TMI Tax Updates - e-Newsletter
December 13, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Securities / SEBI
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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GST:
Seizure of goods alongwith vehicle - On the relevant date i.e. 17.12.2017 there was no requirement of carrying T.D.F. Form-1 in the case of an inter-State supply of goods. In fact on the relevant date there was no prescription of the documents to be carried in this regard under Rule 138 of the C.G.S.T. Act 2017, accordingly, the seizure and penalty imposed upon the petitioners based on the notification dated 21.7.2017 issued under Rule 138 of the U.P.G.S.T. Act 2017, which was not applicable, is clearly illegal.
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GST:
Profiteering - supply of the product, namely, “Washing Machine (Elena Aqua VX)” - it is established that the Respondent has acted in contravention of the provisions of Section 171 of the CGST Act, 2017 and has not passed on the benefit of reduction in the rate of tax to his recipients by commensurate reduction in the prices
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GST:
Extension of time limit for filing of TRAN-I statutory form - carry forward of unutilized Credit of duty - The request of the petitioners to extend the time prescribed under Rule 117 cannot be denied
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Income Tax:
Rectification u/s 154 - AO rectified the original assessment order deleting the entire Transfer Pricing adjustment - as per the binding section i.e. Section 144C(10) of the Act, the mandatory provision was not followed by the Assessing Officer, thereby it is binding on the Assessing Officer to follow the directions of the DRP. Therefore, the assessment becomes null and void.
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Income Tax:
Rectification of mistake u/s 154 - scope of limited scrutiny under CASS - the revenue has also not produced anything to show that the AO has obtained the necessary approval from the Competent Authority for conversion of the limited scrutiny to comprehensive scrutiny - rectification order quashed.
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Income Tax:
Expenditure incurred for charitable purpose u/s. 11 - asset created on the funding of the appellant is used for the courses of the university and not by the appellant. - the expenditure has been incurred as per the object of the society and in terms of a statutory provision of another trust having similar object - Benefit of exemption allowed.
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Income Tax:
Income accrued in India - turstee of a trust - representative assessee - The beneficiaries are thus clearly taxable entities in Netherlands. What essentially follows is like this. If the assessee is to be taxed in its own right, which is not even the case of the revenue, there cannot be any dispute that the assessee is a taxable entity in the Netherlands, and, for this reason, the assessee is liable for treaty protection
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Income Tax:
Disallowance of forfeited amount as trade loss - assessee has entered into an agreement and the impugned property was being purchased as stock-in-trade and subsequently expecting loss on selling the property in future, the deal was cancelled - since the transaction was entered in the normal course of business, claim of business loss allowed.
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Income Tax:
Disallowance of travelling expenses - assessee was in the business of real estate and could not substantiate before the lower authorities with any relevant evidences that foreign travel expenses were incurred for the purpose of business of the assessee - additions confirmed.
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Customs:
Reporting of cases warranting action under PMLA - ED has devised new reporting formats, namely, ML-I & ML-II
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Customs:
Revocation of Custom Broker (CB) License - Mis-Declaration of goods - revocation of licence would be too harsh a punishment - The forfeiture of security deposit for the same would have been adequate taking into account the fact that goods sought to be cleared, were “blank guns” which could have been modified into lethal weapons jeopardizing the National Security and the security of individuals.
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SEBI:
Default by company to refund the amount collected under the Collective Investment Schemes ("CIS") - officer in default - vicarious liability of a peson who was a director only for 50 days - he was not instrumental in the launching/ sponsoring or carrying on the scheme. - Penalty order quashed.
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Service Tax:
Refund of service tax - construction of residential complex - Seeking benefit of decision of HC passed in 2016 - Delay and laches in filing present writ petition has not been explained. Consequently benefit of judgment rendered by Delhi High Court cannot be extended to petitioners of this case.
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Central Excise:
Provisional assessment - Order was not passed stated that it was a provisional assessment order - The authorities have made endorsements on the bonds and on the monthly RT-12 returns filed by the assessee, indicating that it was a case of provisional assessment - The appellant cannot now be permitted to urge that it had not submitted to the process of provisional assessment as such for lack of a specific order of the concerned authority in that behalf.
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Central Excise:
Rebate claim - description of goods in ARE-1 and excise invoices do not tally with the description in the shipping bills - Whenever the assessee claims rebate, the primary and foremost consideration is the identity of goods and the onus to prove the same lies on the claimant.
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VAT:
Amendment to KVAT post GST - There could not have been any further legislative exercise by the State legislature in relation to the repealed KVAT Act - The amendments to Section 25 of the KVAT Act, through the Kerala Finance Act, 2018 are declared illegal and unconstitutional in as much as they were beyond the legislative competence of the State Legislature
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VAT:
Amendment in registration certificate - Proprietorship firm, without dissolution entered into partnership firm - whether partnership firm is required to apply for a fresh registration certificate or amendment is permissible as per section 75 of the VAT Act? - Held No - change of his business includes the change in the ownership of the business.
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2019 (12) TMI 512
Request for Extension of period for filing/revising of TRAN-1 rejected - Rule 117 read with Section 140 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- The issue involved herein is no more res integra in view of the decision in the case of M/S ASIAD PAINTS LIMITED, VERTIV ENERGY PVT. LTD., M/S. WEIWO COMMUNICATION PVT. LTD. AND ORS. VERSUS UNION OF INDIA, GOODS AND SERVICE TAX NETWORK, THE COMMISSIONER OF COMMERCIAL TAXES (GST) , THE ASSISTANT COMMISSIONER OF COMMERCIAL TAXES [ 2019 (12) TMI 464 - KARNATAKA HIGH COURT] whereby this Court has extended the period to file/revise the TRAN-1 by the registered persons by31.12.2019 - Hence, the petitioner is entitled to avail the extended period for filing/revising of TRAN-1 - petition disposed off.
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2019 (12) TMI 511
Seizure of goods alongwith vehicle - arecanut - inter-state transfer - driver was found in possession of bilty etc. pertaining to the goods, but not the e-way bill - Rule 138 of the C.G.S.T. Rules 2017 - authority of State Government to issue e-way bill - Rule 138 of the C.G.S.T. Rules 2017. HELD THAT:- Reading of the rule 138, it refers to an E-way bill System which is to be developed by the G.S.T. Council and it provides for an interim arrangement by the Government till an E-way Bill System is so developed and approved. The words Government used therein is defined in section 2(53) of C.G.S.T. Act 2017 to mean the Central Government - It is not in dispute that on the date of interception of the vehicle in question E-way Bill System had not been developed, therefore, the documents which were required to be carried during movement of any consignment of goods were those which may have been notified by the Central Government under Rule 138 of the C.G.S.T. Rules 2017, as, by virtue of section 20(xv) thereof, it is this rule which is applicable to matters pertaining to I.G.S.T. Act 2017. Neither the State of U.P. nor the Government of India has brought on record any such notification which may have been issued prescribing the relevant documents to be carried in the course of such movement as is referred in section 68 of the C.G.S.T. Act 2017 and Rule 138 of the C.G.S.T. Rules 2017. E-way bill system has been prescribed only recently by a notification of the Government of India dated 7th March 2018 whereby Rule 138 of the C.G.S.T. Rules 2017 has been amended and other Rules have been incorporated in this regard. These amendments are to come into force from a date to be specified by the Central Government. The fact of the matter is that on the date of incident i.e. 17.12.2017 neither there was any E-way Bill System nor any notification by the Central Government under Rule 138 of the C.G.S.T. Rules 2017 requiring the carrying of a T.D.F. Form or any other such document in the course of inter-State supply/movement of goods, as such, the very basis for passing the impugned orders and taking action against the petitioner as impugned herein is apparently erroneous and illegal. In view of the above it cannot be said that there was any intent to evade tax - On the relevant date i.e. 17.12.2017 there was no requirement of carrying T.D.F. Form-1 in the case of an inter-State supply of goods. In fact on the relevant date there was no prescription of the documents to be carried in this regard under Rule 138 of the C.G.S.T. Act 2017, accordingly, the seizure and penalty imposed upon the petitioners based on the notification dated 21.7.2017 issued under Rule 138 of the U.P.G.S.T. Act 2017, which was not applicable, is clearly illegal. As regards the provisions of section 129 U.P.G.S.T. Act 2017 under which the impugned action has been taken, the same is not applicable to an inter-State trade or commerce. By virtue of section 20 of the I.G.S.T. Act 2017 it is section 129 of C.G.S.T. Act 2017 that would apply, but this is not the ground on which we are invalidating the impugned action, as, if it is traceable to the aforesaid provision of C.G.S.T. Act 2017 which is pari materia to the State Act, then mere wrong mentioning of a provision would be too technical a ground for interference. Petition allowed.
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2019 (12) TMI 510
Profiteering - supply of the product, namely, Washing Machine (Elena Aqua VX) - benefit of reduction in the rate of tax on the impugned product not passed on - contravention of provisions of section 171 of CGST Act or not - penalty. Whether there was a reduction in the rate of tax on the product post introduction of GST w.e.f. 01.07.2017 and if so, whether the benefit of such reduction in the rate of tax had been passed on by the Respondent to the recipients, in terms of Section 171 of the Central Goods and Services Tax Act, 2017? HELD THAT:- it is established that the Respondent has acted in contravention of the provisions of Section 171 of the CGST Act, 2017 and has not passed on the benefit of reduction in the rate of tax to his recipients by commensurate reduction in the prices. Accordingly, the amount of profiteering is determined as ₹ 67,28,592/- as per the provisions of Rule 133 (1) of the CGST Rules, 2017. The Respondent is therefore directed to reduce the prices of his products as per the provisions of Rule 133 (3) (a) of the CGST Rules, 2017, keeping in view the reduction in the rate of tax so that the benefit is passed on to the recipients, The Respondent is also directed to deposit the profiteered amount of Rs, 67, 28,592/- along with the interest to be calculated @ 18% from the date when the above amount was collected by him from the recipients till the above amount is deposited in terms of the Rule 133 (3) (b) of the CGST Rules, 2017. Since, the present investigation is to the issue of not passing on the benefit of reduction in the rate of tax by the Respondent has been conducted w.e.f. 01.07.2017 to 31.08.2018, the Authority, as per the Rule 133 (5) (a) of the CGST Rules, 2017, directs the DGAP to investigate quantum of profiteering on all the products including the present product which the Respondent is supplying for violation of the provisions of Section 171 of the CGST Act, 2017 and submit his Report as per the provisions of Rule 133 (5) (b) of the CGST Rules, 2017. Penalty - HELD THAT:- The Respondent has denied the benefit rate reduction of the GST to the consumers in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has thus resorted to profiteering. Hence, he has committed an offence under Section 171 (3A) of the CGST Act, 2017 and therefore, he is apparently liable for imposition of penalty under the provisions of the above Section - thus, a SCN be issued to him directing him to explain why the penalty prescribed under Section 171 (3A) of the above Act read with Rule 133 (3) (d) of the CGST Rules, 2017 should not be imposed on him.
