TMI Tax Updates - e-Newsletter
January 22, 2020

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. GST ON TOBACCO

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Central Government Notifies National Startup Advisory Council

2. Central Government Notifies National Startup Advisory Council

3. Startup India Tableau in Republic Day 2020

4. BIT claims against India dismissed

Notifications

GST - States

1. ORDER No.10/2019-State Tax - dated 15-1-2020 - Himachal Pradesh SGST

Himachal Pradesh Goods and Services Tax (Tenth Removal of Difficulties) Order, 2019.

2. 75/2019-State Tax - dated 15-1-2020 - Himachal Pradesh SGST

Himachal Pradesh Goods and Services Tax (Ninth Amendment) Rules, 2019

3. 74/2019-State Tax - dated 15-1-2020 - Himachal Pradesh SGST

Amendment in Notification No. 4/2018–State Tax, dated the 30th January, 2018

4. 01/2020-State Tax - dated 15-1-2020 - Himachal Pradesh SGST

Governor of Himachal Pradesh appoint the 1st day of January, 2020, as the date on which the provisions of sections 2 to 21, except section 2, section 7, section 10 and sections 13 to 20 of the Himachal Pradesh Goods and Services Tax (Amendment) Act, 2019 (Act No.19 of 2019), shall come into force

5. ORDER No. 09/2019-State Tax - dated 4-1-2020 - Himachal Pradesh SGST

Himachal Pradesh Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019

Indian Laws

6. S.O. 275(E). - dated 20-1-2020 - Indian Law

Central Government hereby appoints the 20th day of January, 2020, as the date on which the provisions of Part III and sections 183, 184 and 185 of Part IX of Chapter VI of the said Act shall come into force.

SEBI

7. SEBI/LAD-NRO/CN/2020/03 - dated 16-1-2020 - SEBI

SECURITIES AND EXCHANGE BOARD OF INDIA (PORTFOLIO MANAGERS) REGULATIONS, 2020

Circulars / Instructions / Orders

Customs

1. 04/2020 - dated 21-1-2020

Clarification relating to import of gifts

Highlights / Catch Notes

GST

• Pharmaceutical Reference Standards Imported as Prepared Laboratory Reagents Subject to 12% Integrated Tax Under Entry No. 80, Schedule-II.

  Case-Laws - AAAR : Classification of goods - The Pharmaceutical Reference Standards (Prepared Laboratory Reagents) imported and supplied by the Appellant and classified under Tariff Item 3822 00 90 of the Customs Tariff Act, 1975 is covered under Entry No. 80 of Schedule-II - attracting a levy of Integrated Tax at the rate of 12%
  Visit to Get Source

  ---

• Court Deems Writ Maintainable for Seized Goods; Advises Appeal u/s 107 to Appellate Authority.

  Case-Laws - HC : Maintainability of writ application - Release of seized goods alongwith conveyance - The writ-applicant should prefer an appeal under Section 107 of the Act before the concerned appellate authority. We would not like to express any opinion on the merits of any of the submissions.
  Visit to Get Source

  ---

• Court Withdraws Interim Protection for Petitioner Misusing ITC Case Safeguards; Non-Cooperation and Witness Threats Cited.

  Case-Laws - HC : Fraudulent input tax credit (ITC) - Vacation of interim protection granted to the petitioner - the petitioner is not joining the investigation, rather misusing the interim protection granted to him and threatening the witnesses - the interim protection granted to the petitioner is hereby withdrawn.
  Visit to Get Source

  ---

• Bus Body Building on Provided Chassis Classified as Service; Subject to 18% GST under Paragraph 5.4, Chapter 87.

  Case-Laws - AAR : Classification of activity - bus body building activity on the chassis provided by the principal as service - The activity of the applicant qualifies to be classified as “Service”, subject to fulfillment of conditions enumerated at para 5.4 and also the vehicle on whose chassis the body is built must fall under Chapter 87. - Liable for GST @18%
  Visit to Get Source

  ---

• Goods Classification for Railways Filters Unchanged: Direct or Distributor Supply Both Treated Equally.

  Case-Laws - AAAR : Classification of goods - filters manufactured solely and principally for use by / in Indian Railways and supplied directly to Indian Railways - he classification of the subject goods Will not change if the Same are supplied to a distributor instead of Indian Railways and the distributor in turn affects the supply to the Indian Railways.
  Visit to Get Source

  ---

• Affordable Housing Project Eligible for Concessional GST Rate on Amenities in Units Under 60 Sq Meters.

  Case-Laws - AAR : Concessional rate of GST - the common amenities and areas are a part of ‘Affordable Housing Project’ and therefore the applicant will be entitled to benefit of concessional rate for the same, only when they are a part of low cost houses i.e. units less than 60 sq.mtrs.
  Visit to Get Source

  ---

Income Tax

• Assessing Officer's Terminal Excise Duty Refund Order Revised u/s 263 for Lack of Inquiry, Protecting Revenue Interests.

  Case-Laws - AT : Revision u/s 263 - the claim of the assessee for the Terminal Excise Duty Refund in the present case was accepted by the Assessing Officer without making any inquiry whatsoever and such lack of inquiry made his order passed under section 143(3) on this issue erroneous as well as prejudicial to the interest of the Revenue.
  Visit to Get Source

  ---

• Assessment Reopening Valid: Revenue Authority Adequately Addressed Objections u/s 147, Income Escapement Prerequisite Met.

  Case-Laws - HC : Validity of reopening of assessment u/s 147 - The objections of the petitioner were dealt with on a point to point basis. - While passing the order the competent Revenue Authority found that necessary prerequisite of Section 147 that “there should be an escapement of income” stood fulfilled. The reasons recorded in that regard were found to be valid
  Visit to Get Source

  ---

• Higher Depreciation Rate Denied: Vehicle Operation Charges Don't Qualify for Business of Hiring Vehicles, Affects Tax Depreciation.

  Case-Laws - AT : Higher rate of Deprecation on vehicles - the assessee that the assessee is eligible for higher rate of depreciation at the rate of 30%. Merely because the invoices raised by the assessee include, inter alia, charges for running of vehicles, does not mean that the assessee is in the business of running the vehicles on hire.
  Visit to Get Source

  ---

• Land Use Change: Agricultural to Eco-Residential Alters Tax Status u/s 2(14) of Income Tax Act.

  Case-Laws - AT : Nature of agricultural land sold - In the activities permitted on conversion of the land into farm house is restricted to the environmental friendly residence. Therefore, the land use was changed from agriculture to environmental friendly residence and no more an agricultural land. Once the land in question was no more an agricultural land at the time of transfer, then the same will not be considered as agricultural land for the purposes of section 2(14) of the Act.
  Visit to Get Source

  ---

• AO Cannot Impose Late Filing Fee for TDS Returns Before June 1, 2015, u/s 234E; Intimations Invalid.

  Case-Laws - AT : Levy of late filing fee u/s. 234E - Late filing of TDS returns - AO while processing the TDS statements, returns in the present set of appeals of the period prior to 01/06/2015, was not empowered to charge fee u/s 234E of the Act, hence, the intimation issued by the Assessing Officer u/s 200A in the appeals before us, does not stand.
  Visit to Get Source

  ---

• DRP Must Include Loss-Making Companies in Transfer Pricing Analysis, Examine Prior Years' Financials per Rule 10B(4) for Accuracy.

  Case-Laws - AT : TP Adjustment - Comparable selection - Merely because these companies have earned losses for the year under consideration would not lead to its exclusion without analysing as per rule 10 B (4) - DRP is to analyse the financials of immediately to preceding assessment years.
  Visit to Get Source

  ---

• Interest-Free Loan Transfer Pricing Adjustment Overturned Due to Misapplication of Penal Interest Clause Comparisons.

  Case-Laws - AT : TP Adjustment - interest free loan given to its associated enterprise (AE) - Lower authorities have erred in going by the penal interest stipulation in the loan agreement to the corresponding interest benchmark in the overseas market. - Addition deleted.
  Visit to Get Source

  ---

• Tribunal Upholds Decision on Bogus LTCG and Unexplained Cash Credits Under Income Tax Act Section 68 Without Further Justification.

  Case-Laws - AT : Bogus LTCG - unexplained cash credits u/s. 68 - when this tribunal fully agrees with the Appellate Assistant Commissioner, it need not record separate reasons than those in the lower appellate discussion.
  Visit to Get Source

  ---

• Assessee's unexplained cash credits lead to addition u/s 68 after failing to disclose income sources to AO.

  Case-Laws - HC : Unexplained cash credit - Addition u/s 68 - The several opportunities given to the assessee to persuade him to reveal the sources of income have already been mentioned in the order passed by the AO. The assessee therefore cannot have any complaint against the Department when he was not furnishing all the details as sought by the Department though he agreed to do so in the statement given by him to the Department
  Visit to Get Source

  ---

• Cash Deposits Labeled as Unexplained Credits u/s 68 Due to Lack of Supporting Documentation, Additions Upheld.

  Case-Laws - HC : Unexplained cash credit u/s 68 - cash has been deposited merely to generate funds in the bank account, whenever payments were required to be made by cheque. Therefore, indeed there is no nexus with the gross receipts. The appellant has not produced any material in support to explain the entries of cash such as books of accounts or purchase bills, etc. - Additions confirmed.
  Visit to Get Source

  ---

Customs

• New Guidelines on Importing Gifts: Procedures, Tax Implications, and Exemptions for Compliance with Customs Laws

  Circulars : Clarification relating to import of gifts
  Visit to Get Source

  ---

• Customs Duty Exemption Denied: Aircraft Used for Private Purposes Violates Notification No. 21/2002-cus Conditions.

  Case-Laws - AT : Import of new aircraft - Benefit of N/N. 21/2002-cus - The usage, of the impugned aircraft post import is not for non scheduled passenger/ charter air transport services but only for private use. The same amount to violation of the undertaking based upon which the exemption was granted to the appellant from paying the customs duty. - Demand with interest and penalty confirmed.
  Visit to Get Source

  ---

Corporate Law

• Amalgamation Scheme Rejected: Valuation Process Criticized for Ignoring Established Methods and Relying on Guesswork.

  Case-Laws - AT : Approval of scheme of amalgamation - The valuer made a valuation disregarding the methodology, methods or share entitlement ratio even as stated by him in his valuation report. No valuation of each share of every company has been done to arrive at the exchange ratio and we are convinced that only the guess work has been done to arrive at share exchange ratio. - Scheme not approved.
  Visit to Get Source

  ---

Indian Laws

• Cheques: Legal Presumption of Debt Exists but Can Be Challenged u/ss 118(a) and 139 of the Negotiable Instruments Act.

  Case-Laws - HC : Dishonor of Cheque - existence of legally enforceable debt or not - It is a settled principle of law that the presumptions U/s 118 (a) and 139 of N.I. Act, 1881 are rebuttable in nature and standard of proof required by accused such rebuttal is preponderance of probabilities and the standard of proof on behalf of prosecution is proof of guilt beyond all reasonable doubts.
  Visit to Get Source

  ---

• Court Denies Waiver of 25% Pre-Deposit Requirement for Appeal Under SARFAESI Act, Section 18(1.

  Case-Laws - HC : Waiver of pre-deposit - applicability of Section 18(1) of the SARFAESI Act - addition to debt due, an amount of interest and future interest that would be added from 2006 onwards until 2017 would escalate the "debt due" to a higher sum. The Petitioners would therefore be liable to deposit 25% of this amount as condition precedent under the provisions of the said Act in the appeal proceedings as pre-deposit - Waiver request rejected.
  Visit to Get Source

  ---

Service Tax

• Appellants' Failure to Disclose Business Transactions Justifies Extended Limitation Period for Assessment, Decision Upheld.

  Case-Laws - AT : Business Support Services - reimbursement of expenses - Since the appellants had not disclosed the details of these transactions to the revenue in the ST-3 returns filed by them. Neither they have been able to establish any bonafides in non disclosure of such information to revenue - the impugned order for invoking extended period of limitation is upheld.
  Visit to Get Source

  ---

Central Excise

• Rexona and Lux Soap Classification: Chapter Heading 34 vs. Heading 33.07 for Central Excise Purposes.

  Case-Laws - AT : Classification of goods - Rexona - Lux - the item in question is soap only for classification under Chapter Heading 34 and it is not bath preparation for classification under Heading 33.07
  Visit to Get Source

  ---

• Cenvat Credit Valid Even If Scrap Manufacturer Doesn't Exist; Presumption of Paper Transaction Not Enough.

