TMI Tax Updates - e-Newsletter
October 24, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Concessional rate of tax - supply of trucks and its spare parts to Public Funded Research Institutions - The supply of trucks and spare parts by the applicant to SHAR, (SDSC SHAR) and LRDE respectively, are eligible for reduced rate of GST as per Notification No. 45/2017
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GST:
The delivery of spares by the applicant to the ultimate consumer on account of M/s. JNSIPL, Maharashtra, where invoice is raised against M/s. JNSIPL, Maharashtra and the goods are delivered to the ultimate consumer of M/s. JNSIPL, Maharashtra, would not amount to a supply to the ultimate consumer under the GST Act. However, the supply is made to M/s. JNSIPL, Maharashtra and invoice needs to be raised on them.
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GST:
Levy of GST - service of providing Hydraulic excavator and ten wheeler tippers to transport RDF (inerts) - there is no involvement of goods and only services are provided. Further the supply is not a “composite supply of goods and services”. - It is a pure supply of services.
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GST:
Supply or not - activity of depositing the timber / wood by the applicant in the Depot - There is no provision in the GST Act for shifting of the tax liability and considering that as a deemed discharge of liability. There are two supplies of timber involved in the chain of transactions, one when the timber is handed over to the depot by the applicant and the second when the timber is sold by the depot. Both are independent supplies in the eyes of the GST Act and hence the tax needs to be discharged at both stages.
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GST:
Rate of tax - nature of supply - supply of printing (of the content supplied by the recipient of supply] is the ancillary to the principal supply of the answer booklet and therefore such supplies would constitute supply of goods falling under respective headings of Chapter 48 or 49 of the Customs Tariff.
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GST:
When an officer functioning under the GGST Act, acts in a highhanded and arbitrary manner in excess of the authority vested in him the same is required to be viewed very seriously. Justice demands that such citizen be compensated for the undue harassment faced by him on account of the unauthorised action of the concerned officer.
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GST:
Profiteering - Sanitary Napkin - Respondent directed to reduce his prices by way of commensurate reduction keeping in view the reduced rate of tax and benefit of ITC which has been availed by him as per Rule 133 (3) (a).
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Income Tax:
TDS u/Sec. 194J /194C - sale of Shrink- Wrapped-packaged software on CD/DVD - Section 119(1), there is no duty cast upon the CBDT to issue clarification and decide the matters which would be essentially in the realm of adjudication before the authorities under the Act.
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Income Tax:
Withholding of refund claim in exercise of powers u/s 241A - Scope and validity of reasons recorded by the AO - the exercise of the powers would not be justified in facts of the case. - Revenue directed to release the refund amount.
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Income Tax:
Validity of reassessment proceedings - Since the jurisdiction of the assessee was not predetermined prior to notice issued U/s 148 of the Act as the assessee has not filed any return of income, therefore, the objection raised by the assessee after the assessment order passed by the A.O., cannot be entertained.
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Income Tax:
Depreciation on the intangible assets/goodwill - the assessee was allowed for depreciation in respect of such goodwill in the 1st year of amalgamation i.e. AY 2006-07. There was no action either u/s 263 or 147 of the Act by the revenue. Therefore we can safely presume that the claim of the depreciation of the assessee in the 1st year has attained finality.
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Income Tax:
Additions towards On money received on sale of property - the addition cannot be made in the hands of the assessee, as denial of opportunity to the assessee to cross-examine the witness whose statements were made the sole basis of the assessment is a serious flaw rendering the order as nullity
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Income Tax:
Validity of reopening of assessment u/s 147 - source of loan given by the assessee - The sort of enquiry, if warranted, ought to have been conducted in the hands of the recipient to justify the source of the loans received and not the payer of the loan, who has given loan out of her regular books of account.
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Income Tax:
Penalty u/s 272A(2)(e) - delay in filing the return of income - Provisions of Sec.139(4A) makes a reference only to provisions of Sec.11 and 12 and not to the provisions of Sec.10(23C)(iiiad) - No penalty
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Income Tax:
Disallowance of expenditure u/s 37(1) - Amount paid as penalty for using electricity during restricted hours - the amount paid being penalty, the AO was justified in disallowing the same.
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Customs:
Valuation of imported goods - Undervaluation and misdeclaration - enhancement of value based on NIDB data - reliance on unauthenticated Email, retracted statements - the very reasons for rejection of transaction value are negated, reference to NIDB data is of no help.
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Central Excise:
SSI Exemption - use of brand name of others - both the firm belong to the same family members. In this position, it cannot be said that one is using the brand name of others.
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VAT:
Plainly, the books of account had been rejected for varied reasons that have been noted and considered by the Tribunal as well. That being a question of fact and findings recorded thereon being based on material and evidence on record, it does not call for any interference by this Court in exercise of revisory jurisdiction.
Articles
Notifications
News
Case Laws:
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GST
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2019 (10) TMI 949
Applicability of GST - man power services provided to Karnataka Rural Road Development Agency - pure services or not - entry no. 3 of Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017 - Government or local authority or a Governmental Authority - whether the KRRDA is a Governmental Authority and whether the contract given by KRRDA to the applicant is in relation to the function entrusted to a Panchayat under article 243G of the Constitution or in relation to the function entrusted to a Municipality under article 243W of the constitution? HELD THAT:- The KRRDA is a Governmental Authority as it is involved in the creation of rural infrastructures like Roads in the villages which is a function entrusted to a Panchayat under Article 243W of the Constitution and is established by the Government - The words in relation to is defined in the Oxford Dictionary as to mean in the context of or in connection with . When two activities are directly linked to each other, then they are said to be in connection with or in the context of. The activity of providing manpower like Data Entry Operators, Field Engineers, Diploma Field Engineers, Senior Software Professionals, Software Engineers for IT Cell, Graduate Assistant, Office Assistant, Peon and Watchman are to manage the back end work and managing the offices of the KRRDA and hence are not involved directly in the activity of maintaining or construction of roads. This activity is not directly connected to the work entrusted to a Panchayat under Article 243G of the Constitution, is only for a support service which is not project specific and hence cannot be considered to be by way of an activity in relation to a function entrusted . The contract of the applicant with KRRDA cannot be covered under the entry no. 3 of the Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017.
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2019 (10) TMI 948
Classification of supply - Composite supply or not - Whether the supply of turn-key Engineering, Procurement Construction (EPC) Contract for construction of solar power plant wherein both goods and services are supplied can be construed to be a composite supply in terms of Section 2(30) of CGST Act, 2017? - taxable at 5% GST. HELD THAT:- In the pertinent case, it is clear that the applicant is making a supply which consists of supplies of goods and supplies of services which are naturally bundled and supplied in conjunction with each other in the ordinary course of business and one of which is a principal supply. Hence this is a composite supply. Taxability of EPC contract of Solar Power Generating System - HELD THAT:- The Solar Power Generating System is goods and if it is supplied as goods would attract the tax at the rate of 5% (2.5% CGST and 2.5% SGST) as per entry no. 234 of Schedule I of Notification No. 1/2017 - Central Tax (Rate) dated 28.06.2017. But in the pertinent case, what is supplied is not goods as such. It is a composite supply involving a creation of an immovable property which is part of the contract of setting up of a Solar Power Generating System and hence would be covered under Works Contract. This is distinguished in the above two entries and hence the work proposed to be done by the applicant is squarely covered under serial no. 38 of Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017 as amended by as amended by Notification No. 27/2018 -Central Tax (Rate) dated 31.12.2018 and attracts tax as per that entry and not under Serial No.234 of Schedule I of Notification No. 1/2017 - Central Tax (Rate) dated 28.06.2017. The contention of the applicant that the solar power plant is not an immovable property is not acceptable for the reason that all the components cannot be recovered on retrieval of the plant and without those elements the solar power plant cannot be stated to work properly. What can be retrieved without cannibalization is only the solar panels and certain other elements which are only part of the entire project and hence the contention of the applicant cannot be accepted.
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2019 (10) TMI 947
Concessional rate of tax - supply of trucks and its spare parts to Public Funded Research Institutions - Applicability of N/N. 45/2017 - Central Tax (Rate) dated November 14th, 2017 - HELD THAT:- The applicant intends to supply trucks and spare parts of automobiles to various research institutions - Notification No. 45/2017 - Central Tax (Rate) dated 14.11.2017 exempts specified goods from so much of the central tax leviable thereon under section 9 of the said Act, as is in excess of the amount calculated at the rate of 2.5% when supplied to the institutions specified, subject to the conditions specified in the corresponding entry. The applicant has received orders from Satish Dhawan Space Centre SHAR (SDSC SHAR) for supply of trucks and order from Electronics Radar Development Establishment (LRDE) for supply of spare parts for trucks. The applicant has also submitted a copy of Exemption Certificate issued by the SDSC SHAR wherein the competent officer has certified that SDSC SHAR is a public funded research institution. Similarly the Electronics 8 Radar Development Establishment (LRDE) has also provided the necessary exemption certificate from the competent authority. These facts indicate that the first condition is satisfied in the instant case. Notification No. 45/2017-Central Tax(Rate) dated November 14, 2017 is applicable on supply of trucks and its spare parts to Public funded research institutions - The submissions of the applicant regarding the nature of the other recipients needs to be verified with reference to the research activity done and also whether they are recognised as a Public Funded Research Organisation and some of the companies to which the applicant intends to supply may not be covered under the term Research Organisation like Bharat Electronics Ltd,. Bharat Heavy Electricals Ltd., Hindustan Aeronautics Ltd. The supply of trucks and spare parts by the applicant to Satish Dhawan Space Centre (SHAR), (SDSC SHAR) and Electronics Radar Development Establishment (LRDE) respectively, as specified in the application, are covered under the description of goods specified in Notification No. 45/2017 - Central Tax (Rate) dated 14.11.2017 and hence are eligible for a reduced rate of tax under the CGST Act and similarly under KGST Act and IGST Acts.
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2019 (10) TMI 946
Supply or not - delivery of spares by JNSIPL, Karnataka - whether constitutes supply under Schedule I of the CGST Act, 2017? - HELD THAT:- The transaction of the applicant is examined and found that the contract of AMC is between the JNSIPL, Maharashtra and the ultimate consumer and the applicant is not a party to it. JNSIPL, Maharashtra is paying the taxes on these services and they shall be responsible for the delivery of the services to the consumer - The applicant, on request for goods to execute the contractual obligation, delivers the goods from his account to the ultimate consumer and raises the invoice on JNSIPL, Maharashtra. The applicant charges IGST on the invoice as it is an interstate supply, which is deemed to be a supply even without consideration. The delivery of spares by the applicant to the ultimate consumer on account of M/s. JNSIPL, Maharashtra, where invoice is raised against M/s. JNSIPL, Maharashtra and the goods are delivered to the ultimate consumer of M/s. JNSIPL, Maharashtra, would not amount to a supply to the ultimate consumer under the GST Act. However, the supply is made to M/s. JNSIPL, Maharashtra and invoice needs to be raised on them.
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2019 (10) TMI 945
Liability of IGST on importer - ocean freight on the case of CIF basis contract - Reverse Charge Mechanism - HELD THAT:- This issue is sub-judice as the same issue is pending before the Hon ble High Court of Gujarat and this ruling is subject to the outcome of the decision of the Hon ble Court. Subject to the final decision in the issue by the Hon ble Court, it is ruled that IGST should be paid by the importer on ocean freight in ease of CIF basis contract, under Reverse Charge.
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2019 (10) TMI 944
Levy of GST - pure supply - Government entity - service of providing Hydraulic excavator and ten wheeler tippers to transport RDF (inerts) from KCDC processing plant Bommanahalli to Bellahalli Land fill site near Yelahanka) done to government organization - rate of tax - exemption by way of Entry No.3 of the Notification No 12/2017 - Government organisation or not - composite supply of goods and services - HELD THAT:- The entire work involves only labour and services and does not involve any goods. It is a composite supply under the meaning of composite supply as defined in section 2(30) of the CGST Act involving only services. It is not a works contract as there is no supply of goods but only a supply of services, even if it is considered as leasing of machineries and vehicles or transportation of goods - Eligibility for exemption by way of Entry No.3 of the Notification No 12/2017 - HELD THAT:- It is clear from the nature of work that the activity does not involve any supply of goods but only services - M/s KRIDL is established as a Company by the Government of Karnataka and is entrusted the work of creating assets in the State of Karnataka and hence is not a Governmental Authority as per the definition of the term - also the acivity is an activity related to the solid waste management which is a function entrusted to a Municipality under Article 243W of the Constitution - All the three conditions of notification satisfied - the services provided by the applicant to KRIDL are covered under the entry no.3 of Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 w.e.f. 25.01.2018. It can be seen from the nature of activity of the applicant that there is no involvement of goods and only services are provided. Further the supply is not a composite supply of goods and services . Hence the activity of the applicant is not covered under entry 3A of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 as amended by Notification No. 2/2018 - Central Tax (Rate) dated 25.01.2018.
