TMI Tax Updates - e-Newsletter
September 25, 2017

Case Laws in this Newsletter:

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

TMI SMS

• Levy of additions tax u/s 115O on distribution of dividend - amount not to be bifurcated as agriculture and non-agriculture dividend - SC

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Articles

• Websites of Government Departments need lot of improvement. We are noticing deterioration in them for example, case of website of ITAT.
• RCM – Applicability to persons not liable to get registered us 23(1)

News

• Note ban was a shake-up, achieved its main objectives

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• NITI Aayog and Govt. of Assam organizes workshop on health sector reforms in Guwahati; launches SATH- Sustainable Action for Transforming Human Capital

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Notifications

GST

• 29/2017 - dated 22-9-2017 - CGST Rate
  Seeks to amend notification no. 5/2017- central tax(rate) dated 28.06.2017 to give effect to gst council decisions regarding restriction of refund on corduroy fabrics

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• 28/2017 - dated 22-9-2017 - CGST Rate
  Seeks to amend notification no. 2/2017- central tax(rate) dated 28.06.2017 to give effect to gst council decisions regarding gst exemptions

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• 27/2017 - dated 22-9-2017 - CGST Rate
  Seeks to amend notification no. 1/2017- central tax(rate) dated 28.06.2017 to give effect to gst council decisions regarding gst rates

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• 30/2017 - dated 22-9-2017 - IGST Rate
  Exempts Skimmed milk powder, or concentrated milk - supplied to a distinct person - for distribution through dairy cooperatives or companies registered under the Companies Act, 2013

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• 29/2017 - dated 22-9-2017 - IGST Rate
  Amendments in the notification No.5/2017- Integrated Tax (Rate) dated the 28th June, 2017.

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• 28/2017 - dated 22-9-2017 - IGST Rate
  Seeks to amend notification no. 2/2017- integrated tax(rate) dated 28.06.2017 to give effect to GST council decisions regarding GST exemptions.

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• 27/2017 - dated 22-9-2017 - IGST Rate
  Seeks to amend notification no. 1/2017- integrated tax(rate) dated 28.06.2017 to give effect to gst council decisions regarding gst rates.

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GST - States

• 27/2017-State Tax (Rate) - dated 21-9-2017 - Bihar SGST
  Amendments in the notification No.1/2017- State Tax (Rate), dated the 29th June, 2017.

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• 26/2017-State Tax (Rate) - dated 21-9-2017 - Bihar SGST
  Exempts intra state supply of heavy water and nuclear fuels by the Department of Atomic Energy.

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• 25/2017-State Tax (Rate) - dated 21-9-2017 - Bihar SGST
  Amendments in the notification No.12/2017- State Tax (Rate), dated the 29th June, 2017

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• F.No.17(131)ACCT/GST/2017/2600 - dated 22-9-2017 - Rajasthan SGST
  Extension of period for submitting the declaration in Form GST TRAN-1 Dated 22-09-2017

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• F.No.12(56)FD/Tax/2017-Pt-II-95 - dated 22-9-2017 - Rajasthan SGST
  Amendment in the Notification Number F.12(56)FD/Tax/2017-Pt-I-44 dated 29th June, 2017,

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• F.No.12(56)FD/Tax/2017-Pt-II-94 - dated 22-9-2017 - Rajasthan SGST
  Amendment in the Notification No F.12(56)FD/Tax/2017-Pt-I-41 dated 29/06/2017

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• F.No.12(56)FD/Tax/2017-Pt-II-93 - dated 22-9-2017 - Rajasthan SGST
  Amendment in the Notification No F.12(56)FD/Tax/2017-Pt-I-40 dated 29/06/2017.

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• F.No.12(56)FD/Tax/2017-92 - dated 21-9-2017 - Rajasthan SGST
  Exemption of supply of heavy water and nuclear fuel by the department of Atomic Energy to the Nuclear Power Corporation of India.

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• F.No.12(56)FD/Tax/2017-91 - dated 21-9-2017 - Rajasthan SGST
  Amendment in the Notification Number F.12(56)FD/Tax/2017-Pt-I-50, dated the June, 2017. - related to exemption of services by way of right to admission to the events organized by FIFA U-17 World Cup 2017.

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• F.No.12(56)FD/Tax/2017-90 - dated 21-9-2017 - Rajasthan SGST
  Amendment in Notification Number F.12(56)FD/Tax/2017-Pt-I-49, dated the 29th June, 2017

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• F.No.17(131)ACCT/GST/2017/2484 - dated 18-9-2017 - Rajasthan SGST
  Notification (2484) 18-09-17 regarding period of Form GST TRAN-1

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• F.No.17(131)ACCT/GST/2017/2472 - dated 15-9-2017 - Rajasthan SGST
  Last Date for filing of return in FORM GSTR-3B

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Highlights / Catch Notes

GST

• CGST exempt goods notified under section 11 (1) - Notification as amended
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• Absolute Exemption from IGST on inter-State supplies of goods - Notification as amended
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• CGST Rate Schedule u/s 9(1) - notifying rates of CGST @ 2.5%, 6%, 9%, 14%, 1.5% and 0.125% on Supply of Goods - Notification as amended by notification dated 22/9/2017
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• IGST Rate Schedule u/s 5(1) - notifying rates of IGST @ 5%, 12%, 18%, 28%, 3% and 0.25% on supply of goods. - Notification no. 1/2017 as amended vide notification dated 22-9-2017
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• Rate of GST on old and scrap buses - 28% or 18% - at such initial tender process initiated by the Respondents-KSRTC, the present petitions filed by the petitioners are premature and misconceived and do not require any interference by this Court at this stage. - HC
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Income Tax

• Levy of additions tax u/s 115O on distribution of dividend - shares of its profits declared as distributable among the shareholders is not impressed with the character of the profit from which it reaches the hands of the shareholder - not to be bifurcated as agriculture and non-agriculture dividend - SC
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• In view of amendment made u/s 132A of the Income Tax Act, 1961 by Finance Act of 2017, the 'reason to believe' or 'reason to suspect', as the case may be, shall not be disclosed to any person or any authority or the Appellate Tribunal, SC dismissed the appeal of the assessee
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• Validity of Assessment Order - period of limitation u/s 153 (2A) is applicable even if the entire order was not set aside but matter was remanded back for for limited aspects with directions - HC
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• Levying interest u/s 234C - interest is to be charged on the returned income and not on assessed income.
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• Accrual of income - sale of right to develop and sell incentive FSI under LOI - till the conditions of LOI are fulfilled transfer is not complete and income does not accrue to the assessee
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• TPA - determination of ALP - TP adjustment by applying Bright Line Test (BLT) is not sustainable on protective basis having no statutory mandate.
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Customs

• Safeguard Duty - Advance License Scheme - as there is no exemption from safeguard duty leviable under Section 8C, which is imposed on the goods imported from China, the importer has to pay safeguard duty
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Corporate Law

• National Advisory Committee on Accounting Standards - Tenure of the NACAS extended from one year to two years
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• Restriction on number of layers for certain classes of holding companies - More than two layers of subsidiaries not allowed subject to certain exceptions.
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Central Excise

• Manufacture - process of cutting of waste plastic container - Such plastic containers before and after cutting are nothing but waste / scrap - Not a manufacturing activity as no new product emerges.
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• Classification printed computer stationary/manifold Business Forms - to be classified under Chapter Heading 4820.00 or under Chapter Heading 4901.90 - items like A4 sheets, advertisement and job card to be classified under Chapter 49
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Case Laws:

• GST

• 2017 (9) TMI 1301
  Rate of GST on old and scrap buses - Validity of Tender notice for Auction - classification of old and scrap Buses - Whether buses would attract GST @ 28% as normal buses or at the rate of 18% under Schedule-III Heading No.7204 “Ferrous waste and scrap; remelting scrap ingots of iron or steel” or under Residuary Entry No.453 of the same Schedule-III, in which, “Goods which are not specified in Schedule I, II, IV, V or VI” of the KGST Act? - Held that: - at such initial tender process initiated by the Respondents-KSRTC, the present petitions filed by the petitioners are premature and misconceived and do not require any interference by this Court at this stage. First of all, the GST rates as indicated in the said E-Tender Notice Annexure-A does not give the fixed rate of GST at 28% as submitted by the petitioners. It only stipulates the rate of GST “As applicable /28.0”. Whether the correct rate is 18% GST as claimed by the petitioners under the aforesaid entries of Schedule-III or 28% or not can be clarified either by the Respondents-KSRTC or the Respondent-Commercial Tax Department. It is for the petitioners to participate in the said Tender process as per the terms indicated therein or not to so participate. The E-Tender Notice cannot be quashed by this Court, as this Court does not find illegality in the same. Petition dismissed - decided against petitioner.

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• Income Tax

• 2017 (9) TMI 1300
  Constitutionality of validity Section 115O - the additional tax as levied by Section 115O on the dividend declared, distributed or paid - Calcutta High Court has upheld the constitutionality of Section 115O, but a rider has been put that additional income tax to be charged under Section 115O can only be on 40 per cent of income which is taxable under Income Tax Act. - Held that:- This Court in Mrs. Bacha F Guzdar (1954 (10) TMI 2 - SUPREME Court) was considering the nature of dividend income in the hands of shareholders. Under the Income tax Act, 1961 earlier the dividend was taxable at the hands of shareholder. By Finance Act, 1997 it was made taxable in the hand of company when additional tax was imposed. This Court while considering the nature of dividend in the above case held that although when the initial source which has produced the revenue is land used for agricultural purposes but to give to the words 'revenue derived from land', apart from its direct association or relation with the land, an unrestricted meaning shall be unwarranted. Again as noted above Nalin Behari Lal Singha (1969 (7) TMI 2 - SUPREME Court) observation was made that shares of its profits declared as distributable among the shareholders is not impressed with the character of the profit from which it reaches the hands of the shareholder. We, thus, find substances in the submission of the learned counsel for the Union of India that when the dividend is declared to be distributed and paid to company's shareholder it is not impressed with character of source of its income. The provisions of Section 115O are well within the competence of Parliament. To put any limitation in the said provision as held by the Calcutta High Court that additional tax can be levied only on the 40% of the dividend income shall be altering the provision of Section 115O for which there is no warrant. The Calcutta High Court having upheld the vires of Section 115O no further order was necessary in that writ petition. - Decided in favor of revenue.

