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TMI Tax Updates - e-Newsletter April 27, 2019 Case Laws in this Newsletter: GST Income Tax Customs Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Highlights / Catch Notes GST: CENVAT Credit - cancellation of flat which is booked in pre-GST Regime and cancelled in post-GST Regime - Since the Appellant has raised questions on the admissibility of the credit of the service tax and VAT paid under the pre-GST regime, it is held that neither AAR nor AAAR has the jurisdiction to pass any ruling on such matters. Visit to Get Source GST: Classification of service - Mining lease - services of right to use natural resources - GST on Dead rent / Royalty / Surface rent - provisions of reverse charge mechanism (RCM) are applicable Visit to Get Source GST: Levy of GST and TDS liability - service for procurement of agricultural produce i.e. oilseeds and pulses from farmers either itself or through Kray Vikray Sahakari Samiti on behalf of its principal - outward supplies of goods as well as services after having procured through Krah Vikrah, Sahakari Samiti - various issues decided by AAR Visit to Get Source GST: Revision of return - filing of GSTR 3B Form manually - Late fee, if any, paid by the petitioner, shall be refunded to the petitioner. Visit to Get Source Income Tax: Rectification u/s 254 - non-consideration of decision of tribunal relied upon by the assessee on identical fact - decision subsequently approved by Hon’ble Bombay High Court and revenue’s SLP dismissed by Hon’ble Apex Court - non-consideration of binding judicial precedent of High Court would constitute mistake apparent from record Visit to Get Source Income Tax: Exemption u/s 54 - sale of house constructed on leased land - as per revenue in order to claim benefit of u/s 54, must also transfer the land appurtenant thereto - what is important is that there should be a transfer of capital asset being a building or land appurtenant thereto and being a residential house - The word 'or' cannot be read as 'and' in the context of section 54 Visit to Get Source Income Tax: Unexplained sundry creditors u/s. 68 - there is a marked difference between the credit representing a liability payable by the assessee and a credit representing monies received from another person - It is because of this distinction a liability for purchase cannot be added u/s. 68. Visit to Get Source Income Tax: Addition of debit balance written off - trade advance which is written off as irrecoverable and so to be treated as a business loss - first prove that the advances were paid during the ordinary course of business - secondly, he took all steps to recover the advanced amount - not proved, addition sustained Visit to Get Source Income Tax: Stay of demand - direction to deposit of 20% of demand - institution is registered u/s 12AA - admittedly a discretion vested in the statutory authority to go below the limit of 20% so fixed in the advisories issued by CBDT - granted interim protection til the disposal of the appeal Visit to Get Source Income Tax: Reassessment u/s 147 - not passing a speaking order rejecting the objections of the assessee - reassessment proceedings requires to be quashed as the neither rejection not acceptance of the objections of the assessee has prejudiced the interest of the assessee to challenge the same before the higher forum Visit to Get Source Income Tax: Reassessment u/s 148 - exemption u/s 10AA - assessment completed u/s 143(3) reopened after expiry of 4 years - Revenue could not place any material to establish that there is a failure on the part of the assessee to disclose all material facts required for assessment - Reassessment invalid Visit to Get Source Income Tax: Addition to excess stock of gold jewellery - proof of purchased pure gold - bill produced for conversion of pure gold into jewellery - no enquiry of department to find out the correctness of the bill as either bogus or fake - no addition called for Visit to Get Source Income Tax: Disposal of appeal by CIT(A) - "Central Action Plan” prepared by CBDT - Incentive for quality orders - such guidelines have a propensity to influence the CIT(A) and be tempted to pass an order in a particular manner so as to achieve a greater target of disposal - transgresses in the CIT(A)'s exercise of discretionary quasi-judicial powers - would not stand the test of law - this portion of the impugned Action Plan of CBDT is set aside Visit to Get Source Income Tax: Disposal of appeal by CIT(A) - "Central Action Plan” prepared by CBDT - priority for disposal of appeals in different Categories - there is neither firm directives that certain class or kinds of Appeals must be decided before a particular date, nor there is any negative implication of a particular CIT(A) not being able to do so - guidelines are directory and not mandatory. Visit to Get Source Income Tax: Deduction u/s 80IB(4) in relation to subsidies - to reduce the cost of its procurements and to neutralize certain inherent disadvantages attached to such products - to make the export of such products viable - deduction allowable Visit to Get Source Income Tax: Assessment u/s 153 - period of limitation - amended provisions of Section 153(2A) is applicable where the appellate order is passed or received after 1st April, 2000 - set aside assessment is to be completed within one year from the end of the financial year in which appellate order setting aside the assessment was received - assessment bar by limitation Visit to Get Source Income Tax: Permanent Establishment(PE) - if in vacation period, employee has not rendered any services in India, that period should not be included for counting 90 days stay - multiple counting of employees in a single day not permissible - No PE - fee for legal consultancy services is not taxable in India Visit to Get Source Customs: Where the redemption fine in lieu of confiscation is not paid within the time stipulated, the Central Government is entitled to retain the excess auction sale proceeds of the confiscated goods, after adjustment of the duty, penalty, interest and other statutory dues. Visit to Get Source Indian Laws: Insurance claim - non-disclosure of a previous insurance policy - the failure of the insured to disclose the policy of insurance obtained earlier in the proposal form entitled the insurer to repudiate the claim under the policy. Visit to Get Source Central Excise: Valuation - job work - body built vehicles - the transport cost as well as transit insurance are required to be added for payment of duty by Hyva. Visit to Get Source Central Excise: Valuation - the automobile cess paid at the rate of .125% by TML is not availed as cenvat credit by Hyva and hence the same is required to be added to the value by Hyva. Visit to Get Source Articles Reopening of assessment u/s. 147 to rectify 154 mistakes Revival of an elapsed demand by subsequent amendment - whether retrospective Notifications Customs 33/2019 - dated 25-4-2019 - Cus (NT) Shipping Bill (Electronic Integrated Declaration and Paperless Processing) Regulations, 2019 GST F. No. 354/32/2019-TRU - G.S.R. 327(E) - dated 25-4-2019 - CGST Rate Corrigendum - Notification No. 3/2019-Central Tax (Rate), dated the 29th March, 2019 F. No. 354/32/2019-TRU - G.S.R. 328 (E) - dated 25-4-2019 - UTGST Rate Corrigendum - Notification No. 3/2019-Union Territory Tax (Rate), dated the 29th March GST - States 10/2019-KGST.CR.01/17-18 - dated 22-4-2019 - Karnataka SGST Seeks to extend the due date for furnishing of returns in FORM GSTR-3B for the Month of March, 2019 for three days (i.e. from 20.04.2019 to 23.04.2019). ORDER No. 04/2019 - dated 29-3-2019 - Karnataka SGST Karnataka Goods and Services Tax (Fourth Removal of Difficulties) Order, 2019 ORDER NO. 03/2019 - dated 8-3-2019 - Karnataka SGST Karnataka Goods and Services Tax (Third Removal of Difficulties) Order, 2019 Order No. 5 - dated 25-4-2019 - Tripura SGST Tripura State Goods and Services Tax (Fifth Removal of Difficulties) Order, 2019 F.1-11(91)-TAX/GST/2019 - dated 25-4-2019 - Tripura SGST Notification seeks to notify the provisions of rule 138E of the TSGST Rules w.e.f 21st June, 2019 F.1-11(91)-TAX/GST/2019 - dated 25-4-2019 - Tripura SGST Notification seeks to notify procedure for quarterly tax payment and annual filing of return for taxpayers availing the benefit of Notification No. 02/2019 State Tax (Rate), dated the 8th March, 2019 F.1-11(91)-TAX/GST/2019 - dated 25-4-2019 - Tripura SGST Tripura State Goods and Services Tax (Third Amendment) Rules, 2019 Order No. 4 - dated 30-3-2019 - Tripura SGST Tripura State Goods and Services Tax (Fourth Removal of Difficulties) Order, 2019 F.1-11(91)-TAX/GST/2019 (Part-II) - dated 30-3-2019 - Tripura SGST Tripura State Goods and Services Tax (Second Amendment) Rules, 2019 09/2019-State Tax (Rate) - dated 30-3-2019 - Tripura SGST Amendment in Notification No. 02/2019- State Tax (Rate), dated the 8th March, 2019, F.IV-3(15)-TAX/2017 - dated 26-3-2019 - Tripura SGST State Government appoints Designated Appellate Authority Indian Laws CEPD. PRS. No.4535/13.01.004/2018-19 - dated 26-4-2019 - Indian Law Ombudsman Scheme for Non-Banking Financial Companies, 2018 News The Reserve Bank Extends Ombudsman Scheme for Non-Banking Financial Companies to eligible Non-Deposit Taking Non-Banking Financial Companies 15th Finance Commission meets Ministry of Panchayati Raj India’s growing significance in global arena. Is it Sustainable? Are we ready for it? (Shri B.P Kanungo, Deputy Governor, Reserve Bank of India - April 19, 2019 - at FEDAI Annual Conference at Beijing) 17th C.D. Deshmukh Memorial Lecture (Opening remarks by Shri Shaktikanta Das, Governor, Reserve Bank of India - April 25, 2019 - Mumbai) Income Tax Department continues search action in J&K Region Case Laws: GST 2019 (4) TMI 1500 CENVAT Credit - Post GST Regime - cancellation of flat which is booked in pre-GST Regime and cancelled in post-GST Regime in two scenarios (i.e. cancelled with some retention amount or without any retention amount.) - Whether the Service Tax/VAT paid earlier can be claimed as credit or allowed as refund to property buyers? - challenge to AAR decision. HELD THAT:- If flat was cancelled in pre-GST regime as per the aforesaid rule of Service Tax Rules, 1944 taxpayer allowed to avail credit of such excess service tax paid if an invoice is issued for which service is not provided - However, as transaction is cancelled in GST regime the reference of the transitional provision of GST law can be taken to determine the availability of deduction for taxes which were already paid under GST law. The cancellation of flat shall be equated with the downward revision of price to allow the benefit available to the builder in erstwhile law. Time limit should apply from date of cancellation as that is the trigger point (and not payment of tax) - Law cannot enforce impossible condition to claim within one year if the contract is cancelled after 1 year (say in July 2018). Availability of MVAT Paid in Pre-GST regime - HELD THAT:- Section 142(1) of the MSGST Act is applicable in the given scenario to the extent of value of goods cancelled. (i.e. to the extent of VAT paid) - As per section 142(2) of the CGST Act, in case of downward revision of price a registered person can issued the credit note for the contract entered in Pre-GST regime and for the purposes of this Act such credit note shall be deemed to have been issued in respect of an outward supply made under this Act. The substantial benefit should not be denied to the applicant because of new law which assessee was eligible under pre-GST regime - it is settled position in law that procedural aspect should not take away substantial benefits of the assessee. Reading both the above provisions viz.- Clause (63) and (62) together, it is aptly clear that the question enumerated at (d) of Section 97(2), supra does not deal with the admissibility of the credit of taxes paid other than the taxes mentioned in the Clause (62) of Section 2 of the CGST Act, 2017, which has been cited herein above, In other words, Section 97(2), which encompasses the questions, meant for the ruling by the AAR or AAAR, does not deal with the input tax credit of the service tax or VAT paid under the existing laws. Since the Appellant has raised questions on the admissibility of the credit of the service tax and VAT paid under the pre-GST regime, it is held that neither AAR nor AAAR has the jurisdiction to pass any ruling on such matters. The ruling of AAR upheld. 