TMI Tax Updates - e-Newsletter
December 23, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
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GST:
Requirement of pre-deposit - Appeal before the GST tribunal to be filed against the order of first appellate authority (commissioner appeals) - The petitioner is permitted to deposit 20% of the remaining amount of tax in dispute and as soon as the said amount is deposited, the recovery proceedings for the balance amount shall remain stayed as provided under sub-section (9) of Section 112 of the Act.
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GST:
Profiteering - purchase of flat in the Respondent’s project “Nirala Greenshire” - t the total quantum of profiteering by an entity/registrant is the sum total of all the benefits that stood denied to each of the recipients/consumers individually. The intent of the words “commensurate reduction” is also clearly explained by the words “by reduction in price”.
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Income Tax:
Revision u/s 263 - We fail to understand the relevance of the balance sheet of the loanees for establishing their creditworthiness when all other relevant documents for the same, i.e. return of income of the loanees and copy of their bank statement from which the loans were advanced were filed and no adverse observation with respect to the same has been made by the Ld. Pr. CIT effecting the creditworthiness of the loanees.
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Income Tax:
Centralization of case - centralized for administrative requirement or other reasons - because of the possibility of the involvement of the assessee in a scam having international ramifications it may not have been possible for the Revenue department to have expressed or given more reasons than what were given in the impugned order and, in the facts of the present case this would be in the larger public interest - Petition dismissed.
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Income Tax:
Rejection of declaration filed under the Income Declaration Scheme, 2016 (IDS) - payment of advance claimed to be adjusted - Admittedly, there was no regular assessment for the said year, whereby the said advance tax could have been adjusted. - Therefore, there is no logic or rationale in denying the petitioner credit of this amount while computing the amount payable by him under the IDS
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Income Tax:
Claim of credit for foreign TDS - the object of section 91(1) is to give relief from taxation in India to extent taxes have been paid abroad for relevant previous year and this relief is not dependent upon payment also being made in previous year. - claim of credit for foreign TDS should be allowed in favour of the assessee.
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Income Tax:
Revision u/s 263 - tax liability under the normal provision of the Act and u/s 115JB Minimum Alternate Tax - the order of the AO may be erroneous but it is not prejudicial to the interest of the revenue - the order passed by the ld. PCIT quashed.
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Income Tax:
Revision u/s 263 - Merely just because the view taken by the AO was not found acceptable does not mean that the AO has failed to make requisite enquiries. Thus, the view taken by the AO was plausible view, which cannot be disturbed by the Ld. Pr.CIT.
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Income Tax:
Credit of TDS - government cannot sit over amount withheld and credit has to be allowed to the assessee in the year rent in advance is offered by the assessee for income.
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Customs:
Amendment in Policy condition No. 2 (iii) to Chapter 95 of ITC(HS), 2017-Schedule 1 (Import Policy) – Procedure to be followed for clearance of toys
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Customs:
Obviously the report obtained by the Revenue Authorities from the sample taken from the confiscated export goods vide Report dated 16.10.2009, was more reliable rather than the Report dated 22.10.2009 produced by the Assessee. - Rejection of the prayer by the learned Tribunal for retesting of the sample in question, especially after a long period of about 9 years was justified
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FEMA:
Clarification on FDI Policy on Contract Manufacturing - FDI in Contract Manufacturing is governed by provisions of para 5.2.5.1 of Press Note 4 (2019). However, compliance with all the conditions enumerated in the FDI Policy and as notified under FEMA would continue to be responsibility of the manufacturing entity.
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Corporate Law:
Oppression and Mismanagement - The impugned Judgment dated 9th July, 2018 passed by the National Company Law Tribunal, Mumbai, is set aside - Remarks made against the Appellants, Mr. Cyrus Pallonji Mistry and others stand expunged.
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SEBI:
Securities and Exchange Board of India (Foreign Portfolio Investors) (Amendment) Regulations, 2019
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Service Tax:
Valuation - inclusion of reimbursable expenses - contribution towards Provident Fund and ESI of the labour - the service provider (appellant) was liable to be charged service tax qua service rendered by him and the valuation of taxable service could not be anything more or less than the consideration paid for rendering such a service. - Demand set aside.
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Service Tax:
Dispute between parties in relation to proof of services rendered and service tax liability - Seeking help from service tax department to prove its case - Praying for Issuing of a subpoena upon the Principal Chief Commissioner, Service Tax - production of authenticated copy of Form ST-3 - A subpoena is directed to be issued.
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Central Excise:
Loss of value of seized goods - insecticides - expiry of seized goods - Petitioner should and must have sold goods by availing the release as soon as provisional release order was passed. Thus, we find that Petitioner and Respondent must equally bear loss of value of goods.
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VAT:
Classification of goods - printing materials - amounts to "works contract" and not sale, during the relevant period and as such since the extended definition of goods under CST Act came on the Statute book only with effect from 11.05.2002, no tax under the CST Act can be imposed on the Assessee prior to 11.05.2002, on works contracts.
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VAT:
Reassessment - Alleged escapement of turnover - The impugned reassessment notice, sitting over the view of Commissioner is nothing but judicial and hierarchical indiscipline on the part of Assessing Authority and misuse of such powers.
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2019 (12) TMI 926
Requirement of pre-deposit - Appeal before the GST tribunal to be filed against the order of first appellate authority (commissioner appeals) - Recovery proceedings - U.P. Goods Service Tax Act, 2017 - petitioner had deposited 10% of the disputed tax liability as provided under sub-section (6) of Section 107 of the Act - HELD THAT:- The petitioner is permitted to deposit 20% of the remaining amount of tax in dispute and as soon as the said amount is deposited, the recovery proceedings for the balance amount shall remain stayed as provided under sub-section (9) of Section 112 of the Act. List in the third week of January, 2020.
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2019 (12) TMI 925
Filing of Form TRAN-I - grievance of the petitioner is that it could not upload the details of un-utilized Input Tax Credit - HELD THAT:- Petition is allowed with permission/modification to file the said Statutory Form TRAN-I by 31.12.2019.
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2019 (12) TMI 924
Detention order - discrepancy noticed after the physical verification of the goods and conveyance - section 129(1) of the Central Goods and Services Tax Act, 2017 - HELD THAT:- Issue Notice, returnable on 20th December 2019.
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2019 (12) TMI 923
Profiteering - purchase of flat in the Respondent s project Nirala Greenshire - Respondent had not passed on the commensurate benefit of input tax credit - contravention of section 171 of CGST Act - penalty - HELD THAT:- The provisions of Section 171 of the CGST Act, 2017 are aimed at ensuring that the recipient gets the commensurate benefit, in the form of reduction of price, in case of any tax rate reduction and/or incremental benefit of ITC (i.e. a sacrifice made by the Govt. from its tax kitty) and the method of interpretation of this provision has been given in the text of Section 171 of the CGST Act, 2017 itself. We observe that the said provision clearly links profiteering to be a function of each supply of goods or services or both and hence, profiteering needs to be computed at the level of each invoice and not at the entity level or any consolidated level. From a complete reading of Section 171 of the Act ibid, it is amply clear that the total quantum of profiteering by an entity/registrant is the sum total of all the benefits that stood denied to each of the recipients/consumers individually. The intent of the words commensurate reduction is also clearly explained by the words by reduction in price . The Authority hereby determines the profiteered amount as ₹ 2,88,43,422/- as per the provisions of Rule 133 (1) of the above Rules. The above amount shall be paid by the Respondent to the eligible buyers as per the details given in Annexure-21 of the DGAP s above Report within a period of 3 months from the date of passing of this order along with interest @18% per annum from the date from which the above amount was collected by him from the buyers till the payment is made failing which it shall be recovered by the concerned Commissioner CGST/SGST and paid to the concerned eligible buyers - this Authority under Rule 133 (3) (a) of the CGST Rules, 2017 orders that the Respondent shall reduce the prices to be realized from the buyers of the flats commensurate with the benefit of ITC received by him. Penalty - HELD THAT:- It is also evident from the above narration of facts that the Respondent has denied benefit of ITC to the buyers of the flats being constructed by him in his present project in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has committed an offence under Section 171 (3A) of the above Act and therefore, he is liable for imposition of penalty under the provisions of the Section - Accordingly, a SCN be issued to him directing him to explain as to 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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Income Tax
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2019 (12) TMI 922
Reopening of assessment - taking into consideration the jantri value of the land sold by the petitioner - as submitted that the reasons recorded for reopening the assessment are erroneous inasmuch as section 50C of the Act does not require the land to be valued at the jantri rate, but as per the valuation made by the Stamp Valuation Authority - HELD THAT:- Having regard to the submissions advanced by the learned advocate for the petitioner, issue Notice, returnable on 27.01.2020. By way of ad-interim relief, further proceedings pursuant to the impugned notice dated 31.03.2019 issued under section 148 of the Act for assessment year 2012-13 are hereby stayed.
