TMI Tax Updates - e-Newsletter
October 14, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
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GST:
GST on license fee charged by the States for grant of Liquor licences to vendors
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GST:
Clarification on the effective date of explanation inserted in notification No. 11/2017- CTR dated 28.06.2017, Sr. No. 3(vi)
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GST:
Clarification regarding taxability of supply of securities under Securities Lending Scheme, 1997
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GST:
Clarification regarding determination of place of supply in case of software/design services related to Electronics Semi-conductor and Design Manufacturing (ESDM) industry
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GST:
Clarification on applicability of GST exemption to the DG Shipping approved maritime courses conducted by Maritime Training Institutes of India
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GST:
Levy of GST on the service of display of name or placing of name plates of the donor in the premises of charitable organisations receiving donation or gifts from individual donors
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GST:
Clarification on issue of GST on Airport levies
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GST:
Clarification on scope of support services to exploration, mining or drilling of petroleum crude or natural gas or both
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GST:
Clarification regarding GST rates & classification (goods)
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GST:
Club membership - amount collected by Rotary club towards convenience of members and pooled together for paying meeting expenses, communication expenses, RI per capita dues, subscription fees etc. - The said transaction by the applicant to its members is a supply of goods/services and is liable to GST.
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Income Tax:
Disallowance of expenditure incurred towards the educational expenses in respect of daughter of one of the Directors of the assessee company - AO correctly concluded that there was no nexus between the higher education expense Daugher and the business of the assessee and accordingly disallowed the entire sum holding that it was not an expenditure incurred wholly and exclusively for the purpose of business.
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Income Tax:
Penalty u/s. 271AAA(2) - Assessment u/s 153 - where the revenue had failed to question the assessee while recording the statement u/s 132(4) of the Act as regards the manner of deriving such income, it cannot jump to the consequential or laster requirement of substantiating the manner of deriving the income.
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Income Tax:
Exemption u/s 11 - Claim of repayment of loan as application of income - Since the assessee has already claimed exemption towards the cost of asset as application of income, the claim cannot be allowed.
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Income Tax:
Addition being unverified sundry debtors - Additions have been confirmed on account of bogus purchases - Any addition out of the sales made out of the aforesaid purchases would result into double addition.
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Income Tax:
Salary income - additions towards difference between returned income and as per 26AS - there was dispute between employee and employer therefore, it was necessary for the AO to examine and allow cross examination.
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Income Tax:
Income accrued in India - AO erred in taxing the service agreement receipt as ‘fee for included services’ as per Article 12(4) of India USA DTAA for such services in absence of clause in the service agreement that the recipient would be able to perform these services of its own without any further assistance of the assessee
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Customs:
Classification of imported goods - Every material in this universe will have chemical constituents - organic/ inorganic. Then can by referring to Chemical Structure, every product gets classified in these chapters. Such an argument is nothing but making the entire scheme of tariff redundant.
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Customs:
Refund of SAD - benefit of N/N. 102/97-Cus. - As there is no tax invoice or any other invoice, hence there is no question of passing on of SAD to the buyer of the dwelling units/commercial units.
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Corporate Law:
Companies (Meetings of Board and its Powers) Amendment Rules, 2019
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Corporate Law:
Schedule VII in the Companies Act, 2013 amended - Contribution to incubators funded by various authorities.
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Service Tax:
Commercial Training or Coaching Service - There was some confusion as to the interpretation of the word "commercial" used in the definition of the said service - Again, the appellant is a State Government Undertaking and there cannot be any mala fide intention on the part of the appellant to evade payment of service tax.
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Central Excise:
Fraudulent availment of CENVAT Credit - The adjudicating authority has committed an error because the admission of the maker though can be used against the maker thereof but cannot be used against any other person, except after the said other person is provided an opportunity to cross-examine the maker of admission.
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2019 (10) TMI 452
Club membership - Supply of goods/services or not? - amount collected by Rotary club towards convenience of members and pooled together for paying meeting expenses, communication expenses, RI per capita dues, subscription fees to the Rotarian or Rotary regional magazine, district per capita assessment and the same is deposited in single bank account - HELD THAT:- The facts of the subject case is similar to the facts of the case in Lions club of poona Kothrud [ 2018 (12) TMI 590 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA ] wherein the appellate authority for advance ruling, Maharashtra has held that fees collected from members cannot be brought within purview of GST. However, only membership fee recovered by them from their members, spent towards incurring various administrative expenses only will be exempt from GST. Expenses other than administrative expenses - HELD THAT:- This authority has already held in similar cases of Rotary Club of Queens Necklace [ 2019 (7) TMI 616 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA ] and Rotary Club of Nariman Point [ 2019 (8) TMI 819 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA ] that the amount collected by the Rotary clubs are towards convenience of members and poled together for paying various expenses and are leviable to GST - there are no grounds to deviate from the said decisions made by this authority since in the facts of the subject case are very much similar to the facts of Rotary Club of Queens Necklace and Rotary club of Nariman Point. The said transaction by the applicant to its members is a supply of goods/services and is liable to GST.
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2019 (10) TMI 451
Filing of TRAN-1 to avail the credit of duty paid on goods - respondents submitted that the petitioner's request is now pending before the GSTN and therefore, once the decision is to be taken by the said authority and the same will be communicated to the petitioner - HELD THAT:- Petition closed.
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2019 (10) TMI 450
Filing of TRAN-1 - Input Tax Credit - carry forward the credit on eligible duties of goods in electronic credit ledger in terms of Section 140(3) and 140(5) of the Central Goods and Services Tax Act, 2017 - HELD THAT:- Since these writ petitions are filed challenging the proceedings, which in effect is against not considering the request of the petitioner to avail the input tax credit on the reason that the time for filing TRAN-1 has lapsed and since it is stated that the said issue is now forwarded to GSTN through the Principal Nodal Officer (Commissioner of CGST, Chennai North) for necessary further action, it is for the petitioner to approach the said authority and pursue the matter further so as to enable him to pass appropriate orders. The Writ Petitions are disposed of, only with a direction to the Principal Nodal Officer (Commissioner of CGST, Chennai North) to take appropriate action without loss of further time so as to get the issues resolved by GSTN at the earliest possible time, at any event, within a period of six weeks from the date of receipt of a copy of this order.
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2019 (10) TMI 449
Manner in which the learned Tribunal has disposed of the appeals - matter decided pending appeals - HELD THAT:- It is an admitted position that the controversy involved in the present case is similar to the controversy involved in the case of COMMISSION OF CENTRAL GST VERSUS JAY CHEMICAL INDUSTRIES LTD. [ 2018 (8) TMI 1392 - GUJARAT HIGH COURT] where the appeals are restored to the file of the learned Tribunal and to avoid any further multiplicity of proceedings /appeals before this Court. In the present case, the appeals are restored to the file of the Tribunal and to avoid further multiplicity of proceedings/appeals before this court, it is directed that the appeal on remand will be kept pending till this court renders a decision in the case of COMMISSIONER VERSUS ESSAR STEEL INDIA LTD [ 2016 (6) TMI 1305 - GUJARAT HIGH COURT] - matter restored - appeal allowed in part.
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Income Tax
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2019 (10) TMI 448
Reopening of assessment u/s 147 - deemed dividend addition u/s 2(22)(e) - HELD THAT:- In the previous year relevant to the AY- 2013- 14, M/s. D. P. Vora received a loan of ₹ 5.68 Crores from M/s. Touchstone. Therefore, the reasons in support states that, this loan is in the nature of deemed dividend, covered by Section 2(22)(e) of the Act. This issue was admittedly not considered earlier, as no scrutiny Assessment was done under Section 143(3) of the Act but only an Intimation under Section 143(1) of the Act was sent to the Petitioner.. Petitioner had in its objection pointed out that for the same Assessment Year i.e. Assessment Year 2013-14, the Revenue has sought to tax the some loan received from M/s. D.P. Vora from M/s. Touchstone under Section 2(22)(e) - Tribunal by an order dated 24th April, 2017 held that the amount received by M/s. D.P. Vora from M/s. Touchstone was in the nature of business transaction so as to meet its trading activities. Thus, not hit by Section 2(22)(e) of the Act. The reasons in support of the impugned notice seeks to tax the same transaction as deemed dividend. Prima facie, once it is held on fact that, the advance was on trading account, then no occasion to apply under Section 2(22)(e) of the Act, can arise, as held by the Delhi High Court in CIT v/s. Creative Dyeing and Printing P. Ltd. [ 2009 (9) TMI 43 - DELHI HIGH COURT].