2019 (4) TMI 1499 Levy of GST - Business Transfer Agreement as a going concern on slump sale basis - serial no. 2 of the Notification No. 12/2017-CentraI Tax (Rate) dated 28.06.2017 - HELD THAT:- On perusal of serial no. 2 of the said notification, it is found that the services by way of transfer of a going concern, as a whole or an independent part thereof is to be treated as supply of service and covered under chapter 99 of the Service Code (Tariff) and is exempted from GST. The applicant is carrying on the business of manufacturing of textile yarns, fabrics and garments across India and one of them is situated at B-8, Phase-I, SIDCUL Industrial Park, Sitarganj, Udham Singh Nagar, Uttrakhand and on perusal of the agreement, it is found that the applicant has intends to sale the ongoing Sitarganj business along with its all assets liabilities and the said Sitarganj business is live/operating. The purchaser has purchased the Sitarganj business to carry on the same kind of business. Further as on date it is found that there is no series of immediately consecutive transfers of the said business. The applicant has supplied services by way of transfer of Sitarganj Business as a going concern, and as per serial no. 2 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, the same is exempted from levy of GST as on date. 2019 (4) TMI 1498 Classification of service - Mining lease - services of right to use natural resources - GST on Dead rent / Royalty / Surface rent - Notification No. 11/2017Central tax (rate) dated 28.06.2017. HELD THAT:- The applicant entered in to a lease transfer agreement dated 19.03.1976 for obtaining mining lease and engaged in the business of mining of Wollastonite, Calcite, Feldspar and Quartz. The said minerals (goods) are classifiable under tariff heading 2506, 2529 and 2530 and are leviable to GST on their supply at the rate of 5%. The Government provides license to various companies including Public Sector Undertakings for exploration of natural resources like oil, hydrocarbons, iron ore, manganese etc. For having assigned the rights to use the natural resources, the licensee companies are required to pay consideration in the form of annual license fee, lease charges, royalty, etc to the Government. The activity of assignment of rights to use natural resources is treated as supply of services and the licensee is required to pay tax on the amount of consideration paid in the form of royalty or any other form under reverse charge mechanism. The mining lease is governed by the Rajasthan Minor Minerals Concession Rules, 2017 (RMMCR). As per provisions of RMMCR, the applicant is required to pay dead rent or royalty (whichever is higher but not both). This activity of payment of dead rent or royalty is a supply of service ( Licensing services for the right to use minerals including its exploration and evaluation ) wherein the government of Rajasthan is supplier and the applicant is recipient. The said service is classifiable under Licensing services for 'the right to use minerals including its exploration and evaluation at Serial No. 257, Heading 9973, Group 99733, sub heading 997337 of annexure Scheme of classification of Services to Notification No. 11/2017-CT (Rate) dated 28.06.2017. Further, the applicant is receiving leasing / licensing services from the government of Rajasthan hence, provisions of reverse charge mechanism are applicable under the Notification No. 13/2017-CT (Rate), dated 28.06.2017 (as amended from time to time) of the CGST Act, 2017. 2019 (4) TMI 1497 Levy of GST - service for procurement of agricultural produce i.e. oilseeds and pulses from farmers either itself or through Kray Vikray Sahakari Samiti on behalf of its principal - outward supplies of goods as well as services after having procured through Krah Vikrah, Sahakari Samiti according to the purchase order of the NAFED - Deduction of TDS from payment to or credit of KrahVikrah, Sahakari Samiti/RAJFED under Notification No. 50/2018-central tax dated 13.09.2018 - Deduction of TDS from payment to or credit of RAJFED under Notification No. 50/2018-Central Tax dated 13.09.2018. Levy of GST - service for procurement of agricultural produce i.e. oilseeds and pulses from farmers either itself or through Kray Vikray Sahakari Samiti on behalf of its principal - HELD THAT:- The key ingredient for determining relationship under GST would be whether the invoice for the further supply of goods on behalf of the principal is being issued by the agent or not - In the instant case, the applicant issues an invoice in his name for further supply to a buyer/ purchaser (as directed by the Principal i.e. NAFED), therefore, this activity is a supply of goods in terms of Schedule I of the Central Goods and Services Tax Act, 2017, and attracts GST as applicable (the supply of goods by an agent on behalf of the principal without consideration has been deemed to be a supply). Levy of GST - outward Supply of pulses (without any brand name) - HELD THAT:- The applicant is not liable for charging RGST/CGST or IGST on outward supply of pulses (without any brand name) through Krah Vikrah, Sahakari Samiti as the same is exempted under Notification No. 02/2017-Central Tax (Rate) dated 28.06.2017 in accordance to section 11 (1) of CGST Act, 2017. Levy of GST - outward Supply of oilseeds (other than of seed quality) - HELD THAT:- The applicant is liable for charging RGST/CGST or IGST on outward supplies of oilseeds (other than of seed quality) made through Krah Vikrah, Sahakari Sarniti and the same attracts GST@50/0 (SGST 2.5% + CGST 2.5%) under Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017 in accordance to section 1 1 (1) of CGST Act, 2017. Deduction of TDS from payment to or credit of KrahVikrah, Sahakari Samiti/RAJFED under Notification No. 50/2018-central tax dated 13.09.2018 - HELD THAT:- As the applicant is not covered under Notification No. 50/2018central tax dated 13.09.2018 read with Section 51 of CGST Act, 2017 and is therefore not liable to deduct Tax at Source (TDS) from payment to or credit of KrahVikrah, Sahakari Samiti/ RAJFED. Deduction of TDS from payment to or credit of RAJFED under Notification No. 50/2018-Central Tax dated 13.09.2018.- HELD THAT:- As the applicant is not covered under Notification No. 50/2018-Central Tax dated 13.09.2018 read with Section 51 of CGST Act, 2017 and is therefore not liable to deduct Tax at Source (TDS) from payment to or credit of KrahVikrah, Sahakari Samiti /RAJFED for their services of procurement of gunny bags, transportation, insurance and services of surveyors for the applicant to be supplied by the applicant to its principal NAFED itself. 2019 (4) TMI 1496 Recovery of refund sanctioned while the appeal was pending - Refund of the drawback sanctioned comprising the customs portion of All Industry Rate - allegation of excess refund to the extent of 10% representing CGST and IGST - HELD THAT:- In the present case, the petitioner has admittedly remitted 10% of the amounts demanded in order dated 14.06.2018 on 09.08.2018 as pre-deposit and no recovery shall be effected in regard to the balance of the demands that shall be deemed to be under an order of stay. The adjustment of the refund is not proper. Mr.Sundar, learned counsel for the respondent, fairly, does not defend the impugned order but only requests some time to refund the amount wrongly adjusted - petition allowed. 2019 (4) TMI 1495 Revision of return - filing of GSTR 3B Form manually - HELD THAT:- This court is of the opinion that the petitioner s argument is well founded. The respondents are enjoined not to raise any demands towards penalty, interest or late filing fee. Late fee, if any, paid by the petitioner, shall be refunded to the petitioner. Petition disposed off. 2019 (4) TMI 1494 Validity of proceedings of the Deputy State Tax Officer, Enforcement (Roving Squad) dated 11.12.2018 - seizure of vehicle - non production of E-way Bill - HELD THAT:- Proceedings for assessment have been initiated by the Commercial Tax Department by issuance of notices under the provision of Section 129(3) of the Central Good and Services Tax Act, 2017 the Tamil Nadu Goods and Services Tax Act, 2017 and Section 20 of the Integrated Goods and Services Tax Act, 2017 are stated to be ongoing. Learned counsel for the petitioner states that a separate Writ Petition has been filed challenging the detention notice itself. In such circumstances nothing survives in the present Writ Petition and the same is closed. 2019 (4) TMI 1493 Levy of GST - revision of Form TRAN-1 - distribution of credit - HELD THAT:- This Court is of the opinion that the GSTR-3B form which is now taken on record manually should be properly verified, in coordination with the concerned Commissionerate, pending final decision and appropriate orders by the GST officials/Commissioner, on the merits of these input claims. No demand shall be imposed by the respondents towards the interest claims, which are said to be approved. In other words, the claim of the petitioners for the set-off of its credit towards the notional demand of ₹16.80 crores shall be duly verified in accordance with law. List on 27th March, 2019 for consideration of the action taken pursuant to this order. Income Tax 2019 (4) TMI 1492 Taxability of receipts for the lease - Long term lease of a hotel property - lease receipt based on % of revenue of hotel - Business Income OR House Property Income - HELD THAT:- As decided in assessee's own [ 2017 (8) TMI 193 - BOMBAY HIGH COURT] income from the same was assessed as a business income. The assessment for the year 1995-96 was completed under Section 143(3) of the Income Tax Act. So also, for the assessment year 2003-04 and assessment year 2005-06, the assessment was completed under Section 143(3). The claim of the assessee of the said income being a business income was accepted. The assessee is not receiving any rent amount but is receiving 1% of the total revenue earned by KHIL and does not get any fix amount as rent. These aspects are considered by the Tribunal. 2019 (4) TMI 1491 Revision u/s 263 - debatable issue - alleged that payment to Noida Software Technology, TDS deducted @2% in place of 10% - disallowance u/s 40(a)(ia) - TDS assessment order u/s. 201(1)(1A) on record was not taken into consideration and thus non application of mind by AO thus being erroneous and prejudicial to the interest of the revenue - HELD THAT:- Tribunal came to the conclusion that the question of deducting the tax at source under the relevant provision of the Income Tax Act, 1961 was highly debatable issue and that, therefore, the Commissioner was not correct in exercising revisional power. - Decided against revenue 2019 (4) TMI 1490 Deduction u/s 80IB(4) in relation to subsidies - to compensate high transport costs and to offset other disadvantages under VKGUY Scheme - HELD THAT:- Government of India realized that the products such as agricultural produce, minor forest produce and Gram Udyog products as also forest based products would have high transport cost and would be accompanied by various other disadvantages. In order to make the export of such products viable, the Government of India decided to grant certain incentives under the said scheme. The clear objective behind the scheme was, thus, to reduce the cost of its procurements and to neutralize certain inherent disadvantages attached to such products. Clearly, thus, the case was covered by the decision of the Supreme Court in the case of Meghalaya Steels Ltd [ 2016 (3) TMI 375 - SUPREME COURT] extensive reference to which has been made earlier. This is not a case akin to export incentives such as DEPB which the Supreme Court in case of Liberty India [ 2009 (8) TMI 63 - SUPREME COURT] held was a benefit far removed from the assessee s business of export. Question is answered in favour of the appellant - assessee 2019 (4) TMI 1489 Disposal of appeal by CIT(A) - Central Action Plan prepared by CBDT - priority for disposal of appeals in different Categories - Incentive for quality orders - possibility of miscarriage of justice - possibility of consciously or subconsciously influencing the mind of the authority about the ultimate outcome of the Appeal - Power of CBDT u/s 119 to issue any instructions or providing directions to require any income-tax authority to pass an order in a particular manner. Priority for