TMI Tax Updates - e-Newsletter
October 29, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
Indian Laws
Highlights / Catch Notes
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GST:
AOP or BOI - renting of immovable property - The co-owners of a jointly held immovable property cannot be treated as an association of persons for determining the liability and requirement of registration under the GST Act where their income from renting is separately ascertainable and assessed for income tax individually at the hand of each co-owner.
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GST:
Levy of GST - The Applicant’s supply of stores to foreign going vessels, as defined under section 2(21) of the Customs Act, 1962 Act, is not export or zero-rated supply, unless it is marked specifically for a location outside India.
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GST:
Receipt of the Child Adoption Fees - The activities, including the activity of facilitating the adoption of the children by the Adoptive parents, are in the nature of “Charitable Activities” , which also consists of advancement of educational programmes or skill development relating to abandoned, orphaned or homeless children - Benefit of exemption available.
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GST:
Levy of GST - The applicant is liable to tax for acting as an intermediary for booking of hotel rooms to the pilgrims from outside, if he does not satisfy all the conditions prescribed for a pure agent.
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GST:
Levy of GST - Charitable Activities - they are providing accommodation services to the pilgrims and charging the persons on a monthly basis or daily basis for residential purposes - The applicant is liable to pay tax in renting of temporary residential rooms for consideration to the devotees and renting of space for shops and stalls.
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GST:
Classification of services - composite supply or mixed supply - The services supplied by the applicant do not constitute a Composite Supply and would be a mixed supply, when the services are billed for a single price in case where the relocation related services are actually provided by them
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GST:
Rate of tax - sub-contract - Since this involves the works related to railway network, the contract can be said to be pertaining to Railways. The term “pertaining to Railways is more expansive and includes other establishments other than Indian Railways. Hence the contract is pertaining to Indian Railways - taxable at 12% of GST
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GST:
Classification of services - auctioning of flowers - providing services for sale or purchase of agricultural produce - Since the applicant is a “commission agent” within the meaning of the term, he also falls under the definition of agent - The “cut flowers” are covered under the definition of “agricultural produce” - Benefit of exemption available.
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Income Tax:
Addition on account of loss of sales of stock - assessee did not submit any stock statement and the bank considered the stock of the company as Nil - The expert has given his exhaustive report and concluded that stocks after 4 1/2 years will deteriorate and will hardly have any value. - CIT(A) has rightly allowed the claim of the assessee
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Income Tax:
Exemption on agricultural income - firm is not the owner of such agricultural land but the partners - assessee firm though not being the owner of the agricultural land in question is entitled to get exemption of the agricultural income derived from the said land owned by the partners of the firm.
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Income Tax:
Genuineness of expenses - purchase of diesel and oil - the in-house consumption of diesel and oil cannot be neglected. But the fact that the assessee has not maintained separate ledgers for the in-house consumption of the diesel and oil viz a viz supplied to the subcontractors cannot be ignored - 50% of expenses allowed.
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Customs:
100% EOU - principles of of promissory estoppel - It is settled law that in case of exemption, it is responsibility of the person claiming the exemption to satisfy that the said exemption is available to him - demand of interest upheld.
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Customs:
Classification of a product - long pepper/pippali - appellant classified their product under CTH 12119099 whereas the department proposed its classification under 09041110 - to be classified under CTH 09041110.
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IBC:
Validity of Resolution plan - Now 270 days is being over as per calculation on the basis of the order of extension, we hold that in absence of any other reason, the Adjudicating Authority has rightly rejected the application for exclusion of certain period.
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IBC:
Extension of CIRP - not taking a decision by the CoC without any reason will not become a reason for exclusion of the time period from the CIRP period. Besides this, CoC has not even passed a resolution seeking exclusion or extension of time as prayed by the Resolution Professional.
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Service Tax:
BAS - export of services or not - the sale of the products and services manufactured or provided by the Foreign Company have been made by the assessee to the Indian customer / client is completely immaterial inasmuch as the assessee has provided the services at the behest of service recipient located outside India - services are to be held to be used outside India as well as delivered outside India.
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Service Tax:
Classification of service - local transportation/shifting charges collected by the Appellant which is inclusive of loading of tipper, transportation upto Railway Track Head and automated unloaded of tipper at the Railway Track Head - The contract is essentially for the transportation of goods.
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Service Tax:
CENVAT credit - input services - Appellant was entitled to avail the Cenvat Credit on the three services, namely, construction service, clearing and forwarding service and real estate service - appeal allowed
Notifications
Customs-
42/2019 - dated
25-10-2019
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ADD
Seeks to rescind notification No. 13/2019-Customs (ADD) dated 14th March, 2019, in pursuance of New Shipper Review investigation issued by DGTR
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41/2019 - dated
25-10-2019
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ADD
Seeks to amend notification No. 28/2018-Customs (ADD) dated 25th may, 2018, in pursuance of New Shipper Review investigation issued by DGTR
GST - States-
21/2019 - No. FD 47 CSL 2017 - dated
16-10-2019
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Karnataka SGST
Seeks to amend Notification No. (17/2019) No. FD 47 CSL 2017, dated the 7th September, 2019
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20/2019 - No. FD 47 CSL 2017 - dated
16-10-2019
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Karnataka SGST
Seeks to make filing of annual return under section 44 (1) of Karnataka Goods and Services Tax Act, 2017 for F.Y. 2017-18 and 2018-19 optional for small taxpayers whose aggregate turnover is less than ₹ 2 crores and who have not filed the said return before the due date
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19/2019 - No. FD 47 CSL 2017 - dated
16-10-2019
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Karnataka SGST
Seeks to prescribe the due date for furnishing FORM GSTR-1 for registered persons having aggregate turnover of up to 1.5 crore rupees for the quarters from October, 2019 to March, 2020.
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GO. Ms. No. 25/2019-Puducherry GST (Rate) - dated
1-10-2019
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Puducherry SGST
Service by way of grant of liquor licence against consideration in the form of licence fee or application fee or by whatever name it is called
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GO. Ms. No. 24/2019-Puducherry GST (Rate) - dated
1-10-2019
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Puducherry SGST
Seeks to amend Notification G.O. Ms. No.7/2019 - Puducherry GST (Rate). dated the 31st March, 2019
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G.O. Ms. No. 23/2019-Puducherry GST (Rate) - dated
1-10-2019
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Puducherry SGST
Seeks to amend Notification No. 4/2019-Puducherry GST (Rate). dated the 31st March, 2019
News
Case Laws:
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GST
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2019 (10) TMI 1140
Association of persons or a body of individuals - Total rental received exceeds the threshold provided under section 22(1) of the GST Act, but the share of each of the three co-owners does not cross the said threshold - whether the applicant and the other two co-owners are to be treated as an association of persons or a body of individuals and, therefore, a person as defined under section 2(84)(f) of the GST Act, who is required to be registered under section 22(1) of the Act? HELD THAT:- Section 26 of the Income Tax Act, 1961 prohibits the assessment of the co-owners of a property consisting of buildings or buildings and land appurtenant thereto as an association of individuals if their respective shares in the property are definite and ascertainable. Shares of each such persons in the income from the property as computed in accordance with sections 22 to 25 shall be included in his total income - Section 3(42) of the General Clauses Act, 1897 defines the term person for itself and for all Central Acts and Regulations to be made thereafter, unless there is anything repugnant in the subject or context. It defines a person to include any company or body of individuals, whether incorporated or not. The issue involved in all these appeals is that the appellants are co-owners of their properties leased out to tenants. The properties are jointly held, and the rental received is assessed under the Income Tax Act 1961 separately for each co-owner. The Applicant, along with the other co-owners, jointly owned an immovable property and rented it out to the central authority after executing a contract jointly to that effect. Each of the co-owners receives the rental proportionate to his share in the immovable property and the income tax authority assesses him separately on the income so received. Although the co-owners have jointly executed the contract and the service of renting the property cannot be supplied separately by any of the co-owners, it appears there is a judicial unanimity against treating the co-owners as an association of persons for taxation where their income from renting is separately ascertainable and assessed for income tax individually at the hand of each co-owner. The co-owners of a jointly held immovable property cannot be treated as an association of persons for determining the liability and requirement of registration under the GST Act where their income from renting is separately ascertainable and assessed for income tax individually at the hand of each co-owner.
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2019 (10) TMI 1139
Classification of supply - pure service or a composite supply? - supply of goods does not exceed more than 25% of the value of the supply - the recipient is government, local authority, governmental authority or a government entity - whether the supply is being made in relation to any function entrusted to a panchayat or a municipality under the Constitution? - deduction of TDS - HELD THAT:- The consideration to be paid measures the work only in terms of the quantity of the garbage lifted and removed. Based on the above documents, it may, therefore, be concluded that the Applicant s supply to HMC is a pure service - Article 243W of the Constitution that discusses the powers, authority and responsibilities of a Municipality, refers to the functions listed under the Twelfth Schedule as may be entrusted to the above authority. Sl No. 6 of the Twelfth Schedule refers to public health, sanitation, conservancy and solid waste management. The Applicant s supply to HMC is a function mentioned under Sl No. 6 of the Twelfth Schedule - Applicant s service to HMC, therefore, is exempt under Sl No. 3 of the Exemption Notification. The TDS Notifications bring into force section 51 of the GST Act, specifying the persons under section 51(1)(d) of the Act and have mandated and laid down the mechanism for deduction of TDS. These notifications, therefore, are applicable only if TDS is deductible on the Applicant s supply under section 51 of the GST Act. Section 51 (1) of the Act provides that the Government may mandate inter alia a local authority to deduct TDS while making payment to a supplier of taxable goods or services or both - As the Applicant is making an exempt supply to HMC the provisions of section 51 and, for that matter, the TDS Notifications do not apply to his supply.
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2019 (10) TMI 1138
Levy of GST - Applicant supplies foreign going vessels stores like paint, rope, spare parts, electronic equipment etc. - zero-rated supplies or not? - HELD THAT:- The supplier there is supplying warehoused goods as stores to the merchant ships on the foreign run where the goods are not to be consumed until the vessel crosses the territorial waters of India. In other words, the foreign going vessel is merely transporting the stores until it reaches a location outside India. Facts of the Applicant s case are not similar or that specific. Foreign going vessels obtain stores and spare parts while staying anchored at a port in India. There is no reason why the part of such stores that the crew consume or is used for repairing or servicing of the vessel while in India should be treated as export. The Applicant s supply of stores to foreign going vessels, as defined under section 2(21) of the Customs Act, 1962 Act, is not export or zero-rated supply, unless it is marked specifically for a location outside India - The Applicant is, therefore, liable to pay tax on such supplies under the GST Act or the IGST Act.
