TMI Tax Updates - e-Newsletter
May 21, 2019

Case Laws in this Newsletter:

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

TMI SMS

• Input tax credit/ITC is not a vested right - Amendment to protect the revenue of the State, which was being misused by the dealers confirmed

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Highlights / Catch Notes

• GST:

  Street lighting services to corporation including operation and maintenance - pure services - notification no. 12/2017-CentraI Tax (Rate) - On the contract, it is clearly specified that all installed equipments constructed or system installed are transferred to BMC in good condition - the activities carried out in the instant case will be considered as a supply of goods - GST applicable
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• Income Tax:

  Capital gain computation - determination of the FMV - it is apparent from the report of the Registered valuer that he does not have any authentic basis for the FMV of the land as on the date of conversion and the view taken by the AO in fixing the FMV is equally not proper - remit the matter to the AO for making a reference to the DVO on a rational basis
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• Income Tax:

  Expenditure u/s 37 - As per the guidance note of ICAI on accounting for real estate transactions as revised in the year 2012, selling overheads and indirect cost incurred for the project are booked directly to the profit and loss account as the expense and is not part of construction cost or development cost - AO is not correct in taking all the selling and market expenses to the WIP
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• Income Tax:

  Addition on the basis of Peak Credit - unexplained credit entries in the bank account - basis of Peak Credit can be adopted to remove the cascading effect of the unexplained credit entries (both cash deposits and withdrawals) in the bank account - this is a well settled and common principle so adopted - The finding of facts cannot be said to be perverse or illegal in any manner
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• Income Tax:

  Disallowance u/s 37 - commission to the assessee’s son - when the rate of commission paid to other agents was on par with the rate paid to the assessee’s son and it is not the case of the Revenue that the son has not rendered any service then CIT(Appeals) is not justified in restricting the payment to 50% - allowed the claim in toto
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• Income Tax:

  Accrual of income - An income from the MOU/lease agreement cannot be said to have accrued or arisen or become legally due to assessee till the time the underlying integral conditions of MOU are fulfilled - taxability of income from proposed lease merely based on book entries de hors its accrual is not sustainable in law when tested on the touchstone of realistic parameters and well established judicial principles
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• Income Tax:

  Revision u/s 263 - unsecured loan - AO after having received relevant documents including confirmation has not taken pains to verify the veracity of loan transactions and the creditworthiness of the parties. AO after issuing notices u/s. 133(6), left the enquiry in between despite only 2 reply received out of 23 - it is case of lack of enquiry and not inadequate enquiry - revision sustained
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• Income Tax:

  Penalty u/s 271B - TAR u/s 44AB upto 30th Sep., 2012 - The criminal proceedings were mounted in January, 2012 and the bail was granted in May, 2012 therefore even if the medical reasons of one of the director is accepted, it cannot be accepted that the other director was free enough to run business but was not capable to get the accounts audited - penalty upheld
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• Income Tax:

  Disallowance of 20% of misc. expenses - if there is any deficiency in the vouchers or the bills supporting the incurrence of expenditure, then at the most those can be regarded to be non-genuine and can be disallowed - AO has resorted to estimating the disallowance of the claim without resorting to the procedure u/s 145(3) r.w.s 144 - arbitrary and adhoc disallowance not sustainable
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• Income Tax:

  Addition u/s 68 - it is contended before AO that advances (cash credit) were made against the purchase of goods - AO and the Appellate Authority have the power of Civil Court u/s 131 including the power to enforce attendance of the witnesses and the parties - If a half-hearted enquiry was made by the AO and additions were made as unexplained cash credits u/s 68 and such finding of facts were reversed by the Appellate Authority, it would not give rise to any substantial question of law u/s 260A
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• Income Tax:

  Registration U/s 12AA - charitable activity OR business - Section 8 of the Companies act provides the registration of companies with charitable objects and ample safeguard has been provided to prevent to misuse of the funds and activity of such company - CIT(E) has not considered all these aspect and also not given an opportunity to reply to adverse inquiry made by AO - remanded for reconsideration
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• Customs:

  Import of restricted item or not - shafts - If shipment is made within original validity of irrevocable commercial letter of credit established before the date of imposition of such restriction of import/export, then such export or import is permitted under FTP upto the time limit prescribed in such letter of credit.
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• Customs:

  Refund of excess paid duty - unjust enrichment - There is no evidence by the Department to rebut the certificate given by the appellant’s Chartered Accountant. Otherwise also the higher duty as was assessed provisionally stands already set aside - Refund allowed.
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• Customs:

  Valuation of imported goods - rejection of declared value - The Department has not been able to provide any value for the contemporaneous import but for the third invoice the source of which is not disclosed - Rejection of value is not proper.
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• Customs:

  Determination of assessable value - valuation imported machinery with addition of 50% of the supervision charges - the supervision of erection, commissioning and performance guarantee tests cannot be done in the country of origin because a commissioned plant cannot be imported - services rendered in India - not includable in the assessable value
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• Corporate Law:

  Winding Up - Oppression and mismanagement - Jurisdiction of Company Judge VS NCLT - A composite company petition is perfectly maintainable and this Court had the jurisdiction to grant the relief of winding up at the time of its preferment - impugned judgment to the extent it holds that this Court lacks jurisdiction is unsustainable - remitted to the Company Judge
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• Indian Laws:

  Benami transaction or not - claim of share in the properties - family dispute - inheritance - purchase of property in the name of wife by the deceased husband - learned Trial Court and the High Court have erred in shifting the burden on the defendants to prove that the sale transactions were not benami transactions.
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• Indian Laws:

  Levy of Property Tax - ground cable laid for the purpose of providing telephone services - The Corporation has followed the procedure prescribed under the Act, 1956 for carrying out assessment before issuing demand notice and there is absolutely no violation of the provisions of the Act, 1956.
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• Service Tax:

  Extended period of limitation - the positive action with a negative intention of wilful and deliberate default is a mandatory prerequisite to conclude wilful misstatement or suppression in order to invoke extended period.
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• Service Tax:

  Waiver of penalty u/s 80 - - The entire service tax along with interest was paid, albeit in instalments, even before the statement of the appellant was recorded - thus this is a fit case to invoke Section 80 of the Finance Act, 1994 to waive penalties.
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• Service Tax:

  Refund of service tax paid - it can be seen that organisation namely M/s Bharat Dynamics Limited is mainly/primarily engaged in defence production which are necessary for the country - the activity of construction of compound wall for above company cannot be said to fall under the category of “Commercial or Industrial Construction Services” for the purpose of levy of service tax - refund allowable
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• Service Tax:

  Pre-deposit u/s 35F - C&F Agent Service & Business Support services - certificate issued by Hindustan Unilever Limited that there is a discharge of service tax liability on reverse charge mechanism which, may be subsumed in the demands raised by the appellants, we hold that the provisions of Section 35F are satisfied - hearing the appeal on merits allowed
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• Service Tax:

  Demand of Interest - the Referral Bench itself extended the benefit of Section 80 of Finance Act, 1994 holding that the appellants were under bonafide belief that they were not liable to pay service tax as they have deposited service tax on monthly basis. - the demand of interest is barred by limitation.
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• Central Excise:

  CENVAT Credit - input services - Rent-a-Cab Agency Services - the employees of the appellant were transported for carrying out their work for the appellant and that their services were used in the manufacturing of the final product - credit allowed.
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• Central Excise:

  Interest on delayed refund of Interest - Only because there is no provision for interest on refund of delayed interest that does not mean that there is any bar or prohibition for granting the same. - claim of interest allowed.
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• Central Excise:

  Utilization of cenvat credit of education cess and secondary and higher education cess paid for payment of basic excise duty - The utilization of the credit is not correct in law.
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• Central Excise:

  CENVAT credit - MS items such as plates, angles, channels and sheets - items not excluded by the Rule 2(k)(f) - definition of inputs u/r 2(k) of CCR, 2004 include all materials of goods used in the factory of the manufacture of the final products and it is undisputed that the above materials were used for repair and maintenance of the machinery - credit allowable
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• Central Excise:

  CENVAT Credit - input services - The scope of the term input service under Cenvat Credit Rules, 2004 is still wider including services used by a manufacturer ‘whether directly or indirectly in or in relation to the manufacture of the final products’
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• Central Excise:

  CENVAT credit - input services - service tax not paid in accordance with what is indicated in the Invoice - Rule 4(7) provides for a proportionate reduction of CENVAT Credit where the value of services rendered is reduced subsequently but service tax was discharged on the original amount and borne by the service recipient
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• VAT:

  Input tax credit (ITC) is not a vested right but it is a concession which is given on the fulfillment of certain conditions as enumerated under the given clause.it is not a vested right but it is a concession which is given on the fulfillment of certain conditions as enumerated under the given clause - the reason and object of the Amending Act was to protect the revenue of the State, which was being misused by the dealers and the said provision was provided as a safeguard.
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Articles

• CLASSIFICATION OF ‘LENO BAGS’ UNDER GST

Notifications

• GST - States

• 61/GST-2 - dated 15-5-2019 - Haryana SGST
  Corrigendum - Notification No. 45/GST-2, dated the 31st March, 2019

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• 9/2019 – State Tax(Rate) - S.O. No. 50 - dated 25-4-2019 - Jharkhand SGST
  Amendment in Notification No. 02/2019- State Tax (Rate), dated the 26th April 2019

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• 8/2019 – State Tax(Rate) - S.O. No. 49 - dated 25-4-2019 - Jharkhand SGST
  Amendment in Notification No. 1/2017-State Tax (Rate), dated the 29th June, 2017

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• 7/2019 – State Tax (Rate) - S.O. No. 48 - dated 25-4-2019 - Jharkhand SGST
  Notify certain services to be taxed under RCM under Section 9(4) of the JGST Act, 2017

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• 6/2019 – State Tax(Rate) - S.O. No. 47 - dated 25-4-2019 - Jharkhand SGST
  Under section 148 of the JGST Act, 2017 to notify certain class of registered persons under JGST Act, 2017

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• 5/2019 – State Tax(Rate) - S.O. No. 44 - dated 25-4-2019 - Jharkhand SGST
  Amendment in Notification No. 13/2017- State Tax (Rate), dated the 29th June, 2017

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• 4/2019 – State Tax(Rate) - S.O. No. 46 - dated 25-4-2019 - Jharkhand SGST
  Amendment in Notification No. 12/2017- State Tax (Rate), dated the 29th June, 2017

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• 3/2019 – State Tax (Rate) - S.O. No. 45 - dated 25-4-2019 - Jharkhand SGST
  Amendment in Notification No. 11/2017- State Tax (Rate), dated the 29th June, 2017

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• 2/2019 – State Tax (Rate) - S.O. No. 36 - dated 25-4-2019 - Jharkhand SGST
  Give composition scheme for supplier of services with a tax rate of 6% having annual turn over in preceding year upto ₹ 50 lakhs

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• 3/2019 – State Tax - S.O. No-26 - dated 27-2-2019 - Jharkhand SGST
  Jharkhand Goods and Services Tax (Amendment) Rules, 2019

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• FIN/REV-3/GST/1/08 (Pt-1) (Vol.1)/111 - dated 29-3-2019 - Nagaland SGST
  Seeks to amend notification No.F.NO.FIN/REV3/GST/1/(Pt-1) “N” , 30th June, 2017

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• 19/2019 - dated 17-5-2019 - Telangana SGST
  Notification of Tax persons to the respective jurisdictions

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• 16/2019 - dated 6-5-2019 - Telangana SGST
  Notifications Filing of return in FORM GSTR – 3B – Certain notification issued

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• G.O.Ms.No. 58 - dated 3-5-2019 - Telangana SGST
  Extension of due date for furnishing Quarterly return in FORM GSTR-1 for tax payers with aggregate turnover upto 1.5 crores

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• G.O.Ms.No. 57 - dated 1-5-2019 - Telangana SGST
  Telangana Goods and Services Tax (Tenth Amendment) Rules, 2018.

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• G.O.Ms.No. 55 - 22/2018-State Tax (Rate) - dated 1-5-2019 - Telangana SGST
  Extension of time for exemption from reverse charges liability on certain Goods and Services

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• G.O.Ms.No. 54 - dated 1-5-2019 - Telangana SGST
  Extension of due date for quarterly furnishing of Form GSTR-1 for tax payers with aggregate turnover upto 1.5 crores

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• G.O.Ms.No. 53 - dated 1-5-2019 - Telangana SGST
  Exempting casual taxable persons making taxable supplies of handicraft goods from obtaining Registration

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• G.O.Ms.No. 44 - dated 9-4-2019 - Telangana SGST
  composition scheme for supplier of services with a tax rate of 6% having annual turn over in preceding year upto ₹ 50 lakhs

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• G.O.Ms.No. 26 - dated 6-3-2019 - Telangana SGST
  Rescinds Notification No.8/2017–Central Tax (Rate), Dated: 28.06.2017

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• G.O.Ms.No. 25 - dated 6-3-2019 - Telangana SGST
  Seeks to amend Notification No. G.O.Ms No. 289, Revenue (CT-II) Department, Dt. 18-12- 2017

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• G.O.Ms.No. 24 - dated 6-3-2019 - Telangana SGST
  Telangana Goods and Services Tax (Fourteenth Amendment) Rules, 2019.