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2019 (10) TMI 943
Supply or not - activity of depositing the timber / wood by the applicant with the Government Timber Depot for disposal as per the provision of Section 104 of the Karnataka Forest Act - levy of GST for keeping the goods at the custody of the auctioneer i.e. Government Timber Depot - HELD THAT:- The supply of goods by the applicant to the depot for further supply on behalf of the principal would also amount to a supply and the applicant has to issue a tax invoice and discharge GST on the same - Hence the transaction of depositing timber with the Government Timber depot for disposal would amount to supply within the meaning assigned to it under the GST Act and GST is chargeable on the value of such supply. Valuation - on what value GST is chargeable in the invoice by the applicant? - HELD THAT:- Section 15(4) of the CGST Act, 2017 mandates that where the value of supply of goods cannot be determined as per Section 15(1) then the same shall be determined in such manner as may be prescribed - the value of supply of timber to the Depot by the applicant shall be the open market value or the value as may be determined under rule 30 or rule 31 in that order. Whether the payment of GST on the full amount by the auctioneer i.e. Government Depot, will be the complete discharge of liability in the hands of the applicant and hence the applicant is not required to charge any GST while depositing as well as receiving the net consideration from the auctioneer? - HELD THAT:- There is no provision in the GST Act for shifting of the tax liability and considering that as a deemed discharge of liability. There are two supplies of timber involved in the chain of transactions, one when the timber is handed over to the depot by the applicant and the second when the timber is sold by the depot. Both are independent supplies in the eyes of the GST Act and hence the tax needs to be discharged at both stages. Time of supply of timber - HELD THAT:- The time of supply is the time of removal of timber/ wood by the applicant for supply to the depot. If the transaction is considered as supply in the hands of the applicant when consideration is not fixed / known at the time of supply, when would be the time of supply and when the applicant has to remit the tax on what value? - HELD THAT:- It is pertinent to note that the time of second supply involving timber i.e. by the depot (agent) to the third party-does not have any impact on the value or time of supply of the first supply, i.e. supply of timber/ wood by the applicant to the depot for sale. Should GST be paid by the applicant on supervision charges collected by the Government Timber Depot under Reverse Charge as per the SI.No.5 of N/N. 13/2017? - HELD THAT:- Since the activity of providing supervision services is not covered under the exceptions in entry 5, the same is liable to tax under reverse charge and this is subject to the condition that the Government Timber Depots are Government Departments, the applicant is liable to pay tax on the receipt of supervision services. In case the Government Timber Depots are not Government Department then such reverse charge mechanism shall not be applicable and the Government Timber Depot shall collect the GST and issue invoice to the applicant.
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2019 (10) TMI 942
Rate of tax - works contract - offset printing of Answer booklets, centre pinning and hand numbering - classified under HSN Code No. 998912 or otherwise? - taxable at 12% or 18%? HELD THAT:- In the instant case applicant is supplying answer booklets printed with water mark supplied by the board made using physical inputs including paper belonging to the printer. Here, supply of printing (of the content supplied by the recipient of supply] is the ancillary to the principal supply of the answer booklet and therefore such supplies would constitute supply of goods falling under respective headings of Chapter 48 or 49 of the Customs Tariff. Therefore answer booklets provided by the applicant to the Karnataka State Secondary Education Board falling under the Heading 4802 of entry 112 of the scheduled II to the notification 01/2017 Central tax (Rate) dated 28/06/2017 taxable at 6% CGST and 6% SGST.
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2019 (10) TMI 941
Maintainability of condonation of delay application - period of limitation in filing first appeal - assessee had filed first appeal that came to be dismissed as beyond time - HELD THAT:- The issue in the present case decided in the case of M/S SHAILENDRA EAT UDYOG VERSUS STATE OF U.P. AND 3 OTHERS [ 2019 (1) TMI 1418 - ALLAHABAD HIGH COURT] where it was held that Consequently and clearly the first appeal filed by the petitioner against the order dated 03.12.2018 was beyond the period for which delay may have been condoned, by about nine days, there is no error in the order of the appellate authority dismissing the appeal as time barred. The present writ petition is also allowed on the same terms and conditions.
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2019 (10) TMI 940
Release of confiscated goods with vehicle - HELD THAT:- Issue rule, returnable on 21.11.2019. By way of ad-interim relief, the respondents are directed to forthwith release the conveyance with the goods contained therein. The petitioner shall file an undertaking before this court within a week from today to the effect that in case he does not succeed in the petition, he will pay the amount computed in the impugned order dated 5.10.2019 issued under section 130 of the Central Goods and Service Tax, 2017, without prejudice to his right to challenge the impugned order before the appropriate forum.
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2019 (10) TMI 939
Detention of conveyance alongwith the goods - the petitioner has already deposited the amount of tax and penalty - HELD THAT:- Having regard to the fact that in connection with the detention of the conveyance as well as the goods contained therein, the petitioner has already deposited the amount of tax and penalty, by way of interim relief, the second respondent is directed to forthwith release the conveyance in question together with the goods contained therein, subject to the final outcome of the petition. Stand over to 20.11.2019.
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2019 (10) TMI 938
Confiscation of goods alongwith conveyance - detention on the ground for verification of bilty - section 129(1) of the CGST Act - HELD THAT:- The reasons for issuance of the notice for confiscation under section 130 of the CGST Act in Form GST MOV-10 are that upon preliminary verification of the dealer online, 42 e-way bills have been generated in December 2018, wherein, IGST has been shown to ₹ 3,64,30,800/- and it appears that, dealers has not paid the same or that the purchases are not genuine. If that be so, nothing prevents the respondents from taking appropriate action against petitioner in accordance with law under the relevant provisions of the CGST Act. However, when the conveyance in question was carrying the goods which were duly accompanied by documents and no discrepancy was found in connection therewith, there was no reason for the third respondent to confiscate the same. The impugned order of confiscation passed by the third respondent under section 130 of the CGST Act, therefore, cannot be sustained. The order dated 08.04.2019 issued by the third respondent under section 130 of the CGST Act as well as the order of demand of tax and penalty dated 29.01.2019, issued in Form GST MOV-09 are hereby quashed and set aside and the third respondent is directed to forthwith release the conveyance and goods in question - Petition allowed.
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2019 (10) TMI 937
Refund claim for the past periods - non-operationalization of the GSTR Forms-2, 2A 3 - petitioner submits that due to continuing stalemate, a huge amount of nearly 923 crores is stuck up as credit to the petitioner, which cannot be utilized - HELD THAT:- We grant 10 days time to the respondents to file their response to the application while making it clear that no further time shall be granted and this application shall positively be taken up for consideration on the next date of hearing. List on 07.11.2019.
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2019 (10) TMI 936
Release of seized car as well as mobile phones - sub-section (2) of section 67 of the Gujarat GST Act, 2017 - wrongful availment of input tax credit - it is also alleged that the petitioner indulged in such activities attracting tax/input tax credit amounting to more than ₹ 10 -15 crores - HELD THAT:- Sub-section (2) of section 157 of the GGST Act gives immunity to an officer appointed or authorised under that Act for anything which is done or intended to be done in good faith under that Act or the rules made thereunder. Thus, an officer is protected provided he is authorised to do something under the GGST Act and provided such act has been done in good faith. Therefore, it was incumbent upon the respondent No. 4 to show whether he has been authorised by a person not below the rank of Joint Commissioner to carry out the search and that the action taken by him was in good faith failing which, he is not entitled to the immunity provided under section 157 of the GGST Act. When an officer functioning under the GGST Act, acts in a highhanded and arbitrary manner in excess of the authority vested in him the same is required to be viewed very seriously. Justice demands that such citizen be compensated for the undue harassment faced by him on account of the unauthorised action of the concerned officer. It is evident as to why the petitioner has taken such a stand. The said request of the petitioner seems to emanate from the fact that the petitioner who is covered by the Goods and Services Tax Act has to deal with the officer concerned day in and day out and is, therefore, afraid of taking any action against him out of fear of facing reprisal for his action as the entire department would be up in arms against him and he would have to face untold harassment in future. Therefore, at the request of the petitioner, the court refrains from passing any order of exemplary costs. The impugned order of seizure dated 25. 10. 2018 passed by the respondent No. 4, is hereby quashed and set aside and the respondent NO. 4 is directed to forthwith release the vehicle as well as to mobile phones of the petitioner and hand them over to him - Petition allowed.
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2019 (10) TMI 935
Profiteering - purchase of two flats in the project River View Heights - benefit of input tax credit by way of commensurate reduction in price not passed on - contravention of section 171 of CGST Act - HELD THAT:- From the perusal of the DGAP's Report it is revealed that the ratio of ITC to the taxable turnover during the pre-GST period was to the extent of 2.37% as compared to post-GST period of 2.65% thus, there was net benefit of 0.28% of ITC to the Respondent. Based on this net benefit and the amounts collected from the home buyers during the post GST period, an amount of ₹ 2,13,468/- has been computed as the profiteered amount as per Annexure-13 of the DGAP report. The Respondent has raised no objection a ins computation of the above amount made by the DGAP vide Annexure-13 and hence it can be relied upon - Respondent has also not denied the fact that there has been net benefit of ITC during the post GST period and has vide submissions dated 04.05.2019, suo-moto decided to pass on the benefit as computed by the DGAP in his Report dated 24.04.2019, which is ₹ 2,13,468/- within due period as was mentioned in the Report. This Authority under Rule 133 (3) (a) of the CGST Rules, 20170rders that the Respondent shall reduce the prices to be realized from the buyers of the flats commensurate with the benefit of ITC received by them as has been detailed above. Since the present investigation is only up to 31.10.2018 any benefit of ITC which accrues subsequently shall also be passed on to the buyers by the Respondents - The concerned CGST or SGST Commissioner shall take necessary action to ensure that the benefit of additional ITC is passed on to the eligible house buyers in future. Penalty - HELD THAT:- The Respondent has denied benefit of ITC to the buyers of the flats being constructed by him in his River View Heights Project in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has thus resorted to profiteering. Hence, he has committed an offence under section 171 (3A) of the CGST Act, 2017 and therefore, he is apparently liable for imposition of penalty under the provisions of the above Section - a SCN be issued to him directing him to explain why the penalty prescribed under Section 171 (3A) of the above Act read with Rule 133 (3) (d) of the CGST Rules, 2017 should not be imposed on him.
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2019 (10) TMI 934
Profiteering - Sanitary Napkin - whether the benefit of reduction in the rate of GST on supply of the product had been passed on by the Respondent to the recipients? - Penalty - HELD THAT:- The quantum of profiteering illegally obtained by the Respondent is determined as ₹ 42,52,370/- as per the provisions of Rule 133 (1) of the CGST Rules, 2017 as the Respondent has failed to passed on the benefit of rate reduction to his customers. Accordingly, the Respondent is directed to reduce his prices by way of commensurate reduction keeping in view the reduced rate of tax and benefit of ITC which has been availed by him as per Rule 133 (3) (a). The Respondent is further directed to deposit the above amount as per the provisions of Rule 133 (3) (c) in the ratio of 50:50 in the Central or the State CWFs of the State of Madhya Pradesh, along with the interest @ 18% till the same is deposited. Penalty - HELD THAT:- The Respondent has denied benefit of rate reduction to the buyers of the product Sanitary Napkin in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has thus resorted to profiteering, which is an offence under section 171 (3A) of the CGST Act, 2017 and therefore, he will be apparently liable for imposition of penalty under the provisions of the above Section - Accordingly, a Show Cause Notice will be issued to him directing him to explain why the penalty prescribed under Section 171 (3A) of the above Act read with Rule 133 (3) (d) of the CGST Rules, 2017 should not be imposed on him. Application disposed off.
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Income Tax
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2019 (10) TMI 933
Reopening of assessment against dead person - father of the petitioner expired on 12.6.2016 and impugned notice was issued on 28.3.2018 - As decided by HC [ 2019 (4) TMI 784 - GUJARAT HIGH COURT] no valid notice can be issued against a dead person, the impugned notice is required to be quashed and set aside - HELD THAT:- Special leave petition is dismissed. Pending application stands disposed of.
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2019 (10) TMI 932
Extraordinary and discretionary jurisdiction of High Court - maintainability of appeal - Single Judge directing the appellant to exhaust the statutory remedy - whether the appeal requires to be decided on merit or not? - Section 115-O invoked unilaterally and without adjudication by treating the transactions as that of dividend, which would not come within the purview of Section 2(22)(d) - HELD THAT:- As a sum of ₹ 2806,40,15,294/- stands deposited and invested in the form of fixed deposit receipts. Mr. Zoheb Hossain, learned Advocate appearing for the Department prays for and is granted two weeks time to put in affidavit in reply. Rejoinder, if any, be filed within a week thereafter. Considering the facts and circumstances on record, we deem it appropriate to list the matter for final disposal on 14.11.2019.
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2019 (10) TMI 931
Assessment u/s 153A - allegation of generation of unaccounted money and also transfer of such money in exchange of share capital - proving any accommodation entry - reliance on third party statement - CIT(A) and ITAT deleted the additions - HELD THAT:- SLP Dismissed.
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2019 (10) TMI 930
Scope of assessment in the remand back proceedings - addition under the head Short Term Capital Gains other than under Section 111A - HELD THAT:- Assessing Officer in this case has traveled beyond the scope of the remand order of the Tribunal and reconsidered the issues with regard to the income from Short Term Capital Gains under Section 111A and Brought/forward losses of previous assessment years and thus, exceeded his jurisdiction over and above the issue which was remanded. Assessing Officer himself has enlarged the scope of the remand without confining himself to the issue which was remanded by the Tribunal. As rightly pointed out by the petitioner under the guise of passing fresh order in pursuant to the order of remand, AO has in effect reopened the uncontested issues and passed fresh order on those issues as well, which were not the intent of the Tribunal, while remitting the matter back to the AO. As rightly pointed out by the learned counsel for the petitioner, what the AO could not have achieved by reopening the assessment under Section 148 in view of lapse of time, sought to achieve the same under the guise of passing fresh order of assessment in pursuant to the remand by the Tribunal. Certainly, the above act of the AO is impermissible under law and consequently, cannot be justified or sustained. No doubt, the learned counsel for the Revenue contended that all the issues are interlinked. No pleading to that effect in the counter filed herein or advancement of argument before the Tribunal. Hence, such contention is liable to be rejected. Thus, this Court is of the view that the assessment made by the Assessing Officer in respect of those two issues viz., income from Short Term Capital Gains under Section 111A and Brought/Forward losses for the assessment years 2006-2007 to 2009-2010 cannot be sustained as valid in law, since such exercise was beyond the scope of the order of remand. While considering the issue which was agitated by the Assessee before the Appellate forums viz., Income from Short Term Capital Gains other than under Section 111A and consequential addition of ₹ 25,05,304/- is concerned, it is the specific case of the petitioner that the Assessing Officer has changed the head from Short Term Capital Gains to Undisclosed Sources under Section 68 , without putting the petitioner on notice and hearing them. It is not in dispute that before passing the impugned order, the petitioner was not put on notice and given an opportunity of hearing as well. Since it is seen that the disputed addition of ₹ 25,05,304/- was reiterated by the Assessing Officer, however, taxing the same as income on a different head viz., from Undisclosed Sources under Section 68, instead of Short Term Capital Gains other than one under Section 111A, without issuing notice to the petitioner to that effect, this Court is of the view that the said issue can be considered by the Assessing Officer once again, however, by putting the petitioner on notice. Matter is remitted back to the Assessing Officer to redo the assessment only in respect of the issue relegated by the Tribunal while remitting the matter viz., income from Short Term Capital Gains other than under Section 111A and consequential addition after giving a notice and an opportunity of hearing to the petitioner.
