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TMI Tax Updates - e-Newsletter May 2, 2019 Case Laws in this Newsletter: GST Income Tax Customs Service Tax Central Excise CST, VAT & Sales Tax Highlights / Catch Notes Income Tax: Penalty u/s.271(1)(c) - claimed higher deduction u/s.36(1)(viia) based on opinion of the Central Statutory Auditors - latter on based on different view canvassed against the other banks, reduced the claim of deduction to the actual amount of provision created in the books of account by revised return - it is a clear cut case of bona fide opinion - no penalty Visit to Get Source Income Tax: Losses in speculation business - Tribunal have to decide whether principle business of the assessee is of granting of loans and advances or dealing in shares and assessee falls within the exception u/s 73 and whether loss from shares dealing was speculation loss or not - remanded to tribunal to decide principle business then allowablity of business loss Visit to Get Source Income Tax: Penalty u/s 271B - receipt from profession or receipt from business - the company in itself cannot be said to be having any professional qualification or education - It was running only with a motive to earn profit through engagement of specialized doctors and with the help of plant & machinery - carrying on a profession, possession of some professional qualification is must - penalty deleted Visit to Get Source Income Tax: Addition u/s 68 - unsecured cash credit - initial burden to prove identity, genuineness of the transactions and creditworthiness of the creditor - the identity of the creditors was proved by some material, the other two elements were not established at all - contentions that the agriculturists were not asked to produce any material to supplement their statement is inconsequential - burden lies upon the assessee to produce the material Visit to Get Source Income Tax: Quashing the criminal proceedings - it cannot be held that complaint does not disclose the prima-facie offences which is lodged against the petitioner - Correctness or otherwise of said allegations has to be decided only in the trial - petition rejected Visit to Get Source Income Tax: Grant of registration u/s 12AA - assessee would have applied u/s 10(23C) - once the CIT(E) having accepted that the main aim of the society was running of college and educational institutions and made no adverse observation regarding genuineness of the objects or the activities carried on by the society - could not denied registration holding that it was entitled to exemption under any other provision Visit to Get Source Income Tax: Right to file appeal by director in individual capacity - assessment order casting liability upon the petitioner in terms of Section 179, making him co-extensively liable with the company Liability - It is open to the petitioner to file an appeal in his individual name Visit to Get Source Income Tax: Scope of power of AO in remand proceedings - in remand proceedings by the Tribunal to the AO, no new source of income can be introduced so as to enhance the assessment - the AO can enhance the income only qua old sources of income which was subject matter of the appeal before the Tribunal - addition deleted Visit to Get Source Income Tax: Scope of enquiry in ‘Limited Scrutiny’ - AO is not justified in taking up the examination of claim and making addition which is beyond the issues selected for limited scrutiny without obtaining prior approval from CIT/Pr. CIT - addition deleted Visit to Get Source Income Tax: Disallowance on account of advances written off - if the direct pieces of evidence are not available with the assessee, then in such a situation, the circumstantial pieces of evidence are required to be considered while adjudicating the issue on hand - eligible for deduction, subject to the conditions u/s 37(1)/ 28 Visit to Get Source Income Tax: Penalty u/s 271D - contravention to the provision of section 299SS - cash gift received from the father - there is no allegation that the assessee has introduced unaccounted money in his business - There is nothing on record which shows that money is paid back to the father by the assessee directly or indirectly - delete the penalty u/s 271D Visit to Get Source Income Tax: Registration u/s 12AA - At the stage of granting registration, the Ld. CIT has to restrict himself to the objects of the assessee and Genuineness of the activities and not to examine whether the funds have been applied or not - application of income will be examined when Trust or Institution files its return Visit to Get Source Customs: Advanced Authorization Scheme - Export Obligation not fulfilled - declaring the petitioner to be a defaulter and placing the petitioner under the “Denied Entry List” - whether the petitioner is entitled to clubbing of its three licenses in question? - the petitioner had not discharged its export obligations as required - Action of DGFT confirmed Visit to Get Source Customs: Refund of Terminal Excise Duty - International Competitive Bidding - Refund allowed accepting the argument that, the payment made by the petitioner inadvertently has to be refunded as per para 8.3(c) of the Foreign Trade Policy, which provides for deemed export benefits Visit to Get Source Customs: Refund of IGST to an exporter - The petitioner cannot be made helpless, just because the computer system does not enable them to refund the IGST amount. Being an undisputed fact that IGST refund is payable to the petitioner, the petitioner is absolutely entitled to the IGST refund from the respondents. Visit to Get Source Customs: Import of restricted item - Gold Granules of Purity 99.99% (Non-Monetary) - the importer has not imported gold on consignment basis and therefore, the conditions laid down by the RBI is not applicable to the appellant. Visit to Get Source Service Tax: The appellant is acting as a principal and is buying spaces in that capacity and is selling the same to their customers as a principal. There is no provision in the Finance Act, 1994 to charge service tax on profit earned from trading. Service tax can only be levied on the value of taxable services rendered. Visit to Get Source Service Tax: CENVAT Credit - transfer of one unit / part of Business - merger of company - transitional credit - Rule 10(2) of CCR, 2004 squarely covers such cases also. Visit to Get Source Service Tax: Valuation - liability of service tax - Typically, HSS is neither liable to customs duty nor under sales tax and therefore just because the invoice price was offered to sales tax, claimed as exemption, would not ipso facto justify that HSS was liable under sales tax - demand confirmed invoking extended period of limitation. Visit to Get Source Central Excise: Valuation - the distributor sold the medicines to DMER at higher transaction value. The question of normal price u/s 4 as it stood prior to 2000 does not apply when there is a transaction value. Visit to Get Source Central Excise: Reversal of cenvat credit of input service for availing benefit of SSI Exemption - The rule 11 did not cover the credit of input services or credit of CENVAT on capital goods. Visit to Get Source VAT: Rate of VAT - spirit / liquor - vires of Article 14, 19 and 265 of the Constitution - Merely on assumption that the procedural irregularity may occur, a statutory provision cannot be held to ultra vires constitution - The challenge to validity of sub-section (5) of Section 20 also fails. Visit to Get Source Articles TAXABILITY ISSUES IN SUPPLY OF FOOD IN SEZ Notifications Companies Law File No 1/8/2013-CL-V. Vol. VI - G.S.R. 341 (E) - dated 30-4-2019 - Co. Law Companies (Acceptance of Deposits) Second Amendment Rules, 2019 F. No. 1/22/2013-CL-V - G.S.R. 339 (E) - dated 30-4-2019 - Co. Law Companies (Appointment and Qualification of Directors) Amendment Rules, 2019 F. No. 01/16/2013 CL-V (Pt-I) - G.S.R. 340 (E) - dated 30-4-2019 - Co. Law Companies (Registration Offices and Fees) Third Amendment Rules, 2019 F. No. 01/10/2013, Part I CL V - dated 30-4-2019 - Co. Law Companies (Registration of Charges) Amendment Rules, 2019 Customs 34/2019 - dated 30-4-2019 - Cus (NT) Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Sliver GST - States .(GHN-46)GST-2019-S.9(1)(25)-TH - dated 29-4-2019 - Gujarat SGST Corrigendum - Notification No.3/2019- State Tax (Rate) dated 30th March, 2019 19/2019-State Tax - dated 25-4-2019 - Gujarat SGST Seeks to amend Notification No. 34/2018 — State Tax, dated the 10th August, 2018 ERTS (T) 4/2019/41 - dated 7-3-2019 - Meghalaya SGST Prescribe the due dates for furnishing of FORM GSTR-1 for those taxpayers with aggregate turnover upto ₹ 1.5 crores for the months of April, May and June, 2019 ERTS (T) 4/2019/40 - dated 7-3-2019 - Meghalaya SGST Prescribing Composition Scheme with 3% Rate of Tax for Persons Having Annual Turnovers up to ₹ 50 Lakhs in the Preceding Year and Supplies include Services News GST Revenue collection for April, 2019 recorded highest collection since GST implementation Electoral Bond Scheme 2018 - Sale of Electoral Bonds at Authorized Branches of State Bank of India (SBI)(AMENDMENT) Change in Tariff Value of Crude Palm Oil, RBD Palm Oil, Others – Palm Oil, Crude Palmolein, RBD Palmolein, Others – Palmolein, Crude Soyabean Oil, Brass Scrap (All Grades), Poppy Seeds, Areca Nuts, Gold and Silver Notified Case Laws: GST 2019 (5) TMI 89 Extension of time period for filing of GST Tran-1 - transitional credit - transition to GST Regime - HELD THAT:- The respondents are directed to reopen the portal within two weeks from today. In the event they do not do so, they will entertain the GST TRAN-1 of the petitioner manually and pass orders on it after due verification of the credits as claimed by the petitioner. List this matter on 31.05.2019. 2019 (5) TMI 85 Refund of IGST - export of Polished Granite Slabs - clerical error in the shipping bill - CBEC, Ministry of Finance, Government of India, issued a Circular No.8/2018, dated 23.03.2018 - Rule 96A of CGST Rules, 2017. HELD THAT:- Admittedly, due to wrong mentioning of the drawback code by the petitioner, refund of IGST for the aforementioned shipping bills could not be processed by the respondents - It is evident from the Circular that the Government of India has provided an alternate mechanism in cases where, the exporters have committed errors in the shipping bills filed by them before the Customs Authority. The case on hand will clearly indicate that only due to inadvertence, the drawback code in the shipping bill was wrongly mentioned as 680203A instead of 680203B. Further, it is undisputed by the respondents as seen from Paragraph No. 11 of the counter affidavit filed by them that IGST refund is payable for the aforementioned shipping bills to the petitioner. But only due to the fact that Export General Manifest for the shipping bills have been closed by the computer system, it is not possible to refund the IGST amount to the petitioner. The petitioner cannot be made helpless, just because the computer system does not enable them to refund the IGST amount. Being an undisputed fact that IGST refund is payable to the petitioner, the petitioner is absolutely entitled to the IGST refund from the respondents. The respondents ought to have refunded the IGST amount for the aforementioned shipping bills to the petitioner - the respondents are directed to refund the undisputed IGST amount payable to the petitioner for the below mentioned Shipping Bill - petition allowed. Income Tax 2019 (5) TMI 39 Losses in speculation business - Interpretation given to the words principal business - what is the principal business of the Assessee/Appellant? - Whether it is granting of loans and advances or share dealing and whether case of the Assessee/Appellants falls within the exceptions to the Explanation under Section 73? - HELD THAT:- Assessee wants us to look into certain facts and evidence like Audit Report, Balance Sheet etc. by alleging that the same have not been referred, discussed and considered by the Tribunal which is apparent on perusal of the impugned order of the Tribunal. According to us this allegation cannot be brushed aside in the present appeal simply on the ground of matter of facts and evidence because it is directly related to application of the provisions of law i.e. Section 73 and Explanation under it. We think Tribunal would be the appropriate forum to scrutinize the said relevant facts and evidence to come to a definite conclusion as to whether principle business of the assessee is of granting of loans and advances or dealing in shares and whether case of the assessee falls within the exception under Section 73 and whether loss from shares dealing was speculation loss or not in the facts and circumstances of this case. Accordingly we set aside the impugned order of the Tribunal and remand to it on the aforesaid issues with direction to decide the aforesaid issue afresh after hearing the parties and examining the relevant records including the records of the assessment proceeding but it would not allow the assessee to file any fresh or new document and on consideration of the same if the Tribunal comes to the conclusion that the principle business of the assessee is of granting of loans and advances and not dealing in shares in that event Tribunal would allow the set off of the loss in shares dealing as business loss as permitted under Section 71 72. Tribunal shall dispose the appeal within 6 months from the date of communication of the this order. 2019 (5) TMI 38 Right to file appeal by director in individual capacity - assessment order casting liability upon the petitioner in terms of Section 179, making him co-extensively liable with the company Liability - liability of directors of private company - petitioner cannot filed appeal since he does not have the login details and the password of the company - HELD THAT:- The question of the petitioner seeking the password and login details of the company does not arise, since he cannot claim to represent the company. On the other hand, his independent right to approach the appellate forum i.e. CIT(A) against the assessment order as a consequence of which the order dated 11.03.2019 was passed, has to be upheld. It is open to the petitioner to file an appeal in his individual name against the order of the AO, imposing tax liability upon the company dated 26.12.2017. The electronic document/appeal filed by the petitioner within thirty days shall be accepted, entertained and processed by the CIT(A) in accordance with law and disposed of on the merits and not merely on the ground that it is barred by limitation. In case of difficulty in loging-in, on account of any electronic or technical glitch, the petitioner can alternatively file the appeal manually 2019 (5) TMI 37 Grant of registration u/s 12AA - denial of registration as assessee would have applied u/s 10(23C) instead of Section 12AA as assessee was running hospital or school - either to apply for exemption under Section 10(23C) or claim exemption under Section 12AA ? - HELD THAT:- For granting exemption under Section 12AA of the Act, the CIT(E) had to satisfied himself about the objects and the genuineness of the activities of the assessee and once the CIT(E) having accepted that the main aim of the society was running of college and educational institutions and made no adverse observation regarding genuineness of the objects or the activities carried on by the society, then the registration under Section 12AA could not have been denied holding that it was entitled to exemption under any other provision. With regard to the finding of the CIT(E) that the emphasize of the society was mainly creation of assets rather then redeployment of funds towards education, the Tribunal had noticed that during the financial year 2014-15 value of car, motorcycle and scooter were ₹ 2.17 lakhs and in 2015-16, it were ₹ 2.30 lakhs and the society surplus amount was @ 5.52% only, which cannot be termed as higher and certainly to run institute, the vehicles were required. Further, the apprehension and assumption of the CIT(E) that the society must be charging some funds, was based on the assumption and surmises and had no logical reasoning. Accordingly, the Tribunal has rightly directed the CIT(E) to grant registration under Section 12AA No illegality or perversity could be pointed out by learned counsel for the revenue in the findings recorded by the Tribunal which may warrant interference by this Court. No substantial question of law arises in the appeal. - Decided in favour of assessee. 