TMI Tax Updates - e-Newsletter
May 24, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
GST
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Scope of Section 17(5)(d) - construction of immovable property (shopping malls) intending for letting out for rent - input tax credit from construction against output GST on rental income - if the assessee is required to pay GST on the rental income arising out of the investment on which he has paid GST, it is required to have the input credit on the GST, which is required to pay u/s 17(5)(d) of the CGST Act - credit allowed
Income Tax
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Income-tax (4th Amendment) Rules, 2019
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Agreement between the Government of the Republic of India and the Republic of the Marshall Islands for the exchange of Information with respect to taxes
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Allowability of dealers incentive - scope in remand proceedings - this tribunal in remand directions made it clear that the impugned dealers incentive had much accrued during the relevant previous year - it was restored back the issue to the AO only to verify that claim confirms to the relevant terms and conditions incorporated in the dealers incentive scheme or not - no such irregularity found - claim allowable
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Deduction of Interest u/s 36(1) - Capital OR revenue - Assessee has also not claimed before us or before the Authorities below that the land in question was put to use in the Assessment Years in question - The words in the Proviso to Section 36(1) "whether capitalised or not" will override the provisions contained in Section 145A/accounting practice followed in the Books - not allowable
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Selection process for the post of Member of ITAT - Selection Committee called 24 most experienced applicants - Rule 4A of the Income Tax Appellate Tribunal Members (Recruitment and Conditions of Service) Rules, 1963 empowers the Selection Board to evolve its own procedure and this Rules are not challenge before this Court - The decision of the Committee to short-list the candidates is reasonable and not arbitrary - writ dismissed
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Penalty u/s 271D - small amounts on different occasions to meet the urgent business needs has been taken from the company in which assessee is a director and shareholder - the reasonable cause given by the assessee for taking the said cash loan duly mandate that levy of penalty u/s 271D is not warranted
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Assessment u/s 153C - gift deed which was found, was in respect of transaction which was duly recorded in the books of account of both the donor and donee and such a document to be even though belonging to assessee, cannot be the basis for initiating proceedings u/s 153C - it has failed to fulfill the basic condition of it being an incriminating document - proceedings initiated is bad in law
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Penalty u/s 271(1)(c) - disallowance of interest u/s 24(b) - full particulars were given and nothing was hidden from the Department and the disallowance of interest was on estimated basis - not a fit case for levy of penalty
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Penalty u/s 271AAA - when the assessee has failed to specify the manner and substantiate the manner in which the undisclosed income was derived rather embark upon the mercy plea that he is making surrender to buy peace of mind and avoid litigation - not entitled for the benefit of section 271AAA(2)
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Revision u/s 263 by CIT - TP adjustment in the book profits u/s 115JB - A.O is not empowered to make any addition or deletion to the profit as per P&L A/c prepared in accordance with Companies Act and relevant accounting standards, other than those items specifically mentioned in Explanation 1 to section 115JB(2) - order of the A.O was neither erroneous nor prejudicial to the interest of the Revenue - revision quashed
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Condonation of delay of 125 days - misunderstanding and inadequate advice by the Tax Consultant about the correct remedy - On receipt of the order of the First Appellate Authority, assessee first approached the CIT(A)/Pr. CIT u/s 264 instead of approaching the Tribunal for relief - the assessee subsequently filed the appeal with application for Condonation of delay - delay condoned
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Claim of Exemption u/s 54 - there is no prohibition under the Act in claiming exemption u/s 54 in case assessee has not filed a return of income - Such legal claim can be put forth at any stage of assessment / appellate proceedings and should be considered on merits in the light of the details / documents / corroborative evidence filed in this regard - exemption allowed
Customs
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Levy of penalty - Warehousing of goods - Goods missing when it was in their custody - The impugned order is contradictory because the Commissioner has dropped the proceedings against the appellant under Regulation 11 & 12 but in the order portion, he still imposed penalty under Regulation 12(8) of the Handling of Cargo in Customs Area Regulations 2009. - Penalty set aside.
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Smuggling of Gold - Illegal importation into India - service of SCN - seized material not being perishable, being gold bars, there was no reason for the Respondents to have hurriedly disposed it off and that too without notice to the Petitioner - When SCN was not served upon the Petitioner, there was no reason to proceed with disposal of the seized gold without notice - equal amount refunded
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Applicability of Notification dated 16.2.2019 - Import from Pakistan - Basic Customs Duty @ 200%, Social Welfare Surcharge @ 10% and IGST @ 28% - goods already entered into India on or before 16.2.2019 and bill of entry had already been filed - Court directed department to take a decision on the representation in accordance with law by passing a speaking order
Indian Laws
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Dishonor of Cheque - Sales tax returns as Proof of transaction between the complainant - summoning the Assistant Commissioner of Commercial Tax to explain the process of submitting the returns is not required.
Service Tax
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Refund to SEZ unit - consumption of services wholly in the SEZ - Service tax on finance charges paid for borrowing funds - only mentions that the funds borrowed by the Appellant could be used for other services/goods in connection with the setting up of the SEZ Unit but does not mention that the funds had actually been used by the Appellant outside the Special Economic Zone - demand set aside.
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Valuation - The cost of free supply of goods provided by the service recipients to the service provider is neither an amount “charged” by the service provider nor can it be regarded as a consideration for the service provided by the service provider. It has no nexus with the taxable services for which value is sought to be determined.
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BAS - charge for the diesel reimbursed by the service recipients - The appellants had paid service tax on the element of service involved in “filling of diesel” and by no stretch of imagination it can be urged that any “service” was rendered by the appellants corresponding to the value of diesel.
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Extended period of Limitation - ancillary activity for providing Digital Signature Certificates (DSC) - Business Support Service or not - activity is related to sovereign function or not - Demand set aside on the ground of period of limitation.
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Demand of service tax - on differences in amount reflected in the ST-3 returns and Form 26AS - without examining reasons for said difference, whether the same was because of any exemption or abatement, it is not legal to presume that the entire differential amount was on account of consideration for providing services - SCN is not sustainable
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Rejection of VCES declaration - wrongful declaration - Renting of Immovable Property Service - It is provided through Section 108 of Finance Act, 2013 that once a discharge certificate u/s 107(7) is issued then revenue does not have authority to reopen any proceedings in respect of declaration made - SCN and impugned proceedings are bad in law
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Commercial coaching or training service - Appellant conduct of a test known as International English Language Testing System - holding of a test cannot by any stretch of imagination, be considered as imparting skill or knowledge or lessons on any subject or field - it was imperative for the Commissioner to have based his conclusion on some positive evidence, rather than drawing an inference - not conducting commercial coaching or training
Central Excise
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Valuation - inclusion of subsidy in the assessable value - The nature of Scheme in the present Appeals are entirely different as ‘Subsidy’ and not ‘remission’ has been provided to the Appellants under the Scheme. - Demand set aside.
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Excisability - Job-work - waste and scrap generated by job worker while processing the goods sent by the principal manufacturer, the Principal manufacturer is not liable to pay duty on such waste and scrap.
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Service/communication of Order - dismissal of appeal on limitation - as the factory was lying closed and the notice was actually delivered by security guard to the management of appellant only on 25.11.2017, that can only considered as the effective date of service not on date of service to guard - appeal maintainable
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CENVAT Credit - duty paying documents - the credit has neither been availed immediately on the receipt of inputs nor has been availed within the six months of the issue of the receipts - assessee has contravened the time limit of both the provisions relevant for the availment of the cenvat credit even on supplementary invoices - credit not allowed
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CENVAT Credit - inputs - heavy duty racks - the goods, which have no relationship with the manufacture of a final product, have to be excluded from the definition of “Input” - use of racks for storage of raw materials and finished goods is a process integrally connected with the manufacture of the final products - input allowable
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Doctrine of Bias - Refusal to transfer appeal - wife is holding the charge of Commissioner (Appeals) and the officer who reviewed the order passed by the Assistant Commissioner and directed him to file appeal on his behalf before the Commissioner (Appeals) is her husband - Justice should be done and be manifestly seen to be done - order to transfer the appeal
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2019 (5) TMI 1278
Scope of Section 17(5)(d) - construction of immovable property (shopping malls) intending for letting out for rent - input tax credit from construction against output GST on rental income - it was alleged that the opposite parties without considering the provisions u/s 17 (5)(d) of the CGST Act held that the provisions regarding input credit of the CGST Act is not applicable - purpose of letting out he is earning out commercial rent income and he has to pay 18% GST on that - HELD THAT:- The very purpose of the Act is to make the uniform provision for levy collection of tax, intra state supply of goods and services both central or State and to prevent multi taxation. Therefore, the contention which has been raised by the learned counsel for the petitioners keeping in mind the provisions of Section 16 (1)(2) where restriction has been put forward by the legislation for claiming eligibility for input credit has been described in Section 16(1) and the benefit of apportionment is subject to Section 17(1) and (2). While considering the provisions of Section 17(5)(d), the narrow construction of interpretation put-forward by the Department is frustrating the very objective of the Act, inasmuch as the petitioner in that case has to pay huge amount without any basis. Further, the petitioner would have paid GST if it disposed of the property after the completion certificate is granted and in case the property is sold prior to completion certificate, he would not be required to pay GST. But here he is retaining the property and is not using for his own purpose but he is letting out the property on which he is covered under the GST, but still he has to pay huge amount of GST, to which he is not liable. In that view of the matter, in our considered opinion the provision of Section 17(5)(d) is to be read down and the narrow restriction as imposed, reading of the provision by the Department, is not required to be accepted, inasmuch as keeping in mind the language used in EICHER MOTORS LTD. VERSUS UNION OF INDIA [ 1999 (1) TMI 34 - SUPREME COURT] , the very purpose of the credit is to give benefit to the assessee. In that view of the matter, if the assessee is required to pay GST on the rental income arising out of the investment on which he has paid GST, it is required to have the input credit on the GST, which is required to pay under Section 17(5)(d) of the CGST Act. In that view of the matter, prayer (a) is required to be granted. However, we are not inclined to hold it to be ultra vires. Prayer (b) is not accepted. The writ petition is allowed to the aforesaid extent.
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2019 (5) TMI 1277
Release of detained goods with vehicle - petitioners submitted that the petitioners have filed representation on 06.03.2019 to respondent No.3 - HELD THAT:- The writ petition disposed off by directing respondent No.3 to take a decision on the representation dated 06.03.2019 (taken on record today) and pass a speaking order after affording an opportunity of hearing to the petitioners within a period of 15 days from the date of receipt of certified copy of order, in accordance with law.
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Income Tax
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2019 (5) TMI 1275
Selection process for the post of Member of Income Tax Appellate Tribunal - eligibility criteria prescribed under Sub-sections (2) and 2(A) of Section 252 of the Income Tax Act - interim Search-cum-Selection Committee decided to call 24 most experienced applicants who were practicing Advocates for interview - HELD THAT:- Rule 4A of the Income Tax Appellate Tribunal Members (Recruitment and Conditions of Service) Rules, 1963 empowers the Selection Board to evolve its own procedure. The aforesaid Rules are not subject matter of challenge before this Court. The decision of the Committee to short-list the candidates is reasonable and not arbitrary. Reference be made to Madhya Pradesh Public Service Commission v. Navnit Kumar Potdar [ 1994 (9) TMI - SUPREME COURT] in which the Supreme Court upheld the action of Madhya Pradesh Public Service Commission to call for interview only 71 applicants out of 188 applicants on the ground that only candidates with 7 years experience be called for interview whereas five years experience was the eligibility criteria.
