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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter September 15, 2018 Case Laws in this Newsletter: GST Income Tax Customs Service Tax Central Excise CST, VAT & Sales Tax Articles GST late fee waiver scheme launched and GSTR1 filing date extended* LEVY OF GST ON EXTRA NEUTRAL ALCOHOL (ENA) News Suresh Prabhu to participate in G-20, Trade and Investment Ministerial Meeting in Argentina Notifications Companies Law File Number 1/5/2013-CL-V - dated 12-9-2018 - Co. Law Amendment to Schedule –V of the CA 2013 File Number 1/5/2013, Part-I, CL-V - S.O. 4823 - dated 12-9-2018 - Co. Law Central Government appoints the 12th September, 2018 as the date on which the provisions of sections 66 to 70 (both inclusive) of the Companies (Amendment) Act, 2017 shall come into force F. No. 1/5/2013 CL-V - dated 12-9-2018 - Co. Law Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2018 GST - States F-10-43/2018/CT/V (70)-35/2018-State Tax - dated 21-8-2018 - Chhattisgarh SGST Amendment in the Notification No. 34/2018-State Tax, F-10-42/2018/CT/V (69), dated the 10th August, 2018 CCT/26-2/2018-19/40/2152 - dated 10-9-2018 - Goa SGST Amendments in Notification Number No. CCT/262/2018-19/37 dated 13th August, 2018. CCT/26-2/2018-19/39/2150 - dated 10-9-2018 - Goa SGST Amendments in the Notification number CCT/26-2/2017-18/12 dated 15th September, 2017, and Notification number CCT/26-2/2017-18/30 dated 26th March, 2018. CCT/26-2/2018-19/38/2151 - dated 10-9-2018 - Goa SGST Amendments in the Notification number CCT/26-2/2017-18/3 dated 8th August, 2017, and Notification number CCT/26-2/2017-18/21 dated 15th November, 2017. 38/1/2017-Fin(R&C)(66) - dated 3-9-2018 - Goa SGST Seeks to prescribe the due dates for quarterly furnishing of FORM GSTR-1 for those taxpayers with aggregate turnover of upto ₹ 1.5 crores for the period from July, 2018 to April, 2019. 38/1/2017-Fin(R&C)(12/2018-Rate)(Corri.) - dated 3-9-2018 - Goa SGST Corrigendum - 38/1/2017-Fin(R&C)(12/2018-Rate)(Corri.). 48/2018-State Tax - dated 10-9-2018 - Gujarat SGST The Gujarat Goods and Services Tax (Ninth Amendment) Rules, 2018. 47/2018-State Tax - dated 10-9-2018 - Gujarat SGST Amendment in the Notification No. 34/2018 for GSTR3B - for Newly Migrated Registered Tax Payers. 46/2018-State Tax - dated 10-9-2018 - Gujarat SGST Amendments in the Notifications Nos. 35/2017 dated 15.09.2017 and 16/2018 dated 23.03.2018 45/2018-State Tax - dated 10-9-2018 - Gujarat SGST Amendments in Notification No 21/2017 and 56/2017 for GSTR-3B - for Newly Migrated Registered Tax Payers. 43/2018-State Tax - dated 10-9-2018 - Gujarat SGST Extension For GSTR-1 For July-2017 To March-2019 Whose Turnover Upto 1.5 Crore. (GHN-85)/GSTR-2018(29) - dated 10-9-2018 - Gujarat SGST Corrigendum - Notification No.(GHN-80)/GSTR-2018(27)TH dated the 4th September, 2018, Notification No. 39/2018-State-Tax. (GHN-84)/GSTR-2018(28) - dated 10-9-2018 - Gujarat SGST Corrigendum To Notification No. 21/2018, dated 25th April, 2018. 41/2018-State Tax - dated 4-9-2018 - Gujarat SGST Waving Late Fee For GSTR-3B, GSTR-4 & GSTR-6. 39/2018-State Tax - dated 4-9-2018 - Gujarat SGST The Gujarat Goods and Services Tax (Eighth Amendment) Rules, 2018. 82/GST-2 - dated 11-9-2018 - Haryana SGST Extend the due date for filling FORM GSTR- 3B for newly migrated (obtaining GSTIN vide notification no. 73/GST-2, dated 06.08.2018) taxpayers (Amend notification no. 76/GST-2 dated 10.08.2018) 81/GST-2 - dated 11-9-2018 - Haryana SGST Extend the due date for filling FORM GSTR- 3B for newly migrated (obtaining GSTIN vide notification no. 73/GST-2, dated 06.08.2018) taxpayers (Amend notification no. 82/ST-2 dated 19.09.2017 and 45/ST-2 dated 30.03.2018). 80/GST-2 - dated 11-9-2018 - Haryana SGST Extend the due date for filling FORM GSTR- 3B for newly migrated (obtaining GSTIN vide notification no. 73/GST-2, dated 06.08.2018) taxpayers (Amend notification no. 69/ST-2 and 127/ST-2 of 2017). 79/GST-2 - dated 11-9-2018 - Haryana SGST Waiver the late fee paid for specified classes of taxpayers for FORM GSTR-3B, FORM GSTR-4 and FORM GSTR-6 under section 128 of the HGST Act, 2017. EXN-F(10)-24/2018 - dated 11-9-2018 - Himachal Pradesh SGST ADDENDUM - Notification No. 39/2018-State Tax dated 4th September, 2018. 48/2018-State Tax - dated 11-9-2018 - Himachal Pradesh SGST The Himachal Pradesh Goods and Services Tax (Ninth Amendment) Rules, 2018. 47/2018-State Tax - dated 11-9-2018 - Himachal Pradesh SGST Amendments in Notification number 34/2018–State Tax dated 9th August, 2018. 46/2018-State Tax - dated 11-9-2018 - Himachal Pradesh SGST Amendments in the Notification number 35/2017– State Tax dated the 9th October, 2017 and Notification number 16/2018–State Tax dated 27th March, 2017. 45/2018-State Tax - dated 11-9-2018 - Himachal Pradesh SGST Amendments in the Notification number 21/2017–State Tax dated the 26th August, 2017 and Notification number 56/2017–State Tax dated the 15th November, 2017. 43/2018-State Tax - dated 11-9-2018 - Himachal Pradesh SGST supercession of the Notification No. 57/2017–State Tax dated 15th November, 2017 and Notification No. 33/2018–State Tax dated 9th August, 2018. 50/2018-GST - dated 10-9-2018 - Jammu & Kashmir SGST Amendments in Notification number 47 dated 10-08-2018. 49/2018/GST - dated 10-9-2018 - Jammu & Kashmir SGST Amendments in the Notification No. 14/2017-GST; Dated. 18/09/2017 and Notification No. 40 Dated 26-03-2018. 48/2018-GST - dated 10-9-2018 - Jammu & Kashmir SGST Amendments in the Notification No. 04/2017-GST dated 08/08/2017 and Notification No. 32 of 2017; dated: 15/11/2017. Income Tax 43/2018 - dated 11-9-2018 - IT Agreement between the Government of the Republic of India and the Government of the Portuguese Republic for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes Circulars / Instructions / Orders GST 63/37/2018 - dated 14-9-2018 Clarification regarding processing of refund claims filed by UIN entities – regarding 64/38/2018 - dated 14-9-2018 Modification of the procedure for interception of conveyances for inspection of goods in movement, and detention, release and confiscation of such goods and conveyances, as clarified in Circular Nos. 41/15/2018-GST dated 13.04.2018 and 49/23/2018-GST dated 21.06.2018 - regarding DGFT Trade Notice No. 32/2018-19 - dated 14-9-2018 Charging of Fees for REX Registration — reg. 39/2015-2020 - dated 13-9-2018 One time relaxation for regularisation and issue of EODC for exports made prior to imports where Advance Authorisation issued for import of Natural Rubber/ Silk – reg. TRADE NOTICE No. 31/2018 - dated 13-9-2018 'To do list for SCOMET Policy/Procedure' for feedback/inputs from industry for simplification of licensing procedure of SCOMET items - regarding Customs Instruction No. 14/2018 - dated 13-9-2018 Safeguard duty on Solar cells whether or not assembled in modules or panels - regarding Highlights / Catch Notes GST Clarification regarding processing of refund claims filed by UIN entities Visit to Get Source Modification of the procedure for interception of conveyances for inspection of goods in movement, and detention, release and confiscation of such goods and conveyances. Visit to Get Source GST - Collection of tax at source (TCS) - Section 52 of the CGST Act comes into force w.e.f 01.10.2018 Visit to Get Source TDS liability u/s 51 of CGST Act, 2017 come into force w.e.f. 01-10-2018 - Persons liable to deduct TDS from payment made or credited to the supplier of taxable goods or services specified Visit to Get Source Income Tax Disallowance of electricity payment paid in cash to Jodhpur Vidyut Vitran Nigam Limited u/s 40A(3) - there was business expediency of making cash payments so that there is no disruption in supply of electricity required to operate the MRI and CT scan machines. - being a case of genuine business transaction and test of business expediency been satisfied. Visit to Get Source Penalty u/s 271(1)(b) - failure to comply with the notices issued - the reasons explained by the assessee are bonafide and reasonable. - penalty imposed u/s 271(1)(b) for non compliance of section 142(1) deleted. Visit to Get Source Addition u/s 68 as received from undisclosed sources - Merely on surmises and conjunctures no addition can be made u/s 68 of the Act, when assessee himself is declaring the monies received in cash as its Business Income. Visit to Get Source The amount sought to be disallowed was debited in the financial year 2006-07 which is not at all relevant for the assessment year 2008-09 in which assessment is sought to be done. No interest whatsoever has been debited in the assessment year 2008-09. Hence, in our considered opinion, there is no question at all of disallowing the interest as capital expenditure which has not at all been debited in the impugned assessment year. Visit to Get Source Best adjustment assessment - estimation of income - in a best judgment, even if, there is an element of guess work, it should not be a wild one, but shall have reasonable nexus to the available material and circumstances of each assessee. Visit to Get Source Addition on account of commission/service charges - All the five parties to whom the assessee paid commission had submitted their copy of bill which contained their PAN details. Tax was deducted at source by the assessee and deposited with the Government - Deduction allowed. Visit to Get Source Addition u/s 68 - CIT-A deleted the entire additions on the basis of few sample shareholders - AO has also not given the breakup of the investment made by the 10 persons or the percentage of investment which has been proved by the assessee to accept the entire investment as genuine. - AO directed to verify the investments atleast to the tune of 25% to 50%. Visit to Get Source Contributions received from consumers - AO has misunderstood the accounting policy and accounting entries passed in the books and erroneously treated the capital contributions received from consumers as income. - Additions deleted. Visit to Get Source Set off of MAT credit - before or after setting off the Tax Deducted at Source and Advance Tax paid - credit under Section 115JAA should be given effect to before charging of interest under Sections 234A, 234B, 234C of the Act. Visit to Get Source Addition of suppressed sale - addition using the material collected by the Excise Department including the statements of relevant witnesses recorded during the search - There is no independent material brought on record by the AO other than those which were already collected by the Excise department and which are yet to be verified - Additions were rightly deleted by the ITAT. Visit to Get Source Reopening of assessment - source of the cash deposits post demonetization - AO in the reasons recorded has simply kept aside the assessee's explanation for the availability of cash on hand for deposit post demonetization. The reasons thus clearly lacked validity and proceeded on erroneous premise. - Notice for initiation of reassessment proceedings quashed. Visit to Get Source Addition u/s 43B - service tax liability - Section 43B does not contemplate liability to pay service tax before actual receipt of the funds in the account of the assessee. Hence the liability to pay service tax into the Treasury will arise only upon the assessee receiving the funds and not otherwise - no additions. Visit to Get Source Customs Safeguard duty on Solar cells whether or not assembled in modules or panels. Visit to Get Source Refund claim - since the Bill of Entry was assessed by the Customs Department and the assessed duty was paid by the respondent, it cannot be said that the duty was paid by the respondent in pursuance of an order of assessment. Visit to Get Source Refund claim - duty paid under protest - assessment of bill of entry subject to test report - it can be said that the assessment was made provisionally by the assessing officer, although the word “provisionally assessed” was not mentioned on the face of the shipping bill. Visit to Get Source Refund - duty was paid under protest - The payment under protest by itself would tantamount to claiming refund, but, it cannot be turned down merely because he has not filed any appeal or appeal was filed by the Department before a higher forum. Visit to Get Source Corporate Law Conditions for Appointment and fixation of Remuneration of Managerial Person - SCHEDULE V -See sections 196 and 197 - - SCH-05 of the Companies Act, 2013 as amended. Visit to Get Source Forms of, and procedure in relation to, certain applications - Section 201 of the Companies Act, 2013 - Amendments came into force w.e.f. 12.9.2018 Visit to Get Source Central Government or company to fix limit with regard to remuneration - Section 200 of the Companies Act, 2013 - Amendments came into force w.e.f. 12.9.2018 Visit to Get Source Calculation of profits - Section 198 of the Companies Act, 2013 - Amendments came into force w.e.f. 12.9.2018 Visit to Get Source Overall maximum managerial remuneration and managerial remuneration in case of absence or inadequacy of profits - Section 197 of the Companies Act, 2013 - Amendments came into force w.e.f. 12.9.2018 Visit to Get Source Appointment of managing director, whole-time director or manager - Section 196 of the Companies Act, 2013 - Amendments came into force w.e.f. 12.9.2018 Visit to Get Source Service Tax Classification Services - construction of building in educational institution by CPWD - services received are not otherwise the activity of the appellant themselves. Outsourcing thereof will not bring the service received under the category of support service - service is falling under the negative list - not liable to be taxed. Visit to Get Source Extended period of limitation - assessee was under a bonafide belief that no service tax is payable by a charitable institution rendering the service of Commercial Training and Coaching. - Tribunal has correctly restricting the demand only to that extent of normal period of limitation. Visit to Get Source Central Excise Valuation - Job work - the value of scrap cleared need not be included for discharging the duty liability on the job worked item Visit to Get Source Clandestine manufacture and removal - since, prosecution launched against the assessee was quashed and they were acquitted, the reliance placed by the Revenue in the same set of evidence cannot hold ground to confirm the demands raised along with interest and imposed penalties on appellants. Visit to Get Source CENVAT Credit - Input Services - appellant is under a statutory obligation to provide group insurance scheme in their factory for the benefit of the employees. This cannot be said to be for the personal benefit of the employees - credit allowed. Visit to Get Source Clandestine removal - shortage of finished goods - If the assessee had sufficient records to establish their innocence, nothing prevented the Managing Director to say so while making the retraction - The allegation of parallel invoicing has not been disproved in the manner known to law. Visit to Get Source VAT Input