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2019 (3) TMI 1860
Revision u/s 263 - Option money received - whether the option price received by the assessee is income or it is capital receipt? - As per CIT JV agreement was never examined by the Assessing Officer - HELD THAT:- The initial year of transaction was 2001 when the Government opened the field for private parties also in the Insurance business. This is not the first year of transaction. The assessee has been receiving option money after the year in which it entered into a JV agreement with CUIH to co-promote a JV company. The first year of scrutiny assessment was 2005-06 and the Assessing Officer raised specific query in relation to the option money received from CUIH. The Assessing Officer examined the balance sheet and notes of accounts and was convinced that the option money received is not taxable during the year.
Once again, assessment order for assessment year 2006-07 was also completed u/s 143(3) of the Act and once again a query was raised in relation to the option money, which was duly replied by the assessee and explained the nature of transaction with notes of account, which also contains capitalisation on interest paid on borrowed funds.
Assessment year 2008-09 was also taken up for scrutiny assessment. Once again queries were raised by the Assessing Officer in relation to the JV agreement and option money. Once again, the assessee explained the transaction in the light of details given in the balance sheet and notes to accounts. The order was framed u/s 143(3) of the Act.
In assessment year 2011-12 also, the return of income was taken up for scrutiny assessment. The balance sheet and notes of account were examined wherein all the details about the capitalization of interest was properly disclosed and receipt of option money was explained to be adjusted against reduction in the share holding in the year of transfer of shares.
It is incorrect to say that the JV agreement was never examined by the Assessing Officer. Right from the first year of scrutiny assessment, after the impugned transaction of option money, JV agreement has been scrutinised by the Assessing Officer alongwith the balance sheet and notes to accounts. It cannot be said that right from assessment years 2005-06 to 2011-12, the Assessing Officers continuously ignored the taxability of option money. A reading of the order of the PCIT framed u/s 263 of the Act clearly shows that the PCIT assumed jurisdiction on the strength of the assessment order for assessment year 2015-16, when the Assessing Officer took a different view on the same set of transactions which the assessee continued to follow since the year 2001.
PCIT has not understood the JV agreement and has been carried away by drawing adverse inference from certain clauses of the JV agreement. It is incorrect to hold that the assessee has purchased shares as the same is business of the assessee. Investment in AVIVA Life Insurance was a capital contribution in the form of shares for the purpose of acquiring controlling interest to the extent of 74% in the company and is definitely a capital asset in the hands of the assessee. There is a specific restriction in the JV agreement that neither of the parties i.e. the assessee and CUIH, will sell its shares to outsiders and right to purchase shares of the assessee was granted to CUIH at a later date as and when FIPB increases the permissible limit of investment for foreign partners in JV agreement.
PCIT completely missed the point that in the case of shares of a company, which is a movable property, the transfer completes when the duly completed transfer deeds, along with share certificates, are delivered to the transferee. Thus, the transfer of shares giving rise to capital gain, if any, is completed in the year in which the shares are delivered to the transferee. This aspect was considered and accepted by the Assessing Officers in the past assessment years and, therefore, no adverse view was taken as there was no sale of shares in those years.
Capitalization of interest - It is a settled proposition of law that any expenditure incurred in acquiring a capital asset has to be capitalised.
Whether the option price received by the assessee is income or it is capital receipt ? - As per the facts explained elsewhere, the assessee entered into a JV agreement with CUIH to co-promote a company in the field of insurance sector. Since CUIH is a prominent player in the European Market it was interested in holding major stake in the JV company but on account of restrictions imposed by FIPB meant for insurance sector CUIH was contended with a stake of 26% and rest of 74% was taken by the assessee.
Both the parties agreed that as and when the government eases the norms, the first right of refusal shall be with CUIH and if it refuses to purchase shares of the assessee, the same can be sold to third parties. Same restriction applied to the assessee also. This resulted into sterilisation of the assessee’s holding and CUIH agreed to pay option price as described in the JV agreement and it was further agreed that the said option price shall be refundable at the time of transfer of shares by the assessee to CUIH and the manner and mode as well as quantum of refundable option price has been described in Article 16A r.w.s Schedule IX of JV agreement.
The sale/transfer of 23% stake by the assessee to CUIH took place in F.Y. 2016-17 relevant to assessment year 2017-18. All the allegations made by the PCIT may be relevant for assessment year 2017-18 when the actual transfer took place. We do not find any merit in applying those allegations in assessment year 2013-14 and 2014-15 to make the assessment orders framed u/s 143(3) of the Act as erroneous and prejudicial to the interest of the revenue.
