TMI Tax Updates - e-Newsletter
January 2, 2020

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise Indian Laws

Articles

1. Input Tax Credit eligibility and its restriction

   By: Ganeshan Kalyani

2. Investment In Units of Mutual Funds in the Name of Minor Through Guardian and Ease of Process for Transmission of Units

   By: Sandeep Golani

News

1. GST Revenue collection for December, 2019 ₹ 1,03,184 of gross GST revenue collected in the month of December

2. $ 5 Trillion Economy: Aspiration to Action (Shri Shaktikanta Das, Governor, Reserve Bank of India - December 16, 2019 - Delivered at the India Economic Conclave held in Mumbai)

3. Ministry of Commerce and Industry Seeks to Promote India–Africa Trade

Notifications

Central Excise

1. 09/2019 - dated 31-12-2019 - CE

Seeks to amend notification No. 11/2017-Central Excise dated 30-06-2017, so as to align it with amended Fourth Schedule to Central Excise Act.

2. 08/2019 - dated 31-12-2019 - CE

Seeks to amend Fourth Schedule in Central Excise Act, 1944

3. 07/2019 - dated 31-12-2019 - CE (NT)

Seeks to amend Notification No. 05/2019-Central Excise-NT, dated the 21st August, 2019

Customs

4. 42/2019 - dated 31-12-2019 - Cus

Seeks to amend notification No. 53/2011-Customs dated 01st July, 2011 so as to provide deeper tariff concessions in respect of specified goods imported from Malaysia under the India-Malaysia Comprehensive Economic Cooperation Agreement (IMCECA) w.e.f. 01.01.2020

5. 41/2019 - dated 31-12-2019 - Cus

Amendments in the Notification of the Government of India in the Ministry of Finance (Department of Revenue), No.46/2011-Customs, dated the 1st June, 2011.

GST

6. 29/2019 - dated 31-12-2019 - CGST Rate

To amend notification No. 13/ 2017- Central Tax (Rate) so as to notify certain services under reverse charge mechanism (RCM) as recommended by GST Council in its 38th meeting held on 18.12.2019.

7. 28/2019 - dated 31-12-2019 - CGST Rate

To amend notification No. 12/ 2017- Central Tax (Rate) so as to exempt certain services as recommended by GST Council in its 38th meeting held on 18.12.2019.

8. 28/2019 - dated 31-12-2019 - IGST Rate

To amend notification No. 10/ 2017- Integrated Tax (Rate) so as to notify certain services under reverse charge mechanism (RCM) as recommended by GST Council in its 38th meeting held on 18.12.2019.

9. 27/2019 - dated 31-12-2019 - IGST Rate

To amend notification No. 9/ 2017- Integrated Tax (Rate) so as to exempt certain services as recommended by GST Council in its 38th meeting held on 18.12.2019.

10. 29/2019 - dated 31-12-2019 - UTGST Rate

To amend notification No. 13/ 2017- Union Territory Tax (Rate) so as to notify certain services under reverse charge mechanism (RCM) as recommended by GST Council in its 38th meeting held on 18.12.2019.

11. 28/2019 - dated 31-12-2019 - UTGST Rate

To amend notification No. 12/ 2017- Union Territory Tax (Rate) so as to exempt certain services as recommended by GST Council in its 38th meeting held on 18.12.2019.

GST - States

12. S.O. 415 - dated 31-12-2019 - Bihar SGST

Governor of Bihar appoints the 1st day of January, 2020, as the date on which the provisions of the Bihar Goods and Services Tax (Amendment) Act, 2019 except section 2, section 7, section 10, sections 13 to 20, section 22 and section 23, shall come into force.

13. S.O. 411 - dated 31-12-2019 - Bihar SGST

Bihar Goods and Services Tax (Ninth Amendment) Rules, 2019

14. ORDER No. 08/2019- State Tax - dated 24-12-2019 - Delhi SGST

Delhi Goods and Services Tax (Eighth Removal of Difficulties) Order, 2019

15. 47/2019-State Tax - dated 24-12-2019 - Delhi SGST

Notify the registered persons whose aggregate turnover in a financial year does not exceed two crore rupees and who have not furnished the annual return

16. 38/1/2017-Fin(R&C)(29/2019-Rate) - dated 31-12-2019 - Goa SGST

Amendment in Notification No. 38/1/2017-Fin(R&C)(13/2017-Rate) dated the 30th June, 2017

17. 38/1/2017-Fin(R&C)(28/2019-Rate) - dated 31-12-2019 - Goa SGST

Amendment in Notification No. 38/1/2017-Fin(R&C)(12/2017-Rate), dated 30th June, 2017

Income Tax

18. 108/2019 - dated 31-12-2019 - IT

Corrigendum - Notification No. 77/2019, dated the 3rd October, 2019

Circulars / Instructions / Orders

GST

1. 130/49/2019 - dated 31-12-2019

Reverse Charge Mechanism (RCM) on renting of motor vehicles

Highlights / Catch Notes

GST

• GST Notification Amended to Include New Services Under Reverse Charge Mechanism Per GST Council's 38th Meeting Recommendations.

  Notifications : To amend notification No. 13/ 2017- Central Tax (Rate) so as to notify certain services under reverse charge mechanism (RCM) as recommended by GST Council in its 38th meeting held on 18.12.2019.
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• GST Council Exempts Specific Services in Notification No. 12/2017-Central Tax (Rate) After 38th Meeting Recommendations.

  Notifications : To amend notification No. 12/ 2017- Central Tax (Rate) so as to exempt certain services as recommended by GST Council in its 38th meeting held on 18.12.2019.
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• RCM Under GST Now Applies to Renting Motor Vehicles: Recipients Must Pay GST, Ensuring Compliance and Preventing Evasion.

  Circulars : Reverse Charge Mechanism (RCM) on renting of motor vehicles
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• In-Patient Healthcare Services, including medicines and implants, exempt from GST under composite supply rule.

  Case-Laws - AAR : Liability of GST - Supply of Healthcare services - Medicines, drugs, stents, consumables and implants used in the course of providing health care services to in-patients admitted to the hospital for diagnosis, or medical treatment or procedures is a composite supply of In Patient Healthcare Service. - Benefit of exemption available.
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• No Input Tax Credit for Construction of Marriage Hall Used for Business Purposes, as per GST Rules.

  Case-Laws - AAR : Utilisation of Input tax credit - no Input Tax Credit is available against any goods or services received by the applicant for construction of the Marriage Hall on his own account even if used in course or furtherance of his business of renting the place.
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• Gift Voucher Supply Time: Issuance for Specific Goods, Redemption for Any Goods.

  Case-Laws - AAR : Classification of supply - supply of goods or supply of services - gift vouchers / gift cards - The time of supply of such gift vouchers / gift cards by the applicant to the customers shall be the date of issue of vouchers if the vouchers are specific to any particular goods specified against the voucher. If the gift vouchers/ gift cards are redeemable against any goods bought, the time of supply is the date of redemption of voucher.
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• GST Rate for Mixed Supply Billed at Single Price Set by Highest Service Rate: 18% as per Section 8.

  Case-Laws - AAR : Rate of GST - as per Section 8, the rate of tax of this mixed supply which is billed at a single price is the rate of the highest rate of the services supplied which is 18%.
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• Court Questions Validity of Petitioners' Offer to Pay Additional GST Due to Missing Board Resolution.

  Case-Laws - HC : Seizure of goods along with the vehicle/truck - The writ petitioners have stated that they were ready to pay the excess amount of GST after assessment. However, we are unable to understand as to how such a statement could be made by the writ petitioners in the absence of any resolution of the Board of Directors in support thereof.
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Income Tax

• Charitable Trust's Income Must Follow Sections 11-13; Mutuality Principle Doesn't Apply, Says Assessing Officer.

  Case-Laws - HC : Exemption u/s 11 - AO has proceeded to classify assessee’s activities as ‘hybrid’, charitable as well as mutual activity - since the assessee is registered as a charitable trust, the application of principle of mutuality for the computation of its income is not required to be gone into as the income is to be computed as per Section 11, 12 and 13 of the Act
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• Foreign currency forward contract losses not speculative u/s 43(5) of Income Tax Act; no direct transaction link needed.