  Case-Laws - AT : Cenvat credit cannot be denied merely on the basis of the presumption that it might be a paper transaction as manufacturer of the scrap are non-existent.
  Visit to Get Source

  ---

VAT

• Penalty Imposed for Importing Unlisted Goods u/s 10-A and 10(b) of Central Sales Tax Act.

  Case-Laws - HC : Imposition of penalty U/s 10-A r.w.s 10(b) of the Central Sales Tax Act - Without addition of items in the registration certificate, it is not permissible for the revisionist to import the goods and in case such goods which are not included in the certificate of registration are imported, same would amount to penalty under the provisions of the Central Sales Tax Act.
  Visit to Get Source

  ---

• Mistakes not raised or considered by Appellate Authority can't be rectified as errors under rectification rules.

  Case-Laws - HC : The very words “rectification of mistake” includes due application of mind on a particular set of fact or law which are liable to be corrected - In the facts of the present case, where an issue was never raised before the Appellate Authority nor considered by it, it cannot be subject matter for correction of a mistake.
  Visit to Get Source

  ---

Case Laws:

• GST

• 2020 (1) TMI 795
  Classification of goods - import of PRS as Prepared Laboratory Reagents - Entry SI.No 80 of Schedule II of the GST rate N/N. 01/2017 IT (R) dated 28.06.2017 - Pharmaceutical Reference Standards (Prepared Laboratory Reagents) imported and supplied by the applicant - classified under Tariff Item 3822 00 90 of the Customs Tariff Act, 1975 - whether covered under Entry No. 80 of Schedule-II to Notification No 1/2017- Integrated Tax (Rate) dated 28th June 2017 attracting a levy of Integrated Tax at the rate of 12% or not? - challenge to AAR decision. HELD THAT:- In the instant case, there is no dispute that the Pharmaceutical Reference Standards imported by the Appellant are Prepared laboratory reagents without a backing with a label and proper instructions for use - there are also an sample of the laboratory reagent wherein the label clearly indicates that it is for laboratory use only. It is also not in dispute that the correct classification of such laboratory reagents is Chapter Heading 3822 of the Customs Tariff. The dispute in this case is whether the description of the goods given against the entry SL.No. 80 of Schedule II applies to all reagents both diagnostic as well as laboratory reagents. When we read the description of the goods under Chapter Heading 3822 of the Customs Tariff together with the HSN Explanatory Notes for Heading 3822, we find that the said Heading covers prepared diagnostic or laboratory reagents and prepared laboratory reagents include not only diagnostic reagents, but also other analytical reagents used for purposes other than detection or diagnosis. Prepared laboratory reagents may be used in medical, veterinary, scientific or industrial laboratories, in hospitals, in industry, in the field or, in some cases. in the home - Further the reagents should be clearly identifiable as being for use only as diagnostic or laboratory reagents which must be clear from their composition, labelling, instructions for in vitro or laboratory use, indication of the specific diagnostic test to be performed or physical form (e.g., presented on a backing or support). The reagents referred to in the Heading 3822 of the Customs Tariff are both diagnostic and laboratory reagents. In the GST rate Notification No 01/2017, the entry SI.No 80 of Schedule II describes the goods under Chapter Heading 3822 as All diagnostic kits and reagents . This implies that all reagents falling under Chapter Heading 3822 are covered under the said entry SI.No 80 - the Heading 3822 of the Customs Tariff applies to both diagnostic and laboratory reagents. Therefore. the correct way to read the entry Sl.No 80 of Schedule II would be au diagnostic kits and all reagents . The interpretation given by the Authority for Advance Ruling that the entry I.No 80 covers only diagnostic kits and diagnostic reagents is not correct. The principle of ejusdem generic applied by the Authority in interpreting the entry SI-No 80 is misconstrued - the Fitment Committee which was mandated to recommend suitable GST rates for goods, have., after taking into consideration the indirect tax rates which were in existence, recommended a rate of 12% for Diagnostic or laboratory reagents . This recommendation has been implemented by entry Sl.No. 80 of Schedule II of Notification No. 01/2017 CT/IT(R) dated 28-06-2017. It is evident from the recommendations of the Fitment Committee that the legislative intent was to reduce the GST rate on all reagents from the rate which eras prevalent in the earlier tax regime. The principle of ejusdem generis has no application in this ease and all reagents which are covered under Heading 3822 would be covered under SI.No. 80 of Schedule II of the rate Notification. The Pharmaceutical Reference Standards (Prepared Laboratory Reagents) imported and supplied by the Appellant and classified under Tariff Item 3822 00 90 of the Customs Tariff Act, 1975 is covered under Entry No. 80 of Schedule-II to Notification No. 1/2017-Integrated Tax (Rate) dated 28th June 2017 attracting a levy of Integrated Tax at the rate of 12% - the ruling of AAR set aside - appeal allowed.

  ---

• 2020 (1) TMI 794
  Maintainability of writ application - Release of seized goods alongwith conveyance - Section 129(1)(a) of the Central Goods and Service Tax Act, 2017 - whether we should entertain this writ-application or relegate the writ-applicant to avail of the alternative remedy of preferring a statutory appeal before the appellate authority under Section 107 of the Act? HELD THAT:- The writ-applicant should prefer an appeal under Section 107 of the Act before the concerned appellate authority. We would not like to express any opinion on the merits of any of the submissions. The period of limitation is on the verge of expiring. In such circumstances, the writ-applicant should act promptly and prefer an appeal at the earliest. Once, the appeal is preferred, we direct the appellate authority to look into the same and decide the same on merits. Also, it is a fact that the goods and the conveyance came to be seized way back on 04.09.2019. It has been almost 5 months. In such circumstance, the appellate authority are directed to give top priority to such appeal and decide the same. It goes without saying that the appellate authority shall give an opportunity of hearing to the writ-applicant - writ application disposed off.

  ---

• 2020 (1) TMI 793
  Classification of goods - filters manufactured solely and principally for use by / in Indian Railways and supplied directly to Indian Railways - whether classifiable under HSN Heading 8421 or under HSN Heading 8607 of the Customs Tariff? - whether the classification of filter will change if the identical goods are supplied to a distributor instead Indian Railways directly, and the distributor in turn ejects supply to Indian Railways? - challenge to AAR decision. HELD THAT:- In the instant case, we find that the subject Filters falling under Chapter Heading 84.21 is excluded from being considered as a part for the goods under Section XVII by virtue of Note 2(e) to Section XVII, thereby failing to fulfill the very first condition above. Further, the subject Filters are also specifically included in Chapter Heading 84.21 as filtering apparatus and hence the third condition of the above General Notes is also not fulfilled. The only condition that is satisfied is that the subject Filters are suitable for use solely and principally with the articles of Chapter 86. Since all three conditions are required to be fulfilled, which is not so in the instant case, the subject Filters cannot be considered as Parts of railway locomotives and therefore, cannot be classified under Chapter Heading 8607. The correct classification of the subject Filters would be under Chapter Heading 84.21 of the Tariff. Thus, the subject Filters manufactured by the Appellant solely and principally for use by the Indian Railways and supplied directly the Indian Railways are classifiable under Chapter Heading 84.21 of the Customs Tariff - The classification of the subject goods Will not change if the Same are supplied to a distributor instead of Indian Railways and the distributor in turn affects the supply to the Indian Railways. The decision of Advance ruling authority upheld.

  ---

• 2020 (1) TMI 792
  Maintainability of application - scope of Advance Ruling Authority - reimbursement of Electricity Charges - HELD THAT:- In the instant case the questions, on which the applicant seeks advance ruling, are not in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the said applicant, but in relation to the service/s being received by them. Therefore the instant application is beyond the jurisdiction of this authority and hence is liable for rejection. The application filed by the Applicant for advance ruling is rejected, in terms of Section 98(2) of the CGST Act 2017.

  ---

• 2020 (1) TMI 791
  Classification of activity - bus body building activity on the chassis provided by the principal as service - Circular No. 52/26/2018-GST dated 09.08.2018 - whether the classification bus body building activity on the chassis provided by the principal as service be extended to their activity of body building of tippers, trailers etc., as per Para No. 12.1, 12.2(b) and 12.3 of Circular No. 52/26/2018-GST dated 09.08.2018, as their activity also is akin to the one referred to in the said Circular. HELD THAT:- The applicant, in the instant case, is also involved in the same activity of body building but not on the chassis of bus. They fabricate the body on the chassis provided by the principal for Tippers, Trailers etc. - It is an admitted fact that the applicant, at present, is charging GST @ 28%, on treating their supply as that of goods, though the invoice is raised for fabrication of body building on (the vehicle) and the actual activity of supply is fabrication of body. Therefore the activity of the applicant is akin to that of the one mentioned in the Circular. The activity of the applicant qualifies to be classified as Service , subject to fulfillment of conditions enumerated at para 5.4 and also the vehicle on whose chassis the body is built must fall under Chapter 87. Classification of services - applicant contends that their services are covered under Service Code 998881 titled as Motor vehicle and trailer manufacturing services - HELD THAT:- As per the said explanatory notes the service code 998881 includes motor vehicle manufacturing services, trailers and semitrailer manufacturing services and motor vehicle parts and accessories manufacturing services. The applicant is involved in manufacturing / fabrication of trailers etc. and hence their activity merits classification under Service Code 998881. Rate of tax on the services - HELD THAT:- The impugned services of the applicant are covered under heading 9988 as manufacturing services on physical inputs (goods) owned by others in terms of SI.No.26(ii) of the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 initially and subsequently under SI.No.26(iii) / (iv) respectively, consequent to amendment of the said entry No.26(iv) of the aforesaid Notification. However, the services by way of Job work in relation to bus body building have been carved out of the earlier entry i.e. SL.No.26(iv) of Notification supra and a separate entry under SI.No.26 (i) (ic) has been incorporated consequent to amendment of the said notification vide Notification No.20/2019-Central Tax (Rate) dated 30.09.2019. It is clearly evident that the applicant inadvertently claimed that their services are covered under entry of the Notification No.11/2017-CT (R) which attract 12% GST (6% CGST 6% SGST), whereas actually they are covered under of the said Notification and attract 18% GST (9% CGST 9% SGST).

  ---

• 2020 (1) TMI 790
  Permission for withdrawal of Advance Ruling application - classification of goods - Reagents used by the applicant for laboratory testing of water samples - whether classified under Sl.No.80 of the IGST schedule-II at 12% under IGST Notification No.1/2017-Integrated Tax (Rate) dated 28.06.2017? HELD THAT:- The applicant vide their letter dated 02.01.2020, requested this authority to permit them to withdraw their application for advance ruling, quoting the reason that the ruling of this authority in IN RE: M/S. CHROCHEMIE LABORATORY PVT. LTD.[ 2019 (10) TMI 871 - AUTHORITY FOR ADVANCE RULING, KARNATAKA] which has facts similar to that of the applicant. The application filed by the Applicant for advance ruling is disposed off as withdrawn.

