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Showing 481 to 500 of 1733 Records
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2019 (6) TMI 1255
Capital gain arising out of sale of office premises - LTCG OR STCG - characterization of asset - not claimed depreciation under Income tax Act though claimed under companies Act - used the office as registered office - mandatory nature of depreciation - HELD THAT:- As decided in SAKTHI METAL DEPOT VERSUS ITO [2004 (11) TMI 507 - ITAT COCHIN] character of the asset does not change only for the reason that the flat was used as a business asset/depreciable asset in the past. A long-term capital asset even though used as a depreciable asset in the past still could be a long-term capital asset for the purpose of taxation, if the property was not treated as a depreciable asset at the time of sale. It is always possible that a particular asset can be a personal asset for some time and a business asset for some other time. It entirely depends upon the intention of the owners of the property in which way it should be used. The assessee’s gain is arising out of sale of office premises is to be assessed as long term capital gain and consequential relief is to be allowed.
Allowance of cost of improvement claimed - assessee is unable to file any evidence before the lower authorities as the transaction of the year 2003-04 and it is 16-year-old matter - HELD THAT:- As noted assessee had incurred various expenses on improvement of the 4 galas in the nature of certain architectural changes, during the A.Y. 2004-05 amounting to ₹ 46,45,700/- which was duly explained from the Schedule of Fixed Assets in the Audited Balance Sheet of the company for FY 2003-04. During the course of assessment proceedings, the AO had asked the AR of the assessee firm to produce various documentary evidences in order to substantiate the cost of acquisition as claimed. We direct the assessee to produce all the relevant evidences before AO and AO will consider the relevant accounts of the assessee including schedule of fixed assets from the balance sheet and will decide the issue afresh. Hence, this issue is set aside to the file of the AO. - Appeal of assessee is partly allowed.
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2019 (6) TMI 1254
Penalty u/s 272A(2)(k) - delay in filing the TDS return - resignation of the accountant - reasonable cause shown within the meaning of Sec 273B - HELD THAT:- Assessee had shown reasonable cause for his failure in complying with the provisions of section 200(3) hence no penalty could be levied. The assessee had deducted and deposited the tax within the prescribed period and thereby made substantive compliance.
The government revenue was not defrauded or deferred. The assessee did not have any motive to make any financial gain. Due to sudden resignation of the accountant, the assessee could not trace his left over jobs which include non-filing of TDS returns in Form 26Q for Quarter-1 & Quarter-2 for FY 2010-11. As soon the same was noticed, TDS both the returns were filed. The circumstance shows that the delay in filing the return was not intentional. The assessee was prevented by sufficient cause for making due compliance. Therefore, we note that assessee had shown ‘reasonable cause’ as referred u/s 273B - Decided in favour of assessee.
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2019 (6) TMI 1253
Addition of unexplained credit u/s 68 - loans was taken long before the start of any activities by assessee - assessee submitted complete details such as income tax return, Annual report , bank account, confirmation of the above lender lender has net worth of ₹ 8.18 cores as share capital and reserves and surpluses - onus of proof - applicability of 68 on charitable institution - HELD THAT:- It is very strange that assessee could not produce the party for examination before ld AO, made no attempt to produce them before CIT (A), but found it convenient to make repayment of the loan by account payee cheque after passing of the assessment order but before the appeal disposed off by the ld CIT (A). The lender is a private limited company and is an artificial juridical entity; it functions through its directors. The directors whereabouts are not known, the company’s address shows that it never existed at that address.
Mere filing of the paper does not establish even the identity of the lender company. The depositors is a private limited company which has existed and carried out the activities therefore, its directors who are not found at the given address and further even they did not respond to the summons. The assessee could not produce them before the lower authorities and in case of some other assessee also it itself proves that the lender is nonexistent shell company.
The lenders which has an asset base of ₹ 8.18 crores has earned a meager income of ₹ 37000/- and the income tax payable for Assessment Year 2009-10 is a meager sum of ₹ 108/- and ₹ 11739/- for the current year. Further this company does not have a fixed asset of single rupee. Further, the balance sheet produced before the lower authorities was also not accompanied with the schedules and the profit and loss account but a stray paper giving the list of various loans and advances etc was given .
Further the bank account of the lender which is given for 9/1/2009 to 12/1/2009 to the AO does not show the name of the bank to which it pertains to similarly bank statement for repayment period was also 18/2/2010 to 05/3/2010 has the similar story to tell. The above conduct and the balance sheet of the lender clearly shows that the lender alleged to have deployed funds are non income producing funds, it does not result into any revenue to that company. The lender clearly is a paper company and nothing more than that. The lower authorities have correctly appreciated the whole transaction and confirmed the addition.
In the present case the assessee failed to discharge its initial onus as cast upon it u/s 68 of the Act. The assessee was asked to produce the director which was found to be not traceable at the given address and further the assessee has also not produced the complete balance sheet.
In the present case, the addition has been made correctly u/s 68 and same also applies to the AOP to whom the provisions of section 11 and 12 applies, if the impugned some was not credited to the income and expenditure account but is shown as a liability.
