2019-TIOL-NEWS-198 Part 2, Dated: Thursday, August 22, 2019

2019-TIOL-NEWS-198 Part 2 | Thursday August 22, 2019

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Legal Wrangle | Customs | Episode 110

DIRECT TAX


	2019-TIOL-1887-HC-AHM-IT Pr.CIT Vs Gujarat Narmada Valley Fertilizer And Chemicals Ltd Whether expenditure incurred towards the corporate social responsibility can be allowed as deduction u/s 37 of Act - YES: HC -Revenue's appeal dismissed : GUJARAT HIGH COURT 2019-TIOL-1886-HC-KOL-IT Hitech Visual Channel Pvt Ltd Vs Pr.CIT On appeal, the High Court holds that the view taken by the Tribunal while delivering the decision is plausible as the assessee fails to produce evidence to prove its case. Thus, this court does not find it is a fit case to admit the appeal. -Assessee's appeal dismissed : CALCUTTA HIGH COURT 2019-TIOL-1875-HC-RAJ-IT Pr CIT Vs Bhilwara Zila Dugdh Utpadak Sahakari Sangh Ltd On appeal, the High Court holds that interest income derived by the Regional Rural Banks from deposits u/s 80 P(2) are allowed to Cooperative Societies by virtue of Section 22 as it unconditionally deems Regional Rural Banks as Cooperative Societies for the purposes of Income Tax Act and all the contingent consequences that flow from it. - Revenue's appeal dismissed: RAJASTHAN HIGH COURT 2019-TIOL-1874-HC-ALL-IT Bir Hotels Pvt Ltd Vs ACIT On appeal, the High Court holds that the assessee is not entitled for deduction u/s 80IB (7)(a) as the assessee fails to establish the nexus of core activity between the saloon business and the hotel business. - Assessee's appeal dismissed: ALLAHABAD HIGH COURT 2019-TIOL-1873-HC-MUM-IT Grasim Industries Ltd Vs DCIT Whether when assessee has an alternate remedy of approaching the CIT(A) against the order of the AO, then it is appropriate to raise all pleas before the CIT(A) rather than seeking writ remedy - YES: HC - Case Remanded: BOMBAY HIGH COURT 2019-TIOL-1872-HC-MAD-IT Sundaram Finance Ltd Vs ADDL CIT Whether it is fit case for remand where it is to be determined whether certain provisions were allowed as deduction in the relevant AYs - YES: HC - Assessee's appeal Partly allowed: MADRAS HIGH COURT 2019-TIOL-1616-ITAT-DEL Sandeep Bhargava Vs ACIT Whether disallowance of proceeds from sale of shares merits being sustained where such shares were issued by a company having weak financial performance, yet witnesses a manifold increase in price of shares, thus establishing that such transaction is not genuine - YES: ITAT - Assessee's appeal dismissed: DELHI ITAT 2019-TIOL-1615-ITAT-DEL Addl. CIT Vs Fertilizer Corporation Of India Ltd Whether additions made on account of unpaid interest on GoI loan merit being sustained where such issue was already settled in favor of the assessee in its own case for a preceding AY - NO: ITAT - Revenue's appeal dismissed: DELHI ITAT 2019-TIOL-1614-ITAT-DEL Kashyap And Company Vs DCIT Whether penalty u/s 271(1)(c) is liable to be imposed where the assessee claims rental income and interest on housing loan, based on incorrect facts - YES: ITAT Whether an additional ground raised for the first time before the Tribunal itself is liable to be accepted where neither an application to such effect had been moved nor any question of law was brought out - NO: ITAT - Assessee's appeals dismissed: DELHI ITAT 2019-TIOL-1613-ITAT-DEL Sadhvi Securities Pvt Ltd Vs ACIT Whether Rule 11UA(a) & (b) mandates that for computing fair market value of shares, the value of assets and liabilities as per the audited balance sheet immediately prior to receipt of consideration is to be adopted - YES: ITAT Whether therefore if the balance sheet is not drawn up as on the date of receipt of consideration, then the balance sheet of the immediately preceding year can be adopted - YES: ITAT - Assessee's appeal dismissed: DELHI ITAT 2019-TIOL-1598-ITAT-KOL ITO Vs Bhagwat Marcom Pvt Ltd Whether addition of unexplained cash credit can be made if concerned transaction does not involve receipt or payment of cash rather its non - cash transaction where shares are issued by assessee to some companies in lieu of the shares held by the said companies - NO : ITAT - Revenue's appeal dismissed: KOLKATA ITAT 2019-TIOL-1597-ITAT-SURAT Vikash Bharatbhai Desai Vs ITO Whether when there is a discrepancy in the estimation of cost of acquisition of land as on April 1,1981, the average rate would be appropriate & reasonable to adopt as Fair Market Value - YES: ITAT Whether when the valuation adopted by the Stamp Valuation Authority is less than 10% as declared by the assessee, the AO is bound to adopt value as declared by the assessee u/S 50C - YES: ITAT - Assessee's appeal allowed: SURAT ITAT

