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Showing 501 to 520 of 1687 Records
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2019 (12) TMI 1187
Penalty u/s 271D - obtaining cash loan in contravention of section 269SS - the cash has been deposited directly in the Bank account of assessee, for which assessee has no control - reasonable cause u/s 273B - HELD THAT:- A.O. merely initiated penalty proceedings separately for violation of Section 269SS of the I.T. Act. He did not record any satisfaction under section 271D of the I.T. Act before initiating the penalty proceedings under section 271D of the I.T. Act. Further, the explanation of assessee on merit clearly suggest that assessee had a "reasonable cause" for violation to comply with the provisions of Law because no cash given directly to assessee but deposited at Shilong Branch over which assessee did not have any control. The assessee immediately acted on the matter and refunded the amount in question. The finding of fact recorded by Ld. CIT(A) have not been disputed through any evidence or material on record. Therefore, considering the issue in the light of "reasonable cause" under section 273B of I.T. Act, for failure to comply with the provisions of Law, no penalty is leviable in the matter.
Considering the above discussion in the light of judgment of the Hon'ble Supreme Court in the case of CIT vs. Jai Laxmi Rice Mills [2015 (11) TMI 1453 - SUPREME COURT] set aside the orders of the authorities below and cancel the entire penalty. - Decided in favour of assessee.
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2019 (12) TMI 1186
Assessment u/s 153A - Deduction u/s 80IA - HELD THAT:- In this case, there is no dispute that the assessee has filed the return of income on 28.11.2014 and the time limit for issue of notice u/s 143(2) was expired on 30.09.2015. As per the settled law, the AO is not permitted to make the addition u/s 153A in the completed assessments without the support of incriminating material. In the instant case, there was no incriminating material found and the assessee has filed the return of income claiming deduction u/s 80IA. The audit report in Form 10CCB was filed manually. Therefore, addition made by the AO without support of the incriminating material u/s 80IA is unsustainable, accordingly, we set aside the order of the Ld.CIT(A) and allow the appeal of the assessee.
Addition u/s 69A - survey u/s 133A was conducted in the business premises of Hira Panna Jewellers - HELD THAT:- Loose sheets were extracted from the computer of Hira panna Jewellers pertaining to the period of April 2014 from 01.04.2014, though it was mentioned as JKS, neither the assessee, nor Shri Mahendra Kumar Jain have accepted that loose papers do belong to them. The assessee bluntly denied and stated that these loose papers did not belong to the assessee.
The computer system found during the course of survey belonged to Hira Panna Jewellers, but not belonged to the assessee. As per section 292C of the Act, the loose sheets, books of accounts found during the course of search /survey are presumed to be belonging to the assessee, where the search or survey is conducted. In the instant case, survey was conducted in the business premises of Hira Panna Jewellers. Therefore, as per the presumption u/s 292C, loose sheets pertained to the Hira Panna Jewellers, but not to the assessee. Unless it is established that the loose sheets pertained to the assessee, the AO is not permitted to tax the contents or unexplained money or expenditure recorded in the loose sheets in the hands of the assessee. In the instant case, there was no material placed on record to show that the loose sheets were belonging to the assessee, therefore, the addition made by the AO in the hands of the assessee on account of unexplained money or expenditure is unsustainable.
Accordingly, we set aside the order of the Ld.CIT(A) and delete the addition made by the AO.
Deduction claimed u/s 80IA - mandation to file the audit report u/s 10CCB electronically - HELD THAT:- As per section 80IA, it is mandatory to file the audit report u/s 10CCB electronically and in the instant case, the assessee has failed to furnish the same. Therefore, we do not find any infirmity in the order of the Ld.CIT(A) and the same is upheld. Appeal of the assessee is dismissed on this ground.
Addition of unexplained jewellery - made the value of entire gold jewellery and silver articles as an addition since none of the family members filed the wealth tax returns or disclosed the same in the return of income - CIT(A) allowed 50% of jewellery as explained keeping in view the Board Circular and confirmed the balance addition - HELD THAT:- Since the assessee’s family consists of the assessee, his wife, daughter and son, the assessee is entitled for credit of 950 gms and the balance to be brought to tax. In the assessee’s case, gold jewellery ornaments found was only 792.50 gms., the entire jewellery is treated as explained and no addition is called for. However, we confirm the addition relating to the silver articles found during the course of search. Accordingly, appeal of the assessee is partly allowed.
Levy of interest u/s 234A, 234B and 234C is mandatory - We direct the AO to levy the interest correctly as provided u/s 234A, 234B and 234C of the Act.
