TMI Tax Updates - e-Newsletter
April 2, 2020
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Detention of Consignment invoices - the driver of the truck by negligence failed to carry the invoices showing the transaction between the petitioner and the 3rd respondent - Section 129 of GST Act - on deposit of the requisite Bank Guarantee, the goods and the vehicle detained are ordered to be released; subject to the outcome of the controversy by adjudicating authority.
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GST:
Interest on delayed refunds - Section 56 of the CGST Act - HC directed the department to pay interest @9% instead of 6% - No case is made out for review of the order passed by this Court - Having regard to the peculiar facts and circumstances of the case, this Court thought fit to award interest @ 9% per annum.
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GST:
Detention of goods alongwith the truck - The proceedings, as on date, are at the stage of show cause notice, under Section 129 of the Central Goods and Services Act, 2017. The proceedings shall go ahead in accordance with law.
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Income Tax:
Order u/s 119 of The Income Tax Act, 1961 on issue of certificates for lower rate/nil deduction/collection of TDS or TCS u/s 195, 197 and 206C (9) - Order-Instruction
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Income Tax:
Cessation of liability - Additions u/s. 41(1) - waiver towards outstanding principal loan amount - waiver of outstanding principal loan amount is a capital receipt or not? - The findings of the CIT(A) are contrary to the facts of the case as the amount credited to capital reserve by the assessee pertains to principal amount borrowed without there being any component of interest embedded therein - ITAT rightly deleted the additions.
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Income Tax:
Penalty u/s 271C - failure on the part of the assessee to deduct tax at source - without declaring the assessee as assessee in default under section 201(1) no penalty under section 271C of the Act can be imposed
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Income Tax:
Revision u/s 263 - Since assessee is having substantial loss and as per the provision of Chapter-VI, the taxable income has to be adjusted first before applying any other provisions contained in the Act particularly when there is no specific provision contained in section 115BBD wherein to impose restriction on carrying forward any loss similar to provision contained in section 115BBE and section 115BBDA. - There is no reason to treat this assessment as erroneous nor it is passed by erroneous interpretation of facts or law.
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Income Tax:
Accrual of income - Addition on account of amount kept in Escrow Account - slump sale - The word “accruing” and arising are used to contradistinguish the word “receive”. Income is said to be received when it reaches to the assessee; when right to receive the income vested to the assessee, it is said to be accrue or arise. The dormant profit cannot be equated with charged to tax under section 3 & 4 of the Income Tax Act.
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Income Tax:
Nature of interest expenditure - ‘ongoing projects’ - these interest expenses are tax neutral and even if it is added/capitalized to the inventory being unsold stock under construction as contemplated by Revenue, then also the same is to be allowed as expenses in subsequent years when Revenue is recognized from such unsold inventory
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Income Tax:
Addition u/s 40(a)(ia) - Default u/s 201 - non deduction of TDS on freight paid during the year - the freight and cartage charges paid to the transporters are subject to deduction of tax at source, but since the transporters are income tax assessee and once they have shown the said income in their income-tax returns, the Assessing Officer cannot create demand on the assessee.
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Income Tax:
Disallowance of Membership Fees paid to Cricket Club of India - The fact that assessee utilizes the facilities for the purpose of his business and it is brought on record by the assessee that the business has increased after taking membership in the club. Considering the turnover, the membership fees is very negligible and it can never be treated as capital assets having enduring benefit.
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Income Tax:
Penalty levied u/s 271AAA - allegation of failure to substantiate the manner of undisclosed income derived - assessee has made it clear that additional income is being offered for A.Y 2011-12 and this income was earned as a result of various business transactions, which were not accounted for in the books of account. - No penalty.
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Income Tax:
Penalty u/s 271C - delay in deposit of the TDS in the Government account - where the assessee has made payment of TDS though late, he cannot be held to be in default and so, there is no question of levy of penalty under section 271C
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Income Tax:
Addition on account of capital contributed by one of the partner u/s 69 - if at all the A.O. was not satisfied from the explanation / source of the Partner, then the additions could have been made in the individual hands of the Partner if it was permissible under section 69 of the Act.
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Income Tax:
Eligibility of deduction u/s.10A - The provisions of Sub Section (4) of Section 92CA of the Act specifically provides that addition made u/s.92CA(3) of the Act is not eligible profits for deduction neither u/s.10A nor u/s.10B of the Act. The ld. CIT(A) in the flagrant ignorance of the plain provisions of the Act allowed the claim for deduction u/s.10B of the Act.
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Income Tax:
Revision u/s 263 - Deduction u/s 36(1)(viii) - Insofar as, the second issue of excess allowances of deduction u/s.36 (1)(vii), the assessment order passed by the AO is erroneous, insofar as it is prejudicial to the interest of the revenue - AO directed to exclude interest on income tax refund from profits and gains of business and also from total revenue from operations for the purpose of determination of allowable deduction u/s.36(1)(viii).
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Income Tax:
Addition u/s. 68 - interest in bank statement and pass book - absence of the books of accounts maintained - AO in this case has not observed or place on record as regards whether the assessee was mandatorily required to maintain books of accounts or not. - Additions deleted.
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Customs:
Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Silver - Notification
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Customs:
Facilitation measures of Clearance of Import Cargo due to delay arising in Outbreak of COVID-19 - Trade Notice
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Customs:
ICES Advisory 10/2020 (Project Imports) — Option to debit duty through Duty Scrips for Project Import BEs - Trade Notice
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Customs:
Validity of Compounding Order - The Tribunal in so many words has observed that there was no clear proposal in the show-cause notice with regard to imposition of the redemption fine and also in the order-in-original. The tribunal has observed that there is no crystallized demand of redemption fine against each of the noticee. - Revenue cannot demand the same now.
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Customs:
Claim of Refund and Interest on Refund - Unjust enrichment - amount claimed as refund was not charged to the profit and loss account but retained in 'receivables' account - Assessing Authority has completely lost sight of this exercise and has proceeded merely on the basis of accounting entries, the methodology of accounting followed by the petitioner and as to whether the duty had been reflected in the 'receivables' or 'profit and loss' accounts.
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DGFT:
Amendment in import policy of Iron & Steel and incorporation of policy condition in Chapter 72, 73 and 86 of ITC (HS), 2017, Schedule – I (Import Policy) - Notification
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DGFT:
Extension of Foreign Trade Policy 2015-2020 till 31.03.2021 - Notification
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DGFT:
Extend the 'Transport and Marketing Assistance' (TMA) Scheme for a further period of one year - Notification
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DGFT:
Extension of validity of Registration cum Membership Certificate (RCMC) beyond 31st March, 2020. - Trade Notice
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DGFT:
Extension of Hand Book of Procedures 2015-2020 till 31.03.2021 - Public Notice
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FEMA:
Period within which export value of goods/software/ services to be realised - Regulation 9 of the Foreign Exchange Management (Export of Goods and Services) Regulations, 2015 as amended
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FEMA:
Foreign Exchange Management (Export of Goods and Services) (Amendment) Regulations, 2020 - Notification
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PMLA:
Prevention of Money-laundering (Maintenance of Records) Amendment Rules, 2020 - the small account shall remain operational between 1st April, 2020 and 30th June 2020 and such other periods as may be notified by the Central Government. - Notification
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Service Tax:
Benefit of VCES-Voluntary Compliance encouragement Scheme, 2013 - clerical error in filling form VCES-1 - The appellant have admittedly deposited the declared amount of tax dues, and they cannot be asked to deposit more tax, which will be against the provisions of service tax law, as well as Article 265 of the Constitution of India - the appellant is entitled to the benefit of VCES 2013.