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2019 (10) TMI 447
Disallowance of expenditure incurred towards the educational expenses in respect of daughter of one of the Directors of the assessee company - allowable revenue expenditure - HELD THAT:- In the present case daughter of one of the Directors was barely 18 years of age without any relevant education, qualification or experience when she was inducted as a whole time Director of the Company. The agreement with the company wherein she undertook to remain in the employment of the assessee company for a period of not less than one year from the date of completion of higher education/training was executed on 20.03.2000, the date when she was inducted as the Director of the Company. The terms of the said agreement also defy logic. It is highly improbable that a Company which would incur expenditure to the tune of ₹ 70 lacs approximate on overseas education, agreed to have Ms. Esha Arya make a commitment to work for the Company only for a period of one year and, in the event she were to leave the Company before the expiry of the said period, she was required to pay only ₹ 50,000/- as default money, which too could also be waived off at the discretion of the Director of the assessee. When these contradictions were pointed out, the Assessee produced the supplemental agreement dated 01.11.2000 wherein she agreed to serve the Company for not less than two years and in the event of default, reimburse 50% of the expenditure incurred on higher education. These facts cannot be ignored and one can easily infer that the expenses were not incurred wholly and exclusively for the business of the Company. In the first round of a challenge, the assessee, despite opportunity failed to produce the evidence that would justify the expenditure, as noted in the impugned order. The assessee could not produce any evidence to show that the assessee company had sponsored the application of Ms. Esha Arya from the beginning. AO thus correctly concluded that there was no nexus between the higher education expense of Ms. Esha Arya and the business of the assessee and accordingly disallowed the entire sum holding that it was not an expenditure incurred wholly and exclusively for the purpose of business. - Decided against assessee.
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2019 (10) TMI 446
Penalty u/s. 271AAA(2) - Assessment order u/s.143(3) r.w.s. 153 after search u/s 132 - fulfilling the pre-conditions - HELD THAT:- As per settled legal position, where the revenue had failed to question the assessee while recording the statement under section 132(4) of the Act as regards the manner of deriving such income, it cannot jump to the consequential or laster requirement of substantiating the manner of deriving the income. It is only when the officer elicits a response that such a requirement, the assessee's responsibility to substantiate manner of deriving such income would commence. When the base requirement itself fails, the question of denying the benefit of no penalty would not arise. After the director responded to question Nos.7 and 8, nothing further was asked and hence he cannot be faulted for not giving further details. Assessee has failed to fulfill the preconditions laid down under section 271AAA(2) is devoid of merits. the assessee has stated in the answer that from where the income was earned. Thereafter he cannot be blamed that he has not substantiated the manner in which the disclosed income was derived. If there was any doubt in the mind of the revenue, they should have asked further question about it when initial onus placed by the explanation has been discharged by him, the onus shifts on the revenue. If no further question are asked, the matter ends there. In light of the above discussion, there is no infirmity or otherwise in the impugned order passed by the tribunal. Both the appeals are therefore, fail and deserve to be dismissed and are accordingly dismissed.
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2019 (10) TMI 445
Revision u/s 263 - exemption claimed u/s 54B - AO initiated the reassessment proceedings solely on the reason that assessee and his wife has sold the agricultural land and made reinvestment and claimed exemption under section 54B - HELD THAT:- . In the present case since reassessment proceedings have been initiated solely on the reason that assessee has availed exemption under section 54B by making investment in the name of his wife and issue was covered in favour of the assessee on the day of filing of the return of income and initiation of reassessment proceedings by Judgment of the Hon ble jurisdictional High Court in the case of Gurnam Singh [ 2008 (4) TMI 28 - PUNJAB AND HARYANA HIGH COURT] therefore, if the assessing officer has not mentioned the details in the reassessment order, it would not be fatal to the case of the assessee. The view of the assessing officer was sustainable in Law, therefore, the Ld. Pr. CIT should not have substituted the view of the assessing officer without any just cause. We, therefore, do not find the reassessment order to be erroneous insofar as prejudicial to the interests of revenue. We do not find any justification for Ld. Pr. CIT to invoke the jurisdiction under section 263 of the Income Tax Act on the above reasons. In this view of the matter, we set aside the impugned order under section 263 of the Income-Tax Act and restore the original reassessment order.
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2019 (10) TMI 444
Disallowance u/s 14A read with Rule 8D - HELD THAT:- The assessee has non-interest bearing funds also which were more than the investments made by assessee. Thus, no cost of fund is involved in earning the exempted income. Further, in this year assessee has no net expenditure as there is a net interest income and in earlier year, no similar disallowance out of interest have been made. The reliance of the assessee on the decision of UMIL Share Stock Broking Services Ltd. [ 2018 (8) TMI 913 - ITAT KOLKATA] clearly apply to the facts of the case of the assessee. No justification for the authorities below to disallow interest expenditure relating to exempted income. We, accordingly, set aside the Orders of the authorities below and delete the addition. As regards other addition assessee has not filed any reply before the authorities below. No details or explanation have been filed. No explanation have been given regarding the activities carried out by the assessee for earning the exempted income. Since assessee earned substantial dividend income, therefore, assessee was bound to incur certain expenditure to earn exempted income, therefore, in the absence of any explanation or any details submitted by assessee before the authorities below as well as before the Tribunal, disallowance is confirmed. Part of this ground is dismissed. Ground No.1 is partly allowed. Addition on account of deduction claimed u/s 36(1)(viia) - HELD THAT:- We are of the view that issue is covered in favour of the assessee by the aforesaid decision of the Tribunal in the case of assessee in which the Order of Tribunal for the A.Y. 2011-2012 have also been considered which is the sole basis for the A.O. to make the disallowance. We, accordingly, following the Order of the Tribunal above, set aside the Orders of the authorities below and delete the entire addition. In the result, Ground Nos.2 and 3 of the appeal of Assessee are allowed.
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2019 (10) TMI 443
Addition on account of share application money along with premium received by the assessee u/s 68 - HELD THAT:- The assessee has tabulated complex structure of the transaction in the group by which the money has been deposited in the company as share capital. Based on the structure it is prima facie apparent that shareholders are mere pass through entities but it needs to be demonstrated with the complete facts. There is also a reason that main director of the company who was very old and severely ill and ultimately passed away, is according to us the sufficient cause to admit those evidences. In view of above facts, we admit the additional evidences submitted by the assessee, as there is a sufficient and reasonable cause for non-production of them before the lower authorities. We are also aware about the manner in which the addition has been made by the learned assessing officer and confirmed by the learned CIT A for non-production of certain details by the assessee despite being given repeated opportunities before them. AO has repeatedly requested the assessee to produce the income tax return of the depositors, which the assessee has not produced before any of the lower authorities. Even before us, the assessee has not produced the same. CIT A has also made huge efforts by issuing notices to the shareholders u/s 133 (6) of the act which was not complied with. Appellant is also required to meet the argument of the learned departmental representative with respect to the judicial precedents of the honourable Delhi High Court and honourable Supreme Court. AR has tried to prove all these facts, which are held against him, based on the agreements, memorandum of Understanding by reading clauses contained therein, explaining the financial structure of the w whole transactions, to show the identity, creditworthiness and genuineness of the transactions and shareholders. As those agreements were, MOUs were not available with lower authorities along with other details produced before us, in the interest of justice, we set aside the whole issue back to the file of the AO with direction to the assessee to prove Identity, creditworthiness of the shareholders and genuineness of the transactions meeting the findings of the lower authorities. AO may examine the additional evidences produced before us as well as all other evidences that assessee may like to produce before the lower authorities and then decide the whole issue afresh. Accordingly, ground number 2 of the appeal of the assessee is set aside to the file of the learned assessing officer as directed above to the parties.
