TMI Tax Updates - e-Newsletter
January 8, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
-
Income Tax:
TDS u/s 194I - Their remains no ambiguity that the assessee was not liable for deduction of TDS u/s 194-I of the Act on the payment made to the Foreign Shipping Companies on account of demurrage charges.
-
Income Tax:
Addition u/s 68 - unexplained cash deposits - since no books of account are maintained in the ordinary course of business of the assessee, no such addition u/s 68 of the Act is tenable.
-
Income Tax:
Charitable activity - grating exemption u/s 10(23C)(vi) - exemption u/s 11 - The cars are used for the purpose of the assessee’s regular activity and the department did not place any material to establish that the cars were used for the personal benefit of directors/ authors/ promoters of the society
-
Income Tax:
Unexplained share capital u/s 68 - the Revenue cannot be held to be an aggrieved party once CIT(A) has deleted the impugned addition based on Assessing Officer favourable remand report.
-
Income Tax:
Loss incurred on sale of shares of subsidiary company - CIT(A) was not justified in holding that the loss incurred on sale of shares of subsidiary companies is a capital loss and not a business loss.
-
Income Tax:
Deduction u/s 37 - Provision for exepenses - in order to derive the true net profit in project completion method it is necessary to show these estimated expenditures, like,Exp. on minor/miscellaneous work - claim allowed.
-
Income Tax:
Addition u/s 68 - exemption u/s 10(38) - allegation of bogus long term capital gain - although the appreciation is very high, the shares were traded on the National Stock Exchange and the payments and receipts were routed through the bank. - A.O. did not mention any fact as to how the claim of assessee was sham or bogus.
-
Income Tax:
Levy of penalty u/s 271D - Cash loans from close relatives cannot be said to fall within the mischief of section 269SS of the Act, as near/close relatives cannot be said to be “other persons” within the meaning of section 269SS
-
Income Tax:
Deduction u/s 80IA - If the scrutiny assessment results in to positive income it is obligation on the part of the AO to allow all the statutory deductions including the deduction u/s 80IA for arriving the taxable income.
-
Income Tax:
Penalty u/s 271D - receipt of loan / deposit in violating of section 269SS - Assessing officer had not recorded any satisfaction regarding the penalty proceedings u/s 271D of the Act in the assessment order passed u/s 143(3) - No penalty.
-
Income Tax:
Validity of the assessment u/s 143(3) - period of limitation - The department did not explain the reasons for service of the said notice and the assessment order with 9 months delay - the assessment order passed u/s 143(3) is barred by limitation and the same is annulled.
-
Income Tax:
Re-assessment is carried out for the benefit of the Revenue and not the assessee. In such re-assessment proceedings, the assessee cannot raise fresh independent claims having the effect of reducing the income already declared.
-
Income Tax:
Charitable activity - exemption u/s. 11 & 12 - the expression 'charitable purpose', as defined in section 2(15) cannot be construed literally and in absolute terms. It has to take colour and be considered in the context of section 10(23C)(iv)
-
Income Tax:
Deduction u/s.80IC - CIT(A) has correctly applied the test of new machinery vis-ŕ-vis old machinery in the year of the formation of the new undertaking i.e. the year one and not in the subsequent years.
-
Income Tax:
TDS u/s 192 - The obligation of the Assessee u/s. 192 is only to make bonafide estimate of income of his employee under the head salaries. Such obligation cannot be tested on the parameters laid down on exercise of power by authorities under the Act exercising powers u/s.132 or u/s.147 of the Act.
-
Income Tax:
Exemption u/s 11 - charitable activity - Assessee failed to intimate the changes made in object clause to CIT(Exemptions) - The additional objects were also in the nature of charitable activities. The foundational characteristics of the Trust, therefore, did not under go any change - Exemption cannot be denied.
-
Customs:
Smuggling - Gold - the department could not adduce any evidence whatsoever to prove that the said two gold bars were smuggled in the two countries. Therefore, the presumption regarding the smuggled nature of seized gold under section 123 of the Customs Act, is not invokable.
-
Service Tax:
Non-payment of service tax - payment made on being pointed out - suppression of facts or not - the burden of proving the alleged suppression is on the Department and the same has to be proved by way of cogent evidence about some positive act on the part of appellant to not to discharge his liability. There is no such evidence on record.
-
Central Excise:
Waste product or not - gad, sludge, acid oil and spent earth, etc. - cannot be considered to be manufactured excisable goods. - The same were merely waste and thus eligible for exemption under Notification No. 89/95-CE.
-
Central Excise:
Demand of duty - Restaurant Business - preparation and sale of Indian, Continental, Fast food, Desserts, Biscuits, Cake, Chocolate, etc. - food items consumed in in the Hotel and Restaurant or outside is relevant, eligible for exemption - However, demand confirmed towards bread, pastry, cakes and biscuits for normal period.
-
Central Excise:
Clandestine removal - demand has been confirmed on the basis of entries in spiral note book recovered - It is well settled law that only on the basis of statements, huge demand cannot be confirmed, especially when statements have been retracted and no cross-examination has been given of the witnesses.
-
Central Excise:
Reversal of cenvat credit while claiming Exemption from duty - unutilized cenvat credit - Rule 11(3) - the provision of reversal of the credit is provided only in respect of inputs and not on input service and capital goods - the principle of ejusdem generis shall apply, accordingly, credit related to capital goods and input services shall not lapse.
-
Central Excise:
Manufacture of bearings and supply to various wind mill manufacturers - a bearing is a part of wind mill, the place of use becomes irrelevant as the exemption is available to the said bearing under Serial no. 332 of the notification itself.
-
Central Excise:
Classification of goods - Bilas Pan Sughandh - the product is pre-dominantly classifiable under 2106 9070 as ‘churan for pan’ and not under 2008 9999.
Circulars / Instructions / Orders
News
Case Laws:
-
GST
-
2019 (1) TMI 304
Appropriation of Bank Guarantee - imposition of penalty - Held that:- In the interest of justice, the authorities will keep the Bank Guarantee untouched till the Ext.P9 is considered - petition disposed off.
-
2019 (1) TMI 303
Refund of IGST - Zero rated supply - Reference was made to Circular No.37/2018-Customs dated 9.10.2018 to submit that the same does not relate to IGST and would have no applicability to the facts of the present case. It was submitted that in any case, the petitioner has already returned back the differential drawback amount, and hence, there is no impediment in the way of the respondents in granting the refund to the petitioner. Notices issued.
-
2019 (1) TMI 231
Detention of goods - release on furnishing a bank guarantee - Held that:- The goods detained shall be released to the petitioner on its furnishing the bank guarantee - petition disposed off.
-
Income Tax
-
2019 (1) TMI 302
Order of settlement commission - Writ Petition - order passed by the Income Tax Settlement Commission (Additional Bench) granting immunity from penalty and prosecution and remanding the matter to the Settlement Commission for limited purpose of reconsidering the question of penalty - Held that:- This is an application for early hearing of the appeal. Let the appeal be listed in the month of April, 2019 before the appropriate Bench. The application is accordingly disposed of.
-
2019 (1) TMI 301
Exemption u/s 11 - charitable activity - Assessee failed to intimate the changes made in object clause to CIT(Exemptions), as per the undertaking given in form no.10A - Held that:- The assessee Trust was granted registration under Section 12A of the Act on the basis of the objects of the Trust recorded in the original Trust deed dated 19.03.1969. The principal objects of the Trust were education of students for which purpose the Trust grants fees, scholarship, prizes, books and loans without interest. Another object of the Trust was providing medical facilities and helping the poor. The amendments of the Trust added additional object of rural development including the programme of promoting socioeconomic welfare or upliftment of the public in rural areas. CIT(Appeals) and the Tribunal examined the original objects of the Trust and the changes brought about by successive amendments. The conclusions of the CIT(A) and the Tribunal were that the original objects of the Trust were not altered or even diluted. The additional objects were also in the nature of charitable activities. The foundational characteristics of the Trust, therefore, did not under go any change. Tribunal has not committed any error in dismissing the Revenue's appeal.
-
2019 (1) TMI 300
Disallowance of interests on debentures under Section 14A - interest expenditure was incurred on debentures issued in the financial year 2008-09 for the specific purpose of acquiring a company in the past and not for investing in mutual funds - directions issued by the DRP under Section 144C - Held that:- As perused the financials for the year ended 31.03.2012, more particularly, the note to financial statement for the year ended 31.03.2012 and in column 14, it deals with the current investments and we find that the investment is ₹ 45.27 Crores as against the investment of ₹ 38.24 Crores for the year ending 31.03.2011. This when compared to cash flow statement for the year ended 31.03.2007 would show that the investment has gone up by about ₹ 6.99 Crores. There is a factual error crept in in this regard. This in our considered view the proper authority to examine the contentions would be the Assessing Officer. The Court is fully conscious of the fact that the Assessing Officer is bound by the directions issued by the DRP under Section 144C of the Act. Nevertheless after the order passed by the DRP, the order has been tested before the Tribunal and it is before us and therefore we will be well within our jurisdiction to remand the matter to the Assessing to take an independent decision on the issues raised before us as pointed out in the preceding paragraphs. AO is required to decide as to whether it was correct for disallowing the interest on debenture under Section 14A when the assessee's case is that the interest expenditure was incurred on debenture issued in the financial year 2008-09 for the specific purpose of acquiring the Company in the past and not for investment in future. AO has to consider the submission of the assessee that the interest incurred by the assessee is specifically towards acquisition of shares in M/s.Glamouroom Taps Pvt. Ltd. which Company subsequently stood amalgamated with the assessee Company and such amalgamation has been approved by the Court with effect from 01.04.2008. AO shall take an independent decision in the matter without being any manner influenced with the observations made or the directions issued by the DRP on 31.08.2016 or by the Tribunal in its order dated 15.03.2017.
-
2019 (1) TMI 299
Denial of waiver of interest u/s 158 BFA (1) for the Block Period 1986-87 to 1996-97 - record to substantiate the furnishing of the documents - Held that:- The benefit of exclusion of time has been extended. However, interest has been held payable from April 1998 to January 1999. Though the petitioner would contend that the documents were furnished during the month of July 1998. However, neither the petitioners are able to establish that they have received the documents during July 1998 nor the respondents are able to establish their statement that the documents were furnished during March 1998. In absence of any record to substantiate the furnishing of the documents, we inclined to accept the petitioners version. Therefore, the petitioners are entitled to one months time from July, 1998 to file returns.Therefore, delay in filing returns has to be computed from August, 1998. In view of the above, both the writ petitions are partly allowed and the impugned orders are modified with following directions: (i)The petitoiner shall calculare interest for the period starting from August 1998 upto 11th January 1999 on the undiclosed income in terms of Section 158 B & A of the Income Tax, Act, 1961 and pay the same within 4 weeks from the date of receipt of a copy of this order and report compliance to the respondent. (ii)Accordingly, Levy for the interest for the period prior to August, 1998 in filing returns stands set aside in the both the cases. (iii)Respondents shall thereafter close the respective files. No costs. Consequently, connected miscellaneous petition is closed.