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VAT:
Benefit under Samadhan Scheme - denial of benefit on the ground that the Assessee has already paid the tax before making an application under the said Scheme - in the absence of the arrears of tax, penalty, interest bearing free as the tax already stood paid, the Assessee by applying under the said Scheme cannot take advantage of reduction of the tax liability to the extent of 50%.
Articles
Notifications
Customs-
37/2020 - dated
1-4-2020
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Cus (NT)
Exchange Rates Notification No.37/2020-Custom (NT) dated 01.04.2020
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36/2020 - dated
31-3-2020
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Cus (NT)
Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Silver
DGFT-
58/2015-2020 - dated
31-3-2020
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FTP
Amendment in import policy of Iron & Steel and incorporation of policy condition in Chapter 72, 73 and 86 of ITC (HS), 2017, Schedule – I (Import Policy)
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57/2015-2020 - dated
31-3-2020
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FTP
Extension of Foreign Trade Policy 2015-2020 till 31.03.2021
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17/3/2018-EP (Agri.IV). - dated
17-3-2020
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FTP
Extend the 'Transport and Marketing Assistance' (TMA) Scheme for a further period of one year
FEMA-
FEMA 23(R)/(3)/2020-RB - dated
31-3-2020
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FEMA
Foreign Exchange Management (Export of Goods and Services) (Amendment) Regulations, 2020
GST - States-
21/GST-2 - dated
31-3-2020
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Haryana SGST
Notification under section 25(6B) to notify the date from which an individual shall undergo authentication, of Aadhaar number in order to be eligible for registration under the HGST Act, 2017.
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20/GST-2 - dated
31-3-2020
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Haryana SGST
Notification under section 25(6D) to specify the class of persons who shall be exempted from aadhar authentication under the HGST Act, 2017.
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18/GST-2 - dated
31-3-2020
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Haryana SGST
Notification to exempt certain class of registered persons capturing dynamic QR code and the date for implementation of QR Code to be extended to 01.10.2020 under the HGST Act, 2017.
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17/GST-2 - dated
31-3-2020
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Haryana SGST
Notification to exempt certain class of registered persons from issuing e-invoices and the date for implementation of e-invoicing extended to 01.10.2020 under the HGST Act, 2017.
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16 /GST-2 - dated
31-3-2020
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Haryana SGST
Notification under section 148 to waive off the requirement for furnishing FORM GSTR-1 for 2019-20 for taxpayers who could not opt for availing the option of special composition scheme under notification No.32/GST-2, dated 08.03.2019 under the HGST Act, 2017.
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15/GST-2 - dated
31-3-2020
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Haryana SGST
Notification under section 148 to provide special procedure for corporate debtors undergoing the corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016 under the HGST Act, 2017
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14/GST-2 - dated
31-3-2020
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Haryana SGST
Amendment of notification no. 35/ST-2, dated 30.06.2017 under the HGST Act, 2017
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13/GST-2 - dated
31-3-2020
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Haryana SGST
Amendment of notification no. 46/ST-2, dated 30.06.2017 under the HGST Act, 2017
Money Laundering-
G.S.R. 228(E) - dated
31-3-2020
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PMLA
Prevention of Money-laundering (Maintenance of Records) Amendment Rules, 2020
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2020 (4) TMI 35
Detention of Consignment invoices - the driver of the truck by negligence failed to carry the invoices showing the transaction between the petitioner and the 3rd respondent - Section 129 of GST Act - HELD THAT:- This court would not be an appropriate authority to adjudicate the controversy to either of the human error or intentional or willful. It would be the domain of the adjudicating authority - For the time being, the goods detained can be released, subject to the compliance of conditions referred to in Sec.129(1) of the Act and Rule 43 of 2017. In case the petitioner furnishes the bank guarantee along with other charges, as per the provisions of Sec.129, on deposit of the requisite Bank Guarantee, the goods and the vehicle detained are ordered to be released; subject to the outcome of the controversy by adjudicating authority.
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2020 (4) TMI 34
Interest on delayed refunds - Section 56 of the CGST Act - this Court directed the applicants herein to pay simple interest on the delayed payment @ 9% per annum. This Court also directed the applicants to look into the chart provided by the writ applicants Annexure-D page-30 of the main matter. By this application, the applicants seek review of our order to the limited extent that the directions could not have been for making payment @ 9% per annum but, in fact, it should have been @ 6% per annum as provided under Section 56 of the CGST Act. HELD THAT:- No case is made out for review of the order passed by this Court dated 10.07.2019. Having regard to the peculiar facts and circumstances of the case, this Court thought fit to award interest @ 9% per annum. Application dismissed.
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2020 (4) TMI 33
Release of detained goods alongwith the truck - Section 129 of the Central Goods and Services Act, 2017 - HELD THAT:- The writ applicant availed the benefit of the interm-order passed by this Court and got the vehicle, along with the goods released on payment of the tax amount. The proceedings, as on date, are at the stage of show cause notice, under Section 129 of the Central Goods and Services Act, 2017. The proceedings shall go ahead in accordance with law. It shall be open for the writ applicant to point out the recent pronouncement of this Court in the case of SYNERGY FERTICHEM PVT. LTD VERSUS STATE OF GUJARAT [ 2019 (12) TMI 1213 - GUJARAT HIGH COURT ] - It is now for the applicant to make good his case that the show cause notice, issued in GSTMOV- 6, deserves to be discharged. Application disposed off.
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Income Tax
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2020 (4) TMI 31
Penalty u/s 272A(2)(k) - delayed filing of TDS statement - AO observed that there are substantial delay of 394 to 729 days in filing TDS statement, which makes the assessee amenable to imposition of penalty 272A(2)(k) - HELD THAT:- As could be seen from the facts discussed above, the Assessing Officer had imposed penalty under section 272A(2)(k) of the Act for different quarters of the financial year 2009 10 due to delay in filing of TDS statements. However, while deciding assessee s appeals for the first three quarters of the financial year 2009 10, the Tribunal [ 2018 (5) TMI 1984 - ITAT MUMBAI] has deleted the penalty imposed under section 272A(2)(k) of the Act. Facts being identical, respectfully following the aforesaid decision of the Co ordinate Bench, we delete the penalty imposed - Ground raised by the assessee is allowed. Penalty u/s 271C - failure on the part of the assessee to deduct tax at source - HELD THAT:- The fact that the Assessing Officer has not passed any order under section 201(1) of the Act treating the assessee as an assessee in default has not been disputed by the Revenue. In the decisions relied upon by the learned Authorised Representative, it has been categorically held that without declaring the assessee as assessee in default under section 201(1) no penalty under section 271C of the Act can be imposed - We delete the penalty imposed under section 271C of the Act. Ground raised by the assessee is allowed.