The issue before us is also squarely covered by the Decision of Honourable Supreme court in case of Pr. CIT V NRA iron & Steel Co Ltd [2019 (3) TMI 323 - SUPREME COURT] and Honourable Delhi High court in Pr. CIT V v. NDR PROMOTERS PVT. LTD. [2019 (1) TMI 1089 - DELHI HIGH COURT] . - appeal of the assessee is dismissed
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2019 (6) TMI 1252
Revision u/s 263 - Pr. CIT directed to make addition/disallowance in respect of expenditure incurred towards R&D u/s 35(2AB); Capital R&D expense allocated to Sun Pharmaceuticals Industries and re-characterization of remuneration earned from partnership firm (SPI) as royalty income - same disallowances were already subject matter of appeals before Tribunal in earlier years - HELD THAT:- Since issues are covered in assessee’s own cases by the order passed by the Co-ordinate Bench in [2019 (4) TMI 868 - ITAT AHMEDABAD] and [2017 (9) TMI 1804 - ITAT AHMEDABAD] and wherein above disallowances/ additions were deleted.
Taking into consideration the order passed by the Co-ordinate Bench in identical issue in assessee’s own cases (supra), we find the disallowance ordered by the Learned PCIT is not sustainable in the eye of law. - assessee’s appeal is allowed
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2019 (6) TMI 1251
Disallowance u/s 14A r.w.r. 8D - in the period prior to introduction of Rule 8D - HELD THAT:- It is not shown to us by learned DR as to how factual matrix in AY 2006-07 is different from that of AY 2007-08. Both the years are prior to AY 2008-09 from where onwards Rule 8D of the 1962 Rules is held to be applicable. Thus, Respectfully following the aforesaid decision of Hon’ble Tribunal in assessee’s own case for AY 2007-08 [2016 (7) TMI 1527 - ITAT MUMBAI] we are of the considered view that end of justice will be met in this case if disallowance of expenses incurred in relation to earning of an exempt income u/s 14A be restricted to 2% of dividend income . Ground no. 1 is partly allowed.
Levy of interest u/s. 234C and 234D - HELD THAT:- As agreed by learned counsel for the assessee that levying of interest u/s 234C and 234D is mandatory and there is no dispute as far as mandatory nature of the interest u/s 234C and 234D is concerned but keeping in view facts and circumstances of the case no interest is exigible. Reference is made to the decision of Hon’ble Supreme Court in the case of Anjum M. H. Ghaswala [2001 (10) TMI 4 - SUPREME COURT]
DR did not objected if the matter is restored back to the file of the AO for verification of the contentions of the assessee and for deciding the quantum of interest u/s 234C and 234D in accordance with law. Remanded to AO with direction.
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2019 (6) TMI 1250
Disallowance of loss of trading in commodity exchange - speculation loss or normal business loss - set off against the profits and gains of business u/s 44AD - failure to get account audited u/s 44AB - HELD THAT:- Records shows that the assessee has filed the detailed statement of transactions carried out for commodity trading from KARVY Commodities Ltd. There is no finding by both the lower authorities challenging the genuineness of the commodity trading transactions entered during the year and the amount of loss suffered by the assessee.
However in the instant case no question has been raised for the genuineness of the trading loss. It is true that it has been disclosed under head income from other source but according to Section 71(1) of the Act assessee is entitled to set off this commodity trading from income under the head Business & profession and income from other sources.
We accordingly direct the revenue authorities to allow the assessee’s claim of commodity trading loss by way of set off to the extent of income under other heads for the year under appeal. Certainly assessee will be allowed to carry forward the loss to the subsequent years.
Addition u/s 68 regarding opening cash balance - source of opening cash balance - HELD THAT:- Assessee has not provided any details in the shape of balance sheet or statement of affairs for the immediate preceding Assessment Year 2013-14. In the given facts and circumstances of the case it seems that the assessee’s claim of having opening cash balance of ₹ 17,92,999/- is baseless and devoid of merit. Further Ld. Counsel for the assessee failed to make any submission which shows that assessee has no credible documentary evidences to support this ground. We therefore have no option left except to dismiss the assessee’s Ground.
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2019 (6) TMI 1249
ADD - Sunset review - invocation of provisions of section 9A of Custom Tariff Act and Rules - imports of Ductile Iron Pipes originating in or exported from China PR - HELD THAT:- The position of law in respect of the remedies on final findings is now clear. The decisions of Supreme Court in respect of JINDAL POLY FILM LTD. VERSUS DESIGNATED AUTHORITY & ANR. [2018 (9) TMI 1294 - DELHI HIGH COURT] have been cited for contending that the alternative remedy in terms of Section-9C of the Act may persuade this Court in not interfering with the final findings. The judgments cited at the bar are of Delhi High Court and there cannot be any dispute to the proposition that the final finding in fact is amounting to determination or review regarding the existence, degree and effect of any dumping in relation to import of any article and hence, it may not have to await the formal order by the Central Government of accepting the same and issuing notification based thereupon.
This Court is of the view that the Court at this stage need not go into the aspect of the tribunal’s power to issue direction to the Central Government in exercise of the power u/s.9C(3) for extending the anti dumping duty notification. The vital facts and time-line of the instant case are itself sufficient to indicate that the remedy of appeal in a present case could not have been said to be an efficacious remedy so as to give sufficient opportunity to the petitioner for seeking appropriate relief after availing the opportunity of putting forward their case.