  Case-Laws - AT : The loss arising on cancellation of foreign currency forward contracts cannot be treated as speculative loss u/s 43(5) - It is not required by the assessee to establish a one–to–one linkage between the forward contracts and the export/import transaction. What is required to look at is, whether the amount of hedging transaction is within the amount of underlying transaction of imports and export.
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• CIT(A) Cuts Asset Value by 50% for Depreciation Without Justification; Decision Challenged for Lack of Evidence.

  Case-Laws - AT : Claim of depreciation - CIT(A) has reduced the purchase value by 50% and allowed depreciation thereon - CIT(A) failed to record that on what basis he has reduced 50% of the purchase value - When the evidences and details produced by the assessee, action of CIT(A) is not justified.
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• Income Tax Act Section 263 Revision: AO's Oversight on Interest Expense Bifurcation Sparks Justified Action.

  Case-Laws - AT : Revision u/s 263 - Claim of interest - bifurcation of the interest expense between pre and post business commencement period - AO did not examine the issue in the manner in which it was expected from him in this regard and, therefore, the impugned action u/s 263 of the Act is entirely justified.
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• Assessee's 100% Depreciation Claim on Pollution Equipment Challenged; AO's Lack of Inquiry Leads to Revision Order Upheld.

  Case-Laws - AT : Revision u/s 263 - assessee’s claim of depreciation at enhanced rate at 100% on alleged air pollution control equipment. - AO did not make any proper inquiry while making the assessment and had accepted the explanation of the assessee - Revision order sustained.
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• Pr. CIT Validly Uses Section 263 to Revise Erroneous Assessment, Protecting Revenue from Alleged Accommodation Entries.

  Case-Laws - AT : Revision u/s 263 - allegation of accommodation entry taken - Pr. CIT has rightly exercised his jurisdiction under section 263 of the Act in setting aside the order of the Assessing Officer being erroneous in so far it is prejudicial to the interest of the Revenue
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• Assessee Wins Case: Fertile Land Yields Higher Crop Output Than Tehsildar's Report Estimated, Claim Allowed by Officer.

  Case-Laws - AT : Agricultural income - At first the AO estimated the gross agricultural produce on the basis of a report from the Tehsildar but when the same was agitated by the assessee claiming that the land owned by the asessee was more fertile and capable of yielding more crops in comparison to an average land as reported by the Tehsildar. - Claim of assessee allowed.
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• Taxpayer's Bogus Purchases Adjusted: 12.5% Rate Reduced to 3% Based on Industry Profit Norms.

  Case-Laws - AT : Bogus purchases - addition made by the AO @12.5% - Rate of profit prevalent in assessee’s trade we are of the view that it would be reasonable if a rate of 3% is applied to the alleged bogus purchases.
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Customs

• Imported Goods from Pakistan Subject to Duty Rate at Bill of Entry Filing Time; Payable by All Petitioners.

  Case-Laws - HC : Release of imported goods from Pakistan - rate of duty - all the Petitioners would be liable to pay duty as was applicable at the time of filing of bill of entry coupled with the fact of the imported goods having entered territory of India on 16.02.2019 prior to the issuance of the impugned notification.
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Indian Laws

• Tender Rejection Overturned: Absence of Month-wise GST Clearance Not in Original Conditions, Deemed Arbitrary and Unjustified.

  Case-Laws - HC : Rejection of Tender application - GST clearance certificate - Petitioner can only be expected to comply with the conditions stipulated in the tender notification and in case the respondents require that tender application should be accompanied with month-wise GST Clearance Certificate, then the said condition should have been reflected in the tender notification itself - In the absence of such condition in the tender application, the action of the respondents in rejecting the tender application/technical bid of the petitioner is arbitrary, contrary to the tender notification and requires to be set aside
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• Accused Challenges Cheque Issuance Claim, Highlights Complainant's Evidence Weaknesses; Defense Argument Partially Successful.

  Case-Laws - HC : Dishonor of cheque - rebuttal of presumption - In this case the accused on one hand disputes issuance of cheque voluntarily and on other hand pointed out lacunae, loopholes and shortcomings in the evidence of complainant. First part of defence is not accepted. But, accused certainly succeeds in bringing on record the lacunae
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Service Tax

• Cleaning Public Roads Exempt from Service Tax Due to Definition Exclusion of Taxable Premises.

  Case-Laws - HC : The activity of cleaning in relation to all other premises excepting those specifically defined, such as public roads and streets in this city, stand outside the ambit of the definition - thus, the receipts from cleaning activities carried out by the petitioner on public roads and streets stand excluded from the ambit of tax, even at the threshold.
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• Ex-gratia payments by M/s Parle to appellant for unintended damages not classified as service payments.

  Case-Laws - AT : Valuation of services - receipt of ex-gratia job charges - the present ex-gratia charges made by the M/s Parle to the appellant were towards making good the damages, losses or injuries arising from “unintended” events and does not emanate from any obligation on the part of any of the parties to tolerate an act or a situation and cannot be considered to be the payments for any services.
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Central Excise

• SVLDRS Scheme Extended: Resolve Central Excise and Service Tax Disputes by January 15, 2020. Avail Benefits Now.

  Notifications : The benefit and option under Sabka Vishwas (Legacy Dispute Resolution) Scheme (SVLDRS) extended till 15-1-2020
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• Proposed Amendments to Fourth Schedule of Central Excise Act, 1944 Aim to Update Excise Duty Provisions.

  Notifications : Seeks to amend Fourth Schedule in Central Excise Act, 1944
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• Appellant using common input services for taxable and exempt goods not required to reverse amount u/r 6(3A).

  Case-Laws - AT : CENVAT Credit - common input services used for taxable as well as exempt goods - the appellant is covered by Rule 6(2) of CCR 2004 and therefore need not reverse any amount under Rule 6(3A).
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Case Laws:

• GST

• 2020 (1) TMI 32
  Liability of GST/Exemption from GST - Supply of Healthcare services - Composite Supply or not - supply of medicines, drugs, stents, consumables and implants used in the course of providing health care services to in-patients admitted to the hospital for diagnosis, or medical treatment or procedures - benefit of N/N. 12/2017 read with Section 8(a) of GST - Tax liability on medicines supplied to in-patients through pharmacy. HELD THAT:- In the case at hand, the applicant being a hospital/ polyclinic undertakes services of diagnosis, treatment which comprises of providing bed/ ICU / room, nursing care, diagnostics including lab investigations and treatment surgical or otherwise under the directions of the Doctors. The hospital provides medicines, consumables, implants, etc. to the In-patients in the course of treatment on the directions of medical doctor for which the In-patient is billed together by the hospital. The hospital cannot provide health services including diagnostic, treatment surgery etc. without the help of medicines to be taken during treatment, implants and consumables used during their stay in the hospital - supply of medicines, implants and consumables are natural bundled with the supply of health services. In this case, supply of health services is the principal supply as that is the reason the in-patients get admitted to hospital instead of buying the medicines or consumables and using on themselves. Therefore, supply of medicines, consumables and implants to in patients in the course of their treatment is a composite supply of health services. The Inpatient services means services provided by hospitals to inpatients under the direction of medical doctors aimed at curing, restoring and/or maintaining the health of a patient and the service comprises of medical, pharmaceutical and paramedical services, rehabilitation services, nursing services and laboratory and technical services. A complete gamut of activities required for well-being of a patient and provided by a hospital under the direction of medical doctors is a composite supply of service and is covered under Inpatient services classifiable under SAC 999311 - Health care services provided by a clinical establishment or an authorized medical practitioner or para medics are exempted vide Sl No 74 of Notification no. 12/2017-C.T. (Rate) dated 28.06.2017 as amended and Sl.No. 74 of Notification No. II(2)/CTR/532(d-15)/2017 vide G.O. (Ms) No. 73 dated 29.06.2017. From a joint reading of the Explanation of service pertaining to Inpatient services and the exemption above, it is evident that the exemption is applicable to a Clinical Establishment , when services by way of diagnosis or treatment or care for illness, etc. are undertaken by such establishment under the directions of a medical doctor - The applicant hospital is a Clinical Establishment and for the health care services as defined in the Notification above provided including the supply of medicines, implants and consumables, they are exempt under Sl No 74 of Notification no 12/2017 -C.T. (rate) dated 28.06.2017 as amended and Sl.No. 74 of Notification No.II(2)/CTR/532(d-15)/2017 vide G.O. (Ms) No. 73 dated 29.06.2017.