disposal of appeals in different Categories - HELD THAT:- We do not think that these guidelines in any manner breach the reasonableness or can be stated to be arbitrary or illegal. These guidelines are for general directives and prescriptions to on one hand enable the revenue to collect taxes which are otherwise due and on the other hand to assess the work output of the Appellate Commissioners which in any organization is of considerable importance. We also do not think that the guidelines have undertone of giving priority to the issues which concern the revenue more than the assessees. What the CBDT has done is to lay down broad guidelines for disposal of Appeals category-wise. There is neither firm directives that certain class or kinds of Appeals must be decided before a particular date, nor there is any negative implication of a particular Commissioner (Appeals) not being able to do so. The guidelines of the CBDT in this respect therefore must be seen as directory and not mandatory. Incentive for quality orders - The term quality cases is explained as those including cases where (a) enhancement has been made, (b) order has been strengthened, in the opinion of the CCID, and (c) penalty under section 271(1) has been levied by the CIT (A) - HELD THAT:- All these contingencies necessarily point to circumstances where the order passed by the Commissioner (Appeals) is in favour of the revenue. For example this policy refers to the enhancement made by the Commissioner or a case where the Commissioner has levied penalty under section 271(1) of the Act. This necessarily refers to enlargement of the assessee's liability before the Commissioner as compared to what may have been determined by the Assessing Officer. In our opinion, such policy is wholly impermissible and invalid. Any directives by the CBDT which gives additional incentive for an order that the Commissioner (Appeals) may pass having regard to its implication, necessarily transgresses in the Commissioner's exercise of discretionary quasi-judicial powers. It is well laid down through series of judgments in field of administrative law, interference or controlling of the discretion of a statutory authority in exercise of the powers from an outside agency or source, may even be superior authority, is wholly impermissible. This general principal of administrative law finds statutory embodiment in sub section (1) of Section 119 of the Act. As is well known, under sub section (1) of section 119, the Board has the power to issue orders and instructions for proper administration of the Act. Suffice it to record that such guidelines have a propensity to influence the appellate Commissioners and be tempted to pass an order in a particular manner so as to achieve a greater target of disposal. Any temptation though in the guidelines referred to as incentives for disposal of an Appeal in a particular manner, would not stand the test of law. Nevertheless to allow the implementation of this policy, on the orders passed by the Appellate Commissioners even for the past financial year, would amount to an illegal prescription to prevail and operate. The following portion of the impugned Action Plan of CBDT is set aside. Incentive for quality orders : (i) With a view to encourage quality work by CITs (A), additional credit of 2 units shall be allowed for each quality appellate order passed. The CIT (A) may claim such credit by reporting such orders in their monthly DO letter to the CCIT concerned. Quality cases would include cases where (a) enhancement has been made, (b) order has been strengthened, in the opinion of the CCID, and (c) penalty u/s 271(1) has been levied by the CIT (A). (ii) The concerned CCIT shall examine any such appellate orders referred to him by the CIT (A), decide whether any of the cases reported deserve the additional credit and convey the same through a DO letter to the CIT (A), which can be relied upon while claiming the credit at the year end. Petition is allowed in part 2019 (4) TMI 1488 Broken period interest allowability as a deduction - Revenue argued that the entire cost of security would include such interest component and the same would, therefore, be in the nature of capital expenditure - assessee argued that there was separate interest component payment of which was an allowable deduction also accepted by ITAT - HELD THAT:- This issue is no longer res integra. The Division Bench of this Court in case of CIT Vs. HDFC Bank Ltd [ 2014 (8) TMI 119 - BOMBAY HIGH COURT] had ruled in favour of the assessee. We are informed that the appeal against such judgment of the High Court was also dismissed by the Supreme Court. In the result, the Income Tax Appeal is dismissed 2019 (4) TMI 1487 Capital gain computation - cost of acquisition of the property taken as the market value of the property as on 1st April 1981 and the indexation will be applied from 1st April 1981 with this base - whether definition of the expression previous owner of the property occurring in the Explanation to subsection 49(1) would be applicable to sub-clause 55(2)(b)(ii) since the definition is confined to subsection 49(1) only ? - HELD THAT:- Both the issues are squarely covered against the Revenue by the Judgment of this Court in the case of Commissioner of Income-Tax Vs. Manjula J. Shah [ 2011 (10) TMI 406 - BOMBAY HIGH COURT] as held Tribunal was justified in holding that while computing the capital gains arising on transfer of a capital asset acquired by the assessee under a gift, the indexed cost of acquisition has to be computed with reference to the year in which the previous owner first held the asset and not the year in which the assessee became the owner of the asset. Exemption u/s 54 - housing complex in the present case is situated on a piece of land which is occupied by the Cooperative Housing Society under a long term lease - Revenue argued that Assessee has to sell a capital asset in the nature of building and land appurtenant thereto to claim exemption - HELD THAT:- In the context of our case, what is important is that there should be a transfer of capital asset being a building or land appurtenant thereto and being a residential house. The requirements of this Section would be satisfied if these conditions are met with. The Revenue strangely argued that the transferrer of a capital asset of a residential unit, in order to claim benefit of Section 54, must also transfer the land appurtenant thereto. Firstly, there is no such prescription u/s 54(1). Secondly, such a rigid interpretation would disallow every claim in case of transfer of a residential unit in a Cooperative Housing Society. The very concept of Cooperative Housing Society is that the society is the owner of the land and continues to be so irrespective of the incomings and outgoings of its members. A member of Cooperative Housing Societies has possessory right over the plot of land which is allotted to him. In case of a constructed building of a Cooperative Housing Society, the member owns the constructed property and along with other members enjoys the possessory rights over the land on which such building is situated. In either case, a member of the Cooperative Housing Society even when he sells his house, never transfers the title in land to the purchaser. The present case is no different. Merely because the housing complex in the present case is situated on a piece of land which is occupied by the Cooperative Housing Society under a long term lease, would make no difference. - Decided against revenue. 2019 (4) TMI 1486 Carry forward of 'Unabsorbed Depreciation' - Carry forward to be allowed without limitation of eight years whether Assessee was entitled to carry forward and set off the 'Unabsorbed Depreciation' for the present year also? - HELD THAT:- Since the matter of calculation of ' Unabsorbed Depreciation ' in which it was first computed and the limitation of eight years prior to amendment has not been properly computed in the present case, the matter deserves to be remanded back to the learned Assessing Authority for undertaking such computational exercise once again. Therefore, without answering the aforesaid questions of law framed for our consideration, we remand the matter back to the learned Assessing Authority in the present case for Assessment Year 2001-2002 for fresh consideration. The Assessee will be free to raise his factual as well as legal contentions before the learned Assessing Authority and the Assessing Authority will be free to take a fresh view in the matter. The Assessing Authority may pass fresh orders within six months from today. 2019 (4) TMI 1485 Eligibility for deduction u/s 80 IA - assessee is only a sub-contractor - proof of having a contract with any Government/authority referred to - HELD THAT:- As decided in M/S. CHETTINAD LIGNITE TRANSPORT SERVICES PRIVATE LIMITED [ 2019 (4) TMI 683 - MADRAS HIGH COURT] Tribunal, rightly applied the Proviso to Section 80IA(4) and held that since the Assessee was recognised as contractor for these railway sidings, which undoubtedly fell under the definition of infrastructure facility , it was entitled to the said benefit u/s 80IA. The grounds on which the Assessing Authority denied the said benefit to the Assessee ignoring the effect of Provisos to Section 80IA(4), therefore, could not be sustained. Proviso does not require that there should be a direct agreement between the transferee enterprise and the specified authority for availing the benefit under Section 80IA. The Assessee was duly recognised as transferee or assignee of the principal contractor and was duly so recognised by the Railways to operate and maintain the said railway sidings at Vadalur and Uthangalmangalam Railway Stations. - Decided in favour of assessee. 2019 (4) TMI 1484 Stay petition - condition stipulated was reduced to 50% of the amount directed in the order of the CIT(Appeals) - HELD THAT:- On considering the entire facts and circumstances of the case, while dismissing the writ appeal, we are inclined to enlarge the time stipulated for making payment of the amount stipulated. If the appellant deposits the balance amount out of the first instalment mentioned in the impugned judgment on or before 15.04.2019, the same will be considered as due compliance of the direction contained in the judgment of the learned Single Judge. In case the balance amount out of the first instalment is paid on or before the said date, the appellant shall be permitted to remit the second instalment within one month thereafter. 2019 (4) TMI 1483 Stay of demand - pre-deposit of 20% of the disputed tax before he can be provided with an interim protection - institution is registered under section 12AA - HELD THAT:- In so far as the issue of pre-deposit is concerned, the guidelines issued by the Department from time to time do prescribe an amount of about 20% or so for obtaining an order of stay on recovery process but which limit can be reduced at the discretion of the Assessing Authority. In so far as the present case is concerned, no such discretion has been exercised and by the order impugned the petitioner has been directed to deposit of 20% of the disputed amount, for availing the interim protection. It is not in dispute that while initially a sum of ₹ 5,00,000/- was deposited by the petitioner towards the disputed tax amount but during the pendency of the matter another sum of ₹ 15,00,000/- has been deposited. Thus when this matter came up for consideration on 26.03.2019, a sum of ₹ 20,00,000/- had already been deposited by the petitioner. Allowing the petitioner to move ahead, it is informed by Mr. Rastogi and not contested by Ms. Archana Sinha, learned counsel representing the Department that a further sum of ₹ 20,00,000/- has been deposited by the petitioner-University . There is admittedly a discretion vested in the statutory authority to go below the limit of 20% so fixed in the advisories issued, that the institution is registered under section 12AA of the Act , we are satisfied by the conduct of the petitioner to grant interim protection until the disposal of the appeal bearing note of the deposit of about ₹ 40,00,000/- by the petitioner towards the disputed amount. 