TMI Tax Updates - e-Newsletter
April 29, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
TMI SMS
Highlights / Catch Notes
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GST:
Classification of goods - Breaded Cheese - The cheese forms most important constituent (55% of total volume) of the product and the impugned goods cannot be formed without cheese -The batter and bread coating are not essential and can be easily substituted - fall under Heading 0406 includes ‘processed cheese’- taxable @ 12% GST.
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GST:
Classification of supply - Maintenance Contract - The activities performed under the impugned Agreement, though comprises of two or more individual supplies of goods or services, cannot be held as “Composite Supply” - Taxable as “Mixed Supply"
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GST:
GST on Intermediary services - Scope of advance ruling - There does not appear to be any intention of the AAR to tax the back operation of the Appellant and the Ruling of AAR which is based on a specific agreement can not be generalized.
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GST:
Levy of GST - DFIA (Duty Free Import Authorisations) - The DFIA popularly known as duty paying scrips in the trade parlance is equivalent to the duty credit scrips - there will be nil rate of GST on the sale or purchase of DFIA
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Income Tax:
Penalty u/s 271D - Default u/s 269SS - loans in question were received by the assessee in cash from her daughter and son-in-law - no penalty leviable
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Income Tax:
Disallowance u/s 37(1) - donation made to Shanti Seva Nidhi for the purpose of training and providing technical knowledge along with diploma courses to the employees of the company and their children - students with qualified diploma degrees are in turn recruited by the company - business purpose of assessee is fulfilled - deduction allowable
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Income Tax:
Penalty u/s 271(1)(c) - assessee disclosed all the true facts relating to the land - it may be a good case for making addition since there was difference between the actual consideration and the stamp duty value - but not a good case where penalty u/s 271(1)(c) may be levied as It is well settled that the penalty proceedings are different and distinct from the assessment proceedings
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Income Tax:
Penalty u/s 271(1)(c) - survey u/s 133A was carried out much prior of date of filing of return u/s 139(1) - amount admitted in survey has offered in return - When the due date for filing return of income was not expired, then how the AO could infer that the assessee would not disclose the income in its return - penalty deleted
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Income Tax:
Revision u/s 263 - unexplained cash deposits - AO has taken a possible view that the deposits/credits in the bank account was on account of sale of banana and has applied the profit rate of 8.06% - when there is some inquiry and the ld.CIT does not agree with the extent of inquiry conducted by the AO as sufficient, he cannot invoke the jurisdiction u/s 263
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Income Tax:
Deduction u/s 54/54F - assessee has not acquired the ownership rights in the new property but merely acquired tenancy right which could not be equated with ownership rights - conditions of Section 54/54F is to purchase or construct the new property within the specified time - deduction denied on acquisition of tenancy right
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Income Tax:
Income of the HUF or individual assessee - Capital gain assessment - obvious from the sale deed that the property in question was undisputedly transferred by four co-owners and not by any HUF or its Karta - capital gain, whatsoever, earned of his share, shall be taxable in the hands of the assessee
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Income Tax:
Resident of India - number of days of stay in India - a citizen of India, or a person of Indian origin - if the assessee comes to a visit in India, the requirement of stay in India in the previous year would be 182 days and not 60 days as contained in clause (c) - stay in adia was 173 days, hence non-resident
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Income Tax:
TP adjustment - Corporate/Management services fee - TPO cannot reject the allowability of expenses simply on the ground that no benefit was derived - It is for the assessee to decide the way in which it has to carry on its business - Once it is proved that the services were availed, then TPO jurisdiction gets restricted to determining the ALP of the transaction.
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Income Tax:
Stay of demand - competency of Dy CIT (E) to revoking the exemption granted u/s 11 and 12 - direction to make a deposit of 20% of the disputed demand canceled - CIT(A) directed to dispose appeal in accordance with law within a maximum period of 6 weeks
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Service Tax:
Classification of services - shops and outlets constructed by the Mandi Samiti various places are being given on rent/fee to various traders and farmers for sale purchases of the agriculture produces - extended period of limitation cannot be invoked .
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Service Tax:
Classification of services - shops and outlets constructed by the Mandi Samiti various places are being given on rent/fee to various traders and farmers for sale purchases of the agriculture produces - extended period of limitation cannot be invoked .
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Service Tax:
Reverse charge - remuneration paid to directors - even though the TDS was deducted under the head salaries and the director has shown the income as salary in his income tax return it would be liable to pay service tax under RCM since the condition of employer employee relationship is not satisfied
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Central Excise:
Refund of pre-deposit along with interest - When Section 35 FF is invoked, either prior to or post 2014, the only thing it talks of is the refund of the amount deposit, heading remains the same but for the application, with subtle difference.
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Central Excise:
Supply of goods for setting up of Mega Power against International Competitive Bidding (ICB) - sub-contract - sub contractor is eligible for the benefit of exemption despite the fact that some contactor has not participated in the ICB process
Articles
Notifications
Circulars / Instructions / Orders
Case Laws:
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GST
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2019 (4) TMI 1570
Maintainability of petition - statutory remedy of appeal - Section 107 of the UPGST Act, 2017 - HELD THAT:- The petitioner has statutory remedy of filing an appeal against the impugned order under Section 107 of the U.P. GST Act, 2017. It is left open to the petitioner to take recourse to the statutory remedy available to him under the law. We are not inclined to entertain this petition at this stage. Petition dismissed.
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2019 (4) TMI 1569
Anticipatory Bail - it was alleged that petitioner have played fraud in Circular Bill Trading - HELD THAT:- This Court while considering the similar aspect in SRI AVINASH ARADHYA, SRI MALLOKARADHYA I.P. VERSUS THE COMMISSIONER OF CENTRAL TAX BANGALORE EAST COMMISSIONERATE [ 2019 (3) TMI 373 - KARNATAKA HIGH COURT ] has discussed elaborately all the points and thereafter it has come to the conclusion that the accused-petitioners therein are entitled to be released on bail - In the instant case also, similar allegations have been made as against the petitioners and as the said aspect has already been covered by this Court, the petitioners herein are also entitled to be released on anticipatory bail - petitioners herein are granted anticipatory bail - petition allowed.
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2019 (4) TMI 1568
Reimbursement of differential tax amount arising out of change in tax regime - transition from VAT to GST regime - HELD THAT:- The petitioner shall make a comprehensive representation before the appropriate authority within four weeks from today ventilating the grievance. If such a representation is filed, the authority will consider and dispose of the same, in the light of the aforesaid revised guidelines dated 10.12.2018 issued by the Finance Department, Government of Odisha, as expeditiously as possible, preferably by 15.07.2019 - petition disposed off.
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2019 (4) TMI 1567
Detention and seizure of the transport vehicle - recovery of tax and penalty - Section 129 of the Karnataka Goods and Services Tax Act, 2017 - HELD THAT:- Having argued the matter for some time resisting the writ petition, both the sides now are in broad agreement that the vehicle in question can be retained by the petitioner by furnishing a Bank Guarantee for the value of the goods in question on or before 10th April 2019, failing which the official respondents are at liberty to seize and detain the vehicle with the police force and of RTO, if so required. Petition disposed off.
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2019 (4) TMI 1566
Bail Application - offence under Section 132(1)(b) of the CGST Act, 2017 - HELD THAT:- This Court is of the opinion that this is a fit case to exercise the discretion and enlarge the applicant on regular bail. This Court has also considered the aspects that; (i) the applicant is in jail since 18.1.2019; (ii) the allegation against the applicant is that he has committed the offence punishable under Section 132(1)(b) of the CGST Act and he has wrongly availed input tax credit and also passed on to the concerned buyer; (iii) however, for the alleged transaction, it is always open for the respondent-department to take departmental action for recovery of penalty etc. against the applicant. The applicant is ordered to be released on regular bail in connection with the offence - Application allowed.
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2019 (4) TMI 1545
Classification of goods - Breaded Cheese - Whether the product Breaded Cheese ( impugned goods ) is classifiable as cheese under Heading 0406 - taxable at the rate of 6 percent each under S. No. 13 of the Schedule-II appended to Notification No. 1/2017-Central Tax (Rate) dated June 28, 2017? - HELD THAT:- The cheese forms most important constituent (55% of total volume) of the product and the impugned goods cannot be formed without cheese. The batter and bread coating are not essential and can be easily substituted. It is only cheese that differentiates the impugned goods from any other product. As Heading 0406 includes processed cheese , which may also contain cream or other dairy products, salts, spices, flavouring, colouring and water - it is undisputed that impugned goods are neither sweetmeat nor are they in the nature of namkeens, bhujia etc. The impugned goods thus are not coveted by Supplementary Chapter Note 6. The HSN and Explanatory Notes which form essential guidance for interpretation of any Heading make it abundantly clear that cheese which contain various additions that are battered or breaded and pre-cooked are included as Cheese under Heading 0406. Ingredients and characteristics of the product with which we are concerned do not contain any material or feature, which will take the said product out of goods falling under Heading 0406. Thus, Goods under reference are classifiable under S. No. 13 of Schedule II of Notification 1/201 7 of Central tax (Rate). vide Heading 0406 and taxable @ 12% GST.
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2019 (4) TMI 1544
Classification of supply - Maintenance Contract - Equipment Parts Supply and Services Agreement - mixed supply or not - challenge to AAR decision - HELD THAT:- Under the second Agreement i.e. Equipment Parts Supply and Services Agreement , both the supplies i.e. supply of services and supply of parts are not integral to each other unlike supplies involved in Agreement-1. Hence, it is not a case of two or more taxable supplies which are naturally bundled and supplied in conjunction with each other in the ordinary' course of business, one of which is a principal supply. The activities performed under the impugned Agreement, though comprises of two or more individual supplies of goods or services, cannot be held as Composite Supply . Consequently, such activities will fall under the category of Mixed Supply as per definition of Mixed Supply, under Section 2(74) of CGST Act, 2017. Thus, the activities performed by the Appellant under Agreement-2 will fall under the category of Mixed Supply .
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2019 (4) TMI 1543
Classification of supply - Zero Rated Supply or not? - Section 16 of the Integrated Goods Service Tax Act, 2017 - services of back office administrative and accounting support - intermediary services - challenge to AAR decision. HELD THAT:- Since, the Appellant is doing the above work on behalf of their client and the said supply of goods is invariably between two persons, i.e. between their client and its buyers/suppliers of goods, thereby, satisfying the second criterion of the intermediary. The Appellant is not providing the goods in question, either to its client's buyers or to its client's suppliers on his own account. The goods in the question invariably belong either to its client or to its client's supplier. Thus, the above goods are, clearly, not provided on their own account, thereby, satisfying the third criterion of the intermediary services - all the criterion applicable to the intermediary are being satisfied adequately by the Appellant. Hence, while performing all the above mentioned activities, the Appellant is clearly acting as intermediary. There does not appear to be any intention of the AAR to tax the back operation of the Appellant and the Ruling of AAR which is based on a specific agreement can not be generalized. Intermediary services or not? - HELD THAT:- Appellant have misconstrued the definition of intermediary as provided in Section 2(13) of the IGST Act, 2017. It is seen that the services they are rendering are in relation to the goods in question which belong to either their overseas client or the client's supplier, as the case may be. AAR decision upheld.
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2019 (4) TMI 1542
Levy of GST - sales and /or purchase of DFIA (Duty Free Import Authorisations) - applicability of serial no. 122a of the Notification No. 2/2017 - C.T. (Rate) inserted vide Notification No. 35/2017-C.T. (Rate) dated 13/10/2017 - whether DFIA (Duty Free Import Authorisations) is duty credit scrips or otherwise? - HELD THAT:- Once it is established that the duty credit scrips issued under SEIS and MEIS, and DFIA are construed as same in the trade parlance dealing with these licenses or scrips and widely called as duty paying scrips or licenses or duty credit scrips due to their common functionality and nature, it is imperative that their classification would be the same despite the differences in the technicalities of their issuance in that duty credit scrips are issued under the MEIS SEIS envisaged in chapter 3, while the DFIA are issued under Chapter 4. The intention of the law maker was crystal clear in that they wanted to give immediate relief to the exporters, who were facing great deal of difficulties due to the existing GST policies along with other technical glitches in the implementation of the GST provisions, by incentivizing their export related activities. It is under this vision and objective that the GST, on the treading of the duty credit scrips, was reduced from 5% to 0% for the promotion of the export, thus restoring the incentives held by the duty credit scrips and adding potential to the marketability of such scrips. All these proposals and recommendations made in the 22nd GST council meeting is comprehensibly and rightfully applicable in the case of DFIA for the reason that the DFIA is also issued by the DGFT for the benefit of the exporters by awarding them incentives on the exports done by them. The DFIA, also popularly known as duty paying scrips in the trade parlance is equivalent to the duty credit scrips, as far as the tax treatment thereon, are concerned and accordingly, there will be nil rate of GST on the sale or purchase of DFIA as provided in Sr. 122A of the Notification 02/2017-C.T. (Rate) dated 28.06.2017 as amended by the Notification No. 35/2017-C.T. (Rate) dated 13.10.2017.
