TMI Tax Updates - e-Newsletter
February 15, 2020
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Securities / SEBI
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Grant of anticipatory bail - GST evasion - FIR lodged - main point which has been emphasized by the learned counsel for the applicant is that because no proper notice has been served upon the applicant demanding outstanding amount of GST, therefore, there was no necessity of the accused being arrested - It is found to be a case of economic fraud in which normal course adopted by the Courts should be not to grant stay against arrest because investigation might require custodial interrogation as well
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GST:
Supply or not - intra-company transaction - as the service provided by the expat employees to the project office fall under the category of "Services by an employee to the employer in the course of or in relation to his employment" - no GST is leviable on the salary paid to the expat employees and reflected in the books of account of the project office.
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GST:
Exemption from GST - Composite Supply or not - service of crushing food grains - It is a composite supply of goods and services where service of crushing food grains is the principal supply and providing packing materials is ancillary to it - The Applicant intends to make the composite supply to the State Government. - It is Pure service to the recipient, namely the State Government - Benefit of exemption from GST available.
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Income Tax:
Unabsorbed business/depreciation loss - carried forward and set off - the legislature has resorted to original provisions by amendment brought in by Finance Act 2001, thereby resorting to old position, which allows set off of unabsorbed depreciation and restrictive period of 8 years for claiming set off has been deleted, thereby extending the benefit against profit and gains of subsequent years without any bar.
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Income Tax:
Addition u/s 14A - exempt dividend income - the estimation of 0.5% of assets which yielded exempted income during the year would be a most reasonable estimate for identifying the administrative expenditure for earning the exempt income
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Income Tax:
Addition u/s 68 - Unexplained cash credit - Addition in dispute is not sustainable in the eyes of law, because the assessee has discharged his onus u/s. 68 of the Act and therefore, the addition in dispute is hereby deleted.
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Income Tax:
Deduction u/s 80IA of the Act for other income - CIT(A) observed that, these receipts cannot be said to be profit derived from the industrial undertaking - assessee has shown his inability and submitted that details are not available - additions confirmed.
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Income Tax:
Exemption u/s 11 - Approval to the respondent-society u/s 80G - the amount in FDRs had enhanced - The amount only gives a protection to the society for daily needs, if the occasion so arises that there is scarcity of funds as the society has almost 350 cows to take care and to feed. It cannot be ruled out that such a cushion may be required considering the nature of the work done by the society.
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Income Tax:
Exemption u/s 11 - grant registration u/s 12AA - proof of charitable activity u/s 2(15) - The grievance against the surplus income not being reasonable is baseless in absence of any challenge to the finding recorded by the Tribunal that excess income has been ploughed back by the society for furtherance of its object.
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Income Tax:
MAT computation - share of profit from the partnership firm was sought to be excluded while computing the book profits u/s.115JB by treating it as capital receipt - the amount received from partnership firm in the sum requires to be reduced while calculating the book profits u/s.115JB.
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Income Tax:
Rejection of books u/s 145 - Addition on account of alleged under-invoicing of sales made - There is no evidence or explanation as to why it has sold the items less than the purchase price by making loss of ₹ 38.40 per kg which resulted in under invoicing - assessee is unable to substantiate its claim with any evidence or valid explanation.
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Income Tax:
Settlement of inter/intra government disputes - Mandation of obtaining COD (Committee on Disputes) approval - Impugned order passed by the Tribunal dismissing the appeals only on the ground that there was no sanction from the COD, is unsustainable and is hereby set aside.
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Income Tax:
Exemption u/s 11 - registration under Section 12AA - violation of Section 40A(3) - Tribunal rightly concluded that the issue with regard to violation of Section 40A(3) of the Act and the nature of donations received can be duly considered while finalising the assessment for the relevant period. There is no illegality or error in the view taken by the Tribunal.
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Income Tax:
Exemption u/s 11 - grant of registration u/s 12AA - The objects of the society were not doubted by the CIT except for the objections raised above. The denial was merely on surmises and conjectures. There is no error in the order of the Tribunal directing grant of registration to the society.
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Income Tax:
Exemption u/s 11 - grant of registration u/s 12AA - hat from the record it is established that various functions were being organised by social organisations for blood donation, 'Akandh Path', conference, function for welfare of differently-abled persons and that use of community hall in the temple complex was not limited to any particular limb of the society but was utilised for social, charitable and religious organisations. - Registration cannot be refused.
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Income Tax:
Exemption u/s 10(20) sic. [10(22)] - claim denied as element imparting education to the students of normal schooling is absent to attract the exemption as engrafted under the aforesaid provision - Tribunal allowed exemption - Order of ITAT set aside - Matter restored before AO
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Income Tax:
Unexplained investment u/s 69 - CIT(A) has rightly adopted this view holding that provisions of section 50C were not applicable on the assessee being the purchaser of the property and also during the survey proceedings no documentary evidence was found which may prove that the assessee has made payment over and above the registered valuation of the property.
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Income Tax:
Addition on account of the peak unaccounted investment - addition on the basis of confessional statement - There was no material to corroborate the statement made by the assessee in the form of confession. In the case on hand, as noted above, there is no material except the confessional statement of the assessee recorded under Section 108 of the Customs Act. - No addition could be made.
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Customs:
Valuation - inclusion of freight and insurance charges in the assessable value or not - when Customs duty has already suffered on value of bunkers and provisions, which included all costs incurred upto the Haldia Port, there is no question of any addition of freight and insurance.
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Customs:
An assessment which is provisional, is provisional for all purposes. There is no provision in law to treat the same assessment as provisional for one purpose and final for another. Even if the respondent had not protested against denial of the benefit of the notification during finalization of the assessment, it does not stop them from claiming the benefit subsequently by filing an appeal against the assessment.
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Customs:
Imposition of penalty - illegal exportation of Red sanders - without leading the evidence to the effect of establishing the act of omission/ commission in relation to the goods confiscated in these proceedings i.e. 15.010 MTs of Red Sanders, illegally exported, the penalty imposed under this section cannot be sustained.
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Customs:
Valuation of imported goods - PVC Laminated sheets (PVC floor covering) - In the present case, the appellant has imported the material from Thailand whereas the Commissioner has relied upon the contemporaneous imports from China which cannot be considered as contemporaneous import at all.
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Service Tax:
CENVAT credit - input services or not - workmen compensation insurance policy in respect of employees - the expenditure incurred was for running of the business and therefore, the said service has to be held to be input service. - Credit allowed.
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Service Tax:
Service charges paid to Foreign Banks against the service received by the appellant-bank - Service charges paid to Master Card International - up to 18.4.2006, appellants are not liable to pay service tax on reverse charge basis. - Further demand is barred by the period of limitation as there is no intention to evade service tax.
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Service Tax:
Levy of service tax - Commission received by appellant from Money Exchange Houses abroad - the appellants are not liable to pay service tax as the service rendered by the appellant fall in the definition of export of service.
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Service Tax:
Service or not - The collection of contribution to build a corpus fund to secure the depositors’ interest is not a mere transaction in money. The service rendered by the appellants does not find place either in the exclusion or in the Negative List. - the activity undertaken by the appellants is not transaction in money. - Demand of service tax confirmed - Penalty waived.
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Central Excise:
CENVAT credit - Once there is no dispute about the actual receipt of duty paid inputs under the cover of duty paying documents, the Cenvat Credit cannot be denied subsequently by referring to consumption of the same.
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2020 (2) TMI 621
Maintainability of petition - appeal pending before Additional Commissioner - HELD THAT:- It appears that a statutory appeal filed by the writ petitioner under section 107 of the Uttar Pradesh Goods and Services Tax Act, 2017, is pending before the Additional Commissioner, Grade-2, Appeal-2, Commercial Tax / SGST, Kanpur, being the respondent no. 4 - Since a statutory appeal has been preferred by the writ petitioner, he ought not to have approached the writ Court. Petition dismissed.
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2020 (2) TMI 620
Grant of anticipatory bail - GST evasion - FIR lodged - main point which has been emphasized by the learned counsel for the applicant is that because no proper notice has been served upon the applicant demanding outstanding amount of GST, therefore, there was no necessity of the accused being arrested - HELD THAT:- This is not a fit case in which indulgence of granting anticipatory bail should be exercised because it has come on record that the applicant's firm was found indulging in running business from bogus address and a huge transaction is shown to have been done without there is any such big transaction reflected from the account of the firm. The argument of the learned counsel for the applicant that notice is required to be issued to the accused before lodging FIR also does not sound to be a reasonable view because there are offence alleged to have been committed under sections 420, 467, 468, 471, 34 and 120B IPC also regarding which no such notice is required to be sent. It is found to be a case of economic fraud in which normal course adopted by the Courts should be not to grant stay against arrest because investigation might require custodial interrogation as well. This court is not to be guided only by the fact that apart from IPC, offence under U.P. Act is also said to have been committed which requires notice to be issued to the accused and in totality of the matter this Court finds that there is no genuine ground to grant relief of anticipatory bail to the accused-applicant in this matter. Looking to the aforesaid fact, taking into consideration the gravity of accusation, and there being possibility of his fleeing from justice, without expressing any opinion on the merits of the case, this Court does not find good ground for enlarging the applicant on anticipatory bail in this case. The anticipatory bail application is rejected.
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2020 (2) TMI 593
Exemption from GST - Composite Supply or not - service of crushing food grains - The Government will send to the Applicant the whole, unpolished food grain for processing. The Applicant will return the grain after crushing. - SI No. 3 or 3A of Notification No 12/2017 CT (Rate) dated 28/06/2017 (corresponding State Notification No. 1136 - FT dated 28/06/2017) - Circular No. 51/25/2018-GST dated 31/07/2018 - HELD THAT:- The Applicant intends to deliver the crushed food grains packed in the manner the recipient requires. The packing material is supplied by the Applicant. The Applicant is, therefore, making supply of a bundle consisting of the service of crushing the grains and supply of materials required to pack the crushed grains, where the former is the predominant supply. They are supplied in conjunction with each other in the ordinary course of business as food grain cannot be transported without proper packing. It is, therefore, a composite supply of goods and services where service of crushing food grains is the principal supply and providing packing materials is ancillary to it - The Applicant intends to make the composite supply to the State Government. The recipient is, therefore, the State Government. It will be an activity in relation to a function entrusted to a Panchayat under article 243G of the Constitution, and its supply to the State Government should be exempt under Sl No. 3A of the Exemption Notification, provided the proportion of the packing materials in the composite supply in value terms does not exceed 25%.
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2020 (2) TMI 592
Supply or not - contracts for supply of goods and supervisory services - import of services - whether the transaction between M/s. Hitachi Power Europe GmbH and its project office located at Meja Thermal Power Project, Allahabad is a transaction between same company or a transaction between two distinct legal entities? - HELD THAT:- A Project Office is merely an extension of the foreign company in India to undertake the project in India and limited to undertake compliances required under various tax and regulatory requirements in India. Accordingly, the transactions between the foreign company and project office is an intra-company affair. If the said transaction is an intra-company transaction, whether the amount paid to the expat employees falls under the definition of Supply under GST laws or will it fall under the Schedule III of the CGST Act, 2017 i.e. Services by an employee to the employer in the course of or in relation to his employment? - HELD THAT:- The project office and the head office are single business entity and the project office is acting as an extended arm of the Head Office. Further the project office is fulfilling all the obligations as employer with reference to expat employees and Employee-Employer relation exist between the project office and expat employees - as the service provided by the expat employees to the project office fall under the category of Services by an employee to the employer in the course of or in relation to his employment - Accordingly, no GST is leviable on the salary paid to the expat employees and reflected in the books of account of the project office.
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2020 (2) TMI 584
Levy of penalty and confiscation of goods - section 129(1) of the GST Act - writ applicant availed the benefit of the interim-order passed by this Court and got the vehicle, along with the goods released on payment of the tax amount - HELD THAT:- It shall be open for the writ applicant to point out the recent pronouncement of this Court in the case of SSYNERGY FERTICHEM PVT. LTD VERSUS STATE OF GUJARAT [ 2019 (12) TMI 1213 - GUJARAT HIGH COURT] . It is now for the applicant to make good his case that the show cause notice, issued in Form GST-MOV-10, deserves to be discharged - Application disposed off.
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Income Tax
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2020 (2) TMI 619
Stay application - rejection of the petitioner s application u/s 220(6) and the consequent attachment of the bank accounts of the petitioner - HELD THAT:- We are informed that the petitioner s appeal is already pending before the CIT (Appeals). We permit the petitioner to immediately file the stay application before the CIT (Appeals). The CIT (Appeals) shall consider the same and pass an order thereon within two weeks without being influenced by the order dated 23.01.2020 passed by the Assessing Officer on the stay application under Section 220(6). The bank accounts of the petitioner already stand attached and the amounts recovered. In case, the CIT (Appeals) grants relief after hearing the assessee, to the extent that any amount may have been recovered in excess of the amount in respect of which stay is not granted, the same shall be restituted to the petitioner by the respondent.
