TMI Tax Updates - e-Newsletter
April 22, 2020
Case Laws in this Newsletter:
GST
Income Tax
Indian Laws
Highlights / Catch Notes
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GST:
Requirement for registration under GST Act - Charitable trust established for activities relating to disaster prevention, mitigation and management - the activities of the applicant are considered as charitable activities and hence, activities of the applicant, being registered under Section 12AA of the Income Tax Act, 1961, exempt from tax under the GST Acts - Not liable for registration - AAR
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GST:
Valuation - supply of service of “Transmission of Electricity” - Electricity charges recovered for consumption of electricity are only exempted under above entry. Amount collected towards other ancillary services are taxable under GST @18% - AAR
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GST:
Requirement of registration - examination to get admission for study at Rashtriya Military College, Dehradun etc. held by the State Examination Board - activities of conducting various types of examinations - State Examination Board is liable for registration as provided under Section 22 of Central Goods and Services Tax Act, 2017. - AAR
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GST:
Classification of service - rate of GST - Amusement services in Amusement Park - giving access right to visitor for individual joy rides in their amusement park - taxable at 18% of GST - AAR
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GST:
Taxability - rate of tax - supply of services - Hospitality Services - the entry relating to composite supply of food and drinks in restaurant, mess, canteen eating joints and such supplies to institutions (Educational, office, factory, hospital) on contractual basis is rationalize at GST rate of 5% and made it clear that the scope of outdoor catering under 7(v) is restricted to supplies in case of outdoor/indoor functions that are event based and occasional in nature. - AAR
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GST:
Rate of GST - Restaurant services - Restaurants in hotel premises having room tariff of less than ₹ 7500/- per unit per day will attract GST of 5% without ITC - Restaurants in hotel premises having room tariff of ₹ 7500/- and above per unit per day (even for a single room) will attract GST of 18% with full ITC. - AAR
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GST:
Input Tax Credit (ITC) - Supply of Dhoop as incentive or gifts or as freebies with the supply of Agarbatti (consisting of 10 pieces of Agarbatti) - credit of Inputs used for manufacture of Dhoop - credit not allowed - AAR
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GST:
Input tax credit (ITC) - supply of port services - Procurement of goods and services for employees - the applicant is not entitled to take credit of input tax charged in respect of above mentioned expenses as the same is not used in furtherance of their business. - AAR
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Income Tax:
Disallowance payment made to gratuity fund u/s.36(1)(v) - gratuity fund was unapproved by the Learned Pr. CIT after 9 years - by any stretch of reasoning, the time taken for granting the approval cannot be justified by the Revenue - lapse/delay on the part of the Pr.CIT for not deciding the approval application of the assessee within a stipulated period of time, cannot be the ground for not allowing the claim of deduction u/s.36(1)(v) to the assessee - AT
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Income Tax:
Correct head of income - rental income - Maintenance charges claimed by the assessee can only be treated as separate source of income and it can be charged as a separate head under income from other sources as claimed by the assessee and if there is any expenditure in connection with the above income, can only be allowed to be claimed by the assessee against the maintenance receipts. It is not relevant, how the assessee has declared previously over the years - AT
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Income Tax:
Levy of Penalty u/s 271AAA or u/s 271(1)(c) - whether addition is made on estimation basis or on the basis of certain evidences, fact remains that the additions made in the assessment is pursuant to search conducted u/s 132 and such income is on the basis of incriminating material found, as a result of search - penalty if at all is leviable, it can be levied only u/s 271AAA, but not under section 271(1)(c) - AT
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Income Tax:
Addition u/s 69A - amount in question was seized by the Director of Enforcement, FEMA - the assessee has duly explained the source of complete cash found during the search - the investigation has also been closed in the case of the assessee by FEMA - Additions deleted - AT
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Income Tax:
Capital gain computation - Since valid reference could not have been made, the value so determined by the DVO as on 01-04-1981, ergo, becomes meaningless for the instant exercise. Going by the provision as applicable to the instant case, it is held that the value of the land as declared by the assessee on 01-04-1981, which is patently more than the value so determined by the DVO/AO, cannot be interfered with.
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Income Tax:
Exemption u/s.11 assessee trust was not registered u/s.12AA at the time of assessment - assessee had already applied for registration u/s.12A on 03.03.2016 and the assessment order was passed on 15.03.2016 - the registration u/s.12AA was granted on 28.03.2016 - First proviso of section 12A(2) would be applicable to the case of the present assessee - AT
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Income Tax:
Set off of current year business loss from the additional/Deemed income - Scope of amendment brought to section 115BBE - CBDT, has clarified the matter that the assessee will be entitled to set off of loss against income determine u/s 115BBE of the Act till assessment year 2016-17 - AT
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Income Tax:
Revision u/s 263 - all the requisite details were furnished by the appellant which enabled the AO to make enquiries into the nature and character of receipt and its taxability. No substance in the impugned order wherein it has been held that AO’s order suffered infirmity on account of lack of enquiry. - AT
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Customs:
IGST refunds on exports-extension in SB005 alternate mechanism - Circular
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Customs:
Review of Circular No. 17/2020 dated 03.04.2020 namely, 'Measures to facilitate trade during the lockdown period- section 143AA of the Customs Act, 1962 - Circular
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Customs:
Electronic Sealing-Deposit in and removal of goods from Customs Bonded Warehouses - Circular
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2020 (4) TMI 599
Requirement for registration under GST Act - Charitable trust established for activities relating to disaster prevention, mitigation and management - HELD THAT:- It is found from the objectives of the applicant as described in the Memorandum of Association as well as from the bye-laws of the applicant, which laid down the modes by which the applicant can raise funds for its activities as mentioned in foregoing paras that the applicant is a charitable trust registered under the Bombay Public Trust Act, 1950. It was established for community based research, policy analysis, planning and technical assistance for the purpose of enhancing prevention, mitigation and management of disasters and reorientation of relief and reconstruction to local initiatives. Thus the applicant is engaged in training/research relating to disaster prevention, mitigation and management - the Applicant is duly registered as a charitable trust under Section 12AA of the Income Tax Act, 1961 as well as under Section 80G of the Income Tax Act. The entire income of the applicant is exempt from Income Tax, even the donations made to the applicant are admissible deductions for the donors under Section 80G of the Income Tax Act - Notification No.12/2017-Central Tax (Rate) dated 28.06.2017 (Sr.No.1) clearly provides exemption to Services by an entity registered under section 12AA of the Income-tax Act, 1961(43 of 1961) by way of charitable activities. Thus, the activities of the applicant relating to disaster prevention, disaster mitigation and disaster management are activities relating to preservation of environment . Thus, the activities of the applicant are considered as charitable activities and hence, activities of the applicant, being registered under Section 12AA of the Income Tax Act, 1961, exempt from tax under the GST Acts, by virtue of Entry No. 1 of the Notification No.12/2017-Central Tax (Rate) dated 28.06.2017 - Consequently, the applicant is not liable to registration in respect of charitable activities relating to preservation of environment which attracts nil rate of GST, by virtue of Section 23(1) (a) of the Central Goods and Services Tax Act, 2017.
