TMI Tax Updates - e-Newsletter
September 22, 2017

Case Laws in this Newsletter:

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

Articles

1. 20 Things You must know about E Way Bills in GST Law

   By: Ravi Kumar Somani

2. ‘DUTY DRAWBACK’ CANNOT BE EQUATED WITH ‘REBATE OF DUTY’

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Haryana constitutes screening committee on anti-profiteering

2. Jaitley asks biz not to wait till last day to file GST returns

3. Exchange Rate of Foreign Currency Relating To Imported and Export Goods Notified

4. RBI Reference Rate for US $

Notifications

Companies Law

1. [F. No. 1/8/2013-CL-V - G.S.R. 1172(E) - dated 19-9-2017 - Co. Law

Companies (Acceptance of Deposits) Second Amendment Rules, 2017

Customs

2. 90/2017 - dated 21-9-2017 - Cus (NT)

Rate of exchange of conversion of the foreign currency with effect from 22th September, 2017

DGFT

3. 29/2015-2020 - dated 21-9-2017 - FTP

Amendment in Appendix 3 (SCOMET items) to Schedule- 2 of ITC (HS) Classification of Export and Import Items 2012

Circulars / Instructions / Orders

DGFT

1. 27/2015-20 - dated 21-9-2017

Amendment to Paragraph 2.72 (b) of the Handbook of Procedures of the Foreign Trade Policy (FTP) 2015-20

Customs

2. 37/2017 - dated 20-9-2017

Implementing Electronic Sealing for containers by exporters under self-sealing procedure prescribed by Circular 26/2017-Cus dated 1st July, 2017 and Circular 36/2017 dated 28 th August, 2017. — reg.

Highlights / Catch Notes

Income Tax

• Deemed rent u/s 23(1)(a) not applicable if property is let out and vacant during the year.

  Case-Laws - AT : Addition u/s 23(1)(a) - deemed rent - once the property is let out and at any point of time this remained vacant during the same cannot be brought to tax under the head House properties income.
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Customs

• New Exchange Rates for Currency Conversion Effective September 22, 2017: Key Updates for Customs and Taxation Stakeholders.

  Notifications : Rate of exchange of conversion of the foreign currency with effect from 22th September, 2017 - Notification
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• Exporters Must Use Electronic Seals for Container Self-Sealing as per Circulars 26/2017-Cus and 36/2017.

  Circulars : Implementing Electronic Sealing for containers by exporters under self-sealing procedure prescribed by Circular 26/2017-Cus dated 1st July, 2017 and Circular 36/2017 dated 28 th August, 2017. — reg. - Circular
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• Re-examine license agreement and supply contract to assess if increased royalty adjusts component price for customs compliance.

  Case-Laws - AT : Valuation of imported goods - it is necessary to re-examine the matter of both license agreement as well as supply contract simultaneously, to see if the enhanced royalty was in the guise of adjustment of the price of components.
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DGFT

• DGFT Amends Paragraph 2.72(b) in Foreign Trade Policy Handbook to Streamline Trade Procedures.

  Circulars : Amendment to Paragraph 2.72 (b) of the Handbook of Procedures of the Foreign Trade Policy (FTP) 2015-20 - Public Notice
  Visit to Get Source

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Corporate Law

• Revised Rules Enhance Compliance and Transparency in Company Deposit Practices: Companies (Acceptance of Deposits) Second Amendment Rules, 2017.

  Notifications : Companies (Acceptance of Deposits) Second Amendment Rules, 2017 - Notification
  Visit to Get Source

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Central Excise

• Cenvat Credit Denied for Director's Club Membership; Not Related to Manufacturing Activities.

  Case-Laws - AT : Cenvat credit availed on Club Membership for the Director is not admissible as it cannot be said to be remotely connected with the activity of manufacture
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Case Laws:

• GST

• 2017 (9) TMI 1165
  GST on legal services - Issuance of two fresh Notifications by Central Government by way of corrigendum - N/N. 8 and 13/2017–Central Tax (Rate) dated 28th June, 2017 - legal services being taxable on reverse charge basis - the Govt. of NCT of Delhi has also to issue a notification on the same lines by way of corrigendum to N/N. 13/2017-State Tax (Rate) dated 30th June, 2017 - Held that: - The issue concerning exemption of lawyers from registration under Section 23 (2) of the CGST Act; the position concerning those lawyers whose registration under the Finance Act 1994 has ‘migrated’ to the CGST Act in terms of Section 22(2) thereof and other issues raised in these petitions will be taken up for consideration on the next date.

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• Income Tax

• 2017 (9) TMI 1164
  A.O. power to assess income on presumptive basis u/s 44BBB(1) - assessee has maintained books of account as prescribed u/s 44BBB(2) - whether books of account maintained by assessee are not proper and do not reflect the correct income of assessee? - Held that:- In the present case, the CIT (Appeals) as well as the Tribunal both held that the assessee had fulfilled all requirements of sub-section (2) of section 44BBB. It is not the case of the revenue that the assessee had not maintained the books of accounts and documents as required under sub-section (2) of section 44AA or that the assessee's accounts were not audited or the audit report not furnished before the Assessing Officer. The Commissioner and the Tribunal also held that the Assessing Officer was wrong in holding that the accounting standard AS- 7 did not apply to the assessee. No reason to interfere since no question of law arises. Assessing Officer, as recorded by the Tribunal has not found any major defects in such accounts. The Commissioner (Appeals) in fact elaborated that the assessee had the past experience from which it could estimate the total cost and had presented figures to show the percentage completion of the project. These figures match with the actual income and expenditure statements of the subsequent financial years. In fact the entire project was completed by the time the Commissioner (Appeals) decided the appeal. - Decided against revenue

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• 2017 (9) TMI 1163
  Decline on entertaining claim on technical grounds - ITAT remanding the matter to the CIT (A) for re-adjudicating on merits - appellant inadvertently added the reversal of provision instead of reducing the same from its taxable income - brought forward business losses - Held that:- When the factual and legal position was clear, there was no need at all for the ITAT to have remanded the matter to the CIT (A). Recently, in Alcatel-Lucent India Ltd. v. Deputy Commissioner of Income Tax case [2017 (9) TMI 1108 - DELHI HIGH COURT] this Court to observed that practice of remand to the TPO should be resorted to by the ITAT only where it is absolutely necessary. It could be either because of lack of clarity on factual aspects or because some facts have emerged since the order of the TPO that require to be taken into consideration since it would have a bearing on the outcome. Further the remand order in such circumstances should clearly spell out what the scope of the remand is. Where all the relevant facts are already before the ITAT and the parties have no new material to provide, simply remanding the issue to the TPO without rendering a finding thereon would be an abdication of the functions of the appellate body. Question framed by the Court is answered in the affirmative i.e. in favour of the Assessee and against the Revenue.

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• 2017 (9) TMI 1162
  Addition on account of ‘fall in net profit to turnover ratio’ - ITAT deleted the addition - Held that:- The ITAT observed that the lower net profit rate of 24.80% has been accepted by the AO for the earlier AY, i.e. 2008-09. However, the Assessee’s line of business was not consistent over the years. The ITAT was of the view that, without rejecting the accounts of the Assessee, making an addition merely on the basis of fall of the net profit ratio was not warranted. The view of the ITAT does not suffer from any infirmity. No substantial question of law arises. Disallowance u/s 40(a)(ia) - reimbursement of expenses paid to the employees/vendors on behalf of the Assessee - ITAT held that the CIT (A) exceeded his powers in issuing a notice of enhancement and making the above disallowance - Held that:- CIT (A) issued notice for enhancement of the disallowance but, in that process, entered into the question whether the expense in question was eligible for deduction at all in the first place. As rightly pointed out by the ITAT, this was beyond the scope of inquiry before the CIT (A). There was also no factual basis for the CIT (A) to doubt the reimbursement of the employees’ expenses. In the circumstances, the impugned order of ITAT holding that the CIT (A) travelled beyond the scope of the appellate proceedings in disallowing the above expenses does not suffer from perversity. The Court is, therefore, not inclined to frame a question of law on this issue as well. Revenue appeal dismissed.

