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Showing 161 to 180 of 1320 Records
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2020 (9) TMI 1161
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - Operational Debt - it was held by NCLAT that there is no illegality or infirmity in the Order passed by the Adjudicating Authority - HELD THAT:- There are no reason to interfere with the impugned order dated 10.08.2020 passed by the National Company Law Appellate Tribunal, New Delhi.
Appeal dismissed.
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2020 (9) TMI 1160
Violation of the Election Code of Conduct - Offences under Section 123(3) of the Representation of the People Act, 1951 - Whether when a complaint has been lodged and/or information furnished of an offence to a Station House Officer, the Station House Officer can himself seek for permission to investigate a non-cognisable offence or as a corollary to it, it is only the informant/complainant, who is to seek permission for investigation from the Magistrate? - HELD THAT:- The Magistrate enquired with the Informant, perused the requisition and found that there is a prima facie case made out, requiring permission to be granted for investigation - Even otherwise, since the Informant herein is a public servant acting or purporting to act in the discharge of his official duties as belonging to the flying squad deputed by the Election Commission, there was no need for sworn statement of the Informant to be recorded, since the Provisio to section 200 exempts the same - thus, it cannot be said that the order permitting the investigation has been passed only on the basis of the requisition sent by the Investigating Officer. The same has been passed after the Investigating Officer having referred the Informant to the Magistrate, who having enquired with the Informant passed the order.
Whether the complaint as regards violation of Section 123(3) of the Representation of Peoples Act, 1951 is limited to the candidate or does it extend to any third party? - Whether the violation of Section 123(3) of the Representation of Peoples Act, 1951 would amount to a penal offence making such person liable for criminal prosecution? - Whether promotion of enmity or hatred is a sine qua non for invoking section 125 of the Representation of Peoples Act, 1951 - HELD THAT:- With the advent of democracy and the election process there have been several aspects relating to the elections, which have resulted in litigations. With the passage of time, laws have been evolved to regulate the electoral system. These electoral laws are aimed at maintaining a level playing field, so no one gets an undue advantage over the same - Various laws over a period of time have restrained or regulated various actions on the part of the candidate or his agent or representatives. Generally speaking, any violation of these electoral laws was regarded to be corrupt practices. Essentially any corrupt practices used by the candidate to get an unfair advantage would result in disqualification of the candidate.
The R.P Act does not contemplate any action against the agent or any other person, who is acting with the consent of the candidate. As stated above, any action for violation of Section 123 of the R.P. Act leads back only to the candidate, if proved resulting in disqualification of the candidate or voiding the result of the election - Similar provisions as under Section 123(2) and (3) of the R.P. Act are not available under Chapter III Part VII relating to Electoral Offenses. There is no provision which makes a corrupt practice under Section 123(2) or (3) of the R.P. Act as an offence under the said Chapter. Thus, no criminal prosecution can be laid on account of the violation of Section 123 of the R.P. Act against any person. Of course, if there is any violation of a penal statute or special statute, separate prosecution could always be laid - An action for violation of Section 123 of the Representation of Peoples Act, 1951, can only be initiated against the candidate seeking for his/her disqualification and voiding of his/her result in the event of such candidate having returned successfully, hence no action can be taken against the agent or a person authorised by him for such corrupt practice in terms of section 123 of the Representation of Peoples Act, 1951 - Violation of Section 123 of the Representation of Peoples Act, 1951 in the present scheme of the legislation would amount to corrupt practice, providing a cause of action for filing of an election petition under Section 81 read with Section 100 and 101 of the Representation of Peoples Act, 1951; there can be penal action initiated by way of criminal prosecution.
Whether in the present case on the basis of the allegation made in the complaint can it be prima facie concluded that the Petitioner has committed an offence under Section 171F of the IPC by exercising undue influence on the persons who had gathered for election rally in terms of Section 171C of the IPC? - HELD THAT:- The exercise of undue influence in terms of Section 171C would only arise in the event of a person threatening any candidate or voter, or any person in whom a candidate or voter is interested, with injury of any kind or induces or attempts to induce a candidate or voter to believe that he or any person in whom he is interested will become or will be rendered an object of divine displeasure or spiritual censure - That means to say that there have to be statements made or threat given to a voter that if he were to vote in any particular manner, he may incur displeasure of the divine or censure by spiritual censure. Unless these two ingredients are satisfied, there cannot be undue influence said to be used and therefore an offence under Section 171F could not be said to be committed - As regards undue influence, if it is to be contended that the speech of the Petitioner amounted undue influence it has to satisfy the dual requirement under Section 171C of the IPC. An ex-facie reading of the complaint does not make any allegation to satisfy the requirement of Section 171C of the IPC. Thus, when the basic requirement is not fulfilled, the criminal law cannot be set in motion, as regards an action, which does not amount to a penal offence.