Since the transfer of shares took place in F.Y. 2016-17 relevant to assessment year 2017-18, the Assessing Officers in the earlier assessment years rightly took a view that capital gains, if any, would arise in F.Y. 2016-17 and, therefore, did not take any adverse view on the transactions done by the assessee since the option price received is totally linked with investment made by the assessee as a capital contribution in the company promoted by it and has direct nexus/link with divestment of such holding in favour of CUIH but this happened in F.Y. 2016-17.
The allegation of the PCIT that the investment in shares of AVIVA life insurance India Ltd is business of the assessee is ill founded as this is only a presumption and surmise of the PCIT contrary to the facts of the case in hand.
It cannot be said that the JV agreement was a colorable device to enter into a sham transaction for evading tax. The JV agreement has been accepted by various government authorities as discussed elsewhere. It is not the case of the PCIT that money invested by DABUR, i.e., the appellant, in AVIVA has come from CUIH. Therefore, the same cannot be held as sham transaction. Moreover, the option money paid by CUIH has come through banking channel with the approval of RBI as explained elsewhere.
23% stake sold by DABUR was in F.Y. 2016-17 relevant to assessment year 2017-18 when the actual transfer of shares took place. Therefore, in our considered opinion, liability towards I.T., if any, would arise in F.Y. 2016-17 relevant to A.Y 2017-18.
Assessing Officers, right from A.Ys 2005-06 to 2011-12, after going through the JV agreement and balance sheet and notes of accounts, filed by the assessee has taken a possible view. It has been held in various decisions that where the A.O has taken a possible view, the assessment order cannot be held as erroneous and prejudicial to the interest of revenue.. We find the Hon'ble Delhi High Court in the case of CIT Vs. Anil Kumar [2010 (2) TMI 75 - DELHI HIGH COURT] has held that where it was discernible from record that the A.O has applied his mind to the issue in question, the ld. CIT cannot invoke section 263 of the Act merely because he has different opinion.
It cannot be said that the JV agreement was a colorable device to enter into a sham transaction for evading tax. The JV agreement has been accepted by various government authorities as discussed elsewhere. It is not the case of the PCIT that money invested by DABUR, i.e., the appellant, in AVIVA has come from CUIH. Therefore, the same cannot be held as sham transaction
Considering the facts of the case in hand in totality, from all possible angles, we are of the considered view that the assessment orders framed u/s 143(3) are neither erroneous nor prejudicial to the interest of the Revenue. The orders of the PCIT are, accordingly, set aside and that of the Assessing Officer are restored. - Decided in favour of assessee.
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2019 (3) TMI 1859
Deduction u/s. 80IA - whether the toll fee so collected during the construction period should go to reduce the project cost or is eligible for deduction u/s. 80IA? - nexus between the development of infrastructure facilities and the toll fee collected - HELD THAT:- In the present case, admittedly, the assessee-company had not derived any profits from the activities of developing or operating and maintaining any infrastructure facilities. It is only in the process of developing infrastructure facilities. There is no nexus between the toll fee collected and the development of infrastructure facilities and therefore, the assessee company is not entitled to deduction u/s. 80IA(4) of the Act in respect of the toll fee collected during the concession period. The ld. CIT(A) had misdirected himself in directing the AO to allow the deduction u/s. 80IA of the Act. Therefore, we reverse the findings of ld. CIT(A) on this issue - Decided in favour of revenue.
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2019 (3) TMI 1858
Classification of supply - supply of goods or supply of services? - printing of question papers on behalf of educational institutions - Levy of GST - rate of GST - HSN or SAC code - TRU Circular No. 11/11/2017-GST, dated 20-10-2017 - HELD THAT:- It has been observed that :-
(a) The manuscript material for printing the question papers relating to the examination is supplied to the applicant by the Education Board/Educational Institutes. The scope of work of the applicant relates to compose, typeset, print, pack, transport, unload and supply sealed Question Papers to the Education Board/Educational Institutes.
(b) As the usage right of the manuscript material of Question Papers (intangible inputs) are owned by the Education Boards/Educational Institutes and the physical inputs used for printing belong to the applicant, supply of printing is the principal supply in this case and the same would constitute supply of service falling under Heading 9989 of the scheme of classification of services.
Rate of GST on supply - HELD THAT:- It is observed as under :-
(a) As defined in clause (y) of Para 2 of the said Notification No. 12/2017-Central Tax (Rate) ‘Educational Institutions’ means an institute providing services by way of :- (i) pre-school education and education up to higher secondary school or equivalent; (ii) education as a part of curriculum for obtaining a qualification recognized by any law for time being in force; (iii) education as a part of an approved vocational education course. The benefit (exemption from payment of GST) of Sr. No. 66 of Notf. No. 12/2017-Central Tax (Rate) is admissible only in case where service is provided to an educational institution.