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2019 (10) TMI 1137
Exemption from GST - Charitable Activities or not - activities conducted by The Children of the World (India) Trust - receipt of the Adoption Fees paid under Regulation 46 of the Adoption Regulations, 2017 by the Prospective Adoptive Parents to the Trust - benefit of N/N. 12/2017-Central Tax (Rate) dated 28.06.2017 as amended - HELD THAT:- On careful consideration of the definitions of business , supply and consideration contained in the CGST/SGST Act, we are of the opinion that the applicant, alongwith providing for advancement of educational programmes or skill development relating to abandoned, orphaned or homeless children, is also providing a service of facilitating adoption and receiving consideration in the form of adoption fees for such facilitation services rendered by them. Therefore, their activities are covered within the scope of CGST/SGST Act. Whether the activities are covered under Exemption Notification 12/2017? - HELD THAT:- The applicant is a Specialized Adoption Agency as defined under the relevant laws and they have established a shelter, namely, Vishwa Balak Kendra , in their own building and provide shelter, food, clothing, healthcare, foster care and basic education to abandoned, orphaned or homeless children below 6 years of age till the time of adoption. Further, their activities which are in the nature of Charitable Activities , also consists of advancement of educational programmes or skill development relating to abandoned, orphaned or homeless children. Such activities are clearly covered under Sr. No. 1 of Notification No.12/2017-CT. (Rate) dated 28.06.2017 as amended from time to time and the applicant being an entity registered under Section 12AA of the IT Act, such activities carried out by the applicant are exempted by the said notification. Whether the receipt of the Adoption Fees paid to them by the Adopting parents, under Regulation 46 of the Adoption Regulations, 2017 is exempted under the Notification No-12/2017? - HELD THAT:- The applicant is a Charitable Trust registered as a Specialized Adoption Agency and is an institution recognized under Section 65 of the said Act, for housing orphans abandoned and surrendered children placed there by order of the Committee for the purpose of adoption. Every aspect of their activity is controlled and processed by CARA. The applicant does not and cannot take any remuneration, donation or any other amount other than the Adoptions fees paid to them. The Adoption Fees as on the date is affixed amount of ₹ 40,000/- for Intra Country and US$ 5,000/-, in case of Inter-Country Adoption. The activities, including the activity of facilitating the adoption of the children by the Adoptive parents, are in the nature of Charitable Activities , which also consists of advancement of educational programmes or skill development relating to abandoned, orphaned or homeless children. Such activities are clearly covered under Sr. No. 1 of Notification No. 12/2017- C.T. (Rate) dated 28.06.2017 and are exempted by the said notification - Therefore the receipt of the Adoption Fees by the applicant from the Prospective Adoptive Parents to the Trust is exempted from the levy of Goods and Services Tax.
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2019 (10) TMI 1136
Levy of GST - renting of temporary residential rooms for consideration to the devotees and renting of space for shops and stalls for the purpose of religious programmers where the predominant object is not to do business but for advancement of religion - Scope of 'Charitable Activities' - HELD THAT:- The applicant is constructing buildings and giving it on rent, etc. which are not directly related to the advancement of religion, spirituality or yoga and hence the contention of the applicant that these are not in the course or furtherance of business cannot be accepted and held that these are covered within the meaning of supplies under section 7(1) of the CGST Act. What is not covered under the term business is the core activities propagating religious or spiritual activity and not the commercial activity of receipt and supply of goods or services or both, undertaken by a charitable trust - Though the main object of the trust is charitable activity which cannot be covered under the term business , not all activities of the trust can be kept out of the definition of supplies . Thus, if the person (supplier) makes a taxable supply, he shall be liable to get himself registered, if his aggregate turnover exceeds the threshold - The applicant is liable to pay tax in renting of temporary residential rooms for consideration to the devotees and renting of space for shops and stalls. Whether the applicant is liable to pay tax on renting of temporary residential rooms as mentioned in five categories to the devotees to stay for the purpose of religious programmes where charges per room is less than ₹ 1000-00 per day? - N/N. 11/2017 - Central Tax (Rate) dated 28.06.2017 - HELD THAT:- The plain reading of the entry 7(ii) of the above Notification reveals that the accommodation provided in commercial places meant for residential or lodging purposes having a declared tariff of a unit of accommodation of ₹ 1000-00 per day per unit or equivalent would be taxable at 6% under CGST Act. The main clauses to be considered is that the accommodation must be provided in a commercial place and such commercial place must be meant for residential or lodging purposes. There is no doubt that the applicant is a supplier of service within the scope of section 7(1) of the CGST Act and they are providing accommodation services to the pilgrims and charging the persons on a monthly basis or daily basis for residential purposes and hence the activity of the applicant is squarely covered under this entry. Entry No. 14 of Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017 states that Services by a hotel, inn, guest house, club or campsite by whatever name called, for residential or lodging purposes, having a declared tariff of a unit of accommodation below one thousand rupees or equivalent is exempted from tax and these services must be of heading 9963. The applicant is liable to pay tax on renting of temporary residential rooms of all categories if the declared tariff of a unit of accommodation is ₹ 1000-00 or more per day or equivalent. Whether the applicant is liable to pay tax on the renting of space for stalls? - HELD THAT:- The applicant is liable to pay tax on renting of space for stalls - Answered in affirmative. Whether the applicant is liable to pay tax on supply of food and beverages at subsidized rates to the devotees, where the predominant object is not to do business but for the advancement of religion? - HELD THAT:- It is to be noted that the applicant is charging consideration for the supply of services. The entry 7 of the Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017 makes it very clear that the supply of goods being food or any article for human consumption or drink by way of or part of any service or in any manner whatsoever is taxable. Hence the supply of food and beverages at subsidized rates to the devotees is taxable under the GST Act. Whether the applicant is liable to pay tax on providing space for registered person without consideration for supply of food and beverages to the devotees, where consideration is received by registered person directly from devotees? - HELD THAT:- The applicant is providing space for registered person without consideration for supply of food and beverages to the devotees and the consideration for the food and beverages supplied by such registered person is received by him directly from the devotees. This would amount to a supply of usage rights of space without consideration and the devotees are consumers - Schedule I to the CGST Act which is related to the activities to be treated as supply even if made without consideration does not cover this item as long as the registered person and the applicant arc not related persons. In case the two are related persons as per definition of related persons as defined in Explanation to section 15 of the CGST Act, 2017, then the providing of space for registered person without consideration would be a supply liable to tax as per the provisions of the CGST Act, 2017. Whether applicant is liable to pay tax for acting intermediary for booking hotel rooms to the pilgrims from outside? - HELD THAT:- It is observed that the applicant intends to book hotel rooms to the pilgrims from outside and the supply of service is by the hotel to the pilgrims and the applicant is facilitating the supply of accommodation service to the pilgrims by the hotel - The applicant is liable to tax for acting as an intermediary for booking of hotel rooms to the pilgrims from outside, if he does not satisfy all the conditions prescribed for a pure agent (i.e the services must be procured from suppliers of accommodation service in addition to the service he supplies on his own account).
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2019 (10) TMI 1135
Classification of services - composite supply or mixed supply - gamut of services collectively referred to as Relocation Management Service provided by the Applicant - HELD THAT:- The agreement show that the applicant is only acting as an agent of the Company to which it is providing service and the service is based on the requirement of each of the employee of the Company. The employee of the Company chooses the services required for him and the applicant facilitates the provision of such services and each of the value of the services is fixed by the agreement and separate Service Charges are fixed. Hence there is no common price involved in the entire service and hence is not covered under a single package. Composite supply or not - HELD THAT:- The terms of the contract between the applicant and the Company are verified and found that the actual supply of relocation services is between the third parties to the Company and the invoicing is also done to the Companies by the third parties. The actual liability of paying the consideration is also on the Company and hence the Company is the recipient of service. The supplier of service is the Third Party Service Provider and each of these services may be provided by different Service providers. Hence this cannot be a composite supply, less so in the hands of the applicant - The billing is done as per the Schedule and includes Direct Cost of such service plus Service Fees plus taxes applicable. Each service has a separate service fees and the services are separately classifiable and if such services are billed in a common invoice that does not amount to a naturally bundled supply and hence the same is not a composite supply. Mixed supply or not - HELD THAT:- The transaction of the applicant is verified and in case where the third parties supplies individual services to the company where invoicing is done to the company directly, the same does not come under services supplied by the applicant in relation to such supply. But where the services are actually supplied by the applicant as authorised services by himself to the company, and in case where such multiple services are for a single price, then since such supplies would not constitute a composite supply, the same may be categorized as a mixed supply . The services supplied by the applicant do not constitute a Composite Supply and would be a mixed supply, when the services are billed for a single price in case where the relocation related services are actually provided by them - The services provided to the company as an agent are management support services of relocation related services which is a single service covered under SAC 9985 and is covered under entry 23(ii) of Notification No.11/2017-Central Tax (Rate) dated. 28.06.2017.
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2019 (10) TMI 1134
Rate of tax - sub-contractors who executes the works contract work like supply of goods or services or both pertaining to Railways based on the order received from the main contractor who got the work order directly from Railways - composite supply or not - applicability of N/N. 11/2017- Central Tax dated 28.06.2017 as amended - relevant date of applicability of the notification. HELD THAT:- The main contractor has obtained the contract from M/s Dedicated Freight Corridor Corporation of India Limited ( DFCCIL ) and then subcontracted to the applicant. The work is related to supply and installation, testing and commissioning of automatic signaling equipment of Indoor and Outdoor, LC Gates as per the requirement of DFCCIL - Since this involves the works related to railway network, the contract can be said to be pertaining to Railways. The term pertaining to Railways is more expansive and includes other establishments other than Indian Railways. Hence the contract is pertaining to Indian Railways. Hence the sub-contract work is covered under the entry 3(v) of the Notification No.11/2017-Central Tax (Rate) dated 28.06.2017 as amended by Notification No.20/2017- Central Tax (Rate) dated 22.08.2017 and is liable to tax at 12% (6% CGST + 6% SGST or 12% IGST) w.e.f. 22.08.2017. Prior to 22.08.2017 it was taxable at 18% under entry 3(ii) of Notification No.11/2017-Central Tax (Rate) dated 28.06.2017.