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Income Tax
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2019 (4) TMI 1533
Resident of India - Assessee not an ordinary resident - number of days of stay in India - a citizen of India, or a person of Indian origin - scope of amendment brought in Section 6(6) by the Finance Act, 2003 w.e.f. 1.4.2004 - Assessee shifted to USSR for his higher education in 1978 and worked there and get permanent resident status in Ukraine till 2002 thereafter shifted to England but continued his business interest in Ukraine, Russia and CSI Countries - HELD THAT:- Tribunal on material on record came to factual finding that the assessee was in India during the previous year relevant to the assessment year in question for 173 days. This factual finding is unassailable. In that view of the matter, clause (a) of Section 6(1) would not apply. It is true that in absence of clause (b) of Explanation 1 below Section 6(1), the assessee would have fulfilled the requirements of clause (c) of Section 6(1). However, as per the explanation, if the assessee comes to a visit in India, the requirement of stay in India in the previous year would be 182 days and not 60 days as contained in clause (c). These facts would demonstrate that the assessee had migrated to a foreign country where he had set up his business interest. He pursued his higher education abroad, engaged himself in various business activities and continued to live there with his family. His whatever travels to India, would be in the nature of visits, unless contrary brought on record. We do not find that the Tribunal, therefore, committed any error. Revenue submitted that Section 6(6) has been amended by virtue of Finance Act of 2003 and this amendment is declaratory in nature. We need not go into this issue because in our opinion, Section 6(6) has no relevance. The question in the present case is not whether the assessee is not ordinary resident of India. The question is during the previous year relevant to the present assessment year, whether he was a resident in India which question must be answered with reference to sub-section (1) of Section 6. In some of the appeals, Revenue has raised additional question as to the date of the travel outside India should be included as a day of resident in India or not. This question would be academic since even after inclusion of the said day, the assessee would not cross the minimum 182 days required for his residence in India - revenue appeals are dismissed
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2019 (4) TMI 1532
Deduction u/s 80IA - eligibility for Renupower Unit Nos. 6 and 7 and Co-Generation Plant - arrying on the eligible business - HELD THAT:- substantial questions admitted in appeal question i to ix relating to deduction of eligibility for Renupower Unit and Co-Generation Plant Disallowance made by the A.O. u/s 36(i)(iii) as confirmed by the CIT(A) under the provisions of Sec. 14A - HELD THAT:- Issue is covered against the Revenue by virtue of judgment of this Court in case of CIT Vs. HDFC Bank Ltd. [ 2014 (8) TMI 119 - BOMBAY HIGH COURT] . We are informed that the appeal against such judgment of the High Court has also been dismissed by the Supreme Court. This question is, therefore, not considered. Disallowance of sum paid to IFFCO as per arbitration proceedings - HELD THAT:- Tribunal has correctly relied upon and referred to the decision of the Gujarat High Court in case of Navjivan Roller Flour Pulse Mills Ltd Vs. Dy. CIT [ 2009 (3) TMI 132 - GUJARAT HIGH COURT] in which it was held that the liability of the assessee to pay damages would arise on the date of the award of such damages even if the award was challenged by the assessee in appeal. This question is, therefore, not considered. TP Adjustment of purchase price of copper concentrate - adjustment was made based on internal comparables and for the same month of transactions - HELD THAT:- We notice that the Tribunal has examined the facts on record and come to the conclusion that the assessee had entered into a long term agreement with the associated enterprise for procuring copper concentrates. The Tribunal examined the material on record at length to come to the conclusion that in the process, there was no excess payment and therefore, there was no need for transfer pricing adjustment. The entire issue being factual in nature, no interference is called for. Reducing the rate of guarantee commission from 1.75% to 0.50% - HELD THAT:- the issue is covered by the judgment of this Court in the case of CIT, Mumbai Vs. M/s. Everest Kento Cylinders Ltd. [ 2015 (5) TMI 395 - BOMBAY HIGH COURT] . It was held that there is different between corporate guarantee and bank guarantee. Additional depreciation u/s 32(iia) in respect of Co-Generation in Plant-2 - Tribunal allowed claim - HELD THAT:- The Revenue fairly states that the same does not arise out of the impugned judgment of the Tribunal. Deduction u/S. 80IA applying the UPSEB/s market rate - HELD THAT:- This Court in recent judgment in case of CIT-LTU Vs. Reliance Industries Ltd. [ 2019 (2) TMI 178 - BOMBAY HIGH COURT] had considered such a question and dismissed the same by referring and relying upon the decision of Gujarat High Court in case of Pr. CIT Vs. Gujarat Glass Works (P) Ltd [ 2016 (10) TMI 1111 - GUJARAT HIGH COURT] . This question is, therefore, not considered. Exemption of interest received from DHIL u/s 10(23G) on a gross basis even though the assessee company has claimed the intereset paid to DHIL as an expenditure - HELD THAT:- The similar issue has been decided against the Revenue by this Court in case of this very assessee by judgment [ 2012 (9) TMI 159 - BOMBAY HIGH COURT] . This question is also not considered.
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2019 (4) TMI 1531
Writ against assessment order - ex parte assessment - non compliance of notice u/s 142 - documents relating to the affairs of the petitioner society was seized by Economic Offences Unit of the Government of Bihar - alternative remedy - whether the petitioner society was precluded to respond to the notice u/s 142 due to seizer of documents by EOU Unit of the Gov. of Bihar - HELD THAT:- We completely fail to appreciate that if the notice u/s 142 was received by the petitioner on 29.11.2018 what stopped the petitioner from visiting the Department either for seeking adjournment or for informing them regarding seizure of the documents by the Economic Offences Unit. It is obvious that the Assessing Authority awaiting the response from the petitioner on the notice at Annexure-4 had no other option but to pass the order on 15.12.2018 in absence of any assistance from the petitioner or any application filed in this regard. Whether the documents mentioned in Annexure-4 were under seizure of the Economic Offences Unit or not are a subject matter of the dispute in view of the stand taken by the Economic Offences Unit and we would not enter into such disputed area for the present rather bearing note of the laid back attitude of the petitioner in not responding to the notice of the Income Tax Department, for the present we would only permit him to exhaust the alternative remedy available to him under the Act and during which course the petitioner would be at liberty to raise all issues as he seeks to raise in the present writ petition. We note that pendency of the matter has taken away the period of limitation prescribed under the Act and thus we hold that if the petitioner chooses to file an appeal within four weeks from today together with the petition for condonation of delay, the Appellate Authority i.e. the Commissioner, Income Tax (Appeal) shall consider and dispose of the same in accordance with law on its own merits bearing in mind the pendency of the matter before this Court.
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2019 (4) TMI 1530
Stay of demand - Exemption u/s 11 - society registered u/s 12AA - competency of Dy CIT (E) Circle, Ranchi, to revoking the exemption granted u/s 11 and 12 - direction to make a deposit of 20% of the disputed demand - HELD THAT:- For ascertaining as to whether the petitioner enjoys registration under Section 12AA of the Act, we had allowed time to learned counsel for the Income Tax Department to clarify as to the source of power for the Deputy Commissioner, Income Tax to revoke the registration under Section 12AA of 'the Act'. A supplementary counter affidavit is filed and which is silent on any such order of revocation. We are certainly satisfied to interfere with the order passed by the Commissioner, Income Tax(Exemptions) in so far as it requires the petitioner to make a pre-deposit of 20% of the tax assessed amount before the appeal(s) can be heard and which order is hereby set aside. We also hereby issue direction to the Commissioner (Appeals) to consider the appeal preferred by the petitioner for the respective years and dispose of the same in accordance with law within a maximum period of 6 weeks from today and until such disposal, the respondents are restrained from taking coercive measures for realization of the demand which are subject matter of appeals.
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2019 (4) TMI 1529
Disallowance u/s 14A for expenses incurred in relation to the exempt income - CIT(A) held that the investment made by the assessee in the shares of other group concerns being strategic in nature, the disallowance u/s 14A could be made only on account of other expenses as per clause (iii) of sub-rule (2) of Rule 8D Held that:- Hon ble Delhi High Court in the case of Cheminvest Ltd. vs CIT [ 2015 (9) TMI 238 - DELHI HIGH COURT] wherein it was held that no disallowance u/s 14A could be made if no exempt income was actually earned by the assessee in the relevant year. Since no exempt income in respect of dividend was actually earned by the assessee during the year under consideration, we respectfully follow the decision above and uphold the impugned order of the Ld. CIT(A) to the extent of relief given by him to the assessee on the issue of disallowance u/s 14A. - Decided against revenue
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2019 (4) TMI 1528
Penalty u/s 271D - Default u/s 269SS - HELD THAT:- Manisha Prakash Amin vs.- JCIT [ 2011 (5) TMI 1073 - ITAT KOLKATA] wherein it was held that the transactions between relatives involving receipt of loan in cash are not in the nature of loans or deposits as envisaged in section 269SS of the Act and the penalty imposed under section 271D was accordingly cancelled As relying on ANANT HIMATSINGKA VERSUS ADDL. COMMISSIONER OF INCOME-TAX, KOLKATA. [ 2011 (11) TMI 796 - ITAT KOLKATA] held that the loan transaction between son-in law and father-in-law for giving a support and help was not a loan or deposit in stricter sense of section 269SS of the Act and the same having been given only as a financial support, the relevant transaction did not fall in the ambit of section 269SS of the Act. In our opinion, the ratio of these decisions of the Coordinate Bench of this Tribunal is squarely applicable in the present case, where the loans in question were received by the assessee in cash from her daughter and son-in-law and applying the same, we hold that the penalty imposed by the Assessing Officer under section 271D and confirmed by the CIT(Appeals) is not sustainable. We accordingly cancel the said penalty and allow the appeal of the assessee.
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2019 (4) TMI 1527
Initiation of proceedings u/s 153A - no incriminating material found in search - HELD THAT:- It is also not in dispute that no incriminating material qua the assessee in question has come on record. It is also not in dispute that as per order passed by the AO u/s 147/143(3) of the Act dated 23.04.2010 that genuineness of the share capital of the assessee was duly examined and no addition has been made. As relying on KABUL CHAWLA [ 2015 (9) TMI 80 - DELHI HIGH COURT] when no incriminating material has come on record during the search and seizure operation conducted at the premises of the assessee rather assessment has been based upon mere statement of Shri Santosh Kumar Jain which was later retracted without any further corroborating material on record. Santosh Kumar Jain in answer to Question No.11 has categorically replied that, we have given accommodation entries to Minda Group of companies through assessee company and has not stated that he has provided accommodation entries to the assessee company. So, in view of the matter, ld. CIT (A) has erred in dismissing the legal ground raised by the assessee that in the absence of incriminating material, if any, unearthed during the course of search initiation of assessment proceedings u/s 153A is not maintainable and the assessment made by the AO is beyond the scope of section 153A of the Act. Consequently, legal ground raised by the assessee is determined in favour of the assessees/respondents. - Decided against revenue.
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2019 (4) TMI 1526
Penalty u/s 271(1)(c) - non specification of charge - without specifically mentioning the proceedings whether the proceedings are initiated on the ground of concealment of income or on account of furnishing of inaccurate particulars - bonafide belief - Receipt of accommodation entries - HELD THAT:- Keeping in view of the facts and circumstances and following the case laws SHAH RUKH KHAN [ 2018 (6) TMI 147 - ITAT MUMBAI] , the issue relating to validity of the proceeding u/s 271 (1)(c) was rightly held to be not tenable and therefore, this ground was correctly dismissed by the Ld. CIT(A), which does not need any interference on my part, hence, I uphold the action of the Ld. CIT(A) on the issue in dispute and dismiss the ground raised by the Assessee. Even otherwise, the assessee has failed to controvert the facts by the AO that the said amount of ₹ 10 lakhs was an accommodation entry and that it has furnished inaccurate particulars of income resulting in a concealment of income. There is no explanation whatever as envisaged u/s 271 (1)(c) has been adduced. In fact the explanation 1 to section 271 (1)(c) is also not found to be giving any relief to the assessee for accepting the addition of the income. It is not the case of the assessee that it has a bonafide explanation for the said receipt of ₹ 10 lakhs not offered for taxation. In the present case the assessee failed to adduce a bonafide explanation within the scope of explanation 1 to section 271(1)(c), hence, the Ld. CIT(A) has rightly confirmed the penalty in dispute, which does not need any interference, hence,uphold the action of the Ld. CIT(A) on the issue of dispute and reject the grounds. - Decided against assessee.
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2019 (4) TMI 1525
Levy of penalty u/s 271(1)(c) - Addition u/s 68 read with section 115BBE on account of sale of equity shares - HELD THAT:- It is not in dispute that addition made u/s 68 read with section 115BBE on account of sale of equity shares was deleted by the Tribunal vide its order [ 2019 (1) TMI 1404 - ITAT DELHI] . Therefore, the very basis for levy of penalty not surviving the levy of penalty also does not survive. Therefore, delete the levy of penalty on addition made u/s 68 read with section 115BBE of the Act and allow the appeal of assessee.- Appeal of assessee is allowed.
