TMI Tax Updates - e-Newsletter
April 19, 2019
Case Laws in this Newsletter:
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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Income Tax:
Income from sale of property - When all these factual observation are seen cumulatively, the claim of the assessee that the activity of sale of properties should be treated as business fails.
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Income Tax:
Exemption u/s.11 - non production of registration certificate u/s.12A - Just because documentary evidences were not furnished by the assessee cannot be the ground for denying exemption u/s. 11 of the Act to the assessee.
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Income Tax:
TDS u/s 195 - secondment of employees - nature of payment - Income from salary OR income from contract of services - ITAT was correct in giving a finding that the impugned income is income from salary instead of income from contract of services
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Income Tax:
Exemption u/s 11 - Excess expenditure incurred by the trust/charitable institution in earlier assessment year could be allowed to be set off against income of subsequent years by invoking Section 11.
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Income Tax:
Low declaration of contract amount - AS-9 - revenue recognition - disputed contractual receipt - Mere filing of the suit for recovery will not in law make it an income which has accrued unless corresponding liability recognized by the other party
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Income Tax:
Allowability of expenses u/s 48 - expenses incurred in IPO - assessee being major shareholder sold his 50% holding agreed to share cost of IPO though there was no precondition - reimbursement of IPO expenses was decided in the board meeting and after taking the report/opinion from the chartered accountant - expenses were incurred wholly and exclusively in connection with the transfer of the shares - held allowable
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Income Tax:
Exemption u/s 54F - assessee was owner of two flats on the date of transfer of capital assets, one was co-owned - owns more than one residential house - a co-owned property cannot be termed as fully and wholly owned by him, thus exemption cannot be denied
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Income Tax:
Addition u/s 56(2)(vii)(b) - purchase of immovable property on less than stamp duty value - it was incumbent upon the AO to refer the matter to the District Valuation Officer
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Income Tax:
Revision u/s 263 - AO recorded in order that assessee had “duly furnished the details of opening stock, closing stock, sales and production i.e. consumption of paddy etc.” this was a case of ‘no inquiry’ - CIT has not undertaken any independent inquiry to contradict the conclusions reached by the AO and to demonstrate that the order of the AO was erroneous and prejudicial to the interest of the revenue - revision not sustainable
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Income Tax:
Reassessment u/s 147 - Department had collected certain documents and materials in search which were before the AO at the time of framing assessment - non utilization of such material by AO for any reason cannot be considered as failure to disclose truly and fully all material facts by assessee - impugned notice is set aside
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Income Tax:
Receipt of bonus share - investments or stock in trade - original shares were part of stock in trade - bonus shares given by company in proportion to the holding of equity capital by shareholders would, in the absence of express provision to be contrary be treated as capital and not income - hence it form part of investments
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Customs:
Import of prohibited goods - ‘parts of electric iron’ - As the imported goods, though required to be, are not compliant with the standards, they fail to overcome the bar of prohibition at the threshold. Hence the question of duty liability, differential or otherwise, will not arise. - re-export allowed.
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Customs:
Suspension of CHA License - the suspension is required to be done immediately after the detection of case against the CHA for misdeed or any manipulation by the CHA, which is not the case in the present proceedings.
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Indian Laws:
Section 12(5) of the Arbitration and Conciliation Act, 1996 - eligible person to be appointed as an arbitrator - where, under any agreement between the parties, a person falls within any of the categories set out in the Seventh Schedule, he is, as a matter of law, ineligible to be appointed as an arbitrator.
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Indian Laws:
Recovery of loan amount form appellant from the spouse of deceased - whether the loan was duly insured - The loan was secured from the date on which the insurance premium was paid. The premium having been paid by the Appellant’s husband during his lifetime, the loan was to be adjusted from the insurance policy.
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Service Tax:
Delay in filing of appeal - receipt of order after 2 years - At the relevant time there was no provision for sending the order by speed post. - The Commissioner (Appeals) was, therefore, was not justified in observing that since the order was sent by speed post on 16 January 2012, it should be deemed to have been served on the appellant within 15-20 days from the date of dispatch.
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Service Tax:
CENVAT credit - input services - the repair of the MD car is in connection with the manufacture of the final product and is eligible - credit allowed.
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Service Tax:
Jurisdiction - Whether the power of arrest under Section 91 of the Finance Act, 1994 can be exercised without following the procedure as set out in Section 73A(3) and (4) of the said Act? - Held No - (SC)
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Service Tax:
Works Contract - Levy of service tax - The Tribunal had rightly set aside the service tax demand upto 30.5.2017 and confirmed the same from 1.6.2007 onwards.
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Central Excise:
Classification of goods - Par-boiling machines - so far as the Department is concerned, whatever action it has to take, the same will have to be consistent with the Circular which is in force at the relevant point of time - circular is binding on the departmental officers.
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Central Excise:
CENVAT credit - Violation of import condition - no demand notice has been issued for recovery of customs duty, therefore, import cannot be held irregular. Thus, the credit cannot be denied on the allegation of violation of import conditions.
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Central Excise:
Rejection of request for provisional assessment - Rule 7 of the Central Excise Rules 2002 - provisional assessment is required because the actual price to be realized from the customer is not known at the time of clearance of goods.
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Central Excise:
Valuation - inclusion of Trade Margin in the assessable value - Appellant has entered into agreement with the OMCs for supply on Natural gas/ CNG on principal to principal basis - the demand of duty on ‘Trade Margin’ is not sustainable
Articles
Notifications
GST - States-
09/2019 No. FD 48 CSL 2017 - dated
29-3-2019
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Karnataka SGST
Seeks to amend KGST Tax Rate Notification(02/2019) dated 7th March, 2019
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08/2019 No. FD 48 CSL 2017 - dated
29-3-2019
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Karnataka SGST
Seeks to amend KGST Tax Rate Notification(01/2019) dated the 29th June, 2017
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07/2019 - No. KGST.CR.01/2017-18 - dated
27-3-2019
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Karnataka SGST
Notification to extend the due date for furnishing of FORM GST ITC-04 for theperiod July 2017 to March 2019 till 30th June 2019 issued
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07/2019 - No. FD 47 CSL 2017 - dated
14-3-2019
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Karnataka SGST
Seeks to supersede notification Notification (3)- FD 47 CSL 2017 dated 28/06/2017 of KGST Rule, 2017/Notification No. 08/2017 - Central Tax dated 27.06.2017 in order to extend the limit of threshold of aggregate turnover for availing Composition Scheme u/s 10 of the KGST Act, 2017 /CGST Act, 2017 to ₹ 1.5 crores.
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06/2019 - No. FD 47 CSL 2017 - dated
14-3-2019
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Karnataka 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.
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06/2019 - No. KGST.CR.01/2017-18 - dated
13-3-2019
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Karnataka SGST
Seeks to prescribe the due dates for furnishing of FORM GSTR-3B for the months of April, May and June, 2019
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05/2019 - No. KGST.CR.01/2017-18 - dated
13-3-2019
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Karnataka 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
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05/2019 - No. FD 47 CSL 2017 - dated
7-3-2019
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Karnataka 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.
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04/2019 - No. KGST.CR.01/2017-18 - dated
20-2-2019
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Karnataka SGST
Seeks to extend the due date for furnishing FORM GSTR-3B for the month of January, 2019 to 28.02.2019 for registered persons having principal place of business in the state of J&K; and 22.02.2019 for the rest of the States.
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07/2019 - dated
26-2-2019
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Telangana SGST
Notification of Tax persons to the respective jurisdictions
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2019 (4) TMI 1054
Block assessment u/s 158BC 158BD - Addition towards interest earned on pro-notes - accrued interest from such investments and patras - HELD THAT:- No merit in the order of the Ld.Revenue Authorities in this regards because the additions are made on the basis of estimate when the Ld.Revenue Authorities could have computed the accrued interest from such investments and patras. Moreover the interest accrued on such investment is not realized by the assessee during the relevant assessment year and if the assessee prefers to account the same on cash basis, the income arising out of such investment will be taxed in the year in which assessee realizes such interest or on the redemption of the bond and the patras. Therefore we hereby direct the Ld.AO to delete the addition Addition towards the business income of the assessee - HELD THAT:- Revenue Authorities has not examined the return of income produced before them stated to have been filed by the assessee. It was simply rejected because the acknowledgment numbers of the return of income filed by the assessee did not match with the records maintained by the Revenue authorities. Since the Ld.Revenue Authorities had not conducted proper enquiries on that regard and had simply brushed aside the documents produced by the assessee, we do not find any merit in the stand of the Ld.Revenue Authorities. Therefore we are of the considered view that the addition made by the Ld.Revenue Authorities for ₹ 4,00,000/- towards the business income of the assessee is not warranted. Penalty u/s 271F - AO rejected the reply filed by the assessee in lieu of the notice issued U/s.142(1) that she had filed the return of income belatedly by admitting income claiming an amount as refund - HELD THAT:- Revenue Authorities has also not verified the claim of the assessee that she had claimed an amount of ₹ 65,719/- as refund. Therefore we are of the considered view that the penalty levied by the Ld.AO invoking the provisions of Section 271F of the Act is not warranted because it is not conclusively proved that the assessee has not filed her return of income. Hence we hereby direct the Ld.AO to delete the penalty levied Addition by estimating the accrued interest on sundry debtors - HELD THAT:- The assessee has only declared ₹ 4,21,490/- as her income in her return of income filed with respect to the relevant assessment year. Since the income declared by the assessee in her return of income is meager there is nothing to suggest that the assessee is maintaining her accounts as per mercantile system of accounting because predominantly her income flows only from huge advance extend which is disclosed as sundry debtors and that has to be enormous in commensurate with the advance extended . The assessee has also claimed that she is maintaining her books of accounts as per cash system of accounting and her declared sundry debtors from which she has to receive substantial revenue as interest. Since the assessee is maintaining her books of accounts as per cash system of accounting we are of the considered view that the addition made by estimating the accrued interest on the sundry debtors by the Ld.Revenue Authorities is not warranted because the same ought to be treated as the income of the assessee in the previous year in which the assessee receives the interest as per cash system of accounting. Addition u/s 14A r.w.r.8D - assessee have claimed no expenditure as deduction - HELD THAT:- The assessee is an individual and it appears that she has made the investment based on her own decision without any external or internal aid and from her own interest free funds. In such situation no expenditure could be attributed for making such investment. Moreover there is nothing on record to suggest that the assessee have claimed any expenditure as deduction. When the assessee has not claimed any expenditure there could not have be any expenditure that is attributable towards earning exempt income.Therefore we are of the considered view that no disallowance can be made U/s.14A of the Act or by invoking Rule 8D of the Rules in the case of the assessee. Hence we hereby direct the Ld.AO to delete the addition
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2019 (4) TMI 1047
Privilege fee - whether is in the nature of revenue expenditure and deductible expenditure under Section 37(1)? - HELD THAT:- Notices issued on the application for condonation of delay and on the special leave petition
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2019 (4) TMI 1046
TDS u/s 194L/194LA - cost of construction incurred by the assessee is the consideration paid for acquiring such rights, interest and titles from such squatters/hutments - whether consideration given by assessee to such squatters/ hutments was not in the nature of 'compulsory acquisition of land/ structure'? - HELD THAT:- SLP dismissed.
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2019 (4) TMI 1045
Monetary limit - Validity of reopening of assessment - existence of substantial question of law - HELD THAT:- The tax effect is less than Rupees One Crore. In view of Circular No. 3/2018 dated 11 July 2018, as amended by Circular dated 20 August 2018 of the Central Board of Direct Taxes, the Special Leave Petition need not be entertained. The Special Leave Petition is accordingly, dismissed. However, the question of law is kept open.
