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2018 (9) TMI 2121 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI
Anti-Competitive Arrangements - Resale Price Maintenance - Discount Control Mechanism - Contravention of provisions of Section 3(4)(e) read with Section 3(1) of the Act, 2002 through arrangements which resulted into Resale Price Maintenance - relevant geographic market - HELD THAT:- In the present case, the ‘DG’ as well as the Commission has failed to decide the relevant geographic market as also the relevant product market - As per the decision of the Hon’ble Supreme Court in Competition Commission of India v. Coordination Committee of Artistes and Technicians of West Bengal Film and Television and Ors [2017 (3) TMI 1692 - SUPREME COURT] for inquiring into an alleged contravention, the factors mentioned in sub-section (3) of Section 19 is required to be taken into consideration. The Commission has failed to inquire into the agreement in the light of sub-section (3) of Section 19. It has not taken into consideration whether the agreement creates any barrier to new entrants in the market; driving existing competitors out of the market or foreclosure of competition by hindering entry into the market. It has also failed to consider whether the said agreement accrual of benefits to consumers and improvements in production or distribution of goods or provision of services. The relevant geographic market and the relevant product market having not been taken into consideration, the inquiry is incomplete being violation of sub-section (6) of Section 19.
Section 26 of the Act, 2002 prescribes procedure for inquiry under Section 19 but in the present case no such inquiry has been made in terms of Section 19 - the Commission though directed the DG to cause an investigation but thereafter, the matter having not closed by the Commission, the Commission was required to make inquiry in terms of Section 27 to find out whether any agreement referred to in Section 3 or action of an enterprise, is in contravention of the provision.
The procedure for inquiry under Section 19 is not a mere formality rather the inquiry by the Commission into an agreement under Section 27 cannot be completed without appreciation of relevant evidence - The DG report is merely an investigation report, in terms of subsection (3) of Section 26 but DG’s report alone cannot be relied upon or cited for finding and the Commission which is required to make independent analysis based on evidence brought on record.
The finding that the Appellant has mandated its dealers to use recommended lubricants/ oils and penalised them for use of nonrecommended lubricants and oils is also not based on any evidence. Nothing brought on the record by the DG or the Commission to suggest that the Appellant penalised one or other dealer for not utilising the recommended lubricants and oils.
The Commission has failed to appreciate the evidence and the impugned order not based on any specific evidence and has been passed merely on the basis of opinion of DG. The DG as well as the Commission also failed to decide relevant geographic market or a relevant product market as required under Section 19 (6) & (7) of the Act, 2002 - the impugned order set aside - appeal allowed.
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2018 (9) TMI 2120 - GUJARAT HIGH COURT
Seeking permission to withdraw these appeals - monetary amount involved in the appeal - tax effect involved in these appeals is below the minimum threshold limit provided by CBIC in its circular dated 11.07.2018 enabling the department to prefer and maintain appeals before the High Court.
HELD THAT:- Permission is granted - Tax Appeals are disposed of accordingly.
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2018 (9) TMI 2119 - ITAT MUMBAI
Income taxable in India - Receipts from Offshore Supply Contracts - whether amounts received by the appellant company from the Offshore Supply Contracts are covered by the provisions of section 44BBB and consequently liable to tax in India? - HELD THAT:- Considering decisions of assessee’s own case in the earlier years from A.Y. 2007-08 to A.Y. 2013-14, we observe that identical issue was decided by the co-ordinate benches of the Tribunal in favour of the assessee by holding that amount received for supply of material and equipment under offshore supply contract is to be excluded from gross receipt for computing income under section 44BBB.
Operative part of the decision [2017 (9) TMI 1999 - ITAT MUMBAI] as decided the issue in favour of the assessee by holding that the amount received by the assessee from supply of material and equipment under offshore supply contracts would not form part of the business receipts for the purpose of section 44BBB of the Act. Decided in favour of assessee.
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2018 (9) TMI 2118 - ITAT KOLKATA
Write off advances - Disallowance u/s 36(1)(vii) read with section 36(2) - HELD THAT:- Assessee had duly credited its profit and loss account in the earlier years either by offering the income or reducing its expenses thereby making it eligible for deduction u/s 36(1)(vii) read with section 36(2) of the Act.
Certain advances were actually made in the normal course of its business which was meant wholly and exclusively for the purpose of its business. Certain amounts lying in the advances recoverable became irrecoverable for quite a long time and the assessee had consciously taken a call to write off the same during the year under consideration which would be squarely allowable as trading loss. Reliance placed by the ld AR on the decision of CIT vs Mysore Sugar Co. Ltd [1962 (5) TMI 3 - SUPREME COURT] and CIT vs Rohtas Industries Ltd [1978 (1) TMI 8 - CALCUTTA HIGH COURT] are very well founded, among others - no infirmity in the order of the ld CITA granting relief to the assessee.
Deduction u/s 80IA - certain items like interest on security deposits / loans, interest on delayed payment by customers, charges towards warehousing of cargo, revenue profit on disposal of fixed assets, sale of tender documents etc. were not derived from the industrial undertaking of CFS activity and denied the deduction u/s 80IA - HELD THAT:- For net realization from auction of cargo argued that the credit balances written back and forfeiture of deposit represents advances and deposits received from customers which were treated as no longer payable and hence written back to income. When asked for the details for the same, the ld AR prayed for one opportunity before the ld AO for furnishing the same. Accordingly we direct the ld AO to verify this aspect in order to ascertain whether the same relates to CFS activity so as to fall within the expression ‘ derived from’ from the details to be filed by the assessee in this regard.
Income derived from disposal of pallets / garbages - We find that the pallets are not owned by the assessee but the same are owned by the customers who stack their products in the pallets. While removing the goods from the warehouse of the assessee, the assessee stated that the pallets are left by the parties, which were unnecessarily occupying the space of the assessee and hence the same were disposed off. We find that this does not have any first degree nexus with the CFS activity of the assessee and cannot be construed as income derived from the said undertaking. Hence we hold that the ld AO had rightly denied deduction u/s 80IA of the Act for the same.