2019 (5) TMI 36 Eligible for deduction u/s 80IC - substantial expansion - @ 100% against the eligible profits for the Assessment Year 2014-15 being 9th Year of production on account of undertaking substantial expansion during the Financial Year 2010-11 - HELD THAT:- M/S. AARHAM SOFTRONICS [ 2019 (2) TMI 1285 - SUPREME COURT] in case substantial expansion is carried out as defined in clause (ix) of sub-section (8) of Section 80-IC by such an undertaking or enterprise, within the aforesaid period of 10 years, the said previous year in which the substantial expansion is undertaken would become initial assessment year , and from that assessment year the assessee shall be entitled to 100% deductions of the profits and gains. Such deduction, however, would be for a total period of 10 years, as provided in sub-section (6). For example, if the expansion is carried out immediately, on the completion of first five years, the assessee would be entitled to 100% deduction again for the next five years. On the other hand, if substantial expansion is undertaken, say, in 8th year by an assessee such an assessee would be entitled to 100% deduction for the first five years, deduction @ 25% of the profits and gains for the next two years and @ 100% again from 8th year as this year becomes initial assessment year once again. However, this 100% deduction would be for remaining three years, i.e., 8th, 9th and 10th assessment years. - Decided in favour of assessee. 2019 (5) TMI 35 Addition u/s 68 - unsecured cash credit - HELD THAT:- CIT(A) accepted the genuineness of the transactions of sale and purchase of shares in question and his findings have not been challenged by the Revenue in the Departmental appeal, therefore, we are of the view that the assessee would be entitled for deduction of loss. CIT(A) was unjustified to direct the AD to allow loss as speculation loss u/s 73 of the Act. We accordingly, set aside the orders of the authorities below and delete the entire addition. Speculation loss u/s 73 - HELD THAT:- Where any part of the business of a company consists in the purchase and sale of shares of other companies, it is deemed to be carrying on a speculative business. In the present case, assessee falls within the exception carved out in the part of the section, which is found in the parenthesis ( other than a company whose gross total income consists mainly of income which is chargeable under the heads Interest on securities , Income from house property , Capital gains and Income from other sources , or a company [the principal business of which is the business of trading in shares of banking or the granting of loans and advances); its total income mainly consists of income derived from the granting of loans and advances. Such being the case, the CIT(A) clearly falls into error in holding that the loss reported pertains to a speculative transaction; the ITAT acted correctly in law in setting aside that finding. Therefore, no question of law arises in this aspect. Write-off of bad debts - Write off of the principal amount - HELD THAT:- ITAT s decision that since the claim for interest had been allowed in the past and was even granted in the current assessment year, the assessee legitimately could claim the write-off as bad debts even towards the principal, was based upon the ruling of the Supreme Court and of this Court [especially IFCI Venture Capital [ 2007 (7) TMI 674 - DELHI HIGH COURT] ], no question of law arises that the assessee in the first instance did not claim the write-off as a deduction per se that does not stop it or preclude it from claiming relief, given the judgment of the Supreme Court in Kedarnath Jute Mfg. Co. Ltd. v. CIT, (Central), Calcutta [ 1971 (8) TMI 10 - SUPREME COURT] . Furthermore, this Court is also of the opinion that Section 36(2) also applied to the facts and circumstances of this case. Disallowance u/s 14A - HELD THAT:- As during the year (AY 2005-06), the total expenditure incurred was about ₹ 90 lakhs. During the hearing, the break-up of these expenses was revealed: about ₹ 2.5 lakhs was spent on salaries; the rest was on professional fees (including legal fees) transport, maintenance of vehicles, stationery, postage, printing etc. It was within the power of the AO to have inquired into these items, to scientifically apportion amounts attributable to expenditure that could reasonably bear proximity with earning of tax exempt income; instead, the AO merely rested content with applying a proportion, which was not appropriate. Given that the funds and scrips (which yielded dividend) were legacy assets, the assessee s arguments were reasonable - question relating to disallowance under Section 14A does not arise. 2019 (5) TMI 34 Additional depreciation u/s 32 - addition of a capacity of windmills by 750 kW as against the 1000 kW installed prior to 01.04.2002 - HELD THAT:- As relying on cases M/S. HI TECH ARAI LIMITED [ 2009 (9) TMI 60 - MADRAS HIGH COURT] and TEXMO PRECISION CASTINGS [ 2009 (10) TMI 140 - MADRAS HIGH COURT] since the assessee satisfied the conditions for claiming additional depreciation on the addition of a capacity of windmills by 750 kW as against the 1000 kW installed prior to 01.04.2002, the assessee is entitled to the said additional depreciation under the said provisions of the Act. - Decided in favour of assessee. 2019 (5) TMI 33 Nature of receipt - gains earned on cancellation of the foreign exchange forward contract - 'capital receipts' or 'revenue receipts' - if it is capital receipt, whether the same could be reduced from the cost of plant and machinery in connection with which forward contracts were entered into? - HELD THAT:- The finding of the Tribunal that it is a capital receipt and not the revenue receipt has become final as there is no challenge at the instance of the Revenue. Necessity to have it reduced from the cost of plant and machinery in connection with which forward contracts were entered into as decided in OIL NATURAL GAS CORPORATION LTD. VERSUS COMMISSIONER OF INCOME TAX [ 2010 (3) TMI 81 - SUPREME COURT] all the assessment years in question being prior to the amendment in section 43A of the Act with effect from April 1., 2003 the assessee would be entitled to adjust the actual cost of the imported capital assets acquired in foreign currency, on account of fluctuation in the rate of exchange at each of the relevant balance-sheet dates pending actual payment of the varied liability. Disallowance of royalty expenses - expenses not relating to the previous year ended on 31.03.1993 - prior period expenses - HELD THAT:- Admittedly, the assessee, instead of claiming the said amount in the assessment year 1992 - '93 claimed it as well in the year 1993 - '94, which was not correct or sustainable and hence disallowed. We are of the view that there is nothing illegal or improper on the part of the Commissioner or the Tribunal in having disallowed the royalty expenses the said extent being attributable to the previous year 1992 - '93, which could not have been claimed during the assessment year 1993 - '94. As it stands so, the second question also stands answered against the assessee and in favour of the Revenue 2019 (5) TMI 32 Quashing the criminal proceedings - offences punishable under Sections 353 and 204 of IPC - complaint is for trying to destroy the evidence and obstructing public authorities to discharge their duties - survey action u/s 133A - for enquiry regarding Bogus exemption u/s 10(38) by investigation team - complaint that petitioner having been swallowed purported sheet of page No.107 of the folder numbered A-3/AOSI/133A in the presence of Income Tax Authorities or its officials - averments made in the complaint spell out the ingredients of the criminal offence or not? - assessment proceeding against company is still pending - HELD THAT:- The complaint in question if perused it would clearly disclose that allegations made in the complaint is for trying to destroy the evidence and obstructing public authorities to discharge their duties. There cannot be any dispute to the fact that officials of the Income Tax Department in exercise of the provisions u/s 133A would be empowered to enter any place within the limits of the Area assigned to such Offices, any place kept by any persons in respect of whom he exercises the jurisdiction, any place in respect of which he authorizes for the purpose of u/s 133A and area within which such place is situated and such person is occupied such place inclusive of business or professional place and required any proprietor/ employee or any other person who may at the time and place be attending or helping in carrying on business or profession. Afford for such officials by facility to inspect the books of accounts or other documents available at such place, check or verify the cash, stock or other available articles or furnish such information as may be required which may be useful for a relevant to any proceeding under the Act, having been carried out by the officials of the Income Tax Department at 09.11.2015 at 3.15 pm and at the time of concluding survey proceedings on 10.11.2015 at 2.30 am, petitioner herein is alleged to have taken out page No.107 containing some notings from the folder numbered as A-3/AOSI/133A from one of the folder which had been impounded and swallowed it in the presence of the authorities. It is for the prosecution to prove the alleged incident during the course of the trial and as such it cannot be held that complaint does not disclose the prima-facie offences which is lodged against the petitioner. Correctness or otherwise of said allegations has to be decided only in the trial. This Court finds there is no good ground to entertain this petition. Hence, it stands rejected. 2019 (5) TMI 31 Addition u/s 68 - unsecured cash credit - assessee urges that the amounts added u/s 68 and brought to tax reflected advances given by 40 agriculturists towards a proposed housing scheme who upon notices issued u/s 133(6) had responded giving the relevant particulars which included copies of their voter identity cards and affidavits - HELD THAT:- This Court is of the opinion that the findings of AO as well as the lower appellate authorities are concurrent, as such the Court circumspects in holding against these findings. That apart, the Court notices that the ruling of the Supreme Court in Commissioner of Income Tax vs. Lovely Exports Private Limited [ 2008 (1) TMI 575 - SUPREME COURT OF INDIA] affirms the position that with respect to the credits, especially cash deposits etc., the initial burden lies upon the assessee to establish by way of the three prong test, that the advances or credits claimed are genuine, first the identity of the creditor; second, the genuineness of the transactions, and third, creditworthiness of the creditor. The Court is satisfied that while the first element i.e. the identity of the creditors was proved by some material, the other two elements were not established at all. In this regard, the assessee s contentions that the agriculturists were not asked to produce any material to supplement their statement is inconsequential. The law in this regard is and always has been that the onus of the initial burden lies upon the assessee, who has to make the necessary efforts to produce the material - no substantial question of law arises. 2019 (5) TMI 30 Addition of unexplained Cash Credit - person could not be produced as he was travelling out of India most of the times - production of the Bank Account copies - HELD THAT:- We are of the opinion that the Assessee can be accorded one more opportunity to prove the said Cash Credit in the name of his close relative Mr.Bhuma Ramakrishna Reddy, who could not be produced before the CIT (Appeals) though the copies of the Bank Account details were furnished by the Assessee. The mere production of the Bank Account copies was not sufficient and the entires made therein were required to be proved by the Assessee by production of the said witness Mr.Bhuma Ramakrishna Reddy. Allow verification of entries in Bank Statement in this regard, we are of the considered opinion that it would be appropriate and in the interest of justice to remit the matter back to the learned Commissioner of Income Tax (Appeals), who may examine the said witness at his own level and return the findings in this regard. 2019 (5) TMI 29 Deduction u/s.36(1)(viia) - amount of provision for bad and doubtful debts as per the books of account - as per assessee revised return offering income should have been accepted rather than making addition for the equal amount - HELD THAT:- Irrespective of the fact whether the revised return is accepted or not, the computation of total income at ₹ 97.35 crore has not been assailed. The assessee has not challenged that the claim of deduction u/s.36(1)(viia) should have been enhanced to the originally claimed amount of ₹ 122.56 crore instead of the revised downsized amount of deduction at ₹ 25.21 crore. In view of this, it is held that the appeal of the assessee is merely academic in nature in so far as the computation of total income is concerned. Penalty u/s.271(1)(c) - Assessee claimed higher deduction u/s.36(1)(viia) - addition restricting the provision to the amount debited in the Profit and loss account only - bonafide mistake - HELD THAT:- Assessee claimed higher deduction u/s.36(1)(viia) on the basis of the opinion of the Central Statutory Auditors. This practice was being followed by the other assessee similarly placed. It was only later on that when the view was canvassed against the banks in similar situation that the assessee came out by a filing revised return reducing the claim of deduction to the actual amount of provision created in the books of account. In our considered opinion, it is a clear cut case of bona fide opinion formed by the assessee in claiming deduction at a higher amount. There was no mala fide intention of the assessee to conceal the income or furnish inaccurate particulars of its income. The actual amount of provision was available before the AO in the Profit and loss account attached along with the return and the amount of deduction u/s.36(1)(viia) was equally available as per the Computation of income. If the intention had been to defraud the Revenue by claiming excess deduction, the assessee could have wrongly increased the amount of provision in its Profit and loss account as well, which it did not. Having declared the figures correctly proves the bona fides of the assessee. As in CIT vs. Reliance Petro Products Private Ltd. [ 2010 (3) TMI 80 - SUPREME COURT] has held that a mere making of a claim which is not sustainable in law, by itself will not attract penalty 271(1)(c) of the Income-tax Act, when the assessee furnishes all the relevant particulars in his return which are not found to be inaccurate. There is no dearth of decisions holding that penalty under section 271(1)(c) cannot be imposed on disallowance of expenses, which were not otherwise bogus. We, therefore, set aside the impugned order and direct to delete the penalty. - Decided in favour of assessee. 2019 (5) TMI 28 Levy of penalty u/s 271(1)(c) - disallowance of provision for bad debt - A.O. noted that such provision is not allowable unless it is ascertained liability - A.O. accordingly made addition of the amount and assessed the net loss - HELD THAT:- We are of the view that penalty is not leviable in the matter. The A.O. issued show cause notice dated 27th December, 2010 before levy of the penalty against the assessee. A.O. in its show cause notice failed to specify in which limb of Section 271(1)(c) the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing inaccurate particulars of income, as rightly pointed-out by the Assessee. The entire penalty proceedings are, therefore, vitiated and no penalty is leviable. See M/S SSA'S EMERALD MEADOWS [ 2016 (8) TMI 1145 - SUPREME COURT] - Decided in favour of assessee. 2019 (5) TMI 27 Addition u/s 37 - expenses on account of business promotion - Allowable business expenditure - assessee is admittedly engaged in the business of trading and marketing of medicines - Authorities below, rejected the claim of assessee company considering that assessee company has provided freebies to the Medical Practitioners and referred to the provisions contained under Indian Medical Council (Professional Conduct Etiquette and Ethics) Regulations, 2002 and also referred to CBDT Circular No.5/2012, Dated 01.08.2012 - HELD THAT:- The said Circular have been considered by the ITAT, Mumbai Bench in the case of DCIT-8(2), Mumbai vs. PHL Pharma (P.) Ltd., [ 2017 (1) TMI 771 - ITAT MUMBAI] in which it was clearly held that said Regulations and Board Circular are not applicable to Pharma and allied Health Care Companies. Therefore, there is no question of application of Section 37(1) of the I.T. Act. Thus whatever expenses incurred by the assessee company are only on account of business promotion expenses which are allowable under the provisions of the I.T. Act. The authorities below have failed to provide as to what offence have been committed by the assessee company on incurring such expenses under any Law. There is no question of applying Explanation to Section 37(1) of the I.T. Act, 1961, against the assessee company. We, accordingly, set aside the Orders of the authorities below and delete the entire addition. - Decided in favour of assessee. 