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TMI Tax Updates - e-Newsletter April 17, 2019 Case Laws in this Newsletter: GST Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise Indian Laws Highlights / Catch Notes GST: Detention of vehicle as well as goods - whether carrying Lorry Receipt issued by the transporter is not a requirement prescribed under rule 138A(1) of the GST rules? - Prima facie case is in favor of assessee. Visit to Get Source GST: Attachment of Bank Accounts - alternative remedy - writ is dismissed as not entertained in the light of the availability of the efficacious alternative remedy under sub-rule (5) of rule 159 of the CGST Rules, 2017 with a direction to department to consider all the objections raised by the petitioners Visit to Get Source GST: Provisional attachment u/s 83 of the Gujarat GST, 2017 - recording of satisfaction - disobedience of the directions of court - show cause as to why Assistant Commissioner of State Tax should not be made personally liable to pay the costs of the petition and contempt for disobedience of the directions of court Visit to Get Source Income Tax: Bogus purchases - profit estimation on alleged party @ 12.50% - no material to substantiate the view taken by the AO - comparing the GP rate on other purchases and overall G.P rate declared, it was held that assessee is operating on low margin, hence the rate of G.P should be at rate earned from other purchases Visit to Get Source Income Tax: Excessive sugarcane price paid to members - sugar to members at concessional rates - remanded to AO to determine that it is “Appropriation of profit” or deductible u/s 37 in light of judgment of Supreme Court Visit to Get Source Income Tax: Revision u/s 263 - SCN related to taxability of unsold flats - amendment introduced by the Finance Act, 2017 w.e.f. 1/4/2018 - When the assessment order was passed on 31.03.2016, relevant provision has not even been brought into statute book - AO cannot be expected to apply the same - the assessment order cannot be said to be erroneous and prejudicial to the interest of the Revenue - order of the CIT quashed Visit to Get Source Income Tax: Computation of deduction u/s 80IA - Section 80IA is the clear cut to get 30% of the income as profit derived by the Assessee from the eligible business - it does say, 30% of the profit from the eligible business or 30% of the total income, whichever is lower -no substantial question of law Visit to Get Source Income Tax: Jurisdiction in writ proceedings - challenge of order of assessment and Tax Recovery proceedings - The very question of validity or otherwise of service the notices of assessment would require detail examination of facts and validity does not rest only on legal contentions - availability of alternative efficacious remedy would be a ground to refuse to entertain the writ petition Visit to Get Source Income Tax: Stay on recovery - Notice u/s 226(3) for attachment of bank account - Provisional attachment u/s 281B - appeal pending before the CIT(A) - while dealing with an application for stay of demand relatable to the assessment order being contrary to the orders of appellate authorities ought to be stayed Visit to Get Source Income Tax: Disallowance of notional interest under TP - TPO had re-characterised the transaction of subscription of shares into advancing of unsecured loans - Nothing is brought on record by the Revenue to suggest that the transaction was sham - TPO could not have treated such transaction as a loan and charged interest thereon on notional basis Visit to Get Source Income Tax: Adjustment u/s 115JB - remuneration received from the partnership firms and credited to Profit and Loss account - no specific adjustment provided under the Explanation to Section 115JB - will form part of book profit Visit to Get Source Income Tax: Exemption/approval u/s 11 & 80G - object are to the promoting the dental and medical education - benefit is extended to all the colleges and the stake holders but not restricted to any particular community or religion - exemption u/s 11 granted Visit to Get Source Income Tax: Disallowance of remuneration/ commission - drawing remuneration from partnership firms - there is no law (Income tax & Partnership Act) which prohibits a person to work in more than one partnership firms and draw remuneration therefrom - All that Section 40(b) requires is that the remuneration should be paid to a working partner Visit to Get Source Income Tax: Addition of interest income relying on 26AS - assessee claimed that interest income did not pertain to it and company has not even claimed the credit of TDS - onus will be on the AO to bring on record independent evidence after making enquiries from the payees - assessee cannot be expected to discharge the impossible burden of proving a negative Visit to Get Source Income Tax: Penalty u/s 271AAB - AO has to arriving to the conclusion that the income disclosed by the assessee in the statement recorded U/s 132(4) is an undisclosed income in terms of Section 271AAB(1) r.w. explanation - not mandatory Visit to Get Source Customs: Classification of imported goods - Tablet PC or mobile telephone - voice communication is secondary function to the Tablet functions. When the importer themselves hold that Tablet function is predominant, any finding rendered by the Commissioner to the contrary cannot survive. Visit to Get Source Customs: Extended period of limitation - improper classification of goods on bonafide belief - it is the duty of the adjudicating authority to classify correctly and to examine whether the classification sought is correct or not - The extended period of limitation is not invokable. Visit to Get Source Customs: Evasion of ADD - The Appellant had imported calculators in SKD condition with a view to assemble them as fully functional calculators to avoid Anti-Dumping Duty. It cannot, therefore, be permitted to re-export the calculators in SKD condition Visit to Get Source Customs: Imposition of penalty on CHA - The CHA is not supposed to verify the each and every aspect about the business of importer as the Inspector of Department or investigating agency. Visit to Get Source Service Tax: Review of the order - The Tribunal does not have the power to even review an order, much less to hear the appeal afresh on merit. Visit to Get Source Service Tax: Classification of services - Information Technology software services or not - sale of canned software with license and condition to upgrade the said software - The demand of service tax with interest upheld. Visit to Get Source Service Tax: Job work - When the process carried out by the appellant amounts to manufacture, the very same activity cannot be considered as a service. Merely because the said activity is carried out on an intermediate product. Visit to Get Source Central Excise: Reversal of CENVAT Credit - clearance of goods (inputs) to their sister concern - Rule 3(6)(a) of the Credit Rules, 2002 will prevail over Rule 3(5) of the Credit Rules, 2002 as it reduces the availing of credit in respect of goods manufactured by a 100% EOU. Visit to Get Source Central Excise: Extended period of limitation - SCN is clearly issued invoking extended period of limitation in a routine manner and without any justification whatsoever for which reason, the impugned order cannot sustain. Visit to Get Source Articles MAJOR CHANGES IN MEIS AND SEIS SCHEME DURING PAST ONE YEAR e-AGILE – A new reform towards compliances in one packet Notifications Customs 31/2019 - dated 15-4-2019 - Cus (NT) Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Sliver GST - States F-10-12/2019/CT/V(32) - 14/2019 - State Tax - dated 7-3-2019 - Chhattisgarh SGST Seeks to rescind notification No. 08/2017 - State Tax dated 01.07.2017 in order to extend the limit of threshold of aggregate turnover for availing Composition Scheme u/s 10 of the SGST Act, 2017 to ₹ 1.5 crores F-10-12/2019/CT/V(31) - 13/2019 - State Tax - dated 7-3-2019 - Chhattisgarh SGST Seeks to prescribe the due dates for furnishing of FORM GSTR-3B for the months of April, May and June, 2019 F-10-12/2019/CT/V (30) - 12/2019 — State Tax - dated 7-3-2019 - Chhattisgarh SGST Seeks to prescribe the due dates for furnishing of FORM GSTR-1 for those taxpayers with aggregate turnover of more than ₹ 1.5 crores for the months of April, May and June, 2019 F-10-12/2019/CT/V (29) - 11/2019 - State Tax - dated 7-3-2019 - Chhattisgarh SGST Seeks to prescribe the due dates for furnishing of FORM GSTR-1 for those taxpayers with aggregate turnover upto ₹ 1.5 crores for the months of April, May and June, 2019 . F-10-12/2019/CT/V(28) - 10/2019 - State Tax - dated 7-3-2019 - Chhattisgarh SGST To give exemption from registration for any person engaged in exclusive supply of goods and whose aggregate turnover in the financial year does not exceed ₹ 40 lakhs 9/2019-State Tax (Rate) - dated 30-3-2019 - Gujarat SGST To provide for application of Composition rules to persons opting to pay tax under notification no-2-2019 State Tax (Rate) 8/2019-State Tax (Rate) - dated 30-3-2019 - Gujarat SGST To amend notification No-1-2017 State Tax (Rate) to notify rate of certain goods for real estate sector 7/2019-State Tax (Rate) - dated 30-3-2019 - Gujarat SGST To notify certain services to be taxed under RCM under section 9(4) of GGST Act for real estate sector 6/2019-State Tax (Rate) - dated 30-3-2019 - Gujarat SGST To notify Promoters as class of persons under section 148 of GGST Act, 2017 5/2019-State Tax (Rate) - dated 30-3-2019 - Gujarat SGST Amend Notification No-13-2017 State Tax (Rate) to specify services to be taxed under RCM for real estate sector 4/2019-State Tax (Rate) - dated 30-3-2019 - Gujarat SGST To amend notification No-12-2017 StateTax (Rate) to exempt certain services for real estate sector 3/2019-State Tax (Rate) - dated 30-3-2019 - Gujarat SGST To amend notification No-11-2017 State Tax (Rate) for rates of various services for real estate sector 16/2019-State Tax - dated 29-3-2019 - Gujarat SGST Gujarat Goods and Services Tax (Second Amendment) Rules, 2019 Income Tax 36/2019 - dated 12-4-2019 - IT Income-tax (3rd Amendment) Rules, 2019 Circulars / Instructions / Orders DGFT - TRADE NOTICE NO. 05/2019-20 - dated 15-4-2019 Requirement of documents for online IEC application — modification and modification procedure to follow Clarifications News Examination for Confirmation of Enrollment of GST Practitioners Change in Tariff Value of Crude Palm Oil, RBD Palm Oil, Others – Palm Oil, Crude Palmolein, RBD Palmolein, Others – Palmolein, Crude Soyabean Oil, Brass Scrap (All Grades), Poppy Seeds, Areca Nuts, Gold and Silver Notified Case Laws: GST 2019 (4) TMI 918 Provisional attachment u/s 83 of the Gujarat GST, 2017 - recording of satisfaction - attachement of Bank accounts - Held that:- Despite the fact that this Court, by judgment in [ 2018 (12) TMI 1441 - GUJARAT HIGH COURT] , had set aside the order of attachment dated 22.10.2018, whereby the first respondent had attached three bank accounts of the petitioner by giving reasons regarding why such action was not warranted including recording satisfaction that no further amount was required to be recovered from the petitioner, and had also laid down guidelines for exercise of powers under section 83 of the Gujarat Goods and Services Tax, 2017, the first respondent has once again passed an identical order attaching the very same bank accounts without recording necessary satisfaction as to why such action was required to be taken in the interest of government revenue. Since the petitioner was constrained to approach this court by way of this writ petition challenging the attachment over its bank accounts on account of the action of Shri S. H. Gandhi, Assistant Commissioner of State Tax (the first respondent herein), which is totally contrary to the judgment in [ 2018 (12) TMI 1441 - GUJARAT HIGH COURT] and is in disobedience of the directions and guidelines laid down therein, Shri S. H. Gandhi, Assistant Commissioner of State Tax is called upon to show cause as to why he should not be made personally liable to pay the costs of the petition as well as, as to why the matter should not be referred to the appropriate bench taking up contempt matters for disobedience of the directions of this court. Stand over to 26th April 2019 . 2019 (4) TMI 917 Attachment of Bank Accounts - availability of remedy against the order of attachment by way of filing objection under sub-rule (5) of rule 159 of the Central Goods and Services Tax Rules, 2017 - Held that:- The petitions are dismissed as not entertained in the light of the availability of the efficacious alternative remedy under sub-rule (5) of rule 159 of the Central Goods and Services Tax Rules, 2017. In terms of the communication dated 4.4.2019 of the Deputy Director, DGGI, AZU, the petitioners are required to file objections within seven days of attachment. Therefore, the petitioners were required to file the objections by 11th April, 2019. 2019 (4) TMI 916 Detention of vehicle as well as goods - section 129(1) of the Central Goods and Services Tax Act, 2017 - detention on the ground that the lorry receipt issued by the transporter is photocopy without computerized serial number and contact number details - whether carrying Lorry Receipt issued by the transporter is not a requirement prescribed under rule 138A(1) of the rules? - Held that:- Prima facie, the contention raised by the learned advocate for the petitioner appears to be valid. Under the circumstances, a prima facie case has been made out for grant of interim relief as prayed for in the petition. Stand over to 18th April, 2019. Income Tax 2019 (4) TMI 879 Condonation of delay - long illness of assessee - HELD THAT:- The Hon’ble Apex Court in the case of MST Katiji and Others [1987 (2) TMI 61 - SUPREME COURT], while explaining and laying down the principles that need to be kept in mind while considering an application for condonation of delay, has emphasized that substantial justice should prevail over technical consideration. The Hon’ble Court also explained that a litigant does not stand to benefit by lodging the appeal late and that the expression ‘every day’s delay must be explained’ does not mean that a pedantic approach should be taken. The doctrine should be applied in a rational, common sense and pragmatic manner. Thus there was sufficient and reasonable cause for the delay in the present case. Assessee has not obtained and not furnished the PAN in Form No.35 - HELD THAT:- CIT(A) has held that the assessee has not obtained and not furnished the PAN in Form No.35. Regarding this finding of the CIT(A), we find that now the assessee has obtained PAN – AANHM 6722 N (a copy of which is placed on record) and therefore this objection of the CIT(A) does not survive anymore. Therefore, in the interest of substantial justice, we set aside the impugned order of the CIT(A) dated 22.09.2017 and restore the matter to his file for admission and consideration and disposal on merits of the issues raised therein, after affording the assessee adequate opportunity of being heard and to file details / submissions required, which shall be duly considered by the CIT(A) before deciding the issues for consideration. We hold and direct accordingly. Ex-parte orders of CIT-A - HELD THAT:- Interest of substantial justice will be well served by setting aside these impugned ex-parte orders of the CIT(A) dated 31.10.2017 and restore the matters in both these appeals also to his file for admission, consideration and disposal on merits of the issues raised therein, after affording the assessee adequate opportunity of being heard and to file details / submissions required, which shall be duly considered by the CIT(A) before deciding the issues for consideration. 2019 (4) TMI 878 Search u/s 132 conducted in the premises of Siddhartha Academy - addition based on loose sheet found in search - on-money receipts - HELD THAT:- The loose sheet seized from the premises of Siddhartha Academy is undated and without the signatures of the assessee. The sale deed was registered for a sum of ₹ 24,85,000/- by the assessee and the co-owner independently. No other evidence was found to establish that the consideration was passed on over and above the registered sale consideration. CIT(A) considered the issue in detail and allowed the appeal of the assessee placing reliance on the decision of this Tribunal in the case of Shri Venkatarama Sai Developers [2015 (11) TMI 1608 - ITAT VISAKHAPATNAM]. Since the material was found in the premises of Siddhartha Academy, presumption is available to the department in the case of Siddhartha Academy, but not in the case of the assessee. It is not correct in coming to conclusion that on-money was exchanged between the parties on the basis of material found in the premises of third party and on the statement given by third parties. In the instant case, both the parties, searched party as well as the assessee have denied having exchanged the on money for sale of land. Even after the assessee’s case is covered under search operations u/s 132, the department did not unearth any evidence regarding exchange of cash in sale transaction. Therefore, since the facts are identical and department could not place any other material to controvert the finding given by the CIT(A) and no other decision of any High Court or Apex Court was brought on record controvert the decisions relied up on by the assessee, we do not find any reason to interfere with the order of the CIT(A) and the same is upheld. 