TMI Tax Updates - e-Newsletter
September 16, 2017

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Service Tax Central Excise CST, VAT & Sales Tax

Articles

• INSOLVENCY AND BANKRUPTCY INTERNSHIP – AN OPPORTUNITY FOR STUDENTS

News

• Change in Tariff Value of Crude Palm Oil, RBD Palm Oil, Others – Palm Oil, Crude Palmolein, RBD Palmolein, Others – Palmolein, Crude Soyabean Oil, Brass Scrap (All Grades), Poppy Seeds, Areca Nuts, Gold and Silver Notified

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• Conference on Portability from Superannuation and Recognized Provident Funds to National Pension System (NPS); NPS has more than 1.71 crore subscribers with total Asset under Management (AUM) of more than ₹ 2.04 lakh crores

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• Minister of State (Law, Justice & Corporate Affairs) Shri P.P. Chaudhary seeks paricipation of the Companies in ‘Swachhta Hi Seva’ campaign of the Government of India and contribute 7 % of their Corporate Social Responsibility (CSR) spending to Swachh Bharat Mission (SBM) during ‘Swachhta Hi Seva’ campaign among others

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• RBI Reference Rate for US $

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Notifications

GST

• 32/2017 - dated 15-9-2017 - CGST
  Seeks to granting exemption to a casual taxable person making taxable supplies of handicraft goods from the requirement to obtain registration

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• 08/2017 - dated 14-9-2017 - IGST
  Granting exemption to a person making inter-State taxable supplies of handicraft goods from the requirement to obtain registration

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• 07/2017 - dated 14-9-2017 - IGST
  Granting exemption from registration to job-workers making inter-State supply of services to a registered person from the requirement of obtaining registration

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GST - States

• KA.NI.-2-751/XI-9(15)/17 - dated 21-6-2017 - Uttar Pradesh SGST
  Appointed the 22nd day of June, 2017, as the date on which the provisions of sections 1, 2, 3, 4, 5, 10, 22, 23, 24, 25, 26, 27, 28, 29, 30, 139, 146 and 164

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• 70/2017/9(120)/XXVII(8)/2017 - dated 31-8-2017 - Uttarakhand SGST
  The Uttarakhand Goods and Services Tax (Fourth Amendment) Rules, 2017

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• 692/2017/9(120)/XXVII(8)/2017 - dated 28-8-2017 - Uttarakhand SGST
  Regarding Constitution of Üttarakhand Appellate Authority for Advance Ruling" (Section 99).

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• 691/2017/9(120)/XXVII(8)/2017 - dated 28-8-2017 - Uttarakhand SGST
  Regarding Constitution of Üttarakhand Authority for Advance Ruling" [Section 96 (1)]

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• 663/2017/9(120)/XXVII(8)/2017 - dated 18-8-2017 - Uttarakhand SGST
  Amendments in the Notification No. 518/2017/9(120)/XXVII(8)/2017 Dated 29 June, 2017

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• 662/2017/9(120)/XXVII(8)/2017 - dated 18-8-2017 - Uttarakhand SGST
  Amendments in the Notification No. 514/2017/9(120)/XXVII(8)/2017 Dated 29 June, 2017

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• 532/2017/9(120)/XXVII(8)/2017 - dated 29-6-2017 - Uttarakhand SGST
  Exemption given to Deductor for intra - state supplies of goods/ services from an unregistered supplier.

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• 531/2017/9(120)/XXVII(8)/2017 - dated 29-6-2017 - Uttarakhand SGST
  Tax on intra-state supplies to be paid by the electronic commerce operator.

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• 516/2017/9(120)/XXVII(8)/2017 - dated 29-6-2017 - Uttarakhand SGST
  Regarding Exempted Intra-state Supplies.

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• 511/2017/XXVII(8)/9(120)/2017 - dated 29-6-2017 - Uttarakhand SGST
  The Uttarakhand Goods and Services Tax (Second Amendment) Rules, 2017

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• 496/2017/9(120)/XXVII(8)/2017 - dated 21-6-2017 - Uttarakhand SGST
  Exemption from taking registration in case of RCM (Reverse Charge Mechanism)

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SEZ

• S.O. 3025(E) - dated 11-9-2017 - SEZ
  Sector Specific Special Economic Zone for IT/ITES - Central Government notifies the 9.15 hectares area at Plot No. 2, MIDC, Phase-1, Hinjewadi, Mulshi Taulka, Pune, Maharashtra and constitutes an Approval Committee

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Circulars / Instructions / Orders

FEMA

• 04 - dated 15-9-2017
  Export Data Processing and Monitoring System (EDPMS) - Issuance of Electronic Bank Realisation Certificate (eBRC)

DGFT

• 25/2015-2020 - dated 14-9-2017
  Amendments in SION H-331 for export product "Toothbrushes" -reg.

Highlights / Catch Notes

GST

• Exemption granted to a casual taxable person making taxable supplies of handicraft goods from the requirement to obtain registration
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• Exemption granted to a person making inter-State taxable supplies of handicraft goods from the requirement to obtain registration - Notification (28 items)
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• Exemption granted from registration to job-workers making inter-State supply of services to a registered person from the requirement of obtaining registration, except Jewellery, goldsmiths’ and silversmiths’ wares and other articles (Chapter 71)
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Income Tax

• Disallowance of bogus loss - No information is available on record as to how the assessee company has taken loss from these client code modification - No details have been brought on record as to from whom assessee has taken the bogus entry of losses - No additions
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• Liquidated damage received/receivable - deduction u/s 80IA - there is no direct nexus between the profit and gains of the undertaking and the receipt from liquidated damages, and thus, assessee is not eligible for deduction u/s 80IA
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• Income accrues or arises in India - employer has directly credited the salary, for services rendered outside India, into the NRE bank account of the seafarer in India - The latter remittance would be outside the scope of section 5(2)(a), as what is remitted is not “salary income” but a mere transfer of assessee’s fund from one bank account to another which does not give rise to “Income”.
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• Denying exemption u/s 11 & 12 - It is quite evident that the floating of subsidiary company was in tune with SEBI directions and contradicts the stand of the revenue that the sub-broker membership of the subsidiary was open to select few and not to public at large and the benefit to select few was extended by the assessee.
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• Addition towards advance received for sale of flats - accrual of income - income accrues to a builder or developer only when transaction of sale is complete and any advance received under the agreement for sale or mere earnest money cannot be taxed as income before the transaction of sale is complete.
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• TPA - even if it could be treated as a corporate guarantee for benchmarking purposes, the corporate guarantee does not constitute an international transaction under section 92B of the Act
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• TPA - ALP - assessee has not charged any interest from subsidiaries and therefore, in the absence of any accrual or arise of income form the lending of the money, there was no jurisdiction for invoking the provision of section 92
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• Interest on refund u/s 244A(1)(b) of the Act on self assessment tax is to be paid from the date of payment of self assessment tax till the date of grant of refund.
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FEMA

• Export Data Processing and Monitoring System (EDPMS) - Issuance of Electronic Bank Realisation Certificate (eBRC) - FEMA
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Service Tax

• Classification of services - “Merger and Acquisition” is highly technical and a restrictive term and cannot be related to the managing of the affairs of the organisation which would come within the definition of “Management Consultant”. - HC
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• Classification of services - running website through which the interested steel manufacturer/trader are making trade - it merits classification as e-commerce service and not online information or database access or retrieval services.
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• Sub-contract - services utilized fully in SEZ - admittedly the work order has been issued by Deputy Commissioner, SEZ. Hence it amounts to providing and consuming service to SEZ and/or allotted through NBCC, as the operating agency to the appellant
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Central Excise

• Classification of various spice powder and mixed spices which are commonly called as Masalas - the goods are rightly classifiable under chapter heading 0904 to 0910 and not under chapter 2103.90 of CET
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• Manufacture - Grinding & Mixing of Glass Frit - Dilution & Mixing of Prepared Inorganic Pigments - - Pigments were mixed with the Silica Powder and therefore, mixing of Pigments with the Silica Powder does not amount to manufacture
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Case Laws:

• GST

• 2017 (9) TMI 750
  Interpretation of statute - Rule 96A of the Central Goods and Services Tax Rules, 2017 - Circular No. 4/4/2017 - Prior to the implementation of the Integrated Goods and Service Tax Act, 2017, there was no service tax on the export of services provided by the Petitioner. Post the IGST Act, the export services provided by the Petitioner are covered under ‘zero rated supply’ under Section 16(1)(a) of the IGST Act - In order to avail of the input tax credit, the Petitioner, being a new entrepreneur with an export turnover of less than ₹ 1 crore per annum, has to necessarily furnish a bond with a bank guarantee - Such a condition does not apply to an exporter with an annual turnover exceeding ₹ 1 crore. Quantum of Bond - Held that: - para 4 of the above Circular envisages that the bond has to be for a sum equal to the export tax liability. The question is, when it is ‘zero rated supply’, is there a necessity to furnish a bond with a bank guarantee? And if so, for what amount? - the Respondent states that he would have to seek a clarification on this aspect and requests for a short adjournment.

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• 2017 (9) TMI 749
  Seizure - powers of the police team / Bureau of Investigation for Economic Offences (BIEO) under GST - areca nuts - the BIEO team suspected that the areca nuts stored in the godown, were of Burmese origin and were smuggled through Mizoram border and was stored in the Guwahati godown, for onward transportation to other parts of the country - Assam Goods & Service Tax Act, 2017 - Held that: - The stored areca nuts were neither stolen nor were kept in suspicious circumstances. At best, tax is payable for dealing in areca nuts but that would be in the domain of the Finance & Taxation Department. The submissions made by the Addl. Advocate General and the Asstt. Solicitor General reflect that the BI(EO) team may have acted beyond their jurisdiction. Therefore, the learned Govt. Advocate has prayed for and is granted three weeks time to file counter affidavit In the interim, to facilitate the petitioners to carry on their legitimate business and taking note of the fact that rate of tax is @2.5% for areca nuts, under the Assam Goods & Service Tax Act, 2017 and they are to pay further 2.5% tax to the Central Govt. coffer, subject to the petitioners' furnishing Bank guarantee for ₹ 30 lakh towards the estimated tax, to the Commissioner of State Tax, the seized goods should be released to the custody of the petitioners.

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• Income Tax

• 2017 (9) TMI 828
  Reopening of assessment - capital gain - share of assessee in property sold - Held that:- No merit in this petition. The special leave petition dismissed. HC order confirmed. [2017 (7) TMI 462 - GUJARAT HIGH COURT] We cannot come to the conclusion that the reasons recorded by the Assessing Officer lacked validity so as to prevent even the assessment to be made. As is well settled, as long as the Assessing Officer has tangible material at his command to form a bonafide belief that income chargeable to tax has escaped assessment, the Court would not interfere with the formation of such belief unless it is shown to be wholly perverse. - Decided against assessee.

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• 2017 (9) TMI 827
  Interest u/s 234B and 234C chargeability if the total income is assessed to tax under section 115J - Held that:- The controversy involved in the present case is no longer res integra, inasmuch as, this court in the case of Deputy C.I.T. (Assistant) v. Farmson Pharmaceuticals Guj. Ltd., [2011 (4) TMI 1037 - Gujarat High Court] has followed the decision of the Karnataka High Court in Kwality Biscuits Ltd. (1999 (11) TMI 48 - KARNATAKA High Court) as affirmed by the Supreme Court in Commissioner of Income Tax v. Kwality Biscuits Ltd. (2006 (4) TMI 121 - SUPREME Court) and has held that interest could not be charged under sections 234B and 234C of the Act when the total income was determined under section 115J of the Act. - Decided against the Revenue and in favour of the assessee.

