TMI Tax Updates - e-Newsletter
January 23, 2020
Case Laws in this Newsletter:
GST
Income Tax
Benami Property
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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GST:
IGST wrongly paid under CGST head - The petitioner Company directed to deposit the amount under the IGST head within a period of 10 days - No interest liability - The petitioner shall also be entitled to get the refund of the amount deposited by them under the CGST head, or they may get the amount adjusted against their future liabilities, in accordance with law
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Income Tax:
Revision u/s 264 in favor of assessee - CIT rejected the application on the ground that, the assessee has filed application only against the order of assessment - Additions towards cash payment in violation of section 40A(3) in the reassessment proceedings - order of CIT sustained.
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Income Tax:
Revision u/s 264 - The assessing authority has duly considered the application of the assessee and after considering the same has recorded a finding that the assessee has clearly misrepresented in his return as well as audit report with respect to Section 40A(3) of the Act and Rule 6DD of the Rules, 1962 and therefore the case of the petitioner is not covered by any of the exceptions.
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Income Tax:
Deduction u/s 80P - the entities registered under the Karnataka Souharda Sahakari Act, 1997 fit into the definition of “co-operative society” as enacted in sec.2(19) of the Income Tax Act, 1961 and therefore subject to all just exceptions, petitioners are entitled to stake their claim for the benefit of sec.80P
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Income Tax:
Reopening of assessment u/s 147 - Issue of jurisdiction u/s 147 has been raised for the first time before the Tribunal- If an authority is found to have no jurisdiction to invoke reopening of a completed assessment, the consent or waiver can never give the jurisdiction to the authority concerned.
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Income Tax:
Clubbing of income of spouse - Non-allowing of set off of business loss - Going by the Explanation 3 read in conjunction with section 64(1)(iv) of the Act, the entire amount of loss resulting from the business of F&O with the gifts received from the assessee is liable to be clubbed in the hands of the assessee. - Claim allowed.
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Income Tax:
Proof of pudding is in the eating. The travel of assessee from losses to profits pursuant to the collaboration with the Arkadin SA, France is evident. Its acquisition of not only the equipment but also the technical knowhow cannot be presumed to be without any cost. As rightly pointed out by the Ld. CIT(A), the findings of the Assessing Officer that the payments were made without any business purpose and without any commensurate benefit to the assessee are not based on any cogent material and without bringing any adverse material on record.
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Income Tax:
Deduction of expenses u/s.37(1) - Expenses on pooja in temples located outside the factory premises and towards local area expenses claimed to be for social contribution for welfare of the residents of the locality where the factory of the assessee is situated - onus was on assessee to prove business nexus - Expenses not allowed.
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Income Tax:
Penalty u/s 271E - violation of provisions of section 269T - Cash loan between relatives - Since the transactions have been entered between assessee and her husband, the same cannot be subject matter of penalty
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Income Tax:
Penalty u/s 271(1)(c) - assessee has not declared interest income on loans and advances on ‘accrual basis’, even though the assessee was following mercantile system of accounting - The explanations furnished by the assessee cannot be said to be false. - No penalty.
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Income Tax:
Bogus LTCG - Addition u/s 68 - The assessee remained non-cooperative before the AO as well as before the Ld. CIT(A) by not producing the Director before the revenue authorities as well as not substantiated the claim before the AO as well as Ld. CIT(A) in spite of the repeated opportunities given to the assessee
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Income Tax:
Penalty u/s 271B - failure to get books of accounts audited u/s. 44AB - assessee under the bonafide belief failed to get the accounts audited and in such facts and circumstances the penalty under section 271B is not warranted
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Corporate Law:
Validity of Arbitral Award - once the stage under Section 14 of the IBC, namely, moratorium with regard to continuation of pending proceedings against the Corporate Debtor has been declared to be over, no further embargo remains for continuing to hear suits and other proceedings to which the Corporate Debtor (the petitioner in this case) is a party.
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Indian Laws:
Dishonor of cheque - Responsibility of Director not engaged in day to day affair of the company - Director having majority shareholding - The complainant in his complaint has not alleged the specific role against the petitioner, to the fact that how she is responsible for issuance of the cheque - the criminal proceedings against the present petitioner would amount to abuse of process of law.
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Service Tax:
CENVAT Credit - capital goods - motor vehicle - cash vans - it has to necessarily prove that the same are registered in its name and that the same were registered in its name during the length of the period of dispute involved. Otherwise, the appellant would not satisfy that the same is capital goods and hence, will be covered under the exclusion clause to Rule 2 (l) ibid.
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Service Tax:
Imposition of penalty u/s 78 - based on the records, maintained by the appellant, the short payment of Service Tax on the GTA service was detected by the department. - the charges of suppression, misstatement etc. cannot be leveled against the appellant, justifying invocation of the provisions of Section 78 of the Act for imposition of penalty.
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Central Excise:
CENVAT credit - paints which were used for job work activities - cost of paints have been separately shown in the invoices and not recovered from the manufacture - credit cannot be denied.
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VAT:
Levy of Sales Tax - sale of goods imported from foreign country - to foreign bound ships as “ship stores” - sale or not - Since the goods are to be consumed on the board of the foreign going ship and the same would be consumed before reaching a destination, it does not fall under the definition of ‘export’. The sale cannot qualify as a sale occasioning export unless the goods reach a destination which is a place outside India. Further, since the goods have been sold from the bonded warehouse and had crossed the customs port/land customs station prior to their sale, it cannot qualify as a sale in course of export within the meaning of Section 5(1) read with Section 2(ab) of the CST Act.
Articles
Notifications
GST - States-
EXN-F(10)-22/2017 - dated
6-1-2020
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Himachal Pradesh SGST
Supersession Notification No. EXN-F(10)-22/2017 dated 3rd August, 2019
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EXN-F(10)-22/2017 - dated
6-1-2020
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Himachal Pradesh SGST
Supersession Notification No. EXN-F(10)-22/2017 dated 1st May, 2018
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29/2019-State Tax (Rate) - dated
6-1-2020
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Himachal Pradesh SGST
Amendment in Notification No. 13/2017- State Tax (Rate), dated the 30th June, 2017
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28/2019-State Tax (Rate) - dated
6-1-2020
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Himachal Pradesh SGST
Amendment in Notification No. 12/2017-State Tax (Rate), dated the 30th June, 2017
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27/2019-State Tax (Rate) - dated
6-1-2020
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Himachal Pradesh SGST
Amendment in Notification No. 1/2017-State Tax (Rate), dated the 30th June, 2017
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72/2019-State Tax - dated
31-12-2019
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Himachal Pradesh SGST
Seeks to notify the class of registered person required to issue invoice having QR Code
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71/2019-State Tax - dated
31-12-2019
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Himachal Pradesh SGST
Seeks to give effect to the provisions of rule 46 of the HPGST Rules, 2017
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70/2019-State Tax - dated
31-12-2019
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Himachal Pradesh SGST
Seeks to notify the class of registered person required to issue e-invoice.