2019 (4) TMI 877 Addition u/s 68 - bogus LTCG - sale proceeds of shares of Kailash Auto Finance Limited (KAFL) treating the same as income from undisclosed sources after rejecting the assessee’s claim of Long Term Capital Gains (LTCG) - HELD THAT:- The purchases were made by the assessee in cash for acquisition of shares of companies and the purchase of shares of the companies was done through the broker and the address of the broker was incidentally the address of the company. The profit earned by the assessee was shown as capital gains which was not accepted by the A.O. and the gains were treated as business profit of the assessee by treating the sales of the shares within the ambit of adventure in nature of trade. Thus, it can be seen that in the decision relied upon by the ld. DR, the dispute was whether the profit earned on sale of shares was capital gains or business profit. The facts of the case of the assessee are identical with the facts in the above case wherein the co-ordinate bench of the Tribunal has deleted the addition in the case of Smt. Pooja Aggarwal [2017 (9) TMI 1104 - RAJASTHAN HIGH COURT] in respect of sale of shares of M/s KAFL. I, therefore, respectfully following the same set aside the order of Ld. CIT(A) and direct the AO not to treat the long term capital on sale of shares of M/s KAFL as bogus and delete the consequential addition. - Decided in favour of assessee. 2019 (4) TMI 876 Registration of society u/s 12AA - exemption u/s 11 - allegation that objects of society are mutually beneficial to the members of the society and are not charitable - after amendment of objects, allegation broadly remain the same - assessee also conducted an entrance examination for candidates seeking for admission of courses like MBBS, BDS etc. - charitable activity u/s 2(15) OR not? - approval u/s 80G - HELD THAT:- The objectives of the society are proximate to the promoting the dental and medical education as well as the welfare of the society at large and also to organize various camps, encourage research activities to hold periodical meetings and conferences etc. as discussed earlier. There is no personal benefit derived by any of the members of the Society and there is no profit motive involved in the activities of the society. The benefit is extended to all the colleges and the stake holders but not restricted to any particular community or religion. Hence, there is no reason to deny registration u/s 12A of the Act when the objects of the society demonstrates that the objects are related to the general public utility at large. The AO is having powers to deny the exemption u/s 11 in case the funds are not utilized for the specified purpose or in violation of the objects of the society. What is to be seen by the CIT(E ) at the time of registration is the objects of the Society. Application of income and denial of exemption u/s 11 is after application of the funds which is permitted by the AO in the assessment. As per the objects s of the society, the objects are charitable in nature and accordingly we direct the CIT(E) to grant registration u/s 12AA of the Act. - Decided in favour of assessee 2019 (4) TMI 875 Disallowance of lease rentals - excessive deduction - HELD THAT:- It is however noted that in the assessment order the AO has nowhere questioned the allowability of the deduction of lease rentals but disallowed the impugned sum on the ground that it was an excessive deduction claimed by the appellant since according to him this amount formed part of the staff welfare expenses and which were separately debited in the P L A/c. I note that before the Ld. CIT(A) as well this Tribunal the appellant was unable to provide any evidence to show that the expenses debited in P L A/c did not include this amount of lease rentals separately claimed as deduction in the computation of income. The Ld. AR appearing on behalf of the appellant therefore requested that the matter be remanded back to the AO and sufficient opportunity be allowed to the appellant to prove that the claim was not an excessive deduction and that the impugned sum did not form part of the staff welfare expenses debited to P L A/c. - allowed for statistical purposes. Addition of interest income relying on 26AS - assessee claimed that interest income did not pertain to it and company has not even claimed the credit of TDS - HELD THAT:- I am of the considered view that based on 26AS alone no additions can be made. This can at best be a starting point for necessary verification but it cannot, on standalone basis, justify the impugned addition.I therefore consider it appropriate to remit the matter to the file of the AO strictly for the limited purpose of verifying the information. In case, he can find any independent evidence for the relevant AY 2012-13 that the appellant had actually received the impugned interest income, then only he can bring the same to tax. It is made clear that the onus will be on the AO to bring on record independent evidence after making enquiries from the payees and that the assessee cannot be expected to discharge the impossible burden of proving a negative i.e., that the assessee did not receive such interest income - allowed for statistical purposes. Adjustment in book profit u/s 115JB - long-term employees benefits in the form of gratuity, leave encashment, ex-gratia bonus - HELD THAT:- Having heard the rival submissions and after perusing the material on record; it is noted that the provisions in respect of gratuity, leave encashment, ex-gratia bonus were created on actuarial basis and had been estimated with reasonable certainty. Accordingly such provisions cannot be said to be provisions of unascertained liabilities so to add it back under clause (c) of the Explanation to section 115JB(2). Since these provisions are in the nature of ascertained liabilities, I am of the considered view that the same is allowable while computing book profit u/s 115JB of the I.T. Act. In this regard, I rely on the decision of this Tribunal in the case of Eastern Power Distribution Co. of AP Ltd Vs ACIT [2011 (3) TMI 547 - ITAT, VISAKHAPATNAM] wherein on identical set of facts this Tribunal - ground stands allowed. 2019 (4) TMI 874 Disallowance u/s 40(a)(ia) for non deduction of TDS - advertisement charges - HELD THAT:- Ld AR argued that let this issue be restored back to the file of the AO to verify the fact of inclusion of the subject mentioned receipts in the income of the payees and once it is done, the assessee should not be fastened with disallowance u/s 40(a)(ia) in the light of second proviso to section 40(a)(ia) r.w.s 201(1) which although was introduced by the Finance Act 2012 has been held to be retrospective in operation by the decision of Hon'ble Jurisdictional High Court in the case of Pr. CIT Vs Tirupati Construction [2016 (8) TMI 1310 - CALCUTTA HIGH COURT]. Hence in the interest of justice and fair play, I deem it fit and appropriate to remand this issue to the file of AO for de novo adjudication in the light of second proviso to section 40(a)(ia) r.w.s 201(1). The assessee is also at liberty to furnish additional evidences, if any, in support of his contentions. - grounds allowed for statistical purposes. Disallowance of remuneration/ commission - lady partners also working in another partnership firm and getting remuneration - neither disputed nor disbelieved that the said two lady partners are working partners and have working knowledge of the business in which the assessee firm was engaged - business of selling sarees & salwar suits - HELD THAT:- The only ground on which the Ld. CIT(A) has upheld the disallowance is that he did not believe that the two lady partners could simultaneously work for two partnerships and draw remuneration/ commission. However there is no law which prohibits a person to work in more than one partnership firms and draw remuneration therefrom. All that Section 40(b) requires is that the remuneration should be paid to a working partner and there is no prohibition either in the Income-tax Act, 1961 or the Indian Partnership Act, 1932 debarring a partner to draw remuneration from more than one partnership firms. In the circumstances, I do not find any reason to uphold the disallowance merely because two working partners of the assessee firm were also working partners of another firm namely M/s Lal Fashion and in that capacity derived remuneration from two firms. - grounds of appellant allowed. 2019 (4) TMI 873 Provision for costs on completed contracts - Liability under the project and estimates have been made project wise - HELD THAT:- The elaborate working of the same along with relevant contracts entered into by the assessee with the customers has already been placed in the paper-book which establishes the fact that the estimates were not mere guess work or made out of thin air. Another undisputed fact is that the assessee has incurred actual expenditure in subsequent years against these estimations which itself prove that the assessee had certain liability under these contracts. It is altogether different aspect that the matter of estimation may not be accurate one or commensurate with actual expenditure incurred by the assessee in future years. It may only necessitate the assessee to adjust the same suitably in subsequent years on the basis of actual outcome. So long as the provisions were made on scientific basis and the basis of the same was substantiated by the assessee, there could be no occasion to disallow the same. It is also noteworthy point that subsequent reversal in future years has been offered to tax by the assessee which lend credence to tax neutrality plea raised by Ld. AR. Proceeding further, it is undisputed position that part of the provisions has always been allowed to the assessee by the Tribunal right from AY 2001-02 onwards [2011 (9) TMI 1183 - ITAT MUMBAI]; [2012 (8) TMI 983 - ITAT MUMBAI]. In the impugned AY, we find that complete project wise provisions made by the assessee has been placed on record and provision made under each project has been uniquely identified. CIT-DR has placed reliance on the decision of Delhi Tribunal rendered in IOT Infrastructure & Energy Services Ltd Vs ITO [2013 (11) TMI 358 - ITAT MUMBAI], is factually different. The due consideration of above factual matrix leads us to inevitable conclusion that the impugned provisions made by the assessee were allowable in full during impugned AY. Cost overruns on incomplete contracts - HELD THAT:- It is undisputed fact that such provisions were made by the assessee in AY 2005-06 which has been allowed by Ld. AO himself. Secondly, out of these provisions of ₹ 192.34 Lacs, an amount of ₹ 134.11 Lacs has actually been utilized / paid by the assessee in subsequent years (which is more than 69% of the provisions) and balance amount i.e. ₹ 58.23 Lacs has been offered to tax in subsequent years. Moreover, the assessee has already placed on record project wise estimation and nothing on record suggest that there was any change in method of accounting being followed by the assessee. This being the case, the impugned additions could not be sustained. We order so. Ground of the appeal stands allowed. Income in respect of Contracts Accounted under Percentage of Completion Method - AO opined that revenue recognized in the books wasless than progress billing and therefore, the PCM adopted by the assessee as per AS-7 to recognize the revenue did not represent real profits earned by the assessee - HELD THAT:- Undisputed position that emerges is that the assessee is following consistent method of accounting to recognize the revenue under these contracts. The percentage of completion of the project has been worked out as per total cost incurred on the project to date vis-à-vis total budgeted cost and that fraction is applied to the contract value for the purpose of revenue recognition. Similar formulae have been adopted by the assessee in preceding two years which has been accepted by the revenue. No case of revenue leakage has been established before us. Nothing on record suggest that remaining income under the project has not been offered by the assessee in subsequent years, following the same method of accounting. Simply because progress billing was more than the stage of percentage of completion, the same, in itself, could not be the basis to usurp the consistent method of accounting being followed by the assessee. Therefore, the additions made by the revenue, under the circumstances, could not be sustained. We order so. Accordingly, ground of assessee’s appeal stands allowed. Excess of Progress Billings under statement of profit in respect of incomplete contracts obtained prior to 31/03/2003 and accounted under Completed Contract Method - HELD THAT:- We find that the assessee has accumulated cost as well as revenue under these projects in the Balance Sheet by following completed contract method. The revenue has accepted such accumulation during AYs 2004-05 & 2005-06 and this is the third year of accumulation under the projects. It is not the case of the revenue that the income under these projects have not been offered to tax in subsequent years. No case of revenue leakage has been established before us. Therefore, the action of revenue in disturbing the consistent method of accounting being followed by the assessee could not be held to be justified. Hence, we delete the impugned additions and allow these grounds of appeal. Disallowance of Software Maintenance Expenses - Revenue or capital expenditure - HELD THAT:- we find that when the expenditure is in the nature of annual maintenance charges, the same could not be held to be capital in nature. Keeping in view the fact that the issue stood covered in assessee’s favor by the orders of Tribunal for earlier years, we hold the expenditure to be revenue in nature and hence, fully allowable to the assessee. Consequently, the depreciation allowed against the same shall stand reversed. This ground stand allowed. Non-grant of TDS Credit withdrawn - HELD THAT:- The assessee seeks certain directions to the lower authorities to grant TDS credit withdrawn in AY 2005-06. Our attention is drawn to the fact that rectification application u/s 154 has already been filed by the assessee and the first appellate authority had already instructed Ld. AO for expeditious disposal of the same. Reiterating the same, Ld. AO is directed to verify the assessee’s claim in this regard and allow the credit, as permissible under the law. This ground stand allowed for statistical purposes. 2019 (4) TMI 872 Penalty u/s 271(1)(c) - Non specification of exact charge, viz., whether the charge is that the assessee has furnished inaccurate particulars of income or “concealed particulars of income” by striking out the irrelevant portion of printed show cause notice - defective notice - HELD THAT:- Bare perusal of the notice issued u/s 27I(1)(c) apparently goes to prove that the Assessing Officer initiated the penalty proceedings by issuing the notice u/s 274/271(1)(c) of the Act without specifying whether the assessee has concealed ''particulars of income" or assessee has furnished "inaccurate particulars of income", so as to provide adequate opportunity to the assessee to explain the show cause notice. Rather notice in this case has been issued in a stereotyped manner without applying any mind which is bad in law, hence is not a valid notice sufficient to impose penalty u/s 271(1)(c) of the Act. The penalty provisions of section 27l(1)(c) are attracted where the assessee has concealed the particulars of income or furnished inaccurate particulars of such income. It is also a well-accepted proposition that the aforesaid two limbs of section 271(1)(c) of the Act carry different meanings. Therefore, it was imperative for the Assessing Officer to strike- off the irrelevant limb so as to make the assessee aware as to what is the charge made against him so that he can respond accordingly. See M/S MANJUNATHA COTTON AND GINNING FACTORY & OTHS., M/S. V.S. LAD & SONS, [2013 (7) TMI 620 - KARNATAKA HIGH COURT] and M/S SSA'S EMERALD MEADOWS [2016 (8) TMI 1145 - SUPREME COURT] - Decided in favour of assessee. 2019 (4) TMI 871 Penalty u/s 271(1)(c) - defective notice - not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income - disallowances of depreciation and expenses u/s 40(a)(ia) - HELD THAT:- The show cause notice issued in the present case u/s 274 does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income. The show cause notice u/s 274 of the Act does not strike out the inappropriate words. In these circumstances, we are of the view that imposition of penalty cannot be sustained. The plea of the ld. Counsel for the assessee, which is based on the decisions of COMMISSIONER OF INCOME TAX, BANGALORE AND THE INCOME TAX OFFICER, WARD-6 (3) , BANGALORE VERSUS M/S SSA’S EMERALD MEADOWS [2015 (11) TMI 1620 - KARNATAKA HIGH COURT] and THE COMMISSIONER OF INCOME TAX & OTHS. VERSUS M/S MANJUNATHA COTTON AND GINNING FACTORY & OTHS., M/S. V.S. LAD & SONS, [2013 (7) TMI 620 - KARNATAKA HIGH COURT] referred to in the earlier part of this order, has to be accepted. We therefore hold that imposition of penalty in the present cases cannot be sustained and the same is directed to be cancelled. 