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• 2017 (9) TMI 1161
  Determination of agricultural land - capital asset u/s. 2(14) (iii)(b) - transfer of land - whether municipal limits existing on the date of issue of Notification No.9447 dated 06.01.1994 u/s 2(14)(iii)(b) should be considered for the purpose of determination of agricultural land instead of the municipal limits existing on the date of sale/transfer? - Held that:- As decided in Commissioner of Income Tax vs. Shri Sher Singh Sunda [2017 (9) TMI 1045 - RAJASTHAN HIGH COURT]Section 50C is a deeming provision which incorporates a legal fiction to adopt the stamp duty value as full consideration for transfer of capital asset being and building. The legal fiction cannot extend beyond the purpose for which it is enacted. Hence the legal fiction created in Section 50C cannot be applied in respect of transfer of capital asset other than land or building including the rights in land and building just like tenancy right. In the instant case, the assessee has not received consideration on account of transfer of land and building but has received consideration in respect of transfer of purchase agreements. The Jaipur Bench in the case of Vijay Luxmi Dhadia, [2008 (9) TMI 944 - ITAT JAIPUR] held that Section 50C will not apply if the transfer document is not stamped. The plots are still to be registered with Stamp Valuation authorities. The Ld. CIT(A) has clearly observed that the word ‘assessable’ has been inserted in Section 50C of the Income Tax Act by the Finance (No.2) Act, 2009 w.e.f. 01.10.2009. The consideration as adopted by the stamp valuation authority can be taken as full consideration if the value adopted by the stamp valuation authority is assessable w.e.f. 1.10.2009. The assessment year under reference is 2006-07 and therefore, the amended provisions of Section 50C is not applicable. AO was not justified in applying the provisions of Section 50C of the I.T. Act for increasing the short terms capital gain. The Ld. CIT(A) was justified in deleting the increase in the value of short term capital gain. It is not the case of the Revenue that the assessee has received more consideration as shown in the agreement. In case there was any evidence to show that the consideration received by the assessee was more than the consideration mentioned in the agreement then the Revenue could have increased the short term capital gain. On the basis of Section 50C of the Act, the AO was not justified in enhancing the short term capital gain. - Decided in favour of the assessee

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• 2017 (9) TMI 1160
  Belated filing of return - reasons for delay - case of genuine hardship - fit case for condone the delay under Section 119 (2)(d) - application filed for condonation of delay in filing the return for the assessment year 1996 - 97 which appears because the reason claim on account of the jurisdictional hierarchic - Held that:- the third respondent had issue notice to the petitioner to sent a return petition on or before 21.10.2003. This direction was complied with by the petitioner by submitting his returns submits which has been rejected different by the impugned order. Firstly the impugned order, the third respondent is not even adverted to the petitioner belated for the assessment year 1997 - 98 was considered as the relief granted. This so -- of the said year under Section 119(2)(b) should be equally acceptable for the assessment year 1996 - 97 and merely because on account of jurisdiction hierarchic another authorities superior to the authority to decide the matter of the year 1997 - 98 to take a decision, the such decision cannot be contrary to the decision arrived at by another authority exercising analogous powers under the Income Tax Act. Further, more I find that the petitioner is an individual assessee having been granted relief for the assessment year 1997 - 98. No prejudice would be caused to the some yardstick same applicable - for the assessment year 1997 - 97 also.

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• 2017 (9) TMI 1158
  Eligibility for the benefit of deduction under Section 80P denied - unconditional stay of recovery of the tax amount - income from other sources - Held that:- 2nd respondent considered the tax liability of the petitioner under the other head that was confirmed against him, namely, the tax amount towards income that was classifiable under the head 'income from other sources'. On the said issue, the 2nd respondent found that, inasmuch as the said income would not qualify for deduction under Section 80 P of the Income Tax Act, the petitioner could not claim exemption from the tax payable under the said head of income. The 2nd respondent, therefore, directed the petitioner to pay the demand confirmed against him under the said head in the assessment order, in six equal and successive monthly installments commencing from 18.07.2017, as a condition for the grant of stay of recovery of the balance amounts confirmed against the petitioner, in the assessment order. On a perusal of the reasoning in Ext.P10 conditional order, it is of the view that the said order, to the extent it directs the petitioner to make payment of the demand outstanding towards tax on income from other sources, does not call for any interference, save to the extent of the quantum that is demanded as a condition for the grant of stay. Taking note of the plea of financial hardship urged on behalf of the petitioner, as against the tax liability of Rs. 68,00,000/-, which the petitioner was directed to pay in six equal monthly installments starting from 18.07.2017, the petitioner ought to be directed to pay only an amount of Rs. 20,00,000/-, within a period of two months from the date of receipt of a copy of this judgment. Save for this limited modification to the directions in Ext.P10 order, the rest of the directions in the said order shall remain unaltered.

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• 2017 (9) TMI 1157
  Payment for use of technical knowhow and trademark - nature of expenditure - revenue expenditure or capital expenditure - Held that:- Since the Assessing Officer has followed the orders for assessment year 2008-09 while treating the royalty expenditure as capital in nature and since the Tribunal has already decided the issue in favour of the assessee, therefore, respectfully following the consistent decision of the Tribunal in assesse’s own case and in absence of any contrary material brought to our notice by the ld. DR, we hold that the payment of royalty by the assessee to its AE – GKN Driveline International GMBH, Germany and logo fee paid to the AE – GKN holding Plc. as revenue in nature. Thus, the grounds raised by the assessee are allowed Provision for warranty claim - allowable expenditure - Held that:- Respectfully following the decision of the Tribunal in assessee’s own case as well as the decision of the Hon'ble Supreme Court in the case of Rotork Controls India P. Ltd. (2009 (5) TMI 16 - SUPREME COURT OF INDIA) we hold that the provision for warranty claim is an allowable expenditure. The ground raised by the assessee is allowed and the ground raised by the Revenue is dismissed.

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• 2017 (9) TMI 1156
  Credit of TDS - CIT (A) found that though initially the assessee claimed the credit of TDS as per 26AS statement, later on the assessee brought to the notice of the AO that such claim was by mistake and since they did not provide any service to SAIL nor did they receive Rs. 5,50,000/- they reconciled their books of accounts - Held that:- This is a verifiable fact at the end of the AO and set aside this ground to the file of the AO with a direction to verify whether any service was rendered and any amount was received. Addition u/s 40(a)(ia) - tds liability u/s 195 - whether transaction took place outside India and the amount was paid on behalf of the assessee to the said company was merely reimbursed by the assessee? - Held that:- There is no denial of fact from the Revenue as to the nature of the payments by the assessee to M/s Commune Market & Events Pvt. Ltd. and M/s FIH. M/s FIH made the payment of Rs. 8,09,545/- directly to M/s Commune Market & Events Pvt. Ltd. outside India and for that matter M/s FIH incurred so much of expenditure which the assessee reimbursed to them. In the circumstances, we find it difficult to agree with the Ld. DR that these payments partake the nature of income in the hands of M/s FIH and consequently, we hold that the assessee was not obliged to deduct TDS on the same. We, therefore, uphold the findings of the Ld. CIT (A) to delete the addition of these two amounts u/s 40(a)(ia) of the Act. Hence, the ground no. 2 is dismissed. Addition on account of bogus creditors - three parties did not respond to notice u/s 133(6) - CIT-A deleted the addition - Held that:- The addition was purely because three parties did not respond to notice u/s 133(6)of the Act and the payments were partly in the previous year and partly in the succeeding year. Having considered the copy of the bank accounts and the cheque numbers with amounts and dates placed on record by the assessee, the Ld. CIT (A) deleted this addition. When there is no denial of the factual position, the findings of the Ld. CIT (A) do not seem to be pervasive requiring any interference. The observations of the Ld. CIT (A) are based on solid facts. - Decided against revenue Addition on prior period expenses - CIT-A allowed claim - Held that:- CIT (A) found merit in the argument of the assessee that an amount of Rs. 63,635/- was paid on account of technical table expenses, and since the AOP was formed only during the assessment year 2010-11, there were no prior period expenses since all the expenses are subsequent to 01.04.2009. We confirm this finding of Ld. CIT (A) and dismissed the ground no. 4. Ad-hoc disallowance being 10% of the total expenses claimed in absence of production of bills & vouchers - Held that:- CIT (A) recorded that the assessee had placed on record the copies of bills of all the four parties along with copies of their ledger accounts. Ld. DR seriously disputed this stating that the Assessing Officer should have been given an opportunity on this aspect to verify the veracity and genuineness of the material produced by the assessee. We are in agreement with the submission of the Ld. DR and find that the material produced by the assessee has to be verified by the AO. We, therefore, set aside this ground also to the file of the AO.