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2019 (4) TMI 1044
Revision u/s 263 - canceling the assessment order passed u/s 143(3) and directing AO to pass a fresh assessment order on all issues, except those, decided by the Commissioner of Income Tax (Appeals) - AO recorded in order that assessee had duly furnished the details of opening stock, closing stock, sales and production i.e. consumption of paddy etc. - no inquiry or lack of enquiry - HELD THAT:- It cannot be said that this case was a case of no inquiry by the AO. Added to this is the fact that the CIT has himself not undertaken any independent inquiry to contradict the conclusions reached by the AO and to demonstrate that the order of the AO was erroneous and prejudicial to the interest of the revenue. There were other issues that arose from the order of the AO apart from the valuation closing stock. These included the disproportionate increase in the packaging expenses and suppression of sales. The CIT has in its impugned order dated 29th March, 2014 refrained from giving a finding on the said issues and therefore failed to come to any conclusion that the order of the AO on these issues was erroneous and prejudicial to the interest of the revenue. This again was not in compliance with the mandate of Section 263 of the Act. As pointed out by the Assessee, without being contradicted by the Revenue, that from AY 2011-12 onwards, no addition was made on account of discrepancy in closing stock. There is merit in the contention therefore of the Assessee that since the issue in the previous and subsequent years stands adjudicated in its favour by the ITAT and this Court, it would be futile to reopen the issue only for three AYs in between viz., 1999-2000 to 2001-02. It is no longer a live issue . The Court cannot be unmindful of the fact that for a number of AYs from 1997-1998 till 2014-15, barring the three AYs in question, the issues have been decided ultimately in favour of the Assessee. In each of these AYs it was a scrutiny assessment under Section 143 (3) of the Act. Surely, the rule of consistency would apply in such a scenario. Accordingly, the Court sees no reason why only for the three AYs in question, the matter should be reopened. - Decided . in favour of the Assessee and against the Revenue.
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2019 (4) TMI 1043
Exemption u/s 11 - Disallowing depreciation on fixed assets on assessee trust - HELD THAT:- Issue squarely covered against the Revenue by the Judgment of Supreme Court in the case of Commissioner of Income Tax III, Pune Vs. Rajasthan Gujarati Charitable Foundation Poona. [ 2017 (12) TMI 1067 - SUPREME COURT ] . Carry forward of deficit and allowing set off against the income of the subsequent years - allowing the deficit will tantamount to double deduction on account of expenditure out of exempt income - HELD THAT:- Excess expenditure incurred by the trust/charitable institution in earlier assessment year could be allowed to be set off against income of subsequent years by invoking Section 11.
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2019 (4) TMI 1042
TDS u/s 195 - disallowance u/s 40(a)(ia) - secondment of employees - Fees for Technical Services u/s 9(1)(vii) - Income from salary OR income from contract of services - HELD THAT:- The contract between the assessee and the Kuwait based company envisaged payment of deputation charges which were quantified at US $ 5500 per month. Such amount would be paid to the assessee. Out of such amount the assessee would remunerate the employee. The mode of payment was also specified. In clear terms, thus the concerned employee was in the employment of the assessee and not of the US based company contrary to what the department contends. The test of the extent of control and supervision of a person by the engaging agency are undoubtedly relevant factors while judging the question whether the person was an agent or an employee. However, in a situation where the person employed by one employer is either deputed to another or is sent on loan service, the question of dual control would always arise. In such circumstances, the mere test of on spot control or supervision in order to decide the correct employer may not succeed. It is inevitable that in a case as the present one, the Kuwait based company would enjoy considerable supervising powers and control over the employee as along as the employee is working for it. Neverthless, the assessee company continued to enjoy the employer emplyee relationship with the said person. For example, if the work of such person was found to be wanting or if there was any complaint against him, as per the agreement, it would only be the assessee who could terminate the service. ITAT was correct in giving a finding that the impugned income is income from salary instead of income from contract of services as held in the assessment order.
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2019 (4) TMI 1041
Exemption under Section 10(2A) - receipt on retirement from partnership firm - chargeability of the receipt as capital gain - question of applicability of the judgments of the Supreme Court - HELD THAT:- In view of the facts on record, which do not seem to be in any manner disputed, the question of applicability of the judgments of the Supreme Court would arise. The applicability of the decision of the Gujarat High Court in case of CIT Vs. Mohanbhai Pamabhai 1971 (9) TMI 56 - GUJARAT HIGH COURT] as confirmed by the Supreme Court in case of CIT Vs. Mohanbhai Pamabhai [ 1987 (2) TMI 59 - SUPREME COURT] the decision of the Supreme Court in case of Sunil Siddharthbhai Vs. CIT [ 1985 (9) TMI 7 - SUPREME COURT] as also the decision of the Supreme Court in case of CIT Vs. R. Lingmallu Raghukumar [ 1997 (1) TMI 74 - SUPREME COURT] would have to be examined. Since this has not been done at the level of the Tribunal, we are of the opinion that it would be a better option that the Tribunal at first instance undertakes such exercise. Only on this ground, the impugned judgment of the Tribunal is set aside. Tribunal is requested to decide the appeals afresh on merits after considering the contentions of both sides
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2019 (4) TMI 1040
Reopening of assessment - reasons to believe - trigger for the reassessment notice in this case was a survey conducted in the premises of CMR - disproportionately low profits declared - HELD THAT:- In the present case, the materials on record and made available to the AO are in the form of a survey report dated 26.03.2015, i.e. after conclusion of the scrutiny assessments for both years, and the relative records were shared with the AO only on 19.03.2018. Given the time constraint after analysing the report of the survey, including the statement recorded during the survey, the AO was of the opinion that the issue of profitability which appears to be gone into, requires re-examination not because of a second opinion or review but because of the survey conducted subsequently. The materials clearly showed that the sales declared were suspect, to say the least. The Court is of the opinion that the relief claimed in these petitions, i.e. quashing of the impugned reassessment notice cannot be granted. The writ petitions are accordingly dismissed.
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2019 (4) TMI 1039
Disallowance u/s 14A - as alleged assessee failed to demonstrate the exact availability of the interest free funds available in hand at the time of making the said investments - ITAT deleted the addition - HELD THAT:- After referring to the decision in case of Reliance Utilities and Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT ] the Court observed that the Tribunal had come to the factual finding that the assessee had its own funds and that such non- interest bearing funds were in excess of investments in tax free securities. In such circumstances, the Court held that disallowance under Section 14A could not have been made. The facts are similar in the present case. The Tribunal therefore, correctly deleted the disallowance in three out of four assessment years and restricted the same in forth year to the extent the investments exceeded the interest free funds. Learned counsel for the Department however submitted that the assessee failed to demonstrate that in the present year only interest free funds were diverted for making tax free investment. In our opinion assessee was not expected to establish the same. Once the presumption that the interest free funds were utilized for making exempt investment, it would be for the revenue to establish to the contrary which in the present case has admittedly not been done. Bonus Shares treatment as investments with a cost of acquisition of Rs.Nil - the original shares, for which bonus shares were allotted, were present in the trading stock itself for the year under consideration, thus the Bonus shares allotted against the same, were too required to be treated as a part of trading stock itself? - HELD THAT:- A very similar situation was examined by the Supreme Court in case of Madan Gopal Radhey Lal. [1968 (9) TMI 14 - SUPREME COURT] shares given by company in proportion to the holding of equity capital by share holders would, in the absence of express provision to be contrary be treated as capital and not income. The Assessing Officer has merely proceeded on the basis that the origin of the bonus shares being the shares held by the assessee by way of stock- in-trade, necessarily the bonus shares would also partake the same character. No question of law
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2019 (4) TMI 1038
Reopening of assessment - validity of the notice of reopening issued beyond the period of four years from the end of relevant assessment year - validity of reasons to believe - undisclosed cash on hand - addition as per seized documents as found during the search - HELD THAT:- Once the Department i.e. the Assessing Officer had certain information, material, or document before him during the assessment proceeding, irrespective of the source of such information, material, or document, the Assessee cannot be blamed for non disclosure thereof. once the Department i.e. the Assessing Officer had certain information, material, or document before him during the assessment proceeding, irrespective of the source of such information, material, or document, the Assessee cannot be blamed for non disclosure thereof. As production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the first proviso to Section 147. Here is not a case where the Assessee is seeking to rely on a disclosure which the Revenue can seek to bring within the fold of the said Explanation. Here is a case where the Department already had collected certain documents and materials which were before the Assessing Officer at the time of framing assessment. If the Assessing Officer did not, for some reason, advert to such material or did not utilize the same, he surely cannot allege that the Assessee failed to disclose truly and fully all material facts. In view of the above discussion, the impugned notice is set aside. - Decided in favour of assessee
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2019 (4) TMI 1037
Stay of recoveries - As the assessee has filed appeal before CIT(A) and 20% of the tax demand is not paid on additions made hence this application is here by rejected - attachment orders - HELD THAT:- This order is non-speaking, merely making reference to nonpayment of 20% of the tax demand by the assessee. Also to consider the impact of the Circulars on the powers of the Assessing Officer/Authorities under the Act to grant a stay, in the case of Mrs.Kannammal V. Income Tax Officer [ 2019 (3) TMI 1 - MADRAS HIGH COURT] as held that Assessing Officer ought to have taken note of the conditions precedent for the grant of stay as well as the Circulars issued by the CBDT and passed a speaking order. Of course the petition seeking stay filed by the petitioner is itself cryptic. The impugned order which is unacceptable on all counts, is quashed in limine. Pursuant to rejection of stay application on 12.12.2019, the Assessing Officer has issued notices under Section 226(3) of the Income Tax Act to the Axis Bank, Anna Salai branch and the State Bank of India, Leather and International Branch, Kilpauk. Consequent upon my quashing of the order dated 12.02.2019, the aforesaid notices also stand quashed and the bank attachments stand lifted forthwith.
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2019 (4) TMI 1036
Interest u/s. 220(2) - claim for waiver made under Section 220(2A) rejected - principle submission on behalf of the petitioner herein is that there was no effective hearing granted to the petitioner before the impugned order of rejection came to be passed by the second respondent - HELD THAT:- Petitioner has not been heard by the second respondent while passing the impugned order, rejecting his claim for waiver made under Section 220(2A) of the Income Tax Act. When specific proviso has been provided under Income Tax Act, affording personal hearing to the assessee, the same has to be adhered to by the authority to exercise his power under the provisions of the Act. In this case, it appears that the second respondent has not afforded effective or reasonable opportunity to the petitioner and simply passed a cryptic order on 29.01.2019, which is the subject matter of challenge in the present writ petition. This Court therefore is of the view that the second respondent has passed the impugned order violating the provisions of the Income Tax Act. As rightly contended by the learned counsel for the petitioner that on this ground alone, the writ petition is liable to be allowed. The second respondent is directed to dispose of the waiver application by granting reasonable opportunity of personal hearing to the petitioner and pass orders on merits and in accordance with law, within a period of eight weeks from the date of receipt of a copy of this order.
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2019 (4) TMI 1035
Rectification u/s 254 - mistake apparent on the record - order passed u/s 254(2) rectified or amended by invoking sub-section (2) of Section 254 once again - HELD THAT:- From a reading of sub-section (2) of Section 254, it would be clear that the Tribunal possesses the power to rectify any mistake apparent on the record in the order passed by it under sub-Section (1). If the order under sub-section (2) of Section 254 is passed, the said order would not be available for rectification of mistake again under Section 254 (2) of the Act. The order passed under Section 254(2) cannot be rectified nor amended by invoking sub-section (2) of Section 254 once again. Repetitive applications under Section 254 (2) of the Act are not permissible. In the case on hand also, the Tribunal in exercise of its power under sub-section (2) of Section 254 has rectified the mistake apparent on the record and deleted the double addition of income in respect of the assessee. Thereafter, the Revenue again files an application under sub-section (2) of Section 254 seeking rectification of the order passed under sub-section (2) of Section 254 which is not maintainable. The Tribunal has rightly dismissed the Misc. petition filed by the Revenue. There is no error or omission in the order passed by the Tribunal. Appeal dismissed.