2019 (4) TMI 870 Re-opening of the assessment u/s 147 - ex-parte order - HELD THAT:- In the absence of any material on record by way of submissions etc. or for that matter any representation on behalf of the assessee despite opportunity the challenge fails. As noticed, considering the submissions of the Revenue, and on a consideration of the material available on record, find no good reason available on record which would justify an interference in the conclusion arrived at. Being satisfied with the same on the facts as they stand Ground raised by the assessee is dismissed. Benefit u/s 54F - HELD THAT:- Considering the circumstances and not commenting either on the correctness or the completeness of the evidences relied upon on behalf of the assessee before the CIT(A), it is directed that in case the evidence filed is not reliable, sufficient or complete, the AO shall call for the DVO’s Report and necessary evidences from the Land Revenue Authorities, confront the report to the assessee and pass an order after hearing the assessee in accordance with law. In view thereof, the impugned order is set aside back to the file of the AO with a direction to pass a speaking order in accordance with law. - Remanded before AO 2019 (4) TMI 869 TP adjustment - selection of comparable - international transactions - functional similarity - Infosys BPO ltd.company cannot be a comparable to the assessee company as it has functional dissimilarity as well as extraordinary events took place during the year and, further, it has high turnover of ₹ 1,312 crores - HELD THAT:- As decided in HYUNDAI MOTOR INDIA ENGG. PVT. LTD. VERSUS DY. COMMISSIONER OF INCOME- TAX, CIRCLE – 2 (2) , HYDERABAD [2018 (6) TMI 505 - ITAT HYDERABAD] other contentions with regard to the brand value and brand building exercise, having huge asset base, can be considered to arrive at the conclusion that Infosys BPO is functionally not similar to that of assessee. Infosys BPO stands on its own as an exclusive BPO of the Infosys Technologies and in earlier years, generally Infosys BPO is excluded in many of the cases. Even though the profits of the Infosys BPO Ltd. is reasonable and no super profits are earned, because of its big brand value this company has to be excluded on the grounds of functional dissimilarity on FAR Analysis. Therefore, we direct the Assessing Officer/TPO to exclude this company. TCS eServe Ltd. - following the turnover filter as well as taking note of the fact that it owns and possesses brand value and intangibles as compared to the assessee which does not own such assets, we direct that this company be excluded from the list of final comparables. Crystal Voxx Ltd - As relying on assessee's own case for AY 2013-14 we direct the TPO to verify the comparability of this company. Therefore, the matter is remitted to the file of the TPO for fresh analysis. This ground is allowed for statistical purposes. Adjustment for risk differences - HELD THAT:- As relying on HELLOSOFT INDIA (P.) LTD. [2013 (10) TMI 747 - ITAT HYDERABAD] we direct the AO/TPO to allow the risk adjustment in accordance with the Rule 10B(1)(e) considering the fact that assessee is a captive service provider to its AEs. Accordingly, ground raised by the assessee is allowed for statistical purposes. MAT credit disallowed the same while computing the tax liability for this AY - HELD THAT:- We direct the AO to verify the claim of the assessee and allow the MAT credit as per law. This ground is allowed for statistical purposes. 2019 (4) TMI 868 TP adjustment - Corporate Guarantee provided to associated enterprises - reliance on ratio decidendi rendered by the earlier order of the Tribunal - assessee is against the confirmation of the addition of corporate guarantee fees up to 2% whereas the Revenue is in appeal before us against the reduction of the addition of corporate guarantee fee from 2.96% to 2% - HELD THAT:- On identical facts and circumstances in the own case of the assessee and Revenue pertaining to AY 2009-2010, the ITAT was pleased to restore the issue to the Ld. CIT (A) for fresh adjudication [2017 (9) TMI 1804 - ITAT AHMEDABAD]. Also see LG. RAMAMURTHI AND OTHERS [1976 (10) TMI 18 - MADRAS HIGH COURT] wherein held if the Tribunal in the present case wanted to take an opinion different from the one taken by the earlier Bench, it should have placed the matter before the President of the Tribunal so that he could have referred the case to a Full Bench of the Tribunal, consisting of three or more members for which there is provision in the Act itself. Tribunal completely erred in coming to the conclusion it did, at variance with and opposed to the conclusion of the Tribunal on the earlier occasion, Enhancing the addition made on account of TP adjustments - Sales made to AE - TPO by issuing show cause notice to apply the profit-sharing method in the ratio of 50% each after considering the function, assets and the risk involved between the assessee and its AE - Assessee submitted that the AE being the owner of IPR is a very complex entity whereas the assessee being a mere contract manufacturer is a less complex entity. Therefore the assessee should be treated as the test party - whether the TPO verified the details furnished by the assessee in determining the ALP of the impugned transaction using TNMM during the assessment proceedings? - HELD THAT:- As decided in the own case of the assessee’s ITAT deleted the addition made by the TPO/AO [2017 (9) TMI 1804 - ITAT AHMEDABAD]. A query was raised from the bench to the learned counsel for the assessee who replied that all the necessary details were available with the TPO and no defect of whatsoever was pointed out therein. Similarly, the ITAT in the earlier year because no defect was pointed out by the TPO in the details furnished by the assessee in determining the ALP using TNMM allowed the appeal of the assessee. The learned DR has also not brought anything on record contrary to the argument advanced by the learned AR of the assessee. Moreover, we are bound to follow the order of this Tribunal in the own case of the assessee in the earlier year as the facts are identical in the impugned issue before us. It is also important to note that the ld. DR has not brought anything on record contrary to the argument advanced by the ld. counsel for the assessee. We also place our reliance on the judgment of Hon’ble Madras High Court in the case of CIT v. L.G. Ramamurthi (supra). DR and the ld. AR has not brought any decisions varying from similar or identical facts or circumstances. Therefore, the ratio decidendi rendered by the earlier order of the Tribunal has necessarily to be followed by us in line and tune with the judicial discipline and decorum Deduction u/s 35(2AB) - HELD THAT:- There is no dispute that all the factual details were available before the lower authorities. The claim made by the assessee was purely legal claim as it is eligible for weighted deduction as per the provisions of Section 35(2AB) of the Act. Merely because the same was not claimed in the return of income nor through a revised return of income, the same cannot be denied. Weighted deduction under section 35(2)AB of the Act in respect of the expenses which were not certified by DSIR - HELD THAT:- As in the own case of the assessee [2016 (12) TMI 1539 - ITAT AHMEDABAD] expenses incurred before Form 3CM approval cannot be denied for the purpose of Section 35(2AB) weighted deduction. The appellant has only claimed those expenses which relate to the time period as approved in the Form 3CM. We accordingly hold that the assessee is very much entitled for claiming the above capital and revenue expenses incurred on in house research and development. The Assessing Officer had rightly held it entitled for the above weighted deduction after verifying all necessary particulars during the course of scrutiny. Merely because the prescribed authority failed to send intimation in Form 3CL, would not be reason enough to deprive the assessee's claim of deduction under section 35(2AB) of the Act. [2017 (8) TMI 933 - GUJARAT HIGH COURT] Disallowance of allocated R & D expenses of partnership firm - Assessee is substantial stake holders in firm - research and development expenses incurred to the other partnership firms - HELD THAT:- The appellant company had assisted the partnership firm in carrying on its business by using its network for marketing the pharmaceuticals products successively. Since the assessee is holding 97.5% of share in the partnership firm, SPI it becomes the duty of the assessee to promote the business of the partnership firm in the capacity of the majority stake holders. Incidentally, the revenue authorities have not brought anything on record which could suggest that the expenditures have not been incurred for the purposes of business. Be it assessee's business or the business of the partnership firm where the assessee is a majority stake holder. In our understanding of the law an expenditure is allowable if it is incurred for the purposes of the business of the assessee. Finding that the assessee is having 97.5% share in the profits of the firm SPI, we do not find any merit in the disallowance made by the A.O Adjustment u/s 115JB - remuneration received from the partnership firms and credited to Profit and Loss account - HELD THAT:- Section 115JB is a complete code in itself. Therefore, if the remuneration is credited by the appellant company in its Profit and Loss account then the same could be reduced it specifically provided under the Explanation to Section 115JB of the Act which we find missing from the relevant provisions. We, therefore, do not find any merit in this claim of the assessee and accordingly we confirm the findings of the First Appellate Authority. See SUN PHARMACEUTICAL INDUSTRIES LTD. VERSUS DCIT [2017 (9) TMI 1804 - ITAT AHMEDABAD] Repairing expenditure treated as capital in nature - assessee claimed that all these expenses are nothing but repair and maintenance expenses incurred by it to keep the machinery in proper working condition by replacing the existing part of the machinery and it does not by itself create any new assets - HELD THAT:- Purchase of Pumps is single motor which is capable of functioning independently without assistance of any other plant & machinery. Therefore, it can be said that a new capital assets has come into existence and hence the expenditure is treated as capital expenditure. Purchase of Freeze Dryer Beta with accessories for the purposes of drying process of organic solvents. The assessee has also incurred labour charges on installation of this dryer. The factual matrix shows that new capital assets.The appellant has purchased Tata Make IOX 160 EPBAX System with 16 trunk lines and 4 E &M Circuits. The configuration of this machine itself shows that it is capable of being used as independently and a new asset has come into existence the same has to be treated as capital expenditure. The appellant company has purchased Copper Busbar 1 MTR for 3000 KVA Transformer and 2 panel boards for MCC (Motor Contrl Centre). The details show that these items have been purchased to replace the electrical items damaged in fire. All these items form part of 3000 KVA Transformer and has no used independently. Therefore, the same have to be treated as revenue in nature. Addition u/s 14A r.w.r 8D - HELD THAT:- Admittedly the rule 8D was applicable w.e.f. AY 2008-09 as observed by the ITAT in its order as discussed above. We also note that in the AY 2008-09 the AO made the disallowance as per rule 8D of income tax rule, but yet the ITAT restored the issue to the file of AO to make disallowance as per rule 8D as discussed above. Thus in order to maintain the consistency and to avoid the multiple proceeding, we are inclined to restore the issue to the file of AO to adjudicate afresh as per the direction of ITAT as discussed above. Hence the ground of appeal of the assessee is allowed for statistical purpose. Disallowance u/s 14A of the Act for computing the book profit u/s 115JB - HELD THAT:- We direct the AO accordingly to delete the addition of expenses disallowed u/s 14A while computing the book profit u/s 115JB of the Act. Hence the ground of appeal of the assessee is allowed. Addition for selling and distribution expenses incurred on behalf of SPI u/s 14A - HELD THAT:- it is equally true that a reasonable disallowance of expenditure should be made for earning the exempt income so far as the share of profit from the partnership firm SPI is concerned. We are conscious about the fact that Rule 8D is not applicable for the year under consideration but at the same time for the computation of disallowance for administrative expenditures, the formula given under Rule 8D is the most appropriate method for the computation of the disallowance. We accordingly direct the A.O. to compute the disallowance so far as administrative expenditures are concerned as per Rule 8D of the ITAT Rules r.w.s. 14A of the Act. interest on refund u/s 244A - HELD THAT:- Interest on refund under section 244A(1) would be assessable in the year in which it is granted and not in the year in which proceedings under section 143(1)(a) attain finality See AVADA TRADING CO. (P.) LTD. VERSUS ASSISTANT COMMISSIONER OF INCOME-TAX, SPL. CIRCLE 18 (1) [2006 (1) TMI 465 - ITAT MUMBAI] Relief u/s 10(15) for interest on tax-free bond which assessee mistakenly offered to tax - Admission of additional ground - HELD THAT:- The ground raised by the assessee is legal in nature which can be admitted at any stage of the proceedings. For this proposition we find support and guidance from the judgement of Hon’ble Supreme Court in case of CIT Vs. Sinhgad technical education society [2017 (8) TMI 1298 - SUPREME COURT OF INDIA] 2019 (4) TMI 867 Penalty u/s 271AAB - discretionary and not mandatory - in statment u/s 132(4) disclosed total undisclosed income of ₹ 10,01,00,000/- on account of advance for purchase of land and also incorporated in return - except the statement u/s 132(4) there is no undisclosed income in the case of the assessee - in SCN no mention under which clause of section 271AAB the assessee is liable for penalty - HELD THAT:- This Tribunal has taken a consistent view that the levy of penalty U/s 271AAB of the Act is not mandatory but the AO has discretion to take a decision after arriving to the conclusion that the income disclosed by the assessee in the statement recorded U/s 132(4) is an undisclosed income in terms of Section 271AAB(1) r.w. explanation defining the undisclosed income. The decision relied by the ld. CIT-DR in case of Principal Commissioner of Income Tax vs. Sandeep Chandak [2017 (12) TMI 70 - ALLAHABAD HIGH COURT] cannot be applied on the issue before us. In the case in hand though the assessee was required to maintain regular books of accounts as per the provisions of section 44AA of the IT Act, however, the AO in the assessment proceedings rejected the books of accounts of the assessee under section 145(3) and assessed the income from the activity of civil contract on estimated basis by making a lump sum addition of ₹ 4,50,000/-. The diary found during the course of search and seizure at the business premises of the assessee contains the entries of advances given for purchase of land. However, until and unless the said transaction is carried out as part of regular business activity, the same is not required to be recorded in the regular books of account and, therefore, the said amount of advance given for purchase of land can be recorded in the capital account of the assessee. Thus the transactions found recorded in the diary are to be recorded in the capital account of the assessee as well as in the balance sheet prepared as on 31st March, 2014 and not on the date of search as on 4th/5th September, 2013. The nature of transactions if not carried out or entered into as part of the business activity are not required to be recorded in the regular books of accounts maintained for the purpose of business activity of the assessee. Following the earlier decisions of the Coordinate Bench of the Tribunal in the case of Ravi Mathur vs. DCIT [2018 (6) TMI 1128 - ITAT JAIPUR] as well as Shri Raja Ram Maheshwari vs. DCIT [2019 (1) TMI 1546 - ITAT JAIPUR], we delete the penalty levied under section 271AAB of the Act. Since the issue of levy of penalty U/s 271AAB of the Act has been decided on merits in favour of the assessee and against the Revenue therefore, the issue of validity of initiation of the penalty proceeding due to defective show cause notice become academic in nature and we do not propose to adjudicate the same. 2019 (4) TMI 866 Allowability of taxes and duties u/s43B - being expenses incurred on account of taxes and duties pertaining to earlier year - mercantile system of accounting and has no provision for the expenses - HELD THAT:- The Tribunal dismissed the said ground of appeal in assessee's own case [2016 (1) TMI 1407 - ITAT PUNE] placing reliance on the decision DCIT Vs. Glaxo Smithkline Consumer Healthcare Ltd [2007 (7) TMI 334 - ITAT CHANDIGARH]. It is not disputed by the Revenue that the facts in the assessment year under appeal are identical to assessment years 2006-07 to 2009-10. No contrary decision has been placed before us by the Revenue.