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Showing 161 to 180 of 754 Records
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2020 (5) TMI 594
Condonation of delay - Rectification order u/s.154 - alternative remedy by filing application u/s. 154 - Late fee u/s. 234E - delay in filing appeal against Section 200A of the Act is 1876 days - assessee aggrieved by the order of late fee u/s. 234E but not inadvertently filed appeal before the CIT(A) against the orders passed on the intimation passed u/s. 200A of the Act but filed appeals against the orders passed u/s. 154 - HELD THAT:- Assessee has taken steps to file all these appeals with the relevant appellate authority but was pursuing only alternative remedy by filing application u/s. 154 of the Act i.e., rectification proceedings were taken up to the Tribunal and consequently, the assessee was made aware by their Chartered Accountant about the consequences of these rectification proceedings, the assessee immediately prepared the appeals and filed with the CIT(A) against intimation u/s. 200A of the Act. Admitted facts are that the assessee was pursuing alternative remedy, even though the delay is very long, we feel that the assessee has reasonable and sufficient cause for not filing these appeals against intimation u/s. 200A of the Act passed by Assessing Officer u/s. 200A of the Act before CIT(A).
Since, we noticed reasonable and sufficient cause in not filing these appeals before CIT(A), we reverse the orders of CIT(A) and condone the delay. We, set aside all these appeals to the file of CIT(A).
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2020 (5) TMI 593
Revenue recognition - Percentage of completion method - Revenue recognized significantly based on principle of AS-9 (Accounting Standard as per ICAI) - HELD THAT:- Assessee has two main stream of revenues, one from ‘NOP’ Project and from other project. Assessee is basically construction contractor and also indulged in developing and sale of project named ‘NOP’. On overall basis, assessee is following percentage completion method. Whether the method of percentage of completion method can be applied for construction contract as well as real estate development project with reference Guidance Note GN(A) 23 (R2012).
Assessee has commenced this project in AY 2006-07 and completed the whole project. It developed the total saleable area of 56727 Sq. ft. and upto AY 2012-13, it sold 46006 Sq. ft, this assessment year, it sold 1032 Sq. ft. only and it carried unsold stock of 9689 Sq.ft. This indicates that assessee has divergent business module.
As per guidance note, percentage completion method can be applied only when revenue, costs and profit from transactions and activities of real estate which have same economic substance as construction contracts. Though, it is clear that only when the economic substance in real estate development and construction contract has to be same.
Project ‘NOP’ does not have same economic substance as construction contract. The difference in revenue generating pattern. ‘NOP’ project already completed but certain portion of development remain unsold. It shows that revenue model is not same i.e. in construction contract, the whole revenue is already determined and only construction has to be completed. Revenue can be recognized significantly based on principle of AS-9 (Accounting Standard as per ICAI).
Where the sale of goods for recognizing revenue, cost and profits from transactions which are in substance similar to delivery of goods. Principle of AS-9 alone can be applied as far as revenue recognition is concern. We notice that percentage of margin recognized by assessee upto 31.03.12 at 13.94% and the revised estimate indicate that it is at 25.97% of the whole project. Short recognition of profit of past sales. As per prudent method of accounting, the revised estimate cost to be recognized immediately and as far as income is concerned, the construction is already completed and still 9689 Sq. ft pending for sale. The economic situation might change when the actual sales of stock in trade i.e. pending area of sale.
We are in agreement with the proposed absorption of the profit during this year based on the revised estimation of profit of ₹ 5,391.88 per Sq. ft. Accordingly, we direct the AO to estimate the profit of the assessee to the extent of sales achieved by the assessee during this year i.e. 1032 Sq. ft. and to estimate the profit of ₹ 55,64,424/-.
Assessee carries stock-in-trade for the next assessment year at 9,689 Sq. ft and we are not sure whether the cost of sales will remain same and there may be cost of holding the stock which might reduce the profit of the assessee, therefore it is prudent to absorb the profit based on the revenue not based on estimation which should have been earned by the assessee by the end of this year. Accordingly, enhancement proposed by the CIT(A) are reduced to ₹ 55,64,424/-. The method proposed by CIT(A) is not applicable to the present case as explained above. Accordingly, the grounds raised by the assessee are allowed.
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2020 (5) TMI 592
Unexplained deposit in assessee’s bank account - proof of spending earlier withdrawals made by the assessee - HELD THAT:- Department has no material to show that the earlier withdrawals made by the assessee has been spent for any specific purposes and not the said amount available with the assessee to redeposit into the bank account. There is also no evidence that the assessee has made withdrawals on various dates for any other purposes than the admission of assessee’s son in a medical college.
