TMI Tax Updates - e-Newsletter
April 30, 2019
Case Laws in this Newsletter:
GST
Income Tax
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Highlights / Catch Notes
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GST:
Exemption from GST - freight charges recovered by the Applicant from the customer without issuance of consignment note - As the contract consists of two or more taxable supplies of goods and services and their combination, is a composite supply as defined u/s 2(30) of the GST Act. - Benefit of exemption not available.
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GST:
Classification of supply - supply of goods and services of installation - applicant would be providing bouquet of goods and services and if we remove one of the supply i.e. supply of the Dimmable Street lights/fixtures, the Other supply would be severely affected or may become meaningless. - Theirs is a composite supply where the principal supply is of goods
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GST:
Classification of goods - rate of GST - Ready to cook popcorn premix i.e. Popcorn Maize with edible oil and salt - the product in question is covered under Chapter 2008 19 90 of the GST Tariff and attracts IGST @ 12% and CGST & SGST @ 6 % each.
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Income Tax:
Income by way of royalty - broadcast reproduction right - DTAA with Singapore - addition of income as per rule 10A on account of “Advertisement Revenue” and “Distribution revenue” - the payment in question can not be categorized as royalty.
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Income Tax:
Waiver of interest u/s 234-B - failure to pay advance tax - while considering the application for waiver of interest u/s 234B of the Act, the Chief Commissioner of Income Tax was bound to consider the disputed aspect, which has unfortunately not been done.
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Income Tax:
Penalty u/s 271(1) (c) - additions/ disallowances made under normal provisions of the Act, if ultimately the tax liability is determined u/s 115JB - No penalty
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Income Tax:
Disallowance made u/s 35(1)(ii) - withdrawal of recognition with retrospective effect - claim weighted deduction of 175% - the donor (i.e assessee herein) cannot be affected due to subsequent withdrawal of recognition with retrospective effect.
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Income Tax:
Rectification u/s.254(2) - The present MA filed by the Revenue is devoid of any merit and is liable to be dismissed as without any basis and virtually seeking a review of the order of the Tribunal on a possible hidden transaction which requires examination after lifting the corporate veil.
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Income Tax:
MAT - AO add back the Income-tax paid in Spain while computing book profit u/s. 115JB - only taxes specified in Explanation 2 can be added back while computing book profits. - tax paid in foreign country cannot be added back u/s 115JB while computing book profits
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Income Tax:
Rectification u/s 254 - non consideration of Tribunal decision in order which was referred and provided in paper book - an apparent error requiring necessary modification u/s 254(2)
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Income Tax:
Condonation of delay of 3599 days - main person looking after the business of Appellant Company suffered serious health ailments and loss in business - delay condoned taking a lenient and sympathetic view
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Income Tax:
Exemption u/s 10(23) - assessee has multiple objectives, but, carried on only educational activities - functions solely for education and not for profit - Every year, when the claim is made, AO is required to verify whether for that PY, the assessee existed solely for educational activities - eligible to claim exemption u/s 10(23)(iiiad)
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Income Tax:
Penalty u/s 271(1)(c) - additional income offered by the assessee voluntarily in response to the notice u/s 143(2) - nothing on record to indicate that this additional income was offered by the assessee as a result of any investigation or detection made by the AO - no penalty leviable
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Income Tax:
Request for providing copy of entire order sheet of Assessment Proceedings - ours is an Open Governance, i.e. moving in the era of transparency - no provision of law is quoted to deny such a relief - record is necessary to decide as to whether the Assessment Order is legally challengeable with a fair degree of success - withholding such records virtually amounts to scuttling the right of the Assessee
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Income Tax:
Application u/s 220(3) for extend the time for payment or allow payment by instalments - High Court ordinarily will not undertake the said exercise, since power is vested in a persona designata - This discretion is to be exercised according to the rules of reason and justice
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Income Tax:
Computing capital gains u/s 50 - though the vesting of the title is mandatorily required for claim of depreciation u/s 32 - de hors ownership of an asset, is not necessary form part of the ‘block of assets’for determining the point of acquisition of the property in terms of Sec. 50(1)(iii)- acquired assets will also form part of block
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Income Tax:
Disallowance u/s 40(a)(ii) - interest on service tax - not a tax levied on the profits/gains of any business or profession hence not disallowable u/s 40(a)(ii) - interest on delayed deposit of service tax is compensatory in nature and not penal - duly allowable u/s 37(1)
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IBC:
Liquidation of the Corporate Debtor if a Resolution Plan is rejected - Resolution Professional, Adjudicating Authority or the Appellate Authority is/are not empowered to reverse the commercial decision of the CoCs.
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Service Tax:
Payment of interest on delayed refund - the order made by such higher Appellate Authority or by the Court shall be deemed to be an order made under sub-Section (2) of Section 11B of the Act.
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Service Tax:
Reverse charge mechanism (RCM) - Remuneration paid to Directors - The whole time director is essentially an employee of the Company - mere fact that the whole time director is compensated by way of variable pay will not in any manner alter or dilute the position of employer - employee status between the company assessee
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Central Excise:
Classification of goods - absorbent cotton wool (non medicated) - ‘Absorbent cotton wool’ manufactured by the appellant falls under CETH 5601 2110 being a more specific classification as well as a later entry.
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Central Excise:
Benefits of exemption - construction/ fabrication at site - The exemption notification 03/2005-CE claimed by the appellant will be applicable only when the structurals are made at the site, not thousands of Kilometers away
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Central Excise:
Clandestine removal - SCN cannot held to be related to the manufacturing/ production activity as the same is based solely on the slips recovered from the third party.
Articles
Notifications
GST - States-
59/GST-2 - dated
26-4-2019
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Haryana SGST
Removal of Difficulty Order under section 172 to extend the time limit for filing an application for revocation of cancellation of registration for specified taxpayers under the HGST Act, 2017.
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58/GST-2 - dated
26-4-2019
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Haryana SGST
Notification under section 164 to notify the provisions of rule 138E of the HGST Rules w.e.f 21st June, 2019 under the HGST Act, 2017.
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57/GST-2 - dated
26-4-2019
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Haryana SGST
Notification under section 148 to notify procedure for quarterly tax payment and annual filing of return for taxpayers availing the benefit of Notification No. 32/GST-2, dated the 8th March, 2019, under the HGST Act, 2017
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20/2019-State Tax - dated
25-4-2019
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Maharashtra SGST
The Maharashtra Goods and Services Tax (Third Amendment) Rules, 2019.
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22/2019-State Tax - dated
24-4-2019
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Maharashtra SGST
State Tax Notify the provisions of Rule 138E of the MGST Rules, 2017.
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Order No. 05/2019-State Tax - dated
23-4-2019
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Maharashtra SGST
The Maharashtra Goods and Services Tax (Fifth Removal of Difficulties) Order, 2019.
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21/2019-State Tax - dated
23-4-2019
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Maharashtra SGST
To notify procedure for quarterly tax payment and annual filing of return for taxpayers availing the benefit of Notification No. 02-2019– State Tax (Rate), dated the 7th March, 2019.
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03/2019-State Tax (Rate) - dated
30-3-2019
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Maharashtra SGST
Amendments in the Government Notification of the Finance Department No.MGST-1017/C.R. 103(10)/Taxation-1 [Notification No.11/2017-State Tax (Rate), dated the 29th June 2017.
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Order No. 01/2019-MGST - dated
12-2-2019
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Maharashtra SGST
Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 117(1A) of the Maharashtra Goods and Service Tax Rules, 2017 in certain cases.
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D.C. (A&R)-2/GST/PWR/Sections/2017-18/ADM-8 - dated
12-2-2019
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Maharashtra SGST
Designate the certain Joint Commissioner as ‘Empowered Officer’ for implementation of E-way Bill.
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GST. 1019/C.R. 19/Taxation-1 - dated
1-2-2019
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Maharashtra SGST
Corrigendum to Notification No. 74/2018- State Tax dated 31st December, 2018.
SEBI-
SEBI/LAD-NRO/GN/2019/011 - dated
26-4-2019
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SEBI
Securities and Exchange Board of India (Mutual Funds) (Amendment)Regulations, 2019
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2019 (4) TMI 1623
Exemption from CGST/SGST - freight charges recovered by the Applicant from the customer without issuance of consignment note - applicability of rate notification entry Sr. 18 of notf.12/2017 - HELD THAT:- The First Contract includes on shore ex works supply of all equipment s and materials. The scope of the works includes testing and supply of Cable Package required for Successful commissioning of VSC based HVDC Terminal and DC XLPE cable system. The second contract includes on shore services i.e. all Other activities like transportation, insurance and all incidental services, installation, training required to be performed for complete execution of the VSC based HVDC Terminal and DC XLPE Cable package. The scope of the work includes transportation, insurance and other incidental services. It is apparent that the First Contract cannot be executed independent of the Second Contract. There cannot be any supply of goods without a place of supply. As the goods to be supplied under the First Contract involves movement and/or installation at the site, the place of supply shall be the location of the goods at the time when movement of the goods terminates for delivery to the recipient or moved to the site for assembly or installation refer to Section 10(1)(a)and (d) of the IGST Act, 2017). The First Contract however does not include the provision and cost of such transportation and delivery. It, therefore, does not amount to a contract for supply of goods unless tied up with the Second Contract. The First Contract has no leg unless supported by the Second Contract. It is no contract at all unless tied up with the Second Contract. Composite nature of the contract is clear from the facts that first Contract cannot be performed satisfactorily unless the goods have been transported and delivered to the contractee s site. The two contracts for supply of the goods and allied services are not separately enforceable. The recipient has not contracted for ex-factory supply of materials, but for the composite supply, namely Works Contract for Supply, for 320 KV, 2X1000MW VSC based HVDC Terminals and DC XLPE Cable system. From the conjoined and harmonious reading of various clauses of first contract and second contact, it Can be safely concluded that the agreement for setting up for + 320KV, 2 X 1000MW VSC based HVDC Terminals and DC XLPE Cable system between Pugalur and North Trichur associated with HVDC Bipole link between Western region (Raigarh, Chhattisgarh) and Southern region (Pugalur, Tamil Nadu-North Trichur, Kerala) Specification No: CC-CS/698-SR2/HVDC-3249/7/G10/R International Competitive Bidding Project is a single indivisible contract. As the contract consists of two or more taxable supplies of goods and services and their combination, is a composite supply as defined u/s 2(30) of the GST Act. Exemption from CGST and SGST not available.