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2019 (4) TMI 1034
Sale of carbon credit - Nature of receipt - Capital Receipt - whether the receipts of the Assessee arising out of sale of carbon credit is to be considered as capital receipt and therefore not liable to tax ? - HELD THAT:- This issue is considered by the several High Courts starting from the judgment of Andhra Pradesh High Court in the case of Commissioner of Income Tax v/s. My Home Power Ltd reported [ 2014 (6) TMI 82 - ANDHRA PRADESH HIGH COURT] holding the receipts to be capital in nature. This was further elaborated by the Division Bench of Karnataka High Court in the case of Commissioner of Income Tax v/s. Subhash Kabini Power Corporation Ltd. [ 2016 (5) TMI 793 - KARNATAKA HIGH COURT] and followed by Allahabad High Court and Rajasthan High Court, (Allahabad High Court decision is in the case of Principal Commissioner of Income Tax v/s. L H Sugar Factory Pvt. Ltd reported in [ 2016 (9) TMI 152 - ALLAHABAD HIGH COURT]
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2019 (4) TMI 1033
Maintainability of appeal - monetary limit - low tax effect - Penalty u/s 271-E - HELD THAT:- As the amount of penalty in dispute remains to be below the Monetary Limit of ₹ 50 lakhs as provided vide Circular dated 11.7.2018, the appeal may be dismissed.
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2019 (4) TMI 1032
Stay application - interlocutory orders passed by the Tribunal on a stay application rejecting the stay application filed by the Assessee - HELD THAT:- We are of the opinion that such an Appeal from 'every' order passed by the Tribunal in a pending Appeal can be filed before the High Court under Section 260-A of the Act but only if the case involves a substantial question of law. The existence of a substantial question of law in the Appeal filed by any of the parties, namely, Assessee or Revenue is necessary to invoke the jurisdiction under Section 260-A of the Act. The interlocutory orders passed by the Tribunal on a stay application rejecting the stay application filed by the Assessee in the present case, prima facie case does not give rise to any substantial question of law as it is firstly a discretionary order and the grant of a stay or refusal thereof or grant of stay partially, depends upon the facts of each case before the Tribunal. It is necessary for any Tribunal or Appellate Authority, while dealing with a stay application to discuss these three factors while granting or refusing the stay to the whole extent or to a partial extent. We do not find any such discussion in the order passed by the learned Tribunal. We dispose of the present Appeal with a request to Income Tax Appellate Tribunal to dispose of the pending Appeal of the Assessee as expeditiously as possible, preferably within a period of three months from today.- interim relief granted.
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2019 (4) TMI 1031
Deduction u/s.80IB(10) - AO denied the said claim for want of valid Completion/Occupancy certificate and other relevant evidences - admission of additional evidences which includes the completion certificate - HELD THAT:- The validity of the said completion certificate and its issuance is the subject matter of litigation and the same goes to the root of the matter relating to the valid claim of deduction u/s. 80IB(10) of the Act. Accordingly, we order the Revenue authorities to admit the additional evidences and re-adjudicate the only issue of claim of deduction u/s.80IB(10) of the Act. - Matter restored before ITAT.
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2019 (4) TMI 1030
Exemption u/s.11 - absence of or non production of registration certificate u/s.12A - Revenue granting constant renewal u/s.80G - HELD THAT:- The action of the Revenue granting constant renewal u/s.80G from time and again itself shows that the Revenue never doubted the registration u/s.12A of the Act for the assessee trust since one of the essential criteria for granting renewal of exemption u/s. 80G of the Act is that the Trust or Society must be registered u/s.12A or 12AA. The very fact that time and gain, the exemption was granted to the assessee trust itself shows that Revenue has agreed to the fact that trust is registered u/s.12A of the Act. Just because documentary evidences were not furnished by the assessee cannot be the ground for denying exemption u/s.11 of the Act to the assessee. The assessee trust has made ample efforts for procuring information from the Department regarding duplicate copy of registration certificate. The Department was not able to provide any copy of the registration certificate. This demonstrates that the process of maintaining record in the Department is not proper and appropriate for which bona-fide assessee cannot be penalized. Furthermore, Revenue has accepted that the assessee trust is registered u/s.12A of the Act since all these years they have granted 80G renewal to the assessee trust and this fact is not disputed by the Department. CIT(Appeals) and direct the Assessing Officer to grant benefit of exemption u/s.11 of the Act to the assessee trust.- Decided in favour of assessee.
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2019 (4) TMI 1029
Penalty u/s 271AAA OR u/s 271(1)(c) - search u/s 132 - HELD THAT:- Section 271AAA is an overriding provision and which is applicable where the search has been initiated under Section 132 on or after 1st June, 2007 but before the 1st day of July, 2012. In respect of such search for any undisclosed income, the penalty is leviable under this Section at the rate of 10% of the undisclosed income. Sub-section (3) has clearly provided that no penalty under Section 271(1)(c) shall be imposed upon the assessee whose case is covered by Section 271AAA. Admittedly, in this case, the search has taken place on 31st January, 2011 which falls within the period in which Section 271AAA was applicable i.e., after the 1st day of June, 2007 but the 1st day of July, 2012. In the above circumstances, in our opinion, learned CIT(A) rightly held that in this case, penalty was leviable under Section 271AAA and not under Section 271(1)(c). - Decided against revenue.
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2019 (4) TMI 1028
Unexplained cash deposits u/s 68 - Addition on account of deposit in bank account maintained with Oriental Bank of Commerce - HELD THAT:- Computation of income for earlier year as well as assessment year under appeal, details of sales, purchase and debtors along with cash flow statement, which would show that assessee has been filing the return of income under section 44AD as such, assessee was not required to maintain books of account. The assessee has disclosed interest income in the return of income from both the Bank Accounts, therefore, it cannot be said that Oriental Bank of Commerce have not been disclosed to the Revenue Department. The material on record clearly suggest that assessee was doing business activities and different sale proceeds amounts received from the debtors, which have been deposited in the Bank Accounts. One Bank account accepted by the Ld. CIT(A) because it was disclosed in the return of income. Interest from both the Bank Accounts have been disclosed in the computation of income filed with the return of income, as such, the CIT(A) on the same reasoning should not have made the addition against the assessee. The assessee has explained the source of cash deposited in Oriental Bank of Commerce. A.O. has taken only the cash deposits in the Bank Account ignoring the amounts withdrawn from the same Bank account, which should have also been considered by the authorities below. Thus, the assessee explained the source of the Bank deposits through the evidences admitted on record. No justification to sustain the addition. We, accordingly, set aside the Orders of the authorities below and delete the entire addition.- Decided in favour of assessee.
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2019 (4) TMI 1027
Disallowance of expenditure claimed by it towards the Contractors Benevolent Fund (CBF) u/s 37(1) - HELD THAT:- The assessee company is engaged in the business of executing civil contract works primarily for the State Government of Karnataka. Authorities below that the State Government of Karnataka had directed the PWD / user Department to deduct 0.1% of the sanctioned bill towards Contractors Benevolent Fund (CBF). The deduction of 0.1% admittedly effected by the PWD / user Department on the express instructions of the State Government of Karnataka towards Contractors Benevolent Fund (CBF) is undeniably out of sanctioned bill for contract works executed by the assessee. The business of the assessee, being execution of civil contracts of the State Government of Karnataka, in our view, the deduction of 0.1% thereof towards the Contractors Benevolent Fund (CBF) by the PWD / user Department on instructions of the State Government, even though not voluntary, is an amount incurred by the assessee wholly and exclusively in the furtherance and in the course of the assessee s business and consequently is expenditure to be allowed under section 37(1) - We consequently delete the disallowances for Assessment Year 2014-15 and Assessment Year 2015-16 made / upheld in respect of amounts incurred by the assessee towards Contractors Benevolent Fund (CBF) in the course of its business of executing civil contract works for the State Government of Karnataka. - Decided in favour of assessee.
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2019 (4) TMI 1026
Condonation of delay - delay of 19 days in filing this appeal before the Tribunal - health issues - reasonable and sufficient cause for delay - HELD THAT:- MST. KATIJI AND OTHERS [ 1987 (2) TMI 61 - SUPREME COURT] laid down the principles for dealing with matters relating to condonation of delay, and the reasons of health issues cited by the assessee in the Affidavit (supra), we are of the view that the assessee was prevented by reasonable and sufficient cause from filing the appeal for Assessment Year 2005-06 on time. Thus Delay condoned. Defective notice issued u/s 274 r.w.s. 271 - non specification of charge - defective notice - HELD THAT:- Notice issued by the Assessing Officer under Section 274 read with Section 271(l)(c) to be bad in law as it did not specify which limb of Section 271(l)(c) of the Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The Tribunal, while allowing the appeal of the assessee, has relied on the decision of the Division Bench of this Court rendered in the case of COMMISSIONER OF INCOME TAX -VS- MANJUNATHA COTTON AND GINNING FACTORY (2013 (7) TMI 620 - KARNATAKA HIGH COURT) - Decided in favour of assessee.
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2019 (4) TMI 1025
Addition u/s 56(2)(vii)(b) - purchase of immovable property on less than stamp duty value - incomes enlisted which are chargeable to income tax under the head Income from other sources - value adopted for stamp duty purposes exceeded the fair market value of property as on the date of purchase - stamp duty value of immovable property as referred to in sub-clause (b), is disputed by the assessee on the ground as mentioned in section 50C(2) - reference to DVO - HELD THAT:- in respect of sub-clause (b), the proviso very clearly provides that the provisions of section 50C(2) of the Act are to be applied and where the assessee is aggrieved by stamp duty valuation done by the State authorities, then in such circumstances, the Assessing Officer may refer the valuation of such property to Valuation Officer. The assessee before the AO and also before the CIT(A) has pleaded that the value adopted for stamp duty purposes exceeded the fair market value of property as on the date of purchase and had submitted not only the evidence of circular rate at the relevant time but also valuation report by the registered valuer, which was filed before the Assessing Officer and CIT(A), then in such circumstances, it was incumbent upon the Assessing Officer to refer the matter to the District Valuation Officer in order to determine the fair market value of the property as on the date of purchase. - Matter restored before AO.
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2019 (4) TMI 1024
Exemption u/s 54F - assessee was owner of more than one residential house - one house was in Joint ownership - AR argued that the assessee was not the owner of flat and hence assessee was entitled for exemption u/s 54F - from the copy of gift deed, it is seen that the daughter of the assessee is minor and the gift has been accepted by her on behalf of her mother i.e. wife of the assessee - HELD THAT:- The word own would not include a case where a residential house is partly owned by one person or partly owned by other person(s). After the judgment of Hon ble Supreme Court in the case of Seth Banarsi Dass Gupta [ 1987 (4) TMI 7 - SUPREME COURT] , the legislature could also amend the provisions of Section 54F so as to include part ownership. Since, the legislature has consciously not amended the provisions of section 54F, it has to be held that the word own in Section 54-F would include only the case where a residential house is fully and wholly owned by the assessee and consequently would not include a residential house owned by more than one person. However, by virtue of gift deed, the share of the assessee has already been transferred in the name of his daughter. Thus even if, as per the provision of section 27(1) of the Act, the assessee is considered to be a deemed owner of the Goa flat, but even then, assessee would still being a co-owner cannot be termed that Goa flat is fully and wholly owned by him, thus cannot be denied exemption. Therefore, in such circumstances, assessee could not be treated as absolute owner of the residential flat situated at Goa and the exemption u/s 54F of the Act cannot be denied to the assessee. On the other hand, Ld. DR had not placed on record any contrary judgments to rebut the contentions of the assessee. Therefore we direct the AO to allow the exemption u/s 54 of the Act.- Decided in favour of assessee.