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2019 (12) TMI 921
Revision u/s 263 - assessee had obtained certain unsecured loans during the year in question - case was selected for limited scrutiny through CASS and notice u/s 143 (2) was issued and on being satisfied the Assessing Officer accepted the return income of the assessee - HELD THAT:- Documents relating to the persons who had granted the loans had not only been submitted before the Assessing Officer but had also been produced before the Commissioner and at no stage was it pointed out that from a perusal of those documents, a case was made out for further requiring the assessee to obtain the balance sheets of all those persons and the Tribunal in these circumstances firstly held that the Commissioner erred in holding that the bank statement and the income tax returns had not been filed before the Assessing Officer and secondly the Tribunal noticed and further held no infirmity has been pointed out by the Ld. Pr. CIT in the same in his entire order which would show that the creditworthiness of the loanees was doubtful and the AO having not taken cognizance of the same had committed an error causing prejudice to the Revenue. We fail to understand the relevance of the balance sheet of the loanees for establishing their creditworthiness when all other relevant documents for the same, i.e. return of income of the loanees and copy of their bank statement from which the loans were advanced were filed and no adverse observation with respect to the same has been made by the Ld. Pr. CIT effecting the creditworthiness of the loanees. - Decided against revenue
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2019 (12) TMI 920
Centralization of case - centralized for administrative requirement or other reasons - HELD THAT:- In the present case, when the survey was conducted on 3.8.2016 a detailed questionnaire was put to the Chairman-cum-Managing Director of the petitioner, and the replies he had given to the questions clearly indicate that he was well aware of the reasons for which the exercise was being carried out. It is not a case where the assessee was left in the dark, not knowing what the reasons were for the centralization of its case. A perusal of the pleadings and the documents shown to us (in a sealed cover) reveal that the petitioners had full and complete knowledge of the reasons which had weighed with the competent authority while passing the order of centralization of the cases. The petitioners in the replication have also strangely not denied any of the averment made by the Revenue in the preliminary objections of their written statement. In fact, as rightly pointed out by counsel for the Revenue, totally vague and evasive replies have been given to paragraph No.2 of the written statement and there is no categoric denial to the averment that the petitioners were connected in some manner to the Augusta Westland case and to the Gautam Khaitan Group of companies. In our considered opinion, because of the possibility of the involvement of the assessee in a scam having international ramifications it may not have been possible for the Revenue department to have expressed or given more reasons than what were given in the impugned order and, in the facts of the present case this would be in the larger public interest; particularly when we find that the reasons were well knows to the petitioners.
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2019 (12) TMI 919
Declaration filed under the Income Declaration Scheme, 2016 (IDS) rejected - payment of advance claimed to be adjusted - failure to pay the tax, surcharge and penalty on the undisclosed income declared by him before the due date, i.e., September 30, 2017 - HELD THAT:- Once the tax deducted at source relevant for the period covered by the declaration filed under the Income Declaration Scheme is given credit as per the Central Board of Direct Taxes' clarification itself, there is no logic as to why advance tax paid for the very same period, which has not been given credit to earlier, should not be adjusted against the amount payable under the Income Declaration Scheme. In the case on hand, the declaration of the petitioner pertains to the assessment years 2010-11 to 2015-16. The advance tax of ₹ 1,10,000 was paid by him for the assessment year 2013-14. Admittedly, there was no regular assessment for the said year, whereby the said advance tax could have been adjusted. Therefore, there is no logic or rationale in denying the petitioner credit of this amount while computing the amount payable by him under the Income Declaration Scheme. The writ petition is accordingly allowed setting aside the impugned pro- ceedings dated February 6, 2018 passed by the Principal Commissioner of Income-tax-6, Hyderabad, rejecting the declaration filed by the petitioner under the Income Declaration Scheme, 2016. The said declaration shall be considered afresh by the Principal Commissioner of Income-tax-6, Hyderabad, duly giving credit not only to the tax deducted at source but also to the advance tax paid by the petitioner for the assessment year 2013- 14.
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2019 (12) TMI 918
Addition u/s 69 - assessee had purchased two properties during the year under consideration and stated that he had taken loan from relatives in part and rest was invested out of his own sources - HELD THAT:- Contention of the assessee was not accepted by the Ld. CIT(A) on the ground that the assessee has been changing his stance. Assessee has also furnished certain documentary evidences demonstrating that the joint owner of the property being brother of the assessee has also contributed for the acquisition of property as he made remittances from Kuwait. It is a fact that the assessee has been changing his stand but it is also fact that the assessee has filed certain evidences in support of his contention that the brother of assessee remitted certain amounts from Kuwait who happened to be co-owner of the properties in question. There is no finding by the lower authorities as to what happened to money which the assessee claimed to have received as gift/loan. Under these facts, we deem it proper to restore this issue to the file of the Ld. CIT(A) to decide the issue afresh after examining the aspect of remittance by the co-owner of the property and also the loan/gift claimed by the assessee. Ground of the assessee s appeal is allowed for statistical purposes.
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2019 (12) TMI 917
Penalty levied u/s.271(1)(c) - income declared during the course of survey - HELD THAT:- AO should be clear as to which of the two limbs under which penalty is imposable, has been contravened or indicate that both have been contravened while initiating penalty proceedings. It cannot be that the initiation of penalty proceedings would be on both the limbs i.e. for furnishing inaccurate particulars of income or concealment of income or without any limbs of Section 271(1)(c) of the Act. The Assessing Officer has to mention specific limbs while imposing penalty u/s.271(1)(c) of the Act. The sanctity in terms of natural justice with regard to this proposition is that the assessee under the scheme of welfare legislation which is embedded in the Income Tax Act, 1961 should get an opportunity to prepare himself for the defense as regards to the exact charge on which penalty is imposed upon him u/s. 271(1)(c) of the Act. In the instant case, the charge is vague and therefore, levy of penalty is not warranted. Appeal of the assessee is allowed.
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2019 (12) TMI 916
Reopening of assessment u/s 147 - as argued approval granted by the Addl. CIT, Range-16, New Delhi is a mechanical and without application of mind - HELD THAT:- Approval granted by the Addl. CIT, Range-16, New Delhi is a mechanical and without application of mind, which is not valid for initiating the reassessment proceedings issue of notice u/s. 148 and is not in accordance with section 151 of the I.T. Act, 1961, thus, the notice issued u/s. 148 of the Act is invalid and accordingly the reopening in this is bad in law and therefore, the same is hereby quashed. Accordingly, the legal ground no. 1 raised by the assessee is allowed.
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2019 (12) TMI 915
TDS u/s 194A - Disallow of interest u/s 40(a)(ia) - non deduction of TDS - HELD THAT:- The amendment to section 194A was expressly provided from the prospective date of 1st June 2015 but not retrospectively. In the instant case the A.Y. involved is 2014-15, hence, the amendment to section 194A has no application in assessee s case. Since the facts are identical and the Ld.CIT(A) followed the order of this Tribunal, we decide the issue in favour of the assessee and uphold the order of the Ld.CIT(A). The revenue s appeal on this ground is dismissed. Amortization of government securities - HELD THAT:- The assessee is required to maintain 25% of its demand and time liabilities in the form of liquid assets as per the provisions of section 24 of the Banking Regulation Act, 1949. In compliance with these provisions, the assessee purchased some government securities. As per the RBI guidelines, where the cost of acquisition of these securities is more than their face value, such excess amount has to be amortised over the remaining period of maturity. The assessee claimed towards amortization for the impugned assessment year. The AO treated the same as contingent liability and disallowed the same. Against which the assessee went on appeal before the CIT(A) and the CIT(A) allowed the appeal of the assessee following the order of this Tribunal in the assessee s own case for the A.Y. 2012-13 and 2013-14 - Issue is remitted back to the file of the AO with a direction to decide the appeal afresh as per the directions given by the Ld.CIT(A) and also keeping in view of latest direction of the RBI
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2019 (12) TMI 914
Penalty u/s.271(1)(c) - penalty is leviable either for concealment of income or furnishing of inaccurate particulars of income - Assessee filing revised return disclosed his entire income in totality and have paid taxes - HELD THAT:- Revised return was accepted and taxes paid accordingly. No further addition was made by the AO in the case of the assessee. In such scenario, in the instant case of the assessee as well, no penalty u/s.271(1)(c) of the Act can be imposed. While levying penalty u/s.271(1)(c) AO has recorded his satisfaction at the time of framing original assessment order based on the original return filed by the assessee u/s.139(1) of the Act. That however, while survey was conducted which resulted in levy of the penalty, during that time no separate satisfaction was recorded by the AO before initiation of penalty proceedings. This is also not legally permissible as observed by the Pune Bench of the Tribunal in the case of Ashok S. Agarwal Vs. the Deputy Commissioner of Income Tax [ 2018 (6) TMI 1678 - ITAT PUNE] . It is not a fit case for levy of penalty u/s.271(1)(c) of the Act. Hence, we set aside the order of the Ld. CIT(Appeal) and direct the Assessing Officer to delete the penalty from the hands of the assessee. Appeal of the assessee is allowed.