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2019 (4) TMI 1622
Classification of supply - Works contract services or composite contract - supply of goods and services of installation - Whether Supply involved in the Contract shall qualify as Composite supply of works Contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017? - HELD THAT:- The contract would involve more than two taxable supplies such as supply of LED Dimmable Street lights and fixtures, installation, commissioning, operation etc. The impugned supplies of goods and services are supplied in conjunction with each other in the ordinary course of business. Thus the transaction in question satisfy the ingredient of composite supply as defined under section 2(30) of the GST Act with supply of LED Dimmable Street lights/ fixtures as principle supply - the supply of Dimmable Street lights/fixtures constitute principle supply. In the subject case it is seen that, even though the contract covers both, supply of goods and service, the bid and subsequent tender is for installation of Energy Efficient dimmable LED Street lights along with pet feeder basis SCADA system in Pune on a design, build, finance, operate, maintain transfer basis for a period of 12 (twelve) years. Hence the predominant and principal factor is to supply and install LED and fixtures on the existing street light poles and then to perform the activity of day to day management of the same by operating and maintaining such equipment to achieve energy savings - As is evident applicant would be providing bouquet of goods and services and if we remove one of the supply i.e. supply of the Dimmable Street lights/fixtures, the Other supply would be severely affected or may become meaningless. Without such installation of LEDs/ fixtures, there can be no day to day management in the form Of operation and maintenance. Hence in view of the above discussions, we reiterate that the principal supply by the claimant would be a supply of goods. In the present case there is supply of both, goods and services made in conjunction with each other in the ordinary course of business - the supply of services/goods in the present case is naturally bundled, with the supply of services goods being incidental to the supply of goods and therefore such contract are to be considered as a composite supply of service where the principal supply is of goods and the supply of services is incidental/ancillary to such supply of goods. Thus the activity of supply will not be covered under Sl.no. 3(vi)(a) of Notification No. 11/2017 - Central Tax (Rate) dt.28th June 2017 amended by Notification No.24/2017-Central Tax (Rate) dt 21.09.2017 and further amended by notification no. 31/2017 Central Tax (Rate) dt 13.10.2017 and notification no. 17/2018 dt.26.07.2018 because the said Notification as amended cover supply of services and does not cover supply of goods. Rate of GST - HELD THAT:- Theirs is a composite supply where the principal supply is of goods and therefore the applicant will have to discharge their GST liability at a rate which will be the tariff rate for the goods, in this case LEDs and fixtures - LED Lights or Fixtures including LED Lamps are covered under the Sub-Heading 9405 40 90 of the GST Tariff, 2017 which are taxable @ 12%.
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2019 (4) TMI 1603
Classification of goods - rate of GST - Ready to cook popcorn premix i.e. Popcorn Maize with edible oil and salt - HELD THAT:- It is the kernel of maize which are used as sweet corn or popcorn. In the case of sweet corn, the kernels are generally soft and are consumed by steaming, boiling, etc. and consumed with or without butter, condiments, etc. However the popcorn variety of maize generally has hard kernels which swell up and burst open when heated. These hard kernels can be mixed with butter, salt, caramel etc which gives rise to flavoured popcorn - while maize is covered under 10059000, maize flour is covered under 1102 20 00. The product imported by the applicant in the subject case is nothing but ready to use Popcorn mixed with salt and oil and needs only to be Microwaved/heated, etc for direct consumption - the kernels of corn/maize are edible parts of a plant and the same are mixed with oil and salt in order to be used for making of popcorn. Thus, the product in question is covered under Chapter 2008 19 90 of the GST Tariff and attracts IGST @ 12% and CGST SGST @ 6 % each.
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2019 (4) TMI 1602
Detention of goods with vehicle - detention on the ground that no e-way bill has been tendered - rule 138 of the Central Goods and Services Tax Rules, 2017 - HELD THAT:- Issue Notice returnable on 2nd May, 2019.
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2019 (4) TMI 1601
Direction to the Registrar to issue the amount of ₹ 17,88,883/- in the name of the Petitioner for payment to the GST portal - HELD THAT:- We are inclined to grant the prayer clauses (a) and (b) as prayed in the Misc. Civil Application. The Registrar of this Court is accordingly directed to refund the amount of ₹ 17,88,883/- in the name of the Petitioner within one week from the date of communication of this order - Petition disposed off.
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Income Tax
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2019 (4) TMI 1621
Income by way of royalty - broadcast reproduction right - DTAA with Singapore - addition of income as per rule 10A on account of Advertisement Revenue and Distribution revenue - PE in India - HELD THAT:- Only if the payment in the present case by way of a royalty as explained in explanation (2) below subsection (1) of Section 9 of the Act, the question of applicability of clause (vi) of subsection (1) of Section 9 would arise. Revenue placed considerable tress on clause (v) of explanation (2) by virtue of which the transfer of the rights in respect of copyright of a literary, artistic or scientific wok including cinematograph film or films or tape used for radio or television broadcasting etc. would come within the fold of royalty for the purpose of Section 9(1) of the Act. We do not see how the payment in the present case could be covered within the said expressions. As noted, this is not a case where payment of any copyright in literary, artistic or scientific work was being made. We may also notice that India Singapore Double Taxation Avoidance Agreement contains Article 12 pertaining to royalty and fees for technical service. Even going by this definition, the payment in question can not be categorized as royalty.
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2019 (4) TMI 1620
Waiver of interest u/s 234-B - levy of interest on account of failure of the Assessee to pay advance tax - bonafide belief that income is not chargeable to tax on the basis of an order passed by the High Court and the expenditure in question was a revenue expenditure and the same was negatived by the Supreme Court later on only to the extent of it not being deductible as current repairs . HELD THAT:- On the debatable issue, the Asseessee had succeeded up to High Court contesting his liability to claim particular expenditure as an allowable revenue expenditure and therefore, it will not be an 'income chargeable to income tax' in view of Section 234B then in our opinion, it would be a fit case to consider for waiver of the interest under Section 234-B and merely because the Supreme Court held that the expenditure in question could not be allowed as 'current repairs', even though it was revenue expenditure in nature, it would not mean that the levy of interest under Section 234-B for the failure to pay advance tax, is automatically attracted and the waiver in such cases, may not be granted by the Competent Authority. As is clear that the issue was highly debatable and therefore, liability of paying advance tax to that extent, treating as admitted liability could not arise. Thin line difference between the 'revenue expenditure' for replacing some of the parts of plant machineries, like rings and frames in the present case in Textile industry being allowable deduction or not and that being a highly debatable issue, in our opinion, particularly when the Assessee had succeeded up to High Court consistently, irrespective of the fact whether the appeal was filed by the Assessee or by the Revenue before the High Court or lower authorities, it cannot be said that the Assessees in such cases, ought to have admitted the liability to pay advance tax, by giving up their claim for claiming such expenditure for replacement of part of plant and machinery as an allowable revenue expenditure. That is why, while considering the application for waiver of interest under Section 234-B of the Act, the Chief Commissioner of Income Tax was bound to consider this aspect, which has unfortunately not been done. Therefore, we are inclined to allow the present Writ Appeal. We accordingly allow this Writ Appeal and set aside the order passed by the learned Single Judg as well as the order passed by the Chief Commissioner of Income u/s 119(2)(a)of the Act, for the Assessment Year 1992-93 and remand the matter to the Chief Commissioner of Income Tax, for re-considering the case of the Assessee afresh for waiver of interest under Section 234-B
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2019 (4) TMI 1619
Miscellaneous application within the time limit envisaged in Sec. 254(2) - Tribunal had dismissed the appeal of the assessee appellant by way of an ex-parte order - A.R explaining the reason leading to failure on the part of the assessee to put up an appearance on the stipulated date of hearing of the appeal for the reason that the assessee was not put to notice as regards the date of hearing of the appeal - HELD THAT:- As perused the material available on record. Admittedly, the notice intimating the date of hearing of the appeal to the assessee applicant was returned by the postal authorities with an endorsement of insufficient address . A.R had been able to substantiate his aforesaid contention by placing on record documentary evidence as had been gathered by him on an application filed with the Registrar, ITAT, Mumbai. When the assessee inadvertently was not put to notice as regards the date of hearing of the appeal, therefore, for the said reason he had failed to put up an appearance at the time of hearing of the appeal. In the backdrop of the aforesaid facts, we are of the considered view that in all fairness as per Rule 24 of the Appellate Tribunal Rules, 1963 the ex-parte order passed by the Tribunal on 21.06.2017 requires to be set aside and the appeal of the assessee be restored. Allow the miscellaneous application filed by the assessee applicant.
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2019 (4) TMI 1618
Revision u/s 254 - Bogus purchases - addition @ 6.18% - estimation of profit percentage - HELD THAT:- Assessee by filing the present application under Sec. 254(2) is seeking a review of the order passed by the Tribunal while disposing off his appeal viz. Popatlal N. Shah Vs. ACIT 19(2), Mumbai [ 2017 (11) TMI 1816 - ITAT MUMBAI] As per the settled position of law, though a mistake which is glaring, patent, apparent and obvious from the records is amenable for rectification under sub-section (2) of Sec.254, however, the powers therein vested cannot be exercised for allowing a review of the order. In sum and substance, as the assessee in the case before us is seeking a review of the order passed by the Tribunal while disposing off its appeal, which as observed by us is not permissible in the eyes of law, therefore, the application filed by him does not merit acceptance.
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2019 (4) TMI 1617
Disallowance u/s.14A - CIT(A) had deleted the disallowance made by the AO u/s.14A on the ground that assessee has not earned any exempt income during the year under consideration - HELD THAT:- It is now well settled in the case of Essar Teleholdings Ltd reported [ 2018 (2) TMI 115 - SUPREME COURT OF INDIA] that no disallowance u/s.14A of the Act could be made when there is no exempt income claimed by the assessee.No infirmity in the order of ld. CIT(A) in this regard. Accordingly Ground No.1 raised by the revenue for both the years is dismissed. Addition u/s.41(1) - HELD THAT:- It is not the case of the revenue that the assessee had claimed deduction or allowance in the earlier years with regard to these sundry creditors. It is not in dispute that these sundry creditors pertain to capital account transactions and hence, does not fall within the ambit of a trading liability of the assessee. Hence, we hold that the CIT(A) had rightly deleted the addition made u/s.41(1). Addition made deemed dividend u/s.2(22)(e) - HELD THAT:- There is no need in the facts of the instant case to look into the dispute as to whether the assessee had maintained a current account with Muchhala Magic Land Pvt. Ltd.,(lending company) and that the provisions of Section 2(22)(e) could indeed be made applicable to the same as the assessee had been given relief by the CIT(A) on the ground that it was not holding any shares in the lending company. This is a primary condition to be satisfied in order to invoke the provisions of Section 2(22)(e) of the Act. Reliance in this regard is placed on the decision of Hon ble Delhi High Court in the case of CIT vs Ankitech (P) Ltd Ors [ 2011 (5) TMI 325 - DELHI HIGH COURT] which in turn followed the decision of Hon ble Jurisdictional High Court in the case of CIT vs Universal Medicare (P) Ltd [ 2010 (3) TMI 323 - BOMBAY HIGH COURT ] Accordingly, we hold that assessee company is not a shareholder in the lending company and hence, the provisions of Section 2(22)(e) of the Act cannot be made applicable in the facts of the instant case. We find that the ld, CIT(A) had rightly deleted the addition in this regard.
