2020-TIOL-NEWS-244, Dated: Thursday, October 15, 2020

2020-TIOL-NEWS-244| October 15, 2020

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INCOME TAX


	2020-TIOL-1221-ITAT-MUM Indoco Remedies Ltd Vs DCIT Whether when AO after applying his mind to the facts & material on record in course of assessment proceedings has computed deduction u/s 80IC on re-allocation of certain expenditure, proceedings u/s 154 could not have been initiated only because it is felt that certain expenditure has been improperly allocated - YES: ITAT Whether the AO having dealt with a debatable issue in the assessment order, it cannot be dealt with again in rectification proceedings u/s 154 - YES: ITAT - Assessee's appeal partly allowed: MUMBAI ITAT 2020-TIOL-1220-ITAT-MUM Doha Bank QSC Vs DCIT Whether only net interest expenditure needs to be considered for computing disallowances u/s 14A - YES: ITAT Whether disallowances computed u/s 14A cannot exceed exempt income earned for the year under consideration - YES: ITAT - Assessee's appeal partly allowed: MUMBAI ITAT 2020-TIOL-1219-ITAT-MUM Medley Pharmaceuticals Ltd Vs DCIT Whether reassessment initiated by AO not on basis of any fresh tangible material which had came to his notice subsequent to culmination of original assessment proceedings, but on basis of same set of facts as were there before his predecessor at time of framing of regular assessment u/s 143(3), is invalid - YES: ITAT Whether sales promotion expenditure incurred by pharmacheutical company on distribution of 'freebies' to doctors & medical practitioners, even though may not be in conformity with Indian Medical Council regulations, cannot be held to have incurred for a purpose which is prohibited by law - YES: ITAT - Assessee's appeal partly allowed: MUMBAI ITAT 2020-TIOL-1218-ITAT-BANG ACIT Vs Reindeer Software Solutions Pvt Ltd Whether information disseminated through the media regarding transfer of shares from non-resident to resident in Form FC-TRS, may not be technically correct and devoid of facts, hence cannot be the basis for addition of undisclosed income in form of capital gains - YES: ITAT - Revenue's appeal dismissed: BANGALORE ITAT 2020-TIOL-1217-ITAT-HYD Kurmayagari Ashwini Vs ITO Whether advanced received by an assessee from a company in which the assessee's spouse is a partner, will be construed as amount lent by the company on behalf of the assessee's spouse - YES: ITAT Whether in such circumstances, the first proviso to Section 56(2)(vi) shall come into effect & such amount is treatable as gift received by the assessee from her spouse, in which case addition u/s 69 in respect of such amount, is unwarranted - YES: ITAT - Assessee's appeal allowed: HYDERABAD ITAT 2020-TIOL-1216-ITAT-JAIPUR Dynamic Engineers Infratrack Pvt Ltd Vs ACIT Whether when the assessee has declared the GP in line with the past history which has attained the finality, the adoption of GP rate by the AO without any basis cannot be accepted - YES: ITAT - Assessee's appeal partly allowed: JAIPUR ITAT 2020-TIOL-1215-ITAT-JAIPUR Subhash Sharma Vs DCIT Whether penalty levied u/s 271(1)(c) without specifying the limb under which the penalty was initiated, merits to be quashed - YES: ITAT - Assessee's appeal allowed: JAIPUR ITAT

GST CASES

2020-TIOL-265-AAR-GST

ITC Ltd

GST - Applicant intends to supply, under the brand name Aashirvaad Svasti, a variant of ready to consume pouch milk fortified with Vitamins A & D and small quantities of turmeric (Haldi) and black pepper extracts - Applicant wants to know whether the said product can be classified under HSN 0401 and is exempt under Sr. no. 25 of 2/2017-CTR, hence the present application before AAR.