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2019 (10) TMI 929
Summons issued to the petitioner by the Assistant Director of Income Tax (Inv.)-Unit 5(2) u/s 131 - petitioner challenged the jurisdiction of the ADIT (Inv.) to issue the said summons on by claiming that the petitioner is not assessed at Delhi - petitioner has been directed to appear in response to the said summons for the purpose of recording his personal deposition and to furnish the computation of income - notice has been issued to the petitioner u/s 127 proposing to transfer the PAN of the petitioner from ITO NCW 5 (2) to DCIT/ ACIT, Central circle 18, New Delhi HELD THAT:- The exercise undertaken by the department through its investigative wing is different from the assessment process which is undertaken by a different wing of the department. So far as investigation is concerned, on a plain reading of Section 131(1) and 131(1A), it is clear to us that the Assistant Director of Income Tax, (Inv.)-Unit 5(2), New Delhi was competent to issue the summons to the petitioner in pursuance of the search undertaken at the premises of the petitioner on 07.04.2019 by the same investigating wing. There is nothing to suggest that the same investigating wing at New Delhi would undertake the assessment proceedings. In view of the aforesaid, we find no merit in this petition and is, accordingly, dismissed. Mr. Nandrajog submits that the petitioner reserves his rights to challenge the search and seizure on several other grounds, which have not been urged in this petition. We make it clear that we have not examined any other ground for challenging of the search and seizure by the investigating wing of the Income Tax Department at New Delhi.
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2019 (10) TMI 928
TDS u/Sec. 194J /194C - sale of Shrink- Wrapped-packaged software on CD/DVD - Petitioner seeks a direction that the Central Board of Direct Tax (CBDT)should issue a direction to Shrink-Wrapped-packaged software on CD/DVD, cannot be subjected to tax deduction at source under Sections 194J/194C - HELD THAT:- In this case, the obligation to deduct tax at source under the Act is on the Petitioner s customers under Section 194C/194J of the Act. In all cases where it is of the view that the payment made is of the nature specified under Sections 194C/194J of the Act, it is liable to deduct tax at source and pay it to the Revenue. This non-deduction of tax by the Petitioner s customers visits it with consequences u/s 201. Therefore, in such a case, the legal right if any is of the customer who is required to deduct tax at source. In any case, there is no legal right in the Petitioner and/or its customers to compel the CBDT to give a ruling on the issue of tax deduction at source. It is clear in terms of Section 119(1) of the Act, there is no duty cast upon the CBDT to issue clarification and decide the matters which would be essentially in the realm of adjudication before the authorities under the Act. The CBDT would also be barred for issuing of instruction in respect of the Petitioner s application b virtue of the proviso (a) to Section 119(1) - writ of mandamus can not be issued, directing the CBDT to consider and decide Petitioner s representation/ application. We decline to entertain this Petition.
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2019 (10) TMI 927
Revision u/s 263 - Show cause notice proceeds on the basis that the books of accounts, transaction accounts of share trading carried out by the assessee vis-a-vis D-mat accounts have not been examined by the AO during the course of assessment proceedings - HELD THAT:- In the assessment order AO has recorded that he examined D-mat account in order to verify the share trading activities claimed by the assessee. Moreover the before passing the assessment order, sale, purchase and closing stocks were also examined by the AO. Thus, the basis to invoke section 263 of the Act factually did not exist as there was due enquiry by the AO during the assessment proceedings leading to the assessment order dated 28 March 2014. Thus, it is amply clear that the Assessing Officer has applied his mind while accepting the claim of the Respondent of operating loss making the proceedings under section 263 of the Act bad in law. In any event, the view taken on fact by the Assessing Officer is a possible view and the same is not shown to be bad. - Decided against revenue.
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2019 (10) TMI 925
Redemption fine allowable as business expenditure u/s 37 - review petition is argued principally on the ground that the additions made by the assessing officer in the hands of the assessee were under Section 69C - HELD THAT:- The evidence necessary to examine this alternative contention was on record. However, the Tribunal had not carried out proper fact finding inquiries and therefore, the entire issue should be placed before the Tribunal for fresh consideration. It is also argued that the ratio of the decision in the case of Haji Aziz Abdul Shakoor Bros. Vs. CIT [ 1960 (11) TMI 15 - SUPREME COURT] would dilute in view of the addition of explanation to Section 37(1) of the Act. No reason to entertain this review petition. Firstly, it is always open for an assessee to raise an alternate contention and if such contention is purely one of law, also at appellate stage. However, the assessee must either rely on the facts already brought on record or within the permissible limits, request the appellate Commissioner or the Tribunal to permit additional evidence to be brought on record. Thus, in the judgment in question having examined all aspects of the matter, there is no need to remand the appeal before the Tribunal. Further, the implications of the judgment of the Supreme Court in case of Haji Aziz (supra) in the light of further development of law has been examined in the said decision before arriving at final conclusions. This has not come for review. In the result, review petition is dismissed.
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2019 (10) TMI 924
Trading addition on account of low yield ratio in comparison to the preceding year - CIT-A sustained part addition - HELD THAT:- Low production of oil from the oil seeds in comparison to the earlier years. We find variation in the yield ratio is very meager and in some of the cases it is less than 1%. Once the difference is very negligible which can be due to various factors and reasons including the quality of seed, oil contents in the seeds due to climate condition for a particular season which affects the quality of crop itself. Ignoring all these factors as explained by the assessee in the reply to the show cause notice of the A.O., the addition made by the A.O. and sustained by the ld. CIT(A) is not justified. CIT(A) has also not given any basis for sustaining the addition of ₹ 3.00 lacs and therefore, such an ad hoc addition without specifying the basis is not permissible, accordingly, the addition sustained by the ld. CIT(A) is deleted. Disallowance of expenditure incurred on transportation - HELD THAT:- The assessee has separately claimed fuel expenses, delivery expenses of ₹ 2,85,206 in its P L account, therefore, even if the said claim of loss on sale of vehicle is wrongly or mistakenly shown instead of delivery expenses, it cannot be accepted when the assessee has already claimed the delivery and fuel expenses separately. Hence, we do not find any error or illegality in the order of the ld. CIT(A) qua this issue. Disallowance of 10% of certain expenses - A.O. has disallowed 10% of the telephone expenses on the ground that the assessee did not maintain any call register and in absence thereof, personal element cannot be ruled out - HELD THAT:- Once the telephone expenses are verifiable from the telephone bills itself then this cannot be a case of unverifiable expenses. Further the personal element is only suspected by the A.O. and not found. Even otherwise, when the telephones are used in the business premises of the assessee and the expenses are verifiable from the telephone bills itself then the same cannot be disallowed on mere suspicion. Travelling expenses were also disallowed as 10% on the ground of personal element. The A.O. has not doubted the expenditure incurred by the assessee and if the expenses are not found to be excessive having regard to the nature of business and volume of business of the assessee then such an ad hoc disallowance on personal element is not justified. Building repair and maintenance expenses, the A.O. has made 10% disallowance on account of non-verifiability of the expenses as the same were paid in cash and supported with self-made vouchers - Since this expenditure was incurred in cash and the assessee has produced only self-made vouchers then in absence of supporting documentary evidence, 10% disallowance of expenditure is justified. Other office expenses - assessee has shown office expenses and most of these were paid in cash and supported by the self-made vouchers. However, it is to be noted that if the expenditure is not found to be excessive and it is inevitable for the business of the assessee then the petty expenses incurred by the assessee on day to day basis is bound to be incurred in cash and without any vouchers from the other side due to such a small and petty expenses. Once the said expenditure is not found to be excessive having regard to the nature of business and volume of the business of the assessee then an ad hoc disallowance is not justified. Accordingly except 10% of building repair and maintenance expenses, all other disallowances made by the A.O. and sustained by the ld. CIT(A) are deleted.
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2019 (10) TMI 923
Reopening of assessment u/s 147 - assessee had returned a loss in the original return, which has been converted into positive income by virtue of the income, computed during the assessment completed u/s 147- HELD THAT:- Reasons for being satisfied about the escapement of income but need not record a finding that there is escapement of income. By issuance of a notice u/s 148, the AO has only got the jurisdiction to verify the claim of the assessee with regard to the evidence filed and the allowability of such a claim and the AO can give a finding about the escapement of income only after the verification of facts. In the final assessment order u/s 147, there may or may not be addition to the returned income but that would not invalidate the proceedings u/s 147. In a catena of decisions, the Hon'ble High Courts and the Hon'ble Supreme Court have held that at the time of issuance of notice u/s 148, the AO has only to be prima facie satisfied about the escapement of income. As rightly pointed out by the learned DR, the assessee had returned a loss in the original return, which has been converted into positive income by virtue of the income, computed during the assessment completed u/s 147. This would definitely have an impact on the MAT credit to be given to the assessee in the subsequent A.Ys. But, as far as the relevant A.Y is concerned, there is no change in the assessed income and no prejudice is caused to the assessee as far as its taxable income for the relevant A.Y is concerned. Therefore, the additional ground of appeal No. 1.6 is also rejected. As regards the decision of the Hon'ble Delhi High Court in the case of Nalwa Investment Ltd [ 2010 (8) TMI 40 - DELHI HIGH COURT] we find that it is a case of penalty u/s 271(1)(c) and therefore, it is not applicable mutatis mutandis to the case before us.
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2019 (10) TMI 922
Rectification u/s 154 - Disallowance of Leave Encashment liability - HELD THAT:- Since the CIT (A) has pointed out that the assessee itself has shown the payment as investment in the LIC and other companies and the interest accrued on such fund was credited to the Profit Loss account, therefore, the AO has to just verify the fact whether any income accruing on the policy taken by the assessee was actually received by the assessee or it is just an accounting treatment by the assessee without actual income. If the benefit accrued on the policy is only accumulated to the fund itself which is to be used for discharge of liability on account of Leave Encashment, then such income though assessee has credited in the Profit Loss account would not partake the character of real income but it would be only accumulation of the value of the policy to be used for discharge of the liability on account of leave encashment. We direct the AO to verify these facts and then allow the claim of the assessee in the above terms. Miscellaneous Application of the assessee is dismissed. While passing the subsequent order Tribunal has concurred with the findings of the Tribunal given in the impugned. Hence in view of the facts and circumstances that when no mistake apparent on record is pointed out by the assessee then the miscellaneous application for seeking the relief which was not granted by the AO is not maintainable.
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2019 (10) TMI 921
Assessibility of the amount received u/s 28 of the Land Acquisition Act - assessee pointed out that land of the assessee was acquired against which it received compensation u/s 28 of the Act, which was part of additional compensation received and not taxable - HELD THAT:- As decided in SHRI AMAR CHAND GUPTA, [ 2019 (8) TMI 1424 - ITAT DELHI] assessees had received interest u/s 28 of Land Acquisition Act on enhanced compensation. The Hon ble Supreme Court in the case of CIT vs Ghansham (HUF) [ 2009 (7) TMI 12 - SUPREME COURT] has clearly held that interest received by the assessee in view of section 28 of Land Acquisition Act 1894 is part of the compensation and therefore was not taxable. The Hon ble Delhi Bench of the Tribunal in the case of Shri Opinder Singh Virk, [ 2019 (5) TMI 676 - ITAT DELHI] has dealt with the decision of the Hon ble Supreme Court in the case of Chet Ram (HUF) [ 2017 (9) TMI 1532 - Supreme Court ]as well as the case laws of Ghanshyamdas and after analysing the same has again held that interest receipt on enhanced compensation u/s 28 of the Land Acquisition Act is in the nature of compensation. - Decided in favour of assessee
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2019 (10) TMI 920
Disallowance of transportation expenses @ 10% - ad hoc disallowance was sustained by the CIT(A) to the extent of ₹ 1.00 lac on lump sum basis - HELD THAT:- D isallowance is made without considering the relevant facts. Further, when the transportation and freight expenses is inevitable in the assessee s line of business then without conducting any enquiry or giving a finding, the payment made by the assessee is either bogus or excessive/inflated then an ad hoc disallowance made by the A.O. of the entire claim of transport expenses where the majority of the payment has been made through cheques is not justified. CIT(A) has also confirmed the disallowance to the extent of ₹ 1.00 lacs which is an ad hoc disallowance without considering the relevant facts on the issue, accordingly, the disallowance sustained by the ld. CIT(A) is deleted. Disallowance of soyabean expenses @ 20% - A.O. observed that the assessee has paid some of the expenses in cash which are below ₹ 20,000/- for which no supporting evidence is available with the assessee except self-made vouchers - HELD THAT:- The said expenditure is incurred on account of Pala and Bharai which means payment is made for loading and unloading of the goods. Though, the payment in such nature of expenditure is made in cash to the labourers, however, the labourers in a particular mandi are regular labourers working and not the strange persons to the traders in a particular mandi. Therefore, once the labourers are known and working almost regularly with the assessee and other traders then the details and particulars of the recipients should be mentioned in the vouchers. Even when these are regular workers working in the mandi then vouchers must have been got signed from the recipients. Since the entire payment is made in cash, therefore, the disallowance restricted by the ld. CIT(A) to 10% is proper and reasonable. Disallowance of wheat expenses - addition restricted by the CIT(A) to 10% from 20% - HELD THAT:- This issue is identical to the issue of disallowance of soyabean expenses being on account of Pala and Bharai i.e. loading and unloading of the goods, therefore, in view of my finding on account of soyabean expenses, 10% disallowance restricted by the ld. CIT(A) is proper and justified. Disallowance of administrative expenses - HELD THAT:- Depreciation on car cannot be disallowed on the ground of non-furnishing of vouchers or non-verifiable of the expenditure. The depreciation is a statutory allowance provided u/s 32 of the Act, therefore, the disallowance made by the A.O. and sustained by the ld. CIT(A) on account of depreciation on car is deleted. Telephone expenses are also not required to be proved by any voucher when the telephone bill itself is a proof. Even otherwise, this expenditure can be verified from an independent source. In absence of any verification conducted by the A.O. regarding the genuineness of the expenditure, the disallowance made and sustained by the ld. CIT(A) is not justified, the same is deleted. Office expenses - majority of the expenditure has been incurred through cheques except only one item of expenditure which is labour charges of ₹ 2,150/- for colour in office. All other expenses are duly supported by the bills of the vendor. It appears, without verifying the details of the expenditure, the A.O. has made ad hoc disallowance in a routine manner. Accordingly, the disallowance made by the A.O. and sustained by the ld. CIT(A) is deleted. Vehicle running and maintenance expenses, from perusal of the details of the expenditure, it is noted that the entire payment is made in cash and some of the payments are made for petrol and for others. No description is given in the details of the expenditure except some bill number is given. Therefore, when the entire expenditure is incurred in cash then the disallowance of 10% made by the ld. CIT(A) is on account of vehicle running and maintenance expenses is proper and justice - Appeal of the assessee is allowed in part.