Thus, in the present case on the basis of the allegation made in the complaint it cannot be prima facie concluded that the Petitioner has committed an offence under Section 171F of the IPC by exercising undue influence on the persons who had gathered for an election rally in terms of Section 171C of the IPC.
What is the procedure to be followed by the Magistrate when a B-report is filed? - Can a Magistrate suo moto reject the B-report without notice being ordered on the complainant? - Whether the Magistrate can suo moto take cognisance of the offence without issuance of notice to the complainant? - HELD THAT:- This procedure has been enshrined in order to protect a citizen of the Country from unnecessary harassment after submission of the B-report, when a B-report has been submitted, it is generally accepted. It is only in exceptional cases, where the B-report has been filed and the complainant is not agreeable to the B-report that the enquiry is conducted under Section 200 of Cr.P.C.; in a proceedings pertaining to non- cognisable offences, the station house officer is not entitled to take cognisance of the non- cognisable offence, it is only on being directed by the jurisdictional Magistrate that he conducts an investigation to enquire as to whether there is prima facie offence made out; once the investigation leads an adverse report in terms of no offence having been made out, it is only the complainant, who can find fault with such investigation or B-report and requests the Magistrate to continue with the matter on the basis of the complaint filed by finding out defects in the investigation and/or by establishing otherwise that there is a prima facie case made out for the prosecution of the accused. In the present case, no notice was issued to the complainant, the Magistrate has rejected B- report without anyone objecting to the B-report and has taken cognisance of the alleged offence suo moto, such a procedure is neither contemplated nor sanctioned under the provisions of Criminal Procedure Code - no criminal prosection can be laid for violation of Section 123 of the R.P. Act. As answered to the points above, I am of the considered opinion that the complaint as such does not make out any case under Section 125 of the R.P. Act or Section 171F of IPC. Thus the question of setting the criminal law into motion on the basis of the complaint which does not prima facie make out an offence, is not sustainable.
What is the procedure to be followed by the Magistrate before issuance of summons to a accused, who is not residing within its jurisdiction? - HELD THAT:- No such summons could be issued without first examining the complainant and his witness if any on oath in terms of Section 200 of the Cr.P.C. Since in the present case, the Petitioner is not resident within the territorial jurisdiction of the Magistrate, the above procedure ought to have been complied with - The registration of complaint and issuance of summons to the accused is violative of Section 202(1) and 202(1) proviso (b) of the Cr.P.C. 11.5. The question that would arise in regard to the above contention is what is the enquiry that the Magistrate would have to conduct. There would have to be an order passed under Section 202(1) of the Cr.P.C. to indicate as to why process is being issued by the Magistrate to an accused who is not residing within the jurisdiction of that Court and for this purpose, sworn statement of the complainant as also the affidavit evidence if any of the complainant's witnesses could be recorded leading to an order by the Magistrate based on his satisfaction that there are sufficient grounds for issuing summons to such accused residing outside its jurisdiction. Such order not having been passed by the magisterate, the summons could not have been so issued.
Whether the Magistrate could have at the stage of taking cognizance relied upon the video recording in a compact disk, without it being accompanied by a certificate under Section 65-B of the Indian Evidence Act? - HELD THAT:- The electronic document cannot be considered to be evidence during trial without a certificate under Section 65-B of the Indian Evidence Act, being accompanied with it. In the present case, admittedly there is no trial, which has commenced. Thus, there would be no requirement of Section 65-B certificate at the stage of examination by the Magistrate whether to take cognisance or not, a Magistrate can always look into any electronic evidence, even if unaccompanied by a certificate under Section 65-B of the Indian Evidence Act for the purpose of taking cognisance or not of an offence.
Is this a fit and proper case for this Court to interfere in the orders passed by the Magistrate under Section 482 of Cr.P.C.? - HELD THAT:- It cannot be said that violation of Section 123 of the R.P. Act would require the initiation of criminal prosecution, no allegation or offence in terms of Section 125 within Chapter-III of Part-VII of the R.P. Act, 1951 is made out. The ingredients of the offences under Section 171C and 171F of the IPC have also not been made out. Hence, prima facie there is no offence, which can be said to have been committed by the Petitioner requiring prosecution. Of course, this does not prevent any action to be taken against the candidate for violation of Sections 123 of the R.P. Act.