- Decided against revenue Disallowance of prior year expenditure - HELD THAT:- As decided in own case [2018 (7) TMI 1916 - ITAT PUNE] this issue should be remanded to file of AO. AO is directed to examine the details furnished by the assessee regarding the genuineness of expenditure and the reasons for not receiving the bills in time, and not including the expenses in the returns of income for the A.Yrs. 2010-11 and 2011-12, as the case may be. Addition on account of expenditure on free service to customers - HELD THAT:- Tribunal in assessee’s own case 2016 (1) TMI 1407 - ITAT PUNE wherein the issue was decided in favour of the assessee by further placing reliance on the judgment in the case of Bharat Earth Movers Vs. Commissioner of Income Tax reported [2000 (8) TMI 4 - SUPREME COURT] has allowed the claim of assessee. There is no contrary material before us to take a different view. - Decided against revenue. Provision for leave encashment - year of assessment - HELD THAT:- A perusal of impugned order shows that the Commissioner of Income Tax (Appeals) has allowed the claim of assessee by following the decision in the case of Bharat Earth Movers Vs. Commissioner of Income Tax [2000 (8) TMI 4 - SUPREME COURT]. AR fairly admitted that the relief has already been granted to the assessee in assessment year 2003-04 and while giving effect to the order of Commissioner of Income Tax (Appeals), the Assessing Officer has not granted relief to the assessee. AR has also furnished the copy of order giving effect to the order of CIT (Appeals) u/s. 250 dated 06-02-2017. A perusal of same reveals that the Assessing Officer has not given the benefit of provision for leave encashment in the assessment year 2001-02 as the relief has already been allowed in assessment year 2003-04. CIT(Appeals) in the impugned order has erred in granting relief to the assessee in assessment year under appeal without ascertaining the fact that the relief with respect to deduction has already been allowed to the assessee in assessment year 2003-04. 2019 (4) TMI 865 Settlement Commission order u/s 245D(4) - absence of any enquiry or investigation in terms of sub-section (3) of Section 245D - HELD THAT:- As per the settled law, the jurisdiction of the Court in examining the correctness of the Settlement Commission's orders in exercise of Writ Jurisdiction is extremely narrow and would be confined to the scrutiny whether the order of the Settlement Commission is in accordance with the provisions of the Act. In fact, in such order, the Settlement Commission had also given reasons why further enquiry on investigation was not necessary. Even in absence of any enquiry or investigation in terms of sub-section (3) of Section 245D, the State Commission while passing the order u/s 245D(4), would look into any further evidence which may be brought on record. As observed by this Court in CIT Vs. ITSC [2013 (10) TMI 985 - BOMBAY HIGH COURT] such further evidence may as well be produced by the Commissioner. In the present case, it is undisputed that the Commissioner did produce additional material. It was also looked into by the Settlement Commission. Department had neither laid a foundation before the Settlement Commission establishing why further enquiry or investigation ought to have been called, nor led any such grounds before us to demonstrate how the Settlement Commission committed an error in refusing to exercise the discretion, we do not find that the Department had made out a case for interference. It appears that the Department's representative had orally persisted with the Settlement Commission to pass an order u/s 245D(3) of the Act calling upon further enquiry or investigation by the Commissioner which would enable the Department to verify and establish that the disclosures made by the assessees were not true and full. In this petition, the Department had prayed that the Settlement Commission be directed to give opportunity to the petitioner to verify the transactions referred to in objections of the Department contained in the reports under Rules 9 and 9A of the Income Tax Settlement Commission Rules. Essentially, therefore, in such petition, also the Department's case was that the Settlement Commission should have called for or permitted further enquiry or investigation by the Commissioner on the points raised in the reports. It appears that this petition was filed after Settlement Commission passed its final order under Section 245D(4). The Department, was not aware about the development and seems to have proceeded on the basis that settlement proceedings were still pending. Whatever be the bonafide impression of the Department, this petition came to be withdrawn without any further rider. It is not clear whether the petition was withdrawn after arguments or it was withdrawn because the Department came to know about the dismissal of the settlement proceedings and desired to file a fresh petition in view of such material change. In any case, we have not proceeded on the basis of the Department's earlier petition being withdrawn without permission to file a fresh one. 2019 (4) TMI 864 Jurisdiction in writ proceedings - challenge of order of assessment and Tax Recovery proceedings - invalid service of notices - service of attachments and auction proceedings - HELD THAT:- The very question of validity or otherwise of service the notices of assessment would require detail examination of facts on record. The question of validity does not rest only on legal contentions. It would require a detail examination of facts, which must be done by the departmental authorities in statutory Appeals provided under the Act. It is well settled that when question of law and facts arises, the High Court in exercise of its writ jurisdiction would be slow in interfering with the orders passed by the competent authority. Availability of alternative efficacious remedy would be a ground to refuse to entertain the writ petition directly aimed at an order of assessment. When a taxing statute provides for statutory remedies, this Court would be slow in by passing such remedies and entertaining the writ petition directly aimed at the order of assessment. Additionally, the Petitioner's challenge to the order of assessment would necessarily have the element of challenge on merits. This would be in addition to the Petitioner's contention regarding invalid service of notices. Any challenge to the order of assessment on merits should be ordinarily allowed to be examined by the Commissioner Appeals in whom statutory appellate powers have been vested under the Act. Lastly, the Petitioner has not even formally challenged the assessment orders. The Petitioner has filed the Petition straight away contending that it did not have copies of assessment orders, neither the order dated 07/03/2019. Therefore it had asked the department to produce copies of such orders, which along with affidavit-in-reply, have been filed. The Petitioner has not sought any amendment to the Petition bringing formal challenge to such assessment orders. This is a purely technical ground and is mentioned only for the purpose of bringing the correct stage of the pleadings on record. Otherwise, this is not a prime ground on which we propose to relegate the Petitioner to appellate remedy. The entire case of the Petitioner to oppose the auction, as noted revolves around two elements; namely invalid assessment orders and questionable ownership of the paintings and artworks. We have dealt with both these aspects and therefore do not find it appropriate to either set aside or quash the auction proceedings on this ground. Petitioner is in the business of buying and selling paintings and artworks. The Petitioner does not claim any particular attachment over any of the painting or artwork. As noted earlier, the Petitioner has not challenged the valuation of these articles. Under such circumstances, even if the Petitioner were to ultimately succeed in Appeal proceedings, the amount recovered by the tax department through auction sale, can always be returned to the Petitioner with interest. In other words, by not interfering at this stage, we have not put the Petitioner to any irreversible situation. If the Petitioner ultimately succeeds in Appeal, subject to further Appeals the department would undoubtedly have to return the sale proceeds received through the auction. Petitioner has referred to several judgment in support of her contentions. These judgments mainly touch in the aspect of valid service of notice and resignation of a Director of the Company. However, since we have not finally decided either of these issues, it is not necessary to dwelve into these judgments. Under such circumstances, both the prayers of the Petitioner are refused. If the Petitioner files Appeals against the assessment orders, latest by 20/04/2019, the Appellate Commissioner shall hear such Appeals on merits, without reference to the limitation. We clarify that all the contentions of both the sides, in relation to such orders of assessment including the question of validity of assessment notices, are kept open. Petition is disposed of. 2019 (4) TMI 863 Stay on recovery - Notice u/s 226(3) by the AO for attachment of bank account - Provisional attachment u/s 281B - HELD THAT:- It was the petitioner's contention that the issue of eligibility for claim u/s 10(23FB) stood concluded in its favour by orders of the CIT(A) for the Assessment Year 2014- 15 and by the Tribunal for the AY 2013- 14 and there are no material changes in facts and law which would warrant a different view for the Assessment Year 2016 -17. This fact viz. the issue being concluded by the orders of the Appellate Authorities is also noticed by the AO in his assessment order dated 20th December, 2018. In fact, the assessment order dated 20th December, 2018 after accepting the above facts refused to follow the same on the ground that the orders of both the Appellate Authorities i.e. CIT(A) and Tribunal on this issue are subject matters of further appeal before a higher forum by the respondents. The orders of higher forums, unless stayed are binding on the lower authorities in the herarchical system of jurisprudence adopted by us. Thus, it is not open to the lower authorities to seek to enforce decisions contrary to and in defiance of the orders of the higher forums in the absence of any change in the facts and/or in law. Thus, while dealing with an application for stay of demand pending the disposal of an appeal before the CIT(A), the demand relatable to the assessment order being contrary to the orders of appellate authorities ought to be stayed for the mere asking. Normally, on setting aside the orders u/s 220(6), we restore the application to the Authorities for fresh consideration in accordance with law. However, looking at the conduct of the Assessing Officer and Pr. CIT in this particular case, restoring the stay application to them for fresh disposal would not serve any purpose. This for the reason that the conduct of the respondent nos. 1 and 2 in this case has been high handed and manifestly unfair towards the petitioner being in defiance of settled law. We have come to this view not only for the manner in which the stay application is disposed of by the respondent nos. 1 and 2 but from the manner in which the notices for attachment, notice / demands for recoveries made, refunds adjusted beginning with order under Section 281B of the Act and ending with notice dated 15th February, 2019 adjusting the refund with the pending demands. We grant an unconditional stay of the demand for Assessment Year 2015 -16 u/s 220(6) till the petitioner's appeal against the order dated 20th December, 2018 before the CIT(A) is disposed of and for a period of two weeks from the communication of the order to the petitioner Set aside the notice issued under Section 226(3) of the Act by the Assessing Officer to the petitioner's bankers and direct the Revenue to deposit the amount of ₹ 14.62 croers (in respect of Assessment year 2016- 17) withdrawn from the petitioner's bank account along with appropriate interest at the bank lending rate from the date of the withdrawal to the date of redeposit into the petitioner's bank account. We also set aside the notices dated 15th February, 2019 by which the refund of ₹ 60.46 Crores and ₹ 12.42 Crores available to the petitioner for the Assessment Years 2012- 13 and 2013 -14 respectively is adjusted against the outstanding demand of ₹ 51.32 Crores for subject assessment year and direct the refund of ₹ 60.46 lakhs and ₹ 12.42 Crores to the petitioner in accordance with law We set aside the order dated 18th December, 2018 passed u/s 281B. This as the Revenue has not been able to justify the basis of their apprehension that if the petitioner's assets are not attached, the interest of the Revenue in recovering its dues would be prejudiced. Before parting, we have to express our dismay at the conduct of the Officers of the Revenue in this matter. We pride ourselves as a State which believes in rule of law. Therefore, the least that is expected of the Officers of the State is to apply the law equally to all and not be over zealous in seeking to collect the revenue ignoring the statutory provisions as well as the binding decisions of this Court. The action of respondent nos.1 and 2 as adverted to in para 14 herein above clearly indicates that a separate set of rules was being applied by them in the case of the petitioner. Equal protection of law which means equal application of law has been scarified in this case by the Revenue. It appears that the petitioner is being singled out for this unfair treatment. The desire to collect more revenue cannot be at the expense of Rule of law. 2019 (4) TMI 862 Reopening of assessment u/s 147 - computation of deduction u/s 80IA - 30% of total income or 30 % of profit of eligible business - HELD THAT:- The idea and understanding of the Revenue, with regard to the scope of Section 80AB, to enable them to reckon the figure of 30%, confining it to the lower extent of total income from all sources, instead of reckoning it as 30% of the business profit from the eligible business, is thoroughly wrong and misconceived. The stand of the Assessee is supported by ruling of the Division Bench of this court in COMMISSIONER OF INCOME TAX VERSUS JOSE THOMAS.[2001 (11) TMI 73 - KERALA HIGH COURT] Since there is no ambiguity in the provisions of Section 80IA, the statute has to be read and understood as it is and cannot be sought to be reI. written or supplemented in any manner. This is more so when Section 80AB stipulating the manner of computation under the Income Tax Act in respect of the deductions to be made under the Income Tax Act, does not come to the rescue of Revenue. This alone has been projected and highlighted by the Tribunal in the order under challenge. As it stand so, there is no substantial question of law to call for interference to decide the issue in favour of the Revenue. - Decided against revenue 2019 (4) TMI 861 Deduction u/s 80IA (4) - Assessee-Contractor involved in the Development of Infrastructure Facility of Sewerage Plants - deduction available to the Contractor, who is transferred with such Infrastructure Facility - HELD THAT:- Since the Assessee admittedly entered into contract with Local Bodies or Municipal Bodies for undertaking the contract works for developing the infrastructure-sewage system, he is directly entitled to get the benefit of such deductions under Section 80IA (4). The said Section, in fact, even extends the benefit to the Contractor, who is transferred with such Infrastructure Facility for operating and maintaining the same as per the Proviso to Section 80IA (4). Relying on decision in CIT VERSUS M/S. CHETTINAD LIGNITE TRANSPORT SERVICES PRIVATE LIMITED [2019 (4) TMI 683 - MADRAS HIGH COURT] wherein it was held that Tribunalhas rightly applied the Proviso to Section 80IA(4) and held that since the Assessee was recognised as contractor for these railway sidings, which undoubtedly fell under the definition of infrastructure facility , it was entitled to the said benefit u/s 80IA - no Substantial Question of Law arises Allowability of fluctuations in Foreign Currency as revenue expenses u/s 37 - capital vs revenue - HELD THAT:- in our opinion, the authorities below have rightly found that the same did not pertain to any capital asset and such loss had occurred to the Assessee in the ordinary course of business, and, therefore, allowed it towards business expenditure u/s 37(1) - no Substantial Question of Law arises 2019 (4) TMI 860 Addition u/s 36(1)(iii) - advance share application money given by the assessee to its sister concerns - HELD THAT:- CIT (Appeals) and the Tribunal held that the Assessing Officer had made a wrong reference to a similar treatment given by him for the earlier assessment year 200708. It was found that in the said assessment year 200708 there was no scrutiny assessment. Thus, the entire basis of the order of the Assessing Officer was knocked down. Quite apart, it was found that the assessee had made investment which would yield income in form of dividend and therefore, investment was made for the purpose of earning income. Accordingly, CIT (Appeals) and the Tribunal were of the opinion that the expenditure incurred for earning such income had to be allowed under Section 36(1)(iii) of the Act. We do not find any error in such view. No question of law arises. Disallowance of expenditure u/s 37(1) - HELD THAT:- Tribunal while upholding the decision of CIT (Appeals) held that while making advances to the sister concerns, the assessee was acting in the normal course of business and that the interest expenditure was therefore allowable as per Section 36(1)(iii) of the Act. It was recorded that the Assessing Officer had not brought anything to prove that the expenditure incurred towards interest was not wholly and exclusively for carrying out the business of the assessee. The Tribunal therefore, confirmed the order of the CIT (Appeals). When CIT(Appeals) and the Tribunal have concurrently held that the expenditure was incurred for the purpose of the business of the assessee, we find no reason to interfere. No question of law therefore arises. Disallowance u/s 14(A) r/w Rule 8D - sufficiency of own interest funds - HELD THAT:- We propose to dismiss this ground only on one issue, the finding of the CIT (Appeals) and the Tribunal that the assessee had sufficient interest free fund in excess of interest bearing fund to make investment which would result in exempt income. The Tribunal in this respect relied upon decision of this Court in case of HDFC bank Limited Vs. Deputy Commissioner of Income tax and ors. [2016 (3) TMI 755 - BOMBAY HIGH COURT]. Such being the facts and settled law, no question of law arises. 