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• 2020 (1) TMI 31
  Utilisation of Input tax credit - utilisation of credit against purchases of materials construction of building materials - nullifying the cascading effect of taxation - whether ITC against purchases of materials and services used for construction of building (constructed by him) can be claimed and utilized to pay GST on the outward supply of services of renting of the building? HELD THAT:- Section 17 (5) (d) provides that no ITC is available in respect of any goods or services received by a taxable person for construction of an immovable property on his own account even if such inputs and input services are used in the course and furtherance of business - In the instant case the applicant has himself built the marriage hall for which he has received various goods such as cement, steel, sand, tiles, bathroom fittings etc. as inputs and services by architect, labour contractor etc. as input services. He is using the hall to rent out to customers for occasions i.e. for furtherance of his business. Therefore, as per section 17(5) (d), no ITC is available on any goods or services received by him for such construction and the same cannot be claimed by him. The input tax paid on the goods/ services received for construction of an immovable property on one s own account is unavailable. The restriction is provided in the Act which is passed by the Legislature. The power to restrict flow of credit exists under Section 16(1) of the GST Act, which shows a Legislative intent that Input Tax credit may not always be allowed partially or fully - As the suitability and requirement of tax payer varies from person to person, rule/ Act, cannot be changed/ amended accordingly and it is mandatory for the tax payers to adhere the restrictions prescribed in Act and Rule. Thus, no Input Tax Credit is available against any goods or services received by the applicant for construction of the Marriage Hall on his own account even if used in course or furtherance of his business of renting the place.

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• 2020 (1) TMI 30
  Classification of supply - supply of goods or supply of services - gift vouchers / gift cards - issue of Own Closed PPIs by the Applicant to customers - time of supply of goods or services warranting tax liability - rate of taxes applicable for such supply of goods or services - levy of GST on issue of PPIs by Third Party PPI Issuers at the time of issue in their Hands - levy of GST on amount received by the Applicant from Third party PPI issuers - GST collection at the time of sale of goods or services on redemption of PPIs i.e. own and from Third Party, sufficient compliance of the Provisions of the CGST Act or not - treatment of Discount (the difference between Face value and discounted value) in the hands of issuer of PPI in case of third party PPIs - levy of GST on differential value. Whether the issue of Own Closed PPIs by the Applicant to customers be treated as supply of goods or supply of services as defined under the provisions of the CGST / SGST Act 2017 and rules, notifications there on? - If yes, is the time of issue of Own Closed PPIs by the Applicant to customers is the time of supply of goods or services warranting tax liability? - If yes, what is rate of taxes applicable for such supply of goods or services as the case may be? - HELD THAT:- n the case at hand, it is stated that the gift cards / vouchers are purchased by the customers on paying a value in money specified on the gift card / voucher. When the money is paid by the customer, such a value is loaded onto the card electronically. PPIs issued by the applicant can be redeemed against purchase of any jewellery in any of the outlets of KJIL across India. This means that when the customer of bearer of the gift card wants to pay for some jewellery in KJIL s stores, they can pay with either cash or with gift voucher - In this case, the gift voucher/ gift card is an instrument squarely covered under the definition of payment instrument under Payment and Settlement Act 2007. It is not a claim to a debt nor does it give a beneficial interest in any movable property to the bearer of the instrument. In fact, if the holder of the gift card/ voucher loses or misplaces it and is unable to produce it before the applicants stores before the time limit specified on the card/ voucher, the instrument itself becomes invalid. Then the customer cannot use it to pay for any goods. Thus it is not an actionable claim as defined under Transfer Of Property Act. It is only an instrument accepted as consideration / part consideration while purchasing the goods from the issuer and the identity of the supplier is established in the PPI. Thus, those instruments which satisfy the conditions of being accepted as consideration/ part consideration against purchase of specified goods and the identities of the potential suppliers are indicated in the instruments are to be considered as Vouchers for the purposes of GST - Applying the above, the PPIs under consideration are Vouchers for the purposes of GST. Further, these PPIs are gift cards supplied by the applicant either directly through to customer or through various distribution channels. In the case of paper based gift vouchers classifiable under CTH 4911 the applicable rate is 6% CGST as per Sl.No. 132 of Schedule II of the Notification No. 1/2017-C.T.(Rate) dated 28.06.2017 and 6% SGST as per Sl.No. 132 of Schedule II of Notification Ms. No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017 as amended - In the case of gift cards, the same are classifiable under CTH 8523 and the applicable rate is 9% CGST as per Sl.No. 382 of Schedule III of the Notification No. 1/2017-C.T.(Rate) dated 28.06.2017 and 9% SGST as per Sl.No. 382 of Schedule III of Notification Ms. No. II(2)/CTR/532(d-4)/2017 vide G.o. (Ms) No. 62 dated 29.06.2017. Territorial jurisdiction - scope of advance ruling - Closed PPIs- issued through Third Party PPI issuers - Whether the issue of PPIs by Third Party PPI Issuers subject to GST at the time of issue in their Hands? - Whether the amount received by the Applicant from Third party PPI issuers subject to GST? - If No, GST collection at the time of sale of goods or services on redemption of PPIs i.e. own and from Third Party will be a sufficient compliance of the Provisions of the CGST Act? - What is the treatment of Discount (the difference between Face value and discounted value) in the hands of issuer of PPI in case of third party PPIs. Whether the Applicant will be liable to pay GST on this difference Value? - HELD THAT:- In this case it is seen that Qwikcilver is the supplier of the vouchers to customers and Qwikcilver also supplies their services to KJIL, Kerala. The above questions pertain to these two supplies. Kalyan Jewellers, Kerala is a distinct entity from KJIL and Qwikcilver is based in Bangalore. This Advance Ruling Authority does not have Jurisdiction over the activity undertaken by these entities.

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• 2020 (1) TMI 29
  Rate of GST - consultant rendering services in the field relating to Import-Export compliances to customers with State and Central Office under Customs, Ministry of Finance Commerce - composite supply or mixed supply? - whether the services provided along with the duty credit scrip are composite in nature, the principal supply being service rendered or usage of scrip? - HELD THAT:- It is seen that the applicant is an all round consultancy company providing all sorts of technical help, documentary support and allied advisory services on matters relating to foreign trade, Customs duty Excise duty along with expert advice consultancy related to the Ministry of Finance Commerce. It is stated that the applicant is entering in providing a one stop solution, which is a new concept in which they offer Document Management Solution, Installation of JAVA in client system maintenance till the contract period, Broadcasting, Business Consulting Services and RTI-other legal service along with procuring and supplying Duty Credit Scrips. It is seen that the duty credit scrip is purchased by the applicant by means of transfer, which means that the scrip belongs to the applicant and he can import goods against the scrip if he chooses so. The applicant further re transfers the scrip to his client. Both these activities are to be done through the systems put in place by DGFT. These activities are independent of the activities of data management or consultancy services that the applicant offers. The applicant can very well supply only the duty credit scrip by buying it and re selling it or only act as a consultant for the transaction by identifying the seller of the scrip and getting it transferred in the name of their client. Data management activities assisting the client in clearance of goods from customs can also be performed without a supply of duty credit scrip - Such supply of services along with the duty credit scrip as in the service order furnished by the applicant in the case of Sitaram Shipping Services is not naturally bundled together and is not a composite supply. These are several individual supplies which are made in conjunction with each other as specified in the service order by the client at a single price but is not a composite supply. In effect, they are mixed supplies. In the instant case the mixed supply consists of the supply of duty credit scrip and supply of various services of data management, consultancy , legal services etc. The supply of duty credit scrip HSN 4907 is exempt as per Sl.No. 122A of Notfn. No. 2/2017-C.T.(Rate) dated 28.06.2017 as amended by Notification No. 35/2017-C.T.(Rate) dated 13 th October 2017 and Sl.No. 122A of Notfn. II(2)/CTR/532(d-5)/2017 G.O. (Ms) No. 63 dated 29.06.2017 as amended by G.O. (Ms) No. 133, dated 13.10.2017. The various services that the applicant is supplying of SAC 998216/998312/998415/998434/998466/998595 etc mentioned in para 4.2 above are all taxable at 9% CGST vide Notification No. 11/2017-C.T.(Rate) dated 28.06.2017 as amended and at 9% SGST vide Notification No. II(2)/CTR/532(d-14)/ 2017 vide G.O. (Ms) No. 72 dated 29.06.2017 as amended. Therefore, as per Section 8 of the ACT, the rate of tax of this mixed supply which is billed at a single price is the rate of the highest rate of the services supplied which is 18%.