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2020 (4) TMI 30
Upward adjustment on account of corporate guarantee commission - HELD THAT:- As decided in own case [ 2019 (10) TMI 73 - ITAT MUMBAI] arm's length price of guarantee fee can reasonably be fixed @ 0.5%. In view of the aforesaid, we uphold the decision of learned Commissioner (Appeals). Arms Length Price adjustment to income from interest loan advances to subsidiaries - HELD THAT:- In case of average period of loan is more than five years, the rate is 6 month LIBOR plus 250 basis points may be adopted. The Hon ble jurisdictional High Court in CIT Vs Tata Autocomp [ 2015 (4) TMI 681 - BOMBAY HIGH COURT] held that where the assessee advances loans to its associated enterprises (AE s) situated in Germany, rate of interest was to be determined on the basis of rate prevailing in Germany where loan has been consumed. Considering the decision of jurisdictional High Court the AO/TPO is directed to recompute the interest on the basis of rate prevalent in the countries where loan was received. In the result the ground of appeal raised by the assessee is allowed and resultantly the ground of appeal raised by the revenue has become infructuous. Notional interest income on infusion of additional funds in wholly owned subsidiary - HELD THAT:- CIT(A) after considering the submissions of concluded that the delay in receipt of share is short and as per Circular of Reserve Bank of India, the interest would be LIBOR plus 150 and directed the TPO/AO to charge interest for 6 month at LIBOR plus 150 basis point for the period between the date of remittance and by adding 15 days and the date of allotment of shares. The coordinate bench of this Tribunal in ITO Vs Sterling Oil Resources (P) ltd [ 2016 (4) TMI 163 - ITAT MUMBAI] held that adjustment on account of notional interest on share application money, which had been recharacterised as loan, merely because there was delay in allotment of share, was not sustainable in law. Further, this Tribunal in Aditya Birla Minacs Worldwide Ltd [ 2016 (8) TMI 1417 - ITAT MUMBAI] also took the same view that share application money cannot be treated as loan amount; merely there is delay in issuance of shares by subsidiary. Considering the consistent view of the Tribunal, we are of the view that share application money cannot be treated as loan amount only because of delay in issuance of shares by its subsidiary. Allocation of R D expenses to the 80IB and 80IC units - HELD THAT:- On show cause notice on the issue, the assessee contended that similar deduction is allowed in the earlier years by Tribunal and furnished the copy of the orders for earlier years. The assessing officer took his view that R D expenditure to the industrial undertaking on which deductions under section 80IB 80IC are claimed, on which the expenditure is not contributed to the earning of the income for which deduction is claimed. The assessing officer allocated interest cost to the units on turnover basis. The ld CIT(A) granted relief to the assessee by following the order of the Tribunal for various earlier years. Considering the consistent view of the Tribunal on identical set of facts and respectfully following the view of the Tribunal in the preceding assessment years in assessee's own case, we uphold the decision of ld. CIT(A). in the result the Ground of appeal is dismissed. Weighted deduction under section 35(2AB) - HELD THAT:- As decided in own case [ 2019 (10) TMI 73 - ITAT MUMBAI] restore the issue to the Assessing Officer for adjudication afresh. TDS u/s 195 - Disallowance u/s 40(a)(ia) for want of TDS for payments made to non-residents on account for pilot bio study, clinical research - HELD THAT:- AO after issuing show cause notice disallowed the expenditure by taking view that similar expenditure was disallowed in earlier years as the assessee is liable to deduct tax under section 195. The ld CIT(A) deleted the additions by following the order of Tribunal in AY 2007-08, wherein it was payment to non-resident for conducting bio equivalence study are not taxable in India and not subject to withholding tax under section 195 of the Act. We have seen that similar view was taken by Tribunal in AY 2006-07 by following the order of Tribunal in AY 2007-08. Therefore, we affirm the order of ld CIT(A). In the result we do not find any merit in the ground of appeal raised by the revenue and the same is dismissed. Addition of Marked to Market loss for calculation of book profit under section 115JB - HELD THAT:- CIT(A) after considering the submissions of the assessee observed that marked to market loss are on account of restatement of trading asset and liability and its ascertainment and computation is not disputed by assessing officer. CIT(A) also held that after the decision in CIT Vs Woodward Governor India (P) ltd. [ 2009 (4) TMI 4 - SUPREME COURT] marked to market loss is allowable deduction. And it cannot be termed as unascertained liability as has been provided in clause (c) of Explanation-1 to section 115JB(2). Accordingly cannot be added back to the book profit. No contrary fact or law is brought to our notice to arrive on other finding. Addition on account of provision of gratuity for calculation of book profit under section 115JB - HELD THAT:- CIT(A) after considering the submissions of the assessee observed provisions of gratuity is based on the actuarial valuation and therefore ascertained liability. The assessing officer has not disputed actuarial valuation and cannot be treated unascertained liability as has been provided in clause (c) of Explanation-1 to section 115JB(2). No contrary fact or law is brought to our notice to arrive on other finding. Therefore, we affirm the action of ld CIT(A) and dismiss the ground of appeal raised by the revenue. Disallowance of section 14A for computation u/s 115JB - HELD THAT:- CIT(A) after considering the submissions of the assessee observed the provision of section 14A cannot be imported to clause (f) of Explanation 1 to section 115JA. The Special bench of Delhi Tribunal recently in ACIT vs. Vireet Investment (P) Ltd [ 2017 (6) TMI 1124 - ITAT DELHI] held the computation under clause (f) of Explanation 1 to section 115JB(2), is to be made without resorting to computation as contemplated under section 14A read with rule 8D. Thus, considering the recent decision of the Special Bench of Tribunal we uphold the order of the ld CIT(A). In the result this ground of appeal is dismissed. Disallowance u/s 14A - HELD THAT:- The Hon ble Bombay High Court in Nirved Traders Pvt Ltd [ 2019 (4) TMI 1738 - BOMBAY HIGH COURT] held that the disallowance under section 14A be restrict to the exempt income.
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2020 (4) TMI 29
Revision u/s 263 - restriction on carrying forward any loss similar to provision contained in section 115BBE and section 115BBDA - HELD THAT:- After careful reading of section 115BBD, we agree with the submission of Ld. AR that there is no provision in that section to eliminate the dividend income from specified foreign company before setting off of loss and similar to the provisions and specific direction present in section 115BBE. Taxable income has to be determined as per the provisions of Income Tax Act i.e. first to compute the total income based on the Chapter-IV and then apply the Chapter-VI and VIA in order to compare the aggregation and set off of losses. After determining the taxable income by applying the above Chapters and if still there is profit, then such taxable profit has to be taxed according to the prevailing rates as per the various applicable provisions of the Act. Since assessee is having substantial loss and as per the provision of Chapter-VI, the taxable income has to be adjusted first before applying any other provisions contained in the Act particularly when there is no specific provision contained in section 115BBD wherein to impose restriction on carrying forward any loss similar to provision contained in section 115BBE and section 115BBDA. Therefore, we do not see any reason to treat this assessment as erroneous nor it is passed by erroneous interpretation of facts or law. Accordingly, the order passed u/s 263 of the Act by Ld. CIT is not as per provisions contained therein or as per the jurisdictional precedence. Hence, it is set aside. Resultantly, the grounds raised by the assessee are allowed.