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2020 (9) TMI 1159
Transfer pricing adjustment made in respect of distribution segment - assessee adopted “Resale Price Method” (RPM) as most appropriate method for the distribution segment - HELD THAT:- We notice that the co-ordinate bench has examined the issue of “most appropriate method” for a distributor of products in the case of Acer India Pvt Ltd [2020 (3) TMI 426 - ITAT BANGALORE]
In the instant case, the assessee has claimed that it has not carried out any value addition to the products imported by it from its Associated Enterprises. Also submitted that the functions to be performed by the assessee as a “distributor”, which is highlighted by the TPO is normal functions performed in the trade circles even by a non-related party - revenue has not negated both these submissions of the assessee. The TPO has also rejected the RPM for the reason that the assessee is incurring Net loss. As held by the Tribunal in various cases that the Gross Profit margin has to be compared under RPM. Accordingly, we are of the view that RPM is the most appropriate method in the facts and circumstances of the case. Accordingly, we direct the AO/TPO to adopt Resale Price Method as most appropriate method and determine the ALP of the transactions accordingly
Transfer pricing adjustment made under ITES segment - assessee adopted TNM method as most appropriate method and Operating Profit/Operating Cost (OP/OC) as Profit Level Indicator (PLI) - Comparable selection - HELD THAT:- Having regard to the submission of the assessee that the segmental results is required to be compared with the assessee company, we are of the view that this issue also requires fresh examination at the end of the AO/TPO. Accordingly we restore this company also to their file for examining it afresh.
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2020 (9) TMI 1158
CENVAT Credit - capital goods which were not specified in the Rule 2(a)(A) of CENVAT Credit Rules, 2004 - Construction materials - Whether the Tribunal committed an error of law in not appreciating the Legislative Intent in insertion of “but shall not include cement, angles, channels, Centrally Twisted Deform bar (CTD) or Thermo Mechanically Treated bar (TMT) and other used for construction of factory shed buildings or laying foundation or making structures for support of capital goods” vide Not.No.16/2009-C.E (N.T) dated 7/7/2009 being clarificatory in view of already existing explanation 2 to Sec.2 (k) of CENVAT Credit Rules, 2004 and therefore, operates retrospectively?
HELD THAT:- The matter is no longer res integra and the learned Tribunal has rightly followed the decisions and held in favour of the Assessee - ollowing the three Hon'ble High Court decisions in the appellant's own case cited supra, and also maintaining this Tribunal's order in the case of Dalmia Cements (Bharath) Ltd. Vs CCE Trichy [2015 (8) TMI 1179 - CESTAT CHENNAI], holding that immovability is not a criteria for denial of Cenvat Credit, we hold that appellants are eligible for Cenvat Credit on the capital goods used in "Dry Process Cement Manufacturing Plant". Accordingly, the impugned order is set aside and the appeal is allowed."
There are no merit in the present Appeal and the same is liable to be dismissed.
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2020 (9) TMI 1157
Maintainability of appeal - non-submission of mandatory 7.5% of the amount confirmed against him by the assessment order, for maintaining an appeal before the First Appellate Authority - non-deposit on account of financial distress - HELD THAT:- Inasmuch as the appeal preferred by the petitioner against the assessment order was numbered by the appellate authority, and was taken up for hearing in 2020, the appellate authority ought to have granted the petitioner an opportunity of paying the deposit amount before proceeding to reject the appeal on the ground of non-payment of predeposit. Had the appellate authority found that the appeal was not one that could be maintained in the absence of the pre-deposit, it ought not to have numbered the appeal and given an impression to the petitioner that he had filed a valid appeal against the assessment order.
The petitioner can be given a month's time to pay the pre-deposit amount required for maintaining the appeal before the 1st respondent - Petition is allowed by quashing Ext.P5 order and directing the petitioner to pay the required pre-deposit amount as per the statute within a month from the date of receipt of a copy of this judgment.
