TMI Tax Updates - e-Newsletter
December 31, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Central Excise
Highlights / Catch Notes
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GST:
Condonation of delay of 77 days - Period of Limitation for filing of appeal against the decision of AAR - the crucial words are “not exceeding thirty days” used in the proviso to sub-section (2) of section 100 - Appeal dismissed on grounds of time limitation.
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GST:
Valuation - works contract - lump-sum amount stood credited to its account on that date as mobilisation advance - whether the unadjusted part of the advance received by the appellant can be considered for taxation under the GST Act on 01.07.2017 itself. - Held Yes
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Income Tax:
Reopening of assessment u/s 147 - notice in the company name being amalgamated -Participation by the amalgamated company in the proceedings would be of no effect as there is no estoppel against law.
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Income Tax:
Nature of activity - Capital Gains/loss or income from business - sale of flats - there is a merit in the contentions of the assessee that if the intentions were to deal on a systematic and repetitive manner, then no businessmen will lock its funds for three years for his trading activities.
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Income Tax:
Disallowance u/s 43B - outstanding municipal tax liability - the assessee was only a collecting agent on behalf of the State and it was the amount which was not collected, which was shown as receivable and also on the other side shown as payable to the State. - the provision of section 43B could not be applied
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Income Tax:
Addition on account of Unexplained paintings - Source of Investment made in the painting - the revenue had failed to place on record any ‘material’ which would irrefutably prove to the hilt that the investment in the aforesaid “two paintings” was made by the assessee during the year under consideration i.e A.Y 2008-09 - additions deleted.
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Income Tax:
Nature of income - professional fees received by the doctor from the Hospital - Taxable as salary or Income from Business or profession - There is no master-servant relationship between the assessee and the hospital. There is no vicarious liability on the company, as only the assessee is liable for any professional negligence and he has indemnified the company - Taxable as business income - Claim of expenditure allowed.
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Income Tax:
Assessment u/s 153C - Papers found during the search of another person - Revenue has not submitted the proper satisfaction except pointing out that the name of the assessee is mentioned in the satisfaction note. - Order of CIT(A) deleting the additions, sustained.
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Income Tax:
Exemption on account of Gratuity and leave encashment including arrears - the assessee is entitled for the exemption claimed u/s 10(10)(i) and 10(10AA)(i) of the Act. T
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Income Tax:
Bogus purchases - Even if the transaction is not verifiable, the only taxable is the taxable income component and not the entire transaction. - in order to fulfill the gap of revenue leakage the disallowance of reasonable percentage of such purchases would meet the end of justice.
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Customs:
Refund of Additional Customs Duty (CVD) - excess payment made under protest - unjust enrichment - invoice showed a composite price and duty was not indicated separately - assessee has placed on record the C.A. Certificate falsifying the allegations of unjust enrichment. Same cannot be ignored - refund allowed.
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Customs:
Valuation of imported goods - misdeclaration - contemporaneous import value - the differential duty worked out and demanded from the appellant based on MRP of M/s EGPL is bad and untenable for the reason that the goods are not manufactured in India. Thus, there is no prescribed MRP by the manufacturer under the legal Metrology Act read with the rules thereunder.
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Central Excise:
Rejection of declaration under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS) - It is not the case of the Board that declarations involving redemption fine cannot be accepted. This court, however, is prima facie of the view that the stand of the Board that in case where redemption fine is imposed and quantified, discharge certificate can only be issued after settlement of redemption fine, is not in consonance with the Scheme which contemplates putting an end to the matter - Matter requires reconsideration.
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Central Excise:
Clandestine removal - the adjudicating authority is opined to have acted solely to confirm demands mechanically with predetermined negative mind because of his bias and prejudice and no willingness to appreciate the facts and records and apply the law correctly - Demand set aside.
Articles
Notifications
GST - States-
45/2019-State Tax - dated
24-12-2019
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Delhi SGST
Time period for furnishing details in form GSTR-1 in respect of certain category of tax payers
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F A-3-42/2017/1/V (79) - dated
22-11-2019
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Madhya Pradesh SGST
Amendment in Notification No. F A-3-42/2017/1/V(53), dated the 30th June, 2017
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F A 3-47/2017/1/V(80) - dated
22-11-2019
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Madhya Pradesh SGST
Amendment in Notification No. F A 3-47/2017/1/V(59), dated the 30th June, 2017
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F A 3-39/2019/1/V (84) - dated
22-11-2019
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Madhya Pradesh SGST
State Government appoints the 24th day of September, 2019, as the date on which the provisions of rules 10, 11, 12 and 26 of the Madhya Pradesh Goods and Services Tax Rules, 2019 shall come into force
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F A 3-39/2019/1/V (83) - dated
22-11-2019
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Madhya Pradesh SGST
Notification under section 7(2) to notify the grant of alcoholic liquors licence neither a supply of goods nor a supply of service under the MPGST Act, 2017
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F A 3-37/2019/1/V (77) - dated
22-11-2019
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Madhya Pradesh SGST
Seeks to exempt supply of goods for specified projects under FAO
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F A 3-32/2017/1/V(78) - dated
22-11-2019
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Madhya Pradesh SGST
Amendment in Notification No. FA3-32-2017-V(41) dated the 29th June, 2017
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F A 3-19/2019/1/V(82) - dated
22-11-2019
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Madhya Pradesh SGST
Amendment in Notification No. F-A-3-19-2019-I-V(41), dated the 17th May, 2019
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F A 3-09/2018/1/V (81) - dated
22-11-2019
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Madhya Pradesh SGST
Amendment in Notification No. F-A3-09-2018-I-V (13), dated the 25th January, 2018
SEBI-
SEBI/LAD-NRO/GN/2019/45 - dated
26-12-2019
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SEBI
Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Fifth Amendment) Regulations, 2019
SEZ-
S.O. 4574(E) - dated
17-12-2019
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SEZ
Central Government de-notifies an area of 45.799 hectares, thereby making the resultant area as 635.217 hectares at Chengambakkam, Appaiahpalem, Gollavaripalem, Mallavaripalem, Aroor, Moporapalle and Cherivi Villages, Satyavedu and Vardayya Palem Mandals in the State of Andhra Pradesh
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2019 (12) TMI 1244
Valuation - works contract - lump-sum amount stood credited to its account on that date as mobilisation advance - whether the unadjusted part of the advance received by the appellant can be considered for taxation under the GST Act on 01.07.2017 itself. - design, supply, installation, testing and commissioning of the power supply and distribution system, third rail system and SCADA system for the entire line and depot of the Kolkata East-West Metro Rail Project - time of supply of services - challenge to AAR decision. HELD THAT:- Even by the wildest imagination, the observations made by Tribunals in the pre-GST regime cannot be made applicable in this case. Moreover, in the transitional provisions of the GST Act, no such provision has been included whereby, the advance outstanding as on 01.07.2017 can be allowed to be subjected to GST only as and when the bills are raised against supply of goods and services. Immediately upon introduction of GST Act, that is with effect from the 1st day of July, 2017, the erstwhile Finance Act, 1994 and the notifications issued there under ceased to exist. In the instant matter the only applicable law is the GST Act, 2017. Accordingly, the time of supply of services is to be guided by section 13(2) of the GST Act - Hence, the remaining unadjusted amount of ₹ 13,80.74,549/- as on 01.07.2017 has to be construed as if it was credited into the account of the appellant on the date of 01.07.2017 only, which will attract GST on such amount on that date itself. Hence, there are no force in the argument of the appellant that section 13 (2) of the GST Act, 2017 will not be applicable in the instant case. In respect of the goods and services provided by the appellant to KMRCL post introduction of GST, the amount of ₹ 13,80,74,549/- can only be considered as advance paid as on 01.07.2017, and in the absence of any exemption of mobilization advance from tax under GST regime, the entire amount of ₹ 13,80,74,549/- becomes taxable on the said date. There are no infirmity in the ruling pronounced by the WBAAR - appeal dismissed.
