2018-TIOL-NEWS-160 Part 2, Dated: Monday, July 09, 2018

2018-TIOL-NEWS-160 - Part II | Monday July 09, 2018

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CASE STORIES


	I-T - When 'Authority' is established by or under an Act, its banker not liable to TDS on payments made to it u/s 194A: Supreme Court I-T - Expenses incurred by company on foreign higher education of one of its director's son cannot be allowed as deduction u/s 37 as business expenditure: HC Sales Tax - Amount paid under relief scheme cannot be sought to be adjusted exclusively against principal amount of tax dues: HC

DIRECT TAX


	2018-TIOL-250-SC-IT New Okhla Industrial Development Authority Vs CIT Whether the NOIDA or the Greater Noida classifies as a local authority within the ambit of Section 10(20) of the Income Tax Act - NO: SC Whether in such circumstances, can the two bodies claim exemption from deduction of TDS based on a redundant circular which was subsequently nullified by an amendment to the Income Tax Act - NO: SC Whether thereby, an assessee is obliged to deduction TDS on rent paid to the two bodies - YES: SC -Revenue's Appeals Dismissed :SUPREME COURT OF INDIA 2018-TIOL-249-SC-IT + Case Story CIT Vs Canara Bank Whether when an 'Authority' is established by or under an Act for a particular purpose, it cannot be denied the benefits of TDS exemption u/s 194A - YES: SC -Revenue's appeal dismissed :SUPREME COURT OF INDIA 2018-TIOL-248-SC-IT Pr.CIT Vs Emc Data Storage Systems India Pvt Ltd Having heard the parties, the Supreme Court condones the delay and disposes of the SLP in the light of order passed in the case of Commissioner of Income Tax Central III v. HCL Technologies Ltd. - 2018-TIOL-167-SC-IT and connected matters. - Revenue's SLP dismissed :SUPREME COURT OF INDIA 2018-TIOL-247-SC-IT Pr.CIT Vs Alembic Ltd Having heard the parties, the Apex Court condoned the delay and directed to issue notice to the parties. -Notice issued :SUPREME COURT OF INDIA 2018-TIOL-246-SC-IT CIT Vs Devraj Infrastructures Ltd Having heard the parties, the Apex Court condoned the delay and granted leave. -Leave granted :SUPREME COURT OF INDIA 2018-TIOL-245-SC-IT Konark Structural Engineers Pvt Ltd Vs DCIT Having heard the parties, the Apex Court condoned the delay and dismissed the SLP. - Assessee's SLP dismissed :SUPREME COURT OF INDIA 2018-TIOL-244-SC-IT Pr.CIT Vs Laxmi Shelters Having heard the parties, the Apex Court condoned the delay and dismissed the SLP. - Revenue's SLP dismissed :SUPREME COURT OF INDIA 2018-TIOL-1282-HC-MUM-IT + Case Story Indian Galvanics Cyrium Foils Ltd Vs DCIT Whether expenses incurred by company on foreign higher education of one of its director's son can be allowed as deduction u/s 37 as business expenditure - NO: HC - Assessee's appeal dismissed : BOMBAY HIGH COURT 2018-TIOL-1270-HC-KOL-IT India Steel Corporation Vs ITO Whether penalty can be imposed based on notional expenditure where taxes are deducted at the time of payment & subsequently deposited in the Govt account within the stipulated time-frame - NO: HC - Assessee's appeal allowed : CALCUTTA HIGH COURT 2018-TIOL-1269-HC-MAD-IT CIT Vs Elegant Estates Whether the right of appeal u/s260A is a restricted right to be exercised only when a substantial question of law arises - YES: HC - Revenue's appeals dismissed : MADRAS HIGH COURT 2018-TIOL-1041-ITAT-MAD Indus Finance Corporation Ltd Vs DCIT Whether when claim in Schedule XIV can be allowed even if depreiciation is provided on the original cost and hence justified in recalculating the profit u/s 115JB - NO: ITAT. - Assessee's appeal dismissed : CHENNAI ITAT 2018-TIOL-1040-ITAT-KOL DCIT Vs Indian Oil Petronas Pvt Ltd Whether appellate authority can entertain the additional ground of excluding capital subsidy received by way of sales tax remission under the West Bengal Incentive Scheme 1999 for the first time without raising the same before the AO by filing the revised return of income - YES : ITAT Whether the assessee can seek exclusion of capital subsidy receipt by way of sales tax remission from the profit of the business as well as book profit u/s 115JB of the Act since the same has been received under the West Bengal Incentive Scheme 1999 - YES : ITAT - Revenue's appeal dismissed : KOLKATA ITAT 2018-TIOL-1039-ITAT-KOL ACIT Vs Itd-Itd Cem JV Whether the assessee can be held to be in default due to non-deduction of tax on land rent paid to AAI, where such rents is offered to tax by AAI - NO : ITAT Whether amount paid to Co-venturer of assessee can be treated as reimbursement where such amount was treated similarly in earlier AYs - YES: ITAT - Revenue's appeal dismissed : KOLKATA ITAT