2019 (5) TMI 26 Rectification u/s 154 - CIT(A) deciding appeal for AY 2005-06 make observation that addition of ₹ 26.44 lakhs should be made in the year of receipt i.e. Asstt.Year 2004- 05 - AO while giving effect of order order of CIT(A) added the same in Asstt.Year 2004- 05 - assessee filed rectification application against above order - ex parte order - scope of debatable issue - HELD THAT:- When the assessee came to know about this order, he filed an application for rectification. His application cannot be thrown out like this, and the CIT(A) failed to note this aspect while confirming the view point of the AO. AO has observed in the impugned order dated 14.8.2015 that he has given effect to the order of the CIT(A) passed in the Asstt.Year 2004-05 also, though, it was passed in the Asstt.Year 2005-06. Had the AO entertained his rectification application and proceeded to dispose of in accordance with law, then, he would have vacated his order dated 9.3.2015 passed in the Asstt.Year 2004-05. There is no debatable issue in that, rather his order dated 9.3.2015 was patently illegal. AO ought to have entertained the application of the assessee, and ought to have rectified his order dated 9.3.2015. Therefore, we allow this appeal and set aside both the impugned orders i.e. order dated 1.9.2016 passed by the CIT(A) and dated 14.8.2015 passed by the AO. We allow the application of the assessee and direct the AO to rectify his order dated 9.3.2015 by deleting the amount of ₹ 26.44 lakhs from the taxable income of the assessee in the Asstt.Year 2004-05. Appeal of the assessee is partly allowed. 2019 (5) TMI 25 Disallowance u/s 14A by applying Rule 8D - assessee has suo moto disallowance u/s 14A - AO made an additional disallowance under normal provisions of the Act - assessee did not maintain separate books of account for accounting for expenses incurred in relation to income not includable in the total income - HELD THAT:- This Bench in assessee s own case [ 2018 (6) TMI 360 - ITAT KOLKATA] held that comment of AO that the assessee did not to maintain separate books of accounts, for the expenses incurred in relation to earning of income not includible in the total income would tantamount to AO being of the opinion that the assessee should maintain separate books for this purpose is not required as per law. AO has committed an error in assuming so. Hence this ground on which the AO has not accepted the suo motu disallowance made by the assessee u/s 14A is wrong. Thus, as the Assessing Officer has not recorded his satisfaction before rejecting the suo-moto disallowance made by the assessee u/s 14A of the Act, we delete this disallowance - Decided in favour of assessee. Disallowance of the provision made for leave encashment - HELD THAT:- This Bench of the Tribunal on identical facts for the Assessment Year 2011-12 in assessee s own case [ 2018 (6) TMI 360 - ITAT KOLKATA] we set aside this issue to the file of the A.O to fresh adjudication in accordance with law. The Assessing Officer may either wait for the judgment of Hon ble Supreme Court in the case of Exide Industries Ltd. [ 2007 (6) TMI 175 - CALCUTTA HIGH COURT] or may consider the alternative plea of the assessee that the claim be allowed on actual payment basis and if it is so done, the assessee would withdraw all the pending litigation, for all the years, wherein he sought deduction of the provision made for the leave encashment. Hence, this ground is allowed for statistical purposes. MAT - computation of book profits u/s 115JB - assessee s case is that the provision has been made for leave encashment and gratuity on actuarial valuation and hence, the liability is an ascertaining liability and hence the liability has to be allowed - As regards bonus, it is argued that the assessee had paid bonus and hence it is an ascertained liability - HELD THAT:- This issue is to be set aside to the file of the Assessing Officer, to examine whether the provision, in question, has been computed on scientific basis by using actuarial valuation as claimed. If so, the proposition of law laid down by the Hon ble Supreme Court in the case of Bharat Earth Movers vs. CIT [ 2000 (8) TMI 4 - SUPREME COURT] is to be applied by the Assessing Officer. As this aspect as to whether the provisions, in question, have been made by actuarial valuation has to be verified, we set aside Ground to the file of the Assessing Officer for fresh adjudication in accordance with law. 2019 (5) TMI 24 Exemption u/s 11 denied - assessee had received book bank fees, dress charges, examination fee and misc. fees which was in the form of capitation fee - HELD THAT:- These charges were charged to the students as the assessee had provided extra facilities like providing dress to the students. The examination fee charged by the assessee was deposited with the UPTU who is engaged in conducting exams. The learned CIT(A) has held that in the earlier years under similar circumstances the Assessing Officer had not made any addition. The assessee, before learned CIT(A), has also filed fee fixation committee letter - The charges were charged for additional facilities which included WIFI system. Under similar circumstances in the case of DCIT vs. Prayag Dant Vigyan Anusandhan Sansthan, [ 2018 (12) TMI 207 - ITAT LUCKNOW] has held the extra charges, charged from the students as not a capitation fees and has allowed relief to the assessee - Decided against revenue Addition to the corpus fund - evidences proving the genuineness of the transactions and creditworthiness of the persons who had given the donation and in the absence of the assessee having filed bank pass-book - HELD THAT:- We find that the assessee had furnished complete list of donors including the names, addresses and PAN numbers of the donors. The list, as noted above, demonstrates that most of the donors have given amounts of ₹ 10,000/- and the list contains the names, addresses and also the mode of payment as to whether cheque or cash. Assessee on its own had added back the amount of ₹ 28,80,000/- in its income which is evident from the copy of computation sheet and after inclusion of such amount in the income the assessee has applied the same for the charitable purposes . CIT(A) has categorically mentioned this fact in his order. Therefore, we do not find any infirmity in the findings of learned CIT(A).- Decided against revenue Addition u/s 68 - addition made by holding that the assessee had not produced copy of income tax return and bank statement of the donors - HELD THAT:- It will not be out of place here to mention that Mr. Avnish Kumar was the trustee, and chairman of the society who used to appear before the AO. How is that the AO was not convinced about his identity and added the amount given by him to the trust as loan, as unverifiable? Similarly Sri Naresh Kumar was also a trustee. His copy of a/c, ITR, bank a/c and statement of trust was on record and also furnished during the appellate proceedings. Mr Avnish Kumar Agrawal was a partner of Sree Ganga Khandsari Udyog which advanced ₹ 20,05,000/- as loan to the trust. The A.O. seemed to have ignored these facts. These documents must have been available to the AO also as these are bank and IT records and are handmade. It is not understood as to how and why the AO could completely disregard such evidences. There was no application of mind, enthusiasm to prove found in his order. He made the addition mechanically without any evidence to support his order.- Decided against revenue Expenditure incurred by the assessee under the head help to poor students - HELD THAT:- Relief given by CIT(A) for help to poor students, we find that assessee has incurred an expenditure of ₹ 62,61,703/- on account of help to poor students, the detail of which is placed in paper book. The expenses booked under this head are on account of journal entries which shows that the amounts were credited to the students the names of which is also mentioned in the ledger account. CIT(A) confirmed the addition to the extent of ₹ 4,38,803/- payments in cash to various other students on several dates amounting to a amount as paid in cash of different persons as prize money, some of them were not the student of the institute when a competition need in the institute. Obviously there is no way to examine this expenditure whether they had actually been incurred or not and has allowed relief for the remaining amount Addition made u/s 40(a)(ia) - CIT-A deleted the addition - HELD THAT:- CIT(A) has held that section 40(a)(ia) is not applicable as the income of the assessee was not taxable under the head business or profession. The findings of learned CIT(A) are correct as the assessee is entitled to exemption u/s 11 and provision of section 40(a)(ia) are applicable only under the head business and profession appearing in Chapter-IV of the Act. We further find that even if disallowance is upheld the addition will result into enhanced income which again will be exempt u/s 11 of the Act. - Decided against revenue 2019 (5) TMI 23 Penalty u/s 271B - receipt from profession or receipt from business - assessee is a private limited company which is engaged in running of a nursing home - activity of company is business or profession - as per AO assessee activity was the professional activity - HELD THAT:- We find that assessee itself did not possess any professional degree and rather it was engaged in commercial activities. There is difference between business and profession. For carrying on a profession, possession of some professional qualification is must. From the qualification we mean that there must be some special training of particular skill which involve high level education. The company in itself cannot be said to be having any professional qualification or education. It was running only with a motive to earn profit through engagement of specialized doctors and with the help of plant machinery. Therefore, the assessee company cannot be said to be engaged in professional activities and rather it is held to be engaged in business activities. Therefore, the provisions of section 44AB(b) will apply for determining the amount of limit required for audit of accounts. The turnover limit for the year under consideration was ₹ 60 lacs and the turnover of the assessee was ₹ 54,45,940/- therefore, the assessee was not liable to get its accounts audited and therefore, the penalty imposed and sustained by learned CIT(A) u/s 271B is not justified - Decided in favour of assessee. 2019 (5) TMI 22 Claim of deduction of PF ESI dues - payments are made prior to the due date of filing the return of income u/s 139(1) - HELD THAT:- Claim of deduction of PF ESI dues. The undisputed fact is that these dues have been paid before the specified due date of filing return of income u/s 139(1). The Assessing Officer denied the deduction on the ground that the payment was made beyond the due date of payments specified in the relevant enactment. This issue is covered in favour of the assessee. As the payments are made prior to the due date of filing the return of income u/s 139(1), the same should be allowed. Hence, we allow this ground of the assessee. Disallowance of claim of deduction u/s 35(1)(ii) of donations given to SHG PH - disallowance based on statement recorded on oath during survey - AO disallowed the claim on the ground that survey was conducted on SHG PH and it came to light that the donations received by cheque/RTGS were returned in cash to the donors - HELD THAT:- The facts of this case as identical with the facts of this case decided by the ITAT cited above [ 2018 (3) TMI 1405 - ITAT KOLKATA] ; [ 2017 (9) TMI 1637 - ITAT KOLKATA] ; [ 2017 (11) TMI 1631 - ITAT KOLKATA] . Copy of the statements was not confronted to the assessee. No evidence of the money being returned in cash is brought on record. The certificate is valid as on the date of donation. Hence, respectfully following of the judgment of Co-ordinate Bench of the Tribunal, we allow these grounds - Decided in favour of assessee. 2019 (5) TMI 21 Reopening of assessment - Validity of notice issued u/s. 148 - wrong facts in reasons - No proper issuance or service of notice - assessment of capital gains in the hands of assessee assuming the land in question as capital asset - Challenge is also made with respect to deduction u/s. 54F - HELD THAT:- Co-ordinate Bench in the case of one of co-owners of the same land which was sold, namely, Smt. Savita D/o Late Mool Chand held that there is a reference to the substantive assessment that was in the hands of Mool Chand, HUF and it is only consequent thereto the protective assessment was said to be made in the hands of the assessee. When the fact does not admit of any doubt that the substantive assessment in the hands of Mool Chand, HUF on 28.3.13, it would not have been possible for the AO to record the reasons in this case on 26.3.13. It suggests that the reasons and the notice u/s 148 of the Act are ante dated or at the lease that they are not properly recorded. No proper issuance or service of notice u/s 148 of the Act and no reliance could be made on the reasons recorded in this matter. We, therefore, hold that there is no proper issuance and service of notice u/s 148 in this matter and consequently, the assessment order is liable to be quashed. - Decided in favour of assessee. 2019 (5) TMI 20 Scope of power of AO in remand proceedings - addition u/s 68 - Addition on account of commission to the extent of 2% - CIT-A deleted the addition - HELD THAT:- It is settled principle of law that on remand of the proceedings by the Tribunal to the AO, no new source of income can be introduced so as to enhance the assessment by the AO and the AO can enhance the income only qua old sources of income which was subject matter of the appeal before the Tribunal. We are of the considered view that the AO has exceeded his powers during remand proceedings, made by the Tribunal by making addition u/s 68 on account of credit entries appearing in the bank statement and as such, the addition made by the AO is not sustainable, hence the CIT(A) has rightly deleted the addition. Consequently, question framed is answered in the negative. Applying the rate of commission at the rate of 2.25 % by the AO and reduced to 2% by the ld. CIT(A) is concerned, this issue has already been decided in the Group cases of Tarun Goyal vide [ 2019 (1) TMI 1266 - ITAT DELHI] thereby AO has been directed to adopt the rate of commission @ 0.50% or 50 paise and computed the profit accordingly. 2019 (5) TMI 19 Rectification u/s 154 - disallowance made u/s 14A - debatable issue - whether order of CIT (A) is erroneous and is not tenable on facts and in law deleting the addition of disallowance made u/s 14A to the book profit - HELD THAT:- CIT (A) has deleted the addition by following the decision rendered by Hon ble Supreme Court in the case of Volkart Brothers [ 1971 (8) TMI 3 - SUPREME COURT] and CIT vs. RTCL Ltd. [ 2012 (4) TMI 287 - DELHI HIGH COURT] on the ground that when the issue is debatable section 154 cannot be invoked. Since the ld. CIT (A) has deleted the addition by following the settled principle of law that when issue is debatable one section 154 cannot be invoked to make further addition, we find no illegality or perversity in the impudent order passed by the ld. CIT (A), hence appeal filed by the Revenue is dismissed. 2019 (5) TMI 18 Scope of enquiry in Limited Scrutiny - disallowing depreciation allowance - approval of Pr. CIT/CIT - due process in law for converting appellant's limited scrutiny into complete scrutiny - disallowance of appellant's claim for deduction which is outside the scope of limited scrutiny - HELD THAT:- In the present case, examination of depreciation is not covered in the two issues selected for examination for limited scrutiny. This is not the case of the revenue that the approval was taken by the AO from CIT/Pr. CIT for converting the scrutiny from limited scrutiny case to total scrutiny case. AO is not justified in taking up the examination of depreciation claimed which is beyond the issues selected for limited scrutiny without obtaining prior approval from CIT/Pr. CIT. AO was not justified in making disallowance out of the depreciation claim of the assessee and therefore, the same is deleted. Appeal filed by the assessee is partly allowed. 