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2020 (2) TMI 618
Settlement of inter/intra government disputes - Mandation of obtaining COD (Committee on Disputes) approval - ITAT dismissed the revenue appeal - Whether Tribunal is justified in dismissing the appeal in limine on the ground that approval from High Powered Coordination Committee has not been taken when a question of law was posed by the revenue to the effect that Section 192 of the statute clearly postulates that a person responsible for paying income chargeable under the head 'Salaries' shall at the time of payment deduct income tax on the amount payable at the average of income tax computed on the basis of the rates enforced for the financial year in which the payment is made on the estimated income of the assessee ? HELD THAT:- Undoubtedly, the Constitution Bench of the Supreme Court in Electronics Corporation [ 2011 (2) TMI 3 - SUPREME COURT ] reversed its earlier decision in ONGC s case [ 1991 (10) TMI 58 - SUPREME COURT] and held that approval of the COD in terms of its earlier judgment was not required. Since the Supreme Court in Electronics Corporation (supra) has recalled its all earlier judgments whereby following the decision in ONGC s case (supra) direction was issued to resort to mechanism of settlement of inter/intra government disputes by referring matter to Committee on disputes and the said committee was set up, therefore, the judgment in ONGC s case (supra) no longer holds the field and it would be deemed that there was no requirement of COD approval for filing the appeal. The substantial question of law framed is thus, answered accordingly. I mpugned order passed by the Tribunal dismissing the appeals only on the ground that there was no sanction from the COD, is unsustainable and is hereby set aside. The matter is remanded to the learned Tribunal to re-decide the appeals on merits in accordance with law.
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2020 (2) TMI 617
Eligible deduction u/s 80P(2)(vi) - HELD THAT:- Circumstances in the instant case are similar to the case of M/s Sai Krishna WLCCS [ 2017 (3) TMI 1802 - ITAT HYDERABAD] we deem it fit and proper to follow the same and direct the AO to allow the deduction u/s. 80P(2)(a)(vi) of the Act. Further with regard to the estimation of income on the difference of amount as reflected in Form 26AS and the turnover declared by the assessee in its return of income, find that the same is also eligible for deduction u/s. 80P(2)(a)(vi) of the Act. Accordingly, assessee s appeal is allowed.
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2020 (2) TMI 616
Deemed dividend addition u/s 2(22)(e) - Amount received by the assessee as Inter-Corporate Deposit - HELD THAT:- It is essential for the amount given as Inter Corporate Deposits , there should be voluntariness emanating from the lender to give the amount to the assessee and not from assessee. In this case, there being common Managing Director, amount was being transferred as and when there was requirement of fund by the assessee from the account of M/s. Dhariya Infrastructure Development Pvt. Ltd. and thereafter returned back by the assessee to the lender. Hence the element of voluntariness is missing in the conduct of parties. The amount was in the nature of loan/advances only. Merely by mentioning in the ledger account, it was Inter Corporate Deposit , the nature and colour of transaction would not changed to Inter Corporate Deposit , as it continues to be loan/advances. Hence required to be taxed for the purposes of deemed dividend. We may rely upon the Jurisdictional High Court in the Durga Prasad Mandelia v. Registrar of Companies [ 1985 (9) TMI 282 - HIGH COURT OF BOMBAY] has noticed the distinction between deposits and loans in the context of section 370 of the Companies Act. We may also rely upon the coordinate Bench decision in the matter of KIIC Investment Company [ 2019 (1) TMI 391 - ITAT MUMBAI] , wherein the Bench had allowed the claim, as the intention can be gathered from the agreement, board resolution and other circumstances. However in the present case nothing is available to infer the intention of parties to give ICD. Thus, Ground Nos. 2 to 4 raised in appeal by the Revenue are required to be allowed Unexplained investment - Exclusion of amount being cash component of investment in flat at Surat - telescopic benefit to the assessee as the assessee made voluntary disclosures based on incriminating material detected during the survey action - statement of the assessee was recorded during the course of survey and the Managing Director of the assessee company had submitted that the assessee has earned an income from contract work which were not disclosed in the financial statement of the assessee - HELD THAT:- We see there is inherent contradiction in the case of the Revenue. Firstly, if the amount invested by the Director of the Company for purchasing of flat is held to be unexplained cash investment then it cannot be taxed in the hands of the assessee company because flat was purchased in the name of Director of the company and amount was invested by the Director. Whether the amount spent by the Director in cash for purchasing flat in his own name can be added in the hands of Assessee Company ? - The answer to this question is No . As the amount was used by the Director and the said amount was invested individually. In the present case the assessee had agreed for the addition of undisclosed income for the earlier years and has sought for telescoping for the amount - In our view, telescoping is permissible to be granted to the assessee as the flat was purchased in the name of the Director. Ownership of the asset(flat) belonged to the individual not the assessee company. Needful is required to be done by the assessee by brining the ownership of the property back to the assessee in the balance sheet to the proportion of contribution made by the assessee company in purchasing flat. In the light of above, Grounds No.5 to 7 raised in appeal by the Revenue are dismissed.
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2020 (2) TMI 615
Reduction of deduction claimed by the assessee u/s 80P - assessee is a Souharda Cooperative registered under Karnataka Souharda Sahakari Act 1997 who provides credit facilities to its members - HELD THAT:- The Hon ble Karnataka High Court in the case of M/s Swambhimani Souhard Credit Cooperative Society Ltd. [ 2020 (1) TMI 831 - KARNATAKA HIGH COURT] has examined the issue of applicability of provision of sec. 80P of the Act to the cooperative registered under Karnataka Souhards Sahakari Act 1997 and held that assessee is entitled for deduction u/s 80P of the Act. However as rightly pointed by ld DR there was no occasion for the AO to examine the claim of the assessee in terms of provisions of sec. 80P of the Act. Accordingly we set aside the order passed by the ld CIT(A) and restore the issue to the file of the AO for examining the same in accordance with the provisions of sec. 80P of the Act. The assessee should be provided adequate opportunity of being heard.
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2020 (2) TMI 614
Set off of unabsorbed business/depreciation loss - carried forward and set off only up to 8 subsequent assessment years - HELD THAT:- Amendment relied upon by Ld.AO has been substituted by Finance Act 2001 w.e.f. 01/04/02, wherein new subsection (2) of section 32 reinstated the provisions, as it stood in assessment year 1996-97. It has been observed that restrictions imposed by Finance Act (No.2) Act, 1996 in the matter of set off of unabsorbed depreciation has been dispensed with and original provision has been restored. Reliance is also been placed on the decision of on coordinate bench of this Tribunal in case of as Gran it private limited vs ITO [ 2013 (1) TMI 998 - ITAT BANGALORE] for assessment year 2005-06 and 2006-07, wherein this tribunal relied upon decision of jurisdictional High Court in case of Karnataka Co-Operative Milk Producers Federation Ltd vs DCIT [ 2011 (2) TMI 1465 - KARNATAKA HIGH COURT ] and various other decisions as has been placed in the paper book filed before us wherein it was held that where ever unabsorbed depreciation was not allowed to be set off against the profit arising after the period of 8 years should be a game considered to be set off after amendment. It was observed that when quantum of unabsorbed depreciation is computed after the amendment, whatever balance of unabsorbed depreciation is available to the credit of assessee must be determined as unabsorbed depreciation eligible for carry forward and set off. Hon ble Court held that the interregnum restriction of limiting claim of eight-year period does not take away right of an assessee to claim balance of unabsorbed depreciation forever. Thus the legislature has resorted to original provisions by amendment brought in by Finance Act 2001, thereby resorting to old position, which allows set off of unabsorbed depreciation and restrictive period of 8 years for claiming set off has been deleted, thereby extending the benefit against profit and gains of subsequent years without any bar. - Decided against revenue
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2020 (2) TMI 597
Penalty u/s 271(1)(c) - furnishing inaccurate particulars of his income - exemption u/s 80-P claimed though it was excluded from the purview of Section 80-P of the Act w.e.f. 01.04.2007 - error in filing return - it was held by High Court that The proceedings under Section 271(1)(c) of the Act were rightly initiated against the assessee and the penalty was also rightly imposed on him - HELD THAT:- There are no grounds to interfere with the judgment and order impugned - SLP dismissed.
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2020 (2) TMI 595
Depreciation claimed on infrastructure facility - HELD THAT:- Appellant submitted that such question has already been admitted in the case of the same assessee for the previous year. Accordingly, this tax appeal is admitted so far as the Question No.2(A) is concerned. Disallowance made on account of forex loss - HELD THAT:- Foreign exchange loss on account of the forward contracts incurred by the assessee from year to year was correctly allowed by the CIT (A) as the assessee Company had entered into foreign currency forward contract with the Bank in terms of the prevalent guidelines which mandates entering of foreign currency contract only with the Banks. Disallowance of the realized foreign exchange loss made by the assessing officer by treating the same as speculation loss u/s. 43(5)(d) of the Act is concerned, the Tribunal has given a finding that as the assessee was not the dealer in the foreign exchange but providing the operating container handling terminal services and there was no purchase or sale of commodity otherwise than the actual delivery, such loss cannot be termed as speculation transaction. Disallowance u/s 14A read with Rule 8D - HELD THAT:- Tribunal, applying the principles as laid down by this Court in the case of CIT vs. Corrtech Energy Pvt. Ltd., [ 2014 (3) TMI 856 - GUJARAT HIGH COURT] wherein it has been held that where the assessee has not claimed any exempt income, no disallowance under Section 14A of the Act can be made, dismissed the appeal of the Revenue on the ground that the assessee did not claim any exempt income.
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2020 (2) TMI 594
Revision petition u/s 264 - grounds raised were that the cash flow statement prepared by the assessing officer was not given to the petitioner and his contentions with regard to the same were not considered and that he was not given copies of the statements relied on and that the opportunity to cross-examine the creditors - HELD THAT:- No illegality or perversity vitiating the order of assessment justifying an interference in the same in exercise of the jurisdiction of judicial review, that too, in an obviously belated proceedings. The assessee who did not avail of the opportunity to substantiate his case in spite of issuance of notice and grant of opportunity cannot be heard to contend that the order is bad for want of consideration of his contention. No further notice was required to be issued in a matter of this nature where the opportunity is granted pursuant to Exhibit P3 order in revision. The writ petition, therefore, fails and the same is accordingly dismissed.
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2020 (2) TMI 591
Stay petition - HELD THAT:- Principal Commissioner is not reviewing the stay petition, in spite of the application submitted by the petitioner, which was not accepted by him. It is also the case of the petitioner, as stated in paragraph-9 of the writ application, that his appeal is still pending before the Commissioner of Income Tax (Appeals), Jamshedpur, in view of the fact that the said post is lying vacant since February, 2019 itself, and due to non-availability of the Appellate Authority, the appeal could not be disposed of. We dispose of the writ application with the direction to the respondent No. 1, the Principal Commissioner of Income Tax, Jamshepdur, to review the stay petition of the petitioner, as it was stated in his earlier order dated 26th June, 2019, that the stay petition shall be reviewed in the 1st week of January, 2020, and to pass the appropriate order, in accordance with law. Till then, no coercive step shall be taken against the petitioner.
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2020 (2) TMI 589
Additions made during the course of the assessment proceedings - incriminating material found during the search or not - HELD THAT:- Assessing Officer, while passing the assessment order, has not clearly stated as to what is the incriminating material on the basis of which the additions were sought to be made. The co-relation between the so-called incriminating material which has not even been disclosed, and the additions made, should have been established by the Assessing Officer, which had not been done. No substantial question of law arises for our consideration.
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2020 (2) TMI 588
Revision u/s 263 - claim of the deduction u/s. 80IB - HELD THAT:- Revenue stand squarely covered by the decision of this Court in the case of Principal Commissioner of Income Tax vs. Alidhara Taxspin Engineers Anr. [ 2017 (5) TMI 1684 - GUJARAT HIGH COURT] held that on interpretation of the partnership agreement and considering the wish of the partners reflected in the partnership deed, not to pay/charge interest on the partners capital and the remuneration, the learned tribunal has rightly deleted the disallowance made by the Assessing Officer with respect to the deduction claimed under Section 80IB. As rightly observed by the tribunal, mere incorporation of interest on the partners capital and remuneration does not signify that the same are mandatory in nature. We concur with the view taken by the learned tribunal. No substantial questions of law.
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2020 (2) TMI 587
Addition on account of the peak unaccounted investment - addition on the account of GP on unaccounted purchases and finalized the assessment u/s 143(3) of the Act - only evidence with the DRI as well as the A.O. was in the form of a confessional statement made by Shri Gandhi on oath recorded under Section 108 of the Customs Act - HELD THAT:- A Co-ordinate Bench of this Court, in the case of Kailashben Manharlal Chokshi vs. Commissioner of Income-tax [ 2008 (9) TMI 525 - GUJARAT HIGH COURT] took the view that merely on the basis of admission, the assessee cannot be subjected to additions. The Co-ordinate Bench proceeded to observe that unless and until some corroborative evidence is found in support of such admission, the department would be justified in making additions. In other words the proposition of law as laid down is that the department cannot start with the confessional statement. The confessional statement has to be brought in aid of other materials on record. In the case on hand two authorities have concurrently recorded a finding of fact that, except the statement recorded under Section 108 of the Customs Act there is no other evidence. There was no material to corroborate the statement made by the assessee in the form of confession. In the case on hand, as noted above, there is no material except the confessional statement of the assessee recorded under Section 108 of the Customs Act. In view of the concurrent findings recorded by both, the CIT(A) as well as the Appellate Tribunal, we are of the view that we should not disturb the finding of facts. None of the questions as proposed by the Revenue could be termed as substantial question of law.