2019 (4) TMI 859 Allowability of bank guarantee - guarantee given in favour of a sister concern, which was enforced the Bank - expenditure incurred in carrying on the business - HELD THAT:- There is no case for the Revenue, that M/s Universal Steel and Alloys Limited is not a sister concern of the Assessee Company and since there is no dispute with regard to the loan procured from the financier offering bank guarantee and also as to the loss sustained (leading to have the debt written off), we find that the issue is covered by the dictum laid down in AMALGAMATIONS PVT. LIMITED [1997 (4) TMI 8 - SUPREME COURT] - Decided against revenue. 2019 (4) TMI 858 Disallowance of notional interest under TP - Purchase of preference share of AE - Transfer Pricing adjustment u/s 92B - AO alleged that it is interest free loans to AE - TPO had re-characterised the transaction of subscription of shares into advancing of unsecured loans - HELD THAT:- We are broadly in agreement with the view of the Tribunal. The facts on record would suggest that the assessee had entered into a transaction of purchase and sale of shares of an AE. Nothing is brought on record by the Revenue to suggest that the transaction was sham. In absence of any material on record, the TPO could not have treated such transaction as a loan and charged interest thereon on notional basis. No question of law arises. Allowabilty of interest u/s. 36(1)(iii) - HELD THAT:- interest free advances to an AE - HELD THAT:- Tribunal came to the conclusion that the assessee had sufficient interest free loans out of which subject advances are made. The Tribunal referred to and relied upon the decision of this Court in the case of Commissioner of Income-tax V/s. Reliance Utilities and Power Ltd. reported in [2009 (1) TMI 4 - BOMBAY HIGH COURT] and deleted the disallowances. Addition for corporate guarantee commission by TPO - Tribunal restricted addition to 1% as against 5% by TPO - HELD THAT:- This Court in the case of CIT v. Everest Kento Cylinders Ltd. Reported in [2015 (5) TMI 395 - BOMBAY HIGH COURT] and submitted that there is a substantial difference between a bank guarantee and a corporate guarantee. He pointed out, that this Court in the said judgment has recognised that in view of inherent differences between the two lines of guarantee, rate of commission to be charged in each cases would be different. The Tribunal applied a lower percentage of commission in the present case considering that, what the assessee had provided was a corporate guarantee and not a bank guarantee. No question of law arises. 2019 (4) TMI 857 Excessive sugarcane price paid to members as well as non-members of the respective assessee - appropriation of profit or not - Relying on clause-3 and additional price payable as per clause 5A of the Sugarcane Control Order, 1966, the AO opined that the excessive price paid was in the nature of `distribution of profits’ and hence not deductible - HELD THAT:- Issue of payment of excessive price on purchase of sugarcane by the assesses is no more res integra in view of the recent judgment of Hon’ble Supreme Court in CIT Vs. Tasgaon Taluka S.S.K. Ltd. (2019 (3) TMI 321 - SUPREME COURT) - we set-aside the impugned orders on this score and remit the matter to the file of the respective A.Os. for deciding it afresh as per law in consonance with the articulation of law by the Hon’ble Supreme Court in the aforenoted judgment. The AO would allow deduction for the price paid under clause 3 of the Sugar Cane (Control) Order, 1966 and then determine the component of distribution of profit embedded in the price paid under clause 5A, by considering the statement of accounts, balance sheet and other relevant material supplied to the State Government for the purpose of deciding/fixing the final price/additional purchase price/SAP under this clause. The amount relatable to the profit component or sharing of profit/distribution of profit paid by the assessee, which would be appropriation of income, will not be allowed as deduction, while the remaining amount, being a charge against the income, will be considered as deductible expenditure. Distribution of profits can only be qua the payments made to the members. In so far as the non-members are concerned, the case will be considered afresh by the AO by applying the provisions of section 40A(2) of the Act, as has been held by the Hon’ble Supreme Court supra. Needless to say, the assessee will be allowed a reasonable opportunity of hearing by the AO in such fresh determination of the issue. Addition of giving sugar to members at concessional rates - difference between the average price of sugar sold in the market and that sold to members is appropriation of profit or not - HELD THAT:- As decided in Krishna Sahakari Sakhar Karkhana Limited [2012 (11) TMI 669 - SUPREME COURT] the difference between the average price of sugar sold in the market and the price of sugar sold by the assessee to its members at concessional rate was taxed by the Department under the head “Appropriation of profit”. The Hon’ble Summit Court remitted the matter to the CIT(A) for considering, inter alia,: “whether the abovementioned practice of selling sugar at concessional rate has become the practice or custom in the Cooperative sugar industry?; and whether any Resolution has been passed by the State Government supporting the practice?; The CIT(A) would also consider on what basis the quantity of the final product, i.e. sugar, is being fixed for sale to farmers/cane growers/Members each year on month-to-month basis, apart from others from Diwali?” The issue under consideration can be decided by an appropriate lower authority only on the touchstone of the relevant factors noted in the above judgment. In our considered opinion, it would be just and fair if the impugned orders on this score are set aside and the matter is restored to the file of AOs, instead of to the CITs(A), for fresh consideration as to whether the difference between the average price of sugar sold in the market and that sold to members at concessional rate is appropriation of profit or not. Addition on account of expenses viz. purchases, power & fuel, repairs to machinery, hospitality Advertisement, Travelling Expenses, Telephone expenses - CIT-A restricted pat addition - HELD THAT:- CIT(A) has categorically mentioned that the assessee is governed by the provisions of Cooperative Societies Act and under the control and supervision of various Govt. authorities. The assessee has maintained books of accounts and the same are subjected to audit. He further noted that the AO failed to verify the books of account and made addition. Under these circumstances and considering the totality of facts and circumstances of the case we are of the considered opinion that the ld. CIT(A) has taken a reasonable view. Thus, we countenance the view taken by the ld. CIT(A) on this score. Appeals are fully/partly allowed for statistical purposes. 2019 (4) TMI 856 Bogus purchases - assessee purchased goods from certain dealers, who have been identified as hawala dealers by the Sales tax department of Government of Maharashtra - profit estimation - G.P rate of 12.50% estimated by the Ld CIT(A) - HELD THAT:- We notice that the assessee has taken all possible steps and produced relevant documents to prove the genuineness of purchases made from M/s RTIL. On the contrary, the various evidences furnished by the assessee has not been disproved by the assessing officer. Hence the view taken by the AO was not based on any material. A.R furnished a chart showing the G.P rate earned on the purchases made from M/s RTIL, G.P rate earned from other purchases and overall G.P rate declared by it. We notice that the overall G.P rate declared by the assessee is 0.10%, while the G.P rate declared on purchases made from M/s RTIL and others was 0.06% and 0.11%. We notice that the assessee is operating on low margin and hence the G.P rate of 12.50% estimated by the Ld CIT(A) is very much on the higher side. There is no material to substantiate the view taken by the AO and hence the entire addition should be deleted. However, the assessee has not cited any reason as to why the G.P rate on purchases made from M/s RTIL is lower than that earned from other purchases. Hence, in order to put this issue at rest, we modify the order passed by Ld CIT(A) on this issue and direct the AO to estimate the G.P on purchases made from M/s RTIL at 0.11% , i.e., the rate of G.P, the assessee earned from other purchases and sustain the addition to that extent. - Decided partly in favour of assessee. 2019 (4) TMI 855 Applicability of of MAT on banking company - assessee being a banking company maintaining its accounts under the Banking Regulations Act, 1949, hence provision contained u/s 115JA will not apply - HELD THAT:- Section 115JA provides for computation of total income chargeable to tax to be an amount equal to 30% of the book profit in case such income is less than 30% of the book profit. However, sub section (2) of section 115JA of the Act mandates that the company for the purpose of section 115JA of the Act has to prepare its Profit Loss Account in accordance with the provisions of Part II III of Schedule VI of the Companies Act, 1956. Undisputedly, the assessee being governed under the Banking Regulations Act, 1949, is not required to prepare its Profit Loss Account under the provisions of Part II III of Schedule VI of the Companies Act, 1956. That being the case, the provisions of section 115JA of the Act are not applicable to the assessee. Deduction u/s 44C - assessee had claimed that amount being expenditure incurred by the head office in the nature of general, administrative expenses - India U.K. Tax Treaty - HELD THAT:- Since the assessee has not contested the applicability of section 44C of the Act either before the Assessing Officer or before Commissioner (Appeals) and has raised it for the first time before us, in our considered opinion, the Department should be given a fair opportunity to examine assessee s claim with regard to applicability or otherwise of section 44C qua Article 26 of India U.K. Tax Treaty. Therefore, we consider it fair and reasonable to restore the issue to the Assessing Officer for examining assessee s claim with regard to the applicability of section 44C of the Act keeping in view the relevant provisions of India U.K. Tax Treaty and the judicial precedents dealing with the issue. - Ground is allowed for statistical purpose. Deduction u/s 44C - Revenue appeal - The Assessing Officer after examining the nature of expenses held that the aforesaid expenditure claimed by the assessee being part of Head Office expenses is eligible for deduction under section 44C , hence, cannot be claimed as deduction separately. - HELD THAT:- such expenditures are incurred by the assessee exclusively for the purpose of business of the assessee in India and are not in the nature of Head Office expenses covered u/s 44C. Disallowance on account of Guest House expenses - HELD THAT:- While the Assessing Officer has disallowed the guest house expenses by invoking the provision of section 37(4) of the Act, learned Commissioner (Appeals) has allowed assessee s claim relying upon his own decision for the assessment year 1996 97. However, as agreed before us by appearing for the rival parties, the issue has now been settled by virtue of the decision of the Hon'ble Supreme Court in case of Britannia Industries Ltd. [2005 (10) TMI 30 - SUPREME COURT], wherein it is held that in view of the provisions of section 37(4) of the Act such expenditure is not allowable. In view of the aforesaid, we reverse the decision of Commissioner (Appeals) on the issue and restore the addition made by the Assessing Officer. Disallowance of interest expenditure attributable to earning of exempt income - assessee has claimed interest income received on tax free bonds as exempt under section 10(15)(iv) - HELD THAT:- As could be seen, learned Commissioner (Appeals) has recorded a categorical factual finding that the interest bearing funds have no nexus with the investment made in tax free bonds. Further, he has also recorded a finding of fact that the assessee had sufficient own fund to make investment in tax free bonds. The aforesaid factual finding of the first appellate authority has not been controverted by the Revenue through any substantive evidence brought on record. 2019 (4) TMI 854 Disallowance u/s 14A r.w.r. 8D - HELD THAT:- Rule 8D is not applicable in the assessee’s case, the ld. Counsel for the assessee has contended that total disallowance was suo motu offered by the assessee u/s 14A and the same being more than the exempt dividend income of ₹ 10,88,37,814/- received by the assessee during the year under consideration, a further disallowance made by the Assessing Officer which exceeded even the exempt dividend income is not sustainable. Since this contention raised by the assessee is duly supported by the decision of the Hon’ble Delhi High Court in the case of Joint Investments Pvt. Limited –vs - CIT (2015 (3) TMI 155 - DELHI HIGH COURT), we uphold the impugned order of the CIT(Appeals) deleting the disallowance made by the Assessing Officer under section 14A as the said disallowance resulted into a total disallowance under section 14A, which was more than the exempt dividend income actually earned by the assessee during the year under consideration. Income from house property - Accepting the ALV of the assessee’s house property thereby rejecting the fair market rent - AO adopted the annual value of the property at ₹ 1.20 crores by following the stand taken in the earlier years and computed the income of the assessee under the head “income from house property” after allowing deduction under section 24(a) - HELD THAT:- This issue thus is squarely covered in favour of the assessee by the decision of this Tribunal rendered in assessee’s own case for the earlier years [2016 (1) TMI 169 - ITAT KOLKATA], which has been upheld by the Hon’ble Calcutta High Court and respectfully following the same, we uphold the impugned order of the ld. CIT(Appeals) giving relief to the assessee on this issue. Ground No. 2 is accordingly dismissed. Addition on account of excess expenditure allegedly claimed by the assessee - HELD THAT:- This working prepared and furnished by the assessee during the course of assessment proceedings was not properly understood and appreciated by the Assessing Officer and he made a huge disallowance without recording any adverse finding about the genuineness or the business expediency of the said expenditure. CIT(Appeals), on the other hand, appreciated the working furnished by the assessee in the right perspective and deleted the disallowance made by the AO, which was unsustainable and unfounded in the facts and circumstances of the case. We, therefore, find no infirmity in the impugned order of the CIT(Appeals) giving relief to the assessee on this issue and upholding the same, we dismiss Ground No. 3 of the Revenue’s appeal. 2019 (4) TMI 853 Condonation of delay in filing of the Miscellaneous Application u/s 254(2) - M.A. is filed by the revenue beyond the due date as prescribed u/s 254(2) of the Act i.e. within six months from the date of the order - HELD THAT:- In view of order in the case of ACIT vs. Gayathri Infra Ventures Ltd [2018 (7) TMI 1917 - ITAT HYDERABAD], this M.A. is not maintainable. The Hon'ble Karnataka High Court in the case of Shri Muni Naga Reddy Vs. ACIT [2018 (8) TMI 1261 - KARNATAKA HIGH COURT] also has held that the Tribunal cannot condone the delay in filing of the Miscellaneous Application u/s 254(2) of the Act. - Miscellaneous Application filed by the Revenue is dismissed. 