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2019 (12) TMI 464
Extension of time limit for filing of TRAN-I statutory form - carry forward of unutilized Credit of duty - time limit prescribed under Rule 117 read with Section 14C of CGST Act, 2017 - circular dated 03.04.2018 - HELD THAT:- It is not in dispute that Rule 117 (IA) permits the registered persons who could not submit the declaration within the due date on account of technical glitches on the common portal, by a further period not beyond 31.03.2019, Though under Rule 117 of the CGST Rules, 2017, period of 90 days from appointed day i.e.01.07.2017 was prescribed, the same has been extended from time to time now upto 31.12.2019 by virtue of the amendment to Sub-Rule IA of Rule 117 vide Notification No.49/2019/Central Tax dated 09.10.2019 - Thus, it is clear that if any technical glitches are found on the common portal of department, the registered persons are permitted to submit the declaration in TRAN-I up to 31.12.2019 whereas the said extension of time prescribed originally under Rule 117 is not extended, if any technical glitch arises on the error committed by the registered persons. In the light of Section 140 of the Act read with Section 142 and 172 as well as Rule 117 (1A), it is clear that though there is no explicit provision to permit revision filing of TRAN-I at an extended period for the registered persons who fail to furnish the material for having filed the same by 27.12.2017, in the absence of any specific time prescribed under Section 140 of the Act and in terms of introduction of Rules 117(1A) and 120A, the arguments advanced by the learned counsel for the revenue could not be countenanced. Reliance can be placed in the case of ADFERT TECHNOLOGIES PVT. LTD. VERSUS UNION OF INDIA AND ORS. [ 2019 (11) TMI 282 - PUNJAB AND HARYANA HIGH COURT] where it was held that The Respondents are directed to permit the Petitioners to file or revise where already filed incorrect TRAN-1 either electronically or manually statutory Form(s) TRAN-1 on or before 30th November 2019. The request of the petitioners to extend the time prescribed under Rule 117 cannot be denied - writ petitions are allowed directing the respondents to permit the petitioners to file/ revise the TRAN-1 either electronically or manually on or before 31.12.2019 - decided in favor of petitioner.
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Income Tax
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2019 (12) TMI 509
Deduction u/s 10A computation - unrealised sale proceeds in foreign exchange within the prescribed period inclusion in the total turnover - HELD THAT:- When the object of the formula is to arrive at the profit from export business, expenses excluded from export turnover have to be excluded from total turnover also. Otherwise, any other interpretation makes the formula unworkable and absurd. Hence, we are satisfied that such deduction shall be allowed from the total turnover in same proportion as well. What is 'export turnover' for the purpose of the numerator would have to be the 'export turnover' for the purpose of denominator as well and 'export turnover' cannot assume two different characteristics for two parts of the same formula. In the present case, the quantum of 'export turnover' has been taken to be the actual remittances of foreign exchange after excluding the unrealised foreign exchange. This then would be the same figure to be adopted so far as the denominator is concerned as well. In fine, 'total turnover' for purposes of the formula would be the actual sale receipts excluding unrealised foreign exchange as adopted for 'export turnover'. This conclusion is also supported by the reasoning that the provisions of Section 10A/10B are beneficial in nature and seek to encourage an assessee engaging in a prescribed activity. See M/S. MAARS SOFTWARE INTERNATIONAL LTD. [ 2019 (3) TMI 578 - MADRAS HIGH COURT]
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2019 (12) TMI 508
Provisional attachment of property - adjournment seeked on behalf of revenue - HELD THAT:- Today again learned counsel for the respondents seeks an adjournment. Even the PCIT (Central) Ludhiana has sought and been granted exemptions from appearance. We find this situation intolerable. In the circumstances, the petitions are disposed of with a direction that the provisional attachment would be to the extent of ₹ 45 crores (as against the proposals for provisional attachment where it was mentioned that a sum of ₹ 22 crores odd was unaccounted under different heads (in all three petitions)).
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2019 (12) TMI 507
Addition u/s 40A(3) - chargeability of transactions to tax by way of TCS forms in accordance with Section 206CA r.w. Rule 114A substantiating the purchases made and the genuineness thereof - Tribunal remanded the case back to the Assessing Officer - HELD THAT:- We are in agreement with learned counsel for the Revenue. In view of the shifting stand taken by the appellant, no illegality can be found with the order of the Tribunal which, it must be remembered, has not restored the order of the Assessing Officer but has asked both the parties to lead evidence in support of their claims and by source no prejudice can be caused to the appellant. Appeal dismissed.
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2019 (12) TMI 506
Deduction of interest on borrowed fund when the same is utilised to give interest free loan/share application money to subsidiary companies - HELD THAT:- In M/S E-CITY INVESTMENTS HOLDINGS [ 2019 (4) TMI 1793 - BOMBAY HIGH COURT] Assessee is a private limited company and is engaged in the business of financing. During the scrutiny assessment of the assessee's return for the assessment year 2008-09, AO noticed that the assessee had claimed expenditure of interest paid on borrowed funds. The assessee had also funded its sister concern without charging interest. AO therefore disallowed the interest expenditure. The issue eventually reached the Tribunal. The Tribunal by the impugned judgment held in favour of the assessee. The entire issue is squarely covered in favour of the assessee in case of S.A.Builders Ltd. [ 2006 (12) TMI 82 - SUPREME COURT] . The Tribunal correctly held that the assessee's decision to fund its subsidiaries driven by business exigency.
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2019 (12) TMI 505
Reopening of assessment - no notice u/s 143 (2) - HELD THAT:- Non-issuance of notice under section 143 (2) of the Act is thus seen as a jurisdictional error vitiating the assessment. See M/S. HOTEL BLUE MOON [ 2010 (2) TMI 1 - SUPREME COURT] .
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2019 (12) TMI 504
Non-deduction of tax - assessee submitted that the A.O. made addition for non-deducting tax at source in respect of interest paid - Counsel submitted that form 15G/15H was filed late, however, the same was duly filed before the CIT(A) and CIT(A) ought to have considered these evidences - Ld. D.R. opposed these submissions and supported the order of the authorities below - HELD THAT:- As heard the rival submissions. It is not disputed by the revenue that the assessee had filed form 15G/15H. CIT(A) should have considered the evidences supplied by the assessee and in case he was not satisfied, he should have got it verified from the bank. Therefore, direct the A.O. to delete this addition.
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2019 (12) TMI 503
Rectification u/s 154 - AO rectified the original assessment order deleting the entire Transfer Pricing adjustment to give effect to the direction of DRP - HELD THAT:- In the present case, the assessee filed objections before the DRP after passing the draft assessment order. DRP issued certain directions to the Transfer Pricing Officer. AO was very well aware that the DRP has given certain directions to the Transfer Pricing Officer and it is binding on the Assessing Officer to follow every direction issued by the Dispute Resolution Panel as per as per Section 144C(10) of the Act. Sub-Section (10) of Section 144C is not procedural but a mandatory requirement. If the Transfer Pricing Officer has not passed any order, the AO should have taken into account the DRP s direction and would have taken cognizance in the final assessment order, but the Assessing Officer choose not to follow the DRP s direction. Subsequently, when the Transfer Pricing Officer passed the order giving effect to DRP s directions vide order dated 21.02.2014, the Assessing Officer on suo moto basis has rectified the assessment order u/s 154 thereby giving effect to directions of the DRP. As per Section 143(3), the Assessing Officer has to pass the assessment order within the prescribed period otherwise the assessment becomes time barred. Assessing Officer has followed the statutory provisions of Section 143(3) thereby passing assessment order. But as per the binding section i.e. Section 144C(10) of the Act, the mandatory provision was not followed by the Assessing Officer, thereby it is binding on the Assessing Officer to follow the directions of the DRP. Therefore, the assessment becomes null and void. As regards rectification, there is no mistake committed on part of Assessing Officer, in fact Assessing Officer was very well aware that the DRP has given certain directions so it could not be termed that there is a mistake apparent on record. When the Assessing Officer has deliberately chosen not to follow a binding provisions u/s 144C of the Act while passing the final assessment order, the Assessment Order, itself becomes null and void. The case laws referred by the Ld. AR are categorically highlighting the same position of law. The submissions of the Ld. DR that after passing assessment order, the Transfer Pricing Officer has given final effect to the DRP direction and thereafter the Assessing Officer u/s 154 has rectified the original assessment order well within time thereby deleting the entire Transfer Pricing adjustment, does not hold the test of legal sanctity as per the provisions of Section 144C(10) of the Act. Thus, assessment order itself is quashed. Therefore, Ground Nos. 1 and 2 of the Assessee s appeal are allowed.
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2019 (12) TMI 502
Deduction u/s 80P(2) - CIT(A) passed order u/s 154 of the I.T.Act, wherein the claim of deduction u/s 80P of the I.T.Act was denied - HELD THAT:- In the case of Chirakkal Service Co-operative Co-operative Bank Ltd. v. CIT [ 2016 (4) TMI 826 - KERALA HIGH COURT] had held that when a certificate has been issued to an assessee by the Registrar of Co-operative Societies characterizing it as primary agricultural credit society, necessarily, the deduction u/s 80P(2) has to be granted to the assessee. Full Bench of the Hon ble jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. V. CIT [ 2016 (4) TMI 826 - KERALA HIGH COURT] had held that the A.O. has to conduct an inquiry into the factual situation as to the activities of the assessee society to determine the eligibility of deduction u/s 80P. In view of the dictum laid down by the Full Bench of the Hon ble jurisdictional High Court (supra), we restore the issue of deduction u/s 80P(2) to the files of the Assessing Officer. AO shall examine the activities of the assessee and determine whether the activities are in compliance with the activities of a co-operative society functioning under the Kerala Co-operative Societies Act, 1969 and accordingly grant deduction u/s 80P(2) of the I.T.Act. Interest on the investments with Cooperative Banks and other Banks , the co-ordinate Bench order of the Tribunal in the case of Kizhathadiyoor Service Cooperative Bank Limited [ 2016 (7) TMI 1405 - ITAT COCHIN] had held that interest income earned from investments with treasuries and banks is part of banking activity of the assessee, and therefore, the said interest income was eligible to be assessed as `income from business instead of `income from other sources . However, as regards the grant of deduction u/s 80P on such interest income, the Assessing Officer shall follow the law laid down in the case of The Mavilayi Service Co-operative Bank Ltd. V. CIT (supra) and examine the activities of the assessee-society before granting deduction u/s 80P of the I.T.Act on such interest income. It is ordered accordingly.