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• 08/2019-State Tax (Rate) - dated 30-3-2019 - Tripura SGST
  Amendments in the Notification of the Government of Tripura in the Finance Department, No. 1/2017-State Tax (Rate), dated the 29th June, 2017.

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• 07/2019-State Tax (Rate) - dated 30-3-2019 - Tripura SGST
  Seeks to notify certain services to be taxed under RCM under section 9(4) of SGST Act as recommended by Goods and Services Tax Council for real estate sector.

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• 06/2019-State Tax (Rate) - dated 30-3-2019 - Tripura SGST
  Notifies the following classes of registered persons,

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• 05/2019-State Tax (Rate) - dated 30-3-2019 - Tripura SGST
  Amendments in the Notification of the Government of Tripura, in the Finance Department, No. 13/2017- State Tax (Rate), dated the 29th June, 2017.

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• 04/2019-State Tax (Rate) - dated 30-3-2019 - Tripura SGST
  Amendments in the Notification of the Government of Tripura, in the Finance Department, No. 12/2017-State Tax (Rate), dated the 29th June, 2017.

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• 03/2019-State Tax (Rate) - dated 30-3-2019 - Tripura SGST
  Amendments in the Notification of the Government of Tripura, in the Finance Department, No. 11/2017-State Tax (Rate), dated the 29th June, 2017.

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• F.1-11(91)-TAX/GST/2019 (Part) - dated 8-3-2019 - Tripura SGST
  Seeks to 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

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• F.1-11(91)-TAX/GST/2019 (Part) - dated 8-3-2019 - Tripura SGST
  Seeks to supersede the Gazette notification No. 215 dated 29.06.2017 in order to extend the limit of threshold of aggregate turnover for availing Composition Scheme u/s 10 of the TSGST Act, 2017 to ₹ 75 lakhs

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• F.1-11(91)-TAX/GST/2019 (Part) - dated 8-3-2019 - Tripura SGST
  Seeks to prescribe the due dates for furnishing of FORM GSTR-1 for those taxpayers with aggregate turnover of more than ₹ 1.5 crores for the months of April, May and June, 2019.

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• F.1-11(91)-TAX/GST/2019 (Part) - dated 8-3-2019 - Tripura SGST
  Seeks to prescribe the due dates for furnishing of FORM GSTR-3B for the months of April, May and June, 2019.

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• F.1-11(91)-TAX/GST/2019 - dated 8-3-2019 - Tripura SGST
  The Tripura State Goods and Services Tax (Third Removal of Difficulties) Order, 2019

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• F.1-11(91)-TAX/GST/2019 - dated 8-3-2019 - Tripura SGST
  To give exemption from registration for any person engaged in exclusive supply of goods and whose aggregate turnover in the financial year does not exceed ₹ 20 lakhs.

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• 02/2019-State Tax (Rate) - dated 8-3-2019 - Tripura SGST
  Notifies that the State tax, on the intra-State supply of goods or Services or both upto an aggregate turnover of fifty lakh rupees.

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Circulars / Instructions / Orders

• GST - States - 19/2019-GST (State) - dated 2-5-2019
  GST exemption on the upfront amount payable in for long term lease of plots, under Notification 12/2017 - Central Tax (R) S. No.41 dated 28.06.2017.
• GST - States - 18/2019-GST (State) - dated 2-5-2019
  GST on Seed Certification Tags.
• GST - States - 17/2019-GST (State) - dated 25-4-2019
  Clarification regarding filing of application for revocation of cancellation of registration in terms of Removal of Difficulty Order (ROD) number 05/2019-Central Tax dated 23.04.2019.
• GST - States - 16/2019-GST (State) - dated 25-4-2019
  Clarification in respect of utilization of input tax credit under GST.
• GST - States - 15/2019-GST (State) - dated 9-4-2019
  Clarification regarding exercise of option to pay. tax under notification No. 2/2019- CT(R) dt 07.03.2019.
• GST - States - 14/2019-GST (State) - dated 29-3-2019
  Clarification in respect of transfer of input tax credit in case of death of sole proprietor.
• GST - States - 13/2019-GST (State) - dated 29-3-2019
  Verification of applications for grant of new registration.
• GST - States - 12/2019-GST (State) - dated 28-3-2019
  Clarifications on refund related issues.
• GST - States - 11/2019-GST (State) - dated 16-3-2019
  Nature of Supply of Priority Sector Lending Certificates (PSLC).
• GST - States - 10/2019-GST (State) - dated 15-3-2019
  Clarification on various doubts related to treatment of sales promotion schemes under GST.
• GST - States - F.1-11(8)-TAX/GST/2019/3560-66 - dated 15-3-2019
  Corrigendum to Circular No.21/2018-GST (State) dated 31st December, 2018 corresponding to Central Circular No. 76/50/2018-GST dated 31st December, 2018 issued vide F.No. CBEC- 20/16/04/2018-GST.
• GST - States - F.IV-3(15)-TAX/2017/3462-77 - dated 12-3-2019
  Notification of designated Appeallate Authority

News

• Auction for Sale (Re-Issue) of Government Stocks

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Case Laws:

• GST

• 2019 (5) TMI 1082
  Release of detained goods with Truck - direction to generate new e-way bill and/or to amend the e-way bill - HELD THAT:- The present petition disposed off by directing respondent No.2 to take a decision on the reply dated 3.5.2019 (Annexure P-5), in accordance with law by passing a speaking order and after affording an opportunity of hearing to the petitioner within a period of one week from the date of receipt of the certified copy of the order.

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• 2019 (5) TMI 1133
  Energy Performance Contract - Applicability of entry no. 3 of Notification No 12/2017-Central Tax - services provided by the applicant by way of providing energy saving street lighting services including operation and maintenance of the street lighting installations to Bhubanewsar Municipal Corporation (BMC) - Pure services - HELD THAT:- The appellants have not made any supply of goods either under a works contract or under a contract for composite service involving supply of goods. There is no transfer of property or effective control or possession in the goods during the execution of the contract for BMC. Therefore, the appellants have made supply of pure service in terms of FAQ issued by CBIC on Government service and are entitled to claim exemption vide serial no. 3 of notification no. 12/2017-CentraI Tax (Rate) and corresponding notification issued under the provisions of Odisha GST. What is the scope of pure services mentioned in the exemption notification No. 12.2017 - Central Tax (Rate), dated 28-06-2017? - HELD THAT:- In this case, the scope of the service involves maintenance work and supply of goods, which falls under the works contract services. The exemption is provided to services involves only supply of services and not for works contract services. On the contract, it is clearly specified that all installed equipments constructed or system installed are transferred to BMC in good condition. Therefore, the activities carried out by the appellant in the instant case will be considered as a supply of goods in terms of the provisions of Schedule II, Para 4-A of CGST Act, 2017 / SGST Act, 2017. The appellant under the grounds of appeal has not put forth any arguments or legal provisions to negate the applicability. Therefore, the contention of the appellant that the transaction doesn t involve any supply of goods is not sustainable. Appeal dismissed.

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• Income Tax

• 2019 (5) TMI 1128
  Capital gain computation - determination of the FMV of the property as on the date of conversion - reference to DVO for valuation - taxable event - HELD THAT:- As apparent that the report of the Registered valuer does not have any authentic basis for the FMV of the land as on the date of conversion. On the other hand, the view taken by the AO in fixing the FMV of the land at ₹ 8.41 crore is equally not proper in as much as he has taken such value on 10-10-2013, whereas the land was converted into stock in trade on 01-04-2012. It is thus seen that both the values do not represent the FMV of the property on the date of conversion. FMV of the property on the date of conversion needs to be determined afresh on a rational basis. Set aside the impugned orders and remit the matter to the AO for making a reference to the Departmental Valuation Officer (DVO) for a fresh determination of the FMV of the property as on 01-04-2012, after entertaining objections, if any, from the assesses and then proceeding accordingly. Unexplained investment - AR contended that the assessee were not given proper opportunity to explain their position regarding the source of investments in the bank accounts - HELD THAT:- Without commenting on the merits, it would be in the interest of justice if the impugned orders are set-aside and the matter is restored to the file of the respective AOs - Appeals are allowed for statistical purposes.

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• 2019 (5) TMI 1127
  MAT Credit u/s 115JAA - Inclusion of surcharge and educational cess while adjusting MAT credit - HELD THAT:- As decided in K. SRINIVASAN [ 1971 (11) TMI 2 - SUPREME COURT] held that the legislative history of the Finance Acts, as also the practice indicates that the term income-tax as employed in Section 2 includes surcharges also the special and the additional surcharge whenever provided which are also surcharges within the meaning of Art. 271 of the Constitution. - Decided against revenue

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• 2019 (5) TMI 1126
  Deduction u/s 80-IB(10) in respect of the project at Gangai Nagar, Velachery - deduction in respect of the built-up area exceeding 1500 sq ft on a proportionate basis. - HELD THAT:- The assessee claimed deduction u/s 80IB(10) of the Act for the same project from the AY 2007-08 onwards. This Tribunal has allowed the assessee s claim for the AY 2007-08. On Revenue s appeal, the Hon'ble Jurisdictional High Court has decided the issue in favour of the assessee for the AY 2007-08 [ 2014 (11) TMI 610 - MADRAS HIGH COURT] but held that the assessee is entitled to deduction in respect of the built up area exceeding 1500 sq ft on a proportionate basis. For this assessment year, the CIT (A) gave a finding, inter alia, that the project was designed as a composite project at the proposed site at Survey No.486/1 and 482 at New Secretariat Colony, Velachery, Chennai. The project of the assessee was also in an area of more than one acre. The approvals were also obtained on unit basis only for the benefit of taking advantage of the relevant rules of the Local Authority. Further, from the order of the CIT (A), it is apparent that he had arrived at the conclusion in favour of the assessee after considering the facts of the case and the decision of various higher judiciaries on the identical issue etc. On identical facts and circumstances, this Tribunal allowed the assessee s appeal in AY 2008-09, supra. Therefore, assessee s appeal is allowed. However, the assessee is entitled to deduction in respect of the built-up area exceeding 1500 sq ft on a proportionate basis. - Decided partly in favour of revenue

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• 2019 (5) TMI 1125
  Exemption u/s 11 - grant of approval for renewal u/s 80G(5) denied - assessee has filed blank Form No.10 r.w.r. 17 of the Income Tax Rule, 1962, it is established to have filed as blank at all because objects are not at all specified, spelt out or set out in the Form No.10 - HELD THAT:- It appears that the said Form No.10 though placed before the Learned AO was not duly filled up. Though such defect was curable in nature the same was not accepted by the Learned CIT(A) in appeal in spite of having been placed upon rectification before him along with the written submission by the assessee. We find that the assessee could have been given an opportunity of being heard on the additional evidences on the basis of the rectified filled up Form No.10 for the ends of justice by the first appellate authority itself. In that view of the matter, we find it fit and proper in order to prevent the miscarriage of justice to set aside the issue to the file of the CIT(A) with the direction upon him to take into consideration the filled up Form No.10 as submitted by the assessee before him and also the additional evidences and to pass orders upon affording an opportunity of hearing to the assessee - Assessee s appeal is allowed for statistical purpose.