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• 2017 (9) TMI 826
  Attachment of the petitioner's bank account - stay of demand - seeking directions u/s 144A from the Additional Commissioner of Income Tax - Held that:- while granting an order of interim stay, the Court or the Appropriate Authority is entitled to take note of the factual and legal submissions made and examine as to whether a prima facie case has been made out by the appellant/assessee for grant of interim order. Taking note of the fact that hearing of the appeal has already commenced, there will be an order of interim stay of all further proceedings pursuant to the impugned order dated 04.9.2017 subject to the condition that the petitioner pays 15% of the income tax demanded i.e 15% of ₹ 1,58,18,050/-. It is stated that pursuant to the attachment of the petitioner's bank account, certain sums have already been realized by the Department. If that be so, then, whatever the amount that has already been realized shall be given credit to while arriving at the balance payable by the petitioner for complying with the above conditional order. The petitioner is directed to effect payment of the amount within a period of 90 days from the date of receipt of a copy of this order. If the petitioner fails to pay the said amount within the time stipulated, it is open to the first respondent to proceed further in accordance with law. As it has already been stated that the Commissioner of Income Tax (Appeals) has commenced hearing of the appeal petition, the appeal petition shall be finally disposed of as expeditiously as possible by following the appropriate legal procedure.

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• 2017 (9) TMI 825
  Application for settlement rejected - combined application for settlement of all cases - petitioner failed to pay the full tax and interest before the last date provided under the statute i.e. 31.7.2007 - constitutionality of sections 245D(2A), 245D(2D) and 245HA of the Income Tax Act, 1961 inserted by the Finance Act 2007 as ultra vires Article 14 of the Constitution - Held that:- The combined effect of the statutory provisions prevailing before 1.6.2007 in our opinion did not prohibit filing of separate applications for settlement assessment year wise and the newly introduced requirement of payment of additional tax with interest by 31.7.2007, failing which, the proceedings before the Settlement Commission would abate, would persuade us to hold that it was open for the Settlement Commission to examine the requirement of payment of additional tax with interest as may be correlated to a particular assessment year. It may be that the assessee himself had filed one common application for settlement of all cases. In view of the statutory provisions prevailing before 1.6.2007 and in view of the noted changes after 1.6.2007, such application need not have to be seen as one composite application for settlement which may either in its entirety are allowed to be proceeded with or be declared as abated. One must look at the application in the background of such statutory provisions before and after 1.6.2007. Had the requirement of payment of additional tax with interest been existing in the statute when the petitioner applied for settlement surely, he would have applied only to the extent that he was able to muster up sufficient funds for additional tax and interest. Under the circumstances, the petitioner's request that entire application for settlement may not be declared as abated, would have to be accepted. The petitioner had paid additional tax and interest by 31.7.2007, his proceedings before the Settlement Commission, would not abate. The abatement would apply with respect to those assessment years for which such payment was not made. In the result, the petition is allowed in part. The impugned order of settlement dated 4.10.2007 is set aside to the limited extent. Declaration of abatement of assessment proceedings before the Settlement Commission in terms of subsection( 3) of section 245HA, would be limited to the assessment years 2004-2005 and 2006-2007. The application for rest of the assessment years would be revived and be placed before the Settlement Commission for disposal in accordance with law.

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• 2017 (9) TMI 824
  Interest income - income earned on FDRs made out of the underutilized fund borrowed for the setting up of the business - should be reduced from the cost of the project instead of taxing it as an income from other sources? - Held that:- Identical questions in relation to another company M/s Sangam Power Generation Company which is also a 100 percent subsidiary company of M/s Jaiprakash Power Ventures Limited have been considered and decided by this Court [2017 (9) TMI 737 - ALLAHABAD HIGH COURT] to held Interest on Fixed Deposit Receipt has no immediate nexus with the business of Assessee company. Business is yet to commence. So long as Assessee had no business income, the interest earned can not be treated as business income. Thus in our view, it has to be treated as "income from other sources". - Decided in favour of Revenue.

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• 2017 (9) TMI 823
  Appeal is admitted on the following substantial questions of law: “A. Whether, on the facts and in the circumstances of the case and in law, the Hon'ble ITAT is justified in upholding the order of CIT(A) in deleting the addition of ₹ 6,23,80,629/as bogus credit in the name of M/s. Nisha Enterprises u/s 68 of the Act? B. Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT is justified in upholding the order of CIT(A) in deleting the addition of ₹ 1,36,00,000/as unexplained share application money u/s 68 of the Act? C. Whether on the facts and in the circumstances of the case and in law the Hon'ble ITAT is justified in upholding the order of CIT(A) in deleting the addition of ₹ 2,98,32,595/on account of stock discrepancy found during the course of Survey u/s 133A of the Act?”

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• 2017 (9) TMI 822
  Penalty u.s 271(1)(c) - exigibility to capital gain - Transfer - exigible to tax by reference to Section 2(47)(v) read with Section 53-A of the Transfer of Property Act, 1882 - JDA entered by assessee - Held that:- The facts of the case of assessee are admittedly identical as have been decided in the case of Shri C.S. Atwal Vs CIT, Ludhiana [2015 (7) TMI 878 - PUNJAB & HARYANA HIGH COURT] issue of exigibility to capital gain in favour of the assessee and against the revenue wherein held as no possession had been given by the transferor to the transferee of the entire land in part performance of JDA so as to fall within the domain of Section 53A of 1882 Act. The possession delivered, if at all, was as a licencee for the development of the property and not in the capacity of a transferee. Further Section 53A of 1882 Act, by incorporation, stood embodied in section 2(47)(v) of the Act and all the essential ingredients of Section 53A of 1882 Act were required to be fulfilled. In the absence of registration of JDA the agreement does not fall under Section 53A of 1882 Act and consequently Section 2(47)(v) of the Act does not apply. In view of cancellation of JDA no further amount has been received and no action thereon has been taken. The issue of exigibility to capital gains tax having been decided in favour of the assessee, the question of penalty under Section 271(1) (c) of the Act would not be exigible - Decided in favour of assessee.

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• 2017 (9) TMI 821
  Penalty u/s 271(1)(c) - appeal under Section 260A before this Court maintainable - Held that:- The matter is no longer res integra. This Court in Commissioner of Income Tax (Appeals), Gurgaon Vs. M/s Parabolic Drugs Limited [2013 (1) TMI 565 - PUNJAB AND HARYANA HIGH COURT] following the Division Bench judgment of this Court in Commissioner of Income Tax Faridabad Vs. M/s Motorola India Limited [2007 (10) TMI 384 - PUNJAB & HARYANA HIGH COURT] had held as under:- “Accordingly, the present appeal is dismissed by holding that this court has no territorial jurisdiction to adjudicate upon the lis over an order passed by the Assessing Officer at New Delhi. Consequently, the appeal is returned to the Revenue for filing before the competent Court of jurisdiction in accordance with law.” In view of the above, present appeal is dismissed as this Court has no territorial jurisdiction to adjudicate upon the lis over an order passed by the Assessing Officer at New Delhi. Consequently, the appeal is returned to the revenue for filing before the competent court of jurisdiction in accordance with law.

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• 2017 (9) TMI 820
  TDS u/s 195 - non deduction of TDS on foreign agency commission outside India for promotion of export sales outside India - P.E. in India - income accrues or arises in India - agent principal relation - Held that:- Non-resident commission agents based outside India rendering services of procuring orders cannot be said to have a business connection in India and the commission payments to them cannot be said to have been either accrued or arisen in India. In view of the decisions cited above (supra), we are of the considered opinion that the assessee is not liable to deduct tax under the provisions of section 195 of the I.T. Act on account of foreign agency commission paid outside India for promotion of export sales outside India. See Kikani Exports Pvt. Ltd. (2014 (9) TMI 96 - MADRAS HIGH COURT), Faizan Shoes Pvt. Ltd. (2014 (8) TMI 170 - MADRAS HIGH COURT) and EON Technology P. Ltd. [2011 (11) TMI 20 - DELHI HIGH COURT ] - Decided in favour of assessee.

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• 2017 (9) TMI 819
  Valuation determined by DVO - CIT(A) confirming the addition by not allowing the deduction of 15% from cost of construction by following the CPWD method and 10% on self-supervision - Held that:- As gone through the DVO report and also the assessment order and found that the DVO by considering the time and place of construction and also rates approved by the CBDT, cost of construction is estimated. Find no infirmity in the order passed by the Ld. CIT(A). So far as self-supervision is concerned, the DVO has granted 7.5%. However, A.O. has not accepted the allowance given by the DVO. On appeal, Ld. CIT(A) allowed the rebate at 7.5% by observing that this rebate is allowed towards probable savings in engaging labour and procuring material directly rather to a contractor. A.O. is directed to allow 7.5% towards self-supervision for an amount of ₹ 15,88,392/-. As find that the Ld. CIT(A) has reasonably allowed self-supervision at 7.5% to the assessee and also find that no further allowance is required on account of self-supervision. By taking into consideration all find no infirmity in the order passed by the Ld. CIT(A). Thus, this appeal filed by the assessee is dismissed.

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• 2017 (9) TMI 818
  Estimation of income from IMFL business - 10% OR 5% - Held that:- The coordinate bench of the Tribunal in the case of Tangudu Jogisetty (2016 (7) TMI 379 - ITAT VISAKHAPATNAM) has considered the profit level in the line of business and decided that 5% of purchase price is reasonable profit margin in the line of IMFL business and directed the A.O. to re-compute the profit of the assessee. Thus we direct the A.O. to re-compute the income of the assessee at 5% of purchase price. Accordingly, this ground of appeal raised by the assessee is allowed. Unexplained investment - advances received - Held that:- It is difficult to accept the explanation given by the assessee that he has received an advance from prospective buyers i.e. who are going to purchase the liquor. So far as admission of additional evidence is concerned, the A.O. passed the assessment on 27.1.2014. The Ld. CIT(A) passed an order on 13.11.2014 and near about 10 months time is available to the assessee to file details before the Ld. CIT(A). Not only that, from the paper book filed by the assessee, it is very clear that all the prospective buyers who advanced the loans to the assessee are from same village of the assessee. When I specifically pointed out the A.R. of the assessee that why you are not able to file confirmation letters from the loan creditors who are belonging to your native village, he has not given any explanation. Under these above facts and circumstances of the case, we are of the opinion that this is not a fit case to admit the additional evidence at this juncture, therefore, additional evidence filed by the assessee is rejected and the order passed by the Ld. CIT(A) is confirmed. Accordingly, this ground of appeal raised by the assessee is dismissed. Unsecured loans - ingenuity of receipt - Held that:- In the case of Shri N. Neelakanteswara Rao from whom the assessee has received ₹ 2 lakhs has not filed return of income for assessment year 2011-12. The assessee has not filed bank account of Shri N.Neelakanteswara Rao to prove that the transaction has been taken place through bank. Similarly, in case of B. Bala Murali Krishna also the assessee has not filed the return of income for the A.Y. 2011-12 and bank account of B. Bala Murali Krishna has not been submitted. The assessee claims to have received an amount of ₹ 1 lakh from Smt. Usha Kumari but no details are filed. Therefore, the entire ₹ 5 lakhs treated by A.O. is unexplained and brought to tax under the head “income from other sources”. On appeal, CIT(A) confirmed the order of the A.O. Even before us assessee has not filed any details and no confirmation letters. Thus, find no infirmity in the order passed by the Ld. CIT(A). This ground of appeal raised by the assessee is dismissed.

