TMI Tax Updates - e-Newsletter
September 28, 2018

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise Wealth tax Indian Laws

TMI SMS

• Credit of TDS deducted from salary - Revenue directed to give the credit even if employer failed to deposit TDS amount with the Government

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• Post GST regime, the pending refund claim of cenvat credit under Central Excise, if sanctioned, will necessarily have to be paid in cash

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Highlights / Catch Notes

GST

• Implementation of Tax Deduction at Source (TDS) under GST
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• Levy of GST - Marg Sudharan Shulk - charged and collected by applicant for the maintenance of forest road, from non government, private and commercial vehicles engaged in mining work in lieu of use of forest road - Levy of GST confirmed.
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• Input Tax Credit (ITC) for providing leasing services - goods and services used for erection of infrastructure to which fibre cables are connected - The infrastructure provided by the applicant is different from “Telecommunication Tower” and accordingly applicant can avail ITC on GST paid on the goods & services in terms of section 16(1) of CGST/SGST Act, 2017, consumed while providing the supply in question.
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• ITC of GST paid on Works Contract Service received by the Applicant for maintenance contract of building shall not be available to them in terms of clause (d) of Section 17(5) of the GST Act 2017.
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• ITC of GST paid on goods purchased for the purpose of maintenance of Mall such as Vitrified Tiles, Marble, Granite, ACP Sheets, Steel Plates, TMT Tor (Saria), Bricks, Cement, Paint, Chemicals, Sanitary Items like wash basin, urinal pots and toilet accessories shall not be admissible to the Applicant in terms of clause (c) of Section 17(5) of the GST Act 2017.
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• Profiteering - contravention of the provisions of Section 171 of the CGST Act, 2017 - Benefit of reduction in the rate of tax by lowering the price of “Maybelline FIT Me foundation” not passed on to recipients - by no stretch of imagination he can pocket this reduction to the detriment of the ordinary consumer.
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Income Tax

• TDS Credit - Wherever the payer-deductor had made the payment to the company but by error deposited tax in the account of the firm, the petitioner company must get benefit of such tax deducted at source.
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• Claim of credit of TDS deducted on salary - Employer failed to deposit the TDS amount with the Government - Department cannot deny the benefit of tax deducted at source by the employer of the petitioner during the relevant financial years. Credit of such tax would be given to the petitioner for the respective years.
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• Addition u/s 41 - remission or cessation of liability - when the software library was capitalized, it cannot be said that any benefit or remission or cessation of liability occurred.
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• Disallowance of artificial loss made on account of fictitious transactions - CIT(A) has deleted the addition merely by observing that the books of accounts of the assessee were audited and have not been rejected by the AO. - Matter restored before the CIT(A)
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• Treatment of interest earned by assessee as “Income from Other Sources” - assessee did not claim for any exemption of interest income on the basis of ‘doctrine of mutuality’, instead has considered for taxability under head ‘Income from Business’ - No reason to change the head of interest income to “income from other sources”.
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• Addition of claim towards staff gratuity - The assessee has no control over the funds contributed to LIC towards the gratuity. The assessee is receiving the gratuity payment directly from the LIC of India as per the scheme which is paid to the employee on happening of the event i. e. retirement or death or resignation. - Deduction allowed.
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• Penalty u/s 271D - Default in accepting the cash loan in violation of section 269SS - urgency of matter - Since, the stamp duty for registration of property was to be paid urgently, the assessee had no other option but to avail the cash loan from the directors. - No penalty.
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• Levy of penalty u/s 272A(2)(k) - delay in remittance of the TDS Amount in the Govt. Account - whether the explanation tendered by the appellant in support of delay in submission of quarterly returns can be considered to be plausible? - Held Yes
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Customs

• Amends Notifcation No. 52/2017 dated 30th June, 2018 - Goods falling under heading 2710 19 20 increased from Nil to 5%
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• Amends Notifcation No. 57/2017 dated 30th June, 2018 - Rate of customs duty on import of certain items - Scope of entry relating to Tariff heading 8518 modified.
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• Amends Notifcation No. 50/2017 dated 30th June, 2018 - Rate of customs duty on import of Gemstones and Diamonds enhanced from 5% to 7.5%
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• Amends First Schedule of Customs Tariff Act, 1975. - Rates of Customs duty on import of certain items enhanced.
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• Restriction imposed on import of yellow peas - before 30th August, 2018, the contract was fully executed - respondents is directed to take necessary steps to permit petitioner to lift and use imported Yellow Peas in these two shipments without subjecting them to the restriction
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• Prohibition order on CHA - prohibiting the appellant from working in any sections of the Chennai Customs station - The prohibition order issued without mentioning any specific period cannot sustain and requires to be set aside.
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• Valuation of imported goods - rejection of invoice value - enhancement of value to 166.6% under Rule 8 - This is a fit case to be remanded to consider the plea of the appellant with regard to whether the deductive method is to be applied.
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DGFT

• Amendments to Foreign Trade Policy 2015-2020 - Extension of Integrated Goods and Service Tax (IGST) and Compensation Cess exemption under Advance Authorisation, EPCG and EOU scheme upto 31.03.2019.
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Corporate Law

• Tenure of the Director - Permanent (non-rotational) director as supported by the Articles of association - Other directors proposed to removed the petitioner by calling EGM - No injunction from calling the EGM can therefore be granted.
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Service Tax

• Refund of Service Tax paid - The rejection of refund claim without issuance of show cause notice cannot sustain
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• Construction of Complex Service - If the land owner enters into a contract with a promoter/builder/developer who himself provided service of design, planning and construction and if the property is used for personal use then such activity would not be subject to service tax
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• CENVAT Credit - insurance services - Motor Insurance Policy for motor vehicles against theft, damage and third-party liability - service tax paid on reimbursement of the repair charges allowed.
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Central Excise

• Refund claim - Once the GST regime is in force, the pending refund claim, if sanctioned, will necessarily have to be paid in cash irrespective of the fact whether the refund amount pertains to that emanating from cenvat account or from account current
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• Manufacture - activity of inspection and sample testing - removal of inputs as such - Revenue cannot change the goal posts and have two different approaches to the same issue for different periods more so when the facts are identical
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• CENVAT credit - travel services extended to Directors, their family members and employees - The credit is admissible only when the travelling service is for the purpose of Official work but in the present case the travelling service for leisure trip - Credit not allowed.
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• Valuation - goods in the Malkapur unit of the appellant - Inclusion of certain costs - principles of natural justice - demand on the basis of selective transaction cannot sustain - short payment of duty and excess payment of duty, both should be considered.
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• Supply of items for setting up independent thermal power plant - Supply against International Competitive Bidding (ICB) - Going by the maxim res judicata pro veritate accipitur, the appellant should succeed.
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Articles

• Portfolio Management Fees is allowable expenditure
• TDS provisions under GST

Notifications

• Customs

• F.No.354/374/2018-TRU - dated 27-9-2018 - Cus
  Corrigendum - Notification No. 67/2018-Customs, dated the 26th September, 2018

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• 70/2018 - dated 26-9-2018 - Cus
  Amends Notifcation No. 52/2017 dated 30th June, 2018 - Goods falling under heading 2710 19 20 increased from Nil to 5%

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• 69/2018 - dated 26-9-2018 - Cus
  Amends Notifcation No. 57/2017 dated 30th June, 2018 - Rate of customs duty on import of certain items - Scope of entry relating to Tariff heading 8518 modified.

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• 68/2018 - dated 26-9-2018 - Cus
  Amends Notifcation No. 50/2017 dated 30th June, 2018 - Rate of customs duty on import of Gemstones and Diamonds enhanced from 5% to 7.5%

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• 67/2018 - dated 26-9-2018 - Cus
  Amends First Schedule of Customs Tariff Act, 1975. - Rates of Customs duty on import of certain items enhanced.

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• DGFT

• 35/2015-2020 - dated 26-9-2018 - FTP
  Amendments to Foreign Trade Policy 2015-2020 - Extension of Integrated Goods and Service Tax (IGST) and Compensation Cess exemption under Advance Authorisation, EPCG and EOU scheme upto 31.03.2019.

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• GST - States

• G.O.Ms.No. 490 - dated 25-9-2018 - Andhra Pradesh SGST
  The Andhra Pradesh Goods and Services Tax (Twenty Fourth Amendment) Rules, 2018.

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• G.O.Ms.No. 489 - dated 25-9-2018 - Andhra Pradesh SGST
  The Andhra Pradesh Goods and Services Tax (Twenty Third Amendment) Rules, 2018.

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• G.O.Ms.No. 488 - dated 25-9-2018 - Andhra Pradesh SGST
  The Andhra Pradesh Goods and Services Tax (Twenty Second Amendment) Rules, 2018.

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• G.O.Ms.No. 487 - dated 25-9-2018 - Andhra Pradesh SGST
  Waiver of Late Fee Paid Under Section 47 in FORM GSTR-3B, FORM GSTR-4, FORM GSTR-6

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• G.O.Ms.No. 486 - dated 25-9-2018 - Andhra Pradesh SGST
  Amendments in G.O.Ms.No.288, Revenue (CT-II) dept., Dated : 12.07.2017.

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• G.O.Ms.No. 485 - dated 25-9-2018 - Andhra Pradesh SGST
  Amendment in the Notification No. G.O.Ms.No.275, Revenue (CT-II) Department, Dated : 30-06-2017

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• G.O.Ms.No. 484 - dated 25-9-2018 - Andhra Pradesh SGST
  Amendment in the Andhra Pradesh Goods and Services Tax Rules, 2017 issued in G.O.Ms.No.256, Revenue (CT-II) Department dated. 29th June, 2017.

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• G.O.MS.No. 482 - dated 24-9-2018 - Andhra Pradesh SGST
  Guidelines for deductions and deposits of TDS by the DDO under GST.

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• S.O. 243 - dated 20-9-2018 - Bihar SGST
  Notifies that every electronic commerce operator, not being an agent, shall collect an amount calculated at a rate of half per cent. of the net value of intra-State taxable supplies.

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• SRO 434 - dated 26-9-2018 - Jammu & Kashmir SGST
  Appoint 1st day of October, 2018, as the date on which the provisions of section 52 of the Jammu and Kashmir Goods and Services Tax Act, 2017 shall come into force

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• SRO 433 - dated 26-9-2018 - Jammu & Kashmir SGST
  Notification regarding seeks to bring section 51 of the Jammu and Kashmir Goods and Services Tax Act, 2017 (provisions related to TDS) into force w.e.f 01.10.2018

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• SRO 368 - dated 4-9-2018 - Jammu & Kashmir SGST
  Seeks to extend the due date for filing of FORM GSTR - 1 for taxpayers having aggregate turnover up to ₹ 1.5 crores

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• SRO 367 - dated 4-9-2018 - Jammu & Kashmir SGST
  Seeks to lay down the special procedure for completing migration of taxpayers who received provisional IDs but could not complete the migration process

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• SRO 366 - dated 4-9-2018 - Jammu & Kashmir SGST
  Exempts the intra-state supplies of handicraft good

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• SRO-GST-47 (Rate) - dated 31-8-2018 - Jammu & Kashmir SGST
  Amendment in Notification SRO No. SRO-CST-8 dated 08.07.2017

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• SRO-GST-43 (Rate) - dated 31-8-2018 - Jammu & Kashmir SGST
  Amendment in Notification No. SRO-GST-2 dated 08-07-2017

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• SRO-GST-42 (Rate) - dated 31-8-2018 - Jammu & Kashmir SGST
  Amendment in Notification No. SRO-CST-1 dated 08-07-2017

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• SRO-GST-41 (Rate) - dated 31-8-2018 - Jammu & Kashmir SGST
  Insert explanation in the Notification No.SRO -GST -11 dated 08-07-2017

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• SRO-GST-40 (Rate) - dated 31-8-2018 - Jammu & Kashmir SGST
  Amendment in Notification No. SRO-GST-13 dated 08-07-2017

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• SRO-GST- 46 (Rate) - dated 31-8-2018 - Jammu & Kashmir SGST
  Amendment in Notification No. SRO-GST-11 dated 08-07-2017

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• SRO-GST- 45 (Rate) - dated 31-8-2018 - Jammu & Kashmir SGST
  Amendment in Notification No. SRO-GST- 14 dated 08-07-2017

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• SRO-GST- 44 (Rate) - dated 31-8-2018 - Jammu & Kashmir SGST
  Amendment in Notification No. SRO-CST-5 dated 08-07-2017

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• Income Tax

• 58/2018 - dated 26-9-2018 - IT
  U/s 10(46) of the Income-tax Act, 1961 Central Government notifies ‘Tamil Nadu Pollution Control board’, a Board constituted by the State Government of Tamil Nadu, in respect of the specified income arising to the said Board

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• 57/2018 - dated 26-9-2018 - IT
  U/s 10(46) of the Income-tax Act, 1961 Central Government notifies ‘Uttarakhand Real Estate Regulatory Authority’, Dehradun, an authority constituted by the Government of Uttarakhand, in respect of the specified income arising to that authority

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• 55/2018 - dated 26-9-2018 - IT
  Central Government notifies the Ex-Servicemen Contributory Health Scheme of the Department of Ex-Servicemen Welfare, Ministry of Defence for the purposes of the clause clause (a) of sub-section (2) of section 80D of the IT Act 1961 for the assessment year 2019-20

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Circulars / Instructions / Orders

• GST - States - 23/2018-GST - dated 25-9-2018
  Clarification regarding removal of restriction of refund of accumulated ITC on fabrics.
• GST - States - CT/GST-15/2017/191 - dated 25-9-2018
  Corrigendum to Circular No. 11/2017-GST issued vide No. CT/GST-15/2017/47 dated 22nd December 2017.
• GST - States - 17/2018-GST - dated 18-9-2018
  Scope of Principal-agent relationship in the context of Schedule I of the Assam GST Act.
• GST - States - 18/2018-GST - dated 18-9-2018
  Recovery of arrears of wrongly availed credit under the existing law and inadmissible transitional credit.
• GST - States - 19/2018-GST - dated 18-9-2018
  Processing of refund applications filed by Canteen Stores Department(CSD).
• GST - States - 20/2018-GST - dated 18-9-2018
  E-way bill in case of storing of goods in godown of transporter.
• GST - States - 21/2018-GST - dated 18-9-2018
  Levy of GST on Priority Sector Lending Certificates (PSLC).
• GST - States - 22/2018-GST - dated 18-9-2018
  Modification of the procedure for interception of conveyances for inspection of goods in movement, and detention, release and confiscation of such goods and conveyances, as clarified in Circular No. 10/2018-GST (CT/GST-15/2017/99 dated 12nd June, 2018) and Circular No. 11/2018-GST (CT/GST-15/2017/117 dated 22nd June, 2018)
• GST - States - 14/2018 - dated 17-9-2018
  Clarification on taxability of printing contracts.
• GST - States - 15/2018 - dated 17-9-2018
  Clarification regarding applicability of GST on the superior kerosene oil [SKO] retained for the manufacture of Linear Alkyl Benzene [LAB].
• GST - States - 16/2018 - dated 17-9-2018
  Clarification on Unstitched Salwar Suits.
• GST - States - 17/2018 - dated 17-9-2018
  Procedure regarding procurement of supplies of goods from DTA by Export Oriented Unit (EOU) / Electronic Hardware Technology Park (EHTP) Unit / Software Technology Park (STP) Unit / Bio-Technology Parks (BTP) Unit under deemed export benefits under section 147 of CGST Act, 2017.
• GST - States - 18/2018 - dated 17-9-2018
  Clarifications regarding applicability of GST and availability of ITC in respect of certain services.
• GST - States - 19/2018 - dated 17-9-2018
  Clarification of unutilised input tax credit of GST paid on inputs in respect of exports of fabrics.
• GST - States - 20/2018 - dated 17-9-2018
  Clarification on taxability of custom milling of paddy
• GST - States - 21/2018 - dated 17-9-2018
  Issue related to classification and GST rate on Terracotta idols.
• GST - States - 22/2018 - dated 17-9-2018
  Clarification on Inter-state movement of rigs, tools and spares, and all goods on wheels [like cranes]
• GST - States - 23/2018 - dated 17-9-2018
  Filing of Returns under GST.
• GST - 66/40/2018 - dated 26-9-2018
  GST on Residential programmes or camps meant for advancement of religion, spirituality or yoga by religious and charitable trusts- reg.
• GST - F.No. 8/10(2)/HRD/EMC/2017 - dated 26-9-2018
  Implementation of Tax Deduction at Source (TDS) under GST
• DGFT - 40/2015-2020 - dated 26-9-2018
  Removal of name of Supreme International FZC from Appendix 2G of Appendices and Aayat Niryat Forms of FTP, 2015-20

