TMI Tax Updates - e-Newsletter
May 30, 2020

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. FUTURE HEARINGS VIA VIRTUAL MADE IN INDIRECT TAXES

   By: Dr. Sanjiv Agarwal

2. Goodwill is IPR ?

   By: Navjot Singh

3. ITC on expenses on account of COVID-19

   By: NiteeshChandra Shukla

4. INPUT TAX CREDIT ON MEDICAL INSURANCE

   By: Navjot Singh

News

1. Tariff Notification No. 48/2020-CUSTOMS (N.T.) in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Silver

2. INDEX OF EIGHT CORE INDUSTRIES (BASE: 2011-12=100) FOR APRIL, 2020

3. Shri Piyush Goyal meets the representatives of traders associations;

Notifications

Customs

1. 10/2020 - dated 29-5-2020 - ADD

Seeks to amend notification No. 27/2015-Customs (ADD) dated 1st June, 2015 to extend the levy of Anti-Dumping duty on acrylic fibres originating in or exported from Thailand for a further period of 6 months.

2. 48/2020 - dated 29-5-2020 - Cus (NT)

Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Silver

DGFT

3. 07/2015-2020 - dated 28-5-2020 - FTP

Amendment in Export Policy of Paracetamol API

GST - States

4. 3240/CTD/GST/2020/1 - dated 5-3-2020 - Puducherry SGST

Amendment in Notification No. 3240/CTD/GST/2019/6, dated 18th October, 2019

Income Tax

5. 30/2020 - dated 28-5-2020 - IT

Income-tax (11th Amendment) Rules, 2020.

Circulars / Instructions / Orders

GST - States

1. 09 T of 2020 - dated 26-5-2020

Clarification in respect of appeal in regard to non-constitution of Appellate Tribunal

DGFT

2. 07/2015-2020 - dated 28-5-2020

Allocation of additional quantity of 3569 MT for export of sugar to USA under Tariff Rate Quota (TRQ)

Customs

3. 26/2020 - dated 29-5-2020

Review of Circular No. 17/2020 dated 03.04.2020 namely, 'Measure to facilitate trade during the lockdown period- section 143AA of the Customs Act, 1962'

4. Instruction No. 7/2020 - dated 28-5-2020

Special drive for disposal of applications for fixation of Brand Rate of Duty Drawback.

Highlights / Catch Notes

Income Tax

• TPO's Rejection of Comparable Profits Method for Arm's Length Price Determination Deemed Legally Unsustainable in India.

  Case-Laws - AT : TP Adjustment - TPO arriving ALP by using TNMM Method and rejecting the CPM Method used by the appellant company for the purpose of determining ALP - In any case, the stand of the TPO was that some of the non-AEs are situated in India, and for this reason, these transactions should not have been treated as valid internal comparables is unsustainable in law, inasmuch as, all it can justify at best is exclusion of such transactions within Indian market, rather than rejecting the method, of ascertaining the ALP, itself.
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• Entity's Online Education Activities Qualify for Tax Exemption u/s 11 as Charitable, Equivalent to Traditional Classrooms.

  Case-Laws - AT : Exemption u/s. 11 - Proof of charitable activities - online educational activities - Attendances are also virtual instead of physical. Chat boxes are medium of group discussion. Strikingly, Timings are 24*7. Still it has all the essential of a “classroom”. It definitely covers ‘process of training, developing the knowledge, skill, mind and character of students’ like normal schooling. Thus, in true sense the activities performed by the assessee are no different from ‘classrooms.’
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• Covid-19 Lockdown Exclusions Suggested for 90-Day Order Pronouncement Rule to Address Pandemic Delays.

  Case-Laws - AT : Pronouncement of orders within 90 days after the conclusion of hearing - Covid-19 epidemic - Worldwide lockdown - We are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by excluding at least the period during which the lockdown was in force.
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• AOP's Dividend Exemption u/s 10(34) Upheld; Trust's Legal Status Not Violated Indian Trusts Act.

  Case-Laws - AT : Exemption u/s 10(34) - assessee's status of an Association of Persons [ AOP] declaring income of Rs. Nil by claiming the dividend as exempt u/s 10(34) - whether the Trust was created in violation of the provisions of the Indian Trusts Act and was therefore not a separate legal entity guided by its deed of formation? - Issues decided in favor of assessee.
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• Tax-Free Income Absent, Section 14A Disallowance Not Applicable; Recalculate Income Excluding Self-Disallowed Amounts.

  Case-Laws - AT : Disallowance u/s 14A r.w rule 8D(2)(iii) - since there is no tax free income, there could not be any disallowance u/s 14A - AO directed to re-compute the income of the assessee after excluding the suo motto amount disallowed by the assessee. Apart from the above disallowance made by the AO on account of administrative expenses is concerned, this also stands deleted.
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• Section 68 Additions Upheld: Lack of Details on Cash Loans from Friends and Relatives Justifies Tax Decision.

  Case-Laws - AT : Additions u/s 68 - in absence of any details of such cash loan received from his friends and relations and considering the fact that the assessee was showing a huge amount of opening cash balance, there was no justification for receiving cash from friends and relations, the addition made by the AO and sustained by the CIT(A) is justified
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• Taxpayer's Rectification Petition u/s 154 Accepted; Error in Tax Return Figures Corrected for Accuracy.

  Case-Laws - AT : Rectification petition u/s 154 - Merely because assessee has inserted some figures, which are not in coherence with the other figures in the income tax return, there is a mistake apparent from the record, which needs to be rectified. Thus, the lower authorities are not justified in rejecting the application under section 154.
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• Income Tax Scrutiny Notice Invalid as Issued by Wrong Authority u/s 143(2.

  Case-Laws - AT : Validity of notice u/s 143(2) - scrutiny assessment - issuance of notice u/s. 143(2) by correct AO - As per CBDT instruction the scrutiny noticemust be issued by the DCIT or ACIT, but in the assessee’s case the scrutiny notice u/s 143(2) was issued by ITO therefore the assessment framed by DCIT is invalid and void.
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Service Tax

• Court Rules No Need to Deduct Unutilized CENVAT Credit in ST-3 Returns; Debiting Required Only for Refund Claims.

  Case-Laws - AT : Refund of unutilized cenvat credit - carried forward of balance cenvat account to TRAN-1 GST Regime - It is not required for the appellant to deduct the amount in the ST-3 returns as and when credit is availed. Only if they intend to file refund claim they are required to debit the same - Therefore the contention of Ld. A.R that assessee ought to have debited the amount during the existence of Finance Act, 1994 itself cannot have substance.
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Central Excise

• Apex Court to Decide on Revenue Authorities' Power to Deny Exemption Under Notification Dated 28.08.1995.

  Case-Laws - HC : Maintainability of appeal - appropriate forum - issue as to whether the said notification would empower the revenue to deny the exemption provided under the notification dated 28.08.1995 is an issue which has to be determined by formulating substantial question of law framed in that regard and same has to be answered - Appeal lies with the Apex Court
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VAT

• Goods Detention and Jurisdiction: Ensuring Single Taxation in Interstate Commerce Under Central Sales Tax Act, 1956.

  Case-Laws - HC : Detention of goods - sale of goods during inter-state movement - Jurisdiction of state - This is on the underlying principle under the Central Sales Tax Act, 1956 that subsequent sale of goods in the course of interstate trade and commerce are not taxed twice.
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• Petitioners Challenge Entertainment Tax on Online Booking, Citing 1939 Tamil Nadu Act's Lack of Internet Provisions.