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• 2017 (9) TMI 817
  Addition on estimated business income - estimation of higher income - CIT-A deleted addition - Held that:- No interference is called for in the matter. The A.O. has not given any reason for estimating the higher income of assessee. The findings of the A.O. are not corroborated by any evidence or material on record. Therefore, on mere estimation, enhancement of income, is without any basis. Accordingly, the Ld. CIT(A) correctly deleted the addition - Decided against revenue Unexplained cash deposit in bank - proof of creditworthiness of Shri Devender Sharma from whom advance has been shown - Held that:- The assessee filed copy of the sale agreement dated 20.04.2011 (PB-49) between assessee and Shri Devender Sharma through which ₹ 10 lakhs was received by assessee in cash as advance against sale of the property. PB-52 is the copy of the bank account of the purchaser Shri Devender Sharma which shows that on 13th April, 2011, he has withdrawn cash of ₹ 12 lakhs from his bank account. Thus, the assessee has been able to prove that he received advance against sale of property and thus, proved the identity of the purchaser and his creditworthiness because he has withdrawn the amount in cash from his bank prior to entering into an agreement to sale with the assessee. - Decided against revenue Addtion u/s 68 - proof of creditworthiness of Shri Sanjay Tyagi for giving loan of ₹ 18 lakhs to the assessee through banking channel - Held that:- The assessee filed copy of the confirmation of the creditor in the paper book at page-32 in which it is confirmed by Shri Sanjay Tyagi for giving loan of ₹ 18 lakhs to the assessee through banking channel, which is supported by the copy of the bank statement. The assessee also filed copy of the bank account of Smt. Javitri Devi to show that she has given ₹ 1 crore to Shri Sanjay Tyagi. Therefore, the assessee proved all the ingredients of Section 68 of the I.T. Act in the matter. Ld. CIT(A) noted that this addition is made by the A.O. without giving opportunity to the assessee. This finding of fact has not been disputed through any evidence or material on record. When A.O. made this addition without giving opportunity to the assessee to explain credit of ₹ 18 lakhs, this itself is sufficient to delete the addition against the assessee because it violates principles of natural justice - Decided against revenue Addition on account of interest on loan - Held that:- No merit in this ground of appeal of the Revenue. PB-25 is Agreement of Sale in favour of assessee and others through which had given the above advance money to the seller. Therefore, A.O. without any justification disallowed the interest.- Decided against revenue Unexplained investment - Held that:- No merit in this ground of appeal of the Revenue. The assessee filed copy of the bank statement to show the withdrawals from his bank account prior to the sale deed. Copy of the sale deed is also filed which support the fact that assessee made investment in property out of his own source. Thus, the assessee explained the source of investment in property.- Decided against revenue

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• 2017 (9) TMI 816
  Disallowance of bogus loss - no incriminating material available on record - changing of the client code - Held that:- A.O. has not confronted any material or statement which may be incriminating in nature against the assessee so as to prove allegation of receiving accommodation entry of the loss. No material has been brought on record by the A.O. in support of his findings. There is no working given as to how the assessee has taken these loss entries. The Ld. CIT(A) on going through the statements of Kunal Khaleja and Subhash Chandra Khaleja which have been relied upon by the A.O. found that there is no co-relation between a sum of ₹ 33,57,951 and the statements of the above broker with the assessee. The finding of fact recorded by the Ld. CIT(A) have not been rebutted through any evidence or material on record. No information is available on record as to how the assessee company has taken loss from these client code modification. There is no working given in the assessment order as to how the impugned addition has been calculated by the A.O. and its basis. In the absence of any incriminating material available on record against the assessee, it is difficult to interfere with the findings of the Ld. CIT(A). No details have been brought on record as to from whom assessee has taken the bogus entry of losses. Learned Counsel for the Assessee also demonstrated through P & L A/c that in assessment year under appeal the loss as compared to the earlier year has reduced to zero. Therefore, there is no question of making any addition against the assessee. - Decided against revenue

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• 2017 (9) TMI 815
  Re-opening of assessment u/s.147 - proceedings initiated only on the basis of the audit objection without any application of mind by the AO - reasons to believe - Held that:- For issuance of notice u/s 148 beyond a period of 4 years from the end of the relevant A.Y, it was necessary for AO to record that the income has escaped assessment on account of the failure of the assessee to disclose fully and truly all material facts necessary for assessment. We have also gone through the order sheet entries of the AO placed filed by the Revenue and there is no recording whatsoever even in the order sheet that there is escapement of income due to failure of the assessee to disclose truly and fully all material facts. The CIT (DR) has tried to justify that there is failure on the part of the assessee to disclose fully and truly all material facts by drawing our attention to the financials of the assessee but it is the AO who has to record the finding and not the CIT (DR). It has been held that the AO has to speak his mind through his order and it cannot be presumed in the absence of any such recording. In the case before us the assessee has filed the return of income for the relevant financial year and it is only from these documents that the audit party has raised its objections. Thus, there is no new material which has come to the notice of the audit party or the AO for raising such objection or forming a belief that there is escapement of income. When all the material facts were part of the record, even if there is loss of revenue, it cannot be reassessed after lapse of four years from the end of the relevant A.Y unless the loss has occurred due to failure on the part of the assessee to disclose fully and truly all material facts. Since the preconditions for initiation of proceedings u/s 147 of the Act by issuance of notice u/s 148 of the Act are not satisfied, we see no reason to interfere with the order of the CIT (A) and the Revenue’s appeal is accordingly dismissed.

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• 2017 (9) TMI 814
  Unexplained cash deposits in the bank account - increased gross receipts - Held that:- It is an admitted fact that assessee maintained bank account with Bank of Rajasthan Limited, Kalkaji, Delhi in which unexplained cash deposits were found and for three months assessee could not offer any explanation before the authorities below. The assessee very cleverly tried to revise the gross receipts to ₹ 25,01,020 against gross receipts of ₹ 9,25,570 declared in the return. No basis or evidence was furnished as to how the receipts have been increased without any justification. No revised return was also filed. It, therefore, appears assessee increased gross receipts just to explain the cash deposited in the bank account which assessee has failed to explain before the authorities below. There is thus, no justification to interfere with the orders of the authorities below. Income accumulation with the son of the assessee - Held that:- The annual income of son of assessee was found very low and it was also not supported by any evidence. His son started filing return of income when he just passed Senior Secondary Examination. The story propounded by assessee is also not acceptable because for the last 07 years if the son of assessee was having cash amount with him, why he was not deposited same in the bank account and why the cash of ₹ 8 lakhs have been given to the assessee in assessment year under appeal for depositing in cash in the joint account maintained by assessee and his son. It is also not believable that a person who was earning would not make any drawings and withdrawal for personal purpose. The Ld. CIT(A) was, therefore, justified in enhancing the income by ₹ 8 lakhs particularly when the second bank account maintained by assessee with Andhra Bank was not disclosed to the A.O. at the assessment stage. If assessee was having any lawful source to make deposit in Andhra Bank, there were no reason for him to conceal this bank account from the A.O. at the assessment stage. Therefore, assessee has created an afterthought story to explain the cash deposited in the Andhra Bank account. No evidence has been filed on record to explain the source of the cash deposited in the bank account maintained by assessee. Further, assessee has not raised any of the grounds of appeal to challenge both the additions. Therefore no evidence to explain the source of the cash deposits in the bank accounts of the assessee, no interference is called for in the matter. - Decided against assessee.

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• 2017 (9) TMI 813
  Reopening of the assessment u/s 147/148 - additions u/s 68 and on commission under section 69A - independent application of mind - information received from Investigation wing - Held that:- A.O. recorded incorrect facts in reasons for reopening of assessment. The reasons failed to demonstrate that the link between the tangible material and the formation of the reasons to believe that income has escaped assessment. The A.O. had not independently considered the tangible material which formed the basis for the reasons to believe that income had escaped assessment. The A.O. merely reproduced information received from Investigation wing and enquiries conducted by them and then, straightaway came to the conclusion that ‘Income chargeable to tax has escaped assessment’. In the present case, as already noticed, the reasons to believe contained not the reasons but the conclusion of the A.O. There is no independent application of mind by the A.O. to the tangible material which form the basis of the reasons to believe that income has escaped assessment. The conclusion of the A.O, at best, are reproduction of the conclusion of the Investigation report. Thus, it is clearly a borrowed satisfaction. Appeal of the assessee is allowed.

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• 2017 (9) TMI 812
  Disallowance of reimbursement of expenses on corporate overhead allocation - failure to furnish necessary direct and proximate evidences of nexus between reimbursement of corporate allocation expenses and income generating activity of the assessee - agreement between holding company and its group companies - Held that:- It is an admitted fact that only expenditure incurred in relation to earning income wholly and exclusively for the purposes of business of the assessee is allowed, as deduction. It is the primary onus of the assessee to prove the nexus between expenditure incurred and business connection of the assessee. In this case, the assessee has reimbursed certain expenses on the basis of an agreement between holding company and its group companies. The assessee claims that the holding company has rendered certain services as listed in the agreement. However, no such evidence has been furnished to the AO to prove as to what are the services rendered by its holding company. We further observe that the assessee has furnished certain additional evidence to prove the nexus between reimbursement of corporate overhead allocation and business activity of the assessee. The assessee claims that those details are not before the AO except copy of agreement between holding company and group companies. Therefore, we are of the considered view that the issue needs to be examined by the AO in the light of the additional evidence filed by the assessee. Hence, we set aside the issue to the file of the AO for reconsideration.

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• 2017 (9) TMI 811
  Liquidated damage received/receivable - revenue receipt chargeable to tax - Held that:- We have observed that in the case of CIT Vs. Saurashtra Cement Ltd. (2010 (7) TMI 11 - SUPREME COURT) the assessee was to be paid compensation at a rate of 0.5% of the price of the respective portion of the machinery for each month of delay by way of liquidated damages from the supplier, without proof of actual loss. Whereas, in the instant case damages in the EPC contract agreement between the assessee and suppliers, have been computed at ₹ 10,61,281 /- on per day basis. The liquidated damages payable to ‘GUVNL’ are also on per day basis. We find that the assessee itself in its letter dated 17/02/2012 addressed to ‘M/s. Enfinity’ which is available on page 15 of the paper book, has referred clause 8.6 (b) of the EPC contract agreement which states that contactor should indemnity the assessee for the net present value for any reduction in the tariff received by the plant as a result of contactors failure to achieve substantial completion by 31st December 2011. The back to back arrangement of liquidated damages in EPC contract as noted by the Ld. CIT-(A) in the impugned order, manifest that the primary objective behind introduction of the liquidated damages clause in EPC contract agreement was to protect the assessee from actual business losses. The act of shifting of site by the assessee and consequently non-availability of transmission lines also contributed, resulting into those business losses. In view of above discussion, we are of the opinion that order of the Ld. CIT-(A) on the issue in dispute is well reasoned and no further interference is required. Liquidated damage received/receivable by the assessee, is revenue receipt chargeable to tax. Not allowing the claim of depreciation under Income-tax Act on full cost of assets (without liquidated damages sought to be taxed as revenue receipt) - Held that:- As already held that the liquidated damages are in the nature of revenue receipt, then same cannot be reduced out of the cost of asset and hence the assessee is eligible for claiming depreciation on the full cost of the asset (without reducing the liquidated damages). In the interest of justice, we feel it appropriate to restore the issue to the file of the Assessing Officer with the direction to allow the depreciation on the cost of the asset without reducing the liquidated damages. We also direct the Assessing Officer to verify from the supplier ‘M/s Enfinity’, the cost of asset charged to the assessee and liquidated damages. The assessee shall be afforded adequate opportunity of being heard. The ground No. 5 of the appeal is accordingly allowed for statistical purposes. Deduction under section 80I on enhanced income due to treating liquidated damages as revenue receipt and depreciation disallowed - non-filing of form No. 10CCB in respect of the amount of income - Held that:- We are not agreed with the Ld. CIT- (A) in view of the decision of the Tribunal in the case of Eagle Synthetics (Pvt.) Ltd. (2010 (2) TMI 719 - ITAT, Ahmedabad) wherein the Tribunal directed the Assessing Officer to grant opportunity to file the audit report in form No. 10CCB on the basis of enhanced income Rejection of the reduction of section 80IA deduction that income was not derived from the undertaking - Plain reading of the sec 80IA(1) provision, it is clear that any profit and gains ‘derived’ by an undertaking or enterprise from eligible business is the only allowed for deduction under section 80IA of the Act. In the case of CIT Vs. Sterling Foods [1999 (4) TMI 1 - SUPREME Court] the Hon'ble Supreme Court has held that for the profit to be derived from the eligible business there should be nexus of first- degree between the profit and the eligible business In the instant case, the receipt is from liquidated damages as a result of contractual obligation between the assessee and EPC contractor. In our opinion, there is no direct nexus between the profit and gains of the undertaking and the receipt from liquidated damages, and thus, assessee is not eligible for deduction under section 80IA of the Act on the said receipt. Since the enhancement of the profit is not as a result of the eligible business, the CBDT Circular No. 37/2016 by the Ld. counsel is also not applicable over the facts of the instant case. Accordingly, we uphold the finding of the Ld. CIT-(A) on the issue in dispute and dismiss grounds No. 6 of the appeal. Disallowance of depreciation on solar power plants - Held that:- We find that the assessee has submitted power generation on 31/03/2012 as 52.976 unit from combined 10 MW capacity, but it has not bifurcated the electricity generated from 6 MW plant and 4 MW plant on 31/03/2012. In absence of such bifurcations, is not possible to know whether the 6 MW plant generated any electricity on 31/03/2012 or not. In view of above facts, in the interest of Justice, we feel it appropriate to restore the issue to the file of the Assessing Officer, who is directed to examine the documentary evidences submitted by the assessee and also to verify from the respective authorities whether the solar power plants in question generated any electricity on or before 31/03/2012 and decide the issue in dispute in accordance with law.