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2020 (4) TMI 598
Valuation - supply of service of Transmission of Electricity - taxability of cost of construction/ erection of Bays/ Sub-Stations, Overhead lines and Underground Cables and other charges including Pro-rata charges, supervision charges, proportionate line charges, registration fees and operation and maintenance charges, recovered by the Applicant from the consumers in assessable value - exempt from GST under Sr. No.25 of Notification No. 12/2017-Central Tax (Rate) dated 28-6-2017 and Notification No. 12/2017-State Tax (Rate) dated 30th June 2017 or not. HELD THAT:- Consideration for both services are charged separately and, hence, the value of Construction Services cannot form part of the value of service of Transmission of Electricity in terms of Section 15 of the Central Goods and Service Tax Act, 2017. Consequently, the said construction services cannot be treated as supply of the Transmission of Electricity service - the construction services provided by the applicant are not in the nature of composite supply and, therefore, the tax liability thereof has to be determined by treating the same different from the supply of transmission and distribution of electricity - The rate of GGST on aforesaid services shall be also 9% as per the corresponding Notification to the Notification No.11/2017-Central Tax (Rate) dated 28.06.2017, as amended, issued under GGST Act, 2017. Taxability - amount recovered from consumers as other charges viz. Pro-rata charges, Proportionate line charges, Registration fees and Operation and maintenance charges etc., towards expenses incurred in providing electric line or electrical plant or other facilities for the purpose of giving the supply of electricity - HELD THAT:- Pro-rata charges are recovered by them considering the augmentation to be carried out at the upstream sub-station and augmentation of existing substation. Other charges like as pro-rata charges, proportionate line charges, registration fees, operation and maintenance charges etc. recovered by GETCO from its various consumers are nothing but the consideration to enable them to create future assets for the mandate it is given. Thus, GETCO recovers said charges for providing electric line or electrical plant or other facilities for the purpose of giving the supply of electricity to the consumers. By virtue of the Entry No.25 of the Notification No.12/2017Central Tax (Rate) dated 28.06.2017, only the service of transmission and distribution by an electricity transmission or distribution utility was exempted from tax under the GST Acts. A comparison with regulation 3 of the Notification No.9 dated 31.03.2005 issued by the Gujarat Electricity Regulatory Commission (GERC), shows that the charges are for any expenses that the Distribution Licensee shall be required to reasonably incurred to provide any electric line or electrical plant specifically for the purpose of giving such supply to the applicant . Thus, the nature of services provided by GETCO in the present case is not covered under the above exemption entry of the Notification No.12/2017-Central Tax (Rate) dated 28.06.2017 - Electricity charges recovered for consumption of electricity are only exempted under above entry. Amount collected towards other ancillary services are taxable under GST. These services are, therefore, taxable under GST under the residual category of services i.e. 999799- Other services n.e.c. and, hence, GETCO is liable to pay GST @ 18% on aforesaid other charges recovered from its consumers.
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2020 (4) TMI 597
Requirement of registration - examination to get admission for study at Rashtriya Military College, Dehradun etc. held by the State Examination Board - activities of conducting various types of examinations - N/N. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended - HELD THAT:- Notification no. 12/2017-Central Tax (Rate) dated 28.06.17 (Sr.No.1), as amended, clearly provides exemption to Services by an entity registered under section 12AA of the Income-tax Act, 1961(43 of 1961) by way of charitable activities. However, the applicant do not fall in the category of Charitable activities - The benefit of exemption is not available to the State Examination Board under entry no. 66 (b)(iv) to the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 read with Notification No. 02/2018-Central Tax (Rate) dated 25.01.2018 as the exams conducted by the applicant are planned and conducted by the State Examination Board on its own accord and its not the services provided to an educational institute - State Examination Board is liable for registration as it does not falls under Section 23(a) of Central Goods and Services Tax Act, 2017 - State Examination Board is liable for registration as provided under Section 22 of Central Goods and Services Tax Act, 2017. Whether the applicant is required to be registered under the Act. - HELD THAT:- Yes, the applicant is required to be registered under the Act. Whether any tax liability arises from the work done by it? - HELD THAT:- Yes, the amount will be taxable.
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2020 (4) TMI 596
Classification of service - rate of GST - Amusement services in Amusement Park - giving access right to visitor for individual joy rides in their amusement park - HELD THAT:- The applicant is supplying services by way of access to amusement facilities including merry-go rounds and other rides in their amusement park to visitors - the rate of CGST on the supply of amusement services in amusement park like merry-go rounds and other rides being made to visitors shall be 9% according to Notification No. 11/2017- Central Tax (Rate), dated 28th June, 2017, as amended (vide Notification No. 01/2018Central Tax (Rate), dated 25th January, 2018) - The HSC code (Tariff Group/ Heading) for the supply of amusement services in Amusement Park like merry-go rounds and other rides shall be 99969/999691 - The rate of tax applicable to the services will be 18% GST.