tax Credit - capital goods - The renewable energy device & spare parts, Boilers, Boiler components and materials for Erection of Boilers are integral parts or integral apparatus or accessories in the manufacturing process and therefore, it should be construed as “capital goods”. Visit to Get Source Case Laws: GST 2018 (9) TMI 805 Extension of time period for filing of GST Tran-1 - application was not entertained on the last date i.e. 27.12.2017 despite several efforts - transitional credit - Held that:- The respondents are directed to reopen the portal within two weeks from today. In the event they do not do so, they will entertain the application of the petitioner manually and pass orders on it after due verification of the credits as claimed by the petitioner - petition disposed off. Income Tax 2018 (9) TMI 804 Reopening of assessment - source of the cash deposits post demonetization - eligibility of reason to believe - Held that:- We are testing the reasons on the basis of material which was available with him. In pre-notice queries, the Assessing Officer had asked the assessee to explain the source of the cash deposits post demonetization. The assessee disclosed such source being her own bank accounts and their withdrawals matching quite closely to the deposits which withdrawals were made within the close proximity of the deposits. If the Assessing Officer had any reason to discard such disclosures and still form a belief that the deposits were from the sources not indicated by the assessee, nothing of the sort has come in the form of reasons recorded. The reasons recorded completely ignored the Assessing Officer's query and the response made by the assessee to such queries. Assessing Officer in the reasons recorded has simply kept aside the assessee's explanation for the availability of cash on hand for deposit post demonetization. The reasons thus clearly lacked validity and proceeded on erroneous premise. Impugned notice is therefore quashed. Petition is allowed in favour of assessee 2018 (9) TMI 803 Addition u/s 68 on account of “unexplained cash credits” - Held that:- The assessee had explained that she was a member of International Air Transport Association. She used to book domestic and international air tickets of various national and international airlines. She had voluminous turnover from which she earned sizeable commission. She had employed several employees for booking the tickets and looking after the financial transactions. She had several customers for whom she would make such bookings. The commission was paid by the Airlines through the banking channel. There was thus no cash element or scope of any cash transactions. She was maintaining her books of account which were duly audited. During the survey, the Revenue authority had a chance upon some such papers in which jottings were made by the employees with regard to financial details with the assessee. They merely contain certain receivable amounts from the customers which could not be construed as cash transactions. The Tribunal accepted such explanation and endorsed substantially the view of CIT [A] who also looked into these very papers and transactions. The entire issue is thus based on factual considerations. With respect to deletion of addition of ₹ 36.50 Lakhs to which second proposed question of law relates, the CIT [A] in particular had come to a conclusion that such addition was already made in the earlier year and second time, this cannot be added. 2018 (9) TMI 802 TDS u/s 194H - Disallowance u/s 40 [a](ia) - non deduction of tds on commission paid - Tribunal was of the opinion that there was no relationship of principal and agent between the assessee and the travel agents, to whom such commission was paid - Held that:- Before the Tribunal, assessee had pointed out that she was a member of International Air Transport Association as engaged in booking the air tickets for domestic and international air travels in various Airlines. Some of the travel agents booked air tickets by using the assessee’s membership. Such travel agents made payment of tickets at a concessional rate and these were the consumers of the assessee and not the agents. AO has committed an error in treating such travel agents as her agents and consequently, the discounted rate at which the tickets were sold was construed as commission paid by her to these agents. The travel agents were not working for her as agents. They had simply booked the tickets in their independent capacity through her. For making the bulk purchases for the airlines, she was getting sizeable commission and in turn, she had offered trade discount to the agents. The Tribunal accepted such explanation, referring to the judgment of this Court in the case of Ahmedabad Stamp Vendors’ Association v. Union of India [2002 (6) TMI 32 - GUJARAT HIGH COURT] in which the Court was of the opinion that the principal agent relationship was essential for applying Section 194 H of the Act. We are broadly in agreement with the view of the Tribunal. No question of law arises. 2018 (9) TMI 801 Addition of suppressed sale - addition using the material collected by the Excise Department including the statements of relevant witnesses recorded during the search - Held that:- We notice that under identical situation in THE PRINCIPAL COMMISSIONER OF INCOME TAX RAJKOT-3 VERSUS VRUNDAVAN CERAMICS PVT. LTD. [2018 (5) TMI 1274 - GUJARAT HIGH COURT] by merely producing the copies of the statements of the witnesses accompanying the show-cause notices, such statements and the veracity thereof does not get automatically established. AO merely cosmetically gave an opportunity to the assessee to meet with such allegations, virtually, shifting the burden of proving the evasion of duty that had taken place on the assessee. As perused the entire order of assessment. There is no independent material brought on record by the Assessing Officer other than those which were already collected by the Excise department and which, as noted earlier, are yet to be verified. The excise show-cause notices in case of the present assessee are yet to be adjudicated. What would be the material on record during such proceedings is not possible for us to foresee. Secondly, the Tribunal has mainly proceeded on the basis of absence of section 4A of the Central Excise Act at the relevant time which, in the opinion of the Tribunal, alone could have permitted the department to substitute the sale price by the transaction value of the goods. Such is not the case in the present group of cases. We would, therefore, be well advised to clear such controversy. - Decided against revenue 2018 (9) TMI 800 Restoration of income tax appeal on the file of this Court - Held that:- Neither the Revenue's Circular dated 11.7.2018 is referred nor any condition therein. If the condition now relied upon is with regard to the Revenue Audit Objection, then, mere raising of this objection in terms of this Circular is not enough. The Revenue will have to point out that this audit objection has been accepted by the Department. We have no such record before us. In the circumstances, we find that this is an attempt to get over the binding Circulars and in any case we shall not allow the Revenue to get over them in this manner. The Circulars continue to bind the Revenue and if they contain any conditions, whether such conditions are attracted or not would have to be proved and established by the Revenue. Once there is no such record before us, we do not countenance the oral request of Mr. Pinto. Consequently, we do not see any reason to entertain this appeal. It is dismissed. 2018 (9) TMI 799 Addition u/s 43B - whether service tax though debited to the profit and loss account but not credited to the Central Government cannot be disallowed u/s 43B - Held that:- When these appeals were argued before us, our attention was invited by Mr. Jasani to a Division Bench Judgment of this Court in Commissioner of Income Tax v. Ovira Logistics P. Ltd.[2015 (4) TMI 684 - BOMBAY HIGH COURT]. Mr. Jasani submits that earlier this very controversy was dealt with and the Revenue's appeal was dismissed. With the assistance of both sides, we have perused this Judgment and we find that it dealt with an identical issue. This Court held that Section 43B does not contemplate liability to pay service tax before actual receipt of the funds in the account of the assessee. Hence the liability to pay service tax into the Treasury will arise only upon the assessee receiving the funds and not otherwise. Thus the consideration has to be actually received and thereupon the liability will arise. No conclusion contravening the above has been brought to our notice by the Revenue. In fact, Mr. Pinto was fair enough to bring to our notice this Judgment. No substantial question of law. 2018 (9) TMI 798 Deemed dividend u/s 2(22)(e) - Held that:- The test of substantiality, in our opinion, is not confined to what the RBI declares it to be, generally. There can be NDFC and NBFC – i.e. an entity which may carry out more than one financial non-banking activity. In the present case too these companies carry on more than one non-banking financial activity – up to 3 or 4. In such event, the 50% test to benchmark whether the amounts fall within or outside the 2nd proviso to Section 2(22)(e) of the Act would fail. - decided against revenue Payment of provident fund and employees state insurance dues deposited by the Assessee within the grace period would qualify for deduction u/s 43B - Held that:- Having regard to the specific provisions of the Employees’ Provident Funds Act and ESI Act as well as the concerned notifications which granted a grace period of 5 days (which appears to have been late withdrawn recently on 08.01.2016), we are of the opinion that the ITAT’s decision in this case was not correct. The assessee undoubtedly was entitled to claim the benefit and properly treat such amounts as having been duly deposited, which were in fact deposited within the period prescribed (i.e. 15 + 5 days in the case of EPF and 21 days + any other grace period in terms of the extent notification). As far as the amounts constituting deductions from employees’ salaries towards their contributions, which were made beyond such stipulated period, obviously the assessee was not entitled to claim the deduction from its returns. Revenue’s appeal is partly allowed. AO is directed to examine the contributions made with reference to the dates when they were actually made and grant relief to such of them which qualified for such relief in terms of the prevailing provisions and notifications. We also clarify that the assessee would be entitled to deduction in terms of Section 36(1)(va). Disallowance of revenue expenditure - expenditure incurred by the assessee for the construction of a hotel in Sri Nagar - Held that:- In appeal the CIT noticed that the assessee had conceded to a ratio of 75%:25%, as constituting the capital and Revenue streams and confirmed such treatment. The Revenue appealed against this decision to the ITAT which dismissed it, by a separate order of 02.06.2006. That order was the subject matter of an appeal (by the Revenue) being Commissioner of Income Tax vs. Bharat Hotels Limited [2015 (8) TMI 718 - DELHI HIGH COURT] the ITAT’s decision was upheld. As a consequence, the question of law is answered in favour of the assessee and against the Revenue (which has appealed against the rejection in the appeal filed by the assessee). Noting the expenditure on account of salary (which the assessee claimed was expenditure towards salary which was claimed as a deduction and the interest paid for loans, that were used for creating infrastructure in Mumbai and Goa; the ITAT had granted complete relief to the assessee. This Court finds no infirmity with the treatment of salaries as Revenue expenditure. As far as the interest expenditure goes, this Court notices that the period in question is covered by the provisions of Section 36(1)(iii) as it stood prior to its amendment in 2003. In respect of that provision, the law as it existed at the relevant time i.e. in A.Y. 2000-01, was governed by India Cements Ltd. vs. Commissioner of Income Tax [1965 (12) TMI 22 - SUPREME COURT] which held that there can be no distinction between expenditure of one kind or the other, when it came to borrowed funds and the treatment of interest thereon. - Decided in favour of the assessee. 2018 (9) TMI 797 Allowing deduction u/s 80HHC on the basis of book profits u/s 115JA even though the eligible profits u/s 80HHC was NIL as per normal computation ? - Held that:- Substantial question of law is decided against the Revenue and in favour of the assessee by relying upon the decision in the case of Ajantha Pharma Limited Vs. Commissioner of Income Tax [2010 (9) TMI 8 - SUPREME COURT] and Commissioner of Income Tax Vs. Bhari Information Tech System Private Limited [2011 (10) TMI 19 - SUPREME COURT OF INDIA] Expenditure incurred on issue of shares as eligible to be amortised u/s 35D - Held that:- Substantial question of law is decided against the Revenue in the light of the decision of the assessee's own case in Shasun Chemicals and Drugs Limited Vs. Commissioner of Income Tax [2016 (9) TMI 1199 - SUPREME COURT OF INDIA] Loss on account of exchange fluctuation - where the accounting was on mercantile basis, the loss on account of exchange fluctuation could be claimed and deducted even in a year prior to the payment in foreign exchange? - Held that:- Substantial question of law is decided against the Revenue by relying upon the decision of the Hon'ble Supreme Court in the case of Commissioner of Income Tax Vs. Woodward Governor India Private Limited [2009 (4) TMI 4 - SUPREME COURT] 2018 (9) TMI 796 Penalty u/section 271(1)(c) - sum debited to the profit and loss account under the head 'other expenses', which was included under 'administrative and other expenses' and the same was stated to have been incurred for land up-keep - Held that:- Admittedly, the expenses, which were included under the head 'other expenses' towards land up-keep, when pointed out by the Assessing Officer, to be justified, the assessee was unable to place any documents to substantiate the same. On the contrary, they accepted it as a non business expenditure. Accordingly, the same was added to the income. The assessee is a company engaged in financial services such as leasing and hire purchase finance and it is beyond one's apprehension that in their returns, they inadvertently included the sum incurred for land up-keep expenses and debited to the profit and loss account. There is nothing on record to show that the inclusion of the said sum under the head 'administrative and other expenses' was an inadvertent error. Furthermore, the assessee was unable to substantiate their stand before the CIT (A) that there was an attempt to file revised returns. Thus, the Authorities below as well as the Tribunal rightly came to the conclusion, on the facts and in the circumstances of the case, that penalty was leviable on the assessee. - Decided against assessee 2018 (9) TMI 795 Disallowance of purchases made from related parties, disallowance of unverified fixed assets, and depreciation on bottles and crates - Held that:-Tribunal has not specifically considered and dealt with the contention and pleas raised by the appellant/assessee while remanding the case on the two aspects relating to addition to fixed assets and purchases of bottles etc. Observation of the Tribunal that the appellant-assessee had not produced books of accounts is seriously disputed and contested by the appellant-assessee. It is stated and claimed that they had produced books of accounts, except books of accounts relating to the manufacturing units, which could not be produced due to Telangana agitation. Invoices and details relating to purchases etc. were produced. The issue would be whether and what documents and papers in respect of the purchases were produced before the Assessing Officer as held by the Commissioner of Income Tax (Appeals) or the findings and observations of the Assessing Officer were justified. Our aforesaid decision would equally apply to the question of claim of depreciation on bottles and tetra packs, which were disallowed by the Assessing Officer. The question of law is partly answered in favour of the appellant-assessee and partly answered in favour of the respondent-Revenue. We uphold the order of remand passed by the Tribunal in respect of disallowance of unverified purchases from related parties. We, however, set aside the order of the Tribunal remanding the matter to the Assessing Officer on the question of unverified fixed assets and depreciation. 