2019 (4) TMI 852 Revision u/s 263 - whether the assessment order was erroneous and also prejudicial to the interests of the Revenue? - HELD THAT:- Not inclined to accept or adjudicate this contention of the assessee at this stage for the simple reason that the said question is pending adjudication before the CIT(A) and if it is held to be not sustainable, then the order u/s 263 also would not be sustainable as the very basis would have been knocked down. Therefore, it cannot be said that the assessment itself is a protective assessment. Therefore, the first objection of the assessee is not adjudicated at this stage. SCN related to taxability of capital gain on GDA relating to Stock -in- trade - in the year of executed the sale deed transferring the stock-in-trade or when stock-in-trade given for joint development to the builder - HELD THAT:- From the judgments in DHEERAJ AMIN VERSUS ACIT [2014 (6) TMI 1017 - ITAT BANGALORE] & WIPRO LTD. VERSUS DCIT [2015 (10) TMI 826 - KARNATAKA HIGH COURT] it is clear that the stockin- trade can be considered as transferred only in the year in which the assessee has executed the sale deed transferring the stock-in-trade and not when the assessee has given stock-in-trade for joint development to the builder. As already held in the above cases, the provisions of section 2(47)(v) would apply only to the capital asset and not to stock-in-trade. We find that the stock-in-trade cannot be considered as transferred in the relevant financial year and therefore, the assessment order cannot be considered to be prejudicial to the interest of the Revenue. Therefore, since of the twin conditions for initiating and also passing of an order u/s 263 is not satisfied and the first ground on which the assessment order has been revised is not sustainable, the CIT order u/s 263 has to be set aside on this ground alone. SCN related to taxability of unsold flats - assessee has received 24 flats from M/s. D.M. Builders and 2 flats were left unsold - amendment introduced by the Finance Act, 2017 w.e.f. 1/4/2018 regarding taxability of notional rent on the two unsold flats - HELD THAT:- When the assessment order was passed on 31.03.2016 when the relevant provision has not even been brought into statute book. The AO cannot be expected to apply the same. Therefore, on this account also, the assessment order cannot be said to be erroneous and prejudicial to the interest of the Revenue. Therefore, we set aside the order of the CIT u/s 263 of the Act. - Decided in favour of assessee. 2019 (4) TMI 851 Rectification u/s 254 - mistake apparent from record - HELD THAT:- Assessee u/s 254(2) of the Act seeking rectification of alleged mistake in the order of the Tribunal. According to the assessee, the ITAT has committed a mistake apparent from record in its order by upholding the order of the CIT (A), even though the assessee has raised a specific ground that it was beyond the power of the CIT (A) to introduce into assessment new sources of income and it placed reliance upon various case law on the issue. We find that the assessee’s contentions have been considered and dealt with extensively by the Tribunal. The assessee is only seeking a review of the order which is not permissible u/s 254(2) of the Act. M.A filed by the assessee is dismissed. 2019 (4) TMI 850 Rectification application u/s 254 - Period of limitation - HELD THAT:- The date of receipt of the order i.e. 23/01/2018, the application is within time and therefore, we proceed to dispose-off the same as argued before us. Disallowance of lease premium would need correction since while adjudicating the issue, reliance was placed on the decision of this Tribunal for AYs 2007-08 & 2008-09 wherein the matter was decided against the assessee - HELD THAT:- Upon perusal, we concur with the same. Accordingly, the last line of para 10 in the stated order may be read as under - Following the orders for earlier years, we dismiss ground no. 5 Applicability of provisions of Section 36(1)(viii) to the assessee - assessee’s claim was allowed by the Tribunal relying upon the orders of the Tribunal in assessee’s own case for AYs 2007-08 & 2008-09 - HELD THAT:- Upon perusal of para 6, we find that it is true that these facts were already noted by the bench while adjudicating the issue. It is not the case of the revenue that certain facts were overlooked which resulted into certain error in the order. The only point urge is that the decision is not acceptable since the issue has not been considered in proper perspective. However, when the decision has been rendered with due appreciation of facts and there are no slippages, it could not be said that there was mistake apparent from record which was amenable to rectification. There is no power with Tribunal to review the issues unless expressly provided under law. Further, the revenue has an alternative remedy under law to contest the decision before higher judicial authorities. Therefore, finding no mistake apparent from record, this plea stand rejected. 2019 (4) TMI 849 Exemption u/s 11 - allowability of depreciation on assets, the cost of which was already considered as application for charitable purpose in the year of acquisition - HELD THAT:- Reference to the decision of the Hon'ble Karnataka High Court in the case of CIT v. Society of Sisters of Anne [1983 (8) TMI 44 - KARNATAKA HIGH COURT] wherein it was held that u/s. 11(1) of the Act, income has to be computed in normal commercial manner and the amount of depreciation debited in the books is deductible while computing such income We may also add that the legal position has since been amended by a prospective amendment by the Finance (No.2) Act, 2014 w.e.f. 1.4.2015 by insertion of sub-section (6) to section 11. Carry forward of excess of expenditure incurred over its income for setting off against income of the succeeding years - HELD THAT:- The principle that the loss incurred under one head can only be set off against the income from the same head is not of any relevance, if the expenditure incurred was for religious or charitable purposes, and the expenditure adjusted against the income of the trust in a subsequent year, would not amount to an incidence of loss of an earlier year being set off against the profit of a subsequent year. The object of the religious and charitable trust can only be achieved by incurring expenditure and in order to incur that expenditure, the trust should have an income. So long as the expenditure incurred is on religious or charitable purposes, it is the expenditure properly incurred by the trust, and the income from out of which that expenditure is incurred, would not be liable to tax. The expenditure, if incurred in an earlier year is adjusted against the income of a later year, it has to be held that the trust had incurred expenditure on religious and charitable purposes from the income of the subsequent year, even though the actual expenditure was in the earlier years, if in the books of account of the trust such earlier expenditure had been set off against the income of the subsequent year. The expenditure that can be so adjusted can only be expenditure on religious and charitable purposes and no other. The High Court relied on the decision in the case of CIT Vs. Society of Sisters of ST. Anne [1983 (8) TMI 44 - KARNATAKA HIGH COURT]. We are therefore of the view that there is no merit in the issue raised in this regard by the Revenue. Accordingly, the same are dismissed. Considering the expenditure incurred in subsequent year before filing of return of income as application for accumulation of income. Excess expenditure/application/deficit/loss of earlier years against income of the current year and in the light of the law laid down by Hon’ble Supreme Court in the case of Nagpur Hotel Owner’s Association case [2000 (12) TMI 99 - SUPREME COURT]. AO is also directed to consider the written submissions filed by the assessee on this issue. Disallowance of expenditure incurred in foreign currency - Expenses incurred in foreign currency has to be considered as application for charitable purpose and incurred for the charitable purposes in India. See DIRECTOR OF INCOME-TAX (EXEMPTION) VERSUS NATIONAL ASSOCIATION OF SOFTWARE & SERVICES COMPANIES [2012 (5) TMI 204 - DELHI HIGH COURT]. Customs 2019 (4) TMI 915 Classification of imported goods - whether classifiable as ADP machine or as a mobile telephone under CTH 85171290? - Confiscation - labelling of consignments as per N/N. 44 (RE-2000)/1997=2002 dated the 24th November, 2000 issued by DGFT - Held that:- The item imported, is more suited for the purpose of working/ reading rather than for the purpose of telephony, specifically as a mobile device - I am unable to make out how convenient it would be to use the device while holding the same against ear as a mobile telephone. Further the imported item admittedly is without an earpiece, which would make it impossible to use the same for conversation. The findings recorded by the Commissioner for ignoring the size of the item imported and trade parlance/ understanding of the same cannot be sustained. The applicability of the circular relied upon by the Commissioner has to be determined after taking into account the size/ dimensions of the imported item and also the trade/ parlance understanding of the same. The order of Commissioner has been passed without application of mind. In the entire order he goes on rejecting the contentions raised by the respondents for claiming classification under CTH 8517 but finally decides the classification as claimed by them. He has failed to consider the manner in which the respondents have positioned themselves in the market vis a vis the imported item. In their own literature, they describe the products stating “Tablet with support for GSM voice communication, SMS and MMS”. Thus respondents have entered the market describing the product as Tablet with support for GSM voice Communication. In our view this is enough to hold that voice communication is secondary function to the Tablet functions. When the respondents themselves hold that Tablet function is predominant, any finding rendered by the Commissioner to the contrary cannot survive. The order of Commissioner is set aside and the matter is remanded back to the adjudicating authority for fresh consideration of issue of classification and all the other associated issues - appeal allowed by way of remand. 2019 (4) TMI 914 Extended period of limitation - improper classification of goods on bonafide belief - re-classification of goods - not a case of mis-declaration of goods - Held that:- Both Revenue as well as the appellant were having the understanding that classification assessed prior to 18.04.2011 was correct at the time of clearance of the bills of entry in question. Further, the show cause notice has been issued on 13 July, 2015 by invoking extended period of limitation - the bonafides of the appellants have been proved and it is not a case of suppression of classification by the appellant. The appellant sought classification under chapter 84 of the Act, it is the duty of the adjudicating authority to classify correctly and to examine whether the classification sought is correct or not? Admittedly, the goods were classified under Chapter 84 of the Act. Therefore, proviso to Section 28 of Customs Act, 1962 are not invokable, to invite extended period of limitation in the facts of this case. The extended period of limitation is not invokable in the facts of this case, as whole of the demand confirmed against the appellant is by invoking extended period of limitation - penalty also not imposable - appeal allowed - decided in favor of appellant. 2019 (4) TMI 913 Re-import/import of goods - N/N. 53/1997-Customs dated 03 June 1997 and 52/ 2003-Cus dated 31 March 2003 - remand of the case for de novo adjudication - Held that:- The documents produced by the appellant are bank realisation certificates from Punjab National Bank. Though the certificates are again the photocopies. However, the Department has also placed on record the verification report confirming all the requisite 4 certificates to be in order - But the Commissioner is observed to have ignored the documents, the bank realisation certificates to arrive at proper verification. Said verifying documents are now also placed on record and are acknowledged to have been verified as correct by the department also. Hence the demand of ₹ 8,55,087/-, ₹ 6897/- ₹ 3248/- and ₹ 2263 also stands set aside. Thus, the order under challenge has not complied the directions of remand properly. The only demand stands confirmed against the appellant is that of ₹ 3,05,011/- as the recovery of Customs duty forgone amount. The same has already been conceded by the appellant. The proportionate value of Redemption Fine is therefore, reduced to Rupee Three lakh and the proportionate penalty accordingly is reduced to Rupees One lakh only. Appeal allowed in part. 2019 (4) TMI 912 Evasion of ADD - re-export parts of calculators found in Semi Knocked Down - according to the Department, on assembling, they resulted in fully functional calculators - Held that:- The calculators in SKD condition were assembled in the presence of the Proprietor of the appellant and it was admitted by him that after assembly fully functional calculators came into existence. It is, therefore, clear that the appellant had imported calculators in SKD condition with a view to evade Anti-Dumping Duty since Anti Dumping Duty is levied on finished calculators. However, when this fact was detected by the Department, the Appellant made a request for re-export of the goods. This request was rejected by the Adjudicating Authority and the Appellate Authority and in our considered view for good and valid reasons. The Appellant had imported calculators in SKD condition with a view to assemble them as fully functional calculators to avoid Anti-Dumping Duty. It cannot, therefore, be permitted to re-export the calculators in SKD condition when the Department detained the goods and after examination concluded that after assembly, fully functional calculators came into existence. Appeal dismissed - decided against appellant. 2019 (4) TMI 911 Imposition of penalty on CHA - Regulation 22 read with Regulation 20 of CBLR, 2013 - Contravention of provisions of Regulation 11(d), 11(n) and 17(9) ibid - mis-declaration of imported goods - it was alleged that the appellant as Customs broker failed to advise the importer to declare the actual description of goods imported by them - time Limitation - Held that:- Obtaining the business through the acquaintance of their employee is not offence under the CBLR - Regarding the use of another person‟s IEC by the appellant, it is evident at the first instance that the same was not within the knowledge of the appellant and, therefore, he cannot be held responsible for that. Even otherwise, it has been held in the case of M/s Necko Freight Forwarders Ltd. [2018 (1) TMI 1185 - DELHI HIGH COURT] that lending of IEC is not an offence under the Customs Act - Therefore, the appellant can also not be held to be liable for this charge which in any case is not sustainable against the appellant. Time Limitation - Held that:- The entire proceeding is time barred and the impugned order is liable to be set aside on this ground alone. The appellant has also taken due precaution to verify the antecedent of the importer so as to comply with the KYC norm. There are larger number of decisions which states that the appellant has Customs Broker is liable to verify the KYC of the appellant on the basis of documents supplied by them as a prudent person. The CHA is not supposed to verify the each and every aspect about the business of importer as the Inspector of Department or investigating agency - From the submission made by the ld. Advocate and fact on record, it is apparent that the appellant has taken due diligence while verifying the KYC of the appellant based on the record submitted by him. Commissioner has disagreed with the report of Inquiry Officer against the appellant without appreciating the responsibilities casted upon the appellant under CBLR. Appeal allowed - decided in favor of appellant. Insolvency & Bankruptcy 2019 (4) TMI 910 Approval of the Resolution Plan for insolvency resolution of the Corporate Debtor - The Resolution Plan of Kushal Limited jointly with Mr. Sandip Agrawal did not meet with the criteria of the initial deposit of 5% as on stipulated date. Hence the CoC rejected the Resolution Plan - Held that:- Section 53 of IBC lists the priorities to be given to the beneficiaries of liquidation value of the assets of the Corporate Debtor. The provisions of Section 53 make it amply clear that Operational Creditors are at the end of the list of beneficiaries as the Secured Financial Creditors have edge over the others. Moreover, the claims of the applicants who filed the Intervention Applications are having the claim below 10 per cent of the total debt of the Corporate Debtor. Hence, in view of Section 24(3)(c) of the Code, the operational creditors , if the amount of their aggregate dues is less than 10 per cent of the debt, they are not entitled to attend and vote in the meetings of CoC. Also, Operational Creditors have no locus standi as far as approval of the Resolution Plan by the CoC is concerned. They are not eligible to attend and vote at the meetings of CoC if they are holding less than 10% of the total debt - Section 24(3)(C) of IBC dispel the misconceptions of the Operational Creditors/intervener that they have edge over the other beneficiaries. Resolution Plan as approved by the Committee of Creditors “CoC” meets the requirements as referred to under section 30(2) of the Insolvency and Bankruptcy Code, 2016 and therefore, IA 224 of 2018 is liable to be allowed as prayed for - Resolution Plan dated 26.05.2018 along with Addendum dated 05.06.2018 submitted by the RP with approval of the CoC is approved. Service Tax 2019 (4) TMI 909 CENVAT Credit - input services - signages - civil construction and other services - principles of natural justice - Held that:- The impugned order has not considered all the submissions made by the appellant with regard to various input services. Further the decisions relied upon by the appellant in support of his submission have also not been properly appreciated by the Commissioner (Appeals). The input service with regard to Civil Construction relates to the period prior to April 2011 but the Commissioner (Appeals) in the absence of sufficient evidence has considered the said service availed after the amendment w.e.f. April 2011 - the appellant in order to support his claim that the said services were prior to the amendment in April 2011 has produced the certificate from the service provider which was not there before the Commissioner (Appeals). The impugned order needs to be set aside and the matter needs to be remanded back to the original authority with a direction to pass a De novo order after considering all the evidence which may be produced by the appellant in support of their submission - Appeal allowed by way of remand. 