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Showing 81 to 100 of 920 Records
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2020 (4) TMI 840
Refund of sugar cess paid on raw sugar imported - rejection on the ground that N/N. S.O. 102 (E) dt. 07.02.2009 exempting levy of CESS on sugar is not applicable to the refund claim of the appellant and also that since the respondents have not challenged the assessment they are not eligible for refund - Whether decision in the case of PRIYA BLUE INDUSTRIES LTD. VERSUS COMMISSIONER OF CUSTOMS (PREVENTIVE) [2004 (9) TMI 105 - SUPREME COURT] and ITC LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA -IV [2019 (9) TMI 802 - SUPREME COURT] would apply to the facts of this case? - HELD THAT:- It is not disputed that the respondents have paid the cess at the time of filing the Bill of Entry under protest. The marking of protest itself gives information to the department that there is requirement for re-assessment. Assessment under Section 17 of Customs Act, 1962 cannot be said to be finalized when respondent has marked the protest while paying duty. In case, respondents had paid the entire duty without any mark of protest, in order to claim refund they have to request for reassessment of Bill of Entry. The mark of protest is an information to the department that the respondent is not making payment of cess voluntarily and then department has to initiate proceedings to vacate protest and pass speaking order for reassessment. If the department fails to do so the respondents cannot be put to any disadvantage of rejecting the refund claim - refund cannot be denied on this ground.
Whether cess paid by the respondent is eligible for refund? - HELD THAT:- The Board has clarified in a letter dt.10.08.2004 that cess is not a duty of excise. Though there may be decisions in which it is held that sugar cess is also duty of excise, the circular issued by the Board is binding on the department - Therefore the decision placed before us by the Ld.A.R contending that sugar cess is also duty of excise and therefore payable by the respondent does not find favour.
There are no grounds to interfere with the reasoned order passed by the Commissioner (Appeals) - appeal dismissed - decided against Revenue.
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2020 (4) TMI 839
Principles of Natural Justice - DFIA scheme - order for assessment of Bill of Entry - benefit of N/N. 98/09-Cus. dated 11.09.2009 denied - case of appellant is that the relied upon documents along with show cause notice were not given to them and hence the impugned order was passed in violation of the principles of natural justice - HELD THAT:- The order has been passed in violation of principles of natural justice as the relied upon documents in the show cause notice were not given to the appellants. Hence the orders of the lower authorities cannot be sustained and the matter needs to be remanded back.
Appeal allowed by way of remand.
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2020 (4) TMI 838
Inaction of the official respondent in not registering an FIR on the basis of the complaint made by the petitioner - complaint discloses a cognizable offence of forgery being committed for filing a case into the court against the petitioner - whether the High Court in exercise of jurisdiction under Article 226 of the Constitution of India can direct the official respondents to register an FIR on the basis of the complaint made by the petitioner?
HELD THAT:- If an act of forgery is resorted to and using such forged document a proceeding is laid in any court, the provisions of Section 195 (1)(b)(ii) of Cr. P.C., does not prohibit the victim from filing a complaint either with the police or before the magistrate under Section 156(3) of Cr.P.C. - Though in the facts of the present case, the petitioner has approached the respondent police authorities by lodging a complaint by e-mail on 03.09.2019 and thereafter on 29.10.2019, the respondent authorities did not register FIR on the basis of the complaint and on the other hand, directed the petitioner to approach NCLT since the matter was pending before such tribunal. Though in the notice issued to the petitioner with regard to the action taken on the complaint, the respondent authorities did not specifically refer to the provisions of Section 195 of the Cr.P.C., the purport of the said communication can clearly be inferred, whereby the respondent authorities wanted a complaint to be made by the concerned court under Section 340 of Cr.P.C., since, the document is already filed into the court.
The restriction placed under Section 195 of the code is applicable only when a court is required to take notice judicially of the act of offence complained and the investigation thereinto by the police authorities. Thus, this court is of the view that the respondent police authorities ought to have registered an FIR on the basis of the complaint made by the petitioner and take up investigation in the matter as specified under Section 156 of the Code, instead of issuing notice claiming that a civil dispute is pending before NCLT and directing the petitioner to approach NCLT for redressal.
Though this court having come to the conclusion that the respondent police authorities ought to have registered an FIR on the basis of the complaint made by the petitioner, this court cannot in a writ petition direct the respondent police authorities to register an FIR and investigate into the matter being complained of - the main relief sought for in the present writ petition of “directing the respondent official to register an FIR on the basis of the complaint” cannot be granted and since a notice has been issued to the petitioner informing the action taken on the basis of the complaint lodged, it is left open for the petitioner to approach the concerned Magistrate court having jurisdiction to avail remedies in accordance with law.