The impugned Final Finding recorded in the Notification dated 01.04.2019, cannot be said to be strictly in accordance with the provision of Rule 23 of the Rules, as there is non-advertance to the material placed on record and there is non- compliance with the principle of natural justice as no requisite information was made available and the conclusions are not supported by the material on record - we are left with no other alternative, but to remand back the matter to the concerned authority after quashing and setting aside the same for reconsideration on the aspects which have been mentioned herein above and record its finding, as the extended period of notification of anti dumping duty is ending, the same is also required to be extended for appropriate time so that assessing the material and recording the final findings afresh could be undertaken meaningfully and without jeopardizing the parties right and contentions and rendering it infructuous.
In that view of the matter, the respondent no.1 is hereby directed to to issue notification extending the anti dumping duty on the product in question, till the final findings are rendered.
Petition allowed by way of remand.
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2019 (6) TMI 1248
Interest on delayed refund - time limitation for Refund of Special Excise Duty and on account of excess payment of CVD - N/N. 9/2006 dated 01.03.2006 - Section 27 of Customs Act - HELD THAT:- The refund claim was filed as back as 31.07.2012 and the subsequent application of refund dated 11.08.2014 was nothing but the continuation of the said previous application itself. The interest has been denied relying upon Section 27 (1B) (c) of Customs Act, 1962.
Perusal of Section 27 makes it clear that the period of limitation of one year is for the person claiming refund - In the present case the application dated 31.07.2012 is within one year of the last Bill of Entry among 13 i.e. dated 05.01.2012. Even first Bill of entry dated 18.08.2011 fulfills the aforesaid limitation as applicable to the appellant. Section 27 (1B) prescribes the mode of computing the aforesaid period of limitation of one year. Thus, Sub-clause (c) thereof gives the extended time to the appellant and not to the Department.
Section 27 (a) of the Customs Act says that if any duty ordered to be refunded under Sub-Section (2) of Section 27 to the applicant is not refunded within 3 months from the date of receipt of application under sub-section (1) of Section 27 they shall be paid to the applicant the interest at such rate as is mentioned in the said Section - the application for refund was filed on 31st July, 2012, another application in continuation thereof was filed on 11.08.2014. Reassessment was on 24.11.2015. Apparently, and admittedly, the amount of refund has been sanctioned but has not been refunded within 3 months from the date of receipt of the above mentioned application, Section 27 (a) being a statutory mandate upon the Department, the Department is liable to pay the interest on the sanctioned amount for the delayed period.
Appeal allowed - decided in favor of appellant.
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2019 (6) TMI 1247
Declaration of Dividend - authorisation to the Official Liquidator to open a separate dividend account - dispensation with the publication of notice of declaration of dividend in newspapers - HELD THAT:- Since the unsecured creditors have filed individual claims and their claims were adjudicated issuing respective Form No. 69/70, the Official Liquidator is directed to issue individual notices of dividend in Form No. 138 in the name of one preferential creditor and 43 unsecured creditors of the company in liquidation, dispensing with publication of notice of dividend in newspapers as required under Rule 276 of the Companies (Court) Rules, 1959.
The Official Liquidator is authorized to open a separate dividend account in Punjab National Bank and pay the dividend to unsecured creditors out of the said account in terms of Rule 290 of the Companies (Court) Rules, 1959. He is also authorised to fix the schedule for making payment and also to pay the dividend due to any deceased creditor to his legal heirs upon production of a family member certificate or such other certificate other than a succession certificate and upon furnishing a personal indemnity in terms of Rule 280 of the 1959 Rules and to incur incidental charges from and out of the available funds of the company in liquidation.
Application allowed.
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2019 (6) TMI 1246
Initiation of Corporate Insolvency Resolution Process (CIRP) - Corporate Debtor - default of repayment of financial debt - HELD THAT:- The present application is filed in conformity with the prescribed procedure and Rule by providing requisite information annexed with relevant documents. That apart, the present application is supported by a Board Resolution passed by the Corporate Applicant/Debtor company proposing CIRP for itself and by duly authorizing to Mr. Sanjay Mansukhbhai Ramani, being one of the directors, for filing the present application. It is also a matter of record in the present matter that the Respondent - Financial Creditor did not oppose the admission of the present IB Petition.
It may be understood that under the provisions of Section 10(3)(b) of the Code it is mandatory on the part of the applicant to propose a name of an IRP in IB Petition, failing which such application may be found as incomplete. Therefore, the Corporate Applicant has properly proposed Mr.Vinod Tarachand Agrawal to act as IRP under the provisions of the Code.
The present IB petition deserves admission under the Code. Therefore, the present IB Petition is admitted under Section 10 of the Insolvency & Bankruptcy Code - moratorium declared.
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2019 (6) TMI 1245
Benefit of reduced penalty - penalty not deposited by assessee - whether the Commission (Appeals) was right in giving the benefit of reduced penalty of 25% under Section 78 of the Finance Act, 1994 even when the penalty has not been deposited by the respondent assessee? - HELD THAT:- The assessee can get the benefit of reduced penalty of 25% of the service tax determined, provided the assessee fulfills the following two conditions as per the proviso to Section 78(1) of the Finance Act, 1994, namely: (i) that the determined amount of service tax along with interest is paid within a period of one month from the date of issue of determining order; and (ii) that the penalty imposed is equal to the amount of service tax confirmed, however, if the assessee deposits the 25% of penalty within a period of one month, the amount of 100% or equal amount of penalty can be reduced to 25%.
