TMI Tax Updates - e-Newsletter
September 3, 2018

Case Laws in this Newsletter:

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

TMI SMS

• If AO is allowed to reopen assessment after the order of CIT(A), then tax payers may loose confidence on the judicial system of this country

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• Denial of ITC - Supplier failed to deposit the tax - The State is deprived of tax to that extent - there is no question of input tax credit

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Articles

1. List of 222 Companies Delisted by BSE on 04 July 18

   By: Raji M

2. RECENT ADVANCE RULINGS IN GST (PART-6)

   By: Dr. Sanjiv Agarwal

News

1. GST Revenue collection for August 2018 close to ninety-four thousand crore rupees

2. Suresh Prabhu holds bilateral meetings on sidelines of RCEP

3. Filing of Income Tax Returns registers an upsurge of 71% upto 31st August, 2018

4. State Government Market Borrowings – Issues and Prospects (Shri B. P. Kanungo, Deputy Governor, Reserve Bank of India - August 31, 2018 - at the Financial Market Conclave of the Bengal Chamber of Commerce and Industry, Mumbai)

5. 8.2 percent Growth of GDP in real terms in Q1 of 2018-19 in line with momentum built in the economy & broad -based

6. Auction for Sale (Re-issue) of ‘7.37% Government Stock 2023; Auction’ for Sale (Re-issue) of ‘7.17% Government Stock 2028’, Auction for Sale (Re-issue) of ‘7.40% Government Stock 2035’, and Auction for Sale of (Re-issue) of ‘8.13% Government Stock 2045’

7. Draft notification proposing amendments in rule 114 of the Income-tax Rules, 1962 and permanent account number application Forms (Form 49A and Form 49AA)- Inviting comments of stakeholders

Notifications

Customs

1. 76/2018 - dated 31-8-2018 - Cus (NT)

Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Sliver- Reg.

GST - States

2. CT/LEG/GST-AAAR/10/18/647 - dated 13-8-2018 - Nagaland SGST

Notify constitution of Nagaland Appellate Authority for Advance Ruling (AAAR)

3. FIN/REV-3/GST/1/08 (Pt-1)/233 - dated 10-8-2018 - Nagaland SGST

Extend the furnish details of outward supply of goods or services or both in FORM GSTR-1.

4. FIN/REV-3/GST/1/08 (Pt-1)/232 - dated 6-8-2018 - Nagaland SGST

Seeks to lay down the special procedure for completing migration of taxpayers who received provisional IDs but could not complete the migration process.

5. FIN/REV-3/GST/1/08 (Pt-1)/231 - dated 6-8-2018 - Nagaland SGST

Amendment in the Notification No. F.NO.FIN/REV-3/GST/1/08 (Pt-1) “K” dated the 30th June, 2017.

6. F17 (131) ACCT/GST/2017/3791 - dated 21-8-2018 - Rajasthan SGST

Amendment in the Notification No. F.17(131) ACCT/GST/2017/3765, dated 10th August, 2018.

7. 12/2018-Rc.46/2018/Taxation/A1 - dated 21-8-2018 - Tamil Nadu SGST

Amendment in the Notification of the Commissioner of State Tax, No. 11/2018, dated the 10th August, 2018.

8. 21/2018 – State Tax (Rate) - dated 20-8-2018 - Telangana SGST

Exempts the intra-state supplies of handicraft good

9. 20/2018 – State Tax (Rate) - dated 20-8-2018 - Telangana SGST

Amendment in Notification No. 5/2017- State Tax (Rate), issued in G.O. Ms No. 110, Revenue (CT-II) Department, Dt. 29-06-2017

10. 19/2018 – State Tax (Rate) - dated 20-8-2018 - Telangana SGST

Amendment in Notification No. 2/2017- State Tax (Rate), issued in G.O. Ms No. 110, Revenue (CTII) Department, Dt. 29-06-2017

11. 18/2018 – State Tax (Rate) - dated 20-8-2018 - Telangana SGST

Amendment in Notification No. 1/2017- State Tax (Rate), issued in G.O. Ms No. 110, Revenue (CT-II) Department, Dt. 29-06-2017

12. 17/2018 – State Tax (Rate) - dated 20-8-2018 - Telangana SGST

Clarifying the scope and applicability of the Notification No. 11/2017-State Tax (Rate), issued in G.O. Ms No. 110, Revenue (CT-II) Department, Dt. 29-06- 2017

13. 16/2018 – State Tax (Rate) - dated 20-8-2018 - Telangana SGST

Amendment in Notification No. 14/2017- State Tax (Rate), issued in G.O. Ms No. 110, Revenue (CT-II) Department, Dt. 29-06-2017

14. 15/2018 – State Tax (Rate) - dated 20-8-2018 - Telangana SGST

Amendment in Notification No. 13/2017- State Tax (Rate), issued in G.O. Ms No. 110, Revenue (CT-II) Department, Dt. 29-06-2017

15. 14/2018 – State Tax (Rate) - dated 20-8-2018 - Telangana SGST

Amendment in Notification No. 12/2017-State Tax (Rate), issued in G.O. Ms No. 110, Revenue (CT-II) Department, Dt. 29-06-2017

16. 13/2018 – State Tax (Rate) - dated 20-8-2018 - Telangana SGST

Amendment in Notification No. 11/2017- State Tax (Rate), issued in G.O. Ms No. 110, Revenue (CTII) Department, Dt. 29-06-2017

17. G.O.Ms.No. 166 - dated 16-8-2018 - Telangana SGST

Telangana Goods and Services Tax (Seventh Amendment) Rules, 2018

18. G.O.Ms.No. 161 - dated 10-8-2018 - Telangana SGST

Amendment in Notification No. 11 of 2018 issued in G.O.Ms.No. 123, Revenue (CT.II) Department, dated 26.06.2018

Highlights / Catch Notes

GST

• IGST Act Section 20: Pre-Deposit Requirement for Appeals Aligns with CGST Act to Streamline GST Appeals Process.

  Act-Rules : Application of provisions of Central Goods and Services Tax Act. - Section 20 of the IGST Act, 2017 as amended - quantum of pre-deposit to be made for filing of appeal before Appellate Authority or Appellate Tribunal.
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• Section 17 IGST Act 2017: Ensures Fair Tax Distribution Between Central and State Governments for Balanced Federal Revenue Sharing.

  Act-Rules : Apportionment of tax and settlement of funds. - Section 17 of the IGST ACT, 2017 as amended.
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• Understanding Section 13(3) IGST Act: Place of Supply Rules for Cross-Border Services and Imported Goods for Repairs.

  Act-Rules : Place of supply of services where location of supplier or location of recipient is outside India. - Section 13(3) of the IGST, 2017 as amended - Performance based service - Import of goods for the purpose of repairs -
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• Section 12(8) of IGST Act: GTA Services Supply Location Based on Goods' Destination for GST Application in India.

  Act-Rules : Place of supply of services where location of supplier and recipient is in India - Section 12(8) of the IGST ACT, 2017 as amended - GTA - where the transportation of goods is to a place outside India, the place of supply shall be the place of destination of such goods
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• IGST Act Section 8: Amendment Refines Definition of Intra-State Supply by Omitting "Business Vertical" Term.

  Act-Rules : Intra-State supply. - Section 8 of the IGST ACT, 2017 as amended - Meaning and scope of "establishments of distinct persons" with state - the term "being a business vertical" omitted from the scope of Intra-State supply
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• Reverse Charge Mechanism in GST: Section 5(4) of IGST Act Shifts Tax Payment Responsibility to Recipients for Compliance.

  Act-Rules : Levy and collection. - Section 5(4) of the IGST ACT, 2017 as amended - Revers Charge mechanism
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• IGST Act 2017 Amendment: "Non-Taxable Online Recipient" Now Includes Panchayats Under Article 243G.

  Act-Rules : Definitions. - Section 2(16) of the IGST ACT, 2017 as amended - Meaning and scope of of the term "non-taxable online recipient" extended to the Panchayat under article 243G
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• Export Proceeds in Indian Rupees Qualify for Export Services if Approved by RBI Under IGST Act Section 2(6.

  Act-Rules : Definitions. - Section 2(6) of the IGST ACT, 2017 as amended - Receipt of export proceeds in Indian Rupees if permitted by the RBI, shall be eligible for satisfaction of conditions of Export of Services.
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• GST Act Section 10: Ensures Cess Proceeds Compensate States for Revenue Loss, Balancing Central and State Finances.

  Act-Rules : Crediting proceeds of cess to Fund - Section 10 of the GOODS AND SERVICES TAX (COMPENSATION TO STATES) ACT, 2017 as amended.
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• Section 7 of GST Act Details State Compensation for Revenue Loss Due to GST Implementation.

  Act-Rules : Calculation and release of compensation. - Section 7 of the GOODS AND SERVICES TAX (COMPENSATION TO STATES) ACT, 2017 - Name of CBEC changed to CBIC
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• UTGST Act 2017 Adds Section 9B for Clear Input Tax Credit Utilization Order to Improve Tax Management.

  Act-Rules : Order of utilisation of input tax credit. - Section 9B of the UTGST ACT, 2017 - New section inserted.
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• Section 9A Added to UTGST Act, 2017: Streamlines Input Tax Credit Use for Better Compliance and Clarity.

  Act-Rules : Utilisation of input tax credit. - Section 9A of the UTGST Act, 2017 - New Section inserted.
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• Section 9 of UTGST Act 2017: Key Tax Payment Rules for Union Territories Explained.

  Act-Rules : Payment of tax. - Section 9 of the UTGST Act, 2017 as amended.
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• Section 7 UTGST Act 2017: Streamlining GST Levy and Collection on Intra-State Supplies for Clarity and Efficiency.

  Act-Rules : Levy and collection. - Section 7 of UTGST Act, 2017, as amended
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Income Tax

• Tax Refund Means Acceptance of Income Return, But Full Refund Not Allowed if New Assessment is Set Aside.

  Case-Laws - HC : Refund of Tax - a deemed acceptance of the return of income furnished by the assessee stands and holds good and consequently, any tax paid either along with the return or later under any circumstances would certainly fall under the purview of "tax chargeable on the total income returned by the assessee" as referred to in Proviso (b) of Section 240 of the said Act. - Entire amount of tax cannot be refunded where the fresh assessment was set aside.
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• Assessing Officers Required to Refer Cases to Transfer Pricing Officer for Adjustments per CBDT Circular.

  Case-Laws - HC : Transfer pricing adjustment - The mandate of the CBDT circular is that the Assessing Officer should make a reference to the Transfer Pricing Officer - There is no acceptable or justifiable reason on record for refusing to abide by this condition in the CBDT circular.
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• Grossing Up Rule: Tax Paid by Assessee for University of Warwick Must Be Added to University's Income u/s 195A.

  Case-Laws - HC : Principle of grossing up u/s 195A - TDS u/s 195 - the obligation to pay the tax is on the University of Warwick and since the assessee in terms of the agreement agreed to pay the taxes, the same has to be necessarily added to the income of the University of Warwick and therefore, the principle of grossing up has to be applied.
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• Authorities Erroneously Classify Preoperative Expenses as Capital Expenditure Using Incorrect Test; Should Be Revenue Expenditure.

  Case-Laws - HC : The preoperative expenses are all generally revenue expenditure and by applying a wrong test, which is not the decisive test, the Authorities had concurrently committed an error in treating the expenditure as capital expenditure.
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• CIT-A Overruled on Taxing Short-Term Gains; Unlawful Justifications Must Be Removed as Per Court Decision.

  Case-Laws - AT : CIT-A having struck down the action of the AO in taxing short term capital gains, had proceeded to make some observations, to somehow bring to tax the short term capital gains, which in our considered opinion, cannot be done as per law at all. - the observations of the CIT-A deserves to be expunged.
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• Reopening Tax Assessments Post-Commissioner Appeals May Erode Taxpayer Trust and Stability in Tax Proceedings.

  Case-Laws - AT : If the AO is allowed to reopen the assessment after the order of the CIT(Appeals), then the tax payers may not have confidence on the judicial system of this country.
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• No TDS on $14,000 Training Fee to Foreign Entity Without P.E. in India u/s 195.

  Case-Laws - AT : TDS u/s 195 - remittance of USD 14,000 towards “training fees” - India-USA Tax Treaty - Foreign entity is not having P.E. in India - It is not a case of “make available” any technology etc. to the assessee - No TDS (withholding tax) liability.
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• Assessee's use of company funds for personal gain leads to confirmed additions u/s 2(22)(e) as deemed dividends.

  Case-Laws - AT : Deemed dividend u/s 2(22)(e) - All indications were that the assessee used money for its own purposes as it did by advancing substantial amounts enjoying the profits of the company. - Additions confirmed.
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• US Subsidiary Must Credit Withheld Tax on Interest Payments if TDS Certificate Provided, Per Article 25 of Indo-US DTAA.

  Case-Laws - AT : Withholding tax credit deducted by US based subsidiary of the assessee company in USA on payment of interest loan - Indo-US DTAA - If the TDS certificate is produced by the assessee, then such tax which has been withheld, Assessing Officer has to give credit of such withholding tax by the US Company which is the mandate of Article 25.
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Customs

• New Tariff Values Set for Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold, and Silver Under Customs Regulations.

  Notifications : Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Sliver- Reg.
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• Valuation of Imported Goods Upheld Due to Lack of Evidence on Chartered Engineer's Examination Process.

  Case-Laws - AT : Valuation of imported goods - Chartered Engineer’s report, admits that goods imported by appellant are only scrap but scrap was in the kind of ‘Tread’, ‘Taste’, and ‘Troma/Trump’ etc. - As nothing has been brought on record, how the examination was done by the Chartered Engineer to find out how much is the quantity of ‘Tread’, ‘Taste’ and ‘Troma/Trump’ are not scrap - valuation cannot be rejected.
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• Appellants Qualify for Concessional Duty Rate Under Project Import Scheme Due to Pre-Clearance Contract Registration.