-
2019 (1) TMI 298
Bogus LTCG - Addition u/s 68 - unexplained cash credits addition - Held that:- Coming to Revenue’s arguments that department had searched / surveyed various entry operators alleged to have engaged in giving bogus LTCG regarding very scrip, put a specific question to Mr.Bhattacherjee as to whether any of the said entry operators had ever quoted assessee’s name or not. The replies is received in negative. Coupled with this, there is no substance in Revenue’s argument that similar addition(s) stand affirmed in various judicial precedents for the reason that sec. 68 addition is a factual issue requiring the taxpayer to prove the identity, genuineness and creditworthiness of the relevant sum credited. Thus make it clear that all these assessees have placed sufficient materials on record indicating them to have derived the impugned LTCG form sale of shares held in M/s Unno Industries Ltd. only. Delete the impugned addition(s) respectively. Brokerage commission disallowance, if any, thereupon shall automatic stood as a necessary corollary. - Decided in favour of assessee
-
2019 (1) TMI 297
Addition u/s 69 on account of cash deposit in bank account - CIT(A) in his aforesaid impugned order has not disposed off various grounds of appeal through a speaking order on merits - Held that:- CIT(A) erred in dismissing Assessee’s appeal on merits in a summary manner, without giving detailed reasons for his order, on various grounds of appeal before him. CIT(A) erred in passing a non-speaking order on each of the points which arose for his consideration and he failed in discharging the statutory obligation to state the reasons for his decision on each such points, which arose for determination in assessee’s appeal before the Ld. CIT(A). Therefore, we set aside the impugned order of Ld. CIT(A); and we direct the Ld. CIT(A) to pass denovo order as per law, in accordance with Sections 250 and 251 of I.T. Act, for fresh disposal of appeal filed by the Assessee - Assessee’s appeal is treated as partly allowed for statistical purposes.
-
2019 (1) TMI 296
Long Term Capital Gain on sale of shops - FMV determination - request for reference to DVO - addition of ₹ 16,69,167/- by replacing the actual sale consideration of shops of ₹ 35,25,000/- which was the fair market value as on the date of sale by the circle rate of ₹ 55,20,000/- for the purpose of calculation of capital gain - Held that:- AO referred to the provisions u/s. 50C(1) and held that the value adopted for stamp duty purposes shall be deemed to be the full value of the consideration received as a result of such transfer. AO assessed full value of the consideration as per the circle rates and added ₹ 16,69,167/- to the total income of the assessee and similarly, Ld. CIT(A) has held that AO was fully justified in taking the full value of the consideration as per the value adopted for stamp duty purposes, as the assessee failed to substantiate the claim of distressing circumstances and also held on the issue of reference that it is not mandatory for the A.O. to refer the matter to DVO mandatorily, which in my opinion, is not sustainable in the eyes of law and against the law laid down in Home Finders Housing Ltd. vs. ITO, Corporate Ward 2(3) [2018 (7) TMI 199 - SUPREME COURT OF INDIA]. Set aside the issue in dispute to the AO with the directions to refer the matter to the DVO for valuation and DVO should allow full opportunity of hearing to the assessee, as per law and submit the Report to the AO. Thereafter, the AO shall decide the matter in dispute afresh - Appeal filed by the assessee stands allowed for statistical purposes.
-
2019 (1) TMI 295
Applicability of provisions of section 153(2A) - contention of the assessee was that through the orders of assessment was dated 30.12.2011, those orders were despatched only on 09.01.2012 through the Bangalore GPO through Speed Post to the assessee and the same was served on the assessee only on 10.01.2012 - period of limitation - whether the date of despatch has to be construed as the date of order of assessment and consequentially the orders of assessment have to be held as bad in law? - Held that:- It is undisputed that the order of assessment was despatched by the AO only on 09.01.2012 and that the last date of limitation for passing the order of assessment, pursuant to the directions of the Tribunal in all the three assessment years was 31.12.2011 as relying on M/S MAHARAJA SHOPPING COMPLEX VERSUS THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-1 (2) [2014 (10) TMI 880 - KARNATAKA HIGH COURT] the orders of assessment have to be held as barred by time and all the orders of assessment are therefore liable to be annulled and are hereby annulled. - decided in favour of assessee
-
2019 (1) TMI 294
Stay petition - Recovery proceedings - financial hardships - Held that:- The assessee has not so far paid even a single penny against the outstanding demand of ₹ 107,80,72,470/- (comprising of tax of ₹ 69,54,77,298/- and interest of ₹ 38,25,95,173/-). Taking into account the facts and circumstances of the case, the fact that the assessee has not been able to establish before us any sort of financial hardship and the balance of convenience, we are of the view that this is a fit case for grant of stay on recovery of demand subject to the assessee paying atleast 50% of the tax demand of approx. ₹ 70 Crores. We grant stay on recovery of the demand outstanding for a period of 6 months commencing today i.e., 04.01.2019, or disposal of appeal, whichever is earlier; subject to the assessee paying an amount of ₹ 35 Crores i.e., approx. 50% of the tax demand (excluding interest of approx. 38 Crores) - Failure on the part of the assessee to comply with the above directions will result in stay being vacated automatically
-
2019 (1) TMI 293
Rectification of mistake - TDS u/s 192 - interest on tax not deducted at source u/s.201(1A) - assessee paid cash equivalent to its employees at the time of their retirement - plea of the assessee that its employees were employees of the State Government and therefore the entire payment to its employees towards unutilized leave period on retirement was exempt u/s.10(10AA)(i) - Held that:- The power of the Tribunal u/s. 254(2) of the Act is only to rectify mistakes apparent on the face of the record. The Tribunal does not have power to review its own orders. Secondly, the decision cited by the learned counsel for the Assessee shows that the benefit of free supply of power was given to erstwhile employees of KEB who became employees of KPTCL on its creation. Therefore, they were also considered as eligible for all benefits that employee of the State enjoyed and that such concession was withdrawn only for future employees of KPTCL. Therefore, the belief of the Assessee that its employees were to be regarded as employees of State cannot be said to be not bonafide, at least to the extent of erstwhile employees of KEB. The obligation of the Assessee u/s.192 is only to make bonafide estimate of income of his employee under the head salaries. Such obligation cannot be tested on the parameters laid down on exercise of power by authorities under the Act exercising powers u/s.132 or u/s.147 of the Act. Apart from the above, we have already set out the circumstances under which belief was formed by the Assessee while deducting tax at source on salary paid to its employees. The correctness of such conclusion cannot be reviewed u/s.254(2) of the Act. The power of the Tribunal under section 254(2) is confined to rectifying any mistake apparent from the record. The Tribunal does not have inherent power of rectification or review or revision. Unless there is mistake apparent from the record in the sense of patent, obvious, clear error or mistake, the Tribunal cannot recall its previous order. If the error or mistake is one which could be established only by long-drawn arguments or by way of process of investigation and research, it is not a mistake apparent from the record. Failure of the Tribunal to consider an argument advanced by either party for arriving at a conclusion is not an error apparent on the record, although it may be an error of judgment. The Tribunal cannot in exercise of its power of rectification look into some other circumstances which would support or not support its conclusion. The Tribunal cannot redecide the matter and it has no power to review its order. A decision on debatable point of law is not a mistake apparent from the record. - Decided against revenue
-
2019 (1) TMI 292
Penalty levied u/s. 271(1)(c) - non specification of charge - various disallowance made - proof of concealment of income or of furnishing inaccurate particulars of income - Held that:- From explanation by the assessee, we find that the additions have been made by not accepting the claim of the assessee. There is no case of concealment of income or furnishing of inaccurate particulars of income. The mere fact that assessee has not filed appeal against the additions, cannot be taken for adverse inference that the levy of penalty is automatic. This view is duly supported by the decision of Hon’ble Apex Court in the case of Reliance Petroproducts (P.) Ltd.[2010 (3) TMI 80 - SUPREME COURT] - decided in favour of assessee.
-
2019 (1) TMI 291
Penalty u/s. 271(1)(c) - Addition on account of advertisement for non deduction of tds - Held that:- Disallowance has been sustained on the ground that necessary evidence and voucher of advertisement were not produced and the TDS was not deducted. We find that this is not at all a case of concealment of income or furnishing of inaccurate particulars of income. All the details including identity of the payee were there. Disallowance has solely been done as the assessee was not able to produce the concerned evidence of expenditure being of advertisement in nature. Hence, if a claim of the assessee is rejected, the same does not automatically lead to levy of penalty u/s. 271(1)(c). See RELIANCE PETROPRODUCTS PVT. LTD. [2010 (3) TMI 80 - SUPREME COURT]. Disallowance made u/s. 43B on account of remittance of service tax collected to the government account - Held that:- Here also we find that all the particulars were duly and correctly disclosed. It is not a case of concealment or furnishing of inaccurate particulars of income. Rejection of the assessee’s claim as held by the Hon’ble Apex Court in Reliance Petroproducts (P.) Ltd.(supra) will not automatically led to levy of penalty u/s. 271(1)(c). Furthermore, the view that section 43B is not attracted on service tax collected has been upheld by the Hon'ble Delhi High Court decision in the case of CIT vs. Noble & Hewitt (I) P. Ltd. [2007 (9) TMI 238 - DELHI HIGH COURT]. Hence, the penalty u/s. 271(1)(c) on this addition is also not sustainable. Due to absence of satisfaction and identification of the specific charge for levy of penalty, the penalty in this case deserves to be deleted on this account also. - Decided in favour of assessee.
-
2019 (1) TMI 290
Deduction u/s.80IC - assessee company has not fulfilled the condition laid down in section 80IC(4)- Held that:- We find that the decision of Ld. CIT(Appeals) is based on the interpretation and nexus u/s.80IC of the Act, wherein, he has correctly applied the test of new machinery vis-ŕ-vis old machinery in the year of the formation of the new undertaking i.e. the year one and not in the subsequent years and therefore, claim of deduction u/s.80IC during the year under consideration held to be justified. - decided against revenue
-
2019 (1) TMI 289
Charitable activity - benefits u/s. 11 & 12 denied - Held that:- The expression 'charitable purpose' should be construed not in a vacuum, but in the specific context of section 10(23C)(iv), which specifically deals with the income received by any person on behalf of, inter-alia, an institution established for charitable purposes. Therefore, the meaning of the expression 'charitable purposes' has to be examined in the context of section 10(23C)(iv). We are of the view that since the object of promoting employments/educational institutions/govt. schemes for the general public is a charitable purpose, the expression 'charitable purpose', as defined in section 2(15) cannot be construed literally and in absolute terms. It has to take colour and be considered in the context of section 10(23C)(iv) as also held in the above judicial pronouncements. On consideration of these facts we are of the view that the authorities below are not justified in disallowing the entire exemption. We, therefore, direct the Assessing Officer to delete the disallowances. - Decided in favour of assessee.