The learned Commissioner (Appeals) erred in determining the quantum of penalty at 25% of the service tax demand and wrongly extended the benefit to the assessee for 25% of mandatory equal amount of penalty as provided under section 78 of Finance Act, 1994.
Penalty set aside - appeal dismissed - decided against Revenue.
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2019 (6) TMI 1244
SSI Exemption - Use of brand name - Department has been of the view that since the appellant have been using the brand name of other persons they should have got themselves registered with the Department since inception in July, 2011 and should have paid Central Excise duty on clearances of branded goods - HELD THAT:- The investigations have brought it out very firmly and categorically that the appellants have been engaged in the manufacture of wall putty and decorative white cement and other cement paints etc. They have also been found using brand name ‘Diamond Gold’ belonging to other person namely M/s. Diamond Waterproof Compound Pvt. Ltd. and even during the investigation, they have tried to mislead the proceedings by stating that the goods are being got manufactured on job work basis from some other manufacturers, however, it has been established that the goods were being manufactured by the appellants only.
It can be seen that the price of ‘Diamond Gold’ brand as well as for ‘Suraksha Gold’ brand for 40Kgs packing of wall putty is same at ₹ 1050/-. The appellants have failed to adduce any concrete evidence to contradict the above findings of the adjudicating authority. There is nothing wrong in adopting the MRP which was found mentioned on the packing of finished goods which was put for seizure at the factory premises of the appellant for deciding the effective rate of clearance for the relevant financial years.
The investigation has established beyond doubt that the appellants have been engaged in the manufacture of wall putty, decorative white cement etc. with the brand name of some other person and on the basis of record of clearances recovered by the investigation team, it is established that the appellants have crossed the exemption limit which is available for SSI units and therefore, they should have been taken a proper Central Excise registration from the Excise authorities. They were also required to make clearances of products manufactured and branded with other persons brand name on payment of Central Excise duty which they have failed.
Appeal dismissed - decided against Appellant.
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2019 (6) TMI 1243
Classification of manufactured goods - cosmetic or a medicine? - Area Based Exemption - benefit of N/N. 49/2003-CE dated 10.06.2003 - manufacture of talcum powder, “Himgange Cool Talc” - it was alleged that they intentionally mis-classified their product as a pharmaceutical product, which is a talcum powder with intention of wrongly availing the benefit of the Notification - HELD THAT:- From the perusal of the provision of D & C Act, it is observed that the license under Rule 140 of the Act is granted on an application in Form 31 praying for license to manufacture cosmetics. Thus, it becomes, clear that irrespective appellants were initially involved in manufacture of pharmaceutical products classifiable under Chapter 30 of Central Excise Tariff Act, 1985, but they subsequently started manufacturing the talcum powder not as a pharmaceutical product of Chapter 30 but as cosmetic product classifiable under Chapter 33. Their application in form 31 under Rule 138 of D & C Act is opined to be an admission on their part to seek permission/license to manufacture the cosmetic product. Admissions are relevant unless and until rebutted.
The ingredients lose their individual existence and the outcome product of those ingredients has to be considered in respect of its complete or precise description and in terms of the essential character being given by the components. Thus, irrespective menthol and camphor are Ayurvedic medicament products but their combination is giving rise to a product admittedly known as talcum power. The mere fact that the talcum powder is providing the refreshing and the cool feeling, the mere application thereof does not make it a pharmaceutics product/ medicament. In general, parlance, it is a talcum power. Apparently and admittedly, the same can be applied without any medical prescription. Also the same is not the cure for any of the specific medical condition.
Thus the product is manufactured not under drug license but under cosmetic license. The cosmetic license was obtained when assessee was already engaged in manufacture of pharmaceutical products. Had this talc been a pharmaceutical product only, there was no need for the assessee to have a cosmetic license for the manufacture thereof. Apparently, in common parlance the product is a talcum powder, which can be used irrespective of any prescription about the dozes to be used thereof - the talcum powder except providing a cooling and refreshing effect on body is not providing any therapeutic value nor any treatment to any specific skin condition. The effect of the talcum powder is opined to be more of a cosmetic product that is the product for a better feel and look of body and skin - issue decided against the assessee in favour of the Department holding that the adjudicating authorities below have rightly classified the impugned “Himgange Cool Talc” as a product classifiable under Chapter 33 of CETA, 1985 i.e. as a cosmetic product.
Whether the appellant had the malafide intention, while declaring its product as pharmaceutical product, while claiming the exemption of Notification No.49/2003? - HELD THAT:- Irrespective of the classification, which otherwise has been held for the talcum powder to be a cosmetic rather than to be a pharmaceutical product, the assessee was bound by his own act and conduct and was in fact, estopped from claiming the said talcum powder as a pharmaceutical product. These observations are sufficient to hold that despite the conscious knowledge of the impugned products to be a mere talcum powder a mere cosmetic, the benefit of Notification No.49/2003 was availed - Though the said benefit, the assessee would have been claiming with respect to his pharmaceutical product in manufacture whereof he was already involved but for taking the same benefit for a cosmetic product despite the above said conscious knowledge, the mis-declaration has been done with a malafide intention to take wrong benefit of the impugned Notification with the sole intention of evading duty.
Penalty - HELD THAT:- The mis-declaration definitely invites penalty under Section 11AC of Central Excise Act, 1944 - penalty upheld.
