TMI Tax Updates - e-Newsletter
November 22, 2019

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax

Articles

1. PROFITEERING ON SUPPLY OF PRINTING CARTRIDGES UPHELD

   By: Dr. Sanjiv Agarwal

2. INSOLVENCY AND BANKRUPTCY (INSOLVENCY AND LIQUIDATION PROCEEDINGS OF FINANCIAL SERVICE PROVIDERS AND APPLICATION TO ADJUDICATING AUTHORITY) RULES, 2019 – AN OVERVIEW

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Exchange Rates Notification No. 85/2019 - Customs (N.T.)

2. Customer Outreach Initiative Conducted by Public Sector Banks (PSBS) During October,2019

3. 19th Session of the India-Finland Joint Commission concludes

4. SEBI Board Meeting

5. IBBI notifies Regulations for Insolvency Resolution and Bankruptcy Proceedings of Personal Guarantors to Corporate Debtors

6. MCA Secretary inaugurates IEPF Authority Help Line No. 1800-114-667

7. Cabinet approves strategic disinvestment of CPSEs.

8. Cabinet approves reduction of Government of India equity shareholding in select CPSEs below 51% by retaining management control

9. Cabinet approves introduction of International Financial Services Centres Authority Bill, 2019 in Lok Sabha, after withdrawal from Rajya Sabha

10. Cabinet approves Taxation Laws (Amendment) Bill, 2019

Notifications

Customs

1. 85/2019 - dated 21-11-2019 - Cus (NT)

Exchange Rates Notification No.85/2019-Custom (NT) dated 21.11.2019

GST - States

2. S.O. 394 - dated 20-11-2019 - Bihar SGST

Amendment in Notification No. S.O. No. 177, dated the 21st September, 2017

3. 38/1/2017-Fin(R&C)(118) - dated 20-11-2019 - Goa SGST

Supersession Notification No. 38/1/2017-Fin(R&C)(52) dated 3rd April, 2018

4. 56/2019-State Tax - dated 16-11-2019 - Gujarat SGST

Gujarat Goods and Services Tax (Seventh Amendment) Rules, 2019

5. 100/GST-2 - dated 19-11-2019 - Haryana SGST

Notification to extend the last date for filing of FORM GST CMP-08 for the quarter July-September 2019 by four days from 18.10.2019 till 22.10.2019 under the HGST Act, 2017

6. 98/GST-2 - dated 18-11-2019 - Haryana SGST

Notification to bring rules 10, 11, 12 and 26 of the HGST (Fifth Amendment) Rules, 2019 in to force under the HGST Act, 2017

7. 97/GST-2 - dated 18-11-2019 - Haryana SGST

Notification to make filing of annual return under section 44 (1) of HGST Act for F.Y. 2017-18 and 2018-19 optional for small taxpayers whose aggregate turnover is less than ₹ 2 crores and who have not filed the said return before the due date under the HGST Act, 2017

8. 96/GST-2 - dated 18-11-2019 - Haryana SGST

Notification to prescribe the due date for furnishing FORM GSTR-1 for registered persons having aggregate turnover of up to 1.5 crore rupees for the quarters from October, 2019 to March, 2020 under the HGST Act, 2017

9. 13/2019-State Tax - dated 8-10-2019 - Kerala SGST

Amendments in Notification No. 11/2018-State Tax dated the 29th September, 2019.

10. 11/2019-State Tax - dated 29-9-2019 - Kerala SGST

The due date for filing Kerala Flood Cess return for the month of August 2019 is extended till 30th September 2019.

11. 12/2019-State Tax - dated 27-9-2019 - Kerala SGST

Appellate Authorities u/s 107 of the Kerala GST Act 2017.

12. 10/2019-State Tax (Rate) - dated 8-9-2019 - Kerala SGST

Amendments in Notification No. 9/2019-State Tax dated the 6th July, 2019.

13. F-A-3-36-2019-1-V-(71) - dated 6-11-2019 - Madhya Pradesh SGST

Special procedure such that the said persons shall not be required to furnish FORM ITC-04.

14. F-A-3-35-2019-1-V-(73) - dated 6-11-2019 - Madhya Pradesh SGST

The Madhya Pradesh Goods and Services  Tax (Seventh Removal of Difficulties) Order, 2019.

IBC

15. IBBI/2019-20/GN/REG051 - dated 20-11-2019 - IBC

Insolvency and Bankruptcy Board of India (Bankruptcy Process for Personal Guarantors to Corporate Debtors) Regulations, 2019

16. IBBI/2019-20/GN/REG050 - dated 20-11-2019 - IBC

Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Regulations, 2019

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/CFD/CMD1/CIR/P/2019/140 - dated 21-11-2019

Disclosures by listed entities of defaults on payment of interest/ repayment of principal amount on loans from banks / financial institutions and unlisted debt securities

Highlights / Catch Notes

GST

• GST Levied on Sale of Developed Plots via Revenue-Sharing; Rule 31 Sets Supply Value at 25% Market Value.

  Case-Laws - AAR : Levy of GST - sale of developed plots for consideration - revenue sharing basis - Rule 31 applies in the instant case and the value of the supply is equal to the total amount received by the applicant, which is equal to 25% of the market value of each plot.
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• GST Applies to Machines in RRC/PRC Models; Reagents as Separate Supply Taxed at 18% GST Rate.

  Case-Laws - AAR : Levy of GST - machines given to the customers under RRC/PRC models - The supply of reagents along with the machine rental services in both RRC and PRC contract is a separate supply independent of machine rental services supplied, if any - Taxable @18% of GST
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• Eligible for Input Tax Credit on Machinery Purchase; Must Comply with Sections 16 and 17(5) of Tax Regulations.

  Case-Laws - AAR : Input tax credit on the purchase of machinery - Since the applicant is using the goods in equipments, as capital goods, in the course or furtherance of his business, he is eligible to take the credit of input tax charged on any supply of such goods. - ITC can be availed subject to section 16 and 17(5)
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Income Tax

• Exemption u/s 11 revoked for activities before Young Indian's incorporation; AJL acquired with valuable property.

  Case-Laws - AT : Exemption u/s 11 - cancellation of registration - even before incorporation of Young Indian, the registered office was shifted to Delhi and the Directors managing the affairs of the assessee company were taken on Board of AJL. Not only that, Young Indian was permitted to use the property of AJL as its registered office. - till the grant of registration and surrender made by the assessee, no worthwhile activities were carried out by AJL. In fact, what it turns out to be is that, the assessee has acquired AJL, a company that owns property worth hundreds of crores from which the AJL had been enjoying only rental income.
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• Court Rules TDS Deduction u/s 194C Instead of 194J Flawed; Breach of Natural Justice in Hastily Conducted Proceedings.

  Case-Laws - HC : Assessee in Default u/s 201 - Deduction of TDS u/s 194C instead of u/s 194J - Advertisements put on digital platforms - technical services - order in haste passed before issuing certificate u/s 197 for Nil rate of TDS - the entire proceedings leading to the impugned orders are vitiated for breach of natural justice and needs to be set aside.
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• Quasi-judicial authorities must ensure fairness by considering all taxpayer evidence, not exploiting ignorance, especially in taxes.

  Case-Laws - HC : The Authorities of the State are not expected to take advantage of a citizen / assessee’s ignorance. - It is not open to the Authority to ignore the evidence / submissions made by the party as it is not the object of quasi judicial authority to confirm their prima facie view, but the object is to find the correct facts and thereafter apply the law to those facts and take a decision in terms thereof.
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• Tax Matter Centralized u/s 127 for Efficiency; Petitioner's Claim of Insufficient Reasoning Rejected by Court.

  Case-Laws - HC : Transfer of a case u/s 127 - In fact, the centralization, in our view, would be to the advantage to the petitioner as well, since the petitioner would not have to deal with two sets of officers at Delhi and Noida. The submission that no reasons are to be found in the impugned order is not correct.
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• Exemption from TDS on Lorry Hire Charges u/s 194C(6) with Penalty for Non-Compliance Under Sub-Section (7.

  Case-Laws - HC : Exemption from TDS u/s 194C(6) - lorry hire charges - Even assuming that the assessee had not furnished the particulars as required under Sub-Section (7) of Section 194C of the Act in the prescribed form, the maximum that could be done is to impose a fine of ₹ 200/- for every day of such non compliance.
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• ITAT Can Admit Revised Tax Claims Even if Original Return Filed Late, Overriding AO's Decision u/s 139(5).

  Case-Laws - AT : Non admitting assessee’s claim through revised computation - AO was of the opinion that since the original return was filed belatedly, the assesee was not eligible to file revised return u/s 139 (5) - AO has no power to admit but ITAT has power to admit the claim of the assessee.
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• Section 23(1)(c): Vacant property rental income deemed 'nil' if unoccupied all year and available for rent.

  Case-Laws - AT : Addition on account of notional rent in respect of vacant property of the assessee - the property was available for rent but was lying vacant for the entire year - after applying provisions of section 23(1)(c) it is to be accepted that rental income from the vacant property is ‘nil’.
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Customs

• Cargo Storage at Ports Limited to 60 Days; Charges Apply for Space Usage; Complies with Article 14.

  Case-Laws - SC : Period of limitation of 60 days for storing imported/exported cargo at Port - rent/usage charges for using the open space, covered space, containers, office accommodation, etc. - Period of sixty days is sufficient and long and cannot be termed as unreasonable and violating Article 14 of the Constitution.
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• Forged Documents Case: Delayed Verification of 2006 Imports Raises Questions on Customs-Attested Packing Lists in Advance License Scheme.

  Case-Laws - AT : Advance License Scheme - forged documents submitted to the licensing authority against ex-bond bills of entry - The alleged failure of the appellant to produce the customs attested copies of the packing list is not a significant pointer as the goods claimed to have been imported in 2006 were subject to verification after a gap of eight years.
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• Customs House Agent's Penalty Dropped Due to Lack of Evidence of Aiding Importer; Importer Not Penalized.

  Case-Laws - AT : Imposition of penalty on CHA - Department has not been able to bring any material on record to show that there is a aiding and abetting by the appellant to the importer - Further, in the impugned order no penalty has been imposed on the importer and penalty has only been imposed on the CHA - Penalty dropped.
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• Customs Duty Exemption: Dismantling and Converting CPTs Not Considered Manufacturing for Exemption Eligibility.

  Case-Laws - HC : Benefit of exemption from Customs duty - Import of goods - Process amounting to manufacture or not - CPTs have been dismantled completely and converted into new CPTs - Repair activity though may be given any shape or form including complete dismantling, will not amount to manufacture.
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IBC

• India Updates Bankruptcy Process for Personal Guarantors to Corporate Debtors, 2019 Regulations Streamline Insolvency Proceedings.

