well founded. An application for refund must be made within a reasonable period of time. What is reasonable a period of time would depend on the facts of each case.
IBC
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Corporate Insolvency process - in the case of operational creditors, the petition filed by a foreign company need not observe such requirements of a statute which are impossible of compliance, namely, of getting a certificate from Indian financial institutions evidencing default in repayment of a debt. We also think that the petition filed by an advocate would be maintainable.
Service Tax
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Jurisdiction of Commissioner - Commissioner under his revisionary power has issued SCN, imposing penalty, by invoking extended period of limitation - Penalty u/s 76, 77 and 78 of FA - payment of service tax with Interest was made on being pointed out - Penalty set aside as imposed beyond Jurisdiction.
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Place of supply of services - Services of promotion of their products availed by an agent outside India - Reverse charge mechanism - The service falls under clause (iii) of Rule 3 of Taxation of Services (Provided from outside Indian and received in India) Rules, 2006 - demand confirmed.
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Refund Claim - whether the appellant have locus standi to file refund claim or not? - service tax deducted and deposited by the Housing Board on behalf of the appellant (service provider) - Held Yes, refund allowed.
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Providing of cash van service with security guard is covered under ‘cash van service’ and cannot be termed as ‘security services’ as the dominant service is transportation of cash from one place to another through these cash vans.
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The activity involves supply of ‘Fire Hydrant System’ as well as ‘Erection, installation’ of the same for Krishi Upaj Mandi. This nature of activity is squarely covered under the category of ‘erection and commission service’
Central Excise
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Clandestine removal - Chewing Tobacco - the charge of clandestine removal cannot be proved merely on the basis of statement - since the charge of clandestine manufacture and removal against M/s ZTPL is not established, penalty is not imposable on ZTPL, the Director and other persons.
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The Department was put to knowledge by putting information in ST-3 returns and it cannot be said that the appellants had suppressed any facts from the Department with an intention to evade payment of service tax - the extended period cannot be invoked.
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CENVAT Credit - Input service - brokerage/Commission obtained by the selling the constructed residential units - The Explanation inserted in Rule 2(1) of Rules, 2004 should be declaratory in nature and effective retrospectively - credit allowed.
Case Laws:
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GST
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2018 (9) TMI 433
Carry forward of CENVAT credit - transition to GST Regime - Whether the applicant is entitled to carry forward the accumulated cenvat credit as reflected in its Excise returns for the month of June- 2017 to GST regime in terms of provisions under the CGST Act, 2017, more particularly Section 140 of the CGST Act? - Whether the accumulated Cenvat Credit so carried forward, not being the credit availed under the GST regime, is required to be adjusted/restricted in the manner prescribed under Rules 42 and 43 of the CGST Rules, 2017? Held that:- A plain reading of Section 97(2) clearly implies that the any question relating to CENVAT credit, which falls under transitional provision, shall be out of purview of Advance Ruling. Admissibility of input tax credit, as given in Section 97(2), relates to 'input tax credit' as defined in Section 2(63) of CGST Act, 2017 read with Section 2(62) ibid and not the CENVAT carried forward in TRAN-1, which categorically pertains to pre-GST regime - thus, the question placed do not fall within the four corners of issues defined for seeking Advance Ruling under Section 97(2) ibid. When the question raised does not fall within the ambit of Section 97(2) and be that as it may, the issue has already been pending before the departmental authorities, there are no reason to take up the matter on merits. The application filed by the applicants is hereby rejected, being not maintainable.
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2018 (9) TMI 432
Cancellation of registration of the petitioner - Punjab Goods and Services Tax Act, 2017 - appealable order - Held that:- It is not in dispute that the order passed by the Excise and Taxation Officer, Ludhiana-3 is appealable in terms of Section 107 of the Punjab GST Act - petitioner is relegated to avail of his appropriate alternative remedy - petition disposed off.
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2018 (9) TMI 431
Levy of GST/Service Tax - fee paid for award of license for sale of liquor - respondent submitted that he has received instructions to the State that in 26th meeting of GST Council held on 10.03.2018 it has been decided that no GST/Service Tax is leviable on the fee paid for grant of license sale of liquor for human consumption - Held that:- Keeping in view the statement made by learned counsel for respondents No.1 to 3, prayer made in the present petition has been rendered infructuous and the same is disposed of accordingly.
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2018 (9) TMI 373
Unable to upload data to avail of CENVAT and VAT credit or credit on stock-in-trade - Circular No. 39/13/2018-GST dated 3rd April, 2018 - Held that:- Petitioners state that they have already made a representation to the respondent authorities under the grievance mechanism and would pursue the said remedy. However, in case they are aggrieved by the final determination, they should be given liberty to challenge the order - The petitioners also reserve their right to challenge the constitutional vires if required and necessary. Petition disposed off.
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Income Tax
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2018 (9) TMI 428
Maintainability of appeal - monetary limit - Penalty under Section 271C - non deduction of tds - assessee in default - Held that:- Since the tax effect/liability is less than the prescribed limit as mentioned in Circular No. 3/2018 dated 11th July, 2018 issued by Ministry of Finance, Department of Revenue, Central Board of Direct Taxes, New Delhi, we see no reason to interfere with the impugned orders. The special leave petitions are, accordingly, dismissed.
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2018 (9) TMI 427
Revision u/s 263 - assessment of immovable properties - Held that:- Commissioner merely proceeded to record that both the immovable properties namely, the mall managed by the petitioner company and one managed by M/s. Gandhi Reality (India) Pvt. Ltd., both are situated in the nearby locality, without giving the distance between the two properties and without even prima-facie ascertaining their respective locations. This would be relevant as we discuss the issue further. Next the Commissioner also merely adopted the respective municipal taxes of the two properties as the basis for considering commercial rental value of these properties. The municipal tax rate as well as the potential for fetching rental charges for the immovable properties have many variables. The municipal taxes are fixed on the basis of various factors such as builtup area, the age of the property, location of the property, nature of occupation of the property, use of the property, etc. So far as the rent potential of the property is concerned, equal number of variables would go into deciding the same such as, location of the property, area under rent, the age of the building, the nature of the business surrounding the property. In an immovable property even a small distance of location can make a big difference if one property is situated at a prime location at an important junction and the other does not enjoy any such advantage. These aspects cannot be standardised by applying a mathematical formula. Commissioner compared the two most variable factors by merely taking the proportion of the two sets of properties between RMC taxes and the rentals received or receivable. The starting point for making further inquiry itself was erroneous. Income from other sources - Held that:- As noticed the correspondence between the AO and the assessee during the course of assessment proceedings in the earlier portion of his order. Considerable attention was given to the question of assessee's income from other sources and the expenditure claimed by the assessee in order to earn such income. In particular, the entire breakup of such expenditure was before AO. AO having asked for details, the assessee supplied full details of property tax expenses, electricity expenses, legal and professional expenses, security charges, etc. AO made no additions. Clearly a case of full inquiry having been made by the AO before he made up his mind. This is not a case where there were no inquiries or no germane inquiries having been made. On this basis, the second ground of the Commissioner also must fail and yet another area on this ground where the Commissioner has committed error while apportioning the cost between two heads of income where the Commissioner has taken the projected income of ₹ 9.35 crores from the house property as estimated by him on the basis of projections. All in all, we do not find this a fit case where Commissioner would have exercised revisional powers.
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2018 (9) TMI 426
Disallowing the provisions made towards liability for warranty for goods supplied by the appellant on the ground that it is a contingent liability - Held that:- Assessee requested that the matter may be remanded to the Assessing Officer for fresh consideration so that the Assessee will be able to produce material to substantiate the case. We find that such a plea wholly inadmissible at this juncture, especially when we are called upon to decide the substantial question of law, which has been framed for consideration. Assessee has failed to fulfill the three conditions pointed out by the Hon'ble Supreme Court in Rotork Controls India Private Limited (2009 (5) TMI 16 - SUPREME COURT OF INDIA) and there has been no material placed before the Assessing Officer to establish that the provision in the accounts for the warranty charges was based on any scientific basis or based on the past experience. Thus, the stand taken by the Assessee was wholly non-substantiated and consequently, the Tribunal rightly allowed the appeal filed by the Revenue and restored the findings of the Assessing Officer.
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2018 (9) TMI 425
Reopening of assessment - change of opinion - contention of the petitioner that the very same issue came up for adjudication for the Assessment Year 2007-08 - conceptual difference between the power to review and power to reassess - Held that:- It cannot be disputed that the original assessment order dated 31.08.2009 under Section 143[3] of the Act was in consonance with the view taken in the preceding as well as succeeding year. It is clear that the audit query raised, influenced the AO to take a contrary view against the decision arrived at in so far as allowing the revenue expenditure claimed by the Assessee towards licence fee/logo. These material facts supports the case of the petitioner-Assessee that the reassessment proceedings initiated under Section 147 is without jurisdiction and requires to be set aside. Assessee has furnished detailed material on the query made by the AO. If such query made is answered by the Assessee, but the AO does not deliberate on that point in the assessment order and does not make any addition in the assessment order, would show that the issue was examined by the AO, but do not find out any ground or reason to make addition or reject the stand of the Assessee. In the circumstances, it must be presumed that the AO had formed an opinion while framing the assessment under Section 143(3) of the Act. The arguments of the learned Counsel for the Revenue that the issue was not addressed by the AO, is a case of ‘no opinion’ cannot be countenanced. The assessments concluded in preceding/subsequent years and the implication in the assessment order under Section 143(3) establishes the opinion formulated by the AO on the subject matter. No re-assessment proceedings can be opened based on the Audit objections sans application of mind. It is manifest that the AO had no ‘reason to believe’, any escapement of income to assessment. Hence, assumption of jurisdiction by the AO to invoke section 147 is unjustifiable. Notice dated 11.02.2014 and the order dated 01.07.2015 are unsustainable. - Decided in favour of assessee.