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2019 (12) TMI 1242
Condonation of delay of 77 days - Period of Limitation for filing of appeal against the decision of AAR - Levy of GST - partially constructed flats whose construction commenced before the implementation of GST but customers for the flats were identified only after the implementation of GST - challenge to AAR decision - delay in filing appeal - HELD THAT:- Section 100 mandates that an appeal should be filed within 30 days from the date of communication of the advance ruling order that is sought to be challenged. However, in view of the proviso thereto. the Appellate Authority is empowered to allow the appeal to he presented within a further period of 30 days if it is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the initial period of 30 days. Thus, the Appellate Authority is empowered to extend the period for filing an appeal for a further period of 30 days and no more. In the instant case, the appeal filed against the Advance Ruling order dated 25.07.2019 is evidently belated by 77 days. The appellant, however, has not explained the reason for the delay in filing the appeal - Notwithstanding this fact, the question whether this Appellate Authority can entertain an appeal under Section 100 of the CGST Act beyond the period of 60 days does not require much debate and has been answered in the negative by the Supreme Court in the case of Singh Enterprises vs CCE [2007 (12) TMI 11 - SUPREME COURT ] - The Supreme Court in the said case interpreted Section 35 of the Central Excise Act, 1944 which is similar to Section 100 of the CGST Act and examined the question whether the Commissioner (Appeals) has the power to condone the delay beyond the period of 30 days from the date of expiry of the period of 60 days prescribed for filing the statutory appeal and also whether the High Court, in exercise of the power conferred under Article 226 of the Constitution of India, can condone the delay. This Appellate Authority being a creature of the statue is empowered to condone a delay of only a period of 30 days after the expiry of the initial period for filing appeal - As far as the language of Section 100 of the CGST Act is concerned, the crucial words are not exceeding thirty days used in the proviso to sub-section (2) - Since the appeal cannot be allowed to be presented on account of time limitation, the question of discussing the merits of the issue in appeal which is the eligibility to GST on partially constructed flats whose construction commenced before the implementation of GST but customers for the flats were identified only after the implementation of GST, does not arise. Appeal filed by the appellant M/s. Durga Projects Infrastructure Pvt. Ltd. dismissed on grounds of time limitation.
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Income Tax
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2019 (12) TMI 1241
Reopening of assessment u/s 147 - notice in the company name being amalgamated - HELD THAT:- In the present case the notice under section 148 of the Act has been issued to Gayatri Integrated Services Private Limited which, as aforesaid, had long back got amalgamated with the petitioner vide order dated 18th June, 2015 passed by this court and thus, it had ceased to have its own existence so as to render it amenable for the reassessment proceedings under the provisions of section 147 of the Act. Moreover, the respondent and the department were duly informed by the petitioner about the amalgamation and despite the said factum having been brought to the notice of the respondent, statutory notice under section 148 came to be issued to Gayatri Integrated Services Private Limited for reopening the assessment on the ground that the respondent has reason to believe that income chargeable to tax for the assessment year 2012-13 has escaped the assessment within the meaning of section 147 of the Act. The controversy in the present petition, is no longer res integra. The Apex Court in the case of Principal Commissioner of Income Tax vs. Maruti Suzuki India Limited [2019 (7) TMI 1449 - SUPREME COURT] in paragraph 33, has categorically held that if the company has ceased to exist as a result of the approved scheme of amalgamation then in that case, the jurisdictional notice issued in its name would be fundamentally illegal and without jurisdiction. It is also held that upon the amalgamating entity ceasing to exist, it cannot be regarded as a person under subsection (31) of section 2 of the Act; against whom assessment proceedings can be initiated. Participation by the amalgamated company in the proceedings would be of no effect as there is no estoppel against law. the notice dated 25th March, 2019 issued by the respondent under the provisions of section 148 of the Act for the assessment year 2012-13, being without jurisdiction, is not sustainable. - Decided in favour of assessee.
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2019 (12) TMI 1240
Transfer of jurisdiction u/s 127 - respondent no.1 has transferred the jurisdiction of the petitioner to DCIT/ACIT, Central Circle-2(3), Bengaluru - HELD THAT:- On a bare perusal of the notice of transfer and the impugned order, it is palpably clear that no specific reason has been provided and neither has any specific link been shown between the petitioner company and the other company on which search has been carried out. Accordingly, the impugned order is stayed till March 31, 2020. The respondents are directed to file the affidavit in opposition within four weeks from date. Reply thereto, may be filed within two weeks thereafter. Let the mater be placed under the heading For Hearing in the Monthly List of February, 2020.
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2019 (12) TMI 1239
Nature of activity - Capital Gains/loss or income from business - sale of flats - stock in trade or investment - AO observed that sale of property has been done in a systematic, repetitive manner - HELD THAT:- We find merit in the contentions of the assessee that if the intentions were to deal on a systematic and repetitive manner, then no businessmen will lock its funds for three years for his trading activities. Assessee, after selling these flats has not acquired any additional flats by re-investing the sale proceeds of these sold flats. Also the fact remains that the above assets are appearing under investments in the balance sheet of the assessee. The principle underlying the distinction between a capital sale and an adventure in the nature of trade were examined in Venkataswami Naidu Co (G) v. CIT [ 1958 (11) TMI 5 - SUPREME COURT] where it was held that the character of a transaction cannot be determined solely on the application of any abstract rule, principle or test but must depend upon all the facts and circumstances of the case. Also in Janki Ram Bhadur Ram v. CIT [ 1965 (3) TMI 19 - SUPREME COURT] held that if the assessee, even at the time of acquisition had a clear intention to resell it, that would be material but not a decisive consideration. We are inclined to agree with the treatment given by the assessee in his return of income as gains/loss from sale of such flats under the head Capital Gains . - Appeal filed by the assessee is allowed.
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2019 (12) TMI 1238
TP Adjustment - TPO rejected the TNMM in respect of management fees paid/payable by the assessee to its AE - HELD THAT:- TPO should not have summarily rejected the TNMM in respect of management fees paid/payable by the assessee to its AE and proposed an adjustment under the CUP method, without benchmarking with comparable uncontrolled transactions. TPO has resorted to an ad-hoc unilateral pricing of management fees, disregarding the facts and circumstances of the case. In the instant case, the TPO has summarily rejected the TNMM followed by the assessee in respect of management fees paid/payable by it to its AE and proposing an adjustment under CUP without benchmarking with comparable uncontrolled transactions. Also the TPO has resorted to an ad-hoc unilateral pricing of management fees, disregarding the facts of the case. In view of the above factual scenario and position of law, we delete the addition made by the AO as adjustment on account of transfer pricing. - Decided in favour of assessee.