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2019 (4) TMI 1524
Disallowance u/s 14A r.w.r. 8D - HELD THAT:- There is no merit in the submissions made by Ld A.R. We noticed that the CIT(A), in the first round, had made disallowance of ₹ 22.39 lakhs under Rule 8D(2)(iii) of I T Rules. The main contention of the assessee before the Tribunal, in the first round, was with regard to the interest disallowance made by CIT(A) under Rule 8D(2)(ii) on the plea that the investments have been made out of surplus funds. In any case, it was not shown before us as to why the disallowance out of administrative expenses should not be made under Rule 8D(2)(iii) of I T Rules. Accordingly we confirm the order passed by Ld CIT(A) on this issue. Non-granting of credit for Foreign Tax - HELD THAT:- CIT(A) has already restored this issue to the file of the AO with the direction to examine the claim of the assessee. Hence we do not find it necessary to give any other direction except stating that the AO shall allow the credit in accordance with the law.
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2019 (4) TMI 1523
Levy of penalty u/s 271(1)(c) - non specification of charge - defective notice - Held that:- Notice issued by the Assessing Officer under Section 274 read with Section 271(l)(c) to be bad in law as it did not specify which limb of Section 271(l)(c), the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The Tribunal, while allowing the appeal of the assessee, has relied on the decision of the Division Bench of this Court rendered in the case of COMMISSIONER OF INCOME TAX -VS- MANJUNATHA COTTON AND GINNING FACTORY (2013 (7) TMI 620 - KARNATAKA HIGH COURT) . Also see M/S SSA'S EMERALD MEADOWS [ 2016 (8) TMI 1145 - SUPREME COURT] - Decided in favour of assessee.
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2019 (4) TMI 1522
Levy of penalty u/s 271(1)(c) - excess claim of gratuity expense - Reasonable cause - Auditors failed to exercise proper professional care in detecting the irregularity while finalizing the accounts and their report u/s. 44AB - HELD THAT:- As clearly a dereliction of duty on the part of the Auditors who had apparently also not reported correctly u/s. 44AB. Equally, the tax professional/s preparing the return failed to detect the anomaly which is patent inasmuch as there is no fresh provision for gratuity while the brought forward provision continues to outstand in accounts despite payment of gratuity, and even as the assessee makes a claim for gratuity for the year in a higher than normal sum of ₹ 214.91 lacs. No doubt that the excess claim of gratuity expense (Rs. 47.30 lacs) was a result of a bona fide mistake by the assessee, saving penalty. The assessee has also raised a Ground qua the invalidity of the penalty proceedings on the basis that in the notice u/s. 274, show causing the assessee therefor, the specific limb of s. 271(1)(c) is not struck off, even as, admittedly, the satisfaction recorded by the AO in the assessment order is for furnishing inaccurate particulars of income. The same was, in view of our acceptance of the assessee s appeal on the principal issue, not pressed nor, consequently, responded to by the Revenue. The impugned penalty is accordingly directed to be deleted. - Decided in favour of assessee.
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2019 (4) TMI 1521
Penalty u/s 271(1)(c) - survey u/s 133A was carried out at the premises of the assessee on 28.3.2012 i.e. much prior to the closing dates of accounts and date of filing of return u/s 139(1) - assessee discloses amount during action under section 133A, and the same is honoured by filing return of income subsequent thereto - HELD THAT:- Admitted during survey u/s.133A when disclosed in the return of income furnished on or before due date and the same is accepted by the AO, there cannot be a case for levy of penalty. When the due date for filing return of income was not expired, then how the AO could infer that the assessee would not disclose the income in its return. The assessee has disclosed this income in its return and the AO has accepted the same without any addition or disallowance. AO has simply carried away by the surmise that had the survey not taken place, the assessee would not have disclosed this income. This assumption and surmises of facts are without any basis. AO cannot anticipate that assessee will not disclose a particular income. There are number of judgments available on this issue where it is held that when an assessee has made a complete disclosure in the return of income and offered the admitted amount for taxation, then there is no question of concealment of income or furnishing inaccurate particulars of income so as to attract provisions of section 271(1)(c). In the case of SAS Pharmaceuticals [ 2011 (4) TMI 888 - DELHI HIGH COURT] has held that when the assessee discloses amount during action under section 133A, and the same is honoured by filing return of income subsequent thereto, no penalty u/s.271(1)(c) is sustainable. CIT(A) has made detailed analysis of the issue in the light of the of various judgments and rightly come to the conclusion that levy of impugned penalty is neither sustainable on facts nor in law. CIT(A) and reject the ground of appeal of the Revenue
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2019 (4) TMI 1520
Revision u/s 263 - unexplained cash deposits - explanation of contra entries - deposit relates to cash sale of banana - offer in return on presumptive profit i.e. 8.06% - HELD THAT:- A perusal of the assessment order on this issue shows that the Assessing Officer has applied his mind and taken a possible view on the basis of the various details filed by the assessee. No doubt, the ld.CIT may not agree with the view of the Assessing Officer. However, it cannot be said that it is a case of no inquiry or that the view taken by the Assessing Officer is not a possible view. It has been held in various decisions that only absence of an inquiry empowers jurisdiction to the CIT to invoke the revisional power u/s 263. However, when there is some inquiry and the ld.CIT does not agree with the extent of inquiry conducted by the Assessing Officer as sufficient, he cannot invoke the jurisdiction u/s 263. AO has taken a possible view on the issue relating to the deposits/credits in the bank account by treating the same on account of sale of banana and has applied the profit rate of 8.06%, therefore, the view taken by the AO cannot be termed as not a possible view. Since the same has been determined on the basis of various replies given by the assessee, therefore, CIT, in our opinion, is not justified in invoking the jurisdiction u/s 263 on the issue of bank deposits/credits in the bank account . The order passed u/s 263 by the ld.CIT is not sustainable in law. - Decided in favour of assessee.
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2019 (4) TMI 1519
Penalty u/s 271AAB - whether automatic post search involving the searched assessee s disclosure followed by assessment proceedings or not ? - additional income disclosures only during the course of search seizure operation - undisclosed income - 'specified previous year' in terms of sub-clause (i) of clause (b) of Explanation to section 271AAA - meaning of the terms 'date of search ' - additional incomes suo motu and substantiated the manner of having derived the same from various business - HELD THAT:- As decided in AKA LOGISTICS PVT. LTD., AMBEY MINING PVT. LTD., M/S CALCUTTA INDUSTRIAL SUPPLY CORP. [ 2019 (3) TMI 209 - ITAT KOLKATA] imposition the impugned penalty u/s 271AAB not automatic - mere issue of notice to impose penalty u/s 271(1)(c) is not sufficient - Assessing Officer had to apply u/s 271AAB Explanations clause (a) to (c). We therefore decline Revenue s appeals. Assessing Officer s penalty show-cause notice nowhere specified the limb in issue pertaining to undisclosed income component as to whether the same related to income or expenditure side. We find no merit in assessee s instant technical plea going by learned co-ordinate bench s decision hereinabove relying upon hon'ble apex court s decision in cases Sandeep Chandak vs. PCIT [ 2018 (6) TMI 106 - SUPREME COURT OF INDIA] We therefore decline assessee s cross-objection.
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2019 (4) TMI 1518
Penalty u/s 271AAB - assessee s search disclosure amounted to undisclosed income within the meaning of section 271AAB Explanation (c) - HELD THAT:- The taxpayer on the other hand strongly supports the CIT(A) s findings deleting the impugned penalty mainly on the ground that the disclosure in issue was made suo motu without any corroborating material found or seized during the course of search which could form the basis for levying the penalty in issue. We find in this backdrop of facts the instant issue raised at the Revenue s behest as to whether the impugned sec. 271AAB penalty is automatic or not is no more res integra. see DCIT, CENTRAL CIRCLE-2 (2) , KOLKATA VERSUS AKA LOGISTICS PVT. LTD., AMBEY MINING PVT. LTD., M/S CALCUTTA INDUSTRIAL SUPPLY CORP. [ 2019 (3) TMI 209 - ITAT KOLKATA] Validity of sec. 271AAB proceedings in a show cause indicating sec. 271(1)(c) action - penalty show cause notice did not specify the specific charge / clause of sec. 271AB - HELD THAT:- Revenue has sufficiently proved right from the beginning that the assessee s undisclosed income is based on corroborative material found during the course of search relations to impugned assessment year 2013-14 only. Learned coordinate bench has already taken sufficient note of all these judicial precedents in identical backdrop of facts. Hon'ble apex court s decision in Sandeep Chadak [ 2018 (6) TMI 106 - SUPREME COURT OF INDIA] has admittedly declined the very argument challenging validity of sec. 271AAB proceedings in a show cause indicating sec. 271(1)(c) action. We do not find any prejudice caused to the assessee once the AO had initiated sec. 271AAB proceedings to the instant lead case Condonation of delay in filing objections 548 days - various procedural formalities and compilation of necessary records - HELD THAT:- The Revenue is fair enough in not disputing correctness of the said condonation averments. We therefore condone the above identical delay in all these cross objection(s). The same are now taken up for adjudication on merits.
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2019 (4) TMI 1517
TP Adjustment - exclusion inclusion of comparable company - functional comparability - FAR Analysis Capgemeni Business Services (India) Ltd - functional comparability - HELD THAT:- Capgemeni Business Services (India) Ltd during the year, provided I.T. enabled assured services in finance and accounting to many Indian and Global clients and has widened the scope of services in supply chain, programme, technology and engineering services etc.,whereas the assessee is providing services in financial processes, annual and quarterly financial reports. Therefore, we are satisfied that both the companies are not into similar type of activities as Capgemeni Business Services (India) Ltd is also into more diversified activities such as Technology Engineering services and therefore, the activities rendered by it are functionally different. Both the companies used brands of their holding companies and therefore, are on par with each other. However, due to functional dissimilarity, we direct the AO to exclude this company from the final list of comparables. Hartron Communications Ltd - income from BPO services is ₹ 17,99,52,212 which has been booked on the basis of Indian currency realized. At note 17, the revenue from operations is reported, we find that the export income has been reported at ₹ 17,99,52,211/-. Further, from the data published by the assessee, this year is an exceptional year of operation. The financial results of Hartron Communications Ltd cannot be considered for the preceding and succeeding financial years It can be seen that this year has been an exceptional year for the said company. Therefore, we are of the opinion that Hartron Communication Ltd cannot be considered as a comparable company to the assessee. In this view of the matter, without commenting on the other objections of the assessee, against this company, we direct the AO/TPO to exclude this company from the final list of comparables only for the ground of exceptional performance during the relevant year. Though the assessee has sought inclusion of Informed Technologies India Ltd, Jindal Intelicom Ltd, we find that by exclusion of the two companies in the above paragraphs, the assessee s margin falls within + or -3% of the average margin of the comparables. Therefore, we do not venture to adjudicate on the inclusion of these two companies at this stage, as it would only result in an academic exercise.
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2019 (4) TMI 1516
Deduction u/s 80IA - Assessee's eligible undertaking - HELD THAT:- Assessee's eligible undertaking itself was independently carrying out the complete activity i.e. from mixing, grinding till the pelletisation. The raw materials once consumed cannot be reconverted into the same position. Its utility gets changed. We find the issue raised in this appeal by the Revenue has been discussed by the Coordinate Bench of this Tribunal [ 2016 (11) TMI 1470 - ITAT KOLKATA] and by following principle of consistency, confirmed the order of CIT(A) in allowing deduction u/s 80IE. Ground of Revenue are dismissed Addition made on account of additional depreciation - HELD THAT:- The additional depreciation u/s 32 (1) (iia) of the I.T. Act is allowable as the plant machinery is wholly engaged in the manufacturing of poultry cattle feeds. Disallowance u/s 14A - assessee earned dividend income and by invoking the method of Rule 8D(2) for the purpose of calculating the disallowance u/s 14A - CIT(A) by placing reliance on the decision of the case of REI Agro Ltd. [ 2013 (9) TMI 156 - ITAT KOLKATA] restricted the disallowance taking into consideration the investment which yielded the dividend - HELD THAT:- Admittedly this exercise was not done before the AO and with the consent of both parties, we deem it proper to remand the matter to the file of AO for his fresh consideration to recompute the disallowance taking into consideration the investments which yielded the dividend income. Thus, Ground raised by the Revenue are allowed for statistical purposes. MAT - Addition u/s 14A relevant to book profit u/s 115JB - CIT(A) while dealing the issue in first appellate proceedings, held the disallowance/computation for section 14A r.w. Rule 8D is not applicable for the purpose of calculation of income u/s 115JB - HELD THAT:- We find force in the arguments of Ld.DR since there was no calculation in this respect by the AO in assessment proceedings, we deem it proper to remand the matter to the AO for his fresh consideration as indicated above. Thus, Ground No.7 raised by the Revenue is allowed for statistical purposes. Addition made on account of late deposit of employees contribution to PF ESIC - HELD THAT:- AO added the impugned amount for not depositing employees contribution before the statutory due date. The CIT(A) deleted the said amount by placing reliance in the case of Alom Extrusion Ld. [ 2009 (11) TMI 27 - SUPREME COURT] by holding no disallowance is maintainable if the deposit is made before the due date of filing the return of income. We find the CIT(A) examined the record and found that said employees contribution was deposited before filing the return of income. Therefore, we find no infirmity in the order CIT(A), accordingly it is justified.