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2018 (9) TMI 424
Transfer pricing adjustment - TPO rejected the comparable selected by the assessee in its TP study - Held that:- Functional dissimilarity between assessee-company and Informed Tech India Ltd. alone was the ground taken before the TPO, when he sought to include Informed Tech India Ltd. as a comparable company. We also notice from the objections raised before the DRP that there was only a broad contention raised against the inclusion of Informed Tech India Ltd. as a comparable company. Since Informed Tech India Ltd. prima facie does not satisfy the filter adopted by the TPO himself, in the interest of justice and equity, we are of the view that the matter is to be re-examined by the TPO. The assessee shall raise all the contentions before the TPO and shall place necessary evidence to prove its case that Informed Tech India Ltd. should not be adopted as a comparable company. Hence Ground No. 7.1 of the assessee is allowed for statistical purposes. Deduction u/s 10B - Held that:- If section 10B is denied for the reason that units are not having necessary approval from the appropriate authority, the authorities are duty bound to consider the alternative claim of deduction u/s 10A of the I.T.Act and grant the same, if the conditions are satisfied as prescribed u/s 10A of the I.T.Act. The alternative claim of the assessee that it should be granted deduction u/s 10A was not considered by the Assessing Officer nor the DRP in its directions. Therefore, we deem it appropriate to remit the issue to the Assessing Officer for fresh consideration. The Assessing Officer shall follow the dictum laid down by the above mentioned judicial pronouncements and shall grant deduction u/s 10A provided the conditions are satisfied by the assessee’s unit as prescribed u/s 10A. Operating profit margin of the assessee should also include the premium on forward exchange contract - Held that:- The Tribunal in the case of Ambattur Clothing Ltd. v. JCIT (2016 (1) TMI 133 - ITAT CHENNAI) had held that when premium on forward exchange contract is on account of proximity with the export turnover, the same should be taken as part of the operating profit margin. Since the DRP has not considered the specific plea of the assessee, in the interest of justice and equity, the matter needs to be considered by the TPO. The assessee is directed to place necessary evidence before the TPO to claim that premium on forward exchange contract is earned in the normal course of the business to hedge against fluctuations in foreign currency exchange rate and gains from such contract has to be considered while computing the PLI in the international transaction with the AE.
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2018 (9) TMI 423
Unexplained cash deposits - Held that:- AO has not accepted that the source of these cash deposits which are from the drawings of ₹ 3,00,000/-. CIT(A) was in agreement with the assessing officer that drawing of ₹ 3,00,000/- will be utilized by the assessee for his household expenditure. The assessee will not manage the household expenses for ₹ 40,000/- for one year and that the assessee has not furnished reconciliation statement showing deposits are from the drawings, the CIT(A) restricted the addition to ₹ 2,60,440/- and partly allowed the appeal of the assessee. A.R. reiterated the submission made before the CIT(A). He could not bring any cogent and relevant material on record to show that the deposits in the bank account were out of earlier drawings made by the assessee before depositing the same in the bank account. We, therefore, confirm the order of the CIT(A) and dismiss this ground of appeal of the assessee. TDS u/s 194C - incurred expenditure under the head “wages” - addition u/s 40(a)(ia) - Held that:- Copy of audited financial statement of M/s. Sumasanka Sponge Iron (P) Ltd., to show that no income accrued to that company out of payment of wages by the assessee through the said company. The assessee also filed before us a copy of the wage register of M/s. Sumasanka Sponge Iron (P) Ltd and and copy of ledger account of M/s. Sumasanka Sponge Iron (P) Ltd to show that the wages of labours were actually paid to the said company and no income of M/s. Sumasanka Sponge Iron (P) Ltd was involved in this transaction. Assessee is not liable to deduct ITDS on the amounts which are purely in the nature of reimbursement to the payee u/s.194C of the Act when the payment to the payee does not involve any taxable income of the payee. We, therefore, set aside the orders of lower authorities and restore the matter back to the file of the Assessing Officer for proper verification of the nature of payment made by the assessee to M/s. Sumasanka Sponge Iron (P) Ltd and re-adjudicate the issue afresh in accordance with law keeping in view the discussion made hereinabove. Business promotion expenses - Held that:- No supporting bills and vouchers were furnished by the assessee. Therefore, we confirm the orders of the lower authorities and dismiss this ground of appeal of the assessee.
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2018 (9) TMI 422
Disallowance made u/s 14A - assessee company made suo moto disallowance - Held that:- The assessee’s total income for the year under consideration has been computed under normal provisions of the Act since the tax payable under 115JB was less then tax payable under normal provisions of the Act. This fact is very much evident from the assessment order itself. Hence the plea of the learned AR that the assessee had paid tax on Long Term Capital Gain under section 115JB does not come to the rescue of the assessee. Only the dividend income had suffered dividend distribution tax u/s 115O and that too in the hands of dividend distributing company and not in the hands of the assessee herein. The assessee company having received dividend of ₹ 12,43,558/- had not suffered any tax thereon and had claimed the same as exempt in its return of income which is in accordance with the provisions of the Act. Hence the preliminary question reframed herein above that the provisions of Section 14A per se are not applicable to the assessee is decided against the assessee. With regard to the computation of disallowance u/s 14A read with Rule 8D of the rules, we find from the balance sheet of the assessee that the assessee has got sufficient own funds of ₹ 12.93 crores whereas investments made by the assessee was only ₹ 7.54 crores. Hence it can be safely presumed that the investments were made only out of the own funds of the assessee - As relying on Reliance Utilities & Power Ltd [2009 (1) TMI 4 - BOMBAY HIGH COURT] no disallowance under the second limb of section 8D(2)(ii) towards interest is required to be made in the instant case. With regard to the disallowance made under Rule 8D(2)(iii) of the rules amounting to ₹ 3,26,941/-, we find that the Co-ordinate Bench of this tribunal in the case of REI Agro Ltd. reported in [2013 (9) TMI 156 - ITAT KOLKATA] had held that only those investments which had resulted dividend income should be considered for the purpose of computing disallowance thereon. Accordingly, we direct the Ld. A.O. to recompute the disallowance to be made under Rule 8D(2)(iii) Addition on account of Portfolio Management Services (PMS) fees paid as not eligible for deduction while computing the capital gains of the assessee - Held that:- As relying on KRA Holding & Trading Pvt. Ltd. vs DCIT [2011 (5) TMI 498 ITAT Pune] PMS fees paid by the assessee in the sum of ₹ 18,93,788/- is eligible for deduction while computing Short Term Capital Gain. Accordingly, ground raised by the assessee is allowed.
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2018 (9) TMI 421
Addition of sales promotion expenses - vendor is absconding and is untraceable - Held that:- Out of the four bills claimed to be raised by the said supplier on the assessee, only the sale to the extent of two bills was disclosed by it in the relevant VAT return. Even the bill nos. declared in the said VAT return were not matching with the bill nos. raised on the assessee. The assessee also could not furnish the list of all 246 policy holders to whom the silver coins were claimed to be given as part of business promotion. The assessee could submit a list of only 90 of such persons and the A. O. found certain anomalies and infirmities even in the said list. All these adverse findings, CIT(A) allowed the claim of the assessee to the extent of ₹ 9, 04, 354/- and as rightly pointed out by the learned DR from the relevant potion of the impugned order, the said relief was also given by him under the wrong impression that the A. O. himself had allowed relief to the assessee to that extent. The assessee has already got reasonable relief from the Ld. CIT(A) on this issue and there is no case for allowing any further relief to the assessee. Accordingly uphold the impugned order of the Ld. CIT(A) on this issue and dismiss this appeal filed by the assessee. -Decided against assessee.
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2018 (9) TMI 420
Penalty u/s. 271(1)(c) - defective notice - Held that:- We find the notice dt. 22-11-2013 issued u/s. 274 r.w.s 271 of the Act does not specify the charge of offence committed by the assessee viz whether had concealed the particulars of income or had furnished inaccurate particulars of income. Hence the said notice is to be held as defective. - Decided in favour of assessee
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2018 (9) TMI 419
Assessment u/s 153A - AO estimated commission on the basis of statement of the assessee wherein it was stated that the commission received was Re. 1 per kg - Held that:- There is no material determining the commission at Re. 1 per kg., particularly when the assessee has explained the basis of the figure of 0. 50 paise per kg which has not been shown to be incorrect and is also higher than admitted to have been paid by Shri Pawan Dua. A surrender was made by the assessee vide letter dated 24. 6. 2014 on the basis of the entire seized documents and the statement was recorded to said effect u/s 132(4). The amount as surrendered by the assessee stands duly offered and assessed to tax. There is no retraction to the said extent. Accept the claim that in absence of any material or evidence to reject the basis given by the assessee of 0.50 paisa per kg, the addition made by adopting the commission rate of Re. 1 per kg. is untenable and, therefore, liable to be deleted. Violation of principles of natural justice - Addition on account of commission income from MCX dabba trading - Not allowing the assessee to cross examine the witness - Held that:- Not allowing the assessee to cross examine the witness by the adjudicating authority, though statements of those witnesses were made the basis of the impugned order, amounted to a serious lapse which makes the order a nullity as it amounted to violation of principles of natural justice. Also in the case of Kishanichand Chellaram v. CIT [1980 (9) TMI 3 - SUPREME COURT] it was held that any material collected at the back of the assessee and the assessee not being confronted with the same and no opportunity having been given the assessee to cross-examine, such material cannot be relied upon against the assessee. Addition to be deleted - Decided in favour of assessee Addition on account of unexplained receipts in respect of commission received from Sh. Sushil Kumar - Held that:- Income from commission from MCX trading has been declared and assessed separately and having so done, in our opinion there is no material to independently tax the figure of ₹ 10 lacs. There is no material brought on record to state that this sum ₹ 10 lacs was received over and above the figure of commission of MCX trading separately estimated by the revenue. This estimation is done on the basis of pages 1 to 10, 13 and 15 of Annexure A-27 (Exhibit 5 from Flat 1-B Pocket-A, Near Satyawati College, Ashok Vihar, New Delhi and statement of Sh. Sushi Kumar recorded u/s 132(4) of the Act. It is noted that that the assessee, on the said basis and documents, had estimated the commission from MCX trading. Thus, once the said documents have already been considered as part of the estimation of commission, no separate addition is called for. - Decided in favour of assessee
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2018 (9) TMI 418
Penalty involving proceedings u/s. 271(1)(c) - defective notice - Held that:- CIT(A) has deleted the impugned penalty on account of the fact that Assessing Officer’s show cause notice initiating the penal proceedings in motion did not specify as to whether the assessee had concealed or furnished inaccurate particulars of income of its taxable income so far as the quantum issue of share capital / premium issue of ₹1,54,78,000 is concerned. We find the instant issue to be no more res integra co-ordinate bench’s decision in Jeetmal Choraria [2017 (12) TMI 883 - ITAT, KOLKATA] wherein held the show cause notice issued in the present case u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income - Decided in favour of assessee.
