TMI Tax Updates - e-Newsletter
February 8, 2020
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Indian Laws
Highlights / Catch Notes
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GST:
Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 117(1A) of the Central Goods and Service Tax Rules, 2017 in certain cases
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GST:
Release of confiscated goods alongwith the truck - the final order of confiscation came to be passed on the very same date on which the notice was issued. - We are convinced with the submissions of with regard to the legality and validity of the impugned order of confiscation in the Form GST MOV-11 - Order quashed - Matter restored.
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GST:
Levy of Interest - whether there is any shortfall in payment of tax / GST - input tax credit - Let the authorities examine the issue and the benefits accorded to the writ petitioner
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Income Tax:
TDS u/s 194H - amount retained by a bank / credit card agency out of the sale consideration of tickets booked through credit card - Whether principal and agent relationship between the assessee and the bank / credit card agencies ? - Held No - No TDS liability.
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Income Tax:
Liability of directors of private company in liquidation u/s 179 - with a view to protect the interest of both, the writ applicant as well as Revenue, we are inclined to quash the impugned order and give one opportunity to the Revenue to initiate the proceedings afresh by issuance of fresh show-cause notice with all necessary details so that the writ-applicant can meet with the case of the Revenue.
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Income Tax:
Penalty u/s 271AAB(1)(c) - Defective notice - the matter written in the body of the notice issued u/s 274 of the Act does not refer to the charges of provision of Section 271AAB of the Act makes the alleged notice defective and invalid and thus deserves to be quashed.
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Income Tax:
TP Adjustment - The Legislature has never shown an intention to treat the same international transaction in two different ways in the hands of two associated enterprises such that there would be arm’s length price adjustment at least in the hands of one of the associated enterprises. Hence, the approach adopted by the DRP/TPO is not acceptable.
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Income Tax:
Addition u/s 40A - payment towards electricity charges in cash to the Ajmer Vidyut Nigam Limited (AVVNL) exceeding permissible limits - the genuineness of the transactions and it being free from vice of any device of evasion of tax is relevant consideration - No additions
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Income Tax:
Disallowance of commission expenses - Once the sample size has been selected by the AO and which has been accepted by the ld CIT(A), the findings on examination of such sample size should be correlated and could reasonably be held representative only proportionality and not of the whole data under examination. In the instant case, basis the sample size of less than 1% which remains unverified, it is incorrect to hold that 100% of claim of commission expenditure remains unsubstantiated
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Income Tax:
Revision u/s 263 - The law is well settled that if there is a failure on the part of AO to make an enquiry on the issue which calls for an enquiry, that by itself will render the order of assessment erroneous and prejudicial to the interests of the revenue.
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Income Tax:
Additional ground - Claim of expenditure incurred on abundant project - assessee could not inadvertently make the aforesaid claim in the return of income - The words 'could not have been raised' must be construed liberally and not strictly. There may be several factors justifying the raising of a new plea in an appeal and each case must be considered on its own facts.
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Income Tax:
Genuineness of expenditure - Before the lower authorities no books of accounts were produced to show the genuineness of the expenses claimed on how the transactions have been entered into. The above addition as made on the basis of the search and seizure operation u/s 132 and the enquiries made by the revenue. - Additions confirmed.
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Customs:
Import of Pigeon (peas (Cajanus cajan) / Toor Dal - Import of restricted item or not - validity of notification - As far as the DGFT is concerned, the power has been given to the Director General of Foreign Trade, the Additional Director General and others to sign to authenticate all instruments made and executed in the name of the President of India (Rule 12). - there is no merit in the contention urged by the learned counsel for the petitioner.
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Customs:
Mis-declaration of ‘country of origin’ of goods in the bills of entry - In the present case the appellant has not claimed any preferential rate of duty. After examining the provisions of Section 111(d) and 111(m), it is found that both the provisions are not applicable in the fact and circumstances of this case. Further, no mala fides has been brought on record on the part of appellant so as to impose penalties
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Corporate Law:
Companies (Incorporation) Amendment Rules, 2020
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Indian Laws:
THE DIRECT TAX VIVAD SE VISHWAS BILL, 2020 - AS INTRODUCED IN LOK SABHA
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Service Tax:
Condonation of delay in filing appeal before the tribunal- While considering the applications for condonation of delay, what is to be seen is whether the interest of revenue will stand protected, even while recognizing the right of the assesse to exercise the statutory remedies available to the assesse and the statutory right of appeal cannot be made redundant by dismissing the application for condonation of delay on technical grounds.
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Service Tax:
SEZ unit - refund - services received for authorized operation - those services which are not specifically approved but the said services are used for authorized operation of the company, appellant still be eligible for the refund in view of the Section 26 and Section 51 of the SEZ Act
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Service Tax:
BAS - cable T.V. operator providing internet services through their cable network to their clients - Nothing in the agreement suggests that the appellant and Sify have an agreement on Principal to Principal basis - in the present case based on the nature of the agreement the appellant is providing services to M/s Sify Limited which fall under the category of business auxiliary service.
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Service Tax:
Recovery of interest u/s 87 without issuance of SCN - in cases where duty has been paid belatedly and interest has not been paid, interest needs to be demanded and recovered following the due process of demand and adjudication. In such cases, the period of limitation as prescribed in Section 11A applies for demand of interest.
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Service Tax:
100% EOU - refund of CENVAT Credit - export of services - Since the amended rule w.e.f. 01.04.2012 does not provide for establishment of nexus between the input and the output services and the benefit of refund is to be extended only on compliance of the formula prescribed therein, the denial of refund benefit on the ground of non-establishment of nexus cannot be sustained.
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Service Tax:
Extend period of limitation - Short payment of service tax - wilful suppression of facts - This Tribunal has repeatedly held that if the information is available in the balance sheet which is a public document then allegations of suppression cannot sustain.
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Service Tax:
Condonation of delay in filing appeal before Commissioner (Appeals) and filing petition before HC - Levy of service tax - The petitioner cannot be allowed to approach the 2nd respondent Appellate Commissioner as the petitioner has been negligent in neither participating in the adjudicatory mechanism provided under the Act nor in not filing a statutory appeal in time.
Articles
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2020 (2) TMI 281
Levy of IGST on Ocean Freight - Reverse charge - Vires of N/N. 8/2017 - Integrated Tax (Rate, issued on 28.06.2017 and Entry 10 of the N/N. 10/2017 Integrated Tax (Rate) also dated 28.06.2017 - Respondents seeks an adjournment to take instructions whether the Respondents have accepted the said decision or they are proceeding to challenge the same before the Supreme Court - HELD THAT:- At request of learned counsel for the Respondents, adjourned to 18.05.2020.
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2020 (2) TMI 280
Extension of date for filing of the GST Annual Return and GST Audit Form (Form 9 and Form 9C) - transition to GST regime - HELD THAT:- It is the conceded position that the date for filing return has been extended till 7.2.2020. In such circumstances, no adjudication is required on the petition. This petition is disposed of however, binding the respondent Union of India to take a decision on the representation to be filed on behalf of the petitioners, within one week of its filing.
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2020 (2) TMI 279
Stay on operation of the direction issued by the authority - profiteering - HELD THAT:- Stay on operation is granted - the respondents are not restrained from undertaking an enquiry if justified, independent of the directions issued in the impugned order as aforenoted. The deposit made by the petitioner in terms of the impugned order shall be subject to further orders in the writ petition. List on 16.09.2020.
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2020 (2) TMI 278
Reopening of portal for filing of TRAN-1 Form - carry forward of input tax credit from pre-GST regime - transition to GST regime - HELD THAT:- We have permitted the advocates for the Petitioners to address on the challenge to the Rule. The Respondents have completed their oral arguments. The learned counsel for the Petitioners seek time for rejoinder on the issue of the validity of the Rule. Petition to stand over to 13 February 2020 at 3.00 p.m.
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2020 (2) TMI 277
Release of detained goods alongwith the vehicle - violation of procedures for inspection and seizure as clearly enumerated in section 67, 68 129 of the Act - principles of natural justice - HELD THAT:- It is ordered that the vehicle and goods detained in pursuance of the impugned Ext.P4 order shall be immediately released by the 1st respondent to the petitioner on his furnishing bank guarantee for the amounts shown in Ext.P4 - Thereafter, the 1st respondent will duly take up the matter for finalisation of adjudication proceedings pursuant to Ext.P4 and shall afford adequate opportunity of being heard to the petitioner through their representative/counsel, if any and then will pass orders finalising such adjudication proceedings, without much delay, preferably within a period of 6 weeks from the date of production of the certified copy of this judgment. Petition disposed off.
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2020 (2) TMI 276
Levy of IGST on Ocean Freight - Reverse Charge - Vires of N/N. 8/2017-Integrated Tax (Rate) dated 28.06.2017 and Entry 10 of the Notification No.10/2017 Integrated Tax (Rate) dated 28.06.2017 - services supplied by a person located in non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India - HELD THAT:- This petition need not be adjudicated further in view of the decision in the case of MOHIT MINERALS PVT LTD VERSUS UNION OF INDIA 1 OTHER [ 2020 (1) TMI 974 - GUJARAT HIGH COURT] where it was held that The impugned Notification No.8/2017 Integrated Tax (Rate) dated 28th June 2017 and the Entry 10 of the N/N.10/2017 Integrated Tax (Rate) dated 28th June 2017 are declared as ultra vires the Integrated Goods and Services Tax Act, 2017, as they lack legislative competency. Both the Notifications are hereby declared to be unconstitutional . Application disposed off.
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2020 (2) TMI 275
Release of confiscated goods alongwith the truck - legality and validity of the order passed by the authority in the Form GST MOV-11. - interpretation of Sections 129 and 130 of the GST Act - HELD THAT:- As regards the legality and validity of the impugned order of confiscation in the Form GST MOV-11, the submissions of petitioner can be agreed upon. The impugned order of confiscation in Form GST MOV-11 is hereby quashed and set aside. The matter is remitted to the respondent No.2 for fresh consideration so far as the issue of confiscation is concerned - the writ application is allowed in part.
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2020 (2) TMI 274
Levy of Interest - whether there is any shortfall in payment of tax / GST - input tax credit - HELD THAT:- Let the authorities examine the issue and the benefits accorded to the writ petitioner in the judgement M/S COMMERCIAL STEEL ENGINEERING CORPORATION VERSUS THE STATE OF BIHAR, THE JOINT COMMISSIONER OF STATE TAXES PATLIPUTRA CIRCLE, PATNA, THE ASSISTANT COMMISSIONER OF STATE TAXES PATLIPUTRA CIRCLE, PATNA [ 2019 (7) TMI 1452 - PATNA HIGH COURT] , be also made available to the instant writ petitioner. We clarify that all issues are left open to be considered by the authorities with regard to the petitioner s entitlement.
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Income Tax
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2020 (2) TMI 273
Addition u/s 68 - expansion of scope of primary onus - unexplained credit entries /share capital - non discharge of initial onus of proof by assessee to establish by cogent and reliable evidence of the identity of the investor companies, the credit-worthiness of the investors, and genuineness of the transaction - HELD THAT:- The basic issue as framed in para 3.4 of the Judgment [ 2019 (3) TMI 323 - SUPREME COURT] was considered in the light of the facts on record. After noting the relevant decisions, the emerging principles were set out in para 11, in the light of which the facts were considered from para 12 onwards. Finally, the conclusions drawn by the Assessing Officer were found to be correct and it was found that the lower Appellate Authorities had erred in interfering with such conclusions. The Appeal was, therefore, allowed and the order passed by the Assessing Officer was restored. We have gone through the contents in the Review Petition and do not find any substance in the submissions raised therein.
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2020 (2) TMI 272
TDS u/s 194H - amount retained by a bank / credit card agency out of the sale consideration of tickets booked through credit card - Whether principal and agent relationship between the assessee and the bank / credit card agencies ? - HELD THAT:- This Court in CIT Vs. Jet Airways (India) Ltd. [2019 (5) TMI 117 - BOMBAY HIGH COURT has answered the two questions in favour of the assessee and against the revenue. In the said decision, this Court vide affirming the similar findings returned by the Tribunal held that amount retained by a bank / credit card agency out of the sale consideration of tickets booked through credit cards is not covered under the definition of 'commission' or 'brokerage' given in explanation (i) to Section 194H of the Act and in such circumstances, assessee is not liable to deduct tax at source under Section 194H in respect of this amount. Appeal filed by the revenue is dismissed.