2019 (4) TMI 1482 Stay of recovery of the demand - garnishee notices u/s 226 (3) during the pendency of the aforesaid stay application - HELD THAT:- As the stay petition filed by the petitioner are pending before the appellate authority and the assessing officer respectively, the interests of both parties will be protected by directing the petitioner to remit a sum of ₹ 25,00,000/- (Rupees twenty five lakhs only) either by appropriation of the amounts lying to its credit in the South Indian Bank, Triplicane Branch/the third respondent herein or by way of fresh remittance, to the satisfaction of the assessing authority. Upon receipt of proof of remittance of the sum of ₹ 25,00,000/- as directed aforesaid, the order of attachment of the petitioners bank account in the South Indian Bank shall stand lifted. The stay application filed by the petitioner, dated 29.01.2019, is pending before the first respondent and the officer is directed to dispose the same within a period of two weeks from today. No further proceedings for recovery shall be taken for a period of three weeks from today. 2019 (4) TMI 1481 Rectification u/s 254 - mistake apparent from record - non-consideration of decision of tribunal relied upon by the assessee on identical fact - decision subsequently approved by Hon ble Bombay High Court and revenue s SLP dismissed by Hon ble Apex Court - HELD THAT:- After careful consideration, the bench concur with assessee s submissions since non-consideration of binding judicial precedent of Hon ble Bombay High Court would constitute mistake apparent from record. Misc. application stands allowed 2019 (4) TMI 1480 Short deduction of TDS made to some specified parties - Assessee in default u/s 201(1A) - assessee filed revised return because there were some mistakes on the part of the assessee, wherein the LTDC (low tax deduction certificate) was rectified which was considered by the TDS - Assessee has taken a plea that online facility for verification of validity of LTDC was not functional at the time of deduction of taxes by the appellant on payments to the payees and therefore, the assessee cannot be termed as assessee in default - HELD THAT:- This fact needs verification to ascertain the default of the assessee, particularly when no cancellation order of LTDC was supplied to the assessee. The assessee has objected that Annexure to Form 26A obtained from the payees was filed but the same has not been considered by the CIT(A), whereas in ground No. 9, the assessee states that no opportunity was given to the assessee to furnish Form 26A. It is necessary to examine Form No. 26 and all its annexures filed by the payees and the assessee is required to furnish the same in its support for verification. Assessee has challenged that the CIT(A) has failed to verify whether the payees have paid taxes on the income or not before saddling interest liability against the assessee. This fact also requires verification at the stage of AO before holding the assessee in default. In presence of all these facts, we remit the case back to the AO for deciding the core issue involved in this appeal after making due verification of the aforesaid aspects. Appeal is allowed for statistical purposes. 2019 (4) TMI 1479 Capital gain - LTCG OR STCG - part performance of contract - transfer of capital asset - vendors after receiving the entire sale consideration refused to execute sale deed - assessee had filed a suit for specific performance in Lok Adalat who directed the assessee to pay an amount to one of the vendors-Sri Boorugu Ramesh Babu and also directed all the vendors to execute sale deed or sale-cum-GPA - computation of period of holding of asset from date of payment of consideration or from date of GPA execution - HELD THAT:- We find that when the assessee paid substantial amount in the F.Y. 2005-06 and the assessee is having interest on the property, in our opinion, the Assessing Officer is not justified in treating the sale proceeds received by the assessee out of the sale of land dated 12/07/2012 as a short term capital gain. In this case, the assessee has paid the entire sale consideration and the vendors are not ready to execute, then he filed a suit for specific performance and the matter has been referred to Lok Adalat. Before the Lok Adalat, the vendors and vendee agreed for the terms and conditions which were entered in F.Y. 2005-06 and accordingly sale-cum-GPA was executed, therefore the transaction took place in the F.Y. 2005-06 and not on the date of execution of sale-cum-GPA executed. Hon'ble Bombay High Court in the case of Amarjeet Thapar ( 2018 (12) TMI 1151 - BOMBAY HIGH COURT] has observed that the assessee had entered into an agreement for purchase of the property in the year 1992. The sale deed could not be executed only because the appropriate authority refused to grant no objection certification and instead, ordered compulsory acquisition thereof. This order was declared as illegal and ab initio void by the High Court, the sale deed was ordered to be executed in favour of the assessee-petitioner, there is no reason for not to accept the assessee s contention that the execution of the sale deed by virtue of the judgment of the High Court would relate back to the original agreement to sale. The petitioner was thus entitled to claim the benefit of cost indexation from the said date. When the assessee has already paid more than 80% of the sale consideration, it cannot be find fault with the assessee as the assessee has performed his duty by paying almost all the sale consideration. It is the duty of the vendors to have executed the sale deed. Under these facts and circumstances of the case, we are of the opinion that the judgment of the Hon'ble Bombay High Court squarely applies to the facts of the present case. - Decided against revenue 2019 (4) TMI 1478 Addition to excess stock of gold jewellery weighing 2717.400 gms - proof of purchased pure gold - bill produced for conversion of pure gold into jewellery - HELD THAT:- There is no dispute that the assessee had purchased pure gold from M/s SVBC, Vizag on 09.11.2015 and 13.11.2015 and the said gold was not available with the assessee at the time of survey and it was also not in dispute that the gold jewellery weighing 2717.400 gms was physically available in the shop at the time of survey. Once, it is established that the assessee had purchased 3,100 gms and the same was not available in the shop, there is no reason to disbelieve the issue of pure gold for making the gold jewellery ornaments. In this case, the assessee has produced the bill for receipt of gold jewellery from M/s Jai Mata Di Jewellers on 03.12.2015 which is within the reasonable time of conducting the survey. Therefore, there is no reason to disbelieve the genuineness of the bill. AO did not make any enquiry with M/s Jai Mata Di Jewellers to find out the correctness of the bill. The assessee is free to furnish the necessary evidence to address the difference found during the course of survey in the reasonable time. In the instant case, the assessee had furnished all the bills from M/s Jai Mata Di Jewellers and voucher No.92, which was raised for issue of gold to M/s Jai Mata di Jewelelrs before the Ld.CIT(A) as well as the AO. Therefore, the assessee has established that the pure gold was issued to M/s Jai Mata Di Jewellers was received back subsequently. The department did not make out a case that the bill issued by M/s Jai Mata Di Jewellers as either bogus or fake. We agree with the observation of the CIT(A) that the AO has made the addition only on suspicion and surmises, hence, the addition made by the AO is unsustainable. Addition for deficit cash found in the business premises during the survey - Addition u/s 68 - HELD THAT:- In this case, there was deficit cash of ₹ 11,59,906/- which was found during the course of survey and the assessee had explained that ₹ 8,00,000/- was kept in his house. The said statement given at the time of survey was also confirmed u/s 132 on 24.11.2015 during the course of search conducted in the residence of Mr.Mahendra Jain. Therefore, there is no reason to disbelieve explanation of the assessee that the sum of ₹ 8,00,000/- found in the residential premises was related to the business and deficit cash of ₹ 8,00,000/- in the business premises stands explained. There was further difference of ₹ 3,59,906/- which was stated to be partly counter cash which was not inventorised by the survey team and offered to income. As rightly observed by the CIT(A), there is no reason to disbelieve the explanation of the assessee with regard to the source of ₹ 8,00,000/- and balance of ₹ 3,50,000/- was admitted as income in response to show cause notice issued by the AO vide his letter dated 04.12.2017. Since the assessee failed to explain the reason for deficit cash and admitted the same as income in its hands, we do not see any reason to interfere with the order of the CIT(A). Accordingly, we uphold the order of the Ld.CIT(A) and confirm the addition 2019 (4) TMI 1477 Reopening of assessment u/s 148 - exemption u/s 10AA claimed - assessment reopened after expiry of 4 years - HELD THAT:- Revenue could not place any material to establish that there is a failure on the part of the assessee to disclose all material facts required for assessment. Therefore, we hold that the AO has wrongly invoked the jurisdiction. Accordingly, we uphold the order of the Ld.CIT(A) and dismiss the appeal of the revenue. Disallowance u/s 10AA without examining the books of accounts - In the original assessment it appears that the assessee had produced the books of accounts and the AO made certain disallowances. No finding was given by the AO in original assessment with regard to non maintenance of separate books of accounts for 10AA unit. In the instant case, the assessee has filed separate trading account for both SEZ and manufacturing unit, P L account and balance sheet separately. The assessee has stated that it has maintained separate books of account and worked out the Net profit of ₹ 2,93,93,500/-, before reducing the interest earned on bank FDs of ₹ 20,20,444/-,thus, the profit from SEZ unit worked out to ₹ 2,73,73,054/- which was claimed as exemption. The assessee is trading in bauxite which is relating to domestic sales and the SEZ is dealing in Chrome Concentrate, both are different products. From the information filed in the paper book, these are taken separately by the assessee. AO after verifying the books of accounts, instead of working out the actual profit of the SEZ unit, resorted for proportionate disallowance of exemption claimed by the assessee which is highly arbitrary. When the material is placed before the AO, it is for the AO to examine the books and work out the correct amount of profit related to the exempted unit unless there is any defect in the books of account. As per the Trading Profit Loss account, the profit derived by the assessee in respect of VSEZ unit which is eligible for deduction u/s 10AA. Therefore, we hold that on merits also, the assessee is entitled for deduction u/s 10AA as allowed originally. - Decided in favour of assessee. 2019 (4) TMI 1476 International transaction u/s 92CA(3) - ALP of international transaction as determined by TPO - Selection of comparable - HELD THAT:- On both the counts, segmental results of the associated segment are better than Non-AE segment, and internal benchmarking analysis under the segmental results prepared using the valid allocation key is justified. On careful analysis of the decision of the CIT(A) we find that he has given a valid reasons for accepting the segmental results. There is an answer in the order of the learned CIT(A) which cannot be dislodged without having any factual infirmity in the same. On reading the transfer pricing study report prepared by the assessee, it is mentioned that assessee incurred marketing expenses only for procuring business from Non AE customers without giving any finding that such is not the fact the factual statement cannot be ignored. Further, TPO also did not state what is the difference between the functions performed, assets deployed and risk assumed by the assessee in its transactions with AE and Non-AE customers. The TP Study report of the assessee states that ther is no such functional dissimilarity. Same is also the finding of ld CIT(A) which is also not controverted before us. Regarding allocation keys adopted by assessee, ld TPO has not stated that how same are incorrect. Therefore, there is no infirmity in the order of the learned CIT(A) we confirm the same. Appeal of revenue dismissed. Appeals of subsequent years are also dismissed being identical to the facts. 