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2019 (12) TMI 913
Revision u/s 263 - assessment was completed u/s. 143(3) - HELD THAT:- The way in which assessment should be finalized falls in the exclusive domain of the AO. Section 142(1) speaks of inquiry before assessment and gives immense power to the A.O. for conducting enquiry. Therefore, the A.O. u/s 142(1)(ii) (iii) can ask the assessee almost any information which he think necessary for passing assessment order. The assessing officer has conducted a detailed scrutiny and thorough enquiry in respect of capital introduced and labour charges. After going through the information furnished by assessee, we note that it is not a case of inadequate scrutiny as noted by the ld CIT in his order u/s 263 of the Act. Thorough examinations of the details and documents and explanations submitted by the A.R. of the assessee (in respect of labour charges and capital introduced), as per requisitions sought by the A.O. and as deemed fit for computing the true taxable income, the assessment was completed u/s. 143(3) of the Act, therefore, it is not a case of inadequate scrutiny hence the order passed by the AO is neither erroneous nor prejudicial to the interest of Revenue, therefore, we quash the order passed by ld PCIT under section 263 of the Act.
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2019 (12) TMI 912
Deduction on account of interest u/s 36(1)(iii) - as per DR before us is that the case of the assessee of commercial expediency behind the incurring of interest expenditure in question was not substantiated by any documentary evidence and the CIT(A) accepted the case of the assessee without considering this vital aspect - HELD THAT:- In the present case, the commercial expediency of the interest expenditure in question was duly established by the assessee and on appreciation of the relevant facts of the case of the assessee as well as keeping in view the decision in the case of S.A. Builders [ 2006 (12) TMI 82 - SUPREME COURT] as well as Reliance Communications Infrastructure Ltd. 2006 (12) TMI 82 - SUPREME COURT] the claim of the assessee for the interest expenditure was allowed by the Ld. CIT(A). We, therefore, find no merit in the contention of the DR that the claim of the assessee for interest expenditure was allowed by the CIT(A) without considering the vital aspect of commercial expediency. In our opinion, when the relevant borrowed funds were utilised by the assessee company for making investment in its subsidy engaged in the same business, the business purpose of the investment as well as its commercial expediency was duly established and the interest paid by the assessee on the borrowed funds was allowable as deduction u/s 36(1)(iii) as held interalia by the Hon ble Supreme Court in the case of S.A. Builders (supra) as well as by the Hon ble Bombay High Court in the case of Reliance Communications Infrastructure Ltd. (supra). - Appeal of the Revenue is dismissed.
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2019 (12) TMI 911
Capital gain computation - CIT(A) in not considering the date of agreement as the date of purchase for computation of capital gain u/s 48 - HELD THAT:- For the computation of the capital gain arisen out of the aforesaid sale, the assessee has taken the date of purchase of the above property as 31.01.2009 which is the date of agreement to purchase as against the actual date of purchase i.e., 21.03.2013. As find the AO treated the date of purchase of the property as 21.03.2013 and determined the gain arising on sale of the property as short-term capital gain whereas, according to the assessee, the property is a long-term capital asset since the holding period is more than 36 months if the date of agreement to purchase the property is considered as the date of acquisition. In the case of Nilam R. Kataria [ 2019 (6) TMI 1052 - ITAT AHMEDABAD] after considering the various decisions, came to the conclusion that the period of holding of the asset has to be considered from the date of allotment of the property and not from the date of actual registration. We direct the AO to consider the date of agreement to sell as the date of acquisition and accordingly compute the long-term capital gain. The grounds raised by the assessee are accordingly allowed.
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2019 (12) TMI 910
Reopening of assessment u/s 147 - as argued reasons recorded and satisfaction / approval accorded is not within the meaning of section 151 - HELD THAT:- Approval granted by the Pr. CIT-4, New Delhi is a mechanical and without application of mind, which is not valid for initiating the reassessment proceedings, because from the aforesaid remarks, it is not coming out as to which material; information; documents and which other aspects have been gone through and examined by the Pr. CIT-4, New Delhi for reaching to the satisfaction for granting approval. Thereafter, the AO has mechanically issued notice u/s. 148 of the Act. The judicial decisions relied upon by the Ld. Sr. DR, have been duly considered. Reopening in the case of the assessee for the asstt. Year in dispute is bad in law and deserves to be quashed. - Decided in favour of assessee.
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2019 (12) TMI 909
Revision u/s 263 - Characterization of interest earned on funds primarily brought for infusion in the business - HELD THAT:- PCIT while reading the provisions of section 263 of the Act and the decision of Hon ble Apex Court in the case of M/s. Tuticorin Alkali Chemicals and Fertilizers Ltd [ 1997 (7) TMI 4 - SUPREME COURT] reached a conclusion that inasmuch as there was no specific inquiry by the Assessing Officer, the assessment order was erroneous in so far as it is prejudicial to the interest of Revenue. He does not conduct any independent enquiry to reach the conclusion that the assessment order was erroneous in so far as it is prejudicial to the interest of Revenue. If we accept the submission of the ld. DR that since all the material was available on record, there was no need for the PCIT to conduct any further inquiry, it also inures to the benefit of the assessee because all these things are available on record and the assessee specifically submitted that the difference in the ITR and 26AS occurred because of the adjustment of the interest received against the project expenditure. Admittedly, this is the only project conducted by the assessee and there is no other project. In such an event, it is not the passive submission to be recorded to the AO, but also actively pleading before him that the interest received was adjusted against the project expenditure. Hon ble jurisdictional High court considered the decision of the Hon ble Apex Court in the case of M/s. Tuticorin Alkali Chemicals and Fertilizers Ltd.(supra) and Bokaro Steel Ltd. [ 1998 (12) TMI 4 - SUPREME COURT] in Indian Oil Panipat Power Consortium Ltd. Vs. ITO [ 2009 (2) TMI 32 - DELHI HIGH COURT] and held that the interest earned on funds primarily brought for infusion in the business could not have been classified as income from other sources. Further, unlike in the case of M/s. Tuticorin Alkali Chemicals and Fertilizers Ltd.(supra), in the case on hand, the assessee had already commenced business. Viewing from another angle, we are of the considered opinion that the ld. PCIT is not justified in invoking the jurisdiction u/s. 263 of the Act or to hold that the assessment order is erroneous or prejudicial to the interest of Revenueand we find it difficult to sustain the same. Hence, we allow the ground appeal.
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2019 (12) TMI 908
Penalty u/s 271(1)(c) - search proceeding carried out under section 132 - whether the assessee can be visited with the penalty with respect to the income disclosed by him in such proceedings voluntarily and without finding any incriminating document during the course of search? - HELD THAT:- Assessee has already disclosed impugned long term capital gain in the return filed under section 139 of the Act. But the addition in the assessment framed under section 153A r.w.s. 143(3) of the Act was made on account of the difference in the rate adopted by the assessee vis-a-vis adopted by the Revenue as on 1st April 1981. The assessee has taken the rate at ₹ 84.80 per square feet for the acquisition of the land whereas the AO has adopted the rate at ₹ 15 per square feet for the acquisition of such land as on 1-4-1981. Thus the addition was made on account of the difference in the rate and not on the basis of any incriminating document found during the course of search. Additional income in the return filed under section 153A of the Act was voluntarily and without having found any income/documents by the Revenue in the manner provided under explanation 5A to section 271(1)(c) of the Act. As such, there was not found any undisclosed income by the Revenue in the course of such conducted under section 132 of the Act. Thus, it is inferred that such addition was not based on the document found during the course of search. There cannot be any penalty under explanation 5A to section 271(1)(c) of the Act until and unless it supported on the basis of incriminating document. At the time of the hearing, a query was raised to the Ld. DR whether the income disclosed by the assessee in pursuance to the search was based on the incriminating document, but he failed to bring any material on record. Therefore, in the absence of any documentary evidence, we infer that the additional income offered to tax cannot be subject to the penalty under explanation 5A to section 271(1)(c) of the Act. - Decided in favour of assessee
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2019 (12) TMI 907
Disallowance in respect of bad debts - bad debts comprising of settlement of claims and appended a note no. 31 to financial statements to that effect and not acknowledged by Reliance entities as debts - AO rejected the claim of the assessee by holding that the amounts written off were sham transactions and was a methodology to reduce tax liability in the hands of the assessee - CIT(A) partly allowed the appeal of the assessee - HELD THAT:- Revenue has not disputed the dealings by the assessee company with Reliance entities which have been offered by the assessee to tax. We are also not in agreement with the findings of the CIT(A) that the said transactions were sham transactions especially when the revenue offered by the assessee has accepted by the Revenue authorities. Moreover, the issue is squarely covered by the decision of the Hon'ble Supreme Court in the case of T.R.F. Ltd. [ 2010 (2) TMI 211 - SUPREME COURT] wherein held that once the debts are written off as irrecoverable, that is sufficient and assessee is not required to prove that the debt has actually become bad during the year. Thus order of the learned CIT(A) cannot be sustained as the assessee has written off the bad debts as same have been offered to tax by the assessee in the earlier year and accepted by the Revenue - Decided in favour of assessee.