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2019 (12) TMI 1237
Addition being the difference in the amount surrendered during the survey and the income offered for tax while filing the return of income - survey action u/s 133A - HELD THAT:- Addition of ₹ 3,78,150/- in respect of the difference in the amount surrendered during the course of survey and income offered for filing of return of income. As gone through the evidence filed by the assessee. The amount was retracted even filing of the return of income. In respect of amount of ₹ 1,58,600/-, the assessee has demonstrated that the amount was given during the assessment year 2003-04. Therefore, the amount was required to be added in that year. The assessing officer is directed accordingly. Regarding the amount of ₹ 1,19,550/-, it is stated that the amount outstanding was received back before the date of survey. In support of this, the assessee has drawn my attention to the written submissions. However, no supporting evidence has been filed. Therefore, I sustain this addition. Regarding amount of ₹ 1 lakh, it is stated that the Ld. CIT(A) has wrongly confirmed the addition of ₹ 2 lakhs. In fact, the land was jointly owned by two persons, therefore, the addition should have been restricted to ₹ 1 lakh. As perused the agreement. As per this agreement, the land is jointly owned. Therefore, the assessing officer should have made addition of ₹ 1 lakh only. I find merit into the contention of the assessee. Therefore, the A.O. is directed to delete this addition. Ground No.1 is partly allowed. Addition u/s 68 - entire amount of cheques/cash deposited by the appellant in current account with bank - HELD THAT:- As stated that detailed explanation was submitted along with the documentary evidences for each and every credit entry. It is submitted that a sum of ₹ 6,56,500/- was deposited by way of cheques. The narration of such deposits is given in respect of the cash deposit. It is stated that ₹ 46,500/- was surrendered during the survey and deposit of ₹ 2 lakhs was out of the cash surrendered during the survey. Further, it is contended that a sum of ₹ 75,000/-, ₹ 1 lakh and ₹ 35,000/- were realised from the debtors. So far the cheque deposit in bank account, the assessee has given supporting evidences, therefore, the A.O. is directed to delete this addition. However, in respect of the cash deposit of ₹ 6.66 lakhs, it is stated that ₹ 4,46,500/- is out of voluntary surrender made by the assessee during the course of survey. Hence, the A.O. is directed to delete this addition. In respect of the remaining amount of ₹ 2,10,000/-, it is stated to have been received from the realisation of sale proceeds. The assessee has not filed any confirmation from the debtors. Hence, the addition of ₹ 2,10,000/- is sustained. This ground of assessee s appeal is partly allowed. Addition being the amount of credit entries during the whole year in savings bank account of the wife of the assessee - HELD THAT:- Amount of credit entries during the whole year in the savings bank account of wife of the assessee Smt. Jyotibala Jain, who is assessed to tax and the amount was properly reflected in the books of accounts has been added. In support of this, the assessee has filed her return of income of the current and earlier years were filed and as per the balance sheet, as on 31.3.2005 31.3.2004, accumulated capital was ₹ 3,40,578/- and ₹ 4,08,721/-. Looking to the evidences submitted and more particularly, the amount which has been credited in the account of the wife of the assessee who herself is assessed to tax, it is also informed that no action has been taken in her hands. I therefore, under these facts cannot sustain these additions.
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2019 (12) TMI 1236
Disallowance u/s 40(a)(ia) - non-deduction of TDS - HELD THAT:- CIT(A) in view of the above binding precedent ought to have deleted the addition but he misdirected himself. When the issue has been decided by the higher forum after considering the law and issue in question, he is under statutory obligation to follow it. Any deviation there from would tantamount the contempt of lawful authority and against the judicial discipline. Therefore, respectfully following the judgement of the Hon'ble apex court rendered in the case of Hindustan Coca Cola Beverages Pvt. Ltd. Vs. CIT ( 2007 (8) TMI 12 - SUPREME COURT ) and the decision of coordinate bench in the case of Rajiv Kumar Agrawal Vs. Addl. CIT [ 2014 (6) TMI 79 - ITAT AGRA] direct the A.O. to delete this addition Addition in lumpsum on the ground that some of the vouchers were not produced - A.O. has not stated as to what were the vouchers, which were not produced - HELD THAT:- As perused the materials available on record and gone through the orders of the authorities below. The assessee claimed certain expenditure, which was required to be substantiated by supporting evidences. Non-furnishing of such evidences would certainly result into disallowance of the expenditure. Ld. A.R. could not point out that what were the evidences placed before the assessing authority, which was sufficient to infer that the expenditure is duly supported by the evidences. Moreover, Ld. CIT(A) has further reduced the disallowance by taking a reasonable view. This ground of the assessee s appeal is dismissed. Appeal of the assessee is partly allowed.
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2019 (12) TMI 1235
Deduction u/s 80P - Deduction u/s 80P of the Act is not allowed on the ground that the expenses claimed by the assessee are not allowable - HELD THAT:- The coordinate bench of this Tribunal has decided the issue related to allowance of deduction u/s 80P of the Act and the expenditure disallowed by the A.O. whether this would qualify for deduction u/s 80P of the Act. A bare reading of provision of section 80P(2) of the Act makes it clear that the deduction would be available in respect of the profit gains of business attributable to any one or more of search activities, which is prescribed u/s 80P(2) of the Act. As per the assessee, the assessee is providing credit facilities to its members. Therefore, it would qualify for claim of deduction u/s 80P of the Act. The coordinate bench under the identical facts has allowed deduction u/s 80P of the Act in respect of the activity similar or same, which is being undertaken by the assessee society. Now the issue would be whether the disallowances made in respect of bad debts and commission payment claimed by the assessee would qualify for deduction u/s 80P of the Act or not? In respect of the bad debt, the assessee is required to demonstrate that the debt which is claimed is in the nature of profit gains and business attributable to such activity. In the present case, the assessee had made provision for bad debt. If the assessee had not done this provision, this amount would have not been deducted from the profit loss account. Therefore, in my considered view, this amount is certainly attributable to the profit gains of the assessee society. Further, disallowance of payment of commission. The commission is claimed as business expenditure, deducted from the profit gains account. Therefore, this would also be in the nature of profit gains of the assessee society. Therefore, in the light of the decision of the coordinate bench rendered in the case of ACIT Circle-4 Vs. Buldana Urban Co-operative Credit Society Ltd. [ 2013 (12) TMI 237 - ITAT NAGPUR ] the assessee is entitled for benefit of deduction u/s 80P of the Act. I therefore, direct the A.O. to grant deduction u/s 80P of the Act to the assessee.
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2019 (12) TMI 1234
Addition of prior period expenses crystalised - HELD THAT:- The assessee has not brought any other material other than submitting that the expenditure was approved by the board subsequently, therefore, the expenditure crystalised in the year under appeal. In my considered view, the assessee ought to have claimed such expenditure in the year when the expenditure was incurred. Undisputedly, the assessee has deducted tax on such expenditure. Moreover, the revenue has not doubted about genuineness of the expenditure. However, agreement with the view expressed by the CIT(A) that mere approval by the board in subsequent year would not be sufficient to hold that the expenditure was crystalised in the year under consideration. In fact, there is no dispute about the quantum of expenditure nor any dispute was pending. The assessee submitted that the A.O. should be directed to allow such expenditure when the expenditure was incurred as the tax has already been deducted by the assessee. Therefore, direct the A.O. to allow expenditure in the year when such expenditure was incurred, if law so permits at this belated stage. Ground of the assessee s appeal is disposed of in the terms indicated herein above. Disallowance of electricity expenses - HELD THAT:- As perused the materials available on record and gone through the orders of the authorities below. There is no dispute with regard to the fact that the property was given on rent from October, 2012 at a monthly rent of ₹ 13,15,000/- and a rent of ₹ 81 lakhs has been credited in the profit loss account. It is pointed out by the CIT(A) that the assessee could not furnish any evidence regarding occupation of the property in December, 2012. The assessee has admittedly received rent for the relevant period. Therefore, it cannot be inferred that the property in question was used wholly and exclusively for business purpose. Hence, the expenditure has rightly been disallowed. This ground of the assessee s appeal is dismissed. Deduction u/s 24(a) - HELD THAT:- Admittedly, the assessee has offered rental income and claimed deduction u/s 24 of the Act. Therefore, since the expenditure is related to the property, which has been let out by the assessee, this expenditure cannot be treated as business expenditure as claimed by the assessee. Disallowance of travelling expenses - authorities below have disallowed the claim on the basis that no supporting evidence regarding travelling being for business purpose has been given. It is undisputed fact that the assessee is a subsidiary of Japanese company - HELD THAT:- Such evidences could not be filed. I find that the Ld. CIT(A) has dismissed the ground purely on the basis that no evidence related to convening of meeting, purpose of meeting and minutes of meeting was furnished. Therefore, set aside the impugned order and restore the issue to the A.O. for verification of purpose and minutes of meeting. The assessee is hereby directed to furnish the minutes of meeting held at Japan with the parent company. If such minutes are produced by the assessee demonstrating the nature and purpose of journey to Japan, the A.O. would delete the addition. Ground of the assessee is allowed for statistical purposes.