2019 (5) TMI 17 Disallowance of reimbursement of expenses u/s. 40(a)(i) - cryptic order of CIT- A HELD THAT:- order of CIT (A), it is seen that the order is very cryptic. On page no. 22 of the paper book for Assessment Year 2012-13, the invoice is available in respect of Hong Kong Dollars 31,123 equivalent to ₹ 2,08,350/-. Similarly on page no. 29 of the paper book is the copy of another invoice for Great Britain Pound (GBP) 1,360.95 equivalent to ₹ 1,14,180/-, total amount of these two invoices in Rupees terms comes to ₹ 3,22,530/-. We fail to understand what is the objection of CIT (A) and what is the basis of his decision Additions made to the income returned solely relying on the information contained in Form No.26AS - Held that:- Assessee has filed reconciliation statement with Form 26AS along with the explanations for differences and the same is available in paper book for Assessment Year 2012-13. As per the certificate given by the assessee in the paper book, all the documents contained in the paper book were before AO and CIT(A) both. Hence this reconciliation statement was available before CIT(A) also. The CIT(A) has not pointed out any specific mistake in the reconciliation statement and he has simply stated that the assessee should have reconciled year-wise and ascertained the correct reason as to why such difference was there. In our considered opinion, ld. CIT(A) should have passed a speaking and reasoned order. Disallowance u/s. 40(a)(ia) out of Car Hire charges - HELD THAT:- Disallowance u/s. 40(a) (ia) out of Car Hire charges was decided by CIT (A) in a cryptic manner. In view of the above factual position, we are of the considered opinion that the entire issue in all the three years should go back to the file of CIT(A) for fresh decision by way of a speaking and reasoned order after providing adequate opportunity of being heard to both sides. Hence we set aside the order of CIT (A) in all the three years and restore the matter back to his file for fresh decision by way of a speaking and reasoned order - Appeals filed by the assessee are allowed for statistical purposes. 2019 (5) TMI 16 Disallowance of expenditure as rent, salaries to staff misc. expenses - assessee only produced self-made vouchers and could not provide the source of payment - FAA confirming the same, enhanced the same by disallowing depreciation in view of the fact that no business activity was being carried out by the assessee during impugned AY. - HELD THAT:- These expenditures are in the nature of audit fees, bank charges, salaries to two employees and rent paid by the assessee. These expenses, in our opinion, were necessary routine expenditure so as to maintain the corporate personality of the assessee. So far as the source of the same is concerned, it is found that books of accounts were duly audited and the assessee was having closing cash balance. Therefore, there could be no justifiable reason to disallow the same. Similarly, the disallowance of depreciation was not justified since the business had not closed down and the block of asset continue to exist in the books. Therefore, by deleting both these additions, grounds of assessee allowed. Addition of Sundry Creditors - Disallowance made for want of proper explanation - cessation of liability - HELD THAT:- We find that new liabilities incurred during the year represent audit fees payable to auditors, outstanding staff salary professional tax. These are current liabilities and nothing on record suggest that these liabilities have ceased to exist. The stand of lower authorities, therefore, could not be sustained to that extent. The amount represent amount due towards one of the directors of assessee company. The assessee had already filed confirmation of the concerned director. It is noted that the assessee has received further sum of ₹ 1.20 Lacs from the said director during the year which was added to the income of the assessee. However, the same has already been deleted by FAA upon finding that the assessee fulfilled the onus of providing identity, genuineness and creditworthiness of the said director. Nothing on record suggest that the liability of the assessee company has ceased to exist and therefore, no addition would be warranted on this account. The amount shown to be due against M/s Raghav Corporation has been confirmed by the said party as evident from paper-book. Therefore, the addition to that extent could also not be sustained. - Decided in favour of assessee 2019 (5) TMI 15 Disallowance of expenditure u/s 14A r/w rule 8D - AO on an ad hoc basis has disallowed 5% out of the exempt income earned towards expenditure attributable to earning such income - HELD THAT:- Identical issue in assessee s own case for assessment year 2006 07 [ 2019 (2) TMI 278 - ITAT MUMBAI] thus as relying we direct the Assessing Officer to restrict the disallowance under section 14A to 1% of the exempt income earned during the year. This ground is partly allowed. Disallowance of deduction claimed on account of pro rata amount of lease hold land - - added back in the computation of income, however, reserved its right to claim it during the assessment proceedings by way of Note - HELD THAT:- Assessee s claim of deduction should have been examined on merit by learned DRP instead of rejecting it on technical ground. Be that as it may, in view of the ratio laid down by the Hon'ble Jurisdictional High Court in Pruthvi Brokers Shareholders Pvt. Ltd. [ 2012 (7) TMI 158 - BOMBAY HIGH COURT] , we restore the issue to the AO for deciding afresh assessee s claim of deduction. While doing so, the AO should also take note of assessee s contention that similar deduction claimed by the assessee in preceding assessment year was allowed. AO is also directed to decide the issue on merit keeping in view the decision of the Hon ble Gujarat High Court in Sun Pharmaceuticals India Ltd. [ 2009 (3) TMI 587 - GUJARAT HIGH COURT] and Delhi International Airport Pvt. Ltd [ 2017 (12) TMI 1214 - ITAT DELHI] and any other decision which may be cited by the assessee. With the aforesaid observations, this ground is allowed for statistical purposes. Disallowance of assessee s claim for excluding write back of provisions for doubtful debts / advances - HELD THAT:- Claim of the assessee, at least, should have been considered by learned DRP on merit, keeping in view the settled legal principle referred to earlier, rather than rejecting it on technical ground. Since assessee s claim was not considered on merits either by the AO or by DRP and was rejected on technical ground, we restore the issue back to the AO for examining assessee s claim on merit. While doing so, the Assessing Officer should also consider assessee s claim of double addition in respect of the provision for bad debt pertaining to the assessment year 2004 05 and decide the issue on the basis of the decision of the Hon ble High Court on the said issue. It goes without saying, the AO must afford reasonable opportunity of being heard to the assessee before deciding the issue. This ground is allowed for statistical purposes. Disallowance of professional and legal fees - added back in the computation of income, however, reserved its right to claim it during the assessment proceedings by way of Note - HELD THAT:- Departmental authorities were not justified in rejecting assessee s claim purely on the technical ground of having not raised such claim in the return of income. Therefore, following the settled legal principle referred to earlier in this order, we restore the issue to the file of the AO for de novo adjudication after considering the submissions of the assessee. While doing so, the AO must decide the issue on merit keeping in view the decisions to be cited by the assessee. Needless to mention, the AO must afford reasonable opportunity of being heard to the assessee. Ground is allowed for statistical purposes. Transfer pricing adjustment made to the interest on loan to the AE - HELD THAT:- Rate of interest applicable to the loan advanced to the AEs. While the DRP has directed the Assessing Officer to compute interest at LIBOR plus 200 basis points, it is the contention of the assessee that as per internal CUP available, interest rate cannot exceed LIBOR plus 50 basis points. In this context, it has been submitted by the assessee that the overseas AE in U.K. has taken a loan from third party in U.K. at LIBOR plus 30 basis points. Similarly, he had submitted that the AE in Spain has taken loan from an unrelated party in the same period at the interest rate of Euribor plus 127.79 basis points. Assessee s contention regarding availability of internal CUP requires examination. Moreover, while deciding similar issue in assessment year 2006 07, [ 2019 (2) TMI 278 - ITAT MUMBAI] , we have restored the issue to the Assessing Officer for considering various submissions made by the assessee with regard to the rate of interest. In view of the aforesaid, we restore the issue to the AO / Transfer Pricing Officer for de novo adjudication after considering assessee s claim of availability of internal CUP. This ground is allowed for statistical purposes. Short TDS credit - HELD THAT:- We direct the Assessing Officer to allow actual credit for TDS after verifying assessee s claim. Levy of interest under section 234C - HELD THAT:- Interest u/s 234C of the Act has to be charged on the income returned by the assessee and not on the assessed income. Accordingly, we direct the Assessing Officer to compute interest u/s 234C on the income returned by the assessee. This ground is allowed. Validity of the order passed under section 92CA(3) - HELD THAT:- Undisputedly, the assessee has not challenged the validity of the order passed under section 92CA(3) either in the course of Transfer Pricing proceedings or even before DRP. For the first time, the assessee has raised the issue before the Tribunal. Though, the issue raised in the additional ground is a purely jurisdictional issue going to the root of the matter, hence, requires to be admitted, however, following our decision in assessment year 2006 07 (supra), we restore the issue to the Assessing Officer to decide the same after considering assessee s submissions. These grounds are allowed for statistical purposes. Assessee s appeal is partly allowed 2019 (5) TMI 14 Exemption u/s 11 - application for registration u/s 12AA - not responded by competent authority within six months - deemed registration - HELD THAT:- CIT(Exemptions) had accepted the fact of receipt of application for registration on 27/12/2005. Since there is no denial by the department within six months, the assessee was deemingly granted registration by virtue of application under section 12AA not being rejected within the stipulated time period of six months from the date of filing the application for registration. Nowhere, there is any adverse observation of the A.O. and the ld. CIT(A) to the effect that the assessee was not following the object of the society and the assessee is not a charitable institution. As relying on SOCIETY FOR THE PROMN. OF EDN., ALLAHABAD [ 2016 (2) TMI 672 - SUPREME COURT] and SOCIETY FOR THE PROMOTION OF EDUCATION, ADVENTURE SPORT CONSERVATION OF ENVIRONMENT [ 2008 (4) TMI 700 - ALLAHABAD HIGH COURT] no merit in the action of the lower authorities for denial of claim of exemption U/s 11 of the Act - Decided in favour of assessee. 2019 (5) TMI 13 Addition of employee s contribution to Provident Fund u/s 36(1)(va) - sum was paid before the due date of submission of return u/s 139(1) but after the due date of payment as per respective Acts - HELD THAT:- This issue is covered in favour of the assessee by the various decisions of the Hon ble jurisdictional High Court including the decision in case of CIT vs. State Bank of Bikaner Jaipur [ 2014 (5) TMI 222 - RAJASTHAN HIGH COURT] as well as decision in case of CIT vs. Jaipur Vidyut Vitran Nigam Ltd. [ 2014 (1) TMI 1085 - RAJASTHAN HIGH COURT] and in case of CIT vs. Udaipur Dugdh Utpadak Sahakari Sangh Ltd. [ 2014 (8) TMI 677 - RAJASTHAN HIGH COURT]. This issue is decided in favour of the assessee and against the Revenue. Hence, disallowances/additions made by the AO on account of employees contribution to PF ESI are hereby deleted. - Appeal of the assessee is allowed. 2019 (5) TMI 12 Rejection of accounts and estimation of profit - HELD THAT:- Assessee states of the AO having not followed the directions by the Jt. CIT u/s. 144A, he does not explain as to in what manner, nor has made these directions a part of the paper-book. In fact, the AO himself states of the assessment order of it being in deference to the guidance issued u/s. 144A. We consider it pertinent to mention this as a direction/s u/s. 144A is binding on the AO, so that any action by him inconsistent therewith, cannot hold. Deduction u/s. 80IB - consolidated income from two units, christened Unit I and Unit II - whether the second unit was an extension of the first unit or a separate unit? - HELD THAT:- What is decisive of the matter, and the test therefore of a new unit is its independence, i.e., from the first (existing) unit. We say so as this only would distinguish a case of extension substantial or otherwise, of a unit from establishing a new undertaking. The ld. CIT(A), though appreciates this as the issue (para 3, pg. 4 of the impugned order), does not issue any finding thereon, merely stating that there is no splitting or reconstruction of the existing unit. The assessment, is set-aside back to the file of the AO for proper determination, who shall examine the issue in all its aspects, and decide afresh, taking into account the material deemed relevant, including that the assessee may wish to additionally rely upon. This, then, decides the issue as regards deduction u/s. 80-IB. Capital receipt - The only issue is if the same is, as claimed by the assessee, reduced from the cost of the relevant plant and machinery for claim of depreciation. If so, that is the end of the matter. If not, the same would need to be adjusted for computing the depreciation admissible (refer Explanation 8 to s. 43(1)). - Revenue s appeal is allowed for statistical purposes. 2019 (5) TMI 11 Addition on receipts at Cash basis and Sundry Creditors - mercantile system of accounting or Cash system of Accounting - disallowance of accounting charges claimed in Profit Loss account - disallowance of donation - Addition on account of under recording of contract payment - difference in Form No. 26AS - CIT-A deleted the additions respectively - HELD THAT:- CIT(A) has discussed all issues in detail as noted above and we find no infirmity in the order of the Ld. CIT(A). The assessee has produced credible evidence before the Ld. CIT(A) that he had maintained regular books of accounts on mercantile basis for the accounting purpose, as is clear from the tax audit report submitted before CIT(A) which could not be controverted by the Ld. DR. From the above finding it is also clear that assessee has recorded the expenses / revenue on mercantile basis therefore the AO is not justified to make additions regarding creditors for expenses - the payment to accountant has been explained by the assessee before the Ld. CIT(A) that it is in the nature of salary and therefore, the payment is under the limit for deducting TDS on the salary. In respect of donation also, the ld. CIT(A) has rightly sustained the disallowance of donation to the extent of ₹ 5000/- out of ₹ 8,000/- for want of evidence. We, therefore, find no infirmity in the impugned order on this score. Addition on account of difference in Form No. 26AS - assessee has rightly explained by the ld. CIT(A) and ₹ 15,450 was a service tax on account of supply of labour to M/s. Dyna Aircon Pvt. Ltd. which has been separately accounted for. Therefore, we do not find any justification to interfere with the order of ld. CIT(A) on this issue. - Decided against revenue. 