Held: The Explanatory Note concerning HSN 0401 mentions that the products falling under this heading may contain in addition to natural milk constituents (i.e. milk enriched in vitamins or mineral salts), small quantities of stabilising agents which serve to maintain the natural consistency of the product during transport in a liquid state as well as very small quantities of anti-oxidants or of vitamins not normally found in the product - Circular 52/26/2018-GST dated 09.08.2018 clarifies that Milk fortified with Vitamins A & D is classifiable under HSN 0401 - Applicant's product, therefore, remains classifiable under HSN 0401 even after a small quantity of curcuminoids having anti-oxidant properties are added - the product is, therefore, exempt in terms of entry no. 25 of 2/2017-CTR: AAR

- Application disposed of: AAR

2020-TIOL-264-AAR-GST

Maninder Singh

GST - GOI and Govt. of Bangladesh have signed a MoU for construction of an oil pipeline from Siliguri in India to the depot of the Bangladesh Petroleum Corporation at Parbatipur in Bangladesh - Work would be monitored by MEA, GOI and which has engaged M/s Numaligarh Refinery Ltd. (NRL) as the implementation agency - NRL has awarded the applicant the contract for installation of the pipeline by the HDD method - Applicant wishes to know whether such supply is a Works Contract Service; whether the supply of service to NRL for the above construction in Bangladesh is an export and exempt under the Act and if not, the rate of tax; whether ITC is available on the inward supplies; whether the applicant is liable to pay tax on the goods and services procured locally within Bangladesh for the purpose of construction of Bangladesh portion of the pipeline on behalf of NRL etc.

Held: Location of the recipient NRL in the present context cannot be determined by applying the provisions u/s 2(14)(b) or (c) of the IGST Act - NRL being registered and resident of India, the location of the recipient of the service shall be in India in terms of s.2(14)(d) of the IGST Act - place of supply of the services, therefore, should be determined in terms of the proviso to s.12(3)(a) of the IGST Act for carrying out the construction work of immovable property - It shall be in India, being the location of the recipient - The applicant's service, therefore, will not be export of service within the meaning of s.2(6) of the Act - supply cannot also be considered as 'deemed export' - Service is a Works Contract Service - since NRL is not a Government Entity as defined in the rate notification, the concessional rate of tax in terms of Entry no. 3(iii)(c) of 11/2017-CTR is not available, hence supply of the impugned service will be taxed @18% under Entry no. 3(xii) of 11/2017-CTR - Applicant is entitled to ITC on the GST paid on procurement - since the applicant has not paid GST on purchasing goods or services in Bangladesh used in the construction of the pipeline, the question of ITC does not arise - GST is payable on the consideration receivable for the applicant's service: AAR

- Application disposed of: AAR

MISC CASE

2020-TIOL-1720-HC-MAD-MISC

National Asphalt Products And Construction Company Vs State of Tamil Nadu

Whether penalty can be imposed on assessee for failure to pay Entry Tax on imported vehicles, when at the time of import the law of the land did not prescribe payment of any duty thereon & such law was changed subsequent to date of import - NO: HC

- Assessee's writ petition allowed : MADRAS HIGH COURT

INDIRECT TAX

SERVICE TAX

2020-TIOL-1515-CESTAT-MUM

Maharashtra Enviro Power Ltd Vs CCE

ST - The assessee-company was awarded a contract by the Maharashtra Industrial Development Corporation for setting up of a Common Hazardous Waste Treatment system and in the process, it was required to have landfill (one of the prescribed methods of waste management) to prevent ground water, soil and surface water from being contaminated - A Multi Barrier System with layers of clay and HDPE had to be constructed as per State Pollution Control Board guidelines - An Audit team from the Department held that such construction amounted to civil works - CENVAT credit of tax paid against inputs received by the assessee for such civil work, was denied - SCN was issued to the assessee for improper availment of CENVAT credit for the relevant period - On adjudication, duty demand was raised, along with equivalent penalty and interest - Similar demands were also raised for a subsequent period - Hence the present appeal.