(b)The services of printing of question paper, supplied by the applicant to other than ‘educational institutions’ will be covered by Sr. No. 27(i) of Notf. No. 11/2017-Central Tax (Rate), as amended, and will attract Goods and Services Tax @ 12%.
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2019 (3) TMI 1857
Disallowance u/s 14A r.w.r. 8D - assessee submitted before us that the disallowance u/s. 14A cannot be made more than the tax free income - HELD THAT:- We have also perused the relevant materials available on record and the order passed by the Hon’ble ITAT Surat Bench [2014 (9) TMI 131 - ITAT AHMEDABAD] as relied upon by the Ld. Advocate appearing for the assessee.
We have also carefully considered the order passed by the Ld. CIT(A). It appears that relying upon the ratio as laid down by different High Court followed by the Coordinate Bench in several matters including the order passed by the Surat Bench the Ld. CIT(A) has restricted the disallowance to the exempt dividend income of ₹ 19,311/- since disallowance exceeding such exempt income is not permissible in law which does not call for any interference. We, therefore, uphold the same. Hence, Revenue’s appeal is thus devoid of any merit and thus dismissed.
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2019 (3) TMI 1856
Reopening of assessment - legality and validity of the notice u/s 148 - addition on the ground that Section 28(iv) of the Act cannot be invoked in this case - Allotment of Sweat Equity shares to the assessee - CIT(A) upheld the legality and validity of the reopening but deleted the addition on the ground that there is no relationship of employer-employee before the company and the assessee, which allotted the Sweat Equity shares to the assessee; that the equity allotted was not specified security and from such an angle it does not answer the description of perquisites u/s 17(2) of the Act; that the valuation of the equity at artificially jacked up prices without any economic basis would not help to sustain the addition - HELD THAT:- As rightly contended by the assessee, even before the issuance of the notice u/s 148, it was clear that the assessee did not receive any benefit whatsoever under the sweat Equity share Agreement. We find force in the submissions made on behalf of the assessee that the reversal of the share premium account pursuant to the orders of the Hon’ble High Court would relate back to the date of allotment.
We are unable to consider the analogy drawn by the Ld. AO and the Ld. DR to say that subsequent/future event cannot affect the taxability in the year of its accrual, because in this matter certain factors which are stipulating constraints on the availment of benefit under the agreement. Firstly, there is a condition of 10 years’ association, which has failed; that secondly, the Hon’ble High Court directed the cancellation of the allotment and to reverse the entries which shall relate back to the date of agreement itself; that thirdly, there is no economic basis for the valuation of the shares to assess the income of the assessee. For these reasons, we are of the considered opinion that the learned CIT(A) rightly reached a conclusion that this is a case of hypothetical income of the nature of perquisite and more so, the very basis of the valuation is not scientific without any financial back up data to justify the valuation.
We are in agreement with the submission on behalf of the assessee that the decision in the case of CIT vs Infosys Technology Ltd.[2008 (1) TMI 17 - SUPREME COURT] wherein the issue involved was that whether allotment of Sweat Equity Shares to an employee is a perquisite or not and it was held that where the lock in period was involved, the perquisite would be treated only in the year in which the lock in period ends. Since in this case the agreement came to an end, shares were surrendered and the entries were reversed long prior to the lock in period, no case of taxing the allotment as perquisite in the hands of the assessee in the AY 2007-08.
In view of the conflict of opinion expressed by the Hon’ble Gujarat and Madras High Court, the view favourable to the assessee had to be accepted and while respectfully following the decision of the Hon’ble Apex court in the case of Vegetable Products Ltd. [1973 (1) TMI 1 - SUPREME COURT ] we find that the composite order cannot be sustained.
We are of the considered opinion that either on facts or on law, there is no need to interfere with the findings of the learned CIT(A) in deleting the addition made by the learned AO on the premise that the allotment of shares to the assessee are to be taxed as perquisites or profession income.
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2019 (3) TMI 1855
Addition u/s 69A - addition has been made on account of disbelieving the cash-in-hand recorded in books of accounts - genuine sources of income OR not? - HELD THAT:- The deeming fiction u/s 69A can be invoked, where in any financial year assessee is found to be the owner of any money, bullion, jewellery or other valuable articles and such money, bullion, jewellery or valuable articles is not recorded in the books of accounts and the source is not explained by the assessee. Here in this case, there is no dispute with regard to the fact that the assessee has been filing the income tax return along with the balance sheets, wherein source of income and cash has been disclosed and recorded. Hence in such a situation it is unfathomable as how provision of 69A can be invoked.
The sole reason for disbelieving the assessee’s explanation is that, firstly, no prudent person after withdrawing the cash will keep at home; and secondly, if there was an OD account having negative balance on which interest is being charged, then there was no need to keep such huge cash in hand at home. Such reasoning dehors any contrary material on record that the cash disclosed in the books of accounts has been invested somewhere else, then on mere surmise assessee’s explanation cannot be discarded.