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2019 (12) TMI 1233
Reopening of assessment u/s 147 - disallowance made on account of outstanding municipal tax liability invoking the provision of section 43B - HELD THAT:- In the present facts, we find that the assessee had disclosed all the items which were considered as reasons for re-opening the assessment, in its audited accounts and even the auditor had given a report of the same. In such a scenario, we hold that there is no merit in the re-assessment proceedings carried out against the assessee where the AO refers to the facts disclosed by the assessee and then record the reasons for re-opening the assessment, such an action cannot be upheld under the provision of section 147 of the Act, in case where four years have lapsed from the end of the assessment year. Accordingly, we find no merit in the re-assessment proceedings carried out u/s 147 of the Act against the assessee. The assessee after collecting the amount had not debited it to the P L Account and whatever amount was not collected, was shown as receivable and contra entry was passed as payable to the State. Once the amount had been debited to the P L Account of the assessee, then the provision of section 43B of the Act were not attracted. In any case, the assessee was only a collecting agent on behalf of the State and it was the amount which was not collected, which was shown as receivable and also on the other side shown as payable to the State. The liability if any, would arise after the amount is collected and that also of the State. In such circumstances, the provision of section 43B of the Act could not be applied and the amount could not be disallowed in the hands of the assessee. Similar accounting has been carried out by the assessee in its books of accounts from Assessment Year 1999-2000 and no disallowance has been made in any of the year. Hon ble Calcutta High Court in the case of CESC Ltd. vs CIT [ 2015 (5) TMI 795 - CALCUTTA HIGH COURT] has held that where the assessee merely acts as Collecting agent for the State Government and pays the same to the State Government on collection, then, the licencee merely acts as a conduit and the electricity duty was not chargeable to the licencee. It was concluded by holding that electricity duty not being a sum payable by the assessee as a primary liability by way of tax, duty, cess or fee, then provisions of section 43B of the Act were not attracted to the licencee/assessee in respect of the electricity duty collected by it for being passed on to the State Government. Applying the said proposition to the issue before us, we hold that there is no merit in the orders of the authorities below in making the aforesaid disallowance u/s 43B. Addition on account of prior period expenses of fixed assets - Revenue is aggrieved that where the fixed assets were capital in nature, the said expenditure could not be allowed in the hands of the assessee - AO denied the claim of the assessee on the grounds that it had claimed depreciation on the said assets, as against the plea of the assessee, it had never claimed any depreciation on such assets - HELD THAT:- CIT(A) accepted the plea of the assessee as the original cost as well as the net book value was the same. CIT(A) also perused the fixed assets register in this regard as on 31.03.2005. The statutory auditor had also reported that the assessee had not claimed any depreciation on the fixed assets of ₹ 5.88 crores till the Financial Year 2004-05. In such scenario, the claim of the assessee was allowed. Revenue has failed to rebut the findings of the CIT(A). In the absence of the same and where the assessee in the audited account had not claimed any depreciation on such assets, the order of the Assessing Officer cannot be upheld. The assessee has written off the assets which were not found/traceable and as the assets were scattered over different areas, the entire exercise of listing of such fixed assets got crystallized during the year and hence, the booking of the expenditure under head prior period expenses of fixed assets, merits to be allowed in the hands of the assessee. We confirm the order of CIT(A) and dismiss Ground of appeal No.1 raised by the Revenue. Addition on account of prior period expenses - case of the AO was that where the assessee was following Mercantile System of accounting, no such expenditure on account of prior period expenditure could be allowed in the hands of the assessee - HELD THAT:- The first fact is that as against the prior period expenses of ₹ 7.66 crores, the assessee has also shown the prior period income of ₹ 7.74 crores and the net amount which is credited to the P L A/c was ₹ 8,79,015/-. Secondly, due to power purchase of prior period, the sum involved was ₹ 1.64 crores which was paid because there was difference in quantity as recorded by DHBVN and HPGCL from the total purchase 2227 crores. The reconciliation error amounts to only 0.07%, which is acceptable, when the quantity purchased is so high. The assessee had shown this Contingent liability in its balance sheet and since the liabilities crystallized during the year under consideration, the said prior period expenses was allowable in the year under appeal. Further, expenditure booked by the assessee was arrear paid of ₹ 7,15,062/-, interest of ₹ 20,160/- and refund of ₹ 1,61,915/-. All these amounts as per the findings of CIT(A) crystallized during the year. The Revenue has failed to controvert the findings of the CIT(A) in this regard; upholding the same, we dismiss Ground of appeal No.2 raised by the Revenue. Expenditure booked on loss of sale of assets - case of the AO was that no such loss could be debited to the P L A/c - HELD THAT:- The explanation of the assessee on the other hand was that the aforesaid losses were on account of flood, cyclone, fire etc. and it was a case of repairs and replacement and not the case of loss of fixed assets per se. We find merit in the plea of the assessee and the nomenclature of the expenditure cannot decide the nature of expenses. What is to be seen is the nature of expenditure and since the same was in the field of Revenue expenditure, the same merits to be allowed in the hands of the assessee. Ground of Appeal No.3 raised by the Revenue is thus dismissed.
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2019 (12) TMI 1232
Cost of acquisition of shares released against cancellation of Global Depository Receipts (GDRs) - HELD THAT:- What ideally should have been taken as the cost of acquisition/FMV of shares of Bajaj Hindustan Ltd., for computing the Short term capital gain/loss is the aforesaid price. However, considering the fact that the revenue authorities have agreed with the assessee with regard to the applicable date for cost of acquisition as 12.04.2006, we do not want to indulge much into that aspect of the issue. Therefore, considering all relevant factors, we are of the view that share opening price of ₹ 523.95 as considered by the assessee is closest to the closing price of the very same shares as on 10.04.2006, wherein, the shares were last traded prior to 12.04.2006. Therefore, in our view, the assessee was justified in adopting the cost of acquisition of shares at ₹ 523.95. The allegation of the revenue authorities that the assessee has chosen the price of share which is more suitable to him, in our view, is not a correct finding of fact as the assessee has not taken the highest price of the share quoted during the date at ₹ 525. After considering pros and cons of the issue, we hold that adoption of share opening price of ₹ 523.95 as cost of acquisition is the most appropriate and rational in the given facts and circumstances of the case. Accordingly, we direct the Assessing Officer to accept the short term capital loss computed by the assessee. Consequently, the addition made in this regard is deleted. Setting off Long term capital loss against Long term capital gain - whether long term capital loss arising on sale of shares can be set off against long term capital gain arising on sale of shares claimed to be exempt u/s. 10(38) ? - HELD THAT:- Following the consistent view expressed by different Benches of the Tribunal on identical issue, we hold that long term capital loss arising out of sale of shares cannot be set off against long term capital gain from shares subjected to STT and claimed exempt u/s. 10(38) of the Act. Accordingly, we direct the Assessing Officer to allow carry forward of long term capital loss as claimed by the assessee.
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2019 (12) TMI 1231
Penalty u/s 271(1)(c) - as alleged notice issued by the AO u/s 274 r.w.s 271(1) ( c) of the Act is defective for not mentioning the specific charge - HELD THAT:- We find the notice issued u/s. 274 r.w.s 271(1)(c ) of the Act, does not specify the charge of offence committed by the assessee viz. whether had concealed the particulars of income or had furnished inaccurate particulars of income. Hence the said notice is to be held as defective. Case followed DR. MURARI MOHAN KOLEY [ 2018 (9) TMI 1 - CALCUTTA HIGH COURT] - Decided in favour of assessee.