  Notifications : Insolvency and Bankruptcy Board of India (Bankruptcy Process for Personal Guarantors to Corporate Debtors) Regulations, 2019
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• India's 2019 Regulations Set Framework for Insolvency Resolution of Personal Guarantors to Corporate Debtors, Streamlining Processes.

  Notifications : Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Regulations, 2019
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PMLA

• Money Laundering Viewed as Continuing Offence; Section 5(1) Applies Retrospectively, Not Just Prospectively.

  Case-Laws - HC : Money Laundering - The concept of continuing offence is keeping the offence alive day by day without wiping the original guilt. Thus, there is an ingredient of continuance of the offence in continuing offence. Therefore, the contention of the petitioner that the second proviso to Section 5(1) is only prospective and not retrospective is without substance or force.
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Service Tax

• Trading Exempt u/r 6(3); Reversal u/r 3(5) Exempts Appellant from Rule 6(3) Obligations.

  Case-Laws - AT : It is true that ‘trading’ is an exempted service and Rule 6(3) covers exempted services. However, having reversed an amount under Rule 3(5) of CCR 2004, the appellant will not be covered by Rule 6(3) because the credit attributable to the inputs removed as such, has already been reversed.
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Central Excise

• Goods Classification Unchanged: Drilling Does Not Alter Essential Character of Forged and Cast Items.

  Case-Laws - AT : Classification of goods - manufacture of various forged and cast items - drilling operations has no impact on the essential character of the item manufactured by the appellant and thus, the classification cannot change solely on the ground of drilling operation.
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• Goods for Food Processing Machinery Classified Under Chapter 8437 of Central Excise Tariff Act, 1985.

  Case-Laws - AT : Classification of goods - food processing machines and its parts - the conveyors and elevators etc. specifically manufactured by the appellant for food processing machinery alongwith other machinery has the merit classification under Chapter 8437 of CETA, 1985
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Case Laws:

• GST

• 2019 (11) TMI 995
  Separate taxability of goods and services - separate contracts for supply of goods and services for a solar power plant - Composite supply or not - whether there would be separate taxability of goods as Solar Power Generating System at 5% and services at 18%? - parts supplied on standalone basis (when supplied with PV modules) - concessional rate of duty - benefit of concessional rate of duty to sub-contractors also or not? Whether in case of separate contracts for supply of goods and services for a solar power plant, there would be separate taxability of goods as Solar Power Generating System at 5% and services at 18%? - HELD THAT:- The performance of the EPC contractor in relation to the supply of goods and supply of services related to the installation and commissioning of the goods are so intricately woven that they cannot be evaluated in isolation from each other. This indivisible nature of the total supply imparts the entire contract the nature of a works contract - The answer to the first question is that for the period up to 31.12.2018 the EPC contract is required to be considered as a works contract and has to be taxed accordingly. The artificial vivisection into two contracts, as envisaged, shall not rob the contract of its essential nature of a works contract. Whether parts supplied on standalone basis (when supplied with PV modules) would also be eligible to concessional rate of 5% as parts of solar power generation system?- HELD THAT:- Notification No. 1/2017 - Central Tax (Rate) dated 28.06.2017 provides that items covered under Chapters 84 or 85 which constitute renewable energy devices and parts required for their manufacture are covered under the aforesaid entry no. 234 and are liable to be taxed at 5% - This essentially implies that those parts are liable to 5% tax only if they go into the manufacture of the Solar power generating system. Whether benefit of concessional rate of 5% of solar power generation system and parts thereof would also be available to sub-contractors? - HELD THAT:- Entry No. 234 in Schedule I to Notification No. 1/2017 - Central Tax (Rate) dated 28.06.2017 does not differentiate between supplies by the contractor or the sub-contractor. It provides that as long as the goods falling under Chapter 84 or 85 are the listed renewable energy devices and parts for their manufacture the rate of tax applicable shall be 5%. It further means that the contract with the sub-contractor has to be for the supply of the solar power generating system.

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• 2019 (11) TMI 994
  Levy of GST - sale of developed plots for consideration - revenue sharing basis - principal supply/predominant supply - applicability of Rule 31 of CGST Rules - Taxability in terms of serial number 5 of Schedule III of the CGST Act, 2017 - HELD THAT:- On the basis of provisions of the agreement it would be in order to conclude that activities undertaken by the applicant are not qualified to be covered under entry number 5 of Schedule Ill of the said Act. Thus the activities undertaken by the applicant amount to a supply of service - the activities undertaken by the applicant, as envisaged in the agreement placed before the Authority, amount to a supply of service to the landowners and is liable to be taxed appropriately under the provisions of the CGST/KSGST Acts. Applicability of provisions of Rule 31 of CGST Rules - ascertaining the value of land and supply of service for the purpose of taxable value - HELD THAT:- Consideration for a service is the total value that the service provider gets in the deal and not what the service provider expends for the provisioning of the service. The total gain to the applicant or the total amount accruing to the applicant for the services is 25% of the amount at which the plots are sold. It has already been emphasised and held that the applicant has no right in the title of the land and therefore the applicant cannot be considered as the sellers of the plots. Their role is limited to aiding and assisting the landowners in the sale of the plots. They are only service providers in the whole process, be it development of the raw land into residential plots or their sale after the development. Therefore the entire amount received by them is liable to be taxed. Thus, Rule 31 applies in the instant case and the value of the supply is equal to the total amount received by the applicant, which is equal to 25% of the market value of each plot.

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• 2019 (11) TMI 993
  Levy of GST - machines given to the customers under RRC/PRC models - supply of reagents along with the machine rental and services in a RRC/PRC contract - Separate supply or mixed supply or composite supply? - rate of tax for the service of machine under RRC/PRC models - Valuation for the purpose of GST - Time of supply - eligibility for the input tax credit on the purchase of machinery for use in RRC / PRC contracts. Whether the applicant is liable to pay GST on the machines given to the customers under RRC/PRC models? - HELD THAT:- There is an act of supply of equipment and in the second clause of the definition of consideration , it is seen that the monetary value of any act or forbearance, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person. There is a clear inducement of supply of goods from the distributor and hence the monetary value of the act of supply of goods in the form of equipments would be the consideration for the supply of equipments. Since the monetary value of this transaction is Rs.NIL, this cannot be considered as the consideration - Hence, the delivery of equipments by the applicant to the end-customer without any charge under this model would not amount to a supply under the Act. Whether the supply of reagents along with the machine rental and services in a RRC/PRC contract is a separate supply or a mixed supply or composite supply? - If considered as composite supply, what is principal supply? - HELD THAT:-It is very clear from the contract that the applicant has detached the supply of equipments from the supply of reagents, in that the supply of reagents can be made either by himself or by his authorised distributor, at the discretion of the applicant. Since the delivery of equipments is not treated as a supply as per the provisions of the Act, there cannot be a composite supply involving it. Further, since the supply of goods in reagents and the supply of services in tolerating an act are not supplied in conjunction, they also do not form the composite supply. Value of the supply of the supplies involved in the contract - HELD THAT:- The supplies of the reagents and the supplies of the services discussed above in paragraph 7.5.3 are taxable on the respective values determined as per Section 15 of the CGST Act / SGST Act. This would be normally on the value for which invoice is raised, which would be the transaction value. But in case of the provision of equipments free of cost, the same does not amount to supply and is only a usage of a fixed asset for the purpose of business and would be a cost on the sale of reagents. What is the rate of tax for the service of machine under RRC / PRC models? - HELD THAT:- Considering the fact there is a transfer of the right to use the equipments for a consideration, the value of such supply is taxable at the same rate of central tax as on the supply of like goods involving the transfer of title in goods. In this case, the goods are equipments which are covered under the HSN Code 9027 8090 - Hence the rental services supplied in relation to the equipments without transfer of title in goods in case of PRC contract is liable to a tax of 9% under the CGST Act and 9% under the KGST Act - The reagents are covered under HSN code 3822 0090 and taxable at 12% - The tax rate applicable on the supply of services in the nature of an act agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act for which a consideration is received, the same are covered under Entry No. 35 and is taxable at 18%. Whether the applicable is eligible for the input tax credit on the purchase of machinery? - HELD THAT:- Since the equipments are capitalized in the books of account, and are used in the course or furtherance of business, they form the capital goods of the applicant. The act of claiming depreciation on the value of these assets under the Income Tax Act, 1961 also points to the fact that they are capitalized in the books of accounts of the applicant - Since the applicant is using the goods in equipments, as capital goods, in the course or furtherance of his business, he is eligible to take the credit of input tax charged on any supply of such goods. But this is subject to the condition and limitation prescribed for capital goods in sub-section (3) of section 16 and also under section 17.

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• 2019 (11) TMI 992
  Refund the input tax credit lying in the petitioner s erstwhile VAT account and CENVAT account respectively - petitioner has been declared as a non-performing asset by the Canara Bank - HELD THAT:- Perusal of the facts and circumstances and the prayers sought for in these writ petitions would show that the petitioner seeks for refund of Input Tax Credit lying in the petitioner s erstwhile VAT account as well as CENVAT account. However, it is seen that the petitioner has filed these writ petitions straightaway without making any demand to that effect by way of refund claim before the concerned authorities. Needless to say that mandamus cannot be sought for without making any demand before appropriate authorities. I do not think that the petitioner can apprehend so and file the writ petitions seeking mandamus straighaway without making any demand before the concerned authorities. Unless the demand is made and it is not considered, the petitioner is not entitled to approach this Court and seek for such relief. This Writ Petition is disposed of, by granting liberty to the petitioner to make such demand before the concerned authorities. If any such demand is made, the same shall be considered and appropriate orders shall be passed on merits and in accordance with law.

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• 2019 (11) TMI 991
  Detention of goods with vehicle - it is alleged that 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 - section 130 of the CGST Act, 2017 - It was submitted that in the absence of any discrepancy in the documents and the goods, it is not permissible for the respondents to confiscate either the vehicle or the goods - HELD THAT:- Issue notice, returnable on 18th November, 2019.

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• 2019 (11) TMI 990
  Refund of IGST - refund is sought by claiming drawback on manufactured goods exported under 15 shipping bills - principles of natural justice - HELD THAT:- Mr. Dwivedi, learned Counsel appearing for respondent no. 3, on instructions, states that the petitioners application dated 26th June, 2019 would be disposed of by respondent no. 3 within a period of 4 weeks from today after following the principles of natural justice - Mr. Jetly, learned Counsel appearing for the respondent no.5, on instructions, states that he will dispose of the petitioners application within 4 weeks from today after following the principles of natural justice. The aforesaid statements have been made by the learned Counsel Mr. Dwivedi for the respondent no.3, on instructions of Mr. Shivendra Das, Assistant Commissioner, IGST, Air Cargo. While the aforesaid statement has been made by Mr. Jetly for the respondent no.5 on instructions of Mr. Pankaj Paul, Superintendent, Drawback, JNCH on behalf of respondent no.5. We accept the statements. Petition disposed off.

