TMI Tax Updates - e-Newsletter
April 20, 2019

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Securities / SEBI Insolvency & Bankruptcy FEMA PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

TMI SMS

• Expenditure on construction of building in a leasehold premises - cannot be considered as repair u/s 30(a)(i) - held as Capital in nature

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• Addition u/s 43B & 2(24)(x) confirmed since employees contribution to PF/ ESIC was not deposited before due date in terms of statutory rules

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• Classification of HP Dream Screen All in One PC - Heading 847130 do not require presence of physical keyboard onscreen keyboard is enough

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Highlights / Catch Notes

• Income Tax:

  Best Judgement Assessment u/s 144 - if the conditions precedent for the assumption of jurisdiction under Section 144 of the Act are not present, the order of assessment u/s. 144 must be struck down as being without jurisdiction.
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• Income Tax:

  Addition u/s 43B r.w.s 2(24)(x) - employees contribution towards PF and ESIC - Since the employees’ contribution toward PF was not deposited before due date in terms of statutory rules, additions confirmed.
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• Income Tax:

  Addition on the basis of statements u/s 132(4) - presumption u/s 292C - retraction should be supported by a strong evidence stating that the earlier statement was recorded under duress and coercion - a bald assertion to this effect at much belated stage cannot be accepted - statement recorded in presence of independent witnesses has overriding effect over the subsequent retraction - addition confirmed
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• Income Tax:

  Stay of demand - demand arise due to non set of past losses - losses exhausted due to addition in earlier year and appeal against those orders are pending before tribunal in which stay was granted by ITAT - deposit reduced to 5% as against 20% ordered by Pr.CIT
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• Income Tax:

  Addition u/s.145A - though the assessee is following the exclusive method of accounting which is contrary to the provisions of section 145A but the effect of the same has been duly considered by the assessee in its memorandum profit and loss account which was offered to tax - no addition only on closing stock u/s 145A without giving effect to the purchases
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• Income Tax:

  Adhoc disallowance of expenses - AO could ventured into estimation only after rejecting the books of accounts of the assessee u/s 145(3) by best judgment assessment u/s 144 - for deficiency in the vouchers disallowance should be item-wise - addition deleted
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• Income Tax:

  Addition u/s 68 - unsecured cash credit - compliance of the summon by share applicant company - The companies have shown small amount of income in their hand, which is not sufficient to discharge their creditworthiness - not justified the high amount of the share premium taken - addition sustained
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• Income Tax:

  Penalty u/s 271AAB - an advance represents an outflow of funds and what has been envisaged by the legislature while defining “undisclosed income” in section 271AAB is an inflow of funds which has not been recorded in the books of accounts or other documents on or before the date of search - not falling under explanation to section 271AAB - no penalty leviable
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• Income Tax:

  Sale of shares as Long Term Capital Gain - Period of holding more than 12 months - assessee showing investment in shares in his personal Balance sheet and purchased out of his own surplus fund - accepted the sale of shares giving rise to capital gain
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• Income Tax:

  Validity of notice u/s 148 - issue examined while passing the order of regular assessment - reasons recorded in support of the impugned notice was merely on the basis of borrowed satisfaction of the audit party - impugned notice bad
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• Income Tax:

  Expenditure on construction of building in a leasehold premises - in the first Assessment Year Expenditure cannot be considered as repair u/s 30(a)(i) as the renovations made are Capital in nature - since expenditure are Capital in nature same will come within the mischief of Explanation 1 to Section 32(1) - deduction as revenue expenses not allowed
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• Income Tax:

  Reassessment u/s. 147 - retention money receipts form part of gross receipt but excluded in computation - no failure on the part of the assessee to fully and truly disclose all material facts relevant for assessment - reassessment annulled
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• Customs:

  Classification dispute - misdeclaration of goods or not - The actual nature of the imported goods for the purpose of correctly classifying the goods become evident only after examination of the goods and obtaining expert opinion - the charge of misdeclaration cannot be fastened upon the appellant.
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• Customs:

  Revocation of CHA License - forfeiture of security deposit - There is a clear evidence on part of the appellant as CHA to fail to discharge the duty casted upon under the provisions of CHALR/CBLR - Revocation sustained.
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• Customs:

  Classification of imported goods - HP Dream Screen All in One 400 PC - The terms of heading 847130 do not require the presence of physical keyboard but only require a keyboard as input device. Even the presence of onscreen keyboard is enough to fulfill the requirements of said heading.
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• Customs:

  Rejection of declared value on Bill of Entry is a serious affair and the same could have been rejected on the basis of cogent examination of evidences and justifiable reasons.
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• Customs:

  Valuation of imported goods - Stainless Steel Seamless Pipes - Can such defective pipes which do not confirm to the prescribed standard be used for the same purpose for which certified prime goods of that standard are used - has further gone on to value the said goods as prime quality goods of the same standard to which the test report of Deputy Chief Chemist CRCL is itself contrary. - The approach of revenue is definitely erroneous
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• IBC:

  Initiation of Corporate Insolvency Resolution Process - default in making repayment - the Operational Creditor becomes entitled to retention money of 25% or 20% only if it completes the terms of purchase order, especially erection, commissioning and trial run - since contract was not completed, amount does not become due, then there is no question of default - petition dismissed
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• SEBI:

  Compounding in proceedings - the alleged violation committed by petitioner has not resulted in any loss to the investors, but this by itself would not justify discharge of accused at the fag end of trial.
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• Service Tax:

  Penalty u/s 78 of FA - Non-payment of service tax - the issue is a bonafide dispute of legal interpretation of the newly introduced provision, no malafide can be attributed to the appellant so as to call for imposition of any penalty.
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• Central Excise:

  Cash refund claim of accumulated CENVAT Credit - though there is no specific relevant date is prescribed in the notification, the relevant date must be the date on which the final products are cleared for export.
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• Central Excise:

  Process amounting to manufacture or not - soaps and detergent bars/cakes, detergent powder, shampoo, tooth paste, etc. in damaged condition, are collected and brought back to the godown and de-packed/de-wrapped or decanted and cut into pieces - These activities cannot amount to manufacture.
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• Central Excise:

  CENVAT Credit - fake invoices - a case can not be established on the basis of few confessional statements without other corroborative evidences like shortage of raw materials, cash transactions, alternative procurement of raw materials.
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• VAT:

  Levy of Interest - bonafide dispute on levy of purchase of tax - from very beginning the revisionist has disputed the liability of payment of tax and that the revisionist never admitted the liability to pay any tax on the sale of 'unriped Imali' - liability of interest on the turn over of 'unriped Imli' is not justified.
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• VAT:

  Separate registration for different units - Commissioner rightly denied the request to accord ex-post facto permission to hold both separate VAT & Composition registrations.
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Articles

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Notifications

• Customs

• 32/2019 - dated 18-4-2019 - Cus (NT)
  Exchange Rates Notification No.32/2019-Custom(NT) dated 18.04.2019 .

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• GST - States

• F.12(56)FD/Tax/2017-pt-IV-182 - dated 1-4-2019 - Rajasthan SGST
  Corrigendum - Notification No. F. 12(56)FD/Tax/2017-pt-IV-177, dated the 29th March, 2019

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• F.12(56)FD/Tax/2017-pt-IV-180 - dated 1-4-2019 - Rajasthan SGST
  Corrigendum - Notification No. F. 12(56)FD/Tax/2017-pt-IV-173, dated the 29th March, 2019

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• F.12(56)FD/Tax/2017-pt-IV-179 - dated 1-4-2019 - Rajasthan SGST
  Corrigendum – Notification No. F. 12(56)FD/Tax/2017-pt-IV-172, dated the 29th March, 2019

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• F.12(56)FD/Tax/2017-pt-IV-178 - dated 1-4-2019 - Rajasthan SGST
  Corrigendum - Notification No. F. 12(5 6)FD/Tax/2017-pt-IV -169, dated the 29th March, 2019

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• F.12(56)FD/Tax/2017-pt-181 - dated 1-4-2019 - Rajasthan SGST
  Corrigendum – Notification No. F.12(56)FD/Tax/2017 pt-IV-174, dated the 29th March, 2019

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• F.12(56)FD/Tax/2017-pt-IV-173 - dated 29-3-2019 - Rajasthan SGST
  Notify certain services to be taxed under RCM under Section 9(4) of the RGST Act, 2017

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• F.12(56)FD/Tax/2017-pt-IV-170 - dated 29-3-2019 - Rajasthan SGST
  Seeks to amend Notification No. F.12(56)FD/Tax/2017-Pt-I-50, dated the 29th June, 2017

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• F. 12(56)FD/Tax/2017-pt-IV-171 - dated 29-3-2019 - Rajasthan SGST
  Amendment in Notification No. F.12(56)FD/Tax/2017-Pt-I-51, dated the 29th June, 2017

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• F. 12(56)FD/Tax/2017-pt-IV -169 - dated 29-3-2019 - Rajasthan SGST
  Amendment in Notification No. F.12(56)FD/Tax/2017-Pt-I-49, dated the 29th June, 2017

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• Order No.02/2019-State Tax /Sikkim - dated 1-2-2019 - Sikkim SGST
  Sikkim Goods and Services Tax (Second Removal of Difficulties) Order, 2019

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• Order 01/2019-State Tax/Sikkim - dated 1-2-2019 - Sikkim SGST
  Sikkim Goods and Services Tax (Removal of Difficulties) Order, 2019

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• Rc.Q4/9879/2019 - 3/2019-TNGST/CST - dated 2-4-2019 - Tamil Nadu SGST
  GST - Tamil Nadu Goods and Services Tax Act, 2017 - e-way bills - Instructions - Regarding

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• GO (Ms.)No.42 - dated 29-3-2019 - Tamil Nadu SGST
  Goods and Services Tax - Tamil Nadu Goods and Services Tax Act, 2017 - Construction services - Rate of state tax on services - Amendments - Notification - Issued.

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• KA.NI-2-244/XI-9(42)/17-2019 - dated 5-3-2019 - Uttar Pradesh SGST
  Uttar Pradesh Goods and Services Tax (Fifth Removal of Difficulties) Order, 2019

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• KA.NI-2-21/XI-9(42)/17 - dated 18-2-2019 - Uttar Pradesh SGST
  Uttar Pradesh Goods and Services Tax (Twenty Sixth Amendment) Rules, 2019

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Case Laws:

• GST

• 2019 (4) TMI 1130
  Profiteering Activity - Benefit of reduction in the rate of tax - HELD THAT:- Issue notice returnable on 19th February, 2019. Deposit of an amount to consumer welfare fund - Held that:- In case Hindustan Unilever has already deposited the amount, no coercive steps for recovery would be taken. However, if Hindustan Unilever has not deposited ₹ 5,55,126/-, the writ petitioner would deposit the same amount within a period of four weeks from today.

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• 2019 (4) TMI 1129
  Extension of time period for filing of GST Tran- 1 - transitional credit - transition to GST Regime - HELD THAT:- The respondents are directed to reopen the portal within two weeks from today. In the event they do not do so, they will entertain the GST TRAN-1 of the petitioner manually and pass orders on it after due verification of the credits as claimed by the petitioner. List this matter on 20.05.2019.

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• Income Tax

• 2019 (4) TMI 1138
  Constitutional validity of the third proviso to Section 254(2A) challenged - discrimination, based on an impermissible or invalid classification - grant extension of stay beyond 365 days - HELD THAT:- Special Leave Petition is dismissed leaving the question of law open.

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• 2019 (4) TMI 1137
  Addition u/s 14A - Sufficient interest free funds for making investment in assets earning tax free income - HELD THAT:- Issue notice only on the question of disallowance under Section 14A.

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• 2019 (4) TMI 1136
  Exemption u/s 80G - petitioner society is liable to pay only 35% of the demanded amount for sanction of the map - HELD THAT:- We find from the perusal of the record that the petitioners, who are a running charitable institution/ dental college, have already obtained certificate of exemption under section 80G. The Government order dated 2.4.2019 clarifies the earlier Government Order dated 18.7.2016 and states that the tax benefit is only admissible to the charitable societies who have obtained certificate under section 80G of the Act. The orders impugned in the present writ petition are prior to the Government Order dated 2.4.2019. We, therefore, set aside the impugned orders dated 26.2.2019 (Annexure 18 to the writ petition and 23.3.2019 (Annexure 19 to the writ petition) and remit the matter to the Vice Chairman, Ghaziabad Development Authority, Ghaziabad, respondent no.4 to re-examine the matter in the light of the Government Orders dated 18.7.2016 and 2.4.2019 expeditiously, preferably within a period of three months from the date of receipt of a certified copy of this order.

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• 2019 (4) TMI 1135
  Grant registration to assessee u/s 12AA - registration was declined after examining that the income derived by the trust is not shown to have been spent for charitable purposes - objects of the applicant/trust and the genuineness of its activities - HELD THAT:- Issue as to whether while considering an application for grant of registration under Section 12AA of the Income Tax Act, 1961 the CIT (E) has to consider the objects of the applicant/trust and the genuineness of its activities and not the application of income of the applicant/trust, is no more res integra in view of the decision by co-ordinate Bench of this Court in CIT Vs. M/s DPR Charitable Trust, Satna [2011 (8) TMI 1136 - MADHYA PRADESH HIGH COURT]. The language employed by the Legislature in Section 12AA only requires that activities of the trust or institution must be genuine which should be in consonance with the object of the trust. At this stage, the Commissioner is not required to examine the application of income. All that he may examine is whether the application is made in accordance with the requirements of Section 12A read with rule 17A and whether Form No.10A has been properly filled up. He has also to see whether the objects of the trust are charitable or not. In the light of the provision contained under Section 12A and Section 12AA of IT Act, we are not persuaded to take a different view, as would give rise to any substantial question of law.

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• 2019 (4) TMI 1134
  Recovery proceedings - need for condition for granting interim stay - HELD THAT:- The assessee/petitioner is a beneficiary of certain orders of the Tribunal for Assessment Years 2004-2005 and 2011-2012. The copies of these orders are at Exhibits-A1 to A4. Thereafter, even the AO exercising his power, in assessment under the Income Tax Act, 1961 gave effect to the Tribunal's order reducing the entire demand. That was done on 30th March, 2016 vide Exhibits-B1 to B7. Then the statements under Section 200(3) of the Income Tax Act, 1961 were filed by the petitioner, copies of which are at Exhibits- C1 to C8. Still the petitioner was served with a demand notice and thereafter the petitioner preferred appeals and also applications for rectification. Fearing that there would be a coercive recovery, even application for stay has been filed. It is contended that the concerned authority rejected the petitioner's application without applying its mind. This writ petition was kept pending because on merits, an identical issue as raised in the instant petition was considered in a batch of appeals at the instance of the Revenue and in the case of the same assessee by a Division Bench of this Court comprising one of us (S.C.Dharmadhikari, J). On 26th February, 2019, this Court passed its order and the Revenue's Appeals have been dismissed. Now, let the petitioner make an application and invoke the guidelines also, which have been issued by the Central Board of Direct Taxes, New Delhi dated 29th February, 2016 guiding the Commissioner of Income Tax (Appeals). It is not necessary that the Income Tax Appellate Authority will insist on a deposit of certain percentage of the amount and make that as a condition for granting interim stay. In the event the petitioner approaches him and now with the reliance on the Division Bench judgment referred by us hereinabove, we have no doubt in our mind that the Income Tax Appellate Authority and in this case, the Commissioner of Income Tax would definitely apply his mind and consider the changed circumstances. He will not be influenced by the earlier actions and orders and pass a fresh order and communicate the same to the petitioner. Let the petitioner seek intervention once again and raise all pleas and also rely upon the Division Bench judgment. In the event, such an application is made, the Commissioner of Income Tax to dispose of it in the light of the Division Bench judgment and in accordance with law within a period of two weeks from the date of its receipt.