  Case-Laws - HC : Levy of Entertainment tax - online booking charges - The petitioners have pointed out that the internet and online facility of booking could not have been envisaged in 1939 when the Tamil Nadu Entertainment Tax Act was enacted as a result that a charge in this regard will necessarily stand outside the ambit of ‘entertainment’ - the enactment provides for the State to levy a tax on entertainment and such an enactment is expected to be dynamic and take within its stride all progress in avenues of entertainment including facilities incidental and ancillary thereto, such as, in the present case, ticketing and booking facilities.
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Case Laws:

• GST

• 2020 (5) TMI 634
  Principles of Natural Justice - validity of assessment order - case of petitioner is that petitioner was not granted time to furnish objections to the show cause notice dated 12.12.2019 - HELD THAT:- A bare perusal of the said show cause notice dated 12.12.2019, made available in the typed set of papers, clearly indicates that the respondent issued the show cause notice on 12.12.2019 and confirmed the said proposal also on the same day, which goes against the very basic principles of natural justice, as the petitioner/assessee was not at all given an opportunity to give their objections. Needless to say that an assessment cannot be made without giving an opportunity of hearing to the assessee. The very show cause notice dated 12.12.2019 in effect, confirming the proposal made therein without hearing the petitioner, cannot be sustained and consequently, the order impugned in this writ petition also cannot be sustained. However, as this Court is not inclined to go into the merits of the claim made by the respective parties arising out of the issue raised in the show cause notice, this court is inclined to remit the matter back to the respondent for redoing the assessment once again, after giving an opportunity to the petitioner to put forth their case by way of objections - Petition allowed by way of remand.

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• Income Tax

• 2020 (5) TMI 633
  Notice issued to dead person - HELD THAT:- As petitioner submits AO could not have issued the impugned notice dated 31st March, 2019 upon a dead person - the orders passed in pursuance to the said notice are a nullity. Learned counsel for petitioner states that no notice was ever served upon the legal heirs within time and thus the proceedings are barred by limitation. In support of his submission, he relies upon Durlabhai Kanubhai Rajpara vs. Income Tax Officer Ward 1(3)(7), Surat, [ 2019 (4) TMI 784 - GUJARAT HIGH COURT ]; Rajender Kumar Sehgal vs. Income Tax Officer Ward 56(1) New Delhi, [ 2018 (12) TMI 697 - DELHI HIGH COURT ]; and Sumit Balkrishna Gupta vs. Asstt. Commissioner of Income Tax, Circle 16(2), Mumbai Ors. , [ 2019 (2) TMI 1209 - BOMBAY HIGH COURT ] . Issue notice. Mr. Zoheb Hossain, learned standing counsel accepts notice on behalf of the respondent. He prays for and is permitted to file a counter-affidavit/ reply-affidavit within a week.

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• 2020 (5) TMI 632
  Revision u/s 263 - Computation of taxation of profits of the Industrial Undertaking u/s 80-I - amounts of duty draw back received for the manufactured goods exported by it - HELD THAT:- It is a matter of record that the Assessing Officer while restricting the deduction under Section 80-I allowed deduction on duty draw back in respect of the goods manufactured and exported. The 1st Appellate Authority noted the contention of the assessee that the dispute was that the assessee claimed deduction under Section 80-I on the goods bought from market and exported. The Appellate Authority held that the assessee is entitled to deduction under Section 80-I proportionately on the goods manufactured and exported. The dis-allowance of deduction under Section 80-I on the goods purchased from market and exported was upheld. Tribunal rightly observed that the issue whether deduction under Section 80-I is available on duty draw back on manufactured goods was never specifically dealt in appeal. There was no occasion for raising the issue as the deduction was allowed by the AO. There is no quibble that the Commissioner (Appeals) as per the explanation to Section 251 of the Act can consider the matter arising out of the proceedings in which the appeal is filed irrespective of the fact that the said matter has not been raised by the appellant. There is also no dispute/ that as per explanation 1(c) to Section 263(1), the revision cannot be done of the issue which has been considered and decided in appeal. In the present case, the issue whether the assessee was entitled to deduction under Section 80-I of the Act on duty draw back with regard to goods manufactured and exported was neither considered nor decided in appeal. The reliance on certain part of the order by learned counsel for the appellant is not well founded. The said observations were vis-a-vis the proportionate deduction under Section 80-I qua the goods manufactured and exported. The reliance on the decision of Gujarat High Court in [ 2003 (4) TMI 77 - GUJARAT HIGH COURT] does not enhance the case of the assessee, as already discussed, the issue taken up in revision was not subject matter of appeal - Decided against assessee. Disallowing the exemption in respect of duty draw back while computing the tax free profit u/s 80-I - HELD THAT:- As decided in M/s Nahar Spinning Mills Ltd. [ 2010 (11) TMI 1099 - PUNJAB AND HARYANA HIGH COURT] in the case of the assessee itself deciding the following question in favour of the revenue.

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• 2020 (5) TMI 631
  TP Adjustment - Enhancement of adjustment/disallowance without show cause notice - Principles of natural justice violated - HELD THAT:- In the present case, the ALP adjustment has been made by the TPO and the DRP has enhanced the same. In the DRP order itself, it has been stated that the TPO has suggested that the adjustment/ disallowance [Emphasis, by underlining, supplied by us now] of .. is justified . That, however, is factually incorrect and legally unsustainable in law. Neither the ALP adjustments can be equated with disallowances of expenses, even though effect may be same, nor the TPO has the authority to disallow the expenses. Clearly, the impugned ALP adjustments are vitiated in law for this short reason alone. In any case, the observations with respect to the lack of evidence in support of the benefits is based on sweeping generalizations and is incapable of sustaining legal scrutiny. All the three ALP adjustments namely Research Development expenses, Management fees and Tender cost stand deleted. Pronouncement of orders within 90 days - Covid-19 epidemic - Worldwide lockdown - HELD THAT:- The extraordinary steps taken suo motu by Hon ble jurisdictional High Court and Hon ble Supreme Court also indicate that this period of lockdown cannot be treated as an ordinary period during which the normal time limits are to remain in force. In our considered view, even without the words ordinarily , in the light of the above analysis of the legal position, the period during which lockout was in force is to excluded for the purpose of time limits set out in rule 34(5) of the Appellate Tribunal Rules, 1963. Viewed thus, the exception, to 90-day time-limit for pronouncement of orders, inherent in rule 34(5)(c), with respect to the pronouncement of orders within ninety days, clearly comes into play in the present case. Of course, there is no, and there cannot be any, bar on the discretion of the benches to refix the matters for clarifications because of considerable time lag between the point of time when the hearing is concluded and the point of time when the order thereon is being finalized, but then, in our considered view, no such exercise was required to be carried out on the facts of this case.

