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Showing 361 to 380 of 1393 Records
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2021 (2) TMI 1035
Levy of Tax - transfer of right to use of goods or not - supply of cranes under the agreement to the Bharath Heavy Electricals Limited - Section 4 of the Tamil Nadu Value Added Tax Act, 2006 - tax levied on the ground that the petitioner has effected sale within the meaning of extended definition of sale under Section 2(33) of the Tamil Nadu Value Added Tax Act, 2006 of transfer of right to use of goods - HELD THAT:- Though it is the contention of the learned counsel for the petitioner that they have paid the service tax and have registered with the Service Tax Authority, there are no records to substantiate the same before the this Court.
The Hon'ble Supreme Court in Bharath Sanchar Nigam Limited and Another Vs. Union of India and Others, [2006 (3) TMI 1 - SUPREME COURT], has enumerated the situation, under which, there would be transfer of right to use where it was held that the lifts were in possession of the petitioner. Thus, there is no transfer of right to use.
In the facts of the case, there is no transfer of right to use and no case was made out for recovery of tax amount from the petitioner under Section 4 of the Tamil Nadu Value Added Tax Act, 2006 - the impugned orders are liable to be quashed and are accordingly quashed - petition allowed - decided in favor of petitioner.
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2021 (2) TMI 1034
Violation of principles of natural justice - petitioner was not heard in person prior to passing of the impugned order - Section 75(4) of the Central Goods and Service Tax Act, 2017 - HELD THAT:- It is true that neither Section 73 nor Section 74 specifically require an assessing officer to extend the opportunity of personal hearing to an assessee prior to completion of proceeding. However, Section 75 of the Act, a general provision relating to the procedure to be followed in determination of tax at sub section (4) thereof, contemplates that an opportunity of personal hearing shall be granted in all cases where a specific request is received, or where the officer contemplates adverse decision against the assessee. Thus, it is only in cases where the explanation offered by the assessee is accepted that there is no necessity for personal hearing. In all other cases, it is incumbent upon the revenue to extend an opportunity of personal hearing to the petitioner. This is the proper interpretation of Section 75(4).
The petitioner will be heard on 29.01.2021 at 10.30 a.m. without expecting any further notice in this regard and consider materials, if any, circulated an order of assessment shall be passed denovo within a period of four (4) weeks from the date of hearing - Petition allowed - decided in favor of petitioner.
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2021 (2) TMI 1033
Maintainability of petition - availability of alternative remedy - Money Laundering - search and seizure proceedings - confiscation of properties - It is the case of the petitioners that upon drawing the panchnama, the Assistant Director issued a letter dated 22.7.2020, intimating the petitioners not to part with any of the noted bank accounts, properties and insurance policies named therein, without prior sanction and further not to withdraw, renew or deal with the same in any manner without prior permission of the respondent No.2 - HELD THAT:- The judgment of the co-ordinate bench in the case of JJIGNESH KISHOREBHAI BHAJIAWALA VERSUS STATE OF GUJARAT AND ORS. [2017 (7) TMI 1377 - GUJARAT HIGH COURT] clinches the issue. The said writ petition was dismissed by this court, inter alia, holding that the PML Act was enacted to prevent money laundering and to provide for the confiscation of property derived from, or involved in, money-laundering and for matters connected therewith or incidental thereto. It has been further held that in terms of Section 8 of the PML Act, the Adjudicating Authority independently considers the issue of such attachment and if it has reason to believe that the person is in possession of proceeds of crime, he shall issue show cause notice to such person. The accused is entitled to explain the sources of income, earning or assets, out of which or by means of which he has acquired the property, lead evidence and furnish any other information in his possession to justify the legitimate means of acquiring the properties in dispute. It is only after taking all the submissions of the accused and documents brought on record to establish the sources of his property so attached that the Adjudicating Authority takes a final decision on the same. In paragraph 22, it has been further observed that any person aggrieved by an order made by the Adjudicating Authority under Section 8 of PML Act can avail the remedy of appeal under Section 26 of PML Act to the Appellate Tribunal, whereby again the accused person is given ample opportunity of being heard, before any orders are passed. It is only when a person is aggrieved by the decision or order of the Appellate Tribunal that he may file an appeal to the High Court within sixty days from the date of communication of the decision or order of the Appellate Tribunal to him. The remedy of appeal under Section 42 of PML Act is in the nature of second appeal.
Section 26 of the PML Act provides for remedy of appeal to the Appellate Tribunal to an aggrieved person. Any person aggrieved by an order made by the Adjudicating Authority under Section 8, can file an appeal under the aforesaid Section 26 to the Appellate Tribunal and the parties concerned will get an opportunity to put-forth his case. A further appeal is provided under Section 42 before the High Court within 60 days from the date of the communication of the decision or order of the Appellate Tribunal. Therefore, reading the provisions of Section 17 in juxtaposition with the provisions of Section 8 read with further provisions of Sections 26 and 42, an alternative efficacious remedy has been provided to the aggrieved person. The PML Act, therefore, is a Code unto itself.