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• 2020 (1) TMI 28
  Permission to insert/fill Part-7B of Table 7(a) of TRAN-1 also filing of TRAN- 2 - transitional credit - main grievance of the petitioner is that GST TRAN-2 Form could not be uploaded by the petitioner under the common portal since there was some defects in uploading the TRAN-1, more particularly, Part-7B of Table 7(a) of TRAN-1 was left blank - HELD THAT:- This Court in M/S. ARVIND LIFESTYLE BRANDS LTD., VERSUS THE UNION OF INDIA, THE CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS, THE GOODS AND SERVICES TAX COUNCIL [ 2019 (5) TMI 172 - KARNATAKA HIGH COURT ], in the context of uploading of GST TRAN-2 Form on the very same reason of the defective TRAN-1, directed the petitioner to approach the Nodal Officer to avail the benefit of the Circular dated 03.04.2018 to upload the TRAN-2 in GST Portal. The petitioner is directed to approach the Nodal Officer-respondent No.4. Respondent No.4 shall consider the case of the petitioner - Petition disposed off.

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• 2020 (1) TMI 27
  Filing of Form GST TRAN-2 - transitional credit - transition to GST regime - Section 140(3) of the CGST Act, 2017 read with Rule 117(4)(b)(iii) of the CGST Rules, 2017 and Section 172 of CGST Act, 2017 - HELD THAT:- It is evident that the application/representation submitted by the petitioner before the Nodal Officer/respondent No.1 has remained unconsidered - the Nodal Officer is obligated to consider the application/representation seeking permission to upload GST TRAN-2 Form electronically or manually. Petition disposed off.

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• 2020 (1) TMI 26
  Seizure of goods along with the vehicle/truck - sole allegation is that the driver/owner/person In-charge of the goods had not tendered any document, e-way bill, etc., even when all the valid documents were actually produced before the officer by the driver - HELD THAT:- The writ petitioners have stated that they were ready to pay the excess amount after assessment. However, we are unable to understand as to how such a statement could be made by the writ petitioners in the absence of any resolution of the Board of Directors in support thereof. Since the writ petitioner no.1, being the company, is ready to pay the excess amount after assessment as may be determined by the concerned officer, we dispose of this writ petition with a direction upon the concerned respondent authority to calculate the excess amount which is required to be paid by the writ petitioner together with penalty, if any, and communicate the same to the writ petitioner within a period of three weeks from date - If the writ petitioner / company makes full payment in terms of such communication to the concerned respondent authority within a week therefrom, the goods as well as vehicle may be released in favour of the writ petitioners in accordance with law.

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• 2020 (1) TMI 25
  Detention and seizure of goods - Vires of section 129 of the Uttar Pradesh Goods and Services Tax Act, 2017 - vires of section 129 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- Liberty is granted to amend the writ petition to enable the writ petitioner to challenge the vires of section 129 of the Uttar Pradesh Goods and Services Tax Act, 2017, in addition to the challenge with regard to section 129 of the Central Goods and Services Tax Act, 2017. Such amendment of the writ petition shall be completed in the presence of an officer of this Court within a period of 10 days - The Advocate-on- Record of the writ petition shall cause service of notice upon a learned Attorney General for India as well as learned Advocate General of the State of Uttar Pradesh. List this matter during the second week of January, 2020.

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• 2020 (1) TMI 24
  Validity of Bank Attachment Notice - withdrawal of notice in Form GST DRC-22 dated 04.10.2019 issued under Section 83 of CGST Act - HELD THAT:- The writ petition stands dismissed as having rendered infructuous.

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• 2020 (1) TMI 23
  Maintainability of petition - compliance with pre-deposit - HELD THAT:- Subject to the writ petitioner securing the amount which is required to be paid as pre-deposit to the appropriate authority for the purpose of hearing in terms of section 107 of the Uttar Pradesh Goods and Services Tax Act, 2017, within a period of fortnight from date, the matter shall be heard on its merit upon filing of affidavits. Let counter affidavit be filed within a fortnight from the date of making payment of pre-deposit in terms of this order and rejoinder affidavit, thereto, if any, be filed within a fortnight therefrom - List immediately thereafter.

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• Income Tax

• 2020 (1) TMI 22
  Time limit for completion of block assessment - period of limitation - date of the order under Section 142(2A) - Tribunal justification in not considering the commencement of the period as 21.04.2000 instead of 20.04.2000, which is the date of service of the order/direction under Section 142(2-A) of the Income Tax Act, 1961 - HELD THAT:- Period of limitation prescribed in Section 158BE excludes the period commencing from the date on which the Assessing Officer directs the Assessee to get his accounts audited viz., the date of the order under Section 142(2A) of the Act. The date of order or direction to get the accounts audited is important and not the date on which such order or direction under Section 142(2A) of the Act is served on the Assessee or received by the Assessee. In the present case, the order under Section 142(2A) of the Act was made by the Assessing Authority on 17.04.2000 directing the Assessee to get the special audit completed and furnished the report on or before 31.07.2000. The difference between these two dates is 105 days. If these 105 days are added to the last date before which the Audit Report was furnished viz., 31.07.2000, the date of assessment will get extended upto 13.11.2000. The assessment for block period in the present case was made by the Assessing Authority admittedly on 13.11.2000 itself and therefore apparently the said assessment is within limitation. The contention of the Assessee is that the period of exclusion should be computed from the date on which the order under Section 142(2A) of the Act was served upon the Assessee viz., on 20.04.2000 till 31.07.2000 which will give the exclusion period of 102 days only and therefore, the Assessment Order passed on 13.11.2000 will be hit by the bar of limitation is misconceived and contrary to the clear and bare language of the provisions of the Act which employed the word directs the Assessee to get his accounts audited . These words are in contra distinction to the words employed in Section 142(2A) proviso where the extension of period by 180 days will become effective from the date when the order of extension is received by the Assessee. The proviso to Section 142(2A) quoted above, clearly uses the words received by the Assessee and not directs the Assessee . This distinction of two different phrases at two different places cannot be intermixed or confused with each other. - Decided against assessee.

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• 2020 (1) TMI 21
  Exemption u/s 11 - AO has proceeded to classify assessee s activities as hybrid , holding that part of the activities are covered by provisions of Section 11 r/w section 2(15) and partly by principle of mutuality - if the assessee has taken the plea of mutuality, whether it could be deprived of the benefit of Section 2(15)? - HELD THAT:- Merely because the assessee is charging for certain goods and services, it does not render such activities as commercial activities and the fact that the AO has accepted that the assessee is promoting public interest as provided in the proviso to Section 2(15), there cannot be any doubt that the assessee should be regarded as charitable organisation and given the full benefit of exemption provided to such organisations under the Act. Relying on this premise, it has been held that since the assessee has not generated any surpluses from anyone-members or non-members, it was not correct to say that the assessee has claimed relief partly as charitable organisation and partly as mutual association. As rightly held that the principle of mutuality becomes superfluous in view of the fact that the activities were held to be charitable. Applying the principle of consistency, CIT(A) held that there is no fundamental change in the nature of activities of the assessee for the period prior to AY 2008-09 and subsequent years. The ITAT has confirmed the findings of the CIT(A). Though the principles of res judicata are not applicable to the income tax proceedings, however, at the same time, one cannot ignore the fact that there is no dispute with respect to the consistency in the nature of activities of the assessee. All the income tax authorities have held that the assessee is a charitable institution and this consistent finding of fact entitles the assessee to have its income computed under Section 11, 12 and 13 of the Act. It was imperative for the Revenue to establish that there was an element of profit motive in the activities of the assessee, to deny the benefit. If any surpluses have been generated on account of some of the activities of the assessee, it would not ipso facto be determinative of the fact that there was an element of profit motive. The contentions raised by the Revenue, do not impress this Court as no error has been pointed out with respect to the aforesaid finding of fact which would disentitle the assessee the benefit of Section 2(15) of the Act. In the present case, since the assessee is registered as a charitable trust, the application of principle of mutuality for the computation of its income is not required to be gone into as the income is to be computed as per Section 11, 12 and 13 of the Act - no ground to disentitle the assessee to the benefits of Section 2(15) - Decided against revenue