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2020 (9) TMI 1156
Penalty u/s 271AAB(1)(a) - additional income surrendered by the assessee u/s 132(4) - income disclosed in the return of income filed after search & seizure action - HELD THAT:- Additional income surrendered by the assessee have been accepted by the Department on the basis of the explanation given by the respondent and on the basis of offering the same as business income which is even clearly discernable from the assessment order. It is also not in dispute that the assessee company has no other source of generating income other than the business carried out by it as per the objects for which it is registered. This fact was not in dispute and method and manner of additional income offered was duly explained to the Investigation Wing and also during the course of assessment proceedings which is well evident from the assessment order itself. We find that under the similar facts, we both the undersigned of this order have adjudicated the similar issue in assessee’s another group concern M/s. Keti Sangam Infrastructure (I) Ltd and Keti-T Construction (India) Ltd [2018 (6) TMI 1525 - ITAT INDORE]wherein deleted the penalty levied u/s 271AAA.
Defective notice - As notice clearly spells out that the provisions under which the notice was issued for levy of penalty u/s 271AAA but the charges mentioned therein refers to those provided in Section 271(1)(c) of the Act. Ld. A.O failed to mention the charges provided u/s 271AAA of the Act. We find that this issue is also squarely covered in favour of the assessee by the decision in the case of Gillco Developers & Builders (P) Ltd [2017 (8) TMI 1468 - ITAT CHANDIGARH] wherein the Tribunal after observing that the notice issued is defective held in favour of the assessee and quashed the penalty proceedings
As penalty proceedings carried out in the case of the assess were void ab-initio since the notice issued itself is defective and not in accordance with law. Thus we find no reason to interfere in the finding of Ld. CIT(A) deleting the penalty levied u/s 271AAA - Decided against revenue.
Penalty u/s 271AAB(1)(a) - income offered by the assessee u/s 41(1) on account of writing off outstanding credit balance in the name of a creditor - HELD THAT:- Alleged outstanding amount was offered to tax u/s 41(1) of the Act in the Income Tax Return filed u/s 139(1) of the Act. In these given facts and circumstances of the case, we are of the considered view that the alleged outstanding amount offered to tax u/s 41(1) of the Act on account of “cessation of liability” is not an undisclosed income since the relevant information about alleged undisclosed income was duly recorded in the books before the date of search and sufficient documentary evidences are available to prove this fact. The alleged amount was brought forward from preceding year and thus forming part of audited books of accounts. Thus the amount offered to tax u/s 41(1) of the Act is not a undisclosed income since it was shown in the return of income filed u/s 139(1) of the Act.
Therefore in our view the action of the Ld. A.O levying penalty u/s 271AAB(1)(a) @10% on the alleged undisclosed income was not justified and uncalled for. Therefore Ld. CIT(A) has rightly allowed the ground raised by the assessee on merits of the case holding that penalty was not leviable u/s 271AAB - Decided against revenue.
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2020 (9) TMI 1155
TP Adjustment - comparable selection - HELD THAT:- Assessee is into services rendered under the title “Technical Support Services” and “Research and Development Services”. Both these services have been clubbed together as “Software Development Services” segment for bench marking.The assessee adopted TNM method as most appropriate method and Operating Profit/Operating Cost as Profit level indicator (PLI).
We direct the AO/TPO to apply the upper turnover filter and exclude comparable companies, which are having turnover of more than ₹ 200/- crores.
Companies functionally dissimilar with that of assessee need to be deselected from final list.
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2020 (9) TMI 1154
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- The Respondent has addressed a letter dated 13.03.2018 to the Petitioner by inter-alia stating that due to some un-avoidable circumstances, payments are delayed from their clients and funds flow was also not good since financial year ending, promised to clear the dues within 30 days period. When the Respondent failed to honour their promise, the Petitioner has issued demand Notice dated 04.10.2019 under the provisions of Code, and thereafter the Respondent raised dispute vide their Reply dated 13.12.2019. The contentions raised in the Reply is totally contrary to their earlier letter dated 13.03.18, and these contentions/ allegations are not all tenable and they cannot constitute valid and legal dispute. Since the Respondent did not appear before the Adjudicating Authority, the amount involved in the case is mere ₹ 4.35 lakhs, and initiation of CIRP is not a solution for the Petitioner, which is small entrepreneur and operational Creditor. Operational. And chances of getting dues of Operational Creditors are very less in comparisons to secured Creditors.
Instead of keep the case pending for service of notice on the Respondent and getting their reply, interest of both the parties would be met, if the Petition is disposed of by directing the Respondent to settle the issue in question within a stipulated period - Petition disposed off.