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2019 (10) TMI 442
Validity of rectification order passed by the AO u/s 154 - AO mentioned in the notice that the development expenses is capital in nature and hence the same is proposed to be disallowed - HELD THAT:- There is no dispute with regard to the fact that the assessee was not the owner of land on which the impugned amount of ₹ 8.50 lakhs was spent. Hence the question of treating the same as Capital expenditure does not arise. The assessee has undertaken to sell the land belonging to other person and accordingly he has entered into an agreement to sell the land with a person named Shri D.K.Sharma, admittedly, as representative of the owner of the land. In our view, the above said activities carried on by the assessee can only considered as real estate activity carried on by the assessee. There is also no dispute with regard to the fact that the assessee has incurred the expenses of ₹ 8.50 lakhs on the development and maintaining the land and the gross receipts of ₹ 100 lakhs, being the advance amount forfeited, was also arisen in respect of the very same land - there is merit in the contentions of the assessee that the development/maintenance of land is related to the real estate activity carried on by the assessee and the above said amount of ₹ 100 lakhs was also received out of the said activity only - the assessee is entitled to claim deduction of ₹ 8.50 lakhs against the gross receipts of ₹ 100 lakhs. Hence we are of the view that the Ld CIT(A) was not justified in confirming the disallowance of ₹ 8.50 lakhs. We also find merit in the alternative contentions of the assessee that the issue relating to deduction of ₹ 8.50 lakhs against the gross receipts of ₹ 100 lakhs is a debatable issue and hence the same is outside the scope of rectification proceedings. Accordingly the impugned orders are liable to be quashed on this ground also. Deemed dividend u/s 2(22)(e) - HELD THAT:- The assessee has maintained a current account/running account with the above said company and the outstanding balances were fluctuating during the course of hearing. We notice that, most of the time, the assessee s money was lying with the above said company and only for a short period of about two months, the company s money was available with the assessee. Hence the ratio of above said decisions can also be conveniently applied to the facts of the present case. Hence there is merit in the alternative contention of the assessee. The amount of ₹ 100 lakhs given to the assessee by the above said company cannot be considered as loan or advance within the meaning of provisions of sec. 2(22)(e) of the Act. Accordingly we set aside the order passed by the ld CIT(A) on this issue and direct the AO to delete the addition made u/s 2(22)(e) of the Act.
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2019 (10) TMI 441
Penalty u/s 271(1)(c) or sec.271AAB - HELD THAT:- It is not clear as to whether the penalty proceedings were initiated for concealment of income or for furnishing of inaccurate particulars of income or for having undisclosed income within the meaning of sec.271AAB of the Act. In the instant case, the AO is asking the assessee to furnish explanations on concealment of income and furnishing of inaccurate particulars of income . The AO has mentioned section 271AAB in the last sentence of notice, but the charge specified is not undisclosed income relevant to sec.271AAB of the Act. The decision rendered by Hon'ble Delhi High Court in the case of Smt. Ritu Singhal [ 2018 (3) TMI 593 - DELHI HIGH COURT] is on different issue and in any case, it is related to the penalty levied u/s 271AAA of the Act. We are of the view that the penalty notice issued u/s 271AAB of the Act to the assessee for AY 2013-14 and 2014-15 cannot be sustained and accordingly the penalty orders passed for the above said years are liable to be quashed. We order accordingly.
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2019 (10) TMI 440
Exemption u/s 11 - Claim of repayment of loan as application of income - HELD THAT:- In the instant appeals, it is the case of the AO that the cost of assets acquired out of loan funds have been claimed by the assessee as application of income in the years in which those assets were acquired. In that case, if the assessee is allowed to claim exemption again on repayment of loan taken for acquiring the very same asset, then the same would result in double exemption for the very same amount, which cannot be the intention of the statute. Since the assessee has already claimed exemption towards the cost of asset as application of income, in our view, the assessee cannot take support of the decision rendered in the case of Janmabhumi Press Trust [ 1995 (8) TMI 2 - KARNATAKA HIGH COURT] to claim exemption on account of repayment of loan taken for acquiring the above said asset. CIT(A) has omitted to consider above said factual aspects and hence we cannot sustain his order passed on this issue. Accordingly, we set aside the order passed by Ld CIT(A) in all the three years on this issue and restore the addition made by the AO in all the three years. Sale consideration received on sale of assets - reasoning given by the Assessing officer is that the assessee had claimed entire cost of assets as application of income in the earlier years and hence the sale consideration should be taken as income of the assessee - HELD THAT:- We notice that the provisions of sec.11(1A) of the Act prescribe the procedure for assessment of income arising on transfer of Capital asset held under trust wholly for charitable or religious purposes. The provisions of sec.11(1A) has been explained by the co-ordinate bench in the case of Al-Ameen Educational Society vs. DCIT(E) [ 2012 (11) TMI 346 - ITAT BANGALORE] Further, the CBDT has also explained the provisions of sec.11(1A) in Circular No.72 dated 06- 01-1972. We notice that the Ld CIT(A) has directed the AO to compute Capital gains arising on sale of capital asset following the decision rendered in the case of Al-Ameen Educational Society (supra). Hence we do not find any reason to interfere with the decision rendered by Ld CIT(A) on this issue.
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2019 (10) TMI 439
Addition u/s 68 - penny stock transaction - Bogus LTCG - bogus transactions of sale of shares of listed companies - addition on the basis of presumption that the assessee has paid commission for alleged accommodation entries of long term capital gain and added the same under section 69C - HELD THAT:- AO has been guided by the report of the investigation wing prepared with respect to bogus capital gains transactions. The assessing officer has not brought out any part of the investigation wing report in which the assessee has been investigated and /or found to be a pan of any arrangement for the purpose of generating bogus long term capital gains. Nothing has been brought on record to show that the persons investigated, including entry operators or stock brokers, have named that the assessee was in collusion with them. In absence of such findings how is it possible to link their wrong doings with the assessee. In fact, the investigation wing is a separate department which has not been assigned assessment work and has been delegated the work of only making Investigation. The Act has vested widest powers on this wing. It is the duty of the investigation wing to conduct proper and detailed inquiry in any matter where there is allegation of tax evasion and after making proper inquiry and collecting proper evidences the matter would be sent to the assessment wing to assess the income as per law. We find no such action executed by investigation wing against the assessee. In absence of any findings specifically against the assessee in the investigation wing report, the assessee cannot be held to be guilty or linked to the wrong acts of the persons investigated. In this case, the AO at best could have considered the investigation report as a starting point of Investigation. The report only Informed the AO that some persons may have misused the scrip: for the purpose of collusive transactions. The AO was duty bound to make inquiry from all concerned parties relating to the transactions and then to collect evidences that the transaction entered into by the assessee was also a collusive transaction. However, the AO has not brought on record any evidence to prove that the transactions entered by the assessee which are otherwise supported by proper third party documents are collusive transactions. Common issue as regards to addition under section 68 of surplus arising out of sale of shares of listed companies and consequent addition under section 69C on the presumption that commission at the rate of 3% was paid is hereby deleted - Decided in favour of assessee Assessment u/s 153A - HELD THAT:- addition to the income of the assessee can only be made on the basis of incriminating record found during the course of search . In the present case, there is no such incriminating material and therefore, the AO has no jurisdiction to make addition in the unabated assessment . The case of the assessee is squarely covered by the decision of Hon ble Bombay High Court decision in the case of Continental Warehousing Corporation (Nhava Sheva) Ltd [ 2015 (5) TMI 656 - BOMBAY HIGH COURT] - Decided in favour of assessee.
