2018-TIOL-NEWS-038, Dated: Wednesday, February 14, 2018

2018-TIOL-NEWS-038 | Wednesday February 14, 2018

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DIRECT TAX


	2018-TIOL-263-HC-MUM-IT Pr.CIT Vs Zee News Ltd Whether when assessee has not earned any tax free income, no disallowance u/s 14A is allowable towards the corresponding expenditure so incurred - YES: HC - Revenue's appeal dismissed : BOMBAY HIGH COURT 2018-TIOL-248-ITAT-KOL + Story Gujrani And Company Vs ITO Whether audit expenses incurred by a CA Firm on their Articled Clerks as per stipulation of ICAI, are liable to be considered while calculating the value of Fringe Benefits - NO: ITAT Whether failure of such CA Firm to substantiate that audit expenses were incurred only on Articled Clerks and not the Audit Staff, can pave way for levy of penalty, especially when said expenses were separately debited in Firm's P&L A/c - NO: ITAT - Assessee's appeal allowed : KOLKATA ITAT 2018-TIOL-247-ITAT-MUM Ajanta Pharma Ltd Vs DCIT Whether assessment of income based on the statement u/s 132(4) per se does not automatically invite charge of penalty u/s 271(1)(c) - YES: ITAT - Assessee's appeal allowed : MUMBAI ITAT 2018-TIOL-246-ITAT-MUM Blue Star Ltd Vs ACIT Whether sales tax collected by an authorised dealer from its customers, if already taxed in previous relevant year, cannot be taxed twice by reopening the assessment of previous year - YES: ITAT Whether levy of penalty will survive, when quantum addition itself has been deleted by the Tribunal being the fact finding authority - NO: ITAT - Assessee's appeal allowed : MUMBAI ITAT 2018-TIOL-245-ITAT-MUM V And V Pharma Industries Vs ACIT Whether entire purchases made from hawala dealers can be treated as bogus and should be disallowed in the hands of purchaser, merely on basis of differential gross profit ratio in last five years - NO: ITAT - Assessee's appeal partly allowed : MUMBAI ITAT 2018-TIOL-244-ITAT-MUM Indus Best Hospitality Realtors Pvt Ltd Vs PR CIT Whether AO is required to examine the "source of source", for verifying the genuineness of payments/expenditure - NO: ITAT Whether provisions of section 263 can be invoked, unless the CIT himself make relevant enquiries and determines the assessment order to be erroneous - NO: ITAT - Assessee's appeal allowed : MUMBAI ITAT 2018-TIOL-243-ITAT-KOL DCIT Vs Bormah Jan Tea Company 1936 Ltd Whether cess levied on the production of green leaf would come under the purview of composite income - YES: ITAT Whether opening valuation of machineries which are not part of tea manufacturing process, can be considered for purposes of claiming deduction u/s 80IE - NO: ITAT - Revenue's appeal dismissed : KOLKATA ITAT 2018-TIOL-242-ITAT-AHM Cims Hospital Pvt Ltd Vs DCIT Whether when disallowance of capital loss prima facie indicate a double addition of the very amount i.e. acquisition cost as well as loss arising from sale of the relevant capital asset, such matter calls for re adjudication - YES : ITAT - Case remanded : KOLKATA ITAT

INDIRECT TAX

SERVICE TAX SECTION

2018-TIOL-548-CESTAT-BANG + Story

Concord India Pvt Ltd Vs CST

ST - Refund - Once an activity is exempted under Section 66B in terms of Exemption Notification 25/2012-ST, the question of invoking Notification No. 30/2012-ST issued under Section 68(2) dealing with reverse charge mechanism does not arise at all - Impugned order set aside, appeal allowed - original authority directed to verify the documents and thereafter sanction the refund claim, in accordance with law: CESTAT [para 5, 6] - Appeal disposed of : BANGALORE CESTAT