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2019 (10) TMI 1133
Classification of services - auctioning of flowers - providing services for sale or purchase of agricultural produce - applicability of exemption notification - commission earned from auctioning of flowers - covered under entry no. 54(e) (g) of N/N.12/2017 - Central Tax (Rate) dated 28.06.2017 and entry no. 54(e) (g) of Notification (12/2017) FD 48 CSL 2017 dated 29.06.2017? - Principal-agent relationship. HELD THAT:- The activity of the applicant is examined and found that the applicant is an auction house where the growers of the flowers bring the flowers to auction them and the buyers come and buy the produce. On successful auction, the applicant issues invoice on behalf of the growers and collect the sale price from the buyers and pays the consideration to the growers. Hence the applicant is acting as a Selling Commission Agent of the Growers. At the same time, he is also collecting commission for the services rendered to the buyer in providing the facilities etc. in connection with the flower auction. In the present case the applicant has presented sample copies of invoices where the applicant issues the invoices for further supply of goods on behalf of the principal. This shows that the provision of the goods by the growers to the applicant is covered under Entry 3 of Schedule I of the CGST Act, 2017. Accordingly the relationship between the applicant and the growers is that between a principal and its agent - however, the fact that the applicant has the authority to pass or receive the title of the goods on behalf of the principal shows that the applicant predominantly acts as the commission agent. Since the applicant is a commission agent within the meaning of the term, he also falls under the definition of agent - The cut flowers are covered under the definition of agricultural produce as is defined in the para 2(d) to the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. Entry No.54 of the Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 prescribes exemption for the services relating to agricultural produce by way of services by a commission agent for sale or purchase of agricultural produce - Since the applicant is a commission agent within the meaning of the term and he is providing services for sale or purchase of agricultural produce, the same is covered under clause (g) of entry no.54 of the Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 and hence the services provided by the applicant is exempted from CGST - Similarly, the services are covered under clause (g) of entry no.54 of the Notification (12/2017) No. FD 48 CSL 2017 dated 29.06.2017 and hence are exempted from tax under the Karnataka Goods and Services Tax Act, 2017.
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2019 (10) TMI 1132
Release of goods - CGST Act, 2017 - section 67(8) of the Act read with Rule 141 of the relevant Rules - HELD THAT:- The Central Goods and Services Tax Act, 2017 provides a complete procedure for release of such goods, as contained in section 67(8) of the Act read with Rule 141 of the relevant Rules - Subject to compliance of the above provisions of law, the goods so seized may be considered for release within next one week. Petition disposed off.
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Income Tax
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2019 (10) TMI 1131
Remedy available under Section 144C(2)(b) - dispute recommended to competent forum - mechanism to resolve the dispute through the Dispute Resolution Panel - TP Adjustment - Income accrued in India - petitioner is a Permanent Establishment of EOS Germany in India as per the Act and India-Germany Double Tax Avoidance Agreement ('DTAA') - Petitioner Company operates as an Indian Branch office of EOS GmbH Electro Optical Systems, Germany ('Head Office') - Whether petitioner merely acts as a liaison office between the Head Office and its customers in India? - HELD THAT:- It is evident that so many factual disputes, which go to the root of the matter, viz., the nature of activities carried on by the petitioner, exist between the parties. Unless and until those factual disputes are settled by appreciation of factual aspects of the matter by a fact finding authority, the question as to whether the income at the hands of the petitioner is to be treated as income earned in India and liable for tax, as claimed by the Revenue, or as the income to be determined by adopting ALP method, as claimed by the petitioner, cannot be considered by this Court and decided at this stage, since the order impugned is only a draft assessment order and the petitioner is only called upon to make objection against the same, if they are not agreeable. Therefore, the disputes raised by the petitioner herein are to be considered by the competent forum provided under the statute itself and resolved accordingly. It is not any empty formality but an effective mechanism. Therefore, to settle such dispute, necessarily the petitioner has to go before the Dispute Resolution Panel as provided under Section 144C of the Income Tax Act, 1961. When the statute provides a mechanism for resolving the dispute between the parties and before which forum, the assessee is entitled to file objections of any nature and when such forum is also vested with power to issue directions to the Assessing Officer for completion of the assessment, this Court is of the view that it is not correct to contend as if the scope and ambit of such forum is with limited purpose and jurisdiction on certain issues. If the above contention of the petitioner is to be accepted that the issue raised in this writ petition cannot be considered by the Dispute Resolution Panel, I am of the view that the very object of providing such mechanism to resolve the dispute through the Dispute Resolution Panel would become redundant. It is well settled that in fiscal matters, the parties cannot directly approach this Court and file writ petition, when an effective alternative remedy is available under the Statute. In other words, the parties cannot attempt to short circuit the whole process, by filing a writ petition straight away and inviting this Court to either assume the role of the Appellate Authority or the Revisional Authority. Therefore, this Court is of the view that the petitioner, instead of agitating the matter before this Court, has to approach the Dispute Resolution Panel and file their objections as provided under Section 144C.
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2019 (10) TMI 1130
Revision u/s 263 - direction to the AO to verify whether the extra amounts paid by the assessee-company over and above the consideration recorded in the sale deeds to the land owners in respect of certain properties purchased by it are payments made towards purchase of lands or not and whether such extra amounts were received by the sellers - Tribunal was convinced that all payments were made to the land owners by the assessee by cheque and therefore the identity and genuineness of the transactions was proved - HELD THAT:- Revenue sought to contend that the finding of the Tribunal that the transactions made by the assessee were genuine, is perverse and illegal, and a case is made out for interference of this Court in exercise of its jurisdiction under Section 260(A) of the Income Tax Act, 1961, we are unable to accede to the said contentions for the reason that finding of the Tribunal recorded above is based on appreciation of evidence and after perusing the material placed before the Tribunal by the assessee. The finding of the Tribunal that payments were made by cheques by the assessee to the land owners and the identity and the genuineness of the transactions between the land owners and the assessee is proved, is a finding of fact based on appreciation of evidence and does not warrant any interference by this Court in exercise of its jurisdiction under Section 260A of the Act. Appeal is without merit and it is dismissed
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2019 (10) TMI 1129
Revision u/s 263 - No deduction of tds on rendering courier services - HELD THAT:- Commissioner of Income Tax, has not appreciated the modus operandi followed by the petitioner in proper perspective and has proceeded upon the erroneous understanding that the petitioner is rendering courier services in respect of which the income therefrom would be tax deductable. The petitioner is not, in fact, a courier agency itself, but an on-board courier, that transports/carries parcels for transport from one courier agency to its counterpart in other States. For these services it receives a commission, which undisputedly, has been offered to tax. The payment received by the petitioner as freight charges represents the direct cost incurred as charges for cargo or cost of ticket purchased. Such payment constitutes a direct cost and hence would not fall within the sweep of income upon the tax is liable to be deducted. - Decided in favour of assessee
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2019 (10) TMI 1128
Bogus purchases - Assessment framed u/s 143(3) r.w.s. 153A - Addition of 25% of such purchases as bogus u/s 69C - HELD THAT:- AO had made addition by merely relying on the statement of one Shri Rajendra Jain which cannot be termed as an incriminating material as said statement should have related to incriminating material found during the course of search or statement must be made relatable to material by subsequent enquiry/ investigation. Addition made by the AO @ 25% of alleged bogus purchases - CIT-A deleted the addition - In the present case, no opportunity to cross examine said Shri Rajendra Jain was provided by the Revenue authorities. Thus it was rightly held that not providing cross examination tantamount to denial of natural justice and does vitiate the assessment. CIT(A) has also considered that the AO himself had recorded in the assessment order that letter was issued to Custom Authorities SEZ-II, Sitapura Industrial Area, Jaipur to verify the said purchases and the AO has recorded a finding that SEZ authorities have confirmed that said purchases are genuine as duly recorded in their records. This itself cast a doubt on AO s conclusion that purchases made by the assessee were bogus. More particularly, when it is certificate from another Govt. Agency by certifying the genuineness of the purchases and it tilts preponderance of probability in favour of the assessee. It is pertinent to mention that the ld. CIT(A) has explicitly dealt with the issue and deleted the addition made by the AO giving full justification to the issue in question and we find no reason to interfere with the order of the ld. CIT(A) Delayed contribution of employees s contribution towards PF and ESIC - CIT(A) deleted the addition - HELD THAT:- As decided in CIT Vs. State Bank of Bikaner Jaipur (2014) [ 2014 (5) TMI 222 - RAJASTHAN HIGH COURT] where PF and/or EPF, CPF, GPF, etc., was paid after the due date under the respective acts but before filing of return of income u/s 139(1), it could not be disallowed u/s 43B or u/s 36(1)(va). - Decided in favour of assessee
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2019 (10) TMI 1127