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2019 (12) TMI 501
Deduction u/s 80P(2) - CIT(A) passed order u/s 154 of the I.T.Act, wherein the claim of deduction u/s 80P of the I.T.Act was denied - HELD THAT:- In the case of Chirakkal Service Co-operative Co-operative Bank Ltd. v. CIT [ 2016 (4) TMI 826 - KERALA HIGH COURT] had held that when a certificate has been issued to an assessee by the Registrar of Co-operative Societies characterizing it as primary agricultural credit society, necessarily, the deduction u/s 80P(2) of the I.T.Act has to be granted to the assessee. Full Bench of the Hon ble jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. V. CIT [ 2016 (4) TMI 826 - KERALA HIGH COURT] had held that the A.O. has to conduct an inquiry into the factual situation as to the activities of the assessee society to determine the eligibility of deduction u/s 80P. In view of the dictum laid down by the Full Bench of the Hon ble jurisdictional High Court (supra), we restore the issue of deduction u/s 80P(2) to the files of the Assessing Officer. AO shall examine the activities of the assessee and determine whether the activities are in compliance with the activities of a co-operative society functioning under the Kerala Co-operative Societies Act, 1969 and accordingly grant deduction u/s 80P(2) of the I.T.Act. Interest on the investments with Cooperative Banks and other Banks , the co-ordinate Bench order of the Tribunal in the case of Kizhathadiyoor Service Cooperative Bank Limited [ 2016 (7) TMI 1405 - ITAT COCHIN] had held that interest income earned from investments with treasuries and banks is part of banking activity of the assessee, and therefore, the said interest income was eligible to be assessed as `income from business instead of `income from other sources . However, as regards the grant of deduction u/s 80P on such interest income, the Assessing Officer shall follow the law laid down in the case of The Mavilayi Service Co-operative Bank Ltd. V. CIT (supra) and examine the activities of the assessee-society before granting deduction u/s 80P of the I.T.Act on such interest income. It is ordered accordingly.
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2019 (12) TMI 500
Default in Deduction of Tax at source - payment of license fee - non-allowable deduction - reimbursement of expenses - escapement of income - HELD THAT:- This issue is covered in favour of the assessee by the decision of the Pune Bench of the Tribunal in assessee own case JOHN DEERE INDIA PVT. LIMITED VERSUS THE DY. DIRECTOR OF INCOME TAX, (INTERNATIONAL TAXATION) -1, PUNE. [ 2019 (8) TMI 1437 - ITAT PUNE] where it was held that lease line charges are at best reimbursement of expenses and hence, not liable for deduction of tax at source. The Ld. DR could not bring any material or relevant documents on records to demonstrate that the order of the Tribunal in assessee‟s own case has been set aside or stayed by the Higher Judicial Forum. The Revenue has not pointed out any distinguishing feature in the facts of the case with that of the assessee‟s own case in earlier year - following the findings in the earlier year and for similar reasons, it can be held that the assessee has not defaulted in deduction of TDS on the impugned payments made - the order of the Ld. CIT(Appeals) set aside. Appeal allowed - decided in favor of assessee.
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2019 (12) TMI 499
Deduction u/s 80IA(4) - sale of steam - operation of captive power plant - AO asked the assessee to explain why the deduction u/s. 80IA(4) should not be disallowed since the same is claimed on vapour income and vapour does not fall within the meaning of power - Reliance placed in the case of M/S. NR. AGARWAL INDUSTRIES LTD. VERSUS THE DCIT., CENT. CIR-3, SURAT [ 2014 (1) TMI 1289 - ITAT AHMEDABAD] wherein as para 3 of the order the issue of deduction u/s. 80IA(4) on steam was restored to the file of the ld. CIT(A) for deciding the issue de-novo. Reliance also placed on the decision of Co-ordinate Bench in the case of THE ACIT (OSD) -1, AHMEDABAD VERSUS J.H. KHARAWALA PVT. LTD. [ 2015 (4) TMI 1282 - ITAT AHMEDABAD] wherein the issue of deduction u/s. 80IA(4) on the value of steam is decided in favour of the assessee. Thus, the assessing officer is directed to allow the claim of the assessee of deduction u/s 80IA(4) on steam - appeal of assessee allowed.
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2019 (12) TMI 498
Reopening of assessment u/s 147 - validity of reasons to believe - HELD THAT:- AO has issued notice within 4 years and AO has recorded detailed reasons and came to the conclusion that there is an escapement of income on the ground that falsification of books of account and also manipulation of accounts for the last several years as well as the statement given by the Chairman Shri Ramalinga Raju and material evidence, which are necessary to be considered, were not at all considered by the AO while passing the order u/s 143(3) of the Act. After going through the reasons recorded by the AO and material available on record, we find that the AO after recording the detailed reasons, reopened the assessment and, therefore, the question of change of opinion does not arise because the assessee has not expressed any opinion at all. Thus, we find that the AO has rightly reopened the assessment. We, therefore, uphold the reopening of assessment made by the AO u/s 147 of the Act. Accordingly, the grounds raised by the assessee on this issue are dismissed. Addition on account of unexplained loans and advances - segregation of interest income and assessing it as income from other sources and treating the income from trading in shares as speculation income. Therefore, the grounds raised by the assessee on these issues are dismissed.
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2019 (12) TMI 497
Penalty u/s 271(1)(c) - deduction of guesthouse expenses - HELD THAT:- Whether the assessee has furnished inaccurate particulars of income by claiming the guest house expenses incurred by it. The wrong claim made by the assessee for the guest house expenses in the income tax return cannot be equated with inaccurate particular of income. It is because the genuineness of the guest house expenses incurred by the assessee was not in doubt, but the same was wrongly claimed in the profit and loss account. There was the short fall of the recoveries against the guest house expenses, that too on account of depreciation allowance amounting only. Had there been some more recoveries against the guest house expenses, then there would not have been any disallowance of such expenses. Thus we are of the view that the assessee has not deliberately claimed such expenses. Once the assessee has furnished all the particulars of expenses which were correct but wrongly claimed as deduction, does not attract the penalty. We hold that the assessee has made the wrong claim for the guest house expenses. But the wrong claim does not mean that the assessee has furnished inaccurate particular of income. Similarly, the disallowance of the repair expenses on estimated basis cannot be subject matter of the penalty as the questions for concealing and furnishing inaccurate particular of income does not arise. Penalty levied u/s 271(1)(c) is not justifiable in the given facts and circumstances. Accordingly, we delete the penalty imposed by the authorities below. Hence, the ground of appeal of the assessee is allowed.
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2019 (12) TMI 496
Exemption u/s 11 - Contiued registration u/s 12AA denied - CIT(E) granted registration for the assessment years 1998-99 to 2008-09 and in the same order from assessment year 2009-2010 denied to continue the registration u/s.12AA - HELD THAT:- In the present case, in the same order, the ld CIT(E) granted registration to the assessee from assessment year 1998-99 to 2008-09 and also denied continuance of registration w.e.f 2009-10 onwards without affording an opportunity to the assessee regarding the doubts arisen in the minds of the CIT(E). Therefore, keeping in view the fact that the assessee has already move upto the Tribunal in three rounds of proceedings seeking grant of registration u/s.12AA of the Act, we are of the considered view that it would be a great injustice to the appellant if the case is restored to the file of the CIT(E) for third time. Thus, we decline to accept the prayer of ld CIT DR for restoring the matter to the file of the CIT(E) for fresh consideration. Income earned by the assessee from commercial lease rent, which is the only point of denying the continuance of registration from assessment year 2009-2010 is not a sustainable ground for dis-continuing the registration already granted to the assesse. When the registration u/s.12A of the Act has been granted to the appellant and ld CIT (E) is satisfied that the activities of the assessee trust falls within the ambit of charitable and OF general public utility and on the same basis, he has granted registration u/s.12A of the Act to the appellant from the assessment years 1998-99 to 2008-09. The barriers created by the CIT(E) from 2009-2010 onwards, where he denied to continue the same registration is also not sustainable on this count that the assessee was not provided proper opportunity of hearing before passing such order denying continuance of registration as per mandate of sub-section(3) of Section 12AA of the Act. We dismiss the observation of ld CIT(E) recorded for the purpose of restricting the registration u/s.12AA of the Act from 2009-2010 onwards. CIT (E) has granted registration u/s.12A of the Act, then, same is required to be continued till it is cancelled by way of following the procedure provided in sub-section (3) (4) of Section 12AA of the Act and without following such procedure, the registration cannot be restricted or upto the specified time and cannot be discontinued by way of cancelling the same for subsequent period in the same order. Therefore, we set aside the order of ld CIT (E) and hold that the registration granted for the assessee w.e.f. A.Y. 1998-99 to 2008-09 is also continued direct him to grant registration from 2009-10 onwards. Hence, the grounds of appeal of the assessee are allowed in the terms as indicated above,.
