TMI Tax Updates - e-Newsletter
January 20, 2020

Case Laws in this Newsletter:

GST Income Tax Customs Securities / SEBI Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax

Highlights / Catch Notes

• GST:

  Classification of goods - odomos - The invocation of the general entry called “others” by the petitioner is clearly misconceived, since the product in question is covered by a specific description in the heading under which the product has been classified - HC dismissed the appeal against the order of AAAR
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• GST:

  In the interest of justice it is hereby provided that let this Court be informed by means of of an affidavit filed by the Secretary, Ministry of Finance, Government of India, New Delhi as to within what period of time the GST, Appellate Tribunal for the State of U.P. would be constituted.
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• Income Tax:

  TDS u/s 194H - discount given by the assessee to its distributors on prepaid SIM Cards - When the transaction was between two persons on principal to principal basis, deduction of tax at source as per section 194H of the Act, would not be made since the payment was not for commission or brokerage.
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• Income Tax:

  Disallowance of Amortized Premium - Though contended, no contrary instructions of CBDT are brought to our notice. The instruction in question having been issued under section 119(2) of the Income-tax Act, 1961, would bind the Revenue.
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• Income Tax:

  Non linking of Aadhaar with PAN - constitutional validity of section 139AA - It is ordered that PAN of the applicant shall not be declared inoperative and the applicant would not be in default in any proceedings only for the reason that the permanent account number is not linked with Aadhaar or Aadhaar number is not quoted and the applicant shall not be subjected to the proviso to sub-section (2) of section 139AA till the judgment of the Supreme Court in the Rojer Mathew v. South Indian Bank Ltd. and others is delivered and available.
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• Income Tax:

  Reopening of assessment u/s 147 - except filing return, the petitioner had taken all other course such as filing of objection and invoking the writ jurisdiction of this Court. - If this Court interferes at the initial stage of reopening proceedings, certainly, it will amount to stay of proceedings for recovery of tax. - Petition dismissed.
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• Income Tax:

  Interest on delayed refund u/s 244A - TDS was not required to be deducted by the employer - once there is a refund and if there is a delay, interest is payable - There is no basis for denying interest on such delayed refund of the amounts.
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• Income Tax:

  Release of cash - cash seized in search at railway station - The proceedings before the said authority are pending adjudication - Having regard to the guidelines issued by the Central Board of Direct Taxes and Section 132B of the Income Tax Act, the AO directed to take a decision preferably within a period of 3 months
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• Income Tax:

  Validity of order of the Settlement Commission - final order is different from the observations/findings in the initial order - there is sufficient material and are also reasons for the Settlement Commission coming to a different conclusion while passing the final order - Order sustained.
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• Income Tax:

  Rejection of application for settlement of the Case - full and true disclosure of the income - the manner in which such income has been derived - Section 245(C) of the Act is meant for those assessees who seek to disclose income not disclosed before the officer including ‘the manner in which such income has been derived’. If the department already knows and has gathered particulars of such income and the manner in which it has been derived, there is no ‘disclosure’ by the assessee.
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• Income Tax:

  Revision u/s 263 - The Dispute Resolution Panel (DRP) has a full authority to direct/propose certain additions or to delete certain additions. Therefore, it is a foolproof mechanism which cannot be doubted by Pr. CIT by invoking Section 263 which is a revisional power in respect of final assessment order or any order but not to a proposal which is called draft assessment order.
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• Income Tax:

  Addition u/s. 68 - Loss from the illegal activity of providing accommodation entry - since the assessee has suffered the loss in his unlawful activity of giving accommodation entry which resulted in the beneficiaries not giving the income to the assessee is an allowable deduction.
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• Income Tax:

  Addition u/s 56(2)(viib) - Method of valuation of share - The AO or Ld. CIT(A) is trying to evaluate the accuracy of the valuation at the time of assessment, this is not proper and also the factuals are based on so many factors subsequent to adoption of projection and valuation.
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• Income Tax:

  Disallowances u/s 40A(3) - payment in cash exceeding prescribed threshold of twenty thousand rupees - the genuineness of the transactions and it being free from vice of any device of evasion of tax is relevant consideration for which section 40A(3) has been brought on the statute books and which has been satisfied in the instant case. - Addition deleted.
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• Customs:

  Valuation of imported goods - comparison of the contemporaneous imports - The brand name of the goods as well as the specification are different. Comparison of the value of such goods which are different from the goods imported by the appellant and enhancement thereon is against the provisions of law.
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• Central Excise:

  CENVAT Credit - in absence of investigation at the end of actual recipients, the allegation of availing credit by the Appellants only on the basis of invoice without actual receipt of goods cannot be allowed to sustain.
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• Central Excise:

  Classification of goods - colour Television (C.T.V.) sub assembly - Revenue had rightly classified the goods- product as complete Television set even though it was subsequently disassembled
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• Central Excise:

  Valuation of manufactured goods - ‘Reebok’ brand shoes - rejection of declared value - there were no allegations in the show cause notice that price was not sole consideration for sale and there were no allegations that there was any flow back of money from the buyers to the appellant - Demand set aside.
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• Central Excise:

  Valuation - manufacture of DG set - inclusion of pre-delivery inspection charges - The activity of filling of Diesel in the DG Set at the site Company is at most can be considered as pre-delivery inspection charges. - the charges for pre- delivery inspection is not includable in the Assessable Value.
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• VAT:

  In the matters of classification, it is the commercial parlance test which is relevant. It is test which has and that has to be adopted by the assessing officer. He has to decide as to how the product is treated in the market by the men of commerce in the trade. It is not the clarification or a particular view of the superior officer which should weigh his mind though such clarifications in the matters of classifications may be a relevant factor.
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Articles

• Acceptance of payment through prescribed electronic modes section 269SU- Can you accept payment thru account payee cheque

Notifications

• FEMA

• FEMA. 397/RB-2020 - dated 7-1-2020 - FEMA
  Foreign Exchange Management (International Financial Services Centre) (Amendment) Regulations, 2020

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• GST - States

• S.O. 79 - dated 16-1-2020 - Bihar SGST
  Amendment in Notification No. S.O. 124, dated the 23rd January, 2018

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• S.O. 75 - dated 13-1-2020 - Bihar SGST
  Bihar Goods and Services Tax (Amendment) Rules, 2020

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• 29/2019-State Tax (Rate) - dated 31-12-2019 - Gujarat SGST
  Amendment in Notification No 13-2017-State Tax in respect of RCM on renting of motor vehicles services

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• 28/2019-State Tax (Rate) - dated 31-12-2019 - Gujarat SGST
  Amendment in Notification No 12-2017-State Tax in respect of granting of long term lease

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• 27/2019-State Tax (Rate) - dated 31-12-2019 - Gujarat SGST
  Amendment in notification No 01-2017-State Tax to change the rate of GST on certain goods like woven and non-woven bags etc

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• Order No. 10/2019-State Tax - dated 27-12-2019 - Gujarat SGST
  Gujarat Goods and Services Tax (Tenth Removal of Difficulties) Order, 2019

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• 75/2019-State Tax - dated 27-12-2019 - Gujarat SGST
  Seeks to carry out changes in the GGST Rules, 2017

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• 74/2019-State Tax - dated 27-12-2019 - Gujarat SGST
  Waiver of late fees for non- filing of FORM GSTR-1 from July, 2017 to November, 2019.

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• 72/2019-State Tax - dated 17-12-2019 - Gujarat SGST
  To notify the class of registered person required to issue invoice having QR Code

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• 71/2019-State Tax - dated 17-12-2019 - Gujarat SGST
  To give effect to the provisions of rule 46 of the GGST Rules, 2017

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• 70/2019-State Tax - dated 17-12-2019 - Gujarat SGST
  To notify the class of registered person required to issue e-invoice

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• 69/2019-State Tax - dated 17-12-2019 - Gujarat SGST
  To notify the common portal for the purpose of e-invoice

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• 68/2019-State Tax - dated 17-12-2019 - Gujarat SGST
  Gujarat Goods and Services Tax (Eighth Amendment) Rules, 2019.