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• 2020 (1) TMI 20
  Reopening of assessment - notices issued to representative assessee as per the provisions of Section 160 - HELD THAT:- The notice dated 14.03.2005 under Section 148 of the IT Act was issued within the prescribed period of limitation as obtained on the date of its issuance. Section 149(3) of the IT Act, inter alia, provides that if the person on whom a notice under section 148 is to be served is a person treated as the agent of the NRI under section 163, then, the notice on such agent of the NRI, shall not be issued after the expiry of a period of two years from the end of the relevant assessment year. In this case, however, from the clarification contained in the communication dated 21.6.2006, it is apparent that the notice issued to Mr. P.P. Mahatme, was not in his capacity as the agent of the NRI-Assessee, but the same was issued to him as the power of attorney holder of the NRI-Assessee. In such a situation, the period of limitation for issuance of the notice was always 6 years. Therefore, the notice dated 14.03.2005 being within 6 years from the end of relevant assessment year, which is 1999-2000, was well within the period of limitation, as then prevalent. The provisions of Section 149(3) of the IT Act were amended by the Finance Act, 2012 with effect from 1/7/2012. The amendment extended the period of limitation for issuance of notice under Section 148, even upon the agent of the NRI, from 2 years to 6 years. Looking to the width of the aforesaid explanation, it is not possible to accept Mr. Naniwadekar s contention that the extended period of limitation will apply only to the assessments for the Assessment Year 2010-11 or 2011-12. The explanation refers to any assessment year beginning on or before the 1st day of April, 2012. The explanation has been introduced specifically for the purpose of removal of doubts or to clarify the position with regard to the applicability of the amended provisions. First substantial question of law is required to be answered against the Appellant and in favour of the Revenue. Transfer of assets attracting tax on capital gains - family arrangement approved by the Civil Court - HELD THAT:- The findings of fact, in the present case, concurrently recorded by all the three authorities indicate that there was no issue of any preexisting right as between the Appellants, Cristovam and Alvaro, who are alleged to have usurped the immovable property belonging to the Appellants. In fact, the record which has been assessed in detail by the the Commissioner of Income-tax (Appeals), establishes that the properties of Xavier Pinto were allocated to his three sons Jose, Rosario and Antonio who, in turn, had one son each by name of Alvaro, Cristovam and Anthony. Anthony migrated to England along with his father Antonio. Margaret (present assessee) is the wife of Anthony. They had three daughters Lorna, Julia and Siobhan who are the Appellants in the connected Appeals. Since there was already a partition of the properties owned by Xavier Pinto between his three sons Jose, Rosario and Antonio sometime in 1950s, obviously Alvaro and Cristovam had no right whatsoever in the immovable properties exclusively belonging to Antonio and after his demise, his son Anthony. After demise of Anthony, the properties were exclusively inherited by the present Appellants, who are the wife and daughter of said Anthony. In the present case, there is clear and cogent material available on record to establish that Cristovam and Alvaro had no right in the immovable property which was the subject matter of dispute and consequently the settlement between the Appellant and the said two persons can hardly be described as a family settlement. The settlement may be enforceable inter-parties now that the same is incorporated in the consent terms, based upon a consent decree may have been issued. However such settlement, cannot be called as a family settlement or family arrangement. Merely because dispute involved some family members and such dispute is ultimately settled by filing consent terms, the same cannot be styled as a family arrangement or family settlement and on such basis, it cannot be held that the consideration received as a result of such settlement, does not constitute capital gain. Decided in favour of the Revenue and against the Assessee.

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• 2020 (1) TMI 19
  Revision u/s 263 - Income accrued in India - whether or not interest received by the Head Office/overseas Branches from the Indian Branch is taxable in India? - HELD THAT:- As per Explanation (a) to section 9(1)(v)(c) of the Act, it was clarified that the interest paid by an Indian Branch of a non resident banking company shall be deemed to be accruing or arising in India and shall be chargeable to tax in addition to any income attributable to the PE in India. It further says that the PE in India shall be deemed to be a person separate and independent of the non resident person. In our view, the aforesaid provision would apply prospectively from 1st April 2016 and not prior to that. The aforesaid view has been expressed by the Co ordinate Bench in DCIT v/s BNP Paribas S.A. [ 2019 (7) TMI 1076 - ITAT MUMBAI] . Therefore, Explanation (a) to section 9(1)(v)(c) of the Act cannot be pressed into action for bringing to tax the interest income in the impugned assessment years. In any case of the matter, the issue, whether or not interest received by the Head Office/overseas Branches from the Indian Branch is taxable in India is a highly debatable issue and the position of law prevailing at the time of completion of assessments as per the available judicial precedents on the issue, clearly held that the interest income was not taxable as it is governed by the principle of mutuality. Therefore, it cannot be said that it is not a possible view. Rather, the assessment orders would have been erroneous had the Assessing Officer taxed the interest income received from the Indian Branch overlooking the decision of the Special Bench in case of Sumitomo Mitsui Banking Corporation [ 2012 (4) TMI 80 - ITAT MUMBAI] which was available at the time of completion of assessments. Even, assuming for the sake of argument that Explanation (a) to section 9(1)(v)(c) of the Act will apply retrospectively, however, proceedings under section 263 of the Act cannot be initiated on the basis of such retrospective amendment as the AO has to proceed on the basis of law prevailing as on the date of assessments. Thus, looked at from any angle, the assessment orders cannot be considered to be erroneous and prejudicial to the interests of Revenue for not bringing to tax the interest received from the Indian Branch. Accordingly, we hold that the impugned orders of CIT passed u/s 263 are unsustainable in law, hence, have to be quashed. Accordingly, we quash the orders passed under section 263 - Decided in favour of assessee.

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• 2020 (1) TMI 18
  Disallowance of loss of foreign currency forward contract - HELD THAT:- Foreign currency forward contracts held by the assessee are far lesser than the underlying exposure on account of imports and exports. The Hon ble Jurisdictional High Court in CIT v/s D. Chetan Co. [2016 (10) TMI 629 - BOMBAY HIGH COURT] has held that hedging transaction entered in regular course of business activity cannot be treated as speculative transaction. The Co ordinate Bench in Mahendra Brothers (2016 (8) TMI 1094 - ITAT MUMBAI) , has held that it is not required by the assessee to establish a one to one linkage between the forward contracts and the export/import transaction. What is required to look at is, whether the amount of hedging transaction is within the amount of underlying transaction of imports and export. In fact, CBDT circular no. 23D (xxxix), dated 12th September 1960, also says that hedging transaction can be taken to be genuine if the total of such transaction does not exceed the total cost of raw material or merchandise in hand. In assessee s own case for the assessment year 2003 04 has allowed assessee s claim of loss resulting from cancellation of forward contract in foreign exchange by treating it as genuine business loss. In assessee s own case in the assessment year 2009 10 would reveal that the reasoning on the basis of which learned Commissioner (Appeals) has disallowed assessee s claim of business loss arising out of foreign currency forward contract is identical to the reasoning of learned Commissioner (Appeals) while disallowing assessee s claim of loss in respect of hedging contract in the impugned assessment. Therefore we hold that loss arising on cancellation of foreign currency forward contracts cannot be treated as speculative loss under section 43(5) of the Act. Accordingly, we allow assessee s claim of loss. Disallowance u/s 69A and 69B - HELD THAT:- Assessee was unable to reconcile the difference between the physical stock and the stock as per books of account with valid reasoning. Therefore, to that extent, the facts are established. However, we find merit in the alternative plea of the assessee for restricting the addition to the gross profit. The Assessing Officer is directed to compute the disallowance accordingly. Grounds are partly allowed.