Income earned on net realization from auction of cargo - The assessee at best would be entitled for claiming demurrage for storing the goods beyond the prescribed time which would be construed as first degree nexus with the CFS activity. Moreover, these are extraneous circumstances which the assessee would not undergo in the normal course of its business. Assessee did not furnish any evidence on record to prove that it has got lien over the goods stored in the CFS unit. In any case, the proceeds realized were only from auction of goods and not from storage of goods and hence the first degree nexus with the CFS activity is conspicuously absent. Hence we hold that the ld CITA erred in granting relief to the assessee in this regard.
Interest on security deposits - We find that the ld AR fairly stated that this tribunal in assessee’s own case for the earlier year had held that it is not derived from CFS unit and accordingly not eligible for deduction u/s 80IA of the Act. Accordingly, we do not find any infirmity in the order of the ld CITA denying relief to the assessee in this regard.
Revenue profit on sale of fixed assets - The same would take the character of sale of scrap as it is not in dispute that the fixed assets were utilized by the assessee only in its CFS unit and the sale thereon would have first degree nexus with the said unit and accordingly would be eligible for deduction u/s 80IA.
Rent receipts - As we find that the same is similar to demurrage claims of the assessee and hence has got first degree nexus with the CFS unit and eligible for deduction u/s 80IA of the Act. Accordingly we direct the ld AO to grant deduction u/s 80IA of the Act for the same.
Hire charges received on assets - We find that the assessee had provided refrigerators, generator sets and personal computers to the customers who had stored the goods in the godown / warehouse of the assessee and had collected hire charges. These assets are given to the customers as part and parcel of the CFS activity carried on by the assessee for smooth and effective storage of the goods and income derived thereon in the form of hire charges is inextricably linked with the CFS activity carried on by the assessee. Hence we direct the ld AO to grant deduction u/s 80IA.
Sale of tender documents - The tender documents were printed by the assessee and had incurred expenses for the same. These tender documents, when remaining unutilized, were sold by the assessee in order to recover its cost / expenses incurred thereon. Hence it would only tantamount to recovery of expenses incurred directly in connection with the CFS unit. We find that the reliance has been rightly placed by the ld AR on the decision of Meghalaya Steels Ltd [2016 (3) TMI 375 - SUPREME COURT] in this regard. Hence we direct the ld AO to grant deduction u/s 80IA of the Act for the same.
Disallowance of Prior period expenses - HELD THAT:- We find that the entire details of prior period expenses are enclosed in paper book. It is not in dispute that these details were also filed before the lower authorities. From the perusal of the said details, we are convinced of the fact that the liability for such expenses had crystallized during the year excluding depreciation and hence we hold that the ld CITA had rightly granted relief to the assessee in this regard. Accordingly, the Ground raised by the revenue dismissed.
Disallowance of lease premium - assessee had claimed the proportionate premium on lease hold land as advance rent payable by it in accordance with the terms of the lease agreement as business expenditure allowable u/s 37 - AR argued that there is a difference between the term ‘rent’ and ‘premium’ and the payment made for getting into a premises is called ‘premium’ - HELD THAT:- Admittedly, the payments made during the year contains payment towards lease rent for fresh lease and for existing leases. Obviously differential treatment need to be given for both in the light of difference between the term ‘ rent’ and ‘premium’ as the said difference has been duly noted in the case of CIT vs Panbari Tea Company Ltd [1965 (4) TMI 19 - SUPREME COURT] In the absence of proper finding in the order of the authorities below with regard to the same, we deem it fit and appropriate, in the interest of justice and fairplay, to remand this issue to the file of ld AO for denovo adjudication of the issue afresh and pass orders in accordance with law.
Disallowance u/s 14A r.w.r. 8D - HELD THAT:- Since the assessee company is having sufficient own funds, by placing reliance on the decision of Reliance Utilities and Power Ltd [2009 (1) TMI 4 - BOMBAY HIGH COURT], we direct the ld AO not to make any disallowance of interest under second limb of Rule 8D(2) of the Rules. With regard to the disallowance under third limb of Rule 8D(2) of the Rules, in consonance with the decision of this tribunal in the case of REI Agro Ltd [2013 (9) TMI 156 - ITAT KOLKATA] we direct the ld AO to consider only investments (excluding foreign investments) that had yielded dividend income should be considered for working out the disallowance under third limb of Rule 8D(2) of the Rules.
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2018 (9) TMI 2117 - SUPREME COURT
Seeking grant of Bail - HELD THAT:- The petitioner is allowed to appear before the Trial Court within two weeks from today - The petitioner shall then be at liberty to file a bail application, which will be considered by the Trial Court forthwith. Even if the application is rejected, the petitioner shall not be arrested for a period of 30 days in order to enable her to approach the higher forum.
Application disposed off.
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2018 (9) TMI 2116 - ITAT CHENNAI
Depreciation claimed on robotix kits - assessee claimed depreciation @ 60% which is applicable for computers - HELD THAT:- It is common knowledge that nowadays the entire industry is automated and machineries are operated through computer. It does not mean that the entire industrial undertaking was a computer. The computer or software installed therein may be used for operating industrial machineries. In this case also, the computer or software attached is used for operation of robotix kits.
It cannot be construed as if the robotix kits itself is a computer. This Tribunal is of the considered opinion that the computer is totally different which comprises processing data and not the machinery which undertakes works as per the instruction given through the computer. Therefore, computer is a different one and robotix kits are entirely different machineries. Hence, this Tribunal is of the considered opinion that the assessee is not eligible for depreciation @ 60% as claimed. Decided against assessee.
Depreciation for three block of assets - AO found that the assessee has not submitted proper bills towards purchase of assets - HELD THAT:- This Tribunal is of the considered opinion that giving one more opportunity to the assessee to produce bills would not prejudice the interests of the Revenue.
Even though no ground was raised before the CIT(Appeals) in respect of the addition the assessee has raised specific ground before this Tribunal. This Tribunal being the final fact finding authority, the facts need to be settled at Tribunal level. Therefore, examining the matter by the AO on the basis of bills and vouchers that may be produced by the assessee is very essential. Ground allowed for statistical purposes.