In view of the effective alternative efficacious remedy available to the persons aggrieved so also considering the object of enacting the PML Act and the principle enunciated by this court, this court would be loath to exercise its extra-ordinary power under Article 226 of the Constitution of India - Petition dismissed.
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2021 (2) TMI 1032
Addition of cash deposits in the bank account of the assessee - assessee submitted that cash was deposited on behalf of his client Shri P.S. Narayana for Life Insurance Premium - HELD THAT:- We do not agree with the contention of assessee because assessee made a cash deposit of the impugned amount in his bank account, therefore, burden was upon the assessee to explain the source of the cash deposit in his bank account through evidence. However, assessee has failed to prove the source of the same, therefore, it being unexplained investment was rightly added to the income of the assessee.
It is also unbelievable that cash amount if received earlier would have been deposited in installments in bank account of the assessee. The entire circumstances would lead to irresistible conclusion that when assessee was caught by the Revenue authorities to explain the cash deposits in his bank account, assessee made a frivolous claim of the alleged amount received from Shri P.S. Narayana for getting insurance policies. It is also a fact that no evidence has been produced before the authorities below of the source of the cash deposited in the bank account of the assessee. No creditworthiness of Shri P.S. Narayana is also established through any evidence of giving any cash to the assessee on different occasions as alleged in the letter of Shri P.S. Narayana. Totality of the facts and circumstances, clearly show that assessee failed to explain the source of the cash deposit in his bank account through any reliable and cogent evidence, therefore, authorities below were justified in making and confirming the addition of the impugned amount in the hands of the assessee - Decided against assessee.
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2021 (2) TMI 1031
Claim for deduction u/s 54F - assessee is having more than one house property thus the AO rejected the claim for deduction u/s 54F - Ground floor is having a garage and one residential unit; first floor is having two 1BHK flats and second floor is having 2 single (with bath) units - AO, accordingly, took the view that each of the unit is separate house - whether each floor of a single stand alone building should be considered as separate house? - HELD THAT:- As decided in Shri Bhatkal Ramarao Prakash [2019 (2) TMI 1059 - ITAT BANGALORE] an independent building can have a number of residential units and it will not lose the character of “one residential house”.
Accordingly, we are unable to agree with the view taken by the tax authorities that each floor of the individual house/each portion in a floor is separate house property. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and hold that the house property received by the assessee is “one residential house” only within the meaning of sec.54F of the Act. Accordingly, we are of the view that the reasoning given by the AO to reject the claim for deduction u/s 54F is not justified. - Decided in favour of assessee.
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2021 (2) TMI 1030
Penalty u/s 271(1)(c) - defective notice - non specification of charge - deduction of long term capital gain in computing book profit u/s 115JB - difference in the computation of book profit under bonafide mistake was subsequently rectified the mistake by filing revised return - HELD THAT:- Bare perusal of the notice issued u/s 274 read with section 271(1)(c) of the Act, extracted above, in order to initiate the penalty proceedings against the assessee goes to prove that the AO himself was not aware / sure as to whether he is issuing notice to initiate the penalty proceedings either for “concealment of particulars of income” or “furnishing of inaccurate particulars of such income” by the assessee rather issued vague and ambiguous notice by incorporating both the limbs of section 271(1)(c). When the charge is to be framed against any person so as to move the penal provisions against him/her, he/she is required to be specifically made aware of the charges to be leveled against him/her.
Following the decisions rendered in the cases of CIT vs. Manjunatha Cotton and Ginning Factory, CIT vs. SSA’s Emerala Meadows [2013 (7) TMI 620 - KARNATAKA HIGH COURT] and Pr. CIT vs. Sahara India Life Insurance Company Ltd. [2013 (7) TMI 620 - KARNATAKA HIGH COURT] we are of the considered view that when the notice issued by the AO is bad in law being vague and ambiguous having not specified under which limb of section 271(1)(c) of the Act the same has been issued, the penalty proceedings initiated u/s 271(1)(c) are not sustainable.
Even otherwise, when the assessee has duly produced balance sheet and profit & loss account before the AO during the assessment proceedings and the income computed in the profit & loss account has been accepted and at the same time, it is nowhere the case of the Revenue that assessee has furnished false information or has not furnished necessary information.
So, mere mistake, claimed to be inadvertent by the assessee, is not a concealment of income by furnishing of inaccurate particulars in the facts and circumstances of the case, when the assessee has filed revised computation of book profit claiming correct figures acceptable to the Revenue. So far as question of filing the revised return only after issuance of notice u/s 143 (2) of the Act to the assessee is concerned, it is again undisputed fact that with the notice u/s 143(2), no questionnaire was issued pointing out wrongly computing the book profit, leading to the reasonable inference that the mistake was inadvertent on the part of assessee.