Petition disposed off.
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2020 (4) TMI 837
Commitment of scheduled offences - Uttar Pradesh State Industrial Development Corporation (UPSIDC), Varanasi - It is the contention of the present appellant that it is a State Authority and has been erroneously shown to have committed the scheduled offences - HELD THAT:- On perusal of the impugned order & PAO, it is seen that nowhere there is any allegations made by the ED that the present appellant has committed the scheduled offences or has generated proceeds of crime or laundered any proceeds of crime. In fact, it is admitted in the written reply to the appeal filed by ED that this appellant has been made as a party as it was the lessor of the property over which the defendants no(s) 1 to 3 has rights as lessee and the ED has got no objection if the order of the Adjudicating Authority is modified in relation to the contention of the appellant.
On perusal of the materials available on record, it is seen that the Impugned Order has not disclosed as to how the present appellant is a party to the alleged commission of crime or has the possession of proceeds of crime or generated the proceeds of crime and laundered them even remotely. The implication of the present appellant along with other defendants by the Adjudicating Authority is neither proper nor legal.
Appeal disposed off.
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2020 (4) TMI 836
Classification of Services - Port Services or CHA services - transport of export goods to the custom station or import goods from custom station to the importers’ premises in their own trucks - charges collected as stevedoring charges - It is the case of the Revenue that the transportation activities undertaken by them is an ancillary service which is part of the composite service of “CHA Service” - HELD THAT:- The stevedoring activity is loading and unloading of cargo. He explained that this activity is rendered by the appellant on his own behalf. He is actually directly dealing with the party. The appellant is only licensed by the port to undertake the stevedoring activity and these activities had not been done on behalf of the port neither they had been authorized by the port to do any port services.
CHA Services - HELD THAT:- This transportation charges are clearly reimbursable from their customers and they have to be necessarily excluded from the amount received from their customers. In these circumstances, the demand of Service tax by including the transportation charges collected by the appellant is not in order. Therefore, this is also liable to be set aside.
Summing up the demand on account of stevedoring services and by inclusion of transportation charges under the category of CHA services is not sustainable - Since the demands are not sustainable, there is no justification for imposition of any of the penalty - Appeal dismissed - decided against Revenue.
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2020 (4) TMI 835
Refund of Swachh Bharat Cess - the cess paid on the input services used for providing export service - rejection of refund on the ground that there is no provision for refund of Swachh Bharat Cess paid on the input services used for providing export service - HELD THAT:- The issue involved in this appeal is no more res integra in view of the decision of this Tribunal in M/S. STATE STREET SYNTEL SERVICES PVT. LTD. VERSUS COMMISSIONER OF CGST, NAVI MUMBAI [2019 (6) TMI 859 - CESTAT MUMBAI] in which this Tribunal while discussing Section 119 of the Finance Act, 2015 and various case laws, by a detailed order allowed the Appeal filed by the Appellants therein and held that the Swachh Bharat Cess paid on input services has to be available as Cenvat Credit and the same can be discharged by utilizing Cenvat Credit and the appellant therein are entitle for refund of it.
The Appellants are entitled for refund of Swatch Bharat Cess used for Export of Services - Appeal allowed - decided in favor of appellant.
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2020 (4) TMI 834
Issues:
1. Appeal seeking withdrawal
2. Interpretation of Notification No. 12/03-ST
3. Classification of supplies as sale
4. Application of pre-dominant nature test
5. Evidence of sale of food and beverages
6. Charging service tax on gross amount
7. Validity of judgment in Sky Gourmet Pvt Ltd case
8. Compliance with precedents
9. Upholding demand of interest
10. Imposition of penalty under Section 76
1. Appeal seeking withdrawal:
The appellant sought withdrawal of the appeal under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, for compounding the imposed duty. The respondent acknowledged this and stated that the appellant's approach to the competent authority under the scheme would be considered and decided in accordance with the law. The court allowed the application for withdrawal, dismissing the appeal with liberty for the appellant to file for compounding tax imposed under the scheme.
2. Interpretation of Notification No. 12/03-ST:
The appeal raised questions regarding the correctness of the order passed by the Customs, Excise & Service Tax Appellate Tribunal at New Delhi and the entitlement of the appellant to claim exemption under Notification No. 12/03-ST. The Tribunal held that even if the appellant satisfied the conditions of the notification, they were not entitled to the exemption. The issue revolved around the interpretation of the notification's conditions and their applicability to the appellant's case.