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• 2017 (9) TMI 1155
  TPA - selecting a comparable - Held that:- Following the decision rendered by the coordinate Bench of the Tribunal in case SunGard Solutions (India) (P.) Ltd. (2014 (12) TMI 429 - ITAT PUNE) and the fact that when the TPO has himself adopted the filter of 25% of RPT for the purpose of excluding a company from the list of comparables, he cannot arrive at a logical computation for benchmarking the international transaction by selecting a comparable having 36.74% of its total expenses with related parties. So, we are of the considered view that Motilal Oswal Investment Advisors Pvt. Limited is not a suitable comparable, hence ordered to be excluded. LIBOR or PLR rate applicability - adjustment qua the delayed receipt of advisory fees - Held that:- Ratio of the judgment CIT-I vs. Cotton Natural (I) (P.) Ltd. (2015 (3) TMI 1031 - DELHI HIGH COURT) “that PLR rate as applied by TPO/CIT (A) are not applicable for determining interest rate rather LIBOR should be applied to compute the interest on the delayed payment of Rs. 1.13 lakhs.” So, in these circumstances, grounds determined in favour of the assessee. Addition on account of bonus by the taxpayer to its Managing Director and Director who were also shareholder of the assessee in the ratio of 2 : 1 u/s 36(1)(ii) - Held that:- As in assessee’s own case for AY 2006-07 the deduction u/s 36(1)(ii) in respect of payment of bonus to the aforesaid shareholder/Director who are also major shareholder in the company with 50% shareholding of each is allowable deduction as there is no change in the shareholding pattern during the year under assessment, hence ground is determined in favour of the assessee. Exclusion of M/s. Keynote Corporate Services Ltd. as unsuitable comparable - Held that:- Revenue's contention that only the shareholding pattern of M/s. Keynote Corporate Services Ltd. is changed with amalgamation which has not affected the profit is not tenable in the face of uncontroverted fact that the profit margin of assessee company has raised up to 145% during the year under assessment which is extremely volatile and abnormal and is due to the amalgamation and merger. Moreover, launch of ESOP Division which focused on designing and implementing stock option scheme for corporate, the business model of comparable company has undergone a change. So, we are of the considered view that the ld. CIT (A) has rightly excluded M/s. Keynote Corporate Services Ltd. as unsuitable comparable.

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• 2017 (9) TMI 1154
  Salaries paid by the Head Office overseas in foreign currency to the expatriates working in India - Permanent establishment ( PE ) of the Appellant in India - Held that:- This issue is covered in favour of assessee by the Delhi High Court order in own case [2016 (4) TMI 817 - DELHI HIGH COURT] relying on decision of ABN Amro Bank(2010 (12) TMI 340 - CALCUTTA HIGH COURT ). Applicability of Section 115JB - Held that:- This issue is covered in favour of assessee by the Delhi High Court order in own case [2016 (4) TMI 817 - DELHI HIGH COURT] concluding that the Assessee s claim for lower tax will have to be accepted because Section 115JB is subject to Section 90(2) of the Act and the taxable income of the Assessee would have to be computed in terms of Article 7(3) of the DTAA. What is significant is that the profit and loss account of the Assessee has not been prepared in terms of Part II of Schedule VI of the Companies Act, 1956 and in fact could not have been prepared in terms thereof. Consequently, the question of applicability of Section 115JB did not arise. As rightly pointed out till the insertion of Section 115JB, banking companies were required to prepare their accounts in terms of special acts that they were governed by, and therefore there were no computation provisions as regards such banking companies. The change brought out by Section 115JB was therefore not retrospective. Applicability of rate of tax - Held that:- We find that this issue is covered against the assessee by Explanation 1 to section 90(2), which read as under:- Explanation 1.-For the removal of doubts, it is hereby declared that the charge of tax in respect of a foreign company at a rate higher than the rate at which a domestic company is chargeable, shall not be regarded as less favourable charge or levy of tax in respect of such foreign company.

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• 2017 (9) TMI 1153
  Disallowance of interest incurred on External Commercial Borrowings (ECBs) - Held that:- Since there is no change in facts in this year from the facts in preceding year accordingly, the findings given therein para no 18 of that order where the claim of the assessee is allowed . hence for this year too we direct the ld AO to disallow the above disallowance. Hence, ground no 1 of the appeal is allowed. Disallowance of circuit accruals - Held that:- Since there is no change in facts in this year from the facts in preceding year where in this claim is allowed and ld AO was directed to delete the disallowance. We also direct similarly for this ground in this year also as there is no change in the facts and circumstances of the case. Accordingly, the findings given above shall apply to this ground as well. Disallowance of year-end accruals - Held that:- Since creation of the year end accruals does not result accrual of income to an identified vendor, the same cannot trigger a withholding tax liability on the part of the appellant. However as the ld AO has disallowed the above amount as the assessee has not produced the relevant basis of making the above provision the issue needs to be set aside to the file of the ld AO with a direction to the assessee to produce the basis of above provisionsing before the ld AO , who may verify the same and if found in accordance with the above finding and if pertaining to the impugned assessment year allow the claim of the assessee. Disallowance of annual revenue shares based license fee - Held that:- We agree with the contention of the assessee that the expense incurred towards revenue share based license fee for maintenance and usage of telecom license payable to Department of Telecom is a recurring fee paid by the license holder on periodic basis towards maintenance and use of the license and the benefit of the same does not extend beyond the close of the year. Further, it is also relevant to note here benefit of the revenue share based license fees paid during one financial year cannot be extended to the subsequent financial year, for which license fee is to be paid separately upon the adjusted gross revenues of such subsequent year. Therefore, payment of the aforesaid annual fee cannot be said to confer any right of an enduring nature upon appellant. It is also important to note that in the immediately succeeding year on same facts, the DRP has allowed the claim of the licence fees on revenue basis u/s 37(1) of the Act. Transfer Pricing Matters - non-charging of interest (on overdue receivables) from AEs as well as Non- AEs - main crux of assessee's submission is that the transfer pricing officer could not have re-characterized the over-due receivables as loan - Held that:- We disagree with the views of the assessee that outstanding receivables is not an international transaction. According to us the explanation (i) (c) covers this transactions. However as assessee has raised contention that assessee as a policy, is not charging any interest either from AE or non AE, then notional interest should not be included on the outstanding dues from the AEs and further the claim of the assessee that no interest is charged on outstanding receivables from unrelated parties even in the cases where the payment is not received for more than 6 months, these issues needs to be examined by the ld TPO afresh , therefore we set aside this issues to the file of the ld TPO for fresh examination with a direction to the assessee to support its contentions with the documents and workings . Accordingly this ground of appeal is allowed with above direction.

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• 2017 (9) TMI 1152
  Income from transaction of shares - capital gain or business income - AO has held that the shares were stock in trade - Held that:- The assessee is a company, which is engaged in the principal business of consulting. The major income of the assessee is shown of consultancy income is shown as the business income. The assessee is holding these shares, which are sold during the year in the books of accounts as investments and not a stock in trade. Assessee has also not borrowed any funds for the purpose of making any investments. In the earlier 2 years assessment on identical facts and circumstances the income from purchase and sale of the shares were also held by the Ld. assessing officer as capital gains. All the shares sold by the assessee are based on actual deliveries. All the shares shown by the assessee are held in its demat account and dividend income earned by the assessee as dividend of Rs. 1 661 8416/– in this year and in previous year of Rs. 1 028 9473/– is also shown as exempt income during the year. All of the shares are valued at cost Only as an investment. The memorandum and articles of Association of the company also authorizes it to invested surplus funds in shares or in any other form of investments Assessee is an investor and not a Trader in shares. Therefore, looking to the facts of the case, we confirm the finding of the Ld. CIT (A) in holding that the income of short-term capital gain shown by the assessee on sale of shares is likely to be charged under the head capital gains and not under the head business income. With respect to the addition made on account of business income instead of short-term capital gain on sale of the shares is dismissed. - Decided against revenue Disallowance u/s 14A - AO's non satisfaction about the correctness of the claim - Held that:- In the present case unless the ld Assessing Officer records his satisfaction about the correctness of the claim of the assessee cannot move ahead for application of Rule 8D of the Act. The Hon'ble Delhi High Court in case of CIT Vs. Taikisha Engineering India ltd (2014 (12) TMI 482 - DELHI HIGH COURT) has held that it is only when voluntary disallowance made by the assessee u/s 14A of the Act is found to be unsatisfactory on examination of accounts, that Assessing Officer is entitled and authorized to compute deduction under Rule 8D of the IT Rules. As in the present case no such satisfaction is recorded respectfully following the decisioin of Hon'ble Delhi High Court we confirm the finding of the ld CIT(A) to delete the disallowance u/s 14A of the Act. - Decided against revenue

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• 2017 (9) TMI 1151
  Reopening of assessment - addition on excessive allowance under the head Repair and Maintenance - eligibility of reason to believe - period of limitation - AO exceeding his jurisdiction - Held that:- A.O. is not empowered to issue notice u/s 148 of the Act after a period of four years from the end of relevant assessment year particularly when there is no failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. Proviso to section 147 itself is categorical enough to bar the A.O. from initiating reopening. In the instant case at the time of original assessment proceedings, the A.O. has made detailed scrutiny of the tax audit report filed by the assessee by relying upon the bills and vouchers brought on record by the assessee to carry out repair and maintenance and thereafter the A.O. had completed the assessment u/s 143(3). Even otherwise in all assessment years 2007-08, 2009- 10, 2010-11, 2011-12 identical expenses claimed by the assessee have been allowed by the revenue while passing order u/s 143(3) as is apparent from the return of income for the aforesaid assessment years available. So the contentions raised by Ld. Sr. DR for the revenue are not tenable nor the case law relied upon by him is applicable to the facts and circumstances of the case in the face of proviso to section 147 of the Act which clearly bars the jurisdiction of the A.O. to reopen the assessment after a period of four years when there is no failure on the part of assessee to disclose fully and truly all material facts necessary for assessee. - Decided in favour of assessee.