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2019 (4) TMI 1023
Disallowance of Mining Expenses - unvouched expenses - HELD THAT:- As gone through the remand report of the Assessing Officer exhibited elsewhere. We find that the first appellate authority gave two opportunities to the Assessing Officer with a specific direction to specify the unvouched expenses under the head mining expenses. On the basis of such specific direction, the Assessing Officer examined the accounts and reported that the expenses were not supported by bills and vouchers. On the basis of such report, the ld. CIT(A) confirmed the addition to the extent of ₹ 83,17,261/-. We do not find any error or infirmity in the findings of the CIT(A). - Decided against revenue.
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2019 (4) TMI 1022
Capital Gain or business income - sale of property - Computation of short-term capital gain - addition invoking section 50C - obligation to refer the matter to the DVO - assessee not made any request for reference to the valuation officer - HELD THAT:- In the instant case, the assessee himself has shown the transactions of sale of the property under the head capital gain and filed the return of income. Even in case of one property, the assessee declared long-term capital gain and claimed deduction under section 54F. Though the assessee is carrying business of trading in Agarbatties , Papad and Badies , but no books of accounts have been maintained in respect of the sale of properties. It is also seen that properties have not been shown as a stock-in-trade or business asset in any of the earlier years since purchase of the properties. When all these factual observation are seen cumulatively, the claim of the assessee that the activity of sale of properties should be treated as business fails. We reject the claim of the assessee that gain on sale of the properties should be assessed under the head profit of the business. In the instant case before us, neither the assessee made any request for reference to the valuation officer nor filed any valuation report of the registered valuer in support of claim of fair market value of the properties. In view of the aforesaid, we reject the contention of the learned counsel that the Assessing Officer was bound to refer the matter to the learned DVO. In our opinion, the findings of the Ld. CIT(A) on the issue in dispute are well reasoned and we do not find any error in the same and accordingly, we uphold the same. - Decided against assessee.
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2019 (4) TMI 1021
Transfer pricing adjustment - benchmarking the interests on the loans - applying LIBOR rate of currency of invoice raised plus suitable basis points - HELD THAT:- Hon ble Jurisdictional High Court in the case of CIT Vs. Cotton Naturals (I) Pvt. Ltd. [ 2015 (3) TMI 1031 - DELHI HIGH COURT] has clearly held that while benchmarking the interests on the loans, the LIBOR rate of currency in which the loan has been raised, should be applied. We direct Ld. AO/TPO to benchmark the transaction applying LIBOR rate of currency of invoice raised plus suitable basis points. Since, we have adjudicated the alternative prayer of the assessee, we are not deciding the other argument of the learned counsel challenging the international transaction of interest on overdue receivables. Accordingly, grounds no. 1 to 3 of the appeal are partly allowed. Disallowance under Section 14A read with Rule 8D(2)(iii) - HELD THAT:- As relying on VIREET INVESTMENT (P.) LTD. [ 2017 (6) TMI 1124 - ITAT DELHI] we direct the Assessing Officer to accordingly restrict the disallowance under Section 14A read with Rule 8D(2)(iii) of the Rules to average value of investment which yield exempt income during the year. The ground of the appeal is partly allowed.
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2019 (4) TMI 1020
Unexplained cash deposit in bank account - income offered for tax twice due to mistake in the return of income - assessee claimed before AO that deposit in the bank was included in the income declared under the head income from other sources and other income However, due to mistake in the return of income was again separately declared as income - HELD THAT:- AO is duty bound to compute income as per the provisions of the Act after taking into consideration all the facts available before him. It is opined also by the CBDT that while making assessment, the Assessing Officer should not take advantage of the ignorance or mistake of the assessee. In the instant case, the assessee has claimed that amount of ₹ 19,00,000/- was mistakenly declared as income twice, once separately shown as income and again by including the same in other income of ₹ 25,00,000/-. However, the details of other income of ₹ 25,00,000/- was not furnished before us and the same was also not examined by the lower authorities. As in the case of Sam Global Securities Ltd. [ 2013 (9) TMI 876 - DELHI HIGH COURT] relying on Goetze (India) Ltd. v. CIT [2006 (3) TMI 75 - SUPREME COURT] has held that wherein deduction claimed by way of a letter before the Assessing Officer, was disallowed on the ground that there was no provision under the Act to make amendment in the return without filing a revised return. Appeal to the Supreme Court, as the decision was upheld by the Tribunal and the High Court, was dismissed making clear that the decision was limited to the power of the assessing authority to entertain claim for deduction otherwise than by a revised return, and did not impinge on the power of the Tribunal. In view of the above, in our considered opinion, it shall be in the interest of the justice to restore this matter back to the file of the Assessing Officer for re-adjudication after proper verification. Addition invoking provisions of Section 68 - Assessee was not maintainable any books of account during the year under consideration. Therefore, the addition is hereby deleted.
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2019 (4) TMI 1019
Accrual of income - Addition towards accrued interest - assessment completed U/s.143(3) / 144 - AO made addition by estimating the interest income on the unaccounted bank deposits @ 9% and advance made to private parties @ 24% - HELD THAT:- Tribunal in the assessee's own case [ 2019 (4) TMI 922 - ITAT CHENNAI] had deleted the addition towards promissory notes, there is no scope for estimating the interest income on such advance for all the relevant assessment years. Further with respect to the other additions towards interest accrued from deposits in RD account, towards interest accrued from money advanced to BMB Promoters, it is apparent from record that the assessee has not received/realized the interest income and since the assessee being HUF, it has the legitimate right to maintain its books of accounts in cash system of accounting as per Section 145(1) of the Act, therefore the interest income can be taxed in the hands of the assessee only in the year in which it receives the interest. Therefore we hereby direct the AO to delete the interest income estimated in the hands of the assessee towards interest accrued from deposits in RD account towards interest accrued from money advanced to BMB Promoters since the assessee has not received the same during the relevant assessment years. Estimation of busniss income - assessee had filed its return of income beyond the time limit it is invalid and non-erst - HELD THAT:- We find that the assessee has filed the return of income though not within due date but belatedly. AO has simply rejected the return filed by the assessee treating it to be non-erst. However we are of the view that though the Ld.AO had rejected the return of income filed by the assessee, it would have been appropriate on his part to examine the details submitted in the return filed by him and thereafter arrive at the apt conclusion based on merits rather than assessing the income by mere estimation. Since the AO has failed to do so, we are of the considered view that estimating the business income of the assessee is not correct. Therefore we hereby direct the Ld.AO to assess the income as stated in the return of income belatedly filed by the assessee. It is ordered accordingly. Levy of Penalty U/s.271F - assessee did not file his return of income for the assessment year 2007-08 in spite of notice issued U/s.142(1) - HELD THAT:- The assessee though had not filed its return of income within the stipulated period, it has filed the return of income belatedly. Further the penal provisions of Section 271F of the Act has been withdrawn with effect from 1st April 2018. It is also apparent that the affairs of the HUF assessee having been managed by the karta who is preoccupied with various commitments, there could have been some lapse on the part of the assessee to comply with the provisions of the Act within the stipulated period of time. Therefore taking a lenient view and drawing strength from the provisions of Section 273B of the Act, we hereby direct the Ld.AO to delete the penalty levied for ₹ 5000/- by invoking the provisions of Section 271F of the Act.
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2019 (4) TMI 1018
Disallowance u/s.14A - assessee had not earned any exempt income during the relevant assessment year - A.Y 2012- 13 - HELD THAT:- Admittedly, the assessee during the year under consideration had not earned any dividend income. Insofar the contention of the ld. A.R that in the absence of any dividend income earned by the assessee during the year no disallowance under Sec.14A could have been made, we are persuaded to subscribe to the same. In our considered view as the assessee had not earned any exempt income during the year under consideration, therefore, no disallowance under Sec.14A could have been made in its hands. See CHEMINVEST LIMITED VERSUS COMMISSIONER OF INCOME TAX-VI [ 2015 (9) TMI 238 - DELHI HIGH COURT] and COMMISSIONER OF INCOME TAX-IV VERSUS HOLCIM INDIA P. LTD. [ 2014 (9) TMI 434 - DELHI HIGH COURT] As in the case of Tata Industries Ltd. Vs. ITO, Ward 2(3)(3), Mumbai [ 2016 (7) TMI 1011 - ITAT MUMBAI] had observed that the disallowance under Sec.14A cannot exceed the tax exempt income earned by an assessee during the year. We thus in the backdrop of the fact that the assessee during the year under consideration had not received any dividend income, respectfully follow the view taken in the aforementioned judicial pronouncements and vacate the disallowance made by the A.O under Sec. 14A as had been sustained by the CIT(A). - Decided in favour of assessee Addition u/s 14A - AY. 2013-14 - HELD THAT:- Whether the assessee had received any dividend income during the year under consideration is not discernible from the orders of the lower authorities. As such, in our considered view the matter in all fairness requires to be restored to the file of the A.O for fresh adjudication as per the extant law. Insofar the working of the disallowance under Sec. 14A in respect of the exempt dividend income is concerned, the A.O in the course of the set aside proceedings after verifying the amount of dividend income received by the assessee during the year shall restrict the disallowance to the extent of such exempt dividend income.