  Case-Laws - AT : Project Import - benefit of concessional rate of duty - the appellants had registered the contract before clearance of the warehoused goods and hence they are eligible for the benefit of the project import.
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• Courier Agency's Registration Revocation Overturned Due to Lack of Inquiry in Revocation Process.

  Case-Laws - AT : Revocation of registration of appellant as a Courier Agency - The revocation proceedings were initiated for the very same incident upon which no inquiry has been conducted. Without such inquiry, the initiation of proceedings is itself in jeopardy. For these reasons, the revocation is set aside.
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Indian Laws

• Petitioner not liable u/s 138 of Negotiable Instruments Act as they didn't sign the dishonored cheque.

  Case-Laws - HC : Dishonor of cheque - Though the loan jointly borrowed by both the accused, the alleged cheque was not signed by the petitioner and as such, no offence under Section 138 of Negotiable Instrument Act can be said to have been committed by the petitioner.
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Service Tax

• Reverse Charge Defense Denied; Businesses Must Pay Service Tax for Nonresident Services to Maintain Tax Scheme Integrity.

  Case-Laws - AT : Reverse charge - in any case if the argument of revenue neutrality is accepted as permissible defense in the present case entire scheme of payment of taxes on reverse charge basis will become otiose and no business liable to pay service tax would be required to pay service tax in respect of services received by them from nonresident service providers, for the reason that the tax so paid will be available as credit to them. - Demand confirmed.
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• Renting Land with Machinery Classified as Immovable Property and Tangible Goods, Not Business Support Services for Tax.

  Case-Laws - AT : Classification of Services - Activity of renting of land along with renting of plant and machinery fell under the category of “renting of immovable property” and “supply of tangible goods” and activity is not covered under the definition of “support services of business or commerce”.
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Central Excise

• Show Cause Notice Proceedings Quashed After 16-Year Delay Under Central Excise Act, Citing Section 11A Time Limits.

  Case-Laws - HC : Time limitation for issuance of SCN - the proceedings are pending for the last more than 16 years when fresh notice for date of hearing was issued on 3.5.2017 - Section 11A (1), (4) and (11) of Central Excise Act - Proceedings quashed.
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• Assessee Granted CENVAT Credit for Capital Goods in Line 3 Used for Both Dutiable and Exempted Products.

  Case-Laws - AT : CENVAT credit - the assessee is entitled to the benefit of CENVAT credit on capital goods on the Line 3 of their plant as it was declared to be meant for manufacture of both dutiable and exempted products and used for manufacture of dutiable products although for a mere 19 days.
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• CENVAT Credit Adjustment Pre-2014: Credit Allowed Despite New Six-Month Limit in Rule 4 Proviso of Cenvat Credit Rules.

  Case-Laws - AT : CENVAT Credit - adjustment of credit prior to 01.09.2014 - taking credit after 6 months from the date of invoice - insertion of 6th proviso in the Rule 4 of Cenvat Credit Rules 2004 - assessee sought breathing period since there was limitation prior to insertion of such proviso - credit allowed.
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• Doctrine of Merger Inapplicable: No Speaking Order from High or Apex Courts in Central Excise Case Review.

  Case-Laws - AT : Review of Order - Doctrine of merger - Admittedly, in the case in hand, the Hon'ble High Court as well as the Hon'ble Apex Court has not passed any speaking order, in that circumstances, doctrine merging is not applicable to the facts of the case.
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• Court Classifies Parle Eclairs and Kismi Toffee as Sugar Confectionery; Eligible for Concessional Duty Rate.

  Case-Laws - AT : Classification of goods - ‘Chocolate’ namely “Parle 2-in-1 Eclairs” - “Kismi Toffee” and “Kismi Toffee Bar.” - the goods manufactured by the appellants are Sugar Confectionary is neither chocolate nor bubble gum - the appellants are entitled to pay concessional rate of duty.
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• Court Rules Revenue Officer's Exam Insufficient for Determining Tobacco Content in Product; No Duty Without Concrete Evidence.

  Case-Laws - AT : Clandestine removal - Product contains tobacco or not - The physical examination by the Revenue officer is not acceptable who is not a chemical examiner - The duty liability cannot be fastened on the appellant on mere assumptions and presumptions.
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• CENVAT Credit Allowed: Payment of Duty at 1% or 2% Clarified Under Notification No. 01/2011-CE and Rule 16.

  Case-Laws - AT : CENVAT Credit - payment of duty @1% or 2% under N/N. 01/2011-CE - Cenvat credit is not availed by virtue of the provisions of said Rule 3 of Cenvat Credit Rules, 2004 but it is availed by virtue of Rule, 16 of Central Excise Rules, 2002 where there is a deeming provision that such goods shall be deemed to be inputs - appeal allowed
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VAT

• Supplier's Tax Payment Failure Leads to Denial of Input Tax Credit; State Not Obligated to Grant ITC.

  Case-Laws - HC : Denial of input tax credit (ITC) - Supplier failed to deposit the tax - The State is deprived of the tax to that extent and hence there is no question of input tax credit - Having not received the tax at the first instance of sale, there is no obligation on the State to grant input tax credit.
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Case Laws:

• Income Tax

• 2018 (9) TMI 81
  Principle of grossing up u/s 195A - TDS u/s 195 - tax deduction on the amount payable to University of Warwick, UK - Whether the grossing up has to be done to arrive at the tax to be deducted at source? - interest under Section 201(1A) levied - Held that:- Section 195A provision provides for the manner of grossing up of income for computing the tax deductible at source in a case, where the tax is to be borne by the payer. This Section provides for grossing up of the tax only if it forms part of the income. As pointed out in Tata Ceramics [2011 (7) TMI 644 - KERALA HIGH COURT]if the tax is exempted under Section 10(6A), it will not form part of the total income and there would be no grossing up of such tax for the purpose of tax deduction at source. Section 2(24) of the Act, defines income and it is an inclusive definition and includes such net of tax payments also [Section 2(24)(iva)]. Thus, in the absence of the definition of income and definition of gross amount under the treaty, the assessee has to necessarily compute the income in terms of Section 195A of the Act. Admittedly, in the instant case, there is no exemption granted under Section 10(6A) of the Act for the assessee to contend that the said payment does not form part of total income. In the light of the above legal and factual position, for the purpose of deduction of tax at source on the payment made by the assessee to the University of Warwick, the income should be computed in terms of the provisions of the Act and in so doing, it shall be increased by taking into consideration the amount of tax liability undertaken to be borne by the assessee. In other words, the obligation to pay the tax is on the University of Warwick and since the assessee in terms of the agreement agreed to pay the taxes, the same has to be necessarily added to the income of the University of Warwick and therefore, the principle of grossing up has to be applied. No hesitation to hold that the Assessing Officer, the CIT(A), and the Tribunal rightly held that the principles of grossing up would apply to the assessee s case. - Decided against the assessee

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• 2018 (9) TMI 80
  Seeing refund together with interest under Section 244 - whether the petitioner is entitled to full refund of tax already paid, since the assessment was annulled later by the competent Authority and such annulment has become final and conclusive - Held that:- Apex Court in the case of Commissioner of Income Tax vs Shelly Products & Another [2003 (5) TMI 4 - SUPREME COURT] has categorically observed that the liability to pay income tax chargeable under Section 4(1) of the Act, does not depend upon the assessment being made and that the liability to pay the tax arises, as soon as the Finance Act prescribes the rate or rates for any assessment year. If the Assessing Authority cannot make a fresh assessment after the earlier assessment made was set aside or nullified, it amounts to deemed acceptance of the return of income furnished by the assessee. Going by the above law laid down by the Apex Court and applying the same to the present facts and circumstances, in pursuant to the nullifying of the assessment, a deemed acceptance of the return of income furnished by the assessee stands and holds good and consequently, any tax paid either along with the return or later under any circumstances would certainly fall under the purview of "tax chargeable on the total income returned by the assessee" as referred to in Proviso (b) of Section 240 of the said Act. Consequently, whatever the amount paid by the assessee in cases of the tax chargeable on the total income more than returned by the assessee alone could be refunded and not a full refund. This is what happened in the present case. Admittedly, the Revenue has refunded a sum of Rs. 6,46,454/-, being the excess tax paid by the assessee. Hence, the tax paid by the Assessee on the admitted return filed by him cannot be refunded and thus, the respondents are justified in rejecting such claim. - Decided against assessee

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• 2018 (9) TMI 79
  Transfer pricing adjustment - brokerage was charged at the lower rate - as the parent company was held to be involved in directional trade and the brokerage is calculated at the rate that is prevalent in the market, that is 0.25 for cash market and 0.05 for futures - Held that:- It is undisputed that it gave certain instructions and in the event the transaction is an international transaction, then, all the relevant provisions of the IT Act would be applicable. The instructions were issued by the Central Board of Direct Taxes (CBDT). The factual finding in this case is that, given the nature of the transaction, these instructions were applicable. If they were applicable, then, there ought to be some solid ground for ignoring a mandate flowing therefrom. The mandate is that the Assessing Officer should make a reference to the Transfer Pricing Officer. That is to make the transfer pricing adjustment. In this case, no such reference was made despite the facts warranting so. There is no acceptable or justifiable reason on record for refusing to abide by this condition in the CBDT circular. Once the circular goes unchallenged and binds the Revenue, then, in the absence of all this, the Tribunal held that the Assessing Officer's order cannot be sustained. He could not have proceeded to make the transfer pricing adjustment.

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• 2018 (9) TMI 78
  Exemption u/s 11 - advancement of general public utility - Held that:- The first issue referred to above is covered by the judgment of the Division Bench of this Court in case of Commissioner of Income tax v. Gujarat Industrial Development Corporation [2017 (7) TMI 811 - GUJARAT HIGH COURT] it cannot be said that the activities carried out by the assessee can be said to be for “advancement of any other object of general public utility”. Considering the object and purpose for which the assessee has been established under the provisions of the Act and the activities carried out by the assessee, it cannot be said that the activities carried out by the assessee can be said to be either in the nature of trade, commerce or business, or rendering any services in relation to any trade, commerce or business for a Cess or Fee or any other consideration so as to attract proviso to Section 2[15] of the IT Act Depreciation on roads - Held that:- The Tribunal observed that income from properties held under Trust would have to be arrived at in normally commercial manner without classification under various heads stated out in section 14 of the Act. The expression “income” has to be understood in popular or general sense. The Tribunal relied on the judgment of this Court in case of Commissioner of IncomeTax v. Sheth Manilal Ranchhoddas Vishram Bhavan Trust [1992 (2) TMI 51 - GUJARAT HIGH COURT]. The view taken by the High Court in the said judgment is approved by the Supreme Court in case of Commissioner of Income Tax v. Rajasthan and Gujarati Charitable Foundation reported in [2017 (12) TMI 1067 - SUPREME COURT]

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• 2018 (9) TMI 77
  Recover the unpaid tax dues of the company from the petitioner in terms of section 179 - Held that:- In show-cause notice the AO has not laid down sufficient foundation for invoking section 179 of the Act leave alone broadly pointing out he has not even alleged that non-recovery was on account of gross negligent, misfeasance or breach of duty on part of the petitioner in relation to the affairs of the company. His final conclusions in the impugned order are therefore based on the material at his command which was never shared with the petitioner. In the result, impugned order is set aside only on this ground making it clear that nothing stated in the order would prevent the Assessing Officer from initiating fresh exercise for the same purpose, if so advised and, if the material at his command is sufficient to permit him to do so.

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• 2018 (9) TMI 76
  Revision u/s 263 - Rectification of mistake - taxability of salary - whether there was indeed any mistake in the Assessment Order and whether that justified exercise of powers by the Assessing Officer conferred vide Section 154 - prejudice caused to the Revenue as the AO not only brought to tax the Indian component, but the global component of the salary that was rectified - Held that:- Tribunal considered the factual and legal position and a judgment of the Hon'ble Supreme Court in the case of Pradip J. Mehta vs. Commissioner of Income Tax [2008 (4) TMI 6 - SUPREME COURT] and arrived at the conclusion that the amendment to Section 6 sub-section 6 clause(a) has been brought into effect from 1st April 2004. That was not applicable to the Assessment Year under consideration. The existing law was considered by the Hon'ble Supreme Court in the aforesaid judgment and the Hon'ble Supreme Court's judgment would bind the Assessing Officer. That part of the income earned outside India would have to be excluded and the assessee would have to be taxed to the extent of the income earned in India. That has admittedly been done. In such circumstances, there was no prejudice caused and this was not a fit case, therefore, to exercise the powers under Section 263 of the Income Tax Act - decided in favour of assessee

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• 2018 (9) TMI 75
  Expenditure incurred towards a new project which was abandoned subsequently - nature of expenditure - capital of revenue - allowable deduction - Held that:- The proper test to be applied is not the nature of new line of business, which was commenced by the assessee, but unity of control, management and common fund. In the instant case, we find that this issue was never disputed by the Assessing Officer or the CIT (A) or the Tribunal, as could be seen from the orders passed by the respective Authorities. The Authorities concurrently held that it is the assessee, who had commenced business and the assessee would mean the assessee company as a whole and not a different entity. Therefore, when there is commonality of control, management and fund, those would be the decisive factors to be taken into consideration and not the new line of business namely textile business. Having held so, it may not be necessary for this Court to dwell upon the facts, which have been identical in the decision in the case of Sakthi Sugars Ltd.[2010 (8) TMI 456 - MADRAS HIGH COURT], as, on facts, we are fully convinced that the decisive factors involved are unity of control, management and common fund. In the instant case, as admitted by the CIT (A), the preoperative expenses are all generally revenue expenditure and by applying a wrong test, which is not the decisive test, the Authorities had concurrently committed an error in treating the expenditure as capital expenditure. For all the above reasons, the order passed by the Tribunal calls for interference and the substantial question of law, which has been framed for consideration, has to be necessarily answered in favour of the assessee

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• 2018 (9) TMI 74
  Validity of best judgment assessment order under Section 144 - Held that:- Given the nature of disputes raised Tribunal was justified in remanding the matter to the Assessing Officer on all questions which were somewhat inter connected. This was a case of best judgment-assessment which had lead to a detailed inquiry by the CIT (Appeals). Issues raised and to be decided, were pending on remand before the Assessing Officer in proceedings for other years. As appellant-assessee submits that they are not per se objecting to remand but apprehend that the Assessing Officer would issue notice to all parties with whom they had business transactions. This, it was submitted that would cause harassment and inconvenience. This would adversely impact business of the appellant/assessee. Assessing Officer has to examine factual aspects. We hope and trust that the Assessing Officer will duly take into consideration apprehensions and fears of the appellant/assessee and hold enquiry as required and necessary, as per the procedure prescribed by law.