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2019 (10) TMI 919
Validity of reassessment proceedings - As alleged order passed by the I.T.O., Ward 7(2), Jaipur without jurisdiction - Jurisdiction over the case of assessee lies with Income Tax Officer, Ward-6(4) and not with the Income Tax Officer, Ward-7(2) who has passed the impugned reassessment order - HELD THAT:- Since the assessee has not filed any return of income U/s 139(1) of the Act and further it is not a case of the assessee that he is regular assessed to tax under a different ITO, therefore, the notice issued by the I.T.O., Ward 7(2), Jaipur based on the assessee s particulars and address which is falling under his jurisdiction, cannot be disputed after completion of the assessment and particularly when the assessee has participated in the assessment proceedings. As per provisions of Section 124(3)(b) of the Act, no person is allowed to call in question the jurisdiction of an Assessing Officer when he has not made any return of income after expiry of time allowed, inter alia, notice issued U/s 148 - assessee did not object the jurisdiction of the A.O. as per the time period given U/s 124(3)(b) of the Act and even up to the date of the assessment order passed by the A.O. Since the jurisdiction of the assessee was not predetermined prior to notice issued U/s 148 of the Act as the assessee has not filed any return of income, therefore, the objection raised by the assessee after the assessment order passed by the A.O., cannot be entertained. Disallowance of brokerage charges in respect of sale/purchase of land - CIT(A) has considered the claim and found that in absence of proof of brokerage payment produced before the A.O., the same cannot be allowed as accepted at this stage - HELD THAT:- When the transaction of sale of land is not in dispute then as per normal practice prevailing in such transactions, a brokerage at the rate of 2% is being paid. Though, during the assessment proceedings, the assessee did not file any evidence in support of the brokerage payment, however, before the ld. CIT(A), the assessee produced confirmation alongwith ID proof of these two persons. CIT(A) has rejected the claim of the assessee only on the ground that the proof was not produced before the A.O. Once the claim of the assessee is not found to be excessive and it is in accordance with the prevailing practice of brokerage @ 2% then the same cannot be denied. The sale and purchase of the immovable property transactions are generally carried out only through the brokers who played a very crucial role of soliciting the sale and purchase transactions between the parties. Accordingly, the A.O. is directed to allow brokerage payment @ 2% of the sale proceeds. Disallowance of brokerage charges in respect of agricultural land purchased by the assessee as well as the expenditure incurred on the agricultural land towards levelling etc . - assessee purchased two agricultural lands during the year under consideration and claimed deduction U/s 54B - HELD THAT:- As regards the brokerage charges, since the assessee has claimed 2% brokerage charges which is otherwise a general practice prevailing in such transaction of purchase and sale of immovable properties, therefore, in view of my findings in respect of ground No. 2 on this issue, the brokerage charges @ 2% is allowed. Expenditure incurred for levelling and other work done at the agricultural land - receipt produced by the assessee says the working of tractor for some hours, however, it is not clear whether the said lady was having the tractor and other labour force for doing the work. Thus, in absence of the details of the JCB and tractor for which the charges are paid by the assessee, the claim of the assessee cannot be accepted - when the assessee has failed to even furnish the relevant details regarding the particulars of the machinery and whether the lady who has executed the receipt was having those machineries, claim cannot be accepted. Disallowance of cost of construction while allowing deduction U/s 54F - assessee claimed the cost of construction of residential house for the purpose of exemption U/s 54F - A.O. has rejected the said claim on the ground that the valuation report filed by the assessee is in the name of one Smt. Sushma Bairwa as the single owner of the property - On appeal assessee filed rectified report of the valuer, however, the ld. CIT(A) has confirmed the action of the A.O. in rejecting the claim - HELD THAT:- It is pertinent to note that that valuation report filed by the assessee was though in respect of the property owned by the assessee bearing No. D-350, Jagdamba Nagar, behind Heerapura, Ajmer Road, Jaipur, however, the name of some other person appeared in the valuation report due to the mistake of exchanging first page of the report with the other valuation report. This fact was brought on record and the rectified valuation report was filed during the appellate proceedings and remand proceedings. Once this substance of the valuation report remains same and the subject matter is also remained same then only because the name of the owner is mistakenly given of some other person due to exchange of the one page of the report which was subsequently rectified, the claim of the assessee ought to have not been disallowed. When the period of construction is also given in the valuation report and the A.O. as well as the ld. CIT(A) has rejected the claim on technical grounds instead of examining the issue on the merits is not justified. Accordingly, once the construction of house is not in dispute then only the valuation or the cost of the construction aspect is required to be verified. Therefore, any typographical mistake or other inadvertent mistake in the valuation report would not have prevail over the substantial issue of cost of construction of the property in question. Neither the A.O. nor the ld. CIT(A) has even proceeded to examine the said issue of correctness of the cost of construction. Therefore, in view of the fact that the assessee produced the valuation report as well as rectified report showing the correct name of the owner then the assessee has discharged his onus to prove the claim of cost of construction of the house. Accordingly, the claim of the assessee U/s 54F of the Act towards the cost of construction is allowed.
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2019 (10) TMI 918
Interest expenses allowability as a business expenses u/s. 36(1)(iii) - HELD THAT:- As before the AO assessee has not substantiated the claim while filing any relevant documentary evidences and the AO disallowed the claim of the assessee u/s. 36(1)(iii) and disallowed the interest @12% and added the same to the income of the assessee. CIT(A), after considering the submissions filed by the assessee alongwith documentary evidences has also dismissed the appeal of the assessee and upheld the assessment order by holding that the assessee failed to prove any business purpose of advance given against property and therefore, the amount @ 12% of amount was disallowed out of interest expenses debited to the profit and loss account. No interference is called for in the well reasoned order of the Ld. CIT(A), because the assessee has not given any detail of unsecured loan which was necessary and other documentary evidence for substantiating the claim before the revenue authorities, especially before the AO and Ld. CIT(A) and before the tribunal. Therefore uphold the order of the Ld. CIT(A) on the issue in dispute and reject the ground raised by the assessee.
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2019 (10) TMI 917
TP adjustment for receivables having delay in receipt of payment of more than 90 days - interest on unrealized export proceeds - HELD THAT:- We find identical issue had come up before the Tribunal in assessee s own case for assessment year 2011-12. We find the Tribunal, after considering the arguments made by both the sides has held that the period of 90 days credit is reasonable in the trade of the assessee and accordingly it was restored to the file of the A.O./TPO to compute the transfer pricing adjustment of receivables having delay in receipt of payment of more than 90 days Respectfully following the decision of the coordinate Bench of the Tribunal in assessee s own case, we restore the issue to the file of A.O./TPO to compute the TP adjustment for receivables having delay in receipt of payment of more than 90 days. The ground raised by the assessee is accordingly partly allowed for statistical purposes.
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2019 (10) TMI 916
Validly of reassessment proceedings - contribution of addition to Sornammal Educational Trust has a gesture of goodwill - as per AO contribution of donation made by M/s. Ranstand Holdings, NV, Netherlands is part and parcel of the total contribution agreed and accordingly issued notice u/s.148 - HELD THAT:- Admittedly in the present case, MOU dated 20.08.2008 was on record but there is nothing on record to show that the Assessing Officer had examined clauses of the MOU governing the contribution of donation by M/s. Ranstand Holdings, NV, Netherlands to Sornammal Educational Trust, Chennai as a gesture of goodwill. It is only during the course of assessment proceedings in the hands of Ms. Hemalatha Rajan for the assessment year 2010-2011, the Assessing Officer had come to know that M/s. Ranstand Holdings, NV, Netherlands had paid contribution of addition to Sornammal Educational Trust has a gesture of goodwill. This would undisputedly constitute a fresh tangible material enabling the Assessing Officer to form an opinion that income escaped assessment. Furthermore, there is nothing on record to show that in the original assessment proceedings, the Assessing Officer has raised this issue of taxability of this item and formed an opinion in favour of the assessee. Therefore, it cannot be said that it is case of mere change of opinion as no such opinion was formed in original assessment proceedings. The proposition of law laid down by Hon'ble Supreme Court in the case of CIT vs. Kelvinator of India Ltd [ 2010 (1) TMI 11 - SUPREME COURT] has no application to the facts of the present case. Thus, the ground of appeal No. 2 raised by the assessee stands dismissed. Tax contribution of donation made by Ranstand Holdings, NV, Netherlands to Sornammal Educational Trust, Chennai as part of compensation paid to the assessee for breach of share purchase agreement - HELD THAT:- From the reading of the above clause, it is clear that goodwill is not part and parcel of compensation paid to the assessee and his wife by Ranstand Holdings, NV, Netherlands and it is separate and distinct transaction and voluntary payment. The fact that contribution was approved by the Government of India under Foreign Contribution Act confirming the position. It prima facie proves that it is a voluntary contribution. Further, the mere fact that assessee and his wife are trustees in the trust does not ipso facto prove that they are beneficiaries of this fund nor there is no material on record brought by the Assessing Officer to say that the money was diverted to the trust by the assessee and his wife. There was no tangible material brought on record by the Assessing Officer to establish collusion in the transaction. Therefore what is apparent should be believed unless and until the contrary is proved in the light of the judgment in the case of Sumathi Dayal vs. CIT [ 1995 (3) TMI 3 - SUPREME COURT] . AO was not justified in treating the contribution paid to the trust as a part of compensation and bringing to tax in the hands of the assessee and his wife. Thus, ground of appeal No.3 filed by the assessee stands allowed.
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2019 (10) TMI 915
Disallowance u/s 14A r.w.r 8D - suo moto disallowance by assessee - HELD THAT:- CIT(A) correctly deleted the additions in view of the decision of the Hon ble High Court in the case of Joint Investment Ltd. vs. CIT, [ 2015 (3) TMI 155 - DELHI HIGH COURT] that disallowance cannot be more than exempt income. CIT(A) has followed the binding precedent of the Jurisdictional High Court, we do not find any error in the order of the learned CIT(A) Nature of expenditure - treating the licence fee paid to DOT as revenue expenditure - HELD THAT:- We find that the learned CIT(A) has deleted the additions following the order of the Tribunal in the case of the assessee for assessment year 2007-08 [ 2015 (1) TMI 924 - ITAT DELHI ] which is a binding precedent wherein the licence fee paid by the appellant is treated as revenue in nature Deduction u/s 10A computation - whether the telecommunication charges and foreign currency expenditure has to be reduced from the export turnover for the purpose of computing deduction? - HELD THAT:- Issue in dispute is covered in favour of the assessee by the decision of the Hon ble Supreme Court in the case of CIT Vs. HCL Technologies Ltd. [ 2018 (5) TMI 357 - SUPREME COURT] held that adjustment, if any made from export turnover under Explanation 2 of section 10A of the Act is also liable to be paid on total turnover to avoid unintended and absurd results Disallowance u/s 14A invoking Rule 8D - HELD THAT:- We agree with the contention of the learned counsel that disallowance as per Rule 8D(2)(iii) ought to be computed at nil, however, on perusal of the computation of Rule 8D(2)(iii) by AO we find that he has worked out investment as on 31.03.2009 at ₹ 54,94,39,000/- and investment as on 31.03.2010 at ₹ 1,68,79,28,003/- and worked out the average investment of ₹ 111,86,83,501/-. In view of above facts, the contention that there was wrong opening and closing investment is not accepted. As far as satisfaction of the Assessing Officer is concerned, firstly the Assessing Officer has rejected the claim of assessee after perusal of the account of the assessee, thereafter, he proceeded to invoke Rule 8D of the Rules. Thus, the contentions of the assessee that no dissatisfaction has been recorded by the Assessing Officer for invoking Rule 8D is not correct. Secondly, the assessee is not in appeal before us and thus, the assessee cannot raise this issue in the appeal of Revenue. Accordingly, we reject the contentions of the assessee. In view of the decision of Joint Investment P. Ltd. [ 2015 (3) TMI 155 - DELHI HIGH COURT] the disallowance cannot be more than exempt income and accordingly, we restrict the disallowance at ₹ 4,22,021/- Disallowance of unrealized foreign exchange loss on account of reinstatement of assets and liabilities holding the same to be notional - CIT-A allowed the claim - HELD THAT:- We find that the learned CIT(A) has decided the issue following the decision of the Hon ble Supreme Court in the case of CIT vs Woodward Governor India Pvt. [ 2009 (4) TMI 4 - SUPREME COURT] We do not find any error in the order of the learned CIT(A) on the issue in dispute, accordingly, uphold the same.