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2019 (4) TMI 1017
Disallowance on account of interest and penalty on service tax - HELD THAT:- The payment of interest on late deposit of service tax with the government account was compensatory in nature and as the same character i.e. of service tax. This aspect was rightly taken into account by the CIT(A) in its finding. Since, the service tax is permissible deduction the interest paid for late deposit of the same is also a permissible deduction and should be allowed in the same manner. Ground No. 1 of Revenue s appeal is dismissed. Disallowance of additional service tax - HELD THAT:- The amount of service tax paid by the assessee was not in the nature of penalty but represented the tax which was not collected by the assessee from its customers and was paid out of its own debited and was thus allowable u/s 37(1) . The amount was expanded by the assessee during the course of its business and it was wholly and exclusively for the business purposes. The expenses cannot be said that the same was not related to business of the assessee as it was the duty of the assessee to deduct service tax while providing service to the customers. Therefore, it comes under the purview of business expenses and hence is rightly deleted by the CIT (A). Ground of Revenue s appeal is dismissed Disallowance of the amount debited under the head short and excess - HELD THAT:- The amounts debited under this head represented the pity difference in the balances of the debtors either on account of rounding off the balances or under recovery of such amount from debtors which were allowable as business expenditure u/s 36(1)(vii) of the Income Tax Act, 1961. Thus, the CIT(A) rightly deleted this addition. Disallowance of unexplained expenditure - HELD THAT:- The assessee before the Assessing Officer filed complete bill vise details along with copies of invoices received from the factory at the time of delivery of diesel as well as filed confirmed copy of its ledger account in the books of M/s Garg Road Lines along with copy of bank statement/duly reflect the payments made by the assessee on various dates of M/s Garg Road Lines for supply of diesels. All these relevant evidences were ignored by the Assessing Officer during the assessment proceeding. The CIT(A) has rightly taken into account all the details filed by the assessee before the Assessing Officer and after verifying the same arrived at the right conclusion that the claim of the assessee is right as the purchase of diesel from the said party was genuine. The assessee has satisfied all the three elements of genuineness creditworthiness and identity of the parties, as per the provisions of the Income Tax Act. Therefore, there is no need to interfere with the findings of the CIT(A). Addition on account of expenses claimed in profit and loss account - AO made 1/5th addition on account of expenses claim being profit and loss account - HELD THAT:- CIT(A) has rightly observed that the assessee fail to produce evidence to substantiate the assets in questions were exclusively use for business purpose only. There was no explanation given to cash as well but after considering the overall effect. The CIT(A) has rightly disallowed 1/10th of the total motor car expenses including depreciation and telephone expenses claim by the assessee. Low declaration of contract amount in the contract with M/s Pico Deepali Overlays Consortium group - revenue recognition - disputed contractual receipt - HELD THAT:- The Hon ble Supreme Court in the case of CIT Vs. Balbir Singh Maini [ 2017 (10) TMI 323 - SUPREME COURT OF INDIA] have observed that the income accrues when it becomes due but it must also be accompanied by a corresponding liability of the other party to pay the amount. Only then it be said that the purposed of taxability that the income is not hypothetical and it has really accrued to the assessee. Mere filing of the suit for recovery will not in law make it an income which has accrued. AO while passing the Assessment order dated 21.03.2013 and CIT(A) while passing the appellate order dated 26.12.2014 observed that by filing the suit against the consortium the Assessee had claimed a right to receive the income. This findings of the Revenue authorities are contrary to the decision of the Hon ble Apex Court in case of Excel Industries [ 2013 (10) TMI 324 - SUPREME COURT] . Thus, Ground No. 1 of the assessee s appeal is allowed. Addition in respect of low declaration of contract amount in the contract with Central Public Works Department (CPWD) - revenue recognition - running contract - HELD THAT:- Here, a right to receive arose in the hands of the assesse when the assessee concern signed an agreement with Consortium of CWG for providing electrical support for opening and closing ceremony of Common Wealth Games. But the facts are that the Assessee could only determine the exact amount payable to it when the R/A Bills were provided to it to, in turn, include it as income in its books of accounts. As per Accounting Standard 9 on revenue recognition issued by the ICAI, para 11 of the main principle inter-alia states if at the time of raising of any claim it is unreasonable to expect ultimate collection, revenue recognition should be postponed. The payment (Rs. 27,72,354/-) for the work done in the contracts with CPWD was made through the tenth RA Bill dated 13.11.2011. Thus, the Assessee included the income in its books of accounts as income credited for the AY 2012-13. Thus, the assessee has postponed the revenue recognition due to the reason that the exact amount payable was not determined and the expected time for receiving payment was also not definite. - Ground of assessee is allowed. Disallowance of business promotion expenses - HELD THAT:- The assessee provided tickets of the opening ceremony to both the customers and the employees. The expenditure incurred was bonafide. The ledger account for the said expenses showed that the amount was incurred for the purchase of opening ceremony tickets of the CWG-2010. The AO decided that Assessee failed to establish that the business purpose in incurring the said expenses. Thus, the AO made an addition of ₹ 15,50,000/- in the income of the Assessee. The CIT (A) upheld the addition made by Assessing Officer. But while determining this addition the Assessing Officer as well as CIT(A) has not looked into the aspect of the business purpose involved in the same. By providing the tickets to the customers and the employees, the assessee promoted its business and has earned a reputation that it is involved in the big events such CWG-2010. This may not yield the immediate business but it impacts the business prospects of the assessee for such large future events. Thus, the Assessing Officer as well as CIT(A) was not correct in disallowing the said expenses. - Ground of assessee is allowed. Addition on account of scrap sale - HELD THAT:- As these electrical items were of a capital nature, their residual value was determined to be 46% like the other electrical items. Thus, the total addition by the AO on the basis of the scrap value of all the aforementioned was of ₹ 3,35,58,732/-. This entire addition though based on evidence produced by the Assessee during the Assessment proceedings, the Assessing Officer has not taken into account all the relevant evidence while determining the addition on the scrap sale. Besides that the Assessing Officer has not given any basis as to estimation of these sale of scrap. Thus, the reasoning to arrive at this addition is not properly given by the Assessing Officer. The CIT(A) also failed to do the same. Therefore, it will be appropriate that the remand back this issue to the file of the Assessing Officer and after verifying all the evidences produced by the assessee take a cogent view and give a proper reason as to whether this addition sustains or not. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice. Ground No. 4 is partly allowed for statistical purpose. Disallowance of hire charges - HELD THAT:- Assessing Officer requested for non-admission of additional evidence adduced by the Assessee without appreciating the facts of the case and the documents submitted under the said rule. CIT(A) rejected the application under Rule 46A of the Income Tax Rules, 1962, without commenting on the above-mentioned documents submitted to prove the identity, genuineness and creditworthiness of the transaction. Thus, it will be appropriate to remand back this issue to the file of the Assessing Officer and after taking cognizance of the documents in the form of additional evidence, the Assessing Officer should decide this claim accordingly. Needless to say the assessee be given opportunity of hearing by following principles of natural justice. Ground is partly allowed for statistical purpose.
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2019 (4) TMI 1016
Exemption u/s 54F - construction of new residential house, having not been completed within the stipulated period and the assessee having not got the possession of the said new house, the requirement for claiming exemption under section 54F was not satisfied - HELD THAT:- CIT(Appeals), found that the entire amount was invested by the assessee in purchase of a new residential house within the stipulated period and the assessee, therefore, had satisfied the requirement for claiming exempt ion under section 54F. MRS. HILLA JB. WADIA [ 1993 (3) TMI 7 - BOMBAY HIGH COURT] wherein it was held that the only requirement for claiming exemption under section 54F is to make the investment in purchase of a residential house within the stipulated period and there is no requirement that the construction of new house should be completed within that period and the assessee gets possession of the said flat. The reason given by the Assessing Officer for denying the claim of the assessee for benefit under section 54F was that two separate flats were purchased by the assessee having separate entrance and the same being incapable of joining together could not be treated as one residential house for claiming exemption under section 54F. As rightly contended by the assessee, this issue also now stands covered in favour of the assessee by the decision of the Hon ble Karnataka High Court in the case of CIT vs- Smt. K. G. Rukminiamma [ 2010 (8) TMI 482 - KARNATAKA HIGH COURT] and CIT vs. - Syed Ali Adil [ 2013 (6) TMI 278 - ANDHRA PRADESH HIGH COURT] wherein it was held that the expression a residential house used in section 54 necessarily has to include buildings or land appurtenant thereto and it cannot be construed as one residential house. As further held in the said judicial pronouncements, section 54 only requires that property purchased by the assessee out of sale proceeds should be of residential nature and the fact that residential house consisted of several independent units could not be an impediment for granting relief under the said section, even if such independent units were situated side by side on different floors and were purchased under separate sale deeds. Keeping in view the legal position emanating from these judicial pronouncements, we are of the view that the assessee is entitled for exemption under section 54F - Decided in favour of assessee.
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2019 (4) TMI 1015
Disallowance of cost of transfer of the asset - cost of transferring shares of 20 Microns Ltd ('20ML') in 'offer for sale' - IPO issued - assessee is an AOP and engaged in the activity of providing Venture Finance Assistance to Information Technology/Software units located in the state of Gujarat - no prohibition for the assessee to share the cost in the IPO expenses - HELD THAT:- As per the agreement between the assessee and 20 ML , there was no obligation on the assessee to incur any cost in connection with the transfer of the shares. As such it was the responsibility of 20 ML to provide an exit route to the assessee for the disinvestment of the shares held by it. In this regard, we note that reimbursement of the expenses was decided in the board meeting of the assessee and after taking the report/opinion from the chartered accountant. As per the report of the chartered accountant there was no prohibition for the assessee to share the cost in the IPO expenses. Therefore even the assessee was not under the obligation to incur such cost, but that cannot be the basis of disallowance of the expenses under section 48 of the Act. The obligation of 20ML was to provide the exit route to the assessee, but there was no clause or condition that the assessee shall not share the expenses in connection with the transfer. AO cannot sit on the armchair of the assessee to decide/direct the business affairs of the assessee. It is the assessee who knows the best of its business affairs. The role of the AO is to establish whether the expenses were incurred wholly and exclusively in connection with the transfer of assets. There is no ambiguity that the expenses were incurred wholly and exclusively in connection with the transfer of the shares as held by us in the preceding paragraph. Thus, the allegation of the AO that the assessee was not under the obligation to incur the cost for the transfer of shares has no relevance in the given facts and circumstances. We conclude that the assessee is entitled to a deduction under section 48 of the Act, for the expenses incurred wholly and exclusively in connection with the transfer of the shares. Accordingly, we reverse the order of the authorities below. Accordingly, we set aside the order of the Ld.CIT (A) and direct the AO to delete the addition made by him. - Decided in favour of assessee.
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2019 (4) TMI 1014
Rectification u/s 254 - mistake apparent from the record - Penalty u/s 271(1)(c) was upheld - rectification of order of Tribunal reported in [ 2017 (11) TMI 1762 - ITAT MUMBAI] - HELD THAT:- A mistake apparent on the record must be an obvious mistake and not something which can be established by a long drawn process of reasoning on points on which there may be conceivably two opinions. A decision on a debatable point of law is not a mistake apparent from the record. This view is supported by the decision of the Hon ble Supreme Court in T.S. Balaram, ITO v. Volkart Bros. [ 1971 (8) TMI 3 - SUPREME COURT] In fact, not a single error in the impugned order has been pointed out by the applicant. What the applicant wants is a review of the order passed by the Tribunal. The Tribunal is a creature of the statute. The Tribunal cannot review its own decision unless it is permitted to do so by the statute. Hon ble Supreme Court has held in Patel Narshi Thakershi v. Pradyumansinghji Arjunsinghji [ 1970 (3) TMI 163 - SUPREME COURT OF INDIA] that the power to review is not an inherent power. It must be conferred by law either specifically or by necessary implication. It is a settled law that the Tribunal has no power to review its order in the garb of section 254(2) of the Act
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Customs
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2019 (4) TMI 1053
Condonation of delay of 1096 days in filing the Customs Appeal - HELD THAT:- We may recall, the Department had initially approached the Supreme Court by filing Appeal under bona fide belief that such Appeal against the Judgment of CESTAT was competent before the Supreme Court. The Supreme Court, however, expressed a different view, dismissing the Appeal of the Department. While doing so, liberty was kept open for the Department to file Appeal before the High Court. It is true that even after this order was passed by the Supreme Court, the Department has taken considerable time in filing Appeal before the High Court. The delay is condoned on the condition of payment of costs of ₹ 20,000/- to the Respondent which shall be paid by the Department latest by 31/05/2019. Notice of Motion is disposed of accordingly.
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2019 (4) TMI 1052
Release of Consignments - issuance of Detention Certificate for waiver of Demurrage and Container Detention Charges in terms of Regulation 6(1)(1) of Handling of Cargo in Customs Areas Regulations 2008 - HELD THAT:- The petitioner will remit the entire duty component of the consignments imported by him in case were such duty is leviable as per paragraph 15(iii) above along with a bank guarantee for the 10% of the invoice value. In cases where the duty impact is neutral, the petitioner shall furnish a bank guarantee for the 10% of the invoice value. Upon satisfaction of the aforesaid conditions, the consignment shall be released forthwith. Waiver of Demurrage and Container Detention Charges - Held that:- In the light of Rule 6(l) of the Handling of Cargo in Customs Areas Regulations, 2009, which provides that the Customs Cargo Provider shall not, subject to any other law for the time being in force, charge any rent or demurrage on the goods seized or detained or confiscated by the Superintendent of Customs or Appraiser or Inspector of Customs or Preventive officer or examining officer, as the case may be, there shall be a waiver of demurrage charges. Petition disposed off.