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2020 (4) TMI 595
Taxability - rate of tax - supply of services - Hospitality Services - business of supplying foods, snacks, beverages etc. to the consumers/clients as per agreement with them - taxability of subject supply of services up to 25.07.2018 and w.e.f. 26.07.2018, due to amendments in subject Notifications - N/N. 11/2017-Central Tax (Rate) dated 28.06.2017. TAXABILTY UP TO 25.07.2018 - outdoor catering services or not - HELD THAT:- The service recipient has engaged the applicant for running of the canteen for their workers / employees. The rates for the meal, snacks, tea have been fixed and payable by the recipient. The menu is required to be decided by the canteen committee of the recipient. It is, therefore, evident that the applicant, who is caterer, is providing service from other than his own premises to the recipient. Therefore, the nature of service provided by the applicant is that of outdoor catering service - From the nature of service provided by the applicant, as is evident from the copy of agreement, it is clear that it is not in the nature of service provided by a restaurant, eating joint including mess, canteen. Therefore, the clarification issued, vide Circular No. 28/02/2018-GST dated 08.1.2018, is not applicable. In the present case also, services in connection with catering are provided by the applicant at a place other than a place of the applicant. Further, the service of catering is provided by the applicant to the recipient and the fact that the meal, snacks, tea etc. are consumed by the workers/employees of the recipient, would not alter the nature of service provided by the applicant - up to 25.07.2018, the said supply of services of the applicant is taxable under Accommodation, food and beverages services as a part of Outdoor Catering Services and is covered under Sr. No. 7(v) of the Table to the Notification No. 11/2017Central Tax (Rate) dated 28.06.2017, as amended up to 25.07.2018, issued under the Central Goods and Services Tax Act, 2017 and Notification No. 11/2017-State Tax (Rate) dated 30.06.2017, as amended up to 25.07.2018, issued under the Gujarat Goods Services Tax Act, 2017, attracting GST @ 18%. TAXABILTY W.E.F. 26.07.2018 - HELD THAT:- The Explanation 1 inserted at column (3) at Sl. No. 7 (i) of the Table to Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, the entry relating to composite supply of food and drinks in restaurant, mess, canteen eating joints and such supplies to institutions (Educational, office, factory, hospital) on contractual basis is rationalize at GST rate of 5% and made it clear that the scope of outdoor catering under 7(v) is restricted to supplies in case of outdoor/indoor functions that are event based and occasional in nature. After amendment of Notification No.11/2017-Central Tax (Rate) dated 28.06.2017, made vide Notification No.13/2018Central Tax (Rate) dated 26.07.2018), the said supply of services of the applicant is taxable under the category of Accommodation, food and beverages services and is covered under Sr. No. 7 (i) of the Table to Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended, issued under the Central Goods and Services Tax Act, 2017 and Notification No. 11/2017-State Tax (Rate) dated 30.06.2017, as amended, issued under the Gujarat Goods and Services Tax Act, 2017, attracting GST @ 5%.
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2020 (4) TMI 594
Rate of GST - Interpretation of Statute - Restaurant services - Supply of Room or unit accommodation services by hotel - Supply of food and beverage services by restaurants in hotel premises - Notifications issued in relation to the rate of 5% GST on restaurant services - N/N. 46/2017- Central Tax (Rate) - Services of Airport pickup and drop to the guests/ customers - other services. Supply of Room or unit accommodation services by hotel - HELD THAT:- GST Rate for the Supply of Room or unit accommodation services by hotels' would be determined according to declared tariff for the room, and GST at the rate so determined would be levied on the entire amount charged, for room stay plus service charges and extra bed, from the guest/customer. The HSC code (Tariff Group/ Heading) for the supply of Room or unit accommodation services by hotel shall be 996311 - GST Rate for Supply of food and beverage services by restaurants in hotel premises would also be determined according to declared tariff for the room, and GST at the rate so determined would be levied on the amount separately charged, for services of breakfast, lunch dinner, from the guest/customer. The HSC code (Tariff Group/ Heading) for the supply of food and beverage services by restaurants in hotel premises shall be 996332. According to declared room tariff, the rate of GST for said services will be as under: (a). Declared Room Tariff up to ₹ 999/- : GST @ NIL [Remark No ITC Credit]. (b). Declared Room Tariff from ₹ 1000/- up to ₹ 2499/-: GST @ 12% [ITC Credit allowed]. (c). Declared Room Tariff from ₹ 2500/- up to ₹ 7499/-: GST @ 18% [ITC Credit allowed]. (d). Declared Room Tariff from ₹ 7500/- and above: GST @ 28% [ITC Credit allowed]. GST Rate for Supply of food and beverage services by restaurants in hotel premises - HELD THAT:- GST Rate for Supply of food and beverage services by restaurants in hotel premises would also be determined according to declared tariff for the room, and GST at the rate so determined would be levied on the amount separately charged, for services of breakfast, lunch dinner, from the guest/customer. The HSC code (Tariff Group/ Heading) for the supply of food and beverage services by restaurants in hotel premises shall be 996332 - Restaurants in hotel premises having room tariff of less than ₹ 7500/- per unit per day will attract GST of 5% without ITC - Restaurants in hotel premises having room tariff of ₹ 7500/- and above per unit per day (even for a single room) will attract GST of 18% with full ITC. Services of Airport pickup and drop to the guests/ customers - HELD THAT:- The applicant supplies the services of Airport pickup and drop to the guests/ customers and charges amount separately for Airport pickup and drop services from gusts, which shall be taxable under Passenger transport services - The HSC code (Tariff Group/ Heading) for the supply of the Passenger transport services by hotel shall be 996412. This service accounting code includes Passenger transport services by motorized taxi within or between urban and suburban areas. The rate of GST for these services will be 18% with ITC. Other services - laundry services - heritage walk services - HELD THAT:- These services nowhere else classified in GST Acts. The HSC code (Tariff Group/ Heading) for the supply of the Other services n.e.c. shall be 999799. The rate of GST for above services will be 18% with ITC. If there is liability to pay GST as in tariff being lesser than ₹ 7,500/-, whether the applicant will be liable to pay 5% GST on restaurant services to the guest who stays at hotel as well as to any outsider who comes just to eat at the restaurant and not 18% GST in terms of Notification no. 46/2017 CGST (Rate)? - HELD THAT:- In case the Restaurant situated in a hotel premises having declared room tariff of less than ₹ 7500/- per unit per day, M/s Mangaldas Mehta and Co. Limited will be liable to pay GST @ 5% without ITC on restaurant services to the guest who stays at hotel as well as to any outsider who comes just to eat at