TMI Tax Updates - e-Newsletter
May 18, 2020
Case Laws in this Newsletter:
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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Income Tax:
Depreciation on the golf course - Whether depreciation should be allowed considering it as ‘plant and machinery’ ? - the golf course is a plant and machinery and assessee is eligible for depreciation thereon @15%
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Income Tax:
Pronouncement of orders not within 90 days - Covid-19 epidemic - 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.
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Income Tax:
Disallowance on account of Sham Agreement - Revenue sharing agreement entered with the holding company by the assessee is diversion of income by overriding title. The revenue's contention that the entire transaction is sham and aimed at only to divert the income to EMLL cannot be said to be correct based on the facts and the judicial pronouncements.
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Income Tax:
Appeal decided ex parte - non-appearance on behalf of the assessee - though the assessee has not explained any plausible reason for non-appearance before the Tribunal, however, even if the impugned order is recalled for giving an opportunity to the assessee, no purpose will be served and it will be only an empty exercise as certain crucial facts have not been brought on record which requires to be verified by conducting a proper enquiry at the level of the A.O.
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Income Tax:
Tax Audit u/s 44AB - Penalty u/s 271B - Failure to get account Audited - Determination of turnover of the Business and Profession - Appellant is a Gynecologist and also runs proprietary concern - There is no difference between the professional receipt of an individual and professional receipt of her proprietary concern as basically she is a professional. Therefore, it cannot be said that receipt of the appellant was in the nature of business receipt.
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Indian Laws:
Dishonor of Cheque - Section 118 provides for presumptions as to negotiable instruments. The complainant being holder of cheque and the signature appended on the cheque having not been denied by the Bank, presumption shall be drawn that cheque was issued for the discharge of any debt or other liability.
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Service Tax:
Non-payment of service tax - extended period of limitation - The Show Cause Notice was issued after period of two years and four months of the issuance of the Internal Audit Report. It cannot, therefore, be said that the facts had been suppressed with intention to avoid payment of tax.
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VAT:
Refund of Input Tax Credit (ITC) - It is not the case of the Revenue that the sub-contractors are not in existence or invoices issued by such contractors are fake or any fraud has been played by the appellant. In such circumstances, denial of input tax credit relating to the refund of input tax paid, eligible for the appellant under Section 20(2) of the Act requires to be further examined by the Revising Authority with reference to Section 10 of the Act.
Articles
Notifications
Customs-
1 of 2020 - dated
11-5-2020
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Cus
Amendment in Customs, Excise and Service Tax (Procedure) Rules, 1982
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42/2020 - dated
15-5-2020
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Cus (NT)
Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Silver
GST-
43/2020 - dated
16-5-2020
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CGST
Central Government appoints the 18th May, 2020, as the date on which the provisions of section 128 of the Finance Act 2020, shall come into force.
GST - States-
S.O. 126 - dated
14-5-2020
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Bihar SGST
Seeks to amend Notification No. S.O. 108 dated the 6th May, 2020
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S.O. 125 - dated
14-5-2020
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Bihar SGST
Bihar Goods and Services Tax (Fifth Amendment) Rules, 2020
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S.O. 124 - dated
14-5-2020
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Bihar SGST
Seeks to bring into force rule 87(13) and Form GST PMT-09 with effect from 21.04.2020
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10682-FIN-CT1-TAX-0002/2020 - dated
31-3-2020
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Orissa SGST
Seeks to amend Notification No. 19829-FIN-CT1-TAX-0022/2017, dated the 29th June,2017
News
Case Laws:
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Income Tax
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2020 (5) TMI 363
Grant of refund - Direction to refund the amount due to the Petitioner within four weeks along with the applicable interest - HELD THAT:- Directions contained in the order dated 17th January, 2020 envisages that in case the respondents have no impediments in granting the refund, the same may be refunded. In the absence of specific directions contained in the aforesaid order with regard to income refund under the Income Tax Act, 1961, we do not see any violation of the directions of this Court much less any wilful disobedience by the respondents of the said order dated 17th January, 2020. Learned counsel for the respondent submitted that the refund claim of the petitioner has been processed and the same will be credited in the beneficiary account within a week. Statement made by the learned counsel for the respondent regarding processing of refund, this contempt petition is dismissed.
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2020 (5) TMI 362
Difference in the net profit ratio as compared to the preceding - invoking the provisions of Section 145(3) - ITAT upholding the order of Ld. CIT(A) in deleting the addition - HELD THAT:- Books of Accounts of the assessee were found to be doubtful on the ground that Net Profit rate had dropped drastically in the preceding years. Subsequently, a remand was ordered and in the remand report the Books of Accounts produced were checked but no finding of any discrepancy was ascertained. It was in these circumstances that the Commissioner allowed the appeal of the assessee and that finding was upheld by the Tribunal. The questions proposed are pure questions of fact and not questions of law much less substantial questions of law.