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• 2020 (5) TMI 630
  TP Adjustment - MAM - TNMM v/s CPM - TPO arriving ALP by using TNMM Method and rejecting the CPM Method used by the appellant company for the purpose of determining ALP - HELD THAT:-Geographical difference, by itself, does not render an independent transaction uncomparable with controlled transaction. Geographical location, by itself, is not an important factor for deciding comparability of an uncontrolled transaction, its importance lies in being one of the factors which could affect the market conditions in which respective parties operate. Unless market conditions, in which uncontrolled transactions have taken place, are materially different vis- -vis conditions in which international transaction has taken place, and such a difference is on account of geographical location of the market, geographical location of the market is of no consequence in judging comparability of an uncontrolled transaction for the purpose of ascertaining the ALP. In respect of consultancy services in such highly sophisticated area as oil and gas sector, the fact that the client is in jurisdiction A and B, by itself, does not make such factor on standalone basis. This objection of the TPO that merely because clients are located at different geographical location, the prevailing market conditions will be different proceeds on the unproven assumption that that the scope of such market as consultancy services with respect to oil and gas sector in India is based on location of the client and that, therefore, it has a bearing on the profit margin. Unlike the market for a physical product, the market for consultancy services of such a nature is unlikely to be restricted to national boundaries, and, therefore, location of some of the clients at one location or the other would not really matter. In any case, the stand of the TPO was that some of the non-AEs are situated in India, and for this reason, these transactions should not have been treated as valid internal comparables is unsustainable in law, inasmuch as, all it can justify at best is exclusion of such transactions within Indian market, rather than rejecting the method, of ascertaining the ALP, itself. In our considered view, therefore, none of the reasons assigned by the TPO, for rejection of the CPM, was thus sustainable in law. TPO does indeed have powers, under section 92C(3), where he is, inter alia, of the opinion that the most appropriate method for ascertaining the arm s length price has not been used for determination of arm s length price, to proceed with his determination of arm s length price in accordance with section 92C(1) and 92C(2), and, by implication, adopt what he perceives to be the most appropriate method. However, this can only be done by following the course laid down in proviso to Section 92C(3), i.e. by issuing specific show cause notice to that effect by the TPO, and the reasons so assigned for rejection of the most appropriate method, adopted by the assessee, are subject to judicial scrutiny. For the detailed reasons set out above, we find that the reasoning adopted by the TPO was incorrect and thus unsustainable in law. Accordingly, the impugned ALP adjustment of Rs. 1,80,00,639 by rejecting the CPM method adopted by the assessee and by adopted the TNMM method, for ascertaining the arm s length price, must be deleted for this short reason alone. Pronouncement of orders within 90 days - Covid-19 epidemic - Worldwide lockdown - HELD THAT:- Rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by excluding at least the period during which the lockdown was in force. We must factor ground realities in mind while interpreting the time limit for the pronouncement of the order. Law is not brooding omnipotence in the sky. It is a pragmatic tool of the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted. The interpretation so assigned by us is not only in consonance with the letter and spirit of rule 34(5) but is also a pragmatic approach at a time when a disaster, notified under the Disaster Management Act 2005, is causing unprecedented disruption in the functioning of our justice delivery system. The extraordinary steps taken suo motu by Hon ble jurisdictional High Court and Hon ble Supreme Court also indicate that this period of lockdown cannot be treated as an ordinary period during which the normal time limits are to remain in force. In our considered view, even without the words ordinarily , in the light of the above analysis of the legal position, the period during which lockout was in force is to excluded for the purpose of time limits set out in rule 34(5) of the Appellate Tribunal Rules, 1963. Viewed thus, the exception, to 90-day time-limit for pronouncement of orders, inherent in rule 34(5)(c), with respect to the pronouncement of orders within ninety days, clearly comes into play in the present case. Of course, there is no, and there cannot be any, bar on the discretion of the benches to refix the matters for clarifications because of considerable time lag between the point of time when the hearing is concluded and the point of time when the order thereon is being finalized, but then, in our considered view, no such exercise was required to be carried out on the facts of this case.

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• 2020 (5) TMI 629
  Income accrued in India - PE in India - use or hire of the containers in international traffic - India UK DTAA - HELD THAT:- Payment of arm s length remuneration to the agent, and taxability of income embedded in such payment in India, is not even in dispute before us, the stand of the authorities below cannot be approved. Given this finding, it is immaterial as to whether the DAPE existed or not, for the simple reason that, as the binding legal position is, the existence of DAPE is wholly tax neutral. We are aware that on a conceptual note, a PE, whether a fixed base PE, DAPE or any other type of PE, provides for threshold limits to trigger taxation in the source state, but then if as a result of a DAPE, no additional profits, other than agent s remuneration in the source country - which is taxable in the source state anyway de hors the existence of PE, become taxable in the source state, the very approach to the DAPE profit attribution may indeed seems incompatible with the above legal position. It may sound incongruous from an academic point of view but then that s what the law is. We hold that once an agent has been paid arm s length remuneration, and the income embedded in such remuneration has been taxed in India, no further profits can be taxed in the hands of the DAPE. Accordingly, the action of the authorities below, in bringing income of the DAPE- independent of the agency remuneration received by the agent of the assessee, is unsustainable in law. We, therefore, uphold the plea of the assessee and delete the impugned addition in the hands of the assessee. Pronouncement of orders within 90 days - Covid-19 epidemic - Worldwide lockdown - HELD THAT:- An unprecedented situation not only in India but all over the world. Government of India has, vide notification dated 19th February 2020, taken the stand that, the coronavirus should be considered a case of natural calamity and FMC (i.e. force majeure clause) maybe invoked, wherever considered appropriate, following the due procedure . The term force majeure has been defined in Black s Law Dictionary, as an event or effect that can be neither anticipated nor controlled When such is the position, and it is officially so notified by the Government of India and the Covid-19 epidemic has been notified as a disaster under the National Disaster Management Act, 2005, and also in the light of the discussions above, the period during which lockdown was in force can be anything but an ordinary period. In the light of the above discussions, we are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by excluding at least the period during which the lockdown was in force. Period during which lockout was in force is to excluded for the purpose of time limits set out in rule 34(5) of the Appellate Tribunal Rules, 1963. Viewed thus, the exception, to 90-day time-limit for pronouncement of orders, inherent in rule 34(5)(c), with respect to the pronouncement of orders within ninety days, clearly comes into play in the present case. Of course, there is no, and there cannot be any, bar on the discretion of the benches to refix the matters for clarifications because of considerable time lag between the point of time when the hearing is concluded and the point of time when the order thereon is being finalized, but then, in our considered view, no such exercise was required to be carried out on the facts of this case.