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• 2018 (9) TMI 73
  Rental income - business income OR Income from house property - principal object of the assessee company is not letting out of properties - Held that:- As decided in assessee's own case when this matter came up for hearing on 08.12.2017, we posed a question to the learned Senior Standing Counsel for the Revenue as to whether the Department accepted the earlier decision of the Tribunal in the assessee's own case for the assessment year 2008-09. The learned Senior Standing Counsel sought for an adjournment to verify the facts. Today, when the case is taken up for hearing, it is reported that the Department accepted the earlier order of the Tribunal in the assessee's own case for the assessment year 2008-09 and that no appeal has been filed against that order. Thus, we find that the substantial questions of law have to be answered in favour of the assessee and against the Revenue.

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• 2018 (9) TMI 72
  Unexplained cash treated - undisclosed income found and seized from lockers in the name of the assessee during the course of search and seizure - Held that:- According to provision of section 69A of the act the income is charged to tax in the year in which the assessee is found to be owner of the money. As the sum was found to be owned by the assessee for Assessment Year 2007-08, it is correctly charged by the ld AO as income of the assessee for this year. We are not in agreement with the ld CIT (A) that as the report from the Govt of Israel is pending, it should not be taxed in the hands of the assessee bit in the hands of Dr. M V Rao as it is alleged that he has earned commission on defense supplies. We state that those cases are not covered under the Income tax act but under the different laws altogether. Merely because the income is taxed u/s 69A of the Act in the hands of the assessee in the Income tax proceedings does not have any impact on proceedings under the other laws against Dr M. V. Rao and Mr. Suresh Nanda. In view of this, ground No. 2 of the appeal of the revenue is partly allowed. Unexplained jewellery found from locker No. 5333 weighing 1748.80 out of which 999.10 grams was seized - Held that:- Merely because Dr. MV Rao has shown certain valuation of jewellery in his wealth tax return for AY 2008-09 which was found in the locker owned by the assessee is belonging to Dr. MV Rao and cannot be taxed as income u/s 69A in the hands of the assessee for AY 2007-08. We are not concerned with the wealth tax matters but Income tax matters. If the jewelry is from tax paid money of the assessee, then irrespective of whether same is shown in wealth tax return or not, it cannot be charges to tax under the Income tax Act. Conversely, if the same is shown in the wealth tax return, it cannot be excluded from the income tax computation if assessee fails to show that same was acquired out of tax paid money. Hence, we reject the contention of the ld AR that total of 819.4 and 288.4 gms of different purity of gold is owned by Dr. MV Rao. We also do not find any infirmity in his order to allow 750 gms to the mother and assessee as per CBDT Instructions. The balance jewellery of 165.70 gms is remaining unexplained and therefore, addition to that extent is correctly confirmed by the ld CIT(A). Penalty levied u/s 271(1)(c) - Held that:- We have confirmed the addition to that extent. In absence of any plausible explanation with respect to the above sum , we confirm the penalty on addition of Rs. 70 lakhs found in the locker in the name of the assessee , which is held to be the income of the assessee u/s 69A of the act, thereby the assessee has concealed her income to that extent. We direct the ld AO to re-compute the penalty on the addition of Rs. 70 lacs as concealed income. Further with respect to the addition on account of jewelry, we have confirmed the order of the ld CIT (A) in quantum appeal where in the most of the addition on account of jewelry is deleted. The ld CIT (A) has also deleted the penalty to that extent only. Therefore, we do not find any infirmity in the order of the ld CIT (A) in deleting the penalty on addition on account of undisclosed jewelry. Accordingly, we confirm the action of the AO in levying penalty u/s 271 (1) (c ) of the act on account of undisclosed income of cash found in the locker in the name of the assessee to the extent of Rs. 70 Lakhs only. Unexplained cash treated as undisclosed income found and seized from the lockers in the name of the assessee during the search - Held that:- CIT (A) is right in deleting the addition to the extent of Rs. 5.50 Crores in the hands of the assessee. We confirm the order of the ld CIT (A) to the extent of this amount and also for the reason given by us in our order for AY 2007-08 in case of the assessee where similar addition of Rs. 1 Crore is deleted. With respect to the balance of sum of Rs. 49 lacs the assessee has explained that this amount was from explained source and cash withdrawal from the bank earlier. No evidence were placed before us to show the correlation between the sum of Rs. 49 lacs found in the locker with respect to respective dates of deposits of cash in the bank lockers vis a vis withdrawal from bank accounts. In view of this, we confirm the addition to that extent of Rs. 49 lacs as undisclosed income of the assessee u/s 69A of the act on account of cash found from various lockers in her name. Hence, addition to that extent of Rs. 49 lacs is confirmed.

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• 2018 (9) TMI 71
  Maintainability of appeal - monetary limit - Exclusion/inclusion of foreign exchange fluctuation gain from computation of 10A - Reworking of disallowance for the purpose of 14A - Held that:- In the present case, if we consider each addition contested by the Revenue, then it would show that tax effect on each appeal would fall below Rs. 20 lakhs. The “tax effect” as per CBDT Circular is tax on the total income assessed minus the tax that would have been chargeable had such total income been reduced by the amount of income in respect of the issue against which appeal is filed, would be less than Rs. 20 lakhs. Therefore, the present appeals of the Revenue are hit by the CBDT Circular and hence not maintainable. Besides that ld.DR has not pointed out whether the case of the Revenue fall within the ambit of exceptions provided in the Circular or not. Thus, keeping in view the above CBDT circular and provisions of section 268A of the Income Tax Act, we are of the view that the present appeals of the Revenue deserve to be dismissed. They are accordingly dismissed.

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• 2018 (9) TMI 70
  TDS u/s 194A - disallowance u/s 40(a)(ia) - assessee has paid the amount to Tata Finance Ltd. towards interest on loan availed for purchasing a vehicle - Held that:- Merely because the amount in question was debited from the account of the assessee through ECS it does not absolve the assessee from deducting tax at source as the nature of payment made clearly comes within the ambit of section 194A of the Act. The claim of the assessee that the amount in dispute was paid in the relevant previous year and nothing remained outstanding at the end of the year is of no relevance as the provisions contained under section 40(a)(ia)does not make any distinction between the amount paid or payable. Therefore, disallowance under section 40(a)(ia) has to be made even in respect of amount paid in the relevant previous year without deduction of tax at source under section 194A. Therefore, reversing the order of the learned Commissioner (Appeals) on this issue, we sustain the addition made by the Assessing Officer. Ground raised is allowed. Disallowance under section 14A r/w rule 8D - Held that:- Assessing Officer has treated the dividend income earned by the assessee as exempt for the purpose of making disallowance under section 14A, however, while computing the income of the assessee he has not excluded the exempt income. AO is directed to exclude the exempt income, if any, while determining the total income of the assessee. Further, in case it is found that the dividend income earned by the assessee or any part of it is exempt as per the provisions of the Act, then, the disallowance under section 14A r/w rule 8D, if warranted, is to be restricted to the quantum of exempt income earned during the relevant previous year. We, therefore, restore this issue to the Assessing Officer for adjudicating afresh. Addition on account of non–payment of Employees’ Contribution to Provident Fund and Employees State Insurance Corporation - Held that:- Decisions of the Hon'ble jurisdictional High Court in case of CIT v/s Hindustan Organics Ltd. [2014 (7) TMI 477 - BOMBAY HIGH COURT] and CIT v/s Ghatge Patil Transport Ltd.[2014 (10) TMI 402 - BOMBAY HIGH COURT] clearly apply to the facts of the assessee’s case. As regards disallowance of employer’s contribution to ESIC, undisputedly, such payment is covered by the proviso to section 43B - DR has not controverted the factual finding of the learned Commissioner (Appeals) that the aforesaid payments were made by the assessee before the due date of filing of return of income for the relevant assessment year. In view of the aforesaid, we do not find any infirmity in the decision of the learned Commissioner (Appeals) on the issue.

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• 2018 (9) TMI 69
  Penalty u/s. 271(1)(c) - Held that:- DR at the time of arguments before us could not point out any factual inaccuracy in the findings recorded by the Ld. CIT(A). Ld. Sr. DR also could not substantiate his arguments with cogent reasoning that the assessee had either concealed his income or furnished inaccurate particulars of income. It is very much evident that the relevant details were very much before the AO at the time of assessment proceedings. ITAT in the case of Sushil Kumar (assessee’s son) had dismissed the Revenue’s Appeal wherein the Department had challenged deletion of addition of quantum by the Ld. CIT(A). Ld. CIT(A), in the impugned order, has rightly observed that two sets of views could not have been possible on some such facts, especially because the impugned agreement to sell was signed by both i.e. father and the son. In view of the factual matrix of the case as well as keeping in mind that divergent views cannot be taken on identical facts, we do not find any reason to interfere in the findings of the Ld. CIT(A) on the issue in dispute and hence, we dismiss the grounds raised by the Department by upholding the action of the Ld. CIT(A) in deleting the penalty in dispute. - decided in favour of assessee

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• 2018 (9) TMI 68
  CIT-A justification in striking down the order passed by the AO u/s 253/143(3) wherein the short term capital gains was brought to tax - whether the CIT-A was justified in passing certain comments about the taxability of short term capital gains after having struck down the addition made by the ld AO in the facts and circumstances of the case? - Held that:- AO did compute the capital gains on conversion of private limited company into LLP at Rs Nil by fixing the consideration at book values as directed by the tribunal. Admittedly, this was computed in the hands of Aravali Polymers LLP (i.e the assessee herein) by treating the assessee LLP in the capacity of successor to private limited company. AO ought to have stopped the proceedings with this action which would be in strict consonance with the directions of the tribunal supra. We are in complete agreement with the arguments of the ld AR that the issue as to whether the sale of 3000000 lakh equity shares of EIH Ltd post conversion into LLP, would result in long term or short term capital gains, was never in dispute in the first round of proceedings. Since this was accepted by the ld AO in the assessment itself, there was no occasion to carry the said issue to the appellate forums such as CITA or the tribunal. Hence the ld AO ought not to have taken a different stand in the proceedings giving effect to the directions of the tribunal by treating the resultant gains on sale of 3000000 equity shares of EIH Ltd as short term capital gains. We find that this action of the ld AO had been rightly struck down by the ld CITA in his order. Accordingly, grounds raised by the revenue are dismissed. But we find that the CIT-A having struck down the action of the AO in taxing short term capital gains, had proceeded to make some observations, to somehow bring to tax the short term capital gains, which in our considered opinion, cannot be done as per law at all. These observations of the CIT-A are totally unwarranted and only reflects the contradictory stand of the CIT-A in as much as, the CIT-A, on the one hand, clearly gives a finding, that the AO cannot travel beyond his jurisdiction and has to strictly abide by the directions of the tribunal, but, on the other hand, the CIT-A decides to travel beyond his jurisdiction to look into issues which were not the subject matter of directions of the tribunal. We hold that the observations of the CIT-A in respect of Ground Nos. 5 & 6 raised before him deserves to be expunged and are hereby directed to be expunged. Accordingly, the grounds raised by the assessee are allowed.

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• 2018 (9) TMI 67
  Disallowance u/s 40A(3) - cash payments in violation of specified modes for purchasing country spirit from payee M/s Asansol Bottling & Packaging Co Ltd. - Held that:- The very payee that it falls within the exception provided in Rule 6DD(k) of the Income Tax Rules since acting as agent of the Government of West Bengal (principal). No exception on facts or law has been pointed out at the Revenue’s behest during the course of hearing. See PUSPALATA MONDAL VERSUS INCOME TAX OFFICER, WARD-2 (2) , ASANSOL [2011 (7) TMI 1183 - ITAT KOLKATA]

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• 2018 (9) TMI 66
  Penalty u/s 271(1)(c) - non specification of charge - defective notice - Held that:- We find the notice dated 28.03.2013 issued u/s. 274 r.w.s 271 of the Act, placed on record, does not specify the charge of offence committed by the assessee viz. whether had concealed the particulars of income or had furnished inaccurate particulars of income. Hence the said notice is to be held as defective. - decided in favour of assessee.