Thus initiating penalty u/s 271(1)(c) of the Act on the basis of vague and ambiguous notice issued u/s 143 (2) of the Act is not sustainable in the eyes of law and that mere difference in the computation of book profit under bonafide mistake is not furnishing of inaccurate particulars of income particularly when assessee had filed balance sheet, profit & loss account showing all the capital gains and has subsequently rectified the mistake by filing revised return - Decided in favour of assessee.
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2021 (2) TMI 1029
Revocation of Customs Broker License - forfeiture of security deposit - imposition of penalty - It is the contention of the appellant that Encanterra Traders existed and was not a fictitious firm - HELD THAT:- It is clear from the decision of the Delhi High Court in MILLENNIUM EXPRESS CARGO PVT. LTD VERSUS COMMISSIONER OF CUSTOMS [2017 (6) TMI 1060 - DELHI HIGH COURT] that there is no obligation on the Customs House Agent to look into the information made available by the exporter/exporter. The Customs House Agent is merely a processing agent of documents with respect to clearance of goods through Customs House and he is not an inspector to weigh the genuineness of the transaction. When the Importer/Exporter Code Number was provided and before this code was issued a background check of the said importer/exporter is undertaken by the Customs Authority, there should be no doubt about the identity of the said exporter. It would be too onerous to expect a Customs House Agent to inquire into what is stated in the documents when there is a presumption that an appropriate background check is done by the Customs Authorities. In fact, the grant of Importer/Exporter Code Number is a proof regarding verification of facts and if the grant of such a code number to an entity at the address mentioned is in doubt, then for such erroneous grant of the Importer/Exporter Code Number, the appellant cannot be faulted.
The basic requirement of Regulation 10 (n) is that the Customs Broker should verify the identity of the client and functioning of the client at the declared address by using, reliable, independent, authentic documents, data or information. For this purpose, a detailed guideline on the list of documents to be verified and obtained from the client is contained in the Annexure to the Circular dated April 8, 2010. It has also been mentioned in the aforesaid Circular that any of the two listed documents in the Annexure would suffice. The finding recorded by the Commissioner that the required documents were not submitted is, therefore, factually incorrect - the KYC documents were submitted by the appellant and the verification was undertaken by Anil, an employee who had made the Directors. The communications with the Encanterra Traders was also done through mail. The self attested Pan Card, Aadhar Card of the Director and Pan Card of the Company had been submitted by letter dated September 10, 2018. A physical verification of the premises, as noticed above, was not necessary to be carried out. The Commissioner, therefore, committed an error in holding that the appellant failed to ensure due compliance of the provisions of Regulations 10(n) of the 2018 Regulations.
The decision of the Tribunal in Multi Wings Clearing & Forwaring P. Ltd. vs. C. C. (General), New Delhi [2019 (4) TMI 1189 - CESTAT NEW DELHI] does not also help the Department as it was found as a fact that the KYC documents were not available with the assessee at the time of visit of the Investigating Agency.
Appeal allowed - decided in favor of appellant.
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2021 (2) TMI 1028
Revision u/s 263 - assessee has claimed deduction on account of bad debts in spite of having credit balance in BDDR account - Pr. Commissioner of Income Tax further opined that the order of assessment passed u/s.143(3) dated 13.12.2016 was erroneous in so far as it was prejudicial to the interest of the revenue because assessment has been made without verification of the claim of written off bad debts as deduction.- Whether any verification or examination was done by the Assessing Officer or not with respect to the bad debts? - HELD THAT:- As already examined that such verification and examination on bad debts was not done by the Assessing Officer. The Assessing Officer has not called for any specific details regarding bad debts. He has also not called for or verified list of bad debts. The Assessing Officer has also not analyzed the Board Circular & Instruction vis-à-vis facts of the assessee’ case and therefore, the assessment order is erroneous and prejudicial to the interest of the revenue.
We are of the considered view that the Ld. Pr. Commissioner of Income Tax was correct in assuming revisionary jurisdiction and passing order u/s.263 of the Act since the order of the Assessing Officer dated 13.12.2016 was erroneous so far as it is prejudicial to the interest of the Revenue. - Decided against assessee.
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2021 (2) TMI 1027
Validity of decision of the first respondent/RP in rejecting the Expression of Interest (EOI) submitted by the applicant for submission of resolution plan in respect of the corporate debtor - Section 60(5) of the I&B Code, 2016 - undischarged insolvent and an undischarged insolvent - relevant date for excess investment in the plant and machinery of the corporate debtor - HELD THAT:- Section 240A exempted the promoters of the MSME to be the resolution applicants of the same corporate debtor for which the resolution plans are sought to be invited. Section 240A has not exempted the corporate debtor itself, even though it happens to be an MSME, to be a resolution applicant to itself. In the present case, M/s Bhandari Deepak Industries Private Limited which is the corporate debtor itself submitted EOI for submitting resolution plan to itself i.e. for Bhandari Deepak Industries Private Limited. This is not permissible under the Scheme of I&B Code, 2016. The applicant has not disputed the fact of submission of EOI by the corporate debtor itself, i.e. Bhandari Deepak Industries Private Limited itself, and not by its promoters, i.e. Mr. Deepak Bhandari and Mrs. Anita Bhandari. It is also not the case of the applicant at any stage that submitting the EOI on behalf of the corporate debtor Bhandari Deepak Industries Private Limited was a mistake and that the actual persons submitting the EOI were Mr. Deepak Bhandari and Mrs. Anita Bhandari, the promoters of the corporate debtor. Once a CP is admitted, the corporate debtor is to be represented by the RP alone and none else such as Suspended Directors of the Board of the corporate debtor. Therefore, we do not find any illegality in the RP rejecting the EOI submitted on behalf of the corporate debtor, M/s Bhandari Deepak Industries Private Limited itself.