2019 (4) TMI 908 Withdrawal of refund claim - delay in processing the claim - Held that:- The matter of fact is that the appellants have duly filed refund claim claiming refund of the amount deposited by them as per the demand confirming against them, when the same was set aside by CESTAT. No explanation has been put forth by the Revenue as to why the said refund claim was not adjudicated upon for nearly two years. No explanation comes forth from either the order of the adjudicating authority or from the order of Commissioner(Appeals). Delay in processing the claim filed by the appellant is enough reason to allow the Appeal in favour of the appellant. If the said refund claim was adjudicated then appellant would have been entitled not only to refund of amount deposited but also to interest as per Section 11BB of Central Excise Act, 1944. Appeal allowed - decided in favor of appellant. 2019 (4) TMI 907 Goods Transport Agency Service - Indian port of entry handling and inland transportation service - composite contracts - short paid duty - Held that:- The composite service may include various intermediary and ancillary services such as loading/unloading, packing/unpacking etc. provided in the course of transportation of goods by road. These services are not provided as independent activity but as means of successful implementation of the principal service, namely the transportation of goods by road. It has, therefore, been stated that a composite service even if it consists of more than one service, should be treated as a single service based on the main or principal service. Thus, any ancillary/intermediate service provided in relation to transportation of goods, and the charges, if any, for such services are included in the invoice issued by the Goods and Transport Agency and not by any other person. Such service would form part of Goods and Transport Agency Service. The learned Authorized Representative of the Department has also made an attempt to convince us that the services rendered by the Appellant were not merely transportation of the goods, but something more and, therefore, fell within the definition of Cargo Handling Services - This activity, as is also apparent from the agreement, is clearly ancillary services provided in relation to transportation of goods. The Appellant is, therefore, correct in asserting that it is not providing Cargo Handling Service‟. Thus, it is more than apparent that the Appellant is not rendering Cargo Handling Services‟ to GVK/Gautami - Impugned order set aside - appeal allowed - decided in favor of appellant. 2019 (4) TMI 906 Review of the order - Utilization of CENVAT Credit - whether credit on input/capital goods used for manufacturing excisable goods could be utilized for payment of Service Tax on the output services? - Applicable rate of service tax - Held that:- There is no substance in the submission advanced by learned Authorized Representative of the Department that the High Court had directed the Tribunal to hear the appeals on merits afresh and even otherwise the only power conferred upon a Tribunal, after a decision is rendered in an appeal is to rectify any mistake apparent from the record under Section 35(2) of the Act. The Tribunal does not have the power to even review an order, much less to hear the appeal afresh on merit. Rule 41 on which the reliance has been placed by the learned Authorized Representative of the Deprtment provides that the Tribunal may make such orders or give such directions as may be necessary or expedient to give effect or in relation to its orders or to prevent abuse of its process or to secure the ends of justice. This Rule, therefore, cannot come to the rescue of the Department to make a prayer for a fresh decision. Application dismissed. 2019 (4) TMI 905 CENVAT Credit - wiring/ installation of fans - disallowed for civil work activity - Held that:- The cenvat credit availed on input service for electrical installation in building, admittedly they have been used inside the factory, hence allowable under Rule 2(k) of the Cenvat Credit Rules, 2004 - Credit allowed. Non-payment of service tax - vitrified tiles used for flooring of the factory - Rent-a-Cab scheme Service - reverse charge mechanism - Held that:- The said amount has already been deposited/ reversed alongwith interest - Under Section 73(3) of the Finance Act, the show cause notice relating to these amounts is bad. Penalty u/s 78 of FA - Held that:- The penalty under Section 78 is dropped as the issue relates to interpretation and no case of deliberate defiance is made out. Appeal allowed in part. 2019 (4) TMI 904 Demand of Service tax - Director’s Remuneration - disallowance of cenvat credit - wrong charge of interest for the delayed payment of tax - Held that:- All the mentioned services, have been received admittedly by the appellant and availed by them in rendering of the output services. Accordingly, I hold that all the services in question are eligible for cenvat credit under Rule 2 (l)of the Cenvat Credit Rules, 2004, which provides, “any service received by the output service provider for rendering an output service are eligible for “input service credit”. Confirmation of interest under Section 75 of the Finance Act - Held that:- Accordingly, for the period from December, 2013 to March, 2014, instead of interest calculated at ₹ 12,77,475/-, but the same should be ₹ 5,82,559/-. Penalty u/s 76 and 78 of FA - Held that:- There is no case made out for willful contravention of or mis-conduct and fraud made out against the appellant. Thus, the penalty under Section 78 and 76 is set aside. There is cogent reasons given by the appellant for delayed payment of tax, which has been found justifiable. Further, there is nothing fraudulent or deliberate delay on the part of the appellant, in view of the debtors/outstanding for output services - penalty under Section 76 & 78 is set aside. The appeal is allowed - decided in favor of appellant. 2019 (4) TMI 903 Levy of service tax - renting of premises for accommodation of students/ student hotel - period 01.02.2012 to 31.10.2013 - Held that:- In view of the provisions of Section 66B read with Section 66D(m), it is apparent that service tax is not exigible in case of letting of premises for residential purposes. Accordingly, the penalty imposed under Section 78 & 77(1)(A) of the Act is also set aside - The demand of interest under Section 75 as well as late fee under Section 70 are also set aside - appeal allowed - decided in favor of appellant. 2019 (4) TMI 902 Rectification of mistake - Condonation of delay of 319 days in filing appeal - Held that:- The entire record attached to the COD application was considered while disposing of the impugned application which means even the case law of Mukesh Kumar [2014 (5) TMI 1055 - DELHI HIGH COURT] was relied upon, being the content of the said application itself. It is thereafter that this Tribunal formed an opinion that in the given facts and circumstances of the present appeal, the financial difficulty in making the predeposit was held not to be a justifiable reason for condoning delay. To our opinion there is no error apparent, as alleged, on the record of this order. In the guise of error apparent on record, the reconsideration of the matter on merits is not permissible. ROM Application dismissed. 2019 (4) TMI 901 Classification of services - Information Technology software services or not - sale of canned software with license and condition to upgrade the said software - Held that:- The service tax liability confirmed by the adjudicating authority and upheld by the first appellate authority along with interest seems to be correct for the simple reason that appellant herein had supplied the canned software to M/s Reliance Capital Ltd for commercial exploitation - there is no hesitation to uphold the tax so raised as the definition of category ‘Information Technology Software Services’ as per the provisions of Sec.65(105)(zzzze) would cover the canned software sold by the appellant - the demand of service tax with interest is upheld. Penalty - Held that:- During the period entire thing was on flux and the Hon’ble High Court of Madras has decided the issue on 24.08.2010 on which day the canned software was considered as service falling under category of ‘Information Technology Software Services’ - Appellant may have entertained a bonafide belief that tax is not payable, can be a justifiable reason, for non discharge of service tax liability - Invoking the provisions of Sec.80 of the Finance Act, 1994, the penalty imposed by the adjudicating authority is set aside. The demand of the tax with interest upheld - penalties set aside - appeal allowed in part. 2019 (4) TMI 899 Job work - intermediate production process - Mega Exemption Notification - Sl. No. 30(c) of N/N. 25/2012 - It appeared to the Department that the job work activity carried out by the appellant is liable to be treated as an exempted service - Held that:- Any activity which amounts to manufacture of excisable goods is not subject to levy of service tax under the category of Business Auxiliary Service . After 01.07.2012, the Negative List of services under Section 66D of the Finance Act, 1994 specifically stated that any process that is carried out for manufacturing of goods is not subject to levy of service tax. A careful reading of paragraph 30 of Notification No. 25/2012 in this background would show that carrying out an intermediate production process as job work in relation to any goods on which appropriate duty is payable by the principal manufacturer, is not taxable. When the process carried out by the appellant amounts to manufacture, the very same activity cannot be considered as a service. Merely because the said activity is carried out on an intermediate product, Sl. No. 30(c) cannot be applied. Sl. No. 30 states an intermediate production process as job work , but does not say that such process will include manufacturing process . When the activity of manufacture is subject to Central Excise Duty, the very same activity cannot be subjected to levy of Service Tax. The entire Show Cause Notice is based on a wrong perspective or interpretation of law. The appellant is not engaged in providing any exempted service. Appeal allowed - decided in favor of appellant. Central Excise 2019 (4) TMI 900 Reversal of CENVAT Credit - clearance of goods (inputs) to their sister concern M/s. IMIL - Rule 3(4) of the Credit Rules, 2002 - Held that:- Respondent M/s. IML had purchased Iron Ore Pellets from M/s. IIL. It is also an admitted position that M/s. IIL in turn had purchased inputs i.e. Iron Ore Pellets from M/s. Kundermukh which is a 100% EOU. Further, it is undisputed that M/s. IIL on receipt of Iron Ore Pellets, took CENVAT Credit of the duty paid by M/s. Kundermukh. However, it did not use the purchased inputs i.e. Iron Ore Pellets for further manufacture. In fact, the Iron Ore Pellets were removed by M/s. IIL as such i.e. as received from M/s. Kundermukh - when removing the Iron Ore Pellets as such i.e. without it being used in manufacture of any other product or it being processed per se, it had correctly in terms of Rule 3(4) of the Credit Rules, 2002 had correctly reversed the CENVAT Credit taken - decided in favor of the Respondent- Assessee and against the Appellant-Revenue. CENVAT Credit - Rule 3(6)(a) of CENVAT Credit Rules - Whether M/s. IMIL has correctly availed the CENVAT Credit as prescribed under Rule 3(6)(a) of CENVAT Credit Rules? - Held that:- The impugned order of the Tribunal proceeds incorrectly on the basis that there can be no limitation/ capping on the credit taken by the Respondent- M/s. IMIL where the goods have been supplied by M/s. IIL i.e. supplier in terms of Rule3(4) of the Credit Rules, 2002. Thus it is a complete misreading of the provisions. The capping of the CENVAT Credit is only in case of that manufacturer who uses the inputs in further manufacture and does not apply to a manufacturer who on acquisition of inputs does not use it for further manufacture but removes it as such so as to be governed by Rule 3(4) of the Credit Rules 2002.Thus in such case Rule 3(6)(a) of the Credit Rules, 2002 will prevail over Rule 3(5) of the Credit Rules, 2002 as it reduces the availing of credit in respect of goods manufactured by a 100% EOU. The next submission that the entire exercise of restricting the credit is an exercise for reassessing the duty paid by the supplier viz. M/s. IIL. Therefore, the submission that this exercise cannot be done in the absence of M/s. IIL in the present facts cannot be accepted. The question is answered in the negative i.e. in favor of the Appellant -Revenue and against the Respondent -Assessee. Appeal allowed - decided in favor of appellant. 2019 (4) TMI 898 Refund claim - wrongly availed Cenvat credit under Rule 14 - Sub-section (2B) of Section 11 A of the Central Excise Act, 1944 - suppression of facts or not - extended period of limitation - Held that:- On going through the SCN, there is no allegation levelled as to suppression or mis-statement, etc; to invoke larger period of limitation. It is also not in dispute that on being pointed out the appellants had reversed the entire Cenvat credit of ₹ 41,09,664/- in RG23C (Capital Goods Register) which fact was duly intimated to the Revenue on 29.06.2007, which fact also stands acknowledged in the SCN at paragraph 03.05. It is a clear case where larger period is invoked for no reason, the Revenue never even whispered that the reversals were never there to allege availing and continue to enjoy any benefit of Cenvat credit. Discernibly, there is no Revenue loss since duty is made good along with interest, not just once - SCN is clearly issued invoking extended period of limitation in a routine manner and without any justification whatsoever for which reason, the impugned order cannot sustain. Appeal allowed - decided in favor of appellant. 2019 (4) TMI 897 CENVAT Credit - input services - Outdoor Catering services - Held that:- In view of the decision of the Larger Bench of the Tribunal in the case of Wipro Ltd’s case [2018 (4) TMI 149 - CESTAT BANGALORE], CENVAT Credit of Service Tax paid on outdoor catering service post 01.04.2011 is not admissible. Time Limitation - Held that:- There is no merit in the contention of the learned Advocate that the demand is barred by limitation, when initially accepting the liability the entire amount was paid on 31.08.2014 with interest and later notice was issued for appropriation of the amount; and the second notice was for recovery of suo-moto credit of the same amount taken subsequently, which is within normal period of limitation. Thus, Appellants are not eligible to avail CENVAT Credit of Service Tax paid on outdoor catering service and required to reverse the same with interest as applicable; however, no penalty is attracted - the matter is remanded to the Adjudicating Authority to examine whether the entire amount of CENVAT Credit with interest has been paid. 2019 (4) TMI 896 Rectification of mistake - error apparent on the face of record - Applicant submits that even though the issue of notional interest and revenue neutrality raised and argued before this Tribunal, the same have not been considered while passing the present order - Held that:- All issues raised by the Appellant have been considered while passing the order. Hence, reconsideration of the issues again would amount to review of the order, which is not permissible - ROM Application dismissed. 