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• 2018 (9) TMI 65
  Reopening of assessment - Deemed dividend under Section 2(22)(e) - Exemption under Section 10B - Held that:- Revenue filed appeal before this Tribunal in respect of deemed dividend under Section 2(22)(e) of the Act alone. As far as exemption under Section 10B of the Act is concerned, the Revenue accepted the order of the CIT(Appeals) and no appeal was filed before this Tribunal. Therefore, as rightly submitted by the Ld. representative for the assessee, the order of the CIT(Appeals) in respect of exemption under Section 10B of the Act attained finality. The order of the Assessing Officer merged with the order of the CIT(Appeals), therefore, this Tribunal is of the considered opinion that the Assessing Officer cannot overturn the order of the CIT(Appeals) by reopening the assessment on the ground that the assessee has not filed return of income within the time limit. This Tribunal is of the considered opinion that the finality attained in a judicial order or in the order of executive officer by whom the order was passed in a judicial proceeding, cannot be so lightly disturbed by the subordinate officers. If the Assessing Officer is allowed to reopen the assessment after the order of the CIT(Appeals), then the tax payers may not have confidence on the judicial system of this country. The power to determine or adjudicate an issue, even though technically flows from Income-tax Act, 1961, actually flows from confidence reposed by the people in the system. In this case, an appeal was filed before this Tribunal against the very same order of the CIT(Appeals). But the Assessing Officer accepted the decision of the CIT(Appeals) in respect of the claim of exemption under Section 10B of the Act. Therefore, this Tribunal is of the considered opinion that reopening of assessment by the Assessing Officer by issuing notice under Section 148 would amount to overturning or disturbing the order of the CIT(Appeals) which attained finality. - decided in favour of assessee

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• 2018 (9) TMI 64
  Disallowance on account of unutilized Modvat credit - revaluation of closing stock including unutilized Modvat credit - Held that:- Hon’ble Bombay High Court in the case of CIT vs Indo Nippon Chemicals Co Ltd [2000 (8) TMI 69 - BOMBAY HIGH COURT] held that where in the closing stock, unutilized Modvat credit is adjusted, similar adjustment should be made to opening stock also. - we are of the considered view that the AO was erred in making adjustment towards unutilized Modvat credit only in respect of closing stock. Therefore, we set aside the issue to the file of the AO to make necessary adjustments towards opening stock as well as closing stock. Treatment of capital expenditure on brand ‘Epilex’ - Held that:- As in assessee’s own case for AY 1998-99 wherein the ITAT has deleted enhancement made by the Ld.CIT(A) towards treatment of capital expenditure on brand ‘Epilex’. CIT(A) also deleted addition made by the AO towards professional charges paid to DSP Meryll Lynch for the purpose of computation of deduction u/s 35AB of the Income-tax Act, 1961. CIT(A) was erred in making enhancements towards treatment of capital expenditure incurred on brand ‘Epilex’. Hence, we direct the AO to delete enhancement made by the Ld.CIT(A). Also delete addition made towards disallowance of professional charges while computing deduction u/s 35AB Exclusion of 90% of other income while computing deduction u/s 80HHC - Held that:- CIT(A) for AY 2001-02 in assessee’s own case has deleted addition made by the AO towards recomputation of eligible profit u/s 80HHC by excluding insurance claim and sale of scrap and such decision has been accepted by the department and no appeal has been filed before the ITAT. Once, the department has accepted the fact that these two items are part of other income eligible for inclusion in the computation of deduction u/s 80HHC, then by following the rule of consistency, the department ought to have accepted the assessee’s claim for current year. Therefore, we are of the considered view that the AO was erred in excluding 90% of other income being insurance claim and sale of scrap for the purpose of computation of eligible profit u/s 80HHC of the Income-tax Act, 1961. Hence, we direct the AO to delete addition made towards re-computation of eligible profit u/s 80HHC excluding insurance claim and sale of scrap. Disallowance of interest income and cash discount while computing deductions u/s 80I & 80IA - Held that:- Bombay High Court in the case of CIT vs Vidyut Corporation [2010 (4) TMI 229 - BOMBAY HIGH COURT] held that interest from customers is eligible for computation of deductions u/s 80I& 80IA of the Income-tax Act, 1961. Insofar as cash discount is concerned though the issue has come up for our discussion for first time during the year under consideration, fact remains that the assessee has failed to furnish evidence to prove that cash discount is part of its core business activity of income eligible for deductions u/s 80I & 80IA of Income-tax Act. AO was right in disallowing cash discount while computing deductions u/s 80I & 80IA of the Income-tax Act, 1961. Accordingly, we uphold disallowance made by the AO and reject ground taken by the assessee. Sales turnover exclusive of sales-tax, excise duty, trade discount, etc. while computing deduction u/s 80HHC - Held that:- AO was erred in including sales-tax & excise duty and also trade discount while computing sales turnover for the purpose of determination of deduction u/s 80HHC of the Income-tax Act, 1961. The Ld.CIT(A), after considering relevant submissions has rightly deleted addition made by the AO. We do not find any error in the order of Ld.CIT(A). Disallowance of interest expenditure u/s 14A - Held that:- once assessee proved with necessary evidence that its own funds including interest free funds are more than the amount of investments, then no interest could be disallowed u/s 14A But, the facts are not emerging from the orders of the lower authorities that the assessee has filed evidence to prove that its interest free funds are more than the amount of investments in shares and securities. Therefore, we set aside the issue to the file of the AO and direct him to cause necessary enquiry to ascertain the position of funds as on the date of investment and if found that the assessee is having its own funds, then no disallowance could be made towards interest expenditure u/s 14A. Disallowance on computer software expenses on the ground that it is in the nature of capital expenditure - Held that:- Assessee has incurred software expenses, which are in the nature of cost of service of personnel, licence fees for software and AMC expenses for various softwares including software for accounting sales and debtors, software support for pay roll division, software maintenance and support for marketing royalty obligations and other day to day obligations, which are in the nature of revenue expenditure. AO was erred in disallowing software expenses on the ground that it is in the nature of capital expenditure which gives enduring benefit to the assessee. Further, in the case of CIT vs Raichem RPG Ltd [2011 (7) TMI 953 - BOMBAY HIGH COURT] has considered similar issue and held that amount paid for acquiring licence to use softwares which facilitate smooth carrying on of business operation, fees paid for said licence was revenue expenditure allowable u/s 37(1) Deduction u/s 80M in respect of dividend declared - Held that:- In this case, the assessee has received dividend income of Rs. 1,68,13,000 and distributed dividend of Rs. 18,33,61,200. The dividend income received by the assessee is less than the amount of dividend declared by the assessee in the year under consideration. Therefore, as per the provisions of section 80M, the assessee is eligible for deduction u/s 80M to the extent of dividend income received or dividend income declared, whichever is less. Since the assessee has distributed dividend more than the amount of dividend income received for the year under consideration, it has rightly claimed deduction u/s 80M to the extent of dividend income received of Rs. 1,68,13,000. Thus the assessee is eligible for deduction u/s 80M in respect of dividend received from wholly owned subsidiary company Disallowance u/s 14A - Held that:- isallowance should be worked out on reasonable basis having regard to the quantum of dividend income earned by the assessee and expenditure incurred for the relevant period. In this case, the assessee has earned huge dividend income of Rs. 6,84,37,043, therefore, considering the facts and circumstances of this case and also keeping in view of various judicial precedents, we are of the considered view that 5% of exempt income towards expenses incurred in relation to exempt income would meet the ends of justices. Therefore, we direct the AO to restrict the disallowance determined towards other expenses at 5% of exempt income. Disallowance of advertisement expenditure - AO has disallowed advertisement expenditure incurred by the assessee on the ground that the same was not spent wholly and exclusively for the purpose of business of the assessee and also such expenditure has benefited the parent company of the assessee - Held that:- AO has recorded categorical finding any that assessee failed to file any evidence to justify such expenditure. Therefore, we are of the considered view that the issue needs to be re-examined by the AO in the light of claim of the assessee that it has furnished necessary evidence to prove advertisement expenses. Hence, we set aside the issue to the file of the AO and direct him to consider the explanation of the assessee in the light of our discussion in preceding paragraphs. If the assessee is able to file necessary evidence Disallowance of deferred sales-tax liability - addition u/s 41(1) - Held that:- AO has misconstrued the facts to come to the conclusion that sales-tax, if any, payable in relation to the transfer of the said undertaking shall mean ‘whatever taxes payable upto the date of transfer of the undertaking’. On the other hand, the assessee has filed necessary evidence to prove that such liability continue to exist in its books of account, even after transfer of Jejuri undertaking and also the said liability has been discharged by the assessee to the department in subsequent period. AO was erred in making addition towards deferred sales-tax liability u/s 41(1) when such liability is existing in the books of account of the assessee

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• 2018 (9) TMI 63
  Deduction of interest from income from house property - Disallowance of interest paid to Axis Bank Ltd - the assessee could not establish the nexus between the borrowing funds from Axis Bank and repayments to the previous lenders - allow the deduction of interest as business expenditure to be set off against the business income of the assessee - Held that:- There is a nexus between the borrowing and repayment of earlier loan creditors. The fact is also adequately substantiated by the observation of the AO in the assessment order wherein the AO has apportioned the interest between property A and property B AO has himself observed that the interest of Rs. 1,08,73,997/- which is made up of two amounts Rs. 1,02,37,297/- as interest to Axis Bank Ltd. and Rs. 6,36,700/- paid to Ramesh S. Shah Family Trust. AO got confused and misunderstood the sequence of transaction and their chronology. The assessee first constructed the building with borrowed money thereafter to pay the major creditor Manakchand H. Loonkar HUF retired partner of Rs. 5,15,05,674/-. The five partners of the firm contributed Rs. 5,20,00,000/- and thereafter the loan from the Axis Bank Ltd. was used to pay the money to the partners and to the lenders. The observation of the AO that interest of Rs. 1,08,73,997/- has to be apportioned between two buildings i.e. building A and B in the ratio of investment according to which the interest attributable to building A comes to Rs. 36,97,159/- and building B Rs. 71,76,838/-. We direct the AO to allow the interest of Rs. 1,02,37,297/- in the proportion of 34% to building A and 36% to building B. Resultantly, Rs. 67,56,616/- is admissible under section 2(b)B and Rs. 34,80,681/- is to be treated as business interest be set off against the business income of the assessee. The AO is accordingly directed. - Decided partly in favour of assessee

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• 2018 (9) TMI 62
  TDS u/s 195 - remittance of USD 14,000 towards “training fees” to M/s Fair Isaac International Corpn. - India-USA Tax Treaty - P.E. in India - Held that:- We find ourselves to be in agreement with the contention advanced by the ld. A.R that as the training services provided by M/s Fair Isaac International Corpn did not “make available” any technology etc. to the assessee, therefore, the same was not covered by the meaning of “fees of included services” as defined in the India–USA tax treaty. Rather, we are of the considered view that rendering of the training services by M/s Fair Isaac International Corpn. would also assume the same character as that of the software license receipts, and as such would be in the nature of its business profits under Article 7 of the India – USA tax treaty. However, as M/s Fair Isaac International Corpn. did not have a PE in India, therefore, the training fees received by it also could not be subjected to tax under Article 7 of the India-USA Tax Treaty. As the assessee was under no obligation to deduct tax at source under Sec. 195 of the Act in respect of the training fees remitted to M/s Fair Isaac International Corpn, therefore, it could not be held as being in default within the meaning of Sec. 201 of the Act for having failed to deduct tax at source while remitting the said amount - Decided in favour of assessee

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• 2018 (9) TMI 61
  Deemed dividend u/s 2(22)(e) - sum received by the assessee from M/s Charu Home Products Pvt. Ltd. - Held that:- The Board circular and the line of reasoning adopted by the various honourable High Courts undoubtedly indicate that the trading transactions or advances would fall outside the mischief of sums that are to be treated as deemed dividends. To this extent, there can be no dispute. Whether amounts advanced by a company to assessee in which the public does not have any substantial shareholding or in which the public is not interested to a shareholder, to an entity or individual holding shares in excess of 10 per cent amounts to a trading transaction or falls within the aspect and, therefore, deemed commercial, there can be no deemed dividend income in the hands of the receiver of the sum. The revenue has to conduct a fact-based inquiry each time such contention is urged by the assessee. These facts were analyzed meticulously by the AO were completely overlooked by the ld CIT (A) who virtually negated findings recorded with respect to the applicability of section 2(22)(e) of the act. All indications were that the assessee used money for its own purposes as it did by advancing substantial amounts enjoying the profits of the company. - Decided in favour of revenue.

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• 2018 (9) TMI 60
  TDS u/s 195 - Revenue’s case before us is that the assessee had failed to place on record any non-deduction of TDS certificate u/s. 195(1) - services rendered in India - Held that:- We find no merit in the instant argument. The fact remains that there is no material on record indicating the assessee’s payees to have rendered any service in India so as to be assessable in India. Hon'ble Madras high court in case CIT vs. Faizan Shoes Pvt. Ltd. [2014 (8) TMI 170 - MADRAS HIGH COURT] holds that section 9(1)(i) r. w. s section 9(1)(vii) of the Act does not apply in absence of any services rendered in India. Chapter XVII of the Act applies only in case the payments in issue are taxable in the hands of overseas recipients’ hands in India and not otherwise. The assessee has also succeeded on the very issue in preceding assessment year 2007-08 as well. - decided in favour of assessee Disallowing assessee’s stores and spares consumption claims - Held that:- The assessee has been consistently succeeding on the very issue since preceding assessment years regarding its claim of consumption of stores and spares comprising of various facilities offered to workmen in all of its tea estates. There is no rebuttal forthcoming to the clinching figures of comparison qua the impugned expenditure vis-a-vis the three preceding assessment years hereinabove. The Assessing Officer appears to have conducted remand proceedings wherein he could not find out even a single irregularity in assessee’s books of account as well as all other details produced. We therefore uphold the CIT(A)’s finding under the challenge in this instant common issue in these two assessment years - decided in favour of assessee Disallowance of nursery expenditure - revenue or capital expenditure - Revenue’s only argument is that such nursery expenditure as the one in hand before us ought not to have been treated as a revenue item of claim in the lower appellate proceedings - Held that:- Coming to enduring advantage spread over number of years hon'ble apex court’s decision in Taparia Tools Ltd. Vs. JCIT [2015 (3) TMI 853 - SUPREME COURT] rejects Revenue’s similar reasoning in concluding that such an approach does not form a justifiable ground to reject a claim of revenue expenditure. We further reiterate that hon'ble jurisdictional high court’s decision in CIT vs. Tasati Tea Ltd [2003 (2) TMI 42 - CALCUTTA HIGH COURT] also holds similar expenditure to be revenue in nature. - decided in favour of assessee Sales promotion expenditure disallowance - Held that:- Failure to dispute the fact that the impugned sum of Rs.9, 48, 411/- forms a minuscule percentage of the total claim amounting to Rs.15, 41, 48, 965/- i. e. less than 1% of the total figure. The relevant payees’ count is more than 100 involving corresponding sums of Rs.4, 000/- to Rs.9, 000/-. The assessee has categorized all of them as small parties. The fact also remains that the assessee has also not been able to file all the relevant details of regarding these alleged small parties. We therefore conclude in larger interest of justice that a lump sum disallowance of Rs.1. 00 lakh out of the impugned figure of Rs.9, 48, 411/-would be just and proper in the given facts and circumstances with a rider that the same shall not be treated as a precedent in preceding or succeeding assessment year.