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• 2017 (9) TMI 1150
  TDS u/s 195 - TDS liability on payment for purchase of land - Limitation in respect of deduction from non-residents - whether Shri Surinder Singh Chahal was resident of USA and the assessee was required to deduct TDS under section 195? - limitation period for passing an order under section 201(1)(a), when the deductee is a non-resident - Held that:- High Court in the case of Bharti Airtel Ltd. vs. Union of India (2016 (12) TMI 1601 - DELHI HIGH COURT) has decided exactly similar issue wherein they have held that period of limitation prescribed under the amended Act is only applicable for the payments made to residents of India and the Parliament has not said anything or remained silent on payments made to nonresident while amending the said provision. The impugned proceedings under section 201 in the case of the assessee in respect of payment made to non-resident, which is admittedly after expiry of four years from the end of the relevant financial year, is barred by limitation and the provisions contained in section 201(1) and 201(3) prescribing time limit as relied upon by the Ld. CIT (A) is only for the residents and is not applicable for the non-residents. Thus, we hold that the proceedings under section 201 are barred by limitation and accordingly the same are quashed. - Decided in favour of assessee.

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• 2017 (9) TMI 1149
  Disallowance towards interest expenditure incurred in relation to the ECBs invoking the proviso to section 36(1)(iii) - AO observed that the ECBs have been utilized for acquisition of capital assets which have not been put to use, and thus the interest incurred till the date such assets have been put to use should be disallowed - Held that:- This ground of appeal has already been decided in AY 2009-10 and AY 2010-11 by orders of even date deleting the disallowance. Since there is no change in facts in this year from the facts in preceding years, accordingly, we direct the ld AO to delete the disallowance of interest. Hence, ground no 2 of appeal is allowed. Disallowance of year-end accruals - Held that:- This ground of appeal has already been decided in AY 2010-11 where this disallowance is deleted and since there is no change in facts in this year from the facts in preceding year, we direct the ld AO to delete the disallowance accordingly. In the result ground no. 4 of the appeal of the assessee is allowed. Disallowance of Support Service expenditure - Held that:- This ground of appeal has already been decided in AY 2009-10 and AY 2010-11 by orders of even date deleting the disallowance. Since there is no change in facts in this year we direct the ld AO to delete the disallowance accordingly for this year too. Transfer Pricing Adjustment - Held that:- As relying on earlier AYs we set aside this ground to the file of the ld AO with direction to determine ALP of the transactions. Disallowance on account of statutory liabilities payable - non-furnishing of challans for TDS payable on salary and on account of service tax - Held that:- In view of this matter, we allow assessee opportunity to the assessee to submit the evidences before the lower authorities for necessary verification within 15 days of the receipt of this order and Ld AO is directed to verify the same and decide the issue in accordance with law.

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• 2017 (9) TMI 1148
  Addition on account of disallowance u/s 14A r.w.r 8D - Held that:- By following the law laid down by Hon’ble Apex Court in judgment cited as Godrej & Boyce Manufacturing Company Ltd. (2017 (5) TMI 403 - SUPREME COURT OF INDIA) and Maxopp Investment Ltd. (2011 (11) TMI 267 - Delhi High Court) we are of the considered view that the findings returned by AO that, “disallowance u/s 14A is to be made even if no exempt income has resulted or earned by the assessee during the year under consideration” is no longer a good law in view of the judgment rendered by Hon’ble Delhi High Court in Holcim India Pvt. Ltd. (2014 (9) TMI 434 - DELHI HIGH COURT) and Godrej & Boyce Manufacturing Company Ltd. (supra) wherein it is categorically held that where the assessee has not earned any dividend income forming part of the total income during the year under assessment, section 14A read with Rule 8D is not attracted. AO proceeded to invoke section 14A read with Rule 8D without recording his dis-satisfaction. So, in these circumstances, the ld. CIT (A) by considering all these facts rightly deleted the addition. So, finding no illegality or perversity in the order of the ld. CIT (A), we hereby dismiss the appeal filed by the Revenue.

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• 2017 (9) TMI 1147
  Penalty u/s 271(1)(c) - willful evasion of tax by not furnishing accurate particulars of income - assessee did not declare the said income arising out of deemed capital gains u/s 54F(3) on the date of search also before the search party - Held that:- The assessee had filed revised return of income on 22-12-2009 wherein declaration of said deemed capital gains u/s 54F(3) was made and the AO thereafter framed an assessment bringing to tax income declared in the revised return of income. It is not the case, where the AO has made any additions which is not qua incriminating material but it is the assessee which when cornered by Revenue filed revised return of income declared and offered for tax deemed capital gains u/s 54F(3). The bank statements wherein the said deemed capital gains of Rs. 1,03,44,000/- was found credited is itself an incriminating material which justifies the chargeability to tax of the said income which was not earlier disclosed to the Revenue. This contention of the assessee is, therefore,rejected. A feeble attempt is made to contend that the said amount which was advanced to Neelkanth Mansion Private Limited was in the nature of loan and advances and hence Section 54F(3) is not applicable is a self destructible contention and is not acceptable. The assessee had in AY 2002-03 claimed exemption of Rs. 1,03,44,000/- u/s 54F on account of investments made in the booking of flats bearing No. 1301, 1302, 1401 and 1402 at Dhawalgiri Building from Neelkanth Mansion Private Limited and claimed exemption u/s 54F of the Act of Rs. 1,03,44,000/- for AY 2002-03 which was allowed by Revenue and now to contend that the said exemption was falsely and incorrectly claimed by filing incorrect return of income and fraud was perpetuated on Revenue by the assessee cannot be accepted. The assessee cannot be allowed to blow hot and cold. It is well settled that mere reflection in the account books of certain amounts in a particular manner is not decisive of the character of income of the assessee which is to be brought to tax in accordance with the provisions and mandate of the 1961 Act. Thus, mere reflection of the amount as loans and advances in the books will not change the character of booking of flat made by the assessee which was earlier accepted by Revenue also to be investment made in booking of flats bearing No. 1301, 1302, 1401 and 1402 at Dhawalgiri Building from Neelkanth Mansion Private Limited. This contention of the assessee stood rejected. Thus we set aside the appellate order of learned CIT(A) and uphold the order of the AO levying penalty u/s 271(1)(c) of the 1961 Act for the details reasons and discussions above. - Decided against assessee.

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• 2017 (9) TMI 1146
  Addition u/s 23(1)(a) - deemed rent - vacant property / vacancy allowance - 3 properties not offered for tax under the head House properties - AR submitted that out of two flats treated as deemed let out, the flat no.2B was let out in 2003 but vacant since then and therefore the provisions of 23(1)(c) - Held that:- We find merit in the contention of the ld.AR that once the property is let out and at any point of time this remained vacant during the same cannot be brought to tax resorting to provisions of section 23(1)(c) of the Act. The issue in the case of assessee is supported by the various decisions referred to and relied upon by the ld.AR in the case of Informed Technologies India Ltd (2017 (2) TMI 744 - ITAT MUMBAI). Tribunal direct the AO to delete the addition in respect of Otters flat No.2B by sustaining the addition in respect of second flat viz Peace Heaven. Accordingly, the ground taken by the assessee is partly allowed. Disallowance being 10% out of vehicle-telephone expenses - Held that:- We find that the ld.CIT(A) has passed a very reasoned order by upholding the disallowance at 10% of the total expenses on the basis of the decision in assessee’s own case in the assessment year 2006-07(supra). Since, the assessee has not furnished any details of expenses during the course of assessment proceedings before the AO or the CIT(A) and therefore the AO is not in a position to verify the expenses. Accordingly, we are inclined to uphold the order of the ld. CIT(A) on this issue. Accordingly, dismissed.