If assessees have genuine sources of income which are received through banking channels, out of which cash has been withdrawn and have been disclosed in the income tax return and in the balance sheet as cash-in-hand, then I am unable to apprehend how the provision of section 69A is applicable. Because the section can only be invoked where in any financial year the assessee is found to be the owner of any money, etc., which has not been recorded in the books of accounts and assessee offers no explanation.
Here in these cases, Assessee’s cash in hand duly stands recorded and source has been explained from the income deposited in the bank account and withdrawal, then in my opinion deeming provision of section 69A cannot be invoked. The reasoning given by the AO and Ld. CIT (A) is vague and based on surmise as to what a prudent person should have done. Once assessee has explained that being of senior citizen they have maintained such liquidity of cash out of their own disclosed income with them for certain contingencies, then without any material to controvert such an explanation, addition cannot be sustained.
Simply because after the period of demonetization, that is, 08.11.2016, certain amount of cash has been deposited in the bank account, it does not mean that the cash-in-hand as on 31.3.2015 and 31.03.2016, duly shown in the balance sheet and disclosed to the department in the respective income tax return filed much earlier, is unexplained. - Decided in favour of assessee.
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2019 (3) TMI 1854
Levy of service tax or VAT - Outdoor catering service or not - Sale of edible foods to employees of the corporate house, who had provided the space and that selling of food articles had suffered VAT levied under the Maharashtra VAT Act - HELD THAT:- The respondent had installed point of sales machines/Bradma machines at the counters from where the cooked food is sold to the employees of the corporate house and that for selling the food items, the respondent had paid appropriate VAT amount levied under the local State Act. It also transpires that the respondent had not separately claimed any charges either from the corporate or from their employees towards provision of any service. Thus, analyzing the factual matrix of the case and also the statutory provisions, the Learned Adjudicating Authority has recorded specific finding that service tax is not payable on the foods sold by the respondent to its consumers directly - there are no justifiable reason or ground to accept the submissions that service tax liability should be fastened on the respondent for providing the taxable service of outdoor catering service.
Appeal dismissed - decided against Revenue.
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2019 (3) TMI 1853
Revision u/s 263 - Deduction u/s 43D admissibility - entitlement for deduction of interest on sticky loans - as this deduction is available only from 01.04.2018 as per the amendment, the CIT held that the Assessing Officer's action in allowing deduction was both erroneous and prejudicial to the interest of revenue, hence the assessment was set aside with a direction to the Assessing Officer to consider this allowability of the deduction afresh, affording sufficient opportunity to the assessee to offer submissions - HELD THAT:- The provisions of section 43D(g) was inserted by Finance Act, 2017 which is clarificatory and should be applied. As such, it was submitted that the assessee cannot be denied the applicability of provisions of section 43D(g) of the Act. An identical issue was considered by Ahmedabad Bench of the Tribunal in the case of Karnavati Co-op. Bank Ltd. vs. DCIT [2011 (11) TMI 367 - ITAT AHMEDABAD] wherein it was held that interest on sticky advances/NPA advances cannot be brought to tax. The provisions of section 43D are applicable to Co-operative Banks also.
We are of the view that there are judgments in favour of the assessee on the issue of applicability of section 43D(g) of the Act to the Co-operative Banks. In view of this, we are of the opinion that the order passed by the Assessing Officer is not erroneous and prejudicial to the interests of the Revenue for the purpose of invoking jurisdiction u/s. 263 of the Act. Accordingly, we quash the order passed by the CIT u/s. 263 of the I.T. Act. - Decided in favour of assessee.
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2019 (3) TMI 1852
Local Authority - pure services - NIT, Kurukshetra - Government Entity or not - scope of Serial No. 17, Schedule XI to the Constitution of India - applicability of Serial No. 3 of Notification No. 12/2017 Central Tax (rate) dated 28.06.2017 - whether the pure services supplied to the applicant institute such as manpower supply services, security services, horticulture services, civil maintenance and electrical maintenance services etc. shall be liable to tax under GST or exempt from payment of tax vide Entry 3 of Notification 12/2017- Central Tax (rate) as amended from time to time?