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2019 (12) TMI 495
Rectification of mistake u/s 154 - scope of limited scrutiny under CASS - determining the fair market value of the property as on 01/04/1981 - HELD THAT:- There was no query raised about the fair market value of the property in question as on 01/04/1981, therefore, the said issue cannot be treated as part of the limited scrutiny under CASS when none of the queries raised under the scrutiny relating to the computation of the capital gain but all are regarding deduction claimed under Chapter IV and particularly U/s 54 of the Act and the variation of the sale consideration shown in the ITR and TDS return as well as the deposits made in the bank account. Thus, we find that the issue which was taken up by the A.O. while passing the order U/s 154 of the Act determining the fair market value of the property as on 01/04/1981 was not within the scope of scrutiny assessment. If the A.O. has taken up the issue of determining fair market value of the property in question as on 01/4/1981 without converting the limited scrutiny to comprehensive scrutiny by taking the prior approval of the competent authority then the said order passed by the A.O. will be nullity as beyond his jurisdiction. AO neither in the assessment order nor in the assessment proceedings sheet has mentioned about any proposal of converting the limited scrutiny to comprehensive scrutiny and consequential approval of the Competent Authority being Principal CIT/DIT. Assessee has produced the certified copy of the assessment proceedings sheet which does not contain any such proposal of the AO for expanding the limited scrutiny to complete scrutiny. Further, the revenue has also not produced anything to show that the AO has obtained the necessary approval from the Competent Authority for conversion of the limited scrutiny to comprehensive scrutiny. Accordingly, the issue which is taken up by the AO in the proceedings under section 154 is illegal and void being beyond his jurisdiction to frame the limited scrutiny assessment. Accordingly, we set aside and quash the order passed by the AO under section 154 of the Act. Since we have quashed the order passed by the AO under section 154 of the Act for want of his jurisdiction on this issue, therefore, we do not propose to take up the other grounds raised by the assessee in this appeal.
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2019 (12) TMI 494
Assessment u/s 153A - materials seized in the search - Addition on account of interest on PDC s - interest was paid in cash to the vendors of the land by the vendee company on monthly basis @ 1.25% p.m. on the amount of PDC s and this cash payment of interest by the vendee company was not accounted for by it, in its books of account. - CIT(A) deleted the interest in respect of one sale deed and sustained the balance amount in respect of three sale deeds - HELD THAT:- We find merit in the arguments of the Ld. Counsel for the assessee. Admittedly the first search took place on 15.11.2007 whereas the assessee company was incorporated on 06.07.2009 - Further there is nothing on record to show that during the course of search that took place on 07.12.2010 which was concluded on 05.02.2011, any document either belonging to the assessee or relating to the assessee were found i.e. either from the premises of the assessee or any of its group concerns. We, therefore, find merit in the submission of the assessee that when the assessee company was not in existence at the time of first search and when none of the documents found during the course of second search belong to the assessee and considering the fact that the AO in the body of the assessment order has not referred to any seized material found during the course of second search pertaining to assessee which gave any clue even in remotest manner with respect to payment of interest on PDCs out of books beyond 6 months from the sale deed, no addition could have been sustained. We find under identical circumstances the Tribunal in the case of M/s. Improper Infrastructure Private Limited, another sister concern, has deleted the addition made by the AO and sustained by the CIT(A) is not justified. We, therefore, direct the AO to delete the disallowance - Decided in favour of assessee.
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2019 (12) TMI 493
Addition to the returned income - reimbursement of interst u/s. 40A(ia) of the Act - wages paid u/s 40a(ia) of the act - remuneration paid by invoking provision of section 40(A)(2) of the Act - addition on account of section 40A(3) of the Act - addition on vehicle running expenses and telephone expenses respectively on estimate basis treating the same as personal in nature - whether the receipt is of such incomes on which tax had been paid on those incomes by the respective recipients as envisaged under the proviso to section 201(1) of the Act, also not considered - principles of natural justice. HELD THAT:- There are considerable cogency in the contention of the ld. counsel for the assessee that the authorities below erred in disallowing ₹ 10,68,968/- under section 40a(ia) of the Income Tax Act, 1961 without even pausing to consider whether the receipt is of such incomes on which tax had been paid on those incomes by the respective recipients as envisaged under the proviso to section 201(1) of the Act. It is also noted that the this has not been verified at the level of the Assessing Officer during assessment, therefore, there is force in the contention of the ld. Counsel for the assessee that the matter may be remanded back to the Assessing Officer for consideration and fresh orders. Appeal allowed for statistical purposes.
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2019 (12) TMI 492
Capital gain by accepting 75% of the value estimated by the Registered Value - rejection of details of cost construction expenses and addition made by the assessee - HELD THAT:- Since the CIT(A) has already accepted the fact that there was a construction and has not doubted the valuation report of the Registered Valuer. Thus, the Assessee before the AO has given the construction cost and the details while incurring the same. Therefore, the same cost cannot be estimated and cannot be disallowed. The evidences show that there is a construction cost incurred by the assessee and through the records the same was properly valued by the Registered valuer. Therefore, the estimation done by the CIT(A) is not justified in absence of any contrary material before the Assessing Officer as well as before the CIT(A). Therefore, we set aside the directions given by the CIT(A). Ground No.2 is allowed. Disallowance on account of commission paid on sale of property - AR submitted that usually for carrying out any purchase and sale transactions in the case of property, an agent is hired and the same is a common practice - HELD THAT:- We have heard both the parties and perused all the relevant materials available on record. As regards commission paid, the assessee has not given any documentary evidence as regards to the payment made to the so-called agent. The evidence was not before the Assessing Officer as well as before the CIT(A). Therefore, in absence of any evidence, the CIT(A) has rightly confirmed this addition on account of commission expenses. Ground No.3 is dismissed. Disallowance of exemption u/s 54 - HELD THAT:- We have heard both the parties and perused all the materials available on records. From the perusal of records, it can be seen that the assessee submitted certain documents before the Assessing Officer and the CIT(A) in respect of claiming benefit of exemption u/s 54F of the Act. The fact remains that the assessee sold property situated at Okhla and purchased a flat at Gurugaon. Whether the transaction of purchase is from borrowed fund or through own funds has not been properly verified by the AO or the CIT(A) before rejecting the assessee s said claim u/s 54F. Therefore, it will be appropriate to remand back this issue to the file of the AO to decide this issue a fresh after taking into consideration all the documents pertaining to sale and purchase of the properties and determine whether the investment is made either through borrowed fund or own fund. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice. Ground No. 4 is partly allowed for statistical purpose.
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2019 (12) TMI 491
Bogus loss on account of CCM [Client Code Modification] - information was received from the office of the Pr. Director of Income Tax (Inv.), Ahmedabad that some brokers were diverting profits/losses through adopting Client Code Modification facility - HELD THAT:- The corrections as effected in the CCMs were of a most nominal amount of ₹ 2 Lakhs plus which could not lie in the realm of manipulation. The broker of the assessee on enquiry had confirmed that the modifications were all genuine. AO had not found any evidence of any under-hand commission having been paid to the broker for manipulations. Whatever was paid to the broker was all through regular channels and was at the rates as prescribed by the stock exchange. AO failed to also note these punching errors occurred in seriatim only in the month of January of that year whereas the assessee's trading in share transactions was spread over the entire year. The fact that the error which occurred could be the product of a novice's mistake at the broker's end has been completely lost sight of by the AO. Commissioner (Appeals) while deciding the issue was overtaken by the decision of the Apex Court in SEBI vs. Rakhi Trading Pvt. Ltd. [ 2018 (2) TMI 580 - SUPREME COURT] . CIT(A) in his enthusiasm to apply the ratio of the case appears to have overlooked the indispensible conditions spelt in the decision itself. In the circumstances it is noted that since the nominal loss as incurred by the Assessee and claimed as such is due to genuine errors in CCM as explained to the Assessing Officer in details and there is nothing irregular about it, hence, the same is directed to be allowed and addition made on this account is hereby cancelled by allowing the appeal of the assessee. - Appeal filed by the assessee is allowed.
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2019 (12) TMI 490
Expenditure incurred for charitable purpose u/s. 11 - Addition on capital expenditure incurred by the appellant on the asset of Pandit Deendayal Petroleum University (PDPU) - expenditure disallowed for charitable purposes - assessee submitted the details with the explanation that the assessee is bound to incur expenses time to time towards the set-up and expansion of the university in terms of Provision of Sec. 25 of the Pandit Deendayal Petroleum University Act, 2007 - HELD THAT:- In SARLADEVI SARABHAI TRUST [ 1988 (3) TMI 53 - GUJARAT HIGH COURT] issue decided in favour of the assessee in the identical facts and circumstances of the case as aforesaid, we do not find irregularities in allowing the exemption by the CIT(A) as claimed by the assessee since the expenditure has been incurred as per the object of the society and in terms of a statutory provision of another trust having similar object so as to warrant interference. Hence the order is passed in affirmative i.e. in favour of the assessee and against the Revenue. The appeal preferred by the Revenue is, thus, found to be devoid of any merit and hence dismissed.
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2019 (12) TMI 489
Reopening of assessment u/s 148 - assessee argued for non service of notice - HELD THAT:- Assessee, at Bar, in all fairness, accepted that the assessee has not filed any return of income in response to notice issued u/s.148 of the Act. However, in para 3 of the reassessment order dated 26.11.2009, the Assessing Officer has mentioned that notice u/s 143(2) of the Act and notice u/s.142(1) of the Act was served on the assessee on 26.5.2009. In absence of any return or response to the notice u/s.148 of the Act, the assessee cannot raise any objection or ground regarding service of notice. Therefore, the additional ground of the assessee being devoid of merits is dismissed. Determining capital revenue expenditure receipts and computed the income - assessee is not registered u/s.12A and hence, it is not claiming any exemption u/s.11 - HELD THAT:- In the present case, undisputedly, the assessee has incurred capital expenditure over and above its capital receipts and same cannot be allowed to be set off from the revenue surplus for the purpose of calculation of tax liability of the assessee. Admittedly, the capital receipts in the current year are less than the capital expenditure and that is why the assessee wants to set off against surplus in the revenue account. In view of above, we see no reason to interfere with the order of the CIT(A) in confirming the addition made by the AO. Validity of reopening of assessment - AY 2008- 09 - HELD THAT:- This issue is squarely covered in favour of the assessee by the decision of Hon'ble Supreme Court in the case of CIT Vs. Kelvinator India Ltd. [ 2010 (1) TMI 11 - SUPREME COURT] wherein newly substituted provision of section 147 of the Act with effect from 01.04.1989 is interpreted by observing, that section 147 of the Act, as substituted w.e.f. 01.04.1989 does not postulates conferment of power upon the Assessing Officer to initiate reassessment proceeding upon his mere change of opinion. Further, if 'reason to believe' of the Assessing Officer is founded on an information which might have been received by the Assessing Officer after the completion of assessment, it may be a sound foundation for exercising the power under section 147 r.w.s. 148 of the Act In the absence of any fresh material, the reappraisal of same material to initiate reassessment proceedings tantamounts to change of opinion and hence bad in law. We also find that in the present case, there was admittedly no failure on the part of the assessee to make a return or to disclose fully and truly all material facts necessary for the assessment. From the above facts of the case and following the decisions quoted above, we are of the considered view that the reassessment order u/s. 147 r.w.s. 144 dated 29.1.2014 of the Act is bad in law a hence, same is quashed and allow the additional ground of appeal.