2019 (4) TMI 1475 Addition based on unaccounted cash receipts - entries in the loose sheets and the diary - HELD THAT:- To sum up, the on money received by the assessee is the unaccounted income of the assessee as per the notings in the diary [bank pass book] and loose sheet subject to verification of duplicate entries, arithmetical error in totalling and the amount transferred to the Head office being debit entries, wrongly added as income of the assessee. With the above directions, the common ground relating to addition on account of unaccounted cash receipts is allowed for statistical purposes. Disallowance made u/s 14A of the Act r.w.r 8D - assessee has not earned any exempt income - HELD THAT:- The assessee company has not earned any exempt income. MAXOPP INVESTMENT LTD. VERSUS COMMISSIONER OF INCOME TAX, NEW DELHI AND PRINCIPAL COMMISSIONER OF INCOME TAX-I VS. D.B. CORP LTD. [ 2018 (3) TMI 805 - SUPREME COURT OF INDIA]. Addition u/s 68 - business transaction relates to booking of flats and subsequent cancellation - HELD THAT:- Assessing Officer has not considered the transaction in true perspective and simply relied upon the report of the Inv Wing, New Delhi. The facts show that the transaction of ₹ 8 crores is not that of loan simpliciter. It is a business transaction and should have been considered from that angle. The companies, namely Virgin Capital Services Pvt Ltd, VIP Leasing and Finance Pvt Ltd and Humtum Marketing Pvt Ltd have tendered money for booking flats in the projects of the assessee company. It appears that the Assessing Officer has not examined the transaction of booking flats by these companies. It also appears that after booking the flats in the projects of the assessee company, bookings were cancelled and subsequently, the money was refunded to these companies. Though the first appellate authority has deleted the addition but at the same time, he has also not gone into the details of booking of flats and subsequent cancellation. Hundreds of flats/houses were booked in the projects of the assessee company and several of them were cancelled subsequently and no adverse inference has been drawn in so far as such bookings and cancellations are concerned. Therefore, there is no reason why the booking transactions with the three companies are singled out. Restore this issue to the file of the Assessing Officer. AO is directed to examine the booking details of these companies and verify the flats booked by these companies in the projects of the assessee company, examine the cancellation of the bookings and whether the booking amount has been refunded by the assessee company and if satisfied with the verification, issue may be decided afresh. Accordingly, Ground No. 2 in assessment year 2009-10 is allowed for statistical purposes. Survey action u/s 133A - diary titled Vamshi Retreats alongwith some loose papers was impounded - HELD THAT:- There is no dispute that in the statement itself, Shri Vinod Kumar Chauhan, Deputy Manager [marketing] of the assessee company has categorically stated that the impounded diary and other documents belonged to Shri Azad Singh. If at the time of enquiry Shri Azad Singh was no more an employee of the assessee company, it cannot be considered adversely against the assessee company. In our considered opinion, the Revenue should ask Shri Azad Singh about the contents of the diary and make necessary enquiry from Shri Azad Singh only. In respect of the other property in the impounded sheet itself, the name of the joint owners alongwith their profit share is mentioned. It is not the case of the Revenue that the assessee has executed any project on the said piece of land mentioned in the impounded document. Moreover, there is no dispute that the assessee company is executing huge projects and would not go for such small projects comprising of six flats only. The loose sheets may have been found from the premises of the assessee company, but since the joint owners names are mentioned in the loose sheet with respective profit share ratio, no adverse inference can be drawn against the assessee company. 2019 (4) TMI 1474 Permanent Establishment (PE) in India - taxability of fee for legal consultancy services in India - amount received by the assessee from the clients in India is not in the nature of either royalty or fees for technical services has been accepted by the AO - whether the employees/other personnel of the assessee have stayed and rendered services in India during the financial year exceeding the period of 90 days to constitute a PE in India. - Counting of vacation period of one of the employees - multiple counting of employees in a single day - India UK DTTA - HELD THAT:- Thus, from the aforesaid facts and materials available on record, the authenticity of which has not been disputed, it is proved that Shri Narayan Iyar, has not rendered any services in India from 17th April 2001 to 4th May 2001, as he was availing study leave. Therefore, the period beginning from 17th April 2001 to 4th May 2001, have to be excluded for computing the period of 90 days as no other employee of the assessee was rendering services in India. Whether multiple counting of employees on a single day is permissible - India UK Tax Treaty - HELD THAT:- multiple counting of employee in a single day, as was done by the Departmental Authorities, is impermissible under Article 5(2)(k)(i) of India UK Tax Treaty. The aforesaid view has been expressed by the Tribunal in case of Clifford Chance [ 2001 (9) TMI 1141 - ITAT MUMBAI] . In fact, in the remand report dated 27th February 2006, a copy of which is at Page 110 of the paper book, the Assessing Officer has accepted the aforesaid legal position in Para 9. Thus, if the period during which Shri Narayan Iyar was on leave is excluded and the multiple counting of employees in a single day is avoided, the aggregate period of stay of assessee s employees in India during the period from 1st April 2001 to 31st March 2002, is 87 days as per the statement placed. Therefore, there was no PE of the assessee in India during the impugned assessment year. That being the case, the fees received by the assessee from legal consultancy services rendered in India is not taxable in India. The addition made, therefore, deserves to be deleted. This ground is allowed. 2019 (4) TMI 1473 Addition on account of debit balance written off - trade advances - allowable u/s. 36(1)(vii) r.w.s 36(2) or as a deduction as a trading loss u/s. 28 - HELD THAT:- In order to successfully claim the trade advance which is written off as irrecoverable and so to be treated as a business loss, the assessee has to first prove that the advances were paid during the ordinary course of business, secondly, if it succeeds in proving the same, then the assessee has to prove that he took all steps to recover the advanced amount and since it failed to recover the amount then only assessee will be eligible to claim the amount as business loss. In this case, the assessee neither during the assessment proceedings nor before the first appellate authority could prove the nature of the advances given to the thirteen parties. Since the assessee could not produce any evidence to prove the nature of the advances given to the thirteen parties by producing some materials either by way of purchase order or a money receipt it failed to pass the first stage we discussed above. CIT(A) cannot be held to be erroneous. Therefore, we confirm the order of Ld. CIT(A) and dismiss this ground of appeal of assessee. Expenditure on account of replacement of certain parts of machinery which the assessee has claim under the head Repairs and Maintenance - expenditure incurred on replacement of cylinder - assessee has contended that this expenditure is a revenue expenditure - HELD THAT:- From a perusal of the items given from 2 to 8, supra, we note that these items are nothing but replacements of the already existing assets and thus does not bring into existence any new asset or the assessee acquire any new advantage of enduring benefit. Item nos. 2 to 8 the Ld. CIT(A) also notes that the expenditure was necessary since in the absence of replacement of the said parts, the machines would not be operational. Therefore, it is essential that for the smooth functioning of the business operations of the assessee, the replacement of the spare parts was a necessity. Even if by such replacement, some advantage has been derived by the assessee due to improvement in technology, it may at the most reduce the operating cost. Therefore, the action of the Ld. CIT(A) in giving relief to the assessee taking note of item nos. 2 to 8 is confirmed. Coming to the item no. 1 which the CIT(A) has not allowed and assessee is in appeal, we note that it pertains to expenditure incurred on replacement of cylinder. We note that the cylinder represents a component part of the Argon Compressor originally purchased by the assessee in December 1993. This cylinder was a replacement of the worn out existing cylinder fitted with the compressor and cannot be said to be a new asset or any new advantage of enduring benefit. Thus, by changing the worn out cylinder, the assessee has effected to preserve and maintain the asset, in this case the compressor. We allow the ground of appeal of the assessee in respect of item no. 1 of chart above on this ground and dismiss the ground of appeal of the Revenue in respect of item nos. 2 to 8 Disallowance of interest expenses - AO noted that assessee has obtained loan at a higher rate and advanced the loan at a lower rate - HELD THAT:- CIT(A) for taking note that the borrowed money was used for the purpose of business, he was of the opinion that the interest expenditure was deductible u/s. 36(1)(iii). Further, it was brought to our notice that the assessee company has substantial interest free own funds out of which payment in question was made. It was brought to our notice that as on 31.03.2005 out of the total funds of ₹ 36.79 cr. only ₹ 10.63 cr. related to loan funds. And the position was almost same even as on 31.03.2016. The security deposit since was only to the extent of ₹ 65 lacs it cannot be said that interest bearing borrowed fund has been diverted to third parties for the purpose other than the business. Since the assessee had mixed fund which includes its own fund in sufficient quantity, a presumption can be drawn that its own funds were utilized for the security deposit in question. For this proposition of law, we rely in CIT-vs.- Reliance Utilities Power Ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] , and looking from both angles, we confirm the order of the Ld. CIT(A) and dismiss this ground of appeal of the assessee. Addition regarding PF on account of employees contribution - payment was made before the due date of filing of the return of income u/s. 139 - HELD THAT:- We note that the CIT(A) has allowed the ground of appeal of the assessee by noting that assessee has remitted the employee s contribution of PF before the due date of filing of Return of Income u/s. 139 of the Act. Since in the ground of appeal of the revenue, the revenue has not assailed the decision of the CIT(A) that any payment made by the assessee in the PF account was after the due date of filing of return u/s. 139 of the Act, so the factual finding of Ld CIT(A) is crystallized. Thus by relying on the decision of the CIT Vs. Vijayshree ltd. [ 2011 (9) TMI 30 - CALCUTTA HIGH COURT] , we confirm the order of Ld. CIT(A) and dismiss this ground of appeal of the revenue. Addition u/s 40A(2)(b) - AO disallowed 50% of the expenditure incurred for rent - rent paid to person covered u/s. 40A(2)(b) - HELD THAT:- On careful readings of the Section, it is worth to mention that before applying the provision it is required that the Assessing Officer should form an opinion having regard to fair market value of the facility rendered. In the present case this exercise is found lacking and we note that the AO did not make any attempt to find from the market to compare the prevalent market rate of the facility given by Smt. Sachi Bhardwaj. The AO has not arrived at an exact figure of disallowance merely on ad-hoc estimate basis, which is an arbitrary exercise of power. Since no comparable instance was cited from the side of Revenue and this primary onus was not discharged, therefore in the totality of the circumstances discussed above warrants upholding the view of the Ld. CIT(A). We confirm the CIT(A) s order and dismiss the ground