TMI Tax Updates - e-Newsletter
November 20, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Securities / SEBI
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
GST
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Fully electronic refund process through FORM GST RFD-01 and single disbursement - CBIC clarifies various issues
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Irrespective of the time and quantum of tax which has not been paid or short paid, the taxpayer has the liberty to self-ascertain such tax amount and pay it through FORM GST DRC-03.
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Rectification of GSTR-1 return - subject to final outcome of the writ petition, we permit the petitioner to rectify the return in GSTR 1 Form for the period November, 2017 in respect of the six recipients noted in the tabulation hereinabove, by correcting their GSTIN Nos. The rectified Form shall be submitted by the petitioner within a week manually.
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Migration of GST registration - the petitioner did not choose to migrate to the regular registration within the time granted under the Statute. The migration did not happen even thereafter within the two subsequent periods of extension - The inaction on the part of the petitioner cannot be condoned
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Detention of goods alongwith vehicle - validity period of the e-way bill that accompanied the transportation had already expired at the time of detention - petitioner has to furnishes a bank guarantee for the tax and penalty amount.
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Release of goods alongwith the vehicle - expiry of the time stipulated in the E-way bill - section 129 of CGST Act - there are no reason to accede to the appellant-writ petitioner’s request for release of the vehicle and the goods on merely furnishing an indemnity bond - goods to be released only on furnishing a bank guarantee.
Income Tax
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Validity of condition imposed under Rule 5(1A) proviso (ii) - the Tribunal was not correct in holding that in the absence of prescription of any time limit under Section 32 of the Act, the condition mentioned in the second proviso to Rule 5(1A) of the Rules to exercise the option with regard to depreciation at the time of filing of the return under Section 139(1) of the Act is invalid, is not correct.
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Claim of depreciation at higher rate - failure to file return of income (ITR) within the time limit prescribed u/s 139(1) - since the return was filing within the extended period of time provided u/s 139(4), claim allowed.
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Validity of order of Settlement Commission - the additional amounts which the respondents have agreed to pay are meagre considering the overall amounts disclosed in the applications under section 245C(1) of the Act. Under the circumstances, the contention that there was no full and true disclosure in the applications made u/s 245C(1), does not merit acceptance.
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Revision u/s 263 - writ Court cannot examine the validity of notice on merit. Petitioner has a remedy before the very same authority by submitting explanation to the notice. Writ Court can interfere in respect of notice only, if, there is any violation of statutory provision.
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Revision u/s 263 - chargeability of unexplained cash credit - the Pr.CIT himself is not sure as to whether the addition can be made u/s.68 or u/s.41(1). - the Pr. C.I.T. was not justified in setting aside the assessment order to the A.O. for passing fresh assessment order after making further inquiries/verifying the matters afresh
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Addition being legal and professional charges - The onus was on the assessee to establish that a Person, rendered legal and professional services in addition to employment with the assessee.
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Advances and deposit written off - Clearly, the advances which had been made by the assessee in the present case are certainly of a type which are within the contemplation of the words "laid out or expended wholly and exclusively for the purposes of the business and allowable under Section 37(1).
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Reopening of assessment u/s 147 - validity of reason to believe - ‘borrowed satisfaction’ of the DDIT (Inv.) - The repetition of certain portions of the investigation report of DDIT without any reasons independently recorded by the AO on the basis of ‘borrowed satisfaction’ of the DDIT (Inv.) cannot be the basis for reopening of assessment u/s. 147 of the Act.
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Loss on account of mark to market - Business Expenditure - even though the loss has not finally crystallized if as per prudent and regular system of accounting, the loss has to be accounted for, the same should be allowed.
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Loss on account of mark to market - there is no bar in adjustment of unabsorbed business losses from speculation profit of the current year, provided the speculation losses for the year and earlier has been first adjusted from speculation profit.
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Mis-match in the rent income offered as per ITR and as reflected in annual statement Form No.26AS (TDS statement) - the mis-match of one month rent is purely an accounting mistake attributable to the prayer for which the assessee should not be penalized.
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Addition being long term capital gain on sale of land - Once the area is within 8 kms from the Municipal limits, then even if the particular land is beyond that distance of 8 kms, it will not be excluded from the definition of capital asset being an agricultural land.
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Validity of reassessment order passed u/s 147 - Since assessment order passed beyond the limitation period i.e. beyond the time limit of 60 days as per the Explanation 1 (ii) to section 153 read with the Ist proviso to section 153 - order cannot sustain.
IBC
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Resolution plan against the owner of land namely SevenHills which was to be developed by the Municipal Corporation (MCGM) - The resolution plan would be a serious impediment to MCGM’s independent plans to ensure that public health amenities are developed in the manner it chooses, and for which fresh approval under the MMC Act may be forthcoming for a separate scheme formulated by that corporation (MCGM).
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Cross Border Insolvency Protocol - ‘The Dutch Trustee’ is equivalent to the ‘Resolution Professional’ of India, therefore, as per law he has a right to attend the meeting of the ‘Committee of Creditors’ - They will work in co-operation with the ‘Resolution Professional of India’
Service Tax
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Inquiry proceedings / summons under service tax - It would be appropriate to direct the petitioner to cooperate with the on-going enquiry, appear before the respondent for completion of proceedings and allow the same to come to a logical conclusion.
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Availing CENVAT credit of service tax under VCES Scheme - It is beyond doubt that the payment of duty on the invoices raised under VCES Scheme has to be held as payment by way of raising supplementary invoices, which was on account of misstatement or suppression with intent to evade payment of duty. - Credit not allowed - Demand confirmed with interest - Penalty waived.
Central Excise
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Adjustment of short paid duty with excess duty paid - Job Work - Motor vehicles - HC refused to interfere into the order of CESTAT allowing adjustment.
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2019 (11) TMI 894
Refund of allegedly wrongfully availing Input Tax Credit paid, under protest - Validity of provisions in section 16(2)(c) and section 42 in Central Goods and Service Tax Act, 2017 - HELD THAT:- Petitioners do not have a case. Investigation is ongoing. No demand has yet been raised, the payment having been made voluntarily. In an earlier writ petition, filed by petitioners, there was direction for the investigation to proceed. Petitioners have not challenged such order. Mr. Kar responds, the challenge here was not urged in his clients earlier writ petition. No express interim order is necessary in view of submissions recorded above and in earlier order dated 20th September, 2019. List on 10th January, 2020.
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2019 (11) TMI 893
Filing of TRANS-1 - unable to avail Transitional credit - CGST Act - HELD THAT:- The Respondents are obliged to open GSTN Portal in view of the decisions of the various Courts on identical facts Mr. Adik, learned Counsel appearing for the Respondents very fairly on instructions, states that, Respondent No.1 would pass an appropriate order on the Petitioner s application dated 4th June, 2019, within a period of three weeks from today, after hearing the Petitioner - petition disposed off.
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2019 (11) TMI 892
Confiscation of goods alongwith the vehicle - respondents have proceeded under section 130 of the CGST Act, 2017 by issuing notice in Form GST-MOV-10 on the ground that after checking the dealers record according to the GST system, the dealer appears to be involved in bogus billing practice or making false claim of ITC for the period of August, 2019 and September, 2019 - HELD THAT:- Issue notice, returnable on 18th November, 2019.
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2019 (11) TMI 891
Refund of IGST/ITC - case of petitioner is that refund of IGST has to be processed by the Jurisdictional Officer of Customs in respect of exports undertaken by the exporters - Rules 96 and 96A of the CGST Rules - HELD THAT:- The Respondents are directed to examine the said claim of the Petitioner and if the same or any part whereof is found to be payable, to release the refund amount within four weeks positively. However, in case the Respondents decided to contest this petition, they should file their counter affidavit within six weeks to which rejoinder may be filed before the next date. List on 04.05.2020.
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2019 (11) TMI 890
Rectification of return - Extension of time limit for filing the annual return - HELD THAT:- Considering the fact that the respondents have not filed a reply despite grant of opportunity as early as on 16.09.2019, and the period for filing the annual return for the period in question would expire on 30.11.2019, we are inclined to grant interim relief as sought by the petitioner verbally. Therefore, subject to final outcome of the writ petition, we permit the petitioner to rectify the return in GSTR 1 Form for the period November, 2017 in respect of the six recipients noted in the tabulation hereinabove, by correcting their GSTIN Nos. The rectified Form shall be submitted by the petitioner within a week manually. List on 08.05.2020.
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2019 (11) TMI 889
Migration of GST registration - the petitioner did not choose to migrate to the regular registration within the time granted under the Statute. The migration did not happen even thereafter within the two subsequent periods of extension - CGST Rules, 2017 - HELD THAT:- The request of the petitioner cannot be entertained, since the petitioner did not avail of the many opportunities granted by the respondents for migrating to the GST registration - The inaction on the part of the petitioner cannot be condoned, and hence, taking note of the averments in the statement filed on behalf of respondents 1 and 2, the prayer sought for in the writ petition cannot be granted. Petition dismissed.
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2019 (11) TMI 888
Rate of GST for the restaurant sector - input tax credit - Validity of Notification dated 14th November, 2017 - option to pay 18% GST with full ITC has been removed for the restaurant sector - HELD THAT:- Issue notice, returnable on 11th December 2019. In the meanwhile, the respondent shall consider and report to this court as to what amount can be taken to secure to the petitioners the option to discharge GST either at the rate of 18% with full input tax credit or at the rate of 5% without input tax credit.
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2019 (11) TMI 887
Validity of detention order - detention on the ground that at the time of detention of the vehicle, the original invoice was not produced by the driver of the vehicle - Rule 138A of the SGST Rules - HELD THAT:- The absence of an invoice can be a valid ground for detention under Section 129 of the GST Act. Accordingly, I find that the detention in Ext.P4 order is justified. It is directed that if the petitioner furnishes the bank guarantee for the tax and penalty amount determined in Ext.P4, then the respondent shall release the consignment and the vehicle to the petitioner, and thereafter proceed for adjudication in terms of Section 138 of GST Act, after hearing the petitioner. Petition disposed off.
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2019 (11) TMI 886
Detention of goods alongwith vehicle - detention was on the ground that the validity period of the e-way bill that accompanied the transportation had already expired at the time of detention - Section 129 of the GST Act - HELD THAT:- It is directed that if the petitioner furnishes a bank guarantee for the tax and penalty amount quantified in Ext.P3B order, then the respondents shall release the consignment and the vehicle to the petitioner - The respondents shall, thereafter, proceed to adjudicate the issue after notice to the petitioner and in accordance with the procedure prescribed under Section 130 of the GST Act.
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2019 (11) TMI 885
Levy of IGST on freight - entry 10 in Notification no. 10/2017-Integrated Tax (Rate) and entry 9(ii) in Notification no. 8/2017-Integrated Tax (Rate), both dated 28th June, 2017 - HELD THAT:- Mr. Banerjee, learned advocate appearing on behalf of revenue does not dispute his client s position on similar challenges, of having had chosen to accept the interim order and proceed for adjudication on merits. In view of above this is a fit case for issuance of similar interim order. No coercive action shall be taken against petitioners. List on 13th December, 2019.
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2019 (11) TMI 884
Delay in uploading GST TRAN-I and certain form GST TRAN-II - delay occurred due to technical glitch - HELD THAT:- The Nodal Officer has to take a decision, whether failure in uploading attributable to the technical glitch or not. Review petition disposed off.
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2019 (11) TMI 883
Release of goods alongwith the vehicle - detention on the ground that the truck had reached the check post in Uttarakhand after expiry of the time stipulated in the E-way bill - section 129 of CGST Act - HELD THAT:- Since it is admitted that the 2017 Act provides for release of goods only on furnishing a bank guarantee, it would be wholly inappropriate for us to issue any direction contrary thereto - there are no reason, therefore, to accede to the appellant-writ petitioner s request for release of the vehicle and the goods on merely furnishing an indemnity bond. Appeal dismissed.
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2019 (11) TMI 882
,Maintainability of appeal - Appealable order u/s 112 of the Uttar Pradesh Goods and Services Tax Act, 2017, however, no Appellate Tribunal is functioning in the State of U.P. - HELD THAT:- Learned counsel for the petitioner submits that the petitioner is ready to deposit the amount of tax, interest, fine fee and penalty, as per the impugned order and as required under the provisions of Section 112 of the Uttar Pradesh Goods and Services Tax Act, 2017, which is a pre-condition for filing the appeal. He prays for fifteen days' time to comply the terms and conditions - Prayer made is allowed. List immediately after fifteen days.
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2019 (11) TMI 881
Filing of GST TRAN -1 - unable to claim transitional input credit - transition to GST regime - HELD THAT:- The present petition is disposed of with direction to the respondents to re-open web portals enabling the petitioner to upload its Form GST TRAN-1 electronically or allow the petitioner to file GST TRAN -1 return manually.
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2019 (11) TMI 880
Waiver of the bar of alternative remedy - detention of goods alongwith vehicle - it was alleged that neither there was any genuine transport agency nor there was any genuine buyer disclosed in the documents found accompanying the goods - HELD THAT:- While the writ petition is being provisionally entertained because of non constitution of Tribunal, insofar as interim relief is concerned, it is provided that the order of confiscation of the truck, shall remain in abeyance, subject to the petitioner depositing with the respondent no.3, an amount equal to tax on the goods found loaded on the truck within two weeks from today. List on 16.10.2019 alongiwth Writ Tax No. 942 of 2018.