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2019 (12) TMI 488
Income accrued in India - turstee of a trust - representative assessee - short term capital gains - Benefit of Indo Dutch Tax Treaty (DTAA) - India-Netherlands Double Taxation Avoidance Agreement - Determining treaty protection - HELD THAT:- When an assessee is a representative assessee of a tax transparent entity, it is the status of beneficiaries or constituents of tax transparent entities which is relevant for the purpose of determining treaty protection. Viewed thus, this is beyond doubt that the income in question has actually accrued to the taxable entities on the Netherlands, which, according to the approach adopted by the AO, is sine qua non for tax treaty protection. It would thus appear that the treaty protection has indeed been wrongly declined to the assessee. The reservation on treaty protection has arises only on account of INGEMEF, a tax transparent entity which is in the nature of contractual arrangement, being in the picture, but then the assessee being a representative assessee of a tax transparent entity requires the beneficiaries or constituents of the tax transparent entity being looked at. The assessee is indeed a trustee of INGEMEF but then INGEMEF is only a contractual arrangement for common investments by three investors and it cannot be treated as a beneficiary as it is not even a legal entity, it's a tax transparent conduit contractual arrangement for the purpose of collective investments. The beneficiaries are thus clearly taxable entities in Netherlands. What essentially follows is like this. If the assessee is to be taxed in its own right, which is not even the case of the revenue, there cannot be any dispute that the assessee is a taxable entity in the Netherlands, and, for this reason, the assessee is liable for treaty protection. If the assessee is to be taxed as a trustee in representative capacity, in our considered opinion, on the facts of this case clearly the beneficiaries are the three investors all of which are taxable entities in the Netherlands, and not the INGEMEF per se. Whichever way we look at it, thus, the assessee is entitled to treaty protection. Once that is found to be the position, article 13(5) clearly provides that the gains from the alienation of any property other than that referred to in paragraphs 1, 2, 3 and 4 shall be taxable only in the State of which the alienator is a resident . So far as sale on gains of shares are concerned, only article 13(4) can come into play and that too is not applicable on the facts of this case and it is not even the case of the revenue that the gains are on sale of unlisted shares which form part of substantial interest in the capital stock or are of the companies which hold principally immovable properties, other than the property in which the business is carried out. In any case, article 13(5) lays down the broad principle and article 13(1) to 13(4) set out the exceptions. It is not even the case of the AO, and rightly so, that these exception clauses come into play on the facts of this case. This being the position, the capital gains, on sale of shares, in the hands of the assessee, and the investors it represents as trustee, are treaty protected from taxation in India. As we hold so, we may add that we are dealing with pre 1st April 2013 legal position and the requirements of Tax Residency Certificate (TRC) do not, therefore, come into play - direct the Assessing Officer to grant the benefit of Indo Dutch tax treaty on the facts of this case. Decided in favour of assessee.
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2019 (12) TMI 487
Enhancing the income by CIT-A u/s 251(2) - assessee has raised the issue of breach of principle of natural justice for not considering the submission of the assessee as well as disregard of voluminous evidence tendered before the Assessing Officer - HELD THAT:- CIT(A) issued show cause notice under section 251(2) of the Act proposing to enhance the income on the issues raised in the said notice. After considering the submission of the assessee, he rejected the objection of the assessee. We find that the learned CIT(A) has followed the decision of the Hon ble Supreme Court in the case of CIT Vs Kanpur Coal Syndicate [ 1964 (4) TMI 18 - SUPREME COURT] on this issue and Ld. counsel of the assessee could not rebut before us the finding of the learned CIT(A) on the issue. In the facts of the instant case before us, the addition has been made in respect of source of income shown in the return of income and the opportunity has been provided to the assessee by way of issue show cause notice by the learned CIT(A). In view of these facts, we do not find any violation of the principle of natural justice. In our opinion, the finding of the learned CIT(A) on the issue in dispute is well reasoned and we do not find any error in the same. Accordingly, we uphold the authority of the learned CIT(A) in enhancing the income. The grounds of appeal of the assessee in this respect are accordingly dismissed. Difference in cash balance available in bank as well as in books of accounts - HELD THAT:- The assessee in its written submissions has raised the issue that opening balance of trade receivables has not been taken into account by the learned CIT(A) and also no adjustment has been made for other non-cash expenditure like depreciation, forex loss booked, etc. CIT(DR) has submitted that issue needs verification at the end of lower authorities. We are in agreement with the learned DR because this is a matter of factual verification on the basis of financial statement of earlier year as well as financial statement of the year under consideration. Accordingly, we set aside the finding of the learned CIT(A) on the issue of addition and restore the matter back to the file of the Ld. CIT(A) for deciding afresh after providing adequate opportunity of being heard to both the assessee as well as to the Assessing Officer. Addition for 50% out of trade payables - HELD THAT:- Mere sample copy of documentary evidence for one transaction of import, is not sufficient to decide the issue in dispute whether the purchases in reference are bogus as held by the learned CIT(A) and the assessee should produce documentary evidence in support of all the purchases made during the year under consideration. We are of the considered opinion that this issue needs verification by the lower authorities. Accordingly, we set aside the finding of the learned CIT(A) on the issue in dispute and restore the matter back to the file of the learned CIT(A) for deciding afresh in accordance with law, after affording adequate opportunity of being heard to both the assessee as well as the Assessing Officer. The grounds of appeal are accordingly allowed for statistical purposes.
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2019 (12) TMI 486
Disallowance of travelling expenses - Allowable business expenses - assessee replied that foreign travelling was made by directors along with their relatives for the business purpose and it is the general practice of the company that directors travel for the business purpose - HELD THAT:- assessing officer has asked the assessee to justify the claim of foreign travel made with business purpose, however, the assessee has explained that it is in general practice of the company that directors travel for the business purpose. In this regard, it is observed that assessee was in the business of real estate and could not substantiate before the lower authorities with any relevant evidences that foreign travel expenses were incurred for the purpose of business of the assessee, therefore, we do not find any reason to interfere in the finding of ld. CIT(A) on this issue, therefore, this ground of appeal of the assessee is rejected. I ncome from House Property - property is used as stock in trade - notional annual letting value made u/s. 23 - HELD THAT:- Hon ble Jurisdictional High Court of Gujarat in the case of CIT vs. Neha Builders Pvt. Ltd. [ 2006 (8) TMI 105 - GUJARAT HIGH COURT] held that if property is used as stock in trade, then, said property would become partake character of stock and any income derived from stock would be income from business and not income from house property. We have further noticed that on identical issue on similar fact, the Co-ordinate Bench of the Bombay in the case of M/s. Runwal Constructions Runwal Omkar Esquare [ 2018 (2) TMI 1707 - ITAT MUMBAI] to hold that the unsold flats which are stock in trade when they were sold they are assessable under the head 'income from business' when they are sold and therefore the AO is not correct in bringing to tax notional annual letting value in respect of those unsold flats under the head 'income from house property. we direct the assessing officer to delete the addition on account of notional annual letting value made u/s. 23 of the act as income from house property, therefore, this ground of appeal of the assessee is allowed. Disallowance of forfeited amount as trade loss - Revenue contended that the assessee has shown advance which cannot be claimed as business loss - HELD THAT:- Assessee was of the view that if the assessee company purchases the said property at a price consideration of ₹ 13 crores in the subsequent sale, the company would not fetch more than ₹ 8 crores and there was likely loss to the company as the assessee could not find out buyer of the said property as the real estate market was in a deteriorated condition as well as marketability of the property in the Dev Arc Mall was also of doubtful nature. Therefore, the dispute arose between the company and the vendor was referred to the arbitrator as per the direction of the arbitrator, the vendor has forfeited the amount of ₹ 3.5 crore out of advance amount of ₹ 5 crores paid by the assessee company to the vendor. The assessee has treated the aforesaid advance of ₹ 3.5 crore as loss incurred in the normal business activity of the company of buying and selling of the property and the same amount has been debited in the profit and loss account for the year ended on 31st March, 2014. We find substance in the findings of the ld. CIT(A) that as per the normal course of business the assessee has entered into an agreement and the impugned property was being purchased as stock-in-trade and subsequently expecting loss on selling the property in future, the deal was cancelled, therefore, forfeiture of advance in a transaction which was entered in the normal course of business is in the nature of business loss. Accordingly, the appeal of the Revenue is dismissed.
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2019 (12) TMI 485
Exemption u/s 11(1)(d) - claiming depreciation on fixed assets while treating the same as application of funds - double deduction - AO treated the development fees was a revenue income of the assessee and not capital receipt as claimed by the assessee - assessing officer treated the one time admission fees as revenue receipt - HELD THAT:- Amount utilized for Requiring Fixed assets is allowable as application of income as per sec. 11(1)(a) of the Act. There are two separate issues one is pertaining to application of income and other is computation of income. In application of income of trust, amount applied for acquiring fixed assets is considered as eligible, therefore this ground of appeal is allowed and AO is directed to allow amount of investment in the fixed assets as part of application of income as per sec. 11(1)(a). Decision in the case of [ 2019 (4) TMI 553 - ITAT AHMEDABAD] and [ 2017 (9) TMI 965 - ITAT AHMEDABAD] followed. Appeal of the revenue is dismissed.