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2019 (4) TMI 1515
Penalty u/s. 271(1) (C) - Additions made by disallowing the exemption claimed u/s. 10(38) - HELD THAT:- Quantum addition has been deleted by the Tribunal. Since quantum addition(s) have been deleted, the imposition of penalty has no legs to stand. Accordingly, we confirm the impugned order of the ld. CIT(A) deleting the imposition of penalty - Decided against revenue
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2019 (4) TMI 1514
Ex-party orders of the CIT(A) - appellant requesting adjournment time and again as he was waiting for the order of the MA, in ITAT order passed i.r.t s. 263 have the direct bearing over the issues involved - allowability thereof u/s. 40A(9), sec. 37(1), diversion of income by overriding title - HELD THAT:- Since all the issues/the grounds raised, are the same and identical facts are involved in as much as the AO has repeated the additions/disallowances following the order u/s. 263 and/or the reassessment order passed by the then AO u/s. 143(3)/263 in A.Y 2012-13, hence the said order of the Hon ble ITAT [ 2018 (2) TMI 507 - ITAT JAIPUR] shall be having a direct bearing over the present appeals. Hon ble ITAT has directed the AO to consider the claim of the assessee on merits as regards allowability thereof u/s. 40A(9), sec. 37(1), diversion of income by overriding title. I also found that recently the AO i.e ITO, Ward-1, Beawar, in there- assessment order passed u/s. 143(3) r/w/s 254 263 of the Act, pursuant to the direction of the Hon ble ITAT, has again repeated the disallowances. Since the facts and circumstances in all the other years under consideration are same, therefore, these are also restored back to the file of the CIT(A) with the same direction. The assessee is also directed to appear before the CIT(A) within a period of 60 days from the receipt of this tribunal order. - Appeals of assessee are allowed for statistical purpose.
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2019 (4) TMI 1513
Income of the HUF or individual assessee - Capital gain assessment - Whether ownership of the property in question was vested in the name of HUF ? - property transferred by four co-owners - estimation of value of property as on 01.04.1981 - proof that HUF as owner of the property - transfer the ownership of the property - HELD THAT:- As obvious from Sale deed that the property in question was undisputedly transferred by four co-owners and not by any HUF or its Karta. Therefore, we do not find any justification to disregard the conclusion reached by the ld. authorities below that four co-owners of the property including the assessee had transferred their asset and therefore, the capital gain, whatsoever, earned of his share, shall be taxable in the hands of the assessee. No cogent evidence is placed on record to establish that the ownership of the impugned property vested with the said HUF. Once, there is complete lack of evidence of ownership of property in the name of HUF, there is no need to prove the partition of HUF as per section 171 of the IT Act and as such the plea of assessee in this regard does not hold good. The ld. AR of the assessee could not be able to discard the findings reached by the ld. CIT(A) in the impugned order. We, therefore, are not inclined to interfere with the impugned order. Accordingly, the appeal of the assessee deserves to be dismissed.
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2019 (4) TMI 1512
Disallowance of VAT expense - allowable expenses u/s 37 - Sales Tax / VAT Demand pertaining to financial years 2005-06 to 2011-12 - CBDT Circular Nos. 496/25.09.1987 674/29.12.1993. - HELD THAT:- Demand has been paid by the assessee in different installments over AY 2012-13 to 2014-15 and claimed as deduction in impugned AY u/s 43B and u/s 37(1). The deduction of amount of ₹ 253.18 Lacs has already been allowed by the revenue during assessment proceedings itself and therefore, there is no dispute with respect to deduction to that extent. The payment of the demand is also not in dispute since the assessee has already placed on record proof of payment during assessment proceedings. Therefore, the payment made by assessee during AY 2014-15 but before due date of filing of return u/s 139(1) was clearly covered by the provisions of Section 43B. Both the lower authorities, in our opinion, fell in error, to observe that the aforesaid liability pertained to FY 2013-14, which is not the case here. Upon perusal of demand notices and copies of challans, we have already noted that demand pertained to earlier several financial years. This being the case, the conditions of Section 43B were fulfilled and the assessee was eligible to claim the deduction of ₹ 224.34 Lacs as per the judgment rendered in Allied Motors (P) Ltd. Vs. CIT [ 1997 (3) TMI 9 - SUPREME COURT] . So far as the deduction we find that this payment also pertains to earlier several financial years. The Ld. AO denied the same primarily on the ground that the assessee failed to demonstrate that the deduction thereof was not claimed in preceding AY 2012-13. Upon perusal of financial statements for AY 2012-13, we find that the assessee has claimed an expenditure of ₹ 31.82 Lacs only in that AY and therefore, this deduction was not claimed in earlier AY, as alleged by AO. With a view to fortify this fact further, the assessee has placed on record an affidavit of one of the directors of the assessee company which would dispel the apprehensions raised by Ld. AO. Therefore, considering the factual matrix, this deduction was allowable to the assessee u/s 37(1). - Decided in favour of assessee.
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2019 (4) TMI 1511
Disallowance u/s 14A r.w. Rule 8D(ii) - Investments were made out of own funds - disallowance u/s 14A added back while computing Book Profits u/s. 115JB - HELD THAT:- We find that undisputed position that emerges is the fact that the assessee s own funds were more than the investments made by the assessee and therefore, a presumption was to be drawn in assessee s favor that the investments were made out of own funds as held in CIT vs. HDFC Bank Ltd. [ 2014 (8) TMI 119 - BOMBAY HIGH COURT] . This position has been reiterated by Hon ble Apex court in the recent decision of CIT Vs. Reliance Industries Ltd. [ 2019 (1) TMI 757 - SUPREME COURT]. Secondly, this issue has already been adjudicated by the Tribunal in assessee s own case for AY 2013-14. Therefore, no infirmity could be found in the impugned order so far as the disallowance of interest expenditure u/r 8D(2)(ii) is concerned. Disallowance of Section 14A while computing Book Profits u/s. 115JB has been deleted by Ld. first appellate authority by placing reliance on the decision of Delhi Tribunal (Special Bench) rendered in ACIT Vs. Vireet Investment (P.) Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] . No contrary decision has also been placed on record by the revenue. There is nothing on record which suggest that the assessee has debited any actual expenditure in the Profit Loss Account and secondly, this issue has also been adjudicated by Tribunal in assessee s favor for AY 2013-14. The impugned order would require no interference in this regard. - Decided against revenue.
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2019 (4) TMI 1510
Capital gain computation - determine the year from which indexation benefit would be available to the assessee - computing the Indexed cost of Acquisition by taking the F.Y. 2000-01 instead of F.Y. 1980-81 as the base year of indexation - property was inherited from his father who had purchased the same prior to 01/04/1981 - HELD THAT:- This issue is squarely covered by the judgment of Hon ble Bombay High Court rendered in CIT Vs. Manjula J.Shah [ 2011 (10) TMI 406 - BOMBAY HIGH COURT] and [ 2018 (10) TMI 590 - SUPREME COURT] - Benefit of indexation would be available to the assessee from FY 1981-82 on fair market value as on 01/04/1981. The first ground of appeal stands allowed. Deduction u/s 54/54F - acquisition of tenancy right - Tenancy rights v/s ownership rights - HELD THAT:- We find that the assessee has not acquired the ownership rights in the new property but merely acquired tenancy right which could not be equated with ownership rights. The conditions of Section 54 as well as Section 54F is that the assessee must purchase or construct the new property within the specified time. The acquisition of tenancy right, in our opinion, do not tantamount to purchase or construction of a new property, in any manner. Therefore, the assessee would not be eligible to claim the aforesaid deduction either u/s 54 or u/s 54F.
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2019 (4) TMI 1509
Transfer Pricing Adjustment u/s 92CA - payment of model fee - royalty - export commission - operating profit/sales ratio of the assessee @ 12.91% is higher than the average of the operating profit ratio of comparable companies, i.e., (-) 21.97% - TNMM - HELD THAT:- The facts of the present assessment year are identical with that of the [ 2018 (7) TMI 208 - ITAT DELHI] . No distinguishing facts were placed on record by the Ld. DR. The payment of model fee is a consideration in terms of agreement with the associated enterprises for availing license to use their proprietary technology and it is a necessity for the assessee for manufacturing of the products to have knowledge of know-how from the associated enterprise. Payment of royalty is made in consideration for right to manufacture products and using the technical know-how owned by the associated enterprises. As regards royalty on sales to AEs, from the records it can be seen that the assessee is an independent manufacturer of products in respect of two wheelers and not a contractor manufacturer. The sale of such products made to the AE on principal to principal basis, at price agreed upon by the parties. As regards payment of export commission, the assessee paid this export commission for providing access by HMCL to the assessee for procuring export orders using their network and infrastructure in relation to export. In fact the export agreement with HMCL impart the consent to the assessee for export of specific models of two wheelers to certain countries on payment of export commission @ 5% of the FOB value of such export. It is noted here that by virtue of the said payment the assessee gained the access to new market for its products, which enabled it to enhance sales. Thus, the TPO/DRP was not correct in disallowing these three components in the Transfer pricing additions and we are allowing Ground No. 1 to 12 of the assessee s appeal. Addition of freight inward/import clearing expenses - assessee ordinarily purchases raw material on CIF basis and, therefore, freight cost for delivery of goods is ordinarily included in purchase price and are factored in the value of closing inventory - HELD THAT:- The assessee is following consistent system of accounting which was without any reasons was disturbed by the Assessing Officer despite that the facts remains same in this year as well. There is no alteration in the profit of the assessee company. Therefore, the issue is squarely covered by the order of the Tribunal in earlier years [ 2018 (7) TMI 208 - ITAT DELHI] Addition on account of cost of rejection of semi-finished goods and obsolete items to the value of closing stock - assessee had debited to the profit and loss account ₹ 1,356.22 lacs representing the cost of material / semi-finished goods rejected in the course of manufacturing or obsolete items - aforesaid rejections comprised of abnormal rejections arising in the course of manufacturing, like rejections on account of obsolescence, etc - Scope of principles of accounting (AS-2) - HELD THAT:- It is pertinent to note that it is not practically possible for the assessee to segregate normal and abnormal wastages embedded in the aforesaid costs and therefore, the assessee, as per consistent and regular method of accounting, accepted by the Revenue as such in the earlier years, did not consider the aforesaid expenditure for the purposes of valuation of closing inventory of finished goods. The AO/DRP was not correct in making this addition. The issue is squarely covered in assessee s favour by the order of earlier assessment years. Disallowance of provision for increase in price of material - adjustments which are not consistent with the explanation to Section 115JB - assessee has appointed various vendors for supply of material to be used in the process of manufacturing of vehicles. The assessee at the time of issuing of purchase order, negotiates the price at which the particular component/ components shall be supplied by the vendor. Subsequently, vendors are provided supply of component schedule annually - HELD THAT:- From the records it can be seen that the provision for the material is worked out in respect of price amendments which were already issued on 31.03.2009 which was made on the basis of actual supplied made upto the end of the year as per price amendments actually issued on 31.03.2009. The provision was made on the basis of actual PO issued to the vendors for change in the prices during the year and thus, does not involved any estimation. AO was not right in making adjustments which are not consistent with the explanation to Section 115JB. Disallowance of prior period expenses - assessee is a large size manufacturing company which receives services from several vendors, running into hundreds and made attempt to quantify the liability incurred towards expenses during the relevant previous years and provide for it - HELD THAT:- From the records it can be seen that the assessee made reasonable attempt to quantify the liability incurred towards expenses during the relevant previous years and provide for it. But it was not humanly possible to consider and provide for all the expenses, in absence of relevant details/material/information for various reasons like non-receipt of bills/invoices from the vendors, the contract terms with vendors not being settled, disputes in relation to bills received, services contracted by zonal/regional/branch officer not intimated to the head office, etc. Therefore, assessee in our opinion rightly claimed miscellaneous expenses aggregating to ₹ 17,83,68,791 pertaining to prior period. Advertisement provisions of Head Office - at the end of year, the assessee makes provision for various expenses incurred during the year on the basis of reasonable estimate since in the absence of receipt of bills/invoices from the vendors, which are received in the succeeding year, the exact amount payable there against was not ascertainable - HELD THAT:- It is pertinent to note that the provision for advertisement expenses was made on the basis of actual Purchase orders and agreements and thus, has been made on reasonable and scientific basis in this year as well. Thus, the Assessing Officer was not right in disallowing the said expenses. In the present Assessment Year also the facts are similar and are squarely covered with the decision of the Tribunal for A.Ys. 2010-11, 2011-12, 2012-13 and 2013-14. Addition u/s 40A(2)(b) - Disallowance of excessive purchase from related parties as per AS- parties - HELD THAT:- The purchase prices of components which are purchased from various suppliers are based upon negotiations with such vendors and are different due to various factors. The assessee also prefers purchasing material from certain suppliers, due to business/commercial expediency. The said parties are not related to assessee, in terms of the provisions of section 40A(2)(b). During the relevant previous year, the assessee made total purchases of various raw materials, etc. aggregating to ₹ 9366.88 crores. Out of the aforesaid total purchases, purchases from related parties, i.e., parties related to the assessee, in accordance with definition given in AS-18 issued by the ICAI and as disclosed in the notes to accounts of the audited accounts of the relevant previous year, but admittedly not related in terms of definition provided in section 40A (2) Deemed dividend u/s 2(22)(e) - payment received on behalf of Hero Honda Fin Corp. Ltd. (HFCL) - HELD THAT:- In this Assessment Year as well when payments by dealers to HFCL are due to the dealers, due to convenience of facility of collection centers of the assessee available all over India, make payment into the assessee's bank account, for and on behalf of HFCL, which is in turn remitted by the assessee to HFCL in 2- 3 days. Thus, the assessee is mere custodian of the said amount. Thus, Section 2(22)(e) will not be applicable in the present case. Disallowance of payments made for advisory services availed from Hero Corporate Services Ltd.