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• 2019 (5) TMI 1124
  Denial of deduction u/s 80P(2) - no return of income was filed by the assessee - HELD THAT:- Hon ble jurisdictional High Court in the case of Chirakkal Service Co-operative Bank Ltd. [ 2016 (4) TMI 826 - KERALA HIGH COURT] held that the return of income whether filed belatedly before the appellate authority has to be considered for claiming deduction u/s 80P(2) Thus the issue of deduction u/s 80P(2)(a)(i) is restored to the Assessing Officer. The Assessing Officer shall examine the activities of the assessee and determine whether its activities are in compliance with the activities of a cooperative society functioning under the Kerala Co-operative Societies Act, 1969 and grant deduction u/s 80P(2) of the I.T.Act in accordance with law. - Appeals filed by the assessee are allowed for statistical purposes

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• 2019 (5) TMI 1123
  Penalty u/s 271(1)(c) - non specify the nature of default i.e. whether the penalty is levied for concealment of income or for furnishing of inaccurate particulars of income - defective notice - agreed additions by the assessee regarding the shortage diesel claimed by the assessee - HELD THAT:- As relying on MANOJ KUMAR AGRAWAL VERSUS DCIT- 1 (1) , RAIPUR. [ 2018 (8) TMI 1804 - ITAT RAIPUR] Such penalty is unsustainable in law legally. It is a settled legal proposition that the Assessing Officer is under obligation to specify the appropriate limb of clause (c) of section 271(1) of the Act at the time of initiation as well as at the time of levy of penalty. In view of the above deliberation on this issue, without going into the merits of the case, we set-aside the order of the CIT(A) and direct the Assessing Officer to delete the entire penalty imposed by him. - Decided in favour of assessee

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• 2019 (5) TMI 1122
  Deduction u/s 80IB denied - non filing of income tax return before due date u/s 139(1) - For claiming deduction u/s 80IB assessee e-filed report and Form 10CCB and Form 3 CB 3CD for tax audit u/s 44AB online on 25.9.2013 and 23.9.2013 respectively - HELD THAT:- As per provisions of Section 80AC of the Act for claim u/s 80IB assessee is required to furnish the return of income before the due date specified u/s 139(1) of the Act. As in the case of Symbosis Pharmaceuticals P Ltd V/s DCIT [ 2017 (11) TMI 1361 - ITAT CHANDIGARH] wherein deduction u/s 80IC was claimed. Audit report was filed before the due date but income tax return was submitted on 31.3.2014 and deduction u/s 80IC was denied. The Coordinate Bench after considering jurisdictional pronouncements gave following observations holding that the claim of the assessee cannot be outset with, as the return was filed within the extended period stipulated in section 139(4) of the Act and the assessee deserves to succeed in part. In the present case as the return of income though belated but filed subsequently on 22.4.2014 u/s 139(4) of the Act whereas the audit reports have been e filed before the due date of filing of return u/s 139(1) of the Act. We direct A.O to accept the tax audit reports submitted by the assessee in support of claim for deduction u/s 80IB. However the matter is remanded to the A.O for the purpose of verification as during the course of assessment proceedings the facts of the alleged claim u/s 80IB of the Act could not be examined on merits by the assessing authority. We therefore direct the Ld. A.O to examine the claim of the assessee u/s 80IB and if the conditions of Section 80IB of the Act are fulfilled then the deduction should be allowed and delay in filing of return of income should not affect in claiming the deduction by the assessee u/s 80IB - Appeal of the assessee is allowed for statistical purposes.

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• 2019 (5) TMI 1121
  Penalty u/s 271(1)(c) - penalty levied on the basis of vague and non specific show cause notice - defective notice - undisclosed interest income - HELD THAT:- From perusal of the above show cause notices we find that the Ld.A.O has merely mentioned the section but the specific charge i.e. whether the penalty have been initiated for concealment of particulars of income or for furnishing inaccurate particulars of income has not been mentioned. Now whether such type of notice which does not speak about the specific charge leveled against the assessee is valid and tenable in the eyes of law needs to be examined. As decided in MANJUNATHA COTTON AND GINNING FACTORY OTHS., M/S. V.S. LAD SONS, [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] taking up the penalty proceedings on one limb and finding the assesssee in another limb is bad in law . Though in the instant appeal the Ld. A.O has made proper satisfaction in the body of the assessment order but in the notice issued u/s 274 r.w.s. 271(1)(c) of the Act he failed to mention the limbs for which penalty proceedings have been initiated. It is the negligence of the Ld. A.O in not making proper specific charge in the notice u/s 274 about the addition for which penalty proceedings have been initiated. Ld. A.O should be clear as to whether the alleged addition goes under the limb of concealment of particulars of income or furnishing inaccurate particulars of income . Merely issuing notice in general proforma will negate the very purpose of natural justice as held by the Hon'ble Apex Court in the case of Dilip N Shraf [ 2007 (5) TMI 198 - SUPREME COURT] that the quasicriminal proceedings u/s 271(1)(c) of the Act ought to comply with the principles of natural justice. - Decided in favour of assessee.

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• 2019 (5) TMI 1134
  Exemption u/s 11 - Grant of registration u/s.12AA rejected - promotion of Cricket - charitable activity u/s 2(15) or not? - assessee are in receipts from the Board of Control for Cricket in India (BCCI) every year and these are in nature of trade, commerce or business as per proviso to section 2(15) of the Act and therefore, the assessee is not carrying out any charitable activities - HELD THAT:- The assessee is receiving money from BCCI as subsidy for providing services in the IPL matches, for conducting Cricket matches for hiring ground only to promote the Cricket and encouraging new talent in the field of Cricket and objects of all the other Cricket associations of any other state are similar in nature. Therefore, the assessee has not provided any services to any trade, commerce or industry as defined in the proviso to section 2(15) of the Act. The Hon ble Apex Court in the case of CIT Vs. Gujarat Maritime Board reported [ 2007 (12) TMI 7 - SUPREME COURT] has held that if the primary purpose and the predominant object is for welfare of general public then the purpose would be charitable in nature. The assessee is not hit by the proviso to section 2(15) of the Act since it does not conduct any service or activities which are in the nature of trade, commerce or business. All the facts being examined vis- -vis taking into consideration of judicial pronouncements placed before us and examining object of the assessee s society provides that it is for charitable purpose for advancement of any other object of general public utility. As in the case of Ahmedabad Rana Caste Association Vs. Commissioner of Income Tax [ 1971 (9) TMI 8 - SUPREME COURT] wherein it has been held that the object of the trust may be charitable in nature and an object beneficial to a section of public is an object of general public utility. The section of public must be definite and identifiable and it is not necessary that the object should benefit the whole mankind. In the case of the assessee, since it is for promotion of Cricket, it may not be benefiting the entire mankind but those being benefited are definitely identifiable and they are sections of public. The work of the assessee society is to promote Cricket so as to bring forth new talents and provide opportunity to the people for representing the State as well as the Country. Therefore, the object of the assessee is for charitable purpose and nothing else - thus we set aside the order of the Ld.CIT(Exemption) and direct the Ld.CIT(Exemption) to grant registration u/s.12AA of the Act to the assessee society. - Decided in favour of assessee.

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• 2019 (5) TMI 1120
  Accrual of income - amount of sale consideration treated as advance money receipt in the hands of assessee in respect of lease of land in the notified and approved SEZ - HELD THAT:- Conclusion drawn by the CIT(A) for non taxability of consideration from the impugned lease agreement in the absence of accrual thereof and in the absence of any liability of the lessee to pay the same to the assessee as successfully demonstrated on behalf of the assessee. An income from the MOU/lease agreement cannot be said to have accrued or arisen or become legally due to assessee till the time the underlying integral conditions of MOU are fulfilled. We also take note of the crucial fact that the advance received from the lessee was ultimately returned to them owing to continued non-fulfillment of terms and the conditions of the proposed lease. Section 145 also recognizes only accrual or cash method of accounting. Therefore, the corporate body is required to maintain its account on accrual method. As per the accrual basis of accounting, the income should belong to the period in which it accrues. Therefore case clearly justified the alternative case of the assessee that the assessee was merely a custodian of the advances received till the key features of MOU are met and consequently income from lease agreement had never factually accrued or arose in the hands of the assessee. The surrounding facts and circumstances cannot be brushed aside while entrusted with this task. Book entries may, at times, are only subservient to actual facts. We thus do not see any infirmity in the action of the CIT(A) for non-chargeability of the fictional and unaccrued income in the hands of the assessee. The case sought to be propounded on behalf of the Revenue for taxability of income from proposed lease merely based on book entries de hors its accrual in favour of assessee is not sustainable in law when tested on the touchstone of realistic parameters and well established judicial principles. Disallowance of deduction u/s 80IB(10) - HELD THAT:- On appraisal of the development agreements, various approvals granted by the Municipal Corporation for the relevant projects, the CIT(A) came to a justifiable conclusion that the assessee has exercised dominant control over the ownership of the land and has carried out construction and development at its own risks and liabilities. The CIT(A) has taken into account the detailed submissions made on behalf of the assessee while adjudicating the issue in favour of the assessee applying the judicial interpretations available in this regard. The objection towards excessive built up area has also been addressed by the CIT(A) based on documentary evidences. Documentary evidences revealed that built up area was within the permissible limit. The Revenue before us could not point out any deficiency in the order of the CIT(A). We also take note of the significant plea on behalf of the assessee that the claim of deduction u/s 80IB(10) was duly allowed by the AO in subsequent year 2010-11 and 2011-12 in the assessment framed u/s 143(3). Also, in the absence of rebuttal of observations made by the CIT(A), we do not see any justification to interfere with the order of the CIT(A). Disallowance u/s 36(1)(iii) on account of proportionate interest expenditure - HELD THAT:- The assessee has clearly demonstrated its own funds to be in excess of corresponding interest free advances. Secondly, the assessee has earned substantial interest netting of which has not been given by the AO at all. CIT(A) further noted that the AO has adopted inconsistent stand and disallowed the interest expenditure on proportionate basis in this year whereas accepted the interest claim in the earlier years. Before us, the Revenue could not support the case of the AO for disallowance. The issue in the context of the facts is no longer res integra and covered in favour of the assessee by several judicial precedents as rightly recorded by the CIT(A). In these circumstances, we are of the view that the CIT(A) has approached the issue in proper perspective and reversed the wrongful disallowance made by the AO. We thus see no perceptible reason to interfere with the order of the CIT(A). Whether the consideration arising from the MOU/lease deed with AIPL recognized as revenue income despite it being a contingent liability and admittedly not accrued or earned by the assessee is liable for taxation under s.115JB? - HELD THAT:- The CIT(A) having arrived at a finding that the receipt from AIPL are contingent in nature and liable to be returned in the event of non fulfillment of conditions of the agreement, could not have arrived at a finding adverse to the assessee for the purposes of determination of book profit u/s115JB merely because of it being recognized in the P L account by the assessee. Unaccrued income from SEZ project amounting to ₹ 97,72,11,000/- cannot be taken into account for the purposes of determination of book profit u/s115JB and tax liability cannot be fastened on the assessee on this score. Therefore, we find merit in the appeal of the assessee. Deduction under s.80IB(10) - objection has been raised by the Revenue that the terms and the conditions of eligibility of deduction has been breached in as much as the built up area of the residential units exceeded 1500 sq.ft. - Revenue could not rebut the specific finding of the CIT(A) in para 5.3.8 of its order wherein it was concluded by the CIT(A) that the built up area is below 1500 sq.ft. on the basis of documentary evidences. Disallowance u/s 14A - HELD THAT:- We observe that the assessee has not declared any exempt income and consequently the provisions of Section 14A is not attracted in view of CIT vs. Corrtech Energy (P.) Ltd. [ 2014 (3) TMI 856 - GUJARAT HIGH COURT] and other several decisions in this regard. Secondly, the CIT(A) has also recorded a finding to the effect that interest free funds available at the disposal of assessee is in excess of amount of investments which give rise to potential exempt income. Thus disallowance of proportionate interest is not permissible in such circumstances. Hence, we do not see any infirmity in the action of CIT(A) in deleting the disallowance of interest expenditure for the purposes of section 14A

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• 2019 (5) TMI 1119
  Disallowance of miscellaneous expenses - alleged that assessee failed to substantiate such claim by producing verifiable details - adhoc disallowance of 20% of the claim - HELD THAT:- It has to be kept in mind that if there is any deficiency in the vouchers or the bills supporting the incurrence of expenditure, then at the most the expenses to the extent that which are not supported by the vouchers can be regarded to be non-genuine and can be disallowed by the AO while computing the income of the assessee. AO has resorted to estimating the disallowance of the claim without resorting to the procedure prescribed in section 145(3) r.w.s 144. Therefore, the action of the AO is arbitrary in nature and therefore, adhoc disallowance cannot be allowed to sustain - Decided in favour of assessee Disallowance u/s 14A u/r 8D(2)(ii) - as contended assessee has made investment from own funds in securities which fetched exempt income and not from the interest bearing loan funds and therefore no disallowance was warranted u/s Rule 8D2(ii) - HELD THAT:- There is no allegation in the present case before us that the loan funds taken by the assessee from United Bank of India and the Tea Board of India has been utilized for any other business purpose other than for which it was sanctioned and since the loan funds has not been diverted for investment in securities, find force in arguments of the learned AR that no disallowance on account of Rule 8D(2)(ii) was warranted and therefore, we direct deletion of addition made by applying Rule 8D(2)(ii). - Decided in favour of assessee.