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• 2018 (9) TMI 59
  Addition u/s 68 - onus to prove - transaction conducted through banking channel - Held that:- Since the investor companies have confirmed the transaction with the assessee-company which were conducted through banking channel and entire evidence were brought on record, thereafter, if the A.O. was not satisfied with the documents on record and explanation of the assessee- company and the Investors, the A.O. should have made further enquiry on the same. However, it is a case where the A.O. has failed to conduct necessary enquiry, verification and deal with the matter in depth. Therefore, the explanation of the assessee- company should not have been disbelieved by the authorities below. Thus set aside the orders of the authorities below and delete the addition of Rs. 40 lakhs. This ground of appeal of assessee is allowed.

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• 2018 (9) TMI 58
  Withholding tax credit deducted by US based subsidiary of the assessee company in USA on payment of interest loan - Indo-US DTAA - tax deduction by source state - credit has been denied by the Revenue authorities on the ground that assessee has not filed its return of income in US for claiming the refund of the withholding tax if the said amount is not taxable in US - there is no scheme under the DTAA for the resident to give credit of the tax withheld in the source country if the same is not taxable in the source country - interest paid by the US company who is a deductor is actually an expenditure for that company and therefore, there is no question of same being taxable in USA and it has not been shown as to under which provision the TDS was made by the deductor in USA Held that:- It is not in dispute that tax has been deducted by the source state, i.e., USA on the interest income of the resident of India, however, it is not clear under which provision such amount of interest paid by the US Company to the Indian Company is liable for tax under the US laws. The TDS certificate perhaps will give the clarity in this regard, because there might be mention of provision or code under which the tax has been withheld. Thus, for the limited purpose the matter is remanded back to the Assessing Officer to examine the TDS certificates which shall be submitted by the assessee; or assessee can provide any other documents to show that withholding of the tax by the US Company is in accordance with the law of the US State. If the TDS certificate is produced by the assessee, then such tax which has been withheld, Assessing Officer has to give credit of such withholding tax by the US Company which is the mandate of Article 25. Accordingly, with this direction the matter is restored back to the file of the Assessing Officer - Decided in favour of assessee partly for statistical purposes.

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• 2018 (9) TMI 57
  Set off of current year looses and brought forward losses/unabsorbed depreciation - scheme of amalgamation - Held that:- - Held that:- SLP dismissed.

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• 2018 (9) TMI 56
  Set off of current year looses and brought forward losses/unabsorbed depreciation - scheme of amalgamation - Held that:- SLP dismissed.

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• 2018 (9) TMI 1
  Imposition of penalty u/s 271(1)(c) - non specification of charge - defective notice - Held that:- We find that there was no specific charge against the assessee in the notice. Revenue has missed out their opportunity to subject the assessee to the penalty proceeding by not issuing a proper notice. No specific case has been made out by the Revenue as to why the matter should be remanded except that the assessee had not participated properly in the assessment proceedings but for that reason best judgment assessment has been made and the income, which had escaped assessment has been added to the income of the assessee. It was incumbent upon the Revenue to make out a specific case for imposition of penalty, on which count the Revenue has failed. - decided against revenue

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• Customs

• 2018 (9) TMI 52
  Validity of Search and seizure proceedings - detention of valuables along with seizure of the key - fraudulent drawback availed - petitioner prays for release of articles - Held that:- In the present case, the key was seized and consequently articles were detained on 07.07.2017. Since then, the petitioner has not been afforded access to the jewellery. Though it is not a direct seizure or detention the effect of such action is that the petitioner has been deprived of the use of her property - The period provided under Section 110 i.e. six months elapsed, the Revenue could have, if it chose to extend that period provided the powers were resorted to within the six month period. Even that option was not exercised. The petitioner is, therefore, clearly entitled to release of all the articles in her locker as well as the locker key. Since the customs authorities have inventorized these goods, it is open for them to continue with the adjudication proceedings as and when they issue show cause notice - petition allowed.

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• 2018 (9) TMI 51
  Communication/ orders dated 18th October, 2016 and 2nd November, 2016 - case of petitioner is that there is a defect/ flaw in the decision making process adopted by the Commission. This in view of the fact that the Commission did not hear the Petitioners in respect of its contention that the order dated 22nd April, 2016, has been complied with and yet rejected it - Held that:- The impugned order dated 18th October, 2016, informing the Petitioner that its application for settlement stands rejected in view of the order dated 22nd April, 2017 of the Commission, is without taking into account the letter dated 22nd June, 2016 addressed by the office of the Commission to the Petitioner, directing them to deposit interest immediately. Petitioner, in compliance thereof paid the interest. These were issues which required the Commission to hear the Petitioner, before holding/ communicating that there is non-compliance with the order dated 22nd April, 2016. In fact, miscellaneous application dated 25th October, 2016 to recall/reconsider the communication dated 18th October, 2018 was also rejected on 2nd November, 2016 without any hearing or taking into account the events subsequent to 22nd April, 2016, particularly, the letter dated 22nd June, 2018 of the Commission. Thus, there is undisputedly a flaw in the decision making process. The Commission is entitled to come to a view that the Petitioner has not complied with the order dated 22nd April, 2016 within the time frame provided therein and there is no justification for extension of time - the orders/ communications dated 18th October, 2016 and 2nd November, 2016 from the office of the Commission set aside - the Commission is directed to hear that Petitioner on its plea that the order dated 22nd April, 2016 passed by the Commission, has been complied with and pass appropriate order thereon, in accordance with law. Appeal allowed by way of remand.

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• 2018 (9) TMI 50
  Valuation of imported goods - rejection of transaction value - Imposition of Redemption Fine and penalty - Held that:- Department has rejected the transaction value on the basis of the Chartered Engineer s report, who admits that the goods imported by appellant are only scrap but scrap was in the kind of Tread , Taste , and Troma/Trump etc. and on that basis valuation of the goods have been arrived on the basis of contemporaneous import. As nothing has been brought on record, how the examination was done by the Chartered Engineer to find out how much is the quantity of Tread , Taste and Troma/Trump are not scrap. In that circumstances the findings of the Chartered Engineer with regard to the valuation of the goods is not acceptable in the absence of any market survey - redemption fine and penalty is not imposable upon the appellant - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 49
  Penalty - Confiscation of imported goods - mis-declaration of the description of goods - Held that:- The Lower Authorities have not accepted the stands of the assessee that they came forward for the retest but extending the benefit of doubt to the appellant, the penalty imposed upon him can be reduced, especially in view of fact that they have cleared goods on payment of higher rate of duty as also on payment of redemption fine of Rs. 20 lakhs - penalty reduced from Rs. 6.50 lakhs to Rs. 3 lakhs - appeal allowed in part.

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• 2018 (9) TMI 48
  Mis-declaration of imported goods - requirement of specific import license - Confiscation - enhancement of value of the goods for the purpose of assessment of Customs duty - Held that:- All the goods imported by the appellant were classifiable under ISRI specifications of 1997 and the same were falling under Sub-heading 760020010. As a result, there has been no mis-declaration - Also, before enhancing the assessable value, revenue has to first establish that the price is not the sole consideration and such exercise was not carried out in the present case - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 47
  Project Import - benefit of concessional rate of duty - non-compliance with sub-clause (i) of Regulation 5 of the PIR as the contracts have been registered by the proper officer at the port after importation of the goods and warehouse - Project Import Regulation, 1986. Held that:- As per Rule 5(2) of the PIR, any importer desiring to claim the benefit of Project Imports, shall get a clearance from the Sponsoring Authority - In the present case the sponsoring authority i.e. the Ministry of Commerce and Industries, Department of Industrial Policy and Promotion (light engineering section), had cleared/approved the project imports of the appellant for import of capital goods for essential setting up of project at Uttaranchal in terms of Customs N/N. 230/86-Cus dated 03.04.1986. This has been addressed to the Assistant Commissioner of Customs, Customs House, Kolkata - However, the regulation 5 is not a condition determining eligibility of the imported goods for the benefit of concessional rate of assessment under Project Regulation. It is only a procedural requirement. The importer shall apply as soon as he has obtained the clearance from the sponsoring authority under Regulation 5(2) of the PIR - Also, no prescribed time limit for obtaining clearance from the sponsoring authority. Both the lower authorities have not gone through the provisions carefully and had denied the benefits on incorrect interpretation of the statutory provisions - In the present case the appellants had registered the contract before clearance of the warehoused goods and hence they are eligible for the benefit of the project import. Appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 46
  Smuggling - contraband item - red sanders - absolute confiscation - Penalties on S/Shri R. Ramesh, Manager, K. Shanmugam, Executive (Operations) both of GFLPL i.e., the CHA firm - Held that:- Even though, the adjudicating authority has found fault with the two persons for being negligent in performing their roles of the CHA, but the fact remains that there is no evidence on record to show that these two persons were aware of the presence of the contraband in the export consignment - there is no evidence on their involvement in any other way in the fraud - penalties set aside. Penalty on Shri C. Srijith, Branch Manager of ILFF - role attributed to him is that of a middle-man, who has liaised with the partners of the exporting firm, and also approached the CHA firm with the export documents for filing the shipping bill - Held that:- There is nothing on record indicating any other role played by Shri C Srijith in the export fraud. He cannot be penalised for being actively engaged in the handling of export cargo without CHA licence. In the absence of any evidence linking Shri C. Srijith to the export fraud, penalties set aside. Penalty on S/Shri D. Srinivasa Rao and A.M. Jamaludheen both Partners of RCO, the exporter - Held that:- Shri D. Srinivasa Rao had admitted in his statement that export documents were signed by him in the capacity of being a Partner of RCO. Shri A.M. Jamaludheen in his statement has also admitted to be Partner in the export business. In view of the fact that the contraband goods having been found in the consignment entry for export and the fact that S/Shri D. Srinivasa Rao and A.M. Jamaludheen both Partners of the exporter, penalties upheld - the confiscation of the export consignment as well as penalties imposed on S/Shri D. Srinivasa Rao and A.M. Jamaludheen upheld. Option of redemption fine - case of appellant is that goods, which are not in the nature of contraband found in the export consignment, should have been given an option for redemption - Held that:- From the record, we find that no request have been made by the appellants to the adjudicating authority for release of the goods other than the contraband. Hence, we find no reason to consider the same. Appeal disposed off.