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• 2019 (4) TMI 1133
  Penalty u/s 271(1)(c) - difference in estimation of the value of the land as on 1.4.1981 for capital gain computation - quantum of income determined is certainly not beyond the shadow of doubts - tribunal deleted the addition - HELD THAT:- Assessing Officer having imposed the penalty, the CIT(A) and the Tribunal both concurrently held that mere difference in estimation of the value of the land as on 1.4.1981 would not give rise to penalty. The Tribunal recorded that there was neither any concealment of income or particulars thereof. The CIT(A) also highlighted the point of diversion between two sides why there was wide gap between two valuations; one presented by the assessee backed by the Government approved valuer and another obtained by the Assessing Officer during the course of assessment. No error in view of the Tribunal. No question of law arises.

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• 2019 (4) TMI 1132
  Notice under section 179 - Liability of directors of private company in liquidation - as submitted the company in question is a public limited company and not a private limited company and hence, it was not permissible to invoke section 179 - HELD THAT:- As submitted that the impugned order passed under section 179 of the Act goes beyond the showcause notice inasmuch as the showcause notice is issued in respect of assessment years 2008-09 and 2011-12 to the petitioner No.1Smt. Anandhi P. Naig and in respect of assessment year 2008-09 only to the petitioner No.2 Shri Pandoo P. Naig whereas, the impugned order has been passed in respect of several other assessment years. It was submitted that except for petitioners No.1 2, the rest of the petitioners have not being served with any notice under section 179 of the Act and therefore, the impugned order is in breach of the principles of natural justice as well as contrary to the statutory provisions. Having regard to the submissions advanced by the learned counsel for the petitioners, issue Notice, returnable on 12.02.2019. By way of adinterim relief, the impugned order dated 31.12.2018 passed under section 179 of the Act as well as the consequential demand notice under section 156 of the Act are hereby stayed.

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• 2019 (4) TMI 1131
  Disallowance u/s 43B - deposit of contribution of PF and ESIC - HELD THAT:- Interpretation of the Proviso to Section 43B of the Income Tax Act,1961, which was omitted by the Finance Act,2003, with effect from 01.04.2004, was held by the Hon'ble Supreme Court to be applicable retrospectively from 01.04.1988, in the case of Commissioner of Income Tax, Kolkata-III v . Alom Extrusions Limited M/S. ALOM EXTRUSIONS LIMITED [ 2009 (11) TMI 27 - SUPREME COURT]. We allow the present Appeal of the Assessee, set aside the impugned order passed by the learned Tribunal and remand the matter back to the learned Tribunal for deciding the Appeal afresh in accordance with the law pronounced by the Hon'ble Supreme Court in the aforesaid case of Alom Extrusions Limited within a period of six months from today.

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• 2019 (4) TMI 1127
  Expenditure on construction of building in a leasehold premises - substantial expenditure towards renovation leading to enduring benefit - revenue or capital expenditure - Explanation 1 to Section 32(1) - current repair u/s 30 - HELD THAT:- We are of the considered view that the expenditure incurred by the Assessee in the present case are Capital in nature and come within the mischief of Explanation 1 to Section 32(1). The alternate submission advanced by Mr.M.P.Senthil Kumar that the repairs to the premises cannot be capitalised in view of Section 30(a)(i) is rejected since the renovations made are Capital in nature in the first Assessment Year and only further repairs may attract the provisions under Section 30(a)(i). In the present case, the Assesses had incurred substantial expenditure towards renovation leading to enduring benefit. They are not merely repairs. The Assessees had also incurred expenditures towards improvement and construction of the building. These cannot be termed as 'repairs'. Consequently, this alternate submission is rejected by us. The second alternate submission advanced by Mr.M.P.Senthil Kumar that the case should be remitted back to the Assessing Officer is also rejected since the fact have been addressed and settled by the Authorities below and it had been concurrently found that the expenditure were capital in nature. The issue of bifurcating the said expenses as capital and revenue would therefore not arise. - Decided in favour of the Revenue.

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• 2019 (4) TMI 1126
  Stay of demand - condition of directing the petitioner to deposit 20% of the tax demanded for the year 2015-2016 - HELD THAT:- No illegality in the exercise of discretion warranting judicial review in the present writ petition. The circumstances which are stated in the writ affidavit as well as before the 2nd respondent however persuade this Court to substitute 20% condition imposed by the 2nd respondent with 10% payable within 45 days from today. The petitioner enjoys the benefit of stay order subject to complying with this condition within the time stipulated by this Court. In default of complying with the condition without reference to the Court, it shall be presumed that the stay order is not in operation. Further the 2nd respondent considers and disposes of the appeal within four months from today.

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• 2019 (4) TMI 1125
  Stay of demand - demand arise due to non set of past losses - appeal of earlier year pending before tribunal in which stay was granted by ITAT - petitioner must deposit 20% of such amount within a short time - whether petitioner company is in financial hardship? - HELD THAT:- We also note that by virtue of the deposit made by the petitioner towards disputed taxes demand for the said assessment year 2009 10 to 2014 15 so far and which may be further made pursuant to the interim directions of the Tribunal, the petitioner would have discharged approximately 15% disputed tax and interest liability. We are informed that the petitioner company is in financial hardship. Considering totality of facts and circumstances of the case, we require the petitioner to deposit 5% of the disputed tax of the present year in two equal installments latest by 31st May 2019 and 30th June, 2019. Subject to this condition being fulfilled, there should be no further recovery of tax and interest from the petitioner till the disposal of the appeal by the Appellate Commissioner. Petition disposed of accordingly.

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• 2019 (4) TMI 1124
  Nature of expenses - lease premium amortised - revenue or capital expenditure - grant depreciation on the foregoing capital expenditure - HELD THAT:- Appeal admitted on question 1 and 2 Expenditure incurred towards increase in share capital by way of fee for merchant bankers, legal fees, stamp duty, registration charges, etc.- capital expenditure - HELD THAT:- This Court in case of Hindustan Lever Ltd. Vs. Commissioner of Income-Tax, reported in [ 2016 (11) TMI 969 - BOMBAY HIGH COURT] , after referring to and relying upon the decisions of Supreme Court in case of CIT Vs. Kodak India Ltd, [ 2001 (10) TMI 7 - SUPREME COURT] and Brooke Bond India Ltd. Vs. CIT, [ 1997 (2) TMI 11 - SUPREME COURT] held that the expenditure incurred for increase in the share capital is capital expenditure. This question is therefore not required to be entertained. Deduction of foregoing capital expenditure u/s 35D - HELD THAT:- Whether a banking company can be said to be an industrial undertaking is being considered by this Court in several Appeals. He drew our attention to a judgment of Kerala High Court in case of Dhanalaxmi Bank Ltd. Vs. Commissioner of Income-Tax [ 2018 (12) TMI 836 - KERALA HIGH COURT] , in which it was held that a banking company is also industrial undertaking and the expenditure incurred in relation to the share capital would be amortized u/s 35D.

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• 2019 (4) TMI 1123
  Validity of reassessment proceedings u/s 147 - borrowed satisfaction of the audit party - original assessment u/s 143(3) - whether the sale of an immovable property by the respondent assessee had resulted into short term or long term capital gain? - HELD THAT:- We find that, both the CIT(A), as well as, the Tribunal have held that the re-opening notice is without jurisdiction. As assessee had furnished all information in respect of the issue of capital gains by letters during assessment proceedings. Therefore, AO had applied his mind to the facts and the law while passing the order of regular assessment. The decision in the case of Beena K. Jain [ 1993 (11) TMI 7 - BOMBAY HIGH COURT] being relied upon by the appellant in support of the reopening notice was available at the time when the regular assessment order dated 12th September, 1996 under Section 143 of the Act was passed. Therefore, it would not be fair to presume that the Assessing Officer was ignorant of the decision rendered by this Court. Moreover, as the impugned order of the Tribunal itself records that the reasons recorded in support of the impugned notice was merely on the basis of borrowed satisfaction of the audit party. This also makes the impugned notice bad. - no substantial question of law - decided in favour of assessee.

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• 2019 (4) TMI 1122
  Sale of shares as Long Term Capital Gain - Period of holding - assessee showing investment in shares in his personal Balance sheet and purchased out of his own surplus fund - HELD THAT:- The assessee had received such amounts upon sale of three scripts and in particular one of M/s Pyramid Saimira. The assessee had purchased such shares and held them for over 12 months. Against the locking period of one year, the assessee had held shares for 17 months before sale. The assessee had not utilized any borrowed funds for such purchase and that in the earlier years, the Assessing Officer had accepted the sale of shares giving rise to capital gain. We do not find that the Tribunal has committed any error. Assessee also relied on the CBDT Circular dated 29/02/2016, which also supports Tribunal s decision. In the circular the CBDT had clarified that in relation to shares held for more than 12 months, which are listed shares, if the assessee wishes to treat them as investments giving rise to capital gain upon sale, the department would not dispute the same as long as the assessee follows the same pattern subsequently. Income Tax Appeal is dismissed.

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• 2019 (4) TMI 1121
  Computation of capital gain - TDR/FSI value inclusion - assessee had merely transfered reversionary right in the lease land - acquisition of which no cost at all can be conceived - HELD THAT:- This issue is covered by a decision of this Court in COMMISSIONER OF INCOME TAX-18 VERSUS SAMBHAJI NAGAR CO-OP- HSG. SOCIETY LTD. [ 2014 (12) TMI 1069 - BOMBAY HIGH COURT] FSI/TDR was generated by the plot itself. There was no cost of acquisition, which has been determined and on the basis of which the Assessing Officer could have proceeded to levy and assess the gains derived as capital gains. Assessee had not incurred any cost of acquisition in respect of the right which emanated from 1991 Rules, making the Assessee eligible to additional FSI. The land and building earlier in the possession of the Assessee continued to remain with it. Even after the transfer of the right or the additional FSI, the position did not undergo any change. The Revenue could not point out any particular asset as specified in sub section (2) of section 55. - Decided against revenue.

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• 2019 (4) TMI 1120
  Addition based on the basis of statements recorded u/s 132(4) - presumption laid down u/s 292C ignored - unexplained cash - assessee retracted from the admission made by him during the course of search - survey was converted into search and the statement of the assessee under Section 132(4) was recorded on 10.10.2014 at 10:15 PM and thereafter search was concluded on 11.10.2014 in the morning and the assessee stated that such cash belonged to the appellant-company as undisclosed income - Subsequent retraction from the surrender without having evidence or proof of retraction - HELD THAT:- Supreme Court in Pullangode Rubber Produce Company Ltd., [ 1971 (9) TMI 64 - SUPREME COURT] as held that admission is an extremely important piece of evidence but it can't be said that it is conclusive. It is open to the person, who made admission to show that it is incorrect. The assessee should be given proper opportunity to show the correct state of affairs. The law with regard to this has developed much thereafter. There is no gainsay the fact that admission made during the search can be disputed by the assessee and at the same time however it is equally well settled that the statement made voluntarily by the assessee could form the basis of assessment. Mere fact that the assessee retracted the statement at later point of time could not make the statement unacceptable. The burden lay on the assessee to show that the admission made by him in the statement earlier at the time of survey was wrong. Such retraction, however, should be supported by a strong evidence stating that the earlier statement was recorded under duress and coercion, and this has to have certain definite evidence to come to the conclusion that indicating that there was an element of compulsion for assessee to make such statement. A bald assertion to this effect at much belated stage cannot be accepted. The assessee indulged in maintaining transaction on diaries and loose papers which was not permissible in any of the method of accounting. The assessee, while filing the return of income, has not disclosed any undisclosed income and hence, retracted from the admission made by him during the course of search. Subsequent retraction from the surrender without having evidence or proof of retraction is not permissible in the eyes of law. The statement recorded during the course of search action which was in presence of independent witnesses has overriding effect over the subsequent retraction. - Decided in favour of revenue

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• 2019 (4) TMI 1119
  Grant of registration u/s 12A denied - irregularities committed by the assessee in the past which led learned CIT(E) to come to adverse conclusion as to satisfaction of objectives and genuineness of activities of the assessee - HELD THAT:- The assessee deserves one more opportunity wherein we are setting aside the issue of registration of the assessee trust u/s. 12A back to the file of the Ld. CIT(Exemption) for denovo consideration of the assessee aforesaid application for registration u/s 12A after considering the entire material/evidences brought on record by the assessee in the set aside proceeding on merits in accordance with law. Now, the ITR for AY 2018-19 is also available which can also be looked into by learned CIT(E) to arrive at decision whether the assessee is entitled for registration u/s 12A of the 1961 Act or not. All the issues are kept open and we clarify that we have not commented on the merits of the issue in this appeal. The learned CIT(E) is directed to admit all evidences/explanations submitted by the assessee in set aside proceedings and decide afresh grant of registration u/s 12A on merits in accordance with law. CIT(E) shall grant proper and adequate opportunity of being heard to the assessee in accordance with principles of natural justice in accordance with law. Appeal of the assessee allowed for statistical purposes.

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• 2019 (4) TMI 1118
  Disallowance of the diesel costs incurred on machines for want of log book of 5% - HELD THAT:- Assessee could not produce any necessary evidences in this regard. CIT(Appeals) observed as is evident from the assessment order that the assessee was asked to produce log books, oil, diesel consumption books, running hour book and mileage register for each of the machineries, vouchers and bills etc. The assessee could not produce/file any of such details asked by the AO. CIT(Appeals) after considering the submissions of the assessee, assessment order held that reasonable disallowance of only 5% of the entire claim made by the Assessing Officer was justified. TDS u/s 194A - Disallowance of interest u/s.40(a)(ia) - disallowance of interest expenses due to non-payment of TDS after end of year - appellant had contended and claimed that the AO did not refer to the provisions of section 43B - HELD THAT:- AO had disallowed the interest u/s.40(a)(ia) r.w.s.194A of the Act for non deduction of TDS and non-payment of TDS within the prescribed time. Whereas the appellant had contended and claimed that the AO did not refer to the provisions of section 43B . In fact the submission of the appellant, itself is in ambiguity and nothing can be arrived at from the said submission. As the contention of the AO has not been refuted by the appellant during the appellate proceeding and also no details and evidences in this regard were furnished, no reason to interfere with the order of the AO. Addition u/s 14A - Disallowance of interest being the expenses incurred on exempt income - HELD THAT:- No infirmity in the assessment order passed by the Assessing Officer disallowing the proportionate expenditure of ₹ 4,87,464/- u/s.14A read with Rule 8D of the Rules and therefore no interference in this action is called for. The disallowance so made is hereby confirmed. Assessee appeal dismissed.