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2019 (5) TMI 1274
Deduction of Interest Expenditure u/s 36(1) - Capital OR revenue - method of accounting prescribed u/s 145A VS - Proviso to Section 36(1) - engaged in the business of Real Estate - interest on the borrowed capital to purchase the land - interest paid was admittedly capitalised in books - HELD THAT:- The Proviso to Section 36(1) of the Act incorporated in Part D of Chapter IV of the Act providing for the Method of Computation of Total Income , quoted above, will, in our opinion, override the provisions of Section 145A, which is incorporated in Chapter IV of the Act relating to Procedure for Assessment . The words in the Proviso to Section 36(1) of the Act whether capitalised or not will override the accounting practice followed in the Books of Accounts by the Assessee. The Assessee has admittedly capitalised the interest paid on the borrowed capital in the present case. The Assessee has also not claimed before us or before the Authorities below that the land in question was put to use in the Assessment Years in question. Mere purchase of the land in the Years in question out of the borrowed capital does not entitle the Assessee to claim such interest paid on borrowed capital as a deductible expenditure in the present Assessment Years merely on the basis of method of accounting prescribed u/s 145A which was brought in the statute to undo the effect of the decision of the Delhi High Court which quashed the CBDT Notification finding it to be ultra vires. The method of accounting provided for valuation of inventory u/s 145A does not determine the allowability of the expenditure. The Proviso to Section 36(1), which says that such claim of deduction will be allowed in the Assessment Years, when it was put to use, will override the provisions contained in Section 145A. Since the position of law and the inter play of the above provisions are very clear, we do not find any substantial question of law to be arising in the present case for our consideration. - Decided against assessee.
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2019 (5) TMI 1273
TP adjustment - selection of comparable M/s.Lubrizol - substantial question of law - whether ITAT was right in law in not holding that Lubrizol was not comparable or in the alternative, should have directed the Assessing Officer to provide adjustment in respect of the criteria due to which the appellant was differentiated from Lubrizol? - HELD THAT:- Assessee pointing out para 6.2 of the order passed by the learned Income Tax Appellate Tribunal regarding Transportation Cost, submitted that since the Assessee had incurred additional cost for Transportation from Gujarat to Chennai, whereas the cost of transportation in the comparable case of M/s.Lubrizol was less and therefore, suitable adjustment should be made in this regard while determining the Arms Length Price in the case of the Assessee. The learned Tribunal has found that since the Assessee has not been able to establish the cost of transportation in the comparable case of M/s.Lubrizol lesser than the Assessee, the argument of the Asessee that suitable adjustment should be made was not upheld. We are of the opinion that the said finding of the learned Tribunal does not give rise to any substantial question of law requiring our consideration u/s 260A. A Division Bench of Karnataka High Court, where one of us (Dr.Justice Vineet Kothari) was a party in the case of Principal Commissioner of Income Tax v. Softbrands India P. Ltd. [ 2018 (6) TMI 1327 - KARNATAKA HIGH COURT] has held by a detailed judgment that in the case of determination of Arms Length Price, unless a perversity in the order passed by the learned Tribunal is established, no substantial question of law will arise requiring interference u/s 260A. - Appeals dismissed
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2019 (5) TMI 1272
Maintainability of appeal - monetary limit - HELD THAT:- When the matter is taken up for admission, the learned Standing Counsel brought to our notice the Circular instruction issued by the Central Board of Direct Taxes vide Circular No.3/2018 dated 11.7.2018 wherein it is stipulated that appeals shall not be filed/pursued by the Department before the High Court in cases where the tax effect does not exceed RS.50 lakhs. In the instant case, the tax effect is said to be less than the monetary limit imposed and therefore, the Tax Case filed by the Revenue is dismissed as not pressed, keeping open the substantial questions of law for determination in an appropriate case.
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2019 (5) TMI 1271
Addition based on documents / records allegedly found and seized during a search operation - denial of natural justice - addition without affording opportunity of cross examination of the concerned parties whose records and statements were relied upon by the AO and made the basis for making addition - HELD THAT:- Respectfully following the order of the Tribunal, SMC Bench, Delhi in the case of Smt. Jyoti Gupta vs. ITO [ 2018 (11) TMI 1353 - ITAT NEW DELHI] and case of Andaman Timber vs. CIT [ 2015 (10) TMI 442 - SUPREME COURT] on identical facts and circumstances, the addition in dispute is deleted and the appeal of the assessee is allowed. As regards the case laws cited by the Ld. DR are concerned, in the case of Udit Kalra vs. ITO [ 2019 (4) TMI 834 - DELHI HIGH COURT] has adjudicated the case on merits and has not adjudicated the issue on cross examination, therefore it will not help the department. As regards ITAT, SMC, Delhi decision in the case of Pooja Ajmani vs. ITO [ 2019 (4) TMI 1665 - ITAT DELHI] in this case the assessee has not raised any legal ground and argued only on merit for which asseseee has failed to substantiate his claim before the lower revenue authorities as well as before the Tribunal, which establish the facts are not identical to the present case, hence, do not support the case of the Department.
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2019 (5) TMI 1270
Levy of penalty u/s 271(1)(C) - addition of the motor car expenses, depreciation and interest on such loan - HELD THAT:- There is no such disallowance of such depreciation and motor car expenses and interest on loan from AY 2010-11 to 2013-14. Although, the vehicle was registered in the name of the Director of the assessee Company, however, the expenses were incurred by the assessee company itself and the vehicle was used for the business of the assessee Company. All particulars were made available before the A.O and there was no such concealment. In the case of CIT (A) Vs. Reliance Petro Products Pvt. Ltd. . [ 2010 (3) TMI 80 - SUPREME COURT] has held that merely because the assessee has claimed the expenditure which claim was not acceptable or was not accepted by the revenue that by itself could not attract the penalty u/s 271(1)(c) - merely because the assessee in the instant case, has accepted the disallowance during the course of assessment proceedings that by itself will not preclude the assessee from taking an alternate argument before the Tribunal during penalty proceedings. Since full particulars are available before the A.O during the course of assessment proceedings, therefore, penalty u/s 271(1)(c) in my opinion is not attracted on motor car expenses and depreciation Disallowance of ad-hoc expenses of the business promotion expenditure - Addition is on ad-hoc basis. As held in various decisions that penalty u/s 271(1)(c) is not sustainable on ad-hoc disallowance of expenses. It is not a fit case for levy of penalty u/s 271(1) (c) - Decided in favour of assessee.
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2019 (5) TMI 1269
Addition of amount/cash deposited into bank - unexplained source of income - HELD THAT:- Assessee s submission is that her husband did not understand the technical questions raised by the AO falls flat on the ground as the queries made by the AO were quite straightforward and there was nothing complicated in the line of questioning regarding the source of amount advanced by him. Hence, the assessee cannot take shelter under such submissions regarding illiteracy etc. , therefore, the addition of ₹ 2 lacs was right confirmed, which does not need any interference Salary paid to son AO has clearly brought out the facts where the assessee was unable to explain the source of the said amount purportedly received from her son. Therefore, we confirm the said addition by upholding the order of the Ld. CIT(A) on this issue and reject the ground raised by the assessee. As regards addition of ₹ 6 lacs on estimation basis is concerned, it is noted that the assessee deposited cash of ₹ 8,50,000/- out of her past savings of dairy work and sales of live stock etc. Statement of the assessee was recorded on 7.10.2016 and she was asked to explain the source of ₹ 8,50,000/-. It was stated by her that they were rearing 4 to 5 buffaloes and were selling milk for ₹ 4000/: to ₹ 5,000/- p.m. The assessee s family were almost remained in the fields, school/colleges, therefore, assessee s version that the huge cash amount of ₹ 8,50,000/- was lying at home does not appear to be correct. If any person has so much huge amount of cash he will keep the same in bank for safe custody and for earning interest income thereon. There were seven members in the assessee s family i.e. the assessee herself, her husband Sh. Jai Pal, her sons Sh. Pawan and Sh. Satish, wife and two daughters of Sh. Pawan. The educational qualification of Sh. Satish is 10+2. He completed 10+2 one and half year back. Sh. Satish was working as a security guard on the ATM machine of Indian Bank located in the village of the assessee. He joined as security guard approximately four months back and is drawing salary of ₹ 7,000/- p.m. The assessee was asked when the marriage of Sh. Pawan was solemnized. It was stated that her son Sh. Pawan was got married in the year 2011 it was a simple marriage and only ₹ 50,000/- was incurred on the marriage. All the above narrated facts do not strengthen the version of earning of ₹ 8,50,000/- from past savings, hence, the assessee s version cannot be accepted in toto. However, AO presumed that the assessee may be able of saving some amount from milk selling and from selling of live stock. The assessee s past saving from selling of milk and from selling of live stock was rightly estimated at ₹ 2,50,000/- and addition of ₹ 6,00,000/- was made to the taxable income of the assessee by treating the same as her income from undisclosed sources, which Ld. CIT(A) has also upheld. In view of above, I confirm the action of the Ld. CIT(A) on this issue and reject the ground raised by the assessee.
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2019 (5) TMI 1268
Computation of commission income - entry operator - from 2% to 0.50% - HELD THAT:- Since in the case of the assessee in subsequent years as referred to above and in the case of group assessees the Tribunal has considered 0.50% as reasonable rate of profit/commission and directed the AO to adopt the same figure for computing the profit on account of commission, we following the same order set aside the orders of the authorities below and direct the AO to adopt profit rate of 0.50% instead of 2% for estimating the commission income accordingly. These grounds of appeal of the assessee are allowed partly. Unexplained deposit in the bank account of assessee - HELD THAT:- The authorities below have rightly followed the directions of the ITAT issued in first round of proceedings. Assessee cannot take a new plea to challenge the addition u/s 68 of the Act when the first order of the Tribunal has reached finality. Since there is a cash credit appearing in the books/bank account of the assessee, therefore, burden was upon the assessee to explain the same to the satisfaction of the AO as per directions of the Tribunal. Even before us Ld. Counsel for assessee was not able to demonstrate as to how the peak addition could be made in the case of the assessee. We, therefore, do not find any justification to interfere with the orders of the authorities below. Addition of ₹ 4,50,000/- is confirmed. These grounds are, therefore, dismissed.
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2019 (5) TMI 1267
Levy of penalty u/s 271(1)(c) - disallowance of interest u/s 24(b) - HELD THAT:- As per the return of income and as per the assessment order, there is no difference in the rent receipt and the municipals tax paid but only difference is on account of interest. The expenses u/s 24(a)/ 24(b) as per the return of income is ₹ 10,43,827/- whereas as per the Assessment Order such amount is ₹ 6,80,443/-. Even the interest u/s 24(a) as per the return of income and as per the Assessment Order is same. The only difference is in the interest calculated as per Section 24(b) which as per the return of income is ₹ 5,81,047/- where as per the Assessment Order the same is 2,46,662/- All particulars were given and there is no concealment as such which in my opinion warrants levy of penalty/s 271(1)(c). The Hon'ble Supreme Court in the case of Reliance Petro Products Pvt. Ltd. [ 2010 (3) TMI 80 - SUPREME COURT] has held that a mere making of a claim which is not sustainable in law cannot by itself will amount to furnishing inaccurate particulars regarding the income of the assessee. Further, when the assessee has declared income of ₹ 5,00,971/- and the A.O completed the assessment on a at total income at ₹ 8,62,157/-, fail to understand as to how and why the penalty has been levied by the A.O on the assessed income at ₹ 8,62,157/- instead of the difference of ₹ 3,63,584/- being excess interest claimed as per u/s 24(b) . This shows that the A.O has not applied his mind. Although, the CIT(A) has considered the same and sustained penalty, however, the same in my opinion is not justified. Full particulars were given and nothing was hidden from the Department and the disallowance of interest of ₹ 3,63,584/- was on estimated basis, therefore, it is not a fit case for levy of penalty u/s 271(1)(c). Therefore, set aside the order of the CIT(A) and direct the A.O to cancel the penalty. The grounds raised by the assessee are accordingly allowed.