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2019 (12) TMI 1185
Loss suffered by the assessee in the derivatives disallowed - HELD THAT:- Since the assessee has furnished all the documents along with bank transaction details, therefore, it cannot be held that primary onus cast upon the assessee has not be discharged. However, at the same time the broker who has carried out such a transaction could not corroborate or confirm the transaction as the notice sent to the broker came back unserved. Thus, the explanation and the evidences submitted by the assessee could not be substantiated. Under these facts and circumstances, we are of the opinion that this issue should be remanded back to the Assessing Officer to re-examine the claim of loss afresh and assessee is directed to substantiate its case and provide not only the confirmation from the broker but also the correct address of the broker and the Assessing Officer would be at liberty to carry out any necessary inquiry as he deem fit to verify the genuineness of the transaction. The assessee shall cooperate with the inquiry as may be asked upon by the Assessing Officer - Ground raised by the assessee is allowed for statistical purposes
Addition u/s 68 - Unesecured cash credits - HELD THAT:- Such stress has been given by the ld. DR and also adverse inference has been drawn by the Assessing Officer that in the subsequent year the sister concern of the assessee has bought back the shares at ₹ 5/- in order to hold that the transaction during the year is bogus or non-genuine. First of all, under the deeming provision what is required to be seen whether the credit appearing in the books of account during the financial year, the assessee has been able to discharge the onus regarding the nature and source of credit or not. Here in this case, the nature of credit is share application money and the source has found to be satisfactorily explained by the assessee as held by Ld. CIT (A). Thus, the onus cast upon the assessee has been fully discharged. Secondly, if a share at a face value of ₹ 10/- and premium of ₹ 90/- has been bought back at ₹ 5/- then Assessing Officer has all the powers under the Act to examine the issue in the year in which transaction has taken place and there he can draw any inference after proper scrutiny and inquiry. So far as this year is concerned, we have to see the genuineness of the transaction of the share application money received during the year. Accordingly, the grounds raised by the Revenue stands dismissed.
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2019 (12) TMI 1184
TDS u/s 194C - composite / turnkey contract including supply of labour and services with supply of material - Non-deduction of TDS on supply of materials treating the assessee as ‘assessee-in-default’ as per Section 201(1)/201(1A) - HELD THAT:- Award of separate contracts shall not in any way dilute the responsibility for successful competition of the facilities, achieving the guaranteed performance of the erection/installation, proper O&M of the erection/installation after final acceptance by the corporation, etc as per the tender specification and a breach in one contract shall automatically be construed as a breach of the other contracts which will confer a right on the corporation to terminate other contracts also at the risk and the cost of the supplier.
Regarding the closure of projects, the contract mentioned the following clause. Closure proposal will be prepared by the contractor after completion of the project or as per decision of NBPDCL for closure of the project. The details of supplied materials and works executed as per the contract will be prepared by the contractors and reconciled with the engineer to his satisfaction. Therefore, the CIT(A) observed that the two contracts are of the nature of a composite package and that they are inseparable. Both contracts serve the purpose of rendering one single service. The scope of the contract includes design, engineering, manufacture, type testing, and training of power grid personnel and supply of, goods. Further, as per the conditions of the supply of contract, the contract price is inclusive of all customs duties, levies, excise duty, sales-tax and other duties payable on equipments, components, sub-assemblies and, raw materials or any other items used and it is clearly mentioned that no separate claim on these duties will be entertained by the contractee. These are essential elements of a composite contract and therefore the CIT(A) held that the two contracts of supply and erection, shall be taken as composite contract.
As relying on M/S SAHARA INDIA COMMERCIAL CORPN. LTD. ALIGANJ LUCKNOW [2017 (1) TMI 1681 - ALLAHABAD HIGH COURT] we remit the issue to the file of AO for verification and adjudication of the issue after affording an opportunity of being heard to the assessee as per the observations made by the Hon’ble High Court supra. If it is found that in the return of income filed for these years by the deductee, it has included the impugned amount in its receipts and there is loss as per return, no demand can be raised u/s 201(1A) of the Act on the present assessees. In case of found otherwise, the charge of interest u/s.201(1A) is liable to be paid by the appellant/assessees.
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2019 (12) TMI 1183
Addition u/s.145A - method of accounting followed - HELD THAT:- After going through the Audit Report that assessee has already considered the application of section 145A in the audit report and the practice of showing the working of inclusion of cess and excise duty on the purchases, sales and the stock is being followed by the assessee company since last several years.
Section 145A requires the valuation of purchase and sale of goods or services and of the inventory shall be adjusted to include the amount of any tax, duty, cess or fee (by whatever have been called) actually paid or incurred by the assessee to bring the goods or services to the place of its location and condition as on date of valuation. In our considered opinion, assessee is following the same method for several years and therefore this ground of Revenue is dismissed.
Deduction u/s. 10A - if the claim of deduction u/s. 10B is disallowed as assessee unit is included in the business of trading of Computers, Computer Peripherals, software development etc. and was granted license setting up 100% EOU under STP scheme as per letter of permission - HELD THAT:- Assessee has also filed copy of letter from STPI, Gandhinagar, Gujarat and assessee is reflecting on the website of Department of Electronics & Information Technology and assessee has also filed the copy of extract of the said website and which has not been disputed by the ld. A.O. and in the past, assessee has been claiming deduction u/s. 10A. Moreover, assessee company set up in the 100% EOU under STP Scheme as per letter of permission No. STPIG/EXIM/S/503/STTL-SWED/13 dated 2-1-2007 by the Designated officer Software and IT enabled services and same details were submitted before the lower authorities.