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2020 (9) TMI 1153
Validity of reopening of assessment - information is received by AO from the investigation wing - Addition u/s 68 - assessee was identified as one of beneficiaries who had received bogus/accommodation entries in the form of share capital by entry provider S.K Jain - HELD THAT:- Merely using the expression ‘failure on the part of the assessee to disclose fully and truly all material facts’ is not enough. The reasons must specify as to what is the nature of default or failure on the part of the assessee.
Hon’ble Bombay High Court in the case of Anand Developers [2020 (2) TMI 995 - BOMBAY HIGH COURT] has held that a mere bald assertion by the AO that the assessee has not disclosed fully and truly all material facts is not sufficient. AO has to give details as to which fact or the material was not disclosed by the assessee leading to its income escaping assessment otherwise the reopening is not valid.
We agree with the argument of assessee that the reason to believe that income has escaped assessment is not based on correct facts and the approval has been given in a mechanical manner and, therefore, such notice based on wrong facts and the approval given in a mechanical manner make the re-assessment proceedings invalid being not in accordance with law. Accordingly we hold that the reassessment proceedings initiated by the AO is not valid in the eyes of law. Accordingly the same is directed to be quashed. Since the assessee succeeds on this preliminary legal ground, the other legal grounds as well as the grounds on merit, in our opinion, do not require adjudication being academic in nature. Appeal filed by the assessee is allowed.
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2020 (9) TMI 1152
Maintainability of application - it is submitted that the application so filed by the applicant is not a corporate applicant in view of the fact that the Director has already been disqualified under Section 164 of the Companies Act, 2013 - HELD THAT:- As per the record of financial creditor Central Bank of India, there are five directors. However, subsequently, when it is verified with the MCA portal it is found that the pattern and status of the Directors have been changed and the same was never been informed to the financial creditors viz. CBI. Further, Ms. Neelu Gupta was never been a Director on the Board of the applicant company and as such she cannot execute SPA in favour of Mr. Sanjay Gupta. Further, on perusal of the record it is found that no Board Resolution is ever passed by the company authorising Mr. Sanjay Gupta to file the instant application. Further, on perusal of the record it appears that Mr. Sanjay Gupta obtained Special Power of Attorney in his favour issued by Ms. Neelu Gupta flouting all the norms of the Companies Act thereby the very power given in favour of Mr. Sanjay Gupta is bad in the eye of law and as such the application is not maintainable for want of proper authorisation.
Admittedly, as also matter of record that, the applicant is not a corporate applicant as per form 6, Clause 3, the applicant is not a director and is disqualified under Section 164, wherein the name and address of the Director is shown as "presently, there is no Director on the Board of the Company due to disqualification under Section 164 of the Companies Act 2013". However, clause 3 of form 6 further discloses that the list of promoters along with their address attached.
On perusal of the record i.e. balance sheet as on 31.03.2016 (page 254) it is found that under the head "deferred tax liability" an amount of ₹ 10,34,37,089/- has been shown thereby meaning that no returns have been filed by the company. It is also a matter of record that objector banks have already initiated proceedings under RDDB Act, 1993 and SARFAESSI Act, 2002 and to install the said proceedings, the applicant has filed the instant application, so as to initiate moratorium and to get stayed the proceedings initiated by the banks. Under such circumstances, the instant application has no merits and, therefore, requires to be dismissed.
Petition dismissed.
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2020 (9) TMI 1151
Disallowance u/s 40(a)(ia) of short deduction of tax at source - Disallowance u/s.40(a)(ia) - TDS u/s 194C OR 194J - HELD THAT:- As relying on M/S. TV18 HOME SHOPPING NETWORK LTD [2020 (2) TMI 1397 - ITAT MUMBAI] when there is a short fall in deduction of TDS there cannot be any disallowance u/s.40(a)(ia) of the Act - we uphold the order of the Ld.CIT(A) and reject the ground raised by the revenue.
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2020 (9) TMI 1150
Sanction under Section 197 Cr.P.C. - Allegation is that is said to be the kingpin involved in this crime and is since absconding - finding that there was a prima facie case made out against the appellant, the Special Judge refused to discharge the appellant from the offences under the IPC - HELD THAT:- A number of judgments have held that the standard of proof in a departmental proceeding, being based on preponderance of probability is somewhat lower than the standard of proof in a criminal proceeding where the case has to be proved beyond reasonable doubt.