News

• India and the United Nations to sign a Five-Year Sustainable Development Framework (2018-2022)

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• Copy of the Presentation made by Secretary, DFS, Shri Rajiv Kumar on 25th September, 2018 after the Finance Minister's Annual Performance Review Meeting with CEOs of Public Sector Banks (PSBs)

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• Sale of Electoral Bonds at 29 Authorised Branches of State Bank of India (SBI) with effect from 01st October, 2018 to 10th October, 2018

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• Competition Commission of India (CCI) imposes penalty upon Esaote S.p.A and Esaote Asia Pacific Diagnostic Pvt. Ltd. for abusing dominant position

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• Month long Startup India – Maharashtra Yatra to begin from 3rd October

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• First Consignment of Indian Rice Ready to be Shipped to China

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• Himachal made credible progress on macro-economic parameters, says Shri N. K. Singh

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• Tariff measures taken to curb the imports of non-essential items

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Case Laws:

• GST

• 2018 (9) TMI 1647
  Levy of GST - Marg Sudharan Shulk - charged and collected by applicant for the maintenance of forest road, from non government, private and commercial vehicles engaged in mining work in lieu of use of forest road - Abhivahan Shulk - charged and collected by applicant in respect of forest produce carried out by a person - Challenge to Advance Ruling decision. Whether GST is leviable on the “Marg Sudharan Shulk” and “Abhivahan ShuIk” said to be charged by Forest Division Dehradun from the non government, private and commercial vehicles engaged in mining work in lieu of use of forest road? Held that:- A fee is charged in lieu of some service granted to a particular class of persons from whom it is being charged. Such fees are to offset the expenses (partly or fully) incurred in rendering the said service and co-relation between the two with exact mathematical precision is not important and in some instances such as license fee, which are regulatory in nature, the quid pro quo also is not essential. The Abhivahan Shulk(transit fee) is different from the Marg Sudharan Shulk (both of which are collected by the forest department under statute of State Government) in as much as the latter is collected for the upkeep and maintenance of roads within the forest area and the same is collected from all the vehicles, whether loaded or empty. Thus the Marg Sudharan Shulk is used for the benefit of public in general who may use the roads of the forest area and not only to a particular class of people who are paying the said fee. The rates of Abhivahan Shulk, on the other hand, are fixed on the quantity of forest produce being transported. A vehicle entering a forest area will have to pay the Marg Sudharan Shulk even if it comes out empty. But the same empty vehicle will not be required to pay any Abhivahan Shulk, if it is coming out of the forest area without any forest produce. Thus, this fee is directly related to the quality and quantity of the forest produce. Abhivahan Shulk fulfills all the criteria, which are required to be established for a government levy, for it to be termed as ‘fee’. The very nature of it being a fee ensures that a quid pro quo has to be there and therefore rendering of some form of service comes in built, which is also established as discussed above. Thus, this shulk collected against the services rendered, is liable to be taxed under the provisions of Goods and Service Tax Acts, unless otherwise exempted - Sub-clause (2) is the exclusion clause and only goods or service falling under the Schedule III (clause a) or being included in any exception notification (clause b), will not be treated as supply of goods or supply of services. Everything and anything other than those covered by sub clause (2) (a) & (b) are to be treated as supply of goods or supply of services as covered by Schedule I or Schedule II in terms of sub-clause (1)(c) and (1)(d) respectively. Government fees are not specified in Schedule III of Section 7 and Abhivahan Shulk is also not covered by any notification for exception in terms of Section 7(2)(b) ibid. Hence, there remains no ambiguity about the taxability of Abhivahan Shulk. Classification - rate of tax - Held that:- The Abhivahan Shulk cannot be covered under notification relating to “NIL” rate nor does it correspond to any entry for services that are taxed at 24%. Hence, this fee has to be covered under the residuary Heading 9997 for other services with the tax rate of CGST@ 9%, and IGST @ 18%. The decision of the Authority on Advance Ruling for the State of Uttarakhand is upheld - appeal dismissed.

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• 2018 (9) TMI 1646
  Input Tax Credit (ITC) - goods and services used for erection of infrastructure to which fibre cables are connected - fibre cables leased to Telecommunication Operators - whether Cenvat credit of goods and services used for erection of infrastructure to which fibre cables are connected for leasing to Telecommunication Operators, is available to them? Held that:- The telecommunication towers are used for hoisting e antennae to predetermined and technically viable heights for optimum coverage of the cellular network. The towers are typically erected at the site and also comprise poles for mounting the antennae, sheIters and housing for electrical and telecom equipment. Telecommunication Towers are in the nature of immovable property and are consists of A pre-fabricated shelter made of insulating PUF material made of fibres, Electronic Panel, Base Transceiver Station (BTS) and other radio transmission and reception equipment, A diesel generator set and Six poles of 6 to 9 meters length each made of hollow steel galvanized pipes - Each of these goods had independent functions and hence, they cannot be treated and classified as single unit. It also observed that all goods are not eligible for credit and only those relatable to output services would be eligible for credit. Since the towers merely enabled the antennae to function, they did not enter the composition of the antenna themselves and could not be construed as components or parts thereof. Further, only telecom equipments like BTS transmitters which are used in providing telecom services alone would be liable to input credit. The towers and PFB are in the nature of immovable goods hence, ITC not admissible on the same. If the goods are movable from one place to another in the same position or liable to be dismantled and re-erected at the later place, if it is liable to be shifted and was dismantled or re-erected at a later place, it will be movable property. But if erected permanently with out being shifted from place to place, then it would be treated as permanently attached to the earth and the same will be treated as immovable property - thus, “telecommunication tower” does not come within the purview of goods in as much as the same being a immovable property and the ITC on “telecommunication tower” is not admissible as per explanation to Section 17(6) of the CGST/SGST Act, 2017. The infrastructure provided by the applicant is different from “Telecommunication Tower” in as much as the in infrastructure provided by the applicant does not contain in a. pre-fabricated shelter made of insulating PUF material made of fibres; b. electronic Panel; c. Base Transceiver Station (BTS) and other radio transmission and reception equipment ; d. diesel generator set; the infrastructure is not a immovable property as it can be easily be moved to another place for use without any damage to the entire infrastructure. Therefore the infrastructure provided by the applicant is to be construed as “movable property”; height of pole is 7m to 9m whereas height of telecommunication tower is 70m to 90m and the infrastructure being a movable property can be classified as 'goods' in terms of section 2(52) of CGST/SGST Act, 2017. Ruling:- The infrastructure provided by the applicant is different from “Telecommunication Tower” and accordingly applicant can avail ITC on GST paid on the goods & services in terms of section 16(1) of CGST/SGST Act, 2017, consumed while providing the supply in question.

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• 2018 (9) TMI 1645
  Works Contract - rate of tax - Applicability of clause(vi)(a) of Sr. No. 3 of table of Notification No. 11/2017-Central Tax (Rate) dated the 28th June, 2017 - liability to pay tax - whether clause(vi)(a) of Sr. No. 3 of table of Notification No. 11/2017-Central Tax (Rate) dated the 28th June, 2017 is applicable on the works contract undertaken by it? - Government entity or not? Whether the Applicant is a government entity or not? - Held that:- The Government of Madhya Pradesh is having full control over the applicant M/S M.P. Paschim Kshetra Vidyut Vitran Co. Ltd. and the applicant is covered under the definition of Government Entity. Nature of work undertaken by the applicant - Held that:- As per the Memorandum of Association of the Company, Main objects to be pursued by the Company on its incorporation is to carry on the business of purchasing, selling, importing, exporting, selling, trading of electrical energy, including formulation of tariff, billing and collection thereof; to execute Power Purchase Agreements with the Bulk supplies, generating companies, Central and State generating stations, regional Electricity Board/neighboring States/utilities and other entities; to execute agreements for sale of power to other distribution companies and other persons and to coordinate, aid and advise on the activities of other companies and concerns. including subsidiaries, associates and affiliates, engaged in generation, transmission, distribution, supply and wheeling of electrical energy. The projects under DDUGY, IPDS, ADB, SSTD, Saubhagya Yojna, FSP and all other schemes of governments are carried out for business purpose and the benefit of Concessional Rate of 12% (6% under Central tax and 6% State tax) as per notification under is not available to the applicant on works pertaining to construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration, which are carried out in respect of projects under DDUGY, IPDS, ADB, SSTD, Saubhagya Yojna, FSP and all other schemes of governments as the same is undertaken for the business purpose - The composite supply of works contract as defined at Section 2 of CGST Act '2017 and MPGST Act, 2017 is treated as supply of service in terms of serial no.6, Schedule II of CGST Act '2017 and MPGST Act, 2017. In the instant case, the applicant had awarded work to the successful bidder tor Supply of Materials and Erection respectively. Therefore, the contract entered by the applicant is squarely falls under the works contract and falls under entry no. (ii) of S. No. 3 of the table of notification no. 11/2017 - Central Tax (Rate), Dated - 28th June 2017 as amended from time to time and corresponding notifications under and MPGST Act, 2017, the applicable rate of tax is 18% (9% under Central tax and 9% State tax). Ruling:- The Applicant is not entitled for the benefit of concessional rate of GST @12% (6% under Central tax and 6% State tax) for the said projects in terms of Notification No.24/2017-CentraI Tax (Rate) dated 21.09.2017 read with Notification No.31/2017-CentraI Tax (Rate) dated 13.10.2017. The applicable rate of tax is 18% (9% under Central tax and 9% State tax).

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• 2018 (9) TMI 1644
  Supply of goods/services - rate of GST - food, soft drinks, and snacks sold in the Snack Bar & Food Court - N/N. 46/2017- Central Tax (Rate) - Input tax credit - credit on GST paid on Movie Distributor revenue share bill, Projector Rental Bill, Advertising Bill, Security Agency Bill, and House Keeping Bill - Credit on GST paid on goods purchased for the purpose of maintenance such as Vitrified Tiles, Marble, Granite ACP Sheets, Steel Plates, TMT TOR, Bricks, Cement, Paint, Chemicals, Sanitary items like wash basin, urinal pots, and toilet accessories - Credit on GST paid on Works Contract service received from registered & unregistered Contractor for maintenance contract of building. Whether GST @5% can be charged on food, soft drinks, and snacks sold in the Snack Bar & Food Court in terms of Notification no.46/2017? - Held that:- The Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 further amended by Notification No.46/2017-Central Tax (Rate) vide entry at Serial Number 7 and corresponding notifications issued under MPGST ACT ,2017, squarely covers the services provided by the Applicant - applicant are not providing any accommodation facility for lodging and boarding and they are also not availing ITC of tax paid on goods & services used/utilized for providing services from the said Snack Bar - On considering the common parlance meaning of 'Outdoor Catering' and its definition for Service Tax, it is concluded that the supply of food, soft drinks and snacks sold in the Food Court or Snack Bar of the Applicant cannot by any stretch of imagination, be treated as a part of outdoor catering. In view of the facts and circumstances, we are of the view that the services provided by the Applicant in Snack Bar would be classifiable under SAC 9963 and chargeable to GST @ 5% (CGST @2.5% + SGST @2.5%), provided they fulfill the conditions laid down under Notification 46/2017-Central Tax (Rate) and corresponding notifications issued under MPGST ACT, 2017. Whether ITC of GST paid on Movie Distributor revenue share bill, Projector Rental Bill, Advertising Bill, Security Agency Bill, and House Keeping Bill can be claimed in full? - Held that:- The Applicant are running a business of operating a Mall with Multiplex and the services mentioned in this particular question definitely classify as input services for providing the declared services by the Applicant. Thus the said input services are attributable towards providing declared output services by the Applicant for furtherance of their business in terms of Section 16 of the GST Act, 2017 - ITC on such services shall be admissible to the Applicant subject to condition that in case any part of such input services are utilized for providing exempted outward supplies, the apportioned ITC to the extent utilized in providing exempted supplies shall be subject to reversal in terms of Section 17(1) of the GST Act, 2017 Whether ITC on GST paid on goods purchased for the purpose of maintenance such as Vitrified Tiles, Marble, Granite ACP Sheets, Steel Plates, TMT TOR, Bricks, Cement, Paint, Chemicals, Sanitary items like wash basin, urinal pots, and toilet accessories can be claimed in full? - Held that:- Mere statement that expenditure is not capitalized cannot come to the rescue of Applicant. Be that as it may, the eligibility of ITC does not depend on the treatment given to the expenditure. If the expenditure is revenue in nature but subsequently capitalized in the books of account it would not make Applicant eligible to ITC on such goods - ITC on such goods used for maintenance/repair/renovation of Mall building, an immovable property, shall not be available to the Applicant. Whether ITC of GST paid on Works Contract service received from registered & unregistered Contractor for maintenance contract of building can be claimed in full? - Held that:- As far as availability of ITC on Works Contract Services is concerned the law is very categorical and unambiguous. ITC on works contract services are allowable only in case when such works contract service is used as an input service for providing further output service of Works Contract - Works Contract Service which the Applicant intends to engage is for the civil work etc. for repair/renovation/maintenance of Mall building. Such service is fully consumed at the end of Applicant and it is not an input service for further provision of output service as Works Contract - ITC in respect of Works Contract Service utilised by the Applicant for repair/renovation/maintenance of Mall building shall not be available to them. Ruling:- The items supplied in Snack Bar and Food Court shall be chargeable to GST in terms of Notification No.11/2017-Central Tax (Rate) as amended by Notification No.46/2017-Central Tax (Rate) and corresponding notification under MPGST ACT,2017 at prevailing rate of 5%(2.5% SGST and 2.5% CGST), subject to conditions laid down at Serial Number 7 of the parent Notification classifiable under SAC 9963. Applicant shall be entitled to ITC of tax paid on Movie Distributor Revenue Sharing Bill, Projector Rental Bill and Advertising Bill in full; further in respect of Security Agency Bill and Housekeeping Bill, the ITC shall be restricted to the apportioned part which is utilised in providing taxable output services. Any ITC attributable to exempted output services shall be subject to reversal in terms of Section 17(1) of the GST Act 2017. ITC of GST paid on goods purchased for the purpose of maintenance of Mall such as Vitrified Tiles, Marble, Granite, ACP Sheets, Steel Plates, TMT Tor (Saria), Bricks, Cement, Paint, Chemicals, Sanitary Items like wash basin, urinal pots and toilet accessories shall not be admissible to the Applicant in terms of clause (c) of Section 17(5) of the GST Act 2017. ITC of GST paid on Works Contract Service received by the Applicant for maintenance contract of building shall not be available to them in terms of clause (d) of Section 17(5) of the GST Act 2017.

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• 2018 (9) TMI 1643
  Unable to upload Form GST TRAN-1 - transition to GST regime - input tax credit - It is the petitioner's case that inspite of its best efforts, the Form GST TRAN-1 for availing transitional credit under the GST Act, was not accepted online - Held that:- As the Notification has been issued, GSTN will now enable filing of TRAN 1 on the common portal for the petitioner and other registered persons in respect of whom extension has been allowed.