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Customs
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2019 (12) TMI 484
Grant of anticipatory bail - seizure of gold was effected from a shop of petitioner - Section 438 of the Code of Criminal Procedure, 1973 - HELD THAT:- Merely filing of an application by any person under Section 438 Cr.P.C. and/or pendency thereof does not mean that the petitioner has been granted any protection by this Court, hence the respondent is not precluded in any manner from taking any action or proceedings in the matters pending before them, as per law until and unless there are specific orders of protection or stay by the Court in favour of a party. It is an admitted case that the petitioner had filed an application under Section 438 of the Cr.PC before the Sessions Court, which was dismissed vide order dated 5.9.2019. There is no doubt that the anticipatory bail may be granted when there is material on record to show that prosecution was inherently doubtful or where there is material on record to show that there is a possibility of false implication. However, when the element of criminality is involved; the custodial interrogation is required and/or the other aspects and facts are required to be unfolded in investigation, the applicant is not entitled for anticipatory bail - It is a well-settled law that, while considering the question of grant of anticipatory bail, the Court prima facie has to look into the nature and gravity of the alleged offence and the role of the accused. The facts of the case demonstrate that the petitioner, despite having been served with various show cause notices, has preferred not to join the investigation - where the accused has failed to join the investigation on false pretexts or sham/farce excuses despite being given opportunities and/or is not fully cooperating with the investigating agency, the anticipatory bail application of such accused should be rejected, solely on this ground. The facts of the present case demonstrate that the petitioner has failed to join the investigation on sham and farce excuses, hence his conduct itself disentitles him for any relief whatsoever from this Court in the matter - Hence, taking into consideration the nature and gravity of the accusations, the stage of the investigation, the alleged role of the accused and the enormity of financial transactions to be investigated, severity of crime and resultant loss to the public as well as nation; non co-operation of the accused in the investigation and requirement of his custodial interrogation, this Court does not find any merit in the anticipatory bail application of the petitioner. The anticipatory bail application is dismissed.
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2019 (12) TMI 483
Coercive action against the Petitioner and its officials for recovery of any customs duty - past imports - action during pendency of ongoing investigation and before issuance of Show Cause Notice - retraction of statements - Section 108 of the Customs Act, 1962. HELD THAT:- There is only a presumption that the respondent is going to take coercive action against this petitioner - There are no reason to pass any order in favour of the petitioner for refund of the amount as prayed for in this writ petition. Petition dismissed.
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2019 (12) TMI 482
Revocation of Custom Broker (CB) License - forfeiture of security deposit - it is alleged that Appellants had in the B/E filed intentionally and deliberately misdeclared the good to circumvent import policy restrictions and requirement of license as per Arms Rule, 2016 - alleged involvement of Appellant in the said fraudulent import of Blank Firing Guns which is restricted under the Arm Rules, 2016 - HELD THAT:- The sole evidence relied in the impugned order, against the appellant is the statement dated 19.06.2017 of Shri Rajesh Kumar Goswami, wherein he has stated that their Custom Broker had suggested to declare the goods as Metal Toy Guns - Apart from the above in the impugned order, nothing else relied against the appellants. As have been stated in para 4.5, the said statement was relied upon by the Commissioner, has been retracted by Shri Rajesh Kumar Goswami before ACMM, stating that the statement was not voluntary and has been taken by the Customs Officer under duress and by giving false promise and false information. It is also evident that issue in the present case can more appropriately be described as that of mis classification and not mis declaration as alleged in the proceedings initiated against the appellants. There is no denial of the fact that the goods were physically examined by the Customs Officer and samples too were drawn from the consignment, sent to appropriate lab for testing by the Custom Officers. It was only after satisfying themselves and discussions at all levels upto Commissioner the goods were held classifiable under Heading 9503. When the Custom Officers themselves have after physically examining the goods concluded that the goods were classifiable under Heading 9503, then can the Custom Broker be accused of mis-declaring the goods and their classification. When Custom Officers who are expert in the matter of classification themselves failed to determine the correct classification of goods after physically examining it and considering the issue for substantial time then can an Custom Broker be accused of failing to determine the correct classification on the basis of description given by the importer and in the import documents. Admittedly certificate as required in terms of ITC (HS) Import Policy, Condition No 2, for the import of goods under CTH 9503 was not produced by the Importer/ Custom Broker, but what stopped/ prevented Custom Officers from insisting on the same before allowing the clearance. Can this failure of the Custom Officers be also the reason for accusing the Custom Broker of his failure to comply with the policy requirements? - HELD THAT:- There are no discussion to show how the Appellants have failed to comply with the requirements of Regulations 11(d) and 11(e). He had advised the client as per his understanding of the law and procedure, and had exercised due diligence accordingly. In our view the only additional advice that he could have rendered in respect of the consignments imported and cleared under CTH 9503 could have been for complying with the requirements of ITC (HS) Import Policy, Condition No 2 for import of goods under that heading. In case the said certificate was produced or insisted upon before clearance of the goods the entire case of misdeclaration/misclassification could have been averted - revocation of licence for that would be too harsh a punishment for the same when Custom officers also have not insisted for the same. The forfeiture of security deposit for the same would have been adequate taking into account the fact that goods sought to be cleared, were blank guns which could have been modified into lethal weapons jeopardizing the National Security and the security of individuals. The appeal filed by the appellant is allowed to the extent of setting aside the order of revocation of Custom Broker License of the Appellants - appeal allowed in part.
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Corporate Laws
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2019 (12) TMI 478
Consolidation of division of equity share of the Company - Section 61(1)(b) of the Companies Act, 2013 read with Rule 71 of NCLT Rules, 2017 - SEBI Circular No. SEBI/HO/MRD/DSA/CIR/P/2016/110 dated October 10, 2016 - HELD THAT:- The apprehension as expressed by minority shareholders with regard to consolidation of shares is concerned, the Company has well taken care of their concern. The Company having complied with the statutory requirement, as contemplated in the Act, we are of the view that the appeal deserves to be allowed. The reason taken for dismissal of Company Petition by the NCLT does not have any substance. As on the date of EGM, it is evident that the votes cast in favour of the resolution for consolidation of shares is more than 95%. It is noteworthy to mention that during pendency of the Appeal, most of the shareholders, who objected for consolidation of shares, have sold their shares to the Director of the Appellant-Company. Considering and taking into consideration the transfer of shares, more than 95% of shareholding, appears to be in favour of consolidation of shares. From the records, only two shareholders holding 172 and 335 shares respectively remained as shareholders of the Company and unequivocally their percentage is very minimal and their rights are well protected. The appeal is allowed in terms of Section 61(1)(b) of the Companies Act, 2013, by allowing the Appellant-Company for consolidations of its share capital - impugned order set aside - appeal allowed.
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Securities / SEBI
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2019 (12) TMI 481
Powers of Whole Time Member ( WTM ) of Securities and Exchange Board of India ( SEBI ) - order of debarment - restraining the appellants from accessing the securities market and further prohibiting them from buying, selling or otherwise dealing in securities, directly or indirectly, or from being associated with the securities market in any manner, whatsoever, for a period of three years from the date of the order - contentions of the appellants are that the WTM committed a manifest error in holding that the appellants were guilty in manipulating the price of the scrips pursuant to the preferential allotment - HELD THAT:- Order of debarment as per the impugned order is of three years. These three years have already been undergone by the appellant pursuant to the impugned ex parte order dated December 19, 2014 restraining them from accessing the securities market, etc. As on date four years and ten months have elapsed and the appellants are still debarred from accessing the securities market etc. We find that the WTM has not considered the period of debarment already spent from the date of the ex parte interim order till the date of passing of the order while considering the quantum of penalty. We are, thus, of the opinion that the debarment period spent by the appellants from the date of the ex parte impugned order till today is sufficient. Thus, without going into the merits of the case and without considering the submissions of the counsel for the parties on merits, we dispose of all the appeals holding that the restraint order restraining the appellants from buying, selling or otherwise dealing in securities, directly or indirectly, or being associated with the securities market in any manner, whatsoever will come to an end from today. Adjudication proceedings have been initiated by the Adjudicating Officer of SEBI and submitted that the findings given in the impugned order of the WTM would be relied upon by the AO. It was urged that the finding given in the impugned order should not be come in the way while considering the matter on merits by the Adjudicating Officer of SEBI. We make it clear that the Adjudicating Officer of SEBI will consider the matter on merits without being influenced by the findings given by the WTM of SEBI.
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2019 (12) TMI 480
Default by company to refund the amount collected under the Collective Investment Schemes ( CIS ) - officer in default - vicarious liability of a peson who was a director only for 50 days - HELD THAT:- If a company is liable to refund the monies received from the investors and if the company fails to pay the amount then the amount can be recovered jointly and severally from every Director of the Company who is an officer in default. Therefore, when the company is the offender, the vicarious liability of the acts of the Directors cannot be computed automatically. The contention that being a Director of the Company the appellant cannot disown his responsibility for the acts of the Company is misconceived. It is not possible to lay down any hard and fast rule as to when a Director would be vicariously responsible for the acts as a Director in charge of day-to-day affairs of the Company. However a finding has to be arrived at that the appellant was responsible for the day-to-day affairs of the Company and was involved in the collection of the monies and in the implementation of the schemes. In our view, it is not necessary that every director is required to be penalized merely because he is a director on the ground that he was deemed to responsible for the affairs of the company. If the director can explain that he had no role to play in the alleged default or that he was not responsible for the affairs of the company in which case penalty could not be fastened upon him on the mere ground that he was a director. The liability arises from being in charge of and responsible for the conduct of business of the company at the relevant time when the offence was committed and not on the basis of merely holding a designation or office in a company. Conversely, a person not holding any office or designation in a company may be liable if he satisfies the main requirement of being in charge of and responsible for the conduct of business of a company at the relevant time. Liability depends on the role one plays in the affairs of a company and not on designation or status. In the instant case, a penalty of ₹ 1 crore has been imposed which is wholly excessive and against the provision of Section 15D of the SEBI Act. AO by a separate order has already given a finding that the Company and its Directors were directly responsible for sponsoring the CIS without registration and were instrumental in generating the monies through this scheme in violation of the Regulations and the Act. The AO has already imposed penalties against the Company and the said Directors. The appellant in the instant case no doubt was a director only for a period of 50 days and in our opinion there is no finding that he was responsible either for sponsoring the scheme or for carrying out the scheme. We have also found that he was not instrumental in the launching/ sponsoring or carrying on the scheme. Thus, no penalty could be imposed upon the appellant.