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Circulars / Instructions / Orders

• SEZ - Minutes of the 94th meeting of the SEZ - dated 3-1-2020
  Minutes of the 94th meeting of the. Board of Approval for SEZ held on 3rd January, 2020 to consider setting up of Special Economic Zones and other miscellaneous proposals
• SEBI - SEBI/HO/DDHS/08/2020 - dated 17-1-2020
  Format for Statement indicating Deviation or Variation in the use of proceeds of issue of listed non-convertible debt securities or listed non-convertible redeemable preference shares (NCRPs)
• GST - States - 129/48/2019 - dated 13-1-2020
  Standard Operating Procedure to be followed in case of non-filers of returns
• GST - States - Circular No. 03/2020 (State) - dated 10-1-2020
  Fully electronic refund process through FORM GST RFD-01 and single disbursement
• GST - States - 130/49/2019 - dated 31-12-2019
  Reverse Charge Mechanism RCM on renting of motor vehicles

News

• Piyush Goyal to lead Indian Delegation to World Economic Forum 2020

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• Finance Commission gets presentation from IMF on Resource Mobilisation for the Next Five Years

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Case Laws:

• GST

• 2020 (1) TMI 707
  Classification of goods - odomos - Appellate Authority has upheld the ruling of the Authority for Advance Ruling classifying odomos (product in issue), under HSN 38089191 of Chapter 38 of the Customs Tariff Act, 1975 - whether classified under HSN 38089191 of Chapter 38 of the Customs Tariff Act, 1975 or under heading no. 3004 of the Customs Tariff Act, 1975? HELD THAT:- A perusal of the classification heading no. 38089191 shows that the product in question is a neat fit into the description of products laid down therein. No laboured process of reasoning is required since the heading no.38089191, is clear as daylight - The conclusion of the Appellate Authority in this regard are consistent with the Rules of interpretation and judicial authority in point. The invocation of the general entry called others by the petitioner is clearly misconceived, since the product in question is covered by a specific description in the heading under which the product has been classified - This Court is not persuaded to take a different view. It is established that all attributes of mosquito repellents relevant for a judicial enquiry of this nature are found in the product in question. This is not a fit case to judicially review the impugned order. Consequently, we decline to exercise our discretionary jurisdiction under Article 226 of the Constitution of India in favour of the petitioner - there is no palpable infirmity in the classification of the product in the order passed by the Appellate Authority. Petition dismissed.

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• 2020 (1) TMI 706
  Proposal for constitution of State bench of GST Appellate Tribunal at Lucknow and 20 area Benches at 16 different locations - Section 109 of the U.P. Goods and Service Tax Act, 2017 - HELD THAT:- From the material disclosed in the affidavit, which according to us is extremely unsatisfactory and does not address the issues which were directed by this Court to be addressed, inasmuch as there is not a whisper as to within what period of time the GST, Council would create GST Appellate Tribunal for the State of U.P. and the Government would notify the same - It is needless to say that it is imperative that this issue be taken up by the Central Government as well as the GST Council, as expeditious as possible, as they are under the legislative mandate to create a GST Appellate Tribunal in the State of U.P. and they cannot shirk from their statutory obligation in this regard. The High Court in exercise of power under Article 226 of the Constitution of India can pass appropriate orders for compliance of the statutory provisions contained in various enactments. In the present case a provision has been made in Section 109 for creation of the GST, Appellate Tribunal, but the reasons best known to the respondents only for the State of U.P. said Appellate Tribunal has not been constituted - The persons aggrieved by the order of the First Appellate Authority have no other remedy than to file a writ petition before this Court, in absence of GST, Appellate Tribunal. In the interest of justice it is hereby provided that let this Court be informed by means of of an affidavit filed by the Secretary, Ministry of Finance, Government of India, New Delhi as to within what period of time the GST, Appellate Tribunal for the State of U.P. would be constituted. Let an affidavit be filed by the next date of listing. List this case on 25.02.2020, on which date the Additional Secretary, Ministry of Finance, Government of India, New Delhi shall appear before this Court for assistance.

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• 2020 (1) TMI 705
  Levy of GST and penalty - sale of un-denatured ENA to liquor manufacturers - Section 61 of UPGST Act - HELD THAT:- The respondent no. 1 without considering the petitioner's reply submitted by it to the respondent no. 1 has issued the impugned show cause notice under Section 73 of the UPGST Act for determining the huge demand of GST, interest and penalty on the supply of un-denatured ENA by the petitioner to liquor manufacturers for the period stated therein - The matter requires consideration after receiving response from the respondents. Petition allowed by way of remand.

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• 2020 (1) TMI 704
  Release of seized goods on provisional basis - Rule 140 of the Central Goods and Services Rules, 2017 - power of proper officer to release the goods provisionally - HELD THAT:- In case the petitioner files an application before the respondent no. 3 within three weeks from today indicating therein that he is ready to comply with the Requirement of Rule 140, the respondent no. 3 shall pass appropriate orders thereon within a further period of one week - In case the petitioner fulfils the requirement of Rule 140 together with its explanation, he shall release his vehicle along with the goods.

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• 2020 (1) TMI 703
  Refund of VAT - extension of time for filing of TRAN-1 form - Section 140 of the CGST and APSGST Act, 2017 - HELD THAT:- The issue decided in the case of LANTECH PHARMACEUTICALS LTD, SRIKAKULAM VERSUS THE PRL COMMISSIONER VISAKHAPATNAM [ 2019 (10) TMI 477 - ANDHRA PRADESH HIGH COURT] where it was held that in the absence of evidence, the re-filing of the form by the petitioner was not allowed. This Writ Petition is disposed of directing the respondents to either open the portal to enable the petitioner to again file the Form GST TRAN-1 electronically or in the alternative accept the Form GST TRAN-1 presented manually, on or before 31.01.2020.

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• Income Tax

• 2020 (1) TMI 702
  Appeal u/s 260A - methods of accounting valuation of sharers - HC do accept the finding of the tribunal that the valuer in our considered view has followed an accepted method of valuation and has based his decision on relevant material - HELD THAT:- SLP Dismissed.

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• 2020 (1) TMI 701
  TDS u/s 194H - discount given by the assessee to its distributors on prepaid SIM Cards - HELD THAT:- Tribunal noted the observations of the Assessing Officer that the discount allowed to the distributors by the Respondent assessee company is on account of principal to principal relationship and not that of principal to agent. The Tribunal followed the decision of the Karnataka High Court in the case of Bharati Airtel Ltd. vs. DCIT [ 2014 (12) TMI 642 - KARNATAKA HIGH COURT] and held that the sale of SIM cards/recharge coupons at discounted rate to the distributors was not commission and therefore not liable to deduct the TDS under Section 194H. When the transaction was between two persons on principal to principal basis, deduction of tax at source as per section 194H of the Act, would not be made since the payment was not for commission or brokerage. See M/S. RELIANCE COMMUNICATIONS INFRASTRUCTURE LTD. [ 2019 (7) TMI 1371 - BOMBAY HIGH COURT] - Decided against assessee.

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• 2020 (1) TMI 700
  Unsubstantiated purchases - CIT(A) applying net profit of 5.76% - CIT (Appeals) and the Tribunal opined that without actually consuming the raw materials, the work done by the Appellant could not have been possible - HELD THAT:- Assuming that the Respondent-Assesssee the purchasers from whom the purchases were made were bogus, in view of the finding of fact that the material was consumed, the question would be of extending the percentage of net profit on total turnover. This would be a matter of calculations by the concerned authority. In this context, if the CIT(Appeals) and the Tribunal chose to follow the percentage arrived by the Settlement Commission in the Respondent-Assessee s own case for the other years, this exercise cannot be considered as irregular or illegal. No substantial question of law

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• 2020 (1) TMI 699
  Bogus purchases - NP determination - HELD THAT:- Tribunal found that the AO, while estimating the net profit at 20% had proceeded on the basis of stock register, delivery challans of goods, work orders, and there was no application of mind for deriving at the figure of 20%. The Tribunal, therefore, found it fit to remand the proceeding to the Assessing Officer. We have not been shown as to how the finding regarding non application of mind by the Assessing Officer is incorrect. The Tribunal has rightly emphasised on the need to scrutinise the relevant aspects while working out the estimation, and not to arrive at the same in a haphazard manner. Tribunal, while disposing of the appeal has not given conclusive findings but has made certain observations to emphasis the need for remand. Tribunal has made these observations only to emphasis that there are various aspects for the Assessing Officer could have taken into consideration. No substantial question of law.

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• 2020 (1) TMI 698
  Suppressed sale consideration - unit sold by the assessee at a lower rate than the other flats in the same building - CIT-A allowed the Appeal after considering the difference of sale transaction and holding that the sale was not under valued also upheld by Tribunal - HELD THAT:- Both, the Commissioner of Income Tax (Appeals) and Tribunal, have assessed the facts on record. The finding of fact is that Unit No. 302 suffers structural and locational disadvantage from the units which were taken into consideration as comparable units. The Tribunal also took into consideration that the price for sale consideration for Unit No. 302 was higher than the ready reckoner prepared by the State of Maharashtra for the stamp duty valuation. There is thus a finding of fact rendered by two authorities concurrently. The issue being one of the fact after assessment of evidence and the approach of the authorities in assessing the evidence is not having been found perverse, the Appeal does not give any rise to any substantial question of law.