the restaurant. If declared tariff of any unit of accommodation of ₹ 7500/- and above per unit per day or equivalent, applicant is liable to pay GST @18% on amount charged for restaurant services to the guest who stays at hotel as well as to any outsider who comes just to eat at the restaurant. If the applicant is charging money towards room stay, breakfast, airport pick up and drop, as well as extra bed plus meals i.e. the package covers everything and individual value is not assigned at the time of booking but when invoice is given to the customer there is a specific mention of each item and separate value assigned to each service, and the sum total exceeds ₹ 7,500/-, what would be the liability of GST i.e. the price offered to customer represents a package offering a bouquet of services? - HELD THAT:- Declared or published room tariff is relevant only for determination of the tax rate slab in respect of the Supply of Accommodation, food and beverage services'. If declared tariff of any unit of accommodation of ₹ 7500/- and above per unit per day or equivalent, M/s Mangaldas Mehta and Co. Limited is liable to pay GST @28% on amount charged for room stay, extra bed (including service charges) from guest under service category of Supply of Room or unit accommodation services by hotels'. Further, the Applicant is liable to pay GST @18% on amount charged for restaurant services i.e. for breakfast to the guest under category of restaurant services . Further, the Applicant is liable to pay GST @ 18% with ITC on airport pickup and drop charges collected from guest under Passenger transport services . Whether the applicant will be liable to pay 5% GST on restaurant services to the guest who stays at hotel as well as to any outsider who comes just to eat at the restaurant in terms of Notification no. 46/2017 CGST (Rate) and not 18% GST? - HELD THAT:- In case declared room tariff of less than ₹ 7500/- per unit per day, M/s Mangaldas Mehta and Co. Limited is liable to pay GST @ 5% without ITC on restaurant services provided to the guest who stays at hotel as well as to any outsider who comes just to eat at the restaurant. During the financial year, on account of low season, the tariff remains below ₹ 7,500/-. However in peak season, the room tariff exceed ₹ 7,500/-, then in this situation, whether the liability of the applicant to pay GST at 18% on restaurant arises from inception or from the day the tariff exceeds ₹ 7,500 and it falls back to 5% as soon as the tariff falls below ₹ 7,500 ? - HELD THAT:- In case different room tariff is declared for different seasons or periods of the year, the tariff declared for the season in which the service is provided shall apply. GST Rate would be determined according to declared tariff for the room, and GST at the rate so determined would be levied on the amount charged for restaurant services from the guest/customer. The applicant has certain lower category of rooms wherein the tariff at which they are sold at includes break-fast. In this scenario, what will be the liability to pay GST on room tariff and breakfast in the event the applicant is liable to pay only 5% GST on restaurant services as tariff falls below ₹ 7,500 and low category rooms are sold at ₹ 3,400/-? - HELD THAT:- In case different tariff is declared for rooms, highest of such declared tariffs shall be the declared tariff for the purpose of levy of GST. If declared tariff of any unit of accommodation of ₹ 7500/- and above per unit per day or equivalent, M/s Mangaldas Mehta and Co. Limited is liable to pay GST @28% on amount charged for room including breakfast (i.e. ₹ 3400/-) from guest.
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2020 (4) TMI 593
Input Tax Credit (ITC) - Supply of Dhoop as incentive or gifts or as freebies with the supply of Agarbatti (consisting of 10 pieces of Agarbatti) - credit of Inputs used for manufacture of Dhoop - Purchase of dhoop from a third party vendor - credit on the non-monetary incentives - credit of insurance and maintenance of the motor vehicles used for transport of Director and Employees. Credit on inputs used for manufacture of Dhoop - Purchase of dhoop from a third party vendor - HELD THAT:- As per Section 17(5)(h) of the Central Goods and Service Tax Act, 2017, credit is not allowed. Non-monetary incentives like say Pressure Cooker - HELD THAT:- As per Section 17(5)(h) of the Central Goods and Service Tax Act, 2017, credit is not allowed. Credit of the Agarbatti given free of cost - HELD THAT:- As per Section 17(5)(h) of the Central Goods and Service Tax Act, 2017, credit is not allowed. Credit of insurance and maintenance of these motor vehicles - HELD THAT:- As per Section 17(5)(a) of the Central Goods and Service Tax Act, 2017, such vehicles not eligible for credit - credit denied.
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2020 (4) TMI 592
Input tax credit - supply of port services - Purchase of medicines for employees as prescribed by their doctor from outside on contractual basis - Purchase of movable medical equipment at hospital - AMC for repair and maintenance of residential colony and hospitals and school - Telephones Mobiles at residence of officers and at hospitals - Caretaking /housekeeping services at Guest House - all the expenses are incurred for maintaining its employees. HELD THAT:- As per clear reading of Sub Section (1) of Section 16 and sub section (1) of Section 17 of the CGST Act, 2017, it is clear that a registered person is entitled to take credit of input tax charged on supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business only - In that case, the applicant is incurring expenses for providing common facilities to their employees within the residential colony where the quarter has been given on nominal fees i.e. Hospitals, Sports Complex, garden, Guest House for official visitors and school for employee s children and the same is not related to furtherance of their business/output service i.e. port service. Also, the applicant is engaged in supply of port services to various clients. Said expenses are for providing common facilities to their employees within the residential colony and the same are not relates to furtherance of their business/output service i.e. Port Service . It is very clear from the provisions of Sub Section (1) of Section 16 and Sub section (1) of Section 17 of the CGST Act, 2017, that a registered person is entitled to take credit of input tax charged on supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business only - the applicant is not entitled to take credit of input tax charged in respect of above mentioned expenses as the same is not used in furtherance of their business. Credit not allowed.
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2020 (4) TMI 591
Grant of bail - offences under Sections 132(1), (b), (c), (f), (h), (j) and (k) read with Section 132(1)(i) of Central Goods and Services Tax Act, 2017 - case of petitioner is that petitioner has been falsely involved in this case - pre-charge evidence - HELD THAT:- Bail petitions filed by the co-accused Sandeep Kumar Agarwal and Ram Kumar were dismissed by this Court on merits. Bail petition filed by the petitioner was dismissed by this Court in view of the fact that bail petitions filed by the co-accused had been dismissed by the co-ordinate Bench of this Court Other co-accused were granted bail under Section 1674(2) Cr.P.C. No ground for grant of bail made out - bail application dismissed.