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2018 (9) TMI 417
Addition made towards share application money - assessments u/s 153A - unabated / concluded assessment - whether the addition could be framed u/s 153A in respect of a concluded proceeding without the existence of any incriminating materials found in the course of search? - Held that:- It is not in dispute that the assessment for the Asst Year 2010-11 was originally completed u/s 143(1) and the time limit for issuance of notice u/s 143(2) of the Act had expired and hence it falls under concluded proceeding as on the date of search. The legislature does not differentiate whether the assessments originally were framed u/s 143(1) or 143(3) or 147. Hence unless there is any incriminating material found during the course of search relatable to such concluded year, the statute does not confer any power on the AO to disturb the findings given thereon and income determined thereon, as finality had already been reached thereon, and such proceeding was not pending on the date of search to get itself abated. In respect of unabated assessments, the legislature had conferred powers on the AO to just follow the assessments already concluded unless there is an incriminating material found in the search to disturb the said concluded assessment. In our considered opinion, this would be the correct understanding of the provisions of section 153A as otherwise, the necessity of bifurcation of abated and unabated assessments in section 153A would become redundant and would lose its relevance. Hence the arguments advanced by the ld DR in this regard deserves to be dismissed. As there was absolutely no incriminating material found during the course of search in the instant case with regard to the issue of share capital, share premium except understanding the discovery of modus operandi of raising bogus share capital based on the certain statements recorded from entry operators in some cases in West Bengal. Since the issue is addressed on preliminary ground of absence of incriminating materials, we refrain to give our findings on the merits of the addition u/s 68 of the Act for the Asst Year 2010-11 - Decided in favour of assessee.
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2018 (9) TMI 416
Addition of sale proceeds of the shares as undisclosed income of the assessee u/s 68 - rejecting the claim of the assessee exemption u/s 10(38) - undisclosed expenditure u/s 69C in respect of purported payments made to Share Brokers/Entry Operators - Held that:- There is absolutely no adverse material to implicate the assessee to the entire gamut of unfounded/unwarranted allegations leveled by the AO against the assessee, which in our considered opinion has no legs to stand and therefore has to fall. DR could not controvert the facts which are supported with material evidences furnished by the assessee which are on record and could only rely on the orders of the AO/CIT(A). Allegations that the assessee/brokers got involved in price rigging/manipulation of shares must therefore consequently fail. Assessee had furnished all relevant evidence in the form of bills, contract notes, demat statement and bank account to prove the genuineness of the transactions relevant to the purchase and sale of shares resulting in long term capital gain. Neither these evidences were found by the AO nor by the ld. CIT(A) to be false or fictitious or bogus nor the AO had issued any notice to the brokers for confirmation - claim of the assessee that the transactions of the assessee were genuine and the authorities below was not justified in rejecting the claim of the assessee exempted u/s 10(38) of the Act on the basis of suspicion, surmises and conjectures. It is to be kept in mind that suspicion how so ever strong, cannot partake the character of legal evidence. - Decided in favour of assessee
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2018 (9) TMI 415
Accrual of income - Addition on account of interest income in relation to advances classified as Non-Performing Advances (NPA)- mercantile basis OR receipt basis - Held that:- When the account becoming NPA is not disputed by the revenue, the recognition of income is to be done only on receipt basis which is in consonance with the real income theory. In these circumstances and respectfully following the decisions of Hon’ble Delhi High Court in COMMISSIONER OF INCOME TAX VERSUS VASISTH CHAY VYAPAR LTD. & OTHERS[2010 (11) TMI 88 - DELHI HIGH COURT]] and various other decisions referred to by the ld AR and in view of this issue being already decided in favour of the assessee by this tribunal in its own case supra, we hold that the interest income on NPA accounts should not be assessed on mercantile basis and the same is to be taxed only on receipt basis. Disallowance of lease rentals u/s 40(a)(ia) - payee had included the subject mentioned receipt as its income - Held that:- We find that the assessee had furnished the certificate from a chartered accountant in the prescribed form as mandated in first proviso to section 201(1) of the Act to prove that the payee had included the subject mentioned receipt as its income and had paid taxes thereon. Hence by application of second proviso to section 40(a)(ia) and 201(1) of the Act, which has been held to be retrospective in operation in the case of Principal CIT vs Tirupati Construction [2016 (8) TMI 1310 - CALCUTTA HIGH COURT]], we hold that no disallowance u/s 40(a)(ia) of the Act in the hands of the payer assessee could be made. Disallowance of Payment made to employees in relation to unfunded pension - Held that:- There was no contribution made by the assessee bank to any of the funds. The payments were directly made to the employees of the bank and subjected to deduction of tax at source. The moment the payments are made to those employees, the assessee had lost complete control over those funds and it had not come back to the assessee in any manner whatsoever either by creation of any fund managed by it or otherwise. From the approval letter of the competent authority of the assessee bank, we find that these payments were made only to meet the increased cost of living of the employees and hence it is effectively a payment made as a welfare measure . Hence the provisions of section 40A(9) as heavily relied upon by the ld DR is not at all applicable to the facts of the instant case - no hesitation in directing the ld AO to grant deduction of the sum of ₹ 4.09 crores in the instant case to the assessee Deduction on account of write off of unavailed service tax credit - Held that:- The assessee had only postponed the claim of deduction by showing at CENVAT receivable as an asset in its balance sheet on the bonafide belief that the same could be utilized against the output service tax liability of the bank. When the same remains unutilized over a period of time and going by the future prospects of the business wherein the said credit would not be utilized in full, the assessee chose to write off the same in part during the year under consideration based on some rationale and proper workings, which in our considered opinion, is in order and cannot be questioned by the revenue. Accordingly, we direct the ld AO to grant deduction for the same Deduction of provision for bad and doubtful debts u/s 36(1)(viia)(b) - Held that:- while computing the statutory deduction under Clause (viia) of Sub- section 1 of Section 36 of the Income Tax Act, 1961, the total income would be the business income of the assessee before deducting the deduction under this Clause and deductions under Chapter 6A of the Income Tax Act, 1961. Therefore, the brought forward losses would not be deducted while computing the total income for the purpose of Section 36(1)(viia). Since the deduction is available only for computing the business income under the clause, therefore the total income also refers the income of the assessee from profit and gain from a business and shall not include the income other than the business income - final order of the ld AO granting relief to the assessee does not call for any interference. MAT - applicability of provisions of Section 115JB for the assessee bank - Held that:- the provisions of section 115JB of the Act are not applicable to an assessee unless it is registered as a company under the Companies Act, 1956 and prepares its financial stated in accordance with the provisions of Section 211 and Part II and Part III of Schedule VI of the Companies Act, 1956. Thus the provisions of section 115JB of the act are not applicable to the assessee bank for the year under appeal. Refund of TDS as deducted from interest paid to its head office and other overseas branches - Held that:- Since the issue is already settled in favour of the assessee, the ld AO has to give refund of the said TDS. We are not inclined to accept the arguments of the revenue that the said refund is to be collected from the TDS officer and not from the assessing officer. Accordingly, we direct the ld AO to grant refund of TDS to the assessee with immediate effect.
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2018 (9) TMI 414
Addition made towards share capital u/s 68 - treating the entire share capital and share premium as bogus - the common director of 5 share subscribing companies was not produced for examination - Held that:- Section 68 provides that if any sum found credited in the year in respect of which the assessee fails to explain the nature and source shall be assessed as its income of the previous year in which the same was received. In the facts of the present case, both the nature & source of the share capital received with premium were fully explained by the assessee. The assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants. PAN details, bank account statements, audited financial statements and Income Tax acknowledgments were placed before the AO. All the three conditions as required u/s. 68 i.e. the identity, creditworthiness and genuineness of the transaction were placed before the AO and the onus shifted to the ld AO to disprove the materials placed before him. Without doing so, the addition made by the ld AO is based on conjectures and surmises cannot be justified - no addition was warranted under Section 68 - Decided in favour of assessee Disallowance u/s 14A - Held that:- We hold that the provisions of section 14A of the Act could be applied only when there is a claim of exempt income by the assessee. Hence we find no infirmity in the order of the ld CITA in this regard. Accordingly, the Ground No. 2 raised by the revenue is dismissed.