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• 2020 (1) TMI 697
  Disallowance of Amortized Premium - Tribunal deleted the addition - HELD THAT:- As decided in Rajkot District Co-op. Bank Ltd. [2014 (3) TMI 110 - GUJARAT HIGH COURT] the instructions clearly provide for amortisation of premium paid on acquisition of securities when the same are acquired at the rate higher than the face value. Such amortisation would have to be for the remaining period of maturity. This precisely the Tribunal had directed in the impugned order. Though contended, no contrary instructions of CBDT are brought to our notice. The instruction in question having been issued under section 119(2) of the Income-tax Act, 1961, would bind the Revenue. No question of law, therefore, arises. - Decided against revenue

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• 2020 (1) TMI 696
  Non linking of Aadhaar with PAN - constitutional validity of section 139AA - default in any proceedings only for the reason that the permanent account number is not linked with Aadhaar or Aadhaar number is not quoted - HELD THAT:- Pursuant to interim order passed by this court, the applicant has already filed the return of income for AY 2017-18; however, during the pendency of this petition, the validity of section 139AA of the Act has been upheld by the Supreme Court in Justice K.S. Puttuswamy's case [ 2018 (9) TMI 1733 - SC ORDER] . The challenge to the constitutional validity of section 139AA of the Act must therefore, necessarily fail. Whether the Aadhaar Act was rightly introduced as a Money Bill - As decided in the case of Rojer Mathew v. South Indian Bank Ltd. [ 2019 (11) TMI 716 - SUPREME COURT] has referred the issue for consideration by a larger Bench. The validity of the Aadhaar Act therefore, has not attained finality. In the event, the larger Bench holds that the Aadhaar Act could not have been introduced as a Money Bill, section 139AA of the Act would be rendered redundant. Therefore, if the applicant is directed to abide by the provisions of section 139AA of the Act, in the event the challenge to the Aadhaar Act being introduced as a Money Bill were to succeed, it would not be possible to turn the clock back as the applicant would be required to provide all the necessary information for obtaining an Aadhaar card and the claim of privacy of the applicant would be lost for all times to come. In the opinion of this court, with a view to balance the equities, the applicant needs to be protected by directing that his PAN shall not be declared inoperative and the applicant may not be subjected to the proviso to sub-section (2) of section 139AA of the Act till the judgment of the Supreme Court in Rojer Mathew v. South Indian Bank Ltd. is delivered and available. In the opinion of this court, grant of such interim relief in favour of the applicant can in no manner have wide repercussions as is sought to be contended on behalf of the revenue. The application succeeds and is, accordingly, allowed to the following extent: It is ordered that PAN of the applicant shall not be declared inoperative and the applicant would not be in default in any proceedings only for the reason that the permanent account number is not linked with Aadhaar or Aadhaar number is not quoted and the applicant shall not be subjected to the proviso to sub-section (2) of section 139AA till the judgment of the Supreme Court in the Rojer Mathew v. South Indian Bank Ltd. and others is delivered and available. Rule is made absolute accordingly to the aforesaid extent.

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• 2020 (1) TMI 695
  Reopening of assessment u/s 147 - whether the Assistant Commissioner of Income-Tax, Visakhapatnam, before reopening the assessment under the first proviso to Section 147 of the IT Act, had got approval of the Commissioner under Section 151 of the IT Act or not? - whether the Assistant Commissioner of Income-Tax, Visakhapatnam, before reopening the assessment under the first proviso to Section 147 of the IT Act, had got approval of the Commissioner under Section 151 of the IT Act or not - HELD THAT:- Admittedly, in the present case, reassessment proceedings were initiated by issuance of notice under Section 148 of IT Act and the petitioner was granted 30 days time for filing its return. If the petitioner was oversure that it was not a case of intentional escape of taxable income on nondisclosure, the petitioner would have satisfied the Assessing Authority by way of filing its return in compliance with the impugned notice but, in the present case, except filing return, the petitioner had taken all other course such as filing of objection and invoking the writ jurisdiction of this Court. If this Court interferes at the initial stage of reopening proceedings, certainly, it will amount to stay of proceedings for recovery of tax. Obviously, learned counsel for the petitioner even though had placed facts of the case, but on examination, we do not find that the present case can be termed as an exceptional case for interference at initial stage of a reopening proceedings. Even if an order is passed after reopening pursuant to the notice, dated 19.03.2019, the petitioner will have a statutory remedy as provided in the IT Act. we are of the considered opinion that the prayer sought for by the petitioner in the instant writ petition cannot be acceded to and Writ Petition may not be entertained. Accordingly, the Writ Petition stands dismissed. See AUTHORIZED OFFICER, STATE BANK OF TRAVANCORE AND ANOTHER VERSUS MATHEW K.C. [ 2018 (2) TMI 25 - SUPREME COURT] - We are of the considered opinion that the prayer sought for by the petitioner in the instant writ petition cannot be acceded to and Writ Petition may not be entertained

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• 2020 (1) TMI 694
  Interest on delayed refund u/s 244A - HELD THAT:- In this case, the amount paid by the petitioner s employer alone has been refunded back without interest vide 1st mentioned impugned order of the 1st respondent dated 5.10.2012. There is however no discussion as to why the interest under Section 244A was not payable to the petitioner. Honourable Supreme Court in Sandvik Asia Ltd versus Commissioner of Income Tax [ 2006 (1) TMI 55 - SUPREME COURT] has ordered payment of interest in case of delayed payment of refund. There it was held amount paid during pendency of the appeal are to be considered as deposits and therefore they should be refunded back together with interest. Sub-clause (1) (a) to section 244 A of the Income Tax Act, 1961 permits interest on delayed payment of refund. That being the case, the petitioner is justified in asking for interest on delayed refund of tax that was paid by his employer which has been held to be not payable by the employer. Further, once there is a refund and if there is a delay, interest is payable by the employer. There is no basis for denying interest on such delayed refund of the amounts. Petitioner has made out sufficient case for interfering with the impugned orders of this Court to give a positive direction to the respondents to pay interest to the petitioner on such delayed refund of the amount.

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• 2020 (1) TMI 693
  Release of cash - cash seized in search at railway station - The proceedings before the said authority are pending adjudication - jurisdiction of Assessing officer - Cash is deposited in the PD account - HELD THAT:- AO is the final authority to release the amount subject to the conditions referred to therein. The proceedings before the said authority are pending adjudication. Further, Section 132B of the Act relates to procedure for applications and release of assets seized under Section 132 or requisitioned under Section 132A of the Act, and the matter is pending before the concerned assessing officer. Having regard to the guidelines issued by the Central Board of Direct Taxes and Section 132B of the Income Tax Act, the assessing officer shall take into account the advance tax paid, the documents filed along with the returns and pass appropriate orders in connection with the assessment at the earliest, preferably within a period of 3 months from today in accordance with law and release the cash to the extent permissible with interest if the petitioners are otherwise entitled to, after making necessary adjustments as required under law.