In view of the detailed CVC order dated 22.12.2011, the chances of conviction in a criminal trial involving the same facts appear to be bleak. We, therefore, set aside the judgment of the High Court and that of the Special Judge and discharge the appellant from the offences under the Penal Code.
Appeal allowed - decided n favor of appellant.
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2020 (9) TMI 1149
TP Adjustment - Addition relating to Arm’s Length Price Adjustment towards interest on receivables from AE’s - Finding on the No.of days delay in receivables - HELD THAT:- The assessee is following the TNMM method and there is no dispute with regard to the method followed by the assessee. TPO has made economic analysis and given a finding that no adjustment is required and the transactions were at ALP.
On going through the order of the TPO, though it was stated that there were outstanding trade receivables TPO has not given any finding on the No.of days delay in receivables. As submitted by the learned AR, the delay was less than 90 days and the industry acceptable period of average is 90 days. The Coordinate Bench of the ITAT in assessee’s own case for the A.Y 2013-14 [2020 (7) TMI 282 - ITAT HYDERABAD] has taken view that no adjustment is required if the delay is between 90 to 120 days.
As respectfully following the view taken by the Coordinate Bench in assessee’s own case for the earlier A.Y2013-14 we hold that no adjustment is required and accordingly we, set aside the order of the DRP/AO and delete the addition made by the Assessing officer. - Decided in favour of assessee.
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2020 (9) TMI 1148
Validity of assessment order - order is primarily assailed on the ground that after an order of remand has been passed by the appellate authority, there would be no justification for the Tribunal to require the assessee to deposit even 10% amount - HELD THAT:- The ends of justice would be met if the revisionist is directed to furnish bank guarantee to the extent of 10% of the tax amount within four weeks from today before the authority concerned. In the event such guarantee is deposited the appellate authority shall proceed to decide the appeal finally, expeditiously. With the aforesaid observation, this revision stands disposed of.
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2020 (9) TMI 1147
Exemption u/s 10(38) denied - Denial of an opportunity of fair hearing by providing copy of the statement and related details - HELD THAT:- In our opinion, the issues are squarely covered by the decision of Bangalore Bench of ITAT in the case of Ranjit Kumar Bothra Vs. ITO. [2020 (4) TMI 50 - ITAT BANGALORE] as held that since the petitioner has been denied an opportunity of fair hearing by providing copy of the statement and related details, the matter is required to be reconsidered by the AO by providing fair and reasonable opportunity of hearing to the assessee after furnishing details / copy of the statement based on which the impugned assessment order has been passed.
From the above it is seen that matter was restored back to the file of the AO for fresh decision - Assessee’s appeal is allowed for statistical purposes.
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2020 (9) TMI 1146
Implementation of approved ResoIution Plan on or before the extended date - HELD THAT:- The prayer for reversal of the money to the Successful Resolution Applicant in the event of the dismissal order from the Hon'ble Apex Court cannot be granted at this stage only on speculations, Accordingly, the said prayer is rejected at this stage.
It is expected that the Successful Resolution Applicant will implement the approved resolution plan on or before the extended date i.e. 30.09.2020.
Application disposed off.
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2020 (9) TMI 1145
Levy of GST - taxable supply or not - sale of Transferable Development Rights (TDR)/ Floor Space Index (FSI) received as consideration for surrendering the joint rights in land in terms of Development Control Regulations - Agreement entered between the Appellant and Pune Municipal Corporation (PMC) read with Development Control Regulations - classification under GST - Applicable rate of GST.
Whether TDR in itself is “land and Building” or “Immovable property other than Land & Building”?
HELD THAT:- The Appellant has referred to various definitions of the term land’ occurring under other legislations where the term land has been defined to include ‘benefits arising out of land’ and as TDR is a benefit arising out of land it will also come under Clause 5 of schedule III to the CGST Act, 2017. We do not agree with the argument of the Appellant as the Clause 5 speaks only of land’ and ‘building’. Neither the GST Act nor the schedules define land’ or choose to do that. In that case there is no need to qualify the term land by ascribing any meaning to it or defining it by borrowing definitions from other laws. The CGST law does not make a reference to any other law while mentioning land’ in Schedule III. Also, if it had wanted to widen the scope of ‘land’ to include ‘benefits arising out of land’ it could have very well done so. Schedule III to the CGST Act, 2017 is so to speak an exemption notification and exemption notifications have to be strictly interpreted - The term land’ has to be interpreted strictly and cannot be extended to cover ‘benefits arising out of land’.