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• 2017 (9) TMI 810
  Assessment u/s 153A - non disclosure of portion of taxable income - Held that:- A notice u/s.153A of the Act can be issued in the cases where action u/s.132 is carried out. As far as additions are concerned same can be made on the basis of some seized material. But he case before us is unique as the assessee herself has admitted that by mistake she had not disclosed a portion of her taxable income. It was never argued by the assessee that she had not earned income from cancellation of booking of a flat. So in our opinion, she cannot raise any objection about the taxability of transactions in question. If we consider the peculiar facts of the case it becomes clear that after the assessee admitted the inadvertent mistake he AO accepted her claim in principle. In light of the peculiar facts and circumstances of the case decide the jurisdictional issue against the assessee. Addition on account of compensation arising from surrender of allotment of flats - whether it is in nature of capital gain? - Transfer u/s 2(47) - Held that:- The income arising out of surrendering the flat to the builder had to be taxed under the head capital gains and not under the head income from other sources. Considering the period of holding of the asset he assessee is entitled to benefit of indexation and the disputed amount is to be taxed as long-term capital gain. See CIT Versus Vijay Kumar Ajit Kumar Vijay Flexible Containers [1989 (9) TMI 16 - BOMBAY High Court]. Second effective ground of appeal is decided in favour of the assessee.

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• 2017 (9) TMI 809
  Reopening of assessment - Inquiry before assessment initiated - assessment proceedings were initiated by issue of notice u/s 142(1) and before concluding the assessment proceedings, the assessing officer has issued notice u/s 148 for reassessment - Held that:- In this case, the assessing officer has issued notice u/s 142(1) within time limit allowed for filing return of income under section 139 of I.T. Act. Since the assessee failed to respond to the notice u/s 142(1), the assessing officer should invoke the provisions of section 144 and complete the assessment as per section 144 on or before 31.03.2011. Since the assessment is already initiated, during pendency of assessment proceedings, there is no case for invoking the provisions of reassessment u/s 148 of I.T. Act and reopening of the assessment. Since the notice u/s 148 is issued without concluding the assessment proceedings, the notice issued u/s 148 is bad in law and cannot be sustained. The assessing officer is not permitted to carry on the assessment proceedings and reassessment proceedings simultaneously. - Decided in favour of assessee.

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• 2017 (9) TMI 808
  Income accrues or arises in India - Remuneration received directly remitted from foreign to the NRE account of assessee by the foreign company - salary accrued to a non-resident seafarer for services rendered outside India - Held that:- Salary accrued to a non-resident seafarer for services rendered outside India on a foreign going ship (with Indian flag or foreign flag) shall not be included in the total income merely because the said salary has been credited in the NRE account maintained with an Indian bank by the seafarer. Remittances of salary into NRE Account maintained with an Indian Bank by a seafarer could be of two types : (i) Employer directly crediting salary to the NRE Account maintained with an Indian Bank by the seafarer ; (ii) Employer directly crediting salary to the account maintained outside India by the seafarer and the seafarer transferring such money to NRE account maintained by him in India. The latter remittance would be outside the purview of provisions of section 5(2)(a) of the Act, as what is remitted is not “salary income” but a mere transfer of assessee’s fund from one bank account to another which does not give rise to “Income”. It is not clear as to whether the expression “merely because” used in the Circular refers to the former type of remittance or the latter. To this extent the Circular No. 13/2017 dated 11.4.2017 is vague. In the instant case, the employer has directly credited the salary, for services rendered outside India, into the NRE bank account of the seafarer in India. In our considered opinion, the aforesaid Circular is vague in as much as it does not specify as to whether the Circular covers either of the situations or both the situations contemplated above. Hence we deem it fit to give the benefit of doubt to the assessee by holding that the Circular covers both the situations referred to above. The result of such interpretation of the Circular would be that the provisions of Sec.5(2)(a) of the Act is rendered redundant. Be that as it may, it is well settled that the Circulars issued by CBDT are binding on the revenue authorities. This position has been confirmed by the Hon’ble Apex Court in the case of Commissioner of Customs vs Indian Oil Corporation Ltd (2004 (2) TMI 66 - SUPREME COURT OF INDIA ) wherein with regard to binding nature of the Circulars and laid down that when a Circular issued by the Board remains in operation then the revenue is bound by it and cannot be allowed to plead that it is not valid or that it is contrary to the terms of the statute.- Decided in favour of assessee.

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• 2017 (9) TMI 807
  Denying exemption u/s 11 & 12 - assessee has made investment in its wholly owned subsidiary company in accordance with the directions of SEBI - main object of assessee trust - Held that:- The main object of subsidiary was to acquire the membership rights of the BSE / NSE so as to facilitate the members of the investor. The assessee is a recognized stock exchange by Central Government in terms of Section 4 of the Securities Contract Regulation Act. Therefore, on these facts we find that the investment in subsidiary was in tune with the requirement of Section 11(5) read with Rule 17C and there was no violation of the same and therefore, the assessee could not be visited with consequential disallowance u/s 13(1)(d)(iii). Main object of the assessee was to promote and assist dealings in securities of any nature issued by limited companies in India. Further, clause V of the said memorandum contained restrictive conditions as to distribution of dividend / bonus/ profits / remuneration / fees whatsoever to its members and the income / property of the assessee was to be applied solely for the promotion of its objects. Further, the assessee company was governed by its by-laws and chapter XV-A of the said by-laws dealt with code of ethics for directors and functionaries of exchanges and put several restrictive conditions upon directors to obtain any sort of benefits / pecuniary advantages by using their position as directors. It is quite evident that the floating of subsidiary company was in tune with SEBI directions and contradicts the stand of the revenue that the sub-broker membership of the subsidiary was open to select few and not to public at large and the benefit to select few was extended by the assessee. It is an admitted position that the assessee was being reimbursed on actual basis by the subsidiary for various services and therefore, it was wrong to infer that the assessee extended benefits as mentioned in Section 13(2) to class of persons enumerated in Section 13(3) which prima-facie weakens the conclusion of the revenue that the case of the assessee was hit by the provisions of Section 13(2) & 13(3). Revenue has alleged that the assessee failed to charge interest on the amount remaining outstanding at year-end - Held that:- A perusal of ledger extract as produced in the paper book reveals that the same represent reimbursement of the last month of the relevant financial year which has been settled subsequently within a short span of time thereafter and hence, there was no occasion / justification to charge the interest against the same which further negates this stand of the revenue that the assessee extended pecuniary benefits to its subsidiaries in contravention of law. The totality of above discussion leads us to an inevitable conclusion that the revenue was not justified in denying the said exemption to the assessee. Therefore, we are inclined to hold that the assessee was entitled for the said exemption u/s 11 / 12 and the appeal of the assessee stands allowed.

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• 2017 (9) TMI 806
  Deduction not granted in respect of the Collector's liability - Held that:- As found that the collector had determined the provisional liability to be paid by the assessee on the assessee getting the reversionary right from Mema Engineers by deed dated 17.2.2000, pending final determination by the Assistant Director, Department of Town Planning on behalf of the Collector. This letter shows that though the event which occasioned the payment of a portion of the unearned income accrued in the year 2000 it was only in the year 2003 that the Collector was aware of the event and the occasion was assessee's request to the Collector to allow it use to property commercially. (This is clear from the opening sentence of the letter which refers to the assessee‟s request for commercial use). The assessee has not stated further whether the final determination for the „unearned income‟ for the transfer in 2000 has been intimated by the Government and whether it had made further payments. The assessee had not stated as to how many flats or floors were developed and how many sold or to whom. The liability would crystallize only when the Collector Mumbai Suburban District considers the matter and determines the amount to be paid by the assessee as Government‟s share of unearned income. This is supported by the fact that the assessee itself has not made any provision in its accounts for the liability. The Auditor has stated that the assessee has not made the provision in the absence of a specific demand from the Collector. It is clear from the above that the liability neither accrued nor crystallised nor paid nor accounted by the assessee during the year under consideration. The Bench specifically asked the assessee to furnish any documentary evidence indicating the actual accrual and/or payment of liability till today, however, the assessee was unable to produce any evidence to this fact. Thus the deduction of expenditure cannot be allowed. In the interest of justice, we restore this matter back to the file of the A.O. with a direction to communicate directly to the Collector of Mumbai so as to find out if any liability is payable by the assessee towards this project and to decide the same afresh as per law. Disallowance made u/s. 14A as per Rule 8D - Held that:- In view of the decision of Hon‟ble Bombay High Court in case of Godrej and Boyce [2010 (8) TMI 77 - BOMBAY HIGH COURT] Rule 8D is applicable w.e.f. A.Y. 2008-09. However, the assessment year under consideration is A.Y. 2007-08 wherein Rule 8D is not applicable. As per the facts and figures placed on record we direct the A.O. to restrict the disallowance u/s.14A to the extent of ₹ 3,77,065/- being amount of PMS charges paid to Enam Securities P. Ltd. We direct accordingly.