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• 2017 (9) TMI 1145
  Allowing depreciation at a rate of 100% on Hoardings Structure - Held that:- As in assessee’s own case for A.Y.2009-10 and 2010-11 [2015 (5) TMI 682 - ITAT KOLKATA] the assessee is entitled for depreciation on hoardings. which are temporary structures, and CIT(A) has rightly allowed the same. This common issue of both the appeals of revenue is dismissed. Allowing the deduction claimed by the assessee u/s 80IA - Held that:- As in assessee’s own case for A.Y.2009-10 and 2010-11 [2015 (5) TMI 682 - ITAT KOLKATA] assessee claimed deduction under section 80-IA in the assessment year 2004-05, i.e., that was the initial assessment year and in that year the matter regarding the claim of deduction has become final for the reason that the hon'ble Calcutta High Court has confirmed the allowance of deduction and the Revenue has not carried the matter before the hon'ble Supreme Court. Whereas the Revenue has referred to the decision of hon'ble Karnataka High Court in the case of CIT v. Skyline Advertising P. Ltd. [2015 (5) TMI 669 - KARNATAKA HIGH COURT] but that cannot be considered as precedent because the jurisdictional High Court has taken a view in favour of the assessee and that also in the assessee's own case. That means the initial assessment year i.e., 2004-05, once the claim of deduction in respect to pre-requisite conditions for allowance of deduction has been satisfied, the same cannot be questioned in future years unless and until the Revenue disturbs the initial assessment year . Similar are the facts in the case of sister concerns of the assessee, i.e., Selvel Transit Advertising Pvt. Ltd. In term of the above - Decided in favour of assessee Allowing TDS payment made by assessee company for hoarding advertisement charges u/ s 194C OR 194I - Held that:- As in assessee’s own case for A.Y.2009-10 and 2010-11 all the assessments were completed under section 143(3) of the Act. No disallowance of these expenses was made all through. But in this year and in subsequent in the assessment year 2010-11 this disallowance was made. Thus we accept the contention of the assessee's counsel as regards to consistency that once on similar facts the Revenue has accepted the payments as contractual payments now they cannot deviate - Decided in favour of assessee. Interest on delay payment of TDS as allowable expenditure u/s 37 - Held that:- We are of the view that the amount in question cannot be equated to a sum paid on account of tax levied on profits and gains of business or profession and therefore could not have been disallowed u/s 40(a)(ii) of the Act. It cannot be disputed that otherwise the payment of interest was wholly and exclusively for the purpose of carrying on the business of the assessee and therefore allowable as deduction u/s 37(1) of the Act

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• Customs

• 2017 (9) TMI 1166
  Valuation of imported goods - Polyester Knitted Fabrics - enhancement of value on the basis of DRI alert - Held that: - the issue stands decided by the Tribunal in the same appellant's case Artex Textile Pvt. Ltd., Aggarwal Overseas Versus CCE, Delhi-IV [2017 (6) TMI 987 - CESTAT CHANDIGARH], where it was held that The value of imported goods in question cannot be enhanced on the basis of DRI alert and the basis of assessed bill of entry - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 1144
  Redemption fine - penalty - transfer of DFIA license - clearance of pan masala, pan masala gutkha in domestic market as well as are exporting the same - N/N. 40/2006-Cus dated 01.05.2006 - Held that: - N/N. 40/2006 ibid clause 1 provisio provides that in respect of resultant products specified in para 4.55.3 of the handbook of procedures, the material permitted in the said authorization or the duty free authorization or the intermediate supply shall be for technical characteristic and specification as the material used in the said resultant product. Provided further that in respect of said resultant product, the exporter shall give declaration with regard to technical quality, characteristics and specifications in the shipping bill. The notification no.40/2006 provides that the items mentioned in para 4.55.3 of HBP are the resultant products. As per public notice no.35(RE13)2009/14 dated 30.10.2013 the provisions of notification no.31(RE-2013)2009-14 dated 01.08.2013 are not applicable if DFIA has been endorsed as transferrable after 01.08.2013. Admittedly, there is no dispute in this case that DFIA has already been transferred. Therefore, the provisions of notification no.31(RE-2013)2009-14 dated 01.08.2013 are not applicable to the facts of this case. As appellant has exported the goods availing the benefit of N/N. 40/2006-Cus dated 01.05.2006 and complied with conditions thereof. Therefore, the proceedings are not sustainable against the appellant - as the DIFA has already been transferred and no objection was raised by customs authorities as well as DGFT while transferring or during the export of goods, in that circumstances, provisions of notification no.31(RE-2013)2009-14 dated 01.08.2013 are not invokable - redemption fine and penalty set aside. Appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 1143
  Benefit of N/N. 158/95 - violation of condition of notification - Held that: - nowhere it is mentioned that the appellant is required to seek extension of time within six months from the date of re-importation. In fact, the fact is not in dispute that re-imported goods are required to be re-exported within three years of re-import as per condition (i) of the said notification. When the main condition of notification has not been violated by the appellant, therefore the benefit of notification cannot be denied merely on the ground that appellant did not seek extension of time within 6 months of re-import - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 1142
  Valuation of imported goods - re-assessment if bills on the basis of contemporaneous price - enhancement of value - Held that: - There is no evidence that transaction value was being influenced by any other considerations. The only basis for enhancement of value by the assessing officer is that certain imports of similar items were assessed with higher value around the same period - the contemporaneous imports have been made in connection with dissimilar nature of consignments with reference to quantity and also in some cases, period of import. Even otherwise, the price variation is in the range of 11 to 15%. The exact nature of goods and the details of contracts of the contemporaneous consignments were not available, only basic description and quantity of the imported items were available, which were compared. In the present case due examination about this crucial aspect has not been done by the assessing officer and comparison based on the contemporaneous import is not proper. Further, the contractual arrangements and invoices should not be rejected in the absence of any evidence to question their authenticity. As submitted by the appellants, NIBD data is a guidelines and an indicator for the assessing officer and it cannot be a substitute for assessable value. The assessable value for imported items has to be invariably arrived at applying Section 14 read with Customs Valuation Rules, 2007. Reliance placed in the case of Topsia Estates Pvt. Ltd. Vs. CC, Chennai [2015 (1) TMI 750 - CESTAT CHENNAI], where the adjudicating authority enhanced the value as the declared value appears to be very low compared to value available in NIDB data, otherwise, there is no material available, and it was held that in this particular situation, Rule 9 of the Valuation Rules would not be invoked. Appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 1141
  Valuation of imported goods - Pneumatic Tools Accessories of various types - rejection of invoice value - deductive method of valuation - Rule 7 of Customs Valuation Rules, 2007 - Held that: - Admittedly, the price-list of the main appellant as displayed in their Website for trading of imported products in India is the main basis. While applying the provisions of Rule 7, it is necessary that the parameters mentioned therein are to be adhered to - In the present case, there is no discussion at all regarding the legal provisions of Rule 7 and the method of arriving at the deductive value in terms of the said Rule. The matter is remanded back to the original authority, who will decide the basis of rejection of transaction value and also re-determination of the transaction value if required in terms of the applicable provisions of Section 14 read with valuation rules - appeal allowed by way of remand.

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• 2017 (9) TMI 1140
  Smuggling - export of contraband item - Red Sanders Wood - penalty - Held that: - Both the brothers were involved in illegal export of Red Sanders Wood which is prohibited item for export under Section 3 (2), and 3(3) of the Foreign Trade (D&R) Act. 1992 read with ITC (HS) Export Policy 2009-2014 for contravention for the provision of the Convention on International Trade in Endangered Species of Wild Flora (CITES) as contained on International Trade Policy - penalties rightly imposed - appeal dismissed - decided against appellant.

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• 2017 (9) TMI 1139
  Benefit of N/N. 21/2002-Cus. dated 01.03.2002 - misdeclaration of goods - Crossslinkable Polyethylene Compounds - Held that: - importer has claimed the benefit of concessional duty for goods which were not entitled to the same. Consequently, the misdeclaration also stands established. Consequently, the order of confiscation of the impugned goods with the imposition of redemption fine and penalty also merits no interference - since the appellant will not be entitled to concessional duty, the demand for differential duty is to upheld along with payment of interest - appeal dismissed - decided against appellant.

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• 2017 (9) TMI 1138
  Valuation - royalty - includibility - whether royalty paid by the Appellant to LME for grant of access to proprietary Ericsson knowhow and Ericson IPR for undertaking the manufacture/ assembly of Radio Base Station (RBS), Mobile Switching Centers (MSC) and Base Station Controllers (BSC) used in GSM (Global System for Mobile communication) networks is includible in the value of components imported from Ericsson AB, Sweden (hereinafter referred to as EAB)? Held that: - in terms of the erstwhile license agreement dated 23/12/2008, royalty was to be paid at the rate of 5 per cent of the net selling price of the licensed products, from which cost of imported components were to be excluded along with taxes. However, in the new license agreement w.e.f. 01/04/2012 the royalty amount of 5.75 per cent was to be paid on the sale value of the licensed products after exclusion of taxes but including the cost of the imported components. Since the significant percentage of the imported components have been procured from EAB Sweden, revenue has taken the stand that such royalty is to be considered as the condition of sale of the components by EAB to the appellant. The issue is similar to the judgement of Hon’ble Supreme Court in Matsushita Television & Audio (I) Limited v/s Commissioner of Customs [2007 (4) TMI 5 - SUPREME COURT OF INDIA], where it was held that royalty in relation to the sale only includible in assessable value. Before adding the royalty amounts to the value of imported components, it is necessary for the department to examine both the technical assistance agreement as well as the pricing agreement. Before taking the final view in the matter, it is necessary to re-examine the matter of both license agreement as well as supply contract simultaneously, to see if the enhanced royalty was in the guise of adjustment of the price of components. Appeal allowed by way of remand.