2018 (9) TMI 794 Set off of MAT credit - before or after setting off the Tax Deducted at Source and Advance Tax paid - Whether MAT Credit can be given priority of set off against tax payable contrary to the scheme of Schedule G of Form 1? - Held that:- The Substantial Questions of Law, asframed for consideration in this Appeal, are squarely covered against the Revenue, in the light of the decision of the Hon'ble Supreme Court in the case of Commissioner of Income Tax vs. Tulsyan Nec Ltd Ltd. [2010 (12) TMI 23 - SUPREME COURT OF INDIA] also followed in the case of Commissioner of Income Tax vs. Aban Loyd Chiles Offshore Ltd [2014 (4) TMI 1013 - MADRAS HIGH COURT] as held that credit under Section 115JAA only should be given effect to and not to the tax and interest therefor and that interest under Sections 234A, 234B and 234C of the Act should be given after giving MAT credit under Section 115JAA. - credit under Section 115JAA should be given effect to before charging of interest under Sections 234A, 234B, 234C of the Act. - Decided in favour of assessee 2018 (9) TMI 793 Treatment to the income derived from sale of shares under the head ‘short term capital gain’ - portfolio management - Held that:- Assessee is having only one portfolio that is of investment and is consistently following to declare capital gain or loss on sale on investment, dividend is earned on investment and there is not stock in trade portfolio. Besides, the assessee is consistently valuing investment at cost and does not claim the diminution in valuing of investment. The intention of the assessee that the Board of Directors of the assessee company has passed the resolution stating that the motive of the company is to deal in investment and not to trade in shares, therefore, we are of the view that assessee’s income i.e Short term Capital Gain by way of sale of investment should be assessed under the head ‘capital gain’ instead of ‘business income’. Therefore, we direct the Assessing Officer to treat the assessee as an investor and assess the income under the head ‘Short term Capital Gain’. - Decided against revenue 2018 (9) TMI 792 Disallowance u/s 80IA - Held that:- We find that similar issue came up for consideration before the SMC-B Bench bench in assessee’s own case for AY 2010-11 and 2012-12 we set aside the order of CIT(A) and remit the issue back to the file of AO to decide the issue afresh considering the documents filed by the assessee and in accordance with law after providing reasonable opportunity of being heard to the assessee in the matter. Thus, the issued raised in ground Nos. 1 - 4 are treated as allowed for statistical purposes. Disallowance u/s 36(1)(va) - delay in contribution to PF and ESI - Held that:- It is a settled position of law that if the contributions towards PF & ESI are paid beyond the due date but before filing of the return of income u/s 139(1) of the Act, no disallowance can be made. Therefore, we remit this issue also to the file of the AO to verify whether the amounts paid before filing of the return of income, if so, disallowance may be deleted 2018 (9) TMI 791 Denial of registration u/s 12AA(3) - proof of charitable activities - Held that:- The facts are identical to the facts of the case decided by the Tribunal for Assessment Year 2009-10 in assessee’s own case wherein held activities of the assessee society do not involve the carrying of any activity in the nature of trade, commerce or business or any activity of running any service in relation to any trade, commerce or business. The proviso inserted in sec. 2(15) w. e. f. 01. 04. 2009 is not attracted in the case of the assessee. We, therefore, hold that the Learned CIT(Appeals) following the said order of the ITAT has rightly decided that the Assessing Offices was not justified in denying the benefit of exemption under sections 11 and 12 available to the assessee by applying the proviso to section 2(15). The first appellate order being comprehensive and reasoned one thus does not need any interference. The same is upheld and the grounds are accordingly rejected - Decided against revenue 2018 (9) TMI 790 Contributions received from consumers - whether to be treated as revenue receipts incidental for carrying on the business activity - Held that:- As decided in assessee's own case [2018 (5) TMI 498 - ITAT HYDERABAD] as Provided, that where such subsidy or grant or reimbursement is of such nature that it cannot be directly relatable to the asset acquired, so much of the amount which bears to the total subsidy or reimbursement or grant the same proportion as such asset bears to all the assets in respect of or with reference to which the subsidy or grant or reimbursement is so received, shall not be included in the actual cost of the asset to the assessee. The appellant has gone on to state that the Assessing Officer has misunderstood the accounting policy and accounting entries passed in the books and erroneously treated the capital contributions received from consumers as income. Therefore, the amount added to the total income under the normal provisions, is not correct. - decided against revenue 2018 (9) TMI 789 Addition u/s 68 - CIT-A deleted the entire additions on the basis of few sample shareholders - Held that:- Assessee has filed confirmation letters of all the 413 persons and during the remand proceedings also, the AO was directed to verify the identity, creditworthiness and genuineness of the transactions. It was the decision of the AO to pick up only 10 persons out of 413 persons and the assessee produced not only these 10 persons but also produced 7 more shareholders. As seen from the remand report reproduced by the CIT (A) AO was satisfied about the creditworthiness of these shareholders for investment in the assessee’s company. AO has not made any adverse comments on the acceptance or otherwise of other 400 people as shareholders, we find that the AO has also not given the breakup of the investment made by the 10 persons or the percentage of investment which has been proved by the assessee to accept the entire investment as genuine. Thus deleting the entire additions on the basis of few sample shareholders is not correct. Therefore, we deem it fit and proper to remand the issue to the file of the AO with a direction to verify the investments atleast to the tune of 25% to 50% and findings on such material may be adopted for coming to any conclusion. - Decided in favour of revenue for statistical purposes. 2018 (9) TMI 788 Addition of capital gain - year in which taxable? - Held that:- Referring to Coordinate Bench decision in the case of other co-owners the appeal of the assessee is allowed and it is held that the capital gain is taxable in the year 2003 when the actual vacant position of the land was given to the Developer. 2018 (9) TMI 787 Addition on account of cash deposits found to be made in the bank account of the assessee by treating the same as unexplained cash credit - Held that:- A perusal of the documents filed by the assessee shows that the same are relevant to decide the issue involved in the assessee’s case. It is also noted that some of the said documents have been made available to the assessee only after the disposal of the appeal of the assessee by the CIT(A) vide his impugned order. DR has not disputed that these documents filed by the assessee as additional evidence are relevant to decide the issue involved in the present appeal. He however has contended that an opportunity should be given to the AO to verify the said documents which are being filed by the assessee for the first time before the Tribunal to support and substantiate his case, as find merit in this contention of the learned DR. CIT(A) on the issue under consideration is set aside and the matter is restored to the file of the AO for deciding the same afresh after giving the assessee one more opportunity to support and substantiate his case on the basis of fresh evidence. Appeal of the assessee is treated as allowed for statistical purpose. 2018 (9) TMI 786 Addition on account of Transfer Pricing Adjustment - selection and rejection of comparable - denial of natural justice - non providing an opportunity to the assessee to have the audited financial statements along with the FAR analysis of the said comparables - Held that:- CIT(A) ought to have given an opportunity to the AO/TPO to offer their comments on the various aspects of the matter by seeking remand report before accepting the submissions made on behalf of the assessee. CIT(A) has passed a very cryptic order and after extracting the submissions made on behalf of the assessee of his impugned order, he has given his conclusions hardly on one and half pages. As rightly pointed out by the learned DR, the comparables selected by the assessee were rejected by the TPO on specific grounds, but the Ld. CIT(A) has accepted the same only by stating that the FAR of the said entities was comparable to the FAR of the assessee-company. He has not given any reason whatsoever to come to that conclusion and has also not commented upon the specific grounds given by the TPO for rejecting the said comparables. Similarly the entities selected by the TPO as comparables on specific grounds were rejected by the Ld. CIT(A) on the ground that their profit and loss account was not available. As rightly pointed out by the learned DR, the OP/OC of the said entities was worked out by the TPO in his order which was not possible without having their profit and loss account. This aspect, therefore, should have been confronted by the CIT(A) to the AO/TPO seeking their comments. CIT(A) in his impugned order has observed that the TPO did not provide an opportunity to the assessee to have the audited financial statements along with the FAR analysis of the comparables selected by him and there was thus a violation of principles of natural justice by the TPO. - Held that:- It is observed that the TPO has clearly mentioned in his impugned order that the financial statements of the said comparables were available in public domain and the assessee did not ask for the same specifically. CIT(A) at least should have remanded the matter to the AO/TPO for providing an opportunity to the assessee to have the audited financial statements along with the FAR analysis of the said comparables if at all, according to the CIT(A), there was any violation of principles of natural justice by the TPO - set aside the impugned order of the Ld. CIT(A) and remit the matter back to him for deciding the same afresh after getting the remand report from the AO/TPO and by passing a well reasoned and well discussed order. Decided in favour of revenue for statistical purpose. 2018 (9) TMI 785 Treatment to the income received by the assessee from service charges - head of income - house property OR business income - allowance of substantial expenses claimed by the assessee against the said income - Held that:- We are unable to understand what exactly are the services that are required to be rendered to collect the common electricity charges from the tenants that can be termed as an independent business activity of the assessee. Even the exact nature of the balance amount received by the assessee on account of service and maintenance charges is not very clear from the details furnished by the assessee and if quantum of such amount is compared, vis-a-vis the substantial rental income received by the assessee, it does not appear that the service and maintenance charges were generated by the assessee from any business activity carried on independently. Find merit in the contention of the D.R. that the service and maintenance charges received by the assessee were only incidental to rental income and since the said activity was ancillary to the main activity of letting out the properties, the service and maintenance charges were chargeable to tax as income from house property as rightly held by the Assessing Officer. As regards the alternative claim of the ld. Counsel for the assessee that the assessee-company was engaged in other business activities during the earlier years and there was only temporarily suspension of the said activities during the year under consideration due to lull in the business, we find that this aspect has not been specifically considered either by the Assessing Officer or even by the ld. CIT(Appeals). Since the issue relating to the claim of the assessee for various business expenses is consequential to this issue, we restore the issue also to the file of the Assessing Officer for deciding the same afresh. Addition in respect of deemed rental income from the property at Qutub Institutional area, New Delhi - Held that:- We set aside the impugned order of the ld. CIT(Appeals) on this issue and restore the matter to the file of the Assessing Officer for deciding the same afresh after verifying the exact date of sealing of the property by Delhi Municipal Corporation from the relevant documentary evidence. Ground No. 3 of the Revenue’s appeal is accordingly treated as allowed for statistical purposes. Deemed rental income from the property at Silver Arch Apartments - Held that:- CIT(Appeals), in our opinion, therefore, was not justified in deleting the addition the property at Silver Arch Apartments - Held that:- CIT(Appeals), in our opinion, therefore, was not justified in deleting the addition made by the Assessing Officer on this issue on the wrong presumption n made by the Assessing Officer on this issue on the wrong presumption