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2018 (9) TMI 2115 - ITAT DELHI
Income from other sources - compensation received as interest income of the assessees - not considering the same as part of the compensation received u/s 28 of the Land Acquisition Act, 1894 - whether provisions of section 56(2)(viii) were not applicable in cases where agricultural land is involved? - As per DR it was not clear from the judgment relied upon by the Ld. AR as to whether the interest was in the nature of compensation or not - HELD THAT:- We restore all the six appeals to the office of the respective Assessing Officer (s) with the direction to determine as to whether the interest paid amounted to compensation or not and follow the judgment as rendered in the case of CIT vs. Ghanshyam HUF (2009 (7) TMI 12 - SUPREME COURT] as has been directed in case of Union of India & Ors. Vs.Hari Singh & Ors. [2017 (11) TMI 923 - SUPREME COURT].
We also direct the respective AO(s) to provide reasonable opportunity to the assessees before the adjudicating the issue as per law and as per the directions of the Hon’ble Apex Court as aforesaid. We also direct the respective assessees to fully co-operate with the assessment proceedings. Appeals of assessees stand allowed for statistical purposes.
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2018 (9) TMI 2114 - MADRAS HIGH COURT
Non-consideration of request for grant of passport - petitioner submitted that the petitioner is the highest tax payer and owns properties worth crores of rupees and is in urgent need of passport, however, his request was not considered by the respondent, due to pendency of the criminal cases, though there is a circular to the effect that the pendency of the criminal case is not a bar for issuance of passport - HELD THAT:- The impugned order passed by the first respondent needs interference and hence, the same is set aside. The petitioner is directed to approach the respondent by filing an application seeking issuance of passport, with full and correct details relating to pendency of the criminal cases against him and enclosing all the required order/permission obtained from the trial Court. On such approach, the respondent shall consider the same on merits and in accordance with law, for issuing passport.
Writ petition disposed off.
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2018 (9) TMI 2113 - ITAT CHANDIGARH
Reopening of assessment u/s 147 - TDS u/s 195 - assessee invested in an upcoming project of Omaxe Ltd. along with four other investors - assessee made payment of 95% of the sale price and was provisionally allotted fourth and fifth floors in a proposed commercial complex and in lieu of such 95% advance payment, Omaxe Ltd. was to pay assured return on monthly basis to assessee till the time possession of the commercial space was handed over - Such payment was made by Omaxe Ltd after deduction of tax u/s 195 @ 15% under the India-U.K. Double Taxation Avoidance Agreement (DTAA) - HELD THAT:- A perusal of the copy of the reasons recorded reveals that the AO has not used the word ‘interest income’ rather he mentioned that he had the information that the assessee had been receiving assured returns on the investment made in Omaxe Ltd. Accordingly, he reopened the assessment and determined the nature of income as ‘income from other sources’ and computed the income of the assessee accordingly. It cannot be said that the Assessing officer was supposed to assume that the assessee was not required to file the return of income as per the provisions of section 115A sub-section (5) or that the AO was of the view that the assessee has been receiving interest income only. In view of this, the reopening of the assessment is held valid.
Additions upon the definition of ‘interest’ as provided under article 12 of the India –U.K. DTAA - As it was a financial transaction and the assured money return received by the assessee was nothing else than the interest received by the assessee on the finances made by the assessee to the Omaxe Ltd to be used for the construction of the property. Omaxe Ltd had rightly deducted the tax @ 15% of the interest / assured return paid to the assessee. Even the assessee on being asked to file the return has also treated the said receipts as interest income. Subsequently, the assessee changed his stand and come with a plea that the assured return is only in the nature of capital receipt. The assessee in this respect has placed reliance on several decisions of the High Courts and Supreme Court.
Without referring to each of the decision, we may point out that the decisions referred to by the assessee are not applicable to the facts and circumstances of the case e.g. in the case of ‘CIT Vs. Saurashtra Cement Ltd [2010 (7) TMI 11 - SUPREME COURT] assessee in that case had received liquidated damages for delay in supply of plant and machinery. The Hon'ble Supreme Court held that the damages were directly and intrinsically linked with the procurement of the capital assets i.e. cement plant.
Neither any damages were paid by the Omaxe Ltd. to the assessee for late delivery of the possession of the commercial floors in question nor any advance money was paid by the assessee to get the commercial floors at some concessional rate or on an early date rather as discussed above, as per the clause of the agreement, even after payment of 95% of the price, the assessee did not get right or lien in the property and as discussed above, this was a financial transaction between the assessee and Omaxe Ltd. In view of this, we hold that the assured return received by the assessee was in the nature of interest and the assessee has rightly returned / offered the same as interest income.
No justification on the part of the lower authorities in treating the receipts of the assessee as ‘income from other sources’. We, accordingly, set aside the impugned order and direct that the assessee in this case has rightly paid the taxes as India – U.K. DTAA. No further addition is warranted. However, the claim of the assessee that it is a capital receipt not liable for taxation is rejected. The appeal of the assessee is, therefore, treated as allowed.
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2018 (9) TMI 2112 - DELHI HIGH COURT
Seeking refund of amount paid as pre-deposit to avail the appellate remedy - HELD THAT:- Since the Court held that the pre-deposit amounts do not bear the character of a levy, the continued withholding of the amount of ₹ 65,90,794/-, cannot be sustained - Respondents are therefore, directed to process the petitioner’s case and ensure that the amounts due to it alongwith interest applicable for the period till payment (calculable from the date of OHA’s order) are remitted, within three weeks.
Petition allowed.
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2018 (9) TMI 2111 - ITAT MUMBAI
Disallowance of foreign travel expenses claimed - travel expenses of employees to foreign countries -TPO treated the same as international transaction, since the travel was made to the places of Associated Enterprises - HELD THAT:- As assessee has furnished full details relating to foreign travel expenses incurred by the assessee before the TPO. DRP has sustained addition only for the reason that the assessee did not furnish details of the same.
We noticed that learned DRP has taken cognizance of details only to the extent of ₹ 16.16 lakhs. During the course of hearing, assessee furnished two sets of statements, one containing full details of travel expenses (which was furnished before the TPO) and another one containing details of ₹ 8.49 lakhs (which is extracted from the above said statement). Since full details have been furnished by the assessee before the TPO and since the entire foreign travel expenses have been incurred by the employees of the assessee for the purpose of business, we are of the view that addition of ₹ 8.49 lakhs sustained by learned DRP is liable to be deleted. Accordingly, we direct the Assessing Officer to delete the addition.