3. Classification of supplies as sale:
The Tribunal held that a Mandap Keeper, with separate invoices for food and services, could not claim exemption under Notification No. 12/03-ST as the supplies of food and beverage were not considered sales within the meaning of relevant legal provisions. The question of whether the supplies constituted a sale simplicitor or a deemed sale was a key point of contention in determining the applicability of the exemption.
4. Application of pre-dominant nature test:
The Tribunal applied the pre-dominant nature test to determine whether the transaction involved a composite of sale and service or predominantly a service. The appellant argued that the transaction was a composite one, while the department contended it was primarily a service. The court examined the application of this test in light of the specific facts and legal provisions.
5. Evidence of sale of food and beverages:
The Tribunal found that the appellant had not provided sufficient evidence to establish the sale of food and beverages in a manner that involved the transfer of possession for a price. This lack of evidence impacted the determination of whether the supplies could be classified as sales for the purposes of taxation.
6. Charging service tax on gross amount:
The Tribunal held that in the case of the appellant, service tax could be charged on the gross amount, including the value of goods, despite the principle of mutual exclusivity of service tax and sales tax. This decision raised questions about the proper application of tax laws in cases involving mixed supplies of goods and services.
7. Validity of judgment in Sky Gourmet Pvt Ltd case:
The Tribunal's decision regarding the judgment in the Sky Gourmet Pvt Ltd case was challenged, with the appellant questioning its correctness. The court had to assess the relevance and applicability of the precedent set by this judgment in the context of the present case.
8. Compliance with precedents:
The appellant argued that the Tribunal had ignored binding precedents, specifically referring to the judgment in the Sky Gourmet Pvt Ltd case and another case involving Daspalla Hotels Ltd. The issue of adherence to established legal precedents and the impact on the decision-making process was a crucial aspect of the appeal.
9. Upholding demand of interest:
The Tribunal had upheld the demand of interest from the appellant, which was contested in the appeal. The court needed to review the legal basis and justification for imposing interest on the appellant in the given circumstances.
10. Imposition of penalty under Section 76:
The Tribunal had imposed a penalty under Section 76 on the appellant, which was challenged in the appeal. The court had to assess whether the imposition of the penalty was justified and in compliance with the relevant legal provisions.
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2020 (4) TMI 833
Process amounting to manufacture or not - repacking of goods (DVDs) and affixing MRP stickers on them - denial of credit by invoking extended period of limitation - denial of CENVAT Credit subsequently on the ground that the there was no manufacture in the first place - HELD THAT:- The packing and repacking, labelling or relabelling amounts to ‘manufacture’ in respect of the goods which are listed in the Third Schedule to the Central Excise Tariff Act, 1985. This is a legal fiction created by the statute and applies only to such goods which are listed in the third schedule and not to others - In the present case, the DVDs which they have imported were classified under 85234080. This tariff heading is not included in the third schedule. Evidently labelling or relabelling these DVDs will not make them classifiable under a different heading (8708) as has been done by the appellant.
Demand of CENVAT Credit by invoking extended period of limitation - HELD THAT:- The excise duty paid by the appellant treating this activity as manufactured is clearly not supported by law. Since the final product is not chargeable to excise duty, cenvat credit cannot be availed on the imported DVDs. However, the appellant has filed the returns which were legally required, with the department. Scrutiny of such returns and calling for any further information would have disclosed this fact that appellant was paying the central excise duty wrongly. The department could have directed them not to pay central excise duty accordingly but the department has not done so. Therefore, the erroneous payment of the appellant made as central excise duty was not detected by the department despite the appellant disclosing in their returns the details which they were mandatorily required to disclose. Under these circumstances, the demand for reversal of CENVAT credit invoking extended period of limitation does not sustain at all - The period in dispute is October 2009 to September 2012 while the SCN was issued well beyond the normal period on 21.02.2015 when this action of the appellant came to light during the audit. It was equally possible for the assessing officers to have scrutinized returns and found that excise duty was being paid wrongly after availing CENVAT credit.