that the possession of the property was already handed over. As rightly contended by the ld. D.R., the possession of the property remained with the assessee during the year under consideration and the assessee being the owner in possession of the property, the notional rental income from the same was chargeable to tax in the hands of the assessee under section 23(1)(a) as rightly held by the Assessing Officer. We, therefore, set aside the impugned order of the ld. CIT(Appeals) giving relief to the assessee on this issue and restore that of the Assessing Officer. Ground No. 4 of the revenue’s appeal is accordingly allowed. Deemed dividend u/s 2(22)(e) for the loans received from Devbhoomi Awas Limited and M/s. Arcus Limited - Held that:- Addition made by the Assessing Officer under section 2(22)(e) in respect of loans received from Devbhoomi Awas Limited and M/s. Arcus Limited by treating the same as deemed dividend under section 2(22)(e) are deleted by the CIT(Appeals) after having found that the said loans had been taken by Turner Morrison Land Limited (TMLL) in the earlier years and the same were transferred to the assessee-company as a result of merger of TMLL with the assessee-company. He also found that the assessee-company was not the shareholder of both these companies when the loans in question were actually received. At the time of hearing before us, the ld. D.R. has not been able to bring anything on record to dispute these findings of fact recorded by the ld. CIT(Appeals) while deleting the addition made by the AO under section 2(22)(e). Addition made on the basis of ITS data - Held that:- It is observed that the difference in relevant ITS data as noted by the Assessing Officer was reconciled by the assessee during the course of appellate proceedings before the ld. CIT(Appeals) and after considering the same, the ld. CIT(Appeals) directed the assessee to produce all the relevant details in support of the reconciliation for verification before the AO. This opportunity given by the ld. CIT(Appeals) to the AO to verify the reconciliation prepared and furnished by the assessee from the relevant details and documents, we are of the view that the revenue cannot be said to have any grievance from the order of the CIT(Appeals) on this issue. Addition u/s 14A read with Rule 8D - Held that:- No disallowance under section 14A can be made if there is no exempt income actually received by the assessee in the relevant year. We accordingly delete the disallowance made by the Assessing Officer and enhanced by the ld. CIT(Appeals) under section 14A read with Rule 8D. See case of Cheminvest Limited [2015 (9) TMI 238 - DELHI HIGH COUR]. 2018 (9) TMI 784 Addition on account of commission/service charges - allowable busniss expenses - Held that:- The assessee had made all the payments to the parties from whom purchase was made by account payee cheques, the purchases made can be verified from the purchase bills, sales tax numbers and transport documents. The books of accounts were not rejected. All the five parties to whom the assessee paid commission had submitted their copy of bill which contained their PAN details. Tax was deducted at source by the assessee and deposited with the Government. Summon u/s 133(6) were served on all the parties/agents, and all of them confirmed to have received the commission - all the five agents have duly included the income in their return of income and paid taxes thereon and that there was no evidence to show that the money has come back to assessee or the agents were related parties. Therefore, the service of the agents are for business purpose and therefore, the commission paid was a business expense and needs to be allowed as 'deduction’ since it is of revenue nature and expended wholly and exclusively for the purpose of business and, therefore, the AO is directed to allow commission expenditure incurred by the assessee. - Decided in favour of assessee 2018 (9) TMI 783 Best adjustment assessment - estimation of income - Limited Rejection of book results under section 145 - Held that:- We are conscious of the fact that in various authoritative pronouncements, it has been propounded that in making a best judgment assessment, the Assessing Officer must not act dishonestly or vindictively or capriciously. It is also pertinent to mention that judgment is a faculty to decide matter with wisdom, truly and legally. Judgment does not depend upon the arbitrary, caprice of an adjudicator, but on settled and invariably principles of justice. Thus, in a best judgment, even if, there is an element of guess work, it should not be a wild one, but shall have reasonable nexus to the available material and circumstances of each assessee. The assessee could have easily made the job of AO more easier if he has submitted details showing commission received by him from the mobile companies. That would eliminate the guess-work for estimating the profit. But instead of agitating the issue upto the level of second appellate authority, this very easy step was not taken by the assessee. In the absence of any details, we are of the view that the ld.CIT(A) has rightly exercised his discretion of estimating the profit. We find that no error in the order of the ld.CIT(A). Thus, ground of appeal is rejected. It is pertinent to observe that profit has been estimated qua sale of mobile recharge vouchers only. This is a limited rejection of books on one issue, which has been upheld by the CIT(A). With regard to the regular source of business i.e. trading in pan masala and gutkha, books have not been rejected. The profit declared by the assessee has been accepted. The closing balance difference on that activity requires to be added separately. The ld.CIT(A) has rightly confirmed this addition. We do not find any merit in this ground of appeal. It is rejected. Penalty u/s 271B - Held that:- We find that penalty under Section 271B of the Act is imposable under the Act, if any person fails to get his accounts audited in respect of any previous year and fails to furnish report thereof to the AO. The threshold limit as provided under the Act, require the assessee to compulsorily get his accounts audited before the specific date. Admittedly turnover of the assessee is more than ₹ 40 lakhs and the assessee did not get his accounts audited. Since the assessee failed to comply with the statutory requirement without any valid reasons, the order imposing the penalty deserved to be confirmed. We do not find any error in orders of both the Revenue authorities below, which we confirm and this appeal of the assessee is dismissed. 2018 (9) TMI 782 Revision u/s 263 - Contention of ld. AR is that the AO has made an enquiry and the Pr.CIT again called for the necessity of enquiry in respect of sundry creditors and also the order passed by the Pr. CIT does not satisfy twin conditions i.e. erroneous or prejudicial to the interest of Revenue - Held that:- Pr.CIT found the confirmations submitted in the assessment proceedings before the AO of sundry creditors are not satisfactory and the AO has not examined and enquired regarding sundry creditors to the extent of ₹ 17,38,511/- and has not recorded his findings in the assessment order. AO has followed the directions of Pr. CIT on the disputed issue of verification of sundry creditors and the ld. AR of the assessee has participated in the assessment proceedings and filed the details and also information was called for u/s.133(6) of the Act in respect of sundry creditors and finally the AO has passed the order u/s.143(3) r.w.s 263. Therefore, we are of the opinion that the assessee has participated in the assessment proceedings and as envisaged by the ld. AR the assessee has filed an appeal against the order of AO passed u/s.143(3)/263 of the Act. Pr.CIT has dealt on the disputed issue and considered the judicial decision and passed a reasoned order. - Decided against the assessee. 2018 (9) TMI 781 Reopening of assessment - Interest expenditure on External Commercial Borrowings claimed as a deductible expenditure - share application money pending allotment which includes ECB and interest accrued thereupon has been issued and shares allotted in A.Y. 2008-09 - Held that:- With the assistance of assessee, we have gone through the profit and loss account of the assessee company for the past year as submitted in paper book. The amount sought to be disallowed was debited in the financial year 2006-07 which is not at all relevant for the assessment year 2008-09 in which assessment is sought to be done. No interest whatsoever has been debited in the assessment year 2008-09. Hence, in our considered opinion, there is no question at all of disallowing the interest as capital expenditure which has not at all been debited in the impugned assessment year. Since, there is no debit of interest in the current assessment year, there is no question whatsoever of disallowing the same on the ground that there has been escapement of income. When the amount in question has not been debited in the profit and loss account as expenditure, nor the assessee has claimed any deduction and the assessee is following mercantile system of accounting, there is no question of disallowing the deduction which has not at all been claimed by the assessee. As regards the merits of the case, on similar analogy, since the impugned expenditure was not incurred during the current year, there is no question of disallowing the same in the current assessment year. As we have already given a finding that there was no question of making a disallowance of interest expenditure for whatever reason as the said expenditure was not at all debited during the year, the assessee succeeds on both the counts of lack of validity of reopening as well as merits of addition. In this regard, we are not inclined to accede to DR's request that a direction should be given for making the addition in earlier assessment year. We are of the opinion that in doing so, we shall be exceeding our jurisdiction. The ITAT is not mandated to exercise revisionary powers which are vested with CIT u/s. 263 to cure fatal errors and omission on the part of the Revenue authorities. - Decided in favour of assessee. 2018 (9) TMI 780 Rental Income received from letting out of factory Premises situated in government notified industrial area - Income from house property or busniss income - Held that:- Assessee's memorandum and Articles of Association clearly indicates that assessee is allowed to carry on business of renting, lease, sublease being of residential and commercial or industrial premises on behalf of assessee itself or on behalf of Central or state government or any local authority in India. Assessee has let out on rental basis the portion which is not occupied by assessee for its business purposes. It is also very clear that assessee had received land from State Government of Haryana for commercial use, which has not been disputed by authorities below. Though we agree with Ld.DR that principle of res judicata do not apply, but consistency should be maintained and taxing authorities should not deviate from its earlier decision, unless there is justifiable material on record calling for such deviation. Thus in our considered view assessee had granted a portion of the building on lease to M/s.ALP Plastics Pvt. Ltd., and M/s.Standard Gold Electricals Pvt. Ltd to commercially exploit the asset, which has to be assessed as business income. - Decided in favour of assessee. Addition u/s 68 as received from undisclosed sources - AO disallowed amount received by assessee towards job work, since the Principal failed to deduct TDS from payments made to assessee, in view of provisions of section 194C - CIT (A) restricting allowability of business expenses to the extent of 50% - Held that:- Admittedly for the year under consideration, amount credited in books of accounts are income in hands of assessee, which has been declared by assessee under the head, “Income from Business”. In fact, view formed by authorities below is based on presumption that assessee is the owner of the said amount credited in cash. Further authorities below rejected submissions of assessee, without making any enquiries in relation to nature of income received on the basis of preceding assessment years. We therefore are of considered opinion that the addition made by Ld.AO which is sustained by Ld. CIT (A) needs proper verification by Ld.AO. Merely on surmises and conjunctures no addition can be made u/s 68 of the Act, when assessee himself is declaring the monies received in cash as its Business Income. It is observed from Ld.AO’s order that assessing officer has not rejected books of accounts, but has disallowed expenses since vouchers did not appear to be authentic. No further enquiries were conducted by Ld.A.O. in this regard for rejecting entire expenses claimed by assessee. Ld.CIT (A) did not dispute business activity but restricted disallowance to 50% without any basis. There are certain expenses like administrative expenses, directors sitting fees, audit fees, depreciation, office repairs and maintenance expenses, legal expenses, factory running expenses, telephone expenses and miscellaneous expenses which cannot be disallowed as these are necessary to be incurred for the purposes of business. As we have in the preceding paragraph already held the rent received from factory premises to be “Income from Business”, factory running expenses and office repairs and maintenance expenses are eligible expenditure in the hands of assessee. We accordingly direct Ld.AO to compute the disallowance of expenses in respect of the other items. Addition on account of interest paid on loans - Held that:- For purposes of allowability of an expenditure under section 37(1) burden lies upon assessee to establish that loans have been expended wholly and exclusively for purposes of business or profession only. In the facts of present case, assessee has not demonstrated in any manner whatsoever, regarding alleged purchase of land out of loans taken from related parties, on which interest of ₹ 3,43,693/- has been paid. Merely by submitting that amount has been utilised for purposes of business, do not support claim of assessee. We therefore do not find any infirmity in decision of Ld. CIT (A) in disallowing interest expenditure. - decided against assessee 2018 (9) TMI 779 Disallowance of bogus purchases - CIT(A) has applied the profit rate at the rate of 15%, which according to us is on higher side going by the nature of business of the assessee i.e. dealing in gift items - Held that:- Additional profit rate of 10% of unproved bogus purchases be further added to income of the assessee which will meet the end of justice in view of the decision of Hon’ble Gujarat High Court in the case of CIT vs. Smith P. Seth [2013 (10) TMI 1028 - GUJARAT HIGH COURT]. Hence, we direct the AO to recompute the profit after applying additional profit rate of 10% on unproved bogus purchases and compute the income accordingly. The appeal of the assessee is partly allowed. 