  ---

• 2020 (1) TMI 789
  Concessional rate of tax / GST - building completion and finishing services - Affordable Housing Project (AHP) - Entry (v) (da) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 as amended by Notification No.01/2018-Central Tax (Rate) with effect from 25.01.2018 - separate services or composite supply - benefit of reduced rate of tax - works contract services provided for the construction of the units and common areas and amenities on pro-rata basis. HELD THAT:- The applicant s case is covered under concessional tax rate of 12% (8% GST after deducting value of land), under Heading 9954 (Construction Services), (v) (da) of above mentioned Notification No. 11/2017, as amended, since the project undertaken by them falls under the definition of Affordable Housing Project . The benefit of reduced rate would be available to them only in the cases of supply effected after 25.01.2018 i.e. the date on which Notification 1/2018-Central Tax (Rate) was issued and the benefit of this reduced rate would be applicable in case of only those flats which are of carpet area upto 60 sq mtrs - In case of other flats which have carpet area more than 60 sq.mtrs. or commercial units, the applicant would be required to pay GST at normal applicable rate, since the benefit of reduced rate is available only for residential units of carpet area less that 60 sq. mts. We agree with applicant s submission that entry (v) (da) of Notification 01/2018, mentioned above no-where restricts the benefit to a Developer only. The Notification entry is qua the supply of service and not qua the person and therefore once a project qualifies as an Affordable Housing Project, the benefit of concessional rate of tax would be available in respect of works contract services pertaining to Low Cost Houses, irrespective of it being supplied by the Developer or the Contractor - In the subject case, the project qualifies as an Affordable Housing Project, and the benefit of concessional rate of tax @12% GST, would thus be available to the applicant. Whether the building completion and finishing services be regarded as a separate service or would it be a composite supply of works contract service as covered under entry v(da) of Notification No. 11/2017 to avail the benefit of reduced rate of tax? - HELD THAT:- In view of the terms of the contract, the building completion and finishing services would not be regarded as separate services. It would be a part of the composite supply of works contract services rendered by the applicant with principal supply of building construction, supply of finishing services will be covered under entry (v)(da) of Notification No. 112017 and applicant will be eligible to avail the benefit of reduced rate of tax i.e 12%, only in respect of dwelling units having area less than 60 sq.mtrs. What would be the appropriate rate of Goods and Services Tax on works contract services provided for the construction of the units and common areas and amenities on pro-rata basis which do not qualify the criteria of low cost houses ? - HELD THAT:- The concessional rate available to applicant is only in respect of low cost houses along with amenities constructed by the applicant. We find that the common amenities and areas are a part of Affordable Housing Project and therefore the applicant will be entitled to benefit of concessional rate for the same, only when they are a part of low cost houses i.e. units less than 60 sq.mtrs. The applicant will thus have to discharge GST @ 12% (after deducting value of land) on works contract services provided for the construction of the units and common areas and amenities, which do qualify the criteria of low cost houses - since concessional rate would be available only for construction services pertaining to dwelling units less than 60 sq. mtrs including common areas and amenities on pro-rata basis, construction services including common areas and amenities on pro-rata basis, performed by the applicant in respect of dwelling units exceeding 60 sq.mtrs. would be liable to full rate of GST i.e. 18%.

  ---

• 2020 (1) TMI 788
  Fraudulent input tax credit (ITC) - issuing goods-less invoices - Vacation of interim protection granted to the petitioner - main thrust for vacation of the interim protection is mainly on the ground that the petitioner and his son who is petitioner are threatening the witnesses - HELD THAT:- The statements of the witnesses is produced in the Court and the same shows about the threats being extended to the witnesses. Therefore, the petitioner is not joining the investigation, rather misusing the interim protection granted to him and threatening the witnesses and also keeping in view the fact that as per the respondent No. 2 and 3 many other witnesses are yet to be examined, the interim protection granted to the petitioner is hereby withdrawn. Application disposed off - List on the date already fixed i.e. 27.03.2020.

  ---

• 2020 (1) TMI 787
  Permission for withdrawal of petition - Transitional credit - rejection on the ground that he Petitioner s additional place of business was not reflected in the OnLine System of the Central Goods and Service Tax Act, 2017 - HELD THAT:- This issue has now been resolved and the Petitioner s additional place of business is reflected in the OnLine System maintained under the Act - on instruction, Mr.Chavda seeks permission to withdraw this petition with liberty to make an application to the GST Council for resolving the issue of transition credit in respect of additional place of business now reflected in the OnLine System. Petition is disposed of as withdrawn.

  ---

• 2020 (1) TMI 744
  Seizure of money - attachment of bank account and goods - Rule 139 of the CGST Rules, 2017 - It is submitted by the counsel for the respondents, who appear on advance notice, that at this stage enquiry is going on. Counsel for the petitioner states that petitioners are ready to join the enquiry as and when called by the IO. Counsel for the petitioners submits that petitioners will produce all the documents necessary for the purpose of enquiry. HELD THAT:- List on 27.3.2020.

  ---

• Income Tax

• 2020 (1) TMI 786
  Validity of reopening of assessment u/s 147 - as argued mandatory prior approval required under Section 151 from the Principal Commissioner, Income Tax, Noida, was not obtained before initiation of the aforesaid reassessment proceedings - HELD THAT:- Satisfaction arrived at by the authority satisfies all the requirements of law as contemplated under Section 147 of the I.T. Act, 1961 and explained by judicial pronouncements in that regard. The petitioner was granted full opportunity to state his case before the authorities in his objections against the issuance of notice under Section 148 of the I.T. Act, 1961 for the Assessment Year 201213. The petitioner duly availed the aforesaid remedy. The authorities while deciding the objections of the petitioner passed detailed speaking orders which again reflect due application of mind on the facts and material in the record. The Deputy Commissioner of Income Tax, Circle5( 1) (1), Gautam Buddh Nagar while disposing of the aforesaid objection of the petitioner against issuance of the notice under Section 148 in its order dated 26.11.2019 considered the objections of the petitioner. The objections of the petitioner were dealt with on a point to point basis. While passing the order dated 26.11.2019 the competent Revenue Authority found that necessary prerequisite of Section 147 that there should be an escapement of income stood fulfilled. The reasons recorded in that regard were found to be valid. The authority also noticed the admission of the assessee that he had incurred Long Term Capital Gain of Rs. 47,43,264/during Financial Year 201112, however, the same has not been disclosed in his ITR The validity of the refusal of the request of the petitioner to cross examine Ashok Kumar Kayan, Sunil Kumar Kayan, Devesh Kumar Kayan whose statements were part of the material, was also affirmed as held Income Tax Act, 1961 does not have any provision which may empower the undersigned to enforce the cross examination of a third party by the assessee. However, the statements of Shri Ashok Kumar Kayan are being provided to the assessee for ready reference. Approval under Section 151 of the I.T. Act, 1961, prior to initiation of proceedings under Section 148 of the I.T. Act, 1961 is a jurisdictional prerequisite. In the absence of such approval the proceedings would fall to the ground for want of jurisdiction. As such, the assessee is fully entitled to a copy of the order passed under section 151 of the I.T. Act, 1961 and correspondingly, the Assessing Officer is obliged to handover a copy of the same, as and when the assessee seeks for it. There is no infirmity in the reassessment proceedings and the same are not liable to be interfered with.

  ---

• 2020 (1) TMI 785
  Reopening of assessment u/s 147 - unexplained cash credit u/s 68 - HELD THAT:- Assessee has failed to produce any material to authenticate his contentions that the cash deposits in his account were on account of the sales being made by him from the Kirana business. In absence of any purchase bill to justify that the deposits in the bank account were sale receipts, the tax authorities cannot be faulted for making the addition of the unexplained cash entries in the bank account. Firstly, the appellant chose to abstain from joining the assessment proceedings despite several notices. Then, he did not render any cogent explanation or documentary evidence to support his contentions before the CIT (A) or ITAT. Pertinently, the assessee had not filed his income tax return for AY 2010-11 and justified his action by contending that he was not liable to file the same as he had adopted presumptive taxation scheme under Section 44AD of the Act and had availed the benefit thereof, wherein there was no obligation to explain individual entry of cash deposit in his bank account unless such entry had no nexus with the gross receipts. However, when confronted with the cash entries, he could not give any convincing justification. Tax authorities upheld that the cash has been deposited merely to generate funds in the bank account, whenever payments were required to be made by cheque. Therefore, indeed there is no nexus with the gross receipts. The appellant has not produced any material in support to explain the entries of cash such as books of accounts or purchase bills, etc and we find no merit in the Appellant s contentions. There are consistent and concurrent findings of the fact by the lower tax authorities, no question of law arises for our consideration. - Decided against assessee.

  ---

• 2020 (1) TMI 784
  Unexplained cash credit - Addition u/s 68 - onus to prove - genuineness of sale proceeds of agricultural produce of the land - HELD THAT:- Sources of income of the assessee are agriculture and also rental income from HUF properties situated at Nalgonda and Suryapet. Though he mentioned about a petrol bunk, since according to the assessee, the petrol bunk business commenced only in 2012, the income from the petrol bunk business cannot be said to be a source of income for the assessee to deposit in the Bank Accounts for the assessment years 2009-10 and 2010-11. He also stated that he was doing real estate business at Hyderabad and was entering into agreements of sale and by keeping certain margin, he was selling the same to others. Though he stated that he was getting an average income of Rs. 4,00,000/- p.a. from the real estate business since 2010, and he claims to have done small ventures at Uppal Bus Depot and promised to furnish details, there is nothing to show that he did furnish any details. Therefore, the cash deposits, which are admitted by him to be from real estate business or rental income, have also to be taken into account. It was the duty of the assessee to disclose these aspects before the Assessing Officer or the CIT (Appeals)-1, Hyderabad or the Tribunal because these are within his exclusive knowledge. Having admitted that he was also doing real estate business and was also having rental income, and by not furnishing any details of the same, he cannot blame the Assessing Officer or the Tribunal for drawing conclusion that his source of money for making deposits other than agricultural income, is the real estate business. No doubt in exercise of appellate jurisdiction under Section 260-A of the Act, this Court has power to interfere with the findings of fact which are vitiated by use of inadmissible material and if a decision is based on conjectures, surmises and suspicions or irrelevant material or if there is perversity, but the instant case does not fall in any of these categories. The several opportunities given to the assessee to persuade him to reveal the sources of income have already been mentioned in the order passed by the AO. The assessee therefore cannot have any complaint against the Department when he was not furnishing all the details as sought by the Department though he agreed to do so in the statement given by him to the Department on 16-10-2015. We are of the opinion that in the instant case, no error of law has been committed by the Assessing Officer or the CIT (Appeals)-1, Hyderabad or the Tribunal in treating a portion of the unexplained deposits as income of the Assessee. - Decided against assessee.

  ---

• 2020 (1) TMI 783
  Revision u/s 263 - claim of the assessee on issues relating to VAT Refund and Terminal Excise Duty Refund was accepted by AO without making any inquiry - HELD THAT:- As demonstrated by the assessee at the time of hearing before us on the basis of the letter issued by the AO and the reply filed by the assessee during the course of assessment proceedings, the inquiry on the issue of VAT Refund was specifically made by the AO and after having satisfied himself with the submission made by the assessee explaining the accounting of VAT Refund, which was duly verified by him from the books of account produced by the assessee, the claim of the assessee for VAT Refund was accepted by the Assessing Officer. On this issue, it was thus not a case of lack of inquiry or lack of proper and sufficient inquiry by the Assessing Officer as alleged by the ld. Principal CIT in his impugned order and this position is not disputed even by the ld. D.R. at the time of hearing before us. Issue relating to the assessee s claim for Terminal Excise Duty Refund was accepted by the AO in the assessment completed under section 143(3) without making any inquiry, which was warranted in the facts and circumstances of the case and this lack of inquiry on the part of the Assessing Officer, in our opinion, made his order passed under section 143(3) erroneous as well as prejudicial to the interest of the Revenue as rightly held by the ld. Principal CIT. The very fact that the assessment was made by the Assessing Officer without proper and sufficient inquiries, as warranted in the facts and circumstances of the case, makes it erroneous and also causes prejudice to the interest of the revenue giving jurisdiction to the ld. Principal CIT under section 263 to revise the same. As already noted, the claim of the assessee for the Terminal Excise Duty Refund in the present case was accepted by the Assessing Officer without making any inquiry whatsoever and such lack of inquiry made his order passed under section 143(3) on this issue erroneous as well as prejudicial to the interest of the Revenue. We accordingly uphold the impugned order passed by the ld. Principal CIT under section 263 setting aside the order of the Assessing Officer only on the issue relating to Terminal Excise Duty Refund and allow partly this appeal of the assessee. - Decided partly in favour of assessee.

  ---

• 2020 (1) TMI 782
  Bogus LTCG - unexplained cash credits u/s. 68 - HELD THAT:- Hon ble apex court s landmark decision in Commissioner of Income Tax vs. K.Y. Pilliah Sons [ 1966 (10) TMI 35 - SUPREME COURT] to affirm both the lower authorities action treating the assessee s share capital in question as unexplained cash credits liable to be added u/s.68 of the Act in entirety. Their lordships have made it clear that when this tribunal fully agrees with the Appellate Assistant Commissioner, it need not record separate reasons than those in the lower appellate discussion. The assessee fails in its solitary grievance therefore. Assessee s appeal is dismissed.