INDIRECT TAX

SERVICE TAX

2019-TIOL-2380-CESTAT-CHD

GE Money Financial Services Pvt Ltd Vs CST

ST - The assessee is engaged in providing of several taxable services as well as exempted services and availing Cenvat credit under Rule 6 (3) of CCR, 2004 - The case of Revenue is that the assessee is providing taxable as well as exempted services, therefore, in terms of Rule 6(5) of CCR, 2004, assessee is restricted to avail upto 20% of Cenvat credit - The assessee has provided taxable services as well as exempted services - It is fact that during the impugned period, assessee was providing taxable services and well exempted services but there is restriction for utilization of credit upto 20% lying in their Cenvat credit account - Admittedly, assessee has availed the credit more than 20% during impugned period - With effect from 1.4.2008, assessee became entitled to avail credit lying in their Cenvat credit account, in that circumstance, as per the decision of Tribunal in case of Mumbai International Airport Pvt.Ltd., the assessee is entitled to avail Cenvat credit - The assessee is liable to pay interest for intervening period i.e. the date of excess utilization of credit till 1.4.2008 - Therefore, the impugned order is set aside restricting 20% of utilization of credit and recovery thereof but the assessee is directed to pay interest for intervening period - In that circumstance, no penalty is imposable on assessee - With regard to denial of credit on inputs services namely, guest house and staff welfare expenses, the said services have been availed by assessee for providing output services and the same have been availed in the course of their business of providing output services - Therefore, in terms of decision of Bombay High Court in case of Ultratech Cement Limited , the assessee is entitled to avail credit on guest house and staff welfare expenses - Therefore, the credit cannot be denied to the assessee: CESTAT

- Appeals disposed of: CHANDIGARH CESTAT

2019-TIOL-2378-CESTAT-HYD

Hotel Hampi International Pvt Ltd Vs CCE, C & ST

ST - Assessee had filed refund claim which was rejected by lower authority as well as first appellate authority but on appeal was sanctioned by this bench vide Final Order dated 22.03.2017 - Thereafter, they were paid the refund in pursuance of this order but were not paid interest under Sec.11BB of CEA, 1944 as made applicable to service tax by Sec.3 of FA, 1994 - Issue is no longer res integra and has been decided by Supreme Court in case of Ranbaxy Laboratories Ltd in which the Apex Court had held that interest has to be paid under Sec.11BB in case of delay in payment of refund - This judgment was followed in a number of cases by Tribunal including by this bench - A plain reading of Sec.11BB also shows that interest has to be paid if refund is not made within three months from the date of application - It does not say within three months from the date of sanction of refund under Sub-Section (2) of Sec.11B as held by first appellate authority - Assessee is entitled to interest from three months after the date of application till the date they were paid interest: CESTAT