Admittedly, the corporate debtor Bhandari Deepak Industries Private Limited is an undischarged insolvent and an undischarged insolvent is ineligible to be the resolution applicant under Clause (a) of Section 29A and Section 240A has not exempted any person including MSME from the applicability of Clause (a) of Section 29A - the action of RP upheld.
Relevant date for excess investment in the plant and machinery of the corporate debtor - Another reason for rejection of the EOI of the applicant given by the RP was that the corporate debtor does not fall under the definition of MSME or ME as defined in MSME Development Act, 2006, since the investment in plant and machinery as on the date of commencement of CIRP was ₹ 14,14,82,754/-, which is beyond the prescribed limit - HELD THAT:- The relevant date for consideration of exemption from applicability of Clauses (c) and (h) of Section 29A, in terms of Section 240A is the date of submission of EOI but not the date of consideration of the plan by the COC. Hence, the contention of the applicant, that the issue with regard to excess investment in the plant and machinery of the corporate debtor cannot be considered as on the date of submission of EOI, is untenable.
Application dismissed.
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2021 (2) TMI 1026
Short-term capital gain or business profit transfer of computer software to its holding company - transfer of the 'CONNET’ computer software by the Appellate to its holding company - determination of value of assets on the date of transfer - transfer of the software with a notional fair market value of the computer software - As argued computer software was transferred to MPHR US at its book written down value being 1NR 1,27,31,017/-, which was less than the tax written down value of the computer software being INK 1,48,19,687/-, and thus the value at which the block had been adjusted resulted in a short-term capital loss to the Appellant - HELD THAT:- Assessee has developed this software and transferred the same to its holding company, certifying it as commercial unviable and whatever the cost received by the assessee from its holding company as the cost of writing off of the software.
It is not clear whether if there is any commercial value to the software which was transferred to the holding company, at present it may not be commercially viable, but it is not clear whether this software will be of use to its holding company in future. Since assessee has invested lot of labour and invested resources to develop software which is used by the customers of the holding company.
Assessee has developed this software and utilized the same in its business and claimed the depreciation as well during this intervening period. Therefore, it clearly indicates that software was utilized in the running of the business of the assessee vis-à-vis holding company. Since, there is not record submitted by the assessee or its holding company that the software under consideration is completely discarded. In our considered view, the software which was transferred to the holding company which was used by the assessee in its business, the actual cost of the software was ₹ 2,01,87,114/- and assessee has used the above software in its business and claimed depreciation
Cost of the assets Relevace at the time of writing off of the assets in the books of the assessee - The written down value of the assets at the time of writing off of the assets was ₹ 1,27,31,017/-. Since this assets was developed by the assessee and utilized by the assessee in it business and if at all mark up is applied, it can be applied only to the cost of the assets which was transferred to its holding company. Therefore, even though the AO has applied 20% as ad-hoc premium, in our considered view, normal premium charged on this type of assets are within 10-20% and AO has adopted higher value of the premium. For the sake of justice, in our considered view, premium of 15% may be proper and accordingly, we direct the AO to calculate the premium 15% on the value of assets on the date of transfer and accordingly complete the assessment. Resultantly, the ground of assessee are partly allowed.
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2021 (2) TMI 1025
Revision u/s 263 - allowability or otherwise of the losses booked on account of revaluation of nonconvertible debentures and of futures & options - HELD THAT:- In cases where there is inadequate enquiry but Lack of enquiry, again the Ld. CIT must give and record the finding that the order/enquiry made is erroneous. In the decision DG HOUSING PROJECTS LTD [2012 (3) TMI 227 - DELHI HIGH COURT] it was also observed by the Hon’ble Court that the income tax officer in this case had made enquiries in regard to the nature of expenditure incurred by the assessee. The assessee had given detailed explanation in that regard by a letter in writing.
Claim was allowed by AO on being satisfied with the explanation of the assessee. Such decision of the AO cannot be held to be erroneous simply because in his order he did not make an allowable discussion in that regard. In the given case of the assessee, we notice that assessee has filed the financial statement along with relevant notes to accounts. AO after verification of the return of income and notes to account, he sought certain clarification which was properly submitted by the assessee in writing. Ld. CIT observes that the note submitted by the assessee is nothing but notes forming part of accounts. AO has merely accepted those explanation without applying his mind completed the assessment.