It cannot be said that the withdrawals have not been utilized to redeposit with the bank account. Therefore, it has to be presumed that the assessee has withdrawn the cash and the same remained to be unutilized for one reason or the other, and the cash remained with the assessee. In such circumstances, due credit has to be given for such withdrawal of cash by the assessee. See SHRI MATHEW PHILIP [2019 (11) TMI 1404 - ITAT COCHIN] wherein held cash deposits made by the assessee on various dates should be reasonably presumed that it is from earlier withdrawals made by the assessee on various dates. - Decided in favour of assessee.
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2020 (5) TMI 591
Registration u/s 12AA - Trust exists solely for education and advancement of general public utility OR for profit - CIT(Exemption) rejected the registration merely on the ground of non furnishing of documents/information by the assessee to study the bona-fides of the objects of the assessee's Trust - HELD THAT:- Finding recorded by the Ld. CIT(Exemption) that the registration cannot be granted for the assessee as it is involved in imparting the training to the employees of the state govt, is incorrect and contrary to the law. For this purposes, we may rely upon the decision of CIT Vs. Andhra Pradesh Police Welfare Society [1983 (3) TMI 19 - ANDHRA PRADESH HIGH COURT] and Water and land Management Training Research Institute [2015 (6) TMI 248 - ITAT HYDERABAD] and DIT Vs. National Safely Counsel [2015 (6) TMI 248 - ITAT HYDERABAD].
Object of general public utility is wider and larger object which encompasses the object like imparting the training to the Govt employees working in various Department and Revenue. The Govt. Employees working with state govt. belongs to various state of the society and they are not restricted to one religion, caste or creed. If there is an improvement in their workmanship and the managerial skill then it will indirectly benefit the public and also to the Government. We are of the opinion that the assessee is entitled to get relief claimed before us and accordingly, we direct the Ld. CIT(Exemption) to issue the registration certificate from the date of application u/s.12AA of the Act. Thus, the grounds raised by the assessee in this appeal are allowed.
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2020 (5) TMI 590
License/registration fee paid - whether is a commercial right and in the nature of an asset within the meaning of section 32(1)(ii) and the assessee is entitled to claim depreciation thereon? - capitalization of expenditure for special Dunnage whereas debiting the expenditure for ordinary Dunnage to the profit and loss account and claimed the same to be revenue expenditure - HELD THAT:- Assessee has been using two types of Dunnage, though for the same purpose, but with two different life times, namely, the special Dunnage having life time of more than five years, whereas the ordinary Dunnage has to be used only for one year and un-usable thereafter - the assessee has capitalized the expenditure on the special Dunnage in their accounts and has been claiming depreciation @ 16% per annum over the useful period and on the same analogy in respect of ordinary Dunnage, they are treating the expenditure for one year and debiting the same to the profit and loss account to claim it as revenue expenditure. It is also not in dispute that the Revenue has been accepting the capitalization of special Dunnage and allowing depreciation @ 16% per annum over the period of life expectancy of such Dunnage.
As life expectancy is taken as the determining factor for the separate treatment to the Dunnage, we do not find any illegality or irregularity in the view taken by the ld. CIT(A) that because of the single use within a year in respect of ordinary Dunnage, the expenditure thereon has to be taken as revenue expenditure and no addition on that score could be made. This finding of the ld. CIT(A) cannot be said to be illegal or irregular or perverse. We, therefore, find the ground No. 1 of appeal of the Revenue as devoid of merits.
Depreciation in respect of license/registration fee paid to Indian Railways - CIT(A) based his finding on the observations of the Tribunal in the case of ONGC Videsh Ltd [2009 (10) TMI 76 - ITAT DELHI-F] wherein it was held that the right granted to the assessee by way of license whereunder the assessee had become owner of such right, such license enables the assessee to have an access to carry on their business and therefore, it falls within the category of an asset u/s. 32(1)(ii) - No decision is brought to our notice to the contrary to take a different view. We, therefore, while agreeing with the ld. CIT(A), find that the claim of depreciation in respect of license/registration fee paid by the assessee to the Indian Railways is an asset whereon depreciation u/s. 32(1) is allowable. We, therefore, dismiss ground No. 2.