If the assessee has treated the activity of manufacture and paid excise duty thereon and availed cenvat credit can cenvat credit be subsequently denied by the department holding that the activity was not manufacture in the first place? - HELD THAT:- The Hon’ble High Court of Karnataka in the case of Vishal Precision Steel Tubes & Strips Pvt. Ltd. [2017 (3) TMI 1287 - KARNATAKA HIGH COURT] has held that cenvat credit cannot be denied under such circumstances. This ratio of this judgement of the Hon’ble High Court of Karnataka binds us to hold that cenvat credit cannot be recovered from the appellant even on this count - As the cenvat credit cannot be denied and recovered from the appellant the demand of interest thereon as well as proposed penalties do not survive.
Appeal allowed - decided in favor of appellant.
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2020 (4) TMI 832
Withholding of refund - refund arising out of change in Rate of tax - packing material - Cement - APGST Act - HELD THAT:- In the instant case, the respondents had withheld the refund for 11 years on ground of ‘want of cross-verification details’ which is not a ground mentioned in Sec.33-C for withholding the refund due to petitioner. Admittedly no proceeding such as an appeal or revision was pending against the petitioner. So Sec.33 F(2) of the APGST Act is also inapplicable - Also a refund withholding order must invariably specify (as per Sec.33C) the period of time during which it will be in force and a refund cannot be withheld indefinitely as has been done in the instant case.
Sec.33-E and 33-F of the APGST Act give 6 months time to the respondents to complete the verification and the authorities cannot with hold the refund beyond the said period - Thus there has been an ex-facie abuse of power by the respondents 1 and 2 in denying refund to the petitioners of the sum of ₹ 28,10,432/-.
Petition allowed with costs.
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2020 (4) TMI 831
Arbitration application - adjudication of dispute between the parties - permanent injunction restraining the appellant from relying on the arbitration clauses contained in the agreements - HELD THAT:- In the present case the arbitration in question is a domestic and an institutional arbitration where CIAA was empowered to and did nominate the Arbitrator. It is not as if there were completely different mechanisms for appointment of Arbitrator in each of the agreements. The only distinction is that according to one of the agreements the venue was to be at Kolkata. The specification of “place of arbitration” may have special significance in an International Commercial Arbitration, where the “place of arbitration” may determine which curial law would apply. However, in the present case, the applicable substantive as well as curial law would be the same.
It was possible for the respondent to raise submissions that arbitration pertaining to each of the agreements be considered and dealt with separately. It was also possible for him to contend that in respect of the agreement where the venue was agreed to be at Kolkata, the arbitration proceedings be conducted accordingly. Considering the facts that the respondent failed to participate in the proceedings before the Arbitrator and did not raise any submission that the Arbitrator did not have jurisdiction or that he was exceeding the scope of his authority, the respondent must be deemed to have waived all such objections.
The High Court was in error in setting aside said Order. In any case, the fact that the cause title showed that the present appellant was otherwise amenable to the jurisdiction of the Alipore Court, could not be the decisive or determining criteria - Appeal allowed.
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2020 (4) TMI 830
Registration of FIR - locus standi of the complainant - Mr. M. Subramaniam and Mr. R.V. Prasanna Venkatesan who were not even made parties to the criminal petition, have filed present petition - HELD THAT:- While it is not possible to accept the contention of the appellants on the question of locus standi, we are inclined to accept the contention that the High Court could not have directed the registration of an FIR with a direction to the police to investigate and file the final report in view of the judgment of this Court in SAKIRI VASU VERSUS STATE OF U.P. AND OTHERS [2007 (12) TMI 485 - SUPREME COURT].
The direction of the High Court for registration of the FIR and investigation into the matter by the police, is set aside. At the same time, our order would not be an impediment in the way of the first respondent filing documents and papers with the police pursuant to the complaint dated 18.09.2008 and the police on being satisfied that a criminal offence is made out would have liberty to register an FIR - appeal allowed in part.
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2020 (4) TMI 829
Permission for withdrawal of application - Stay of operation of impugned order - validity of provisional attachment orders - utilization of amount lying in the attached accounts for payment of current GST liabilities - HELD THAT:- Application is dismissed as withdrawn with liberty as sought for by learned counsel for the petitioner.
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2020 (4) TMI 828
Validity of enactment of Central Goods and Service Tax Act, 2017 and the law framed by the Madhya Pradesh Outdoor Advertising Media Rules, 2017 - vires of Rule 4 - HELD THAT:- The prayer seems to be reasonable and accordingly it is hereby allowed.
The petitioner is directed to deposit the amount before the Registry of this Court in the form of fixed deposit within a period of 30 days from today and the respondents shall not take any coercive action against the petitioner - List the matter on 26.03.2020 as prayed for.