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• 2020 (5) TMI 628
  Revision u/s 263 - applicability of the provisions of section 2 (15) - exemption u/s. 11 - Proof of charitable activities - Assessee providing virtual education - organizing innovative IT Education and training program - HELD THAT:- If the activities carried out by the assessee are visualized Assessee is not engaged in any other activity other than education. Therefore, for this reason, we are of the view and hold so that the learned CIT E is not correct in holding that assessee is not engaged in educational activities covered under section 2 (15) of the Act. No evidences have been put forth by the revenue except merely an allegation of violation of the provisions of section 13 (1) (C) - It has not been shown that how the assessee has conferred any benefit directly or indirectly on any person. It is also not shown that who are those persons who are fulfilling the criteria of section 13 (3) of the act. Thus, the order of the learned CIT exemptions so far as this issue is involved is not supported by any evidence. It is apparent from the assessment order and the communication made by the assessee during the course of assessment proceedings before the assessing officer it is apparent that all and every aspect of the assessment of the income of the assessee have been examined by him. AO has in detailed look into the activities, object, the functions, nature of receipts, nature of expenditure, applicability of service tax, applicability of tax deduction at source credit and above all the applicability of the provisions of section 2 (15) of the act. Thereafter, AO has granted assessee the benefit of being an educational Institute. It is not required for the assessing officer to examine how the payer of an income has dealt with receipt of an income in the hands of the assessee. This cannot be a general law but in the specific facts of the case where the payment made by the parties are subjected to tax deduction at source under section 194J of the income tax act cannot go against the assessee. The learned CIT exemption has not in substance held that any due enquiry which should have been made by the assessing officer has not been made by him. Perhaps at the level of enquiry and the manner of enquiry may be different because of change in perception. However, that does not make the order erroneous. Assessee is carrying on educational activities which are covered by the provisions of section 2 (15) of the income tax act and it is neither business nor profession of the assessee. It definitely constitute a charitable activity as it does not charge the fees at the level of market rate and even otherwise the surplus generated is also used for charitable activities of education. This is the finding of the learned assessing officer for assessment year 14 15 and for earlier assessment years. In view of this, the order passed by the assessing officer is not at all erroneous. Education is no exception. Naturally, classrooms have no bricks and mortar, no benches and blackboards. Blackboard Collaborate and digital white boards have replaced blackboards. Teachers and students do not assemble at one place but they reach each other on cloud through Meets, Teams, WebEx and Zoom! Such cloud classes have wide representation of students across the globe blurring the geographies of traditional classrooms. Attendances are also virtual instead of physical. Chat boxes are medium of group discussion. Strikingly, Timings are 24*7. Still it has all the essential of a classroom . It definitely covers process of training, developing the knowledge, skill, mind and character of students like normal schooling. Thus, in true sense the activities performed by the assessee are no different from classrooms. Therefore, we set aside and quash the order passed by the learned CIT exemption under section 263 - Decided in favour of assessee.

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• 2020 (5) TMI 627
  Disallowance u/s 14A r.w.r. 8D - CIT(A) upheld rejection of suo motu disallowance offered by the assessee but gave some partial relief on the computation part - as pointed out by the assessee that at best entire expenses of project and investment department could be treated as expenditure incurred by the assessee in relation to income which does not form part of the total income - HELD THAT:- AO cannot reject the suo motu disallowance offered by the assessee on the ground that such a disallowance under rule 8D will be more; that s putting cart before the horse. Quite to the contrary, an AO can resort to rule 8D only when, as per the prescription of Section 14A(2) the Assessing Officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act . That satisfaction, as required, u/s14A(2), for invoking rule 8D, cannot be on the basis of mechanism of rule 8D itself; it has to be independent of rule 8D. AO has noted the explanation of the assessee and proceeded to disregarded the same on the basis of working of rule 8D(2)(i) and 8D(2)(iii). There is no other, and in fact no, reason for rejection of the computation of disallowance by the assessee. On the fact of this case, there is not even a whisper of the reason, barring reference to rule 8D(2)(i), for rejecting the suo motu disallowance offered by the assessee. On these facts, and for the detailed reasons set out above, the Assessing Officer was in error in invoking rule 8D(2). We, therefore, deem it fit and proper to direct the Assessing Officer to delete the impugned additional disallowance under section 14A read with rule 8D, and to thereby accept the suo motu disallowance offered by the assessee. Once we hold so, all other issues raised in these appeals become wholly academic and infructuous, and there is no need to adjudicate on the same. Pronouncement of orders within 90 days - Covid-19 epidemic - Worldwide lockdown - HELD THAT:- We are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by excluding at least the period during which the lockdown was in force. We must factor ground realities in mind while interpreting the time limit for the pronouncement of the order. Law is not brooding omnipotence in the sky. It is a pragmatic tool of the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted. We are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by excluding at least the period during which the lockdown was in force. We must factor ground realities in mind while interpreting the time limit for the pronouncement of the order. Law is not brooding omnipotence in the sky. It is a pragmatic tool of the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted.

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• 2020 (5) TMI 626
  Exemption u/s 10(34) - assessee s status of an Association of Persons [ AOP] declaring income of Rs. Nil by claiming the dividend as exempt u/s 10(34) - whether the Trust was created in violation of the provisions of the Indian Trusts Act and was therefore not a separate legal entity guided by its deed of formation? - settlor was also the sole beneficiary of trust - HELD THAT:- Undoubtedly, the trust is belonging to Escorts Ltd , it is the settlor and it is the beneficiary - that does not mean that it is the trustee also. AO has not brought on record any evidence to show that Escorts Limited is the trustee of the assessee. Therefore, the allegation of ld AO that Escorts Limited is also the trustee is devoid of any merit and based on mere conjectures and surmises. Further the sole beneficiary is Escorts Limited and Settlor of the trustis Escorts Limited is the major reason why the ld AO is refusing to recognize the above trust. Honorable Gujarat High court has answered it in BHAVNA NALINKANT NANAVATI [ 2002 (1) TMI 48 - GUJARAT HIGH COURT] where the settlor was also the sole beneficiary was held to be a valid trust. Revenue did not show us any bar in the trust act where the settlor cannot be beneficiary of that trust. Assessee also submitted identical structures in case of Mahartana Companies, which were not found be violating Trust Act. Therefore, we do not find any infirmity in the Escorts Limited being the settlor and sole beneficiary of the trust. Assessment of the trustee in Representative capacity in terms of provision of section 160 and 161 of The Income tax Act - In the present case, the income on behalf of the beneficiary i.e. M/s Escorts Ltd. is received by the assessee. Therefore it is liable to be assessed as a representative assesse as the income earned by it for the benefit of Escorts Ltd. On appeal, the ld CIT (A) reversed the position. CIT(A) has misconstrued the issue. All that the appellant had contended was that the AO having accepted the status of a representative assessee, should have carried the matter to its logical conclusion by exempting the dividend income u/s 10(34) of the Act, in conformity with the provisions of Section 161(1) of the Act and which was the contention before us as well. Coming to the issue of dividend which is interconnected, the same has been subjected to dividend distribution tax, being a dividend referred to in Section 115-O - Considering the taxability of the said dividend in the case of EL the beneficiary, the same would not be taxable since the dividend was exempt u/s 10(34) of the Act. There is no reason for the ld AO to treat it as any other receipt other than dividend and then to tax it as income from other sources. Admittedly, in this case the dividend is subject to dividend distribution tax. According to section 10 (34 ) of the act same is exempt. As per the depository system of holding shares, the shares owned by a private trust are held in a demat account in the names of the trustee/trustees which in the present case was Shri S.A. Dave and the same depiction appeared in the audited accounts for the relevant period - requirements of a shareholder receiving the dividend also stood satisfied in the case of the appellant and benefit of the exemption u/s 10(34) would be available as it would be in the hands of the beneficiary i.e. EL. Appellant s alternative submission that irrespective of the treatment in the assessment, the benefit of the exemption u/s 10(34) of the Act cannot be denied and that the colour of the receipt would not change in the absence of any statutory provision has substantial merit - Revenue could not show us any provision in the act, which can change the characterization of dividend receipt as income from other sources. Such rights are probably available the ld AO, if at all, u/s 98 of the act only in case of impermissible avoidance arrangement. Such is not the case in the impugned appeal. Thus, In our opinion the AO was not justified in changing the nature of the receipt, which continued to remain a dividend irrespective of whatever view was expressed in the assessment. Hence, we hold that the appellant was required to be assessed in the status of a representative assessee and consequently to the same tax treatment as would have been accorded to the beneficiary vis exemption u/s 10(34) in respect of the dividend. Appellant contends that the AO cannot go behind the scheme of arrangement and amalgamation duly sanctioned by the High Court, more so when the tax authorities assessing the amalgamating companies have completed their assessment u/s 143(3) of the Act without demur -The income of the assessee is required to be assessed by the Assessing officer as defined u/s 2(7A) of The Income Tax Act according to the provisions and procedures enshrined there in. The schemes of merger, amalgamation and corporate restructuring may grant certain relief or concession to the parties, but it cannot be said that even if they are in violation of the tax lawsit should be accepted by revenue as it is. Thus merely because schemes of corporate restructuring sanctioned by the high court or any other authority does not prevent assessing office in assessing the Income of the assessee. Off course, necessary relief granted may be allowed by him. In conclusion, Ground No.3 is disposed-off in terms indicated. Conclusions drawn from the statements of the trustees recorded u/s 131 and allegation of tax evasion thus creation of the trust being a colorable device - Adverting to the view expressed by the AO and the Ld. CIT(A) that the trustees have acted on a notional basis and that the real trustee is EL along with being the settlor and the sole beneficiary, at the outset , we hold that the appellant trust was formed with the sole object of holding the shares of EL on behalf of the sole beneficiary i.e. EL. The single pay out on account of dividend was directly credited to the bank account of the trust and by the same mode paid over to the sole beneficiary. In other words other than bank charges and audit fee, there was no likelihood of any other expenditure being incurred such as the one contemplated by the Ld. CIT(A) in Para 10.2.8 of his order. The same logic would apply to the non-existence of any other asset and in our opinion the allegation that the facilities of M/s EL have been utilized, is an assumption, there being no legal basis for an adverse view on the common address of the appellant trust and M/s EL. Admittedly even as per the revenue the creation of an identical trust with similar clauses has been accepted and in our view there is no reason to draw adverse inferences in the case of the assessee about the appellant trust not being an irrevocable trust or the trustees, acting on a notional basis or EL acting in the capacity of a trustee also.In view of the discussion, aforesaid Ground No. 6 in the appeal is allowed.