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2020 (2) TMI 271
Rectification of mistake - Tribunal restriction of profit of the petitioner on sale and purchase from 3% to 1.5% - HELD THAT:- Section 254(2) of the Act provides that Tribunal may, at any time within six months from the end of the month in which the order was passed, with a view to rectifying any mistake apparent from the record, amend any order passed by it while disposing of the appeal and shall make such amendment if the mistake is brought to its notice by the assessee or by the Assessing Officer. Substance of Section 254(2) of the Act is rectification of mistake apparent from the record. An error or mistake apparent from the record is one which is manifest on the face of the record. No long-drawn hearing is required for rectification of such mistake. In the instant case, what we notice is that not only was there no mistake apparent from the record but in the garb of the Misc. Application, petitioner had sought for review of the final order passed by the Tribunal and for rehearing of the appeal which is not permissible in law. In our view, Writ Petition does not appear to be bonafide. We dismiss both the Writ Petitions and impose cost of ₹ 10,000/- on each of the petitions on the petitioner.
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2020 (2) TMI 270
Deduction u/s 80IB - breach of principles of natural justice - HELD THAT:- There is a CBDT Notification No. 2 of 2011 dated 05.01.2011 which clarifies that projects covered by section 80IB(10) of the Income Tax Act, 1961 would be eligible for deduction under the said provision from the assessment year 2005-06 on-wards. In Ramesh Gunshi Dedhia s case 2014 (8) TMI 1190 - BOMBAY HIGH COURT this notification was not available before the Tribunal as it was issued afterwards. That was the reason why the Appeal has been admitted by this court. He further submits that in later assessment years Tribunal has relied upon the said notification of the CBDT and granted relief to the Appellant. Having heard learned counsel for the parties and having perused the impugned order passed by the Tribunal, we are of the view that the impugned order is required to be set aside for re-hearing of the appeal in accordance with law after giving further opportunity of hearing to the parties.
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2020 (2) TMI 269
Unexplained income u/s 68 - moneys credited in the books as share application money - onus to establish identity of the investor companies - HELD THAT:- Identity of the creditors were not in doubt. Assessee had furnished PAN, copies of the income tax returns of the creditors as well as copy of bank accounts of the three creditors in which the share application money was deposited in order to prove genuineness of the transactions. In so far credit worthiness of the creditors were concerned, Tribunal recorded that bank accounts of the creditors showed that the creditors had funds to make payments for share application money and in this regard, resolutions were also passed by the Board of Directors of the three creditors. Though, assessee was not required to prove source of the source, nonetheless, Tribunal took the view that Assessing Officer had made inquiries through the investigation wing of the department at Kolkata and collected all the materials which proved source of the source. In a thorough consideration of the matter, we are of the view that the first appellate authority had returned a clear finding of fact that assessee had discharged its onus of proving identity of the creditors, genuineness of the transactions and credit-worthiness of the creditors which finding of fact stood affirmed by the Tribunal. There is, thus, concurrent findings of fact by the two lower appellate authorities. Appellant has not been able to show any perversity in the aforesaid findings of fact by the authorities below. - Decided in favour of assessee.
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2020 (2) TMI 268
Block assessment passed u/s 158BC - Absence of mandatory requirement of recording of satisfaction - AO not even recorded any material found during the search showing the undisclosed income of the assessee - HELD THAT:- CBDT had recently issued a Circular No.24/2015 dated 31.12.2015, according to which, where satisfaction is not recorded by the competent authority then appeals against such orders of Tribunal granting relief to the Assessee has to be withdrawn by the Revenue Department. In view of the aforesaid Circular, Mr.T.R.Senthil Kumar does not want to press the appeals on merits and seeks leave of this Court to withdraw the same. Mr.Venkat Narayanan, learned counsel for the Respondent/Assessee has not opposed the same. Accordingly, the appeals are dismissed as withdrawn.
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2020 (2) TMI 267
Liability of directors of private company in liquidation u/s 179 - satisfaction of the condition precedent for taking action under Section 179 of the Act, 1961, viz. that the tax dues cannot be recovered from the Company - HELD THAT:- In the context of Section 179 of the Act, 1961, this Court held that before recovery in respect of the dues from a private company can be initiated against the directors, to make them jointly and severally liable for such dues, it is necessary for the Revenue to establish that such recovery cannot be made against the company and then alone it can reach to the directors who were responsible for the conduct of the business during the previous year in relation to which liability exists. There is no escape from the fact that the perusal of the Notice under Section 179 of the Act, 1961, reveals that the same is totally silent as regards the satisfaction of the condition precedent for taking action under Section 179 of the Act, 1961, viz. that the tax dues cannot be recovered from the Company. In the show-cause notice, there is no whisper of any steps having been taken against the Company for recovery of the outstanding amount. Even in the impugned order, no such details or information has been staled. Question is, whether such an order could be said to be sustainable in law. The answer has to be in the negative. At the same time, in the peculiar facts and circumstances of the case and more particularly, when it has been indicated before us by way of an additional affidavit-in-reply as regards the steps taken against the company for the recovery of the dues, we would like to give one chance to the department to undertake a fresh exercise so far as Section 179 of the Act, 1961, is concerned. If the Show-cause notice is silent including the impugned order, the void left behind in the two documents cannot be filled by way of an affidavit-in-reply. Ultimately, it is the subjective satisfaction of the authority concerned that is important and it should be reflected from the order itself based on some cogent materials. However, with a view to protect the interest of both, the writ applicant as well as Revenue, we are inclined to quash the impugned order and give one opportunity to the Revenue to initiate the proceedings afresh by issuance of fresh show-cause notice with all necessary details so that the writ-applicant can meet with the case of the Revenue. We are inclined to adopt such measure keeping in mind the statement made by the learned counsel Mr.Soparkar that till the fresh proceedings are not completed, his client will not operate the bank account. Writ-application is partly allowed. The impugned notice as well as the order is hereby quashed and set aside. It shall be open for the respondent to issue fresh show-cause notice for the purpose of proceeding against the writ-applicant under Section 179 of the Act, 1961. We would like to give a time bound program so that the proceedings may not go on for an indefinite period. We are also issuing such direction because of the statement being made that the writ-applicant will not operate the bank account till the fresh proceedings are initiated and completed.
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2020 (2) TMI 266
Revision u/s 263 - contention of the petitioner is that the respondent had no basis to come to the conclusion that the orders have been passed erroneously or to dis-prejudice of the revenue as all the issues raised in the order dated 31.03.2015 were pursuant to a notice issued under Section 148 on 24.03.2014 - HELD THAT:- The assessment order passed on 31.03.2015 for the assessment year 2014-15 has not clearly discussed the issue. Instead, it has accepted the returns filed by the petitioner based on the decision of this Court without actually discussing how the revised returns filed by the petitioner under Section 143 (3) of the Income Tax Act was acceptable. At the same time, it is for the petitioner to establish before the respondent as to whether the invocation of Section 263 was justified or not. Hence, the petitioner can be directed to participate in the adjudicatory mechanism prescribed under the Act. Therefore, the petitioner is directed to file its reply to the impugned notice within 30 days from the date of receipt of this order. The respondent shall pass an appropriate order within a period of 30 days thereafter.
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2020 (2) TMI 265
Capital gain - transfer of leasehold rights by the assessee - HELD THAT:- Having gone through the definition of capital assets we note that capital asset is property of any kind held by the assessee. In this case of M/s STP Limited (assessee) is holding lease rights in the property and the assessee has transferred these lease rights in favour of M/s ARA Enterprises Pvt. Ltd. and received the lumpsum amount. Therefore, it falls in the definition of property of any kind held by an assessee and hence subject to capital gain tax. We note that the explanation to Section 2(14) of the Act clearly says that the property includes and shall be deemed to have always included any rights in or in relation to an Indian company, including rights of management or control or any other rights whatsoever. In the assessee s case under consideration, the assessee transferred his lease hold rights in favour of M/s ARA Enterprises Pvt. Ltd and these lease rights fall in the category of any other rights whatsoever . We note that M/s. ARA Enterprises Pvt. has paid ₹ 2,24,00,000/- on 31.03.2010 and balance amount of Ltd. arrear of ₹ 1,32,63,433/- has been paid during the year. These two amounts are basically the consideration for transfer of Leasehold Rights. Thus ₹ 3,56,63,433/- is the consideration for restoration and subsequent transfer of Leasehold Rights. Besides during the current year, M/s. ARA Enterprises Pvt. Ltd. has also paid 50% of the rent payable to Kolkata port Trust. However, this is in the nature of revenue receipt and assessee would keep receiving such income in subsequent years. Assessee has not provided the details of amount, if any, which it might have paid for acquiring the Leasehold Rights. Amount paid if any, would not be much as it was acquired a long time back. Cost of acquiring Leasehold Rights is almost Nil. Hence entire amount of ₹ 3,56,63,433/- is taken to be Long Term Capital Gain of the assessee and income is enhanced by this amount by ld CIT(A) Therefore, having gone through the provision of Section 2(14) and Section 2(47) of the Act, it is evidently clear by reading of these sections, that the assessee has transferred lease hold rights in favour of M/s ARA Enterprises Pvt. Ltd. which is transfer as per Section 2(47) of the Act, therefore, the ld. CIT(A) has rightly computed the capital gain and hence, we confirm the order of the ld. CIT(A). Undisclosed income from license fee - HELD THAT:- We note that it is not clear whether the said amount was paid in pursuance of the agreements between assessee and its sub-lessee in view of the commercial expediency. Since the assessee has failed to prove the commercial expediency therefore we confirm the order passed by the ld. CIT(A).
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2020 (2) TMI 264
Bogus purchases - estimation of income - profit element embedded in these purchase transactions to factorize for profit - HELD THAT:- Primary onus casted upon assessee, to prove the transactions, remained undischarged. The stated factual matrix, in our considered opinion, would make it a fit case to make estimated additions to account for profit element embedded in these purchase transactions to factorize for profit earned by assessee against possible purchase of material in the grey / unorganized market and undue benefit of VAT against such bogus purchases, which learned first appellate authority has rightly done so. Accepting the submissions that the assessee was dealing in low margin item like iron steel which would warrant lower estimation and keeping in view the healthy Gross profit rate of 5.43% already reflected by the assessee, we restrict the estimation to net 5% of alleged bogus purchases of ₹ 3,40,80,030/- which comes to ₹ 17.04 Lacs.- Decided partly in favour of assessee. Disallowance u/s 14A - HELD THAT:- It transpires that the dividend income of ₹ 51,250/- stated to be earned by the assessee has been found to be taxable and Ld. AO has been directed to include the same while computing taxable income. Therefore, there would be no exempt income earned by the assessee and hence, no disallowance u/s 14A would be warranted as held by Hon ble Madras High Court in Chettinad Logistics P. Ltd. [ 2017 (4) TMI 298 - MADRAS HIGH COURT ] as relied upon by Ld. CIT(A). Therefore, finding no fault in the adjudication of Ld. CIT(A), we dismiss this ground of appeal. Disallowance u/s 36(1)(iii) - AO was directed by CIT-A to exclude interest on letter of credit interest on car loan while computing the disallowance and consider only the balance interest component while computing the proportionate disallowance. HELD THAT:- We find that Ld. CIT(A) has clinched the issue in correct perspective and met the assessee s submissions with due application of mind. No fault could be found in the directions of Ld. CIT(A) for exclusion of interest on letter of credit and interest on car loan since the same did not have any nexus with interest free loans advanced by the assessee. Resultantly, this ground stand dismissed. Disallowance u/s 40(a)(ia) on mere reimbursements - HELD THAT:- Undisputed position that emerges is that the assessee has duly deducted tax at source against service charges whereas no tax has been deducted against mere reimbursements. These reimbursements were supported by the supporting bills of the agents and there was no profit element in it. All these expenses were pure reimbursement in nature. This being the case, no TDS was required on such reimbursements. The decision of this Tribunal in Utility Powertech Ltd. V/s ACIT [ 2010 (4) TMI 1063 - ITAT MUMBAI ] also supports the same view. This decision has been rendered after considering the decision of Hon ble Bombay High Court in CIT V/s Siemens Aktiongesellschaft [ 2008 (11) TMI 74 - BOMBAY HIGH COURT] Therefore, we find no fault in the action of Ld. CIT(A) in deleting the same by relying upon the order for AY 2012-13. This ground stands dismissed. - Decided in favour of assessee.
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2020 (2) TMI 263
Reopening of assessment u/s 147 - period of limitation - Re-assessment allegedly framed on 3103-2016 as served only on 18-08-2016 i.e after 140 days - HELD THAT:- Re-assessment is not sustainable since it was framed beyond the stipulated time limit period.