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• 2017 (9) TMI 805
  Addition u/section 14A r.w.r. 8D - disallowance of expenditure incurred to earn exempt income - computation of claim - Held that:- In this case, the assessee has various investments including investments in subsidiaries and also it is a fact that the details filed by the assessee does not throw any light to prove that dividend income is earned form shares held by way of amalgamation only. We find that the Hon’ble Delhi High Court in the case of Joint Investments P Ltd vs CIT (2015 (3) TMI 155 - DELHI HIGH COURT) held that the window for disallowance is indicated in section 14A and is only to the extent of disallowing expenditure incurred by the assessee in relation to tax exempt income. This proportion or portion of the tax exempt income surely cannot swallow the entire amount as has happened in this case. Also in the case of CIT vs Holcim India Pvt Ltd (2014 (9) TMI 434 - DELHI HIGH COURT) has held that there can be no disallowance u/s 14A in the absence of exempt income. The rationale behind these judgments is that the amount of disallowance cannot exceed exempt income. In this case we find that the assessee has earned exempt income of ₹ 24,138, whereas the AO disallowed an amount of Rs ₹ 3,36,28,000. Therefore, considering the facts and circumstances of the case and also following the ratios of the case laws discussed above, we are of the view that disallowance u/s 14A cannot exceed the exempt income. Hence, we direct the AO to restrict disallowance u/s 14A to the extent of exempt income earned by the assessee. - Decided partly in favour of assessee.

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• 2017 (9) TMI 804
  Revision u/s 263 - allowability of provision for expenses - Held that:- As found from record that assessee as an accounting practice, closes its books of accounts on monthly basis and, accordingly, inter-alia provision for the above-referred expenses i.e., rent, electricity and maintenance is generally made at the end of each month. On the first day of the next month, the provision entry is reversed and actual payment is recorded. However, during the assessment proceedings, instead of the year end provision figures in respect of the above-referred expenses, inadvertently, the month end provision numbers got filed. However, vide its letter dated 13/08/2015, assessee had clarified that the provision figures that were submitted during the assessment proceedings (and which were picked by CIT in the revision proceedings) were actually month end provision figures and not the provision figures which were outstanding at the year end. It is clear that as per the revised provision figures in respect of rent, utilities and office maintenance, the total provision outstanding as at the year-end is INR 2,85,917/- and not ₹ 1,23,09,109/- taken by CIT in his order u/s.263. We accordingly modify the order of CIT and direct the AO to verify the said provision of ₹ 2,85,917/- as been claimed to be subsequently paid / adjusted in the subsequent year i.e. A.Y. 2013-14. If the AO found that a sum of ₹ 2,85,917/- had not actually paid in the next year, he may add the same to the total income of assessee. Appeal is allowed in part

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• 2017 (9) TMI 803
  Addition towards advance received for sale of flats - accrual of income - revenue recognized from sale of goods or rendering services - AO made additions only on the ground that the assessee is following mercantile system of accounting and project completion method for recognition of revenue - According to the AO, revenue from the project should be recognized when the project is complete - Held that:- We do not find any merit in the findings of the AO for the reason that unless a written sale agreement is entered into specifying the terms and conditions for sale, it cannot be construed that the parties have agreed for transfer of property. Since the assessee has entered into agreement for sale in the financial year relevant to AY 2008-09 and also executed the sale deeds in the same financial year, the revenue therefrom towards sale of flats needs to be recognized as and when the sale is complete. We further observe that the assessee has recognized revenue from sale of these flats in the financial year relevant to AY 2008-09 and this fact was not disputed by the AO as well as the CIT(A). Therefore, we are of the view that the assessee has rightly recognized revenue from sale of flats as per the method of accounting regularly followed in its business and also as per the Accounting Standard-9 issued by the ICAI. Hon’ble Gujarat High Court in the case of CIT vs Motilal C Patel & Co (1988 (4) TMI 36 - GUJARAT High Court) under similar facts has observed that income accrues to a builder or developer only when transaction of sale is complete and any advance received under the agreement for sale or mere earnest money cannot be taxed as income before the transaction of sale is complete. Thus assessee has rightly recognized revenue from sale of flats when the sale of flat was completed by way of instrument of sale which has happened in the financial year relevant to AY 2008-09. - Decided in favour of assessee.

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• 2017 (9) TMI 802
  Reopening of assessment - addition invoking sec 69B - not allowing Assessee to cross-examine witnesses - Held that:- Denial of such opportunity goes to the root of the matter and strike at the very foundation of the assessment order. Not providing such opportunity amounted to violation of principle of natural justice, a serious flaw which makes the order nullity. We do not find any merit for the addition made by AO without allowing assessee an opportunity to cross examine the person on whose statement addition was made. See Andaman Timber Industriescase [2015 (10) TMI 442 - SUPREME COURT] - Decided in favour of assessee.

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• 2017 (9) TMI 801
  TPA - arms length price adjustment in respect of interest charged on advances to the subsidiaries and corporate guarantee - Held that:- Since as per the facts of the present case as well as in view of the above discussions, we find that the assessee has not charged any interest from subsidiaries and therefore, in the absence of any accrual or arise of income form the lending of the money, there was no jurisdiction for invoking the provision of section 92 of the Act. Therefore, we direct the Assessing Officer to delete this arms length price adjustment of ₹ 4,97,120/- in respect of interest charged on advances to the subsidiaries. Issuance of a corporate guarantee may have an influence on the profit, income, loss and asset of an entity, in whose favour the guarantee is issued, but it has, in our understanding, no impact on the same as long as it is issued without a consideration and as long as the guarantee is not invoked by the beneficiary. To treat this phrase as implying a benefit test, will, in our considered view, stretching the things too far. The benefit test, as we see it, does not find place in the statute as yet. Thus as per the facts of this case, does not constitute a corporate guarantee akin to bank guarantee and, even if it could be treated as a corporate guarantee for benchmarking purposes, the corporate guarantee does not constitute an international transaction under section 92B of the Act. - Decided in favour of assessee. Disallowing expenses u/s 14A by invoking Rule 8D (2) (ii) and (iii) - Held that:- As perused the material placed on record as well as the orders passed by revenue authorities. Since as per the facts of the present case as well as in view of the above discussions, we hold that since the total interest interest free funds available with the assessee in the form of share capital and reserves alone more than the investments of the assessee and the investment of the assessee was at negligible percentage of interest free funds with the assessee and while relying upon the judgment cited above as well as bearing in mind the entirety of the facts, we direct the Assessing Officer to delete the disallowance of ₹ 12,28,142/- made u/s 14A read with Rule 8D '. Accordingly, this ground raised by the assessee is allowed.

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• 2017 (9) TMI 800
  Addition on non-genuine creditors - Held that:- During the first appellate proceeding, the assessee furnished written submission on 23.04.2014. The ld. CIT(A) after considering the submission concluded that the creditors namely Chennur Textile, S. Henil & Co. and Ishtiyak Ahmed, the assessee was unable to prove the genuineness about the creditors. The assessee has proved genuineness with respect of Santhil Kumar Textile KPM against whom a liability of ₹ 27322/- was shown. The ld. CIT(A) considering the fact deleted the addition to the extent of ₹ 27322/- and sustained the remaining addition. We have noticed that the finding of ld. CIT(A) is based on material fact available on record and do not require any further interference at our end. Thus, Ground No.1 raised by assessee is dismissed. Cash expenses disallowance - Held that:- The assessee failed to substantiate his claim even before the ld. CIT(A). The ld. CIT(A) observed that the salary expenditure of ₹ 264.44 Lakhs (except expenditure of ₹ 25,000/- by cheque) has been shown in cash. Since the assessee has to failed to substantiate and provide the details before the AO as well as before the ld. CIT(A). The ld. CIT(A) however, restricted the disallowance to ₹ 8,00,000/-. Before us, the assessee failed to substantiate his claim as to why the addition be deleted. As the assessee has neither come forward nor substantiate his claim. Thus, we do not find any illegality or infirmity in the order passed by ld. CIT(A). Addition on account of estimate of G.P. @ 6% - Addition u/s 68 - CIT-A deleted both additions - Held that:- CIT(A) considered and relied upon the documents which were not filed before the AO during the assessment proceeding. Considering the submission of ld. DR for the Revenue, we are of the view that the documents furnished before the ld. CIT(A) for the first time required verification by the AO. Hence, the appeal of the Revenue is allowed. The order of ld. CIT(A) to the extent of deleting the addition u/s 68 of the Act and deleting the estimate G.P. @ 6% are restored to the file of AO. The AO is directed to pass the order afresh in accordance with law

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• 2017 (9) TMI 799
  Grant interest u/s 244A(1)(b) on self assessment tax - paid from the date of assessment order OR from the date of payment of self assessment tax - Held that:- As per the decision of the Hon’ble Bombay High Court in the case of The Stock Holding Corporation Of India Ltd. (2014 (11) TMI 899 - BOMBAY HIGH COURT) and Calcutta High Court in the case of Birla Corporation Limited (2016 (2) TMI 470 - CALCUTTA HIGH COURT ), we are of the view that refund u/s 244A(1)(b) of the Act on self assessment tax is to be paid from the date of payment of self assessment tax till the date of grant of refund. The appeal of assessee is allowed and that of the Revenue is dismissed.

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• 2017 (9) TMI 798
  Loss on account of “Securities written off” disallowed - claim of bad debts - Held that:- The undisputed facts of the case are that the writing off of this amount was not in challenge but the year in which the amount was to be written off and the year in which it has to be allowed by the authorities. We find merit in the contention of the ld.AR that the writing off of the said amount in neither of the assessment year i.e. 2010-11 or 2011-12 is tax neutral as is clear from the computation of total income filed as the in that both the years the taxable income of the assessee was NIL. In the first year, the assessee sustained loss of ₹ 46,80,427/-. In the next year income after adjustment of the brought forward losses to the tune of ₹ 77,17,152/- is turned out to be NIL. In the case of Vishnu Industrial Gases Pvt Ltd [2008 (5) TMI 636 - DELHI HIGH COURT] held that where the rate of tax remained same in both the assessment years then the issue of whether the tax is leviable in one year or other year is immaterial. In the present case, also in both the assessment year the income of the assessee is not assessable to tax at all. We also find that the assessee has decided to write off when it finds that the further investment in the said securities would be loss making propositions considering the adverse market conditions. Moreover, it is the assessee who can take decision to write off of the amount which became bad in particular year and the revenue cannot dictate the terms of writing off the bad debts or how to run the business in the ordinary course of business. On this count also the deciding of writing off the bad debts deserved to be allowed. We, therefore, set aside the order of the FAA and direct the AO to delete the disallowance. - Decided in favour of assessee.

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• Customs

• 2017 (9) TMI 764
  Request for inspection of public file with the Designated Authority (DA) - levy of anti dumping duty - delay in making request - Held that: - the Petitioner claims that the Petitioner became aware of the Notification dated 17th February 2017 only in the second week of May, 2017 and therefore could not make the above request earlier. This explanation is not convincing. The Notification, having been gazzetted, is presumed to have been in the knowledge of the Petitioner. Further, the provisional duty during the period of investigation was already in force for more than a year and was to the knowledge of the Petitioner. It appears to the Court that, having missed its opportunity of filing its appeal in the CESTAT within time, the Petitioner was seeking to build an alibi to explain its delay and therefore applied for inspection of the DA’s file - petition dismissed - decided against petitioner.

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• 2017 (9) TMI 763
  Writ of habeas corpus - Detention order - Jurisdiction of Court to entertain the appeal - proceedings under COFEPOSA - Held that: - As per provisions of Article 226 of Constitution of India, there are two limitations placed on the exercise of jurisdiction by this Court. Firstly, that the power is to be exercised 'throughout the territories in relation to which it exercises jurisdiction; and secondly, that the person or authority, to whom this Court is empowered to issue writ, must be within those territories i.e. amenable to its jurisdiction either by residence or location. When the aforesaid tests are applied the safe conclusion, which can be drawn in this case is that this Court lacks jurisdiction in facts and circumstances of this case. All the actions against petitioner were being taken in Mumbai. The incident had accrued in Mumbai. He has violated the provisions of law in Mumbai. He was arrested there; released on bail; and also filed writ petition before the High Court of Mumbai in that regard. Taking recourse to above provisions, the competent authority of Government of Maharashtra issued his detention order in exercise of power under Section 3 (1) of COFEPOSA Act. No part of cause of action has accrued to petitioner within the jurisdiction of this Court. The petitioner, if wants to challenge the act of competent authority which passed the order of his detention, he could approach Bombay High Court for redressal of his grievance. The jurisdiction lies only with Bombay High Court within whose jurisdiction cause of action arose and lies. The petition is dismissed on the ground of lack of jurisdiction with this Court to entertain this petition.