The assessee is in this business since 2007 and company has been set up in the 100% EOU under STP Scheme and all details have been submitted before the lower authorities. Since assessee has complied with all the condition for availing of benefit of section 10A. Therefore, we dismiss this ground of the revenue.
Allowing of foreign exchange gain in the claim of deduction u/s 10A - A.O. held that income due to foreign exchange gain are not eligible for deduction - HELD THAT:- Since already we have confirmed the order of the ld. CIT(A) for granting relief to the assessee u/s 10A of the Act. We draw support in favour of assessee from the latest judgment of Hon’ble Madras High Court in the matter of CIT Chennai- III vs Pentasoft Technologies Ltd. [2019 (9) TMI 155 - MADRAS HIGH COURT] wherein similar claim of the assessee was allowed by the Hon’ble Madras High Court.
In the matter of Nuwave Esolutions Pvt. Ltd. vs. CIT (Delhi) [2018 (12) TMI 1752 - ITAT DELHI] has also granted relief to the assessee and granted deduction in foreign exchange gain. Therefore, in our considered opinion, assessee is eligible for exemption u/s. 10B of the Act and we do not find any reason to interfere in the order passed by the ld. CIT(A). - Decided against revenue.
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2019 (12) TMI 1182
Penalty u/s 271C - Payment to Doctors - Employer / Employee relationship or not - failure to deduct tax at source u/s 192 of the Act when making payments during the relevant year to the consultant doctors as against u/sn 194J - HELD THAT:- Assessee placed before us Form 26A issued by accountant of assessee, in respect of payment made by assessee to these alleged nine doctors. As additional evidence in respect of these nine doctors which in our considered opinion, deserves to be admitted and requires due verification also.
We therefore admit additional evidences filed by Ld.AR at this stage.
In our opinion, Ld.AO will have to verify all these details to ascertain true facts. We direct Ld.AO to call for all necessary information/details in respect of these nine doctors, the letter of appointment issued by assessee and returns filed by these doctors.
AO that in the event, it is found that these doctors were providing professional services to assessee which satisfies requirement of a visiting doctor, undoubtedly, it cannot be held that relationship between assessee and the concerned doctors were that of employee-employer and no demand could be raised under section 201(1) and 201(1A) of the Act. On the contrary, if there exist employee-employer relationship, the benefit may be granted to assessee upon verifying the additional evidence filed, which we have already admitted in preceding paras.
Set aside appeals challenging demand raised under section 201(1) and 201(1A) of the Act, back to Ld.AO for de novo assessment.
As we have set aside additions back to Ld.AO for verification on de novo basis, penalty levied under section 271C will not survive. However, the AO is at liberty to initiate penalty proceedings u/s 271C of the IT Act, 1961 in the set aside proceedings, if desired so.
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2019 (12) TMI 1181
Registration u/s 12AA - advancement of any other object of general public utility - Charitable activity u/s 2(15) - activity of providing training in various fields to various persons and the objects also includes preservation of environment, yoga, medical relief and relief of poor. - HELD THAT:- On a perusal of various objects mentioned in the trust deed we agree with the contentions of the ld DR that the assessee has included various type of objects in the object clause.
Even though the assessee has shown certain photographs which are placed in the paper book, the same will not prove that the assessee is engaged in the educational activities or any other specific activities as claimed by it. No other material was placed before us in order to compel us to interfere with the order passed by ld CIT(E). Under the set of facts we have no other option but to confirm the order passed by ld CIT(E) - Decided against assessee.
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2019 (12) TMI 1180
Claim of exemption u/s 44A - mutual concern - for the benefit of members - profit motive - the activities is to get quality grocery, clothes, stationery and durable items at a very reasonable rate to the employees of Ordanance Factory - HELD THAT:- Members of the society are employees of the Ordnance Factory, Ambarnath and they become members by subscribing to the share capital of the Society; the Managing Committee of the Stores effects purchases of various goods from the manufacturers/wholesellers at competitive price and sales are effected to members only, either on cash or on credit basis ; credit sales proceeds are recovered from members through their employer i.e. Ordnance Factory and its allied establishment, Ambarnath from salaries.
Thus it is observed by us that the object is not to earn profit but to provide best possible consumer goods at best price to its members only. It is a case of mutual entity running on principles of mutuality. The essence of mutuality lies in the return for what one has contributed to a common fund. The fund should fulfill the essential requirements that all the contributors to the common fund must be entitled to participate in the surplus and that all the participators in the surplus should be contributors to the common fund. There must be complete identity between the contributors to the fund and the participators in the surplus.
We hold that the essence of mutuality has been established by the appellant. Therefore, we are inclined to set aside the order of the Ld. CIT(A).- Decided in favour of assessee.
Deduction u/s 80P(2)(d) in respect of interest earned on fixed deposits - AO allowed net interest deduction after deducting proportionate expenses for earning such interest income received from another Co-operative Bank - HELD THAT:- As evident from the accounts, the appellant is not enjoying any credit facilities from any financial institution. In order to develop the habit of savings, the appellant is collecting thrift deposit from salaries on monthly basis since its inception and these funds are utilized for the business purpose of the appellant. During the year under consideration, the appellant invested ₹ 11,05,000/- out of interest income and surplus in the fixed deposits against various funds.