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• 2020 (1) TMI 17
  Claim of depreciation - Commissioner (Appeals) has reduced the purchase value by 50% and allowed depreciation thereon - non genuine purchases merely relying upon the information received from the Sales Tax Department - HELD THAT:- Facts on record do establish that the assessee had purchased the machinery and it was installed in its factory. When such evidences were filed before the Assessing Officer, the minimum which is expected from him was to verify the authenticity of these documents before treating the purchases as non genuine. However, as it appears from record, the Assessing Officer has not conducted any effective enquiry qua the documentary evidences filed by the assessee. It is further evident, merely relying upon the information received from the Sales Tax Department and the fact that the notice issued under section 133(6) of the Act returned back un served, the Assessing Officer has disallowed assessee s claim of depreciation. Whereas, learned Commissioner (Appeals) without any justifiable reason has reduced the purchase value by 50% and allowed depreciation thereon. It is not forthcoming from the order of learned Commissioner (Appeals) on what basis he has reduced 50% of the purchase value. In our opinion, when the assessee has furnished certain documentary evidences demonstrating purchase of goods from the declared source and delivery of such goods at its premises, without bringing any contrary material to falsify such evidences, assessee s claim cannot be rejected on presumption and surmises. When learned Commissioner (Appeals) has factually found that the machinery was received by the assessee and was installed in its factory. Thus, in the facts and circumstances of the present case, we hold that the assessee is entitled to claim depreciation on the entire purchase value of Rs. 10,23,750, as permissible in law. Accordingly, the AO is directed to allow assessee s claim of depreciation on the amount of Rs. 10,23,750, keeping in view the period for which the asset was put to use. essing Officer is directed to allow assessee s claim of depreciation on the amount of Rs. 10,23,750, keeping in view the period for which the asset was put to use.

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• 2020 (1) TMI 16
  Levy of fees u/s 234E - processing the TDS statement under section 200A - assessee entered into an agreement for purchase of 96 flats and while making a part payment of the sale consideration the assessee deducted tax @ 1% under section 194IA - assessee paid the TDS amount in Form no.26QB belatedly - HELD THAT:- As decided in own case [ 2019 (7) TMI 290 - ITAT MUMBAI] the claim of the assessee that purchases of all the flats is to be taken as a single transaction, therefore, the levy of fee prescribed under section 234E of the Act is to be restricted to one challan cum statement filed in Form no.26QB, is unacceptable. When the assessee itself has filed separate TDS statements in respect of the tax deducted at source relating to the respective flats, while processing such statements under section 200A of the Act, the Assessing Officer has to levy fee under section 234E of the Act taking into account the delay in filing each of the statements. That being the case, assessee s contention that fee under section 234E of the Act is to be restricted to one transaction is not acceptable. At this stage, it will be relevant to observe, clause (c) of sub section (1) of section 200A of the Act contemplates that while processing the TDS return, fee under section 234E of the Act shall be computed. Thus, use of word shall in the aforesaid provision makes it mandatory on the part of the Assessing Officer to levy fee under section 234E of the Act. Since, the assessee has filed separate TDS statements under section 200(3) of the Act read with rule 26QB, there is no error on the part of the Assessing Officer in computing fee under section 234E of the Act while processing such statements. As regards the contention of the learned Authorised Representative that appeal against levy of fee under section 234E of the Act is maintainable before the learned Commissioner (Appeals), we find merit in the same. Therefore, to that extent, the assessee s contention is accepted. However, it will not make much difference as learned Commissioner (Appeals) has decided the issue on merit. In view of the aforesaid, we do not find any reason to interfere with the decision of learned Commissioner (Appeals) on the issue. - Decided against assessee.

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• 2020 (1) TMI 15
  Revision u/s 263 - assessee s claim of depreciation at enhanced rate - HELD THAT:- Although the assessee has filed revised return of income, the assessee has not filed any revised tax audit report wherein the depreciation at enhanced rate was stated to be eligible. Thus, apparently in our considered opinion, it is a case of clear non-application of mind by the AO. We also do not agree with the contention of the Ld. Authorised Representative that the AO took one out of the two plausible views because if the GPU and PCA equipment do not fall under the category of air pollution control equipment at all, the only view possible is that depreciation is to be allowed @ 15% only. The assessee has also contended that this being a beneficial provision should be construed liberally but for that purpose the assessee should first fulfil the eligibility condition at the threshold as even a beneficial provision cannot be applied without due and proper examination of the facts. Therefore, it is very much apparent that in the present case the AO has allowed depreciation at the enhanced rate without examining the eligibility of the same. The Hon ble Delhi High Court in the case of BSES Rajdhani Power Ltd. vs. PCIT [ 2017 (11) TMI 588 - DELHI HIGH COURT] had held that the non consideration of larger claim of depreciation and consideration of only part of it by the AO who did not go into the issue with respect to the whole amount was an error that could be corrected u/s 263. In this case it is our considered view that the AO has not examined the complete aspect of the case and has allowed the assessee s claim without any inquiry. The action of the Ld. Pr. CIT is bound to be upheld. The Hon ble Apex Court in the case of Deneal Merchants Pvt. Ltd. vs. ITO and another [ 2017 (12) TMI 476 - SUPREME COURT] has categorically held that where the Commissioner of Income Tax had passed an order u/s 263 of the Act with observation that the AO did not make any proper inquiry while making the assessment and had accepted the explanation of the assessee, such order was to be upheld. Thus, we uphold the validity of section 263 proceedings on the issue of enhanced depreciation claimed by the assessee at 100% on alleged air pollution control equipment. Claim of interest - it is the assessee s contention that the assessee has duly bifurcated the interest expense between pre and post business commencement period and has made disallowance accordingly - HELD THAT:- Again, no specific query has been raised by the AO in this regard and the AO has simply :relied on the details provided in the audited financial statements. Although the assessee submits that the AO has raised a specific query at serial No. 23 of the questionnaire dated 9.9.2013 with regard to interest expenses, we find that such assertion is incorrect in as much as the said question requires the assessee to file complete details of expenses exceeding Rs. 10 lacs and Rs. 1 lacs for similar transactions along with reasons for increase over the last year. In query No. 24, the assessee was asked for a complete chart of loans and advances given showing opening balance along with details of interest, TDS expenses and closing balances. Thus, this question also does not specifically asked for break-up of interest into post and pre business commencement period. Similarly, it has been submitted that the assessee had submitted the confirmation of loans as well as details of interest expenses which are placed on page 69 of the paper book. A perusal of the same shows that the reply contains the total interest paid to IDBI. However the break up between pre and post business commencement has again not been disclosed. Therefore, in this regard also we agree with the contention of the Ld. Pr. CIT that the AO did not examine the issue in the manner in which it was expected from him in this regard and, therefore, the impugned action u/s 263 of the Act is entirely justified. Pr. CIT was perfectly justified in invoking the provisions of section 263 in the assessee s case and we uphold his action accordingly.

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• 2020 (1) TMI 14
  Revision u/s 263 - assessment was reopened u/s 148 of the Act on the allegation of accommodation entry taken from Shri S.K. Jain group of cases, which were subjected to search on 14/9/2010 by the Investigation Wing - HELD THAT:- AO should have verified the genuineness of the transaction and also should have carried out adequate enquiry to come to a logical conclusion that either there is no accommodation entry and the contents found qua the assessee being one of the beneficiary of the accommodation entry in the books of account of the concerns of S.K. Jain group are false or bogus; or assessee had amply demonstrated and substantiated before the AO regarding the genuineness of the transaction of the accommodation entry. In absence of such a mandate which was cast upon the AO, we are of the opinion that the assessment order is not only erroneous but also prejudicial to the interest of revenue, as the issue definitely required proper enquiry and verification by the AO. Once adequate or proper enquiry has not been done, then in terms of Explanation 2 inserted in section 263 of the Act by the Finance Act, 2015, w.e.f. 1.6.2015, the assessment order is deemed to be erroneous in so far as it is prejudicial to the interest of Revenue. Present case is squarely covered by the decision of Surya Jyoti Software Pvt. Ltd. vs. Pr. CIT [ 2017 (11) TMI 1588 - ITAT DELHI] which was passed on identical set of facts. We further note that the present case is also covered against the assessee by the judgment of the Hon ble Supreme Court of India in the case of Deniel Merchants Pvt. Ltd. vs. ITO [ 2017 (12) TMI 476 - SUPREME COURT] wherein dismissed the SLPs in cases where the AO did not make any proper inquiry while making the assessment and accepted the explanation(s) of the assessee(s) insofar as receipt of share application money was concerned. We hold that the Ld. Pr. CIT has rightly exercised his jurisdiction under section 263 of the Act in setting aside the order of the Assessing Officer being erroneous in so far it is prejudicial to the interest of the Revenue. Accordingly, we confirm the order of the Ld. Pr. CIT and dismiss the grounds raised by the assessee before us. Appeal of the assessee stands dismissed.

