TMI Tax Updates - e-Newsletter
February 11, 2020
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
CST, VAT & Sales Tax
Highlights / Catch Notes
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GST:
The seized vehicle and goods have been released on the strength of such security deposit. Hence, the proceedings taken out u/s 129 are liable to be concluded in view of section 129 (5) - Clearly the notice u/s 129(3) of the UP GST Act, 2017 is infructuous and the proceedings taken thereunder are liable to be treated as concluded.
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Income Tax:
Time limit for completion of assessment - scope of the term "Direction" u/s 153 - it must be express direction necessary for disposal of the case before the authority or Court. It must also be a direction which the authority or Court is empowered to give while deciding case before it. The expressions “findings” and “direction” in Section 153(3)(ii) must be accordingly confined. Section 153(3)(ii) is not a provision enlarging the jurisdiction of the authority or Court.
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Income Tax:
Penalty u/s 271(1)(c) - fresh assessment in the remand proceedings - AO not only maintained the earlier income but even the appeal instituted by the appellant against the same was withdrawn by the appellant. In such circumstances, we are unable to agree with the contentions of the appellant that at the stage of making order giving effect to the Order of the Commissioner (Appeals), there was necessity of making a fresh Order or there was a necessity of issuing a fresh notice for initiating the penalty proceedings.
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Income Tax:
The Government of India has introduced E-Governance for conduct of assessment proceedings electronically. It is a laudable steps taken by the Income Tax Department to pave way for an objective assessment without human interaction. At the same time, such proceedings can lead to erroneous assessment if officers are not able to understand the transactions and statement of accounts of an assessee without a personal hearing. The respondent should have to be therefore at least called for an explanation in writing before proceeding to conclude that the amount collected by the petitioner was unusual.
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Income Tax:
Accrued interest on the loan raised for the company against F.D. Booked by the Director - this interest is actually the liability of the company and there is no basis for claiming this expenditure, in the hands of the appellant. Therefore there is no basis for setting off of this liability of company against interest earned by assessee on funds belonging to him deposited in the bank.
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Income Tax:
Exemption u/s 11 - cancellation of registration - The Circular, in the context of income limits under the proviso also explains that merely because in a particular year the limits may be exceeded is not a good ground to cancel the registration itself, though, all these aspects, can be taken into consideration at the stage of assessment.
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Income Tax:
Change in accounting policy - the change in accounting policy is a result of the audit objection raised by CAG. The appellant has claimed deduction in profits in the computation of the total income, and added it as income in the subsequent assessment year, which has been accepted by the AO. The change is, thus, revenue neutral.
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Income Tax:
Deduction u/s 43B disallowed - In the present case, the liability to pay Excise Duty of the assessee is incurred on the removal of finished goods in the subsequent year i.e. year beginning from 01.04.1999 and what we are concerned with is unutilised MODVAT Credit as on 31.03.1999 on which date the asseessee was not liable to pay any more Excise Duty. Hence, present is not a case where appellant can claim benefit of proviso to Section 43B.
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Customs:
Electronic sealing - Deposit in and removal of goods from Customs bonded Warehouses.
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Customs:
Refund of Countervailing Duty (CVD) and Special Additional Duty (SAD) - non-fulfilment of its export obligations - At best, the appellant could have availed the CENVAT Credit, but that would not ipso facto give them any right to claim refund of such credit in cash with the onset of G.S.T. because CENVAT is an option available to an assessee to be exercised and the same cannot be enforced by the CESTAT at this stage.
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Customs:
Levy of penalty u/s 112 (a) of the Customs Act, 1962 - smuggling of Gold - The Revenue has made out a case by linking the chain of events, phone calls, etc., towards the scheme planned well in advance for executing anti-national activity by defrauding the Revenue, as brought on record very succinctly by the Adjudicating Authority in the form of unchallenged statements and the call records - Appeal dismissed.
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Customs:
Classification of imported goods - Closed Circuit Television (CCTV) Cameras - CTH 8525 80 - From the HSN Note read with the Customs Tariff Heading 8525, it is found that there is no entry specifically for CCTV cameras - , they cannot be classified under television camera, but rightly under “Others” for the period in dispute
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Customs:
Refund of amount deposited with Customs - unjust enrichment - The Appellant has to stand on its own legs and establish that they have paid the aforesaid amount on their own account, which they failed to establish.
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Customs:
Compounding of offences - Section 137(3) of the Customs Act, 1962 - prevent litigation and encouraged earlier settlement of dispute - The Application for compounding of offences can be rejected only on the grounds mentioned in the guidelines issued by Circular dated 2009 and not otherwise.
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Customs:
Anti-Dumping Duty - Final levy of duty is higher than the provisional levy of duty - demand of differential duty - In an identical case, it has been decided that, in such circumstances differential Anti-dumping Duty is not payable - Though the aforesaid decision is Interim Stay order but we agree with the view expressed by the Tribunal.
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DGFT:
Amendment in Export Policy of Personal Protection Equipment/Masks
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Corporate Law:
Jurisdiction - power of SFIO - diversion/siphoning of funds - Needless to say that when huge public money and public interest are involved, Tribunal should in the interest of justice iron out procedural/Technical objections to advance substantial justice
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Service Tax:
Activity of providing parking facility in the Malls - there is no doubt that the right to collect parking fees given by the mall owners is nothing but a consideration provided to the appellant by the mall owners and the measure of such consideration is the gross income generated through the parking fees.
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VAT:
Benefits of exemption - The Hank Yarn of others types of Yarns like Silk for Handloom Kancheepuram and Banarasi Silk Sarees, Khadi Slik, Linen fabric are also used by Handloom Industry. Therefore, we do not appreciate why exemption should be restricted only to Cotton Hank Yarn, as contended by Revenue. Entry 44 never meant a harm to be caused to other type of yarns sold in Hank form, by denying exemption to them.
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2020 (2) TMI 374
Seizure of goods alongwith conveyance - requirement to furnish bank guarantee equivalent to the amount of his liability - Section 129 of UPGST Act - HELD THAT:- The scheme of Section 129 of the UPGST Act, 2017 is the most reliable guide of the legislative intent. Section 129 of the UPGST Act, 2017 contemplates a comprehensive scheme with a summary procedure for release of goods and conveyances seized in transit. The legislative intent is to secure revenue interests and equally to ensure expeditious release of the seized goods and conveyances. This procedure is distinct from the adjudicatory process of determination of tax liability.
It is admitted by the State Revenue that the petitioner had furnished a security in the form of a bank guarantee, equivalent to the amount payable under clause (a) of section 129(1) of the UPGST Act, 2017, upon demand made by the Revenue to furnish such security of like amount. The security in the form of a bank guarantee so furnished upon demand to the satisfaction of the State Revenue Authorities is clearly relatable to Section 129 (1)(c) of the UPGST Act, 2017 -
The seized vehicle and goods have been released on the strength of such security deposit. Hence, the proceedings taken out under section 129 of the UPGST Act, 2017 are liable to be concluded in view of section 129 (5) of the UPGST Act, 2017 - Clearly the notice under Section 129(3) of the UPGST Act, 2017, dated 4th December, 2019 is infructuous and the proceedings taken thereunder are liable to be treated as concluded.
Petition disposed off.
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2020 (2) TMI 373
Grant of permission for online quiz game - rejection on the ground that after coming into force the GST Act, 2017 and Goods and Service Tax Rules, 2017, the Uttar Pradesh Entertainment and Betting Tax Act, 1797 and Uttar Pradesh Entertainment and Betting Tax Rules, 1980 have been removed by Section 174 of the Goods and Service Tax Act, 2017 - HELD THAT:- Considering the fact that the petitioner has filed application dated 27.01.2020 under new rule and the same is pending consideration before the respondent no.2, the respondent no.2/respondent no.3/competent authority are directed to decide the application dated 27.01.2020, expeditiously.
Petition disposed off.
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Income Tax
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2020 (2) TMI 376
Deduction u/s 43B disallowed - advance payment of Excise Duty which represented unutilised MODVAT credit without incurring the liability of such payment - HELD THAT:- The proviso to Section 43B provides that nothing contained in the Section shall apply in relation to any sum which is actually paid by assessee on or before due date applicable in his case for furnishing the return in respect of the previous year in which the liability to pay such sum was incurred. The crucial words in the proviso to Section 43B are “in respect of the previous year in which the liability to pay such sum was incurred”.
The proviso takes care of the situation when liability to pay a sum has incurred but could not be paid in the year in question and has been paid in the next financial year before the date of submission of the Return.
In the present case, there was no liability to adjust the unutilised MODVAT credit in the year in question since had there been liability to pay Excise Duty by the appellant on manufacture of vehicles, the unutilised MODVAT credit could have been adjusted against the payment of such Excise Duty. In the present case, the liability to pay Excise Duty of the assessee is incurred on the removal of finished goods in the subsequent year i.e. year beginning from 01.04.1999 and what we are concerned with is unutilised MODVAT Credit as on 31.03.1999 on which date the asseessee was not liable to pay any more Excise Duty. Hence, present is not a case where appellant can claim benefit of proviso to Section 43B. The submissions of Shri Ganesh on proviso to Section 43B also does not support his claim. - Decided in favour of revenue.