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2020 (4) TMI 28
Accrual of income - Addition on account of amount kept in Escrow Account - slump sale - whether sale of business is irrevocable and complete on the closing date mentioned in the agreement and capital gain is accrued on the date of sale - gain on transfer of business purchase agreement - HELD THAT:- Income for the year under consideration of ₹ 447.30 crore and further ₹ 17.89 crore was accrued to the assessee. The assessee offered the same under the head Capital Gain and no other income which is not accrued to the assessee is not liable to tax in the year under consideration. The remaining income was accrued only in subsequent Assessment Year i.e. A.Y. 2013-14 to 2016-17 that is an amount of ₹ 17.89 Crore each in four subsequent years, and the same has been offered for taxation under the head Capital Gain. Even this fact is not disputed by the revenue. The objection of ld. DR for the revenue is that the assessee in subsequent year claim set off of Long Term Capital Loss on sale of mutual funds of ₹ 7.55 crore and ₹ 4.36 crore. In our view, the assessee is legally entitled to claim the set off of legitimate losses under the same head if it accrues to the assessee. As noted above the Hon ble Jurisdictional High Court in CIT vs. Nagri Mills Co. Ltd. [ 1957 (9) TMI 30 - BOMBAY HIGH COURT ] held that as to why the Income-tax authorities, in a matter such as where the deduction is obviously a permissible deduction under the Income-tax Act, raise disputes as to the year in which the deduction should be allowed. The question as to the year in which a deduction is allowable may be material when the rate of tax chargeable on the assessee in two different years is different; but in the case of income of a company, tax is attracted at a uniform rate. Applying the same analogy that the assessee being a corporate entity is taxed at the marginal rate, the revenue should not fritter away its energies in fighting matters. The case law relied by the ld. DR for the revenue are not applicable on the facts of the present case as the same are based on different set of facts. In the present case, though the price was determined but was payable on fulfillment of certain condition as agreed in Escrow Agreement and the same were paid subsequently. In E.D Sasson Co. Ltd. [ 1954 (5) TMI 2 - SUPREME COURT] (also relied by ld. AR) wherein it was held that income may accrue to an assessee without the actual receipt of the same. If the assessee acquires a right to receive the income, the income can be said to have accrued to him though it may be received later on its being ascertained. The basic conception is that he must have acquired a right to receive the income. Thus, the ratio of this decision is more favourable to the assessee. The word accruing and arising are used to contradistinguish the word receive . Income is said to be received when it reaches to the assessee; when right to receive the income vested to the assessee, it is said to be accrue or arise. The dormant profit cannot be equated with charged to tax under section 3 4 of the Income Tax Act. We are of the view that the accrued capital gain in the year under consideration was offered by the assessee to tax and the remaining of the capital gain which was accrued only in the subsequent years have been offered to tax in AY 2013-14 to 2016-17. The assessee has placed on record the copy of computation and return of income for AY 2013-14 to 2016-17 - Decided in favour of assessee Defalcation loss disallowance - allowable busniss loss - HELD THAT:- We have noted that in assessee s appeal for A.Y. 2006-07 to 2009-10 in [ 2018 (12) TMI 406 - ITAT MUMBAI] the claim of assessee with regard to defalcation loss has been restored to the file of AO. Therefore, to avoid the duplicity, the issue is restored to the file of AO to examine the claim and pass the order in accordance with law. In the result this ground of appeal is allowed for statistical purpose.
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2020 (4) TMI 27
Nature of interest expenditure - ongoing projects - interest expenses claimed as deduction while computing income of the impugned assessment year - assessee is doing a real estate activity of constructing flat for further sales /renting etc. as business activity - HELD THAT:- When assessee is engaged in real estate business and is constructing flats which are meant for the purpose of sale/renting purposes as a business, the interest expenses incurred on borrowings are towards revenue field and was correctly charged to Profit and Loss Account as time cost and claimed as deduction while computing income of the assessee. The assessee in the instant case in not building a capital asset rather assessee is doing a real estate activity of constructing flat for further sales /renting etc. as business activity and these ongoing projects are at different stages of completion. In our considered view, the assessee has rightly claimed interest expenses as deduction while computing income of the impugned assessment year. In any case, these interest expenses are tax neutral and even if it is added/capitalized to the inventory being unsold stock under construction as contemplated by Revenue, then also the same is to be allowed as expenses in subsequent years when Revenue is recognized from such unsold inventory - we allow appeal of the assessee
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2020 (4) TMI 26
TP Adjustment - AMP expenses - HELD THAT:- The authorities below have failed to brought on record any documents or evidence showing the existence of the agreement between the assessee and it's AE by virtue of which, the assessee was under no obligation to incur the marketing expenditure for the brand building of the brand owned by the assessee. No such finding of fact recorded by the lower authority, was brought to our notice by the DR for the revenue. In the light of the above we deem appropriate to reproduce the finding recorded by the tribunal for the earlier assessment year in the case of the assessee while dealing with the AMP issue. Merely because there is an incidental benefit to the foreign AE, it cannot be said that the AMP expenses incurred by the Indian entity was for promoting the brand of the foreign AE. Following the decision of the coordinate bench for the assessment year 2008 09 to assessment year 2012 13 [ 2018 (3) TMI 1665 - ITAT MUMBAI] the issue of AMP is allowed in favour of the assessee and against the revenue. Adjustment on import of finished goods - suitability of foreign AE as a tested party - HELD THAT:- TPO for the assessment year under consideration had recorded the finding that the assessee did not provide the requisite information. However, during the course of argument, AR had drawn our attention to the annual accounts of the comparables, which are provided by the assessee before the TPO. However, despite providing the requisite information TPO had recorded that the said information's were not provided to TPO. Further, we also noticed that the annual reports of the comparables was not considered as comparables were having different calendar years , other than the financial year of the tested party. Assessee is carrying out the distribution function with respect to goods imported from its AE. Therefore, foreign AE of the assessee cannot be considered as a tested party for benchmarking the international transaction. On perusal of the paper book and documents submitted by the assessee, it is abundantly clear that the assessee had provided requisite necessary data of the foreign AE of the assessee as well as the comparables to the TPO, this fact was duly acknowledged by the DRP in the order reproduced hereinabove. Both the lower authorities had rejected the contention of the assessee for considering the foreign AE as a tested party by following the reasons given by the DRP for the assessment year 2009-2010. Order passed by the lower authorities is required to be set aside, as the order passed by the lower authorities were cryptic orders, as authorities have failed to consider the documentary evidence produced before it while passing the order on the submissions of the assessee. Further the lower authorities have failed to pass reasoned speaking order dealing with the submissions/documentary evidence of the assessee. Therefore, we remand these grounds back to the file of the Dispute Resolution Panel (DRP) for denovo examination and passing the reasoned speaking order without influencing with the order passed by the DRP for the assessment year 2009-10. DRP is directed to pass a detailed speaking order after considering the documents/ evidence already on record :- Whether the foreign AE of the assessee can be considered as tested party for the purpose of benchmarking the international transaction subject matter of the present dispute and If on examination of the above parameters, the DRP comes to the conclusion that the foreign AE can be considered as tested party, then the DRP will examine the suitability of comparable provided by the assessee in the TP study on the basis of the parameter laid down in Chapter 10 and the rule framed therein for said purpose. DRP shall also find out whether the comparables provided by the assessee are into the same line of business or not. DRP shall also find out whether these comparables are from the same country or from the same region having the similar economic, geographical and political condition or not which may affect the profitability of these comparable. The DRP shall apply appropriate filters for the purpose of including and excluding the comparables. If the DRP comes to the conclusion that the foreign AE of the assessee can be considered as a tested party and thereafter DRP rejects the comparables selected by the assessee, then the DRP may include any other suitable comparable which satisfy the various filters applied by the DRP for that purposes after following the procedure as laid down in chapter 10 of the income tax act read with rule framed there under.
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2020 (4) TMI 25
Disallowance of transportation charges - assessee has not furnished all supporting evidence - entity of the parties as well as the genuineness of the transactions was not established - notices u/s 133(6) were not served upon the parties - assessee was engaged in the business of trading of mines and minerals - HELD THAT:- In the business of trading of mines and minerals it incurred a high volume of transportation charges. Sometimes the assessee hired local transport for the transportation of goods. The ld. Counsel submitted that in the year under consideration the assessee incurred transportation charges amounting to ₹ 5,76,26,254/-, out of which it paid ₹ 8,82,059/- to M/s Shakti Transport during the F.Y. 2009-10. The assessee received bill and invoices from Shakti Transport and thereafter made the payment through account payee cheque. The ld. Counsel submitted that during the assessment stage the party called M/s Shakti Transport did not cooperate with the assessee,therefore, the assessee could not produce the said party before the ld. Assessing Officer, but assessee submitted the bill, ledger and relevant bank statement for the payment made. We note that there is merit in the submission of the ld. Counsel as the assessee produced bills, ledger copy, bank statement (transaction done through banking channel) to prove the bona fide of the transaction, therefore, we delete addition. Addition of share application money u/s 68 - HELD THAT:- The company duly filed Form No.2 with the Registrars of Companies for the aforesaid shares issued. The quantity and value in respect of share application money has been properly accounted for in the books of accounts of the company and explained properly to the Assessing Officer. Further, the Ld AO added the share application money as unexplained cash credit as per section 68 of the Income Tax Act 1961 whereas the assessee is a company (not being a company in which the public are substantially interested), and shares were issued to the existing Directors/shareholders therefore identity of the share subscribers are not in doubt. The Assessing Officer made addition on the ground that quantity and value in respect of share application money is not matching. We note that assessee filed reconciliation and submission as noted above and there is no mismatching. Hence, we delete the addition. Undervaluation of closing stock - HELD THAT:- total value of closing stock is ₹ 29,80,494/- of which ₹ 4,93,533/- comprises of Non iron Ore Fines Products and ₹ 24,86,961/- comprises of Iron Ore Fines Products. The said value includes cost of purchase, freight inwards and loading and unloading charges. The aforesaid method of valuation of closing stock is as per Accounting Standard-2 and the assessee has been applying the same method regularly. We note that the Assessing Officer allowed such valuation in all previous assessment years, therefore, based on the principal of consistency the assessee s claim should be allowed in this year also. As the assessee was applying the method of valuation of closing stock as per Accounting Standard-2 on a regular basis without any deviation, the addition sustained by ld. CIT(A) on account of undervaluation is directed to be deleted. - Assessee appeal allowed.