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• 2020 (5) TMI 625
  Disallowance u/s 14A r.w rule 8D(2)(iii) - disallowance suo motto by assessee - HELD THAT:- If something has been offered by an assessee patently under some misconstruction of law, then the revenue cannot be permitted to plead that since the assessee has offered as its income, therefore, it has to be taxed. Therefore which is based on large number of decisions including that of Hon ble jurisdictional High Court in the case of S.R. Koshti [ 2004 (12) TMI 62 - GUJARAT HIGH COURT] allow the additional ground of appeal as well as original ground raised by the assessee. In other words, since there is no tax free income, there could not be any disallowance under section 14A - direct the AO to re-compute the income of the assessee after excluding the suo motto amount disallowed by the assessee. Apart from the above disallowance made by the AO on account of administrative expenses is concerned, this also stands deleted. Both amounts be excluded from the computation of income, and thereafter income of the assessee be duly determined. - Appeal of the assessee is allowed.

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• 2020 (5) TMI 624
  Assessment u/s 153A - reliance is placed on the incriminating material found during the course of search of third-part - HELD THAT:- As perused copy of the Panchnama through which the documents in dispute was seized. On perusal of the Panchnama, we find that the Panchnama is not containing the name of the assessee. Therefore, it is evident that the material relied upon for making the impugned addition was not found from the premises of the assessee. during relevant period, for using any material found from the premises of the third party during the course of the search in the assessment proceedings of the assessee, the Assessing Officer of the third party was required to record satisfaction as the material belonging to the assessee in terms of section 153C of the Act and was then required to proceed as per the provisions of section 153C of the Act. In the instant case, it is evident that addition in dispute has been made in the assessment completed under section 153A of the Act. Assessing Officer is required to follow the procedure laid down in the Act for making the assessment and he cannot devise his own procedure. In our considered opinion, when the case of the assessee is covered under the provision of section 153 of the Act and if reliance is placed on the incriminating material found during the course of search of third-party, then provisions of section 153C of the Act would be applicable and have to be adhered to. Hon ble Delhi High Court in the case of Pr. CIT vs. Meeta Gutgutia [ 2017 (5) TMI 1224 - DELHI HIGH COURT] has held that the invocation of section 153A to re-open concluded assessments of assessment years earlier to year of search was not justified in absence of incriminating material found during search qua each such earlier assessment year. Also confirmed by SC[ 2018 (7) TMI 569 - SC ORDER] Apparently, in the present case, no incriminating material was found qua the assessment year in question. Therefore, the assessment framed by the Assessing Officer in violation of the procedure provided in the Act is bad in law and void ab initio and cannot be sustained. - Decided in favour of assessee.

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• 2020 (5) TMI 623
  Capital gain on sale of land - whether the land in question is agricultural land or not? - assessee have filed certificate from the Tehsildar and copies of Khasra and Khatauni in support of their claim that the land in question was agricultural - HELD THAT:- In view of the various documents filed by the assessee in support of their claim of the land being agricultural in nature, which were totally ignored by the lower authorities, and the fact that the two assesses i.e. Mrs. Urmila Ghanshyam Dass Ghiraiya and Smt. Usha Devi have been regularly showing agricultural income in their returns of income, we are unable to subscribe to the conclusion arrived at by the CIT (A) that the land in question was not agricultural land. Accordingly, while holding that the land in question was agricultural land - Decided in favour of assessee.

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• 2020 (5) TMI 622
  Addition on account of notional interest on interest free advances given - addition being deemed interest @ 15% on such interest free advances - HELD THAT:- Referring to submission that the assessee has a capital balance and unsecured interest free loan and, therefore, no disallowance is called for - when the assessee has trade dealings with persons to whom advances were made and looking to the business expediency, disallowance of interest is not permissible. We find force in the above argument of the assessee. However, as mentioned by the Ld. CIT(A), the assessee has not submitted any reconciliation to show that the advances have been made out of non-interest bearing funds. The assessee also could not substantiate before us the trade dealings with the persons to whom such interest free advances are given - restore the issue to the file of the AO with a direction to give one more opportunity to the assessee to substantiate his case. The first issue raised by the assessee in the grounds of appeal is accordingly allowed for statistical purposes. Addition of unexplained creditors - HELD THAT:- Referring to assessee submission that all the details were given before the CIT(A) and it was submitted that purchases have been made from the parties continuously throughout the year for which cheques were issued to them at the end of the year. However, we find the ld.CIT(A) sustained the addition on the ground that the cheques were not encahsed during the year and the amounts were unpaid and the assessee did not furnish any further details to show when and how the payments to the sundry creditors have been made in subsequent years. Restore the issue to the file of the AO with a direction to give one final opportunity to the assessee to substantiate regarding the subsequent clearance of the cheques and give an opportunity to the assessee to file confirmations from the said sundry creditors. The Ground No.2 raised by the assessee is accordingly allowed for statistical purposes. Addition on account of low household expenses, loans from friends and opening cash - HELD THAT:- When the assessee is having a turnover of more than Rs. 3 crores during the year and the assessee has filed the cash flow statement of the whole year and the assessee is a person of means, therefore, merely because the assessee has not deposited the cash in bank account cannot be a ground for disbelieving the opening cash of Rs. 99,125/- which, in the peculiar facts and circumstances of the case, appears to be reasonable. We, therefore, set aside the order of the CIT(A) on this issue and direct the AO to delete the addition. So far as the amount received by the assessee from his friends and relations in cash is concerned, no justification or no details whatsoever was filed either before the AO or before the CIT(A) or even before us. Therefore, in absence of any details of such cash loan received from his friends and relations and considering the fact that the assessee was showing a huge amount of opening cash balance, there was no justification for receiving cash from friends and relations, the addition made by the AO and sustained by the CIT(A) is justified. - Decided partly in favour of assessee. Addition of transportation expenses and HRA - HELD THAT:-, we find in absence of any supporting details regarding the transportation expenses and house rent allowance, the AO made the additions. Since no details were furnished before the CIT(A) he also sustained the addition. It is the submission of the ld. Counsel that these are part of the salary statement and the lower authorities have not gone through the same - restore the issue to the file of the AO with a direction to give one final opportunity to the assessee to substantiate the same. Ground No.5 raised by the assessee is accordingly allowed for statistical purposes. Deduction under the head Property income - HELD THAT:- We find it is the submission of the ld. Counsel that the statutory deduction u/s 24 of the IT Act was not granted by the AO or the CIT(A). We, therefore, deem it proper to restore the issue to the file of the AO with a direction to verify the details and allow the statutory deduction allowable to the assessee from his income from house property as per law.