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2019 (10) TMI 438
Disallowance of sundry creditors - bogus purchases - HELD THAT:- The evidences on record clearly show that the purchases made from Mittal Paper Mart are total bogus purchases as Mittal Paper Mart itself was a bogus firm. Even in the statement of accounts of Mittal Paper Mart, there is no receivables from the assessee. Reliance on the order of the Additional Commissioner Grade – 2 (Appeal 2) Commercial Tax Department will also do not good to the assessee as we cannot question the wisdom of the Additional Commissioner [Appeal], Commercial Taxes Department. The documentary evidences brought on record emanating from the assessment proceedings supported by the remand report establishes only one fact that the credit entries in the name of Mittal Paper Mart P/o Shri Radhey Shyam Mittal is unexplained credit which is supported by evidences on record. Merely because the transactions have been done by account payee cheques would not suffice when the forensic expert’s report clearly proves that the account was operated in the handwriting of Shri Puneet Jain, and all deposits and withdrawals were made in the handwriting of Shri Puneet Jain. Onus was upon the assessee to explain the genuineness of the credit entries and since Mittal Paper Mart was creditor of the assessee, Shri Radhey Shyam Mittal appeared before the Assessing Officer in response to the summons issued u/s 131 of the Act for and behalf of the assessee. Therefore, technically, Shri Radhey Shyam Mittal was assessee’s own witness. All that is meant by the principle ‘Audi Alteram Partem’ is that no party should be condemned unheard. Once the evidences are collected by the Assessing Officer have been placed before the assessee for his information, comment and criticism, it meets all the requirements of principles of natural justice. Natural justice certainly includes that any statement of a person before it is accepted against somebody else, that somebody else should have an opportunity of meeting it by way of interrogation or by way of comment does not matter so long as the party charged has a fair and reasonable opportunity to see, comment or criticise the evidences. The statement of Shri Radhey Shyam Mittal prompted the Assessing Officer to make further enquiry from the bank and the evidences collected from bank were referred to forensic expert for verification of handwriting and report of the forensic expert was made available to the assessee on which the assessee did not even care to make any comment. No merits in the submissions of the assessee. Addition is sustained. - Decided against assessee. Addition being unverified sundry debtors - HELD THAT:- Such debit entries cannot become income of the assessee. The assessee was showing bogus sales out of bogus purchases and we have confirmed the addition on account of bogus purchases to the extent of ₹ 17.31 crores. Any addition out of the sales made out of the aforesaid purchases would result into double addition. We, therefore, do not find any merit in this addition of debit entry and the same is directed to be deleted. - Decided against revenue
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2019 (10) TMI 437
TP Adjustment - MAM Selection - TPO rejected all 4 companies adopted as comparable by the assessee in its TP Study for CPM Method and selected 4 companies as comparables for applying TNMM to benchmark the transaction of import of raw materials - AR argued that the primary reason for rejection of CPM by the ld. TPO was that assessee had incurred loss during the year - HELD THAT:- When the CUP method using ICIS software covers 68% of the total transactions that too being a direct method and a traditional transaction method, DRP ought to have accepted the same. Before us, we find that assessee by way of additional evidences had produced comparable data using TIPS Data Base which covers even more higher percentage of total value of import transactions from the AEs. We hold that CUP is a direct method. We find that assessee has raised additional grounds of appeal for adoption of CUP to be MAM which we are inclined to accept in the facts of the instant case. We find that assessee had also filed additional evidences before us by producing data from TIPS Data Base maintained by the Customs Department, for the purpose of comparability of the prices of import transactions carried out by the assessee vis- -vis comparable prices on the relevant date or nearer to the date of transactions. This according to the ld. AR covers 94.69% of the total value of import transaction from AEs, which according to the ld. DR covers only 70% of the total transactions. We hold that in either case, substantial amount of transactions gets covered using TIPS Data Base under CUP method. Hence, we admit the entire additional evidences filed by the assessee before us in this regard and deem it fit and appropriate to restore the entire issue to the file of the Ld. AO with the following directions:- (a) CUP should be adopted as MAM being the direct method and being a traditional transaction method which should be preferred over traditional profit method such as RPM and TNMM. (b) TIPS Data Base maintained by the Customs Department which has also been accepted by the Delhi Tribunal in the case of Tilda Riceland Pvt. Ltd. vs. ACIT [ 2014 (3) TMI 63 - ITAT DELHI] should be accepted as a valid database. (c) While comparing the data at or near to the relevant date of transactions with the comparable prices using TIPS Data Base, the ld. TPO is directed to adopt portfolio approach to take both the prices that are favourable to assessee as well as that are adverse to assessee in view of a categorical finding of fluctuating prices for the same product already given by the ld. DR which is not disputed by the ld. DR before us. We hold that the revenue cannot do cherry picking of those transactions which are favouring them and ignore those transactions that are detrimental to them while benchmarking the transactions of the assessee with comparable cases. Addition of sundry creditors u/s.41(1) - HELD THAT:- It is not in dispute that the assessee had not written back those liabilities as no longer payable by crediting to its profit and loss account. The assessee continues to show the said sundry creditor balance as its liability, meaning thereby liability to pay all these sundry creditors had been duly acknowledged by the assessee as on the balance sheet date and even in subsequent years. Hence, the same does not fall under the ambit of cessation of liability. It is for the assessee to decide whether a particular liability had ceased to exist from its books or not. SUGAULI SUGAR WORKS PVT. LIMITED [ 1999 (2) TMI 5 - SUPREME COURT] followed. We direct the ld. AO to delete the addition made u/s.41(1). We direct the ld. AO to delete the addition made u/s.41(1). Disallowance of foreign exchange loss - Non admission of additional evidence - DR vehemently opposed that the additional evidences submitted by the assessee before the Tribunal should not be admitted as sufficient opportunities were provided to the assessee by the lower authorities - HELD THAT:- e are not inclined to accept this argument of the ld. DR as the basic details of forward contracts were indeed given by the assessee before the lower authorities and the same were not properly appreciated with reference to the relevant documents by the lower authorities. The present documents filed were only as a matter of abundant caution and to further strengthen the evidences as detailed supra. Hence, we are convinced that these additional evidences deserve to be admitted and accordingly, deem it fit and appropriate to remand this issue to the file of the ld. AO to decide the impugned issue in dispute before us in the light of additional evidences filed by the assessee together with list of forward contracts on cancellation of which foreign exchange fluctuation loss had been incurred by the assessee need to be verified by the ld. AO and, if it is found by the ld. AO, that the forward contract was indeed entered for trading purposes, then the exchange fluctuation loss should be allowed as deduction Addition of sundry creditor balances - unexplained credit and upheld by the ld. DRP - HELD THAT:- We find lot of force in the alternative argument made by the ld. AR that purchases made from the aforesaid parties involved were accepted by the ld. AO as genuine. Once the purchases have been accepted as genuine, there cannot be any question of disputing the closing balance of the sundry creditors of the very same parties by treating them as unexplained credits u/s.68 - assessee had furnished various evidences which had not been properly appreciated by the lower authorities and certain evidences were also submitted before us as additional evidence for the first time as detailed supra and these additional evidences require to be factually examined by the ld. AO. Hence, we admit those additional evidences in the interest of justice and fair play and deem it fit and appropriate to remand this issue to the file of the ld. AO for denovo adjudication Disallowance of legal and professional fees on an adhoc basis - Admission of additional evidence - HELD THAT:- We find that the assessee had also submitted additional evidences giving various details of legal and professional fees paid to various parties together with their PAN and nature of services rendered by them. These evidences require factual examination of the ld. AO and hence, in the interest of natural justice and fair play, we deem it fit to remand this issue to the file of the ld. AO for denovo adjudication in the light of various additional evidences submitted by the assessee which are admitted herein and decide the issue in accordance with law. Disallowance of interest u/s.36(1)(iii) - HELD THAT:- we deem it fit and appropriate in the interest of justice and fair play to remand this issue to the file of the ld. AO for adjudication in the light of additional evidences filed hereinabove and in the light of decision of RELIANCE UTILITIES POWER LTD. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] and HDFC BANK LTD. [ 2014 (8) TMI 119 - BOMBAY HIGH COURT] . The assessee is at a liberty to furnish further evidences, if any, in support of its contentions
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2019 (10) TMI 436
Salary income - additions towards difference between returned income and as per 26AS - Addition being difference between Form No. 16 as provided by the employer and as per ITR - Denial of natural justice - no opportunity to defend given to assessee - HELD THAT:- AO believed the Form No.16 submitted by the employer of the assessee and disbelieved the Form No.16 submitted by the assessee and treated it as false. However, before treating the same the AO should have verified the correct facts from the employer by calling him and producing records. The perusal of letter received on 23.12.2016 by the AO from Sparsh Technologies (PB-21) shows that they have not furnished individual cheque/ transfer details of the employee on the ground that that same is not traceable in the bank statement. Therefore, the gross salary paid by them and claimed to be at ₹ 87,77,543 is not ascertainable. However, this could be ascertained from individual ledger account of salary or from the payroll registers maintained by the employee. Further, the 26as part And B are not verified by the AO as the assessee has only submitted Form No. 16 with part B. The mismatch between bank account of the assessee and salary credited by the employer needs verification to arrive at correct amount and reason for claiming deduction / exemption under chapter VIA. AO has not allowed proper opportunity of being heard nor allowed opportunity of cross examination of the employer to the assessee before accepting his supply. We find that there was dispute between employee and employer therefore, it was necessary for the AO to examine and allow crossexamination. The principle of audi alteram partem is the basic concept of natural justice. The expression audi alteram partem implies that a person must be given an opportunity to defend himself. This principle is sine qua non of every civilized society. We restore this appeal to the file of the AO for reconsideration all grounds of appeal after allowing proper opportunity of being heard in accordance with law and allowing cross examination of the employer of the assessee to the assessee. The AO may issue summons under section 131 of the Act to the employer and ask to produce salary register and payments details and copy of bank statement to verify the payment made to the assessee - Decided in favour of assessee for statistical purposes.