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2019 (11) TMI 879
Grant of anticipatory bail - alleged availment of input tax credit on the basis of forged invoice - Section 132 of the Jharkhand GST Act, 2017 - alleged offence of Smt. Renu Singh - HELD THAT:- The petitioner of A.B.A. No.6521 of 2018 namely Smt. Renu Singh is directed to surrender in the Court of learned Chief Judicial Magistrate, Bokaro within four weeks from today and in the event of her arrest or surrendering, she will be enlarged on bail provisionally for a period of one month from the date of her surrender on showing proof of reversing input tax credit of ₹ 50,00,000/- with the Goods and Service Tax Department after the date of this order and on furnishing bail bond of ₹ 25,000/- (Twenty five thousand) with two sureties of the like amount each to the satisfaction of learned Chief Judicial Magistrate, Bokaro in connection with Bokaro Steel City P.S. Case No.121 of 2018 corresponding to G.R. No.663 of 2018 with the condition that she will co-operate with the investigation of the case and appear before the investigating officer as and when noticed by him and furnish her mobile number and photocopy of the Aadhar Card with an undertaking that she will not change her mobile number during the pendency of the case and subject to the conditions as laid down under Section 438(2) of the Code of Criminal Procedure. Petitioner of A.B.A. No.4745 of 2018 namely Nikit Mittal - HELD THAT:- The petitioner of A.B.A. No.4745 of 2018 namely Nikit Mittal is directed to surrender in the Court of learned Chief Judicial Magistrate, Bokaro within one month from today and in the event of his arrest or surrendering, he will be enlarged on bail on showing proof of reversing input tax credit of ₹ 1,06,282/- to the Goods and Service Tax Department after the date of this order and on furnishing bail bond of ₹ 25,000/- with two sureties of the like amount each to the satisfaction of learned Chief Judicial Magistrate, Bokaro in connection with Bokaro Steel City P.S. Case No.121 of 2018 corresponding to G.R. No.663 of 2018 with the condition that he will cooperate with the investigation of the case and appear before the investigating officer as and when noticed by him and furnish his mobile number and photocopy of the Aadhar Card with an undertaking that he will not change his mobile number during the pendency of the case and subject to the conditions as laid down under Section 438(2) of the Code of Criminal Procedure.
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2019 (11) TMI 822
Imposition of tax and penalty - it is alleged that the truck had reached the check post in Uttarakhand, after the expiry of the time stated in the E-way bill - Section 129 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- The writ petition is wholly premature. Petitioner must give a reply of the show cause notice to the concerned authority explaining the valid reasons as to why delay has been caused and since under sub-section (1) of Section 129 of the Central Goods and Services Tax Act, 2017, goods can be released inter alia on petitioner s furnishing a security equivalent to the amount payable, in case, the petitioner deposits the security, the same shall be considered in accordance with law. Petition disposed off.
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Income Tax
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2019 (11) TMI 878
TP Adjustment - whether, the objections filed by the petitioner on 1/2/2019 was within the time contemplated u/ 144(C) of the Income Tax Act? - HELD THAT:- In terms of Section 144(C)(2) of the Income Tax Act, the petitioner assessee was to submit his objections to the draft assessment order within 30 days of the receipt of the same, and the said objections were to be simultaneously sent to both the Dispute Resolution Panel as also to the Assessing Officer. It is trite, that in matters involving transfer pricing, and where a reference is made to the Transfer Pricing Officer, the final assessment must await the decision of the Transfer Pricing Officer, or in applicable cases, that of the Dispute Resolution Panel. The relevant date in the instant case, which involved a reference to the transfer pricing officer, has to be the date on which the objections were received by the Dispute Resolution Panel and the question to be answered is whether, the objections filed by the petitioner on 1/2/2019 was within the time contemplated under Section 144(C) of the Income Tax Act. When the petitioner had not opted for the e-proceeding facility, and had chosen to have its assessment proceedings continued in the manual mode, the receipt of the draft assessment order in the manual mode has to be seen as the date of service of the draft assessment order. This would be so because, an assessee that did not opt for the electronic mode for the completion of his assessment proceedings, virtually expresses his lack of confidence in the said facility and thereby chooses to opt for the manual facility in which he reposes greater confidence. Till such time as the electronic facility is made mandatory for assessees, therefore, the wishes of the assessee have necessarily to be respected by the department. It would also be an aspect of fairness in tax administration that the assessee is not prejudiced on account of service of an order, through a mode that he did not opt for. This court must also remind itself that, in the event of an ambiguity in construing the provisions in a taxing statute, it has to take a view that favours the assessee. It is the receipt of the draft assessment order on 05/01/2019 through the manual mode, that determines the starting point of limitation for the period of 30 days u/s 144(C)(2) of the Income Tax Act, for the petitioner to have submitted his objections before the Dispute Resolution Panel. On reckoning the period of 30 days from 05/01/2019 as aforesaid, I find that the objection filed by the petitioner on 01/02/2019 before the Dispute Resolution Panel was within time. Ext.P19 order of the Dispute Resolution Panel must, on that reasoning, be set aside and I do so. As already noticed, in matters involving transfer pricing, the assessment order by the Assessing Officer must necessarily follow the findings of the Dispute Resolution Panel and hence, based on the finding that Ext.P19 order of the Dispute Resolution Panel is illegal,I have to hold that Ext.P20 order of assessment, that did not await the decision of the Dispute Resolution Panel on merits, is also illegal. The writ petition is therefore allowed by quashing Exts.P19 and P20 orders and directing the 2nd respondent Dispute Resolution Panel to consider the objections of the petitioner to the draft assessment order on merits, and pass fresh orders in lieu of Ext.P19 within a period of three months from the date of receipt of a copy of this judgment. The 1st respondent Assessing Officer shall thereafter, complete the assessment proceedings, taking note of the order of the 2nd respondent, and after hearing the petitioner, within a further period of three months from the date of receipt of the order of the 2nd respondent. It is made clear that the findings in this judgment have been entered taking note of the peculiar factual circumstances that arose in the instant case, and hence this judgment is not to be cited as a precedent in subsequent cases.
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2019 (11) TMI 877
Revision u/s 263 - computation of deduction under Section 80-HHC - 90% of the interest was excluded from the business profits - AO had not applied his mind as to the nature of the interest received to see if it is to be taxed as income from business or income from other sources - HELD THAT:- Section 263 of the Income Tax Act, 1961 is not intended to be invoked for every type of mistake or error committed by the Assessing Officer. It is only when an order is erroneous, it is attracted. Though the phrase prejudicial to the interests of the revenue in Section 263 is of wide import and is not confined to loss of tax, it has been held by the Honourable Supreme Court in Malabar Industries Co Ltd [2000 (2) TMI 10 - SUPREME COURT ] that every loss of revenue as a consequence often order of the Assessing Officer cannot be treated as prejudicial to the interests of the revenue. The scheme of computing of total income under various heads in Chapter IV of the Income Tax Act, 1961 reveals that Income from Other Sources is only those income which cannot be brought to tax under any of the specific heads of income in the provisions preceding Section 56 in chapter IV of the Income Tax Act, 1961. An income received in the ordinary course of business is an integral part of the regular income of the assessee. Since there is no infirmity in the calculations made by the Assessing Officer while computing the deductions in view of the above decisions cited on behalf of the assessee, the view of the Commissioner of Income Tax that the Assessing Officer committed an error while passing the respective Assessment Orders which resulted in loss of revenue prejudicial to interest of revenue cannot be sustained. Assessing Officer to compute deduction under Section 80 HHC in the order of the Commissioner of Income Tax is without any basis. We are therefore of the view that the Commissioner of Income Tax erred in invoking the revisional powers under Section 263 of the Income Tax Act, 1961 in the facts of the present cases.- Decided in favour of assessee
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2019 (11) TMI 876
Claim of depreciation at higher rate - failure to file return of income (ITR) within the time limit prescribed u/s 139(1) - ITAT allowed the claim u/s 32 - condition imposed under Rule 5(1A) proviso (ii) - HELD THAT:- In the instant case, admittedly, in the return was filed on behalf of assessee, within the extended period of time provided under Section 139(4) of the Act, and the assessee has claimed depreciation. Thus, the benefit of the aforesaid decision of the Hon ble Apex Court in the case of Commissioner of Income Tax ( 2000 (12) TMI 99 - SUPREME COURT ) would enure to the benefit of the assessee. Rule 5(1A) proviso (ii) - It is pertinent to mention here that the Tribunal while taking into account Section 32 of the Act, has held that since Section 32 of the Act does not provide any specific provision for exercising the option within the time limit, therefore, the condition imposed in the second proviso of Rule 5(1A) of the Rules to the extent that such an option has to be exercised at the time of filing of the return under Section 139(1) of the Act is invalid cannot be upheld. It is trite law that the Tribunal is bound by the provisions of the Act and the Rules and has no power to declare any provisions of either the Act or Rules to be invalid or ultra vires. Therefore, the substantial question of law framed by this Court is answered in favour of the Revenue and it is held that the Tribunal was not correct in holding that in the absence of prescription of any time limit under Section 32 of the Act, the condition mentioned in the second proviso to Rule 5(1A) of the Rules to exercise the option with regard to depreciation at the time of filing of the return under Section 139(1) of the Act is invalid, is not correct. Impugned orders passed by the Tribunal insofar as it pertains to the finding that the second proviso to Rule 5(1A) of the Rules are ultra-vires is hereby set aside.
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2019 (11) TMI 875
Assessment u/s 153C - Assessment completed u/s 144 - HELD THAT:- The aforesaid assessment note nowhere satisfies the requirements referred to, in the preceding paragraph. Before the Tribunal, the Revenue could not adduce any cogent material or evidence to prove that the addition in all the assessment years was made in the case of Assessee in the Assessment completed u/s 144 read with section 153C on the basis of any incriminating material or document being found during the course of the search. As further noticed that even no such incriminating material or document has been referred to by the Assessing Officer during the course of the search while completing Assessment. The order passed by the Assessing Officer has been passed in contravention of the law laid down by the Hon ble Supreme Court in the case of M/s. Calcutta Kintwears [ 2014 (4) TMI 33 - SUPREME COURT ] . Therefore, the appeal preferred by the Assessee was rightly allowed by the CIT (Appeals) and the appeal preferred by the Revenue was rightly dismissed by the Income Tax Appellate Tribunal.
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2019 (11) TMI 874
Validity of order of Settlement Commission - full and true disclosure or not - additional income offered during section 245D(4) - HELD THAT:- Proceedings before the Settlement Commission are in the nature of settlement between the parties and are not strictly speaking adjudicatory proceedings. On a perusal of the impugned order passed by the Settlement Commission, it is abundantly clear that both the respondents had not accepted the liability of 5% of trading expenses, but in the spirit of settlement offered to pay the amount computed by the AO with a view to bring the quietus to the matter and buy peace of mind. This court is of the view that the offer to pay such amounts in addition to the amounts disclosed in the applications under section 245C cannot be said to be disclosure of any further amounts under that section as the same have been offered only to bring about a settlement. The fact that the applicants have offered to pay such amounts, the liability whereof has not been accepted by them, cannot be termed as non-disclosure of full and true facts in the applications under section 245C of the Act. Under the circumstances, considering the amounts so offered by way of settlement which are quite meagre considering the overall disclosure made, this court does not find any infirmity in the impugned order passed by the Settlement Commission warranting interference in exercise of powers under article 226 of the Constitution of India. In the facts of the present case, no revised application under sub-section (1) of section 245C of the Act had been filed by the respondents revising the initial disclosures. The respondents/ applicants have not made any revised disclosures, nor have they accepted the liability to pay the additional amounts. Nonetheless, in the spirit of settlement, the respondents applicants have, offered to pay such amounts to bring a quietus to the matter and buy peace of mind. Moreover, the additional amounts which the respondents have agreed to pay are meagre considering the overall amounts disclosed in the applications under section 245C(1) of the Act. Under the circumstances, the contention that there was no full and true disclosure in the applications made under section 245C(1) of the Act, does not merit acceptance. Insofar as the contention that the impugned order is a non-reasoned order, from the facts noted hereinabove, it is evident that the Settlement Commission has applied its mind to the nature of disclosures, the contentions of the revenue and the explanation of the respondent applicants and has given its findings thereon. On a perusal of the impugned order it is not possible to state that it is a non-speaking order. Such contention is, therefore, misconceived. This court does not find any infirmity in the impugned order, so as to warrant interference.
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2019 (11) TMI 873
Revision u/s 263 - assessment order of the AO pursuant to DRP decision or not? - HELD THAT:- In view of Section 263 of Act 1961 read with the principles laid down by the Apex Court in various decisions, the cited decision on behalf of the petitioner would not aid or support the contention of the petitioner that Principal Commissioner/respondent has no jurisdiction to invoke Section 263 of Act 1961, is not appreciable. Consequently, the contention of the petitioner that Principal Commissioner has no jurisdiction to invoke Section 263 of Act 1961 is hereby rejected. The other contention is that impugned notice dated 08.02.2016 do not contain the ingredients and notice is liable to be set-aside. Petitioner has a remedy before the Principal Commissioner if there is any shortcoming in respect of ingredients stated in Section 263 of Act 1961. Writ Court cannot examine the validity of notice on merit. Petitioner has a remedy before the very same authority by submitting explanation to the notice. Writ Court can interfere in respect of notice only, if, there is any violation of statutory provision. In view of the principle laid down in HARBANSLAL SAHNIA AND ANR. VERSUS INDIAN OIL CORPN. LTD. AND ORS. [ 2002 (12) TMI 564 - SUPREME COURT] the petitioner has not apprised this Court that he need not exhaust a remedy of submitting explanation/reply to the notice dated 08.02.2016. The power conferred on the High Court under Article 226 of the Constitution of India is to advance justice and not to thwart it. The very purpose of such Constitutional powers being conferred on the High Court is that no man should be subjected to injustice by violating law. This Court does not sit as an appellate authority over the decision of the authorities below. Further, while exercising extra-ordinary jurisdiction by the High Court under Article 226 of the Constitution of India, it should examine whether the impugned action is per se illegal or vitiated by errors apparent on the face of the record. In view of above narrated facts and circumstances read with the legal issues, petitioner has not made out a case so as to interfere with the impugned notice dated 08.02.2016. Resultantly: I. Writ Petition stands rejected reserving liberty to the petitioner to approach the respondent in filing explanation/reply within a period of four weeks from the date of receipt of this order. II. Rule is made absolute in the preceding terms.