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2020 (4) TMI 827
Doctrine of mutuality - Exemption from taxability - excess of income over expenditure - Common Identity - Oneness with the members / contributors - Completeness of Identity - Non-profiteering and Obedience to Mandate - assessee incorporated by YRIPL as its fully owned subsidiary after having obtained approval from the Secretariat for Industrial Assistance (for short “SIA”) for the purpose of economisation of the cost of advertising and promotion of the franchisees as per their needs - HELD THAT:- What is prohibited is the infusion of a participant in the transaction who does not become a ‘member’ of the common fund, at par with other members, and yet participates either in the contribution or surplus without subjecting itself to mutual rights and obligations. The principle of common identity prohibits any one dimensional alteration in the nature of participation in the mutual fund as the transaction fructifies. Any such alteration would lead to the non-uniform participation of an external element or entity in the transaction, thereby opening the scope for a manifest or latent profitbased dealing in the transaction with parties outside the closed circuit of members. It would be amenable to income tax as per Section 2(24) of the 1961 Act.
In the present case, it is indisputable that Pepsi Foods Ltd. is a contributor to the common pool of funds. However, it does not participate in the surplus as a beneficiary for at least two reasons first, Pepsi is not a member of the purported mutual concern as the Tripartite Agreement as well as the terms of SIA approval permit only ‘franchisees’ to become members of the mutual concern. Notably, Pepsi Foods Ltd. is not a franchisee and thus, it cannot participate in the surplus. Second, Pepsi does not enjoy any right of participation in the surplus or any right to receive back the surplus which are mandatory ingredients to sustain the principle of mutuality.
The contention of the assessee company that Pepsi Foods Ltd., in fact, does benefit from the mutual operations by virtue of its exclusive contracts with the franchisees is tenuous, as the very basis of mutuality is missing as far as Pepsi Foods Ltd. is concerned, as discussed hitherto. Even if any remote or indirect benefit is being reaped by Pepsi Foods Ltd., the same cannot be said to be in lieu of it being a member of the purported mutual concern and therefore, cannot be used to fill the missing links in the chain of mutuality
Surplus of a mutual operation is meant to be utilised by the members of the mutual concern as members enjoy a proximate connection with the mutual operation. Non-members, including Pepsi Foods Ltd., stand on a different footing and have no proximate connection with the affairs of the mutual concern. The exclusive contract between the franchisees and Pepsi Foods Ltd. stands on an independent footing and YRIPL as well as the assessee company are not responsible for implementation of this contract. Resultantly, the first limb of the three pronged test stands severed.
In the present case, even if any surplus is remaining in a given assessment year, it is unlikely to reduce the liability of the franchisees in the following year as their liability to the extent of 5 per cent is fixed and non-negotiable, irrespective of whether any funds are surplus in the previous year. The only entity that could derive any benefit from the surplus funds is YRIPL, i.e. the parent company. This is antithetical to the third test of mutuality.
Exemption granted to a mutual concern is premised on the assumption that the concern is being run for the mutual benefit of the contributors and the contributions made by the members ought to be directed in that direction. Contrary to this fundamental tenet, clause 8.1 of the Tripartite Agreement relieves the assessee company from any specific obligation of spending the amounts received by way of contributions for the benefit of the contributors. It explicates that the assessee company does not hold such amount under any implied trust for the franchisees
The doctrine of mutuality bestows a special status to qualify for exemption from tax liability. It is a settled proposition of law that exemptions are to be put to strict interpretation. The appellant having failed to fulfil the stipulations and to prove the existence of mutuality, the question of extending exemption from tax liability to the appellant, that too at the cost of public exchequer, does not arise.
Difference between purported mutual concern (assessee company) and clubs - Held that:- In the case of clubs, the operations are exempted from taxability because of the underlying notion that they operate for the common benefit of the members wishing to enter into a social exchange with no commercial intent. Further, all the members of the club not only have a common identity in the concern but also stand on an equal footing in terms of their rights and liabilities towards the club or the mutual undertaking. Such clubs are a means of social intercourse, as rightly observed by CIT (A) in the present case, and are not formed for the facilitation of any commercial activity. On the contrary, the purported mutual concern in the present case undertakes a commercial venture wherein contributions are accepted both from the members as well as non-members, as discussed earlier. Moreover, one member is vested with a myriad set of powers to control the functioning and interests of other members (franchisees), even to their detriment. Such an assimilation cannot be termed as a case of ordinary social intercourse devoid of commerciality.