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• 2017 (9) TMI 1299
  Concealment of income - search conducted on a train by the police authorities - Block assessment - employee of the appellant was returning from Amritsar by train and were found in the possession of ₹ 30 lacs cash in a search by Railway Police - appellant submitted that the proceedings initiated u/s 132 were invalid as it cannot be based on a search conducted on a train by the police authorities and, therefore, the proceedings initiated for block assessment are without jurisdiction - Held that:- This plea was not raised by the appellant before any of the authorities. Further, we find that in view of the amendment made in Section 132A of the Income Tax Act, 1961 by Finance Act of 2017, the 'reason to believe' or 'reason to suspect', as the case may be, shall not be disclosed to any person or any authority or the Appellate Tribunal as recorded by Income Tax Authority under Section 132 or Section 132A. We, therefore, cannot go into that question at all. Even otherwise, we find that the explanation given by the appellant regarding the amount of cash of ₹ 30 lacs found by the GRP and seized by the authorities has been disbelieved and has been treated as income not recorded in the Books of Account maintained by it. No infirmity in the order passed by the High Court. [2007 (2) TMI 685 - DELHI HIGH COURT]

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• 2017 (9) TMI 1298
  Validity of Assessment Order - time limit specified in Section 153(2A) - period of limitation where entire order was not set aside but matter was remanded back for for limited aspects with directions - Held that:- The Kerala High Court in Patel R.P. v. ACIT [2015 (3) TMI 609 - ITAT COCHIN] held that Section 153 (2A) of the Act would apply even where more than one issue is involved i.e. even where one of the issues has been remanded to the AO for a fresh determination. The analysis of the terms ‘finding’ and ‘directions’ by the Supreme Court in Rajinder Nath (1979 (8) TMI 3 - SUPREME Court) was in the context of Section 153 (3) (ii) at a time when Section 153 (2A) of the Act had not been introduced since the relevant AY in that case was 1956-57. The said decision is, therefore, not of help to the Revenue. For all the aforementioned reasons, the Court holds that, in the present case, the assessment proceedings had to necessarily be completed by the AO within the time limit specified in Section 153 (2A) of the Act. Inasmuch as the AO failed to do so, the impugned notice dated 14th September 2015 issued by the AO and all proceedings consequential thereto including the order dated 2nd December 2015 passed by the AO are hereby set aside. - Decided in favour of assessee.

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• 2017 (9) TMI 1296
  MAT Computation - adjustments to book profit - addition of provision for doubtful debts & advances - Held that:- We notice that the issue is covered by the judgement in case of Commissioner of Income Tax vs. Vodafone Essar Gujarat Ltd. [2017 (9) TMI 51 - GUJARAT HIGH COURT ] as held as in the balance sheet as on 31st March 2003 of the assessee, it can be seen that the provision of bad and doubtful debts has been reduced from the gross debtors and net sundry debtors are shown as asset in the balance sheet. This amounts to actual write off and would not be hit by clause (i) of the explanation to section 115JB.Thus the provision for bad and doubtful debts cannot be termed as a provision for liability but is in the nature of diminution in the value of asset.- Decided in favour of Assessee. MAT Computation - Deduction u/s. 10B for determination of book profit under section 115JB - Held that:- Ajanta Pharma (2010 (9) TMI 8 - SUPREME COURT ) was a case in which very similar issue in the context of the deduction under section 80HHC of the Act came up for consideration for reduction while computing book profit for the purpose of section 115JB of the Act. Section 80HHC of the Act also as is well known recognizes proportionately the income arising from the export turn-over for deduction. In this context the Supreme Court held that while reducing the book profit for the purpose of section 115JB of the Act, it would be the entire profit and not the proportionate profit qualified for deduction under section 80HHC which should be taken into account. The Tribunal was therefore correct in holding that the issue is covered in favour of the assessee.

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• 2017 (9) TMI 1295
  TPA - selection of comparable - Held that:- Assessee company’s activities are that of a fee based investment/financial advisory service provider. Unlike merchant bankers who are involved in active financing transactions, the Assessee is only advising on financial issues, thus companies functionally different with that of assessee need to be deselected from final list of comparable with that of assessee.

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• 2017 (9) TMI 1294
  Denial of benefit of Section 11 - Assessing Officer was directed by the First Appellate Authority to verify whether general administrative and employee expenses have been applied towards the object of the trust or not - Held that:- The Tribunal noted that these grounds have already been dealt with, and on facts, findings have been recorded against the Revenue and in favour of the assessee. Once the orders of the Tribunal to that effect have been upheld by this Court and no factual distinction being brought on record for the assessment year in question, the Tribunal followed and applied the earlier orders to the assessment year in question/under consideration. We do not see any reason to interfere with such an order of the Tribunal. It does not give rise to any substantial question of law. The findings are essentially on facts. Once they are not found to be perverse or vitiated by any error of law apparent on the face of record, then there is no merit in the Appeal. It is dismissed. There shall be no order as to costs. - Decided against the revenue.

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• 2017 (9) TMI 1293
  Reopening of assessment - Addition of bogus purchases and export sales under Section 68 - reopening on the basis of a report of the Directorate of Revenue Intelligence (‘DRI’) - Held that:- Despite the AO being aware of the above development, he did not himself undertake any inquiry into the question whether the purchases and sales were made from and to bogus entities. No additions allowed on cases of borrowed information - Decided in favour of assessee.

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• 2017 (9) TMI 1292
  Exemption under section 54 and 54F denied - amount invested for the purchase of residential plot and deposits made under capital gain in the Bank - Held that:- When it is not in dispute that the assessee has paid an amount of ₹ 75,85,818/- which is 95% of the total sale consideration for purchase of the property to M/s. Unitech High-Tech Developer (Rs. 7,41,250/- on 20.1.2011 and ₹ 68,44,298/- on 23.3.2011) through banking channel and also deposited ₹ 25,00,000/- under capital gain the right in personam was created in favour of the assessee from the date of entering into an agreement dated 11.1.2011 in favour of the assessee. It does not matter if the registration of the sale deed has not been made in favour of the assessee because transfer of the property is to be taken from the date of agreement in favour of the assessee. Moreover the assessee has made frantic efforts to take the possession of the property from the developer by approaching Hon'ble High Court of Allahabad as well as National Consumer Disputes Redressal Commission. Hon'ble Delhi High Court in case cited as Balraj v. Commissioner of Income-Tax [2001 (12) TMI 51 - DELHI High Court] held that for the purpose of attracting the provisions of section 54 of the Income-tax Act, it is not necessary that the assessee should become the owner of the property as registration of the document was not imperative. So once the assessee has paid substantial amount to purchase the property within a period of one year he has become entitled for exemption u/s 54 of the Act. - Decided in favour of the assessee

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• 2017 (9) TMI 1291
  Revision u/s 263 - deduction u/s 80IA(4) - Held that:- We are inclined to hold that the view taken by the AO, while granting deduction u/s 80IA(4) of the Act to the assessee, is reasonable and plausible which cannot be held as legally unsustainable and not in accordance with law and also being passed without application of mind. We, therefore, are of the considered opinion that the impugned notice and order of Ld. CIT is not valid and void ab initio. Since in the present case the order u/s 263 of the Act passed by the Principal CIT is based on the order for A.Y. 2009-10, the very essence of the said order has been decided by the Tribunal in assessee’s own case in favour of the assessee, therefore, the order u/s 263 of the Act passed by the Pr. CIT is set aside. Appeal of the assessee is allowed.

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• 2017 (9) TMI 1290
  Assessment u/s 153A - proof of incriminating material found in search - Held that:- In the facts and circumstances of the present case which are identical to the assessment years 2007-08 and 2010-11 no assessment was pending has not been disputed by the ld. CIT-DR and the only dispute is with regard to the incriminating material and no addition in respect of unexplained jewellery has been made during the year and addition so made has already been deleted by the Tribunal for assessment year 2011-12 and accordingly, following the decision of the Hon'ble Delhi High Court in the case Kabul Chawla Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT ] no addition could have been made in the year under consideration. - Decided in favour of assessee.

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• 2017 (9) TMI 1289
  Disallowance u/s 40(a)(ia) - tax paid before the due date for filing the return - Held that:- From the evidences filed by the assessee it is apparent that the assessee had deducted tax on the sum of ₹ 58,25,41,577/- and paid it before the due date for filing the return but since these evidences were not before the AO, we therefore in the interest of justice and fair play to both the parties direct the AO to verify whether the assessee has duly deducted the tax on the sum of ₹ 58,25,41,577/- and paid the same before the due date for filing of the return. The assessee is directed to furnish all these evidences before the AO. In case the AO finds that the assessee had duly deducted TDS and paid the same before filing of the return no disallowance should be made in the income of the assessee. In case the AO feels that the assessee has partly committed default under section 40(a)(ia) the AO should restrict the disallowance to that extent only. Thus, this ground is allowed for statistical purposes. Set off of opening balance of doubtful debts created in respect of advances made by the rural branches - revision u/s 263 - Held that:- We set aside the order of the CIT and direct the AO not to make any disallowance on setting off of opening balance for bad and doubtful debts created in respect of advanced made by rural branches amounting to ₹ 103,68,55,666/-. Even otherwise since the assessment related to A.Y. 2012-13 and the return has been filed on 26.09.2012, when the amendment has not been brought into section 36(1)(vii) by inserting Explanation 2 due to applicability of the decision of Hon'ble Supreme Court in the case of Catholic Syrian Bank Ltd. vs. CIT [2012 (2) TMI 262 - SUPREME COURT OF INDIA] the view taken by the AO will be possible view and therefore the view taken by the AO could have regarded to be one sustainable in law. Initiating penalty under section 271(1)(c) - Held that:- After hearing the rival submissions and going through the orders of the Tax Authorities below we are of the view that it is a case where it cannot be said that the assessee has submitted inaccurate particulars of its income. The onus, in our opinion, is on the Revenue to prove that the assessee has furnished inaccurate particulars of income. No such evidence or material, even though the learned D.R. has vehemently argued, has been brought to our knowledge. We, therefore, reverse this direction of the CIT. Thus this ground also stands allowed.