  ---

• 2020 (1) TMI 781
  TP Adjustment - interest free loan given to its associated enterprise (AE) - arms length rate of interest - HELD THAT- As decided in THE GREAT EASTERN SHIPPING CO. LTD. [ 2017 (6) TMI 1207 - BOMBAY HIGH COURT] arm s length price in the case of loans advanced to AE would be determined on the basis of rate of interest being charged in the country where the loan is received/consumed. The action of the assessee in adopting the bank rate prevailing in Australia is correct d the AO erred in adopting the India bank rate. The loan amount was given in Australia currency as per the promissory note the AE has to return the amount in Australia Dollar. We hold that there was no necessity of ALP adjustment in this case therefore, we direct the deletion of the addition made on this count. Lower authorities have erred in going by the penal interest stipulation in the loan agreement to the corresponding interest benchmark in the overseas market. We go by judicial consistency to delete the impugned identical transfer pricing adjustment(s) Disallowance u/s 14A r.w.r. 8D - assessee has suo moto made the disallowance - HELD THAT:- As already come on record that the impugned sec. 14A r.w.s. 8D disallowance has to be computed going by apportionment formula by determining the expenditure incurred for deriving business as well as exempt income. We therefore deem it appropriate to restore the instant administrative expenditure disallowance issue back to the Assessing Officer for computation of administrative expenditure disallowance going by the proportionate formula as per this tribunal s co-ordinate bench s decision MARUTI TRADERS AND INVESTORS VERSUS ACIT, CIRCLE-31, KOLKATA [ 2019 (1) TMI 258 - ITAT KOLKATA] . We reiterate that we are dealing with indirect head of expenditure which not be strictly apportioned between regular business activities for deriving exempt income. We accordingly accept assessee s identical grievance raised in both assessment year(s) for statistical purposes in above terms. Education cess and secondary higher education cess u/s 40(a)(ii) r.w.s. 37(1) - HELD THAT:- As decided in Chambal Fertilizers Chemicals Ltd.. [ 2018 (10) TMI 589 - RAJASTHAN HIGH COURT] holds that the relevant statutory provision to this effect as well as the CBDT s Circular issued way back on 18.05.1967 do not include Cess . Learned co-ordinate bench s decision in ITC Ltd. [ 2018 (11) TMI 1611 - ITAT KOLKATA] also decided the very issue in assessee s favour. We therefore decline the Revenue s arguments supporting the impugned disallowance and direct the Assessing Officer to grant necessary relief to the assessee.

  ---

• 2020 (1) TMI 780
  Rectification u/s 154 - disallowing / adding cost of construction - HELD THAT:- We notice in this backdrop of pleadings that the learned lower authorities action invoking sec. 154 proceedings is not liable to be concurred with. We reiterate that the Assessing Officer has himself treated the assessee s case as involving under assessment and not rectification as indicated in preceding paragraphs. Hon ble jurisdictional high court s decision in Commissioner of Income Tax, Kolkata-IV vs. M/s J.L. Morison India Ltd. [ 2018 (6) TMI 1683 - CALCUTTA HIGH COURT] holds that such rectification proceedings do not involve a long drawn process of arguments or reasoning but an error apparent from records. There is no such reason in the Assessing Officer s said show cause notice. We therefore draw strong support from their lordships decision and reverse both the lower authorities action invoking sec. 154 rectification jurisdiction for the purpose of partly disallowing the assessee s cost of construction.

  ---

• 2020 (1) TMI 779
  TP Adjustment - international transaction entered into by assessee with its associated enterprises - Comparable selection - comparables have earned losses - HELD THAT:- Current year is to be taken into account but the test for 3 consecutive years which means 2 years preceding the current year or also to be taken into account in the event there are factors which could influence the determination of transfer prices. In the present facts of case the authorities below has not considered the situation of these 2 companies in the immediately preceding 2 assessment years relevant to the assessment year under consideration. Merely because these companies have earned losses for the year under consideration would not lead to its exclusion without analysing as per rule 10 B (4) refer to herein above we are thus of opinion that DRP is to analyse the financials of immediately to preceding assessment years. Accordingly, we set aside these comparables back to DRP for re-examining financials, on the basis of Rule 10B(4). Assessee is directed to provide all relevant details in respect of these companies before DRP. Satisfaction of 75% trading filter - We are unable to discern the impact of manufacturing activity on turn over of the comparable company. Assessee do not object the functional similarity of this company. We direct Ld. AO/TPO to call for information under 133(6) of the Act from this company and then decide in terms of filters applied.

  ---

• 2020 (1) TMI 778
  TP Adjustment - Assessment u/s 144C(1) - eligible assessee u/s 144C(15)(b)(i) - failure to pass draft of the proposed assessment order - adjustment towards the domestic transactions undertaken for the assessee with its related parties - TPO has passed the order u/s 92CA(3) - HELD THAT:- In terms of section 144C(1) AO was required to issue the draft of the proposed assessment order to the assessee as variation so proposed is prejudicial to the interest of the assessee, being a specific mandate of the legislation as provided u/s 144C(1) of the Act. Wherever, there is any variation to the returned income proposed in the hands of the eligible assessee, the Assessing Officer shall in the first instance issue a draft of the proposed order and only where the assessee intimate the Assessing Officer the acceptance of the variations so proposed or no objection is received within the specified period, the Assessing Offer shall pass the final assessment order. In the instant case, the Assessing officer has not issued the draft of the proposed assessment order and the provisions of section 144C have been clearly violated and not followed by the Assessing Officer. The contention of the Revenue that due opportunity has been provided to the assessee during the course of assessment proceedings wherein the matter relating to the adjustment proposed by the TPO was discussed with Assessee does not absolve the Assessing Officer from the mandatory and not just a procedural requirement of issuing the draft of the proposed order as required u/s 144C(1) of the Act. Therefore, following the decision in case of Jaipur Rugs Company (P) Ltd . [ 2018 (6) TMI 146 - ITAT JAIPUR] the assessment order so passed by the Assessing Officer u/s 144C(1) read with 143(3) without issuing the draft of the proposed order cannot be sustained in the eyes of law and is hereby set aside. In the result, the ground no. 1 of the assessee s appeal is allowed.

  ---

• 2020 (1) TMI 777
  Disallowance of expenditure on sales promotional articles - allowable business expenditure us 37(1) - HELD THAT:- Entire expenditure incurred by assessee on sales promotional article would be an allowable deduction. The grounds raised by the assessee, in this regard stand allowed whereas the grounds raised by revenue stand dismissed. See assessee s own case [ 2018 (7) TMI 1883 - ITAT MUMBAI] Disallowance of medial conference expenditure - as per assessee this expenditure was never disallowed in earlier years but the same has been disallowed for the first time in this year - HELD THAT:- Genuineness of the expenditure was never under doubt either in earlier assessment years or in the year under consideration. The reasoning applied by lower authorities to disallow the same stem from same reasoning logic as applied to disallow expenditure on sales promotional articles. This being the case, our adjudication as well as reliance on orders of Tribunal in assessee s own case for earlier years as well as reliance on the decision of this Tribunal in DCIT V/s PHL Pharma Limited ( [ 2017 (1) TMI 771 - ITAT MUMBAI] (which has been co-authored by one of us) would equally apply to this issue also - we direct for deletion of disallowance of medical conference expenditure as sustained by learned first appellate authority. Resultantly, the grounds raised by the assessee stands allowed.

  ---

• 2020 (1) TMI 776
  Additions u/s 68 - sums received from the shareholders as share capital and share premium - Discharge of initial onus - HELD THAT:- Net worth of the share applicant companies, only net worth of three companies is not available, namely, Kokila Exports, M/s Madsan Agencies P. Ltd and M/s Sudharshan Casting [P] Ltd. However, we find that the directors of these companies, namely, Shri Ajit Singh for Kokila Exports and Shri Vinay Kumar Shah for Madsan Agencies and Sudharshan Casting appeared before the directors in compliance to summons u/s 131 of the Act. We are of the considered view that the assessee has prima facie discharged the initial onus cast upon it successfully. Thus the assessee has successfully discharged the initial onus cast upon it by provisions of section 68 - Decided in favour of assessee.

  ---

• 2020 (1) TMI 775
  Levy of late filing fee u/s. 234E against the order passed u/s. 200A - Late filing of TDS returns - scope of amendment - HELD THAT:- As decided in M/s WITS INTERIOR PVT. LTD., NEW DELHI [ 2018 (5) TMI 1960 - ITAT DELHI] the issue before the Hon ble Bombay High Court in the case of Rashmikant Kundalia [ 2015 (2) TMI 412 - BOMBAY HIGH COURT] was with respect to constitution validity of the section introduced by Finance Act, 2015 w.e.f. 01/06/2015 but was not abreast of the applicability of section 234E of the Act by the AO while processing TDS statement. So far as in LAKSHMINIRMAN BANGALORE PVT. LTD. AND OTHERS [ 2015 (8) TMI 379 - KARNATAKA HIGH COURT] it was held that intimation raising demand prior to 01/06/2015, u/s 200A of the Act, levying fee u/s 234E, is not valid . Respectfully following the aforesaid decision of the Coordinate Bench, hold that amendment in section 200A(1) of the Act is procedural in nature, therefore, the AO while processing the TDS statements, returns in the present set of appeals of the period prior to 01/06/2015, was not empowered to charge fee u/s 234E of the Act, hence, the intimation issued by the Assessing Officer u/s 200A in the appeals before us, does not stand, therefore, the demand raised by way of charging fee u/s 234E is not valid, resultant, the same is deleted as the intimation issued by the Assessing Officer in the present case, for the period prior to 01/06/2015, is beyond the scope of adjustment provided u/s 200A of the Act. Thus, the appeals of the assessee are allowed.

  ---

• 2020 (1) TMI 774
  TPA - Applicability of Most Appropriate Method - Revenue has applied Transactional Net Margin Method [TNMM] whereas the assessee alleges Resale Price Method [RPM] as Most Appropriate Method - whether subvention revenue is part of operating profit thereby affecting PLI - HELD THAT:- RPM method identifies the price at which product purchased from the AE is resold to unrelated party; then in the case of resellers, who do not alter the tangible goods and services or use any intangible assets to add substantial value to the property or services i.e. resale is made without any value addition, then in such facts and circumstances, RPM method is to be applied as method to benchmark the international transaction undertaken. We hold so and allow the ground raised by the assessee on this issue. The Assessing Officer is directed to apply the RPM method in order to benchmark the international transaction undertaken by the assessee in the distribution segment, after allowing reasonable opportunity of hearing to the assessee Subvention income - whether the same is part of operating margin - HELD THT:- As decided in NALCO WATER INDIA LIMITED VERSUS ASST. COMMISSIONER OF INCOME TAX, CIRCLE 2, PUNE [ 2019 (9) TMI 609 - ITAT PUNE] subvention amount received by the assessee before us is operating in nature and the same has to be included as operating income, while computing PLI in the hands of the assessee. The assessee in the present appeal has not raised any issue about its taxability and hence, the said status is not disturbed Adjustment on account of AMP spent - HELD THAT:- There is no provision either in the Act or in the Rules to justify the application of BLT for computing the arms length price and also in the absence of BLT, the existence of an international transaction vis -vis the AMP expenditure cannot exist. Further, we hold that there cannot be a quantification of adjustment for determining the AMP expenses incurred by the assessee after applying the BLT, to hold the same to be excessive and thereby an existence of international transaction between the assessee and its AE. We find no merit in exercise carrying of Assessing Officer/DRP/TPO in this regard and delete the Transfer pricing adjustment made on account of AMP expenditure. Accordingly, we delete the adjustment on account of transfer pricing analysis of AMP expenditure.

  ---

• 2020 (1) TMI 773
  Levy of penalty u/s 271(1)(c) - estimation of rental income - HELD THAT:- We find that for A.Y 2011-12, the rental income has been determined by the Assessing officer not basis any material or direct evidence found against the assessee but basis the hypothesis that the plot ought to have been let-out at least for the number of occasions on which the Mahurats are there as per the Panchang i.e. 28 during the respective year. Therefore, for the remaining 11 Mahurats other than 17 mahurats for which assessee has already offered rental income, basis the average rate of booking of Rs. 15,000/-, rental income was estimated at Rs. 1,65,000/-. Further, rental for small parties, exhibition and garba party were again estimated by the AO. Similar findings are recorded for other two assessment years. The said determination of income could form the basis of addition in the quantum proceedings, however for the purposes of levy of penalty, mere addition made in the assessment order could not form the basis of levy of penalty. It is a settled legal proposition that assessment and penalty proceedings are separate proceedings and therefore, mere addition made in the assessment order is not sufficient for levy of penalty. Against said estimation of income done by the AO CIT(A) has reduced the quantum of estimation of rental income. Therefore, where there is no positive evidence or material beyond doubt of assessee having concealed the particulars of income or furnishing inaccurate particulars of income, mere addition in the quantum proceedings is not sufficient to hold assessee liable for levy of penalty. Levy of penalty on estimated rental income cannot be sustained and is hereby directed to be deleted. Mere disallowance of depreciation claim where all particulars are on record and inadvertent mistake of disclosing the interest income net of TDS instead of gross of TDS in the return of income where both interest income and TDS is apparent from the return of income cannot form the basis for levy of penalty on account of furnishing inaccurate particulars of income and is hereby directed to be deleted. - Decided in favour of assessee.