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2019 (11) TMI 872
Payment of interest disallowed u/s 40(a) (ia) - forms submitted by the recipients of interest, filed in Form No.15G and 15H were not produced before the assessing authority - HELD THAT:- The order of remand by the Tribunal is in the light of the Judgment rendered by Division Bench of this Court in the matter of Commissioner of Income-Tax v. Sri Marikamba Transport Co. [ 2015 (6) TMI 181 - KARNATAKA HIGH COURT ] as held that though filing of Form Nos.15G and 15H by recipient of interest is mandatory before the persons from whom they seek payment of interest without deducting tax at source. However filing of same by the person disbursing interest to the authorities is procedural and not mandatory. In the event the assessing authority decides to look into the same, it could be called for while taking up the same for assessment. In the instant case, though the assessing authority entertained doubt regarding the respondent herein collecting such form before disbursing the interest, there is nothing on record to demonstrate that the assessee was called upon to produce forms to substantiate the deductions which they have made. Assessing Authority as well as Appellate Authority is rightly set aside by the Tribunal and the same is remanded back to the Assessing Authority for fresh consideration. On going through the order impugned, this Court is of the considered opinion that the order of remand is just and proper on factual matrix of the case.
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2019 (11) TMI 871
Capital gain computation - determining the cost of acquisition on sale of property for computing the capital gains - HELD THAT:- The fair market value as on 01.04.1981 was adopted by the assessee on the basis of Chartered Engineers certificate issued by S.V.Ramana, who has valued the building after making personal visit. The question whether the fair market value and the SRO value is one and the same or not was considered by this Tribunal in the case law cited supra and held that the fair market value is not a guideline value In the instant case, both the lower authorities have simply brushed aside the Chartered Engineer s valuation report submitted by the assessee without assigning any reasons. Further the AO has adopted the SRO value as fair market value which is incorrect approach. The guide line value is the rate at which the properties are registered in and around the area, but not related to the exact premises of the assessee. Therefore for the purpose of determining the capital gains, the guide line value cannot be applied blindly when there is registered valuer s report made available to the AO. Since the facts of this case are identical to the facts of the case law relied upon by the assessee, we direct the AO to adopt the fair market value of the cost of acquisition as certified by the registered valuer s certificate, instead of substituting the same with SRO value. Accordingly, we set aside the order of the Ld.CIT(A) and delete the addition made by the AO. Appeal of the assessee is allowed.
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2019 (11) TMI 870
Reopening of assessment u/s 147 - AO received information from the Sales Tax Department, Govt. of Maharashtra that the assessee had obtained accommodation entries by availing bogus purchase bills to inflate purchases - HELD THAT:- As mentioned earlier, the AO has reopened the assessment which was processed u/s. 143(1) of the Act. The Hon ble Supreme Court in the case of ACIT v. Rajesh Jhaveri Stock Brokers P. Ltd. 2007 (5) TMI 197 - SUPREME COURT analyzed the distinction between the acceptance of a return u/s 143(1) and an assessment which is framed u/s 143(3) of the Act. In the former case, the AO would have much wider latitude to reopen the assessment. Thus in the instant case, the AO has rightly issued notice u/s 148 for reopening the return of income processed u/s 143(1) of the Act. No irregularity has been committed by the AO in recording the reasons and then issuing the notice u/s.148. As mention earlier, the AO had issued notice u/s. 142(1) calling for details to be filed by the assessee and also the books of accounts to be reproduced. In response to it, the assessee failed to file the complete details. Also the assessee failed to produce before the AO the books of accounts for verification - As relying on N.K. Industries Ltd. [ 2016 (6) TMI 1139 - GUJARAT HIGH COURT ] we set aside the order of the Ld. CIT(A) and direct the AO to restrict the additions limited to the extent of bringing the G.P. rate on disputed purchases at the same rate of other genuine purchases. We direct the assessee to file the relevant documents/evidence before the AO. Needless to say, the AO would give reasonable opportunity of being heard to the assessee before finalizing the order. Assessee's appeal is partly allowed.
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2019 (11) TMI 869
Deduction u/s.80-IA in respect of profits derived from its new industrial undertaking of manufacturing surface coating systems - HELD THAT:- Location of the manufacturing action had to be therefore primarily outside the four walls of the assessee s establishment but by that fact the sanctity of the business of manufacturing is not lost. Thus, merely because some components are bought out or the parts are got fabricated under the direct supervision and control of the assessee on the basis of own drawing and designs cannot mean that the undertaking was not set up or it constitutes reconstruction of the existing business rather the drawing and designs constitutes the heart of the manufacturing process. CIT(A) has not dealt with the manufacturing processes/details and it is also not apparent from his order as to how he has come to a conclusion that (i) the surface coating systems is nothing but providing spray painting equipments at the site of the assessee with additional accessories; (ii) it is only minor modification of the existing product; (iii) surface coating systems constitutes as a reconstruction of the existing business. On careful perusal of the CIT(Appeals) s order and the findings arrived therein, he has not dealt with specifically as to why he has not accepted the analysis of the Assessing Officer. He has not passed a speaking order nor has reasons backing his order which is not apparent from his order. These issues (i) whether the factual parameters for getting deduction u/s.80-IA are complied by the assessee or not; (ii) whether surface coating systems constitutes reconstruction of the existing business requires detailed factual analysis and verification coupled with a speaking order. We set aside the orders of the Ld. CIT(Appeals) for both the assessment years and restore them back to his file for necessary adjudication as per law after following principles of natural justice. Appeals of the assessee for the assessment years 1995-96 and 1997-98 are allowed for statistical purposes.
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2019 (11) TMI 868
Addition u/s 68 - treating the cash deposits made in bank accounts of the assessee as unexplained income - HELD THAT:- In the instant case, though the assessee has maintained the books of accounts, the cash deposits made in the bank account were not found credited in the books of accounts. The entire transactions were made outside the books of accounts. In the absence of any finding with regard to cash deposits recorded in the books of accounts of the assessee, the addition made by the AO u/s 68 in respect of cash deposits made in the bank account are unsustainable. During the appeal hearing, the Ld.DR did not bring any other decision to support the revenue s contention that the cash deposits made in the bank account to be brought into the purview of section 68 of the Act. Addition made by the AO u/s 68 in respect of cash deposits made in the bank account is unsustainable, accordingly, we set aside the order of the Ld.CIT(A) and delete the addition made by the AO. Accordingly, the appeal of the assessee is allowed.
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2019 (11) TMI 867
Assessments completed u/s 153A - Addition u/s 68 - unexplained cash credit - HELD THAT:- As decided in own case [ 2019 (5) TMI 850 - ITAT KOLKATA] addition by treating the share application money as unexplained cash credit u/s 68 was made by the Assessing Officer in the assessment completed u/s 153A on the basis of Bank account found during the course of search and since the said Bank account as well as the transactions reflected therein were duly disclosed by the assessee in its return of income originally filed for the year under consideration, we find ourselves in agreement with the contention of the assessee that the same cannot be treated as incriminating material found during the course of search. The addition made by AO u/s 68 and confirmed by the ld. CIT(Appeals) thus was not based on any incriminating material found during the course of search and the same, in our opinion, is not sustainable being outside the scope of section 153A - Decided in favour of assessee.
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2019 (11) TMI 866
Revision u/s 263 - chargeability of unexplained cash credit in the form of sundry creditors for raw material and expenses , to income tax as the income in addition to the returned income of the assessee for assessment year concerned u/s.68 or 41(1) - HELD THAT:- It cannot be said that the view taken by the A.O. is not one of the possible views. The Pr.CIT may be of the view that some more disallowance/addition would have been justified, however, that by itself will not make the assessment to be erroneous and prejudicial to the interest of the Revenue. The course adopted by the A.O. is certainly one of the possible views. It is now settled law that if, while making the assessment, once the AO has completed the assessment rejecting the books of accounts of the assessee and estimating the gross profit of the assessee, again directing the AO to accept the returned income, which otherwise to accept the books of accounts of the assessee invoking powers conferred u/s.263 of the Act, amounts to change of opinion and, therefore, the Pr.CIT is not permitted to substitute his own view about the computation of income in place of the income assessed by the A.O., unless the order of the A.O. is patently unsustainable in law. Our view is supported by the decision of Hon ble Delhi High Court in the case of CIT Vs. International Travel House Limited, [ 2010 (9) TMI 347 - DELHI HIGH COURT] as held that the Pr. CIT does not have unfettered power to initiate proceeding by revision, re-examining the matter and directing fresh enquiry on his own whim for change or having a different view - Commissioner has been conferred with a quasi-judicial power and the same is hedged with limitations and, therefore, it has to be exercised within the parameters of the provision. When the Commissioner is himself not able to form an opinion, he cannot direct another inquiry by the Assessing Officer under section 263 of the Act. In the instant case, the Pr.CIT himself is not sure as to whether the addition can be made u/s.68 or u/s.41(1). Accordingly, we hold that the Pr. C.I.T. was not justified in setting aside the assessment order to the A.O. for passing fresh assessment order after making further inquiries/verifying the matters afresh - Decided in favour of assessee.
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2019 (11) TMI 865
Addition u/s 36 for writing off irrecoverable expenses - disallowing the advances and deposit written off - whether the advances and deposit written off by the assessee can be allowed u/s 37(1) as business loss? - HELD THAT:- In the instant case, the claim of advances and deposit have not been considered for income in the year under consideration or in the earlier year(s), such advances or deposit written off are not eligible for deduction under section 36(1)(vii). An assessee is entitled for claim under Section 36(1)(vii) , where by reason of the inability or insolvency of the debtor to pay, the money is unable to be recovered. In all other cases, the claim for allowance should have to be sustained under Section 37(1) which requires that the expenditure (not being of a capital nature) should have been wholly and exclusively incurred for the purpose of the business. In the instant case, we find that advances for salary and deposits for lease premises have been written off. Clearly, the advances which had been made by the assessee in the present case are certainly of a type which are within the contemplation of the words laid out or expended wholly and exclusively for the purposes of the business and allowable under Section 37(1). The ratio of the decision of the Hon ble Supreme Court in the case of Southern Technologies Ltd. (supra) cannot be applied in the facts of the instant case. Accordingly, we set aside the finding of the Learned CIT(A) on the issue in dispute and allow the ground of the appeal of the assessee. Addition being legal and professional charges - HELD THAT:- Disallowance on the ground that the assessee failed to provide any evidence of rendering services by Sh. Amreek Singh. The onus was on the assessee to establish that Sh. Amreek Singh, rendered legal and professional services in addition to employment with the assessee. As assessee has failed to produce any evidences before the Ld. CIT(A) as well as before us, we do not find any error in the order of the CIT(A) on the issue in dispute and accordingly, we uphold the same. The ground of the appeal of the assessee is dismissed. Short-term capital loss - HELD THAT:- Documents are in relation to lawsuit filed by the vendor against assessee, however, in these letters of attorney of the assessee there is no mention of any fact that asset of the assessee were lying at those customer sites, with the assessee has claimed as not recoverable. No other evidence from the client/customer of the assessee to substantiate that assets were lying at their sites, has been furnished by the assessee either before the lower authorities or before us. In the facts and circumstances of the case, we do not find any error in the order of the learned CIT(A) and accordingly, we uphold the same. Ground of the appeal of the assessee is accordingly dismissed. As far as appeal of the Revenue is concerned, we find that the tax effect involved in the issue agitated before the Tribunal, is less than ₹ 50 lakh, as prescribed by the Central Board of Direct Taxes (CBDT) vide Circular No. 17/2019, dated 08/08/2019, wherein the Revenue has been directed not to pursue those appeals. In view of the tax involved in the present appeal of the Revenue, being less than the prescribed limit of ₹ 50 lakh, the appeal of the Revenue is dismissed.
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2019 (11) TMI 864
TP Adjustment - admit the additional evidence - HELD THAT:- Following the decision of the Tribunal in assessee s own case for the immediately preceding two assessment years, we admit the additional evidence filed by the assessee in the form of affidavit and restore the issue to the file of the A.O./TPO to determine the ALP of the commission paid by the assessee, after considering the affidavit of Mr. Ernst Huber, Director, Taratec SA, Switzerland and in the light of the decision of the Tribunal in assessee s own case in the immediately two preceding assessment years. The appeals filed by the Revenue for all the three years are accordingly allowed for statistical purposes. Disallowance u/s 14A r.w. Rule 8D - HELD THAT:- In view of the decision of the Hon'ble Delhi High Court in the case of Holcim India Ltd. [2014 (9) TMI 434 - DELHI HIGH COURT] where it has been held that no disallowance u/s 14A r.w. Rule 8D can be made when the assessee has not received any exempt income during the year, we uphold the order of the CIT(A) and the ground raised by the Revenue is dismissed. Disallowance u/s 14A r.w. Rule 8D - HELD THAT:- There is no satisfaction of the Assessing Officer in the instant case. He had categorically asked the assessee and the assessee has computed such disallowance as per the provisions of section 14A r.w. Rule 8D of the Act. We, therefore, do not find any infirmity in the order of the Assessing Officer in making a disallowance of ₹ 5,50,945/-. The ld.CIT(A) has rightly disallowed the same. We, therefore, uphold the action of the CIT(A) in sustaining the addition of ₹ 5,50,945/-. So far as assessment year 2009-10 is concerned, it is seen from the computation statement filed at page 96 of the paper book that the actual dividend received by the assessee during the year is ₹ 4,21,566/- only. It has been held in various decisions that the disallowance u/s 14A r.w. Rule 8D cannot exceed the actual exempt income received. We, therefore, modify the order of the CIT(A) and direct the Assessing Officer to restrict the disallowance u/s 14A r.w. Rule 8D to the actual dividend income received during the year. The ground raised by the assessee for the A.Y. 2008-09 is accordingly dismissed and the ground raised for the A.Y. 2009-10 is partly allowed. Disallowance on account of club membership and club service charges - AO disallowed on the ground that the assessee did not file any reply on this issue - CIT(A) upheld the action of the Assessing Officer on the ground that the assessee, during the assessment proceedings as well as the appeal proceedings has not filed any evidence in support of the claim of expenses - HELD THAT:- Considering the totality of the facts and in the interest of justice, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to give one final opportunity to the assessee to substantiate the claim of expenses on account of club membership and club service charges. This ground raised by the assessee for assessment year 2009-10 is accordingly allowed.