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• Income Tax

• 2019 (11) TMI 996
  Exemption u/s 11 - cancelling the registration u/s. 12AA(3) - Acquisition of Associated Journals Limited (AJL) by the Young Indian - CIT (E) withdrawing the registration granted u/s. 12A retrospectively from A.Y. 2011-12 on the alleged grounds that the activities carried on by the Appellant are not genuine and are not in accordance with the objects of the assessee - Assessee had suo moto surrendered its registration u/s. 12A in March 2016 HELD THAT:- Had the intention of the assessee company being clear and bona fide from the date of its inception, that it wanted to acquire AJL only to carry out its charitable activities, then it should have been stated so and brought on record not only at the time of seeking registration u/s. 12AA, but also at the time of cancellation. The events clearly pointed out that even before incorporation of Young Indian, the registered office was shifted to Delhi and the Directors managing the affairs of the assessee company were taken on Board of AJL. Not only that, Young Indian was permitted to use the property of AJL as its registered office. there was a clear-cut breach on part of the assessee company. If there was concealment and suppression of material facts, then such a registration granted is always open for cancellation or revocation at any time by the ld. DIT (E)/CIT (E) when it comes to his notice. The assessee nowhere had clarified or sated that the purpose of acquiring AJL and its activities, except for reiterating that as a shareholder, Young Indian does not have any ownership interest, whatsoever, in the properties owned by AJL as it is a separate legal entity. CIT(E) was fully justified in law and on facts in cancelling the registration from the date of granting of registration itself, i.e., from the assessment year 2011-12. Even after grant of registration u/s. 12AA, no genuine activities have been carried out by the assessee either in furtherance of its objects or otherwise, which can be held to be for charitable purpose because one of the so called purpose of acquiring AJL was not carried out at all. Otherwise, also, we have already discussed and given our categorical findings that till the grant of registration and surrender made by the assessee, no worthwhile activities were carried out by AJL. In fact, what it turns out to be is that, the assessee has acquired AJL, a company that owns property worth hundreds of crores from which the AJL had been enjoying only rental income. Clearly, AJL, which had been earning rental income, cannot be held that its activities were aligned with the objects of the assessee company or through AJL; it was carrying out activities in pursuance of its objects qua that period. Hence, in that sense, the assessee s activities cannot be held to be genuine. Thus, the cancellation of registration u/s 12AA by the Ld. CIT (E) from A.Y. 2011-12 is upheld. Though we have tried to note down various arguments placed by the parties and the judgments relied upon and have also dealt with all the core arguments, but some of the contentions and submissions made are not being dealt with, as we do not find them to be relevant on the facts and circumstances and also in view of our detail discussion and findings given above. Accordingly we hold that the ld. CIT (E) was justified in cancelling the registration from the assessment year 2011-12, because none of the activities of the assessee was carried out in accordance with its objects nor its activities can be held to be genuine. Consequently, the appeal of the assessee is dismissed.

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• 2019 (11) TMI 989
  Assessee in Default u/s 201 - Deduction of TDS u/s 194C instead of u/s 194J - Advertisements put on digital platforms - technical services - order in haste passed before issuing certificate u/s 197 for Nil rate of TDS - payment made to digital platforms such as M/s. Google India Pvt. Ltd. and others - HELD THAT:- In this case, the Adjudicating Authority was of the view that evidence of M/s. Google (I) (P) Ltd., that it had paid the taxes, has not been filed in the appropriate form and manner. In such a case, the authority should ask the party concerned to submit the same in proper form and manner. It is only thereafter that, a view can be taken on the same. The Authorities of the State are not expected to take advantage of a citizen / assessee s ignorance. So also the technical evidence led is ignored without pointing out why it is not acceptable, by cross examining the technical expert or by leading contrary evidence. It is not open to the Authority to ignore the evidence / submissions made by the party as it is not the object of quasi judicial authority to confirm their prima facie view, but the object is to find the correct facts and thereafter apply the law to those facts and take a decision in terms thereof. It must also be borne in mind that the petitioner had filed its reply as directed by the Court on 9th September, 2019 being the last date to file a representation. The respondent disposed of the same on 9th September, 2019. This in the absence of any statutory obligation or judicial directions to dispose of the show-cause notice by 9th September, 2019 itself. The Authority could take time, consider the submissions and call the party for further hearing before passing the impugned order. Undue haste in passing the impugned orders dated 9th September, 2019 on the part of the respondent no.1 was only with the objective of using these orders declaring the Petitioner is an assessee in default, for the purposes of depriving the petitioner of its right to obtain certificates under Section 197 of the Act at Nil rate of tax deduction to be made by its customers. This is evident from the fact that on 29th July, 2019 when the Court set aside the earlier three orders dated 31st May, 2019 issued under Section 201(1) and 201(1A) the Court had directed the petitioner to make a representation along with supportive material before the respondent no.1 Income Tax Officer (TDS) within a period of 6 weeks from that date which expires i.e. on or before 9th September, 2019. On the same date, i.e. on 29th July, 2019 this Court had in another Writ Petition had set aside certificates dated 4th June, 2019 issued by the Deputy Commissioner of Income Tax respondent no.2 under Section 197 of the Act. This inter alia on the ground that they were based upon the orders dated 31st May, 2019 issued under Section 201 and 201(1A) of the Act. The Court held that the orders dated 31st May, 2019 are set aside and the respondent no.1 will re-examine the issue and determine the rate of income tax to be deducted by the petitioner s customers while making payment to the petitioner. The aforesaid exercise had to be done within 4 weeks from 29th July, 2019. We are also unable to comprehend why the undue haste on the part of the respondent No.1 in passing the order under Section 201 and 201(1A) of the Act. This for the reason that even if the tax deduction certificates were issued under Section 197 of the Act before an order was passed under Section 201(1) and 201(1A) of the Act, it was always open to the Revenue to cancel the earlier tax deduction certificate issued under Section 197 of the Act and issue fresh tax deduction certificates, in view of the orders under Section 201(1) and (1A) of the Act. Thus, the entire proceedings leading to the impugned orders dated 9th September, 2019 are vitiated for breach of natural justice and needs to be set aside. Dis-allowance made under Section 40(a)(ia) - the requirement to deduct tax at the time of credit in the books of accounts i.e. even before the payment is made, is not suffering from breach of natural justice not having considered the Petitioner s submissions. However, as the impugned orders were passed in undue haste, in the absence of sufficient consideration being given to Petitioner s submission. We see no reason to split the impugned orders in two parts so as to relegate the petitioner to file an appeal in respect of dis-allowance under Section 40(a)(ia) and on the other issues entertain the Petition.

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• 2019 (11) TMI 988
  Transfer of a case u/s 127 - sufficient reasons - centralisation of investigation and assessment - HELD THAT:- There is no denying the fact that transactions were undertaken between the members of the Keshav Lal Group and the petitioner. Since the petitioner is in the other end of the said transaction undertaken by members of the Keshav Lal Group, which are under investigation, and the petitioner too has been issued notice u/s 153C, it is only reasonable and proper that the proceedings are centralized so that a wholesome view could be taken by the same officer who is undertaking the assessment. In fact, the centralization, in our view, would be to the advantage to the petitioner as well, since the petitioner would not have to deal with two sets of officers at Delhi and Noida. The submission that no reasons are to be found in the impugned order is not correct inasmuch, as, the reasons are contained in the proposal for centralization dated 10.07.2019 which was communicated to the petitioner and the petitioner s objections were also called for. The petitioner has been granted sufficient opportunity for hearing and has also been apprised of the reasons for the said transfer. We therefore, do not find any merit in this petition and accordingly, dismiss the same.

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• 2019 (11) TMI 987
  Disallowance of expenses booked for lorry hire u/s 37(1) - Exemption from TDS u/s 194C(6) - lorry hire charges - failure to furnish the availability of the permanent account numbers of the payee - Rectification of mistake - HELD THAT:- On a perusal of the remand report furnished by the Assessing Officer along with the letter dated 20.2.2017, we find that there was no finding rendered by the Assessing Officer as to the veracity, admissibility and correctness of the details produced by the assessee before the CIT(A), on which, the remand report was called for. Therefore, the exercise, which should have been adopted by the Assessing Officer, is to examine the details and if necessary, call for at least a few of the lorry owners, whose details such as PAN particulars, registration numbers of the trucks were furnished and then should have come to a conclusion as to whether those documents would substantiate the stand taken by the assessee. We find that no such exercise was conducted by the Assessing Officer while the matter was sent back to him for considering the documents produced by the assessee for the first time before the CIT(A). We also find in the remand report, much of which was the view of the Assessing Officer and the scrutiny assessment was incorporated though in a different language. The Tribunal, though recorded the submissions of the assessee that they produced the details of the truck owners by giving their PAN particulars and registration numbers of the trucks, etc., when the Tribunal dismissed the appeal by the impugned order, it did not go into the said aspect, but was largely guided by the month and year, in which, the amounts were settled by the assessee i.e April 2014. This, according to the assessee, is a typographical error in the remand report and the assessee produced records to show that the payments were made in April 2012 itself. Though this mistake was pointed out by the assessee before the Tribunal by filing the miscellaneous application, the Tribunal was not inclined to exercise its jurisdiction. Thus, taking into consideration the above factual position, we are of the considered view that the Assessing Officer should re-examine the correctness of the details, produced by the assessee in the form of freight charges paid by them, before the CIT(A), though not in the scrutiny assessment. Even assuming that the assessee had not furnished the particulars as required under Sub-Section (7) of Section 194C of the Act in the prescribed form, the maximum that could be done is to impose a fine of Rs. 200/- for every day of such non compliance. Therefore, this procedural law, as prescribed under Sub-Section (7) of Section 194C of the Act cannot take away the benefit, which will accrue to the assessee under Sub-Section (7) of Section 194C of the Act. For the above reasons, we are inclined to remand the matter to the Assessing Officer for a fresh consideration. Above tax case appeal is allowed, the orders passed by both the Tribunal are set aside and the matter is remanded to the Assessing Officer to consider the details furnished by the assessee for payment of freight charges, issue notice to the assessee, afford them an opportunity and if deems fit, summon a few of the transport operators and then, after satisfying himself about the veracity, admissibility and correctness of the details furnished by the assessee, shall redo the assessment

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• 2019 (11) TMI 986
  Bogus commission expenditure - AO after recording statement of all agents came to conclusion that all the agents are not genuine as they do not have any basic information of doing any business with the assessee - HELD THAT:- Extensive discussion was made on the issue in the AY.2011-12 by the AO, CIT(A) as well as the ITAT, we deem it necessary to follow the order of ITAT in assessee s own case [ 2018 (5) TMI 1943 - ITAT HYDERABAD] for the earlier assessment years as well as the subsequent assessment year as held that assessee had claimed commission payment as expenditure and paid through banking channel and deducted TDS as per the provisions of I.T. Act. The issue before us is, AO after recording statement of all agents came to conclusion that all the agents are not genuine as they do not have any basic information of doing any business with the assessee. The same view was ratified by ld. CIT(A). We notice from the statement recorded from agents that all have confirmed the receipt of commission and declared the same as income in their respective returns. From the statement, we notice that few agents are either house-wives, students or retired personnel. They do not have any information of the transaction carried on with the assessee but all of them had a direct link with the assessee as their husbands, parents or one of the family members, who are in direct contact with the assessee. It shows that the subordinates or family members have assisted in carrying out the agency business for the recipient of the commission. Assessee has submitted enough evidence in support of utilizing the services of agents in the business and also revenue authorities have not brought any cogent material to show that the payments were come back to assessee and these payments cannot be categorized as gratuitous payments. Therefore, we delete the addition made by the AO. - Decided in favour of assessee.