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2020 (5) TMI 589
Application for amendment of petition - petitioner seeks permission to amend the petition so as to include a challenge the notification bearing no. S.O. 1119(E) dated 17.03.2020 issued by the Joint Secretary to the Government of India - COFEPOSA Act - HELD THAT:- Perusal of Section 7 of COFEPOSA shows that the said provision enables the appropriate Government to take action in terms of the said provision in respect of a person against whom a detention order has been made. The pre-requisite for the Government to exercise the power under the said provision is that the proposed detenue has absconded or is concealing himself, as a result whereof the order cannot be executed. Besides, the appropriate Government “should have a reason to believe” that the situation meets the criteria for resorting to Section 7 of the Act. Merely because the aforesaid provision stipulates that failure to comply with directions issued by the Government would amount to a separate and distinct offence, it does not necessarily mean that the challenge to a notification under the said provision has to be categorically by way of a separate and a distinct petition.
The detention order would be quashed and the consequential proceedings which have been initiated under Section 7 of the Act, on account of non-compliance, would continue to survive. Contravention of section 7 may be a separate offence contemplated under the Act, requiring independent consideration, but the substantive question before us at this stage is not whether the same deserves to be quashed or not - since the proceedings under Section 7 of the Act emanate from the detention order, the proper recourse is to allow the petitioner to impugn the same along with the main petition.
Another crucial aspect of Section 7 flows from the verdict of the apex court dealing with the scope of jurisdiction of the Court while entertaining a petition challenging the detention order at a pre-execution/pre-arrest stage. In the case of ADDL. SECRETARY TO GOVT. OF INDIA VERSUS ALKA SUBHASH GADIA [1990 (12) TMI 216 - SUPREME COURT] the Supreme Court has emphasized that while the court has the power to interfere with the detention order even at the pre-execution stage, but they are not obliged to do so nor will it be proper for them to do, save in exceptional cases. The discretion of the Court has to be exercised judicially on well settled principles and the detenu cannot claim such exercise of power as a matter of right.
In a situation where the proposed detenu is an absconder, the Court while entertaining a petition at the pre-execution stage, would have to exercise extra caution and take his conduct into consideration. At the same time, the petitioner can demonstrate that the respondents have failed to exhibit earnestness in taking an action under section 7 of the Act. Indeed, in the present case, the petitioner has alleged that the action of the respondents is an act of malice in law.
Notification under Section 7 of the Act and the facts and circumstances leading to its issuance, would have a bearing on the petitioner’s challenge to the detention order one way or the other. The proposed amendments would not entirely change the scope of the main petition. Even if it did, it is settled law that the principle of constructive res judicata does not apply to petitions alleging violation of Article 21 of the Constitution.
The petitioner is directed to place the amended writ petition incorporating the grounds and the prayer within a period of three days from today with an advance copy to the respondents - application allowed.
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2020 (5) TMI 588
Amendment in shipping bills - rejection of request made by the Appellant for making amendment in the shipping bills on the ground that the Appellant had failed to provide any documentary evidence, as was required under section 149 of the Customs Act - HELD THAT:- The Commissioner (Appeals) completely failed to distinguish the requirements of paragraph 2 of the notification and paragraph 3 of the notification. The documents which the Commissioner (Appeals) sought from the Appellant are in relation to the requirements of paragraph 3 of the notification and in fact even the information sought in the format is a format contemplated in paragraph 3 of the notification. Paragraph 2 of the notification required a declaration to be made in the shipping bills regarding the intention to claim rebate either under paragraph 2 or paragraph 3 of the notification. The appellant had not indicated the said declaration and it is this declaration that was sought to be submitted in the shipping bills through the amendment sought by the Appellant. Neither the Adjudicating Authority nor the Commissioner (Appeals) have mentioned about any requirement of paragraph 2 of the notification not having been met by the Appellant.
For applicability of section 149 of the Customs Act relating to amendment of documents, all that has to be seen is that documentary evidence should have been in existence at the time the goods were exported. There is no document which was not in existence at the time the goods were exported for the simple reason that all the Appellant was claiming by the amendment was incorporation of the declaration that the Appellant intended to avail the rebate under paragraph 2 of the notification. Under paragraph 2 of the notification all that has to be seen for calculation of the rebate is the schedule. The documents mentioned in the order of the Commissioner (Appeals) were not required to be examined.
It is, therefore, clear from the nature of the amendment that was sought by the Appellant in the Bills of entry and also from the provisions of section 149 of the Customs Act and the notification dated 29 June, 2012 that the amendment sought by the appellant in the shipping bills of entry was liable to be allowed since only a declaration was sought by the Appellant that rebate should be granted by refund of service tax paid on the specified services under paragraph 2 of the notification - Appellant shall be permitted to carry out the amendments in the shipping bills.
Appeal allowed - decided in favor of appellant.