Held - It is clear that setting of landfill is a mandatory requirement of the guidelines set by the State Pollution Control Board and the said construction was made for storage and disposal of Hazardous Waste which can be equated with construction of immovable property but not other than plant and machinery as found in the definition of works contract services - It is difficult to arrive at a definite conclusion if the said setting up of a landfill is civil structure or not, in view of the fact that civil structure has to be a structure of a permanent nature and the life of landfill ends after the same gets fill up - Hence the Commr.(A) held that landfill created by digging out the land to be used for waste management cannot be treated as civil structure, since it was done in a scientific process to ensure that toxic waste is managed effectively - In the demand raised against the assessee, every expenditure concerning setting up of the landfill and tax paid there on was taken into consideration to deny the credits on the entire amount - It is, noteworthy, to mention here that in the SCN demand was made, as it appeared to theDepartment, that the inputs credits were outside of the definition - The Commr.(A) also candidly admitted to be unsure about the precise or legal definition of the term 'civil structure' - Besides, the contradictory findings recorded by the two Commissioners on the same issue demonstrates that the issue involves interpretation, which which case invoking extended limitation and imposition of penalty is unwarranted - Moreover, the Commissioner in another case held that a landfill is not a civic structure - Hence considering that only service portion of the civic structure is disallowed for CENVAT credit & the landfill setup had a very limited life span that help in storage and disposal of Hazardous Waste and setting up of such landfill is a mandatory requirement in waste management as per guidelines of the State Pollution Control Board, the credit taken by the assessee in setting up of such landfills is admissible: CESTAT

- Assessees appeals allowed : MUMBAI CESTAT

2020-TIOL-1514-CESTAT-MUM

ICICI Prudential Asset Management Company Ltd Vs CCGST

ST - CENVAT - Rule 2(l) of CCR, 2004 - Input Service - lower authorities have denied the Cenvat benefit on the taxable services viz. event management, convention, courier charges, agency commission, sponsorship service on the ground that those services have no nexus with the output service provided by the appellant.

Held: Event management service is availed by the appellant for organising training for the distributors and the investors who are linked with the appellant in connection with the business activities - Since the appellant is mainly engaged in the business of asset management and portfolio management service, the event management service availed by them for conducting training, meetings etc., will be considered as input service for the purpose of availment of the Cenvat benefit - Cenvat demand amounting to Rs.56,41,656/- disallowed by the department cannot be sustained: CESTAT [para 6]

- Appeals disposed of: MUMBAI CESTAT

CENTRAL EXCISE

2020-TIOL-1513-CESTAT-DEL

Mewar Technocast Pvt Ltd Vs CCGST

CX - The issue relates to denial of SSI exemption under Notfn 8/2003-CE by clubbing the clearances of job worker with that of the assessee and consequential demand of duty along with penalty for the period April, 2008 to August, 2009 - The similar issue has been decided in favour of assessee in the case of M/s. Mewar Hi-Tech Engg. Ltd. 2019-TIOL-3210-CESTAT-DEL , wherein this Tribunal held that the taxable event for the central excise duty is the manufacture of excisable goods, and the moment, there is transformation into a new commodity commercially known as a distinct and separate commodity having its own character, use and name, whether be it the result of one process or several processes, 'manufacture' takes place and liability to duty is attracted - Thus, the sale or ownership of the end product is absolutely irrelevant for the purpose of taxable event under the scheme of CEA r/w the Rules - Further, the job worker is not liable to pay duty only in the circumstances under the erstwhile Rule 57(F) of CER, 1944, or according to the present Rule 4 (5)(a) of CCR, 2004 read with the relevant Notfn 214/86-CE, wherein the principal manufacturer gives an undertaking to the jurisdictional Central Excise Authority of the job worker to pay the duty - Admittedly, no such procedure was undertaken - Hence, under the scheme of the Act, ipso facto the duty liability is on the job worker - Accordingly, assessee is not liable to pay any central excise duty for the goods got manufactured and cleared from the job worker's premises - As regards the issue of limitation, assessee has maintained proper books of accounts' register and vouchers of their transactions and has also disclosed such transactions before other Tax Authorities, as the assessee was not liable to pay central excise duty being an SSI Unit, not requiring registration under the Central Excise Provisions - Accordingly, the demand for extended period of limitation is also not maintainable: CESTAT