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• 2020 (1) TMI 13
  Assessment framed on a non-existing entity - Scheme of merger undertaken - HELD THAT:- Even after the ld. DRP taking into account the fact of merger and passing order by giving directions to the ld. AO in the name of the merged entity i.e. Atos India Pvt. Ltd, the ld. AO continued to frame the final assessment order in the name of erstwhile amalgamating company. Hence, it could be safely concluded that the ld. AO had passed draft assessment order as well as the final assessment order in the name of non-existent entity despite having due intimation of the fact of merger duly approved by the Hon ble Bombay High Court vide order dated 21/12/2012. The law is now very well settled that assessment framed on an non-existent entity deserves to be declared as void ab initio by the recent decision of the Hon ble Supreme Court in the case of PCIT vs. Maruthi Suzuki India Ltd. [ 2019 (7) TMI 1449 - SUPREME COURT] wherein it was held that where during pendency of assessment proceedings, assessee company was amalgamated with another company and thereby lost its existence, the assessment order passed subsequently in the name of said non-existent entity, would be without jurisdiction and was to be set aside. We hold that the assessment order framed by the ld. AO in the instant case deserves to be quashed as the same is without jurisdiction, being framed on a non-existent entity. Accordingly, the additional ground raised by the assessee is allowed.

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• 2020 (1) TMI 12
  Disallowance of excessive agricultural income - AO has accepted net agricultural income by estimating the agriculture income as per agriculture department/tehsildar reports which is general in nature and based on survey of whole state/district whereas the agriculture yield depends upon quality of land/irrigation facilities, manure and seeds quality and the general report/survey report is not applicable everywhere - HELD THAT:- Entire agricultural produce obtained by way of crops is fully vouched and has been sold through Krishi Upaj Mandi. The sale is beyond doubt. AO has not brought any material on record to disprove the sale vouchers and no enquiry has been conducted from the parties through whom the agricultural produce was sold. Any enquiry made from these parties would have disclosed the truth but this was not done by the AO. He has preferred to act on estimate and guess work. At first the AO estimated the gross agricultural produce on the basis of a report from the Tehsildar but when the same was agitated by the assessee claiming that the land owned by the asessee was more fertile and capable of yielding more crops in comparison to an average land as reported by the Tehsildar. However, the AO did not accept the contention of the assessee. This shows the variation on working of agricultural income on estimate basis. AO has estimated price as well yield whereas he is not a specialist for this and made an addition of Rs. 8,24,190/-. Thus found that merely on estimate basis the AO has rejected the assessee s claim of agricultural produce which is duly supported by the bills and vouchers. AO acted on the basis of suspicion and doubt. It is settled position of law that suspicion however strong cannot take the place of evidence. In this case the vouchers of sale cannot be rejected on the basis of suspicion and doubt. in the immediately preceding year the scrutiny assessment was framed and agricultural income so disclosed by the assessee was accepted by the Department at Rs. 31,27,010/- whereas during this year the Department has accepted only a sum of Rs. 21,66,534/- as against disclosed agricultural income of Rs. 27,00,104/-. No justification for the disallowance of agricultural income of the assessee so made by the AO and confirmed by the ld. CIT(A). - Decided in favour of assessee.

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• 2020 (1) TMI 11
  Addition on account of unexplained total deposits with the bank - AO also added the commission income on account of transactions in the Syndicate Bank Account - HELD THAT:- Protective addition in the hands of Dharmender Kumar was restricted to the commission at 0.37% on the net credits for A.Y. 2010-11. Therefore, there is no credible basis for treating the entire turnover as the income of the assessee for which the assessee has filed additional evidence before the CIT(A) which were taken cognizance by the CIT(A). CIT(A) has rightly held that in the subsequent scrutiny assessment orders no adverse view has been taken on the transaction in the bank account and therefore, CIT(A) rightly deleted the addition As regards direction given to the Assessing Officer to compute the commission income at 0.37% on the total transactions in bank account of M/s. Pride Trade Agency and M/s Sidh Trading Company the CIT(A) has rightly held that the assessee has not shown any nexus between the cash withdrawal and cash deposited on later dates and has not accepted the claim of the assessee and worked out commission to the extent of Rs. 1,23,712/-. - Decided against revenue

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• 2020 (1) TMI 10
  Bogus purchases - addition made by the AO @12.5% - HELD THAT:- The assessee is undoubtedly beneficiary of hawala purchases from the group related to Bhanwarlal Jain on whom search was conducted and it was candidly accepted during the search that the whole group is engaged in providing bogus billings. We partly agree with the view taken by the authorities below that only a rate can be applied to bring the profit element in the bogus purchases to tax. Pertinent to mention that the assessee has filed evidences to prove that the purchases were made and consequent to this the AO has rightly applied the rate on bogus purchases. However, the quantum of rate applied is excessive and unreasonable in view of the trade of the assessee. Rate of profit prevalent in assessee s trade we are of the view that it would be reasonable if a rate of 3% is applied to the alleged bogus purchases. Accordingly we set aside the order of the CIT(A) and direct the AO to apply a rate of 3% on bogus purchases - Appeal filed by the assessee is partly allowed.

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• Customs

• 2020 (1) TMI 9
  Release of imported goods from Pakistan - rate of duty - Vires of N/N. 5/2019-Customs dated 16.02.2019 - consignments of goods from Pakistan had entered the territory of India and the bill of entry with the prescribed rate of duty was electronically generated on 16.02.2019 before impugned notification enhancing the duty @ 200% was issued in late evening on the same date - prayer for release of the imported goods upon payment of the rate of duty assigned in the bill of entry instead of the subsequently enhanced duty @ 200%. HELD THAT:- It is not in dispute that the petitioner is entitled to the relief in terms of the judgment in the case of M/S RASRASNA FOOD PVT. LTD. VERSUS THE UNION OF INDIA AND ORS. [ 2019 (8) TMI 1400 - PUNJAB AND HARYANA HIGH COURT ] where it was held that Without going into vires of impugned notification, it is held that all the Petitioners would be liable to pay duty as was applicable at the time of filing of bill of entry coupled with the fact of the imported goods having entered territory of India on 16.02.2019 prior to the issuance of the impugned notification. The Respondent shall release goods within seven days on payment of duty as declared and assessed, if not already paid, ignoring the impugned N/N. 5/2019. The petitioner would be entitled to same relief as in the case of M/s Rasrasna Food Pvt. Ltd. as also in view of the interpretation of the provision of Section 15 of the Customs Act, 1962 - the Respondents are directed to forthwith release the goods as directed by the Tribunal - petition allowed.

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• Insolvency & Bankruptcy

• 2020 (1) TMI 8
  Settlement of the matter between the creditor and debtor - CIRP started - Committee of Creditors has not been constituted - HELD THAT:- Taking into consideration the fact that there is default of only Rs. 9,87,988.35/-, we assess the fee of the Interim Resolution Professional at Rs. 1,00,000/- per month i.e. Rs. 1,50,000/-for one and a half month plus Rs. 37,936/- i.e. Rs. 1,87,936/-. However, Rs. 2,00,000/- should be adjusted against the advance already received by the Interim Resolution Professional . In view of the fact that the parties have reached settlement before the constitution of the Committee of Creditors , the impugned order passed by the Adjudicating Authority (National Company Law Tribunal), Jaipur Bench, Jaipur is set aside - The Corporate Debtor (company) is released from all the rigours of law and is allowed to function independently through its Board of Directors from immediate effect. The Interim Resolution Professional will hand over the assets and records to the Board of Directors immediately. Appeal allowed.

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• Service Tax

• 2020 (1) TMI 7
  Classification of services - Business Auxiliary Services or not - cleaning and sweeping of public roads and streets in the city of Chennai as well as collection and transportation of municipal solid wastes at designated places in the city - HELD THAT:- The activity of cleaning has been defined and understood to apply qua commercial and industrial as well as related buildings and premises only. The activity of cleaning in relation to all other premises excepting those specifically defined, such as public roads and streets in this city, stand outside the ambit of the definition - thus, the receipts from cleaning activities carried out by the petitioner on public roads and streets stand excluded from the ambit of tax, even at the threshold. The impugned SCN which seeks to bring to tax receipts from cleaning activities carried out by the petitioner in public roads/public streets, was based on an objection by the audit that has itself not found favour with the Departmental assessing officer, and has subsequently not been pursued - Petition allowed - decided in favor of petitioner.