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69/2019-State Tax - dated
31-12-2019
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Himachal Pradesh SGST
Seeks to notify the common portal for the purpose of e-invoice
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68/2019-State Tax - dated
31-12-2019
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Himachal Pradesh SGST
Himachal Pradesh Goods and Services Tax (Eighth Amendment) Rules, 2019
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26/2019-State Tax (Rate) - dated
6-12-2019
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Himachal Pradesh SGST
Amendment in Notification No. 11/2017- State Tax (Rate), dated the 30th June, 2017
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01/2020 - KGST.CR.01/17-18 - dated
20-1-2020
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Karnataka SGST
Seeks to appoint Revisional Authority under CGST Act, 2017
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04/2020-State Tax - dated
17-1-2020
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West Bengal SGST
Seeks to extend the one-time amnesty scheme to file all FORM GSTR-1 from July 2017 to November, 2019 till 17th January, 2020
SEZ-
S.O. 277(E) - dated
16-1-2020
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SEZ
Central Government notifies the 5.37 hectares area at No. 138, Old Mahabalipuram Road, Sholinganallur, Kancheepuram District in the State of Tamil Nadu and constitutes an Approval Committee
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2020 (1) TMI 835
Levy of penalty - Section 129 (3) of the CGST Act, 2017 - HELD THAT:- The petitioner is having remedy to file an appeal against the impugned penalty order under Section 107 of the U.P. GST Act, 2017. Petition dismissed.
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2020 (1) TMI 834
Enlargement on Bail - procedure for disposal of rejected Fabric/bags of bags - whole prosecution case against the applicant is without jurisdiction and vitiated under law - HELD THAT:- Keeping in view the nature of the offence, evidence, complicity of the accused, submissions of the learned counsel for the parties, I am of the view that the applicant has made out a fit case for bail. Bail application allowed.
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2020 (1) TMI 833
Recovery of short paid IGST alongwith interest - IGST wrongly paid under CGST head - HELD THAT:- Admittedly, the petitioner Company had discharged their tax liability under the IGST head, but inadvertently or otherwise, the petitioner deposited the amount under the CGST head. It is not the case that the petitioner Company has concealed the transaction or has committed any fraud in discharging its tax liability. It is a plain case in which the tax has been paid by the petitioner to the Central Government, but not under the IGST head, rather under the CGST head. There appears to be substance in the submission of learned counsel for the petitioner, inasmuch as, by deliberately depositing the cash in the electronic cash ledger for the CGST head, at the place of IGST head, possibly no benefit was going to be derived by the petitioner Company. In that view of the matter, we are not in a position to doubt the bona fides of the petitioner Company, that due to the initial stage of the CGST regime, there might be some confusion, and the cash was wrongly deposited in the wrong electronic cash ledger. There is no provision of cross utilization of the fund as in case of 'electronic credit ledger'. Benefit of the provisions of Section 77 (1) of the CGST Act, read with Section 19(2) of the IGST Act - HELD THAT:- The contention of the learned counsel for the CGST that these provisions are for the persons acting bona fide, may also be accepted, but there is nothing on the record of this case to show that the petitioner Company had not acted bona fidely, particularly in view of the fact that the transaction relates to the early stages in which the GST regime had been implemented, and there might be some confusion prevailing at that initial stage - In that view of the matter, we do not find any plausible reason whatsoever, to deny the petitioner Company the benefit of the provisions of Section 77 (1) of the CGST Act, read with Section 19(2) of the IGST Act. The petitioner Company is directed to deposit the amount of ₹ 41,98,642/-, under the IGST head within a period of 10 days from today, towards the liability of September, 2017. The petitioner shall not be liable to pay any interest on the said amount. The petitioner shall also be entitled to get the refund of the amount of ₹ 41,98,644/- deposited by them under the CGST head, or they may get the amount adjusted against their future liabilities, in accordance with law, as they may choose - application allowed.
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Income Tax
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2020 (1) TMI 823
Reopening of assessment u/s 147 - purported infringement of section 194C of the Act ostensibly on review of existing records - reopening after four years - HELD THAT:- We find that the action u/s 147 was sought to be taken in respect of assessment completed u/s 143(3) earlier after expiry of four years from the end of relevant assessment year alleging escapement of income from taxation. Therefore, the action of the AO is also required to be tested on the touchstone of embargo placed by the first proviso to section 147 of the Act. We do not find anything on record to show as to what material facts remained to be disclosed by the assessee in the original assessment proceedings. Significantly, the re-assessment order passed under s.147 of the Act also does not portray any concern of the AO on this aspect. Ostensibly, in the absence of an express allegation as a starting point, the conditions stipulated under first proviso under s.147 are not complied with. In this event, where embargo placed by the first proviso could not be overcome, the legitimacy of notice issued under the provisions of section 147 of the Act is vitiated. It is also the categorical case of assessee that TDS obligations under s.194C of the Act were duly met and challans for payments were also placed before lower authorities. The entire reassessment proceedings, thus, is without jurisdiction and liable to annulled. The consequent re-assessment order is also therefore liable to be struck down and cancelled as bad in law. Objection on behalf of the Revenue that challenge to jurisdiction u/s 147 has been raised for the first time before the Tribunal - It is well settled that the question of lack of jurisdiction is pure question of law capable of being adjudged on be basis of material on record. There is no estoppel available to the Revenue on the ground that assessee did not raise the question of jurisdiction before the lower authorities. Estoppel cannot give jurisdiction over a matter which is otherwise lacking. If an authority is found to have no jurisdiction to invoke reopening of a completed assessment, the consent or waiver can never give the jurisdiction to the authority concerned. Such view has been expressed J. S. Parker [ 1973 (2) TMI 25 - BOMBAY HIGH COURT] P. V. Doshi vs. CIT [ 1977 (8) TMI 29 - GUJARAT HIGH COURT] Issuance of notice under s.147/148 of the Act is void ab initio and accordingly reassessment order is without jurisdiction and therefore illegal - Decided in favour of assessee.
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2020 (1) TMI 822
Clubbing of income - Non-allowing of set off of business loss - computation of total income that the assessee clubbed loss from the business of his spouse - HELD THAT:- Assessee gifted certain Fixed Deposit receipts and other amounts to his wife not only in this year but also in the earlier years. Interest income arising from such FDRs amounting to ₹ 7,21,547/- in addition to Venture capital income of ₹ 1,11,252/- accruing to wife from such gifts has been religiously clubbed by the assessee in his hands and offered for taxation. Two possible situations of utilization of the assets transferred by husband to wife triggering the clubbing provisions. The first, which is covered within the main part of section 64(1)(iv) of the Act, is where the amount of assets received by wife are invested exclusively in an asset attracting clubbing of full income therefrom. Interest income arising from FDRs amounting to ₹ 7,21,547/- is an illustration of such positive income, which has been promptly offered by the assessee. The second, which is covered within section 64(1)(iv) read with the Explanation 3 of the Act, is where the assets received by wife as gift from husband are invested by her in a business, in which she has her own separate investment as well, thereby attracting clubbing of income to the extent it is relatable to the investment of gifts received from husband in the common business. Loss (negative income) of ₹ 31,56,429/- from F O business is an illustration of such income, which was rightly clubbed by the assessee but wrongly denied partly. Going by the Explanation 3 read in conjunction with section 64(1)(iv) of the Act, the entire amount of loss resulting from the business of F O started by Mrs. Priti Bhaskarwar with the gifts received from the assessee is liable to be clubbed in the hands of the assessee. Assessee is entitled to club full loss of ₹ 31.53 lakh arising during the year from the business of F O carried on by Mrs. Priti Bhaskarwar, in his personal income. Appeal allowed.