Appeal allowed in part.
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2019 (6) TMI 1242
Validity of assessment order - Telangana VAT Act - grievance of the petitioner as against the impugned order of assessment is that the petitioner was unable to obtain ‘F’ Forms for part of the turn over, from four different States, on account of certain issues and that these Forms cannot be generated now online, as the Forms related to the assessment year 2014-15 - HELD THAT:- The petitioner should first go before the Appellate Deputy Commissioner by way of a statutory appeal. The impugned order though dated 30.03.2019, was received on 28.05.2019 and the limitation for filing a statutory appeal has not expired.
The Appellate Authority may examine whether it is a fit case for accepting other evidence as indicated by the Supreme Court in Ambica Steels Limited [2009 (3) TMI 550 - SUPREME COURT]
Petition disposed off.
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2019 (6) TMI 1241
Rejection of stay application - petitioner has already paid 25% of the demand at the time of filing the first appeal before the VAT Appellate Tribunal - Classification of goods - rate of tax - HELD THAT:- The impugned order is set aside and the stay of recovery of the balance amount is granted, subject to the condition that the petitioner deposits with the concerned authority, 25% of the demand in addition to the 25% already paid. This amount shall be paid within a period of six (06) weeks. Upon such payment, the petitioner shall have the benefit of stay pending disposal of the appeal before the Tribunal - Petition allowed - decided in favor of petitioner.
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2019 (6) TMI 1240
Alternate remedy - non assessment of income of the petitioner as same derived from the agriculture - benefit of the section 10(1) - HELD THAT:- Since an efficacious alternative remedy is available to the petitioner under Section 246 of the Income Tax Act, 1961, hence, present petition under Section 226 of the Constitution of India is not maintainable. Perusal of the impugned assessment year reveals that the assessee neither has filed his return of income nor has filed any written submission.
This Court is of the considered view that the petitioner could not be permitted to abandon or by pass that remedy and invoke the jurisdiction of the High Court under Article 226 of the Constitution of India, when he had an efficacious and adequate remedy open to him by way of appeal before the Commissioner of Income Tax (Appeal).
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2019 (6) TMI 1239
Classification of services - Business Auxiliary services or not - appellant was acting as a marketing agent for several banks and financial institutions who are engaged in the business of car finance - HELD THAT:- The matter in its entirety is no longer res integra as it has been already been decided by this Tribunal in the case of BRIJ MOTORS PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, KANPUR [2011 (11) TMI 410 - CESTAT, NEW DELHI] that the activity undertaken by the appellant as mentioned in the preceding paragraph is covered by the definition given under section 65 (19) of the Finance Act, 1994 and is appropriately classifiable under the category of ‘Business Auxiliary Service’ - This Tribunal has taken a similar view in the case of VED AUTOMOTIVES VERSUS COMMISSIONER OF CENTRAL EXCISE, KANPUR [2016 (11) TMI 836 - CESTAT ALLAHABAD] whereunder it has been held by this Tribunal that the activity akin to the one taken by the appellant is rightly classifiable under service category of ‘Business Auxiliary Service’.
Thus, the activity undertaken by the appellant is rightly classifiable under ‘Business Auxiliary Service’.
Penalty u/s 78 of FA - HELD THAT:- The appellant had deposited the entire amount of Service Tax demanded under the Show cause notice dated 30 November, 2006 along with interest much before the issue of show cause notice. Secondly, there was a certain amount of confusion at the field level for proper classification of activity undertaken by the appellant as to whether it is classifiable under the category of ‘Business Auxiliary Service’ or under ‘Business Support Service’ and since there have been multiplicity of interpretation with regard to the applicability of service tax law in the nature of activity undertaken by the appellant, the issue of imposition of penalty under section 78 of Finance Act is not warranted - the imposition of penalty under section 78 in this case is not justified.
The confirmation of Service Tax demand is justified but the imposition of penalty under section 78 of the Finance Act, 1994 is set aside - appeal allowed in part.
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2019 (6) TMI 1238
Applicability of TP provisions of Chapter-X on Tonnage Tax Scheme of the Chapter XII-G - HELD THAT:- Tonnage Tax Scheme, as per Chapter XIT-G of the Act, is a separate code by itself in as much as it provides a self-contained changing provision as well as 'method of computation of income in the chapter, and, the method of computation of income under TTS is not dependent on receipt or expenditure of the assessee.
Under Tonnage Tax Scheme, the income has to be computed as per the method prescribed in section 115VG. The income as per Tonnage Tax Scheme is computed on the basis of the weight of the vessel and number of days it is held, irrespective of its revenue realisations and the expenditure incurred for the purpose of the business.
Hence, neither the business receipts nor the business expenditure of the assessee has any bearing on the method prescribed for computation of income under TTS as per section 115VG. The tonnage tax scheme, in that sense, is a presumptive method of computation of taxable income which is not dependent on actual receipts and expenditure of the assessee.
The perception of AO that chapter X of the Act creates an independent or a separate charge of income, an aspect which is contrary to the judgment in the case of Vodafone Services Pvt.ltd. vs. UOI [2014 (11) TMI 881 - BOMBAY HIGH COURT] wherein after referring to an earlier judgment [2014 (10) TMI 278 - BOMBAY HIGH COURT], held that chapter X does not contain any charging provision but is a machinery provision to arrive at an arms length price of a transaction between associated enterprises.