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2019 (12) TMI 477
Pledging/misuse of client securities by the stock broker - violations of the Securities Laws - HELD THAT:- The securities lying in the aforesaid DP account actually belong to the clients which are the legitimate owners of the securities. Therefore, KSBL did not have any legal right to create any kind of pledge on these securities. Even if the client securities were pledged, it should have only been for meeting the obligation of the respective clients which was not observed in this case. Considering the issue of misuse of clients securities by KSBL in unauthorized manner, for its own use and purposely not disclosing the DP account no. 11458979, named KARVY STOCK BROKING LTD (BSE) to the Exchanges in their reporting create a serious doubt on the conduct and integrity of KSBL. The acts of KSBL are prima facie in violation of Stock Broker Regulations, SEBI circular no. SMD/SED/CIR/93/23321 dated November 18, 1993, SEBI Circular No. MRD/DOP/SE/Cir 11/2008 dated April 17, 2008, SEBI Circular No. SEBI/HO/MIRSD/MIRSD2/CIR/P/2016/95 dated September 26, 2016, SEBI Circular No. SEBI/HO/MRD/DP/CIR/P/2016/13 dated December 16, 2016, SEBI Circular No. CIR/MRD/DP/54/2017 dated June 13, 2017, SEBI Circular No. CIR/HO/MIRSD/MIRSD2/CIR/P/2017/64 dated June 22, 2017 and Circular No. CIR/HO/MIRSD/DOP/CIR/P/2019 dated June 20, 2019, as discussed above. Therefore, there is need for urgent regulatory intervention to prevent further misuse of clients securities. In exercise of powers conferred upon me under Sections 11(1), 11(4) and 11B read with Section 19 of the SEBI Act, 1992 and Regulation 35 of SEBI (Intermediaries) Regulations, 2008, by way of this ex parte ad interim order, pending forensic audit, hereby issue the following directions: (i) KSBL is prohibited from taking new clients in respect of its stock broking activities; (ii) The Depositories i.e. NSDL and CDSL, in order to prevent further misuse of clients securities by KSBL, are hereby directed not to act upon any instruction given by KSBL in pursuance of power of attorney given to KSBL by its clients, with immediate effect; (iii) The Depositories shall monitor the movement of securities into and from the DP account of clients of KSBL as DP to ensure that clients operations are not affected; (iv) The Depositories shall not allow transfer of securities from DP account no. 11458979, named KARVY STOCK BROKING LTD (BSE) with immediate effect. The transfer of securities from DP account no. 11458979, named KARVY STOCK BROKING LTD (BSE) shall be permitted only to the respective beneficial owner who has paid in full against these securities, under supervision of NSE; and (v) The Depositories and Stock Exchanges shall initiate appropriate disciplinary regulatory proceedings against the Noticee for misuse of clients funds and securities as per their respective bye laws, rules and regulations;
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Service Tax
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2019 (12) TMI 476
Completion and finishing services - Service tax not paid - re-classification of services - Whether the Tribunal can allow the party to retreat from their earlier stand of paying Service tax under a certain category after claiming the benefit of abatement? - approbation and reprobation on the same issue allowed or not - HELD THAT:- The subject matter in this appeal as also the substantial questions of law, already stand adjudicated by this Court in COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, PANCHKULA VERSUS M/S SATISH KUMAR CONTRACTOR LTD., PANCHKULA [2019 (4) TMI 1008 - PUNJAB AND HARYANA HIGH COURT] wherein this Court while relying on the decision of Hon ble Supreme Court in Lassen Tourbo Ltd. s case [2015 (8) TMI 749 - SUPREME COURT] set aside the service tax demand upto 30.05.2007 and confirmed the same only from 01.06.2007, holding that respondent was providing the services of construction with material and the amount and the material supplied cannot be vivisected. Therefore, the respondent was not liable to pay service tax prior to 1.6.2007 in view of the decision of the Apex Court in COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [2015 (8) TMI 749 - SUPREME COURT] . The subject matter of this appeal is squarely covered by the ratio of judgment reproduced above and therefore, no illegality or perversity could be pointed out in the order passed by the Tribunal which may warrant interference by this Court. Appeal dismissed - decided against Revenue.
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2019 (12) TMI 475
Refund of service tax - Petitioners are aggrieved by levy of Service Tax on services in relation to construction of residential complex as defined under Section 65(105)(zzzh) of the Finance Act, 1994. According to learned counsel for petitioner levy of Service Tax on construction of residential complex was declared invalid as decided in the case of Suresh Kumar Bansal Vs. Union of India and others [ 2016 (6) TMI 192 - DELHI HIGH COURT ] - delay in filing present petition - HELD THAT:- In the present case, petitioners are entitled for refund of Service Tax for financial year 2016-17. They were not party in matters decided by Delhi High Court - Court also finds that present petitioners have approached this Court in November, 2019 for seeking benefit of judgment in Suresh Kumar Bansal rendered by Delhi High Court. Benefit of a judgment, rendered long ago, cannot be extended after huge unexplained delay. Delay and laches in filing present writ petition has not been explained. Consequently benefit of judgment rendered by Delhi High Court cannot be extended to petitioners of this case. Petition dismissed.
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Central Excise
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2019 (12) TMI 474
Valuation - captive consumption - provisional assessment - Order was not passed stated that it was a provisional assessment order - applicability of Section 11A of the Central Excise Act, 1944 - time limitation - Could the respondent authorities have ignored the binding directions of the Hon ble High Court of Delhi to hold that no Show Cause Notice (SCN) was required in the present case as the assessments in question were provisional? HELD THAT:- The fact remains that the appellant voluntarily furnished requisite bonds in Form B-13 referable to Rule 9B supported by bank guarantee for equivalent amount of the differential duty. It is not an undertaking filed pursuant to the order of the Court. Concededly, the order disposing of the writ petitions does not absolve the appellant from the said bonds; nor the endorsements made thereon and on the monthly RT-12 returns, indicating that it was a provisional assessment have been ordered to be effaced. Suffice it to observe that the order dated 10/12.3.1993 passed by the High Court of Delhi, disposing of the writ petitions filed by the appellant in no way extricate the appellant from the process to which the appellant had voluntarily submitted itself at its own volition, namely, under Rule 9B of the Rules. Thus, it was not a case of duty not levied or not paid or shortlevied or shortpaid. The understanding of the parties was absolutely clear that the appellant was liable to pay excise duty, but for the exposition of the High Court of Delhi in J.K. Cotton Spinning Weaving Mills Co. Ltd. Ors. [ 1980 (10) TMI 71 - HIGH COURT OF DELHI ]. Understood thus, the appellant is obliged to fulfill its statutory obligations including those arising from the undertaking/bonds in Form B-13 and cannot resile from the process to which it had submitted itself without any demur, namely under Rule 9B of the Rules. Section 11A of the Act as applicable at the relevant time, would apply to cases of recovery of duties not levied or not paid or short levied or short paid etc. - The case at hand, however, would come within the dispensation predicated by Rule 9B of the Rules, which deals with provisional assessment to duty. The authorities have made endorsements on the bonds and on the monthly RT-12 returns filed by the assessee, indicating that it was a case of provisional assessment. Having submitted to that process, it is not open to the appellant to urge that an express order of provisional assessment has not been passed by the authorities. Whether circumstances for making provisional assessment existed in the present case? - HELD THAT:- In the present case, admittedly there was a dispute pending before the Delhi High Court regarding the excisability of the yarn cleared for captive consumption. Pending final decision of the Delhi High Court, it was open to the appellant to seek and to the proper officer to allow clearance of yarn for captive consumption on provisional assessment basis. In fact, in the B-13 Bond it is recorded that the appellant had sought provisional assessment. Even if the contention of the appellant that the B-13 Bond was executed at the instance of the excise authorities, is accepted, in view of the fact that a dispute was pending before the Delhi High Court, it was open to the proper officer to insist on clearing the yarn for captive consumption on provisional assessment basis. Whether a provisional assessment order was in fact made before clearance of yarn for captive consumption on provisional assessment basis? - HELD THAT:- It is not in dispute that during the period from May, 1981 to May, 1984 the appellant had cleared the yarn for captive consumption by executing B-13 Bond which is applicable to provisionally assessed goods. It is pertinent to note that the Delhi High Court by its interim order had not directed the appellant to execute B-13 Bond. Apart from B-13 Bond, there are various types of Bonds specified in Appendix I to the 1944 Rules, which could be executed by the appellant. The fact that the appellant claims to have executed the B-13 Bond at the instance of the revenue clearly shows that as per the directions given by the proper officer, the clearances have been effected on provisional assessment basis by executing B-13 Bond - It is not the case of the appellant that B-13 bond was executed inadvertently or by mistake. Therefore, having consciously cleared the yarn for captive consumption on provisional assessment basis by executing B-13 Bond as directed by the excise authorities, it is not open to the appellant to contend that there was no order/directions to clear the yarn on provisional assessment basis. The appellant cannot be allowed to approbate and reprobate for inviting the High Court of Delhi to pass interim order stipulating that the appellant would execute bonds in Form B-13 referable to Rule 9B of the Rules and continue to file monthly RT-12 returns from time to time, on which endorsements have been made indicating that it is a case of provisional assessment. The appellant cannot now be permitted to urge that it had not submitted to the process of provisional assessment as such for lack of a specific order of the concerned authority in that behalf. Appeal dismissed.
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2019 (12) TMI 473
Permission for withdrawal of appeal - imposition of penalty - Sabka Vishwas (Legacy Dispute Resolution)Scheme, 2019 - HELD THAT:- Learned counsel for the respondents accepts notice and states that he has no objection if the application is allowed, appeal is dismissed as withdrawn with the leave of the Court to enable the appellant to approach the authorities concerned to avail the relief available to appellant Company under the aforesaid Scheme dated 21.8.2019. Appeal dismissed as withdrawn.
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2019 (12) TMI 472
Maintainability of appeal - Clandestine removal - refund of duty - Assessee states that in compliance of fresh order passed by the learned Tribunal, the amount of claimed refund already stands sanctioned by the Department vide order dated 31.07.2019 passed by the Adjudicating Authority. Hence it is claimed by the respondent- assessee that the present appeal would not survive in the facts of the case. In response counsel for the appellant submits that the department is in process of filing an appeal against the fresh order dated 15.05.2019 passed by the Tribunal. HELD THAT:- It is not disputed that nothing more survives in this appeal - the appeal is disposed of having been rendered infructuous.
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2019 (12) TMI 471
Rebate claim - denied on the ground that the description of goods in ARE-1 and excise invoices do not tally with the description in the shipping bills and commercial invoices as well as purchase orders placed by foreign buyers - Onus to prove - HELD THAT:- The crucial aspect of the rebate claim ought to have been tallied before the rebate is given and since the description of goods mentioned in ARE-1 and excise invoices do not tally with the description of the shipping bills and the commercial invoices as well as with the purchase orders placed by the foreign buyers, it is found that no error has been committed by the lower authorities in passing the Order-in-Original, and the order in Appeal and in further rejecting the revision petition, vide the impugned order. Onus to prove - HELD THAT:- Whenever the assessee claims rebate, the primary and foremost consideration is the identity of goods and the onus to prove the same lies on the claimant, who, in this case has failed to do so, even as observed by the Revisional Authority - Moreover, the findings of fact warrant no interference. Petition dismissed.