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2020 (2) TMI 585
Unexplained investment u/s 69 - Section 50C applicability - Purchase of land - HELD THAT:- Tribunal had concluded that the Assessing Officer had made the additions on the basis of the statement of the partner, namely, Shri Prem Kumar Agrawal. However, the said statement was retracted on the very next day of completion of survey proceedings by way of duly signed affidavit, signed by all the partners. Further, except for the retracted statement of the partner, there was no other material with the Assessing Officer to make such an addition. The addition was made on the basis that the sale consideration which was shown in the two sale deeds dated 28.09.2006 and 09.10.2006 was ₹ 31,01,000/- and ₹ 31,10,000/- whereas the Stamp Valuation Authority had determined the market price of this land at ₹ 42,69,500/- and ₹ 42,44,000/- respectively, resulting in the difference of ₹ 23,02,500/-. Applying the provisions of Section 50C of the Act, the addition was sought to be made. However, the provisions of Section 50C of the Act were not available to the Revenue as the assessee was the purchaser of the land. CIT(A) has rightly adopted this view holding that provisions of section 50C were not applicable on the assessee being the purchaser of the property and also during the survey proceedings no documentary evidence was found which may prove that the assessee has made payment over and above the registered valuation of the property. In lack of any incriminating material, no addition was called for by the AO Addition on the basis of the provision of 50C - difference of market value and purchase cost of the plots purchased, as discussed hereinabove, made the remaining addition as unexplained investment in the properties. This was done on the basis of the surrender made by the partner at ₹ 52 Lac. - HELD THAT:- The law with regard to an admission or confession is well settled. An admission may be a strong piece of evidence but it is not conclusive evidence. The veracity of such evidence can be judged vis-a-vis the material evidence and the obtaining circumstances of the case in which it was made because it can always be explained by the person who has made such confession or admission. In the present case, a perusal of the findings recorded by the Tribunal shows that the aforesaid two additions of ₹ 23,02,500/- and ₹ 28,97,500/- towards unexplained investments were made by the Assessing Officer merely on the basis of the statements given during the course of survey and that there is no incriminating material or documentary evidence available with the Assessing Officer to substantiate the said additions for the assessment year 2007-08. That apart, the retraction was immediately made on the very next day by filing an affidavit signed by all the partners. Therefore, in the given facts and circumstances of the case, the retraction cannot be said to be for extraneous reason Addition of suppressed sales - HELD THAT:- Revenue was unable to demonstrate that the case of the assessee for the assessment year 2007-08 for which addition was sustained only to the extent of ₹ 17,05,082/-, was different from the earlier decision of the Tribunal or that the earlier decision of the Tribunal was set aside or reversed by the High Court or the Supreme Court. Apart from the aforesaid, the findings recorded by the CIT(A) and upheld by the Tribunal on the issues raised in the present appeal are based on appreciation of evidence on record. The learned counsel for the Revenue has failed to point out as to how and in what manner such findings of fact are illegal or perverse. The findings arrived at by the CIT(A) and affirmed by the Tribunal are just and reasonable. The only endeavour of the learned counsel for the appellant was to re-appreciate the evidence so as to persuade this Court to take a different view, which is not permissible under Section 260A of the Act.
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2020 (2) TMI 583
Exemption u/s 10(20) sic. [10(22)] - claim denied as element imparting education to the students of normal schooling is absent to attract the exemption as engrafted under the aforesaid provision - Tribunal allowed exemption - HELD THAT:- We are conscious of the fact that the provision contained in Subsection (22) of Section 10 has been omitted from the Act w.e.f. 1.4.1999 but the assessment year involved in the present case is 1994-95. In this view of the matter, the present case is squarely covered by the judgment in Assam State Text Book Production [ 2009 (10) TMI 60 - SUPREME COURT] and Division Bench judgment of this Court in M.P. Text Book Corporation [ 2015 (7) TMI 537 - MADHYA PRADESH HIGH COURT] The impugned order passed by the learned Tribunal is set aside. The matter is remanded to the Assessing Officer for de novo consideration. All questions are left open.
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2020 (2) TMI 582
Eligible profits of business for section 80HHC - gross rent receipts from employees without adjusting expenses incurred by the employer on running and maintenance of such accommodations - HELD THAT:- The explanation provides for reduction from the profits and gains of business or profession , receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature. Depreciation is not receipt of a similar nature as mentioned in the explanation. Supreme Court in Acg Associated Capsules P. Ltd.'s case 2012 (2) TMI 101 - SUPREME COURT ] held that the explanation is to be construed as per the plain natural meaning of the words in it. The receipts mentioned in the explanation are the actual payments received like brokerage etc. The phrase receipt of similar nature will not increase its scope to include depreciation which is not on same footing as brokerage, commission etc. The finding recorded by the Tribunal on the said issue is upheld. The question is answered against the assessee. Whether tribunal has erred in holding that report turnover of the unit whose profits are allowed a deduction under Section 10B of the Income Tax Act is not to be included in the export turn over for the purpose of calculating the deduction under Section 80HHC ? - The issue is covered in favour of the assessee by a decision of the Division Bench of this Court in M/s Mahavir Spinning Mills Ltd. v. Commissioner of Income Tax, Ludhiana and another, [ 2016 (9) TMI 156 - PUNJAB AND HARYANA HIGH COURT ] Non-allowance of exemption under Section 10B - HELD THAT:- Sub-section (4) to Section 10B of the Act gives a formula for working out the profits from export of articles. Once it is held that interest on delayed payment relating to export is eligible under Section 10B of the Act, thereafter the calculation is to be done as per sub-section (4) to Section 10B of the Act. The decision of the Tribunal allowing only interest relating to export sales under Section 10B of the Act is upheld, however, the directions for verification are modified to the extent that the Assessing Officer shall assess the interest received on delayed payments as per provisions of Section 10B(4) of the Act. The question is answered in favour of the assessee. Apportioning the Head Office expenses amongst various units claiming deduction U/s 10-B/80-IA/80-IB - HELD THAT:- Sub-section (7) of Section 10B of the Act provides that the provisions of sub-sections (8) and (10) of Section 80-IA shall apply. Subsection (10) of Section 80-IA of the Act empowers the Assessing Officer to consider a reasonable profit derived by the eligible business, in case there is a close connection between the eligible assessee and another person or the business is so arranged that the business transacted between them produces higher profit than expected. The contention raised by learned counsel for the revenue deserves acceptance that the expenditure incurred by the head office is a common expenditure for eligible and non-eligible units run by the appellant-company, the same needs to be apportioned to determine the actual profits of both the types of units. The finding recorded by the Tribunal on the said issue warrants no interference. The question is answered against the assessee.
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2020 (2) TMI 581
Exemption u/s 11 - grant of registration u/s 12AA - ITAT directed the CIT(E) to grant registration - income derived from the property held by the trust for charitable and religious purposes - HELD THAT:- Subject to the provisions of sections 60 to 63 of the Act, the income mentioned in it shall not be included in the total income of previous year. The section nowhere provides that the property should be owned by the trust. The requirement is held for charitable purpose . In the present case, the land though belonged to the government but the construction made on it was held under the trust and it is for the income from such property that application for registration under Section 12AA of the Act was moved. Section 12 of the Act gives a deeming fiction that voluntary contribution received by the trust created for charitable or religious purposes shall be deemed for the purpose of Section 11 of the Act to be income derived from the property held by the trust for charitable and religious purposes. In view of the above discussion, the objection that the property was not owned by the society cannot be sustained. In the present case, there is no dispute raised that the work of the society was for general public and the work done by it, including raising of the construction on the land that belonged to the Government was for community at large, for charitable and religious purposes. Further that from the record it is established that various functions were being organised by social organisations for blood donation, 'Akandh Path', conference, function for welfare of differently-abled persons and that use of community hall in the temple complex was not limited to any particular limb of the society but was utilised for social, charitable and religious organisations. The explanation of the society to the effect that the liability shown as on 31.3.2013 was discharged in the subsequent year was accepted. Needless to add at this stage that the said aspect can be looked into by the Assessing Officer at the time of framing of assessment and allowing exemption under Section 11 of the Act. No substantial question of law arises
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2020 (2) TMI 580
Exemption u/s 11 - grant of registration u/s 12AA - Charitable activity u/s 2(15) - HELD THAT:- The finding recorded by the Tribunal is not disputed that the vehicles added were school buses. Even if transportation was not specifically mentioned in the aims and objects of the society, the same will not make any difference. Carrying children to the schools and back home is an essential for running schools especially if the schools are in rural areas. The safety of students is of utmost importance. There is another aspect of the matter that purchase of school buses will not amount to amassing assets, rather it is in furtherance of the object of the society to provide quality education. The funds were utilised for education purposes. There is no challenge to the finding of the Tribunal that lower salary paid was not at the cost of quality of education, moreover this itself cannot be a consideration for refusing registration under Section 12AA of the Act. At this juncture, it would be pertinent to note that merely the fact that the society was earlier registered under Section 10(23C) of the Act cannot be taken as an adverse ground for consideration of the application for registration under Section 12AA of the Act. It is for the society to take prudent decision for itself as to which section would be more beneficial. The objects of the society were not doubted by the CIT except for the objections raised above. The denial was merely on surmises and conjectures. There is no error in the order of the Tribunal directing grant of registration to the society. However, it would be needless to state that in case the revenue subsequently comes to the conclusion that the activities of the society are not for charitable purposes, it would always be at liberty to initiate action in accordance with law including invoking of sub-section (3) of Section 12AA
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2020 (2) TMI 579
Exemption u/s 11 - grant registration u/s 12AA - proof of charitable activity u/s 2(15) - HELD THAT:-CIT while processing the application for registration has to look into the genuineness of the activities of the trust and satisfy himself about the genuineness of the activities. The issues raised with regard to the security deposit being not in comparison vis-a-vis the rent received will not have impact on the genuineness of the activities. It is an admitted case that the security received was duly reflected in the books of account. Similarly, the enrouting of advance fee is also an issue with regard to the accounting. These having been shown in the books can be dealt with in detail by the Assessing Officer while framing the assessment and allowing exemption under Section 11 of the Act. The present stage would not be appropriate for the same. Additional land purchased, the Tribunal rightly observed that CIT has a power under Section 12AA(3) of the Act in case of utilisation of the said land against the aims and objects of the society. The grievance against the surplus income not being reasonable is baseless in absence of any challenge to the finding recorded by the Tribunal that excess income has been ploughed back by the society for furtherance of its object. There is no illegality in the order of the Tribunal directing grant of registration to the society. However, it would be needless to state that in case the revenue subsequently comes to the conclusion that the activities of the society are not for charitable purposes, it would always be at liberty to initiate action in accordance with law including invoking of sub-section (3) of Section 12AA of the Act. No substantial question of law
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2020 (2) TMI 578
Exemption u/s 11 - Approval to the respondent-society u/s 80G - the amount in FDRs had enhanced - HELD THAT:- From the averment of the society before the CIT, it was evident that out of total 350 cows, only 20-30 cows were milking. The doubt raised by the CIT was as to how 20-30 cows could produce milk worth ₹ 16,54,634/-. The said doubt was baseless as the CIT was swayed by the figure. If the figure is roughly worked out to the daily amount and if an average price per litre milk is taken as ₹ 40/-, the production would come to 114 litres of milk a day. The objection that the amount in FDRs had enhanced will not enhance the case of the revenue. There is not even an iota of evidence to establish that the amount was not being utilised for the aims and objects of the society but for some other purpose. The amount only gives a protection to the society for daily needs, if the occasion so arises that there is scarcity of funds as the society has almost 350 cows to take care and to feed. It cannot be ruled out that such a cushion may be required considering the nature of the work done by the society. The contention that the society had diverted itself into commercial activities is belied from the ratio of milking and non-milking cows. Out of 350 cows, only 20 to 30 cows were milk yielding. The ratio would be 32:3. The said ratio is a pointer against the plea of revenue. There cannot be any objection if a society while achieving its aims and objects is able to generate some funds so that its daily expenses can be met of its own. There is no quibble on the proposition that registration u/s 12AA itself would not be enough for approval under Section 80G of the Act. The Tribunal has only considered that aims and objects of the society have been found genuine while granting registration u/s 12AA and for granting approval u/s 80G the reasons have been recorded and the denial of approval not sustained. Learned counsel for the revenue has neither been able to show that the view taken by the Tribunal is erroneous nor any material on record is shown to hold that the order of the Tribunal is legally unsustainable. - Decided against revenue
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2020 (2) TMI 577
Disallowance u/s 36(1)(iii) - assessee could not prove nexus of interest of interest free loans given to others with interest free fund - addition of proportionate interest on the ground that respondent assessee did not charge interest on the loans advanced and investment made in the group companies - HELD THAT:- Findings of fact arrived at by CIT(Appeals) and the Tribunal wherein the Assessing Officer is directed to recompute the proportionate disallowance by taking total interest expenditure is without any ambiguity and as such there is no infirmity in the order passed by the First Appellate Authority as well as the Tribunal in view of the concurrent findings of fact. The order of the Tribunal so far as this issue is concerned, does not require any interference. Accordingly the appeal stands dismissed qua question no. 2(A) is concerned. Appeal admitted on Question 2(B), 2(C) and 2(D) : [B] Whether the Appellate Tribunal has erred in law and on facts by upholding the decision of the CIT(A) deleting the disallowance of ₹ 42,90,471/- made by the Assessing Officer under Section 14A r.w. Rule 8D? [C] Whether the Appellate Tribunal has erred in law and on facts by upholding the decision of the CIT(A) deleting the disallowance of depreciation of ₹ 5,00,000/- on the assets not put to use in the year under consideration in respect of non-operative multi metal project at Ambaji? [D] Whether the Appellate Tribunal has erred in law and on facts by upholding the decision of the CIT(A) deleting the disallowance of ₹ 31,15,94,168/- claimed under Section 80IA of the Act?