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2020 (2) TMI 372
Provision for salary - deduction was made in light of the Pay Revision Committee (“PRC”) appointed by the Government of India - Disallowance on the ground that it did not accrue and the same was merely a contingent liability - pay revision of the employees of the Appellant being a Public Sector Enterprise is due every 10 years and with the expiry of one wage settlement or agreement - HELD THAT:- It is a well settled principle of law that an assessee, following the mercantile system of accounting, is not entitled to claim deduction until the liability for which deduction is claimed has accrued. The Act makes a distinction between actual liability in praesentia .
The pay revision of employees of the appellant, a PSU is due every ten years with the expiry of one wage settlement or agreement. Invariably, there is a time lag between expiry of a wage revision and negotiation of a fresh wage revision. The appellant had made provision of ₹ 1.60 crores on scientific foundation and on the basis of its past experience in its accounts for Financial Year 2006-07. The provision was made for the period 1st January, 2007 to 31st March, 2007 and deduction was claimed on the standpoint that appellant is under an obligation to pay revised pay to its employees with effect from 1st January, 2007, determination whereof, was a matter of time. The appellant, thus had a reasonable basis to make provision for this expenditure. nd a liability de future which, for the time being is only contingent. The former is deductible but not the latter. The question to be decided in each case is whether any present liability has accrued against the assessee.
The position in the current case is that the liability had already arisen with certainty. The committee was constituted for the purpose of wage revision. That the wages would be revised was a foregone conclusion. Merely because the making of the report and implementation thereof took time, it could not be said that there was no basis for making the provision. In view of the above, we hold that the ITAT and CIT (A) have fell in error by disallowing the expenditure of ₹ 1.60 crores on account of anticipated pay revision in Assessment Year 2007-08. The first and second questions of law are thus answered in favour of the appellant.
Change in accounting policy - Addition on account of financial impact due to change in accounting policy in respect of revenue recognition of application fee, front end fees, administrative fee and processing fee of loans from the date of signing of the loan agreement to the date of realization - HELD THAT:- The tax authorities should have proceeded to determine and ascertain as to whether, the income has in reality accrued to the assessee, or not, notwithstanding the change in accounting policy. If the income had indeed accrued, the addition would have been permissible. However, to determine this, in our opinion, the treatment given in the assessee’s books of account would not be necessary, but would be dependent on the answer to the question as to whether the income has indeed accrued, having regard to the test as discussed hereinabove. The question whether real income has materialized or not, has to be scrutinized, having regard to the commercial and business certainties and realities of the situation in which the assessee is positioned, and not with reference to system of accounting. The answer to such decision would then relate to the chargeable accounting year in which such profits actually arose and assessee would be liable to tax accordingly. Applying this yardstick, we do not find that any income accrued at the point of mere execution of the agreement and, thus, the income did not accrue in the relevant AY. The financial impact has since been factored in the subsequent year.
We also find merit in the submissions of the appellant that the change in accounting policy is a result of the audit objection raised by CAG on 10th October, 2006. The appellant has claimed deduction in profits in the computation of the total income, and added it as income in the subsequent assessment year, which has been accepted by the AO. The change is, thus, revenue neutral. - Decided in favour of assessee.
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2020 (2) TMI 371
CIT (Appeals) jurisdiction to entertain the additional grounds - rejection of the application under section 154 - amount of short term capital gain on the sale of debts funds was inadvertently considered as business income in the appellant's return - whether the CIT (Appeals) had the jurisdiction to entertain this additional grounds in the appeal instituted by the appellant questioning the Assessing Officer's order dated 12/12/2011 made under section 143 (3) of the said Act, even though such grounds neither flow from any change of circumstances or the law nor is it that such grounds were unavailable to the appellant/assessee at the stage of filing the return or during the progress of the assessment proceedings before the Assessing Officer?
HELD THAT:- The substantial questions of law as framed are required to be answered in favour of the appellant/assessee and against the respondent/revenue to the extent of holding that the CIT (Appeals), in the facts and circumstances of the present case, did have the jurisdiction to entertain the two additional grounds raised by the appellants in the context of payment of the amount of ₹ 52,14,543/- as short terms capital gain and the addition of amount of ₹ 5,90,093/- to the business income in the return filed by the appellant. However, in the present case the ITAT after holding that the CIT (Appeals) lacked the jurisdiction to entertain the two additional grounds has proceeded to observe that even on merits, the CIT (Appeals) was wrong in exercising discretion in favour of the appellants or accepting the case of the appellants on merits.
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2020 (2) TMI 352
Unexplained Cash credits/cash deposit in Savings Bank Account - addition of peak amount - HELD THAT:- CIT(A) disbelieved the amounts received by the assessee whereas the persons who had given the affidavits had not been cross-examined before rejecting the affidavits. As per AR the credits were in the bank account which was not a part of the books of accounts and the credits stood confirmed by the persons concerned and supporting documents to show the creditworthiness were also filed. It was also averred by the ld. AR that the cash balance in the books was also available and which could have been used for deposit in the bank account and detail of the cash balance available in the books on the various dates on which there were deposits in the bank account along with relevant pages of cash book were filed before CIT(A).
We restore the issue for a limited purpose to the file of AO to verify and examine as to whether the assessee is entitled the benefit of opening cash in hand and cash available in books of account related to his business with regard to the amount after providing reasonable opportunity of being heard to the assessee. The assessee is also directed to cooperate with the AO for early disposal of the case and substantiate his claim with regard to cash deposit into the bank account and cash withdrawals from the bank account. Accordingly, we allow the sole ground raised by the assessee partly for statistical purposes.
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2020 (2) TMI 351
Addition u/s 69A in respect of the deposits in bank account AND cash deposits in bank account - HELD THAT:- Both the authorities below have neither considered the documents filed by the assessee nor has taken into consideration the submissions of the assessee properly. The CIT(A) has himself in para 4.7 has mentioned that in the course of present proceedings the assessee filed certain additional evidence with regard to the sources of cash in hand, opening balance of cash, gifts received in cash of ₹ 1. lac from Smt. Harjinder Kaur, mother of the assessee and also a gift of ₹ 1 lac in cash from Sh. Sukhraj Singh, brother of the assessee. We have also carefully perused the findings of the AO as well as the observations made by the CIT(A) and found that the documents filed by the assessee are necessary for examination of the sources of deposits made in cash and forwarded to the AO for remand report, then it is the duty of the AO to examine the documents and give report properly. As per the ld. AR the affidavit for the gift given by mother and real brother as being out of their savings and the gifts received from family members out of their savings.
Documents filed by the assessee are necessary for examination of the sources of deposits made in cash and forwarded to the AO for remand report, then it is the duty of the AO to examine the documents and give report properly. As per the ld. AR the affidavit for the gift given by mother and real brother as being out of their savings and the gifts received from family members out of their savings. Ld. AR of the assessee also tried to justify the cash deposit into his bank account as quoted supra by way of his written submission.
Issue needs verification and examination on the part of the AO after considering the submissions of the assessee and the documents to be furnished by the assessee. Needless to say, the assessee shall be given reasonable opportunity of being heard. The assessee is also directed to cooperate with the AO for early disposal of the case and substantiate his claim properly. - Appeal of the assessee is allowed for statistical purposes.
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2020 (2) TMI 369
Addition u/s 69A - Unexplained the deposit of cash collected during the demonetization into their account - HELD THAT:- Government of India demonetized ₹ 500 and ₹ 1000 notes on 08.11.2016. Between 01.11.2016 and 08.11.2016, the petitioner had collected a sum of ₹ 57,85,655/-which is also does not appear to be usual as compared to collections made during the November 2015. Out of the total collection of ₹ 57,85,655/-and a closing cash of ₹ 38,72,374/- as on 31.10.2016, the petitioner deposited an amount of ₹ 26,77,716/- which is also not in variance with the cash deposits made by the petitioner during the preceding financial year. Collection of monthly subscription/dues by the petitioner during the aforesaid period appear to be reasonable as compared to be same period during 2015.
The Government of India has introduced E-Governance for conduct of assessment proceedings electronically. It is a laudable steps taken by the Income Tax Department to pave way for an objective assessment without human interaction. At the same time, such proceedings can lead to erroneous assessment if officers are not able to understand the transactions and statement of accounts of an assessee without a personal hearing. The respondent should have to be therefore at least called for an explanation in writing before proceeding to conclude that the amount collected by the petitioner was unusual.
Petitioner has prima facie demonstrated that the assessment proceeding has resulted in distorted conclusion on facts that amount collected by the petitioner during the period was huge and remained unexplained by the petitioner and therefore same was liable to be treated as unaccounted money in the hands of the petitioner under Section 69A\
Since the assessment proceedings no longer involve human interaction and is based on records alone, the assessment proceeding should have commenced much earlier so that before passing assessment order, the respondent assessing officer could have come to a definite conclusion on facts after fully understanding the nature of business of the petitioner. It appears that the return of income was filed by the petitioner on 02.11.2017. However, the assessment proceeding commenced much later towards the end of the period prescribed under section 153 of the Income Tax Act, 1961. In our view, assessment proceeding under the changed scenario would require proper determination of facts by proper exchange and flow of correspondence between the petitioner and the respondent Assessing Officer.