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2020 (4) TMI 24
TDS u/s 194C - disallowance u/s 40(a)(ia) on account of freight charges - HELD THAT:- Assessee having obtained the PAN of the concerned transport contractor was eligible for immunity provided u/s 194C(6) of the Act as it is stood prior to the amendment in 2015 and he was, therefore, not liable to deduct tax at source from the impugned payments made to the transport contractor. The disallowance made by the AO u/s 40(a)(ia) and confirmed by the Ld. CIT(A) for the alleged failure of the assessee to deduct tax at source thus is not sustainable and deleting the same, allow this appeal of the assessee.
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2020 (4) TMI 23
Reopening of assessment u/s 147 - more than 6 years lapsed - reopening barred by limitation - HELD THAT:- In this case, the re-assessment order for this assessment year, i.e 2010-11, was passed on 29.12.2016. By the time, more than 6 years had lapsed from the end of the assessment year 2009-10 and hence, in accordance with the decision ofPARVEEN KUMARI VERSUS COMMISSIONER OF INCOME-TAX AND ANOTHER [ 1998 (12) TMI 72 - PUNJAB AND HARYANA HIGH COURT] and relied upon by the Ld. A.R., no re-assessment could be directed under Section 150(1) of the Act. Therefore, the directions issued by the learned CIT(A) is not in accordance with law. Hence, we quash the direction issued by the learned CIT(A) for reopening the assessment for the assessment year 2009-10, which was barred by the limitation under Sections.150(2) of the Act and allow the appeal of the assessee.
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2020 (4) TMI 22
Addition u/s 40(a)(ia) - Default u/s 201 - non deduction of TDS on freight paid during the year - assessee filed the detailed submission stating that TDS is not attracted, as the freight payments are not contractual in nature and moreover the transporter have their PAN number and the entire freight payments were paid during the year, hence the provisions of section 40(a)(ia) of the Act is not applicable - HELD THAT:- Section 201 of the Act provides that where any person, including the principal officer of a company or an employer, who is required to deduct tax at source on any sum, in accordance with the provisions of the Act, does not deduct or does not pay such tax or fails to pay such tax, after making the deduction, then such person shall be deemed to be an assessee in default in respect of such tax. Therefore, section 201 of the Act is applicable in the case of the assessee. We do agree that the freight and cartage charges paid to the transporters are subject to deduction of tax at source, but since the transporters are income tax assessee and once they have shown the said income in their income-tax returns, the Assessing Officer cannot create demand on the assessee. Our aforesaid view is duly supported by the decision of the Hon'ble Supreme Court in Hindustan Coca Cola Beverages Pvt. Ltd. vs. CIT [ 2007 (8) TMI 12 - SUPREME COURT] . We, therefore, in the interest of justice to both the parties, set aside the order of the ld. CIT(A) and restore this issue to the file of the Assessing Officer with a direction that the Assessing Officer shall re-adjudicate this issue and verify from the evidence filed by the assessee, whether transporters have shown the said income in their income-tax returns and duly paid tax thereon. In case the Assessing Officer find that the transporters have duly shown the said income in their income-tax returns and paid tax thereon, the demand raised shall get deleted, as it relates to section 201(1) of the Act. - Decided in favour of assessee for statistical purposes.
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2020 (4) TMI 21
Reopening of assessment u/s 147 - unexplained cash - relevant assessment year - HELD THAT:- Cash was found in possession of assessee on 13-04-2009 which is relevant to the AY.2010-11 and not to the AY.2009-10. Therefore, the presumption that the income has escaped assessment for the AY.2009-10 itself is not validly made. For this reason itself, the reopening of the assessment is not valid. Since re-opening of the assessment is not for valid reasons, the consequent re-assessment proceedings would also be void ab initio . Therefore,Grounds raised by the assessee and set aside the assessment made by the AO. AY.2010-11 - since there is no material filed by the assessee before the Tribunal to prove that the assessee had more cash than ₹ 45,000/- as estimated by the AO as on 13-04-2009, find no reason to interfere with the order of Ld.CIT(A), confirming the addition of ₹ 5,50,000/- made during the year. AY.2009-10, the assessee has claimed refund of taxes paid i.e., ₹ 5,95,000/- paid as self-assessment tax and there is a liability of assessee for the AY.2010-11 since the amount has been brought to tax in the AY.2010-11. The Department is therefore directed to adjust the self-assessment tax paid by the assessee for the AY.2009-10 towards tax liability of the assessee for the AY.2010-11, and the balance amount shall be refunded to the assessee as per law.
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2020 (4) TMI 32
Cessation of liability - Additions u/s. 41(1) - waiver towards outstanding principal loan amount - waiver of outstanding principal loan amount is a capital receipt or not? - Tribunal deleting the addition made by the Assessing Officer and confirmed by the CIT(A) by considering the amount as capital receipt - HELD THAT:- CIT(A) has agreed to the submissions of the respondent-assessee that addition cannot be made under Section 41(1) but has considered that the respondent was paying interest on the loan taken by it which was claimed by it as expenditure in profit and loss account, and therefore, it was borrowing with interest which was waived. CIT(A) has applied the ratio of T.V.Sundaram Iyengar and Sons Ltd [ 1996 (9) TMI 1 - SUPREME COURT] to hold that the quality and nature of receipt for income-tax purposes is fixed once and for all, when the receipt is received and that subsequent operation can change its nature, is not absolute and that in given cases by reason of subsequent events, the amount which initially was not received as trading receipts may be regarded as business income - as considered by the CIT(A) that if the loan was for the trading purpose and was treated as such from the very beginning in the books of account, the waiver thereof may result in the income. It was, therefore, held that the waiver of the loan should be taxable under the provisions of Section 2(24) read with Section 28(iv) of the Act. Aforesaid findings given by the CIT(A) are contrary to the facts of the case as the amount credited to capital reserve by the assessee pertains to principal amount borrowed without there being any component of interest embedded therein. In that view of the matter the dictum in case of Mahindra and Mahindra Ltd [ 2003 (1) TMI 71 - BOMBAY HIGH COURT] would be applicable and as such neither Section 28(iv) of the Act nor Section 41(1) of the Act would be applicable so as to tax the amount of waiver of loan comprising of principal amount in the ends of the assessee. We are in agreement with the findings given by the Tribunal. The question of law raised in this appeal cannot be termed as substantial question of law.