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2019 (4) TMI 1051
Suspension of CHA License - contravention of Regulation 10(a), 10(b), 10(d), 10(e) and 10(n) of Customs Broker Licensing Regulation, 2018 - abetting the importer in evasion of duty by resorting to mis-declaration of goods - HELD THAT:- The provisions of immediate suspension of license is required to be resorted to in deserving cases so as to prohibit the functioning of Custom House Agent at particular station, so that he does not tampers with the documents during the investigation and also to prohibit the CHA from indulging in activities prejudicial to Revenue during the investigation. Needless to say, the suspension is required to be done immediately after the detection of case against the CHA for misdeed or any manipulation by the CHA, which is not the case in the present proceedings. The impugned order is not sustainable and deserves to be set aside - appeal allowed - decided in favor of appellant.
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2019 (4) TMI 1050
Import of prohibited goods - parts of electric iron - case of Revenue is that the appellant imported Euroline brand of electric iron , comprising the main component and certain other parts, excluding power supply and base , in the impugned transaction and the excluded parts were imported separately with intent to evade compliance with the norms of the Bureau of Indian Standards - HELD THAT:- It is on record that the impugned goods, upon examination and not by the mere reliance on legal fiction in the interpretative rules, were found to be the most vital component of electric iron and that the goods were so packed as to easily integrate the other two parts which, admittedly, had been imported separately but concurrently, to support the finding that the goods are, indeed, electric iron. Indubitably, the prescriptions of Bureau of Indian Standards, made available by Learned Consultant, applies to the finished product and not to the parts but the most essential component that is impugned in this dispute, if allowed to remain non-compliant, would not be conducive to public safety. As the imported goods, though required to be, are not compliant with the standards, they fail to overcome the bar of prohibition at the threshold. Hence the question of duty liability, differential or otherwise, will not arise. Penalty under section 112 of Customs Act, 1962 - HELD THAT:- The goods were imported for sale in India but were ordered to be re-exported. Penalty is an instrument of deterrence. Re-export is not without any financial consequence to the importer. That should be sufficient deterrent against such imports - Penalty set aside. The impugned order is modified and the detriment limited to that of re-export of the said goods without having to redeem the goods and without being penalised - appeal disposed off.
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2019 (4) TMI 1049
Imposition of penalty under Regulation 22 of CBLR, 2013 on CHA without revoking license - change of opinion - HELD THAT:- What the statute requires is clear: either revocation or penalty up to ₹ 50,000/-, but never both. The review authorities therefore cannot insist for adopting their views since that is undisputedly the domain of the Commissioner in stricto sensu. When the legislation in its wisdom has clearly pegged the upper limit of penalty at ₹ 50,000/-, the review authorities who are subordinate thereto can never question that limit, which is precisely done in the case on hand; they have termed the same as minimal, meagre, to quote. This is not permissible in the current set. There is no fault with the original authority s decision in choosing one over the other, since, such a power is vested only with the original authority per Regulation 20(7). It is the settled position of law that the views of higher authorities are just a change of opinion which cannot influence/substitute the decision of another authority. The present appeal is frivolous, misconceived and above all, wastage of time and money - Appeal of Revenue dismissed.
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2019 (4) TMI 1048
Revocation of CHA License - forfeiture of security deposit - contravention of Regulation 11(a), 11(d) and 11(e) of the CBLR, 2013 - HELD THAT:- So far as the compliance of the Regulation 11 (a) of CBLR is concerned which provides that Customs Broker shall obtain the authorization from each of the companies, firms or individuals with whom he is for the time being employed as Customs Broker and produce authorization whenever required of Deputy Commissioner of Customs or Assistant Commissioner as the case may be - In this regard, it is found that the appellants had not only taken the appropriate authorization from the importer, namely M/s. Jagdamba Enterprises but all the KYC documents such as IEC registration copy, authority letter, ID proof, PAN card etc. The appellant have taken due caution as was mandated under the Customs Broker License Regulation and same has been produced to the investigating agency - obtaining copy of the IEC Code number, Pan card and other details after verification of same with the original documents, including a proper authorization letter for trading, clearing work of the importing firm is an enough compliance of CBLR 11 (a) - the findings on this count by the adjudicating authority are not legally sustainable. Compliance of Regulation 11(d) and 11(e) of the CBLR 2013 - HELD THAT:- The appellant was regularly engaged by the importer for clearing their import consignment and they have cleared 11 consignments of same importer on the previous occasions wherein no violation of the Customs Act have been detected. This very fact proves that the appellants have ensured the compliance of Customs provisions from the importer on the previous occasions and thus, there is no reason why he would not advice him correctly to follow provisions of law for the impugned import consignment - The entire investigations in this matter does not establish any case of connivance of the appellant in mis-declaration of the contents of the import consignment. The violation of regulation 11(a), 11 (d) and 11(e) of CBLR 2013 is not established against the appellant - the revocation of Customs Broker License is not justified - appeal allowed - decided in favor of appellant.
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Insolvency & Bankruptcy
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2019 (4) TMI 1013
Liquidation of Corporate Debtor - replacement of Resolution Professional, Shri. R. Mukundan and to appoint a new insolvency professional as the Liquidator - Section 7 of the I B Code, 2016 - HELD THAT:- The Resolution Professional has filed MA/139/IB/2019 in CP/699/IB/CB/2017 with the prayers to pass an order for liquidation of the Corporate Debtor viz., M/s. Gemini Communication Limited and to appoint a new insolvency professional as the liquidator. Since no Resolution Plan has been received by this Authority under sub-section (6) of Section 30 of the I B Code, 2016, before the expiry of the Corporate Insolvency Resolution Process period, the Corporate Debtor has to be ordered for Liquidation.
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2019 (4) TMI 1012
Initiation of Corporate Insolvency Resolution Process - Corporate Debtor - default in repayment of loan amount - section 7 of the Insolvency Bankruptcy Code - HELD THAT:- Had there been an intention to the Corporate Debtor to settle this claim amount through OTS, the Debtor company would have responded to the letter dated 20.06.2017 but whereas there is no material reflecting that this Corporate Debtor made any efforts to resolve this issue through OTS despite more than one and half years is over from the date the Creditor Bank sent a letter asking the Corporate Debtor to provide full information as aforesaid - By looking at the conduct of the Corporate Debtor, it is clear that the Corporate Debtor made an attempt to set up these letters filed by the creditor bank as defence to impress upon this Bench that the debtor made efforts for one time settlement, but on record no material is there to prove that the Corporate Debtor pursued OTS proposal any time thereafter. The submissions made by the Corporate Debtor are misconceived and for trying to drag out this matter on one or the other pretext. There is a liability is subsisting against the Corporate Debtor and the Corporate Debtor has already defaulted in repaying the liability, therefore, and thus it is a fit case for admission - application admitted - moratorium also declared.
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2019 (4) TMI 1011
Maintainability of application - time limitation - claims has been filed after efflux of more than six months from the date of the approval of the Resolution Plan - HELD THAT:- It is trite that once Resolution Plan is approved, it is deemed as all claims pending against the Corporate Debtor are settled by way of Resolution Plan whereby further claims cannot be entertained against the Corporate Debtor running under management of Resolution Applicant - thus application is belatedly filed when cause of action is no more sustainable against this Corporate Debtor which has already undergone restructuring through Resolution Plan approved by this Bench. The application is hereby dismissed as misconceived.
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Service Tax
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2019 (4) TMI 1009
Export of services or not - the effective use, consumption and enjoyment of service has taken place on the soil territory of India - consideration for the same has been received from outside India - scope of accrual of benefit - HELD THAT:- Learned counsel for the petitioner submitted that he has instructions to withdraw the appeal with liberty to the appellant to file an appeal before the Apex Court - petition dismissed as withdrawn.
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2019 (4) TMI 1008
Works Contract - Levy of service tax prior to 1.6.2007 - benefit of abatement - HELD THAT:- The respondent was providing the services of construction with material and the amount and the material supplied cannot be vivisected. Therefore, the respondent was not liable to pay service tax prior to 1.6.2007 in view of the decision of the Apex Court in COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [2015 (8) TMI 749 - SUPREME COURT]. The Tribunal had rightly set aside the service tax demand upto 30.5.2017 and confirmed the same from 1.6.2007 onwards. No illegality or perversity could be pointed out in the order passed by the Tribunal which may warrant interference by this Court. Appeal dismissed - decided against Revenue.
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2019 (4) TMI 1007
CENVAT Credit - inputs - steel, cement, glass etc - input services - services used in or in relation of the construction of malls - capital goods - lifts etc. - denial of credit also on the ground that the original invoices are not available with them. Whether the appellants are eligible to avail the Cenvat credit on the services supplied to them by their job workers/contractors for which raw materials have been supplied by the appellant? - HELD THAT:- The demand in question is prior to the amendment of the provisions of input services under the Credit Rules i.e. prior to 2011. The issue is no longer res integra in view of the decision of Hon ble Andhra Pradesh High Court in the case of Sai Sahmita Storages (P) Ltd. [2011 (2) TMI 400 - ANDHRA PRADESH HIGH COURT] which was subsequently followed by the various other decisions - credit allowed. The reliance placed on the various decisions by learned Advocate on behalf of the appellant, are directly on the issue regarding the availability of Cenvat credit in construction of Mall on inputs, capital goods and input services and capital goods used for construction of shopping mall and payment of service tax on the various services rendered by the mall after been operationalised, using these credit lying in balance. Appeal allowed - decided in favor of appellant.
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2019 (4) TMI 1006
CENVAT credit - input services - service of the car was carried out on the vehicle which is used to ferry the employees inside the manufacturing unit and also to transport the work-in-progress - HELD THAT:- The repair service of the car which is used to ferry the employees inside the factory and also used for material for work-in-progress is eligible as the same is indirectly related to the manufacture. Similarly the repair of the MD car is also in connection with the manufacture of the final product and is eligible - credit allowed. Photography for ground breaking function - hiring charges - cleaning and debris removal - HELD THAT:- The services fall in the definition of input service as the same is directly or indirectly related to the manufacture of the final product and thereby fall in the definition of input service - credit allowed. Rent-a-cab service - HELD THAT:- The learned consultant did not press for the same being small amount - credit not allowed. Except rent-a-cab on which the appellant has not pressed for cenvat credit, other services fall in the definition of input service and the appellant is entitled to cenvat credit of the same - Appeal allowed in part.
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2019 (4) TMI 1005
Maintainability of appeal - appeal has been dismissed for the reason that it was not filed within the period stipulated in Section 85 (3) of the Finance 1994 - HELD THAT:- In the present case it is not in dispute that the order passed by the Assistant Commissioner (STC) was sent to the appellant by speed post on 16 January, 2012 and was not sent by registered post with acknowledgment due. At the relevant time there was no provision for sending the order by speed post. The Commissioner (Appeals), after noticing that the order was dispatched on 16 January, 2012 by speed post, presumed that it should have been delivered within 15 to 20 days. The order dated 9 January, 2012, passed by the Adjudicating Authority, was not sent to the appellant by either of the modes prescribed under Section 37(C) of the Central Excise Act. The deeming provision contained in Sub-Section (2) of Section 37(C) of the Central Excise Act could not, therefore, have been resorted to by the Adjudicating Authority. The Commissioner (Appeals) was, therefore, was not justified in observing that since the order was sent by speed post on 16 January 2012, it should be deemed to have been served on the appellant within 15-20 days from the date of dispatch. The appeal was required to be filed, within 3 months from the date of receipt of the decision or order of the adjudicating authority - The Commissioner (Appeals), therefore, committed an illegality in holding that the appeal had been filed not only beyond the statutory period of limitation but also beyond the extended period of limitation provided for under in Section 85(3) of the Act. Appeal allowed - decided in favor of appellant.