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2019 (5) TMI 1266
Deduction u/s 80P - need for inquiry into the factual situation as to the activities of the assessee society to determine the eligibility of deduction u/s 80P - whether the interest income received on investments can be treated ? - HELD THAT:- The Larger Bench of the Hon ble jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. [ 2019 (3) TMI 1580 - KERALA HIGH COURT] held that the Assessing Officer has to conduct an inquiry into the factual situation as to the activities of the assessee society to determine the eligibility of deduction u/s 80P - Assessing Officer is not bound by the registration certificate issued by the Registrar of Kerala Cooperative Society classifying the assessee-society as a cooperative society. The Hon ble High Court held that each assessment year is separate and eligibility shall be verified by the Assessing Officer for each of the assessment years Thus the issue of deduction u/s 80P(2)(a)(i) is restored to the Assessing Officer. The Assessing Officer shall examine the activities of the assessee and determine whether their activities are in compliance with the activities of a cooperative society functioning under the Kerala Co-operative Societies Act, 1969 and grant deduction u/s 80P(2) in accordance with law. Interest on the investments with Cooperative Banks and other Banks, the co-ordinate Bench order of the Tribunal in the case of Kizhathadiyoor Service Cooperative Bank Limited [ 2016 (7) TMI 1405 - ITAT COCHIN] held that interest income earned from investments with treasuries and banks is part of banking activity of the assessee, and therefore, the said interest income was eligible to be assessed as `income from business instead of `income from other sources .
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2019 (5) TMI 1265
Assessment u/s 153C - no incriminating document was found - addition relating to photocopy of gift deed found in search action with the donors and disallowance of various expenses on adhoc basis @ 5% - HELD THAT:- The assessment proceedings are initiated in case of the person searched u/s 153A, wherein also assessment for six years immediately preceding the year of search are open for assessment or reassessment. Further proceedings can be initiated u/s 153C against other person, in case any document or asset is found relating to him. So, there is no merit in the order of CIT(A) in holding that word incriminating is not mentioned to the document found, seized or requisitioned in section 153C is an incorrect interpretation of law. Search and seizure machinery is to be initiated in order to detect the undisclosed income or property of the person searched and in case during the course of search of a person, any document relating to any other person is found, then such a transaction which is recorded in the books of account of such other person cannot be the basis for initiating action u/s 153C which admittedly, are relation to the determination of undisclosed income / property in the hands of such other person. Accordingly, we hold so. Addition of gift - Coming to the facts of present case, search u/s 132 was conducted on the premises of Ashoka group of cases on 20.04.2010 the alleged undisclosed income was on account of gift deed which was executed on 02.02.2010 i.e. relevant for financial year 2009-10, which is the year before the year of search. Since the search took place in April, 2010, on the basis of copy of such gift deed, which is one time transaction, there is no merit in initiating proceedings u/s 153C starting from assessment year 2005-06 onwards. No such gift deed was found for those years - as perused the assessment records, which revealed that no incriminating material at all was found during the course of search or survey in Ashoka group Assessing Officer has failed to bring anything incriminating with regard to donations received by the assessee trust in pursuing its various objects or with regard to inflated expenses, if any. there is no specific doubt over the correctness of expenses claimed by the assessee trust in various assessment years under reference. In such scenario, where no incriminating material at all was found against the assessee, there is no merit in initiating proceedings u/s 153C for assessment years 2005-06 to 2009-10. Assessment year 2010-11 i.e. the year in which gift deed was executed, again the document which was found was in respect of transaction which was duly recorded in the books of account of both the donor and donee and such a document to be even though belonging to assessee, cannot be the basis for initiating proceedings u/s 153C ; since it has failed to fulfill the basic condition of it being an incriminating document which kick start from the search action being carried out under the provisions of section 132. Accordingly, we hold that proceedings initiated u/s 153C against the assessee for assessment year 2010-11 are without any basis and initiation is bad in law. Consequently, the assessment order passed u/s 143(3) r.w.s. 153C of the Act for assessment years 2005-06 to 2010-11 do not stand and the same are held to be bad in law.- Decided in favour of assessee
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2019 (5) TMI 1264
TP adjustment - sale of engine parts by way of addition of stock difference amount - HELD THAT:- In the financial statements, the Stock difference was shown in the credit side of Profit and Loss account, since the value of closing stock was more than the value of opening stock. Accordingly, the value of raw material consumed was shown at gross figure of ₹ 1172.18 lakhs. While computing PLI, the assessee has reduced the value of stock difference from the value of raw material consumed, i.e., the credit figure was netted off against the debit figure. Hence, this action of the assessee would not change the net profit. TPO was not correct in presuming that the assessee has purposefully done this in order to artificially reduce the operating cost. Even if it is assumed for a moment that the TPO was right, then the reduction of operating cost should have increased the profit margin, since any reduction in expenses should increase the profit. We notice that the assessee has adopted different form of depicting the Profit for the purpose of PLI. Since the credit figure has been netted off against the debit figure, it shall not have any effect on the Net Profit. We notice that an identical view has been expressed by the Delhi bench of Tribunal in the case of ITO vs. E Value Serve.Com [ 2016 (9) TMI 1363 - ITAT DELHI] Accordingly, we reject the presumption entertained by TPO holding the same as fallacious. Accordingly we direct AO/TPO to re-work the PLI of the assessee. Inclusion of two comparables named M/s Talbros Engineering Limited and Jotindra Steel Tubes Limited. - HELD THAT:- It is stated that M/s Talbros Engineering Limited is engaged in the business of production of motor vehicle parts and M/s Jotindra Steel Tubes Limited is engaged in the business of manufacture of steel pipes tubes. We have earlier noticed that the assessee is engaged in the business of manufacture and export of aircraft engine parts, components and sub-assemblies. Before us, the assessee could not show as to how the functional profile of both the comparable companies, referred above, is similar to that of assessee. Accordingly we reject this ground of the assessee. Computation of Net profit margin of comparable companies - According to the assessee, there is difference in the net profit margin computed by the assessee and the TPO in respect of comparable companies - HELD THAT:- In the case of JMT Auto Limited, the Net profit margin computed by the assessee was 5.60%, while the net profit margin computed by the TPO was 11.69%. It shows that there is difference in the methodology adopted by the assessee and TPO for computing Net profit margin. It is a matter of reconciliation and hence, in our view, the assessee should be provided with an opportunity to understand the methodology adopted by TPO or explain the difference, if any in order to reconcile the methodology adopted by it with that of the TPO. Accordingly, this issue requires fresh examination at the end of AO/TPO. Accordingly we restore this issue to the file of AO/TPO. Computation of PLI by adopting Cash profit - A.R submitted that the cash profit should be considered for computing PLI - Ld D.R, on the contrary, submitted that the quantum of depreciation would depend upon the value of assets - HELD THAT:- With regard to this contention of the assessee that the cash profit (profit before depreciation) should be considered as PLI, we notice that the same finds support from the decision rendered by the co-ordinate bench in the case of DCIT vs. M/s Centum Rakon India P Ltd [ 2018 (7) TMI 1972 - ITAT BANGALORE] . We notice that the co-ordinate bench has expressed the view that the profit before depreciation can be taken as PLI, if there is substantial variation in the manner of charging depreciation by the assessee and comparable companies. Accordingly we direct the AO/TPO to take into consideration the above said contention of the assessee. We also direct the assessee to furnish the details to prove that there is substantial variation in the manner of charging depreciation. Rejection of claim for capacity utilization adjustment - HELD THAT:- the average capacity utilization of M/s Rane Engine Valves Limited and M/s Samkrg Pistons Rings Limited are comparable with the assessee company. We notice that the capacity utilization of Sundaram Fasteners Limited is exceptionally higher at 218.24%. We notice that the assessee itself has computed the % of capacity utilization of M/s Sundaram Fasteners Limited on the basis of installed capacity and actual production. A cursory perusal of the same, in our view, would show that there may be some error in it, since it would be difficult to achieve capacity utilization of 218% in the normal industry standard. We notice that the assessee has not attempted to ascertain the facts in this regard and offer reasonable explanations. Accordingly we do not find merit in this ground urged by the assessee and accordingly reject the same. Benefit of +/- 5% range. It is consequential in nature. In view of the above, the issue relating to determination of ALP of international transactions needs to be recomputed in the light of discussions made supra. Computation of deduction u/s 10B - HELD THAT:- According to Ld A.R, the AO was not justified in deducing the brought forward losses and unabsorbed depreciation while computing deduction u/s 10B of the Act. The Ld A.R submitted that the contention of the assessee is supported by the decision rendered in the case of CIT vs. Yokogawa India Ltd [ 2016 (12) TMI 881 - SUPREME COURT] Accordingly we restore this issue to the file of the AO for examining the claim of the assessee by duly considering the decision of Hon ble Supreme Court, referred above. Method of allowing set off of brought forward losses and unabsorbed depreciation - HELD THAT:- This issue also needs to be restored to the file of the AO, as the decision taken in the earlier grounds shall have impact on this issue. Accordingly we restore this issue to the file of AO.
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2019 (5) TMI 1263
Disallowance of deduction u/s 80HHC - scope of amendment - claim the benefit of 3rd Proviso to 80HHC (3) without complying with any conditions laid down therein - HELD THAT:- 3rd and 4th proviso to Section 80HHC inserted by taxation law (Second Amendment Act, 2005) would not operate retrospectively, and period prior to the same and the cases of exporters having turnover below 10 crores and also the exporters with turnover above 10 crores should be treated similarly, and even the exporters with turnover exceeding 10 crores would be entitled to claim the benefit of 3rd Proviso to 80HHC (3) without complying with any conditions laid down therein. In the facts and circumstances involved in this matter, we have no hesitation to hold that this case is squarely covered by the decision of the Hon ble Apex Court in the case of Avani Exports . [ 2015 (4) TMI 193 - SUPREME COURT] and, therefore, the deduction u/s 80HHC of the Act shall be calculated in accordance with this decision. Decision of the Hon ble Apex Court is the law of the land and the authorities cannot refuse to follow the same, when once it is brought to their notice. 18. With this view of the matter, we find force in the submissions of the Ld. AR that the deduction u/s 80HHC has to be computed by giving benefit of the decisions of the Hon ble Apex Court in the case of Avani Exports (Supra). The assessee to provide the working for such a re-computation before the Ld. A.O and the Ld. A.O will verify and extend the benefit of the decision of the Hon ble Apex Court in thecae of Avani Export (Supra) to the case of the assessee.- Decided in favour of assessee.
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2019 (5) TMI 1262
Levy of penalty u/s 271AAB - additional income declared in pursuance of search - HELD THAT:- In the instant case, in the absence of any incriminating documents, no corroboration of income declared under s.132(4) per se is available. Thus, such additional income on the basis of standalone statement under s.132(4) of the Act would not fall within the sweep of expression undisclosed income contemplated for the purposes of section 271AAB of the Act as held by the Coordinate Bench in group cases. In parity with the decision rendered in the group cases in identical set of facts, we are disposed to hold in favour of the assessee. The appellate order passed by the CIT(A) is accordingly set aside and the Assessing Officer is directed to delete the penalty so imposed u/s.271AAB - Decided in favour of assessee.
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2019 (5) TMI 1261
Addition made u/s.68 - un-served notices issued u/s.133(6) - HELD THAT:- The assessee is not only provided all the relevant documentary evidences but even the Assessing Officer in the remand report mentioned that he personally inspected 9 out of those 10 disputed creditors, meaning thereby existence of these creditors are established. As decided in M/S. ORCHID INDUSTRIES PVT. LTD. [ 2017 (7) TMI 613 - BOMBAY HIGH COURT] assessee has produced on record the documents to establish the genuineness of the party such as PAN of all the creditors along with the confirmation, their bank statements showing payment of share application money. It was also observed by the Tribunal that the Assessee has also produced the entire record regarding issuance of shares i.e. allotment of shares to these parties, their share application forms, allotment letters and share certificates, so also the books of account. The balance sheet and profit and loss account of these persons discloses that these persons had sufficient funds in their accounts for investing in the shares of the Assessee. In view of these voluminous documentary evidence, only because those persons had not appeared before the Assessing Officer would not negate the case of the Assessee. See ORISSA CORPORATION PVT. LIMITED [ 1986 (3) TMI 3 - SUPREME COURT] and M/S. GAGANDEEP INFRASTRUCTURE PVT. LTD. [ 2017 (3) TMI 1263 - BOMBAY HIGH COURT] - Decided in favour of assessee.