In the instant case, the provisions of chapter X have been invoked to alter an expenditure, namely the mobilisation and demobilisation charges paid for a qualifying ship, an item which has no bearing on the income as computed under Chapter XIIG and accordingly the provisions of Chapter X have no application in computing the income of the assessee chargeable to tax as per Chapter XII-G of the Act.
Transfer pricing regulations do not apply to the assessee to the extent of operations carried out through operating qualifying ships where the income is taxed under TTS - Appeal of the assessee is allowed.
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2019 (6) TMI 1237
Sale of property through power of attorney - transfer u/s 2(47) - sale of agricultural land - HELD THAT:- Assessee entered into an agreement for sale on 04.05.2012 with Shri V.R. Anbuvelrajan and Shri S. Balamurugan. The assessee did not execute any sale deed. Subsequently, in the year 2013, the assessee executed power of attorney in favour of the said Shri V.R. Anbuvelrajan and Shri S. Balamurugan. The assessee claims that the physical possession of the property was handed over to Shri V.R. Anbuvelrajan and Shri S. Balamurugan and entire sale consideration was also received from them. However, it appears no sale deed was executed by the assessee in favour of the said Shri V.R. Anbuvelrajan and Shri S. Balamurugan. The assessee claims that the sale was completed when the assessee entered into agreement for sale with Shri V.R. Anbuvelrajan and Shri S. Balamurugan and received the entire consideration after handing over the physical possession of the property.
On the strength of the power of attorney executed by the assessee in favour of Shri V.R. Anbuvelrajan and Shri S. Balamurugan, they sold the property for higher consideration. Therefore, it is obvious that as claimed by the assessee, there are two different transactions. One transaction is between the assessee and Shri V.R. Anbuvelrajan & Shri S. Balamurugan. The other transaction is between Shri V.R. Anbuvelrajan & Shri S. Balamurugan with M/s Jacaranda Properties Pvt. Ltd. These two transactions have to be brought for taxation in the respective hands. These facts were not examined by the Assessing Officer. Therefore, the orders of both the authorities below are set aside and the entire issue is remitted back to the file of the Assessing Officer. - Appeal filed by the assessee is allowed for statistical purposes.
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2019 (6) TMI 1236
Levy of GST - Supply of various services - whether the applicant can be considered as “government”? - HELD THAT:- As per clause (23) of section 3 of the General Clauses Act, 1897, the word “Government” or “the Government” shall include both the Central Government and any State Government - Section 2(53) of the CGST Act and the corresponding section of the SGST Act defines the word ‘Government’ as the Central/State Government, The applicant which is engaged in research, development, production, testing, marketing and logistics of a comprehensive product range in the areas of air, land and sea systems is having an industrial status and functions under the Ministry of defence. It is not created by the constitution of India as a legislative, executive or judicial authority of the country - hence, the applicant cannot be treated as “Government” as defined under section 2(53) of the CGST Act, 2017.
Levy of GST - Supply of services - Ministry of Defence, Government of India - Ordnance Factory Bhandara (OFB) - Liquidated damages deducted from the payments to be made to suppliers in case of delayed delivery of goods or services - Amount of Security deposit forfeited of suppliers due to non-fulfilment of certain contract conditions - Security deposit left unclaimed by the suppliers and recognised as income after 3 years - Food and beverages supplied at industrial canteen inside the factory premises - Community hall (Multipurpose Hall) provided on rental basis to employees of our organisation - School bus facility provided to children of the employees - Conducting exams for various vacancies - Rent recovered from residential quarters of employees - HELD THAT:- In case of Liquidated damages deducted from the payments to be made to suppliers in case of delayed delivery of goods or services, Sr. No. 62 (heading 9991 or 9997) of Notification No. 12/2017- Central Tax (Rate) dated 28th June 2017 provides NIL rate of Tax in respect of services provided by the Central Government, State Government, etc. by way of tolerating non-performance of a contract for which consideration in the form of fines or liquidated damages is payable to the Central Government, State Government, Union Territory or local authority under such contract. Since the applicant is not ‘Government’, they are not liable to get exemption under the said Notification in respect of ‘Liquidated damages’ deducted from the payments to be made to suppliers in case of delayed delivery of goods or services.
Amount of Security deposit forfeited of suppliers due to non-fulfilment of certain contract conditions - HELD THAT:- Security deposits which are refundable in nature are not liable to tax as per the GST Laws. However in this case such Security deposits are forfeited which would be considered as ‘additional consideration’ flowing to the applicant on account of supply of goods by them and this additional consideration will be required to be added in the taxable value and accordingly, tax liability will have to be discharged by the applicant. The jurisdictional office has reported that the applicant has paid the service tax on such amount of Security deposited forfeited before the GST regime.
Security deposit left unclaimed by the suppliers and recognised as income after 3 years - HELD THAT:- There appears to be no intention on the part of the applicant to forfeit such deposit. It is just a case of the supplier not claiming the same. Hence we cannot treat the same as a consideration received for the supply of goods or services or both and therefore the applicant is not liable to pay any tax on such amount shown as income under the GST Regime. Security Deposits which in normal course are refundable as such, are not liable to tax under the GST regime.