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• 2019 (11) TMI 985
  Non admitting assessee s claim through revised computation - AO was of the opinion that since the original return was filed belatedly, the assesee was not eligible to file revised return u/s 139 (5) - powers of the ITAT to entertain a fresh claim - additional claim for deduction other than the filing of revised return - HELD THAT:- On a combined reading of the judgments of Goetze India [ 2006 (3) TMI 75 - SUPREME COURT] and CIT vs. Pruthvi Brokers Shareholders Pvt. Ltd. [ 2012 (7) TMI 158 - BOMBAY HIGH COURT] it is our considered opinion that although the AO cannot be held in error for not admitting the assessee s claim through revised computation, the ITAT can entertain such a claim. Therefore, it is our considered opinion that interest of justice would be served if this issue is restored to the file of the AO with a direction to accept the assesee s claim which has been filed by filing a revised computation after proper examination and verification. We are also guided by the spirit of CBDT Circular No. 14 (XL-35) of 1955 dated 11th April 1955 wherein the CBDT has laid down administrative instruction for guidance of income tax officers on matters pertaining to assessment. The Board has in the above said instruction stated that it is one of the duties of the officers of the department to assist a tax payer in every reasonable way, particularly in the matter of claiming and securing reliefs. Restore this issue to the file of the AO with the direction to admit the claim of the assessee and allow the same if after proper verification and examination it is found to be correct and as per law

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• 2019 (11) TMI 984
  Disallowance of various expenses debited to the Profit and Loss account - assessee has not carried out any business activity during the year - HELD THAT:- The copy of the Partnership Deed which is placed by the assessee in the Paper Book reveals that one of the activity of the firm is financing as spelt out in the Partnership Deed. We further find that the conclusion of the AO of assessee not having carried out any business activity is also contrary to the facts in view of the fact that in computation of income in the assessment order. AO himself has computed the income of Rs. 19,09,431/- as business income . The aggregate capital balance of the partners also reveals that the partners capital account in aggregate is in credit and only the capital of one of the partners is in debit. We are of the view that AO was not justified in disallowing the expenses by noting that no business activity has been carried out by the assessee. We therefore the AO direct to delete the addition made by him. Thus, the grounds of the assessee are allowed.

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• 2019 (11) TMI 983
  Addition on account of notional rent in respect of vacant property of the assessee - Assessee explained that since the property was lying vacant during the relevant period, no rental income was disclosed - AO estimated rental income of the property at 6% of the capital value and made addition as notional rent - HELD THAT:- In the present case it is an undisputed fact that the property in question was let out in the past, during the period relevant to assessment year under appeal the property was lying vacant for the entire year and hence, no actual rent was received by the assessee. Consequently, the assessee did not offer any rental income to tax. In the given facts, the provisions of section 23(1)(c) of the Act get attracted. The assessee during the Financial Year 2015-16 has purportedly rented out the premises and has offered the rental income to tax. A perusal of the statement of profit and loss account for the year ended 31/03/2016 furnished by the ld. Authorized Representative of the assessee reveal that the assessee has received rental income of Rs. 2,10,000/-. Assessee has also furnished copy of the assessment order dated 18/12/2018 passed under section 143(3) of the Act for assessment year 2016-17. No addition on account of rental income/ notional rental income has been made by the Assessing Officer in the assessment order. Thus, rental income offered to tax has been accepted by the Assessing Officer. In the past as well the propeprpty under question was let out. It was during the period relevant to assessment year under appeal that the property was lying vacant for which reasons were given by the assessee. In the peculiar facts of the case we are of the considered opinion that no addition on account of notional rent is warranted. The Co-ordinate bench in the case of Sachin R. Tandulkar [ 2018 (8) TMI 847 - ITAT MUMBAI] in somewhat similar circumstances after applying provisions of section 23(1)(c) of the Act accepted rental income from the vacant property as nil . In view of the similarity of facts, we find merit in the submissions of the assessee. Accordingly, the impugned order is set-aside and the appeal of assessee is allowed.

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• 2019 (11) TMI 982
  Disallowance u/s 41(1) - allegation of the Revenue that learned Commission (Appeals) had deleted the addition by admitting fresh evidences in violation of Rule 46A of the Income Tax Rules - HELD THAT:- There is neither remission nor cessation of liability as envisaged under Section 41(1). Insofar as the allegation of the Revenue that learned Commission (Appeals) had deleted the addition by admitting fresh evidences in violation of Rule 46A of the Income Tax Rules, we are not convinced with the same. It is noticed that in the course of assessment proceedings also, the assessee vide letter dated 15.03.2016 had furnished all the evidences including approval from RBI to demonstrate that the liability has not ceased to exist. It appears that the AO has completely ignored the submissions of the assessee and the materials brought on record, whereas, Commission (Appeals) after appropriately appreciating the relevant facts and material on record as well as the submissions of the assessee had taken a correct view by deleting the addition under Section 41(1), since, factually there was neither remission or cessation of liability under Section 41(1). In view of the aforesaid, we do not find any infirmity in the decision of learned Commission (Appeals) on the issue. The grounds raised by the Revenue are dismissed.

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• 2019 (11) TMI 981
  Disallowance u/s. 36(1)(iii) - Assessee contended that amounts borrowed by the assessee were utilized for the purpose of the business and therefore no proportionate interest is liable to be disallowed u/s. 36(1)(iii) - HELD THAT:- On a perusal of the balance sheet, we find that assessee had sufficient interest free own funds to the extent of Rs. 804.95 Crores in the form of share capital, reserves and surplus and money received against share warrant and the assessee made investment in work in progress at Rs. 48.11 crores and also increase in long term loans and advances to the extent of Rs. 31.03 crores. Therefore, undoubtedly the assessee is having its own interest free funds more than the amount of advances given to various parties and the investments shown in capital work in progress. In the case of CIT v. Reliance Utilities and Power Limited [2009 (1) TMI 4 - BOMBAY HIGH COURT ] identical issue has come up before the Hon ble Jurisdictional High Court as to whether there can be any disallowance u/s. 36(1)(iii) of the Act when the assessee has interest free funds more than the investments and when assessee paid interest on borrowals utilized for investments. Assessee is having sufficient interest free funds much more than the investments made by the assessee in capital work in progress and also in providing long term loans and advances to various parties. In the circumstances, the presumption is that the assessee has made investments from out of its interest free funds only and therefore there cannot be any proportionate disallowance u/s. 36(1)(iii) - we direct the Assessing Officer to delete the disallowance made u/s. 36(1)(iii) Disallowance made u/s. 14A r.w. Rule 8D - HELD THAT:- Hon ble Supreme Court in the case of PCIT v. State Bank of Patiala ( 2018 (11) TMI 1565 - SC ORDER ) the Special Leave Petition filed against the decision of the Hon ble Punjab and Haryana High Court in the case of PCIT v. State Bank of Patiala [ 2018 (4) TMI 23 - PUNJAB HARYANA HIGH COURT] has been dismissed by upholding the order of the Hon ble High Court in holding that amount of disallowance u/s. 14A of the Act shall be restricted to amount of exempt income only and not a higher figure. We respectfully following the said decision direct the Assessing Officer to restrict the disallowance u/s. 14A r.w. Rule 8D of I.T. Rules only to the extent of exempt income earned by the assessee during the relevant Assessment Year. This ground is partly allowed. Assessee in default u/s. 201(1) - TDS u/s 194H and 194C - disallowance u/s. 40(a)(ia) for non-deduction of tax at source in respect of professional fees and payments made towards advertisements - HELD THAT:- Assessee therein, cannot be treated as as assessee in default u/s 201(1), if the recipient has offered the income and has paid the taxes thereon - In the case of the assessee before us, the recipients of the payment, have already offered the income in their hands and therefore, the assessee cannot be treated as as assessee in default Disallowance of interest on Service Tax and VAT - Assessee submits that the said amounts are not penal in nature and hence allowable as business expenditure - HELD THAT:- Interest paid on Service Tax and VAT is not penal in nature and therefore is allowable as deduction. Thus, following the said decision BSR Co. . [ 2018 (8) TMI 1903 - ITAT MUMBAI] . we direct the Assessing Officer to delete the disallowance of interest on Service Tax and VAT and recompute the income of the assessee.

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• 2019 (11) TMI 980
  Reopening of assessment u/s 147 - addition u/s 68 - HELD THAT:- AO has given the opportunity to the appellant to defend the case. But for the search at the premises of Shri. Gautam Chand Jain, this information about accommodation entries would not have come to light. The statement given by Mr.Jain U/s.132(4) is a valid evidence. The very purpose of providing accommodation entries is to create an impression of genuineness in a transaction while actually is impermissible in law. When this was the situation, and when appellant was sounded, it was the duty of Appellant to provide with further evidence to prove that the transaction was genuine. Since the Appellant has not succeeded in proving a tainted transaction with additional evidence, am constrained to accept the conclusion of the Assessing Officer as in order - Decided against assessee.