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2019 (12) TMI 906
Additions on account of expenditure made on gifts given to doctors and disallowing claim of deductions u/s.35AB(1) and u/s.35(1)(iv) - HELD THAT:- We observe that in assessee s own case for assessment year 2011-12, the Tribunal had an opportunity to examine this issue and it was brought to the notice of the Tribunal that in assessee s own case for assessment year 2010-11 [ 2018 (2) TMI 52 - ITAT PUNE] the matter was decided in favour of the assessee. Thereafter, the Tribunal while deciding this issue for assessment year 2011-12 (supra.) had held that considering rule of consistency, this issue of disallowance of marketing and sales promotion expenses should be allowed in favour of the assessee and that the Circular issued by the Medical Counsel of India read with Circular issued by the CBDT do not cover the Drug making companies like the present assessee. Claim of credit for foreign TDS - HELD THAT:- Decision of Mumbai Bench of the Tribunal in the case of JCIT Vs. Petroleum India International [ 2008 (9) TMI 398 - ITAT BOMBAY-E] and submitted that identical issue came before the Tribunal and the Tribunal decided the same in favour of the assessee. The Ld. Counsel further placed reliance on the judgment of the Hon ble Jurisdictional High Court in the case of CIT Vs. Petroleum India International [ 2013 (2) TMI 99 - BOMBAY HIGH COURT] wherein the Hon ble High Court has held that the object of section 91(1) is to give relief from taxation in India to extent taxes have been paid abroad for relevant previous year and this relief is not dependent upon payment also being made in previous year. We find the said issue i.e. claim of credit for foreign TDS should be allowed in favour of the assessee.
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2019 (12) TMI 905
Revision u/s 263 - tax liability under the normal provision of the Act and under section 115JB Minimum Alternate Tax - HELD THAT:- Tax liability of the assessee under the normal provisions of I.T Act comes at ₹ 42,93,91,857/-(after adjusting the disputed amount by ld PCIT), whereas the tax liability u/s 115JB-MAT comes to the tune of ₹ 53,51,67,527/- which is more than normal income tax liability. As per the scheme of the Act, the assessee is supposed to pay the income tax as per Minimum Alternate Tax under section 115JB which is more than the tax liability computed under the normal provision of the Act. If for the time being, we presume that the issue discussed by the ld. PCIT is correct and after giving the effect of the issue raised by the ld. PCIT, even then the tax liability under the normal provision would be below than the tax liability u/s 115JB of the Act therefore there is no loss to the Revenue. Therefore, we can conclude that the order of the Assessing Officer may be erroneous but it is not prejudicial to the interest of the revenue. In order to exercise the jurisdiction u/s 263 of the Act, the ld PCIT needs to satisfy two conditions namely, i) the order is erroneous and ii) the order is prejudicial to the interest of revenue. In the assessee`s case under consideration one of the conditions prejudicial to the interest of the revenue is not satisfied therefore the order passed by the ld. PCIT needs to be quashed. As the issue is squarely covered in favour of the assessee by the decision of M/s ARL Infratech Ltdin [ 2018 (1) TMI 1552 - ITAT JAIPUR] and there is no change in facts and law and the Revenue is unable to produce any material to controvert the aforesaid findings of the Division Bench (supra). We find no reason to interfere in the said order of the Division Bench, therefore, respectfully following the judgment of the Division Bench we conclude that order passed by the assessing officer is not prejudicial to the interest of Revenue, hence we quash the order of ld PCIT under section 263 of the Act. - Decided in favour of assessee
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2019 (12) TMI 904
Revision u/s 263 - case was selected under scrutiny, and accordingly order u/s. 143(3) was passed on 28.12.2016 by assessing total income of Rs. Nil - disallowance u/s.14A read with Rule 8D and the claim u/s. 57(iii) of the Act which is to be proper verified - HELD THAT: - Hon`ble Supreme Court in CIT v. Max India Ltd. [ 2007 (11) TMI 12 - SUPREME COURT] reiterated that the phrase prejudicial to the interests of the Revenue as used in section 263(1) must be read in conjunction with the expression erroneous and unless the view taken by the Assessing Officer is found to be unsustainable in law, the powers under section 263 of the Act cannot be invoked. The order passed by the AO, in our opinion, shall be deemed to be erroneous in so far as it prejudicial to the interest of the Revenue, if the Pr. CIT would have specifically pointed out which of inquiries or verification should have been carried out by the AO in this regard and the AO failed to carry out those inquiries and verification as desired by the Pr. Commissioner of Income-tax. Since the Pr. CIT has not suggested the basis of inquiry or verification to be carried out by the AO, the order passed by the AO cannot be deemed to be erroneous in so as far as it is prejudicial to the interest of the Revenue. In the light of the above mentioned judicial precedents and facts of the present case, we are of the opinion that the AO has adopted one possible legal view sustainable in law on the issue and mere invoking proviso based on revenue audit objection amounts non application of mind. Merely just because the view taken by the AO was not found acceptable does not mean that the AO has failed to make requisite enquiries. Thus, the view taken by the AO was plausible view, which cannot be disturbed by the Ld. Pr.CIT. Therefore, we find that twin condition were not satisfied for invoking the jurisdiction under section 263 - Appeal of the assessee is allowed.
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2019 (12) TMI 903
Credit of TDS - claim not allowed by the AO on the ground that corresponding amount received from the deductor, M/s Root Corporation Ltd. has been shown by the assessee only as advance rent and not rental income for the year under consideration - Assessee contested that benefit of deduction of the tax has to be allowed to the assessee and the government cannot sit over the money of the taxpayer without any credit - HELD THAT:- CIT(A) after considering the position of the law in detail, relying on the decision of the Hon ble Andhra Pradesh High Court in the case of Sri Y Rathiesh Vs. Commissioner of Income Tax [ 2014 (9) TMI 2 - ANDHRA PRADESH HIGH COURT] has upheld the withdrawal of TDS credit by the Assessing Officer. We do not find any error in the order of the learned CIT(A) on the issue in dispute. However, we are of the considered opinion that government cannot sit over amount withheld and credit has to be allowed to the assessee in the year rent in advance is offered by the assessee for income. The grounds of the appeal of the assessee with respect to TDS credit are accordingly partly allowed. Addition of expenses pertaining to the house property, income from which has been offered under the head income from house property - deduction for expenses incurred on said property already stand covered by the 30% deduction under the income from house property - HELD THAT:- Assessee failed to substantiate that the expenses in dispute pertains to portion of the property, income from which is not included under the head income from house property . The claim of the assessee cannot be allowed in absence of substantiation with documentary evidences. We do not find any error in the order of the learned CIT(A) on the issue in dispute and accordingly, we uphold the same. The ground of the assessee related to disallowance are accordingly dismissed.
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2019 (12) TMI 902
TP Adjustment - Comparable selection - TPO rejected M/s. R System International Ltd. as comparable on the ground that this company is having different financial year ending i.e. December - CIT(A) directing Transfer Pricing Officer to include M/s. R System International Ltd. as comparable - HELD THAT:- When financial results are available in the public domain and result of M/s. R. Systems International Ltd. has been recasted on the basis of audited quarterly result and audited financial results, we are of the considered view that no error has been committed by the ld. CIT (A). So, we find no ground to interfere into the findings returned by the ld. CIT (A) on this issue, hence ground no.1 is determined against the Revenue. Benchmarking of receivables on the ground that receivables were not separate international transactions - recharacterisation was not permitted, non-application of SBI base rate for benchmarking etc. and has given invoice details of receivables along with their duration, proceeded to apply the interest @ 11.69% to bring the transactions qua receivables at arm s length by deeming the receivables outstanding beyond the period stipulated in the service agreement/invoice as deemed loan advanced - HELD THAT:- Following the order passed by the Tribunal in taxpayer s own case for AY 2009-10 [ 2018 (4) TMI 926 - ITAT DELHI] we are of the considered view that in the instant case, the period of outstanding receivables is ranging between 25 days to 365 days and facts and circumstances are identical, so no interest can be charged on the receivables with AEs, hence ld. CIT (A) has rightly ordered to delete the addition. Consequently, ground no.2 is determined against the Revenue.