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2019 (10) TMI 435
Sale of land - whether exigible to Long Term Capital Gain (LTCG) - whether there is a transfer of property on execution of sale agreement ? - HELD THAT:- We have carefully perused the judgment of the Hon ble High Court in the case of Harbour View [ 2018 (12) TMI 213 - KERALA HIGH COURT] was of the view that when vendee is put in possession of property and is in receipt of part payment of sale consideration on execution of sale agreement, there was transfer as per provisions of section 2(47)(v) of the I.T.Act r.w.s. 53A of the T.P.Act, 1882. We hold that the assessee is liable to be taxed for long term capital gain in the current assessment year. It is ordered accordingly. We hold that the assessee is liable to be taxed for long term capital gain in the current assessment year. Addition u/s 41(1) - liability in relation to the sundry creditors is considered as ceased to exist - HELD THAT:- In the impugned order has clearly stated that the liability has seized to exist during the FY 2010-11 itself and the same has been accepted by the appellant during the assessment proceedings. In the above circumstances Assessing Officer was legally correct in assessing a sum u/s 41(1) in the assessment year 2011- 12 Disallowance of depreciation - block of assets whose WDV is NIL- HELD THAT:- AO has worked out the short term capital loss and the same has been allowed u/s 50 of the I.T.Act. As a result, the Written Down Value (WDV) for the block of assets consisting of plant and machinery and building became NIL. Therefore, the disallowance of claim of depreciation of this block of assets, whose WDV is NIL is correct and hence the addition is confirmed. Disallowance of Commission expenses - HELD THAT:- The assessee has not produced any evidence to show that it has incurred any commission expenditure during the relevant assessment year. Hence, we hold that the Assessing Officer has correctly disallowed the claim of commission payment. Appeal filled by assessee dismissed.
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2019 (10) TMI 434
Addition unexplained cash credits - addition made u/s.68 - HELD THAT:- The identity of the creditors M/s Biometrix and nature, source and genuineness of the transaction is established and therefore direct that the addition made by invoking Section 68. See M/S RELIANCE UTILITIES P LTD., AND M/S RELIANCE PORTS AND TERMINALS LTD. [ 2017 (2) TMI 1007 - ITAT MUMBAI] - Decided in favour of assessee.
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2019 (10) TMI 433
Addition made on account of payment of interest - assessee computed the income earning from the said property under the head income from house property - HELD THAT:- From the assessment Order the AO held a sum were not spent on repairs and renovation on the said property and no documentary evidence were filed in respect of the balance amount. Before us also the Ld. AR did not bring on record any evidence contrary to the finding of both the authorities below. The assessee filed paper book but however, no such evidences were filed before this Tribunal showing that the assessee actually incurred the said ₹ 1,00,00,000/- towards repairs and renovation. Therefore, in our view that the finding, both the Authorities below, are to be upheld in the absence of any documentary evidence substantiating the claim of assessee. Alternative claim of assessee that if not deduction is not allowable U/s 24(b) of the Act a deduction may be given U/s 57(iii) - On perusal of the Clause (iii) of Section 57 of the Act it is noted that the deductions are contemplated to the income computed under the head income from other sources, whereas as, in this present case the statement of total income as filed by the assessee in its paper book shows the assessee earned income from house property and claimed standard deduction U/s 24(a) of the Act @ 30% - income of the assessee are computed under the head income from house property and therefore, the application of deductions contemplated in the Section 57 of the Act does not arise at all, as the deductions are available u/s 57 of the Act if the income chargeable under the head income from other sources. Thus, AR's alternative deduction is not acceptable and are rejected. Payment to M/s. Aavishkar Corporation and claiming deduction on payment of interest - there was no evidence to show that a sum of ₹ 1,00,00,000/- spent for renovation and repairs before the Authorities below as well as before this Tribunal - claim of payment of interest as deduction cannot be seen separately to the fact that no evidence showing incurring of expenditure on account of repairs and renovation were not filed before us as well as both the Authorities below. Therefore we find no infirmity in the Order of CIT(A) for the reasons as set out in para no.-5 of impugned Order which is reproduced hereinabove and it is justified. Thus, ground no.-2 filed by the assessee is dismissed. Addition made on account of payment of brokerage - AO held that when the standard deduction U/s 24 of the Act is granted no other deduction is available under the statute and denied the same - HELD THAT:- The claim of granting deduction U/s 57(iii) of the Act was denied by the CIT(A) only on the ground that the deduction is not permissible under law other than the standard deduction of 30% U/s 24(a) of the Act. Admittedly, an amount of ₹ 1,10,300/- has been debited under the brokerage expenses relating to earning income from house property. Therefore, as rightly pointed by the CIT(A) that the deduction U/s 57(iii) of the Act is not permissible when the assessee availed already standard deduction U/s 24(a) of the Act. Therefore, we find no infirmity in the Order of CIT(A) and it is justified. Ground no.-3 raised by the assessee is dismissed. Addition u/s 14(A) r.w.s. 8D(2)(ii) (iii) - contention of the Ld. AR is that the assessee has its own sufficient funds for investments and the disallowance under Rule 8D(2)(ii) (iii) is not maintainable - HELD THAT:- As find from the perusal of balance sheet as on 31.03.2012 that the assessee has balance of fund at ₹ 5,59,80,394.72 and therefore, we find force in the arguments of the Ld. AR that the assessee did not utilize any borrowed funds for its investments and the disallowance made under Rule 8D(2)(ii) is not maintainable. Therefore, taking into consideration the submission of the Ld. AR along with the balance sheet we restrict the disallowance to an extent of ₹ 4,000/- and ₹ 20,152/- made under Rule 8D(2)(ii) is deleted. Ground no.-4 raised by the assessee is allowed in part.
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2019 (10) TMI 432
Waiver of advance as Business Income - said advance was in the nature of revenue as it was sales consideration for the electricity to be supplied in the future and, thus, the adjustment of the advance was to be made by way of supply of electricity - CIT(A) upheld the same by holding that the advance received by the assessee was revenue receipt - HELD THAT:- Advance received by the assessee is revenue advance as is clear from the fact that the same is to be discharged/repaid/adjusted by way of supply of energy to the holding company. We have also perused the decisions relied upon by the AR in defence of his arguments in the case of CIT vs. Mahendra And Mahendra [ 2018 (5) TMI 358 - SUPREME COURT] and Solid Containers vs. DCIT [ 2008 (8) TMI 156 - BOMBAY HIGH COURT] . However, the facts underlying the said decisions are different and the ratio laid down cannot be applied to the present case. In the said decisions, the advance raised by the assessee were of capital in nature and, therefore, they are not applicable to the present case. Accordingly, we uphold the order of the CIT(A) on this issue and the ground raised by the assessee is dismissed. Capital gain computation - not allowing the claim for cost of improvement capitalized with cost of land, while computing the Long Term Capital Gains - HELD THAT:- The issue of developmental expenses of land could not be examined by the AO as the assessee could not produce the documents being damaged and mutilated in the building collapse. Now the learned AR submitted before the Bench that the assessee has genuinely incurred these expenses and the same as to be treated as part of cost of property while computing the cost of land. It is further submitted that the assessee has reconstructed the record, which could be produced before the AO. DR, on the other hand, strongly opposed the arguments of the learned AR by submitted that the assessee has failed to produce the record before the authorities below and no second round should be allowed to the assessee to prove its case. After analysing the facts on record, we observe that it would be in the interest of justice, if the assessee is given one more opportunity to explain its case before the AO by filing the necessary evidences of expenditure incurred on development of the land. - Decided in favour of assessee for statistical purposes.