- Appeal allowed: HYDERABAD CESTAT

CENTRAL EXCISE

NOTIFICATION

etariff19_07

CBIC extends validity of 2% BED on ATF drawn from RCS-UDAN airport or heliport or waterdrome

exnt19_05

Sabka Vishwas Scheme - Rules with Form notified

exnt19_04

Sabka Vishwas (Legacy Dispute Resolution) Scheme to be effective from Sept 1

CASELAWS

2019-TIOL-2381-CESTAT-DEL

Shivangi Polysacks Pvt Ltd Vs CCE & GST

CX - Section 4(3)(d) of the CEA, 1944 - Rajasthan Investment Promotion Scheme notified by Government of Rajasthan - Payment of VAT using 37B Challans are considered legal payments of tax - such subsidy amounts are, therefore, not required to the included in the transaction value - there is, therefore, no justification for inclusion in the assessable value the VAT amounts paid by the assessee using VAT 37B Challans - issue stands settled in favour of the appellant - impugned orders are set aside and the appeals are allowed: CESTAT [para 9 to 12]

- Appeal allowed: DELHI CESTAT

CUSTOMS

INSTRUCTION

F.No.390/Misc/116/2017-JC

CBIC also raises monetary limits for indirect tax cases

CASELAW

2019-TIOL-2377-CESTAT-HYD

CC, CE & ST Vs SV Technologies Pvt Ltd

Cus - The assessee-company imported Computer Radiography System and filed bill of entry classifying the product under 90189099 - On assessment, the goods were allowed to be cleared from home consumption u/s 47 of the Act after payment of duty - It was later noted that identical goods were imported at other stations and were classified under Heading 90229099 - An SCN was issued proposing to re-classify the goods under Heading 90229099 and raising demand for differential duty - The Revenue also proposed to deny exemption under Notfn No 10/2003-CE & confirmed the duty demand with interest - On appeal, the Commr.(A) upheld the classification favored by the Revenue, but also held that the assessment order in the subject bill of entry had not been challenged by the Revenue & so demand raised u/s 28 of the Act was unsustainable - To arrive at such a finding, the Commr.(A) relied upon the judgments of the Apex Court in Flock India Ltd and Priya Blue - Hence the O-i-O was quashed, leading to the present appeal by the Revenue.

Held - It is seen that the judgments of the Apex Court in both these cases pertain to refund claimed by the assessee without challenging the assessment order in the bill of entry - The present case is different, in the sense that, where after assessment and clearance of the goods is completed by issue of order u/s 47 of the Customs Act 1962 within the normal period of limitation, the duty demand was raised u/s 28 - SCN was issued proposing re-classification of the goods and an opportunity was also given to the assessee to present its case and its submissions were considered - However, the Commr.(A) also held that the Deputy Commissioner concerned raised the demand without first challenging the assessment of the bill of entry - This was not the ratio laid down by the Apex Court in either of the two cases relied upon by the Commr.(A) - Moreover, cases pertaining to demand raised u/s 28 after clearance of the goods u/s 47 of the Act are covered by the decision of the Apex Court in Jain Shudh Vanaspati Ltd., wherein it was held that demand could be raised u/s 28 even after clearance of goods as per Section 47 - Hence the O-i-A is incorrect and merits being quashed: CESTAT

- Revenue's appeal allowed HYDERABAD CESTAT

HIGH LIGHTS (SISTER PORTALS)


	TII TP - No adjustment on account of notional interest on receivables from AEs is warranted, if no interest is charged on receivables from non-AEs as well for credit period: ITAT TP - Company engaged in diversified activity related to advanced assets & software cannot be adopted as comparable to captive ITes segment: ITAT TP - TPO is not justified in holding ALP at nil by applying benefit test, if services were taken as per policy of group company to avail benefit of low cost, specialization and confidentiality and rendering: ITAT TIOL CORPLAWS SEBI, 1992 - Penalty order against NDTV for non-compliance with Listing Agreement cannot be quashed on pleas that Key Managerial Personnels were more culpable than the Company: SAT NI Act, 1881 - Evidence produced for discharge of Statutory Presumption u/s 139 in favour of Complainant cannot be cast aside simply because complaint u/s 138 contains no allegation : SC Companies Act, 2013 - Revenue cannot seek restoration of name or assume role of creditor after Company's name is duly struck off from Register of Companies just because it has raised a subsequent tax demand : NCLAT