of appeal of revenue. Brought forward depreciation loss - HELD THAT:- provisions of section 32(2) as amended by Finance (No.1) Act, 2001 would allow the unabsorbed depreciation allowance available in the assessment years 1997-98, 1999- 2000, 2000-01 and 2001-02 to be carried forward to the succeeding years and if any unabsorbed depreciation or part thereof could not set off till the assessment year 2002-03, then it would be carried forward till the time it is set off against the profits and gains of subsequent years without any limit whatsoever. As relying M/S ARCH FINE CHEMICALS PVT. LTD. VERSUS ASSTT. COMMISSIONER OF INCOME TAX [ 2013 (10) TMI 425 - ITAT MUMBAI] CIT(A) was justified in allowing set off of unabsorbed depreciation for the assessment year 1997-98 against the profit for the assessment year 2006-07. Disallowance u/s. 40(a)(ia) for interest payment - payment was not really interest payment but the late payment charges of the electricity bill - recipient has included the amount in the total income in its return of income and paid taxes thereon - HELD THAT:- In the case of the assessee, the payment being in the nature of late surcharge, the same was not covered under the TDS provisions of Act and accordingly no disallowance can be made u/s. 40(a)(ia). We note that the Finance Act 2012 made an amendment of section 201 40(a)(ia). In accordance with this amendment, the payer assessee would not be deemed to be in default if the recipient of income, has taken into account the amount received from the payer in computing income as declared in the return and has paid due tax on the returned income. We note that the Tribunal has held that the insertion of second proviso to sec. 40(a)(ia) is curative and it has retrospective effect w.e.f. 1st April, 2005, being a date from which Sec. 40(a)(ia) was inserted by the Finance (No. 2) Act, 2004. The assessee made payment to Ajmer Vidyut Vitran Nigam Ltd, which is a State Government Undertaking. Considering the judicial decisions as cited above, we set aside the impugned order of Ld CIT(A) and remand the issue back to AO and the AO is directed to verify the fact regarding the payment of the tax by the recipient and if the AO finds that the recipient has included the amount in the total income in its return of income and paid taxes thereon, then the disallowance made by the AO by invoking the provisions of section 40(a)(ia) be deleted. See M/S. TIRUPATI CONSTURCTION [ 2016 (8) TMI 1310 - CALCUTTA HIGH COURT] 2019 (4) TMI 1472 Reassessment proceedings u/s 147 - not passing a speaking order rejecting the objections of the assessee - Jurisdictional power in direction to the learned assessing officer to initiate action u/s 269SS - HELD THAT:- AO despite making repeated requests by the assessee for furnishing the reasons recorded for reopening of the case did not provide the reasons even before 13 months of the 1st request and when assessee files objection to such reasons within 60 days, he does not disposal of them by a speaking order but passes the assessment order u/s 143 (3) read with section 147 of the act. This itself shows that reassessment proceedings requires to be quashed as the neither rejection not acceptance of the objections of the assessee has prejudiced the interest of the assessee to challenge the same before the higher forum. Therefore not passing a speaking order rejecting the objections of the assessee but passing an order u/s 147 of the act making the additions based on reasons recorded has caused serious prejudiced to the interest of the assessee. The reopening of the assessment is quashed. Therefore, the learned CIT A was not correct in holding that the reopening has been done in accordance with the law by the assessing officer. Accordingly, ground number 1 of the appeal of the assessee is allowed. 2019 (4) TMI 1471 Disallowance on account of depreciation on goodwill - extra consideration paid for acquisition of assets - AO submitted that the assessee has failed to demonstrate before the AO towards the bonafides of creation of goodwill - HELD THAT:- The essential controversy involves maintainability of claim of depreciation on cost of goodwill by the assessee. The assessee has claimed extra consideration paid towards acquisition of net value of assets of Interkraft Autocity Pvt. Ltd. with a view to acquire the dealership of Mercedes-Benz embedded with the concern covering the state of West Bengal and entire North-East. Thus, there can be no quarrel that extra consideration paid for acquisition of assets and the business of the concern represents cost of goodwill. This being so, the assessee would be entitled in law for claim of depreciation thereon in view of case of Smiffs Securities Ltd [ 2012 (8) TMI 713 - SUPREME COURT] . Therefore, we find no infirmity in the conclusion drawn by the CIT(A) in favour of the assessee. Thus, we decline to interfere. - Decided against revenue 2019 (4) TMI 1470 Unexplained cash deposit in the bank account u/s 68 - source from where these amounts were deposited in the bank - Whether it is probable that out of these withdrawals some amounts remained with the assessee, which can be re-deposited after two-three months? - HELD THAT:- On certain occasions, the assessee has withdrawn substantial cash viz. on 29.3.2007 he has withdrawn ₹ 1,05,000/-; similarly on 20.3.2007 he has withdrawn ₹ 25,000/-, and again on 21.3.2007 he withdrew an amount of ₹ 25,000/-. Thus, out of this withdrawal, some amount must be available with the assessee, which can be used for re-deposits. He has also withdrawn ₹ 62,000/- on 18.4.2007. To our mind, it is probable when the assessee does not belong to an organized sector of business. His total deposits in a year not exceeded more than ₹ 20,0000/-. Therefore, considering total withdrawals at different intervals tabulated in details, we are of the view that at least some credit be given to the assessee out of the major withdrawals. He could able to save something from them for re-depositing. Considering all the aspects, we delete ₹ 5,00,000/- (Rupees Five Lakhs only) on an estimate basis out of total addition made by the AO and confirmed by the ld.CIT(A). - Decided partly in favour of assessee. 2019 (4) TMI 1469 Nursery expenses allowability - allowable revenue expenditure u/s 37 - HELD THAT:- From the details furnished by the assessee in respect to this claim of expenditure, the CIT(A) concluded that the payments made were in the nature of salaries and wages paid regularly to the employees of the assessee and some administrative expenses were incurred to maintain the infrastructure facility of the unit. It was brought to our notice that the young tea bushes of the Telepara Unit was utilized as a part of uprooting and replacement programme in the existing plantation area and hence, allowable under Rule 8(2) of the I. T. Rules, 1962 and the expenses for maintaining nursery are allowable as per the Tribunal s order [ 2011 (5) TMI 1092 - ITAT KOLKATA] therefore, we are of the opinion that the Ld. CIT(A) s order does not require any interference from our part and, therefore, we confirm the order of Ld. CIT(A) and dismiss this ground of appeal of the revenue for AYs 2008-09 and 2009-10. Notional Interest addition - HELD THAT:- Expenditure has been incurred by the assessee company way back in the year 1992-93 and because of restructuring of the company in the year 1995, the project of Mushroom and Floriculture activities was transferred to the new sister company called M/s. Yule Agro Industries Ltd. in the year 1995-96 so it cannot be called as loan/advance but in effect merely transfer of the assets and liabilities consequent upon restructuring. So, the entire value of the expenditure which has been incurred on the projects way back in the year 1992-93 was subsequently transferred to the M/s. Yule Agro sister company in the year 1995 due to the restructuring cannot be strictly termed as loan/advance and, therefore, question of notional interest as computed by the AO is unsustainable and has been rightly deleted by the CIT(A) which we confirm. This ground of revenue s appeals is dismissed. Liquidated damages claimed - HELD THAT:- CIT(A) has relied on the order of the Hon ble Allahabad High Court in the case of Central Trading Agency Vs. CIT [ 1964 (3) TMI 120 - ALLAHABAD HIGH COURT] wherein the Hon ble High Court allowed the expenses incurred for liquidated damages under the head commercial expediency and also the decision of the Hon ble Madras High Court in the case of CIT Vs. Indane Bislers [ 1972 (9) TMI 28 - MADRAS HIGH COURT] . Our attention was drawn to the copies of the contract and other details and we agree with the Ld. CIT(A) that it was an inbuilt condition of the contract that in case of late delivery of goods, percentage of consideration as liquidated damages would be deducted by the customer while making payment. It is noted that the payment was made to the assessee by the parties while it was carrying on its business, and the deduction of payment made by the parties were as per the contractual terms and so, it is an allowable deduction and we confirm the order of the Ld. CIT(A) and dismiss this ground of appeal of the revenue. Expenses incurred by the assessee for maintenance of immature tea bushes (young tea bushes) - HELD THAT:- Tribunal s order in assessee s own case wherein the Tribunal has held that the expenses incurred for maintenance in respect of immature tea bushes in the existing garden is to be allowed as revenue expenditure and it was further held that since the expenses were incurred by the assessee company for maintenance and replacement of tea bushes in its existing garden, the same cannot be said to have created an enduring benefit which can be termed capital in nature and as accordingly, the expenses claimed by the assessee company was allowed as revenue expenditure. See TASATI TEA LTD. [ 2003 (2) TMI 42 - CALCUTTA HIGH COURT] - Ground of appeal of revenue is dismissed. Unexplained sundry creditors u/s. 68 - AO has made the addition on the difference found in respect to the sundry creditors u/s. 68 - HELD THAT:- The amount credited is not a cash credit in the sense that some monies have been received by the assessee but the credit represents a mere liability payable by the assessee in future. Under accounting principles, a liability can only be brought into account by making a credit entry in the books of account in favour of the person to whom the money is payable. Thus, there is a marked difference between the credit representing a liability payable by the assessee and a credit representing monies received from another person. It is because of this distinction a liability for purchase which has been credited in the account of the supplier cannot be added u/s. 68. More so, when the purchase has been accepted as genuine and a deduction, therefore, has been allowed, therefore, the action of the CIT(A) deleting the addition need not to be interfered for this additional reason also as stated above. The revenue s ground of appeal is, therefore, dismissed. Prior period expenses - HELD THAT:- Expenses of such nature which though relates to earlier period had crystalised in the year under consideration either due to change of law with retrospective effect like bonus or till finalization of sales tax case or settlement with trade union with retrospective effect in respect to fee, allowance etc. or receipt of final bill after the cut-off date of the assessment years. The CIT(A) has duly considered the magnitude and the scale of operations of the assessee company and observed that many of the expenses could not be correctly estimated and there could arise exigencies which require calibration/correction and, therefore, taking note of the fact that these expenses are crystallized in this assessment year under consideration, the CIT(A) has given relief which according to us, does not require any interference from our part and we confirm the same. Therefore, this ground of appeal of the revenue for the assessment years under consideration is dismissed. Disallowance u/s 14A applying Rule 8D - HELD THAT:- In the interest of justice and fair play, we set aside the order of CIT(A) and remand this matter back to the file of the AO to recompute the disallowance u/s. 14A read with Rule 8D as per law laid by the Tribunal in REI Agro Ltd., [ 2013 (9) TMI 156 - ITAT KOLKATA] and in accordance to law. Therefore, this ground of appeal of revenue is