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• 2019 (11) TMI 979
  Disallowance of ad-hoc rate of 2% of certain expenses u/s 37(1) - HELD THAT:- It is an undisputed fact that the assessee had furnished the requisite documents before the AO and produced the books of accounts. AO has proceeded to make a general statement about the expenses being not verifiable as some of the vouchers are self-made and they do not bear name and signature of the recipients. He on the basis of such surmises had concluded that the probability of the expenses for non-business purpose cannot be ruled out and accordingly, he disallowed Rs. 2% on aggregate amount on ad-hoc basis. We find that no instance of the expenses being for non-business purpose has been pointed out by the AO in the assessment order. Further, before us, Ld.A.R. has contended that no disallowance of expenses has been made either in subsequent years nor in earlier years. Considering the totality of the aforesaid facts, we are of the view that in the present case, no disallowance of expenses is called for - Ground of the assessee is allowed. Disallowance u/s 36(1)(iii) - Revenue s case that assessee has diverted borrowed funds to its sister concerns and for which no interest has been charged - HELD THAT:- CIT(A) after considering the factual position has given a finding that assessee had sufficient interest free funds and it was not the case of diversion of funds to its sister concerns. To arrive at the aforesaid conclusion, Ld.CIT(A) also relied on the submissions of the assessee in the case of Reliance Utilities [ 2019 (1) TMI 757 - SUPREME COURT ]. Before us, no fallacy in the findings of Ld.CIT(A) has been pointed out. We therefore find no reason to interfere with the order of Ld.CIT(A). Thus, the grounds of Revenue are dismissed.

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• 2019 (11) TMI 978
  Revision u/s 263 - Addition u/s 40A(3) - TDS u/s 194C - HELD THAT:- A perusal of the show cause notice as extracted clearly shows that the issue of verification as to whether the payment is made after deduction of TDS or not and as to whether the provisions of section 40(a)(ia) of the Act would apply in respect of the payments made, is not a part of the show cause notice. It is true that the assessee has discussed the provisions of rule 6DD and the applicability of Rule 6DD(k) of the Act, in his reply to the show cause notice, the provisions of rule 6DD(k) is in respect of reasons for making the payment in a manner other than as prescribed under the Act, and is not in any way connected to the applicability of Sec.40(a)(ia) of the Act or the deduction of TDS u/s.194C(6) of the Act. A perusal of Section 263(1) of the Act clearly shows that the words used are after giving the assessee an opportunity of being heard . In the present case, the directions given by the ld.PCIT to the Assessing Officer is not an issue, that has been put to the assessee or one which has been done after giving the assessee an opportunity of being heard. This being so, his direction is unsustainable and consequently, the order passed u/s.263 of the Act becomes unsustainable and consequently quashed.

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• 2019 (11) TMI 977
  Bogus purchases - AO being not satisfied with the assessee s reply on purchases he has disallowed 20% of assessee s purchases holding as unverifiable purchases - HELD THAT:- It is seen that in the nature of purchases made by the assessee during the year under consideration and that of the assessment year 2012-13 and thereafter there is no change in the nature of purchases since they have been made in cash, supported by self made vouchers. The very nature of the industries, a slaughter house, the assessee company is required to made purchases from the small butchers in cash to whom it had to make advance payments where complete address would not be available. CIT(A) has observed that since the AO has accepted the part of the purchased made in cash supported by self made vouchers, there is no reason in making disallowance of 20% of the purchases, without pin pointing specific cash vouchers. CIT(A) has rightly observed that the AO has made disallowances in the realm of assumption and guess work. We are inclined to agree with the finding of the CIT(A) that assessee case get strength from the AO s own action that in subsequent years no such disallowances have been made by the AO, particularly when there was no change of facts in the case of the assessee. The disallowance made by the AO, without any basis cannot be approved. CIT(A) is justified in deleting disallowance - Decided against revenue.

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• 2019 (11) TMI 976
  Disallowance on account of bad debts written off - HELD THAT:- Relevant details in respect of its claim for bad debts written off were furnished by the assessee during the course of assessment proceedings before the AO and only on perusal of the same, it was found by the AO that almost the entire course fees receivable by the assessee from 16 students was written off by the assessee as bad debts. As rightly contended by the learned counsel for the assessee, the said course fees having been offered by the assessee company as its income and the same having been written off in the books of account as irrecoverable, the conditions stipulated in section 3(1)(iii) read with section 36(2) were duly satisfied and the assessee was entitled to claim deduction on account of bad debts written off as held by the Hon ble Supreme Court in the case of TRF Ltd. vs CIT [ 2010 (2) TMI 211 - SUPREME COURT ] . We accordingly deleted the disallowance made by the AO Disallowance on account of miscellaneous expenses written off - HELD THAT:- As rightly contended by the learned DR in this regard, such details are not furnished by the assessee either before the AO and before the Ld. CIT(A) to show the nature of expenses and the basis on which the same are written off in the year under consideration. He has contended that this matter may therefore be sent back to the AO for verification. We find merit in this contention of the learned DR. The impugned order of the Ld. CIT(A) on this issue is accordingly set aside and the matter is restored to the file of the AO for deciding the same afresh after verifying the relevant details to ascertain the exact nature of expenses claimed by the assessee as well as the basis of the writing off the same. Ground No. 2 of the assessee s appeal is treated as allowed for statistical purpose. Disallowance of expenditure under the head membership fees and subscription - revenue or capital expenditure - HELD THAT:- Assessee has submitted that it was annual fees paid by the assessee to Hotel Oberai and not an entrance fees. He however has not brought on record any documentary evidence to show that the amount in question represents annual fees paid to Hotel Oberai and not the entrance fees. Moreover, the business expediency of the expenditure incurred by the assessee is also remained to be unproved. We, therefore, uphold the impugned order of the Ld. CIT(A) confirming the disallowance made by the AO on this issue and dismiss ground No. 3 of the assessee s appeal. Addition u/s 40(a)(ia) - delay in payment of tax deducted at source from the payments made against contract charges, rent and professional charges - HELD THAT:- DR as contended that the claim made on behalf of the assessee of having deposited the relevant TDS amount before the due date of filing of return of income requires verification by the AO in the light of the relevant details furnished by the assessee at page No. 6 of the Paper Book. We find merit in this contention of the learned DR and since the learned counsel for the assessee has not raised any objection in this regard, we restore this issue to the file of the AO for deciding the same afresh after verifying the claim of the assessese of having deposited the entire amount of TDS before the due date of filing of return of income. Ground No. 4 of the assessee s appeal is accordingly treated as allowed.

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• 2019 (11) TMI 975
  Penalty u/s 271(1)(c) - defective notice - non specification of charge - HELD THAT:- From a perusal of this notice, it is crystal clear that the charge for which penalty is proposed to be levied u/s 271(1)(c) whether for concealment of income, or for furnishing of inaccurate particulars of income, is not specific. The law mandates that the authority, who is proposing to impose penalty, shall be certain as to the basis on which the penalty is being levied and the notice must reflect that specific reason, so that the assessee, to whom such notice is given, can prepare himself regarding the defence, which he would like to take to support his case. In SSA s Emerald Meadows [ 2016 (8) TMI 1145 - SC ORDER] looked into the facts before them that Tribunal relying on the decision of Division Bench of Hon ble Karnataka High Court in the case of CIT and Another vs. Manjunath Cotton Ginning Factory [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] allowed the appeal of the assessee holding that notice issued by the Assessing Officer under section 274 read with section 271(1)(c) of the Act was bad in law, as it did not specify under which limb of section 271(1)(c) of the Act, penalty proceedings has been initiated, i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. Appeal of the assessee is allowed.

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• 2019 (11) TMI 974
  Bogus expenditure - HELD THAT:- To accept the claim of the assessee bonafide, the assessee has not furnished any evidence as to which loose diamonds was converted into ornaments. Onus is always on the assessee to prove such claim. If at all to accept the submissions of the assessee as genuine then the onus was again on the assessee to furnish documentary evidences regarding transportation of such loose diamonds from the place of delivery to the business premises of the assessee. In this regard the assessee should have furnished the name and address of the person/employee who transported the loose diamonds, the ledger accounts of expenses incurred towards his/her lodging, boarding and travel from Chennai to the place of delivery and bank. No such details were ever furnished either before the AO or before the CIT(A) or even before the Tribunal. No infirmity in the order passed by the CIT(A) in treating the impugned transaction of purchase of diamonds from M/s. Nazar Impex Pvt. Ltd as only an accommodation entry resorted to by the assessee to reduce its taxable income. Accordingly, the ground raised by the assessee stands dismissed.

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• Customs

• 2019 (11) TMI 973
  Period of limitation of 60 days for storing imported/exported cargo at Port - rent/usage charges for using the open space, covered space, containers, office accommodation, etc. - Validity of circular dated 31st August, 1998 - scales of rates prescribed vide Notification dated 4th November, 1993 - Past Clearance of import cargoes from Kandla Port - contentions raised by the appellant are that after the amendment vide Act 15 of 1997, applicable with effect from 9th January, 1997, in terms of Section 47A read with Sections 48 and 49 of the Port Trusts Act, only the Tariff Authority could have fixed the tariff/rent and the Traffic Manager could not have directly or indirectly fixed the said tariff, which the latter did by way of issuance of the impugned circular dated 31st August, 1998. Whether the impugned circular dated 31st August, 1998 was in conformity with the terms of the notification or had the effect of modifying or amending the notification dated 4th November, 1993? HELD THAT:- The answer to the question would be in favour of the first and second respondents. The notification dated 4th November, 1993 had specified rent/usage charges for open space, covered space, containers, office accommodation, etc., which charges were payable dependent upon the space and the length of time used for storage. Note 1 to the notification stated that a person wanting to use the rental space was required to make an application for storage of goods to the Traffic Manager. It was also specified that any unauthorised occupation of rented space shall make the person liable to pay double the rent as penalty. Note 1 did not specify when and in what circumstances occupation of the rented space would be treated as unauthorised occupation. Note 2 had specified that storage charges would be paid in advance and penal interest @ 18% would be payable on the amount due and not paid from the date when the amount had become due till the date of actual payment. Note 4 had specified that the space cannot be allotted without permission of the Traffic Manager of the Port. Note 5 had stipulated that the space allotted would be vacated on notice from the Traffic Manager or any other officer on his behalf, failing which the occupation would be treated as unauthorised and the person in unauthorised occupation would be liable for penalty rent under Note 1. It is clear from the Notes that the notification had empowered and left it to the Traffic Manager to deal with the question of unauthorised occupation, including the time-limits or period during which the goods could be authorised to be stored. The notification had not specified when and in what circumstances use of the storage area would be treated as unauthorised as this was left to the wisdom of the Traffic Manager who was the person in-charge and responsible for efficient and proper functioning of the port operations and mandated to take the need based decisions on the basis of prevalent facts and circumstances. This latitude was necessary as the schedule of rates fixed vide notification dated 4th November, 1993 were applicable till a new Notification or amendment was made by following the procedure prescribed vide Section 52 of the Port Trusts Act, which would require approval from the Central Government. Prescribing different slabs or rates for storage of cargo for different periods was meant to fix rates for the rent payable and not to deny or curtail the power of the Traffic Manager to authorise and permit use of sheds and space for storage of cargo/containers. As per the Notes, the Traffic Manager, on an application by the owners or their agents was to grant permission for authorised storage. Storage without the permission or contrary to the permission was unauthorised. Further, the space allotted was to be vacated on notice from the Traffic Manager. On failure to comply, and vacate the space, the use was treated as unauthorised occupation and the person in default was liable to pay double the rent for unauthorised use. We would reject the contention that the Traffic Manager was not competent to fix time-limit for storage. The contention is unacceptable and would be contrary to the Notes and the powers vested and given under the Regulations to the Traffic Manager. It is not that levy of penalty for unauthorised occupation of the space for period beyond sixty days of storage as fixed vide the impugned circular would be illegal and invalid. In fact, it would be in conformity and in consonance with the notification and in particular Notes 1, 4 and 5 thereof. The circular had brought about uniformity, clarity and transparency in the use of storage facilities at the Kandla Port. The circular though issued on 31st August, 1998 was made effective and applicable from 1st October, 1998. Therefore, the parties were given time to take steps to avoid the usage of the storage facility from being declared as unauthorised. The impugned circular specifically recorded that there was congestion at the Port which had necessitated issuance of the circular stipulating that storage of goods beyond the period of sixty days would be treated as unauthorised occupation. The said circular ensured uniformity and equal treatment without discretion as upper time-limit of sixty days was prescribed for storage of goods failing which penalty was payable. Period of sixty days is sufficient and long and cannot be termed as unreasonable and violating Article 14 of the Constitution. Appeal dismissed - decided against appellant.