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2019 (5) TMI 1260
Penalty u/s 271AAA - income surrendered during the course of search seizure action u/s 132 - recording of satisfaction in the assessment order before initiating penalty - HELD THAT:- We are of the considered view that the CIT (A) has deleted the penalty on the wrong premise that the AO has not recorded his satisfaction in the assessment order itself as to the reasons why he was satisfied that penalty u/s 271AAA should be initiated. Because in the assessment order AO sought to initiate the penalty proceedings u/s 271AAA qua the surrendered amount during search operation which is in accordance with the provisions contained in the section. Even otherwise, all the conditions laid down to initiate the penalty proceedings u/s 271AAA are complete as discussed in the preceding paras. Failure to substantiate the manner in which the undisclosed income as derived and liability to penalized as required u/s 271AAA(2) - In the instant case, instead of complying with the provisions laid down u/s 271AAA (2) to specify the manner in which the surrendered income has been derived and to substantiate the manner in which the undisclosed income was derived, assessee merely harped upon his statement that the surrender is being made to buy peace and to avoid litigation with the Department in the spirit of cooperation, to avail of the escape route from the penalty under sub-section (2) of section 271AAA. So, when the assessee has failed to specify the manner and substantiate the manner in which the undisclosed income was derived rather embark upon the mercy plea that he is making surrender to buy peace of mind and avoid litigation, he is not entitled for the benefit of section 271AAA(2) of the Act. Following the decision rendered in case cited as Pr.CIT vs. Smt. Ritu Singal [ 2018 (3) TMI 593 - DELHI HIGH COURT] we are of the considered view that ld. CIT (A) has erred in deleting the penalty u/s 271AAA, hence appeal filed by the Revenue is hereby allowed and penalty order passed by the AO is restored. - Decided in favour of revenue
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2019 (5) TMI 1259
Penalty u/s 271D - loan transaction took place between the assessee and her parents and brother - 'reasonable cause' under section 273 B - HELD THAT:- The Delhi Bench of the Tribunal in the case of Sunil Kumar Sood vs. Jt. CIT [ 2018 (6) TMI 1122 - ITAT DELHI] held that where the assessee has taken loan from his wife for the purchase of house which is for the benefit of the whole family, penalty levied u/s 271D of the Act is not justified. Various other decisions relied on by the assessee in the synopsis also supports her case wherein under identical circumstances where the assessees had received loans in cash from close family relations, penalty levied u/s 271D was deleted. Since the assessee, in the instant case, has received cash loan from her parents and brother to meet the stamp duty cost for purchase of a house property for her own living, therefore, that it is not a fit case for levy of penalty u/s 271D of the Act and the provisions of section 273B will come to the rescue of the assessee as a reasonable cause. therefore, set aside the order of the CIT(A) and direct the JCIT to delete the penalty. - Decided in favour of assessee.
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2019 (5) TMI 1258
Revision u/s 263 by CIT - addition made by the TPO though but not added by in the computation of book profits u/s 115JB - whether the accounts have been prepared by the assessee in accordance with the provisions of Part II Part III of Schedule VI of the Companies Act, 1956 together with applicable accounting standards ? - HELD THAT:- The accounts have been prepared in proper compliance with applicable accounting standards. There is no evidence brought on record by the ld. CIT that the accounts of the assessee have not been approved by the shareholders in the General Body Meeting or they have been subject to any enquiry by the Registrar of Companies for non-compliance to any accounting standards. Hence, the entire observations of the ld. CIT with regard to verification of compliance of provisions of section 297 of the Companies Act, compliance to accounting standards i.e. AS-18, AS-21 and AS-23 are totally irrelevant and not germane to the issue under consideration in the facts and circumstances of the assessee s case. The issue as to whether the transfer pricing addition made by the ld. TPO had to be added back while computing book profits u/s 115JB was the subject-matter of adjudication by the Coordinate Bench of the Delhi Tribunal in the case of M/s Cash Edge India (Pvt.) Ltd. vs. ITO [ 2016 (1) TMI 598 - ITAT DELHI] This decision of the Delhi Tribunal was duly brought to the attention of the ld. CIT while giving reply to show cause notice issued u/s 263 and the ld. CIT conveniently ignored the same and does not whisper about the same in his final finding while proceeding to treat the order of the ld. A.O as erroneous and prejudicial to the interest of the revenue. CIT had only mentioned in Para 5 of his order that the transactions with related parties and associated enterprises require elaborate examination by A.O by conducting detailed enquires and verifications in the light of provisions of Companies Act, relevant accounting standards and income tax Acts. We find that the ld. CIT had not specifically pointed out any exact error committed by the ld. A.O while framing the assessment. Instead, the ld. CIT only directed the A.O to make detailed and roving enquires through the route of invoking revisional jurisdiction u/s 263. A.O is not empowered to make any addition or deletion to the net profit as per Profit Loss A/c prepared in accordance with Part II Part III of Schedule VI of Companies Act 1956 and relevant accounting standards thereon, other than those items specifically mentioned in Explanation 1 to section 115JB(2). Reliance in this regard is also placed on the decision in the case of CIT vs. HCL Comnet Systems and Services Ltd. [ 2008 (9) TMI 18 - SUPREME COURT] . There is no absolute allegation that the annual accounts of the assessee company were not passed/approved by the shareholders in the General Body Meeting. Thus order of the A.O was neither erroneous nor prejudicial to the interest of the Revenue warranting invocation of revisional jurisdiction u/s 263 - Decided in favour of assessee.
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2019 (5) TMI 1257
TDS u/s 194C - amount reimbursed towards advertisement expenditure incurred by the distributors - disallowance made u/s 40(a)(ia) - HELD THAT:- We are of the considered opinion that the payments made by the appellants to its regional distributors are nothing but reimbursement of expenses. However, in the interest of justice and fair play, we deem it fit to restore this issue to the file of the Assessing Officer. The assessee is directed to furnish all the invoices raised by its regional distributor on the basis of which it has made payment of ₹ 15.93 crores as reimbursement. AO is directed to verify the invoice and decide the issue whether the impugned payments are reimbursements or not. We would like to make it clear that after verification, the Assessing Officer is free to make any enquiry he deems it fit to be made in the hands of the regional distributor as per the provisions of law. - Appeal filed by the assessee is allowed for statistical purposes.
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2019 (5) TMI 1256
Condonation of delay of 125 days - wrong guidance and advice by the Tax Consultant - misunderstanding and inadequate advice about the correct remedy - HELD THAT:- On receipt of the order of the First Appellate Authority, assessee first approached the CIT(A) u/s 264 of the Act on 07.12.2017 instead of approaching the Tribunal for relief. The assessee filed the present appeal on 24.04.2018. Therefore, the delay, should be condoned Scope of limited scrutiny - case selected under CASS - the additions on the non-CASS issues - Turnover of the assessee as the same deferred from the turnover returned under the GST provisions - No approval from the superior authorities before the scrutiny scope is extended to non-CASS issues - HELD THAT:- As relying on SURESH JUGRAJ MUTHA VERSUS ADDL. CIT, RANGE-3, DHULE [ 2018 (5) TMI 1855 - ITAT PUNE] it is settled legal issue at the level of the Tribunal, Pune Bench, in the cases, selected under CASS, the additions on the nonCASS issues can only be made after obtaining due permission from the superior authorities and the said approval of the superior authorities in writing should be available on records. In this appeal, I find there is no whisper about the obtaining of such approval from the superior authorities before the scrutiny scope is extended to non-CASS issues. In any case, the Assessing Officer did not make any addition on account of the issues of sales of the assessee. Therefore, in my considered view, the said order of the Tribunal covers the common solitary preliminary issue raised before me in this appeal. Accordingly, the preliminary issue raised by the assessee in his appeal is allowed.
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2019 (5) TMI 1255
Admission of additional evidence - sufficient cause - CIT(A) appreciated the reasonable cause put forth by the assessee for delay in filing the appeal - HELD THAT:- In my view, approach of the CIT(A) appears to be incongruous and does not stand the test of reason. Rule 46A of the Rules prescribes circumstances under which additional evidence can be admitted after allowing opportunity to the AO. One of the conditions laid down in Rule 46A of the Rules is when there is sufficient cause for failure to produce the evidence before the AO. While evaluating sufficient cause for failure to produce evidence before the AO, the test of reasonableness and human probabilities must be applied so as to aid the object of assessment proceedings, i.e., determination of the income liable for taxation. Assessment proceedings and appellate proceedings under the Act, between the assessee and Revenue, are not adversarial proceedings. The ultimate object of assessment and appellate proceedings is to determine the correct income of the assessee liable for taxation and technicalities must not come in the way of determination of the correct total income. Therefore, the refusal by the CIT(A) to admit additional evidence, in the facts and circumstances of the case on hand, does not stand to reason. Claim of Exemption u/s 54 - in remand report AO has only remarked that there is a claim for exemption u/s 54 and that no return of income has been filed by the assessee for AY 2009-10 - HELD THAT:- No adverse remarks have been made by the AO with regard to the computation of LTCG as well as the entitlement to claim exemption u/s 54. It is, therefore, clear that the AO was satisfied about the sale / purchase of the said properties and the investment benefit available to the assessee u/s 54. In the remand report, the AO has only remarked that there is a claim for exemption u/s 54 and that no return of income has been filed by the assessee for Assessment Year 2009-10. This remark by the AO cannot be a factor to deny the assessee its legitimate claim for exemption u/s 54. There is no prohibition under the Act on the assessee in claiming exemption u/s 54 in case it has not filed a return of income. Such a legal claim can be put forth at any stage of assessment / appellate proceedings and should be considered on merits in the light of the details / documents / corroborative evidence filed in this regard. Having considered the entire material on record on this issue and taking into account the peculiar facts and circumstances of the case on hand, the assessee is entitled to exemption u/s 54 and therefore the entire sale consideration assessed by the AO is hereby deleted. - Decided in favour of assessee.
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2019 (5) TMI 1254
Allowability of dealers incentive - scope in remand proceedings - accrual or crystallization of expenses during the relevant previous year - HELD THAT:- We wish to re-emphasize here first of all that this is second round of litigation. This tribunal s co-ordinate bench s remand directions extracted hereinabove made it clear that the impugned dealers incentive had much accrued during the relevant previous year. It further concluded that same should have been allowed by the Assessing Officer (supra). The Revenue s fails to dispute the clinching fact that our earlier remand directions had restored back the issue to the Assessing Officer only to verify whether the assessee s impugned claim confirms to the relevant terms and conditions incorporated in the dealers incentive scheme or not. The Assessing Officer appears to have been found no such irregularity in the impugned claim in light of the relevant dealers incentive scheme filed during the course of consequential proceedings. We therefore see no reason to interfere with the CIT(A) s findings deleting the impugned disallowance in tune with tribunal s first round remand directions in these peculiar facts and circumstances - Decided in favour of assessee.
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2019 (5) TMI 1253
Deduction u/s 10A - non-filing the report in form No. 56F in original return which was filed with revised return of income - mandatory OR procedural in nature - assessee engaged in the manufacturing business of glass lenses and frames - HELD THAT:- It is an undisputed fact that the assessee has filed the report in the prescribed form before the completion of the assessment proceedings u/s 147. Therefore we are of the view that the assessee has sufficiently complied the provisions of section 10A for claiming the deduction. Hence in our considered view, no disallowance in the given facts and circumstances can be made due to non-filing of the report in the form 56F within the time as prescribed for the deduction u/s 10A. As relying on XAVIENT SOFTWARE SOLUTIONS (INDIA) PVT. LTD. VERSUS DCIT, CIRCLE-3, NOIDA [ 2018 (4) TMI 992 - ITAT DELHI] the assessee is entitled to the deduction u/s 10A. - appeal of the assessee is allowed.
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2019 (5) TMI 1242
Accrual of income - Demurrage/wharfage charges accrued to the assessee - assessee followed mercantile system of the accounting - existing right in favour of the assessee to receive the charges and the assessee accordingly billed for the same - HELD THAT:- SLP disissed.