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2020 (5) TMI 587
Valuation - manufacture and clearance of physician samples - sale on principal to principal basis - applicability of Rule 4 of the Central Excise Valuation Rules, 2004 or Section 4(1)(a) of the Central Excise Act, 1944 - HELD THAT:- This Tribunal following the ratio laid down by Hon’ble Supreme Court in COMMR. OF CENTRAL EXCISE & CUSTOMS, SURAT VERSUS M/S SUN PHARMACEUTICALS INDS. LTD. & ORS. [2015 (12) TMI 670 - SUPREME COURT], observed in the case of M/S MEDISPRAY LABORATORIES PVT. LTD., M/S MEDITAB SPECIALITIES PVT. LTD., AND M/S OKASA PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, GOA [2017 (2) TMI 309 - CESTAT MUMBAI] where it was held that the physician samples manufactured and sold by Okasa Pvt. Ltd. to their principal, the transaction is on principal to principal basis. Therefore, whatever goods were sold by the appellant to their principal is correct transaction value in terms of Section 4.
Appeal allowed - decided in favor of appellant.
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2020 (5) TMI 586
Deemed assessment order - challenge on the ground that there is no valid reason for the respondent to call for such records in the light of Pondicherry General Sales Tax (Assessment) Rules, 2007 which was implemented on the eve of Pondicherry VAT Act, 2007 w.e.f. 01.12.2007 - HELD THAT: The assessment order in question pertains to 2001 to 2002 for which the petitioner has also filed returns. Since PGST Act, 1967 was being replaced with Puducherry VAT Act, 2007, the Government of Puducherry issued the above Rules. The purpose of the aforesaid Rule was to bring finality to the assessment proceedings which had remained incomplete as on 01.05.2007. The respondents ought to have passed a deemed assessment order and thereafter, initiated fresh proceedings under the provisions of the newly inserted Pondicherry VAT Act, 2007 read with Pondicherry General Sales Tax (Assessment) Rules, 2007. Instead, they delayed in passing deemed assessment order in terms of the aforesaid Rules - there are no merits in the impugned order.
The impugned notice is quashed and the respondent is directed to pass appropriate assessment orders in terms of the Pondicherry General Sales Tax (Assessment) Rules, 2007 - Petition allowed - decided in favor of petitioner.
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2020 (5) TMI 585
Waiver of GST dues - release of an amount of ₹ 500 Crores by way of loan under the scheme of the Government of India to revive the projects so that work may start and then on completion the money is generated and repaid - HELD THAT:- It was pointed out by the learned Receiver that UCO Bank is considering the proposal for financing of the unsold inventory part. Considering urgency, let them consider and take a decision within 15 days in consultation with the learned Receiver - A note has been submitted by Mr. M.L.Lahoty, learned counsel, with respect to sale of certain properties in Eden Park and Castle completed by NBCC. Let the learned Receiver respond to the Note submitted by Mr. Lahoty on the next date of hearing and to point out whether their flats already stand allotted.
The DRT is directed to transmit the rent which they have received from property that has been attached to the Amrapali Account (being A/c No. 02070210002834) maintained by the Registry of this Court.
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2020 (5) TMI 584
Assessment u/s. 153A - survey action u/s. 133A - HELD THAT:- In view of the uncontroverted and admitted statement given on behalf of the assessee u/s. 133A and the documents impounded during the survey, which were also virtually admitted by the assessee, there was no error in the order of the Tribunal in accepting the materials on record in order to arrive at an assessment.
We cannot say that there was no search action u/s. 132 of the Income Tax Act so as to frame assessments u/s. 153A of the I.T. Act. The assessments were also based on material gathered during the course of survey u/s. 133A - See HOTEL MERIYA [2010 (5) TMI 556 - KERALA HIGH COURT] - we are inclined to dismiss this ground of the assessee.
Unaccounted sale receipts in the form of cash - Estimating the collection of cash outside the books - HELD THAT:- We direct the Assessing Officer to give due credit towards cost of construction relating to the unaccounted sale receipts collected by the assessee which was included in the work in progress that was shown by the assessee in its balance sheet. With this observation, we remit the issue in dispute to the file of the Assessing Officer for limited purpose of re-quantification of the addition in respect of unaccounted cash receipts unearthed by the Department during the course of search/survey action. The Assessing Officer is directed to compare the above cost of construction with the work in progress shown by the assessee in its balance sheet.