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2019 (11) TMI 863
Addition on account of bad debts claimed in computation of income - assessee is NBFC registered with RBI under the category of investment company and the loan advance to M/s. VTL was not in the ordinary course of business - CIT(A) deleted the disallowance by accepting the additional evidence - HELD THAT:- We find the Hon'ble Delhi High Court in the case of Global Capital Ltd. [ 2007 (5) TMI 235 - DELHI HIGH COURT] as held that under the provisions of section 36(1)(vii) of the IT Act, as amended w.e.f. 1st April, 1989, the assessee is not required to establish that the concerned debt has actually become bad in the relevant year for the purpose of claiming deduction under this section and the only requirement for claiming the deduction is that the assessee has to write off the relevant debt in its books of account. The various decisions relied on by the ld. DR are distinguishable and not applicable to the facts of the present case in view of the decision of the Hon'ble Supreme Court in TRF Ltd. [ 2010 (2) TMI 211 - SUPREME COURT] and the binding decisions of the jurisdictional High Court cited supra. In view of the above discussion and in view of the detailed reasoning given by the ld.CIT(A) on this issue, we find no infirmity in the order of the CIT(A). Accordingly, the same is upheld and the grounds raised by the Revenue are dismissed. Addition being the advance given to Mrs. Anuradha Shyam Chandani which was written off as bad debt on its forfeiture by the party during the year - claim of the appellant if not allowable as bad debt u/s 36(1)(vii), is allowable as business/trading loss under section 37(1 )/28 - HELD THAT:- CIT(A) upheld the action of the Assessing Officer on the ground that the advance given by the assessee for purchase of property which was later written off is not allowable under the provisions of section 36(1)(iii) as bad debt as the same is not a trading debt which was taken as income in earlier years or money advanced in the ordinary course of business of money lending, hence, also not in the ordinary course of business. It is the submission of the assessee that in view of the various decisions cited by him, even if the same is not treated as bad debt, the same should be allowed as business loss. It is an admitted fact that the assessee does not fulfill the conditions prescribed u/s 36(1)(vii) or 36(2) so as to claim the amount as bad debt. It is the alternative contention of the assessee that the same should be allowed as a business loss. However, the assessee has to prove before the Assessing Officer that the amount can be allowed as a business loss. We deem it proper to restore this issue to the file of the Assessing Officer with a direction to grant an opportunity to the assessee to substantiate its claim that it fulfills the conditions required for allowing the above amount of ₹ 1 crore as business loss. Disallowance u/s 14A - HELD THAT:- As held by the Assessing Officer himself, the assessee has received a dividend income on shares held as stock-in-trade which has been claimed as exempt. It is also held by the Assessing Officer that the assessee has made suo motu disallowance u/s 14A of the Act. Therefore, we find merit in the argument advanced by the ld. counsel that when the assessee has himself disallowed an amount of ₹ 55,32,603/- and no satisfaction has been recorded by the Assessing Officer, therefore, the disallowance made by the Assessing Officer and sustained by the CIT(A) is not correct. We, therefore, set aside the order of the CIT(A) on this issue and direct the Assessing Officer to delete the addition. Disallowance under Rule 8D(2)(i) being the amount of custodian fee paid in relation to shares held both as stock in trade and investments - HELD THAT:- We find merit in the argument of the ld. counsel for the assessee that the provisions of section 14A is not applicable in respect of the shares held as stock-in-trade as the profit therefrom is taxable as business income and dividend income thereon is incidental. Further, the assessee itself has disallowed an amount of ₹ 55,32,603/- and the Assessing Officer has not recorded any satisfaction and the assessee has received dividend income of only ₹ 39,97,165/- on the shares held as stock-in-trade. Since no satisfaction has been recorded by the Assessing Officer, therefore, we find merit in the argument of the ld. counsel for the assessee that the disallowance made by the Assessing Officer and sustained by the CIT(A) is not proper. We accordingly set aside the order of the CIT(A) and direct the Assessing Officer to delete the addition. The ground raised by the assessee is accordingly allowed. Addition to the book profit u/s 115JB being the amount of estimated expenditure disallowed under Section 14A / Rule 8D - HELD THAT:- We find, the Special Bench, Delhi, of the Tribunal in the case of VIREET INVESTMENT (P.) LTD. [ 2017 (6) TMI 1124 - ITAT DELHI] has held that the computation under clause (f) is to be made without resorting to the computation as contemplated u/s 14A r.w. Rule 8D of the Incometax Rules, 1962. Since the issue has been decided in favour of the assessee by the decision of the Special Bench of the Tribunal, therefore, in absence of any contrary material brought to our notice by the ld. DR, we set aside the order of the CIT(A) on this issue and allow the ground raised by the assessee.
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2019 (11) TMI 862
Reopening of assessment u/s 147 - addition u/s 68 - Validity of reason to believe - HELD THAT:- A.O. has not gone through the details of the information and has not even applied his mind and merely concluded that he has reason to believe that income chargeable to tax has escaped assessment. In the reasons A.O. has recorded that assessee has received accommodation entry of ₹ 2.45 crores, but, ultimately made an addition of ₹ 11.05 crores without bringing any material against the assessee. The reasons to believe are, therefore, not in fact reasons, but, only conclusion of the A.O. There is no independent application of mind by the A.O. to the report of Investigation Wing to form the basis for recording the reasons. The reasons recorded by the A.O. are also incorrect as noted above. The reasons failed to demonstrate the link between the alleged tangible material and the formation of reasons to believe that income chargeable to tax has escaped assessment. Reopening of the assessment is bad in law and that sanction/approval granted by Pr. Commissioner of Income Tax is also invalid. We may also note that vide Order sheet Dated 23.08.2019 the case was re-fixed for hearing because the Ld. D.R. argued that approval have been granted by Commissioner of Income Tax after due discussion of the matter and perusal of the relevant information and thereafter approval in prescribed proforma sent to the A.O. and he has mentioned that I am satisfied. However, no record was produced. Therefore, this case was re-fixed for fresh hearing. However, on the date of hearing no such record have been produced for the inspection of the Bench. Therefore, satisfaction recorded by the Pr. Commissioner of Income Tax is invalid and without application of mind. Therefore, the reopening of the assessment is invalid and bad in Law and cannot be sustained in Law. We, accordingly, set aside the Orders of the authorities below and quash the reopening of the assessment under section 147/148 - Decided in favour of assessee.
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2019 (11) TMI 861
Reopening of assessment u/s 147 - validity of reason to believe - borrowed satisfaction of the DDIT (Inv.) - HELD THAT:- Reasons recorded by the AO to reopen the assessment of the assessee in the present case do not satisfy the requirement of section 147 of the Act. Information referred to by the AO in the reasons recorded (supra) is extremely scanty and vague. There is no reference to any document or statement, except reference of investigation report of DDIT (Inv.), Delhi and a general modus operandi of entry operators/providers and conclusions of the AO without any basis. Thus, the reasons recorded by the AO does not in fact have any reasons to believe the escapement of income. Further, it is evident that the AO did not apply his own mind to examine the basis/material of an information receipt from DDIT(Inv). AO accepted the information passed on DDIT (Inv.), which was vague in a mechanical manner which goes on to show that AO did not independently apply his mind on receipt of information from the DDIT has simply adopted the information received from the DIT (Investigation) as gospel of truth and thus the reason to belief escapement of income is not that of the AO but at best be said to be action mechanically carried out by the AO on receipt of report from DDIT (Inv.). The repetition of certain portions of the investigation report of DDIT without any reasons independently recorded by the AO on the basis of borrowed satisfaction of the DDIT (Inv.) cannot be the basis for reopening of assessment u/s. 147 of the Act. Therefore, following the ratio laid down by the Hon ble Delhi High Court in the case of Meenakshi Overseas Pvt. Ltd [2017 (5) TMI 1428 - DELHI HIGH COURT] and various case laws as cited before us we hold that jurisdictional condition precedent in section 147 of the Act has not been satisfied by the AO for reopening the assessment. - Decided in favour of assessee.
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2019 (11) TMI 860
Loss on account of mark to market - Business Expenditure - Assessee submitted that it had made provisions for loss following accepted accounting principles as per the Guidance Note on Accounting for Equity Index Equity Stock Futures and Options issued by theICAI and claimed the loss as deductable business expenditure. HELD THAT:- As decided in case of M/s. Edel Commodities Limited v. DCIT [ 2018 (4) TMI 562 - ITAT MUMBAI ], even though the loss has not finally crystallized if as per prudent and regular system of accounting, the loss has to be accounted for, the same should be allowed. Disallowance u/s 14A read with Rule 8D(2)(iii) - HELD THAT:- In the case of Nirma Credit Capital (P) Ltd [ 2017 (9) TMI 485 - GUJARAT HIGH COURT ] it is held that for the purpose of applying factors contained in clause (ii) of sub-rule (2) of rule 8D, prior to its amendment w.e.f 02.06.2016, amount of expenditure by way of interest would be interest paid by assessee on borrowings minus taxable interest earned during financial year. Addition made to Book Profit computed u/s 115JB on account of disallowance made u/s 14A - HELD THAT:- We have heard the rival submissions and perused the material available on record. In the case of Vireet Investment (P) Ltd [ 2017 (6) TMI 1124 - ITAT DELHI ] it is held that computation under clause (f) of Explanation 1 to section 115JB(2) is to be made without resorting to computation as contemplated u/s.14A r.w. Rule 8D.
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2019 (11) TMI 859
Disallowance in respect of interest paid to NBFC without deduction to tax - HELD THAT:- We restore the issue to the file of the AO. It shall be open to the assessee to furnish necessary evidences to show that payee has filed returns and has included the receipt from the assessee for the purposes of taxation. The AO may also make suitable inquiries in this regard and decide the issue in accordance with law. Income from sale of two properties resulting into double taxation - HELD THAT:- We find apparent justification in the plea of the assessee. The same income cannot be taxed in two assessment years simultaneously as per the scheme of taxation. Thus, while the assessee may not be permitted to defer the tax liability of income of the present year to the next year, the Revenue at the same time cannot sit over the taxes wrongly paid for the income already assessed in the preceding assessment year AY 2011-12 and refusing to refund the same in AY 2012-13. The action of the CIT(A) is accordingly set aside on this score and the AO is directed to refund the taxes collected in AY 2012-13 in accordance with law after ascertaining the fact of the taxes recovered on the same income in AY 2011-12. Mis-match in the rent income offered as per return of income vis- -vis income accrued reported by the payer as reflected in annual statement Form No.26AS of the assessee - HELD THAT:- Assessee while addressing the issue submitted that while the payer has wrongly declared the rent income of 13 months in Form No.26AS in AY 2011-12 in question, the assessee has declared actual income for 12 months. The prayer has committed mistake in the subsequent year and declared rental income for 11 months whereas the assessee has declared rental income again for 12 months. Thus, the mis-match of one month rent is purely an accounting mistake attributable to the prayer for which the assessee should not be penalized. As submitted that entire exercise is tax neutral. AR for the assessee however at the same time submitted that the issue may be sent back to the AO for necessary factual verification in this regard, if considered expedient. Averments made on behalf of the assessee to be just and proper. The issue is remitted back to the file of the AO for factual verification of the aspects and re-determination of the issue in accordance with law after giving opportunity to the assessee in this regard. Disallowance of estimated disallowance of 20% of interest expenditure incurred of car loan as personal in nature - HELD THAT:- We are not impressed by the late challenge of this aforesaid issue without putting it across before the CIT(A). Additional ground towards disallowance of interest expenditure cannot be permitted to be raised at this stage where necessary evidence towards sole user of car for business purposes is not available on record. The assessee cannot raise additional ground without good reason at a belated stage without showing its bonafides. The additional ground raised is thus dismissed.