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2020 (2) TMI 262
Assessment u/s 153C - non recording satisfaction u/s 153C - HELD THAT:- A.O. was required to record satisfaction under section 153C because the A.Y. 2010-2011 is covered by Section 153C as satisfaction note was recorded on 23.07.2010. Therefore, there was no justification for the A.O. to pass Order under section 143(3) of the I.T. Act, 1961. Since mandatory conditions of Section 153C of the I.T. Act, 1961 are not satisfied in the present case, therefore, the Ld. CIT(A) was justified in quashing the assessment order under section 143(3) - Appeal of Revenue dismissed.
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2020 (2) TMI 261
Penalty u/s 271AAB(1)(c) - Defective notice - whether the notice issued u/s 274 r.w.s. 271AAB of the Act suffers from fatal error and technical defect thereby not providing an opportunity to the assessee to plead his case? - Admission of additional legal ground - HELD THAT:- In view of the ratio held by the Hon'ble Apex Court in the case of National Thermal Power Company Limited [ 1996 (12) TMI 7 - SUPREME COURT] admit the additional legal ground for adjudication. For levying penalty u/s 271AAB of the Act the Ld. A.O needs to primarily issue notice u/s 274 of the Act so for initiating proceedings u/s 271AAB of the Act the Ld. A.O has to first pass through the hurdle of Section 274. Three notices issued to the assessee on 22.03.2016, 03.06.2016 and 16.09.2016, we find that there is no mention about various conditions provided u/s 271 AAB - A.O has very casually used the proforma used for issuing notice before levying penalty u/s 271(1)(c) of the Act for the concealment of income or furnishing of inaccurate particulars of income. Except mentioning the Section 271AAB of the Act in the notice it does not talk anything about the provision of section 271AAB. Certainly such notice has a fatal error and technically is not a correct notice in the eyes of law because it intends to penalize an assessee without spelling about the charge against the assessee. We, therefore respectfully following the judgment of jurisdictional High Court in the case of PCIT V/s Kulwant Singh Bhatia [ 2018 (5) TMI 960 - MADHYA PRADESH HIGH COURT] , decision of Co-ordinate Bench of Chennai in the case of DCIT V/s R. Elangovan [ 2018 (4) TMI 1553 - ITAT CHENNAI] and Jaipur Bench in the case of Ravi Mathur Vs DCIT [ 2018 (6) TMI 1128 - ITAT JAIPUR] and in the given facts and circumstances of the case wherein the matter written in the body of the notice issued u/s 274 of the Act does not refer to the charges of provision of Section 271AAB of the Act makes the alleged notice defective and invalid and thus deserves to be quashed. Since the penalty proceedings itself has been quashed the impugned penalty stands deleted. Thus assessee succeeds on legal ground challenging the validity of notice issued u/s 274 r.w.s. 271AAB of the Act.
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2020 (2) TMI 260
Valuation of inventory - change in method of valuing inventory - HELD THAT:- For a limited verification, we are restoring the matter back to the file of the AO for verification of the assessee s contention that the assessee has consistently followed the above new method of valuing inventory in succeeding years also and no attempt is made to suppress income chargeable to tax of the relevant ay . Further, On perusal of the order of the Ld.CIT(A) , it is also observed by us that different methods are applied by assessee for valuing different components of inventory. If the assessee has to change method of valuing inventory in compliance with AS-2 issued by ICAI, then changed method of valuation has to be applied to all the components of inventory as prescribed under AS-2 and the assessee cannot be allowed to pick and chose method of valuing inventory to apply method to some components of inventory and leaving out other components of inventory. In that scenario, it will lose the character of being a change of method lacking bonafide and genuineness warranting change of method of valuation of inventory. So, also for limited verification by the AO, we are remitting matter back to the file of the AO , wherein the assessee is directed to justify as to why it is adopting different method for valuing different components of inventories and whether the said differential methods for valuing different components of inventory are consistent with AS prescribed by ICAI. The assessee is directed to give justification before AO for adopting different method of valuing different components of inventory and to prove that these differential methods are consistent with AS-2 prescribed by ICAI and hence accordingly, there was no intent to reduce tax by applying new method of valuing finished goods.
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2020 (2) TMI 259
TP Adjustment - providing of software development services by the assessee to its AE - Claim of the assessee that sub-contracting charges incurred by the assessee should be given pass-through status and hence, should be excluded from the operating cost and income while computing arm s length price - HELD THAT:- As decided in own case [ 2016 (9) TMI 1458 - ITAT BANGALORE] cost of software development services cannot be treated in this fashion as claimed by the assessee. Hence we do not find any merit or substance in the contention raised by the assessee on this issue. Comparable selection - assessee seeks inclusion of only two companies, viz., Powersoft Global Solutions Limited and Evoke Technologies Private Limited - Tax Authorities have rejected the claim for inclusion of them as comparables only for the reason that financial data relating to these two companies are not available - HELD THAT:- Since the assessee submits that the financial details of these two companies are available on record, we are of the view that these two companies should be restored to the file of the AO / TPO for examining the claim of the assessee for their inclusion as comparables. Accordingly, we restore these two companies to the file of the AO / TPO. Exclusion of Larsen Toubro Infotech Limited and Persistent Systems Limited - The assessee is a captive service provider of software services to its AE. There is no dispute that the facts are identical in the assessee s case and in the cases decided by the co-ordinate bench. Accordingly, respectfully following the decision of the co-ordinate Bench rendered in the case of CGI Information Systems and Management Consultants P Ltd [ 2018 (4) TMI 1755 - ITAT BANGALORE] we direct the AO / TPO to exclude Larsen Toubro Infotech Limited and Persistent Systems Limited from the final list of comparables. Since the ALP of the international transaction relating to software development services are to be determined afresh in the light of our decisions rendered above, we restore this issue to the file of the AO / TPO.
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2020 (2) TMI 258
Levy of penalty u/s 271(1)(c) - Defective notice - penalty proceedings have been initiated, whether for concealment of particulars of income or furnishing inaccurate particulars of income - A.O. disallowed interest income and electricity expenses - HELD THAT:- As decided in own case [ 2017 (12) TMI 257 - ITAT DELHI] AO did not record his satisfaction for initiation of penalty proceedings, because while passing the assessment order u/s. 143(3)(ii) AO has stated that Penalty proceedings u/s. 271(1)(c)is being initiated separately for furnishing inaccurate particulars of income / concealment income , which is not sufficient and therefore, the penalty proceedings cannot be said to be validly initiated under such circumstances. However, nowhere in the assessment order states the specific charge of alleged concealment and / or furnishing of inaccurate particulars of income. Therefore, the entire penalty proceedings stand vitiated, because it is not in accordance with law - Decided in favour of assessee.
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2020 (2) TMI 257
TP Adjustment - receipt of interest on loans and advance granted to AT S India - HELD THAT:- In the instant case, the payment of interest made by AT S India to AT S Austria on the one hand and the receipt of interest by AT S Austria from AT S India on the other hand have taken place under the same agreement i.e. Loan Agreement and Distribution Agreement. In this scenario, if the arm s length interest rate is determined by the DRP at LIBOR plus 450 basis points in the hands of AT S Austria, then the international transactions under consideration would never be at arm s length in the hands of AT S India. Similarly, if the international transactions under consideration are accepted by the TPO to be at arm s length in the hands of AT S India, the same would never be at arm s length in the hands of AT S Austria. Thus, the international transactions under consideration would never be at arm s length both in the hands of AT S Austria and AT S India simultaneously. The Legislature has never shown an intention to treat the same international transaction in two different ways in the hands of two associated enterprises such that there would be arm s length price adjustment at least in the hands of one of the associated enterprises. Hence, the approach adopted by the DRP/TPO is not acceptable. We note that the assessee granted loan and advance to AT S India in foreign currency (Euro) and AT S India repaid principal / paid interest on loan and advance in foreign currency (Euro). Hence, in the instant case, Euro-LIBOR would be the appropriate benchmark that conforms to the arm s length standard under the CUP Method. The assessee applied the Euro-LIBOR rates prevailing during the relevant period for computation of interest payable by AT S India to the assessee and further added credit spread of 350 basis points (net of tax) for loan and 100 basis points for advance. Hence, the interest received by the assessee from AT S India is at arm s length under the CUP Method. In the assessee`s case, the DRP did not mention in his order the comparability analysis prescribed under clause (a) of sub-rule (1) of rule 10B of the Income-tax Rules, 1962. The DRP did not bring on record any comparable uncontrolled transaction under the CUP Method for substantiating that the interest rate of LIBOR plus 450 basis points conformed to the arm s length standard under the CUP Method - we delete the upward adjustment to the income of the assessee. Arm s length price adjustment made by the AO in respect of recovery of information technology ( IT ) service cost from AT S India - payment made by AT S India to the assessee - HELD THAT:- Assessee entered into IT Cost Pooling Agreement with its group companies including AT S India under which all the parties to the aforesaid agreement combined together for financing the object of arranging IT products and related services for all the parties to the aforesaid agreement. No third party (i.e. third party means entity not being party to the IT Cost Pooling Agreement ) was given access to the IT products and related services arranged by the assessee under the IT Cost Pooling Agreement . The costs incurred by the assessee for arranging IT products and related services were allocated to the parties to the aforesaid agreement on actual basis (i.e. without adding any profit element to the cost) using appropriate allocation keys mentioned in the aforesaid agreement. Thus, there was complete identity between the contributors to the IT cost pool and participators in the benefit under the aforesaid agreement i.e. both parties having been AT S group companies. The fund contributed by the group companies was not spent for any purpose which was not within the scope of the aforesaid agreement. The payment made by AT S India to the assessee is in the nature of reimbursement of cost, therefore we delete the addition ALP adjustment in respect of receipt of corporate guarantee fee from AT S India - HELD THAT:- As the issue is squarely covered in favour of the assessee by the decision of the coordinate bench, in the case of M/s Emami Limited [ 2019 (5) TMI 1371 - ITAT KOLKATA] , Assessment Year: 2013-14 and there is no change in facts and law and the Revenue is unable to produce any material to controvert the aforesaid findings of the coordinate Bench. Respectfully following the above binding precedent, we delete the addition - Decided in favour of assessee
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2020 (2) TMI 256
Addition for interest received on compensation for compulsory acquisition of the agricultural land of the assessee - exemption under section 10(37) as part of the land compensation or it is taxable under section 56(2)(viii) - HELD THAT:- As relying on CHET RAM (HUF) [ 2017 (9) TMI 1532 - SUPREME COURT] interest received on compulsory acquisition of land under section 28 of Land Acquisition Act (LAA) would be in the nature of compensation and not interest, which is taxable under the Income from other sources. Accordingly, we restore the issue to the file of the learned CIT(A) to decide the taxability in accordance with law after verifying whether the interest received is in respect of land acquired u/s 28 of the LAA or interest under section 34 of the LAA. It is needless to mention that adequate opportunity of being heard shall be afforded to both the parties, i.e., the Assessee and the Assessing Officer. The ground Nos. 1 to 3 of the appeal of the assessee are accordingly allowed for statistical purposes. Addition for cash deposits appearing in the bank account as unexplained - HELD THAT:- Assessee did not provide any explanation or statement in respect of the cash deposits. One can understand of not having ready availability of the documentary evidence but the assessee was not prevented from explaining the source of deposits which according to him was money received from his mother and uncle. No such explanation was even offered by the assessee before the AO. Thus, the explanation and documentary evidence filed before the ld. CIT(A) are result of afterthought only. The Ld. CIT(A) has rejected the additional evidences as same were not in accordance with Rule 46A of the Rules. In view of the facts and circumstances of the case, we are of the considered opinion that assessee failed to discharge its onus to explain the source of the cash deposits and therefore, Ld. CIT(A) is justified in sustaining the addition. We, accordingly, uphold the same. The grounds of the appeal of the assessee are accordingly dismissed. Penalty u/s 271(1)(c) - non granting of credit of TDS - HELD THAT:- As far as the issue of initiation of the penalty proceeding is concerned, the ground raised is premature at this stage and, therefore, same is dismissed as infructuous. However, as far as granting of the credit of the TDS is concerned, we direct the Assessing Officer to examine the claim of the assessee and if same is found in accordance with law, the assessee should be allowed the credit of tax deducted at source. The ground of the appeal of the assessee is accordingly partly allowed.