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• 2017 (9) TMI 1288
  Addition being the deduction for commission - assessee is in appeal against the confirmation of addition on the ground that no adequate opportunity was given by the ld. CIT(A) for placing the evidence - Held that:- I am satisfied that the ends of justice would meet adequately if the impugned order is set aside and the matter is restored to the file of the Assessing Officer. I order accordingly and direct him to decide this issue afresh as per law, after allowing a reasonable opportunity of being heard to the assessee. Penalty u/s 271(1)(c) on account of commission - Held that:- Since the issue in quantum has been restored to the Assessing Officer for fresh adjudication, the penalty is also restored accordingly. My view in restoring the penalty to the AO is fortified by the judgment of the Hon’ble Supreme Court in the case of Mohd. Mohatram Farooqui vs. CIT (2010 (2) TMI 1122 - SUPREME COURT) in which it has been held that if addition is restored to the AO, then penalty should also be restored.

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• 2017 (9) TMI 1287
  Disallowance u/s 14A r.w.r 8D - Assessing Officer has included all the investments for calculation of disallowance under Rule 8D - admit additional ground - Held that:- From a reading of the letter of the assessing officer it is apparent that the Assessing Officer has objected to the additional ground on the basis that since from the perusal of assessment record it is clear that due opportunities were provided to assessee during the assessment proceedings. The Assessing Officer has overlooked the facts of the case and mechanically given his comment, as regard the position of raising the ground during assessment proceedings. The additional issue has emerged only after the assessment proceedings which are completed vide order dated 26.12.2011; and sale consideration has been changed only on 01.02.2012 in supplementary share purchase agreement. The learned CIT (A) has erroneously rejected the claim of the assessee holding that, the request of the appellant to admit additional ground of appeal is against its own admitted position at the time of filing of return and later during the assessment proceedings, which cannot be allowed to be accepted. The aforesaid objection is fundamentally misconceived as the issue raised is a legal plea and therefore such a plea based on facts on record brought during the appellant proceedings and, confronted to the learned Assessing Officer, who not disputed on the facts in the remand report, can be raised at any stage of the proceedings include appellate proceedings. Matter is set aside to the file of AO who will verify the genuineness of ht claim of the assessee that whether the sale consideration is ₹ 10 crores or ₹ 25 lakhs and decide the issue de novo but by affording adequate opportunity of being heard to the assessee. Thus, Ground No. 1 of the assessee is allowed for statistical purposes.

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• 2017 (9) TMI 1286
  Penalty u/s 271(1)(c) - Disallowance of depreciation on Bentley Car - Disallowance of loss on fixed assets - Held that:- There is no documentary evidence which could support the fact that the assessee owned the car since May, 2009 as the registration of the car in his name was completed in November, 2009 for which part payment was made in May, 2009 after the full payment was made and on completion of custom requirements. Moreover, the claim for depreciation only gets deferred to subsequent Years by claiming it for half year. In our view the deferral of depreciation allowance does not result into any concealment of income or furnishing of furnishing of any inaccurate particulars. However, it was a sheer accounting error in debiting loss incurred on sale of a fixed asset to profit and loss account instead of reducing the sale consideration from wdv of the block under block concept of depreciation. There was a sheer accounting error in debiting loss incurred on sale of a fixed asset to profit & loss account instead of reducing the sale consideration from wdv of the block under block concept of depreciation. There was a separate line item indicated loss on fixed asset of ₹ 1,69,429/- in the Income & Expenditure Account which was omitted to be added back in the computation. The error went un-noticed by the tax auditor as well as the same was overlooked while certifying the Income & Expenditure Account and by the tax consultant while preparing the computation of income. Hence, there was no intention to avoid payment of taxes. The quantum of assessee tax payments clearly indicates the assessee intention to be tax compliant. Moreover, the assessee with a returned income of 34.94 crores and tax payment of more than ₹ 10.85 crores which does not show any mala fide intention to conceal an income of ₹ 13.09 lacs (not even 0.4% of returned income) with an intention of evading tax of ₹ 4 lacs (not even 0.4% of taxes paid). Therefore, the allegation that assessee was having any mala fide intention to conceal his income or for furnishing inaccurate particulars of income is not correct, hence, the penalty in dispute needs to be deleted. - Decided in favour of assessee.

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• 2017 (9) TMI 1285
  Addition u/s 14A - disallowance made by assessee suo moto - Held that:- Hon’ble Bombay High Court in the case of Godrej & Boyce Mfg. Co. Ltd. v. DCIT (2010 (8) TMI 77 - BOMBAY HIGH COURT) wherein held that sub-section (2) of section 14A does not authorize or empower the AO to apply the prescribed method irrespective of the nature of the claim made by the assessee. The AO has to first consider the correctness of the claim of the assessee having regard to the accounts of the assessee. The satisfaction of the AO has to be objectively arrived at on the basis of those accounts, after considering all the relevant facts and circumstances. The application of the prescribed method arises in a situation where the claim made by the assessee in respect of expenditure which is relatable to the earning of income which does not form part of the total income under the Act is found to be incorrect. On the very first proposition, argued by the learned Counsel for the assessee in the present case before us, we are of the view that the assessee has specifically raised ground regarding disallowance u/s 14A of the Act read with rule 8D(2) of the Rules and this is merely a proposition on which the assessee is arguing this issue. He need not to raise any specific ground qua this proposition as contested by the learned Sr. DR. AO failed to adhere to the provisions of section 14A of the Act read with rule 8D of the Rules. The AO could not find any mistake in the computation of disallowance suo moto by the assessee. Accordingly, we delete the disallowance and allow this issue of the assessee’s appeal. Levying interest u/s 234C - Held that:- We find that the AO while computing Income Tax liability for the subject assessment year levied interest u/s 234C on the assessed income, whereas as per section 234C of the Act the interest is to be charged on the returned income. We find from the facts of the case that there is no tax due on the returned income and hence, no interest can be levied u/s 234C of the Act in the present case before us. We direct the AO to delete the levy of interest and compute levy of interest on returned income u/s 234C of the Act. We direct the AO accordingly.

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• 2017 (9) TMI 1284
  Accrual of income - assessee under the tripartite agreement has sold right to develop and sell incentive FSI under the Letter Of Intent (LOI) by Slump Rehabilitation Authority (SRA) - JV agreement - Held that:- It is only when conditions of LOI are fulfilled that the assesse can give away title to the free sale building. In the circumstance till the conditions of LOI are fulfilled transfer is not complete and income does not accrue to the assesse. We find from the facts of the case that lot of work in accordance with LOI was pending as on the date of tripartite agreement. Accordingly, we are of the view that principal amongst the conditions pending completion is construction of rehabilitation building no 4 and many temples and places of worship and the CIT(A) has rightly held that income under the tripartite agreement has not accrued to the assesse - Revenue’s appeal is dismissed. Telescoping to net profit addition against addition on account of negative peak - Held that:- We are of the view that the assessee himself admitted that profit @10% i.e. net profit on gross contract receipt can be confirmed as estimated by the AO but the consequential telescoping of the available cash balance amount to ₹ 14,48,166/- in this year is to be allowed, giving effect to the balance of pooled cash account and further effecting the negative peak cash credit in current and in subsequent assessment years. We find the plea of the assessee is quite reasonable that the estimated net profit @ 10% is to be upheld and excess is to be allowed to be set off against negative peak cash in current assessment year as well subsequent assessment years. The assessee have filed complete details, the AO can verify and allow the same. We direct the AO accordingly. Addition of negative cash balance - non adjusting the cash balance in the balance of Jawahar B Purohit pooled cash account - Held that:- We find that as regards to the loan brought from various persona and the same are depicted at page 234 of the assessee’s paper book whereby the assessee has issued bearer cheques in their name and cash was withdrawn by the assessee and confirmation is filed at the stage of assessment despite the fact that in the books of accounts the amount are still outstanding, the cash received by the assessee from these debtors is available with the assessee and qua this amount, the assessee’s pooled cash account should be increased and peak benefit should be allowed. Addition on account of agricultural income, not accepted and treated the same as income from other sources - Held that:- We find from the facts of the case that search was carried out on 16.11.2009 and there is no incriminating material were found during the course of search relating to agricultural income and accordingly, by following the decisions of Hon’ble Bombay High Court in the case of Continental Warehousing Corporation (Nhava Sheva) Ltd. (2015 (5) TMI 656 - BOMBAY HIGH COURT). Accordingly, we confirm the deletion and the appeal of Revenue is dismissed.