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• 2019 (5) TMI 1118
  Deduction u/s.80lB (10) - pro-rata deduction - AO noted that there was no record of the projects being completed by 31:03.2008 - HELD THAT:- As decided in assessee's own case [ 2019 (3) TMI 682 - ITAT HYDERABAD] assessee has only submitted the letters before CIT(A) to claim the deduction in pro-rata basis. As per the findings of ld. CIT(A), these letters do not give any details about the stage of completion, size of the flat to ascertain whether these projects satisfy the conditions specified in section 80IB(10). Therefore, we direct the AO to collect information about the stage of completion of the projects and size of the flats. If it is within the norms, AO should give pro-rata deduction u/s 80IB(10). This is accepted law as far as allowing pro-rata deduction u/s 80IB(10). With regard to completion certificates, it is enough that assessee files the completion certificate on block-wise or handing over proof to the flat owners. We direct the AO to decide the issue as per the above said directions and accordingly, ground raised by the assessee is allowed.

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• 2019 (5) TMI 1117
  Addition u/s. 68 - unexplained investment in share capital and cash deposit - explanation to immediate source of the cash deposits - admission of additional evidence - search u/s 132 - assessee has made a specific request to the AO to allow time to furnish these details, which was denied - admission of additional evidences in the form of names, addresses, copies of acknowledgement of ITRs, confirmations of accounts of investors - HELD THAT:- AO without conducting enquiries to establish otherwise, made the addition for non-compliance in technical manner cannot be sustained in the interest of justice. Over and above, most of the investors are assessed to the income tax at the same place where the AO could have very easily invoked such enquiry, if he had any serious doubts about the genuineness of transactions. This could have been done either by the summons u/s 131 or even by deputing Inspector, which was not done. These facts have not been controverted by the ld. DR. Once the details have been provided by the assessee during the appellate proceedings before the ld. CIT(A) which are also provided to the AO to verify the same. AO was duty bound to invoke the necessary enquiry by way of issuance of summons u/s 131 of the Act or by way of deputing an Inspector which he fails to do so. Investors are regularly assessed to income tax and investments are not disputed and as such investments made by them are not disputed in their respective cases. The addition so made by the AO is not sustainable as rightly deleted by the ld. CIT(A), following the decision of CIT vs. Venkateshwar Ispat P. Ltd. [ 2009 (5) TMI 290 - CHHATTISGARH HIGH COURT] Unexplained cash deposits in bank account - CIT(A) has stated that the assessee has filed copy of banks statements, cash books, audited balance sheet with the relevant schedule for the relevant periods to establish the opening cash balances as an additional evidence on which the AO again did not issue any enquiries and hence ld. CIT(A) has admitted the same as an additional evidence under Rule 46A of the Rules after affording due opportunity to the AO. CIT(A) has observed that the cash deposits have been made out of the cash balance available with the assessee as on the date of deposits. CIT(A) has made specific observation regarding the cash deposits as being made out of cash balance available with the assessee before the date of deposits duly supported by the fact that the assessee has withdrawn from the same bank account and it was lying with him as unutilized which was re-deposited subsequently. Thus, the immediate source of the cash deposits stands explained and no adverse inference could be drawn in this context. We are of the considered opinion that the ld. CIT(A) is correct in holding that the Assessing Officer has made the addition in technical manner. - Decided in favour of assessee.

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• 2019 (5) TMI 1116
  Registration U/s 12AA - Exemption u/s 11 - charitable activity OR business - assessee U/s 8 company in providing micro finance to economically and financially weaker section without any discrimination as to caste, creed, religion or sex for earning their livelihood at nominal rate of interest on their personal guarantee only - HELD THAT:- Primary and predominant object of the assessee are to promote the welfare of the economically weaker and destitute persons of the society by way of providing finance at concessional rate of interest and without asking for any security. Thus prima facie the object of the assessee are charitable in nature in terms of Section 2(15). CIT(E) has conducted inquiry through AO and the assessee was not given an opportunity to reply to such adverse inquiry against the assessee. CIT(E) has also not considered the very purpose of formation of the assessee U/s 8 of the Companies Act with charitable object. Section 8 of the Companies act provides the registration of companies with charitable objects and also ensures that the activity as well as the funds of the company cannot be used for the individual benefit but it should be strictly as per the objects of the company. Even in the case of winding up/ dissolution of the company if any asset remains after satisfaction on debt and liability the same shall be transferred to another company register U/s 8 of the Companies Act therefore, ample safeguard has been provided U/s 8 of the Companies Act to prevent to misuse of the funds and activity of such company. CIT(E) has not considered all these aspect while passing the impugned order, therefore, in the facts and circumstances of the case, we set aside this matter to the record of the ld. CIT(E) for considering all the relevant facts as well as the contentions of the assessee and also to give an opportunity to the assessee of hearing and present its case to explain each and every objection of the ld. CIT(E) before passing fresh order. - Appeal filed by the assessee is allowed for statistical purposes.

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• 2019 (5) TMI 1132
  Rectification u/s 254 - Deduction u/s 10A - set off of unabsorbed depreciation - HELD THAT:- This Court has been taken through the judgment of the Supreme Court in CIT v Yokogawa India Ltd. [ 2016 (12) TMI 881 - SUPREME COURT] . The Court has held that though Section 10-A as amended is a provision for deduction, the stage of deduction would be while computing the gross total income of the eligible undertaking under Chapter-IV of the Act and not at the stage of computation of total income under Chapter-VI . As far as the present case is concerned, no error appears to have been committed by the ITAT in the impugned order [ 2017 (8) TMI 273 - ITAT DELHI] .

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• 2019 (5) TMI 1131
  Addition made u/s. 14A r.w.r. 8D upto the exempt income earned by the assessee - HELD THAT:- It not disputed by the appellant-revenue that the issue involved herein is concluded by the decision of this Court in The Pr. Commissioner of Income Tax, Patiala v. State Bank of Patiala [ 2017 (5) TMI 843 - PUNJAB AND HARYANA HIGH COURT] wherein it was held that the amount of disallowance under Section 14A of the Act was restricted to the amount of exempt income only and not at a higher figure. Also see MAXOPP INVESTMENT LTD. VERSUS COMMISSIONER OF INCOME TAX, NEW DELHI AND PRINCIPAL COMMISSIONER OF INCOME TAX-I VS. D.B. CORP LTD. [ 2018 (3) TMI 805 - SUPREME COURT] whenever dividend is declared by the investee company that would necessarily be earned by the assessee and the assessee alone. Therefore, even at the time of investing into those shares, the assessee knows that it may generate dividend income as well and as and when such dividend income is generated that would be earned by the assessee. In contrast, where the shares are held as stock-in-trade, this may not be necessarily a situation. The main purpose is to liquidate those shares whenever the share price goes up in order to earn profits - Decided against revenue.

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• 2019 (5) TMI 1112
  Disallowance u/s 37 - commission to the assessee s son - CIT(Appeals) allowed 50% of the commission to be paid in the case of assessee s son - HELD THAT:- We find that when the rate of commission paid to other agents was on par with the rate paid to the assessee s son, merely because Shri Navneet Bagdi appears to be the assessee s son, the CIT(Appeals) is not justified in restricting the payment to 50%. Moreover, it is not the case of the Revenue that Shri Navneet Bagdi has not rendered any service. In those circumstances, the CIT(Appeals) ought to have allowed the claim of the assessee in toto. Therefore, the order of the CIT(Appeals) in respect of commission payment to Shri Navneet Bagdi is modified and the Assessing Officer is directed to allow the entire payment . Disallowance u/s 35(1)(ii) - Assessee involved in the sham transaction under the garb of donation - HELD THAT:- The very fact that the transaction ultimately ended in refunding the money to the assessee through banking channel after reducing the commission to the extent of 5% shows that the money has come back to the assessee. This is the transaction arranged in such a way that the accommodation entries were made at several entities level and ultimately the money came back to the assessee. Herbicure Healthcare Bio-Herbal Research Foundation of Kolkata involved in the fraudulent and sham transactions, providing accommodation entries and claiming bogus weighted deduction to the extent of 175%. The antecedents of the recipient were unearthed by the Department during the course of survey operation. The material available on record clearly establishes that the so-called donation ultimately received back by the assessee after reducing the commission. CIT(Appeals) in a very reasoned order found that the assessee involved in the sham transaction under the garb of donation. addition confirmed.

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• 2019 (5) TMI 1111
  Assessment of income - gross profit v/s net profit of suppressed sales - survey u/s 133A - HELD THAT:- As relying on SHRI HARIRAM BHAMBHANI [ 2015 (2) TMI 907 - BOMBAY HIGH COURT] and BALCHAND AJIT KUMAR. [ 2003 (4) TMI 76 - MADHYA PRADESH HIGH COURT] we direct the Assessing Officer to assess the income from undisclosed sales in question by applying the net profit rate in place of the gross profit rate undisclosed sales. The net profit rate shall be that which the assessee had disclosed in its regular books of account for the said Assessment Year on recorded sales. In the result, this ground of the assessee is allowed in part. Disallowance u/s 40A(3) and Section 40(a)(ia) - when profits have been estimated as a percentage of turnover, in the case of the assessee - HELD THAT:- As decided in M/S PRADEEP SINGH WAZIR VERSUS COMMISSIONER OF INCOME TAX AND ANR. [ 2017 (3) TMI 1268 - SUPREME COURT] the income of the assessee on the total contract receipts had been reached at by applying the net rate of profit after reduction and, thus, no further addition could be made u/s 40(a)(ia). No contrary decisions is brought to our notice by the D/R. We delete the disallowance made u/s 40A(3) and 40(a)(ia) as in this case, the income has been estimated by the AO. Hence, we allow this ground of the assessee. Taxation of excess stock found by the revenue during the course of survey u/s 131 - HELD THAT:- As relying on M/S. SUBARNA RICE MILL VERSUS INCOME-TAX OFFICER, WD-2 (3) , BURDWAN [ 2015 (7) TMI 522 - ITAT KOLKATA] we direct the AO to tax only the gross profit embedded in the excess stock found for the Assessment Year. The balance addition is hereby deleted. In the result this ground of the assessee is allowed in part. Also see SMT. MADHU CHHANDA SIRKAR AND VICE-VERSA. [ 2018 (9) TMI 1775 - ITAT KOLKATA]

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• 2019 (5) TMI 1130
  Addition u/s 68 - unexplained cash credit - credit entries in capital account represented Trade Advances for purchase of goods - additional evidence u/r 46A - ITAT deleted the addition - HELD THAT:- Assessment Orders were passed by the Assessing Authority on 20.12.2016 after holding 3 hearings on 28.9.2016, 1.12.,2016 and 19.12.2016. The only evidence produced by the Assessees and having been examined by the Assessing Authority was a letter dated 8.12.2016 which has been quoted by CIT(A) in its order. Another letter filed by the Assessees dated 19.12.2016 is also quoted by the learned CIT(A) as the last submission made by the Assessees, wherein it is contended that those advances were made to the Assessees against the purchase of goods. Therefore, in our opinion, nothing prevented the Assessing Authority to examine the matter further even summoning the said creditor viz., Proprietor of M/s.Kannan Enterprises, Kollam. Unless the such credit entries were shown to be explained, merely based on assumptions that there were certain increase in the capital of the Assessees which was also explained to the Assessees, the Assessing Authority could not have made such an addition merely on assumptions. Assessing Authority and the Appellate Authority have the power of Civil Court u/s 131 including the power to enforce attendance of the witnesses and the parties. If a half-hearted enquiry was made by the Assessing Authority and additions were made as unexplained cash credits u/s 68 and such finding of facts were reversed by the Appellate Authority, it would not give rise to any substantial question of law for our consideration u/s 260A. The two Appellate Authorities have concurrently held that those credit entires represented Trade Advances for purchase of goods and Rule 46A does not apply in the present case. No substantial question of law .

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• 2019 (5) TMI 1110
  Penalty u/s 271B - tax audited report u/s 44AB upto 30th Sep., 2012 - assessee case is based upon the criminal proceedings and health issues which resulted into non-getting audit of the books of account - HELD THAT:- The criminal proceedings were mounted in January, 2012 and the bail was granted in May, 2012 therefore even if the medical reasons of one of the director is accepted, it cannot be accepted that the other director was free enough to run business but was not capable to get the accounts audited. It was further observed that neither the date of sealing of factory by the Bank nor any document in its support has been provided and therefore in consideration of the facts mentioned above, the default of not getting the accounts audited does not appear to be for genuine reasons and for the reasons beyond the control of the appellant. On the contrary, the accounts were not audited with a specific motive to scuttle the criminal proceedings. Even on specific query as to whether the income in Income tax Return and audit report is same or not, neither reply nor audit Report furnished. The assessee has taken the stand of criminal proceedings and illness of one of the directors in order to avoid the penal consequences of Section 271B of the Act which we have already held no nexus with non-compliance of legal obligation. It is thus clear the assessee has not been able to give any sufficient and reasonable cause for not getting the accounts whatsoever maintained by it audited u/s 44AB and therefore failed to discharge the onus. In the overall consideration and analyzation and keeping in view the spirit of stringent provisions, we are of the considered view that the authorities below rightly invoked the provisions of section of 271-B of the act and imposed the penalty - Decided against assessee.