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2019 (12) TMI 901
Reopening of assessment u/s 147 - recomputing the book profits of the assessee us/ 115JB - HELD THAT:- As per the first proviso to sec. 147 of the Act an action u/s 147 can be taken in a case where an assessment was already completed u/s 143(3) of the Act within the period of 4 years from the end of relevant asst. year. However, if there is failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that assessment. year then the notice u/s 148 of the Act can be issued within a period of 6 years from the end of the relevant asst. year. The question therefore is as to whether it can be said in the present case that there was a failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. In this regard it is clear from the perusal of the order passed u/s 143(3) of the Act that same item which have not been added to the book profits u/s 115JB were added in the originally concluded assessment. proceedings u/s 143(3) of the Act when the total income of the assessee was computed under the normal provisions of the Act. Therefore, it cannot be said that there was any failure on the part of the assessee to fully and truly disclose all material facts necessary for his assessment. There was no failure on the part of the assessee to fully and truly disclose material facts, the reopening of the assessment u/s 147 beyond the period of 4 years is not valid. Consequently the order of re-assessment u/s 147 of the Act is liable to be annulled on this ground and is hereby annulled. In view of the decision on the aforesaid ground on the validity of initiation of proceedings u/s 147 of the Act, the issues on merits of the appeal of the assessee are not being considered.
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2019 (12) TMI 900
Revision u/s 263 - Assessment u/s 153A - bogus purchases calculating at the rate of 2% of URD purchases made in cash by AO - HELD THAT:- Assumption of inaccurate particulars/facts: In this regard, we examined the revision order of the Pr.CIT and search for the details of entire facts, which were correctly assumed by the Assessing Officer while making the reassessment u/s 153A r.w.s. 143(3) of the Act. We find that the allegation of the Pr.CIT is unspecific and vague. Therefore, such allegations are now stand rejected. Accordingly, the same is decided in favour of the assessee. Complete lack of application of mind - The catch words of the new inserted provisions of the said Explanation 2 of section 263 of the Act is (i) without making enquiries or (ii) verification which should have been made and (iii) allowing any relief without enquiring into the claim. On examination of each of these expressions, we find the core issue of URD purchases were repeatedly examined over a period of months/years and issued number of letters/notices after carefully examining three sets of Paper Books containing 1000 and above pages. Further, we find that it is not a case of granting of relief at all but it is a case of making a disallowance out of the URD purchases. Therefore, the provisions of clause (b) of Explanation 2 to section 263 of the Act do not apply to the facts of the present case. Inadequate enquiry or verification which should have been made - Allegations in the order of the Pr.CIT are general in nature and unspecific to the indirect assumption of facts and uncertain of the left over enquiries has to be conducted. The Pr.CIT has not made out a case to allege that the Assessing Officer is of complete lack of application of mind. Further, contrary to the same, we find the Assessing Officer and his team invoked the provisions of section 131 regarding the statement of the URD purchases and examining the Paper Books filed by the assessee on this issue etc before a view is taken about the requirement of making disallowance at the rate of 2% of such URD purchases in cash. Para 11 of this order contains the chronology of events and the Assessing Officer s effects in scrutinizing the same issue relating to URD purchases. Thus, it is a case of taking a view on the matter by the Assessing Officer. Pr.CIT decision to take another possible view, which is not permitted in law. Therefore, from the above, it is not a case for assumption of jurisdiction u/s 263 - Decided in favour of assessee.
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2019 (12) TMI 880
Re-assessment proceedings initiated u/s 147/148 - HELD THAT:- If the recorded reasons shout contradiction and inconsistency it means necessary satisfaction in terms of the statutory provision has not been recorded at all. AO was not competent to continue with the proceeding under section 147 on some other issues or grounds which were not mentioned in the reasons recorded under section 148(2). A plain reading of Explanation (3) to Sec. 147 shows that for the purpose of reassessment u/s 147 the AO can reassess income in receipt of an issue which escaped assessments and such other income which comes to his notice subsequently in the course of proceedings under the said section even though the reasons for such issue/income were not included in the recorded reasons. The explanation (3) however pre-supposes that the issue with reference to which the reason was recorded, was found to be legally judicially tenable and with reference thereto the AO is able to prove that income had indeed escaped assessment. It is only when the AO is able to establish valid initiation of reassessment proceedings with reference to the recorded reasons and in the reassessment u/s 147; such income is also assessed; only then the AO will be able to be expand the scope of reassessment proceedings by assessing any other escaped income which comes to his notice in the course of reassessment. If on the other hand, the AO is not able to justify the reopening of a concluded assessment with reference to reasons recorded u/s148(2) or where on examination of assessee's submissions AO agrees that on the basis of reasons recorded it cannot be held that income had escaped assessment within the meaning of Sec. 147 then in such an event the very reopening of a concluded assessment stands vitiated and therefore the AO cannot expand the scope of reassessment by including some more issues or reasons which did not find mention in the reasons recorded u/s148(2). For that we rely on the judgment of the Hon`ble Bombay High Court in the case of CIT Vs Jet Airways India Ltd [ 2010 (4) TMI 431 - HIGH COURT OF BOMBAY] In view of the facts narrated above and the binding precedents applicable to the facts, we are of the view that the reasons recorded are bad in law therefore we quash the reassessment order passed by AO under section 147/148 - Decided in favour of assessee.
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2019 (12) TMI 879
Penalty u/s 271(1)(c) - assessee has challenged the order of the AO before the ld.CIT(A) on the ground that AO imposed penalty u/sec.271(1)(c) which is not in accordance with the provisions of the Act - HELD THAT:- In this case the AO has issued penalty notice in which the AO has not marked one of the two limbs i.e. concealment of particulars of income or furnishing inaccurate particulars of income and has issued notice in mechanical manner in standard format without application of mind. The notice issued by the AO is not valid as the AO failed to mention the charge on which the penalty was proposed to be levied thereby depriving the assessee to respond to the charge on which the penalty was proposed to be levied. The case is squarely covered by the decision of THE COMMISSIONER OF INCOME TAX-11 VERSUS SHRI SAMSON PERINCHERY [ 2017 (1) TMI 1292 - BOMBAY HIGH COURT ] which provides that failure on the part of the AO to state the charge on which the penalty was proposed to be levied would render the penalty order as invalid and ab initio and thus penalty cannot be sustained. - Appeal of assessee is allowed.
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2019 (12) TMI 878
Revision u/s 263 - non application of mind by PCIT - PCIT need not to take guidance from AO to revise the assessment order - HELD THAT:- PCIT exercised his jurisdiction under section 263 of the Act based on the proposal received from AO for revision of the Assessment Order. It means, the ld PCIT is using the mind of the assessing officer to revise the order of AO u/s 263 which according to us is not the scheme of section 263 of the Act. PCIT ought to apply his own mind to examine whether order passed by the assessing officer is erroneous and prejudicial to the interest of revenue. That is, ld PCIT should examine the assessment records and assessment order made by AO to find out the error in the assessment order, as the power under section 263 is given to ld PCIT and not to ld AO. PCIT need not to take guidance from AO to revise the assessment order. That is, the revisional jurisdiction vested with the PCIT as per the scheme of the Act. The Act gives various powers to various authorities to exercise powers and they have to exercise powers in their respective given sphere which is clearly ear-marked and spelled out by the statute. Thus, the revisional jurisdiction exercised by the ld PCIT is not in accordance to law therefore, order passed by the ld PCIT u/s 263 of the Act is not sustainable in law.
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Customs
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2019 (12) TMI 899
Exemption from payment of cost recovery charges - Whether the appellant can be held responsible for non-payment of cost recovery charges when no calculation was made by the Revenue? - HELD THAT:- The appellant started working as CFS with effect from 1-3-2008 and as per instruction dated 14-12-1995 read with Circular No. 52/97-Cus., dated 17-10-1997, a CFS is required to deposit in advance the cost recovery charges. It is fact on record that cost recovery charges are to be calculated by the Revenue, the appellant cannot pay cost recovery charges without calculation of demand of cost recovery charges payable by the appellant. Therefore, in the absence of any calculation of the demand made by the Revenue, the appellant cannot be responsible for non-payment of cost recovery charges. As per C.B.E. C. circular dated 12-9-2005, if CFS achieved bench mark performance during the previous years, it is entitled for waiver of charges. Admittedly, in this case the appellant has achieved the bench mark performance within the initial two years. As the appellant has achieved the bench mark performance, in that circumstance, the Revenue is duty bound to examine the issue and disposed of the claim of waiver failing which the Revenue cannot continue to demand of cost recovery charges from the appellant. On perusal of the said provision, the CFS is required to pay the cost recovery charges at rate and manner specified by the Ministry. As, no manner or rate has been prescribed under the regulation or any other way subsequent to the regulation, in that circumstance, we are of the view that cost recovery charges cannot be demanded from the appellant. Respondent during 2008-2010 achieved benchmark performance and instructions of 2005 as well 2009 nowhere require filing of application by CFS seeking waiver of cost recovery charges. As per instructions no dues should be pending on 31.8.2005 and it is not case of Appellant that anything was pending against Respondent on 31.8.2005. Even otherwise, the Respondent cleared dues of 2008-10 prior to notice dated 04.06.2012(Annexure A-1) issued by Appellant. Prior to 2009 only instructions were holding the field and Respondent-CFS cannot be asked to pay cost recovery charges when it had already achieved benchmark performance which is the paramount requirement. The Respondent has not claimed exemption for the period 2008-2010, thus there seems no reason to charge cost of officers when benchmark performance stood achieved. There are substance in the findings recorded by Tribunal that no demand of cost of officers can be made in the absence of specified rates and manner. Appeal dismissed - decided in favor of appellant.