The impugned order is set aside and the case is remitted back to the respondent to pass a fresh order within a period of sixty days from date of receipt of a copy of this order. Petitioner shall file additional representation if any by treating the impugned order as the show cause notice within a period of thirty days from date of receipt of a copy of this order.
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2020 (2) TMI 367
Penalty u/s 271(1)(c) - CIT (Appeals) found some fault in the exercise of jurisdiction by AO and remanded the matter back - AO disallowed the mining land restoration charges in an amount of ₹ 1,40,00,000/- and added back this amount to the return income - HELD THAT:- Commissioner (Appeals) basically directed the AO to revisit the issue of disallowance but did not specifically interfere with or set aside the endorsement relating to the issuance of notice under Section 271 (1) (c) of the IT Act. From the tenor of the Order dated 16.11.2000, it is clear that the Commissioner (Appeals) did not wish to interfere with the endorsement at the stage of disposal of the appeal as the endorsement would undoubtedly lose its efficacy, in case, upon remand, the AO were to revoke the disallowance to the extent of ₹ 1,40,00,000/- thereby reducing the returned income to that which was originally declared by the appellant at the time of filing of the initial returns for the Assessment Year 1997-1998.
The Order dated 16.11.2000, upon contextual reading and understanding also suggests that in case, upon remand, the AO were to maintain his original position of disallowing the amount of ₹ 1,40,00,000/-, thereby maintaining the return income at ₹ 54,49,180/-, then, obviously, there could be no jurisdictional bar to the continuance of the penalty proceedings, initiated by the endorsement which is to be found in the AO's Order dated 8.2.2000. If the Order dated 16.11.2000 is read and interpreted in this fashion, then, it is difficult to agree with Mr. Kulkarni's submissions or to take a view at variance with that taken by ITAT in the impugned Order dated 28.8.2013.
In this case the AO not only maintained the earlier income as determined in his Order dated 8.2.2000 but even the appeal instituted by the appellant against the same was withdrawn by the appellant. In such circumstances, we are unable to agree with the contentions of Mr. Kulkarni that at the stage of making order giving effect to the Order of the Commissioner (Appeals), there was necessity of making a fresh Order or there was a necessity of issuing a fresh notice for initiating the penalty proceedings. Such a contention appears to emphasise entirely on form than on substance, even, though it is the case of the appellant that it is the substance which must prevail over the form, when it comes to the interpretation of the Order dated 16.11.2000.
We answer the substantial questions of law against the appellant in favour of the Revenue. The appeal is therefore dismissed and the parties are directed to appear before the Commissioner (Appeals) on 9th March, 2020 at 11.00 a.m., in order to enable the Commissioner (Appeals) to decide on merits whether penalty of ₹ 40,00,000/- was correctly levied upon the appellant.
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2020 (2) TMI 366
Exemption u/s 11 - cancellation of registration - Tribunal justification in comparing the appellant with a private builder and developer and in holding that the appellant was carrying on business for profit so as to attract proviso to Section 2(15) ? - Whether the Appellate Tribunal was justified on facts and in law in sustaining the order u/s 12AA(3) particularly on grounds alien to Section 12AA(3) - HELD THAT:- There are no categorical findings that the activities of GIDC are not genuine or are not in accordance with the objects of the trust or the institution. Merely because, by reference to the amended provisions in Section 2(15), it may be possible to contend that the activities of GIDC are covered under the proviso, that, by itself, does not render the activities of GIDC as non-genuine activities so as to entitle the CIT to exercise powers under Section 12AA(3) of the said Act.
We have really not gone into the question as to whether the activities of GIDC are indeed covered under the proviso to Section 2(15) of the said Act as amended. This is because we are satisfied that the substantial question of law at (b) is required to be answered in the favour of the appellant and against the Respondent Revenue. Once this is done, there is really no necessity to go into the other issue as is reflected in the substantial question of law at (a).
We also add that the Circular No.21/2016 also, supports the contentions of Mr. Vaidya, inasmuch as it reiterates that the process of cancellation of registration has to be initiated strictly in accordance with the provisions under Section 12AA(3) and after carefully examining the application of the said provisions. The Circular, in the context of income limits under the proviso also explains that merely because in a particular year the limits may be exceeded is not a good ground to cancel the registration itself, though, all these aspects, can be taken into consideration at the stage of assessment. In fact in case of Khar Gymkhana [2016 (6) TMI 489 - BOMBAY HIGH COURT] as also in Karnataka Industrial Area Development Board [2015 (7) TMI 169 - KARNATAKA HIGH COURT] the Division Benches of our Court have taken the view that such matters can be evaluated in the course of assessment but this shall not be a ground for cancellation of the registration itself.
We allow this appeal by answering the substantial question of law at (b) above in favour of the appellant and against the respondent Revenue.
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2020 (2) TMI 350
Addition u/s 68 - bogus share premium and share capital during the assessment year under consideration - whether shareholding companies are only paper companies not carrying out any substantial business activities? - HELD THAT:- The assessee company has not commenced its business activity at the time of preparation of valuation report by the Auditor and subscription of share by 35 companies, as the clearance for mega project was accorded by the Competent Authority on 18-2-2009. It is preposterous and against the human probability that the third party company would buy shares with such huge share premium of a paper company which has no business background and track record, without looking into the assets, business, model and strong fundamentals of the company. All these aspects have been meticulously examined by the Assessing Officer in the assessment order. Ironically the CIT(A) has glossed over the findings recorded by the Assessing Officer
CIT(Appeals) had merely decided the appeal on the lines of findings recorded by the Hon’ble Supreme Court in the case of Lovely Exports [2008 (1) TMI 575 - SC ORDER] - We do not concur with the view adopted by the CIT(A) while allowing the appeal of the assessee. No exercise was carried out by the learned CIT(A) to go into the root of the matter and find out the actual business carried out by the assessee and the investing companies and he had also not examined the issues from the prospective of a prudent businessman , i.e. whether the prudent business man would like to invest and buy shares of a paper company having a negative NAV at a premium of ₹ 190/- per share or not.
CIT(Appeals) has not dealt with any of the findings recorded by the Assessing Officer on merit whereby he had brought on record the financial status of these companies, the working of these companies from the same premises through the key person. The Ld. CIT(Appeals) has not discussed anything with respect to the report of the Inspector and operation of these companies being carried out by Shri Praveen Kumar Jain.
We deem it appropriate to remand this matter to the file of Ld. CIT(Appeals) to decide the appeal in accordance with the decision of the Hon’ble Supreme Court in the matter of NRA Iron & Steel Pvt. Ltd. [2019 (3) TMI 323 - SUPREME COURT] and also in the matter of NDR Promoters Pvt. Ltd. [2019 (1) TMI 1089 - DELHI HIGH COURT]
Needless to say, the primary onus to prove genuineness, creditworthiness and identity of the 35 shareholders companies is on the assessee as per parameter mentioned in Para 11 of the decision in the matter of Principal Commissioner of Income Tax (Central)-1 Vs. NRA Iron & Steel Pvt. Ltd. (supra) Para 13 of the NDR Promoters Pvt. Ltd. (supra. Delhi High Court). The assessee is required to discharge the same. In the light of above, we direct the Ld. CIT(Appeals) to decide the issue afresh - Decided in favour of revenue for statistical purposes.
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2020 (2) TMI 348
LTCG in respect of sale of land - Characterization of income - benefit of indexation - HELD THAT:- As already negated observation of Ld.AO that, said land was purchased and sold in a short span during financial year relevant to assessment year under consideration. We therefore reject this argument by Ld.DR that income earned from sale of said land is to be treated as business income.
Coming to the nature of said land, Ld.AO before Ld.CIT(A), submitted that the Village that includes said land has been ascertained by BDA as residential zone. Whereas assessee submitted that he did not convert the said land for non agricultural purposes. However, we also note that assessee has not established by way of documents /evidences that it was agricultural land. We therefore cannot appreciate the argument advanced by Ld.AR. As we have held hereinabove that said land is a long term capital asset, capital gains must be computed by granting indexation benefit to assessee. Ld.AO is directed to recomputed LTCG in respect of sale of said land by assessee in accordance with law.
Accrued interest on the loan raised for the company against F.D. Booked by the Director - Payments of interest on FD and on the interest paid on loan - HELD THAT:- Admittedly, assessee deposited ₹ 1 crore in bank in his name as F.D, on which assessee received interest of ₹ 3,93,198/-. On security of this FD, company in which assessee is a Director, raised loan of ₹ 50 lakhs and repaid the loan. However, interest on loan amounting to ₹ 3,68,252/- was claimed as expenditure by the assessee. In our opinion this interest is actually the liability of the company and there is no basis for claiming this expenditure, in the hands of the appellant. Therefore there is no basis for setting off of this liability of company against interest earned by assessee on funds belonging to him deposited in the bank. Hence, the actual interest which actually works out to 3,68,253/- - We therefore do not find any infirmity in order of Ld,CIT(A).