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2020 (4) TMI 590
Grant of Regular Bail - huge fraud of ₹ 74 crores - fake firms - evasion of GST input taxes - case of petitioner is that Himani Munjal, co-accused is granted bail - HELD THAT:- The firms were misused for evading GST input taxes by the accused. Fake firms had been created in different States of the country. Although, co-accused Himani Munjal has been granted bail by the Apex Court, but it appears that she has been granted bail on account of the fact that she is a lady and has a young child to lookafter. Her custody period was also taken into consideration - Thus, the case of the petitioner can be said to be on different footing. No ground for grant of bail to him is made out - Bail application dismissed.
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2020 (4) TMI 589
Filing of statutory Form TRAN-I - un-utilized Input Tax Credit - transition to GST regime - HELD THAT:- The present petition is squarely covered by the judgment in ADFERT TECHNOLOGIES PVT. LTD. VERSUS UNION OF INDIA AND ORS. [2019 (11) TMI 282 - PUNJAB AND HARYANA HIGH COURT] where the Respondents are directed to permit the Petitioners to file or revise where already filed incorrect TRAN-1 either electronically or manually statutory Form(s) TRAN-1 on or before 30th November 2019. Therefore, the present petition is liable to be disposed of in terms of the said case with permission/modification to file the said Statutory Form TRAN-I by 31.12.2019.
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Income Tax
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2020 (4) TMI 588
Disallowance u/s. 14A r.w Rule 8D - Assessee agitated the disallowance before the CIT(A) claiming that there is no exempt income - HELD THAT:- We restore this issue to the files of the CIT(A) with a direction that the CIT(A) shall decide this issue in true perspective of the underlying facts in the issue after giving a reasonable opportunity of being heard to the assessee. GP estimation - additions on account of differences in EVA and lumpsum additions of wages - HELD THAT: Once the AO has estimated the GP addition which was sustained by the CIT(A) all the related expenses are deem to be allowed and, therefore, there should not be any further addition in trading account. Therefore, modifying the findings of the CIT(A) we direct the AO to delete the addition on account of EVA and wages. Modifying the findings of the CIT(A) ground No.3 is dismissed.
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2020 (4) TMI 587
Penalty u/s 271(1)(c) - Defective notice - provision for doubtful debts and the interest paid on TDS was not added back in the computation of income - HELD THAT:- AO to assume jurisdiction u/s 271(1)(c), proper notice is necessary and the defect in notice u/s 274 of the Act vitiates the assumption of jurisdiction by the learned Assessing Officer to levy any penalty. In this case, notice issued u/s 274 read with 271 is defective and, therefore, we find it difficult to hold that the learned AO rightly assumed jurisdiction to pass the order levying the penalty. As a consequence of our findings above, we direct the Assessing Officer to delete the penalty in question. See M/S MANJUNATHA COTTON AND GINNING FACTORY OTHS., M/S. V.S. LAD SONS, [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] and M/S SSA'S EMERALD MEADOWS [ 2016 (8) TMI 1145 - SC ORDER]. AO to assume jurisdiction u/s 271(1)(c), proper notice is necessary and the defect in notice u/s 274 of the Act vitiates the assumption of jurisdiction by the learned Assessing Officer to levy any penalty. In this case, facts stated supra, clearly establish that the notice issued under section 274 read with 271 of the Act is defective - Decided in favour of assessee.
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2020 (4) TMI 586
Claim not made by the assessee in the income tax return - Booking cancellation charges disallowed - whether deduction for the expenses not made in the income tax return can be claimed before the appellate authorities? - HELD THAT:- Necessary basic details about the claim of the assessee were available before the authorities below with supporting documents. The impugned expenditure was also claimed in the profit and loss account. Now the controversy arises, the claim not made by the assessee in the income tax return out of ignorance/lack of knowledge/unawareness can deprive it from claiming the same and there was no duty on the revenue to enquire about the legitimate claim of the assessee if any. Assessee has not made altogether a new claim before the appellate proceedings which was not disclosed in the financial statements. As such we note that the basic details about the claim of the assessee were very much available before the authorities below right from the profit and loss account of the assessee which is the crucial document to determine the income of the assessee. We are inclined to admit the claim of the assessee. Accordingly, we set aside the same to the file of the AO for fresh adjudication as per the provisions of law and in the light of the above stated discussion. Hence the ground of appeal of the assessee is allowed for the statistical purposes. Appeal filed by the assessee is allowed for the statistical purposes
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2020 (4) TMI 585
Deduction claimed u/s 24(a) disallowed - Rent income should be treated as income from house property OR Business income - HELD THAT:- Assessee had a facility and which assessee cannot utilize the same for its business purposes. It is forced on the assessee to transfer the same to a non-profit organization. In this situation, assessee can only sell the same or let the facility be given on rent. It has selected the second option. As per the nature of transaction, it falls under the head income from house property. The tax authorities have apprehension that assessee may claim additional benefit by claiming regular depreciation for the same assets under block of assets and also deduction u/s 24(a) - We do agree with the tax authorities considering the fact that assessee could not bring on record the details of assets, which are given on rent. It comes down to find the same. Assessee should be given one more opportunity to substantiate and submit the details of assets, which was given on rent and a declaration that it is not claiming any additional depreciation. - ground raised by the assessee is allowed for statistical purposes.
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2020 (4) TMI 584
Reopening of assessment u/s 147 - no return of income was filed within 30 days as provided in the notice under section 148 - cash deposits in saving bank account - HELD THAT:- As assessee has not filed return of income within statutory period of notice under section 148 of the Act hence, the assessee was debarred from taking objection to issue of jurisdiction, specifically when she has not complied with proceeding and not raised any objection to issue of notice under section 148 of the Act during the course of assessment proceedings. In view of these facts and circumstances, we uphold the reopening of assessment as valid and in accordance with law. In view of this matter, this ground of appeal is therefore, dismissed. Addition of cash deposit in bank account - HELD THAT:- Cash deposits are linked with business transaction of the assessee. Since the assessee has not maintained any books of accounts, hence, in such situation only net profit as per provisions of section 44AF of the Act is required to be estimated as net profit and not entire turnover or cash deposits reflected in the bank account. Following the ratio laid down in the case of CIT V. Pradeep Shantilal Patel [ 2013 (11) TMI 1646 - GUJARAT HIGH COURT] wherein it was held that where assessee admitted that cash deposits pertained to his retail business but details and nature of business were not forthcoming from record, considering total turnover of assessee, net income to be determined under section 44AF AO is directed to estimate net profit @ 5% of total turnover of ₹ 15,11,906 being cash deposits in bank account. - AO will allow set off the amount of ₹ 75,000 disclosed in her income-tax return. In other way, the set off and telescoping would be allowed of ₹ 75,000 disclosed in return of income and considered by the AO in assessment order. This grounds of appeal is therefore, partly allowed.