-
2019 (1) TMI 288
Penalty u/s 271(1)(c) - defective notice - non specification of charge - Held that:- The perusal of notice u/s 274 read with Section 271 dated 20/03/2015, as placed on record, reveal that the appropriate clause as applicable to the fact of the case was not marked and secondly, the appropriate limb for which the penalty was being initiated was not marked / ticked. Penalty order reveal that the penalty has finally been levied by invoking explanation-1 to Section 271(1)(c) since the assessee has concealed the income by furnishing inaccurate particulars of income. An important observation is the fact that the two limbs viz. concealment of income and furnishing of inaccurate particulars of income have inter-changeably been used by Ld. AO while levying the impugned penalty. However, these two limbs, as per settled judicial pronouncements, are distinct and operate separately in the sense that concealment implies ‘to hide something’ whereas ‘furnishing’ implies adducing / putting forward something - non specification of the exact charge with due application of mind for which the assessee was being penalized the impugned penalty could not be sustained - decided in favour of assessee
-
2019 (1) TMI 287
Initiation of re-assessment proceedings - provision on account of NPA; provision on account of overdue interest; and deduction on account of loss on Government Securities claimed by the assessee in its Profit and loss account - Held that:- Once there is no failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment, there can be no reassessment after a period of four years from the end of the relevant assessment year. On this score also, the initiation of re-assessment proceedings cannot be validated. We, therefore, hold that the re-assessment was not properly initiated. As such, all the proceedings flowing from such illegal initiation of re-assessment proceedings are liable to be and are hereby set-aside. Thus, there is no need to discuss the other additions made by the AO/CIT(A) on merits. Equally, the fresh claim made by the assessee in the return filed in response to the notice u/s 148 is also held to be not tenable as the very initiation of reassessment is not legally valid. Addition of Entry fees and Nominal membership fee to the Reserve Funds without routing it through the Profit and loss account - AO treated these amounts as chargeable to tax - Held that:- CIT(A) confirmed the addition by observing that such amounts was received by the assessee from the persons who became members of the society. In the absence of any material coming from the side of the assessee supporting the claim for treating such amounts as not chargeable to tax, we uphold the impugned order to this extent. Addition on account of provision of overdue interest - Held that:- We find that though there is a reference to disallowance of provision for overdue interest of ₹ 1.97 crore on pages 3 and 5 of the impugned order but there is no elaborate discussion on the merits of such ground. Under these circumstances, we set-aside the impugned order to this extent and remit the matter to the file of ld. CIT(A) for passing a speaking order on this issue. Addition u/s 43B - Held that:- In view of the fact that the addition has been deleted by the ld. CIT(A), the assessee has erroneously presumed that this disallowance was confirmed in the first appeal. This ground is dismissed as having become infructuous. Reopening of assessment - Held that:- It is observed that the assessee furnished a return in response to notice u/s.148 at total income of ₹ 5.55 crore as against the originally filed return with an income of ₹ 6.59 crore. The decision taken by the authorities below in not accepting the lower income in the re-assessment is in accordance with the judgment of Hon’ble Supreme Court in the case of CIT Vs. Sun Engineering Works Pvt. Ltd.(1992 (9) TMI 1 - SUPREME COURT). It goes without saying that the re-assessment is carried out for the benefit of the Revenue and not the assessee. In such re-assessment proceedings, the assessee cannot raise fresh independent claims having the effect of reducing the income already declared.
-
2019 (1) TMI 286
Validity of the assessment u/s 143(3) - period of limitation - assessment was completed u/s 143(3) by an order dated 04.03.2012, the said order was served on the assessee on 05.12.2013 with inordinate delay of 9 months - Held that:- In the instant case, there was a delay of 9 months in serving the demand notice and the assessment order on the assessee. The department did not explain the reasons for service of the said notice and the assessment order with 9 months delay. Therefore, we hold that there is no material to believe that the assessment order was passed on 04.03.2013. Accordingly, we hold that the assessment order passed u/s 143(3) is barred by limitation and the same is annulled and the appeal of the assessee is allowed.
-
2019 (1) TMI 285
Penalty u/s 271D - assessee had received loan / deposit from 08 persons - violating the provisions of section 269SS - non recording of satisfaction - Held that:- Assessing officer had not recorded any satisfaction regarding the penalty proceedings u/s 271D of the Act in the assessment order passed u/s 143(3) of the Act. Therefore, keeping in view the ratio laid down in case of ‘CIT v Jai Laxmi Rice Mills’ [2015 (11) TMI 1453 - SUPREME COURT] delete the impugned penalty levied by the AO and sustained by the CIT(A). - Decided in favour of assessee.
-
2019 (1) TMI 284
Deduction u/s 80IA - return was filed in response to notice u/s 153A - entertainment of fresh claim - Held that:- In the instant case, when the return was filed in response to notice u/s 153A, the assessee did not claim the deduction since the taxable income as per the computation of income was zero. If the scrutiny assessment results in to positive income it is obligation on the part of the AO to allow all the statutory deductions including the deduction u/s 80IA for arriving the taxable income. As during the pendency of proceedings, when it has come to the notice of the assessee that there was taxable income, the assessee itself had claimed the deduction and was entitled for deduction u/s 80IA. The assessee made the claim before the AO and even after allowing the deduction claimed by the assessee, the resultant income would not go to reduce the returned income originally. There is no dispute that the assessee is entitled for deduction u/s 80IA. Therefore, we are of the considered opinion that it is injustice to deny the claim by appellate authorities who are permitted to entertain the fresh claim, when assessee makes the bonafide claim. The assessee’s case is squarely covered by the decision in the case of CIT Vs. G.M.Knitting Industries Pvt. Ltd. [2015 (11) TMI 397 - SUPREME COURT] as well as the decision of Hon’ble Delhi High Court in the case of Vedanta Ltd. [2018 (5) TMI 355 - DELHI HIGH COURT] and we hold that the assessee is entitled for the deduction u/s 80IA. Accordingly, we direct the AO to allow the deduction u/s 80IA of the Act. For the quantum of deduction, compliance of statutory requirements for claiming the deduction u/s 80IA was not discussed in the assessment order. Therefore, we remit the matter back to the file of the AO for limited issue of deciding the quantum of deduction and for obtaining the required details such as audit report etc. before allowing the deduction. Accordingly we direct the AO to verify the documents placed by the assessee during the assessment proceedings and allow the eligible deduction u/s 80IA. - Decided in favour of assessee for statistical purpose.
-
2019 (1) TMI 283
Levy of penalty u/s 271D - assessee had taken cash loans from his father-in-law in contravention of the provisions of section 269SS - Held that:- We find that the issue of levy of penalty u/s 271D of the Act in similar factual circumstances was considered by a co-ordinate bench of this Tribunal in the case of Smt. Deepika Vs. Addl. CIT [2017 (10) TMI 1405 - ITAT BANGALORE] as held that transaction of loan between father in law and daughter in law in cash cannot be subject matter of levy of penalty u/s.271D of the Act. Cash loans from close relatives cannot be said to fall within the mischief of section 269SS of the Act, as near/close relatives cannot be said to be “other persons” within the meaning of section 269SS. Thus we are of the view that imposition of penalty u/s.271D of the Act cannot be sustained. - decided in favour of assessee
-
2019 (1) TMI 282
Deduction u/s.80P(2)(a)(i) - supply of food grain seeds was done under Public Distribution System (PDS) and not to its members and therefore the deduction claimed cannot be allowed - Held that:- The claim of the Assessee was that Co-operative Bank is essentially a Co-operative Society and therefore deduction has to be allowed under Clause (d) of Sec.80P(2). The Hon’ble Karnataka High Court followed the decision in The Totgars Co-operative Sales Society Ltd. [2017 (7) TMI 1049 - KARNATAKA HIGH COURT] held that interest earned from Schedule bank or cooperative bank is assessable under the head income from other sources and therefore the provisions of Sec.80P(2)(d) of the Act was not applicable to such interest income. Clear that the source of funds out of which investments were made remained the same in AY 2007-08 to 2011-12 and in AY 1991-92 to 1999-2000 decided by the Hon’ble Supreme Court [2010 (2) TMI 3 - SUPREME COURT]. Therefore, whether the source of funds were Assessee’s own funds or out of liability was not subject matter of the decision of the Hon’ble Karnataka High Court in the decision cited by the learned DR. To this extent the decision of the Hon’ble Karnataka High Court in the case of Tumukur Merchants Souharda Co-operative Ltd. [2015 (2) TMI 995 - KARNATAKA HIGH COURT] still holds good. - Hence, on this aspect, the issue should be restored back to the AO for a fresh decision after examining the facts in the light of these judgment Claim for deduction on a sum u/s.80P(2)(a)(iv) income derived from purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to its members, will be eligible for deduction - CIT(A) did not allow the claim of the Assessee for the reason that the Assessee made a prayer for remand to the AO and submitted that not all income that was claimed as deduction u/s.80P(2(a)(iv) of the Act was income from public distribution system and to the extent it was trading with members, the deduction claimed should be allowed. DR submitted that in any event the deduction claimed cannot be over and above what is allowed u/s.80P(2)(c). We are of the view that the prayer made is reasonable and accordingly, we set aside the order of CIT(A) on this issue for the limited purpose of examining the claim of the Assessee u/s.80P(2)(a)(iv) to the extent of profits derived from dealing with members alone. Appeals by the assessee are treated as allowed for statistical purpose.
-
2019 (1) TMI 281
Levy of penalty u/s.271(1)(c) - leave encashment expenses added u/s.43B in the assessment order on grounds of concealment of income and furnishing inaccurate particulars - Leave encashment expenses were reported in Form 3CD and the failure to add back the same in computation of income was a bona-fide mistake - Held that:- So far as assessment order is concerned, the Assessing Officer has mentioned that penalty proceedings have been initiated for ‘furnishing of inaccurate particulars of income’. At the time of levying penalty in the assessment, Assessing Officer mentioned both limbs of clause (c) of section 271(1) i.e. ‘concealment of income’ as well as ‘furnishing of inaccurate particulars of income’. This manner of recording of satisfaction suggests the existence of ambiguity with reference to applicability of specific limb. Penalty order is unsustainable in law legally. The Assessing Officer is under obligation to specify the correct limb at the time of initiation as well as at the time of levy of penalty. The penalty order is liable to be quashed on this legal issue. Thus, the order of CIT(A) is set-aside and direct the Assessing Officer to delete the penalty. - decided in favour of assessee.
-
2019 (1) TMI 280
Non prosecution of appeal - assessee has chosen to be neither present nor represented - Held that:- Respectfully following the order of ITAT in the case of MULTIPLAN INDIA (PRIVATE) LIMITED. [1991 (5) TMI 120 - ITAT DELHI-D] we dismiss the appeal of the assessee in limine for non-prosecution. However, we wish to clarify that the assessee will be at liberty to approach ITAT for recall of this order and for restoration of this appeal under relevant provisions of law if the assessee is able to show that there was reasonable cause for non representation on the part of the assessee on the date of hearing.