It is fact on record that the issue under consideration is not a new issue came up afresh in this assessment year, we notice that similar issue was came up in the earlier assessment year and the coordinate bench has decided the issue on merit as well. In our considered view the learned CIT is not appreciated the fact that AO has applied one of the possible view in this case.
DR submitted that the case of the assessee falls under explanation – 2 in section 263 of the Act and further relied in the case of Crompton Greaves Ltd [2016 (2) TMI 169 - ITAT MUMBAI] - The issue under consideration is, whether the AO has passed the order without enquiries or verification which he should have made. In this case, the assessee has filed the financial statement alongwith the notes and also findings of ITAT in the earlier Assessment Year. AO seeks clarification on those issues. The assessee responds to the query and files certain information. AO considers the same to complete the assessment and he takes the view that the claim of the assessee is proper. Therefore, it shows that AO has verified the issue. Whether it is adequate enquiry or not is the issue. The explanation 2(a) is applicable when no enquiries were made and it is proved on record that AO has made certain enquiry, therefore, for the improper enquiries, the explanation 2(a) is not applicable. Therefore, this line of argument is rejected.
Moreover, if the notes to account is clear and explains the case of the assessee, the AO need not have to enquire further. Accordingly, the order passed u/s 263 is set aside and the grounds raised by the assessee are allowed.
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2021 (2) TMI 1024
Capital gain computation on sale of lands - difference in value determined by DVO and value declared by assessee - CIT(Appeals) directing the AO to substitute the value determined by DVO on reference u/s.50(2) as deemed value of consideration received on sale of land u/s.50C - AO mad addition solely on the basis of difference between the rate adopted by stamp valuation authority solely on the basis of sale consideration shown by the assessee and the value determined by the stamp valuation authority - HELD THAT:- Difference between sale consideration and the value adopted by DVO is merely 9.11%, as it does not exceed 10%, fiction of section 50C of the Act will not came into play, therefore, capital gain will have to be computed with reference to actual sale consideration only. Hence, we direct the A.O. to delete the addition qua plot no.1.
Addition with regard to plot no.2 - assessee vehemently submitted there was a 5 feet deep hole in the ground and a drainage next to the land, Slum cluster next to the plot, water of waste drainage was flooded in the said land and during the monsoon season part of the land remains water logged. All those factors are duly mentioned in clause 5 of the agreement to sale and that the market value of the land was less than the market value of surrounded land and was fixed keeping in view of such circumstances and relied upon the decision of Co-ordinate Bench in [2017 (4) TMI 1531 - ITAT AHMEDABAD]4 - Assessee before the ld.CIT(A) categorically pleaded that rate of land was determined on the basis of actual position of considering the various factors as illustrated in clause 5 of agreement to sale dated 29.03.2011.
Valuation of DVO has not considered those factors as illustrated in para 5 of agreement to sale deed.
Co-ordinate Bench in Shri Vinubhai V.Navadia Vs. DCIT, [2017 (4) TMI 1531 - ITAT AHMEDABAD] while considering the various factors effecting the sale consideration granted 50% reduction in the deemed value of consideration in the basis of DVO Report.
As assessee has brought on record that in second plot, there was a 5 feet deep hole in the ground and a drainage next to the land, Slum cluster next to the plot, water of waste drainage was flooded in the said land and during the monsoon season part of the land remains water logged and the market value of was fixed keeping in view of such circumstances. The Ld. CIT(A) has not examined those facts and simply accepted the report of the DVO.
The report of the DVO is also based on certain estimation. Thus, keeping in all facts and circumstances of the preset case and the evidence available on record the assessee is allowed 6% of reduction in difference of sale consideration and value determined by the DVO. Therefore, we direct the AO to allow the deduction of 6% of difference on the actual sale consideration and the value determined by the DVO and compute the capital gain accordingly.- Appeal of assessee allowed.