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2020 (4) TMI 20
Disallowance of Membership Fees paid to Cricket Club of India - Nature of expenditure - revenue or capital expenditure - HELD THAT:- In the present case, assessee has taken permanent membership of CCI Club and assessee is allowed to use the facility of the club and it can never create any capital assets. As the assessee can only utilize the facility and in case, he decides to surrender the membership, he will not get any refund. Therefore, assessee does not get any right by becoming a member. The fact that assessee utilizes the facilities for the purpose of his business and it is brought on record by the assessee that the business has increased after taking membership in the club. Considering the turnover, the membership fees is very negligible and it can never be treated as capital assets having enduring benefit. It may give benefit of utilizing the club facilities, but cannot create any right of endurance /right of possession. - Decided in favour of assessee.
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2020 (4) TMI 19
Penalty levied u/s 271AAA - assessee has failed to substantiate the manner of undisclosed income derived - HELD THAT:- In the statement itself, the assessee has made it very clear that disclosed income is earned from business income. This is further substantiated from the fact that in its profit and loss account, the assessee has shown income from operations/sales at ₹ 18,130 lakhs which included declared business income of ₹ 75 lakhs as per Schedule 1 at page 8 of the paper book. In its reply, filed on 25.04.2011, the assessee once again made it clear that additional income is being offered for A.Y 2011-12 and this income was earned as a result of various business transactions, which were not accounted for in the books of account. This reply was filed before the DIT [INV], Panipat and submissions were reiterated before the ACIT, Central Circle, Karnal on 13.02.2013. Considering these facts on record, we are of the considered view that the assessee has fulfilled all the conditions laid down in section 271AAA of the Act. Therefore, no interference is called for. - Decided against revenue
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2020 (4) TMI 18
Unexplained cash deposits - At the time of hearing, the assessee furnished a certificate obtained from Kanataka Bank as additional evidence to show that cash deposits made into the savings bank account of the assessee was out of withdrawals made from the current account of the assessee - HELD THAT:- Since the assessee has filed additional evidence, we are of the view that this issue requires fresh examination at the end of the AO. The claim of the assessee that deposits made consisted of business receipts and withdrawals made earlier and this claim also requires verification. Accordingly we set aside the order passed by ld CIT- A on this issue and restore the same to the file of the AO for examining it afresh. Addition of sundry creditors - assessee did not furnish confirmation letters and also he did not produce the creditors before the AO - HELD THAT:- We noticed from the paper book that the assessee has furnished confirmation letters claimed to have been produced before ld CIT(A). Those confirmation letters are addressed to Ld CIT(A) only. However the ld CIT(A) has observed that the assessee has not furnished the confirmation letters which is contradictory to copies of confirmation letters available on record. In any case the confirmation letters have not been furnished before the AO and hence there was no occasion for the AO to examine this letters. This issue also requires fresh examination at the end of the AO. Accordingly we set aside the order passed by ld CIT(A) on this issue and restore the same to the file of AO for examining it afresh by duly considering the confirmation letters filed by the assessee. While examining this issue, the AO should also keep in mind that the assessee has not maintained books of accounts, income has been declared by the assessee on estimated basis and the Statement of Affairs have been prepared on estimated basis only. Disallowance of deduction claimed u/s 80C - HELD THAT:- Assessee did not furnish any evidence to support the claim and hence we have no other option but to confirm the order passed by the ld CIT(A) on this issue.
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2020 (4) TMI 17
Exemption u/s 11 - application for registration u/s.12AA rejected - As per CIT(Exemption) assessee trust had generated huge surplus in all years and no details were furnished with respect to the fact that the surplus generated was ploughed back to the beneficiaries or utilized for the charitable purposes - entire decision of the Ld. CIT(Exemption) is based on survey report - HELD THAT:- Nowhere in the order of the Ld. CIT(Exemption), it comes out that the assessee was given opportunity to counter the survey report or to make any submission in respect thereof before the Ld. CIT(Exemption). That further, opportunity was also not possible since the very next day i.e. on 30.05.2019, the Ld. CIT(Exemption) has passed his order rejecting the application of the assessee trust. CIT(Exemption) has not come out with a reasoned order and his findings as per the relevant documentary evidences submitted are missing wherein he has only relied on the survey report and even did not provide the assessee any opportunity to make submissions regarding the said survey report. We take guidance from the judgment of Shri Anjaneya Medical Trust Vs. CIT [2016 (3) TMI 30 - KERALA HIGH COURT] and considering the totality of facts and circumstances, in the interest of justice, we set aside the order of the Ld. CIT(Exemptions) and restore the matter back to his file to adjudicate the issue in accordance with law and as per the principles laid down in the findings of the Hon ble High Court decision (supra.) after providing reasonable opportunity of hearing to the assessee trust. - Appeal of the assessee trust is allowed for statistical purposes.
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2020 (4) TMI 16
Penalty u/s 271C - delay in deposit of the TDS in the Government account - HELD THAT:- Penalty under section 271C of the Act can only be levied where the assessee fails to deduct the whole or any part of the tax as required by or under the provisions of Chapter XVII-B, or pay the whole or any part of the tax as required by or under (i) sub-section (2) of section 115- O, or (ii) the second proviso to section 194B. In Coca Cola Beverage P. Ltd. vs. CIT [ 2007 (8) TMI 12 - SUPREME COURT ] and in Jagran Prakashan Ltd. v. Deputy Commissioner of Income-tax (TDS) [ 2012 (5) TMI 488 - ALLAHABAD HIGH COURT ] and also various orders of the Tribunal, it has been held that where TDS was paid by the assessee or the required tax was paid by the deductee, the assessee should not be held to be in default. Only interest on delayed payment under section 201(1A) of the Act can be charged. In the light of these decisions, where the assessee has made payment of TDS though late, he cannot be held to be in default and so, there is no question of levy of penalty under section 271C of the Act - We allow the appeal of the assessee and cancel the penalty levied under section 271C - Decided in favour of assessee.
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2020 (4) TMI 15
Addition on account of capital contributed by one of the partner u/s 69 - A.O. recorded the statement of Shri Jagdish Chander u/s 131 observed that Shri Jagdish Chander categorically denied having given any loan to Shri Manoj Kumar and that the assessee had not been able to controvert the statement given by Shri Jagdish Chander - HELD THAT:- In the present case it is an admitted fact that the Partner of the assessee firm made the contribution towards his capital account and explained the source for the same. As relying on METACHEM INDUSTRIES [ 1999 (9) TMI 21 - MADHYA PRADESH HIGH COURT], JAISWAL MOTOR FINANCE [ 1983 (2) TMI 47 - ALLAHABAD HIGH COURT] , METAL METALS OF INDIA [ 2006 (11) TMI 630 - HIGH COURT OF PUNJAB HARYANA] and METAL METALS OF INDIA [ 2006 (11) TMI 630 - HIGH COURT OF PUNJAB HARYANA] when the Partner of the assessee firm accepted that he deposited the amount in the assessee firm as a share of his capital contribution and also explained the source of the deposits then the addition made in the hands of the assessee firm was not justified and if at all the A.O. was not satisfied from the explanation / source of the Partner, then the additions could have been made in the individual hands of the Partner if it was permissible under section 69 of the Act. In that view of the matter the addition made by the A.O. and sustained by the Ld. CIT(A) is deleted. - Decided in favour of assessee.