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2019 (12) TMI 898
Detention of goods - EPCG Scheme - benefit of concessional rate of duty - recovery of the differential customs duty - HELD THAT:- Although it is a fact that the petitioner could not install the items of capital machinery imported by them under the EPCG scheme within the specified time after their import, it is also a fact that their case for waiver of the procedural requirements under the EPCG scheme is pending consideration before the 5th respondent, pursuant to a permission stated to have been granted to them by the 3rd respondent through a communication dated 28.12.2018 - The application for review of the earlier decision of the EPCG Committee, rejecting their request for waiver of the procedural conditions under the EPCG scheme, appears to be based on the general power of review that is conferred on the DGFT under paragraph 9.13 of the Handbook of Procedures to the Foreign Trade Policy, 2015-20. If a decision favourable to the petitioner is taken by the said committee in the review petition, then it would obviate the necessity for pursuing the demand for differential customs duty at the instance of the authorities under the Customs Act - therefore, it would be prudent for this Court to direct the 5th respondent Committee, headed by the 3rd respondent, to consider and pass orders on Ext.P34 application within an outer time limit of six months from the date receipt of a copy of this judgment, after hearing the petitioner in the matter. The impugned detention notices cannot survive - Petition disposed off.
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2019 (12) TMI 897
Levy of redemption fine and penalty - export of Cow Crunch Upper Finished Leather - DGFT Public Notice dated 27.5.1992 - retesting sought after a long period - HELD THAT:- Rejection of the prayer for retesting after a long period on the part by the Tribunal cannot be faulted. Even though the Assessee obtained a Report from the same Institute on 22.10.2009, the product description shown in that Report viz., Cow Lining Leather Colour: OLIVE (KISSEL)(IV)(1) is also not the same as the export of the goods in question which is subject matter of the present case viz., 'Finished Leather'. The Report dated 16.10.2009 relied upon by the Revenue, gives the description of the sample is Cow Softy Upper Leather (Crunch) Colour: OLIVE (VI)(1)(E) . A mere difference of description of the goods in these two Reports given by the CLRI itself, as obtained by the Revenue and Assessee, cannot be fatal to the reliance placed by the Revenue on the said Report dated 16.10.2009 which pertained to the confiscated goods only. There are no force in the contention raised by the learned counsel for the Assessee that on the basis of the report adduced by the Assessee before the Tribunal vide dated 22.10.2009, though obtained shortly after the report dated 16.10.2009, the Tribunal was required to direct a retest. Obviously the sample goods sent by the Assessee for testing was not from the lot of the goods exported or goods confiscated by the Revenue in question. Therefore, obviously the report obtained by the Revenue Authorities from the sample taken from the confiscated export goods vide Report dated 16.10.2009, was more reliable rather than the Report dated 22.10.2009 produced by the Assessee. Rejection of the prayer by the learned Tribunal for retesting of the sample in question, especially after a long period of about 9 years was justified - Appeal dismissed.
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2019 (12) TMI 896
Refund claim - unjust enrichment - case of Revenue is that although the appellant is a manufacturer and has captively consumed the imported goods they have not discharged the burden of showing that the unjust enrichment does not apply to their case - HELD THAT:- The balance sheet does show as a heading balance with excise sales tax authorities . The certificate of the cost accountant indicated that the differential custom duty was included in this receivables account. There are no evidence to the contrary in the records before me. Evidently, the amount is added in the books of accounts as amount receivables and not as cost of raw materials and it could not have been passed on indirectly to the customers. The appellant is entitled to refund of the differential duty and their claim is not hit by the clause of unjust enrichment - appeal allowed - decided in favor of appellant.
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Corporate Laws
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2019 (12) TMI 895
Oppression and Mismanagement - case of appellant is that an abiding theme of Respondents conduct is the consistent and steady squeezeout of the Appellants rights and title to, and interest in, their ownership of 1st Respondent Company in a manner that is lacking in probity and is unfair - conversion from Public Company to Private Company - HELD THAT:- It is not open to the Respondents to state or allege that loss in different Tata Companies was due to mismanagement of Mr. Cyrus Pallonji Mistry (11th Respondent). If that be so, why the nominated Directors who have affirmative voting right over the majority decision of the Board or in the Annual General Meeting of the shareholders allowed the Tata Companies to function in a manner which caused loss, as accepted in the press release dated 10th November, 2016. The consecutive chain of events coming to fore from the correspondence referred elsewhere in this Judgment amply demonstrates that impairment of confidence with reference to conduct of affairs of company was not attributable to probity qua Mr. Cyrus Pallonji Mistry but to unfair abuse of powers on the part of other Respondents. The Press Statement of Tata Sons Limited dated 10th November, 2016 facts of which were never discussed by Board is an afterthought of Respondents to put all blame on Mr. Cyrus Pallonji Mistry (11th Respondent). The Board of Directors majority decision of which is guided by the affirmative vote of the nominated members, have failed to explain as to why the Board failed in its duties and not noticed the loss of any of the Tata Companies . The fact of investment of ₹ 1,00,000 Crores out of ₹ 6,00,000 Crores by Shapoorji Pallonji Group to consider the effect of absence of a nominee Director of minority group ( Shapoorji Pallonji Group ) or a Director who can take care of minority members (group). On the other hand, in terms of Article 104B read with Article 121 and 121A, the nominee Directors of the Tata Trusts have control over the meeting of the Board of Directors, having power to annul the majority decision by refraining from exercise of affirmative vote - Even in absence of such right of minority members ( Shapoorji Pallonji Group ), because of healthy atmosphere and clear understanding between two groups i.e. Tata Group and Shapoorji Pallonji Group for last 40 years, except for few years in between thereof, one of the persons of Shapoorji Pallonji Group was made as the Executive Chairman or Director, which includes Mr. Cyrus Pallonji Mistry (11th Respondent) and his father Mr. Pallonji Shapoorji Mistry. Shapoorji Pallonji Group , minority shareholders, all the time had confidence on the decision making power of the Board of Directors of the Tata Sons Ltd. as amity and goodwill prevailed inter se the two groups. The Tata Sons Limited remained silent for more than 13 years and never took any step for conversion in terms of Section 43A (4) of the Companies Act, 1956. Even after enactment of the Companies Act, 2013 which came into force since 1st April, 2014, for more than three years, it had not taken any step under Section 14. Till date, no application has been filed before the Tribunal under Section 14(2) of the Companies Act, 2013 for its conversion from Public Company to Private Company - In absence of any such approval by the Tribunal under Section 14, we hold that Tata Sons Limited cannot be treated or converted as a Private Company on the basis of definition under Section 2(68) of the Companies Act, 2013. The Resolution dated 24th October, 2016 passed by the Board of Directors of Company removing Mr. Cyrus Pallonji Mistry (11th Respondent) as the Executive Chairman of the Company ( Tata Sons ) is declared illegal; all consequential decisions taken by Tata Companies for removal of Mr. Cyrus Pallonji Mistry (11th Respondent) as Directors of such companies are also declared illegal. The impugned Judgment dated 9th July, 2018 passed by the National Company Law Tribunal, Mumbai, is set aside - Remarks made against the Appellants, Mr. Cyrus Pallonji Mistry and others stand expunged. Both the appeals are allowed - appeal allowed.
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Insolvency & Bankruptcy
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2019 (12) TMI 894
Maintainability of application - initiation of CIRP - Corporate debtor defaulted in making repayment - existence of debt and dispute or not - HELD THAT:- As per the order dated 01.08.2019 of this tribunal it is noted that the Corporate Debtor is not in a position to clear the debt that due presently. Hence this tribunal vide the order dated 01.08.2019 direct the Corporate Debtor to file an affidavit in relation to the admission of claim. From the definition of Operational creditor and Operational Debt'', it can be seen that the applicant has provided services to the respondent and has placed sufficient evidence to prove its claim. There was a default in payment of claimed amount, and the respondent failed to establish the fact that there is a pending dispute between the parties in respect of the amount claimed. Moreover, the respondent has also filed an affidavit in which it has been submitted that Respondent is not in the position to honour the debt owed to the Operational Creditor - In light of the same, such application deserves to be admitted for triggering Corporate Insolvency Resolution Process against the respondent corporate debtor. Besides, the respondent had not issued any notice of dispute after receiving demand notice in terms of Section 8 of the Code. The present petition is complete and there has been default in payment of dues by the respondent. Therefore, on fulfilment of the requirements of section 9 (5) (i) (a) to (d) of the Code, the present petition warrants admission. Petition admitted - moratorium declared.