TDS u/s 195 - Permanent establishment(PE) in India - payments to M/s.BNP Paribas Investment Singapore Ltd., Singapore as distribution fee for arranging subscription for the units - HELD THAT:- The assessee has admittedly sent payments abroad by remittances in foreign currency and no part of the payments are made by assessee in India or to any person in India on behalf of BNP Paribas, Singapore. We have observed that as per DTAA entered into between India and Singapore, the fees for technical services can be brought to tax in India under Article 12 , clause 4 of India-Singapore DTAA , if technical know how is made available which enables person acquiring the said technical know how or technical knowledge to apply the technology contained therein , while we have observed that in the instant case BNP Paribas , Singapore did not made available any technical knowledge , know how , experience, skill or processes to the assessee which could enable the assessee to apply technology contained therein rather the fee is paid towards services rendered by BNP Paribas, Singapore for distribution of funds being units or shares on behalf of the assessee. The aforesaid payments made by the assessee in our considered view did not fall within the ambit of Article 3 and 4 of Indo-Singapore DTAA and thus cannot be categorized as Royalty payments or fees for technical services. These are payments made for managerial services rendered by BNP Paribas, Singapore to assessee for distribution of units of Mutual Fund and no technical know how or knowledge is made available to the assessee by the said BNP Paribas, Singapore which could enable assessee to apply the said technical know how contained therein. Moreover, the services were rendered abroad by payee and payments were also made by assessee by remitting payment abroad in foreign currency. Keeping in view aforesaid provisions/clauses as are contained in India-Singapore DTAA, these payments cannot be held to be taxable in India and consequently assessee was not required to deduct income-tax at source u/s 195 of the 1961 Act while remitting payment abroad to said BNP Paribas, Singapore. It is well established principle in tax-matters that taxing statute provisions under domestic law or treaty provisions whichever are beneficial to the assessee shall be applicable. The treaty provision in the instant case contains make available clause, while BNP Paribas did not made available any technical know how or knowledge to the assessee which could enable assessee to apply technical knowledge contained therein We are inclined to delete aforesaid additions made by the AO by invoking provisions of Section 40(a)(i) of the 1961 Act read with Section 195 of the 1961 Act which stood later confirmed by learned CIT(A). In our considered view, if the said payments are not taxable in India in the hands of the Non-resident recipient , then provisions of Section 195 shall have no applicability. Additions/disallowances earlier made by AO by invoking provisions of Section14A of the 1961 Act read with Rule 8D - disallowance made while computing book profits u/s.115JB - HELD THAT:- We are in agreement with this contentions of the assessee keeping in view decision of Special Bench of Delhi Tribunal in the case of M/s. Vireet Investment Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] that only those investments which actually yielded exempt income during the year under consideration should be considered for making disallowance u/s 14A and hence we are restoring this issue to file of the AO with direction to compute disallowance u/s.14A r.w.r.8D(2)(iii) by taking into account only those investments which actually yielded dividend income during the year under consideration, keeping in view ratio of decision of Special Bench of Delhi tribunal in the case of Vireet Investment [ 2017 (6) TMI 1124 - ITAT DELHI] . Thus, with these observations, we set aside this matter back to the file of the AO for re-determination of disallowance of expenditure incurred in relation to earning of an exempt income u/s.14A of the 1961 Act. This ground in Revenue s appeal is allowed for statistical purposes. Disallowance of payments towards sub-advisory fee made to Fund Quest u/s.40(a)(i) - HELD THAT:- Issues concerning payments made by assessee by remitting abroad in foreign currency to the same party Fund Quest, France was decided by Chennai- tribunal in assessee s own case for ay: 2008-09 in [ 2014 (2) TMI 224 - ITAT CHENNAI] by holding in favour of the assessee as reproduced above and Respectfully following aforesaid decision of the ITAT, Chennai Benches, we dismiss this ground raised by Revenue . While dismissing this ground raised by Revenue, we are guided by principles of judicial discipline and principles of consistency in taxingstatute as laid down by Hon ble Supreme Court in the case of Radha Soami Satsang v. Satsang [ 1991 (11) TMI 2 - SUPREME COURT] Disallowance of expenses - expenses incurred by assessee in the nature of repairs and improvement made to leasehold building not owned by assessee which was used for office premises - Allowable revenue expenditure - HELD THAT:- Each year is a separate unit and the facts may vary from year to year. CIT(A) followed the decision of tribunal for earlier year viz. ay: 2008-09. We have observed that detailed investigation of each of these expenses were not done by authorities below to arrive at decision whether benefit of enduring nature was derived by assessee by incurring these expenses .We are inclined to restore this issue back to file of the AO to look into nature of each of these expenses and then to arrive at decision whether these expenses are to be capitalized or to be held to be revenue in nature, after considering the amended provisions of Section 30 and 32 of the 1961 Act. The assessee is directed to provide details of each of these expenses incurred by it to enable authorities to arrive at decisions whether the expenses were incurred on capital field or were revenue in nature. Needless to say that the AO shall provide with proper and effective opportunity of heard to the assessee in accordance with principles of natural justice in accordance with law in the denovo set aside assessment proceedings. TDS u/s 194J - payment made towards commission and brokerage to mutual fund distributors without deduction of income-tax at source - HELD THAT:- Issue decided in assessee s own case for ay: 2008-09 in [ 2014 (2) TMI 224 - ITAT CHENNAI]
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2019 (10) TMI 1126
Reopening of assessment u/s. 147 r.w.s. 148 - reopening based on a survey report prepared after survey u/s.133A - turnover declared was found more than shown by the assessee in its regular books of account - HELD THAT:- We note that the assessee s income termed as incentive and sales commission is only on attainment of sales target from the same line of business and, therefore, when the assessee receives incentive/discount a part of it is also passed on to the consumers to attract more consumers. When the books of account of the assessee has been rejected, there was no necessity for separate addition of the commission/incentive/discount which the assessee had undisputedly received in the same business and it is not the case of the revenue that the assessee was engaged in any other business from which assessee had received separate incentive/commission for doing certain other services the said income.Once the books of account of the assessee were rejected by the AO, then he should have only estimated the profits of the assessee. Once the books of account of the assessee were rejected by the AO, then he should have only estimated the profits of the assessee. We note that the turnover found in the impugned typed Balance Sheet and P L Account during survey was to the tune of ₹ 3,00,50,000/- and the sales incentive and sales commission was to the tune of ₹ 31 lacs and ₹ 15 lacs, so the total amounts comes to ₹ 3,00,50,000 + ₹ 31,00,000 + ₹ 15,00,000 = ₹ 3,46,50,000/-. Though the assessee had shown a GP of 4.35%, in the interest of both the parties, we enhance the same to 6% and thus the GP comes to ₹ 20,79,000/- and thus the assessee receives a relief of ₹ 49,31,830/-. Appeal of the assessee is partly allowed.
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2019 (10) TMI 1125
Employees contribution to PF ESI - disallowance as assessee failed to deposit the same as per the time limit provided in accordance with the respective Acts - HELD THAT:- As t the amounts were paid before the due date of filing of the return under section 139(1) of the Act, therefore, the ld. CIT(A) by considering the submissions of the assessee and also by following the decision of the ITAT, Visakhapatnam Bench in the case of Eastern Power Distribution Company of A.P. Ltd. [ 2016 (9) TMI 1040 - ITAT VISAKHAPATNAM] allowed the appeal of the assessee correctly. Disallowance of festival/entertainment expenses pooja expenses - As these expenditure are personal in nature and not related to business activity of the assessee, the entire amount has been disallowed u/sec. 37(1) - CIT(A) restricted the expenditure to 50% - HELD THAT:- We find that the ld. CIT(A) reasonably restricted the disallowance to the extent of 50%, therefore no interference is called for.
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2019 (10) TMI 1124
Addition on account of loss of sales of stock - assessee did not submit any stock statement and the bank considered the stock of the company as Nil - HELD THAT:- Assessee had physical stocks which has been carried forward from earlier years. The department has accepted the book results in the past. The assessee has enclosed annual accounts for the year ending March 2009, 2010, 2011, 2012 and 2013 wherein the stocks have been reflected constantly. AO failed to appreciate that the quantity details have been mentioned in the annual accounts from year to years that scrap salvage is always sold by weight and not by meters. That the stocks were hypothecated to bank as per the stocks statement for the month of December 2008 and no stocks statement could be furnished for the subsequent period due to closure of the factory premises. AO failed to summon the scrap dealer to verify the genuineness of sale made by the assessee. If he had done so his doubts would have been cleared and the conclusion would have been different. The AO has made the addition without rejecting the books of accounts as envisaged in section 145 of the Act. Moreover, the assessee has engaged the services of a technical expert to evaluate the status of stocks in the given situation. The expert has given his exhaustive report and concluded that stocks after 4 1/2 years will deteriorate and will hardly have any value. CIT(A) has rightly allowed the claim of the assessee and there is no reason to interfere with the same, hence, we dismiss this issue of Revenue s appeal and affirm the order of CIT(A). Claim of depreciation - business not continuing because of illegal strike by the workers - HELD THAT:- Assessee has not close down the business but it is not going on because of illegal strike by the workers and therefore manufacturing has been stopped temporarily. It is not the case that the assets are not in use or the intention of the assessee is not to use the same. Another factor is that once, assets is forming part of block of assets and in earlier years depreciation is allowed and due to certain risks in this year, assessee is unable to carry out the manufacturing activities, depreciation cannot be disallowed. Hence, we affirm the order of CIT(A) and this issue of Revenue s appeal is dismissed. Disallowance of various expenses for the reason that there was no manufacturing or business activity carried out by the assessee in earlier years - HELD THAT:- CIT(A) allowed the claim of the assessee on the premises that the assessee did not carry on the business because the workers of the company are went on illegal strike and therefore, the assessee business was stopped including manufacturing activity. He stated that actually, the assessee s business is very much in place and assessee has not close down its business. It can be called a temporarily lull in the business activity and none of the expenses are in the category of disallowable items rather the same are for business expenditure. It is not the case of the AO that the expenses are not genuine or not related to business. We have gone through the facts in entirety and noted that the assessee has placed on record that the assessee has sold closing stock of goods as scrap sale in AY 2013-14. This justifies that the assessee s business was not close down. We find that the CIT(A) has rightly allowed the claim of the assessee and we confirm the order of CIT(A).
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2019 (10) TMI 1123
Penalty u/s 271AAB - AO has only mentioned the penalty under section 271AAB in the show cause notice which does not satisfy the requirement of law - HELD THAT:- When the AO has failed to specify the default attracting the levy of penalty in terms of clauses (a) to (c) of section 271AAB(1) of the Act, the said show cause notice suffers from illegality and consequently the order passed by the AO under section 271AAB is not sustainable and liable to be quashed. Levy of penalty under section 271AAB regarding undisclosed income on account of advance for land and excess jewellery - HELD THAT:- When the jewellery was found at the residence of the assessee and also accepted as belonging to the family members as the department has already allowed the credit of the jewellery declared in the wealth-tax return by the family members then the benefit of the CBDT Instruction No. 1916 dated 11.05.1994 shall also be given in respect of all family members. Irrespective of the income disclosed by the assessee in the statement recorded under section 132(4) of the Act, the AO is required to consider the benefit of CBDT Instruction No. 1916 dated 11.05.1994 at the time of levying the penalty under section 271AAB. Such benefit of CBDT Instruction has to be allowed in respect of all the family members. Once the benefit is given as per the CBDT Instruction in respect of the quantity of the gold being 500 grams per married lady, 250 grams per unmarried lady and 100 grams per male member of the family, then the excess jewellery treated for undisclosed income will not survive. Accordingly, the penalty levied by the AO in respect of the excess jewellery without giving the benefit of CBDT Instruction No. 1916 is not sustainable. The same is deleted.