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2020 (4) TMI 14
Eligibility of deduction u/s.10A - CIT(A) allowed the alternate claim u/s.10B - In the earlier proceedings, earlier CIT(A) specifically held that, deduction u/s 10B is not available - HELD THAT:- AO had categorically held that the assessee is not eligible to claim deduction u/s.10A of the Act as the assessee had not complied with the conditions stipulated such as filing form No.56FF. However, the ld. CIT(A) placing reliance on the decision of Heartland K.G. Information Ltd [ 2013 (9) TMI 375 - MADRAS HIGH COURT ] had directed the Assessing Officer to allow the claim of deduction u/s.10B of the Act. The issue of allowability of claim u/s.10B of the Act is neither alive nor it is permissible, as it amounts to overruling the decision of the Tribunal, by CIT(Appeals). Thus, the ld. CIT(A) had seriously fell in error in directing the Assessing Officer to allow the claim for deduction of provision u/s.10B of the Act. Further, it is an admitted position that before making addition on account of Arm s Length Price adjustment u/s.92CA(3), there was be no profit available which can be claimed as deduction u/s.10B or 10A of the Act. The provisions of Sub Section (4) of Section 92CA of the Act specifically provides that addition made u/s.92CA(3) of the Act is not eligible profits for deduction neither u/s.10A nor u/s.10B of the Act. The ld. CIT(A) in the flagrant ignorance of the plain provisions of the Act allowed the claim for deduction u/s.10B of the Act. Therefore, we reverse the order of the ld. CIT(A) and allow the appeal filed by the Revenue.
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2020 (4) TMI 11
Assessment u/s 153A - necessity of any incriminating material for initiating the proceedings u/s 153 - where no assessment proceedings for the year under consideration are pending, in that eventuality, in the absence of any incriminating material found during the course of search and seizure proceedings, whether addition can be made qua unabated assessment for the said year - HELD THAT:- In this case Income Tax Return filed by the assessee for the relevant assessment year: 2011-12 has already been processed and completed on dated 17.04.2011 by the Revenue Department u/s 143(1) of the Act and it is not the case of the Revenue Department that the assessment proceedings were still alive as on the date of search operation, therefore the case cited by the Ld. CIT DR is distinguishable on facts. Even from the orders passed by the authorities below there is nothing to suggest as to what incriminating material has been found on dated 11.02.2016 during the search u/s 132(1) of the Act from the assessee possession or his premises, on the basis of which the additions have been made. As the issue involved in the instant case is squarely covered by the decisions of Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] and Pr. CIT vs., Meeta Gut Gutia [ 2017 (5) TMI 1224 - DELHI HIGH COURT] - Decided in favour of assessee.
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2020 (4) TMI 13
Revision u/s 263 - Deduction u/s 36(1)(viii) - provision for restructuring of assets written back and towards provision for bad and doubtful debts written back - HELD THAT:- We are of the considered view that insofar as, the issue of allowances of deduction of ₹ 22.49 crores towards provision for restructuring of assets written back and ₹ 1.44 crores towards provision for bad and doubtful debts written back, the assessment order passed by the AO cannot be termed as erroneous, insofar as it is prejudicial to the interest of the revenue and hence, we set aside the findings of the Ld.PCIT and restored the findings of the Ld.AO. PCIT has questioned deduction allowed u/s 36(1)(viii) being profits from long term finance given by the assesee, on the ground that although, AO has examined the issue and recomputed eligible profit and gains and income from operations, but failed to reduce interest received on income tax refund of ₹ 22.95 crores from profits and gains of business before allowing deduction u/s 36(1)(viii) and consequently, allowed excess deduction of ₹ 1.40 crores. We find that although, the Ld. AO has examined the issue at the time of assessment proceedings and recomputed eligible deduction u/s. 36(1)(viii), but failed to exclude interest received on income tax refund from profits and gains of business before allowing deduction u/s. 36(1)(viii). We further noted that the assessee has accepted the fact that the said interest on income tax refund needs to be excluded from profits and gains of the business. Further contended that once, it has been excluded from profits and gains of the business, then the same needs to be excluded from revenue from operations in order to compute eligible deduction u/s.36(1)(viii) and accordingly, filed a revised computation of eligible deduction u/s.36(1)(viii), which is part of paper book page 107 filed by the assessee. We are of the considered view that insofar as, this issue is concerned the assessment order passed by the Ld. AO is erroneous, insofar as it is prejudicial to the interest of the revenue. However, as regards excess deduction computed by the ld. PCIT and excess deductions worked out by the assessee, there is a difference, which needs to be thoroughly examined by the Ld.AO in light of facts gathered by the Ld.PCIT and revised computation filed by the assessee in revisional proceedings. Assessment order passed by the ld. AO u/s 143(3), insofar as, this issue is concerned is erroneous, insofar as prejudicial to the interest of the revenue. Assessment order passed by the AO u/s 143(3) is neither erroneous, nor prejudicial to the interest of the revenue, insofar as, the first issue of allowances of deduction towards provision for restructuring of assets written back and towards provision for bad and doubtful debts written back. Insofar as, the second issue of excess allowances of deduction u/s.36 (1)(vii), the assessment order passed by the AO is erroneous, insofar as it is prejudicial to the interest of the revenue and hence, we modified the findings of the Ld.PCIT. While considering the second issue of excess deduction allowed u/s.36 (1)(viii), we direct the AO to exclude interest on income tax refund from profits and gains of business and also from total revenue from operations for the purpose of determination of allowable deduction u/s.36(1)(viii). Appeal filed by the assessee treated as partly allowed.
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2020 (4) TMI 12
Benefit of deduction claimed u/s. 54 and 54F - sale of flat and shop - as assessee did not furnish the purchase agreement of the flat and accordingly, the AO disallowed the deductions claimed u/s. 54 - HELD THAT:- Assessee is allowed the benefit of deduction claimed u/s. 54 and 54F of the Act on the basis of the letter of allotment as the assessee has paid substantial amount of consideration to the builder and hence, the addition made by the AO is hereby deleted - See Hill JB Wadia [1993 (3) TMI 7 - BOMBAY HIGH COURT] Addition u/s. 68 - interest in bank statement and pass book - absence of the books of accounts maintained - HELD THAT:- As in case of CIT Vs. Bhaichand H. Gandhi [1982 (2) TMI 28 - BOMBAY HIGH COURT ] for the proposition that interest in bank statement and pass book cannot qualify that addition u/s. 68 of the Act. CIT(A) also noted that the assessee has filed unsigned confirmation and also no compliance was made regarding notice u/s. 133(6) of the Act thereafter finally learned CIT(A) held tha AO in this case has not observed or place on record as regards whether the assessee was mandatorily required to maintain books of accounts or not. Having said that and relying on the jurisdictional decision of the High Court, addition made by the AO in the absence of the books of accounts maintained by the assessee be deleted. - Decided in favour of assessee.
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Customs
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2020 (4) TMI 10
Maintainability of appeal - validity of Compounding Order - demand of redemption fine or not - Whether in the facts and circumstances of the present case, an appeal under Section 129A(3) was maintainable before the CESTAT, challenging a Compounding Order passed by the Compounding Authority? - HELD THAT:- The issue is answered in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS GIRISH B. MISHRA [ 2013 (6) TMI 179 - GUJARAT HIGH COURT ] where it was held that Appeal against any such order would lie before the Tribunal in terms of Clause (a) of sub-section (1) of Section 35B of the Central Excise Act - We may clarify that although the decision of the Coordinate Bench in the case of Girish B. Mishra is in connection with the provisions of the Central Excise Act, yet the provisions of customs are analogous to the provisions of the Act, 1944. The case is squarely applicable to the present facts. Whether in the facts and circumstances of the present case, the CESTAT was right in interpreting the Order in Original dated 31.03.2005 and coming to a conclusion that there was no demand of redemption fine? - HELD THAT:- The Tribunal in so many words has observed that there was no clear proposal in the show-cause notice with regard to imposition of the redemption fine and also in the order-in-original. The tribunal has observed that there is no crystallized demand of redemption fine against each of the noticee. None of the questions of law as proposed by the Revenue could be termed as substantial questions of law - appeal dismissed.