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2018 (9) TMI 413
Determination of the arms length price of international transaction of business support service - Held that:- As during the course of proceedings before the ld TPO assessee has shown the copies of the email which shows that certain services are received however same are only sample emails which are stated by the assessee as proof of receipt of the services. The emails are dated 16.08.2012, 13.06.2010, 02.05.2012, 07.05.2013, 14.06.2013. Some of the emails are not pertaining to the impugned assessment year and from these emails it is for the assessee to show before the ld TPO that services have been received by the assessee - the additional evidences filed by the assessee before the ld DRP also contains certain emails which have not been considered by the lower authorities. These are also required to be considered - referring to history of determination of ALP by the ld AO in case of the assessee for earlier and subsequent years and in the interest of justice, it is necessary that the issue with respect to determination of the ALP of the international transaction of business support services and technical service fees are remitted back to the file of the ld Transfer Pricing Officer for determination of their ALP. with respect to the royalty payment of ₹ 42055227/- ALP of which determined by ld TPO of ₹ 4715664/-, we also remit the issue back to the file of the ld AO with a direction to the assessee to show how payment of royalty is inextricably linked with the manufacturing activities and why it ought to be aggregated and benchmarked together with other international transaction under transactional net margin method.
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2018 (9) TMI 412
Disallowance on account of difference between the depreciation claimed and depreciation allowed on the basis of amortization for the remaining part of the concessionaire agreement - Held that:- A close reading of the CBDT Circular No. 09/2014 dated 23.04.2014 shows that deduction claimed out of initial cost of development of infrastructure, facility of roads/highway under BOT projects in earlier year may be deducted from the initial cost of infrastructure facility of roads/highway and the cost so reduced shall be amortized equally over the remaining period of the toll concessionaire agreement. This effectively means that the reduced cost is to be amortized equally over the remaining period. There is nothing in the Circular to suggest and the same shall be applicable on retrospective basis. In view thereof, the action of the AO in applying the Circular retrospectively is not in order. The disallowance of ₹ 23, 85, 71, 095/- made by the AO on account of difference between the depreciation claimed at ₹ 42. 48. 04. 025/- and depreciation allowed on the basis of amortization for the remaining part of the concessionaire agreement i. e. from 01. 04. 2011 to 24. 03. 2034 at ₹ 18, 62, 32, 930/- is directed to be deleted. These grounds of appeal are ruled in favour of the appellant.
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2018 (9) TMI 411
Justification to apply the profit rate of 8% in view of section 44AD - rejection of books of accounts - Held that:- All the books of account are maintained in ordinary course of business, but the same could not be produced before the AO for the reason that the accounts books were with the lady accountant, who had gone on long leave owing to her pregnancy. This reason, however, is not appealing to us, as the assessee has also failed to attend various dates given by first appellate authority and to produce the books of accounts before him. The application of section 44AD by the authorities below does not appear proper keeping in view the volume of gross receipts and the audit reports filed by the assessee before the AO. The Authorities below, therefore, were also not justified to apply the profit rate of 8% in view of section 44AD without examining the previous and subsequent history of the appellant and without referring to any comparable case in the line of assessee’s business. Best judgment assessment should not be based on simple presumption, but should have a reasonable basis, as held in several decisions - restore the matter back to the file of Assessing Officer for passing the assessment order de-novo after giving one more opportunity to the assessee of being heard - Appeal is allowed for statistical purposes.
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2018 (9) TMI 410
Reopening of assessment - no notice u/s 148 has been received by assessee - while calculating the amount of capital gain, no benefit of cost of improvement etc., was considered - Held that:- Assessee has not exercised such an option because no return under section 148 have been filed. The facts of the case noted in the assessment order shows that A.O. was having credible information that assessee sold the property for ₹ 10 lakhs and for stamp duty purpose it is valued at ₹ 12,18,000/-. Therefore, the capital gain shall have to be calculated on sale of immovable property as per provisions of Section 50C. There were sufficient tangible material available with the A.O. on record to initiate reassessment proceedings against the assessee because assessee has not declared capital gains for the purpose of taxation on sale of the property. It may also be noted here that before Ld. CIT(A) assessee has raised a different ground of appeal but in the ground of appeal before Tribunal, assessee challenged the order of the A.O. on the ground that no notice under section 148 was received by the assessee. However, no evidence have been produced in respect of such ground of appeal and even Learned Counsel for the Assessee did not argue on the same. - Decided against assessee
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2018 (9) TMI 409
Stay on demand - Penalty u/s 271(1)(c) - Held that:- Tribunal vide Order dated 23.02.2018 subject to direction to both the parties to argue both the appeals on priority basis. It was also directed that both the parties shall not seek any adjournment in these appeals on 13.03.2018. However, the assessee has sought adjournment on 13.03.2018 and thereafter, continuously has been making request for adjournment. It, therefore, appears that assessee is not interested in arguing the appeals as well as stay application. Since the Order of the Tribunal is not complied with and the disposal of appeals are delayed on the default of the assessee because assessee has been seeking adjournment continuously, therefore, in our view, it is not a fit case for grant of stay. We, accordingly, vacate the interim order dated 23.02.2018 and dismiss the stay application.
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2018 (9) TMI 408
Entitled to deduction u/s. 80P(2)(i)(a) - Whether the interest earned on investment made with sub-treasury and Banks is entitled for deduction u/s. 80P(2)(i)(a)? - Held that:- As in the case of Chirakkal Service Co-operative Society [2016 (4) TMI 826 - KERALA HIGH COURT] the assessee is entitled to deduction u/s. 80P(2) of the I.T. Act and directed the Assessing Officer to allow deduction u/s. 80P of the Act. Assessee was entitled to deduction u/s 80P(2)(a)(i) for the interest received on investment made with sub-treasuries and banks - Held that:- Interest earned from investment with sub-treasuries and Banks was part of the banking activities, and therefore, the said income was entitled to deduction u/s 80P(2)(a)(i). Hence, Padne Service Co-operative Bank Limited v. ITO (I2018 (1) TMI 602 - ITAT COCHIN) we hold that the CIT(A) is justified in directing the A.O. to grant deduction u/s 80P(2)(a)(i) of the I.T. Act for the interest earned on the investments made with sub-treasuries and Banks. It is ordered accordingly.
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2018 (9) TMI 407
Entitlement to the claim of deduction u/s 80P(2)(a)(i) - no return filed - Held that:- It is undisputed that the assessee has not filed return of income for the relevant assessment year. The Hon’ble jurisdictional High Court in the case of The Chirakkal Service Co-operative Bank Ltd. & Ors. (2016 (4) TMI 826 - KERALA HIGH COURT), had categorically held that no deduction u/s 80P shall be allowed when no return of income has been filed for a particular assessment year. Since the assessee has not filed the return of income for the relevant assessment year, deduction u/s 80P(2) of the I. T. Act cannot be granted - Decided against assessee.
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2018 (9) TMI 406
Depreciation claimed at the rate of 60% on design software comprising of drawings and designs, engineering and development of special purpose custom built hydraulic cylinders and excavator equipments - Held that:- The claim of depreciation was on software in the nature of design and assembly drawings of hydraulic cylinders, bill of materials and other components. Depreciation was claimed by the assessee on the opening written down value of this asset. Acquisition of the said asset was in financial year 2011-12 relevant to assessment year 2012-2013. The question whether such asset was eligible for depreciation available to "computer and computer softwares" had come up before this Tribunal in assessee’s own case for assessment year 2012-2013 wherein held Once the Ld.CIT(A) has himself held the purchase made by the assessee company is a design software, we wonder as to how it cannot be treated as a computer software. The design software embedded in CD containing the design has to be necessarily treated as computer software and the same is clarified in Note 7 of the new Appendix-1 of the Rules which states that “computer software” means any computer program recorded on any disk, tape, perforated media or other information storage device. Further as per the Rule, the rates prescribed for computer software is 60% for the relevant assessment year - Decided in favour of assessee.