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2019 (10) TMI 914
Disallowance of depreciation on the intangible assets/goodwill acquired in the scheme of amalgamation - principle of consistency - assessee claimed the depreciation 1st time on the intangible assets acquired in the scheme of amalgamation in the assessment 2006-07 - HELD THAT:- Intent of the Legislature is to make amalgamation a tax neutral scheme for companies as well as for the shareholders and not to provide a tax planning mechanism to either of them. Coming to the present facts of the case we note that Indeed there was no entry in the books of the transferor company for the intangible assets/ goodwill being self generated assets. Thus in the backdrop of the above stated facts we are of the view that impugned transaction for claiming the deduction on account of the depreciation is an arrangement for claiming the higher depreciation which is unwanted under the provisions of law. Before parting, we are conscious to the fact that the assessee was allowed for depreciation in respect of such goodwill in the 1st year of amalgamation i.e. AY 2006-07. There was no action either under section 263 or 147 of the Act by the revenue. Therefore we can safely presume that the claim of the depreciation of the assessee in the 1st year has attained finality. Admittedly the 1st year is the base assessment year from where the issue of depreciation is emanating. The question arises once the depreciation has been allowed in the 1st year then the same can be disturbed in the subsequent year without having any change in the facts and circumstances. In our considered view, in such a case the principles of consistency shall be applied as held by the Hon ble Bombay High Court in the case of PCIT Vs. Quest Investment Advisors Ltd. [ 2018 (7) TMI 479 - BOMBAY HIGH COURT] - the assessee succeeds on the principle of consistency. Accordingly we set aside the order of the learned CIT (A) and direct the AO to allow the depreciation to the assessee. Hence the ground of appeal of the assessee is allowed.
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2019 (10) TMI 913
Assessment u/s 153A - Addition u/s 68 as unexplained cash credits - HELD THAT:- Since the assessment for the year under consideration was not pending as on the date of search, there was no abatement and the addition made by the Assessing Officer in the unabated assessment completed under section 153A on account of share capital and share premium amount by treating the same as unexplained cash credit was not sustainable as the same was not made on the basis of any incriminating material found during the course of search. We accordingly uphold the impugned order of the ld. CIT(Appeals) deleting the said addition made by the Assessing Officer and dismiss this appeal of the Revenue. See M/s. Shantinath Financial Services Ltd. [ 2019 (10) TMI 878 - ITAT KOLKATA]
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2019 (10) TMI 912
On money received on sale of property - undisclosed / un accounted sales consideration received against sale of property over and above the apparent and declared sales consideration which is as per registered sale deed - HELD THAT:- When the addition has not been made in the hands of the buyer, who is the source of the cash payment to the seller (assessee), no addition can be made in the hands of the assessee. In fact the addition should have been made in the hands of the buyer on account of cash paid to the seller and in the hands of the seller as unaccounted sale consideration subject to capital gains tax. Even otherwise the assessee has requested for the cross-examination of Sri Honey Gupta as well as the broker during the assessment proceedings however same has been denied. The only evidence available with the Assessing Officer is the statement of Mr. Honey Gupta and the broker which has been used against the assessee for making the addition. When the assessee had specifically asked for the cross-examination and if same was not given to the assessee, the addition cannot be made in the hands of the assessee, as denial of opportunity to the assessee to cross-examine the witness whose statements were made the sole basis of the assessment is a serious flaw rendering the order as nullity in as much as it amounted to violation of the principles of the natural justice as held in ANDAMAN TIMBER INDUSTRIES VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA-II [ 2015 (10) TMI 442 - SUPREME COURT] - In view of this we do not have any other alternative but to direct the learned assessing officer to delete the addition made in the hands of the assessee over and above the declared sales consideration towards the sale of the property for the computation of the capital gain - Decided in favour of assessee.
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2019 (10) TMI 911
Disallowance under the head expenses - addition to 10% of the total expenses and restricted the depreciation to 1/5th of the total depreciation on the addition of fixed assets added during the year under consideration by CIT-A - AO made ad-hoc disallowance on the reasoning that books of accounts and bills and voucher in respect of the other expenses as well as addition to the assets were not produced before him - HELD THAT:- CIT(A) noticed that the assessee has not filed detail of expenses before the Assessing Officer, still he restricted the disallowance for other expenses to 10% of the total expenses without any justification and only on the basis of the magnitude of the disallowance. The learned CIT(A) should have examined the books of accounts along with bills and vouchers to decide the issue of disallowance of other expenses and depreciation. The action of the learned CIT(A) of sustaining the disallowance on ad-hoc basis is not justified. In the facts and circumstances of the case, we feel it appropriate to restore the matter back to the file of the Assessing Officer for deciding afresh with the direction to the assessee to produce all the necessary documents in support of its claim including books of accounts and bills and voucher in relation to other expenses and additions to assets for justifying the claim of the depreciation. It is needless to mention that the assessee shall be afforded adequate opportunity of being heard. Accordingly, the grounds raised by both the parties are allowed for statistical purposes.
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2019 (10) TMI 910
TDS u/s 195 - Payment for transponder charges - whether the payment made by the assessee amounts to royalty and liable to the provisions of TDS or not, and interpretation of provisions pertaining to Indo-US DTAA? - AO held that the assessee has failed to comply the provisions of TDS on the payment made to M/s Intelsat Corporation USA on account of payment of transponder charges for the satellite facility provided - HELD THAT:- No disallowance u/s 40 (a) (i) can be made on account of programming cost paid to various non-residents and also payments made to PanAmSat and other non-residents. See NEW SKIES SATELLITE BV, SHIN SATELLITE PUBLIC CO. LTD. [ 2016 (2) TMI 415 - DELHI HIGH COURT] and TAJ TV LTD., C/O. M/S. SURESH SURANA AND ASSOCIATES [ 2016 (12) TMI 1291 - ITAT MUMBAI] - Decided against revenue.
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2019 (10) TMI 909
Income accrued in India - Additions by treating certain receipts as Fees for Technical Services / Fees for included services within the meaning of Article 12 of India-USA Double Taxation Avoidance Treaty (DTAA) - HELD THAT:- The Fees for included services is defined in Article 12(4) of India-US Tax Treaty, wherein Fees for included services means payment of any kind to any person in consideration for rendering of any technical or consultancy services (including through the provision of services of technical or other personnel if services are ancillary and subsidiary to the application or enjoyment or right, property or information for which payment is received or make available technical knowledge, experience, skill no-how or process or consist of development and transfer of a technical plan or technical design. We have noted that the assessee has claimed that services rendered are ancillary and subsidiary and inextricably essentially linked with the software supplied. In our view, unless the services satisfy the make available test, the same cannot be taxed as FIS. Further, mere fact that provision of service may require technical input by the person providing services does not per se mean the technical knowledge. In our view, the receipt on account of support and maintenance services are not taxable under Article 12 as the services do not make available technical knowledge, experience, skill, know-how or process or consist of any development and transfer of any design. Levy of interest u/s 234B - HELD THAT:- Assessee is a foreign company and tax resident of USA and as per section 195 of the act taxes deductible at source on all its received and accordingly the assessee was not liable to pay advance tax. Therefore we direct the assessing officer to recompute the tax by following the decision of the jurisdictional High Court in case of NGC network Asia LLC [ 2009 (1) TMI 174 - BOMBAY HIGH COURT]
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2019 (10) TMI 908
Revision u/s 263 - assessee has made a provision pending final price payable for the purchase of copper concentrate received during the year for which actual purchase price could not be finalized before the close of the financial year but soon thereafter - absence of direction in the order of the learned CIT u/s 263 of the income tax act - HELD THAT:- We found that in the show cause notice issued by the learned PCIT that assessee had made a provision being the final price payable for the purchase of copper concentrate, for which the quotation price could not be finalized. The actual outflow of money was expected to be made after the finalisation of the quotation price in the next financial year. An amount which was debited in the raw material consumption account was made a provision which was liable to be disallowed - at the time of passing of the order u/s 263 of the income tax act, PCIT has categorically held that in respect of the issue on hand the provision is a liability which can be measured only by using a substantial degree of estimation and if certain conditions are not met the provisions cannot be recognised. It is apparent that principal Commissioner of income tax invoked her powers u/s 263 of the income tax act to verify whether the provisions made by the assessee are allowable or not. While looking at the accounts of the assessee for financial year ended on 31st of March 2010, in schedule number 12, current liabilities and provisions are mentioned. The point number 2 of that schedule deals with the various provisions made by the assessee wherein under the head of the other provisions, sum of ₹ 259,31,00,000 was mentioned. Ld PCIT referred to the provisions of this amount in show cause notice, dealt with the issue of allowability of such provision in a her order, held that AO has not verified this aspect, clearly shows that, this issue was dealt with by the ld PCIT. In view of this, it cannot be said that the learned PCIT as not given any direction to the learned assessing officer to verify the above deduction claimed by the assessee. Hence, we reject the argument of the learned authorised representative that above addition made by the learned assessing officer was not emanating from the order of the learned Principal Commissioner Of Income Tax passed u/s 263 of The Income Tax Act. Accordingly ground number 7 to the extent of claim of the absence of direction in the order of the learned CIT u/s 263 of the income tax act and ground number 8 of the appeal of the assessee are dismissed. Provision pending final price payable for the purchase of copper concentrate received - Merits of the addition, on the basis of the probability, the assessee has made a provision for which it has already incurred an obligation at the time of the receipt of the goods. Estimate made by the assessee is also a reliable estimate as same is accepted by the industry as stated in the annual accounts of another s similar company, based on the London metal exchange prices. Therefore the provision created by the assessee is a liability which has been measured by using a substantial degree of estimation. CIT A has added in holding that such provision made in the books of account is not deductible while computing the taxable income of the assessee. We disagree with the above finding of the learned CIT A for the reason that assessee has received the goods during the financial year for which the prices would be payable letter on but the reliable estimate is made based on the London metal exchange prices. Such provision has gone into the purchase account of the assessee. Further if, it is carried into the stock, it becomes the cost of the underlying inventory of the assessee. Therefore if the provision is not granted to the assessee as deduction then equivalent amount of the closing stock is also required to be reduced. It is also not the case of the revenue that the provision made by the assessee has not been subsequently discharged by payment to the respective parties or if there is an excess or Short has not been carried to the raw material consumption account of the subsequent year. It is not the case of the revenue that assessee is merely carrying on a provision in its books of account without discharging it reversing it into the subsequent year. Further the finding of the learned CIT A is also incorrect that assessee has not provided the basis of working of the provisions of rupees to 59,31,00,000. The above provision has been made on the basis of the London metal exchange prices and certified by the auditors as well as approved by the shareholders of the company. Identical issue has arisen in the case of the company in earlier years when the assessee chain the method of accounting with respect to the purchase price and the matter reached to the level of the coordinate bench which did not find any infirmity in the accounting treatment made by the assessee for provisions for purchases. In the result we do not find any reason to uphold the order of the lower authorities wherein the disallowance made by the learned assessing officer is upheld by the learned CIT A. - Decided in favour of assessee. Non granting the full claim of the tax deduction at source to the appellant - HELD THAT:- AO is directed to the follow the direction of the learned CIT capital and grant the credit of the above tax deduction at source after proper verification.
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2019 (10) TMI 906
Reopening of assessment - Bogus LTCG - Disallowance of the claim of long term capital gain u/s. 10(38) - HELD THAT:- We find that Hon'ble Apex Court in the case of Rajesh Jhaveri Stock Brokers Private Ltd. [ 2007 (5) TMI 197 - SUPREME COURT] has held that intimation under section 143(1) is not an assessment order. Hence it cannot be said that there was any application of mind by the assessing officer in the original assessment. Moreover, at the time of reopening the escapement of income need not be conclusively proved. In this view of the matter in our considered opinion the reopening is valid We find that it is the claim of the assessee that he has earned the gain in this case where the share price of a little-known company has jumped many times in no time and that all documentary records are available. It is noted that the assessee purchased shares at cost of ₹ 8,342/- on 29/30.4.2003. They were sold at ₹ 3,19,288/- on 23.11.2004, registering astonishing jump in share price. But there is no economic or financial justification for such astonishing jump. Quantity, price and time and sale, parties being persistent in number of such trade transactions with huge price variations, it will be too na ve to hold that the transactions are through screen-based trading and hence anonymous. Such conclusion would be overlooking the prior meeting of minds involving synchronization of buy and sell order and not negotiated deals as per the board's circular. The impugned transactions are manipulative/deceptive device to create a desired loss and/or profit. Such synchronized trading is violative of transparent norms of trading in securities. If the findings of SAT are to be sustained, it would have serious repercussions undermining the integrity of the market and the impugned order of SAT is liable to be set aside. On the above additional reasoning also, agree with the conclusion allowing the appeal preferred by SEBI against the traders. We also agree with the conclusion dismissing the appeal preferred by the SEBI against the brokers - Decided against assessee.