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• 2019 (11) TMI 972
  Imposition of penalty - Smuggling - Gold - appellant is accused of procuring illegally imported gold, handling the same and causing transportation thereof to the ultimate recipient Kawale in Mumbai - HELD THAT:- We regret to note that a high official like the Commissioner gives expression to his emotion in the order, in stead of making proper adjudication in accordance with law. In order to hold the appellant guilty, his involvement in the smuggling chain had to be stated, based on evidence or on presumption from the absence of it and, thereafter, on a proper application of the law the amount of penalty should have been considered. Regrettably, the Tribunal also fell into the same error endorsing the above finding of the Commissioner reducing the penalty. On what basis the penalty was being reduced was also required to be indicated with reasons. We find the absence of it. The entire matter remanded back to the Commissioner (Prev.) West Bengal, Kolkata to decide the case afresh in accordance with law with reasons upon giving hearing to the interested parties within six months of communication of this order - appeal allowed by way of remand.

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• 2019 (11) TMI 971
  Grant of Bail - offence punishable under Section 135 of the Customs Act, 1962 - alleged smuggling of foreign marked gold bars to Mumbai from different cities of India, by domestic airlines - HELD THAT:- The statements of the applicants revealed that the applicants were aware of the contents in the parcel. Learned Counsel for the applicants vehemently denies having any knowledge, as there is no requirement to inspect the said parcels. Prima facie, it appears that the parcels were to be delivered to some local persons in Mumbai, through the applicants courier agencies. Whether or not the applicants had knowledge of the contents, is a matter which will be decided by the trial Court. Further detention of the applicants is not warranted - the applications are allowed and the applicants are enlarged on bail on specified terms conditions.

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• 2019 (11) TMI 970
  Release of confiscated goods - Gold bars - silver ingots - acquittal in criminal proceedings - petitioner herein had predominantly raised a ground before this Court stating that they were acquitted of the criminal charges arising out of the issue pertaining to the confiscation proceedings and in view of the acquittal, they would be entitled for release of the confiscated goods - HELD THAT:- A mere order of acquittal in the criminal proceedings would not entitle the petitioner to seek for release of the confiscated goods, particularly in the light of the fact that the confiscation proceedings have become final. When the right of the petitioner to seek for release of the confiscated goods has finally been adjudicated by the Hon ble Supreme Court, a mere reference to the acquittal orders, in favour of the petitioner, from the criminal proceedings would never him give the right to seek for release of the confiscated items. There are no merits in the claim made by the petitioner in the present writ petition - petition dismissed.

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• 2019 (11) TMI 969
  Customs Broker License - Eligibility to appear for written examination prescribed for issuance of Customs Broker License - it is alleged that the petitioner had completed his Master s Degree from a foreign University, but had not submitted any proof to the effect that Degree awarded is equivalent to M.B.A. Degree awarded by Universities recognised by UGC/AICTE - HELD THAT:- A plain reading of the conditions prescribed in CBLR, 2013 reveals that the aspiring applicants should be a graduate from a recognised University and should possess one of the qualifications prescribed under Regulation 5(f)(ii). Effectively, if the applicant possesses a professional degree such as Master s degree, along with Graduation from a recognised University, he would be qualified to participate in the written examination subject to other qualifications. The impugned order seems to refer to a disqualification by quoting a Degree obtained by the petitioner from a foreign university. Apparently, the Master s Degree in Science obtained by the petitioner from Indian Institute of Technolgoy, Madras in the year 1977 has been lost sight of by the respondents, which can also be considered as a requisite qualification as prescribed under the Regulations - Apparently, the impugned order is contrary to the CBLR Regulations. In view of the fact that the petitioner has possessed both a Bachelor s Degree as well as Master s Degree in Science from the Indian Institute of Technology, Madras, he is deemed to have qualified himself to take up the written examination for Customs Broker License - Petition allowed.

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• 2019 (11) TMI 968
  Imposition of penalty - Seizure of goods - gold/gold jewellery - petitioner submits that the writ petitioner would be satisfied if the aforesaid amount realized by the Customs Department is refunded after deducting Rs. 20,00,000/- penalty that has been imposed on the writ petitioner - HELD THAT:- There is no disputation or disagreement before this Court as between both the Learned Counsel that the instant case stands covered by the earlier order and there is no disagreement that earlier order made by a Hon ble single Judge has been given a legal quietus. It has not only been given legal quietus, but has been acted upon and refund after deducting penalty has also been given to the writ petitioner therein pursuant to the earlier order. Fourth respondent is directed to pay to the writ petitioner money realized by selling the consignment seized from the writ petitioner after deducting the penalty of Rs. 20,00,000/- imposed - petition disposed off.

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• 2019 (11) TMI 967
  Advance License Scheme - forged documents submitted to the licensing authority against ex-bond bills of entry - HELD THAT:- The marking citizen fashion that was not incorporated in any of the documents of M/s Kirmi Exports does not indicate that the goods were not those of M/s Kirmi Exports and more particularly in the light of the report of the Directorate of Revenue Intelligence of non-conformity of seized goods with the three bills of entries referred to in the show cause notice. The alleged failure of the appellant to produce the customs attested copies of the packing list is not a significant pointer as the goods claimed to have been imported in 2006 were subject to verification after a gap of eight years. The discrepancies pointed out in verification report do not suffice to conclude that the goods are in conformity with the descriptions in the three bills of entry cited in the show cause notice. The conclusion of manipulation, or deliberate attempt to conceal the origin of the seized goods, is not established by the facts on record - appeal allowed - decided in favor of appellant.

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• 2019 (11) TMI 966
  Imposition of penalty on CHA u/s 112(a) of the Customs Act, 1962 - short paid duty paid along with interest and penalty on being pointed out - HELD THAT:- Once the original importer after being pointed out by the audit have paid the differential duty along with interest, there was no necessity to issue the show-cause notice under Section 28 of the Customs Act. Also, Department has not been able to bring any material on record to show that there is a aiding and abetting by the appellant to the importer - Further, in the impugned order no penalty has been imposed on the importer and penalty has only been imposed on the CHA under Section 112(a) of the Customs Act for abetting or aiding which is not established in the present case and therefore there is no justification for imposing the penalty on the CHA. Appeal allowed - decided in favor of appellant.

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• 2019 (11) TMI 956
  Process amounting to manufacture or not - Validity of N/N. 25/99-Cus., dated 28-2-1999 - import of parts of picture tubes for use in manufacture of Colour Picture Tubes at concessional rate of duty - Appellant received defective CPTs in addition to the material for manufacturing CPTs - It is the case of the appellant that since returned CPTs have been dismantled completely and converted into new CPTs, therefore, such activity amounts to manufacture - applicability of Rule 16 of the Central Excise Rules, 2002 - HELD THAT:- As per rule 16 repair activity undertaken by the appellant did not amount to manufacture, and therefore, the goods used for repair of CPTs were not eligible for concessional rate of duty under notification No. 25/99-Cus., dated 28-2-1999 as that exemption is available only for such goods which were used for the manufacture of finished goods. In fact, as per the appellant s own case in Hotline CPT Ltd. V. Commissioner of Central Excise, Indore [ 2004 (5) TMI 166 - CESTAT, NEW DELHI ], CESTAT in paras 7 and 8 has held that the activity of repair of CPTs did not amount to manufacture. We have also perused the letter dated 23-5-2001 and as has been contended by learned counsel for the respondent, it nowhere gives information to the revenue as to using of goods imported on concessional rate of duty for such repair work. In fact, such concessional rate of duty was applicable on imported parts only for the purpose of manufacture of excisable goods - Repair activity though may be given any shape or form as mentioned by learned counsel for the appellant including complete dismantling, will not amount to manufacture. The substantial question of law so framed is decided against the appellant and there is no apparent error in the impugned orders - appeal dismissed.