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2020 (2) TMI 576
Exemption u/s 11 - registration under Section 12AA - violation of Section 40A(3) - HELD THAT:- The finding recorded by the Tribunal that Smt. Sunita and Smt. Sangeeta were possessing qualifications for being Teachers has not been controverted. There is no challenge to the fact that during the relevant time as per the circular issued by the Government, salary of PGT Teacher was fixed as ₹ 31,240/-, whereas both the teachers were receiving salary of ₹ 20,000/- and ₹ 18,000/- respectively. In such circumstances, there is no violation of Section 13(1)(c). It is pertinent to mention here that the salary paid is much less than the prevailing salary. There is no direct or indirect benefit given to the members, rather they were being paid consideration for the services rendered. The scope at the time of processing the application u/s 12AA of the Act is to satisfy with regard to the objects of the trust or the institution and the genuineness of its activities. Apart from the objections mentioned above, the CIT had not recorded any dissatisfaction with regard to the objects of the assessee or with regard to the genuineness of its activities. Tribunal rightly concluded that the issue with regard to violation of Section 40A(3) of the Act and the nature of donations received can be duly considered while finalising the assessment for the relevant period. There is no illegality or error in the view taken by the Tribunal. However, we may hasten to add that subsequently if the revenue is satisfied that the activities of the assessee are not for charitable purpose, it can always initiate action for cancellation of registration under sub-section (3) of Section 12AA - No substantial question of law arises.
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2020 (2) TMI 575
Discrepancy between the stocks as per books of account and as per bank records - addition in view of the statements given by the bank officials that the stocks statement as furnished on 31.3.1988 continued to be reflected in their accounts being upto 28.4.1988? - HELD THAT:- The contention is that the stock was from the hypothecated stock of ₹ 20,00,000/- odd. To substantiate the said claim, no evidence was produced before the authorities. The bank was never informed that the hypothecated stock was reduced and out that ₹ 12,00,000/- odd of stock was pledged. The assessee failed to discharge the onus of explaining the discrepancy. The matter can be viewed from another angle, i.e., as and when there was additional stock of ₹ 3,44,000/-, the assessee approached the bank to show that the stock had increased. The said stock was pledged with the bank on 29.4.1988 and thereafter drawing power was enhanced by ₹ 2,33,600/- and accordingly the value of stock was changed by the bank. The value of hypothecated stock as on 31.3.1988 was repeated subsequently on 16.4.1988 and 24.8.1988 as there was no change of value of stock and the same was not informed to the bank. The assessee failed to prove incorrectness of entries of D.P. Register. The evidence was duly considered by the Tribunal and partial relief was granted. No illegality is shown in the order of the Tribunal sustaining addition - Decided against assessee.
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2020 (2) TMI 574
Exemption u/s 11 - entitlement to registration u/s 12AA - HELD THAT:- There was material before the learned Tribunal to hold the entitlement of the assessee to grant of registration under Section 12AA of the Act. There is no dispute that the assessee is registered under the Societies Act and is engaged in imparting education, which is undoubtedly a charitable activity. It is not the case of the appellant that the previous order dated 10.12.2010 of the Assessing Officer whereby on being satisfied with the aims and objects of the assessee the returned income of the assessee was accepted under Section 143(3) was illegal in any manner and therefore, could not have been relied upon. So far as the contention of the learned counsel that instead of directing for grant of registration under Section 12AA of the Act, the matter should have been remanded to the CIT for fresh consideration, is only in the realm of submission. In our considered view, once the assessee was found to be entitled to grant of registration under Section 12AA of the Act, the learned Tribunal has not committed any error in directing the CIT to grant registration. Thus, the order passed by the learned Tribunal is in accordance with law - Decided in favour of the assessee
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2020 (2) TMI 573
Settlement of inter/intra government disputes - Mandation of obtaining COD (Committee on Disputes) approval - ITAT dismissed the revenue appeal - Whether COD s approval is mandatory in cases where assessee is not P.S.U. but D.D.Os who are disbursing the payments to the employees and contractors are forced to deduct tax as per provisions of Chapter XVII-B of the Act? - HELD THAT:- Undoubtedly, the Constitution Bench of the Supreme Court in Electronics Corporation [ 2011 (2) TMI 3 - SUPREME COURT ] reversed its earlier decision in ONGC s case [ 1991 (10) TMI 58 - SUPREME COURT] and held that approval of the COD in terms of its earlier judgment was not required. Since the Supreme Court in Electronics Corporation (supra) has recalled its all earlier judgments whereby following the decision in ONGC s case (supra) direction was issued to resort to mechanism of settlement of inter/intra government disputes by referring matter to Committee on disputes and the said committee was set up, therefore, the judgment in ONGC s case (supra) no longer holds the field and it would be deemed that there was no requirement of COD approval for filing the appeal. The substantial question of law framed is thus, answered accordingly. I mpugned order passed by the Tribunal dismissing the appeals only on the ground that there was no sanction from the COD, is unsustainable and is hereby set aside. The matter is remanded to the learned Tribunal to re-decide the appeals on merits in accordance with law.
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2020 (2) TMI 571
Rejection of books u/s 145 - Addition on account of alleged under-invoicing of sales made - HELD THAT:- The assessee was buying the milk powder at an average cost price of ₹ 168 to 173/- per kg. on various dates from GCMMF and selling the same at a price around ₹ 173/- to ₹ 175/- to customers barring JDB to whom assessee sold the product at rate of ₹ 135/- per kg. thereby suffering a loss of ₹ 38.40/- per kg. Question would arise, why the assessee was suffering loss only in one case, whereas in all other cases it was getting profit. The explanation of the assessee of alleged commitment to sell the products at lower price was not substantiated, and hence not acceptable. CIT(A) has also observed that the said JDB is not even a related party, and there are no other transactions with them. Therefore, the Revenue authorities are rightly held that books of accounts did not reflect true picture, and accordingly rejected under section 145. There is no evidence or explanation as to why it has sold the items less than the purchase price by making loss of ₹ 38.40 per kg which resulted in under invoicing sale by ₹ 20,74,752/-. Even before me also, the assessee is unable to substantiate its claim with any evidence or valid explanation. Disallowance of interest of total bank interest - HELD THAT:- No infirmity in the orders of the Revenue authorities on this issue, because both have concurrently found that the assessee does not have sufficient interest free funds of his own to advance the sister concern at the lesser rate. The claim of the assessee was that loan was advanced to the party from surplus and/or accrual does not carry any force, because no documentary evidence or material was furnished by the assessee even before me. It is pertinent to note that on one hand the assessee is opting to suffer loss due to sales at much lesser rate and incurring heavy interest expenditure to the extent for loans taken from bank at the rate of 10.72%, on the other hand, the assessee is advancing loan to sister concern at the rate of 2%. Therefore the disallowance made by the Assessing Officer and sustained by the Ld. CIT(A) is justified.
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2020 (2) TMI 570
Assessment framed u/s 153C - Period of limitation - block period for initiation of proceedings - HELD THAT:- AO recorded satisfaction on 29.05.2017 and determined the block period as 2010-11 to 2015-16 taking into consideration the date of search. In our opinion, as in terms of the decision of Hon ble High Court of Delhi in the case of RRJ Securities Ltd. [ 2015 (11) TMI 19 - DELHI HIGH COURT] the date of recording of satisfaction is to be construed as the AO having jurisdiction to assess the searched person u/s 153C of the Act. Hon ble High Court of Delhi in the case of Sarwar Agency Pvt. Ltd. [ 2017 (8) TMI 733 - DELHI HIGH COURT] decline to admit the substantial question of law raised by the Revenue challenging the decision in the case of RRJ Securities Pvt. Ltd. Therefore, we find no infirmity in the order of CIT(A) and it is justified and we completely agree with the reasons recorded by the CIT(A) in his order in para no 6 which is reproduced herein above. Ground nos. 1 and 2 raised by the Revenue are dismissed.
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2020 (2) TMI 568
Characterisation of income - income of the assessee under the head income from other sources or business income - Revenue sharing from operation of multiplex - HELD THAT:- The light of authoritative pronouncements of Hon ble Gujarat High Court as well as Hon ble Supreme Court in the case of Excel Industries [ 2013 (10) TMI 324 - SUPREME COURT] find that there is no justifiable reason for the AO to deviate from view taken in earlier years, in this year. Neither the AO nor the ld.CIT(A) has pointed out what are the changes in the facts and circumstances from the earlier years. Even otherwise, if looked from angle of Revenue sharing from operation of multiplex as well as other liabilities of the assessee, it would demonstrate that it was a business exploitation by the assessee, and it has only given a portion of the complex for a period of ten years to PVR. Therefore, its income ought to be assessed under the head business income. Allow the appeal of the assessee and set aside the finding of both the Revenue authorities. The ld.AO shall assess the income of the assessee under the head business income . - Appeal of the assessee is allowed.
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2020 (2) TMI 564
Capital receipt chargeable to tax u/s.45 - claim of exemption u/s.10(2A) - income within the meaning of Section 2(24) - Addition made by the ld AO under MAT provisions as pure capital receipt is not taxable under MAT - assessee had relinquished its interest in the partnership firm vide retirement deed - HELD THAT:- The assessee retired from the partnership firm and received amount standing to its credit in the books of the partnership firm. Much prior to the retirement i.e. on 01/04/2007, the firm re-valued its asset i.e Development rights in land which resulted in appreciation of ₹ 262,12,92,699/- and correspondingly credited partner s current account in their respective profit sharing ratio in the books of that firm. The assessee s share thereon worked out to ₹ 10,48,51,708/-. In response to this revaluation, no entry was passed in the books of the assessee firm as on 31/03/2008, by correspondingly increasing the investment made in Pranik Landmark Associates with corresponding credit to current account of the partners of the assessee firm. The assessee passed this entry belatedly only in the year of receipt of actual money from Pranik Landmark Associates i.e. during the F.Y.2009-10 relevant to A.Y.2010-11 in which year, it retired from Pranik Landmark Associates. Pursuant to assessee passing this entry during A.Y.2010-11 in its books for the revaluation, the amounts ultimately received by the assessee from the partnership firm exactly matched with the investments made in the partnership firm. In other words, the assessee did not receive any sum over and above the value of its investments from Pranik Landmark Associates. Hence, there cannot be any levy of capital gains or any levy in the nature of income within the meaning of Section 2(24) of the Income Tax Act in the hands of the assessee. There was no transfer of relinquishment of rights in favour of the continuing partners. We find that in the instant case the firm i.e. Pranik Landmark Associates had only paid the amounts lying to the credit of the partner i.e. the assessee and had not paid even a penny more than the amount lying in the credit of the partner s current account - Decided against revenue. MAT computation - share of profit from the partnership firm was sought to be excluded while computing the book profits u/s.115JB by treating it as capital receipt - HELD THAT:- Once, a receipt is classified as income then, the same would be liable for inclusion in book profits u/s.115JB of the Act even though the said income is exempt or otherwise deductible under other specific provisions of the Act. In our considered opinion, this is a subtle distinction, which needs to be understood. In other words, the profits and gains that are otherwise deductible u/s.10A/10B/Section 80IA / 80IB of the Act under normal provisions of the Act would still be liable for book profits u/s.115JB of the Act, since the provisions of section 115JB of the Act have an overriding effect over other provisions of the Act. But where a particular receipt from its inception is not at all income such as capital receipt as is present in the instant case, then, the said capital receipt would be outside the scope of inclusion as book profits u/s.115JB of the Act. We hold that the amount received from partnership firm in the sum requires to be reduced while calculating the book profits u/s.115JB of the Act. Accordingly, the ground No.2.1 received by the revenue is dismissed.