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2019 (10) TMI 905
Validity of reopening of assessment u/s 147 - source of loan given by the assessee - HELD THAT:- Once the assessee paid ₹ 2.00 lakh to another person out of her regular books of account, there cannot be any question of the assessee not substantiating the source of loan, which is overtly from the regular books of account maintained by her. This sort of enquiry, if warranted, ought to have been conducted in the hands of the recipient to justify the source of the loans received and not the payer of the loan, who has given loan out of her regular books of account. In view of the foregoing discussion, it is clear that the reasons recorded by the AO for initiating re-assessment proceedings are invalid and do not justify initiation of re-assessment. Even though the original summary assessment was made u/s 143(1) of the Act and the period of four years from the end of the assessment year had not expired before issuing notice u/s 148 of the Act, still, the AO, having missed the opportunity of making assessment u/s 143(3) after issuing notice u/s 143(2) of the Act within the stipulated period, could have made assessment or reassessment u/s 147 only on the basis of the some reasons to believe about the escapement of income. Existence of reasons for escapement of income are sine qua non to embark upon the assessment or reassessment u/s 147. Change or no change of opinion, as argued by the ld. DR, are the factors to be considered after fulfilling the jurisdictional condition of there being an escapement of income, in the absence of which no assessment or reassessment can be made u/s 147. As it is apparent from the above discussion that no valid reasons exist about the escapement of the assessee s income, we hold that the AO was not justified in taking recourse to the provisions of section 147 of the Act. We, therefore, strike down the initiation of assessment proceedings and the consequential assessment order passed u/s 147 of the Act and also the impugned order. - Decided in favour of assessee.
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2019 (10) TMI 904
Addition on account of gift received from assessee s brother - HELD THAT:- Assessee has discharged his burden casted upon him that the gift received by him is a genuine gift. If at all, the Assessing Officer has any doubt about the gift transaction, he ought to have made a detailed enquiry and to prove that the gift received by the assessee is not a genuine gift. In this case, no such exercise has been done by the AO. AO has failed to prove the gift received by the assessee is not a genuine gift and simply addition is made, the same is confirmed by the ld. CIT(A). Gift received by the assessee cannot be considered as not genuine gift. The assessee has proved the identity of the parties, creditworthiness of the donor and genuineness, therefore, the assessee has discharged burden casted upon him. It is further observed that no occasion is required to receive the gift by the assessee from his brother-Shri V.Bala Sudhakar. Therefore, the Assessing Officer is not correct in denying the gift received by the assessee is not a genuine gift. Under the similar circumstances, the assessee also received gift in earlier years, the same has been considered by the coordinate bench of the tribunal in assessee s own case [ 2016 (11) TMI 1039 - ITAT VISAKHAPATNAM] for the A.Ys. 2009-10 to 2011-12 and held that the gift received by the assessee is a genuine gift from his brother and the addition made by the Assessing Officer is deleted. Addition made by the Assessing Officer and confirmed by the ld. CIT(A) cannot survive - Decided in favour of assessee.
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2019 (10) TMI 903
Addition merely on the basis of a statement recorded during survey u/s. 133A - HELD THAT:- Addition made by the AO in the course of assessment proceedings merely on the basis of statement in course of search and post search proceedings is not sustainable. In DIGAMBAR KUMAR JAIN (HUF) [ 2012 (11) TMI 1167 - MADHYA PRADESH HIGH COURT] held in this case that the AO made an addition merely on the basis of a statement recorded during survey u/s. 133A of the IT Act and ld. CIT(A) and the Tribunal had deleted it by holding that merely on the basis of such statement without corroboration, such addition could not be made and when the appeal was filed by the revenue against this Tribunal order before the Hon ble Madhya Pradesh High Court, the same was dismissed by Hon ble Madhya Pradesh High Court. In this case, the Tribunal held that the income is not taxable in the hands of the assessee in view of principle of mutuality and since in the present case, mutuality aspect is not there, this Tribunal order on this aspect is not relevant in the present case but this Tribunal order is relevant regarding this aspect that merely on the basis of the statement recorded during the course of search, an addition cannot be made blindly and the same has to be examined as per the relevant facts and law. In the present case also, although some papers were found and seized and surrender was also made by assessee up to ₹ 93 Lakhs out of amount noted in seized paper of ₹ 1,39,08,062/-, neither the AO nor ld. CIT(A) has corroborated the amount of addition with the entries in the seized material even on sample basis to show that the entry in the seized material is in fact regarding some undisclosed income of the assessee. The surrender of the assessee of ₹ 93 Lakhs is also not correlated with the seized material - we hold that the addition made by the AO and confirmed by CIT(A) merely on the basis of statement without establishing that the entry on the seized paper is indicating any undisclosed income of the assessee is not sustainable and hence, we delete the same. Unexplained investment in gold bullion - HELD THAT:- As per the balance sheet as on 31.03.2009 of Shri Somashekar available on page no. 14 of the paper book, there is capital balance of ₹ 16,06,085/- and there is investment in gold bullion of ₹ 11,43,320/- and similarly, as per the balance sheet of Shri K. Chandrashekar (HUF) as on 31.03.2009 available on page no. 18 of the paper book, there is capital of ₹ 31,28,398/- and investment in gold bullion of ₹ 11,43,320/-. Under these facts, we are of the considered opinion that the addition made by the AO on this account is also not sustainable and hence, we delete the same because in our opinion, restoring the matter back to AO in the facts of the present case is not required. Ground nos. 6 and 7 are also allowed.
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2019 (10) TMI 902
Penalty levied u/s 271(1)(c) - disallowance made u/s 40(a)(ia) - TDS u/s 194C - HELD THAT:- Pursuant to the directions of the Tribunal the AO while giving the effect in his order framed under section 143(3) read with section 254 of the Act deleted the entire additions made in the first round of litigation and accepted the returned income. In the light of the aforesaid stated facts, once the foundation has been removed, the superstructure must fall. Since the basis for the levy of penalty i.e. the disallowances made in the assessment order has been removed, the penalty so levied deserves to be deleted. Therefore, we decline to interfere with the findings of the CIT(A). Appeal filed by the Revenue is dismissed.
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2019 (10) TMI 901
Admission of additional evidence by CIT-A - CIT(A) in violation of sub-rule (3) of Rule 46A has accepted fresh evidences without providing the Assessing Officer a reasonable opportunity of examining the evidence and rebutting it - HELD THAT:- In the facts of the present case, the fact that fresh evidence has been admitted which has not been confronted to the AO to offer his rebuttal etc. is not disputed by the ld. AR despite a detailed hearing on the issue. Accordingly, to set right this statutory deficit, the issue is remanded back to the file of the AO with the direction to pass a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard. The assessee in its own interests is advised to participate fully and fairly in the proceedings as in the eventuality of abuse of the trust reposed, it is made clear that the Assessing Officer shall be at liberty to pass an order on the basis of material available on record. Said order was pronounced in the Open Court at the time of hearing itself. Appeal of the Revenue is allowed for statistical purposes.
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2019 (10) TMI 900
TP Adjustment - comparable selection - DRP rejecting Eclerx Services Ltd. treating it as KPO - HELD THAT:- It is a settled issue that the 'E-clerx' constitutes a KPO company and the same is not comparable to that of a BPO company like the present assessee. Considering the settled nature of the issue at the level of the Jurisdictional High Court on this issue, we find the order of the DRP and the Assessing Officer is fair and reasonable and it does not call for any interference. Accordingly, ground No.1 raised by the Revenue is dismissed. Computation of operating profit margin without considering the one-time price rebate - HELD THAT:- As decided in AAM SERVICES INDIA PVT. LTD. [ 2018 (3) TMI 1814 - ITAT PUNE] such prior period expenses/items/foreign exchanges losses are not to be reduced from the current year's profits for determining PLI of the year under consideration. DRP granted relief to the assessee on this issue of prior period rebate claim qua the computation of the PLI of the assessee for the current year. It is a settled legal proposition that the 'extraordinary items' such as the prior period rebate expenses should not be considered for the computation of the operating profits for the current year. Reliance is placed on the said Pune Bench decisions (supra) and the Delhi Bench decision in the case of EDAG Enggineers Design India (P.) Ltd. [ 2014 (10) TMI 1010 - ITAT DELHI] We should direct the Assessing Officer/TPO to re-compute the operating profit margin of the assessee without considering the said one-time price rebate and thus, we affirm the views of the DRP. Thus, on the strength of the precedents on the subject, the order of the DRP in giving the above direction to the Assessing Officer, is fair and reasonable and the same does not call for any interference. Accordingly ground No.2 raised by the Revenue is dismissed.
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2019 (10) TMI 899
Penalty u/s 272A(2)(e) - delay in filing the return of income by the assessee, though it is undisputed that the income of the assessee was not chargeable to tax in view of the provisions of section 10(23C)(iiiad) - due to a reasonable and genuine cause - HELD THAT:- As decided in HTSL COMMUNITY SERVICE TRUST [ 2012 (4) TMI 152 - ITAT BANGALORE] it is not a case that the assessee did not file a return of income at all. During the year preceding the relevant assessment year, the assessee-trust was formed. The relevant previous year was the first year of activities of the assessee and the assessee was not familiar with the relevant provisions of filing of return of income and the procedure involved thereof. It was under a bona fide belief that the return is to be filed only after securing recognition under section 80G. However, on being appraised of the provisions of law, return was filed without any further delay. Since the entire income was applied towards the charitable activities, no tax was payable for the relevant assessment year. As a result of late filing of the return, there was no loss of revenue to the Government. The assessee had no ulterior motive to defraud the revenue and had not acted dishonestly or negligently. We also agree with the submission of the learned counsel for assessee that the provisions of section 139(4A) are applicable only in case where exemption is claimed u/s 11 and 12 of the Act and not in case where income of an organization does not form part of the total income under the Act in view of the provisions of Sec.10(23C)(iiiad) of the Act. Provisions of Sec.139(4A) makes a reference only to provisions of Sec.11 and 12 and not to the provisions of Sec.10(23C)(iiiad) of the Act. - Decided in favour of assessee.
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2019 (10) TMI 898
Disallowance of expenditure u/s 37(1) - Amount paid as penalty for using electricity during restricted hours - HELD THAT:- Without opting for continuous power supply, the assessee was found in usage of energy during restricted hours (above 15% of contracted load), prohibited by law, thereby, it was levied to pay penalty, which cannot be treated as just like payment of electricity charges, but, it is an offence committed by the assessee against which, the assessee was penalized. As per Explanation to section 37(1) of the Act, any expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law shall not be deemed to have been incurred for the purpose of business or profession and no deduction or allowance shall be made in respect of such expenditure. This Explanation would squarely apply to the facts of the assessee's case and the amount paid being penalty, the AO was justified in disallowing the same and rightly confirmed by the ld. CIT(A). Thus, the ground raised by the assessee stands dismissed. Disallowance of payment made to Sales Tax Department - HELD THAT:- Payment made to Sales Tax Department by way of interest which is compensatory in nature for belated filing of return and payment of taxes thereon. We have also gone through the order of the Joint Commissioner (Appeals) First, Commercial Tax, Uttarakhand, in assessee s own case, wherein, it was amply clear and elaborately discussed the circumstances under which penalty was levied, more particularly, against levy of penalty by the AO [Commercial Tax], the assessee preferred further appeal. Therefore, the penalty payment made by the assessee and disallowed by the Assessing Officer was rightly confirmed by the ld. CIT(A). Thus, the ground raised by the assessee stands dismissed. Rejection of alternative plea of proportionate deduction under section 80IC - HELD THAT:- Expenditure which is an offence or prohibited by law shall not be deemed to have been incurred for the purpose of business or profession and no deduction or allowance shall be made in respect of such expenditure and made it clear that only that expenditure which is related to business activity would come under the purview of the aforesaid circular of the CBDT. CIT(A) further held that the expenditure had already been incurred and therefore, but for the disallowance under the Income Tax Act, would not increase the profit in the hands of the assessee. Thus, the ld. CIT(A) has held that as the disallowance under Explanation to section 37(1) of the Act is deemed to have not been incurred for the purpose of business, they cannot be considered for the purpose of computing profits of the business of the assessee, thereby, the question of claiming any deduction under section 80IC of the Act does not arise. In the appellate order, the ld. CIT(A) has narrated correct position of law and penalty payment made by the assessee, cannot be claimed as an allowable expenditure. In view of the above facts, the alternative plea raised by the assessee stands dismissed.
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2019 (10) TMI 878
Assessment u/s 153A - addition u/s 68 - HELD THAT:- Search and seizure action u/s 132(1) was conducted on 17th 18th December, 2014 and the addition made by the Assessing Officer in the unabated assessment completed in pursuance of the search under section 153A of the Act on account of share capital and share premium received during the year under consideration by treating the same as unexplained cash credit was deleted by the ld. CIT(Appeals) on the ground that the same was not based on any incriminating material found during the course of search. It is true that when a search under section 132(1) is conducted, the Assessing Officer gets jurisdiction to issue notice under section 153A for the relevant years and complete the assessments for the said years. It is also true that there is no explicit mention in the language used in section 153A that the addition made under section 153A should be based on the incriminating material found during the course of search. The scope of assessment to be made under section 153A, however, is considered and defined in the various judicial pronouncements. Assessments are classified in two categories, i.e. completed assessment and pending or abated assessment. It is held that if the assessment for the relevant year is pending as on the date of search and it is not completed, the same gets abated and the scope of assessment to be made under section 153A for the said year is wide, which includes assessment of income on the basis of incriminating material found during the course of search as well as the assessment of income, which is the subject matter of regular assessment. On the other hand, if the assessment for the relevant year is not pending as on the date of search, the same is to be regarded as completed assessment and the scope of assessment to be made under section 153A is limited to the assessment of undisclosed income on the basis of incriminating material found during the course of search. This legal position clearly emanates from the various judicial pronouncements cited and relied upon by the assessee in the written submission filed before us. No doubt, there are certain judicial pronouncements cited by the ld. D.R. in his written submission, wherein a contrary view has been taken, which is in favour of the Revenue. However, a consistent view has been taken by the Hon ble Calcutta High Court on this issue in several cases, which is in favour of the assessee. As in the case of DCIT vs.- Salasar Stock Broking Limited [ 2016 (8) TMI 1131 - CALCUTTA HIGH COURT] held that the addition made by the Assessing Officer in the assessment completed under section 153A was beyond the scope in the absence of any incriminating material found during the course of search. Since the assessment for the year under consideration was not pending as on the date of search, there was no abatement and the addition made by the Assessing Officer in the unabated assessment completed under section 153A on account of share capital and share premium amount by treating the same as unexplained cash credit was not sustainable as the same was not made on the basis of any incriminating material found during the course of search. We accordingly uphold the impugned order of the ld. CIT(Appeals) deleting the said addition made by the Assessing Officer and dismiss this appeal of the Revenue.