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• 2020 (5) TMI 621
  Rectification petition u/s 154 - demand raised by the Ld AO under section 115WE - assessee value of fringe benefit tax shown is wrongly computed - HELD THAT:- The assessee is constantly saying that there is an error in the value of fringe benefits shown by the assessee in the income tax return of income in part C computation of fringe benefits and fringe benefit tax Apparently the total of four quarters is only Rs. 2 876308/ however the assessee has also put a figure of total of fringe benefits as 509560. Apparently there is an error apparent from the record. Either the total of Rs. 2876308/- is correct or actual value of total fringe benefits is Rs. 5 09560 is correct. Hence, there is an apparent error, which needs to be rectified. The central processing centre has taken the correct value of the fringe benefits automatically whereas it did not pay any heed to the figures mentioned of total fringe benefits of Rs. 5 09560. Naturally, there is an error in the return of income filed by the assessee apparently. Assessee cannot be asked to pay the tax on incorrect computation. He can be burdened with the tax liability only on the correct value of the fringe benefits. The assessee is saying that there is an error in input of figures of four quarters, which is the total of expenses and not the value of fringe benefit in those expenses. No infirmity in the request of the assessee. Merely because assessee has inserted some figures, which are not in coherence with the other figures in the income tax return, there is a mistake apparent from the record, which needs to be rectified. Thus, the lower authorities are not justified in rejecting the application under section 154 -direct the assessee to substantiate the correct figure for all the four quarters before the assessing officer, who is further directed to charge the correct fringe benefit tax payable by the assessee after proper verification - Decided in favour of assessee for statistical purposes.

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• 2020 (5) TMI 620
  Stay petition - condition of payment to grant the stay of demand - pandemic Covid-19 situation and worldwide lockdown - limited working of courts - HELD THAT:- As decided in case of M/s Steria (India) Ltd [ 2020 (5) TMI 444 - ITAT DELHI] as taken note of such extraordinary situation, the Hon ble Supreme Court of India in Suo Motu Writ Petition [ 2020 (5) TMI 418 - SC ORDER] exercised the power under Article 142 read with Article 144 of the Constitution of India, and mitigated the difficulties that would be faced by the litigants across the country in filing their petitions/applications/suits/appeals/all other proceedings within the period of limitation prescribed under the general law of limitation or under Special Laws by extending such period of limitation with effect from 15th March, 2020 till further orders. Similarly, Hon ble Delhi High Court [ 2020 (3) TMI 1186 - DELHI HIGH COURT] took suo motu cognizance of the extraordinary circumstances prevailing on account of nationwide lockdown necessitated due to the spread of COVID-19, and directed that, in all matters pending before it or any courts subordinate to it, where any interim orders concerning stay, etc. were subsisting as on 16th March, 2020 and which were to expire thereafter, the same shall stand automatically extended till 15th May, 2020 or until further orders. As in the present case the stay already granted by the Tribunal vide order dated 8th November, 2020 stood extended till 15th June, 2020.

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• 2020 (5) TMI 619
  Penalty proceedings u/s 271 (1)(c) - Defective notice - non deletion of appropriate words from notice - addition on account of sale of shares and unexplained credit - HELD THAT:- There is no concealment in the present case. Assessee has also filed all the details during the regular assessment proceedings. From the notices dated 23.12.2011 and 15.03.2016 produced by the Ld. AR during the hearing, it can be seen that the AO was not sure under which provisions of Section 271 of the Income Tax Act, 1961, the assessee is liable for penalty. The issue is squarely covered by the decision of the Hon ble Supreme Court in case of M/s SSA Emerald Meadows. [ 2016 (8) TMI 1145 - SC ORDER]. Inappropriate words in the penalty notice has not been struck off and the notice does not specify as to under which limb of the provisions, the penalty u/s 271(1)(c) has been initiated, therefore, we are of the considered opinion that the penalty levied u/s 271(1)(c) is not sustainable and has to be deleted. - Decided in favour of assessee.

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• 2020 (5) TMI 618
  Validity of notice u/s 143(2) - scrutiny assessment - issuance of notice u/s. 143(2) by correct AO - monetary limits for assigning the cases for the purpose of scrutiny u/s 143(3) - Assessing Officer Jurisdiction - Whether notice of scrutiny u/s 143(2) was issued by the ITO, Ward-5(2), Kolkata who does not have jurisdiction to issue scrutiny notice to the assessee company ? - HELD THAT:- Notice u/s 143(2) of the Act is a sine qua non for an assessment to be framed u/s 143(3) of the Act, which must be issued by the jurisdictional Assessing Officer. The CBDT has issued instruction no. 01/2011 wherein the CBDT has declared the monetary limits for assigning the cases for the purpose of scrutiny u/s 143(3) of the Act by the Income Tax Officer, Deputy Commissioner and Assistant Commissioner. As per CBDT instruction no. 01/2011 the scrutiny notice u/s 143(2) must be issued by the Deputy Commissioner or Assistant Commissioner, but in the assessee s case the scrutiny notice u/s 143(2) was issued by Income Tax Officer, Ward-5(2), Kolkata therefore the assessment framed by Deputy Commissioner of Income Tax, Circle10(2), Kolkata is invalid and void, and hence we quash the assessment order u/s 143(3) dated 28.03.2015. Since we have quashed the assessment order and cross objections raised by the assessee are allowed on the legal issue therefore we do not adjudicate the Revenue s appeal on merits. - Decided in favour of assessee.