Correct Head of income - interest income earned by the assessee from margin money deposits held with bank and interest on income tax refund - assessee offered both the above said income under the head ‘income from business’ but AO assessed them under the head ‘income from other sources’ - HELD THAT:- With regard to interest income earned on margin money deposits, we noticed that the Coordinate Bench of the Tribunal has decided this issue in favour of the assessee relating to A.Ys. 2011-12 & 2010-11 - Consistent with the view taken in assessee’s own case for earlier years, we direct the Assessing Officer to assess interest income earned on margin money deposits under the head ‘income from business’.
Interest earned on income tax refund - The same is required to be assessed under the head ‘income from other sources’, as the same does not have nexus to the day to day business carried on by the assessee. Accordingly, we confirm the order passed by the Assessing Officer on this issue.
Assessment of income tax recoverable from Gujarat Electricity Board (GUVNL) and Essar Steel Ltd.- computing book profit u/s. 115JB - HELD THAT:- During the course of hearing, the assessee furnished copy of audited financial statement as well as computation of book profit made u/s. 115JB of the Act. We noticed that the assessee has proceeded to compute book profit by adopting figure of “Profit before tax”. In that case, the adjustments, if any, made to the Income tax amount will not have effect on the Book profit, since the figure of “Profit before tax” was adopted to compute book profit u/s 115JB of the Act. In the instant case, we notice that the adjustment of ₹ 22.69 crores has been made by the assessee against the “Provision for tax”, which is appearing after “Profit before tax”. Accordingly, this issue has to be decided in favour of the assessee. Accordingly, we direct the Assessing Officer to delete the addition made by him to the book profit.
Disallowance u/s. 14A under normal provisions of the Act as well as for computing book profit u/s. 115JB of the Act - HELD THAT:- As in assessee’s own case in A.Y. 2009-10 [2017 (10) TMI 1624 - ITAT MUMBAI] and the Tribunal, by following the decision of Hon'ble Delhi High Court rendered in the case of Cheminvest Ltd. [2015 (9) TMI 238 - DELHI HIGH COURT] has held that no disallowance u/s. 14A is required as the assessee did not earn any exempt income. Since the facts are identical in this year also, by following the above said decision of Hon’ble Delhi High Court, we direct the Assessing Officer to delete the disallowance u/s. 14A of the Act, while computing total income under normal provisions of the Act. Since the assessee has not earned any exempt income, the question of making any addition to the net profit while computing book profit also does not arise.
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2018 (9) TMI 2110 - ITAT MUMBAI
Disallowing interest on late deposit of TDS - CIT(A) disallowing interest on late deposit of TDS - Appellants submit that interest on late deposit of TDS is not akin to interest on tax levied on the profits and gains of any business or profession and therefore is not covered u/s 40(a)(ia) - HELD THAT:- In the case of Martin & Harris (P.) Ltd. [1989 (7) TMI 342 - CALCUTTA HIGH COURT] has held that whenever interest is charged under the Act, whether for delayed payment of tax or filing underestimate of tax or for non-submission of the estimate or return or for default in filing return within the time or delay in making payment of tax, it cannot be allowed as deduction in computing total income as essentially interest in such a case for non-compliance with the provisions of the Act is inextricably connected with the amount of income tax. Where Income Tax itself is not a deductable amount, be it compensation or be it penalty, payable in addition to the tax cannot be allowed as a deduction in computing total income.
In Ferro Alloys Corpn. Ltd. [1991 (12) TMI 39 - BOMBAY HIGH COURT] has held that the claim for deduction of interest levied u/s 220(2) u/s 215 and u/s 201(1A) was rightly rejected as not allowable u/s 37.
In Chennai Properties & Investment Ltd [1998 (4) TMI 89 - MADRAS HIGH COURT] assessee could not possibly claim that it was borrowing from the State the amounts payable by it as income-tax, and utilising the same as capitalisation in its business, to contend that the interest paid for the period of delay in payment of tax amounted to a business expenditure. Therefore, the interest paid under section 201(1A) could not be allowed as business deduction - Assessee dismiss the appeal.
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2018 (9) TMI 2109 - ITAT BANGALORE
Bad Debts Written Off u/s.36(1)(vii) - AO disallowed the assessee's claim as he was of the view that it was only a prudential write off since the individual accounts were not squared off - AO also observed that the write off was not debited to the assessee's profit and loss account - HELD THAT:- The facts on record indicate that the assessee bank had debited the bad debts written off to the account ‘Bad Debts Written Off Account’ (GL Code 180101) which is part of the profit and loss account and has reduced the write off from Gross Advances in the Balance Sheet. The authorities below disallowed the write off on the ground that the individual accounts are not squared off at the Branch Level. We find that this issue of write off has been settled by the coordinate bench of this Tribunal in the assessee's own case [2017 (11) TMI 1425 - ITAT BANGALORE] Further, we also find that in a later decision the coordinate bench in the case of Vijaya Bank [2018 (1) TMI 1575 - ITAT BANGALORE] has decided this very issue in favour of the assessee bank and against Revenue.
Respectfully following the aforesaid decision of the Hon'ble Apex Court in the case of Vijaya Bank [2010 (4) TMI 46 - SUPREME COURT] and the decision of co-ordinate benches of this Tribunal in the assessee's own case (supra) and that of Vijaya Bank (supra), we hold that the assessee bank is eligible to claim and be allowed write off of the bad debts under Section 36(1)(vii) of the Act. We, therefore, delete the disallowance made by the Assessing Officer in this regard. Consequently, ground No.2 of the assessee's appeal is allowed.
Disallowance of Claim u/s.36(1)(viia) - assessee bank had created a provision for bad and doubtful debts in the books of account and claimed deduction u/s.36(1)(viia) based on the Aggregate Rural Advances (AAA) computed as per Rule 6ABA of the Income Tax Rules, 1962 - AO was of the view that it is only the incremental advances that has to be considered for computing the ‘AAA’ and consequently allowed the deduction to that extent - HELD THAT:- We find that this issue is covered in favour of the assessee by the aforesaid decisions of the co-ordinate benches of this Tribunal in the assessee's own case [2017 (11) TMI 1425 - ITAT BANGALORE] and that of Vijaya Bank [2018 (1) TMI 1575 - ITAT BANGALORE] and respectfully following the same, we hold that the computation of the AAA made by the Assessing Officer while working out the deduction under Section 36(1)(viia) of the Act is incorrect and therefore delete the disallowance made there under. Consequently, ground NO.3 of the assessee's appeal is allowed.