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2019 (4) TMI 1616
Penalty u/s 271(1) (c) - additions/ disallowances made under normal provisions of the Act, if ultimately the tax liability is determined u/s 115JB - HELD THAT:- CBDT vide Circular No. 25/2015 dated 31.12.2015 is unambiguous and categorical that no penalty u/s 271(1)(c ) of the Act could be levied in respect of additions/ disallowances made under normal provisions of the Act, if ultimately the tax liability is determined u/s 115JB of the Act by the AO. It is not in dispute that the assessee is liable to tax only u/s 115JB of the Act even after the completion of assessment u/s 143(3) of the Act for the year under consideration. Hence respectfully following the aforesaid circular, we hold that no penalty u/s 271(1)( c) of the Act could be made in the facts of the instant case in the hands of the assessee. Since relief is granted to the assessee on this ground, the arguments advanced by the AR on merits of the addition / disallowance need not be gone into and we refrain to give our opinion on the same. - Decided in favour of assessee.
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2019 (4) TMI 1615
Disallowance made u/s 35(1)(ii) - withdrawal of recognition with retrospective effect - claim weighted deduction of 175% of the amounts actually paid by such beneficiaries - HELD THAT:- The provisions of section 35(1)(ii) of the Act vide its Explanation clearly proves that the donor (i.e assessee herein) cannot be affected due to subsequent withdrawal of recognition with retrospective effect. Respectfully following NATIONAL LEATHER CLOTH MANUFACTURING CO. VERSUS INDIAN COUNCIL OF AGRICULTUAL RESEARCH AND OTHERS [ 1999 (10) TMI 55 - BOMBAY HIGH COURT] and the provisions of the Act, we direct the AO to grant deduction u/s 35(1)(ii) of the Act in the sums of ₹ 26,25,000/- and ₹ 21,00,000/- for the Asst Years 2013-14 and 2014-15 respectively. Accordingly, the grounds raised by the assessee for both the years are allowed. Charging of interest u/s 234B is consequential in nature and does not require any specific adjudication.
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2019 (4) TMI 1614
Penalty u/s 271(1)(c) - whether the assessee is accused of concealment of particulars of any taxable income or it had furnished inaccurate particulars of such income? - 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) of the Act, 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] - Decided in favour of assessee.
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2019 (4) TMI 1613
Penalty u/s. 271(1)(c) - penalty does not contain the specific charge against the assessee namely as to whether the assessee was being proceeded against for having concealed particulars of income or having furnished inaccurate particulars of income - non specification of charge - defective notice - Held that:- Notice issued by the AO 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) of the Act, 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 [ 2015 (11) TMI 1620 - KARNATAKA HIGH COURT] - Decided in favour of assessee.
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2019 (4) TMI 1612
Rectification u/s.254(2) - uncontrolled transaction - Assessee and M/S.WS Retail Services Pvt.Ltd. and the terms of the said agreement provide that M/S.WS Retail Pvt.Ltd., shall sell the products sold by the Assessee to it only through the web portal Filpkart.com - there was a supply agreement and license and service agreement between parties (which parties is not spelt out in the MA) which prohibits/controls W/S.Retail Services Pvt.Ltd., from either purchasing or procuring goods from any other person other than the Assessee and also to sell the goods other than to the customers placing orders in the Flipkart portal - allegation in the MA is that the above Agreements were not placed by the Assessee before the Tribunal - further averment in the M.A. is that existence of the above agreements, indicate some hidden transaction, which requires examination by the Tribunal by lifting the corporate veil - further allegation in the MA is that the revenue could not bring the above facts to the knowledge of the Tribunal at the time of hearing of appeals because of suppression of the above facts by the Assessee HELD THAT:- DR was unable to explain the relevance of the documents now sought to be filed before us for deciding the issue that was for consideration before the AO. As we have already mentioned these documents were neither the basis of assessment or the basis of conclusions by the CIT(A) for its conclusions on the addition that was in challenge before the Tribunal. These documents were never sought to be relied upon by the learned DR when the appeal was heard nor was there any allegation of any hidden transaction requiring examination by the Tribunal after lifting the corporate veil. These documents could not have been relied upon by the learned DR when the appeal was argued for the reason that these documents were not the basis on which the assessment and the addition challenged before the Tribunal were made by the AO and confirmed and enhanced by the CIT(A). Even in the allegation in the MA is that the Assessee has failed to place the documents now sought to be filed before Tribunal by the Revenue. The conclusions drawn by the Tribunal which have been extracted in Paragraph-5 of this order, will hold good and these documents will have no impact on the conclusions drawn by the Tribunal. Therefore, there exists no relevancy of these documents now sought to be filed with regard to the issue that was decided by the Tribunal. The revenue cannot seek to raise a totally new basis of assessment in an MA and on a possibility of existence of a hidden transaction after lifting corporate veil. It cannot therefore be said that there was mistake apparent from the record which calls for rectification u/s.254(2) of the Act. The power of the Tribunal u/s. 254(2) of the Act is only to rectify mistakes apparent on the face of the record. The Tribunal does not have power to review its own orders. Power of review is not an inherent power but must be conferred by law either specifically or by necessary implication. The present MA filed by the Revenue is devoid of any merit and is liable to be dismissed as without any basis and virtually seeking a review of the order of the Tribunal on a possible hidden transaction which requires examination after lifting the corporate veil when there those were neither the basis of assessment by the AO or CIT(A) or the Tribunal.
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2019 (4) TMI 1611
Deduction on provision for leave encashment - post payment of taxes - HELD THAT:- In the instant case, as mentioned earlier the assessee vide submission dated 10.12.2014 has filed a specific note before the AO regarding deduction on provision for leave encashment along with the decision of the Supreme Court, wherein it was submitted before the AO that provision for leave encashment has been made post payment of taxes in line with the Supreme Court decision in Exide Industries Ltd. . [ 2007 (6) TMI 175 - CALCUTTA HIGH COURT]. Revision u/s 263 - Disallow the foreign taxes paid in Spain on which no relief u/s. 90 could be claimed disregarding the fact that the AO has after detailed examination - deduction of Income-tax paid in Spain (in excess of foreign tax credit equivalent to MAT) vide order u/s. 143(3) r.w.s. 144C - deduction on account of Income-tax paid in Spain u/s. 37(1) - HELD In the present case, the assessment order passed by the AO on the above issue follows the decision Reliance Infrastructure Ltd . [ 2016 (12) TMI 1293 - BOMBAY HIGH COURT] Further, as the issue of allowability of deduction u/s 37(1) of foreign tax credit on which tax credit is not available u/s 90 has been admitted by+ case of Tata Sons [ 2013 (2) TMI 735 - BOMBAY HIGH COURT] , the same being a debatable issue, no revisionary proceedings u/s 263 is tenable. Thus, the 3rd ground of appeal is allowed. MAT computation u/s 115JB - add back the Income-tax paid in Spain while computing book profit u/s. 115JB - AO has after detailed examination, allowed Income-tax paid in Spain (in excess of foreign tax credit equivalent to MAT) vide order u/s 143(3)r.w.s 144C - HELD THAT:- As mentioned earlier, as per clause (a) to Explanation 1 to section 115JB(2) of the Act, income tax paid or payable, which is debited to the profit and loss account is to be added back while computing book profits u/s 115JB of the Act. Thus as per section 115JB of the Act, only taxes specified in Explanation 2 can be added back while computing book profits. In this regard we may refer to the decision in Rashtriya Chemicals Fertilizers Ltd [ 2018 (3) TMI 1564 - ITAT MUMBAI]. The CBDT Circular No. 1/2009 dated 27.03.2009 containing Explanatory Notes to Finance Act, 2008 clarifies the above issue. Therefore, the 4th ground of appeal is allowed.
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2019 (4) TMI 1609
TPA - comparable selection - functional similarity - HELD THAT:- Assessee has categorized itself as a professional service provider in the I.T. industry thus companies functionally dissimilar with that of assessee need to be deselected from final list. Thirdware Solution Pvt Ltd - perusal of the annual report reveals that there is no segmental reporting. In our understanding of the facts, even if the Revenue from the three services mentioned at b), c) and d) above comprises of 90% of the total sales, still segmental reporting is a must to justify the inclusion of this comparable. Though the first appellate authority has excluded this company on the ground that it has supernormal profits, but that is not a good reason for excluding this company, but having no segmental accounts make this company excluded from the final set of comparables. Though we do not agree with the exclusion on the point of super normal profits, but nevertheless, for want of segmental reporting, we direct for exclusion of this company from the final set of comparables. L T - there is no dispute that the same was excluded by the TPO for related party transactions. Therefore, inclusion of the same in the final set of comparables is uncalled for and deserves to be excluded. Working capital adjustment - since the assessee has filed a detailed working of the working capital adjustment the same cannot be dismissed on the ground that the assessee is in the service industry - we direct the TPO to grant working capital adjustment. See SUN LIFE INDIA SERVICE CENTRE PVT. LTD VERSUS DCIT, CIRCLE-2, GURGAON. [ 2015 (10) TMI 2431 - ITAT DELHI] The assessee is directed to furnish afresh a detailed working of the working capital adjustment. The TPO is directed to examine the same and decide the issue. Admission of additional ground - ground raised by the Revenue which states that the CIT(A) erred in not including M/s Infosys as one of the comparables, which was left out by the TPO due to inadvertence - HELD THAT:- We are of the opinion that merely because of provisions of section 154 or section 263 of the Act were available with the revenue, it cannot preclude revenue to raise additional ground before us. Therefore, additional ground is admitted. A perusal of the TP study shows that the assessee did include M/s Infosys in its list of comparables. The TPO made a fresh search during the TP assessment proceedings and from his fresh search, the TPO excluded certain comparables and made a final list of comparables as mentioned elsewhere. The exercise so done by the TPO does not leave any room for assumption that inadvertently he has not included M/s Infosys in the final set of comparables. On the contrary, it appears that non inclusion was intentional. Plea of the Revenue that the ld. CIT(A) erred in not including M/s Infosys as one of the comparable is ill-founded because the assessee was in appeal before the ld. CIT(A) and since the assessee had no grievance for non inclusion of M/s Infosys how could the ld. CIT(A) have adjudicated on inclusion of Infosys unless he wanted to exercise his powers of enhancement. No merit in additional ground raised by the Revenue.