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2020 (2) TMI 255
TP Adjustment - benchmarking of international transactions - selection of MAM - HELD THAT:- When we examine the order passed by the ld. CIT(A) it has come on record that, during the appellate proceedings, the taxpayer has failed to provide working of the net profit margin for 2 segments i.e. outbound and inbound travel related services, however on combined basis i.e. AE as well as non-AE transactions taking together nor separately for AE and another party from which internal comparables can be examined on TNMM for inbound and outbound services . This factual position has not been disputed by the ld. AR for the taxpayer. In the absence of working of net profit margin of internal comparables for inbound and outbound services, the issue as to benchmarking the international transactions cannot be decided. Now, the taxpayer has come up with segmental account in tabulated form explained in page 2 3 of the synopsis which is required to be examined by the TPO to benchmark the international transactions. So, the TPO is directed to benchmark the international transactions by applying TNMM on the basis of internal comparables in view of the working supplied by the taxpayer. So, the case is remanded back to the TPO to decide afresh after providing opportunity of being heard to the taxpayer by following the decisions rendered by the Tribunal in AYs 2007-08 2006-07 in taxpayer s own case. Consequently, the appeal of the taxpayer is allowed for statistical purposes.
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2020 (2) TMI 254
Addition u/s 40A - payment towards electricity charges in cash to the Ajmer Vidyut Nigam Limited (AVVNL) exceeding permissible limits - HELD THAT:- There is no dispute regarding the identity of state electricity distribution company (AVVNL), the genuineness of the transaction in terms of electricity bills for consumption of electricity by the assessee, source of cash being the withdrawals from assessee s own bank account and the test of business expediency has also been met as we have noted above. Further, as held by the Hon'ble Rajasthan High Court in case of Smt. Harshila Chordia [ 2006 (11) TMI 117 - RAJASTHAN HIGH COURT] the consequences, which were to befall on account of non- observation of sub-section (3) of section 40A must have nexus to the failure of such object. Therefore the genuineness of the transactions and it being free from vice of any device of evasion of tax is relevant consideration. The intent and the purpose for which section 40A(3) has been brought on the statute books has not been violated in the instant case. Therefore, being a case of genuine business transaction and test of business expediency been satisfied, no disallowance is called for by invoking the provisions of section 40A(3) of the Act. In the result, we hereby direct the deletion of disallowance so sustained by the Ld. CIT (A). - Decided in favour of assessee
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2020 (2) TMI 253
Mismatch in sales turnover - Discrepancy between 26AS data and its P L account - Admission of additional evidences - case of the assessee was selected under limited scrutiny - HELD THAT:- CIT(A) has choosen not to accept the additional evidences filed by the assessee and rejected the reconciliation filed by assessee. During the arguments before us, the ld. AR contended that the voluminous data given to the ld. CIT (A) could not have compiled within a short span of two days i.e. the date of show cause 11.12.2017 and the date of order 13.12.2017. He argued that the details filed if considered with due diligence will reconcile the correct taxable income. DR also fairly argued that the matter needs to be examined by the Assessing Officer by taking into consideration the evidences filed by the assessee subsequently. Hence, taking into consideration and keeping in view, the arguments of both the parties, the time available to the assessee during the assessment proceedings, the examination under took by the Assessing Officer on the additional evidences field by the assessee before the ld. CIT (A) and the remand report thereof, we hereby set aside the matter to the file of the Assessing Officer to reconcile the mismatch of TDS vis- -vis the returned income of the assessee. Appeal of the assessee is allowed.
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2020 (2) TMI 252
Disallowance of commission expenses claimed - assessee is carrying on business in name of Rajasthan Small Scale Cottage Industries and is deriving income from sale of handicraft, carpets and other similar items - HELD THAT:- CIT(A) has not recorded any specific adverse findings on perusal of the reconciliation statement except in respect of two vehicles, where she has relied on the findings of the AO in the remand report, and held that vehicles are not found registered and prima facie, the entries are fictitious in nature. Basis non-verification of two entries out of total 264 entries examined by the Assessing officer which represent less than 1% of the sample size, it would be factually incorrect to hold that the assessee has failed to substantiate whole of his claim of commission expenditure. As we have held above, in case of voluminous transactions, some defined audit methodology and adequate sample size may be adopted to verify the expenses and being a factual matter, it can vary from year to year. Once the sample size has been selected by the AO and which has been accepted by the ld CIT(A), the findings on examination of such sample size should be correlated and could reasonably be held representative only proportionality and not of the whole data under examination. In the instant case, basis the sample size of less than 1% which remains unverified, it is incorrect to hold that 100% of claim of commission expenditure remains unsubstantiated. We therefore deem it appropriate to restrict the disallowance of commission expenditure to the extent of 1% of ₹ 2,08,66,037 which comes to ₹ 208,660/- which remains unsubstantiated and the remaining addition is hereby directed to be deleted. Disallowance of 8% out of commission payment - For A.Y 2014-15 - HELD THAT:- We find that the ld CIT(A) has followed and relied on her findings for A.Y 2013-14 and further held that in this year, one entry out of total 55 entries examined by the Assessing officer remain unsubstantiated and therefore, the assessee has failed to establish the genuineness of the whole of the commission expenditure. In his submission, the assessee has submitted that in respect of one entry so pointed out by the Assessing officer and referred to by the CIT(A), there was a clerical mistake where in the voucher, the vehicle number has wrongly been written as DL-132117 instead of DL-13C-2117 and besides that, there is no other specific defect pointed out by the AO. Following our findings and reasoning given for AY 2013-14, we find that in absence of any specific finding by the Assessing officer except in respect of one entry where the vehicle number has been wrongly written by the assessee, a mistake admitted by the assessee and not disputed by the Revenue, the whole of commission expenditure cannot be disallowed. In the result, the addition so made is directed to be deleted.
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2020 (2) TMI 251
TDS u/s 194C - payment made by the assessee is under a contract to the contract workers - additions in the remand proceedings - HELD THAT:- Once the CIT(A) was satisfied that the payment in question is not liable for TDS then the issue which was set aside for reconsideration and adjudication stands over and decided in favour of the assessee. Disallowance made by the CIT(A) of 20% of the labour expenses by questioning the correctness of the claim is clearly beyond the scope of set aside proceedings and jurisdiction of the CIT(A) in the set aside proceedings. Accordingly, in view of the facts and circumstances of the case, the disallowance of 20% of the labour charges made by the ld. CIT(A) is unjustified and arbitrary and the same is deleted. - Decided in favour of assessee.
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2020 (2) TMI 250
Addition u/s 68 - share application money and premium unexplained - HELD THAT:- Investment made by the share applicant has been confirmed and also the source from where the investment has been made and also the PAN and the ward where the share applicant is being assessed is also mentioned. The copy of ITRs have also been filed for A.Y. 2011-12 and 2012-13 with balance sheet, profit and loss account and its annexures. It is also stated that they will be glad to furnish further information, if so desired. It may be mentioned that similar replies have been received from other share applicants namely M/s Bhavtarani Sales Pvt. Ltd., M/s Chaturbhuj Agencies Pvt. Ltd. and M/s Toor Finance Company Ltd. From the evidence/s placed on record by the assessee as well as share applicants, it is seen that the identity and existence of share applicants cannot be doubted as the replies have been received in response to notice issued u/s 133(6) of the Act. By placing on record the bank account particulars, PAN, ITRs and financials etc. the assessee has also submitted the prima-facie material to prove the creditworthiness and genuineness of transactions. In such circumstances, non-production of directors, without bringing any contrary material on record, cannot be adversely viewed against the assessee - there is no infirmity in the order of the Ld. CIT (A) vide which, after considering all these evidences, the impugned addition made on account of share application money and premium has been deleted. Unconfirmed unsecured loans - Copy of bank account of creditor is placed and copy of ITR for A.Y. 2012-13 showing income of ₹ 6,40,525/- is placed and the audit report for the year under consideration has been placed . Similar reply has been filed in respect of the other two creditors namely M/s Franklin Leasing and Finance Pvt. Ltd. and M/s RKG Finvest Ltd. It is also seen that to all these creditors, interest has been paid by the assessee after due deduction of tax at source and repayment has also been made through banking channels. In the case of M/s Franklin Leasing and Finance Pvt. Ltd, the evidence of repayment of loans have been filed and in the case of M/s RKG Finvest Ltd such evidence has been filed at pages 212 to 215. Further, in the case of M/s RKG Finvest Ltd the assessment has been framed u/s 143(3) for A.Y. 2012-13 and copy of assessment order dated 08-08-2014 in the case of M/s RKG Finvest Ltd has been filed. Keeping in view the above position, we are of the opinion that there is no infirmity in the order of Ld. CIT (A) vide which, after considering all these evidences, the impugned addition to be deleted. - Decided in favour of assessee.
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2020 (2) TMI 249
Levying late filing fees u/s 234E - Intimation issued u/s 200A - delay in filing quarterly TDS return - HELD THAT:- In the instant case, as well, there is a continued default beyond 1.06.2015, therefore, following the decision of SHRI UTTAM CHAND GANGWAL M/S ADINATH STONES [ 2019 (1) TMI 1355 - ITAT JAIPUR] , the levy of fees under section 234E, which is levied for each day during which the default continues, is upheld for the period 1.06.2015 to the date of actual filing of the TDS statement and the balance late filing fees so levied is hereby deleted. In the result, the appeal of the assessee is partly allowed. Similar fact pattern exist in respect of all other cases where undisputedly, the TDS statements pertaining to the financial year 2012-13, 2013-14 and 2014-15 have been filed in year 2017 and intimation issued by the ACIT-TDS in December 2017.
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2020 (2) TMI 248
TP Adjustment - MAM selection - HELD THAT:- Assessee is a wholly owned subsidiary of Brother Japan. It is engaged in the business of distribution of information and communication equipments such as printers and facsimile machines by importing from AE and selling in the local market. RPM is a transfer pricing method where the resale price to the independent party is reduced by comparable resale price margin to arrive at ALP of the product transferred between the related parties. Resale price margin is a margin representing the amount out of which a reseller would seek to cover its selling and other operating expenses and, in the light of the functions performed (taking into account assets used and risks assumed) make an appropriate profit. It is well settled that RPM is to be used for determining ALP only when goods purchased from the associated enterprise are resold to unrelated parties and there is very little value addition involved. In CIT v. L Oreal India (P.) Ltd. [ 2012 (10) TMI 1191 - ITAT MUMBAI] it is held that in case of distribution or marketing activities when goods are purchased from associated entities and sales are effected to unrelated parties without any further processing, then, RPM (resale price method) is most appropriate method to determine ALP of said transaction. In ACIT v. L Oreal India (P.) Ltd. [ 2015 (2) TMI 407 - BOMBAY HIGH COURT] it is held that where assessee buys products from its AEs and sells to unrelated parties without any further processing, RPM is most appropriate method to determine ALP. Having examined the facts of the present case, we are of the considered view that the principles laid down in the above decisions are applicable here. Therefore, we set aside the order of the Ld. CIT(A) on the above grounds of appeal and delete the adjustment made by the AO u/s 92CA(3) of the Act. Adjustment as the compensation for its Advertisement Marketing and Promotion ('AMP') services - appellant incurs 'excessive' AMP expenses in relation to its distribution activities thereby qualifying as 'services' as per the arm's length principle - HELD THAT:- We find that out of total expenses on advertisement of ₹ 1.22 crore, only ₹ 36.34 lacs are expenses towards brand promotion, while the remaining expenses of ₹ 86 lacs pertain to the selling expenses such as incentives and other benefits paid to dealers/distributors for promoting sale and not the brand name of the AE. In Maruti Suzuki India Limited v. CIT [ 2015 (12) TMI 634 - DELHI HIGH COURT] , the Hon ble Delhi High Court held that there being no international transaction on AMP spend with an ascertainable price, neither substantive nor machinery provision of Chapter X were applicable to the transfer pricing adjustment exercise . In Honda Siel Power Products Limited [ 2015 (12) TMI 1333 - DELHI HIGH COURT] again held that when assessee is carrying on business as independent enterprise and is incurring AMP expenses for its own benefit and not at the behest of AE, hence benefit of creation of marketing intangibles for foreign AE on account of AMP expenses can at best said to be incidental . All the more, since the AMP expenses of the assessee, after reducing selling expenses are just 0.91%, which is nearly equivalent to the average AMP expenses of comparables at 0.9%, the same meets the ALP standard under the Act and hence, no adjustment is required - Decided in favour of assessee.