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2020 (1) TMI 821
TP Adjustment - addition on account of ALP - Not making reference to Ld. TPO - certain payments to its Associated Enterprises ( AEs ) which is not an expense but in fact an income AND amount as not claimed by the assessee in its P L account and is only the amount of reimbursement which the assessee incurred towards payments to reliance for the ITFS services, but utilised by the Associated Enterprises ( AEs ) and therefore such sum was reimbursed by the AE s - AO reached a conclusion that the assessee failed to substantiate as to when and how the various services were requisitioned from the AE s - whether the services were actually needed by it, whether the same were actually received by it by producing contemporaneous documentary evidence, at the time of entering into the agreement or at the time of availing the services - HELD THAT:- On a consideration of the submissions made on behalf of the assessee, we are of the considered opinion that the payments were made for business purpose and the Revenues earned and declared by the assessee show the proportion of benefit, because the assessee travelled from losses to profit after their collaboration with the Arkadin SA, France. Proof of pudding is in the eating. The travel of assessee from losses to profits pursuant to the collaboration with the Arkadin SA, France is evident. Its acquisition of not only the equipment but also the technical knowhow cannot be presumed to be without any cost. As rightly pointed out by the Ld. CIT(A), the findings of the Assessing Officer that the payments were made without any business purpose and without any commensurate benefit to the assessee are not based on any cogent material and without bringing any adverse material on record. We are in agreement with the Ld. CIT(A) in his findings that the Assessing Officer failed to specify how the payments made by the assessee were not in commensurate with the services obtained by the assessee and such findings are without any basis. The very fact of the Assessing Officer disallowing the income and the reimbursement which does not pass through the P L account while disallowing the expenses shows that the disallowance was made by the learned Assessing Officer without any proper verification of the material facts available on record. We also find strength in the submission of AR that inasmuch as AO noticed that the value of the international transaction exceeds ₹ 5 crores, pursuant to the instruction No. 3/2003, dated 20/5/2003, the matter should have been referred to the Ld. Transfer Pricing Officer for determination of ALPB of the international transaction, and for not doing so the adjustment on account of ALP cannot be sustained. In the case of M/s SG Asia Holdings (India) Private Limited referring to the instruction No. 3/2003 held that in view of the guidelines issued by the CBDT instruction No. 3/2003, the Tribunal was right in observing that by not making reference to Ld. TPO, the Assessing Officer had breached the mandatory instructions issued by the CBDT and declined to find the conclusion so arrived by the Tribunal to be incorrect. - Decided against revenue
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2020 (1) TMI 820
Penalty u/s 271(1)(c) - difference between the slump sale claimed and that of the learned Assessing Officer as per section 50C - Defective notice - non specification of charge - under which limb of section 271(1)( c ) of the Act the penalty was levied ? - HELD THAT:- Penalty order does not reveal that the learned Assessing Officer undertake any new material that was suppressed by the assessee, pursuant to which the detection of concealment of income was found. It s not the case of the Revenue that the assessee did not reveal the auditor s report or their claim of slump sale under section 50B of the Act. Further it could be seen that except the valuation covered by the stamp duty, there is nothing on record to show that the value of the slump sale was not ₹ 1.2 crores. Even according to the penalty order, immediately on the learned Assessing Officer issuing show cause notice, the assessee gave up the claim of slump sale and by way of revised computation of income accepted the opinion of the learned Assessing Officer and paid the taxes thereon with interest. The penalty order does not clearly specify under which limb of section 271(1)(c) of the Act, the penalty was levied. So also, the impugned order by the Ld. CIT(A) also not clear on that aspect. For these reasons, viewing from any angle, we are of the considered opinion that penalty cannot be sustained and the same is liable to be deleted. We accordingly direct for its deletion. - Decided in favour of assessee.
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2020 (1) TMI 819
Disallowance u/s 14A r.w.r. 8D - HELD THAT:- We have observed that authorities below have not dissected the various investments vis- -vis dividend income received by the assessee and the matter need to be remanded back to the file of AO for fresh adjudication after considering and analyzing various investments made by the assessee vis-a-vis dividend income received which was claimed as an exempt income. We are agreeable with contentions of the assessee that dividend income received from foreign companies are chargeable to income-tax in India and if that be so in the case of the assessee having offered for tax such dividend income received from foreign companies , then no disallowance of expenses u/s 14A is warranted so far as such investments in foreign companies as dividend income is already subjected to tax in India. AO shall verify this aspect and shall then not include such foreign investments for the purpose of making disallowances of expenses u/s.14A the dividend income of which has already been subjected to tax in India for the year under consideration . So far as claim of the assessee having made strategic investments or investments in subsidiary companies or group /associated companies in India or companies promoted by it and on that short ground seeking exclusion from invocation of Section 14A o the issue is no more res integra as Hon ble Supreme Court has settled this controversy in its judgment in the case of Maxopp Investment Limited v. CIT [ 2018 (3) TMI 805 - SUPREME COURT] wherein this issue is decided in favour of Revenue and such investments are to be considered/included for making disallowance of expenses u/s.14A - AO is directed to include such investments for making disallowance of expensed incurred in relation to earning of an exempt income by invoking provisions of Section 14A - Thirdly, in the case of ACIT v. M/s.Vireet Investment Pvt. Ltd. vs. ACIT, [ 2017 (6) TMI 1124 - ITAT DELHI] has held that investments which yielded dividend income during the year under consideration are only to be considered for the purposes of making disallowance of expenses u/s 14A. We are bound by aforesaid decision of Special Bench of the tribunal. The AO shall verify those investments which yielded dividend income during the year under consideration and then made disallowance u/s 14A by including such investments which yielded dividend during the year under consideration Hon ble Delhi High Court in the case of Joint Investments Private Limited v. CIT [ 2015 (3) TMI 155 - DELHI HIGH COURT] has held that disallowance of expenses u/s 14A cannot exceed exempt income. The AO is directed to follow the aforesaid decision of Hon ble Delhi High Court. We are of the considered view that this matter needs to be remanded to the file of the AO for fresh adjudication Deduction of expenses u/s.37(1) - Expenses on pooja in temples located outside the factory premises and towards local area expenses claimed to be for social contribution for welfare of the residents of the locality where the factory of the assessee is situated - AO observed that the assessee has incurred these expenses towards Corporate Social Responsibility but was not incurred wholly and exclusively for the purposes of the assessee s business - HELD THAT:- Assessee has not filed any justification/explanation as to how these expenses are incurred wholly and exclusively in connection with the business of the assessee as is mandated u/s.37(1) of the 1961 Act. The onus is on the assessee to prove that these expenses are incurred wholly and exclusively for the purpose of business of the assessee as is required u/s 37(1) as it is the assessee who is claiming these expenses as deduction while computing income chargeable to tax under provisions of the 1961 Act. The principles of res-judicata are not applicable to Income-tax proceedings although we agree with the proposition that principles of consistency is required to be maintained in tax proceedings. But, however, every assessment year is a separate unit and the assessee has to prove that expenses incurred in a particular year are incurred wholly and exclusively for the purposes of the business of the assessee and has a direct nexus with the business of the assessee, satisfying mandate of provisions of Section 37(1) Assessee having failed to prove that in the year under consideration, these expenses were incurred wholly and exclusively for the purposes of business of the assessee as no evidence is produced to justify the same , these expenses cannot be allowed as business deductions and disallowances as were made by the authorities below are hereby confirmed. More over, the assessee is relying on the orders of the authorities for ay(s): 2007-08 and 2008-09, while we are presently concerned with ay: 2012-13 which is a distant ay and onus was on assessee to prove business nexus and expenses being incurred in the year under consideration wholly and exclusively for the purposes of business of the assessee as is mandated u/s 37(1) - Decided against assessee Disallowance of business deduction being provision for profit incentive payable to its employees which was debited to P L A/c but was not paid during the previous year - HELD THAT:- Provisions of Section 36(1)(ii) read with Section 43B(c) cannot be applied , as these payments are not towards bonus but are governed by commercial expediency to have smooth operations and to avert strike. However, Memorandum of Settlement produced before us is dated 04.09.1977 which is in operation only till 31.12.1980 , while we are presently seized of ay: 2012-13. There is no finding of lower authorities as to whether this Memorandum of Settlement is still operative even in impugned ay. There is no finding/evidence on record to come to the said conclusion that the said memorandum of settlement still hold the field and these payments were made under the said memorandum of settlement . We are of considered view that the matter need to be restored to the file of the AO for fresh adjudication and the assessee is directed to produce agreement/settlement with the employees which is valid and effective for year under consideration and based on that the AO shall adjudicate the matter afresh keeping in view the provisions of Sec.37(1), 36(1)(ii) and 43B and also ratio of decision of CIT v. Lakshmi Mills Co. Ltd [ 1997 (3) TMI 17 - MADRAS HIGH COURT] and CIT v. Sivanandha Mills Ltd. [ 1984 (12) TMI 60 - MADRAS HIGH COURT] - The assessee is directed to appear before AO and furnish relevant agreements/settlement which is applicable/relevant for previous year relevant to impugned ay and to justify that the provisions as aforesaid were made by it as per settlement arrived at with its employees as applicable to the impugned ay.