INDIRECT TAX

SERVICE TAX

2018-TIOL-2088-CESTAT-DEL

CST Vs LR Sharma

ST - Assessee is engaged in work of providing/ laying/jointing/ replacement of water pipelines for Delhi Metro Rail Corporation (DMRC), Delhi Jal Borad (DJB) and other similar companies - Demand for Service Tax was raised vide SCN covering the period 2004-05 to 2009-10 and 2010-11 - The Adjudicating Authority dropped the entire demand by holding that activity carried out for both agencies is regarding laying of pipelines and the said activity will not be covered under category of Erection Commission or Installation Service under Section 65 (39a) of Finance Act - Revenue has sought to differentiate between the work carried out to DMRC as well as DJB - The Revenue is not disputing the dropping of demand in respect of DJB but have argued that the activity undertaken for DMRC is not exclusively pertaining to laying of pipeline and the said activity will fall within the definition of Section 65 (39a) - Relevant contracts executed by assessee with DMRC will need to be scrutinized for taking a definitive view whether such activities will be liable to Service Tax under category of Section 65 (39a) of the Act - Since the relevant agreements have not been produced for perusal, Tribunal is left with no option but to remand the matter to Adjudicating Authority for de novo decision after perusing the relevant contracts with DMRC - Impugned order is set aside only in respect of demand of Service Tax pertaining to DMRC contracts: CESTAT - Matter remanded : DELHI CESTAT

2018-TIOL-2087-CESTAT-AHM

Vijay Tanks And Vessels Pvt Ltd Vs CCE, C & ST

ST- While rendering services, invoices were issued mentioning the value of taxable services and the amount of service tax paid - There was a short receipt of the taxable value, mentioned in the respective invoices leading to excess payment of service tax - This excess payment of service tax was certified by CA in his Certificate - The assessee filed claim for refund of excess service tax paid - However, the Revenue did not appreciate it and duty demand was raised - During proceedings, the reason for receiving less taxable value was service receivers failed to conform the services for which the work orders issued - The Commr.(A) rejected their appeal on grounds that the relevant work orders have not amended indicating the payment of less amount of value against deficit in taxable services.

Held - There is no basis or requirement to amend the work orders to be eligible to claim refund of excess paid service tax: CESTAT (Para 4, 6) - Appeal allowed : AHMEDABAD CESTAT

CENTRAL EXCISE

2018-TIOL-2091-CESTAT-MUM

CCE Vs Asian Industries

CX - Issue is whether the clearances made by the respondent to merchant exporter for export against Sales Tax Form 14-B should be treated as export clearance or otherwise.