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2020 (2) TMI 347
TP Adjustment - comparable selection - HELD THAT:- Assessee provides IT services and IT enabled services to its group companies. Assessee is engaged in building and maintaining the local information technology infrastructure and assists global teams in supporting the technology environment and usage, thus companies functionally dissimilar with that of assessee need to be deselected from final list.
Computing incorrect operating margins of comparables by not granting appropriate working capital and risk adjustments - HELD THAT:- Transfer pricing analysis is estimation and not an exact science. One has to see that, reasonable adjustment must be made where ever it is needed, so as to bring both comparable and test party on same footing. In present facts of case, DRP may be correct in denying working adjustment due to unavailablity required data, however there is no merit in observations of DRP/TPO as supported by Ld.CIR DR, in denying working capital adjustment due to absence of details for working out adjustments in comparable companies chosen. If we appreciate the argument advanced by Ld.CIT DR, there would remain no comparables for the purpose of comparibility analysis to determine ALP of an international transaction, and this would be fatal to entire exercise of transfer pricing analysis.
Regarding comparable companies, one has to fall back upon only on information available in public domain. If that information is insufficient, it is beyond the power of Assessee to produce correct information about comparable companies. Revenue on the other hand has sufficient powers u/s.133(6) to compel production of required details from comparable companies. If this power is not exercised to find to get information required, then it is no defense to say that Assessee has not furnished required details to deny any adjustment on account of working capital differences. Therefore this objection of DRP is not sustainable. Therefore in, endeavor should be made to bring in comparable companies for the purpose of broad comparison and working capital adjustment claimed by Assessee should be analysed, keeping in mind, OECD guidelines.
Based on the above discussions, and respectfully following decision of coordinate Bench of this Tribunal in the case of Huawei Technologies India (P.) Ltd. [2018 (10) TMI 1796 - ITAT BANGALORE] we direct working capital adjustment to be computed and to allow as per actuals, after considering exclusion/inclusion of comparable companies in the final set of comparables as discussed hereinabove.
Disallowance u/s 14A - HELD THAT:- Admittedly, there is no exempt income earned by assessee during the year, as has been noted by Ld.AO in impugned order. Under such circumstances, ratio of Hon’ble Madras High Court which has been approved by Hon’able Supreme Court in case of Chittinad Logistics Ltd [2017 (4) TMI 298 - MADRAS HIGH COURT] is squarely applicable. Respectfully following the same we direct Ld.AO to delete addition made under section 14 a read with rule 8D for year under consideration.
Disallowance u/s 43 B towards leave encashment and bonus paid to the employees - admission of additional documents - HELD THAT:- On perusal of order passed by DRP, it is noted that assessee had filed various documents which was called for by ACIT however the same has not been considered. Assessee’s is really filing these documents before this Tribunal to consider claim of leave encashment and bonus paid to employees in accordance with law. We do not find any reason not to allow request of Ld.AR, as it is in consonance with principles of natural Justice. We therefore admit the additional evidence filed by assessee and send it back to Ld.AO for verification. Ld.AO shall verify the documents filed by assessee and consider the claim as per law. Needless to say that proper opportunity must be granted to assessee of being represented.
Disallowance of provision for expenses under section 40 (a) (i)/(ia) on account of non-deduction of tax at source pertaining to other payables and pertaining to related parties - HELD THAT:- As it has been admittedly submitted by both sides that assessing officer has not followed the directions of DRP, we are of the opinion that the issue needs to be set-aside to Ld.AO. AO shall verify the details filed by assessee and consider the claim is in accordance with law. Needless to say that proper opportunity of being heard should be granted to assessee. Accordingly these grounds raised by assessee stands allowed for statistical purposes.
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2020 (2) TMI 346
Disallowance of expenditure towards retention money/security deposited KID, EOT etc. which resulted in reduction of taxable income - HELD THAT:- The assessee in the instant case, claims that a certain portion of bill has been kept as a lien in the custody of the contractee till the fulfillment of the conditions specified in the contract. Naturally, such retention money would accrue only where the terms of the contract stands fulfilled. In the absence of its accrual, the income cannot be taxed under mercantile system of accounting on a hypothetical basis. We find considerable force in the aforesaid plea of the assessee.
It is not the case of the Revenue that the work under the contract has been completely fulfilled. The unrealized portion of the bills raised by the contractor assessee is in the league of contingent income until and unless the terms and conditions of the contract stands fulfilled. We find complete merit in the argument laid on behalf of the assessee on this score. When seen differently, we also find substance in the case made out that the assessee has booked the unrealized portion of the bill in the year of realization as and when happened. Therefore, the action of the assessee does not cause any prejudice to the Revenue and is tax neutral. In such circumstances, when seen in combination, we are inclined to accept the claim of the assessee for non-taxability of unrealized income kept in the custody of the contractee as per the terms of the contract. For the reasons narrated, we set aside the order of the CIT(A) and direct the AO to delete the disallowance of expenditure
Chargeability of interest u/s 234B - HELD THAT:- As relying on M/S ANAND VIHAR CONSTRUCTION PVT. LTD. AND VICE-VERSA. [2018 (11) TMI 1738 - ITAT RANCHI] AO is directed to delete the levy of interest under s.234B of the Act.
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2020 (2) TMI 360
Status of HUF - Time limit for completion of assessment - scope of the term "Direction" u/s 153 - Exclusion of certain period - Validity of directions made by ITAT to make assessments Harnarayan Bhagat and his three sons in the new status of Individuals / HUFs after holding that the earlier assessments made in the status of HUF / Individuals were not correct - HELD THAT:- Validity of directions made by ITAT to make assessments Harnarayan Bhagat and his three sons in the new status of Individuals / HUFs after holding that the earlier assessments made in the status of HUF / Individuals were not correct.
Shri Harnarayan Bhagat was assessed in the status of HUF as Karta in respect of the business carried on in the name of Shri Radhakishan Balkishan. A partial partition of HUF business took place on 13/11/1974 in which Smt. Bansibai W/o Harnarayan, Shri Harnarayan and their three sons were given equal shares. The said partial partition was accepted by ITO under Section 171 of the Act of 1961. No business assets were left in the HUF and business of HUF came to an end after the said partition.
Since wife of Harnarayan Bhagat was also allotted her equal share in the above partial partition, so far as the HUF of Harnarayan Bhagat is concerned, Harnarayan was left as the sole surviving coparcener in said HUF and his status was converted into an individual in respect of assets allotted to him in the above partial partition, however, despite the said position, Shri Harnarayan wrongly filed the returns in the status of HUF. Similarly the three sons of Harnarayan who were married having wife and children also wrongly filed their respective returns as individuals although their correct status on receipt of the property in partial partition was that of their respective HUFs.
Assessments of Harnarayan Bhagat for various assessments years were completed in the wrong status of HUF by Assessing Officer on the basis of returns filed without examining his correct status post partition. Similarly assessments of his sons were completed in status as Individuals of his sons were completed in status as Individuals as against correct status of their respective HUFs which were challenged in appeals by all assessee on the ground that, mere admission of the assessees about wrong status could not bring liability upon them and Assessing Officer ought to have assessed them in the correct status, that is, Harnarayan ought to have been assessed in the status of individual and his sons ought to have been assessed in the status of their respective HUFs consisting of their respective wives and children.
As regards the expression “direction” in Section 153(3)(ii) of the Act, it is now well settled that it must be express direction necessary for disposal of the case before the authority or Court. It must also be a direction which the authority or Court is empowered to give while deciding case before it. The expressions “findings” and “direction” in Section 153(3)(ii) must be accordingly confined. Section 153(3)(ii) is not a provision enlarging the jurisdiction of the authority or Court.
The direction given by the ITAT to make assessment in new status are clearly contrary to the law laid down by the apex Court in MURLIDHAR BHAGWAN DAS [ 1964 (1) TMI 5 - SUPREME COURT], N KT. SIVALINGAM CHETTIAR [1967 (3) TMI 16 - SUPREME COURT], FORAMER [2000 (8) TMI 45 - ALLAHABAD HIGH COURT] and GUPTA TRADERS [ 1981 (12) TMI 36 - ALLAHABAD HIGH COURT] and the order of the ITAT to the aforesaid extent deserves to be quashed and is accordingly quashed in all the appeals. The question of law answered is in favour of the assessee.
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Customs
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2020 (2) TMI 359
Anti-Dumping Duty - Final levy of duty is higher than the provisional levy of duty - demand of differential duty - Interpretation of statute - Rule 21 of Customs Tariff (Identification, Assessment and Collection of Anti-dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 issued vide Notification No. 2/95-Cus. (N.T.), dated 1st January, 1995 - finalization of duty by N/N. 88/2007-Customs, dated 24.07.2007 whereby the Final Antidumping Duty was fixed - HELD THAT:- From the plain reading of the above rule 21(1) it is clear that in case where the Central Government has imposed Anti-dumping Duty on provisional basis and at the time of finalization if the Anti-dumping Duty is fixed on the higher side then the differential duty shall not be collected from the importer.