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2020 (2) TMI 247
Revision u/s 263 - whether the AO before concluding the Assessment did make any enquiry on this aspect? - service tax input written off allowability - HELD THAT:- Assessee could not substantiate before us as to how the AO made enquiries on this issue before concluding the assessment, except by pointing out that all facts were laid before the AO and it can be presumed that he had taken note of this aspect while concluding the assessment. The fact that the AO himself initiated proceedings u/s.154 of the Act to rectify error apparent on record on the aspect of having allowed service tax input written off as a deduction goes to show that he had while completing the Assessment not enquired or was not conscious of the merits of the claim for deduction of the aforesaid sum while computing income. The law is well settled that if there is a failure on the part of AO to make an enquiry on the issue which calls for an enquiry, that by itself will render the order of assessment erroneous and prejudicial to the interests of the revenue. We need not examine the arguments of the learned counsel for the Assessee in this regard because Explnation-2 is only a deeming provision and if on facts it is found that the AO did not make any enquiries before concluding the assessment on the question whether service tax input written off can be allowed as a deduction in computing income from business, there is no need to take recourse to the deeming provisions. As far as the merits of the claim made by the learned counsel for the Assessee that the service tax input written off is an allowable deduction, he relied on the decision of Delhi ITAT in the case of Maruti Suzuki Ltd. [ 2015 (9) TMI 20 - ITAT DELHI ] . We do not think it necessary to deal with the merits of the claim of the Assessee as the same will be examined by the AO in the set aside proceedings. We, however, make it clear that the observations of the CIT in paragraphs 6 7 of the impugned order with regard to correctness of the claim of the Assessee regarding deductibility of the sum in question are not warranted because the jurisdiction u/s.263 of the Act is invoked on the ground that the AO failed to make necessary enquiry which he ought to have made before completing the assessment. The aforesaid observations in the impugned order should not therefore have any effect in the set aside proceedings before the AO and the subsequent appellate authorities. - Decided against assessee.
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2020 (2) TMI 246
Deduction u/s. 54/54F - deduction u/s. 54/54F when purchased the house outside India - assessee claimed deduction on the capital gain on sale of the property as he invested the capital gain in purchase of a residential house in Texas on 12.7.2013 - whether the assessee would be entitled to ? - HELD THAT:- We find that in the decision rendered in the case of Jai Kumar Gupta HUF [ 2019 (3) TMI 466 - ITAT MUMBAI] on identical facts the assessee had made a claim for deduction u/s. 54 of the Act instead of 54F of the Act. The Tribunal held that the assessee s claim for deduction u/s. 54F should be examined. In the case of Arshia Basith [ 2018 (8) TMI 1359 - ITAT BANGALORE] the Bangalore Bench of the Tribunal held that assessee would be entitled to deduction u/s. 54F of the Act even in respect of property purchased which is located outside India. In the case of assessee the deduction claimed should be examined in the parameters of section 54F of the Act in the light of decision cited before us. The AO is directed to apply the ratio laid down in the aforesaid decision and allow the claim of deduction of assessee in accordance with the law, after affording assessee opportunity of being heard. Appeal of assessee is treated as allowed for statistical purposes.
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2020 (2) TMI 245
Disallowance u/s 14A r.w.r. 8D on account of expenditure incurred for earning of tax exempt income - HELD THAT:- Assessee was possessed of sufficient own funds to meet the investment in question. No interest expenditure disallowance u/s 14A of the Act read with Rule 8D(2)(ii) of the I.T. rules is attracted on this issue. Disallowance of administrative expenditure u/s 14A of the Act read with Rule 8D(2)(iii) - decisions of the Hon'ble Delhi High Court in the case of Joint Investments Private Ltd vs CIT [ 2015 (3) TMI 155 - DELHI HIGH COURT] and ACB India Limited vs ACIT [ 2015 (4) TMI 224 - DELHI HIGH COURT] wherein it is held that for computing the average value u/s 14A of the Act read with rule 8D(2)(iii), only the investment yielding non-taxable income have to be considered and not the entire investment. In view of this, the Assessing Officer is directed accordingly to consider only the investments yielding tax exempt income for computation of disallowance under Rule 8D(2)(iii) of the I.T. Rules. Deduction u/s 80IC - 10% of the disallowance out of deduction claimed on the ground of utilization of expertise of management of non-eligible unit in the eligible units at Tahiwal (HP) - HELD THAT:- Issue to b decided in favour of assessee as relying on M/S CREMICA AGRO FOODS PVT. LTD. [ 2018 (1) TMI 842 - ITAT CHANDIGARH] MAT Computation u/s 115JB - Foreign exchange fluctuation loss addition - HELD THAT:- This issue is accordingly restored to the file of the Assessing Officer for verification of the aforesaid submissions of the assessee. If the assessee has offered the aforesaid amount for taxation in the return filed u/s 115JB of the Act in the subsequent assessment year 2010-11, then this amount should not be added / adjusted in computing the income of the assessee u/s 115JB for the year under consideration. This issue, with the above directions, is restored to the file of the Assessing Officer. . Claim of expenditure incurred on abundant project - assessee could not inadvertently make the aforesaid claim in the return of income, however, the plea for this claim was raised during the assessment proceedings - HELD THAT:- Hon ble Bombay High Court in the case of CIT vs. Pruthvi Brokers and Shareholders Pvt. Ltd. [ 2012 (7) TMI 158 - BOMBAY HIGH COURT] has observed that the assessee is entitled to raise not merely additional legal submissions before the appellate authorities, but is also entitled to raise additional clams before them. The appellate authorities have jurisdiction to deal not merely with additional grounds, which became available on account of change of circumstances or law, but with additional grounds which were available when the return was filed. The words 'could not have been raised' must be construed liberally and not strictly. There may be several factors justifying the raising of a new plea in an appeal and each case must be considered on its own facts. In view of this, ground No.4 taken by the assessee is admitted for adjudication - issue is restored to the file of the Assessing Officer for adjudication of the same on merits irrespective of the fact whether this claim was made in the return of income not. Addition u/s 43B - Delayed Contribution towards Provident Fund having been paid before the due date of filing of the return - HELD THAT:- As decided in M/S HEMLA EMBROIDERY MILLS (P) LTD. [ 2013 (2) TMI 41 - PUNJAB AND HARYANA HIGH COURT] it is an admitted fact that there was delay in depositing the employees' contribution of provident fund and ESIC. However, it is accepted by the AO that the deposit was made before filing of the return of income - the impugned disallowance is deleted. - Decided in favour of assessee.
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2020 (2) TMI 244
Addition on account of issue of share capital to the allegedly bogus non existing companies - HELD THAT:- In the present case the assessment proceedings started from 22/10/2013 and ended on 18/3/2013 (as mentioned in column number 8 of the assessment order about the date of hearings). Therefore it is apparent that assessment proceeding were after release of the directors from the judicial custody. Therefore, this explanation does not serve any purpose for non-submission of details or for appearing before the learned assessing officer. Absence of the staff could not be a valid reason for a company who has such a large operations as claimed by the assessee. Further, with respect to mental agony/depression of the directors no evidences were produced. No evidences were produced that there are large number of cases involved on the group. No reason to upset the orders of the lower authorities and in fact we agree that the assessee had sufficient opportunity to furnish the evidence but assessee has deliberately not submitted the same. Argument advanced by the assessee in the grounds of appeal and the activities of the assessee clearly shows that there is no violation of principles of natural justice of the lower authorities. In fact it is assessee who is trying to seal itself for the misdeed conducted by it. Hence, Ground no 1 to 6 are dismissed. Claim of depreciation and expenses from allegedly non-existing bogus companies and non-production of books of accounts - HELD THAT:- The most of the purchase shows by the assessee are software for which the assessee has not produced any details about its ownership, functionary etc. the AO has proved conclusively with the suppliers are bogus. The issue is squarely covered against assessee by the decision of the Hon'ble Delhi High Court in case of Chintels India Ltd Vs. DCIT [ 2017 (7) TMI 746 - DELHI HIGH COURT] wherein, bogus depreciation of software was disallowed of the ld AO was confirmed. The special leave petition filed before the ld Hon'ble Supreme Court is also dismissed [ 2018 (1) TMI 814 - SC ORDER] . The facts on that case are identical to the facts of the case before us. In view of this, we do not find any infirmity in the order of the ld AO in disallowing the depreciation on the software. We confirm order of the ld CIT A . Accordingly, ground Nos. 7 of the appeal are dismissed. Addition of share capital and share application money - HELD THAT:- Assessee did not discharge its initial onus of proving the identity, creditworthiness and genuineness of the share capital received. Most of the claim the investor were found by him to be based in Kolkata, inspector of the circle was sent to that place to verify the identity capacity and genuineness. The copy of the inspector report shows that the claimed investors are bogus. Therefore he confirmed the addition. We do not find any infirmity in the order of the learned CIT A. Accordingly ground number 8 of the appeal is dismissed. Addition on account of unsecured loan received - HELD THAT: -The assessee has not produced any details with respect to the identity of lenders, their creditworthiness and genuineness of the transaction. Thus assessee has failed to discharge initial onus cast upon it u/s 68 of the income tax act. Therefore we do not find any infirmity in the order of the lower authorities in confirming the above addition. Addition on account of investment in the property at Mumbai - HELD THAT:- The assessee did not provide any details of information before the learned assessing officer or before the learned CIT A. In view of this, we do not find any infirmity in the order of the lower authorities in confirming the above investment in the fixed assets. Addition on account of investment in plant and machinery - HELD THAT:- Inquiries during search as well as in assessment proceedings revealed that those companies could not have made any sales to the assessee company and there from to be bogus. The purchase of software was found to be from a nonbanking financial company which did not have any background or asset to deal with into such software. The companies were also found to be bogus there were glaring differences found with the documents submitted by the assessee. The claim of development of software was also found to be false. During the course of appellate proceedings also no further details were produced and no justification could be given regarding the investments made in these purchases. Therefore the learned CIT A confirmed the above addition. We do not find any justification to interfere with the orders of the lower authorities. Addition of sum received from Lakshmi Exim private limited. - AO made an addition u/s 68 as the assessee has failed to show the identity, creditworthiness and genuineness of the transaction -HELD THAT:- Before the learned CIT A, no further information was provided and therefore the addition was confirmed. The facts are identical to the facts in the case of the assessee for earlier years where the identical addition on account of share application money was made. In view of these facts we find no infirmity in the order of the lower authorities as assessee has failed to show the identity, creditworthiness and the genuineness of the rejection of the above investment in the share application money with the assessee company. Disallowance u/s 14A under rule 8D - HELD THAT:- During the course of assessment proceedings the assessee was asked to submit the details about the applicability of the provisions of section 14 A of the income tax act. The issue has been dealt with in para number 6 of the assessment order. The assessee did not furnish any reply to the above query. Thereby the learned assessing officer computed the disallowance applying the provisions of rule 8D and disallowed a sum of rupees 2293450/ . Before the learned CIT A no justification was given by the appellant for this disallowance. As there is a complete absence of information from the side of the assessee before the lower authorities, we do not find infirmity in their order in confirming the above disallowance Disallowance being the various expenditure incurred by the assessee including the opening stock - HELD THAT:- Before the lower authorities assessee did not submit any details about the expenditure e, without substantiating the same with the vouchers and bills and the nature of expenditure, thus, no infirmity can be found with the orders of the lower authorities in disallowing the above expenditure. Before the lower authorities no books of accounts were produced to show the genuineness of the expenses claimed on how the transactions have been entered into. The above addition as made on the basis of the search and seizure operation u/s 132 and the enquiries made by the revenue. At all the times the opportunities given to the assessee were avoided. In view of these facts, we confirm the actions of the lower authorities in disallowing the expenditure on account of various expenditure including opening stock.
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Customs
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2020 (2) TMI 243
Legality and validity of detention order - COFEPOSA Act - alleged smuggling of goods, abetting smuggling of goods and engaging in transporting or concealing or keeping smuggled goods - gold - cigarettes - betel nuts - inordinate delay in passing detention order - HELD THAT:- The detention order stands vitiated on account of inordinate and explained delay in passing detention order, non supply of vital material / documents, more particularly bail orders of the Competent Court and release of co-detenue Shri Ramnarayan Laddha, on identical fact situation, his detention order was revoked by the Advisory Board - So on these three grounds, present petition deserves to be accepted and accordingly, it is hereby allowed. Detention order passed by respondent no.2 is hereby quashed and set aside. The petitioner shall be released forthwith, if he is not required in any other offence - petition allowed.
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2020 (2) TMI 242
Revocation of CHA License - time limitation - enquiry not completed within 90 days - HELD THAT:- The Tribunal had revoked the suspension of the license and as on today the Petitioner continues to function as a broker. The period of 90 days therefore as far as the Petitioner is concerned cannot be considered as mandatory but it was more of a direction in the interest of the Respondents. Therefore, on this ground alone, the enquiry cannot be quashed. In the reply affidavit the Respondents have explained the reason for delay. They have referred to the proceedings taken place at Jodhpur. Considering the explanation, it cannot be said that there is gross delay and a complete failure of the Respondent to complete an enquiry so as to warrant quashing of the proceedings. The learned Counsel for the Respondents, on instructions, states that the Respondents will complete the enquiry within a period of 12 weeks, however, the Petitioner must co-operate with the same and as far as presence of witnesses is concerned, the Respondents will try their best to examine them but there could arise certain eventualities unforeseen by the Respondents, such as witnesses may take time - accepting the statement of the Respondents that an enquiry will be completed within a period of 12 weeks subject to availability of the witnesses and co-operation of the Petitioner, the Writ Petition is disposed of.