2019 (5) TMI 10 Disallowance on account of advances written off - assessee has claimed bad debts which represented the advances written off - deduction has been claimed under the wrong section - advances written off were never booked as income of the assessee in the earlier years - assessee claimed as a deduction u/s 37(1) or 28 - AO rejected the claim by observing that there was no evidence that the advances were given in the course of the business - CIT (A) reversed the order of the AO - HELD THAT:- Admittedly In the present case, the advances were given by the assessee to the parties long time ago as evident from the submission of the assessee which was not disputed by the authorities below. Thus in the instant case if the direct pieces of evidence are not available with the assessee, then in such a situation, the circumstantial pieces of evidence are required to be considered while adjudicating the issue on hand. It is an undisputed fact the advances written off by the assessee as discussed above cannot be categorized as bad-debts under the provisions of section 36 (1)(vii) and 36(2). As established law that the advances given in the course of the business are eligible for deduction under section 37(1)/ 28. This fact has already been elaborated in detail in the preceding paragraphs. Thus we are of the view claim of the assessee cannot be just rejected merely on the ground that the deduction has been claimed under the wrong section. Assessee has written off such advances in its books of accounts when it finds that such advances are not recoverable. It is also important to note that there should not be any dictate/ direction from any superior authority for the writing off such advances. The decision of the assessee is in itself sufficient to claim the deduction for such advances by the writing off in the books of accounts subject to the conditions as specified u/s 37(1)/ 28. Thus we disagree with the contention of the learned CIT-A. Thus AO had emphasized on the fact that the assessee failed to produce the necessary details of the parties. Indeed such details of the parties were one of the corroborative factors which would eliminate the doubts, but in the absence of that agreement, the other circumstances ought to have been evaluated, which could lead the adjudicating authority towards a firm conclusion. No disallowance is warranted for advances written off as bad debts. Thus the conclusions drawn by the Commissioner (Appeals) were to be upheld. Hence the ground of appeal of the Revenue is dismissed. Disallowance u/s 43B - delay in payments made to the employer as well as employee s contribution to PF - HELD THAT:- The issue regarding the employee s contribution towards the provident fund after the grace period as specified under the relevant Act is not eligible for deduction u/s 43B, in view of the judgment of Hon ble Gujarat High Court in the case of the GSRTC [ 2014 (1) TMI 502 - GUJARAT HIGH COURT] . Regarding the employer s contribution towards the provident fund, we note that the employer deposited the same before the due date of filing the income tax return as specified u/s 139(1) . Thus, we are of the view that the assessee has complied with the provision of section 43B. No reason to interfere in the order of the CIT (A). The ground of appeal of the Revenue is partly allowed. Non-deduction of TDS on the payment made for investigation expenses - paid by bank on behalf of assessee and debited to the loan account - HELD THAT:- The primary liability of the assessee was to make the payment to the chartered accountant firm. Thus merely the payment was made by the bank on behalf of the assessee does not mean that the transaction is covered under the provisions of section 194A read with section 2(28A). As such the assessee is liable to deduct the TDS u/s 194J. Thus assessee is not eligible for deduction for the expenses due to non-deduction of TDS under section 194J read with section 40a(ia). As per the 2nd proviso to the section 40a(ia) the expenses on account of non-deduction of TDS will not be disallowed if the recipient has included such receipts in its books of accounts and offered the same to tax. Therefore, in the interest of justice and fair play, we are inclined to set aside the issue to the file of AO for fresh adjudication as per the provisions of law. - the ground of appeal of the Revenue is allowed for statistical purposes. Difference in income declared in return and shown in form 16A - CIT (A) deleted the addition made by the AO by observing that IPOL has deducted the TDS twice on the advance money as well as on the actual bill of the assessee - HELD THAT:- We note that assessee has shown job work charges from IOPL in its books which was also confirmed by the party as evident from the details available on the paper book. We also note that the AO without finding out any defect in the reconciliation filed by the assessee has relied on form 16. AO action for the addition was based on the form 16A only which is not correct as per the provision of law. AO should have pointed out the specific defect in the submission of the assessee before making the disallowance. In view of the above, we do not find any infirmity in the order of learned CIT-A. Hence the ground of appeal of the revenue is dismissed. 2019 (5) TMI 9 Defective return - N.P. determination - assessee declared presumptive income less than 8% of gross receipt declared in the return of income - as argued proceedings u/s. 143(3) of the Act is void since the return was declared defective - case was selected for scrutiny by CASS - HELD THAT:- Assessee has appointed a new AR in First Appeal and no effort has been made to either produce the AR who filed the return nor any affidavit or even a confirmation of the previous AR has been filed to corroborate the error that was apparently committed by him. However, before the Ld. CIT(A) a technical ground was raised that the proceedings u/s. 143(3) of the Act is void since the return was declared defective - no such plea was taken during the assessment proceedings in which the assessee not only participated but even his statement was recorded. It is also to be noted that the case was selected for scrutiny by CASS which is computer based selection and not manual selection of the cases for scrutiny. So, the plea of the AR that the return was defective does not have any basis. In the absence of any third party evidence in the form of confirmation or admission by the original counsel who filed the return with regard to the error attributed to him, the affidavit of the assessee filed at the time of assessment whose unsigned and unverified extract has been filed before the CIT(A), has very little evidentiary value as it does not corroborate the version of the assessee. CIT(A) has rightly held that no sufficient evidence was brought on record to interfere the findings of the AO in the assessment order, which does not need any interference on our part. - Decided against assessee. 2019 (5) TMI 8 Categorization/characterization of income surrendered during survey proceedings - deemed income from undisclosed sources u/s 69, 69A, 69B and 69C or income from business - whether from disclosed or undisclosed sources, and the allowability of claim of set off of losses ,both current and brought forward ,against the same? - tax rate u/s 115BBE HELD THAT:- To put it simply, the unrecorded investments/assets/expenditures made out of unexplained sources are treated as deemed incomes of the assessee. The onus is on the assessee to establish the source of the surrendered income failing which it is to be categorized as deemed income u/s 69/69A/B/C. And establishing the source of income is a factual matter. Surrender was on account of debtors/receivables relating to the business of the assessee only. The Revenue has accepted the surrender as such, as being on account of receivables. It follows that the debtors were generated from the sales made by the assessee during the course of carrying on the business of the assessee, which was not recorded in the books of the assessee. Though the said income was not recorded in the books of the assessee but the source of the same stood duly explained by the assessee as being from the business of the assessee. Even otherwise no other source of income of the assessee is there on record either disclosed by the assessee or unearthed by the Revenue. The preponderance of probability therefore is that the debtors were sourced from the business of the assessee. Therefore, there is no question of treating it as deemed income from undisclosed sources u/s 69, 69A, 69B and 69C and the same is held to be in the nature of Business Income of the assessee. Having held so, the same was assessable under the head business and profession and as stated above, the benefit of set off of losses both current and brought forward was allowable to the assessee in accordance with law. Contention of the Revenue therefore that the income be treated as deemed income u/s 69,69A/B/C is accordingly rejected and as a consequence thereto the plea that no set off of losses be allowed against the same u/s 115BBE of the Act also is rejected. Therefore, as per the facts of the case and as per the provisions of law relating to the issue, the surrendered income, we hold, was assessable as business income of the assessee and set off of losses was to be allowed against the same as rightly claimed by the assessee. Whether the set off of losses is to be allowed against the same - whether amendment denying the set off of losses by the Finance Act, 2016 w.e.f. 1.4.2017 was clarificatory in nature and retrospective? - HELD THAT:- The assessee, on the other hand, has drawn our attention to several decisions of the I.T.A.T. ;[ 2017 (8) TMI 721 - ITAT JAIPUR]; [ 2018 (4) TMI 19 - ITAT JAIPUR] , which have held the amendment to be prospective in nature. No contrary decision either of the I.T.A.T. or of any higher judicial authority has been brought to our notice by the Revenue. The decisions rendered by the I.T.A.T. will, therefore, apply, following which, we hold that in the impugned year the assessee was entitled to claim set off of losses against the income assessed as deemed income u/ss 68, 69, 69A, 69B and 69C of the Act as per the provisions of section 115BBE of the Act as it stood prior to amendment by Finance Act, 2016. 2019 (5) TMI 7 Registration u/s 12AA rejected - as per CIT activity of the assessee cannot be termed as charitable as it has been systematic generating surplus from year to year and the amount has not been applied for its objectives - accounts are not audited and higher interest income has been earned from the surplus so generated, etc. - whether application was rightly rejected seeking registration u/s 12AA of the Act on the basis of the reasons stated herein above? - HELD THAT:- In CIT Vs. Surya Educational Charitable Trust, [ 2011 (10) TMI 47 - PUNJAB AND HARYANA HIGH COURT] wherein held that the object of section 12AA of the Act, is to examine the genuineness of the objects of the Trust, but not the income of the Trust for charitable or religious purposes. The stage of application of income is when such Trust or Institution files its return. At the stage of granting registration, the Ld. CIT has to restrict himself to the objects of the assessee and Genuineness of the activities. The CIT has not to examine whether the funds have been applied or not. In the case in hand, the Ld. CIT rejected the application substantially on the basis that the assessee has accumulated funds which are not been ploughed back for charitable purposes. The profits earned are invested in ever increasing FDRs to earn interest income instead of utilizing for charitable purposes. The explanation of the assessee for accumulating the funds is that it planned for future expansion of technical education in state. The assessee has also applied funds for constructing the hotels for boys and girls, auditorium with the sitting capacity of 3000, campus development to establish green campus. The assessee has also established UITs at Jhabua Shadol for which the capital expenditure will be approximately ₹ 100 crores. In our considered view, the Ld. CIT has not considered the explanation in the light of the binding precedents. Set aside the order of the Ld. CIT(E) and restore the issue of granting of registration to his file to re-consider the same - Decided in favour of assessee for statistical purposes. 2019 (5) TMI 6 Penalty u/s 271D - contravention to the provision of section 299SS - cash received from the father - difference between the gift and loan/Deposit - gift deed prepared subsequently - CBDT Circular No.387 dated 06/07/1984 - no allegation that the assessee has introduced unaccounted money in his business - HELD THAT:- Provision of section 269SS was brought under the statue to discourage the assessee to justify their unaccounted money. However, in the case on hand, there is no allegation that the assessee has introduced unaccounted money in his business. Thus, keeping in view the object of the provision of section 269SS the cash transaction which is genuine cannot be brought under the net of tax under the provision of section 269SS. Such transactions between the relatives and sister concern are not subject to the provisions of section 269SS. In the similar facts and circumstances in the case of G.D. Subraya Sheregar vs. ITO [ 2006 (4) TMI 356 - ITAT BANGALORE] has decided the issue in favor of the assessee. In view of the above proposition we are of the opinion that the Genuineness of the cash transaction has not been doubted between the son and father. Therefore, the penalty levied u/s 271D of the Act is not sustainable. The controversy arises merely delay in preparation of Gift Deed can cause prejudice to the assessee by holding that the cash transaction is not in the nature of the gift. In this regard we note that a Gift Deed is nothing but an understanding in writing which proves/establishes the nature of transaction carried out between the parties. Once the donor has agreed/confirmed that he had given a gift to the assessee, then the same cannot be denied merely on the ground that the Gift Deed was not prepared at the relevant time. Even if it was given a loan at that relevant time and later on the parties agreed to treat the same as a gift, then the matter ends here as the transaction is between son and father which was substantiated with the gift deed and confirmation. There is the basic difference between the gift and loan/Deposit. A gift is never paid back/return to the donor while it is not so in the case of the loan. There is nothing on record which shows that money is paid back to the father by the assessee directly or indirectly - direct the AO to delete the penalty u/s 271D - Decided in favour of assessee. Customs 2019 (5) TMI 88 Smuggling - improper importation of goods - Section 110 of the Customs Act, 1962 - Provisional release of goods - HELD THAT:- The statute itself provides for the disposal of the seized goods, documents and things by the appropriate officer in such a manner as the Central Government may from time to time determine after following the procedure prescribed under the Customs Act, 1962 in cases where the goods are of perishable or dangerous nature and taking into account the depreciation in the value of the goods with the passage of time, constrained storage space for the goods or any other relevant consideration by notification in the official gazette which notification is also to satisfy the goods or classes of goods through which the disposal may be ordered under Sub-section (1) of Section 110 of the Customs Act, 1962. It is apparent that the Customs Act, 1962 provides for a complete code in itself in relation to search, seizure, confiscation and release of goods seized in alleged violation of the Customs Act, 1962 - at the stage of investigation being conducted by the Customs Officers that the provision of Section 451 of the Cr.P.C., 1973 thus do not operate. It is apparent that despite the non-existence of a specific bar to the jurisdiction of Courts in the Customs Act, 1962 to release of the seized goods during investigation by the Customs Authority, the Trial Court could not have invoked the provisions of Section 451 of the Code of Civil Procedure, 1973 for release of the vehicles in question on superdari in as much as the seizure of the two vehicles in question was not subject matter of any inquiry or trial before the learned CMM at the time of consideration of the prayer for release of the vehicles on superdari. The impugned orders of the learned Trial Court are thus set aside - petition disposed off. 2019 (5) TMI 87 Advanced Authorization Scheme - Export Obligation not fulfilled - whether the petitioner is entitled to clubbing of its three licenses in question? - declaring the petitioner to be a defaulter and placing the petitioner under the Denied Entry List - HELD THAT:- The petitioner was required to discharge its export obligations under the advance license dated 27.08.2004 within a period of 18 months (as is apparent from the copy of the license annexed alongwith the petitioner). However, according to the counter affidavit filed on behalf of the DGFT, the said obligation is required to be completed within a period of 36 months. Admittedly, the petitioner was required to submit documents to evidence fulfillment of the export obligation within a period of two months from the date of the expiry of the said period. However, the petitioner failed and neglected to do so. It was not in response to the show cause notice but an independent request for providing clubbing facility and approval for extension of the export obligation. Thus, concededly, the petitioner had not discharged its export obligations as required - the decision of DGFT to pass an order under Rule 7.1(k) of the Foreign Trade (Regulation) Rules, 1993 cannot be faulted. Thus, no interference with the impugned order dated 14.10.2014 is warranted. Petition dismissed. 