2018 (9) TMI 778 Penalty u/s 271(1)(b) - failure to comply with the notices issued under section 148 and 142(1) - Held that:- As decided in SHRI CHOUTH MAL SHARMA VERSUS THE INCOME TAX OFFICER, WARD 7 (4) , JAIPUR [2018 (7) TMI 378 - ITAT JAIPUR] other than the default committed by the assessee specified in the clause (b) of section 271(1) the non compliance to the other notices or directions would not attract the penalty under section 271(1)(b) of the Act. Accordingly, the penalty levied under section 271(1)(b) for non compliance of notice under section 148 is not valid and the same is deleted. As regards the penalty levied for non compliance of notice under section 142(1), we find that the assessee was not served with any of the notices issued by the AO due to the change of address and since the assessee has not filed any return of income, therefore, the AO was not having the present address of the assessee. Hence when the notice issued under section 142(1) was not served upon the assessee, and the AO has not conducted further enquiry regarding the current address of the assessee then in the facts and circumstances of the case that the assessee had already furnished the current address in the quantum proceedings, the reasons explained by the assessee are bonafide and reasonable. We delete the penalty imposed under section 271(1)(b) of the Act for non compliance of section 142(1). - Decided in favour of assessee 2018 (9) TMI 777 Disallowance of electricity payment paid to Jodhpur Vidyut Vitran Nigam Limited u/s 40A(3) - payment in cash exceeding specified limits - business expediency of making cash payments - Held that:- The assessee has entered into an agreement with a Government Hospital in Bikaner whereby it operates the MRI and CT Scan machines. The nature of such activities therefore demand a continuous supply of electricity and the assessee cannot risk the life of the patients especially those admitted in emergency cases by not operating these machines for want of electricity. Thus there was business expediency of making cash payments so that there is no disruption in supply of electricity required to operate the MRI and CT scan machines. It is not in all cases that the payments have been made in cash, rather the assessee has made cheque payments as well during the year. Therefore, it is in only those cases where the cheque payments couldn’t be arranged nearing the due date of payment that the payments have been made in cash. Therefore, being a case of genuine business transaction and test of business expediency been satisfied, no disallowance is called for by invoking the provisions of section 40A(3) of the Act. In the result, we hereby direct the deletion of disallowance so sustained by the ld CIT(A) - Decided in favour of assessee Disallowance of Freight & labour expenses and shop expenses - AO observed that expenses are not fully supported by bills vouchers - Held that:- The nature of these expenses are such that pakka bill is not possible. The expenses are reasonable considering the turnover of ₹ 1,98,00,164/-. The AO has not pointed out any specific expense which is not supported by vouchers. The shop expenses pertain to tea, refreshment, etc. which is reasonable. Hence, lump sum disallowance out of these expenses is uncalled for & be deleted. We find merit in the contention so raised by the ld AR and the adhoc disallowance so sustained by the ld CIT(A) is hereby deleted. - decided in favour of assessee 2018 (9) TMI 776 Disallowance of depreciation to assessee trust - cost of assets on which depreciation was claimed was allowed as application of income - Held that:- By virtue of judgment in the case of Rajasthan & Gujarati Charitable Foundation Poona (2017 (12) TMI 1067 - SUPREME COURT) even where cost of acquisition is treated as application of income, depreciation has to be allowed on such assets. Accordingly, we are of the opinion that assessee was eligible for claiming such depreciation. Excess application of income for earlier years claimed for carry forward not allowed - set off denied against the surplus for the impugned assessment year - Held that:- There is no dispute that excess of application claimed by the assessee was the amount which was expended above its income. In other words, assessee only claimed excess application without considering accumulation of 15% allowed to it. In such circumstances, we are of the opinion that assessee was eligible for claiming the carry forward of excess over application of income pertaining to the earlier years. Orders of the lower authorities is set aside. AO is directed to give set off claimed by the assessee. Grounds of the assessee stand allowed. Gratuity paid to its employees not allowed as application of income - Claim of the assessee before us is that gratuity payment was actually paid during the relevant previous year, but the AO and CIT (Appeals) took a view that there was no actual cash outflow - Held that:- Now before us, assessee has filed a list showing names of the persons to whom gratuity payments were claimed as effected during the relevant previous year. In the circumstances, we are of the opinion that the matter needs a fresh look by the ld. Assessing Officer. We set aside the orders of the lower authorities and remit the question regarding allowability gratuity payment of ₹ 13, 99, 817/- back to the file of the AO for consideration afresh in accordance with law. - Decided in favour of assessee for statistical purposes. 2018 (9) TMI 775 Disallowance of the sub-contract charges paid to SIPL - Notice issued by the AO u/s 133(6)returned back - Held that:- The notice issued by the AO u/s 133(6) to SIPL on the address given by the assessee was returned back by the postal authorities with a remark “no such firm/person in this address”. Thereafter, the AO vide letter dated 08.10.2011 informed the above matter to the assessee and asked to submit correct current address or produce the party for verification. The assessee neither submitted the new current address of SIPL nor produced the party for verification. As observed by the AO, the fresh address given by the assessee in its submission dated 18.10.2010 is the same which was given earlier. It is the finding of the AO that the assessee filed copies of two bills which are just computer generated bills without any invoice number, service tax number, GST/VAT No. We find from the P/B filed by the appellant that the assessee had filed before the AO vide its letter dated 13.10.2016 during the course of remand proceedings. Thus taking into account the facts and circumstances of the case, we direct the AO to restrict the disallowance to 10% of the sub-contract charges of ₹ 44,38,520/- paid to SIPL. 2018 (9) TMI 774 Entitled to the benefits of section 10B - Interest income earned by the assessee on Fixed Deposits kept with bank in order to obtain the facility of Bank Guarantees - Held that:- The claim of the assessee is on a sound footing in as much as factually speaking it is not disputed that interest has been earned on deposit with bank and used for furthering the business of its 100% EOU, which is eligible for benefits of section 10B. So long as such income constitutes profits and gains of business of the eligible undertaking, the same would fall within the scope of expression ‘Income from profits and gains’ incorporated in section 10B(4) of the Act. In view of the aforesaid and also the order dated 16.07.2010 of the Tribunal in assessee’s own case for A.Ys 2003-04 and 2004-05, claim of the assessee deserves to be accepted. We hold so. Scaling down the carry forward losses of non-10B units by the amount of exemption u/s. 10B - Held that:- CIT(A) has directed the Assessing Officer to verify the claim of the assessee and allow it as per law. Pertinently, before the CIT(A) the assessee has relied on various decisions of the Tribunal as well as the judgment of Hon’ble Karnataka High Court in the case of Yokogawa India Ltd. (2011 (8) TMI 845 - KARNATAKA HIGH COURT). In our considered opinion, the manner in which the CIT(A) has decided the issue does not require any interference from our side 2018 (9) TMI 773 Revision u/s 263 - CIT found fault with the action of the AO in allowing interest as interest on the loan, the assessee had taken from the Govt. of West Bengal - Held that:- At the first instance itself note that the loan was sanctioned by the West Bengal Government and as per the terms and conditions of the loan sanctioned it was provided that the G.O. will be issued later on prescribing the terms and conditions of the loan sanctioned. In the light of the G.O. on the subject matter “loans and advances of the State Govt. & interest rates and other term and conditions for the year 2011-12” the interest on the borrowed funds cannot be termed as a contingent liability. However, we note that though the assessee had debited ₹ 537.34 lacs i.e. 6.25% of the borrowed funds as interest expenditure and claimed deduction of the same. The said sum was not paid before the due date of filing of the return of income. So, as per section 43B of the Act, the sum of interest not paid cannot be allowed as expenditure in this A.Y. And since the AO has accepted the return of income of the assessee without looking into the fact that the assessee has not remitted the interest to the lender, so as per section 43B of the Act the expenditure claimed on interest incurred on the loan taken, could not have been allowed and, therefore, the order of the AO is erroneous as well as prejudicial to the interest of the revenue. We uphold CIT’s action in setting aside the order of the AO and directing him to reassess the assessment and disallow interest is in order - Decided against assessee. 2018 (9) TMI 772 Disallowance u.s 14A - Allowable deduction u/s 37(1) - investment advisory fees paid to Tusk Investment Fund 1 and Tusk Investment Fund 2 - AO and CIT-A held that the investment advisory fees paid to Tusk Investment Fund 1 and 2 respectively are for earning tax free income and hence cannot be allowed deduction u/s 14A - Held that:- In the present case, it not in dispute that the AO made the disallowance u/s 14A of the Act r.w. Rule 8D of the Income Tax Rules, 1962. It is also noticed that the assessee although earned the dividend income of ₹ 18,48,394/- which was claimed as exempt, but the disallowance was made by the assessee suo motto u/s 14A r.w. Rule 8D of the Income Tax Rules, 1962 for a sum of ₹ 29,44,969/-, the said fact has been accepted by the AO at page no. 4 of the assessment order dated 03.11.2014. It is well settled that as per the ratio laid down by the Hon’ble Jurisdictional High Court in the case of Joint Investment (P.) Ltd. Vs CIT [2015 (3) TMI 155 - DELHI HIGH COURT] that the disallowance u/s 14A of the Act can be made only to the extent of exempt income In the present case, since the assessee suo motto made the disallowance of ₹ 29,44,969/- u/s 14A of the Act r.w. Rule 8D of the Income Tax Rules, 1962, more than the exempt income claimed at ₹ 18,48,394/-. Therefore, no further disallowance was called for. - Decided in favour of assessee. 2018 (9) TMI 771 Additional depreciation on boiler - assessee claimed higher depreciation @80% on boilers treating the same as Energy Savings Devices - Held that:- Upon due consideration, we find that the relief has been provided to the assessee by Ld. first appellate authority by relying upon the decision of Hon’ble Madhya Pradesh High Court rendered in DCIT Vs Vippy Solvex Products Limited [2007 (3) TMI 746 - MADHYA PRADESH HIGH COURT]. The cited case, in turn, places reliance on the decision of Hon’ble Kerala High Court rendered in CIT Vs. Cochin Refineries Limited [1987 (1) TMI 9 - KERALA HIGH COURT]. In both the cases, Hon’ble High Courts have allowed the claim of the assessee by observing that additional plant & machinery had no separate existence and could not be utilized for any other purpose and formed integral component of the boiler and therefore, eligible for higher depreciation. Similar observation has been made by Ld. First appellate authority while arriving at the conclusion. Before us, the revenue has neither controverted the factual findings nor able to bring on record any contrary judgment to defend its viewpoint. CIT(A), in our opinion, has clinched the issue in right / proper perspective and provided relief to the assessee with due application of mind. Therefore, we find no reason to interfere with the same. - Decided against revenue 2018 (9) TMI 770 Benefit of section 11 denied - registration u/s.12AA is continuing - taxation of interest income - Held that:- So far as the status of registration u/s.12AA is concerned, the same still stands as on date, because registration cancelled by the learned CIT(E) has been set aside and reversed by the Tribunal. Once, the assessee is registered u/s.12AA, then it is sine-qua-non that benefit of Section 11 has to be given. The Assessing Officer has granted exemption to the assessee on its entire income following the ‘principle of mutuality’. Only taxed the interest income. If income is to be computed u/s.11, then ostensibly interest income would also form part of the income and expenditure account. Accordingly, the same has to be computed in the same manner and the benefit of Section 11 has to be given. We find that this precise issue had come up for consideration before this Tribunal in assessee’s own case in the Assessment Year 2009-10, wherein the Tribunal has allowed the benefit of Section 11 after following the Tribunal’s order for the Assessment Year 2008-09. Once in the earlier assessment years the assessee has been granted exemption u/s.11 and registration u/s.12AA is still continuing, then we do not find any reason as to why benefit of section 11 should be denied. Accordingly, the order of the learned CIT (A) is confirmed and Revenue’s appeal is dismissed. 