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• 2017 (9) TMI 762
  Jurisdiction - power of DRI to issue SCN - Additional Commissioner (Preventive), proper officer or not - whether DRI is competent to issue show-cause notice? - Held that: - w.e.f. July 6, 2011, the Additional Director General, DRI was prospectively appointed as proper officer for the purpose of Section 28 of the Customs Act. Hence, from 06.07.2011 ADG-DRI has been empowered to issue demand notice under Section 28. Subsequently, sub-section 11 was inserted under section 28 of the Customs (Amendment and Validation) Act, 2011 dated 16.9.2011, assigning the functions of proper officers to various DRI officers with retrospective effect - Later on, i.e. for the period subsequent to the amendment, the matter i.e. the DRI officers having the proper jurisdiction to issue the SCN or not had came up before the Hon’ble Delhi High Court in the case of Mangali Impex vs. Union of India [2016 (5) TMI 225 - DELHI HIGH COURT], and the High Court inter alia, held that even the new inserted section 28 (11) does not empower either the officers of DRI or the DGCEI to issue the SCN or adjudicate for the period prior to 8.4.2011. Recently, the Hon’ble High Court of Delhi in the case of BSNL Vs. UOI [2017 (6) TMI 688 - DELHI HIGH COURT] has dealt with the identical issue where the notice was also issued by DRI. The Hon’ble High Court of Delhi has considered the judgment in the case of Mangli Impex Vs. UOI which is stayed by the Hon’ble Supreme Court. Finally the Hon’ble High Court has granted liberty to the petitioner by observing that petitioner is permitted to review the challenge depending on the outcome of the appeals filed by the UOI in the Supreme Court against the judgment of the Court in the case of Mangli Impex Ltd. Appeal allowed by way of remand.

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• 2017 (9) TMI 761
  Mis-declaration of goods - woven fabrics and not fully knitted fabric - appellant diverted the imported consignment for other than intended purposes - N/N. 94/2004 dated 10.9.2004 - Held that: - The evidence brought out in the impugned order clearly establishes that the import consignments have been mis-declared regarding the contents of the goods. In fact, have been diverted to places other than the ones entered in the license. We find that belated attempt by the main appellant to bring in the address of other companies, as if a supporting manufacturer is not relevant to decide already imported consignments which were diverted. The evidence examined by the impugned order has not been controverted with any authority. Penalty - Held that: - The manager of the second appellant had in fact confirmed that they are aware of the diversion of the imported cargo and they were involved in arranging the transport of such diversion. The original authority on careful consideration of the role of the CHA in the above mentioned violations concluded that such action on the part of the second appellant will attract penal consequence - penalty upheld. Appeal dismissed - decided against appellant.

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• 2017 (9) TMI 760
  Penalty u/s 114(i) of Customs Act, 1962 - illegal export of Ivory Idols - confiscation - penalty - Held that: - It is an admitted fact that the goods i.e. ivory idols were recovered in the town and not in the customs area. The adjudicating authority has held that appellant had every reason to export the goods without any cogent and acceptable evidence - there is nothing available on record to indicate that appellant had attempted to export these goods by either moving the goods to the customs area or getting into any negotiations with some one else for attempting to sell the said goods. There is also no evidence brought on record to show that the said goods were illegally procured by the father-in-law of appellant - The fact that the goods were moved from Mysore to Hyderabad is being an admitted fact, the entire case seems to be a fall out due to some family dispute between appellant and his father in law, cannot by itself be the reason for slapping the appellant with an allegation of attempted export of antique idols. In the case of Pradeep Dhond Vs. CCE, Mumbai [2013 (2) TMI 679 - CESTAT MUMBAI], the Division Bench of the Tribunal was considering a similar issue and held that there was an attempt to export does not stand in the light of the fact that there was no communication between appellant therein and the foreign buyer, hence confiscation and penalty was set aside. Confiscation as well as penalty u/s 114 (i) set aside - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 759
  Mis-declaration of goods - Smuggling - Demurrage and container charges - he undeclared goods were concealed behind the declared goods - redemption fine - Held that: - it was revealed that apart from the declared goods there were 41 nos. of undeclared goods also stuffed in the container. A letter has been produced by the appellant in which it is stated that it was due to mistake at the end of the supplier while loading. We are not able to accept this submission in toto. However, the appellant intends to re-export the undeclared goods. The redemption fine is to be imposed for the limited purpose of re-export of the goods - appeal allowed - decided partly in favor of appellant.

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• 2017 (9) TMI 758
  Import of wire less transmitting/receiving apparatus, satellite communication equipment etc against forged import licenses - confiscation - penalty - Held that: - The goods imported by the appellants require an import licence from WPC Cell of DoT. The licence produced by them and on whose basis the goods were cleared, have been found to be forged and fraudulent. Even though M/s Aricent & M/s Hughes have no role to play in forging of the WPC licences, the fact remains that goods were imported without proper import licence which becomes a contravention of Section 111 - It stands established as per the investigation carried-out by DRI that WPC import licences required for import of certain telecom equipments were fabricated and forged by ASL in their offices. It is seen that S/Sh. Ashok Gupta, Jarnail Singh Chaudhary, Sanjay Sachdeva and Ms Anuradha Diwan have played their part in fabricating WPC licences which were handed-over and used for import of equipments. The various individuals have also admitted their role in the fraud in their respective statements. The penalty imposed on (1) M/s Aricent Holdings Ltd (2) M/s Hughes Communication India Ltd and (3) M/s Hughes Network Systems India Ltd upheld - The penalties imposed on various functionaries of ASL are fully justified and are upheld - appeal dismissed - decided against appellant.

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• 2017 (9) TMI 757
  Benefit of N/N. 26/2000-Cus. dated 01.03.2000 - clearance of the imported goods of Srilankan Origin - Window Air Conditioner - denial of exemption on the ground that the benefit cannot be extended suo moto as there is a condition to the effect that the claim has to be made at the time of importation and in absence of such claim by the appellants, the benefit cannot be extended - Held that: - reliance placed in the case of Share Medical Care [2007 (2) TMI 2 - SUPREME COURT OF INDIA] wherein it has been held that even if an applicant does not claim the benefit under a particular notification at initial stage, he is not debarred, prohibited or estopped from claiming such benefit at a later stage - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 756
  Refund claim - Limitation - Held that: - the Revenue is totally misdirected in approaching this Tribunal by challenging the order of Hon’ble High Court alleging that the said order did not lay down the correct position of law. We find such prayer before the Tribunal is untenable - appeal dismissed - decided against appellant.

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• 2017 (9) TMI 755
  Refund of excess duty paid - case of Revenue is that Since the order of assessment of the bills of entry was not challenged, it has become final and hence, the same cannot be challenged by filing refund claims - Held that: - the bill of entry was assessed without the respondent claiming the benefit of the notification. Accordingly, there was no lis at the time of the original bill of entry - it will be appropriate to follow the decision of the Hon’ble High Court in the case of AMAN MEDICAL PRODUCTS LTD. Versus COMMISSIONER OF CUSTOMS, DELHI [2009 (9) TMI 41 - DELHI HIGH COURT], where it was held that the non-filing of the appeal against the assessed bill of entry does not deprive the appellant to file its claim for refund under Section 27 of the Customs Act, 1962 - appeal dismissed - decided against Revenue.

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• 2017 (9) TMI 754
  Revocation of CHA License - forfeiture of security deposit - time limit as prescribed in Regulation 22 of Customs House Agents Licensing Regulation(CHALR), 2004 - Held that: - Regulation 20(5) provides the preparation of report by the enquiry officer within 90 days from the date of issuance of the notice under Regulation 20(1) of Customs Brokers Licensing (Amendment) Regulations (CBLR), 2013. In the present case, the enquiry officer has taken 8 months - Further, Regulation 20(7) provides that the Commissioner of Customs may pass the order within 90 days from the date of submission of the enquiry report. But, in the present case, it has taken 24(twenty four) months. The Tribunal in the case of Hindustan Shipping Agency V. Commr. of Customs (Port), Kolkata [2016 (12) TMI 889 - CESTAT KOLKATA] on the identical issue allowed the appeal of the Customs House Agent and held that The time limit prescribed by law is mandatory and the appellant is not permitted to suffer. The legislature has prescribed the time limit for taking steps in each and every stage as prescribed in the sub-Regulations of Regulation 22. The Commissioner of Customs cannot ignore such time limit without assigning any reason or in an unusual situation. In the present case, there is no material on record for contravention of the provisions of the law. Appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2017 (9) TMI 751
  Dissolution of the company - liquidation proceedings in progress - Held that:- The fund position of the Company is ₹ 1,51,735-75 as on 30.06.2017 which is barely sufficient to meet the Liquidation Expenses as Govt. Commission, Income Tax, audit fee etc, hence, the Official Liquidator is not in a position to admit the claims as stated above. The Income Tax Department did not file its claim and the claim of other authorities namely Central Excise Department, Nehru Place, and Noida also could not be adjudicated for want of funds. There are no assets of the Company (In Liquidation) in the hands of the Official Liquidator for realization. No fruitful purpose shall be served to continue the present liquidation proceedings and it is a fit case for dissolution of the Company under Section 481 of the Companies Act, 1956. The company stands dissolved after deduction from the amount of ₹ 1,51,000/- (approx.) lying with the company as on 30th June, 2017. Copy of this order may be sent to the Registrar of Companies by the OL within time prescribed as per law. The OL shall close the books of accounts of the company in liquidation.

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• Service Tax

• 2017 (9) TMI 797
  Tour operator Service - appellant had supplied a bus to IFFCO to carry its employees and family members from the factory premises at Phulpur to Allahabad and vice-versa - Held that: - the CESTAT was justified in holding that renting of the vehicle by the appellant-assessee to the IFFCO falls within taxable service in the category of 'tour operator' as defined under Section 65 (113) of the Finance Act, 1994 and that the appellant assessee had used 'tourist vehicle' for providing such services - decided against assessee. Penalty - Held that: - the facts of the case establishes that the appellant was under a bona fide belief that he is not a tour operator as he is not using the tourist vehicle and as such is outside the purview of the service tax. Therefore, he failed to apply for registration under the Act and in filing the appropriate return. On account of bona fide dispute as to the liability of the appellant to service tax, it cannot be said that there was any intention to evade tax on his part by concealing taxable service - penalty set aside - decided in favor of assessee. Appeal allowed - decided partly in favor of appellant.

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• 2017 (9) TMI 796
  Classification of services - Merger and Acquisition Services - whether classified under the head Banking and other Financial Services or under the head Management Consultancy Services? - Held that: - “Merger and Acquisition Services” having been introduced for the first time as a separate category under Banking and other Financial Services with effect from 16th July 2001 would show that the said service was never a part of Management Consultancy Services which has been in existence at all times - “Merger and Acquisition” is highly technical and a restrictive term and cannot be related to the managing of the affairs of the organisation which would come within the definition of “Management Consultant”. The decision of Division Bench of this Court in Indian National Shipowners Association [2010 (12) TMI 12 - Supreme Court of India] would apply in the present case partially since that case has considered the issue of introduction of a new entry viz. mining service in the Finance Act and held that the levy of service tax on this service would be after the insertion of the new entry. Service tax is payable on Merger and Acquisition Services only upon its insertion in the Banking and Financial Services with effect from 16th July 2001 and was not leviable prior thereto - appeal dismissed - decided against Revenue.