Total work in progress shown by the assessee in its books of accounts in each assessment year is to be apportioned between accounted collections and unaccounted collections in their respective ratio so as to arrive at correct undisclosed income of assessee for each assessment year. The resultant figure would be the undisclosed income of the assessee for each assessment year and there is no question of taking any percentage of it as income of assessee as argued by ld. AR.
assessee is only entitled for proportionate deduction towards cost of construction and accordingly AO has to recompute the unaccounted income for all three Assessment Years after giving an opportunity of hearing to the assessee. It is needless to say that the addition made by the Assessing Officer herein is not u/s. 69 or 69A of the I.T. Act. It is with reference to the unaccounted sale receipts which is part of the assessee’s turnover. Being so, the restriction imposed u/s. 69 or 69A of the I.T. Act with regard to granting of deduction towards expenditure does not apply.
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2020 (5) TMI 583
Profiteering - purchase of Flat No. EFP 24-0501 in “Emerald Floors Premier’ project - allegation is that the Respondent had not passed on the benefit of Input Tax Credit (ITC) by way of commensurate reduction in the price of the flat - contravention of provisions of section 171 of CGST Act - application forwarded to the DGAP to conduct detailed investigation in to the complaint according to Rule 129 (1) of the CGST Rules, 2017 - HELD THAT:- It is clear from the perusal of Sub-Section 171 (1) that both the benefits of tax reduction and ITC are required to be passed on by the suppliers to the buyers by commensurate reduction in the prices as they are the concessions which have been granted to them from the public exchequer in the interest of the consumers. Sub-Section 171 (2) provides that the Central Government may on the recommendations of the GST Council constitute an Authority to examine whether the input tax credits availed by any registered person or the reduction in the tax rate have actually resulted in a commensurate reduction in the prices of the goods or services or both supplied by him. Therefore, this Authority has jurisdiction to examine all such cases in which the above benefits are required to be passed on suo moto or to get them investigated through the DGAP and its power to do so is not circumscribed by any restriction to the effect that it cannot examine those cases in respect of which no complaint has been made - It is also apparent from the provisions of Rule 129 (1) that the DGAP shall investigate and collect necessary evidence in all such cases in which rate of tax has been reduced or the benefit of ITC has been granted which is required to be passed on to the buyers and submit his Report to this Authority under Rule 129 (6) and hence he is bound to investigate all those cases where benefit of ITC or tax rate is required to be passed on.
This Authority has not replaced or substituted any function which the Courts were performing hitherto. Though it performs quasi-judicial functions but it cannot be equated with a judicial tribunal. Also, it performs its functions in a fair and reasonable manner in accordance with the Act but does not have the trappings of a Court and therefore, absence of a Judicial Member does not render the constitution of this Authority unconstitutional or legally invalid - the Chairman and the Technical Members of the Authority are being appointed by the competent authority (Appointments Committee of the Cabinet) of the Union Cabinet keeping the requirements of the above mandate of the GST law in perspective. Moreover, the orders passed by this Authority are further subject to the judicial review and therefore, the Respondent should not have any grievance on this account.
The Respondent has benefited from the additional ITC to the extent of 11.90% of the turnover during the period from July, 2017 to March, 2019 and hence the provisions of Section 171 of the CGST Act, 2017 have been contravened by the Respondent as he has not passed on the above benefit to his customers and thus he has profiteered an amount of ₹ 13,35,79,636/- inclusive of GST @ 12% on the base profiteered amount of ₹ 11,92,67,532/-. Further, the Respondent has realized an additional amount of ₹ 1,04,734/- which includes both the profiteered amount @ 11.90% of the taxable amount (base price) and 12% GST on the said profiteered amount from the Applicant No. 1 - this Authority under Rule 133 (3) (a) of the CGST Rules, 2017 orders that the Respondent shall reduce the prices to be realized from the buyers of the flats of the above Project commensurate with the benefit of ITC received by him as has been detailed above. Since the present investigation is only up to 31.03.2019 any benefit of ITC which accrues subsequently shall also be passed on to the buyers by the Respondent. The concerned Commissioner CGST/SGST shall ensure that the above benefit is passed on to the eligible flat buyers.
Penalty - HELD THAT:- The Respondent has denied benefit of ITC to the buyers of the flats being constructed by him in his above project in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and he has thus resorted to profiteering. Hence. he has committed an offence under Section 171 (3A) of the CGST Act, 2017 and therefore, he is apparently liable for imposition of penalty under the provisions of the above Section - Accordingly, a Show Cause Notice be issued to him directing him to explain why the penalty prescribed under Section 171 (3A) of the above Act read with Rule 133 (3) (d) of the CGST Rules, 2017 should not be imposed on him.
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2020 (5) TMI 582
Change of physical status of land - resume of possession of land - HELD THAT:- This Court is of the view that such a prayer cannot be granted at this stage, when there are no specific facts asserted on affidavit by the applicant as to when and by whom was the applicant informed about alleged construction activities on the subject land and the exact nature of such construction activities. Thus, there is no occasion for directing the Official Liquidator to file an affidavit to demonstrate that the physical condition of the subject land as was in existence in August, 2019 continues to be so on date.