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2020 (5) TMI 361
Depreciation on the golf course - Whether depreciation should be allowed considering it as plant and machinery ? - HELD THAT:- As in assessee s own case for Assessment Year 2005-06 to 2011-12 [2019 (9) TMI 148 - ITAT DELHI ] wherein, the coordinate bench has held that the golf course is a plant and machinery and assessee is eligible for depreciation thereon @15% - Allow ground No. 1 of the appeal directing the ld AO to grant depreciation on cost of developing golf course on land considering it as plant and machinery. Addition on account of security deposit and membership fees - Revenue receipt or capital receipt - HELD THAT:- In Gulmohar Green Golf and country club Ltd [2016 (12) TMI 1559 - GUJARAT HIGH COURT ] wherein it was been held that the security deposit recovered from the members at the time of their enrolment as a member is refundable on occurrence of the contingency mentioned in the rules and regulation and bylaws, therefore it is required to be treated as a deposit, thus, a capital receipt. Therefore, it was held that it is not an income of the assessee. As in the case of the assessee also the security deposit is refundable hence respectfully following the decision of GULMOHAR GREEN GOLF AND COUNTRY CLUB LTD.[ 2016 (12) TMI 1559 - GUJARAT HIGH COURT] we also hold that the sum of refundable security deposit received from the members of the assessee is a capital receipt and cannot be charged to tax as income. Accordingly, we direct the learned assessing officer to delete the addition to the extent of refundable deposit received from the members. Addition on account of security deposit and membership fees received.
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2020 (5) TMI 360
Revision u/s 263 - Reopening of assessment u/s 147 - disallow expenditure on purchases from overseas in terms of Section 40(a)(i) for non deduction of tax at source from such payment - HELD THAT:- Reassessment order was passed on 26.03.2015 after making disallowance of purchase. Aggrieved thereto petitioner has filed appeal before CIT(Appeals) under Section 246A(1)(b), which is pending. PCIT has issued impugned notice dated 08.06.2016 under Section 263 on the ground that assessment order dated 26.03.2015 passed u/s 143(3) was erroneous and prejudicial to the interest of Revenue inasmuch as sales tax subsidy accruing to petitioner under scheme of Government of Maharashtra had not been brought to tax as revenue receipt . As contended that aforesaid notice dated 08.06.2016 is barred by limitation u/s 263. As the issue of taxability of sales tax subsidy as per Maharashtra Government was not at all an issue of reopening of the assessment, Hon court held that limitation for 263 proceedings will start from the original assessment order. Issues subject to revision were pertaining to original assessment and not the reopened assessment; the limitation should also start from the original assessment. In this case as original assessment order u/s 143(3) of the act was passed on 16.01.2014, the revision thereof could have been taken up to 31.3.2016. Impugned order u/s 263 of the act was passed on 26/2/2019, therefore it is clearly beyond the limitation prescribed u/s 263 (2) of the act. Thus the impugned order is barred by limitation and hence quashed. - Decided in favour of assessee.
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2020 (5) TMI 359
Disallowance u/s 14A - no tax exempt income - HELD THAT:- Undisputed facts of this case that there was no tax exempt income in the relevant previous year, we hold that no disallowance under section 14A could have been made, on the facts of this case and in the year before us. We, therefore, uphold the plea of the assessee and delete the disallowance. Once we uphold the plea of the assessee that no disallowance under section 14A could have been made on the facts of this case, grievances of the Assessing Officer, against learned CIT(A) s partially deleting the disallowance under section 14A, become infructuous. Pronouncement of orders not within 90 days - pedantic view - Covid-19 epidemic - 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. 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 358
Maintainability of appeal - low tax effect - computation of tax effect - HELD THAT:- As relying on KESHAV POWER LTD. [ 2019 (8) TMI 811 - SC ORDER] since the tax effect involved in the matter is less than threshold limit going by the latest circular issued by the CBDT, we see no reason to interfere in this matter. The Special Leave Petition is dismissed.
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2020 (5) TMI 357
Profit on sale of investment as profit in the Life Insurance Business - not treating the profit disclosed in shareholder s account - applicability of provision of section 44 of the Act read with 1st Schedule - HELD THAT:- As decided in own case [ 2018 (1) TMI 845 - ITAT DELHI] and [ 2019 (4) TMI 1769 - ITAT DELHI] direct the assessing officer to take profit shown in shareholders' profit and loss account i.e. Form A-PL to be part of the income derived from life insurance business. Thus these grounds are allowed. Non considering surplus actuarial valuation done in accordance with the Insurance Act, 1938 as per old Form No. 1 - AO has held that after the commencement of IRDA Act. 1999 and the taxable income should be equivalent to the actuarial valuation as per the new regulation and not as per old From in From No. G, H and I - HELD THAT:- As decided in own case [ 2018 (1) TMI 845 - ITAT DELHI] in the submissions of the learned Sr. Advocate that CBDT Circular has limited application to a situation where the insurance benefits are assigned to third parties, where the benefits are to be paid/reserved/expended on behalf of the policy holder or the assignee. As the term on behalf of implies agency relationship and when the benefits are assigned to third parties, insurance company acts as agent of the policy holder. Even otherwise, if we go to the explanatory note as given under para 40.2 of the Circular 202, according to this bonus paid to the policy holder will also be taxed but that is not the case of the Revenue. The Revenue has only contested the bonus declared and the incremental FFA. 89. No such disallowance has been made by the Revenue