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• 2018 (9) TMI 1642
  Facility of deferment of payment of the Value Added Tax denied - Sick Industrial Unit - Impact of migration from VAT regime to GST regime - modified Rehabilitation Scheme sanctioned by BIFR on 24.09.2013 - Held that:- It appears that while passing the impugned order dated 09.05.2018 whereby the Government Order dated 10.02.2014 has virtually been declared to be inoperative, the authority concerned does not appear to have taken into account the effect of the repeal and saving clause contained in section 174 of U.P. Goods and Services Tax Act, specially sub section 2(c) of section 174 of the said Act. The impugned order dated 09.05.2018 only states that under section 71 of the then prevalent U.P. Value Added Tax Act, the powers were vested in the State Government to defer the liability of payment of Value Added Tax in case of the sick units declared as such under the Act - What is, thus, noticeable here is that the authority concerned while passing the said order dated 09.05.2018 has clearly ignored the provisions of section 174(2)(c) of U.P. Goods and Services Tax Act. The impugned order dated 09.05.2018, as is contained in annexure-1 to the writ petition, is hereby quashed - Petition allowed.

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• 2018 (9) TMI 1641
  Unable to upload TRANS Form 1 - Input tax credit - Held that:- Circular No.39/13/2018-GST sets up a IT-Grievance Redressal Mechanism to address the grievance of the tax payers relating thereto. The petitioner would, therefore, withdraw this writ petition and approach this IT-Grievance Redressal Mechanism relying upon this Circular and request it to take a decision in terms therewith, but in accordance with law. Petition dismissed as withdrawn.

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• 2018 (9) TMI 1640
  Profiteering - contravention of the provisions of Section 171 of the CGST Act, 2017 - Benefit of reduction in the rate of tax by lowering the price of “Maybelline FIT Me foundation” not passed on to recipients - reduction in the rate of GST - N/N. 41/2017 -Central Tax (Rate) dated 14.11.2017 - Sale of goods by increasing the basis price of goods - also, the complaint mentioned at Sr. No. 1 did not contain the copy of the complaint and only a photocopy of the invoice was sent by the DGAP - Respondent has also claimed that the Authority had not prescribed the methodology under Rule 126 of the CGST Rules, 2017 for determining whether the benefit of tax reduction had been passed on or not and hence he could not be held liable for profiteering. Held that:- The Respondent had enhanced the basic price of both the shades of the product which was exactly equal to the amount by which the GST on them had been reduced and hence there is no doubt that the Respondent had resorted to profiteering amounting to ₹ 15,861/- which includes profiteering of ₹ 41/- made by him from the Applicant No. 1, which constitutes violation of the provisions of Section 171 of the above Act. It is also established that the Respondent had issued incorrect invoices while selling the product to his customers as he had not correctly shown the basic price which he should have legally charged from them which is an offence under Section 122 (1) (i) of the CGST Act, 2017 and hence he is liable for imposition of penalty under the above Section. Rule 133 (3) (d) of the CGST Rules, 2017 also makes it clear that the penalty has to be imposed as per the provisions of the Act and since it is proposed to impose penalty under the Act there is no question of creating substantive liability under the Rules as there is specific sanction under the above Act to impose penalty. Similarly the CGST Act, 2017 also provides for imposition of interest under the Act and therefore, the same can be levied in the present proceedings. The Respondent cannot claim that since the amount of profiteering was miniscule no penalty should be imposed as each breach of the law has to be visited penalty. The Respondent is directed to reduce the price of both the shades of the product to ₹ 410/- and ₹ 449/- respectively excluding GST. He is also directed to refund an amount of ₹ 41/- along with interest @ 18% to the Applicant No. 1 from the date when this amount was realised by him from her till the date of refund - Since rest of the recipients are not identifiable the DGAP is directed to get the balance amount of profiteering of ₹ 15,820/- deposited in the Consumer Welfare Fund of the Central and the Concerned State Govt. as per the provisions of Rule 133 (3) (c) of the CGST Rules, 2017 along with interest @ 18% till the amount is paid. As regards complaint mentioned at Sr. No. 1 did not contain the copy of the complaint and only a photocopy of the invoice was sent by the DGAP - Held that:- In the second complaint mentioned at Sr. No. 30 of the minutes there was a written application with full name, email address, product label, invoice and gist of the allegation and hence this complaint was rightly considered by the Committee and sent to the DGAP for investigation. A copy of this complaint was also supplied to Sh. Sayan Bandhopadhyay representative of the Respondent on 06.01.2018 as is clear from the receipt issued by him and hence the allegation made by the Respondent that he was not supplied copy of the complaint on the basis of which the present proceedings had been launched is not correct - It is also apparent from the reply filed by the DGAP on 19.06.2018 that no APAF-1 form had been prescribed when the above Applicant had lodged her complaint on 23.11.2017 and hence there was no question of filing the complaint in the above Form and hence this averment of the Respondent is also not correct. Presence of methodology under Rule 126 of the CGST Rules, 2017 for determining whether the benefit of tax reduction had been passed on or not - Held that:- The present proceedings are nowhere connected with looking in to the process of fixation of prices or margins of profit by the Respondent and they are limited only to the extent of finding out whether the benefit of tax reduction has been passed on by the Respondent to his customers or not. This Authority is only concerned with passing on of the commensurate benefit as is arrived at after calculation of the impact of rate reduction on the MRP of a product. There is further no restriction on the right of the Respondent to conduct trade as per Article 19 (1) (g) of the Constitution as Section 171 only requires him to pass on the above two benefits and does not require him to get any licence or seek approval to conduct trade or fix prices of the products being sold by him. The Respondent must remember that the Government has thought is appropriate in the public interest to reduce the rate of tax on the products being sold by him by sacrificing its own revenue and therefore, he is bound to pass on this benefit to his customers and by no stretch of imagination he can pocket this reduction to the detriment of the ordinary consumer. Notice may also be issued to the Respondent to show cause as to why penalty as per the provisions of Section 122 of the CGST Act, 2017 read with Rule 133 (3) (d) of the CGST Rules, should not be imposed upon him. Application disposed off.

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• Income Tax

• 2018 (9) TMI 1639
  Penalty u/s 271(1)(b) - assessee refused to answer the notice under Section 142(1) - accounts held in HSBC Bank - assessee was an attorney of some account holder - Held that:- Application seeking permission for open court hearing is rejected. We have carefully gone through the review petitions and the connected papers. However, we do not find any merit in the review petitions. Accordingly, the review petitions are dismissed. Pending applications, if any, shall also stand disposed of.

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• 2018 (9) TMI 1638
  Grant of credit of the tax deducted at source - refund such excess tax to the petitioner with statutory interest - Held that:- In the first of the two reasons leading to mismatch, as noted, the ground was that the fixed deposits offered by the firm by way of security to cover defect liability for specified period, the authorities not permit substitution of the FDs even though the firm had ceased to be in existence. The Banks of which such FDs were therefore offered by way of security, had no choice but to make payment of interest in the name of the firm and also deduct tax in such name. However, according to the petitioner, the income was declared by the company. If so, the company must get the benefit of tax deducted at source. Wherever the payer-deductor had made the payment to the company but by error deposited tax in the account of the firm, the petitioner company must get benefit of such tax deducted at source. The petitioner has no control over the payerdeductor. In the present case those payees are all Government organizations. At the instance of Incometax Department the petitioner did try to persuade such organizations to make corrections, but failed. The respondent No.1 Assessing Officer is requested to verify full details of payments and deduction of tax at source. The petitioner shall provide necessary documents alongwith representation which may be mad latest by 10.10.2018.

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• 2018 (9) TMI 1637
  Suo motu rectification by the department - main grievance of the petitioner is that the first respondent has chosen to pass the present impugned order only by considering its own suo motu rectification application without considering the rectification application filed by the petitioner also under Rule 13 of the said Rules and passing an order on such application as well - Held that:- The respondents admitted to the position that the application filed by the petitioner has not been disposed of so far. Needless to state that when the parties have filed the rectification petition to rectify the same order, it is not proper to pass an order on the application filed by one party alone leaving the other application either unheard or not disposed of. Therefore, without expressing any view on the merits of the contentions raised by both parties, this Court is of the view that the present impugned order has to be set aside only for the purpose of remitting the matter back to the first respondent for considering both the applications filed under Rule 13 and pass a fresh order on merits and in accordance with law. Accordingly, the writ petition is allowed and the impugned order is set aside. Consequently, the matter is remitted back to the first respondent to hear afresh the suo motu application under Section 13 by the first respondent along with the application filed by the petitioner for rectification dated 11.10.2017 and pass orders on both the applications on merits and in accordance with law. Such exercise shall be done by the first respondent within a period of eight weeks form the date of receipt of a copy of this order.

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• 2018 (9) TMI 1636
  Proceedings under section 158BC and 158BD - proceedings against Karta of HUF - seizure of several cheques belonging to Rakesh K. Shah HUF drawn on Catholic Syrian Bank - petitioner right to maintain petition on behalf of karta - Held that:- The petitioner cannot maintain this litigation. The petitioner is a member of HUF. His father Rakesh K. Shah was a Karta of HUF, as stated in the petition, had taken appropriate steps at the relevant time to protect the interest of the HUF. The cause of action arose way back in the year 2001. The petitioner has filed this petition in the year 2018 only on the ground that he was born in the year 1997 and therefore attained majority only recently. The Karta of the HUF having initiated the litigation and having persuade the remedies against the action of the Income Tax department, in absence of any allegations of misfeasance at the hands of the Karta, a member of the HUF individually cannot restart the same litigation. The law does not recognize multiple actions at the hands of different members of an HUF long many years after the cause of action had arisen. One of the essential elements of maintaining a writ petition under Article 226 of the Constitution of India which pertains to Court's discretionary powers of issuing writs, is timely action at the ends of the petitioner. The petitioner cannot file a writ petition 17 years later on the ground that he only recently attained majority. Essentially, the petitioner is taking up the cause for and on behalf of the HUF and not in his individual capacity. The Karta of the family was at the helm of the affairs at the relevant time. The petitioner does not have an independent right to raise the grievances.

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• 2018 (9) TMI 1635
  Claim of credit of TDS deducted on salary - Employer failed to deposit the TDS amount with the Department - Denial of benefit of tax deducted at source by the employer of the petitioner during the relevant financial years - Department seek to recover such amount from the petitioner or whether the petitioner is correct in contending that he had already suffered the deduction of tax, the mere fact that the deductee did not deposit such tax with the Government revenue could not permit the Income-tax Department to recover such amount from the petitioner - Held that:- The issue is no longer res integra. Division Bench of this Court in case of Sumit Devendra Rajani (2014 (8) TMI 418 - GUJARAT HIGH COURT) examined the statutory provisions and in particular Section 205 of the Income-tax Act, 1961. Facts in both case are very similar. These petitions we hold that the Department cannot deny the benefit of tax deducted at source by the employer of the petitioner during the relevant financial years. Credit of such tax would be given to the petitioner for the respective years. If there has been any recovery or adjustment out of the refunds of the later years, the same shall be returned to the petitioner with statutory interest.

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• 2018 (9) TMI 1634
  Disallowance of a part of repair and maintenance expenditure u/s 37 - fact recorded by the AO that neither vendor nor confirmation were produced during the course of assessment proceedings - ITAT deleted the addition for the reasons that the assessee had furnished PAN of venders - Held that:- The finding of the Tribunal deleting disallowance of 50% by the Assessing Officer is primarily factual. We have quoted the reply filed by the respondent/assessee before the first appellate authority. These documents and papers were relied upon by the Tribunal and the Commissioner of Income Tax (Appeals). However, copies of the said documents/papers have not been filed. There is nothing to show and establish that the findings of the Commissioner of Income Tax (Appeals) and the Tribunal are perverse and factually incorrect. No substantial question of law

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• 2018 (9) TMI 1633
  Refund of Seized cash - Execution of orders - period of limitation prescribed by the Limitation Act, 1963 for bringing a Writ Petition to this Court - Held that:- The petitioner knows that the details which he had provided prior as well have not resulted in the alleged admissible refund released or paid with interest. If the petitioner was supposed to receive this amount in terms of this Court's order within 12 weeks from 25­-3­-2008, failing which it was to earn simple interest at 6% from the date of seizure till the date of return, then, we would have expected such a petitioner to move this Court in execution proceedings so as to enforce the order. Every order passed by this Court under Article 226 of the Constitution of India can be executed as if it were a decree made in the exercise of the Ordinary Original Civil Jurisdiction of this Court. Such step is not taken as well. The Revenue should not have been allowed to retain the amount. However, the petitioner's inaction from the date of this Court's order and the period stipulated therein coming to an end, till 4­-7­-2018, which is the date on which this second petition has been filed, is enough to dismiss the petition. It is neither maintainable, and assuming it is, the same is clearly barred by delay and laches. No assistance can be derived from the Assessment Order which, in any event, is dated 2­1-2­-2009, or the communication at Page 50, dated 5-­7­-2017. It is shocking and surprising that Mr. Tiwari would argue that there is no period of limitation prescribed by the Limitation Act, 1963 for bringing a Writ Petition to this Court. Admittedly, no appeal is filed to challenge the Assessment Order dated 2­1-2­-2009 even after no cognisance is taken of the request to rectify it. Mr. Tiwari would submit that it is the respondent-­Department's fault and when it fails to comply with this Court's order and addresses a communication at page 51 dated 11­-10­-2017, we must not throw out this petition on technical grounds - no writ petition could have been brought by relying on the communication from the Revenue. We are unable to agree with the petitioner for the simple reason that this Court is not obliged to entertain belated and stale claims.

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• 2018 (9) TMI 1632
  Entitled to deduction u/s 80HHC in respect of the interest and rent earned out of business operations - whether Tribunal was right in holding that 90% of the gross receipts should be excluded from the profits of the business under Clause (baa) of Explanation to Section 80HHC? - Held that:- Question No.1 is concerned, the same has to be answered in favour of the Revenue and against the assessee in the light of the decision, in the case of Commissioner of Income Tax Vs. K.Ravindranathan Nair [2007 (11) TMI 10 - SUPREME COURT OF INDIA] wherein held the processing charges were included in the gross total income from cashew business. In terms of Cl. (baa), 90 per cent of the 'independent income' had to be deducted from gross total income to arrive at business profits to which the fraction had to be applied. Since, the processing charges constituted independent income similar to rent, commission, etc., which formed part of the gross total income, the same had to be reduced by 90 per cent as contemplated in Cl. (baa) to arrive at business profits. Therefore, the said processing charges were includible in the total turnover in the formula under section 80HHC(3) of the IT Act. The nature of every receipt needs to be ascertained in order to find out whether the said receipt forms part of/or that it has an attribute of an export turnover. When an indirect tax is collected by the taxpayer on behalf of the Government the tax recovered is for the Government. It may be an income in the conceptual sense or even under the IT Act but while working out the formula under section 80HHC(3) of the IT Act and while applying the four variables one has to ascertain whether the receipt has an attribute of export turnover. An indirect tax like excise duty does not have that element of export turnover as understood in the above formula. As stated above, it is recovered by the taxpayer on behalf of the Government - Decided in favour of revenue 90% of the gross receipts should be excluded from the profits of the business under Clause (baa) of Explanation to Section 80HHC - Held that:- So far as the second question of law is concerned, the issue has been decided by the Hon'ble Supreme Court in the case of ACG Associated Capsules (P) Ltd. Vs. Commissioner of Income Tax [2012 (2) TMI 101 - SUPREME COURT OF INDIA] as held ninety per cent of not the gross interest/rent but only the net interest/rent, which has been included in the profits of the business of the assessee as computed under the heads ‘PGBP’ is to be deducted under clause (1) of Explanation (baa) to Section 80HHC for determining the profits of the business. Matter remanded back to A.O. to work out the deductions – Decided in favor of assessee for statistical purposes.