Application dismissed.
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2020 (5) TMI 581
Classification of goods - kraft paper made honeycomb boards - whether classified under HSN code 48081000 or 48089000? - HELD THAT:- On verification of the structure and purpose for which kraft paper honeycomb board or paper honeycomb board used are similar to the corrugated paper board(listed under 48081000), only difference is that this paper honeycomb board consists of honey comb like structure core material at the centre and on either side of this one or more layer of kraft paper is glued by using adhesive with fluting direction being perpendicular to corrugated boards. Hence this honeycomb paper board classified under the heading 48089000 as other instead 48081000.
The kraft paper honeycomb board or paper honeycomb board is classified under the heading 48089000.
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2020 (5) TMI 580
Classification of goods - scooter along with retro-fitment - restriction on input tax credit on purchase of vehicle under HSN 8711 at 28% GST - whether the vehicle classified under heading 8713 or 8711? - HELD THAT:- In the instant case, it is an admitted fact that the applicant purchases a vehicle i.e. two-wheeler and also certain additional parts/accessories to retrofit the said vehicle with the said parts/accessories. The word ‘Retrofit’ as a noun is an act of adding a component or accessory to something that did not have it when manufactured. Therefore, the applicant is adding certain components to the two wheeler by retrofitting the same i.e. an attachment is added to the said two wheeler (motor cycles) to enable it to be driven by the disabled person. This does not change the basic feature of the two wheeler. In the instant case the two-wheeler was neither specially designed or constructed nor altered to change its basic structure, after retrofitment.
Explanatory Notes to the Harmonized Commodity Description and Coding System specifies that the heading 8713 excludes Normal vehicles simply adapted for use by disabled persons or a bicycle fitted with a special attachment and pedalled with one foot and Trolley-stretchers. In the instant case the two-wheeler is simply retrofitted with additional components / accessories to enable it for use by disabled persons. Therefore, the impugned retrofitted two-wheeler gets excluded from the heading 8713 - the retro fitted two-wheeler is nothing but a two-wheeler purchased by the applicant under heading 8711 20 19, added with additional components/accessories and hence does not change its basic structure. Therefore, the said retro fitted two-wheeler merits classification under heading 8711 20 19 only.
Whether the tax paid on two wheelers and retrofit equipment is available to the applicant as input tax credit or not? - HELD THAT:- In the instant case the applicant purchases the two wheelers for “further supply of such motor vehicles”, though they add certain accessories to retrofit the said vehicle. Thus, the applicant is entitled to avail input tax credit of the tax/es paid on the said motor vehicles and the retrofit equipment as the accessories are utilized for value addition of the said motor vehicle.
Thus, the retrofitted vehicle merits classification under heading 8711 20 19 and hence attracts GST @ 28% and applicant is entitled for input tax credit of tax paid on purchase of vehicle i.e. scooter.
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2020 (5) TMI 579
Input Tax Credit - transition to GST regime - HELD THAT:- The issue decided in the case of BRAND EQUITY TREATIES LIMITED, MICROMAX INFORMATICS LTD., DEVELOPER GROUP INDIA PRIVATE LIMITED, RELIANCE ELEKTRIK WORKS VERSUS THE UNION OF INDIA AND ORS. [2020 (5) TMI 171 - DELHI HIGH COURT]where Respondents are directed to either open the online portal so as to enable the Petitioners to file declaration TRAN-1 electronically, or to accept the same manually.
Issue Notice.
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2020 (5) TMI 578
Deemed dividend u//s 2(22)(e) - assessee to be in default u/s 201/201(1A) - HELD THAT:- The assessee company had advanced the loan to its associated concern M/s. Arihant Agencies which was then transferred to the account of Sh.Dinesh Kumar Jain and the fund was transferred back to the assessee company on the same day as Director’s share capital.
We find that the issue of deemed dividend u/s 2(22)(e) of the Act in respect of similar transaction being made wherein the transaction of receipt and payment were on the same date itself by both the parties, arose before the Tribunal in series of cases i.e. Seema Devi Bansal i[2018 (7) TMI 1545 - ITAT DELHI] relating to Assessment Year 2010-11 and Sh. Harish Kanwar [2017 (10) TMI 997 - ITAT DELHI] relating to Assessment Year 2011-12. We have also decided similar issue in Surbhi Jain vs ITO [2020 (5) TMI 533 - ITAT DELHI] relating to Assessment Year 2011-12, applying the ratio laid down by Hon’ble Bombay High Court in Praveen Bhimsi Chheda Shivsadan vs DCIT [2011 (5) TMI 857 - ITAT MUMBAI] held that under similar circumstances, it was not case of deemed dividend u/s 2(22)(e) of the Act.