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• 2017 (9) TMI 1283
  Computation of the taxable income under Section 44BB - Receipts on account of service tax - non inclusion in gross revenue of the assessee for the purpose of computation of profits under the presumptive provisions of u/s 44BB - Held that:- This issue stands covered by the judgment of DIT vs. Mitchell Drilling International Pvt. Ltd.(2015 (10) TMI 259 - DELHI HIGH COURT) wherein held for the purposes of computing the ‘presumptive income’ of the assessee for the purposes of Section 44 BB of the Act, the service tax collected by the Assessee on the amount paid t it for rendering services is not to be included in the gross receipts in terms of Section 44 BB (2) read with Section 44 BB (1). The service tax is not an amount paid or payable, or received or deemed to be received by the Assessee for the services rendered by it. The Assessee is only collecting the service tax for passing it on to the government. We find that in the assessee’s own case for the earlier year, the Tribunal has allowed this issue in favour of the assessee. Accordingly, following the binding judicial precedence, we decide this issue in favour of the assessee that service tax element cannot be included in the gross receipts for the purpose of computing the profit and thus, the grounds raised by the Revenue are dismissed.

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• 2017 (9) TMI 1282
  TPA - determination of ALP - TPO by applying the Bright Line Test (BLT) proposed adjustment on protective basis - Held that:- Following the decision rendered in case of Sony Ericsson Mobile Communications India (P.) Ltd. (2015 (3) TMI 580 - DELHI HIGH COURT) and Perfetti Van Melle India Pvt. Ltd. (2017 (5) TMI 1305 - ITAT DELHI), TP adjustment amounting to ₹ 22,30,18,964/- by applying BLT is not sustainable on protective basis having no statutory mandate. So, ground is determined in favour of the assessee.

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• 2017 (9) TMI 1281
  Revision u/s 263 - disallowance made u/s 14A - Held that:- The Hon’ble Delhi High Court in the case of Maxop Investments Ltd. Vs CIT (2011 (11) TMI 267 - Delhi High Court) held that the AO cannot proceed to determine the amount of expenditure incurred in relation to exempt income without recording a finding that he is not satisfied with the correctness of the claim of the assessee. This is a condition precedent while rejecting the claim of the assessee, with regard to incurring of expenditure or no expenditure in relation to exempt income. AO will have to indicate cogent reasons for the same and Rule 8D comes into play only when the AO records a finding that he is not satisfied with the assessee’s method. In the case in hand the AO has not made any such recording of satisfaction and has accepted the disallowance made u/s 14 A by the assessee. In such circumstances it is not open for the ld. CIT to come to a conclusion that the AO should have invoked Rule 8D, without himself recording the satisfaction that the calculation given by the assessee in its disallowance made suo moto u/s 14A is not correct. Coming to the other expenses claimed, the ld. CIT has simply collected information after raising queries and has not given any finding whatsoever that there is an error made by the AO or that the circumstances was such that would require and warrant further inquiry or investigation. No error in the assessment order has been pointed out and it is not stated as to how prejudice was caused to the revenue. The finding that the AO had failed to properly scrutinise the above aspects does not give powers to the ld. CIT to revise the assessment u/s 263 of the Act. Making rowing enquiries is not a finding of an error. Assessments cannot be set aside for fresh enquiries unless a specific error is pointed out at not making proper enquiry cannot be equated with no enquiry. In view of the above we quash the order passed u/s 263 of the Act and allow the appeal of the assessee.

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• 2017 (9) TMI 1257
  Disallowance of interest expenses incurred on External Commercial Borrowings - Held that:- There is a very thin line of demarcation between the term expansion and extension, which can be differentiated basis the facts and evidences brought on record. Neither the Ld AO or the Ld DRP has brought any evidence on facts to suggest that there was an extension of business during the year under consideration and the interest paid should be disallowed u/s 36(1)(iii) of the Act. Further, the assessee also distinguished the decisions relied upon by the lower authorities on facts of the present case. While arriving at the above finding we also draw support from the case of DCIT vs. Gujarat Alkalies & Chemicals Ltd. [2008 (2) TMI 11 - SUPREME COURT OF INDIA] cited by the Ld. AR wherein it was held that extension' implies starting of a new business activity. Keeping in view the above said meaning we are of the view that the telecom equipment purchased by the Appellant using the ECB loans was for continuation of the existing business only and not for the extension of business. Hence, the said proviso to Section 36(1)(iii) does not apply to the facts of the present case. In the result, the ground No. 3 of the appeal of the assessee is allowed. Disallowance of expenses of Capital nature claimed as revenue expenditure - Held that:- In the absence of the evidence to substantiate that the payment is made for post implementation of project, we agree with the finding arrived at by the Ld. AO that the payment is for a capital asset. In view of the same, the ground of appeal is hereby dismissed. However, while giving effect to our order, the AO is directed to grant depreciation u/s 32 of the Act on the claim of the assessee after verification. Needless to say that assessee be given an opportunity of hearing and producing working of the claim of the depreciation with respect to the actual cost of the assets and amount of depreciation and rates of depreciation allowance applicable on it. In view of this The ground no 4 of the appeal of the assessee is allowed on alternative arguments with above directions. Disallowance of interest incurred on short term loans - Held that:- Since in Ground No. 3 above, we have already held that there has been no extension of existing business, the proviso to Section 36(1)(iii) is not applicable in the facts of the present case. Hence, the above finding would squarely apply to the present ground also. In the result the said ground no 5 of the appeal of the assessee is allowed. Disallowance of circuit accruals - accrual of income - Held that:- Practice of disallowing the claim of circuit accrual in the year of creation and allowing it in the next year is nothing but a timing difference. The fact that the expenses are allowed in the subsequent year also proves that the lower authorities have not disputed the incurrence of such expenses. Hence, in accordance with the mercantile provisions it should be allowed in the year of creation itself. The assessee has also drawn reference to the principles laid down by the Hon'ble Apex Court in the case of M/s Rotork Controls India (P) Ltd (2009 (5) TMI 16 - SUPREME COURT OF INDIA) and M/s Bharat Earth Movers (2000 (8) TMI 4 - SUPREME Court ). According to us the provision for circuit accruals is made in compliance of accounting standards issued by the Institute of Chartered Accountants of India and also on a proper scientific basis backed by documentation. Therefore , we hold that the circuit accruals are created on scientific basis and thus needs to be allowed in the year of creation on accrual basis Disallowance of credit of additional TDS certificates - Held that:- We have heard the parties on this issues , both the parties agreed that if the additional TDS certificates of the assessee are proper then ld AO may verify and allow the claim of the assessee in accordance with law. In this regard, the AO is directed to check the genuineness of the TDS Certificates and give credit of the same in accordance with the provision of the Income -tax Act. This ground no 7 of appeal is allowed for statistical purposes. TPA - royalty payments - ALP - Method to be applied for benchmarking the transaction i.e. CUP v/s TNMM - Held that:- In a scenario where no data is available to apply the direct methods, one has to resort to residuary methods for benchmarking a transaction / group of transaction such as ‘TNMM'. Considering all these factors the Appellant adopted TNMM to benchmark the transaction. In the absence of any justification by DRP/TPO for application of CUP, we justify the use of TNMM as the most appropriate method. In view of the above findings, we hold that for intra group services (where the evidences have been furnished), the assessee has satisfied the need, benefit and rendition test. However we would also like to mention that out of seven services the assessee has not furnished evidences for following three services namely- country services, information technology, project management. In the absence of any evidences, the test of necessity, need and rendition cannot be commented upon and the assessee is given an opportunity to furnish the evidences for these three services before the AO/TPO for necessary verification. The ld TPO may examine them and decide the issue with respect to those services in accordance with law. With respect to the method as the ld TPO has not examined the comparability analysis under the TNMM method of Intra Group services, he must examine the comparability analysis of IGS ( intra Group Services) and determine ALP. Disallowance of royalty payment which is paid to the overseas entity in the US - Held that:- According to us the royalty payments needs to be tested on the basis of factum and quantum both aspects. It also needs to be looked at the functions to be performed by the parties for royalty payments. It also nees to be looked in to nature of the use of the intangibles which are covered in License Agreement with AT&T Corp, pursuant to which it was granted the right to use licensed marks in marketing material for publicity, advertising, signs, product brochures, instruction manuals and in other form of advertising. These intangibles, which are licensed to AGNS India, are key value drivers for the business and benefit it by enabling it to expand its presence in the marketplace. What would be the duration of payments of such license royalty is also determinative of the factor of the payments as it cannot also continue for an indefinite period . It may also happen that India brand because of consumer may become bigger than AE's brand. As the assessee has adopted the TNMM which is crude method of benchmarking royalty payments and Ld TPO has disregarded the transaction only on the benefit analysis and has also rejected the CUP benchmarking of the assessee , we are of the view that this issue needs to be set aside to the file of the ld TPO to determine the ALP of the royalty payments afresh after examining the method, comparability and then ALP afresh. Assessee is also directed to support its ALP determination afresh after submitting the detailed answer to all the questions raised by the ld TPO in para no 9 of his order except the benefit test. Hence this ground no 8 of the appeal is allowed with above directions. Allowability of support service expenditure - Held that:- We find that no evidence has been brought on record by the Department to dispute the said claim. Rather, the Department's claim is merely based on suspicion as also noted by the DRP while deleting the above disallowance. We also find that even otherwise, both ACSI and appellant are profit making entities and hence, there was no tax incentive for the parties to deflate the revenues earned by appellant. We find that where the appellant has actually incurred the aforesaid support services cost and no evidence has been brought by the Department to controvert the same, such expenditure cannot be disallowed merely on suspicion. - Decided in favour of assessee.