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• 2018 (9) TMI 1631
  Addition u/s 41 - assess the benefit derived by the assessee in the form of allotment of shares, which represents deduction allowed towards the cost of production of film software during the earlier years - remission or cessation of liability occurred - Held that:- We fully agree with the decision taken by the Tribunal in confirming the order passed by the CIT (A). As rightly held by the Tribunal, for Section 41(1) to be attracted, there should be remission or cessation of liability of a third party, because the Section pre-supposes the transaction between two persons where an allowance of deduction has been made on account of loss, expenditure or trading liability and subsequently during any previous year, such person has obtained some benefit in respect of such trading liability by way of remission or cessation, etc. Thus, in the assessee's case, when the software library was capitalized, it cannot be said that any benefit or remission or cessation of liability occurred. - Decided against revenue

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• 2018 (9) TMI 1630
  Rejection of revised return - entitlement to file a revised return - whether claim of loss of stock of time expired soft drinks and bad debts made in the revised return are within the parameters of Section 139(5) and also in view of the provisions of Section 143(2)? - Held that:- The Proviso states that where the assessee rectifies the defect after the expiry of the said period of fifteen days or the further period allowed, but before the assessment is made, the Assessing Officer may condone the delay and treat the return as a valid return. Sub-Section (9) of Section 139 of the Act is a beneficial provision to the assessee, which provides them an opportunity to rectify the defects. Since the intention being that the assessment proceedings are an outcome of dialogue and discussion, the Assessing Officer is entitled to clarify all issues by issuing notice to the assessee and calling upon them to produce documents and explain their books of accounts, etc. Unfortunately, in the instant case, such procedure was not adopted when the revised return was rejected at the very threshold, which, in our considered view, ought not to have been done. For the above reasons, on the peculiar facts and circumstances of the case, we find that the assessee had not been given an opportunity as contemplated under Sub-Section (9) of Section 139 of the Act and therefore, we deem it proper to remand the matter to the Assessing Officer to redo the assessment after giving an opportunity to the assessee in terms of Section 139(5) of the Act to rectify the defects, which have been pointed out by the Assessing Officer in the assessment order. As the Revenue points out that it is not clear as to whether the bad debts, which were sought to be written off by the assessee, were, in fact, written off in the subsequent year.This issue can also be considered by the Assessing Officer while taking up the assessment afresh in terms of the above direction. Decided in favour of the assessee and the matter is remanded to the Assessing Officer to redo the assessment after giving an opportunity to the assessee to rectify the defects in the revised returns dated 24.5.1999

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• 2018 (9) TMI 1629
  Reallocating expenditure/income on account of royalty from Jammu Unit to Corporate Division - entitlement to deduction u/s 80-IB - Held that:- Tribunal observation that “however due to some unforeseen reasons the assessee could not use the technical know-how neither at Jammu Unit nor at any other units.” is without considering the findings recorded by the Assessing Officer. The Assessing Officer with reference to the nature of the sachet pouches manufactured at the Jammu Unit had held that the assessee had manufactured and produced the sachet pouches using the technical know-how provided in terms of the MoUs. The Tribunal reversed the said finding without any discussion and explanation to arrive at a completely contrary view accepting the contention of the respondent-assessee. No reason and ground have been recorded why the finding of the Assessing Officer was incorrect or wrong. Thus the matter requires reexamination by the Tribunal on the question, whether the Jammu Unit had utilized the technical know-how provided to the respondent-assessee company under the MoUs. Till this core and important aspect and question is decided, we cannot proceed and decide, the other question whether the expenditure on royalty was incurred by the Jammu Unit or the Corporate Office. - Decided partly in favour of revenue for statistical purposes.

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• 2018 (9) TMI 1628
  Exemption u/s 80G denied - registration u/s 12A confirmed - Held that:- As the assessee has drawn our attention to the letter of the Income Tax Officer from the Office of the Commissioner of Income Tax, Bhopal confirming the registration u/s 12A w.e.f. 31.12.1990. Under these facts, we deem it proper to set aside the order of the Ld. CIT(Exemption) and restore the application of the assessee to the file of the Ld. CIT(Exemption) to decide afresh in accordance with law after verifying the contention and the contents of the letter dated 25.4.2006 issued by the Income Tax Officer (Tech) for Commissioner of Income Tax, Bhopal. Grounds of the assessee’s appeal are allowed for statistical purposes.

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• 2018 (9) TMI 1627
  Entitlement to registration u/s 12AA denied - information not provided by the assessee society - Held that:- There is no dispute with regard to the fact that the Ld. CIT(Exemption) is empowered to call for such documents or information from the Trust or Institution as he thinks necessary, in order to satisfy himself about the genuineness of the activities of the Trust or Institution and may also make such enquiries as he may deem necessary in this behalf. In the present case, Ld. CIT(Exemption) had asked for certain information which were not provided by the assessee society. As perused the objects of the association. From the objects, it cannot be inferred that it is purely for the benefit of a particular religious community. Set aside the order of the Ld. CIT(Exemption) and restore the application for reconsideration. The assessee would furnish requisite details along with supporting evidences in respect of its activities before the Ld. CIT(Exemption). Appeal filed by the assessee is allowed for statistical purposes.

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• 2018 (9) TMI 1626
  Disallowance of artificial loss made on account of fictitious transactions - bogus purchases - Held that:- It is clear from the order of the AO that Highland Industries Limited booked bogus sales to Saraf Chemicals Limited and bogus purchases from L.N Chemicals and Modhera Chemicals. The profit was generated out of this arranged transaction of sale and purchase. This profit was set off from fictitious loss created out of transactions between Highland Industries Limited and Tempatation Foods Limited. AO held that the loss claimed by the assessee company on the transactions made from Temptation foods was fictitious and ought to be disallowed. This factious loss was created only to square off the profits shown from Sharaf Chemicals. Without controverting the detailed finding so recorded by the AO, the CIT(A) has deleted the addition merely by observing that the books of accounts of the assessee were audited and have not been rejected by the AO. CIT(A) also stated that no enquiry was done by the AO to establish that the activity on which losses were shown by the assessee were bogus. Without giving any positive finding on the enquiry which AO has failed to do, the CIT(A) cannot delete the addition just by stating that AO has failed to do the enquiry. There should be positive finding by CIT(A) in support of his action of deleting the addition made by AO. We set aside the order of CIT(A) on this issue and restore the matter back to his file for making due enquiry to find out the nature of loss having been incurred by the assessee which was used to set off the income found to be earned during the course of survey. - Appeal of the Revenue is allowed for statistical purposes.

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• 2018 (9) TMI 1625
  Addition on account of corpus fund received front Director Sports, Govt, of Uttarakhand - assessee is not registered under section 12 A/12 AA - Held that:- It is observed from communication between assessee and Government of Uttarakhand Department of Culture, Tourism and Games, Dehradun, dated 01/12/14, that funds were released, as ‘corpus fund’ for operation of Civil Services Institute construction at Dehradun. It is also observed that only reason for disallowance of claim of assessee is because, phrase “Corpus Fund” has not been mentioned in letter dated 23/03/11, issued by Principal Secretary, Government of Uttarakhand to Director of Sports, Uttarakhand Culture, Tourism and Games. However it is observed that in Minutes of meeting by Government of Uttarakhand Department of Culture, Tourism and Games, dated 31/05/13 presided over by Chief Secretary, there is a specific reference regarding budget allocation of ₹ 5 crore as “corpus fund” from Sports Department to assessee, for its daily functioning in clause (vii). No doubt on nature of funds to be towards ‘corpus’. Further assessee has been able to prove that corpus fund was received for meeting out capital expenditure which according to explanation of assessee have been used actually to meet the capital expenditure. Thus, in our considered opinion, corpus fund which is meant for specific purpose to meet out capital expenditure could not be part of annual receipts of the Society, even if no registration u/s 12AA has been granted. Disallowance of depreciation claimed - Held that:- As observed that Principal Secretary, Uttarakhand on 29/03/11 directed Sports Department, Uttarakhand to bring assessee into existence. He nominated budget fund to meet planned cost for construction of building for assessee. It is observed that Ld. A.O. relied upon the view that the building owned by assessee has been constructed by the grant sanctioned by Government of Uttarakhand and, therefore, in view of Explanation 10 to Section 43(1), depreciation could not be allowed on such construction. As we have already held in preceding paragraphs that the money received by assessee from Government of Uttarakhand was in the nature of corpus which was to be utilised for capital expenditure of assessee, we differ to follow the view taken by Ld.CIT(A). Further it is observed that objects of society works on principle of mutuality and has been created for benefit of its members. We therefore direct Ld. AO to allow the depreciation on such building as claimed by assessee. Treatment of interest earned by assessee as “Income from Other Sources” - Held that:- Amount on which interest has been earned by assessee, itself is exempt from tax under ‘doctrine of mutuality’. Further it has been observed from objects of the society that treatment of excess funds must be in furtherance of objects of society. In the instant case, surplus funds were to be used for any specific service, infrastructure, maintenance or for any other direct benefit for members. Further from submissions of assessee before Ld. CIT (A) it is observed that bank with whom fixed deposits are maintained are not its members and assessee did not claim for any exemption of interest income on the basis of ‘doctrine of mutuality’, instead has considered for taxability under head ‘Income from Business’. We therefore do not find any reason to change the head of interest income to “income from other sources”. - Assessee appeal allowed.

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• 2018 (9) TMI 1624
  Addition u/s 14A - Held that:- The decision of Hon’ble High Court in PCIT Vs. Nirma Credit & Capital (P) Ltd. [2017 (9) TMI 485 - GUJARAT HIGH COURT] is brought to our notice and it is so held in the said decision that for the purpose of applying factors contended in clause (ii) of sub-rule (2) of rule 8D, prior to its amendment w.e.f. 02.06.2016, amount of expenditure by way of interest would be the interest paid by the assessee on borrowings minus taxable interest earned during the financial year. As a matter of fact CIT (A) also placed on reliance on the decisions of the ITAT reported in the case of Income Tax Officer, Ahmedabad Vs. Karnavati Petrochem Pvt. Ltd. [2014 (1) TMI 920 - ITAT AHMEDABAD]. No circumstances are brought to our notice to say as to why the decisions of the Tribunal stated above and also the decision of Hon’ble Gujarat High Court shall not be made applicable facts of the present case. We are convinced with the reasoning adopted by the Ld. CIT(A). MAT computation - calculating the income u/s 115JB - assessee had debited income from SEZ which is to the tune of ₹ 46,04,41,180/- besides not claiming deduction u/s 80 IAB of the Income Tax Act, 1961 and thereby reduced the book profit from ₹ 47,00,02,273/- to nil - Held that:- As decided in assessee's own case it is permissible under law for the assessee to claim deduction under sub section 1 of section 80 IAB of the Act for any 10 consecutive assessment years out of 15 years beginning from the year in which a special economic zone has been notified by the Central Government and it is not open for the AO to draw an inference that the assessee has to choose either the postponement of the benefits u/s 80 IAB of the Act or the deduction u/s 115 JB of the Act. Addition u/s 14 A of the Act while computing book of profit u/s 115 JB - Held that:- Special Bench of this Tribunal in ACIT Vs. Vireet Investment (P) Ltd. [2017 (6) TMI 1124 - ITAT DELHI] (Special Bench) held that computation under clause (f) of explanation 1 to section 115 JB (2) of the Act is to be made without resorting to computation as contemplated u/s 14A of the Act r/w Rule 8D of the Rules. - Decided against revenue

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• 2018 (9) TMI 1623
  Rejection of books and accounts - estimation of profit - Held that:- CIT (A) has not assigned any basis for estimating net profit rate of 6.5%. Although it is apparent from the orders of both the lower authorities that the assessee has been extremely negligent and careless in his approach and even after being given numerous opportunities, he failed to produce the books of accounts. All the same, the action of both the lower authorities in estimating the net profit rate without any basis can also not be approved. Therefore in the interest of justice, we deem it expedient to restore the issue to the file of the Assessing Officer to decide the issue de novo after giving due opportunity to the assessee to present its case and we also direct the assessee to produce the books of accounts before the Assessing Officer, failing which the Assessing Officer shall be at liberty to estimate the net profit rate as per law. - Decided in favour of assessee for statistical purposes.

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• 2018 (9) TMI 1622
  Addition as undisclosed income - submission on behalf of the assessee that the amounts that were paid in cash to the seller had already been disclosed in the return of income of the assessee and the addition is only on the surmises and junctures - Held that:- On a careful perusal of the orders of the authorities below, we are of the considered opinion that except this presumption on part of the Assessing Officer that the assessee will have to make the balance sale consideration of ₹ 1.17 crores in cash, besides which the assessee should have entered into contracts similar nature to make an addition of ₹ 2.5 crores, absolutely there is nothing in the custody of the Assessing Officer to justify the same. As rightly observed by the Ld. CIT(A) the submission of the assessee that if, in a span of 7 months, the assessee earned a sum of ₹ 5.13 crores, it does not guarantee that he went on earning at similar proportions in the balance period also. The Assessing Officer is not sure where the assessee made payment of balance sale consideration or not. However, the submission of the Ld. AR is that subsequently on 17.01.2013, ultimately, the sale was cancelled by way of a cancellation deed and a copy of the cancellation date is placed on record. We find justification in the observations of the Ld. CIT(A) that there is no guarantee that the assessee paid the balance sale consideration out of the unexplained earnings during the remaining period of the year. No addition could be sustained on presumptions. We, therefore, find any amount of strength in the reasoning adopted Ld. CIT(A), and we do not find any reason to interfere with the same. We accordingly dismiss this ground of appeal. Addition made on account of personal use - Held that:- It is an admitted fact that the final accounts submitted before the Assessing Officer are accepted and the balance sheet shows the withdrawals by the assessee which are adequate for their expenses. Ld. CIT (A) held that in the absence of any specific discrepancy pointed out by the Ld. Assessing Officer no addition cannot be sustained. In the facts and circumstances involved in the case we are also of the same opinion. We, therefore, uphold the findings of the Ld. CIT(A) on this aspect. - Revenue appeal dismissed.

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• 2018 (9) TMI 1621
  Correct head of income - notional rental income on the flats held as stock-in-trade - whether the notional annual rental value on unsold flats held as stock-in-trade by the assessee is to be assessed under the head Business Income or under the head Income from House Property ? - Held that:- Mumbai Bench of the Tribunal in M/s. C.R. Developments Pvt. Ltd. Vs. JCIT [2015 (5) TMI 1161 - ITAT MUMBAI]), M/s. Runwal Constructions Vs. ACIT [2018 (2) TMI 1707 - ITAT MUMBAI] and Shri Girdharilal K. Lulla Vs. DCIT [2017 (12) TMI 519 - ITAT MUMBAI] under similar set of facts have taken a consistent view in holding notional annual rental value on unsold flats held as stock-in-trade by the assessee engaged in construction and development activities as Business Income‟. Thus, in view of the facts of the case and the decision rendered in the case of Commissioner of Income Tax Vs. Neha Builders (P.) Ltd. [2006 (8) TMI 105 - GUJARAT HIGH COURT] we find merit in the submissions of assessee and allow the appeal.