Applying the said parity of reasoning and we hold that the assessee cannot held to be in default u/s 2(22)(e) of the Act and there is no merit in raising the demand u/s 201(1) and charging interest u/s 201(1A).
Penalty u/s 271C for the aforesaid default u/s 201(1) - HELD THAT:- Since we have already deleted the demand raised u/s 201(1) there is no merit in levy of penalty u/s 271(1)(c) and the same is deleted. Grounds of appeal raised by assessee are thus allowed. - Decided in favour of assessee.
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2020 (5) TMI 577
Disallowance u/s 14A r.w.r 8D - HELD THAT:- In this case, the assessment year involved is 2006-07. Rule 8D was introduced with effect from 24/03/2008 which was prospective in operation and cannot be applied retrospectively as held by the Delhi High Court in the case of Maxopp Investment Ltd. vs. CIT [2011 (11) TMI 267 - DELHI HIGH COURT].
Accordingly, we direct the AO to disallow only 2% of expenses incurred towards exempted income. Thus, this ground of appeal of the assessee is partly allowed.
Addition of sale proceeds of Rubber Trees and of timber under Rule 7A of the Income Tax Rules.1962 - as contended that Rule 7A cannot be applied as the income from sale of rubber trees is not agricultural income - HELD THAT:- High Court observed in the case of Harrisons Malayalam Ltd [2019 (1) TMI 1359 - KERALA HIGH COURT] that sale of old and unyielding trees would not give rise to the exempt income. If there is no exempt income, then there is no question of application of Rule 7A. In such circumstances, the claim of the assessee is to be allowed. Jurisdictional High Court considered its own judgment in the case of CIT vs. Thiruvambadi Rubber Co. Ltd. [2011 (6) TMI 452 - KERALA HIGH COURT]
Being so, the reliance placed by the CIT(A) on the judgment of the Jurisdictional High Court in the case of CIT vs. Thiruvambadi Rubber Co. Ltd. [2011 (6) TMI 452 - KERALA HIGH COURT] is totally misplaced. Accordingly, we hold that the sale proceeds on sale of rubber trees and timber cannot be brought to tax under Rule 7A of the I.T. Rules. Thus, this ground of appeal of the assessee is allowed.
MAT computation - Diminution in the value of investment, provision for lease rent and provision for bad debts - arriving at the book profit u/s. 115JB, treating the same as a provision for an unascertained liability - HELD THAT:- We are of the opinion that the amount set aside as provision for diminution in the value of investment is to be added back to the book profit as shown in the profit and loss account in view of the retrospective amendment introduced by Finance Act No. 2, 2009 by introducing clause (i) (c) . By virtue of the said amendment the amount set aside as provision for diminution in the value of any asset is to be added back in view of the specific clause (i) in the said Explanation. Being so, we do not find any infirmity in the order of the lower authorities in adding back the said amount to the book profits shown in the profit and loss account .
Similar provision was made for lease rent as unascertained liability which is hit by the provisions of clause (c) in Explanation (2) of section 115JB of the Act. The contention of the Ld. AR is that the assessee is following mercantile system of accounting and therefore, the provision is to be allowed, though it was crystallized in the year in which the order of the Government of Kerala in G.O. (Ms) No.162/13/RD dated 26-04-2013 was passed.
We are not in agreement with this contention of the Ld. AR. Being so, we are not in agreement with the Ld. AR’s contention that this ascertained liability is to be allowed in view of mercantile system of accounting followed by the assessee - Provision for lease rent is unascertained liability in the assessment year under consideration and it is to be allowed in the year of crystallization of the expenditure. This ground of appeal of the assessee is dismissed. The appeal of the assessee is partly allowed.
Payment of interest for delay in payment of agricultural income tax as a deduction while computing the income of assessee under Income Tax Act - HELD THAT:- Interest incurred for delay in payment of Agricultural income tax also cannot be allowed u/s 36(1)(iii) as the condition laid down u/s 36(1)(iii) has not been fulfilled. In other words, interest paid is not for the purpose of the business of the assessee on which income assessee is paying income tax. In our opinion, the interest paid is having direct nexus with agricultural income which is exempt from tax u/s 10(1). Therefore, such payment of interest cannot be allowed u/s 36(1)(iii) also. We have also carefully gone through all the case law cited by the Ld. AR, which have no relevance to the facts of the case. In view of this discussion, we are inclined to dismiss all the grounds of appeal of the assessee. The assessee appeal is dismissed.