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• 2020 (1) TMI 6
  Valuation of services - payment of job charges - revenue s view is that such receipt of ex-gratia job charges by the appellant amounts to providing services - whether the receipt of ex-gratia job charges amount by the appellant amounts to providing any services so as to attract the Service Tax on the same? - HELD THAT:- The appellant is admittedly manufacturing confectionaries for and on behalf of the M/s Parle and is clearing the same upon payment of Central Excise duty on the basis of MRP declared by M/s Parle. It is only in situation when the appellant s capacity, as a manufacturer, is not being fully utilized by M/s Parle, their claim of ex-gratia charges arises so as to compensate them from the financial damage/injury. As such, ex-gratia amount is not fixed and is mutually decided between the two, based upon the terms and conditions of the agreement and is in the nature of compensation in case of low/less utilization of the production capacity of the assessee. In the present case apart from manufacturing and receiving the cost of the same, the appellants were also receiving the compensation charges under the head ex-gratia job charges. The same are not covered by any of the Acts as described under Section 66E (e) of the Finance Act, 1994. The said Sub-clause proceeds to state various active and passive actions or reactions which are declared to be a service namely; to refrain from an act, or to tolerate an act or a situation, or to do an act. As such for invocation of the said clause, there has to be first a concurrence to assume an obligation to refrain from an act or tolerate an act etc. which are clearly absent in the present case. In the instant case, if the delivery of project gets delayed, or any other terms of the contract gests breached, which were expected to cause some damage or loss to the appellant, the contract itself provides for compensation to make good the possible damages owning to delay, or breach, as the case may be, by way of payment of liquidated damages by the contractor to the appellant. As such, the contracts provide for an eventuality which was uncertain and also corresponding consequence or remedy if that eventuality occurs. As such the present ex-gratia charges made by the M/s Parle to the appellant were towards making good the damages, losses or injuries arising from unintended events and does not emanate from any obligation on the part of any of the parties to tolerate an act or a situation and cannot be considered to be the payments for any services. Appeal allowed - Inasmuch as the appeal stands allowed on merits, the plea of limitation is not being adverted to.

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• 2020 (1) TMI 5
  Rectification of mistake - case of appellant is that since the order dated 03.05.2019 fails to consider the alternative submission made in the order and error has occurred in the order which needs to be rectified - HELD THAT:- The appellant had raised this alternative contention in para H of the appeal memorandum. However, due to inadvertent error, the said contention was not answered in the order dated 03.05.2019. There is an error. As a result of omission of this issue in the order dated 03.05.2019, the order is consequently amended by substitution of para 5 of the order - ROM application allowed.

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• Central Excise

• 2020 (1) TMI 4
  CENVAT Credit - common input services used for taxable as well as exempt goods - appellant s contention is that they have not availed the CENVAT Credit on the entire amount of common input services but have availed CENVAT Credit only proportionate to the value of the excisable goods cleared and taxable services rendered - whether in terms of Rule 6 of CCR 2004 as applicable during the relevant period, the appellant could take proportionate amount of CENVAT Credit on the common input services, utilising relative turnover of the dutiable goods and taxable services to the total turnover and whether it can be considered as compliance in terms of Rule 6(2) of CCR 2004? HELD THAT:- This issue was earlier discussed by this Bench with respect to the same appellant in the case of SHAKTI HORMANN PVT. LTD. VERSUS CCT, CE ST, MEDCHAL GST [ 2018 (12) TMI 426 - CESTAT HYDERABAD] and it came to the conclusion that the appellant is covered by Rule 6(2) of CCR 2004 and therefore need not reverse any amount under Rule 6(3A). Appeal allowed - decided in favor of appellant.

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• 2020 (1) TMI 3
  Maintainability of appeal - non-prosecution of the case - HELD THAT:- Perusal of record shows that since the filing of appeal till date there is no single appearance of the appellant except the repeated written request of the adjournment. Today s absence coupled with the above observation for the conduct of the appellant is sufficient to opine that appellant is not interested in pursuing the impugned appeal. Therefore, the appeal deserves dismissal for want of prosecution. The appeals dismissed for non-prosecution.

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• Indian Laws

• 2020 (1) TMI 2
  Rejection of Tender application - rejection on the ground that as per NIT condition No. 23(V) the GST clearance certificate was mandatory document to be uploaded with tender documents otherwise the tender was supposed to be rejected - case of the petitioner is that he had complied with the said condition and uploaded all the requisite documents, as required in terms of Condition No. 2 (v) and (vi) and was eligible for consideration of his tender application. HELD THAT:- It is worthwhile to record herein that the prospective bidders are required to furnish the relevant information/documents alongwith their tender form/ application in a particular manner, as reflected/required in terms of the tender notification and when such compliance has been made, it is not open for the authorities to reject the applications/bids for non-compliance of the condition(s) not mentioned or highlighted in the tender notification - In the present case, the tender notification required the petitioner to upload certain particulars in terms of condition No. 2 (v), which the petitioner has done, but, the respondents have rejected the tender application of the petitioner for not uploading the month-wise GST Clearance Certificate along-with the tender application, which condition was not specifically provided in the tender notification. Petitioner can only be expected to comply with the conditions stipulated in the tender notification and in case the respondents require that tender application should be accompanied with month-wise GST Clearance Certificate, then the said condition should have been reflected in the tender notification itself - In the absence of such condition in the tender application, the action of the respondents in rejecting the tender application/technical bid of the petitioner is arbitrary, contrary to the tender notification and requires to be set aside. This writ petition is allowed and the respondents are directed to issue fresh tender notification highlighting therein all the documents/certificates required to be furnished at the time of uploading the tender application.

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• 2020 (1) TMI 1
  Dishonor of cheque - rebuttal of presumption required to be drawn under Section 139 of the NI Act - shortcomings in the evidence of the complainant found - As per the rule of the company, signature of the Chairman and Director are required. Whereas, the cheque in question contained only the signature of accused No.3 - non-production of documents (referred by them during cross-examination) and which are though admitted by the complainant during cross-examination. HELD THAT:- The trial Court held that transaction of sale of the material is not proved by the complainant. I have also gone through the examination-in-chief and cross-examination of the complainant s witness. The accused has opened out his defence while cross-examining the complainant s witness. On this background, to show genuineness of the said transaction, he could have examined any witness or produce any documentary evidence. Unfortunately, it has not happened. If goods are sold and delivered through truck, lots of documentary evidence comes into existence in a usual course. So also various persons are involved in the said process. So, why complainant has not examined and produced any documentary evidence - Any explanation has not been offered before the trial Court and before this Court also. Such kind of evidence is not important when the accused pleads that signature on the cheque was taken by applying force. This is not the defence which usually the Court come across - there are no reason to discard with the inferences drawn by the trial Court. Not producing documents - HELD THAT:- Neither accused nor the complainant produces documents. Accused justifies their act of non-production due to admission given during cross-examination. Whereas, complainant pleads that the accused believe on those documents, they shall produce it. When none of them have produced documents, Court can only draw inferences about existence of notice, visit and agreement. Court will be handicapped in reading contents of documents. So, issue is merely by admitting those facts, whether any onus shifts on the complainant. To certain extent, it is true. But, onus on complainant to produce those documents on one hand and onus on accused to produce them, if compared together primary onus is certainly on the accused. It does not extent to reading contents of documents. Rebuttal of presumption - HELD THAT:- Simple denial of liability and denying the case of complainant does not amount to rebuttal of presumption - In this case the accused on one hand disputes issuance of cheque voluntarily and on other hand pointed out lacunae, loopholes and shortcomings in the evidence of complainant. First part of defence is not accepted. But, accused certainly succeeds in bringing on record the lacunae - the conclusion of the trial Court that the accused is successful in rebutting the presumption is agreed upon. Reason for dishonor of cheque - HELD THAT:- Cheque is dishonoured due to insufficient funds. The accused through bank witness ought to have brought on record the reasons for not mentioning in the memo as cheque is incomplete They ought to have brought on record the practice of bank while scrutinizing the cheque. They ought to have brought on record why cheque was not dishonoured for reason cheque is incomplete . Accused lost this opportunity even though they examined bank witness. Hence, we have to hold that cheque was returned for the reason funds insufficient . Trial Court has not drawn any conclusion. It was wrongly held that the complainant ought to have brought on record earlier cheques given to the complainant by accused. There are no reason to disagree with the conclusion drawn by the trial Court - No interference is warranted - Appeal stands dismissed.

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