HELD THAT:- Although “Pure services” have not been defined under the Goods and Services Tax Act, 2017, but it is meant to mean supply of services without involving any supply of goods. Entry No. 3 of Notification 12/2017- Central Tax (rate) dated 28.06.2017 lends weight to this definition, whereby the works contract services and composite supplies involving supply of any goods are excluded from pure services - Since the NIT, Kurukshetra has been established by an Act of Parliament and as per the Department of Secondary and Higher Education, Minister of Human Resource Development, Government of India Notification dated 14th May, 2003, the Central Government took over total control of NIT, Kurukshetra, it qualifies to be a Government Entity as defined under Section 2(zfa) of the Notification No. 12/2017 Central Tax (rate) dated 28.06.2017
The National Institute of Technology, Kurukshetra is an institute of higher education whereas, Entry No. 17 of Schedule XI, Article 243G of the Constitution of India incorporates Education, including Primary and Secondary Schools. It suggests that the term education used in this Entry includes only school education and that too imparted in Primary and Secondary Schools. Had that not been the case, the subject Technical training and vocational education would not have found mention at Entry No. 18 of Schedule XI. Whereas, NIT provides higher education and as such it cannot be said to be covered under Entry No. 17 of Schedule XI of Constitution of India - The pure services received by the NIT includes services such as manpower supply services, security services, horticulture services, civil maintenance and electrical maintenance etc. Whereas, Entry No. 3 of exemption Notification 12/2017- Central Tax (rate) mentions “Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union Territory or Local Authority or a Governmental Authority, or a Government Entity by way of any activity in relation to any 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.”
The higher education imparted by NIT, Kurukshetra neither falls under the subjects assigned to Panchayats under Article 243G nor does it fall under those assigned to Municipalities under Article 243W Indian Constitution. Moreover, Panchayats (Gram Panchayats, Block Panchayats and Zila Panchayats) have no connection whatsoever with these services received by NIT, Kurukshetra. Neither the tender for services are floated by Panchayats nor is the payment being made by them. The Panchayats have been created for rural areas whereas Municipalities look after urban affairs. The NIT, Kurukshetra, located within the Municipal boundaries of Kurukshetra, does not even have the remotest link with the Panchayats. In this manner, the provisions of Entry No. 3 of exemption notification does not apply in case of the applicant.
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2019 (3) TMI 1851
Classification of goods - rate of tax - detachable foot mats used for motor vehicles, manufactured from PVC including TPU/Foam and sold in detachable condition as standalone products - fall under Chapter 39 of the GST Tariff or otherwise? - taxable at 12% or 18%? - HELD THAT:- Heading 3904 of this chapter covers Polymers of Vinyl Chloride or of other Halogenated Olefins, in primary forms. As per the manufacturing process explained by the applicant, at the time of personal hearing as well as written submission, the car foot mats are made of PVC fibres, which are bounded to each other by way of liquid PVC coating. In this manner, the foot mats are made entirely of PVC and is clearly covered under the Sub-Heading 4904 10 which covers Poly Vinyl Chloride, not mixed with any other substances, taxable at 18%.
But as per Clause (p) of Note 2 of Chapter 39, goods of Section XI (Textiles and textile articles) are excluded from this chapter. Section XI deals with textiles and textile articles and Chapter 57 (carpets and other textile floor covering) form part of this section. The article manufactured and supplied by the applicant is neither covered under Chapter 57 nor any other chapter of Section XI. As such, the exclusion provided in Clause (p) of Note 2 of Chapter 39 is not applicable in case of the product of the applicant.
The PVC foot mats manufactured and supplied by the applicant fall under Chapter 39, Sub-Heading 4904 10, taxable at 18%.
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2019 (3) TMI 1850
Input Tax Credit - availability of credit on capital goods (demo cars) and set off against output tax payable under GST - availability of credit on ancillary input services such as insurance and repair and maintenance availed in respect of the demo cars - Section 16(1) of the CGST Act - HELD THAT:- Section 16(1) relates to entitlement with respect to credit of input tax charged on any supply of goods and services or both to the recipient which are used or intended to be used in course or furtherance of his business. It means that the recipient is entitled to credit of input tax charged on supply of inputs as well as capital goods to him - A plain reading of the provisions contained in Section 17(5)(a) of CGST Act suggests that the provisions of Section 17(5)(a) of the Act are not only over-riding provisions with respect to Section 16(1) and Section 18(1), but are also exhaustive in nature and limits the scope of Input tax credit with respect to motor vehicles.
The use of the words “Notwithstanding anything contained in sub-section (1) of section 16” emphasizes that the Input Tax Credit can be availed on motor vehicles only if the conditions prescribed under Section 17(5)(a) are satisfied. So, even if, the demo vehicles are capitalized in the book of accounts and are used or intended to be used in the course or furtherance of business, the Input Tax Credit with respect to these vehicles cannot be availed by the recipient - The applicant has further contented that the demo vehicles are eventually sold to buyers in open market and GST is charged on such supply. A close scrutiny of Section 17(5)(a) reveals that the term supply has been prefixed by the word “future” and due weightage should be given to the prefix. In essence the term further supply connotes “resale” which is not the purpose of the applicant behind purchasing demo cars.