2019 (5) TMI 86 Refund of Terminal Excise Duty - International Competitive Bidding - para 8.3(c) of Foreign Trade Policy - principles of natural justice - HELD THAT:- There is a specific clause in the purchase order and eventhough it is pointed out that the appellant is eligible for exemption from payment of Terminal Excise Duty, the claim application was deficient, and the same was not considered on the ground that there is no provision under para 9.2(c) of Foreign Trade Policy to allow such claim. It is the duty of the customers to obtain exemption from Terminal Excise Duty at the time of making supply itself and the claim made subsequently for refund of Terminal Excise Duty being the benefits provided in para-8.3(c), which stipulates that exemption from Terminal Excise Duty, where supplies are made against International Competitive Bidding and in other cases, refund of Terminal Excise Duty will be given could not be considered. This Court is of the view that when the same issue has been allowed in favour of the assessee and against the respondent, this petitioner is also entitled for similar relief seeking for refund of the Terminal Excise Duty and respondent is directed to process the refund claim petition made, in accordance with 2009 policy. Petition allowed. 2019 (5) TMI 84 Non-compliance of pre-deposit - EPCG scheme to import capital goods at concessional rate of duty - HELD THAT:- The assessee submitted copy of certificate of discharge on 6.6.2017. The respondent informed the assessee that it had no power to review or withdraw its order. Thereafter, the assessee filed appeal alongwith application for condonation of delay as well as waiver of mandatory pre-deposit. The Tribunal directed the assessee to make the pre-deposit. Ultimately, the assessee filed an affidavit before the Tribunal that it was not in a position to make the mandatory pre-deposit due to financial constraints. Thus, the assessee failed to fulfill the required conditions. Appeal dismissed on account of failure to make the pre-deposit. 2019 (5) TMI 83 Rectification of mistake - error apparent on the face of record or not - HELD THAT:- There is merit in the ROM application filed by the Revenue. There indeed has been an error apparent on the face of record as pointed out by the Revenue. In the event, paragraph 10.4 of the impugned Final Order will require to be rectified - ROM application allowed. 2019 (5) TMI 82 Import of restricted item - Gold Granules of Purity 99.99% (Non-Monetary) - It is the case of the Revenue that import of Gold Granules is permitted only through a Nominated Bank or a Nominated Agency, or a Holder of Status of Star and Premier Trading Houses, subject to RBI Regulation and procedure prescribed in this regard - HELD THAT:- As per the RBI regulations, it is only the Nominated Bank and Nominated Agency as notified by DGFT which is permitted to import the said goods - Since the appellant is not a Nominated Bank or a Nominated Agency or a Holder of Status of Star and Premier Trading Houses, the restriction procedures and clarifications issued by the RBI relating to import of Gold/Gold Granules do not entitle the payment to import the Gold Granules in question. Further, it is not in dispute that the Gold Medallion of Purity 999.9 fall under CTH 71141910 of CETA 1975 and as per the Import Policy, the Articles of Gold are classifiable under CTH 71141910 and are freely importable and there is no restriction, Gold Medallion fall within the definition of Articles of Gold . Further, the appellants have imported the Gold Medallion which is classified as Articles of Gold from Korea and vide Notification No. 152/2009 dated 31.12.2009 the BCD leviable on the import of Articles of Gold from Korea falling under Chapter 71141910 is Nil. Further, CBEC Circular No. 27/2016-Cus. dated 10.06.2016 relied upon by both the authorities is not applicable in the facts and the circumstances of this case because the appellant is not a Nominated Agency but it is only an individual importer who has imported gold against advance payment or Letter of Credit (not exceeding 90 days) for Home consumption, wholesale and retail sales. Further, the Master Direction issued by the RBI is also not applicable in the present case because that instruction of the RBI only applies to Nominated Banks and Nominated Agencies as notified by DGFT. Further, I also note that in the present case, the importer has not imported gold on consignment basis and therefore, the conditions laid down by the RBI is not applicable to the appellant. Appeal allowed - decided in favor of appellant. 2019 (5) TMI 81 Import of restricted item - Gold Granules of Purity 99.99% (Non-Monetary) - It is the case of the Revenue that import of Gold Granules is permitted only through a Nominated Bank or a Nominated Agency, or a Holder of Status of Star and Premier Trading Houses, subject to RBI Regulation and procedure prescribed in this regard - HELD THAT:- Since the appellant is not a Nominated Bank or a Nominated Agency or a Holder of Status of Star and Premier Trading Houses, the restriction procedures and clarifications issued by the RBI relating to import of Gold/Gold Granules do not entitle the payment to import the Gold Granules in question. Admittedly, the appellant does not fall in the category of Nominated Agencies but there is no bar on the importer to import Gold in any form unless it is restricted like Monetary Gold which is covered under CTH 71082000. Appeal allowed - decided in favor of appellant. 2019 (5) TMI 80 Revocation of CHA License - whether notice issued by Commissioner of Customs in writing to the Custom Broker within 90 days from the date of receipt of an offence report is required to be served within 90 days or not? - Regulation 20 of Customs Broker Licensing Regulation, 2013 - HELD THAT:- The Commissioner of Customs shall issue a notice in writing to the Custom Broker within 90 days from the date of receipt of an offence report which means that the Commissioner of Customs is required to issue notice in writing to the Custom Broker which does not mean that if he has issued the notice and kept it in his file, so, he has complied with the provisions of Regulation 20 of CBLR, 2013. In fact, it is to be issued to the Custom Broker which means it should be received by Custom Broker. The notice was required to be received by the Custom Broker within 90 days of the receipt of the offence report - Admittedly, as per the impugned order itself, the notice was received by the Custom Broker only on 28 August, 2018 which is the period beyond the 90 days prescribed in the said Regulation. The SCN issued to the Custom Broker is barred by limitation - Appeal allowed - decided in favor of appellant. 2019 (5) TMI 79 Principles of natural justice - notice for imposition of penalty not issued - Imposition of penalty under Regulation 12(8) of the Handling of Cargo in Customs Area Regulations, 2009 - HELD THAT:- Though the Bond which was executed by the appellant for ₹ 3 Crores was due to expire on 16.06.2018 but the appellant vide their letter dated 07.06.2018 requested for the extension of the Bond on the ground that filing of the fresh Bond of ₹ 11 Crores will take some time as the same needs approval of the Board of the Port Trust. Imposing the penalty without issuing the notice thereby denying an opportunity to oppose the imposition of penalty is in violation of the principles of natural justice - Penalty not sustainable - appeal allowed - decided in favor of appellant. 2019 (5) TMI 78 Waiver of penalty u/s 112 of CA - contraventions of the provisions or not - HELD THAT:- No penalty was imposed by the authorities below on the ground that respondent has not contravened the provisions of Section 112 of the Customs Act. Further, the Commissioner(Appeals) has categorically come to the conclusion that in this case, the importer has acted bona fidely and there is no negligence on his part. There is no infirmity in the impugned order dropping the penalty under Section 112 of the Customs Act, 1962 - appeal dismissed - decided against Revenue. Service Tax 2019 (5) TMI 77 Nature of activity - service or not - laying or relaying of roads for PWD and other local corporations based on the contracts awarded by the Government organizations or undertakings - HELD THAT:- No service tax shall be levied or collected in respect of management, maintenance or repair of roads, during the period from 16.06.2005 to 26.07.2009 (both days inclusive). Since the services of the petitioner would not fall under the definition of Section 65(105)(zzza) of the Finance Act, 1994, he is exempted from the service tax payable during the period from 16.06.2005 to 30.09.2008 for which service tax has been claimed from him. Petition allowed. 2019 (5) TMI 76 Taxability - Construction of residential complexes - CBEC in its circular No. 151/2/2012-ST dated 10.02.2012 - HELD THAT:- The issue of taxability on construction of residential complexes service prior to 01.07.2010 is no longer res integra and has been settled in the case of KOLLA DEVELOPERS BUILDERS VERSUS CCCE ST, HYDERABAD-II [ 2018 (11) TMI 164 - CESTAT HYDERABAD] by the Tribunal - CBEC has also clarified that prior to 01.07.2010 no service tax is chargeable on such services - the demand of service tax for the period prior to 01.07.2010 needs to be set aside. Period post 01.07.2010 - HELD THAT:- The appellant submits that they have already discharged service tax for this period and had filed ST-3 returns. In view of the above, the demand for service tax for the period prior to 01.07.2010 is set aside and the demand for service tax post 01.07.2010 is confirmed which according to the learned counsel for the appellant has already been discharged. Penalty - HELD THAT::- As the demand in respect of the most of the period is set aside and service tax has already been paid in respect of the remaining period, there is no case to impose penalty under Sec.77 78 of the Finance Act, 1994 - Penalties set aside. Appeal allowed - decided in favor of appellant. 2019 (5) TMI 75 Erection, Commissioning and installation services - Sub-contract - It is the case of the revenue that the main contractor M/s NCCL is the one who has rendered services to IIT, Kharagpur and if so they could have claimed refund of service tax under Section 102 of FA - HELD THAT:- The ultimate client in this case is IIT, Kharagpur which is an educational establishment. Research park of this educational establishment was being constructed by the main contractor M/s NCCL and a portion or that work has been sub-contracted to the appellant. The exemption available to the services provided to IIT, Kharagpur does not depend on whether such services are provided directly by the main contractor or by the main contractor using the services of a sub-contractor. The services rendered by the appellant through the main contractor to IIT, Kharagpur are exempted under Sec.102 of the Finance Act, 1994. The application for refund has been filed within the time stipulated in the section. The appellant is not liable to pay service tax as he has already paid the same and he is entitled to refund under Sec.102 of the Finance Act, 1994 - appeal allowed - decided in favor of appellant. 2019 (5) TMI 74 Business Auxiliary Services - Revenue is of the opinion that such sale and purchase of the space on the vessel constitutes rendering service and service tax is chargeable on the difference between the price at which the said space was initially purchased from the shipping liner and the price which was charged from the customers by the appellant - HELD THAT:- When the appellant is purchasing space, on his own account, on the ship and, in turn, selling the same to their customers, is acting as businessmen and not as a service provider. He is purchasing the space at a lower price and selling the same at a higher price for a profit. Conversely, if he is not able to sell the entire spaces that he had bought or he is forced to sell the same at a lower rate, he may incur a loss. In the instant case, the demand is made on the profit earned during the relevant period by purchasing and selling the space. By no stretch of imagination, can this be considered as a service to their customers. The appellant is acting as a principal and is buying spaces in that capacity and is selling the same to their customers as a principal. There is no provision in the Finance Act, 1994 to charge service tax on profit earned from trading. Service tax can only be levied on the value of taxable services rendered. Appeal allowed - decided in favor of appellant. 2019 (5) TMI 73 Imposition of penalty u/s 78 - payment of tax along with interest on being pointed out - HELD THAT:- The default was only for a short period and the default of delay in filing of the Returns remains accepted. The appellant has also paid penalty and that no appeal is filed before this Court. Further, they have paid the tax on being pointed out and thus, the same is a good cause for the belated payments. Thus, in view of the above facts, there can be no dispute with regard the bonafides of the appellant. It is a fit case where discretion of Section 80 could be exercised to the extent of deleting the penalty under Section 78 and the impugned order is accordingly set aside - appeal allowed - decided in favor of appellant. 2019 (5) TMI 72 Rectification of Mistake - error apparent on the face of record -The error sought to be rectified, is that in the same appeal, there are two orders of the Tribunal stating that earlier order dated 15.07.2015 remanded the matter back to the adjudicating authority while this order decided the issue on merits against the Revenue and that there cannot be two orders on the same appeal. HELD THAT:- On specific query from the Bench as to whether this point was brought to the notice of the Bench when the matters were heard, both sides fairly submit that it was not mentioned before the Bench - there is no error apparent on the face of the records - ROM Application dismissed. 2019 (5) TMI 71 Rectification of Mistake - typographical error - HELD THAT:- The issues seeking rectification merits consideration - ROM application allowed. 2019 (5) TMI 70 Rectification of mistake - error apparent on the face of the record - HELD THAT:- There is no order seeking demand from the appellant on this category and got included in the amount demanded under the works contract service. Since we have set aside the demands of works contract automatically these demands also get set aside. Demands of CENVAT credit of ₹ 13,91,586/- - HELD THAT:- There is no dispute as to that appellant assessee had availed ineligible CENVAT credit of the payment of service tax, accordingly, we hold that the demand of ₹ 13,91,586/- needs to be confirmed along with interest - Since the issue involved in the case could be one of interpretation, penalty sought to be visited on the appellant for this amount is set aside. Application for rectification of mistake filed by the Revenue is partly allowed. 2019 (5) TMI 69 Rectification of Mistake - error apparent on the face of record - HELD THAT:- The bench in Para 8, 9 10 has categorically came to a conclusion that the activity undertaken by the appellant may not be covered under works contract service, accordingly, arrived at a conclusion and appeals were disposed of. By filing this application, we are of the view that appellant seeks to reargue the entire matter on merits, which is not the purport or mandate of the provisions of Sec.35C of Central Excise Act, 1944, made applicable to the Finance Act, 1994. There is no merit on the application - ROM application dismissed. 2019 (5) TMI 68 Rectification of Mistake - typographical error - HELD THAT:- There is typographical error in Para 2 of the Final Order of the Tribunal - the same is rectified. Rectification of mistake - error which is sought to be rectified by the appellant is that the details of man hours spent for each activity along with the cost of such manpower will not be available in some cases - HELD THAT:- There is no error apparent on the face of the records but at the same time the said sentence needs clarification, which is done. Application for ROM disposed off. 2019 (5) TMI 67 Rectification of Mistake - typographical error - HELD THAT:- The error is rectified - application for rectification of mistake stands disposed of. 2019 (5) TMI 66 Rectification of mistake - typographical - HELD THAT:- The application filed by the applicant/assessee seeks to rectify the errors is correct and needs to be allowed, as errors are typographical in nature and rectified - ROM Application allowed. 