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• Customs

• 2017 (9) TMI 1280
  Bail application - It is the case of the Department that the petitioner had well-planned the entire modus with full knowledge of the fact that the modus adopted by the petitioner amounts to offence and loss of revenue to the Department - mis-interpreting provisions of Section 108 of the Act - production of documents by petitioner - whether pending investigation under the provisions of the Customs Act, the petitioner is considered as an accused? - interpretation of statute - Held that: - The Department has challenged the order of the Sessions Court in not accepting their contention that the petitioner has not cooperated with the investigation and has erroneously concluded that when the Court granting bail had imposed condition of full cooperation to the Investigation Agency, did not include that the petitioner was required to produce any documents before the Investigating Officer. The Sessions Court appears to have limited the operation of the condition of bail conservatively. Section 108 of the Customs Act is for the very purpose to aid the investigation and in the aid of investigation, to produce documents - The nature of details sought for under the summons of Section 108 of the Customs Act issued by the Investigating Officer is on the basis of investigation carried thus far. The investigation, which is under the domain of the Investigating Officer, he was perfectly justified in calling upon the details - interpretation now given to word “fully cooperate with the investigation” stands expanded to the extent that it means to see that the petitioner to fully cooperate and such cooperation must be voluntary cooperation, thereby leaving it upon the petitioner, who is facing investigation, to decide on his own where he desires to volunteer and where he does not. Such proposition cannot be accepted in the field of investigation - The petitioner has therefore not fully cooperated with the investigation as per the conditions of bail order. Whether in the facts of the case, the petitioner, who is arrested under Section 104 of the Customs Act can be considered as an accused to bring him under the protection of Article 20(3)? - Held that: - this Court is of the view that in the facts of the present case, where petitioner is yet to attend the status of an accused arrested for commission of offence, Article 20(3) of the Constitution cannot be made applicable, which would protect the petitioner from operation of Section 108 of the Customs Act - The power of a Customs Officer to carry out investigation in Chapter 13 of the Customs Act, both Sections 104 and 108 fall in Chapter 13 when person under investigation joins the investigation with the aid of the powers in Chapter 13. Hence, when the petitioner was imposed with a condition to cooperate fully, he would be subjected to investigation under the provisions under Chapter 13 including Section 108. Therefore, when the Department was within its power to investigate, issued summons under Section 108 and it was obligatory upon the petitioner to cooperate. Non-cooperation on the grounds mentioned amounts to breach of conditions of bail. Application allowed - The order dated 10.03.2017 passed by Additional Sessions Judge, City Sessions Court No.15, Ahmedabad in Criminal Misc.Application No.3525 of 2016 is quashed - The case is relegated back to the Additional Sessions Judge, City Sessions Court No.15, Ahmedabad for fresh consideration of the application filed by the Department - petition allowed by way of remand.

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• 2017 (9) TMI 1279
  Penalty u/s 112 of CA - principles of natural justice - the petitioner was denied an opportunity of cross-examination of the material witnesses relied upon by the prosecution - Held that: - The show cause notice although intulated as to be one under Section 124 of the Customs Act, 1962, the order in original proceeds to impose penalty under Section 112 of the Customs Act, 1962 - The allegations in the proceedings are that, about 40 kgs. of gold were found in the custody of the petitioner. These allegations along with the order in original are required to be gone into. With the petitioner not providing any asset from which the penalty can be recovered, it would not be prudent to grant an unconditional stay of the imposition of the personal penalty.

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• 2017 (9) TMI 1278
  Penalty u/s 117 of CA, 1962 - service of notice - no notice u/s 155 (2) of the Customs Act, 1962, was issued - Held that: - on the identical issue, the Tribunal in the case Suvasis Banerjee & Others [2016 (8) TMI 874 - CESTAT KOLKATA] has held that the protection under section 155(2) is applicable to all legal proceedings. Further, if protection to officers against proceedings in courts can be given, there is no reason why such a protection cannot be given to proceedings before quasi judicial authorities - penalty set aside - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 1277
  Benefit of N/N. 21/2002-Cus - the appellant had claimed the exemption of the imported goods under Sl.No.80A of the N/N. 21/2002-Cus. From the facts, it emerges that this was also initially allowed by the department. It was only later that the appellant changed their claim to benefit of Sl.No.80(B) of the notification - denial on the ground that procedures set out in IGCRDMEG Rules were not followed - whether the IGCRDMEG Rules, 1996 will have the effect of denying the benefit extended under exemption notification? Held that: - there is no post-import condition for Sl.No.80(A). The requirement of following procedure laid down in IGCRDMEG Rules comes into the picture only when the goods are imported under claim of benefit under Sl.No.80(B). The appellant has a point that when the goods had been imported with initial claim of benefit under Sl.No.80(A), there would not have been any inkling of the requirement of the said rules. For this reason itself, appellant cannot be faulted for not having taken correct registration and filed declaration as provided for in the said Rules. In any case, appellant have submitted letter of the jurisdictional Superintendent of Central Excise dt. 13.1.2006 confirming the use of the imported goods in the manufacture as required. The purpose of the IGCRDMEG Rules is to ensure mandate of the import and its manufacture and its subsequent processing etc. without obviating commission of fraud etc. There is no such allegation here. The usage of the imported goods have been sufficiently established which would be sufficient compliance of the condition of the notification. Appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 1276
  Quantification of duty - redemption fine - penalty - non-fulfillment of export obligation - production and export of polished Granite Slabs, Tiles and Monuments - In terms of the LOP, the assessee have to achieve a minimum export obligation of NFEP of 40% for a period of 10 years. Only because this obligation was not achieved, the Development Commissioner on 23.02.2005, imposed penalty of ₹ 2,00,000/- and finally on 29.05.2005 had cancelled the LOP - whether the duty liability confirmed against the assessee is in order or otherwise? Held that: - when the capital goods, tools etc. have been obtained and used by the assessee right from 1988, till permanent closure of the factory in July 2002, and, subsequent cancellation of LOP on 02.09.2005, it would be unjust and unfair to deny depreciation for the period of four years exposure to natural elements as also for wear and tear that would have resulted due to their extensive use. It is also noted that machinery available in the factory premises had been placed under seizure on 29.08.2006. It is also not the case that assessee had siphoned off capital goods etc. and that they were not found as on the date of seizure - for the purposes of determining the duty liability in respect of both imported and indigenously procured goods, depreciation for the period from their import/procurement, upto the date of cancellation of the LOP and the duty liability should be calculated accordingly. The matter is therefore once again remanded to the adjudicating authority, however only for the limited purpose of requantifying the duty liability - matter on remand. Penalty u/s 112 (ii) of Customs Act, 1962 - Held that: - considering that travails faced by assessee, in particular, the fact that while having not fulfilled export obligation in toto, they have however achieved NFEP of 82.69% and 96.21% for the relevant periods, as also the fact that the dispute has resulted in protracted legal proceedings, the penalty should be reduced to ₹ 25,00,000/-. Confiscation and penalty upheld - appeal allowed - decided partly in favor of appellant.

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• 2017 (9) TMI 1275
  Benefit of N/N. 21/2002-Cus. dt. 1.3.2002 under Sl.No.80(B) - concessional rate of duty - import of bulk drug, Zidovudine - Revenue alleged that appellants are not eligible for such concession rate of duty as they have not fulfilled the conditions set out in Sl.No.80(B) of the notification - appellant claims that the procedure attached to Sl.No.80(B) is not a substantive one and being only a procedural condition, the non- compliance of the same would not disentitle the appellant of the substantive benefit - Held that: - It is not disputed that Zidovudine is specifically listed in List 3 against Sl.No.80(A) of the said notification. Against Sl.No.80(A), there is no condition attached - similar issue decided in the case of COMMISSIONER OF C. EX., HYDERABAD Versus HETERO DRUGS LTD. [2009 (7) TMI 1139 - CESTAT BANGALORE], where it was held that there is no definition of bulk drugs in the Notification involved. As per the Drugs (Prices Control) Order, 1995, drugs also include bulk drugs. The item Lopinavir figures in List 3 of N/N. 21/2002-Cus and exemption is allowed - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 1274
  Imported goods not used for intended purpose - it appeared to the department that against 6007.721 MTs of crude palm oil imported, only 5990.466 MTs was utilized for the intended purpose, hence 17.255 MTs of crude palm oil was not so utilized - Held that: - the quantity of 17.255 MTs not utilized in the manufacture of final products, in any case, constitutes only 0.57% of the total quantity imported - similar issue decided in the case of M/s Jhunjhunwala Vanaspati Ltd. Jaunpur (U.P.) Versus The Commissioner of Central Excise, Allahabad [2015 (10) TMI 1532 - ALLAHABAD HIGH COURT], where it was held that the object of grant of exemption was only to debar those importer/manufacturers from the benefit of the Notifications who had diverted the products imported for other purposes and had no intention to use the same for manufacture of the specified items at any stage - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 1273
  Confiscation - Redemption fine - penalty - mis-declaration of quantity of goods - there is a difference in weight to the extent of 2000 kgs - Held that: - The excess quantity found in the container has not been disputed by the appellant and this is the exactly argument advanced by the Ld. AR that it is a case of mis-declaration of quantity. The authorities below have rightly confiscated the impugned goods and imposed redemption fine and penalty, therefore, the confiscation of goods is upheld. Considering the fact that the differential duty is only 94000/- and mistake has been admitted by the supplier on the goods. In that circumstance, the redemption fine and penalty imposed on the appellant are excessively high, therefore, the redemption fine is reduced to ₹ 20,000/- and penalty is reduced to ₹ 10,000/-. Appeal allowed - decided partly in favor of appellant.