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• 2020 (1) TMI 692
  Rejection of application for settlement of the Case - full and true disclosure of the income - the manner in which such income has been derived - Validity of order of the Settlement Commission - it is contended that, basis of the observations/findings in the initial order, the Settlement Commission, while passing the final order, ought not to have arrived at different conclusions than those arrived at in the initial order - Pursuant to the search, notices u/s 153A of the Act were issued reopening the assessments HELD THAT:- Initial order is a preliminary one passed on the basis of information provided in the Settlement Application of the writ petitioner without hearing the Revenue and that by the said order the Settlement Commission only allowed the application to be proceeded with further, subject to the caveat that the said initial order is passed without prejudice to the finding that may be given in the later stage of the proceedings. It is also to be noted that the initial order itself reflects that the view expressed therein is a prima facie view. Therefore, the first set of contentions that on the basis of the observations/findings in the initial order, the Settlement Commission, while passing the final order, ought not to have arrived at different conclusions than those arrived at in the initial order needs no countenance. Nonetheless, we make it clear that we shall further deal with this issue as to whether the Settlement Commission could have arrived at a different conclusion while passing the impugned (final) order under Section 245C(1) of the Act. In the light of the long time gap between the days of search on one hand and the dates of the filing of the affidavit the remittance of tax, the explanations offered by the petitioner to the effect that he was under immense pressure at those distant times are not worthy of credence acceptance, being implausible. Though there is no dispute with regard to the legal position in regard to the right to explain an admission and the evidentiary value of the retracted confessions, since it is not possible in the facts circumstances of the case to accept the contention of the petitioner that the confessions or the information including the affidavit and remittance of part of tax was obtained from the petitioner under fear, threat and coercion etc, the said decisions do not advance the case of the petitioner any further. Dealing now with the other part of these set of the contentions, namely requirement of collection of evidence related to undisclosed income and that the information in the statements or confessions are not in the nature of clinching evidence by themselves and that there should be other credible material to buttress the case of the department and that no material is recovered and no cash was found and, therefore, in any view of the matter, the contents of the statements do not constitute the basis for adverse conclusion against the petitioner, what is to be noted is that admittedly during search Admission when free and voluntary is the best form of proof on which the department can rely. After the days of search seizure, the deponent was not in the custody of the department and was very much free to think coolly and consult his legal counsel and chartered accountants. Therefore, the deponent s contention that he was continuing under fear and/or threat and/or duress etcetera by the times he gave the affidavit and remitted the tax, as already noted, is deplorable, in the facts circumstances peculiar to the case. Hence, this part of set of contentions of the petitioner that there is no additional material is misconceived and is therefore, rejected being devoid of merit. There is no true and full disclosure as to the details of this income from real estate business. As rightly contended by the respondents, the statements of dealers and distributors are not filed insofar as the income admitted in the application filed before the Settlement Commission and the manner of earning income as explained in the application as the amounts were received back from the dealers and distributors towards reimbursement of sales promotion expenses/discounts are not supported by any evidence like the details of dealers from whom the reimbursement of sales promotion was done and to which dealers the discounts were wrongly debited. Names and addresses of those dealers were submitted neither before the department nor the Commission for verification but the extra income was merely admitted. As rightly contended by learned standing counsel for the respondents, there is non disclosure of the details of various transactions related to incomes from real estate business. Hence, we find that the Settlement Commission is justified in concluding that the applicant had stated that the income offered relates to reimbursements of sales promotion expenses and also discounts made to dealers wrongly debited, but, the claim made by the petitioner is not supported by any evidences or details and hence, the manner of earning unaccounted income as claimed by the applicant stands disproved and that the Settlement Commission is further justified in rejecting the Settlement Application since it does not constitute a full and true disclosure of income nor has revealed a true picture of manner in which it has been earned. In the light of the discussion supra, we are of the considered view that there is sufficient material and are also reasons for the Settlement Commission coming to a different conclusion while passing the final order and that the final order is sustainable both under facts and in law for the reasons assigned therein. The above discussed aspects are sufficient to sustain the impugned order. Hence, there is no need, in our considered view, to go into the other aspects related to acquisition of investments and assets viz., investment in Arunachalam Palace, Guntur and Kalyanamandapam in Tutucorin; investment in M/s.Goutham Buddha Textile Park Pvt.Ltd, etcetera. Be it noted that Section 245(C) of the Act is meant for those assessees who seek to disclose income not disclosed before the officer including the manner in which such income has been derived . If the department already knows and has gathered particulars of such income and the manner in which it has been derived, there is no disclosure by the assessee. We answer the points holding that the petitioner failed to make out valid and sufficient grounds in support of the contention that the impugned final order of the Settlement Commission is unsustainable under facts and in law. We accordingly hold that the said order is sustainable.

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• 2020 (1) TMI 691
  Disallowance u/ 14A r.w.s. 8D - HELD THAT:- As in assessment year 2011-12 we find that the Ld. CIT(Appeals) has given relief to the assessee following the decision of the Tribunal in assessee‟s own case for assessment year 2008-09 by holding that the disallowance of expenditure u/s.14A read with rule 8D is not justified in view of the fact that the appellant has its own sufficient funds which were invested in the shares and were utilized for incurring the various other expenses and no interest has been paid on these surplus funds available with the appellant. DR at the very outset submitted that with regard to the order of the Tribunal for assessment year 2008-09 in assessee‟s own case, the Revenue had preferred an appeal before the Hon‟ble Jurisdictional High Court and the Hon‟ble High Court also had given relief to the assessee. That being further aggrieved, the Revenue had preferred an appeal before the Hon‟ble Supreme Court as passed an ex-parte order wherein the findings of the Hon‟ble High Court and the Tribunal was reversed and the issue was decided in favour of the Revenue. That further the said order being ex-parte, the assessee had filed an curative petition before the Hon‟ble Supreme Court and the Hon‟ble Supreme Court had recalled the ex-parte order to be now heard on merits and had directed for listing the said appeal. Thereafter, whether the Hon‟ble Supreme Court had heard the appeal or decided the appeal on merits is not coming out from the facts on record nor the Ld. DR was in a position to state the correct legal scenario. The Ld. DR vehemently contended that technically as on date, the matter stands in favour of the Revenue. However, it has to be ascertained whether after recalling the ex-parte order, the Hon‟ble Supreme Court had heard the appeal on merits or not or has passed any order that has to be considered since it will have the effect on all these appeals. More so, as evident from the aforesaid facts after decision of the Tribunal for assessment year 2008-09, lot of events has taken place and these events and the legal developments have to be ascertained before arriving at any decision. In the interest of justice, we, therefore, set aside the respective orders of the Ld. CIT(Appeals) in respect of all these assessment years and remit the matter back to their respective files for adjudicating the issue after taking into consideration recent legal developments specifically the order passed by the Hon‟ble Supreme Court on merits, if any, and the Ld. CIT(Appeals) shall adjudicate the issue after complying with the principles of natural justice. Reopening of assessment u/s 147 - validity of reason to believe - determination of book profits u/s.115JB - HELD THAT:- There was no new material in front of the Assessing Officer to form reason to believe‟ that any income has escaped assessment. The power of the Ld. CIT(Appeals) is co-terminus with that of the Assessing Officer and he has made statement on record that there was no new material before the Assessing Officer so to resort to the provisions of section 147/148 of the Act. Even before us, the Ld. DR could not bring any material on record to controvert these facts nor could place before us any case laws in support of the revenue. The binding judicial pronouncements as on record have also been considered and are equally applicable to the facts of the present case. That further, once reassessment proceedings and the consequent order passed is declared void-ab-initio as per law and hence, quashed, the issue of book profits determined u/s.115JB of the Act becomes academic in nature. Therefore, we do not find any infirmity with the findings of the Ld. CIT(Appeals) and the same is hereby upheld. - Decided against revenue

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• 2020 (1) TMI 690
  Bogus LTCG - Penny stock - Disallowance of exemption claimed u/s.10(38) - long term capital gain earned on sale of equity shares of PS IT Infrastructure Services Ltd. (PS IT I SL) - HELD THAT:- PS IT I SL is a penny stock company and the assessee obtained only accommodation entries in the garb of long term capital gain from transfer of its shares, for which an appropriate addition has rightly been made and upheld by the authorities below. View above is fortified by the judgment of Sanjay Bimalchand Jain vs. Pr. CIT [ 2017 (5) TMI 983 - BOMBAY HIGH COURT] which has been briefly referred to by the AO as held that the assessee did not tender cogent evidence to explain how the shares in an unknown company worth ₹ 5 had jumped to ₹ 485 in no time. The fantastic sale price was not at all possible as there was no economic or financial basis to justify the price rise. It was held that the assessee had indulged in a dubious share transaction meant to account for the undisclosed income in the garb of long term capital gain. The gain was accordingly held to be rightly assessed as undisclosed income. Similar view has been taken by the Hon ble Delhi High Court in Suman Poddar vs. ITO [ 2019 (9) TMI 1089 - DELHI HIGH COURT] . In view of the foregoing discussion, accord imprimatur to the view adopted by the ld. first appellate authority on this score and accordingly countenance the impugned order. - Decided against assessee.