There is no merit in the action of the AO to disallow the expenses @ 87.54%. Also there is no merit in the order of the CIT(A) in restricting it to 50%. It is well settled that section 80P(2)(d) of the Act allows whole deduction of an income by way of interest or dividends derived by the Co-operative Societies from its investment with any other Co-operative Society. Having regard to the above provisions, we are of the considered view that there is no basis to restrict the disallowance to 50% as held by the Ld. CIT(A). The apportioning of the expenditure to the interest income is not justified and the appellant is entitled to deduction u/s 80P(2)(d) of the entire interest of ₹ 7,70,784/-. The order of the Ld. CIT(A) therefore reserves to be set aside.- Decided in favour of assessee.
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2019 (12) TMI 1179
Addition u/s. 28(iv) - share transactions - whether the amount of premium paid by the Telenor Group for acquiring the shares of 8 UW companies can be held to be in the form of any benefit or perquisite arising from the business of assessee u/s 28(iv) ? - HELD THAT:- Here, the assessee company had purchased 3.54 crore shares at ₹ 10/- per share from M/s. Unitech Ltd. of 8 telecom companies for an aggregate consideration of ₹ 34.50 crores under share purchase agreement dated 25.10.2008 and any subsequent allotment by such 8 telecom companies independently to Telenor at ₹ 179 per share cannot be the basis to hold that there is any benefit or perquisite arising from business carried on by the assessee company.
In a worst case scenario if there is any benefit the same benefit would be of M/s. Unitech Ltd. which held the shares of 8 telecom companies from whom the three companies have purchased the shares. It would be also relevant to mention that Ld. CIT (A) in one of the assessee company which is also impugned before us, i.e., M/s Acorus Unitech Wireless Pvt. Ltd.,that the benefit if at all in these transactions actually accrued to Unitech Ltd. and to favour Sri Ramesh Chandra and Sri Sanjay Chandra the actual beneficiaries and not to the assessee company. This itself goes to support the contention of the Ld. Counsel that no benefit or perquisite arose in the hands of the assessee companies.
The judgments relied upon by the ld. DR which has also been referred in the impugned order in no manner will apply on the facts of the present case because most of them pertained to waiver of a loan or unclaimed credit balance returned back to the P&L account taken during the course of business. Thus, these judgments do not help the case of the Revenue at all. Accordingly, the additions made by the Assessing Officer and sustained by the Ld. CIT (A) u/s. 28(iv) are directed to be deleted.
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2019 (12) TMI 1178
Disallowance u/s 14A - investments which yielded exempt income - HELD THAT:- Considering the fact that the lower authority has considered all investments made by assessee for calculating average investment for disallowance u/r 8D(2)(iii), the Special Bench of Delhi Tribunal in Vireet Investments P Ltd [2017 (6) TMI 1124 - ITAT DELHI] held that only those investments which yielded exempt income should be considered for disallowance u/r 8D(2)(iii), we restore this part of ground to the file of AO to make fresh computation of average investments by taking into consideration only those investments which yielded the exempt income.
Disallowance u/r 8D(2)(ii) - assessee vehemently argued that the disallowance in respect of net interest has to be made by taking into consideration only 3 investments which yielded dividend income during the year. We have noted that the assessee has raised this plea, for the first time before us and has strongly relied upon the decision of Mumbai Tribunal in Sajjan India Ltd vs ACIT [2017 (12) TMI 47 - ITAT MUMBAI] wherein it was held that mandate of Act is to tax real income and tax can only be levied under authority of law. Even if disallowance fall below disallowance u/s 14A offered by assessee in the return of income, revenue cannot charge tax on income, which never was income of assessee chargeable to tax. Therefore, we deem it appropriate to restore this part of disallowance u/r 8D(2)(ii) to the file of the AO to examine the issue afresh in the light of above referred decision and pass the order afresh in accordance with law.
Disallowance u/s 56(2)(viia) - AO treated the investment in shares as income under section 56(2) (viia) - HELD THAT:- We have noted that the assessing officer during the assessment not provided the valuation (FMV) arrived by him to the assessee. During the first appellate stage the assessee furnished the working of the FMV of the shares of these two entities, however, the AO despite granting opportunity to file his remand report, not controverted the said valuation. The valuation furnished by the assessee is in accordance with Rule 11UA is also not disputed by AO. The values of shares as per valuation furnished by assessee are less than the consideration paid by the assessee for acquisition of shares. The ld. DR for the revenue failed to bring any fact or evidence to our notice to take other view. Thus, we do not find any infirmity in the order passed by ld. CIT (A) in deleting the addition qua the acquisition of shares of Shivalik Solid Waste management and Coimbatore Integrated Waste Management Pvt Ltd., which we affirm. In the result ground No.2 in revenue’s appeal is dismissed.