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2019 (4) TMI 1600
Penalty u/s 271(1)(c) - bonafide mistake committed by the assessee in declaring less income in the return - additional income offered by the assessee voluntarily in response to the notice received u/s 143(2) - two balance sheets and trading and profit and loss accounts were submitted by the assessee - HELD THAT:- As rightly contended by the assessee, there is nothing on record to indicate that this additional income was offered by the assessee as a result of any investigation or detection made by the AO and since the addition was made by the AO on the basis of the financial statements prepared and furnished by the assessee, we find merit in the contention of assessee that the additional income was offered by the assessee voluntarily to rectify the bonafide mistake committed inadvertently. We are of the view that the assessee cannot be said to have concealed particulars of his income or furnished inaccurate particulars of such income so as to attract the penal provision of section 271(1)(c) of the Act. In that view of the matter, we cancel the penalty imposed by the AO u/s 271(1)(c) and confirmed by the Ld. CIT(A) and allow this appeal of the assessee.
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2019 (4) TMI 1585
Assets exempt for wealth tax - definition of 'Asset' under Section 2 (ea) - Whether Assets like factory building and motor cars leased out by the Assessee to the third party was subject to wealth tax as per clause (vi) of Section 40 (3) of the Finance Act 1943? - HELD THAT:- We are of the opinion that the matter deserves to be remanded back to the Income Tax Appellate Tribunal and the learned Income Tax Appellate Tribunal is requested to look into the amended position of law with effect from 01.04.1993 by insertion of definition of 'Asset' under Section 2 (ea) of the Wealth Tax 1957. We are not making any observations on the merits of the claim of the Assessee here. Therefore, without answering the Substantial Questions of Law as framed above, we set aside the order passed by the learned Tribunal on 15.09.2006 and restore the appeal to the file of Income Tax Appellate Tribunal to consider the same afresh, in accordance with law, within a period of six months for the Assessement Year 1998-1999 only.
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2019 (4) TMI 1584
Condonation of delay of 3599 days - legitimate reasons of delay - serious health ailments and loss in business - HELD THAT:- Though we find that no Substantial Questions of Law arises in the present case but taking a lenient and sympathetic view of the matter in view of the aforesaid facts and circumstances, where the main person looking after the business of Appellant Company suffered serious health ailments and loss in business due to which not only the proceedings before the First Appellate Court could not be attended, but also a huge delay occurred in preferring the Appeal before the learned Tribunal, we are inclined to allow the present appeal. Revenue also failed to bring on record any material on record for rebutting the averments made in the Affidavit filed by the Assessee. Request the learned Tribunal to decide the Appeal on merits. Delay condoned.
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2019 (4) TMI 1583
Lease Equalisation Charges - deductibility as expenditure against the Lease Rental Income - HELD THAT:- Issue as decided against the Revenue by the Supreme Court in the case of Commissioner of Income Tax v. Virtual Soft Systems Ltd., [ 2018 (4) TMI 1472 - SUPREME COURT] , wherein held that Lease Equalisation Charges are deductible as expenditure against the Lease Rental Income in the hands of the Assessee. Question No.1 is answered in favour of the Assessee and against the Revenue. MAT - Provision for Non Performing Assets to be added back for computing Book Profits u/s 115JA - HELD THAT:- Issue decided in M/S. INTEGRATED FINANCE CO. LTD. VERSUS THE DEPUTY COMMISSIONER OF INCOME-TAX [ 2019 (2) TMI 1439 - MADRAS HIGH COURT] held the settled position in law as on date is that with effect from 01.04.1998 any amount set aside as provision for diminution in value of asset would be liable to be added back to the ''book profits'' in terms of s.115JA - Decided against assessee. Allowability of Provision for Non Performing Assets - HELD THAT:- The said issue is covered by a decision of a Co-ordinate Bench of this Court in the case of T.N.Power Finance Infrastructure Development Corpn. Ltd. v. Joint Commissioner of Income Tax, [ 2005 (10) TMI 38 - MADRAS HIGH COURT] held that Appellate Tribunal was right in upholding the order of the Commissioner of Income-tax (Appeals) in disallowing provision for non-performing assets which was debited to the profit and loss account. Accordingly, the question of law is answered in the affirmative, against the assessee and in favour of the revenue.
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2019 (4) TMI 1582
Application u/s 220(3) for extend the time for payment or allow payment by instalments - discretion in the AO to grant some relief u/s u/s 220(3) - request for providing copy of entire order sheet of Assessment Proceedings - recovering 20% of is mandatory - HELD THAT:- This provision vests discretion in the Assessing Official to grant some relief to the Assessee who falls within its parameters. This discretion is to be exercised according to the rules of reason and justice. It is not a Mughal discretion. When a Citizen makes an application and seeks personal audience, the law requires due consideration thereof after affording an opportunity of hearing, even when the provision in so many words does not speak of granting of such opportunity, since the principles of Natural Justice being part of Article 14 are inbuilt in every public power subject to all just exceptions. Even God is said to have given an opportunity of hearing to Adam and Eve before punishing them for eating the forbidden fruit. That being so, denial of personnel hearing is fault some, to say the least. The contention to the contrary is very difficult to countenance. Furnishing of entire order sheet relating to the Assessment Proceedings in question ought to have been favorably considered by the Respondent herein inasmuch as ours is an Open Governance, i.e. moving in the era of transparency. Petitioner was seeking the copies of the public records relating to his own affairs and not of others. No provision of law is quoted to deny such a relief. Petitioner is more than justified that, the said record is necessary to the Assessee to decide as to whether the Assessment Order is legally challengeable with a fair degree of success and therefore, withholding such records virtually amounts to scuttling the right of the Assessee to seek legal redressal against the Assessment Orders. It is open to the Assessee to show that the said Circulars are not binding axioms needs to be considered by the Respondent-Assessing Official in whom the discretion is vested u/s 220 (3). This Court ordinarily will not undertake the said exercise, since power is vested in a persona designata. - matter is remitted for consideration afresh after affording an opportunity of hearing to the Petitioner or his agent
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2019 (4) TMI 1581
Penalty u/s 271(1)(c) - disallowance u/s 14A - interest and finance charges incurred on availing the loan which was diverted to other companies - HELD THAT:- No substantial question of law arises and the finding of fact recorded by the Tribunal with regard to deposits made by the Assessee Company with another Company viz., M/s.DSQ Holdings Limited was held to be a genuine Inter-Corporate deposits made, as the Assessee Company owed a sum to the said Company and therefore, the Assessee Company did not charge any interest on the sums advanced by it to the said Company for purchase of Shares. No exempted income in the form of Dividend was earned by the Assessee Company during the year in question. The findings of facts recorded by the Tribunal as well as the first Appellate Authority are correct findings of facts and do not give rise to any perversity in the matter. The said findings of facts are, therefore, binding on High Court under Section 260A. The penalty under Section 271(1)(c) was imposed as a consequential of the said addition by the Assessing Authority which has been rightly set aside by both the Appellate Authorities. - Decided against revenue.
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2019 (4) TMI 1580
Adhoc disallowance of 10% of various expenses - HELD THAT:- We find that the expenses have been disallowed purely on an adhoc basis and even the CIT(A) has returned a finding that the AO has no material to make the subject disallowance. In absence of any finding that the expenses are bogus or not incurred for the purposes of the assessee s business, the adhoc disallowance so made is directed to be deleted. In the result, the ground of appeal is allowed. Addition u/s 41(1) - HELD THAT:- As on last day of the financial year i.e, 31.03.2012 relevant to impugned assessment year, the amount of ₹ 69,270 stood credited in the account of Shekhawati Courier Cargo. The act of square up of the said account with the trade debtor happened in subsequent financial year 2014-15 relevant to assessment year 2015-16. In absence of any finding that as on the close of the financial year, there is any benefit by way of remission or cessation of its freight liability, the amount cannot be brought to tax u/s 41(1) in the year under consideration. The Revenue is however free to take action as per law in the year the account was squared up. In the result, the ground of appeal is allowed. Disallowance of interest paid on service tax u/s 40(a)(ii) - assessee has paid interest on service tax - HELD THAT:- On a plain reading of the above provisions, it provides that any sum paid on account of any rate or tax levied on the profits or gains of any business or profession or assessed at a proportion of, or otherwise on the basis of, any such profits or gains. What it therefore provides is the rate or tax levied on the profits/gains of any business or profession. The interest on service tax is not a tax levied on the profits/gains of any business or profession. Thus, the very foundation of disallowance by invoking the provisions of section 40(a)(ii) is not satisfied in the instant case. Further, the decision relied upon by the ld CIT(A) is distinguishable as the said decision deals with case of interest on late deposit of TDS which was disallowed by the AO u/s 37(1) of the Act. Even where the provisions of section 37(1) are considered as implied invoked by the ld CIT(A) in the instant case, it is a settled position that the interest on account of delayed deposit of service tax is compensatory in nature and not in the nature of penalty and was, therefore, duly allowable under section 37(1) of the Act. The decision of the Coordinate Bench in case of Remfry Sagar Consultants [ 2012 (9) TMI 190 - ITAT DELHI] which has laid down a similar proposition thus supports the case of the assessee. In the result, the ground of appeal is allowed.
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2019 (4) TMI 1579
Claim of exemption u/s 10(23) - assessee is an educational society and is constituted with multiple objectives to carry on its operations - HELD THAT:- We find that the CIT(A) has rejected the contention of the assessee on the ground that the assessee has multiple objectives other than solely educational activities in the object clause. The tax authorities should apply the provisions of the Act as the Legislature intended to develop the educational activities and promote those institutions, which have functions solely for education and not for profit. In case, an assessee has multiple objectives, but, carried on only educational activities, then, the assessing authorities can allow the benefit. In the given case, facts are very clear that during the relevant AY, the assessee has carried on only educational activities and has not carried on any other activities. U/s 10(23)(iiiad), it is not a case of registration and the allowability of the claim thereafter without verification of facts. Every year, when the claim is made, AO is required to verify whether for that PY, the assessee existed solely for educational activities. Therefore, assessee is eligible to claim exemption u/s 10(23)(iiiad) for the relevant AY before us. Accordingly, the addition made by the AO is hereby deleted and the grounds raised by the assessee on this count are allowed. Also see GEETHA BHAVAN TRUST [ 1994 (11) TMI 71 - KERALA HIGH COURT] , very much relevant for this case.