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2019 (10) TMI 431
Income accrued in India - GSA receipts treated as 'fees for included services' as per Article 12 of the tax treaty between India and USA - HELD THAT:- We find that the expression making available is very much important to decide in which contracting state the amount received for rendering the services relating to the technical know-how is to be taxed. The expression make available is used in the context of supplying or transferring technical knowledge or technology to another. It is different than the mere obligation of the person rendering the services of that persons own technical knowledge or technology in performance of the services. The technology will be considered as made available when the person receiving the services is able to apply the technology by himself. We hold that the assessing officer erred in taxing the service agreement receipt as fee for included services as per Article 12(4) of India USA DTAA for such services in absence of clause in the service agreement that the recipient would be able to perform these services of its own without any further assistance of the assessee. - Decided in favour of assessee
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Customs
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2019 (10) TMI 430
Maintainability of petition - compliance with the requirement of pre-deposit - Maintaining the Bank guarantees further - direction to the respondents 2 3 to discharge the remaining bank guarantees to the petitioner. Whether the petitioner is entitled to seek for return of the remaining bank guarantees over and above the sum representing 7.5% of the duty demand towards pre-deposit as contemplated under Section 129E of the Customs Act, 1962, while preferring the appeal before the CESTAT? HELD THAT:- It is seen that as against the order of adjudication, the petitioner has already approached CESTAT and filed the appeal. There is no dispute to the fact that pending disposal of the appeal, the mandatory requirement for the petitioner is to make pre-deposit of 7.5% of the duty demand. It is also not in dispute that the said mandatory requirement of pre-deposit of 7.5% of the duty demand has also been met with by the petitioner by enforcement of three bank guarantees to the tune of ₹ 1,08,40,000/- and also by appropriation of ₹ 26 Lakhs, already paid by the petitioner on 16.02.2009 - Therefore, it is evident that the statutory requirement of making pre-deposit pending disposal of the appeal has been met with by the petitioner. When such being the factual position, it is to be seen as to whether the respondent/Revenue is entitled to direct the petitioner to keep the remaining bank guarantees alive pending disposal of the appeal. The claim made by the petitioner before this Court that the respondents are not entitled to seek for keeping remaining bank guarantees alive, cannot be sustained for the simple reason that the order of adjudication put to challenge before the Tribunal includes a direction for enforcement of all 29 bank guarantees totally valued at ₹ 3,44,16,000/-, which has to be considered and decided only by the Tribunal. At this juncture, it is relevant to note that making a pre-deposit of 7.5% of the duty demand is the statutory obligation of the appellant/petitioner to maintain the appeal before the appellate forum. Compliance of such statutory requirement itself, cannot be stated as the reason for returning any balance money lying in the hands of the Revenue, which was collected during pendency of the adjudication proceedings, especially, when the Revenue has succeeded, before the Adjudicating Authority in confirming the demand. Therefore, the Revenue cannot be faulted in either retaining the money pending disposal of the appeal or asking the appellant/petitioner to keep the bank guarantees alive. The very agreement of the Revenue to make adjustment of the sum equivalent to 7.5% of pre-deposit out of such bank guarantees itself, is a concession shown and therefore, the petitioner should be satisfied with the same. Petition dismissed.
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2019 (10) TMI 429
Principles of natural justice - Permission for project imports of second hand capital goods for its industrial plant rejected - the request was rejected without any explanation and reasons - HELD THAT:- The respondent is directed to pass a fresh speaking order specifying in detail, reasons to the petitioner for rejection of its application. This exercise be done within a period of two weeks from the receipt of this order - Petition allowed by way of remand.
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2019 (10) TMI 428
Jurisdiction - power to issue SCN - Section 28 of the Customs Act, 1962 - the issue is pending for consideration before the Supreme Court in FORECH INDIA PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS INLAND, CONTAINER DEPOT, TUGHLAKABAD, NEW DELHI [ 2017 (12) TMI 984 - DELHI HIGH COURT ] where it was held that the Tribunal would independently apply its mind on the question of jurisdiction and decide the issue - HELD THAT:- This Court is of the opinion that an identical approach is necessary in this case. Accordingly, following the order in FORECH INDIA PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS INLAND, CONTAINER DEPOT, TUGHLAKABAD, NEW DELHI [ 2017 (12) TMI 984 - DELHI HIGH COURT ], this appeal is allowed and the CESTAT would independently apply its mind to the question of jurisdiction and also decide the appeal on merits, including the aspect of imposition of penalty if any. Appeal allowed in part.
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2019 (10) TMI 427
Jurisdiction - power to issue SCN - Section 28 of the Customs Act, 1962 - the issue is pending for consideration before the Supreme Court in FORECH INDIA PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS INLAND, CONTAINER DEPOT, TUGHLAKABAD, NEW DELHI [ 2017 (12) TMI 984 - DELHI HIGH COURT ] where it was held that the Tribunal would independently apply its mind on the question of jurisdiction and decide the issue - HELD THAT:- This Court is of the opinion that an identical approach is necessary in this case. Accordingly, following the order in FORECH INDIA PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS INLAND, CONTAINER DEPOT, TUGHLAKABAD, NEW DELHI [ 2017 (12) TMI 984 - DELHI HIGH COURT ], this appeal is allowed and the CESTAT would independently apply its mind to the question of jurisdiction and also decide the appeal on merits, including the aspect of imposition of penalty if any. Appeal allowed in part.
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2019 (10) TMI 426
Classification of imported goods - CAXESTER MCT 8040 (Medium Chain Triglyceride 60/40) - IMEX 3/9280 (Caprylic Capriate Triglyceride) - whether classified under CTH 29159090 or under heading No 15162091? - exemption under N/N. 12/2012-Cus at Sl No 165 - HELD THAT:- All the published literature support the findings recorded by the Commissioner in the impugned order to the effect that the goods imported are nothing but re-esetrified fat/ oil. On going through the published literature, and also the fact that as per the rulings relied from U S Customs and Kenya Customs, there are no error in the classification of the goods determined under Chapter 15162091. It is true that the Rulings of the U S Customs and Kenya Customs may not be binding but definitely have great persuasive value as the Classification Code followed by all these Countries, are based on HSN Explanatory Notes at least upto the six digit level, with which the classification system adopted by Indian Customs is also aligned. It is only beyond six digit level that local jurisdictions have their own expansions. Chapter 28 and 29 of the Customs Tariff refer to inorganic and organic chemicals. Every material in this universe will have chemical constituents - organic/ inorganic. Then can by referring to Chemical Structure, every product gets classified in these chapters. Such an argument is nothing but making the entire scheme of tariff redundant and hence the arguments advanced by the appellants need to be rejected on this ground itself. Appeal dismissed - decided against appellant.
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2019 (10) TMI 425
Benefit of N/N. 21/2002 Cus. dated 1.3.2002 as amended and N/N. 6/2006-CE dated 1.3.2006 - Import of anesthesia ventilatory system - Department observed that the goods were anesthesia machines with ventilation facility and therefore, are not eligible to exemption - HELD THAT:- The Bench in the case of M/S. DATEX OHMEDA INDIA PVT. LTD. VERSUS THE COMMISSIONER OF CUSTOMS (APPEALS) [ 2018 (8) TMI 908 - CESTAT BANGALORE] has held that As long as, they are ventilators and used with Anesthesia Systems, exemption should be available. Appeal allowed - decided in favor of appellant.
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2019 (10) TMI 423
Imposition of penalty on Custom Broker firm (CB) - failure in exercising supervision of proper conduct of their employee in transaction of business - HELD THAT:- The Commissioner in his findings in the impugned order has observed that the action against the appellant has been taken on the basis of the Order-in-Original passed by the Commissioner of Custom, Nhava Sheva Port - He has further observed that in the absence of any offence report which alleged violation of Regulation 11 (d), (e), (f), there is no basis to decide the same and further, he has also observed that there is no allegation of willful mis-declaration proved against the appellant in the inquiry conducted by the Inquiry Officer. It was not justified on the part of the Commissioner to impose a penalty of ₹ 50,000/- without holding the appellant guilty of violation of Regulation as alleged against him - Penalty do not sustain - appeal allowed - decided in favor of appellant.
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2019 (10) TMI 422
Valuation of imported goods - Old Used Offset Printing Sheet-Fed Machines - enhancement of declared value - enhancement only based upon the suggestions made by the Chartered Engineer - HELD THAT:- It is well settled law that before taking up the matter for enhancing the value of the imported goods in terms of Valuation Rules, Revenue is under an onus to establish that the transaction value agreed upon between the importer and the supplier of the goods was not reflecting the agreed transaction value. Revenue is required to produce evidence to show that the agreed upon price was not the sole criteria for supply of the goods and there was some under-hand transactions. In the absence of the same, the enhancement proceeding cannot be initiated against the importer. The Hon ble Supreme Court in case of M/S SANJIVANI NON FERROUS TRADING PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, NOIDA [ 2017 (3) TMI 359 - CESTAT ALLAHABAD] has held that assessment in terms of Section 14 of the Customs Act, 1962 has to be done on the basis of price which is actually paid. In the absence of any exercise done by the Revenue to show that the transaction price was not the price actually paid to the supplier of the goods, the enhancement cannot be done. Appeal allowed - decided in favor of assessee.