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2020 (1) TMI 818
Penalty u/s 271E - violation of provisions of section 269T - Cash loan between relatives - AO noticed that the assessee has taken money from her husband - HELD THAT:- In the instant case, there is no dispute between parties that the assessee has received loan from her husband and re-paid the loan to him. The assessee has placed reliance on the decision rendered by the Co-Ordinate Bench of this Tribunal in the case of Smt. Deepika vs. ACIT [ 2017 (10) TMI 1405 - ITAT BANGALORE] wherein the Tribunal has held that the loan transactions between the close relatives would not attribute penalty u/s 271D In the case of M. Yeshodha [ 2013 (2) TMI 211 - MADRAS HIGH COURT] has taken the view that the transaction of loan between father-in-law and daughter-in-law cannot be subject matter of penalty u/s 271D of the Act. In the instant case, the claim of the assessee is that these transactions are only gift transactions. However, the assessee appears to have failed to substantiate the same and hence the tax authorities have taken the view that the impugned transactions are loan transactions. The assessee was constrained to offer explanations relating to business exigencies only for the reason that the tax authorities have considered these transactions as loan transactions. CIT(A) has accepted the explanation of business exigency and accordingly deleted the penalty u/s 271D of the Act. Since the transactions have been entered between assessee and her husband, we are of the view that the decision rendered by Hon ble Madras High Court in the case of M Yeshodha(supra) may be conveniently applied here.- Decided in favour of assessee.
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2020 (1) TMI 832
Revision u/s 264 in favor of assessee - CIT rejected the application on the ground that, the assessee has filed application only against the order of assessment - Additions towards cash payment in violation of section 40A(3) in the reassessment proceedings - Whether the deposit of amount in cash in the bank account of M/s Jalan Synthetics can be held to be covered under the provisions of Rule 6DD(c)(v) of the Rules, 1962? and for which purpose it can be said to be a payment by use of electronic clearing system through bank account - HELD THAT:- It seems that the issue pertaining to the validity of the order under Section 147 of the Act, 1961 was not raised by the assesseee in his application and his only grievance was with regard to the re-assessment order. Cash is deposited directly in the bank account of the beneficiary, can the benefit of Rule 6DD(c)(v) of the Rules, 1962, can be given to the assessee. Such transaction by depositing cash directly in the bank account of the beneficiary is not routed through any clearing house nor is the money send through electronic mode and therefore such a transaction in my considered opinion cannot be covered by Rue 6DD(c)(v) of the Rules, 1962, and therefore benefit of the provision cannot be given to the petitioner. The petitioner also could not lead any evidence to show that he had deposited the amount on the instructions of M/s Jalan Synthetics or due to any business exigency. In absence of such evidence, the assessing authority rightly denied the benefit of exemption to the petitioner. The impugned order dated 19.01.2016, passed by the Principal Commissioner, Income Tax has considered the reply given by the petitioner and has concluded that in respect to the transfer of funds made by the petitioner, benefit of Rule 6DD of the Rules, 1962 is not attracted and therefore computation made by the assessing authority has been up held. The jurisdiction of writ Court in exercise of jurisdiction under Article 226 of the Constitution of India is limited to examining the decision making process and not the decision itself. This position of law has been constantly reiterated by the Hon ble Apex Court in its various pronouncements. See MUNICIPAL COUNCIL NEEMUCH VERSUS MAHADEO REAL ESTATE AND ORS. [ 2019 (9) TMI 1307 - SUPREME COURT] Reassessment proceedings were initiated on account of the fact that it was discovered that the assessee had misrepresented in his return with regard to the payments made to M/s Jalan Synthetics of ₹ 3,40,000/- in cash which were deposited in their bank account and such a transfer was not admissible in the light of provisions of Section 40A(3) of the Act and Rule 6DD of the Rules, 1962, and therefore, in the reassessment proceedings the said amount was added to the income of the assessee. The reassessment order was assailed by moving an application under Section 264 of the Act, 1961. The assessing authority has duly considered the application of the assessee and after considering the same has recorded a finding that the assessee has clearly misrepresented in his return as well as audit report with respect to Section 40A(3) of the Act and Rule 6DD of the Rules, 1962 and therefore the case of the petitioner is not covered by any of the exceptions. No evidence was led by the assessee to demonstrate that the cash was deposited at the instance of M/s Jalan Synthetics, so as to give benefit of Rule 6DD of the Rules, 1962, to the petitioner. Petitioner-assessee also could not demonstrate that the impugned order is bereft of reasons or that it is perverse or that it has failed to consider the relevant material or document and therefore in absence of any of such infirmity the contention of learned counsel for the petitioner cannot be accepted and the writ petition is liable to be dismissed.
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2020 (1) TMI 817
Penalty u/s 271(1)(c) - assessee has not declared interest income on loans and advances on accrual basis , even though the assessee was following mercantile system of accounting - HELD THAT:- Assessee has not declared interest accrued but not received by it in its return of income and the same was declared only during the course of assessment proceedings. As explained that, as per the Circulars issued under Karnataka Society s Act and Rules, NABARD and RBI, it was required to account for the interest income on realization basis. There is some valid reason for the assessee in not declaring interest accrued but not received by it. There is also no dispute with regard to the fact that the assessee has offered interest income whenever it has realized it. Before the CIT(A) the assessee has furnished details of interest adjustments required to be made u/s 145 of the Act in the financial year 2010-11 and 2011-12 relevant to the asst. years 2011-12 and 2012-13 Interest adjustments warranted an addition of ₹ 209.81 lakhs during the year under consideration and, while in the succeeding asst. year i.e. asst. year 2012-13, it warrants reduction of the total income by ₹ 363.76 lakhs. According to the assessee it has not claimed deduction of above said amount in asst. year 2012-13. These facts would show to that the interest income is not altogether concealed, but accounted for in the succeeding years on receipt basis , According to the assessee, the above system is followed in consonance with certain principles directed to be followed by its controlling authorities. In effect, it results in shifting of income from one year to another year only. Hence explanations furnished by the assessee cannot be said to be false. We also notice that the AO has also not found it to be false or fount it to be not bonafide. In any case, the system so followed by the assessee results in shifting of income from one year to another year and the said practice, according to the assessee, is supported by the directions given by the controlling authorities. The impugned addition would not give rise to levy of penalty u/s 271(1)(c) - Decided in favour of assessee.