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• Corporate Laws

• 2019 (11) TMI 965
  Jurisdiction - power of review of the CLB - inspection of the original documents referred to and relied upon by the appellants in their affidavit in reply - Whether power of review not specifically conferred upon the Company Law Board by the Rules/Regulations statutorily framed, could still be exercised by the Board by restoring to the inherent powers conferred upon it under Regulations 44 of the Company Law Board Regulations, 1991? HELD THAT:- One cannot lose sight of the fact that during the period from 10.08.2010, when the inspection of the document was allowed to 18.10.2011, when the last opportunity of two weeks was granted to file rejoinder, forfeiting the right if order is not complied with, and for that matter even on 08.02.2012, no allegation that inspection of all the documents was not provided or certified copy of the documents not supplied was made by the respondent nor there were any allegations that appellants had made false or misleading statements or used forged and fabricated documents. The reasoning and the observations made by the Bench, which led the Board to exercise its inherent powers to recall/review its earlier orders are against the record and not sustainable. In Patel Narshi Thakershi and others Vs. Shri Pradyumansinghji Arjunsinghji [1970 (3) TMI 163 - SUPREME COURT] , the Supreme Court has held that it is well settled that power to review is not an inherent power. It must be conferred by law either specifically or by necessary implications. Thus, the power of review was in fact contained in the Company Law Board Regulations, 1975 as Rule 45 and was incorporated in the Company Law Board Regulations, 1991, as Regulation 27. However, in 1992, this regulation was specifically omitted. No provision has been brought to my notice from which it could be gathered that the Board had power to review its own order. If the power of review has been specifically omitted. It is not possible to import the provision of review by taking shelter under Regulation 44 - The inherent powers are inherent by virtue of the Court/Tribunal with the duty to render justice. The inherent jurisdiction can be restored to only when there is no other remedy available to the party. The question of law is decided in favour of the appellants - Appeal allowed - decided in favor of appellant.

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• Insolvency & Bankruptcy

• 2019 (11) TMI 964
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment - existence of debt and dispute or not - HELD THAT:- The Corporate Debtor has acknowledged the debts through Confirmation of Accounts and also it is seen that the Corporate Debtor has admitted in its Balance Sheet dated 31.03.2015, that Rs. 112,93,542/- is due from the Applicant. The corporate debtor has not produced evidence that the Corporate Debtor has objected/disputed the debit notes or its contents prior to the receipt of section 8 notice. The defence of raising a dispute is lame and without any supporting evidence and can be categorised as moonshine dispute. The present application is complete and the Applicant is entitled to claim its dues, establishing the default in payment of the operational debt beyond reasonable doubt - application admitted - moratorium declared.

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• 2019 (11) TMI 963
  Maintainability of application - initiation of CIRP - Corporate Debtor defaulted in making repayment - existence of dispute or not - Section 7 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- In the present case applicant had sanctioned and disbursed the loan which are recoverable with applicable interest by entering in to loan cum Hypothecation Agreements with the respondent borrower. The corporate debtor had undertaken the liability to repay the loan along with the agreed interest. The loan/financial facility was clearly disbursed against the consideration for time value of money with a clear commercial effect of borrowing. Moreover, the debt claimed in the present application includes both the component of outstanding principal and interest. The matter not only the present claim comes within the purview of Financial Debt but also the applicant can clearly be termed as Financial Creditor of the respondent corporate debtor so as to prefer the present application under Section 7 of the Code. As per the provisions of Section 7 of the Code, no prior notice under Section 8 of the Code is required in respect of a financial debt. An application under Section 7 of the Code is acceptable so long as the debt is proved to be due and there has been occurrence of existence of default. What is material is that the default is at least 1 lakh. In view of Section 4 of the Code, the moment default is of Rupees one lakh or more, the application to trigger Corporate Insolvency Resolution Process under the Code is maintainable. In the present case the claimed financial debt in the light of the award exceeds Rs. 564 Lacs and the respondent has defaulted in making payment of the debt. The present application is complete in all respect and the applicant financial creditor is entitled to claim its outstanding financial debt from the corporate debtor and that there has been default in payment of the financial debt - in terms of Section 7(5)(a) of the Code, the present application is admitted.

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• PMLA

• 2019 (11) TMI 962
  Money Laundering - Provisional Attachment of Bank accounts of petitioner - proceeds of crime - attachment order challenged on the ground of lack of jurisdiction, illegal and vitiated by the vice of mala fides and perversity - petitioner contended that the ED authorities have no power to freeze the bank accounts, as they have got power only to order provisional attachment of the alleged proceeds of crime under Section 5 of PMLA, upon fulfilment of the mandatory conditions stipulated therein - continuing offence or not - retrospective penalization - Maintainability of petition - alternative remedy of appeal - HELD THAT:- Admittedly, there is a complaint under Section 5(5) of the PMLA to be adjudicated under Section 8 of the said Act, based on the impugned PAO issued under Section 5(1) of the Act. The requirement for issuing the same is the presence of reason to believe at every stage, which should be recorded in writing. The reason to believe to be recorded in writing should be in consonance with the second proviso to Section 5(1) of the PMLA. Secondly, the notice under Section 8(1) of the PMLA also should be communicated recording the reason to believe . Only when there is a violation of the legal requirements, the PAO would be rendered illegal. It is to be stated that the PAO is valid for a period of 180 days and within a period of 30 days of passing such order, the concerned authority has to forward a complaint under Section 5(5) of the PMLA to the Adjudicating Authority, which has been done in this case on 26-10-2018. The Adjudicating Authority, after issuing notice, hearing the parties and considering their reply and other materials, has to pass a reasoned order as to the nature of the property deciding whether the property is involved in money laundering or not. Though the expression continuing offence is not defined in the PMLA, whether a particular offence is a continuing one or not depends upon the nature of offence and the purpose intended to be achieved. The concept of continuing offence is keeping the offence alive day by day without wiping the original guilt. Thus, there is an ingredient of continuance of the offence in continuing offence. Therefore, the contention of the petitioner that the second proviso to Section 5(1) is only prospective and not retrospective is without substance or force. The second proviso is applicable to property acquired even prior to the coming into force of this provision. Hence, retrospective penalization is permissible. Maintainability of petition - alternative remedy of appeal - HELD THAT:- The petitioner ought to have faced the Section 8 proceedings and other appellate alternative remedies. Without exhausting those remedies, the petitioner cannot maintain this petition before this Court under Article 226 of the Constitution. Petition dismissed.

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• 2019 (11) TMI 961
  Money Laundering - proceeds of crime - attachment of properties - Section 5 of the Prevention of Money Laundering Act, 2002 - HELD THAT:- Since it is ex facie apparent that there is no material indicated either in the impugned provisional attachment order or in the impugned complaint which would justify the same in respect of the petitioners or their assets, the aforesaid order and the complaint are liable to be set aside qua the petitioners. The impugned order and the impugned complaint in so far as they relate to the petitioners, are set aside. The properties of the petitioners, as mentioned in the impugned order and the impugned complaint, are also excluded from the said order/complaint - Appeal allowed.

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• Service Tax

• 2019 (11) TMI 960
  Levy of service tax - works contract as a turnkey project - SCN imposes liability upon his client to pay service tax based on prior entry in section 65 (105) (zzd) - HELD THAT:- List under heading For Orders on 22nd November, 2019.

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• 2019 (11) TMI 959
  Service of SCN - no service of the original order of the Commissioner (Appeals) upon the petitioner - Recovery of service tax with penalty - coercive action for recovery - case of the petitioner is that coercive recovery has been initiated even though he had not received the appellate order passed by the Commissioner of Customs and Central Excise (Appeals) - HELD THAT:- Admittedly, been no service of the original order of the Commissioner (Appeals) upon the petitioner - thus, no recovery action may be initiated, in the aforesaid circumstances and the respondents are directed to keep in abeyance such recovery for a period of eight weeks from the date of this order. Petition disposed off.

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• 2019 (11) TMI 958
  Refund of unutilised CENVAT credit - input services - Works Contract Services - Business Auxiliary Service - HELD THAT:- It appears that appellant is trying to remould its grounds of appeal at the argument stage to give it proper shape that would confirm to the provisions of law since primarily the rejection of availment of inputs on those services were excluded from the definition of credit on the ground that those were available in Rule 2(l) of CENVAT Credit Rules, 2004 and therefore are not eligible credits. Appellant also failed to substantiate that those services were not primarily for personal use or consumption of employees or not covered within the exclusion clause. Therefore, no irregularity or illegality can be attributed to the order passed by the learned Commissioner (Appeals). Appeal dismissed.

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• 2019 (11) TMI 957
  Nature of activity - manufacture of service? - activity of labeling or relabeling of containers and repackaging from the bulk packs to retail packs or adoption of any other treatment to render the products marketable - exclusion clause of Section 65 (29) - exemption from payment of service tax under Business Auxiliary Service . HELD THAT:- As is evident from the notes to Chapter 4 of Central Excise Tariff Act, 1985 even adoption of any other treatment by itself or with packing/repacking, labeling/relabeling to make the product marketable amounts to manufacture. The definition under Chapter 4 of Central Excise Tariff Act, 1985 of manufacture is much wider and leaves no doubt in our mind that pasteurization, packing from bulk pack to branded consumer packs undertaken by the respondent clearly amounts to manufacture as per Note 6 of Chapter 4 of the Central Excise Tariff Act, 1985 - they get covered under the scope of definition manufacture as provided under Section 2 (f) of Central Excise Act, 1944. The provisions of law are absolutely unambiguous on this aspect and conclude that since the activity is of manufacture - the levy of service tax is excluded from the scope of levy of service tax under business auxiliary service - thus, the activity undertaken by the appellant is not leviable to service tax under business auxiliary service. Appeal dismissed - decided against Revenue.

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• 2019 (11) TMI 952
  Proportionate reversal of CENVAT Credit - inputs used in manufacture of exempted products as well as taxable goods - reversal of inputs as such - Rule 6(3) of CCR 2004 - whether the appellant is required to pay amount under Rule 6(3) in respect of exempted service viz: trading undertaken by them or they could reverse an amount under Rule 3(5) when the inputs are removed as such? - levy of interest and penalties. HELD THAT:- It is found from the rules that both options are open. Rule 3(5) does not make a distinction based on the purpose for which the inputs are removed as such; whether the inputs are removed as such for sale or otherwise makes no difference to the applicability of Rule 3(5) of CCR 2004. It is true that trading is an exempted service and Rule 6(3) covers exempted services. However, having reversed an amount under Rule 3(5) of CCR 2004, the appellant will not be covered by Rule 6(3) because the credit attributable to the inputs removed as such, has already been reversed - the demand on this account needs to be set aside. Demand under Rule 6(3) of CCR 2004 - the inputs which were used for manufacture of the exempted products - Whether the appellant is liable to pay an amount under Rule 6(3)(1) when they have reversed proportionate amount of CENVAT Credit on the inputs used in manufacture of exempted products? - HELD THAT:- Rule 6(2) provides the assessee an option to maintain separate accounts for receipt consumption, inventory of inputs used in relation to manufacture of exempted goods and dutiable goods and take CENVAT Credit only on inputs used in manufacture of dutiable goods. In the case of ASTRIX LABORATORIES LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS SERVICE TAX, HYDERABAD-I [ 2019 (5) TMI 1344 - CESTAT HYDERABAD ] and MATRIX LABORATORIES LTD VERSUS CCCE ST, HYDERABAD - I [ 2018 (8) TMI 1440 - CESTAT HYDERABAD ], the appellant had taken CENVAT Credit only on the inputs which have gone into manufacture of dutiable goods. A plain reading of Rule 6(2) does not require separate stocks of inputs to be maintained. It also does not require that the inputs should be bought under different invoices. What is required is maintenance of separate accounts. The appellant in this case has, by reversing the proportionate amount of credit as per the standard formula, has, in effect, maintained such accounts. The matter remanded to the original authority for the limited purpose of verification of the amounts reversed - appeal allowed by way of remand.