Depreciation on Investments - HELD THAT:- As decided in THE KARNATAKA BANK LTD case [2013 (7) TMI 656 - KARNATAKA HIGH COURT]depreciation claimed on investments ‘held on maturity’ by a bank has to be treated as stock-in-trade in accordance with RBI guidelines and CBDT Circular.
Respectfully following the decision of the co-ordinate bench in the case of Vijaya Bank [2018 (1) TMI 1575 - ITAT BANGALORE] which is in line with the decision of the Hon'ble Karnataka High Court in the case of ING Vysya Bank [2013 (6) TMI 43 - KARNATAKA HIGH COURT] we delete the disallowances / additions made by the Assessing Officer and allow ground No.4 raised by the assessee.
Appreciation on Investments - AO was of the view and held that the appreciation as per books has to be brought to tax - HELD THAT:- While deciding ground No.4 (supra), we have held that the investments are to be valued at cost OR market value whichever is lower for the purposes of Income Tax. Since the valuation method to be adopted is as per the Income Tax Act for the purpose of computing taxable income, the Book results are to be ignored. Therefore, the notional appreciation in value of investments as per Books is not to be taxed and we therefore delete the addition made by the Assessing Officer. Consequently, ground No.5 of the assessee's appeal is allowed.
Unrealised Foreign Exchange Gain - AO held that the unrealized gains on revaluation of forward contract of approx. Rs.77.91 Crores is liable to be taxed since the same was credited to the profit and loss account - HELD THAT:- We find that the issue before us; i.e. treatment of unrealized foreign exchange gain, has been considered and held in favour of the assessee by the decision of a co-ordinate bench of this Tribunal in the assessee's own case in order reported in [2017 (11) TMI 1425 - ITAT BANGALORE] wherein held that no income can be taxed on notional basis unless and otherwise income accrued to the assessee.”
Thus we hold that the unrealized gains on revaluation of foreign exchange contracts is not exigible to tax and therefore delete the addition made in this regard by the Assessing Officer. Consequently, Ground No.6 of the assessee's appeal is allowed.
Disallowance u/s 14A r.w.r. 8D - HELD THAT:- Respectfully following the aforesaid decisions of the coordinate bench in the case of Vijaya Bank [2018 (1) TMI 1575 - ITAT BANGALORE]and the assessee's own case [2018 (1) TMI 1575 - ITAT BANGALORE], we hold that, in the facts and circumstances of the case on hand, no disallowance can be made under Section 14A of the Act over and above the amount disallowed suo moto by the assessee. Consequently, ground No.7 of the assessee's appeal is allowed.
TDS u/s 194J - Disallowance u/s.40(a)(ia) of the Act in respect of payment made to NPCI - AO held that since NPCI is providing technical services to the assessee bank, the payments made in this regard are liable to TDS - HELD THAT:- We find that the issue before us is covered in favour of the assessee by the decision of the Hon'ble Apex Court in the case of Kotak Securities Ltd. [2016 (3) TMI 1026 - SUPREME COURT] to hold that the services rendered by NPCI are not technical services and as such, are not covered by the provisions of Sec. 194J of the Act. Consequently, ground No.8 is allowed as indicated above.
Addition of profit on sale of shares in CARE Ltd. - ‘Profits from Business’ OR ‘Long Term Capital Gains’ (LTCG) exempt under Section 10(38) - HELD THAT:- It is a settled principle that it is based on the intention at the time of purchase and also treatment in the books that the issue of whether in the case on hand the profits arising on sale of shares of CARE Ltd. by the assessee in the year under consideration are to be treated as business income on account of holding shares as stock-in-trade, as held by Revenue OR as Capital Gains since they are investments, as claimed by the assessee.
In an appraisal of the material in the case on hand, it is seen that the assessee invested in the purchase of shares of CARE Ltd.; in 1993. While there are contrasting claims of Revenue that the said shares were held as stock-in-trade and that of the assessee that the shares were all along held as investments, what is important in the treatment given to these scrips / shares in the assessee's books of accounts; which has to be verified. If the assessee bank has included the shares of CARE Ltd., as Investments in the relevant Balance Sheets, only then these investments can be treated as capital asset and the gains arising there from can be treated as LTCG. If these shares are found to be held as stock-in-trade then the profits arising from sale thereof would have to be treated as Business Income. These facts require examination and verification by the Assessing Officer. We, therefore, remand this issue / matter to the file of the Assessing Officer for fresh examination - ground No.9 of assessee's appeal is allowed for statistical purposes.
Disallowance of Depreciation on ATMs - HELD THAT:- We find that this issue has been held in favour of revenue and against the assessee by the decision of a coordinate bench of this Tribunal in the case of State Bank of Mysore [2016 (5) TMI 1578 - ITAT BANGALORE] in which the Tribunal held that ATMs are not computers and hence depreciation thereon is to be allowed @ 15% only. Respectfully following the aforesaid decision of the co-ordinate bench (supra), we dismiss ground No.10 raised by the assessee.
Disallowance u/s.40(a)(ia) - Assessing Officer made this disallowance since the assessee bank did not furnish the details called for in respect of TDS and its remittances - HELD THAT:- As submitted by the counsels of both parties and from a perusal of the order of assessment, we find that the disallowance under Section 40(a)(ia) of the Act has been made by the authorities below on account of non-furnishing of details by the assessee. We are of the considered view that in the interest of substantial justice, the ex-parte disallowance under Section 40(a)(ia) of the Act made by the Assessing Officer is to be set aside and this issue is restored to the file of the Assessing Officer for fresh examination, verification and adjudication. Needless to add that the Assessing Officer shall afford the assessee adequate opportunity of being heard and to file details / submissions required that shall be considered by the Assessing Officer before deciding this issue. It is ordered accordingly. Consequently, ground No.11 of the assessee's appeal is allowed for statistical purposes.