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2019 (4) TMI 1004
Maintainability of appeal - appeal has been dismissed for the reason that it was not filed within the period stipulated in Section 85 (3) of the Finance 1994 - HELD THAT:- In the present case it is not in dispute that the order passed by the Assistant Commissioner (STC) was sent to the appellant by speed post on 16 January, 2012 and was not sent by registered post with acknowledgment due. At the relevant time there was no provision for sending the order by speed post. The Commissioner (Appeals), after noticing that the order was dispatched on 16 January, 2012 by speed post, presumed that it should have been delivered within 15 to 20 days. The order dated 9 January, 2012, passed by the Adjudicating Authority, was not sent to the appellant by either of the modes prescribed under Section 37(C) of the Central Excise Act. The deeming provision contained in Sub-Section (2) of Section 37(C) of the Central Excise Act could not, therefore, have been resorted to by the Adjudicating Authority. The Commissioner (Appeals) was, therefore, was not justified in observing that since the order was sent by speed post on 16 January 2012, it should be deemed to have been served on the appellant within 15-20 days from the date of dispatch. The appeal was required to be filed, within 3 months from the date of receipt of the decision or order of the adjudicating authority - The Commissioner (Appeals), therefore, committed an illegality in holding that the appeal had been filed not only beyond the statutory period of limitation but also beyond the extended period of limitation provided for under in Section 85(3) of the Act. Appeal allowed - decided in favor of appellant.
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2019 (4) TMI 1003
Refund claim - export of services - Rule 5 of CENVAT Credit Rules, 2004 - HELD THAT:- There is no dispute that the appellant was registered with the Central Excise Department as required under Rule 5 of CENVAT Credit Rules, 2004 for claiming refund at the time of export. They have shifted their premises and the new address was yet to be registered. The old premises was registered and change of address resulted in change in the jurisdiction of office. Mere change in the jurisdiction of the office, because the new address is located elsewhere which would disentitle the appellant from claiming of refund under Rule 5 of CENVAT Credit Rules, 2004. Refund allowed - appeal dismissed - decided against Revenue.
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2019 (4) TMI 1002
Scope of SCN - Input services - GTA Services - wrong availment of input credit on the strength of invalid documents/bills issued by the transporter - HELD THAT:- The adjudicating authority held that the assessee had resorted to fraudulent means to mutate documents in order to avail ineligible cenvat credit which was not the allegation in the show-cause notice. Accordingly, the adjudicating authority has traversed beyond the scope of show-cause notice - The ground alleged in the show-cause notice and the ground on which the demand has been confirmed, are different and therefore, the order has travelled beyond the show-cause notice - appeal allowed - decided in favor of appellant.
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Central Excise
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2019 (4) TMI 1001
Clandestine removal - under valuation of goods - Tribunal ignored the tangible evidence collected by the department - section 35G of the Central Excise Act,1944 - HELD THAT:- Section 35G of the Act specifically excludes the jurisdiction of the High Court with regard to the order of the Tribunal dealing with valuation of the goods for the purposes of assessment. In fact, Section 35L (1)(b) of the Act provides for an appeal from the order of the Tribunal before the Hon'ble Supreme Court in respect of appeals relating to valuation of goods for the purpose of assessment. The submission that the appeal as filed involves not only issue of valuation for the purposes of assessment but also other issues warranting an appeal to this Court is not acceptable. Even if the order of the Tribunal has dealt with other issues besides valuation, the appeal has to be before the Hon'ble Supreme Court. Besides, an order of the Tribunal cannot be bifurcated. It has to be challenged as a whole before one forum. Therefore, this Court does not have jurisdiction to entertain this appeal. Appeal disposed off.
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2019 (4) TMI 1000
CENVAT Credit - capital goods used exclusively in manufacture of exempted goods - Area based exemption availed by the appellant - Rule 6(4) of the Cenvat Credit Rules - extended period of Limitation - HELD THAT:- The assessee did not declare all the particulars to the department on the ground that, since the exemption notification was inapplicable on the date of receipt of the goods by the assessee, they were entitled to claim the benefit of Cenvat credit - The bonafide belief of the assessee, that they were not liable to pay duty, would not, by itself and without anything more, amount to fraud or collusion or wilful mis-statement or suppression of facts or contravention of the provisions of the Act or the Rules with intention to evade payment of duty. The extended period of limitation would apply only to cases where the adjudicating authority has put the assessee on notice of its falling within any one of the clauses (a) to (e) of Section 11A(4) - In the present case that was not done and, consequently, the extended period of limitation is not available to assess the assessee to excise duty. The order-in-original, passed by the adjudicating authority, was beyond the period of limitation. Appeal dismissed - decided against Revenue.
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2019 (4) TMI 999
Valuation - inclusion of Trade Margin in the assessable value - Appellant has entered into agreement with the OMCs for supply on Natural gas/ CNG on principal to principal basis - extended period of limitation - HELD THAT:- The terms of the supply were negotiated on principal to principal basis and it specifically provides the responsibility of the Appellant and OMCs to do certain acts and services. Hence clearly it is a negotiated deal between the two parties - The agreement between the appellant and OMCs clearly shows that the trade margin were being decided at fixed level by the parties to such agreement. The Trade Margin is decided after considering the costs and expenses incurred by OMCs including their profits. The above terms of the agreement clearly show that the transaction between the appellant and the OMCs is at arms length and cannot be doubted. Hence the Trade Margin cannot be included in the assessable value at the Appellant s end and hence the demand raised against the Appellant on Trade margin is not sustainable. Reliance can be placed in the case of MAHANAGAR GAS LIMITED VERSUS CCE, MUMBAI - V [2016 (9) TMI 782 - CESTAT MUMBAI], where it was held that trade discount allowed by whatever name called is an admissible deduction and the appellants are not liable to include the same for the purpose of payment of duty. In the present case also the value of the goods between the Appellant and OMCs is fixed as per the agreement and hence the same cannot be disputed - It is also a fact that the OMCs are Public Undertakings and therefore, there is no iota of doubt that the transaction between the parties is the sole consideration and at arm s length - there is no commission being paid by the appellant to the OMCs and what has been provided by the appellant is only a trade discount, which is a normal business practice - the demand on Trade Margin confirmed against the Appellant is not sustainable and is required to be set aside. Time limitation - HELD THAT:- The Revenue was in knowledge of the valuation method adopted by the appellant. The Appellant since 2005 had made correspondence with the department disclosing the price structure with bulk customers, retail customers and OMCs to the Revenue - Since there is no ingredient of any malafide intention on the part of the Appellant to evade the excise duty, the extended period cannot be invoked for raising demand. Appeal allowed - decided in favor of appellant.
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2019 (4) TMI 998
Extended period of Limitation - non-adoption of new Rule 10A of Central Excise Rules - mis-declaration and suppression of facts or not - HELD THAT:- The disputed period is 01.04.2007 to March 2008 and the SCNs were issued on 12.05.2009 and 05.11.2009. The facts are very clear, the department can never claim to be not in the know of various events, the assessee had remitted the duty alongwith interest even before the Revenue could allege non-compliance with Rule 10 A. Firstly, when there is no dispute with regard to regular filing of returns, then the CERA audit and internal audit, and the fact that upon being pointed out the differential duty, the same was made good immediately with appropriate interest, coupled with no allegation or even a whisper about any technical breach or lack of explanation in the SCNs, lead to irrefutable conclusion that the SCNs were issued in a routine manner without any proper justification whatsoever. The same are therefore issued beyond the normal period only to impose penalty and the same has rightly been knocked down by the Commissioner (Appeals). Appeal dismissed - decided against Revenue.
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2019 (4) TMI 997
Rejection of request for provisional assessment - Rule 7 of the Central Excise Rules 2002 - Order passed without issuance of SCN - Principles of natural justice - Valuation as per Rule 4(1)(b) of the Central Excise Act, 1944 - appellant was not aware of the various discounts offered by the CEAT - job-work - HELD THAT:- Provisional assessment has been allowed to various dealers of the CEAT and those orders have also been placed on record by the appellant which clearly shows that in the facts and circumstances of the appellant, provisional assessment is required because the actual price to be realized from the customer is not known on account of the fact that the CEAT offers various categories of discounts to its customers. Denial of provisional assessment by both authorities is not in accordance with law - appeal allowed - decided in favor of appellant.
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2019 (4) TMI 996
Clandestine manufacture and removal - the entire case of the department is based on the documents recovered i.e. handwritten pencil ledgers at the premises of M/s Deepak Industries - corroborative evidences or not? - witnesses for cross- examination not produced by Department - HELD THAT:- The appellant requested for cross-examination of these witnesses, however, we find that the department was not able to produce these witnesses, as evident from the impugned order passed by the learned Commissioner. We find that it is well settled law that if the department is not able to produce their witness for cross- examination, then the said statements of those witnesses cannot be relied upon as held by Hon ble High Court of Madras in the case of Karan Traders Vs Joint Commissioner of C. Ex, Salem [ 2016 (7) TMI 870 - MADRAS HIGH COURT ]. The statements of Sh. Ravindra Singh, Proprietor of M/s Deepak Industries and Sh. Ajay Kumar Singh, Service-Senior Assistant of M/s Prakash Industries Ltd, cannot be relied upon and has to be eschewed from evidence - the department has also relied upon the documents recovered from the premises of the appellant, however, we find that there is neither any signature of the appellant or panchas or even officers of DGCEI, and the said documents have never been confronted to the proprietor of the appellant. This clearly raises a suspicion on the genuineness of the said documents, as rightly argued by the learned Counsel for the appellant, especially, when there is no other cogent and positive evidence adduced by the department in the nature of purchase of raw material, use of electricity, sale of final products, payment, realization of sale proceeds, mode and flow back of funds. There is no iota of evidence on records as per law - Appeal allowed - decided in favor of appellant.
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2019 (4) TMI 995
Rectification of Mistake - the dispute with regard to value addition has not been decided by this Tribunal - mistake apparent on the record or not - HELD THAT:- The issue is value addition has not been decided by this Tribunal, therefore, we recall our order dated 05.09.2018 with the direction to registry to list the appeal to decide the issue of value addition only in Next Division Bench.
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2019 (4) TMI 994
Rectification of mistake - error apparent on the face of record - HELD THAT:- There is a mistake apparent on record for recording the impugned order, the same may be read as under Arising out of Order-In-Original No. 01/CE/Comm/SML/2018-19 dated 26.04.2018 - ROM Application allowed.
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2019 (4) TMI 993
Rectification of Mistake - error apparent on the face of record or not - HELD THAT:- There is a mistake apparent on record by recording the impugned order, therefore, the caption of the appeal be read as Arising out of Order-in-Appeal No. 250/CE/Appl/Jal/2007 dated 10.08.2007 - ROM Application allowed.
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2019 (4) TMI 992
Clandestine removal - MS Ingots - case has been made out on the basis of third party evidence - HELD THAT:- There is an admission by the appellant that they have cleared the goods without payment of duty, but during the course of investigation, on pointing out, immediately, the appellants had paid the duty to buy peace - further, during the course of cross examination, the recipients of the goods has denied the receipt of the goods and the said evidence is required to be considered by the authorities while imposing penalty on the appellant, but the same has not been considered. In that circumstance, penalty is not imposable on the appellant. Appeal allowed in part.