In the present case though as per provisional Notification No. 106/2006-Cus the lower Anti-dumping Duty was imposed and by final Notification No. 88/2007-Customs, the rate of Anti-dumping Duty was higher, the provisional Anti-dumping Duty was very much considered in the Bills of Entry filed by the appellant and since the price declared by the appellant in the Bill of Entry was not lower than the Anti-dumping value the Anti-dumping Duty shown in the Bills of Entry is ‘nil’. In this case it is very clear that at the time filing of Bills of Entry there was Anti-dumping Duty imposed and since the Anti-dumping Duty arrived at is zero, there was no need of any payment on assessment of Bills of Entry.
There is cleared imposition and collection of Anti-dumping Duty at the time of assessment of Bill of Entry. Moreover, as per our interpretation if there is any difference between the rate of Antidumping Duty in the provisional notification and final notification the differential amount of Anti-dumping Duty shall not be collected, therefore, only because in the appellant’s case at the time of assessment there was ‘nil’ Anti-dumping Duty, the differential Anti-dumping Duty as per the Final Notification cannot be demanded.
Identical issue decided in the case of MERCHEM LTD. VERSUS COMMISSIONER OF CUSTOMS, COCHIN [2014 (5) TMI 523 - CESTAT BANGALORE] where the Tribunal has taken a view, in such circumstances differential Anti-dumping Duty is not payable - Though the aforesaid decision is Interim Stay order but we agree with the view expressed by the Tribunal.
Thus, in terms of Rule, 21(1) the appellant are not liable to pay the differential Anti-dumping duty - appeal allowed - decided in favor of appellant.
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2020 (2) TMI 358
Compounding of offences - Section 137(3) of the Customs Act, 1962 - Appellant filed an application under the said Rules for compounding of offence on 10/02/2006 but since the offence committed by the Appellant is punishable under Section 120B IPC r/w Section 135 of the Customs Act, 1962 therefore the said application was not considered being outside the purview of the then Compounding of Offences Rules, 2005.
HELD THAT:- The purpose of compounding of offences against payment of compounding amount is to prevent litigation and encourage early settlement of dispute. In the guidelines issued vide Circular No. 15/10/2009 no prohibition has been imposed against deciding the application for compounding of offences which were earlier rejected on the technical ground being outside the purview, nor there is any embargo that if the application has been rejected earlier the same cannot be entertained again even if it falls within the purview of compounding of offences as per the guidelines of 2009. A perusal of the said circular/guidelines makes it clear that it is not applicable only qua those case which has been specifically excluded in that circular/guidelines from the purview of compounding. It is not the case of the Appellant that the offence committed by him is no longer an offence. His only plea is that now the offence under the Provision of IPC can also be compounded as per the Circular of 2009.
Going by the reasoning given by the learned Commissioner, the very purpose of compounding of offence i.e. to prevent litigation and encouraged earlier settlement of dispute, will be defeated. The Application for compounding of offences can be rejected only on the grounds mentioned in the guidelines issued by Circular dated 2009 and not otherwise. After going through the guidelines issued by Circular dated 2009, I am of the view that the Application filed by the Appellant for compounding falls within the four corners of the Circular dated 2009 and the same deserve to be allowed.
Appeal allowed - decided in favor of appellant.
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2020 (2) TMI 357
Refund of amount deposited with Customs - amount has been paid by appellant on their own account - Advance license scheme - violation of actual user condition, the condition on which license was granted - HELD THAT:- Although it is the case of the Appellants that the said amount has been paid by them under duress but it has nowhere mentioned in the letter dated 8.10.2007 or in any other communication by the Appellant to the Department nor any other communication which substantiate the argument of duress has been brought on record. It has been vehemently argued on behalf of the Appellant that the aforesaid amount has been paid by the Appellant from their own account, but the wordings of the order dated 18.4.2001 are on their own account. There is a big difference between the meaning of the words from their own account and on their own account.
The Appellant has to establish that the amount has been paid by them on their own account which they failed to establish through any of the documentary evidence produced by them. It is true that the revenue, in the Appeal filed by M/s. Kunal Overseas Ltd. before this Tribunal against the Order-in-Original dated 18.4.2001 opposed its request to reduce the pre-deposit amount by the amount of ₹ 20 lacs paid by the Appellants herein, but that does not mean that it is the stand of the Revenue or that it has been pleaded by the Revenue that the aforesaid amount of ₹ 20 lacs was paid by the Appellant herein on its own account and not on account of the importer. The Appellant has to stand on its own legs and establish that they have paid the aforesaid amount of ₹ 20 lacs on their own account, which they failed to establish.
Appeal dismissed - decided against appellant.
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2020 (2) TMI 356
Classification of imported goods - Closed Circuit Television (CCTV) Cameras - to be classified under CTH 8525 8010 or under CTH 8525 8090? - HELD THAT:- A close look at the above Bills-of-Entry reveals that there are differences as regards the descriptions of the imported goods are concerned. In any case, there is no dispute that the appellant itself had classified under CTH 8525 8090 in its Bill-of-Entry under dispute and thereby effectively prevented the Revenue from questioning further.
From the HSN Note read with the Customs Tariff Heading 8525, it is found that there is no entry specifically for CCTV cameras and it is nowhere even hinted that CCTV cameras, which according to the appellant are neither digital cameras nor video camera recorders, would fall under the category of television cameras itself and hence, this argument of the assessee cannot be accepted. For these reasons, they cannot be classified under television camera, but rightly under “Others” for the period in dispute, since we cannot add or substitute our views/opinions, to negate Revenue’s classification, just to go with appellant’s claim which is based only on arguments.
Appeal dismissed - decided against appellant.
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2020 (2) TMI 355
Levy of penalty u/s 112 (a) of the Customs Act, 1962 - smuggling of Gold - reliance placed on statements of co-noticees, which were later on retracted - call records also formed basis of demand - HELD THAT:- In the Order-in-Original, the Adjudicating Authority has, no doubt, explained very succinctly the modus operandi of the main accused and the involvement to some extent of Mr. Francis and Mr. Karunanithi, from where the role of the appellant kicks in, and as the Adjudicating Authority has extracted, both appear to have stated that the appellant knew about the gold smuggling. Their statements assume relevance since both of them have inter alia stated that they are working in the appellant’s service agency which fact has not been denied - Now, the appellant’s explanation regarding the call records coupled with the extracts of statements of persons apprehended on the early hours of the eventful day lead us to understand that considering the gravity and nature of the offence/activity alleged, the explanation offered in the form of reply is not at all sufficient to conclude as to the innocence of this appellant, as pleaded.
Considering the calls on record, the appellant cannot wash off his responsibility with a total denial that he did not know Mr. Khaja at all and that there was only a wrong call for about 6 seconds, etc. There has been some calls as well on 10.03.2015 between Mr. Khaja and the appellant, the appellant and Mr. Mathiarasu and again, the appellant and Mr. Khaja, which clearly leads to suspicion for which the appellant could only answer.
The Revenue has made out a case by linking the chain of events, phone calls, etc., towards the scheme planned well in advance for executing anti-national activity by defrauding the Revenue, as brought on record very succinctly by the Adjudicating Authority in the form of unchallenged statements and the call records - there are no reasons to interfere with the impugned order - appeal dismissed.
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2020 (2) TMI 353
Refund of Countervailing Duty (CVD) and Special Additional Duty (SAD) - non-fulfilment of its export obligations - Section 142 (3) of the C.G.S.T. Act, 2017 - HELD THAT:- The availability of CENVAT paid on inputs despite failure to meet with the export obligation may not hold good here since, firstly, it was a conditional import and secondly, such import was to be exclusively used as per FTP. Moreover, such imported inputs cannot be used anywhere else but for export and hence, claiming input credit upon failure would defeat the very purpose/mandate of the Advance Licence. Hence, claim as to the benefit of CENVAT just as a normal import which is suffering duty is also unavailable for the very same reasons, also since the rules/procedures/conditions governing normal import compared to the one under Advance Authorization may vary because of the nature of import.
Admittedly, the inputs imported have gone into the manufacture of goods meant for export, but the export did not take place. At best, the appellant could have availed the CENVAT Credit, but that would not ipso facto give them any right to claim refund of such credit in cash with the onset of G.S.T. because CENVAT is an option available to an assessee to be exercised and the same cannot be enforced by the CESTAT at this stage.
There is no question of refund - Appeal dismissed - decided against appellant.