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2019 (5) TMI 1241
Assessments made without reference to Section 10(37) and 145A - interest and the compensation - HELD THAT:- The income by way of interest and the compensation amount were declared on accrual basis. That the law with regard to the method of computation of the income came to be settled in the case of Commissioner of Income Tax Vs. Ghanshyam [ 2009 (7) TMI 12 - SUPREME COURT ] , wherein the Hon ble Apex Court was pleased to lay down the law that the computation of income sought to be made on receipt basis It is not in dispute that under the amended provision of sub-section 37 of section 10 of the Income Tax Act the income in the case of an assessee, being an individual or a Hindu undivided family, any income chargeable under the head Capital Gains arising from the transfer of agricultural land and such transfer is by way of compulsory acquisition under any law, or a transfer the consideration for which is determined or approved by the Central Government or the Reserve Bank of India and where such income has arisen from the compensation or consideration for such transfer received by such assessee on or after received, such income would not form part of the total income. During the course of arguments, the learned Senior counsel placed reliance on the provisions of Section 10(37) of the Income Tax Act which undoubtedly came to be inserted vide amendment dated 01.04.2005 and the provision of Section 145A came to be substituted with effect from 01.04.2010. Substantial question of law is answered in the affirmative. Appeal is allowed in part. The order under challenge is set aside. The appeal is remitted back to the competent authority for re-assessment in accordance with law and more particularly with reference to Sections 10(37) and 145A
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2019 (5) TMI 1214
Levy of penalty u/s 271D - availing loan in cash from father - HELD THAT:- We find from the facts narrated above that assessee had given reasonable cause for availing loan in cash from his father within the meaning of section 271D of the Act. Hence, the assessee would be out of the rigours of the levy of penalty u/s 271D of the Act. The assessee had placed reliance on the decision in the case of CIT vs. Smt. M. Yasoda [ 2013 (2) TMI 211 - MADRAS HIGH COURT] wherein the loan received by that assessee from her father-in-law was subjected to levy of penalty under section 271D of the Act and the Hon ble High Court ordered cancellation of penalty thereon. In view of the aforesaid facts and respectfully following the judicial precedent relied upon hereinabove, we direct the ld. A.O to cancel the penalty u/s 271D of the Act in the facts and circumstances of the case. Accordingly, the grounds raised by the assessee are allowed.
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Customs
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2019 (5) TMI 1252
Smuggling - Gold - Illegal importation into India - Baggage rules - release of seized Gold - service of SCN not made to petitioner - seized Gold disposed off without issuing SCN to petitioner - HELD THAT:- The record reveals that the seizure of the gold was made on 5th January, 2015. An SCN had to be served within a period of six months thereafter in terms of Section 110 (2) read with Section 124 (1) (a) of the Act. This is a mandatory requirement as has been explained in several decisions of this Court including Iqbal Hussain v. Union of India [ 2017 (3) TMI 704 - DELHI HIGH COURT ]. It was further explained in Chaganlal Gainmull v. Collector of Central Excise [ 1989 (11) TMI 59 - SUPREME COURT ] that if the SCN was not issued within six months from the date of seizure the consequence would be that the person from whom the gold was seized would become entitled to its return - Even the adjudication order in the present case would be illegal as the Commissioner passed the same ex parte without the SCN having been actually served upon the present Petitioner at all in the present case. The second illegality committed is the disposal of the seized gold without notice having been issued to the Petitioner - There is no explanation offered by the Respondents as to why they were constrained to dispose of the seized gold, when it was neither perishable nor hazardous. Also, there is no answer why it had to be disposed of without notice being issued to the person from whom it was seized. This is irrespective of whether the SCN was served or not - In the present case with the seized material not being perishable, being gold bars, there was no reason for the Respondents to have hurriedly disposed it off and that too without notice to the Petitioner. When it was plain that even the SCN was not served upon the Petitioner, there was no reason to proceed with disposal of the seized gold without notice. As far as the return of the seized gold is concerned, the Court has been presented with a fait accompli, with the Respondents already having hurriedly disposed of the said gold. Mr. Satish Aggarwala on instructions states that the proceeds collected during the auction were equal to the value of the gold being an amount of ₹ 93,34,783/- - Court accordingly directs that the Respondents will refund to the Petitioner the sum of ₹ 93,34,783/- (or the precise amount recovered by the Respondents by auction/sale proceedings) not later than 30th June 2019 failing which the Respondents will pay simple interest at 6% p.a. on the said sum for the period of delay. Petition allowed.
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2019 (5) TMI 1251
Applicability of Notification dated 16.2.2019 (Annexure P-8) - Import from Pakistan - Basic Customs Duty @ 200%, Social Welfare Surcharge @ 10% and IGST @ 28% - goods already entered into India on or before 16.2.2019 and bill of entry had already been filed - Release of the goods - HELD THAT:- We dispose of the present petition by directing respondent No.2 to take a decision on the representation dated 21.2.2019 (Annexure P-10), in accordance with law by passing a speaking order and after affording an opportunity of hearing to the petitioner within a period of 15 days from the date of receipt of the certified copy of the order.
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2019 (5) TMI 1240
Levy of penalty - Warehousing of goods - Goods missing when it was in their custody - Demand of duty along with interest on the missing bonded cargo - HELD THAT:- No enquiry was conducted by the Commissioner under Regulation 12 which is envisaged and the procedure as prescribed under Regulation 12 has not been complied with. Further, the impugned order is contradictory because the Commissioner in para 21 of the impugned order has dropped the proceedings against the appellant under Regulation 11 12 but in the order portion, he still imposed penalty of ₹ 50,000/- under Regulation 12(8) of the Handling of Cargo in Customs Area Regulations 2009. The impugned order is contradictory because the Commissioner in para 21 of the impugned order has dropped the proceedings against the appellant under Regulation 11 12 but in the order portion, he still imposed penalty of ₹ 50,000/- (Rupees Fifty Thousand only) under Regulation 12(8) of the Handling of Cargo in Customs Area Regulations 2009. Penalty not sustainable - duty of demand alongwith interest upheld - appeal allowed in part.
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2019 (5) TMI 1239
Refund of SAD - N/N. 102/2007-Customs dated 14/09/2007 amended by Notification No. 93/2008-Customs dated 01/08/2008 - Rejection on the ground that the refund has not been filed within one year of SAD payment - correctness of the order of original Adjudicating Authority - HELD THAT:- The refund claim of additional duty due to the exemption flowing out of Notification No. 102/2007 has to be filed within one year in view of the subsequent Notification No. 93/2008-Cus which still holds good and also in view of Section 27 of the Customs Act, 1962 - The Commissioner (Appeals) has committed an error while giving an expanded interpretation qua limitation to favour assessee. Refund not allowed - appeal allowed - decided in favor of appellant-Revenue.
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Insolvency & Bankruptcy
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2019 (5) TMI 1250
Admission of application under Section 9 of Insolvency and Bankruptcy Code, 2016 - settlement reached prior to the constitution of the Committee of Creditors - HELD THAT:- The parties have reached settlement prior to the constitution of the Committee of Creditors . Following the decision of the Hon ble Supreme in SWISS RIBBONS PVT. LTD. AND ANR. VERSUS UNION OF INDIA AND ORS. [ 2019 (1) TMI 1508 - SUPREME COURT] , we allow the Operational Creditor to withdraw the application. The impugned dated 7th January, 2019 is set aside. The application under Section 9 of IB C filed by 1st Respondent Operation Creditor is disposed of as withdrawn.
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2019 (5) TMI 1238
Initiation of Corporate Insolvency Resolution Process - declaration of Moratorium - debt amount in default for Financial Creditor - HELD THAT:- This Bench has not been informed whether any Information Memorandum is prepared by the Ld. RP and whether advertisement has been made inviting Expression of Interest (EoI). It is also not on record whether any Valuation Report is procured by RP. Rather as of now, as informed, the Insolvency Process is heading towards Liquidation of the company. On verification of description of the expenses, it is noticed that D P fees claimed at ₹1,59,74,250/- and likewise, rest of the fees such as Lawyer fees, meeting fees, the RP insurance appeared to be towards higher side. In the absence of explanation of each items, had to be supported by corroborative evidence, it is not possible on the part of this Bench to allow entire expenditure. This Bench is of the opinion that a guideline can be obtained from IBBI, New Delhi that whether any Regulation or any Notification about the fixation of remuneration of RP has been issued as a guiding factor. I, therefore, refer this problem i.e. fixation of CIRP cost, etc. to IBBI, New Delhi. On receiving the reply from IBBI, New Delhi, this Bench shall again consider this MA - application allowed in part.
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Service Tax
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2019 (5) TMI 1249
Commercial Training or Coaching Service or not - consideration received from the students towards the conduct of a test known as International English Language Testing System (IELTS) - HELD THAT:- A perusal the relevant clauses of the agreement clearly show that the agreement is with regard to the holding of the IECTS Test by the Appellant. There is nothing in the agreement which may require the Appellant to coach or train any candidate desires of appearing at the IELTS Test nor any consideration in terms of money is earmarked for this purpose. What has, therefore, to be determined is whether conduct of a test would amount to commercial training or coaching by a commercial training or coaching centre. Commercial training or coaching has necessarily to be provided by a commercial training or coaching centre which centre has been defined to mean any institute or establishment providing commercial training or coaching for imparting skill or knowledge or lessons on any subject or field. The holding of a test cannot by any stretch of imagination, be considered as imparting skill or knowledge or lessons on any subject or field. To arrive at a conclusion that the Appellant was conducting coaching or commercial training activity it was imperative for the Commissioner to have based his conclusion on some positive evidence in this regard, rather than drawing such an inference. In any case, for levy of service tax, there has to be an evidence that the Appellant was conducting commercial coaching or training. The contention of the learned Authorized Representative of the Department that the holding of the Test is itself a skill and, therefore, the Appellant is providing commercial training or coaching cannot also be accepted. No skill or knowledge is being provided to the candidates appearing at the test. Appeal allowed - decided in favor of appellant.
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2019 (5) TMI 1248
Differences in the the figures reflected in the ST-3 returns and those reflected in Form 26AS - demand of service tax - HELD THAT:- Revenue cannot raise the demand on the basis of such difference without examining the reasons for said difference and without establishing that the entire amount received by the appellant as reflected in said returns in the Form 26AS being consideration for services provided and without examining whether the difference was because of any exemption or abatement, since it is not legal to presume that the entire differential amount was on account of consideration for providing services. The SCN is not sustainable - appeal allowed - decided in favor of appellant.
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2019 (5) TMI 1247
Rejection of VCES declaration - wrongful declaration - Renting of Immovable Property Service - HELD THAT:- The appellant had filed declaration under VCE Scheme on 07.10.2013 in form VCES-1 declaring tax dues of ₹ 1,19,643/- for the period from April, 2011 to December, 2012. An acknowledgment in the form VCES-2 was issued to appellant on 10.10.2013. Subsequently discharge certificate in the form VCES-3 was issued on 30.10.2013. On 01.10.2014 show cause notice was issued making allegations that declaration under VCE Scheme filed on 07.10.2013 was substantially false. It is provided through Section 108 of Finance Act, 2013 that once a discharge certificate under Sub-section (7) of Section 107 is issued then revenue does not have authority to reopen any proceedings in respect of declaration made. Appeal allowed - decided in favor of appellant.
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2019 (5) TMI 1246
Taxability - Business Support Services - HELD THAT:- We note that the issue involved in the present appeal is relating to taxability under Business Support Services on guarantee issued by individual Director in his personal capacity for loan given by Banks to the Company and Company paying some commission to Director for the said guarantee being given. Learned Commissioner (Appeals) relying on Para 3.13 of letter dated 28/02/2006 issued by Joint Secretary TRU, Central Board of Excise Customs, New Delhi has held that as clarified by C.B.E. C. through said letter the present activity is not covered by Business Support Services and therefore, he set aside the order passed by Original Authority confirming demand. There are no contention by Revenue in respect of non-applicability of said clarification issued through letter dated 28/02/2006 by Joint Secretary TRU, Central Board of Excise Customs, New Delhi. Appeal dismissed - decided against Revenue.