2018 (9) TMI 769 Disallowance of expenses for purchase of application software - nature of expenditure - revenue or capital expenditure - Held that:- If the revenue expenditure has been incurred in a particular year then same has to be allowed in that year itself, if the assessee has claimed the expenditure in that year and Revenue cannot deny the same. Thus, in view of earlier year precedence in assessee s own case [2016 (6) TMI 1240 - ITAT DELHI] and also respectfully following the ratio laid down by the Hon'ble Apex Court in the case of Taparia Tools Ltd [2015 (3) TMI 853 - SUPREME COURT], we decide this issue in favour of the assessee Addition u/s 14A - Held that:- AO should have first examined such a claim with regard to the accounts of the assessee and the nature of expenditure debited so as to prima-facie come to a satisfaction whether any expense can be attributed for the purpose of earning the exempt income. It is only when he finds certain discrepancies in assessee s claim, then only he can proceed with making of the disallowance. Here in this case, as discussed above, no such satisfaction has been recorded, and therefore, we hold that no disallowance u/s.14A should be made. The other plea taken by the parties before us, are not discussed, because at the threshold we have held that no disallowance should be made. Income on account of reversal of income as per RBI guide lines - Held that:- this issue has been discussed by the Tribunal in assessee s own case for the Assessment Year 1999-00 in the case of its sister concern which has been confirmed by the Hon'ble Delhi High Court also. The ld. CIT (A) has held that since the issue is now settled by the Hon'ble Jurisdictional High Court in the case of the assessee and on the similar facts, he deleted the addition. - Revenue appeal dismissed. Customs 2018 (9) TMI 768 Valuation - goods cleared on provisional assessment - Whether the Hon'ble Tribunal failed to appreciate that the second test report dated 29.08.2005 issued by the National Metallurgical Laboratory (NML) would be determinative of the issue particularly when the Commissioner of Customs chose to agree to the Appellant's request for re-test of the goods imported in one lot? - Whether the Tribunal had erred in upholding the imposition of penalty by holding that the appellant had misdeclared the description of the goods when the declaration was made as per the import documents issued by the supplier abroad? - Held that:- Though the goods have been released, it is only a case of provisional release and the Department having accepted the request made by the appellant for a re-test and the test report on the second test having gone in favour of the assessee and the benefit having been extended to the remaining goods, in our considered view, the transaction cannot be split up into two, more so when there is no notice issued to the assessee as to from which containers the samples were drawn at the first instance. The onus is on the Department to prove that the goods, which are contained in the containers are all different category than what was drawn for the purposes of making test. If such is the allegation, then it would amount to a case of concealment or wilful mis-statement with an intention to smuggle the goods. In the absence of any such allegation, the benefit of the second test report ought to have been granted to the assessee in respect of the entire goods, which were imported vide two bills of entries. Appeal allowed - decided in favor of appellant/assessee and against the Revenue. 2018 (9) TMI 767 100% EOU - Refund of excess Export Duty paid - duty was paid under protest - Held that:- Admittedly, the petitioner has paid the duty under protest @ 10%. But the appropriate duty would be 5% from 1-3-2013 vide Notification No. 15/2013-Cus., dated 1-3-2013 and 2.5% from 1-3-2015 vide Notification No. 8/2015-Cus., dated 1-3-2015 - It is well-settled that the duty paid by the assessee under protest, if ultimately found, was not leviable, it would automatically entitle him for refund. The payment under protest by itself would tantamount to claiming refund, but, it cannot be turned down merely because he has not filed any appeal or appeal was filed by the Department before a higher forum. The petitioner is entitled to get refund - petition allowed. 2018 (9) TMI 766 Revocation of CHA License - forfeiture of security deposit - alleged forgery of signature of the Assistant Commissioner of Customs on the duplicate copy of shipping bill no. 11288/21.05.2005 which had, inadvertently, been left blank while approving the shipment - Held that:- It would appear that the original and triplicate copies of the shipping bill had been duly approved by the ‘proper officer’ and that the duplicate copy was not signed. The employee tasked with the completion of documentation formalities had admitted to the forgery of signature owing to the incumbent officer being on leave. That undoubtedly, as found by the Principal Commissioner of Customs, is not tolerable - the conclusion following from the report of the duly constituted inquiry authority that the licencee had failed in supervisory responsibilities is not on the same footing. The lack of any finding in the impugned order that the customs broker was aware, let alone, of conniving in the forgery. In the first round, the licencing authority was not convinced that the supervision was expected to extend to such matters as the licencee was not informed about - the revocation of licence and forfeiture of security deposit has been ordered in the absence of any further evidence recorded in this round that could lead to a different conclusion - it is apparent that the Principal Commissioner of Customs (General) did not appear to have applied his mind to the facts and circumstances, the framework of the chargesheet and the findings of the inquiry authority before proceeding to penalise the appellant. It cannot be overlooked that there was sufficient probability of misconstruing the remand order of the Tribunal. Revocation and forfeiture set aside - appeal allowed - decided in favor of appellant. 2018 (9) TMI 765 Classification of imported goods - non-service of notice to Respondent - Held that:- Both the lower authorities have considered their own classification of the goods without putting the respondent on notice. In our view, the entire issue needs reconsideration by the adjudicating authority - Appeal allowed by way of remand. 2018 (9) TMI 764 Refund of Differential duty paid by exporter - finalization of provisional assessment - Held that:- The duty was paid at the higher rate but the assessment was made subject to the outcome of the test reports of the chemical examiner. In fact, if the chemical examiner s report had shown that the Fe content in the iron ore was higher than 62% then no refund would have arisen as a consequence. Thus, it can be said that the assessment was made provisionally by the assessing officer, although the word provisionally assessed was not mentioned on the face of the shipping bill. If the assessment is taken to be final, the calculation of the duty is certainly wrong because the rate of duty on iron ore with Fe content less than 62% was only ₹ 50/MT and not ₹ 300/MT. It was the responsibility of the assessing officer to correctly assess the export duty payable and he made a mistake. The customs officers are well within their powers to correct these mistakes under Sec.154 of the Customs Act. Appeal dismissed - decided against Revenue. 2018 (9) TMI 763 Refund claim - duty paid under protest - Assessments of the shipping bills - Finalization of assessment - Held that:- Section 154 of the Customs Act empowers the officers to correct clerical or arithmetic mistakes in any decision or order. In this case, the duty was paid at the higher rate but the assessment was made subject to the outcome of the test reports of the chemical examiner. In fact, if the chemical examiner s report had shown that the Fe content in the iron ore was higher than 62% then no refund would have arisen as a consequence. Thus, it can be said that the assessment was made provisionally by the assessing officer, although the word provisionally assessed was not mentioned on the face of the shipping bill. Appeal dismissed - decided against appellant. 2018 (9) TMI 762 Refund claim - excess payment of duty consequent upon rebate discount given by the Supplier - refund claim was rejected mainly on the ground that the assessment made by the appellant in the Bill of Entry reached its finality, which they have not challenged - Held that:- Tribunal in the case of Commissioner of Customs (Export) New Delhi Vs. Lalit Kumar [2017 (1) TMI 7 - CESTAT NEW DELHI] after considering the decision of Priya Blue Industries Limited [2004 (9) TMI 105 - SUPREME COURT OF INDIA], dismissed the appeal filed by the Revenue, and held that since the Bill of Entry was assessed by the Customs Department and the assessed duty was paid by the respondent, it cannot be said that the duty was paid by the respondent in pursuance of an order of assessment. The case of the respondent falls under the second category i.e. borne by him contained in Section 27 ibid, according to which, since the duty incidence has been borne by the respondent, claiming of refund of such excess duty in terms of Section 27 ibid, in our view is in conformity with the statutory provisions. Appeal allowed - decided in favor of appellant. Service Tax 2018 (9) TMI 761 Removal of Office Objections - Held that:- Four weeks’ time is granted to the learned counsel for the petitioner to cure the defects as pointed out by the Registry, failing which the Special Leave Petition shall stand dismissed without further reference to the Court. 2018 (9) TMI 760 Extended period of limitation - Whether in the facts and circumstances of the case and in law was the Tribunal correct in holding that the extended period of limitation is not invokable? - Whether in the facts and circumstances of the case and in law was the Tribunal justified in setting aside the demand for extended period and consequently penalty under Section 78 of the Finance Act, 1994? Held that:- It is undisputed before us that the issue of a charitable institution rendering the service of Commercial Training and Coaching being chargeable to service tax under the Act was a debatable issue before the decision in Sri Chaitanya Educational Committee [2015 (6) TMI 627 - CESTAT BANGALORE (LB)] was rendered on 1st June 2015 - No fault can be found in the present facts with the impugned order of the Tribunal restricting the demand only to that extent of normal period of limitation and deletion of equivalent penalty under Section 78 of the Act. This as the Tribunal found on facts and on the basis of the law that the Respondent was under a bonafide belief that no service tax is payable by a charitable institution rendering the service of Commercial Training and Coaching. Appeal dismissed - decided against Revenue. 2018 (9) TMI 759 CENVAT Credit - input services - Agency Commission - media/broadcasters - Whether in the facts and the circumstances of the case and in law was the Tribunal right in holding that the Respondent is entitled to take the input service credit on Agency Commission as well as the Service Tax charged by the media/broadcasters as shown in the said invoices? Held that:- The grievance of the Appellant-Revenue is that the invoices issued by the broadcaster also shows the name of the advertising agency, therefore, the Respondent could not avail of the CENVAT credit on the basis of the above invoices - the impugned order of the Tribunal has rendered a finding of fact that the invoices as issued by the broadcaster are in the name of the Respondent. It also holds on a finding of fact that the advertising agency is merely shown as an agent of the Respondent. This finding of fact is not shown to be perverse. Appeal dismissed. 2018 (9) TMI 758 Classification Services - Business Support Services or not? - Negative list - services of Central Public Works Department (CPWD) in terms of an MOU dated 20th December, 2008 for construction of hostel blocks, Sports Complex, academic block, literature hall complex, canteen, hospital, staff residential quarters etc. in the premises of the appellant. Whether the appellant is a business entity? - N/N. 25/2012-S.T., dated 20 Jun., 2012 and N/N. 2/2014-S.T., dated 30 Jan., 2014 - Held that:- The perusal of both these Notifications shows that any authority, which is set up by an Act of Parliament or is established by a Government is a Governmental authority and any services provided to a Governmental authority by way of construction, errection, commissioning, installation, even repair, maintenance, renovation or alteration of any civil structure are exempted from the purview of taxable services. Whether the services as received by appellant from CPWD, a Govt. Department is a support service? - Held that:- For any services received to be called as support service, the important ingredient is that the support should have comprised of such functions that the recipient is able to carry out in ordinary course of operations themselves - In the present case, the appellant is carrying out the function of imparting education and the technical knowhow/consultancy but the service received from CPWD is that of construction of various civil structures. It becomes absolutely clear that the services received are not otherwise the activity of the appellant themselves. Outsourcing thereof will not bring the service received under the category of support service. Therefore, the adjudicating authority below has formed a wrong interpretation of the definition while holding the impugned services received as the support services. Whether the demand as confirmed is sustainable? - Held that:- Since impugned period is the post negative list period, section 67 D is relevant. This provision excludes the services provided by a Government or a local authority from the ambit of taxability. Apparently the service provider herein is a Govt. authority - The services are not taxable - Once the demand is not sustainable, question of accruing interest and of imposition of penalty does not at all arise. Appeal allowed - decided in favor of appellant. 2018 (9) TMI 757 Rent a Cab Service - Revenue entertained a view that the activity of providing vehicles to another person on monthly leasing rent also amounts to providing Rent a Cab Service‟ and as such demands were raised against the appellant for the period 2008-09 and 2011-12, by way of issuance of a show cause notice dated 21/03/2013 - Boards clarification issued vide F.No.B-43/7/97-TRU dated 11/07/1997 - Extended period of limitation. Held that:- Board Circular does not make the legal issue very clear. There is no reference to the terms who , his and him . The clarification does not make it clear as to how and who has paid the service tax on which amount billed by whom - the appellant‟s providing motor vehicles to the other Rent a Cab‟ operator on leasing basis is also covered by the services falling under the category of Rent a Cab‟ and tax liability would arise against him. Extended period of limitation - Held that:- As the issue is complicated issue of legal interpretation of provisions of law and there is no direct evidence on record to reflect upon any mala fide of the assessee, the longer period would not be available to the Revenue - demand restricted within the normal period of limitation. Appeal allowed in part. 2018 (9) TMI 756 Condonation of delay in filing appeal - case of appellant is that delay occurred for the reason of closure of factory due to shortage of fund - Held that:- The poor market demand had forced the appellant to stop the plant on 09.04.2016 and the order in appeal indicates that it was communicated to the plant unit at Pulgaon - The contention of the appellant is therefore acceptable that no responsible person was available there during such closure of plant to handle the taxation matters. Therefore such delay in filing appeal cannot be attributed to the negligence of the appellant company, which was going through a bad time. Delay condoned - COD application allowed. 