  ---

• 2020 (1) TMI 772
  Reopening of assessment u/s 147 - notice barred by limitation or not - as per revenue assessee had bank deposits in a foreign country an in that case, sixteen years from the end of the relevant assessment year is the time limit for reopening assessment as per section 149(1)(c) - HELD THAT:- As decided in SRI BISWANATHGARODIA AND (VICE-VERSA) [ 2019 (11) TMI 1025 - ITAT KOLKATA] identical issue was involved and this Tribunal upheld the order of Ld. CIT(A) holding the proceedings initiated u/s 148/147 in respect of AYs 2005-06 and earlier, after 1st April 2012 to be time barred. CIT(A) was justified in holding that the notice dated 19.08.2013 issued u/s 148 in respect of AY 2005-06 was time barred and consequently therefore the order dated 19.01.2015 passed by the AO being ab initio void was therefore rightly cancelled. We also note that the decision of this Tribunal is in consonance with the decision of the Hon ble Delhi High Court in the case of BrahmDatt Vs UOI [ 2018 (12) TMI 832 - DELHI HIGH COURT] . During the course of appellate hearing, the ld. AR also brought to our attention that not only the SLP preferred by the Revenue has been dismissed by the Hon ble Supreme Court [ 2019 (7) TMI 351 - SC ORDER] but even the review petition filed by the Department before the Hon ble Delhi High Court was dismissed. For the reasons set out in foregoing therefore we find no reason to interfere with the order of the Ld. CIT(A). Addition u/s 68 - CIT-A deleted addition on admission of additional evidence - violation of Rule 46A - HELD THAT:- DR was unable to pin point what additional evidence was produced by the assessee before the Ld. CIT(A) which influenced his decision. CIT, DR did not bring to our attention any particular document, which in his opinion constituted fresh or new evidence within the ambit of Rule 46A. Remand report was called for prior to adjudication of the appeal and in that view of the matter it was imperative for the Revenue to point out the specific document or evidence which was in the nature of additional evidence, not available with the AO. In the remand report the AO admitted that the explanation put forth in appeal was also made in the course of assessment and, after examining the entries in the bank statement, he admitted that there was prima facie connection between the entries made in the bank statement on 07.12.2004 and 31.03.2006, because the narration of the entries was identical. At the time of hearing of appeal, the ld. AR filed before us copies of the relevant bank statements for the months of December 2004 and March 2006. From the entries in the bank statements, it was clearly discernible that the sum of USD 105000 was invested in December 2004 in Bonds yielding coupon rate of 2.5% and having maturity date of 31.03.2006. We also note that the coupon interest on such bond was assessed as income in the impugned order. The entries in the bank statement by itself made it abundantly clear that the investment in bonds made on 07.12.2004 was redeemed on 31.03.2006 and proceeds were credited to the bank account on maturity. On these facts therefore, we hold that the ld. CIT(A) was right in concluding that the credit on 31.03.2006 related to the investment made in earlier FY 2004-05 and therefore no addition was permissible in the relevant AY 2006-07. As noted from the remand report another grouse of the AO was that the assessee was resisting the addition made even in AY 2005-06 on the technical ground of limitation. On realizing the possibility that the said sum may escape assessment even in AY 2005-06 on technical grounds, the AO justified the addition in the AY 2006-07 being the year in which the investment was redeemed. We are however unable to agree with the said contention because it is a trite law that any income can be assessed to tax only in the right year in which it is taxable and not in any other year. The said sum of USD 105000 was invested in FY 2004-05 and in the income-tax assessment for AY 2005-06, the AO had assessed the source of such investment u/s 68 of the Act, in the order passed u/s 147 of the Act. In that view of the matter, the impugned addition in AY 2006-07 constituted double taxation of the same sum, which is impermissible in law. We therefore see no reason to interfere with the order of the Ld. CIT(A). The Revenue s appeal for AY 2006-07 is therefore dismissed.

  ---

• 2020 (1) TMI 771
  Bogus LTCG - Penny stock purchases - Exemption u/s 10(38) denied - HELD THAT:- As decided in SUMAN PODDAR [ 2019 (9) TMI 1089 - DELHI HIGH COURT] profits earned by assessee are part of major scheme of accommodation entries and keeping in view ratio of judgments quoted above, we, hereby decline to interfere in order of Ld. CIT(A). (emphasis supplied) It would be seen that Cressanda Solutions Ltd. was in fact identified by Bombay Stock Exchange as penny stock being used for obtaining bogus Long Term Capital Gain. No evidence of actual sale except contract notes issued by share broker were produced by assessee. No question of law, therefore arises in present case and consistent finding of fact returned against Appellant are based on evidence on record. Also referring to decision of Hon ble Supreme Court in the case of Sumati Dayal [ 1995 (3) TMI 3 - SUPREME COURT] and Durga Prasad More [ 1971 (8) TMI 17 - SUPREME COURT] we hereby sustained the orders of the authorities below and dismiss the appeal filed by assessee

  ---

• 2020 (1) TMI 770
  Nature of land sold - agricultural land or capital asset u/s 2(14) - whether the land in question sold by the assessee will fall in the definition of Capital Asset u/s 2(14) of the IT Act or it will fall in exclusion clause of section 2(14)? - Conversion of land to Farm House - Subsequently, the JDA has issued Patta in favour of the purchaser - CIT-A confirming the order of Income Tax Officer of treating the sold of agricultural land (as per provision of section 2(14) as capital asset - HELD THAT:- As per the terms and conditions of the said Lease issued by the JDA, the land in question was given only for environmental friendly residence/farm house. Further as per the conditions of conversion of the land to farm house, the activity permitted in the area is only construction of low coverage, low height structure for residential use. In the activities permitted on conversion of the land into farm house is restricted to the environmental friendly residence. Therefore, the land use was changed from agriculture to environmental friendly residence and no more an agricultural land. Once the land in question was no more an agricultural land at the time of transfer, then the same will not be considered as agricultural land for the purposes of section 2(14) of the Act. The sale deed dated 09.12.2009 clearly describes the intention of the parties not for agricultural use. Therefore, the very purpose and object of the incentive for giving the exemption under section 2(14) of the IT Act as per exclusion clause of the said section shall not be available once the actual use of the land is no more an agricultural. after conversion of the land, the land use was restricted was only for construction of environmental friendly residence (farm house). Accordingly, in the facts and circumstances of the case and in view of the order of this Tribunal in case of ACIT vs. Sunil Bansal [ 2019 (6) TMI 304 - RAJASTHAN HIGH COURT] , we do not find any error or illegality in the impugned order of the ld. CIT (A). - Decided against assessee.

  ---

• 2020 (1) TMI 769
  Higher rate of Deprecation on vehicles used in the business of promotional activities in rural markets of India - @30% or 15% - HELD THAT:- It is obvious from a perusal of the bare provisions in law that the normal rate of depreciation on vehicles is 15% as per Part A of S.No.III(2) of New Appendix I. The higher rate of 30% is admissible to an assessee, under S.No.III(3)(ii) of Part A of New Appendix I only if the vehicles are used in the business of running them on hire. Before us, it was admitted by the learned AR of the assessee that the business of the assessee is rural marketing, promotions, roadshows, display advertising etc. and that the assessee is not in the business of running the vehicles on hire. We are not persuaded by the contention raised on behalf of the assessee that the assessee is eligible for higher rate of depreciation at the rate of 30%. Merely because the invoices raised by the assessee include, inter alia, charges for running of vehicles, does not mean that the assessee is in the business of running the vehicles on hire. The fact remains that the vehicles are used by the assessee in the assessee s business of rural marketing, promotions, roadshows, display advertising etc. and that the assessee is not in the business of running the vehicles on hire. See GUPTA GLOBAL EXIM (P) LTD. [ 2008 (5) TMI 7 - SUPREME COURT] - Decided against assessee.

  ---

• Customs

• 2020 (1) TMI 768
  Smuggling - foreign marked gold bars - acquittal of accused - offence punishable under Section 135 (1) (b) read with Section 135 (1) (i) of the Customs Act, 1962 and under Section 8 (1) of Gold Control Act punishable under Section 85 (1) (ii) of the Gold (Control) Act, 1968 - cross-examination of witnesses. HELD THAT:- There is nothing on record to indicate that respondent no.1 was apprised of his rights under Section 102 and consequences thereof. For proving the offence under Section 135, prosecution must prima facie establish a case of legal seizure of contraband gold from the conscious possession of accused. For that purpose, at the outset, prosecution must prove that the seizure effected from the person of accused on 25th March 1985 at Kalbadevi Road, was legal. The provisions of Section 102 of The Customs Act, 1962 accord a protection to the suspect prior to a search being taken under section 100 or 101 of the said Act. Such protection is with the view to ensure that such search is taken with good cause and to lend credence to the evidence derived from such search. The expression if such person so requires in Section 102 necessarily implies that to enable him to exercise his legal rights under Section 102, he should be made aware of such rights. It is the obligation of the officer of customs to apprise the suspect of the rights available to him under Section 102, viz. to be taken to the nearest Gazetted Officer of customs or magistrate. This is a necessary sequence to be complied with for enabling the suspect exercise his rights; and the failure to do so will render such valuable rights conferred to the suspect under Section 102 illusory and a mere farce. The suspect will be denied of this additional degree of protection / opportunity if a Gazetted Officer himself takes search and does not apprise the suspect of his rights under Section 102 thereby the procedural requirements of Section 102(3) not being complied with. It is settled law that even though a statement recorded under Section 108 is admissible in evidence, it has no evidentiary value unless it is corroborated by independent witnesses. Moreover, in this case, respondent has retracted and in his retraction alleged that he was mercilessly beaten by the Customs Officers. The Magistrate was also pleased to direct the Superintendent of Jail to send respondent no.1 for medical examination and the Medical Officer of the Jail has certified that accused had injuries. That indicates, torture and makes me conclude that the confession could not be said to be voluntary. There is an acquittal and therefore, there is double presumption in favour of accused. Firstly, the presumption of innocence available to accused under the fundamental principle of criminal jurisprudence that every person shall be presumed to be innocent unless he is proved guilty by a competent court of law. Secondly, accused having secured acquittal, the presumption of his innocence is further reinforced, reaffirmed and strengthened by the Trial Court. For acquitting accused, the Trial Court observed that the prosecution had failed to prove its case. The opinion of the Trial Court cannot be held to be illegal or improper or contrary to law. The order of acquittal cannot be interfered with - Appeal dismissed.