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2019 (5) TMI 1237
Non-payment of service tax - Steamer Agent Service - period April 2001 to December 2005 - Review order under Section 84 of the Finance Act 1994 - Revenue sharing basis - HELD THAT:- There is no mention of the activity of booking of space by the appellant and sharing of profit for that purpose. The tenor of the agreement is on the lines of sharing of information and providing documents. Provision of documents as mentioned above is incidental to the Cargo Agent Service to shipping lines - we find force in the argument of learned AR that the services rendered by the appellant are directly or indirectly to a shipping line. Alternate claim of the appellants is that the amounts were received by them in foreign exchange and for that reason the same are not taxable - HELD THAT:- There is some force in the argument. However, as submitted by the learned AR the appellants did not produce any evidence to the effect that they receive the remuneration in foreign exchange and that the same was not repatriated - matter may be remanded to the original authority to verify from the books of accounts and the evidence to be submitted by the appellants to decide so as to the eligibility of the appellants. Appeal allowed by way of remand.
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2019 (5) TMI 1236
Extended period of Limitation - Refund to SEZ unit - consumption of services wholly in the SEZ - Service tax on finance charges paid for borrowing funds - demand confirmed by invoking the extended period of five years under the proviso to Section 73(1) of the Finance Act, 1994 - period of dispute is from 19 May, 2006 to 31 March, 2011 - Lending services received from International Finance Corporation and Asian Development Bank to the extent of ₹ 3,46,84,459/- - Lending services received from PROPARCO to the extent of ₹ 30,06,192/-. Lending services received from International Finance Corporation and Asian Development Bank to the extent of ₹ 3,46,84,459/- - HELD THAT:- Appellant does not dispute that the ECBs have been obtained from the International Finance Corporation and the Asian Development Bank. The Appellant also does not dispute that it paid commitment charges/front end fees and certain other expenses to both the Asian Development Bank and the International Finance Corporation - What is, however, contended by the Appellant is that in view of the provisions of the Asian Development Bank, 1956 and the International Finance Corporation (Status, Immunities and Privileges) Act, 1958 and the terms of the agreement entered into by India, the Appellant was not liable to pay any Service Tax. In regard to the applicability of Goods Service Tax on Asian Development Bank and International Finance Corporation, the Government of India issued a Circular dated 01 January, 2019 clarifying that the services provided by the International Finance Corporation and Asian Development Bank are exempt from Goods Service Tax in view of the provisions of the two Acts. This issue was examined by the Division Bench of this Tribunal in COASTAL GUJARAT POWER LTD VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI-I [ 2016 (12) TMI 229 - CESTAT MUMBAI] both with regard to the International Finance Corporation and the Asian Development Bank where it was held that When the enactments that honour international agreements specifically immunize the operations of the service provider from taxability, a law contrary to that in the form of section 66A which legislates such operations into tax net will not prevail. The finding recorded by the Adjudicating Authority in regard to Issue that the Appellant is required to pay Service Tax on the lending services received from International Finance Corporation and Asian Development Bank has to be set aside - demand set aside. Lending services received from PROPARCO to the extent of ₹ 30,06,192/- - Notifications dated 03 March, 2009 and 20 May, 2009 - HELD THAT:- The Notification dated 03 March, 2009 grants exemption to the taxable services specified in Section 65 (105) of the Finance Act, 1994 provided in relation to the authorized operations in the Special Economic Zone and received by a developer or units of a Special Economic Zone, whether or not the said taxable services are provided inside the Special Economic Zone, from the whole of the Service Tax leviable thereunder under Section 66 of the Finance Act. The proviso, however, stipulates that the exemption claimed by the developer or units or Special Economic Zone shall be provided by way of refund of Service Tax paid on the specified services used in relation to the authorised operations in the Special Economic Zone. It would, therefore, be seen that prior to 20 May, 2009, the exemption could be claimed by way of refund of Service Tax paid on the specified services used in relation to the authorised operations in the Special Economic Zone. However proviso (c) was amended by Notification dated 20 May, 2009. The amended proviso (c) stipulates that the exemption claimed by the developer or units of Special Economic Zone shall be provided by way of refund of Service Tax paid on the specified services except for services consumed wholly within the Special Economic Zone. It is, therefore, clear that on and after 20 May, 2009 the exemption from payment of Service Tax can be claimed if the services are consumed wholly within the Special Economic Zone. The show cause notice does not contain a charge that the Appellant had utilized the borrowings for any other service outside the Special Economic Zone. In fact, the show cause notice did acknowledge that the funds received by the Appellant were to be utilized for the construction and placing into operation the Kochi Terminal, but the show cause notice further stated that the funds borrowed could be used for receiving other services/goods in connection with the setting up of SEZ Unit . The show cause notice, therefore, only mentions that the funds borrowed by the Appellant could be used for other services/goods in connection with the setting up of the SEZ Unit but does not mention that the funds had actually been used by the Appellant outside the Special Economic Zone - The Adjudicating Authority, therefore, could not have drawn an inference without any evidence that the funds borrowed by the Appellant could have been used outside the Special Economic Zone. The contention of the Appellant that the borrowings were used wholly within the Special Economic Zone entitled the Appellant to examine under the Notification dated 03 March, 2009, as amended on 20 May, 2009, therefore, deserves to be accepted. Appeal allowed - decided in favor of appellant.
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2019 (5) TMI 1235
Maintainability of appeal - the appeal had been filed beyond the period of two months from the date of receipt of the order - no application for condoning the delay in filing the appeal before the Commissioner is filed - Section 85(3A) of the Finance Act, 1994 - HELD THAT:- The appellant claims to have received the order dated 30 April 2014 passed by the adjudicating authority on 12 June, 2015. The period of two months as contemplated under Section 85(3A) of the Act would expire on 11 August, 2014. The appeal was filed before the Commissioner (Appeals) on 3 September, 2014. The appellant claims that an application for condoning the delay in filing the appeal was filed before the Commissioner (Appeals) because the appellant was under a bona fide belief that the limitation for filing the appeal is three months. This according to the appellant, is because three months is provided in sub-section (3) of Section 85 of the Act. Under sub-section (3) of Section 85, the appeal can be filed before the Commissioner (Appeals) within three months from the date of order if the order of the adjudicating authority is before the date on which the Finance Bill, 2012 received the assent of the President. However, under sub-section (3A) of Section 85 of the Act, the appeal can be filed within two months from the date of the order of the adjudicating authority if the order is passed after the Finance Bill, 2012 received the assent of the President. It is also sought to be contended by the learned Counsel for the appellant that neither was any objection raised before the Commissioner (Appeals) nor was any objection taken by the office of the Commissioner (Appeals) regarding the appeal not having been filed within two months from the date of receipt of the order of the adjudicating authority. It is appropriate to remand the matter to the Commissioner (Appeals) with liberty to the appellant to move an application for condoning the delay since the appeal was filed within the extended period of one month for which the Commissioner (Appeals) could condone the delay - appeal allowed by way of remand.
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2019 (5) TMI 1234
Erection, commissioning and installation Service - non-payment of service tax - HELD THAT:- The Dy. Commissioner of Service Tax Division, Udaipur have verified the records and after verification of balance sheet, bills and various assessment orders passed by Commercial Tax Department, Udaipur have stated that the appellant has paid sales tax/VAT on certain quantities cleared by them and these are sales - Along with that report the Dy. Commissioner has enclosed the documents, which have been examined and verified by the Dy. Commissioner, which shows that the report filed by Dy. Commissioner is on the basis of verification of documents and same has been produced before the adjudicating authority for consideration. In the impugned order, instead of examining the documents, the adjudicating authority has reported that he had perused the said report and found that factually nothing has been verified - the said finding is without application of mind and without examining the documents and reports produced before him. Matter remanded back to the adjudicating authority to consider the report of the Dy. Commissioner dated 30 January, 2012 and verify all the document relied upon by Dy. Commissioner while preparing the report and thereafter to pass an appropriate order in accordance with law - appeal allowed by way of remand.
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2019 (5) TMI 1233
Valuation - charge for the diesel reimbursed by the service recipients - Management, Maintenance and Repair Service - Business Auxiliary Service - Section 67(1) of the Act read with Rule 5 of the Service Tax (Determination of Value) Rules, 2006 - HELD THAT:- The appellants were required to perform various services including diesel filing. It needs to be remembered that the scope of this service was limited to the activity of filling the diesel in DG sets for which the appellants were paid service fee of ₹ 500/- or ₹ 750/- per site. The diesel was to be procured from the filling stations authorised by the service recipients and the value of diesel was paid to the appellants only upon appropriate verification. The value of diesel was in the nature of reimbursement. The appellants had paid service tax on the element of service involved in filling of diesel and by no stretch of imagination it can be urged that any service was rendered by the appellants corresponding to the value of diesel. The valuation of taxable service for charging service tax could only be the gross amount charged for providing such taxable services which in the present case is the filing of diesel and any other amount cannot be a part of the valuation as it cannot be an amount for such taxable services. The Department cannot go beyond the contract value and arrive at the value of taxable service merely because of the use of the word gross in Section 67 of the Act. The use of the word charged makes it clear that it refers to the amount billed by the service provider to the service recipient and, therefore, unless an amount is charged by the service provider to the service recipient, it does not enter into the equation for determining value on which service tax is payable as was observed by the Supreme Court in CST, DELHI VERSUS M/S. BHAYANA BUILDER PVT. LTD. [2018 (5) TMI 721 - CESTAT NEW DELHI] . The cost of free supply of goods provided by the service recipients to the service provider is neither an amount charged by the service provider nor can it be regarded as a consideration for the service provided by the service provider. It has no nexus with the taxable services for which value is sought to be determined. The impugned order relies upon Rule 5(1) of the Rules which Rule, has been struck down by the Supreme Court in UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [2018 (3) TMI 357 - SUPREME COURT] as being ultra vires the provisions of Section 67 of the Act. Appeal allowed - decided in favor of appellant.
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2019 (5) TMI 1232
Demand of Service tax - short term accommodation services - the contention of the appellant in respect of the same was that the tariff was less than ₹ 1,000/- per room per day in respect of the said services and there were exemption under N/N. 31/2011 dated 25th April, 2011 for tariff billow ₹ 1,000/- and exemption resulted in nil rate of duty - HELD THAT:- The learned Commissioner (Appeals) has not rejected the ledgers maintained. Further, learned Commissioner (Appeals) should have verified the said ledgers vouchers and satisfied himself than believe in the information available on the website. The said observation are unsustainable in the absence of any credible evidence relied upon by the learned Commissioner (Appeals) - appeal allowed - decided in favor of appellant.
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2019 (5) TMI 1231
Refund claim - rejection for the reason that the appellant had not fulfilled the conditions stipulated under the Notification No. 12/2013 which is extracted at page-2 of the SCN - HELD THAT:- For the periods in dispute viz., from 2013-14, both the SCNs dated 25.05.2017 have been issued and it appears that the appellant had submitted that it had effected reversal of credit which was also disclosed in their returns for April, 2013 to September, 2014. There is no dispute as to the appellant satisfying the other conditions of the said Notification and it is the settled position of law that a mere procedural lapse cannot take away the substantial benefit, more so, when there is no dispute as to the eligibility to the benefits of a beneficial Notification. Nor is the case of Revenue that there has been violation to any other provision/s of the Statute or Rules. Undisputedly, there was some requirements lacking in terms of Notifications which, upon being pointed out per SCN, the appellant has complied with. The denial of refund is unsustainable - appeal allowed - decided in favor of appellant.