Whether supply of “TDR” is supply of “service” or supply of “Goods”? - HELD THAT:- The transferable development right that is TDR is an immovable property and hence not covered under the definition of goods. But the transfer of development right which is an immovable property is covered under the definition of service as the definition of service is very wide and it covers anything other than goods under its ambit. Hence as per the definition of supply under Section 7 of the CGST Act, 2017, the transfer of TDR made for consideration in the course or furtherance of business is supply of service and taxable as per the provisions of CGST Act, 2017. It is again made clear that levy of a tax is not on land but levy of tax is on the benefits arising out of the land, which are in the nature of service - The definition of service is broadened so as to cover all commercial transactions within its ambit and sale of TDR is a commercial transaction. There is no section under the Act which explicitly prohibits the taxation of TDR. The Schedule Ill to the CGST Act, 2017 only mentions ‘land’ to be outside the ambit of GST and not ‘benefits’ arising out of land. TDR is a benefit arising out of land and not land itself - Therefore, it is liable to tax.
As the Act casts a liability on the supplier to pay tax on supply or transfer of TDR, the Central Government, in exercise of the powers conferred by sub-section (1) of section 9, sub-section (1) of section 11, sub-section (5) of section 15 and sub-section (1) of section 16 of the Central Goods and Services Tax Act, 2017 (12 of 2017), on the recommendations of the GST Council notified the rate as 9% (CGST) covered under Si. No. 16, item (iii) of Notification No. 11/2017 - Central Tax (Rate), dated 28-06-2017 (heading 9972). Therefore, the effective rate of GST on TDR/FSI is 18% . Further, the Central Government issued Notification No. 4/2018 - C.T. (Rate) dated 25.01.2018, thereby postponing the time of supply till the time of supply of the developer arises. The Government presupposes a liability to pay tax before the time of supply arises.
The subject transaction would adequately get classified under the Heading 9972. Now, the Notification No. 11/2017- C.T.(Rate) dated 28.06.2017 to ascertain the exact entry and the GST rate thereto. On perusal of the aforesaid Notification, it is observed that the subject transaction would be covered under entry at SI. No. 16 (iii) of the Notification No. 11/2017-C.T. (Rate), dated 28.06.2017, bearing description “Real estate services other than (i) and (ii) above”, and accordingly, would attract GST at the rate of 18%.
The sale of TDR/FSI would be leviable to GST under Heading 9972, at the rate of 18%, as prescribed under the entry at St. No. 16 (iii) of Notification No. 11/2017 - Central Tax (Rate), dated 28-06-2017 - advance ruling upheld.
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2020 (9) TMI 1144
Input Tax Credit - lift installation charges paid to Fujitec - credit booked as Capital expenditure in their books without availing the depreciation on 18% GST charged by Fujitec - challenge to AAR decision - HELD THAT:- The definition of the “Plant and Machinery” categorically excludes building or any other civil structure. Since, the lifts/elevators, erected, installed and commissioned in the buildings, are construed as an integral part of those building as held by the Advance Ruling Authority on the basis of the Hon'ble Apex court judgment mentioned in the impugned Advance Ruling, hence, the same would be excluded from the category of “Plant and Machinery”, in terms of the provisions related to the 'Plant and Machinery” laid out. Further, the Larger Bench of the Supreme Court in the case of M/S. KONE ELEVATOR INDIA PVT. LTD. VERSUS STATE OF TAMIL NADU AND OTHERS [2014 (5) TMI 265 - SUPREME COURT] has held that in the case of installation of lift after the goods are assembled and installed with skill and labour at the site, it becomes a permanent fixture of the building. Once it has been established that the lift, after its erection, installation and commissioning, would be considered as part of the building, and hence immovable property, the Appellant cannot claim ITC on the input services in terms of the provisions laid out under section 17(5)(d) of the CGST Act, 2017.
The provision of Section 17 of CGST Act, says that ITC would be available on tax paid on works contract services when such services are an input service for further supply of works contract service. The appellant does not fulfill the conditions laid down above. It has to be understood that the exception carved out to provide ITC in the case of tax paid on works contract is for those who in turn provide works contract service. For eg when a principal gets a contract of work executed from a sub-contractor and provides the same to the employer. In such a case, the principal becomes eligible for ITC even though the contract results in immoveable property. However, the situation is far from it in the present case. Firstly, the society itself is not a works contract service provider. Nor is it in the business of providing works contract services. It has not itself provided any works contract service to the members. If the society is not itself a provider of the service there is no question of any ITC on input service. The works contract service is received by the society for the common benefit of the members.