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2019 (4) TMI 1578
Disallowance u/s 14A r.w.r 8D - claim restricted to the exempt income earned by the assessee - whether investment in downstream subsidiary companies is out of business expediency and therefore the provisions of section 14A of the Act could not have been invoked ? - HELD THAT:- We find that the assessee has raised a specific ground that the investments were made to gain control of the subsidiary companies and therefore, it is its business expediency. The assessee however, relied upon the contentions before the authorities below. Therefore, the ground No.4 on this issue is rejected. Respectfully following the decision of the Coordinate Bench in the case of M/s. Jasper Industries [ 2018 (6) TMI 1601 - ITAT HYDERABAD] we direct the AO to restrict the disallowance u/s 14A r.w.r 8D only to the exempt income earned by the assessee during the relevant previous year. Assessee s appeal is accordingly partly allowed.
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2019 (4) TMI 1577
Disallowance of deduction u/s. 35ABB and membership fee to various clubs - HELD THAT:- Issue decided in the cases of assessee itself for A.Yrs.2002-03 to 2008-09 in favour of assessee. Disallowance of business loss - HELD THAT:- As examined the schedule BP of ITR-6 regarding computation of income from business or profession and we find that at Sr. No. 12(ii), the assessee has mentioned the figure of ₹ 49,83,62,873/- under the head depreciation allowable u/s. 32(1)(i). This figure is filled manually by the assessee while filing ITR-6. However, Schedule DPM Schedule DOA pertaining to depreciation of plant machinery and depreciation on other assets, are lying blank. It is not understandable as to why these schedules were kept blank by the assessee when he has claimed depreciation. This may also affect the business losses claimed by the assessee. AO also required to examine and verify the figure of depreciation mentioned at Sl. No. 11 and at sl. No. 12(ii) of ₹ 49,83,62,873/- of Schedule BP whereas in Profit and loss account, the amount of depreciation is shown at ₹ 95,01,65,233/- at Sl. No. 42. All these distorted figures shown in the return of the assessee need to be examined and verified thoroughly by the AO before arriving at correct business losses admissible to the assessee. No justification in the direction of the ld. CIT(A) to take the business loss of ₹ 94,10,62,358/-. Accordingly, this issue is restored back to the file of Assessing Officer for making proper verification of the figures returned by the assessee in ITR-6 as noted above and thereafter he shall work out correct business profit/losses of the assessee. The assessee is directed to reconcile all the figures shown in ITR-6.
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2019 (4) TMI 1576
Penalty u/s 271(1)(c) - Quantum addition deleted - HELD THAT:- the addition on the basis of which the impugned penalty u/s 271(1)(c) of the Act was levied by the Assessing officer has been deleted, therefore, the impugned penalty was not leviable and the Ld. CIT(A) was fully justified in deleting the same. We, therefore, do not see any merit in these appeals of the Department. See KC BUILDERS AND ANOTHER VERSUS ASSISTANT COMMISSIONER OF INCOME-TAX [ 2004 (1) TMI 7 - SUPREME COURT] - Decided in favour of assessee.
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2019 (4) TMI 1575
Rectification u/s 254 - Ex parte order of the CIT(A) - ITAT set aside - HELD THAT:- In terms of Section 250(6) of the Act notwithstanding non-appearance by the assessee. CIT(A) in the instant case has simply dismissed the appeal of the assessee without looking at the various grounds at all. Therefore, the action of the CIT(A) was in departure with the provisions of the law. Therefore, such order of the CIT(A) was not sustainable in the opinion of the ITAT. Such order of the ITAT is not amenable to rectification within the sweep of Section 254(2). The judgment of the Hon ble Gujarat High Court in Ashokji Chanduji Thakor [ 2018 (10) TMI 1657 - GUJARAT HIGH COURT] was rendered on the premise that CIT(A) had passed ex parte order and decided the appeal on merits. This is not true in the instant case. The judgment of the Hon ble Gujarat High Court is rendered in different fact situation provides no help in the instance case. Thus, we see no warrant to entertain the rectification application of the Revenue - miscellaneous application filed by the Revenue is dismissed
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2019 (4) TMI 1574
Rectification u/s 254 - impugned order taking its employees stock option plan ESOP figure at ₹26,17,37,836/- instead of the correct amount of ₹2,61,73,34,836/- - HELD THAT:- Revenue is very very fair in not disputing the latter correct figure. We therefore direct necessary modification in our order in assessee s appeal [ 2018 (11) TMI 1611 - ITAT KOLKATA] to this effect. The assessee s ESOP claim shall now be read as of ₹2,61,73,34,836/-. Its first grievance raised in the instant miscellaneous application is treated as accepted. Rectification u/s 254 - disallowing u/s 80IA - Tribunal followed its earlier order - legislature enacted the new Electricity Act, 2003 - The very issue as to whether the tribunal s said earlier order in assessment year 2002-03 would operate or not post facto the above legislative developments was considered by yet another co-ordinate bench s decision - HELD THAT:- DR fails to dispute all these developments and also the fact that our impugned order had not taken into consideration this latter case law already complied in paper book we treat our earlier direction as per assessment year 2002-03 order as an apparent error requiring necessary modification u/s 254(2). We therefore make it clear that the AO shall hold frame his consequential computation in tune with the provisions in new Electricity Act, 2013 so far as assessee s sec. 80IA deduction claim in Revenue s appeal is concerned. The assessee succeeds in its instant second substantive ground as well as lead MA.
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2019 (4) TMI 1573
TP adjustment - TPO rejecting TNMM and applied CUP method - The TPO held that the expenditure incurred by the appellant and allowed by the JV partners/Operator board shall be considered as Comparable Uncontrolled Price - international transactions pertaining to intra-group services received by the appellant (i.e. MSU charges, reimbursement of expenses, payroll expenses, Information Technology and other charges) - HELD THAT:- It has been admitted that facts and circumstances of the services received by assessee for the year under consideration are same vis- -vis assessment year 2010- 11, and other preceding assessment years. We are therefore inclined to follow the same view. Respectfully, following view taken by this Tribunal in assessment year 2010-11 [ 2017 (4) TMI 1190 - ITAT DELHI] , addition made by Assessing Officer stands deleted. Erroneous application of CUP for determining arm s length interest rate - assessee taken fixed rate of interest @ 6.18% (being USD Libor swap rate + 350 bps) - TPO proceeded on the basis of an independent fresh search and considered LIBOR + 2.785 BPS as the arm s length rate - HELD THAT:- Lower authorities and materials available on record. We also refer to the specific observation by DRP reproduced hereinabove. As both the parties admit that the issues under consideration are similar and identical with that of facts in assessment year 2010-11 [ 2017 (4) TMI 1190 - ITAT DELHI] . The directions issued by this Tribunal for assessment year 2010-11 more particularly the underlined portion are followed by us. Ld. CIT DR did not object for the issue to be set aside. We direct the TPO/AO to compute the rate of interest on the basis of aforesaid direction and accordingly is set aside to AO/TPO. Disallowance of branch office expenditure - treating it as pre-operative in nature - whether said expenditure was incurred wholly and exclusively for the purpose of the Appellant s business in India? - AO limited the disallowance to avoid double addition/ disallowance - HELD THAT:- We fail to see any such provision in the act that if the other party in the joint-venture do not agree to share the particular cost, the cost incurred by one of the partners of that joint-venture becomes the expenditure not for the purpose of the business of that partner. No such provision has also been brought to our notice by the revenue. It is also not the case of the revenue that details of those expenditure are not available before them or Assessee has furnished incomplete information for its allowability. Further, no judicial precedent was cited before us by revenue, which says that such expenditure are not allowable to the Assessee. Disallowance of head office expenditure - Allowable revenue expenditure - cost of services availed of by the taxpayer required by PSC with regard to its standard of operation including the quality of execution of work, access to latest industry information and global updates, safety of its employees and the environment etc., disallowed merely on the ground that the said expenses have not been borne by the joint venture partner - DRP applying the provisions of section 44C of the Act to payments made to BG International Limited - HELD THAT:- We fail to see any such provision in the act that if the other party in the joint-venture do not agree to share the particular cost, the cost incurred by one of the partners of that joint-venture becomes the expenditure not for the purpose of the business of that partner. No such provision has also been brought to our notice by the revenue. It is also not the case of the revenue that details of those expenditure are not available before them or Assessee has furnished incomplete information for its allowability. Further, no judicial precedent was cited before us by revenue, which says that such expenditure are not allowable to the Assessee. Accordingly, this ground raised by the assessee stands allowed. Disallowance of depreciation and depletion - disallowing depreciation being the difference of depreciation amount between the tax audit report and the computation - aforesaid difference is on account of the fact that the appellant had capitalised certain costs as part of the cost of the fixed assets and appellant had claimed depreciation thereon - the tax auditor in the Tax Audit Report considered this as revenue in nature - HELD THAT:- AO ought to be directed to accept the opening WDV of assets as submitted by the appellant in the schedule to computation of income which is arrived from the closing WDV of fixed assets of previous year. Accordingly, the AO be directed to delete disallowance on account of difference in depletion as per the computation of income and tax audit report. Without prejudice, it is submitted that if the expenditure capitalised by the appellant in previous years is not held to be capital in nature and depreciation and depletion on capitalised portion is subsequently disallowed, the amount capitalised by the appellant should be allowed as deduction under section 37(1) in the relevant assessment year. CIT DR has no objection for the above issue to be set aside to ld. AO/TPO - restore the issue to the file of the Assessing Officer with a direction to give an opportunity to the assessee to substantiate its case. The ground raised by the assessee on this issue is allowed for statistical purposes. Disallowance of loss on transportation - AO disallowing loss on transportation of condensate on the ground that the expenditure cannot be allowed on the basis of the provisions made by the assessee - HELD THAT:- In view of the admitted case of the taxpayer that during the AY 2016-17, independent expert appointed by the joint venture partners had determined the loss on condensate at 1.7% and without prejudice, the taxpayer also made a prayer for allowing the loss of transport of condensate @ 1.7% during the year under assessment, we are of the considered view that when undisputedly as per settlement agreement entered into between the taxpayer, ONGC and Reliance Industries Limited with ONGC (transporter) for transportation of gas and condensate, the loss is to be determined by the expert appointed by the joint venture partners, there is no question to resort to the estimation to claim such loss. More so in AY 2016-17, loss has been determined by the expert appointed as per settlement agreement @ 1.7%. So, we are of the considered view that the matter is required to be remanded back to the AO to decide afresh after providing an opportunity of being heard to the taxpayer by following the rule of consistency - restore the issue to the file of the Assessing Officer with a direction to give an opportunity to the assessee to substantiate his case as per the direction of the DRP. Disallowance of inventory written off - As per AO Appellant submitted only internal documents which do not suffice for allowance of expenditure - HELD THAT:- When the taxpayer has prepared obsolete inventory in accordance with the system of accounting regularly followed by it in compliance to section 211 (3C) of the Companies (Accounting Standards) Rules, 2006 as amended and other relevant provisions of the Companies Act, 1956 and has duly got prepared audited report of an independent auditor on the basis of physical verification and in view of the maintenance of inventory, the disallowance made by the AO/DRP is not sustainable in the eyes of law - restore the issue to the file of the Assessing Officer with a direction to give an opportunity to the assessee to substantiate his case. The Assessing Officer shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee Foreign exchange loss disallowance - whether foreign exchange gain has been taxed in the previous years, foreign exchange loss in the subsequent years needs to be allowed? - HELD THAT:- As decided in own case [ 2018 (7) TMI 1954 - ITAT DELHI] in view of the law laid down by the Hon ble Apex Court in case of CIT vs. Enron Oil Gas Limited . [ 2008 (9) TMI 3 - SUPREME COURT] , we are of the considered view that the income earned by the taxpayer in foreign currency pursuant to the PSC entered into with Government of India is governed by the agreement of PSC and the foreign exchange losses on account of foreign currency translation is an allowable deduction while computing the total income of the taxpayer. In such circumstances, provisions of PSC are to be applied and the disallowance made by AO/DRP on account of difference in revenue is not sustainable, hence allowable subject to verification by the AO - restore the issue to the file of the AO with a direction to give an opportunity to the assessee to substantiate his case as per the direction of the DRP. Interest u/s 234B, 234C 234D - HELD THAT:- As relying on assessee's own case [ 2018 (7) TMI 1954 - ITAT DELHI] we direct the Assessing Officer to compute the interest u/s 234C of the Act qua returned income as per law followed by interest u/s 234B 234D of the Act by giving due opportunity to the assessee.