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• 2019 (4) TMI 1117
  Transfer pricing adjustment to the International transaction of marketing support services - comparable selection - HELD THAT:- M/s Global Procurement Consultant Ltd - there is no dispute on the activity of consultancy of procurement services carried out by the company. In our opinion, the consultancy related to procurement services and project review etc cannot be compared with the marketing support services carried out by the assessee. The company cannot be compared only on the ground that it is in the business of providing services. The company being functionally dissimilar, we direct the learned AO/TPO to exclude from the final set of the comparables. M/s TSR Darashaw Ltd - Perusal of the schedule forming part of the financial statement for year ending 31/03/2009, filed by the assessee, we find that income has been shown from share registry and transfer services, depository services, record management payroll and provided fund management, corporate and fixed deposit management etc. The services rendered by the company are entirely different nature as compared to the services of marketing support rendered by the assessee to its AE. In our opinion, the company is functionally dissimilar to the assessee, accordingly we direct the Ld. AO/TPO to exclude the company from the final set of the comparables. M/s Excellent Insurance Broking Services Ltd. - We find from the order of the learned DRP that no express direction has been given to retain or include this comparable in the final set of the comparable. Accordingly, we accept the contention of the Ld. Counsel that learned TPO was not justified in including the company in the final set of comparables, without any specific direction of the learned DRP. We are of the opinion that all the 19 companies selected by the assessee, including the company M/s Excellent Insurance Broking Service Ltd. should be considered afresh by the learned TPO along with 5 comparables which have been retained by the Tribunal in the case of the assessee for assessment year 2008-09, in the light of the filters applied by the TPO. We further direct that, in case, no companies found to be comparable out of the 19 companies and 5 companies are mentioned respectively above, the learned TPO may carry out a fresh search on the database applying the filters already upheld by the learned DRP. Appeal of the assessee are accordingly allowed for statistical purposes.

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• 2019 (4) TMI 1116
  Addition u/s 68 - unsecured cash credit - HELD THAT:- Principal officers of the share applicant company, were not produced by the assessee is undisputed. In case of the 2 share applicant companies, the summon issued also returned unserved. The one company, in which case though the summon was served, but no one attended before the AO in compliance of the summon. The share applicant companies have filed certain documents, including balance sheet and profit and loss account, bank statements etc. in form of paper trail. The companies have shown small amount of income in their hand, which is not sufficient to discharge their creditworthiness. The assessee has also not justified the high amount of the share premium taken. In view of these peculiar facts seen cumulatively in the light of various decisions relied upon by the learned DR including the decision of PCIT Vs NRA Iron and Steels Private Limited [ 2019 (3) TMI 323 - SUPREME COURT] , we uphold the finding of the CIT(A) on the issue in dispute. - Decided against assessee.

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• 2019 (4) TMI 1115
  Penalty u/s 271(1)(c) - debatable issue - order passed beyond the period of limitation prescribed under Section 275(1)(a) - period of limitation - HELD THAT:- It is not disputed that substantial questions of law on the quantum additions confirmed by ITAT have already been framed by Hon ble Delhi High Court regarding all the additions in respect of which penalties (disputed in the present appeals before us) have been levied by the AO, u/s 271(1)(c) of IT Act. It is also not in dispute that quantum additions were on disputable and debatable issues on which different views could legitimately exist. In these facts and circumstances, respectfully following the aforesaid precedents, vide order of Hon ble Delhi High Court in CIT vs. Liquid Investment and Trading Company [ 2010 (10) TMI 1021 - DELHI HIGH COURT] , CIT vs. Nayan Builders Developers [ 2014 (7) TMI 1150 - BOMBAY HIGH COURT] , ACIT vs. Moradabad Toll Road Co. Ltd. [ 2015 (11) TMI 848 - ITAT DELHI] ; and after due consideration of PCIT vs. M/s Shree Gopal Housing and Plantation Corporation [ 2018 (2) TMI 604 - BOMBAY HIGH COURT] ; in our view the issue regarding penalty u/s 271(1)(c) of IT Act disputed in the appeals before us is covered in favour of the assessee by the aforesaid orders - as we have already deleted the penalties levied u/s 271(1)(c) of IT Act, the other contention raised by the assessee, that the penalties were barred by limitation, is academic in nature and need not be adjudicated - Decided in favour of assessee.

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• 2019 (4) TMI 1114
  Best Judgement Assessment u/s 144 - Validity of AO s jurisdiction u/s. 144 - failure on the part of the assessee to file return of income u/s. 139 or not? - HELD THAT:- Out of three preconditions for invoking the provisions of section 144, in the present case, none of these three conditions is existing because the assessee has filed the return of income as well as complied with the notice issued by the AO u/s. 142(1) - the only requirement of notice issued by the AO u/s. 142(1) on 13.01.2017 was this that assessee should attend along with the books of accounts on 24.01.2017 and this is not the case of the AO that the assessee has not appeared before him along with the books of accounts. In our considered opinion, in the facts of present case as discussed above, this judgment of MOHINI DEBI MALPANI [ 1969 (1) TMI 22 - CALCUTTA HIGH COURT] is squarely applicable in which it was held that if the conditions precedent for the assumption of jurisdiction under Section 144 of the Act are not present, the order of assessment u/s. 144 must be struck down as being without jurisdiction. Thus the conditions precedent for the assumption of jurisdiction u/s. 144 were not present and therefore, the assessment order passed by the AO u/s. 144 of IT Act deserves to be struck down and we struck down the same in all these four years. Validity of reopening of assessment - combined reasons recorded for several years - HELD THAT:- issue of combined notice u/s 148 for several years to the assessee cannot be equated with recording of combined reasons 148 for several years because, in reply to notice u/s 148, the assessee is required to make compliance within a prescribed time by filing return of income but by recording of reasons for reassessment, the action is to be taken by the AO only by issuing notice u/s 148 and no action is to be taken by the assessee at this stage. Once the notice is issued by the AO u/s 148 and the return is filed by the assessee, the assessee may obtain the copy of reasons recorded by the AO and thereafter, the assessee may raise objection against the reopening. At that stage, if the reasons for several years are identical and therefore recorded together, it has no impact on the action to be taken by the assessee and hence, in our considered opinion, this judgment cannot be stretched to hold that recording of combined reasons for more than one year renders the reassessment bad in law. This objection has no merit. No live link or nexus between information/material and formation of belief - HELD THAT:- There is no specific mention of name of the assessee in any statement as noted by the AO himself in the order passed by him to dispose of the objections of the assessee, in our considered opinion, the facts noted by the AO in the reasons recorded by him can be reasons to have suspicion about the genuineness of these transactions but on the basis of these facts, a man of ordinary prudence will not have reasons to believe that income has escaped assessment because the live link between the material available with the AO and formation of belief is missing particularly when there is no mention of the material found in course of survey, if any and considering this admitted fact that it is observed by the AO himself in Para 2 on page 173 of the order passed by him to dispose of the objections of the assessee that there is no specific mention of name of the assessee in any statement. In the light of above discussion, in our considered opinion, this judgment of Hon ble apex court rendered in the case of ITO vs. Lakhmani Mewal Das [ 1976 (3) TMI 1 - SUPREME COURT] is applicable in the present case and respectfully following the same, we hold the reopening is not valid in the facts of the present case. - Decided in favour of assessee. In view of our decision in favour of the assessee on both these technical aspects i.e. validity of the assessment order u/s 144 and validity of reopening of the assessment, we feel that decision on merit is not called for because it is of academic interest only. Hence, we do not decide the issue on merit.

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• 2019 (4) TMI 1113
  Penalty u/s 271AAB - advances given for purchase of land - assessee had admitted undisclosed income in its statements u/s 132(4) and paid the taxes thereon before specified date - Whether the surrender so made, in terms of statement of the assessee recorded u/s 132(4) during the course of search, falls in the definition of undisclosed income ? - HELD THAT:- The assessee HUF is a partner in two partnership firms and derives income from share in the profit and interest from such partnership firms which it has reported in its return of income and therefore, as far as maintenance of books of accounts is concerned, the assessee HUF not carrying on any business is thus not required to maintain regular books of accounts. The diary found during the course of search and seizure at the premises of the assessee contains the entries of advances given for purchase of land and therefore, the said amount of advance given for purchase of land can be recorded in the capital account of the assessee. Thus the transactions found recorded in the diary are to be recorded in the capital account of the assessee as well as in the balance sheet prepared as on 31.03.2015 and not on the date of search as on 5.02.2015. These transactions are recorded in a diary which is nothing but other documents maintained in the normal course, then it cannot be presumed that the assessee would not have disclosed the same in the return of income to be filed after the date of search. A Whether the advances so given for purchase of land qualify as undisclosed income as per definition given in the explanation to section 271AAB of the Act? - An advance represents an outflow of funds and what has been envisaged by the legislature while defining undisclosed income in section 271AAB is an inflow of funds which has not been recorded in the books of accounts or other documents on or before the date of search and not an outflow of funds. Further, the deeming fiction so envisaged in section 69 and 69B cannot be extended and applied automatically in context of section 271AAB which contains a specific definition of undisclosed income. As relying on SHRI RAJENDRA KUMAR GUPTA VERSUS THE DCIT, CENTRAL CIRCLE-2, JAIPUR. [ 2019 (1) TMI 1545 - ITAT JAIPUR] we delete the penalty levied under section 271AAB of the Act on cash advances towards purchase of land. - Decided in favour of assessee.

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• 2019 (4) TMI 1112
  Reopening of assessment - accommodations entries in the nature of bogus sales and unsecured loans - addition was made on the statement of Sh. Vikrant Kayan without providing any opportunity to the assessee to cross examine the same - HELD THAT:- Assessee has considerable cogency that addition was made on the basis of statement of Sh. Rajendra Jain, but the assessee was not granted the opportunity to cross examine Sh. Rajendra Jain which ground was also raised before the CIT(A), who did not adjudicate the same, which is against the settled law. Since the impugned addition was made on the statement of Sh. Vikrant Kayan without providing any opportunity to the assessee to cross examine the same, which is in violation of principle of natural justice and against the law laid down by the Hon ble Supreme Court of India in the case of Andaman Timber vs. CIT [ 2015 (10) TMI 442 - SUPREME COURT] the addition in dispute is deleted and the appeal of the assessee is allowed. See SMT. JYOTI GUPTA VERSUS THE I.T.O, DELHI [ 2018 (11) TMI 1353 - ITAT NEW DELHI]

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• 2019 (4) TMI 1111
  Block assessment u/s 158BC and 158BD - Non filing of Income Tax returns - assessee had not filed its return of income for the assessment years falling within the block period before the date of search and thereby made addition - HELD THAT:- Revenue Authorities have not conducted any investigation on that regard. Revenue Authorities also ought to have examined the copy of the returns filed by the assessee that was produced before them and thereafter arrived at a proper conclusion. Revenue Authorities had not taken any coercive action for the alleged fraud committed by the assessee. In this situation we can neither hold the matter in favour of the Revenue nor the assessee - addition made by the AO in the block assessment is devoid of merits because there is no conclusive finding by the Revenue that the assessee had not filed its return of income for the assessment years 1997-98 to 2003-04. Hence we hereby direct the Ld.AO to delete the addition made in the block assessment. Addition towards money advanced being the money advanced as unexplained investment - HELD THAT:- With respect to the addition made towards the advance of ₹ 10,00,000/- extended to M/s. Vicky Films, we find that the finding of the Ld.AO to be vogue which is further confirmed by the Ld.CIT(A) by general discussion in his order. Revenue had simply rejected the returns filed by the assessee and also not examined the detailed explanation offered by the assessee, needless to mention that the books of accounts of the assessee was incomplete. In this situation, we do not find any merit in the order of the Ld.Revenue Authorities for making addition for ₹ 10,00,000/- and ₹ 4,50,000/- towards advance extended to M/s. Vicky Films and M/s. Nadiadwala Grandson Entertainment without conclusive finding. Therefore we hereby direct the Ld.AO to delete the addition made for ₹ 10,00,000/- and ₹ 4,50,000/- with regard to the advances extended to M/s. Vicky Films and M/s. Nadiadwala Grandson Entertainment respectively. Addition towards various investment - HELD THAT:- The decision rendered in the case of the assessee s related parties Shri Rakesh Sarin and Smt. Renu Sarin, Shri Akshay Sarin M/s. B.R. Sarin Sons HUF holds good in the case of the assessee also and accordingly we hereby direct the Ld.AO to delete the addition of ₹ 4,500/- towards investment in shares, ₹ 50,000/- towards investment in RBI Bonds, ₹ 25,000/- towards investment in various UTI/IDBI and HDFC Relief bonds, ₹ 20,000/- towards investment in Kisan Visan Patras, ₹ 3,50,000/- and ₹ 41,50,000/- towards investment in RBI relief bonds which was assigned to Standard Chartered Bank as the undisclosed investments / income of the assessee Addition towards cash deposit in bank account as unaccounted investment and towards deposit in RD account - HELD THAT:- In similar situation herein above, we have deleted the addition made by the Ld.AO because the Ld.AO had failed to examine the return filed by the assessee and the explanation submitted. Therefore the same decision holds good for this issue also. Accordingly as we have held in the case of the assessee s related parties SMT. RENU SARIN, [ 2019 (4) TMI 1054 - ITAT CHENNAI] ] , SHRI RAKESH SARIN, [ 2011 (6) TMI 977 - ITAT CHENNAI] we hereby direct the Ld.AO to delete the addition Addition towards negative cash balance - HELD THAT:- It is apparent that the books of accounts maintained by the assessee in its computer were incomplete; however the assessee had furnished certain explanations along with the copies of the return of income filed by it. It is also apparent that the Ld.A.O had rejected the returns filed by the assessee and failed to examine the particulars filed along with the return of income. In this circumstance we do not find merit in the addition made by the Ld.AO towards negative cash balance of ₹ 4,72,112/- because the addition is made without proper investigation and conclusive finding. Therefore we hereby direct the Ld.AO to delete the addition made. Addition towards unaccounted pro-notes - HELD THAT:- This Bench of the Tribunal in the case of the assessee s related parties Smt. Renu Sarin [ 2019 (4) TMI 1054 - ITAT CHENNAI] ] held the issue in favour of the assessee stating the pro-notes were incomplete in all aspects and therefore presumption cannot be made that the assessee had lend money though there is some air of doubt. Moreover peak credit concept may also be applicable in the case of the assessee due to rotation of advances and repayments. It appears that the Ld.AO has not examined those aspects. There is every probability that if such exercise would have been carried out the source of the amount utilized in the finance business would have been explainable as the amount utilized in the business would have been much less than the addition made by the Ld.AO. Therefore adhoc addition of the amount mentioned in the entire pro-notes is not justifiable. Addition towards purchases of fixtures amenities as unexplained investment - HELD THAT:- Revenue Authorities have not arrived at any conclusive finding on the issue after proper investigation. Therefore we do not find any merit in the orders of the Ld.Revenue Authorities for making addition

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• 2019 (4) TMI 1110
  Assessment of income - inclusion /exclusion of income which the assessee has itself included in the return of income filed by the assessee for these two Assessment Years - HELD THAT:- When the assessee has accepted in various statements recorded u/s. 131 that these two amounts are undisclosed income of the assessee and the assessee has also included these two amounts in the return of income filed by the assessee for these two Assessment Years, the assessee can still plead for reduction of these two amounts from the taxable income of the assessee if the assessee can bring cogent evidence on record to establish beyond doubt that these two amounts are not the income of the assessee. In the present case, the assessee is making various arguments in this regard but no cogent evidence could be brought on record by assessee to establish beyond doubt that these two amounts are not income of the assessee in these two years. Addition based on entries of seized cash book - HELD THAT:- Explanation of the assessee should not be rejected outrightly and should be examined on merit and if no merit is found therein then only it can be rejected. AO has also stated that assessee has failed to establish that how the payment made to Saikrupa Minerals is related with the amounts paid in cash to Ashwathnarayan Singh Co. AO also says that ledger account of Saikrupa Minerals does not indicate payment of ₹ 52.23 Lakhs on a single day. In the absence of any narration against this amount of ₹ 52.23 Lakhs in the seized material, this is only an assumption of the AO that this is on account of cash payment but such assumption is not supported by the entry in the seized material. As per the ledger copy of Saikrupa Minerals appearing on page no. 69 of paper book, it is seen that amount of ₹ 57,41,404/- is credited to the account of this party in respect of Transportation Hire Charges for 7,794.340 MT @ ₹ 455/- per MT + 4,739.760 MT @ ₹ 465/- per MT. The total quantity comes to 12,534.100. This explanation of the assessee is acceptable particularly when there is no such narration in the seized material that this amount of ₹ 52.23 Lakhs noted on page no. 7 of the seized cash book is on account of cash payment to any party. Explanation of the assessee in relation to entries on page 41 of the seized material as find the amount of ₹ 105,63,900/- against date 29.03.2010 with narration Payment was struck off and therefore, we enclose the photo copy of this page 41 of the seized material as available on page 57 of the paper book. In our opinion, this amount cannot be considered for addition in view of these facts that the amount in question is struck off in the seized material itself and the reasons about such striking off are explained by the assessee being on account payment by cheque of ₹ 1 Crore and no further enquiry is made by the department whether DDIT (Investigation) or the AO in spite of retraction by the assessee as early as on 29.03.2011 i.e. before expiry of 15 days from the date of the first statement u/s 131 on 15.03.2011 in which declaration was made after including these two amounts. In view of this, we delete this addition also.