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2019 (10) TMI 877
Income accrued in India - taxability of IPLC as fees for technical services/ fees for included services (FTS/ FIS) and Royalty under the Income tax Act and India US tax treaty - HELD THAT:- Payment made by the assessee is only in respect of standard services provided by AT T and Spinet, which cannot be held to be Royalty . Only those payment, when it made for scientific work, any patent, trademark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience, which is absolutely missing in the present case. The payment in the present case is not for a payment for a scientific work nor there any patent, trademark, design, plan or secret formula or process for which the payment made. The service is connectivity to the telecom operators in the call end jurisdiction. The facility is a standard facility which is used by other telecom companies as well. Therefore, the action of the assessing officer, which was upheld by ld. DRP, in treating the receipt as fee for FIS/ FTS or for the Royalty is not justified. In the result the ground No. 2 of the appeal is allowed. Taxability of income from sale of shrink- wrapped software as Royalty - HELD THAT:- The receipt on account of sale of copyrighted/Shrink Wrapped Software is not taxable as per Article 12(14) of India-US Tax Treaty. Further, the receipt is also not taxable under the provisions of Income-tax Act as the assessee is eligible for beneficial provision of India-US Tax Treaty in term of section 90(2) of Income-tax Act. Moreover, after the amendment introduced in Explanation (4) in definition of Royalty under section 9(1)(6) by Finance Act, 2012, there is no corresponding change made in definition in term of Royalty under India-US Tax Treaty. Therefore, in view of the aforesaid discussion, the ground no.3 of the appeal is allowed in favour of assessee. Taxability of support and maintenance services as FIS - HELD THAT:- We have noted that the assessee provided support and maintenance services linked with the software supplied. Accordingly, the taxability of such services is dependent on the taxability of software supplied. As we have held that the receipt earned on sale of software is not taxable under Article 12 of India-US Tax Treaty, therefore, the services the receipt from support and maintenance services are also not taxable under 12(4)(b) of India US Tax Treaty. In the result, this ground of appeal is allowed. Taxability of service fee as FTS - HELD THAT:- Fees for included services is defined in Article 12(4) of India-US Tax Treaty, wherein Fees for included services means payment of any kind to any person in consideration for rendering of any technical or consultancy services (including through the provision of services of technical or other personnel if services are ancillary and subsidiary to the application or enjoyment or right, property or information for which payment is received or make available technical knowledge, experience, skill no-how or process or consist of development and transfer of a technical plan or technical design. We have noted that the assessee has claimed that services rendered are ancillary and subsidiary and inextricably essentially linked with the software supplied. In our view, unless the services satisfy the make available test, the same cannot be taxed as FIS. Further, mere fact that provision of service may require technical input by the person providing services does not per se mean the technical knowledge. In our view, the receipt on account of support and maintenance services are not taxable under Article 12 as the services do not make available technical knowledge, experience, skill, know-how or process or consist of any development and transfer of any design. In the result, ground no.5 of the appeal is allowed. Levy of interest under section 234B - HELD THAT:- Assessee is a foreign company and tax resident of USA and as per section 195 of the act taxes deductible at source on all its received and accordingly the assessee was not liable to pay advance tax. Therefore we direct the assessing officer to recompute the tax by following the decision of the jurisdictional High Court in case of NGC network Asia LLC [ 2009 (1) TMI 174 - BOMBAY HIGH COURT] .
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Customs
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2019 (10) TMI 897
Restricted import or not - Nepalese currency - N/N. FEMA 6/ RB-2000 dated 03.05.2000 - Confiscation - penalty - HELD THAT:- The confiscation ordered by Original Authority and sustained through impugned Order-in-Appeal is under the provisions of section 121 of Customs Act, 1962. Under said section of 121 of Customs Act, 1962 only such proceeds can be confiscated which are sale proceeds of sale of smuggled goods. It is established that there were no smuggled goods and therefore the question of sale of smuggled goods in the present appeal does not arise. Further when the smuggled goods are sold in India, they were sold against the exchange of Indian currency. How the smuggled goods are sold in exchange of Nepalese currency within the territory of India has not be explained anywhere by Revenue. Appeal allowed - decided in favor of appellant.
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2019 (10) TMI 896
Valuation of imported goods - Undervaluation and misdeclaration - enhancement of value based on NIDB data - evasion of customs duty - Appellants submits that the investigation into the impugned case is offshoot of investigation conducted against TELE BRANDS (INDIA) PVT LTD, HITESH ISRANI, SHREENATH ENTERPRISES, PRAKASH CHANDRA PANDYA, GNG CO, NANDGOPAL NAIDU VERSUS COMMISSIONER OF CUSTOMS (IMPORT) , MUMBAI [ 2016 (1) TMI 97 - CESTAT MUMBAI] - HELD THAT:- The evidence relied upon by the department is identical/similar. Therefore, following the ratio of tribunal judgement in Tele-brands India Pvt. Ltd the impugned order may be set aside. The instant case also relies on unauthenticated Email, retracted statements. We find that in view of the categorical findings by the Tribunal nothing survives in the case. In fact in the case against Tele-brands some confirmation by the originating country was there, which was not relied upon by tribunal as the same was not authenticated and corroborated. Such communication also is not available in this case. We find that as the very reasons for rejection of transaction value are negated, reference to NIDB data is of no help. Appeal allowed - decided in favor of appellant.
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Corporate Laws
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2019 (10) TMI 895
Winding up of the respondent Company - appointment of Official Liquidator - Sections 541 and 542 of the Companies Act, 1956 - HELD THAT:- The applicant company has been unable to explain the source of funds for acquisition of the land. The applicant has not been able to show bank statements, the statement of accounts, Bank Instruments etc. Despite several opportunities the records which would normally be in the power and possession of the applicants have been deliberately hidden from the court. This clearly raises a strong suspicion about the acts and conduct of the applicants. In the present case, despite directions of this court dated 5.9.2008 and subsequently, the applicants have failed to produce relevant documents to show the details. Clearly, this court would draw an adverse inference against the applicants for having withheld from the court the most relevant documents/important documents to show that it is not a part of the Hoffland Group and the funds for purchase of the land in question were not of the Hoffland Group but of the applicant company. The plea of the applicants lacks bona fide. The best evidence was available with the applicants which they have chosen not to place on record. Only as a mechanism and ploy to delay the proceedings this desperate plea is being taken that this court may frame issues and record evidence - petition dismissed.
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Insolvency & Bankruptcy
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2019 (10) TMI 894
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make payments - Existence of default or not - HELD THAT:- It is clear that the Applicant has provided services for which Corporate Debtor has failed to make payment. The outstanding, operational debt of more than Rupees One Lakh is due and payable against the Corporate Debtor and Corporate Debtor has committed default in making the payment. Further, the Corporate Debtor has not controverted the same even during the hearing. Therefore, the default is also established. The Application under sub-section (2) of Section 9 of I B Code, 2016 is complete. The existing operational debt of more than rupees one lakh is due and payable against the corporate debtor and its default is also proved - Application admitted - moratorium declared.
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2019 (10) TMI 893
Maintainability of application - initiation of CIRP - Section 7 of the Insolvency and Bankruptcy Code, 2016 - precise case of the Petitioner-Financial Creditor is that the total amount in default due to the financial creditor by the corporate debtor as on 03.05.2019, is ₹ 9,91,11,819.00/- - ex-parte order - HELD THAT:- The form and manner of the application has to be the one as prescribed. It is evident from the record that the application has been filed on the proforma prescribed under Rule 4 (2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, read with Section 7, of the Code - We are satisfied that a default amounting to lacs of rupees has occurred. As per requirement of Section 4 of the Code if default amount is one lac or more then the CIR Process would be issued. The application under sub-section 2 of Section 7 is complete; and no disciplinary proceedings are pending against the proposed Interim Resolution Professional. Petition admitted - moratorium declared.
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2019 (10) TMI 892
Liquidation Order - section 33(1)(a) of the Insolvency Bankruptcy Code, 2016 - HELD THAT:- The order of liquidation has been passed by the Adjudicating Authority in view of the application u/s 33 (1)(a) filed by the Resolution Professional on the instruction of Resolution Professional more than 180 days have been passed. In absence of any infirmity, we are not inclined to interfere with the order of liquidation dated 5th December, 2018. In the absence of any application u/s 60 filed by the Appellant before the Adjudicating Authority, the Adjudicating Authority has not decided such issue. Appeal dismissed.
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Service Tax
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2019 (10) TMI 891
Classification of services - Business Auxiliary Service or Travel Agent Service - time limitation - HELD THAT:- This issue is no more res integra and has been settled by the Tribunal and by the Hon ble High of Kerala in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS SHABEER TRAVELS [ 2010 (3) TMI 818 - KERALA HIGH COURT] wherein the Hon ble High Court of Kerala has held that services can not be charged under business auxiliary services - the demand of service tax under Business Auxiliary Service is not sustainable in law, therefore set aside. Time limitation - HELD THAT:- The entire demand is also barred by limitation as the Department has wrongly invoked the longer period by alleging suppression whereas the issue involves pure interpretation and in such circumstances, invoking extended period of limitation is not sustainable. Appeal allowed - decided in favor of appellant.
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2019 (10) TMI 890
Classification of services - services availed by M/s Cathay Pacific Airways Ltd from the CRS Companies who are non resident service providers - On-Line Information and Database Access or Retrieval Service - reverse charge mechanism - appellants have argued that for the purpose of levy service tax under reverse charge mechanism (Section 66A of the Finance Act, 1994), the services should have been received by them from the service provider who is not having any permanent establishment in India - Whether the services of CRS Companies for which contractual agreement was made between the Headquarters of Cathay Pacific Airlines be said to be provided to services received by the Cathay Pacific, Branch Office located in India, for the purpose of levy of service tax? - difference of opinion. HELD THAT:- The matter referred to the President for constituting larger bench to resolve the following issues: (a) What is true scope and interpretation of Section 66A of the Finance Act, 1994 (b) Whether the tribunal has rightly decided in case of British Airways that branch office for the purpose of section 66A was distinct entity from the head office. (c) Whether the tribunal has rightly in case of British Airways held that the payments made by the Head Office against the service received by the branch office located in India, will make the Head Office the recipient of service, for the purpose of Section 66A of the Finance Act, 1994.
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2019 (10) TMI 889
Imposition of penalty - Wrong availment of credit - Man-power Supply Agency Services provided - appellant has reversed the entire wrongly availed credit along with interest before issuance of show-cause notice - intent to evade present or not - HELD THAT:- As per sub-section (3) of section 73, no SCN is to be issued when the credit is reversed on being pointed out by officers of the department. The present SCN has been issued alleging for fraud and suppression of facts on the appellants. The suppression alleged by the department is that while reversing the wrongly availed credit, the appellant has not reversed the entire amount. This cannot be considered as positive act of suppression of facts with intention to evade payment of service tax - Moreover, when the audit party pointed out the error, they reversed the entire amount. The entire figures were correctly reflected in the accounts of the appellant. There are no ingredients to attract sub-section (4) of section 73 of the Finance Act, 1994 - penalty not warranted - appeal allowed - decided in favor of appellant.
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2019 (10) TMI 888
Classification of goods - Cargo Handling Services or not - loading and transportation of coal from Quarry Beds/Coal Handling Plants/Surface Stock to different destinations within the mines - HELD THAT:- The conclusions of the Ld. Commissioner (Appeals) that under the contract the Appellant is to transport coal by Tipper for short distances within the mines including loading, hence, it is taxable under Cargo Handling Service , cannot be countenanced. Under Sec. 65(105)(zzp) read with Sec.65(50a) and Sec. 65(50b) of the Finance Act, 1994, the requirement of provisioning of taxable service to any person by a Goods Transport Agency in relation to transport of goods by road in a goods carriage stands satisfied in this case and transport for long or short distances is not the relevant criterion for classification under the category of Goods Transport Services. Appeal allowed - decided in favor of appellant.
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Central Excise
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2019 (10) TMI 887
CENVAT Credit - input services - outward transportation of goods - place of removal - period Jan. 16 to Jun. 17 - HELD THAT:- The lower authorities have erred in holding that the place of removal is the factory gate - As per the decision of the Hon ble Apex Court in the case of COMMISSIONER, CUSTOMS AND CENTRAL EXCISE, AURANGABAD VERSUS M/S ROOFIT INDUSTRIES LTD. [ 2015 (4) TMI 857 - SUPREME COURT] when the sale is on F.O.R. basis, the freight charges have to be included in the assessable value for discharging of excise duty and if so, the place of removal is the buyer s premises. The place of removal in the present case is the buyer s premises and in such circumstances, the disallowance of credit on the service tax paid on GTA Services cannot be sustained - the disallowance of credit is unjustified - Appeal allowed - decided in favor of appellant.