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2021 (2) TMI 1023
Levy of service tax - Export Pass fee and Import fee - Storage License Renewal fee - Excise Staff Salary and Overtime charges - Permit fee paid to the State Excise department - Reverse charge Mechanism - Section 117 of the Finance Act, 2019 - HELD THAT:- The learned Commissioner has wrongly considered the fee paid by the appellant to the State Excise department and various other Government departments/agencies as having an element of a quid pro quo in it and hence services provided by the State Excise department. We also note that the fee charged for grant of license is not a consideration for service, but a price charged for “exclusive privilege” parted by the State, the export fee does not have an element of service and therefore not a service and accordingly not subject to levy of service tax. The State Legislature is empowered to make laws in terms of Article 246 read with the Seventh Schedule of the Constitution of India. The State Legislature is empowered to make laws in respect of Entries 8 and 66 of the State List which cover production, manufacture, possession, transport, purchase and sale of intoxicating liquors and fees in respect of any of the matters in this List excluding fees taken in any court. We further note that to deal with intoxicating liquor is part of the State responsibility and it is in exercise of these privileges, State has exclusive rights to manufacture, possession, consumption, transport etc. of liquor within its territory and to grant licenses and permits to ensure compliance - in August, 2019, the Finance Act, 2019 was enacted amending Section 66B of the Act, to the effect that service tax was not leviable on services provided by the State Government by way of grant of liquor licenses against consideration in the form of license fee or application fee “by whatever name called”, during 01.04.2016 to 30.06.2017 along with this amendment the dispute regarding the leviability of service tax on fee paid to State Government in relation to alcoholic liquor for human consumption has come to an end and it is clear that service tax is not leviable on the said fees from April 2016 to June 2017. Specific inclusion of word “by whatever name called”, the Legislature made it abundantly clear that any fee paid under the purview of State Excise legislation would not be leviable to service tax. Further, it is pertinent to note that the word “License Fee” is defined by Oxford Dictionary to mean “a fee paid to an organization for permission to own, use or do something”.
Levy of service tax on Storage License fee - HELD THAT:- The learned Commissioner has observed that the said license is issued to the appellant by the State Excise department for the specific purpose of storing CO2. The appellant has paid the fee against the renewal of license for storing CO2 which fact is admitted by Ashish Jain, Manager of appellant in his statement dated 05.02.2018. The learned Commissioner has rightly upheld the demand of service tax on Storage License Renewal fee which cannot be considered as fee paid towards grant of liquor license - the demand of service tax on Storage License fee for CO2 along with interest is upheld.
Liability on license fee and other application fee paid to the State authorities - HELD THAT:- The issue with respect to tax liability on license fee and other application fee paid to the State authorities continued to be an issue under GST as well and the GST Council in its 26th meeting on 10.03.2018 recommended that GST was not leviable on license fee and application fee, “by whatever name called”, payable for alcoholic liquor for human consumption and that this would apply mutatis mutandis to the demand raised by the Service Tax/Excise authorities on license fee for alcoholic liquor for human consumption in the pre-GST era i.e. for the period from April 2016 to 30th June 2017.
The appellant is not liable to pay service tax on Export Pass fee, Import Pass fee, Permit fee, Excise Staff Salary and overtime allowances/charges - the service tax demand on Storage License fee for CO2 which the appellant is liable to pay along with interest is confirmed - appellants are not liable to pay penalties in view of the fact that demand itself is not sustainable - appeal allowed in part.
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2021 (2) TMI 1022
Manpower Recruitment or Supply Agency Service - seconded employees - demand on the ground that the appellants have not paid service tax on receipt of Manpower Supply Service and had not complied with the conditions prescribed in Notification No. 12/2013-ST dated 01.07.2013 - HELD THAT:- In order to classify any service under the manpower recruitment or supply agency service the following conditions need to be satisfied:
i. The agency must be any person
ii. It must be engaged in providing a specified service
iii. The specified service is recruitment or supply of manpower
iv. The service can be provided “temporarily or otherwise’
v. The service may be provided directly or indirectly
vi. The service may be provided in any manner
vii. The service must be provided to any other person.
An identical issue was decided by this Tribunal in the case of Target Corporation India Ltd. [2021 (1) TMI 712 - CESTAT BANGALORE] where it was held that in the case of seconded employees, service tax is not leviable under the category of manpower recruitment or supply of manpower service.
Appeal allowed - decided in favor of appellant.
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2021 (2) TMI 1021
Revocation of Customs Broker License - forfeiture of security deposit - corroborative evidences or not - no fresh evidence was brought by the Revenue before the Inquiry Officer as well as before the Commissioner to prove that the appellant had information, knowledge or have connived in the overvaluation of the goods or misdeclaration etc. - violations of Regulations 10(d), 10(n) and 13(7) of CBLR - principles of natural justice - HELD THAT:- In the present case, the Department has failed to bring any corroborative evidence or statement of anybody on record to prove that the appellant had information, knowledge or have connived in the overvaluation of the goods or mis-declaration etc. It is also noted that the law is well settled that an element of mens-rea or direct or indirect involvement attributable to the appellant through active knowledge or connivance is required to prove in a proceedings under CBLR, 2018. We noted a series of judgments in our order dt. 14/07/2020 but both the authorities have not considered the same at all. Both the authorities have not even distinguished the authorities relied upon by the appellant and have been noted in the order dt. 14/07/2020.
The learned Commissioner was bent upon revoking the licence of the appellant in spite of the fact that the appellant were not responsible for violating the regulations as alleged against them - Appeal disposed off.