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• 2019 (4) TMI 1109
  Adhoc disallowance of expenses - Rejection of books of accounts - best judgment assessment u/s 144 - HELD THAT:- AO could have ventured into estimation only after rejecting the books of accounts of the assessee u/s 145(3) and thereafter by best judgment assessment u/s 144 of the Act. Here in this case, the AO has not passed any order u/s 144 of the Act. AO thus without rejecting the books of account of the assessee has gone for estimation on suspicion and conjectures that the assessee may be inflating its expenses with the self-made vouchers. While scrutinizing the expenditure if the expenses claimed are not having any nexus to the business of the assessee or if there is deficiency in the vouchers or there is no bills supporting the incurrence of an expenditure, at the most expenses to the extent that are not supported by the vouchers can be held to be non-genuine and can be disallowed by the AO; and item-wise the AO could have disallowed the expenditure rather than going for adhoc disallowance of percentage basis of the expenses claimed by the assessee which action of the AO is arbitrary in nature and cannot be sustained. Set aside the Ld. CIT(A) order wherein also he had restricted the expenses claimed @ 5 percentage of expenses which is also adhoc disallowance. Therefore, the addition is directed to be deleted.

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• 2019 (4) TMI 1108
  Addition u/s.145A - Enhancement of closing stock value - opening stock, purchases, sales and closing stock of the goods were recorded in the books of accounts without including the amount of CENVAT/VAT - assessee following the exclusive method of accounting - CIT(A) deleted the addition made by AO by observing that the assessee has been following its method of valuation consistently and there was no dissatisfaction of AO about the correctness/completeness of the books of accounts of the assessee - HELD THAT:- Assessee has been recording its transactions of purchase, sales, and valuation of inventories, net of CENVAT/VAT consistently. Thus, if the inventory of closing stock is enhanced by the amount of CENVAT credit attributable to it, then the amount of corresponding purchases should also be increased by the said amount which will result in tax neutral exercise. Thus, in our considered view, the Assessing Officer erred in enhancing the value of closing stock without giving effect to the purchases. There is no ambiguity that the assessee has been following the exclusive method of accounting. However, the assessee to comply the provisions of section 145A of the Act has given the effect of CENVAT/VAT in the opening stock, purchases, sales and closing stock in the memorandum profit and loss account as placed. Assessee has made its computation of income after taking the profit as shown in the memorandum profit and loss account as on 31/03/2008. Thus, we can safely conclude that though the assessee is following the exclusive method of accounting which is contrary to the provisions of section 145A but the effect of the same has been duly considered by the assessee in its memorandum profit and loss account which was offered to tax. Thus, there cannot be any fault of the assessee merely on the reasoning that the assessee has not valued its closing stock as per the provisions of section 145A of the Act. - Decided against revenue

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• 2019 (4) TMI 1107
  Deduction allowable u/s. 10AA - whether expenses incurred on telecommunication expenses incurred in foreign currency for rendering services outside India is to be reduced from export turnover only or from total turnover also ? - HELD THAT:- As per the judgement rendered in the case of CIT Vs. Tata Elxsi Ltd. [ 2011 (8) TMI 782 - KARNATAKA HIGH COURT] it is held that total turnover is sum total of domestic turnover and export turnover and therefore, if any amount is reduced from export turnover then total turnover also goes down by the same amount automatically. Also approved by CIT Vs. HCL Technologies Ltd. 2018 (5) TMI 357 - SUPREME COURT] and therefore, we decline to interfere in the order of CIT (A) directing the AO to recompute the deduction allowable u/s 10A of the Act after reducing expenditure incurred in foreign currency towards telecommunication expenses foreign travel expenses from the export turnover. - Decided against revenue.

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• 2019 (4) TMI 1106
  Bogus purchases - assessee is aggrieved by confirmation of the additions to the tune of 12.5% of the alleged bogus purchases - estimation of profits embedded in purchases is to be done which involves estimation which should be fair and honest - HELD THAT:- Keeping in view nature of goods / industry in which the assessee is dealing and keeping in view that goods involved are imported being purchased from grey market who had brought these goods in Indian market without payment of custom duties, it will be fair and reasonable to estimate profits embedded in these purchases to the tune of 25% (twenty five percentage) of the alleged purchases as income to be brought to tax over and above what was declared by the assessee in its books of accounts to cover advantage it got by way of inflated purchase prices due to buying from grey market, tax advantage by way of VAT/CST and custom duty saved on imported goods being bought from grey market who obviously brought goods in Indian territory without paying custom duties. The reliance on the assessee on other case laws to contend that addition of 2% is warranted lacks merit as each case is to be decided on its own merit keeping in view nature of product and circumstances surrounding the same.

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• 2019 (4) TMI 1105
  Bogus purchases addition u/s 69C - accommodation entries - HELD THAT:- CIT(A) after considering the facts of the case had granted relief to the assessee by restricting the additions u/s 69C @ 3% over and above regular profit disclosed by the assessee. Even before us, no new facts or contrary judgments have been brought on record before us in order to controvert or rebut the findings so recorded by Ld. CIT(A). Therefore, there are no reasons for us to interfere into or deviate from the findings so recorded by the Ld.CIT(A). Hence, we are of the considered view that the findings so recorded by the Ld. CIT (A) are judicious and are well reasoned. - Decided against assessee Adhoc disallowance @ 10% on the Conveyance, Telephone and Travelling charges - HELD THAT:- CIT(A) after appreciating the facts of the case had granted partial relief to the assessee by restricting the additions. Since the Assessee could not prove the absence of personal element involved in the expenses claimed, therefore, Ld. CIT(A) had rightly upheld the remaining additions. Even before us, no new facts or contrary judgments have been brought on record before us in order to controvert or rebut the findings so recorded by Ld. CIT(A). Therefore, there are no reasons for us to interfere into or deviate from the findings so recorded by the Ld.CIT(A). Hence, we are of the considered view that the findings so recorded by the Ld. CIT (A) are judicious and are well reasoned - Decided against assessee

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• 2019 (4) TMI 1104
  Addition of unsecured loans u/s 68 - as alleged genuineness creditworthiness/capacity to the lender could not be proved - copies of statements recorded by the AO on oath in remand proceedings, it is clear that all the 11 corporate entities have advanced loans through account payee cheques and reflected in their respective balance sheets, filed with the various agencies including the Income Tax Department along with their return of income - HELD THAT:- CIT(A) has given detailed finding and taken into consideration of the submissions made by the assessee as well as the remand report of the Assessing Officer called during Appellate Proceedings. In-fact, from the records it emerges that the unaccounted money as alleged by the Assessing Officer was the loan which was repaid subsequently by the assessee. Therefore, there is no need to interfere with the findings of the CIT(A). The appeal of the Revenue is dismissed.

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• 2019 (4) TMI 1103
  Disallowance on account of leasehold repairs and maintenance expenses capitalized by the AO - Allowable revenue expenditure u/s 37 - HELD THAT:- The assessee does not become owner of the modification carried out in the rented out premises as the are either held or fastened to the ground and these could not be removed and carried in the present state after modification.Thus, the expenditure are revenue in nature Expenditure incurred by the assessee on suspended lights, outdoor flooring recessed luminaire frame made of brushed metal and installation of epoxy flooring, tiles is for making the rented premises more attractive and presentable with commensurate as dealer of high end vehicles as tenant of premises being in the nature of current repairs and therefore, revenue in nature and allowable as business expenses. Hence, the lower authorities were not justified in treating the same as capital in nature and consequently, capitalizing it. - Decided in favour of assessee Addition u/s 40A (2)(b) - interest paid on Inter Corporate Deposit (ICD) - CIT-A reducing the rate of interest from 12% to 11% - HELD THAT:- The increase in interest rate from 10% to 12% without bringing and substantiated and bringing any evidence on record is not justified, notwithstanding the fact that the assessee has taken ICD loan on interest rate of 10% from M/s. TACL. Further no evidence has been adduced to substantiate the excessiveness of interest rate @12% asper provisions of section 36(1) (iii) of the Act as interest paid is for personal benefit and not for business purpose, when the assessee has been paying interest @11% for other persons. Therefore, the AO was quite justified in restricting the increase in interest rate to 11% with commensurate with other parties. In view of this matter, we find do not find any infirmity in the order of CIT (A), accordingly, same is upheld. Disallowance of prior period expenses on account of rate and taxes - unascertainable liability - HELD THAT:- Though the liability pertained to arrears including the period up to 31.03.2009, but it has been crystallized and determined vide letter dated 30.07.2009.Thus, the liability has been determined and crystallized during the year under consideration and also paid during the year under consideration, hence, same is being business expenditure is allowable as expenses. Since the liability was not ascertainable and quantified hence, provision could not be made in earlier years As decided in EXXON MOBIL LUBRICANTS P. LTD. [ 2010 (9) TMI 36 - DELHI HIGH COURT] where the liability for payment was determined and crystallized in the year under question and therefore, allowable and it cannot be held to be prior period merely because the expenses related to a transaction of earlier years.In view of these facts we hold that the liability of prior period expenses has been determined and crystallized vide letter dated 30.07.2009, hence, these expenses on account of rate and taxes are allowable as business expenses. Addition u/s. 14A read with Rule 8D - non recording satisfaction, excluding share application money, establishing link of investment and expenditure and by not considering the average of total assets and not the net assets - HELD THAT:- The presumption would be that the investment in exempt income yielding investment is made out of interest-free funds as held in the case of CIT vs. Reliance Utilities Power Ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] wherein it has been laid down that where the assessee had both interest bearing borrowed funds and interest free own funds and if own funds were sufficient to meet investment yielding tax free income, then it can be presumed that such investments were from interest-free funds and not from borrowed funds. Therefore, we are of the considered opinion that no disallowance on account of interest is called for under Rule 8D (ii) of Income-Tax Rules, 1962. Disallowance of interest in respect of interest under Rule 8D(2)(ii) are not to be considered as same are directly related to business income. Therefore, disallowance of interest of ₹ 20,12,865 is therefore, deleted. AO at the first instance must examine the disallowance made by the assessee or the claim of the assessee that no expenditure was incurred to earn the exempt income. If and only if the AO is not satisfied on this count after making reference to the accounts, that he is entitled to adopt the method as prescribed i.e. Rule 8D of the Rules. Thus, Rule 8D is not attracted and applicable to assessee who have exempt income and it is not compulsory and necessary that an assessee must voluntarily compute disallowance as per Rule 8D of the Rules. Where the disallowance or nil disallowance made by the assessee is found to be unsatisfactory on examination of accounts, the assessing officer is entitled and authorised to compute the deduction under Rule 8D of the Rules. Disallowance u/s. 14A are restricted to ₹ 8,516 and balance disallowance is deleted subject to verification by the AO that the assessee has correctly taken the average value of investment after excluding of share capital and reserve surplus, and only considering exempt income yielding investment and excluding interest of ₹ 20,12,865, which is directly attributable to business income.

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• 2019 (4) TMI 1102
  Reassessment u/s. 147 - retention money receipts form part of gross receipt but excluded in computation - allegation of double deduction - proceedings initiated after the end of four years from the end of relevant assessment year - rectification u/s 154 - HELD THAT:- Assessee has declared in the gross receipts of his business the sums which were claimed as retention money and income which did not accrue to the Assessee. Therefore, the contention of the revenue which is based on observations in the order of the AO that the Assessee did not include the retention money in the gross receipts and therefore the Assessee is claiming double deduction, is contrary to facts and not supported by any material on record. On the contrary the Assessee has demonstrated before us that the gross receipts declared in the profit and loss account includes the sum claimed as retention money which was not offered to tax on account of its alleged non-accrual. Therefore, the argument of the DR that there was failure on the part of the Assessee to fully and truly disclose all material facts relevant for assessment of his income for the relevant Assessment year is without merit. Consequently, the proviso to Sec.147 of the Act is applicable in the present case. Since there was no failure on the part of the Assessee as is contemplated by the proviso to Sec.147 of the Act and since the Assessment u/s.147 is sought to be made after the period contemplated under the proviso to Sec.147 of the Act, we hold that the initiation of the reassessment is bad in law and the order of reassessment is therefore annulled. - Decided in favour of assessee.