  ---

• 2020 (1) TMI 767
  Smuggling - sale proceeds from sale of Gold Bars - Indian Currency - acquittal of accused - offence punishable under Section 135 (1) (A) and (B) read with Section 135 (1) (i) of the Customs Act, 1962 - compliance with the provisions of Section 102 of the said Act or not - reliability of statements - HELD THAT:- Admittedly the formalities to be followed under the provisions of Section 102 of the said Act have not been followed. Mr. Natarajan, in fairness, true to his role as an Officer of the Court, admitted that the requirements of Section 102 of the said Act have not been complied with and compliance with those requirements is mandatory - For proving the offence under Section 135 of the said Act, prosecution must prima facie establish the case of legal seizure. For that purpose, at the outset, prosecution must prove that the seizure effected from the person of respondent no.1 on 8th January 1991 was legal. The only difference between Section 102 of the said Act Act and Section 50 of the Narcotic Drugs and Psychotropic Substances ACT, 1985, (NDPS Act) is under Section 50 of NDPS Act the person has to be searched either in the presence of a nearest Gazetted Officer of any of the departments mentioned in Section 42 of NDPS Act or a Magistrate, but under the provisions of Customs Act, accused has to be taken without unnecessary delay to the nearest gazetted officer of customs or magistrate. The provisions of Section 102 of the said Act accord a protection to the suspect prior to a search being taken under section 100 or 101 of the said Act. Such protection is with the view to ensure that such search is taken with good cause and to lend credence to the evidence derived from such search. The expression if such person so requires in Section 102 necessarily implies that to enable him to exercise his legal rights under Section 102, he should be made aware of such rights - Section 102(3) provides that once the suspect is taken either before the Gazetted Officer or the magistrate, whichever the case may be, such Gazetted Officer or magistrate is empowered to forthwith discharge the person if he sees no reasonable ground for search, or otherwise direct that the search be made. In my opinion, the suspect will be denied of this additional degree of protection / opportunity if a Gazetted Officer himself takes search and does not apprise the suspect of his rights under Section 102 thereby the procedural requirements of Section 102(3) not being complied with. Reliability on statements and evidences - HELD THAT:- The value of the gold was told by the Officers and PW-4 cannot give the particulars of denomination of currency notes recovered by the Officers. PW-4 says he also had no occasion to count the currency notes but the Officers told him about the total amount but did not tell him about the denomination of currency notes. Therefore, the evidence of PW-4 and the contents of panchnama (Exhibit P-2) is unreliable - Also, there is no record of the fact which shows that an attempt was made by respondent no.1 to write the statement and the attempt was given up for reasons mentioned by PW-2. There is no independent or distinct corroboration to the facts stated in the statement at Exhibit P-5 - also, in the cross examination, PW-4 says that he has met PW-1 earlier and due to the nature of his work, he was required to visit Customs Office again and again. PW-4 also says he did say no initially to PW-1 when he was called to be the panch witness but then he was told by PW-1 that as he was working as Customs Agent he was expected to do the work and so he consented to act as panch witness. This also indicates that PW-4 was a pliable witness. There is an acquittal and therefore, there is double presumption in favour of accused - Firstly, the presumption of innocence available to accused under the fundamental principle of criminal jurisprudence that every person shall be presumed to be innocent unless he is proved guilty by a competent court of law. Secondly, accused having secured acquittal, the presumption of his innocence is further reinforced, reaffirmed and strengthened by the Trial Court. For acquitting accused, the Trial Court observed that the prosecution had failed to prove its case. The opinion of the Trial Court cannot be held to be illegal or improper or contrary to law - The order of acquittal cannot be interfered with - appeal dismissed.

  ---

• 2020 (1) TMI 766
  Import of new aircraft - Benefit of N/N. 21/2002-cus dated 1.3.2002 as amended - Department got intelligence that the said aircraft had been imported for private use by the appellant under the guise of non scheduled operator (passenger permit) - Whether the appellant herein has violated condition no. 104 (under sl. No. 347 N) of notification no. 21/2002-Cus as amended by notification no. 61/2007-Cus while importing an aircraft vide B/E No. 218981 dated 21.05.2007 by not complying with the undertaking as was given to DGCA at the time of said import? HELD THAT:- The scheduled as well as non scheduled air transport services firm (whether for passenger or charter) are open to use by the members of public and as such stands distinguished from what can be called as private use of the aircraft. The another thing which distinguishes scheduled air transport services and non scheduled from being called as the private use of aircraft is being published tariff / hire charges / remuneration against use of the said aircraft by any group but of public. Since the undertaking has been given for using the imported aircraft for NSOP/C services published tariff to the public is still the mandatory requirement. Clause 2 of condition no. 104 of notification no. 21/2002 as amended by 61/2007, lays down the requirement that the importer has to furnish the undertaking to the Customs Department to use the imported aircraft only for an avowed purpose. As mentioned in the said undertaking, the purpose of such undertaking is to avail the exemption of customs duty which otherwise were to be paid to the Customs Department except in case of the use of the imported aircraft for the specific purpose in a specified manner as mentioned in the said undertaking. It becomes absolutely clear that any breach of such undertaking will definitely be actionable. The furnishing of undertaking by the importer to the Ministry of Civil Aviation (DGCA) to make the specific use i.e. NSOP/C of the said aircraft is sufficient to permit the import of the aircraft, that too with exemption from payment of customs duty. This undertaking binds the importer that he shall use the aircraft for NSOP/C. This indicates that the said use of the aircraft will be possible only after the aircraft is imported pursuant to the said permission of DGCA. Accordingly, ]the nature of use as to whether it is in terms of the undertaking given or not can be appreciated only post import. For seeking the benefit of impugned notification two conditions were required. The former that is taking an approval from Civil Aviation subject to impugned undertaking as a pre import condition and verifying the compliance of the said undertaking as a post import condition. This finding has been corroborated from clause (ii)(b) of Condition no. 104 of the Notification no. 21/2002 as amended by 61/2007 - A perusal makes it abundantly clear that in the event of importer failing to use the imported aircraft for the purpose as is specified in the undertaking that an amount equal to the duty payable on the said aircraft shall be paid by the importer on demand. The amount to be paid apparently and admittedly is the amount of customs duty which was to be paid at the time of import at the undertaking for using the aircraft for the specified purpose i.e. NSOP/C being given. Clause 2A thus clarifies that the correlative right to monitor the manner of use of the aircraft and determine whether it was being used for the said purpose as undertaken vests in Customs Department. In the present case, neither the Civil Aviation Rules nor Aircraft Rules empower DGCA to investigate about the compliance of the undertaking. The undertaking is given in furtherance of the notification issued by the Customs Department in compliance of the Statutory Provisions of the Customs Act 1962. The verification as to whether the benefit of exemption from payment of customs duty should continue or not is opined definitely to lie with Customs Department only. The usage, of the impugned aircraft post import is not for non scheduled passenger/ charter air transport services but only for private use. The same amount to violation of the undertaking based upon which the exemption was granted to the appellant from paying the customs duty. Consequent to the said violation the appellant has made himself liable to pay the said customs duty as if he has failed to pay the same at the relevant point of time to the jurisdictional customs authority from any point of imagination cannot be ruled out. They are held to vest with the jurisdiction to demand the customs duty. Since the benefit of exemption has been claimed by giving an undertaking whereupon the appellant has failed to stand with the possibility of intent of the appellant to evade said duty at the time of import of the aircraft cannot be ruled out especially when there is no evidence produced on record by the appellant. There are no ambiguity or infirmity in the order under challenge - appeal dismissed.

  ---

• Corporate Laws

• 2020 (1) TMI 765
  Approval of scheme of amalgamation - valuation report - HELD THAT:- Valuer has to be an independent person assigned the important duty that his report is equitable to all stakeholders for which his report is to be relied upon. As regards the arguments of the learned counsel for the appellant that the valuation report has been got prepared from an unregistered valuer is concerned, we note that earlier there was no such section in Companies Act - Section 247 of the Companies Act, 2013 was notified w.e.f. 8.10.2017. The compliance of Section 247 would arise only after this date. There has been no regulation of valuers under the Companies Act, 1956 though the practice has been well established that this valuation was being done by the Chartered Accountants or valuers. The valuation report was submitted by the Valuer in March, 2017 - But the duties of the valuer as all along is necessitated that as a professional he will do his work i.e. Make an impartial, true and fair valuation of any assets which may be required to be valued; Exercise due diligence while performing the functions as valuer; Make the valuation in accordance with such rules as may be prescribed. In view of the serious compromises in the process of the valuation of shares the creditability of the exchange ratio recommended could at best be termed as guess work by the valuer. The scheme based on such a valuation report losses its creditability and will impact the entitlement of the shareholders of the transferor companies. The valuer made a valuation disregarding the methodology, methods or share entitlement ratio even as stated by him in his valuation report. No valuation of each share of every company has been done to arrive at the exchange ratio and we are convinced that only the guess work has been done to arrive at share exchange ratio. We are unable to convince ourselves that on the basis of this valuation report and for other reasons recorded above the amalgamation can be termed as fair to all stakeholders. Such Scheme could not have been approved. Impugned order is quashed and set aside - Appeal allowed.

  ---

• Insolvency & Bankruptcy

• 2020 (1) TMI 764
  Maintainability of application - initiation of CIRP - Corporate debtor failed to make repayment - existence of debt and dispute or not - Section 9 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The Corporate Debtor has placed sufficient material on record vide Report of Architect dated 25.04.2018, its Letter of Termination dated 17.01.2019 and Email dated 02.02.2019 to establish the pre-existing disputes between the Parties. Further, it is observed that the total amount due and payable mentioned in the Demand Notice sent on 30.04.2019 by the Operational Creditor to the Corporate Debtor is Rs. 1,86, 11,538 along with an interest @ of 8% per annum, which is at variance with an amount of Rs. 1,52,52,527 along with an interest of 18% per annum mentioned in the Part IV of the Petition - these disputes require adducing of further evidence and proper investigation into the claims, which can be adjudicated only under Civil Proceedings by the Competent Court. Petition dismissed.

  ---

• 2020 (1) TMI 763
  Restraint from invoking or encashing the Bank Guarantee - direction to Bank of China not to pay any amount to the Corporate Debtor s Bank - HELD THAT:- In all the cases the appellants have sought direction to Liquidator to restrain from invoking or encashing the Bank Guarantee. However, the Bank Guarantees were invoked. Though it is not clear as to whether the amount have been realised by the Corporate Debtor on invocation of aforesaid Performance Bank Guarantees or not, which was to be released by the Bank of China - Therefore, the direction as sought for by appellants to direct not to pay any amount to the Corporate Debtor, cannot be ordered. In case the Performance Bank Guarantees have been invoked, and the Corporate Debtor has received the amount out of the Performance Bank Guarantees, in such case we are of the view that the appellants can file their respective claim before Liquidator who may decide the claim in terms of Section 40 of I B Code - Thereafter if any person be aggrieved, such person is entitled to file appeal under Section 42 of Insolvency Bankruptcy Code, 2016 before the Adjudicating Authority. Appeal disposed off.

  ---

• Service Tax

• 2020 (1) TMI 762
  Business Support Services - reimbursement of expenses - amounts on which service tax has been demanded has been spent by Shri Ajay Kumar on transportation of the vehicles on behalf of M/s Jaika Motors Ltd. - extended period of limitation - demand of interest and penalty. HELD THAT:- Undisputed and also as admitted by the appellants in their letter dated 07.01.2013 which was in response to the summons issued under Section 14 of Central Excise Act, 1944 which by Section 83 of Finance Act, 1994 has been made applicable to service tax matters - From the definition of the Business Support Services as above and the clarification issued it is quite evident that the activities undertaken by the appellant clearly fall within the category of Business Support Services. Since the appellants had not disclosed the details of these transactions to the revenue in the ST-3 returns filed by them. Neither they have been able to establish any bonafides in non disclosure of such information to revenue - the impugned order for invoking extended period of limitation is upheld. Demand of interest - HELD THAT:- Since the demand of tax has been upheld the demand for interest will follow. It is now settled law that interest under Section 75, is for delay in the payment of tax from the date when it was due. Since appellants have failed to pay the said Service Tax by the due date interest demanded cannot be faulted - the demand of interest made under Section 75 of the Finance Act, 1994 is upheld. Penalty - HELD THAT:- It is now settled position in law that penalty under section 78 can be imposed only if the ingredients specified in the said section are present. The ingredients specified for invoking the Section 78 are identical to those specified for invoking the extended period of limitation as provided by Section 73 ibid - Since in respect of SCN, we hold that demand could have been made by invoking the extended period of limitation as provided by Section 73, we uphold the penalties imposed under Section 78 of The Finance Act, 1994. By not indicating the details of these transactions in the ST-3 returns as required under Section 70 of Finance Act, 1994 read with Rule 7 of Service Tax Rules, 1994, appellant have made themselves liable to penalty under Section 77 ibid. Hence the penalties imposed upon by the adjudicating authority under this section are upheld. Appeal dismissed.

  ---

• Central Excise

• 2020 (1) TMI 761
  CENVAT Credit - excess found goods - credit denied and penalty imposed on the ground that the goods were found physically excess as compared with statutory record in the stocks - time limitation - HELD THAT:- The adjudicating authority has not denied the fact that on the same facts a Show Cause Notices as already been issued to the appellants on 01.07.1994 to deny Cenvat credit. Further, on the same invoices the impugned show cause notice has been issued to the appellant on 28.02.1996. The impugned show cause notice is barred by limitation as the fact of availment of Cenvat credit was not in the knowledge of the Revenue while issuing Show Cause Notice dated 01.07.1994. The impugned show cause notice is not sustainable, consequently, the demand raised against the appellant to deny Cenvat credit is not sustainable - Appeal allowed - decided in favor of appellant.