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• 2017 (9) TMI 795
  Interest on refund - advance payment of service tax - Held that: - the appellant is not relying on any statutory provision entitling the appellant for interest on the amount refunded - also the payment made by the appellant pending adjudication was a voluntary advance payment and that taking note of the advance payment made by the appellant, in the adjudication order, the adjudication authority has not levied any penalty or fine on the appellant - interest not allowed - appeal dismissed - decided against appellant.

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• 2017 (9) TMI 794
  Demand of interest - delayed payment of service tax - Security Service - Business Auxiliary Service - CBE&C Circular dated 20/05/2003 - Held that: - The said issue has not been decided by both the authorities below and refrain to discuss the merits by giving one reason or the other reason, therefore, the impugned order is set aside and the matter is remanded back again to the Adjudicating Authority to re-examine the issue in the light of remand order dated 31st January 2012 - appeal allowed by way of remand.

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• 2017 (9) TMI 793
  Installation, commissioning and erection service - management maintenance or repair service - the respondents were engaged by BSNL for the work of laying of optical fibre cables and outdoor upgradation work execution of repair and maintenance thereof - CBEC Circular dated 24th May, 2010 - Held that: - I have gone through the observations made by the learned Commissioner (Appeals) who has relied on the CBEC Circular dated 24th May, 2010 to hold that the said services of laying of optical fibre cable is not to be taxed as per the said circular. The activity such as excavation of trenches, jointing splicing of OFC are the integral part of the services of laying of cable - appeal dismissed - decided against Revenue.

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• 2017 (9) TMI 792
  Classification of services - Works Contract Service - composition scheme - whether the service provided during the period 01.04.2005 to 31.10.2008 would fall under the category of Erection, Commissioning and Installation Services or under Commercial or Industrial Construction Service? - Held that: - The Hon’ble Supreme Court of India in case of Commissioner of C.Ex. & Cus. Kerala Vs Larsen & Toubro Ltd, [2015 (8) TMI 749 - SUPREME COURT] has categorically held that services which involve rendering of service as well as supply of material involved in such work were to be classified only under the ‘works contract service’ w.e.f. 01.06.2007 when such services were included in the statute. It has further been hold that by the Apex Court that such services cannot be classified under any other category prior to 01.06.2007. The demand for the period upto 31.05.2007 set aside and the demand amounting to ₹ 3,17,863/- for the period from 01.06.2007 upheld - appellant will also be liable to pay interest in terms of Section 75 - penalties set aside - appeal allowed - decided partly in favor of appellant.

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• 2017 (9) TMI 791
  Classification of services - Cargo Handling Service - Site Formation Services - CBEC through Circular No. 104/07/2008-ST dated 06.08.2008 - Held that: - in the contracts executed by the appellant loading and unloading was incidental and transportation was the essential feature for the contract. The transportation of coal was mostly within the mining area. For the purpose of transportation and loading unloading was undertaken - in the present case transportation of coal was main activity and loading and unloading was incidental to the same. Further there was no activity of packing or unpacking. Therefore, in view of definition of GTA service and Cargo Handling Service and in view of Circular of CBEC dated 06.08.2008, the services rendered by the appellant covered under the above stated show cause notices did not qualified to the definition as Cargo handling Service - Further, the service which was described as site formation service was not in respect of preparation for construction. Therefore, the service which was proposed by Revenue to be covered by Site Formation Service was not eligible to be called Site Formation Service - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 790
  Renting of immovable property service - levy of service tax - Held that: - the case has been made out that sopo charges are not in respect of any fixed place/ spaces or shops in the market but the same are collected for open spaces allotted to contractors for further sale to vendors etc. - The impugned order does not deal with the issue involved in the instant case as the same were not properly communicated - matter remanded to the original adjudicating authority for deciding the issue afresh after getting a clear understanding of the nature of all the charges collected by the appellant - appeal allowed by way of remand.

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• 2017 (9) TMI 789
  Rectification of Mistake - Held that: - the applicants are seeking benefit of ₹ 12,18,423/- already paid by them against the confirmation of penalty of ₹ 34,55,247/-. Annexure B of the show-cause notice shows that the said duty of ₹ 12,18,423/- was paid during the period 28.08.2008 to 08.04.2009 - It is obvious that the amount paid by the appellant was subsequent to the action initiated by the revenue and not prior to detection by the revenue. In these circumstances, no benefit in penalty in respect of the said amount can be granted - ROM application dismissed.

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• 2017 (9) TMI 788
  Classification of services - Business Auxiliary Service - whether classified under e-commerce service or Online information and database access or retrieval services? - Held that: - the respondent is running website through which the interested steel manufacturer/trader are making trade. The respondent is buying and selling the steel product of various steel manufacturer/trader. We do not find that the buyer of the goods is accessing any information online or data online on the respondent’s site but they are only interested for sale and purchase of the steel products. The respondent with regard to such trading are getting margin from sale and purchase. Hence the service of the respondent is clearly of e-commerce in respect of steel products. Therefore it merits classification as e-commerce service and not online information or database access or retrieval services. As regard the demand under Business Auxiliary Service the respondent has claimed N/N. 13/2003 which was extended by the Ld. Commissioner (Appeals). The Ld. Commissioner has relied upon the Board Circular dt. 9.7.2001 and also examined the web sites and came to conclusion that the activity of the respondent is nothing but e-commerce trading activity they are not providing on line database and access or retrieval services - appeal dismissed - decided against Revenue.

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• 2017 (9) TMI 787
  Refund claim - whether the appellant is entitled to refund under N/N. 41/2007-ST, as amended with respect to input services which were received at other than registered address and such addresses have been subsequently recognised by the Department by issuing centralized registration certificate? - Held that: - the appellant was having centralized billing and accounting system, it is apparent that these services utilized at the non-registered addresses during the relevant period, the output services generated at such premises was availed or accounted by the registered office at C-32, Sector-58, Noida - the appellant is entitled to refund of the balance amounting to ₹ 1,25,442/- under N/N. 41/2007-ST - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 786
  Renting of immovable property service - Levy of tax - collection of Sopo charges from various persons for use of the vacant land in the municipal area - Held that: - The grounds of appeal do not contain any argument in support of appeal. In view of lack of any argument in the grounds of appeal, we do not find any reason to interfere with the impugned order in so far as the demand of service tax on Sopo charges for use of vacant land are concerned, especially since the issue is squarely covered in decision relied on in the impugned order. Extended period of limitation - Held that: - It is apparent that once revenue had on 08.09.2008 informed respondent that they were liable to pay service tax on the rental income the case of bonafide for non-payment of service tax thereafter does not survive. However, it is seen that the period from 08.09.2008, first letter was received to the Chief Officer of the respondent the period would be covered from the normal period of limitation. Thus for the period prior to that the appellants can claim a bonafide belief that they are not liable to pay service tax. Appeal dismissed - decided against Revenue.

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• 2017 (9) TMI 785
  Advertisement services - commission - taxability - case of appellant is that they did receive 15% of the commission from news papers and print media for providing service to advertisers, and they passed 10% to 12% from the commission received to their advertisers/customers and retained only 3% to 5% which is their consideration, and on the said consideration only service tax is leviable - Held that: - the Tribunal in the case of CST, Ahmedabad Vs. Poornima Advertising & Promotion Pvt. Ltd. [2009 (11) TMI 456 - CESTAT, AHMEDABAD] has held that Service tax liability arises only on the actual amount collected by the appellants and not 'on the full discount received by them from the advertising agency, from news paper or the media'. Appellant are given one more opportunity to provide evidence substantiating the fact that they retained only 3% to 5% of commission received from the newspaper agency or printing media. Once it is substantiated by documentary evidence, the service tax will be charged only on the retained amount of 3% to 5%, which is actual consideration for advertisement services provided by the appellant - appeal allowed by way of remand.

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• 2017 (9) TMI 784
  Business Support Services - reverse charge mechanism - guarantee provided by the Government of India to Neyveli Lignite Corporation (NLC) - Held that: - When the meaning of the term “support services of business or commerce” is read it throws light that the provider of service of the nature and description aforesaid should have been engaged in the provision of that service which would support the service recipient - Guarantee as is understood in the economic world is an undertaking given by a guarantor to secure a financial commitment which is the scope of banking and financial service. The Govt. is neither a banker nor a financial service provider - appeal dismissed - decided against Revenue.

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• 2017 (9) TMI 783
  Sub-contract - services utilized fully in SEZ - whether the appellant is entitled to exemption from Service tax in terms of N/N. 4/2004-ST read with N/N. 9/2009-ST as amended by N/N. 15/2009-ST which provided for exemption to the provider of service if such services are provided for utilization fully in the SEZ? - Held that: - the approval should be either by the Deputy Commissioner and/or Board of approvals as the case case may be. Here, admittedly the work order has been issued by Deputy Commissioner, SEZ. Hence it amounts to providing and consuming service to SEZ and/or allotted through NBCC, as the operating agency to the appellant - Thus, there is ipso facto approval of the Deputy Commissioner of the SEZ. No further approval of the Approval Committee is required under the facts and circumstances. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2017 (9) TMI 782
  Maintainability of petition - alternative remedy of appeal - CENVAT credit - Held that: - when there is no challenge to the impugned proceedings on the grounds of lack of jurisdiction and the respondent having afforded an opportunity of personal hearing to the petitioner and whether it is to the satisfaction of the petitioner or not being a factual issue and in the absence of plea of malafide, the petitioner has to necessarily avail the alternative remedy provided - Further more, the nature of transaction and the documents which were relied on for the purpose of availment of CENVAT Credit are factual matters. This again has to be agitated before an authority, which is the fact finding authority, which can re-appreciate all the documents and records and can take a decision in the matter. Thus, there are no justifiable grounds to entertain the Writ Petition as against the impugned order - petition dismissed being not maintainable.

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• 2017 (9) TMI 781
  Clandestine removal - Whether Tribunal was right in holding that the Central Excise Duty cannot be demanded from the Respondent as they are not manufacturer or producer of the goods? - Held that: - If any duty is demanded on shortages and excess of the goods found at the premises of the respondent, the same is to be demanded from the refineries, who are manufacturers of the goods - In the present case, it was not found that the respondent-assessee had procured the goods clandestinely without payment of duty. In the absence of the respondent-assessee being a manufacturer or producer of the goods, the duty demanded was not held to be valid. Thus, the appeal filed by the respondent-assessee was rightly allowed by the Tribunal. It has been held in a catena of judgments that a registered dealer not being a manufacturer or producer of goods is not liable to pay duty under Section 11D of the Act. Appeal dismissed - decided against Revenue.