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2019 (11) TMI 858
Disallowance of expenditure claim on consultancy - Non-deduction of TDS - HELD THAT:- The fact remains that this taxpayer has not tendered any details of the actual nature of expenditure. We therefore find no reason to disagree with the lower authorities conclusion quoting assessee s failure in filing the relevant details. Coupled with this, the fact also remains that the legislature has itself amended Section 40(a)(ia) vide the Finance Act, 2014 w.e.f. 01.04.2015 restricting a disallowance made u/s 40(a)(ia) from 100% to 30% only. This tribunal s order in DIPAK PARUI VERSUS J.C.I.T., RANGE-53, KOLKATA [ 2018 (7) TMI 2066 - ITAT KOLKATA] holds the above proviso inserted in the Act to be a curative one having retrospective effect. We therefore, direct the Assessing Officer to restrict the impugned disallowance to the extent of 30% only. Necessary computation to follow. This first substantive ground is taken as partly accepted in foregoing terms. Section 69A unexplained money addition - HELD THAT:- Dispute between the parties is that of reconciliation of assessee s closing opening cash in hand as per Schedule-7 of its balance sheet as on 31.03.2007 and 01.04.2008 with corresponding sums of ₹ 59,08,962/- and 1,07,14,466/-; respectively. The assessee has further pleaded that there is a lack of reconciliation in accounts pertaining to 4 lakh consumers and 9 circles with 21 divisions. This assessee is a public sector power utility company wherein the main source of cash in hand is that of consumer payments by way of power charges only. We therefore deem it appropriate that larger interest of justice will be met in case the Assessing Officer re-examines the entire issue afresh as per law within three effective opportunities of hearing. The assessee shall place on record all necessary particulars within the very number of opportunities. Bad debt disallowance - HELD THAT:- There is no dispute between the parties about allowability of a bad debts claim under the provisions of the Act per se since the issue herein is that of factual aspects only. The Assessing Officer as well as the CIT(A) hold that the assessee had not placed on record the relevant details of the beneficiaries/consumers covered under the power dues waiver schemes as well as about non-production of the Board s resolution to this effect. The assessee s case on the other hand is that it had no other source except that of providing power services to the consumers in whose cases it had written off all the outstanding dues in case of lakhs of consumers. We therefore deem it appropriate that the instant factual issue also requires necessary verification at least on test check basis. The Assessing Officer is directed to examine the same afresh within three effective opportunities of hearing as per law. Leave encashment disallowance for lack of actual payment u/s 43B(f) - HELD THAT:- Hon ble Calcutta high court has admittedly quashed the foregoing statutory provision itself in Exide Industries Ltd. vs. U.O.I. [ 2007 (6) TMI 175 - CALCUTTA HIGH COURT] . Hon ble Apex Court admitted the Revenue s SLP [ 2009 (5) TMI 894 - SC ORDER] and stayed operation of above high court s judgement. The said case is stated to be pending till date. We therefore restore this issue back to the Assessing Officer to decide afresh as per their lordships final call on the issue. This second substantive ground is taken as accepted for statistical purposes. Consultancy fee, security service charges and donation disallowances made to the Administrative Staff College of India payments - HELD THAT:- Lower authorities hold that the assessee had not deducted TDS on the former two payments. Mr. Goenka s only plea during the course of hearing is that the assessee had deducted TDS involving the former two claims as on 04.04.2008 and 12.05.2008 i.e. in next financial year 2008-09 respectively. We therefore deem it appropriate to restore the issue back to the Assessing Officer for fresh necessary factual verification as per law. Administrative Staff College of India donation - HELD THAT:- There is no denial of the fact about the assessee having not claimed the impugned expenditure in the said earlier assessment years. The very claim is being denied in the year of payment as well. Hon ble Gujarat High Court s judgement in PCIT vs. Adani Enterprise Limited [ 2016 (7) TMI 1250 - GUJARAT HIGH COURT] holds that such an expenditure claim is a revenue neutral instance in case the assessee concerned is assessed at the same rate both in the years of accrual and in the year of payment. We therefore decline the Revenue s foregoing technical argument. Mr. Goenka at this stage submitted that the assessee s payee also enjoys Section 197(1) exemption as per ADIT(Exemp)-2, Hyderabad s order dated 21.04.2005 and the relevant certificate to this effect which was placed before the CIT(A) could not be factually verified. We therefore deem it appropriate to send the instant issue back to the Assessing Officer for afresh factual verification as per law within three effective opportunities of hearing. Allowability of the alleged penalty amount imposed under the Tripura Value Added Tax Act, 2004 read with the Tripura Value Added Tax Rules, 2005 - Both the lower authorities hold the same to be not allowable being to a penalty imposed for non-compliance of a fiscal statute as per Section 37(1) of the Act that the same is opposed to public policy - HELD THAT:- We find from the perusal of the CIT(A) s detailed discussion in page 33 para 26.4 that the said issue of correctness of TVAT is yet to attain finality since the taxpayers revision petition is stated to be pending. Nor there is adjudication either in assessment order or the CIT(A) s order as to whether the amount in question represents a penalty per se or it is a mere penal action for nomenclature purposes. We therefore restore the instant issue back to the Assessing Officer for afresh adjudication as per law after taking into consideration all these factual and legal aspects. Appeal allowed for statistical purposes.
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2019 (11) TMI 857
Claim for deduction on account of foreign exchange fluctuation loss as a result of restatement of the Assessee s liability as on the last date of the previous year, without there being an actual payment or settlement - HELD THAT:- It is no doubt true that there has been no actual payment and at the time of ultimate settlement, there may not be a loss also. Nevertheless, AS 11 of ICAI requires such liability also to be reflected in the financial statements. The Hon ble Supreme Court considered all these aspects in the case of CIT(A) Vs. Woodward Governor [ 2009 (4) TMI 4 - SUPREME COURT ]. The first aspect examined by the Hon ble Supreme Court was as to whether the additional liability due to exchange rate fluctuation was a liability. The Hon ble Supreme Court held that the expression expenditure as used in s. 37 may, in the circumstances of a particular case, cover an amount which is really a loss even though the said amount has not gone out from the pocket of the assessee. The Court explained that the word paid in s. 43(2) means actually paid or incurred according to the method of accounting on the basis of which profits or gains are computed under s. 28/29 and that Sec. 37(1) has to be read with ss. 28, 29 and 145(1). Therefore, loss suffered by the assessee in respect of a revenue liability on account of exchange difference as on the date of the balance sheet is an item of expenditure allowable under s. 37(1). The Court explained that under para 9 of AS-11, exchange differences arising on foreign currency transactions have to be recognized as income or expense in the period in which they arise, except as stated in para 10 and para 11. An enterprise has to report the outstanding liability relating to import of raw materials using closing rate or exchange. Any loss arising on conversion of said liability at the closing rate has to be recognized in the P L a/c for the reporting period. In the present case, there is no dispute that the outstanding liability was in respect of trade receivables and payables and therefore loss would be on revenue account. In such circumstances, we are of the view that the CIT(A) was justified in allowing the claim made by the assessee. We find no grounds to interfere in the order of the CIT(A). Accordingly, appeal by the Revenue is dismissed.
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2019 (11) TMI 856
Corporate Social Responsibility (CSR) expenses - expenses incurred under the directions of BPE Govt. of India requiring Companies to spend a prescribed percentage of its profits on CSR and now also made mandatory under the Companies Act - HELD THAT:- Both sides have agreed before us at the time of hearing that the dispute regarding allowability of CSR expenses is covered in favour of the assessee by aforesaid orders in assessee s own case [ 2018 (4) TMI 1664 - ITAT DELHI ] in identical facts and circumstances, in assessee s favour. Neither side has brought any distinguishable facts nor circumstances to our attention to persuade us to take a view different from the view take in the aforesaid orders - Appeal of the assessee is allowed.
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2019 (11) TMI 855
Reopening of assessment u/s 147 - issuing notice u/s 148 without obtaining proper sanction u/s 151 - addition of LTCG - HELD THAT:- Prima facie the reasons recorded by the AO led to the formation of belief that the income assessable to tax in the shape of capital gains has escaped assessment. This is not a case of formation of belief on assumption of facts but the AO has conducted a proper enquiry to form the belief that the land in question does not fall in the exclusion clause of section 2(14) being capital asset. Therefore, at the stage of recording the reasons, the AO is not required to establish the sufficiency and correctness of the reasons to believe that the income has escaped assessment. It is only a prima facie reasonable belief based on the reasons recorded that the income assessable to tax has escaped assessment. Once the belief of the AO is based on some facts recorded in the reasons and these facts are not in dispute, then the issue whether the land in question is capital asset or not cannot be finally determined in the reasons recorded but it is a subject matter of assessment. Accordingly, I do not find any substance and merit in ground no. 1(a) of the assessee s appeal to challenge the validity of reopening. The same is rejected. Addition being long term capital gain on sale of land - HELD THAT:- Undisputedly the land was sold by the assessee to M/s. Manglam Developers who has developed the entire township and plotting scheme on this land. The land was transferred for non agricultural purpose and, therefore, it was no more an agricultural land even at the time of transfer when the intention of the parties was undisputedly to use the land for non agricultural purpose. Secondly, as per the provisions of section 2(14)(iii)(b) it is clear that the distance has to be measured from Municipal limits to the area in which the land is situated and not to a particular piece of land sold by the assessee. Once the area is within 8 kms from the Municipal limits, then even if the particular land is beyond that distance of 8 kms, it will not be excluded from the definition of capital asset being an agricultural land. Therefore, all these contentions of the assessee are only with respect to the particular land in question and no such dispute has been raised that the area in which the land is situated is beyond 8 kms from the Municipal limits. - Decided against assessee
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2019 (11) TMI 854
Validity of reassessment order passed u/s 147 - period of limitation after the vacation of stay by the HC - HELD THAT:- Since assessment order passed beyond the limitation period i.e. beyond the time limit of 60 days as per the Explanation 1 (ii) to section 153 read with the Ist proviso to section 153 i.e. the order is passed after the expiry of 60 days from the date of vacation of stay by the High Court. And in parity with the above said ITAT order, we are not inclined to interfere in the order passed by the ld. CIT(A) . In our considered opinion, ld. CIT(A) has passed detailed and reasoned order. Appeal filed by the Revenue is dismissed.
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2019 (11) TMI 853
Addition u/s 14A - interest disallowance under Rule 8D(2)(ii) - HELD THAT:- We find that the issue is squarely covered in favour of the assessee by the decision of the Tribunal cited supra in assessee s own case for AYs 2008-09 to 2011-12. The Tribunal, by following the decisions of the Tribunal in the cases of Premier Finance Leasing Co. Ltd [ 2016 (5) TMI 1218 - ITAT MUMBAI] and Aditya Birla Nuvo Ltd [ 2014 (10) TMI 154 - ITAT MUMBAI] decided the issue in favour of the assessee. Working of suo moto disallowance - HELD THAT:- We find from records that the ITAT, for AYs 2008-09 to 2011-12, after considering a plethora of judgements, has directed the assessing officer to make disallowance u/r 8D(2)(iii) @0.5% of the average value of investments after excluding strategic investments. Considering the decision of Special Bench of Delhi Tribunal in Vireet Investment (P) Ltd [ 2017 (6) TMI 1124 - ITAT DELHI] we direct the assessing officer to disallow 0.5% of the average value of investments excluding strategic investments for the making of Rule 8D(2)(iii) of I.T. Rules. As such, ground 2 of the assessee succeeds in part Disallowance of Broken period expenses - HELD THAT:- The closing balance has been shown in the balance sheet. The interest income on Government securities and the profit/ loss has been offered in the return of income for the current year. Similar treatment is consistently offered by the assessee in earlier years. The assessee also relied on the CBDT Circular No. 18/2015 dated 02.11.2015. The ld CIT(A) accepted the contention of the assessee granted relief to the assessee by relying on the CBDT circular and on the decision of Hon ble Supreme Court in CIT Vs Citi Bank NA [ 2008 (8) TMI 766 - SUPREME COURT] and in American Express International Banking Corporation Vs CIT [ 2002 (9) TMI 96 - BOMBAY HIGH COURT] . We have noted that this issue is also covered in favour of the assessee, hence, we affirms the order of the ld CIT(A) and accordingly dismissed the ground of appeal raised by the revenue. Allowability of ESOP expenses - HELD THAT:- CIT(A) allowed relief to the assessee by following the order of his predecessor in assessee s own case for AY 2009-10 as relying on M/S. BIOCON LIMITED AND OTHERS VERSUS THE DY. COMMISSIONER OF INCOME-TAX (LTU) AND OTHERS [ 2013 (8) TMI 629 - ITAT BANGALORE] Disallowance of urban (non rural) bad debt s - HELD THAT:- The Tribunal while confirming the order of ld CIT(A) followed the decisions of Hon ble Supreme Court in Catholic Syrian Bank Ltd vs CIT [ 2012 (2) TMI 262 - SUPREME COURT] and in CIT vs. Karnataka Bank Ltd [ 2013 (2) TMI 40 - SC ORDER] . Hence, we do not find any infirmity in the order passed by ld CIT(A), which we affirms. In the result this ground of appeal is dismissed.
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Customs
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2019 (11) TMI 852
Classification of imported vessel - M V royal Sesa - classifiable under CTH 89019000 or under CTH 89059090? - benefit of N/N. 12/2012-Cus dated 17.03.2012 (Sr No 461) and N/N. 21/2012-Cus dtd 17.03.2012 - it was held in the case that The vessel M V Royal Sesa imported vide B/E No 006/JGD/12-13 dated 15.04.2013 is correctly classifiable under heading 89059090 and benefit of exemptions claimed is not admissible to them. HELD THAT:- Interference with the impugned order not required - appeal dismissed.
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2019 (11) TMI 851
Imposition of penalty u/s 112(b) of the Customs Act, 1962 - Confiscation of goods - gold biscuits for foreign origin cut into two pieces - Nokia mobile phone - reliability on statements - HELD THAT:- As far as the statement made by the respondent no.2 Sujeet Kumar under Section 108 of the Customs Act, 1962 is concerned, the same would certainly not be hit by bar of admissibility under Section 25 of the Evidence Act, but the evidentiary value of such statement would also depend on various other factors. The statement under Section 108 of the Customs Act and its retraction are both required to be corroborated and proved - The same cannot be treated as substantive piece of evidence in terms of Section 3 of the Evidence Act, as it is not given by the witness and not subjected to cross-examination. It is also not given on oath. The Tribunal has taken note of the statement of Sujeet Kumar and his retraction made from jail in its order. The Tribunal has given a categorical finding that the respondent no.1 herein had produced retail invoices of M/s Bhawana International in order to substantiate his claim that he had purchased two pieces of gold bars from Chandni Chowk, Delhi on 14.04.2014 and on his instructions his brother Chandreshwar Prasad Sah (Respondent no.3) had handed over the gold pieces to Sujeet Kumar (Respondent no.2) for carrying it to Patna to hand it over to Mahavir Prasad to make gold ornaments in exchange of the said gold. Under Section 130 of the Customs Act, 1962 an appeal would be maintainable before the High Court from every order passed in appeal by the Tribunal on or after the 1st day of July, 2003 (not being an order relating, among other things, to the determination of any question having relation to the rate of duty of customs or to the value of goods for purposes of assessment) only if the High Court is satisfied that the case involves a substantial question of law. Appeal dismissed.
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2019 (11) TMI 850
Maintainability of appeal - issue relating to valuation - Section 130 of the Customs Act - HELD THAT:- We have perused the impugned order and all that the impugned order does is to remand the matter to the original adjudicating authority to decide the issue of jurisdiction after the Supreme Court decision in the case of Mangli Impex Limited Vs. Union of India is rendered and then proceed on merits by providing opportunity to the assessee of being heard. Petition disposed off.