2019 (4) TMI 895 Rectification of mistake/restoration of appeal - Held that:- The averment in the Misc. Application found to be mis-leading and incorrect inasmuch as the Revenue has filed two appeals as required under Rule 6A of CESTAT (Procedure) Rules, 1982 on the same day i.e. 01.08.2016 for the amounts ₹ 14,28,748/- and ₹ 50,49,547/- as the impugned order-in-appeal disposed two orders-in-original. The appeals are allocated different numbers viz. E/86987/2016 and E/86988/2016. Therefore, the present Misc. Application filed by the Revenue is infructuous. We are also constrained to mention that this Bench has been constituted specifically at 1430 hrs. to-day by the Hon’ble President, since the Members are assigned to different Benches, only for the purpose of disposal of ROM applications filed. This sort of frivolous application consumes the time of the Tribunal and retards the pace of disposal of appeals pending before the Tribunal. ROM/ROA is dismissed being infructuous. 2019 (4) TMI 894 CENVAT credit - excess / surplus quantity of electricity is sold to outside power distribution companies on consideration without payment of duty - Rule 6 of CENVAT Credit Rules, 2004 - Held that:- As per Rule 6(1) of the CENVAT Credit Rules, 2004 read with Explanation (1) the non-excisable goods which are manufactured by the manufacturer in his factory will get covered under Rule 6(1) in the light of the said Explanation - In the present case, the appellant has reversed the proportionate credit and thereby complied with the statutory requirement as provided in Rule 6(3A) - demand set aside - appeal allowed - decided in favor of appellant. 2019 (4) TMI 893 Imposition of Interest and penalty - non-utilization of wrongly availed CENVAT credit - appellant had throughout sufficient balance in their CENVAT credit account - Held that:- The issue is no more res integra and has been settled in favour of the assessee by the Karnataka High Court in the case of Bill Forge Ltd. [2011 (4) TMI 969 - KARNATAKA HIGH COURT], where it was held that once the entry was reversed, it is as if that the Cenvat credit was not available - appeal allowed - decided in favor of appellant. 2019 (4) TMI 892 Imposition of Interest and penalty - non-utilization of wrongly availed CENVAT credit - balance in the CENVAT register or not - appellant was registered both under Central Excise and Service Tax - Held that:- The appellants have reversed the wrongly availed CENVAT credit on being pointed out by the audit before the issuance of show-cause notice. Further, the appellant has filed the ER-1 returns along with the reply to the show-cause notice wherein they have shown sufficient balance in their register till the date of reversal but the same was not considered by both the authorities below and they have only considered ST-3 returns and recorded the finding that the assessee did not have sufficient balance in their CENVAT register. The issue decided in the case of CCE vs. Bill Forge Ltd. [2011 (4) TMI 969 - KARNATAKA HIGH COURT]. Appeal allowed - decided in favor of appellant. 2019 (4) TMI 891 Clandestine manufacture and removal - SSI Exemption - entire case is based on the statements recorded during the investigations - cross-examination denied - penalty under Section 26(2) of the Central Excise Rules, 2002 - Held that:- In the absence of circumstances as specified in Section 9D(1)(a) of the Excise Act, the truth of the fact contained in any statement, recorded before a gazetted Central Excise Officer has to be taken as evidences as per Section 9 D(1)(b). The evidentiary value of the statement, is therefore, completely lost in this case as the parameter of Section 9D has not been complied with - The burden of proof lies on the Revenue and required to discharge effectively, however, the same has not been done in this case. As far as the use of the common brand name is concerned, it is on record that the same has been assigned by the assignment deed is dated 1/04/2012 on other applicants. No error is committed by the appellant in using the common brand name ‘AKS’ by the other appellants as well. In any case, the AKS is brand fixed were ‘AKS Gold’ and ‘AKS Silver’ appears to be a different brand name than ‘AKS’ - In this case the statement of Shri Bharat Bhushan which was relied upon by the Department have not been examined by the Adjudicating Authority before accepting their statement and also the cross examination of these persons were permitted even after categorical submissions made by the appellants before the Adjudicating Authority. Appeal allowed - decided in favor of appellant. 2019 (4) TMI 890 Refund of wrongly reversed CENVAT credit - inputs consumed in provision of job worker - unjust enrichment - Section 11B of the Central Excise Act - Held that:- In the impugned order, the learned Commissioner(Appeals) has failed to consider the clause c of proviso to Section 11B(2) of the Central Excise Act, 1944 which provides an exception. As per clause c proviso to Section 11B(2) of the Act, if such refund of amount of duty paid on excisable goods used as input in accordance with rule made, or any notification made under this Act, the same has to be credited to the applicant instead of Consumer Welfare Fund - Appeal allowed - decided in favor of appellant. 2019 (4) TMI 889 Condonation of delay of 506 days in filing appeal - service of order - Section 35B(3) of the Central Excise Act, 1944 - Held that:- There is an inordinate delay of 506 days in filing these two appals. Further, the appellant as per their own averments in the applications received the copy of the impugned order in the first week of June 2017 by the security staff of the appellant but it was not handed over to the concerned employee dealing with Central Excise cases. The appellants have been very casual and negligent in not filing the appeal expeditiously even after coming to know of the impugned order in November / December 2018. Consequently, there are no sufficient reasons for condoning such an inordinate delay of 506 days. COD application dismissed. 2019 (4) TMI 888 Default of payment of duty - Rule 8 of Central Excise Rules, 2002 - Suppression of facts - extended period of limitation - Held that:- The present case pertains to the default of payment of duty by the appellant for two periods i.e from September 2014 to October 2015 and for the period from February 2016 to February 2017 and the total duty which has been demanded from the appellant is ₹ 20,39,822/- for both the periods with equal penalty under Section 11AC of the Central Excise Act - non-payment of duty had arisen on account of freezing of the bank account owing to the family dispute and it is only the appellant who requested the Department to recover the duties directly from their bank account as recorded in the SCN itself; thereafter, the Department recovered an amount of ₹ 17,11,244/- from the bank account of the appellant. It is a case of default in the payment of duty as per sub-Rule 4 of Rule 8, the Department has power to recover the same in the manner as they are applicable for recovery of any duty or other sums payable to the Central Government. Imposition of penalty - Held that:- Circular of the Department dated 15.12.2003 also explains the position of law with regard to default in the payment of Excise Duty. Further, imposing the penalty by invoking Section 11AC of the Central Excise Act is not applicable in the present case because Section 11AC can only be applied if the provisions mentioned therein are satisfied whereas this is not the case where there is intentional evasion of duty or clandestine removal. The imposition of equal penalty under Section 11AC of the Central Excise Act is not sustainable in the facts and circumstances of this case and therefore, the imposition of penalty under Section 11AC is set aside, but since there was a default in the payment of duty, imposition of penalty of ₹ 5000/- under Rule 27 of the Central Excise Rules. Appeal disposed off. 2019 (4) TMI 887 Rectification of Mistake - two paras are contradictory - Held that:- In Para 7 of the said order, findings of the Tribunal are in favour of the assessee-respondent. As such, the appeal of the Revenue was required to be rejected. It seems that the expression – “Accordingly, I allow the appeals filed by the Revenue” is a typographical error. The same should have been “I rejected the appeals filed by the Revenue.” The error rectified - ROM Application allowed. 2019 (4) TMI 886 Clandestine manufacture - drawing of copper wire from copper wire rods - Confiscation - Held that:- The admitted fact is that the goods loaded in the two trucks were duty paid. Further, from the facts on record, it is evident that one of the trucks as waiting outside the factory and the other truck had gone inside the factory gate and duty paid goods found loaded at M/s Hindalco Industries, were still lying in the truck. Further, the cogent explanation given as to job work, was not found untrue. The goods are not liable for confiscation under Rule 25 of the Central Excise Rules, 2002 - penalty also set aside - appeal allowed - decided in favor of appellant. Indian Laws 2019 (4) TMI 885 Cancellation of appellant enrollment as an Advocate - Bar Council of Rajasthan dismissed the application of the Appellant for enrolment on 16th January, 2000 and referred the matter for confirmation of the Bar Council of India - Held that:- The suppression that was alleged against the Appellant at the time of seeking enrolment in the Bar Council of Himachal Pradesh pertains to his being in Government service in the State of Himachal Pradesh and his involvement in a criminal case. Subsequent acquittal cannot come to the rescue of the Appellant. Section 26 of the Advocates Act, 1961 confers power on the Bar Council of India to remove the name of a person who entered on the Roll of Advocates by misrepresentation. It is in exercise of this power that the enrollment of the Appellant was cancelled. The first order that was passed by the Bar Council cancelling his enrolment as an advocate was confirmed by this Court. The repeated attempts made by the Appellant later amount to an abuse of process. The orders impugned in the Appeals do not suffer from any infirmity and are upheld. 2019 (4) TMI 884 Dishonor of Cheque - default in repayment of loan - Auction - Section 17(1) of the SARFAESI Act - Held that:- Section 17(1) of the SARFAESI Act makes it clear that the measures contemplated under Section 13(4) of the Act provide continuity to the cause of action. In the present case, against the action of the respondent Bank in accepting the only bid and confirming the sale, the petitioners have an alternative effective remedy of filing an application under Section 17 of the SARFAESI Act. In the present case, since the action taken by the respondent- Bank in auctioning the residential house in question on account of default in repayment of the loan, was in continuation of the measures provided under Section 13(4) of the Act, the petitioners have an alternative effective remedy of filing an application under Section 17 of the Act. The petitioners instead of availing that remedy, have approached this Court under Article 226 of the Constitution of India. Petition dismissed - decided against petitioner. 2019 (4) TMI 883 Maintainability of suit - time limitation - nominee in the bank account or FDR - loan given by late Shri. Hari Om Rana to his father - Held that:- The bank having confirmed that Mr. Rampal had withdrawn the amount as a nominee of late Shri. Hari Om Rana, he is liable to secure the said amount. Further, in so far as the explanations given by Mr. Rampal in his leave to defend application in paragraph H and I are concerned, all these issues as to why the monies were withdrawn from late Shri. Hari Om Rana’s account and for what purpose they were put to use have to be thrashed out in trial. However, the FDR amount of ₹ 1,12,19,339/- deserves to be secured. Mr. Rampal has taken a stand that he has given a loan of ₹ 2 crores to late Shri. Hari Om Rana during his life time. This fact also needs to be established in trial as there are no documents placed by Defendant No. 1 to show in what manner the loans were extended by him to his son. The law under Order XXXVII suits is quite well settled. If there are issues which need to be gone into in trial, but the Plaintiffs have made out a case for being secured, leave to defend can be granted conditionally. There are various factual issues that need to be gone into and the present is not a case for a decree being passed at this stage especially because the matter is one amongst family members and there seems to be some basis for the Defendant No.1 to argue that the land in fact belongs to him - Admittedly, there is no loan agreement and there are no documents admitting liability. However, the encashment of the FDR and the payments made from the bank account of late Shri. Hari Om Rana to his father’s bank account are circumstances that go against the Defendant No.1. It is the settled position in law that if the pleadings of the parties require to be adjudicated by the Court, the exceptional procedure under Order XXXVII CPC should not lead to decreeing of the suit. While there are triable issues which have been raised, the leave to defend cannot also be unconditional. The Plaintiff No. 1 is the widow of late Shri. Hari Om Rana and Plaintiff No. 2 is his daughter. Defendant No. 1 is in control of the entire estate and the estate may be whittled away by the time the suit is tried and adjudicated. Thus, some conditions have to be imposed. The IAs filed by the bank and Defendants No. 1, Mr. Rampal seeking leave to defend are accordingly allowed. 2019 (4) TMI 882 Dishonor of Cheque - insufficiency of funds - repayment of borrowed amount - section 138 of NI Act - burden of prove - Held that:- It was for the accused to have brought on record such facts and such circumstances which may lead the Court to conclude either that the consideration did not exist or that its non-existence was so probable that a prudent man would, under the circumstances of the case, act upon the plea that the consideration did not exist. It has repeatedly been held by the Hon’ble Supreme Court in RANGAPPA VERSUS SRI MOHAN [2010 (5) TMI 391 - SUPREME COURT OF INDIA] that though there may not be sufficient negative evidence which could be brought on record by the accused to discharge his burden, yet mere denial would not fulfill the requirements of rebuttal as envisaged under Sections 118 and 139 of the Act. The only defence put-forth by the accused was that the cheque was handed over in the year 2010 as a security cheque, when loan was taken from the complainant. The borrowed money was returned before 2012, but the complainant misused the security cheque. Therefore, in such circumstances, it cannot be said that the accused has discharged the onus by bringing on record such facts and circumstances as to show the preponderance of probabilities tilting in his favour, any doubt on the complainant’s case that he had returned the money. This assumes importance because the petitioner had not denied the issuance of cheque. Revision petition dismissed. 2019 (4) TMI 881 Cancellation of the policy of insurance - group discount in respect of J.P.A. (Group) Policy - natural person who claims to be a beneficiary of a J.P.A. Group Insurance Policy - HELD THAT:- In the present case, the parties are governed by the terms and conditions of J.P.A. Group Policy. The stand taken by the insurance company is that such policy underwent a revision subsequently and that, the insurance company changed its policy. The change in the policy is reflected in the writing dated August 1, 2002. The insurance company is no longer in a position to continue with a long-term J.P.A. Group Insurance cover for 15 years granting a cover of ₹ 10 lacs. An insurance company is entitled to change its policy. This change in policy led to the issuance of the impugned letter dated August 1, 2002 - The fact that there is a change of policy is not disputed. The writing dated August 1, 2002 itself not contains the justification of change in policy. The justification is set forth in the affidavit of the insurance company. A Court is entitled to consider the materials on the basis of which the impugned decision was taken. In the facts of the present case, change of policy is a complete justification for the termination. The impugned letter dated August 1, 2002 therefore, in such that it cannot be said to be arbitrary requiring interference by a writ Court. The insurance company having acted in terms of the contract between the parties as contained in J.P.A. Group Insurance Policy, it cannot be said that, such an action is arbitrary or unreasonable. The parties to a contract must abide by it howsoever unreasonable, one of the parties may find such terms to be. It is of no consequence that, the Court might find the action taken on the basis of the agreed terms to be unreasonable. It is not for the Court to rewrite the contract for the parties. There is no infirmity in the impugned actions taken by the insurance company - petition dismissed. 2019 (4) TMI 880 Applicaton for regularization of service rejected - State denied the benefit to the respondent on the ground that he was not sponsored by the Employment Exchange - HELD THAT:- I t is found that even others who were not sponsored by the Employment Exchange were also given the benefit of regularization. The learned Single Judge was, therefore, justified in quashing the impugned order dated 07 September, 2012 and issuing a Mandamus for regularization of service. The appellants have not made out a case for interference in the order passed by the learned Single Judge - intra-Court appeal dismissed.
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