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• 2019 (4) TMI 1101
  Addition of preliminary expenses u/s.35D(2) - Treated as Capital expenses - HELD THAT:- Admittedly this expenditure pertain to filing and stamping charges of ROC for increase in the authorized capital is nothing but a capital expenditure. In the judgment of CIT-vs-Tungabhadra Industries Ltd. [ 1991 (11) TMI 6 - CALCUTTA HIGH COURT] categorically held that fees paid for increasing authorized capital is a capital expenditure. Thus, the same are not eligible for deduction u/s 35D of the Act. In Punjab State Industrial Development Corporation Ltd.-vs-CIT 1996 (12) TMI 6 - SUPREME COURT] dealing with the issue further held that the expenses incurred on increasing the share capital and fees paid to Registrar of Companies for increase in authorized capital is capital expenditure and cannot be allowed for revenue expenditure which was duly taken care of by the Learned CIT(A) while confirming such addition. - Decided against assessee Addition u/s 43B - Disallowance u/s 2(24)(x) - certain PF and ESIC payments on behalf of the employees were made by the assessee beyond the stipulated due date - HELD THAT:- Admittedly the PF received from the employees were deposited by the assessee company in the PF account beyond the due dates as prescribed in PF Act. In the case of CIT vs. Gujarat State Road Transport Corporation [ 2014 (1) TMI 502 - GUJARAT HIGH COURT] pleased to hold that where the employer has not credited the sum received by it as employees contribution to employees account in relevant funds on or before due date as prescribed in Explanation to Section 36(1)(va), the assessee shall not be entitled to deduction of such amount though he deposits the said sum before the due date prescribe u/s 43B i.e. prior to filing of return u/s 139(1) of the Act. Since in this particular case, the employees contribution toward PF was not deposited before due date in terms of statutory rules as mentioned hereinabove, the Learned CIT(A) confirmed such addition - Decided against assessee Disallowance of the claim of deduction u/s 80IB - assessee has not claimed deduction in respect of its windmill unit u/s 80IA(4) neither filed a revised return within the stipulated time - HELD THAT:- As decided in assessee's own case [ 2017 (2) TMI 730 - ITAT AHMEDABAD] the appellant has made claim for deduction u7s.80IB in the original return and it was revised during the assessment proceedings. Since the appellant has not made a fresh claim of deduction u/s.80IB during the assessment proceedings, accordingly, I am of the considered opinion that ratio of Goetz India Ltd. [ 2006 (3) TMI 75 - SUPREME COURT] will not be applicable. Assessing Officer has merely disallowed the claim for not filing revised return of income. It is an established proposition of law that the correct income of the assessee has to be assessed by the Assessing Officer and if there is a rightful claim then the same should be allowed to the assessee. More particularly in this case of assessee claimed a deduction u/s 80IB of the Act in the return of income so there is no new claim made during the course of assessment proceedings but it is just a correct claim which has been put forward with due supporting before ld. Assessing Officer and the same should have been allowed to the assessee. - Decided in favour of assessee. Defect apparent on the face of the records of the assessment order - instead of the figure of declared income available with the revised return the figure appearing in the original return has been taken into account without rejecting the revised return so filed by the assessee - not adjudicating the ground of appeal as raised by the appellant challenging the action of the Assessing officer in computing the total income - HELD THAT:- Error as committed by the Learned AO needs to be rectified. Rather the same ought to have been directed to be rectified by the Learned First Appellate Authority when the same was brought to his notice in appeal by the appellant. Having not doing so, we are of the considered opinion that the issue is to be set aside to the file of the AO for de novo proceeding taking into consideration the figure appearing for the revised return filed on 28.02.2013 by the appellant. In that view of the matter, the additions made on the basis of a wrong calculation is deleted.

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• 2019 (4) TMI 1100
  Disallowance of depreciation on bridges - Assessee is neither owner of bridges nor constructed under BOT - construction was made from fund of government - HELD THAT:- Assessee does derive income from allowing right to use the bridges on which he had claimed depreciation during the previous year. The Assessee is not owner of the bridges and only constructs bridges out of funds provided by the State Government. Therefore, the conditions for allowing depreciation both on the ownership aspect as well as use for business is not satisfied so as to allow depreciation on bridges claimed by the Assessee. The position is different where bridges are built under Build Operate Transfer (BOT), where the cost of construction is reimbursed by allowing the person constructing bridges to recover his cost and profits by collecting toll. This aspect is made very clear in the CBDT Circular No.9/2014 dated 23.4.2014. Admittedly the Assessee has not constructed bridges on which depreciation has been claimed by it under BOT. - Decided against assessee. Expenditure incurred on construction of roads - allowable revenue expenditure u/s 37 - HELD THAT:- Argument in the present case cannot be allowed as neither the books of accounts of the Assessee are maintained as such by showing the grant received from the Government as income and the sum expended for the projects as expenditure. The further claim of writing off the expenses on building bridges on a pro rata basis as revenue expenditure is also rejected for the same reason. Interest income as income from other sources - investment of surplus HUDCO loan for building bridges temporary parked in investments to yield income - Assessee availed loans from HUDCO for the purpose of construction of bridges - amount of loan disbursed by HUDCO till utilization for the purpose of construction of bridges were temporarily invested in fixed deposits - interest paid on loans availed from HUDCO was capitalized as cost of the asset and the interest income earned on temporary parking of funds was reduced from the cost of assets - HELD THAT:- Revenue has accepted the order of the CIT(A) and is not agitating the same. It is the assessee s submission that the ITAT decide this issue based on the given set of facts for the AYs 2002-03, 2003-04 2004-05. In respect of AY 2005-06, however, the CIT(A) has dismissed the plea that the interest ought not to be taxed under the head Income from Other Sources by following the order of his predecessor for the AYs 2002-03 to 2004-05. The CIT(A) has followed the order of his predecessor in this regard. CIT(A) however is silent on the plea that interest paid on loans from HUDCO needs to be allowed as revenue expenditure. Since he states that he agrees with the reasoning of his predecessor while dismissing the ground the order of the predecessor on treating the entire interest paid on loans from HUDCO as Revenue expenses is to be allowed. Tribunal in-the event it does affirm the treatment of interest earned as Income from Other Sources, should allow the alternate plea that the interest paid on loans from HUDCO should be allowed as revenue expenditure as done so by the CIT(Appeals) in the order for the AYs 2002-03 to 2004-05 and which has been accepted by the Revenue. Disallowance of prior period expenses relates to interest paid to Krishna Bhagya Jala Nigam Limited- a public sector undertaking towards interest - HELD THAT:- Since the Assessee was following mercantile system of accounting and since no reasons were given for allowing prior period expenses as deduction in the present AY, the revenue authorities disallowed the claim for deduction of prior period expenses - Assessee submitted that the expenses claimed as deduction that was disallowed as prior period expenses crystalized during the relevant previous year as expenditure of the Assessee. No details whatsoever were furnished in this regard. In the circumstances, we confirm the order of the CIT(A) in this regard.

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• 2019 (4) TMI 1099
  Addition u/s 68 towards share capital and share premium - notices issued u/s 133(6) by the AO were duly served on 12 subscribing companies - HELD THAT:- AR fairly stated that the various evidences submitted by the assessee as detailed supra were not even considered by the AO as the assessment was made with a pre-determined mindset that the share capital and premium received by the assessee was not genuine. Hence he prayed for setting aside of this issue to the file of AO, which was also agreed by the DR. Hence in these peculiar facts and circumstances, we deem it fit and appropriate, in the interest of justice and fairplay, to remand this issue to the file of AO for denovo adjudication and decide the same in accordance with law uninfluenced by earlier decision taken in this regard. Grounds raised by the revenue are allowed for statistical purposes.

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• 2019 (4) TMI 1055
  Block assessment u/s 158BC 158BD - Non filing of Income Tax returns - assessee had not filed his return of income for the assessment years falling within the block period before the date of search - Revenue Authorities had rejected the acknowledgements of the returns filed by the assessee because it did not match with the records maintained by the Ld.Revenue Authorities - HELD THAT:- Revenue Authorities have not conducted any investigation on that regard. The Ld.Revenue Authorities also ought to have examined the copy of the returns filed by the assessee that was produced before them and thereafter arrived at a proper conclusion. Further the Ld.Revenue Authorities had not taken any coercive action for the alleged fraud committed by the assessee. In this situation we can neither hold the matter in favour of the Revenue nor the assessee - Addition made by the AO in the block assessment is devoid of merits because there is no conclusive finding by the Revenue that the assessee had not filed his return of income for the assessment years 1997- 98 to 2003-04. Hence we hereby direct the Ld.AO to delete the addition . Case followed SHRI RAKESH SARIN, [ 2011 (6) TMI 977 - ITAT CHENNAI] Undisclosed investments - HELD THAT:- Since the facts and the issue being same, the decision rendered in the case of the assessee s father Shri Rakesh Sarin [ 2011 (6) TMI 977 - ITAT CHENNAI] and mother Smt. Renu Sarin . [ 2019 (4) TMI 1054 - ITAT CHENNAI] holds good in the case of the assessee also and accordingly we hereby direct the Ld.AO to delete the addition respect to the investment made in Insurance Policies with HDFC, ₹ 88,490/- being the investment made in shares, investment in UTI, investment in shares of Aashna Invt. P. Ltd., City Union Bank Sundaram Finance, fixed deposit with Andhra Bank, investment in RBI Bonds and the investment in UTI, ICICI, IDBI HDFC relief bonds. Addition of cash deposit in SB account Current Account and addition of ₹ 8,10,656/- towards Recurring deposit - AO added the same to the undisclosed income of the assessee because the transactions were not accounted in the assessee s books of accounts - HELD THAT:- AO had failed to examine the return filed by the assessee and the explanation submitted thus we hereby direct the Ld.AO to delete the addition made. Addition towards pronotes - HELD THAT:- From the facts of the case, it is apparent that the pro-notes were incomplete in all aspects and therefore presumption cannot be made that the assessee had lend money though there is some air of doubt. Moreover peak credit concept may also be applicable in the case of the assessee due to rotation of advances and repayments. It appears that the Ld.AO has not examined those aspects. There is every probability that if such exercise would have been carried out the source of the amount utilized in the finance business would have been explainable as the amount utilized in the business would have been much less than the addition made by the Ld.AO. Therefore adhoc addition of the amount mentioned in the entire pro-notes is not justifiable. Further the Ld.AO has also not made any investigation in the market to find out whether any amount borrowed from the assessee was pending to be returned to the assessee Addition being the amount advanced to M/s. Shibi Travels as unexplained advances - HELD THAT:- No merit in the order of the Ld.Revenue Authorities on this issue. The assessee had explained the transaction as advance extended to M/s. Shibi Travels against collateral security of a ticket to US. These facts could have been confirmed and verified by the Ld.Revenue Authorities from M/s. Shibi Travels which they have failed to do so. Hence we do not find any merit in the findings of the Ld.Revenue Authorities who had simply rejected the explanation offered by the assessee without verifying the facts. Addition being the amount advanced to M/s. Nadiadwala Grandson as unexplained advances - HELD THAT:- From the above facts it appears that the assessee had explained before the Ld.Revenue Authorities that the amount advanced to M/s.Nadiadwala Grandson Entertainment for ₹ 2,50,000/- on behalf of M/s. Adlab Film Ltd., was omitted to be recorded in the books of accounts of the assessee. However on repayment of the loan of ₹ 2,50,000/- by M/s. Adlab Film Ltd., it was recorded in the name of M/s. Adlab Film Ltd.. These facts could have been verified by the Revenue from both M/s. Nadiadwala Grandson Entertainment and M/s. Adlab Film Ltd. However the Ld.Revenue Authorities had failed to do so. It is also admitted fact that the books of the assessee were incomplete. In this situation, we do not find any merit in the order of the Ld.Revenue Authorities for adding the amount Addition being the amount advanced to M/s. Status Enterprises as unexplained advances - HELD THAT:- Since neither the Ld.AR nor the assessee submitted any explanation before us on this issue, we do not have any other option but to confirm the addition made by the Ld.Revenue Authorities on this issue. Accordingly we hereby confirm the addition Addition on account of property purchased at Kasthurba Nagar - CIT(A) has rejected the submission of the assessee with respect to the source of investment arising from the VDIS disclosure and borrowings by stating that it has no correlation with the investment made in the property purchased at Kasthurba Nagar - HELD THAT:- CIT(A) has rejected the return of income filed by the assessee by stating it to be bogus without further investigation. When the facts being so, we do not find any merit in the observation of the Ld.CIT(A) when he has only investigated the matter partially. There is also no finding by the Revenue as to what investment was made from the voluntary disclosure. The disclosure in the VDS scheme is also not under challenge. In this situation we do not find any merit in the addition made by the Ld.AO which is further sustained by the Ld.CIT(A) on the issue. Hence, we hereby direct the Ld.AO to delete the addition made

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• Customs

• 2019 (4) TMI 1098
  Evasion of SAD - Sub-section (5) of Section 3 of Customs Tariff Act, 1975 - HELD THAT:- Tribunal have already held in the case of LLOYD Electric Engineering Ltd. vs. Commissioner of Customs, Central Excise Service Tax, Noida-II [2018 (3) TMI 567 - CESTAT ALLAHABAD] that the present appellants were helping the importers in evasion of said SAD by allowing them to warehouse goods in their warehouse and subsequently allowing clearances of the same without payment of said SAD - Appeal dismissed - decided against appellant.

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• 2019 (4) TMI 1097
  Classification of imported goods - whether classified under CTH 54075490 as Polyester Woven Fabrics as against the classification declared by the appellant under CTH 63041990 as Polyester Bed Sheet ? - HELD THAT:- The essential distinguishing feature of made up article is that it should be produced in finished state and ready for use without sewing or other working. The fabric needs to be hemmed and stitched firmly in order to assume the shape of a bed cover/quilt cover/bed sheet - The imported goods, as presented, are in the form of fabrics folded and stitched roughly on two sides. The test report from both the expert agencies to whom samples were sent have concurrently reported that the goods cannot be classified as made ups but are more appropriately classified as polyester woven fabric . Confiscation of the imported goods - misdeclaration of goods or not - penalty - HELD THAT:- The appellant has declared the classification of goods as per their understanding. The export invoice indicates the goods as Polyester bed sheet . The actual nature of the imported goods for the purpose of correctly classifying the goods become evident only after examination of the goods and obtaining expert opinion - the charge of misdeclaration cannot be fastened upon the appellant. There is nothing on record to substantiate the view that the appellant has intentionally misdeclared the goods - order of Confiscation set aside - The penalty imposed under Section 112 (a) is also set aside. Appeal allowed in part.

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• 2019 (4) TMI 1096
  Revocation of CHA License - forfeiture of security deposit - whether the Commissioner in the impugned order has rightly deferred with the inquiry report given by the Inquiry Officer appointed by him to conduct inquiry regarding the charges against the appellant for noncompliance of CHALR, 2004/CBLR, 2013? HELD THAT:- Due to administration exigency there had been change in the Inquiry Officer by the ld. Commissioner. In fact this case four Inquiry Officer were appointed on the various occasions and the Show Cause Notice were accordingly amended by issuance of corrigendum. We do not find that the non-adherence of the time limit prescribed under Rule 22/20 of CHALR/CBLR be fatal in this case - Accordingly, there are enough reasons for non-completion of inquiry against the appellant within the prescribed time and the impugned order cannot be faulted on this ground as submitted by ld. Sr. Advocate. There is a clear evidence on part of the appellant as CHA to fail to discharge the duty casted upon under the provisions of CHALR/CBLR - the renewal has been made by the department following the prescribed procedure as the charges against the appellants were not proved till then. Having now inquiry report before the ld. Commissioner and subsequent disagreement thereof is on record and, therefore, the Commissioner cannot be faulted with a revocation of licence granted to the appellant for their involvement in the clearance of import consignment viz. drawing and design by their client M/s Tata Steel Ltd. - the impugned order passed by the Commissioner is sustainable under the provisions of CHALR/CBLR - Appeal dismissed - decided against appellant.