Once it is conclusively determined that the assessee company had not operated as a mutual concern, there would be no question of extending exemption from tax liability.
Application of income by overriding title - It is urged that once the incoming amount is earmarked for an obligation, it does not become “income” in the hands of the assessee as no occasion for the application of such income arises. - Held that:- the question of diversion by overriding title was neither framed nor agitated in the appeal memo before the High Court or before this Court (except a brief mention in the written submissions), coupled with the fact that neither the Tribunal nor the High Court has dealt with that plea and that the rectification application raising that ground is still undecided and stated to be pending before the Tribunal - Argument rejected.
Decided against the assessee.
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2020 (4) TMI 826
Deferred Revenue expenditure disallowance - deferred revenue expenditure’ on account of advertisement, publicity, holding conferences, market research, subsidy, various launch schemes, selling and distribution etc.- AO held that the expenses were incurred for the accounting year below the line in the books of account but the assessee had claimed in full for computing the total income as revenue expenditure incurred during the year - HELD THAT:-In the present case, the expenditure on advertisement and sales promotion has been claimed for deduction as revenue expenditure. The advertisement and sales promotion is the necessity of the business and thus, an integral part of the business activity. Therefore, the expenses incurred on advertisement etc. are not for acquisition of an asset or right of a permanent character, therefore, cannot be said to be a capital expenditure. It is but a revenue expenditure.
Whether the expenses on account of advertisement, publicity and sales promotion in relation to the business are in the nature of deferred revenue expenditure and although the benefit of such expenses would be availed by the assessee over a number of years but should it be allowed for the relevant assessment year for which assessee claims exemption, also came up for consideration before a Division Bench of Punjab and Haryana High Court in Commissioner of Income Tax vs. M/s Glen Appliances Pvt. Ltd.D. [2011 (5) TMI 1108 - PUNJAB AND HARYANA HIGH COURT] accepting the plea of the assessee had held that the expenses incurred by the assessee on the aforesaid activities were revenue in nature and the entire amount was admissible in the year in which it was incurred. - Decided in favour of the assessee.
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2020 (4) TMI 825
Addition on loose papers impounded during the survey proceedings - case was selected for scrutiny - HELD THAT:- In the case in hand, once it was found that there was double addition on same papers for two assessment years for a single project, it cannot be said that the assessee had failed to explain the loose papers despite the onus was placed upon him to prove the loose papers. No benefit can be derived by the Revenue from the judgment in Chuharmals case [1988 (5) TMI 1 - SUPREME COURT] which is distinguishable on facts and is not applicable in the present case.
No force in the submission advanced by the appellant that at the time of survey more than one project was in progress.
CIT(A) specifically observed that the AO had failed to prove that the seizure was in respect of site different from Shanti Residency project and no effort was made by him to make spot inspection to prove that at the time of survey other projects of the assessee were also running. AO had also not been able to substantiate that there was really any other project running at the same time, otherwise the Assessing Officer ought to have subjected them to tax in the assessment year 2009-10 as well, which had not been done.
Addition on the basis of the expenditure made out of books of accounts - CIT(A) deleted the said addition accepting the plea of the assessee that the papers pertaining to the expenses shown in those papers were not part of his accounts but were related to the sub-contractors and the sub-contractors had also filed ITRs showing 8% NP - CIT(A) also deleted the addition on the ground that the Revenue failed to substantiate that the papers pertained to project other than Shanti Residency and there was reason to believe that when the profit was calculated on the basis of the NP/GP rate then there was nothing to separate the expenses therefrom - HELD THAT:- In view the findings recorded by the CIT(A) which have been affirmed by the learned Tribunal and considering the same on the touchstone and anvil of the arguments advanced by the learned counsel for the appellant/Revenue, we find no reason to differ as no illegality or perversity has been pointed out by learned counsel for the Revenue in the aforesaid findings of fact, which may warrant interference by this Court.