Circular No. 109/28/2019-GST, dated 22.07.2019 ,issued by the CBIC as referred to by the Appellant to contend that the Circular does not disallow the ITC in respect of goods, which become immovable property after being installed, and hence they are rightfully eligible to avail ITC in respect of the lift installation charges paid to the lift contractor, even if the lift is considered as immovable property, as held by the Maharashtra Advance Ruling Authority - we are of the view that the said Circular allows the ITC in respect of GST paid on Capital Goods only, and not on the works contract services. It is not in dispute that the Appellant is availing the works contact services from the lift contractor for the replacement of the lift in the Society, which after being installed, becomes immovable property, and therefore ITC in respect of GST paid on such works contract services would not be admissible to the Appellant.
The Appellant will not be eligible to avail the ITC in respect of the GST paid on lift installation charges paid to the lift contractor, in terms of section 16(2)(b) read with section 17(5)(c) and 17(5)(d) of the CGST Act, 2017 - decision of AAR upheld - appeal not maintainable.
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2020 (9) TMI 1143
Works Contract - Earth Work or not - construction of tunnel and its allied works - Composite supply of goods and services - Sl.No. 3A of Notification no. 12/2017-CT (Rate) dated 28th June 2017 - any activity in relation function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution - HELD THAT:- It is evident that as per the work order, the work deals with excavation of earth and depositing it on the sides. As per the definitions, it is clear that Earthwork includes excavation and as per the contract the Earthwork constitutes more than 92.66% of the contract by value.
On a careful reading of the entry, we find ourselves in disagreement with the finding of the AAR. The entry says that the Composite supply should have earthwork forming more than 75% of the contract by value. Thus it very much clear from the wording that the Contract may be for something else- be it construction of building, tunnel, canal, road and in these contracts if the earthwork constitutes more than 75% then it qualifies for the above entry. If the intention of the Legislature had been to cover only pure contract of earthworks in it then a qualifying condition of more than 75% by value wouldn't have been provided. We therefore find the reasoning of the AAR untenable.
The Services provided by the appellant in the impugned matter qualifies for inclusion under entry 3(vii) of the Notification 12/2017 dt 28.6.2017.(as amended by Notification 31/2017 - dt 13.10.2017).
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2020 (9) TMI 1142
Concessional rate of GST - affordable housing project (AHP) - Works Contract - whether Entry No. 3(v)(da) of Notification 11/2017 Central Tax (Rate) dated 28/06/2017, as amended time to time, applies to the works contract service received from the contractors? - HELD THAT:- Entry No. 3(v)(da) of the Rate Notification is related to the construction of low-cost apartments. Clause 4(xvi) of the Rate Notification defines an affordable residential apartment. It shall mean a residential apartment in a project which commences on or after 01/04/2019 or in an ongoing project in respect of which the promoter has not exercised the option to pay tax at the rate specified in (ie) or (if) of Entry No. 3, having carpet area not exceeding 60 sqm in metropolitan cities or 90 sqm in cities or towns other than metropolitan cities and for which the gross amount charged is not more than 45 lakh - It is ascertained from the WBHIRA website that the project is under construction and the flats offered on sale are partly booked.
The flats having a carpet area of 60 sqm or less per unit in the RREP qualify as affordable residential apartments, provided the gross amount charged per unit does not exceed ₹ 45 lakh and the promoter has not exercised the option to pay tax at the rate specified in (ie) or (if) of Entry No. 3. It now needs to be ascertained whether the RREP is an affordable housing project, which enjoys infrastructure status vide the AHP Notification - The built-up area for the affordable residential apartments, as identified by the architect, under the RREP is 7885 sqm (the calculation sheet is attached). The relevant FAR, therefore, comes out to be 1.401, which is 50.96% of the FAR for the project. The RREP, therefore, is an affordable housing project in terms of the AHP Notification.
Thus, the works contract service for the construction of those dwelling units in the RREP that are affordable residential apartments in terms of clause 4(xvi) of the Rate Notification are taxable under Entry No. 3(v)(da) of the said notification, provided the applicant does not opt for paying tax at the rate specified in (ie) or (if) of Entry No. 3.
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