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2018 (9) TMI 405
Validity of reopening of assessment - provisions of section 153C were not invoked against the assessee - Held that:- AO initiated reassessment proceedings u/s 147 of the Act on the basis of information received based on material qua the assessee, found in the search on the Santosh Group of Institutions, Ghaziabad. Respectfully following ‘Sushil Gaur’ (2017 (8) TMI 482 - ITAT DELHI) and ‘Arun Kapur’ (2012 (6) TMI 403 - ITAT AMRITSAR) and ‘Rajat Shubra Chatterji’ (2016 (7) TMI 258 - ITAT DELHI), hold that since in the present case, admittedly, the assessee, with regard to whom incriminating material was found and seized, as per the reasons recorded u/s 147 in the assessee’s case, from which material, it came out that a sum of ₹ 21 lac had been paid by the assessee on 03.03.2006 to Santosh Medical College, Ghaziabad, a part of the Santosh Group of Insititutions, Ghaziabad, on whom, a search was conducted on 27.06.2013, and since the assessee was not assessed u/s 153C of the Act, which provision specifically excludes the operation of section 147 of the Act, the AO erred in invoking the provisions of section 147 of the Act instead of those of section 153C, thereby illegally rendering the provisions of section 153C as redundant. Thus the reasons recorded u/s 147 of the Act and all proceedings pursuant thereto, culminating in the order under appeal, are quashed. - Decided in favour of assessee
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2018 (9) TMI 404
Disallowance of provision for Long Term Incentive Plan ('LTIP') Payments - Held that:- The explanations of ld. AR are vague and not satisfactory. Whereas ld. DR on the other hand submitted that the income tax department is deprived to verify and examine these documents and to form an opinion on the disputed issue. We find strength in the arguments of ld. DR as these documents are filed for the first time before the Tribunal as envisaged by ld AR. Therefore, we in the interest of substantial justice, are of the opinion that this disputed issue shall be restored to the file of AO along with the documents where the AO shall verify and examine and adjudicate the issue. Non-grant of credit in respect of Tax Deducted at Source ('TDS') and advance tax paid - Held that:- The assessee has raised the ground in respect of non-grant of credit of TDS, we found that the CIT(A) having dealt on this issue has directed to AO to consider the assessee’s claim for grant of TDS credit after due verification as per provisions of law. Therefore, we are of the opinion that the directions of the CIT(A) are acceptable and we uphold the same and dismiss this ground of appeal of the assessee. Addition on account of penalty paid to Department of Telecommunication(DoT) - Held that:- As decided in in the case of Vodafone Essar Digilink Ltd.[2018 (6) TMI 1029 - ITAT DELHI] gone through the relevant provisions of the Indian Telegraphs Act, 1885 and find that anomalies and irregularities in CIF and CAF are not covered under any of the specific provisions of the Indian Telegraphs Act. Rather, such penalties were imposed for noncompliance with the contractual obligations under the Licence agreement. As the payment by the assessee is not for an offence, nor is it prohibited by law, the same being failure to comply with the contractual obligations, cannot fall within the domain of Explanation 1 to section 37(1) of the Act. Similar issue came up for consideration before the Kolkata Bench of the Tribunal in the case of Vodafone East Ltd. [2015 (9) TMI 1358 - ITAT KOLKATA] Disallowance of proportionate interest debited to P &L A/c - Held that:- When the query was raised to the ld. AR whether such disallowance was made by the AO in earlier years or any scrutiny order was passed, the ld. AR could not substantiate with any evidence. We found this issue needs to be re-examined and verified by the AO on material submitted by the assessee. Accordingly, in the interest of substantial justice, we remit this issue to the file of AO to adjudicate afresh
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2018 (9) TMI 403
Valuation of the shares - valuation method provided in Rule 11UA(2)(a) - addition by rejecting the valuation done as per Discounted Cash Flow Method - The AO observed that the assessee raised loans from the above associate concerns and has converted them into shares application/premium money. - Held that:- there cannot be any scope of introduction of assessee’s unaccounted income through allotment of shares at unreasonably high priced shares. Therefore, such observations is not relevant and a mere suspicion. It appears that the authorities below have ignored Explanation (a) below S. 56(2)(viib). The said Explanation provides that the fair market value of the shares shall be the value-(i) as may be determined in accordance with such method as may be prescribed i.e. u/r 11UA; or (ii) as may be substantiated by the company to the satisfaction of the Assessing Officer, based on the value, on the date of issue of shares, of its assets, including intangible assets being goodwill, know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature, whichever is higher. Accordingly, the value computed under the Rule at ₹ 95.90 per share is higher than ₹ 65.31 or ₹ 32.76 per share and therefore, the higher valuation has to be adopted. Moreover, it is only the Explanation (a)(ii) speaks of the satisfaction of the AO but there appears no such condition in the Explanation (a)(i) which therefore AO is not permitted to interfere in the valuation, once done in accordance with the method prescribed in the Rule 11UA(2). No justification behind rejecting the declared valuation of the shares and in the impugned addition made by the AO but partly sustained by the CIT(A), which is hereby deleted.- Appeal of the assessee is partly allowed
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Customs
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2018 (9) TMI 400
Refund of SAD - N/N. 102/2007-CUS dated 14th September, 2007 - whether limitation period specified under Section 27 of the Act would apply to claims for refund made under the notification of 2007? - Held that:- Issue notice on the special leave petition, as also on the prayer for interim relief - Tag with SLP (C) No. 1507/2017.
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2018 (9) TMI 399
Penalty u/s 114 of CA - Smuggling - Red Sanders - allegation pertains to smuggling of red sanders under the cover of magnesium sulphate in HDPE bags - whether there is any evidence either before the Original Authority or before the Tribunal to link the appellants with the smuggling of red sanders? Held that:- The Commissioner of Customs noted that the said Mr.V. Sundaramoorthy and the said Mr.Hemadri entered into a conspiracy and arranged a genuine export consignment to smuggle red sander logs out of India through the said consignment, for which, the said Mr.Hemadri approached the said Mr.V.Sundaramoorthy of the said M/s.G.Masilamani, CHA for carrying out the work of clearance in Chennai and had given them all the documents, which were in the name of the said M/s.A.S.P.Senna Traders namely the IEC holder. It was further noted from the surveyor's report that the container was tampered without disturbing the liner and the customs seal and a part of the declared cargo was de-stuffed and replaced with red sanders. Further, from the statement, it emerged that the said Mr.P.Ashok Kumar was working for one M/s.Dravidian Logistics, CHA and he is a close friend of the said Mr.Hemadri and that the appellants or the others, who had given their statements, did not plead any ignorance of the transaction nor ignorance of the persons, whose names have been mentioned there. Thus, the complexity and the connivance among persons, which include the appellants, had been clearly brought out in the order passed by the Commissioner of Customs. Thus, there was abundant evidence available, which was considered by the Original Authority and a finding has been rendered as to the complexity and the modus operandi adopted by the appellants for the purpose of illegal export of red sanders. Penalty upheld - appeal dismissed - decided against Appellant.
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2018 (9) TMI 398
Refund of the Terminal excise duty - duty paid for goods supplied to Export Oriented Units - Deemed export or not - rejection on the ground that refund of TED cannot be granted where ab initio exemption is available from payment of excise duty - Held that:- It is not in dispute that the petitioner supplied goods to the EOU at the relevant time, its entitlement would be as defined in terms of the then existing policy i.e. refund in terms of [Para] 8.2 to 8.5 of the policy. Any subsequent amendment made to the existing policy liberalizing the Scheme and exempting payment of TED cannot be a reason to deny the refund of payment already made by the petitioner. Delhi High Court in Kandoi Metal Powders Mfg. Co. Pvt. Ltd’s case [2014 (2) TMI 773 - DELHI HIGH COURT], has held that once the supply of goods fall within the category of deemed export, the unit would be entitled to refund of TED. Refund allowed - petition allowed - decided in favor of petitioner.
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2018 (9) TMI 397
Penalty u/s 112(a) of Customs Act, 1962 - detection of ‘mobile memory cards and adaptors’ in Baggage - Smuggling - Baggage Rules - Held that:- The appellant was neither a passenger nor was he present at the time of interception of the ‘memory cards and adaptors’. He, however, operates a business in trading of similar items and had some business relationship with one of the domestic passenger - admittedly, the statement of Jitendra Sharma was entirely retracted and that a plausible explanation to exact revenge by implicating the appellant has also been suggested. Even if the statements are exculpatory and the retracted statement is discounted, the corroborative evidence in the form of the letter dated 20th August 2007 from the travel agent cannot be discounted. It is clearly mentioned therein that the appellant is a regular customer who used to book tickets on phone and used to send Mohamed Sohail to collect the tickets. There are no flaws in the finding of the original authority that a conclusion can be derived from the contents of a statement, retracted though, in conjunction with material evidence of purchase of the tickets that were utilized by others whose complicity in the smuggling has not been controverted - appeal dismissed.
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2018 (9) TMI 380
Refund of CVD paid - duty was paid under protest - rejection of refund of duty with interest on the ground that it is barred by limitation - Section 27 of the Customs Act, 1962 - petitioner made an application for refund under Section 27 of the Customs Act, 1962 only on 6-5-2015 i.e. beyond the period of one year from the date of the order of CESTAT namely 9-5-2013. Held that:- Under Section 11B, the application for refund of duty of excise must be made “before the expiry of one year from the relevant date.” “Relevant date” is defined in Explanation (B)(ec). Thus, the application for refund must be made before the expiry of one year from the date of the judgment, decree, order or direction of the authority, Tribunal or Court. What is important and what is different in Section 11B of the Central Excise Act from Section 27 of the Customs Act is that Section 11B does not contain a provision similar to sub-section (1B) of Section 27 of the Customs Act, 1962 which opens with the words “Save as otherwise provided in this section”. Thus, Explanation (B) including clause (ec) thereof is not subject to the proviso. Under Section 27 of the Customs Act, sub-section (1B) is subject to the second proviso to sub-section (1). The respondents’ apprehension that if the petitioner’s submission is accepted, there would be no period of limitation is not well founded. An application for refund must be made within a reasonable period of time. What is reasonable a period of time would depend on the facts of each case. This apprehension in any event cannot be the basis of denying a just claim on the ground of limitation. Refund allowed - petition allowed - decided in favor of petitioner.