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2019 (11) TMI 849
Amendment of shipping bills - rejection of request of the petitioner for conversion of Advance Licence shipping bills to Drawback shipping bills - HELD THAT:- A Full Bench of the Supreme Court in the case of MOHINDER SINGH GILL ANR. VERSUS THE CHIEF ELECTION COMMISSIONER, NEW DELHI ORS. [ 1977 (12) TMI 138 - SUPREME COURT] considers a similar situation where the impugned order, in that case as well, was wholly non-speaking and did not contain any reasons in support of the conclusion - The observations of the Bench in the aforesaid matter are equally applicable to the case on hand, since R1, before me, has furnished reasons supplementing the impugned order only by way of counter. The first respondent will issue a notice to the petitioner calling upon it to appear for a personal hearing and pass orders de novo on the request of the petitioner for conversion of Advance Licence shipping bills to Drawback shipping bills - petition allowed.
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2019 (11) TMI 848
Exemption from payment of CVD - srl. no. 67 of the N/N. 4/2006-CE dated 01.03.2006 - rejection of exemption on the ground that no end use certificate was produced by the appellant and unjust enrichment aspect has also not been satisfied - HELD THAT:- Since at this juncture, the appellant submits that relevant records will be submitted by it for verification, we are of the view that the matter should be remanded to the Learned Commissioner (Appeals) for verification of the documents/records and thereafter to decide the matter afresh. The matter is remanded to the Learned Commissioner (Appeals) for deciding the issue afresh - Appeal allowed by way of remand.
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Securities / SEBI
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2019 (11) TMI 847
Claim of fee continuity benefit - what constitutes annual turnover for the purpose of SEBI registration fee ? - HELD THAT:- On a complete perusal of all the facts and the provisions in various Circulars/ Regulations more particularly stated in Circular / Press Note dated August 28, 2003 issued under SEBI (Broker Regulations) Rules, 1992 we cannot agree with the contentions of the appellant that they are entitled for fee continuity benefit treating the initial registration granted to Pennar on August 6, 1994. The correspondences and the relevant regulations make it very clear that the appellant has been rightly treated as a fresh registration with effect from the date of granting the new registration on October 20, 2000 and thereafter cannot indefinitely continue to claim that it is case of transferring some portion of equity to Garban and the original legal entity continues. It is a fact that original legal entity as a company continues but the question to be answered is whether for the purpose of granting registration as a broker is it the same entity. Incorporation as a company and registration as a SEBI intermediary are two different and distinct processes where there are additional rules and regulations to be adhered to. This is a case of a complete takeover of a brokerage by a new entity Garban and the new registration granted by SEBI is in the name of Garban. Both the NSE and SEBI have categorically stated to the appellant through multiple correspondences that the appellant cannot claim fee continuity benefit only on the ground that the appellant has been seeking the same through their earlier correspondences. Those claims were put to rest the day SEBI granted a fresh registration number and from that date it has to be treated as a separate broker distinct from the original Pennar as far as its business is concerned. Accordingly, the orders relied on by the appellant relating to a Company is a legal entity in perpetuity, though correct, is not relevant in the context. The date of initial registration of the appellant is to be treated as October 20, 2000, the date of granting the fresh registration by SEBI and all fee liabilities arising from its turnover have to be recalculated with effect from this date. Since rate of interest of 15% per annum has been implemented on delayed payment by SEBI from December 16, 1998 interest, if any, on the registration fee / turnover fee @ 15% per annum also is due from the appellant on any delay in depositing/ paying the principal amount of fee. Rate of turnover fee applicable to the appellant - we do not agree with the submissions of respondent SEBI. It is on record that the appellant did give an auditor s certificate. The turnover proforma produced by SEBI before us consists of two parts; its upper part showing the turnover table and lower part showing fee computation table. What is argued before us is that the auditor certificate provided by the appellant consisted of only the upper portion of the relevant proforma giving the turnover table and that too for part of the period i.e. 1999-2000 to 2002-2003; not the full five years period from October 2000 October 2005. The latter argument has no meaning since in 2003 the appellant could not have provided turnover data upto 2005. When it is a fact that the appellant was dealing only in WDM segment and the turnover fee applicable to WDM segment was only 0.001% it was not appropriate for SEBI to impose a turnover fee at the rate of 0.01% thereby imposing such a huge burden on the appellant without any legal basis; which is highly arbitrary. If SEBI had any doubt regarding the turnover figures, being the regulator those doubts should have been removed before passing an order, particularly when the order imposes a very heavy burden on the appellant. When SEBI could calculate the fee liability based on the figures given by the appellant it was incumbent on SEBI to apply the applicable rate of fee based on the admitted position of the appellant trading only in the WDM segment. Therefore, we set aside the imposition of fee on the appellant @ 0.01% of its turnover. In conclusion, we pass the following directions:- (a) Appellant s claim of fee continuity benefit is devoid of any merit and is dismissed. (b) SEBI shall recalculate the turnover fee liability from October 20, 2000 for a period of five years at the rate of 0.001% of the turnover of the appellant. (c) After adjusting the deposits / payments already made by the appellant, if any outstanding amount of principal is due from the appellant SEBI is at liberty to impose simple interest on such outstanding payment at the rate of 15% per annum. (d) Appellant shall submit the turnover data in the prescribed proforma for the five year period from October 20, 2000 within one month from the date of this order and SEBI shall compute the fee liability and communicated to the appellant within a period of one month thereafter. Payment arising from the revised calculations, from either of the parties, shall be completed within one month thereafter.
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2019 (11) TMI 846
Suspension of registration of a broker with the National Stock Exchange of India Limited ( NSE for short), for a period of one year by Whole Time Member ( WTM ) of SEBI - HELD THAT:- Safekeeping all the documents and material relating to a broker s functions is a basic responsibility. Conflicting replies relating to the role of BGSPL and Shri Puneet Agarwal as well as relating to other similar clients owned premises based branch operations therefore do not absolve the appellant fully from the violations upheld in the impugned order. It is held in the impugned order that the appellant violated various provisions of law, regulations and circulars issued thereunder. These include SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992, PFUTP Regulations, Securities Contract (Regulations) Act, 1956 and the Securities Contract (Regulations) Rules, 1957 and various circulars issued by SEBI. Some of the violations though may be technical and procedural in nature. We also do not agree with the contentions of the appellant that client codes given in the contract notes are just reference codes in the absence of SEBI identifying those clients. When BGSPL was only one client and its unique client code was used there was no requirement for using other reference codes. Therefore, we do not find any fault in the finding in the impugned order that the appellant was using the services of unregistered sub brokers or some of its clients were actually discharging functions of sub brokers without SEBI registration . Whether BGSPL or some other such entities got the registration for sub broker-ship later is not germane to the matter because what is relevant is whether they were certified sub brokers at the relevant time. Therefore, given these major violations we do not find any fault in penalizing the appellant with an order of suspension. Time frame is very important while judging gravity of offences across time and in doing justice. We also agree with the submissions of the appellant that a long period of suspension of a market intermediary like a broker would make them completely defunct which, in the given context would make the punishment disproportionate. At the same time we do not agree with the submission that a warning would suffice since utilizing unauthorized sub-broker type dealing by a broker is a serious offence irrespective of the vintage of the offence. Balancing all these factors and circumstances into account we are of the view that a complete suspension of the appellant for a period of one year may not do full justice. Therefore, we modify the order of one year suspension of the appellant to that of one year restriction from taking any fresh clients. Therefore, the appellant shall not admit or take business from any new clients for a period of one year from the date of this order.
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2019 (11) TMI 845
Collective Investment Scheme ( CIS ) without SEBI registration - violating Section 12(1B) of the SEBI Act, 1992 and Regulation 3 of the SEBI (Collective Investment Scheme) Regulations, 1999 ( CIS Regulations, 1999 ) - Non obtaining certificate of registration for running such a scheme under SEBI Act and CIS Regulations - HELD THAT:- The appellants are in fact running a CIS. It is also an admitted fact that the appellants did not obtain a certificate of registration for running such a scheme under SEBI Act and CIS Regulations, 1999. Accordingly, the penalty imposed on the appellants cannot be faulted. The penalty imposable under Section 15(D)(a) of SEBI Act at the relevant time was ₹ 1 lakh for each day during which an entity carries on any collective investment scheme or ₹ 1 crore whichever is less. In the instant case, the appellant Company was set up in 2010 and the money collected in the form of investment in joint venture project / scheme during 2012-13 and for periods ranging from 4 to 7 years. Therefore, the Company and the scheme came into existence many years after notification of the CIS Regulations, 1999 and the schemes were flouted despite the fact that Regulations notified in the year 1999 makes it mandatory for obtaining registration from SEBI for hoisting any such a scheme. Accordingly, we do not find any anomaly in the direction to pay a penalty of ₹ 25 lakh jointly and severally by the appellants which takes into account the mitigating factors under Section 15J of SEBI Act - Appeal is dismissed.
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Insolvency & Bankruptcy
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2019 (11) TMI 844
Resolution plan against the owner of land namely SevenHills which was to be developed by the Municipal Corporation (MCGM) - MCGM filed an application claiming that it ought to be declared as a Financial Creditor and a Member of the Committee of Creditors. - Right to terminate the agreement - However, later during the proceedings, it opposed the resolution plan, arguing that being a public body as well as a planning authority, it had to comply with the provisions of the Mumbai Municipal Corporation Act, 1888 ( MMC Act ), which meant that all action and approval had to be taken by the Improvement Committee of the Corporation. - effect of section 92 of MMC Act - NCLT and NCLAT rejected the objection of MCGM HELD THAT:- In the present case, Section 92 of the MMC Act has no bearing on the validity of the resolution plan, the approval order or the impugned order. Section 92 of the MMC Act mandates and prescribes the manner in which disposal of land belonging to the appellant would take place. However, the resolution plan does not contemplate any disposal of the said land or creation of any additional rights and obligations of MCGM or the Corporate Debtor in relation to the lands. It is merely the shareholding of the Corporate Debtor which undergoes a change pursuant to the resolution plan. MCGM cannot place any embargo on such shareholding changes by resorting to proceeding under the Code. It was urged that SNMC does not acquire any interest in the said land and only acquires managerial control over the Corporate Debtor by way of holding equity shares in the Corporate Debtor. Therefore, there arises no question of Section 92 of the MMC Act being violated through the resolution plan. Discussion regarding the insolvency process and relevant provisions of the MMC Act - HELD THAT:- In this case, it is not the provisions of the IBC which this court has to primarily deal with; it is rather whether the process and procedure adopted by the NCLT and later the NCLAT, in overruling MCGM s concerns and objections with regard to the treatment of its property (i.e. the lands) is in accordance with law. The show cause notice in this case preceded admission of the insolvency resolution process. In view of the clear conditions stipulated in the contract, MCGM reserved all its rights and its properties could not have therefore, in any manner, been affected by the resolution plan. Equally in the opinion of this Court, the adjudicating authority could not have approved the plan which implicates the assets of MCGM especially when SevenHills had not fulfilled its obligations under the contract. It is evident from a plain reading of Section 92(c), that the Commissioner (of MCGM) is empowered to, with the sanction of the corporation, lease, sell or otherwise convey any immovable property belonging to the corporation. It is not in dispute that the original contract entered into on 20 12 2005 contemplated the fulfilment of some important conditions, including firstly, the completion of the hospital project within a time frame; and secondly, timely payment of annual lease rentals - MCGM was constrained to issue a show cause notice before the insolvency resolution process began, and before the moratorium was declared by NCLT on 13th March, 2018. According to MCGM, in terms of Clause 26 (of the contract), even the agreement stood terminated due to default by SevenHills. This court does not propose to comment on that issue, as that is contentious and no finding has been recorded by either the adjudicating authority or the NCLAT. Section 238 cannot be read as overriding the MCGM s right indeed its public duty to control and regulate how its properties are to be dealt with. That exists in Sections 92 and 92A of the MMC Act. This court is of opinion that Section 238 could be of importance when the properties and assets are of a debtor and not when a third party like the MCGM is involved. Therefore, in the absence of approval in terms of Section 92 and 92A of the MMC Act, the adjudicating authority could not have overridden MCGM s objections and enabled the creation of a fresh interest in respect of its properties and lands - The resolution plan therefore, would be a serious impediment to MCGM s independent plans to ensure that public health amenities are developed in the manner it chooses, and for which fresh approval under the MMC Act may be forthcoming for a separate scheme formulated by that corporation (MCGM). The last contention of the respondents, that MCGM was bound by the statement made by its counsel, in the opinion of this court, cannot prevail - As held earlier, there is no approval for the plan, in accordance with law; in such circumstances, the written plea accepting the plan, by a counsel or other representative who is not demonstrated to possess the power to bind MCGM, is inconclusive. This court holds that the impugned order and the order of the NCLT cannot stand; they are hereby set aside - Appeal allowed - decided in favor of appellant.
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2019 (11) TMI 843
Maintainability of application - initiation of CIRP - Corporate Debtor defaulted in making repayment - Corporate Debtor raised objection regarding maintainability of the petition on the ground that they are an insurance company and therefore, they are Financial Services Provider , the business of which is strictly regulated by the Financial Sector Regulator - HELD THAT:- The definition of financial service under Section 3 (16) of the Code clearly includes the transactions effecting contract of insurance. However, the Operational Creditor does not have any claim in respect of contract of insurance. The claim is with respect to the outstanding license fees and the service tax amounts. Hence, the Corporate Debtor cannot use the provisions of Section 3 of the Insolvency and Bankruptcy Code, 2016 as a blanket cover to claim exclusion from IBC Proceedings on the ground that it is a financial service provider. This Tribunal is inclined to admit this petition and initiate CIRP of the Corporate Debtor - Petition admitted.