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2019 (12) TMI 1230
Income accrued in India - PE in India - applicability of section 44BB - non-resident assessee - Receipts earned from provision of services through various vessels - DTAA - computing profits and gains in connection with the business of exploration of mineral oil. - HELD THAT:- The word services followed by expansive phrase in connection with are relatable to prospecting for and exploration of mineral oil. That means, all services associated with prospecting for and exploration activities are brought within the scope and reach of section 44BB. Another category of assessees governed by section 44BB are those supplying plant and machinery on hire. In the instant case, we find that neither the AO nor the DRP has examined the applicability of section 44BB by looking into whether the pith and substance of each of the contract/agreement entered by the assessee is inextricably connected with prospecting, extraction or production of mineral oil. This is evident from the order of the DRP dated 29.08.2018 passed u/s 144C(5) and the assessment order dated 19.09.2018 passed by the AO u/s 143(3) r.w.s. 144C(5) and 144C(13) of the Act. Therefore, we set aside the order of the AO and restore the matter to him to make an order afresh after examining each of the contract/agreement and by following the ratio laid down by the Hon ble Supreme Court in ONGC [ 2015 (7) TMI 91 - SUPREME COURT] . - Thus the 2nd to 8th ground of appeal are allowed for statistical purposes.
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2019 (12) TMI 1229
Addition on account of Unexplained paintings - Source of Investment made in the painting - HELD THAT:- In the case before us, the view taken by the lower authorities has to fail on two grounds viz (i). that, the assessee had duly evidenced the source of investment made by him for purchase of the aforesaid two paintings; and (ii). that, even otherwise as the aforesaid paintings were purchased by the assessee on 17.06.2006 i.e in the period relevant to the immediately preceding year i.e A.Y 2007-08, therefore, it was impermissible on the part of the revenue to draw any adverse inferences in the hands of the assessee during the year under consideration viz. A.Y 2008-09. Be that as it may, as the revenue had failed to place on record any material which would irrefutably prove to the hilt that the investment in the aforesaid two paintings was made by the assessee during the year under consideration i.e A.Y 2008-09, therefore, the same on the said count also by no means could have been treated as an unexplained investment in his hands for the said year. Accordingly, in the backdrop of our aforesaid observations we are unable to persuade ourselves to subscribe to the view taken by the lower authorities. Resultantly, the order of the CIT(A) is set aside and the addition under Sec. 69 made by the A.O is vacated. - Decided in favour of assessee.
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2019 (12) TMI 1228
Reopening of assessment u/s 147- estimate of diversion of profits due to modifications - HELD THAT:- AO was in possession of the relevant information and material germane to the allegation to enable him to hold prima facie belief towards escapement of income. The report of the investigation wing would constitute relevant material unless such report or information is absolutely vague or based on unspecific information. However, whether material available before AO would conclusively prove the escapement is not the concern at the stage of reopening. The information available with the AO in the instant case provides specific estimate of diversion of profits due to modifications and is thus reliable in character. Such specific nature of information is capable to grant cause or justification or a supposition that income has escaped assessment and consequently would confer jurisdiction on the AO to reopen assessment. AO has acted upon credible information coupled with underlying material to initiate the action under s.147 of the Act. The reasons recorded were based on prima facie material which, in turn, clearly indicated the relationship between the formation of belief and the reasons for such belief. The belief entertained by AO is, in our view, not arbitrary or irrational. We thus see no error on the part of the AO to exercise the powers under s.147 of the Act. Ground No.1 of assessee s appeal concerning validity of jurisdiction under s.147 of the Act is accordingly dismissed. Additions made on account of losses shifted in/ profit shifted out from the hands of the assessee owing to modification carried out by the broker in the client code assigned to assessee and other corresponding client - HELD THAT:- Modifications within the relatives were also regarded as genuine errors by SEBI as per the aforesaid circular. The shifting of trade in the correct client code falling in the Distance 1 category, thus, cannot be regarded as any kind of alleged misuse of CCM facility. We find considerable force in the aforesaid plea of the assessee. It is quite plausible that error of such type by way of wrong punch of client code could occur as normal incident of business while entering the orders on behalf of the client by the broker. Such errors are to be recognized as genuine error even in the light of SEBI Circular. Such error in punching of trade does not call for any adverse inference. Consequently, the AO is directed to delete the losses shifted in or profits shifted out owing to modifications in client code falling in Distance 1 category as tabulated above with regard to all captioned assessees. Shifting in of losses or shifting out of profits falling in Distance 2 category - Having regard to the peculiar facts that losses have not been purchased in last few months of financial year (December 2010 to March 2011) but the losses have arisen in the very beginning of the financial year, benefit of doubt, if any, would surely lean towards the assessee in such facts. AO is thus directed to delete the adjustment in the assessed income to the extent of amount attributable to trade transactions falling in Distance 2 category of CCM. Losses arising due to CCM falling in Distance 3 category - Market Regulator SEBI has also frowned hard on such modifications. Such substantial modification in client code would naturally involve some indulgence of mind with set purpose to shift in losses/shift out profit in the hands of an interested client. Such modifications in client code, in our view, do not fall within the league of bonafide error when seen on the touchstone of preponderance of probabilities. The concerted and systematic modification in client code to the advantage of assessee is an orchestrated affair to suppress profits generated on trades. We thus decline to interfere with the action of AO with reference to losses falling in Distance 3 category. Losses resulting from client code modification falling in Distance 4 category would automatically fall in highly doubtful category as a near impossibility. The client code of one client stands substituted by an altogether modified client code. Losses resulting in the hands of the assessee from such revamp in the client code, if permitted, will obfuscate ground reality of tax escapement arising from such modifications. Such fundamental modification in the client code lacks any tangible purpose but to accommodate a willing client by the broker in wrongful indulgence. Thus, the plea of the assessee in respect of losses from modification calling in Distance 4 category requires to be rejected outrightly. We thus decline to interfere with the action of Revenue in respect of losses falling in Distance 4 category. Having analysed the extent of modification distance-wise, the AO is directed to grant relief to the assessee in all captioned appeals in respect of losses attributable to Distance 1 and Distance 2 category.
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2019 (12) TMI 1227
Assessment u/s 153A - addition on account of liquor sales - Estimation of undisclosed Restaurant Sales and Consequent Profits - HELD THAT:- In the present case, there was no seized material found during the course of search to estimate the liquor sales, restaurant sales or income from M/s. Kwality Restaurant to sustain the addition. Even while conducting enquiry after search also, the Assessing Officer has not come across any material which relates to the assessee so as to make addition in these assessment years. We could have confirmed the addition , had there been any post search evidence/material found by the Assessing Officer. Neither seized material was found during the course of search nor any material found during the post search enquiry. There is also no allegation that the original assessment was found to be wrong in view of wrong claim made by the assessee. In other words, since the assessment was framed u/s. 153A r.w.s. 143(3) of the I.T. Act, the Assessing Officer could make addition, which he could make u/s. 143(3), even without seized material. There was hardly any evidence to estimate turnover and income of Kwality Restaurant and club the same with the appellant for A.Ys 2001-02 to 2006-07 and also for the period up to 31st December, 2006 for AY 2007-08. Thus, the Assessing Officer was not justified in clubbing the income of Kwality Restaurant in the hands of the assessee for the above period. In view of the above, we hold that estimation of undisclosed turnover from Kwality Restaurant and computing the undisclosed income on the same by the Assessing officer was not backed by any evidence and was purely a guess work and therefore, the addition worked out by the Assessing officer in the A.Y. 2001-2002 is to be deleted. Being so, business income from Kwality Restaurant cannot be assessed in the hands of the assesse and we do not find any infirmity in the orders of CIT(A) on this issue. Thus, this ground of appeal of the assessee is allowed and that of the Revenue is dismissed. The appeal of the assessee is allowed and the appeal of the Revenue is dismissed.