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2020 (2) TMI 563
MAT - Addition made u/s. 115JB on account of provision for contingency - HELD THAT:- Upon careful consideration, we find that if finally assessee has been called upon to pay more than the amount provided for the concerned period, the same cannot be said to be unascertained liability. Hence, we direct that if against the same liability, which has been held to be unascertained, subsequently assessee has paid the amount, the same cannot be said to be provision for unascertained liability. The Assessing Officer shall examine the subsequent payment and decide as per our observation as above. Deduction u/s 80IA of the Act for other income - HELD THAT:- We find that the learned CIT(A) s finding is cogent that these receipts cannot be said to be profit derived from the industrial undertaking. They are admittedly beyond the first degree and the decision of Hon'ble Apex Court in Liberty India [ 2009 (8) TMI 63 - SUPREME COURT] is squarely applicable. Since this issue is decided on the basis of applicable Hon ble Supreme Court decision, dealing with other decisions is not relevant. Moreover, as regards the issue of foreign exchange gain is concerned, the learned CIT(A) has given a finding that no detail regarding the same was furnished before him. Before us also, the learned counsel of the assessee has shown his inability and submitted that details are not available. In these circumstances, in our considered opinion, there is no infirmity in the order of learned CIT(A). Hence, we uphold the same. TP Adjustment - proportionate adjustment sustained under Section 92C of the Act with respect to the arm s length price of technical services made to the associated enterprise - HELD THAT:- In assessee s own case for assessment year 2008-09 keeping the principles of judicial consistency and judicial discipline, it is directed that the arm s length price of the said transaction of technical service fees be taken at 50% of the amount claimed by the appellant (full consideration for clauses (a) and (b) of the agreement and half consideration for clauses (c), (d) and (e) of the agreement). Hence the arm s length price of the international transaction would be ₹ 1,73,25,000/-. This means an adjustment of ₹ 1,73,25,000/- is required to be made to the said international transaction. The AO is directed accordingly. Disallowance of expenses under Section 14A - First contention is that disallowance under Section 14A of the Act is to be limited to the extent of exempt income earned - HELD THAT:- We find that the contention of the learned counsel of assessee is cogent inasmuch as the same view was taken by the Hon'ble Apex Court in the case of Maxopp Investment Ltd. vs CIT [ 2018 (3) TMI 805 - SUPREME COURT] Second contention of assessee is having sufficient interest free funds and hence no disallowance for interest is to be done under Section 14A - This claim is supported by Hon'ble Jurisdictional High Court decision in the case of CIT vs HDFC Bank Ltd. [ 2014 (8) TMI 119 - BOMBAY HIGH COURT] and CIT vs Reliance Utilities Power Ltd [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] . We find this submission is also cogent. Hon'ble Jurisdictional High Court in the aforesaid case has duly accepted that no disallowance for interest is to be done under Section 14A of the Act if assessee is having sufficient interest free funds available with it. It was also expounded that assessee was not required to bring out a one-to-one co-relation - we remit this issue to the file of the Assessing Officer, to do computation of disallowance u/s 14A of the Act afresh.
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2020 (2) TMI 562
Addition on the basis of the material seized during the course of the search - HELD THAT:- We find that assessee has partly accepted the entries in the documents seized, which confirm that the documents were related to the assessee , but the assessee has failed to explain the balance entries reflected in those documents, and therefore, lower authorities are justified in sustaining the addition in dispute. As the assessee could explain part of the transaction recorded in seized material and the balance sale could not be reconciled by the assessee, and therefore in our opinion, the lower authorities are justified in sustaining the addition. Accordingly, the grounds of appeal of the assessee are dismissed.
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2020 (2) TMI 561
Addition u/s 68 - Unexplained cash credit - AO observed that, assessee had invested a huge sum of money in booking of flats and properties although he was merely a salaried employee - HELD THAT:- As perused the confirmation, Voter ID card, PAN card, Ledger account of Prem Kumar and affidavit of Sh. Sushil Kumar Yadav alongwith Cash Flow Statement and Statement of account of Raghuveer Sharma with Omaxe and others. Assessee has also filed a letter of Omaxe for transfer of property in the name of buyers; copy of passport of Sh. Vinod Kumar Khera; Allotment letter of plot to the assessee by Omaxe; confirmation from Shri SK Bothra alongwith his income tax return, confirmation, voter ID card and other documentary evidences for establishing the identity and genuineness of transactions. In the last, have also thoroughly perused the documentary evidences in the shape of Paper Book and assessee has established the creditworthiness and genuineness of transaction which require u/s. 68 of the Act and by establishing his onus. Addition in dispute is not sustainable in the eyes of law, because the assessee has discharged his onus u/s. 68 of the Act and therefore, the addition in dispute is hereby deleted.
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2020 (2) TMI 560
Addition u/s 14A - exempt dividend income - proximate relationship between the expenditure incurred and the dividend income earned - HELD THAT:- As the assessee has not maintained separate books of account or not identified expenses separately towards earning the exempt income, there is no alternative expect estimation. The assessee has estimated the disallowance on the basis of estimation of man hours spent towards the investment in mutual fund activity. The ld. AO has estimated the expenditure for earning exempt income in proportion of exempt income to total income including exempt income. CIT(A) has estimated the disallowance at 5% of exempted income. We find the legislature has approved the similar disallowance for administrative expenses w.e.f. assessment year 2008-09 under Rule 8D(2)(iii) as (0.5%) of average investment in assets yielding exempt income. Hon ble Delhi High Court in the case of ACB India Ltd. Vs. ACIT [ 2015 (4) TMI 224 - DELHI HIGH COURT] and the Special Bench of the Tribunal in ACIT Vs. Vireet Investment Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] , has restricted the disallowance towards administrative expenses under Rule 8D(2)(iii) to 0.5% of the assets which yielded exempt income during the year. In our opinion, the estimation of 0.5% of assets which yielded exempted income during the year would be a most reasonable estimate for identifying the administrative expenditure for earning the exempt income. We, accordingly, direct the Assessing Officer to compute the disallowance in view of our above direction, however, the disallowance, if any, computed in this manner should be restricted to disallowance of ₹ 23,55,952/-, which was made by the Assessing Officer in original assessment proceedings - Appeal of assessee is accordingly allowed for statistical purposes.
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2020 (2) TMI 559
Reopening of assessment u/s 147 - addition made in respect of section 2(22)(e) - HELD THAT:- The basis of re-assessment proceedings is that the Assessing Officer should have the reason to believe that some income has escaped assessment, that belief should lead him to reach a logical conclusion i.e. in the final assessment he should bring those incomes which had earlier escaped from tax, now they should be taxed. In this case, the Assessing Officer fails to do so. None of the issues for which reopening was initiated, no additions are made in respect of them. Taking guidance from the decisions of jurisdictional High Court in CIT Vs. Smt. Maniben Valji Shah [ 2005 (2) TMI 35 - BOMBAY HIGH COURT] and CIT Vs. Jet Airways (I) Ltd. [ 2010 (4) TMI 431 - HIGH COURT OF BOMBAY] firstly the basic criteria of section 147/148 of the Act is not fulfilled as evident from the action of the Assessing Officer; secondly, there is no rational and intelligible nexus between the reasons and the belief. In such circumstances, we are of the considered view that the action of Assessing Officer in resorting to reopening of assessment and framing the assessment u/s 143(3) r.w.s. 147 of the Act is not valid in law and we accordingly, quash the re-assessment order. Appeals of assessee are allowed.
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2020 (2) TMI 558
TP Adjustment - corporate guarantee provided by assessee company to its subsidiaries - international transaction - interest on receivables for extra credit period - ALP adjustment on sale of instant coffee - HELD THAT:- As decided in own case [ 2019 (4) TMI 1820 - ITAT VISAKHAPATNAM] assessee had given corporate guarantee to its 100% subsidiary and the AE for the purpose of business. The assessee had not incurred any expenditure towards the corporate guarantee. The revenue could not bring any evidence to establish that the assessee had incurred any expenditure for extending the corporate guarantee. As stated by the Ld.AR it is the obligation on the part of the assessee to extend the support and assistance to its subsidiaries for business development. Since the facts are identical, respectfully following the view taken by coordinate benches in the case laws cited, we hold that the corporate guarantee given by the assessee on behalf of its AE would not constitute an international transaction within the meaning of 92B of the Act. Accordingly, we uphold the order of the Ld.CIT(A) and dismiss the appeal of the revenue. Interest on receivables - HELD THAT:- In the instant case also it is established that the transactions with the AEs are at arms length price. All the AEs are 100% subsidiary companies and the assessee is debt free company having large amount of reserves. The department has not made out a case of undue advantage of allowing credit. The Ld.CIT(A) has given finding that the receivables were received in reasonable period and there was no delay. The department did not place any evidence to controvert the finding given by the Ld.CIT(A). Therefore, we hold that there is no case for making adjustment of interest on receivables in the assessee‟s case. ALP adjustment suggested by the TPO in respect of difference in price charged to assessee s AE when compared sale to non-AE - HELD THAT:- After considering the submissions and data, the TPO has suggested and worked out the adjustments on sale of instant coffee to the AE and computed the same at ₹ 1,09,42,509/- which is charged less to the AE compared to the non-AE and called explanation from the assessee. The assessee has submitted that TPO has taken only two sizes out of 11 sizes i.e. 100 grams and 200 grams and suggested adjustment which is not correct. Out of 11 sizes in 6 cases, the assessee has charged higher price. It was further contended before the TPO that comparing the product size-wise is unfair and incorrect and also unscientific and requested the TPO to adopt weighted average method and find out the ALP and submitted that weighted average method is applied difference is only less than 3% which is permissible according to law. The TPO rejected the request of the assessee and suggested the adjustment of ₹ 1,09,42,509/- u/sec. 92CA(3) of the Act. On appeal, ld. CIT(A) directed the Assessing Officer to delete the addition. As per proviso to sub-section (2) of section 92C, the difference to the extent of 3% is permissible. We further find that the assessee by submitting all the details explained before the TPO that the assessee has charged for AE as well as non-AE similar prices for the supply of instant coffee and no profit has been shifted to AE, however, the TPO not accepted the explanation given by the assessee and suggested TP adjustment without giving any reasons. The TPO has not given what is the reason for choosing only two sizes 100 grams and 200 grams, when the assessee specifically submitted before the TPO that out of 11 sizes, 6 sizes the assessee has charged high price and submitted that average has to be taken. Without considering the same, the TPO simply suggested adjustment by taking only two sizes, in our opinion, the assessee has discharged the burden casted upon him to show that it has not shifted profits to AE, therefore it is the duty of the TPO to establish that the assessee has shifted profits to AE. In this case, without giving any reason simply suggested TP adjustment by the TPO. We find that TPO is not correct. Thus, we find that the ld.CIT(A) has considered the facts and directed the Assessing Officer to delete the addition. We find no reason to interfere with the order passed by the ld. CIT(A). Thus, this ground of appeal raised by the Revenue is dismissed.
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2020 (2) TMI 557
Disallowance u/s 14A - HELD THAT:- Though the assessee has earned dividend income of ₹ 8,800/- as against disallowance made by the AO but has not claimed the same as dividend income in the computation of income, in these circumstances, no disallowance can be made u/s 14A read with Rule 8D. So, we find no illegality or perversity in the findings returned by the ld. CIT (A). Ground No.1 of Revenue s appeal for AY 2011-12 is determined against the Revenue. Addition made merely on the basis of fact that information u/s 133(6) has not been filed by some of the creditors - HELD THAT:- It is proved that the AO as well as ld. CIT (A) proceeded to make/confirm the addition without considering the reply of the assessee and without procuring the presence of such sundry creditors to whom the notices u/s 133(6) were issued by using coercive method. In AY 2011-12, AO as well as ld. CIT (A) have made/confirmed the addition of ₹ 15,19,688/- out of amount of ₹ 35,10,494/- challenged vide ground no.3 on account of nonconfirmation from creditors which had resulted into double taxation as the similar addition was made in the preceding years. In AY 2010-11, AO has also recorded strange observation that, the assessee was to provide information called for along with proof of identity on the assessee s letter-head with cop of PAN and ITR to establish the genuineness of the transaction. We are constrained to record that information called for need not be furnished on the letter-head when it is otherwise supported with requisite documents. All these facts show that the addition has been made merely on the basis of conjectures and surmise and the issue is required to be remitted back to the AO to decided afresh after providing opportunity of being heard to the assessee, so as to reconcile the discrepancies arisen out of the reply of various parties given in response to notice u/s 133 (6). Disallowance u/s 36 (1)(iii) - Interest free loans - HELD THAT:- In the instant case, when the assessee has come up with specific defence that the advance has been made out of interest free funds and the same has been made for business expediency, the applicability of the judgment relied upon by the ld. DR for the Revenue is to be seen after marshalling of the facts pleaded by the assessee only. So, in the given circumstances, these issues are required to be decided by passing a speaking order. Accordingly, this issue is remitted back to the AO to decide afresh after providing opportunity of being heard to the assessee Wrongly computed tax demand by not allowing the complete tax credit of TCS and TDS - HELD THAT:- This issue has been arisen out of some clerical error on the part of the AO who has not taken into consideration TCS and TDS credit for computing the tax liability. So, we direct the AO to verify the TCS and TDS credits claimed by the assessee and computed the tax liability accordingly, hence Ground No.5 of assessee s appeal for AY 2010-11 is determined in favour of the assessee for statistical purposes. Addition u/s 36(1)(va) on account of delay in filing the employees contribution to provident fund on the ground that the assessee has made payment before filing of the return of income - HELD THAT:- Following the decision rendered in case of CIT vs. Bharat Hotels Ltd. [2018 (9) TMI 798 - DELHI HIGH COURT] we are of the considered view that the assessee company is not entitled for deduction u/s 36(1)(va) of the Act claimed on account of depositing the employees contribution towards ESI PF as per provisions contained u/s 2(24)(x) read with section 36(1)(va) after due date which is evident from table extracted in preceding para no.5. So, the case laws relied upon by the ld. AR for the assessee is not applicable to the facts and circumstances of the case. Consequently, finding no illegality or perversity in the impugned order passed by the ld. CIT (A), appeal filed by the assessee is hereby dismissed. Addition u/s 40(a)(ia) on account of disallowance for nondeduction of tax on commission expenses - HELD THAT:- CIT (A) after thrashing the facts and after entertaining additional evidence filed by the assessee qua which remand report was called reached the conclusion that the assessee company has given rebate and discount on sales which cannot be treated as commission. When it is undisputed case of the assessee company that the payment has been directly given to the vendee and not through any commission agent, it cannot be treated as commission. During the preceding years, such payment has been treated as rebate and discount and not commission and the AO has not been able to distinguish the facts of the instant case with that of the preceding years. So, in the given circumstances, we are of the considered view that when it is rebate and discount and not commission, no TDS is required to be deducted. Consequently, we are of the considered view that CIT (A) has rightly deleted the addition, hence ground no.3 is determined against the Revenue.