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2020 (1) TMI 816
Bogus LTCG - Addition u/s 68 - onus to prove - HELD THAT:- No real transaction of purchase and sale of shares of M/s Supreme Agro Products Pvt. Ltd. did take place in the case of the assessee. M/s Supreme Agro Products Pvt. Ltd. was running in huge losses and had not declared any dividend for several years which shows that the aforesaid transaction in dispute is to make the money unaccounted money as a long term capital gain which is taxable at a concessional rate, was a bogus transaction in the nature of colourable device of the nature covered in the scope of decision of Hon ble Supreme Court of India in the case of CIT vs. Mc. Dowell Ltd. ( 1985 (4) TMI 64 - SUPREME COURT ) . In considered view the Ld. CIT(A) has passed a well reasoned order on the basis of documentary evidences filed by the assessee which did not prove the genuineness of the transaction in dispute. The assessee remained non-cooperative before the AO as well as before the Ld. CIT(A) by not producing the Director before the revenue authorities as well as not substantiated the claim before the AO as well as Ld. CIT(A) in spite of the repeated opportunities given to the assessee. - Decided against assessee.
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2020 (1) TMI 831
Deduction u/s 80P - Whether an entity registered under the Karnataka Souharda Sahakari Act, 1997 fits into the definition of co-operative society as enacted by sec. 2(19) of the Income Tax Act, 1961 for the purpose of Section 80P thereof? - HELD THAT:- In both these definitions as defined by sec.2(d-2) of 1959 Act and Sec. 2(e) of 1997 Act the word co-operative is employed not as an adjective but as a noun; the definition of other relative concepts in the dictionary clauses of these Acts strengthens this view; this apart, sec.7 of the 1997 Act provides that the entity registered as a co-operative shall be a body corporate, notwithstanding the conspicuous absence of the word society as a postfix; sec.9 of the 1959 Act makes the entity once registered u/s.8 thereof a body corporate; both the entities have perpetual succession by operation of law; thus on registration be it under the 1959 Act or the 1997 Act, a legal personality is donned by them, so that inter alia they can own and possess the property; The employment of the word Sahakari in the very title of the 1997 Act is also not sans any significance; Sahakaar in Sanskrit is the equivalent of sahakaara in Kannada which means co-operation ; as already mentioned above both the 1959 Act and the 1997 Act employ this terminology; the 1997 Act is woven with the principles of co-operation; sec.4 of this Act bars registration of an entity unless its main objects are to serve the interest of the members in the area of co-operation and its bye-laws provide for economic and social betterment of its members through self-help mutual aid in accordance with the cooperative principles; this apart, even sub-section (2) of sec.4 is heavily loaded with co-operative substance. These writ petitions succeed; a declaration is made to the effect that the entities registered under the Karnataka Souharda Sahakari Act, 1997 fit into the definition of co-operative society as enacted in sec.2(19) of the Income Tax Act, 1961 and therefore subject to all just exceptions, petitioners are entitled to stake their claim for the benefit of sec.80P - Decided in favour of assessee.
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2020 (1) TMI 830
Deductions relating to, operating expenses, the cash deposit in bank and agricultural income - HELD THAT:- Revenue followed due process of law to its hilt and in spite of granting the assessee several opportunities, he miserably failed to comply with the notices issued by the concerned authorities. As such, the assessment was completed in the manner as stated in the order reproduced hereinabove. Assessee did not submit evidence or material at all before the lower Income Tax authorities in support of its claims for the deductions relating to, operating expenses, the cash deposit in bank and agricultural income. Decided in favour of the Revenue
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2020 (1) TMI 829
Addition on account of commission expense - deduction allowable u/s.37 - whether arrangement between the appellant and the commission agents is such that the commission agents are to provide details of potential customers as well as solicit the orders ? - ITAT deleted the addition - HELD THAT:- The appellate tribunal took the view that the CIT (Appeals) ought not to have confirmed the disallowance only on the ground that the only service rendered by the commission agents was that of introducing the potential customers to the assessee, which would not fall within the ambit of Service so as to make the claim of commission eligible for deduction under Section 37 of the Act. The tribunal takes the view that the commission paid to the persons for referring the names of the customers, is allowable under Section 37 of the Act for the purpose of introducing potential customers to the assessee and the same would fall within the ambit of Service . We are in agreement with the view taken by the appellate tribunal as regards the deduction available under Section 37 of the Act. We are of the view that the proposed question cannot be termed as a substantial question of law.
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2020 (1) TMI 815
Reopening of assessment u/s 147 - Bogus purchases - HELD THAT:- CIT(A) considering the submission of the assessee and taking note of the fact that the assessment was completed u/s. 143(3) of the Act originally and during the course of such assessment proceedings assessee has filed all the relevant details in respect of set off of unabsorbed losses and depreciation relating to amalgamating company and also furnished copy of the High Court order approving the scheme of amalgamation, Ld. CIT(A) held that reopening was done merely on change of opinion and not based on any material on record which has come subsequent to completion of the assessment u/s. 143(3) We do not see any valid reason to interfere with the findings and the decision in holding that the reassessment was made merely on change of opinion and quashing the reopening of assessment. None of the findings of the Ld. CIT(A) have been rebutted with evidences by the revenue. Thus, we sustain the order of the Ld.CIT(A) and reject the grounds raised by the revenue.
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2020 (1) TMI 828
Rectification of mistake - HELD THAT:- Considering the volume, frequency and other relevant things in respect of various transactions on the part of the assessee, having no hesitation in holding that it showed a substantial participation of the assessee in the shares as trading. In fact, the entire case sought to be made by the review-applicant, being the assessee, with regard to error apparent on the face of the record is based on paragraph 9 of the judgment under review, which on a plain reading clearly reveals that the Court merely recorded the contention of the assessee that had no reflection at all in respect of the ultimate analysis of the Court while arriving at a decision to dismiss the appeal filed by the assessee.
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2020 (1) TMI 827
Nature of expenditure - expenses incurred in the preoperative period towards the project development cost - revenue or capital expenditure - HELD THAT:- Question of law as considered in M/S. RELIANCE FOOT PRINT LIMITED [ 2017 (7) TMI 611 - BOMBAY HIGH COURT] expenditure to be revenue expenditure - the same has been held against the Appellant-Revenue. Expenditure u/s. 37(1) - whether expenses were preoperative in nature and hence not admissible as expenditure u/s. 37(1) ? - whether Tribunal was justified in allowing the expenses incurred u/s. 37(1)? - HELD THAT:- Issue considered and held against the Appellant-Revenue in M/S RELIANCE HOME STORE LTD [ 2019 (6) TMI 1427 - BOMBAY HIGH COURT]
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2020 (1) TMI 826
Penalty u/s 271(1)(D) - impugned penalty order barred by limitation u/s 275 or not? - HELD THAT:- Since the question of limitation may go to the root of the matter and whether the penalty order in question can be sustained or not would depend upon it being within the limitation or not as prescribed under Section 275 of the Act, the learned Tribunal could have examined the said contention raised by the Assessee, as noted by it in para 4 of its order and discussing the relevant facts and case laws, it could have pronounced upon the issue as to whether the penalty order under Section 271-D of the Act passed by the Assessing Authority on 31.03.1995 was within limitation or not. But the learned Tribunal has not admitted the said plea of the Assessee. Therefore, we remit back the matter to the learned Tribunal and request the learned Tribunal to decide the said question after hearing both parties once again. Therefore, the appeal of the Assessee is disposed of, without answering the substantial questions of law raised before us and we remand the case back to the learned Tribunal on the limited issue of deciding the question of limitation as raised by the Assessee.