in the earlier assessment years i.e. up to A.Y.2009-10 and it is for the first time that the CIT(A) has enhanced the assessment . We are of the view, even on the ground of consistency, the Revenue cannot discard the consistent and regular method followed for determining the taxable income without there being any change or otherwise, the bonus declared and the incremental FFA has been allowed as deduction by the Revenue. Addition on account of funds for further appropriation and bonus allocated to the policyholders to the taxable income of the appellant - treating the same as part of the actuarial surplus liable to be taxed u/s 44 of the Act read with Rule 2 - HELD THAT:- As decided in own case [ 2018 (1) TMI 845 - ITAT DELHI] for all legal purposes, the property must be treated as belonging to the assessee and perhaps the Legislature would remedy the hardship of the assessee in such cases if it wants. Even though the assessee had a mere husk of title and as against the vendee no reality of title, as against the world he was still the legal owner and the real owner. In case the Revenue is of the opinion that due to the language of Rule 2, the companies carrying on life insurance business will be paying unjustifiably tax at a lower rate, the Revenue can approach the Parliament for making the necessary amendment in the Income Tax Act. We even noted upto Assessment Year 2009-10, the Revenue has consistently excluded amount appropriated for FFA out of the available surplus for the purpose of ascertaining acturial surplus while computing profit and gains of life insurance business of the assessee. Therefore, following principle of consistency as has been held by Hon'ble SC in the case of Radhasaomi Satsang Baug [ 1991 (11) TMI 2 - SUPREME COURT] and that of Excel Industries Ltd. [ 2013 (10) TMI 324 - SUPREME COURT] we set aside the order of CIT(A) and delete the enhancement made by CIT(A) in this regard. Disallowance incurred on account of donation - donation was made by the assessee to the concern in which the directors of the appellate company are trustees - HELD THAT:- Respectfully following the decision of the coordinate bench [ 2018 (1) TMI 845 - ITAT DELHI] with respect to disallowance of donation made u/s 37(1) of the Act is the ground is confirmed against assessee. Claim of the assessee is that though donation is disallowable u/s 37(1) of the Act, if it fulfills the condition of the allowability of the donation under chapter VI A of the Act it should be allowed to the assessee - HELD THAT:- Direction to verify the claim of the assessee u/s 80G. Exemption of claim by the assessee u/s 10(34) for the dividend income - issue raised by the assessee as an additional ground before the ld CIT(A) - CIT(A) rejected the same on the ground that since the claim was not made in the return of income or before the ld AO, he does not have the power to entertain the additional claim - applicability of S. 14A for disallowance of expenditure in respect of income not forming part of Total Income - HELD THAT:- This issue is duly covered by decision of Mumbai Bench of this Tribunal in case of ICICI Prudential Insurance Co. Ltd. [ 2012 (11) TMI 13 - ITAT MUMBAI] in which under para 47 while dealing with similar issue following decision of General Insurance Corp of India [ 1999 (9) TMI 3 - SUPREME COURT] gave clearcut finding that assessee is entitled to exemption u/s 10(34) for the dividend income. No contrary decision for applicability of S. 10(34) S. 14A was brought to our knowledge. We accordingly allow the additional ground and dismiss the plea of learned DR that directions be given in case exemption is granted u/s 10(34) to disallow be expenditure u/s 14A of the Income Tax Act. Direction of the ld CIT(A) to the ld AO to re-compute the losses assessed in earlier assessment years as per section 44 of the Act and further the grant set off u/s 72 of the Act only in respect of income covered u/s 115B(ii) of the Act and that too against the loss as re-compute in earlier years.
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2020 (5) TMI 356
Disallowance on account of Sham Agreement - AO found that the transaction is with a related party - revenue has been transferred to its holding company - assessee is not eligible for deduction of expenditure incurred towards services obtained from its holding company at the 25% of the revenue - HELD THAT:- A compulsion at source imposed by a third party is necessary to create a superior title. Just because diverted income is collected by the assessee himself for and on behalf of the beneficiary; it cannot be inferred that it was only an application and not diversion. In the instant case, the assessee has been obligated by virtue of the agreement to divert the income at source and also for the contributions made by the holding company. Revenue sharing agreement entered with the holding company by the assessee is diversion of income by overriding title. The revenue's contention that the entire transaction is sham and aimed at only to divert the income to EMLL cannot be said to be correct based on the facts and the judicial pronouncements. In case of assessee [ 2020 (1) TMI 458 - ITAT DELHI] itself based on the same agreement, we do not find any merit in the appeal of the assessee in deleting the addition made by the learned CIT A holding that the agreement between the holding company as well as the assessee was not sham agreements. Accordingly, we dismiss the appeal of the learned assessing officer. Payment of the disbursement income to the holding company - diversion of income by overriding title or merely on application of income - HELD THAT:- As decided in case of assessee [ 2020 (1) TMI 458 - ITAT DELHI] payment made to the holding company is obligated the in diversion of income by overriding title. The coordinate bench also after considering the contribution made by the holding company and keeping in view the amounts that have been already offered for taxation in the hands by the respective entities the above expenditure is allowable in the hands of the company. The relevant paragraphs as cited above that the revenue sharing agreement entered with the holding company by the assessee is a diversion of income by overriding title, we allow ground number one of the appeal following the reasoning given by the coordinate bench.