  ---

• 2020 (1) TMI 760
  CENVAT credit - denial on the ground that the manufacturer are non-existent - HELD THAT:- No investigation have been conducted with the transporters to ascertain the fact whether the transporter has directly supplied the goods to the appellant or not - Moreover, the appellant sought cross-examination of the witnesses whose statements have been relied upon by the Revenue and no such cross-examination was granted. The case has been made out against the appellants on the basis that the manufacturers are not existent. In fact, the appellant has purchased the goods from M/s Shree Mahalaxmi Scrap Trading Co,. a dealer who has issued the proper invoice and same has been accompanying with the goods, the buying manufacturer was not required to ascertain the fact whether the manufacturer is existent or not. Admittedly, nothing adverse has been brought out on record by the Revenue. In that circumstances, Cenvat credit cannot be denied merely on the basis of the presumption that it might be a paper transaction as manufacturer of the scrap are non-existent. Credit allowed - appeal allowed - decided in favor of appellant.

  ---

• 2020 (1) TMI 759
  Classification of goods - Rexona - Lux - whether classified under S. H. No. 3401.10 of CETA or under sub-heading 3307.30 of CETA? - CBEC Circular No. 31/89 dt. 12/05/1989 - HELD THAT:- The issue has been settled by the Tribunal in the case of appellants themselves in the case of HINDUSTAN LEVER LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, NAGPUR [ 2002 (10) TMI 143 - CEGAT, MUMBAI] and was upheld by the Supreme Court in COMMISSIONER OF CENTRAL EXCISE, NAGPUR VERSUS HINDUSTAN LEVER LTD. [ 2013 (8) TMI 722 - SC ORDER] , where it was held that the item in question is soap only for classification under Chapter Heading 34 and it is not bath preparation for classification under Heading 33.07 of the Central Excise Tariff Act as contended by the Revenue. Appeal allowed - decided in favor of appellant.

  ---

• 2020 (1) TMI 758
  CENVAT Credit - input service distribution - Credit distributed by their head office as ISD is denied - input services or not - HELD THAT:- As it is not disputed at the end of the head office, therefore, the admissibility of Cenvat credit cannot be disputed at the end of the appellant. Therefore, the appellant is entitled to avail the Cenvat credit on the disputed services in question and, accordingly, the impugned order is set aside - Appeal allowed - decided in favor of appellant.

  ---

• 2020 (1) TMI 757
  Valuation - Waste and scrap - waste and scrap used captively for Manufacture of exempted reprocessed granules - benefit of N/N. 67/95-CE dated 16.03.1995 - captive consumption - Whether the valuation should be done in terms of Rule 8 of Central Excise Valuation Rules that is on Cost Construction Method or on the comparable value of waste and scrap sold to independent customer on Principle to Principle basis? HELD THAT:- The waste and scrap consumed captively and sold to independent buyers are one and the same. There is no allegation in the Show Cause Notice that the waste and scrap cleared for captive consumption and the one sold to the independent buyers are different. No investigation was carried out to establish that the waste and scrap sold and captively consumed are different in nature. Also, the waste and scrap as generated in the course of manufacture of BOPP film. Therefore, there cannot be different category of waste in one process of Manufacture of BOPP film. The entire SCN was issued only on the basis of Rule 8 of Valuation Rules and CBEC Circular dated 30.6.2000, however this dispute has been resolved by the Larger Bench of this tribunal in the case of IISPAT INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX., RAIGAD [ 2007 (2) TMI 5 - CESTAT, MUMBAI] according to which even though goods were not sold and used captively, the valuation of such goods shall be on the basis of the Sale Price of such goods sold to the independent buyers. There is no specific character of the waste and scrap mentioned in the description, either in case of captive consumption or in the case of waste and scrap sold to independent customer. Therefore, merely on the description which does not give the actual character of the scrap, it cannot be said that the scrap sold to independent customer is different from waste and scrap captively consumed. Therefore, the conclusion of the Adjudicating Authority that both types of clearances are of different waste and scrap is not tenable - the appellant has correctly valued the goods in conformation to the Larger Bench judgment in the case of Ispat Industries Ltd. Time Limitation - HELD THAT:- The fact of sale of waste and scrap and captive consumption for further manufacture of reprocessed granules and use thereof in the manufacture of BOPP films was in the knowledge of the department - Subsequently, since the issue was contentious on the dispute of valuation in case of captive consumption the same was resolved by the Larger Bench of this tribunal in the case of Ispat Industries Ltd. Therefore, it cannot be said that the appellant had any intention to evade payment of Excise Duty. Accordingly, the extended period of demand was also not invocable. Appeal allowed - decided in favor of appellant.

  ---

• 2020 (1) TMI 756
  Benefit of N/N. 254/87-CX dated 25.11.1987 - demand duty in respect of the man made fabrics cleared by them - admissible limit of percentage of polyester in manmade fabric - HELD THAT:- Commissioner (Appeals) has in the impugned order denied the benefit of the Board s Letter 261/19/12/76- CX.8 dated 25.2.1977 - We are not in position to agree with the views expressed by the Commissioner (Appeal) for the reason that it is based on erroneous reading of the said letter. The finding recorded by Commissioner (Appeal) to the effect that the said Board letter applies only to rayon/ artificial silk and not polyester has been rejected by the tribunal in case of MORARJEE GOCULDAS SPG. WVG. CO. LTD. VERSUS COMMR. OF C. EX., MUMBAI [ 1997 (12) TMI 365 - CEGAT, MUMBAI] where it was held that It is evident therefore that in order to arrive at the classification, fabric made from yarn or a mixture of synthetic or artificial yarn with cotton or wool, the tolerance factor has to be applied. Appeal allowed - decided in favor of appellant.

  ---

• 2020 (1) TMI 755
  Valuation - Nitrogen Gas manufactured and cleared to M/s. JSW - Department contends that the appellants have procured liquid Nitrogen Gas at the rate of Rs. 7 to Rs. 10 per cubic meter and sold the same to M/s. JSW at the rate of Rs. 1.90 per cubic meter and thus the appellants have under valued the nitrogen gas sold to M/s. JSW - adoption of Rule 11 of the valuation Rule 2000 or Section 41(a) of Central Excise Act 1944 - revenue neutrality - extended period of limitation. HELD THAT:- With effect from 2000 the concept of value has changed in the Central Excise Parlance. The concept of transaction value has been put in place instead of the normal price existing earlier. It is not the case of the department that different transaction values do not exist for the product. It is clearly brought out by the Appellants that in terms of the agreement itself, different prices are available for the Nitrogen manufactured from different streams. We find that these two are differently identifiable transaction and as such there is no bar under Section 41(a) of Central Excise Act, 1944 for the existing of two transaction values, Although for the same product and for the same receiver. It is not the case of the department that the price paid or payable by M/s. JSW to the Appellants has been suppressed and differential amounts were being paid by M/s. JSW to the Appellants. In the absence of any such evidence the department contention that the sale value adopted by the Appellants do not represent the actual transaction value is not sustainable. The agreement between the appellant and the customer clearly brings out the difference in pricing. The higher price adopted was only in respect of the clearance of Nitrogen is made out of Liquid Nitrogen purchased by the Appellants. Just because there is a variation in one of two consignment the value cannot be adopted to the entire consignment in the particularly in the era of assessment based on transaction value. The department has not put forth any evidence to demonstrate that amounts over and above the transaction value were collected by the Appellants. On going through the SCN and the adjudication order, it is found that the same have not taken into account the fact that appellants have arrived at the value in terms of Rule 6 of Central Excise Valuation Rules 2000. It has also not been brought on record as to why the calculation arrived at by the appellants has not been discussed and disposed off before calculating in a different manner. Under the circumstances, the matter requires to travel back to the Adjudicating Authority to arrive at the correct assessable value, considering the observations of the bench as above and the submissions of the appellants. Appeal allowed by way of remand.

  ---

• CST, VAT & Sales Tax

• 2020 (1) TMI 754
  Doctrine of merger - Levy of Purchase Tax - transfer of right to use the goods - Section 8A of the U.P. Trade Tax Act, 1948 - applicability of Section 22 of the Act, 1948 - Contention of the revisionist is that the lease rent received by the revisionist from the lessee, was not amenable to levy of tax on the transfer of right to use the goods as per Section 3F of the Act, 1948 and therefore they were not liable for payment of any tax, as such. HELD THAT:- The application under Section 22 of the Act, 1948 sought to rectify the mistake committed by the assessing authority who passed the assessment order in ignorance of the amendments made in Section 3F of the Act, 1948 by means of Amendment Act No. 11 of 2001 and therefore the said application was clearly not maintainable, inasmuch as, in exercise of power under Section 22 of the Act, 1948, only the mistake committed by the first Appellate Authority could have been rectified. The issue regarding tax on lease rent became final when the same was duly accepted by the revisionist and the revenue did not chose to reopen the same by exercising powers relating to reopening the assessment and therefore, the order of the assessing authority attained finality and was not liable to be opened in the manner the revenue has sought to reopen, i.e. by moving an application under Section 22 of the Act, 1948 - The situation would have been different had the issue regarding lease rent been considered and decided by the first appellate authority - the doctrine of merger as canvassed by the learned counsel for the revenue would not apply. The very words rectification of mistake includes due application of mind on a particular set of fact or law which are liable to be corrected under the powers conferred under Section 22 of the Act, 1948 - In the facts of the present case, where an issue was never raised before the Appellate Authority nor considered by it, it cannot be subject matter for correction of a mistake and therefore application under Section 22 of the Act, 1948, preferred by the revenue for correction of mistake in the order of Joint Commissioner (Appeals), was clearly misconceived. The application for rectification under Section 22 of the Act, 1948 was moved by the revenue for rectification of the order of the Joint Commissioner (Appeals) but in the entire application there was no mention of the mistake sought to be rectified in the said order and therefore, such an application would not be maintainable and it would be a colourable exercise that under the garb of rectification of mistake of the order of first Appellate Authority, the order of the Assessing Authority is rectified/modified and fresh assessment is made in this regard - the impugned order of the Tribunal is not sustainable and therefore the same is set aside - Revision allowed.

  ---

• 2020 (1) TMI 753
  Imposition of penalty U/s 10-A read with Section 10(b) of the Central Sales Tax Act - quantum of penalty - addition/amendment with regard to the items required to be imported by the revisionist - amendment in the registration certificate. HELD THAT:- The admitted facts of this case are that the revisionist had moved an application for adding of Branch of his firm and also for addition of items. The competent authority had only added the Branch but no order was passed with regard to addition of the items. It is true that Form-C was issued in respect to the items to be imported, which did not find mention in the certificate of registration and the revisionist is claiming that the said goods were imported under the bona-fide belief that the goods have been included in the amended certificate of registration - It is also uncontroverted that application regarding addition of items was not allowed nor were the items entered on the certificate of registration. Without addition of items in the registration certificate, it is not permissible for the revisionist to import the goods and in case such goods which are not included in the certificate of registration are imported, same would amount to penalty under the provisions of the Central Sales Tax Act. In the instant case, the assessee despite coming to know that the goods/items have not been included in the list, he did not moved any application for disposal of pending application or moved a fresh application for including the goods in the certificate of registration - The revisionist in the present case was fully aware of the amendments incorporated in his certificate of registration and from the list of items appended therein, he should have been aware of the fact that his application for addition of goods had not been allowed and this the items had not been included in the list of goods he intends to import on Form C. This Court is of the considered opinion that there is no illegality or infirmity in the order of the Tribunal and therefore no interference in the same is required - Revision dismissed.

  ---

• 2020 (1) TMI 752
  Waiver of penalty u/s section 54(1)(14) of the VAT Act - Form 38 was blank - contravention of the provisions of Section 50 of the Act, 2008 - HELD THAT:- Perusal sub Section 6 of Section 28A itself indicates that penalty can be imposed only after giving opportunity of being heard that the goods were being so transported in an attempt to evade payment of tax due or likely to be due under the Act and therefore mens rea becomes essential ingredient - Non-filling up of column no. 6 i.e. not mentioning of bill / cash memo / chalan / invoice number may lead to an inference that in case of non-checking of goods the declaration form may be re-used for importing goods of same quantity, weight and value to evade payment of tax but it cannot be the sole ground to impose penalty under Section 54(1)(14) of the Act, 2008. Satisfaction has to be recorded after giving opportunity to the dealer / person and after considering all the relevant materials / evidences on record that there was an intention to evade payment of tax. The guilty mind is necessary to be established to impose penalty under Section 54(1)(14) of the Act, 2008. In the present case also the vehicle was accompanied by Form 38 and all other documents were being carried along with other documents and only due to human error column would remain unfilled. It was the duty of the Officer managing the Check Post who after discovering that some column of Form 38 found unfilled should have filled the same himself in the light of Circular dated 03.02.2009 and should have allowed the vehicle to proceed alongwith the goods - It is undisputed that the goods transported were the same which were mentioned in the various documents (bill/builty/challan etc.) carried by the driver of the vehicle. Revision dismissed.