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2020 (4) TMI 583
Disallowance payment made to gratuity fund u/s.36(1)(v) - gratuity fund was unapproved by the Learned Pr. CIT after 9 years - HELD THAT:- Assessee had made particular application for granting of approval on 14.08.2008. However, the approval was only granted by the Pr. CIT on 06.03.2017. CIT has taken almost 9 years to grant approval, in our view by any stretch of reasoning, the time taken for granting the approval cannot be justified by the Revenue - lapse/delay on the part of the Pr.CIT for not deciding the approval application of the assessee within a stipulated period of time, cannot be the ground for not allowing the claim of deduction u/s.36(1)(v) to the assessee - assessee should not suffer loss on account of inaction and lethargic attitude of the Revenue in granting the approval - deduction u/s.36(1)(v) cannot be denied on account of failure or delay in passing order of the application of the assessee on 14.08.2008 - though the order of granting approval was passed on 06.03.2017, the same should have made effective from the date of 14.08.2008 or at least effective from 01.04.2009 because in our view 6 months time is sufficient for considering process of application for approval u/s.36(1)(v) - Decided in favour of assessee.
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2020 (4) TMI 582
Correct head of income - rental income - assessment as income from house property or income from other sources - rental income received in terms of the leave and license agreements alongwith the maintenance charges received under the head income from house property - HELD THAT:- Maintenance charges claimed by the assessee can only be treated as separate source of income and it can be charged as a separate head under income from other sources as claimed by the assessee and if there is any expenditure in connection with the above income, can only be allowed to be claimed by the assessee against the maintenance receipts. It is not relevant, how the assessee has declared previously over the years and what is relevant the lawful claim of the assessee and whether the claim of the assessee is legally tenable. The Hon ble Courts have held that the maintenance charges collections are different from the rental income considering the purpose and expressions contained in the agreements. Accordingly, grounds raised by the assessee are allowed in this regard. Therefore, we direct the AO to compute the income of the assessee under the head income from house property and income from other sources and complete the assessment after duly accepting the revised return of income and complete the assessment as per law. Disallowance u/s 14A - HELD THAT:- We notice from the records that assessee has no dividend income, therefore when there is no exempt income, AO cannot invoke the disallowance u/s 14A of the Act. See Cheminvest Ltd. [ 2015 (9) TMI 238 - DELHI HIGH COURT] and Pr.CIT vs Ballarpur Industries Limited [ 2016 (10) TMI 1039 - BOMBAY HIGH COURT] - Decided in favour of assessee.
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2020 (4) TMI 581
Estimation of income - bogus purchases - HELD THAT:- AO has not disallowed the sales, but disputed only the purchases. Therefore, we cannot disallow 100% of the purchases and we have seen that various courts held that when the AO accepts the turnover without any dispute and in those situation, only the benefit enjoyed by the assessee are being considered for disallowance instead of 100% of purchases and considering the benefit enjoyed by the assessee for these type of transactions, the rate of disallowance were varying from 12.5% to 3%. We notice that during this current AY, the turnover of the assessee has grown to 20.68 crores against 8.05 crores, even though there is sharp increase in the turnover, the assessee declared only 3.07% as the GP. Since Ld. CIT(A) has adopted previous year gross profit as the base for this AY also. But the results achieved by the assessee for the period is not reasonable and cannot be relied on. Therefore, following the standard basis of the decision of the Coordinate Benches, we are inclined to direct the AO to disallow 12.5% of the purchases value which are under dispute. - Decided partly in favour of revenue.
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2020 (4) TMI 580
Penalty u/s 271(l)(c) - Defective notice without striking of inapplicable part of show cause notice - estimation of income on unexplained cash deposits in bank account - estimation of unexplained expenditure incurred by the assessee for household and ceremonial expenses - HELD THAT:- AO has recorded clear satisfaction as required under the law during the course of assessment proceedings, before initiate penalty proceedings u/s 271(1)(c). Therefore, we are of the considered view that there is no merit in legal arguments taken by the assessee and accordingly, ground of assesee appeal is rejected. Levy of penalty u/s 271(1)(c) instead of penalty u/s 271AAA - Assessment pursuant to search u/s 132 - HELD THAT:- In this case, the search was conducted on 28/02/2009, which comes within the relevant assessment year 2009-10. The addition made in assessment proceedings is consequent to search proceedings conducted u/s 132 and on the basis of incriminating material found during the course of search. Thus, two requirements of the provisions of section 271AAA i.e, the undisclosed income and specified previous year are fulfilled - Penalty, if at all is leviable, it can be levied only u/s 271AAA of the I.T.Act, 1961, but not u/s 271(1)(c) Arguments of the Ld. DR that although, provision of section 271AAA is applicable for specified previous year, but additions made in the assessment is on estimation basis, and therefore, the conditions prescribed u/s 271AAA are not fulfilled in order to levy penalty under said section is incorrect, because whether addition is made on estimation basis or on the basis of certain evidences, fact remains that the additions made in the assessment is pursuant to search conducted u/s 132 and such income is on the basis of incriminating material found, as a result of search. Therefore, we are of the considered view that the additions made in the assessment proceedings, is towards undisclosed income of a specified year and hence, penalty if at all is leviable, it can be levied only u/s 271AAA of the Act, but not under section 271(1)(c) AO was erred in levying penalty u/s 271(1)(c) in a cases, where the assessment has been completed for a specified previous year and addition has been made towards undisclosed income unearthed during the course of search conducted u/s 132 - penalty levied by the Ld. AO u/s 271(1)(c) cannot be sustained under the law and hence, we direct the Ld. AO to delete penalty levied u/s 271(1)(c). Additions towards undisclosed income on account of cash deposits in undisclosed bank account towards professional receipts for the relevant year, on the basis of incriminating material found during the course of search - Addition is only on estimation basis that too on the basis of expenditure incurred by the assesee in cash for household expenses, ceremonial expenses etc. Therefore, we are of the considered view that when, addition is made on estimation basis that too on the basis of material found during the course of search for part of the period, then levying penalty u/s 271(1)(c) on such estimated addition is incorrect. AO has made additions towards undisclosed cash deposits in bank account without establishing fully that assessee has deposited cash into bank account for the remaining period of the financial year. AO has not made out a clear case of concealment of particulars of income or furnishing inaccurate particulars of income, which warrants levy of penalty u/s 271(1)(c) - AO was incorrect in levying penalty u/s 271(1)(c), in respect of additions made towards undisclosed income on the basis of estimation. - Decided in favour of assessee.