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• 2017 (9) TMI 1272
  Safeguard Duty - Advance License Scheme - N/N. 96/2009-Cus dated 11.09.2009 and N/N. 98/2009-Cus dated 11.09.2009 - goods imported from People’s Republic of China - N/N. 04/2012-(S.G.) dated 05.10.2012 - Held that: - the issue is no more res-integra and stand settled by the Hon'ble Bombay High Court in the case of Balkrishna Industries Limited Vs. UOI [2015 (12) TMI 1390 - BOMBAY HIGH COURT], where it was held that the safeguard duty imposed under Section 8C of the Customs Tariff Act, 1975, vide N/N. 4/2012-Cus is leviable, as the same is country specific, whereas the other two notifications are not country specific. Inasmuch as there is no exemption from safeguard duty leviable under Section 8C, which is imposed on the goods imported from China, the importer has to pay safeguard duty, in terms of Section 8C- appeal dismissed - decided against appellant.

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• 2017 (9) TMI 1271
  Smuggling - Betel nuts - confiscation - penalty - Held that: - the driver has admitted that he was transporting the said betel nuts and failed to explain the source of procurement of betel nuts, he only said that one person stopped him and told that there is some consignment which is carrying from Sonauli to Gorakhpur and for that he will get the fare of ₹ 4,000/- and he failed to explain the name and address of the person who loaded the betel nuts in pickup van - He also admitted his crime before the officers - penalty imposed on Shri Zubair Ahmad of ₹ 25,000/-, qua on Appellant No. 1 is justified. Confiscation - quantum of redemption fine - Held that: - the vehicle in question was involved in transportation of betel nuts whom source could not be explained by the Appellant No. 1 in that circumstance, vehicle is liable for confiscation, and the order of confiscation is justified - redemption fine has been imposed to the tune of ₹ 90,000/- is highly excessive, and is reduced to ₹ 40,000/-. Appeal allowed - decided partly in favor of appellant.

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• Corporate Laws

• 2017 (9) TMI 1269
  Legality of non-intermediary front running in security market under the SECURITIES AND EXCHANGE BOARD OF INDIA (PROHIBITION OF FRAUDULENT AND UNFAIR TRADE PRACTICES RELATING TO SECURITIES MARKET) REGULATIONS, 2003 [ FUTP 2003 ] - Held that:- To attract the rigor of Regulations 3 and 4 of the 2003 Regulations, mens rea is not an indispensable requirement and the correct test is one of preponderance of probabilities. Merely because the operation of the aforesaid two provisions of the 2003 Regulations invite penal consequences on the defaulters, proof beyond reasonable doubt as held by this Court in Securities and Exchange Board of India Vs. Kishore R. Ajmera (2016 (2) TMI 723 - SUPREME COURT) is not an indispensable requirement. The inferential conclusion from the proved and admitted facts, so long the same are reasonable and can be legitimately arrived at on a consideration of the totality of the materials, would be permissible and legally justified. Concerned parties to the transaction were involved in an apparent fraudulent practice violating market integrity. The parting of information with regard to an imminent bulk purchase and the subsequent transaction thereto are so intrinsically connected that no other conclusion but one of joint liability of both the initiator of the fraudulent practice and the other party who had knowingly aided in the same is possible Having regard to the facts of the present cases i.e. the volume of shares sold and purchased; the proximity of time between the transactions of sale and purchase and the repeated nature of transactions on different dates, in considered view, would irresistibly lead to an inference that the conduct of the respondents were in breach of the code of business integrity in the securities market. The consequences for such breach including penal consequences under the provisions of Section 15HA of the SEBI Act must visit the concerned defaulters for which reason the orders passed by the Appellate Tribunal are set aside and the findings recorded and the penalty imposed by the Adjudicating Officer are restored.

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• Insolvency & Bankruptcy

• 2017 (9) TMI 1270
  Corporate insolvency procedure - Insolvency and Bankruptcy Code, 2016 - Held that:- Going by the test of “existence of a dispute”, it is clear that without going into the merits of the dispute, the appellant has raised a plausible contention requiring further investigation which is not a patently feeble legal argument or an assertion of facts unsupported by evidence. The defense is not spurious, mere bluster, plainly frivolous or vexatious. A dispute does truly exist in fact between the parties, which may or may not ultimately succeed, and the Appellate Tribunal was wholly incorrect in characterizing the defense as vague, got-up and motivated to evade liability. Learned counsel for the respondent, however, argued that the breach of the NDA is a claim for unliquidated damages which does not become crystallized until legal proceedings are filed, and none have been filed so far. The period of limitation for filing such proceedings has admittedly not yet elapsed. Further, the appellant has withheld amounts that were due to the respondent under the NDA till the matter is resolved. Admittedly, the matter has never been resolved. Also, the respondent itself has not commenced any legal proceedings after the e-mail dated 30th January, 2015 except for the present insolvency application, which was filed almost 2 years after the said e-mail. All these circumstances go to show that it is right to have the matter tried out in the present case before the axe falls. We, therefore, allow the present appeal and set aside the judgment of the Appellate Tribunal.

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• PMLA

• 2017 (9) TMI 1268
  Bail under Section 439 Cr.P.C. - offence under Sections 3 & 4 of PMLA - Held that:- In the instant petitions the petitioners, i.e. (1) Virendra Jain and (2) Surendra Kumar Jain, are involved in illegal activities of money laundering by way of share subscription with the help of a skilled person Rajesh Aggarwal, Chartered Accountant and the petitioners succeeded in receiving proceeds of crime amounting to ₹ 1,11,96,000/-, which is a Schedule Offence under Sections 3 & 4 of PMLA. The aforesaid activities of the petitioners is illegal and not permissible under the law. Therefore, the conditions laid down under Section 45 of PMLA will have an overriding effect on the general provisions of the Cr.P.C. Consequently, this Court find no merit in the present petitions and the bail applications, i.e. BAIL APPLN. 1113/2017 & BAIL APPLN. 1114/2017, of the present petitioners, i.e. (1) Virendra Jain and (2) Surendra Kumar Jain are rejected.

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• Service Tax

• 2017 (9) TMI 1265
  Circular dated 27th April, 2017 - Service of Notice - Held that: - The Registrar of the CESTAT will file an affidavit on this aspect at least a week prior to the next date - Notice be served on Respondents No.1 and 2 through ordinary process as well as Dasti.

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• 2017 (9) TMI 1264
  Classification of services - Valuation - reimbursable expenses - includibility - documentation charges, cartage, break bulk charges, spread share charges, handling charges, handling charges, miscellaneous charges, etc - whether services performed by appellant would fall under the ambit of Custom House Agent s Service (CHA) and Business Auxiliary Service (BAS)? Held that: - on the same issue, in appellant s own case, BAX GLOBAL INDIA LTD. Versus COMMISSIONER OF SERVICE TAX [2007 (10) TMI 132 - CESTAT, BANGALORE] the Tribunal held that amount collected by CHA like cartage revenue, MSIL/JWG charges, due carrier, documentation charges etc. are for services rendered by third party and the appellant initially make payment for the activities on behalf of the client and later collected the amount from the client and that these are actually reimbursable expenses and not relating to the CHA activities. Even in respect of air freight, the Tribunal held that these charges cannot be said to be related to the activities of CHA. Business Auxiliary Services - whether free booking of space in shipping liners would amount to BAS or not? - Held that: - The appellant pre-books the slots even before they get an order from their exporter or other client. It is not the case that the appellants are doing on behalf of client only after they get an export order - The Tribunal in RE : Greenwich Meridian Logistics (I) Pvt. Ltd. Vs CST Mumbai [2016 (4) TMI 547 - CESTAT MUMBAI] held that while notional surplus was earned from purchase and sale of space however that it was not by acting for the client. Appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 1263
  Rent-a-cab service - Section 11D of Central Excise Act, 1944 - demand of service tax - Held that: - In the landmark judgment, Commissioner, Customs & Central Excise Versus Sachin Malhotra, Raj Kumar Taneja, M/s. Shiva Travels [2014 (10) TMI 816 - UTTARAKHAND HIGH COURT] the Hon’ble High Court has clearly laid down that in the case of rent a cab scheme, there is a requirement that the hirer should have freedom to use the vehicle as he pleases which undoubtedly implies that he must have possession and control over the vehicle, which is not the case in the services provided by the appellant therein - also, the show cause notice has not made any reference to Section 73A - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 1262
  Penalty waived u/s 78 of FA - invocation of section 80 - delay in payment of service tax - assessee says that the delay was caused due to financial crunch, and later on the tax was paid with interest, thus no malafide intent to evade tax - Held that: - there was no intention to evade Service Tax and there were bona fide reasons for not paying the Service Tax in time which was subsequently paid with interest. Therefore, the benefit given by the Commissioner (A) by resorting to section 80 is justified - appeal dismissed - decided against Revenue.

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• 2017 (9) TMI 1261
  CENVAT credit - input services - Group Insurance Policy for employees - Professional Indemnity Service - Held that: - the assessee is service provider and these services has been received by the appellant in the course of their business of providing output service - any services availed by the assessee who is provider of output service is entitled to avail cenvat credit on the services used for their business of providing output service - the assessee is entitled to avail cenvat credit on both the services in dispute - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 1260
  Reverse Charge Mechanism - manpower supply service - demand on the ground that they were not paying service tax on account of salary reimbursed to foreign national/expats working with them for the period June, 2005 to 2008-09 - Held that: - it is nowhere coming out from the show cause notice or from the finding of the lower authorities that the foreign company, who have deputed its employees, is manpower supply or Recruitment Agency. Also, there is employer-employee relationship between the assessee and the deputed expatriate employees - reliance placed in the case of Computer Sciences Corp. India Pvt.Ltd. vs.CST [2014 (4) TMI 252 - CESTAT NEW DELHI], where it was held that There was no basis whatsoever to hold that in such a transaction, a taxable service involving the recruitment or supply of manpower was provided by a manpower recruitment or supply agency. Unless the critical requirements of clause (k) of Section 65(105) are fulfilled, the element of taxability would not arise. No taxable service involving recruitment or supply of manpower was provided - the amount reimbursed to foreign nationals/expats working with the assessee cannot be considered as the amount paid for rendition of manpower supply or recruitment agency - demand set aside - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 1259
  CENVAT credit - duty paying invoices - Construction Services - denial on the ground that the invoices stands raised in the name of their Project Manager and not in the assessee's name - Held that: - the Tribunal has approved the allowing of the credit on the basis of the rectified invoices. In such a scenario, the present appeal of the Revenue agitating the factum of allowing of credit on the basis of rectified invoices become infructuous - appeal dismissed - decided against Revenue.