2018-TIOL-536-CESTAT-DEL

Purvanchal Construction Works Pvt Ltd Vs CST

ST - Assessee is registered with Department for payment of Service Tax under category of construction of residential Complexes - For the year 2005-2006 assessee paid Service Tax on provisional calculation - Thereafter they have filed ST-3 A returns containing details of earlier payment and differential amount, if any, paid - Said amount deposited by the party was found in order - Later in another proceedings order was issued stating that assessment for period June, 2005 to March, 2006 has been completed and assessee deposited correct Service Tax - Accordingly, he finalized the provisional assessment for the period - Finalization of provisional assessments is within the powers of Assistant/Deputy Commissioner in terms of Rule 6 (6) of STR, 1994 - The endorsements of Superintendent, though refers to an approval by Deputy Commissioner, cannot be considered as finalization of provisional assessment - The assessment has to be done by Assistant Commissioner in his name and signature - Same cannot be delegated to Superintendent - Coming to the second question regarding belated order of finalization, it would appear that assessments were done noting that the case was not closed by a jurisdictional proper authority - In any case, the duty payments as already deposited by assessee have found to be correct - There is no grievance regarding any demand for extra payment or liability that was put on assessee on such finalization - Though belated assessment there could be no grievance as no additional burden has been put on assessee - Further finalization of provisional assessment is only with reference to correct quantification of tax liability - No other issue was considered, same has been verified and found correct: CESTAT - Appeal dismissed : DELHI CESTAT

2018-TIOL-535-CESTAT-BANG

Saraf Enterprises India Pvt Ltd Vs CCE, C & ST

ST - Issue is regarding denial of CENVAT credit of service tax paid on various input services like telephone charges, insurance premium for vehicle, retreading of trailer tyres, annual renewal fee, insurance premium for renewal of insurance policy for tea warehousing by tea estates/tea brokers, professional fees paid to Chartered Accountant services and debit note for warehousing charges - Assessee engaged in activity of renting out warehouses for storage of tea for various tea companies in Coimbatore and Cochin and are registered themselves at Cochin for discharge of service tax under "renting of immovable property services" in respect of warehousing in Coimbatore and Cochin - If the claim of assessee is that they have discharged the service tax of renting of immovable property at Coimbatore from Cochin, then any services rendered in respect of such rendering of immovable property services, they are eligible to avail CENVAT credit of service tax by such service providers - Since the entire issue needs to be gone into for correlation of services on which the CENVAT credit was availed and the output services provided, matter remanded to adjudicating authority to reconsider the issue afresh: CESTAT - Matter remanded : BANGALORE CESTAT

CENTRAL EXCISE SECTION

2018-TIOL-542-CESTAT-MUM + Story

Eddy Cranes Engineers Pvt Ltd Vs CCE

CX - Cranes supplied for setting up a water supply facility for thermal power plant is entitled for exemption in terms of notfn 3/2004-CX – Impugned order set aside and appeal allowed: CESTAT [para 4, 5] - Appeal allowed : MUMBAI CESTAT

2018-TIOL-541-CESTAT-AHM

Meghmani Organics Ltd Vs CCE

CX - the issue at hand pertains to the eligibility of Cenvat credit on the service tax paid on sales commission - Held - Considered the judgments on the issue, and the fact that the issue, raised in Astik Dyestuff Pvt. Ltd. vs. C.C.E. & Cus. was pending disposal by the High Court - Therefore, both sides given liberty to approach the Tribunal after the issue is settled by the High Court: CESTAT (Para 2) - Appeal Diposed Off : AHMEDABAD CESTAT

2018-TIOL-540-CESTAT-AHM

Tema India Ltd Vs CCE

CX - Assessee was denied CENVAT credit during period October 2008 to September 2013 of service tax paid on various input service - In view of judgments of Tribunal in Fiamm Minda Automative Ltd. 2016-TIOL-930-CESTAT-DEL ; Castrol India Ltd. 2012-TIOL-2024-CESTAT-AHM ; Arm Embeded Tecnologies Pvt. Ltd. 2016-TIOL-2565-CESTAT-BANG , Doshion Ltd. 2013-TIOL-118-CESTAT-AHM and GE India Exports (P) Ltd. 2016-TIOL-1591-CESTAT-HYD , service tax paid on the services viz. Banking & Financial services, Consulting Engineer's service (Drawing Charges), EXIM/DGFT Consultant's service, Company Secretary service and Chartered Accountant's Service, Installation Services, Maintenance Services, which are held to be 'input services' as defined under Rule 2(l) of CCR, 2004, CENVAT credit of the same is admissible - However, credit availed on Club Membership for Director is not admissible as it cannot be said to be remotely connected with the activity of manufacture - Service tax paid on membership charges to Heat Transfer Researches Inc., is admissible as the said service is being used in or in relation to manufacture of finished goods - Accordingly, impugned order is modified: CESTAT - Appeals partly allowed : AHMEDABAD CESTAT