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2019 (4) TMI 1572
Disallowance of depreciation on astrology fees - architectural and management consultancy fees and payments were capitalized in the books - service provider raised invoice / debit note as Astrology Fees - TDS u/s 194J at the rate of 10% was deducted - genuineness of expenditure - assessee claimed depreciation on such capitalization - main reason why the ld CIT(A) doubted the genuineness of payments to Mr Anand Nair due to the MOU. - HELD THAT:- Once the income has been assessed in the hands of one entity, then the same income cannot be assessed in the hands of the other entity. Further, the Hon ble Bombay High Court in the case of CIT v Noshira D Mody [ 2014 (4) TMI 1157 - BOMBAY HIGH COURT] held that where the recipient of commission has offered the same to tax, it cannot be disallowed u/s 37(1) in the hands of the payer. Therefore, we are of the considered view that when Shri Anand Nair has offered the professional fees to tax, it cannot be disallowed in the hands of the payer. Shri Anand Nair has already paid tax to Government in respect of the fees received by him from the assessee company. The payment of fees to Mr Anand Nair cannot be considered as non-genuine, when all evidences conclusively proved that said payment is genuine and it was incurred wholly and exclusively for business purpose. The assessee has rightly capitalized the same under the head Plant and Machinery. Hence, the AO is directed to allow depreciation claimed on architect fees paid to Shri. Anand Nair and capitalized in books under fixed assets. Disallowance of rent paid to Mr Anand Nair - Leave and License agreement for a period of three years - flats were to be used for accommodating the guests and employees of the assessee company who come from outstation - HELD THAT:- Guest house could be a better and cheaper option than the hotel in terms of comfort, privacy and familiar surroundings. With regard to sale in subsequent years at a low price, it is noted that the same is a transaction between a brother to his sister; therefore, not a correct benchmark to determine the rent is excessive. Further, Shri Anand Nair is not a related party. The payments were made to Shri Anand Nair by account payee cheque. TDS was duly deducted u/s 194I of the Act. Applicable service tax has been charged. The rent was offered to tax in the hands of Shri Anand Nair. The sample guest list demonstrates that the guest house was constantly used by employees and their families for personal / official purpose or for holding interviews. The payment is reasonable from the point of view of the Assessee Company as it would have to incur huge expenses if it were to accommodate outstation guests and employees in Hotels. Also assessee is able to block premises for a period of 3 years and have the premises whenever it desires. Therefore, only for the reason that rent is high genuineness of payment cannot be questioned and disallowance be made. But, considering the size of flat and the locality, we are of the view that rent payment of ₹ 1,00,000/- per month for two flats appears to unreasonable and excessive. Further, the AO did not brought on record any comparable cases of similar nature or find out market rate prevailing at that time. Therefore, we are of the considered view that this issue needs to be re-examined by the AO Disallowance of housekeeping charges paid - paid with respect to two flats at Vakola, Mumba pursuant to a Housekeeping agreement for a period of three years - HELD THAT:- Whether the expenditure is justified/reasonable or not has to be seen from the businessman point of view and AO cannot step in the shoes of Assessee as held by the Hon ble Supreme Court in Hero Cycles (P) Ltd. vs. CIT [ 2015 (11) TMI 1314 - SUPREME COURT OF INDIA] . Therefore, we are of the view that the lower authorities were erred in treating housekeeping charges as non genuine payments. But, considering the size of flat, we are of the view that housekeeping payment of ₹ 1,00,000/- per month for two flats appears to unreasonable and excessive. Further, the AO did not brought on record any comparable cases of similar nature or find out market rate prevailing at that time. Moreover, this issue is linked with disallowance of rent payment to flats. Since, we have already set aside disallowance of rent issue to the file of AO, we feel that this issue also needs to be reexamined by the AO. Depreciation attributable to Plant Machinery purchased from M/s Triochem Sucrotech Engineering Projects P Ltd. - non adjudication by the CIT(A) at all in its order - request to be set aside to the CIT(A) to give a proper finding - HELD THAT:- .CIT (A) has analysed each and every party alleged to be bogus and her analysis was so minute that she has even identified a payment of ₹ 92,81,009/- in respect of one party whereby such payment was debited in P L account and directed to be disallowed over and above the addition made by AO. The Ld. DR could not pint out any other infirmity in the order of CIT(A), but, simply argued that no express finding was given in respect of transaction with Tricohem, therefore, matter may be set aside to CIT(A). We are of the considered opinion that the ld. CIT (A) has adequately dealt with this issue and we do not find any infirmity whatsoever in the order of CIT(A). Disallowance u/s 14A r.w.r. 8D - CIT(A) deleted the disallowance on the ground that no dividend was earned - HELD THAT:- There is no doubt that investment in subsidiaries ought to be included for 14A disallowance. However, other factors have also to be looked into like net worth, investment amount, receipt of dividend etc. We note that as against net worth of the assessee as on 31.03.2011 of ₹ 401.92 crores, investment stood at ₹ 25.85 crores. Thus, the assessee has adequate own funds. Hence, following the Hon ble Bombay High Court decision of CIT v HDFC Bank [ 2014 (8) TMI 119 - BOMBAY HIGH COURT] no interest could be disallowed. It is also on record that the assessee has neither received any dividend income nor claimed any income to be exempt. Since there is no exempt income earned, there is no question of invoking Section 14A. See VIREET INVESTMENT (P.) LTD. [ 2017 (6) TMI 1124 - ITAT DELHI]
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2019 (4) TMI 1571
Computing capital gains u/s 50 - reduction of cost of new assets acquired but not owned for considering WDV of block of assets - acquiring of the asset vs ownership of the capital asset - HELD THAT:- We are unable to persuade ourselves to subscribe to the observations of the A.O that de hors ownership of an asset, the same cannot form part of the block of assets . In this regard, as observed by us herein above, though the vesting of the title is mandatorily required for claim of depreciation u/s 32, however, the same would not apply for determining the point of acquisition of the property in terms of Sec. 50(1)(iii). As regards the observations recorded by the A.O that the builder viz. M/s Silver Land Developers Pvt. Ltd. had stated that all rights to use, exploit and access the units under reference remained with them only, and they were yet to give formal possession of the office units to its customers only after receiving the OC/BCC from Municipal Corporation of Greater Mumbai, we find that the said aspect has been clarified by Sh. Harshkumar N. Seksaria (supra) in his affidavit, dated 12.03.2018. We are of the considered view that as the affidavit, dated 12.03.2018 of Sh. Harshkumar N. Seksaria, director of M/s Govindram Brothers Pvt. Ltd. which substantially dislodges the observations and the veracity the material acted upon by the A.O for drawing of adverse inferences as regards the date of acquisition of the property under consideration viz. Unit No. 5 6 (supra) by the assessee, was not there before the A.O, therefore, he had no occasion to verify the genuineness and veracity of the facts as had been deposed therein. We thus in all fairness and in the interest of justice are of the considered view that the matter requires to be revisited by the A.O, who shall verify the veracity of the facts deposed by Sh. Harshkumar N. Seksaria in his affidavit dated 12.03.2018 and after making necessary verifications as he may deem fit, therein readjudicate the issue. The Grounds are allowed for statistical purposes. Addition u/s 14A - HELD THAT:- CIT(A) duly appreciated that the A.O had failed to record the reasons which he was obliged to do for dislodging the claim raised by the assessee in its return of income that no expenditure was incurred for earning of the exempt dividend income. In the backdrop of the aforesaid facts, the CIT(A) observing that a part of the expenses would have been incurred by the assessee as regards its other business activities viz. (i) production and marketing of television programs; and (ii) sale and purchase of high value immovable properties, as well as a part of such expenses would have been incurred by the assessee for maintaining its corporate entity, therefore, accepted the disallowance as was attributed by the assessee by making a specific reference to all the expenses as stood debited in its profit and loss account for the year under consideration, as having been incurred for earning of the exempt dividend income. No infirmity does emerge from the order of the CIT(A) who had scaled down the disallowance under Sec. 14A in the hands of the assessee Recharacterization of the capital loss on sale of shares as a speculative loss - HELD THAT:- As the transaction involved in purchase and sale of shares of Hindustan Zinc Ltd. by the assessee company during the year was a solitary transaction, therefore, the presumption would be that the said shares as claimed by the assessee were held as an investment, unless the same is rebutted by the department on the basis of irrefutable material. As the solitary transaction of purchase and sale of shares of Hindustan Zinc Ltd. by the assessee company during the year under consideration cannot be held to be a part of its business, therefore, the loss of ₹ 1,05,62,764/- suffered by the assessee on the sale of the same was rightly claimed as a capital loss, and the same could not have been held to be a speculative loss as had been so done by the A.O by invoking the Explanation to Sec. 73. We thus being persuaded to subscribe to the well reasoned view of the CIT(A) that the loss on sale of shares of Hindustan Zinc Ltd. by the assessee was rightly claimed as a capital loss, thus uphold his order to the said extent. The Ground of revenue is dismissed.