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• 2017 (9) TMI 1258
  Condonation of delay - GTA service - mining of coal in various coal fields - recipient of service - reverse charge mechanism - the decision in the case of M/s Western Coal Fields Ltd. Versus CCE, Nagpur [2017 (5) TMI 398 - CESTAT NEW DELHI] contested - Held that: - delay condoned - appeal admitted.

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• Central Excise

• 2017 (9) TMI 1256
  Condonation of delay - Maintainability of appeal - project import - the decision in the case of Commissioner of Central Excise and Service Tax Versus Kei Industries Limited [2017 (4) TMI 942 - RAJASTHAN HIGH COURT] contested - Held that: - delay condoned - leave granted.

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• 2017 (9) TMI 1255
  Offence under Section 9 of CEA - framing of charge - case of petitioners is that once order of Commissioner Central Excise dated 28.7.2001 was set aside in appeal by Appellate Tribunal vide order dated 6.11.2003, the complaint which was based primarily on the order of demand dated 28.7.2001 could not be sustained since the genesis of the complaint had disappeared - Held that: - there is no ground to accept the petition and quash the complaint besides ancillary proceedings. The prosecution has been launched against the accused for committing an offences under Sections 9 and 9AA of the Act for the reason that chenille yarn was found in the factory premises of the accused without any record being maintained in that regard, rather it was wrongly described as cotton yarn. The complaint is based upon such allegations. When charge was framed against the accused by Chief Judicial Magistrate, Panipat, these very contentions had been raised there but were rejected by learned Chief Judicial Magistrate and accused was served with charge-sheet. They had filed a representation against the order framing charge but again were unsuccessful as their revision petition was dismissed by learned Additional Sessions Judge vide order dated 7.8.2014 giving detailed reasoning citing case law and observing that adjudication proceedings and criminal proceedings are independent and can go on simultaneously and finding in adjudication proceedings is not binding on criminal proceedings. The order passed by the Commissioner is a relevant piece of evidence to support the contentions in the complaint but besides that there is other evidence also both oral as well as documentary as it comes out from the perusal of the complaint. Therefore, no ground is made out to accept the petition and to quash the complaint and subsequent ancillary proceedings. Petition dismissed - decided against petitioner.

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• 2017 (9) TMI 1254
  Interpretation of statute - ‘case’ within the meaning of Section 31 (c) of the CEA - application under Section 32E filed by petitioner - Settlement Commission rejected the application filed by the Petitioner on the ground that the matters stood adjudicated and hence the Petitioner’s application was no longer in respect of a ‘case’ within the meaning of Section 31 (c) of the CEA - whether the Settlement Commission was right in rejecting the applications filed by the Petitioners, filed before it on the ground that there was no `case' pending in terms of Section 31 (c) of the Central Excise Act, 1944? Held that: - an application under Section 32E has to be made ‘before adjudication’ - It is clear from a conjoint reading of Sections 31 (c) and 32E of the CEA, that if any proceeding is pending before the adjudicating authority on the date on which the application under Section 32E is filed, the said application would be maintainable, subject to the fulfilment of the other requirements under Section 32E of the CEA. In the present case, there is no dispute as to the date of the order passed by the adjudicating authority. The date of the order is 7th December, 2016, though, the date appearing on the order itself is 2nd December, 2016 - There is no cavil to the conclusion that the date of the order in the present case is 7th December, 2016 and the date of the filing of the application before the Settlement Commission is 5th December, 2016. Thus, on the date when the application came to be filed before the Settlement Commission, the proceeding was pending before the adjudicating authority. In the circumstances, the Settlement Commission was in error in holding that the application before it was not maintainable. The applications of the Petitioners are held to be maintainable - petition allowed - decided in favor of petitioner.

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• 2017 (9) TMI 1253
  Valuation - related party transaction - High Tensile Stranded Iron & Steel Wires - some excisable goods are also sold to independent buyers at the same rate - department is of the view that in respect of sales of goods to related persons, the same cannot be assessed on the price sold to independent buyers, but will need to be charged to duty at the rates determined on the basis of cost of production on which profit margin is added - Held that: - Rule 8 & 9 comes into play when goods are sold by an assessee only through related person and not when goods are sold both to related persons and independent buyers - similar issue decided in the case of ISPAT INDUSTRIES LTD. Versus COMMISSIONER OF C. EX., RAIGAD [2007 (2) TMI 5 - CESTAT, MUMBAI], where it was held that provisions of Rule 8 would apply only in case where its entire production production of a particular commodity is captively consumed - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 1252
  CENVAT credit - input services - Customs House Agent (CHA) service - Port Services - Steamer Agent Services - denial on the ground that the services were used outside the factory premises not being in relation to manufacture of their finished goods and therefore, did not qualify as an input service? - Held that: - There is no dispute of the fact that the goods have been exported. In such cases the place of removal is the port where the exports are loaded on to the vessel - Hon’ble High Court of Gujarat in the case of Inductotherm India Pvt. Ltd [2014 (3) TMI 921 - GUJARAT HIGH COURT] has granted the credit of CENVAT Credit for Cargo Handling Services used for clearance of final product from the port for export. Even though, the Hon’ble High Court has held that in the Cargo Handling service, the same ratio will be applicable to calculate free service which are in dispute before us since, all of them have been rendered in the port for export of goods. Appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 1251
  CENVAT credit - fake invoices - Held that: - it is clearly established that no goods accompanied invoices by those two dealers M/s BSC and Steel Centre. Consequently, the CENVAT Credit availed by MCU on the basis of such invoices are irregular and needs to be disallowed - similar issue of fraudulent CENVAT Credit availment on the invoices issued by first stage dealers came up before the Mumbai Bench of the Tribunal in the case of Bhagwati Steel Casts Ltd. Vs. CCE, Nasik [2013 (1) TMI 123 - CESTAT MUMBAI] in which Tribunal, vide three Member Bench decision. upheld the order and disallowed the CENVAT Credit on the basis of dealer's invoices which were accompanied by consignment notes in which vehicle numbers were found to be incapable of transporting goods - recovery of CENVAT Credit along with interest as well as penalty of ₹ 1,16,03,673/- imposed against MCU, are upheld. Since penalty has been imposed on M/s. Bhagwati Steel Centre, we feel no separate penalty is required to be imposed on Shri Bimal Kr. Kheria, partner of M/s Bhagwati Steel Centre. Appeal allowed - decided partly in favor of appellant.

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• 2017 (9) TMI 1250
  Manufacture - process of cutting of waste plastic container - raw material / packing material - some of plastic containers were found to have defects, breakage, leakage etc. As such plastic containers can no longer be used for the intended purpose, the appellant cleared them as waste - Held that: - The appellant has cut the broken / defective containers because these bore the brand name. By such cutting of waste plastic containers no new product with a new name emerges. Such plastic containers before and after cutting are nothing but waste / scrap. It is correct that appellant has no intention to manufacture waste and is registered for manufacture of packaged drinking water - similar issue decided in the case of M/s. Pepsico India Holdings (P) Ltd. Versus CCE- Meerut-II [2015 (10) TMI 1133 - CESTAT NEW DELHI], where in similar situation it was held that manufacture does not take place. The demand is not sustainable - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 1249
  CENVAT credit - duty paying invoices - It has been alleged that the assessee availed CENVAT Credit on the basis of parallel set of invoices or trader s invoices and JVAT 304 P forms - clandestine removal - Held that: - the entire demand of duty was raised on the basis of the records recovered from the premises of M/s Bharat Alloys Pvt. Ltd. - But the revenue in their grounds of appeal had not placed any evidence corroborative with the records of the assessee. It is well settled that the charge of clandestine removal cannot be established on the basis of the documents recovered from the premises of the third partly, unless, it is corroborative with the record of the assessee. Penalties on partners - Held that: - the Commissioner (Appeals) already imposed penalty of equal amount of duty on the assessee. Further, the Adjudicating Authority had not categorically discussed the role of the partners for imposition of penalty. Therefore, the Commissioner (Appeals) rightly set aside the penalties on the partners. Appeal dismissed - decided against Revenue.

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• 2017 (9) TMI 1248
  CENVAT credit - manufacture of taxable as well as exempt goods - non-maintenance of separate records - Rule 6 (3) (a) of CCR, 2004 - case of appellant is that they have reversed more than the credit than what ought to have been paid by them as per Rule 6 (3) (a) of CCR, 2004, therefore nothing further is required to be paid by them in terms of reversal of cenvat credit. Held that: - It is consistently agreed upon in the SCNs that the appellants had reversed such credit, however, while considering the input credit for reversal, the notices had omitted to consider input service credit reversed, and hence, the credit actually reversed by the appellants has not been calculated correctly. Now the Ld. Advocate avers that the appellant has reversed much more than that required to be reversed by them in the impugned period under Rule 6 (3) (a) of the Rules - such an averment would require to be verified - for the limited purpose for causing verifying the claim of the appellant that the entire quantum of Cenvat credit required to be reversed as indeed been reversed, the matter is remanded for denovo adjudication. Penalty u/r 15 of CCR - Held that: - Rule 15 of the said Rules contains provisions for confiscation and penalty in cases where Cenvat credit in respect of input or capital goods or input services has been taken or utilized wrongly - During the impugned period, provision for imposition of penalty equal to the wrongly taken or used cenvat credit was applicable when such credit was taken or utilized wrongly by reason of fraud, collusion, or willful mis-statement or suppression of facts or contravention of concerned statutory provisions with intent to evade payment of service tax - There is no allegation of suppression or fraud, collusion, willful mis-statement either in the SCNs or in the impugned orders - penalties set aside. Appeal allowed by way of remand.