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2020 (4) TMI 824
Deduction u/s 80-IA - Assessee not filed form No.10CCB alongwith return of income in original assessment proceedings - AO fails to file the audit report under Section 80-IA(7) along with the original return of income filed under Section 139 but presents the same during the course of assessment proceedings u/s 143 - Whether Unit-II was eligible for claiming deduction u/s 80-IA of the Act, when the profits shown by the Unit-II in respect of sales to consumption of raw material clearly showed that the profit claimed by Unit-II for deduction u/s 80-IA of the Act was erroneous? - HELD THAT:- In a decision reported in Commissioner of Income Tax vs. Punjab Financial Corporation) [2001 (12) TMI 50 - PUNJAB AND HARYANA HIGH COURT] section 32AB(5) of the Act is not mandatory and the Assessing Officer has the discretion to entertain the audit report even though the same has not been filed with the return but presented during the course of assessment proceedings and give benefit of the deduction to the assessee in terms of Section 32AB(1) - provision under Section 139 of the Act which provides for filing of revised return and rectification of defect in the return and, therefore, the requirement of filing the duly audited report along with the return was held to be not mandatory. Be it noted, the provision under Section 32AB(5) of the Act is similar to Section 80-IA(7) of the Act.
Therefore, we are unable to take any different view in the matter than the one arrived at by the Punjab and Haryana High Court in Punjab Financial Corporation (supra).
First point under issue No.(a) is held in affirmative. Where the assessee files the audit report in Form No.10CCB before completion of the assessment, we do not find any reason to hold that the condition envisaged under Section 80-IA of the Act had not been fulfilled.
Benefit as admissible in case of reassessment proceedings - Basic purpose of Section 148 of the Act is merely to empower the Assessing Authority with the machinery for assessment. Fundamentally, both the assessment and reassessment need the same machinery. In other words, the provisions relating to regular assessments shall apply to the assessment made pursuant to the notice of reassessment.
Once that is so, all the essential traits and requirements of procedure embodied for framing of regular assessment under the Act would also apply to reassessment proceedings as well. Therefore, the audit report furnished at the time of reassessment proceedings could not be ignored by the Assessing Officer while adjudicating the issue of admissibility of deduction under Section 80-IA of the Act. The point No.(ii) noticed above is decided accordingly.
At the time of passing of the order, there was material before the Assessing Officer to rely upon the audit report duly filed by the assessee in Form No.10CCB as contemplated under Section 80-IA(7) of the Act. Once the accounts of the assessee for the relevant year were examined and the audit report was submitted at the time of reassessment proceedings, it could not have been discarded by the Assessing Officer on the ground that no separate audited financial statements were attached in the original assessment proceedings. There is nothing to show that the Assessing Officer had doubted the correctness of the said audit report so as to make it necessary for the assessee to have submitted separate audited financial statements of Unit No.II and in absence of which the audit report had been incomplete.
Admittedly, since the audit report in Form No.10CCB was ultimately filed before completion of the reassessment, we do not find any reason to hold that condition under Section 80-IA(7) of the Act had not been satisfied. Consequently, question No.(A) is answered in favour of the assessee and against the Revenue.
Deduction u/s 80IA - Once the assessee was maintaining separate accounts for both the units and product manufactured was different and raw material used was also different then it was not open to the Assessing Officer to compare the value of sales of Unit-II by combining the accounts of Unit-I and Unit-II. Thus, we do not find any force in the submission of the learned counsel for the appellant that profit shown by Unit-II in respect of sales to consumption of raw material was erroneous and therefore, deduction under Section 80-IA of the Act was not allowable to the Unit-II. Accordingly, the question No.(B) is also answered against the Revenue.
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2020 (4) TMI 823
Nature of expenditure - treatment of non-compete fee - capital or revenue expenditure - assessee has raised that in case expenditure is held to be capital in nature then depreciation is to be allowed on the same - HELD THAT:- Payment of non-compete fee was capital expenditure in the hands of the assessee, on which the assessee is not entitled to claim depreciation u/s 32 of the Act. The Tribunal had relied on the decision of Jurisdictional High Court in the case of Sharp Business System vs CIT [2012 (11) TMI 324 - DELHI HIGH COURT] and applied the same. We decide both the main issues and alternate grounds against the assessee.
Disallowance of expenses incurred on ice boxes provided to dealers - whether expenditure incurred towards ice boxes and dealer sign board provided to hawkers/dealers carrying on brand names of the assessee was capital in nature? - HELD THAT:- The assessee explained that since the product sold by it were to be sold on particular temperature, the ice boxes were used by the hawkers for selling the items at aforesaid temperature.
As in CIT vs Honda Siel Power Products Ltd. [2007 (8) TMI 251 - DELHI HIGH COURT] while deciding the issue of advances made for ownership of tools and dies which remained with the manufacturer, had allowed the same as revenue expenditure as it facilitated the trading operations of the assessee.