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2020 (2) TMI 383
Detention order - Section 3(1) of COFEPOSA Act - Smuggling - foreign currencies - baggage rules - detenue's statement is that he used to smuggle around 300 cartons of cigarettes from Dubai/Kabul on his arrivals - seizure of detenue's passport - HELD THAT:- In the instant case, authorities after investigation and on evaluation of the evidences i.e. i. His 11 visits between Delhi and Dubai as per his passport; ii. Video clippings from detenu's mobile showing his involvement in smuggling of foreign currency with help of certain other persons; iii. Materials produced by Orient Exchange Company (LLC) showing declaration by detenu for his dealing in foreign exchange; was subjectively satisfied that detenu is engaging himself in smuggling of foreign currency and if he is released on bail, there is every likelihood of his indulgence in prejudicial activities, therefore, it was necessary to detain him in order to prevent him from engaging in such activities.
Petition dismissed - decided against petitioner.
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2020 (2) TMI 345
Quantum of redemption fine and penalty - Valuation of imported goods - enhancement of value - Confiscation of goods - HELD THAT:- The learned Commissioner(Appeals) has ordered reduction of redemption fine and personal penalty on the basis of ratio laid down by the Tribunal in the case of M/S. OMEX INTERNATIONAL VERSUS COMMISSIONER OF CUSTOMS, NEW DELHI [2015 (4) TMI 112 - CESTAT NEW DELHI (LB)] - The Tribunal has taken the view that redemption fine of 10% and penalty of 5% of the value of the imported goods, would be appropriate in case of import violating Exim Policy Provisions.
There are no reasons to interfere with the findings of the learned Commissioner(Appeals) on the basis of such decision - appeal dismissed - decided against Revenue.
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Corporate Laws
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2020 (2) TMI 382
Rectification of register of members - transfer of shares - restoration in the post of directorship of the petitioner - HELD THAT:- No doubt certain share certificates carries two directors signatures excluding authorised signatory and signatures on back side transfer of shares is also signed by one authorised signatory and sometime by two authorised signatories - In any case appellant itself is telling that some of the share certificates are forged.
Any member of a company can redress their relief in cases of oppression vide Chapter XVI of the Companies Act, 2013. NCLT order not to alienate the assets of the company is till further order only.
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2020 (2) TMI 381
Striking of the name of the appellant company from Register of Companies - HELD THAT:- The Appellant has replied vide its letter dated 29.3.2017 (Page 290 of the appeal) and the said letter has the acknowledgement of ROC, Pune. Therefore, it can not be said that the appellant has not replied - Further there is nothing on record that the compliance of Section 248(6) of the Companies Act, 2016 has been made by the Respondent. This fact has also not been noted in the NCLT order. Without complying this provision the ROC vide FORM No.STK5 dated 7.4.2017 has struck off the names of the various companies including the appellant No.2 company. We note that the company is having FDR with the Bank and Performance guarantee has been given and income tax is being deposited on the interest of income.
The name of the appellant No.1 company shall be restored to the Register of Companies subject to the following compliances - Appellants shall pay costs of ₹ 25,000/- to the Registrar of Companies, Pune within 30 days - Appeal allowed.
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2020 (2) TMI 377
Jurisdiction - power of SFIO to investigate the matter - diversion/siphoning of funds - HELD THAT:- When there is siphoning and diversion of funds running into crores, directions issued to the SFIO to investigate should have been followed rather than filing of application for recalling the order, on account of any technical issue of obtaining permission from the Central Government. The same could be done by the SFIO itself as the siphoning of funds is in respect of public money which is noticed in the order dated 04.02.2019 and extracted in the aforesaid order.
Needless to say that when huge public money and public interest are involved, Tribunal should in the interest of justice iron out procedural/Technical objections to advance substantial justice - Application dismissed.
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Insolvency & Bankruptcy
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2020 (2) TMI 384
Recall of order denying petitioner /award-debtor from taking recourse to the provisions of The Insolvency and Bankruptcy Code, 2016 (IBC) - delay in hearing of the Section 34 application - HELD THAT:- The only question which was before the Court was whether the Section 34 can be proceeded with in view of the objection taken by the petitioner that the respondent /award-holder has not filed any claim in the resolution proceedings before the National Company Law Tribunal (NCLT). It may also be pointed out that the entire discussion in the order with regard to the said issue was by reason of the protracted submissions made on behalf of the petitioner and upon the Court being invited to decide on the issue.
The apprehension expressed by learned counsel appearing for the petitioner that the petitioner may risk the effect of the observations made in the order at the time of enforcement of the award cannot therefore be accepted. If no view has been expressed on the merits of the award, such apprehension is misplaced.
The prayer of learned counsel for the respondent /award-holder that costs are be imposed on the petitioner for the frivolity of the application is considered and rejected - Decided against petitioner.
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2020 (2) TMI 380
Maintainability of application - initiation of CIRP - corporate debtor failed to make repayment of its debt - time limitation for filing proceeding - HELD THAT:- There is no proof of any acknowledgement of liability on the part of the Corporate Debtor or any payment made by the Corporate Debtor within the limitation period that may have the effect of extending the period of limitation within the meaning of section 18 or section 19, as the case may be, of the Limitation Act, 1963.
The dates of default in respect of the five invoices range between 02.03.2014 and 11.07.2014. Even if we take the last of the dates, i.e., 11.07.2014, the three-year limitation in terms of Article 137 of the Limitation Act, 1963, for filing the present proceeding ended on 10.07.2017, while the present petition was filed on 15.05.2018.
Reliance can be placed in the case of B.K. EDUCATIONAL SERVICES PRIVATE LIMITED VERSUS PARAG GUPTA AND ASSOCIATES [2018 (10) TMI 777 - SUPREME COURT] where it was held that If the default has occurred over three years prior to the date of filing of the application, the application would be barred under Article 137 of the Limitation Act, save and except in those cases where, in the facts of the case, section 5 of the Limitation Act may be applied to condone the delay in filing such application.
Thus, not only is the Petition devoid of merits but, it is also barred by limitation - petition dismissed.
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2020 (2) TMI 379
Maintainability of application - initiation of CIRP - Corporate debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT:- There is overwhelming evidence to prove default and the defense which has been taken by the Corporate Debtor is rather evasive in nature. It is pertinent to mention that the Corporate Debtor as such in his pleadings has nowhere disputed or denied the claims made by the FC. Also taking into consideration Section 128 of the Indian Contract Act, the liability of the guarantor is co-extensive with the liability of the principal debtor and the same can be invoked without exhausting the remedies against the Principal Debtor.
The application deserves to be admitted - application admitted - moratorium declared.
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2020 (2) TMI 378
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT:- The Operational Creditor is entitled to claim its dues, establishing the default in payment of the operational debt beyond doubt, moreover since the Corporate Debtor has admitted its inability to pay its debts. Hence, the present application is admitted - The registered office of respondent is situated in New Delhi and therefore this Tribunal has jurisdiction to entertain and try this application.
Application admitted - moratorium declared.
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Service Tax
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2020 (2) TMI 354
Refund of unutilized input Service Tax credit - denial for want of registration - HELD THAT:- This issue is covered by the decision of the Chennai Bench of the Tribunal, in the appellant’s own case although for a different period, in CST, CHENNAI-III VERSUS M/S. TEMENOS INDIA PVT. LTD. [2018 (4) TMI 1784 - CESTAT CHENNAI] and this Bench, after following the decision of the Hon’ble High Court of Judicature at Madras in the case of COMMISSIONER OF SERVICE TAX-III, CHENNAI VERSUS CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, CHENNAI & M/S. SCIOINSPIRE CONSULTING SERVICES (INDIA) PVT LTD, CHENNAI [2017 (4) TMI 943 - MADRAS HIGH COURT] has ruled in favour of the assessee - the denial of refund for want of registration of the premises is bad - refund allowed.
Refund claim - denial on the ground of ineligibility/want of nexus - various input services - Gardening Service - Housekeeping Service - Transport Charges - Labour Charges for bore-well - Vehicle Hire Charges - Temenos day expenses - Interior Consultancy - Partition work - Insurance Service - Hotel Expenses - Other rental charges - Electrician and Plumber - Tour Operator Service - Pest Control Service - Car Parking Charges - AMC Charges - External Consultant.
Gardening services - HELD THAT:- This issue was dealt with by the Ahmedabad Bench of the Tribunal in the case of M/s. MURUGAPPA MORGAN THERMAL CERAMICS LTD. VERSUS CCE AHMEDABAD [2013 (4) TMI 384 - CESTAT AHMEDABAD] wherein the Tribunal held that the appellant was required to maintain a garden which is an obligation under the relevant pollution control law and CENVAT Credit with respect to the services used for maintaining the garden would therefore be admissible - refund allowed.
Housekeeping services - HELD THAT:- This issue is covered by the decision of the Delhi Bench of the Tribunal in COMMISSIONER OF CENTRAL EXCISE, DELHI-III VERSUS HERO HONDA MOTORS LTD. [2014 (5) TMI 724 - CESTAT NEW DELHI] wherein the Bench has ruled in favour of the assessee - refund allowed.
Transport charges - HELD THAT:- In COMMR. OF CUS. & C. EX., HYDERABAD-III VERSUS GREY GOLD CEMENTS LTD. [2014 (9) TMI 673 - ANDHRA PRADESH HIGH COURT], the Hon’ble High Court has held that the credit of input service tax on Transportation Charges is proper - refund allowed.