2018 (9) TMI 755 Stay on operation of an order - CENVAT Credit - The stay petition reveals that appellant department has a strong case in its favour and unless order-in-original allowing the appeal setting aside the duty demand etc. is stayed, there will be revenue loss to the government - Held that:- It is observed that cenvat credit availed by the respondent/OP was held to be inadmissible and duty demand as made, was confirmed by the first adjudicating authority with ancillary relief but the same was set aside by the Commissioner (Appeals) holding that such finding on invoicing procedure was too technical - It is apparently clear that no such inconvenience would be forthcoming in staying the impugned order appealed against and mere apprehension that respondent may continue such practice in subsequent years to the disadvantage of department has no basis. The stay petition filed on behalf of the appellant department, being devoid of merit, is rejected. 2018 (9) TMI 754 Modification of the Tribunal's order dt. 29.5.2012 and 17.9.2012 - Held that:- Even though six years had been passed from the date of passing the pre-deposit order, the applicant even though after giving undertaking to comply the same had not been complied with the direction of pre-deposit and kept on filing applications for modification of the order on the ground that they have deposited earlier the entire amount, when the said submission was considered by the Tribunal while passing pre-deposit order - From the letter dt. 4.4.2018 placed by the Revenue, it is crystal clear that the applicant had not paid the directed amount and all the payments which they claim to have been made was considered by the adjudicating authority. The Misc. applications seeking modification of the orders dt. 29.5.2012 and 17.9.2012 have no merits and are dismissed. 2018 (9) TMI 753 Business Auxiliary Service - Commission received for affecting sale and purchase of goods on behalf of M/s. RMP Revenue - Held that:- This Tribunal in similar circumstances held that the amount paid to the distributor by M/s. RMP Infotech Pvt. Ltd. being a Commission and accordingly leviable to service tax under the category of 'Business Auxiliary Service' - appeal dismissed - decided against appellant. 2018 (9) TMI 752 Penalty - service tax liability paid, but interest not paid - invocation of section 80 for setting aside penalty - Held that:- It is clear from the records, the appellant paid the service tax liability but not paid the interest. In the absence of any such evidence, the Provisions of Section 80 or any other provisions to set aside the penalty would be incorrect as the appellant was given enough opportunities to discharge the interest liability also - appeal dismissed - decided against appellant. 2018 (9) TMI 751 Review of Order - GTA Service - Review sought on the ground that appellant had not produced declarations of non availment of CENVAT credit on capital goods & inputs on the consignment notes of the GTA services, in order to avail the benefit of N/N. 35/2004 - Scope of SCN - Held that:- The basis of allegations in the show cause notice issued by Commissioner as reviewing authority, were not raised in the show cause notice adjudicated by first appellate authority, and the Adjudicating Authority had also not recorded any findings on this point because as it was not alleged - the provisions of Section 84 mandates review of Order-in-Original passed by Original Authority below the Commissioner, on the allegations in the show cause notice already issued and adjudicated and cannot traverse beyond the scope of original show cause notice. On this ground itself the impugned order is liable to be set aside and we do so. The provisions of Section 84 mandates review of Order-in-Original passed by Original Authority below the Commissioner, on the allegations in the show cause notice already issued and adjudicated and cannot traverse beyond the scope of original show cause notice. On this ground itself the impugned order is liable to be set aside. Appeal allowed. 2018 (9) TMI 750 Classification of service - classifiable under Cargo Handling Service or under Site formation and clearance service? - Held that:- The Ld. Commissioner (Appeals) has not recorded any reason as to why the services rendered by the appellant be classified under the Site formation services as alleged by Revenue and not cargo handling service, as claimed by the appellant - the order is devoid of reasoning and non-speaking one. Matter remanded to the Ld. Commissioner (Appeals) to record reasons on the classification of the services as claimed by the appellant vis-a-vis alleged by the Revenue after affording an opportunity to the appellant - appeal allowed by way of remand. Central Excise 2018 (9) TMI 749 Interest - relevant date for calculation of Interest - whether the date will be calculated from the date of the enactment of the Finance Bill, 2011 i.e. 08.04.2011 till the date of actual payment of the differential duty i.e. 31.05.2011 or not from the due date of payment of the differential duty i.e. 29.04.2010 till the date of actual payment? Held that:- The Apex Court in Star India (P)Ltd. [2005 (3) TMI 10 - SUPREME COURT] very clearly makes reference to the validation clause in Finance Act, 2002 - there is no difference with the Finance Act, 2011 which arises for consideration in this appeal. Appeal dismissed. 2018 (9) TMI 748 Condonation of delay of 529 days in filing appeal - failure to remove office objections within the stipulated time i.e. 19.05.2016 - Held that:- If the State is suffering on account of negligence of its officers then it must bring on record action having been taken against such delinquent officers. Nothing has been shown to us that the State has taken action against the officer concerned - there is no reason to condone the delay for the purpose of setting aside the order dated 21.04.2016 passed by the Prothonotary and Senior Master. The Notice of Motion stands dismissed. 2018 (9) TMI 747 Jurisdiction - Whether in the facts and circumstances of the case and in law was the Tribunal justified in holding that the Commissioner (Appeals) has exercised the powers under Rule 96ZM of the Central Excise Rules, 1944 (“the Rules”) without going into the jurisdiction of the Joint Commissioner to pass the original order? Held that:- As it is in defiance of the provisions of Section 11A of the Act which at the relevant time only empowered the Collector to adjudicate a notice of demand invoking the proviso of Section 11A of the Act. This issue of jurisdiction goes to the root of the dispute and in the absence of the Tribunal reversing the finding of the Commissioner of Central Excise (Appeals) as recorded in the order dated 14th October 2008, no occasion to give further directions to the original authority can arise. There is no occasion to answer the proposed question of law. It would be appropriate that the impugned order dated 30th March 2007 of the Tribunal is set aside and the issue restored for fresh disposal in accordance with law - appeal disposed off. 2018 (9) TMI 746 Clandestine removal - shortage of finished goods - Confiscation - Whether mere storage of finished products and lying in the factory can be treated as unaccounted stock liable for confiscation? - Whether the Tribunal can ignore the plea of “defect in quantification” and impossibility of search operation within the short time and pass the order without reference to such issues? Held that:- There has been no investigation into the material aspects, which are required to be proved for establishing an allegation of clandestine removal - It may be true that the burden of proving such an allegation is on the Department. However, clandestine removal with an intention to evade payment of duty is always done in a secrete manner and not as an open transaction for the Department to immediately detect the same. Therefore, in case of clandestine removal, where secrecies involved, there may be cases where direct documentary evidence will not be available. Based on the seized records, if the Department is able to prima facie establish the case of clandestine removal and the assessee is not able to give any plausible explanation for the same, then the allegation of clandestine removal has to be held to be proved - the assessee has not denied any of the allegations, which were put forth except for simple and flimsy retraction. If the assessee had sufficient records to establish their innocence, nothing prevented the Managing Director to say so while making the retraction. There was no attempt made by the assessee to state their case by coming forward to give a statement and producing records. The allegation of parallel invoicing has not been disproved in the manner known to law. Appeal dismissed - decided against assessee. 2018 (9) TMI 745 SSI Exemption - crossing of threshold exemption limit - extended period of limitation - Held that:- In the case in hand the respondent in monthly did declare the quantities of exempted goods clearances, though may not have declared the value of clearances. Nothing prevented Revenue from seeking details of value from respondent - there is no ground for invocation of extended period of limitation - Appeal dismissed - decided against Revenue. 2018 (9) TMI 744 CENVAT Credit - duty paying invoices - credit availed on the basis of supplementary invoices - Rule 9 (1) (b) of the Cenvat Credit Rules 2004 - whether the appellant is entitled to Cenvat Credit on the basis of supplementary invoices issued by the coal company? Held that:- In an identical set of facts, in the case of M/S BIRLA CORPORATION LTD. VERSUS CGST, CC & CE, JABALPUR [2018 (7) TMI 1264 - CESTAT NEW DELHI], Tribunal allowed the Cenvat Credit holding that there cannot be suppression of fact when the issue of liability of payment of Excise duty at the end of the coal companies was a debatable issue which is pending adjudication in the Apex Court. Appeal allowed - decided in favor of appellant. 2018 (9) TMI 743 Clandestine removal - SSI exemption - N/N. 09/2003- CE - shortage of finished goods - it was alleged clandestine manufacture and removal of goods as well as irregular availment of SSI exemption using other's Branc name - Held that:- It is not clear from show cause notice itself, whether the brand name Vandana is owned by the appellant himself in which case no differential duty arises or the brand name is owned by somebody else, in which case, the differential duty is payable. It is also the submission of the appellant that in respect of mint stools manufactured by them the goods did not carry brand name NAMASKAR as alleged by the Department in the show cause notice. - These factual aspects need to be verified by the Original Authority to determine which of the clearances indicated in annexure D-4 to the show cause notice had the brand name of another person and recompute the differential duty accordingly - matter on remand. The penalty of ₹ 10,000/- under Rule 13 of CCR, 2004 confirmed by the First Appellate Authority in the impugned order is set aside - The penalty under Section 11AC shall stand reduced - Personal penalty on Shri M.V. Sekhar Rao and Smt. M. Vijayalakshmi is reduced to ₹ 25,000/- each. Appeal allowed in part and part matter on remand. 2018 (9) TMI 742 MODVAT/CENVAT credit - duty paying invoices - appellant received only invoices and not goods - Held that:- It is not in dispute that the show cause notice was issued with sixty seven relied upon documents of which only five are now available with the Department - It is also not in dispute that the cross examination of the persons who made these statements were not allowed by the Adjudicating Authority. It is found from the list of RUDs that the 67 relied upon documents in the show cause notice roughly half are statements made by various persons. The admissibility of the Statements made before Central Excise Officers in any proceeding before a court or in any proceedings other than a court is governed by Section 9D of the Central Excise Act. Hon’ble High Court of Punjab & Haryana in the case of Jindal Drugs Pvt. Ltd., [2016 (6) TMI 956 - PUNJAB & HARYANA HIGH COURT] that for any statement made before an Excise Officer to be taken as evidence, we have to follow the above provisions of Rule 9D which has not been done in this case as neither were the persons making the statements examined as required under Section 9D (1)(b) nor was the cross examination allowed - even the statements and other relied upon documents are not available with the Revenue except five of the documents. Appeal allowed - decided in favor of appellant. 2018 (9) TMI 741 CENVAT Credit - Input Services - Club or Association Service - Life Insurance Service - Air Travel Agent Service - denial of credit on the ground that the services fall within the exclusion category specified in Rule 2 (l) (C) - Held that:- The services such as membership of club is not for the personal benefit of any employee, but are for pursuing the business activities of the appellant - credit allowed. Life Insurance Service - Held that:- It is noted that the appellant is under a statutory obligation to provide group insurance scheme in their factory for the benefit of the employees. This cannot be said to be for the personal benefit of the employees - Credit allowed. Air Travel Agent’s Service - Held that:- The said services have been availed by the officials of the appellant in regard to their business - credit allowed. Appeal allowed in toto - decided in favor of appellant. 2018 (9) TMI 740 Clandestine manufacture and removal - shortage of raw materials, shortage of finished goods, unaccounted HDPE bags - Exoneration of accused - Held that:- After appreciating entire evidence which is the fulcrum of allegations and the adjudication proceedings against the assessee and Shri M.M. Reddy, the Special Judge acquitted the assessee and Shri M.M. Reddy the offences which are alleged under the provisions of the Section 9 and Section 9 -AA of Central Excise Act, 1944. The law is fairly settled in such situation wherein, the criminal proceedings as well as adjudication proceedings are based upon the same set of evidences and if entails an exoneration by one court, it can be considered to exonerate from other proceedings. It has to be recorded here that in the cases in hand before me, the evidences relied upon by the Revenue in the adjudication proceedings were the same as were relied upon before the Learned Special Judge for Economic Offences. The law on the point of exoneration in criminal proceedings, which requires standard of proof beyond all reasonable doubts, has to be considered as yardstick to come to the conclusion proceedings before the Tribunal - In the case in hand, since, prosecution launched against the assessee and the Shri M.M. Reddy was quashed and they were acquitted, the reliance placed by the Revenue in the same set of evidence cannot hold ground to confirm the demands raised along with interest and imposed penalties on appellants. Appeal allowed - decided in favor of appellant. 