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2020 (2) TMI 241
Detention of imported goods - over-valuation - Board's Circular No. 01/2011 Cus. dated 04/01/2011 - HELD THAT:- The goods have already been ordered to be provisionally released upon certain conditions and, therefore, we see no reason to entertain this writ petition. The Supreme Court has in its recent decision in THE STATE OF UTTAR PRADESH ORS. VERSUS M/S KAY PAN FRAGRANCE PVT. LTD. [ 2019 (12) TMI 95 - SUPREME COURT] has criticized the practice of writ Courts directing release of the seized goods where the statute provides for provisional release. Since, an order of the provisional release is appealable order, hence also, we see no reason to entertain this writ petition - Petition dismissed.
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2020 (2) TMI 240
Maintainability of appeal when the Appeal against such Order of the Chief Commissioner was voluntarily withdrawn by the same Appellant and no further remedy was sought against such order - Tribunal entertained the appeal - Maintainability of Appeal against an Order of the Principal Commissioner - speaking and reasoned Order - HELD THAT:- They seek to question the jurisdiction of the Tribunal to entertain the appeal from the Order-In-Original. It is the argument of the Appellant that when appeal against order of Chief Commissioner was withdrawn and no further remedy was sought, an appeal before the Tribunal from the Order-In-Original could not have been entertained. This submission cannot be accepted. The Tribunal has entertained the appeal against the Order-In-Original relying on the decision of the Division Bench of this Court in the case of THE PRINCIPAL COMMISSIONER OF CUSTOMS VERSUS BOMBINO EXPRESS PVT. LTD. [ 2018 (2) TMI 1509 - BOMBAY HIGH COURT] . In this case also an identical argument was advanced. The Appellant in this case also had approached the Tribunal after rejection of the representation. In the case of Principal Commissioner of Customs vs. Bombino Express Pvt. Ltd., objection was raised to the jurisdiction of the Tribunal on the ground that there was merger of the order passed under representation with the Order-In-Original and thereafter no appeal should have been entertained by the Tribunal. Whether the Honourable CESTAT s Order is legal proper in its conclusion that no inquiry was conducted pursuant to suspension of the registration when it is clearly detailed in the Order in Original dated 26-11-2015 that, the decision to grant no further license was being ordered with attendant forfeiture and penalty based on the inquiry/investigation conducted by issue of SCN dated 12-12-2014 as adjudicated by Order in Original dated 26-10-2015? - HELD THAT:- It takes exception to the observations of the Tribunal that procedure as contemplated under the Regulation 14 was not followed while revoking the registration of the Respondent. This submission also cannot be accepted. The operative part of the Order-In-Original is ambiguous. It only states that no license to operate be granted to the Respondent under Regulation 10. The learned Counsel for the Appellant submitted that the Order-In-Original revokes the license and there is ample material on record to show that the revocation was justified. There is no debate on the factual position that, after suspension of the license there was no further inquiry giving opportunity to the Respondent before passing the Order-In-Original - The second proviso to the Regulation 14 states that if Principal Commissioner or Commissioner of Customs is of the opinion that grounds cannot be established prima facie without an inquiry, he may conduct an inquiry and in the meanwhile may suspend the registration. If suspension of the license takes place then the proviso contemplates an inquiry. Appeal dismissed.
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2020 (2) TMI 239
Service of SCN - Refund of SAD - Section 3(5) of the Customs Tariff Act, 1975 in terms of N/N. 102/2007-Cus dated 14.09.2007 - purported failure on the part of the petitioner to correct the deficiencies pointed out in the respective memos issued to the petitioner on 10.07.2012 in terms of Public Notice No.39/2011 dated 14.06.2011 - principles of HELD THAT:- Since the refund claims were to be rejected, the respondent ought to have issued proper notices to the petitioner and called upon the petitioner to show cause as to why the refund claims of the petitioner should be rejected, even if the deficiencies pointed out in the respective memos were not rectified by the petitioner. In VASTA BIO-TECH PVT. LTD. VERSUS ASSISTANT COMMR. OF CUS., CHENNAI [ 2018 (1) TMI 1437 - MADRAS HIGH COURT] , this Court under a similar circumstances had set aside the order stating that the order was passed in violation of principle of natural justice - in this case also there is violation of principle of natural justice though the petitioner failed to remove the deficiencies pointed out in the respective memos. The impugned orders dated 14.08.2012 may be treated as show cause notices - petition disposed off.
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2020 (2) TMI 238
Selection of petitioner in the examination of Customs Broker - submission of the learned senior counsel for the petitioner is that under the Customs Brokers Licensing Regulations, 2013, the applicants who were successful in the written examination, were entitled to be called for oral examination within two years from the date of declaration of the result of the related written examination - Section 6 (c) of the General Clauses Act, 1987. HELD THAT:- The contention of the petitioner is completely misplaced. It seems that the petitioner comprehends that merely because under the 2013 regulations, the petitioner was entitled to seven attempts to clear the examination for getting custom broker license, he has a vested right to claim such number of attempts, and the respondents could not have brought in the 2018 regulations which reduced the number of attempts only to six. Similarly, the petitioner is under a misconception that merely because under the 2013 regulations, he is entitled to two attempts at interview, the same could not have been cut down. His submission that-since under the 2018 regulations, a candidate has to clear the interview in a single attempt, the same violates his fundamental rights enshrined under Article 14, 19(1)(g) and 21 of the Constitution of India is completely untenable. Petitioner cannot question the curb put by the respondents in respect of the number of attempts for clearing the interview. In our considered opinion, the arguments of the petitioner are inherently flawed. The petitioner has concededly not cleared the examination whilst the 2013 regulations were in force. He did make five attempts, but was unsuccessful. Therefore, in that sense of the matter, no right whatsoever, much less vested right can be said to have accrued in favour of the petitioner under the said regulations. Since the petitioner did not clear the examinations whilst the 2013 regulations were in operation, the same cannot be the basis of impugning the fresh regulations, even if the same superseded certain clauses of the 2013 regulations, that enabled the Petitioner better opportunities. The principle of law being pressed into service that a vested right cannot be taken away, is not attracted in the present case - Merely because 2013 regulations provided for seven opportunities to clear the written examination, and two for oral examination, does not mean that such regulations have to remain effective in perpetuity, and that the respondents cannot introduce fresh regulations. If we were to construe that a right would accrue or vest in favour of a person merely because a particular rule, regulation or a legal provision enables him/her to avail of an opportunity as provided, and that the same cannot be modified or altered, it would amount to holding that no rule or regulation can be superseded or modified under any circumstances. The respondents are at freedom to bring a change in the regulations, if the circumstances and the need so arises, and the same has to be done in accordance with law. The provisions of such regulations cannot be declared to be ultra vires only for the reason that certain clauses which existed prior thereto have been modified. In the present case, no right whatsoever has accrued in favour of the petitioner that permits him to avail seven attempts to crack the examination in question, and two chances to appear in the interview, even though the Rules have changed. Examinations held under the regulations of 2018 cannot be treated as those undertaken under the 2013 Regulation. They are strictly governed by their own regulations. The 2018 Regulations are prospective in their nature and have been applied prospectively. Petition dismissed - decided against petitioner.
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2020 (2) TMI 237
Rejection of revision application - Duty Drawback - Section 129 DD of the Customs Act, 1962 - delay in getting foreign remittance - imposition of penalty u/s 117 of CA - HELD THAT:- In this case a SCN was issued to the Petitioner on 27.08.2010. The Petitioner had failed to file the relevant BRCs/extensions from Reserve Bank of India in time. Therefore, the Third Respondent was justified in issuing the above mentioned Show Cause Notice to the Petitioner. The fact however, remains that the Third Respondent has come to a conclusion that there was export realization though belatedly and therefore dropped the proceeding but at the same time has imposed of penalty for late realization of the export proceeds. Section 117 makes it very clear that penalty is to be imposed where there is failure to comply or where there is a violation in law, penalty can be imposed. The exporters do face difficulties in realization of export proceeds and therefore not all cases where there is a delay in producing BRCs penalty is to be imposed. Further, imposition of penalty may result in denial of export incentive indirectly in several cases. This is not a fit case for imposition of ₹ 25,000/- as there is a realization of the export proceeds. However, since there is a failure of penalty imposed under Section 117 of the Customs Act, penalty of ₹ 25,000/- is reduced to ₹ 5,000/- - Petition disposed off.
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2020 (2) TMI 236
Import of Pigeon (peas (Cajanus cajan) / Toor Dal - Import of restricted item or not - sections 3 and 6 of Foreign Trade (Development and Regulations) Act, 1992 - validity of N/N. 19/2015-2020 dated 05-08-201897 - principles of natural justice - HELD THAT:- Section 3 of the Act confers the power on the Central Government to make orders and polices. Section 6 of the Act prohibits the exercise of this power, particularly under Section 3 of the Act by any other Officer. The powers under Section 3, 5, 15, 16 and 19 of the Act, cannot be exercised by any one else or be delegated. But if the impugned notifications are seen, they very clearly state as follows: the Central Government hereby amends . Thus, it is clear that it is the Central Government alone that has amended these rules. Apart from that, the points raised by the learned Assistant Solicitor General also deserve consideration. The Central Government has to function through a human agency, who has to sign and authenticate these orders. The Government, therefore, passed the orders in the name of President of India called the Authentication of orders and Instruments Rules, 2002. As far as the DGFT is concerned, the power has been given to the Director General of Foreign Trade, the Additional Director General and others to sign to authenticate all instruments made and executed in the name of the President of India (Rule 12). The rule about authentication is very clear and admits of only one interpretation. This Court is therefore of the opinion that there is no merit in the contention urged by the learned counsel for the petitioner. The notification clearly states that it is issued by the Central Government. 2002 Rules that are produced permit the authentication thereof by the DGFT - this Court holds that the challenge to the notification has to fail. Petition dismissed.
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2020 (2) TMI 235
Imposition of redemption fine and penalty - mis-declaration of country of origin of goods in the bills of entry - import of Bitumen - prohibited goods or not - HELD THAT:- In the present case there is no dispute that the impugned goods i.e., bitumen is not prohibited goods either under the Customs Act or Foreign Trade Policy or any other law in force at the time of importation of goods and the Customs in the show cause notice has admitted this fact. It is also a fact that there is no prohibition of impugned goods from Iran either under the Customs Act or Foreign Trade Policy - Further, the only allegation against the appellant in the present case is that in the bill of entry filed by them, they have wrongly mentioned the country of origin as UAE whereas in fact the country of origin is from Iran - After perusal of various statements made by the various persons during the course of investigation including that of the appellant, it is found that nobody has spoken against the appellant that the appellant is in any way involved in the manipulation of changing the country of origin documents. The appellant has filed the bill of entry and showed the country of origin as UAE on the basis of documents supplied to him by the supplier based at UAE. Further no document has been produced by Revenue on record to show the involvement of appellant in any way in the said mis-declaration. Further, in the present case the appellant has not claimed any preferential rate of duty. After examining the provisions of Section 111(d) and 111(m), it is found that both the provisions are not applicable in the fact and circumstances of this case. Further, no mala fides has been brought on record on the part of appellant so as to impose penalties on the appellant under Section 112(a) and Section 114AA of the Customs Act, 1962. Appeal allowed - decided in favor of appellant.