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• 2019 (4) TMI 1095
  Validity of SCN - SCN issued under the provisions of Section 28 of the Customs Act without the assessment being finalised under Section 18(2) of the Customs Act - demand along with penalty - HELD THAT:- The SCN was issued under the provisions of Section 28 of the Customs Act and also proposing the levy of interest, imposition of penalty under the various provisions of the Act. In the SCN, there is no whisper about the consignment having been assessed provisionally and proposed to be finalised by considering the test report obtained from the CRCL. The appropriate course would have been to consider the test report and apply the same to the imported consignment with a notice to finalise the same under the provisions of the Customs Act. It is completely against the provisions of the Custom Act to issue the Show Cause Notice under the provisions of Section 28 of the Customs Act without the assessment being finalised under Section 18(2) of the Customs Act. Revenue has not brought any other decision in support of the impugned order, that as to how without the final assessment, which at the first instance, has been made provisional the demand can be issued - This is act of respondent Commissioner under Section 28 of the Customs Act in contravention of the provisions of Section 18(2) of the Act, and is not sustainable. Appeal allowed - decided in favor of appellant.

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• 2019 (4) TMI 1094
  Classification of imported goods - HP Dream Screen All in One 400 PC - classified under CTH 84713010 or under CTH 84715000 - HELD THAT:- The manufacturer has himself stated that the product is having a touch screen and virtual on screen keyboard is as good as the physical keyboard, and could be used for entry of data. Hence there is no merits in the submissions of the appellant to the effect that there is no keyboard imported/ associated with the imported goods - The terms of heading 847130 do not require the presence of physical keyboard but only require a keyboard as input device. Even the presence of onscreen keyboard is enough to fulfill the requirements of said heading. Whether the item imported is portable or not? - Appellants have contended that the item imported is not portable and hence the same cannot be classified under heading 847130 - HELD THAT:- It is observed that in technical literature portable computers are not limited to laptops/ notebooks but this term is used for all computers which can be easily relocated from one place to another place - the imported goods are definitely in category of portable computers. There is no support to the contentions raised by the appellant from the technical literature put forth by them. Nowhere in the technical literature relied upon by the appellant it is stated that keyboard has to be physical only. Since the imported goods satisfy all the terms and conditions for classification under heading 847130, there is no fault/error in the classification as determined by the adjudicating authority and the appellate authority - appeal dismissed - decided against appellant.

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• 2019 (4) TMI 1093
  Rejection of declared value - short paid the duty on the imported consignment by misdeclaring the value - Penalty - benefit of first proviso to Section 114A of the Customs Act - HELD THAT:- We do not know what was consideration of the evidence and submissions made by the appellant which lead to rejection of the declared value by the Appellants. Rejection of declared value on Bill of Entry is a serious affair and the same could have been rejected on the basis of cogent examination of evidences and justifiable reasons. Neither the adjudicating authority or Commissioner (Appeal), have pointed to such special circumstance warranting the rejection of the declared transaction value by the Appellant on Bill of Entry. From plain reading of the rule 12 it is quite evident that the word doubt used in the rule do not refers to the doubt of a doubting Thomas, but said doubt has to be based on cogent reasons and evidences. No cogent evidence or reason has been put forth in the present case to justify the doubt of the assessing officer. If the case of the revenue was that contemporaneous imports were at higher price, could they have proceeded without referring to NIDB maintained by the revenue itself. Without even referring to their own database both adjudicating authority and Commissioner (Appeal) have rejected the declared value on the basis of the certain emails which were not with the reference to imports under consideration. Appeal allowed - decided in favor of appellant.

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• 2019 (4) TMI 1092
  Valuation of imported goods - Stainless Steel Seamless Pipes Grade 304 - enhancement of assessment value - rejection of declared value - reliance placed on contemporaneous imports - case of Revenue is that the goods are of prime quality - HELD THAT:- We are not in position to agree with the claim of revenue that the goods are prime quality goods confirming to AISI 303/304. If the manner in which revenue has proceeded to hold the defective stainless steel pipes to be of prime quality on the basis visual inspection report we have no doubt that there can be many more tragedies akin to Bhopal Gas Tragedy in this country. Can such defective pipes which do not confirm to the prescribed standard be used for the same purpose for which certified prime goods of that standard are used. Revenue has further gone on to value the said goods as prime quality goods of the same standard to which the test report of Deputy Chief Chemist CRCL is itself contrary. The approach of revenue is definitely erroneous and cannot be sustained. Appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2019 (4) TMI 1091
  Restoration of name of the Company in the Register of Companies - HELD THAT:- This Tribunal is of the view that the Company was in existence and it is a going concern and name of Company to be restored in the Register of Companies as maintained by ROC. By exercising the powers conferred on this Tribunal under Section 252 of the Companies Act, 2013, and Rule 87-A of NCLT (Amendment) rules 2017, R/w NCLT Rules, 2016, the Company application bearing CA No. 79/252/HDB/2019 is disposed of with the direction to restore the original status of the Company as if the name of the company has not been struck off from the Register of Companies and take all consequential actions like change of company's status from 'strike off' to Active (for e-filing), to restore and activate the DINS, if applicable, to intimate the bankers about restoration of the name of the company so as to defreeze its accounts.

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• Securities / SEBI

• 2019 (4) TMI 1090
  Compounding in proceedings - consent of respondent to permit compounding - Compounding at the initial stage or at the final stage - Whether object of the SEBI Act would be lost if compounding is permitted by this Court, as the allegations levelled against petitioner are of artificially jerking the price of the share of petitioner s company? - HELD THAT:- No doubt, that petitioner had filed an application for compounding way back in the year 2013 and it remained pending, but now, the proceedings before the trial court have reached the stage of final arguments. Compounding at the initial stage has to be encouraged, but not at the final stage. The object of the SEBI Act has to be kept in mind. A stable and orderly functioning of the securities market has to be ensured. It will not be in the interest of justice to discharge the accused at the final stage of the proceedings by allowing the application for compounding without the consent of SEBI Act as it will defeat the objective of the SEBI Act. Though the Adjudicating Officer has found that the alleged violation committed by petitioner has not resulted in any loss to the investors, but this by itself would not justify discharge of accused at the fag end of trial. As relying on N.H. SECURITIES LTD., NAVINDCHANDRA PAREKH AND KIRTIKUMAR PAREKH [ 2018 (12) TMI 99 - BOMBAY HIGH COURT] and M/S. METERS AND INSTRUMENTS PRIVATE LIMITED [ 2017 (10) TMI 218 - SUPREME COURT OF INDIA] no justification to allow petitioner s application under Section 24A of the SEBI Act, 1992.

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• Insolvency & Bankruptcy

• 2019 (4) TMI 1128
  Initiation of Corporate Insolvency Resolution Process - grant of moratorium - appointment of Interim Resolution Professional - default in making repayment - retention money - amount not became due as on date - existence of debt or not? - Section 9 of Insolvency and Bankruptcy Code, 2016 - whether delay occurred on account of Corporate Debtor? - HELD THAT:- Admittedly, Corporate Debtor was given contract for completing the project for Majalgaon Lift Irrigation System on Turnkey Basis and equipment was transported to the project site. At that stage authorities of Government of Maharashtra issued order suspending the work. It is an unforeseen event. Parties to the Purchase order did not visualize such an event will take place. In the normal course if there is no suspension order, Operational Creditor can erect, commission and trial run the equipment. In case in the normal course, delay occurred on account of Corporate Debtor for completing the project on any ground other than the ground now referred to, then it can be said the retention money becomes due up to 20% and if not paid it amounts to default. The situation is otherwise. Without any fault from the side of Corporate Debtor concerned authorities of Government of Maharashtra issued order of suspension of the project work. The Corporate Debtor cannot be blamed for the suspension order passed by the authorities of Government of Maharashtra. The suspension order does not show that it was issued on account of failure on the part of Corporate Debtor to perform its part of the contract given to it by the Government of Maharashtra. The Operational Creditor becomes entitled to retention money of 25% or 20% as the case maybe only if it completes the terms of purchase order, especially erection, commissioning and trial run. This part of the contract was not completed. The amount becomes due only if Operational Creditor completes the remaining part of the Purchase Order. Till then, the amount does not become due. When the amount does not become due, then there is no question of default. Operational Creditor failed to establish that there is a debt due and payable and it was committed default. As far as IBC is concerned, the Operational Creditor to establish debt as well as default. When these two are not established, then petition cannot be admitted - petition dismissed - decided against petitioner.

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• 2019 (4) TMI 1089
  Maintainability of petition - initiation of Corporate Insolvency Resolution Process - grant of moratorium - appointment of Interim Resolution Professional - Section 9 of Insolvency and Bankruptcy Code, 2016, r/w Rule 6 of Insolvency Bankruptcy (Application to the Adjudicating Authority) Rules, 2016 - Corporate debtor - contention of PCS that operational creditor issued demand notice to the corporate debtor in FORM-3 FORM-4 enclosing invoices which are shown as Annexure-B at Pg.No.10-25 of the application. PCS contended that there is no reply for the said demand notice. HELD THAT:- The operational creditor rendered services to the corporate debtor and raised invoices. There was no reply to the demand notice. The amount claimed by operational creditor is an operational debt and corporate debtor committed default. Nowhere corporate debtor raised any dispute. The documents filed by operational creditor would establish that corporate debtor rendered services to the corporate debtor and operational creditor raised invoices which was committed default. Therefore there are grounds to admit the petition. The Operational Creditor proposes the name of Ms. Shri Sunit Jagdishchandra Shah, as Interim Resolution Professional. The proposed IRP has given written consent in Form-2 vide memo. He has also certified there are no disciplinary proceedings pending against him either with the Board or ICSI. He has enclosed certificate of Registration - The Adjudicating Authority is satisfied that the Corporate Debtor failed to discharge its liability mentioned in the Petition filed by the Operational Creditor under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC), resulting occurrence of default for an amount of ₹ 74,17,215/-. The Adjudicating Authority admits this Petition under Section 9 of IBC, 2016, declaring moratorium for the purposes referred to in Section 14 of the Code - petition admitted.

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• FEMA

• 2019 (4) TMI 1088
  Cancellation of the Passport - investigation being conducted under FEMA - Request for an alternate mode of examination by video conferencing - HELD THAT:- In the present case, the petitioner is a non-resident Indian and contends that the provisions of FEMA are inapplicable. Notwithstanding the aforesaid contention, Mr. Tripathi, learned Senior Counsel for the petitioner had made a statement before this Court on 14.08.2018 that the petitioner would provide all documents as required by the respondents even though, according to the petitioner, the same are not required to be disclosed. It is not disputed that in compliance with the aforesaid order, the petitioner has supplied all documents that were called for by the ED. This Court had, during the course of proceedings, also pointedly asked Mr. Amit Mahajan, learned counsel for the respondents that whether there was any other document that was required by the ED. Although, he did not dispute that all documents had been provided, he nonetheless submitted that the petitioner was required to be confronted with certain documents and, therefore, his presence was necessary. The petitioner had voluntarily agreed to appear by teleconferencing and also make all arrangements for the same, however, that was not accepted. In this regard, the Division Bench of this Court in Lalit Kumar Modi [ 2014 (10) TMI 527 - DELHI HIGH COURT] had observed that FEMA did not entail custodial interrogation and, therefore, a request for an alternate mode of examination by video conferencing ought not to be shrugged aside This Court is of the view that the controversy involved in the present petition is covered by the decision of the Division Bench in Lalit Kumar Modi [ 2014 (10) TMI 527 - DELHI HIGH COURT] and the petitioner s passport could not be suspended in public interest. In terms of Section 10(1)(e) of the Passports Act, a passport can be cancelled in cases where offence alleged to have been committed by the holder of passport is pending before a criminal court in India. Further, in terms of Section 10(3)(h) of the Passports Act, a passport can be cancelled if a warrant or summons for the appearance, or a warrant for the arrest, of the holder of the passport has been issued by a Court under any law for the time being in force. Criminal prosecution as contemplated under Section 13(1C) of FEMA can be commenced by filing a criminal complaint. Plainly, if such a complaint is filed and summons are issued by a competent court, the passport facilities provided to the accused could be withdrawn by virtue of Section 10(3)(h) of the Passports Act. Impugned order suspending the petitioner s passport is set aside. However, it is clarified that respondent no.3/ED is not precluded from initiating any other proceedings as permissible in law.

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• PMLA

• 2019 (4) TMI 1087
  Disproportionate assets case filed by CBI against the Retired Army officer [Appellant No. 1] - Appellant No. 2 is the wife of Appellant No.1 and Appellant No.3 is the son of Appellant No.1. - assets of Appellant Nos. 2 3 have been incorrectly attributed to Appellant No.1, income of the Appellant No.1 has been suppressed and several other errors have been made in computation of income, assets and expenditure of the appellants - mandation of prescribed period of 180 days for adjudication - HELD THAT:- The CBI in its final report has merely charged the appellants for having committed the offences punishable under sections 12(2) r/w 13(1)(e)of the Prevention of Corruption Act, 1988 and under Section 120-B r/w Sections 465, 471 of the IPC 1860, however in the conclusion last para of the impugned order, it is concluded by the Adjudicating Authority that the appellants have committed the schedule offence. The said conclusion is on the face of is without any basis as the evidence in the schedule offence is yet be concluded,such declaration made by the Adjudicating Authority is an abuse of the process of court. How can any authority comes to the conclusion in advance. The final judgement is yet to be delivered by the Special Court after evidence as to whether the accused has committed the schedule offence or not.In other cases, also similar observations are made against the person who are not even name in the FIR or any charge-sheet is filed under this Act. The Authority under this Act is duty bound to deal with the reply and materials on record within the meaning of Section 8(2) of the Act and decide the same on merit rather to simply adopt the CBI report and to give sweeping findings that the person concerned has committed the schedule offence when such matter is still pending before Special Court. The Adjudicating Authority in the Impugned Order merely on presumptions has come to the conclusions arrived at merely on the basis the CBI Final Report dated 19.12.2014, without conducting any independent inquiries, despite the Act requiring the authority to independently apply its mind to the entire matter. When it was pointed out to the learned counsel for the respondent who supports the impugned order. The said explanation is unimpressive as it is the duty of the Adjudicating Authority to deal with the plea of the person concerned and material placed on record but the same has not been discussed. Section 8(2) of PML Act, 2002 is a mandatory provision if the reply and material available on record are not dealt with in the impugned order. The same is liable to be set aside. The prescribed period of 180 days for adjudication has already been expired under Section 5 of the Act. Thus, there is no need to remand back the matter. Counsel for the appellant after hearing made the fair suggestion without prejudice which is quite reasonable. The impugned order is accordingly modified. I is the admitted position that the charge-sheet against the appellants under the scheduled offence as well as prosecution complaint under PMLA and under this Act is also pending before the Special Court. Without expressing any opinion on merit, the impugned order is modified to the following extent:- a) That as far as account maintained by Smt. Minni Narang and Sumant Narang ( A/c. No. 0181012002249 of Kotak Mahindra Bank, Sector-18, NOIDA - balance amount as ₹ 5,66,604.74) and also account maintained by Smt. Minni Narang and Sh. J.K. Narang (account no. 00431000084976 of HDFC Bank, Saket, New Delhi balance amount as 14,59,940.54) totalling ₹ 20,26,545.28, the said amount be appropriate by the respondent. Without prejudice, the FDR be prepared initially for a period of two years in the nationalized bank till the date of final judgement passed by the Special Court. It can also be reviewed for further period in case the final order is not passed. b) With regard to the property bearing no. C-80, Sector 47, NOIDA(U.P), without prejudice, the attachment of the said property shall continue till final judgement is passed by the Special Court. However, the attachment will continue and the and the appellant shall not dispose of the said property till the final order is passed after recording the evidence. c) The observation made by the Adjudicating Authority in the conclusion part of the impugned order shall not be used against the appellants. The Special Court even otherwise is to pass the final order after recording the evidence without having any influence of the impugned order dated 15.7.2016.