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Insolvency & Bankruptcy
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2019 (4) TMI 1608
Corporate insolvency process - outstanding debt - existence of default committed by the Corporate Debtor - HELD THAT:- Looking at the documents filed by the Financial Creditor, we are of the view that the Financial Creditor filed all the requisite documents proving the existence of debt as well as existence of default committed by the Corporate Debtor, therefore, we hereby hold that this Company Petition is fit for admission, whereby, since the Financial Creditor has placed the consent letter of the Resolution Professional. Moratorium is hereby declared prohibiting accordingly.
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2019 (4) TMI 1607
Liquidation of the Corporate Debtor if a Resolution Plan is rejected - CoCs rejecting of the Resolution Plan of the Applicant - Resolution Plan is rejected for reasons extraneous to the scheme of the IBC - HELD THAT:- Reasons stated by the CoCs for rejection of the Resolution Plan of the Applicant show that there has been significant haircut to which the creditors would be subject to, offer was materially lower than the OTS offer made in 2016, and much concern is about the preferential payments, potentially undervalued transactions and transactions that could have been made to potentially defraud creditors. The reasons given by the CoCs for rejection of Resolution Plan may not be looking plausible on the face of it. But, the reasons are justifiable, which point out towards commercial un-viability and uncertainties of the Resolution Plan submitted by the Applicant. CoCs while rejecting or accepting the Resolution Plan is under obligation to strike a balance between the interests of the creditors and Corporate Debtor. Resolution Applicant or the promoters of the Corporate Debtor cannot thrust their will on the creditors, who have already been pushed to odd position with regard to the recovery of their legitimate dues, which have been advanced to the Corporate Debtor in the shape of credit against the consideration for the time value of money. Resolution Professional, Adjudicating Authority or the Appellate Authority is/are not empowered to reverse the commercial decision of the CoCs. In view of the reasons recorded by the CoCs for rejection of the Resolution Plan of the Applicant and the legal proposition laid down by the Hon'ble Apex Court in K. SASHIDHAR VERSUS INDIAN OVERSEAS BANK OTHERS [ 2019 (2) TMI 1043 - SUPREME COURT] , the Resolution Applicant has no vested right to challenge the rejection of its Resolution Plan. Therefore, the Application for challenging the rejection of the Resolution Plan is devoid of merit and stands rejected
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2019 (4) TMI 1606
Corporate Insolvency Resolution Process - Corporate Debtor committed default in paying debt - HELD THAT:- Uncontroverted facts stated by the Financial Creditor about the debt and default by the Corporate Debtor. I hold that Financial Creditor proof both the facts that there is financial debt due and payable by the Corporate Debtor and Corporate Debtor committed default in paying the debt. The application filed by the Financial Creditor under section 7 of the Insolvency Bankruptcy Code, 2016 for initiating Corporate Insolvency Resolution Process against the Corporate Debtor, M/s. Venkateshwara Capital Mangement Ltd. is hereby admitted.
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2019 (4) TMI 1605
Corporate Insolvency Resolution Process - Applicant/Corporate Debtor to make payment of outstanding debt failing which the Bank will be forced to take appropriate action for recovery of their dues - Corporate Insolvency Resolution Process is set in motion against the Applicant/Corporate Debtor which ordinarily shall get completed within 180 days, reckoning from the day this order is passed - HELD THAT:- The documents placed on record are clearly evidencing that the Corporate Debtor has committed default in making payment of the amount of loans availed from various Financial Creditors. The Applicant/ Corporate Debtor has proposed the name of the IRP, after seeking consent in Form-2. Hence, the Applicant/Corporate Debtor has fulfilled all the requirements of law for admission of the Application. Therefore, Application filed under Section 10 of the I B Code, 2016, is admitted. The Corporate Insolvency Resolution Process is set in motion against the Applicant/Corporate Debtor which ordinarily shall get completed within 180 days, reckoning from the day this order is passed. Mr. Mathur Sabhapathy Viswanathan, is appointed as IRP. There are no disciplinary proceedings pending against him. The IRP is directed to take charge of the Corporate Debtor s assets and management immediately. The supply of essential goods or services of the Corporate Debtor shall not be terminated or suspended or interrupted during moratorium period. The provisions of Sub-section (1) of Section 14 shall not apply to such transactions, as notified by the Central Government. The IRP shall comply with the provisions of Sections 13(2), 15, 17 18 of the Code. The directors of the Corporate Debtor, its promoters or any person associated with the Management of the Corporate Debtor are/is directed to extend all assistance and cooperation to the IRP as stipulated under Section 19 and for discharging his functions under Section 20 of the I B Code, 2016. The Registry and the Corporate Debtor are directed to send the copy of this Order to the IRP for making compliance with this Order as per the provisions of I B Code, 2016. The Order is dictated and pronounced in the open Court in the presence of the Counsel for the Corporate Debtor and Counsel for the Indian Overseas Bank.
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2019 (4) TMI 1604
Order of Liquidation of the Corporate Debtor - Eighth Committee of Creditors meeting held in which the Resolution Professional informed the Members that no Resolution Plan has been received/ proposed nor the Resolution seemed to be possible, it was proposed that the Corporate Debtor Company be liquidated - HELD THAT:- Resolution Professional informed that during the entire 270 days of the Resolution Process, claims from Financial Creditors, Operational Creditors and other Creditors were received. However, as no Resolution Plan has been received and/ or approved throughout the Resolution Process period, it is pertinent that the Corporate Debtor be Liquidated. The Committee of Creditors members concurred with the views of the Resolution Professional. As a consequence, the RP has preferred this Application U/s. 33 praying for Order of Liquidation of the Corporate Debtor. Resolution Professional has also submitted that the Committee of Creditors had not recommended him to be the Liquidator. The Resolution Professional has also expressed his unwillingness to continue to perform the duties of the Liquidator. This Bench Orders that : i) The Process of Liquidation shall commence as per the Chapter III of the Code from date of this Order. ii) The Resolution Professional (Mr. Rajeev Mannadiar) is now to be termed as Liquidator as per the Provisions of S. 34(1) of the Code. iii) The RP shall advertise in Newspaper about the Liquidation of the Debtor as per the provisions of the Code. iv) Copy of this Order shall be forwarded to the Concerned Authority with which the Debtor is registered. v) The Liquidator is at liberty to seek any directions, if need be, from this Bench during the Liquidation Process.
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Service Tax
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2019 (4) TMI 1599
CENVAT Credit - input services - common input services used for taxable as well as exempt services - non-maintenance of separate records - HELD THAT:- The very basis of the finding is not sustainable in law as the Department has failed to prove that these input services are also used in or in relation to the provisions of exempted services i.e. trading in securities. In the absence of such co-relation, Rule 6(3) is not applicable. Appeal allowed - decided in favor of appellant.
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2019 (4) TMI 1598
Demand of Interest and penalty - irregular availment of CENVAT credit, nut not utilized - allegation against the appellant is that they have availed 100% CENVAT credit on capital goods instead of only 50% of the credit - HELD THAT:- This issue is no more res integra and has been settled by the jurisdictional High Court of Karnataka in the case of COMMISSIONER OF CENTRAL EXCISE SERVICE TAX LARGE TAXPAYER UNIT, BANGALORE VERSUS M/S BILL FORGE PVT LTD, BANGALORE [ 2011 (4) TMI 969 - KARNATAKA HIGH COURT] has held that the assessee is not liable to pay interest if he has not utilized the CENVAT credit and there was sufficient CENVAT credit in the books of the assessee during the relevant time. Demand of interest and penalty do not sustain - appeal allowed - decided in favor of appellant.
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2019 (4) TMI 1597
Refund of unutilized CENVAT Credit - export of output services - fulfilment of conditions of Rule 5 of Export of Services Rules, 2005 read with Notification No. 11/2005-ST dated 19.04.2005 - HELD THAT:- Since, appellant had no scope to use accumulated input Service Tax credits as output services are exported, it availed Rule 5 of Export of Services Rules, 2005 read with Notification No. 11/2005-ST dated 19.04.2005. This being the factual backdrop, the appellant is entitled to get rebate since application was considered to be in proper order and only the conditionality of Export of Services Rules were to be verified. Payment of interest on delayed refund - Since it was held by the Hon'ble Supreme Court in RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. [ 2011 (10) TMI 16 - SUPREME COURT OF INDIA] that explanation appearing below Proviso to Section 11BB introduces a deeming fiction that where the order for refund of duty is not made by the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise but by an Appellate Authority or by the Court, then for the purpose of this Section, the order made by such higher Appellate Authority or by the Court shall be deemed to be an order made under sub-Section (2) of Section 11B of the Act. Therefore, no irregularity can be noticed in the order passed by the Commissioner (Appeals). Appeal dismissed.
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2019 (4) TMI 1596
Liability of tax - appellant had crossed the threshold exemption limit in as much as Mandap Keeper Services were not being taken into consideration by them for the purpose of payment of service tax - HELD THAT:- Undisputedly, the appellant never brought the fact of renting of Mandap to a third person. On the contrary, before both the authorities below, they accepted their tax liability and only sought some time to deposit the same, which, in fact, was also deposited by them - On specifically being asked, learned advocate has not been able to disclose the name of the third person to whom the said Mandap was rented. Apart from that, this being a factual position, cannot be allowed to be raised at the second Appeal stage. Penalty - HELD THAT:- Admittedly it is a case of clandestine activity and not a case of any legal interpretation of provisions - Penalties set aside. Appeal dismissed - decided against appellant.