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• 2019 (5) TMI 1074
  Penalty u/s.271(1)(c) - non specification of charge - defective notice - HELD THAT:- AO has not specified as to the offence committed by the assessee i.e., whether the assessee had concealed its particulars of income or furnished inaccurate particulars of income or committed both the offences. The above facts narrated clearly prove that there is absolutely no clarity of mind of the AO for levying penalty on the offence committed by the assessee. As relying on SHRI SAMSON PERINCHERY VERSUS ACIT-CENTRAL CIRCLE-18 19, , MUMBAI -20 [ 2013 (11) TMI 369 - ITAT MUMBAI] penalty levied by the ld. AO deserves to be deleted on this technical ground of not specifying the specified charge of the offence committed by the assessee - Decided in favour of assessee

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• 2019 (5) TMI 1083
  Carry forward and set-off unabsorbed depreciation - whether unabsorbed depreciation was eligible for carry forward and set-off against business profits only for a further period of eight years? - HELD THAT:- SLP dismissed.

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• 2019 (5) TMI 1129
  Addition on the basis of Peak Credit - unexplained credit entries in the bank account - HELD THAT:- Only if the Assessee has failed to explain the entries in bank account, then the additions made by the Authorities under the Act on the basis of Peak Credit can be adopted to remove the cascading effect of the unexplained credit entries in the bank account. The assessee had both cash deposits and cash withdrawals in his bank account with the same bank. Therefore, the method of 'Peak Credit' was rightly adopted for addition of the alleged undisclosed income of the Assessee and this is a well settled and common principle so adopted. The finding of facts of the Authorities below cannot be said to be perverse or illegal in any manner. - Decided against revenue

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• 2019 (5) TMI 1115
  Revision u/s 263 - unsecured loan transactions - Lack of enquiry V/S inadequate enquiry - as per Pr. CIT, AO failed to make proper enquiry with respect to unsecured loans reflected in the books of assessee - Pr. CIT in the impugned order has pointed specific instances where the lenders have common addresses raising an eye of suspicion and also creditworthiness of lenders has not been verified by the AO - HELD THAT:- As per the list furnished by assessee there are 23 lenders of unsecured loan. As is evident from documents furnished before us, the remaining 21 parties have not responded to the notice issued by Assessing Officer. Though the assessee has furnished various documents i.e. confirmations of the parties, return of income filed by the lenders, their ledger extracts etc., but their non-appearance before the Assessing Officer raises an eye of suspicion, especially when majority of lenders are stated to be closely related to the assessee. In majority of cases loans have been advanced by the parties after similar amounts have been credited to their respective bank accounts. This finding has not been controverted by assessee. AO after having received relevant documents including confirmation has not taken pains to verify the veracity of loan transactions and the creditworthiness of the parties extending loan. AO after issuing notices u/s. 133(6), left the enquiry in between. Therefore, it is case of lack of enquiry by Assessing Officer and not inadequate enquiry as has been asserted by the assessee. - Decided against assessee.

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• 2019 (5) TMI 1084
  Disallowance u/s 40A(2)(b) - payment being excessive or unreasonable - disallowing 3% of excess rate of interest paid to the parties @15% on the borrowed funds - HELD THAT:- Before disallowing u/s 40A(2)(b) for such payment being excessive or unreasonable it has to be ascertained that such payment is made to specific person under clause 40A(2)(b) and secondly there must be a clear finding that such expenditure is excessive or unreasonable having regard to the fair market price of the goods, service or facilities for which the payment is made - the opinion of the AO for the expenditure excessive or unreasonable is to be confirmed vis- vis fair market price for such goods services or facilities. We find that such finding is absolutely missing from the orders passed by the authorities below. Relying upon the said ratio of CIT-vs Sarjan Realities [ 2014 (8) TMI 206 - GUJARAT HIGH COURT] also passed order deleting addition made by Revenue on excess payment of interest made by the assessee. Since no deliberation has been made by the authorities below so as to compare the rate of interest paid by the assessee with that of the market rate of interest before making addition we delete the addition made by the authorities below. Disallowance u/s 36(1)(iii) being interest at 12% on certain advances made by the assessee - HELD THAT:- AR before us failed to substantiate that the impugned advance to the tune of ₹ 5,00,000/- has been made for business purposes. Apart from that it appears from the balance sheet of the assessee being part of the record before us that the assessee is having capital as own interest free fund of ₹ 34,14,312/- therefore it seems that the assessee made advances of ₹ 15,85,678/- (50,00,000-34,14,312) from the borrowed funds. We, therefore, fail to appreciate as to why disallowance has been made u/s 36(1)(iii) at 12% on the entire investment of ₹ 50,00,000/-. We, therefore, restrict such disallowance to the tune of ₹ 1,90,283/- u/s 36(1)(iii) being 12% of investment of ₹ 15,85,678/- made from the borrowed funds by the assessee.- Assessee s appeal is partly allowed.

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• 2019 (5) TMI 1114
  Rejection of books of accounts - net profit estimation - AO pointed various defects in the books of accounts of the assessee - acceptance of CIT(A) order in earlier year - HELD THAT:- Non-verification of creditor s ledger account and non-maintenance of stock register raise serious doubts on the amount of profit worked out on the basis of the books of accounts. AO in the assessment order has also pointed out that the assessee should have reported its revenue and profit from the projects following the percentile completion method. Assessee in his written submission has contested the issue of allowing statutory expenses like, depreciation etc. out of the 8% gross profit rate estimated by the Assessing Officer but not contested the issue of rejection of books of account. In view of uncontroverted defects in books of accounts, we don t find any infirmity in the action of the Ld. CIT(A) in upholding the rejection of books of accounts. Accordingly, we uphold the action of the Assessing Officer in invoking section 145(3) and rejection of books of accounts of the assessee. Sustaining the net profit rate of 5% on works contract subject to depreciation and 3% rate on supply by CIT-A he has followed the finding of his predecessor in the case of the assessee for assessment year 2012-13. Assessee has not brought on record any order of the Tribunal, where this net profit rate applied by the CIT(A) in assessment year 2012-13 has been disturbed. In absence of any contrary order of the higher appellate forum, the order of the CIT(A) for assessment year 2012-13 has become final. No infirmity in the order of the CIT(A) for the year under consideration in following the own comparison of profit results of the assessee upheld by the learned CIT(A) for estimating the net profit from works contract as well as from supply contract. - Decided against assessee.

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• 2019 (5) TMI 1113
  Addition u/s 68 - unexplained Cash deposits in bank - HELD THAT:- As decided in VIJAY KUMAR PROP. V.K. MEDICAL HALL C/O KAPIL GOEL, ADV. VERSUS ITO WARD-2 FARIDABAD. [ 2018 (11) TMI 1550 - ITAT DELHI] Section 68 can be applied only where, there are sum found credited in books of account maintained by assessee. No doubt passbook /bank statement, are maintained by a bank for its customers. Thus in our considered opinion, we agree with proposition advanced by AR of non applicability of section 68 in case of cash credit found in saving bank account. AO applied section 68 and made additions in hands of assessee, as unexplained cash credits, to such amount, which has been found deposited by assessee in his saving bank account. To our mind in present facts of case section 69 should have been initiated by Ld.AO. It is unfortunate that Assessing Officers blindly apply provisions, which can be fatal to the interest of Revenue. - Decided in favour of assessee.

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• Customs

• 2019 (5) TMI 1081
  Import of restricted item or not - shafts - import before the restrictions were placed - HELD THAT:- It is a settled principle that goods are to be assessed in the way, it is presented unless the contrary is established. Invoice copy annexed to the appeal indicates 4 varieties of shafts being imported from M/s CRYOSTAT S.A.S., France and it is not understood as to why all those 4 categories of shafts which appellant claims to have been parts of its centrifugal pumps were all classified as transmission shafts, thus attracting policy restriction and why provision contained in para 1.5 of the Foreign Trade Policy cannot be pressed into services on the ground that shipment was done after the restriction was imposed. If shipment is made within original validity of irrevocable commercial letter of credit established before the date of imposition of such restriction of import/export, then such export or import is permitted under FTP upto the time limit prescribed in such letter of credit. Both in classification and application of restriction for such imports during the validity of letter of credit, the order of the Commissioner (Appeals) is unsustainable and the same is liable to be set aside - Appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 1080
  Refund of excess paid duty - unjust enrichment - machines sold at a loss - HELD THAT:- Once the sale price is less and that the one out of five machines could not fetch any money, as it could not be sold, it is clear that the appellant had suffered. It is settled principle that when there is an element of loss, there arises no question of any unjust enrichment. Section 27 (2) of Customs Act, 1962 stipulates that the refundable amount shall be credited to Consumer Welfare Fund but only in a condition where it is shown that the burden of duty paid has been passed on by the importer. As per Customs Manual also, the condition of holding unjust enrichment and for appropriating / transferring the amount refundable to Consumer Welfare Fund is applicable except where the importer has not passed the incidence of such duty and interest to any other person (there are other conditions also but not applicable to the facts of the present case). It becomes abundantly clear that if and only if the incidence of duty is proved to be passed on by the importer to the buyers that the refund of the impugned amount could be transferred to the Consumer Welfare Fund. The order under challenge is the result of mere presumptions. There is no evidence by the Department to rebut the certificate given by the appellant s Chartered Accountant. Otherwise also the higher duty as was assessed provisionally stands already set aside - Seen from any angle, it is not at all the case of appellant being enriched unjustly. Refund allowed - appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 1079
  Valuation of imported goods - rejection of declared value - which is correct value at which the goods imported which is required to be accepted for the purpose of assessment of Customs duty? - HELD THAT:- The valuation of the imported goods has to be done as per Section 14 of the Customs Act read with Custom Valuation Rules, 2007, which has not been followed in this case. Investigation has been done in an unprofessional manner and the prices has been arbitrarily enhanced by the Customs Officer which has not been rectified in the impugned order in spite of various submissions made by the appellant. The Department has not been able to provide any value for the contemporaneous import but for the third invoice the source of which is not disclosed. In view of that it will be inappropriate and contrary to the provisions of the Section 14 of the Customs Act read with Custom Valuation Rules, 2007 to reject the transaction value as has been held by the lower adjudicating authority and learned Commissioner (Appeals) in the impugned order. The department is directed to release the consignment at declared price within a fortnight from the receipt of this order - Appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 1109
  Attachment of Bank Accounts - de-freezing of attached Bank Accounts - conditional or un-conditional de-freezing - requirement of furnishing security - HELD THAT:- The impugned orders dated 16th and 31st March 2017 of the learned Single Judge to the extent that they require SLML to furnish security in the sum of ₹ 10 crores to the satisfaction of the DRI as a condition to operate its bank accounts are hereby set aside. It is directed that all of SLML s bank accounts shall be permitted to be operated by the Respondents without any pre-condition - Petition disposed off.

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• 2019 (5) TMI 1108
  Extending the order of Settlement Commission to the co-notice - Concessional rate of customs duty - Import of Crude Palm Oil - diversion of import conditions - imposition of penalty - Was the CESTAT justified in declining to extend the benefit of the order passed by the Settlement Commission to the present Appellant? - HELD THAT:- The Court is of the view that the mere fact that the Settlement Commission permitted the Department to proceed against the co-noticees in accordance with law did not mean that the co-noticees could not rely on the said order to argue, on the basis of the judgment of this Court in M/s Lesag HBB (I) Ltd. and Others vs. CCE, [2016 (11) TMI 681 - DELHI HIGH COURT] and that of the Supreme Court in Union of India vs Omkar S Kanwar [2002 (9) TMI 101 - SUPREME COURT] that the proceedings against them ought to have been dropped under the KVS Scheme. The Court finds that the CESTAT has not discussed the import of the two judgments in the impugned orders. Was the CESTAT obliged to deal with the appeal on merits notwithstanding the preliminary objection raised by the Department on issue (i) above? - HELD THAT:- Once the CESTAT accepted the plea of the Department that the benefit of the order of the Settlement Commission should not be extended to the Appellant, the logical sequitur was that the appeal had to then be considered on merits. The Court fails to understand how the CESTAT could observe that nothing further remained to be decided in the appeals in view of the order of the Settlement Commission. Appeal restored to the file of the CESTAT for being considered afresh uninfluenced by the earlier orders dated 5th June, 2018 and 21st February, 2019 - appeal disposed off.