Maintenance Charges – (Labour charges for bore-well, Interior Consultancy, Partition work, Electrician and Plumber) - HELD THAT:- The above services can be comfortably clubbed under ‘Maintenance Charges’ and are covered by the decision of the Bangalore Bench of the Tribunal in KIRLOSKAR SYSTEMS LTD. VERSUS COMMISSIONER OF SERVICE TAX, BANGALORE [2014 (12) TMI 787 - CESTAT BANGALORE] - refund allowed.
Pest control service - HELD THAT:- The service is very much essential for maintaining a healthy atmosphere in the working premises/factory premises and hence, this would be an essential input service - there is direct nexus of this input service with the output service - refund allowed.
Car parking charges - HELD THAT:- The service was held to be an eligible input service by the Mumbai Bench of the Tribunal in PTC SOFTWARE (INDIA) PVT. LTD. VERSUS COMMR OF CENTRAL EXCISE, PUNE-III [2014 (12) TMI 498 - CESTAT MUMBAI] stating that car parking is part of the business premises of the appellant and is a business expenditure - refund allowed.
AMC charges - HELD THAT:- The Bangalore Bench of the Tribunal in the case of ADC INDIA COMMUNICATIONS LTD. VERSUS COMMR. OF C. EX., BANGALORE [2012 (12) TMI 388 - CESTAT, BANGALORE] has held that Annual Maintenance Contract (AMC) has nexus with manufacture of products and also that AMC for computers are used for manifold purposes in connection with manufacture and clearance of products. In view of the above requisite nexus, the Bench held that the assessee was entitled to take credit of the Service Tax paid - refund allowed.
External Consultant service - HELD THAT:- Credit denied on the ground of Incorrect Invoice/Excess Credit, we see no explanation offered by the assessee and hence, the denial of refund is upheld - refund cannot be allowed.
Non-disclosure of CENVAT Credit in the ST-3 returns - HELD THAT:- The appellant had contended that the credits were included in the CENVAT Credit Register, which fact has not at all been denied by the authorities below. In this regard, we find the decision in TARGET CORPORATION INDIA PVT. LTD. VERSUS COMMISSIONER OF CENTRAL TAX, BANGALORE EAST [2019 (10) TMI 1148 - CESTAT BANGALORE] to be very much apt wherein, the co-ordinate Bangalore Bench has inter alia ruled that the denial of refund only on the basis of non-disclosure of CENVAT Credit in ST-3 return was not legally sustainable - refund allowed.
Appeal allowed in part.
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2020 (2) TMI 368
Encashment of Bank Guarantee and the Bond - the appeal is being withdrawn, on which bank guarantee and Bond was furnished - HELD THAT:- The issue of discharge of Bank Guarantee and the Bond may be properly determined by the designated Committee itself. Mr. Srivastava states that the applicant will have no serious objection even if the designated Committee orders the encashment of the Bank Guarantee for the purposes of appropriating the amount guaranteed thereby towards the settlement under the said scheme.
At this stage, we leave all these matters to the decision of the designated Committee itself. Based upon the decision of the designated committee, the parties will have liberty to apply to this Court for appropriate orders in relation to the Bank Guarantee and the Bond so furnished - application disposed off.
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2020 (2) TMI 349
Valuation - management, maintenance or repairs or not - activity of providing parking facility in the Malls - whether the Mall owners receive any payment or consideration from the appellant or not - extended period of limitation - HELD THAT:- Section 67(1)(i) clearly stipulates that where the consideration is not wholly or partly consisting of money, it would be such amount in money as, with the addition of service tax charged, is equivalent to the consideration. Further, in Section 67(1)(i) consideration has be taken as the gross amount charged by the service provider. Thus, there is no doubt that the right to collect parking fees given by the mall owners is nothing but a consideration provided to the appellant by the mall owners and the measure of such consideration is the gross income generated through the parking fees.
The learned Counsel for the appellant has sought to repudiate the liability on the impugned activity by contending that they are merely operating the parking area which is different from the service of ‘management maintenance and repairs’. We are not inclined to accept this distinction because as far as the business activity is concerned qua the appellant, it is operation of the parking area but when this activity is examined qua the mall owners they are providing the service of ‘management, maintenance or repairs’ to the mall owners.
Extended period of limitation - HELD THAT:- There was a clear mis-declaration and wilful suppression in as much as the appellant has suppressed the income of parking fees in the relevant returns with an ulterior motive to evade the service tax. They have wilfully designed their mode of operation to evade the service tax - the extended period is invokable in the case.
The levy of service tax on the activity under ‘management, maintenance or repair service’ is upheld - However, the appellant will be entitled to avail Cenvat credit of service tax paid by the service providers and cum duty benefit - The penalties under Section 78 of Finance Act, 1994 need to reworked accordingly - case remanded back to the Adjudicating Authority to re-determine the taxable demand, interest and penalties - appeal allowed partly by way of remand.
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2020 (2) TMI 344
Refund of service tax - construction of complex service - levy of tax on the said service, ultra vies or not - refund sought following the decision of the Hon'ble High Court of Delhi in SURESH KUMAR BANSAL & ANUJ GOYAL & ORS. VERSUS UNION OF INDIA & ORS. [2016 (6) TMI 192 - DELHI HIGH COURT] declaring that, in the absence of machinery provision for segregation of service component of consideration, the levy would be ultra vires - refund rejected on the ground that the decision of the Hon’ble High Court of Bombay, in MAHARASHTRA CHAMBER OF HOUSING INDUSTRY AND ANOTHER VERSUS UNION OF INDIA AND OTHERS [2012 (1) TMI 98 - BOMBAY HIGH COURT] upholding the validity of the levy including the Explanation inserted in section 65 (105)(zzh) of Finance Act, 1994 by Finance Act, 2010, took precedence over that of any other High Court.
HELD THAT:- It cannot but be noticed that the dispute in re Maharashtra Chamber of Housing Industries arose from the incorporation of a legal fiction to distinguish rendering of service from supply of goods in a composite transaction the taxability of which was, itself, not denied. In re Suresh Kumar Bansal, the approval accorded to the legal fiction by Hon'ble High Court of Bombay was not discarded but its implementability was discarded in the absence of a mechanism, in the statute, for isolating the value of services in a composite transaction. Hence there is no bar on taxation of such composite transaction.
The dispute before the Hon'ble High Court of Delhi was on the inclusion of the tax in the amount charged in the invoice. It was not an appeal against rejection of a refund claim. While specific directions were issued on the handling of tax deposited, if any, the consideration of claim for refund under section 11B of Central Excise Act, was not a part of the document - Their applicability to the scheme of the negative list as well as the eligibility for refund has not been decided upon in the impugned order especially as the claim is not a consequential relief ordered by the Hon'ble High Court but needs examination in the context of section 11B of Central Excise Act, 1944.
The claim for refund is restored for consideration afresh by the original authority to ascertain the eligibility of appellant on the extent to which taxability under the ‘negative list regime’ is impacted - appeal allowed by way of remand.
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CST, VAT & Sales Tax
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2020 (2) TMI 375
Sales tax exemption or deferral of sales tax - Section 6 of the Karnataka Sales Tax Act, 1957 - HELD THAT:- Acquisition is the act by which a person acquires property in a thing. "Acquire" is to become the owner of the property. One can, therefore, acquire a property either by voluntary or involuntary transfer. But the Sales Tax Act applies only to "sale" as defined in the Act. Under clause (ff) of Section 2 of the Act it is defied as a transfer of property. As purchase is only a different, aspect of sale, looked at from the stand point of the purchaser, and as the Act imposes tax at different points in respect of sales, having regard to the purpose of the sale, it is unreasonable to assume that the Legislature contemplated different categories of transactions when the taxable event is at the purchase point. Whether it is sale or purchase the transaction is the same. If it was a transfer inter vivos, in the case of a sale, it must equally be so in the case of a purchase. Context, consistency and avoidance of anomaly demand a restricted meaning. That it must only mean transfer is also made clear by the nature of the transactions excluded from the acquisition, namely, mortgage, hypothecation, charge or pledge-all of them belong to the species of transfer. We must, therefore, hold that the expression "acquisition" in clause (ff) of Section 2 of the Act means only "transfer".
The fact remains that the appellant, after recall of the entire decision, participated in the appeal proceedings before the Division Bench and argued the matter on merits.
Appeal dismissed - decided against appellant.
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2020 (2) TMI 370
Exemption from VAT or not - Hank Yarn - exemption under Entry 44 of Part B of the Fourth Schedule to the Act - Tamil Nadu Value Added Tax Act, 2006 - taxability under Entry 3(a) of Part B of the First Schedule to the Act, 2006 - HELD THAT:- The intention, if any, of the State could have been very well expressed in clear terms of the Entry 44 itself. Nothing prevented the State from writing Entry 44 as 'Cotton Hank Yarn' or 'Hank yarn sold to Handloom Industries'. We cannot import external aids of interpretation where the plain meaning of the terms of the statute, namely the exemption Entry, is clear itself - The external aids for interpretation can be employed only if there is any ambiguity or confusion, but such external aids of interpretation cannot be applied to create a confusion or ambiguity unnecessarily.