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Corporate Laws
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2018 (9) TMI 402
Properties situated in Aamby Valley City not in a position to be auctioned - no response with regard to the notice inviting tender - respondent-contemnor submitted that it has entered into negotiation with M/s. Sai Rydam Realtors Pvt. Ltd. and M/s. Prime Downtown Estates Pvt. Ltd. Mr. as rep resented by Paras Kuhad - Held that:- As accepted by Mr. Kuhad that a Demand Draft amounting to ₹ 99 crores has been handed over to Mr. Pratap Venugopal, learned counsel assisting Mr. Arvind P. Datar, learned senior counsel appearing for SEBI. Be it noted, the agreed amount is ₹ 982.80 crores. He further submits that a sum of ₹ 200 crores shall be deposited in the SEBI-Sahara Refund Account on or before 24.07.2018 and another sum of ₹ 200 crores shall be deposited on or before 16.08.2018. The balance amount shall be deposited on or before 12.09.2018. Needless to say, the TDS and other applicable taxes can be deducted as per rules. Be it clarified that if the abovementioned companies violate the time limit indicated above, they shall be liable for contempt of this Court and this Court may think of sending all the Directors to jail. Needless to say, the amount deposited shall be forfeited. Once we have directed for transaction to take place, no one shall create any obstruction in the same. As far as maintenance is concerned it is submitted by Mr. Singh that the revenue generating activities should be allowed. Mr. Khambatta and Mr. Vaidyanathan, learned senior counsel appearing for the Official Liquidator / Court Receiver have no objection to this request. At this stage, another aspect needs to be noted. We have been apprised by Mr. Datar that a hotel by the name ‘Plaza Hotel’ in New York has already been sold. The respondent-contemnor shall file an affidavit explaining the basis for the said sale and as to how the sale proceeds have been utilised - the Receiver and the Official Liquidator are discharged.
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2018 (9) TMI 401
Rectification of the financial statement of return - Held that:- Proviso to clause (2) of Section 131 show that the Tribunal is to give notice to the Central government and the Income-Tax Authority. Clause (3) therein makes it clear that the Central Government is empowered to make rules as to the application of the provisions of the Act in relation to revised financial statement or a revised director’s report and making different provisions according to which previous financial statements or reports are replaced or are supplemented by the documents and to make further provisions with respect to the functions of the company’s auditor. It is informed that no such Rule has been framed empowering the Regional Director, Southern Region, Chennai and decide such issue. In the present case, we find that the Tribunal not only failed to notice the aforesaid provision but on wrong presumption forfeited the right of the appellant to file the reply, which was uncalled for. We hope and trust in future the Tribunal will not act in such manner by forfeiting the right of a person to file reply. We set aside the impugned order and allow the respondent/applicant to implead the Central Government, through its Secretary, Ministry of Corporate Affairs, 5th Floor, ‘A’ Wing, Shastri Bhawan, Dr. R. P. Road, New Delhi, as party-respondent in the petition. If such an application for impleadment is filed, the Tribunal will allow prayer for impleadment it and after notice to the Central Government and other necessary parties will pass appropriate order in accordance with law.
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Insolvency & Bankruptcy
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2018 (9) TMI 430
Corporate Insolvency process - NCLT ultimately found ample evidence of default in the debt that was owed- NCALT set-aside the aforesaid judgment of the NCLT on the ground that the mandatory requirement of Section 7(3)(a), which included the filling up of a statutory form not having been done, and the application being made by an advocate and not by the party in person, allowed the appeal - Held that:- The present is the case of a financial creditor who has moved the NCLT. In Macquarie Bank Limited Vs. Shilpi Cable Technologies Limited (2017 (12) TMI 850 - SUPREME COURT OF INDIA) we have since taken the view that, in the case of operational creditors, the petition filed by a foreign company need not observe such requirements of a statute which are impossible of compliance, namely, of getting a certificate from Indian financial institutions evidencing default in repayment of a debt. We also think that the petition filed by an advocate would be maintainable, as has been held in Macquarie Bank supra. We are of the view that the said judgment would apply in the case of financial creditors as well We, therefore, set-aside the judgment of NCLAT and restore that of NCLT.
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2018 (9) TMI 429
Initiating Corporate Insolvency Resolution Process - Approval of resolution plan - Held that:- The decision of the ARCIL leads to certain shadow of doubts behind the rejection of the plan of the said applicant. However, this Bench power to interfere with the statutory right of the CoC to either approve or reject a resolution plan by a vote of not Les than 75% of voting share of the financial creditors I am liable to approve the resolution plan which was approved with 100% voting share and meets the requirements of sub section (2) of section 30 of the I&B Code. In view of the above, and upon finding that none of the objections raised by any of the objectors against the Resolution Plan submitted by CP Ispat Private Limited stand proved with supporting evidence, it appears to me that the resolution plan of CP Ispat Pvt. Ltd is to be approved as per Sub-Section (1) of Section 31 of the I&B Code 2016. Accordingly, the Resolution Plan submitted by CP Ispat Private Limited is hereby approved.
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Service Tax
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2018 (9) TMI 395
De-freezing of Bank Account - bank account was freezed on the reason that the petitioner has failed to pay the service tax, in pursuant to a demand resulting out of the said order passed on 05.03.2018 - educational services. Held that:- It is seen that the petitioner suffered an order in original dated 05.03.2018 passed by the first respondent imposing service tax as well as penalty. It is not in dispute that as against the said order, the petitioner has right of appeal before the CESTAT. It is also not in dispute that such appeal can be filed only by making pre-deposit of the statutory liability, as contemplated under the relevant provision of law, while filing such appeal. Since it is stated that freezing of the subject matter bank account has totally paralysed the petitioner's day to day activities, this Court is of the view that the respondents 1 and 2 shall have to permit the petitioner to operate the bank account initially, atleast for the purpose of effecting the pre-deposit, while filing the statutory appeal before the CESTAT - to that extent, the petitioner is entitled to operate the said account so that his right of filing of appeal before the CESTAT is not defeated for want of making pre-deposit. Petition disposed off.
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2018 (9) TMI 394
Refund of service tax - refund claimed for the duty on difference value estimated in the month of March 2011/ finalized in the month of November 2011 and the revised value in the month of March 2011 - Held that:- While the appellant have claimed that they raised the invoice of ₹ 16,91,000,00/-, the entry shown by them added up to 16,78,65,570/-. We also observed that if three entries i.e. 85,570,740/- separate ₹ 82,294,830/- and ₹ 117,535,680/- are added then the total comes to 285,401,250/-. The appellant had claimed that the provisional figure appearing in the balance sheet was ₹ 28,49,43,332 /-. Enough evidence has not been produced to show that the appellant had indeed received much lesser amount then that recorded in their balance sheet. It is also not clear if the price was earlier fixed at ₹ 28,49,43,332/- and latter re-negotiated at ₹ 16,91,000,00/- or if the price was never fixed and for the first time it was negotiated at ₹ 16,91,000,00/- - thus, it is not clear that if appellant had received an amount less then what was recorded in the balance sheet for the year 2010-11. If the transaction was complete by way of book entry in the record of book of appellant and M/s Vodafone India Ltd at the time of finalization of the balance sheet of the year 2010-11. The factual position needs to be ascertained if the 1. Service was completed in the year 2010-11 or it continued in 2011-12 as it appear from the ledger; 2. If the Vodafone India Ltd had recorded in their balance sheet the value corresponding to the value recorded in the balance sheet of appellant completing the transaction; and 3. The four payments entries made in the appellant’s ledger of Vodafone India Ltd relate to which periods. Appeal allowed by way of remand.
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2018 (9) TMI 393
Jurisdiction of Commissioner - Commissioner under his revisionary power has issued SCN, imposing penalty, by invoking extended period of limitation - Penalty u/s 76, 77 and 78 of FA - payment of service tax with Interest was made on being pointed out - no intent to evade - Held that:- This issue was considered by the Hon’ble High Court of Karnataka in the case of Motor World [2012 (6) TMI 69 - KARNATAKA HIGH COURT] wherein the Hon’ble High Court after considering the scope of revision power of the Commissioner to impose penalty which was dropped by the original authority in exercise of his discretion under Section 80 has finally held that Revisional authority had no jurisdiction to interfere with the said orders as the authority held that there was sufficient cause for non-payment of duty. Therefore, the order passed by the revisionary authority is erroneous and calls for interference. Tribunal in the case of S-Mac Security Services Pvt. Ltd. Vs. CST, Bangalore [2016 (8) TMI 15 - CESTAT BANGALORE], after noting the fact that the service tax along with interest has been voluntarily paid by the appellant before issuance of show-cause notice, has set aside the penalty imposed by Revisionary Authority under Sections 76 to 78. Imposing penalty by exercising revisionary power is not sustainable in law - appeal allowed - decided in favor of appellant.
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2018 (9) TMI 392
CENVAT Credit availed by mistake - revised return filed on being pointed out, rectifying the mistake - appellant also paid the entire amount of differential duty in January 2007 along with interest - Rule 7B of the Service Tax Rule, 1994 - Held that:- No CENVAT Credit was availed in the month of October 2006, November 2006, December 2006, February 2007 and March 2007. Rule 7B of the Service Tax Rule, 1994 is designed to take care of such contingencies, the fact that the appellant were not availing Cenvat Credit is clear from the fact that no credit was availed in five month out of six covered in the Service Tax return - Since, appellant have filed revised return on 08.05.2007 that is within the period described under Rule 7B, it supersedes the original return filed by them. In these circumstances, no Cognizance needs to be taken of the first return filed by the appellant wherein, the Cenvat Credit was availed and utilised - appeal of M/s. Amardeep Construction is allowed. Penalty u/s 78 of FA - Held that:- Since, demand and duty does not survive, the imposition of penalty cannot also survive - penalty set aside. Appeal allowed - decided in favor of assessee.