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2020 (1) TMI 825
Donation paid by the assessee u/s 80G allocation to the unit eligible for deduction u/s 80-IC - HELD THAT:- We note that the donation paid by the assessee has no connection with the unit eligible for deduction under section 80-IC of the Act. The scheme of the Act provides to claim the deduction u/s 80G after claiming all the deduction provided under chapter VI-A of the Income Tax Act. Therefore, the assessee can claim the deduction on account of such donation only against the Gross Total Income after claiming all other deduction. Donation paid by the assessee cannot be claimed as an expense in the profit and loss account as the same has not been incurred wholly and exclusively for the purpose of the business as provided under section 37(1) of the Act. Thus even if the assessee claimed the donation as an expense in the profit and loss account, then it has to be disallowed while computing the income under the head business and profession. Thus, the only option available to the assessee to claim the deduction on account of such donation is only under the provisions specified under section 80G of the Act which can be claimed in the manner as discussed above. Appeal admitted on following question of law - [A] Whether Tribunal erred in deleting disallowance made on account of provision for Employee Long Term Compensation Plan? [B] Whether Tribunal erred in confirming decision of CIT(A) deleting disallowance of depreciation claimed by the assessee at the rate of 60% on the items connected with the VSAT? [C] Whether theTribunal erred deleting reduction of deduction under Section 80IC of the Act?
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2020 (1) TMI 824
TDS u/s 194J or 194H - payment made to a holding company of the assessee - sub-brokerage payments - company providing various Professional or Technical Services - HELD THAT:- As decided in M/S SHCIL SERVICES LTD. [ 2019 (2) TMI 536 - BOMBAY HIGH COURT] any person responsible for paying to a resident any income by way of commission or brokerage would at the time of crediting of such income to the account of the payee or at the time of payment of such income whichever is earlier, deducted income tax at the rate of 5%. This specific provision requiring deduction of tax at source in relation to payment of commission of brokerage cannot be ignored while examining the payment of brokerage in the present case so as to take the case within the ambit of Section 194J as was admitted by the Assessing Officer, CIT (Appeals) and the Tribunal correctly assessing the statutory position and deleted the disallowance - Decided in favour of assessee.
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2020 (1) TMI 814
Penalty u/s 271B - failure to get books of accounts audited u/s. 44AB - assessee did not maintain her books account as well as not got the books of account audited as per the provision of section 44AB - HELD THAT:- As during the course of assessment proceedings assessee prepared her books of account and got audited from accountant under the provision of section 44AB. The books of accounts, which were subsequently audited, prepared by the assessee during the assessment proceedings were accepted by the AO therefore no penalty was levied under section 271A AO levied the penalty for not furnishing the audited report in form 3CD in time under section 271B. Never the less, it is important to note that admittedly there was the loss from the transactions of purchase and sale of shares and there was the substantial compliance on the part of the assessee for getting the accounts audited. More so, the plea of the assessee that her son has carried out the sale purchase transaction of shares has not been proved wrong. It is also important to note that there was no infirmity in such report was pointed out by the AO. Therefore, assessee under the bonafide belief failed to get the accounts audited and in such facts and circumstances the penalty under section 271B is not warranted. With the above observations, the orders of lower authorities are set aside and the penalty levied u/s 271B is deleted. - Decided in favour of assessee.
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Benami Property
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2020 (1) TMI 797
Benami Transactions or not - Dishonor of Cheque - Suit for recovery - Lending of advance to the accused - The trial court was of the opinion that the evidence clearly showed that the amount had been deposited by Plaintiff in his bank account and that this circumstance, supported Accused plea that the amount was returned immediately. - HC decreed the order of trial court. HELD THAT:- The defendant/appellants arguments are two-fold: one, that the document on which the High Court returned its findings was a photocopy and was therefore, inadmissible; and two, that the question whether the sale consideration was ₹ 2,30,000/- or ₹ 1,30,000/- could not have been gone into, since that argument was based on a prohibited transaction, outlawed by the Benami Act. As far as the first question goes, this court notices that the plaintiff had put the matter, during the course of cross examination, to the appellant/defendant. The latter, unsurprisingly, admitted the document, despite the fact that it was a photocopy. The plaintiff had argued that the original of that document was with the purchaser: this was not denied. the argument that the plaintiff s plea regarding the real consideration being barred, has no merit. The plaintiff did not claim return of any amount from the buyer; the suit is not based on any plea involving examination of a benami transaction. Besides, the plaintiff is not asserting any claim as benami owner, nor urging a defense that any property or the amount claimed by him is a benami transaction. Therefore, the defendant appellant s argument is clearly insubstantial. In the present case, the appellants did not prove that the transaction (to which they were not parties) was benami; on the contrary, the appellant s argument was merely that the transaction could not be said to be for a consideration in excess of ₹ 1,30,000/-: in the context of a defense in a suit for money decree. The defendant/appellants never said that the plaintiff or someone other than the purchaser was the real owner; nor was the interest in the property, the subject matter of the recovery suit - Therefore, in the opinion of this court, the conclusions and the findings in the impugned judgment are justified. Appeal dismissed.
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Customs
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2020 (1) TMI 813
Condonation of delay of 87 days in filing the appeals before the Tribunal - HELD THAT:- The delay is condoned. Prayer for withdrawal of appeal - HELD THAT:- The prayer of the Revenue is allowed and the appeals are dismissed as withdrawn.
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Corporate Laws
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2020 (1) TMI 810
Transfer of shares - execution of transfer deed - entitlement of allotment of 60000 shares which were due to R1 (including R2) on right basis by the appellant company - time limitation - HELD THAT:- Appellant company in their correspondence with the Respondent has already accepted to issue shares to the Respondents as per their entitlement on production of court orders, affidavit and indemnity bond and on payment of ₹ 120000/- being the consideration amount of 60000 shares. During the course of arguments when we asked learned counsel for the appellant when the Letter of Administration has been submitted by the Respondent then why did you insist for affidavit and indemnity bond. When Letter of Administration has been issued, it means that the Appellants are discharged from their liability. On this, the learned counsel for appellant apologised. The appellant is a listed company in real estate and is very well aware of legal formalities. By insisting affidavit and indemnity bond again and again inspite of Letter of Administration issued clearly establish that the Appellants are harassing the poor investors. The act of the appellants deserves some penal action. We also note that the Respondents are entitled for 60000 shares as per entitlement on payment of consideration. Respondent will make payment of consideration to the appellant company within 15 days from the date of receipt of this order and he shall be entitled to the benefit of the membership from the date of payment - Appellant company will transfer/arrange for transfer 60000 shares to the Respondent within 30 days from the date of receipt of payment - impugned order upheld.