-
2019 (1) TMI 279
Income from sale of shares - Short Term Capital Gain and long-term capital gain OR business income - Held that:- We hold that the frequency, magnitude of the transaction in systematic manner cannot be the criteria to hold that the assessee is engaged in business activity of shares. Therefore, we are inclined to set aside the order of Learned CIT(A) and direct the AO to treat the income from investment activity under the head capital gain. - Decided in favour of assessee.
-
2019 (1) TMI 278
Deduction u/s 54F - property purchased was registered in the name of the assessee vide dated 10.10.2011 which is beyond the period prescribed under the provision of Section 54F - Held that:- It is a fact on record that the assessee before the AO claimed to have invested ₹ 11.11 lacs. However, the assessee before the CIT(A) claimed the first time to have made the payment of ₹ 19.34 lacs out of which a sum of ₹ 8,34,000/- was paid in April & May 2011, i.e. the date beyond the period of three years but before getting the registration of the property. From the above, it is clear that the assessee has never filed anything about the payment of ₹ 8.34 lacs before the AO. Therefore, the same needs to be verified by the AO. Whether the assessee is eligible for deduction u/s 54F for the payment made beyond three years? - Held that:- There was a delay on account of some dispute in the property which prevented the assessee from investing the money within the time as specified under section 54F of the Act. Thus, it is clear that the assessee could not comply with the provision of Section 54F of the Act which was beyond his control. Therefore we are of the view that the assessee is very much eligible for deduction u/s 54F for the amount which has been invested by him beyond the prescribed period but before getting the registration of the property provided there was sufficient reason which prevented the assessee for making in the investment within the prescribed time. The delay occurred due to the situation beyond the control of the assessee. Thus, he is eligible for deduction u/s 54F of the Act. - we direct the AO to verify the amount invested by the assessee and allow the exemption u/s 54F of the Act for the amount invested in the property beyond the prescribed period but before the registration of the property. - Decided in favour of assessee for statistical purposes.
-
2019 (1) TMI 277
Penalty u/s 271(1)(c) - non-disclosing the capital gain income - no specific charge mentioned in the notice issued u/s 274 - Held that:- The overall conduct of the assessee and circumstances suggest that the assessee deliberately did not offer the capital gain income in her income tax return. In our considered view, non-availability of the fund cannot be an excuse for not disclosing the capital gain income earned by the assessee. The case law relied on by the assessee before the lower authorities are not relevant to the facts of the case on hand. The assessee has concealed her particulars of income by not disclosing the long-term capital gain in her return of income. No reason to disturb the finding of the CIT(A). Hence, the ground of the assessee is dismissed Indeed there is no specific charge in the notice issued u/s 274/271(1)(c) of the Act as alleged by the assessee. However, we note that there was a specific charge for concealment of income on the basis of which the AO levied the penalty in his order dated 20.06.2012. Therefore, we are of the view that the assessee cannot get immunity from the penalty on the ground that there was no specific charge in the notice issued u/s 274 of the Act. - decided against assessee
-
2019 (1) TMI 276
Addition u/s 68 - bogus long term capital gain - exemption under section 10(38) denied - Held that:- As decided in similar issues in SHRI AMAR NATH GOENKA case [2018 (12) TMI 754 - ITAT DELHI] in the case of the assessee, both twin conditions are satisfied. He has filed copy of the shares certificate with transfer form, copy of debit note issuedc opy of cash receipt, copy of ledger account ,copy of form for evidence for payment of securities transaction tax on transaction entered in a recognized stock exchange and copy of the bank statement of the assessee AO had not produced any evidence whatsoever in support of the suspicion. On the other hand, although the appreciation is very high, the shares were traded on the National Stock Exchange and the payments and receipts were routed through the bank. There was no evidence to indicate for instance that this was a closely held company and that the trading on the National Stock Exchange was manipulated in any manner. A.O. did not mention any fact as to how the claim of assessee was sham or bogus. The assessee thus, satisfied the conditions of Section 10(38) of the I.T. Act - decided in favour of assessee
-
2019 (1) TMI 275
Disallowance u/s 36(1)(iii) of proportionate interest - Held that:- DR fails to dispute the clinching fact that neither the Assessing Officer nor the CIT(A) have examined the said vital date of the impugned conversion of assessee’s stock-in-trade to investment whilst computing the proportionate disallowance in issue dispute the fact that the taxpayer’s statement of fact had made it clear that actual date of conversion was 31.03.2005 only. We therefore deem it appropriate to restore this sole substantive ground back to the Assessing Officer for factual verification of date of the stock-in-trade shares to investments in issue to be followed by necessary computation of the proportionate interest disallowance as per law after affording adequate opportunity of hearing to the assessee. - Decided in favour of assessee for statistical purposes.
-
2019 (1) TMI 274
Revision u/s 263 - cash deposit found deposited in the bank account of the assessee - denial of natural justice - Held that:- There is no dispute that such show-cause notice dated 6.10.2017 has been duly served on the assessee and the assessee has been duly represented through its AR before the Pr.CIT in the revisionary proceedings and the principle of natural justice have thus been duly adhered to - merely because the show cause notice dated 06.10.2017 is signed by the ITO (Technical), the same will not affect the assumption of jurisdiction by the Pr CIT u/s 263 of the Act and we are unable to accede to contentions so raised by the ld AR in this regard. Coming to another contention of the AR that the proceedings U/s 263 of the Act were initiated after receiving the proposal from the ITO, Ward-1(1), Alwar and where such proceedings have been initiated after receiving the proposal from the ITO, the said proceedings again deserved to be quashed. Pr CIT has examined the assessment records and on being satisfied that the order passed by the Assessing officer is erroneous and prejudicial to the interest of the Revenue, he has directed to issue the show-cause notice. There is no dispute that a proposal has been sent by the ITO Ward 1(1), Alwar, however, the same has been duly examined along with the assessment records by the Pr. CIT and after duly application of mind and on being satisfied that the matter calls for his intervention, the ld Pr CIT has exercised his jurisdiction under section 263 of the Act. For cash deposit found deposited in the bank account of the assessee Pr CIT has given a specific finding that the AO has not ascertained whether the assessee was having in his possession and ownership as many number of plots of land in respect of which the assessee has received the advance from 76 persons. Pr CIT has held that the affidavits from these buyers and the statement of 5 of these buyers recorded by the AO nowhere narrate the plot serial number, area of plot, site plan, locality etc. And thereafter, he has held that by merely receiving the affidavits and taking the statements of 5 persons on face value without any further examination, the genuineness of the transaction and creditworthiness of these 76 buyers were not substantially proved. Thereafter, he has finally held that the order passed by AO based on incorrect and mistaken assumption of facts by way of accepting the statement of the assessee on face value and without due verification is erroneous as well as prejudicial to the interest of the Revenue and he has set-aside the assessment order with a direction to the Assessing officer to pass assessment order afresh. We therefore find that there is a clear finding recorded by the ld Pr CIT on examination of facts and material on record as to how the order passed by the Assessing officer is erroneous and prejudicial to the interest of the Revenue. Regarding the second issue of cost of acquisition in respect of plots of land sold during the year AO has considered cost of whole of the ancestral land valued at ₹ 1,25,000 as on 1.4.1981 as cost of acquisition and the same has been allowed set off in full against certain plots of land (out of whole of the ancestral land so converted and divided into plots of land) which have been sold during the year. We donot agree with the contention of the ld DR to exclude the cost relating to roads. What the assessee can claim is the proportionate cost of acquisition corresponding to the plots of land which has been sold during the year and we therefore find the order of the AO is erroneous to this extent. At the same time, we find that the assessment order passed by the Assessing Officer U/s 143(3) of the Act was also subject matter of appeal before the ld. CIT(A) wherein the assessee has challenged the assessment of long term capital gain on sale of agricultural land which in turn include determination of cost of acquisition for working out such capital gains. Therefore, the present ground relating to cost of acquisition raised by the ld. Pr. CIT in invoking his jurisdiction U/s 263 was very much the subject matter of appeal before the ld CIT(A) and to this extent, we agree with the contention of the ld AR that the ld Pr. CIT cannot exercise his jurisdiction under Section 263 of the Act as far as this matter is concerned and to this extent, order of the ld Pr CIT stand modified. We modify the order of the ld Pr CIT to the limited extent of issue relating to cost of acquisition not falling under his jurisdiction u/s 263, being the subject matter of appeal before the ld CIT(A) and the remaining order is hereby sustained. - decided partly in favour of assessee
-
2019 (1) TMI 273
Bogus LTCG - Treating the assessee’s losses arising from sale of various script to be non-genuine - Held that:- The Revenue fails to dispute herein as well as there is no material either of the case file indicating this assessee to have availed accommodation entries as per any search / survey statement. The Revenue seeks to place a very heavy reliance in department investigation wing survey operation statements u/s. 133A from one of the assessee’s directors against genuineness of the impugned losses. We find that such a search and survey statement; if any in absence of any evidence in itself carries no value as per CBDT’s Circular dated 10.03.2003 as reiterated in subsequent clarification dated 18.12.2014. We therefore go by our foregoing detailed discussion to conclude that the CIT(A) has rightly deleted the impugned loss disallowance in both assessment year(s). - decided against revenue
-
2019 (1) TMI 272
Revision u/s 263 - Pr. CIT power to issue notice - value of property has been taken more than its value, was not available before the AO - Held that:- It is an admitted fact that the ld. Pr. CIT passed the Assessment Order which could have been passed by the Assessing Officer only, since the powers has been given under Sections 143(3), 144, 147, 153A and 153C of the Act to the AO who has been defined u/s 2(7A) of the Act and means the Assistant Commissioner or Deputy Commissioner or Assistant Director or Deputy Director or the Income-tax Officer who is vested with the relevant jurisdiction by virtue of directions or orders issued under sub-Section (1) or (2) of Section 120 or any other provision of this Act and the Additional Commissioner or Additional Director or Joint Commissioner or Joint Director who is directed under clause (b) of Sub-section (4) of the said Section but nowhere it is provided that the Pr. Commissioner can pass an assessment order. In the present case, the CIT-18, New Delhi passed the impugned order as an assessment order which has been mentioned on the front page of the order dated 31.03.2018 passed by the Pr. CIT, therefore, the said order was not a valid order u/s 263 of the Act. Moreover, nowhere the ld. Pr. CIT mentioned in the said order that there was any relevant material before him for the year under consideration to substantiate that the AO had not applied his mind while framing the original assessment u/s 143(3) of the Act rather the ld. Pr. CIT acted only on the basis of the valuation report obtained by the AO for the assessment year 2015-16 on 15.12.2017. It cannot be said that the Pr. CIT came to the conclusion on the basis of the relevant record pertaining to the assessment order under consideration i.e. assessment year 2013-14 that the order passed by the AO was prejudicial to the interest of the revenue or it was erroneous. On the contrary, the AO applied his mind and did not accept the revised claim of the assessee and had taken a possible view. It is well settled that the provisions of Section 55A of the Act provides that the AO may refer the matter to DVO for valuation of the property. The use of the word “may” makes it discretionary so it is not mandatory. In this case, it appears that the AO was satisfied from the valuation of the property, he did not refer the matter to the DVO and accepted the valuation report of the Registered Valuer (approved by the Govt.) which was furnished by the assessee. Therefore, it can be said that the AO has taken one of the possible view in this case, therefore, it cannot be said that the assessment order passed was erroneous or prejudicial to the interest of the revenue - decided in favour of assessee.