(HCSL) - During the relevant previous year, the assessee paid retainer ship fee in connection with availing advisory services for the purposes of business. - HELD THAT:- Services were rendered by HCSL to the assessee and the assessee explained the nature of services received from Hero Corporate Services Ltd. and nexus of same with the business of the assessee before the Assessing Officer. AO was not right in disallowing the payments made for advisory services availed from HCSL. TDS u/s 194H - TDS on quarterly target and turnover discount and Sales Discount - HELD THAT:- From the perusal of records it can be seen that as dealership agreement entered between the appellant and dealers is on a principal-to-principal basis and dealers do not act as agents of the appellant while purchasing and further selling the vehicles. Accordingly, the incentives offered at the time of purchase of vehicles do not fall within the meaning of commission u/s 194H. AO was not correct in holding that the assessee was liable to deduct tax from discounts/incentives u/s 194H. TDS u/s 194J - disallowance of legal and professional expenses u/s 40(a)(ia) - re-imbursement of professional expenses - HELD THAT:- In the present Assessment Year, the Assessing Officer disallowed the aforesaid expenses, invoking section 40(a)(ia), for the failure of the assessee to deduct tax at source there from under section 194J . But it is pertinent to note here that the Assessing Officer did not doubt that the payment was made by assessee towards reimbursement of expenses, it was still held that assessee was liable to deduct tax at source under section 194J of the Act. Deletion of disallowance on account of non-deduction of tax on reimbursement of expenses following the order for assessment years 2007-08 and 2008-09 Disallowance of Royalty Expenditure/ model fee/cess on model fee - capital in nature - HELD THAT:- As during the currency of the agreement, the assessee only had a limited right to use the technology of Honda. Ownership/proprietary rights in the technical know-how continued to vest in Honda and the assessee was not authorized to transfer, assign or convey the know-how/technical information to any third party as the assessee only acquired limited right to use and exploit the know-how. Thus, royalty/TGF/Model fee payable to Honda is only for the purpose of use of technical assistance in the manufacture and sale of products and the assessee has not acquired any capital asset. Thus, the payment made to simply use the technical know-how/knowledge provided by the foreign collaborator as opposed to acquisition of ownership rights therein are revenue expenditure only and the same should have been allowed by the Assessing Officer/TPO. The model fees is also allowable as revenue expenditure in previous years. Gains from sale of investments - capital gain vs business income - assessee invests surplus funds arising in the course of business under various modes of investment like mutual funds/ PMS, shares etc - gains realized from sale of such various instruments during the relevant previous year, were disclosed under the head capital gains - HELD THAT:- AO overlooked the fact that the assessee was not a trader in stock and had no intention of holding the shares as stock. Besides the Assessing Officer also overlooked the aspect that sales were effected by deliver and revenue in earlier years taxed such transactions under the head capital gains. Disallowance u/s 14A as per Rule 8D - assessee company earned dividend/interest income from investments in shares, bonds, and mutual funds, which was exempt under section 10(34)/l 0(35)/l0( 15)(iv)(h) - assessee made suo moto disallowance - HELD THAT:- AO did not accept the method of disallowance computed by the assessee under section 14A and made further disallowance of ₹ 124.88 lakhs invoking provisions of Rule 8D after reducing the suo moto disallowance made by the assessee in the return of income. But the Assessing Officer has not given the proper calculation to that effect. Therefore, the matter is restored back to the file of the AO. AO that after taking congnizance of the Apex Court decision in case of Maxopp Investment Ltd. [ 2018 (3) TMI 805 - SUPREME COURT OF INDIA] , pass the appropriate order. Disallowance of additional depreciation of model fee - incurred prior to commencement of production of the new model - HELD THAT:- It is pertinent to note that in the present year expenditure was incurred on new model fees prior to commencement of production of new models of two wheelers, and even otherwise this is revenue neutral exercise as the same adjustment would be required to be made to the opening stock of finished goods for the year under consideration. Thus, the facts are similar to the subsequent Assessment years and are squarely covered with the decision of the Tribunal for A.Ys. 2010-11, 2011-12, 2012-13 and 2013-14. Disallowance of reimbursement of foreign travelling expense to directors/employees - allowable business expenditure - no evidence/proof of actual expense incurred by employees - HELD THAT:- The details were given by the assessee company to the Assessing Officer in specified form for the expenditure on basis of which travel bill was settled. But AO simply disallowed the same stating that there is no sufficient evidence to establish incurrence of actual expense. AO is not correct in disallowing this expenses as the employees will not get the extra allowance in case of excess expenditure. Expenses incurred on advertisement on death anniversary of Late Shri Raman Munjal being the founder of the assessee company - personal expenditure being related to promoters family and was not incurred for the purpose of business - HELD THAT:- It is pertinent to note that such expenditure incurred by the assessee on death anniversary of Sh Raman Kant Munjal was not personal expenditure of the promoter family and satisfied the tests of commercial and business expediency and thus was an allowable business deduction under Section 37(1) of the Act. Disallowance of commission paid to Managing Director CEO, Shri Pawan Munjal and Joint Managing Director, Shri Sunil Kant Munjal u/s 36(1)(ii) - HELD THAT:- In the preceding years the Tribunal held that the commission paid to directors with reference to percentage of profits of the company for the services rendered as per the terms of appointment, constitutes part of the remuneration package, and in the absence of any disallowance on other components of remuneration paid to such director, the commission cannot, ipso facto be classified as payment of profit/dividend covered within the exception provided u/s 36(1)(ii). Disallowance of proportionate amount of premium paid for land taken for 99 years at Haridwar - HELD THAT:- It is pertinent to note that the DRP, allowed the assessee depreciation on the premium paid for acquiring of leasehold rights of land, considering the same as an intangible asset in the nature of business or commercial right which is eligible for depreciation u/s 32(1)(ii). This direction was not at all considered by AO. Direct the AO take into account the direction of the DRP and pass necessary order after giving hearing to the assessee by following principles of natural justice. Therefore, we remand back this issue to the file of the Assessing Officer. Disallowance of expenses incurred on account of Corporate Social Responsibility (CSR) - HELD THAT:- The role of the assessee was not restricted to merely earning profit, but also discharging certain community related expenses, which would be considered to have been incurred on account of commercial/ business expediency. Disallowance of deduction u/s 80IC - being the proportionate amount of sales to vendors for processing of semi-finished goods supplied by the assessee , computed on ad-hoc basis, on the ground that manufacturing activity to the aforesaid extent of sales was outsourced - HELD THAT:- We fully agree with the findings of the Tribunal in A.Ys. 2010-11 to 2013-14 that outsourcing of certain intermediary processes or procurement of finished components in the process of manufacture does not tantamount to outsourcing of manufacturing activities and thus would not hamper the claim of deduction of the assessee company u/s 80 IC. It is also pertinent to mention that no appeal has been filed by the Department before the Hon ble Delhi High Court. Disallowance of deduction u/s 80IC - part of the manufacturing activity (ies) at Haridwar were outsourced on the basis of lower consumption of power per unit at Haridwar plant vis- -vis rate of power consumption at other two plants - HELD THAT:- In the present Assessment Year also difference in consumption of electricity was on account of the fact that the plant at Haridwar was much more energy efficient than other plants and therefore, certain processes were carried out in said plant. Thus, outsourcing of certain intermediary processes or procurement of finished components in the process of manufacture does not tantamount to outsourcing of manufacturing activities and therefore claim of deduction under Section 80IC is just and proper. Disallowance of deduction u/s 80IC on account of inter-unit transfer of goods - assessee is engaged in the business of manufacturing two-wheelers - HELD THAT:- Allowing the claim of the assessee under section 80-IC of the Act, held that for the purpose of computing market price of inter-unit transfer of goods, when the non-eligible units procured goods at market price from third party vendors and supplied the same to the eligible unit at the same purchase price as increased by the applicable freight cost, no further substitution of such price is warranted in terms of section 80IA(8) and the transaction was a genuine business transaction borne out of commercial expediency Disallowance of deduction u/s 80IC on account of inflation of profit by charging higher basic price - assessee is engaged in the business of manufacturing two-wheelers - HELD THAT:- Section 80IA(10) is applicable to transactions entered with related parties whereas the prices charged by the assessee was from customers/dealers. Thus the final price charged to the end customer was the same irrespective of the unit of manufacture. Therefore, the Assessing Officer was not correct in disallowing the claim of the assessee. Disallowance u/s 80IC on account of profit attributable to advertisement and marketing activities carried out at Head Office - HELD THAT:- The Head office is not a separate profit centre and therefore, no profit is to be separately attributed to such activity. For the purpose of working out eligible deduction under Section 80IC of the Act, actual expenses incurred at the head office are to be allocated between various profit centers on a rational and scientific basis which has been rightly done by the Assessee company. AO was not correct in disallowing the said expenses. Disallowance of certain incomes earned by the eligible unit, on the ground that such incomes were not derived from the business of manufacture of specified articles or things - HELD THAT:- Other incomes in the nature of Interest on loan to employees, interest on loan to vendors for working capital support, freight recovery, sundry sales, cash discounting from vendors and exchange fluctuation gain, etc. earned by a unit eligible for deduction under Section 80IC has to be considered as incidental to the activity of carrying out manufacturing and thus eligible for deduction Disallowance of deduction u/s 80IC for non compliance of Rule 18BBB and non-adherence to condition specified in Industrial Policy - HELD THAT:- The assessee company has given all the necessary details to the Assessing Officer and fulfilled all statutory conditions for the claim of deduction u/s 80IC. Disallowance of purchase u/s 40(a)(ia) for alleged failure to deduct TDS u/s 194C - HELD THAT:- In the present case the recipient have discharged their tax liability and certificate of Chartered Accountant to that effect was provided by the parties, therefore, no disallowance can be made u/s 40(a)(ia). Thus, this issue is squarely covered in case of Ansal Land Mark Township P. Ltd [ 2015 (9) TMI 79 - DELHI HIGH COURT] Disallowance of commission paid to dealers on institutional sales alleging failure of deduction of tax at source u/s 194H - HELD THAT:- Since the payees have also paid tax on the income received/receivable from the assessee, no disallowance could be made under Section 40(a)(ia). We agree with the findings of the Tribunal for A.Y. 2007-08 that tax is not required to be deducted u/s 194H on payments made to dealers on account of sales by dealers on principal to principal basis TDS u/s 194J - Disallowance of payment made to dealers under free service coupons for non deduction of tax - HELD THAT:- Tribunal in earlier years deleted the disallowance made u/s 40(a)(ia) on the ground that - (i) repair services do not fall within the meaning of professional services defined u/s 194J and (ii) no service was, in any case, availed by the assessee from dealers; service, if any, was availed by customers from the dealers, necessitating obligation on the assessee to deduct tax at source. Disallowance of additional depreciation of computers installed at Supervisory Office - HELD THAT:- we are remanding back the matter to the file of the Assessing Officer to determine if the computers were used for data processing at industrial premises or not. We direct the Assessing Officer that after taking congnizance of the same pass appropriate order. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice Disallowance of deduction u/s 80IA in relation to generation of power - HELD THAT:- Issue is squarely covered with the decision of the Tribunal in earlier years. In fact here also price of power charged by State Electricity Board is not reflective of market price for computing deduction u/s 80IA (4). Disallowance of provision for warranty holding the same to be unascertained - HELD THAT:- In assessee's own case for earlier assessment year decided the issue in favour of the assessee and accepted the method of accounting for warranty claim. The departmental appeal has not been entertained by the High Court against said orders. AR pointed out that the Revenue has not preferred appeal against the order passed by the CIT(A) on the aforesaid issue for the assessment year 2003-04 which is pending before the Tribunal. Thus the Revenue accepted the aforesaid claim made by the assessee. AO was not correct in disallowing the provision for warranty holding the same to be unascertained as the provision for warranty was made by the assessee since A.Y. 1996-97 on the basis of weighted average cost for the actual claims received in the past two years which was a scientific and rational basis and accepted by the revenue in past. Disallowance of export commission paid to Honda Motor Co. Ltd. of Japan, u/s 40(a)(ia) - HELD THAT:- similar issue was decided in favor of the assessee by Tribunal, holding that by way of export agreement, Honda has only permitted the assessee to export the specified goods to the specified countries and the assessee has not acquired any asset/intangible right in the nature of a capital asset. Ad-hoc disallowance on the ground that the assessee had allegedly engaged in shifting of profits and/or losses through Client Code Modification (CCM) - HELD THAT:- AO did not bring any document and/or evidence on record to support the adverse inferences drawn in respect of genuineness of the impugned transactions or suggesting mala fide client code modifications in the case of the assessee - disallowance has been made purely on the basis of assumptions and surmises. There was no adverse material on record which shows that the assessee has shifted the profits and/or losses through Client Code Modification (CCM) - Assessee is partly allowed for statistical purpose.