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2020 (1) TMI 812
Validity of Arbitral Award - maintainability of application - petitioner contends that the application cannot be proceeded since Corporate Insolvency proceedings under the Insolvency and Bankruptcy Code, 2016 (the IBC) has been initiated against the petitioner as the Corporate Debtor - whether the present application under Section 34 of the Act should be kept in abeyance by reason of the provision of the IBC being invoked by operational creditors against the petitioner? HELD THAT:- It would be evident from the dates since above that the impugned Award of 7th July, 2008 is a culmination of a dispute between the parties which existed before the initiation of corporate insolvency proceedings against the petitioner. It is also true that once the Award was challenged by the petitioner (Award Debtor) in 2008, the debt became disputed and subject to a decision in the Section 34 proceedings). This court is not inclined to agree with the contentions of the petitioner that the challenge to the Award cannot be considered by reason of the proceedings under the IBC. This is by reason of the fact that the respondent award-holder could not have filed a claim before the NCLT/IRP since the Section 34 proceedings had not been decided in favour of the said respondent in 2017 and hence there was no final or adjudicated claim as on that date. Further, once the stage under Section 14 of the IBC, namely, moratorium with regard to continuation of pending proceedings against the Corporate Debtor has been declared to be over, no further embargo remains for continuing to hear suits and other proceedings to which the Corporate Debtor (the petitioner in this case) is a party. This Court finds no basis for relegating the Section 34 to the backburner. Although, no formal application has been made, this Court deemed it fit to pass this order since detailed submissions have been made by Counsel appearing for the parties. List the application on 21st January, 2020.
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2020 (1) TMI 811
Rejection of plaint - Specific performance of agreement of sale - plaint rejected on the ground that there is no substantial legal cause of action for filing the suit and the entire basis for filing the suit is based on an alleged oral agreement between two companies is also absurd, speculative and bad in law. Whether the oral agreement of sale entered by two or more private limited companies validly gives rise to cause of action to file suit for specific performance? HELD THAT:- Section 21 of the Act of 2013 lays down the manner in which the document or proceeding requiring authentication by a company or contracts made by or on behalf of a company. There is no provision of oral agreement in the Act of 2013. In view of Section 465(2)(b) of the Act of 2013 coming into force, Section 46(1)(b) of the Act of 1956 is repealed and therefore, the latter is not applicable. Ministry of Law and Justice, Government of India, issued notification dated 30-08-2013, amending the law relating to companies and by the said amendment, Section 46 of Companies Act, 1956 was repealed. In the new Act, it is expressly said this Act which means 2013 Act. When there is conflict between the old Act and new Act, new Act will prevail. Application under Order VII Rule 11 CPC can be filed at any stage of the proceedings. Therefore, the contention of the respondent in this regard cannot be appreciated. As per Section 10 of the Contract Act, if law envisages written contract, it should be in writing. Normally, when two companies wanted to enter into an agreement for sale and purchase of of land, they must enter into a written agreement, but not by way of an oral agreement - In the present case, it is the case of the respondent that it entered into an oral agreement with the petitioners for purchase of a huge extent of land, which cannot be believed. The trial Court dismissed the application filed by the petitioners/defendants on the ground that the application is filed when the suit was coming up for arguments. But, as per the provisions of Order VII Rule 11 CPC., when an application filed for rejection of the plaint, it shall be decided on the basis of the cause of action disclosed in the plaint and the said application can be filed at any stage even at the stage of arguments - In the present case, the trial Court, without deciding the application on the basis of the cause of action mentioned in the plaint, simply dismissed the application on the ground that the said application was filed at the stage of arguments, which is against the provisions of Order VII Rule 11 CPC. In view of the same, it can be said that the trial Court erroneously dismissed the application without properly looking into the provisions of law. The the oral agreement entered by the two juristic persons is not valid - revision petition allowed.
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Insolvency & Bankruptcy
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2020 (1) TMI 809
Practice as a 'Professional' like Advocate, Resolution Professional etc. - Practice after retirement - HELD THAT:- Merely because he has joined a profession and is an ex-employee, no bias can be alleged on the character of such person or the persons engaged such profession like Advocate or Resolution Professional in any matter including the 'Corporate Insolvency Resolution Process'. Let notice be issued on the Respondent by Speed Post. Requisites along with process fee be filed by 18th January, 2020 - Place the case 'for orders' on 3rd February, 2020.
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2020 (1) TMI 796
Appointment of the proposed IRP - apprehension of bias against the appointment of the proposed IRP - It is submitted that Mr. Shailesh Verma is an ex-employee of SBI; joined the services of SBI in the year 1977 and since then he had been working with SBI till his retirement in 2016. He has been in the services of SBI for a period of over 39 years - HELD THAT:- It is evident that such an Interim Resolution Professional is unlikely to act fairly and cannot be expected to act as an independent umpire. We grant an opportunity to the Financial Creditor to perform its statutory mandatory obligation by substituting the name of the Resolution Professional to act as an Interim Resolution Professional in place of the earlier one. The hearing is deferred to 15.01.2020 for compliance.
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2020 (1) TMI 808
Maintainability of application - initiation of CIRP - Corporate Debtor committed default in making repayment - Section 7 of Insolvency and Bankruptcy Code, 2016 read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - HELD THAT:- It can be said that the Applicants have not been able to establish a prime facie case of being a financial creditor and trigger Section 7 of the IBC as allottee in the real estate project as there was no default on the part of the Respondent to deliver the said flat as on 01.02.2019, when the applicants chose to seek refund of amounts paid to the Respondent. But the said flat was promptly offered for delivery on 07.06.2019 and there was a deemed extension of time due to force majeure, and granting of stay by the court for the period of six months, which caused a delay in construction of tower -3, which delayed the construction of the firefighting ram and common podium common to all the towers T-1 to T-6. Petition dismissed.
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2020 (1) TMI 807
Permission for withdrawal of application - initiation of CIRP - Corporate Debtor failed to make repayment - existence of debt and dispute - HELD THAT:- The total amount stands paid in favour of Mr. Hukum Singh ('Financial Creditor'). The parties informed that the 'Committee of Creditors' has not been constituted. In exercise of powers conferred under Rule 11 of the National Company Law Appellate Tribunal Rules, 2016, we set aside the impugned order dated 6th November, 2019 and allow Mr. Hukum Singh to withdraw the application under Section 7 which stands disposed of as withdrawn. Appeal allowed.
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Service Tax
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2020 (1) TMI 806
Demand of interest and penalty - CENVAT credit wrongly on Additional Duty of Customs - Section 3(5) of Customs Tariff Act - irregularly availed credit reversed on being pointed out - HELD THAT:- The appellants have reversed the CENVAT credit of ₹ 24,14,131/- availed on Special additional duty and the same was reversed in March 2017 as shown in the relevant Returns furnished in the Court. Further, this reversal was done before the issue of SCN which was issued on 18.05.2017. Further, the appellants have filed ST Returns for various periods to show that they have enough balance as unutilized amount of CENVAT credit almost in all periods from the quarter of availment of CENVAT credit (October 2013 to March 2014) to the quarter in which the said amount is reversed (October 2016 to March 2017) to cover the said availment of CENVAT credit of ₹ 25,84,886/- which includes the wrongly taken credit of Customs Cess paid amounting to ₹ 1,70,755/- in respect of Bill of Entry No. 9247243 dated 07.02.2013 which the consultant has agreed to pay. The present appeal is allowed by way of remand to the Original Authority to verify the quantum of reversal allegedly made by the appellant amounting to ₹ 24,14,131/- and also to verify whether the appellant had sufficient balance of unutilized amount of CENVAT credit during all the periods from the date of availment till reversal - Appeal allowed by way of remand.