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• 2017 (9) TMI 1137
  Benefit of N/N. 39/96-Cus dated 23.07.1996 - duty paying invoices - The benefit was found to be claimed by submitting forged customs duty exemption certificates purpotedly issued by the GM, OEF, Kanpur - Held that: - the appellant M/s. Anurag Trading Co. have imported goods covered by the five BOEs without payment of duty fraudulently claiming the benefit of notification no. 39/1996 on the basis of CDECs which have not been issued by the OEF Kanpur. The claim of the appellant that such CDECs were furnished to them by various officials of OEF have been disproved by the investigation carried out by Revenue. In fact, the investigation carried out by Revenue has brought out the fact that OEF Kanpur has not issued any CDECs authorizing duty free import. In view of the above discussion, we are of the view that the customs duty demands raised in show cause notice dated 08.07.2011 which have been upheld by the adjudicating authority needs to be sustained along with penalties imposed on M/s. Anurag Trading Co. along with interest under section 28 AB and section 28 AA of the customs act 1962. Demands raised under section 28B in respect of 39 BOE filed during the period August 1996 to January 2004 were issued vide the relevant show cause notice on 05.03.2013 - It has been argued that even though no time limit has been prescribed in the section 28B of the Customs Act it is settled position of law that the time limit applicable for demand of customs duty under section 28 ibid is also applicable to the recovery of amount under section 28B - Held that: - By considering time limit of five years specified under section 28, we find that the entire demand raised under section 28B in show cause notice dated 05.03.2013 becomes hit by time bar. Consequently, entire demand confirmed by the adjudicating authority with reference to show cause notice dated 06.03.2013 are hit by time bar and hence is to be set aside. Consequently, there will also be no justification for imposition of any penalties. The levy on penalty in terms of show cause notice dated 08.07.2011 has been challenged by the CHA on the ground that they had filed the documents before the Customs authorities for clearance of goods on behalf of the importer M/s. Anurag Trading Co. only on the basis of documents given to them by the importer - there is nothing on record to show that CHA, M/s. Trinetra Impex Pvt. Ltd. had any role to play in forging of the certificates or in mis-leading the customs authorities. Consequently, we are of the view that imposition of penalty on Shri Kailash Gupta, the Director of M/s. Trinetra Impex Pvt. Ltd. is without justification and is required to be set aside. Appeal allowed - decided partly in favor of appellants.

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• 2017 (9) TMI 1136
  Valuation of imported machines - CD Replication machines - mis-declaration - principle of equality and equal protection - Held that: - there was typographical error in declaring Euro 22 lakhs plus as valuation, which is impossible. It shows casualness and careless attitude on the part of the adjudicating authority - in the case of other importers, the same item was valued at 2,10,000 Euro at the same time - By keeping in mind the principle of equality and equal protection of the law, the same treatment will have to be given in the assessee’s case when the exporter’s machine and export are at par - the adjudicating authority directed to compute the valuation of each machine @ of 2,10,000 Euro and demand the balance customs duty as per law. Regarding the penalty, the same may be made equal to the difference of the duty amount. Appeal allowed in part by way of remand.

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• 2017 (9) TMI 1135
  RES IPSA LOQUITUR - valuation - It is the claim of the assessee-Appellants that the second valuation report was never made available to them and the Department has charged the Customs duty on the basis of original valuation report and imposed penalties - Held that: - no record is available with the Department pertaining to the said statement and second valuation report - As per the maxim RES IPSA LOQUITUR, the facts of the case speak itself - the Department is directed to re-compute the duty on the basis of the second valuation report which is mentioned in the affidavit of the approved valuer i.e. 2,03,752.10 US $ and decide the issue afresh - appeal allowed by way of remand.

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• 2017 (9) TMI 1134
  Interpretation of statute - importer - who is the importer of the impugned goods? - Held that: - in the statements given before the authorities Shri Prashun Jain has never admitted to his importing these goods. The admission is regarding arranging for parties who will provide financial assistance and procurement of imported goods. It indicates his involvement with the import consignment as facilitator, not as importer. In fact, it was mentioned that he and Shri Biplav Kumar has arrangement between them to the effect that Shri Prashun Jain will arrange for parties who will provide finance and procurement of imported goods and Shri Biplav Kumar will arrange for clearance of goods. In the second statement, the appellant stated that the goods were imported by Shri Prashant Gupta, the appellant is suppose to help the importer in clearing the goods through customs - the appellant can be considered as importer of the impugned goods. Seizure of consignment - Held that: - the proceedings with reference to past clearance are in further weaker ground. The contents of the past clearance, their identity and who processed the import on whose behalf could not be established. Even on the principle of preponderance of probability as invoked by the Original Authority, the present case falls much short of required proof. The selective reliance of part of the retracted statements alone cannot be the basis for sustaining the duty demand against the appellant. On careful consideration of the evidences available on record, we hold that Shri Prashun Jain cannot be held as importer in the present case. Penalty u/s 114 AA, under Section 28 and 112 of the Act - Held that: - if a person knowingly or intentionally makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document which is false or incorrect in any material particular, in the transaction of any business for the purposes of this act shall be liable to a penalty not exceeding five times, the value of goods. We note that the said provisions are wide enough to cover the acts of the appellant as brought out during the investigation. Considering that the evidences of such involvement in the past clearances are not available to a sustainable level and involvement in the present consignment has been established based on available evidence, we find that a penalty of Rs. 5 lakhs under Section 114AA will meet the ends of justice. Other than this penalty, we find that the appellant cannot be put to any liability for duty or penalty, under Section 28 and 112 of the Act. Penalty imposed on M/s Om Freight Forwarders P. Ltd. - Held that: - the person from whom the goods were seized has to establish the bonafideness with valid document. Further, we also note that the reliance placed by the Original Authority on the Tribunal decision dealing with unclaimed consignment has no application to the facts of this case to decide the penalty on the forwarding agent. Even if it is admitted that the delivery order was issued without verifying the antecedent of the person, this will not amount to abetting an act or omission of such act, which requires prior knowledge of possible breach of legal provision, by the main offender. The Original Authority stated that by issuing delivery order without proper verification, the appellants have abetted the unlawful import of impugned consignments in connivance with Shri Prashun Jain. This assertion is not supported by any evidence. The charge of abetting can be established only when there is an prior knowledge on the part of abettor regarding possible offence by the main offender. The omission on the part of M/s CMC is not liable to penalty as an abettor as they had no knowledge of the offence as well as they had no intention to defraud the exchequer by indulging in the offence of smuggling. The charge against M/s CMC was that they have enabled filing of bill of entry without verifying the authorized person’s status. On a similar situation, the Original Authority arrived at a different conclusion in respect of the freight forwarders. Here also the charge of negligence cannot lead to an offence as abettor. The reasons adopted by the Original Authority for M/s CMC are equally applicable to the present appellant also. The appeal filed by Shri Prashun Jain is partly allowed and the appeal filed by M/s Om Freight Forwarders P. Ltd. is allowed - decided partly in favor of appellant.

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• 2017 (9) TMI 1133
  Waiver of interest demanded - Warehouse of goods - equipment and goods were imported for the purpose of 100% EOU. But due to unforeseen reasons, the project could not be started and there was no question of exporting the goods - Held that: - The purpose of 100% EOU has been defeated for the unforeseen reasons. Undoubtedly, goods and equipments were imported where customs duty was also not paid. For paying duty belatedly the interest is leviable as per the ratio laid down by the Hon’ble Supreme Court in the case of CIT Vs. Sant Ram Mangat Ram Jewellers [2003 (1) TMI 10 - SUPREME Court]. It may be mentioned that ignorance of law is no excuse - demand of interest upheld - appeal dismissed - decided against appellant.

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• 2017 (9) TMI 1132
  Penalties u/s 112(a) and 112(b) of the Customs Act, 1962 - smuggling - Gold - Baggage Rules - it is evident that the gold was smuggled since it carries foreign markings. It may be mentioned that the smuggling always weakens the economy and the backbone of the nation. Offence is there, so the gold was rightly confiscated. The said owners who handed over the smuggled gold were not traceable inspite of the best efforts of the department. Since offence of smuggling has taken place, so, the penalty is justified but looking at the young age of the appellants and considering the fact that this is their first offence, the penalty on appellants is looking on higher side - the penalty reduced to Rs. 7 lakhs on each of the first three appellants and Rs. 12 lakhs on the fourth appellant (Sh. Lucky Raikwar) - appeal allowed - decided partly in favor of appellant.

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• 2017 (9) TMI 1131
  Maintainability of appeal - delay in filing appeal - condonation of delay - Held that: - the copy of letter dated 03.02.2017 was not given to the appellant before passing the impugned order, which the appellant had obtained through RTI application subsequently. Therefore, in the interest of justice, the appellant be given a fair chance to rebut the date of communication as 26.04.2016 as observed by the Ld. Commissioner (Appeals) - appeals need to remanded to the ld. Commissioner (Appeals) to consider all issues afresh - appeal allowed by way of remand.

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• Corporate Laws

• 2017 (9) TMI 1109
  Winding up proceedings pending - jurisdictional issue - Held that:- In view of winding up proceedings pending before the Hon'ble High Court against the Corporate Debtor, Learned Counsel for the parties made their submissions in relation to jurisdictional issue as to whether this Tribunal can proceed with the Insolvency proceedings. Heard, Order reserved.