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• 2020 (5) TMI 617
  Disallowance of additional ESOP expenses - HELD THAT:- We note that this issue stands squarely covered by the decision of Special Bench of the Tribunal in the case of Biocon Ltd. Vs. DCIT [ 2013 (8) TMI 629 - ITAT BANGALORE] and also in assessee s own case for the AY 2013-14 [ 2018 (12) TMI 1724 - ITAT KOLKATA]. Addition towards exchange loss - MTM profit on derivative contract from the computation of income - CIT-A deleted the addition - HELD THAT:- We note that this issue is covered in favour of the assessee in assessee s own case for the AY 2013-14 in [ 2018 (12) TMI 1724 - ITAT KOLKATA] and the Ld. DR could not point out any change in facts or law which would have warranted any interference on the part of us. In the absence of the same, we note that the issue under dispute had been dealt elaborately by the Ld. CIT(A), supra which we agree and thus in our considered opinion, does not call for any interference.

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• 2020 (5) TMI 616
  Revision u/s 263 - Deduction u/s 80IA - as per CIT-A since the Assessee in the present case had filed the return of income on 23-11-2011 which was beyond the time allowed u/s 139(1) for assessment year 2011-12, the AO ought not to have allowed deduction u/s 80IA - HELD THAT:- It is not disputed before us that in view of the decision in the case of M/s Saffire Garments vs ITO [ 2012 (12) TMI 193 - ITAT RAJKOT] wherein the provisions of section 80AC were held to be mandatory and that an assessee who does not file its return of income on or before the due date prescribed u/s 139(1) of the Act will not be entitled to claim deduction u/s 80IA of the Act. Therefore on merits of the claim for deduction u/s.80IA of the Act, the Assessee has no case. We are of the view that in the present case, the order of the AO is erroneous and prejudicial to the interest of revenue for the failure on the part of the AO to make proper enquiries on the claim of deduction as claimed by the Assessee u/s 80IA of the Act and therefore, as laid down in the case of M/s GEE VEE Enterprises Vs Addl.CIT Others [ 1974 (10) TMI 29 - DELHI HIGH COURT] the jurisdiction u/s 263 of the Act was rightly invoked by the Pr.CIT. We therefore, find no merit in this appeal filed by the assessee and accordingly, we dismiss the same. - Decided against assessee.

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• Customs

• 2020 (5) TMI 615
  Issuance of detention certificate - Waiver of demurrage and detention charges - Regulation 6(1)(1) of the Handling of Cargo in Customs Areas Regulations 2009 - Ministry of Shipping Order No.PD- 14033/4/2020-PD VII dated 21.04.2020 and instructions dated 24.04.2020 - HELD THAT:- The petitioner submitted that the petitioner is ready and willing to pay the duty levied by the Customs for release of the goods by making provisional assessment and therefore, the respondent may be directed to consider such request. The respondent shall consider the request of the petitioner for provisional assessment and pass such order, within a period of three weeks from the date of receipt of a copy of this order - petition disposed off.

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• 2020 (5) TMI 614
  Impleadment of petition - demurrage charges in accordance with the impugned notification dated 01.04.2020 - HELD THAT:- This application has been filed by the petitioners for impleadment of three further respondents (viz., Secretary, Ministry of Finance, Department of Revenue and Expenditure; the Central Board of Indirect Taxes and Customs and the Chief Commissioner of Customs, Delhi Zone) as respondent nos. 9, 10 and 11 in the present petition. The petitioners claim that the presence of the three respondents is necessary to enable complete adjudication of the disputes raised. List before the roster bench on 01.06.2020.

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• Insolvency & Bankruptcy

• 2020 (5) TMI 613
  Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute - HELD THAT:- This Court can take judicial notice of the fact that on account of COVID-19 lock down, the Institutions which are playing the adjudicatory role, including this Court, are entertaining fresh matters through E-mail and through Video Conferencing and are passing appropriate orders. This Court directs the 3rd respondent to entertain the appeal along with the application for interlocutory relief, if the papers are otherwise in order through E-mail / other electronic mode and by giving preference, shall take up the interlocutory application at the first instance through Video Conferencing and give a disposal as expeditiously as possible ; and for a period of three weeks from today, the Insolvency Resolution Professional shall defer decisions to constitute a Committee of Creditors and take over of the Management. The direction, as to the entertainment of the appeal along with the application for interim relief by way of E-mail filing / other electronic mode, is to be taken as general direction by the 3rd respondent, so that similar kind of petitions need not be filed before the Registry of this Court - Petition disposed off.

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• 2020 (5) TMI 612
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - time limitation - HELD THAT:- The Corporate Debtor has not submitted any document with respect to any communication between the Corporate . Debtor and M/S. Yes Corporation pursuant to the fact that kerosene was delivered in place of aromatic spirit which was allegedly supplied by the Operational Creditor to the Corporate Debtor. It is observed that the Corporate Debtor has not placed on record any prior communication or has raised an issue or dispute with the Operational Creditor with respect to supply of kerosene in place of aromatic spirit to substantiate the argument of per existing dispute between the parties. It is further observed that the invoices raised by the Operational Creditor mention the relevant date and the rate of Interest 18%. The present petition being filed in July, 2019 is within the limitation, being within three years from the date of the cause of action - Petition admitted - moratorium declared.

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• Service Tax

• 2020 (5) TMI 611
  Refund of unutilized cenvat credit - carried forward of balance cenvat account to TRAN-1 GST Regime - Section 142 (4) of CGST Act,2017 - HELD THAT:- It is brought out from the facts that though the credit was availed prior to introduction of GST the refund claim was filed by them only on 22.03.2018. The requirement to debit the refund amount as under para 2 (h) of the notification can be applied only when the assessee is required to file ST-3 returns. After introduction of GST, it is not possible for the assessee to file ST-3 returns. It is not required for the appellant to deduct the amount in the ST-3 returns as and when credit is availed. Only if they intend to file refund claim they are required to debit the same - Therefore the contention of Ld. A.R that assessee ought to have debited the amount during the existence of Finance Act, 1994 itself cannot have substance. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2020 (5) TMI 610
  Maintainability of appeal - appropriate forum - applicability of notification No.13/2008-CE dated 01.03.2008 amending the notification No.108/95-CE dated 28.05.1995 - Section 35G or 35L of the Central Excise Act? - HELD THAT:- A conjoint reading of Section 35G and 35L, it could be seen that an appeal would lie to this Court against every order passed in an appeal by the appellate tribunal, if the case involves a substantial question of law. However, exception to this general rule is that an appeal would lie before the Hon ble Apex Court and not before this Court against an order relating, amongst other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for the purposes of assessment. The aforesaid authoritative principles by the Hon ble Apex Court in the case of COMMISSIONER OF CUSTOMS, BANGALORE-1 VERSUS M/S MOTOROLA INDIA LTD. [ 2019 (9) TMI 229 - SUPREME COURT] where it was held that if order of the Appellate Tribunal would go beyond interse disputes between the parties and may effect large number of cases, such an issue would partake the character of one of General public importance . Comparative analysis of Section 35G and 35L of the Central Excise Act would indicate they are mutually exclusive. Therefore, dispute which would be in the domain of Section 35L cannot be held or presumed that it would incidentally fail with domain under Section 35G also. Parliament would not have envisaged of vesting overlapping of the jurisdiction. The dispute does not restrict itself to inter party rights, but extends to class or category of assessees like the respondent herein, inasmuch as, interpretation of the notification dated 01.03.2008 is the subject matter of this appeal. Thus, issue as to whether the said notification would empower the revenue to deny the exemption provided under the notification dated 28.08.1995 is an issue which has to be determined by formulating substantial question of law framed in that regard and same has to be answered - the issue involved relates determination of excercisibility of the goods for the purposes of assessment by virtue of the clarificatory notification dated 01.03.2008. An appeal under Section 35G before this Court would not be maintainable and appellant revenue has to pursue its grievance by filing an appeal under Section 35L before the Hon ble Apex Court - Appeal filed under Section 35G is held to be not maintainable and reserving liberty to the appellant to present this appeal before Hon ble Apex Court under Section 35L - appeal dismissed.