-
2019 (1) TMI 271
Reopening of assessment - assessee have claimed interest expenditure paid in the nature of jamakharchi transactions - validity of reason to believe - Held that:- The assessee had successfully demonstrated during the course of lower appellate proceedings that it had never claimed the impugned interest expenditure in its books. He thereafter holds that the Assessing Officer’s sole reason of re-opening no more survives and this is what brings into action various decisions that if a re-opening is done for “x” reason, then it deserves to be quashed in case no addition is made for the said reason. Mr. Majumdar’s case is that the Assessing Officer had made the twin addition(s) including one forming the subject-matter of re-opening. He fails to dispute the clinching fact that assessee had no where claimed the impugned expenditure in its books for the impugned assessment year which gave rise escapement of taxable income from being assessed. CIT(A) has rightly observed therefore that the above re-opening reason itself had been assumed on an incorrect factual position. That being the case, we find merit in the CIT(A)’s above extracted detailed reasoning that the impugned re-opening would not sustain the test of legality. - Decided in favour of assessee.
-
2019 (1) TMI 270
Deduction u/s 37 - Provision for exepenses - Treatment made by the assessee in respect of estimated expenditures, like, Exp.on minor/miscellaneous work, in its books of accounts - method of accounting - Held that:- Since in project completion method, the entire expenses and entire sales should be shown, therefore, it is necessary for the assessee to make provision for estimated expenditures which are to be incurred in subsequent years on account of minor/miscellaneous work. If the assessee does not make provision for estimated expenditures, like, exp. on minor/miscellaneous work, then in that case assessee will not able to show true profit and loss, in its profit and loss account. In project completion method, the assessee prepares profit and loss account and other financial statements once in life of a project, therefore, these estimated expenditures, like, exp. on minor/miscellaneous work, can not be shown next year. Another important point is that in project completion method, the assessee has shown entire sales/Revenue therefore he is entitled to record the entire expenses which had incurred by him or to be incurred to earn the said entire sales/Revenue. Therefore, in order to derive the true net profit in project completion method it is necessary to show these estimated expenditures, like,Exp. on minor/miscellaneous work. Hence, we accept the treatment made by the assessee in respect of estimated expenditures, like, Exp.on minor/miscellaneous work, in its books of accounts. Deduction of TDS on the estimated expenditures, like, Exp. on minor/miscellaneous work - Held that:- So far the sum of ₹ 94,51,860/- is concerned, we note that the assessee has deducted TDS and paid before 31.09.2012 i.e. before the due date of submission of return of income for assessment year 2012-13, therefore by no any stretch of imagination, the disallowance should be attracted i.e. the disallowance made by the Assessing Officer is directed to be deleted based on the fact that the assessee made the compliance and paid TDS on or before submissions of the return of income. So far the balance amount of ₹ 2,15,30,312/- is concerned, as we have explained that since the assessee is following the project completion method and in project completion method the assessee prepares financial statement, profit and loss account and balance sheet once in life of project and some ancillary works which may remain pending will get completed in subsequent years. Since the assessee made provision for these expenses to compute the true net profit and the payee is not known, therefore, deduction of TDS is not possible, hence the disallowance is not attracted. We are unable to uphold the stand of the Revenue, therefore we direct the Assessing officer to delete the additions. We also uphold the order of the ld. CIT(A) in respect of deletion of amount of ₹ 1,69,36,702/-, since this amount pertains to purchase of raw materials therefore no TDS is attracted. Hence, we dismiss the appeal filed by the revenue
-
2019 (1) TMI 269
Deduction u/s 80IA - relief on account of transfer of power price for the purpose of deduction u/s 80IA - not allowing the benefit of downward adjustment as provided in the proviso of Section 92C - Held that:- The Revenue authorities reduced the selling price of power even as well as increased the expenses towards the claim of deduction u/s 80IA(8) instead of reducing the claim u/s 80IA(8) of the Act. To arrive at this conclusion, none of the authorities have given any plausible explanation in the orders. The Assessing Officer/TPO while not allowing the benefit of downward adjustment as provided in the proviso of Section 92C of the Act from the Arm's length price, has not given any reason while making this addition. This addition is based on presumption and assumption which is not permissible under the Income Tax Act, 1961. Addition on account of managerial remuneration - Held that:- The comparison done by the Assessing Officer between the remuneration paid by the assessee company to Ms. Shallu Jindal with the remuneration paid by Essar Steel Ltd to Sh. Ashutosh Agarwala is not proper as well considering the facts that the assessee company is a profit making venture whereas Essar Steel Ltd. is incurring losses. It should also be noted that the assessee company has also complied with all the provisions of the Companies Act, 1956, relating to the payment of managerial remuneration to its managerial personnel appointed and the said payment of managerial remuneration has also been approved by the Board of Directors. The reference made to Circular No. 6P dated 08.07.1968 issued by the CBDT is apt in the present case. Thus, the Assessing Officer was not correct in making addition on account of managerial remuneration. Allocation of common expenses u/s 80IA - Held that:- From perusal of the Assessment Order/Order of the TPO/Directions of the DRP, in the present case none of the authorities have doubted that there was no expenses. In facts, the Assessing Officer/TPO/DRP re-allocated the expenditure in the ratio of turnover between eligible and non-eligible units without bringing into the light the flaw or inaccuracy or any suitable explanation involved in relation to the method of allocation adopted by the assessee company Bank Guarantee commission addition - Held that:- DRP has directed to delete the bank guarantee commission and without appreciating the same, the Assessing Officer made an addition which is unsustainable. Therefore, we direct the Assessing Officer to comply with the directions of the DRP and grant the relief to the Assessee. Depreciation charged by the assessee in respect of electrical installation - Held that:- This issue is covered in assessee’s own case and the DRP also directed to delete said addition. Without appreciating the same, the Assessing Officer made an addition which is unsustainable. Therefore, we direct the Assessing Officer to comply with the directions of the DRP and grant the relief to the Assessee Allowability of CSR expenses - non business expenses - Held that:- Insertion of Explanation 2 to section 37(1) is applicable w.e.f. 1.4.2015 and thus, the said provision will not be applicable in the present case. There is no dispute that the expenses in question are not incurred under the statutory obligation. The Assessing Officer disallowed the claim of CSR expenses without disputing the factual matrix or bringing on record any adverse material which can be seen from the Assessment Order. Thus, this disallowance does not survive. Difference on account of 26AS - Held that:- AR pointed out that the difference on account of 26AS the assessee has already made the submission after reconciliation which has not been appreciated. There is no proper finding to that effect in the Assessment Order, therefore, it will be appropriate to remand back this issue to the file of the Assessing Officer for proper adjudication - Appeal of the assessee is partly allowed for statistical purpose.
-
2019 (1) TMI 268
Loss incurred on sale of shares of subsidiary company - long-term capital loss OR business loss - Held that:- Loss on sale of shares held as investment in subsidiary companies is a revenue loss. Also when holding company invests amounts for business of its subsidiary, it must be held for business expediency. We find merit in the arguments advanced by the assessee. See BRIGHT ENTERPRISES PVT. LTD. VERSUS COMMISSIONER OF INCOME TAX, JALANDHAR (PUNJAB) [2015 (11) TMI 342 - PUNJAB & HARYANA HIGH COURT] We are of the considered opinion that the CIT(A) was not justified in holding that the loss incurred on sale of shares of subsidiary companies is a capital loss and not a business loss. The grounds raised by the assessee are accordingly allowed. - decided in favour of assessee.
-
2019 (1) TMI 267
Unexplained share capital u/s 68 - CIT-A deleted the addition - Held that:- We find no merit in Revenue’s instant grievance. It has come on record that the Assessing Officer’s remand report filed during the course of lower appellate proceedings had found assessee’s impugned share capital / premium against the allotment of its equity shares to be very much legally in order. We have ourselves perused the ITO ward-6(1) Kolkata remand report in question forming part of case file to this effect. We conclude in the peculiar clinching factual backdrop that the Revenue cannot be held to be an aggrieved party once CIT(A) has deleted the impugned addition based on Assessing Officer favourable remand report. As decided in Smt. B. Jayalakshmi vs. ACIT [2018 (8) TMI 208 - MADRAS HIGH COURT] holds in identical facts that the Revenue is not entitled to maintain appeal in these facts and circumstances. We therefore decline Revenue’s sole substantive grievance. - decided against revenue
-
2019 (1) TMI 266
Charitable activity - grating exemption u/s 10(23C)(vi) - exemption u/s 11 - CCIT observed that, assessee cannot be said to be existed only for educational purposes and accordingly rejected the contention of the assessee for grating exemption u/s 10(23C)(vi) - Held that:- ITAT Delhi Bench in the case of Puranchand Dharmath Trust Vs. ITO, Wd-1, Gurgaon [2018 (5) TMI 630 - ITAT DELHI] held that where the assessee Trust advanced money as a loan to another Trust for which the assessee had not received any interest and the said sum was returned by the Trust, the amount advanced not being investment could not be held to be in violation of section 13(1)(d), 11(5) of the Act. Therefore, respectfully following the view taken by this Tribunal in the assessee’s own case, and as per our findings, we hold that there are no violations and the revenue did not make out any case to substantiate the violations in respect of 13(1)(c), 13(2)(a), 13(2)(g) and 13(2)(h) of the Act. Therefore, we do not find any reason to interfere with the order of the Ld.CIT(A) and the same is upheld. The cars are used for the purpose of the assessee’s regular activity and the department did not place any material to establish that the cars were used for the personal benefit of directors/ authors/ promoters of the society. During the appeal hearing the revenue did not place any material to controvert the finding of the LD.CIT(A). Therefore we uphold the order of the ld.CIT(A) and dismiss the appeal of the revenue on this ground. Expenses related to the liquor and tobacco products and other entertainment expenses - Held that:- AO during the assessment proceedings observed that the assessee has incurred certain expenditure on cigarettes, in the name of Godavari Institute of Engineering which is run by the Society. Since the expenditure was not incurred for furtherance of the objects of the Society, the AO disallowed the said expenditure holding that it is gross violation of the objects of the Society. The Ld.CIT(A) examined the account of boarding and lodging and observed that a sum of ₹ 24,035/- relating to the expenses incurred for liquor and cigarettes was recovered and credited to the account. Ultimately, no expenditure was claimed relating to liquor and cigarettes etc. Therefore, allowed the appeal of the assessee and held that there are no violations for granting of exemption u/s 11 of the Act. During the appeal hearing, the revenue could not controvert the finding of the Ld. CIT(A) with tangible material. Therefore, we uphold the order of the CIT(A) and dismiss the appeal of the revenue on this ground. Reopening of assessment - Held that:- As per the proviso to section 147 of the Act, no notice u/s 148 could be issued unless, there is failure on the part of the assessee that income chargeable to tax had escaped assessment. In this case, the assessee filed the return of income claiming exemption u/s 10(23C) of the Act and there was no claim made by the assessee u/s 11. Only on cancellation of the approval granted u/s 10(23C) and on receipt of observations from the CCIT regarding violations and diversion of funds, it has come to the knowledge of the AO that the assessee has violated the provisions of section 13(1)(c), 13(2)(a), 13(2)(g) and 13(2)(h) of the Act thus there is no occasion to the AO to examine the violations u/s 13. The assessee did not furnish information with regard to it’s claim u/s 11, in the original assessment. In view of the findings of the CCIT with regard to the violations u/s 13(1)( c) and section 11(5) the AO reopened the assessment. There was no claim u/s 11 and no information was furnished with regard to satisfaction of the conditions for granting exemption of income under section 11 of the Act by the assessee. Thus there was a failure on the part of the assessee and the AO has rightly reopened the assessment u/s 148 of the Act.