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2019 (12) TMI 1226
Nature of income - professional fees received by the doctor from the Hospital - Taxable as salary or Income from Business or profession - Deduction of claim of expenditure - AO observed that, retainership fee received by the assessee from the company North Bengal Eye Centre Pvt. Ltd. was not in the nature of professional fees assessable under the head income from profession , but was in the nature of salary income assessable under the head income from salary - HELD THAT:- AO has in his assessment order assessed the income in question under the head income from profession , though in the body of the order, he was of the opinion that the income in question was assessable under the head income from salary . He simply disallowed the claim of exemption made by the assessee and assessed the gross receipts as professional income. A perusal of the agreement demonstrates that the assessee was rendering professional services. It does not lead us to a conclusion that there is an employer-employee relationship between the assessee and the company. There is no master-servant relationship between the assessee and the hospital. There is no vicarious liability on the company, as only the assessee is liable for any professional negligence and he has indemnified the company. The hospital deducted tax at source on the payments made u/s 194J of the Act as it was of the opinion that the payment was for professional services. Hence, we are of the opinion that the income in question is assessable under the head income from profession . As already stated, the AO has assessed the income under the head income from business or profession . No reason is given for disallowing the claim of the expenditure except that such deduction is not allowable when computing income under the head salary . This finding has been overruled by us. Thus, we direct the allowance of the amount of expenditure as claimed by the assessee. - Appeal of the assessee is allowed.
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2019 (12) TMI 1225
Assessment u/s 153C - recording of satisfaction - CIT(A) deleted the addition by holding that the jurisdiction u/s 153C is not assumed properly - Papers found during the search of another person - AO wrote a satisfaction note, and held that these papers belong to the assessee and issued notice u/s 153C to the assessee. - HELD THAT:- CIT(A) while giving the finding observed that the satisfaction note is not recorded in the file of the assessee searched u/s 132 and documents claimed to be owned by the assessee was transferred to the file of the assessee. Therefore, the jurisdiction assumed u/s 153C in the case of the assessee is not in accordance with provisions of section 153C wherein satisfaction note in the searched persons proceeding has to be recorded separately. The Ld. DR from the records has not submitted the proper satisfaction except pointing out that the name of the assessee is mentioned in the satisfaction note. In response to notice u/s 153C, the assessee filed return declaring income of Nil on 20.12.2012. All these contentions were dealt with by the CIT(A) while giving finding to that extent with reasoned order. The case laws referred by the Ld. DR that of PCIT vs. Sheetal International Pvt. Ltd. [ 2017 (7) TMI 738 - DELHI HIGH COURT] , PCIT vs. Instronics Ltd. [ 2017 (5) TMI 1426 - DELHI HIGH COURT] and Ganpati Fincap Services (P) Ltd. vs. CIT [ 2017 (5) TMI 1425 - DELHI HIGH COURT] are factually distinguishable as in present assessee s case no satisfaction was recorded separately by the Assessing Officer of the searched person. Thus, these case laws will not be applicable in assessee s case. Therefore, appeal of the Revenue is dismissed.
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2019 (12) TMI 1224
Exemption on account of Gratuity and leave encashment u/s 10(10)(i) and 10(10AA)(i) - HELD THAT:- Assessee was an employee of Chaudhary Charan Singh Haryana Agricultural University, Hisar, a State University, established under The Haryana and Punjab Agricultural Universities Act, 1970 and notified under University Grants Commission. The Tribunal in case of Ram Kanwar Rana [ 2016 (6) TMI 687 - ITAT DELHI] held that the exemption u/s 10(10)(i) and 10(10AA)(i) are available to the assessee in respect of the arrears of gratuity and dismissed the grounds about the initiation of the re-assessment. Similar view has been taken in several decisions including Raghubir Singh Panghal vs. ITO [ 2016 (6) TMI 1163 - ITAT DELHI] . As in the present case also the assessee is found to be an employee holding a civil post under a State, therefore, the provisions of Section 10(10)(i) of the Act are attracted in this case and the assessee is entitled to exemption in respect of gratuity amount received in total upto ₹ 10 lac which covers a sum of ₹ 6,50,000/- received during the year. As regards the arrears of leave encashment, it is also on the same footing to that of exemption claimed under Section 10(10)(i). Therefore, the assessee is entitled for the exemption claimed under Section 10(10)(i) and 10(10AA)(i) of the Act. The CIT(A) as well as the Assessing Officer was not right in disallowing the same - Decided in favour of assessee.
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2019 (12) TMI 1223
Penalty u/s. 271(1)(c) - Bogus purchases - estimation of Gross Profit was made by the Assessing Officer restricting the profit element in the alleged bogus purchases at 12.11% - HELD THAT:- Similar view has been taken in the case of CIT v. Aero Traders Pvt. Ltd. [ 2010 (1) TMI 32 - DELHI HIGH COURT] wherein the Hon'ble High Court affirmed the order of the Tribunal in holding that estimated rate of profit applied on the turnover of the assessee does not amount to concealment or furnishing inaccurate particulars. In the case on hand the AO has only estimated the Gross Profit on the alleged non-genuine purchases without there being any conclusive proof of concealment of income or furnishing inaccurate particulars of such income. Thus, we do not observe any infirmity in the order passed by the CIT(A) in deleting the penalty imposed by the Assessing Officer. Appeal of the Revenue is dismissed.
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2019 (12) TMI 1222
Disallowance of bogus purchases - condonation of delay - AO made additions/ disallowance by taking view that the assessee has shown purchases from the parties which are identified as hawala dealers by Sales Tax department of the State Government - HELD THAT:- Assessee has fairly stated in the application/affidavit for condonation of delay that the impugned order dated 30.06.2016 was received on 16.07.2016. Considering the contents of the affidavit of the partner of the assessee that he was observing Jain Parushan from 29th August 2016 to 5th September 2016 and thereafter attend pilgrimage at Pali Thana Jain Temple and return to Mumbai only on 13.09.2016 and the appeal was filed immediately after proper consultation with Advocate on 27.09.2016. The assessee has shown bonafidely explained the delay and we have further seen that the delay is of only 13 days, thus, the delay in filing of the appeal is condoned. Bogus purchases - Even if the transaction is not verifiable, the only taxable is the taxable income component and not the entire transaction. And after considering the facts of the case and the rival contentions of the parties we are of the opinion that in order to fulfill the gap of revenue leakage the disallowance of reasonable percentage of such purchases would meet the end of justice. The Hon ble Bombay High Court in CIT Vs Hariram Bhambhani [ 2015 (2) TMI 907 - BOMBAY HIGH COURT] held that revenue is not entitled to bring the entire sales consideration to tax, but only the profit attributable on the total unrecorded sales consideration alone can be subject to income tax. Considering the facts of the present case the disallowance on account of bogus purchases is restricted to 12% of the total impugned (disputed) purchases. The assessing officer is directed accordingly.
