TMI Tax Updates - e-Newsletter
May 30, 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
Highlights / Catch Notes
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GST:
Possibility of arrest - Possibility of detention to custody - Grant of anticipatory bail - Input Tax Credit - fake invoices - SC refused to interfere - Decision of Telangana HC got confirmed.
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GST:
Extension of time limit for filing of Form GST-TRANS-I electronically - Input Tax Credit - directed petitioner to prefer a representation before the GST Council, New Delhi and before the Nodal Officer of the State of Jharkhand - directed respondents to decide in accordance with law as early as possible and practicable
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Income Tax:
Long term v/s short term capital gains - capital asset was acquired way back in F.Y. 2006-2007 which is accepted by the A.O, as such, on date of sale period of holding would be beyond 36 months - land remain as capital asset because of the peculiar facts and circumstances as per Notification of the Ministry of Defence - entry made in book on 06.04.2012 would not be relevant - LTCG
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Income Tax:
Reassessment u/s 148 - reasons recorded should show in what manner the assessee had failed to make a full and true disclosure of all material facts necessary for the assessment, it is not mere irregularity but it would render the reopening of assessment after four year invalid as First proviso to section 147 is applicable - assessment quashed
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Income Tax:
Addition u/s 69 - cash deposited in the bank out of opening cash in hand - AO noticed that the assessee had raised loans and also withdrawn cash numerous times thereafter which was not needed, if she already had so much cash in hand and had deposited cash in three installments after a period of 8-9 months - opening cash in hand was not actually available with her so as to justify the cash deposited - addition sustained
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Income Tax:
Non issuance of Notice u/s 143(2) - The flaw found in the notice will goes to the root of the matter and the same cannot be cured u/s 292BB or dispensed with, to consider the case on merits - notice is the foundation and Assessment Order will not survive because it was built upon such defective/ invalid notice and would certainly fall to the ground
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Income Tax:
Revision u/s 263 - the facts demonstrate that necessary enquiry have been conducted by the AO and relevant documents regarding the issue was received by the AO - CIT may be of the opinion that it is erroneous but in no way it can be prejudicial to the interest of the Revenue since there there is always a difference between any enquiry conducted or no enquiry conducted - revision set aside
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Income Tax:
Approval u/s 80G(5) - time of granting approval u/s 80G, only the object of trust is required to be examined - possession of registration u/s 12AA by assessee society shows that the activities being carried out are charitable nature and granting of approval u/s 80G(5)(vi) is consequential
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Income Tax:
Validity of the assessment order u/s 144C(13) - there is no dispute that the assessing officer has passed the assessment order within one month from the end of the month in which direction of DRP was received - order sustainable
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Income Tax:
Reassessment u/s 147 - notices u/s 133(6), 147/148, 142(1)/143(2) and Assessment Order were never validly served on the assessee due to change in address - assessment set aside and restored back to the file of the AO to proceed from the stage of the issue of notice u/s. 148(1), which is undisposed
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Income Tax:
Penalty u/s 271 - audited accounts reflected accumulated balance as on 31/03/08 in the return of income of assessee - charitable status of assessee underwent a change pursuant to amendment to Section 2(15) and claim of assessee was became inadmissible - it cannot be held that inaccurate particulars was furnished
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Income Tax:
Disallowance of weighted deduction u/s 35(1)(ii) - donation was deposited in Axis Bank, where, society is not maintaining any account - When there is no piece of evidence that the assessee’s donation was remitted to donee’s bank account, the assessee cannot claim weighted deduction u/s 35(1)(ii)
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Income Tax:
Revision u/s 263 by Pr. CIT - there is no question of on money as the agreement value was even higher than the maximum rate which was taken by the DDIT (Inv.), Mumbai to ascertain the amount of on money received by the builder - AO after considering the submissions of the assessee does not come to the conclusion of potential escapement - revisionary order is without jurisdiction
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Income Tax:
Short Term Capital Gain u/s 50 - sale of property being part of block of assets - the other property never entered the block of depreciable asset as income from them was falling under the head income from house property - no adjustment is permissible with capital gain of depreciable properties from other property
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Income Tax:
Disallowance u/s. 40(a)(ia)- broadband connectivity charges - on payment for internet connection charges, neither section 194C is applicable nor section 194-I nor 194-J - No TDS required hence no disallowance
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Customs:
Forfeiture of security deposit - Authorized Courier or not - Plainly, if the petitioner was not in touch with the customers and was merely acting in a custom clearance agent, the question of extending expeditious clearance facilities on reliance of the petitioner’s infrastructure and knowledge of its customers, does not arise.