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2020 (5) TMI 355
TP Adjustment - Comparable selection - Software Development Service Segment - HELD THAT:- No infirmity in excluding Infosys Ltd., Larson Tubro Infotech Ltd., Mindtree Ltd., Persistent Systems Ltd., Sasken Technologies Ltd., Infosys Ltd., and TATA Elxsi Ltd., for having high turnover as compared to a captive service provider like assessee. Risk adjustment at 1% on ad hoc basis - HELD THAT:- Risk adjustment has been provided at risk adjustment on ad hoc basis at 1%. Ld.CIT DR submitted that there is no scientific manner which has been applied by DRP. Assessee is a low risk bearing company for SWD and ITES segment. Therefore while computing risk adjustment, risk assumed by comparables for earning revenue under particular segment needs to be analysed. Assessee is directed to provide for necessary details in respect of all comparables finally selected. If that information is insufficient, and it is beyond the power of Assessee to produce correct information about comparable companies. Revenue on the other hand has sufficient powers u/s.133(6) to compel production of required details from comparable companies. If this power is not exercised to find and get information required, then it is no defense to say that Assessee has not furnished required details to deny any adjustment on account of working capital/risk differences. Ld.AO/TPO shall then compute risk as adjustment in accordance with law. Revenue s appeal stands allowed for statistical purposes. Computing deduction under section 10A - excluding band width expense and travel expense incurred in foreign currency from export turnover - HELD THAT:- DRP while considering the issue referred to view of Hon ble Karnataka High Court in case of Tata Elxsi Ltd vs CIT [ 2011 (8) TMI 782 - KARNATAKA HIGH COURT] correctly directed Ld.AO to follow the view taken therein, while computing deduction under section 10 A. In the absence of segmental details companies need to be rejected. Inclusion of companies functionally comparable with assessee that is rendering captive services to its associated enterprises. Exclusion of companies as undergone acquisition which is an extraordinary event and can impact the profits for the year under consideration. Working capital adjustment - claim denied since assessee did not filed requisite details in respect of comparables - HELD THAT:- As held by various decisions of coordinate benches of this Tribunal, we direct Ld.TPO to recompute working capital adjustment in actual, and to consider the same for purposes of computing arm s length margin as per the view expressed by this Tribunal in case of Huawei Technologies India Pvt. Ltd vs JCIT [ 2018 (10) TMI 1796 - ITAT BANGALORE] Assessee is directed to provide for necessary details in respect of all the comparables finally selected. If that information is insufficient, it is beyond the power of Assessee to produce correct information about comparable companies. Revenue on the other hand has sufficient powers u/s.133(6) to compel production of required details from comparable companies. If this power is not exercised to find to get information required, then it is no defence to say that Assessee has not furnished required details to deny any adjustment on account of working capital. Ld.AO/TPO shall then compute working capital adjustment in accordance with law.
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2020 (5) TMI 354
TP Adjustment - selection of MAM - Interest on receivables computed by Ld.AO/TPO - assessee has used TNMM to compute ALP of the transaction - HELD THAT:- Following the earlier decision in Kusum Healthcare (supra), it was observed that there are several factors which need to be considered before holding that every receivable is an international transaction and it requires an assessment on the working capital of the assessee. Applying the decision in Kusum Health Care [ 2015 (4) TMI 180 - ITAT DELHI] the Hon ble High Court directed the TPO to study the impact of the receivables appearing in the accounts of the assessee; looking into the various factors as to the reasons why the same are shown as receivables and also as to whether the said transactions can be characterized as international transactions. We deem it appropriate to set aside the impugned order on this issue and remit the matter to the file of the Assessing Officer/TPO for deciding it in conformity with the above referred judgment. Disallowances made towards provision of expenses and stamp duty paid for registration the lease deed - HELD THAT:- Disallowance has resulted in enhancing the claim of deduction under section 80 IB (8A) - The disallowance has been made because of the statutory provisions under section 37 and as a consequence of such disallowance there is an increase in the income in the hands of assessee. We are therefore unable to accept the contentions of authorities below that in computing deduction under section 80 IB (8A) of the act in the hands of assessee the disallowance so made ought to be ignored. We direct the Ld.AO to compute the deduction under section 80 IB (8A) of the act in the hands of assessee in accordance with law having regard to ratio laid down by Hon ble Bombay High Court in case of CIT vs Gem Plus Jewellery [ 2010 (6) TMI 65 - BOMBAY HIGH COURT]. Provision for expenses for computation of MAT under section 115JB - HELD THAT:- AO has not verified the claim and has denied it to assessee. We direct Ld.AO to verify the claim of assessee and if found eligible the same should be granted to assessee in accordance with law. TDS credit - HELD THAT:- Direct Ld.AO to verify and consider the claim of assessee based upon the documents filed in accordance with law.
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2020 (5) TMI 353
Reopening of assessment u/s 147 - Validity of reason to believe - as alleged absence of any valid approval obtained under section 151 - CIT(A) dismissed the appeal of the assessee - HELD THAT:- CIT(A) has passed ex-parte order and dismissed the appeal for non prosecution. The CIT(A) has not at all discussed the merit of the case. It will be appropriate to remand back the matter to the file of the CIT(A) for fresh adjudication on merit. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice. Thus, appeal of the assessee is partly allowed for statistical purpose.
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2020 (5) TMI 352
Appeal decided ex parte - non-appearance on behalf of the assessee - HELD THAT:- If an ex parte order is passed without hearing the respondent/assessee then if the assessee has explained the reason for non-appearance to the satisfaction of the Tribunal then the Tribunal should recall the order to give an opportunity of hearing to the assessee and decide the appeal afresh after considering the arguments and contention of the assessee In case in hand Tribunal has not given any finding on the merits of the issue and there is no allegation on the part of the assessee regarding non-consideration of any relevant and vital facts while passing the impugned order. Therefore, though the assessee has not explained any plausible reason for non-appearance before the Tribunal, however, even if the impugned order is recalled for giving an opportunity to the assessee, no purpose will be served and it will be only an empty exercise as certain crucial facts have not been brought on record which requires to be verified by conducting a proper enquiry at the level of the A.O. Hence, in the facts and circumstances of the case, we do not find any merit in this Misc. application of the assessee and the same is hereby dismissed.