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2018 (9) TMI 391
Place of supply of services - Services of promotion of their products availed by an agent outside India - Reverse charge mechanism - Section 66A of FA - Suppression of facts or not? - Extended period of limitation - Held that:- In the instant case, the period of dispute is 18.04.2006 to 30.09.2007. In the identical circumstances, in the case of Tech Mahindra Limited vs. CCE, Pune [2015 (2) TMI 392 - CESTAT MUMBAI] it has held that failure to disclose the services in the ST-3 return is insufficient to invoke the extended period of limitation - So long as the recipient of service is located in India, the said service would be taxable as the service received in India. In the instant case, while the service provider located abroad, he has been procuring orders for the appellant located in India. The service falls under clause (iii) of Rule 3 of Taxation of Services (Provided from outside Indian and received in India) Rules, 2006 - Thus, the demand of duty is sustainable both, on merits as well as limitation. Penalties u/s 76 and 78 of FA - Held that:- Simultaneous penalties under Section 76 and 78 cannot be imposed. Consequently, the penalty under Section 76 is set-aside and the penalty under Section 78 is upheld - the benefit to avail 25% is extended to the appellant subject to payment of entire tax along with interest and 25% of penalty within one month of the date of receipt of the order. Decided against appellant-assessee.
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2018 (9) TMI 390
Service tax collected but not paid - Business Auxiliary Service - process of mechanical treatment of Oily Sludge - whether the said service amounts to manufacture or is classified as Business Auxiliary Service? - Held that:- The appellants have put forth various arguments to support their stand including that the value of taxable service worked out in the SCN namely ₹ 15,76,81,173/- is wrong and that the correct figure should be ₹ 12,30,97,874/-. They have also now sought benefit of Notification No.8/2005-ST. In the event, on the quantum of tax liability, the interests of justice would be best served by remanding the matter to the adjudicating authority for de novo consideration - matter on remand. Penalty - Held that:- The elements of suppression, fraud etc. cannot be alleged against the appellant and hence imposition of penalties under Section 78 as well as Section 77 is unjustified - penalty set aside. Appeal allowed in part and part matter on remand.
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2018 (9) TMI 389
Valuation - Exclusion of value of material - value of goods/ material sold while providing the said taxable services has not been shown separately on the invoices. - Benefit of N/N. 12/2003-ST - Management, Maintenance or Repair Service Held that:- The respondents substantially comply with requirements of the N/N. 12/2003-ST and benefit of the said Notification cannot be denied while computing the value for payment of Service Tax on the taxable services provided by them. Though Commissioner (Appeal) has in his order observed that “value of materials deemed to be sold during the execution of the contract can be calculated to be 67% of the gross value on which VAT has been paid”. The correctness of same needs to be verified from the documents and actual value of material sold during the provisioning of such services needs to be worked and demand of service tax worked out accordingly - thus, it is apparent that demand of Service Tax payable needs to be worked out and the payments already made against the provisions of these services be adjusted the against the demand so worked out. If any amount remains unpaid after such adjustment the same needs to be recovered from the respondents. Appeal dismissed - decided against Revenue.
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2018 (9) TMI 388
Refund Claim - whether the appellant have locus standi to file refund claim or not? - service tax deducted and deposited by the Housing Board on behalf of the appellant (service provider) - Held that:- This issue is already settled by the judgment of the Hon’ble Supreme Court in the case of Oswal Chemicals & Fertilizers Ltd. [2015 (4) TMI 352 - SUPREME COURT], where it was held that the appellant who had paid the excise duty to the manufacturer, viz., M/s. Indian Oil Corporation Ltd. and BPCL in the instant case, had the necessary locus standi to file the application claiming the refund of the duty - It was further held in the case that Explanation (B) defines “relevant date”. Though this date has reference to the calculation of limitation period for the purposes of seeking refund of the duty under the aforesaid provision. However, clause (e) while stating the “relevant date” clarifies that in case of a person, other than the manufacturer, the date of purchase of goods by other person would be the relevant date. This itself indicates that the person can be other than the manufacturer and Explanation (B) caters to such other person. Thus, the appellant have locus standi to file refund claim in this case. Disclaimer certificate - Held that:- The appellant have placed on record disclaimer certificate dt.30.1.2018 from the Housing Board Haryana in respect of their claim. The order of the Commissioner (Appeals) in the present case is dated 31.1.2018 - Admittedly, the disclaimer certificate was not produced before the Commissioner (Appeals) when the impugned order was passed. It would therefore be appropriate to set aside the impugned order and remand the matter to the first appellate authority so that he can examine the issue afresh by taking into account the disclaimer certificate dt.30.1.2018. The matter is remanded back to the Commissioner (Appeals) with the direction to consider the disclaimer certificate dt.30.1.2018 issued in favor of the appellant issued by the Housing Board Haryana and to pass a fresh order in accordance with law - appeal allowed by way of remand.
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2018 (9) TMI 387
Manpower recruitment and supply service - engaging labourers for harvesting sugarcane - Contention of the department is that the charges towards supply of cane harvesting labourers are recovered from the farmers at the rate accepted by the farmers and therefore the said activity would be covered within the definition of manpower recruitment or supply agency service - Held that:- It is explained by the appellant that there is no employer and employee relationship between the cutting labourers and the appellant. The appellant company has no say in the rate for cutting demanded by the labourers and the labourers have got every right to deny to cut for a particular sugarcane grower. The mill simply manufactures the sugar with regard to the availability of the cutting labourers only. Being a Government undertaking, it can be seen that all appointments are to be made in the muster roll of the sugar mill - it cannot be said that the appellants have provided harvesting labourers to the sugarcane growers for harvesting the sugarcane. Tribunal on identical set of facts had considered the issue and held that the sugarcane growers themselves are encouraging the harvesting labourers and as a mere facilitation, the amount to be paid to these harvesters are deducted from the price of the sugarcane that is to be paid to the farmers. Demand set aside - appeal allowed - decided in favor of appellant.
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2018 (9) TMI 386
Condonation of delay in filing appeal - service of order - it is contended that the impugned order was sent to appellant’s factory address instead of registered address - Held that:- Apparently the delay is inordinate and it is therefore the responsibility of the appellant to explain the delay in a convincing manner without giving any room for suspension as to negligence or nonchalant manner - it is found that the contention that the assessee had responded to statutory notices;had also appeared before the lower appellate authority in response to hearing notices,to be correct which facts are not rebutted by the learned advocate appearing for the assessee. Even though the explanation as offered in the application for condonation of delay is very sketchy but in the substantial interest of justice and going by the plea of the appellant that the issue involved on merits is no more res integra, the delay is condoned subject to the condition of imposing a cost of ₹ 10,000/-, since the explanation or the reasons given is not foolproof. COD Application allowed.
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2018 (9) TMI 385
Classification of Service - Security service or not? - appellants are engaged in providing security services to the bank as well as cash van to the bank for carrying the cash from one place to another - Short payment of Service Tax - Held that:- The appellants are providing security service under a separate contract and also providing cash van to the banks for transporting the cash from one place to another place. Admittedly, the cash vans are having the security guards but the dominant service is to provide cash van for transportation of cash from one place to another. Admittedly, in this case, the main service provided by the appellant is cash van service. Whether Cash Van service shall do qualify as Security Service or Supply of Cash Van Service ? - Held that:- Providing of cash van service with security guard is covered under cash van service and cannot be termed as security services as the dominant service is transportation of cash from one place to another through these cash vans - the appellants are not liable to pay differential Service Tax under the category of security service - Penalty not imposable. Reliance placed in the case of Kingfisher Airlines Ltd. v. Commissioner of Service Tax, Mumbai [2015 (11) TMI 54 - CESTAT MUMBAI (LB)], wherein it was held that the dominant service is transportation of passenger by air and Service Tax is not payable on excess baggage charges under the transportation of goods by air. Appeal allowed - decided in favor of appellant.
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2018 (9) TMI 384
Erection, Commissioning or Installation Services - appellant carried out the work of providing and erecting ‘Fire Hydrant System’ for Krishi Upaj Mandi, Kukshi, District – Dhar (M.P.) - abatement under N/N. 1/2006-ST dated 01.03.2006 - Held that:- The activity involves supply of ‘Fire Hydrant System’ as well as ‘Erection, installation’ of the same for Krishi Upaj Mandi. This nature of activity is squarely covered under the category of ‘erection and commission service’ - the demand of Service Tax upheld with the grant of abatement - appeal dismissed - decided against appellant.
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2018 (9) TMI 374
Withdrawal of appeal - petitioner seeks liberty to withdraw the writ petition but requests that the initial bank guarantee furnished to the extent of 10% of the determined liability should be allowed to continue during the pendency of the appeal - Held that:- This aspect shall be considered by the Customs Excise and Service Tax Appellate Tribunal (CESTAT) in the petitioner’s appeal, if filed within two weeks, and appropriate orders made in this regard before considering the main appeal and its merits - petition dismissed as withdrawn.
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Central Excise
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2018 (9) TMI 383
Area based exemption - Exemption under Notification No.56/2002 - Whether an assessee availing of exemption under Notification No. 56/2002-C.E. can pay education cess and S & H Cess through BED Credit? - Held that:- The issue is covered by the decision in the case of M/S. SRD NUTRIENTS PRIVATE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE GUWAHATI [2017 (11) TMI 655 - SUPREME COURT OF INDIA], where it was held that appellants were entitled to refund of Education Cess and Higher Education Cess which was paid along with excise duty once the excise duty itself was exempted from levy - appeal allowed - decided in favor of appellant.
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2018 (9) TMI 382
Manufacture or service - business of installing roller blinds, curtain tracks, etc. at site. - Assembly at site - moveable assets or not - test of Removal/dismantling - imposition of penalties - Held that:- Appellant contends that the Learned Tribunal was plainly wrong in recording the finding that the Blinds in question are movable properties and can be removed/dismantled and consequentially imposing penalty - It that is so, the appellants may approach the Learned Tribunal for rectification - appeal disposed off.