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2019 (5) TMI 1230
Extended period of Limitation - ancillary activity for providing Digital Signature Certificates (DSC) - Business Support Service or not - activity is related to sovereign function or not - Whether the demand has to be held as time barred and the penalty has to be set aside? - difference of opinion - majority decision - HELD THAT:- The learned Member (Judicial) have recorded that the appellants had reflected all the transactions in the balance-sheet as also raised invoices for the same and therefore, it cannot be held that there was any suppression on the part of the appellants. Appellant had also referred the correspondence between Commissioner and appellants as also between appellant and Office of Controller of Certify Authority, Ministry of Communication Technology. It was, further, recorded that all the related documents like audited balance-sheet was submitted by the appellant to other Tax Authorities like Income Tax. I note that the learned Member (Judicial) have therefore, held that there was no suppression on the part of the appellant. In the present case since suppression could not be established therefore, I agree with the views expressed by learned Member (Judicial) that the demand was barred by limitation - since the demand does not sustain for extended period, therefore, the invocation of penal provisions is not justified. The majority decision is that the demand raised by way of invoking the extended period of limitation is required to be held as time barred by limitation. A small part of demand falling under normal period may be requantified and recovered by Assistant Commissioner alongwith applicable interest - Penalty is set aside. Appeal allowed in appellant.
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2019 (5) TMI 1229
Nature of activity - service or manufacture? - Business Auxiliary service - demand on the ground that job work undertaken by them amounts to production of goods as per Sec.65 (105) (zzb) of the Finance Act, 1994 - HELD THAT:- It is not in dispute that the definition of business auxiliary services prior to 16.06.2005 included production of goods on behalf of the clients . This definition has been revised and it became production or processing of goods for, or on behalf of the clients on 16.06.2005. In the instant case all the services were rendered for the client and not on behalf of them to some other party. As can be seen from the scope of work, the respondent only did some processing of the goods and had not produced any goods. There is no infirmity in the findings of the lower authorities that the services were not exigible to service tax during the relevant period. Appeal dismissed - decided against Revenue.
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Central Excise
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2019 (5) TMI 1276
Doctrine of Bias - Refusal to transfer appeal from Commissioner (Appeals) Ludhiana to some other Commission (Appeals) - transfer sought on the ground that wife is holding the charge of Commissioner (Appeals) and the officer who reviewed the order passed by the Assistant Commissioner and directed him to file appeal on his behalf before the Commissioner (Appeals) is her husband - there is reasonable apprehension in the mind of the petitioner about bias in deciding his appeal pending before Commissioner (Appeals), Ludhiana - principles of natural justice. HELD THAT:- In view of the settled legal position enunciated above, the following broad principles emerge:- i) Question of bias depends on the facts and circumstances of each case. It cannot be an imaginary one or come into existence by an individual s perception based on figment of imagination. ii) Justice should both be done and be manifestly seen to be done. Nothing is to be done which creates even a suspicion that there has been an improper interference with the course of justice. iii) To adjudge the attractability of plea of bias, a court is required to adopt a deliberative and logical thinking based on the acceptable touchstone and parameters for testing such a plea and not to be guided or moved by emotions or for that matter by one s individual perception or misguided intuition. The petitioner alleges that Mrs. Charul Baranwal is holding the charge of Commissioner (Appeals) Ludhiana and she is wife of Commissioner who had reviewed order passed by Assistant Commissioner and directed him to file appeal on his behalf before Commissioner (Appeals). Thus, the husband is holding charge of appellant whereas the wife is holding charge of appellate authority. Consequently, there is reasonable apprehension in the mind of the petitioner about the bias. The communication dated 5.11.2018, Annexure P.8 passed by Chief Commissioner, CGST, Chandigarh in refusing to transfer appeal of the petitioner from Commissioner (Appeals) Ludhiana to some other Commissioner (Appeals) is set aside. The appeal of the petitioner is transferred from Commissioner (Appeals), Ludhiana to Commissioner (Appeals), Jalandhar, who will decide the same afresh after hearing the parties in accordance with law. Petition allowed.
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2019 (5) TMI 1245
CENVAT Credit - inputs - heavy duty racks used in their factory where they are manufacturing wiring harness and battery cable/terminal - HELD THAT:- It stands held in various decisions that racks are required to be used for handling of raw materials as also their final product, which is a process integrally connected with the manufacture of final product and there is nothing in the definition of input , which would exclude the same. Even in terms of the said Exclusion (E), the goods, which have no relationship with the manufacture of a final product, have to be excluded from the definition of Input . As such, the criteria for exclusion is relationship with the manufacture of final product . Various decisions have held that the use of racks for storage of raw materials and finished goods is a process integrally connected with the manufacture of the final products. As such, the use of racks has to be held as related with the manufacture of the final product, thus, not making Exclusion Clause (E) is applicable. Extended period of limitation - HELD THAT:- The demand stands initiated against the appellant by invoking the longer period of limitation - In the light of the law declared by the Tribunal in various decisions holding that racks as cenvatable, the bonafide belief entertained by the assessee that such racks are cenvatable cannot be brushed aside. Otherwise also, the appellant was availing the credit by reflecting the same in their cenvat credit account, in which case, no malafide can be attributed to them so as to invoke the extended period - demand barred by limitation. Appeal allowed - decided in favor of appellant.
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2019 (5) TMI 1244
CENVAT Credit - duty paying documents - credit availed on the strength of supplementary invoices issued by the subsidiary companies of Coal India Limited i.e. M/s. South Eastern Coalfields Limited (M/s. SECL) against the coal receipts despite that the appellants units has been closed since June, 2013 - HELD THAT:- In the present case, admittedly the supplementary invoices on which credit has been availed were issued in March and May 2013 and the credit there upon has been availed in March 2014, December, 2014 and January, 2015. Thus, the credit has neither been availed immediately on the receipt of inputs nor has been availed within the six months of the issue of the receipts. It becomes clear that while availing the said cenvat credit assessee has contravened the time limit of both the provisions relevant for the availment of the cenvat credit even on supplementary invoices. The argument of the appellant of not receiving the invoices in time and the emphasis upon RTI application is not sufficient to extend any benefit in favour of the assessee because as per the Rules of Interpretation of Law, the language of the statute has to be read strictly in terms of the language therein. Both the Rules as quoted above have no ambiguity as far as the time for the availment of cenvat credit is concerned. There is nothing nor even the RTI applications which can give any reason to have an extended interpretation to both these provisions. Appeal dismissed - decided against appellant.
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2019 (5) TMI 1243
Service/communication of Order - relevant date - dismissal of appeal on limitation - whether the date of communication of the order-in-original has to be taken as 12 September, 2017, when the order was served on the security guard, as the factory was lying closed? - HELD THAT:- Section 37C provides that all notices shall be served by tendering or sending it by registered post with acknowledgement due or by speed post or approved courier to the person to whom it is intended or his authorised agent, if any. In the present case, it appears that the appellant also has neglected in making proper arrangement for receipt of their mail/dak. However, as the factory was lying closed, the notice was actually delivered to the management of the appellant only on 25 November, 2017 when the security guard delivered to the notice to the proper person, that can only considered as the effective date of service. The purpose of the notice is to put the requisite person on notice or alert so that he can take proper steps. Thus, the earlier date i.e. 12 September, 2017 was not the proper service on the security guard. The impugned order is set aside and appeal allowed by way of remand with direction to the learned Commissioner (Appeals) to decide the appeal on merit.
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2019 (5) TMI 1228
Refund of duty paid for non-operative period - manufacture of SS Patta/ Patti - Compound Levy Scheme - Department formed the opinion that there is no provision in the said Notification for refund of duty paid for the non operative period of the machines during the month - HELD THAT:- There is no dispute about the fact that the appellant had regularly been opting for the compounded levy scheme as provided vide Notification No. 17/2007-CE dated 01 March, 2007. It is also an admitted fact that for the month of October 2016 and February 2016 for which the refund has been applied for by the appellant, all the cold rolling machines of the appellant were not functional, one or the other thereof being dismantled. The only dispute is that according to the Department since the machine was dismantled in the mid of the month pro-rata benefit is available only to the assessee who has opted for the compounding scheme for the first time which admittedly is not the case of appellant. Whereas, according to the appellant, the Notification makes no such distinction. Perusal of Condition 3 proviso 2 of the Notification makes it clear that this proviso talks about the discharge of duty liability of the assessee for the month in which he has moved his application opting for the said compounding fee, as required under Rule 2 of the said Notification, and in such a circumstance, this proviso says that the payment of duty shall be made as calculated on pro-rata basis. This observation makes it clear that the second proviso is not applicable in case where the benefit of compounding scheme is to be availed by the assessee in the form of a refund when any of its rolling machine has not been functional for any number of days in a given month. The duty of excise can only be levied in accordance of Section 3 of the Central Excise Act, 1944. In accordance whereof this duty is leviable only on manufacture of excisable goods and the Department can only collect the duty on the machines manufacturing excisable goods - When this second proviso is read alongwith the said Section 3, the argument of the learned Departmental Representative justifying the findings of the Commissioner (Appeals) becomes absolutely redundant. Appeal allowed - decided in favor of appellant.
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2019 (5) TMI 1227
SSI Exemption - use of brand name - Manufacture of Homeopathic Medicines - Medicaments used in Bio-chemic System and not bearing the brand name - benefit of N/N. 03/2005-CE dated 24.02.2005 - HELD THAT:- Admittedly, SBL stands as an abbreviation of the assessee s name and the expression WORLD CLASS HOMOEOPATHY cannot be considered to be a brand name or trade name in the light of the explanation attached to the notification - appeal dismissed - decided against appellant.
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2019 (5) TMI 1226
Valuation - inclusion of subsidy in the assessable value - disbursement of the sales tax amount as Subsidy - section 4 of CEA - HELD THAT:- In the present case, the Appellants in terms of the Scheme had deposited the entire amount of VAT collected. It is this amount that is used as a measure for granting financial assistance to be subsequently provided. The learned Authorised Representative has, however, placed reliance on the decision of the Tribunal in CCE ST, RAIPUR VERSUS. M/S. JAYASWAL NECO INDUSTRIES LTD. [ 2015 (8) TMI 963 - CESTAT NEW DELHI] and M/S HONDA MOTORCYCLES SCOOTERS INDIA PVT. LTD. VERSUS CCE, DELHI-III [ 2016 (9) TMI 533 - CESTAT CHANDIGARH] , to contend that the Subsidy should be included in the Transaction Value . It needs to be noted that these two decisions are not connected with the Scheme under consideration in these appeals, but relate to Remission Schemes and the decision of the Supreme Court in COMMISSIONER OF CENTRAL EXCISE, JAIPUR-II VERSUS M/S. SUPER SYNOTEX (INDIA) LTD. AND OTHERS [ 2014 (3) TMI 42 - SUPREME COURT] has been relied upon. The nature of Scheme in the present Appeals are entirely different as Subsidy and not remission has been provided to the Appellants under the Scheme. Appeal allowed - decided in favor of appellant.
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2019 (5) TMI 1225
Captive consumption - benefit of N/N. 67/95 of the Central Excise - manufacture of Toolings which have been captively used for manufacture of final product and invoice was raised for the same - HELD THAT:- The Adjudicating authority as well as the learned Commissioner (Appeal) have not applied their mind and perused the records and pass the order in routine manner. As we have found from the record that appellant are not manufacturer of the tooling in question therefore, question of payment of duty does not arise - Appeal allowed - decided in favor of appellant.
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2019 (5) TMI 1224
Excisability - Job-work - scrap generated at the end of job worker - Rule 4 (6) of Cenvat Credit Rules, 2004 - Revenue entertained a view that scrap generated at the end of job worker is dutiable in the hands of the appellant and appellant has not pay duty thereof - HELD THAT:- Admittedly, in this case, the job worker has paid duty on the scrap, which is generated during the course of job work. As duty has already been paid on the said scrap, therefore, no duty is payable by the appellant, otherwise, it will be the duty has been demanded twice. Similar issue has been dealt by this Tribunal in the case of M/S. NATIONAL ENGINEERING INDUSTRIES LTD. VERSUS C.C.E. JAIPUR-I [ 2015 (9) TMI 769 - CESTAT NEW DELHI] , wherein this Tribunal held that waste and scrap generated by job worker while processing the goods sent by the principal manufacturer, the Principal manufacturer is not liable to pay duty on such waste and scrap. Thus, as the scrap generated at the end of job worker has already suffered duty in job worker s end therefore, the appellant is not required to pay duty thereon - appeal allowed - decided in favor of appellant.