2019 (5) TMI 65 Rectification of Mistake - typographical error - HELD THAT:- There is some typographical error - the same is rectified - ROM application disposed off. 2019 (5) TMI 64 Rectification of Mistake - error apparent on the face of record - HELD THAT:- Two errors are apparent on the records and accordingly they are rectified. Revenue is seeking another error for rectification is that the Commissioner should not have delegated the power of adjudication to lower authorities and this point was not considered by the Bench - HELD THAT:- In the grounds of appeal, Revenue has not contested as to how the CENVAT Credit which has been allowed is incorrect - there is no error apparent on the face of this order as urged by learned Departmental Representative. Application for ROM disposed off. 2019 (5) TMI 63 Rectification of Mistake - HELD THAT:- The demands which has been confirmed by the adjudicating authority, amount attributable to the tax liability on 25% of freight charges is liable to be paid with interest and abatement of 75% of the freight charges is to be extended to appellant. Since the issue involving of interpretation, no penalty is imposed for the assessee. Application for ROM disposed off. 2019 (5) TMI 62 Rectification of Mistake - typographical error - error apparent on the face of record - HELD THAT:- Since the errors are apparent on the face of the records, accordingly they are rectified - application for ROM disposed off. 2019 (5) TMI 61 Scope of SCN - issue of abatement raised later - HELD THAT:- Since the appellant has now sought eligibility of the abatement of 50% of service tax liability vide Notification no. 30/2012-ST dated 20.06.2012, this is a fit case to be remanded back to the original authority to examine the eligibility under this exemption notification and decide the matter afresh after following principles of natural justice. Appeal allowed by way of remand. 2019 (5) TMI 60 Refund of service tax paid - Benefit of N/N. 12/2003-ST - Works contract service - deduction on the value of materials which was not claimed by oversight - HELD THAT:- Appellant have paid the service tax on the material component which was 55% of the value of the contract, learned counsel draw our attention to the fact that they had discharged state VAT on composition scheme of the total value of the contract and 55% value of contract is material cost has been worked out based upon the consumption of the materials by them and certified by the CA Benefit of notification 12/2003-ST cannot be denied to the respondent. Further, it has to be seen that even for the works contract services, Service Tax (Determination of value) Rules, 2006 provide for reduction of the cost of the materials/property transferred in execution of works contract. The Chartered Accountant s certificate which was produced by the respondent before the lower authorities, as also various bills, would indicate that the claim of the respondent as to there being 55% of the value of the works contract executed by them, is not being disputed. The first appellate authority has categorically recorded that respondent was able to convince him about the claim based upon documents which were in support of the respondent. It is also noted that revenue is not disputing the respondent s eligibility to benefit of notification 12/2003-ST. The claim of the respondent for deduction of material cost to the extent of 55% of the value of the works contract has been properly appreciated by the first appellate authority - though the first appellate authority has recorded an observation that the assessee/respondent is eligible for benefit of notification 01/2006, in effect has not extended that relief to the appellant. Hence, revenue s agitation seems to be irrelevant on this point and is academic in nature. Unjust enrichment - HELD THAT:- The first appellate authority was correct in coming to a conclusion that respondent/assessee has passed the hurdle of unjust enrichment and has not recovered/collected the amount of service tax (claimed as refund) from their customer. Appeal dismissed - decided against Revenue. 2019 (5) TMI 59 Rebate claim - N/N. 11/2005-ST dt. 19/04/2005 - Rejection of benefit of notification on the ground that the appellant was not registered - HELD THAT:- The rejection of the rebate claim under Notification No.11/2005-ST dt. 19/04/2005 on the ground that the appellant was not registered is not sustainable in law in view of the judgment of Hon ble Karnataka High Court in the case of mPortal India Wireless Solutions Pvt. Ltd.[2011 (9) TMI 450 - KARNATAKA HIGH COURT] wherein it has been held that registration with the Department is not a prerequisite for claiming the credit. As far as other grounds on which rejection has taken place is not legally tenable because the appellants have produced all the documents in support of the rebate claim but the same have not been properly examined. Case remanded back to the original authority with a direction to decide the claim of the appellant within a period of three months from the date of receipt of this order - appeal allowed by way of remand. 2019 (5) TMI 58 Extended period of limitation - Cable operator service - multi system operator -N/N. 25/2004-ST dated 10th September 2004 - HELD THAT:- We do not consider it proper that the issue of classification, once settled by the Tribunal, should be reopened in the absence of a contrary order from a judicial authority. Hence, for all practical purposes, the appellant is a multi system operator and such operators were brought within the ambit of taxation only from 10th September 2004. The notice leading to the impugned proceedings has erred in seeking to recover tax beyond the normal period of limitation. CENVAT Credit - HELD THAT:- It is not in dispute that the tax burden of input service had been discharged by the appellant and, in the absence of any specific bar, the entitlement for availment of CENVAT credit of such tax paid by the appellant cannot be denied. This would, doubtlessly, alter the quantum of demand on, as well as the complexion of the proceedings against, the appellant. In particular, the scope for applicability of section 73(3) of Finance Act, 1994 would need to be ascertained in the light of lack of ingredients for the invoking of the extended period of limitation. Matter remanded back to the original authority for a fresh determination of the final tax liability. 2019 (5) TMI 57 Renting of immovable property service - demand of service tax - Benefit of N/N. 45/2010 ST dated 27.02.2010 - HELD THAT:- The appellant had a property in Chenoy Trade Centre, Parklane, and Secunderabad which they rented to M/s Global Technology Pvt. Ltd., but had not declared the rental income in their ST-3 returns and therefore there is a demand of ₹ 30,930/- along with interest confirmed by the Adjudicating Authority - Demand upheld. CENVAT Credit - duty paying documents - improper documentation - Rule 9 CCR, 2004 - HELD THAT:- Appellant submits that they were not able to produce the documents before the Adjudicating Authority but they will be able to do so now. In view of the above, the demand in so far as these two amounts is concerned, needs to be remanded back to the Adjudicating Authority to examine the documentation that may be provided by the appellant and re-determine the CENVAT credit to be denied, if any. Services provided to SEZ developer - benefit of N/N. 09/2009-ST dated 03.03.2009 - Demand on the ground that Notification provided for exemption by way of refund to the SEZ unit/developer and not to the supplier themselves.- HELD THAT:- Supply of services by the assessee to the SEZ developer M/s. APIIC has to be treated as export of services in view of Section 2(m) read with Section 51 of the SEZ Act, 2006. No service tax can, therefore, be levied on such supply notwithstanding the fact that Notification No. 09/2009-ST dated 03.03.2009 did not provide for exemption as the services are deemed to have been exported. Appeal disposed off. 2019 (5) TMI 56 Rectification of mistake - liability of interest and penalty - HELD THAT:- Before the Commissioner also assessee had challenged the imposition of interest and he has taken me through the grounds of appeal as well as a letter written by him to the Commissioner dated 24.04.2017 wherein he has prayed for setting aside on interest and penalty both. Further, before the Tribunal also in the ground of appeal, the assessee has challenged the imposition of penalty and interest both and vide order dated 11.10.2018, the Tribunal has allowed the appeal of the appellant. There is no error apparent on the face of the record which needs to be corrected by way of this application - ROM application dismissed. 2019 (5) TMI 55 Rectification of mistake - error apparent on the face of record or not - HELD THAT:- There is no error apparent on the face of the record which needs to be rectified. Further, the applicant through this application wants the Tribunal to consider the order afresh on merits which is beyond the scope of ROM application. ROM application is dismissed. 2019 (5) TMI 54 Rectification of Mistake - HELD THAT:- The only error that the Revenue seeks to rectify is that the appellant had not raised the issue of recognition by AICTE was not agitated before the adjudicating authority but the Tribunal has recorded that they were agitating before the lower authorities - Application for ROM disposed off. 2019 (5) TMI 53 CENVAT Credit - transfer of one unit / part of Business - merger of company - transitional credit - Rule 10 of CCR, 2004 - denial of credit on the ground that the transfer of CENVAT credit under Rule 10 of the CCR, 2004 applies only if the entire business gets transferred or shifted - sufficient balance in the account of M/s Global in their ST-3 returns or not as on 31.03.2008 to justify the CENVAT credit availed by the appellant - HELD THAT:- There is nothing in this Rule to indicate that the company will have to transfer entire business and cannot hive off one part of the business and sell it to another company as has been the assertion in the impugned order. In normal course of business, it is often the practice that one may decide to sell one of its businesses to another firm. In such cases, the business which has been sold gets de-merged from the parent company and merges with the buyer company. Rule 10(2) of CCR, 2004 squarely covers such cases also - there are no force in the argument in the show cause notice that the transfer of the benefits under Rule, 10 of the CCR, 2004 would apply only if the entire business is sold and does not apply if the seller company sells only one of this businesses (in this case, the BPO Division). Denial of credit on the ground that there is no sufficient balance in the account of M/s Global in their ST-3 returns or not as on 31.03.2008 to justify the CENVAT credit availed by the appellant - HELD THAT:- The ST-3 returns filed by the appellant disclose the amount of CENVAT credit availed. The returns do not require invoice of the details of the CENVAT credit availed to be provided in order to the copies of the invoices to be submitted along with the returns - the appellant has fulfilled their obligations under the CENVAT Credit Rules, 2004. Appeal allowed - decided in favor of appellant. 2019 (5) TMI 5 Valuation - inclusion of administrative charges and supervision charges collected over and above the selling price from their customers in the assessable value tripartite agreement - extended period of limitation - HELD THAT:- The procurement of goods in the case on hand by the appellant, be it coal or fertilizer, is not for self-consumption or usage by the appellant nor has it been canvassed in this fashion before us, but for the benefit of TNEB/MFL. This being so, on going through the documents it is to be held that the appellant has only been acting on behalf of TNEB/MFL and thereby providing services in relation to procurement of goods or services for them - Typically, HSS is neither liable to customs duty nor under sales tax and therefore just because the invoice price was offered to sales tax, claimed as exemption, would not ipso facto justify that HSS was liable under sales tax in the first place and secondly, it is not our domain also to go into this issue. Time Limitation - HELD THAT:- The tax evasion came to the notice of the Revenue on specific intelligence following which they started investigating the activities of the appellant. Also apart from analysing the purchase orders, tripartite agreement, balance sheets etc., Revenue also examined the Dy. General Manager of MMTC on 17.03.2008 and after gathering pieces of evidence, a SCN dated 23.03.2009 came to be issued. In the totality of circumstances therefore, the conclusion by the Revenue that there was wilful intent to evade tax cannot be faulted nor considered inconsistent with statutory prescription that justify invocation of extended period of limitation - extended period rightly invoked. Appeal dismissed - decided against appellant. Central Excise 2019 (5) TMI 52 CENVAT Credit - input services - rent-a-cab services - HELD THAT:- Since the learned Chartered Accountant submits that he is not contesting the CENVAT Credit on the rent-a-cab services, there is no dispute to that extent. Penalty u/r 15 (2) of CCR - HELD THAT:- There is no sufficient evidence of either fraud or collision wilful mis-statement or suppression of facts in order to justify imposing penalty. Undoubtedly, there is violation of rules while availing CENVAT credit but the intent to evade payment of central excise duty is not evident from the records. In view of the above, there is a case to set aside the penalty under Rule 15(2). Appeal allowed in part. 2019 (5) TMI 51 CENVAT Credit - steam, an exempt product - denial on the ground that the appellant is clearing steam to an outside factory - Rule 6 of CCR - HELD THAT:- Whether the steam in question was cleared only to 100% EOUs as has been recorded in the second show-cause notice but not in the first show-cause notice and as has been asserted by the learned Chartered Accountant. If the entire steam was cleared to 100% EOUs, then in terms of Rule 6 (6)(ii) no reversal of CENVAT credit is required. This factual position has to be verified by the adjudicating authority. CENVAT Credit - input services availed from M/s Institute of Chemical Technology, (ICT) Mumbai by the appellant in their attempt to produce soya protein in their factory - HELD THAT:- It needs to be verified whether the entire production during the relevant period was cleared on payment of excise duty. Learned A.R. points out that the invoices presented by the learned Chartered Accountant is of 2017 while the services were availed during 2014-15. Therefore, the correlation is required and this verification has to be done. Appeal allowed by way of remand. 2019 (5) TMI 50 Rectification of mistake - error apparent on the face of record - HELD THAT:- Necessary rectification done in para-6 of the Final Order - HELD THAT:- The application for rectification of mistake is disposed off. 2019 (5) TMI 49 Benefit of N/N. 06/2006-CE, dated 01.03.2006 as amended - cast iron fittings manufactured by the appellant - It is the case of the Revenue that the appellant is not entitled to the benefit of this notification insofar as the cast iron fittings are concerned since the notification specifically covers only pipes needed for delivery of water and did not include the fittings - HELD THAT:- The present case is with respect to the eligibility of exemption notification which explicitly does not cover the pipe fittings. Therefore, no benefit can be extended to the pipe fittings in the absence of an exemption notification - The appellant assessee is not eligible for the benefit of exemption notification - appeal dismissed. 