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2019 (10) TMI 1122
Bogus purchases - CIT(A) restricted the addition to the extent of 25% of the bogus purchase - HELD THAT:- The assessee is in the profession of Real Estate Development. It is settled that 100% of the addition is not justifiable. In this regard, we find support of law settled in case CIT Vs.Nikunj Eximpt Enterprises (P) Ltd. [ 2013 (1) TMI 88 - BOMBAY HIGH COURT] . In case CIT Vs. Simit P. Sheth [ 2013 (10) TMI 1028 - GUJARAT HIGH COURT] it is held that the addition is required to be added to the income of the assessee to the extent of income embedded in the bogus purchase. The sale is not disputed. On seeing the facts and circumstances of the case, we are of the view that the addition to the extent of 25% of the bogus purchase is very high, therefore, we restrict the addition of bogus purchase to the extent of 12.5% of the bogus purchase. - Decided in favour of the assessee against the revenue.
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2019 (10) TMI 1121
Reopening of assessment - as alleged reassessment order was passed against the non-existent company despite the fact that the amalgamation was of Spice Communication Ltd with was brought to the notice of the assessing officer - HELD THAT:- The Hon ble Delhi High Court in PCIT Vs Maruti Suzuki India Ltd [ 2017 (9) TMI 387 - DELHI HIGH COURT] held that where during the pendency of assessment proceedings, the assessee company was amalgamated with another company and thereby lost its existence, assessment order passed subsequently in name of said nonexistent entity would be without jurisdiction and deserved to be set aside. Hon ble Bombay High Court in Jitendra Chandralal Navlani Vs UOI [2016 (9) TMI 60 - BOMBAY HIGH COURT] held that notice issued under section 148 in respect of nonexistent entity and assessment order framed consequent to such notice were without jurisdiction. We set aside the reassessment order passed under section 143(3) rws 147 as the same was passed against the non-existent entity amalgamated with Idea Cellular Ltd. w.e.f.28.02.2010. Hence, we affirms the order of ld Commissioner (Appeals). - Decided against revenue
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2019 (10) TMI 1120
Unaccounted investment - alleged seized document having few transactions on debit/left hand side and credit on right hand side - HELD THAT:- As far as the figures of ₹ 60,00,000/- and ₹ 2,60,000/- which is on the left hand/debit side we observe that the assessee entered into partnership in Regal Samarth Krishna Construction Company which was executing the project of construction of flats in the name of Chitrakoot . The assessee also entered into partnership with other concern Regal Samarth Krishna Builders on 20.10.11 which was running another project named Triveni Heights . In the firm Regal Samarth Construction Company the assessee has introduced capital of ₹ 30,00,000/- through cheque during financial year 2012-13 and similarly in Regal Samarth Construction Company also assessee being 30% partner has introduced capital by cheque/cash of ₹ 30,00,000/-. So there remains no dispute that the amount of ₹ 60,00,000/- which is appearing in the seized material, stands duly explained with the capital accounts of the partnership firms and supports the contention of Ld. Counsel for the assessee that ₹ 60,00,000/- is duly accounted for in the books of accounts. Remaining amount of ₹ 2,60,000/- have also been paid by cheque as appearing in the seized document, thus the figure of ₹ 2,60,000/- also stands duly explained by the assessee. Since the assessee is one of the working partner in Regal Samarth Construction Company and the alleged transaction have direct nexus with the assessee but during the course of proceedings before both the lower authorities and before us assessee failed to produce any material evidence in support of his claim that the alleged amount of ₹ 85,00,000/-is not having any ingredient of undisclosed/un recorded income. So we are of the view that ₹ 85,00,000/- is the amount to be received by the assessee and it can be purely unaccounted income or it can be an amount which comprises of income and capital introduced by the assessee. Since the revenue has not brought any other material evidence to prove that the alleged amount is purely an income the assessee certainly deserves benefit of doubt and further since below the alleged account itself the sum of ₹ 22,40,000/- is mentioned as an amount referred as balance to be for payment. This amount of ₹ 22,40,000/- is the difference between ₹ 85,00,000/- (i.e. amount to be taken less ₹ 62,60,000/- the amount invested by the assessee), therefore the addition for unaccounted investment in our view cannot be more than ₹ 22,40,000/-. We therefore are of the considered view that the alleged addition of unaccounted investment needs to be sustained only to the extent of ₹ 22,40,000/- and thus the finding of Ld. CIT(A) is set aside and the assessee gets relief of Rsd.65,20,000/-. Ground No.1 of the assessee is partly allowed.
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2019 (10) TMI 1119
Monetary limit - maintainability of appeal - low tax effect - scope of recent CBDT Circular No. 17/2019 dated 08.08.2019 - HELD THAT:- Revised / enhanced minimum threshold limit of tax effect of ₹ 50,00,000/- vide aforesaid recent CBDT Circular No. 17/2019 dated 08.08.2019 is applicable not only for appeals to be filed by Revenue in future; but also for appeals already filed by Revenue in ITAT. Accordingly, in view of the aforesaid recent CBDT Circular No. 17/2019 dated 08/08/2019; the direction in aforesaid earlier Circular dated 11.07.2018 to withdraw /not press Revenue s appeal with tax effect below ₹ 20,00,000/-; is now to be read as direction to withdraw / not press Revenue s appeal with tax effect below revised / enhanced limit of ₹ 50,00,000/-. By necessary implication, therefore, all existing appeals in ITAT, having tax effect below the revised / enhanced limit of ₹ 50,00,000/- , are to be treated as withdrawn / not pressed; and are, not maintainable. We also hold, in view of the foregoing, that the relaxation in monetary limits for filing of appeals by Revenue in ITAT, vide aforesaid CBDT Circular dated 08.08.2019 shall be applicable also to the pending appeals in ITAT already filed by Revenue. It is well settled that CBDT Circulars and Instructions, which are beneficial for assessee, are binding on the authorities below. Accordingly, this appeal filed by Revenue is held to be not maintainable, and is treated as withdrawn / not pressed by Revenue; and is, accordingly dismissed in view of aforesaid CBDT Circular dated 08.08.2019. We clarify that Revenue will be at liberty to approach Income Tax Appellate Tribunal U/s 254(2) of Income Tax Act, 1961; seeking recall of this order and, for restoration of appeal, if it is found that appeal of Revenue is not covered by aforesaid CBDT Circular dated 08.08.2019.
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2019 (10) TMI 1118
Undisclosed bank account - as submitted that the bank manager of the said bank also knew that the said bank account was an undisclosed bank account and consequently, the Bank Manager used the said account of the assessee for certain unaccounted transactions of other customers of said branch - HELD THAT:- A perusal of the statement recorded by the DCIT u/s.131 of the Act from the Assistant Manager of Indian Bank, Sivakasi branch on 26.05.2016 clearly shows from the letter of the Bank Manger dated 28.03.2016 admitting to the transactions have been done by the Bank Manager in the assessee s account and not relating to the assessee stands clearly established. Branch Manager has categorically admitted in his letter and the same has also been reiterated by the Assistant Manager in his statement recorded u/s.131 of the Act by the DCIT, we are inclined to accept the same and consequently the AO is directed to delete the addition representing the credits to an extent of ₹ 2,36,00,000/- for assessment year 2010-11 and ₹ 1,41,73,539/- for the assessment year 2011-12 in the assessment of the assessee. In respect of balance credits, admittedly what is liable to be added only peak credit as this is an unaccounted bank account and a perusal of the bank account clearly shows that there are withdrawals and deposits. However, it is noticed that the assessee has filed an application admitting its GP for the purpose of addition before the Hon ble Settlement Commission at 24%. The assessee has not shown any addition having been offered on account of the initial capital. Consequently, we are of the view that the interest of justice would be served, if the GP rate is adopted at 30% in respect of unaccounted credits in the Indian Bank account, which is the unaccounted bank account and has been accepted by the assessee - addition made by the AO in respect of the said bank account stands modified and the AO is directed to restrict the addition to 30% representing the GP and initial capital required in respect of the credit of ₹ 32,88,176/- accepted by the assessee for the assessment year 2010-11 and 30% as GP in respect of the credits accepted by the assessee to an extent of ₹ 2,59,70,330/- for the assessment year 2011-12. Appeals filed by the assessee for the assessment years 2010-11 2011-12 stands partly allowed. Benefit of set off of the undisclosed income as source for the unexplained expenditures - In respect of assessment years 2012-13, 2013-14, and 2014-15 Admittedly, GP addition of 30% in respect of unexplained credits accepted and appearing in the unaccounted bank account with Indian Bank Sivakasi, has been directed for the assessment years 2010-11 2011-12. This being so, admittedly there would be income available to the assessee on account of the said GP addition. This income would very much be available to the assessee for the purpose of set off of the unexplained expenses which have been added for the assessment years 2012-13, 2013-14 2014-15. This being so, the Assessing Officer is directed to grant assessee the benefit of set off of the undisclosed income added for the assessment years 2010-11 2011-12 as source for the unexplained expenditures added by invoking the provisions of sections 69 69C of the Act for the assessment years 2012-13 2013-14 2014-15.
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2019 (10) TMI 1117
Exemption on agricultural income - firm is not the owner of such agricultural land but the partners - HELD THAT:- It appears from the partnership deed which is available on record that the said partnership firm has decided to carry on business on selling of agricultural produces from 01.04.2013 by doing agriculture work in the partnership by the name Shraddha Farm at Ahmedabad. Needless to mention such partnership deed has been executed amongst three partners namely Patel Mukundbhai Rambhai, Patel Ushaben Mukundbhai and Patel Bhargav Mukundbhai. The detail of the agricultural land is also mentioned in the said partnership deed at clause 1. We have further considered Section 2(1A) which defines agricultural income which is derived from the agricultural land situated in India used for agricultural purposes. This section does not specify that Revenue has to be derived by the owner of the agricultural land only. The term revenue , therefore, implies some yield or some income from agricultural operations. Further that it can be inferred that agricultural income can also be derived by person who is a cultivator or who is the owner of land. It is only the receiver of rent-in-kind who can directly be held to be the owner of land as referred to in this section. Further that a cultivator may be the owner but it is not necessary that he has to be the owner. In terms of Clause (a) there can be a recipient of rent from land which implies ownership and also a recipient of revenue derived from land, which implies that the person can be the owner or may not be the owner of land. Sub Clause (1) of Clause (b) speaks of income derived from an agricultural land by agricultural activity. Thus revenue derived from land or from agriculture implies a periodic return of income from agricultural operations only It can be well appreciated that the assessee firm though not being the owner of the agricultural land in question is entitled to get exemption of the agricultural income derived from the said land owned by the partners of the firm. The issue is thus decided in the affirmative i.e. in favour of the assessee and against the Revenue.