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2019 (12) TMI 1221
Order passed by the Addl. JCIT u/s 92CA (3) - Disharge of function of Transfer pricing officer (TPO) by the additional Commissioner Of Income Tax - assessee submitted that order passed u/s 92CA was passed by The Additional Commissioner Of Income Tax and he is not the authorised officer to pass such an order - HELD THAT:- Here it is not the case of the assessee that the additional Commissioner of income tax who passed the order of the transfer pricing under section 92CA (3) of the act was not authorised by the central board of direct taxes to perform all or any of the functions of an assessing officer specified u/s 92C of the Act. Here it is not the case of the assessee that the additional Commissioner of income tax who passed the order of the transfer pricing under section 92CA (3) of the act was not authorised by the central board of direct taxes to perform all or any of the functions of an assessing officer specified u/s 92C of the Act. Thus we hold that, the order passed by the additional Commissioner of income tax u/s 92CA (3) of the income tax act is appellate order passed by a transfer pricing officer in case of the assessee for assessment year 2002 03. In view of this, the additional ground raised by the assessee in the cross objection is dismissed. Cost for working out PLI of the assessee for benchmarking international transactions - Whether third-party cost should be included in the total cost of the assessee for providing marketing support services and therefore markup thereon should also be placed to determine the arm s-length price of the market support and services fee on by the assessee? - In this case the agreement between the assessee and the associated enterprise was not produced before the lower authorities. In absence of examination of such agreement with the actual conduct of the parties, it cannot be decided that what are the operating costs incurred by the assessee for marketing support services functions, therefore, the order of the learned CIT A cannot be sustained. Further, we do not find that on what basis certain cost not allocated to the marketing support function of the assessee have been accepted by the learned CIT A. No basis has been given for accepting the contention of the assessee by him. As the assessee has also produced the agreement between the associated enterprise and the assessee now (it was not before the learned assessing officer, the transfer pricing officer or before the learned CIT appeal) before us, there is no explanation with respect to what is the operating cost as well as what is the indirect overhead on which the assessee is required to be remunerated, the whole issue is required to be set aside to the file of the learned Assessing Officer/Transfer Pricing Officer with a direction to the assessee to produce all relevant agreement as well as to demonstrate the conduct of the assessee in accordance with those agreements , and to justify what the parties mean by the operating cost and indirect overhead . Thereafter the learned transfer-pricing officer may determine the arm s-length price of the market support service fee, which would have been charged by an independent party to the associated enterprise. Accordingly, we set aside this issue to the file of the learned transfer-pricing officer accordingly. Thus, ground number one of the appeal of the learned assessing officer challenging the order of the learned CIT A, wherein it has been held that no mark up was required on 3rd party cost incurred by the taxpayer on account of sales promotion, marketing and other expenses and expenses incurred for distribution of the digital satellite receiver for which dealers/agents were engaged and also the commission paid to dealers and agents for selling such digital satellite receiver is allowed for statistical purposes as per above directions.
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2019 (12) TMI 1220
Disallowance of expenses relatable to exempt income by invoking the provisions of section 14A of the Act read with Rule 8D - HELD THAT:- Once the assessee s own interest free funds in the shape of share capital and reserve and surplus is more than investment in giving tax free bonds of Unit Trust of India, no disallowance on account of can be made. Hence, we delete the addition. Disallowance of administrative expenses - HELD THAT:- We noted that the CIT(A) has restricted the disallowance at ₹38,690/- as against the amount offered by suo mot at ₹60,913/-. We find no infirmity in the order of CIT(A) and this issue of the assessee s appeal is dismissed. Disallowance of commission expenses simplicitor - revised return filed on 19.12.2009 was invalid return filed belatedly - HELD THAT:- We are of the view that this issue needs detailed verification at the level of AO afresh. Hence, we set aside the orders of the lower authorities i.e. the order of CIT(A) and that of the AO and remand the matter back to his file for fresh adjudication. The assessee committed before us that he will file all the required details to prove the commission expenses before the AO and incase assessee fails to explain the same, the AO can repeat the addition. Hence, this issue is set aside to the file of the AO. Claim of deduction in respect of education cess - HELD THAT:- Education-cess is part of the Income tax and cannot be allowed as deduction. See K. SRINIVASAN [ 1971 (11) TMI 2 - SUPREME COURT] Deduction under section 80IA - HELD THAT:- We noted that the Revenue has now only relied on the assessment order and no arguments were made. We noted that even this issue is covered by the CBDT Circular No 1/2016 dated15.02.2016, wherein the initial assessment order is defined. Even this provision is interpreted by the Hon ble Supreme Court in the case of Velayudhaswamy Spinning Mills (P) Ltd. [ 2012 (10) TMI 1125 - SC ORDER] . Hence, we are of the view that the CIT(A) has rightly allowed the claim of the assessee and we upheld the same. This issue of Revenue s appeal is dismissed. Addition u/s 14A - disallowance of interest expenditure under Rule 8D(2)(ii) - Disallowance under Rule 8D(2)(iii) being administrative expenses - HELD THAT:- The assessee s own funds as on 31.03.2008 is amounting to ₹174.78 crores on account of reserve and surplus and share capital whereas, investment capable of yielding tax free income amounting to ₹22.3 crores and hence, presumption is that the entire investment has been made out of own funds and not out of borrowing. The learned Counsel for the assessee relied on the decision of Hon ble Bombay High Court in the case of CIT vs. HDFC Bank Ltd. [ 2014 (8) TMI 119 - BOMBAY HIGH COURT] . The facts and circumstance are exactly identical what to AY 2007-08, hence this interest disallowance cannot be sustained and we delete the same We direct the AO to include the investments for the disallowance of expenses under Rule 8D(2)(iii) to the extent of investments which give rise to exempt income only. We direct the AO accordingly. Charging of interest u/s 234B - HELD THAT:- In view of the provisions of section 234B(2)(1) only an amount of interest paid as a part of self-assessment tax ought to be reduced from tax paid under section 140A of the Act while computing the interest under section 234B of the Act. Hence, we find no infirmity in the order of CIT(A) directing the AO to recompute the interest accordingly under section 234B
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Customs
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2019 (12) TMI 1219
Refund of Additional Customs Duty (CVD) - excess payment made under protest - import under Section 3 (1) of Customs Tariff Act, 1975 read with Sl. No. 263 A and condition No.16 of Notification No. 12/2012-EX dated 17.03.2012 - tax burden passed to buyers or not - principles of unjust enrichment - liability to deposit to Consumer Welfare Fund - HELD THAT:- Apparently and admittedly all the relevant documents were made good the deficiency by the assessee-respondent as were sufficient to sanction the refund. Partial amount of claim was rejected only on the ground that Balance-sheet was not showing the accountable of the amount of impugned Bill of Entry. When assessees invoice showed a composite price and duty was not indicated separately and the sale price of the goods before as well as after the reclassification, revaluation etc. remained the same, it can be concluded that the incidence of duty was not passed on to the consumer. Merely because the Excise duty is booked as expenditure in Profit Loss account, it cannot be said the incidence of duty has been passed on. Mere fact that the amount of differential CVD is shown as recoverable in profit and loss account is, in itself, not sufficient to prove that burden thereof has been passed by the assessee to the buyers. Onus otherwise rests upon the Department to prove the same. There is no such evidence produced by the Department. On the contrary, the assessee has placed on record the C.A. Certificate falsifying the allegations of unjust enrichment. Same cannot be ignored, that too, in absence of any evidence to the contrary. The questions decided in favour of the assessee-respondents - Appeal dismissed - decided against Revenue.