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2020 (5) TMI 351
Reopening of assessment - Capital gain computation - invoking Section 50C - full value consideration being determined by the DVO - whether valuation adopted by the stamp valuation authority cannot by itself be made the basis of re-opening of assessment? - HELD THAT:- Assessee has brought on record the material which distinguishes the case from the normal transfer as property was occupied by the tenants at a meager rent and also dispute is pending in the Court. Certainly adverse factors affect the fair market value and no buyer would like to purchase the property if the vacant and undisputed possession is not handed over to him at the time of transfer - when the property is attached with various factors adversely affecting the value/ price of the property, the fair market value determined by the DVO by adopting the DLC Rates and giving only 15% discount on account of distressed sale is not justified. DVO has not cited any comparable instances of a similarly situated property occupied by the tenants. It is undisputed fact that the assessee cannot fetch a prevailing market price which is in the area. Accordingly, in the facts and circumstances of the case, we find that sale consideration as agreed between the parties and reflected in the sale deed is representing correct fair market price of the property in question. Hence, the addition made by the AO and sustained by the ld. CIT(A) on this account is deleted. Cost of acquisition as well cost of construction - CIT(A) rejected the claim of the assessee on the ground that the assessee has not filed any evidence to substantiate her claim that ground floor of the property was constructed in the year 1984-85 - HELD THAT:- AO as well as the DVO has accepted the construction of the ground floor in the financial year 1984-85 and first floor in financial year 2002-03. Therefore, there is no basis for doubting the year of construction as claimed by the assessee. We are of the considered view that average indexed cost taken by the assessee as well as by the AO would be a just and reasonable amount of cost of construction. Accordingly, the average of two amounts comes to ₹ 5,68,056/- and the same shall be allowed as deduction on account of indexed cost of construction. The AO is directed to recompute the Long Term Capital Gain by considering the indexed cost of construction as indicated above.
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2020 (5) TMI 350
Penalty u/s 271B - Failure to get account Audited - Determination of turnover of the Business and Profession - AO invoked the provisions of section 44AB - assessee s accounts are not audited despite the eligible turnover of professional receipts AND no audit report is submitted - if the assessee is a medical professional or a business woman? - HELD THAT:- It is an undisputed fact that the assessee is a qualified doctor, a Gynecologist and Anesthetist. She runs a nursing home. It is also admitted fact that the assessee attends to the patients and treats them in OPD and others. Therefore, mere running a nursing home/hospital does not convert a medical doctor into a business woman. Running a nursing home by her alone is a part of the medical profession. It is a different way of conducting her medical profession. Further, we find it is not the case of the assessee that she received salary from a hospital and there is no service agreement to support such an arrangement. Therefore, on this limited issue, we are of the considered opinion that the assessee is covered by provisions of section 44AA of the Act. Appellant is a Gynecologist and also runs proprietary concern named as Indira Maternity Home. There is no difference between the professional receipt of an individual and professional receipt of her proprietary concern as basically she is a professional. Therefore, it cannot be said that receipt of the appellant was in the nature of business receipt. Appellant is a professional who is running a proprietary concern and therefore receipt of the proprietary concern is also a professional receipt. Accordingly no merit in the submission of the appellant and penalty levied under Section 271B is upheld. It is self-explanatory and the order of the CIT(A) is fair and reasonable on this issue and it does not call for any interference. Accordingly, the ground raised by the assessee is dismissed.
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2020 (5) TMI 349
Disallowance of deduction claimed u/s 54B - Reinvestment in agricultural lands in the names of sons/wife - HELD THAT:- Reinvestment was made by the assessee in the residential house in the name of his wife. The purposive construction of the provisions preferred as against the literal construction of the same. - Following the decision of High Courts with respect to Section 54F, the benefit extended to the assessee. Reinvestment in the names of sons - Revenue submitted that the investment in the hands of the wife and daughters cannot be compared with that of the investment in the hands of the sons. In the present case, the assessee s investment made in the names of Shri Rahul Sakaram Bhondve (son), Shri Tarachand Sakaram Bhondve (son). The above cited decisions are relevant for the case of spouse only not to the son s cases. Considering the same, discussion given by the CIT(A) and the Assessing Officer in their respective orders is fair and reasonable and it does not call for any interference. Reinvestment by way of Advances by assessee and the sons - HELD THAT:- There is paucity of facts with regard to the ownership of ₹ 18,00,000/- paid to D.N. Chaudhary deceased. Notwithstanding the incompleteness of the transaction, the requirement for claim of deduction in the investment of capital gains, the assessee is entitled for deduction to that extent the contribution belongs to the assessee out of the said ₹ 18,00,000/-. The Assessing Officer is directed to examine the same and the claim of the assessee indicated above. Thus, this part of grounds is allowed for statistical purposes. Allowability of expenses out - HELD THAT:- There is no legal impediment in transferring the property by the appellant without concurrence of the sisters of his father. The payment, if made by the appellant therefore appears to be gratis, and is not related to the transfer of the land in Sept 2006 and therefore such expenditure is not wholly or exclusively related to the transfer of the capital asset and therefore not deductible u/s 48. Recipients of cash are not the owners of the property at the time of property transferred. The above payments made are not required to be incurred wholly and exclusively for the transfer of property by the assessee. Above finding of the CIT(A) is fair and reasonable on this issue and it does not call for any interference. Accordingly, this part of grounds is dismissed.