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• 2017 (9) TMI 1247
  Classification of goods - whether the printed computer stationary/manifold Business Forms are to be classified under Chapter Heading 4820.00 attracting 4% duty adv. from 01.03.2002 to 28.02.2003 or under Chapter Heading 4901. 90 attracting NIL rate of duty as contended by the appellant? Held that: - The Ld. Counsel has produced before us the sample copies of the manifold business forms pertaining to Table II which is under dispute. One such item is the cash certificate/fixed deposit certificate printed for a Bank. The others are Bill for Telecom, Tuticorin District, Tax invoice for S.P. Hotel &Towers, Receipt for LIC, Inland letter form for submitting voting particulars for Rane Brake Lining Ltd. etc. We are convinced that these are customized maniform business forms and cannot be sold in open market - The co-ordinate Bench of the Tribunal in the case of Data Processing Forms Pvt. Ltd. Vs. CCE, Ahmedabad [2011 (9) TMI 921 - CESTAT AHMEDABAD] had occasion to analyse a similar issue, where, The printed products scanned and made part of the judgement are identical in character to those placed before us. The Tribunal has observed that merely because some details are to be filled in, such customized forms cannot be excluded from Chapter 49. The products listed in Table II merit classification under Chapter 49. It is seen that the Commissioner (Appeals) has accepted the contention of appellant and classified items like A4 sheets, advertisement and job card under Chapter 49 - when the impugned items are classified under CETH 49 would attract NIL duty and then the appellant would be well within the SSI exemption limit. The demand is therefore unsustainable - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 1246
  Write off of value of inputs - Rule 3 (5B) of the Cenvat Credit Rules, 2004 - case of Revenue is that appellant had written off the value of inputs at the time of annual stock taking, but did not reverse the amount of CENVAT credit for the period 31.12.2004 and for the year 2005-06 on the said inputs - Held that: - Rule 3 (5B) was inserted in the statute by N/N. 26/2007-CE(NT) dated 11.05.2007 - The present case relates to the period 2005-06, prior to the insertion of Rule 3 (5B) in the statute. The Hon’ble Gujarat High Court in the case of Commissioner of Central Excise Vs. Ingersoll Rand (India) Ltd. [2013 (2) TMI 32 - GUJARAT HIGH COURT] observed that there was no authority of the reversal of MODVAT Credit in cases which are covered prior to introduction of Rule 3 (5B) of Cenvat Credit Rules, 2004. Appeal dismissed - decided against Revenue.

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• 2017 (9) TMI 1245
  Refund claim - Rule 5 of CCR, 2004 - time limitation u/s 11B of the CEA, 1944 - case of Revenue is that refunds were rejected as the appellants have failed to furnish the documents in support of their claims - Held that: - appeals are required to be remanded back to the original authority for verification of the documents which may be produced by the appellants in support of their claim for refund - It is expected from the appellant to render proper assistance to the original authority for verification of the documents as the documents are voluminous in nature - appeal allowed by way of remand.

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• 2017 (9) TMI 1244
  CENVAT credit - non-maintenance of separate records - Rule 6(3A) of the CENVAT Credit Rules - Held that: - there is no dispute as to the fact that the appellant had reversed the proportionate CENVAT credit attributable to inputs and input services utilized for manufacturing and clearing of exempted goods; that they have not informed the Revenue authorities at the beginning of the year i.e., 2008-09 as to the intention to reverse the proportionate CENVAT credit as per Rule 6(3A) of the CENVAT Credit Rules, 2004. Since there is no denial that the appellant had reversed the proportionate CENVAT credit in time as provider, the ratio of the Division Bench of the Tribunal in the case of Cranes and Structural [2016 (8) TMI 387 - CESTAT BANGALORE], will squarely apply to the case in hand, wherein it has been held that provisions of Rule 6(3A) are procedural in nature and if they are compiled subsequently within the time, should be held as compliance of the provisions of CENVAT Credit Rules. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2017 (9) TMI 1243
  Restoration of appeal - Penalty u/s 67(1)(c) of the Act - benefit u/s 22(5) of the KVAT Act - whether such an order could have been passed by the Tribunal in the appeals filed by the assessee and particularly in the absence of appeal or cross objection by the Revenue? - Held that: - Although this issue was not raised in the appellate order, this was pointedly raised in the rectification applications as is seen from the orders passed by the Tribunal itself - it is not that in a case of this magnitude, the issues were properly framed or considered - matters require to be considered afresh with due application of mind - proceedings are now restored to the files of the Tribunal for re-consideration - appeal allowed by way of remand.

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• 2017 (9) TMI 1242
  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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• Wealth tax

• 2017 (9) TMI 1240
  Wealth tax assessment - Whether the Scindia House Property of the Respondent-Assessee is its ‘business asset/stock-in-trade’ and cannot form part of its ‘wealth’ for the purposes of the WTA?" - whether the amendment to sub-section 3 of Section 40 by the Finance Act, 1988 (FA 1988) by way of insertion of a proviso to the same is clarificatory and hence retrospective in nature?” - Held that:- The Assessee has accepted that from AY 1990-91 the income earned by it from the Scindia House property is not its business income. Applying the rule of consistency as explained by the Supreme Court in Radhasoami Satsang v. Commissioner of Income Tax (1991 (11) TMI 2 - SUPREME Court), as further explained by this Court in Mool Chand Khairati Ram v. DIT (2015 (7) TMI 922 - DELHI HIGH COURT) it must be held that even for AYs 1984-85 onwards till AY 1990-91 the Scindia House property cannot be considered to be the Assessee's stock-in-trade. In other words even for the said AYs, the Scindia House property formed part of the Assessee's net wealth for the purposes of the WTA. For the above reasons, the Court holds that the ITAT erred in holding by its orders dated 27th December 2004 and 12th January 2005 that the Scindia House property was the Assessee's stock-in-trade and was therefore to be excluded from its net wealth for the purposes of the WTA. Is the amendment to Section 40 (3) retrospective? - Held that:- The additional question for AYs 1984-85 to 1988-89 is answered in favour of the Revenue and against the Assessee by holding that the amendment to Section 40 (3) of the FA 1983 by the FA 1988 is not retrospective and will not apply to a period prior to 1st April 1989.

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• Indian Laws

• 2017 (9) TMI 1297
  Memorandum of Charge - misconduct in discharge of duties as DCIT - delay in initiating the disciplinary proceedings causes prejudice to the employee - seeking expunction of adverse entries in the ACR and for upgradation of the same. - Held that:- There is no allegation of corrupt motive or corrupt practice attributed to the petitioner in any of the Memorandums of Charge. So far as second Memorandum of Charge, which has been served after delay of about seven years, is concerned, the department for the first time, raised a contention in respect of lack of jurisdiction invested with the petitioner for deciding the cases. Though the department presented appeals challenging the appellate orders passed by the petitioner, such contention was never raised before any forum. The contention raised by the department, in that regard, is also questionable. The decisions rendered by the petitioner on merit in the matter of Mr. Rakesh Sarin are questioned referring to the interpretation put by the petitioner to certain precedences / case law and the interpretation of the relevant provisions of Income Tax Act. Merely because the interpretation put by the petitioner may not be acceptable to the department, itself cannot be a matter of departmental enquiry. If such view is accepted, it would be highly impossible for the quasi- judicial authorities to take decisions in the matter, which would severely prejudice the administration. The department has not attributed anywhere corrupt motive or dishonest conduct on the part of the petitioner while deciding the matters. The belated Memorandums of Charge served on the petitioner surely causes prejudice to the petitioner. Gravity of the allegations also do not calls for permitting the department to proceed with the belated charges levelled against the petitioner after 20 years and seven years, respectively.

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• 2017 (9) TMI 1267
  Arbitration proceedings - eligibility of award - Held that:- There is a difference of opinion in relation to entertainability of an application by this Court for making the award as Rule of the Court. The matter is, therefore, referred to larger bench for decision of the following question : “Whether this Court can entertain an application for making the award as Rule of the Court, even if it retains seisin over arbitral proceedings?”

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• 2017 (9) TMI 1266
  Simultaneous proceedings of arbitration proceedings along with the SARFAESI proceedings - Whether resort can be had to Section 13 of the SARFAESI Act in respect of debts which have arisen out of a loan agreement/mortgage created prior to the application of the SARFAESI Act to the respondent? - lender invoking the SARFAESI Act provision where its notification as financial institution under Section 2(1)(m) has been issued after the account became an NPA under Section 2(1)(o) of the said Act? - Held that:- SARFAESI proceedings are in the nature of enforcement proceedings, while arbitration is an adjudicatory process. In the event that the secured assets are insufficient to satisfy the debts, the secured creditor can proceed against other assets in execution against the debtor, after determination of the pending outstanding amount by a competent forum. SARFAESI proceedings and arbitration proceedings, thus, can go hand in hand. The date on which a debt is declared as an NPA would again have no impact. We are, thus, of the view that the provisions of the SARFAESI Act would become applicable qua all debts owing and live when the Act became applicable to the respondent in terms of the parameters contended by learned senior counsel for the respondent and enlisted at serial Nos. i to iv in para 18. We are, thus, of the view that the appeal is completely devoid of merit, and is only an endeavour to prolong the ultimate date of judgment for the appellants to meet their obligations.

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