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2019 (12) TMI 1218
Valuation of imported goods - misdeclaration - rejection of declared value on the basis of contemporaneous import value - RUDs not provided - time limitation - penalty. Undervaluation - confiscation - HELD THAT:- The facts on the basis of which the allegation of undervaluation have been made, like NIDB data or import value of M/s EGPL were available to Revenue all throughout. It is admitted that M/s EGPL is also a regular importer of O-General ACs directly from the manufacturer located at Thailand - Accordingly, the demand with respect to 11 past bills of entry which were filed and assessed prior to 13.03.2012 is held time barred and accordingly set aside - Consequently, the revaluation and confiscation is also set aside with respect to these 11 bills of entry. Rejection of transaction value with respect to the live bill of entry - goods found and seized in the godown - HELD THAT:- Admittedly, in the facts of the case the buyer and seller are not related. Further, there is no allegation by Revenue that the appellant have remitted any amount directly or indirectly to the seller and shipper of the goods other than through normal banking channel, than the amount mentioned in the import documents. Accordingly, rejection of transaction value by Revenue is held to be against Section 14 of the Customs Act and the same is set aside. Further, the differential duty worked out and demanded from the appellant based on MRP of M/s EGPL is also bad and untenable for the reason that the goods are not manufactured in India. Thus, there is no prescribed MRP by the manufacturer under the legal Metrology Act read with the rules thereunder. In case of import, the importer is free to determine his retail selling price or MRP. There is no law under which the present appellants are bound to sell the goods at the retail selling price or MRP by M/s EGPL. Further distinguishing features in the sales made by M/s EGPL like providing of free installation, providing of copper tubing etc and after sales service are not being done or provided by the present appellants. In this view of the matter, the MRP of the appellant is not comparable with the MRP of M/s EGPL - Further, it is admitted fact that the imported goods found in the godown of the appellant have been imported by filing proper bills of entry which have been duly assessed by the competent officer of the customs. In this view of the matter, the impugned order suffers from impropriety and at the same time is erroneous. The penalty imposed on Shri Rohit Sakhuja is also set aside. Appeal allowed - decided in favor of appellant.
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Insolvency & Bankruptcy
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2019 (12) TMI 1243
Maintainability of application - initiation of CIRP - Corporate debtor failed to make repayment - whether a default has occurred or not? - HELD THAT:- The default in the repayment of the loans/cash credit facility is stated to have occurred from 30.11.2016 onwards when quarterly instalments and monthly interest became due. The computation of the overdues and default is given in Annexure V (colly). A letter dated 02.02.2017 is stated to have been issued by the financial creditor informing the corporate debtor that its account maintained with the financial creditor was declared as a Non-Performing Asset as on 31.12.2016 in terms of the guidelines of the RBI. A loan recall notice is stated to be issued on 05.01.2018 and notice under Section 13(2) of SARFAESI Act, 2002 on 18.01.2018. The facts sufficiently evidence the occurrence of the default. t has been held by the Hon'ble Supreme Court in M/S. INNOVENTIVE INDUSTRIES LTD. VERSUS ICICI BANK ANR. [ 2017 (9) TMI 58 - SUPREME COURT ] that in the case of a corporate debtor, who commits a default of a financial debt, the adjudicating authority has merely to see the records of the information utility or other evidence produced by the financial creditor to satisfy itself that a default has occurred and it is of no matter that the debt is disputed so long as the debt is due that is payable unless interdicted by some law or has not yet become due in the sense that it is payable at some future date - In the present case, the evidence produced by the financial creditor has been discussed above and it has been concluded that a default has occurred. The debt is also due since it is not interdicted by any law. The occurrence of default is proved in the present case - application filed in the prescribed Form No.I is found to be complete - Application admitted - moratorium declared.
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Central Excise
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2019 (12) TMI 1217
Rejection of declaration under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - cases involving confiscation and redemption fine - Designated Committee has held that the cases involving confiscation and redemption fine have not been covered under the Scheme and, therefore, the declarations cannot be accepted and no relief can be granted to the petitioners under the Scheme - HELD THAT:- On a plain reading of clauses (a) to (h) of section 125 of the Finance Act, it is abundantly clear that persons whose cases involve confiscation and fine in lieu of confiscation are not placed in the categories of persons who are not eligible to make declarations under the Scheme. Thus, persons who have been ordered to pay fine in lieu of confiscation or to whom show cause notices proposing confiscation of goods have been issued, have not been declared to be ineligible to make a declaration under the Scheme - while clause (a) of subsection (1) of section 129 of the Finance Act provides that the declarant shall not be liable to pay further duty, interest or penalty, it does not expressly provide that the declarant shall not be liable to pay fine/redemption fine; which is why the present controversy has arisen. It may be noted that while under the Scheme no express provision has been made discharging the declarant from the liability to pay fine, the Directorate General of Taxpayer Service, Central Board of Indirect Taxes and Customs has issued FAQs, flyers and press notes wherein it is specifically stated that the most attractive aspect of the Scheme is that it provides substantial relief in the tax dues for all categories of cases as well as full waiver of interest, fine and penalty. In all these cases, there would be no other liability of interest, fine or penalty. There is also complete amnesty from prosecution. It is not the case of the Board that declarations involving redemption fine cannot be accepted. This court, however, is prima facie of the view that the stand of the Board that in case where redemption fine is imposed and quantified, discharge certificate can only be issued after settlement of redemption fine, is not in consonance with the Scheme which contemplates putting an end to the matter - this court is of the view that the matter requires consideration. Hence issue Rule, returnable on 23rd January, 2020. This court is further of the view that a prima facie case has been made out for grant of interim relief inasmuch as if the interim relief as prayed for is not granted, the petitioners would not be in a position to file fresh declarations before the last day for filing declarations under the Scheme, which may either create an irreversible situation or unnecessary complications. Having regard to the fact that if all similarly situated declarants were to approach this court, the same would needlessly lead to multiplicity of proceedings, the court is of the view that the benefit of this order may be granted to even those declarants who have not approached this court, subject to the declarants filing an undertaking before the Designated Committee that in case the outcome of the present petition is against the petitioners, they would pay the redemption fine, failing which, the discharge certificate shall be revoked.
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2019 (12) TMI 1216
Clandestine removal - MS Ingots - allegation that the appellants were carrying out activities of clandestine clearances in a pre-mediated manner with sole objective of defrauding the Government of its legitimate revenue in the form of Central Excise Duty - demand based on the statement of Shri Pawan Bansal, Director of M/s. Shree Jagdambay Castings Pvt. Ltd. as was recorded on 29.07.2013 - denial of cross-examination - Onus of proof - HELD THAT:- It is found that the said statement got subsequently retracted by Shri Pawan Bansal. It is further apparent that though the appellants received the relied upon documents, but they have been aggrieved of those not being legible. Legible copies thereof were insisted but were never made available. Adjudicating Authority below is observed to have ignored the repeated requests of the assessees for the legible documents. Copies of documents though are on record but perusal makes it clear that many of them are not at all legible. Denial of cross-examination - HELD THAT:- The denial of coss-examination in the given circumstances is opined to be unfair and unjustified. The order under challenge records that, the case is mainly based on the record of M/s.BRMPL, which is duly corroborated by the statements of directors of BRMPL and the persons who were maintaining the records . But no such record and the corroboration thereof has been specified by the adjudicating authority below. Onus of proof - HELD THAT:- The law is well settled that in respect of any allegation of clandestine removal the onus is squarely and solely on the Revenue to prove what it alleges and that onus of the revenue cannot be shifted to the assessee. The assessee cannot be called upon to prove the negative. There is no investigation whatsoever or any proof brought on record by the revenue in regard to the alleged clandestine production and unaccounted removal of excisable goods by the assessee. Mere allegation by the Revenue cannot take the place of proof. There is no iota of evidence apparent on record specifically to the corroboration of the software data recovered during search. There is no compliance of Section 36B of Central Excise Act Sub Clauses (2) (4) prescribes very stringent conditions for Computer Printouts to be a piece of admissible evidence. Not even Section 45A has been resorted as there is no apparent opinion of examiner of electronic evidence - The law is also well settled that the adjudication in a quasi-judicial proceeding must be fair and objective and the authority concerned must act correctly in accordance with law. In the present case the adjudicating authority is opined to have acted solely to confirm demands mechanically with predetermined negative mind because of his bias and prejudice and no willingness to appreciate the facts and records and apply the law correctly. Appeal allowed - decided in favor of appellant.
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