Availing of Input Tax Credit on the ancillary input services such as insurance and repair & maintenance - HELD THAT:- The demo vehicles are not used for the purposes specified under Section 17(5)(a) i.e. for making taxable supplies, including further supply of such motor vehicles and are, therefore, not covered under exception provided under section 17(5)(ab)(i) - These demo vehicles are also not covered under exceptions mentioned under section 17(5)(ab)(ii).
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2019 (3) TMI 1849
Classification of services - service provided in accordance with Notification No. 11/2017-CT (Rate) dated 28.06.2017 read with annexure attached to it, by the State of Haryana to M/s. Sainik Mining And Allied Services Ltd., for which royalty is being paid - Whether said service can be classified under 9973 specifically under 997337 as Licensing services for the right to use minerals including its exploration and evaluation or as any other service? - rate of GST on given services provided by State of Haryana to M/S Sainik Mining and Allied Services Ltd. for which royalty is being paid.
HELD THAT:- The term “services” has been defined under section 2(102). “Services” means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged - That in exercise of power conferred under Section 9(1) of the CGST Act 2017, Notification No. 11/2017-CT (Rate) dated 28.06.2017 has been issued which notifies the Central Tax, on Intra-State supplies of service description along with Tariff Heading in accordance with the scheme of classification is specified which are subject to specific conditions.
The service in question is “licensing services for right to use minerals” and not “leasing or renting of goods” and thus is not covered under Sr. No.17 (viia). Therefore, it would fall under the residual entry at Sr. No. 17 (viii). Being so, the rate of tax applicable on such services, as provided therein, shall be 9% CGST and 9% SGST.
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2019 (3) TMI 1848
Classification of service - service provided in accordance with Notification No. 11/2017-CT (Rate) dated 28.06.2017 read with annexure attached to it, by the State of Haryana to M/s. Quality Earth Minerals Pvt. Ltd., for which royalty is being paid - Whether said service can be classified under 9973 specifically under 997337 as Licensing services for the right to use minerals including its exploration and evaluation or as any other service? - rate of GST on given services provided by State of Haryana to M/s. Quality Earth Minerals Pvt. Ltd., for which royalty is being paid.
HELD THAT:- The term “services” has been defined under Section 2(102). “services” means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged - That in exercise of power conferred under Section 9(1) of the CGST Act 2017, Notification No. 11/2017-CT (Rate) dated 28.06.2017 has been issued which notifies the central tax, on intra-state supplies of service description along with Tariff Heading in accordance with the scheme of classification is specified which are subject to specific conditions.
The services for the right to use minerals including its exploration and evaluation, as per Serial No. 257 of the annexure appended to Notification No. 11/2017-CT (Rate), dated 28.06.2017 is included in group 99733 under Heading 9973. The royalty/dead rent paid/payable to the Government by the applicant is consideration against the transfer of right to use minerals including its exploration and evaluation as per the lease granted by the Government to the applicant.
Rate of GST on given services provided by State of Haryana to M/s. Quality Earth Minerals Pvt. Ltd. for which royalty is being paid - HELD THAT:- The services for the right to use minerals including its exploration and evaluation, as per Serial No. 257 of the annexure appended to Notification No. 11/2017-CT (Rate), dated 28.06.2017 is included in group 99733 under heading 9973 and is covered under Serial No. 17(viii). Accordingly, as per Notification No. 11/2017-CT (Rate) as amended vide Notification No. 27/2018-CT (Rate) dated 31.12.2018 and made effective from 01.01.2019, rate of GST on given services provided by State of Haryana to M/s. Quality Earth Minerals Pvt. Ltd., for which royalty is being paid is 18%.
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2019 (3) TMI 1847
Classification of goods - rate of tax - U-Bolt, Screws Bolts and Nuts, Spring Pins and Bushes manufactured and supplied by the Applicant - whether the items U-Bolt, Centre Bolt & spring pins manufactured by the applicant are covered under Chapter 73 or Chapter 87? - whether the item bush is covered under Chapter 84 or Chapter 87? - HELD THAT:- The Centre Bolt in question fulfills the description as given the HSN explanatory note. The Centre Bolt is threaded and is designed to engage with a nut. Accordingly, as the Centre Bolt fulfills the description of a bolt under CTH 7318 and is made of steel, it is also classifiable under CTH 7318 - the articles falling under heading 7318 do not fall under the expression parts and parts and accessories of motor vehicles. Accordingly, the articles falling under 7318 will be covered exclusively under this category for tariff purpose.