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• 2020 (1) TMI 689
  Disallowance of claim of exemption u/s 11 in respect of consultancy fee received - claiming exemption u/s 10(23C) - HELD THAT:- On a perusal of the additional evidences filed before us, prima facie, we are of the view that the assessee has been recognized as a deemed university, hence, falls within the category of university/other educational institution covered under section 10(23C)(iiib) or 10(23C)(vi) of the Act. Further, it has been recognized as an educational institution by competent authorities of the Government. Now it is fairly well settled that the proviso to section 2(15) applies only to the activity of the advancement of any other object of general public utility as per the definition of charitable purpose under section 2(15) of the Act. It is the contention of the assessee that since it is engaged in the activity of providing education, the proviso to section 2(15) of the Act is not applicable. The aforesaid aspect has not been examined or dealt with by the Tribunal in assessment year 2010 11 probably because no pleading to that effect was taken by the assessee. The contention of the assessee regarding applicability of the proviso to section 2(15) of the Act requires examination keeping in view the decision of DIT (E.) v/s Lala Lajpatrai, [ 2016 (4) TMI 641 - BOMBAY HIGH COURT] wherein has held that the test to determine as to what would be a charitable purpose within the meaning of section 2(15) of the Act is to ascertain what is the dominant object/activity. The Court has observed that if the dominant object is the activity of providing education, it will be charitable purpose under section 2(15) of the Act, even though, some profit arises from such activity. Therefore, assessee s contention regarding applicability of proviso to section 2(15) of the Act requires examination. Further, assessee s claim of exemption u/ 10(23C)(iiiab) or 10(23C)(vi) of the Act also requires examination keeping in view the orders passed by the learned Chief Commissioner of Income Tax, Mumbai, under section 10(23C)(vi) of the Act and also considering the fact that the assessee has been recognized as a deemed university and receiving substantial grant from the Government. Since the aforesaid claim of the assessee has not at all been examined by the Departmental Authorities, we are inclined to restore the issue to the file of the AO for re examination and direct him to adjudicate the issue keeping in view the additional evidences filed by the assessee and the decisions to be cited before him. We make it clear that the AO must consider all the contentions of the assessee with regard to the applicability of the proviso to section 2(15) of the Act as well as the claim of exemption under section 10(23C)(iiiab) or under section 10(23C)(vi) of the Act. Needless to mention, the Assessing Officer must provide reasonable opportunity of being heard to the assessee before deciding the issue through a speaking order - Assessee s appeals are allowed for statistical purposes.

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• 2020 (1) TMI 688
  Disallowance on account of interest u/s 36(1)(iii) - assessee-company has given interest free loans and advances to related party - HELD THAT:- In A.Y. 2011-2012 the Ld. CIT(A) has allowed the claim of assessee and deleted the addition, copy of the Order is placed in the paper book. Though the Department has filed an appeal before the Tribunal, but, no ground have been raised on this issue. Copy of the grounds of appeal is also filed on record. These facts itself are sufficient to delete the addition. We may further note that assessee has own sufficient funds to give advance to M/s. Prateek Resorts Builders Pvt. Ltd., out of own funds. There was also an opening balance as contended by the Learned Counsel for the Assessee in preceding year, on which, addition has already been deleted. The assessee has also placed on record the correspondence between the parties to show that advance have been given for commercial expediency. It is well settled Law that when interest free funds are available to the assessee which were sufficient to made its investments, it would be presumed that the investments were made from the interest free funds available with the assessee. We rely upon case of Reliance Utility and Power Ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] and Reliance Industries Ltd. [ 2019 (1) TMI 757 - SUPREME COURT] and Munjal Sales Corporation [ 2008 (2) TMI 19 - SUPREME COURT] . Considering the totality of the facts and circumstances of the case, we do not find any justification to sustain the addition. Disallowance under section 14A read with Rule 8D - HELD THAT:- In I.P. Support Services India Ltd. [ 2015 (10) TMI 752 - DELHI HIGH COURT] held that no disallowance be made in the absence of satisfaction as to why voluntary disclosure made by assessee was unreasonable and unsatisfactory. - Thus in the absence of any satisfaction recorded by the A.O. for making disallowance under section 14A read with Rule 8D of the I.T. Act, no disallowance could be made in the case of the assessee. We, accordingly, set aside the Orders of the authorities below and delete the entire addition. - Decided in favour of assessee.

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• 2020 (1) TMI 687
  Revision u/s 263 - order was passed u/s 143(3) r.w.s 144C - the same was subject to review by the Dispute Resolutions Panel (DRP) - Additional grounds raised - HELD THAT:- Additional grounds raised by the Ld. AR are legal ground, in light of decision of National Thermal Power Company Ltd. [ 1996 (12) TMI 7 - SUPREME COURT ] we admit these ground Order under Section 263 was passed against the draft assessment order. The said draft assessment order was adjudicated before the DRP, therefore, it was in the matter of scrutiny before the Resolution Panel. The draft assessment order is not a final order or is not any order which is described u/s 263. It is a proposal given to the assessee upon which the assessee has a right to raise objections before the Dispute Resolution Panel. This mechanism is developed in respect of certain specialized matters. The Dispute Resolution Panel has a full authority to direct/propose certain additions or to delete certain additions. Therefore, it is a foolproof mechanism which cannot be doubted by Pr. CIT by invoking Section 263 which is a revisional power in respect of final assessment order or any order but not to a proposal which is called draft assessment order. Thus, we are allowing additional grounds which are preliminary grounds raised in respect

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• 2020 (1) TMI 686
  Addition on undisclosed income u/s. 68 - Loss from the illegal activity of providing accommodation entry - Survey proceedings - HELD THAT:- In this case on hand the assessee for this year had estimated his undisclosed income to the tune of ₹ 3 cr. from his illegal activity of providing accommodation entry after survey on his premises on 22.08.2014. Since the survey in his premises attracted media attention his customers/beneficiaries distanced from him, which resulted in assessee losing ₹ 1.68 cr. (non-recovery of commission from the illegal activity of providing accommodation entry) so, we find that the loss occurred to the assessee springs directly from the carrying on of the business of providing accommodation entry to the beneficiaries and is thus incidental to it has to be allowed as a deduction. Though the AO and Ld. CIT(A) noted that the assessee is in the illegal activity of providing accommodation entry did not appreciate the true significance of the distinction between an infraction of the law committed in the carrying on of a lawful business and an infraction of law committed in a business inherently unlawful and constituting a normal incident of it's activity [CIT Vs. Piara Singh [ 1980 (5) TMI 2 - SUPREME COURT] and, therefore, in the present case in hand since the assessee has suffered the loss in his unlawful activity of giving accommodation entry which resulted in the beneficiaries not giving the income to the assessee is an allowable deduction. Thus, even if the assessee's estimation of ₹ 3 cr. as his income as per the disclosure petition is accepted, still the assessee's loss of ₹ 1.68 cr. has to be given as deduction and, therefore, the addition in any case was not warranted. So, we direct deletion of ₹ 1.68 cr. as discussed supra. - Appeal of assessee is allowed.

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• 2020 (1) TMI 685
  Validity of re-opening of the assessment u/s 147 - eligible reasons to believe - HELD THAT:- Re-opening is bad in law as it is nowhere recorded in the reasons for re-opening that there was the failure on the part of the assessee truly and fully disclose material facts required for the assessment. See AMIYA SALES AND INDUSTRIES AND ANOTHER VERSUS ASSISTANT COMMISSIONER OF INCOME-TAX OTHERS. [ 2004 (9) TMI 32 - CALCUTTA HIGH COURT] DR relied on case of A.G. Holdings Pvt. Ltd. [ 2012 (5) TMI 44 - DELHI HIGH COURT] which is not at all applicable to the facts of the case on hand wherein the proviso to Section 147 was not the subject matter as the original assessment was not done u/s 143(3) of the Act. The original return of income in that case was processed u/s 143(1) of the Act. The applicability of the proviso to Section 147 of the Act was not the subject matter of adjudication. Hence this case law does not help the Revenue. - Decided in favour of assessee.