Addition in respect of purchase of shares of ETL - CIT(A) sustained the addition of difference of FMV as per Rule 11UA. The ld. AR for the assessee vehemently argued that ETL is a closely held company and its shares are not readily available in the market for sale or trading and that the sale by Sidhi Samrat Dychem Pvt Ltd was a mode of exit from the agreement due to certain financial difficulties faced by Sidhi Samrat Dychem Pvt Ltd. No such evidence in the form of correspondence or any communication is brought on record by the assessee that Sidhi Samrat Dychem Pvt Ltd was facing financial difficulties, which may justify the action/ transaction with assessee.
Hence, we do not find merit in the submissions of the ld. AR for the assessee.
Alternative submission of the ld AR for the assessee that provisions of section 56(viia) are anti abuse and intended to prevent the practice or receiving property without consideration or for inadequate consideration, are concerned, the ld AR has strongly relied on the Circular No. 01/2011 dated 6th April 2011 issued by Central Board of Direct Tax (CBDT) and the decision of Tribunal in ACIT Vs Subhodh Menon (supra). The throughout the proceedings took the stand that the assessee that the transaction with ETL is bonafide transaction. We are also of the view that in absence of any imputation of any consideration over and above consideration was passed, the addition is not justified.
As we have already noted that in absence of any imputation of any consideration over and above consideration was passed, the addition is not justified. The assessing officer has not made any investigation from ETL nor brought any adverse material on record against the assessee. Hence, we accept this submission of the ld. AR for the assessee and allow the ground of appeal raised by the assessee.
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2019 (12) TMI 1177
Capital gain on property inherited - Exemptions u/s 54F and 54B - inheritance of property of an individual who dies intestate, after the introduction of Hindu Succession Act, 1956 - AO considering the property as HUF property of the respective assessee - HELD THAT:- We find that undoubtedly the land in question was inherited by the assessee and his family members on the death of their predecessor.
In the case of Yudhishter Vs. Ashok Kumar [1986 (12) TMI 380 - SUPREME COURT] has clearly held that after Hindu Succession Act, 1956, when the son inherited the property in the situation contemplated by section 8, he does not take it as Kartha of his own undivided family, but takes it in his individual capacity.
In the case of Uttam Vs. Saughag singh & Ors [2016 (3) TMI 1369 - SUPREME COURT] the Hon’ble Supreme Court has held that the share of the Hindu male coparcener is governed by the proviso to section 6 of Hindu Succession Act and a partition is effected by operation of law immediately before his death and in this partition, all the coparceners and the Hindu Male’s widow get a share in the joint family property. On the application of section 8 of the Act, it was held that such property would devolve only by intestacy and not survivorship. It was also held that after the joint family property has been distributed in accordance with section 8 on the principles of intestacy, the joint family property ceases to be joint family property in the hands of the various persons who have succeeded to it as they hold the property as tenants in common and not as joint tenants.
Thus, the above decisions of the Hon’ble Supreme Court on the inheritance of property of an individual who dies intestate, after the introduction of Hindu Succession Act, 1956, hold that on the death of the Hindu Male, the property devolves on the heirs in their individual capacity and ceases to be the HUF property. Respectfully following said decision, we hold that the property inherited by the respective assessees is their individual property and, therefore, the capital gains, if any, is exigible to tax in their individual hands alone.
Whether the said property is a capital asset u/s 2(14) - It is not required to be adjudicated at this stage as it has already been decided by the coordinate bench of this Tribunal in the assessee’s case in the earlier round of litigation that it is a capital asset u/s 2(14) of the IT Act. Thus, the grounds of appeal on this issue in the case of all the assessee’s are rejected.
Claim of deduction u/s 54B - We find that the AO and CIT(A) have not really examined the allowability of such claim by holding the assessee to be an HUF and held that deduction u/s 54B is allowable only in the case of individuals. Further, with regard to the claim of deduction u/s 54F also, the AO has not gone into the details of the investment made in the residential property and whether the conditions of section 54F are fulfilled by the respective assessees. Therefore, we are of the view that the grounds of appeal on the issue of deduction under sections 54F and 54B needs reconsideration afresh by the AO. Therefore, they are set aside to the file of the AO and the grounds are treated as allowed for statistical purposes.
Expenditures claimed as incurred towards sale of their land, the assessees have not been able to provide any evidence in support of such claim and, therefore, disallowance of such claim is confirmed in each of the cases.
All the appeals of the assessees are treated as partly allowed and only as regards the claim u/s 54F & 54B they are are set aside to the file of the AO.
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2019 (12) TMI 1176
Revision u/s 263 - AO has failed to make inquiries and apply her mind with regard to the applicability of the provisions of section 43CA - HELD THAT:- In the instant case, AO had primarily changed the head of income from business to that of long term capital gains for the reason that the assessee was trying to avoid provisions of section 50C. Provisions section 50C applies with regard to the transfer of long term capital asset, whereas section 43CA applies to transfer of asset (other than capital asset). Therefore, if the transfer of asset is to be assessed under the head `income from business’ necessarily, the provisions of section 43CA would have application and the value of asset for the purpose of stamp duty valuation under the State Government laws would deemed to be the consideration received on account of transfer of such business asset.
AO had failed to take note of the provisions of section 43CA and the impact of such section in the instant case. As mentioned earlier, the assessee has already filed an appeal as against the assessment order holding the transfer of land would be assessable as income from long term capital asset. In context of the appeal filed by the assessee, the application of section 43CA assumes significance.