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2021 (2) TMI 1020
Penalty u/s 271(1)(c) - deduct tax at source u/s 194J - assessee company has suo motu deposited the tax deducted at source along with interest in the Government account to settle the dispute with the Revenue - HELD THAT:- We are of the considered view that when, in the undisputed facts and circumstances of the case, assessee company has voluntarily on its own deducted the tax and deposited the same with Government exchequer along with interest well prior to date of filing of income-tax return, it shows its bona fide creating a reasonable cause to be covered u/s. 273B of the Act, hence penalty imposed by the AO is not sustainable. So, finding no illegality or perversity in the impugned order passed by the ld. CIT(A), present appeal filed by the Revenue is hereby dismissed.
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2021 (2) TMI 1019
Depreciation for assets classified under KILN-III - Whether CIT(A) has erred in law and on facts in admitting the assessee's additional evidence regarding the purchase of invoice (s) of the fixed asset in the nature of generator during the lower appellate proceedings and that too, in violation of Rule 46A of the Income Tax Rules.? - HELD THAT:-Assessee's statement of depreciation as per Income Tax Act sufficiently revealing that it had placed not only the details of the corresponding fixed asset generator but also filed necessary particulars during the course of assessment as per the certificate coming from the paper book. We thus see no merit in Revenue's foregoing technical grievance under Rule 46 of the Income Tax Rules. The same is accordingly declined. - Decided against revenue.
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2021 (2) TMI 1018
TP Adjustment - addition on account of arm's length interest on loans advanced to the Associated Enterprises (AE) - Commissioner (Appeals) directed the Assessing Officer to determine the arm's length interest applying LIBOR rate - HELD THAT:- As assessee has submitted that advancing of interest free loans to the subsidiaries is a shareholder’s activity, hence, should not be subjected to arm's length price determination, however, we are not convinced. A perusal of Explanation–I(c) of section 92B of the Act makes it clear that capital financing including any type of long term and short term borrowing, lending, etc., comes within the ambit of international transaction.
Since, the assessee has provided interest free loan to the AEs, which, under similar circumstances would not have been provided to unrelated parties, arm's length interest has to be determined. It is further observed, in the course of proceedings before the first appellate authority the assessee relying upon various judicial precedents had submitted that arm's length interest should be determined by applying LIBOR rate.
Addition made on account of adjustment made towards fee on corporate guarantee - Assessee had not charged any commission/fee from the AEs for the corporate guarantee so provided, the Transfer Pricing Officer determined the fee/commission for corporate guarantee @ 1.25% on the quantum of loan availed and proposed an adjustment - HELD THAT:- As rightly observed by learned first appellate authority, the Tribunal, Mumbai Bench, in Everest Kanto Cylinders Ltd. v/s DCIT, [2012 (11) TMI 1099 - ITAT MUMBAI] while negating identical contention made by the assessee has held that provision of corporate guarantee is an international transaction.
The aforesaid decision of the Co–ordinate Bench has also been upheld in case of the same assessee as reported in [2015 (5) TMI 395 - BOMBAY HIGH COURT]. That being the case, we do not find any merit in the submissions of the assessee that provision of corporate guarantee is not an international transaction.
As regard the arm's length rate of fee/commission, the assessee relying upon the decision of the Asian Paints India Ltd. [2015 (5) TMI 395 - BOMBAY HIGH COURT] has submitted that it should be reduced to 0.2%.On careful perusal of the decision rendered in case of Asian Paints (supra), we find that in the facts of the said case the assessee itself had charged commission @ 0.2% over the years and the Tribunal has accepted the claim of the assessee which was not contested by the Revenue. Taking note of these facts the Hon'ble Jurisdictional High Court has dismissed the appeal of the Revenue. These are not the facts in case of the present assessee. Therefore, we are not inclined to interfere with the decision of learned Commissioner (Appeals) on this issue. This ground is dismissed.
Disallowance made on account of alleged non–genuine purchases - HELD THAT:- What should be the reasonable rate of profit which can be applied. As noticed, the Assessing Officer has referred to a report of the task group for Diamond sector published by the Government of India, Ministry of Commerce and Industry, New Delhi, wherein the benign / presumptive taxation threshold was set at 2.5%.
Keeping in view the aforesaid threshold limit set by the task group, in our considered opinion the reasonable profit element on the alleged non–genuine purchases can be estimated @ 3%. Therefore, we direct the Assessing Officer to restrict the disallowance to 3% on the purchases made from Sun Diam only. No disallowance should be made on the purchases made from Nayan Gems. Before parting, we must observe that on a careful examination of the decisions relied upon by the learned Counsel for the assessee, we found them to be not applicable to the facts of the present case, hence, we have not deliberated upon them at length. This ground is partly allowed.
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2021 (2) TMI 1017
Validity of re-assessment notice u/s. 148 - Notice issued beyond 4 years - ex-parte orders - HELD THAT:- From the appeal papers and the orders of the authorities below i.e., CIT(A)'s order and AO's order, it is noticed that practically both the orders are ex-parte. From the order of the CIT(A), it is noticed that the CIT(A) has not adjudicated the issue of re-opening, whether notice u/s. 148 can be issued beyond 4 years in the given facts and circumstances of the case. Secondly, the CIT(A) has not at all touched the issue of best judgment completed ex-parte, which is raised by the assessee. Even on merits we noted from the order of CIT(A), that CIT(A) has not given any finding on merits except accepting the version of the AO.