allowed for statistical purposes. Disallowance made under bad debt written off - HELD THAT:- CIT(A) after going through the aforesaid facts and the law on the subject has given relief to the assessee. We further note that the assessee has produced copy of the general ledger extracts showing year wise and bill wise details of some high value of debtors, namely Mining Allied Machinery Ltd. ₹ 20,04,507/-, National Hydel Power Corporation Ltd. ₹ 15,19,912/- etc. are out of ₹ 1,13,05,600/- an amount of ₹ 1,09,58,100/- which was a debt lying in the books of the assessee for more than fifteen years pertaining to ESG and electronic Unit which has become non-existent and the balance amount of ₹ 3,47,500/- deducted by SAIL due to dispute in delivery of goods as discussed above. Taking note of the fact that the bad debt written off by assessee had been offered by the assessee to tax in the earlier years as business income, we find no infirmity in the order of the Ld. CIT(A) and decline to interfere in the order of the Ld. CIT(A) and dismiss this ground of appeal of revenue. Addition in respect of sundry receipt of tea division - According to assessee, 60% of sundry receipt is agricultural income cannot be added as business income - HELD THAT:- CIT(A) has given a cryptic order without going into the details as to the validity of the claim made by the assessee and since there is no application of mind by the Ld. CIT(A) it would be in the fitness of things that this issue is also referred back to the file of AO, therefore, we set aside the order of Ld. CIT(A) and remand this issue back to the file of AO with a direction to the assessee to produce all documents to substantiate the claim that the sundry receipt which it claimed as to be considered as income under Rule 8. And the AO is directed to adjudicate this issue afresh in the line of the ratios laid in the judicial precedents on this issue and in accordance to law. This ground of appeal of revenue is allowed for statistical purposes. 2019 (4) TMI 1468 Unexplained cash - assessee company is collecting tax on behalf of NDMC - admitted before MM that cash of NDMC which was siphoned off by him - HELD THAT:- It would not be out of place to mention here that SCPL was appointed as an agent by NDMC to collect the tax on its behalf. In the year 2012, Shri Awanindra Singh pleaded guilty before the Metropolitan Magistrate by admitting that he siphoned off the tax collected on behalf of NDMC. However, this admission is in the year 2012 and cannot be considered as a basis for holding the order of the CIT(A) to be wrong which was passed in the year 2000. Moreover, if this admission by Shri Awanindra Singh before the Metropolitan Magistrate is to be taken into account, then also the cash found from him which was seized by the CBI authorities and has been directed by the Metropolitan Magistrate to be confiscated and deposited with NDMC cannot be considered as unexplained cash of the assessee because SCPL were the collecting agent for the taxes on behalf of NDMC and now, it is established and admitted by Shri Awanindra Singh that it was NDMC s tax collection which was siphoned off and kept in his lockers. Thus, it cannot be treated as unexplained cash for the purpose of income tax in his hands. We find that the return for assessment year 1996-97 was filed on 24.09.1996 and for assessment year 1997- 98 on 28.11.1997. Thus, the said company has filed regular returns of income tax with the concerned Assessing Officer. The allegation that the said company did not file the return of income is factually incorrect. If there is any non-compliance under the Companies Act, it is for the Registrar of Companies to take appropriate action but it will have no bearing so far as income tax assessment is concerned. The order of the CIT(A) wherein he set aside the addition of ₹ 1,75,03,500/- for fresh consideration to the Assessing Officer cannot be faulted with. - Revenue s appeal are rejected. Interest on FDRs - FDRs were in the name of the wife and children of the assessee - the books of account of SCPL not produced before the AO for verification - balance sheet of SCPL contained the note that the company s FDRs stood in the name of the directors and their relatives - HELD THAT:- When SCPL is a separate assessee whose assessments were completed u/s 143(3) and in whose balance sheet, FDRs were duly disclosed, then in our opinion, there would hardly be any justification to treat them as unexplained investment of the assessee merely because books of SCPL were not produced during the assessment proceedings of the assessee. If the Assessing Officer had any doubt, he could have got verified the same through the Assessing Officer of SCPL. Thus, when the FDRs belonged to SCPL, the interest, if any, can be considered in their hands only and not in the case of the assessee. In view of the above, we uphold the order of learned CIT(A) deleting the addition for interest on FDRs Unexplained investment in property - HELD THAT:- CIT(A) has given the year of acquisition of all assets. The agricultural land in Bihar was acquired during the financial year relevant to assessment year 1993-94, agricultural land at Najafgarh was acquired during the financial year relevant to assessment year 1996-97 and flat at Mumbai during the financial year relevant to assessment year 1994-95. When no asset was acquired during the financial year relevant to the assessment year under consideration, there cannot be any question of unexplained investment in acquisition of such asset. Addition being cash belonging to NDMC found by CBI during search at NDMC collection centre - HELD THAT:- Admittedly, SCPL was the collection agent for NDMC in respect of electricity and water charges. All the above sums were found during the course of search by the CBI at the collection centre of NDMC at Nirman Bhawan. Therefore, the entire cash was out of the collection of electricity and water charges made by SCPL. Therefore, the same cannot be considered as unexplained money of the assessee. Accordingly, we do not find any justification for sustaining any addition in this regard. The additions sustained by learned CIT(A) are deleted and assessee s appeal is allowed while ground No.4 of the Revenue s appeal is rejected. Assessment u/s 153 - period of limitation - HELD THAT:- After considering the proviso to Section 153(2A) as well as the memorandum explaining the provisions of Finance Act, 2001, we are clearly of the opinion that the amended provisions would be applicable where the appellate order is passed or received after 1st April, 2000. As per amended provision, the set aside assessment is to be completed within one year from the end of the financial year in which appellate order setting aside the assessment was received. In this case, order of CIT(A) is dated 27th November, 2000 though the exact date of receipt of such order by the CIT is not given before us but it can be reasonably presumed that it was received within the financial year ended on 31st March, 2001, especially when no contrary claim is made by the Revenue. In such circumstances, the set aside assessment was to be completed before 31st March, 2002 while the set aside assessment is completed on 31st March, 2003 which is clearly barred by limitation. In view of the above, we quash the assessment order dated 31st March, 2003. Once the impugned assessment order is quashed, the other grounds raised in the assessee s appeal do not require any adjudication. Reopening of assessment u/s 148 - HELD THAT:- When the Revenue is of the opinion that the cash which assessee claimed to have received from issue of shares never belonged to it, he could not have formed an opinion that there is escapement of income in the hands of the assessee. Considering the totality of above facts viz., (a) the notice under Section 148 has been issued on wrong premise that the assessee did not file the return of income while, in fact, the returns were actually filed, (b) the proceedings have been initiated for examination of share capital which is not permissible in law and (c) the Assessing Officer never formed an opinion that there was escapement of income in the hands of the assessee, we are of the opinion that reopening of assessment was not valid. Accordingly, the same is quashed and consequently, the impugned assessment orders are also quashed. 2019 (4) TMI 1453 Applicability of Section 194A in relation to the payment of bank guarantee commission - excluding bank guarantee commission from the purview of Sec.194A, even when the payment was made prior to CBDT's Notification No.56/2012 dated 31.12.2012 - HELD THAT:- Revenue candidly pointed out that in case of Commissioner of Income TaxTDS2 Vs. Nimbus Communications Ltd. [ 2019 (2) TMI 650 - BOMBAY HIGH COURT] such an issue had come up for consideration, revenue's appeals were dismissed. Without recording separate reasons, this appeal is also dismissed. 2019 (4) TMI 1452 Stay of demand - Petitioner was directed to remit 20% of the demand on or before 15.03.2019 - HELD THAT:- The petitioner shall pay 50% of the amount directed in the conditional order in two instalments. First of such intalment shall be paid on or before 31.03.2019 and balance 50% within a further period of one month. Impugned order accordingly modified as above. The appeal shall be disposed of as expeditiously as possible. Customs 2019 (4) TMI 1467 Interpretation of statute - Section 126 of the Customs Act, 1962 - scope of the term 'vest with the Central Government occurring in Section 126 (1) of the Act - Can the Central Government retain the excess auction proceeds after adjusting the customs duty, interest, penalty and redemption fine or has such excess amount have to be returned paid to the owner of the goods? HELD THAT:- Under Section 125 of the Act, an option indeed is given to the importer to redeem the goods by payment of fine. A time limit is also set for that purpose. If, as in the present case, the importer fails to avail of that opportunity it leads inevitably to confirming the confiscation of the goods and their sale by public auction. Section 126 (1) of the Act spells out the legal effect of such confiscation . Section 126 (2) of the Act lends a further finality to such vesting. It requires the officer adjudging confiscation to mandatorily take and hold possession of the confiscated goods. The distinction sought to be drawn between confiscation of prohibited goods and of other goods is relevant only to the extent of the discretion in the adjudging officer to permit their redemption by payment of fine. Once there is a failure to pay the fine within the time stipulated, the consequence is the same whether the goods are prohibited goods or other goods . The transient nature of the confiscation ends and it becomes absolute . This is what is made clear by Section 126 of the Act. Sections 125 and 126 of the Act form one continuous scheme and are not to be read disjunctively. Once the vesting of the goods in the government is absolute, it would be inconsistent with the character of that vesting to contend that the Central Government can only recover through the sale of such goods the duty, penalty and interest and should return the excess to the owner/possessor of the goods. The question referred to this Bench is answered in the affirmative by holding that under Sections 125 read with Section 126 of the Act, where the redemption fine in lieu of confiscation is not paid within the time stipulated, the Central Government is entitled to retain the excess auction sale proceeds of the confiscated goods, after adjustment of the duty, penalty, interest and other statutory dues. The central government in such circumstance is under no obligation to return the excess amount to the importer. Petition dismissed. 2019 (4) TMI 1466 Maintainability of appeal - valuation dispute - HELD THAT:- This is clearly a valuation dispute between the parties - This Court has no jurisdiction over the matter - Appeal dismissed. 