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• 2019 (5) TMI 1107
  Valuation of imported machinery - EPCG Scheme - addition of 50% of the supervision charges to the assessable value - post-importation charges - contract which appellant have entered into with their supplier includes an amount of EUR 460,000 towards supervision of erection, commissioning and performance guarantee tests of the equipment and machinery - HELD THAT:- It is not in dispute that the charges for supervision of erection, commissioning and performance guarantee tests need not be included in the assessable value to the extent they represent post importation charges and to the extent they represent any charges for services rendered prior to importation, they are includable. Perusal of Article 3.1 of the contract shows that the entire amount of EUR 460,000 paid by the assessee to their supplier is towards supervision of erection, commissioning and performance guarantee tests in India. Therefore, the entire amount is for services rendered in India. Even otherwise, the supervision of erection, commissioning and performance guarantee tests cannot be done in the country of origin because a commissioned plant cannot be imported. Commissioning takes place after the import - there is no scope for interpreting these charges as meant for any services rendered in the country of origin. The entire charges for supervision of erection, commissioning and performance guarantee tests in India is not includable in the assessable value - Appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2019 (5) TMI 1078
  Winding up petition - principal sum was due - interest amounts to a crystalised sum of money which the company has been unable to pay - HELD THAT:- On query from Court petitioning creditor has not been able to show admission by the company of any settled sum on account of interest at agreed rate except that learned advocate appearing on its behalf before said co-ordinate Bench on 24th January, 2019 had said, entire amount of ₹ 18,16,927.63P shall be paid to petitioning creditor within 15th February, 2019. This, Court finds, is an admitted debt on interest. As such, the company is liable to be wound-up for not having paid it deeming it unable to pay. List under heading For Orders on 2nd May, 2019.

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• 2019 (5) TMI 1077
  Compounding of Offences - alleged contravention is that the company had not passed the Board Resolution for taking loan of ₹ 43.02 crores from M/s Maytas Properties Limited and ₹ 95,965/- from M/s Veeyes Investments Private Limited. - HELD THAT:- There appears to be no judgment of the Supreme Court or any of the High Courts exactly delineating the parameters that could be followed in considering the compounding of cases under various jurisdictions. However, in the context of the offences alleged under the SEBI Act, SEBI had notified certain guidelines - In recent times, the NCLAT chaired by Hon'ble Sri Justice Sudhansu Jyoti Mukhopadhaya, retired Supreme Court Judge in VIAVI SOLUTIONS INDIA (P.) LTD. VERSUS REGISTRAR OF COMPANIES, NCT DELHI AND HARYANA [ 2016 (2) TMI 1067 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] had broadly set out the parameters that are required to be noticed in compounding the offences. This Court does not find any infirmity in the order of the CLB, as, in broad sense, the parameters appear to have been applied - it cannot be said that the CLB failed to apply the parameters for compounding the offences for which prosecution has been laid. If one looks at the question of law raised, in the settled legal principles, it is really not a substantial question of law as what all has been questioned is the wisdom of the CLB in exercising discretion by accepting the compounding applications. The penalty imposed for compounding is substantially high which would serve as a deterrent in future to the respondent and also similarly-situated entities / persons. Since there is no merit in the Appeal and the decision of the CLB having been based on the material placed before it, and that no question of perversity of finding of fact having been raised, the Appeal does not warrant interference - appeal dismissed - decided against appellant.

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• 2019 (5) TMI 1076
  Compounding of offences - whether the Appeal raises a substantial question of law as set out in para 7, and whether the discretion exercised by the CLB while ordering compounding of offences calls for interference by this Court? HELD THAT:- There appears to be no judgment of the Supreme Court or any of the High Courts exactly delineating the parameters that could be followed in considering the compounding of cases under various jurisdictions. However, in the context of the offences alleged under the SEBI Act, SEBI had notified certain guidelines - In recent times, the NCLAT chaired by Hon'ble Sri Justice Sudhansu Jyoti Mukhopadhaya, retired Supreme Court Judge in VIAVI SOLUTIONS INDIA (P.) LTD. VERSUS REGISTRAR OF COMPANIES, NCT DELHI AND HARYANA [ 2016 (2) TMI 1067 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] had broadly set out the parameters that are required to be noticed in compounding the offences. It cannot be said that the CLB failed to apply the parameters for compounding the offences for which prosecution has been laid. If one looks at the question of law raised, in the settled legal principles, it is really not a substantial question of law as what all has been questioned is the wisdom of the CLB in exercising discretion by accepting the compounding applications. The penalty imposed for compounding is substantially high which would serve as a deterrent in future to the respondent and also similarly-situated entities / persons. Since there is no merit in the Appeal and the decision of the CLB having been based on the material placed before it, and that no question of perversity of finding of fact having been raised. Appeal does not warrant interference at the hands of this Court and the same is liable to be dismissed.

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• 2019 (5) TMI 1075
  Jurisdiction - Power of official liquidator is required to approach the Debts Recovery Tribunal - validity of sale taking place - official liquidator was not issued with any notice - HELD THAT:- The official liquidator representing the company in liquidation is required to challenge the irregularity or otherwise of a sale made under the SARFAESI Act, before the Debts Recovery Tribunal. If the borrower is aggrieved by the sale proceedings carried out under the provisions of the SARFAESI Act, appeal has to be filed within a period of 45 days under section 17 of the said Act. Since, in the present case, as the sale was alleged to have been carried out without notice to the official liquidator, counsel appearing for the first respondent-asset reconstruction company, and counsel appearing for implead petitioner in I. A. Nos. 2 and 3 and the petitioner in C. A. No. 277 of 2018, on instructions, would submit that their clients would not raise the plea of limitation for filing of appeal under section 17 of the SARFAESI Act, and thereby the said plea may be treated to have been waived, and that this court may direct the official liquidator to file appeal within reasonable time. The official liquidator is directed to file appeal before the Debts Recovery Tribunal within a period of two weeks from the date of receipt of a copy of this order, and on filing of such appeal, the Tribunal shall dispose of the same in accordance with law, after giving notice and opportunity of hearing to all the parities, within a period of twelve weeks thereafter. Till the disposal of the appeal, the interim order granted by this court on May 2, 2018 shall continue. The official liquidator is permitted to incur expenditure with respect to the court fee and other legal expenditure including counsel's fee, by moving appropriate application before the Tribunal.

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• 2019 (5) TMI 1106
  Winding Up - Oppression and mismanagement - Company Judge has rejected the Company Petition at the threshold itself relying on Section 443(2) that relief's of oppression and mismanagement u/s 397 and 398 as well as winding up u/s 433(f) are sought which in the jurisdiction of Company Law Board - scope of Contributory - It was contended that the petitioner in the Company Petition is not a contributory as defined u/s 428 who alone can maintain a company petition u/s 439(1)(c) of the Companies Act, 1956 - HELD THAT:- The petitioner in the Company Petition asserts that he is a contributory of S.N.D.P.Yogam which is a non-trading company to which the Companies Act, 1956 does apply. Clause (4) of the Memorandum of Association of the S.N.D.P.Yogam speaks both of 'liability' as well as 'shares' making it ambiguous warranting an adjudication as to its constitution. The Memorandum of Association does not give any indication of S.N.D.P.Yogam being a company limited by guarantee. A composite company petition of the nature filed is perfectly maintainable and this Court had the jurisdiction to grant the relief of winding up at the time of its preferment. We shall not be misunderstood as holding that a case for winding up the company has been made out though the impugned judgment to the extent it holds that this Court lacks jurisdiction is unsustainable. The Company Petition remitted to the Company Judge for disposal - impugned judgement set aside - Company appeal allowed.

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• Insolvency & Bankruptcy

• 2019 (5) TMI 1105
  Admission of application - Operational Creditor - Invocation of provisions of Section 9 of the Insolvency Bankruptcy Code, 2016 against the Corporate Debtor - HELD THAT:- The default as defined u/s. 3(12) of The Code is established. Demand Notice has been issued to the Respondent Debtor, however, not replied to the said Demand Notice within the prescribed time period of 10 days u/s.8(2) of The Code nor made the payment. Keeping the admitted facts in mind that the Operational Creditor had not received the outstanding Debt from the Corporate Debtor so far and that the formalities as prescribed under The Code have been completed by the Petitioner/ Operational Creditor, it is my conscientious view that this Petition deserves Admission - Upon Admission of the Application and Declaration of Moratorium the Insolvency Process such as Public Announcement etc. shall be made immediately as prescribed under section 13 read with section 15 of The Code. Application admitted.

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• Service Tax

• 2019 (5) TMI 1104
  Short payment of service tax - Transport of Goods by Road Service - suppression of facts or not - invocation of extended period of limitation - HELD THAT:- The show cause notice has been issued admittedly beyond the stipulated period of eighteen months - Admittedly, no allegation of suppression has been invoked against the Appellant in the show cause notice. Meaning thereby that the notice has been issued without there being any justification for invoking the extended period of limitation. Section 73 permits extended recovery for a period of upto five years in cases of fraud, collusion, wilful mis-statement, suppression of facts or contravention of the Finance Act or Rules with intent to evade payment of service tax. But for this purpose show cause notice must allege and state fraud, collusion, wilful mis-representation, suppression of facts, etc. - It seems that in this matter the extended period of limitation has been invoked in a mechanical manner without adducing any proof/evidence to establish that provision of Section 73 ibid are attracted. There must be some positive act from the side of the assessee to find wilful suppression. Mere failure to pay duty or disclose a transaction or a mere misstatement is not sufficient for invocation of the extended period of limitation unless it is due to any fraud, collusion or wilful misstatement or suppression of fact or contravention of any provision. There has to be a positive, conscious, and deliberate action intended to evade tax, e.g., a deliberate mis-statement or suppression in order to evade tax. The invocation of the extended period of limitation in the instant matter is erroneous and the show cause notice is itself illegal - Appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 1103
  Works Contract Service - Composition Scheme - vivisection of service portion of the works contract - Rule 2A of Service Tax (Determination of Value) Rules, 2006 - HELD THAT:- The reliance for issuance of SCN is placed on ST-3 returns filed by the appellant. From the SCN and the Order-in-Original, we could not come across any contention to establish that there was any observation that any information submitted in the said ST-3 return was not proper - Hon ble Supreme Court of India in the case of M/S. UNIWORTH TEXTILES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE. RAIPUR [ 2013 (1) TMI 616 - SUPREME COURT] has held that the positive action with a negative intention of wilful and deliberate default is a mandatory prerequisite to conclude wilful misstatement or suppression in order to invoke extended period. Tribunal in the case of GUJARAT STATE PETRONET LTD. VERSUS COMMR. OF CUS. C. EX., AHMEDABAD [ 2014 (1) TMI 1096 - CESTAT AHMEDABAD] by relying on the ruling of Hon ble Supreme Court in the case of COLLECTOR OF CENTRAL EXCISE VERSUS CHEMPHAR DRUGS LINIMENTS [ 1989 (2) TMI 116 - SUPREME COURT] has held that there should be deliberate default of information which are required to be disclosed to invoke extended period of limitation. ST-3 returns were regularly filed and there was no observations made in the proceedings that information was lacking in the said ST-3 returns and there was no observation that the incomplete or incorrect information was submitted through ST-3 returns. Therefore, the extended period of limitation was not available to revenue - SCN issued by invoking the extended period of limitation. Appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 1102
  Classification of services - Man Power Recruitment and Supply Services or not - appellant engaged in deputing labour force for activities of packing, loading, un-loading, bagging, handling to their clients - time limitation - HELD THAT:- The appellants were engaged in the supply of labour to various pharmaceutical companies and were raising bills by mentioning various activities undertaken like packing, loading, un-loading, bagging, handling etc. However it is a fact that the charges of services were determined based on the number of persons or hours worked for rendering services and charging service charges. The appellants also received performance production incentives for the services rendered. Even though the appellants may be mentioning the nature of services rendered by them to the service recipients, however it is an accepted fact that the charges for the services were recovered by them on the basis of number of persons or hours worked for rendering the services. In such case, the services rendered by the appellants would fall under the category of Manpower Recruitment or Supply Agency services for the impugned period which is liable for service tax. Extended period of Limitation - Penalty - suppression of facts or not - HELD THAT:- There is no charge of deliberate non-payment of service tax due to suppression of facts or malafide intention of the Appellants has been proved -The extended period of limitation for raising demands can be invoked only when the person liable to pay tax has intentionally or deliberately involved in evasion of service tax - It is clearly appearing from the statements of the proprietors that they did not take service tax registration being unaware of the service tax liability and were under the bona fide belief that their services are of packing, loading, unloading and other activities, which do not fall under the category of Manpower Recruitment and Supply Agency Service - extended period of limitation and penalty cannot be invoked. The demand is hit by limitation of time and is not sustainable to the extent the same has been made by invoking the period of limitation i.e. beyond one year from date of show cause notice - demand alongwith interest and penalties do not sustain - appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 1101
  Demand of Interest and penalties - sale space or time for advertisement - delayed payment of service tax - Rule 6 of Service Tax Rules 1994 - application of time limitation for demand of interest and penalties - difference of opinion - majority order - HELD THAT:- Admittedly, the Referral Bench itself extended the benefit of Section 80 of Finance Act, 1994 holding that the appellants were under bonafide belief that they were not liable to pay service tax as they have deposited service tax on monthly basis. In that circumstance, I hold that the demand of interest is barred by limitation. Therefore, I agree with the view expressed by the Hon ble Member (Judicial). The Registry is directed to place matter before the Referral Bench for further proceedings.