2019 (5) TMI 48 Rectification of Mistake - error apparent on the face of record - HELD THAT:- Final Order No. A/31140/2016 issued on 01.11.2016 in this appeal is recalled. Registry is directed to relist the appeal on 15th April 2019 - Application for rectification of mistake is disposed off. 2019 (5) TMI 47 Rectification of mistake - mistake apparent on the face of record - HELD THAT:- The order has taken into consideration the audit conducted by the department on the appellants records and it has been fairly held on merits that the appellants are entitled to credit they have availed and that the appellants case is squarely applicable in terms of Section 11(A)(2B). Therefore, there is no scope for any confusion in this regard. Mention of the word records and documents in para 7 is a mistake apparent on record. Therefore, in the interest of justice and in order to eliminate any kind of doubt in this regard, necessary rectification is carried out. ROM Application allowed. 2019 (5) TMI 46 Rectification of Mistake - error apparent on the face of record or not? - HELD THAT:- In paragraph No. 10 the bench has given a reasoning to come to a conclusion that CENVAT credit of ₹ 2,26,303/- is denied to the appellant - there is no error, leave alone an error apparent on the face of the record. Applications for rectification of mistake are dismissed. 2019 (5) TMI 45 Rectification of Mistake - HELD THAT:- There is an error in the final order dated 19.07.2018, which is apparent on the face of the records, inasmuch these documents relevance was mentioned during the final hearing but not considered. The application brings out that there is an error apparent on the face record which needs rectification, at the same time, in order to meet the ends of the justification it would be appropriate that the issue involved in these appeals is reheard. Applications for rectification of mistake stands disposed of 2019 (5) TMI 44 Clearance of Cement to builders and other institutional/industrial consumers in bags of 50kg each - Sl. Nos. 1A and 1C of Notification No. 04/2006-CE dated 01.03.2006 as amended - HELD THAT:- On an identical issue in the case of PARASAKTI CEMENT INDUSTRIES LTD VERSUS CCCE ST, GUNTUR, CCT, GUNTUR- GST [ 2019 (2) TMI 1095 - CESTAT HYDERABAD] this bench held that the benefit of exemption Notification No. 04/2006-CE as amended from time to time is available to the assessee in respect of clearances institutional buyers whether are not the cement is sold in individual bags. Appeal allowed - decided in favor of appellant. 2019 (5) TMI 43 Valuation - supply of designated medicines to various hospitals at rate contract - price escalation clause - the medicines were sold by the assessee to their distributors at a lower rate and thereafter the distributors supplied the goods to hospitals at higher rates as per the rate contract - Section 4 of CEA - HELD THAT:- The invoices were issued by the appellant on their distributors, which has a transaction value. In turn, the distributor sold the medicines to DMER at higher transaction value. The question of normal price under Sec.4 as it stood prior to 2000 does not apply when there is a transaction value. The show cause notice is entirely based on old Sec.4 which does not apply to the period in question. Therefore, the demand under Sec.11A has to fail on this ground alone. Demand u/s 11D of CEA - HELD THAT:- Prior to Finance Act, 2008, only such persons who are liable to pay duty had to deposit any amount collected as representing duty. This left persons who were not required to pay excise duty and still collected some amount as excise duty scot free - Since the entire period is prior to 2008 and the allegation is that the amounts were collected by the distributors of the assessee and not by the assessee themselves as representing excise duty, the demand under Sec.11D does not sustain against the appellant/assessee. The demand also does not sustain against the distributors because prior to 2008, persons who are not liable to pay excise duty were not covered by Sec.11D. The entire demand under Sec.11A and Sec.11D along with interest and penalties need to be set aside - penalty on the Managing Director of the assessee also needs to be set aside. Appeal allowed - decided in favor of appellant. 2019 (5) TMI 42 Refund claim of amount of interest debited by them in PLA during 2003 - default in payment of duty - Time limitation - HELD THAT:- The debit of interest in RG 23A in march, 2003 was not in accordance with the law as in terms of Rule 3 of the Cenvat Credit Rules 2004, specifically mandates that the Cenvat Credit availed can be utilised for making payment of duty only. The absence in specific provision to debit the amount of interest in CENVAT account, It was found that it was erroneous on the part of the appellant to use CENVAT credit for paying interest. The payment of interest in cash in 2014, and claiming refund of amount debited in March 2003 is definitely time barred, when it is not disputed that they have to pay interest. Appeal dismissed - decided against appellant. 2019 (5) TMI 41 CNC machines and other goods which were supplied by them to various scientific and research institutions such as ISRO, BARC, etc. - Benefit of N/N. 10/1997-CE dated 01.03.1997 - case of Revenue is that the appellant s products are machinery falling under Chapter 84 and do not fall in any of the categories mentioned in the notification - HELD THAT:- A plain reading of the exemption notification would show that unlike some other notifications, this notification did not restrict the benefit to goods falling under chapter heading. Therefore, regardless of which chapter heading of CETH the goods fall, the exemption would apply as long as they match the description of the goods and fulfil other conditions. There is no dispute regarding fulfilment of the conditions of the notification. The only question is whether the CNC machines and other equipment manufactured by the appellants specifically for supply to scientific institutions can be called scientific equipment or otherwise. This issue is no longer res integra and in the case of GODREJ APPLIANCES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, VAPI [ 2008 (2) TMI 393 - CESTAT AHMEDABAD] , this exemption notification has been interpreted by the Tribunal to cover the equipment supplied to scientific and research institutions for the purpose of scientific research whether or not such goods fall under chapter 90. In the present case, CNC machines and other equipment which have been manufactured are no doubt meant for and supplied to scientific institutions for their research and we find no reason to hold that these cannot be called scientific and technical equipment within the meaning of the notification 10/1997-CE. We, therefore, find that the assessee is entitled to the benefit of exemption notification 10/1997-CE on merits. Time Limitation - HELD THAT:- When the assessee has been audited regularly and has not clandestinely removed any goods and has supplied all goods to Government research institutions. The appellants are themselves Public Sector Undertaking and the department has made no case whatsoever to allege that there was fraud, collusion, wilful misstatement or suppression of facts with an intent to evade payment of duty on behalf of the appellant - the extended period of limitation is wrongly invoked and entire demand is hit by limitation as well. The appellant had made out a case both on merits and on limitation. Consequently, the question of penalty under Sec.11AC does not arise. he appellant had made out a case both on merits and on limitation. Consequently, the question of penalty under Sec.11AC does not arise. Appeal allowed - decided in favor of appellant. 2019 (5) TMI 40 CENVAT Credit - reversal of amount of credit of input service lying in his account - whether the appellant availing the benefit of SSI exemption is required to reverse the amount of credit of input service lying in his account on that day under Rule 11(2) or otherwise? - HELD THAT:- A plain reading of Rule 11(2) shows that the assessee who opts for benefit of SSI exemption is required to reverse the amount of credit of inputs lying in stock, lying in work-in-progress or used in the manufacture of final products lying in stock and thereafter if any balance is left, the same shall also lapse. Clearly, this rule did not cover the credit of input services or credit of CENVAT on capital goods. Therefore, the appellant is not required to reverse service tax credit availed by them on that day. There is no legal basis for the department to ask the appellant to reverse the CENVAT credit of input services - appeal allowed - decided in favor of appellant. CST, VAT & Sales Tax 2019 (5) TMI 4 Rate of VAT - Tax at 13% on spirit - vires of Article 14, 19 and 265 of the Constitution - HELD THAT:- In the present case, liquor has been taxed @ 5% whereas, the Rectified Spirit/ Extra Neutral Alcohol is taxed at higher rate of 13% (presently 14%) - The spirit which is a liquor containing alcohol is obtained by distillation under Madhya Pradesh Distillery Rules, 1995, the spirit takes different form. As per Rule 2(3) it can be Denatured Spirit or Denatured Alcohol which means alcohol of any strength which has been rendered effectively unfit for human consumption by admixture of such denaturant as may be approved by the Excise Commissioner - when the sale or purchase is of ENA/ Rectified Spirit the State will be within its competence to charge levy at the rate under residual entry. Under Entry 56 in part II of Schedule II and Entry 6 in part III A of Schedule II of the VAT Act 2002, the liquor which is sold by the holder of licence FL2, FL3, FL3A, FL4 and FL4A is only subjected to 5 % tax and not other species of the liquor which as rightly construed by the State functionaries will be covered by residuary entry - there is no ultra vires or an arbitrary act on the part of the State in charging tax at the rate 13% on ENA/Rectified Spirit. Input Tax Rebate (ITR) - Constitutional validity of sub-section (6-A) of Section 14 of 2002 Act - HELD THAT:- There is no force in the submissions made on behalf of the petitioner that they are not afforded opportunity to prove the bonafide of their claim - the challenge to the validity of Section 14 (6A) fails. Constitutional validity of Section 20(5) of VAT Act, 2002 - HELD THAT:- The contention that the provisions contained under sub-section (5) lacks jurisdictional foundation and therefore it is ultra vires, are taken note of and are rejected outright. If the petitioners have any grievance as regard to the procedural irregularity they are always at liberty to take recourse to forum of appeal for redressal of the grievance. Merely on assumption that the procedural irregularity may occur, a statutory provision cannot be held to ultra vires constitution - The challenge to validity of sub-section (5) of Section 20 also fails. Constitutional validity of the procedure prescribed under Section 46 and 53 of VAT Act, 2002 read with Rule 60 of the Madhya Pradesh VAT Rules, 2006 - procedure of filing of appeal and its summary rejection - HELD THAT:- A Co-ordinate Bench of this Court in ASSOCIATED ALCOHOLS BREWERISE LTD. VERSUS STATE OF M.P. ORS. [ 2018 (10) TMI 145 - MADHYA PRADESH HIGH COURT ] had an occasion to examine the validity of these provisions where it was held that It is clear that rectified spirit is not alcohol and not fit for human consumption and hence, not an excisable article. In absence of such excise ability under the M.P. Excise Act, the question of levying excise or power to levy does not arise and hence the goods in question do not fall within preview of Entry 47, List I of VAT Act to be considered Tax free goods. The challenge to the validity of Section 46 and 53 of Act 2002 read with Rule 60 of the Rules of 2006 is negativated. Petition disposed off. 2019 (5) TMI 3 Condonation of delay of 445 days in filing appeal - sufficient cause for condonation of delay present or not? - HELD THAT:- The law of limitation has been enacted which is based on public policy so as to prescribe time limit for availing legal remedy for redressal of the injury caused. The purpose behind enacting law of limitation is not to destroy the rights of the parties but to see that the uncertainty should not prevail for unlimited period. Under Section 5 of the 1963 Act, the courts are empowered to condone the delay where a party approaching the court belatedly shows sufficient cause for not availing the remedy within the prescribed period. The Apex Court in ORIENTAL AROMA CHEMICAL INDUSTRIES LTD. VERSUS GUJARAT INDUSTRIAL DEVELOPMENT CORPORATION ANR. [ 2010 (2) TMI 1121 - SUPREME COURT OF INDIA ] noticed that the courts should adopt liberal approach where delay is of short period whereas the proof required should be strict where the delay is inordinate. There is no ground to condone the colossal delay of 445 days in filing the appeal. The question regarding whether there is sufficient cause or not depends upon each case and primarily is a question of fact to be considered taking into totality of events which had taken place in a particular case - In the present case after appreciating the matter it cannot be said that there was sufficient cause for condonation of delay. Delay cannot be condoned - application for COD dismissed. 2019 (5) TMI 2 Exemption from payment of VAT to an individual industrial unit or dealer in the developed SEZ - Section 7(6) of the Haryana Value Added Tax Act, 2003 - HELD THAT:- The issue decided in the case of EXCISE AND TAXATION COMMISSIONER, HARYANA VERSUS M/S ANANT RAJ LTD. REWARI AND ANOTHER [2019 (4) TMI 637 - PUNJAB AND HARYANA HIGH COURT], where it was held that a developer and co-developer of an SEZ are entitled for exemption from payment of tax under the Act by virtue of Section 11(1)(i) of the HSEZ Act - appeal disposed off. 2019 (5) TMI 1 Grant of Exemption as per G.O.Ms.No.381/CT and RE dated 15.09.1997 - sales made to M/s.Ford India Limited - HELD THAT:- It is not in dispute that the Petitioner submitted the relevant declaration to avail the benefit of the exemption notification within a period of about four months from the date of assessment. Accordingly, the said declaration could very well have been verified for purposes of ascertaining the genuineness thereof and considered in the revision proceedings. This Court quashes the order of the third Respondent and consequently directs the first Respondent to take into consideration the declaration submitted by the Petitioner in respect of the claim for exemption after verifying the genuineness thereof and thereafter complete a fresh assessment, after providing reasonable opportunity to the Petitioner - petition disposed off. 2019 (4) TMI 1716 Remission of sales tax arrears with interest thereon of the former owner of the immovable property currently owned by the Petitioner - enforceable charge of the property - Section 100 of the Transfer of Property Act, 1882 - HELD THAT:- From a perusal of Section 100 of the TPA, it is clear that, unless expressly provided otherwise by any law for the time being in force, unlike a mortgage, a charge can be enforced against the property in the hands of a transferee only if the transferee had notice of the prior charge and was not a bona fide purchaser. In the instant case, the learned counsel for the Respondent admitted that the Sub- Registrar concerned was not informed about the existence of the charge in favour of the Respondent. It is also clear from the encumbrance certificate, which was obtained by the Petitioner in December 1998, that no charge was reflected in respect of the said property up to December 1998. The allegation that the Petitioner and the erstwhile owner colluded in effecting the sale is not based on actionable evidence and such an inference cannot be countenanced purely on the basis that the parties concerned reside in the same area or even because the original title deeds were missing as per the public notice. Therefore, it cannot be said that the Petitioner had prior notice, either actual or constructive, of the existing charge. Whether Section 24-A of the TNGST Act contains a stipulation that the charge can be enforced even against a transferee without notice? - HELD THAT:- From the language of Section 24(2), it is clear that a statutory charge is created in favour of the sales tax department upon failure to pay sales tax within 21 days of the date of receipt of a notice of assessment. Therefore, from the counter affidavit, it appears that a statutory charge was created over the property on or about 31.06.1996. More importantly, when the language of Section 24-A is examined, there is nothing therein that suggests that the statutory charge would be enforceable against a transferee without notice. There is no evidence that there was collusion between the Petitioner and the erstwhile owner. Equally, from the documents on record, the Petitioner appears to be a bona fide purchaser without notice, either actual or constructive, of the prior charge in favour of the Respondent. Petition allowed.
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