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2019 (12) TMI 470
Extended period of limitation - change in classification of goods when the 6 digit code was replaced by 8 digit code - allegation in SCN is that from 1/3/2005 to 31/3/2008, the assessee failed to disclose value of clearances of these disputed items in their monthly returns. The department has issued letter only on 29/4/2008 to the assessee intimating that the goods are subject to levy of central excise duty - HELD THAT:- From the records, the department was well aware that the disputed goods were cleared by the assessee claiming exemption from duty by classifying them under Chapter 49. It is further stated in the letter that as per new harmonised classification which replaced 6 digit code to 8 digit code from 28.2.2005, the goods would attract duty, as the goods fall under Chapter 48. From this letter it is very much clear that the department was well aware that the appellant was clearing the goods without payment of Central Excise duty even after 28.2.2005. There are no evidence indication suppression of facts. It is a dispute of classification. There is no positive act established by the department to show that the appellant suppressed facts with intention to evade payment of duty. The period involved is also the transitional period when the 6 digit code was replaced by 8 digit code and there was a change in the classification of the disputed goods. Thus, the demand raised invoking the extended period cannot sustain - demand is set aside on ground of limitation only.
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CST, VAT & Sales Tax
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2019 (12) TMI 469
Constitutional validity of Amendment to KVAT post GST - Time limitation for reopening of assessment - Legality of the notices and assessment orders issued to the petitioners in connection with the assessment under the Kerala Value Added Tax Act - the notices and assessment are challenged on the ground that the authorities concerned did not have the jurisdiction to issue them since the amendments introduced to Section 25 (1) of the KVAT Act, through the Kerala Finance Acts of 2017 and 2018, notified through gazette notifications dated 19.06.2017 and 31.03.2018 respectively, did not contemplate a retrospective operation of the amended provisions. Whether under the provisions of Section 25 (1) of the KVAT Act, as amended by the Kerala Finance Act, 2017, and before the repeal of the KVAT Act on 22.06.2017, the six year period of limitation for re-opening assessments could be relied upon to issue pre-assessment notices in cases where, by 31.03.2017, the five year period for reopening assessments under the unamended provisions of Section 25 (1) of the KVAT Act had already expired? - whether the amendment to the third proviso to Section 25 (1) of the KVAT Act, through the Kerala Finance Act, 2017, would enable the revenue to re-open assessments in cases where, by 31.03.2017, the five year period for re-opening assessments under the un-amended provisions of Section 25 (1) of the KVAT Act had already expired? - HELD THAT:- In the instant cases, it can be seen that the purpose of the amendment to the third proviso to Section 25 (1) of the KVAT Act was only to extend the time for re-opening those assessments where the period of limitation for re-opening under the unamended provisions was to expire by 31.03.2017. The object of the amendment was to permit a re-opening of such cases till 31.03.2018. The amendment has to be viewed in the backdrop of the introduction of the new regime of GST in the State with effect from 22.06.2017, on which date the KVAT Act was repealed by the State legislature - the circumstances under which the amendment was carried out clearly bring out the intention of the legislature to permit a re-opening of past assessments under the KVAT Act up to 31.03.2018 and it is this intention that must be read into the third proviso to Section 25 (1), as amended with effect from 01.04.2017, so as to give it full effect. In the instant cases, while the main part of Section 25 (1) clearly indicates that the extended period of six years for re-opening assessments is to operate prospectively with effect from 01.04.2017, the third proviso seeks to carve out those assessments, where the period of re-opening would have expired by 31.03.2017, for a differential treatment, by stating that in such cases, the re-opening could be carried out before 31.03.2018. To treat the said proviso as having only prospective effect would render meaningless the words used by the legislature in the said proviso and accord to it the same meaning as the main provision. Thus, under the provisions of Section 25 (1) of the KVAT Act, as amended by the Kerala Finance Act, 2017, and before the repeal of the KVAT Act on 22.06.2017, the six year period of limitation for re-opening assessments could not be relied upon to issue pre-assessment notices in cases where, by 31.03.2017, the five year period for reopening assessments under the unamended provisions of Section 25 (1) of the KVAT Act had already expired - the amendment to the third proviso to Section 25 (1) of the KVAT Act, through the Kerala Finance Act, 2017, would enable the revenue to re-open assessments in cases where, by 31.03.2017, the five year period for re-opening assessments under the un-amended provisions of Section 25 (1) of the KVAT Act had already expired. Whether, after the CAA, 2016, and the repeal of the KVAT Act pursuant thereto, on 22.06.2017, the State legislature retained any residual power of legislation so as to amend the provisions of Section 25 (1) of the KVAT Act through the Kerala Finance Act, 2018? - HELD THAT:- The amendments effected to Section 25 (1) of the KVAT Act, through the Kerala Finance Act 2017, were before the repeal of the KVAT Act with effect from 22.06.2017. The provision as it stood then, and in particular the third proviso thereto, authorised the re-opening of past assessments till 31.03.2018. The amendment effected through the Kerala Finance Act, 2018, with effect from 01.04.2018, enlarged the period for re-opening past assessments from 31.03.2018 to 31.03.2019. Under ordinary circumstances, and based on my findings above as regards the effect of the amendments brought into the third proviso to Section 25 (1) by the Kerala Finance Act, 2017, the legislative measures should have sufficed to justify a reopening of past assessments up to 31.03.2019, notwithstanding that the amendment itself was effective only from 01.04.2018. However, the intervention of the CAA 2016, and the consequent repeal of the KVAT Act with effect from 22.06.2017, has a bearing on the legality of the 2018 amendment - The power to amend a statute being a facet of the legislative power itself, the State legislature could not have exercised a power to amend the KVAT Act, save to the extent permitted, when it did not retain any residual right to further legislate on the subject of taxes on sale or purchase of goods. At the time of repeal of the KVAT Act, and simultaneous enactment of the State GST Act with a savings clause therein, the savings clause operated only to save rights, privileges, immunities, action taken etc under the erstwhile enactment as it stood at the time of its repeal, which included the amendments brought in through the Kerala Finance Act, 2017. There could not have been any further legislative exercise by the State legislature in relation to the repealed KVAT Act - The amendments to Section 25 of the KVAT Act, through the Kerala Finance Act, 2018 are declared illegal and unconstitutional in as much as they were beyond the legislative competence of the State Legislature - thus, the issue has to be answered in the negative and in favour of the writ petitioners. Petition disposed off.
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2019 (12) TMI 468
Review of order - Leave sought by the Petitioner to withdraw writ petition with liberty to file appeal against the order passed by the Maharashtra Sales Tax Tribunal - power of Court to condone delay - HELD THAT:- The Respondents seek to rely upon the decision of the Supreme Court in the case of Superintending Engineer, Dehar Power House v. Excise and Taxation Officer, Sunder Nagar [ 2019 (11) TMI 6 - SUPREME COURT ] to contend that there is a power in the Court to condone delay under section 5 of the Limitation Act even in an appeal filed under section 27 of the MVAT Act. Thus, it is a contested issue which could be considered at the hearing of the petition. The order id recalled - review petition allowed.
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2019 (12) TMI 467
Amendment in registration certificate - proprietorship firm, without dissolution entered into partnership firm - whether partnership firm is required to apply for a fresh registration certificate or amendment is permissible as per section 75 of the VAT Act? - HELD THAT:- Section 75 of the VAT Act casts a duty upon the dealer to inform his Assessing Authority about the change in the ownership of his business where the provisions of sections 17 18 apply - Rule 33 authorizes a dealer to inform about the change in the business in requisite Form - XII within a period of 30 days; whereas, sections 17 14(a) of the VAT Act clearly provide that where there is a change in the constitution of a firm without dissolution thereof, then it is not necessary for the dealer to apply for a fresh certificate of registration. In the case in hand, on constitution of a partnership firm, the dealer immediately moved a duly signed application for amendment on 02.11.2011 in the registration certificate in Form - XII prescribed under Rule 33 of the U.P. Value Added Tax Rules and submitted on 25.11.2011 within the prescribed limit of 30 days - Further, the record reveals that there is no finding against the dealer that the change in the constitution was not informed to the Department in proper format within the prescribed period. Therefore, the dealer has duly given information to his Assessing Authority as per the requirement of section 75 of the VAT Act with regard to change of his business which includes the change in the ownership of the business. The authorities below were not justified in rejecting the amendment application of the revisionist - question of law is answered in favour of the revisionist and against the Department - revision allowed.
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2019 (12) TMI 466
Imposition of penalty u/s 9(2A) of CST Act, 1956 - difference of tax was arrived at from the turnover which were available in the books of accounts - no concealment of turnover as such - HELD THAT:- No question of law raises in the present tax case revision. The learned Tribunal has recorded the finding of the fact that the turnover in question is very much reflected in the books of accounts and there is no justification for imposition of penalty for concealment of turnover - The said facts as found do not give rise to any question of law. The tax case revision, filed by State, has no merit - Revision dismissed.
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2019 (12) TMI 465
Principles of natural justice - validity of assessment assessment - any time to file objections to the proposed notice, or providing opportunity of hearing, not granted - also non-consideration of request for reopen of assessment filed by the petitioner - AP VAT Act - CST Act - HELD THAT:- It is a fit case where the relief sought for by the petitioner can be granted to the extent of directing the authority to reopen assessment filed by the petitioner through letter, dated 2.5.2017 and deal with the acceptance of the documents, more particularly, C form and H form declarations and then pass orders in accordance with law, within a period of three months from the date of receipt of a copy of this order. Petition allowed.
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Indian Laws
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2019 (12) TMI 479
Grant of anticipatory bail - petitioner acted as a guarantor to a loan facility obtained by one of the sister concern Society of the Company i.e. Prabhu Dayal Memorial Religious Educational Association. The said Society defaulted in repayment of the loan - all the bank accounts of accused company and other directors have been freezed to stop the further movement of invested amount of the investors - HELD THAT:- Keeping in view the serious allegations mentioned above against the petitioner, who has played key role in the present case and due to the material documents which are required to be seized from the petitioner, for which custodial interrogation is required, therefore, I am not inclined to grant anticipatory bail to the petitioner. Petition dismissed.
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