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• 2019 (5) TMI 1135
  Classification of service - Construction of Complex Service or Works Contract Service - supply of material coupled with the provision of work and labour - Composite Works Contract - DDA had undertaken a competitive bid process for selecting private entity to undertake the implementation of the project for the development of Residential Facility to be used to provide accommodation for athletes and officials participating in the CWG and thereafter dispose of as apartments for residential purposes. HELD THAT:- DDA had undertaken a competitive bid process for selecting private entity to undertake the implementation of the project for the development of Residential Facility to be used to provide accommodation for athletes and officials participating in the CWG and thereafter dispose of as apartments for residential purposes. For this purpose, a site comprising 11 hectares located adjacent to the Akshardham Temple was identified and DDA selected the Appellant as Project Developer for undertaking the implementation of the project. DDA further agreed to grant to the Project Developer and the Project Developer agreed to accept from DDA exclusive developer rights to the development of the Project on the Project Site as per the terms and conditions of the agreement. The responsibility of the Appellant under the PDA included construction of residential units, which necessarily involves supply of material coupled with the provision for work and labour. The materials have to be supplied as per the given specifications and work and labour have to be in accordance with the Good Industry Practices as per Clause 8.8 of the agreement. The activity undertaken by the Appellant under PDA would, therefore, qualify as a composite and indivisible works contract and by no means can be said to be Service simplicitor. The show cause notice was, however, issued to the Appellant alleging that the Appellant is providing CCS services under Section 65(105)(zzzh) of the Act. The Supreme Court in COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] examined as to whether Works Contract Service can be classified under Section 65(105)(zzzh) and held that the scope of Section 65(105) (zzzh) is limited to cover contract of service simplicitor only and not a composite works contract. The Supreme Court noticed that it is only w.e.f 01 June, 2007 that Section 65(105)(zzzza) was introduced to cover composite works contract and so works contract cannot be covered under any other category of services prior to 01 June, 2007. Composite Works Contract cannot be taxed under CCS under Section 65(105) (zzzh) as the scope is limited to cover contract of service simplicitor only. The position that comes out very clearly, therefore, is that even prior to 01 June, 2007 and post 01 June, 2007, the nature of service rendered by the Appellant to DDA was Works Contract Service and not CCS. The show cause notice alleged that the Appellant was providing CCS service to DDA and the demand has also been confirmed under this category by the adjudicating authority. The impugned order, therefore, deserves to be set aside for this reason alone since the demand made under a particular category of service found to be incorrect in a subsequent proceeding, cannot be sustained. The nature of the services provided by the Appellant to DDA would fall under Works Contract Service since it was an indivisible works contract and it is only when work is undertaken as a contract of service simplicitor, that it would fall under the category of CCS - Demand set aside - appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 1100
  Imposition of penalty - service tax along with interest much before the issuance of SCN - Works Contract Service - period 11.05.2007 to 24.04.2009 - HELD THAT:- The appellant has not discharged the service tax under Works Contract Services for which a show cause notice has been issued. The appellant has pleaded that they failed to discharge the service tax for the reason that they were not aware that they are liable to pay service tax mainly because the services were rendered to public sector undertaking and also that they were under the bonafide belief that service tax is not required to be paid. The said contention cannot be accepted. The appellant has paid the entire amount of service tax along with interest much before the issuance of SCN - as per subsection (3) of Section 73 of Finance Act, 1994, the penalties imposed cannot sustain. Demand of service tax with interest upheld - penalty set aside - appeal allowed in part.

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• 2019 (5) TMI 1099
  Refund of service tax paid - Industrial and Commercial Construction Service - Department was of the view that construction services rendered by appellant to M/s Bharat Dynamics Limited are subject to levy of service tax - Rejection of refund on the ground that the service recipient is a commercial concern and therefore the service tax paid is in order - HELD THAT:- The appellant had rendered the services to M/s Bharat Dynamics Limited which is a Public Sector Undertaking under the Ministry of Defence. The said organisation namely M/s Bharat Dynamics Limited is mainly/primarily engaged in defence production which are necessary for the country - The view taken by the Department that the said organisation is a commercial concern cannot be appreciated. The activity of construction of compound wall for M/s Bharat Dynamics Limited cannot be said to fall under the category of Commercial or Industrial Construction Services for the purpose of levy of service tax. The rejection of refund claim on this ground is unjustified. Appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 1098
  Imposition of penalty - service tax with interest paid in instalments, even before the statement of the appellant was recorded - no suppression of facts - HELD THAT:- It is not in dispute that the appellant was liable to pay service tax and had not paid it during the relevant time. However, subsequently, having realized his tax liability, he obtained registration and paid service tax in instalments through various challans. The first statement recorded by the Department was after the service tax along with interest already paid by the appellant - the appellant had a reason to not to pay service tax. He was merely ignorant. His conduct does not show in any manner that he had any intention to suppress the facts from the department or to evade payment of service tax. The entire service tax along with interest was paid, albeit in instalments, even before the statement of the appellant was recorded - thus this is a fit case to invoke Section 80 of the Finance Act, 1994 to waive penalties. The impugned order is modified to the extent that the service tax and interest already confirmed are upheld and all penalties are waived of, under section 80 of the Finance Act, 1994 - appeal allowed in part.

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• 2019 (5) TMI 1097
  Condonation of delay of 70 days in filing appeal - HELD THAT:- It can be seen from the order of the Hon ble High Court, there is direction to consider the plea of the appellant on the stay petition would mean the delay, if any, needs to be condoned accordingly the application for condonation of delay is allowed. Compliance with the mandatory pre-deposit - Section 35F of Central Excise Act, 1944 as applicable to the Finance Act, 1994 - HELD THAT:- The said section mandates for predeposit of an amount equivalent to 7.5% of the demands confirmed if the order challenged is passed by the Commissioner as an Adjudicating Authority - In the case in hand, the impugned order is passed by the Commissioner as an Adjudicating Authority. The total demands confirmed on the appellant is approximately ₹ 4.31 crores and the pre-deposit mandated by Section 35F of the Central Excise Act, 1944 on this amount is approximately ₹ 32 lakhs. Considering the certificate issued by Hindustan Unilever Limited that there is a discharge of service tax liability which, may be subsumed in the demands raised by the appellants, we hold that the provisions of Section 35F are satisfied and direct the registry to take on record the appeal and list the same for disposal without any further pre-requirement of an amount as pre-deposit for hearing the appeal on merits.

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• Central Excise

• 2019 (5) TMI 1096
  Interest on delayed refund of Interest - HELD THAT:- Only because there is no provision for interest on refund of delayed interest that does not mean that there is any bar or prohibition for granting the same. Hon ble Supreme Court in the matter of Ranbaxy Laboratories Ltd. [ 2011 (10) TMI 16 - SUPREME COURT ] held that the Appellant is entitle to claim interest after three months from the date of filing of refund claim till its realisation. Since again there was inordinate delay in refund of interest to the Appellant therefore the Appellant has to file another refund claim for refund of interest of ₹ 6,84,274/- for delay in refunding the interest to the Appellant on the ground that the interest on delayed refund was immediately payable alongwith the refund amount on 02.08.2012 but was actually paid on 16.07.2015. The prayer of the Appellant for grant of interest on delayed payment of interest is allowed - Appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 1095
  CENVAT Credit - common input used for dutiable and exempted goods - iron ore fines - waste product - maintenance of separate records - Rule 6 (3) of Cenvat Credit Rule, 2004 - Circular dated 25.04.2016 - HELD THAT:- In the present case the iron fines are bound to emerge during crushing of iron ore used for manufacturer of final product. No extra procedure is required for emergence of iron fines. Hence, the fines cannot be called as manufactured product. The Hon'ble Supreme Court s decision in the matter of UNION OF INDIA VERSUS DSCL SUGAR LTD. [ 2015 (10) TMI 566 - SUPREME COURT] has clearly laid down that bagasse is agricultural waste of sugarcane and the waste and residue of agricultural products, during the process of manufacture of goods cannot be said to be result of any process. There is no manufacturing process involved in Bagasse s production. Bagasse is not goods but merely a waste or by-product, therefore Rule 6 of CENVAT Credit Rules, 2004 is not applicable in the present case. Bagasse is bound to come into existence during the crushing of the sugarcanes and is an unavoidable agricultural waste. Credit allowed - appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 1094
  CENVAT Credit - time limitation - wrong input credit availed on the basis of invoices issued beyond six months - violation of Rules 3(1) and 4(1) ibid read with Notification No. 06/2015-C.E. (N.T.) dated 01.03.2015 - HELD THAT:- Hon ble High Court of Gujarat in the case of M/s. Baroda Rayon Corporation Ltd. Vs. Union of India [2011 (3) TMI 1551 - GUJARAT HIGH COURT] in this context assumes importance when the Hon ble High Court concluded that the Notification to the extent it prescribed the time limit was bad and consequently quashed the same - The situation is no different here since neither Rule 3(1) nor Rule 4(1) prescribes any such time limits. Rather, it is the Notification No. 06/2015 relied upon by the adjudicating authority, which was also approved by the Commissioner (Appeals), that has prescribed the time limit and therefore, the contravention, if any, could be of the time limit prescribed in the Notification alone - credit cannot be denied on this ground. CENVAT Credit - input services - Rent-a-Cab Agency Services - HELD THAT:- As long as the fact remains that the employees of the appellant were transported for carrying out their work for the appellant and that their services were used in the manufacturing of the final product, the credit cannot be denied since it is directly covered in the inclusive definition - Credit allowed. CENVAT Credit - credit availed twice on the basis of same invoices - HELD THAT:- The fact that it had reversed such credit is on record along with the fact that though it had availed, had not utilized the same - The above aspect coupled with the vital contentions of the assessee that it had more than ₹ 60,00,000/- worth credit in its CENVAT Register has not at all been discussed and if the above facts were found to be true, then the Revenue cannot claim any loss - the issue requires fresh examination by the adjudicating authority who shall consider all the above arguments, verify documentary evidences that may be filed and then pass a speaking order - Matter on remand. Demand of Interest under Section 11AA of the Central Excise Act, 1944 - HELD THAT:- The interest is mandated only if the person is liable to pay duty and that such interest shall be calculated from the date on which such duty becomes due up to the date of actual payment - Both authorities have recognized the reversal/debit with a rider as to the same being after the issuance of Show Cause Notice vide entries in CENVAT Credit Register dated 16.07.2017. Then, Sub-Section 3(b) extracted hereinabove should come to the rescue of the appellant, as per which no interest could be demanded even if the duty is paid after the date of the order but before forty five days and apparently, the above test seems to be satisfied here - adjudicating authority shall consider the above aspects also, hear the assessee and then pass a speaking order on this and only then demand appropriate interest, if any. Penalty u/s 11AC - HELD THAT:- The issues were seriously debatable involving interpretations of Rules/Instruction and moreover, the findings of the adjudicating authority while issuing Show Cause Notice as to the audit observation from books/returns itself points out that there was no suppression, fraud, etc. or that no defect as such was pointed out - penalty not imposable. Appeal allowed in part and part matter on remand.