Taxing of interest on Income Tax Refunds - assessee assails the decision of the authorities below in taxing the interest of Income Tax Refunds though the same is not recognised in the assessee's books of account - HELD THAT:- As contended by Revenue, this issue has considered and held against the assessee and in favour of revenue by the decision of the ITAT, Mumbai Benches in the case of Hindustan Petroleum Corpn. Ltd [2015 (7) TMI 524 - ITAT MUMBAI] Respectfully following the aforesaid decision of the ITAT, Mumbai (supra), we dismiss ground No.12 raised by the assessee.
Applicability of Sec.115JB of the Act to Banking Companies - HELD THAT:- We find, from a perusal of the impugned order, that the learned CIT(Appeals), following her own decision on this issue for earlier assessment years, allowed the assessee's appeal on this issue. It is also evident therefrom that the learned CIT(Appeals) failed to consider the effect of the amendment by Finance Act, 2012, to the application of the provisions of Sec. 115JB of the Act to the assessee bank. We, therefore, set aside the finding of the learned CIT(Appeals) rendered in favour of the assessee and restore this issue to the file of the learned CIT(Appeals) with a direction to decide / adjudicate the applicability of the provisions of Sec. 115JB of the Act; post amendment by Finance Act, 2012 and also the grounds relating to computation of ‘Book Profit’, if it is held that Sec. 115JB of the Act is applicable to the assessee bank.
Depreciation on leased assets - HELD THAT:- This issue is only consequential in nature as in earlier years, a co-ordinate bench of this Tribunal in the assessee's own case [2016 (7) TMI 1388 - ITAT BANGALORE] for Assessment Years 2008-09 & 2007-08 has allowed the assessee's claim for depreciation on leased assets to Kedia Group of companies. These orders have been referred to and followed by another co-ordinate bench of this Tribunal in the assessee's own case for Assessment Years 2009-10 to 2011-12 [2017 (11) TMI 1425 - ITAT BANGALORE] Respectfully following the aforesaid decision of the co-ordinate bench of this Tribunal in the assessee's own case (supra), we dismiss Ground No.3 of Revenue’s appeal.
Disallowance of Loss from investment in ISARC Trust - HELD THAT:- From the details on record it is seen that in the year under consideration, the assessee claimed loss under Section 61 of the Act since it is holding 95% of the Security Receipts (SRs) of ISARC (India SME Asset Reconstruction Company) Trust. According to the observations made by CIT(Appeals), assessee has not filed any evidence either before her on the Assessing Officer about the assets in question being transferred irrevocably and proceeded to uphold the disallowance made by the Assessing Officer. In this factual matrix of the case, we are of the view that in the interest of substantial justice, the order of authorities below are to be set aside and this issue remanded to the file of the Assessing Officer for examination, verification and adjudication after affording the assessee adequate opportunity of being heard and to file details / submissions required in this regard which shall be duly considered before deciding the issue.
Disallowance of penalty paid to RBI under FEMA Guidelines - AO made disallowance of payment of penalty imposed by RBI on the assessee under FEMA Guidelines on the ground that it is not in respect of any infraction of law, has not been adjudicated by the learned CIT(Appeals) in the impugned order, where the issue was raised by the assessee at ground of appeal No.10 - HELD THAT:- We find that this issue was raised in ground No.10 by the assessee before the learned CIT(Appeals), but the same has not been adjudicated by the learned CIT(Appeals). We, therefore, restore this issue raised as Ground No.10 and 10.1 in Form No.35, to the file of the learned CIT(Appeals) for examination and adjudication on merits, after affording the assessee adequate opportunity of being heard and to file details / submissions required which shall be considered by the learned CIT(Appeals) before deciding the issue.
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2018 (9) TMI 2108 - ITAT AHMEDABAD
Deemed divided addition u/s 2(22)(e) - assessee has received payment from company in which the assessee is one of the director - HELD THAT:- The company Leela Tubes Private Limited set up a project at Daman in the year 2000-2011 with the help of bank finance and was also enjoying the working capital facilities. Initial couple of years were the period of establishing the product in market but during the year 2004-05, due to inability to retire the Letter of Credits opening by the Bank in favour of the suppliers of raw-material, there was very huge default and the company went into near bankrupt situation. The company was declared NPA.
As a result, neither the bankers of the Company IDBI Bank Ltd. were giving the credit facilities and because of the defaults, the bankers were not allowing the company to pay to the creditors. As a result, it was very it was very difficult to get the raw-material from the market. Under the circumstances, the assessee asked his uncles and cousins to agree to permit him to offer as security the ancestral residence being Flat No.203 at Shripalnagar and avail the funding. In such fashion, some funding was availed from YES Bank and assessee opened a personal account and transferred the surplus funds of the company into his account and as and when the amount was falling due for payment he used to transfer back the amount to the account of company and make the payment and with working like this for a period of more than seven years, it is in the account year 2012-13, that old bank dues were cleared. In support of his contention, assessee filed a paper-book and also filed computation of income of the company at page No.50 for AY 2011-12 in which company is showing business losses. The assessee has also filed balance-sheet of the company for the year under consideration which shows trade payable.
As we are of the considered opinion that assessee had received an amount rom M/s.Leela Tube Pvt.Ltd. (LTPL) in order to safe-guard the interest of the company and the same was done in order to protect the interest of the company and assessee even sought help from his relatives and placed as security the ancestral House being Flat No.203 at Shripalnagar, Ahmedabad. Therefore, in our considered opinion, this was for the business expediency and same cannot be treated as deemed dividend u/s.2(22)(e) of the Act. Thus, we direct the Assessing Officer to delete the addition - As a result, Assessee’s ground of appeal is allowed.
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2018 (9) TMI 2107 - TELANGANA HIGH COURT
Seeking to dispense with his appearance permitting his counsel Sri Bharadwaj Reddy - offence punishable under Section 120-B of I.P.C. read with 420 of I.P.C. and Section 12 of Prevention of Corruption Act - Whether the appearance of the petitioner on all dates of adjournments in C.C.No.12 of 2013 be dispensed with, permitting his authorised advocate Bharadwaj Reddy to appear on his behalf permanently on all the dates of hearing of the case on the ground that he is a Director of various companies and that he is facing financial difficulty besides loss of man hours?
HELD THAT:- The present criminal petition is filed under Section 482 of Cr.P.C. In HAMIDA VERSUS RASHID AND ORS. [2007 (4) TMI 768 - SUPREME COURT], the Apex Court held that it is well established principle that inherent power conferred on the High Courts under Section 482 Cr.P.C. has to be exercised sparingly with circumspection and in rare cases and that too to correct patent illegalities or when some miscarriage of justice is done.