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2018 (9) TMI 381
Non-service of notice - Principles of Natural Justice - Jurisdiction - petitioners are carrying on business in Kolkata but are wrongly implicated in the proceedings in Coimbatore - Held that:- Without entering into the question of assumption of the jurisdiction by the Coimbatore authority, it would be proper, in the facts of the present case, to return a finding that, the proceeding stands vitiated due the breach of principles of natural justice - Since the petitioners were not issued a show cause notice, and not heard by the adjudicating authority, the adjudicating proceeding stands vitiated by the breach of principles of natural justice. The same stands quashed. Petition allowed - decided in favor of petitioner.
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2018 (9) TMI 379
Clandestine removal - Chewing Tobacco - statements showing removal of goods by ZTPL without payment of duty and other evidences and invoices - Seizure - Confiscation - excise duty demand. Seizure of goods valued at ₹ 1,08,517/- from Shivam Agency Nagpur - Held that:- The said seized goods have not been directly transported from the factory of ZTPL to the said Shivam Agency; that 21 cartons seized from Shivam Agency Nagpur were purchased by them from M/s Geeta Trading Company Nagpur out of the 30 cartons purchased by them from M/s ZTPL earlier. It is also seen that the said 21 cartons were sold under commercial Invoice No. 451 dated 28.01.2006 and goods were transported under lorry receipt No. 4901272. In view of such documentary proof and in absence of evidence of clearance of said goods by M/s ZTPL without payment of duty, clandestine removal of goods valued at ₹ 1,08,517/- is not established - Confiscation not sustainable and is to be set aside. Seizure of goods valued at ₹ 36,000/- from Mustufa Sales Agency, Ahmedabad - Held that:- This fact of clearance of goods on payment of duty under Invoice No.329 dated 19.05.2005 has not been denied by revenue or it is not the caase of the revenue that the goods cleared under the said Invoice No.329 dated 19.05.2005 were different than the goods seized and confiscated. The finding of the Commissioner (Appeals) is erroneous as he has referred to batch number without co-relating with the Invoice and it is not understood as to how it can be concluded from only batch number that the detained goods were not received under Invoice - Confiscation not sustainable and is set aside. Seizure of goods valued at ₹ 4,09,080/- from M/s Balaji Pan Centre, Chennai - Held that:- It is settled law that the serious allegation of clandestine clearance cannot be made merely on the basis of statement which has not been corroborated by any other evidence - confiscation set aside. Seizure of goods valued at ₹ 26,800/- from Nobel Joseph, Chennai - Held that:- The allegations are based only on the statement and entries made in his private records without independent corroboration - Confiscation not sustainable. Duty Demand amounting to ₹ 30,54,404/- - the entire case of clandestine manufacture and removal of goods has been made on the basis of seizure of goods/documents from the premises of third parties and on the basis of statements of persons without independent corroboration - Held that:- There is no seizure in factory of ZTPL, all seizures have been made at the premises of others - Nowhere it has been stated in his statement dated 17.07.2006 that goods were clandestinely cleared by ZTPL. Thus, charge of clandestine removal of goods by ZTPL without payment of duty does not prove. It seems an undue inference has been drawn by the ld Commissioner (Appeals) which is not permissible - It is thus evident that said goods were not cleared without payment of duty. It is also argued by Revenue that the department is not required to prove its case with mathematical precision. But the Revenue has to establish such a degree of probability that a prudent person may, on its basis, believe in the existence of the fact in issue - The theory of preponderance of probabilities cannot be accepted in cases of weak evidences of doubtful nature. The settled law is that Charge of clandestine removal is required to be proved by sufficient evidences and in the present matter, these are no evidence on the basis of which such a serious charge of clandestine manufacture and clearance can be established. Penalty imposed on Rashminbhai Majithia, Director of ZTPL - Held that:- In any case, penalty under first SCN dated 09.08.2006 cannot be imposed as he was never put to notice as to why penalty should not be imposed upon him. Thus, Additional Commissioner (Appeals) travelled beyond the scope of SCN in imposing penalty of ₹ 20,000/- on Rashminbhai Majithia. Further, the ld. Commissioner (Appeals) has also acted without any jurisdiction to enhance the said penalty to ₹ 1,00,000/- though no appeal was filed by Department for enhancement of penalty or any notice was issued by Commissioner(Appeals) proposing to enhance penalty already imposed by O-I-O. Thus penalty is liable to be set-aside. ZTPL and others have pointed out that wherever identification marks were recorded by DGCEI officers in Panchnama, M/s ZTPL has shown corresponding invoices showing removal of those goods on payment of duty. In absence of evidence relating to clandestine clearance of goods from factory, absence of statement from any employee of ZTPL and no evidence of transportation of the goods, charge of clandestine removal is not proved against M/s ZTPL - Held that:- The ld. Advocate for ZTPL has rightly contended that only on the basis of Gopal Sales letter and statement it cannot be charged that goods more than ₹ 81 Lakhs were removed without invoices. Again, there is no evidence of transportation of these goods from ZTPL to premises of Gopal Sales in Maharashtra - the department has not verified facts and has presumed without evidence that goods worth ₹ 50 Lakhs were given as bonus by ZTPL to Gopal Sales. The position has been clarified by Hari Chand Gidwani, Prop. of Gopal Sales in his Affidavit by affirming that goods of ZTPL were sold by Payal Sales Corporation and Pooja General Stores in his area for which it was binding for ZTPL to give him incentive. In absence of any corroborative evidence, Revenue has not been able to establish charge of clandestine removal of goods to Gopal Sales. There is no independent evidence to show that any goods were removed by ZTPL without payment of duty to any person or firm. This Tribunal has been consistently holding that the charge of clandestine removal cannot be proved merely on the basis of statement - since the charge of clandestine manufacture and removal against M/s ZTPL is not established, penalty is not imposable on ZTPL, the Director and other persons. Appeal allowed - decided in favor of appellant.
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2018 (9) TMI 378
Valuation - re-determination of assessable value - consolidated sales consideration for the body built on the chassis which included the cost of raw materials procured by the appellants; body building costs and the profit margin - Section 4(1)(b) read with Rule 6 of the Central Excise Valuation Rules, 2000 - Held that:- In the instant case, the appellants have submitted that whereas the Department only excluded the element of excise duty from the assessable value, for quantification of demand, appellants submit that the transaction value of M/s. TML is to be adopted after deducting in addition to the excise duty Sales Tax/VAT paid by M/s. TML and CST paid by the appellants. The point raised by the appellants is valid for arriving at the duty liability. The matter needs to go back to the Original Authority - penalties are set aside - appeals are allowed by way of remand with a direction to the Original Authority to quantify the duty considering the reasonable & applicable deductions on account of Excise Duty/VAT/CST etc. paid by M/s. TML and by the appellants.
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2018 (9) TMI 377
Time Limitation - Show Cause Notice is issued on 17.03.2011 invoking the extended period - no suppression of facts - Commercial and Industrial Construction Service - shortfall in accounting of value - abatement under N/N. 1/2006-ST - Held that:- The appellant has disclosed that they are availing the benefit of Notification 01/2006. As per the Notification, the benefit would not be eligible if the assessee avails credit on inputs/input services. However, the appellant has availed credit on certain input services. The same has been disclosed by them in the ST-3 returns by Column 5B - Thus, the Department was put to knowledge and it cannot be said that the appellants had suppressed any facts from the Department with an intention to evade payment of service tax - the extended period cannot be invoked. Appeal allowed - decided in favor of appellant.
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2018 (9) TMI 376
CENVAT Credit - Input service - brokerage/Commission obtained by the selling the constructed residential units - whether the brokerage/Commission obtained by the selling the constructed residential units is an input service for the appellant? - Held that:- The very perusal of Rule 2(1) makes it clear that the explanation to Rule 2(1) of Rule says in clear terms that there is no bar on availment of the Cenvat Credit on sales promotion service by way of sale of dutiable goods on commission basis - Further, by inserting the Explanation in the Rule 2(1), It has confirmed the Board Circular and consequence of the Explanation is to extend the benefit to the assessee. The Explanation inserted in Rule 2(1) of Rules, 2004 by Notification No. 2/2016-CX(N.T) should be declaratory in nature and effective retrospectively. The amount of brokerage/Commission to be eligible as an input service for the entitlement of the assessee for availing the Cenvat Credit thereupon - Appeal dismissed - decided against Revenue.
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2018 (9) TMI 375
SSI Exemption - N/N. 08/2003-CE dated 01.03.2003 - dummy units or not? - Clubbing of clearances - crossing of threshold exemption limit - Held that:- The individual manufacturing appellants have independent identities since the revenue could not establish that their books of accounts are common, that their bank accounts are common, that their registration with Income Tax, Sales Tax are common and that there is common funding and that there is mutuality of interest and that there is financial flow back and that the units which were held to be dummy did not have any manufacturing facility - In the absence of any such evidence, it is held that the manufacturer units are independent units and therefore, their clearances could not be clubbed together. Denial of benefit of SSI Exemption to the manufacturer appellants is not sustainable - appeal allowed - decided in favor of appellant.
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Indian Laws
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2018 (9) TMI 396
Dishonor of Cheque due to insufficiency of funds - Section 138 of the Negotiable Instrument Act - Held that:- The burden is on the complainant to adduce evidence to justify the averments in the complaint. If the complaint is lacking in averments, that can be good reason to quash the proceeding. However, when the complaint is replete with averments, it will be beyond the scope of this Court acting under Section 482 of Cr.P.C., to give a declaration that those averments are contrived and therefore, the prosecution should be quashed - petition dismissed.
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