Spring Pins - HELD THAT:- Spring Pins are specifically covered under tariff item 73209020. Spring Pins manufactured and supplied by the Applicant are made up of various types of steel. Further, Spring Pin is in the nature of a spring and hence provided under the sub-heading “Other”, covered under the CTH 7320 which covers springs and leaves for springs, of iron or steel. Accordingly, Spring Pins are classifiable under CTH 7320 - CTH 8708 comprise of parts and accessories of the motor vehicles of CTH 8701 to 8705. The HSN explanatory notes to CTH 8708 specifically provides that parts and accessories are classifiable under CTH 8708, when they fulfill two conditions viz. the item is identifiable as being suitable for use solely or principally with the above-mentioned vehicles of this CTH and are not excluded by the provisions of the Notes to Section XVII.
As per explanatory note to heading 8708, plain shaft bearings are included in parts and accessories of motor vehicles of headings 87.01 to 87.05 hence, classifiable in heading 8708.
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2019 (3) TMI 1846
Classification of goods - supply of Electrical energy units through diesel generators - covered under Tariff code-27160000-ElectricaI Energy, attracting NIL rate of Tax or not - HELD THAT:- The facilities provided by the applicant are not classified as goods rather as services. The provision of power back-up in a commercial or residential building is in the form of a service, whatever name it may be assigned- be it utility services, maintenance services or any other service. These services are covered under the Chapter 99, Heading 9972, Group 99722 and HSN Code 997221 (Property management services on a fee or commission basis or on contract basis). As such, the service is liable to CGST @ 9% and SGST @9%.
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2019 (3) TMI 1845
Commission charged for providing bogus entries - Charging tax on activity at appropriate rate of commission for providing such service - adopted the rate of commission of 2% on the total turnover, which order the CIT (A) confirmed - Tribunal reduced the rate of commission to 0.15% - HELD THAT:- Tribunal referred to its own decision in case of the Assessee's sister concern and held that the appropriate rate of commission should be 0.15% which is also admitted by the Assessee during search.
The entire issue is based on facts. The estimation of the rate of commission of the Assessee would always be subject matter of some guesswork. No precise formula could be applied. Tribunal having taken into consideration the relevant factors, has arrived at a certain percentage of commission that any such kind of activities could be expected to be derived from. This does not give rise to any substantial question of law. Revenue also disputes the expenditure allowed by the Tribunal on such activities. - Decided against revenue.
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2019 (3) TMI 1844
Approval of Resolution Plan - rule 11 and any other applicable provisions of NCLT Rules, 2016 - HELD THAT:- Hon'ble NCLAT has already held that "resolution plan being in conformity with section 30(2) warranted approval by the Adjudicating Authority. Hon'ble NCLAT has further directed the Adjudicating Authority to approve the plan in terms of section 31 of IBC with modification that the plan is to be implemented within the period of 12 years as offered by the successful resolution applicant.
In this case the resolution plan has been approved by the Committee of Creditors with requisite majority and Hon'ble NCLAT has already held that the resolution plan is in conformity with section 30(2) of the I & B Code 2016 and has given the specific direction to approve the plan in terms of section 31 of IBC with modification that the plan is to be implemented within the period of 12 years as offered by the successful resolution applicant - Adjudicating Authority can scrutinise the approved Resolution Plan only under parameters of section 30(2) and section 31 of the Code and Hon'ble NCLAT has already given a finding that Resolution Plan conforms with the provision of section 30(2) of the Code. Given the Directions of Hon'ble NCLAT we as adjudicating Authority we at this moment approve the resolution plan in terms of section 31 of the I & B Code 2016.
Designated Registrar is directed to communicate this order immediately to the Resolution professional, Successful Resolution Applicant and the Dissenting Financial Creditor by way of e-mail and submit the compliance on 28-3-2019.
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2019 (3) TMI 1843
Disallowance of reimbursement of expenses - AR did not improve the case of the assessee in respect of payments made to Manoj Pandey except stating that the disallowance may be restricted to 20% of the expenses as per Section 40A(3), as the payments have been made by way of cash - HELD THAT:- In the instant case, the tax authorities have disallowed the claim of expenditure, since the assessee has failed to prove the same. Hence we do not find merit in the submission of Ld A.R that the disallowance may be restricted to 20% of expenses by following the provisions of Section 40A(3) - Since the assessee has failed to prove the genuineness of expenses incurred on Manoj Pandey, we are of the view that the Ld CIT(A) was justified in confirming the disallowance.
Assessee has submitted that the amount paid to Manoj Pandey was only ₹ 19,99,250/-. Accordingly we confirm the disallowance to the tune of ₹ 19,99,250/-. The balance amount has been claimed to have been paid to M/s Sonal Enterprise (₹ 5.00 lakhs) and Shri Krishna P Vaidya (₹ 2.20 lakhs). Since both these payments require examination, we restore them to the file of the assessing officer for examining them.