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2019 (10) TMI 1116
Disallowance in respect of purchase of diesel and oil in the absence of supporting evidence - HELD THAT:- AR for the assessee justified that it has incurred the diesel and oil expenses on its plant and machinery used by it. The learned AR for the assessee also admitted the fact that the assessee has not maintained the separate ledger for the diesel and oil expenses incurred for in-house consumption and supplied to the subcontractors. Considering the facts as stated above, the in-house consumption of diesel and oil cannot be neglected. But the fact that the assessee has not maintained separate ledgers for the in-house consumption of the diesel and oil viz a viz supplied to the subcontractors cannot be ignored. Therefore in the interest of justice and fair play, we are inclined to restrict the disallowance being 50% of the expenses under the head diesel and oil as discussed above. Hence the ground of appeal of the assessee is partly allowed. Bogus purchases - assessee before the learned CIT (A) filed the additional evidence under rule 46A of Income Tax Rule - Difference between the amount of purchases shown by the assessee viz a viz the amount of sales shown by the party to the assessee in its books of accounts - HELD THAT:- Even the amount of rupees 2,01,054.00 is treated as an advance to JPSCPL; the assessee is entitled to write it off in the books of accounts if it becomes irrecoverable as it is arising in the course of the business. As the assessee has not shown the amount as an advance in its books of accounts, therefore it can be inferred that it has been written off by the assessee in the year under consideration. Disallowance cannot be made for the expenses claimed by the assessee merely on the ground that the other party has shown liability in its books of accounts. The treatment of the accounting entries in the books of 3rd parties cannot be decisive for the claim of the assessee. It is settled law that the expenses/advances written off in the course of the business are eligible for deduction either under section 28(i) or 37(1) of the Act - assessee is eligible for the deduction for ₹2,01,054.00 on account of the money paid to JPSCPL in the course of the business. Hence we disagree with the view taken by the learned CIT-A. Accordingly, we reverse the same and direct the AO to delete the addition made by him
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2019 (10) TMI 1115
Rectification u/s 254 - Validity of reopening of assessment - AO has originally passed order under section 143(3) on 20.02.2014 and, therefore, the subsequent reopening of the order of the AO to make the disallowance under section 40A(3) - HELD THAT:- All the contentions of the assessee as well as the decisions relied upon by the ld. A/R of the assessee were considered by the Tribunal while passing the impugned order. Tribunal has specifically discussed the relevant facts pertaining to the violation of section 40A(3) of the Act which were pointed out by the Audit Party - AO has completely ignored the mandatory provisions of section 40A(3) at the time of passing the order under section 143(3) and subsequently the audit party has pointed out the fact of violation of provisions of section 40A(3) when the assessee has made the payment in cash exceeding the minimum limit as provided under section 40A(3). This fact of payment in cash exceeding the limit as provided under section 40A(3) is not in dispute and, therefore, in those facts, the Tribunal has held that the reopening was valid. The decision taken by the Tribunal on merits of the case cannot be reversed in the proceedings under section 254(2) of the Act by re-appreciating the same facts and decisions relied upon by the ld. A/R of the assessee. Therefore, the assessee has not pointed out any apparent mistake in the order of the Tribunal qua this issue. Accordingly, we do not find any merit or substance in the mistake alleged by the assessee in the Miscellaneous application Addition u/s 40A(3) - taxi fare and dish installation charges - HELD THAT:- As regards the disallowance made under section 40A(3) of the Act in respect of taxi fare, the Tribunal has discussed the relevant fact that each payment is exceeding ₹ 20,000/- and was represented by a separate bill. Therefore, to that extent the expenditure was clearly hit by the provisions of section 40A(3) of the Act. Accordingly, we do not find any apparent error in the order of the Tribunal qua the disallowance made under section 40A(3) on account of taxi fare. Second disallowance was made in respect of the dish installation charges made in cash. To the extent of the payment made in cash exceeding ₹ 20,000/-, our decision on this issue regarding taxi fare charges is applicable mutatis mutandis. However, we find that the Tribunal has observed that the dish installation are not main business of the assessee and the assessee has not shown any income from the said activity which is based on the record that in the Profit Loss account no such income is shown on account of dish installation activity. However, now the ld. A/R has submitted that the activation charges shown in the Profit Loss account are regarding the income from dish installation activity. Though apart from the submission of the ld. A/R, no other material is produced before us to give a concluding finding, therefore, we modify our observation in para 8 of the impugned order.
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Customs
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2019 (10) TMI 1114
100% EOU - Demand of Interest - principles of of promissory estoppel - Benefit of N/N. 52/2003-Cus denied - duty short/ not paid by the Appellants demanded alongwith the interest - Section 28 of the Customs Act, 1962 - case of appellant is that once they had been allowed registration as EOU, and clearance of the goods by allowing the exemption under Notification No 52/2003- Cus, the demand made under Section 28 and demand of interest under Section28AA/ 28AB will be hit by the principles of promissory estoppel. HELD THAT:- Hon ble Supreme Court in the cases of ELSON MACHINES PVT. LTD. VERSUS COLLECTOR OF CENTRAL EXCISE [ 1988 (11) TMI 107 - SUPREME COURT] , PLASMAC MACHINE MFG. CO. PVT. LTD. VERSUS COLLECTOR OF CENTRAL EXCISE [ 1990 (11) TMI 142 - SUPREME COURT] and in COMMISSIONER OF CUSTOMS, CALCUTTA VERSUS INDIAN RAYON INDUSTRIES LTD. [ 2008 (7) TMI 401 - SUPREME COURT] has constantly held that there is no estoppel against the operation of law. In view of the specific provisions Section 28 of Customs Act, 1962, providing for the demand of duty short/ not paid at the time when the same was due, we are not in agreement with the submissions made by the appellant by invoking the principle of promissory estoppel. It is also settled law that in case of exemption, it is responsibility of the person claiming the exemption to satisfy that the said exemption is available to him - demand of interest upheld. Permitting the debit of the duty demanded in cash from SFIS Scrips - HELD THAT:- It is not in dispute that during the relevant period when the imports were made such debits from the SFIS Script was not permitted. Had the appellants claimed the duty exemption against the EPCG Licenses issued to them in 2005, at the time of import, they would have paid duty @ 5.1% in cash. Now when the benefit of inadmissible exemption has been denied to them, and as special measure benefit of debit against EPCG license has been allowed by the EPCG Committee against the licenses issued in 2005, appellants could not be placed in better position then what they would have been in if they had cleared these goods against these license - there are no infirmity in the order of Commissioner denying the debit from SFIS Scrip/ License specifically for the reason that no one should be allowed to take benefit of his own wrongs. Appeal dismissed - decided against the appellant.
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2019 (10) TMI 1113
Classification of a product - long pepper/pippali - appellant classified their product under CTH 12119099 whereas the department proposed its classification under 09041110 - HELD THAT:- The issue of classification of the aforesaid product is no more res integra and covered by the two successive judgments of this Tribunal in the appellant s own case GANESH INTERNATIONAL VERSUS COMMISSIONER OF CUSTOMS, NAGPUR [ 2004 (4) TMI 142 - CESTAT, MUMBAI] and GANESH INTERNATIONAL VERSUS COMMISSIONER OF CUSTOMS, MUMBAI [ 2012 (9) TMI 537 - CESTAT, MUMBAI] where this Tribunal after exhaustive analysis of the relevant material and evidence on record, classified the product under CTH 09041110. No contrary judgment has been placed on record by the appellant - appeal dismissed.
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Insolvency & Bankruptcy
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2019 (10) TMI 1112
Validity of Resolution plan - Extension of CIRP - Exclusion of certain period - the Committee of Creditors would not consider the Resolution Plan due to completion of the Corporate Insolvency Resolution Process period of 270 days - Section 60(5) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- In the present case, the Appellant has not challenged the order dated 20th February, 2019 whereby 90 days period was granted from retrospective date. In such circumstances, we are not inclined to deliberate on the issue whether the extension of 90 days from the retrospective date is right or wrong in absence of such challenge. Now 270 days is being over as per calculation on the basis of the order of extension, we hold that in absence of any other reason, the Adjudicating Authority has rightly rejected the application for exclusion of certain period. From the impugned order, it will be evident that the Adjudicating Authority has noticed that even during liquidation it is still open to the liquidator to sell the Corporate Debtor as a going concern - In the present case, no order of liquidation has been passed but we accepted that the period of Corporate Insolvency Resolution Process is completed, appropriate order is required to be passed by the Adjudicating Authority. Even if an order of liquidation is passed by the Adjudicating Authority, in such case, the liquidator is to follow the procedure laid down under Section 230 of the Companies Act, 2013. Appeal disposed off.
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Service Tax
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2019 (10) TMI 1111
CENVAT Credit - various input/input services - appellant is builder and engaged in the activity of construction of commercial, industrial and residential premises and thereafter these premises were let out by the appellant - HELD THAT:- The said issue has already been examined by this Tribunal in the case of M/S DLF CYBER CITY DEVELOPERS LTD. VERSUS COMMISSIONER CENTRAL EXCISE CGST, GURUGRAM [ 2018 (1) TMI 379 - CESTAT CHANDIGARH] , where this Tribunal has observed that the inputs, capital goods and input services used by the appellants for providing output services, in terms of Rule 2 (a) (ii) of the Cenvat Credit Rules, 2004, the appellant is entitled to avail Cenvat Credit. As the issue has already been decided by this Tribunal holding that any inputs, capital goods or input service used for providing output services, namely, renting of immovable property service, the assessee is entitled to avail Cenvat Credit - credit allowed - appeal allowed - decided in favor of appellant.