2019 (4) TMI 1465 Non-compliance with the pre-deposit - Whether on the facts and in the circumstances of the case and in law was the Tribunal justified in dismissing the appellant's appeal for noncompliance of an order on pre-deposit even when it notices that rectification application to rectify the order on pre-deposit was pending? HELD THAT:- The Appellant did not appear before the Tribunal on 17th October, 2016 (when order of pre-deposit was made) nor on 19th December, 2016 (when appeal itself was dismissed). This inspite of notice. Nevertheless, the Tribunal had on 19th December, 2016 itself noted the fact as recorded in the impugned order that an application for rectification of the order dated 17th October, 2016 was pending for consideration. The Tribunal ought not to have disposed of the appeal finally for noncompliance with the earlier order dated 17th October, 2016 without first considering the Appellants' rectification application. This, the Tribunal is obliged to do even in the absence of the party. Therefore, the fair and just thing for the Tribunal to do was to list the Rectification Application on board and dispose of the same before taking up the appeal for final disposal. This the Tribunal did not do. In fact, this manner of dealing with an appeal by the Tribunal is deprecated. This only leads to injustice and multiplicity of proceedings. The substantial question of law is answered in the negative i.e. in favour of the Appellant-Assessee and against the Respondent-Revenue. Service Tax 2019 (4) TMI 1463 Demand of Interest and penalty - non-payment of service tax - service tax paid before adjudication proceedings - goods transport Agency subject matter under dispute during relevant time - revenue neutrality - HELD THAT:- There was no deliberate suppression of fact by the appellant in this case. In fact, the Audit detected the case is non payment of service tax on the basis of records maintained by the appellant. This transaction of non payment of service tax was duly reflected in their books of account. In such a situation it has been held by the Hon ble Tribunal that no suppression of fact can be alleged. There is no justification of imposition of any penalty or interest, relying upon the decision in the case of M/S. NANDGANJ SIHORI SUGAR CO. VERSUS CCE. LUCKNOW [ 2014 (5) TMI 138 - CESTAT NEW DELHI] - also, as whole exercise is revenue neutral and accordingly there is no scope of levy of any penalty. The impugned regarding penalty and interest and order is set aside - As the payment of Service Tax is not contested the same is upheld - appeal allowed in part. Central Excise 2019 (4) TMI 1462 Rectification of Mistake - recall of final order - HELD THAT:- There is no material to interfere with the impugned order - The civil appeals are accordingly dismissed. 2019 (4) TMI 1461 Valuation - body built vehicles - addition of transport cost and transit insurance in assessable value - HELD THAT:- It is well settled that for the purpose of arriving at the assessable value at the job worker s end, the cost of transportation and the transit insurance will need to be added so as to arrive at the value in the hands of the job worker - thus, the transport cost as well as transit insurance are required to be added for payment of duty by Hyva. Whether it is required to add cess at the rate of .125% as well as an amount of ₹ 10,000/-? HELD THAT:- The Hon ble Supreme Court in the case of COLLECTOR OF CENTRAL EXCISE, PUNE VERSUS DAI ICHI KARKARIA LTD. [ 1999 (8) TMI 920 - SUPREME COURT OF INDIA] , has held that the cost of production of excisable product cannot include the element of duty paid on the raw material, but availed as modvat credit by the manufacturer - In this case, the automobile cess paid at the rate of .125% by TML is not availed as cenvat credit by Hyva and hence the same is required to be added to the value by Hyva. Whether the amount of ₹ 10,000/- paid by TML as additional BED on the chassis is required to be added? - HELD THAT:- There is no dispute that the amount of ₹ 10,000/- has been availed as cenvat credit by Hyva. However, the adjudicating authority has still included this amount in the value with the findings that Hyva has extended a discount of ₹ 10,000/- on the body built price - since there is no dispute that Hyva has availed additional BED of ₹ 10,000/- as cenvat credit, there is no justification for addition of the same. Time Bar - HELD THAT:- The Adjudicating Authority has not given any specific reason for coming to such conclusion other than a blank observation that the assessee short paid duty by way of suppression of valuation as well as suppression of facts of non-receipt of amount equal to additional BED at specific rate. It was very much within the knowledge of the Department that Hyva has carried out body building for TML and the manufactured vehicles were being paid duty in terms of Valuation Rules - invoking the suppression clause is without basis. Consequently, the demand for differential duty is to be restricted to normal time limit. The impugned order loading the assessable value with transport cost, transit insurance as well as automobile cess is upheld - the portion of the order for loading the assessable value with ₹ 10,000/- is et aside - demand restricted to normal period. Penalty on TML or on Hyva also set aside. Appeal allowed in part. 2019 (4) TMI 1460 Scope of SCN -Demand of sectral excise duty - furniture items to various customers including M/s. I. T. C. as well as M/s. ABN Amro Bank - HELD THAT:- It is seen that the impugned order has decided the issue only with reference to M/s. Interscape; hence we are at a loss to understand the basis for the appeals filed by the Revenue against M/s. Amro Bank as well as M/s. ITC. No specific grounds are also forthcoming for the Departmental appeal against these two persons - the appeal directed against M/s. ITC as well as M/s Amro Bank. are infructous and hence, dismissed. Appeal of Revenue against the dropping of the demand against M/s. Interscape - chargeability of Central Excise Duty on furniture items - HELD THAT:- The Hon ble Supreme Court in the case of COLLECTOR OF CENTRAL EXCISE, NEW DELHI VERSUS LOUIS SHOPPE [ 1995 (3) TMI 108 - SUPREME COURT OF INDIA] decided this issue in favour of Revenue - thus, for the period until the issue was finally in March 1995 by the Supreme Court in the Louis Shoppe case, no duty can be demanded. He has also accordingly held that Revenue was not justified in invoking the extended period of time limit and hence, no demand can be enforced for the period beyond normal time limit - Since, no demand has survived within the normal time limit, he has dropped the entire demand raised in the Show Cause Notice. Appeal dismissed - decided against Revenue. 2019 (4) TMI 1459 Clandestine removal - steel wire - the impugned order is based on the presumption and assumption and is contrary to the evidence on record - HELD THAT:- It is on record the recovery of the weighment registers were not made under Panchnama and the reliance of same cannot be placed for alleging the clandestine removal against the appellant. It is also held by the Adjudicating Authority these weighment slips were recovered from gate office of the appellant which has been denied by the appellant. In absence of the assumption of the said document without proper panchnama reliance cannot be placed on said record - the appellant has categorically desired to have the cross examination of rawmaterial supplier and the incharge of the weighbridge, which had been denied by the Adjudicating Authority. No case has been made against the appellant for want of (i) proper investigation (ii) denial of cross examination asked by the appellant as per section 9D (1) of the Central Excise Act (iii) reliance on the third party evidence without any corroboration with additional evidence (iv) non-reliance of on the investigation report submitted by the Range Superintendent by the order of Adjudicating Authority - Appeal allowed - decided in favor of appellant. 2019 (4) TMI 1458 Excisability - waste - aluminium dross and skimmings arising in the course of manufacture of aluminium products - HELD THAT:- Aluminium dross, being a waste product emerging during the manufacture of Aluminium products, cannot be subject to excise duty. Hon ble Supreme Court in the matter of UNION OF INDIA VERSUS DSCL SUGAR LTD. [ 2015 (10) TMI 566 - SUPREME COURT] , has held that waste product/residue, which itself is not the result of any process, cannot be treated as falling within the definition of Section 2(f) of the Act and in the absence of manufacture, there cannot be any excise duty. Appeal allowed - decided in favor of appellant. 2019 (4) TMI 1457 Utilisation of CENVAT Credit on AED - Since tyres manufactured with dipped nylon tyre cord fabric did not attract AED, cenvat credit on AED paid could not be utilised till 1.4.2000 by the appellant - Credit of Additional Excise Duty (AED) utilised for payment of Basic duty of Excise - HELD THAT:- The issue decided in the case of COMMISSIONER OF C. EX., MUMBAI-III VERSUS CEAT LTD. [ 2010 (3) TMI 621 - CESTAT, MUMBAI] , where it was held that In the instant case, the debits were held to be of no consequence when the assessee was required to pay duty initially discharged using AED(GSI) credit. Therefore, the credit needed to be restored and was correctly ordered so by the Commissioner. Appeal allowed - decided in favor of appellant. CST, VAT & Sales Tax 2019 (4) TMI 1456 Maintainability of petition - statutory remedy of appeal - Rate of tax - Water supply and sanitary equipments and fittings of every description - whether the articles dealt with by the appellant/petitioner is liable to be taxed at the rate stipulated in Sl. No.101 in SRO No.82/2006 or not? - HELD THAT:- The indulgence of this court can be shown to facilitate the appellant/petitioner to seek appropriate statutory remedy. The appellant/petitioner will be at liberty to challenge the orders of assessments as well as the order of penalty. 2019 (4) TMI 1455 Recovery of arrears of interest and penalty - lifting of attachment of property - HELD THAT:- Having accepted the conclusion of the aforesaid committee, it does not now lie in the mouth of the department to state that the Special Committee could not have considered a matter falling within the compass of the Entry Tax Act. The fact that the petitioner has remitted the tax component also does not advance the case of the respondent. Thus, particularly for the reason that the Entry Tax assessment relating to the period 1995-96, dated 31.12.1997 has been set aside and no other demand admittedly exists, the petitioners stand is accepted - The impugned order is quashed and the respondents are directed to lift the attachment on the property within a period of four (4) weeks from the date of receipt of a copy of this order. Petition allowed. Indian Laws 2019 (4) TMI 1454 Insurance claim - disclosure of vital information - non-disclosure of a previous insurance policy - HELD THAT:- In the present case, the insurer had sought information with respect to previous insurance policies obtained by the assured. The duty of full disclosure required that no information of substance or of interest to the insurer be omitted or concealed. Whether or not the insurer would have issued a life insurance cover despite the earlier cover of insurance is a decision which was required to be taken by the insurer after duly considering all relevant facts and circumstances. The disclosure of the earlier cover was material to an assessment of the risk which was being undertaken by the insurer. Prior to undertaking the risk, this information could potentially allow the insurer to question as to why the insured had in such a short span of time obtained two different life insurance policies. Such a fact is sufficient to put the insurer to enquiry. We are not impressed with the submission that the proposer was unaware of the contents of the form that he was required to fill up or that in assigning such a response to a third party, he was absolved of the consequence of appending his signatures to the proposal. The proposer duly appended his signature to the proposal form and the grant of the insurance cover was on the basis of the statements contained in the proposal form. Barely two months before the contract of insurance was entered into with the appellant, the insured had obtained another insurance cover for his life in the sum of ₹ 11 lakhs. We are of the view that the failure of the insured to disclose the policy of insurance obtained earlier in the proposal form entitled the insurer to repudiate the claim under the policy. The SCDRC was in error in reversing the judgment of the District Forum. The NCDRC has similarly erred in affirming the view of the SCDRC - Appeal allowed - decided in favor of appellant.
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