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Customs
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2020 (5) TMI 347
Restoration of mistake - recall of the order - HELD THAT:- In the order dated 04.12.2013 while disposing the stay application filed by the various appellants including the present appellant, this Tribunal directed pre-deposit 10% of the penalty imposed on each of them. Thereafter, time and again, the appellant filed modification applications repeating the same grounds of financial difficulty. Each of the said modification application had been rejected on merit by this Tribunal. Also, while rejecting the respective modification applications, extension of time of deposit was granted to the appellant for compliance of the stay order. Instead of complying with the directions, the appellant indulged on dilatery tactics to avoid the deposit of the directed amount by filing modification applications time and again repeating the same grounds. The last of the modification application, the subject matter of the present ROM application, was dismissed for non-prosecution; but in the interest of justice, later restored, The appellant though did not appear on 05.06.2018, but it was again considered on merit and dismissed. There are no merit in the present application seeking recall of the order dated 05.06.2018 and to hear the appellant again. ROM application dismissed.
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Insolvency & Bankruptcy
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2020 (5) TMI 348
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - time limitation - HELD THAT:- A letter was sent on 23-6-2016 to Quickdel informing that as per the account statement as on 31-3-2016, ₹ 50,02,846 is receivable from Quickdel and that on 2-8-2016, confirmation was received that as on 31-3-2016, Quickdel owed an amount of ₹ 42,49,251 to Grey Orange. Relevant email from Ms. Varsha Goel, Accounts Executive of Quickdel and copy of the written communication are stated to be filed at Annexures-E and F of the petition. In the reply, Quickdel has stated that after checking the record, it is submitted that no such letter even signed acknowledged by Grey Orange or its employee as alleged as per the records maintained by Quickdel and the same is forged and fabricated. In the absence of any evidence to support the contention, the genuineness of the emails and the confirmation (Annexure-F of the petition) is accepted - it is held that Quickdel has not been able to prove that a dispute truly exists in fact. The dispute sought to be raised is spurious, hypothetical and illusory and assertions of fact unsupported by evidence. The dispute sought to be raised is therefore, rejected. Time Limitation - HELD THAT:- Section 238A of the Code inter alia provides that the provisions of the Limitation Act, 1963 shall, as far as may be, apply to the proceedings before the Adjudicating Authority. The specific dates of default are not given in Part IV of the application. We have therefore, to accept the averment of the learned counsel for Quickdel that the limitation starts from 14-9-2015. The effect of the acknowledgement dated 2-8-2016 (Annexure-F of the application) is required to be examined - In the present case the acknowledgement of liability in writing is made before the expiration of the period for filing suit or application in respect of the claimed amount of ₹ 42,49,251. The acknowledgement dated 2-8-2016 is signed by Ms. Varsha Goel, Accounts Executive of Quickdel. No specific averment has been made that Ms. Varsha Goel, Accounts Executive was not authorized to sign the acknowledgement. Therefore, as per Section 18 of the Limitation Act, a fresh period of limitation is to be computed from the time when the acknowledgement was signed - the plea that the application under section 9 is not filed within limitation is not accepted. Application admitted - moratorium declared.
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2020 (5) TMI 346
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - Operational Debt present or not - Debt due and payable or not - HELD THAT:- It is evident from the copies of invoices that there is no tax invoice paid by way of royalty to the land authorities by the Petitioner which points to the fact that no work was done by the Petitioner. There is nothing on record to show that there has been any compliance to NHAI procedures, royalty payment, approval of source of material in name of either of the parties. Therefore, this Bench has no hesitation in arriving at a conclusion, based on the facts submitted before it, that it is not a fit case of Operational Debt which can be considered u/s. 9 of the IBC. The Bench finds there is no 'Debt due' and payable and therefore, dismisses the Petition filed by the Petitioner. Petition dismissed.
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2020 (5) TMI 345
Maintainability of application - applicant/operational creditor is an individual was an employee of the corporate debtor residing at the address given in the cause title - first and foremost objection raised by the corporate debtor is that the applicant has suppressed many material facts and stated many false things to mislead the Adjudicating Authority - pre-Existing dispute or not - HELD THAT:- The corporate debtor had informed the applicant about the issue of delay in the progress of work at site of ONGC and, therefore, ONGC had issued termination notice to the corporate debtor on 9th May, 2017 (page 39).On perusal of the records it is also found that the demand notice issued by the petitioner on 1-9-2018 is replied by the corporate debtor on 15-9-2018 (page 10) whereby the corporate debtor has raised various disputes/objections with regard to performance, contribution, cost control and delay in completion of the project by the petitioner. The corporate debtor has also raised dispute regarding unauthorised absence of the petitioner from the duties and tampering the attendance register. Thus, there is pre-existing dispute in as much as the operational creditor has totally failed to provide the services to the corporate debtor as envisaged in the offer letter. That apart, claim of the applicant is not crystalized so as to establish the date of default and amount due and payable, which is one of the main ingredients to initiate Insolvency Proceedings. Thus, before admitting the application, this Adjudicating Authority is to see that, at this stage, as to whether there is a plausible contention which requires further investigation. The operational creditor has totally failed to establish that amount is due and payable and not yet been paid. The Adjudicating Authority is of the considered view that the instant application devoid of merit and as such is not maintainable on the very reason that there is/are pre-existing disputes with regard to the delay in completion of the work site of ONGC - Application dismissed.