- Appeal allowed: DELHI CESTAT

CUSTOMS

2020-TIOL-1512-CESTAT-DEL

Deepak Goel Vs Pr CC

Cus - Intelligence received was that M/s J.S. Designer Ltd. was indulging in over invoicing of export consignments of dyed and printed polyester fabrics with intention to fraudulently avail undue export benefits (DEPB) - Appellant, a broker in the Textile cloth market, has filed appeal against imposition of penalty of Rs. 25 lakhs under Section 114 AA of the Customs Act, 1962 - Facts are proved on the corroborative evidence being seizure of documents including cheque books etc of various firms and companies, wherein benamidar of this appellant were proprietor/partners/Directors and such benamidar persons have also admitted that they were only the name lenders engaged on salary basis, and such firm/companies were managed by Shri Deepak Goel - Admittedly, as per facts on record such firms and companies were raising inflated bills for the supply of fabric to M/s J.S. Designer Ltd. - Appellant has facilitated the main accused M/s J.S. Designer Ltd. and its Directors in inflating FOB value of goods for export, by justifying the cost, indirectly - As the appellant have not directly facilitated M/s J.S. Designer Ltd. and its Directors, but have indirectly facilitated them in inflating the FOB value for the purpose of wrongly claiming higher DEPB benefits, taking a liberal view, penalty reduced from Rs. 25 lakhs to Rs. 7,50,000/- - Appeal is allowed in part: CESTAT [para 35, 36]

- Appeal partly allowed: DELHI CESTAT

2020-TIOL-1511-CESTAT-KOL

Daruka International Vs CC

Cus - The issue to be decided is, whether the assessee is eligible for refund of mica cess in respect of shipping bills filed after 01.04.2016 and before 14.05.2016 - On perusal of amendments introduced vide Section 239 of FA, 2016, it clearly appears that the same would be applicable with the date of enactment i.e. 14.05.2016 inasmuch as no stipulation has been made to provide that the same would be applicable w.e.f. 01.04.2016 - By virtue of said Section 239, the enactments mentioned in the Fifteenth Schedule have been repealed - This is more so in view of the specific provision made in Section 241 of FA, 2016, which clearly provides that the duties levied under the respective enactments immediately preceding the date on which the Finance Bill, 2016 receives the assent of the President, if not collected shall be collected and paid into the Reserve Bank of India for being credited to the Consolidated Fund of India - This clearly affirms the position that cess applicable under the repealed Act was very much effective till the date of receipt of President's assent - The same being the legal position, no contrary conclusion can be drawn on the basis of contents of Office Memorandum as relied by the assessee - The Commissioner (A) has rightly relied upon the Gujarat High Court's decision in case of Gujarat Paraffins Pvt Ltd. 2012-TIOL-375-HC-AHM-CX , wherein the Court observed that the speech of the Finance Ministry cannot be considered to be a law unless the same is backed by statutory provisions contained in the enacted law - The observation made by Apex Court in case of B K Industries is squarely applicable to the facts of the instant case, inasmuch as the Apex Court clearly held that Section 13 in the said case (Section 241 in the instant case) expressly provided that the cess due before the date of said repeal, but not collected, shall be collected according to law as if the Cess Act is not repealed - This provision amounts to a positive affirmation of the intention of the Parliament to keep the said imposition alive and effective till the date of the repeal of the Cess Act - Mere reliance on the Official Memorandum dated 27.7.2016 would not come to their rescue inasmuch the same cannot override the legal position emanating from the provisions contained in the statutory enactment - No reason found to interfere with the findings given by authorities below and hence, the impugned orders are sustained: CESTAT

- Appeal rejected: KOLKATA CESTAT

HIGH LIGHTS (SISTER PORTAL )


	TII TP - AO is legally bound to dispose off any objections raised by assessee to re-opening of assessment: HC I-T - High Court is obliged to intervene in matter in which assessee has also availed alternative remedy of appeal to CIT(A): HC TP -TPO has jurisdiction to disallow business expenditure: ITAT TP - When computing ALP of remittance made by Indian assessee to non-resident AEs, TPO is required to verify assessee's claim that such remittance was of nature of cost to cost reimbursement of expenses which AEs had incurred purely on account of administrative convenience for and on behalf of assessee: ITAT TIOL CORPLAWS Code of Criminal Procedure - Bail u/ s 439 of CrPC can be denied by court if release of petitioner on bail would be detrimental to pending investigation and likely to cause serious prejudice to case of prosecution: HC IBC - Claims of all interested parties ought to be heard by Appellate Tribunal (NCLAT) before finalising terms of settlement and resolution plan: HC

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