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• Insolvency & Bankruptcy

• 2017 (9) TMI 1130
  Corporate insolvency procedure - Insolvency & Bankruptcy Code, 2016 - eligible debt existence - Held that:- It is admitted that the appellant is debenture holder. The Respondent- 'Corporate Debtor' also pleaded that the appellant is Investor. From the relevant facts as we noticed above, we find that the Respondent- 'Corporate Debtor has a liability and obligation in respect of amount which is due to the debenture holder from the 'Corporate Debtor', including 'Financial Debt' i.e the amount due on maturity of debentures. 32. The 'default' means non-payment of debt as defined in sub-section (12) of Section 3, as below:- “(12) “default” means non-payment of debt when whole or any part or instalment of the amount of debt has become due and payable and is not repaid by the debtor or the corporate debtor, as the case may be” The fact as pleaded and not disputed by Respondent - 'Corporate Debtor' that the 'debenture holder' (Appellant) and amount matured in the year 2011, 2012 and 2013 has not been paid. Thus, we find there is a default as defined under section 3(12) of the I & B Code. The 'Corporate Debtor' had a liability and obligation in respect of claim of respondent which includes the 'Financial Debt', including those come within clause (c) of sub-section (8) of Section 5. As per the agreement, the same was liable to be paid from the date of maturity along with interest, if any and the same having not paid, the default of debt is apparent. This apart we find that the amount of debt and interest, as shown by appellant was to be disbursed against consideration for time value of the money. Therefore, it cannot be stated that debentures on maturity do not come within the purview of amount payable against the consideration for the time value of the money.Learned Adjudicating Authority having admitted the application under Section 7, the application being complete, no interference is called for.

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• 2017 (9) TMI 1129
  Corporate insolvency procedure - Insolvency and Bankruptcy Code - Held that:- According to learned counsel the provisions of Insolvency and Bankruptcy Code are not retrospective and cannot take away the rights of the petitioner which has emerged from the provisions of the erstwhile Companies Act, 1956. The aforesaid argument is wholly misplaced because the Companies Act, 2013 has been enforced amending the provisions concerning winding up and substituting it by Section 271 of 2013 Act. It is further appropriate to mention that Section 255 of the Insolvency and Bankruptcy Code, 2016 provides that the Companies Act, 2013 was amended in the manner specified in the Schedule XI. It is pertinent to mention that in Chapter XXII of 2013, Act the provisions of the 1956 Act have not been incorporated in 2013 Act and schedule XI of the Code which had come into force has substituted Section 271 by limiting the grounds of winding up and the ground for inability to pay has been taken away by the schedule XI. It is thus patent that the jurisdiction concerning inability to pay debt w.e.f. 15.11.2015 has been taken over by the provisions of Insolvency and Bankruptcy Code, 2016. Therefore, it is not possible to accept that the petitioner would not comply with the Rules of 2016 namely Adjudicating Authority/Transfer of Pending Proceeding Rules (supra). Accordingly, we conclude that the petition is liable to be dismissed.

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• Service Tax

• 2017 (9) TMI 1128
  Time limitation - demand - Held that: - Though the appellants were registered with the Service Tax Department, they have not considered the full taxable value to discharge service tax - there is no plausible reason of bonafideness in such short payment of tax liability. Supply of tangible goods - quantification of tax liability - applicability of provision of Section 67(2) - Held that: - The said provision will apply only in cases, where the gross amount charged by a service provider is inclusive of the service tax payable - In the present case, we are not shown any evidence to the effect that the gross amount charged is inclusive of such service tax payable either by way of understanding between the service provider and service recipient or in the documents like invoice, to this effect. In absence of such supporting evidence, the provisions of Section 67(2) cannot be automatically applied to reduce tax liability, under any category. Appeal dismissed - decided against appellant.

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• 2017 (9) TMI 1127
  Voluntary Compliance Entitlement Scheme - deposit made prior to enactment of VCES scheme - deposit of service tax made between 25.03.2013 and 03.05.2013 - whether the service tax amount of Rs. 22,81,984/- deposited prior to coming into effect of VCES-2013 Scheme is eligible under the same? - Held that: - reliance placed in the case of Sadguru Construction Co. & 1 Versus Union of India & 2 [2014 (5) TMI 219 - GUJARAT HIGH COURT], where it was held that if any service tax is due and payable by a person for the aforesaid period, the same would be included in the definition of the expression "tax dues" if the same has not been paid as on 1.3.2013 - payments made after 01.03.2013 and before 10.05.2013 had been considered to be eligible under the VCES-2013 Scheme - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 1126
  Penalty - construction service - works contract service - Held that: - the appellant is liable to pay service tax under works contract service and they did not discharge the same. During the course of investigation, they have paid service tax partly, Rs. 14,39,977/-; the additional amount of Rs. 12 lakhs towards this tax liability was discharged only in 27/03/2017. Even now, the full tax liability on this has not being discharged alongwith interest. No bonafide reason or reasonable cause for non-payment of service tax during the material time could be ascertained from the appeal papers - penalty upheld. Commercial or industrial construction service - works contract - applicability of decision in the case of Commissioner, Central Excise & Customs Versus M/s Larsen & Toubro Ltd. and others [2015 (8) TMI 749 - SUPREME COURT] - Held that: - the applicability of decision in the case of Larsen & Toubro Ltd. has to be verified - The relevant date also has to be re-calculated in terms of Section 73 (6) wherever variation from such provision is contested by the Revenue - matter on remand. Appeal allowed by way of remand.

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• 2017 (9) TMI 1125
  Mining services - activity of transporting coal from pit-head to dump yard within the mining area - Held that: - the Hon’ble Supreme Court in CCE & ST, Raipur Vs. Singh Transporters [2017 (7) TMI 494 - SUPREME COURT] categorically held that such services rendered within the mining area cannot be taxed under the category of mining services - demand set aside. Valuation - inclusion of value of diesel, supplied free of cost by the client to the appellant - Held that: - the issue came up for consideration in the appellant own case M/s Karamjeet Singh & Co. Ltd. Versus CCE, Raipur [2013 (12) TMI 434 - CESTAT NEW DELHI], where it was held that Section 67 does not cover the situation where free of cost material are supplied by the recipient of service - the said value cannot be become part of service rendered - demand set aside. Appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 1124
  Mandap keeper service - The appellant in their appeal claimed that they have not at all provided Mandap keeper Service - Held that: - as already noted the appellant did not dispute they are providing taxable service before the original authority and they have also admitted having collected Service Tax on these services - due to certain objection from accounting department, the reason for which is not recorded, certain amount stands unpaid to the Government - appeal dismissed - decided against appellant.

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• 2017 (9) TMI 1123
  Refund claim - whether refund claim for Rs. 20,57,416/- filed on 28.9.2015 for the period from 01.4.2014 to 30.3.2015 is barred by the limitation prescribed under Sec 11B of CEA 1944 as applicable to Service Tax matters by virtue of Sec. 83 of Finance Act, 1994? - Held that: - all refund claims arising out of payment of duty/tax under a particular statute be filed in accordance with the provisions of the said statute - relaince placed in the case of Commissioner of Service Tax, Ahmedabad. Versus M/s. Gujarat State Road Transport Corporation [2012 (12) TMI 673 - CESTAT, AHMEDABAD], where it was held that law on the refund of an amount paid as duty or tax liability is governed by provisions of Section 11B of the Central Excise Act, 1994 - appeal allowed - decided in favor of Revenue.

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• 2017 (9) TMI 1122
  Stock-broker - liability of tax - “transaction/turnover charges” paid to stock exchanges and V-SAT Charges - Revenue initiated proceedings against the appellant to tax turnover/transaction charges under the category of “stock broker service” and V-SAT charges under the category of “leased circuit services” - scope of SCN - Held that: - the show cause notice discussed the scope of the tax entry of leased circuit services. The Service Tax demand was upheld in the impugned order, as a 'stock broker service' holding that leased circuit services can be provided only by a Telegraph Authority - the impugned order travelled beyond the scope of show cause notice and on that ground alone the demand confirmed cannot be sustained. The notice for demand was issued on 03.08.2010 covering the period of 01.01.2008 to 15.05.2008. Admittedly, the demand is a repeat demand in continuation of earlier demands on the same set of facts. It is by now a well settled principle of law that repeat show cause notices with same set of facts and legal position cannot be issued invoking suppression, fraud etc. to sustain a demand for extended period. Appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 1121
  Waiver of pre-deposit - Commercial training and Coaching services - Held that: - for the earlier period for the said activity, this Tribunal in the case of Mem Worldwide Private Limited Versus Commr. of C. Ex. & S.T., Rohtak [2014 (8) TMI 1097 - CESTAT NEW DELHI], prima facie has taken view that the service tax is not payable by the applicant under the said category - As this Tribunal has taken a view that the demand is not sustainable against the applicant, therefore, the requirement of pre-deposit of demand of service tax, interest and penalty and stay recovery during the pendency of the appeal waived - appeal allowed.