2018 (9) TMI 739 CENVAT credit - input service - renting of immovable property service (renting of godowns) - place of removal - denial of credit on the ground that these godown are beyond the place of removal - Held that:- These godowns are places of removal in terms of Sec. 4(3)(c) of the Central Excise Act. Nevertheless, the nexus with manufacture is also decided in identical cases in the case of DSCL Sugar [2012 (12) TMI 830 - CESTAT NEW DELHI] where it has been held that sugar factories are entitled to input service credit on rent paid on godowns in which they stored sugar after paying duty - appeal allowed - decided in favor of appellant. 2018 (9) TMI 738 Refund claim - whether M/s BHEL (respondent herein) can claim refund of the duty paid by their supplier under Sec.11B and whether the same can be allowed as CENVAT credit? - Held that:- Sec.11B of the Central Excise Act does not restrict the entitlement of claim of refund to the person who paid the duty only. In fact, it can be claimed by any person if he can prove that he is entitled to the refund and he has borne the burden of the tax - when M/s CST had paid the duty which they were not required to and the respondent herein had borne the burden of the duty, they are entitled to claim refund of the duty. Whether M/s CST had paid duty in excess considering that the N/N. 6/2002-CE was already rescinded during the relevant period? - Held that:- The first appellate authority in the impugned order has clearly considered this issue and recorded that the Notification No.6/2002-CE was rescinded but an identical Notification No.6/2006-CE dated 01.03.2006 was issued and M/s CST was squarely covered by Sl.No.91 of this notification - there is no reason to hold that M/s CST had not paid excess duty or that the respondent herein cannot claim refund of the same. Appeal dismissed. 2018 (9) TMI 737 Recall and review of the Tribunal order no. A/10767-10769/2018 dated 23.04.2018 - rabble rousing - Principles of natural justice. Held that:- Under the Central Excise Act, the tribunal does not have any power to review its own order. However, in terms of section 35C sub section 2, the tribunal can entertain an application for rectification of mistake apparent from the record - The key is that tribunal can amend an order only “with a view to rectifying any mistake apparent from the record”. Thus, if there is no mistake apparent on record no amendment to order can be made. The facts recorded in order and as described by applicants are being examined in that perspective. It is apparent that in the instant case final decision pronounced in the court has not been altered. What has happened is that the reasoning which was given by dictation in brief in the courts, has been elaborated in the written order in so far as merits are concerned. We find that such changes are acceptable - we are not able to conclude that there is any error apparent on record as far recording of order on merit on 23/04/2018 in the court is concerned. It is not any dispute that the order in the court was pronounced by Hon'ble President, while order on 23.04.2018 was issued “Per” Member Technical. No authority has been brought before us that prescribes that the member who pronounced the order in the court is required to dictate or draft the order. In terms of Rule 26 where the gist of the decision is pronounced without the detailed order, the last paragraph shall specify the date on which the gist of decision was pronounced. In the instant case, the gist of the decision in the instant case was pronounced on 23.04.2018 and thus there is no error in the impugned order in that respect. Rule 26 also prescribes that date of final order shall be the date on which the members of the bench signed the order applied to the situation where the gist of decision is not pronounced in the court. The said clause does not apply to the instant case where the gist of decision was pronounced in the open court. There has been an error apparent on record as the order has been passed without granting any hearing to appellant's advocate and insufficient hearing to appellant - the Miscellaneous application is allowed and the order dated 23.04.2018 is recalled and the appeal is restored to its original number. 2018 (9) TMI 736 CENVAT Credit - inputs - Welding Electrodes, Steel Plates, Sheets and Angles which were used exclusively for repair and maintenance within the factory premises - period May 2015 to March 2016 - Held that:- There is no dispute as to the fact that the Welding Electrodes, Steel Plates and Sheets, Angles were used exclusively for repairs and maintenance within the factory during the period May, 2015 to March, 2016 - It is seen from the records, these repairs and maintenance was in respect of the plant and machinery which is used for manufacturing of final products was the claim which has not been disputed by the lower authorities. The definition of Input includes all goods used in the factory by the manufacturer of the final products. In the case in hand, it is undisputed that appellant is a manufacturer and has used various inputs in this case, exclusively for repairs and maintenance of plant and machinery which are used for the manufacturing activity. The impugned order has not considered this definition of inputs in its correct perspective - appeal allowed - decided in favor of appellant. 2018 (9) TMI 735 Extension of Stay Order - Rectification of Mistake - Held that:- Since, the final order has not been passed, the extension of stay order is granted. Rectification of Mistake - Difference of opinion - Held that:- In terms of the Hon’ble Gujarat High Court judgment, in the case of Colourtex V. Union of India [2005 (10) TMI 101 - HIGH COURT OF GUJARAT AT AHMEDABAD], the order wherein, there is difference of opinion among two members of the bench, and the matter referred to the third member, there is no final outcome of the case. In such a situation no ROM application is maintainable. ROM applications dismissed. 2018 (9) TMI 734 SSI Exemption - packing materials - exemption denied on labels/stickers falling under Chapter sub-heading No. 8421 1020/90 of the Central Excise Tariff Act, 1985 - N/N. 8/2003-CE dated 01/03/2003 - Held that:- The Tribunal in the case of Purab Printers [2015 (10) TMI 1550 - CESTAT MUMBAI] has extended the benefit of SSI exemption provided under N/N. 8/2003-CE dated 01/03/2003, holding that clause (e) under para 4 in the notification dated 01/03/2003 considers within its ambit labels, stickers for consideration of benefit of SSI exemption - Appeal allowed - decided in favor of appellant. 2018 (9) TMI 733 Valuation - value of scrap - inclusion of assessable value - job-items - whether the respondent is required to include the value of scrap for discharge of Central Excise duty on the job items cleared by them? - Held that:- The self same issue was decided by the Tribunal in PR. ROLLING MILLS PVT. LTD. VERSUS COMMISSIONER OF C. EX., TIRUPATHI [2009 (3) TMI 444 - CESTAT, BANGALORE] wherein, the appeal filed by the assessee (respondent in this case) was allowed holding that the value of scrap cleared need not be included for discharging the duty liability on the job worked item - appeal dismissed - decided against Revenue. 2018 (9) TMI 732 Clearance from EOU to DTA - Inter-unit transfer - levy of SAD - whether goods cleared from EOU to DTA on inter unit transfer basis would attract SAD or not? Held that:- Identical issue decided in the case of Micro Inks [2014 (2) TMI 207 - CESTAT AHMEDABAD], where it was held that there is no such notification or order issued by the state government exempting impugned goods from the payment of sales tax/VAT - appeal allowed - decided in favor of appellant. 2018 (9) TMI 731 CENVAT Credit - input services - Garden Maintenance Service - Whether the appellant are entitled to Cenvat credit of service tax paid on 'Garden Maintenance Service' during the period July 2016 to January 2017? - Held that:- The activity of 'Garden Maintenance Service' in the factory premises are in compliance with pollution control laws and relates to their manufacturing unit - The Tribunal in the case of M/s Gmm Pfaulder Ltd. [2016 (12) TMI 334 - CESTAT AHMEDABAD] held that it falls under the scope of the definition of 'input service', and accordingly service tax paid on such service is admissible to credit. Appeal allowed - decided in favor of appellant. 2018 (9) TMI 730 Rectification of Mistake - Time Limitation - Held that:- The entire order considers the issue on merits in detail. It is also a fact that the appellant had claimed that the show cause notice is hit by limitation and had taken grounds before the lower authorities as also before the Tribunal. It is apparent on the face of the records that the Bench has not passed any order on the limitation issue - the Final Order dated 15.09.2017 needs recall - application of ROM disposed off. 2018 (9) TMI 729 CENVAT Credit - inputs utilized for supply of finished goods to developers of special economic zone - period prior to 31st December 2008 - Held that:- The amount in dispute pertains to the goods cleared between May 2007 to November 2008 when rule 6 of CENVAT Credit Rules,2004 providing for certain exceptions did not extend to developers of special economic zones - Also, when the matter came up before the Tribunal for stay of the order of the first appellate authority, the entire amount of pre-deposit has been waived and the appeal admitted for hearing. In the circumstances in which the appeal has been admitted, the failure to deposit the amount directed by the first appellate authority becomes redundant - the dismissal of appeal on grounds of failure to comply with the pre-deposit requirement does not sustain. Impugned order set aside - matter remanded back to the first appellate authority for decision on merits. 2018 (9) TMI 728 Undervaluation of goods - HDPE bags - Held that:- The First Appellate Authority in para No. 7 has specifically considered the issue of a particular chit No. 84 dated 20.01.2001 and invoice No. 768 dated 21.01.2001 raised in respect of a specific purchaser of the appellant and came to a conclusion that similarities on this account between the chit and corresponding invoice. He has done a factual verification on this issue and hence we find that on facts there is no dispute as to that appellant had collected additional amounts over and above the amounts which were shown on the excise invoice. Tthe impugned order is correct and legal and does not suffer from any infirmity - Appeal dismissed. 2018 (9) TMI 727 CENVAT Credit - inputs used by them in manufacture or maintenance of the parts and equipments of the cement plant - whether the appellant is entitled to CENVAT credit on inputs used by them in manufacture or maintenance of the parts and equipments of the cement plant? - Held that:- The assessee is entitled to input credit on the items mentioned in terms of Rule 2(k) of CENVAT Credit Rules, 2004 read with Explanation 2 thereof and therefore the demand is liable to be set aside along with the interest and penalty - reliance placed in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS M/S LLOYDS METALS & ENGG LTD [2014 (8) TMI 913 - CESTAT MUMBAI], where credit was allowed on MS bars, beams etc., used for setting up kiln, cooler and chimney etc., in factory - appeal allowed - decided in favor of appellant. 2018 (9) TMI 723 Withdrawal of appeal - Held that:- All these applications are filed by revenue for withdrawal of appeals - application allowed - appeal dismissed as withdrawn. CST, VAT & Sales Tax 2018 (9) TMI 726 Validity of Notice of proposal - assessment years 2010-2011 to 2014-2015 - mismatch and purchase made from registration cancelled dealers - Held that:- As the present notice issued in respect of the mis-match issue is not in consonance with the order already passed by this Court, this Court is of the view that the present impugned notice, insofar as the mis-match issues are concerned, is liable to be set aside and the matter is to be remitted back to the Assessing Officer. Equally, in respect of the other issue, namely the purchase from the registration cancelled dealers is concerned, this Court finds that the notice does not give the details of cancellation of registration of the other end dealers and therefore, as rightly pointed out by the learned senior counsel, the petitioner will not be in a position to give an effective reply to the notice of proposal insofar as that issue is concerned - it is for the Assessing Officer to issue fresh notice in respect of that issue also with material particulars so as to enable the petitioner to give effective reply. Petition allowed in part. 2018 (9) TMI 725 Service of Order - Order of attachment - arrears of sales tax - only grievance of the writ petitioner is that the original assessment order had not been served - Held that:- If the original order of assessment became final, then the consequential order of attachment, cannot be challenged as the Assessee had accepted the original assessment order. In the event of not challenging the original assessment order, it is to be construed that the assessment became final and therefore the consequential attachment order, cannot constitute a cause of action for moving the writ petition or otherwise. In respect of the present writ petition on hand, the attachment order issued, consequent to the issuance of the original assessment order, is under challenge. Now it is established by the respondents that they have served the original assessment order to the writ petitioner in the manner known to law. Thus, the writ petition deserves no further consideration. Petition dismissed. 2018 (9) TMI 724 Input tax Credit - capital goods - renewable energy device spare parts, Boilers, Boiler components and materials for Erection of Boilers - denial of credit on the ground that renewable energy device spare parts, Boilers, Boiler components and materials for Erection of Boilers are not involving in manufacturing process or packing or storing of the goods in the course of business and the goods do not fall under the category of capital goods ? - Whether the renewable energy device spare parts, Boilers, Boiler components and materials for Erection of Boilers are essential for manufacturing process or not? Held that:- Biomass Gasifier Unit is an manufacturing unit. That will certainly fall under the definition of apparatus or spare parts or accessories. In such circumstances, the goods used in the manufacturing process shall be taken as capital goods and the benefit under Section 19(3) shall be allowed. In the case of Thiagarajar Mills (P) Ltd., vs. Additional Commissioner (CT) (Revision petition), Ezhilagam, Chepauk, Chennai and others [2018 (8) TMI 1562 - MADRAS HIGH COURT], this Court has held that wind mill used for the purpose of generation of energy utilised in the manufacturing process will also fall under the category of capital goods . The renewable energy device spare parts, Boilers, Boiler components and materials for Erection of Boilers are integral parts or integral apparatus or accessories in the manufacturing process and therefore, it should be construed as capital goods . Petition allowed.
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