-
2019 (1) TMI 265
Addition u/s 14A r.w.r.8D - Held that:- CIT(A) has deleted the additions made by the Assessing officer u/s 14A of the Act on the ground that the assessee did not earn any exempt income during the year under consideration. The issue is squarely covered in favour of the assessee by various decisions of the Hon'ble High Courts including case of ‘CIT Vs. Winsome Textiles’ [2009 (8) TMI 220 - PUNJAB AND HARYANA HIGH COURT] and ‘Cheminvest Ltd Vs. ITO’ [2015 (9) TMI 238 - DELHI HIGH COURT] wherein held no disallowance is attracted u/s 14A in case the assessee has not earned any income not forming part of the total income.- Decided in favour of the assessee Addition of the interest expenditure u/s 36(i)(iii) - interest free advances - Held that:- In the earlier assessment year 2012-13 which has been decided by this Tribunal in the own case wherein, the Tribunal after considering the rival submissions of the parties has decided the issue in favour of the assessee by holding that assessee was possessed of sufficient own funds to meet the investment / interest free advances made. The Tribunal while allowing this issue in favour of the assessee has relied upon the decision in the case of ‘Reliance Utilities and Power Ltd.’ [2009 (1) TMI 4 - BOMBAY HIGH COURT] and ‘Bright Enterprise Pvt Ltd. Vs. CIT’ [2015 (11) TMI 342 - PUNJAB & HARYANA HIGH COURT] - decided in favour of the assessee
-
2019 (1) TMI 264
Addition u/s 68 - unexplained cash deposits - Held that:- As decided in VIJAY KUMAR PROP. V.K. MEDICAL HALL C/O KAPIL GOEL, ADV. VERSUS ITO WARD-2 FARIDABAD. [2018 (11) TMI 1550 - ITAT DELHI] under similar situation section 68 can be applied only where, there are sum found credited in “books of account” maintained by assessee. No doubt passbook /bank statement, are maintained by a bank for its customers. - since no books of account are maintained in the ordinary course of business of the assessee, no such addition u/s 68 of the Act is tenable. Also AO applied section 68 and made additions in hands of assessee, as unexplained cash credits, to such amount, which has been found deposited by assessee in his saving bank account. To our mind in present facts of case section 69 should have been initiated by Ld.AO. It is unfortunate that Assessing Officers blindly apply provisions, which can be fatal to the interest of Revenue. However as a Tribunal, we are not competent to make addition u/s 69A of the Act, by virtue of the decision of Smt. Sarika Jain vs. CIT [2017 (7) TMI 870 - ALLAHABAD HIGH COURT] - Decided in favour of assessee.
-
2019 (1) TMI 263
TPA - Comparable selection - functional similarity - Held that:- Assessee an Indian company is engaged in the business of software development and distribution of software licenses thus companies functionally dissimilar with that of assessee need to be deselected from final list. The company cannot be treated as comparable as it fails the RPT filter. As applying the employee cost filter, exclusion of companies whose employee cost as a proportion to operating revenue is less than 25%. Addition on account of mismatch in receipt as shown by the assessee and as appearing in the TDS certificates - Held that:- We direct the Assessing Officer to decide the issue afresh after thoroughly examining the submissions and other details filed by the assessee to reconcile the difference in receipts. Assessing Officer must afford reasonable opportunity of being heard to the assessee. This ground is allowed for statistical purposes.
-
2019 (1) TMI 262
Capital gain for termination of lease and vacating the premises - Subsequently, the assessee claimed before the AO that it was for sale of marbles and what was received is an advance - Held that:- The claim of the assessee that what was received is for vacating the premises appears to be true. Therefore, the amount received for termination of lease and vacating the premises is a capital gain and the assessee admittedly offered the same as a capital gain and paid the taxes. In those circumstances, this Tribunal is of the considered opinion that there is no justification for the authorities below to assess the entire receipt of ₹ 45,00,000/- as income from “other sources”. Even if undertake the receipt as advance for sale of the marbles, this Tribunal is of the considered opinion that unless and until the sale of marbles is concluded by deliver of the marbles, the advance cannot be treated as income of the assessee during the year under consideration. Moreover, what was to be assessed as income is only the profit element embedded in it and not the entire sale consideration. Assessing the entire amount of ₹ 45,00,000/- as income from “other sources” is not correct. Accordingly, the order of both the authorities below are set-aside and addition of ₹ 45,00,000/- is deleted. - Decided in favour of assessee.
-
2019 (1) TMI 261
Bogus LTCG - addition u/s 68 - exemption u/s.10(38) denied - addition on Investigation Report said to be received by the AO from Investigation Wing Department at Kolkata - assessee purchased and sold the shares of M/s.Kailash Auto Finance Ltd.held to be a Penny Stock Company - Held that:- It is not known, how the Department is claiming M/s.Kailash Auto Finance Ltd., is a Penny Stock Company. We have to ascertain who authorized the registration of such company, which is a Public Limited Company, and who authorized for listing of such company in the Stock Exchange. Blaming the innocent investor, as if, he invested in the Penny Stock Company may not serve any purpose. There should be thorough investigation and bring the facts on record, how these companies were registered by the Registrar of Companies and allowed to issue public shares so as to invite the general public for investment. Unless and until, these facts are brought on record, the claim of the assessee cannot be doubted. The role of the assessee in promoting the said company, inflating the price of the shares also needs to be examined. Accordingly, the orders of authorities below are set-aside and the entire matter is remitted back to the file of the AO. - Appeal filed by the assessee is allowed for statistical purposes.
-
2019 (1) TMI 260
Disallowing the deduction u/s 10B - the other income is arising from the activity of 100% Export Oriented Unit thus eligible for deduction u/s 10B of the Act - whether the income earned by the assessee from the business activities of the 100% units? - Held that:- The profit of the undertaking is eligible for deduction u/s 10B of the Act provided it should arise in the course of business activities of 100% export unit. In the identical facts and circumstances the Hon’ble ITAT in the case of Lubrizol Advanced Materials India Pvt. Ltd. [2013 (12) TMI 1590 - ITAT AHMEDABAD] has decided the issue in favour of the assessee
-
2019 (1) TMI 259
TDS u/s 194I - demurrage/detention charges paid - non-resident shipping companies which are assessed u/s.172 - assessee submitted that non-adjudication of grounds would brand order of the Tribunal as suffering from apparent error - Held that:- Their remains no ambiguity that the assessee was not liable for deduction of TDS u/s 194-I of the Act on the payment made to the Foreign Shipping Companies on account of demurrage charges. Accordingly, we set aside the order of ld. CIT(A) and delete the addition made by the AO . Case of DEMPO & CO. PVT. LTD., THE COMMISSIONER OF INCOME TAX [2016 (2) TMI 308 - BOMBAY HIGH COURT] to be followed. - Decided in favour of assessee
-
2019 (1) TMI 258
Disallowance made u/s 14A - Held that:- Referring to ISG TRADERS LTD. VERSUS COMMISSIONER OF INCOME-TAX, WEST BENGAL-III, KOLKATA. [2011 (9) TMI 58 - CALCUTTA HIGH COURT] that interest relatable to earning of exempted dividend by working out the percentage of dividend vis a vis total turnover during the year we hold that the expenditure to be disallowed u/s 14A of the Act is to be worked out in the similar fashion - Accordingly we hold that the disallowance u/s 14A of the Act should be restricted to ₹ 2,74,633/- in the facts and circumstances of the instant case - decided partly in favour of assessee Addition u/s 68 - unexplained cash credit and unexplained expenditure towards alleged commission - Held that:- We find that the assessee had clarified before the ld AO more than once in writing that it had not claimed any long term capital gains as exempt or claimed any short term capital loss in the return of income.Since the lower authorities had proceeded on an erroneous assumption that the assessee had claimed bogus long term capital gains as exempt or incurred short term capital loss with a view to evade tax, the entire findings given by them in their respective orders becomes totally irrelevant. The profits from sale of shares of Tuni Textile Mills Ltd is to be taxed as income from business as offered by the assessee and not u/s 68 of the Act under the head ‘income from other sources’, the provisions of section 115BBE of the Act cannot be made applicable in the instant case - lower authorities had erred in making and confirming the addition being gains on sale of shares of Tuni Textile Mills Ltd as bogus and consequentially adding as unexplained expenditure towards commission. Both the additions directed to be deleted - decided in favour of assessee Revisionary jurisdiction u/ 263 - disallowance u/s 14A of the Act was not made by the ld AO by applying the computation mechanism provided in Rule 8D - Held that:- Provisions of section 14A of the Act are applicable even if the shares are held as stock in trade as decided in the case of Maxopp Investments [2018 (3) TMI 805 - SUPREME COURT OF INDIA]. We find that we have already held elsewhere in this order that the disallowance u/s 14A should be restricted to ₹ 2,74,633/- in the facts and circumstances of the instant case in the light of ISG Traders Ltd vs CIT [2011 (9) TMI 58 - CALCUTTA HIGH COURT] - As we have held that the disallowance u/s 14A of the Act cannot be made by applying the computation mechanism provided in Rule 8D of the Rules in the facts and circumstances of the instant case, we have no hesitation in quashing the revision proceedings u/s 263 - decided in favour of assessee
-
Customs
-
2019 (1) TMI 257
Proceedings in terms of Rule 11 and 12 of the Handling of Cargo in Customs Area Regulations, 2009 - grievance of the petitioner is that the 4th respondent is illegally releasing the container belonging to the petitioner against the terms of the regulations - Held that:- Since, the prayer sought for in this writ petition is limited for issuing a direction to the 3rd respondent to initiate proceedings and as it is now stated by the 1st to 3rd respondents that already investigation has commenced, this Court is not inclined to express any view on the merits of the contention made by the petitioner or the 4th respondent, since it is for them to cooperate with investigation and allow the Adjudicating Authority to pass appropriate orders after completion of such investigation - petition disposed off.