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• 2017 (9) TMI 1120
  Erection, commissioning or installation services - works contract services - management, maintenance or repair services - works orders/ agreements executed by the appellants mainly for Jodhpur Vidyut Vitran Nigam Nigam Ltd. and Dakshin Haryana Bijli Vitran Nigam - N/N. 11/2010-ST dated 27.02.2010 - Held that: - Admittedly the appellants are providing various services, which are connected to transmission/ distribution of electricity. All such services provided in relation to transmission or distribution of electricity by a person to any other person has been exempted by the N/N. 45/2010-ST dated 20.07.2010, which was issued in terms of Section 11 C, for retrospective operations - the services rendered by the appellant in connection with transmission (upto 26.02.2010) and distribution (upto 21.06.2010) are exempted from tax liability. For the period post 26.02.2010 (for transmission), as the Notification stipulates that taxable service provided to any person, by any other person for transmission of electricity is exempt from Service Tax. Neither the taxable service nor the provider of service, nor the recipient of service is qualified by any restriction. The Revenue contends that the service for transmission of electricity is only exempt - the services rendered by the appellant, wherever they are for transmission of electricity are to be exempted. In other words, the exemption under N/N. 11/2010-ST is not only for the taxable service of transmission of electricity. Regarding confirmation of Service Tax under works contract service, we note that the application of Notification No.11/2010 has to be examined in view of the above findings and the tax liability has to be calculated only with reference to such taxable services, which are not for transmission of electricity. Appeal allowed by way of remand.

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• 2017 (9) TMI 1119
  Penalties u/s 76 and 78 - entire amount of service tax along with interest has been paid by the appellants - Held that: - it is a fit case for invoking Section 80 of the Finance Act, 1994, as even though no service tax is payable on the services provided on the repair and maintenance of the vehicle during the warranty period, but the entire amount of service tax along with interest has been paid by the appellants - penalties set aside - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2017 (9) TMI 1118
  Clandestine removal of goods - evidences - Held that: - the kachha parchies recovered from Sh. Maurya are not reliable evidence produced by the Revenue. Therefore, the demand against the appellant on account of clandestine removal of goods is not sustainable in the absence of any corroborative evidence to support in the absence of excess production, excess receipt of raw material, production capacity and transportation of goods - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 1117
  Reduction of penalty imposed under Rule 15 of Cenvat Credit Rules, 2004 - CENVAT credit on inputs denied - Held that: - the maximum penalty can be imposed equivalent to the duty but minimum penalty is discretion of the adjudicating authority - In the facts and circumstances of this case, the penalty imposed on the appellant equivalent to duty is on higher side - penalty reduced to Rs. 50,000/- - appeal allowed - decided n favor of appellant.

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• 2017 (9) TMI 1116
  Reversal of CENVAT credit - capital goods destroyed in fire - Rule 3(5) of Cenvat Credit Rules - Held that: - if capital goods or inputs have been removed as such, then the only option is that assessee is required to reversed the Cenvat credit availed on these goods. If capital goods are put in use, in that case, provision of Rule 3(5) of Cenvat Credit Rules, 2004 are not applicable - Admittedly, in the case in hand, capital goods were in use by the appellant and after use have been destroyed in fire. CENVAT credit not required to be reversed - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 1115
  Classification of goods - ready mix concrete - whether such goods manufactured at the site may be called as Concrete Mix, which is exempted under N/N. 04/97-CE dated 01.03.1997 or will be classifiable under Ready Mix Concrete under Central Excise Tariff Sub-heading No.38245010, which will attract Central Excise duty? - Held that: - the goods in question will need to be determined either as ready mix concrete or concrete mix on the basis whether the same has been especially made with precision and of high standard and as per the particular needs to the customer and delivery to the customer at his site. To facilitate such determination, we set aside the impugned order and remand the matter to the original authority for such re-determination - If after such re-consideration, refund arises, the same can be paid subject to unjust enrichment - appeal allowed by way of remand.

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• 2017 (9) TMI 1114
  Refund claim - time limitation - Service of notice - Notice sent by the Tribunal, presumably has been served as it has not been returned - Held that: - identical issue has come in the case of Vernerpur Tea Estate Vs. Commr. of Central Excise & Service Tax, Shillong [2016 (4) TMI 17 - CESTAT KOLKATA], where it was held that on cumulative reading of various provisions of Notification No. 33/99-CE, we are of the considered opinion that refund claims, filed after more than 5 to 6 years of such duty payment, are clearly time barred - appeal allowed - decided in favor of Revenue.

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• 2017 (9) TMI 1113
  CENVAT credit - capital goods - whether the appellants are eligible to avail CENVAT credit on the duty paid on angles, channels, beams, girders plats, sheets, coils, bars, cements etc. used for fabrication of structures for machinery, factory, roads etc. during the period January 2009 to December, 2009? - Held that: - cement has been utilized for building road and other purposes and therefore, not eligible to credit. As far as admissibility of CENVAT credit on the duty paid inputs viz. angles, channels, beams etc. used in the fabrication of machinery, in principle, the same is admissible as per the judgment of the Tribunal in the case of Singhal Enterprises Pvt. Ltd. vs. C.Cus. & C. Ex., Raipur [2016 (9) TMI 682 - CESTAT NEW DELHI], where it was held that applying the “User Test” to the facts in hand, we have no hesitation in holding that the structural items used in the fabrication of support structures would fall within the ambit of ‘Capital Goods’ as contemplated under Rule 2(a) of the Cenvat Credit Rules, hence will be entitled to the Cenvat Credit - However, from the record it is not clear the exact quantity of angles, channels, beams etc. that were used in the fabrication of machinery and structure of capital goods, hence to ascertain the said factual position, the matter is remanded to the adjudicating authority for scrutiny of the claim of the Appellant. Appeal allowed by way of remand.

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• 2017 (9) TMI 1112
  Sale of scrap - waste material - wooden scrap/ plastic scrap - oily cotton canvas scrap - SS Steel - MS aluminium scrap - Held that: - the matter is covered by the Tribunal’s decision in the appellant’s own case M/s JB Mangharam Foods Pvt. Ltd. Versus C.C.E. Indore [2017 (1) TMI 283 - CESTAT NEW DELHI] - no duty liability can be sustained in case of waste material, wooden scrap/ plastic scrap oily cotton canvas scrap, the details of which are given in the table annexed with the appellant’s reply to the Show Cause Notice. In case of the duty liability on SS Steel, MS, aluminium scrap, the matter is remanded to the original adjudicating authority to verify the fact that no Cenvat credit on the machinery or iron and steel removed as scrap were taken by the appellant and thereafter decide the matter afresh after giving opportunity of personal hearing to the appellant. Appeal allowed in part and part matter on remand.

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• 2017 (9) TMI 1111
  CENVAT credit - input services - Banking & Financial services - Consulting Engineer’s Service (Drawing charges) - EXIM /DGFT Consultant’s service - Company Secretary services and C.A. services - Installation services - Maintenance services - Held that: - in the various judgments of this Tribunal, the service tax paid on the services viz. Banking & Financial services, Consulting Engineer’s service (Drawing Charges), EXIM/DGFT Consultant’s service, Company Secretary service and Chartered Accountant’s Service, Installation Services, Maintenance Services, which are held to be ‘input services’ as defined under Rule2(l) of Cenvat Credit Rules, 2004, CENVAT credit of the same is admissible. However, the credit availed on Club Membership for the Director is not admissible as it cannot be said to be remotely connected with the activity of manufacture - the service tax paid on membership charges to Heat Transfer Researches Inc., is admissible as the said service is being used in or in relation to manufacture of finished goods. Decided partly in favor of appellant.

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• CST, VAT & Sales Tax

• 2017 (9) TMI 1110
  Interpretation of statute - refund - reversal of input tax credit - Section 19 (2) (v) of the Tamil Nadu Value Added Tax Act, 2006 - Held that: - it appears that the State is in the process of preferring Appeals by re-presenting the Appeal papers and the Appeals are yet to be numbered. The settled legal position being that, mere pendency of an Appeal without interim order will not amount to the grant of stay of the order passed by the Lower Court or Lower Forum - In the instant case, it appears that the Appeals filed by the State are yet to be numbered. Therefore, this Court is inclined to issue appropriate direction in this Writ Petition, however, leaving it open to the respondents to pursue their Appeal in the meantime. Similar issue decided in the case of M/s. Everest Industries Limited Versus The State of Tamil Nadu, The Deputy Commissioner (CT) (FAC) [2017 (3) TMI 279 - MADRAS HIGH COURT], where it was held that A plain reading of the provisions of sub-section (1) and sub-section (2) of Section 19 of the 2006 Act would show that, as long as specified goods, which suffer tax are used for any of the purposes set out in clauses (i) to (vi) of sub-section (2) of Section 19, the assessee should be able to claim the ITC, with a caveat in so far as clause (v) is concerned - the respondent directed to take note of the decision of the Court in M/s. Everest Industries Ltd.'s case and pass decision on merits - petition allowed by way of remand.

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