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• 2018 (9) TMI 1620
  Addition on account of interest on reverse fund - Held that:- The assessee has made a provision in the profit & loss account as ‘interest on reserve fund’. This provision is made by the assessee on notional basis and not accrued liability, therefore, Assessing Officer has made addition on this count and the ld. CIT(A) confirmed the same on the ground that it is a provision on notional basis and does not ascertain to be accrued liability. We find no infirmity in the order passed by the ld. CIT(A). Thus, this ground of appeal raised by the assessee is dismissed. Addition on account of interest on deficit cover fund - Held that:- As find that it is a provision made by the assessee on notional basis and it cannot be considered as an accrued liability. Mere provision made in the accounts would not be eligible for deduction. We find that ld. CIT(A) correctly confirmed the order of the Assessing Officer. Thus, this ground of appeal raised by the assessee is dismissed. Addition of claim towards staff gratuity - Held that:- In the instant case the assessee has made the payments to the LIC towards group gratuity scheme directly in approved schemes. The assessee has also obtained the policy in favour of the bank. The assessee has no control over the funds contributed to LIC towards the gratuity. The assessee is receiving the gratuity payment directly from the LIC of India as per the scheme which is paid to the employee on happening of the event i. e. retirement or death or resignation. We hold that the assessee is entitled for the deduction for payment of gratuity to LIC and accordingly, we set aside the order of the lower authorities and allow the appeal of the assessee. Amortization loss on account of merger of Palakol Cooperative Urban Bank - Held that:- It is very clear that assessee company being an Indian company can only make a claim under section 35DD of the Act. The Income Tax Act, 1961 has defined what is an Indian company, as per section 2(26), Indian company means a company formed and registered under the companies Act 1956. In the present case, the assessee is not an Indian company and not registered under the Companies Act, 1956. It is only a Co-operative bank, therefore, assessee is not eligible to make claim under section 35DD of the Act. The main condition which needs to be fulfilled is that the said loss should have been allowable in the hands of Palakol Bank (Amalgamated bank) as per the provisions of the Act. The entitlement as to allowance of such loss in the hands of Palakollu Bank or its eligibility otherwise to be carried forward under the provisions of section 72 was not proved. Therefore, once this condition is not fulfilled the acquirer bank (assessee) is not eligible to carry forward the said losses/unabsorbed depreciation as per the provisions of section 72AB of the Act. We find that the Assessing Officer has rightly denied the claim of the assessee and the same is confirmed by the ld. CIT(A). We find that the assessee neither acquired goodwill nor any commercial right. Therefore, assessee is not eligible for claim under section 32 of the Act. We find no reason to interfere with the order passed by the ld. CIT(A). Thus, this ground of appeal raised by the assessee is dismissed. Amortization of premium on Government Securities i. e. HTM - Held that:- From the details filed, it is seen that the securities were held under HTM category and the premium paid over the cost of acquisition have been amortized over a period of maturity and claimed as allowance. He found that assessee’s claim is in accordance with the CBDT Instruction and directed the Assessing Officer to allow this claim and delete the addition. The ld. Departmental Representative has not pointed out any error in the order passed by the ld. CIT(A), which is neither contrary to any provision of law nor CBDT Circular. We have also considered CBDT circular and find that ld. CIT(A) by following the Circular No. 17/2008, dated 26/11/2008 directed the Assessing Officer to delete the addition. We find no infirmity in the order of the ld. CIT(A). Thus, this ground of appeal raised by the Revenue is dismissed.

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• 2018 (9) TMI 1619
  Revision u/s 263 - rejection of books of accounts and estimation of income - Held that:- AO made due verifications of both the issues raised in the assessment order and there is no scope for inferring the adverse view. Since the income is estimated on gross turnover, the AO is not permitted to make any other addition on account of trade creditors. No error caused prejudice to the interest of the revenue from the order of the AO. Therefore, we hold that the Ld.Pr.CIT has invoked jurisdiction without any material to support his view. At best, it can be called as inadequate enquiry, but not lack of enquiry. Though lack of enquiry is a reason for taking up the case for revision, inadequate enquiry does not give any scope for invoking the jurisdiction u/s 263. Therefore, we cancel the order u/s 263 and restore the assessment order. - decided in favour of assessee.

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• 2018 (9) TMI 1618
  Disallowance of interest expenses - capitalization of interest paid as part of the cost of any asset - Held that:- The first condition for applicability of the proviso is that there should be acquisition of an asset. The second condition is that such acquisition should be for extension of existing business. In the present case both the conditions are not satisfied. There was no acquisition of any asset by the Assessee from NGEF or HUDA and both the transactions did not ultimately fructify. Assessee had to abandon its idea of carrying out development on these properties. Assessee was already in the business of acquiring properties and constructing flats. In the ordinary course of its business, the Assessee sought to acquire properties from NGEF and HUDA. Therefore it cannot be said that the Assessee indulged in any extension of existing business or profession. It is clear that at no point of time the Assessee was certain of acquiring the properties either from NGEF or HUDA. As far as the transaction with NGEF is concerned, the Division Bench dismissed the Assessee’s claim for acquiring the property much prior to the end of the relevant previous year. Though the Assessee preferred appeal before the Hon’ble Supreme Court against the order of the Division Bench of the Karnataka High Court, the same was ultimately dismissed on 25.9.2008 and the Assessee was to get back only the EMD paid by it to the Official Liquidator together with interest. The interest income was offered to tax by the Assessee in AY 2008-09 and the interest expenditure in connection with borrowing funds for paying the EMD was also claimed as deduction and revenue expenditure for the relevant previous year. The interest expenditure was therefore rightly held by the CIT(A) to be for the purpose of business of the Assessee and an allowable deduction u/s.36(1)(iii). As far as the EMD paid to HUDA is concerned, Assessee as early as 27.11.2006 has rescinded the agreement to acquire property from HUDA. The expenditure incurred in the form of interest on borrowings to pay the EMD to HUDA has to be considered as borrowing for the purpose of business of the Assessee allowable u/s.36(1)(iii) of the Act. - Decided against revenue.

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• 2018 (9) TMI 1617
  Reopening the assessment u/s 147 - addition of cash credit - Held that:- When the same AO repeated the addition of cash credit in the set aside proceedings in case of M/s. Rasal Builders and Developers Pvt. Ltd. vide order dated 06.12.2010, the reopening after the order of ld. CIT (A) is nothing but based on the satisfaction of the ld. CIT (A). AO reaffirming its stand in the case of M/s. Rasal Builders and Developers Pvt. Ltd. in two rounds of proceedings cannot be allowed to resort to provisions of section 148 when his stand was reversed by the ld. CIT (A) in the second round of litigation. What the AO failed to do on his own cannot be done on the basis of the order of the appellate authority in the case of other assessee. The notice issued u/s 148 was only after receiving the letter dated 23rd September, 2011 and, therefore, the reopening is only in compliance of the said letter and not based on the opinion and independent application of mind of the AO. We set aside and quash the reopening of the assessment being not sustainable in law and consequently the reassessment order is set aside. - Decided in favour of assessee

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• 2018 (9) TMI 1616
  Penalty u/s 271D - Default in accepting the cash loan in violation of section 269SS - urgency of matter - Held that:- It is explained by the assessee that it was in the process of undertaking a real estate project for which it was to execute a sale deed which required payment of stamp duty of an amount of ₹ 3,00,000 or thereabout. Since, the stamp duty was to be paid urgently, the assessee had no other option but to avail the cash loan from the directors. On a perusal of the bank statement copy filed it is noticed that the cash loan of ₹ 3,50,000 was deposited in bank account on 5th October 2010 and on the very same day, the said amount was transferred from the bank account to the Sub–registrar and some other Government Agency towards payment of stamp duty. This fact is also corroborated from the endorsement made in the sale deed executed by the assessee. Thus, prima–facie, it appears that for payment of stamp duty the assessee was compelled to avail the cash loan from the directors looking at the urgency of the matter. there is a reasonable cause for the default or failure on the part of the assessee to comply to the provisions of section 269SS of the Act. That being the case, imposition of penalty under section 271D not justified - Decided in favour of assessee

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• 2018 (9) TMI 1615
  Penalty proceedings u/s 271(1)(c) - disallowance of ex-gratia payment to the staff in excess of entitlement of bonus which was 8.33 after invoking the provision of section 43B - Held that:- AO has invoked the provision of section of 43B(c) holding that such a difference of ₹ 5,90,656/- falls within the ambit of scope of 43B r.w.s. 36(1)(ii). However it has not been pointed out by him that such an ex-gratia payment, whether falls within the provision of Bonus Act or not; or whether such a payment made to its labourers and staff was not during the course of carrying on the business or for commercial expediency. Here the payment has been treated as ex-gratia by the assessee which otherwise is allowable but AO has treated it as part of bonus and brought within the scope of section 43B denied simply because the AO has tried to bring such payment within the scope of section 43B, this action of the AO does not lead to an inference that either the assessee has furnished inaccurate particulars of income or has made any false claim. Even if such ex-gratia payment is in excess of the limit prescribed under the payment under Bonus Act or u/s 36(1)(ii), but same being in the nature of business expenditure cannot be held that claim of such expenditure warrants any levy of penalty u/s 271(1)(c). - Decided in favour of assessee.

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• 2018 (9) TMI 1614
  Levy of penalty u/s 272A(2)(k) - delay in remittance of the TDS Amount in the Govt. Account - whether the explanation tendered by the appellant in support of delay in submission of quarterly returns can be considered to be plausible? - Held that:- The explanation that the delay was caused on account of delayed remittance of tax deducted amount to the Govt. Account and the ignorance of the provisions of law on the issue as the company was newly set up can be considered to be reasonable having regard to the ratio laid down in the case of Budhan Singh & Sons [1983 (1) TMI 71 - ALLAHABAD HIGH COURT] wherein it was held that when the assessee is in the first year of business operations, ignorance of provisions of law can be held to be reasonable cause for non-compliance of the provisions of law. Further the columns of Form 26Q also contains columns requiring the details as to the date of the deposit of the TDS Amount in the Govt. Account. Therefore, when there is a delay in remittance of the TDS Amount in the Govt. Account, this would constitute a reasonable cause for not filing the prescribed returns within the due date. The statute also prescribes different penal provisions for delay in remitting the TDS amount to the Govt account. The explanation tendered by the assessee cannot be termed as unreasonable or unplausible. Therefore we are of the considered opinion that the case on hand is not a fit case for levy of penalty u/s. 272A - Decided in favour of assessee.

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• 2018 (9) TMI 1613
  Disallowance of Investment in REC Bonds claimed as deduction u/s 54EC from LT Gain - delay between actual (Registered) transfer and effective deemed transfer was only 46 days - Held that:- As per section 54EC of the Act, any Long Term Capital Gain (LTCG), arising to any assessee, from the transfer of any capital asset on or after 01.04.2000 shall be exempt to the extent such capital gain is invested within a period of six months after the date of such transfer in the long-term specified asset provided such specified asset is not transferred or converted into money within a period of three years from the date of its acquisition. The investment is restricted only upto ₹ 50,00,000/-. In the instant case, the purchase agreement was registered on 05.08.2011. Again an additional stamp duty of ₹ 1,41,070/- was paid on 22.03.2012 and thus the registration was completed. The appellant purchased the REC Bond on 31.03.2012. As per it the assessee has paid ₹ 1,41,070/- towards additional stamp duty on 22.03.2012 to complete the process of registration of the ‘Purchase Agreement’. The assessee filed its return of income for the impugned assessment year on 20.03.2014. The AO completed the assessment u/s 143(3) on 04.03.2015. Thus no one can say that the payment of additional stamp duty by the assessee is an afterthought. To sum up by paying the additional stamp duty of ₹ 1,41,070/- the appellant completed the process of registration of the ‘Purchase Agreement’ on 22.03.2012. The appellant purchased the REC Bond on 31.03.2012. We set aside the order of the Ld. CIT(A). - Decided in favour of assessee

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• Customs

• 2018 (9) TMI 1606
  Effect of notification - Restriction imposed on import of yellow peas - vide Notification No. 32 dated 30th August, 2018 - Held that:- Respondents are clear that policy change on a particular item applies prospectively from the date of Notification unless it is otherwise provided for. Here, while imposing restriction on 30th August, 2018, no words providing otherwise are employed. There is nothing on record, therefore, to show that the Notification No. 32/2015-20, dated 30th August, 2018 has to operate retrospectively. The documents filed by petitioner along with petition show that against two contracts, the balance 90 per cent amount was paid respectively on 23.05.2018 and 04.06.2018. Yellow Peas forming subject matter of those two contracts were to be loaded at Ukraine and unloaded at Nhava Sheva Port. The shipments were accordingly loaded on 28.04.2018 and 10.05.2018 and have reached the port of discharge on 23.05.2018 and 31.05.2018. These details, therefore, show that before 30th August, 2018, the contract was fully executed - respondents is directed to take necessary steps to permit petitioner to lift and use imported Yellow Peas in these two shipments without subjecting them to the restriction imposed vide Notification No. 32 dated 30th August, 2018. Petition allowed.

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• 2018 (9) TMI 1605
  Valuation - declared value - declared value of the goods in the bill of entry applied by it was accepted but later, on the allegations levelled by the Directorate of Revenue Intelligence (DRI), the question is sought to be revisited - case of petitioner is also that it has been subjected to harassment and its representatives repeatedly summoned to attend DRI proceedings in Ahemdabad - Held that:- This Court is of the opinion that since the respondents have now carried out their appraisal of the imported articles, the petitioner may, if it chooses, apply for provisional release of the goods. In case the conditions imposed upon the petitioner are not acceptable to it for any reason or the conditions are also honoured, it is open to the petitioner to avail appropriate remedy before CESTAT - petition disposed off.

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• 2018 (9) TMI 1604
  Revocation of CHA License - imposition of penalty - contravention of 11(a), 11(d) and 11(e) of CBLR 2013 - case of applicant is that once the documents as allegedly deficient were already submitted, that there was no reason for revoking the CHA license under section 11 of CBLR as alleged - Held that:- It is apparent from his application that in the financial year 2018 itself, he has filed 13,000 Bill of Entry / shipping bills. It is mentioned that as far as impugned consignment is concerned, it is one more consignment of the same importer, who was already filing Bills of Entry for clearance of the goods through the appellant/applicant and that the previous consignments have duly been cleared - it is prima facie apparent that documents have been complete with reference to the said previous consignments. It is also an apparent and admitted fact that for the impugned consignment also the importer, the CHA and even the introducer are same. Apparently there seems no question of different set of documents as that of KYC including PAN, authorization letter etc. of the importer. This Tribunal in another matter with respect to the present applicant itself, M/S. HIM LOGISTICS PVT. LTD. VERSUS CC, NEW DELHI [2016 (4) TMI 971 - CESTAT NEW DELHI], has also held that once CHA is ascertained to have followed KYC norms and verifying the copies of requisite documents, there remains no legal requirement on his part for physically verifying the business and their residential premises of the importer. Since the appellant, prima facie seems to have complied with the obligation cast upon him, revocation of his license is unproportionate penalty - In view of the arguments on behalf of the applicant that the order under challenge has not properly appreciated the fact of the compliance of Regulation 11C of CBLR 2013 on part of the appellant the revocation is prima facie opined to be harsh order causing prima facie irreparable loss not only to the CHA but to his employees as well. These observations are opined sufficient for staying the operation of revocation of CHA license. Application disposed off.

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• 2018 (9) TMI 1603
  Prohibition order on CHA - prohibiting the appellant from working in any sections of the Chennai Customs station under the jurisdiction of Chennai Customs Zone - misuse of IE Code by third parties, without their consent or knowledge - it is also a case of appellant that prohibition order has been continued for a long time without giving a specific period of prohibition and without any SCN to initiate proceedings for revocation of licence. Held that:- The prohibition order issued without mentioning any specific period cannot sustain and requires to be set aside - however the Department is at liberty to initiate proceedings under Regulation 20 of CBLR as per the provisions therein - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 1602
  Benefit of N/N. 21/2005-Cus. - whether a part of the accessory of a mobile handset would also qualify for exemption under N/N. 21/2005-Cus.? - Held that:- There is no dispute that the mobile charger is an “accessory” of a mobile handset. Further, Tribunal in the case of TWENTY FIRST CENTURY BUILDERS VERSUS COMMISSIONER OF CUS., NEW DELHI [2004 (8) TMI 428 - CESTAT, NEW DELHI], has held that parts of accessory of a mobile phone cannot get the benefit which is otherwise available to the mobile phone or its accessory under Notification 21/2002. Appeal dismissed - decided against appellant.

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• 2018 (9) TMI 1601
  Valuation of imported goods - rejection of invoice value - enhancement of value to 166.6% under Rule 8 of the Customs Valuation Rules, 1988 - appellant has produced a working sheet to argue that the deductive method under Rule 7 can be resorted to arrive at the value of the goods - Held that:- In the impugned order, the Commissioner (Appeals) has noted that the appellant has not furnished any data / details to resort to Rule 7 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. The ld. counsel has pleaded that if an opportunity is given to them, the appellant would be able to establish their case with regard to adoption of deductive method. This is a fit case to be remanded to consider the plea of the appellant with regard to whether the deductive method is to be applied - appeal allowed by way of remand.