The order passed under Section 205 of Cr.P.C. is purely within the discretion of Magistrate/Judge here, the Principal Special Judge for CBI Cases, Hyderabad. The Principal Special Judge for CBI Cases being the Master of the proceedings in his Court exercised his discretion and declined the request of the petitioner. In Sushila Devi and Jagadguru Sachidanada Shankarabharati Swami of Sri Kudli Sringeri Mutt case (referred supra) it is held that the next test will be a question of status; highly placed public functionaries, or very busy captains of industry and the like should not, unless the prima facie case is serious, be compelled to attend. If these principles are applied to the present facts of the case, though the petitioner is busy industrialist, who intend to establish another industry in the composite State of Andhra Pradesh by illegal means i.e. allegedly paying approximately Rs.139 crores for transfer of prospecting license. Therefore, his pre-occupation in the affairs of various companies or industries is not a ground in view of the seriousness of the case involving more than Rs.100 crores for granting largesse by the Government i.e. transfer of prospecting licence by M/s Raghuram Cements Limited, in violation of settled guidelines for such transfer. When the petitioner allegedly resorted to such practice to establish an industry, the Principal Special Judge for CBI Cases exercised his discretion to negate the relief.
If the petitioner is aggrieved by the direction for taking up the matter on every Friday, he can challenge the order passed by this Court in PIL No.145 of 2015 in appropriate proceedings. But to overcome difficulty in appearance, on account of direction issued by this Court, the petitioner cannot resort to procedure under Section 205 of Cr.P.C. - there are no illegality in the discretion exercised by the Principal Special Judge for CBI Cases warranting interference of this Court while exercising power under Section 482 of Cr.P.C. since this Court cannot regulate or issue any direction to the subordinate Courts in passing discretionary orders, which purely lies on the Magistrate or the Judge, who is exercising power of the Magistrate under special enactment.
Consequently, the petition is liable to be dismissed.
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2018 (9) TMI 2106 - ANDHRA PRADESH HIGH COURT
Determination of age of ink in the cheque - HELD THAT:- It is observed in A. Inayathulla [2015 (1) TMI 1482 - MADRAS HIGH COURT], another expression of the Madras High Court in K. Vairavan v. Selvaraj [2012 (7) TMI 1150 - MADRAS HIGH COURT], and that though there is scientific method available, there is no expert available who can scientifically examine particularly at the Forensic Science Department of the Government of Tamilnadu. The Central Forensic Sciences Laboratory, Hyderabad, expert attended the Tamilnadu Judicial Academy to address the officials also stated that no expert is available there had and the fax message received from Assistant Director of Central Forensic Sciences Laboratory, Hyderabad, of there is no validated method in their laboratory to undertake examination to determine the relative or absolute age of the ink of the writings or signatures. It is observed in A. Inayathulla supra, by referring to the expression in R. Jagadeesan supra that there is one institution known as Nutron Activation Analysis, BABC, Mumbai, where there is facility to find out the approximate range of the time, during which the writings would have been made and it is a Central Government Organization.
In view of the expression in A. Inayathulla [2015 (1) TMI 1482 - MADRAS HIGH COURT] no useful purpose can be served or no opinion can be possible are untenable and it is observed at Para 14 that the Apex Court in Kalyani Baskar v. M.S. Sampoornam [2006 (12) TMI 545 - SUPREME COURT] having set aside the order of the Magistrate upheld in revision of dismissing the application of the accused in a cheque bouncing case and allowed the request of the accused to send the disputed signatures to handwriting expert saying that is valuable right of defence, unless the Court thinks that the object of the application itself is vexatious or with a delay tactics such request cannot be negated.
Once such is the case, the facility available and the expert is also available. Thus there is no meaning in arguing of no practical use or purpose or sending to determine age of the ink is a futile exercise.
This Civil Revision Petition is allowed by setting aside the order of the lower Court by restoring and allowing the application with a direction to the lower Court to direct the defendant to deposit Rs. 20,000/- and send the document to the Nutron Activation Analysis, BABC, Mumbai which is a Central Government Organization where the facility of determination of age of the ink available for its determination, on petitioner's ascertain the full and correct address and availability of the facility and from deposit of the amount.
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2018 (9) TMI 2105 - ITAT PUNE
Deduction u/s 80P - Taxability of the interest income earned from the Fixed Deposits with banks other than the Cooperative Banks/Societies - AO is of the opinion that the said income is taxable and the exemption u/s.80P(2)(a)(i) of the Act is not available to such receipts - HELD THAT:- An identical issue was dealt with by the Hon'ble ITAT, B Bench, Pune in appellant's own case for assessment year 2010-11 [2015 (8) TMI 1085 - ITAT PUNE] as relied on the judgment of Hon'ble Supreme Court in the case of CIT Vs. Vegetable Products [1973 (1) TMI 1 - SUPREME COURT] and held that the interest income earned on short term deposits kept with banks has to be allowed as deduction u/s 80P(2)(a)(i).
AO was not justified in denying the appellant's claim of deduction u/s 80P(2)(a)(i) - In the result, the claim of the appellant u/s 80P(2)(a)(i) of the Act for the year under consideration is allowed. We are of the opinion that the assessee is entitled to deduction u/s.80P(2)(a)(i) in respect of the interest income earned on fixed deposits kept with the Nationalized Banks/Scheduled Banks and the same constitute as business income of the assessee. We therefore uphold the order of CIT(A) and direct the AO to allow the claim of assessee. Grounds raised by the Revenue are dismissed and in favour of the assessee.