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2020 (4) TMI 1
Search of bonded warehouse - Import of foreign brand liquor and beer without pass-permit for the stock - offence punishable under Sections 66(1)(b), 65(a)(e) and 81 of the Gujarat Prohibition Act, 1949 - HELD THAT:- Indisputably, the bonded warehouse was under the control and supervision of the Customs Department and the Central Government only and the police has nothing to do with it. This is a classic case wherein the police played a role by making egoistic approach to usurp the powers of Customs Department. The police was not authorized to carry out any search seizure procedure except requesting for the same to the Department or to the Central Government. The police at its own could not have made any venture of searching the bonded warehouse belonging to the Customs Department. There appears no iota of evidence or material to prosecute the present applicants in connection with the impugned F. I. R. - applications allowed.
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2020 (4) TMI 9
Claim of Refund and Interest on Refund - Unjust enrichment - Though the refund was sanctioned, the same was credited to the Consumer Welfare Fund on the ground of unjust enrichment. The sole basis appears to have been that the amount claimed as refund was not charged to the profit and loss account but retained in 'receivables' account. - HELD THAT:- The CESTAT (while remanding the case back) has, in conclusion, noted the submission of the petitioner that the entire sales of Palmolein oil had been completed in August 2001 itself, and the differential duty remitted, under protest, in September, 2001. It is in this context that the CESTAT states that documents in support of the aforesaid submission be examined by the Authority to convince himself that the incidence of duty has not been passed on to the consumer. Regrettably, the Assessing Authority has completely lost sight of this exercise and has proceeded merely on the basis of accounting entries, the methodology of accounting followed by the petitioner and as to whether the duty had been reflected in the 'receivables' or 'profit and loss' accounts. Admittedly, the sales had been completed in August 2001 whereas the differential duty was remitted only in September 2001, it appears clear to me as seen from the records of the Assessing Officer and his observations in the impugned order, that the incidence of duty has not been passed on in this case. There is thus no necessity for remand as this exercise and the result thereof is quite apparent from the existing records and the observations of the officer himself - decided in favor of petitioner. Interest on the refund claim - Section 27A of Customs Act - case of Revenue is that the provisions of Section 27A require interest to be paid on duty that has been ordered to be refunded under Section 27(2) but not refunded within three(3) months from date of receipt of application under Section 27(1) of the Act - HELD THAT:- The refund claim in this case was filed on 03.02.2016, the Application was returned as defective and the application re-presented on 14.03.2016. These dates are not in dispute. Thus, in the light of the discussion as above and the clear stipulation in Section 27B, interest at the rate of 6% shall be paid by the respondents on an amount of ₹ 1,09,11,275/- computed from 14.06.2016 till date of repayment within a period of four (4) weeks from date of receipt of this order. Petition allowed.
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Insolvency & Bankruptcy
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2020 (4) TMI 8
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT:- There is a disputed question the of fact relating to payment of debts and the purchase order was issued by joint venture dated July 6, 2013 relied on by the appellant was issued by the joint venture, i. e., Prasad-Shreehari (joint venture) which is not a party to this appeal or was not impleaded as the co-applicant in the application filed under section 9 of the I and B Code , we are not inclined to grant any relief to the appellant. Appeal dismissed.
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Service Tax
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2020 (4) TMI 7
Benefit of VCES-Voluntary Compliance encouragement Scheme, 2013 - denial of benefit on the ground of clerical error in filling form VCES-1 - HELD THAT:- The benefit of VCES 2013, have been denied by revenue, only for the simple clerical error in filling form VCES-1. The appellant have admittedly deposited the declared amount of tax dues, and they cannot be asked to deposit more tax, which will be against the provisions of service tax law, as well as Article 265 of the Constitution of India - the appellant is entitled to the benefit of VCES 2013. Appeal allowed - decided in favor of appellant.
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2020 (4) TMI 6
CENVAT credit - input services - Container Cleaning - Washing of Unloaded Containers - pest control services - GTA services - Credit availed on documents not in the name of the Appellant - Payment of Service Tax on Bank Charges - Input Service used after clearing final products - Port/logistics Services and Porter Coolie charges. Container Cleaning - Washing of Unloaded Containers - HELD THAT:- These costs are included in landed cost of imported material and accordingly expenses are under the purview of input service - Credit allowed. Pest control services - HELD THAT:- The said service is required to save the raw materials and finished goods from various pests and also to protect the workers health - Credit allowed. GTA Services - HELD THAT:- hen there is no dispute regarding the payment of the Service Tax and when there is no loss of revenue to the exchequer, the benefit of Cenvat credit should not be denied to the appellant for procedural infractions - credit allowed. Credit availed on documents not in the name of the Appellant - HELD THAT:- The issue is not contested. Payment of Service Tax on Bank Charges - HELD THAT:- Since the assessee have availed credit on the basis of self-prepared documents on the debit note, the credit on this account cannot be allowed and the same is upheld - credit denied. Input Service used after clearing final products - HELD THAT:- Issue not contested. Port/logistics Services and Porter Coolie charges - HELD THAT:- The Porter and Coolie charges have been incurred regarding the transportation of the input materials. Similar is the case of Port/logistic services - credit allowed. Appeal allowed in part.
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Central Excise
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2020 (4) TMI 5
Prohibition on institution of suits or continuation of pending suits or proceedings against the Corporate Debtor - HELD THAT:- Ld. NCLT has specifically prohibited for institution of fresh suits or continuation of pending suits or proceedings in the judicial forum including the Tribunal. In view of the fact that the petition filed by the petitioner, the appellants herein, was admitted by the Ld. NCLT, we are of the considered opinion that the present appeals filed by the appellants cannot be proceeded further till final decision on the issue is rendered by Ld. NCLT - matter adjourned sine die.
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CST, VAT & Sales Tax
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2020 (4) TMI 4
Maintainability of petition - Input Tax Credit availed in respect of mismatch - appropriate forum - HELD THAT:- This Court while exercising its jurisdiction under Article 226 of the Constitution of India, is not sitting as an Appellate Court to examine the merits and demerits of claim of the petitioner. These are disputed questions of facts to determine the rate of Input Tax Credit. Therefore, the present Writ Petitions lack merits. The cases are remitted back to the 1st respondent to pass fresh orders in accordance with law - petition allowed by way of remand.
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2020 (4) TMI 3
Benefit under Samadhan Scheme - denial of benefit on the ground that the Assessee has already paid the tax before making an application under the said Scheme - HELD THAT:- There is no error in the impugned order passed by the Deputy Commissioner and in the absence of the arrears of tax, penalty, interest bearing free as the tax already stood paid, the Assessee by applying under the said Scheme cannot take advantage of reduction of the tax liability to the extent of 50%. The learned Deputy Commissioner appears to be justified in rejecting such applications filed by the Assessee - Petition dismissed.
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Indian Laws
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2020 (4) TMI 2
Bail application - Smuggling - Ketamine - contraband item - Section 67 of the NDPS Act, 1985 - HELD THAT:- In as much as, the recovery of Ketamine is of a commercial quantity allegedly attempted to be exported by the petitioner in association of the co-accused persons with also commercial quantity of Ketamine dissolved in solutions of rose water and liquid glucose having been allegedly recovered from the premises i.e. godown at Khasra No.755/2/1, Village Mundka, New Delhi which was testified by the landlord to have been rented out to the petitioner herein, presently, it cannot be concluded that the petitioner is not guilty of the commission of any offence punishable under the NDPS Act, 1985 in relation to which the charges had been framed against him vide order dated 05.11.2014 with additional charges having also been framed against the petitioner subsequently. There is no merit in the prayer made by the applicant vide the present application seeking release on bail despite the factum that the petitioner is in custody since 20.07.2012 - Application dismissed.
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