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2020 (5) TMI 576
Disallowance of unpaid service tax u/s 43B - credit balance of service tax payable - HELD THAT:- As considered by the co-ordinate Bench of the ITAT, Hyderabad Benches in the case of M/s. Bartronics India Ltd. v. ACIT [2012 (6) TMI 61 - ITAT HYDERABAD] that when the assessee has not paid the service tax as required under the provisions of section 43B, which is also very much covered u/s 43B. The provisions of section 43B of the Act is very clear and it states that “any sum payable by the assessee by way of tax, duty, cess or fee, by whatever name called, under any law for the time being in force
Service tax collected by the assessee and not paid to the Government exchequer before the due date of filing of return, is to be disallowed, though it was not charged to the profit and loss account and it attracts the provisions of section 43B and the present provisions of section 145A of the Act cannot be applied in view of non obstante clause in section 43B of the Act. Thus, this ground of appeals of the Revenue for both the assessment years is allowed.
Disallowance of proportionate interest on borrowed funds - HELD THAT:- We find that the assessee has not established in the cash flow statements about the availability of enough own funds at the time of making investments in the exempted income yielding assets. Hence, it is appropriate to verify the fact whether enough own funds are available with the assessee as on the date of making investments in the exempted income yielding assets. Being so, the assessee is directed to produce cash flow statements showing availability of enough own funds for making such investments with supporting documents which have to be examined by the AO before making disallowance. Accordingly, we remit this entire issue in dispute to the file of the Assessing Officer for fresh consideration with a direction to the assessee to produce relevant cash flow statements to show that interest free funds were available with the assessee to make such investments.
Depreciation on undivided share of land treating them as cost paid towards building - HELD THAT:- The assessee has shown the land as undivided share of land separately in the block of assets which is not entitled for depreciation. The CIT(A) is not justified in granting depreciation on the undivided share of land. Accordingly, we vacate the findings of the CIT(A) on this issue. Thus, this ground of appeals of the Revenue for both the assessment years is allowed.
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2020 (5) TMI 575
Rejection of books of accounts - Suppressed production - determination of quantum of clay which can be extracted/produced from mines - HELD THAT:- AO has proceeded ahead and basis his own investigation and understanding of the mining process involved, and basis his own calculation and understanding of variables has worked out the quantum of clay which could be extracted from one of the mines owned by the assessee without referring the matter to the domain experts in the field of mining such as geologists and mining engineers.
AO in the instant case, was totally unsuited for undertaking the activity of determining the exact production of the material, which itself involves very complicated procedures.”
Such calculation AO has determined the shortfall or suppression in the clay production vis-à-vis production disclosed by the assessee in respect of one of the mines. Using the same percentage of suppressed production, he has proceeded ahead and worked out proportionate suppression of production in the other two mines without getting into specific of functioning of such mines which again cannot be accepted. Without getting into the merits of the formula so arrived by the AO as we find ourself not competent enough to comment upon, we find that effectively, the AO has tried to determine the quantum of clay which could potentially be extracted from the mines and that’s where whole case of the Revenue rest.
The question for consideration here is not the potential extraction of clay rather the actual clay which has been extracted from the mines and which has been sold/dispatched during the year under consideration and which has not been disclosed in the return of income and what credible material is available on record in support of such findings. There is no material on record and no finding recorded by the AO that quantum of clay so determined by him as part of suppressed production has been actually dispatched and sold and more so, when the assessee’s activities comes under the jurisdiction of State Mining Department and both its production and dispatches are closely monitored by the Mining Department
As held in case of CIT vs. Shri Girija Smelters (P) Ltd [2014 (10) TMI 890 - TELANGANA AND ANDHRA PRADESH HIGH COURT] the occasion to levy income tax would arise, only when the product in question was found or alleged to have been sold, and the sale proceeds, constituting income were not reflected in the returns.
Not even alleged that the product shown in the form of discrepancies, was sold at all. Royalty assessments were carried out by the Mining Department without any adverse findings and copy of royalty assessment orders, copy of monthly returns, details of production at mines and dispatches from the mines and reconciliation thereof were admittedly furnished before the lower authorities and even acknowledged by the CIT(A) and no discrepancy has been highlighted therein either by the AO or by the ld CIT(A) and there is no material on record which highlight dispatches from the mines without paying the requisite royalty.There is no basis for alleging suppression of production by the assessee and the findings of the lower authorities are hereby set-aside. - Decided in favour of assessee.
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