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2019 (4) TMI 1508
Penalty u/s 271(1)(c) - Sale of land - nature of land sold - assessee disclosed all the true facts relating to the land - alleged that assessee concealed the income or filed inaccurate particulars of income - HELD THAT:- It is an admitted fact that the assessee sold the agricultural land for a sum of ₹ 3 lacs. A.O. has taken market value/stamp duty value at ₹ 7 lacs and difference of ₹ 4 lacs was added to the income of the assessee under the provisions of clause (vii) of sub-section (2) of section 56. The said land was not an asset as per the definition provided u/s 2(14) which defines the capital asset. The provisions contained in sub-section (14) of section 2 of the Act clearly state that the agricultural land beyond the municipal area is not to be included in the definition of capital asset. In the present case, the A.O. added the notional value i.e. the difference in actual consideration and stamp duty value, in the hands of the assessee under the head income from other sources . In the instant case, the assessee disclosed all the true facts relating to the land and nothing was concealed, therefore, it may be a good case for making addition since there was difference between the actual consideration and the stamp duty value. It is well settled that the penalty proceedings are different and distinct from the assessment proceedings. In the present case, it cannot be said that the assessee had concealed income or furnished inaccurate particulars of his income. Considering the peculiar facts of this case, in my opinion, it is not a good case where penalty u/s 271(1)(c) of the Act may be levied - Decided in favour of assessee.
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2019 (4) TMI 1507
Disallowance of interest expenditure - CIT-A deleted the addition following a direct decision in assessee s own case for the assessment years 1998-99 to 2002-03 - HELD THAT:- Revenue authorities cannot even challenge the relief granted by an appellate authority in one assessment year, when, on the same issue, it has accepted the relief granted by the appellate authority in another assessment year. Be that as it may, the issue in appeal is covered, in favour of the assessee, by an decision of the coordinate bench. In this view of the matter, respectfully following the coordinate bench decision and having regard to the fact that the learned Departmental Representative has not pointed out any reasons whatsoever as to why the coordinate bench decision will not apply on this assessment year as well, we approve the conclusions arrived at by the CIT(A) and decline to interfere in the matter. No interference is called for. Addition on account of interest free loans and advances to sister concerns - assessee did not discharge the onus of showing the nexus of interest free advances and loan with interest free funds - CIT-A deleted the addition following a direct decision in assessee s own case for the assessment years 1998-99 to 2002-03 - HELD THAT:- The relief on this issue was given by the coordinate bench was challenged by the Assessing Officer before Hon ble High Court. We further find that earlier decision for the assessment years 1998-99 to 2002-03 passed by the coordinate bench was carried in appeal before Hon ble jurisdictional High Court on this issue, and, Their Lordships, vide judgment [ 2016 (8) TMI 154 - GUJARAT HIGH COURT] , were pleased to confirm the decision of the Tribunal on the same. In this view of the matter, respectfully following the Hon ble jurisdictional High Court s judgment on the issue and having regard to the fact that the learned Departmental Representative has not pointed out any reasons whatsoever as to why the coordinate bench decision will not apply on this assessment year as well, we approve the conclusions arrived at by the CIT(A) and decline to interfere in the matter. No interference is called for. Addition u/s 37 - fees paid to a Delhi based agent for registration of products in Iraq - payments were made for the kickbacks and not incurred for business purposes - payment for After Sales Service Fees to Iraqi entities - HELD THAT:- The fees paid to a Delhi based agent for registration of products in Iraq, by no stretch of imagination, can be said to be a payment of kickbacks to Iraqi regime. The erudite discussion in the assessment order, about the Volker Committee report and the kickbacks to Iraqi regime by those doing business with Iraq in the sanction days, has nothing to do with this disallowance. We find that the payment is made for a legitimate purposes and there is no bar under section 37 on its deductibility. We, therefore, approve the conclusions arrived at by the CIT(A) and decline to interfere in the matter on this aspect as well.
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2019 (4) TMI 1506
Addition for work in progress - Year of assessment - consultancy services - unbilled portion of the work relating to various projects executed during the relevant previous year was required to be accounted for by the assessee as work in progress - HELD THAT:- AR has furnished before us relevant documentary evidences which demonstrate that not only the assessee has offered the disputed amount as income in assessment year 2008 09, but has also claimed the corresponding TDS in the said assessment year. It is also a fact on record that the tax rate for assessment year 2007 08 and 2008 09 are the same. That being the case, whether the amount is taxed in the impugned assessment year or in assessment year 2008 09, will have no effect on the Revenue. If the amount is taxed in the impugned assessment year, it has to be excluded from the income of the assessee in assessment year 2008 09, since, it has already been assessed in that assessment year. This is due to the settled legal principle that the same income cannot be assessed in two assessment years. Taxability of reversal of professional fee - Failure on the part of the assessee to co relate the reversal of entries - HELD THAT:- Assessee has filed fresh material reconciling the differences pointed out by the AO and the CIT(A) after considering the observations of the AO in the remand report, the submissions made by the assessee and evidences filed was satisfied that the assessee has properly reconciled / co related the reversal of entries. The learned Departmental Representative has not brought before us any material to controvert the factual finding of the CIT(A) insofar as it relates to the amount of ₹ 17,66,393. Therefore, to that extent we uphold the decision of CIT(A) Ground raised is dismissed. Admission of additional evidence - violation of rule 46A - HELD THAT:- It is evident from the impugned order of the CIT(A), every single piece of evidence furnished by the assessee in the course of appeal proceedings were sent for verification / examination of the AO and the AO after verifying these evidences has furnished a remand report. The remand report furnished by the assessee was taken note of by the learned CIT(A) while disposing off the appeal of the assessee. CIT(A) has strictly complied to the provisions of rule 46A of the rules insofar as it relates to admission of additional evidence. Therefore, we do not find merit in the ground raised. Accordingly, it is dismissed. Disallowance of Deloitte Touche Tohmatsu (DTT) subscription - HELD THAT:- The assessee has paid the subscription to run and manage its business activity more effectively, efficiently and profitably. Moreover, it is a fact on record that similar subscription was paid by the assessee in the preceding as well as succeeding assessment years. Notably, on verifying the scrutiny assessment orders passed u/s 143(3) for the assessment years 2006 07, 2009 10 and 2010 11 and 2011 12, copies of which have been submitted before us, it is observed that no such disallowance was made by the Assessing Officer in the aforesaid assessment years. There being no difference in facts brought to our notice in the impugned assessment year, applying the rule of consistency also, the expenditure claimed by the assessee has to be allowed, since, the nature of expenditure as revenue has been accepted by the Department in all other assessment years except the impugned assessment year. Disallowance of the professional fees - addition sustained by CIT(A) basically for the reason that the failed to lead proper evidence to reconcile the reversal of entries - HELD THAT:- Assessee has enclosed in the paper book a credit note issued in favour of Ruchi Soya Industries ltd for ₹ 67,34,400 as well as bill raised subsequently for ₹ 6,73,440 to prove its claim. However, the assessee has not brought on record any account confirmation from Ruchi Soya Industries ltd. Therefore, in our view, the claim of the assessee has to be cross verified by making necessary enquiry with Ruchi Soya Industries ltd. That being the case, without expressing any opinion on the merits of the issue, we restore it to the Assessing Officer for fresh adjudication after providing due opportunity of being heard to the assessee. Grounds raised are allowed for statistical purposes.
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2019 (4) TMI 1505
TP adjustment - ALP of payment of royalty - revenue expense vs capital expenditure - HELD THAT:- As per circular issued by the Chief General Manager, RBI, royalty @ 8% on exports and 5% on domestic sales is permitted under the automatic route, without any restriction on the duration of royalty payments. Press Note No.9 (2000 series) dated 08-09-2000 issued by the Government of India, Ministry of Commerce and Industry provides that : Payment of Royalty upto 2% for exports and 1% for domestic sales is allowed under automatic route on use of trade mark and brand name of the foreign collaborator without technology transfer . It is thus seen that payment for use of trade mark and brand name, under Press Note No.9 (2000 series), is allowed under automatic route at 1% for domestic sales. The case of the assessee is that it paid royalty @ 0.5% on sales made in India to certain persons other than OEMs and hence such payment should be construed at ALP. Nothing has been brought on record to demonstrate that the view canvassed by the Tribunal on this issue for the preceding years [ 2013 (2) TMI 877 - ITAT PUNE] has been either reversed or modified in any manner by the Hon ble High Court. Respectfully following the precedent, we do not approve the action of the AO in treating royalty payment as a capital expenditure. To sum up, out of the total payment of royalty at ₹ 1,01,81,033/- in respect of two agreements, the only amount which is to be disallowed is a sum to be calculated afresh, representing duplicate payment in respect of royalty for use of trade mark towards steering, axle and accessories for 35 and 55 HP tractors, included in the sum of ₹ 75.41 lakh. The AO is directed to grant relief accordingly. TP adjustment - Corporate/Management services fee - The assessee applied Cost plus method in the transfer pricing documentation for showing that the international transactions was at ALP - whether the assessee availed any services from its AEs pursuant to the two Agreements? - HELD THAT:- It is for the assessee to decide the way in which it has to carry on its business. If it feels that services are required to be availed, the TPO cannot reject the allowability of such payment simply on the ground that no benefit was derived. It is not necessary that every incurring of expenditure must necessarily result in to some benefit. Had it been the situation, then no businessman would have ever incurred loss, which is a proposition far away from the stark reality. Once it is proved that the services were availed by the assessee, then his jurisdiction gets restricted to determining the ALP of the transaction. We have noticed above that the assessee did avail services from its AEs. In such a situation, it is held that the view point of the authorities that NIL ALP should be determined because the assessee did not get any benefit out of the services, is rejected. In our considered opinion, the contention of the ld. AR for aggregating the payment for Corporate/Managerial services with other international transactions and then applying the TNMM on entity level cannot be accepted. Section 92C(1) of the Act provides that the ALP in relation to the international transaction shall be determined by any of the prescribed methods having regard to the nature of transaction or clause of transaction . Rule 10A(d) defines the term transaction as including a number of closely linked transactions . Thus, it is evident that the two or more transactions can be aggregated for determination of the ALP, if they are closely linked transactions. It is thus held that the methodology adopted by the assessee for computation of ALP in respect of its international transaction of intra-group services by choosing foreign AE as a tested party under the Cost plus method as well as under the TNMM or by aggregating this transaction with others under the TNMM cannot be and is hereby rejected in entirety. It has been noted above that the TPO proceeded to determine Nil ALP on the reason that the assessee did not avail any services. We have found out supra that the services were, in fact, availed by the assessee. Since neither the exercise done by the TPO for benchmarking the international transaction, either originally or during the course of the first appellate proceedings, is sustainable nor the view point of the TPO determining Nil ALP can be affirmed because of the assessee having actually availed the services, we are of the considered opinion that the ends of justice would meet adequately if the impugned order is set aside and the matter is restored to the file of AO. It is directed that the AO/TPO will firstly determine the most appropriate method and then find out the ALP of the international transaction in accordance with our above observations and directions.
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2019 (4) TMI 1504
TP Adjustment - addition on account of guarantee fee - HELD THAT:- Tribunal in assessee's own case wherein with respect to the similar bank guarantee the Tribunal has upheld addition to the extent of 0.9%. As the facts and circumstances of the case during the year under consideration are same, respectfully following the order of the Tribunal in assessee's own case, we direct the AO to restrict addition on account of guarantee fee @ 0.9%. Addition in respect of interest on loan advanced to AE - HELD THAT:- We direct the AO to restrict the addition on account of interest as per rates applicable to currency in which loan was required to be repaid to the assessee i.e. LABOR rate. Disallowance u/s 37(1) - donation made to Shanti Seva Nidhi - eligible for deduction u/s 80G and also claimed in original return - Allowable revenue expenditure - HELD THAT:- The assessee had claimed an expenditure of ₹ 50,00,000/- u/s 37(1) of the Act which is in the form of donation given to Shanti Seva Nidhi for the purpose of training and providing technical knowledge along with diploma courses to the employees of the assessee company and their children. These students with qualified diploma degrees are in turn recruited by the assessee company for their manufacturing division. Thus the amount given to Shanti Seva Nidhi have resulted in training and providing technical knowledge along with diploma course to the employees of the assessee company and their children and who in turn were recruited by the assessee company in its manufacturing division. Thus, the business purpose of assessee is fulfilled. There is no justification for disallowance of the expenditure u/s 37(1).