AO having failed to take notice of section 43CA while framing the assessment order, would render the assessment order erroneous and prejudicial to the interest of the revenue in view of Explanation (2) clause (a) of section 263. Therefore, since the AO has failed to cause any inquiry in this regard nor examined the impact of section 43CA we are of the view that the CIT has correctly invoked his revisionary jurisdiction u/s 263 and set aside the assessment order dated 26.12.2016. - Decided against assessee.
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2019 (12) TMI 1175
Reopening of assessment - jurisdiction and authority of the Assessing Officer who passed reassessment order under section 143(3) read with section 147 - whether the learned Joint Commissioner of Income-tax who passed the reassessment order dated March 20, 2015 is vested with jurisdiction and authority to pass such order in absence of proper order under section 120(4)(b)? - HELD THAT:- Revenue has failed to file any order passed by the Principal Chief Commissioner of Income-tax/Chief Commissioner of Income-tax/Principal Commissioner of Income-tax, under section 120(4)(b), authorising the Joint Commissioner of Income-tax to act as an Assessing Officer in the case of the assessee. We further noted that although the Revenue filed copy of the Board's general notification authorising Joint Commissioner of Income-tax/ Additional Commissioner of Income-tax to act as an Assessing Officer, but failed to file the order of the Principal Commissioner of Income-tax under section 120(4)(b) of the Act, empowering the Joint Commissioner of Income-tax to act as an Assessing Officer. We further noted that although, the Revenue has filed order of the Principal Commissioner of Income-tax-17, Mumbai passed under section 120(1) and (2) of the Act, but said order is not under section 120(4)(b) of the Act. Therefore, we are of the considered view that the reassessment order passed by the Joint Commissioner of Income-tax-Range17, Mumbai is void ab initio and liable to be quashed, because, the Assessing Officer who had passed reassessment order does not had valid jurisdiction and authority to pass such order, in absence of proper order in writing under section 120(4)(b) of the Income-tax Act, 1961.
Reassessment order passed by the Joint Commissioner of Income-tax, Range-17, Mumbai is void ab initio and liable to be quashed, because the Assessing Officer who had passed the assessment order does not possesses valid authority and jurisdiction to pass such order in absence of separate order under section 120(4)(b) of the Act. Case followed M/S. TATA COMMUNICATIONS LTD., (FORMERLY VIDESH SANCHAR NIGAM LTD.,) VERSUS ADDITIONAL COMMISSIONER OF INCOME TAX RANGE-1 (3) , MUMBAI AND VICE-VERSA [2019 (8) TMI 1446 - ITAT MUMBAI] - Decided in favour of assessee.
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2019 (12) TMI 1174
Principles of natural justice - Inquiry proceedings against Air Cargo Customs Clearing Agent - Mandamus sought directing the respondents not to harass the Petitioner in the guise of enquiry either by personal appearance or search warrant or interfering in the day-to-day business of the Petitioner - HELD THAT:- The search of the Head of the Office of the Petitioner-company personally, is challenged. The action on the part of the respondents is quite natural and incidental. Hence, the Petitioner cannot preclude the officials of the respondents from proceeding with their official duty. It is also to be stated that the officials of the respondents also cannot exceed their limit, in the guise of enquiry, by violating the human rights.
The respondents have given an undertaking that the Petitioner will not be harassed in the guise of enquiry and investigation, the respondents are directed to conclude the enquiry with the Petitioner and their staff members within a period of one month from the date of receipt of a copy of this order - Petition disposed off.
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2019 (12) TMI 1173
Approval of the Resolution Plan - extension of time period for legal proceedings - invitation for "EoI" - filing of the Resolution Plan by the Resolution Applicant - Section 30(6) of I&B Code, 2016 - Since the Resolution Plan submitted by the successful Resolution Applicant scored more value, the same was placed before the COC for voting which was ultimately approved by the COC and voted with approval of 81.39% of share and now the Resolution Plan placed for consideration.
HELD THAT:- It is a settled law that the Financial Creditors and the Operational Creditors cannot be treated on the same footing and moreover, the principle of equality cannot be stretched to treating unequals equally, as that will destroy the very objective of the Code. It is time and again reiterated by the Hon'ble Supreme Court that so long as the provisions of the Code and the Regulations have been met, it is the commercial wisdom of the requisite majority of the Committee of Creditors which is to negotiate and accept a resolution plan, which may involve differential payment to different classes of creditors, together with negotiating with a prospective resolution applicant for better or different terms which may also involve differences in distribution of amounts between different classes of creditors and hence the objections made by the Applicants are not sustainable
A conjoint reading of Section 25(2)(h) of the IBC, 2016 with Regulation 36A (10), (11) and (12) would posit the fact that objections to inclusion or exclusion of a prospective resolution applicant in the provisional list referred to in sub-regulation (10) can be made with supporting documents within five days from the date of issue of the provisional list - In the present case, the intended prospective resolution applicant viz. Sai Trading and Interiors has expressed their interest by way of an email to the Resolution Professional on 17.04.2019 and his name was included in the provisional list of resolution applicant released by the Resolution Professional on 23.04.2019, however his name was left out from the final list of prospective resolution applicant released by the Resolution Professional on 28.04.2019.