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2020 (4) TMI 579
Addition u/s 69A - amount in question was seized by the Director of Enforcement, FEMA from the residence of the assessee at Bhubaneswar - assessee explained that the assessee sold his house at Morar, Gwalior and advance was received on sale of his house - HELD THAT:- authorities below should not have asked the purchaser to prove source of the source. The purchaser also in his statement explained the reasons for giving the advance in cash to the assessee because he was not maintaining bank account for the last ten years. The assessee has only the source of income from capital gain and income from other sources being interest. Therefore, the assessee was not doing any business activity during the year under consideration. The assessee has disclosed to the Revenue department about the advance received against property to be sold and such particulars were disclosed in the return of income as well. Therefore, the facts of the case clearly prove that the AO should not have insisted the assessee to prove source of the purchaser for purchase of the property in question. It is not the case of the revenue authorities that the assessee in this case has not offered any explanation so as to attract the provisions of Section 69A - Referring to observations made by the coordinate bench of the Tribunal in case of the purchaser Shri Raghav Garg [ 2013 (8) TMI 671 - ITAT AGRA] from whom the assessee has taken advance on account of purchase of house property of the assessee in accordance with the agreement to sale, we are of the considered view that since the assessee has duly explained the source of complete cash found during the search by the FEMA and the investigation has also been closed in the case of the assessee by FEMA as reproduced hereinabove, the addition made by the AO and sustained by the Ld. CIT(A) is bad in law and liable to be deleted. Therefore, we delete the addition in dispute and allow the ground No.1 raised by the assessee. Disallowance of reimbursement of expenses - HELD THAT:- Before us ld. AR submitted that the assessee is having the supporting documents as placed in the paper book, therefore, prayed for one more opportunity to substantiate its claim before the AO. In view of the above facts and circumstances of the case, we restore this issue to the file of AO to decide the issue after examining and verifying those documents to be produced by the assessee to substantiate his claim. Non-taxability of amounts received as directors fees - HELD THAT:- Remit this issue to the file of AO to decide the disputed issue after examining and verifying the documents available with the assessee in form of paper book. Non-credit of tax payment - HELD THAT:- AR before us submitted that the revenue authorities have not given credit - we direct the AO to verify the records for payment of tax. If it is found that the assessee has already paid the tax, then the AO will give due credit accordingly. Thus, this ground of appeal of the assessee is allowed for statistical purposes.
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2020 (4) TMI 578
Addition u/s 68 - Addition of capital gain earned on sale of jewellery in return of income filed with Revenue - assessee is a salaried employee with ICICI Bank - Case of the assessee was selected for framing scrutiny assessment under CASS - HELD THAT:- Assessee could not produce purchase bills for purchase of the jewellery to the tune of 382.93 gms - sale of the jewellery as claimed by assessee to have been made during the year under consideration was not to registered gold jewelers but were all claimed to be made to private individuals. The sale consideration for the entire sale of jewellery as claimed by assessee was in cash and none of the party paid sale consideration through banking channel - the entire transaction for sale of gold jewellery is an afterthought and a sham transaction which is claimed by assessee as he was cornered by Revenue. Assessee could not satisfactorily explain transactions for sale of gold jewellery. The amounts were deposited in cash in the bank account maintained by assessee and onus was on assessee to satisfactorily explain sources of cash deposit in his bank account which in the instant case, the assessee failed to satisfactorily explain and Section 68 is clearly applicable. Vide CBDT instruction number 1916 dated 11.05.1994 which stipulates that in case of male member , 100 grams of gold jewellery could be treated as held explained , we give benefit of the aforesaid CBDT instruction to the assessee in terms of aforesaid CBDT instruction, while rest of the sale of jewellery as claimed by assessee could not be accepted and the sale consideration of 282.92 grams of gold jewellery as claimed by assessee is to be held as unexplained as income from undisclosed sources in the hands of assessee which is to brought to tax in the hands of assessee. Assessee will be required to pay tax on capital gain arising from sale of said 100 gm of gold jewellery as per provisions of the 1961 Act. AO is directed to bring capital gains on sale of 100 gm of jewellery to tax in the hands of assessee in accordance with law, while rest of sale consideration is to be brought to tax as unexplained income. The assessee is directed to file before AO computation for working of capital gains on sale of 100 gms of gold jewellery , for verification by the AO. The matter is remanded to AO to that effect. AO shall provide proper and adequate opportunity of being heard to the assessee. - Decided partly in favour of assessee.
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2020 (4) TMI 577
Capital gain computation - determination of the full value of consideration in terms of section 50C - DVO valued the property as on the date of sale at ₹ 850/- per sq. meter. - HELD THAT:- Vide order dated 06- 02-2020, the Tribunal has directed to adopt ₹ 1,032/- as per sq. mtr as fair market value on the date of sale in that case, namely, 08-01-2004 against survey number 187. It, therefore, emerges that the stamp value of ₹ 955/- in this case is still less than the fair market value determined by the Tribunal for similar property in the case of Shri Nitin N. Shewale - agree with the view taken by the ld. CIT(A) in restricting the addition by adopting fair market value as on the date of transfer of land at ₹ 955/- p.s.m., being the stamp value. There is no scope for further reduction in such value as urged on behalf of the assessee. This ground is dismissed. Valuation as on 01-04-1981 - assessee adopted the unindexed rate of ₹ 163.50/- p.s.m. as on 01-04-1981 - on the basis of the DVO s report that the ld. CIT(A) adopted the rate of ₹ 50/- per sq.mtr as the F.M.V as on 1.4.1981 - HELD THAT:- Going by the interpretation of the pre-amended provision by the Hon ble jurisdictional High Court in the case of Puja Prints [ 2014 (1) TMI 764 - BOMBAY HIGH COURT] as applicable to the facts of the instant case, it is vivid that no reference could have been made to the DVO when the value adopted by the assessee was more than the fair market value of the land in the opinion of the AO. Since valid reference could not have been made, the value so determined by the DVO as on 01-04-1981, ergo, becomes meaningless for the instant exercise. Going by the provision as applicable to the instant case, it is held that the value of the land as declared by the assessee on 01-04-1981, which is patently more than the value so determined by the DVO/AO, cannot be interfered with. Set-aside the impugned order and remit the matter to the file of the AO for determining the amount of capital gain afresh in accordance with the discussion made supra . Appeals allowed for statistical purposes.