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Service Tax
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2020 (5) TMI 344
Non-payment of service tax - non-filing of ST-3 Returns - services to ZEC as a sub-contractor - period of dispute is from 1 April, 2007 upto 30 June, 2013 - recovery alongwith interest and penalty - extended period of limitation - whether the Appellant had submitted a reply to the Show Cause Notice? - HELD THAT:- The impugned order is dated 24 July, 2014. It appears that the reply submitted in the office could not be placed before the Commissioner at the time the order was passed. The matter on merits as to whether a sub contractor is liable to pay service tax on the activity undertaken by a sub-contractor in pursuance of a contract has been decided by a Larger Bench of the Tribunal in COMMISSIONER OF SERVICE TAX VERSUS MELANGE DEVELOPERS PVT. LTD. [ 2019 (6) TMI 518 - CESTAT NEW DELHI] in favour of the Department. Invocation of Extended Period of Limitation - HELD THAT:- The audit of records of Appellant for the period September, 2006 to March, 2010 was conducted by the Internal Audit of the Department on 13 and 14 September, 2010 and an Internal Audit Report was issued on 14 December, 2010 incorporating audit paragraphs relating to non payment of service tax. The Show Cause Notice was, however, issued on 18 April, 2013 after period of two years and four months of the issuance of the Internal Audit Report. It cannot, therefore, be said that the facts had been suppressed with intention to avoid payment of tax. The Mumbai Bench of the Tribunal in GAMMON INDIA LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, GOA [ 1999 (5) TMI 436 - CEGAT, MUMBAI] dealt with this issue and observed that where a Show Cause Notice was issued in September, 1989 even though the Appellant therein had supplied information to the Department in August, 1987, the notice was barred by limitation. The Civil Appeal filed by the Department before the Supreme Court was dismissed on 1 May, 2002 - In the instant case, the Department kept quiet for over two years and four months before issuing of the Show Cause Notice. Thus, the Department was not justified in invoking the extended period of limitation. The demand of service tax, imposition of penalty and interest for any period beyond the period of one year prescribed under Section 73 of the Act, therefore, cannot be sustained - the matter needs to be remitted to the Commissioner to determine the service tax liability and the imposition of penalty and interest if any, within the normal period prescribed at the relevant time - Appeal allowed by way of remand.
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CST, VAT & Sales Tax
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2020 (5) TMI 343
Maintainability of petition - existence of alternative remedy - Requests for adjournment from personal appearance - adjournment sought on the ground that because of the prevalent pandemic situation, namely COVID-19, the petitioner could not file a detailed reply nor appear in person before the 1st respondent - appellant also sought time on the ground that they could not access all the records and to prepare their statement of objections - HELD THAT:- The existence of an alternative remedy is not a bar on this Court. The writ in the opinion of this court is maintainable, as this Court opines that there is a failure of the rules of natural justice which entail a fair hearing. A reading of the impugned order shows that it also relates to the period 2014-2015 onwards. Therefore, this Court finds sufficient strength in the statement made that old records had to be accessed in order to prepare a detailed reply. This Court also notices that 1st respondent has also noticed the orders passed by the Hon ble Supreme Court of India in the taken up matters by which limitation was extended for all matters, including limitation prescribed in the Statutes. The impugned order dated 17.04.2020 and the consequential order 23.04.2020 are both set aside - Immediately after the pandemic situation eases and the restrictions are lifted on the movement of men and material etc., 1st respondent is directed to issue a notice to the petitioner giving him two weeks time to appear along with his reply and all his documents. 1st respondent is therefore, directed to give two weeks notice, after the Central Government relaxes the lock down in India, fix a suitable date for the appearance of the petitioner and for disposal of the matter. It is made clear that if the petitioner seeks time or otherwise tries to delay the matter, 1st respondent is at liberty to proceed strictly in accordance with law - Petition allowed.
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2020 (5) TMI 342
Refund of Input Tax Credit - Invocation of suo-moto revision power under Section 64 of KVAT Act - denial of refund on the ground of non-payment of tax collected from the appellant by the sub-contractors - burden of proof - HELD THAT:- The co-ordinate Bench of this Court in the case of M/S BHAVANI ENTERPRISES, SMT. CHANDRA KANTA AGARWAL, SRI RITESH AGARWAL, SMT. SHRUTI AGARWAL VERSUS THE ADDITIONAL COMMISSIONER OF COMMERCIAL TAXES ZONE III [ 2018 (6) TMI 974 - KARNATAKA HIGH COURT ] while examining the issue of burden of proof has observed that the provision of Section 70 of the Act in its plain terms clearly stipulates that the burden of proving that input tax claim is correct lies upon the dealer claiming such input tax credit. The factual finding given by the prescribed Authority as well as the Appellate Authority requires to be examined by the Revisional Authority. The Revisional Authority proceeded to set-aside the order of the first Appellate Authority on the ground that the issue is not relating to the question whether the assessee is not a developer of SEZ but the issue relates to the claim of input tax credit made by the assessee on the basis of the invoices issued by the sub-contractors who have not at all deposited the tax to the extent of input tax credit claimed by the assessee - the input tax paid on the purchases from M/s. Dev Structural India Private Limited, Belagavi and M/s. Kanmani Constructions Pvt. Limited, Bengaluru, is refunded after due verification of all the documentary evidence. Whether allowing of the input tax credit as aforesaid would preclude the prescribed Authority in denying the input tax credit claimed by the assessee requires to be examined by the Addl. Commissioner of Commercial Taxes. It is not the case of the respondents that the sub-contractors are not in existence or invoices issued by such contractors are fake or any fraud has been played by the appellant. In such circumstances, denial of input tax credit relating to the refund of input tax paid, eligible for the appellant under Section 20(2) of the Act requires to be further examined by the Revising Authority with reference to Section 10 of the Act. Appeal allowed in part and part matter on remand.