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• 2020 (1) TMI 684
  Addition u/s 56(2)(viib) - Method of valuation of share - valuation method i.e. based on net asset or based on DCF method - Assessee has issued rights shares to its shareholders with share premium after duly valuing the shares based on DCF method and the valuation was done by a merchant banker - CIT(A) rejected the valuation report submitted by the assessee as erroneous by adopting the DCF method, but accepted the DCF valuation only to the extent of actual performance in the subsequent years and accordingly, partly allowed the ground raised by the assessee - HELD THAT:- Since AO has rejected the valuation report, he himself proceeded to value the fair market value of the shares based on net assets method. Since AO has rejected the valuation report even though it was done by valuer, which is independent entity. We observe that the reason for rejecting the valuation report by the AO was well answered by Ld. CIT(A) and also Ld. CIT(A) has appreciated the fact that assessee has option to choose one of the method i.e. net asset method or DCF method, whichever is favourable to them. Since Ld. CIT(A) has already addressed the issue of method of valuation which has to be adopted, therefore we do not intend to go into which method has to be adopted and accordingly, we notice that the department is in appeal against Ld. CIT(A) and in our considered view, Ld. CIT(A) has properly rejected the method adopted by the AO and proceeded to accept the DCF method adopted by the assessee. Therefore, we are inclined to dismiss the ground raised by the department. CIT(A) has accepted the DCF method adopted by the assessee and he analyzed the factual performance of the assessee subsequent to issue of shares. The valuation of shares are for that matter any valuation is itself is a projection of future events or activities and no doubt it has to be done with some accuracy, however no person in the world at the time of projecting events or result to project with 100% of accuracy and actual events are highly volatile and highly dependent on so many factors. Assessee has projected based on the fact that software of wallet and association of ICICI bank will increase the market share and accordingly, they have projected the figures and further the valuer has adopted the projection figures provided by the assessee and it is left to the wisdom of valuer to accept or reject or to carry out independent investigation raised with the valuer and legislature in more than one place depends on the skills of the professionals like merchant banker only to value the valuation of shares or other volatile securities. Since, Ld. CIT(A) has compared the factuals with projections and assessee has achieved 40% of the actual results is too harsh to the assessee and the valuation is done in order to carry out certain activities by the management. In this case, the valuation was used to issue of rights shares. The AO or Ld. CIT(A) is trying to evaluate the accuracy of the valuation at the time of assessment, this is not proper and also the factuals are based on so many factors subsequent to adoption of projection and valuation. Accordingly, we are not in a position to accept the method adopted by Ld. CIT(A). - Decided in favour of assessee.

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• 2020 (1) TMI 683
  Disallowances u/s 40A(3) - payment in cash exceeding prescribed threshold - HELD THAT:- Three cheque payments amounting to ₹ 21 lacs out of total disallowance of ₹ 2.38 crores are clearly outside the scope of section 40A(3) as the same have been transferred to respective payee s account as reflected in the bank statements and the addition so made is directed to be deleted. In respect of other payments we find that the identity of the persons from whom the purchases have been made has been established and the source of cash payments is clearly identifiable in form of the withdrawals from the assessee's bank accounts and the said details were submitted before the lower authorities and have not been disputed by them. It is not the case of the Revenue either that unaccounted or undisclosed income of the assessee has been utilised in making the cash payments. The genuineness of the transaction has been established as purchase of construction material for road construction and lastly, the test of business expediency has been met as it is the admitted position that the mining activities had been banned in the State of Haryana and the assessee had no other option but to buy construction material from State of Rajasthan where the suppliers and stone crushing units had insisted on cash payments at the time of delivery of material. Further, as held by the Hon'ble Rajasthan High Court in case of Smt. Harshila Chordia [ 2006 (11) TMI 117 - RAJASTHAN HIGH COURT] the consequences, which were to befall on account of non-observation of sub-section (3) of section 40A must have nexus to the failure of such object. Therefore the genuineness of the transactions and it being free from vice of any device of evasion of tax is relevant consideration for which section 40A(3) has been brought on the statute books and which has been satisfied in the instant case. Addition u/s 68 - addition for the reason that the creditworthiness of creditors have not been established and hence, he has confirmed the additions so made by the AO - HELD THAT:- We find that these three persons have appeared before the Assessing officer and have confirmed the transaction of advancing the money to the assessee and during the appellate proceedings, their confirmations along with PAN details have also been filed. The transactions have happened through the banking channel and in support of creditworthiness, agricultural land ownerships records and the bank accounts reflect regular transactions of deposits and withdrawals have been submitted, the assessee has thus discharged the initial onus cast on it and in absence of any contrary findings and any material on record by the Revenue, no addition is called for by invoking provisions of section 68. In the result, the addition so made is directed to be deleted and ground of appeal is allowed.

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• Customs

• 2020 (1) TMI 682
  Smuggling - Gold - confiscation of seized goods alongwith penalty - process of adjudication of the Show Cause Notice dated 29th August, 2017 has already been started, which is yet to be completed - HELD THAT:- This writ petition has been preferred for correction of methodology of adjudication, which we are not going to interfere at all because it is left on the discretion and wisdom of the respondents and with the expectation that they shall follow the law, rules, regulations and Government policy as applicable to the facts of the case. Petition disposed off.

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• 2020 (1) TMI 681
  Valuation of imported goods - PVC Flex Sheet - rejection of declared value - reasons for rejecting the value declared by the appellant not given, the matter was remanded to the adjudicating authority to pass speaking order for enhancing the value - HELD THAT:- The transaction value has been rejected without according sufficient reasons. Further, on perusal of the discussions and findings of the original authority, the department has made comparison of the contemporaneous imports of which description of the goods do not match with the goods that are imported by the appellant. The brand name of the goods as well as the specification are different. Comparison of the value of such goods which are different from the goods imported by the appellant and enhancement thereon is against the provisions of law. The enhancement of value cannot sustain - appeal allowed - decided in favor of appellant.

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• Securities / SEBI

• 2020 (1) TMI 680
  Penalty u/s 15HA of the SEBI - carrying out the scheme of collective investment scheme without obtaining registration under the SEBI Act - HELD THAT:- Collection so made by the appellants and the other entities was wholly illegal and the decision of the AO that the amount so collected under the collective investment scheme is the illegal profit earned by the appellants and other entities does not suffer from any manifest error of law. The total amount of realization made by the company and its directors amounts to illegal profits made by them. Factors contemplated under Section 15J of the SEBI Act was duly considered. AO found that the whole amount was illegally raised under the collective investment scheme without obtaining registration from SEBI after coming into force of Regulation 4(2)(t) of the PFUTP Regulations, 2003 during the period of 06.09.2013 to 15.06.2014 the AO found that the amount so realised was a profit for the purpose of Section 15HA. AO further found that the profit made by the appellants was at the cost of the investors. We are of the opinion that the factors contemplated under Section 15J of the SEBI Act was duly considered and we do not find any infirmative in the reasoning adopted by the AO. On the question whether the appellants have violated Regulation 4(2)(t) of the PFUTP Regulations and or on the question whether the appellants were required to get the scheme registered under SEBI Act, we are of the opinion that it is no longer open to the appellants to agitate the matter as the same has been decided by SEBI which order has been affirmed by this Tribunal. We also find that specific findings have been given by AO that the amount mobilized during the period from 01.09.2013 to 15.06.2014 has not been refunded to the investors. No ground contrary to the aforesaid finding has been urged by the learned counsel for the appellants. No manifest error in the order of the AO imposing penalty under Section 15HA of the SEBI Act.

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• 2020 (1) TMI 679
  Pledging of securities of unpaid clients required taking of explicit authorization by the stock broker from each such client and in respect of each such pledging - HELD THAT:- PoA given by the client to the broker can be used for the purpose of pledging in favour of the stock broker, only for the purposes of meeting the margin requirements. The authorization claimed under said PoA by the Representor is not the explicit authorization of the client, as referred to under SEBI circular dated September 26, 2016 and of which record is also required to be maintained by the stock broker of all such authorisations. Representor, in para 18 (e) of its representation dated December 19, 2019 has prayed that in respect of partly/unpaid clients, KSBL be directed to issue five days notice to the clients or the Representor be allowed to issue 5 days notice to clients to enable the clients to redeem the pledged shares by making payment of the corresponding outstanding indebtedness, failing which the Representor be permitted to invoke the pledge on shares. If the Representor is able to show proof of authorization in respect of securities having value of ₹ 13.69 crores belonging to unpaid clients, such securities can be released to the Representor after following the above procedure under supervision of NSEIL.

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• Insolvency & Bankruptcy

• 2020 (1) TMI 678
  Maintainability of application - initiation of CIRP - Corporate debtor failed to make repayment - time limitation - Section 7 of the I B code - HELD THAT:- In the present case, there is nothing on record to suggest that the Corporate Debtor acknowledged the debt within three years and agreed to pay the debt. The application moved by Corporate Debtor to restructure the debt or payment of the interest, does not amount to acknowledgement of debt. There is nothing on record to suggest that the Corporate Debtor or its authorized representative by its signature has accepted or acknowledged the debt within three years from the date of default or from the date when the account was declared NPA, i.e., 29th September, 2015 - Any dues payable, even if acknowledged after three years of limitation period, cannot be taken into consideration for the purpose of deriving conclusion under Section 18 of the Limitation Act. Admittedly, the Corporate Debtor defaulted in making payments on 11th June, 2015 and the Dena Bank declared the account as NPA on 29th September, 2015. Therefore, the application filed under Section 7 of the I B Code by the Bank is barred by limitation - the application under Section 7 of the I B Code was filed for the purpose of execution of the Decree passed by the Debts Recovery Tribunal in favour of the Financial Creditor for the purpose other than for the resolution of insolvency, or liquidation and is covered by Section 65. The application under Section 7 of the I B code filed by the Bank of India Limited. is dismissed - Corporate Debtor Poonam Drums and Containers Private Limited is released from the rigor of the Corporate Insolvency Resolution Process - matter is remitted to the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench to decide the fee and cost of the Corporate Insolvency Resolution Process as incurred by the Resolution Professional, which is to be borne and paid by the Bank of India Limited.