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• 2020 (5) TMI 609
  CENVAT Credit - input services - Garden maintenance - housekeeping within the factory premises - HELD THAT:- The issue regarding admissibility of CENVAT Credit in respect of garden maintenance is squarely covered by the decision of Tribunal in the case of M/S NHAVA SHEVA INTERNATIONAL CONTAINER TERMINAL PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIGAD [ 2017 (4) TMI 805 - CESTAT MUMBAI] where it was held that It is apparent that credit for the sewage treatment plant and for the garden maintenance cannot be denied as the same are statutory requirement for operating the Port - credit allowed. House Keeping - HELD THAT:- The consent obtained from the Pollution Control Committee by the appellant is subject to the condition that the appellant shall maintain good housekeeping in the factory premises. Thus, maintenance of good housekeeping is requirement to run the factory. Hence, the credit on same count cannot be denied. Penalty is set aside - Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2020 (5) TMI 608
  Detention of goods - sale of goods during inter-state movement - Jurisdiction of state - immediate release of the detained lorry and the consignment of goods on the ground that the transaction was covered by E1 sales invoice and therefore the transaction outside the purview of the respondents under Tamil Nadu Value Added Act, 2006 - HELD THAT:- If at all, the Check Post authorities at Maharashtra border had found that the goods were not charged to tax on such inter-state sale, they would have detained the goods and the lorry there. In fact, they would have collected appropriate central sales tax before the goods left the Maharastra border under the provisions of the Central Sales Tax Act, 1956 - As such, no taxable event had taken place within the State of Tamil Nadu. There was also no scope for invoking Section 72 of the TNVAT Act, 2006 under the circumstances - the argument of the learned counsel for the petitioner that there was an E-1 transaction cannot be countenanced in the facts of the present case. Only such transaction would be exempted under section 6 (2) of the Central Sales Tax Act, 1956. This is on the underlying principle under the Central Sales Tax Act, 1956 that subsequent sale of goods in the course of interstate trade and commerce are not taxed twice. Petition allowed - decided in favor of appellant.

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• 2020 (5) TMI 607
  Levy of Entertainment tax - online booking charges - Section 3(7) (c) of the Tamil Nadu Entertainment Tax Act, 1939 - whether the online ticketing charges quoted by the petitioners would have to be included in the payment for admission liable to tax? - HELD THAT:- The petitioners levy an additional charge upon a consumer only when he opts for the online facility and these charges are necessary to defray the expenses incurred by the petitioner for offering this facility to a consumer. They point out that the online booking facility is hosted by third party service providers, such as, BookMyShow and other similar portals, which charge the petitioners a fee for hosting the booking portal. This has to be re-compensated and hence the online booking charge - Each will be rendered meaningless without the other and thus it is only the two events together that render the lottery composite and whole. Applied in the context of the present case, the distinction sought to be made by the petitioner between seating charge and online booking charge is clearly artificial and a distinction without a difference. By purchase of a ticket online the petitioner obtains only a single vested right that of entry to the theatre and the amounts collected from the petitioners, the seating and booking charges are both relatable to the same entertainment event. A vehicle is part of the facilities offered and serves to improve or enhance the experience of the entertainment provided as compared to a squatter who could well walk into a drive-in theatre and sit on the seating provided to watch the film. The experience is rendered more pleasurable and the facility offered becomes intrinsic to the process of watching the film itself. Thus, the receipts from such additional facility/benefit should stand encompassed within the charge - Extending this reasoning to the case before me, the access to online booking again indisputably facilitates and smoothens the access to the entertainment. Though there are other modes of booking available, a customer, when he opts for the online booking facility makes a conscious choice as opposed to standing in a queue before a booking counter or deputing another who would purchase the tickets on his behalf. The facility of booking a ticket with the click of a button, seated in the comfort of one s home is a conscious choice that comes at a cost and without doubt, enhances the experience of watching a film. The petitioners have also pointed out that the internet and online facility of booking could not have been envisaged in 1939 when the Tamil Nadu Entertainment Tax Act was enacted as a result that a charge in this regard will necessarily stand outside the ambit of entertainment - the enactment provides for the State to levy a tax on entertainment and such an enactment is expected to be dynamic and take within its stride all progress in avenues of entertainment including facilities incidental and ancillary thereto, such as, in the present case, ticketing and booking facilities. Petition dismissed.

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• 2020 (5) TMI 606
  Re-opening of assessment - notices issued under Section 16 of the TNGST Act, 1959 - levy of penalty under Section 16(2)(c) and 10(3)(1) of TNGST Act - HELD THAT:- It is noticed that the petitioner has challenged only the notices issued by the 1st respondent on 24.02.2010 pursuant to the orders dated 16.05.2005 of the Appellate Assistant Commissioner (CT) - III and a notice issued pursuant to the order dated 05.05.2010 of this Court in W.P.Nos.9771 9772 of 2010. All the Writ Petitions were filed by the petitioner including the present Writ Petitions were nothing, but abuse of the court proceeding. Since the direction of this Court in the Writ Petitions has not been complied with, I am inclined to quash the impugned notice dated 03.06.2010 for failure to comply with the directions of this Court in W.P. Nos. 9771 9772 of 2010 thought it is really not open to the petitioner to truncate the assessment proceedings to preliminary and final order - the 2nd respondent is directed to disposed the revision petitions filed by the petitioner after hearing the petitioner in terms of the aforesaid directions of the court in W.P. Nos. 9771 9772 of 2010, on 05.05.2010. Petition disposed off.

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• Indian Laws

• 2020 (5) TMI 605
  Dishonor of Cheque - main thrust of argument is that since respondent No. 1 admittedly received a sum of Rs. 5 million US Dollars from one of the debtors of the respondent No. 2 company, therefore, after adjustment of this amount, no debt is left and 5 complaints U/s 138 NI Act are liable to be quashed - HELD THAT:- In the instant case, though admittedly, an amount of 5 million US Dollars have been received by respondent No. 1 from M/s Roseberry Global FZE, Sharjah, who according to the petitioner is one of the debtor(s) of respondent No. 2 company but there is nothing on record to suggest that there were any such directions from the side of respondent No. 2 company to apply the said amount so received against the cheques in question in respect of which the complaints are pending. Liability against the respondent No. 2 company is around 14 Hundred Crores and the cheque(s) amount are only part of the money payable by the respondent No. 2 company. Moreover, in view of Section 60 of the Indian Contract Act, in a case, where the debtor has omitted to intimate, and there are no other circumstances indicating to which debt the payment is to be applied, it is the discretion of the creditor to adjust the payment against any lawful debt actually due and payable to him from the debtor - there is nothing on record to suggest that there were any specific directions by the respondent No. 2 company qua adjustment of this amount so received by respondent No. 1 against the cheque(s) amount in respect of which the complaints are pending. Petition dismissed.

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