Disallowance made u/s 40(a)(ia) - AO disallowed interest expenses paid on unsecured loans as the assessee failed to prove that due TDS was deducted from the payments - CIT(A) also confirmed the same - HELD THAT:- A.R submitted that the assessee has paid interest to four parties, out of which he has deducted tax at source from the payments made to two parties. With regard to the remaining two parties, the Ld A.R submitted that the payees have declared the income in their respective return of income and hence the benefit of the proviso to Section 40(a)(ia) of the Act be given to the assessee.Since these details require examination, in the interest of natural justice, we set aside the order passed by Ld CIT(A) on this issue and restore the same to the file of the AO for examining the claim of the assessee in accordance with the law.
Direction given u/s 150(1) by CIT-A - CIT(A) confirmed the disallowance of reimbursement of expenses and also directed further to verify past and subsequent years of ROI filed by assessee to examine whether these expenses have been claimed therein also - HELD THAT:- The scope of finding or direction that can be given by the appellate authority within the meaning of Section 150(1) has been explained by the Hon'ble Courts. In the case of Peico Electronics and Electricals Ltd. [1992 (1) TMI 18 - CALCUTTA HIGH COURT] observed that though the powers of the First Appellate Authority are co-terminus with that of the AO and has powers to enhance the assessment but that is confined to the assessee and a finding or direction, while disposing of the appeal, must be a finding necessary for giving relief in respect of the assessment year in question.
In the instant case, we notice that the impugned directions given by Ld CIT(A), which are extracted above, were not at all necessary for disposing of the issue before him and accordingly, we are of the view that the Ld CIT(A) was not justified in giving the above said direction. Accordingly, we set aside the same.
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2019 (3) TMI 1842
CENVAT Credit - Hotel Bills - case of appellant is that the hotel stay is for the purpose of business activity by the staff of the company - HELD THAT:- It is a recurring issue and periodical demand was raised - This Tribunal in their own case decided the same issue in their favour.
Appeal allowed - decided in favor of appellant.
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2019 (3) TMI 1841
On-money in cash - unaccounted income - Incriminating document found and impounded in the business premises of Shri Anoop Asthana, the broker - HELD THAT:- Material forming the basis of the addition presently under consideration is the very same as that on which the completed assessments under section 153C for those earlier years were reopened, but no addition was made.
As regards receipts the same had been found from the possession of Shri Anoop Asthana, the broker. So far as regards the two receipts dated 05.04.2014 and 28.04.2014, the related sale deeds were executed and final registration in favour of the customers was executed on 19.06.2018 and 31.05.2018, respectively.
The receipt no.1030 dated 31.05.2013 related to assessment year 2014-15, but no addition was made in the said assessment year. In relation to the said receipts, Shri Sanjeev Kumar Jhunjhunwala had been extensively examined by the Authorised Officer during the course of survey and he had given name-wise details of the persons to whom the receipts in question had been issued by the appellant company. His statement was recorded on 27.06.2014, in continuation to the statement recorded on 26.06.2014.
As declared an income of ₹ 9 crores stated to have been earned by him from commodity trading till that date. During the course of regular assessment proceedings, he was extensively examined on 01.09.2016 by issue of summons under section 131(1). In response to Question Nos.14, 15 and 16, he stated that he had done trading in commodity, and looking to the market conditions prevailing at that time, it was not improbable to have earned income of this volume. Further, in response to Question No.18, he was required to submit documentary evidences in support of income declared by him. In response to Question No.21, he gave complete details supported by documentary evidences relating to commodity trading.
In response to Question No.22, he gave complete information about income declared and income tax, wealth tax payments made by him on such income/wealth. In response to Question No.23, he gave complete information, name-wise, of the booking receipts as had been impounded during the course of survey at the office premises of Shri Anoop Asthana, and in the end, he categorically stated that it would not be proper to draw adverse inference in relation to income from commodity trading.
One cannot but come to the inexorable conclusion that the order under appeal suffers from the vice of not taking into consideration the assessee’s contention, which contention also does not stand rebutted, that it was not provided with any opportunity of crossexamining Shri Anoop Asthana.
We hold that -the case of the assessee has been prejudiced for want of providing him opportunity of cross-examination of Shri Anoop Asthana, whose unilateral statement recorded exparte qua the assessee has been made the sole basis of the addition, thereby violating the principles of natural justice; and
(ii) the other material, i.e., three pages of the diary found in the search do not establish any case for addition in the hands of the assessee in the year under consideration, as none of these documents relate to the year under consideration, one of them does not contain any date/year and the other two pertain to earlier years, in which, no addition based on these documents was made.
Grievance sought to be raised by the assessee is justified.
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