The sale of cotton hank yarn is also equally exempted, but merely because the Assessee does not manufacture and sell cotton hank yarn, he cannot be deprived of the exemption on the other yarns sold in hank form, so long as Entry 44, in its present form, stands for interpretation by Courts. The Hank Yarn of others types of Yarns like Silk for Handloom Kancheepuram and Banarasi Silk Sarees, Khadi Slik, Linen fabric are also used by Handloom Industry. Therefore, we do not appreciate why exemption should be restricted only to Cotton Hank Yarn, as contended by Revenue. Entry 44 never meant a harm to be caused to other type of yarns sold in Hank form, by denying exemption to them.
In the light of the said Budget Speech of the year 2006-2007 also, there is nothing specifically mentioned to state that there was any intention to restrict the exemption of Hank yarn only to the cotton hank yarn and not others. Cotton hank yarn as well as other types of yarn in hank form are equally entitled to exemption under Entry 44 and therefore, Handloom Industry stood encouraged by said exemption. Was there any intention of State to harm Powerloom Industry by denying exemption to other types of Yarn sold in Hank form. The answer is an emphatic 'No'.
Merely because Cotton hank yarn is the chief raw material for Handloom Industry or merely because powerloom industry can have an overarch over the Handloom Industry in the textile sector, we cannot deny the exemption to the supply of raw material namely VSF and PF Hank yarn to powerloom industry in the face of the plain language of the plain words 'Hank Yarn' employed in Entry 44 of the Fourth Schedule to the Act - the alleged Clarifications issued by the Commissioner of Department on 14.02.2013 and 29.06.2017, on a review application too, were clearly incorrect and unsustainable in law and the same deserve to be quashed. We, accordingly, quash the both of these Clarifications.
Appeal allowed - decided in favor of appellant.
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2020 (2) TMI 365
Interest on delayed refunds - Section 54 of the Gujarat Sales Tax Act, 1969 - HELD THAT:- Without entering into any controversy with regard to payment of interest and without going into the issue whether Section 54 is applicable or not, the respondent No.2 are directed to pay interest on the amount of ₹ 2,98,800/- from the date of the decision of this Court in the Tax Appeal No.275 of 2009, i.e., 16th November, 2016. Interest shall be calculated at the rate of 9% per annum from 16th November, 2016 till the date of actual payment.
Application disposed off.
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2020 (2) TMI 364
Demand for sales tax on sale of used cars and Trade Discount - stock transfer - wrong adjustment of Entry Tax - benefit of Notification No.79, CT & R (B2), dated 23.03.2007 - clarification issued by the Authority for Clarification and Advance Ruling vide clarification dated 25.10.2016 - HELD THAT:- In the light of the clarification dated 25.10.2016 of the Authority for Clarification and Advance Ruling issued under Section 48 A of the Tamil Nadu VAT Act, 2006, the issue relating to availability of benefit of G.O.Ms.No.79 CT & R (B2) Dept. dated 23.3.2007 as amended by the of G.O.Ms.No.78 CT & R (B2) Dept. dated 11.7.2011 would require reconsideration by the respondent.
The issue relating valuation is answered in favour of the Petitioner. Thus, the demand of tax on Trade Discount in the impugned orders are quashed to that extent - As far as the issue relating to rate of tax is concerned, the same is remitted back to the respondent to pass fresh order in the light of the clarification issued by the Authority for Clarification and Advance Ruling vide its order dated 25.10.2016.
Appeal allowed by way of remand.
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2020 (2) TMI 363
Validity of reassessment order - Section 39(1) of the Karnataka Value Added Tax Act, 2003 - Section 9(2) of the CST Act of 1956 read with Section 36(1) of the said Act of 2003 - disallowance of input tax credit - levy of output tax - non-production of books of accounts - HELD THAT:- It is apparent from the first page of the inteliigence report that the Intelligence Report relates to the years 2011-12 and 2012-13. Secondly, the Intelligence Report is not an adjudication. The Intelligence Report is submitted by exercising the powers under Section 52 of the said Act of 2003 after directing production of the documents and after inspection of the documents. Section 52 of the said Act of 2003 does not contemplate any adjudication. Apart from the fact that the Intelligence Report relates to different periods, the Intelligence Report only records an opinion which is forwarded for taking action. Perhaps on the basis of the said report, the First Information Report may have been registered. The grievance of the learned counsel appearing for appellant is that the inspection report was not produced before the authority before passing the reassessment order.
The learned Single Judge has rightly observed that there is no final adjudication made on the issue whether the allegation made against the tax consultant is correct. Admittedly, the dispute is between the appellant and the tax consultant. Hence, there are no error in the view taken by the learned Single Judge in exercise of the powers under Article 226 and 227 of the Constitution of India.
Appeal dismissed - decided against appellant.
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2020 (2) TMI 362
Levy of penalty u/s 54(1)(14) of the U.P. Value Added Tax Act, 2008 - inter-state sale - Form 38 had certain unfilled (blank) column - intent to evade tax or not - HELD THAT:- In the instant case it is admitted fact that the respondent had duly applied for and obtained Form 38 for import of goods and the Column 2 to 6 of the said Form was left blank on account of negligence of the respondent. It is only on account of non filling of Column 6, penalty has been imposed upon the respondent. It has been submitted on behalf of the respondent that there was no intention to evade tax and the driver of the vehicle carrying the goods was carrying all the relevant documents including the bill/challan/bilty etc. from which the details of goods being carried on the vehicle could have been verified by the officer concerned and therefore there was no occasion for the assessing officer to pass penalty order, inasmuch as there was no intention on the part of the assesee to evade tax.
Non-filling up of column no. 2 to 6 i.e. not mentioning of bill / cash memo / chalan / invoice number may lead to an inference that in case of non-checking of goods the declaration form may be re-used for importing goods of same quantity, weight and value to evade payment of tax but it cannot be the sole ground to impose penalty under Section 54(1)(14) of the Act, 2008. Satisfaction has to be recorded after giving opportunity to the dealer / person and after considering all the relevant materials / evidences on record that there was an intention to evade payment of tax. The guilty mind is necessary to be established to impose penalty under Section 54(1)(14) of the Act, 2008.
In the present case also the vehicle was accompanied by Form 38 and all other documents were being carried along with other documents and only due to human error column would remain unfilled. It was the duty of the Officer managing the Check Post who after discovering that some column of Form 38 found unfilled should have filled the same himself in the light of Circular dated 03.02.2009 and should have allowed the vehicle to proceed alongwith the goods. It is undisputed that the goods transported were the same which were mentioned in the various documents (bill/builty/challan etc.) carried by the driver of the vehicle.
No question of law arises in this revision for consideration of this Court - Revision dismissed.
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2020 (2) TMI 361
Maintainability of petition - alternative remedy of appeal - requirement of pre-deposit - HELD THAT:- In the instant case, if the petitioner were to avail the remedy of appeal under the statute, it would have to make mandatory pre-deposit of 12.5% before the appellate Deputy Commissioner; and in the context of the claim of the petitioner that the addition of two zeros in the figures relating to transit sales in the CST return is a bonafide mistake, the situation does not warrant the petitioner having to comply with the said condition of pre-deposit. Therefore, we are inclined to entertain this Writ Petition under Article 226 of the Constitution of India.
Error in the return - rectification of mistake - it is contended that VAT returns are not taken into consideration for finalization of the CST returns and that CST assessment under sub-Rule 5-A of 14 – A of CST (Telangana) Rules - HELD THAT:- From the above sub-rule it is clear that if a dealer who had filed a return discovers any error in the returns, he is entitled to file revised returns before an original assessment is made - The Supreme Court in PRICE WATERHOUSE COOPERS (P.) LTD. VERSUS COMMISSIONER OF INCOME-TAX, KOLKATA - I [2012 (9) TMI 775 - SUPREME COURT] dealt with a similar situating akin to the present one, where a tax audit report filed along with the returns contained a computation error in its returns of income tax and the Supreme Court observed that human errors some time occur and merely because an Assessee has not been careful, it does not mean that Assessee is guilty of furnishing inaccurate particulars or attempting to conceal its income.
Since the error committed by the petitioner became known to the petitioner at the time when the show cause notice dt.28.01.2019 was issued to him by the 1st respondent, and by that date there was no assessment on the original return filed by the petitioner, it was incumbent on the part of the 1st respondent to consider the reply filed by the petitioner to the show cause notice on 20.03.2019 and the supporting material, and treat it as a revised return, since admittedly there is no proforma prescribed for filing of a revised CST return in the Act or the Rules framed there under.
The petitioner are permitted to file a revised CST return in Form CST-6 or through a representation, which shall be treated as revised return, within a period of four (04) weeks from today along with supporting documents - petition allowed.
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