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2019 (10) TMI 421
Maintainability of appeal - compliance with the requirement of pre-deposit - Section 129 E of the Customs Act - the appellants did not deposited the amount and sought adjournment on various dates fixed for ascertaining compliance with the said order, the Stay Order was ultimately withdrawn - HELD THAT:- It is seen that no deposit stands made by the appellant in spite of the matter being pending in the Tribunal for the last five years. The condition for pre-deposit is being one of the essential conditions for disposal of the appeals, the appeals cannot be heard today on merits and are required to be dismissed for non-compliance with the provisions of Section 129-E of the Customs Act read with the said order as also Interim order passed by the Tribunal. Appeals dismissed for non-compliance with the provisions of Section 129-E of the Customs Act.
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2019 (10) TMI 420
Refund of SAD - benefit of N/N. 102/97-Cus. - denial on the ground of unjust enrichment - the goods were imported and utilized in civil construction, as the respondent assessee is engaged in construction of buildings and selling the same to the various buyers of unit in the said building, being dwelling units - rejection also on the ground that the adjudicator observed that the burden of passing on of SAD is not clear from the facts on record - rejection also on the ground of non submission of sale invoice for resale of the imported goods. HELD THAT:- The Commissioner (Appeals) was justified in holding that in case of imported goods being used for construction of an immovable property, being a case of deemed sale or passing of the property in goods used in construction, no separate tax invoice needs to be issued, as the conveyance is done through deed of sale, duly registered before the competent authority. That in such cases, the requirement of invoice for the sale is substituted by the deed of conveyance. Secondly, there is no case made out of the imported goods being consumed. It is not the case of revenue that the goods are in the nature of fuel or pesticides (consumables), etc., which are not transferable after its use in the civil construction - As there is no tax invoice or any other invoice, hence there is no question of passing on of SAD to the buyer of the dwelling units/commercial units. Refund allowed - appeal dismissed - decided against Revenue.
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Insolvency & Bankruptcy
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2019 (10) TMI 419
Assignment of debt on consideration - Liquidator claimed its debt against Debtor - HELD THAT:- The Liquidator has rightly rejected the claim of this Applicant, because the reason for rejection of the claim is since the Hon ble DRT, Hon ble DRAT, Hon ble High Court of Madras and Hon ble Supreme Court of India held that this Applicant will not have any locus to proceed against the Corporate Debtor for the right of assignment conferred upon by this Applicant by the two banks aforementioned has already been transferred to M/s. Poddar Projects Limited, therefore no right has remained vested with this Applicant to proceed any further against this Corporate Debtor save and except proceeding against the M/s. Poddar Projects Limited to whom this debt was further assigned. Application dismissed.
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2019 (10) TMI 418
Liquidation Order - exclusion of certain period to enable the Committee of Creditors to accept the Resolution Plan - HELD THAT:- Taking into consideration the fact, that Information Memorandum was published and in the absence of any viable or feasible Resolution Plan order of Liquidation was passed. We are not inclined to interfere with the order dated 10th December, 2018.' During the period of liquidation, the Liquidator is to ensure that the Corporate Debtor continues as a going concern and Liquidator is required to act in terms of decision of this Appellate Tribunal in Y. SHIVRAM PRASAD AND ASSET RECONSTRUCTION COMPANY (INDIA) LTD. VERSUS S. DHANAPAL ORS. AND SERVALAKSHMI PAPER LTD. ORS [ 2019 (5) TMI 386 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ] where it was held that It is clear that during the liquidation process, step required to be taken for its revival and continuance of the Corporate Debtor by protecting the Corporate Debtor from its management and from a death by liquidation. The Appellant being the Promoter may move before the Liquidator, if he intends to file scheme in terms of section 230 of the Companies Act, 2013. Appeal disposed off.
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2019 (10) TMI 417
Liquidation of the Corporate Debtor - Section 33(2) of the Insolvency Bankruptcy Code, 2016 - HELD THAT:- When no Resolution Applicant came forward with a viable and feasible resolution plan, the CoC could not get any opportunity to approve the resolution plan, therefore the CoC finally passed unanimous resolution on 20.06.2019 for liquidation of this Corporate Debtor. The Applicant (RP) herein placed this application annexing the resolution passed by the CoC on 20.06.2019 with 100% voting suggesting the same Resolution Professional s name to continue as Liquidator of the Corporate Debtor Company. This Bench hereby orders for liquidation.
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2019 (10) TMI 416
Maintainability of application - initiation of CIRP - operational debt due - existence of a dispute between the parties or not? - HELD THAT:- This adjudicating authority is of the considered view that operational debt is due to the Applicant and in support of that operational creditor has placed copy of the ledger at page Nos. 8 to 10 to the application. That, service is complete and no dispute has been raised by the respondent. That, Applicant is an Operational Creditor within the meaning of sub-section (5) of Section 20 of the Code. The petitioner is able to establish that there exists debt as well as occurrence of default - the Application filed by the Applicant is complete in all respects. Thus, it is a fit case to initiate Insolvency Resolution Process by admitting the Application under Section 9(5)(1) of the Code - petition admitted - moratorium declared.
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2019 (10) TMI 415
Maintainability of application - initiation of CIRP - Corporate Debtor has not paid the outstanding dues - Existence of dispute - HELD THAT:- This adjudicating authority is of the considered view that operational debt is due to the Applicant and in support of that operational creditor has placed copy of the invoices at page No. 11 to 20 to the application. That, there is/are no existing dispute raised by the respondent at any point of time nor there is any proceeding pending viz. suit or arbitration between the parties in any Court of Law. The petitioner is able to establish that there exists debt as well as occurrence of default - the Application filed by the Applicant is complete in all respects. Application admitted - moratorium declared.
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Service Tax
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2019 (10) TMI 414
Imposition of penalty u/s 77 and 78 of Finance Act. 1994 - non-payment of service tax on SWIFT charges by the Commissioner (Appeals) - HELD THAT:- There is nothing available in the case record to indicate that M/s. SWIFT is a Banking company but as its name appears, it handles transmission of financial and other telecommunication net working for the Banks. The allegation against appellant in the show cause is found to be use of service of transmission of financial and other related messages. In common parlance, transfer of data and transmission of messages could be different from each other but as SWIFT charges has been held to be taxable in various judgements, judicial precedent dictates that the same principal is to be respected for all times to come unless over-ruled by a larger Bench or Appellate Forum. Taxability on SWIFT charges, which has been accepted by the appellant who also discharged duty liability, is to be excluded from the purview of this discussion - However, having regard to the fact that taxability on SWIFT charges and application of reverse charge mechanism during the relevant period was in hegemony, imposition of penalty by invoking the extended period is beyond the purview of section 78 (4) unless the intention to evade payment of tax on ground of suppression etc. is established - Section 77 penalty is for not reflecting the taxable service in the periodic Returns. The appeal is allowed to the extent of setting aside penalties u/s 77 and 78 of the Finance Act - Appeal allowed in part.
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2019 (10) TMI 413
CENVAT Credit - input services - Conference/Event Management Service - Maintenance Service for maintenance of D.G. Sets - Liasoning and Documentation Services - output services of telecommunication services - HELD THAT:- As held by Hon ble Bombay High Court in THE COMMISSIONER OF SERVICE TAX VI, MUMBAI VERSUS M/S. DBOI GLOBAL SERVICES P. LTD. [ 2018 (12) TMI 171 - BOMBAY HIGH COURT] the essential condition for admissibility of Cenvat credit on input service is whether the input service is used in providing output service. In the present case, there is no dispute that the above stated three input services were used in providing output service. There is no dispute on the duty paid nature of the same. Further, the question as to whether an input service is required to be subjected to service tax or not, cannot be examined at the time of availment of the same as held by various judicial pronouncements - all the three services are eligible as input services and therefore, service tax paid on the same is available to the appellant as Cenvat credit. Credit allowed - appeal allowed - decided in favor of appellant.