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• 2017 (9) TMI 780
  100% EOU - clearance to DTA - exemption under N/N. 51/96-Cus. dt. 23.7.96 - valuation - quantification of 50% of FOB value for DTA clearance - Held that: - the jurisdictional Commissioner in the appellant-assessee's own case, for earlier period, allowed DTA clearance based on the quantification fixed by the Development Commissioner - In the present case, the permission granted by the Development Commissioner has not been contested or varied. Revenue also held a view that some of the goods cleared by the appellant-assessee to DTA are not similar to the goods which are exported by them - Held that: - It would appear that the goods cleared by the appellant-assessee to DTA though may broadly fall under the category of optical components, they are not fit to be used as such without further work. In the appeal, Revenue did not bring out any evidence to support their claim that these are not at all optical items or components but are simple glasses - no case is made out by Revenue against the impugned order on this ground. Eligibility of Night Vision Binocular for clearance to DTA - Held that: - appellant says that they do have specific permission dt. 27.11.98 from the Development Commissioner for clearance of specific number of Night Vision Binoculars to DTA. As such, we find no merit in the appeal by the Revenue on this issue also. Appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 779
  Penalty - Reversal of CENVAT credit - appellant after extraction of normal paraffin from the imported kerosene returned the kerosene after such process, to M/s. CPCL - concessional rate of duty under N/N. 26/99-Cus. dated 28.2.1999 - Held that: - There could be no ground of bona fide belief on such action when they have availed knowingly the CENVAT credit on the CVD paid on kerosene. The CENVAT Credit Rules did not permit for any ambiguity in interpreting the provisions when the inputs are cleared as such - In the present case, there is no possibility or confusion or bonafide belief for non-reversal of credit in time. In fact, the detailed investigation of accounts as well as statement of various responsible persons of the appellant only could bring in the quantum of reversal, which should have been done by the appellant. It is well within the knowledge by the appellant and there could be no bonafide in not following the procedure and for submitting incorrect Chartered Accountant's certificate - penalty upheld - appeal dismissed - decided against appellant.

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• 2017 (9) TMI 778
  Classification of goods - various spice powder and mixed spices which are commonly called as Masalas - appellant have classified these items under excise tariff entry 09109100 whereas the Revenue contended that it should be classified as mixed condiments and mixed seasoning under Chapter 21 - Held that: - similar issue decided in the case of Eastern Condiments P. Ltd. & Others Vs CCE Madurai [2015 (6) TMI 1014 - CESTAT CHENNAI], where it was held that the products of various masalas manufactured and cleared by the appellants as listed out in the respective OIO’s are rightly classifiable under chapter heading 0904 to 0910 and not under chapter 2103.90 of CET - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 777
  CENVAT credit - capital goods and inputs received in the mines - capital goods received and used in the captive power plant - Held that: - In the appeal filed against said Order-in-Appeal dated 13.06.2011 in Appeal No. E/2544/2011 it has already been held that said Order-in-Appeal dated 13.06.2011 is not sustainable and has been set aside in earlier part of this order I, therefore, hold that neither Order-in-Original dated 02.11.2011 nor impugned Order-in-Appeal dated 30.03.2012 are sustainable. Further due to reasons stated above, Appeal No. E/1620/2012 has become infructuous. Therefore same is disposed as infructuous.

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• 2017 (9) TMI 776
  CENVAT credit - whether various services like repair, maintenance services and construction services used in the residential colony of the employees is eligible for CENVAT credit? - Held that: - reliance placed in the case of Reliance Industries Ltd. Versus Commissioner of CE & ST (LTU), Mumbai [2015 (11) TMI 100 - CESTAT MUMBAI], where it was held that once the cost of service has been taken as expenses and included in the cost of final product, the credit is admissible - CENVAT credit in respect of services used in the residential colony, is admissible - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 775
  CENVAT credit - civil works for the construction of the factory premises - pest control services - Held that: - as regards pest control services there cannot be any dispute as to availment of the CENVAT credit as the appellant is a manufacturer of organic chemicals and needs pest control in order adhere to Good Manufacturing Practices - there is no hesitation to hold that CENVAT credit availed of the service tax paid by the service provider of pest control services is eligible as credit. As regards the CENVAT credit availed on the service tax paid on civil works rendered for the construction of the factory, these civil works were rendered for construction of the factory from where the appellant is planning or was proposing to manufacture and clear the goods on payment of appropriate duty - There is no dispute as to the fact that in this case, though works contracts was for setting up of a factory was entered prior to 01.03.2011 and partial work was completed, any service tax paid on the works contracts for setting up the factory the appellant till 01.03.2011 is eligible to avail the CENVAT credit - the CENVAT credit availed of the service tax paid on services rendered for construction of a factory post 01.04.2011 is to be held as not eligible. To that extent, the appellant is required to reverse CENVAT credit along with interest. Penalty - Held that: - since major portion of the CENVAT credit is held to be eligible visiting the appellant with penalty for the small portion which is availed, without any intention to evade or to avail ineligible CENVAT credit, penalties imposed are set aside. Appeal allowed - decided partly in favor of appellant.

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• 2017 (9) TMI 774
  100% EOU - CENVAT credit - input services - credit availed before appellant got registration - Held that: - decision in the case of mPortal India Wireless Solutions (P.) Ltd. Versus Commissioner of Service Tax [2011 (9) TMI 450 - KARNATAKA HIGH COURT] relied upon, where it was held that Registration not compulsory - credit allowed. CENVAT credit - credit availed on the basis of photo copies of the invoices - Held that: - Since appellants claim is that they are in a position to produce the original documents on which CENVAT credit was availed, in the interest of the justice, it is fit to remand this issue in respect of availment of CENVAT credit on the photo copy of the invoices, to reconsider the issue after following natural justice - matter on remand. Appeal allowed in part and part matter on remand.

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• 2017 (9) TMI 773
  CENVAT credit - structural items - Held that: - the appellant could not produce any substantial evidence to support their claim that the goods were factually brought to their factory premises and used for manufacturing supporting structures of specified capital goods, their foundation. Consequently, the demand on account of ₹ 55,14,450/- along with interest and equivalent penalty confirmed by the impugned order is hereby sustained. However, in the case of the remaining amount of Cenvat credit of ₹ 25,20,652/-, when the assessee is claiming that they have used the items for which this Cenvat credit has been taken; in the light of Tribunal’s decisions in the case of M/s Singhal Enterprises Pvt. Ltd. [2016 (9) TMI 682 - CESTAT NEW DELHI], this Cenvat credit amounting to ₹ 25,20,652/- is found admissible. Appeal allowed - decided partly in favor of appellant.

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• 2017 (9) TMI 772
  Manufacture - Grinding & Mixing of Glass Frit - Dilution & Mixing of Prepared Inorganic Pigments - Dilution & Re-packing of Cover Coats, Lacquer & Media - whether the above processes amounts to manufacture or not? - Held that: - Tribunal in the said case law Jayu Products Versus Collector of Central Excise, Bombay [1994 (10) TMI 132 - CEGAT, NEW DELHI] has held that if duty paid Ultra Marine Blue was mixed with China Clay as a dilutant then it did not amount to manufacture - In the present case Pigments were mixed with the Silica Powder and therefore, mixing of Pigments with the Silica Powder does not amount to manufacture - demand withheld. The impugned Order-in-Appeal is sustainable in so far as it is related to upholding of demand of Central Excise in respect of repacking of the goods from bulk container of 200 kgs. into 20 kgs, as the process amounted to manufacture. Appeal allowed - decided partly in favor of appellant.

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• 2017 (9) TMI 771
  Valuation - related party transaction - Held that: - The learned counsel for the respondent has argued that since Revenue has decided not to file appeal before Hon’ble Supreme Court the ground raised by Revenue does not survive - the ground raised by the Revenue for preferring present appeal does not hold good any more - appeal dismissed - decided against Revenue.

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• 2017 (9) TMI 770
  Clandestine manufacture - 30,157.280kg of Menthol Powder-in-Process and 1,36,682.750 kg of D.M.O.-in-Progress, was not accounted for, by the appellant in their ER-1 return for the month of February, 2006 nor any application for remission of duty on said quantities was filed by appellant - Held that: - It clearly means that manufacture had not taken place and the process of manufacture was not completed. Therefore, there was no need to enter the same in record RG-1 nor there was any need to file ER-1 return in respect of the same. Since the duty is on manufacture and the process of manufacture had not been completed, there was no question of payment of Central Excise duty on the said quantities of the goods in progress - the question of submission of application for remission of duty did not rise - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 769
  Benefit of N/N. 67/1995-CE - case of Revenue is that in the manufacture of denatured spirit, rectified spirit got generated and rectified spirit is not specified in the first schedule to Central Excise Tariff Act, 1985, denying the benefit of notification - Held that: - this Tribunal in the case of Bajaj Hindusthan Sugar Ltd. [2016 (8) TMI 386 - CESTAT ALLAHABAD] has held that Ethyl Alcohol and rectified spirit are one and the same - SCN not sustainable - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 768
  Validity of SCN - case of appellant is that the said SCN was issued with the presumption that the cost of drawing and design was @ 0.085% of the cost of goods manufactured - Held that: - there is no material on record to establish that the cost of drawing was @ 0.085% of the cost of manufacture. Therefore, we hold that the demand is presumptive in nature and therefore not sustainable - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 767
  Demand of interest - Held that: - when the duty is paid late, i.e. after the due date as provided under Section 11AB of Central Excise Act, 1944, interest at the prescribed rate, has to be paid - appeal dismissed - decided against appellant.

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• 2017 (9) TMI 766
  CENVAT credit - input services - outdoor caterer service - rent-a-cab service - hospitality service - club service - denial on account of nexus - Held that: - the issue of CENVAT credit on the input service in question is no longer res integara as in the various judgements this Tribunal have been extending the benefit of CENVAT credit in respect of all the services in question - credit allowed - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 765
  Refund of excess duty paid - Held that: - the ld. Commissioner (Appeals) has held that once the provisional assessment got finalized on the basis of requisite documents already submitted by the respondent, the refund claim cannot be denied for want of requisite documents - appeal dismissed - decided against Revenue.

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• CST, VAT & Sales Tax

• 2017 (9) TMI 753
  Benefit of section 4BB of the Act - Held that:- The benefit of Sec 4BB is the statutory benefit and the assessees are entitled for the said benefit. To this effect, the Commissioner has already issued a circular No. 554 dated July 22, 2004 - similar issue covered by the case of AR. Rice Mills Pvt. Ltd. Versus Commissioner of Commercial Taxes, UP. Lucknow [2009 (11) TMI 861 - ALLAHABAD HIGH COURT], where relying in the case of Diksha Suri v. ITAT [1997 (5) TMI 20 - DELHI High Court], Union of India v. Paras Laminates Pvt. Ltd. [1990 (8) TMI 140 - SUPREME COURT OF INDIA] and Commissioner of Income-tax v. Ramamurthi [1976 (10) TMI 18 - MADRAS High Court] wherein the said benefit already allowed - Matter is remanded to Tribunal to decide same afresh.

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• 2017 (9) TMI 752
  Taxability - lease agreement - operating lease - Acquisition of Assets - case of appellant is that the ownership of the goods lie solely with the petitioner, and this is totally different from a Term loan, wherein, it is in essence, an agreement for borrowing - Held that: - The respondent has no explanation to offer, as to why, the matter was not taken to the logical end, and after issuance of the notice, dated 31.05.2007, there has been a long gap of more than 7 years before the next notice issued, dated 29.04.2014. Even thereafter, for over nearly 1 1/2 years, nothing happened in respect of the petitioner's reply, dated 06.05.2014, and notice was issued on 27.08.2015, without reference to any of the earlier notices or reply notices given by the petitioner. Thus, to that extent, the entire procedural formalities adopted by the respondent is flawed and amounts to violation of principles of natural justice. When the respondent had taken up the matter for adjudication, he ought to have taken into consideration what had transpired earlier and what was on their record from 2007 onwards. This Court can safely presume that the respondent was not even aware of the earlier proceedings, which were initiated in the year 2007. So far as the legal position is concerned, even it is accepted that the nature of transaction done by the petitioner amounts to deemed sales, then, provision under Section 4 (2) of the TNVAT Act 2006 would stand attracted. The Writ Petitions are disposed of with a direction to the petitioner to treat the impugned proceedings as show cause notices, submit their detailed objections in writing within a period of 30 days from the date of receipt of a copy of this order.

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