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• 2020 (1) TMI 677
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment - application rejected on the ground of existence of dispute prior to issuance of SCN - HELD THAT:- It is an admitted fact that the Appellant failed to supply coal as per the P.O. dated 9.8.2016. It is not in dispute and in view of the requirement, the Respondent had placed Purchase Order on one Trona Minerals India Pvt. Ltd. vide Purchase Order no. 4400000028 dated 19.09.2016 for supply of 3000 MT of Coal. The stand of the Respondent is that the Appellant had failed to supply coal as ordered on 09.08.2016 and in view of necessity, they had placed and purchased coal from Trona Minerals India Pvt. Ltd. and raised a Debit Note on the Appellant in accordance with clause-8 of the Terms and Conditions as specifically mentioned along with the Purchase Order dated 9.8.2016, which is part of the said Purchase Order - the Appellant clearly admitted that they could not supply the material as per the Purchase Order and the Respondent had issued a Debit Note on the Appellant debiting an amount of ₹ 49,50,000/- and the same has been communicated to the Appellant by e-mail dated 23.09.2017 at 12:58 P.M. and the Appellant had received the said e-mail and replied to the said e-mail on the very same day i.e., on 23.09.2017 at 3.14 P.M. Thus it is a case of pre-existence of dispute prior to the issuance of Demand Notice dated 01.02.2018. It is clear that the Adjudicating Authority has to satisfy whether there is pre-existence of dispute prior to the receipt of Demand Notice or there is a record of dispute in the Information utility and in such case, the Adjudicating Authority shall reject the application - there is an existence of dispute prior to the receipt of Demand Notice. Appeal dismissed.

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• Service Tax

• 2020 (1) TMI 676
  Liability of sub-contractor to pay tax - construction of residential complex - Department was of the view that the Appellant as sub-contractor were liable to pay service tax on the value of services provided to main contractor, including Manglam - period 2011-12 to 2012-13 - HELD THAT:- As far as the payment of service tax by the sub-contractor is concerned, the same is settled by the order of this Tribunal in case of COMMISSIONER OF SERVICE TAX VERSUS MELANGE DEVELOPERS PVT. LTD. [ 2019 (6) TMI 518 - CESTAT NEW DELHI] therefore, the Appellant is required to pay service tax on the work undertaken by him as sub-contractor. The Appellant has contended that for relevant period they would be entitled for exemption of from payment of service tax under N/N. 06/2005 as amended and also for the construction activities undertaken services provided to the educational institute which is exempt under service tax law - It is also submitted that the Appellant has also provided certain materials, while providing service to the service recipient which is required to be given adjustment in terms of N/N. 12/2003-ST dated 20.06.2003, which has not been considered by the Commissioner (Appeals) whiling remanding the matter back to Adjudicating Authority. Appeal allowed by way of remand.

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• 2020 (1) TMI 675
  Classification of services - mandap keeper service - appellant also providing catering services to the persons/companies availing the facility of the Mandap Keeper Service - splitting the value of service into two parts; one part with invoices raised for banquet hall charges and another for catering/food charges - sale of food-whether service or not - benefit of N/N. 12/2003-ST dated 20 June 2003. HELD THAT:- The matter is no longer res-integra as the issue has already been decided in appellant s own case CCE, JAIPUR VERSUS CHOKHI-DHANI RESORTS PVT. LTD. [ 2017 (1) TMI 38 - CESTAT NEW DELHI] where it was held that the supply of food and beverages is not an activity ancillary to the primary activity of convention service, value of food items need not be added. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2020 (1) TMI 674
  Whether the Cenvat Credit of duty paid by a 100% EOU, which according to the department is customs duty, is admissible to the receiver? - HELD THAT:- A plain reading of N/N. 23/2003-CE dated 31/03/2003 reveals that when 100% EOU has paid Excise duty under Section 3 ibid r/w Sr. no. 2 of the said notification, the admissible quantum of Cenvat Credit be calculated in accordance with the formula prescribed under Rule 3(7) of Cenvat Credit Rules, 2004 whereas Section 3 of Central Excise Act provides that the duty charged by an EOU is a duty of Excise charged by 100% EOU and the amount of duty charged is one single amount and it does not contain any bifurcation like DCD,CVD etc. In the instant Appeal, it is not the case of the Revenue that the supplier i.e.100% EOU has availed the exemption under Serial No. 2 of Notification No. 23/2003, their only case is that the EOU supplier has availed benefit of exemption under serial no. 1 of the notification - It is settled position that Rule 3(7) ibid comes into operation only if the benefit has been availed under serial no. 2 of the aforesaid notification as the application of the said rule is conditional upon availing such exemption. In none of the authorities produce by Revenue it has been held that the aforesaid notification that Rule 3(7) will be applicable irrespective of the fact whether the supplier has availed exemption under serial no. 2 or not therefore, the authority cited by Revenue are not applicable on the facts of the present case - The Appellants are justified in taking credit of the amount of duty in issue. Extended period of limitation - HELD THAT:- The period involved in the matter is from April 2009 to April 2010 whereas the show cause notice was issued on 28/04/2014. The credit availed by the Appellant was being reflected in their credit account and therefore no suppression or malafide with intent to effect duty can be attributed to the Appellants - the demand is held to be time barred also. Appeal allowed - decided in favor of appellant.

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• 2020 (1) TMI 673
  CENVAT Credit - allegation that credit on the invoices issued by M/s Laxmi Dye Chem and M/s Harshlaxmi Chemisolv without receipt of inputs - reliance placed on statements and evidences - case of appellant is that the whole case has been made against them on the basis of documents alleged to have been seized from third party and statements of various parties without extending investigation of persons to whom the goods were actually alleged to be sold. HELD THAT:- The allegations of non receipt of goods alongwith the invoices by both the Appellants from M/s Laxmi Dyechem and M/s Harshlaxmi Chemosolv are based upon the diary/ norte books seized from said two concerns. Further the statements of authorised persons of said two concerns as well as authorised persons of the Appellant concerns have also been relied upon to show that no inputs were received by them. In case of M/s Yahska Polymers, the statement of transporter has also been relied upon to show that no goods were consigned to M/s Yahska - However no investigations has been conducted to ascertain from the parties to whom the inputs were allegedly actually sold by M/s Laxmi Dyechem and M/s Harshlaxmi Chemisolv to ascertain the actual position - The SCN is absolutely silent about the investigation at the end of alleged actual recipients who allegedly received the goods without cover of invoice. Also, in absence of investigation at the end of actual recipients, the allegation of availing credit by the Appellants only on the basis of invoice without actual receipt of goods cannot be allowed to sustain. There are no reason to demand and recover Cenvat credit from both the Appellants - appeal allowed - decided in favor of appellant.

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• 2020 (1) TMI 672
  Classification of goods - colour Television (C.T.V.) sub assembly manufactured by the appellants and cleared by them - HELD THAT:- Inasmuch as the goods being cleared from the assessee s factory were having all the essential character of CTV, the same were required to be assessed under Chapter Heading 8528.00. Inasmuch as the issue stands decided by the said decision of the Hon ble Supreme Court in the case of M/S SALORA INTERNATIONAL LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, NEW DELHI [ 2012 (9) TMI 276 - SUPREME COURT] , where it was held that complete Television was manufactured by the appellant and the time of the parts of the TV set being transported from the factory of the appellant, the parts manufactured by it are already identified as distinct units, thus the Revenue had rightly classified the goods- product as complete Television set even though it was subsequently disassembled, there are no justifiable reason to take a view different than the one taken by the Hon ble Supreme Court. Appeal dismissed.