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2019 (4) TMI 1503
Bogus Long Term Capital Gain - transactions for purchase of shares were not genuine as there is no evidence regarding date of purchase of shares - purchase of shares mentioned only cash payment - HELD THAT:- This matter is squarely covered by a judgment of this court in CIT Vs. Smt. Pooja Agarwal , [ 2017 (9) TMI 1104 - RAJASTHAN HIGH COURT] wherein the issues were answered in favour of the assessee and against the department. This appeal be also decided in view thereof. In that view of the matter, no substantial question of law arises in this appeal.
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2019 (4) TMI 1502
Penalty u/s 271(1)(c) r.w.s. 274 - defective notice - exact nature of contravention for which the assessee was liable under the provisions - HELD THAT:- We are also shown a Division Bench judgment of our Court in Pr. CIT Versus Dr. Murari Mohan Koley, [ 2018 (9) TMI 1 - CALCUTTA HIGH COURT] .It came to the conclusion that unless the charge against the assessee was specific, the same could not be maintained. Applying this ratio, the Tribunal, in our opinion, has correctly deleted the penalty of for the self same reason that no details of any charge were provided to the assessee in the impugned notice. For this technical reason, the order of the Tribunal has to be upheld. We admit the appeal before us and dismiss the same. We have only gone into the question of technical defect in the notice stated to have been issued under Section 271(1)(c) read with Section 274 and the consequences thereof.
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2019 (4) TMI 1501
Disallowance u/s 14A - assessee s own funds are more than total investment, which gives rise to exempt income and in that case it is presumed that the assessee had used own funds for investment which earned exempt income - HELD THAT:- No disallowance can be made under Rule 8D(ii) on account of interest - the assessee drew our attention to the balance sheet of the assessee, wherein, share capital reserve to the tune of ₹ 40,84 cores is available and total investment is ₹ 17.73 crores, which is invested to earn exempt income. There are mixed funds and the AO has not proved any nexus with the earning of exempt income and the invested funds. Once this is the position, the presumption is that the assessee has invested in the investment which gives rise to the exempt income out of own funds in view of HDFC Bank [ 2014 (8) TMI 119 - BOMBAY HIGH COURT] . MAT - Applicability of provisions of section 115 JB in respect to disallowance of expenditure relatable to exempt income under section.14A r.w Rule 8D - HELD THAT:- The issue is squarely covered by the decision of ITAT Delhi, Special Bench in the case of Vireet Investment Pvt Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] wherein, it is held that while applying the provisions of sect ion 115 JB the computation under Clause (f ) of Explanation (1) to sect ion 115 JB(2), the disallowance is to be made without resorting to the computation as contemplated u/s 14A r.w. Rule 8D of the Rules thereby the CIT(A) relying on the decision of ITAT Delhi SB in the case of Vireet Investment (supra) deleted the disallowance. - Decided against revenue.
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Customs
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2019 (4) TMI 1565
Stay of appeal - The CESTAT in the impugned order ELECTROTHERM INDIA LIMITED, ASHAPURA VOLCLAY LTD AND OTHERS VERSUS C.C., KANDLA AND ORS. [ 2017 (6) TMI 659 - CESTAT AHMEDABAD ] had noted that the said issue of classification is pending in this Court in other appeals. The order of the CESTAT disposing of the appeal is set aside and it is clarified that the appeal would remain pending before the CESTAT till the issue is decided by this Court whereafter the parties can approach the CESTAT - Status quo which was granted by the CESTAT shall continue.
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2019 (4) TMI 1564
Stay application - demand with interest - time limitation - monetary amount involved in the appeal - HELD THAT:- The committee of Commissioners have held that the impugned order falls under clause (a) of Para 3 of the instruction dated 17/08/2011 introduced vide instruction dated 17/12/2015 - there is no constitutional validity of any of the provisions of the Act or Rules is under challenge before any of the Superior Courts in respect of the issue under dispute in the present appeal - the amount involved in this case is below the monetary limit of ₹ 10 lakhs. There are no reasons for staying of the impugned order as prayed by the appellant/Revenue - appeal disposed off.
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2019 (4) TMI 1541
Cancellation of Letter of Undertaking - Grant of a license for setting up an industrial unit in the Noida Export Processing Zone (NEPZ) for the manufacture of Colour Televisions - It was alleged that the petitioner had indulged in wrongful activities and has been persistently violating the provisions of the SEZ Act, 2005 - HELD THAT:- A plain reading of the impugned decision of the BoA indicates that the petitioner s appeal had been rejected on the ground that the petitioner had not furnished details of import, export and sales in the domestic tariff area in the prescribed format. It is also observed that the petitioner had failed to provide details of Free Foreign Exchange received from overseas and, therefore, it was not possible to ascertain the Net Foreign Exchange (NFE) position. This Court considers it apposite that the BoA re-examine the petitioner s contention in the light of the decision rendered by the CESTAT. It would also be apposite for the BoA to consider the petitioner s contention that it had in fact achieved a positive NFE if the petitioner places the necessary documents to establish the same. The matter is remanded to the BoA to consider the petitioner s appeal afresh.
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2019 (4) TMI 1540
Release of Consignments - Peas and Dholl - issuance of Detention Certificate for waiver of Demurrage and Container Detention Charges in terms of Regulation 6(1)(1) of Handling of Cargo in Customs Areas Regulations 2008 - HELD THAT:- The petitioner will remit the entire duty component of the consignments imported by him in case were such duty is leviable as per paragraph 15(iii) above along with a bank guarantee for the 10% of the invoice value. In cases where the duty impact is neutral, the petitioner shall furnish a bank guarantee for the 10% of the invoice value. Upon satisfaction of the aforesaid conditions, the consignment shall be released forthwith. Waiver of Demurrage and Container Detention Charges - Held that:- In the light of Rule 6(l) of the Handling of Cargo in Customs Areas Regulations, 2009, which provides that the Customs Cargo Provider shall not, subject to any other law for the time being in force, charge any rent or demurrage on the goods seized or detained or confiscated by the Superintendent of Customs or Appraiser or Inspector of Customs or Preventive officer or examining officer, as the case may be, there shall be a waiver of demurrage charges. Petition disposed off.
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Service Tax
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2019 (4) TMI 1563
Refund of service tax - rejection on the ground of time limitation - HELD THAT:- Once the impugned orders confirming the demand have been set aside by the Tribunal in toto, the Lower Authorities cannot reexamine the same and cannot hold that part of the demand falling within the limitation period has to be confirmed and as such, is not required to be refunded. This is a clear contempt of the Tribunal s order. If the Revenue was of the view that the said order of the Tribunal is not correct, it was open to them to file an appeal their against before the higher Appellate Forum. There is no ambiguity in the said order of the Tribunal which in very clear terms has held in favour of the assessee and has set aside the order confirming the demand against the assessee - Impugned order set aside - appeal allowed - decided in favor of appeal.
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2019 (4) TMI 1562
Business Auxiliary services - multi-level marketing activities - extended period of limitation - HELD THAT:- The issue is decided in the case of PARAMJIT KAUR VERSUS C.S.T., DELHI [2018 (4) TMI 962 - CESTAT NEW DELHI], where it was held that Since the issue relates to interpretation of the taxability of service, the extended period of limitation cannot be invoked for confirmation of the service tax demand. Thus, the demand is barred by limitation, except a part of the period, for which the matter is being remanded to the lower authorities for quantification of the demand falling within the limitation period - penalty set aside - appeal disposed off.
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2019 (4) TMI 1561
CENVAT Credit - common input services used for services as well as trading - time limitation - whether the appellant is liable to pay amount under Rule 6(3A) read with Rule 2 (e) of the Cenvat Credit Rules and whether the show cause notice has been rightly issued invoking extended period of limitation? HELD THAT:- The said explanation is in the nature of increasing tax liability of an assessee and as such, the same cannot be retrospective in nature unless specifically so provided by the competent authority. Extended period of limitation - HELD THAT:- The elements of invocation of extended period are not available in the facts and circumstances, extended period of limitation is not available. Penalty also set aside. Appeal allowed - decided in favor of appellant.
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2019 (4) TMI 1560
Imposition of penalty - tax liability with interest discharged before issuance of SCN - Bonafide belief - HELD THAT:- The appellant could have entertained a bonafide belief that the services rendered by them were under the works contracts as they had undertaken various jobs of fabrication, painting of works with the paint purchased by them and paid works contracts tax to the State Government. Hence the entire execution of the contract by them to various customers may have got covered under works contract which was not taxable during the period in question - This is a fit case for invocation of section 80 and setting aside of penalty - the tax liability and interest thereof is upheld - appeal allowed - decided in favor of appellant.
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2019 (4) TMI 1559
Classification of services - shops and outlets constructed by the Mandi Samiti various places are being given on rent/fee to various traders and farmers for sale purchases of the agriculture produces - whether classified under renting of immovable property service or otherwise? - Extended period of limitation - HELD THAT:- The matter got clarify only after the Central Board of Excise Customs has clarified the issue vide Circular No. 157/8/2012-ST dated 27 April 2012 wherein it was provided that activities undertaken by the APMCs are not covered under service tax leviability except renting of the shops in the market area etc. Extended period of limitation - HELD THAT:- The department was already aware of this matter as necessary enquiries have been made by them in the month of July 2011 itself and before that we also feel that the necessary ingredients for invoking the extended time proviso under Section 73 of Finance Act, 1994 for demanding service tax are not present in the circumstances of this case and, therefore, we feel that the demands should have been restricted to the normal period of demand. Penalty - HELD THAT:- There are no valid grounds for imposing penalty on the appellant as the circumstances under which the non-payment of the service tax has occurred can easily be covered by the provisions of Section 80 of the Finance Act, 1994. The demand of service tax in this case need to be restricted to normal period of demand - appeal allowed in part.
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2019 (4) TMI 1558
Classification of service - Business Auxiliary Service or not? - services of foreign commission agents availed for booking of orders for export - time limitation - HELD THAT:- The department was fully aware about the facts of the matter and therefore the impugned second show cause notice which came to be issued should have been issued for normal period of demand under Section 73 and not by invoking the extended time proviso. Thus, the issue of the show cause notice by invoking extended time proviso is legally not sustainable. Matter remanded to the Original Adjudicating Authority to restrict the demand to the normal period of demand under Section 73 (1) of the Finance Act, 1994 - appeal allowed by way of remand.
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2019 (4) TMI 1539
CENVAT credit - Input service - GTA - goods transport agency service availed for transport of goods from the place of removal to depots or the buyers premises - interpretation of statute - input service which is defined in Rule 2(l) of the CENVAT Credit Rules, 2004 - period from January, 2005 to March, 2008 - HELD THAT:- The issue is decided in the case of Commr. of Central Excise, Belgaum vs. Vasavadatta Cement Ltd. [ 2018 (3) TMI 993 - SUPREME COURT], where it was held that tax paid on the transportation of the final product from the place of removal upto the first point, whether it is depot or the customer, has to be allowed. Appeal allowed - decided in favor of appellant.
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2019 (4) TMI 1538
Non-payment of service tax - Security Agency service - Rent-a-Cab Scheme Operator Service - period 2001-2002 to 2005-2006 - Commercial concern versus non profit concern - Adjudicating Authority has taken the view that no Service Tax is liable to be paid since the Respondent Agency is not formed with a profit motive - HELD THAT:- The issue decided in the case of PUNJAB EX-SERVICEMEN CORPORATION VERSUS UNION OF INDIA [ 2010 (9) TMI 871 - PUNJAB HARYANA HIGH COURT] where it was held that As per definition of security agency under Section 65(94) service provider should be engaged in the business rendering specified service. There is no warrant for reading therein requirement of profit motive. Thus, the respondent will be liable to payment of Service Tax along with interest under the category of Security Agency Service - however, the respondent deserves the benefit of waiving of penalty subjected to the condition that the Service Tax is paid along with interest - appeal allowed in part.
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2019 (4) TMI 1537
Demand of service tax - Reverse charge - Directors of the appellant company have been receiving remuneration - employer - employee relationship - HELD THAT:- To establish the employer - employee relationship, the clause of hiring and firing are an essential ingredient without which it cannot be construed whether the individual is the Promoter/Director or an employee Director. The remuneration cheque has to be paid on a month to month basis along with the admissible perquisites. There is a deviation in the facts of the present case. Also, Directors have shown the remuneration under the head Salary in the respective Income Tax Return and Tax was deducted at source by the appellant company on such payments. Appeal dismissed - decided against appellant.
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Central Excise
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2019 (4) TMI 1557
CENVAT Credit - inputs - Whether on the facts and in the circumstances of the case and in law, the Tribunal was correct and justified in passing the impugned order without examining the eligibility of credit as 'inputs' as defined under Rule 2(k) of the Cenvat Credit Rules, 2004? - HELD THAT:- The dispute has to be decided by the Tribunal on the basis of the Rule 2(k) of the Credit Rules, 2004 as substituted with effect from 1st March, 2011 as applicable to the period for which the demand is made i.e. 2015. It is for the Tribunal to examine the case of the Appellant that the said products are in fact used for repairs and maintenance of machinery as claimed and not for making supporting structures for capital goods. If the above claim of the Appellant is correct, it must then decide whether they satisfy the definition of inputs as given in Rule 2(k) of the Credit Rules 2004 existing during the period 2015. Appeal restored to the Tribunal.