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2019 (12) TMI 893
Maintainability of application - initiation of CIRP - Corporate Debtor defaulted in making repayment - Financial Debt - whether any coupon rate is prescribed or not comes within the 'financial debt'? - HELD THAT:- This Tribunal is of the view that both at the time of initial agreement dated 28.03.2011 as well as under the Amendment Agreements, the 'Investor Debentures' being a part of 'Investor Securities' falls within the definition of 'Financial Debt' as 'debentures' by its very nature, taking into consideration the provisions of Section 3(30) of the Companies Act, 2013, of which this Tribunal can take recourse to in the absence of any definition contained in IBC, 2016 of 'debentures' in view of Section 3(37) of IBC, 2016, is defined to include debenture stock, bonds or any other instrument of a company evidencing a debt, whether constituting a charge on the assets of the company or not, the 'debt' which was due and payable, when the event of default happened in the instant case as per the agreements prior to settlement agreement in the year 2015 and hence the contention that the Petitioner cannot be considered as a 'Financial Creditor' or the amount claimed as a 'Financial Debt' is not acceptable. The Settlement Agreement is only a sequel to the earlier agreements under which investments were made, and in any case the Settlement Agreement treats the total amount as a 'debt' payable with interest cannot be denied by the Corporate Debtor in the capacity as a promoter/developer as both of them/all of them are jointly and severally liable for the amounts due to the Financial Creditor having signed the agreements jointly and in the circumstances the contention that no privity of contract exists as between the parties raised by the Corporate Debtor cannot also be accepted. Thus when repayment was demanded and since there has been no repayment till date, whether it be of 'debenture' or 'loan' being attendant with payment of interest or not, as agreed between the parties and the amount being disbursed against the consideration for the time value of money thereby falling within the definition of 'Financial Debt' and there is default in repayment of the 'financial debt' and that a default has been committed in terms of Section 3(12) of the Code of a 'financial debt' as defined under Section 5(8) of the Code and that the Applicant has rightly invoked the provisions of the Code. Application admitted - moratorium declared.
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Service Tax
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2019 (12) TMI 892
Permission for withdrawal of appeal - liability of excise duty - job-work - N/N. 214/86-CE(NT) dated 25.03.1986 - HELD THAT:- In view of instructions dated 22.08.2019 (A-1) issued by Central Board of Indirect Taxes and Customs in exercise of power conferred by Section 35(R) of the Central Excise Act made applicable to the Service Tax vide Section 83 of the Finance Act, whereby the monetary limit for filing appeal before the Hon'ble High Courts has been revised to ₹ 1 Crore and these instructions will apply to the pending cases as well as duty involved in this appeal is ₹ 34 lacs, Appeal dismissed as withdrawn. The instant appeal is dismissed as withdrawn.
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2019 (12) TMI 891
Refund of service tax incorrectly paid - rented premises being used for agriculture purpose was exempt from payment of Service Tax - refund was rejected on the ground of time limitation - HELD THAT:- It emerged that wrongly paid Service Tax could only be refunded to FCI upon showing that the burden was not passed on to the consumer i.e. Department of Food and Supplies; and that HAFED would have to release the withheld amount equal to the service tax element incorrectly paid with the Tax Authorities. Accordingly, Mr.Sourabh Goyal, Counsel for the Revenue was directed to work out the mechanism for refund of aforesaid amount from one government institution to the other. Simultaneously while directing FCI/HAFED to bring the withheld lease amount, the matter was adjourned to 24.9.2019. Revenue has produced a copy of letter dated 13.12.2019 written by Assistant Commissioner, Govt. of India, Ministry of Finance, Department of Revenue and addressed to Deputy Commissioner (Law) CGST Commissionerate, Rohtak stating therein that in terms of the order dated 24.9.2019 passed by this Court, refund claim submitted by the FCI was examined and thereafter cheque No.651380 dated 13.12.2019 amounting to ₹ 2,58,19,711/- favouring FCI,Hisar was handed over to the representative of FCI Hisar. The petitioner concedes that in terms of the order dated 24.9.2019 passed by this Court, petitioner-landlord has been paid due amount by HAFED, which was released by the competent authority through FCI to the tenant- HAFED - petition disposed off as infructuous.
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2019 (12) TMI 890
Valuation - inclusion of reimbursable expenses - contribution towards Provident Fund and ESI of the labour provided by the appellant to his clients - whether included in the gross amount or not - Rule 5 of the Service Tax (Determination of Value) Rules, 2006 - Section 67 of the Finance Act, 1994 - Non-speaking order - principles of natural justice - HELD THAT:- The controversy involved in the present case duly stands answered by the decision of the Hon ble Apex Court in UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT] and the judgment of the Division Bench of Kerala High Court in SECURITY AGENCIES ASSOCIATION, M/S. RELIANCE SECURITY AGENCY VERSUS UNION OF INDIA REPRESENTED BY THE SECRETARY TO GOVERNMENT, MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, NEW DELHI, THE CENTRAL BOARD OF EXCISE AND CUSTOMS, NEW DELHI, THE CHIEF COMMISSIONER OF CENTRAL EXCISE, ERNAKULAM AND THE ASST. COMMISSIONER OF CENTRAL EXCISE, PALAKKAD [ 2019 (2) TMI 774 - KERALA HIGH COURT] , relied upon by learned counsel for the respondent, fails to advance the case of the respondent. The Kerala High Court was dealing with a situation prior to amendment of Section 67 of the Act effected on 01.05.2006, whereas, in the present case we are considering the case of the appellant after the amendment - Hence, the service provider (appellant) was liable to be charged service tax qua service rendered by him and the valuation of taxable service could not be anything more or less than the consideration paid for rendering such a service. Appeal allowed.
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2019 (12) TMI 889
Dispute between parties in relation to proof of services rendered and service tax liability - Seeking help from service tax department to prove its case - Praying for Issuing of a subpoena upon the Principal Chief Commissioner, Service Tax - production of authenticated copy of Form ST-3 for the financial year 2012-2013 - case of the defendants is that the majority of the bills which the plaintiff claims to be due and payable are either fictitious or have already been cleared twice over. Whether the plaintiff will suffer or is likely to suffer any prejudice, if production of the document is called for? HELD THAT:- The view of this Court to that question is clearly in the negative. It is nobody s case that the document, if produced, would establish that no service tax amounts have been deposited by the plaintiff to the account of the defendants. On the contrary, the document is necessary to prove and/or corroborate the evidence of the plaintiff s witness that service tax has been deposited by the plaintiff on the defendant s account but no document has been submitted from which this would be evident. It was the specific case of the plaintiff s witness that the plaintiff has filed its return of service tax for the Financial Year 2012 - 2013 and that no corroborative documents have been disclosed but that the plaintiff is ready to produce the same. The evidence, therefore, leads this Court to presume that there may be documents which would lend credence to the plaintiff s case that the plaintiff has indeed deposited service tax to the account of the defendants in relation to the transactions forming the subject matter of the suit. Hence, the resistance of the plaintiff to the present application is quite confounding as the document may actually come to the aid of the plaintiff in proving its case. After all the plaintiff must prove the amounts claimed in the suit. The position in this case would have been different if the defendants had called for the document without the plaintiff s witness deposing either to service tax or any deposit made in relation to such. The plaintiff s witness has not only made specific statements in relation to deposit of service tax but also offered to produce the documents in question. The most important issue is that the bills, forming part of Exhibit-G, disclose a clear component relating to service tax. These bills admittedly form the basis of the plaintiff s claim in the suit. A subpoena is directed to be issued upon the Principal Chief Commissioner, Service Tax - I, Kolkata Commissionerate, Range-XVIII for production of the original or authenticated copy of Form ST-3 for the Financial Year 2012 - 2013 for the period of October, 2012 - March, 2013 as filed by Crown Transport Private Limited having service tax no.AABCC3754HSD001 - application allowed.
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Central Excise
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2019 (12) TMI 888
Loss of value of seized goods - insecticides - expiry of seized goods - direction to Respondents to pay value of goods, which have expired and could not be sold due to seizure - HELD THAT:- Respondent-DGCEI seized insecticides which are having shelf life on account of expiry date. The goods were seized on 17.11.2015 and provisional release order was passed on 13.4.2016 i.e. after the expiry of 5 months. The release conditions were onerous which this court vide order dated 13.6.2016 modified. The value of goods and the fact that goods have become unfit for sale is not in dispute. Respondent is not solely at fault and responsible for loss of goods as alleged by Petitioner, whereas we find that Petitioner is also partially responsible - Petitioner should and must have sold goods by availing the release as soon as provisional release order was passed. Thus, we find that Petitioner and Respondent must equally bear loss of value of goods. Petitioner is entitled to 50% of value of goods, as aforesaid determined, which are lying in the factory premises of the Petitioner. The Respondent shall refund in cash 50% of value of goods within one month from the date of receipt of copy of this order failing which the petitioner shall be entitled to payment of interest at the rate of 9% on the aforesaid amount due from the date of present order till the date of payment, which the Department would be free to recover from the sanctioning/competent Authority. Petition allowed.