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• 2019 (5) TMI 1093
  CENVAT credit - input services - service tax not paid in accordance with what is indicated in the Invoice - it was alleged that appellant has not paid the value of input services and the service tax paid as indicated in the invoice/bills has paid a reduced amount as was evident from the records - Rule 4(7) of CCR 2004 - HELD THAT:- It is not in dispute that the appellant has paid less amount towards the services availed by them by reducing the consideration of the services. They did not pay the tax on full invoice value. However, service provider paid service tax on the full invoice value and the appellant has taken credit of the entire amount of service tax paid. There is an excess payment of service tax by the service provider considering the reduced payment made for the services. This excess payment could have been claimed as refund by the service provider but they have already passed on this burden to the appellants herein. The appellants herein have borne the full burden of the excess service tax paid by them. They have also taken credit of the excess service tax. An alternative could have been for the appellant to seek refund of the excess amount of service tax paid as the persons who bore the burden of excess service tax. From a plain reading of Rule 4(7), it does not appear that Rule 4(7) provides for a proportionate reduction of CENVAT Credit where the value of services rendered is reduced subsequently but service tax was discharged on the original amount and borne by the service recipient - This is consistent with the circular of the Board No. 877/15/2008-CX, dated 17.11.2008 in which the Board has clarified that where higher duty than the due is paid due to subsequent reduction in prices, credit as per invoice is available to the assessee. This is also consisted with similar circular regarding credit of service tax in Board s Circular No. 122/3/2010-ST, dt.30.04.2010. Both these circulars were, of course, issued prior to Rule 4(7) was amended w.e.f. 01.04.2011. The appellant is entitled to CENVAT Credit of the service tax paid by them as indicated in the invoices - appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 1092
  CENVAT Credit - input services used in production of exempt goods - denial on account of nexus with taxable final products - It is the case of the Revenue that the input services in question were used in or in relation to the power plant which produced electricity which is exempt and not in or in relation to the manufacture of the final product namely sugar - HELD THAT:- The term manufacture is not defined in Cenvat Credit Rules, 2004 and therefore should be interpreted as per the definition of the term in Section 2(f) of the Central Excise Act, 1944 according to which manufacture includes any process incidental or ancilliary to the completion of the manufactured product . Therefore, the definition of manufacture itself is quite wide in the Central Excise Act - The scope of the term input service under Cenvat Credit Rules, 2004 is still wider including services used by a manufacturer whether directly or indirectly in or in relation to the manufacture of the final products . It is not in dispute that the final products in this case is the sugar and that the electricity from the captive power plant and the steam generated from it were used for manufacture of the sugar. The input services in question were, in turn, used for running the captive power plant, in relation to coal, transporting Bagasse, etc. Therefore, these input services which were used in the captive power plant were indirectly used in the manufacture of sugar or in relation to such manufacture. Therefore, the input services in question fall within the definition of input services under Rule 2(k) of Cenvat Credit Rules, 2004. Whether electricity so generated is used within the factory only or is also sold outside? - HELD THAT:- It is used partly in the factory, and partly sold to grid. If the input services were divisible, credit could be denied to the extent the input services were used in relation to generation of electricity sold to the grid. However, the nature of the services is such that they cannot be divided - As far as the inputs are concerned there is provision for reversal of proportionate amount of cenvat credit under Rule 6. This however does not extend to the input services. Credit allowed - appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 1091
  Utilization of cenvat credit of education cess and secondary and higher education cess paid for payment of basic excise duty - the cesses were abolished prior to the date when the utilization took place - Rule 3(7)(b) of Cenvat Credit Rules 2004 - HELD THAT:- The cenvat credit in question was credit of education cess and secondary and higher education cess lying in balance with the appellant on 01.03.2015. Prior to this date this could be utilised only for payment of education cess and secondary and higher education cess. The appellant could not use this credit for this purpose as these cesses were abolished. Notification No. 12/2015 amended Cenvat Credit Rules 2004 by inserting three provisos to Rule 3(7)(b) enabling utilisation of credit of education cess and secondary and higher education cess in respect of inputs received after 01.03.2015 for payment of basic excise duty. However, the balance lying in credit was not covered by this notification also. Any provisions of fiscal laws or criminal laws should be read as such with no scope for intendment regardless of the consequences - A plain reading of the Cenvat Credit Rules as they existed during the relevant period did not allow the appellant to utilise credit of educational cess and secondary and higher education cess lying in balance for payment of basic excise duty. The utilization of the credit is not correct in law - appeal dismissed - decided against appellant.

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• 2019 (5) TMI 1090
  CENVAT credit - inputs or finished products - case of Revenue is that the goods in the question were finished products by themselves and cannot be used for manufacture of furniture and not inputs - HELD THAT:- The goods in question are in many cases inputs used for manufacture of furniture although in some cases the goods appear to be finished goods themselves. These are either used by the assessee for manufacture of final products or were cleared as such on payment of central excise duty. The assessee is entitled to cenvat credit against the disputed Bills of Entry subject to verification by the lower authority that the goods in question have been cleared on payment of central excise duty as per Rule 3(5) of Cenvat Credit Rules, 2004 or were used for manufacture of final products. For the limited purpose of the verification, the matter is being remanded to the original authority for verification - Appeal allowed by way of remand.

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• 2019 (5) TMI 1089
  CENVAT credit - inputs used for repair and maintenance of the machinery - MS items such as plates, angles, channels and sheets falling under chapter heading: 72, 73 and 74 - CBEC vide Circular No. 943/4/2011-CX dated 29.04.2011 - appellant is a manufacturer of bulk drugs - HELD THAT:- The definition of inputs under Rule 2(k) of CCR, 2004 has been amended with effect from 01.04.2011 to include all materials of goods used in the factory of the manufacture of the final products. It is not in dispute that the goods in question were used in the factory of manufacture by the manufacturer. The only question which remains is only whether they get excluded by the exclusion part of the definition as materials which have no relationship whatsoever to the manufactured final products. It is not in dispute that the materials in question were used for repair and maintenance of the machinery which were used for manufacture of final product - thus there is a direct relationship between goods which were used and the manufactured of final products and therefore they were not excluded by clause (f) of the Rule 2(k). Credit allowed - appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 1088
  CENVAT Credit - various input services - Business improvement services - House keeping services - Airport Agency services - Pest Rodent Control Services (in Refinery) - Tanker Agency at Ports - Cleaning of Roads - Water Washing of Cranes - Data Digitization for Inspection Department - AMC for Godrej Make furniture - period of dispute is October 2014 to June 2015 - HELD THAT:- In their own case, for an earlier period, this Bench in M/S HINDUSTAN PETROLEUM CORPORATION LTD. VERSUS CCE, C ST, VISAKHAPATNAM [ 2016 (9) TMI 680 - CESTAT HYDERABAD] considered the eligibility of CENVAT Credit on all these services and has allowed CENVAT Credit from all these services, except Road Cleaning Services which it disallowed. Since the matter has already been decided by this Bench in respect of the same assessee, there are no reason to deviate from the decision already taken - CENVAT Credit allowed on all input services except road cleaning service - appeal allowed in part.

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• CST, VAT & Sales Tax

• 2019 (5) TMI 1087
  Input tax credit - scope of amendments made to restrict the credit - benefit of credit which was rightly reversed by the assessing authority - Assessment Year 2013-14 - whether grant of input tax credit (ITC), according to Section 13(1)(f) of the Act or the benefit to be extended as granted by the Tribunal applying the provisions of Section 13(3)(b) read with Explanation (iii)of Section 13 of the Act - HELD THAT:- As the Apex Court in the case of Jayam Co. [2016 (9) TMI 408 - SUPREME COURT] has categorically held that the claim of ITC is not the right of a dealer but is a concession granted under the provisions of the Act. Similarly in Section 13 of the U.P.VAT Act, input tax credit has been provided as a concession to a dealer who in respect of taxable goods purchased within the State subject to conditions given therein, and such other conditions and restrictions as may be prescribed, is allowed credit of an amount as input tax credit, to the extent provided by, or under the relevant clause, meaning thereby that it is not a vested right but it is a concession which is given on the fulfillment of certain conditions as enumerated under the given clause. In the present case Section 13(1)(f) was inserted on 20.8.2010 and the reason and object of the Amending Act was to protect the revenue of the State, which was being misused by the dealers and the said provision was provided as a safeguard. In the present case, it is rice bran which is purchased, and rice bran oil and physical refined rice bran oil is manufactured from the raw material. Further, only 13.77 % of taxable goods, i.e., rice bran oil is produced and rest of 83.60 % bye product i.e. DORB is produced, which is exempted from tax under Schedule-I of the VAT Act. Thus, the case of the dealer is covered under this provision as sale price is lower than the cost price. While the benefit granted by the Tribunal would amount to loss to the revenue if the argument of the counsel for the assessee is accepted that cumulative sale price of the taxable product and exempted bye product have to be considered. Present case specifically falls under Section 13(1)(f) of the Act. Supreme Court in the case of Jayam Co. have held that it is not a right of a dealer to get the benefit of ITC but it is a concession by virtue of the provisions of the Act. Further, it is a trite law that whenever concession is given by statute or notification etc., the condition thereof are to be strictly complied with in order to avail such concession. Further, the observation of the Apex Court that how much tax credit is to be given and under what circumstances, is the domain of the Legislature and the Courts are not to tinker with the same - Thus, in the present case by Amending Act of 2010, the Legislature had made specific provision in regard to those cases where the sale price of the manufactured goods was lower than the cost price. Revision allowed.

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• Indian Laws

• 2019 (5) TMI 1085
  Levy of Property Tax - ground cable laid for the purpose of providing telephone services or other telecommunication facilities - petitioner is a cellular service provider - case of petitioner is on the basis that the petitioner being not the owner of the land in which under ground cables are laid, the demand of property tax from the petitioner falls foul of Section 132 (1) of the Act, 1956, which implies that the property tax is payable by the owners of building or land - HELD THAT:- Since the definition of land in the CG Municipal Corporation Act is pari materia with the definition of land in the Gujarat Act, it is incorrect on the part of the petitioner to treat the subject levy of property tax, merely because while collecting the levy, it has used the term for laying of cables. The levy is in fact for use of land for laying of cable. Next argument of learned counsel for the petitioner is that the Corporation has not adopted the procedure provided under Section 133 of the Act, 1956 to impose the subject tax - HELD THAT:- Section 133 is for imposition of new tax and it is precisely for this reason, Section 133 (4) provides that nothing contained in this section shall apply to tax mentioned in clause (a) of sub-section (1) of Section 132, which shall be charged and levied in accordance with Section 135. The property tax being charged under Section 132 (1)(a) read with Section 132 (6)(j), the argument resting on non-compliance of Section 133 has no force. The Corporation has followed the procedure prescribed under the Act, 1956 for carrying out assessment before issuing demand notice and there is absolutely no violation of the provisions of the Act, 1956. Petition dismissed.

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• 2019 (5) TMI 1086
  Benami transaction or not - claim of share in the properties - family dispute - inheritance - purchase of property in the name of wife by the deceased husband - the case on behalf of the plaintiffs that the suit properties were purchased in the name of defendant no.1 out of the funds raised on selling the ancestral properties - whether the transactions/Sale Deeds in favour of defendant no.1 can be said to be benami transactions or not? HELD THAT:- the payment of part sale consideration cannot be the sole criteria to hold the sale/transaction as benami. While considering a particular transaction as benami, the intention of the person who contributed the purchase money is determinative of the nature of transaction. The intention of the person, who contributed the purchase money, has to be decided on the basis of the surrounding circumstances; the relationship of the parties; the motives governing their action in bringing about the transaction and their subsequent conduct etc. In the case of JAYDAYAL PODDAR (DECEASED) THROUGH HIS L. RS AND ANOTHER VERSUS MST. BIBI HAZRA AND ORS. [1973 (10) TMI 55 - SUPREME COURT] it is specifically observed and held by this Court that the burden of proving that a particular sale is benami and the apparent purchaser is not the real owner, always rests on the person asserting it to be sold. It is further observed that this burden has to be strictly discharged by adducing legal evidence of a definite character which would either directly prove the fact of the benami transaction or establish circumstances unerringly and reasonably raising an interference of that fact. It is required to be noted that the benami transaction came to be amended in the year 2016. As per Section 3 of the Benami Transaction (Prohibition) Act 1988, there was a presumption that the transaction made in the name of the wife and children is for their benefit. By Benami Amendment Act, 2016, Section 3 (2) of the Benami Transaction Act, 1988 the statutory presumption, which was rebuttable, has been omitted. It is the case on behalf of the respondents that therefore in view of omission of Section 3(2) of the Benami Transaction Act, the plea of statutory transaction that the purchase made in the name of wife or children is for their benefit would not be available in the present case. Once it is held that the Sale Deeds in favour of defendant no.1 were not benami transactions, in that case, suit properties, except property nos. 1 and 3, which were purchased in her name and the same can be said to be her selfacquired properties and therefore cannot be said to be Joint Family Properties, the plaintiffs cannot be said to have any share in the suit properties (except property nos. 1 and 3). At this stage, it is required to be noted that the learned Counsel appearing on behalf of defendant no.1 has specifically stated and admitted that the suit property Item nos. 1 and 3 can be said to be the ancestral properties and according to him even before the High Court also it was the case on behalf of the defendant no.1 that item nos. 1 and 3 of the suit properties are ancestral properties. Appeal allowed in part.

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