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• 2019 (4) TMI 1086
  Prevention of Money Laundering - freezing of bank account - Copy of reason to believe not produced - permission to lease-out the property to third party denied - HELD THAT:- Despite of interim order on 26.3.2018 passed by this Tribunal, has issued a communication to other authority not to grant the approval/license to the appellant. The said act of the respondent is clearly in breach of interim order passed by this Tribunal. The respondent has no jurisdiction for violation of the order. The explanation given by the counsel that since the appellant during retention proceeding entered into an agreement with third party, therefore, the respondent has issued such communication. The said explanation is not valid. The respondent is duty bound to comply all the orders of the Court included of this Tribunal. If the respondent wanted to issue communication to the authority, the respondent could have filed the application for seeking the permission of this Tribunal in this regard. Even notice issued u/s 8(1) is defective, as the details of the property is not mentioned nor the reasons to believe are given. The plea taken by the appellant is of serious in nature, however, this tribunal at present is not inclined to pass the order to defreeze the immovable property in question in view of serious allegations made in the FIR though the charge-sheet in the schedule offence is yet to be filed. The role of appellant would have to be seen once the charge-sheet is filed. Till that time, the appellant should be allowed to lease-out the property to third party. I am of the view that once the retention proceedings under section 17(4) were pending, the appellant ought to have waited before execution of lease-agreement with third party. In view of alleged allegations mentioned in the FIR, the immovable property cannot be defreezed. Thus, the impugned order is partly modified in view of the finding arrived in paras 8 12 of my order. As far as freezing of bank accounts are concerned, the same are de-freezed subject to the condition that the appellant shall not deal with the balance amount lying in the accounts. The said accounts, however can be operated by the appellant. As far as immovable properties are concerned, the interim order passed on 26.03.2018 shall continue till the final order passed by the Special Court after recording the evidence. However, the freezing order pertaining to immovable properties shall continue till the final order is passed by the Special Court. The appellant is always at liberty to move the petition for review of order for de-freezing, if charges are not framed against him.

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• 2019 (4) TMI 1085
  Prevention of Money Laundering - retention of the records seized from the residential premises of the Appellant - Application of the Respondent under Section 17[4] of the Act seeking retention of documents, Hard Disk Drive [HDD] and Indian Currency seized from the residential premises of the Appellant - HELD THAT:- In the present case, no report against the appellant has been forwarded to the Magistrate. No complaint against the appellant was filed before a Magistrate. A mere reading of Sections 17 to 21 that the outer limit upto the date for deciding the application for retention of property is 180 days from the date of seizure of any property or records. The said period is not extendable as per the scheme of the Act, unless the prayer for retention is allowed and subject to filling of prosecution complaint within 90 days from the date of passing the retention order. Once the prayer is allowed, the person concerned/aggrieved party of such order, is entitled to file the appeal under Section 26 of the Act. The same shall be heard and after giving an opportunity of being heard, the appellant Tribunal shall pass the order either to confirm the order of retention or to modify or setting aside the same. The prescribed period for filing the prosecution complaint is ninety days. In the present case, more than one year and ten months have been passed, but no prosecution complaint has been filed. The provisions of section 8 (3) (a) provides that the attachment or retention of property or record seized shall continue during the investigation for a period not exceeding ninety days. The said prescribed period has already been expired as more than a year has already elapsed but the properties and records have not been returned so far which is in clear violation of the provisions of PMLA. No prosecution complaint has been filed against the Appellant. Order: - a) As far as Indian Currency amounting to ₹ 4,25,000/- is concerned, in the absence any prima facie material placed by the respondent and being the appellant discharging his burden, we are satisfied that the said money cannot be retained further. The said currency of ₹ 4,25,000/- seized was part of the withdrawal of ₹ 5,00,000/- made by the father of the appellant from the current account of his proprietorship firm M/s. R.C. Kapoor Co. bearing no. 1160199139 maintained with Central Bank of India, M-2, South Extension, Part-I vide Cheque No. 156406 dated 06.02.2017. Therefore, even on merit, the appellant is entitled to receive the said money forthwith. b) With regard to one Hard Disc Drive is concerned, without prejudice, the respondent is entitled to take a copy of the Hard Disc Drive, the same be returned to the appellant forthwith. c) As far as Receipt of ₹ 1,32,00,000/- and the possession letter dated 17.03.2015 pertaining to the office premises of the appellant are concerned, the original letter may be kept by the respondent, if so required, and a photo copy of the same be handed over to the appellant. Present appeal is allowed.

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• Service Tax

• 2019 (4) TMI 1084
  Penalty u/s 78 of FA - Non-payment of service tax - insurance auxiliary services received from abroad for vessels - reverse charge mechanism - period between 11.04.2008 and 31.03.2013 - bonafide belief or not - HELD THAT:- The Appellants are having specification vessels including accommodation, barges and tugs etc., which are primarily used by Oil and Gas Industries and are also providing water diving services. In the light of confusion within the industry and challenge on levy, the Appellants registered themselves on 21.11.2018, under Supply of Tangible goods Services classifiable under Section 65 (105) (zzzzj) read with Section 65(50) of the Finance Act, 1994 and started paying service tax. Respondent Department entertained a view that for the period prior to registration from 15.06.2008 to 30.11.2008, the Appellants are required to pay service tax. This being so, demand of service tax under supply of tangible services for the period prior to such registration, though not disputed, can never be considered to be in conformity to Section 265 of the Constitution of India. Having regard to the fact that investigation by Anti-Evasion Wing had brought all those duty demand from the records maintained by the appellant and considering the fact that the issue is a bonafide dispute of legal interpretation of the newly introduced provision, no malafide can be attributed to the appellant so as to call for imposition of any penalty. Appeal allowed - decided in favor of appellant.

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• 2019 (4) TMI 1083
  CENVAT Credit - input services - floor insulation work interior design work - hotel charges - HELD THAT:- It is the contention of the Appellant that on the basis of the sample invoices produced, the learned Commissioner has wrongly concluded that the floor insulation work relates to civil structure and hotel stay charges are not incurred in relation to professional work rendered by the employees of the Appellant Company. He submits that if all invoices are examined, then it can be ascertained that these services are used only for the purpose of interior design and renovation work and hotel charges are in relation to discharging professional services on behalf of the Company. The matter is remanded to the Adjudicating authority, who would examine all the input service invoices taking into consideration the case-laws on the subject and arrive at the conclusion whether the CENVAT Credit on the two input services are eligible or otherwise - appeal allowed by way of remand.

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• 2019 (4) TMI 1082
  Refund of tax already paid by them alongwith interest - actual amount payable by them was paid much before the issuance of SCN - period 2003-04, 2004-05 - HELD THAT:- The appellant assessee has submitted a CA certificate which certifies that the appellant had not repatriated any foreign currency out of India during the relevant period. Accordingly, there is no liability on the part of the appellant assessee and therefore set aside the same. Export of Services - period 2005-06, 2006-07 - HELD THAT:- As far as the order of the Ld. Commissioner is concerned, the relief has been allowed on the basis of the documents produced such as CA certificate along with Bank Statement, Copies of telegraphic transfer credit advices and corresponding certificates of foreign inward remittances - there is no infirmity in the order of the Ld. Commissioner and therefore the appeal filed by the Revenue is rejected to that extent. Advances - HELD THAT:- The appellant assessee submitted a CA certificate certifying that they had paid tax on such advance after completion of service. Thus the appellant assessee cannot be held liable to pay tax on such advances as the same would result in double payment of tax - demand set aside. Cum tax benefit - HELD THAT:- The appellant assessee has not collected service tax and where the gross amount charged by a service provider, for the service provided or to be provided is inclusive of service tax payable, the value of such taxable service shall be such amount as, with the addition of tax payable, is equal to the gross amount charged - decided against Revenue. Appeal dismissed - decided against Revenue.

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• 2019 (4) TMI 1081
  Levy of Interest and penalty - wrongly availed CENVAT Credit, but not utilized - Reversal of credit on being pointed out - also, there was always a surplus balance over and above the inadmissible Cenvat credit -Time Limitation - HELD THAT:- The Show Cause Notice doesn t not bring out any allegation, of specific omission or commission on the part of the appellants, so as to establish intent to evade payment of duty. The Show Cause Notice merely states that the facts were brought to the Notice of department only during the course of Audit. It is not denied that the appellants were regularly filing the ST-3 returns. The Show Cause Notice doesn t specify when audit has taken place. It only states reversal was on 15- 2-2008. Show Cause Notice was issued 08/10/2012 - the department has not made any case for invoking extended period of time - SCN is barred by time limitation. As the issue is settled on limitation, there is no reason to go into merits of the issue - appeal is allowed on limitation.

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• 2019 (4) TMI 1080
  CENVAT Credit - Towers, tower materials and shelters which were used by the appellants for providing telecommunication service - HELD THAT:- The Tribunal in the case of VODAFONE ESSAR SOUTH LTD., AIRCEL CELLULAR LTD., DISHNET WIRELESS LTD. VERSUS CST CHENNAI , [2018 (1) TMI 1218 - CESTAT CHENNAI] held that the appellants are not eligible for such credit. Extended period of limitation - HELD THAT:- There is no evidence adduced by the Department to substantiate the claim of suppression with intent to evade payment of service tax. We further note that there were conflicting decisions on the issue regarding admissibility of credit on tower and shelter material. There were also numerous proceedings initiated by the department against most of the telecommunication companies. Hence, there is no question of suppression with intent to avail irregular credit - the demand beyond the normal period of limitation is not sustainable, hence set aside. Demand alongwith interest and penalties are set aside as being time-barred - appeal allowed.

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• Central Excise

• 2019 (4) TMI 1079
  Valuation - goods covered under Pan Masala Packing Machine (Capacity Determination Collection of Duty) Rules, 2008 - cross examination of witnesses - scope of quasi-judicial proceedings - HELD THAT:- Ultimately the Tribunal itself has come to the conclusion and recorded findings of fact that no attempt had been made by the assessee to remove any goods in clandestine manner and all the goods were found available in the factory premises. Tribunal has come to the conclusion that the order of confiscation, duty and penalty against the appellant was unsustainable and, therefore, set aside the impugned order - Appeal dismissed - decided against Revenue.

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• 2019 (4) TMI 1078
  Condonation of delay of 42 days in filing the captioned tax appeal - time limitation - section 5 of the Limitation Act, 1963 - HELD THAT:- Considering the averments made in the memorandum of application, the court is of the view that the delay caused in filing the tax appeal has been sufficiently explained - The delay caused in filing the tax appeal is hereby condoned - Application for COD allowed.

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• 2019 (4) TMI 1077
  Penalty - SSI Exemption - crossing of threshold exemption limit - N/N. 8/2003-CE dated 1.3.2003 - whether the appellant is required to discharge penalty equal to the duty since they have paid almost entire amount of duty on initiation of the proceeding for recovery? - HELD THAT:- The authorities below have not extended the benefit to discharge 25% of penalty imposed under Section 11AC of the Central Excise Act, 1944 on the appellant company. Consequently, the appellant company is eligible to discharge 25% of the penalty imposed subject to fulfillment of the conditions laid down under Section 11AC of the Central Excise Act, 1944. Penalty on the Director and the employee - HELD THAT:- There is no evidence on record to suggest their personal involvement in the case. In these circumstances, imposition of personal penalty under Rule 26 of Central Excise Rules, 2002 on the Director and the employee is unwarranted and unjustified. Appeal disposed off.

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• 2019 (4) TMI 1076
  Cash refund claim of accumulated CENVAT Credit - Time limitation - Section 11B of Central Excise Act, 1944 - period January to Sept, 2008 - appeal filed by the appellant on 3.9.2010 - HELD THAT:- The issue has been considered at length by the Hon ble Madras High Court in the case of COMMISSISONER OF CENTRAL EXCISE VERSUS GTN ENGINEERING [2011 (8) TMI 960 - MADRAS HIGH COURT] , where it was held that though there is no specific relevant date is prescribed in the notification, the relevant date must be the date on which the final products are cleared for export. Appeal dismissed - decided against appellant.

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• 2019 (4) TMI 1075
  Payment of Clean Energy Cess but under wrong code - invocation of extended period of limitation - penalty - HELD THAT:- In the instant case it is not denied the appellants have not paid Clean Energy cess. The only mistake was the wrongful mention of the assess code. The assessee code mentioned also pertains to the appellants themselves. It is not the case of the department that the code used is not in existence or is in defunct. Tribunal has held that payment of tax is a wrong code will not make the payment null and void as in the case of CCE ST V/S.K.K. Kedia 2014 (10) TMI 602 - CESTAT NEW DELHI] There is no case made out by the department against the appellant. As long as the duty is paid and credited duly to the Govt. of India account, procedural infractions which are curable in nature will not nullify such payments. Demanding such duty second time is certainly harsh and has no sanction of law, more so along with interest and penalty. Appeal allowed - decided in favor of appellant.

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• 2019 (4) TMI 1074
  Valuation - pre-recorded cassettes - Board s Circular No.619/10/2002-CX, dt.19.02.2002 - period from October 1997 to May 1999 - HELD THAT:- There is no dispute about the fact that royalty charges have been paid by M/s Pen Audio Pvt. Ltd to various artists, which ought to be included in the assessable value of pre-recorded cassettes manufactured on job work basis by the Appellant. It is the claim of the Appellant that even though they placed on record the balance sheet of Pen Audio Pvt. Ltd for calculation of the assessable value on the basis of the royalty charges paid by M/s Pen Audio Pvt. Ltd., but the same was not considered and the demand was confirmed - Since the issue has been settled by the Hon ble Supreme Court in M/S. KRCD. (I) PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI [2015 (4) TMI 856 - SUPREME COURT] , therefore, it is prudent to remand the matter to the Adjudicating authority. Appeal allowed by way of remand.

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• 2019 (4) TMI 1073
  Refund of accumulated CENVAT Credit - Doctrine of merger - HELD THAT:- The basic issue is the grant of refund of ₹ 4.1 crores sought by the respondent. This issue stands decided in favour of the respondents with the dismissal of SLP by the Hon ble Supreme Court. The refund cheque has also been since issued. The various orders passed by Lower Authorities stand merged with the Order of the Supreme Court. Appeal dismissed - decided against Revenue.

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• 2019 (4) TMI 1072
  Process amounting to manufacture or not - manufacture of Xtra Mile Super Diesel and Xtra-premium MS by the process of blending of HSD and MS with multifunctional additives (MFA) - evasion of Central Excise Duty - HELD THAT:- The issue is no more res-entigra in view of the Tribunal s decision in HINDUSTAN PETROLEUM CORPN. LTD. VERSUS COMMR. OF C. EX, DELHI ROHTAK [2008 (9) TMI 154 - CESTAT, NEW DELHI] whereby the Tribunal, has held that a process or treatment to enhance the marketability of a product or to improve the value addition does not amount to manufacture. Appeal allowed - decided in favor of appellant.