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• Corporate Laws

• 2018 (9) TMI 1609
  Tenure of the Director - Permanent (non-rotational) director as supported by the Articles of association - Other directors proposed to removed the petitioner by calling EGM - Seeking permanent injunction against the Defendants from conducting an Extraordinary General Meeting (‘EGM’) for removing the Plaintiffs - Held that:- A perusal of the Articles of Association clearly shows that the Plaintiff No.1 is a non-rotational Director and can remain so long as he does not voluntarily resign. However, this Article is subject to the provisions of the Companies Act which permits the removal of a Director by majority share holders in a lawfully requisitioned EGM. Article 17 of the Articles of Association cannot therefore be treated as having precedence over the provisions of the Companies Act. No injunction from calling the EGM can therefore be granted. The resolutions sought to be passed in the EGM have already been circulated. The hearing, if any, that the Plaintiffs seek can only be granted at the EGM and not before. The EGM having not been held, the suit is not maintainable and is also premature. The injunction in respect of the EGM does not deserve to be granted. No other relief is pressed or arises. Thus, the present suit is not maintainable and is therefore dismissed.

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• 2018 (9) TMI 1608
  Rectification of the Register of Members for the purpose of entering the name in 1st Respondent Company's register - forfeiture of shares - Whether or not the petitioner is entitled to get his name entered in the register of the members of the 1st Respondent Company? - Held that:- In the light of the provisions of the Articles of Association of the company and the decision taken by the Board of Directors to forfeit the shares of the Petitioner, it can safely be concluded that the Petitioner is not a member of the 1st Respondent Company as his shares stand forfeited for non-payment of the subscription money. The Petitioner has miserably failed to support his contention for rectification of the Register of Members for the purpose of entering his name in the Register of members of 1st Respondent Company. Though petitioner claims that he has been chairing all the Board Meetings and was in charge of the finance and fund raising matters, but he did not open any account of the 1st Respondent Company with the Bank and even not maintained any record, particularly with the regard to the payment, if any, of subscription money for 25,000 of shares subscribed. Even, he did not file PAS-3 to intimate the RoC of the allotment of shares being made by the Company. The defence of the Petitioner that the Respondents have fabricated all the record relating to the 1st Respondent Company is hollow and therefore, stands rejected. Thus, the issue raised under stands decided against the Petitioner, as he is not legally entitled to seek relief under prayer ‘D'

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• 2018 (9) TMI 1607
  Scheme of Amalgamation - bar to allow/sanction merger of an Indian LLP with an Indian Company - Held that:- This is the clear case of casus omissus. If the intention of the parliament is to permit a foreign LLP to merge with an Indian Company, then it would be wrong to presume that the Act prohibits a merger of an Indian LLP with an Indian Company. Thus, there does not appear any express legal bar to allow/sanction merger of an Indian LLP with an Indian Company. There is no additional requirement for any modification and the said Scheme of Amalgamation appears to be fair and reasonable and is not contrary to public policy and not violative of any provisions of law. Taking into consideration the above facts, the Company Petition is allowed and the Scheme of Amalgamation annexed with the Petition is hereby sanctioned which shall be binding on the partner, shareholders, creditors and employees of the Companies. The Scheme shall become effective from the date on which the certified copy of this order sanctioning the scheme is filed with the ROC, Chennai. While approving the Scheme as above, it is clarified that this Order will not be construed as an order granting exemption from payment of stamp duty or taxes or any other charges, if payable, as per the relevant provisions of law or from any applicable permissions that may have to be obtained or, even compliances that may have to be made as per the mandate of law. The Transferee Company is directed to file the amended MoA and AoA with the RoC, Chennai, for his records. The Companies to the said Scheme or other person interested shall be at liberty to apply to this Bench for any direction that may be necessary with regard to the working of the said Scheme. A certified copy of this Order shall be filed with the concerned Registrar of Companies within 30 days of the receipt of the Order.The Order of sanction to this Scheme shall be prepared by the Registry as per the relevant format provided

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• Insolvency & Bankruptcy

• 2018 (9) TMI 1612
  Corporate Insolvency Resolution Process - proof of dispute in regard to raising of loan by the Corporate Debtor in the nature of a financial debt which was due and payable - Held that:- Internal dispute of Directors of Corporate Debtor and pendency of application under Section 241 and 242 of Companies Act, 2013 before NCLT, New Delhi Bench for adjudication does not construed a valid defense to triggering of Insolvency Resolution Process. I&B Code is a special law having an overriding effect on any other law as mandated under Section 238 of I&B Code. Triggering of Insolvency Resolution Process cannot be defeated by taking resort to pendency of internal dispute between Directors of Corporate Debtor on allegations of oppression and mismanagement. The statutory right of a Financial Creditor satisfying the requirements of Section 7 of the I&B Code to trigger Insolvency Resolution Process cannot be made subservient to adjudication of an application under Section 241 and 242 of the Companies Act, 2013. I&B Code is supreme so far as triggering of Insolvency Resolution Process is concerned and same cannot be eclipsed by taking resort to remedies available under ordinary law of the land. Thus we are of the firm opinion that the instant appeal is frivolous and the Appellant has encroached upon the precious time of this Appellate Tribunal on flimsy grounds. It lacks merit. Admission is accordingly refused and appeal is dismissed.

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• 2018 (9) TMI 1611
  Corporate insolvency process - outstanding financial debt - Held that:- There are Promissory Notes given by the Corporate Debtor through their directors/authorised signatories to the Applicants. These documentary evidences have not been controverted by the Resolution Professional or Respondent Nos. 3 to 5 or the Respondent No.6. The Resolution Professional has raised an issue under Para 7 of his reply filed on behalf of the Corporate Debtor that the provisions of section 58A of the Companies Act, 1956 r/w the Companies (Acceptance of Deposit) Rules, 1975, have not been complied with by the Applicants, whereas the said provisions along with the relevant Rule, were to be complied with by the Corporate Debtor and not by the Applicants. Even if it is assumed that the relevant provisions along with the Rule have not been complied with, the same shall not render the transactions as null and void. Because, the non-compliance of the provisions of the Companies Act and the relevant Rules entail punishment for the Officers of the Corporate Debtor, who are in default but section 58A of the Companies Act, 1956 or even the provisions of sections 73 to 76 of the Companies Act, 2013, do not prohibit the return of the loans/advances taken from the Applicants by the Corporate Debtor. The members of the CoCs cannot dispute the claim of the Applicants in any manner as there is no provisions in the I&B Code, 2016, empowering the CoCs to decide the claim of the co-creditors. The Corporate Debtor or Resolution Professional cannot take the advantage of its/his own wrongs. Miscellaneous Application is allowed and the claim of the Applicants stands admitted to the tune of ₹ 1,50,94,000/-; the representative of the Applicants is permitted to attend the CoCs and exercise rights attached thereto. Therefore, the Resolution Professional is directed to enter the names of the Applicants in the list of the Financial Creditors, allow their representative to participate in the CoC and exercise the right attached thereto without making any delay, and file the status report before the Registry through an Affidavit within 3 days from the date of pronouncement of this Order.

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• 2018 (9) TMI 1610
  Corporate Insolvency Resolution Process - whether there is a pre-existing dispute between the parties before issuance of a demand notice? - Held that:- In the case on hand, first of all no notice of dispute has been issued by the respondent. Even if no notice of dispute is issued this Adjudicating Authority has to find out whether there was a pre-existing dispute between the parties before issuance of a demand notice. The suit filed by the respondent against M/s. Sumitomo Electronic Industries Ltd. and the petitioner questioning the termination of the Distributionship Agreement dated 01.04.2016 that exists between the petitioner and the respondent without assigning any reasons, by issuing email dated 07.04.2017 by the Sumitomo Electronic Industries Limited and for restraining the Sumitomo Electronic Industries Limited and respondent herein from giving distribution of splicing machines to M/s. Invas Technologies Pvt. Ltd. and M/s. Candid Optronix Pvt. Ltd. Senior Civil Judge granted temporary injunction directing M/s. Sumitomo Electric Industries Ltd. and the respondent herein to supply the spare parts of the splicing machines which were already supplied on the same terms and conditions and on condition of paying the costs of the spare parts, accessories etc. A perusal of the aforesaid order passed by the Senior Civil Judge and the counter in the above said applications clinchingly show that the dispute that is pending in the City Civil Court or in the Hon'ble High Court of judicature at Hyderabad has nothing to do with the operational debt claimed in this petition. The operational debt claimed in this petition is pertaining to the period upto 30.03.2017 and during the subsistence of the Distributionship Agreement. The dispute that is pending in the Civil Court pertain to the termination of the Distributionship Agreement dated 01.04.2016 and the consequential reliefs. It is not even the case of the respondent that on account of the termination of the Distributionship Agreement he has not paid the operational debt. Therefore, the dispute in Civil Court do not relate to the operational debt that is claimed in this petition. The dispute that is pending has nothing to do with the operational debt claimed in this petition. Therefore, there does not exist dispute relating to operational debt claimed in this petition prior to the issuance of demand notice. The petition is complete in all respects. Petition deserves to be admitted and it is accordingly admitted.

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• Service Tax

• 2018 (9) TMI 1599
  Substantial question of law - Held that:- The questions as proposed do not give rise to any substantial questions of law as issue raised stand concluded by the decision of this Court in CST Vs. Kumar Beheray Rathi [2018 (2) TMI 1056 - BOMBAY HIGH COURT] - appeal dismissed.

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• 2018 (9) TMI 1598
  Classification of Services - Whether the service provided by M/s. Rochem AG Swizerland to the Respondent herein is covered under the Intellectual Property Right Service' falling under Clause (zzr) of Section 65(105)? - Held that:- This question become academic as it is undisputed that the show cause notice has been issued on 1st February, 2010 seeking to recover service tax for the period 2007-08 - Supreme Court in the case of Commissioner of Customs, Mumbai Vs. B.V. Jewels [2004 (9) TMI 104 - SUPREME COURT OF INDIA], has held that where the Tribunal finds that the demand by the Revenue is barred by limitation. There is no need to go into the merits of the controversy - the question does not give rise to any substantial questions of law being academic. Thus not entertained. Time Limitation - Whether the provisions of extended time period laid down in Section 73(i) are invokable in the present case? - Held that:- This question also not giving rise to any substantial question of law and is dismissed. Appeal dismissed.

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• 2018 (9) TMI 1597
  CENVAT Credit - capita goods removed from outside the premises - removal from Stores to 290 exchanges - Rule 14 of the CCR 2004 read with proviso to Section 73 (1) of the Finance Act, 1994 - Held that:- The issue stands squarely covered by the decision in the appellant’s own case, in the case of BSNL Vs CCE Jaipur [2017 (5) TMI 896 - CESTAT NEW DELHI], where it was held that In the absence of any allegation of diversion of capital goods for other than intended purpose or their clearance to third party, the Revenue is not justified in denying credit on such capital goods which are admittedly installed and utilized for providing taxable output service - Demand do not sustain. CENVAT Credit - duty paying documents - Rule 9 of CCR - reason for rejection is that post offices are not registered with the department and such Statements / bills / invoices raised by them do not become a valid document prescribed under Rule 9 - Held that:- Appellant has adduced proof of the Registration Certification No. TMPAS5321NST001 issued to the Senior Post Master, Head Post office, Trichy, copy of which has also been filed in pages 46-47 of the paper book. This being so, just because the registration certificate has not been mentioned in the TRC document issued by the Post Master, this by itself should not be a reason for denial of input service credit, especially when considering that all the other particulars required as per Rule 9 ibid have been indicated in all such documents - credit allowed. Appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 1596
  Business Auxiliary services - commission paid to foreign agents for promotion and marketing of their products - Reverse charge mechanism - Held that:- In similar set of facts, in the case of M/S. J.P.P. MILLS PRIVATE LTD VERSUS COMMISSIONER OF CENTRAL EXCISE (APPEALS) , SALEM [2017 (10) TMI 750 - CESTAT CHENNAI], the Tribunal has considered the issue and held that the benefit of Notification 14/2004 dated 10.9.2004 is eligible for such activities - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 1595
  Penalty - Interest - fraudulent availment of CENVAT credit - the appellant has reversed the credit before utilization - Held that:- The Hon’ble High Court of Madras in the case of Strategic Engineering P. Ltd. [2014 (11) TMI 89 - MADRAS HIGH COURT] has held that demand of interest and penalty cannot sustain when the credit has been reversed before utilization - in the present case, even before providing output service, the assessee has reversed the credit - demand of interest and penalty do not sustain - decided in favor of assessee.

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• 2018 (9) TMI 1594
  Non-compliance of predeposit - Demand of service tax on construction of residential complex - Held that:- During the stay application, the Tribunal has observed that the amount of ₹ 36,63,065/- deposited by the appellant is sufficient compliance of predeposit. We agree to the said observation by the Tribunal in the stay application and matter is remanded to the Commissioner (Appeals) to decide the issue on merits - appeal allowed by way of remand.

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• 2018 (9) TMI 1593
  Valuation - inclusion of reimbursable charges such as CFS charges, steamer agent charges, transport expenses etc. in the taxable value for the purpose of payment of service tax - Held that:- When department alleges specifically that the amount collected is reimbursable expenses, then at no stretch of imagination can the amount collected by appellant be considered as consideration for the service - On the issue whether the reimbursable expenses are to be included in the taxable value for discharging the service tax, the decision of Hon’ble Apex Court in the case of Intercontinental Consultants & Technocrats [2018 (3) TMI 357 - SUPREME COURT OF INDIA] would squarely apply, where it was held that only with effect from May 14, 2015, by virtue of provisions of Section 67 itself, such reimbursable expenditure or cost would also form part of valuation of taxable services for charging service tax - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 1592
  Valuation - inclusion of 70% of value towards material cost in assessable value - defence of the appellant was that they had already paid VAT on the remaining 70% of the gross charges - Department took a view that the goods used in providing the services are to be treated as inputs for providing the service and accordingly the cost of such inputs should form integral part of the taxable value of such services. Held that:- The Hon’ble Apex Court in the landmark judgment Safety Retreading Co. (P) Ltd. Vs CCE Salem [2017 (1) TMI 1110 - SUPREME COURT] has unequivocally held that when the assesseee had paid tax under the State statute on the value component of material used, service tax would be exigible only on the remaining value of services provided - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 1591
  Condonation of delay of 467 days in filing the appeal - case of appellant is that delay occurred due to the sudden illness of the staff looking after the service tax matters, who failed to bring it to the notice of the management about the impugned order - Held that:- It is also initially stated by him that they were not able to raise funds for making the predeposit. The delay of 467 days is very large and such explanations cannot be a ground for condoning the delay - thus, appellant has failed to put forward sufficient cause for condoning the huge delay of 467 days - delay cannot be condoned - COD application dismissed.

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• 2018 (9) TMI 1590
  Refund of Service Tax paid - case of appellant is that they have not been issued a show cause notice proposing to deny the refund claim - principles of natural justice - Held that:- A notice is a right of the party to enable him to know the grounds for rejection of the refund claim so as to arm himself to defend the case. It is the foundation of any lis in taxation proceedings. Without issuance of such show cause notice, the adjudicating authority has gone into the matter and rejected the refund claim. In appeal, Commissioner (Appeals) has upheld the same and also added a further ground for rejection. The rejection of refund claim without issuance of show cause notice cannot sustain - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 1589
  Construction of Complex Service - construction of residential complex and Pondicherry University(PU) and appellant’s quarters made to CPWD/PD - Demand of Service Tax - Held that:- The decision of this Tribunal in M/s. Sima Engineering Constructions [2018 (5) TMI 405 - CESTAT CHENNAI] covers the issue where relaince placed in Nitesh Estates Vs. Commissioner of Central Excise [2015 (11) TMI 219 - CESTAT BANGALORE], where it was held that If the land owner enters into a contract with a promoter/builder/developer who himself provided service of design, planning and construction and if the property is used for personal use then such activity would not be subject to service tax - demand do not sustain. Penalty - Tower Foundation for M/s. BSNL. under Commercial or Industrial Construction Service - the tax liability was paid up by the appellant albeit under another head, namely, CICS whereas the demand confirmed is under Works Contract Service - Held that:- Setting aside of penalty is judicious especially considering that the amount of tax liability was already paid up by the respondents. Appeal dismissed - decided against Revenue.