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Customs
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2020 (2) TMI 613
Validity of SCN - SCN issued u/s 28 of the Customs Act of 1962 - appellant is importer or not - final assessment of Bills of Entry - Valuation - inclusion of freight and insurance charges in the assessable value or not - HELD THAT:- In the present case, the appellant is not the importer and in fact, the importer is M/s JSW as per Section 2 (26) of the Customs Act, 1962. In the case of ASPINWALL CO. VERSUS COMMISSIONER OF CENTRAL EXCISE, TRICHY [ 2001 (4) TMI 144 - CEGAT, CHENNAI] , it has been held that simply by presenting papers for clearance of goods, one does not become importer of goods or agent of importer under Section 147 of the Customs Act, 1962. The person presenting the papers cannot be held to be responsible for short levy of duty on grounds of having filed Bill of Entry on behalf of importer - Further, the addition of 1% of the price paid to ship owner as loading and un-loading charges is also not sustainable in law. In the present case, the actual unloading charges being nil, nothing can be added towards un-loading charges. Further, the addition of 20% and 1.125% of the price paid to ship owner towards freight and insurance, is also not sustainable in law because the said addition is based on a wrong presumption that price paid to ship owner for bunkers and stores is a FOB price. Further, no amount has been incurred by JSW in addition to what has been paid to ship owner and on which duty has already been assessed towards freight and insurance. Thus, when Customs duty has already suffered on value of bunkers and provisions, which included all costs incurred upto the Haldia Port, there is no question of any addition of freight and insurance. Appeal allowed - decided in favor of appellant.
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2020 (2) TMI 612
Import of Ordinary Portland Cement Clinker in Bulk under CTH 2523.10.00 form Indonesia claiming concessional rate of duty i.e. BCD @ 5% as per the said Notification - benefit denied on account of certain discrepancies in the certificate of origin - importer prayed for provisional assessment of the goods and got the goods cleared - Benefit of N/N. 46/2011-CUS dated 01.06.2011 - HELD THAT:- As per Sl.No.195 of the notification No.46/2011-CUS dated 01.06.2011, the concessional rate of duty is extended to the goods imported from Indonesia under CTH 252310 to 252321. The respondent has imported the goods from Indonesia which is evident from the Bill of Lading and Certificate of Origin issued under ASEAN-INDIA Free Trade Area (AIFTA) between Indonesia and Republic of India vide No.0000270/PDG/2018 dated 29.01.2018. We also find that the said Certificate was duly verified by the proper officer of Appraising General Unit dated 09.03.2018 13.04.2018. Also the Invoice No.PWD052-2k18/SII-A dated 23.01.2018 Country of Origin (i.e. Indonesia) as mentioned in the said certificate is also mentioned in the Bill of Entry as declared by the respondent - The First Appellate authority has, in the impugned order, recorded cogent reasons for allowing the benefit of the notification. Even if the respondents had initially not claimed the benefit of notification, nothing prevents them for claiming it by filing an appeal against the assessment. Any assessment, including self-assessment can be appealed against. It is now a well established legal principle that an assessment which is provisional, is provisional for all purposes. There is no provision in law to treat the same assessment as provisional for one purpose and final for another. Even if the respondent had not protested against denial of the benefit of the notification during finalization of the assessment, it does not stop them from claiming the benefit subsequently by filing an appeal against the assessment. The Appellate Authority was correct in examining such a claim and giving the benefit of Notification since he found them eligible for the same. Appeal dismissed - decided against appellant.
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2020 (2) TMI 611
Imposition of penalty - illegal exportation of Red sanders - prohibited goods or not - proper investigation not carried out - principles of natural justice - HELD THAT:- It is quite evident that none of these persons were traced and investigated by the investigating authority/ DRI in the present case. Amongst the persons who have not been investigated the name of present appellant figures. However, even without questioning them, or causing investigation, these person have been made the party to the show cause notice. The appellant have not been investigated in the case of present seizure and confiscation of red sanders. The statement that has been relied upon by the Commissioner, is also in case of some another investigation, seizure and confiscation. It is really irony that it has been admitted that even the true identity etc of the appellant has not been established in the present case and the Commissioner has imposed penalty even when the investigations against the appellant are still pending in the present case. It is also not under stood as to how and on basis of which evidence linkage has been established between the appellants and present consignment of Red Sanders confiscated in the impugned order. Imposition of penalty - HELD THAT:- Section 114 of CA shows that this section is applicable only in respect of the person who has done any act of omission or commission qua the goods held liable for confiscation under Section 113. Any act performed by the person in respect of any other goods which may be similar/ same/ identical, but not the subject matter of the proceedings cannot be reason for imposition of penalty under this section. Thus without leading the evidence to the effect of establishing the act of omission/ commission in relation to the goods confiscated in these proceedings i.e. 15.010 MTs of Red Sanders, illegally exported, the penalty imposed under this section cannot be sustained. The number of person including the present appellant have not been investigated in this case, and the investigation are kept open, our order setting aside the penalty herein should not be treated as exoneration of the appellant in the proceedings which follow on completion of investigations against those persons - appeal allowed - decided in favor of appellant.
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2020 (2) TMI 566
Valuation of imported goods - PVC Laminated sheets (PVC floor covering) - rejection of declared value - value re-fixed under Rule 5 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - penalty on Customs Broker u/s 117 of CA - HELD THAT:- In the show-cause notice the Revenue has alleged that the supplier of the goods M/s. K.H.I. Vanich Group Co., Bangkok appears to be a trader and not the manufacturer. For this allegation, in the show-cause notice, Revenue has no basis because the appellant has given the invoices issued by the said supplier and has submitted in the reply to the show-cause notice that the said supplier is the biggest manufacture of the impugned goods in the world. Further, we find that the goods have been imported by the appellant under ASEAN Agreement between two Sovereign States and if the Department has any cogent evidence to come to the conclusion that no such manufacturer exist, then they should have made proper enquiry to blacklist such a supplier but the same has not been done at all. Commissioner on its own has come to the conclusion that the raw material for the impugned goods is LDPE and LLDPE and the value of raw material ranges from UDS 1180 to USD 1270 per metric tonne without any basis. He has observed in the impugned order that it is available in the Public Domain that LDPE and LLDPE are the raw material for the impugned goods. Further, even in the test report obtained by the Revenue from CIPET, Cochin, it is not mentioned that LDPE and LLDPE is the raw material for impugned goods. The information relied upon by the Commissioner available in the Public Domain is not admissible as evidence in law when there is a specific test report available of authorized agency. Further, the certificate issued by the manufacturer which is also on record, shows that LDPE and LLDPE is not the raw material for the impugned goods but the same has not been considered by the Commissioner. In the present case, the appellant has imported the material from Thailand whereas the Commissioner has relied upon the contemporaneous imports from China which cannot be considered as contemporaneous import at all. Further, the appellant himself earlier imported the same product and declared its value which was accepted and the goods were cleared from the same port. Instead of considering the same as contemporaneous import, the Commissioner has relied upon imports from China. The impugned orders re-fixing the price than the price declared by the importer is not sustainable in law - Appeal allowed - decided in favor of appellant.
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2020 (2) TMI 565
Valuation of imported goods - used Toyota Land Cruiser of 1998 model - non-compliance with the pre-import condition - rejection of declared value - redetermination of value - tampering of the chassis number - HELD THAT:- The Commissioner (Appeals) in the impugned order has considered all the aspects in detail and after considering all these grounds, the Commissioner (Appeals) has come to the conclusion that in the absence of any physical evidence of tampering, clarification of interested third party cannot be a sufficient reason for rejection of the invoice value. Further, in the first round of litigation this Tribunal remanded the matter to the adjudicating authority with a direction to afford an opportunity to the importer to cross-examine the signatory of the documents relied upon by the adjudicating authority. Further, we find that instead of the person who has signed the letter dated 19/12/2005 some other person was produced for cross-examination who during the cross-examination expressed ignorance about the contents of the letter dated 19/12/2005 and the reason for issuing the said letter. There is no infirmity in the impugned order which is upheld by dismissing the appeal of the Revenue - Appeal dismissed - decided against Revenue.
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Corporate Laws
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2020 (2) TMI 610
Striking off the name of the Appellant Company from the Register of the Companies - failure to file due returns under the provisions laid down under Section 403(1) proviso-1 of Companies Act r/w Companies (Registration of Offices and Fees) Rules, 2014 - HELD THAT:- The Appellant Company is having substantial movable as well as immovable assets. Therefore, it cannot be said that the Appellant Company is not carrying on any business or operations. Hence, we are of the opinion that the order passed by the NCLT, Kolkata Bench as well as ROC, Jharkhand is not sustainable in law. The name of the Appellant Company be restored to the Register of Companies subject to the specific compliances - appeal allowed - decided in favor of appellant.
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Securities / SEBI
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2020 (2) TMI 609
Fraud scheme of issuance of GDRs - Pledge Agreement and the announcement that the GDRs were successfully subscribed without disclosing the Pledge Agreement to the investors resulted in misleading information to the public and thereby adversely impacting the investors - violation of Section 12A(a), (b), (c) of SEBI Act, 1992 read with Regulations 3(a), (b), (c), (d) and 4(1) of PFUTP Regulations, 2003 - HELD THAT:- Contention in the order that it is a fraudulent scheme created by the appellants along with some other entities cannot be faulted. In this context, it is relevant to note that in our order in the matter of PAN Asia Advisors Limited [ 2016 (12) TMI 1202 - SECURITIES APPELLATE TRIBUNAL MUMBAI] (Lead Manager) and Vintage (subscriber) whose beneficial owner was Arun Panchariya were all found to be guilty of the violations of Indian Securities Laws under the PFUTP Regulations, 2003. The same has been the modus operandi in respect of Cals Refineries Limited [ 2017 (10) TMI 1512 - SECURITIES AND EXCHANGE BOARD OF INDIA] though the entities connected therein were different. The contention that Pledge Agreement was not required to be disclosed under the Listing Agreement is not correct as the Listing Agreement, which forms the very basis of a disclosure based regulatory regime, requires every material information to be disclosed to the Stock Exchange at the earliest, sometime in a matter of minutes and others in a matter of days. When the company has lent the entire proceeds of the GDR issue to the tune of US$ 38.75 million as security for a third party abroad to avail a loan on the basis of that security and thereby potentially jeopardizing the entire proceeds is not a non-event but an important material information affecting all the stakeholders. We would hold that such events have to be disclosed in bold letters so that the investors of the company as well as those who are subscribing to its GDR issue etc. should be fully aware of those highly material facts. Arguments on delay in investigation and consequently affecting natural justice are also devoid of any merit in the matter since this Tribunal is aware of the complexity involved in the entire manipulative GDR issue. We also do not find any deficiency in the finding in the impugned order that money has been brought in fully by the company starting from December 14, 2010 and ending January 04, 2012 and, therefore, full repayment of loan taken by Vintage was done without resorting to sale in the Indian market as irrelevant. The basic question to be answered is whether the issue was subscribed by a loan taken by Vintage on the basis of pledging the proceeds of the GDR issue as security for the said loan taken by a third party and that too a party located abroad and whether sufficient disclosures of material events associated with the issue was properly done. We are of the considered view that the method adopted by the appellants was vitiated through fraud and hence finally whether the money has come back or not is relevant in the facts and circumstances. We are of the opinion that imposition of the restraint on the appellants herein has been done taking all the relevant factors into account as in similar matters like Cals Refineries Limited [ 2017 (10) TMI 1512 - SECURITIES AND EXCHANGE BOARD OF INDIA] the period of restraint imposed on the appellants was 10 years while in the instant matter restraint is only for 5 years.