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2019 (10) TMI 886
Irregular availment and utilization of excess CENVAT credit - inputs - capital goods - typographical error - penalty u/s 11AC - HELD THAT:- It is not the case of Revenue that despite being pointed out by the department about the short reversal of ₹ 50/- the Appellant failed to do the needful nor it is the case of Revenue that they raised this plea before the Adjudicating Authority at the time of hearing. It seems this issue was raised by Revenue before the learned Commissioner for the first time. Had the department raised this shortfall of ₹ 50/- earlier then the Appellant would have paid that amount then and there. It has been pointed out by the learned Chartered Accountant appearing for Revenue that the department in its audit report itself alleged the availment of excess credit amount to ₹ 4,38,389/- only and not the amount of ₹ 4,38,439/-. No reason has been mentioned by the Revenue for mentioning the lesser amount in its audit report. It is the mistake on account of incorrect calculation on the part of the department and Appellant cannot be penalised for it. The Appellant acted fairly and immediately upon being pointed out by the audit party, reversed the excess excess credit availed by them alongwith applicable interest. Imposition of penalty - HELD THAT:- Proviso to Section 11AC(1)(a) , Central Excise Act, 1944 specifically provides that if the assessee pays the duty portion alongwith interest payable u/s. 11AA before the issuance of the show cause notice or within 30 days of issue of show cause notice, no penalty shall be payable by that assessee. In my view since the Appellants have already reversed the entire excess credit availed by them (as pointed out by the audit party) alongwith interest, much before the issuance of the show cause notice, in view of Section 11AC ibid no penalty is payable by them. Appeal allowed - decided in favor of appellant.
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2019 (10) TMI 885
Valuation - casting items were manufactured as per the specification of drawing supplied by the buyers of such casting items - inclusion of value of the said drawings in the assessable value - imposition of penalty - HELD THAT:- The statute provides for adding the value of drawings, blue prints, technical expertise, maps and of such similar items as are used in production of the goods. Apparently and admittedly the drawings herein, for the goods manufactured/produced, are provided by the customers and the value thereof has not been included in the assessable value. Rule 6, as above, specifically includes the value thereof in the assessable value. Irrespective those drawings have been provided free of cost to the appellants, the value thereof is required to be included as per Rule 6 itself. Even in terms of Section 4, as above, the value of these drawings is something else in addition to money - Hence, the value of the impugned drawings is liable to be included in the assessable value. Imposition of penalty - HELD THAT:- The appellant has taken the plea of prevalent confusion but we observe from the record that the appellant was several time asked by the department to produce the evidence about receipt of drawings free of charge and that the same never provided nor ever was declared in the ER-1 returns. Such a conduct of the appellant rather corroborate the alleged intention of the appellant to not to include the value of drawings into the assessable value so as to evade the duty - penalty upheld. Appeal dismissed - decided against appellant.
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2019 (10) TMI 884
SSI Exemption - use of brand name of others - case of the department is that the brand name Laxmen belongs to Sanjay Umrania, therefore, use of brand name by Laxman Metal Sawing Co was use of brand of another person - HELD THAT:- There is no dispute of the facts that the brand name Laxmen was being used by M/s Lalita Machines Tools proprietorship concern of Sh. Sanjay Umrania and also by M/s Laxman Metal Sawing Co which is a HUF proprietorship concern and Sh. Sanjay Umrania is Karta of said HUF, therefore, there is no dispute that both the firm belong to the same family members. In this position, it cannot be said that one is using the brand name of others. The appellant is entitled for SSI exemption - Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2019 (10) TMI 882
Principles of natural justice - Grant of sanction b y the Additional Commissioner under Section 21 (2) of the Act permitting the assessing authority to initiate the re-assessment proceedings - no opportunity of hearing was afforded to the applicant by the Additional Commissioner - Service of order - no SCN issued - HELD THAT:- T he ground being raised and pressed in the present case is fundamental both in the context of re-assessment proceedings as also in the context of violation of natural justice claimed by the assessee. It cannot be denied that the basis of the proceedings is the circular letter dated 18.3.2002. Also, it cannot be denied that the re-assessment order was passed on 30.3.2002 - Further, the reassessment order itself does not make any mention of the date on which the Additional Commissioner may have granted permission to the assessing authority to initiate the assessment proceedings outside the normal period of limitation or the date when it was served on the assessee or the date when re-assessment notice was first served on the assessee. The objections raised by the assessee are touching on jurisdictional issue. They go to the root of the proceedings. Therefore, it is desirable that the matter be re-examined by the first appellate authority specifically on the issue whether there exists an order, granting permission, passed by the Additional Commissioner with respect to the re-assessment proceedings initiated by the assessing authority. The matter is remitted to the first appeal authority to decide the matter afresh - revision allowed by way of remand.
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2019 (10) TMI 881
Best Judgement assessment - rejection of books of accounts - assessee had been subjected to best judgment assessment on trading in wood/timber and manufacture and sale of packing boxes - opportunity of cross examination of the persons from whom the inquiries were made behind the back - HELD THAT:- It is a settled principle in law that any adverse material that the assessing officer seeks to rely against the assessee must be first confronted to the assessee. In as much as, in the facts of the present case, that adverse material is in the shape of statements of third parties, the makers of the statement should have been first offered for cross-examination to the assessee - Even if the aspect of cross-examination is left aside for the moment, insofar as the inquiry that is sole basis of the adverse inference drawn against the assessee is found to have been conducted after the last date of the hearing in the assessment proceedings, no reliance whatsoever could have been placed on the same. The only course open to the assessing officer would have been to fix another date, in the assessment proceedings, and to allow the assessee time to respond to the adverse material that had been brought on record in the meanwhile. In absence of such course having been adopted, the assessment order that was based solely on such adverse material, could not be sustained - Revision allowed.
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2019 (10) TMI 880
Levy of trade tax - Grant of exemption - Eligibility Certificate dated 05.02.1998, issued under section 4-A of the U.P. Trade Tax Act, 1948 - rate of tax payable in each Assessment years during the period of exemption - HELD THAT:- Clearly, in the facts of the case, since the original exemption application filed by the assessee had been allowed (and not rejected), by the Divisional Level Committee, by its order dated 05.02.1998, there never arose any remedy to the assessee to apply for review in terms of Rule 25(3)(c) of the Rules. Therefore, the application that came to be filed by the assessee after grant of Eligibility Certificate was wholly non est. It did not confer jurisdiction on the Divisional Level Committee to review or to re-examine or modify the entitlement to exemption, already granted. The only power that may have remained with the revenue would have been under Section 4-A(3) of the Act, whereunder the Commissioner may have modified the Eligibility Certificate issued by the Divisional Level Committee vide its order dated 05.02.1998. That power having not been exercised, it was neither for the assessing authority nor for the first appellate authority to sit in judgement over the same or to deprive the assessee of any part of the exemption already granted by the Divisional Level Committee. In that context and regard, the assessing authority as also the first appellate authority, were purely executing authorities, that had to give full effect to the Eligibility Certificate duly granted by the competent authority namely Divisional Level Committee - answered in the negative i.e. completely in favour of the assessee and against the revenue. Whether the Trade Tax Tribunal is legally justified in law in confirming the orders passed by Authorities below rejecting the books of account of revisionist without any incriminating material available to him? - HELD THAT:- Plainly, the books of account had been rejected for varied reasons that have been noted and considered by the Tribunal as well. That being a question of fact and findings recorded thereon being based on material and evidence on record, it does not call for any interference by this Court in exercise of revisory jurisdiction - answered in the affirmative i.e. in favour of the revenue and against the assessee. Revision application allowed in part.
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Indian Laws
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2019 (10) TMI 883
Suit for recovery along with pendente lite and future interest and costs against the Defendants - stocking and retail sale of alcoholic beverages from its outlets at Gurgaon - Whether Mr. Satish Chandra Pandey is duly authorised to sign, file and institute the present suit on behalf of the plaintiff company? - HELD THAT:- Since the resolution of the Board has been proved by producing the original minute book, mere absence of seal/signature over the same makes it immaterial. Significantly, pursuant to the specific authorization to Mr. Satish Chandra Pandey, the Plaintiff Company has consistently participated in the present proceedings and this leaves no room for doubt that the authorization was valid. The prosecution of the suit is itself ratification of the authorization given by the Board - It is established that the suit was validly instituted by a competent person who has been authorized by the Plaintiff Company by way of a resolution by the Board of Directors. Accordingly, the issue is decided in favour of the Plaintiff and against the Defendants and it is held that Mr. Satish Chandra Pandey has validly signed, filed and instituted the present suit on behalf of the Plaintiff Company. Whether the Plaintiff is entitled to recover the amount of ₹ 2,50,96,591.44 from the Defendants? - HELD THAT:- On a conjoint reading of all the documents produced on record i.e. Form L-32, L-34 and invoices, it can be firmly inferred that the Plaintiff has successfully proved the supply of goods under the aforesaid forms and the invoices. It is also significant to note that Defendants have led no evidence to the contrary. Undoubtedly, the burden of proof for this issue lay upon the Plaintiff, as it had to prove the liability. However, shifting of onus of proof is a continuous process in the evaluation of evidence. In the present case, during trial the Plaintiff had been able to produce sufficient material in the nature of documentary and oral evidence that suggests the high degree of probability of the liability of the Defendants, the onus thus shifted on the Defendants - Defendants have failed to discharge the onus and in the absence thereof, the burden of proof, never shifted back and thus on the basis of high degree of probability established by the Plaintiff it can be said that Plaintiff has discharged the onus. On the basis of the documents and the evidence led, it emerges that the defense of the Defendants was only with the intent to avoid liability, without any substance and that Plaintiff s case is proved through preponderance of probability. Having regard to the fact that Defendants have not been able to elicit anything adverse with respect to the entries reflected in the said document, it can be safely inferred that statement of accounts along with corroborating independent evidence has been led in the present case so as to render the statement of account as reliable evidence within the meaning of Section 34 - the aforesaid issue is decided in favour of the Plaintiff and against the Defendants. Whether the Plaintiff is entitled to the award of pendente lite and future interest @24% per annum and if not at the same rate, then at what rate and for what period? - HELD THAT:- Defendants have not been able to place anything on record to disprove the documents relied upon by the Plaintiff and therefore it is clear that there was an agreement between the parties to pay interest on the outstanding amount and hence Defendants are liable to pay interest on the outstanding amount. However, the rate of interest claimed is found to be on the higher side and accordingly the pendente lite and future interest is awarded in favour of the Plaintiff at the rate of 12% per annum - decided in favour of the Plaintiff and against the Defendants. Whether the Plaintiff did not supply the quantity of beverages in accordance with the invoices in question? - HELD THAT:- No evidence affecting a party is admissible against that party unless the latter has had an opportunity of testing its truthfulness by cross examination. Therefore any such statement made by DW-1 favouring the Defendants cannot be relied upon. On the contrary, in view of the findings given in respect of Issue No.2, the Plaintiff has duly proved the documents and the transactions between the parties and proved that Defendants have an outstanding liability towards the Plaintiff. Even otherwise the testimony of the Defendants witnesses, examination in chief and the cross examination does not prove that there was any shortage of supply - the issue is decided against the Defendant and against the Plaintiff. Relief - HELD THAT:- A decree is passed in favor of the Plaintiff and against the Defendants for a sum of ₹ 2,50,96,591.44/- alongwith pendente lite and future interest at the rate of 12% per annum from the date of filing of the present suit, till the date of realization. Plaintiff is also entitled to the cost of the suit on furnishing the certificate of cost within a period of three weeks.
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2019 (10) TMI 879
Refuse to grant bail - Section 120B IPC read with Section 420 IPC, Section 8 and Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988 - alleged irregularities in Foreign Investment Promotion Board (FIPB) clearance given to the INX Media for receiving foreign investment to the tune of ₹ 305 crores against approved inflow of ₹ 4.62 crores. When other factors i.e. flight risk and tampering with evidence are held in favour of the appellant, whether the High Court was justified in declining regular bail to the appellant on the apprehension that there is possibility that the appellant might influence the witnesses? HELD THAT:- The jurisdiction to grant bail has to be exercised on the basis of the well-settled principles having regard to the facts and circumstances of each case. The following factors are to be taken into consideration while considering an application for bail:- (i) the nature of accusation and the severity of the punishment in the case of conviction and the nature of the materials relied upon by the prosecution; (ii) reasonable apprehension of tampering with the witnesses or apprehension of threat to the complainant or the witnesses; (iii) reasonable possibility of securing the presence of the accused at the time of trial or the likelihood of his abscondence; (iv) character behaviour and standing of the accused and the circumstances which are peculiar to the accused; (v) larger interest of the public or the State and similar other considerations - There is no hard and fast rule regarding grant or refusal to grant bail. At this stage itself, it is necessary for us to indicate that we are unable to accept the contention of the learned Solicitor General that flight risk of economic offenders should be looked at as a national phenomenon and be dealt with in that manner merely because certain other offenders have flown out of the country. The same cannot, in our view, be put in a straight-jacket formula so as to deny bail to the one who is before the Court, due to the conduct of other offenders, if the person under consideration is otherwise entitled to bail on the merits of his own case. Hence, in our view, such consideration including as to flight risk is to be made on individual basis being uninfluenced by the unconnected cases, more so, when the personal liberty is involved. Insofar as the flight risk and tampering with evidence are concerned, the High Court held in favour of the appellant by holding that the appellant is not a flight risk i.e. no possibility of his abscondence . The High Court rightly held that by issuing certain directions like surrender of passport , issuance of look out notice , flight risk can be secured. So far as tampering with evidence is concerned, the High Court rightly held that the documents relating to the case are in the custody of the prosecuting agency, Government of India and the Court and there is no chance of the appellant tampering with evidence. The appellant is not a flight risk and in view of the conditions imposed, there is no possibility of his abscondence from the trial. Statement of the prosecution that the appellant has influenced the witnesses and there is likelihood of his further influencing the witnesses cannot be the ground to deny bail to the appellant particularly, when there is no such whisper in the six remand applications filed by the prosecution. The charge sheet has been filed against the appellant and other co-accused on 18.10.2019. The appellant is in custody from 21.08.2019 for about two months. The co-accused were already granted bail. The appellant is said to be aged 74 years and is also said to be suffering from age related health problems - Considering the above factors and the facts and circumstances of the case, we are of the view that the appellant is entitled to be granted bail - Appeal allowed - decided in favor of appellant.
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