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2019 (5) TMI 1223
Condonation of delay of 578 days in filing appeal - Section 35B(5) of the Act, 1944 - HELD THAT:- In the present case, the appellant who is the Director of the Company was aware of the order passed by the adjudicating authority as it was received by him on 12 May, 2017. The Director was also aware that an appeal could be filed before the Tribunal, as the Director was a party in Writ Petition in the Delhi High Court where it was sought to be contended that the Writ Petition should be entertained since the requirement of pre-deposit before the Tribunal was onerous. Even after the decision of the Supreme Court on 23 January, 2018 that required the Director to file an appeal before the Tribunal within 30 days from the decision of the Supreme Court, the Director filed the appeal only on 11 March, 2019. Thus, the Director kept quiet for a long period of time from 23 January, 2018 up to 29 January, 2019 even though the Director was not required to wait for a Resolution of the Company for filing an appeal. The delay for this long period from 23 January, 2018 up to January 2019, when the appellant initiated steps for filing the appeal has not been explained at all, much less sufficiently explained. We are, therefore, not convinced that there was sufficient cause for not presenting the appeal within the stipulated period - application for COD dismissed.
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CST, VAT & Sales Tax
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2019 (5) TMI 1222
Validity of assessment order - rejection of books of account as well as the declared turnover - HELD THAT:- Admittedly the applicant runs a bar with the restaurant, which in normal course runs at least 12 to 16 hours per day. It starts in the noon and it continued till late night. The location of the place of the business of the applicant is a very prestigious place situates at R.D.C., Ghaziabad. The place of business is surrounded by the commercial activities as well as residential. The estimate is based on the basis of the material recovered at the time of survey dated 19.10.2005 and the substantial relief has been allowed by the appellate authority by recording a categorical finding arrived at a conclusion - revision petition dismissed.
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2019 (5) TMI 1221
Levy of Turnover Tax - turnover of old, discarded materials (Stores) - taxable at the ate of 10% or not - N/N. 1225 dated 31.03.1992 - benefit of declaration certificate of C.S.D. filed before him along with application under Section 12B - principles of natural justice - HELD THAT:- None of the authorities have taken care of the amended notification or even the original notification which clearly provides the rate of tax at the rate of 6%8% and after amendment at the rate of 4% with effect from 1st April, 1992. The present dispute relates to the period starting with effect from 01.04.1997 which ended on 31st March, 1998, therefore, the rate of tax on old, discarded and unserviceable items will be 4%. Accordingly the order passed by the authorities below and the order of the Tribunal needs to correct. Furnishing of declaration certificate - HELD THAT:- Tribunal has not justified in rejecting the claim of the applicant by recording a finding that the applicant do not fulfill the condition of Section 12B of the U.P. Trade Tax Act. From perusal of the contents of Section 12B of the Act, it is crystal clear that the said additional evidence can be placed or produced by the assessee, whether oral or documentary before the appellate authority or 'Tribunal' which the assessing authority had wrongly refused to admit or which after exercise of due diligence was not within the knowledge of the assessee or could not be produced by the assessee before the assessing authority - In the present case, the assessing authority passed the assessment order on 30th March, 2000 and the first appeal was decided vide order dated 25th September, 2001. Admittedly, the declaration certificate has been issued by the CSD canteen after a gap of about four years from the date of transaction which was taken place before 31st March, 1998, hence in my opinion, the rejection of the claim of the applicant/revisionist is unjustified. The matter is remitted to the Tribunal to pass appropriate order - revision allowed by way of remand.
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2019 (5) TMI 1220
Invocation of Section 10-B of U.P. Trade Tax Act - revision by Commissioner - validity of assessment order - it was alleged by Deputy Commissioner (Executive) that the order of assessment was bad as the same has been passed by the assessing authority completely ignoring the inquiry report as well as the survey report - HELD THAT:- No case is made out to interfere as the finding recorded by the Deputy Commissioner (Executive) as well as by the Tribunal are finding of fact and are based on the material found at the time of inquiry and survey, which was not at all considered by the assessing authority while passed the assessment order. The Deputy Commissioner (Executive) rightly invoked the provision of Section 10-B. Revision dismissed.
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Indian Laws
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2019 (5) TMI 1219
Maintainability of petition - termination of services of appellant (teachers of affiliated or associated colleges other than those maintained by Government or local authority) - respondent management submitted that the writ petition was not maintainable against a private unaided college as it was not State within the meaning of Article 12 of the Constitution - HELD THAT:- The High Court held that merely because of affiliation to the CCS University, the writ petition was not maintainable against a private unaided college. The order is cryptic, nonspeaking and devoid of any consideration of the statutory provisions of the Act. The effect and consequences of the order of the Vice-Chancellor dated 16.07.2016 has also not been considered. Termination of services of the appellant on 04.06.2015 by a nonspeaking order with immediate effect - HELD THAT:- The college being affiliated to the University was bound by the provisions of the Act with its attendant consequences for noncompliance. The college having accepted the order of the Vice-Chancellor and acted upon the same by holding departmental proceedings cannot urge that it is bound by one part of the order and not the other. It cannot have the benefit of the order without complying with its obligations under the order. A bare reading of the statutory provision makes it manifest that prior approval of the Vice-Chancellor was mandatory before termination of the appellant. Having allowed the order to attain finality, it is not open for the college management to now urge that it was not bound to follow the procedure. The order of termination dated 24.04.2017 being in teeth of Section 35(2) of the Act is patently unsustainable. The termination is in teeth of the provisions of the Act, it is set aside. The appellant is held entitled to reinstatement - appeal allowed.
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2019 (5) TMI 1218
Insurance against burglary and/or house breaking - loss or damage was caused without forcible and violent entry to and/or exit from the premises - case of appellant is that conditions of exclusion under the policy document were not handed over to the appellant by the insurer and in the absence of the appellant being made aware of the terms of the exclusion, it is not open to the insurer to rely upon the exclusionary clauses - HELD THAT:- The District Forum came to a specific finding of fact that the insurer did not furnish the terms and conditions of the exclusion and special conditions to the appellant and hence, they were not binding. When the case traveled to the SCDRC, there was a finding of fact again that the conditions of exclusion were not supplied to the complainant. The NCDRC missed the concurrent findings of both the District Forum and the SCDRC that the terms of exclusion were not made known to the insured. If those conditions were not made known to the insured, as is the concurrent finding, there was no occasion for the NCDRC to render a decision on the effect of such an exclusion - the NCDRC was in error in reversing the decisions of the District Forum and the SCDRC which were grounded on a pure finding of fact that the terms of exclusion were not made known to the insured. The order passed by the District Forum shall accordingly, stand restored - appeal allowed.
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2019 (5) TMI 1217
Dishonor of Cheque - Jurisdiction - Court having jurisdiction under Sub-section (2) of Section 142 of the Negotiable Instruments Act, 1881 - contention raised on behalf of the petitioner herein is to the effect that when the complaint was instituted in June, 2012, the territorial jurisdiction lay with the Court at Delhi - HELD THAT:- The complainant s base branch of its bank is situated at 612, Ground Floor, Opp. Rani Mill, Delhi Road, Meerut 250002, U.P. In terms of Section 142 (2)(a) of the Negotiable Instruments Act, 1881, the branch of the Bank where the payee or holder in due course maintains the account, is the place where the offence under Section 138 of the Negotiable Instruments Act, 1881 can be enquired into and tried exclusively by the user of the word only . The verdict of this Court in Liugong India Pvt. Ltd. Vs. State (Govt. of NCT of Delhi) Ors. [2018 (4) TMI 620 - DELHI HIGH COURT] which bring forth the retrospective applicability of Section 142 (2) of the Negotiable Instruments Act, 1881 in terms of Section 142A(1) makes it apparent that in the circumstances of the instant case, the territorial jurisdiction to try the complaint cases under Section 138 of the Negotiable Instruments Act, 1881 in relation to the three cheques issued on behalf of the respondent no.1, the details of which have already been adverted to hereinabove, lies with the concerned Court at Meerut, U.P. Petition allowed.
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2019 (5) TMI 1216
Review petition - Appointment of an Arbitrator - applicability of Bihar Public Works Contract Dispute Arbitration Act, 2008 - HELD THAT:- Firstly in the present case pertaining to the State of Bihar, the Bihar Public Works Contract Dispute Arbitration Act, 2008 was not reserved for the asset of a President of India, hence, the same has not received the asset of the President of India, as provided for under Article 254 of the Constitution of India, secondly it is clear that in case of conflict between the State Act and the Central Act, Central Act would prevail in view of Section 8 of the Bihar Public Works Contract Dispute Arbitration Act, 2008, thirdly, only in cases where the agreement in between the parties is silent with regard to the arbitration being conducted in accordance with the provisions of Arbitration and Conciliation Act, 1996 or in case there is specific stipulation of resolution of the dispute by reference to the State Tribunal, the parties would have a forum of Tribunal under the Bihar State Act, 2008 for resolution of the dispute. The judicial propriety and judicial discipline requires this Court to follow the decision rendered by the Hon'ble Apex Court in identical matters. Since the agreement in question dated 26.2.2015, governed by the provisions of the Standard Bidding document and Clause-25 of the General Condition of contract, provides for settlement of dispute and arbitration to be conducted in terms of the provisions of the Arbitration and Conciliation Act, 1996, the Bihar Public Works Contract Dispute Arbitration Act, 2008 will not apply and the provisions of the Arbitration and Conciliation Act, 1996 will apply - Therefore, since the parties have agreed to resolve the disputes amongst them by taking recourse to the remedy available under Clause-25 of the agreement, i.e in terms of the provisions of the Arbitration and Conciliation Act, 1996, this Court deems it fit and proper to recall the order dated 4.10.2018 passed in CWJC No. 13292 of 2018, whereby and whereunder the petitioner was directed to move the Bihar Public Works Contract Disputes Arbitration Tribunal, and grants liberty to the petitioner to take recourse to appropriate remedy available under the Arbitration and Conciliation Act, 1996 for appointment of an Arbitrator for resolving the dispute, which has arisen in between the parties. In view of the fact that interim protection had been granted by this Court not only in the order dated 30.11.2018 passed in CWJC No. 13292 of 2018, but also by an order dated 10.4.2019 passed in the present case, this Court deems it fit and proper to extend the same protection to the petitioner herein for a period of eight weeks from today. Review Petition allowed.
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2019 (5) TMI 1215
Dishonor of Cheque - Sales tax returns as Proof of transaction between the complainant - Maintainability of an application u/s 311 of Cr.P.C. summoning the Assistant Commissioner of Commercial Tax to explain the process of submitting the returns - production of sale returns from April-2016 to March-2017 - HELD THAT:- It is not the case of the petitioner that no tax returns are filed and the very purpose of calling the Assistant Commissioner of Commercial Tax according to the petitioner who is an expert to explain the procedure for submitting the returns and also to explain regarding deficiency, mistakes, false filing or is there any illegal sale transaction. The Court below while considering the application in the impugned order also mentioned the reasons that 138 proceedings is a summary proceedings and the examination of the Assistant Commissioner of Commercial Tax in order to substantiate the defence is not at all necessary - in the very application nowhere it is stated that examination of the Assistant Commissioner of Commercial Tax is necessary to substantiate the defence of the petitioner herein. No doubt, the principles relied upon by the petitioner s counsel is with regard to giving a fair opportunity to the accused and I have already pointed out that in the application nowhere he has stated that the evidence of the Assistant Commissioner of Commercial Tax is very material to substantiate his defence and hence there is force in the contention of the respondent s counsel that only with an intention to protect the proceedings the very application is filed. I do not find any reasons to interfere with the order of the Court below in setting aside the order and no need to examine the Assistant Commissioner of Commercial Tax in order to prove the issues between the parties when the issuance of the cheque has not been disputed and the defence has already been taken that the cheque was issued only for the purpose of security and the same can be considered before the Court below whether it is for the security purpose or cheque is issued insofar as to the debt or liability - petition dismissed.
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