A perusal of the minutes of the 8th COC reveals the fact that exclusion of M/S. Sai Trading and Interiors from the prospective list of resolution applicant was deliberated upon by the COC in its 8th COC meeting dated 28.04.2019 and the COC and the Home buyers had serious doubts as to the capability, competence, quality, bonafide and financial soundness of M/S. Sai Trading and Interiors and upon detailed discussions made thereunder, it was finally resolved to exclude M/S. Sai Trading and Interiors from the prospective list of resolution applicant and moreover, as per Regulation 36A (11) of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, the COC is empowered to include or exclude any person from the prospective resolution applicant.
The person challenging the Resolution Plan is not even an unsuccessful Resolution Applicant but only an intended prospective resolution applicant, whose name has been left out from the final list of resolution applicants, M/S. Sai Traders and Interiors has no vested right that his resolution plan ought to have been considered by the COC and no challenge can be preferred thereof before this Adjudicating Authority.
The Resolution Plan is hereby approved and is binding on the Corporate Debtor and other stakeholders involved so that revival of the Debtor Company shall come into force with immediate effect and the "Moratorium" imposed under section 14 of IBC, 2016 shall not have any effect henceforth - application disposed off.
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2019 (12) TMI 1172
Demand of service tax - Rent a Cab Service - Business Support Service - evasion of service tax - suppression of facts - extended period of limitation.
Rent-a-cab operator service - HELD THAT:- The demand sustainable on merits - As regard the limitation, the question answered in negation and in favour of the assessee.
Business Support services - HELD THAT:- Under clause (104C) the definition starts with the words “Services Provided in relation to business or commerce” and thereafter in the inclusion clause same names of the services are provided. Aas per the clear definition, the services primarily should have a support service in relation to business /commerce - In the present case the appellant have provided the support service of providing driver, cleaner and maintenance of buses which are owned by the company M/s. Welspun. There is no doubt or dispute that M/s welspun is an exclusive commercial organization and carrying out their manufacturing and sales activity in the factory where the appellant have provided the services, therefore, the services provided by the appellant is undoubtedly in relation to business or commerce - it is not necessary that only those support service which are identical or similar to the services under the inclusion clause will fall under business support service. The services mentioned in the definition as inclusive are some of the services apart from all the services which are provided in relation to business or commerce.
The services provided by the appellant to M/s. Welspun who have used this service undisputedly in relation to their business or commerce and will fall under support services of business or commerce - the demand under business support service was rightly invoked by the revenue.
Time limitation - HELD THAT:- Since there was no ambiguity as regard taxability of appellant service under the head of Business Support Service, non-payment of service tax without informing to the department is clearly under suppression of fact on the part of the appellant, therefore, the demand for extended period is rightly invoked by the Adjudicating Authority and the First Appellate Authority.
Penalty u/s 76 and 78 - HELD THAT:- Simultaneous penalty under section 76 and 78 cannot be imposed as held by Hon’ble Gujarat High Court in the case of M/S RAVAL TRADING COMPANY VERSUS COMMISSIONER OF SERVICE TAX [2016 (2) TMI 172 - GUJARAT HIGH COURT], therefore, the penalty imposed under section 76 is set aside - Other penalties and interests to the extent demand was sustained is imposable.
Appeal allowed in part.
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2019 (12) TMI 1171
Recovery of CENVAT credit - input services - allegation that input services were not utilized by the assessee but utilised for the broadcasting of channels by the overseas entity - penalties u/s 78A of Finance Act, 1994 - exported services or not - exclusion from the definition of ‘input service’ in rule 2(l) of CENVAT Credit Rules 2004 or not - insistence on the part of Revenue that the responsibility for discharge of tax liability is distinct from provision of service which alone entitles availment of CENVAT credit.
HELD THAT:- It is not disputed that the appellant-assessee has discharged tax liability but it has been held that such compliance is as a mere agent who does not consume the ‘input service’; implicit in this hypothesis is that even the procurement of service is as an agent even though Learned Authorized Representative is unable to draw sustenance for deeming such agency in the taxing statute or in the CENVAT Credit Rules, 2004.
It is not the entitlement of the ‘broadcaster’ within the scheme of CENVAT credit that is objected to but the claim of the appellant-assessee to that entitlement as ‘surrogate’ of provider of service - There is no allegation that the disputed services are not ‘input services’ for a ‘broadcaster’ and, hence, the exclusions or the schedule, for which that definition is intended, are not relevant for deciding on eligibility in the dispute before us. The perception conflict between surrogacy and agency seems to be the genesis of the controversy; while the appellant-assessee claims to be the surrogate, Revenue is prepared only to concede status of agency for discharge of liability and, that too, as a legal fiction which excludes categorization as ‘broadcaster.’