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• 2019 (4) TMI 1071
  Levy of Interest and penalty - Valuation - Sugar confectionary - valued u/s 4 or 4A of the Central Excise Act - benefit of abatement - N/N. 13/2002-CE (Non-tariff) dated 01/03/2002 - the impugned order has imposed penalty and demanded interest on the basis that the appellants have evaded payment of Central Excise Duty - HELD THAT:- In the present case, no adjudication proceedings under Section 11A of the Central Excise Act or any other provisions had been conducted at all. A close perusal of Section 11AC and 11AB makes it abundantly clear that these sections can only be invoked in cases where determination regarding evasion of payment of duty had taken place under Section 11A. The impugned order passed under Section 11AC and Section 11AB cannot be sustained - Penalty under Section 11 AC cannot be imposed without any proceedings on a charge of duty evasion - Appeal allowed - decided in favor of appellant.

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• 2019 (4) TMI 1070
  Valuation - inclusion of amortised cost of the designs and drawings in assessable value - HELD THAT:- The issue was decided by the Tribunal in COMMISSIONER OF CENTRAL EXCISE JAMSHEDPUR VERSUS TATA MOTORS [2008 (12) TMI 129 - CESTAT KOLKATA] , where it was held that the cost of drawings and designs is includible in the assessable value of the components - the demand falling within normal time limit upheld - penalties set aside. The Original Authority is directed to re-quantify the demand - appeal allowed in part.

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• 2019 (4) TMI 1069
  CENAVT Credit - capital goods - engineering goods - denial on account of nexus - it is also alleged that the assessee had adjusted such capital goods against physical goods against physical shortage/obsolescence in their stores account and spare consumption account - main grounds of appeal of the Revenue are that the Commissioner (Appeals) did not resort to any enquiry and remanded the matter to the Adjudicating Authority which is contrary to the provisions of law. HELD THAT:- Since the Show Cause Notice was issued only in respect of capital goods, there is no occasion on the part of the Lower Appellate Authority to include inputs also which was not an issue to be decided by him - Accordingly, the impugned order is modified to the extent that the Original Adjudicating Authority would pass the denovo order after verification of the statutory registers and quantification of capital goods only and not the inputs since such allegation was not there in the Show Cause Notice. Appeal allowed by way of remand.

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• 2019 (4) TMI 1068
  Process amounting to manufacture or not - already marketable or marketed soaps and detergent bars/cakes, detergent powder, shampoo, tooth paste, etc. in damaged condition, are collected and brought back to the godown and de-packed/de-wrapped or decanted and cut into pieces - HELD THAT:- The product is not made marketable to the consumer but it is sold in bulk to various parties, who in turn may make them marketable. The activity of packing or repacking or any other treatment must be for rendering the products marketable. By resorting to such activities of de-packed/de-wrapped or decanted or cutting into pieces rendered the products as non-marketable or nonsaleable. These activities cannot amount to manufacture. Appeal allowed - decided in favor of appellant.

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• 2019 (4) TMI 1067
  Valuation - inclusion of Sales Tax collected from their buyers and retain the same without remitting to the Sales Tax Department in assessable value - HELD THAT:- The issue has been settled by the Hon ble Supreme Court in the case of Super Synotex (India) Ltd. Vs. CCE Jaipur [2014 (3) TMI 42 - SUPREME COURT] , wherein the Apex Court has approved the inclusion of the retail Sales Tax in the assessable value - the issue stands decided against the appellant on merit. Time Limitation - HELD THAT:- The CBEC has clarified the issue (among other things) vide their circular No. 1063/2/2018-CX dated 16/02/2018 and held that such amount retained by the assessee is not required to be added to the assessable value - Since there was no clarity on the issue, the assessee cannot be said to be at fault, hence extended period would not be available to raise the demand. The appellant will be entitled to the benefit of time bar - Appeal allowed - decided in favor of appellant.

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• 2019 (4) TMI 1066
  Valuation - inclusion of Handling charges in assessable value - MRP based assessment u/s 4A of CEA - HELD THAT:- In respect of goods notified under this section, duty is required to be paid only on the basis of MRP affixed by the manufacturer less allowed abatement. In respect of such goods, the actual amount recovered from the customers is relevant - there is no basis for the Revenue to demand differential duty by adding the handling charges to the amount recovered through trade invoices - demand of differential duty on handling charges set aside. Valuation of empty metal containers - Stock Transfer - Revenue neutrality - HELD THAT:- The duty paid by the appellant is availed entirely as Cenvat Credit by the receiving unit. Under these circumstances, it cannot be said that the appellant indulged in conscious under-valuation with a view to evade Central Excise Duty. The demand raised in the impugned order on empty containers is not maintainable - appeal allowed - decided in favor of appellant.

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• 2019 (4) TMI 1065
  CENVAT Credit - benefit of N/N. 30/2004-CE dated 09.07.2004 availed - case of the Department is that since they have cleared the consignment availing full exemption under Notification No. 30/2004-CE, they are not entitled to avail Cenvat credit in respect of stock lying on 31.03.2006 - HELD THAT:- The appellant adopted the mechanism as clarified by the CBEC between 01/04/2006 till 01/02/2007. It is submitted that following the procedure laid down by the Circular dated 1/2/2007 of their own account, debited Cenvat Credit amount the ₹ 103,45,517/- along with interest of ₹ 95,802/- (total amount of ₹ 1,04,41319) for the closing stock as on 31/01/2007 and the said entry was made on 31/3/2007 as the appellant has started the proportionate availment of Credit at the end of the month in view of the aforesaid board Circular. The learned Adjudicating Authority denied the aforesaid credit and confirmed the demand, without appreciating the fact that the method of taking proportionate credit at the end of the month was true. The appellant has provided the detailed worksheet regarding the availment of the credit certified by the Chartered Accountant which was not accepted by the Adjudicating Authority. In this case, we are of the view that Chartered Accountant certificate cannot be disagreed without any valid reasons. The acceptance of CA Certificate has been upheld by this Tribunal and the higher courts in a large number of decisions, and therefore, the Commissioner again to ignored the same is prior to the provisions of law. The Adjudicating Authority is bound to follow the departmental Circular which is not there in case at hand. Appeal allowed - decided in favor of appellant.

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• 2019 (4) TMI 1064
  Related party transaction or not - goods sold from the factory gate of the appellant during the said period were sold to/through firms which were related persons - Section 4(4)(c) of the provisions of the Central Excise Act - Mutuality of Interest - HELD THAT:- The issue is no more res-integra as this stands settled by the decision of Hon ble Supreme Court in UNION OF INDIA OTHERS VERSUS ATIC INDUSTRIES LTD. [1984 (6) TMI 51 - SUPREME COURT OF INDIA] , where it was held that It is essential to attract the applicability of the first part of the definition that the assessee and the person alleged to be a related person must have interest, direct or indirect, in the business of each other. In the instant case, there is no evidence disclosed in either the show cause notice or the impugned order which establishes that the requirement as stated above, laid down by Hon ble Supreme Court that both the Appellant and the parties to whom it sold the goods, had interest in the business of each other. The evidence on record discloses that the Appellant did not have any interest in the business of its buyers. Hence, there was one way interest .Whereas the pre-requisite is that of mutual interest, which has not been satisfied. Therefore, it cannot be said that the Appellant and its buyers were related persons and that the sale of the goods were to or through related persons, as envisaged under Section 4(4)(c) of the Central Excise Act - The contrary finding of the Commissioner is thus not sustainable. Valuation - goods sold from depots/selling agent s places - whether the factory gate sale price or the depot sale price is to be considered or not? - HELD THAT:- In the impugned order of the Commissioner, it is acknowledged that the Appellant Company sold small quantity of their goods at the factory gate and that such goods were cleared ex-factory to the independent buyers . It is, therefore, established that the Appellant had factory gate sales, though of small quantity, which were cleared to independent buyers - These are all post manufacturing expenses and there is no evidence that any part of the said expenses were incurred within the factory premises prior to clearance of the goods from the factory gate. Hence, these charges are not to be included in determining the assessable value of the goods cleared ex-factory by the Appellant. There has been no under-valuation of the goods sold by the appellant during the material period and hence, there has been no short payment of Central Excise duty payable - demand of duty and interest, confirmed by the impugned order, is thus unsustainable - penalty also not sustainable. Extended period of limitation - HELD THAT:- Since we have decided the issue on merits, in favour of the Appellant, we refrain from dealing with this issue. Appeal allowed - decided in favor of appellant.

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• 2019 (4) TMI 1063
  CENVAT credit - inputs - M.S. Channels, MS plates, HR plates, pipes, etc falling under chapter 72 - input services - Air Travel Agent services and travelling expenses. Input services - Air Travel Agent services - travelling expenses - Forex Broker - Insurance- Gratuity - Repairs Maintenance Expenses - Insurance Expenses - Vehicle Expenses - Motor car expenses - HELD THAT:- All these services are used either in or relation to manufacture or overall business activities of the company. This tribunal in various judgments allowed the credit on all these services - appellant is entitled for Cenvat credit. Inputs - steel items that is M.s. channels, plates, coil, etc, -no proper verification done - HELD THAT:- Merely by seeing from the photographs, without physical verification, how it can be decided that whether the steel items were used in repair maintenance or for making support structure. Therefore, the finding of the Commissioner (A) is not based on the fact but it is on his own assumption - Since, no verification was carried out by the department as regard actual use of the said goods, matter needs reconsideration - matter on remand. Appeal allowed in part and part matter on remand.

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• 2019 (4) TMI 1062
  CENVAT Credit - fake invoices - fraudulent paper transactions without physically receiving the corresponding goods - HELD THAT:- No evidence whatsoever has been produced by the Revenue to substantiate the fact that the respondent assessee had procured the impugned goods from elsewhere after getting possession of the relevant Central Excise Invoices issued in their favour from M/s Shree Ganesh Forging Company. Further, nothing has been brought on record to show any manner in which the assessee had accounted for the quantum of raw materials for finished goods in their stock if the impugned goods/inputs had not been received by them during the material period, as alleged by the Department. In the absence of any credible corroborative evidence, the allegation of non-receipt of inputs/goods by the assessee is not maintainable - The credit cannot be denied merely on the ground of suspicion being not bagged by credible corroborative evidence. Tribunal in the case of M/S. DHAKAD METAL CORPORATION AND M/S. BHAVNA METAL COMPANY VERSUS COMMISSIONER OF CENTRAL EXCISE S.T., DAMAN [2015 (8) TMI 146 - CESTAT AHMEDABAD] , where it was held that It is beyond comprehension that a man will get invoices without inputs and separately acquire inputs clandestinely from other sources to manufacture his goods. There is no whisper about M/s. Dhakad Metal Corporation to be indulging in clandestine removal of finished goods in these proceedings. It is now well settled legal position that a case can not be established on the basis of few confessional statements without other corroborative evidences like shortage of raw materials, cash transactions, alternative procurement of raw materials. Appeal dismissed - decided against Revenue.

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• CST, VAT & Sales Tax

• 2019 (4) TMI 1061
  Rate of tax - projector machine/Plant and machinery which are manufactured and sold by the revisionist company - Claim of the revisionist is that items manufactured are taxable at the rate of 4% whereas the assessing authority has imposed the tax treating the said item as unclassified fixing tax liability @ 12.5% - principles of natural justice. HELD THAT:- In the instant case the Tribunal has failed to consider the bonafide explanation offered by the revisionist that admittedly, there was no fault on the part of the revisionist and since the counsel representing the assessee failed to appear before the first appellate authority and failed to provide any intimation to the revisionist about the fate of the case, the delay is caused. The explanation of the revisionist prima facie appears reasonable, genuine and bonafide. The explanation offered by the revisionist is adequate. Once the counsel representing the revisionist accepted his failure to discharge his duties, the assessee should not be punished. The matters are remanded to the Tribunal to examine the issues on merits

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• 2019 (4) TMI 1060
  Levy of Interest - bonafide dispute on levy of tax - purchase of unriped Imli - Section 22 of the U.P. Trade Tax Act - HELD THAT:- The claim of the revisionist appears to be bonafide as from very beginning the revisionist has disputed the liability of payment of tax and that the revisionist never admitted the liability to pay any tax on the sale of 'unriped Imali' and further that the revisionist has purchased the 'unriped Imli' from vegetable market only from the vegetable vendors, therefore, it was presumed that there was no tax on the item in question. The revisionist, in fact, has contested the issue by means of filing the appeals and instant revision petition. Since the matter relates to assessment year 1992-93 and was finalised after the judgment delivered by this Court in 2005, the liability of interest on the turn over of 'unriped Imli' is not justified. There is no liability of payment of interest under Section 8(1) of the Act - revision petition disposed off.

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• 2019 (4) TMI 1059
  Requirement of pre-deposit - maintainability of appeal - HELD THAT:- It is undisputed that the assessee Company had deposited more than ₹ 60 Crores of tax and the only amount of dispute is in regard to ₹ 3 Crores and odd, for which the appeal is pending before the First Appellate Authority. It is directed that the First Appellate Authority shall proceed and decide the appeal in accordance with law expeditiously preferably within a period of two months from the date of production of a certified copy of this order - revision disposed off.

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• 2019 (4) TMI 1058
  Eligibility for compounding for the A.Y. 2002-03 - on the date of initial rejection of his application for compounding for that year, assessee was in arrears of compounding fee for the A.Y. 2001-02 - Section 7D of the U.P. Trade Tax Act, 1948 - HELD THAT:- In the first place, each assessment year is a separate unit. Even if it is assumed that the assessee could have made an application for compounding for the A.Y. 2002-03 while continuing to stand in default for the earlier assessment year, it is difficult to accept that such an application could be allowed in view of the default having survived on the date of rejection of that application. Thus, the assesseee may have had time till his application for compounding of A.Y. 2002-03 was pending to remove the default towards payment of compounding fee for the earlier year. However, that having not been done, the ineligibility to be allowed to pay compounding fee in lieu of tax (on assessment basis), was rightly adjudged against the assessee. The question of law is answered in the negative i.e. in favour of the revenue and against the assessee.

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• 2019 (4) TMI 1057
  Separate registration for different units - Section 38[6] of the Karnataka Value Added Tax Act, 2003 - HELD THAT:- The Assessee is bound to have a common registration number and by taking advantage of separate registrations under Section 38[6] of the Act while availing the benefit of concessional rate under composition scheme under Section 15 of the Act, for one unit, the entire tax liability cannot go down below the minimum on the basis of regular payment of tax for other units, under Rule 47[1] of the Rules. Commissioner rightly denied the request to accord ex-post facto permission to hold both separate VAT Composition registrations - Decided against the assessee.

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• Indian Laws

• 2019 (4) TMI 1056
  Shri Rajeev Kumar, Commissioner of Police, Kolkata directed to appear and make himself available before the investigating agency, namely, the Central Bureau of Investigation (C.B.I.) and to faithfully cooperate with the investigating agency at all times - no coercive steps including arrest shall be taken against the Commissioner of Police.

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