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2019 (12) TMI 887
100% EOU - Refund of education cess paid for third time - legality of payment of Education Cess for the third time - refund claim rejected on the ground of unjust enrichment - HELD THAT:- The Adjudicating authority initially rejected the refund claim on the ground of limitation since the same was filed in 2010 for the payment made under protest. However, the Appellate Commissioner in the order set aside the said findings observing that the education cess was paid for the third time under protest, therefore, not barred by limitation under Section 11B of Central Excise Act, 1944. However, he concludes that since the Appellant failed to establish that the burden of duty has not been passed on to the customer, therefore, not eligible for refund. The documents referred to by the Commissioner (Appeals) have not been examined by the Adjudicating authority, while analysing the refund claim. He has passed the order only on the issue of limitation, without scrutiny of other issues. It is necessary to remand the matter to the Adjudicating authority to analyse the relevant documents relating to unjust enrichment, quantum of refund admissible, etc. Needless to say that a reasonable opportunity of hearing be given to the Appellant - appeal allowed by way of remand.
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CST, VAT & Sales Tax
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2019 (12) TMI 886
Process amounting to manufacture or not - processing of Blue Leather into Finished Leather by undertaking the various processes to complete the same into Finished Leather - benefit of concessional rate of tax - Section 3(3) of the TNGST Act - HELD THAT:- The said controversy as to whether the conversion of the wet leather into finished leather came into consideration in the case of Golden Leathers vs. Secretary, Tamilnadu Sales Tax Appellate Tribunal [ 2010 (4) TMI 535 - MADRAS HIGH COURT ], wherein discussing the Tanning process undertaken by the manufacturing unit of the leather industry, a Division Bench of this Court concluded that conversion of Wet Leather into Finished Leather amounted to 'manufacture' and therefore, the concessional rate of tax under section 3 was available to such manufacturer. There is no doubt that the Tribunal was justified in allowing the Appeal of the Assessee and holding that the the process of conversion of Wet Blue Leather into Finished Leather amounts to 'manufacture' within the meaning of Section 3 and therefore there was no misuse of declaration in Form 17 by the Assessee while purchasing chemicals for processing the leather and therefore, the Assessee was not liable to pay higher rate of tax on such purchase of materials. Revision petition dismissed - decided against Revenue.
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2019 (12) TMI 885
Liability of purchase tax - inclusion of freight charges or delivery charges paid by the Sugar Mills, Assessee to the Lorry Owners for getting the sugar cane from the fields of the sugar cane growers to the factory gate in assessable value - TNGST Act - HELD THAT:- The controversy is no longer res integra as this very controversy came to be decided by a Full Bench of this court in the case of Chengalvarayan Co-operative Sugar Mills Limited v. State of Tamil Nadu [ 1996 (7) TMI 522 - MADRAS HIGH COURT ] which came to be affirmed by the Hon'ble Supreme Court in the case of E.I.D. Parry (I) Ltd. v. Assistant Commissioner of Commercial Taxes [ 1999 (12) TMI 708 - SUPREME COURT ] and later on followed by the Hon'ble Supreme Court in the case of Ponni Sugars (Erode) Ltd. v. Deputy Commercial Tax Officer [ 2005 (11) TMI 247 - SUPREME COURT ] where it was held that the transport subsidy formed part of the consideration for the purchase of the sugarcane by the appellant from the sugarcane growers. There are no reason to take a different view as there is no distinction on facts in the present case and the purchase of sugar cane by the Assessee Sugar Mill during the period in question also happened in a similar way and therefore, the mere bifurcation of prices in the invoices to the extent of transport charges or plantation subsidy will not materially affect the aforesaid prevailing legal position. The Tribunal is justified in imposing the purchase tax on the Assessee Sugar Mill on the entire purchase price including the components of price for the sugar cane, plantation subsidy and transportation charges paid by the Assessee for transportation of sugar cane from the sugarcane fields to the factory premises of the Petitioner. The Tax Cases filed by Assessee fail and they are devoid of merits and they are liable to be dismissed - Appeal dismissed.
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2019 (12) TMI 884
Classification of goods - printing materials manufactured out of their own materials and sold by dealers - whether liable to be taxed as printed materials or not? - HELD THAT:- The work of printing the materials and supplying it to the individual customers as per their requirements obviously amounts to works contract and not sale, during the relevant period and as such since the extended definition of goods under CST Act came on the Statute book only with effect from 11.05.2002, no tax under the CST Act can be imposed on the Assessee prior to 11.05.2002, on works contracts. Petition allowed - decided in favor of assessee.
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2019 (12) TMI 883
Validity of assessment order - Karnataka Value Added Tax Act, 2003 - garnishee notice - petitioner has sought for permission to file appeals against the impugned VAT and CST assessment orders before the Joint Commissioner of Commercial Tax (Appeals) seeking a direction to the said authority to consider the said appeals without raising issue of limitation - HELD THAT:- The prescribed authority has concluded the assessments for the periods in question and accordingly issued demand notices and the garnishee notices. Being aggrieved, the petitioner is before this Court. There is no legal impediment to consider the alternative prayer of the petitioner so as to relegate the petitioner to avail the alternative and efficacious statutory appeal available under the provisions of the KVAT Act and CST Act since the issue involved herein certainly involves the question of facts and law - the petitioner is permitted to file the statutory appeal before the Appellate Authority. If such an appeal is preferred within a period of two weeks from the date of receipt of certified copy of the order, the same shall be considered by the Appellate Authority on merits without objecting to the period of limitation. Garnishee notice being issued by the respondent - HELD THAT:- This Court deems it appropriate to stay the Garnishee notice until the Appellate Authority decides the application to be filed by the petitioner seeking stay of the demand pursuant to the assessment orders impugned herein, subject to compliance of Section 63[4] of the Act. Petition disposed off.
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2019 (12) TMI 882
Principles of natural justice - opportunity of personal hearing not provided - validity of assessment order - main grievance of the petitioner in this case is that the impugned orders were passed without affording an opportunity of personal hearing - HELD THAT:- Though counter affidavit filed by the respondent specifically states that the notice of personal hearing dated 09.06.2018 was served on the petitioner s representative on 12.06.2018, no such reference is made in the impugned orders at any place. In fact the impugned orders referred only the notice of proposal and the dealers objections, without making any reference to the notice of personal hearing. Therefore, it is evident that the contention of the petitioner that no such notice was served on them has some force and consequently, the matter needs to be remitted back to the Assessing Officer to give such opportunity and pass fresh orders of assessment. Since this Court finds that no such notice seems to have been issued, as there is no reference to that effect in the impugned orders, this Court is of the view that the matter needs to be remitted back to the Assessing Office for passing fresh orders of assessment. Appeal allowed by way of remand.
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2019 (12) TMI 881
Reassessment - Alleged escapement of turnover - polyster, cotton blended yarn - violation of condition of the Notification in G.O.Ms.No.111, Commercial Taxes and Religious Endowments, dated 7th April 1998 - consignment/branch transfers of the goods - change of opinion - HELD THAT:- In view of the terms employed in the said Notification dated 7th April 1998, examining the facts of the Assessee itself, the Assessing Authority himself had applied the reduced rate of 2% of the sale of the stable fibres yarn on the Assessee in terms of the said Notification and the said issue stood concluded by the Clarification issued by the learned Commissioner under Section 28-A of the Act on 21.10.1999. Therefore, it was not open to the Assessing Authority to invoke his reassessment powers conferred under Section 16(1) of the Act on the same set of facts. Admittedly, there were no different facts available before the Assessing Authority and the same consignment transfer of cotton yarn to the extent of ₹ 1,56,23,382.32 was sought to be made the basis for impugned reassessment proceedings under Section 16(1) of the Act, whereas the said facts had already been considered by the earlier Assessing Authority for the very same period on the basis of a binding order passed by the Commissioner under Section 28-A of the Act on 21.10.1999 - The impugned reassessment notice, sitting over the view of Commissioner is nothing but judicial and hierarchical indiscipline on the part of Assessing Authority and misuse of such powers. The impugned reassessment notice does not refer to the binding order of the Commissioner under Section 28-A of the Act at all. The impugned reassessment notice under Section 16(1) of the Act by the learned Assessing Authority on 06.06.2001 is based on a mere change of opinion and without any other reason whatsoever and the same is not permissible under Section 16(1) of the Act - Petition allowed.
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