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2019 (10) TMI 412
Commercial Training or Coaching Service - Impart of training to the newly recruited drivers and conductors of State owned transport undertaking and collecting fees for such training - demand of service tax - Profit motive or not - scope of word 'commercial' - Benefit of N/N. 24/2004-S.T., dated 10-9-2004 - extended period of limitation - HELD THAT:- It is not disputed that the appellant has collected fees from the newly recruited drivers and conductors for giving them training. The training imparted was not rendered free of charge. This being the case, as per the Board's Circular No. 59/8/2003-S.T., dated 20-6-2003, the activity of training imparted by the appellant would fail under the category of Commercial Training or Coaching Services . Profit motive or not - scope of word 'commercial' - second contention taken by the Learned Counsel is that the appellant being a Public Sector Undertaking their activity had no profit motive - HELD THAT:- The amendment brought forth on 26-2-2010, has introduced an Explanation wherein, it is stated that commercial means any training or coaching that is provided for consideration irrespective of the presence or absence of any profit motive. The said Explanation is applicable retrospectively, which means, it is applicable from 1-7-2003 onwards. Thus, the second argument of the Learned Counsel also fails. Benefit of N/N. 24/2004-S.T., dated 10-9-2004 - third argument put forward by the Learned Counsel is that the training imparted by them is in the nature of vocational training - HELD THAT:- Vocational training means the training that imparts skills to the candidates in order to enable the candidate to seek employment or undertake self- employment, directly after such training. In the present case, the training is imparted to employees, who have already been recruited by the appellant as drivers and conductors. Therefore, the definition of Vocational Training will not be applicable for the activity of training rendered by the appellant - Thus, there are no grounds to set aside the demand on merits of the case. Extended period of limitation - HELD THAT:- There was some confusion as to the interpretation of the word commercial used in the definition of the said service - Again, the appellant is a State Government Undertaking and there cannot be any mala fide intention on the part of the appellant to evade payment of service tax - there are no ingredients for invoking the extended period. There is, ho positive act of suppression of facts with intention to evade payment of tax established by the department. The issue as to whether a Public Sector Undertaking can be considered to be a commercial concern is also an interpretational one - extended period cannot be invoked. The impugned order to the extent of the demand invoking extended period is set aside - Any demand and interest thereon which falls for the normal period is not interfered - However, the penalties for the normal period are set aside - appeal allowed in part.
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Central Excise
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2019 (10) TMI 411
Maintainability of petition - petitioner submits that in the impugned order there is reference to an O.M. which would apply to all officers and in view thereof the present writ petition has been filed - HELD THAT:- Admittedly no order has been passed with respect to applicant No.2 association or in respect of its members in general - In the absence of any general direction having been passed and in the absence of counsel being able to show how the association is collectively aggrieved by the impugned order, no orders are required to be passed in this writ petition. Petition dismissed.
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2019 (10) TMI 410
Fraudulent availment of CENVAT Credit - sufficient degree of preponderance about the existence of the alleged fact - Department has not to establish a fact with mathematical procession - denial of opportunity to cross-examination - HELD THAT:- The original adjudicating authority has recorded that no request for cross-examination was at all made whereas Commissioner (Appeals) has justified the denial on the ground that the witness who were prayed to be cross-examined, their statements were never retracted rather the proposed demand and the duty liabilities thereof stands already discharged, that too, voluntarily. Law has also been settled that payment of duty under protest does not estoppes the assessee from challenging the illegality. The improved statements of the witnesses without them being cross-examined by the assessee cannot form the basis of confirming the demand against the assessee. Admittedly none of those witnesses are from appellant s company. The evidence otherwise becomes a third party evidence with no cogent corroboration from appellants. Lack of evidence - HELD THAT:- Admittedly, no investigation with M/s. Isha Enterprises has ever been done by the Department to this aspect, except recording the statements of both the partners thereof. The admission coming out of from both the said statements is the sole basis to adjudicate against the present appellants. The adjudicating authority has committed an error because the admission of the maker though can be used against the maker thereof but cannot be used against any other person, except after the said other person is provided an opportunity to cross-examine the maker of admission. As already discussed above, no such opportunity was provided. There seems no justification for remanding the matter to grant an opportunity to the appellants to cross-examine those witnesses because there is no other documentary evidence produced on record by the department to rebut the documents of appellants as that of invoices, GRs etc. which have presumption of correctness attached Annexure to show cause notice clarifies that the sole adjudication is based upon the oral testimonies. The order under challenge is passed under ignorance of the documents which already supports the appellant contentions and are sufficient to falsify the allegations of cenvatable invoices being received by appellant without delivery of goods. Appeal allowed.
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2019 (10) TMI 409
Benefit of N/N. 12/2012 - production and distribution of HSD/MS and SKO to various oil companies like IOCL, HPCL, BPCL etc. - Department has issued a SCN claiming that such SKO which has been used as interface was cleared with an intention to be distributed through Public Distribution System - CBEC Circular No. 636/27/2002-CX dated 22.04.2002 - HELD THAT:- The issue decided in the case of M/S MANGALORE REFINERY AND PETROCHEMICALS LTD, SHRI. VK JAIN GENERAL MANAGER HPCL, TAX AND HINDUSTAN PETROLEUM VERSUS C.C.E. S.T. -MANGALORE [ 2019 (7) TMI 165 - CESTAT BANGALORE] where it was held that What has been cleared by the appellants at the factory is undisputedly, SKO for use in PDS system. If some quantity of the SKO is not used for the intended purposes, after clearance, duty cannot be demanded from the appellants. Appeal allowed - decided in favor of appellant.
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2019 (10) TMI 408
Duty Drawback - fixation of brand rate of duty drawback - Section 129(1)(b) of the Customs Act, 1962 - HELD THAT:- From Section 129(1)(b) of the Customs Act, 1962, it is amply clear that where the impugned order is passed by Commissioner (Appeals) and the issue involved is of payment of drawback, the proper authority before the application is to be made is Revisionary Authority, Govt. of India. Therefore, this Tribunal has no jurisdiction to entertain the appeal relating to issue involved of payment of drawback. This Tribunal has no jurisdiction in present appeals - the appeals are dismissed as non-maintainable.
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2019 (10) TMI 407
CENVAT Credit - input services - services received by the Appellant relate to setting up of an industry or for repair, renovation and modernisation of existing factory - scope of exclusion clause after amendment to the definition of input service prescribed at Rule 2(l) of CENVAT Credit Rules, 2004 after 01.04.2011 - HELD THAT:- Since the evidences could not be placed before the learned Commissioner (Appeals), no findings in this regard could be recorded, analyzing the documents/evidence by him. It is prudent to remand the matter to the Adjudicating authority to examine all the evidences now placed before this Tribunal in the de-novo adjudication to ascertain whether the claim of the Appellant that the services received relates to maintenance, repair, modernisation, renovation etc or otherwise - Appeal is allowed by way of remand to the Adjudicating authority.
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CST, VAT & Sales Tax
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2019 (10) TMI 424
Revision petition - Release of detained goods - revision petition returned contending that there is a delay in filing the same and that the writ petition filed by the petitioner - HELD THAT:- The second respondent is not justified in returning the revision on the reason that it is time barred, especially when this Court has specifically directed the Revisional Authority to consider the contentions raised by the petitioner and pass a speaking order in the revision petition. It is also factually incorrect to say that the above writ petition filed before this Court in M/S. EIS TECHINFRA SOLUTIONS (INDIA) PVT. LTD. VERSUS THE DEPUTY COMMERCIAL TAX OFFICER, CHENNAI [ 2017 (7) TMI 1332 - MADRAS HIGH COURT] , is pending as on date of passing of the proceedings dated 11.07.2018. Therefore, the second respondent is not justified in returning the revision petition. The petitioner shall represent the revision petition with a copy of the order passed by this Court in M/S. EIS TECHINFRA SOLUTIONS (INDIA) PVT. LTD. VERSUS THE DEPUTY COMMERCIAL TAX OFFICER, CHENNAI within a period of two weeks from the date of receipt of a copy of this order. On receipt of such revision, the second respondent shall pass orders on the same on merits and in accordance with law - Petition allowed by way of remand.
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2019 (10) TMI 406
Attachment of Bank Accounts - pendency of the stay application before the first appellate authority - HELD THAT:- The petitioner has preferred an appeal before the first appellate authority being the Joint Commissioner of Commercial Tax (Appeals), Ahmedabad. During the pendency of such appeal, the respondent No.2 has, on 16.5.2019, resorted to powers under section 44 of the GVAT Act and attached the bank account of the petitioner. Thereafter, the stay application of the petitioner has been rejected as the petitioner had not shown willingness to pre-deposit 20% of the demand, against which the petitioner has preferred an appeal before the Tribunal, which is pending. Thus, despite the fact that the stay application of the petitioner was pending hearing before the first appellate authority, the second respondent authority has resorted to the drastic action of attaching the above-referred bank account of the petitioner under section 44 of the GVAT Act. Having regard to the pendency of the stay application in the appeal against the assessment order, the second respondent ought to have stayed his hands and not resorted to the drastic action of attaching the bank account of the petitioner - Impugned order do not sustain - petition allowed.
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