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2019 (10) TMI 1110
Transportation of by air service - demand of service tax on charges made for excess baggage carried by the passengers in the regular flights - HELD THAT:- The issue has already been decided in the case of KINGFISHER AIRLINES LTD, JET AIRWAYS LTD. VERSUS COMMISSIONER OF SERVICE TAX [ 2015 (11) TMI 54 - CESTAT MUMBAI (LB)] where it was held that Excess baggage charges collected by the appellant Airlines is integral part of the service provided for transport of passengers by Air' - no service tax can be demanded on the said charges and the demand is said count is set aside. CENVAT credit - services availed prior to start of their actual operations - period of 2005-06 - HELD THAT:- The appellant has already disclosed and debited the amount inadmissible to them, and for the balance amount, the appellants have relied on the decisions of M/S VAMONA DEVELOPERS PVT LTD VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, PUNE-III [ 2015 (12) TMI 1111 - CESTAT MUMBAI] , M/S. BEICO INDUSTRIES PVT. LTD. AND SHRI SHANKARANAND SUDHAKAR PATHAK VERSUS CCE. ST. - VAPI [ 2014 (8) TMI 14 - CESTAT AHMEDABAD] , M/S LARSEN TOUBRO LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI [ 2017 (5) TMI 390 - CESTAT MUMBAI] and CITY CENTRE MALL NASHIK PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, NASHIK [ 2017 (11) TMI 301 - CESTAT MUMBAI] . Reimbursement of certain expenses - Service of manpower recruitment and supply - Reverse charge mechanism - taxability - HELD THAT:- It is seen that the impugned order does not deny that the amount paid by the appellant is in the nature of reimbursement. On perusal of the contract also shows that only excess insurance charges have to be reimbursed on actual basis - No demand in respect of such reimbursements can be made. Consequently, this demand of service tax is also set aside. Since, all the demands have been set aside, no penalties can been imposed. Appeal allowed - decided in favor of appellant.
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2019 (10) TMI 1109
Belated registration - security services - new levy of service tax on the said service during relevant period - intent to evade/suppression of facts or not - extended period of limitation - HELD THAT:- The very levy of service tax on security service was a new subject in the year 1998. The said service was made taxable only w.e.f. 16.10.1998 i.e. the very date from which the impugned demand has been made. The submission of the appellant that the error in filing of ST-3 returns is based upon a certain understanding of the appellant and hence the same should not be the only basis of alleging suppression of facts, more so, when the same was communicated and made known to the Department, is reasonable and not devoid of merit - we are unable to agree with the contention of the Revenue that in absence of disclosure in returns regarding the total billings, the assessee has willfully suppressed, particularly in view of the fact that the assessee has duly communicated to the Department about their understanding regarding the tax liability. The Addl. Commissioner s letter dated 24.08.2012, issued after more than 2 years of the issue of impugned order dated 16.03.2010, is a communication from an Officer below the rank of Commissioner cannot be entertained at this stage, since not disowned by the Ld. Commissioner himself. In any case, the very fact that the Ld. Commissioner on being satisfied that tax amount could not be recovered by appellants from its clients, he reduced the tax demand. Further, the very applicability of tax on security service being a new subject, the conduct of assessee could not be doubted - the Department cannot allege suppression on the part of the assessee to justify invocation of extended period of limitation. In view of the statutory legal provisions as applicable during the period from 16.10.1998 to 31.03.2004 involved in this case and the discussions made, we are of the view that the impugned Show Cause Notice dated 17.01.2005 could not be legally issued and therefore, the demand of service tax, interest and penalty cannot sustain - appeal allowed - decided in favor of appellant.
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2019 (10) TMI 1108
Works Contract service - demand of service tax - execution of works contract for construction/repair, etc. of roads, distress bridges, non-commercial infrastructure, civil structures, government buildings, civic amenities of public interest by way of provision of labour/services and supply of goods in the execution of such contracts - period 2005-06 to 2008-09 - applicability of decision in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT ]. HELD THAT:- The repair and maintenance, etc. of roads, Government buildings, etc. are retrospectively exempted by Finance Act, 2012 and therefore question of demanding tax thereon does not arise - Further, the Hon ble Supreme Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] has held that a Works Contract cannot be taxed under any other category of service like Erection, Commissioning or Installation Services. On the day of passing of the impugned Order the provision of Sec. 97 and sec. 98 were not in the statute book and the judgment of the Supreme Court in Larsen Toubro Ltd. was passed subsequently, hence, the Learned Commissioner did not have the benefit of examining the aforesaid contracts in the light of Sec. 97 and Sec. 98 and judgment of the Hon ble Supreme Court in the case of Larsen Toubro Ltd. Matter remanded back to the adjudicating authority for passing orders afresh in the light of Sec. 97 and Sec. 98 and the judgment of the Hon ble Supreme Court in the case of Larsen Toubro Ltd. - appeal allowed by way of remand.
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2019 (10) TMI 1107
Exemption from service tax - Business auxiliary services - export of services or not - Ld. Commissioner held that since the services were not delivered outside India, the conditions laid down in the Export Rules were allegedly not satisfied - HELD THAT:- The Ld. Commissioner in his impugned order has accepted that the services provided by the assessee have been used outside India and that the payment for the said services have been received in convertible foreign exchange. He has however observed that since the products of the Foreign Company have been marketed or sold to customers in India, the services are not delivered outside India. The identical issue has been dealt by the Tribunal in M/S AIRBUS GROUP INDIA PVT. LTD. VERSUS CST, DELHI [ 2016 (7) TMI 1209 - CESTAT NEW DELHI] for the period 2006 to 2011 wherein it has been held that the services provided by assessee would qualify as export of service even if the activities were undertaken in the Indian soil upon the instructions of service recipient located outside India. There is force in the submission of the Ld. Counsels for the assessee regarding the fact that the sale of the products and services manufactured or provided by the Foreign Company have been made by the assessee to the Indian customer / client is completely immaterial inasmuch as the assessee has provided the services at the behest of service recipient located outside India - thus, the subject services are to be held to be used outside India as well as delivered outside India and therefore, constitutes export of service on which no service tax stands payable. The impugned demand of service tax is set aside - appeal allowed - decided in favor of assessee.
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2019 (10) TMI 1106
Classification of service - local transportation/shifting charges collected by the Appellant which is inclusive of loading of tipper, transportation upto Railway Track Head and automated unloaded of tipper at the Railway Track Head - HELD THAT:- A perusal of the show cause notice shows that the demand in the instant case is on the Work of Shifting of Iron Ore Lumps and Fines from Dump Yard to Railway Siding which involved loading at Dump Yard, transportation and unloading at Railway Siding. The Appellant has already paid service tax on wagon loading activities which is clear from the quantification made in the show cause notice. The contract is essentially for the transportation of goods which incidentally involving loading of tipper/unloading of tipper at Railway Track head/Railway Siding which cannot be taxed under the category of Cargo Handling Service simply because rates for loading of tipper at Dump Yard and unloading of tipper at Railway Siding is not provided separately. Appeal allowed - decided in favor of appellant.
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2019 (10) TMI 1105
Classification of services - royalty which the appellant is paying towards the use of IPR of foreign company - whether classified under the head of Intellectual Property Rights or not - HELD THAT:- The very identical issue has been considered by this Tribunal after careful consideration of various judgments in the case of MESSRS INDUCTOTHERM PVT. LTD. VERSUS C.S.T. SERVICE TAX - AHMEDABAD [ 2019 (7) TMI 1528 - CESTAT AHMEDABAD ] where it was held that since so-called IPR claimed by the Revenue is not governed by any Indian Law, the same will not fall under IPR services. Thus, no Service Tax can be demanded under the head of Intellectual Property Right Services - appeal allowed - decided in favor of appellant.
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2019 (10) TMI 1104
CENVAT credit - input services - Construction Service - Architect Service - Cleaning Service (pest control) - Goods Transport Agency Service - Insurance Service - Interior Decorator Service - period April 2008 to March 2009. Construction service - HELD THAT:- It cannot be doubted that the Appellant is using wireless equipments for providing telecommunication service and for this purpose radio antennas are used to transmit and receive radio signals. These antennas which transmit signals are, therefore, an integral and essential part of the service. They are mounted on towers so as to raise the heights of the antennas. Civil work is, therefore, required to be undertaken for erection of the towers - Construction service is, therefore, an integral part of the telecommunication services and is used for providing the output service. It, therefore, qualifies as an input service - reliance placed in the case of VODAFONE ESSAR SOUTH LTD., AIRCEL CELLULAR LTD., DISHNET WIRELESS LTD. VERSUS CST CHENNAI [ 2018 (1) TMI 1218 - CESTAT CHENNAI] where it was held that for providing telecommunication service, the erection and construction of telecommunication towers is a basic essential requirement and would be an input service - Credit allowed. Clearing and forwarding service - HELD THAT:- The requisite custom clearance at the port is required for the clearance of the goods which include hardware and software forming port of the BSC as well as optical fibre cables. The said clearing and forwarding service would, therefore, be an input service - reliance placed in the case of COMMISSIONER OF CENTRAL EXCISE, SERVICE TAX AND CUSTOMS, BANGALORE-II VERSUS NASH INDUSTRIES [ 2016 (6) TMI 155 - CESTAT BANGALORE] - credit allowed. Real estate service - HELD THAT:- It is seen that the Appellant has used this service for procuring suitable plots for construction of the shops of the Appellant. It is, therefore, in relation to the business of the Appellant and, therefore, would be eligible for input service - reliance placed in the case of DELTA ENERGY SYSTEMS LTD. VERSUS COMMISSIONER OF C. EX., DELHI-III [ 2014 (1) TMI 664 - CESTAT NEW DELHI] - credit allowed. Thus, the Appellant was entitled to avail the Cenvat Credit on the three services, namely, construction service, clearing and forwarding service and real estate service - appeal allowed - decided in favor of appellant.