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Service Tax
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2020 (2) TMI 608
Demand of service tax alongwith interest - amount in dispute has already been paid by the respondent but the interest is not paid - recovery of interest. As per (ASHOK JINDAL) - MEMEBR (JUDICIAL) - HELD THAT:- The amount in dispute has already been paid by the respondent. In these circumstances, we do not find any merit in the appeal, accordingly, the appeal is dismissed. As per (SANJIV SRIVASTAVA) - MEMBER (TECHNICAL) - HELD THAT:- The respondents though have paid the paid the tax/ duty have not deposited the interest due on account of delay in payment of the tax/ duty. Hence when Commissioner (Appeal) has set aside the proceedings for demand of tax/ duty, it would impact the recovery of interest which has not been paid by the respondents. It is well settled law and Hon ble Apex Court has constantly held that demand of interest under a fiscal statue is absolute liability and arises on the account of late payment of tax from the due date. Since the liability is absolute no separate proceedings are required for recovery of interest. In case of admitted duty/ tax liability if there is delay in payment of duty/ tax, the revenue should proceed to recover the interest due on the said admitted tax/ duty along with the admitted duty/ tax. Thus, recovery of interest under section 11AB of the Central Excise Act, 1944/ Section 75 of the Finance Act, 1994 is not a consequence of confirmation of demand made in terms of Section 11A of Central Excise Act, 1944/ Section 75 of Finance Act, 1994 but is a consequence of delay in payment of duty/ tax. Hence just for the reason that Commissioner (Appeal) has held that demand of duty/ tax cannot be sustained for the reason that assessee has already paid the duty/ tax would not come in the way of recovery of interest that I due for the reason of delay in payment of tax. The interest that is due needs to be recovered as sums due to the government by application of provisions of Section 11 of Central Excise Act, 1944.
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2020 (2) TMI 607
CENVAT credit - input services or not - workmen compensation insurance policy in respect of employees - HELD THAT:- It is very clear that the appellant is engaged in providing security services and detective agency service. To cover the risk of bearing the liability of payment of compensation to the employees in case of any mis-happening, appellant subscribed to said insurance policy for their employees - Therefore, the expenditure incurred was for running of the business and therefore, the said service has to be held to be input service. Therefore, the service tax paid on workmen compensation insurance premium is admissible as cenvat credit. Credit allowed - appeal allowed - decided in favor of appellant.
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2020 (2) TMI 569
Service or not - appellant, Kerala Cooperative Deposit Guarantee Fund Board is constituted, under Kerala Cooperative Deposit Guarantee Scheme, 2012 for administration of Cooperative deposit fund, by Government of Kerala - whether the activity of the appellant is identical to the service rendered by Deposit Insurance And Credit Guarantee Corporation (DICGC) in the case of [DICGC [ 2015 (5) TMI 143 - CESTAT MUMBAI ] ? - HELD THAT:- In terms of Section 65 B (44) of Finance Act, 1994 Service is any activity carried out by a person for another for consideration and includes a declared service . Some exclusions are provided in the said Section itself like an activity constituting merely a transaction in money or actionable claim etc. - The appellant claims that they are not collecting any consideration for any particular service rendered but are only receiving contribution towards building a corpus fund and therefore, no service is involved. The collection of contribution to build a corpus fund to secure the depositors interest is not a mere transaction in money. The service rendered by the appellants does not find place either in the exclusion or in the Negative List. Therefore, the Learned Commissioner has correctly concluded that the activity undertaken by the appellants is not transaction in money. Further, Learned Commissioner referring to the Indian Contract Act, 1872 shows that the premium collected by the appellants constitutes a consideration as defined under Section 2(d) of the said Act. Learned Commissioner has relied upon the case of Deposit Insurance and Credit Guarantee Corporation. The appellants argued that it would be pertinent to note that the analogy of the Deposit Insurance and Credit Guarantee Corporation of India (DICGC) does not apply in the instant case - the Tribunal in the case has gone into various aspects and have concluded that it is clear that deposit insurance undertaken by the appellant falls within ambit of general insurance business defined in Section 65(49) read with Section 65(105)(d) of the Finance Act, 1994 - the activity of the appellant is same as that of DICGC and if DICGC is liable to pay Service Tax so is the appellant liable to pay Service Tax. Penalty - HELD THAT:- The appellants are a body constituted by the Government. There are a number of decisions by the Tribunal and Higher Courts that mens rea cannot be attributed to the Public Sector Units. The appellant is a body constituted by Government. Therefore, it is not expedient and necessitated to impose penalties. Therefore, while confirming the duty demand along with interest, the penalties imposed under Section 77 78 are liable to be set aside, by invoking the provisions of Section 80 of the Finance Act, 1994. Appeal allowed in part.
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2020 (2) TMI 567
Levy of service tax - Commission received by appellant from Money Exchange Houses abroad - Service charges paid to Foreign Banks against the service received by the appellant-bank - Service charges paid to Master Card International - export of services or not - Circular No.111/5/2009-ST dated 24.2.2009 - benefit of exchange houses - extended period of limitation. Commission received by appellant from Money Exchange Houses abroad - HELD THAT:- This issue is no more res integra and has been consistently held by the Tribunal as export of service and therefore, not liable to service tax under Finance Act, 1994 - Further, in the case of Kerala State Financial Enterprises Ltd. [2010 (10) TMI 801 - CESTAT, BANGALORE], this Tribunal by relying upon the decision in the case of Muthoot Fincorp Ltd. [2009 (8) TMI 236 - CESTAT, BANGALORE] held that the assessee is not liable to service tax as the same falls under the definition of export of service - the appellants are not liable to pay service tax as the service rendered by the appellant fall in the definition of export of service. Service charges paid to Foreign Banks against the service received by the appellant-bank - Service charges paid to Master Card International - HELD THAT:- The said services fall in the definition of Import of Service and the same was made liable to service tax on reverse charge basis with effect from 18.4.2006 in view of the decision of the Bombay High Court in the case of Indian National Ship Owners Association [2008 (12) TMI 41 - BOMBAY HIGH COURT]. Therefore, up to 18.4.2006, appellants are not liable to pay service tax on reverse charge basis. Extended period of limitation - HELD THAT:- Commissioner himself has admitted that short-payment of service tax is not deliberate but owing to the reason of system failure. Further, the Commissioner has dropped the penalty under Section 78 by resorting to Section 80 of the Finance Act. Once the penalty under Section 78 is dropped, it means that the Original Authority did not find that there was an intention to evade payment of service tax on the part of the appellant. The essential condition for invoking the extended period of limitation is that there should be an intention to evade payment of service tax and the same is absent in the present case and therefore the extended period of limitation cannot be invoked - In the present case, the show-cause notice was issued on 3.9.2008 for the period 1.9.2004 to 31.7.2007, and the entire period up to 31.3.2007 is barred by limitation. Appeal allowed - decided in favor of appellant.
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Central Excise
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2020 (2) TMI 606
Proportionate reversal of CENVAT Credit - dispute relates to availment of Cenvat Credit on same set of invoices twice and availment of input credit of duty more than the duty amount shown in the relevant invoices for the period 2014-15 - HELD THAT:- The Appellant has also produced a Chartered Accountant s certificate showing the reversals made for the FY 2014-15 on account of following the procedure as per Rule 6(3) of the CCR, 2004. Also a verification report as submitted by the Range office of the Appellant is placed on record which shows that the Appellant has actually reversed Cenvat credit following the said process for FY 2014-15. From the above noted facts, I find that the Appellant cannot be asked to pay more than what it has actually availed. The Appellant cannot be asked to reverse more than the actual Cenvat credit availed by the Appellant and based on the Chartered Accountant s certificate and Range Officer s report, there is no doubt as to the fact that the Appellant has actually followed the process of proportionate reversal under Rule 6(3) of the CCR, 2004. Thus, the demand is set aside on the above ground. Imposition of penalty - HELD THAT:- The disputed amount had been paid before the issuance of the show cause notice, and the entire amount was paid along with interest. Therefore, the payment of duty in the instant case should have been treated as payment of central excise duty under Section 11A(2B) of the Act and the show cause notice should not have been issued. Additionally, the Revenue has not been able to prove beyond reasonable doubt the presence of fraud, collusion, willful misstatement or suppression of facts on the part of the appellant. Therefore, imposition of penalty under section 11AC of the Act is unwarranted. Appeal allowed - decided in favor of appellant.
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2020 (2) TMI 605
Demand of Interest - whether the Commissioner (Appeal) was justified in demanding interest along with the duty as determined by the Adjudicating authority? - HELD THAT:- The matter went upto the Hon ble Supreme Court for the demand of duty in respect of the earlier period where the Hon ble Supreme Court decided the case on merit in favour of the Revenue and set aside the penalties. Section 11AB deals with interest on delayed payment of duty. Sub Section (1) of Section 11AB provides that where any duty of excise has not been levied or paid etc. the person who is liable to pay the duty as determined under Sub-Section (2) or has paid the duty under sub Section (2) of Section 11A shall in addition to the duty, be liable to pay interest. The expressions shall, in addition to the duty, be liable to pay interest in Section 11AB(i) of the Act, 1944 as it stood during the relevant period make it clear that the liability to pay interest is linked with the delayed payment of duty as determined under Section 11A of the Act, 1944. The Commissioner (Appeals) proceeded on the basis of Section 11A(14) of the Act, 1944 which was not introduced, during the material period, but the Order of the Commissioner (Appeals) is required to be upheld, after analyzing Section 11AB of the Act 1944 as it stood during the relevant period. There are no reason to interfere the order of the Commissioner (Appeals) - appeal dismissed - decided against appellant.
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2020 (2) TMI 604
Demand of interest on interest - appellant is already sanctioned refund alongwith the interest - HELD THAT:- Section 11B of the Central Excise Act, 1944 provides for refund of duty paid. If the refund is not sanctioned within prescribed time limit, a provision has been made under Section 11BB for payment of interest. However, there is no provision for payment of interest on such interest if the interest itself was paid belatedly. The question of law which arises is when there is no explicit provision for payment of interest on interest, whether it can be paid. This question of law was decided by Three Member Bench of the Apex Court in the case of COMMISSIONER OF INCOME TAX, GUJARAT VERSUS GUJARAT FLUORO CHEMICALS [ 2013 (10) TMI 117 - SUPREME COURT] , in which, a batch of SLP were disposed off. Although the case pertains to the income tax, the question of law is identical to the present one inasmuch as where the interest on the refund is paid belatedly, whether the assessee is entitled to interest on such interest, in the absence of any explicit provisions of law for such payment. The appellant is not entitled for interest on interest and there is no infirmity in the impugned order rejecting such a claim for interest on interest - Appeal dismissed - decided against appellant.
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2020 (2) TMI 603
Clandestine removal - shortage of stock - demand based on electricity consumption - whether the demand is based on assumptions and presumptions or not - corroborative evidences or not - CENVAT credit - HELD THAT:- The rusted wire rods found during the course of stock taking an recorded in the panchnama have arisen out of the stock of wire rods recorded in the production records maintained by the respondents, and hence they continue to be part of the stock available with them. It is not the case of the department in appeal that this rusted stock have been accounted elsewhere in the production records as old and rusted wire rods in coil form/ scarp. Commissioner is correct in his conclusion that the goods were entered in the production records maintained by the respondents only after quality inspection and clearance. During the period of demand it was for the respondent assessee to determine at which stage the he enters the finished goods in his production records unlike the earlier period when an RG-1 stage was prescribed by the department. There seem to be no error in the approach adopted by the respondent in entering the goods in the production records only after the completion of quality control checks. Undisputedly though production was happening on the national/ public holidays, the goods could not have been entered in the production records awaiting the quality inspection which would happen on subsequent days. After comparing all the records and returns it is found that production declared by the respondents in the ER- 1 returns is higher than the production recorded in the private records. Nothing has been put forth in the appeal by the revenue that the findings and discussions are incorrect in any way. ER- return is the statutory return prescribed under Central Excise Law. If the total production declared in ER-1 return is higher than that computed production on the basis of private records, there are no merits in submission made by the revenue, that production in RG-1 register do not tally with private records. Hence the issue on this account is answered in favour of the respondents. CENVAT credit - HELD THAT:- It may be pointed out that admissibility of CENVAT Credit is linked to the fact of receipt of duty paid inputs within the manufactory under the cover of duty paying document (viz invoice) - In the present case the demand for denial of Cenvat Credit is sought to be made on the basis of consumption, which is contrary to the scheme of Cenvat Credit Rules. Once there is no dispute about the actual receipt of duty paid inputs under the cover of duty paying documents, the Cenvat Credit cannot be denied subsequently by referring to consumption of the same. Appeal dismissed - decided against Revenue.
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2020 (2) TMI 602
Interest on delayed refunds - denial of interest for the pre-deposit before 06.08.2014 - relevant date for calculation of interest - HELD THAT:- The issue has been settled by this Tribunal in the case of M/S. MARSHALL FOUNDRY ENGG. PVT. LTD., M/S. MARSHALL AUTO CAST PVT. LTD., M/S. MARSHALL FOUNDRY WORKS PVT. LTD., M/S. MARSHALL CASTING LIMITED AND M/S. MARSHAL ATUT INDUSTRIES LIMITED VERSUS COMMISSIONER OF CGST, FARIDABAD [ 2019 (11) TMI 1269 - CESTAT CHANDIGARH] where it was held that appellants are not entitled to claim interest on delay refund from the date of deposit till its realization. The appellant is entitled to claim the interest on delay refund from the date of deposit till its realization - Appeal allowed - decided in favor of appellant.