Held: Identical issue has come up earlier in the case of Amar Packaging Industries [Tax Appeal no. 31 of 2010 decided on August 21, 2012] wherein the Gujarat High Court held that Certificate in Form-H issued by merchant-exporter is acceptable as proof of export - in the present case, Form 14-B is identical to Form-H of the Sales Tax department - in the case of S V Mestry Engg. Works - 2016-TIOL-328-CESTAT-MUM , Tribunal has held that Form-H provided by buyer can be considered as proof of export as clarified in CBEC Circular 212/46/96-CX., dated 20.05.1996 and Circular 648/39/2002-CX dated 25.07.2002 - in view of these judgments issue is no longer res integra and impugned order cannot be disturbed - Revenue appeals dismissed: CESTAT [para 4] - Appeals dismissed : MUMBAI CESTAT

2018-TIOL-2090-CESTAT-MUM

UNI Deritend Ltd Vs CCE & ST

CX - Input Service - Whether appellant is entitled for CENVAT credit on Workmen's Compensation Insurance Policy - There is no dispute that the workmen's compensation insurance policy is taken by the company under the statutory obligation as per the Workmen's Compensation Act, 1923 - in absence of such policy, the appellant is unable to employ the workers, which was affect the production - it is an essential and unavoidable service availed by the appellant - credit admissible, impugned order is set aside and appeal is allowed: CESTAT [para 4] - Appeal allowed : MUMBAI CESTAT

2018-TIOL-2089-CESTAT-BANG

Chettinad Cement Corporation Ltd Vs CCE & ST

CX- The assessee are manufacturers of Cement - It engaged in construction of various structures and buildings, laying of foundations and making of structures for support of capital goods in the factory premises and construction services in the residential colony - They availed cenvat credit on the services tax paid for the period in dispute - Duty demand was raised - The original authority confirmed the demand and when assessee filed appeal before Commr. (A) it was rejected.

Held - On considering various work orders it is clear that the scope of work relates to supply of DG sets operator with required tools for O&M work like fuel filling , coolant top-up, start & stop of DG set, battery checking in the factory - The services availed by the assessee have nexus with the manufacture of final product of the assessee - All the services even after the amendment in the definition of input service fall within the scope of input service because the same has not been specifically excluded - The matter is remanded back to the original authority for the purpose of verification of the usage of the various services availed by the assessee - Hence, the order challenged is set aside : CESTAT (Para 2, 6) - Matter remanded : BANGALORE CESTAT

CUSTOMS

CIRCULAR

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Clarification on acceptance of any copy of Shipping Bill in lieu of EP copy of Shipping Bill for grant of EODC of Advance Authorisation

CASE LAWS

2018-TIOL-2086-CESTAT-AHM

CC Vs Ruchi Soya Industries Ltd

CUS - In the present case, the Commr.(A) set aside the O-I-O denying the benefit of exemption in Notification No. 21/2002-Cus on the ground of beta-carotene content in the crude palm oil imported by the assessee being below the prescribed threshold to disentitle them from the privilege - Demand for differential duty was raised.

Held - In the assessee's own case, it is clear that expert opinion holds that carotene content reduces due to lapse of time - This is reflected in the test reports too - The various tests of the samples were effected over a period of four months since arrival of cargo and there is a consistent decline in the distinguishing content - Therefore, the conformity of goods with crude palm oil as per prescribed parameters at the time of import should not be in doubt: CESTAT (Para 1, 4, 5, 6) - Revenue's appeal dismissed : AHMEDABAD CESTAT

MISC CASE

2018-TIOL-1281-HC-AHM-CT + Case Story

Shree Narmada Aluminium Industries Ltd Vs State of Gujarat

Whether an amount of tax dues paid would first be applied towards recovery of interest & penalty arising from the principal amount, where the interest & penalty are greater than the principal amount of tax - YES: HC

Whether in such circustances, an assessee can seek that an amount paid under a relief scheme only be adjusted against the principal amount of tax dues payable - NO: HC

Whether upon adjusting such payment against the interest & penalty & not against the principal amount, can such amount be treated as being paid in excess & whether a refund of such amount can be claimed - NO: HC - Assessee's writ petition dismissed : GUJARAT HIGH COURT

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