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• 2020 (1) TMI 671
  Valuation of manufactured goods - Reebok brand shoes - rejection of declared value - it was alleged that various raw materials imported by the appellants were alleged to be undervalued on their import into India - appellant has submitted that there were no allegations in the show cause notice that the price at which the goods were sold by the appellant to the buyers was not the sole consideration - extended period of limitation. HELD THAT:- It is clear from the precedent decision of this Tribunal in GURU NANAK REFRIGERATION CORPN. VERSUS COLLECTOR OF C. EX., NEW DELHI [ 1995 (10) TMI 115 - CEGAT, NEW DELHI] affirmed by Hon ble Supreme Court of India in COLLECTOR OF C. EX., NEW DELHI VERSUS GURU NANAK REFRIGERATION CORPN. [ 2003 (3) TMI 100 - SUPREME COURT] that if there are no allegations that there was no price at which the goods were sold by the appellant and if there are no allegations that the price was not the sole consideration for the sale and if there were no allegations that the buyers were not at arm s length and if there are no allegations that there was flow back of money from the buyers to the assessee then revenue cannot reject the price declared by the appellant. In the present case there were no allegations that the price of the goods was not available. In fact the goods were cleared by the appellant during the relevant period with total assessable value of ₹ 28,99,988/- as stated in the show cause notice - also there were no allegations in the show cause notice that price was not sole consideration for sale and there were no allegations that there was any flow back of money from the buyers to the appellant. Therefore, there are no grounds for holding that the appellants have undervalued there clearances during the period from August, 1996 to December, 1996. Appeal allowed - decided in favor of appellant.

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• 2020 (1) TMI 670
  Initiation of proceedings for imposition of penalties - Imposition of bar under Rule 8 (3A) of Central Excise Rules, 2002 - default in payment of Central Excise Duty - Additional Commissioner, Central Excise, Ghaziabad through his letter dated 15.12.2016 referring to appellant s letter dated 28.11.2016 addressed to Commissioner informed that the appellant had paid defaulted Central Excise duty of around ₹ 3 crores with applicable interest of around ₹ 15 lakhs and therefore, no further action from the end of Revenue was warranted. HELD THAT:- The letter dated 15.12.2016 was decision of revenue, communicating that no further action was warranted from the end of revenue. Therefore, if revenue wished to initiate proceedings for imposition of penalty under Rule 8 (3A) then revenue should have approach Commissioner (Appeals) challenging the letter dated 15.12.2016 issued by Additional Commissioner. After the appeal period for filing appeal before Commissioner (Appeals) from the date of issue of the said letter dated 15.12.2016 that no further action was warranted, was over the said decision become final. Therefore, the said show cause notice dated 17.07.2017 is not sustainable. Appeal allowed - decided in favor of appellant.

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• 2020 (1) TMI 669
  Clandestine removal - Copper Ingots - In the case of M/s Shivam Metal and M/s Vasudev Udyog and in case of Mayank Metal goods were removed from the factory and they were en-route to M/s Sandeep Manufacturing Strips. Goods confiscated and duty demanded in respect of M/s Mayank Metal - HELD THAT:- In case of M/s Mayank Metal it was proposed that the goods which were removed from the factory and wereen-route to M/s Sandeep Manufacturing Strips were proposed to be confiscated. It was also stated that duty of ₹ 84,046/- was paid on the said goods and the said amount was proposed to be appropriated - From the pleadings and on perusal of record, it is noted that the said duty was paid by the appellant during the normal course of business and the goods were also reflected in their ER-1 return. The said return was also filed before the issuance of said show cause notice - Once the goods are reflected in ER-1 return and duty liability on the same has been accepted then even if the duty is not paid on the due date the recourse available with revenue is to resort to provision of Section 11 of Central Excise Act, 1944 and recover duty with interest and such goods do not become contravening goods and there is no provision in Central Excise Law to confiscate the goods which are not contravening goods - the impugned order in so far as the same is in respect of M/s Mayank Metal is set aside. Goods confiscated and duty demanded in respect of M/s Shivam Metal and M/s Vasudev Udyog - HELD THAT:- All the goods which were confiscated were still within the factory and they had not been cleared from the factory. In case some goods are found in the factory which are in excess of the book balance then the provisions are that the manufacture is made to record the excess finished goods in his RG-1 register so that the goods suffer Central Excise duty on clearance. When the goods have not been removed from the factory without payment of duty they do not become contravening goods and the same are not liable for confiscation - The Original Adjudicating Authority should have directed the appellant to record the excess found finished goods in RG-1 register so that they suffer duty on their clearance. The goods were in the present case still within the factory and therefore, they were not liable for confiscation. Therefore, the impugned order in respect of goods belonging to M/s Shivam Udyog and Vasudev Udyog is set aside with directions to the respective appellants to record the said goods in their RG-1 register if already recorded in RG-1 register cleared as payment of appropriate Central Excise duty then no action to be taken. In case of M/s Vasudev Udyog raw materials were also confiscated. Central Excise Act deals with the manufacture and so long as the goods are not manufactured the Central Excise duty is not due on the same.The authorities under Central Excise Act do not have power to seize and confiscate the raw material. Therefore, confiscation of raw material belonging to M/s Vasudev Udyog is also set aside. Appeal allowed - decided in favor of appellant.

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• 2020 (1) TMI 668
  Valuation - manufacture of DG set - inclusion of pre-delivery inspection charges and after sale service charges in the assessable value - HELD THAT:- The appellant have discharged the excise duty on sale price of DG set. The activity of testing of DG set at the site of the customer and the use of diesel is not part and partial of sale of DG set. It is an independent activity of service therefore the cost of diesel which was recovered by the appellant from the customer as reimbursement for the testing of the DG set is not includable in the transaction value towards the sale of DG set. The activity of filling of Diesel in the DG Set at the site Company is at most can be considered as pre-delivery inspection charges. The Hon ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE, MYSORE VERSUS M/S TVS MOTORS COMPANY LTD. [ 2015 (12) TMI 874 - SUPREME COURT] held that the charges for pre- delivery inspection is not includable in the Assessable Value. The demand of duty on the cost of diesel is not sustainable - Appeal allowed - decided in favor of appellant.

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• 2020 (1) TMI 667
  Clandestine removal - shortage of stock - the appellant is in export warehouse receiving non-duty paid petroleum products for the purpose of export - HELD THAT:- The demand stands raised only on the basis of losses which are either in the condonable limit or have not been correctly measured. There is no evidence of any removal of the product, in the said case demand of duty against the appellant can t be upheld. Appeal allowed - decided in favor of appellant.

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• 2020 (1) TMI 666
  Rebate of Central Excise duty - Department alleged that the goods exported were not the same goods mentioned in the duty paying documents on which rebate for Central Excise duty was claimed - HELD THAT:- The appellant have filed documents relating to 31 rebate claims and further they have filed documents for 22 rebate claims. Thus out of the initial claim for 84 rebate claims they have submitted 53 rebate claims as documents for 53 rebate claims have been filed. The appellant claims that he has taken necessary permission for factory stuffing. Officers of Central Excise have examined the duty paid nature of goods after verifying the GP-1s and therefore, rejection at a later date is illegal an void. The claim of the appellant and documents need to be verified in terms of the Public Notice, Board Circular etc. existing during the relevant date. The appeal is allowed by way of remand to the adjudicating authority to consider the documents now filed and that may be filed by the appellant during course of denovo proceedings.

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• CST, VAT & Sales Tax

• 2020 (1) TMI 665
  Exemption to Unbranded Furniture sold by the petitioner - whether taxable at 12.5% under item 69 (C,C No.3) Part C of the 1st Schedule Tamil Nadu VAT Act, 2006? - HELD THAT:- The law on the subject is well settled. In the matters of classification, it is the commercial parlance test which is relevant. It is test which has and that has to be adopted by the assessing officer. He has to decide as to how the product is treated in the market by the men of commerce in the trade. It is not the clarification or a particular view of the superior officer which should weigh his mind though such clarifications in the matters of classifications may be a relevant factor. However, they are not the only factors which are relevant. The impugned order is set aside and the case is remitted back to the 1st respondent to pass an independent order uninfluenced by either of the clarifications of the Department - Petition allowed by way of remand.

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• 2020 (1) TMI 664
  Principles of Natural Justice - validity of assessment order - It is the grievance of the petitioner that no reasonable opportunity was provided to the petitioner before passing of the order impugned - HELD THAT:- It is apparent that the assessment order impugned is made on the annual basis relating to the tax periods, April 2009 to March 2010. A reading of provisions of Rule 37 of of KVAT Rules and Section 38(7) of of KVAT Act makes it clear that the authority authorized by the Commissioner is empowered to assess to the best of its judgment for the tax period or periods that would apply to such dealer. It is incumbent on respondent No.1 Authority to assess/re-assess the dealer for the tax period or periods which would be a calendar month in the present set of facts - No consolidated assessment on annual basis is justifiable under the scheme of the Act. Hence, on this ground alone, the order impugned deserves to be set aside. The matter is restored to the file of respondent No.1 to re-do the assessment-under Section 38(7) of the Act in accordance with law after providing reasonable opportunity to the petitioner - petition allowed by way of remand.

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