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• 2018 (9) TMI 1588
  Business Auxiliary Service - incentives/brokerage received from shipping liners - Extended period of limitation - Held that:- In some of the instances, the assessee have collected profit/margin over and above the reimbursable expenses, but in most cases they have not collected it - this aspect requires verification - matter on remand. Similarly, with regard to the disallowance of credit on input service, the same requires to be remanded to the adjudicating authority so as to give a further chance to the assessee to establish whether they are eligible for the credit on these input services. Appeal allowed by way of remand.

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• 2018 (9) TMI 1587
  Levy of service tax on commission retained - case of appellant is that retaining the commission for the service rendered to foreign insurance companies has to be treated as amount received in convertible foreign exchange and, therefore, are export of services - whether the appellants are liable to pay service tax on the commission retained by them in Indian currency? Held that:- In the appellant’s own case SUPRASESH GENERAL INSURANCE SERVICES & BROKERS PVT. LTD. VERSUS THE COMMISSIONER OF SERVICE TAX, CUSTOM, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL [2015 (9) TMI 1219 - MADRAS HIGH COURT], the very same issue was considered and the jurisdictional High Court has held the same in favour of the assessee. Appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 1586
  Valuation - includibility - whether the electricity charges and air conditioning charges collected by the appellant on actual basis from the tenants is includible in the taxable value for discharging service tax under renting of immovable property? - Held that:- It is brought out from records that electricity charges and air conditioning charges are nothing but actual charges which are being reimbursed by the tenants - The decision of the Hon’ble Apex Court in the case of Intercontinental Consultants and Technocrats Pvt. Ltd. [2018 (3) TMI 357 - SUPREME COURT OF INDIA] has held that such reimbursable charges cannot be included in the taxable value for the purpose of discharging service tax - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 1585
  CENVAT credit - input services - repairs and maintenance of the vehicles by the ‘Authorized Service Stations’ in respect of those vehicles which were insured by the appellant - Held that:- The issue has been considered by this very Bench in this very assessee’s case in M/s. United India Insurance Co. Ltd. Vs. C.C.E. & S.T., LTU, Chennai [2018 (6) TMI 200 - CESTAT CHENNAI], where it was held that the service tax paid on the bill of the ASS is to be considered as falling within the definition of the input service which is used for providing the output service of the vehicle insurance - credit allowed - appeal dismissed - decided against Revenue.

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• 2018 (9) TMI 1584
  CENVAT Credit - insurance services - Motor Insurance Policy for motor vehicles against theft, damage and third-party liability - service tax paid on reimbursement of the repair charges - Held that:- The identical issue decided in the case of M/S. UNITED INDIA INSURANCE CO. LTD. VERSUS CCE & ST, LTU, CHENNAI [2018 (6) TMI 200 - CESTAT CHENNAI], where it was held that The general insurance service provided by the appellant basically insures the vehicle against damages. It is obvious that such service can be provided to the customer ie., owners of the vehicle only by way of reimbursement of the repair charges. The service tax paid on the bill of the ASS is to be considered as falling within the definition of the input service which is used for providing the output service of the vehicle insurance. Appeal allowed - Credit allowed - decided in favor of appellant.

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• 2018 (9) TMI 1583
  Sale of space for Advertisement Services - Period May 2006 to May 2010 - demand of Service Tax - Held that:- What is covered by the Sale of Space for Advertisement Services after amendment, or perhaps the advertisements in business directories, yellow pages and trade catalogues, are those primarily meant for commercial purposes. The sale of space for advertisement in the course of not being in journals which is meant for in-house circulation only, the activity of the appellant is not covered by the definition of Sale of Space for Advertisement Services and, therefore, the same is not exigible to service tax - Demand set aside. Penalty - Renting of Immovable Property Services (RIS) - period June 2007 to March 2010 - demand of Service Tax - Held that:- It is submitted that the same issue was under serious litigation before various judicial forums and, therefore, it was too premature to say that there was any service element. The law, as amended from 01.06.2007, till the further amendment by the Finance Act, 2010, saw multiple litigation - penalty set aside. Membership of Club or Association Service (MCA) - period June 2005 to May 2010 - demand of service tax - Held that:- The association is not liable to pay service tax since there is no service provider and service recipient; it is only on mutuality concept that the association is run - Demand set aside. Business Support Services (BSS) - Convention Services (CS) - Management Consultant Services (MCS) - Appellant submitted that though the issue involves complexity, he has instructions not to press the demands, but only request for setting aside the penalties and interest, if any - Held that:- Undoubtedly the issues involved intricacies, complexities and some of the issues are still being litigated elsewhere. In view of the above the demand on these four items is confirmed, but, however, the penalties set aside. Appeal allowed in part.

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• Central Excise

• 2018 (9) TMI 1582
  Violation / breach of Rule 8(3A) of the Central Excise Rules, 2002 - vires of Rule 8(3A) of the Central Excise Rules, 2002 - Whether the Tribunal committed substantial error of law by allowing Respondent's appeal without examining the case on merit in spite of charge made out in the notice emphasizing contravention of the provisions of Rule 8(3A) of Central Excise Rules, 2002? - Held that:- Once the provision has been declared ultra vires by any High Court then one has to proceed on the basis that the provision which has been declared as unconstitutional is non-existant. Therefore, unless a contrary decision is given by any other competent Court, the Tribunal in the state has to proceed with the decision of the other High Court as it is the law of land and binding upon it. When a provision has been declared unconstitutional by a Court, then the Tribunal is bound to follow it as held by this Court in C.C.E., Mumbai III Vs. Valson Dyeing Bleaching Printing Works [2010 (9) TMI 338 - BOMBAY HIGH COURT], where the Tribunal allowed the Appeal of the Respondent holding that the basis of the proceeding therein was on account of breach of notification No. 42 of 1998 (NT) 10th December, 1998 - Nothing has been shown as to why the decision of our Court in Valson Dyeing should not be followed. Appeal dismissed.

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• 2018 (9) TMI 1581
  Condonation of delay of 1233 days in filing the Tax Appeal - Compliance with pre-deposit duly made - Held that:- The valuable statutory right of appeal would be lost to the assessee even after fulfilling the condition of predeposit; if the appeal is not heard on merits. It is true that this does not mean that the appeal should have been filed before the Tribunal after a long delay without explanation. However, the assessee has tried to explain the delay by pointing out that the manager had not brought the facts to the notice of the appellant. The assessee’s appeal before the Appellate Commissioner would be revived and be heard on merits.

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• 2018 (9) TMI 1580
  CENVAT credit - inputs - Whether “adverse inference” could have been drawn by the Appellate Tribunal against the appellant for denying Cenvat credit of ₹ 5,89,667/in respect of 12 invoices when the appellant has received duty paid inputs under 4,686 invoices during the period in question involving Cenvat credit of ₹ 27,32,17,300/for which no dispute at all been raised by the Revenue; and similar dispute raised by the Revenue for 76 invoices involving Cenvat credit of ₹ 39,76,922/has also been rejected by the Appellate Tribunal? Held that:- The assessee was not able to establish the actual movement of the goods. When the RTO report strongly suggested that the vehicles in which the goods were stated to have been transported were incapable of doing so, the burden would be on the assessee to dislodge these primary findings particularly when the report of the RTO was not challenged. The assessee's stand that it had merely ordered goods on FOR value and therefore was not obliged to explain the manner of transportation is too simplistic in background of facts on record. When RTO report as it remained unexplained by the suppliers of the goods clearly establish that the goods could not have been transported in the vehicle stated to have been done, the assessee called a greater explanation. The conclusions of the Tribunal are not based on drawing presumptions or adverse inference even though the Tribunal has fleetingly so stated. The findings are based on evidence suggesting no movement of goods. Secondly, the quality cannot be claimed in negative - appeal dismissed.

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• 2018 (9) TMI 1579
  Validity of Rule 96ZO of the Central Excise Rules, 1994 - Imposition of penalty - Whether the Tribunal was correct in holding that Rule 96ZO of the Central Excise Rules, 1994 as ultra vires and holding that the penalty is not imposable on respondent, when the Rule 96ZO has been formulated under Section 37 of the Central Excise Act, 1044 vide N/N. 33/97-CE(NT) dated 01.08.1997, when as per the Section 37(4)(a) of the Central Excise Act, the Government of India has the powers to make the Rules with regard to penalty of an amount equivalent to the duty involved? Held that:- The issue for consideration in the present appeal was decided by the Hon'ble the Apex Court in the matter of Shree Bhagwati Steel Rolling Mills vs. Commissioner of Central Excise and others [2015 (11) TMI 1172 - SUPREME COURT], where it was held that A penalty can only be levied by authority of statutory law, and Section 37 of the Act, does not expressly authorize the Government to levy penalty higher than ₹ 5,000/-. This further shows that imposition of a mandatory penalty equal to the amount of duty not being by statute would itself make rules 96ZO, 96 ZP and 96 ZQ without authority of law. We, therefore, uphold the contention of the assessees in all these cases and strike down rules 96ZO, 96 ZP and 96 ZQ insofar as they impose a mandatory penalty equivalent to the amount of duty on the ground that these provisions are violative of Article 14, 19(1)(g) and are ultra vires the Central Excise Act. Appeal dismissed - decided against Revenue.

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• 2018 (9) TMI 1578
  CENVAT credit - clearance of exempt product - Whether appellants were liable to pay the amount collected/charged on clearance of exempted product under Section 11 D of Central Excise Act, 1944? - Held that:- From perusal of excise invoice, commercial invoice and customer ledger available in appeal paper book, it is found that amount reversed under Rule 6 has never been charged or collected from the customer. In the excise invoice it was shown separately to comply the provisions of Rule 6 of Cenvat Credit Rules, 2004. Further, there is no dispute that amount of ₹ 56161401/- has already been reversed by the appellants in their credit account. This issue stands settled by the decision of Larger Bench of this Tribunal in the case of Unison Metals Ltd. Vs CCE [2006 (10) TMI 171 - CESTAT, NEW DELHI], where it was held that as long as the amount of 8% or 10% is paid to the Government in terms of erstwhile rule 57CC of the Central Excise Rules, 1944 or rule 6 of the Cenvat Credit Rules, the provisions of section 11D shall not apply even if the amount is recovered from the buyers - the decision squarely applies to the present case and that demand confirmed under Section 11 D of Central Excise Act, 1944 is set aside. CENVAT Credit - Whether appellants were eligible to take Cenvat credit on molasses received in the distillery division after payment of Central Excise duty either from its sugar division or from some other factory? - Held that:- There is no dispute that molasses received in distillery division had been utilized for manufacture of final products which were dutiable as well as exempted. In terms of Rule 3 of Cenvat Credit Rules, 2004, appellants were eligible for taking credit of Central Excise duty paid on molasses so received in distillery division - appellants are eligible for Cenvat credit of Central Excise duty paid on molasses received in the distillery division. Whether appellants were eligible to take Cenvat credit of molasses purchased from other sugar factories after payment of Central Excise duty received as distillery division? - Held that:- Appellants are engaged in the manufacture of dutiable as well as exempted final products which were exempted as well as dutiable. In terms of Rule 3 of Cenvat Credit Rules, 2004, appellants were eligible for taking credit of Central Excise duty paid on other inputs/input services used in distillery division - appellants are also eligible for Cenvat credit of input services like Erection Commissioning Services, Goods Transport Services, Security Services etc. Whether appellants were eligible to avail Cenvat credit on other inputs/services used in distillery division for manufacture of exempted products i.e. rectified spirit/ENA? - Held that:- Rectified spirit and/or ENA is sold out side by the appellants; it is also consumed captivity for manufacture of dutiable final product like Denatured spirit and Special Denatured Spirit; it is also consumed captively for manufacture of non excisable products like country liquor and Indian made foreign liquor - To the extent rectified spirit and/or ENA is capitively consumed for manufacture of non excisable final products and to the extent rectified spirit is sold out side, we hold that appellants were liable to reverse credit in terms of Rule 6 (3) of Cenvat Credit Rules, 2004. Whether appellants were liable for reversal of credit under Rule 6 (3) of Cenvat Credit Rules, 2004 at the rate of 10% or on proportionate basis on clearance of rectified spirit/ENA during March, 2002 to March, 2007? - Held that:- Rule 6 (3) has been amended from time to time. For the period up to 20.02.2007, in case of products falling under Chapter Heading 22.04, assessees were required to reverse credit attributable to inputs and inputs services in or in relation to manufacture of such final products. In case of other final products assessees were required to pay an amount equal to 10% of the total price excluding sales tax and other taxes, if any, paid on such goods, of the exempted final product charged by the manufacturer for sale of such goods at the time of clearance from the factory - w.e.f. 21.02.2007 in case of products falling under Chapter Heading 22072000, assessees were required to reverse credit attributable to input and inputs services in or in relation to manufacture of such final products. In case of other final products assessees were required to pay an amount equal to 10% of the total price excluding sales tax and other taxes, if any, paid on such goods, of the exempted final product cleared by the manufacturer for sale of such goods at the time of clearance from the factory. Thus, For the period 01.03.2002 to 27.02.2005, appellants were required to reverse credit on attributable basis - For the period 28.02.2005 to 20.02.2007, appellants were required to reverse the credit @ 10% of the total price of exempted final product - Again w.e.f. 21.02.2007, appellants were required to reverse credit on attributable basis. Adjudicating authority is directed to determine the amount reversible in terms of this order and the appellants shall be liable for payment of any amount found to have been short paid/reversed. We further direct that in case appellants have reversed more amount than the amount reversible in terms of this order, appellants shall be eligible for its refund as consequential relief. Appeal disposed off.

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• 2018 (9) TMI 1577
  Rectification of Mistake apparent from record - area based exemption - whether the issue canvassed in rectification application was raised before the authority whose order is prayed to be rectified? - Held that:- The appellant has sought exemption on the basis of Notification. It is an admitted fact that the exemption was available only after the compliance of conditions mentioned therein. It is also an admission that one of the condition was not complied with at the time of availing the exemption. The record also makes it clear that the said condition was complied after a delay of four years. The Order under challenge has denied the benefit to the applicant/appellant denying it to be retrospectively available. In the given circumstances, it becomes clear that the issue still remains is as to whether the compliance of condition can be given a retrospective effect. Irrespective of the Adjudicating Authority has decided it in favour of the Department, it still is a debatable issue. The aggrieved party has a remedy to take this debate to a higher forum, but the same cannot be considered as an error apparent on record. Larger Bench in the case of Gujarat State Fertilizers and Chemicals Vs. C.C.E. Vadodara [2000 (9) TMI 1068 - CEGAT, NEW DELHI] has held that a subsequent proceeding is not a ground for reopening a concluded proceeding and passing fresh Order. Application dismissed.

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• 2018 (9) TMI 1576
  Refund claim of amount reversed - appellant cleared the goods availing the benefit of Notification No.33/2012-CE after reversing an amount of 6% - refund claimed as it appeared that the said amount of 6% was not required to be paid for availing the notification benefit - refund claim was denied on the ground of Limitation - unjust enrichment - transition to GST Regime - transitional credit - Held that:- The disputed amount of ₹ 5,20,800/- has otherwise passed muster under Section 11B of the Central Excise Act, 1944. The original authority, while rejecting the claimed amount of ₹ 6,55,200/- on the grounds of limitation did not find any such fault with the impugned amount of ₹ 5,20,800/-. Neither has the amount been found hit by unjust enrichment as per the provisions of Section 11B of the Central Excise Act, 1944. Transitional provisions of Section 142 (3) of the GST Act - Held that:- Once the GST regime is in force, the pending refund claim, if sanctioned, will necessarily have to be paid in cash irrespective of the fact whether the refund amount pertains to that emanating from cenvat account or from account current. Any other interpretation would lead to a situation where the assessee, who is otherwise undisputedly entitled to the refund amount of ₹ 5,20,800/- is left high and dry only because that amount emanated from their erstwhile cenvat account - Refund allowed. Appeal restored.