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2019 (11) TMI 842
Cross Border Insolvency Protocol - participation of the Dutch Trustee (Administrator) in the meeting of the Committee of Creditors - HELD THAT:- In the present case, we make it clear that the Committee of Creditors have no role to play as the agreement reached between the Dutch Administrator and the Resolution Professional of India is on the basis of the direction of this Appellate Tribunal. In spite of the same, unfortunately the Committee of Creditors interfered with the matter and put its view to the Resolution Professional resulting into difference of the suggestions. The Dutch Trustee is equivalent to the Resolution Professional of India, therefore, as per law he has a right to attend the meeting of the Committee of Creditors . However, as we do not want to overlap the power between one and other, we are of the view that the suggestion given by the Dutch Trustee (Administrator) as shown in its Clause 6.1.2 should be part of the Agreement Cross Border Insolvency Protocol . Therefore, we direct to insert Clause 6.1.2, as suggested by the Dutch Trustees' - The Dutch Trustee (Administrator) will work in co-operation with the Resolution Professional of India and, if any, suggestion is required to be given, he may give it to the Resolution Professional . The impugned order dated 20th June, 2019 passed by the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench in so far it relates to the observations that the Dutch Court has no jurisdiction in the matter of corporate insolvency resolution process of Jet Airways (India) Limited, (Offshore Regional Hub) is set aside - appeal disposed off.
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2019 (11) TMI 841
Liquidation of company - proceedings under CIRP - Resolution Professional submits that no resolution plan was received by him - CoC in the meeting unanimously decided to liquidate the Company. - HELD THAT:- RP has complied with the procedure laid under the Code read with Insolvency Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (Regulations), for the valuation report filed by the valuer has not been disputed by the CoC, on verification - this case is fit to pass liquidation order under sub-section 1 of section 33 of the Code as no resolution plan has been approved by the Adjudicating Authority. Resolution Professional is appointed as the Liquidator as provided under section 34(1) of the Code. All powers of the board of directors, key managerial personnel and the partners of the Corporate Debtor, as the case may be, shall cease to have effect and shall be vested with the liquidator - Application allowed.
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Service Tax
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2019 (11) TMI 840
Inquiry proceedings / summons under service tax - Business Auxiliary Services - the present Writ Petition challenging summons dated 28.09.2010 calling for the attendance of the petitioner along with TDS statements for the previous five years, Credit/Debit notes received from finance company/TVS Motor Company and free service details - HELD THAT:- This Writ Petition is premature. What has been challenged is a summons issued in terms of the provisions of Section 14 of the Central Excise Act, 1944, which entitles the Central Excise Officer, duly empowered by the Central Government in that behalf, to summon persons to give evidence and produce documents in an on-going enquiry. In the present case, enquiry is admittedly on-going in regard to the taxability of the commission received by the petitioner. The apprehension of the petitioner appears to be that the respondent has pre-determined the issue and is hence merely seeking to collate requisite documents to enable the issuance of a show cause notice without application of mind as to whether such show cause notice is actually called for or not. In the present case, the question as to whether the petitioner is actually rendering services to the finance companies is one of fact. One cannot deny that there is a symbiotic relationship between the petitioner and the financial institutions and one does benefit from the efforts of the other in terms of furthering their own respective business interests - The petitioner by the efforts of the finance companies, gets the benefit of increased business, quite apart from the the finance company benefiting by the marketing efforts of the petitioner. However, whether such an arrangement would fall within the realm of 'taxable services' is yet unclear and will emanate only upon further detailed enquiry of facts. It would be appropriate to direct the petitioner to cooperate with the on-going enquiry, appear before the respondent for completion of proceedings and allow the same to come to a logical conclusion. While dismissing the Writ Petition and fixing a date when the petitioner will appear before the respondent for enquiry, it is made clear that the respondent shall not approach this issue with a pre-determined mind - petition dismissed.
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2019 (11) TMI 839
Maintainability of appeal - Section 35 (F) of the Central Excise Act, 1994 or Section 129 (E) of the Custom Act - Initiation of recovery proceedings - Section 87 of the Finance Act - HELD THAT:- It is admitted position that against the order passed by the Additional Commissioner Central Excise Service Tax Department, Dhanbad, the appeal was filed by the petitioner before the Appellate Authority, which dismissed the appeal of the petitioner, and thereafter the petitioner has preferred the appeal before the Customs, Excise Service Tax Appellate Tribunal, Kolkata, which is pending. The petitioner has also deposited 10% of the amount as assessed, before the Appellate Tribunal. The reliefs prayed for by the petitioner can be made by the petitioner before the Customs, Excise Service Tax Appellate Tribunal, Kolkata, where the appeal of the petitioner is admittedly pending - Application disposed off.
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2019 (11) TMI 838
Maintainability of appeal - monetary amount involved in the appeal - HELD THAT:- The Central Board of Indirect Taxes and Customs had issued circulars from time to time and the latest being the circular, dated 22.08.2019, which fixed the monetary limits for the Department to file appeals against the order of the Tribunal and per se, the appeal pending before this Court, subject to the condition, the monetary limit should be above ₹ 1 crore. Earlier there was an instruction stipulating the lesser amount, however, the instruction dated 22.08.2019 issued by the Central Board of Indirect Taxes and Customs (CBITC) is not only applicable to the fresh cases but also the pending cases. This appeal is dismissed as withdrawn and the substantial questions of law raises in this appeal are left open.
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2019 (11) TMI 837
Liability of service tax - commercial construction service/works contract service (labour charge) paid to the subcontractors - HELD THAT:- The appellant claimed to have paid Service Tax on the disputed amount during the personal hearing made before the adjudicating authority but failed to substantiate the same with documentary evidence. It is also apparently clear that appellant s only claim was that the amount in which Service Tax has been demanded for providing manpower supply services was received by the appellant and not paid to the sub-contractors. Appellant had therefore not complied with Rule 2A(1b)(i) (ii) of the Service Tax (Determination of Value) Rules, 2006, Section 77 and sub-clause zzzza of clause (105) of Section 65 of the Finance Act, 1994 as well as tax liability on reverse charge mechanism applicable to manpower supply service and avoided to make payment of Service Tax for which it failed to produce documents concerning payment of tax. There is no irregularity or illegality can be noticed in the order of the Commissioner (Appeals) that would require interference by this Tribunal - appeal dismissed.
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2019 (11) TMI 836
Imposition of penalty u/s 78 of the Finance Act, 1994 - imposition of late fees u/r 7C of the Service Tax Rules, 1994 - extended period of limitation - HELD THAT:- It is a fact on record that appellant availed service tax Registration on 08.10.2013, whereas investigation was started on February, 2014, as appellant started paying service tax of their own after obtaining registration - Extended period of limitation it is not invokable, moreover, appellant has paid service tax along with interest before issuance of the Show Cause Notice. In that circumstances, in terms of Section 73 (3) of the Act, no Show Cause Notice was required to be issued to the appellant. The proceedings initiated against the appellant through the impugned Show Cause Notice are set aside - the appeal is allowed to the extent by dropping the penalty and fine imposed on the appellant in the impugned order - appeal disposed off.
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2019 (11) TMI 835
Rejection of declaration filed in terms of the VCES Scheme - Business Auxiliary Service - imposition of penalty u/s 78 - HELD THAT:- The appellant is not disputing the service tax liability of ₹ 2,26,560/-. Penalty - HELD THAT:- Inasmuch as the appellant declared the wrong information in VCES declaration, they are liable to penalty in terms of the Section 78 of the Finance Act. However, they had deposited an amount of ₹ 4,63,307/- in terms of VCES declaration even prior to the show cause notice and as such, we accept the learned advocate s contention that the penalty amount should be reduced to ₹ 2,26,560/- - As such while upholding the confirmation of the said demand, we reduce the penalty equivalent to ₹ 2,26,560/-. CENVAT Credit - HELD THAT:- In the absence of any dispute about the receipt and utilization of the input services in providing output services, the denial on the grounds of non availability of complete address etc. cannot be upheld - demand set aside. Liability of service tax - legal services - HELD THAT:- Learned advocate submits that the same is not being contested and they have also deposited the same alongwith interest. Accordingly the same is confirmed as not contested. As regards penalty of ₹ 10,000/-(ten thousand) imposed under Section 77 of the Act, we set aside the same as the appellant has already been penalized to the extent of 100% in terms of the Section 78 of the Act. Appeal disposed off.
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2019 (11) TMI 828
Availing CENVAT credit of service tax under VCES Scheme - Import of services - Reverse Charge - Management Consultancy Services - appellant received various services from foreign associated company - foreign based company was not having any office in India - penalty - HELD THAT:- The fact is that the said payment was made in terms of VCES Scheme which is special piece of legislation allowing assessee s to pay tax or duty, which has not been paid by them at the requisite point of time. The fact that the duty was not paid at the time of import of service is indicative of a situation that the short levy or non levy has occurred on account of suppression of facts. Had the scheme not been floated by the Government of India, proceedings would have been initiated against the assessee by way of issuance of a show cause notice raising the demand in question and confirming the same alongwith interest and penalty. It is beyond doubt that the payment of duty on the invoices raised under VCES Scheme has to be held as payment by way of raising supplementary invoices, which was on account of misstatement or suppression with intent to evade payment of duty. In such a scenario, the Cenvat credit of service tax paid by the appellant would not be available to the appellant in terms of provisions of Rule 9(1)(b). The further fact of the service having no nexus with the manufacturing activity is not required to be adverted to, when the appellant is not entitled to credit in principle - demand upheld. Penalty - HELD THAT:- The entire credit was availed by the appellant by reflecting the same in their Cenvat credit account which were intimated to the Revenue and otherwise also it is noted that the issue is a bona fide issue of interpretation of the provisions of law - there is no justifiable reasons to impose penalty upon the appellant. Appeal disposed off.
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Central Excise
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2019 (11) TMI 834
Conviction of offences - offence punishable under Section 9(1)(ii) of the Central Excise and Salt Act, 1944 - HELD THAT:- The ends of justice would be met if the sentence imposed upon the appellant of two months with fine of ₹ 1 lakh is substituted by sentence of fine for ₹ 3.5 lakhs. The amount of Rs. One lakh as ordered by the High Court has already been paid - The amount of ₹ 2.5 lakhs so deposited in the Registry shall now be appropriated towards fine and shall be made over to the Department - appeal disposed off.
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2019 (11) TMI 833
Rectification application - the Appellant s grievance was with regard to confirmation of demand as well as on imposition of penalty. However, the order is with only in respect of physician s sample distributed free by it amongst the physicians - HELD THAT:- There are no reasons in this order as to why the grievance of the Petitioner set out in the rectification application was not justifiable. The impugned order dated 20th November, 2018 passed by the Tribunal is, set aside. The rectification application stands restored to the file of the Tribunal to be decided as per law - Petition allowed.
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2019 (11) TMI 832
Adjustment of short paid duty with excess duty paid - Job Work - Motor vehicles - Provisional assessment - HELD THAT:- The controversy involved in the present case also relates to adjustment, which has been done by the respondent before this Court as adjustment was done by the respondents by adjusting the excess amount already paid towards duty in subsequent months. No case for interference is made out in the present appeal. It has also been pointed out by the learned counsel for the parties that an appeal has been preferred against Gwalior Bench judgment before the Hon'ble Supreme Court, however, there is no interim order passed by the Hon'ble Supreme Court in the matter. This Court is of the opinion that no substantial question of law arises in the present appeal also - Appeal dismissed.
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2019 (11) TMI 831
Valuation - includibility of insurance and freight in assessable value - It was observed by the Revenue the amount collected by the appellant was in excess of the amount Freight, paid by the appellant to the transporter. Similarly insurance was connected in some cases where there was no corresponding payment to any Insurance Company. HELD THAT:- The decision of the Hon ble Apex Court in case of COMMISSIONER OF CENTRAL EXCISE, NOIDA VERSUS M/S. ACCURATE METERS LTD. [ 2009 (3) TMI 1 - SUPREME COURT] is specifically covers the issue at hand - The Hon ble Apex Court in the said case has held that Tribunal were correct in their view that the amount claimed by way of transportation charges and insurance cannot be considered for determining the value of the electric meters supplied. Appeal allowed - decided in favor of appellant.
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2019 (11) TMI 830
Abatement of duty - closure of factory - Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010 - the appellant claimed abatement for the month of April 2015 inasmuch as the duty was deposited for the said period. However, for the next month i.e. May 2015 he did not deposit the duty for the period of closure till 15.05.2015 and claimed abatement himself. HELD THAT:- There is no dispute about the fact that the factory was continuously closed from 18.04.2015 to 15.05.2015. In such a scenarios, the assessee was entitled to the abatement of duty for the month of April 2015 as also May 2015 depending upon the closure period. The artificial bifurcation done by the Commissioner (Appeals) for April 2015 and May 2015 separately thus holding the period of closure in April was only 13 days, cannot be appreciated. No doubt, for May 2015 appellant was required to pay duty and then claim abatement but the said procedural lapse on the part of the assessee cannot lead to the denial of benefit otherwise available to the assessee. The assessee was entitled to the abatement for both the months for the closure period, with directions to the original authority to quantify the interest liable to the assessee - appeal disposed off.
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2019 (11) TMI 829
Valuation - job-work - manufacture of Plastic jerry can and pet bottles - case of the department is that the principal manufacturer are using the job worker manufactured goods in the manufacture of exempted goods, therefore, the job worker being a manufacturer are required to pay excise duty - extended period of limitation - HELD THAT:- In the case of THERMAX BABCOCK AND WILCOX LTD., THERMAX LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE-I [ 2017 (12) TMI 266 - CESTAT MUMBAI] , Division Bench of Mumbai Tribunal referred the matter to Larger Bench and then only the Larger Bench has held that in case of job worker when the procedure under Notification No. 214/86- CE is not followed and the principal manufacturer is not discharging the excise duty on their final product, job worker is required to pay excise duty. Therefore the appellants have correctly entertained the bonafide belief that on the basis of various judgments that excise duty was payable by the principal supplier of the raw material. Extended period of limitation - HELD THAT:- It is settled law in various judgments in the case of MARSHA PHARMA PVT. LTD. VERSUS COMMISSIONER OF C. EX., VADODARA [ 2009 (6) TMI 818 - CESTAT, AHMEDABAD] which was upheld by Hon ble Gujarat High Court in COMMISSIONER - CENTRAL EXCISE CUSTOMS VADODARA - I VERSUS MARSHA PHARMA PVT LTD [ 2010 (9) TMI 1125 - GUJARAT HIGH COURT] and also in case of COMMISSIONER OF C. EX., CUS. ST., VAPI VERSUS CHARAK PHARMA P. LTD. [ 2012 (11) TMI 475 - GUJARAT HIGH COURT] that the demand for the extended period of limitation was not permissible when the issue was referred to Larger Bench of Tribunal. The appeals related to the demand of extended period are allowed and in respect of demand for the normal period it is remanded to the adjudicating authority for re-quantification of the demand It is made clear that since we have held that there was no malafide on the part of the appellants, no penalty is imposable on all the appellants in respect of any duty liability arise after re-quantification. Appeal allowed by way of remand.