Food and beverages supplied at industrial canteen inside the factory premises - HELD THAT:- No outdoor caterer is involved. We find that the canteen is in providing services related to supply of food and beverages to their employees and also charging consideration for the same. The service code (Tariff Group/Heading) for such services is 9963 and the same is taxable under GST - The applicant’s claim that Sr. No. 6 of the exemption list on supply of services as per notification no. 12/2017- Central tax (Rate), is applicable to them is not acceptable in view of the fact that as discussed above they are not Central Government.
Community hall (Multipurpose Hall) provided on rental basis to employees of our organisation - HELD THAT:- The applicant has provided Community hall (Multipurpose Hall) on rental basis to their employees which is covered under the definition of supply of services as mentioned above and they are liable to pay GST on the amount charged by them from their employees for supplying such services. For reasons mentioned in the foregoing the applicant is not entitled for any exemption under Notification No. 12/2017-Central Tax(rate) dated 28-06-2017.
School bus facility provided to children of the employees - HELD THAT:- As per Sr. No. 66 (b) (heading 9992) of Notification No. 12/2017-Central Tax (Rate) dated 28th June 2017, services provided to an educational institution by way of transportation of students does not attract any GST liability. As the applicant is not an educational institution and the school bus facility is extended to the children of employees and not to an educational institution, the provisions of Sr. No. 66 (b) (heading 9992) of Notification No. 12/2017-Central Tax (Rate) dated 28th June 2017 is not applicable to them.
Conducting exams for various vacancies - HELD THAT:- The services by way of conducting exams is available only to educational institutions as per Sr. No. 66 (aa) (heading 9992) of Notification No. 12/2017-CentraI Tax (Rate) dated 28 th June 2017. The applicant is neither an educational institution nor ‘Government’ as discussed aforesaid and therefore they are liable to pay GST on such services supplied by them.
Rent recovered from residential quarters of employees - HELD THAT:- Under the provision of GST Laws, “renting of immovable property” is included in Schedule II of the CGST Act and is taxable. However Entry No. 12 of Notification No, 12/2017 mentioned above, exempts supply of services by way of renting of residential dwelling for use as residence.
Input tax credit - expenditure on the goods and services consumed by our organisation - Maintenance of garden inside the factory premises - Maintenance and upkeep activities relating to gardens, parks, playground, factory school for children of employees, hall for recreational activities, residential quarter buildings of employees, roads, footpaths, street lightings and other parts of estate area that are located outside the factory premises but within the factory estate - Medicine purchased by the hospital maintained by our organisation and used for treatment of factory employees and their dependents. Expenditure on maintenance, upkeep and other activities relating to such hospital - Expenditure related to maintenance and upkeep of guest houses maintained by organisation - Expenditure related to purchase of LPG cylinders used within industrial canteen - HELD THAT:- As regards maintenance of garden inside the factory premises, the applicant, being a registered person is entitled to take credit of input tax charged on any supply of goods and services or both received by them, which are used or intended to be used in the course of furtherance of their business. Supply in relation to maintenance of garden is not a supply that can be considered as a supply used or intended to be used in the course of furtherance of the business of the applicant which is to manufacture Propellants and Commercial Explosives. Hence the applicant are not eligible to avail ITC of the tax paid by them on the same. The services availed in relation to plantation and gardening within the plant area will not qualify for input tax credit.
Maintenance and upkeep activities relating to gardens, parks, playground, factory school for children of employees, hall for recreational activities, residential quarter buildings of employees, roads, footpaths, street lightings and other parts of estate area that are located outside the factory premises but within the factory estate - HELD THAT:- The activities listed by the applicant are carried out outside the factory premises. These activities can at best be termed as welfare or social activities and they are not carried out in furtherance of the business and have no nexus to their manufacturing activity. Since these activities are not used or intended to be used by the applicant in furtherance of business ITC on the same are not available to them.
Medicine purchased by the hospital maintained by our organisation and used for treatment of factory employees and their dependents - Expenditure on maintenance, upkeep and other activities relating to such hospital - HELD THAT:- The hospital/dispensary maintained by the applicant for its employees and their dependents come within the definition of “Clinical Establishment” as defined under the said Notification at definition mentioned at Sr. No. 2(s) and such supply of service is exempted under Sr. No. 74, heading 9993 of the Notification no. 12/2017-Central Tax(Rate) dated 28th June 2017. Thus ITC on such exempted supply of services is not available to applicant under sub section (2) of Section 17 of the CGST Act, 2017 in respect of services and goods procured for maintenance of hospitals and pharmacy outlet as such services, being nil rated, fall under exempt supplies.
Expenditure related to maintenance and upkeep of guest houses maintained by organisation - HELD THAT:- Provision of guest houses is a perquisite for their employees and therefore tax paid on maintenance and upkeep of guest houses cannot be allowed as ITC. Guest houses are generally used for temporary accommodation of employees as well as outsiders. Such provision of guest house cannot be treated as an activity in course or furtherance of its business and related to the applicant’s business. Further, we find that the goods, or services, or both pertaining to Guest House are used for personal consumption of the employees/guests and are not used or intended to be used in the course or furtherance of business. As such in view of the provisions of Section 17 (5)(g), no ITC is available to the applicant. Hence, we hold that they are not eligible for ITC on taxes paid for maintenance and upkeep of guest houses.