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2020 (2) TMI 590
Maintainability of appeal - Section 35G of the Central Excise Act, 1944 - eligibility for benefit of Exemption N/N. 39/2001-CE dated 31.07.2001 - goods manufactured on such plant and machineries that were installed after cut off date 31.12.2005 - expansion of the unit after cut-off date 31.12.2005 - extended period of limitation - HELD THAT:- Reliance can be placed in the case of COMMISSIONER, CENTRAL GST AND CENTRAL EXCISE VERSUS M/S RATNAMANI METALS AND TUBES LTD. [2019 (9) TMI 1275 - GUJARAT HIGH COURT] where it was held that The applicability of Notification No.108/95-CE dated 28.8.1995 is subject matter of the appeal. Such notification has a direct bearing on the determination of the rate of duty for the purposes of assessment. Under the circumstances, in the light of the provisions of section 35G read with section 35L of the Central Excise Act, 1944, these appeals are not maintainable before this court. The present Tax Appeal is not maintainable before this Court and the only remedy available to the revenue is to file an appeal before the Supreme Court under Section 35L of the Act 1944 - Appeal disposed off.
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CST, VAT & Sales Tax
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2020 (2) TMI 601
Recovery of arrear of tax - charge was created in respect of the property - HELD THAT:- The facts are not in dispute that the registered dealer was in arrears of tax and therefore by virtue of section 24 of the Tamil Nadu General Sales Tax Act, 1959 and Section 42 of the TNVAT Act, 2006, a charge over the property of such defaulting dealer stood created in favour of the 1st respondent Commercial Tax Department Further as per Section 100 of the Transfer of Property Act, 1882 also a charge is said to have been created in favour of the 1st respondent as if the dealer had created simple mortgage in favour of the 1st respondent. It was held that section 24 (2) of the Tamil Nadu General Sales Tax Act, 1959 does not provide anything contrary to section 100 of the Transfer of Property Act, 1882 and unless a provision is made in any statute contrary to the rule in Section 100 of the aforesaid Act, a bona fide purchaser for consideration without notice of charge is protected - On facts it was concluded that the appellant had no notice prior to the transfer. It also held that there was no material to show that the appellants had constructive notice of the charge and no submissions were made by the respondent on this issue. Under those circumstances, the Division Bench of this Court took a view that the property in the hands of the appellants for a value above consideration without notice of the sales tax arrears of the defaulting company or the subsequent charge created over the property was free in the hands of the appellant therein. Coming to the facts of the present case, it is noticed that the vendor of the property from whom the petitioner s vendor purchased the property was in arrears of sales tax to the 1st respondent. Though the property had been subject matter of encumbrance as early as 2011, at the behest of the 1st respondent Commercial Tax Department, it was not reflected in the encumbrance certificate obtained by the petitioner s vendor on 19.4.2012 or by the petitioner himself on 12.10.2012 and on 6.12.2012. Only in the encumbrance certificate issued by the second respondent through online portal dated 24.6.2016 the charge has been reflected in favour of the 1st respondent - it is incumbent on the petitioner as purchaser to have also made a physical search in the records before taking a final decision as to whether the property was free from any encumbrance or not. The present writ petition is liable to be dismissed - decided against petitioner.
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2020 (2) TMI 600
Demand of differential tax - imposition of penalty - settlement of disputes relating to arrears of tax, penalty or interest pertaining to sales tax - application of settlement rejected on the ground that the petitioner had not paid the amounts under section 7(1)(c) Tamil Nadu Sales Tax (Settlement of Disputes) Act, 2002 - HELD THAT:- The provisions of Tamil Nadu Sales Tax (Settlement of Disputes) Act, 2002 provides for an expeditious settlement of disputes relating to arrears of tax, penalty or interest pertaining to sales tax and the matters connected therewith or incidental thereto. The rate applicable in determining the amount payable for settling the dispute is provided in Section 7 of the said Act. This is a case where the disputed tax is lesser than the penalty imposed as a result of which if the case is settled in Section 7(1)(b) of the Tamil Nadu Sales Tax (Settlement of Disputes) Act, 2002, amount payable by the petitioner is far below 15% of the penalty that would have been payable by the petitioner if the case was pertaining to penalty simplicitor and was to be settled under Section 7(1)(c) of the Tamil Nadu Sales Tax (Settlement of Disputes) Act, 2002. The provision of the Tamil Nadu Sales Tax (Settlement of Disputes) Act, 2002 is to be read plainly without any addition or deletion - Though the settlement of dispute is to prejudice of the revenue, nevertheless it is on account of the defect in the method prescribed under the provisions of the Tamil Nadu Sales Tax (Settlement of Disputes) Act, 2002. Therefore, the impugned order cannot be sustained. Though, the petitioner benefits by being a lesser amount under Section 7(1)(b) of the Tamil Nadu Sales Tax (Settlement of Disputes) Act, 2002, nevertheless it is purely on account of the defect in the Act. The benefit which flows from such defective drafting of the Act cannot be denied based on the presumed and assured intention of the legislature. Unless the law was amended, the benefit of such enactment cannot be denied - the impugned order passed by the respondent is unsustainable - petition allowed - decided in favor of petitioner.
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2020 (2) TMI 599
Demand of VAT u/s section 5/6 of the TN VAT Act, 2006 - petitioner s father had settled an immovable property along with an existing house in favour of the petitioner and her sister in the year 2004 - the impugned order has been passed without following principles of natural justice and without actually examining whether indeed the petitioner has rendered any works contract as has been confirmed the impugned order - HELD THAT:- The intention of the State Legislature was to levy and collect stamp duty at 1% was on the cost of the proposed construction or the value of construction or the consideration specified in the agreement whichever was higher relating to proposed construction of building at the stage of construction and not thereafter. Expression building included any unit proposed to be construct - It was not intended to cover situation where the building was already constructed. In the facts of the case, it is evident that there was indeed a sale of flat/apartment by the petitioner and therefore stamp duty payable would have been under Article 23 of the Schedule-I to the Indian Stamp Act, 1899. The truncated valuation of UDS in the land for payment of stamp duty and registration of Construction Agreement on payment of stamp duty at 1% + 1% registration in the case of built up unit was not intended under the Stamp Act, 1899 - There was no works contract by the petitioner exigible to tax under the provisions of the TN VAT Act, 2006. At best, such a tax liability would have been payable only by the 3rd respondent and not on the petitioner. The issue needs proper examination - appropriate action ought to have been taken only by the authorities under the Stamp Act, 1889 under Section 47 A of the Stamp Act, 1899, in accordance with law and not from the petitioner under the provisions of the TN VAT Act, 2006 - the impugned order demanding tax under the provisions of the TN VAT Act, 2006, is unsustainable. Petition allowed.
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2020 (2) TMI 598
Maintainability of appeal - Section 46 of the Madhya Pradesh VAT Act, 2002 - fulfillment of condition of pre-deposit - correctness of the orders of assessment and rejection of applications for correction of error and further claiming exemption under Notification No.35 dated 23.10.1981 - HELD THAT:- The petitioner has already made the statutory compliance in terms of sub-section (6) of Section 46 of the Act by making payment of pre-deposit on 07.04.2018. The said predeposit has been made by the petitioner just on the next day after the two weeks time extended by this Court in review petition expired on 06.04.2018. Thus, there was delay of only one day in making the necessary pre-deposit. There is nothing on record to suggest that the delay on the part of the petitioner was intentional or for any ulterior purpose. Taking the totality of facts and circumstances into consideration, there are no prejudice would be caused to any of the parties if the appeal is heard on merits - the delay of one day in making pre-deposit is condoned and thus, the impugned order passed by the Appellate Board is set aside. The Appellate Board is directed to decide the appeal on merits in accordance with law - petition disposed off.
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2020 (2) TMI 596
Levy of tax on Trade discount - Petitioner submits that the discount offered by the manufacturer would actually reduce the price in the hands of the manufacturer who sold the cars to the Petitioner and such discount cannot be taxed in the hands of the Petitioner - HELD THAT:- There is no dispute that the Petitioner is a dealer in motor cars and had received trade discount from the manufacturer from whom it had purchased the cars for retail sales at its show rooms. The trade discount which has been offered by the dealer is an incentive given by the manufacturer based on the performance of the Petitioner in the retail market. The trade discount offered by the manufacturer to the Petitioner does not in any manner enhance the taxable value of the motor cars sold by the Petitioner to the retail buyer at its show rooms. There is no basis on which the aforesaid amount of ₹ 3,48,08,441/- can be taxed as taxable turn over of the Petitioner. The two transactions are independent transactions. One transaction is between the manufacturer who is also a dealer who had passed on incentives to the Petitioner and the second transaction between the Petitioner and its buyers of its retail show room to whom the Petitioner has sold the cars. As these two are independent transactions there is no basis on which the trade discount passed to it by the manufacturer(dealer) to the Petitioner can be added in to the taxable turn over of the Petitioner for the purpose of assessment under the TNVAT Act, 2006. The writ petition stands allowed even though the Petitioner has an alternate remedy by way of appeal.
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Indian Laws
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2020 (2) TMI 586
Compliance with paragraph 6.4 of the Master Circular dated 1st July, 2015 issued by the Reserve Bank of India (RBI) - default in repayment of debt - restructuring of petitioner's debt - validity of retrospective declaration of the petitioner to be in default and an NPA with effect from 1st July, 2011. HELD THAT:- The petitioner s prayer is that this Circular should be complied with insofar as it lays down the Prudential Norms on Income Recognition Assets Classification and Provisioning pertaining to advances. Now, this part of the Circular would require a closer look. The said aspect is found in Part A, 3, 4 and 5. That says, an asset can be termed as Non Performing Asset, if it satisfies the criteria laid down in the definition of this expression. Firstly, this part says that in line with the international practices and as per the recommendations made by the Committee on the Financial System, the Reserve Bank of India has introduced, in a phased manner, the norms styled as prudential norms for income recognition, asset classification and provisioning for the advances portfolio of the banks. Pertinently, Mr.Kamdar does not point out that it is to move towards greater consistency and transparency in the published accounts that the policy has been brought into effect. It is clarified that this policy should be objective and based on record of recovery rather than on any subjective considerations. Likewise, the classification of assets of banks has to be done on the basis of objective criteria, which would ensure a uniform and consistent application of the norms. Importantly, the provisioning should be made on the basis of the classification of assets based on the period for which the asset has remained non-performing and the availability of security and the realisable value thereof. The financial assets which can be sold to the Securitisation Company and Reconstruction Company by any bank or financial institution are non-performing assets, including a non-performing bond/debenture, a Standard Asset where the asset is under consortium/multiple banking arrangements and atleast 75% by value of the asset is classified as non-performing asset in the books of other banks/financial institutions and atleast 75% by value of the banks/financial institutions who are under the consortium/multiple banking arrangements agree to the sale of the asset. Secondly, a procedure has to be followed and in the case of consortium/multiple banking arrangements, if 75% (by value) of the banks/financial institutions decide to accept the offer, the remaining banks/financial institutions will be obligated to accept the offer. However, this is preceded by an assessment of each bank/ financial institution of the value offered by the Securitisation Company/Reconstruction Company for the financial asset and decide whether to accept or reject the offer. Further, there cannot be a transfer to this Securitisation Company/ Reconstruction Company at a contingent price, whereby, in the event of shortfall in the realization by the Securitisation Company/Reconstruction Company, the banks/financial institutions would have to bear a part of the shortfall. Finally, if the auction process is used for sale of non-performing assets to Securitisation Companies/ Reconstruction Companies, that should be more transparent and complying with what is laid down in para 6.4 clause (d)(iv). It is the first respondent, which is accusing the petitioner of breach and violation of the packages and the conditions thereof. The bank accuses the petitioner of not fulfilling its commitment or the essential conditions under the packages. This may be or may not be correct, but it is definitely a version contrary to that of the petitioner. In such circumstances, how arbitrariness, much less, mala fides, can be attributed to a public financial institution without resolution of the factual disputes, is unclear to us. In other words, this is not an undisputed factual position, but a highly disputed one. It is in these circumstances that we are disinclined to grant any relief. It may be that the seventh respondent has addressed a letter to the petitioner, copy of which is at page 322 of the paper-book, and it claims that it is entitled to recover from the borrowers or guarantors the total dues of the banks alongwith the interest at contractual rate. It makes reference to certain banks mentioned in Schedule-1. This may not be inclusive of all the debts and dues to even Canara Bank. Therefore, this communication may say that the assignment agreements are with Union Bank of India, Andhra Bank, ICICI Bank Limited, Axis Bank, Bank of Baroda, Bank of India, Dena Bank, Indian Overseas Bank, Punjab National Bank, State Bank of India, Oriental Bank of Commerce and Central Bank of India, still, the petitioner has impleaded Canara Bank, Corporation Bank, Indian Bank, Vijaya Bank, IDBI Bank and Life Insurance Corporation of India Limited, all of which are not a party to this agreement. In these circumstances, marking of the documents in favour of these entities would not suffice. Petition dismissed.
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2020 (2) TMI 572
Anticipatory bail in connection with Complaint Case being Economic Offence (Complaint) Case registered under section 276B of the Income Tax Act, 1961 - HELD THAT:- As a fit case where the above named petitioner be given the privilege of anticipatory bail. Hence, in the event of his arrest or surrender within a period of four weeks from the date of this order, he shall be released on bail on furnishing bail bond of ₹ 25,000/- (Rupees Twenty Five Thousand) with two sureties of the like amount each to the satisfaction of learned Special Judge (Economic Offences), Ranchi, in connection with Complaint Case being Economic Offence (Complaint) Case No. 9 of 2018 with the condition that the petitioner will cooperate with the trial of the case and other conditions laid down under section 438 (2) Cr. P.C.
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