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2020 (4) TMI 576
Exemption u/s.11 denied - assessee trust was not registered u/s.12AA at the time of assessment - HELD THAT:- The benefit of change in Law as above by Finance Act, 2014 should be available and for the year under consideration, the benefit of exemption should be available on the date of registration as the assessment of the year was pending because as per chronology of events the assessee had already applied for registration u/s.12A on 03.03.2016 and the assessment order was passed on 15.03.2016 - the registration u/s.12AA was granted on 28.03.2016 and the same was also produced during the First Appellate Authority. Referring to observations of the Co-ordinate Bench of Tribunal in SNDP YOGAM VERSUS ASST DIRECTOR OF INCOME TAX (EXEMPTION) , RANGE 4, KOCHI [ 2016 (3) TMI 1110 - ITAT COCHIN] we are in agreement with the view taken therein by the Co-ordinate Benches. First proviso of section 12A(2) as had been made available to the statute vide the Finance Act, no.2 [2014], being a beneficial provision intended to mitigate the hardship in case of charitable institutions, thus find ourselves to be in agreement with the view taken by the Tribunal in the aforesaid appeals. First proviso of section 12A(2) would be applicable to the case of the present assessee. Therefore, we set-aside the order of the ld.CIT(A), consequently delete the additions. Therefore, this ground raised by the assessee is allowed
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2020 (4) TMI 575
Set off of current year business loss from the additional/Deemed income - Scope of amendment brought to section 115BBE - assessee had surrendered an additional income on account of difference in cash in hand, unaccounted investment in building unaccounted amounts receivable) - HELD THAT:- Referring to Circular No. 11 of 2019 of the CBDT, has clarified the matter that the assessee will be entitled to set off of loss against income determine u/s 115BBE of the Act till assessment year 2016-17. The assessment year under consideration being assessment year 2014-15, the assessee is accordingly entitled to the set off of the current year losses against the deemed income. Appeal of the assessee stands allowed.
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2020 (4) TMI 574
Revision u/s 263 - difference between lack of inquiry and inadequate inquiry - As per CIT AO was the alleged lack of enquiry in respect of the liquidated damages which was claimed to be in the nature of capital receipt and for which he held the assessment order to be erroneous and prejudicial to interest of the Revenue - HELD THAT:- From the order of the Ld. Pr. CIT, we note that he found fault with the AO s role of an investigator and that he did not properly investigate into the facts of the case before taking a view that the liquidated damages received by the assessee being capital receipt was not liable to tax. We note that in the given facts of the present case the AO had made specific enquiry regarding the nature of liquidated damages. In compliance with the AO's notice u/s.142(1) the appellant furnished the required details along with an explanation vide its submission dated 30.11.2016. The appellant furnished copies of the FA agreements, arbitration award and the legal opinion received from a Senior Advocate regarding the character of receipt and its taxability. The appellant had also furnished a written note outlining the factual matrix and the reasons for which the receipt of liquidated damages was treated to be in the natureof capital receipt - all the requisite details were furnished by the appellant which enabled the AO to make enquiries into the nature and character of receipt and its taxability. No substance in the impugned order wherein it has been held that AO s order suffered infirmity on account of lack of enquiry. Where the CIT finds that the enquiry conducted by the AO is not in accordance with his subjective standards, then the Ld. Pr. CIT should himself conduct the investigation and thereafter record a clear finding in his order u/s. 263 that the view followed or acted upon by the AO in his order was unsustainable in law. In the given facts of the present case, as noted earlier, the AO had made due enquiries into the nature character of receipt of liquidated damages. - Decided in favour of assessee.
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Indian Laws
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2020 (4) TMI 573
Constitution of High Powered Committees which could decide which prisoners may be released on interim bail or parole during the pandemic (COVID 19) - HELD THAT:- Having regard to the present circumstances prevailing in the country and having regard to the fact that we have already permitted the release of prisoners and people under detention in general, and such detenues who have completed three years upon their declaration as foreigners, we see no reason why the period should not be reduced from three years to two years, that is to say, the prisoners or detenues who have been under detention for two years shall be entitled to be released on the same terms and conditions as those laid down in the aforesaid order dated 10.05.2019, except that they shall not be required to furnish a bond in the sum of ₹ 1,00,000/-. Application disposed off.
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2020 (4) TMI 572
Directions to be issued for dealing with the present health crisis arising out of Corona virus (COVID-19) with regard to Prisons and Remand Homes - HELD THAT:- Having regard to the provisions of Article 21 of the Constitution of India, it has become imperative to ensure that the spread of the Corona Virus within the prisons is controlled. We direct that each State/Union Territory shall constitute a High Powered Committee comprising of (i) Chairman of the State Legal Services Committee, (ii) the Principal Secretary (Home/Prison) by whatever designation is known as, (ii) Director General of Prison(s), to determine which class of prisoners can be released on parole or an interim bail for such period as may be thought appropriate. For instance, the State/Union Territory could consider the release of prisoners who have been convicted or are undertrial for offences for which prescribed punishment is up to 7 years or less, with or without fine and the prisoner has been convicted for a lesser number of years than the maximum - It is made clear that we leave it open for the High Powered Committee to determine the category of prisoners who should be released as aforesaid, depending upon the nature of offence, the number of years to which he or she has been sentenced or the severity of the offence with which he/she is charged with and is facing trial or any other relevant factor, which the Committee may consider appropriate. List the matter after three weeks.
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