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• 2018 (9) TMI 45
  Revocation of registration of appellant as a Courier Agency - Forfeiture of Security deposit - imports alleged to contain concealed contraband in the form of gold - Smuggling in Gold - misusing of authorization for clearing consignments - competence of the Commissioner to suspend the licence - Regulation 14 of Courier Imports and Exports (Clearance) Regulations 1998 (as amended) - Initiation of revocation proceedings without any inquiry. Held that:- Regulation 14 empowers the competent authority to direct forfeiture of security deposit for failure to comply with the conditions of registration under Regulations or of the Act. The first step to revocation is the placing of authorized courier on notice of the grounds on which such eventuality is proposed and to be given an opportunity of making a representation in writing and a further opportunity of being heard in their defence. In the present case, instead of a mere order of suspension, it was with the stated purpose of conducting an inquiry before taking up the process of revocation of registration. In view of the expressed intention to conduct an enquiry for which powers conferred under regulation 14 was invoked and, in the circumstances where the grounds against the authorized courier are not established prima facie, it is obvious that enquiry that was to be conducted was not brought to its logical conclusion as mandated in the proviso, i.e. to proceeding with the revocation or restoration of the licence. There is no record of the outcome of the enquiry either in the order of deregistration or in the show cause notice proposing deregistration Thus, the proceedings had commenced with show cause notice without reference to the grounds contemplated by the Principal Commissioner for suspension - The revocation proceedings were initiated for the very same incident upon which no inquiry has been conducted. Without such inquiry, the initiation of proceedings is itself in jeopardy. For these reasons, the revocation is set aside. Appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2018 (9) TMI 53
  Interim order for release of the Petitioner from ‘illegal’ judicial custody - bail application - Challenge to validity of Section 212 (6) and (8) of CA act - Held that:- The form of the ‘Arrest Order’ is appended to the SFIO Arrest Rules. It is addressed to the person arrested. Column 15 thereof is titled “grounds of arrest with sections under which arrested.” It is this Arrest Order which in terms of Rule 4 is required to be served on the person arrested. In the present case, the grounds of arrest, even according to the SFIO, were only “explained” to the Petitioner. Nowhere is it noted that he was attempted to be served with the grounds of arrest and he refused to receive the grounds. It is only said that he refused to sign the arrest memo in acknowledgment of his having been “explained” the grounds of arrest. Although Section 212 (8) states that he should be “informed” of the grounds of arrest, Rule 4 of the SFIO Arrest rules read with the Arrest form appended thereto mandates serving upon the Petitioner the copy of the Arrest Order containing the grounds of arrest in Column 15. Even till the filing of the present petition or even thereafter the Arrest order was not served on the Petitioner. On perusing the files, the Court noticed that the proposal placed before the Director SFIO was for the arrest of the Petitioner and one other person in exercise of the powers under Section 212(8) Companies Act. This proposal was approved. Yet for some unexplained that other person has not been arrested till date. It appears prima facie that the SFIO was selective about whom it wanted to arrest. Further despite the names of several individuals finding mention in the notes, whose culpability is more or less similar to that of the Petitioner, the coercive provision of arrest has been exercised only qua the Petitioner. The power vested in an Inspector of the SFIO to use the signed statement of an accused as evidence against him in terms of Section 271 (4) read with Section 217 (7) prima facie appears to violate the fundamental right against self incrimination enshrined in Article 20 (3) of the Constitution of India. The Petitioner has been arrested pursuant to the investigation commenced by the SFIO into the affairs of BSL, BSPL and their group companies. Yet till date there has been no move to prosecute any of the companies. It is contended by the SFIO that the arrest of the Petitioner, in his individual capacity, without proceeding against the companies he was promoter of or was controlling, is not illegal since the definition of ‘fraud’ in terms of the explanation to Section 447 of the Companies Act contemplates any ‘person’ committing such fraud against a company. This need not include the company which has suffered such fraudulent acts. The above submission has to be examined in light of Section 212 (14) of the Companies act which states that the central government has to take a call on whether prosecution should be launched against “the company and its officers or employees, who are or have been in employment of the company or any other person directly or indirectly connected with the affairs of the company.” It is not the disjunctive “or” that is used between the expressions ‘the company’ and ‘its officers or employees’. Under Section 15 IBC, there has to be a public announcement of the corporate insolvency resolution process. Under Section 18 IBC, the interim RP has to collect information concerning the business operations of the company under insolvency for the past two years. In terms of Regulation 36 (2) (h) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations 2016, the information memorandum should contain “details of all material litigation and any ongoing investigation of proceeding initiated by the Government and statutory authorities” against the company facing liquidation. Whether the fact that BSL was under investigation by the SFIO and whether this considered as part of the decision-making process of the NCLT which approved the resolution plan is a question which does not find an answer in the records shown to the Court in the process of hearing the present interim application. As regards the challenge to the validity of Section 212 (6) of the Companies Act insofar as it severely curtails the chances of a person accused of the offence under Section 447 of the Companies Act getting regular bail - Both the PMLA provisions and Section 447 Companies Act pertain to economic offences. It is not possible at this stage to conclude that the offence under Section 447 Companies Act is more heinous than that under Section 45 PMLA. Secondly, as far as the high threshold for grant of bail is concerned, barring the slight difference in the language, both provisions do make it equally difficult for a person accused of an offence thereunder to obtain bail. The above observations in Nikesh Tarachand Shah [2017 (11) TMI 1336 - SUPREME COURT OF INDIA], prima facie support the challenge by the Petitioner to the constitutional validity of Section 212 (6) Companies Act. Thirdly, even at a practical level, if indeed for a valid arrest if the records have to bear out the opinion of the Director SFIO that the person arrested “has been guilty” of the offence under Section 447, then it will be virtually impossible for the Special Judge to conclude for the purpose of Section 212 (6) that the said person is not guilty of the offence. For all the above reasons, the Court is of the view that the Petitioner has a prima facie case in his favour for the grant of interim relief. The present petition cannot be viewed as a mere petition for issuance of a writ of habeas corpus and an attempt to bypass the regular route of obtaining regular bail. With the provision for grant of bail, i.e. Section 212(6)(ii) Companies Act and the provision concerning arrest, i.e. Section 212(8) Companies Act, themselves being challenged, and since those challenges are prima facie not frivolous, the Petitioner should also be able to seek interim relief incidental to such challenge. The Petitioner will submit a personal bond in the sum of Rs. 5 lakhs as well as two sureties in the sum of Rs. 2 lakhs each to the satisfaction of the Special Judge (Companies Act) in the case (SFIO v. Neeraj Singal) File No. SFIO/INV/BPS/2016/480-494.

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• Insolvency & Bankruptcy

• 2018 (9) TMI 55
  Corporate insolvency process - seeking approval of the Resolution Plan - Held that:- Resolution Plan has been unanimously approved by the CoC and has been submitted in compliance of Section 30 of the Code for approval. Resolution Professional has confirmed that the Resolution Plan is compliant to sub-section (a) to (f) of Section 30(2) of the Code and also comply Regulation 38 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. Besides there is no objection from any stake holders in respect of approval of the resolution Plan. In absence of any discrimination or perverse decision it is not open to the Adjudicating Authority to modify the Plan. Adjudicating Authority is not expected to substitute its view with the unanimous commercial wisdom of the CoC nor should deal with technical complexity and merits of Resolution Plan unless it is found contrary to the express Provisions of law and goes against the public interest. Admittedly the revival of the corporate debtor company would certainly enhance the interest of all the stakeholders and is in the line to achieve the object of the Code. In view of the finding that the resolution plan, as unanimously approved by the CoC, is in accordance with the sub-section 2 of section 30 read with section 31 of the Code and as the Resolution Applicant is not disqualified under Section 29A of the Code and as no infirmity seems to have brought out upon screening of the Resolution Plan; we hereby approve the Resolution Plan under sub-section (1) of section 31 of the Code.

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• 2018 (9) TMI 54
  Corporate Insolvency Resolution Process - approval of resolution plan - Held that:- This Bench power to interfere with the statutory right of the CoC to either approve or reject a resolution plan by a vote of not Les than 75% of voting share of the financial creditors it is liable to approve the resolution plan which was approved with 100% voting share and meets the requirements of sub section (2) of section 30 of the I&B Code. In view of the above, and upon finding that none of the objections raised by any of the objectors against the Resolution Plan submitted by CP Ispat Private Limited stand proved with supporting evidence, it appears to me that the resolution plan of CP Ispat Pvt. Ltd is to be approved as per Sub-Section (1) of Section 31 of the I&B Code 2016. Accordingly, the Resolution Plan submitted by CP Ispat Private Limited is hereby approved upon the following directions : 1. It shall be binding on the corporate debtor and its employees, members, creditors, guarantors, and other stakeholders involved in the resolution plan. 2. The resolution plan of the corporate debtor shall come into force with immediate effect. 3. The moratorium order passed under Section 14 shall cease to have effect. 4. The Resolution Professional shall forward all records relating to the conduct of the Corporate Insolvency Resolution Process and the Resolution Plan to the Insolvency and Bankruptcy Board of India to be recorded on its database. 5. A copy of this order is to be forwarded to IBBI.

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• Service Tax

• 2018 (9) TMI 42
  Penalty - payment of Service tax before issuance of SCN - also before Final Order interest and portion of penalty was paid - Cable Operator Service - case of appellant is that thy have not paid the service tax under the impression that when the principal signal supplier is paying the service tax, then Cable TV operator need not pay service tax again on the said services - invocation of section 80. Held that:- The appellant as per the impugned order is entitled to CENVAT credit for payment of service tax. Further the appellant has paid the substantial amount before the issue of show-cause notice and some of the amount has been paid before the Final Order was passed along with interest and penalty, the details of which has been given by him in the grounds of appeal. Further, the appellant has stated that he has paid 25% of penalty on 29.03.2011. Further, the appellant being a small businessman and is not having adequate knowledge of the Act and the Service Tax Rules and paid the entire amount along with interest and 25% of the penalty, therefore, he is entitled to the benefit of Section 80 of the Finance Act 1994 as there was a reasonable ground for failure to pay the duty in time. Penalty set aside by invoking section 80 - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 41
  Liability of Service Tax - Programme Producer s Service - appellant hired the services of certain nonresident service providers namely M/s IMG and M/s Hawkeye for producing the live feed of the cricket matches being played in India to be telecasted on various TV Channels, against payment of commercial consideration for the IPL 2008, IPL 2009 IPL 2010 - services were being provided by the nonresident service provider and hence service recipient - Revenue Neutrality. Held that:- There is no dispute about the fact the services provided by the nonresident service providers namely M/s IMG and M/s Hawkeye for producing the live feed of the cricket matches being played in India for the appellants have been held to be classifiable as Programme producer s Service and hence liable to service tax under the said category - the service tax in respect of this service was due from the Appellant on reverse charge basis and was to be paid by them on the due date as prescribed. Revenue Neutrality - Held that:- The case cannot be revenue neutral in view of the fact that in this case because service tax is being demanded from the Appellant only for the reason that the service provider is nonresident, in case service provider was located in India, service tax would have been paid by him in respect of the present transactions. Manner of payment of the tax would not change the nature of levy and in any case if the argument of revenue neutrality is accepted as permissible defense in the present case entire scheme of payment of taxes on reverse charge basis will become otiose and no business liable to pay service tax would be required to pay service tax in respect of services received by them from nonresident service providers, for the reason that the tax so paid will be available as credit to them. Penalty u/s 76 - delay in payment of service tax from the due date - Held that:- Various authorities as follows have upheld imposition of penalty under section 76 in case of delay in payment of service tax from the due date - reliance placed in the case of COMMISSIONER OF C. EX. CUSTOMS VERSUS SJ. MEHTA CO. [2010 (10) TMI 135 - GUJARAT HIGH COURT] - penalty upheld. Appeal dismissed - decided against appellant.

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• 2018 (9) TMI 40
  Extended period of limitation - Business Auxiliary Services - Recovery Agent Services - Held that:- Some demands have been paid by the appellant during investigation, the same is required to be verified by the Authorities below whether the said amount paid by the appellant covers the demand within the period of limitation or not? - Therefore, the matter needs examination at the end of the Adjudicating Authority. The learned Commissioner (Appeals) has observed that there is no willful intent of evade payment of service tax and the said order has not been challenged by the Revenue. In that circumstances, the extended period of limitation is not invokable as no mala fides are attributable to the appellant, therefore, the demands pertains to the extended period of limitation is set aside - Penalty also set aside. Appeal disposed off.

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• 2018 (9) TMI 39
  Commercial or Industrial Construction - period from 10.09.2004 to 31.05.2007 - demand of Service Tax - Held that:- The appellant had entered into a composite contract wherein they had supplied the goods along with the service and paying VAT as works contract on the goods supplied by them. Relying on the decision of Hon’ble Apex Court in the case of Larsen & Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT] wherein it has been held that if the assessee providing service along with goods, then the service is covered under ‘works contract’. Admittedly, the said service is taxable with effect from 01.06.2007 and for the prior period, if assessee is providing service along with material, the assessee is not liable to pay service tax under the category of ‘Commercial or Industrial Construction’ services. The appellant is not liable to pay service tax as the appellant is providing service along with material - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 38
  Classification of services - appellants engaged foreign agents in foreign countries for getting the meat exported from India to be cleared in foreign countries and delivering such goods to the consignees - Whether the Service classified under Business Auxiliary Service or Clearing and Forwarding Agent Service? - Held that:- There is no responsibility cast on the foreign agent for promoting the sale of goods produced by the appellant - there is no activity mentioned in the agreement to fit into one of entries at Sl. No. (i) to (vi) of the definition under Section 65 (19) of the Finance Act, 1994. The services rendered by foreign agents to the appellant are correctly classifiable as clearing and forwarding agent service - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 37
  Refund claim - refund claim was rejected on the ground that the shipping bill and commercial invoices were in the name of M/s.BRK Commodity India Ltd. and the application for refund was filed by M/s.KLA (I) Public Ltd. - Held that:- A copy of fresh certificate of incorporation is available at page 37 of the appeal paper book and therefore it is undisputed fact that M/s.BRK Commodity India Ltd. and M/s.KLA India Public Ltd. are one and the same - refund cannot be rejected on the said ground that the documents were in the name of M/s. BRK Commodity India Ltd. and the refund application was filed by M/s.KLA India Public Ltd. There is no report available on record about the requirement of conditions of said Notification having been satisfied in the present case - matter remanded to the original authority to examine admissibility of the refund in terms of the conditions of the Notification under which refund claim was filed and decide the claim in accordance with law - appeal allowed by way of remand.