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2018 (9) TMI 2104 - ITAT COCHIN
Revision u/s 263 - applicability of Explanation to section 73 so as to consider the deemed speculation loss from trading of shares and disallowing set off of deemed speculation loss from trading of shares out of the business income - CIT opined that in view of Explanation to section 73 introduced by Finance (No. 2) Act, 2014 which is applicable form assessment year 2015-16, the assessee cannot be granted set off of deemed speculation loss from trading of shares out of the business income of the assessee - HELD THAT:- The amendment inserted to Explanation to section 73 by Finance (No. 2) Act, 2014 is to be applied retrospectively from the date of insertion to Explanation to section 73 of the Act. In coming to this view, we take support from the judgment in the case of CIT vs. Alom Extrusions Ltd. [2009 (11) TMI 27 - SUPREME COURT] wherein Their Lordships were considering the amendment made by the Finance Act, 2003 by omitting the second proviso to section 43B of the Act w.e.f. 01/04/2004 and bringing about uniformity in the first proviso by equating tax, duty cess and fees with contribution to welfare funds viz. Provident Fund, etc. The Supreme Court held that the aforesaid amendment in section 43B of the Act by Finance Act, 2003 is curative in nature and would therefore apply retrospectively w.e.f. 01/04/1988.
In the present case, the principle business of the assessee is trading in shares. Hence, deemed speculative loss from trading in shares is to be set off of against the business income of the assessee. This ground of the assessee is allowed.
CIT initiated the proceedings u/s. 263 of the Act based on the recommendations of the AO - We find that this argument is not based on any material borne on record. Accordingly, this argument of the Ld. AR is rejected.
Judicial discipline requires consistency in the income tax proceedings - According to the Ld. AR res judicata does not apply to income tax proceedings. Though, each assessment year being a unit, what was decided in one year might not apply in the following year; where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order; it would not be at all appropriate to allow the position to be changed in a subsequent year. In the present case, non-consideration of one issue in one assessment year does not give vested right to the assessee to derive benefit from such an error committed by the AO. In our opinion, perpetuating the error is not heroism. This argument of the Ld. AR is rejected. Appeal filed by the assessee is partly allowed.
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2018 (9) TMI 2103 - NATIONAL COMPANY LAW TRIBUNAL, NEW DELHI PRINCIPAL BENCH
Extension of time period of Corporate Insolvency Resolution Process in respect of the corporate debtor by a further period of 90 days w.e.f. 02.10.2018 - Section 12(2) of IBC - HELD THAT:- Section 25 (2) (h) added on 23.11.2017 by way of amendment does not contemplate floating of any expression of interest. It is beyond our understanding as to how the IBBI has taken upon itself the task of framing Regulation 36A of IBBI (Insolvency Resolution Process for Corporate Persons), Regulations, 2016 using the expression ‘invitation of expression of interest’ along with Form ‘G’. Such an assumption of power would be beyond the competence of IBBI as the source of power to frame Regulation under the IBC is drawn from Section 240 of IBC, 2016. Section 240(1) in categorical terms provides that the IBBI may by notification make regulation consistent with the Insolvency and Bankruptcy Code, and further subject to the Rules framed by the Government under Section 239 of IBC, 2016 for carrying out the provisions of the Code.
In the present case on 04.06.2018 ‘expression of interest’ was invited and last date for expressing interest to submit the resolution plan was 18.06.2018 without in fact inviting any resolution plan. Such a course is negation of the salient features highlighted by Supreme Court that the speed is essence of the IBC, 2016, therefore, we have no other option except to declare Regulation 36A as ultra-vires of Section 240(1) of IBC, 2016. The IBBI is directed to frame Regulation according to its competence and the source of power as given to it by the Code.
The period is extended by 90 days which shall now to come to an end on 31.12.2019 - application disposed off.
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2018 (9) TMI 2102 - AUTHORITY OF ADVANCE RULING, JHARKHAND
Levy of GST - Healthcare services or not - Doctor's Consultancy to the various categories of people - Tests and Scans to the various categories of people for IPD and /or OPD cases - Admission charges, Bed Charges, Operation Charges, Sundry Charges, etc - Medicine Dispensation to In-Patients - whether GST needs to be paid on supplies to Non-Employees for consideration only (with ITC on inward supplies) or GST needs to be paid on supplies made to employees without consideration as well? - Medicine Despensation to other patients - supplies to Non-Employees for consideration only (with ITC on inward supplies) or GST - Preventive Health Check-up.
HELD THAT:- The services provided by the applicant falls under the category of the service “Health Care Services”.
Pertaining to the services provided by the Applicant to their Employees and their dependents ,it is observed that the Applicant run hospital is as per terms of employment contract and part of CTC.As this is a part of facility for employee in terms of contract of employment, it cannot be treated as service provided by employer to employee and hence may not subject to GST. This view is also supported by Press release issued by CBEC on 10.07.2017.
Supply of Drugs and Medicines is a Taxable Supply under the GST Act and the rates are accordingly prescribed under Chapter 30 and Heading 9804 of the GST Tariff - Human Health Care and Social service is also a Taxable Supply under the GST Act and the rates are accordingly prescribed under the Heading 9993 of the GST Tariff - But vide SI No. 74 of Notification NO. 12/2017-Central Tax (Rates), dated 28.06.2017 “Health Care Services” are exempted from levy of GST.
Services provided to non-employees - HELD THAT:- Doctor's Consultancy services provided in the hospital is an activity for diagnosis or treatment or care for illness, injury, etc. Hence, it is covered by the definition of Health Care Services and accordingly not chargeable to GST - Test and Scan services provided in the hospital is an integral part for diagnosis or treatment or care for illness, injury, etc. Hence, it is covered by the definition of Health Care Services and accordingly not chargeable to GST - Admission Charges, Bed Charges, Operation Charges, Sundry Charges, etc. recovered from patients is towards miscellaneous facility provided in the hospital which is directly linked to treatment of illness, injury, etc. Hence, it is covered by the definition of Health Care Services and accordingly not chargeable to GST - Medicine Dispensation to In-Patients is in the course of treatment or care for illness, injury, etc. Hence it is covered by the definition of Health Care Services and accordingly not chargeable to GST - Medicine Dispensation to Other Patients after the consultancy from Doctor's is also in the course of treatment or care for illness, injury, etc. Hence it is covered by the definition of Health Care Services and accordingly not chargeable to GST - Preventive Health Check-up is a preliminary investigation process for diagnosis of illness. Hence it is covered by the definition of Health Care Services and accordingly not chargeable to GST.
The activities undertaken by the applicant fall under “Health Care Services” as defined clause 2(zg) of the Notification issued under Union Territory Goods & Service Tax Act, 2017. “Health Care Services” are exempted from levy of GST vide Circular No. 354/ 17/2018-TRU dated 12.02.2018.
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