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Customs:
Jurisdiction - inherent power to grant conditional redemption - in the absence of a specific provision the adjudicating authority has no power to direct re-export of the goods as a condition precedent for grant of redemption on payment of fine - no substantial question of law warranting interference
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Corporate Law:
Restoration of the name of the Company in the ROC - The statement of account from 01.01.2011 to 25.02.2019 of the Company with Canara Bank, has been filed to show that it was carrying on business at the time when its name was struck off - ROC submitted that no objection to its restoration - ingredients of Section 252(3) are satisfied - company is restored
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IBC:
Distribution of assets - Workmen dues - whether part of liquidation estate assets or not? - The provident fund dues, pension funds dues and gratuity fund dues are not treated as a part of the liquidation estate and would not, therefore, be recovered by Section 53 of the Code which provides for waterfall mechanism
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IBC:
Commercial wisdom of CoC cannot be interfered with by the Adjudicating Authority. Definitely, it does not mean that Carte Blanche powers are given to RP & the CoC but to apply 'commercial mind' is the forte of the CoC and to apply the 'judicial mind' is forte of the Adjudicating authority
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Service Tax:
Small scale exemption - benefit of N/N. 6/2005-ST dated 01.03.2005 - aggregate value only includes the amounts charged by the appellant - service tax paid by the appellant for reverse charge basis would have been paid by the appellant to the foreign service provider, it does not include the amounts paid by the appellant - exemption granted
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Central Excise:
CENVAT Credit - It is not the duty of the appellant to know about the manufacturer of the goods when invoice contains all the details in terms of Rule 9(2) of CENVAT Credit Rules, 2004 - without investigating the allegation non receipt of input by the appellant is not sustainable and benefit of doubt goes in favor of the appellants.
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Central Excise:
Area based exemption - benefit of N/N. 50/2003-CE dated 10.06.2003 - The assembling of various parts amounts to manufacture in terms of the provisions of Section 2(f) of Central Excise Act - the Amending N.No.01/2008-CE is applicable only in those cases where the processes undertaken does not amount to manufacture - activity at Roorkee was of manufacturing nature - benefit of exemption correctly availed by them
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VAT:
Pre-deposit - input credit of purchases from dealers having cancelled /abinitio Tin - to disallow tax credit on any purchase, it has to be established that it is in respect of the very goods purchased by a dealer that the tax has not been paid, it cannot be disallowed by working out the percentage of purchases - directed to hear the appeal on merits, without insisting pre-deposit
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2019 (5) TMI 1559
Extension of time limit for filing of Form GST-TRANS-I electronically - Input Tax Credit - transitional regime - HELD THAT:- The petitioner is directed to prefer a representation before the Goods Service Tax Council, New Delhi as also before the Nodal Officer of the State of Jharkhand for extending the time for submitting Form GST-TRANS-I electronically for the Input Tax Credit - The decision will be taken by the respondents-authorities in accordance with law as early as possible and practicable, preferably within a period of four weeks from the date of receipt of a copy of representation. Petition allowed.
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2019 (5) TMI 1528
Possibility of arrest - Possibility of detention to custody - Grant of anticipatory bail - Input Tax Credit - fake invoices - input tax credit claimed on the basis of certain invoices, without there being any actual physical receipt of goods - issuance of fake GST invoices - fabricated and fake E-way bills - Petition against the decision [ 2019 (4) TMI 1320 - TELANGANA AND ANDHRA PRADESH HIGH COURT] HELD THAT:- Having heard learned counsel for the petitioner and upon perusing the relevant material, we are not inclined to interfere - SLP dismissed.