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CST, VAT & Sales Tax
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2019 (11) TMI 827
Cancellation of registration of petitioner - extension of lease agreement - Before expiry of lease period, the second respondent issued the impugned notice dated 11.06.2019 and called upon the petitioner to produce fresh lease agreement also by indicating that failure to produce such lease agreement would result in taking action to initiate cancellation of registration - legality of notice issued by the second respondent calling upon the petitioner to produce fresh lease agreement to continue the business. HELD THAT:- There is no dispute to the fact that the lease obtained by the third respondent from the owners viz., the respondents 4 5 expired on 23.06.2019. However, it is an admitted fact that even before expiry of the lease period, the Indian Oil Corporation has filed the suit in O.S.No.1434 of 2019 on the file of the Principal District Munsif Court, Pondicherry on 15.06.2019 seeking mandatory injunction and permanent injunction as stated supra. It is stated that the said suit is still pending, wherein, the petitioner has also been arrayed as third defendant. Whether the lease granted in favour of the third respondent and got expired on 23.06.2019, is liable to be renewed or not, is a matter, now seized of by the Civil Court and thus, the said issue has to be considered and decided by such forum after considering the respective pleadings of the parties and the evidence let in by them. The third respondent shall file implead petition to implead the second respondent/Commercial Tax Department, as a party/defendant in the said suit along with appropriate interim application seeking interim relief against the said respondent, within a period of four weeks from the date of receipt of a copy of this order - On filing of such interim application, the learned Principal District Munsif, Puducherry, shall consider the said application and pass orders on the same on merits and in accordance with law - petition disposed off.
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2019 (11) TMI 826
Concessional rate of tax - inter-state sale - sale of natural rubber and tread rubber - KVAT Act - CST Act - amendments brought about to Section 8(5) of the CST Act with effect from 11.05.2002 - HELD THAT:- It is not in dispute that as per the provisions of Section 8(5) as it then stood, the State Government had a power to grant exemption in public interest in respect of the tax to be paid on interstate sales, only in respect of those sales that were effected to registered dealers outside the State of Kerala. Ext.P1 notification, admittedly, did not make a distinction between sales to registered dealers and unregistered dealers outside the State and it is therefore that the petitioner was able to claim the benefit of exemption in terms of Ext.P1 notification. When it was noticed that Ext.P1 notification was beyond the powers of the State Government, Ext.P8 notification was introduced so as to remove the illegality in Ext.P1 notification. Inasmuch as the illegality is one that stems from an exercise of power contrary to the provisions of the parent statute (the CST Act), the petitioner cannot contend that the respondents are estopped from withdrawing the benefits conferred through Ext.P1 notification. It is trite that there cannot be an estoppel pleaded against the express provisions of a statute. Thus, the petitioner cannot take advantage of any benefit that was conferred on him through Ext.P1 notification, when the very benefits have been taken away, on account of the statutory mandate through Ext.P8 notification. The impugned order set aside - the assessing authority is directed to re-do the assessment, within a month from the date of receipt of a copy of this judgment, after hearing the petitioner - petition allowed by way of remand.
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2019 (11) TMI 825
Estimation of turnover and tax - Whether the facts and circumstances of the case the tribunal was right in deciding the second appeal of the applicant in summary manner being the court of last fact finding authority, without considering the reply to the show cause notice and the memorandum of second appeal? HELD THAT:- The Tribunal, as the last fact finding authority, ought to have given serious consideration and it ought to have recorded its own findings of fact, upon consideration of grounds pressed. It further appears that there cannot be any dispute to the rule being relied upon by the learned counsel for the assessee. In the facts of the present case, it is seen that, it remained undisputed that two bill books had been found from the premises of the assessee during the survey dated 29.8.2005 wherein transaction of purchase and sale of raw materials and finished goods were found recorded. Those remained from being reconciled by the assessee from its regular books of accounts. The total number of pages on which such transaction have been found recorded were in excess of fifty and period for which they related was also in excess of a few months. Present is clearly a case where adverse material found during the survey brought to light substantial undisclosed purchase and sale of goods. Therefore, there can be no challenge to the rejection of books of accounts of the assessee. Revision dismissed.
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2019 (11) TMI 824
Rate of tax - bolders, sand, pipes, etc. - It is the contention of the assessee that the rate of tax on such commodity was 4% whereas he has been subjected to tax @ 12.5% - HELD THAT:- For the purposes of deduction of tax at source, lower rates are prescribed, whereas the rate of tax on commodity is independent and is separately notified in that regard. The commodities being taxable @12.5%, there is no merit in the submission advanced by learned counsel for the assessee. Also, it has been submitted that the bolders supplied by the assessee were of size less than 90 mm. Therefore, it was taxable @ 4%. It is contended that, that issue has not been decided by the Tribunal - However, perusal of the order of the first appeal authority reveals that admittedly, the assessee had not maintained any books of accounts during the assessment year in question. That being an undisputed fact, the argument being raised, cannot be carried any further, this being the revisional jurisdiction. Revision dismissed.
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2019 (11) TMI 823
Imposition of penalty u/s 13-A(4) of the U.P. Trade Tax Act, 1948 - overwriting on Form 49 - discrepancy noted either on physical verification of the goods or on verification of accounts - HELD THAT:- In view of the fact that the penalty came to be imposed solely on account of overwriting in Form-49 required to be filled up for transportation of goods and there was no discrepancy found, either on physical verification of the goods or in the bills or the books of accounts themselves, it could never be said that the goods were not properly accounted for. Answered in the negative, i.e. in favour of the assessee and against the revenue.
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Indian Laws
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2019 (11) TMI 895
Right to information - disclosure of information - infringement of constitutional status of the judges - how transparent is transparent enough. WHETHER THE SUPREME COURT OF INDIA AND THE CHIEF JUSTICE OF INDIA ARE TWO SEPARATE PUBLIC AUTHORITIES? - HELD THAT:- Article 124 of the Constitution, which relates to the establishment and constitution of the Supreme Court of India, states that there shall be a Supreme Court of India consisting of a Chief Justice and other judges. It is undebatable that the Supreme Court of India is a public authority , as defined vide clause (h) to Section 2 of the RTI Act as it has been established and constituted by or under the Constitution of India. The Chief Justice of India as per sub-clause (ii) in clause (e) to Section 2 is the competent authority in the case of the Supreme Court. Consequently, in terms of Section 28 of the RTI Act, the Chief Justice of India is empowered to frame rules, which have to be notified in the Official Gazette, to carry out the provisions of the RTI Act - This is equally true and would apply to the High Courts in the country as Article 214 states that there shall be a High Court for each State and Article 216 states that every High Court shall consist of a Chief Justice and such other judges as the President of India may from time to time deem it appropriate to appoint. INFORMATION AND RIGHT TO INFORMATION UNDER THE RTI ACT - HELD THAT:- When information is accessible by a public authority, that is, held or under its control, then the information must be furnished to the information seeker under the RTI Act even if there are conditions or prohibitions under another statute already in force or under the Official Secrets Act, 1923, that restricts or prohibits access to information by the public - Section 22 of the RTI Act is a key that unlocks prohibitions/limitations in any prior enactment on the right of a citizen to access information which is accessible by a public authority. It is not a key with the public authority that can be used to undo and erase prohibitions/limitations on the right of the public authority to access information. In other words, a private body will be entitled to the same protection as is available to them under the laws of this country. SECTIONS 8, 9, 10 AND 11 OF THE RTI ACT - HELD THAT:- Sub-section (1) of Section 8 begins with a non-obstante clause giving primacy and overriding legal effect to different clauses under the sub-section in case of any conflict with other provisions of the RTI Act. Section 8(1) without modifying or amending the term information , carves out exceptions when access to information , as defined in Section 2(f) of the RTI Act would be denied. Consequently, the right to information is available when information is accessible under the RTI Act, that is, when the exceptions listed in Section 8(1) of the RTI Act are not attracted. In terms of Section 3 of the RTI Act, all citizens have right to information, subject to the provisions of the RTI Act, that is, information held by or under the control of any public authority , except when such information is exempt or excluded - clauses (d), (e) and (j) of Section 8(1) of the RTI Act incorporate qualified prohibitions and are conditional and not absolute exemptions. Clauses (a), (b), (c), (f), (g), (h) and (i) do not have any such stipulation. Prohibitory stipulations in these clauses do not permit disclosure of information on satisfaction of the larger public interest rule. These clauses, therefore, incorporate absolute exclusions. Once the PIO comes to the conclusion that any of the exemption clauses is applicable, the PIO cannot pass an order directing disclosure under Section 8(2) of the RTI Act as this discretionary power is exclusively vested with the public authority. Fiduciary Relationship under Section 8(1)(e) of the RTI Act - HELD THAT:- The RTI Act complements both the right to information and the right to privacy and confidentiality. Further, it moderates and regulates the conflict between the two rights by applying the test of larger public interest or comparative examination of public interest in disclosure of information with possible harm and injury to the protected interests. The, relationships can be partly fiduciary and partly non-fiduciary with the former being confined to a particular act or action which need not manifest itself in entirety in the interaction and relationship between two parties. What would distinguish non-fiduciary relationship from fiduciary relationship or an act is the requirement of trust reposed, higher standard of good faith and honesty required on the part of the fiduciary with reference to a particular transaction(s) due to moral, personal or statutory responsibility of the fiduciary as compared to the beneficiary, resulting in dependence of the beneficiary. This may arise due to superior knowledge and training of the fiduciary or the position he occupies. Ordinarily the relationship between the Chief Justice and judges would not be that of a fiduciary and a beneficiary. However, it is not an absolute rule/code for in certain situations and acts, fiduciary relationship may arise. Right to Privacy under Section 8(1)(j) and Confidentiality under Section 11 of the RTI Act - HELD THAT:- The personal records, including name, address, physical, mental and psychological status, marks obtained, grades and answer sheets, are all treated as personal information. Similarly, professional records, including qualification, performance, evaluation reports, ACRs, disciplinary proceedings, etc. are all personal information. Medical records, treatment, choice of medicine, list of hospitals and doctors visited, findings recorded, including that of the family members, information relating to assets, liabilities, income tax returns, details of investments, lending and borrowing, etc. are personal information. Such personal information is entitled to protection from unwarranted invasion of privacy and conditional access is available when stipulation of larger public interest is satisfied. This list is indicative and not exhaustive. Confidentiality may have some bearing and importance in ensuring honest and fair appraisals, though it could work the other way around also and, therefore, what should be disclosed would depend on authentic enquiry relating to the public interest, that is, whether the right to access and the right to know outweighs the possible public interest in protecting privacy or outweighs the harm and injury to third parties when the information relates to such third parties or the information is confidential in nature. MEANING OF THE TERM PUBLIC INTEREST - HELD THAT:- Public interest has no relationship and is not connected with the number of individuals adversely affected by the disclosure which may be small and insignificant in comparison to the substantial number of individuals wanting disclosure. It will vary according to the information sought and all circumstances of the case that bear upon the public interest in maintaining the exemptions and those in disclosing the information must be accounted for to judge the right balance. Public interest is not immutable and even time-gap may make a significant difference. The type and likelihood of harm to the public interest behind the exemption and public interest in disclosure would matter. The delicate balance requires identification of public interest behind each exemption and then cumulatively weighing the public interest in accepting or maintaining the exemption(s) to deny information in a particular case against the public interest in disclosure in that particular case. Further, under Section 11(1), reference is made to the possible harm and injury to the third party which will also have to be factored in when determining disclosure of confidential information relating to the third parties. In the RTI Act, in the absence of any positive indication as to the considerations which the PIO has to bear in mind while making a decision, the legislature had intended to vest a general discretion in the PIO to weigh the competing interests, which is to be limited only by the object, scope and purpose of the protection and the right to access information and in Section 11(1), the possible harm and injury to the third party. It imports a discretionary value judgment on the part of the PIO and the appellate forums as it mandates that any conclusion arrived at must be fair and just by protecting each right which is required to be upheld in public interest. There is no requirement to take a fortiori view that one trumps the other. JUDICIAL INDEPENDENCE - HELD THAT:- It is necessary that the question of judicial independence is accounted for in the balancing exercise. It cannot be doubted and debated that the independence of the judiciary is a matter of ennobled public concern and directly relates to public welfare and would be one of the factors to be taken into account in weighing and applying the public interest test. Thus, when the public interest demands the disclosure of information, judicial independence has to be kept in mind while deciding the question of exercise of discretion. However, we should not be understood to mean that the independence of the judiciary can be achieved only by denial of access to information. Independence in a given case may well demand openness and transparency by furnishing the information. Reference to the principle of judicial independence is not to undermine and avoid accountability which is an aspect we perceive and believe has to be taken into account while examining the public interest in favour of disclosure of information. Judicial independence and accountability go hand in hand as accountability ensures, and is a facet of judicial independence. Further, while applying the proportionality test, the type and nature of the information is a relevant factor. Distinction must be drawn between the final opinion or resolutions passed by the collegium with regard to appointment/elevation and transfer of judges with observations and indicative reasons and the inputs/data or details which the collegium had examined. Transparency and openness in judicial appointments juxtaposed with confidentiality of deliberations remain one of the most delicate and complex areas. Clearly, the position is progressive as well as evolving as steps have been taken to make the selection and appointment process more transparent and open. Notably, there has been a change after concerns were expressed on disclosure of the names and the reasons for those who had not been approved. The position will keep forging new paths by taking into consideration the experiences of the past and the aspirations of the future. Revision disposed off.
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