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• 2018 (9) TMI 36
  Business Auxiliary Service - commission received from HDFC Bank as a recovery agent during the period 2008-2009 to 2012-2013 - Demand of Service Tax - Held that:- In all the years the services provided by the appellant remained below the threshold limit of Rs. 10 lakhs. Moreover, with regard to the issue of sale of goods was not disputed by the authorities below and not consider in the impugned order - as the value of services provided by appellant falls within the threshold limit of 10 lakhs, no Service Tax is payable by the appellant - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 35
  CENVAT Credit - common input/input services used for providing taxable as well as Exempted Services provided by the appellant - case of Revenue is non maintenance of separate records - Held that:- In appellant own case MAGNUM VENTURES LTD. VERSUS C.C.E. GHAZIABAD [2016 (8) TMI 307 - CESTAT ALLAHABAD], Tribunal that appellant is maintaining separate account as required under Rule 6(2) of the Cenvat Credit Rules, 2004 and credit need not be reversed - demand @ 5% of the value of the exempted services is not sustainable - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 34
  Classification of Services - Business Support Services or Supply of Tangible Goods Service? - right to use of studio/office and other equipment - demand of Service Tax with Interest and penalty - extended period of limitation - Held that:- An identical situation was considered by the Tribunal in the case of Bajaj Hindustan Limited vs. Commissioner of Central Excise, Lucknow [2018 (5) TMI 552 - CESTAT ALLAHABAD] and it was held that the explanation under the definition of business support services refers to circumstance wherein infrastructure stands provided along with office and other common utility to a person conducting his business from that place. Activity of renting of land along with renting of plant and machinery fell under the category of “renting of immovable property” and “supply of tangible goods” and activity is not covered under the definition of “support services of business or commerce”. Admittedly in the present case, office/studio along with equipment stands hired by the customer at a fix annual rent. Once the premises have been handed over to the customer, it is the obligation of the customer to maintain the said premises and to get all the infrastructure like a telephone line or the electricity, etc., on their own - the appellant had not provided any “Business Support Services” but the activity amounted to falling under the category of “Supply of Tangible Goods”, which were not taxable during the period prior to 16.05.2008. Appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 33
  Works Contract Service - Construction of Residential Complex Service - appellant contended that w.e.f. 01.06.2007, they registered themselves under “Works Contract Service” and paid service tax on the said service under works contract service - Held that:- The issue is covered by the decision in the case of COMMISSIONER, CENTRAL EXCISE & CUSTOMS VERSUS M/S LARSEN & TOUBRO LTD. AND OTHERS [2015 (8) TMI 749 - SUPREME COURT], where it was held that such activities were covered w.e.f. 01.06.2007 under works contract service and for the earlier period the same activities which were covered by works contract service did not attract any service tax - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 32
  Service or not? - appellant manufactured require tools in their factory and used the same for manufacture of final product to be exported to the General Electric Company USA - Held that:-There was no service involved in the present case and the amount received by the appellant to the tune of Rs. 58,02,925/- was used for development of tools and said tools were manufactured within the factory of appellant - there is no case for levy of service tax - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 31
  Levy of Service tax on U.P. Police - Security Agency Services - the appellant U.P. Police were providing Police Guard for escorting and handling of cash in transit and for deposits by the Banks in the currency chest for various Banks - Held that:- The services provided by appellant to various Banks was part of the statutory duty and therefore the same was not covered by provisions of Finance Act, 1994 related to Service Tax - Identical issue decided in the case of DY. INSPECTOR GENERAL OF POLICE VERSUS COMMISSIONER OF C. EX., BHOPAL [2017 (11) TMI 346 - CESTAT NEW DELHI], where it was held that the police department which is in the agency of State Government cannot be considered to be a person engaged in the business of running security services - Appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 30
  Rent-a-Cab Service - appellants entered into an agreement with M/s Uttar Pradesh State Road Transport Corporation (UPSRTC) and provided buses owned by them for use by U.P.S.R.T.C. - Tribunal’s decision in the case of M/s S.K. Kareemun Vs Commissioner of Central Excise, Customs & Service Tax, Hyderabad-III [2015 (1) TMI 282 - CESTAT BANGALORE] relied upon where Demand of service tax confirmed for the period 1/6/2007 onwards. Held that:- The lower authorities did not have the benefit of final order passed by Tribunal in the case of M/s S.K. Kareemun - matter remanded to the Original Adjudicating Authority with direction to take into consideration the case law and decide the matter afresh - appeal allowed by way of remand.

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• 2018 (9) TMI 29
  Refund claim - N/N. 17/2007-ST dated 07.07.2009 as amended by N/N. 41/2012-ST dated 29.06.2012 - Original authority held that the shipping bill and commercial invoices were in the name of M/s.BRK Commodity India Ltd. and the application for refund was filed by M/s.KLA (I) Public Ltd. and therefore they were not admissible for refund - Held that:- A copy of fresh certificate of incorporation is available at page 37 of the appeal paper book and therefore it is undisputed fact that M/s.BRK Commodity India Ltd. and M/s.KLA India Public Ltd. are one and the same - refund cannot be rejected on the said ground that the documents were in the name of M/s. BRK Commodity India Ltd. and the refund application was filed by M/s.KLA India Public Ltd.. However, there is no report available on record about the requirement of conditions of said Notification having been satisfied in the present case. Matter remanded to the original authority to examine admissibility of the refund in terms of the conditions of the Notification under which refund claim was filed - appeal allowed by way of remand.

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• 2018 (9) TMI 28
  Principles of Natural Justice - case of appellant is that Revenue has added the transactions in respect of service and sale on which UPVAT was paid towards consideration for providing services as a result demand is not worked out on the basis of facts - Held that:- The impugned order is issued without following the principle of natural justice. Therefore, the same is not sustainable in law - the matter remanded back to the Original Authority with directions to offer an opportunity of personal hearing to the appellant - appeal allowed by way of remand.

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• 2018 (9) TMI 27
  Nature of activity - sale or service - Whether the transaction being transfer of right and privilege of export of sugar quota by the appellant on receipt of consideration is a service or sale of goods? - Held that:- Tribunal in the case of Commissioner of Central Excise & Service Tax, Meerut-I v. M/s. Bajaj Hindusthan Sugar Ltd. [2017 (10) TMI 1055 - CESTAT ALLAHABAD] has held that transaction question regarding the sale of right and privilege of export of sugar quota is sale of goods and no service element is involved - appellant has not provided any service therefore they are not liable to pay Service Tax - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2018 (9) TMI 26
  Interpretation of Statute - Board's circular No.6/92 dated 29.5.1992 - SSI exemption - Clubbing of Turnover - no dummy units - maintainability of appeal - Held that:- The real issue in this appeal is regarding interpretation of Board's circular No.6/92 dated 29.5.1992 and the appeal against the impugned order passed by the Appellate Tribunal would lie before the Apex Court - appeal disposed off with liberty to challenge the same by filing an appeal under Section 35-L of Central Excise Act, 1944 before the Apex Court - present appeal not maintainable.

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• 2018 (9) TMI 25
  Time limitation for issuance of SCN - the proceedings are pending for the last more than 16 years when fresh notice for date of hearing was issued on 3.5.2017 - Section 11A (1), (4) and (11) of Central Excise Act - Held that:- Judgments of different High Courts were referred to and it was summed up that delay in conclusion of proceedings pursuant to show cause notices after a long gap without proper explanation, is unlawful and arbitrary. The Court further examined the fact as to whether transfer of proceedings to call book in view of circular dated 14.12.1995 can be said to be a reasonable explanation. The opinion expressed was that the mandate of law cannot be diluted by issuing circular especially when there is no power to issue such directions regarding transfer of cases to call book. Section 11A(11) of the Act provides that Cental Excise Officer shall determine the amount of duty within six months in case notice has been under Sub-section 1 thereof, whereas in the case of fraud, collusion, etc., the period prescribed is one year. No doubt, the words where it is possible to do so have been used, however, that will not stretch the period to decades as is in the cases in hand. The notices in the present cases having been issued more than decade back and the proceedings having not been concluded within reasonable time, the same deserves to be quashed - petition disposed off.

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• 2018 (9) TMI 24
  Valuation - interface quantity of Superior Kerosene Oil (SKO) which was supplied through pipeline with Motor Spirit (MS) and High Speed Diesel (HSD) - The case of the department is that the appellant, instead of paying excise duty on the interface quantity of SKO as per rate prevalent for SKO, they should have paid excise duty higher of the two duties, after determining the duty payable on SKO and duty payable on MS/HSD. Held that:- While clearing the goods, the appellant have cleared from the factory quantities of MS, HSD and SKO separately. Since all the three goods are supplied through a pipeline, the SKO get mixed with either MS or HSD. As per the provisions of Section 4, the excise duty is payable on the transaction value at the time of removal of the goods from the factory - In the present case, the goods cleared from the factory is MS/HSD and SKO. Accordingly, the duty on these products is payable as per price of the respective product prevailing at the time of removal of the goods - The appellant have correctly applied the price of respective goods cleared from the factory at the time of removal. Whether after removal of goods, intermixing of SKO with MS/HSD amounts to manufacture? - Scope of SCN - Held that:- There is no charge in the show cause notice that the activity of supplying HSD/MS with interface SKO amounts to manufacture. Therefore, on this point, the adjudication order travelled beyond the scope of show cause notice which is not permissible in the law. The differential duty demand raised on interface quantity of SKO is clearly not sustainable - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 23
  Refund claim of amount retained without adjudication - rejection on the ground that till finalization of remand proceedings, refund claim cannot be entertained - Held that:- When the matter was remanded by this Tribunal for fresh adjudication, it is the duty of the adjudicating authority to adjudicate the matter at the earliest possible opportunity failing which justice can not be delivered - As the amount was deposited in the year 2007 and after 11 Years, no appropriation of the said amount has been done by adjudication despite the matter was remanded on 08.11.2016 for fresh adjudication. Tthe Revenue cannot withhold the amount in question without any authority/adjudication. Refund allowed - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 22
  CENVAT credit - input services - Services of commission agents to develop its market and promote the sales - Held that:- An identical issue has come up before the Tribunal in the case of M/s Mangalam Cement Ltd. vs. CCE, Udaipur [2017 (12) TMI 426 - CESTAT NEW DELHI], where it was held that the CBEC vide Circular No.943/4/2011-CX. Dated 29/04/2011 has clarified that Cenvat credit is admissible on the services of the sale of the dutiable goods on commission basis - credit allowed - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 21
  Area Based Exemption - N/N. 56/2002-CE - It appeared that the appellant without carrying out any actual manufacturing activity were just showing the production of PVC/PE granules and while availing the duty exemption under N/N. 56/2002-CE - refund of duty on goods exempted by N/N. 4/2006 dated 01.03.2006. Manufacture of goods taking place or not? - Held that:- The sole case has been made out by the Revenue on the basis of statements of Shri Hemraj Takasia, Shri Ramesh Kumar and Shri Jodhraj Sharma the employees of the appellant who retracted their statements on the very next day, stating that statements were taken under threat and pressure. Further, these statements were never examined in terms of Section 9D of the Act - on the basis of statements recorded and without following the procedure of Section 9D of the Act, the said statements are not reliable - it cannot be alleged that appellant was not doing manufacturing activity. Whether the goods manufactured by the appellant were exempt from payment of duty in terms of N/N. 4/2006-CE dated 01.03.2006? - Held that:- Admittedly, it is taken on record that appellant was not required to pay duty and whatever amount has been paid by the appellant was not duty. If the said amount is not a duty, then the provisions of Section 11A of the Act are not applicable to the facts of this case as the said provisions are invokable only in case of non-payment of duty, short payment of duty or erroneously refund of duty. But, in this case no duty is involve, therefore provisions of Section 11A of the Act are not invokable - the amount already refunded to the appellant is not recoverable under Section 11A of the Central Excise Act, 1944. Appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 20
  CENVAT credit - Capital Goods - whether under these circumstances the assessee is entitled to the benefit of capital goods CENVAT credit on the disputed Line 3 of the plant? - Held that:- A plain reading of the Rule 6(4) of CENVAT Credit Rules, 2004 shows that no credit is admissible on capital goods used exclusively in manufacture of exempted goods or in providing exempted services. There is no requirement of the capital goods to be used any specified extent in manufacture of dutiable goods. The Rule, as it is framed, entitles an assessee to claim credit on capital goods even if the machinery is used to manufacture a single unit of dutiable goods. This appears unfair but equity has no place in matters of taxation and we have to follow the law as it is drafted. Whether the entitlement of capital goods should be decided based on how they are used at the time of receipt of capital goods? - Held that:- In this case, the plant was capable of manufacturing both exempted and dutiable products and the appellants declared their intention to manufacture both using Line 3. They, however, never used machinery for the first time of two years to manufacture dutiable goods at all. Thereafter, the appellants used machinery to manufacture of dutiable goods for 19 days. Thus, it cannot be said that the goods are used exclusively for manufacture of exempted products - the assessee is entitled to the benefit of CENVAT credit on capital goods on the Line 3 of their plant as it was declared to be meant for manufacture of both dutiable and exempted products and used for manufacture of dutiable products although for a mere 19 days. Demand set aside - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 19
  CENVAT Credit - adjustment of credit prior to 01.09.2014 - taking credit after 6 months from the date of invoice - insertion of 6th proviso in the Rule 4 of Cenvat Credit Rules 2004 - assessee sought breathing period since there was limitation prior to insertion of such proviso - Held that:- The insertion of the proviso is limited to its application and no explanation even by way of clarificatory orders by the department is found in respect of application of the Rule to the invoices raised prior to the amendment date or about adjustment of such credit in so called breathing period of nearly one month and three weeks during which period, situation might not have arisen to avail such credit since production is influenced by lot of factors including rainy season, labour problem etc. - The clarificatory order issued by the CBEC Board vide Circular no. 990/14/2014-CX-8 dated 19.11.2014 which has been referred in the show-cause notice is unrelated to the issue in hand since it has exempted the period of limitation in three contingencies if within six months credit was taken for the first time and subsequently reversed. In the case in hand, since appellant had availed the credits on 30.09.2014 in the same month on which the appended proviso to the Rule came into force, it is entitled to avail and adjust the same against the final product of his manufacturing unit. Appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 18
  Review of Order - Doctrine of merger - application under Order 47 Rule 1 of C.P.C. - Held that:- The said provision can be attracted in case the appellant was not able to produce the documents which were beyond their control before this Tribunal while considering the appeal filed by the appellant - in this case initially the order of this Tribunal dated 19.03.2013 was challenged before the Hon'ble High Court wherein the appeal has been dismissed in limine in the said order was also carried before the Hon'ble Apex Court wherein also the appeal filed by the appellant is dismissed in limine. Doctrine of merger - Whether the order of this Tribunal has merged with the order of the Hon'ble Apex Court or not? - Held that:- The said issue came up before the Hon'ble Apex Court in the case of Kunhayammed Vs. State of Kerala [2000 (7) TMI 67 - SUPREME COURT], wherein the Hon'ble Apex Court has examined the issue when the order of this Tribunal merged with the order of the Superior Court and the Hon'ble Apex Court, where it was held that The Legislature has taken care to confer the jurisdiction to review on the High Court as to such appellate orders also against which though an appeal was carried to the Supreme Court, the same was not admitted by it. An appeal would be said to have been admitted by the Supreme Court if leave to appeal was granted - Admittedly, in the case in hand, the Hon'ble High Court as well as the Hon'ble Apex Court has not passed any speaking order, in that circumstances, doctrine merging is not applicable to the facts of the case. As the appellant has filed an application for Review of the order of this Tribunal, although the appellant has filed an application under order 47 Rule 1 of C.P.C. 1908, but, the said application is in nature of application for rectification of mistake and the same can be filed under Section 35C (2) of the Central Excise Act, 1944. The purchase order which was sought by this Tribunal were not in the possession of the appellant, therefore, the observation of this Tribunal "that as the documents were in the possession of the appellant, there is abuse in process of law on behalf of the appellant" is mistake apparent on record - the matter is remanded in limited purpose for verification of purchase orders in question and consideration thereof on merits - application disposed off.