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2019 (4) TMI 1595
Reverse charge mechanism (RCM) - Remuneration paid to Directors - the assessee company pays remuneration to its whole time directors which has fixed as well as variable components - It is the case of the department that the said remuneration paid to the directors would constitute service liable to service tax in the hands of assessee under reverse charge mechanism - HELD THAT:- The whole time director is essentially an employee of the Company and accordingly, whatever remuneration is being paid in conformity with the provisions of the Companies Act, is pursuant to employer employee relationship and the mere fact that the whole time director is compensated by way of variable pay will not in any manner alter or dilute the position of employer employee status between the company assessee and the whole time director - when the very provisions of the Companies Act makes whole time director (as also in capacity of key managerial personnel) responsible for any default / offences, it leads to the conclusion that those directors are employees of the assessee company. In the present case, the appellant has duly deducted tax under section 192 of the Income Tax which is the applicable provisions for TDS on payments to employees. This factual and legal position also fortifies the submission made by the appellant that the whole time directors who are entitled to variable pay in the form of commission are employees and payments actually made to them are in the nature of salaries. This factual position cannot be faulted in absence of any evidence to the contrary. Demand of service tax on remuneration paid to whole time directors cannot be sustained - appeal allowed - decided in favor of appellant.
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Central Excise
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2019 (4) TMI 1594
Clandestine removal - demand based on the slips recovered from the M/s Baheti Dyechem, whch are relating to trading activity - HELD THAT:- Examination of the slips recovered from premise of Baheti Dyechem at Bhiilwara shows that Annexure C is merely a summary of the said slips. In these circumstances it is apparent that the entire demand of duty is based on the slips recovered from the premise of M/s Baheti Dyechem at Bhilwara. The Commissioner after examining the documents has come to the conclusion that slips recovered at the premise of M/s Baheti Dyechem at Bhilwara are not relating to production activity but relating to trading activity. The impugned order comes to the conclusion that the slips recovered from the M/s Baheti Dyechem do not relates to production activity but trading activity. In these circumstances, the Annexure C to the SCN cannot held to be related to the manufacturing/ production activity as the same is based solely on the slips recovered from the M/s Baheti Dyechem at Bhilwara. Appeal allowed - decided in favor of appellant.
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2019 (4) TMI 1593
Valuation - inclusion of freight or transportation expenses and second stage handling charges in the assessable value - HELD THAT:- The issue is settled in the case of COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE, NAGPUR VERSUS M/S ISPAT INDUSTRIES LTD. [ 2015 (10) TMI 613 - SUPREME COURT] , where it was held that When the goods were handed over to the transporter, the respondent had no right to the disposal of the goods nor did it reserve such rights inasmuch as title had already passed to its customer. The freight or transportation expenses, in the instant case being 2nd stage handling charges, are not to be included in the transaction value for calculating the jute cess payable on the goods cleared through DGS D. Appeal allowed - decided in favor of appellant.
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2019 (4) TMI 1592
Condonation of delay in filing appeal - time limitation - power of Commissioner (Appeals) to condone delay - HELD THAT:- An Appeal can be filed within 60 days from the date of communication of the order but if the Appeal is filed after 60 days but within 30 days after the expiry of 60 days, the Commissioner (Appeals) may condone the delay in filing the Appeal if he is satisfied that the Appellant was prevented by sufficient cause from preferring the Appeal within 60 days. It, therefore, implies that if the Appeal is filed after 30 days after the expiry of the initial 60 days, the delay cannot be condoned. The Supreme Court in SINGH ENTERPRISES VERSUS COMMISSIONER OF C. EX., JAMSHEDPUR [ 2007 (12) TMI 11 - SUPREME COURT OF INDIA] examined the provisions of Section 35(1) of the Act and held that the first proviso to Section 35 (1) makes the position very clear that if the appeal is not preferred within 60 days from the date of communication of the order, then the delay can be condoned if the Appeal is presented within a period of further 30 days only - In the present case admittedly, the appeal that was filed before the Commissioner (Appeals) was not only filed beyond 60 days from the communication of the order, but even beyond the extended period of 30 days and therefore, the Commissioner (Appeals) committed no illegality in rejecting the appeal. Thus, the Commissioner (Appeals) could not have condoned the delay if the appeal was not preferred within 30 days after the expiry of the initial period of 60 days - appeal dismissed - decided against appellant.
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2019 (4) TMI 1591
CENVAT Credit - inputs/capital goods - MS channels, angles, plates joists etc. which were used in manufacture/fabrication/maintenance of the capital goods in their factory - HELD THAT:- This issue is no longer resintegra and has already been decided in favour of the appellant in their own case NAVBHARAT VENTRURES LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, HYDERABAD [ 2018 (3) TMI 840 - CESTAT HYDERABAD] where it was held that these items are eligible for availment of CENVAT credit - credit allowed. Whether or not the materials in question have been used in or in relation to fabrication/maintenance of the capital goods? - HELD THAT:- The Finance Department can show that the materials were received in their factory and they have been allotted to different divisions. Once these were allotted and sent to various divisions of repair and maintenance, it will be difficult to point out as to which angle used in the repair and in particular which has come from stock received from which invoice. Such one to one co-relation in my considered view is difficult except where the factory has sophisticated inventory management system to track each sheet of metal and each angle - thus, the appellant has satisfactorily shown that the materials in question were used in their factory for maintenance/repair of capital goods. Appeal allowed - decided in favor of appellant.
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2019 (4) TMI 1590
CENVAT Credit - manufacture of Cement - capital goods or not - M.S. plates, bars angles, tors, channels and sheets etc. - period of dispute is December 2001 to April, 2003 - HELD THAT:- The larger Bench of this Tribunal in M/S. MANGLAM CEMENT LTD. VERSUS C.C.E., JAIPUR-I [ 2018 (3) TMI 1547 - CESTAT NEW DELHI] where the issue before the larger Bench was whether on Cement and Steel items used for foundation for installation of machinery, which is embedded to earth, the assessee is entitled to avail Cenvat Credit on steel items in terms of Rule 2(k)/2(a) of the Cenvat Credit Rules, 2004, or not, the question has been decided in favour of the assessee. The appellant is entitled to cenvat credit on the items of iron and steel - appeal allowed - decided in favor of appellant.
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2019 (4) TMI 1589
Goods fabricated at site of work for use in construction work at such site - Benefit of N/N. 3/2005-CE, dated 24.02.2005 - HELD THAT:- The site of work is Andaman Nicobar Islands and the goods are fabricated thousands of miles away in Visakhapatnam. The exemption notification 03/2005-CE claimed by the appellant will be applicable only when the structurals are made at the site, not thousands of Kilometers away in Visakhapatnam. Therefore, there is no force in the argument of the appellant that they are entitled to the benefit of exemption notification No. 3/2005-CE. Also they are not covered by the exemption notification No. 32/2005-CE, dt. 17.08.2005 as claimed because they are the manufacturers. Any exemption notification must be viewed strictly against the person who is claiming its benefit - the appellant is not even remotely entitled to the benefit of the exemption notifications which he claimed. Appeal dismissed - decided against appellant.
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2019 (4) TMI 1588
100% EOU - benefit of N/N. 23/2003- CE, dated 01.03.2003 - violation of import conditions - benefit denied on the ground that they were using imported resin and ager in the manufacture of final products cleared to DTA - HELD THAT:- It is the case of the appellant that going by the judgment of Hon ble Apex Court, epoxy resin and ager cannot be considered as raw materials but only as consumables and therefore they are entitled to the benefit of the exemption notification. On an identical issue regarding the same product, the coordinate Bench of the Tribunal at Bangalore in the case of IMPERIAL GRANITES (P) LTD. VERSUS COMMISSIONER OF CUS. C. EX., TIRUPATHI [ 2007 (3) TMI 165 - CESTAT, BANGALORE] held that appellant is entitled to the benefit of exemption notification because epoxy resin and ager are not raw materials but consumables because the granite slabs can not come into existence without use if there are no cracks and fissures. The appellant is entitled to the benefit of the exemption notification No. 23/2003-CE - appeal allowed - decided in favor of appellant.
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2019 (4) TMI 1587
Classification of goods - absorbent cotton wool (non medicated) - whether classifiable under Chapter Heading CETH 5601 2110 or under CETH 3005 9090? - HELD THAT:- On an identical issue in the case of M/S SHANTI SURGICAL PVT. LTD., SHANKET KHERIA DIRECTOR, SUBHASH CHANDRA KHERIA. GM VERSUS COMMISSIONER OF CENTRAL EXCISE, KANPUR [ 2017 (7) TMI 50 - CESTAT ALLAHABAD] , the Bench of the Tribunal at Allahabad has held that absorbent cotton wool is correctly classified under CETH 5601 2110 it being a more specific entry. Absorbent cotton wool manufactured by the appellant falls under CETH 5601 2110 being a more specific classification as well as a later entry in the Central Excise tariff - demand do not sustain - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2019 (4) TMI 1586
Levy of tax on supply of goods by way of or as part of any service - sub-clause (f) of Article 366(29A) of the Constitution of India - HELD THAT:- Issue Rule returnable on 27th June, 2019. Since the constitutional validity of clause (g) of section 2(23) of the Gujarat Value Added Tax Act, 2003 is subject matter of challenge, Issue Notice to the learned Advocate General. By way of interim relief, the respondents are restrained from making any coercive recovery pursuant to the impugned assessment order dated 15.3.2019.
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Wealth tax
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2019 (4) TMI 1610
Asset for the purpose of levying the wealth-tax - agricultural activity was carried out on the land in question - exemption from wealth-tax - HELD THAT:- In the present case it is noticed that the term assets covered under the Wealth-tax Act is defined under section 2(ea) of the Wealth-tax Act in the exception to the said section 2(ea), urban land which is classified as agricultural and in the record of the Government and used for agricultural purposes does not came under the category of urban land for the purposes of definition of the assets on which wealth-tax is to be levied. In the present case the revenue record, i. e., khasra, girdwari copy of which is placed at page Nos. 5 to 10 of the assessee's compilation reveals that on the land belonging to the assessee, crop of paddy and wheat were grown, therefore the land in question was used for the purpose of agricultural activity. Revenue record clearly established that the agricultural activity was carried out on the land in question therefore this was not to be included in the list of the assets for levy of the wealth-tax, accordingly we set aside the impugned order and direct the Assessing Officer not to include the urban land on which agricultural activity was carried out by the assessee in the list of asset for the purpose of levying the wealth-tax. - Decided in favour of assessee.
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