Despite the non-allowance of expenditure in Assessment Year 2002-03, the Assessing Officer himself has allowed the expenditure in Assessment Year 200-3-04,2004-05 and 2005-06. In the totality of the above said facts and circumstances and following the consistency approach, we are of the view that the expenditure incurred on ice boxes, merits to be allowed as deduction in the hands of the assessee. Hence, the claim of the assessee is allowed in entirety. - Decided in favour of assessee.
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2020 (4) TMI 822
Assessment u/s 153A - Addition u/s 68 - incriminating material found in search or not ?- HELD THAT:- Assessee has already filed original return of income accompanied by P & L A/c, balance-sheet. In the original return of income, the assessee has disclosed the receipt of ₹ 7 lakhs from Shri Praveen Kumar as per balance-sheet.
Copy of the ledger account shows that it is already disclosed in the books of account of the assessee. Therefore, receipt of ₹ 7 lakhs from Shri Praveen Kumar as advance was already disclosed in the original return of income. Further, on the date of search, the return was not pending as same was completed because no proceedings were initiated against the assessee for passing the original assessment.
Further the original assessment order were passed in the Group cases in which the Ld. CIT, Central-(2), New Delhi, has invoked jurisdiction under section 264 of the I.T. Act, 1961 and all the matters were restored to the file of A.O. for passing the Order afresh, as per Law. Thus, all the facts with regard to receipt of ₹ 7 lakhs from Shri Praveen Kumar was disclosed to the Revenue Department in the original return of income. therefore, mere recovery of the Agreement to Sell, through which, advance of ₹ 7 lakhs was received by assessee from Shri Praveen Kumar could not be treated as incriminating material found in search.
Thus, there is no recovery of any incriminating material during the course of search against the assessee so as to make any of the additions against the assessee. The issue is, therefore, covered by Judgments of Hon’ble jurisdictional High Court in the cases of Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] and Meeta Gutgutia [2017 (5) TMI 1224 - DELHI HIGH COURT]. Identical issue have considered and decided in the Group cases of M/s. Alankar Saphire Developers and following the reasons for decision in the same case of the Group, we set aside the Orders of the authorities below and delete all the additions. The additional ground is, therefore, allowed - Decided in favour of assessee.
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2020 (4) TMI 821
Computation of capital gains - A.O. adopted the sale consideration as full value of consideration while computing the capital gains on transfer of land - HELD THAT:- Assessee disclosed the capital gains by adopting the sale consideration at ₹ 19,85,000/-. This sale consideration figure was sought to be substituted by the Ld. A.O with ₹ 37,92,600/- being the consideration figure mentioned in the agreement for sale. A.O also recorded a statement from the purchaser of the land Smt.R.Pushpavalli on 23.11.2011 wherein on oath, she had categorically confirmed that she had paid actual consideration of ₹ 37,92,600/- to the assessee in cash in three installments. This fact when confronted with the assessee, the assessee was not able to counter the same.A.O. adopted the sale consideration figure of ₹ 37,92,600/- as full value of consideration while computing the capital gains on transfer of land. This action was upheld by the learned CIT(A). We do not find any infirmity in the said action of learned CIT(A) upholding the Ld. A.O’s order with regard to adoption of sale consideration.
Cost of improvement - Claim made said sum was incurred by her towards cost of development and assessee had incurred this expenditure through a mason Shri C.Vasudevan. - A.R. argued that without incurring of development cost on the said land, the sale of land could not have happened - HELD THAT:- Except merely making a bald statement, the Ld. A.R. was not able to furnish any other evidence before us to substantiate the claim. However, as the last opportunity in the process of identifying truth behind the transfer of land by the assessee, we deem it fit and appropriate, in the interest of justice and fair play, to remit this aspect of the issue to the file of Assessing Officer for denovo adjudication i.e only with respect to amount of deduction towards cost of improvement of ₹ 5 lakhs while computing the capital gains. We hold that the assessee should furnish all necessary evidences in support of her claim before the Assessing Officer and the Assessing Officer should also make cross verification with Shri C.Vasudevan or any other person through whom the development work has been carried out to identify the truth involved thereon. Hence this aspect of the issue is remitted back to the file of A.O. for afresh adjudication.
Exemption under Section 54F denied - reinvestment in new property has been made by the assessee in the name of her husband instead of in her name - HELD THAT:- As relying on C.I.T Vs. V.Natarajan [2006 (2) TMI 136 - MADRAS HIGH COURT] we hold that even though the new property has been invested in the name of assessee’s husband, exemption under Section.54F cannot be denied to the assessee. - Decided in favour of assessee.
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