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2020 (2) TMI 234
Export of goods under DEPB Scheme - mis-classification of export products under the DEPB schedule with the intention of claiming higher DEPB credit - confiscation - redemption fine - penalty - HELD THAT:- It is not in doubt that the goods were declared in a particular manner in the export documents and that they were cleared by the department officers after assessment and examination. As per the description given in the documents, the DEPB schedule under which they claimed credit matched. There is nothing on record to show that the duplicate set of invoices which they prepared for the overseas importers were presented before the customs officers. Only subsequent investigations by the DRI resulted in unearthing of the documents including the duplicate set of invoices - the First Appellate Authority has not considered this aspect or given any findings thereon. Confiscation - redemption fine - HELD THAT:- During the relevant time Customs Act, 1962 extended to the whole of India [Section 1(2)]. There was no extra territorial jurisdiction to the Customs Act during the relevant period. A plain reading of Section 1(2), 2(19) and Section 113 shows that during the relevant period since the Customs Act extended only to the whole of India and not beyond, action under this act could be taken only within the country and not outside. Therefore, only the export goods, i.e., the goods which are to be exported could be confiscated. There was no provision to confiscate the goods which have already been exported. Therefore, in the present case, the First Appellate Authority was correct in setting aside the confiscation of the goods under Section 113 as this section did not provide for such confiscation - Since the goods cannot be confiscated under Section 113, the question of the order imposing a redemption fine under Section 125 also does not arise. Penalty - HELD THAT:- The penalty under Section 114 is dependent upon the goods being held liable for confiscation under Section 113 this penalty also does not sustain. This is a fit case to be remanded to the First Appellate Authority with a direction to give a specific finding with regard to the mis-declaration of the goods by way of duplicate set of invoices and the consequences of such mis-declaration on the eligibility of DEPB credit at the rate claimed by the respondent - The impugned order is upheld to the extent of setting aside confiscation imposition of fine and penalties are cancelled - Appeal allowed by way of remand.
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2020 (2) TMI 233
Fraudulent removal of imported goods without payment of proper customs duties - contravention of the provisions of Section 12 of Customs Act, 1962, read with Notification no. 34/97 dated 07.04.1997 - Wilful presentation of wrong documents - Confiscation - penalties - HELD THAT:- The Show Cause Notice dated 13.03.2009 demanded only part of duty that has been debited by the respondents, from the DEPB License in respect of the Ex-Bond Bill of Entry. The demand made in the Show Cause Notice dated 11.03.2010 was in respect of the entire amount of duty that was to be paid in respect of the said ex-bond Bill of Entries. Commissioner has by removing the Ex Bond Bill of Entries covered by the Show Cause Notice dated 13.03.2009 from the demand made in the Show Cause Notice dated 11.03.2010, has without considering the demand made in respect of said Ex Bond Bill of Entries by the second show cause notice limited the demand to the amount shown to be paid by utilizing the DEPB License. Since Commissioner has instead of reducing the overlapping demand made by the two show cause notice, removed the entire demand made against those ex-bond Bill of Entries by Show Cause Notice dated 11.03.2010, which were covered by earlier Notice dated 13.03.2009 we are not in position to uphold the impugned order in this respect. In our view Commissioner should have recorded finding in respect of each Bill of Entry covered by Show Cause Notice dated 11.03.2010 and then confirmed our dropped the demand made. If there was any overlapping demand in the two show cause notices, then the demands should have been adjusted to the extent of overlap. Thus the matter needs to be remanded back to the adjudicating authority to re-determine the issues in respect of the Bill of Entries covered by 2nd Show Cause Notice, which have been removed by him for the reason of their being covered by 1st Show Cause Notice. Imposition of penalties u/s 112(a) of CA - HELD THAT:- From the findings recorded by the Commissioner, it is evident that he has imposed the penalty on Appellant, CHA, for his failure to discharge the obligations cast on him in terms of Regulation 13 of Custom House Licensing Regulation 2004 and also certain activities of one of his employee namely Shri Rajesh Bhanushali - However, Hon ble Delhi High Court has in case of COMMISSIONER OF CUSTOMS VERSUS SHIVA KHURANA [ 2019 (1) TMI 838 - DELHI HIGH COURT] has held there is nothing in the Regulations nor in the Customs Act which can cast such a higher responsibility as are sought to be urged by the Revenue. In the absence of any indication that the CHA concerned was complicit in the facts of a particular case, it cannot ordinarily be held liable - penalty cannot be upheld and is set aside. Appeal allowed by way of remand.
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Insolvency & Bankruptcy
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2020 (2) TMI 232
Recall of order - Jurisdiction of Adjudicating Authority-NCLT to issue directions directly to the SFIO under Section 210 read with Section 213 (b) (in) of the Companies Act, 2013 - HELD THAT:- When neither of the Ex.-directors or the company secretary or any other person not prepared to divulge the information as to where such an amount has disappeared, directions were issued to the SFIO to investigate and it should have been followed rather than filing of application for recalling the order on account of a technical issue of obtaining permission from the Central Government. The same could be done by the SFIO itself as the siphoning of funds is in respect of public money which is noticed in the order dated 16.11.2018. Application dismissed.
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Service Tax
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2020 (2) TMI 231
Condonation of delay in filing appeal before the tribunal - sufficient cause for delay or not - Classification of services - Renting of Immovable Property Service or not - Whether sufficient cause is shown for the condonation of delay? - HELD THAT:- The delay deserves to be condoned, in the light of the contentions of the appellant that the reason for the delay is beyond the control of the appellant and that the said reason for the delay is on account of the ill health of the accountant and his leaving the job in June, 2014, without intimation, after having received the copy of the impugned order and placing it in audit file, which is not within the knowledge of the appellant. If the explanation is accepted and an opportunity is provided to have the cause in the proposed appeal decided on merits, the highest that would happen is that the cause would be decided on its merit after hearing the parties and in that view of the matter, it cannot be said that if the delay is condoned after accepting the explanation as a sufficient cause prejudice would be caused to the revenue/respondent herein. While considering the applications for condonation of delay, what is to be seen is whether the interest of revenue will stand protected, even while recognizing the right of the assesse to exercise the statutory remedies available to the assesse and the statutory right of appeal cannot be made redundant by dismissing the application for condonation of delay on technical grounds. This is a fit case for condonation of delay and affording an opportunity to the appellant to have the intended appeal decided on its merit by the CESTAT. Hence, the impugned order is liable to be set aside and that such a course sub-serves the ends of justice. Appeal allowed.
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2020 (2) TMI 230
Refund of service tax - duty paying documents - non-submission of proper document admissible in terms of Notification No.40/2012-ST - HELD THAT:- The benefit of Notification No.40/2012-ST can be availed in either way i.e. the service provider may not tax the amount or the service recipient being SEZ can claim refund - Mere technical discrepancy in the invoices cannot be the ground for denying substantive benefit of refund available to SEZ unit. It is the policy of the Government to exempt or refund the input tax incurred by the SEZ unit. Regarding re-conciliation of Service Tax payment with evidence of challans, I find that the same was produced before the lower authority and also before me and the same is satisfactory. The appellant herein is eligible for claiming refund of the Service Tax paid by the service provider which is in consonance with the law - appeal allowed - decided in favor of appellant.
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2020 (2) TMI 229
SEZ unit - refund in respect of services received for authorized operation by virtue of N/N.12/2013-ST dt. 01/07/2013 - HELD THAT:- The appellant is a SEZ unit and as per Section 26 read with Rule 31 of SEZ Rules, 2006 along with Section 51 of SEZ Act, the SEZ Act has overriding impact over other laws and other SEZ units are exempt from payment of service tax for any service which is used for authorized operations. The issue is no more res-integra and is decided in the case of MAST GLOBAL BUSINESS SERVICES INDIA PVT LTD VERSUS COMMISSIONER OF CENTRAL TAX, BANGALORE [ 2018 (9) TMI 258 - CESTAT BANGALORE] where it was held that Keeping in view the intention of the Government in enacting the SEZ Act and giving special fiscal concessions to SEZs, It is held that this is only a procedural and is not a mandatory condition as held by the Commissioner(Appeals). Further, refunds have been rejected on the ground that some of the services are not covered in the default list of services whereas factually those services are very much covered in the approved list of services issued by the office of the Development Commissioner which has been placed on record. Further, those services which are not specifically approved but the said services are used for authorized operation of the company, appellant still be eligible for the refund in view of the Section 26 and Section 51 of the SEZ Act. The matter is remanded to the original authority to verify the invoices allegedly not produced before the authorities earlier - Appeal allowed by way of remand.
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2020 (2) TMI 228
Demand of interest and penalty - irregularly availed CENVAT credit on BCD reversed on being pointed out - HELD THAT:- The appellant had sufficient balance during the relevant period and has not utilized the same. Therefore, in view of the decision of the Hon ble Karnataka High Court in the case of COMMISSIONER OF CENTRAL EXCISE SERVICE TAX LARGE TAXPAYER UNIT, BANGALORE VERSUS M/S BILL FORGE PVT LTD, BANGALORE [ 2011 (4) TMI 969 - KARNATAKA HIGH COURT] , the appellant is not liable to pay the interest and the penalty. CENVAT Credit - input services - insurance of vehicles - HELD THAT:- The vehicle belongs to the company and are used for an activity indirectly in relation to production and therefore by the amendment in the definition of input service w.e.f. 01.04.2011, the services used for maintenance of vehicle is not excluded because the same is not used for personal use of a particular person - credit allowed. CENVAT credit - input services - Outdoor Catering Service and Health Insurance Charges - HELD THAT:- The impugned order is wrong in denying the CENVAT credit of Service Tax paid on Outdoor Catering Service and Health Insurance Charges which had already been allowed in the OIO and the Department did not file any appeal against that nor the appellant has filed appeal before the Commissioner regarding Outdoor Catering Service and Health Insurance Charges - credit allowed. Appeal allowed - decided in favor of appellant.
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2020 (2) TMI 227
Business Auxiliary Services - appellant-cable T.V. operator, entered into an agreement with M/s Sify Limited, Chennai to provide internet services of M/s Sify Limited through their cable network to their clients - levy of service tax - HELD THAT:- A perusal of various clauses of the agreement would show that the agreement is not in the nature of an agreement between a principal and principal. It is in a nature of an agreement between a principal and an agent. As a principal, M/s Sify Limited is entitled to engage as many several agents as they please in addition to the appellant (para 3.5 of the agreement). On the other hand, as an agent the appellant cannot provide services of other internet service providers through their network (para 3.7 of the agreement). The agreement is for an initial term of 3 years and renewable at Sify s option for further term of one year each. Either during the initial term or during any renewed term, Sify may, at any time, terminate the agreement without assigning any reason whatsoever after giving 90 days notice. Similar option of termination is not available to the appellant. The appellant collects the revenue on behalf of M/s Sify Limited from the customers and for the services rendered by the appellant, M/s Sify Limited will pay to the appellant 30% of the browsing revenue. There is nothing in the entire agreement that would suggest that a new joint venture has been formed or a joint venture between the two companies has been established as a business. Nothing in the agreement suggests that the appellant and Sify have an agreement on Principal to Principal basis - in the present case based on the nature of the agreement the appellant is providing services to M/s Sify Limited which fall under the category of business auxiliary service. Appeal dismissed - decided against appellant.
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2020 (2) TMI 226
Recovery of interest u/s 87 without issuance of SCN - Delay in payment of service tax - HELD THAT:- In the present case the appellant paid the service tax liability but with delay. Appellants have shown the tax arrears in their returns and subsequently paid the tax due. Subsequently, during the audit, the Department detected that there was a delay and the appellant is liable to pay the interest for the delay in payment of the tax. The original authority has given the decision in violation of the principles of natural justice and no opportunity whatsoever is given to the appellant to put forth his defense regarding the basis of calculation on which the interest payable is arrived. Further the provisions of Section 73(1B) which was inserted w.e.f. 14/05/2015 is not applicable in the present situation because Section 73(1B) covers situation where self-assessed tax is not paid in part or in full, recovery of such tax with interest can be made by invoking the provisions of Section 87 of the Finance Act, 1994 whereas in the present case there is no dispute regarding the payment of tax and the said payment of tax was paid much before the audit was conducted and there is no demand of tax in the present case. Hence, provisions of Section 73(1B) read with Section 87 are not applicable in the present case. Applicability of time limitation for demanding of interest - HELD THAT:- In the present case, the demand is made for the period April 2011 to March 2016 by issue of a letter of demand dated 24/08/2017. The Tribunal has dealt with this issue of limitation in various decisions relied upon by the appellant cited supra and it has been consistently held that to demand interest also period of limitation is applicable - in the Master Circular No. 1053/02/2017-CX dated 10/03/2017, the Board has clarified that in case where duty and interest is demanded, it is quite clear that limitation prescribed in Section 11A applies. Further it may be noted that in cases where duty has been paid belatedly and interest has not been paid, interest needs to be demanded and recovered following the due process of demand and adjudication. In such cases, the period of limitation as prescribed in Section 11A applies for demand of interest. The confirmation of demand of interest without issuing the show-cause notice is not sustainable - period of limitation is applicable as far as demand of interest is concerned - Appeal allowed - decided in favor of appellant.