2018-TIOL-539-CESTAT-AHM

West Coast Pharmaceutical Works Ltd Vs CCE

CX - the assessee availed Cenvat credit of service tax paid on Security & Manpower Services - The Department alleged that invoices did not mention STC number & that service provider had not discharged service tax for a particular period - Duty demand was raised, with imposition of interest & penalty for recovery of such credit - Held - the counsel for the assessee submits that the service tax shown in each and every invoices had been duly paid by the service provider for the period before and after 01.07.2012 - Further they had paid their liability of 75% of service tax subsequently - Assessee's counsel claimed that the amount of service tax payable has invariably been shown in all the invoices either "as service tax" or as "service charge" at the applicable rate during the relevant period - The counsel submits that the payment of the service tax amount on which credit availed needed verification - Hence matter remanded for verification of the same: CESTAT (Para 3,7) - Case Remanded : AHMEDABAD CESTAT

2018-TIOL-538-CESTAT-ALL

CCE Vs Sharda Forging And Stamping Pvt Ltd

CX - Revenue is in appeal against impugned order wherein on the issue that assessee was taking Cenvat credit on furnace oil (fuel), which was used in manufacture of both dutiable and non-dutiable goods and thus alleged that assessee have contravened the provisions of Rule 6(3)(b) of CCR, 2004 inasmuch as they had utilized said cenvatable input (furnace oil) in manufacture of both dutiable and exempt goods but have not paid amount equal to 10% of total price of such exempted or non-dutiable goods - Issue is no longer res integra and it is squarely covered in favour of assessee in their own case vide 2015-TIOL-1432-CESTAT-DEL - Accordingly, the appeal filed by Revenue is dismissed: CESTAT - Appeal dismissed : ALLAHABAD CESTAT

2018-TIOL-537-CESTAT-BANG

Rital India Pvt Ltd Vs CCE

CX - Assessee had created a provision in books of accounts for writing down the value inputs - The entry in books of accounts was passed on 19/11/2015 - However, effect of entry was given in financial statements for year ended 31st March, 2015 - Assessee reversed CENVAT credit on 29/07/2015 along with interest - On realising that liability to reverse CENVAT credit arose only on 19/11/2015, assessee filed an application for refund of interest paid - On perusal of Rule 14(1)(i) and Rule 14(1)(ii), it is clear that when the CENVAT credit has been wrongly availed but not utilised, interest cannot be recovered - In the instant case, Department's case is that the assessee was liable to reverse CENVAT credit as on 31/03/2015 - However, it reversed the credit oly on 29/07/2015 - Further, for the period 31/03/2015 to 29/07/2015, assessee had sufficient balance in CENVAT credit account and they have not utilised the CENVAT credit and therefore in view of provisions of Rule 14(1)(i), assessee is not liable to pay interest and interest paid by them is liable to be returned to them - Therefore, impugned order set aside: CESTAT - Appeal allowed : BANGALORE CESTAT

CUSTOMS SECTION

2018-TIOL-534-CESTAT-CHD

Gurcharan Singh And Sons Vs CC

Cus - Assessee filed bill of entry for clearance of cartons of "Coloured Self Adhesive Paper Tape"and declared the assessable value @ USD 51.5 per roll - On examination, goods were found to be rolls of Reflective Sheeting of different colours packed in rectangular card boxes bearing brand name of "TECHLITE" - Assessee had correctly declared the items as coloured reflective sheeting and had changed the description of goods to coloured self adhesive paper tape at the instance of customs officers - They had claimed classification under tariff heading 39199090 - However, Bill of Lading and the invoice carried two different descriptions of the same product and it was for this reason, the customs officer directed them to declare as per Bill of Lading - Revenue seems to be presuming that the decision to change the description of goods was taken in view of prior information regarding declaration of impugned goods available with the Anti Smuggling staff - However, no evidence to support this belief is coming forward from the impugned order - Hence, the charge of mis-declaration of description of the goods is not tenable.

As for mis-declaration of value, case of the department is mainly dependent on imports made by M/s.Mukesh Enterprises and M/s. Tanmay International from same supplier - In case of M/s.Mukesh Enterprises, the basis was the confessional reply by the importer of goods Sh. Joginder Singh that goods were ordered by him from overseas supplier M/s.CHANGZOHU HUAWEI REFLECTIVE MATERIAL CO. Ltd., China at a value of USD 114 per roll under invoice dated 30.09.09, procured by the Economic Intelligence Bureau and issued by the same overseas supplier - Purported invoice dated 30.09.2009 also formed the basis in case of import of similar goods by M/s. Tanmay International wherein, the value of similar item was also enhanced by department - However, case was dropped by Commissioner (A) and the department had appealed to the Tribunal against said order who dismissed the appeal of the department - Since the allegation in SCN was based on similar type of goods in case of M/s.Tanmay International, decision of Tribunal in M/s.Tanmay International is squarely applicable to the present case - Accordingly, order of Commissioner (A) is not sustainable and the same is set aside: CESTAT - Appeal allowed : CHANDIGARH CESTAT