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2019 (4) TMI 1556
Condonation of delay in filing appeal - whether the Tribunal was justified in dismissing the appellant's appeal on account of delay of 188 days in filing the appeal before it? - HELD THAT:- The Tribunal found the delay in filing the appeal was not satisfactorily explained by the appellant. This essentially on the ground that the evidence to support the inability to attend work due to back pain was a medical certificate issued by a Paediatric Surgeon. It was in the above circumstances, the Tribunal took a view that the delay does not deserve to be condoned. The view taken by the Tribunal may be a possible view. However, in case of doubt, the benefit, if any, must go in favour of the appellant - We do feel in matters such as these, a more liberal approach should be adopted as nobody gains by delaying filing of an appeal and when the reasons for the delay is a plausible reason which is not alleged to be untrue then the ends of justice would require condoning the delay and by considering the issue on merits. Delay condoned - the appeal of the appellant would be restored to the file of the Tribunal.
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2019 (4) TMI 1555
Condonation of delay of 1535 days in filing appeal - extension of time for making compliance - HELD THAT:- The fact that the amounts are belatedly paid is not disputed by the respondent. To ensure that the Revenue is adequately compensated, the applicants have agreed to pay interest at the rate of 9% per annum on the amounts which are due and payable under the common interim order from 19th August, 2014 (the date on which time fixed under the order of this Court expired till the date of payment of the entire amount). The learned Counsel appearing for the applicants states that the first sentence in paragraph no.5 of the undertaking has been inadvertently incorporated and the same may be treated as deleted. He states that the interest at the rate of 9% p.a. will be actually paid and there is no question of furnishing bank guarantee for the said amount. Considering the fact that the compliance with the undertaking will compensate the Revenue to a substantial extent for the delay, the notices of motion deserve to be made absolute.
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2019 (4) TMI 1554
Interest on delayed refund of amount deposited under the proviso to Section 35F - Refund of pre-deposit along with interest - Section 35FF of the Central Excise Act, 1944 - HELD THAT:- There is no other Deposit other than pre-deposit and hence the issue per se, is nothing but interest on pre-deposit. The date of pre-deposit is 27.07.2006, whereas the Final Order of this Court is dated 22.05.2017. Section 35 FF came into the statute book in 2008 and the same was substituted w.e.f. 06.08.2014. Both the assessee as well as the Revenue have for once agree that Section 35FF applies. When Section 35 FF is invoked, either prior to or post 2014, the only thing it talks of is the refund of the amount deposit, heading remains the same but for the application, with subtle difference. The date of deposit is in 2006 which is prior to 2014 and therefore as per the above proviso the provision of Section 35FF before 2014 amendment shall alone apply, which discernably mandates the payment of interest only if there was a delay beyond three months - the Commissioner (Appeals) has applied correct law and therefore the same does not call for any interference. Appeal dismissed - decided against appellant.
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2019 (4) TMI 1553
Rectification of Mistake - time limitation - it was alleged that the rectification application is filed beyond the period of six months from the date of final order - HELD THAT:- Revenue was appellant, the respondent assessee have been treated to be appellant at several places treating the assessee as an appellant has resulted in irrational/ erroneous conclusion by this Tribunal, in allowing the appeal by way of remand, observing that the appellant did not have the proper hearing before the Court below. The final order is erroneous and leading to irrational conclusion - appeal restored.
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2019 (4) TMI 1552
Irregular utilisation of CENVAT credit lying on balance in Education Cess (EC) and Secondary Higher Education Cess - Revenue is contesting the same on the ground that EC SHEC can be utilised only for discharge of those cesses and not the basic excise duty - HELD THAT:- The issue is no more res integra as on an identical issue, writ petition was filed before the Hon ble High Court of Delhi in the case of CELLULAR OPERATORS ASSOCIATION OF INDIA AND OTHERS VERSUS UNION OF INDIA AND ANOTHER [ 2018 (2) TMI 1264 - DELHI HIGH COURT ] wherein the Hon ble High Court discarded the same contentions raised by the petitioners therein and held that though the Central Government of India had issued notifications 12/2015-CE(NT) and 22/2015-CE(NT), it cannot be said that CENVAT credit of EC SHEC lying in balance as on 01.03.2015 can be utilised for discharge of basic Central Excise duty for clearances after 01.03.2015. The appellant herein is from a organised sector and was aware of the provisions as to the utilisation of CENVAT credit. It cannot be said that appellant was not aware of the fact that EC and SHEC cannot be utilised for discharge of basic Central Excise duty as on 01.03.2015. Appeal dismissed - decided against appellant.
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2019 (4) TMI 1551
CENVAT Credit - duty paying invoices - violation of Rule 3 (1) read with Rule 9 of the Cenvat Credit Rules, 2004 - credit denied on the ground that the invoices issued by T. Paul Sons are not backed by manufacturer s invoices - HELD THAT:- The Revenue has not brought on record any other evidence to support the ground that the three suppliers of goods to M/s. T. Paul Sons were not manufacturers or have issued such invoices for goods not manufactured by them - there is no reason for denial of the credit - appeal allowed - decided in favor of appellant.
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2019 (4) TMI 1536
Valuation - inclusion of amount of Sales Tax retained by the appellants in assessable value - HELD THAT:- The amount of Service Tax retained by the appellants in a particular financial year is required to be included in the total aggregated value of clearances made in the said financial year. Duty is payable on the value of clearances, in excess of ₹ 1 crore limit specified in Notification No. 08/2003. For the clearances made after crossing the said limit, duty becomes payable at specific rates to be determined on the basis of the quantum of clearances made - reliance placed in the decision in the case of COMMISSIONER OF CENTRAL EXCISE, JAIPUR-II VERSUS M/S. SUPER SYNOTEX (INDIA) LTD. AND OTHERS [ 2014 (3) TMI 42 - SUPREME COURT] . CBEC has issued a circular No. 1063/2/2018-CX dated 16/02/2018, in which, among others, the issue regarding inclusion of sale tax incentive amount in the value has been clarified. The Circular further clarified that the demand in such cases is to be restricted to the normal period. The differential duty, if any, is to be held as payable only for the period falling within the normal time limit. The extended time limit will not be available to Revenue to raise such demand. We direct the Original Adjudicating Authority to re-quantify the demand within the normal time limit - penalty set aside. Appeal allowed in part.
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2019 (4) TMI 1535
Clandestine removal - short accountal of a quantity of 674.402 MT of finished goods - no sufficient evidences provided to prove clandestine removal - HELD THAT:- It is apparent that the department has not proved its case with sufficient evidences to sustain the charges of clandestine removal - demand do not sustain - appeal dismissed - decided against Revenue.
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2019 (4) TMI 1534
Supply of goods for setting up of Mega Power against International Competitive Bidding (ICB) - sub-contract - benefit of N/N. 6/2002-CE dated 01.03.2002 as amended - denial of the benefit of the exemption on the ground that the appellant had not directly participated in the International Competitive Bidding - HELD THAT:- Notification only stipulates that the excisable goods supplied against an ICB are eligible from payment of duty. In our view there is no condition stipulated in the notification that the person claiming benefit for the goods cleared should have been the bidder in ICB for the mega power project. In our view so long as the goods are supplied to such contract awarded to a person who took part in the International Competitive Bidding, the benefit is not deniable. Bharat Heavy Electricals Ltd. (BHEL) had participated in the ICB and entered into an agreement with M/s. Jindal Power Ltd. (Project Authority) for setting up of the 1000MW Raigarh Thermal Power Project in Chhattisgarh. This project received the status of Mega Power Project from the Joint Secretary of the Ministry of Power. BHEL had sub-contracted the Appellant for the supply of boilers and parts for setting up of the plant. The Project Authority Certificate also clearly recognized the Appellant as one of the sub-contractors for the supply of boilers and parts for the aforesaid project. Tribunal under similar circumstances, in the case of M/S TOSHNIWAL INDUS. PVT. LTD. VERSUS CCE, JAIPUR-II [ 2017 (5) TMI 387 - CESTAT NEW DELHI] had decided the issue rejecting a similar contention raised by the department as in the present case, holding that sub-contractor did not take part in International Competitive Bidding. Thus, Appellant is entitled to avail benefit of Notification No. 6/2002-CE as amended vide Notification No. 48/2004-CE and its successor notification No. 6/2006-CE. Hence, the demand confirmed by the Commissioner in the impugned orders is not sustainable - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2019 (4) TMI 1550
Validity of assessment order - Ext.P1 is assailed is that the petitioner on account of a few health issues was unable to move out of the house or appear before the first respondent on the dates when enquiry was held - HELD THAT:- This Court, prima facie, is of the view that the case in hand is not a case of complete denial of opportunity to petitioner or following the requirements of the Kerala Value Added Tax Act, 2003; but a case of examining whether the opportunity afforded to petitioner merits reasonableness and the opportunity if is lost, can the petitioner take advantage of his last opportunity to get the matter decided afresh by the 1st respondent. Without much deliberation by taking note of contents in Ext.P4 and also the bona fide offer of petitioner to deposit substantial a sum of ₹ 2,00,000/- even before the assessment order is passed would go to show that the petitioner was in fact prevented from availing the opportunity given to the first respondent beyond the circumstances under his control. Ext.P1 assessment order is set aside and the matter is remitted to the first respondent for disposal in accordance with law - appeal disposed off by way of remand.
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2019 (4) TMI 1549
Rejection of request for rectification of re-assessment orders - it was alleged that the prescribed Authority has concluded the assessment without providing sufficient opportunity to the petitioner - HELD THAT:- There is no embargo for the Assessing Authority to amend the order under sub-section(3) of Section 69 of the Act in relation to any matter other than which has been so considered and decided in proceedings by way of appeal or revision relating to an order referred to under sub-section (1) of Section 69 of the Act. Though the Appellate Authority has dismissed the appeals as withdrawn, no matter has been considered and decided on merits. That being the position, the prescribed Authority rejecting the rectification applications on the ground of dismissal of the appeals cannot be sustained. The books of accounts not being produced by the petitioner allegedly for non service of notices, would have a direct bearing in determining the tax liability. The prescribed Authority ought to have examined whether the request made by the petitioner would be amenable to rectification under Section 69 of the Act. Hence, this court is of the considered opinion that the interest of justice would be sub-served in setting aside the endorsements Annexures M, N and P to the writ petitions and restoring the proceedings to the file of the respondent No.1 to reconsider the same in accordance with law - Petition disposed off.
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2019 (4) TMI 1548
Remand of the case - verification of transfer of non-taxable goods in picture varnish coating - HELD THAT:- No question of law arises in the present case as by the impugned order under revision dated 04.08.2003, only a remand of the case to the Assessing Authority, which was made by the first appellate authority viz., the Appellate Assistant Commissioner has been upheld by the Tribunal. The question of penalty deleted by the Tribunal under Section 12 (3)(b) of the Act will naturally be decided again as matter of consequence. Appeal dismissed.
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2019 (4) TMI 1547
Principles of natural justice - re-assessment proceedings was concluded for the tax periods April 2012 to March 2013 without any express authorization by the Commissioner of Commercial Taxes - HELD THAT:- It is evident that the Commissioner of Commercial Taxes has issued an order assigning assessment and re-assessment under the provisions of the KVAT Act on the respondent relating to the petitioner for the tax period 2012-13. Sl.No.726 of the order of the Commissioner of Commercial Taxes dated 1.10.2013 placed on record by the learned counsel for the Revenue makes it clear that the reasons have been assigned for issuing the assignment note that the assessee received advance amount of ₹ 3,94,22,952 on which dealer is liable to pay tax. However in the present case, the order of the Commissioner of Commercial Taxes placed on record envisages the authorization issued to the respondent to reassess the petitioner relating to the tax periods in question - the arguments of the learned counsel on this point is negated. Indisputably, the order impugned is an ex-parte order and assessee-petitioner is before this Court making allegations inasmuch as non service of proposition notice and assessment order - petition stands dismissed relegating the petitioner to avail the alternative remedy of appeal available under the Act.
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Wealth tax
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2019 (4) TMI 1546
Wealth tax assessment - Taxability of flat as rented out for complete financial year - assessee submitted that the flat was let out for more than 300 days in the impugned assessment year and the rental income was admitted on actual basis - HELD THAT:- There was no evidence brought on record by the AO to establish that the flat was let out for less than 300 days or the assessee had under stated the rental income, thus the addition was made purely on suspicion. As per law, the AO is not permitted to make any addition on presumptions and surmises unless there is a material on record to show that the flat was not let out for more than 300 days. In the instant case, there was no evidence, hence, the addition made by the AO is unsustainable, accordingly, we uphold the order of the Ld.CIT(A) and dismiss the appeal of the revenue. Reopening of assessment for escapement of wealth tax - vacant land situated at Rajahmundry consisting of one acre of agricultural land - HELD THAT:- On identical facts for the A.Y. 2010-11 to 2013-14 in the assessee s own case this Tribunal held that the said land is agricultural land and has no application of section 2(ea) of W.T.Act . CWT(A) by considering the pattaadaar pass book, sale deed and balance sheet, gave a categorical finding that the land is an agricultural land and section 2(ea) has no application.
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