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Central Excise
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2019 (10) TMI 1103
Permission for withdrawal of appeal - monetary amount involved in the appeal - CENVAT Credit - electricity so generated and cleared/sold to the grid outside the factory can be treated as captively used for the manufacture of final products - inputs used in the power so generated - Rule 2 and 3 of CENVAT Credit Rules, 2004 - HELD THAT:- It is averred in the application that Central Board of Inidirect Taxes and Customs has issued instruction dated 22.8.2019 and revised the monetary limit for filing appeal before this Court to Rs.One Crore Only and these instructions are applicable on pending cases also. It is further averred that in view of the said instructions, the counsel has written instructions from the office of Commissioner of Central Goods and Service Tax, Rohtak vide letter dated 22.8.2019 to withdraw the present appeal, the amount involved being ₹ 54, 38, 492/-. Appeal dismissed as withdrawn.
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2019 (10) TMI 1102
Refund of interest - appellant only availed the Cenvat Credit in their books and not utilized the credit at all - whether the appellant is liable to pay interest for the mistakenly/irregularly availing Cenvat credit which they did not utilize? - HELD THAT:- The Hon ble Karnataka High in the case of COMMISSIONER OF CENTRAL EXCISE SERVICE TAX LARGE TAXPAYER UNIT, BANGALORE VERSUS M/S BILL FORGE PVT LTD, BANGALORE [ 2011 (4) TMI 969 - KARNATAKA HIGH COURT] after considering the Hon ble Supreme Court s decision in the case of UOI AND ORS. VERSUS IND-SWIFT LABORATORIES LTD. [ 2011 (2) TMI 6 - SUPREME COURT] held that if the wrongly availed credit does not stand utilised by the assessee and is reversed before utilisation, no interest liability would arise against them. A larger Bench of the Tribunal in the matter of J.K. TYRE INDUSTRIES LTD. VERSUS ASST. COMMR. OF C. EX., MYSORE [ 2016 (11) TMI 911 - CESTAT BANGALORE] has held that since the appellant therein had merely availed credit and had reversed the same before utilizing the availed credit for remittance of duty, interest liability would not arise. It is not disputed that the irregularly availed Cenvat Credit was reversed by the appellants immediately upon being pointed out by the audit that too with interest and therefore no show cause notice was issued for that purpose. The said credit was not utilized by the appellant for payment of excise duty etc. It is merely a book entry and therefore the credit wrongly availed does not amount to short payment of duty - The credit having been taken inadvertently stands reversed by the Appellant even before utilisation, no interest liability would arise inasmuch as there is no loss to the Revenue and the credit remained as a paper entry in their books of accounts. Since there was no loss of revenue to the government exchequer, therefore the question of compensating the revenue by way of interest does not arise. In the facts of the present case, Revenue cannot impose liability to pay interest on the assessee invoking the provisions of Rule 14 of Cenvat Credit Rules, 2004 - Appeal allowed - decided in favor of appellant.
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2019 (10) TMI 1101
CENVAT Credit - fake invoices - Cenvatable invoices issued by a registered dealer without physical receipt of inputs - principles of natural justice - HELD THAT:- It is settled position that violation of natural justice goes to the root of the matter and is incurable at the appellate stage. The entire case of the Revenue is based on the documents seized by them from the premises of M/s. SBI as well as the statements of Bhavik Sashikant Thakkar-proprietor of M/s. SBI and its accountant Naeem Shaikh. From the record of the case it is clear that no summons were issued to Bhavik Sashikant Thakkar and Naeem Shaikh in order to secure their presence in order to enable the appellant to cross-examine them. The correctness of their statements can only be tested if the same is processed through cross-examination by the appellant who are affected by it. It seems that none of the authority below has made any serious efforts to secure their presence. It is no doubt true that the non-affording of opportunity of cross-examination of Bhavik Sashikant Thakkar-proprietor of M/s. SBI and its accountant Naeem Shaikh has resulted in contravention of the principles of natural justice in the facts of the present case - the impugned order needs to be set aside and the matter is remanded to the adjudicating authority for denovo adjudication after affording of opportunity of cross-examination of Bhavik Sashikant Thakkar-proprietor of M/s. SBI and its accountant Naeem Shaikh to the Appellant. Appeal allowed by way of remand.
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2019 (10) TMI 1100
Reversal of CENVAT Credit - waste/by-product - bagasse - non-maintenance of separate records - Rule 6(3A) of Cenvat Credit Rules, 2004 - HELD THAT:- The Hon ble Supreme Court in the matter of UOI vs. D.S.C.L. Sugar Ltd. [ 2015 (10) TMI 566 - SUPREME COURT ] has laid down that Bagasse is agricultural waste of sugarcane and the waste and residue of agricultural product during the process of manufacture of goods cannot be said to be result of any process. Admittedly, there is no manufacturing process involved in Bagasse s production. Bagasse, pressmud and composed fertilizer is not goods but merely a waste or byproduct therefore Rule 6 of the Cenvat Rules shall have no application in the present case and they are bound to come into existence during the crushing of the sugarcane and are an unavoidable agricultural waste. The amendment dated 1.3.2015 in Rule 6 ibid has wrongly been relied upon by both the authorities below while coming to the conclusion that the assessee is liable to reverse the Cenvat Credit availed by them. The Hon ble Supreme Court in the matter of D.S.C.L. Sugar Ltd. has laid down that bagasse being an agricultural waste or residue, there could be no manufacturing activity. If that is so and if bagasse is not manufactured, the same cannot be held to be excisable, in which case the amendment which has been relied upon by the authorities below as well as by the Revenue, would not apply. Even after amendment to Rule 6 ibid, bagasse which emerges as a waste/ byproduct, falls outside the scope of the said Rule - Appeal allowed - decided in favor of assessee.
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2019 (10) TMI 1099
CENVAT Credit - input services - Repair and maintenance service - erection commissioning and installation of windmill located outside of the factory premises - courier service - vehicle insurance of company owned vehicle - HELD THAT:- As per the use explained by the Ld. Counsel all the three services were used in relation to either manufacture of the final product or for business activity, therefore, all the three services are inputs services - The period involved is prior to amendment of definition dated 01.04.2011 of inputs service i.e. January, 2009 to February, 2009 - Credit allowed - appeal allowed - decided in favor of appellant.
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2019 (10) TMI 1098
Demand of duty refunded in cash - area based exemption under N/N. 56/2002-CE dated 14.11.2002 - adjudicating authority has confirmed demand on the grounds that the farmers are non existence ensuring non supply of raw material by commission agents to J K based units and absence of evidence of power by the appellant - HELD THAT:- Identical issue decided in the case of M/S NANDA MINT PINE CHEMICALS LTD. VERSUS CC, CHANDIGARH-II [ 2018 (10) TMI 877 - CESTAT CHANDIGARH] where it was held that As there is no corroborative evidence to show that the appellant were not manufacturing the goods, therefore, the allegation alleged in the show cause notice is not sustainable. As the issue has already been settled that Revenue has failed to establish that there was no manufacturing activity and we also take a note of the fact that Jammu Commissionerate has frequently visited the factory premises and found manufacturing the goods going in their own, in that circumstances, the allegation made in the impugned order are not sustainable against the appellant - appeal allowed - decided in favor of appellant.
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2019 (10) TMI 1097
CENVAT credit - input services - construction service availed during the period of 2008-09 - CBEC Circular No. 98/1/2008-2011 - HELD THAT:- The issue is decided in the case of COMMISSIONER CENTRAL EXCISE COMMISSIONERATE, DELHI-III VERSUS M/S BELLSONICA AUTO COMPONENTS INDIA P. LTD. [ 2015 (7) TMI 930 - PUNJAB HARYANA HIGH COURT ] - Each limb of the definition of input service can be considered as an independent benefit or concession exemption. If an assessee can satisfy any one of the limbs of the above benefit, exemption or concession, then credit of the input service would be available. This would be so even if the assessee does not satisfy other limb/limbs of the above definition. To illustrate, input services used in relation to setting up, modernization, renovation or repairs of a factory will be allowed as credit, even if they are assumed as not an activity relating to business as long as they are associated directly or indirectly in relation to manufacture of final products and transportation of final products upto the place of removal. The demand of Cenvat credit cannot be sustained and the same is set aside - Appeal allowed - decided in favor of appellant.
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2019 (10) TMI 1096
Imposition of penalty - credit reversed alongwith interest paid before the issuance of SCN - mala fide on the part of the appellant or not - HELD THAT:- In the impugned order the Commissioner (A) has misconstrued the appeal before him and has only observed that the issue involved in the appeal before him is with regard to the imposition of penalty. Further, the Commissioner (A) though has observed that there is no mala fide in paying the duty along with interest at the time of audit and has also observed that the appellant should not have been burdened with penalty but still the Commissioner (A) has remanded the case back to the original authority on the question of imposition of penalty. Further, the original authority has also not followed the direction of the Tribunal and examined the merits of the case and has rejected the claim of the appellant on the ground that they have accepted their fault during the audit and has reversed the same. Having done that, the original authority came to the conclusion that they are precluded to challenge the merit. This case needs to be remanded back to the original authority to comply with the direction and decide the whole case on merits as well as on limitation - Appeal allowed by way of remand.
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Indian Laws
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2019 (10) TMI 1095
Suit for specific performance of an agreement of sale - plea of estoppel - share in the property - Time limitation - HELD THAT:- It is clear that there was no possibility of erroneous beliefs in the mind of the plaintiffs as to title position in the property. No doubt about it that defendant No.1 has acted as a power of attorney, but at the same time, did not act in his capacity as the owner of the property. The ownership of K.B. Ramchandra Raj Urs was known to the plaintiffs. In spite of that the plaintiffs have not set up the case to bind the share of K.B. Ramchandra Raj Urs. They have not pleaded in the plaint that K.B Ramchandra Raj Urs owned the property. There is no whisper as to the title of K.B. Ramchandra Raj Urs in the plaint. They needed to plead the facts to attract the plea of estoppel. That has not been done. Thus, the agreement which had been executed was not concerning share of defendant No.1, but of late K. Basavaraja Urs as his power of attorney. It would be appropriate to modify the decree passed by the courts below to the extent of 50 per cent of the shares of the deceased late K. Basavaraja Urs and to set it aside with respect to the remaining share of K.B. Ramchandra Raj Urs (defendant No.1) in the property, since the property devolved under section 15 of the Hindu Succession Act. The plaintiffs to be entitled only to the extent of share in the suit property. The decree to the remaining extent is set aside. The plaintiffs would not be entitled to refund of any consideration as by now the worth of property has increased manifold - appeal allowed in part.
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