-
2019 (1) TMI 256
Smuggling - Gold - illegal importation and possession of primary gold in contravention of the provisions of the Customs Act - appellant claims lawful possession of gold - confiscation - penalty - Held that:- There is no dispute with the two Gold Bars recovered from the residential premises owned by the appellant’s father and the appellant and his brother Shri Harish Kumar Chaurasia were residing along with their respective families in the said premises. There is no dispute that the said gold bars did not have any foreign marking. No further investigation has been made by the Department thereafter - Thus, the department could not adduce any evidence whatsoever to prove that the said two gold bars were smuggled in the two countries. Therefore, the presumption regarding the smuggled nature of seized gold under section 123 of the Customs Act, is not invokable. Neither seized gold could be legally confiscated under Section 111 (b) of the Customs Act, 1962 nor any penalty could be imposed on the appellant - appeal allowed - decided in favor of appellant.
-
2019 (1) TMI 255
Maintainability of appeal - substantial question of law or not - Classification of imported goods - Used Jute Bags - whether classifiable under CTH 63051090 or under the CTH 63101030? - Held that:- The appellant have raised a new issue which is indeed a question of law that in the case of M/s Dipen Overseas CVD is not chargeable as Used Jute Bags imported by the appellant are not manufactured in India. This issue involved substantial question of law, therefore, can be raised at any stage - We absolutely disagree with the contention, that the appellant suo moto declared the classification of Used Jute Bags under 63051090; therefore, they cannot challenge the assessment of bill of entry. Since all the issues involved mixed question of law and fact, the matter as a whole should be considered afresh - appeal allowed by way of remand.
-
Service Tax
-
2019 (1) TMI 254
Classification of services - transport of passengers by air - Held that:- Issue notice. Until further orders, there shall be stay of operation of the impugned order passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi.
-
2019 (1) TMI 253
Non-payment of service tax - payment made on being pointed out - suppression of facts or not - extended period of limitation - Held that:- The said payment was made on 27.09.2013 itself. Since it was made beyond the prescribed period, the interest thereupon was also paid on 14.10.2014. It is also apparent that prior to the impugned order the Department has twice earlier conducted the audits of the assessee - the fact had not come to the notice of the Department for the first time. The question of suppression of fact or mis-representation thereof does not arise. Hence, the Department is not entitled to invoke the extended period as mentioned in proviso to Section 73 of the Act - It is the settled law that the burden of proving the alleged suppression is on the Department and the same has to be proved by way of cogent evidence about some positive act on the part of appellant to not to discharge his liability. There is no such evidence on record. Time Limitation - Held that:- The impugned Show Cause Notice was issued on 27.06.2016 and period in dispute is 2012-13, i.e. much beyond the normal period of one year. Hence, the same is barred by limitation. Appeal allowed - decided in favor of appellant.
-
2019 (1) TMI 252
Penalty - amount of cenvat credit availed has been reversed alongwith the interest even before the issuance of SCN - credit on common input services for exempted as well as taxable services - non-maintenance of separate records - Held that:- The demand as was pointed out during the audit was paid alongwith the interest by the appellant, i.e. the cenvat credit availed on its trading activity (the exempted) was reversed alongwith the interest before issuance of the impugned Show Cause Notice. In accordance of Rule 6(3)(b) of CCR. In view of this admitted fact, no penalty can be imposed under Section 11AC of the Excise Act and under Rule 15 of the CCR Rules. This Tribunal in the case of CCE, Panchkula Vs. Krishna Cylinder [2015 (1) TMI 1197 - CESTAT NEW DELHI] has held that in accordance of the provisions of Section 73(3) of the Finance Act, the Show Cause Notice was not required to be issued when service tax along with interest has been paid by the assessee before the issuance of the Show Cause Notice. Further, in the Show Cause Notice there were no specific allegations of non-payment due to fraud, collusion, wilful mis-statement or suppression of material facts, it was held that no penalty can be imposed on such assessee - The facts in the present case are identical. Penalty cannot be imposed - appeal allowed - decided in favor of appellant.
-
2019 (1) TMI 251
Recovery of short payment of Service tax - Partial reverse charge (RCM) - Department noticed that appellant has been making payment on 75% instead of 100% on total value/ expenses towards payment made to the labour contractor under Manpower, Recruitment And Supply Service - N/N. 30/2012 dated 20.06.2012 as amended - Revenue neutrality - time limitation - penalty - Held that:- It is the admitted fact that till 31.03.2015, the service recipients were to discharge the liability to the extent of 75% of the total value of service received and 25% thereof was to be paid by the service provider. It is also an admitted fact that the appellant and his service provider were discharging their liability throughout - The change in the present case came into effect from 01.04.2015. The period of demand is April 2015 to December 2015. The pleaded inadvertence of the appellant that the amendment was not in the notice of the appellant cannot be ruled out. Otherwise also, there is no apparent evidence on record to prove the alleged intention of the appellant to not to discharge his liability. It is apparent from the record that the appellant has been impressing upon the challans for the month of April 2015 to December 2015, about payment of 25% of the value of service received by the service provider during said period itself but the authorities below have been silent about the said evidences. Revenue neutrality - reduction in quantum of penalty - extended period of limitation - Held that:- There is no apparent intention of the appellant to evade the payment of duty. No evidence Department could produce to prove the same despite it was the Department’s own onus. In absence of the discharge of their onus the silence of the authorities below about the documents reflecting 100% payment is sufficient to hold that Department has wrongly invoked the extended period of limitation - The period of demand is w.e.f. April 2015 to December 2015. The impugned Show Cause Notice is dated 31.03.2017. Since the proviso to Section 73 Central Excise Act, 1944 was not available to the Department as discussed, the Show Cause Notice is definitely barred by time. Appeal allowed - decided in favor of appellant.
-
2019 (1) TMI 250
CENVAT Credit - credit on purchase of MS bars/saria on the strength of invoices issued by the manufacturers and admittedly used in the discharge of service rendered under the classification of Commercial and Industrial Construction Service or ‘Commissioning and Installation service’ - validity of SCN - Held that:- The SCN is wholly misconceived, being on the basis of alleged violation of Rule 8 of Cenvat Credit Rules, 2004. It is held that the provisions of Rule 8 of CCR are not applicable in case of an output service provider. It is an admitted fact that the appellant have received the inputs and have used them in rendering the output service, as is evident from the copy of the invoices produced before this Tribunal with reference to rendering of output service. The appellants have paid service tax without availing any abatement - the SCN are misconceived and not maintainable - appeal allowed - decided in favor of appellant.
-
Central Excise
-
2019 (1) TMI 249
Implementation of order - refund claim allowed - low tax effect - Held that:- The appeal deserves to be dismissed on the ground of low tax effect and the substantial questions of law are left open - the appellant is directed to implement the direction issued by the Tribunal - appeal dismissed.
-
2019 (1) TMI 248
Classification of goods - Bilas Pan Sughandh - Department has termed the product as Churan for Pan classifiable under tariff heading 2106 9070, whereas the appellant claimed under 2008 9999 - Held that:- It is settled law that classification of goods is based on more of product known in trade parlance then on the basis of its ingredients in the market - Product is sold and purchased with the clear description as Pan Flavour Material - Under chapter heading 2106 9070, there is specific tariff entry in the name of churan pan, therefore, in our considered view the product is pre-dominantly classifiable under 2106 9070 as churan for pan and not under 2008 9999. Penalty u/s 11AC and Rule 25 of CER - Held that:- In the present case issue involved is interpretation of classification of goods for this reason penalty is not imposable. The impugned orders are modified to the effect that the demand of duty and classification ordered by the lower authorities are upheld and penalty imposed under section 11AC/ 25 is set aside - appeal allowed in part.
-
2019 (1) TMI 247
Manufacture of bearings and supply to various wind mill manufacturers - benefit of N/N. 12/2012-CE - benefit denied on the ground that the bearing manufactured by them and used by wind mill manufacturers is not a part of wind mill and, thus, not eligible to the benefit of notification - also, for the period beyond 11.07.2014, the benefit is sought to be denied on the ground that the appellant have not followed the condition prescribed under Sr. No. 332(A) of the notification. Held that:- N/N. 12/2012-CE exempts non conventional energy devices or systems specified in list 8 from Central Excise duty. Serial no. 13 of the said list covers ‘wind operated electricity generators, its components and parts thereof including rotor and wind turbine controller’. The said exemption continued even after amendment of notification on 11/07/2014. It is seen that not only wind turbine electricity generators but its components and parts are exempted by virtue of notification 12/2012-CE, irrespective of place where they are used. In the instant case, the bearings manufactured by the appellant are used as component of wind operated electricity generators and there is no dispute that the product is directly supplied to manufacturers of wind operated electricity generators and is used as component of the wind turbine - In the instant case, it can be said that the bearing is an essential component of wind mill without which it cannot function. In these circumstances, a bearing can be called a component of the wind mill and therefore, exempted under N/N. 12/2012-CE. Failure of the appellant to observe condition no. 2 prescribed in respect of following Central Excise (Removal of goods at Concessional Rate of duty for manufacture of Excisable goods) Rules, 2001 - Held that:- Since, it has been held that a bearing is a part of wind mill, the place of use becomes irrelevant as the exemption is available to the said bearing under Serial no. 332 of the notification itself. Appeal allowed - decided in favor of appellant.
-
2019 (1) TMI 246
Demand of Cenvat Credit - adjudicating authority has demanded the cenvat credit lying in balance as on 01.04.2008 - Rule 11(3) of Cenvat Credit Rules, 2004 - time limitation - Held that:- As per the facts of the present case, though on 01.04.2008 and unutilized cenvat credit of ₹ 9,64,05,566/- was lying but out of the said amount of ₹ 8,57,60,788/- was related to the inputs used in the manufacture of exported goods. The appellant claimed refund under Rule 5 for the said amount and the department has sanctioned that refund, the issue of refund has attained finality. Therefore, as regard this amount of ₹ 8,57,60,788/- which included in overall demand amount has been allowed by the department as refund. In the such case demand for this particular amount cannot be raised otherwise it will amount to review of refund sanction order. The adjudicating authority ignoring all the provision of Rule 6(6), demanded cenvat credit lying in balance as on 01.04.2008 invoking Rule 11(3) in isolation which is absolutely illegal and incorrect. Reversal of cenvat credit while claiming Exemption from duty - unutilized cenvat credit - credit is related to input service credit and capital goods. From the plain reading of Rule 11(3), it is clear that the provision of reversal of the credit is provided only in respect of inputs and not on input service and capital goods. The provision for lapsing of credit provided in Clause (ii) of Rule 11(3), the principle of ejusdem generis shall apply, accordingly, credit related to capital goods and input services shall not lapse, therefore, the unutilized cenvat credit lying in balance related to capital goods and input service cannot be demanded. Time limitation - Held that:- In respect of the unutilized cenvat credit, the appellant filed refund claim and the same was sanctioned by the sanctioning authority after remand by the Commissioner (Appeals), therefore, there is no suppression of fact on part of the appellant - the demand for an amount lying as on 31.03.2008, an SCN should have been issued within 1 year whereas the SCN was issued on 06.05.2009 which is clearly beyond the normal period of one year, hence the same is time bar. Appeal allowed - decided in favor of appellant.