The levy on manufacture is crystallised on the product without having to take recourse to manufacturer making abundantly clear, by implication, that the manufacturer pays the duty and takes eligible credit. Likewise, in section 66 of Finance Act, 1994, there is no reference to any person but only to the taxable events described in section 65(105), and in the successor section 65B, even less so. The complexity of definition of taxable activity, necessitating human presence, is now sought to be superimposed on the CENVAT credit scheme which recognises only the taxpayer within its ambit. The deployment of expressions in CENVAT Credit Rules, 2004 warrants recourse to Finance Act, 1994 only for interpreting expressions that are not defined therein. As the said Rules do not allude to ‘taxable service’ except with the qualification ‘provider of’, and is defined in rule 2(q) and rule 2(r) as a composite expression, which is not untrammeled, even the parent statute may be unable to afford an interpretation. By inclusive qualification, rule 2(r) of CENVAT Credit Rules, 2004 brings ‘person liable to pay tax’ within its ambit - The levies devolve on the person liable to tax as laid out in the Service Tax Rules, 1994 and, in view of rule 9 of CENVAT Credit Rules, 2004, credit can be taken only by the entity burdened with the incidence of tax. That is the sole criteria of eligibility to take credit and not the process by which broadcast signals are received in India.
The relationship between the overseas entity and the appellant-assessee is open and declared and the tax law sought to be invoked against the latter is not premised on the existence of a relationship between the two. The laudable morality that guided the widening of investigative jurisdiction cannot be read out of context to impute an allegation that is not acknowledged in the law pertaining to levy of service tax.
In the light of findings that the appellant-assessee is not only de facto but also de jure provider of ‘output service’ as well as consumer of the impugned ‘input service’, the recovery ordered in the impugned order as well as the penalties on the appellant-assessee and the individual appellants is set aside - appeal allowed - decided in favor of assessee.
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2019 (12) TMI 1170
Classification of services - works contract services or not - agreement/ sale deed for sale of undivided portion of the land together with the semi finished portion of the flat - agreement for construction with their customers after sale - HELD THAT:- There is no dispute that the show cause notice demanded service tax only on the amounts received after sale has been completed. Therefore, the amounts received towards sale deed were supposed not to have been included in the demand. However, prima facie, looking at the annexure to the SCN and the table presented before us by the learned CA as well as the reply to RTI query received by him, it does appear that sale deed value has been included while computing the demand and confirming it.
Since the dispute is only regarding the computation of the demand and not on any specific point of law, it is a fit case to be remanded to the original authority to recalculate the demand after excluding the sale deed value - appeal allowed by way of remand.
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2019 (12) TMI 1169
Sub-contract - liability of sub-contractor to pay service tax - main contractor sub contracted part of the work to the appellant, who rendered the services and did not pay any service tax by writing on the invoices that service tax is exempted as per N/N. 25/2012 –ST dated 20.06.2012 - HELD THAT:- The services provided by the assessee were part of the main contract awarded by the State Government to the principles contractor. Further Commissioner (Appeals) has relied upon the instructions issued by the board itself laying down that in such a scenario no tax liability would fall upon the sub-contractor.
There are no infirmity in the order of Commissioner (Appeals) - appeal dismissed - decided against Revenue.
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2019 (12) TMI 1168
Levy of tax as well as penalty - sale of third Doubling machine taking place - alleged suppressed turnover - HELD THAT:- The learned Authorities below have erred in imposing the tax on the alleged suppressed taxable turnover of the third machine on the basis of a Proforma Invoice claimed to have been raised by the Assessee on the Purchasing Dealer M/s.Anand Cotspin Limited. The said Slip No.4 produced in the course of survey does not refer to any final Invoice, but the fact remains that the Assessee has produced the said explanation before the Assessing Authority as well as Statement of Account of said purchasing dealer independently before the Income Tax Authority of the Purchasing Dealer M/s.Anand Cotspin Limited under section 133(6) of the Income Tax Act giving the third sale under the Invoice No.3 dated 29.06.1996. Merely because the Proforma Invoice shown in the Slip No.4 could not be produced by the Assessee before the Assessing Authority and the same, in our opinion, could not be treated as suppressed sale taxable turnover in the hands of the Assessee.
The Assessee had entered into a series of sale of Doubling machines to the same Company viz., M/s.Anand Cotspin Limited and two Invoices were duly recorded for in the assessment period in question for the year 1995-96 and the third sale took place under Invoice No.3 dated 29.06.1996. The Proforma Invoice included in the Slip No.4 was neither serially numbered nor any date has been mentioned and therefore, merely on the basis of mention of the Proforma Invoice in the said statement, the Assessing Authority could not have imposed tax on the same as suppressed sale - merely on the alleged failure to produce the said Proforma Invoice as indicated in Slip No.4, the authorities below cold not have arrived at the conclusion of a suppressed taxable turnover in the hands of the Assessee during the year 1995-96. The third machinery was admittedly sold by the Assessee in the next year 1996-97 under Invoice No.3 dated 29.06.1996 which has been accounted for in the next year and there is no dispute on that issue.
All the three authorities below have erred concurrently in holding that the Assessee had suppressed a turnover to the extent of ₹ 6,44,118/- on the basis of the alleged Proforma Invoice not produced by the Assessee - Petition allowed - decided in favor of petitioner.
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