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2019 (4) TMI 991
Violation of import condition - benefit of N/N. 32/2005-Cus - it is alleged that in terms of Notification No.32/2005-Cus, the importer shall not transfer or sale the imported goods - HELD THAT:- Admittedly, in this case, the goods have been transferred by the appellant to the job worker for further processing but no demand has been raised under Customs Act, 1962 for contravention of conditions of Notification No.32/2005-Cus. Therefore, on that count, no demand is sustainable against the appellant. CENVAT credit denied for violation of condition of notification - the allegation of the department is that systematic rubber has been sent by Windsor was not received back and no machinery installed in the factory, therefore no manufacturing process can take place in the factory of M/s. Windsor - HELD THAT:- As it is already held that for violation of conditions of Notification No.32/2005-Cus dt.8.4.2005, there is no demand notice has been issued for recovery of customs duty, therefore, import cannot be held irregular. Thus, the credit cannot be denied on the allegation of violation of conditions Notification No.32/2005-Cus dt.8.4.2005. Therefore, the allegation is not sustainable. Further, it has been alleged that there is no entry of passing of vehicle on the basis of report of NHAI - HELD THAT:- Revenue has failed to show the evidence except the report of NHAI in the form of the statements/records of vehicle owner to ascertain the fact to came to the conclusion that these goods vehicles in question have not transported the goods from Ludhiana to Jalandhar or Jalandhar to Ludhiana. Except from the report of NHAI, no documents has been placed by the Revenue whether it is mere paper transaction, therefore the credit cannot be denied when the goods have been cleared on payment of duty. CENVAT credit - credit sought to be denied to M/s. Kohinoor Enterprises, M/s. Asian Tire Factory Limited and M/s. Vinko Auto Industries on the ground that no goods have been travelled from M/s. Windsor and only invoices have been moved - HELD THAT:- There is no record of passing of toll barrier were recorded therein. In this case, except the report from the toll barrier, no efforts were made by the Revenue to ascertain whether the entries are of found at toll barrier and whether the goods fond travelled from Ludhiana to Jalandhar or Jalandhar to Ludhiana or not. In fact, investigation with regard to the transporter is essential to ascertain whether they have transported the goods from Windsor to the buyer s premises or not. Penalty - HELD THAT:- As it is held that the credit cannot be denied and therefore no proceedings initiated against M/s. Windsor Exports under Customs Act, 1962 as no cogent evidence has been produced by the appellant for non movement of the goods along with invoices, the benefit of doubt goes in favour of the appellants - Penalty also set aside. Appeal allowed - decided in favor of appellant.
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2019 (4) TMI 990
Utilization of CENVAT Credit - Rule 3(7)(b) of Cenvat Credit Rules, 2004 - whether the AED(GSI) paid after 01.04.2000, Can the respondent utilized the same for payment of BED/SED or not? - HELD THAT:- It has been held by the Hon ble Apex Court in COMMISSIONER OF C. EX., GOA AND CHENNAI VERSUS MRF LTD. [2005 (1) TMI 110 - SUPREME COURT OF INDIA] that they are not liable to pay AED(GSI). Therefore, whatever duty paid on account of AED(GSI) by the appellant is not AED(GSI), therefore, the respondent is entitled to avail cenvat credit of the same. It is fact on record, the appellant has paid AED(GSI) through debit entry on 31.12.2004 and the said explanation allowed the AED(GSI) paid on or after 01.04.2000 can be utilized towards payment of basic excise duty or special excise duty. Therefore, the respondent is correctly availed the cenvat credit of AED(GSI) which has been used for payment of basic excise duty/special excise duty. Appeal dismissed - decided against Revenue.
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2019 (4) TMI 989
Classification of goods - Par-boiling machines - whether classified under Chapter Heading No. 8437 of CETA, 1985 or under Chapter Heading No. 8419 of CETA? - HELD THAT:- The facts are not in dispute that for the period prior to 15.05.2014, the circular dated 19.05.2010 was in operation. In that circumstance, it is to be seen that whether the circular dated 19.05.2010 is binding on the revenue authorities during the period in question or not? - Admittedly, the said issue has been examined by the Hon ble Apex Court in the case of PAPER PRODUCTS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE [1999 (8) TMI 70 - SUPREME COURT OF INDIA] wherein the Hon ble Apex Court observed that so far as the Department is concerned, whatever action it has to take, the same will have to be consistent with the Circular which is in force at the relevant point of time. Thus, as the circular dated 19.05.2010 was in operation during the period in question, therefore, we hold that the said circular is binding on the departmental officers. For the period prior to 15.05.2014 if the appellants have classified their products in question under Chapter Heading No. 8437 of CETA, no demand is sustainable in terms of the Circular No. 924/14/2010-CX dated 19.05.2010 - demand for the period with penalties set aside - appeal allowed - decided in favor of appellant.
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2019 (4) TMI 988
CENVAT Credit - input services - garden maintenance services - period December, 2013 to March, 2016 - HELD THAT:- Hon ble Chennai High Court in the case of RANE TRW STEERING SYSTEM LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE AND CENTRAL TAX, CHENNAI OUTER COMMISSIONERATE [2018 (2) TMI 1745 - MADRAS HIGH COURT] has reversed the Tribunal s decision in the case of RANE TRW STEERING SYSTEMS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, LTU, CHENNAI [2017 (4) TMI 846 - CESTAT CHENNAI] vide which the garden maintenance services were held ineligible inputs for the period post 1.4.2011 - credit allowed. Extended period of limitation - HELD THAT:- The said credit was being availed by the appellant by reflecting the same in the ER-1 returns and as also by maintaining proper records. In such a scenario, no mala fide can be attributed to them so as to justifiably invoked the longer period - Major part of demand is barred by limitation. Appeal allowed - decided in favor of appellant.
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2019 (4) TMI 987
Delay in filing of ER-6 Returns - Rule 9A(3) of CCR, 2004 - period 2012-13 to 2015-16 - HELD THAT:- The appellant has committed the lapse of non-filing of ER-6 Returns which is required to be filed under Rule 9A(3) of CCR, 2004. Penalty u/r Rule 15A of the CCR, 2004 - HELD THAT:- For violation of CCR, both the authorities have imposed penalties under CER, 2002 which is not permitted by law therefore by invoking Rule 15A of the CCR, 2004 - Penalty under Rule 27 of CER, 2002 and Rule 12(6) of the CER, 2002 set aside - penalty is reduced to ₹ 5000/- only under Rule 15A of the CCR. Appeal allowed in part.
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CST, VAT & Sales Tax
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2019 (4) TMI 986
Validity of assessment order - interim application seeking stay - HELD THAT:- Tribunal granted the relief subject to the condition that the appellant pays 20% of the total payment and on furnishing bond for the balance amount - There is no error, illegality, irregularity or impropriety in the impugned judgment warranting interference in this appeal. The Tribunal has exercised its discretionary jurisdiction in granting stay, which under normal circumstances cannot be subject to judicial review. Therefore the approach of the learned Single Judge seems to be perfectly justified. Further, the learned Single Judge had exercised equity in granting the instlament facility. Appeal dismissed.
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2019 (4) TMI 985
Validity of assessment order - Section 58 of U.P. Value Added Tax Act, 2008 - HELD THAT:- The Tribunal recorded a categorical finding that for purchasing J.C.B. Machine, Form-C was issued. The Tribunal further recorded finding that the Form-C had been issued by the assessing authority itself and for the mistake of the assessing authority, the assessee cannot be held liable. Tribunal further held that it was not a case of false representation and the machine has been purchased against Form-C and there was no false representation. The finding so recorded by the Tribunal is finding of fact and no interference is required. Revision dismissed.
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Indian Laws
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2019 (4) TMI 984
Recovery of loan amount form appellant from the spouse of deceased - whether the loan was duly insured - after the loan was sanctioned on 27.02.2015, the amount was credited to the loan account after deducting the insurance premium - deficiency of service on the part of the Respondent Finance Company - HELD THAT:- The National Commission, in exercise of its revisional jurisdiction, has set aside the concurrent findings of the District Forum and State Commission, by the impugned Order dated 30.11.2018 - The revisional jurisdiction of the National Commission is a limited jurisdiction, to be exercised in case the State Commission lacked jurisdiction, or acted with illegality or material irregularity. The National Commission has allowed the Revision Petition of the Respondent Finance Company on two grounds; first, that the Appellant had failed to produce any evidence to prove that the insurance premium was paid to the Respondent Finance Company; second, that there was no evidence to prove that the Respondent Finance Company deducted the insurance premium from the loan account - A perusal of the pleadings and record, would show that both these findings are factually incorrect. It is the admitted position that the deceased husband of the Appellant had paid the insurance premium by a Demand Draft in favour of the Insurance Company. This has been acknowledged in paragraph 4(c) of the Revision Petition filed by the Respondent Finance Company - As a consequence, the risk would be covered from the date of payment of the insurance premium. The loan was secured from the date on which the insurance premium was paid. The premium having been paid by the Appellant s husband during his lifetime, the loan was to be adjusted from the insurance policy. The National Commission has erroneously set aside the Order passed by the State Commission on factually incorrect grounds - The Appellant has made out a clear case of deficiency of service on the part of the Respondent Finance Company - the Order dated 30.11.2018 passed by the National Commission is set aside - appeal allowed.
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2019 (4) TMI 983
Eligible person to be appoint as an arbitrator - Section 12(5) of the Arbitration and Conciliation Act, 1996 - appointment of an arbitrator - HELD THAT:- Section 12(1), as substituted by the Arbitration and Conciliation (Amendment) Act, 2015, makes it clear that when a person is approached in connection with his possible appointment as an arbitrator, it is his duty to disclose in writing any circumstances which are likely to give rise to justifiable doubts as to his independence or impartiality. The disclosure is to be made in the form specified in the Sixth Schedule, and the grounds stated in the Fifth Schedule are to serve as a guide in determining whether circumstances exist which give rise to justifiable doubts as to the independence or impartiality of an arbitrator. Once this is done, the appointment of the arbitrator may be challenged on the ground that justifiable doubts have arisen under sub-section (3) of Section 12 subject to the caveat entered by subsection (4) of Section 12. Section 12(5), on the other hand, is a new provision which relates to the de jure inability of an arbitrator to act as such. Under this provision, any prior agreement to the contrary is wiped out by the nonobstante clause in Section 12(5) the moment any person whose relationship with the parties or the counsel or the subject matter of the dispute falls under the Seventh Schedule. The sub-section then declares that such person shall be ineligible to be appointed as arbitrator. The only way in which this ineligibility can be removed is by the proviso, which again is a special provision which states that parties may, subsequent to disputes having arisen between them, waive the applicability of Section 12(5) by an express agreement in writing. What is clear, therefore, is that where, under any agreement between the parties, a person falls within any of the categories set out in the Seventh Schedule, he is, as a matter of law, ineligible to be appointed as an arbitrator. Thus, the Managing Director of the appellant could not have acted as an arbitrator himself, being rendered ineligible to act as arbitrator under Item 5 of the Seventh Schedule. Appeal allowed.
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2019 (4) TMI 982
Dishonor of Cheque - Offence under Section 376 of the IPC - As per the prosecutrix, admittedly there is a prior complaint filed by the respondent against her under Section 138 of the Negotiable Instruments Act for dishonour of a cheque issued in favour of the respondent - HELD THAT:- There are no specific details provided by the prosecutrix either in her statement given to the police or in the statement given under Section 164 Cr. P.C. - The finding returned by the trial court that the material placed before the Court does not disclose grave suspicion against the accused for framing of a charge against him for committing the offence punishable under Section 376 of the IPC, does not appear to be perverse or misplaced. Perusal of the records as well as the statements show that the allegations are completely vague and bereft of any details, further the material placed on record does not give rise to grave suspicion against the respondent of having committing the offence under Section 376 of the IPC. There is no merit in the petition. The petition is accordingly dismissed.
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