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2020 (2) TMI 225
CENVAT Credit - Right of User (ROU)-sharing/leasing of immovable property service - exempted services - Rule 6(3) CENVAT Credit Rules, 2004 - extended period of limitation - HELD THAT:- The demand of ₹ 3,81,152/- on the lease rent amount paid to M/s HPCL during the previous years and got reimbursed in the year 2013-14 is not sustainable because the appellant has paid the Service Tax on gross amount without any deduction of Service Tax and M/s HPCL has deposited the gross Service Tax to the Department without claiming any refund and only adjustment was made on the net amount payable to M/s HPCL. Therefore, the Service Tax Department has been paid with full amount of Service Tax and the demand of Service Tax on refund is not sustainable. Demand of Service Tax of ₹ 1,03,947/- under Rule 6(3) of CCR, 2004 - HELD THAT:- The appellants have not rendered any exempted service by way of trading, in fact, the appellant had purchased the material during the year 2000 to 2002 and paid the full Excise duty and did not avail any CENVAT credit because at that time transportation service was not under the purview of Service Tax. Moreover, the activity of the appellant is not trading and they are neither manufactures nor trader and full Excise duty has been paid on all the goods purchased by them and no CENVAT credit was availed as output service was not taxable. In view of this, this demand is also not sustainable in law. Demand of CENVAT credit of ₹ 58,775/- is concerned - HELD THAT:- The Commissioner (A) has rightly disallowed this credit on the grounds that there is an amendment in the definition of input service w.e.f. April 2011. Input service credit of ₹ 52,875/- availed during January 2014 on input service provided by M/s Barley Person C India Ltd. for pre-feasibility study connected for laying petroleum pipeline from Mangalore to Kannur in Kerala - HELD THAT:- The appellant, during the course of audit, has agreed to reverse the same. Similarly, the CENVAT credit on construction of civil structure is concerned, the appellant availed the CENVAT credit to the extent of ₹ 52,113/- and during the course of audit agreed to reverse the same. Time limitation - April 2013 to March 2015 - HELD THAT:- The disputed period in this case is April 2013 to March 2015 whereas the SCN was issued on 04.03.2016 alleging suppression of material fact with intent to evade payment of duty. Further, the appellant is a PSU and is maintaining proper books of accounts in which all the transactions are recorded and some discrepancies were found during the course of audit; some of which appellant agreed and reversed ineligible CENVAT credit but with regard to others, the appellant contested the same and thereafter a SCN was issued and adjudication was done - Since all the discrepancies were noticed on the basis of audit, it cannot be alleged that the appellant being a PSU have indulged in suppression of material fact with intent to evade payment of tax. Since suppression cannot be alleged against the appellant, hence invoking the larger period of limitation to confirm the demand is not tenable in law - the entire demand is barred by limitation. Appeal allowed - decided in favor of appellant.
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2020 (2) TMI 224
100% EOU - refund of CENVAT Credit - export of services - Rule 5 of the Cenvat Credit Rules, 2004 - denial of benefit of refund in case of some of the input services on the ground that there were no nexus between such disputed input services and the output service exported by the appellant and that the disputed services are not conforming to the definition of the input service as per Rule 2(l) of the Cenvat Credit Rules, 2004 - HELD THAT:- Rule 5 of the Cenvat Credit Rules was substituted by Notification No.18/2012-C.E.(N.T.), dated 17.03.2012 (w.e.f. 01.04.2012). Under the said substituted rule, it has been provided that the manufacturer or the service provider has to claim the refund as per the formula prescribed therein. Considering such amendment of Rule 5, the Tax Research Unit of Department of Revenue vide circular dated 16/03/2012 has clarified that the new scheme under Rule 5 does not require the kind of correlation that is needed at present between exports and input services used in such exports. Since the amended rule w.e.f. 01.04.2012 does not provide for establishment of nexus between the input and the output services and the benefit of refund is to be extended only on compliance of the formula prescribed therein, the denial of refund benefit on the ground of non-establishment of nexus cannot be sustained. Tribunal in the case of M/S MAERSK GLOBAL SERVICES CENTRES (INDIA) PVT. LTD. VERSUS COMMISSIONER OF C.G. ST-NAVI MUMBAI [ 2019 (10) TMI 959 - CESTAT MUMBAI] has extended the refund benefit on the ground that establishment of nexus between the input and the output services cannot be insisted upon. Since, correlation between the relevant invoices and the refund application is required to be scrutinized in a proper manner, the matter should be remanded to the original authority for verification of the relevant invoices and other documents for a proper fact finding whether, the refund benefit has been claimed once or twice - the matter is remanded for a limited purpose of verification of the relevant invoices with regard to the allegation of availment of double credit by the appellant. Appeal allowed by way of remand.
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2020 (2) TMI 223
Repair and maintenance services - Reverse charge mechanism - services received and consumed outside India when the aircrafts were on foreign run - period from 18th April 2006 to 31st March 2008 - HELD THAT:- There is no concrete finding on any of the allegations or on the taxability of the various payments made to overseas entities by M/s Kingfisher Airlines Limited. For the most part, the findings are devoted to the failings in the show cause notice on lack of being specific and the lack of having discharged the burden of proof necessary for rendering a finding. While one cannot but concur with his finding that, in the absence of legal provision prior to the insertion of section 66A of Finance Act, 1994, there could not be any taxability on discharge remittance, we cannot agree with him that the adjudication order has discharged its obligation to discuss the allegations in the show cause notice for rendering a finding thereon - It was incumbent upon the adjudicating authority to examine various evidences, including payments and agreements entered upon to come to the conclusion of taxability or otherwise. The matter remanded back to the original authority for a fresh decision after consideration of the facts and evidence on records - appeal allowed by way of remand.
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2020 (2) TMI 222
Extend period of limitation - Short payment of service tax - wilful suppression of facts - willful suppression the value of the service provided in the ST-3 Returns - issuance of SCN by invoking proviso to Sub-Section (1) of Section 73 of Finance Act, 1994 - HELD THAT:- It is very clear that the allegation is to the effect that appellant had suppressed value and such suppression was allegedly as compared to the entries in the balance sheet - This Tribunal has repeatedly held that if the information is available in the balance sheet which is a public document then allegations of suppression cannot sustain. It is noted that the appellant had filed ST-3 Return and the allegation is on the basis of information available in the public document i.e. balance sheet. Therefore, the suppression is not established. Appeal allowed - decided in favor of appellant.
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2020 (2) TMI 221
Condonation of delay in filing appeal before Commissioner (Appeals) and filing petition before HC - Levy of service tax - erection, commissioning and installation service - HELD THAT:- After the impugned order was passed on 29.12.2009, the petitioner should have filed an appeal before the appellate commissioner namely, the 2nd respondent within a period of 60 days or within a period of 30 days thereafter with an application for condoning the delay after explaining the reasons for the delay - Though, the preamble to the impugned order states that the appeal should have been filed within 90 days, as per the amendment to Section 35 of the Central Excise Act, 1944 in 2001, a statutory appeal should have been filed within 60 days of receipt of the impugned order. The present writ petition has been filed long after a lapse limitation on 26.04.2011. The petitioner cannot be allowed to approach the 2nd respondent Appellate Commissioner as the petitioner has been negligent in neither participating in the adjudicatory mechanism provided under the Act nor in not filing a statutory appeal in time. Even according to the petitioner, the impugned order was received on 4.01.2010. No steps were taken by the petitioner to file a statutory appeal or approach this Court within a time - petition dismissed.
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Indian Laws
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2020 (2) TMI 220
Grant of Bail - seizure of narcotics and psychotropic substances - alleged commission of the offences punishable under Sections 8, 21, 22 and 29 of the NDPS Act, 1985 - HELD THAT:- The provisions of the NDPS Act, 1985 cannot be read in exclusion to the Drugs and Cosmetics Act, 1940 and that if the action of an accused amounts to a prima facie violation of Section 8 of the NDPS Act, 1985, the circumstances and the gravity of the offence does not entitle such an accused to be granted bail. There is no ground for grant of bail and the application is thus, declined.
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2020 (2) TMI 219
Freezing of Bank Accounts - Chapter V-A under section 68-F and other related Sections given in Chapter V-A of the NDPS Act - It is averred that as the said account contained illegally acquired money so the IO had freezed the account of the petitioner - HELD THAT:- The freezing order has been passed by the IO on 30.10.2019 which was to be sent for confirmation to the concerned competent authority as stipulated U/s 68 F(2) of NDPS Act which was accordingly sent by the IO on 31.10.2019 to the competent authority for confirming or declining the said freezing order and the time prescribed for this procedure is 30 days as per section 68 F(2) of the NDPS Act. The petition filed by the petitioner is, therefore, liable to be dismissed as there is no challenge to the freezing order dated 30.10.2019 and in any case it was sent for confirmation to the competent authority on 31.10.2019 by the IO. The competent authority had 30 days time to either confirm or decline the freezing order but the petitioner came running to the court without laying any challenge to the present order dated 30.10.2019. The petition is not maintainable as there being no challenge to the freezing order dated 30.10.2019, so the same is dismissed. However, since the proceedings have been stayed by virtue of the order dated 05.11.2019, so the time for completion of the proceedings by the competent authority as per provisions of section 68F(2) of NDPS Act is extended for 25 days from the date of disposal of this writ petition. Application disposed off.
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2020 (2) TMI 218
Smuggling - Cocaine - whether the appellant s search conducted by police officials which yielded 25 grams of cocaine was not compliant with the provisions of Section 50 of the NDPS Act, as it was not conducted in the presence of Gazetted Officer/Magistrate? HELD THAT:- The mandate of Section 50(1) of the NDPS Act is to ensure that the authorized officer informs the person proposed to be searched about his right to be searched before a Magistrate or a Gazetted Officer. The authorized officer is also obliged to take the concerned person (the suspect) to the nearest Gazetted Officer of any departments mentioned in Section 42 of the NDPS Act or to the nearest Magistrate, if such person so requires - it is no longer res integra that it is mandatory to comply with Section 50 of the NDPS Act. There is also no ambiguity as to manner in which Section 50 of the NDPC Act is required to be complied. Plainly, there is no requirement to conduct the search in the presence of a Magistrate or Gazetted Officer, if the person proposed to be searched did not so desire, after being informed of his right in this regard. The words if such person so requires as used in Section 50(1) of the NDPS Act make it amply clear that the person to be searched would be taken before a Magistrate or a Gazetted Officer, only if he so requires. In terms of Sub-section (2) of Section 50 of the NDPS Act, the Authorised Officer is empowered to detain the person proposed to be searched until he can bring him before the Gazetted Officer/Magistrate, as referred to in Sub-section (1) of Section 50 of the NDPS Act. The words such requisition , as mentioned in the opening sentence of Subsection (2) of Section 50 of the NDPS Act, obviously refers to the person proposed to be searched electing to exercise his right to be searched before a Gazetted Officer / Magistrate. Sub-section (5) of Section 50 of the NDPS Act were met, that is, if it is not possible to take the person to be searched to the nearest Gazetted Officer/Magistrate without the possibility of the person being searched parting with the possession of any narcotic drugs, psychotropic substance or any controlled substance or article or document. In terms of Sub-section (6) of Section 50 of the NDPS Act, the authorised officer is also required to record reasons for his belief that necessitated him to search the suspect without taking him to the nearest Gazetted Officer or Magistrate. Such reasons are required to be recorded within seventytwo hours of the search being conducted and a copy of the same is required to be sent by the authorised officer to his immediate official superior. Given the scheme of Section 50 of the NDPS Act, it is difficult to accept that it is mandatory to search a suspect before a Magistrate/ Gazetted Officer, notwithstanding that the suspect does not so require, after he is apprised of his rights in this regard. The prosecution has established that the appellant was apprised of his right to be searched before a Magistrate or a Gazetted officer but he did not require that his search be conducted before the said persons - Appeal dismissed.
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2020 (2) TMI 217
Smuggling - Psychotropic Substances - conviction of offences u/s 20(b)(ii)(c) read with Section 29 of the Narcotics Drugs and Psychotropic Substances Act, 1985 - HELD THAT:- Section 29 of the NDPS Act and to pay a fine of ₹ 1,00,000/- each and in default thereof to undergo simple imprisonment for 6 months vide order dated 11.10.2012. The appellants have almost served the substantial sentence as stated hereinabove. The conduct of the appellants has been reported to be satisfactory as per the nominal roll received from the jail authorities. The appellants have not been previously convicted nor are they involved in any other criminal case. Taking into consideration, Section 30 of the Code of Criminal Procedure, 1973, the default sentence of the appellants is reduced from six months to two months. It is ordered that the appellants shall pay a fine of ₹ 1 lac each and in default of payment of fine, the appellants shall have to further undergo simple imprisonment for two months. Appeal disposed off.
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