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• 2018 (9) TMI 1575
  Manufacture - activity of inspection and sample testing - Rule 16 of Central Excise Rules 2002 - removal of inputs as such - non-maintenance of separate records - sub-rule 5 of Rule 9 of Cenvat Credit Rules, 2004 - willful misstatement of facts - penalty. Whether inspection, testing and loading of software on the imported IFWT-Telephone Instruments, before the clearance by the assessee, amounts to manufacture? - Held that:- In case, the Revenue takes a stand that the activity undertaken by appellant does not amount to manufacture, the assessee succeeds in the earlier appeal as where the process do not amount to manufacture, the duty paid by the appellant needs to be treated as a deposit and requires to be refunded as the appellants have shown that the same is not passed on - Revenue cannot change the goal posts and have two different approaches to the same issue for different periods more so when the facts are identical - In the interest of Justice and equity, the issue requires to go back to the original adjudicating authority - Matter on remand. Whether the credit availed on the Power Supply Units, in respect of which it has been alleged that proper accounts have not been maintained, is factually correct, if not whether Cenvat credit is allowable? - Held that:- Prima facie the appellants have made out a case that they have maintained record pertaining to the receipt, storage, usage and clearance of the power supply unit. It is seen that assessee’s own records were taken as an evidence for arriving at the demands raised in the show-cause notice - on this issue also the matter required to go back to the original adjudicating authority for a proper appreciation of records maintained by the appellants. Appeal allowed by way of remand.

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• 2018 (9) TMI 1574
  Penalty - CENVAT credit - ineligible import duty - Services for repair re-conditioning restoration, decoration or any other similar services of Motor Vehicle - insurance of vehicles - credit was reversed admittedly by the appellant along with interest - Held that:- As Ld. Counsel fairly conceded that they are not contesting the Cenvat Credit demand, therefore, demand in this regard stand upheld - as per Board Circular No. 208/07/2008-CE-6 dated 25.05.2008, the adjudicating authority must give option of 25% of penalty in the order - the penalty reduced to 25% of demand of Cenvat Credit upheld subject to condition that such demand, interest and 25% penalty stand paid within one month from the date of receipt of this order. CENVAT credit - Outdoor catering service - Held that:- This service was availed for Event management programme for completion of 25 years of the company, therefore, it is a function organised for the company and not for any individual. Therefore, it cannot be said that the outdoor catering service was availed by any individual for personal consumption - demand set aside. CENVAT credit - travel services extended to Directors, their family members and employees - Held that:- The credit is admissible only when the travelling service is for the purpose of Official work but in the present case the travelling service for leisure trip - Credit not allowed. CENVAT credit - Security service - denial only on the ground that the Service Tax should have been paid on reverse charge basis by the appellant whereas, the Service Tax was admittedly paid by the service provider - Held that:- As per the Cenvat Credit Rules, the Cenvat Credit is admissible so long the service is input service and same is Service Tax paid. Therefore, even Service Tax is paid by the service provider the credit of such Service Tax cannot be denied on inputs service received by the appellant - There is no dispute that the Security Services is liable for Service Tax and Service Tax was admittedly paid, therefore, credit is legally admissible to the appellant - credit allowed. Appeal allowed in part.

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• 2018 (9) TMI 1573
  CENVAT credit - clearance of capital goods after use - whether the appellant, on the clearance of capital goods after use for substantial period, is required to pay duty or otherwise in terms of Rule 3(5) of Cenvat Credit Rules, 2004? - determination of CENVAT Credit by taking into account depreciation, justified or not? Held that:- In the earlier order, Tribunal has held that there would be duty liability, the matter was remanded for re-quantification after considering depreciation, therefore, issue on demand of cenvat credit which was re-quantified by adjudicating authority is not open for fresh decision - demand upheld. Penalty u/s 11AC - Held that:- The matter was not free from doubt which is evident from the remand order of the Tribunal itself that on the same issue, the matter referred to the Larger Bench wherein it was decided that duty is payable after considering depreciation - It is also fact that the demand of duty was raised for normal period. Considering all these facts, it is clear that there is no suppression of fact on the part of appellant - Penalty not justified. Demand of Interest - Held that:- As per the provision existing during the relevant period under Rule 14 even if the assessee does not utilize the credit wrongly availed but if it is availed then also the interest was chargeable - demand of Interest upheld. Appeal allowed in part.

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• 2018 (9) TMI 1572
  Valuation - goods in the Malkapur unit of the appellant - Inclusion of certain costs - principles of natural justice - appellant argues that they have been denied the principles of natural justice in not being provided with the copy of report of Director (cost) - Scope of SCN - new grounds raised in SCN - Held that:- It is a well established principle that the day the show cause notice was issued, the clock stops and only the allegations made in the show cause notice and only the documents which were relied upon in the show cause notice can be considered for subsequent adjudication proceedings. It is not open for the department to add additional documents which, in this case the learned Commissioner has correctly not done - As far as the report by M/s SSZ is concerned, it was also not relied upon document but it was used as defence by the appellant before the adjudicating authority and for the reasons recorded therein, he did not agree with the same. Revenue neutrality - Held that:- The demand is on duty short paid or not paid which is a consolidated exercise. In this case, since the department has opted to rely on the cost audit report of DPA, they should do so fully recalculating the duty payable on all clearances during the period. The figures submitted by the learned counsel would show that such a calculation would eliminate the demand because they have paid in excess of what would have been payable - the demand in respect of their Malkapur unit does not survive as far as the question of under-valuation is concerned. The demands in respect of the Jeedimetla and Balanagar units follow from the demand in Malkapur unit and hence will not survive either. CENVAT credit on rejected material - Held that:- There is nothing on record to show that the material had not entered the factory of manufacturer or have not been taken into production process. This being a part of quality control of manufacture of final products, they are entitled to the credit on the rejected inputs. Appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 1571
  Fraudulent availment of cenvat credit - fraudulent availment of area based exemption Notification No. 50/2003-CE dated 10.06.2003 - Area Based Exemption - it was alleged that goods manufactured by M/s AO has been shown on paper but the same has been manufactured and cleared by M/s AI without payment of duty - undervaluation - related parties. Area based exemption - it is alleged that the appellant have mis-used the benefit of exemption Notification No.50/2003-CE dated 10.06.2003 and availed benefit of the said Notification without manufacturing the goods - Held that:- It has been alleged against by the appellant is that the appellant had cleared fully finished chrome plated spanners under the guise of forgings to their sister unit. The appellant has explained CP stands for Cold Pressed whereas it has been presumed by the adjudicating authority as Chrome Plate and explanation given by the appellant by way of affidavits has not been considered. In that circumstance, it cannot be presumed that CP is used for Chorme Plates , therefore, on that ground it cannot be held that the appellant M/s AO was cleared Chrome Plate spanners under the guise of forgings to M/s AI - M/s AI is having facility of electroplating and installed the machinery in their factory. The same has been found installed by the authorities below. In that circumstances also, the benefit of doubt goes in favour of the appellants, therefore, the goods cleared from the premises of M/s AI are entitled under exemption of Notification No. 50/2003-CE dated 10.06.2003 - the demand cannot be raised on account of denial of benefit of exemption Notification No. 50/2003-CE dated10.06.2003, therefore, the demand of ₹ 57,81,475/- is set aside. CENVAT Credit - it is alleged that appellant M/s AO has not received the inputs and availed cenvat credit without receipt of the goods - Held that:- The allegations against the appellant M/s AO is that they have not received the goods are based on the various statements, no cross objection of the persons whose statements have been relied and granted and no other corroborative evidence has been produced on record by the Revenue in support of the allegation - it cannot be held that the appellants had not received any goods in the absence of any corroborative evidence and merely relying statements of the suppliers - further, no statements of the transporters has been recorded to substantiate the statements of the suppliers - credit cannot be denied. Valuation - it has been alleged that clearance made by M/s AO to M/s AI have been undervalued - Held that:- The fact on record that M/s AO is clearing the goods on the same price to M/s AI as well as to independent buyers, therefore, Rule 9 of the Valuation Rules, is not applicable to the facts of the case - the charge of undervalued is not sustainable against the appellants. Appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 1570
  Valuation - inclusion of Inspection Charges, Service charges and Freight Charges in assessable value - appellant have collected separately these charges from their buyers through debit notes - whether pre-delivery inspection charges are includible in the assessable value? - Held that:- The said issue was settled by the Hon’ble Supreme Court in TVS Motors Co. Ltd. [2015 (12) TMI 874 - SUPREME COURT], where it was held that PDI charges and free ASS charges would not be included in the assessable value under Section 4 of the Act for the purposes of paying excise duty - demand set aside. Whether the service charges related to transport arrangement through rail is includible in assessable value? - Held that:- Since the said charges are collected after the place of removal which is the factory gate. On the very basis, it can be definitely held that the service charges collected for cargo handling on the instruction of the contractor cannot be included in the assessable value - demand set aside. Appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 1569
  Valuation - includibility - freight collected in excess of the actual freight incurred by the appellant towards delivery of goods to the buyers place is an additional consideration towards sale of goods - Held that:- The issue is no longer res integra as the Hon’ble Supreme Court in the case of Baroda Electric Meters Ltd. [1997 (7) TMI 126 - SUPREME COURT OF INDIA] held that duty of excise is on manufacture and not a tax on the profits made on transportation - Even after the new Valuation Rules came into force, similar view was expressed in Bathinda Industrial Gases Vs. C.C.E. & S.T., Chandigarh-II [2014 (7) TMI 351 - CESTAT NEW DELHI] - demand set aside - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 1568
  Supply of items for setting up independent thermal power plant - Supply against International Competitive Bidding (ICB) - Benefit of Sl. No. 91 of N/N. 06/2006-CE dt. 01.03.2006 denied - goods required for setting up of Mega Power Project are exempt from payment of customs duty on import under Sl. No. 400 of N/N. 21/2002-Cus. dt. 01.03.2002 Held that:- Identical issue decided in the case of BHARAT HEAVY ELECTRICALS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE CHENNAI III COMMISSIONERATE [2018 (8) TMI 1566 - CESTAT CHENNAI], where it was held that It is unequivocally clarified by the Ministry that power project is not a mere expansion of existing power project, but is an independent power project, which is newly setup. Further as per N/N. 12/2012-Cus. Dt.17/3/2012, the said power project is specified in Entry 53 of the List 32A - but for the change in the name of the project, the contractor, contractee and the purpose of the contract examined in the earlier Final Order remain the same. Going therefore by the maxim res judicata pro veritate accipitur, the appellant should succeed. Appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 1566
  Refund of Excise duty paid - rejection of refund on the ground that the assessment was not provisional and even if it was provisional, refund is premature and that the appellants did not pay duty under protest; the appellants did not produce proof that the equipment manufactured by them were same as those covered by the Tribunal‟s order cited above and they have not given proof that they have not passed on the incidence of duty. Held that:- It is seen that the appellants have submitted the documentary proof that the goods cleared by them were manufactured out of the imported items or equipments. Once the appellants have submitted the details of the same, the department could have well verified the claim instead of simply brushing aside the claim saying that the appellants did not prove that the imported equipments and the equipments cleared by them were one and the same. Moreover, the appellants submitted that they have cleared IFWT model telephones which are classifiable under 8525.2017 of Central Excise Tariff Act Provisional assessment - Held that:- The records of the case are very clear that the assessments were provisional for not only the impugned period but for subsequent periods also. A show-cause notice dated 15.7.2007 was issued to the appellants and the show-cause notice cites so many letters written by the appellants to show that the assessments were provisional - the Order-in-original also refers to the assessment being provisional; therefore, it is evident that the assessments were provisional. Lower authorities have also taken a plea that assessments are provisional for the purpose of valuation and not for classification - Held that:- The provisional assessment has to be treated as provisional for all purposes and not necessarily in respect of particular grounds considered. From the available records of the case, it is not clear as to whether the assessments have been finalised or not. In the absence of the same, it is to be understood that the assessments are provisional, therefore, the refund claim made by the appellants is not hit by limitation. Moreover, there was no reason or requirement for the appellants to file a refund claim as grant of refund should be a normal process on finalization of the assessments. Unjust enrichment - Held that:- Prima facie, a strong case has been established by the appellants that there was no scope for believing that the incidence of duty has been passed on by the appellants to their customers - there is no question of unjust enrichment in the instant issue. However, as the finalization of assessment did not appear to have been finalized, this aspect can be verified by the lower authority on finalization of the provisional assessments. Appeal allowed by way of remand.

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• Wealth tax

• 2018 (9) TMI 1567
  Validity of re-opening the assessments of wealth - AO brought the lands situated at Akkelenahalli–Mallenahalli villages under the ambit of wealth and adopting the guideline value of the lands, brought the same to tax under the Act - land is situated within 8 Km from BBMP by following Straight Line method (SLM) for measurement of distance - Held that:- We find that the said issue is covered in favour of the assessee by decision of the co-ordinate bench of this Tribunal in the aforesaid two assessees’ cases, along with other co-owners in which the Tribunal held that BIAPPA does not qualify to be an authority and therefore, the said lands are agricultural lands and not urban land or capital assets as canvassed by Revenue. Consequently, ground of Revenue’s appeal is dismissed. Whether the distance has to be considered as the crow flies i.e the distance has to be calculated aerially and not by road? - Held that:- In the case of CIT vs. Satinder Pal Singh (2010 (1) TMI 752 - PUNJAB AND HARYANA HIGH COURT) it was held that the reckoning of urbanization as a factor for prescribing the distance is of significance which would yield to the principle of measuring distance in terms of approach roads rather than by straight line or horizontal plane or as per crows flight’. Thus, it is clear to us that for the period under consideration, in the appeals before us i.e. assessment year 2007-08 the distance has to be calculated by road and not as the crow flies or by straight line. In this factual and legal matrix of the case, as discussed above, ground No.2 raised Revenue is dismissed. The said lands in question are not ‘urban lands’ but ‘agricultural lands’ and hence not exigible to wealth-tax. Consequently, Revenue’s appeals are dismissed. See assessee’s own case[2015 (11) TMI 951 - ITAT BANGLORE]. - Decided in favour of assessee

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• Indian Laws

• 2018 (9) TMI 1600
  Recovery proceedings - Sale of mortgaged properties for recovery of loan amount - The companies contend that the upset price in auction is ludicrously low; they also maintain that one property answers the description of agricultural land. So Section 31 of the SARFAESI Act bars its sale. Do the petitioners have an efficacious alternative remedy to challenge the DRT's Ext.P1 order? - Held that:- The petitioners questioned the Bank’s recovery proceedings before the Tribunal. Faced with an adverse order, they chose to file this writ petition, rather than invoke Section 18: filing an appeal before the Debt Recovery Appellate Tribunal. The petitioners defend their choice of forum, claiming that they have raised here a jurisdictional question. The alternative remedy, the petitioners maintain, does not affect the case prospects. This plea could have been probed, but the Bank came forward to repel the petitioners’ case on merits, too. True, the Bank did take a plea about the alternative remedy-only after a fashion - Much time spent on hearing the case on merits, I reckon it is imprudent for me to shun adjudication on this count: the alternative remedy - this issue needs no answer. Does the alleged undervaluation affect the sale of the secured assets? - Held that:- Curious is the petitioners’ plea. They pleaded, as noticed by the DRT, that they had sold all the mortgaged properties (4 items) to various persons for ₹ 1,52,35,000/-. So the DRT observed that the sale price of all the four properties by the petitioners themselves was very much below the Reserve Price of the 1st item in the auction. In the writ petition, too, this pleading remained unamended or explained, as rightly contended by the Bank’s counsel. So I find this issue against the petitioners: the Bank did assign valid reasons for the upset price it fixed. Did the Bank bring to sale any agricultural land, violating Section 31 of the Act? - Held that:- Thekkemukkalil Company (a) does not answer the description of an agriculturist; (b) does not cultivate the land; (c) derives no income from agriculture; (d) does not have agriculture as an object; and (e) did not inform the Bank that the secured asset is an agricultural land. So it does not fit into the niche Blue Coast Hotels created to protect genuine agriculturists - the debtor’s last gasp effort to save the property with endless excuses and plethora of pleas should wilt in the judicial gaze. A salutary provision aimed at protecting poor peasants cannot aid corporate concerns camouflaged as agriculturists. Here, the companies induced the Bank to lend, offered property, kept the Bank in dark about the alleged nature of the property, bargained with the Bank, borrowed time, and finally, driven to wall, cried foul. Petition dismissed.

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