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• 2018 (9) TMI 17
  CENVAT credit - various Iron and Steel Items used for supporting structures for plant and machinery in their factory - period from 2007-08 to 2009-10 - Extended period of Limitation - Held that:- The issue has been settled by the Larger Bench in the case of Vandana Global Ltd. [2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)], where it was held that Goods like cement and steel items used for laying 'foundation' and for building 'supporting structures' cannot be treated either as inputs for capital goods or as inputs in relation to the final products and therefore, no credit of duty paid on the same can be allowed under the CENVAT Credit Rules. The extended period of limitation is not invokable - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 16
  Classification of goods - absorbent cotton wool - appellant classified the same under chapter Heading 5601 whereas, the Revenue sought classification under Chapter Heading 3005 - Held that:- The identical issue came up before this Tribunal in the case of Shanti Surgical Pvt.Ltd. v. Commissioner of Central Excise, Kanpur [2017 (7) TMI 50 - CESTAT ALLAHABAD] whereas it was held that the said goods merits classification under Chapter Heading 5601 of the Central Excise Tariff Act - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 15
  Short payment of Duty - Manufacture of Pan Masala containing Tobacco - Revenue contended that the respondent short paid Central Excise duty of Rs. 41,93,548/- for the month of March, 2011 - Held that:- Revenue did not contend that the finding of this Tribunal have been set aside by any Higher Appellate Authority - reliance placed in the case of M/s Thakkar Tobacco Products Pvt. Ltd., M/s Vishnu Pouch Packaging Pvt. Ltd. Vs CCE, Ahmedabad [2015 (2) TMI 606 - CESTAT AHMEDABAD], where it was held that in case of such adjustment of duty which is mandatorily required be abated, Revenue cannot insist upon recovery of amount so adjusted - appeal dismissed - decided against Revenue.

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• 2018 (9) TMI 14
  Classification of goods - Chocolate namely Parle 2-in-1 Eclairs - Kismi Toffee and Kismi Toffee Bar. - appellants are classifying the said goods under Tariff Item No.17049020 as Boiled Sweets whereas Revenue wanted to be classified all the said items under Tariff Items No.17049030 as White Chocolate - Benefit of N/N. 03/2006-CE dated 01/03/2006 (Sr.No.16) and N/N. 12/2012-CE dated 17/03/2012 (Sr.No.19). Held that:- White chocolate should contain cocoa butter . As per the test report, it is clear that the sample does not contain any cocoa butter and white chocolate requires fat content of 25% as per the Food Safety Standards (Food Products Standard Food Additives) Regulations, 2011 whereas the fat content in the goods in question is 8% only. Therefore, from the test report it can be said that the goods in question are not white chocolate. Therefore, the said item do qualify for exemption as per the Notification No.03/2006-CE dated 01/03/2006 (Sr.No.16), also Notification No.12/2012-CE dated 17/03/2012 (Sr.No.19). Admittedly, the goods manufactured by the appellants are Sugar Confectionary is neither chocolate nor bubble gum - the appellants are entitled to pay concessional rate of duty as allowed by the Notifications. Appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 13
  Valuation - appellants were supplying this Acid Slurry to their sister unit for captive consumption - case of the Revenue is that the appellant is clearing the Acid Slurry to their sister unit, therefore, the valuation is to be arrived in terms of Rule 8 of Valuation Rules, 2000 - Demand of Differential Duty - Held that:- In appellant’s own case for the earlier period, GORAMAL HARIRAM LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, NOIDA [2013 (3) TMI 550 - CESTAT NEW DELHI], this Tribunal has held that appellant is not required to pay duty under Rule 8 of the Valuation Rules 2000 - appellant has not required to pay the duty as demanded in the impugned order. Revenue Neutrality - Held that:- The sister unit is entitled to take Cenvat credit. In that circumstances, it is Revenue in neutral situation. Therefore, no duty is payable by the appellant. Appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 12
  Manufacture or not - appellant is doing job-work on castings supplied by M/s.Escorts Ltd. and after doing the said activity the goods were sent back to M/s.Escorts Ltd. for further processing - The case of the Revenue is that the activity undertaken by the appellant M/s.Progressive Instruments & Machine Tools amounts to manufacture and they are not paying duty - Extended Period of Limitation. Held that:- It is a fact on record that on the activity undertaken by the appellant, the appellant is discharging Service Tax and the same has been accepted by the department. In that circumstances, demand for the period September, 2007 to June, 2011 cannot be demanded from the appellant by issuance of the show cause notice dated 05.10.2012 as the activity undertaken by the appellant was known to the department - demand with Penalty set aside - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 11
  Clandestine removal - Nasha Brand Pan Samagri - no samples of finished goods were drawn from the premises of the appellant - Held that:- Whether the goods manufactured by the appellant contains tobacco or not is to be determine only by the test conducted by chemical examination which is not done in this case. The physical examination by the Revenue officer is not acceptable who is not a chemical examiner. The duty liability cannot be fastened on the appellant on mere assumptions and presumptions. Admittedly, Revenue has failed to prove the case with documentary evidences and no cross-examination of the witness has been granted to the appellant which in gross violation of principles of natural justice in terms of Section 9D of the Central Excise Act 1944 - allegations of clandestine removal of dutiable goods is not sustainable. Appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 10
  CENVAT Credit - Clearance to SEZ Unit - inputs - denial of credit on the ground that the clearances to developer of SEZ is not covered under the provisions of Rule 6(6) of Cenvat Credit Rules 2004 - Held that:- The issue is covered by the decision in the case of SUJANA METAL PRODUCTS LTD. VERSUS COMMISSIONER OF C. EX., HYDERABAD [2011 (9) TMI 724 - CESTAT, BANGALORE], where it was held that Exception provided under Rule 6(6) of Cenvat Credit Rules, 2004 shall be applicable to supply of exempted goods both to SEZ units and SEZ developers/promoters - credit allowed - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 9
  Applicability of Rule 3 of CCR - Recovery of CENVAT Credit - Rule 16 of Central Excise Rules, 2002 - Held that:- Rule 3 of Cenvat Credit Rules provides for baring the appellant from taking Cenvat credit of duty paid by availing the benefit of exemption under N/N. 01/2011-CE - However, the said rule is not applicable in the present case, because in the present case Cenvat credit is not availed by virtue of the provisions of said Rule 3 of Cenvat Credit Rules, 2004 but it is availed by virtue of Rule, 16 of Central Excise Rules, 2002 where there is a deeming provision that such goods shall be deemed to be inputs - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 8
  Non-reversal of Cenvat credit involved in the sale of plant & machinery - Validity of SCN - Held that:- The basis for issue of show cause notice was that A.G. Audit came to know from the party’s balance sheet that party received Rs. 23.00 Lakhs during the year 2009-10 on account of sale of plant & machinery. Without producing any evidence that the appellant had availed any Cenvat credit in respect of such plant & machinery it was presumed that party had availed Cenvat credit and was required to reverse Cenvat Credit of Rs. 2,81,283/- - there is no basis for issue of said show cause notice since the burden was on Revenue to prove that appellant had availed Cenvat Credit - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 7
  Service of Hearing notice - notice could not be served on account of change of Address - Held that:- The appellant has shifted from their address B-46, Sector-60, Noida and the Counsel for the appellant has also withdrawn Vakalatnama and that the appellants has not registered changed address with the registry of this Tribunal. Therefore, it is not possible to communicate date of hearing to the appellants - appeal dismissed - decided against appellant.

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• 2018 (9) TMI 6
  Penalty - Clandestine removal - Held that:- Considering the lapse of time since the occurrence of the offence and the law itself being history row, the interest of justice will be best served by reducing the penalty to Rs. 5,00,000/- - appeal allowed in part.

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• 2018 (9) TMI 5
  Penalty u/r 13 of CCR 2002 - Held that:- Bearing in mind the provisions of rule 13 in vogue then, it would appear that the appellant had wrongly resorted to an option that was not available, imposition of penalty in these circumstances is warranted - quantum of penalty reduced - appeal allowed in part.

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• 2018 (9) TMI 4
  Principles of Natural Justice - CENVAT Credit availed on the documents issuable as registered first stage dealer without supply of the goods - request for cross-examination denied - Held that:- The original authority specifically discarded the request for cross examination on the ground that these were not relied upon as documents and statements - It is settled law that the evidence of deposition of the witnesses must be subject to proof during the adjudication proceedings. It would be appropriate for the matter to be remanded back to the original adjudicating authority to comply with the request of the appellant for cross-examination - appeal allowed by way of remand.

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• 2018 (9) TMI 3
  Recovery of CENVAT Credit - time limitation - Appellant contests the confirmation of recovery on the ground that demand was entirely beyond the period of limitation permissible under section 11A of Central Excise Act, 1944 - Held that:- The recovery for period beyond five years of ineligible credit amounting to Rs. 6,499/- is set aside as also interest for the period beyond five years. Demand within the extended period of limitation - Held that:- the claim of the Learned Counsel that the extended period is not invokable does not sustain - the interest calculation should be re-worked accordingly. Appeal disposed off.

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• CST, VAT & Sales Tax

• 2018 (9) TMI 2
  Whether the estimation done on the basis of the value shown in the Delivery Note is correct, especially when the Delivery Note discloses the value as stipulated by the Commissioner for payment of advance tax? - Held that:- It is submitted that as per the Circular of the Commissioner it is mandated that Delivery Notes show the sale value of goods for the purpose of payment of advance tax. Even if the said contention is accepted, the assessee was obliged to produce the invoices showing the sales having been carried out at a lower price. There was absolutely no evidence produced before the Assessing Officer or the Appellate Authorities to substantiate such contention - the addition made on interstate purchase at the GP as computed by the Assessing Officer is sustained. Whether the Tribunal was justified in sustaining the estimation on the local purchases when there was not even a single evasion or undervaluation detected with respect to such local purchase and sales? - Held that:- Though a explanation was put forth for reason of there being no substantiating evidence, we have declined deletion of addition with respect to interstate purchases; despite which it is to be noticed that the explanation was a plausible one - there being no evidence to indicate a suppression of local purchases, the addition made on that count is not proper - decided in favor of assessee. Denial of input tax credit - Held that:- Input tax credit is a concession permitted to avoid the cascading effect in a value added tax regime. What is paid as tax at an earlier instance has to be set off in the later instance, wherein the taxation is only on the value addition - The State is deprived of the tax to that extent and hence there is no question of input tax credit. The assessee could definitely file a suit for recovery from the entity from whom they made the purchase. Having not received the tax at the first instance of sale, there is no obligation on the State to grant input tax credit - Decided in favor of Revenue. The revision is partly allowed.

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• Indian Laws

• 2018 (9) TMI 44
  Acquittal of Accused - Offence punishable under Section 138 of NI Act - Held that:- In the overall circumstances of the case negotiable instrument has to be examined in the context of relevant circumstances. The claim is made at the fag end of the trial regarding very cheque did not belong to accused, is not only misleading more particularly when there are no circumstances, explanation, the situation wherein the cheque belonging to a person other than accused has been signed by accused. Even if the claim was put forward by the accused in the beginning it would have not improved his case in the context and circumstance of the case. Accused has issued the cheque belonging to another person invariably other account of accused, signed it. Apart from the presumptions regarding holder considering be it under Section 118 or Section 139 of the Negotiable Instruments Act, when the representation is made by issuing cheque and by signing on it, there will not be occasion to doubt as to whether it is mentioned on the cheque that account belongs to another person - The Judgment pronouncing the acquittal of the accused passed by the learned first appellate Judge does not answer the questions of reasonability and legality and it is liable to be set aside. Appeal allowed.

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• 2018 (9) TMI 43
  Dishonor of cheque due to insufficiency of funds - Offence u/s 138 and 142 of Negotiable Instrument Act - case of petitioner is that offence under Section 138 of Negotiable Instrument Act would not attract against him for the reason that he is not the drawer of the cheque - Held that:- It is seen from the complaint that the cheque is not belonging to the petitioner and the cheque pertains to the account No.88 and it stands in the name of the second accused. The other cheques issued by the second accused belong to her account. Though the loan jointly borrowed by both the accused, the alleged cheque was not signed by the petitioner and as such, no offence under Section 138 of Negotiable Instrument Act can be said to have been committed by the petitioner. The complaint against the petitioner is not maintainable and the respondent/complainant can very well proceed as against the second accused - quash petition allowed - decided in favor of petitioner.

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