Expenditure related to purchase of LPG cylinders used within industrial canteen - HELD THAT:- Their canteen is in providing services related to supply of food and beverages to their employees and also charging consideration for the same and therefore such service is taxable under GST regime. The LPG cylinders are used to provide such services related to supply of food and beverages to their employees and therefore we are of the opinion that they are eligible to avail ITC on the purchase of LPG cylinders.
Whether the exemption to a ‘defence formation’ for preparation and generation of E- way bills is applicable to Ordnance factories & other Central Government & Public Sector Undertakings(PSU’s) that function under the Ministry of Defence, Government of India? - HELD THAT:- As per para 14(k) of Rule No. 138 of the CGST Rules, 2018(Notification No. 12/2018 - Central Tax), e-way bill is not required to be generated when any movement of goods is being caused by defence formation under the Ministry of Defence as a consignor or a consignee - the applicant which functions under the Ordnance Factory Board (OFB) which in turn functions under the Department of Defence Production and Supply, Ministry of Defence, Government of India, is causing movement of goods to units of the Indian Armed Forces, proof establishments, DRDO, etc. and are eligible for the benefit under Rule 138 (14) (k) of the CGST Rules.
Whether exemption on payment of GST on transport of ‘military or defence equipments’ through a goods transport agency applicable to goods transported by our organisation? - HELD THAT:- As per Sr. No. 21, Heading 9965 or 9967, clause (h) of the Notification No. 12/2017- Central Tax (Rate), “Services provided by a goods transport agency, by way of transport in a goods carriage of defence or military equipments” are exempt from the levy of GST - the applicant is manufacturing and transporting goods like propellant & explosives that are used in the manufacture of ammunition and therefore the said exemption is available to them.
Whether Input Tax Credit is to be reversed on finished goods that are destroyed during testing? - HELD THAT:- The interpretation as made out by the applicant that reversal of ITC will arise only if the inputs or capital goods are themselves lost, stolen or destroyed etc. and not where the finished goods are lost, stolen or destroyed etc. is not acceptable for the simple reason that Section 16(1) contemplates both the situations i.e. case where the goods are actually used or intended to be used. To arrive at the conclusion that the applicant’s submission is not tenable, we find that where inputs are used, they cease to exist and they being destroyed, lost or stolen, etc. will not arise - thus once the inputs are used in the manufacture of final products, which are then sent for testing purposes, then in such a case the said inputs cannot be considered to have been destroyed.
Whether proportionate Input Tax Credit has to be reversed in cases where lesser payment is made to the supplier due to deduction on account of liquidated damages from supplier’s dues? - HELD THAT:- The applicant deducts liquidated damages (L.D) from the payment to be made suppliers in certain cases where there is a delay in supply of goods or services by such supplier. Such deduction will be construed as amount received as compensation for tolerating non-performance of supplier on account of delay in delivery of goods or services and is an activity to be treated as a supply of service as per clause 5(e) of Schedule II to the CGST Act, 2017 on which the applicant will have to discharge GST - ultimately applicant would be paying a lesser amount to their suppliers against supply of goods received, which would result in lesser payment being made by the supplier towards GST - Hence the applicant will be eligible to take ITC proportionally equal to actual payment made to such suppliers and is therefore required to reverse ITC accordingly.
Applicability and effect of the notifications - Being a part of the Ministry of Defence, Government of India - N/N. 2/2018- Central Tax (Rate), in relation to services by an arbitrator or an advocate to our organisation - N/N. 3/2018- Central Tax (Rate), in relation to services supplied by our organisation by way of renting of immovable property to a person registered under the Central Goods and Services Tax Act, 2017 - N/N. 36/2017-Central Tax (Rate), in relation to payment of tax on reverse charge mechanism on sale of used vehicles, seized and confiscated goods, old and used goods, waste and scrap to a GST registered person.
N/N. 2/2018- Central Tax (Rate) - HELD THAT:- The applicant has submitted that as per Notification No. 2/2018-Central Tax (Rate), services by an arbitrator or an advocate to the Central Government have been exempted. Accordingly, it means that no tax on reverse charge mechanism has to be calculated and paid by them for payments made to arbitrators and advocates from the date of notifications coming into effect. We have in our discussions above held that the applicant is not “Governments and therefore the said exemption is not applicable to them.
N/N. 3/2018- Central Tax (Rate) - HELD THAT:- The applicant has submitted that as per Notification No. 3/2018-Central Tax (Rate), services supplied by the Central Government, State Government, Union territory or local authority by way of renting of immovable property to a person registered under the Central Goods and Services Tax Act, 2017 has been covered under reverse charge mechanism. They have submitted that since their organisation is a part of the Central Government, the notification is applicable to them - Renting of immovable property is to be treated as supply of service as per the provisions of Schedule II (Section 7) of CGST Act 2017. The applicant, who is no: ‘Government’ are giving nonresidential property on rental basis to a registered person under the CGST Act 2017, which is covered under the definition of supply of services as defined in CGST Act 2017 as supply of real estate services other than renting of residential dwellings and will be chargeable to tax under the GST regime.
N/N. 36/2017-Central Tax (Rate) - HELD THAT:- The applicant is not ‘Government’ and therefore they shall discharge GST in respect of supply of any used vehicles, seized and confiscated goods, old and used goods, waste and scrap.
Whether Input Tax Credit on services of passenger vehicles hired by our organisation is available? - HELD THAT:- This question has been withdrawn by the applicant.
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