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• Central Excise

• 2019 (11) TMI 955
  Refund claim - unjust enrichment - denial of refund claim on the ground that the appellant failed to opt order of provisional assessment of goods - HELD THAT:- While the procedure of provisional assessment has been provided for the convenience of the assessee, it is not a mandatory requirement - In the instant case the claim has been filed within the limitation, and therefore, the refund cannot be denied on that count. The appeal of M/s ONGC on this count is allowed. Appeal dismissed - decided against Revenue.

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• 2019 (11) TMI 954
  Classification of goods - manufacture of various forged and cast items which are subsequent used by the buyers for manufacture of machinery parts - whether the items manufactured by the appellant falling under chapter heading 7326 or under chapter 84? - CBEC Circular No. 139/7/88-CX.4, dated 28-07-1989. HELD THAT:- The appellants are also doing a drilling operation. The appellants have explained that the drilling is done to create a hole on the item for the purpose of providing a hold for other operations and for the purpose of carrying these items from one place to another. Apparently, such drilling operations has no impact on the essential character of the item manufactured by the appellant and thus, the classification cannot change solely on the ground of drilling operation. There are no merit in the arguments of Revenue that the classification needs to be changed from Chapter 73 to chapter 84 - appeal allowed - decided in favor of appellant.

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• 2019 (11) TMI 953
  Valuation - job-work - benefit of N/N. 214/86-CE dated 25.03.1986 denied to the appellant on the ground that principal manufacturers have not complied with the conditions stipulated in the said notification inasmuch as the principal manufacturers have not filed required undertaking - HELD THAT:- There is no dispute that the appellant have manufactured Formaldehyde from Methanol supplied by Principal Manufacturers on job work basis. The job worked goods were returned back to the Principal Manufacturer - if it is found that job worked goods were used in the manufacture of final products by the Principal Manufacturer and the said final product is cleared on payment of duty, the appellant is clearly entitled for exemption N/N. 214/86-CE. As regards the undertaking required to be submitted, we find that in the said under taking also the Principal Manufacturer has to undertake that job worked goods will be used in the manufacture of final product which shall be cleared on payment of duty for the home consumption and/ or for the purpose of export. Therefore, on verification, if it is established that final products wherein the job worked goods i.e. Formaldehyde was used, has been cleared on payment of duty in the home consumption and/ or cleared for export without payment of duty under Bond then, appellant s manufacture on job work basis is clearly covered by exemption N/N. 214/86-CE. Since the Adjudicating Authority has not verified the facts regarding nature of clearances of final product by the Principal Manufacturers that, for the home consumption on payment of duty and/ or export under Bond, the matter needs to be remanded for the limited purpose of this verification and all other issues raised by the appellant, are kept open - appeal allowed by way of remand.

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• 2019 (11) TMI 951
  SSI Exemption - cross-utilisation of brand names - liability to duty was founded on denial of benefit of the exemption notification to both the manufacturer for cross-utilisation of brand names belonging to each other - HELD THAT:- It is seen from the orders of the original, as well as the first appellate, authority that even despite acknowledgement of the timelines of dutiability, which impacted the quantity, and valuation under section 4A of Central Excise Act, 1944 and specific submission that the imported goods were sold as such, there is a marked absence of any suggestion to segregate the value for determination of liability - It is, therefore, not ascertainable from the record if the imported goods had been segregated, in terms of the claim of the appellants herein that 90% of the goods were branded and that only 10% remained unbranded or of the denial of exemption notification extended to the entire clearance instead of being restricted to goods on which ineligible brand names were affixed. The impugned order lacks the base essentials that signify disposal of grounds in appeal - the first appellate authority are directed to hear the matter afresh and pass appropriate orders - appeal allowed by way of remand.

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• 2019 (11) TMI 950
  Refund of accumulated unutilised CENVAT credit - inputs and input services used for goods manufacture and supplied to 100% EOU - deemed exports - Rule 5 of CENVAT credit Rules, 2004 - HELD THAT:- The Commissioner (Appeals) had observed that the Assistant Commissioner i.e. refund sanctioning Authority had wrongly interpreted Rule 5 of the CENVAT Credit Rules, 2004 by stating that refund under this rule is permissible only if the goods are exported out of India and in case finished goods are cleared to 100% EOU against CT-3 which is considered as deemed export, refund is not admissible and such observation by wrong interpretation Notification No. 5/2006-CE (NT) dated 14.03.2006 as superseded by Notification No. 27/2012-CE (NT) dated 18.06.2012 is erroneous, since the spirit behind Rule 5 of the CENVAT Credit Rules, 2004 is to allow refund of CENVAT credit against deemed export also. No irregularity and illegality can be attributed to such an observation made by the learned Commissioner (Appeals) so as to invoke appellate jurisdiction of this Tribunal. Further this Tribunal in respondent s own case COMMISSIONER OF CENTRAL EXCISE CUSTOMS, NASIK VERSUS KIRAN ELASTOMERS PVT. LTD. AND (VICE-VERSA) [ [ 2017 (12) TMI 269 - CESTAT MUMBAI ] for the period prior to period under dispute had allowed refund to the respondent by holding that there was no significant difference as regards term export for the purpose of Rule 5 of CENVAT Credit Rules, 2004, during pre and post amendment introduced to Rule 5 in 2012. Appeal dismissed.

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• 2019 (11) TMI 949
  Clearances to DTA - Benefit of N/N. 23/2003-C.E. dated 31.03.2003 - Machined Bearing Housing Assembly - Turbine Housing Assembly - Department was of the view that the Turbine Housing Assembly is not eligible for exemption under the Notification since the product cleared under DTA is not similar to the goods which are exported - HELD THAT:- The appellant has exported Machined Bearing Housing Assembly whereas the goods cleared in DTA seeking benefit of Notification No. 23/2003-C.E. is Turbine Housing Assembly. It is a fact that both of these are components of turbo-charger. In the appellant s own case M/S. ABI TURNAMATICS VERSUS COMMISSIONER OF GST CENTRAL EXCISE [ 2019 (2) TMI 1296 - CESTAT CHENNAI] , the Tribunal after analyzing the said issue, has held in favour of the assesse. The denial of benefit of the Notification and the demand of duty cannot sustain - Appeal allowed - decided in favor of appellant.

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• 2019 (11) TMI 948
  Classification of goods - food processing machines and its parts and automobile components for JCB, elevator and conveyors etc. - classifiable under heading No. 8437 as machinery used in Milling Industry or are classifiable under heading No. 8428, as other lifting, handling, loading or unloading machines? HELD THAT:- Similar case came up before this Tribunal in the case of ALPSCO GRAINTECH PVT LTD, NIRDOSH BALI MANAGING DIRECTOR OF MS ALPSCO GRAINTECH PVT LTD VERSUS C.C.E. S.T. -CHANDIGARH-II [ 2018 (12) TMI 478 - CESTAT CHANDIGARH ] respectively, this Tribunal held that the merit classification of the said goods is under Chapter Heading No. 8437 of CETA 1985 and this order of this Tribunal have been affirmed by the Hon ble Apex Court in COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX CHANDIGARH II VERSUS ALPSCO GRAINTECH PVT LTD ETC. [ 2019 (7) TMI 1177 - SC ORDER ]. Thus, the conveyors and elevators etc. specifically manufactured by the appellant for food processing machinery alongwith other machinery has the merit classification under Chapter 8437 of CETA, 1985 - appeal allowed - decided in favor of appellant.

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• 2019 (11) TMI 947
  CENVAT credit - input services - commercial or industrial construction service - works contract service - scope of exclusion clause in Rule 2(l) of Cenvat Credit Rules, 2004 - the exclusion clause was inserted in the definition of input service under Rule 2(l) of Cenvat Credit Rules, 2004 w.e.f. 01.04.2011 - period involved in the present case is from 2007 to 2010. HELD THAT:- The said clause was inserted w.e.f. 01.04.2011 - Further, the Hon ble Punjab Haryana High Court in the case of COMMISSIONER CENTRAL EXCISE COMMISSIONERATE, DELHI-III VERSUS M/S BELLSONICA AUTO COMPONENTS INDIA P. LTD. [ 2015 (7) TMI 930 - PUNJAB HARYANA HIGH COURT] has held in para 11 of their ruling that the said amendment was not retrospective. Credit is allowed to appellant - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2019 (11) TMI 946
  Actual entitlement of interest - Rate of interest - HELD THAT:- The Petitioner s claim for interest at the rate of 12% per annum certainly cannot be accepted - So also, the Petitioner cannot insist for interest at the rate of 8% per annum, which is otherwise statutory prescribed rate of interest in terms of the said Act. Upon cumulative consideration of all the aforesaid circumstances, we feel that the interest at the rate of 4% per annum, will be appropriate in the facts and circumstances of the present case. The Respondents is directed to pay to the Petitioner the interest amount of Rs. 54,62,665/-, as was payable to the Petitioner as on 14th December 2017 together with interest thereon at the rate of 4% per annum to be computed from 14th December, 2017 till the date of actual payment - petition disposed off.

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• 2019 (11) TMI 945
  Estimation of turnover of production of bricks - Reduction in firing period - the assessee had disclosed the firing period of 53 days from 12.01.2000 to 05.03.2000 - HELD THAT:- Though there may be some force in the submission of learned counsel for the assessee that there is no direct material to reach a conclusion that the assessee had run the brick-kiln for 65 days and not 53 days (as disclosed by him), however, that issue is a pure question of fact which is to be decided in the facts and evidence obtaining in each case. This Court is not required to interfere with the findings of fact, unless shown to be perverse, and in the second, in the facts of the present case, it is seen that the assessee had not maintained any books of accounts. Once there were no books, the best judgment assessment become a necessary consequence - In the matter of estimation, though the Assessing Authority had made a vast addition by increasing the firing period from 53 days to 90 days, the first appellate authority has taken a pragmatic view and reduced the same to 65 days. In doing so, the first appellate authority appears to have relied on the facts discovered during the survey dated 21.01.2000 with respect to preparation of raw bricks etc. Revision dismissed.

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