CIT(A) has not adjudicated both the issues on jurisdiction i.e., best judgment made ex-parte as well as notice issued u/s. 148 of the Act beyond 4 years, which is beyond jurisdiction, according to the assessee. Since, these issues were not adjudicated, we are of the view that let the CIT(A) re-examine the issues in entirety, but it is also noticed that even the order of the AO is an ex-parte u/s. 144 r.w.s. 147 - Hence, purpose will not be served in case matter is restored back to CIT(A), because AO has to gather all the evidences and he has to adjudicate these issues. Hence in entirety, the assessment is set aside and appellate order is also set aside, matter remanded back to the file of the AO, to re-do the assessment afresh. The assessee is at liberty to raise jurisdictional issues as well as issues on merits before the AO. Appeal of the assessee is allowed for statistical purpose.
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2021 (2) TMI 1016
TP Adjustment - interest on delayed export proceeds receivable by the assessee from its AEs - HELD THAT:- Facts involved in the appeal of the assessee for the year in question are in parity with those as were there before the Tribunal in the case of its abovementioned ‘sister concern’, viz. Dania Oro jewellery Pvt. Ltd. Vs. DCIT-9(3)(1) [2018 (1) TMI 240 - ITAT MUMBAI] As the weighted average delay in realisation of the sale proceeds by the assessee from its AEs is less than that involved in realisation of the sale proceeds from the non-AEs, and the assessee adopting a uniform policy had not charged interest in either case, thus, finding ourselves in agreement with the view taken by the Tribunal in the aforesaid case, we respectfully follow the same. Accordingly, we herein and direct the A.O/TPO to vacate the transfer pricing adjustment of ₹ 1,07,01,654/- made towards interest on delayed export proceeds receivable by the assessee from its AEs.
TP adjustment - computing the impugned adjustment LIBOR+ 200 basis points (2.583%) instead of the base rate of State Bank of India i.e 10.81% - We find is rendered as infructuous, for the reason, that the transfer pricing adjustment as regards the delayed realization of sale proceeds by the assessee from its AE had been vacated by us while disposing off its additional ground of appeal.
Addition/disallowance under Sec. 2(24)(x) r.w.s 36(1)(va) - delayed the payments made in respect of the employees contributions to PF and ESIC by failing to deposit the same within the due dates (including the grace period) - HELD THAT:- On a perusal of the judgment of the Hon’ble High Court of Bombay in the case of CIT (Central), Pune Vs. Ghatge Patil Transport Limited. [2014 (10) TMI 402 - BOMBAY HIGH COURT] both the employers and the employees contributions to the various employees welfare funds are covered under Sec. 43B of the Act. In our considered view, as the employees contribution towards PF and Employees State Insurance therein aggregating to ₹ 8,65,227/- was deposited by the assessee prior to the ‘due date’ of filing of its return of income hence, the same was not liable to be disallowed under Sec. 2(24)(x) r.w.s 36(1)(va) of the Act. Our aforesaid view is further supported by a subsequent order of Hon’ble High Court of Bombay in the case of Geekay Security Services (P) Ltd. Vs. DCIT [2018 (12) TMI 702 - BOMBAY HIGH COURT]
Disallowance under Sec. 36(1)(iii) of the interest expenditure attributable to the interest free advances that were given by the assessee company to its directors - HELD THAT:- we concur with the claim of the ld. A.R that in case the interest free funds available with the assessee were sufficient to justify the loans advanced to the directors, it could safely be presumed that the same were made by the assessee from the interest free funds available with it. At the same time, we find that the claim of the assessee that it had sufficient self owned funds to justify the loans advanced to the aforesaid directors need to be verified on the part of the assessing officer, and if the said claim is found to be in order then no disallowance under Sec. 36(1)(iii) would be called for in its hands.
Deduction u/s 10A computation - not including the interest income while computing the assessee’s entitlement for deduction under Sec. 10A - HELD THAT:- We direct the A.O to consider interest income as a part of the eligible profits of the assessee’s business for computing its deduction under Sec. 10A .
Not considering claim that the unrealised export turnover as and when realised should be considered as forming part of its export turnover for the purpose of computing its deduction under Sec. 10A - HELD THAT:- As perused the order of the Tribunal in the assessee’s own case for A.Y. 2010-11 [2018 (5) TMI 130 - ITAT MUMBAI] ,we respectfully follow the same. Accordingly, we herein set aside the aforesaid matter to the file of the A.O, with a direction to consider any sum realised out of the unrealised export sales as part of the assessee’s export turnover for the purpose of computing its deduction under Sec.10A of the Act, as and when the same is received as per the extant guidelines of the Reserve Bank of India.
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