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Indian Laws
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2020 (5) TMI 341
Dishonor of Cheque - insufficiency of funds - summon of applicant to face trial under Section 138 of NI Act - HELD THAT:- The present complaint was filed in 2006 after the amendment has came into force. Thus according to the proviso if the complainant has put forth the reason in the complaint itself for not filing the complaint within time and the learned Magistrate is satisfied that delay has been explained can take cognizance of the offence as such the said case is not applicable in the present facts and circumstances of the case. It is not incumbent upon the opposite party no.2 to file separate application for condoning the delay in filing the complaint in view of the proviso to Section 142 of the Act. The complainant had satisfied that she had sufficient cause for not making a complaint within the prescribed period as there is an explanation of the delay in filing the complaint the learned court below has committed no error in rejecting the objection of the applicant in the light of the amended proviso of Section 142 of the Act who however succeeded in getting the proceeding of the present case stalled for a long period. The other factual aspect of the case cannot be decided at the threshold, which is the subject matter of trial. Thus it cannot be said that the filing of complaint was barred by limitation, the learned Magistrate has rightly rejected the objection filed by the applicant by impugned order dated 18.10.2010 which does not call for any interference. The applicant has utterly failed to make out any case that the cognizance is bad in law, hence there is no justifiable reason to quash the proceeding pending against the applicant since 2010. The application is absolutely misconceived and is accordingly dismissed - application dismissed.
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2020 (5) TMI 340
Dishonor of Cheque - summon order - rebuttal of presumption - HELD THAT:- A dishonour would constitute an offence only if the cheque is returned by the bank unpaid either because the amount of money standing to the credit of the drawer s account is insufficient to honour the cheque or that the amount exceeds the amount arranged to be paid from that account by an agreement with that bank. Now, for an offence under Section 138 NI Act, it is essential that the cheque must have been issued in discharge of legal debt or liability by accused on an account maintained by him with a bank and on presentation of such cheque for encashment within its period of validity, the cheque must have been returned unpaid. The payee of the cheque must have issued legal notice of demand within 30 days from the receipt of the information by him from the bank regarding such dishonor and where the drawer of the cheque fails to make the payment within 15 days of the receipt of the aforesaid legal demand notice, cause of action under Section 138 NI Act arises. Section 139 of the Act raises a statutory presumption that the cheque is issued in discharge of a lawfully recoverable debt or other liability. This presumption is no doubt rebuttable at trial but there is no gain saying that the same favours the complainant and shifts the burden to the drawer of the instrument (in case the same is dishonoured) to prove that the instrument was without any lawful consideration. It is also noteworthy that Section 138 while making dishonour of a cheque an offence punishable with imprisonment and fine also provides for safeguards to protect drawers of such instruments where dishonour may take place for reasons other than those arising out of dishonest intentions. It envisages service of a notice upon the drawer of the instrument calling upon him to make the payment covered by the cheque and permits prosecution only after the expiry of the statutory period and upon failure of the drawer to make the payment within the said period. This Court having noticed the facts of the case and the evidence on the record needs to note the legal principles regarding nature of presumptions to be drawn under Section 139 of the Act and the manner in which it can be rebutted by an accused. Section 118 provides for presumptions as to negotiable instruments. The complainant being holder of cheque and the signature appended on the cheque having not been denied by the Bank, presumption shall be drawn that cheque was issued for the discharge of any debt or other liability. The Court also finds that the trial Court after examining the original copy of cheque, cheque return memo, bank receipt, notice, notice delivery statement and original registry receipt, has found substance in the submission of the complainant and has observed that prima facie case for the offence punishable under Section 138 N.I. Act is made out against the applicant and he has rightly passed the impugned order dated 7th May, 2019 summoning the applicant - this Court does not find any illegality or perversity in the order passed by the Courts below. This Court also observes that plea taken on behalf of the applicant that the present complaint is not maintainable on the ground that sons of opposite party no.2 has stolen his cheques and after committing forgery and playing fraud with the help of same, opposite party no. 2 had presented the same before the Bank, cannot be accepted at this stage of the proceedings, as under the order of the trial court he has only been summoned under the provisions of N.I. Act only. The said plea may be taken and examined during the course of trial not at the pre-trial stage - it is apparent that from November, 2018 to 28th February, 2019 he has slept over his missing cheques and woke up only after service of legal notice dated 6th February, 2019 i.e. on 9th February, 2019 but after 19 days he moved an application before the Bank for stoppage of bank account. Except that, he has taken six months and twenty days to go to Police Station for lodging of the first information report. Therefore, this Court is of the opinion that the said plea has no leg to stand. In the present case, much less to speak of any process alien to law being adopted by the Courts below, as stated above, this Court does not find even any illegality or perversity in the orders passed by the Courts below - application dismissed.
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