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2020 (1) TMI 805
CENVAT Credit - capital goods - motor vehicle - General Insurance Service on cash vans - HELD THAT:- The definition of capital goods covers motor vehicles other than those inter alia used for providing output service and Sub-clause (B) requires registration in the name of the provider of output service. Hence, when the assessee is trying to make out a case that the cash vans in question are its capital goods, then it has to necessarily prove that the same are registered in its name and that the same were registered in its name during the length of the period of dispute involved. Otherwise, the appellant would not satisfy that the same is capital goods and hence, will be covered under the exclusion clause to Rule 2 (l) ibid. Further, there is a clear finding by the lower authorities that the appellant did not produce any documentary evidence in its support to prove that the motor vehicle is registered in its name and hence, the lower authorities did not have the benefit of the registration certificate furnished for the first time before this forum - Further, the period of dispute is from April 2013 to September 2015 and October 2015 to June 2017 whereas the photocopy of registration certificate reflects the date of registration as 25.11.2014. Mere filing of photocopy of registration certificate before this forum, that too for the first time, would not help anyone since it has to be established that those very vehicles were in fact used and for this, the Tribunal cannot go into this aspect - In view of this, photocopy of the registration certificate cannot be accepted since its relevance has neither been explained nor established and therefore, the case of the appellant falls back to the position where there is a categorical finding of the Adjudicating Authority as to non-furnishing of supporting documentary proof. The appellant has not been able to discharge the burden as to registration in its name and hence, there are no merit in the contentions of the assessee. Appeal dismissed - decided against appellant.
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2020 (1) TMI 804
Imposition of penalty u/s 78 - short paid of service tax under Reverse Charge Mechanism, which was subsequently paid alongwith the interest - HELD THAT:- So far as invocation of Section 78 of the Act is concerned, the ingredients mentioned therein namely fraud, suppression, willful misstatement etc. have to be established by the department. The learned adjudicating authority in this case has specifically mentioned that based on the records, maintained by the appellant, the short payment of Service Tax on the GTA service was detected by the department. Thus under such circumstances, the charges of suppression, misstatement etc. cannot be leveled against the appellant, justifying invocation of the provisions of Section 78 of the Act for imposition of penalty. Late fee for delayed filing of ST-3 returns - HELD THAT:- The SCN had not specifically invoked the provisions of section 74 of the Act, which has been invoked for the first time by the adjudicating authority, during the course of adjudication of the matter. It is evident that the adjudication order in this case, has gone beyond the scope of the show cause notice and on that count, imposition of late fee on the appellant cannot be sustained. Appeal allowed - decided in favor of appellant.
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Central Excise
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2020 (1) TMI 803
Maintainability of appeal - monetary limit involved in the appeal - HELD THAT:- In the present case, there is no challenge to the constitutional validity of any particular Provision, Act or Rule nor there is any challenge to the legality, validity of any Notification/Instruction/Order or Circular. In such circumstances, the Instruction dated 17th August 2011 referred to in Paragraph-4 of the Instruction dated 22nd August 2019 will have no application. In view of the monetary limit prescribed by the Ministry of Finance, Department of Revenue, this appeal is disposed of accordingly.
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2020 (1) TMI 802
Clandestine removal - corroborative evidences - whether the electronic evidence collected during the course of the investigation by the appellant is properly taken into consideration by the Tribunal for adjudication in the appeal or not? HELD THAT:- In view of the findings of facts arrived at by the Tribunal, after considering the material placed before it, no question of law much less any substantial question of law arises for consideration out of the impugned order - appeal dismissed.
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2020 (1) TMI 801
CENVAT credit - paints which were used for job work activities - cost of paints have been separately shown in the invoices and not recovered from the manufacture - allegation that the appellant was not paying Central Excise duty for the said job work - benefit of N/N. 214/1986-CE dated 25.03.1986 - HELD THAT:- The Hon ble Larger Branch of this Tribunal in case of STERLITE INDUSTRIES (I) LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE [ 2004 (12) TMI 108 - CESTAT, MUMBAI] held that the job worker, who has received the goods from the manufacturer under Rule 57F of erstwhile Central Excise Rules, entitled to Cenvat credit of duty paid in respect of input received directly and used by him in the manufacture of said goods on a job work basis. Credit allowed - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2020 (1) TMI 800
Levy of Sales Tax - sale of goods imported from foreign country - to foreign bound ships as ship stores - sale or not - whether the subject sales (of goods imported from foreign country and after unloading the same on the landmass of the State of West Bengal, kept in the bonded warehouse without payment of customs duty) to foreign bound ships as ship stores can be regarded as sale within the territory of the State and amenable to sales tax under the West Bengal Sales Tax Act, 1954 or the West Bengal Sales Tax Act, 1994? HELD THAT:- The sale to be in the course of import, must be a sale of goods and as a consequence of such sale, the goods must actually be imported within the territory of India and further, the sale must be part and parcel of the import so as to occasion import thereof. Indeed, for the purposes of Customs Act, only upon payment of customs duty the goods are cleared by the Customs authorities whence import thereof can be regarded as complete. However, that would be no impediment for levy of sales tax by the State concerned in whose territory the goods had already landed/unloaded and kept in the bonded warehouse. Indubitably, the sale which is to be regarded as exempt from payment of sales tax, is a sale which causes the import to take place or is the immediate cause of the import of goods. The appellants having failed to establish that the stated goods would be actually imported within the territory of India and had not crossed the customs station, cannot contend that the sale was in the course of import as such within the meaning of Section 5 read with Section 2(ab) of the CST Act. Moreover, there is no direct linkage between the import of the goods and the sale in question to qualify as having been made in the process or progress of import. There are no hesitation in accepting the argument of the respondents that being a taxation statute, strict interpretation of these provisions is inevitable. Going by the definition of customs port or land customs station as applicable in the present cases, it is customs port or land customs station area appointed by the Central Government in terms of notification under Section 7 - As the stated goods had travelled beyond the customs port/land customs station at the relevant time, in law, it would mean that the goods had crossed the customs frontiers of India for the purposes of the CST Act. Resultantly, the legal fiction created in Section 5(2) of the CST Act will have no application. In the present case, it is not the case of the appellant that the goods in question were being exported. Since the goods are to be consumed on the board of the foreign going ship and the same would be consumed before reaching a destination, it does not fall under the definition of export . The sale cannot qualify as a sale occasioning export unless the goods reach a destination which is a place outside India. Further, since the goods have been sold from the bonded warehouse and had crossed the customs port/land customs station prior to their sale, it cannot qualify as a sale in course of export within the meaning of Section 5(1) read with Section 2(ab) of the CST Act. Appeal dismissed.
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2020 (1) TMI 799
Waiver of penalty levied under Section 54(1)(14) of U.P. Value Added Tax Act, 2008 - Form 38 had certain unfilled (blank) column - intent to evade tax or not - HELD THAT:- 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.
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Indian Laws
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2020 (1) TMI 798
Dishonor of cheque - Responsibility of Director not engaged in day to day affair of the company - Director having majority shareholding - offence u/s 138 of the Negotiable Instruments Act, 1881 - HELD THAT:- As per Section 141(1) of the N.I. Act, the person, who was incharge of and responsible to the Company for the conduct of the business of the Company, as well as the Company, shall be deemed to be guilty of the offence - In the present, although the petitioner is the Director of the Company, she is not responsible for the day to day affairs of the Company. The complainant in his complaint has not alleged the specific role against the petitioner, to the fact that how she is responsible for issuance of the cheque. It is also perused that even the cheque has not been signed by the petitioner. Thus, as per this section, the person, who was incharge of and responsible to the Company for the conduct of the business of the Company, as well as the Company, shall be deemed to be guilty of the offence.. In the present, although the petitioner is the Director of the Company, she is not responsible for the day to day affairs of the Company. The complainant in his complaint has not alleged the specific role against the petitioner, to the fact that how she is responsible for issuance of the cheque. It is also perused that even the cheque has not been signed by the petitioner - the criminal proceedings against the present petitioner would amount to abuse of process of law. Petition allowed.
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