-
2019 (1) TMI 245
Clandestine removal - demand has been confirmed on the basis of entries in spiral note book recovered from the residential premises of Shri Vijay Kumar Goyal and other loose documents (slips) recovered from the premises of Shri Sanjay Goyal - retraction of statement after 2 years - Held that:- There are names of suppliers & buyers mentioned in the said records, however, during the course of investigation of the named buyers by the Revenue, the said buyers have denied to have purchased any goods from the appellant. The Revenue has not been able to identify any buyer of the said goods - also, no investigation has been conducted as regards supplier of raw materials to the appellant. Hon’ble Allahabad in the case of Continental Cement Company Vs. UOI [2014 (9) TMI 243 - ALLAHABAD HIGH COURT] has laid down various parameters to establish clandestine removal of goods. However, in the present case, no such evidence has come on record. Revenue is mainly relying on the statement of various persons to conclude that clandestine removal of goods have been established and nothing more is required to prove. It is well settled law that only on the basis of statements, huge demand cannot be confirmed, especially when statements have been retracted and no cross-examination has been given of the witnesses. The appellant have led cogent evidence being bill for acquisition of furnace in recent, furnace past contract given for its installation, etc. Such evidence was not found untrue. Further as per the panchnama, the furnace was under installation. No supporting raw material, moulds, labour etc was found, essential for manufacture of ingots. No ascertainment of furnace capacity by an expert was done. In the inspection by officers of Municipal Corporation of Delhi, in the near vicinity of date of panchnama, no manufacturing activity was found. The Calculation of purchase of copper scrap have also been included. The whole case of Revenue is based on assumption and presumption on unreliable evidences - appeal allowed - decided in favor of appellant.
-
2019 (1) TMI 244
Clandestine manufacture and removal - Restaurant Business - preparation and sale of Indian, Continental, Fast food, Desserts, Biscuits, Cake, Chocolate, etc. - products under Chapter-18 and 19 - it was alleged that during the period June, 2008 to Feb. 2013 the Central Excise duty was not paid nor registration was taken - invocation of extended period of limitation - SSI benefit denied - Held that:- When it is an admitted fact that the appellant was duly registered with Commercial taxes department, has neither charged nor calculated any excise duty, recorded the turnover in balance sheets, books of accounts, maintained vouchers, menu card, bills etc., invocation of extended period on the ground of alleged evasion and suppression of facts is not tenable, and therefore the demand for the extended period alongwith penalty needs to be set aside. The contention that products of Chapter Heading 16 to 19 and 15 are exempt, if the same are prepared in the Hotel and Restaurant, whether consumed at the place or not, excludes items under Chapter -1905, which are related to bread, pastry, cakes and biscuits, leaving behind certain items under the said tariff. Therefore, the demand to the extent of items under Chapter heading cake and pastry for the normal period of limitation, from the relevant date is held to be chargeable and therefore demand to the extent of ₹ 5,41,959/- and ₹ 25,553/- stand confirmed - remaining demand alongwith the penalty is set aside. Appeal allowed in part.
-
2019 (1) TMI 243
Rectification of mistake - typographical error - apparent on the face of the record - Held that:- This rectification application allowed and pursuant to the rectification, the aforementioned final order shall stand modified - ROM application allowed.
-
2019 (1) TMI 242
Maintainability of ROM Application - Held that:- The appellant had filed an application for rectification of mistake (ROM) in the Final Order No. E/51923/2018-SM dated 21.5.2018 by which the appellant’s appeal was dismissed for non-prosecution with liberty to come again subject to satisfying the reasons for default but within prescribed time - Instead of restoration of appeal (ROA), the appellant has filed the ROM application. In this case, there is no scope for filing of ROM as there is no mistake in the order - ROM application dismissed.
-
2019 (1) TMI 241
CENVAT Credit - inclusion of subsidy in assessable value - Section 4 of the Central Excise Act, 1944 - Held that:- In the present case, for the initial period the assessees are required to remit the VAT recovered by them at the time of sale of the goods manufactured. A part of such VAT is given back to them in the form of subsidy in Challan 37 B. Such Challans are as good as cash but can be used only for payment of VAT in the subsequent period. In terms of the scheme of the Government of Rajasthan payment of VAT using such Challan are considered legal payments of tax. In view of the above, Revenue is not correct in taking the view that VAT liability discharged by utilizing such subsidy challans cannot be taken as VAT actually paid. Tribunal in the Welspun Corporation Ltd. [2017 (10) TMI 1303 - CESTAT MUMBAI] conclude that there is no justification for inclusion in the assessable value, the VAT amounts paid by the assessee using VAT 37B Challans. Appeal allowed - decided in favor of appellant.
-
2019 (1) TMI 240
CENVAT Credit - M.S. Angles, M.S. Channels, M.S. Joist, Chequered Plates, Gratings, etc. used for fabrication of support structures - period April, 2004 to April, 2005 - scope of SCN - Held that:- The order of the Commissioner (Appeals) is self-contradictory and has traveled beyond the scope of the SCN. It has thus appeared to the ld. Commissioner (Appeals) that the structural steels items are not proved to have been used in or in relation to the manufacture of capital goods or components, spares and accessories of the capital goods, specified in terms of Rule 2(a) of the Cenvat Credit Rules, 2004. In absence of production of any primary evidence regarding the receipt, issue, consumption and inventory of these structural steel items, the submission of the appellant is not sustainable. This is contrary to the allegation made in the SCN. Tribunal had remanded the matter in view of the pendency of the appeal before the Chhattisgarh High Court in the case of Vandana Global Ltd. [2018 (5) TMI 305 - CHHATTISGARH, HIGH COURT], wherein the Larger Bench of the Tribunal had held that the cenvat credit on inputs/structural items used for fabrication of foundation, structural and supporting structures in the factory of production, credit is not available. These are not goods and or capital goods, being immovable. Appeal allowed - decided in favor of appellant.
-
2019 (1) TMI 239
Rectification of mistake - typographical error - Held that:- There is typographical error in paras-3, 6 & 9 of the Final Order, wherein it has been mentioned ‘Notification No.15/2003-CE’, whereas it should be read as ‘notification no.50/2003-CE’ - the notification number in the aforementioned paras shall be read as ‘notification no.50/2003’ instead of ‘notification no.15/2003’ - ROM allowed.
-
2019 (1) TMI 238
Rectification of Mistake - typographical error - Held that:- Inasmuch as the said mistake is a typographical mistake, we rectify the same and replace the para 3 of Final Order - ROM allowed.
-
2019 (1) TMI 237
CENVAT Credit - duty paying invoices - supplementary invoices - issue pending adjudication - existence of confusion - Rule 9 (1) (b) of CCR - Held that:- Similar matter has already been decided by the Division Bench of this Tribunal in Birla Corporation Ltd. vs. CGST, Jabalpur, [2018 (7) TMI 1264 - CESTAT NEW DELHI] and same has been followed by the Single Bench of this Tribunal in decision of Jaypee Sidhi Cement and Hindustan Zinc Ltd. vs. CGST, Jabalpur and CGST Udaipur, [2018 (7) TMI 1279 - CESTAT NEW DELHI] - Since the main issue is still pending adjudication in the Hon’ble Apex Court that both the said decisions have considered that Rule 9 (1) (b) of CCR is not applicable to the given set of circumstances - issue being already sub-judiced the element of confusion cannot be ruled out. Suppression being altogether contradictory to confusion cannot be made applicable in the given circumstances, unless and until there is some apparent positive act of the appellant on the record. Mere failure of ascertaining about the exclusion part of Rule 9 (1) (b) cannot be held to be the act of suppression or collusion on part of the appellant. Above all, the supplementary invoice has been issued by the Coal Companies which are the undertakings of the Government of India, there can be no presumption, unless rebutted, of any alleged suppression or collusion. Appeal allowed - decided in favor of appellant.
-
2019 (1) TMI 236
CENVAT Credit - input service - service received from selling agents, to whom the appellant paid by way of sales commission on the sales effective through them - Held that:- CENVAT credit is available in respect of sales commission. Further, the notification dated 3.2.2016 has clarified the law by way of explanation, so as to reduce the litigation. The explanation inserted with effect from 3.02.2016 has got retrospective effect. Even prior to 03.02.2016, the activity of a sales commission gent was in the nature of sales promotion only. Credit allowed - appeal dismissed - decided against Revenue.
-
2019 (1) TMI 235
Waste product or not - gad, sludge, acid oil and spent earth, etc. - N/N. 89/95–CE dated 18.05.1995 - whether the impugned by-products arising in the course of said crude vegetable oils are to be treated as waste or not? - Held that:- This issue has been dealt with by this Tribunal in Ricela Health Foods Ltd. Vs. CCE, Chandigarh & Allahabad [2018 (2) TMI 1395 - CESTAT NEW DELHI] where it was held that the removal of unwanted materials resulting in products like gum, fatty acid and wax (as therein) cannot be called as the process of manufacture of these products and the same cannot be considered to be manufactured excisable goods. It was further held that same were merely waste and thus eligible for exemption under Notification No. 89/95-CE. The Order confirming the demand even for the normal period is therefore not sustainable - Appeal allowed - decided in favor of appellant.
-
2019 (1) TMI 234
Maintainability of appeal - Process amounting to manufacture or not - classification of such products - issue pending adjudication before higher forum - Held that:- Once the controversy is pending adjudication before the highest forum of the country, there seems no reason to have adjudication on merits in these Appeals. Resultantly, four of the Appeals herein are hereby adjourned sine die so as to follow the judicial discipline to avoid conflict of opinion and also to save parties from unnecessary expenditure of time and money.
-
CST, VAT & Sales Tax
-
2019 (1) TMI 233
Validity of assessment order - the authorities are taking coercive steps before the appellate authority - Held that:- The petitioner has exercised on time its statutory remedy of filing an appeal. It appears that it has also filed a stay petition. Procedural fairness demands that the authorities may wait, before taking further steps, until the appellate authority decides on the stay petition - writ petition disposed off directing the respondent authority to defer coercive steps until the second respondent considers the stay petition.
-
2019 (1) TMI 232
Validity of assessment order - the authorities are taking coercive steps before the appellate authority - Held that:- The petitioner has exercised on time its statutory remedy of filing an appeal. It appears that it has also filed a stay petition. Procedural fairness demands that the authorities may wait, before taking further steps, until the appellate authority decides on the stay petition - writ petition disposed off directing the respondent authority to defer coercive steps until the second respondent considers the stay petition.
|