  ---

• 2020 (1) TMI 751
  Waiver of penalty u/s 54(1)(14) of U.P. Value Added Tax Act, 2008 - unfilled (blank) column of Form 38 - contravention of the provisions of Section 50 of the Act, 2008 - HELD THAT:- In the instant case it is admitted fact that the respondent had duly applied for and obtained Form 38 for import of goods and the Column 6 of the said Form was left blank on account of negligence of the respondent. It is only on account of non filling of Column 6, penalty has been imposed upon the respondent. It has been submitted on behalf of the respondent that there was no intention to evade tax and the driver of the vehicle carrying the goods was carrying all the relevant documents including the bill/challan/bilty etc. from which the details of goods being carried on the vehicle could have been verified by the officer concerned and therefore there was no occasion for the assessing officer to pass penalty order, inasmuch as there was no intention on the part of the assesee to evade tax. Non-filling up of column no. 6 i.e. not mentioning of bill / cash memo / chalan / invoice number may lead to an inference that in case of non-checking of goods the declaration form may be re-used for importing goods of same quantity, weight and value to evade payment of tax but it cannot be the sole ground to impose penalty under Section 54(1)(14) of the Act, 2008. Satisfaction has to be recorded after giving opportunity to the dealer / person and after considering all the relevant materials / evidences on record that there was an intention to evade payment of tax. The guilty mind is necessary to be established to impose penalty under Section 54(1)(14) of the Act, 2008 - In the present case also the vehicle was accompanied by Form 38 and all other documents were being carried along with other documents and only due to human error column would remain unfilled. It was the duty of the Officer managing the Check Post who after discovering that some column of Form 38 found unfilled should have filled the same himself in the light of Circular dated 03.02.2009 and should have allowed the vehicle to proceed alongwith the goods. It is undisputed that the goods transported were the same which were mentioned in the various documents (bill/builty/challan etc.) carried by the driver of the vehicle. Revision dismissed.

  ---

• 2020 (1) TMI 750
  Maintainability of revision - rectification of mistake - wrong finding has been given in the order in the appeal which is already on the record of the Trade Tax Tribunal - Section 22 of the U.P. Trade Tax Act - limited scope of Tribunal u/s 22 of the U.P. Trade Tax Act - evidence on record but ignored and not considered under the judgment. HELD THAT:- The scope of Section 22 of the Act, 1948 is limited and the same is attracted only when the applicant is able to demonstrate that there is error apparent on the face of record, requiring rectification. If an error is discovered after dwelling deep in the matter and after debating, then such a error would not amount to error apparent on the face of record and in fact would amount to review of the order, which cannot be done under the garb of an application under Section 22 of the Act, 1948. The rectification as sought by the revisionist, does not amount to error apparent on the face of record, rather it seeks re-examination of the entire issue by dwelling into various transactions and books of account which is not the purport and effect of exercising power under Section 22 of the Act, 1948. There are no merits in the revision and the revision is dismissed.

  ---

• 2020 (1) TMI 749
  Seizure of goods by police - goods seized by the police under the Trade Tax Act for the reason, the applicants are not the importer as per the definition of importer provided under Section 2E of the U.P. Trade Tax Act and contesting the matter before the authorities - HELD THAT:- The conjoint reading of Section 28-A and Section 15A(1)(o) clearly provides that in case of contravention of the provisions of Section 28- A of U.P. Trade Tax Act, the person is liable to be penalised under Section 15A(1)(o) - From the perusal of the FIR and the impugned order dated 17.01.2007 passed by the learned trial court clearly establishes that the basis of applying Section 420 of I.P.C. is that the applicants have acted in contravention of Section 28-A of the U.P. Trade Tax Act. The perusal of Section 5 Cr.P.C., which is saving clause and protects the procedure provided under the provisions of U.P. Trade Tax Act for initiation of prosecution against the person who contravenes any of the provisions of U.P. Trade Tax Act - Ordinarily criminal prosecution instituted against an accused person must be tried under the provisions of the Code and the High Court would be reluctant to interfere with the said proceedings at an interlocutory stage. The continuation of the prosecution against the applicants would be illegal and nothing but an abuse of the process of the Court - Application allowed.

  ---

• 2020 (1) TMI 748
  Validity of revision - imposition of penalty - Form-31/documents prescribed for inter-State sale not produced - revision relates to assessment year 2005-06 - HELD THAT:- It is clear that the First Appellate Authority has recorded findings of fact that the goods were being imported for production of non taxable goods and therefore import of said machine is not liable to be taxed - Secondly, that the said machine was not found in working condition and therefore the same was returned to M/s Disha Enterprises, therefore there was no sale on which such penalty can be imposed. Aforesaid facts, in the opinion of this Court, should have been considered by the Tribunal in their proper perspective and in case explanation given by the revisionist are accepted, then it is clear that it indicates that there was no intention to evade tax. Though the Tribunal was not relying on any document which may have given rise of any occasion for the assessing authority to initiate such proceedings, but looking into the fact that the revisionist at the very first instance produced the entire documents before the assessing authority, indicates that the revisionist fulfilled all the conditions as prescribed under the Act, 1948 and even then penalty has been imposed by the assessing authority. Thus, it is clear that there was no clear finding recorded by the authorities concerned to the effect that there was intention to evade tax under the Act. The finding of fact recorded by the Tribunal have not been rebutted by the revenue and therefore they have attained finality - It is clear that the machine in question was found not in working condition and has been returned back and even otherwise no concluded transaction took place on which penalty could have been imposed by the revenue. Revision allowed.

  ---

• Indian Laws

• 2020 (1) TMI 747
  Leave to appeal - Dishonor of Cheque - friendly loan - existence of legally enforceable debt or not - offence u/s 138 of NI Act - the case of complainant/petitioner is that she had advanced loan of Rs. 3,15,000/- to accused/respondent no.2 but the same has not been supported by any document to prove that the loan was actually advanced - HELD THAT:- It is not in dispute that loan was given in the year 2012. The petitioner has also stated in her complaint Ex.CW1/6 in para 5 that the accused had issued two other cheques out of which cheque for Rs. 5,000/- was honoured on 08.08.2012 and another of Rs. 15,000/- was dishonoured on 28.12.2012 . She has also stated in her cross-examination as CW-1 that I had received total three cheques from the accused. The first cheque was cleared on 08.08.2012 and second cheque was dishonored vide memo dt. 28.12.2012 and the third cheque was dishonored vide memo dt. 21.01.2014 The Ld. Trial Court observed that petitioner has also failed to give particular dates on which the cheques were issued by respondent no.2 in favour of the petitioner. Further, petitioner has not given any satisfactory reason as to why she did not send any written communication demanding the balance payment from respondent no.2. This fact becomes all the more important in the light of the testimony of respondent no.2 as DW-1 and legal notice Ex.DWl/C sent to the petitioner in October 2013 demanding his security cheques from the petitioner - the learned Trial Court opined that the case of the petitioner that there exists legally enforceable debt of Rs. 3,15,000/- against respondent no.2, is rendered doubtful. It is a settled principle of law that the presumptions U/s 118 (a) and 139 of N.I. Act, 1881 are rebuttable in nature and standard of proof required by accused such rebuttal is preponderance of probabilities and the standard of proof on behalf of prosecution is proof of guilt beyond all reasonable doubts. The petitioner/complainant has miserably failed to prove her case beyond reasonable doubt - petition dismissed.

  ---

• 2020 (1) TMI 746
  Waiver of pre-deposit - Direction to deposit 50% of the amount of debt due - applicability of Section 18(1) of the SARFAESI Act - It is a conceded case of the respondents that none of the eventualities exist as the amount due to the Bank has been recovered - HELD THAT:- Section 18(1) of the SARFAESI Act clearly stipulates that any person aggrieved by any order made by the DRT under Section 17, may prefer an appeal to DRAT within 30 days from the date of receipt of the order of the DRT. The second proviso to Section 18(1) stipulates that no appeal shall be entertained by the DRAT unless the borrower has deposited with it 50% of the amount of debt due from him, as claimed by the secured creditor or as determined by the DRT, whichever is less. The third proviso to Section 18(1) gives a discretion to DRAT to reduce the aforesaid amount to not less than 25%, provided that DRAT gives reasons for the same which are to be recorded in writing. What becomes clear from the aforesaid provisions is that there is a jurisdictional bar from entertaining an appeal filed by the borrower from an order passed under Section 17, unless the borrower deposits 50% of the amount of debt due from him, as claimed by the secured creditor or as determined by the DRT, whichever is less. There is also a discretion granted to the DRAT to reduce this amount to 25% provided it finds adequate reasons for doing so and gives reasons, that are recorded in writing. If this deposit is not made, then DRAT has no jurisdiction to entertain the appeal of the borrower. The DRAT has no power or jurisdiction to reduce the deposit amount to less than 25%. This is ex-facie clear from the plain and unambiguous language of Section 18 of the SARFAESI Act. The submissions made on behalf of the Petitioners that as the amount of debt due had not been determined by DRT, the appeal entertained by the DRAT without insisting of pre-deposit is erroneous. Under the second proviso to sub-Section (1) of Section 18 of the SARFAESI Act, the amount of 50% which is required to be deposited by the borrower is computed either with respect to the debt due as claimed by secured creditor in his statutory notice or as determined by the DRT whichever is less. This means that if the amount of debt is yet to be determined by DRT then the borrower while preferring an appeal would be liable to deposit 50% of the debt due from him as claimed by the secured creditor in his statutory notice. Since the condition of pre-deposit is mandatory, complete waiver of pre-deposit cannot be granted and it is beyond the jurisdiction of the Tribunal to do so as is evident from the second and third proviso to Section 18(1). In the present case, the Petitioners have challenged the sale of its two properties at Nagpur and Kolkatta before the DRT and therefore the amount that has been realized pursuant to sale of the aforesaid two properties would not be available to the Petitioners for considering it towards the pre-deposit amount. Had the Petitioners not challenged the sale, then in that event the amount of Rs. 7,60,50,000/- would have been available to the Petitioners. But, having challenged the same, the same would now not be counted. The debt due would be debt which would be outstanding under the statutory notice issued by Respondent no. 1 under the SARFAESI Act. This debt would be debt due as on 2006. Further in addition to this debt due, an amount of interest and future interest that would be added from 2006 onwards until 2017 would escalate the debt due to a higher sum. The Petitioners would therefore be liable to deposit 25% of this amount as condition precedent under the provisions of the said Act in the appeal proceedings as pre-deposit, in view of the challenge made by the Petitioners to the sale of its properties as well as due to the pendency of the counter-claim of the Petitioners - We therefore, fail to see as to how the Petitioners can make a grievance and seek complete waiver of the pre-deposit amount. Petition dismissed.

  ---

• 2020 (1) TMI 745
  Grant of Regular Bail - Section 437/439 of Code of Criminal Procedure, 1973 - flight risk - tampering evidence - influencing witnesses - it is submitted that the entire case against the Applicant is completely false and fabricated - HELD THAT:- The Applicant has no role to play in the transactions alleged in the FIR, the complaint dated 27.12.2019 and/or the verification memo dated 27.12.2019/28.12.2019. As stated above, he was illegally detained on 31.12.2019 while he was on his way to the airport and was thereafter forced to carry out various acts against his wishes and under pressure and coercion of the CBI officials. The Applicant has not demanded or accepted any bribe amount, nor has made any attempt to do so. Even as per the case of CBI in the remand Application dated 02.01.2020, the Applicant has not handled the tainted money at any point of time. There is no circumstance adverse to the grant of bail. That the Applicant has no criminal antecedents. The Applicant has been falsely named in the said FIR - the Applicant undertakes to abide by any directions or conditions imposed by this Hon ble Court in granting him bail. The Applicant has preferred the present Application bona fide and in the interest of justice. The Applicant has not filed any such or similar Bail Application either before this Hon ble Court or before the Hon ble High Court - bail granted.

  ---