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2019 (5) TMI 1527
Submission of revised declaration form in GST TRAN-1 - due to some inadvertent mistake, the amount of CENVAT credit admissible as ITC was not filled up in the column - HELD THAT:- Rule 120A of the CGST Rules, 2017 provides that where a registered dealer submits a declaration electronically in FORM GST TRAN- 1 within the time period specified in Rule 117, Rule 118, Rule 119 and Rule 120 he may revise such declaration once and submit the revised declaration in FORM GST TRAN-1 electronically on the common portal within the time period specified in the said Rules or such further period as may be extended by the Commissioner in this behalf. The application for extending the time period for submitting the revised FORM GST TRAN-1 electronically has to be extended by the Commissioner and not by any other subordinate authority - as the petitioner has already submitted an application for extension of time, to submit the revised FORM GST TRAN-1 to the Nodal Officer, the Commissioner concerned is directed to ensure that the aforesaid application so submitted by the petitioner before the Nodal Officer may be called upon by him and appropriate orders are passed on it in accordance with law most expeditiously, if possible, within a period of one month from the date of production of a certified copy of this order before him. Petition disposed off.
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Income Tax
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2019 (5) TMI 1558
Transferring the jurisdiction of the cases u/s 127 - Jurisdiction of HC - correctness of an order passed under Section 153-A of the Act by the Deputy Commissioner of Income Tax (DCIT) at Ghaziabad - HELD THAT:- The Court is informed by the learned counsel for the Revenue that as far as the order under Section 153-A of the Act passed by the DCIT, Ghaziabad is concerned, against the order of the ITAT, the Revenue has already approached the High Court of Judicature at Allahabad. At the same time, the Revenue has also filed a Special Leave Petition against the judgment M/S ABC PAPERS LIMITED [ 2019 (3) TMI 501 - PUNJAB AND HARYANA HIGH COURT] passed by the High Court of Punjab and Haryana. The decision in the said SLP is awaited. As far as the position of law is concerned, this Court in CIT v. Aar Bee Industries [ 2013 (7) TMI 94 - DELHI HIGH COURT] has held that where there is transfer of cases, then notwithstanding where the original order of assessment order or order under challenge may have been passed, the jurisdiction would lie with the High Court within whose territorial jurisdiction the situs of the Officer passing the order is located. This is of course contrary to the view expressed by the Punjab and Haryana High Court in M/S ABC PAPERS LIMITED [ 2019 (3) TMI 501 - PUNJAB AND HARYANA HIGH COURT] before it, which has been challenged by the Revenue before the Supreme Court.
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2019 (5) TMI 1557
Non issuance of Notice u/s 143(2) within the time- validity of assessment - curable defect u/s 292BB - HELD THAT:- As could be seen from the material on record, the assessee neither appeared nor co-operated for inquiry during assessment. It is an exparte assessment concluded by the respondent Authority, rejecting the time sought for by the petitioner to file objections to the Notices issued u/s 143(2) and u/s 142(1). It is clear that service of notice has to be made on the assessee within a period of six months from the end of financial year in which return is furnished, not from the date or issuance of notice. The relevant factor is the date of service of Notice and the same if to be considered in accordance with the e-Portal maintained by the Department, an exception has to be taken with the order impugned herein. In such circumstances, Section 292BB would not attract and the arguments of the learned counsel for the revenue deserves to be negated. It is well settled legal principle that omission on the part of the Assessing Authority to issue proper notice under Section 143(2) of the Act cannot be a procedural irregularity and the same is not curable, which is referred in Hotel Blue Moon s case [ 2010 (2) TMI 1 - SUPREME COURT] . The flaw found in the notice issued u/s 143(2) goes to the root of the matter and the same cannot be cured or dispensed with, to consider the case on merits. The Assessment Order is passed based on the invalid Notice, which does not survive. Notice is the foundation. Assessment Order built upon such defective notice would certainly fall to the ground. Writ petition is allowed.
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2019 (5) TMI 1556
Addition u/s 69 - Unexplained investments - unexplained cash found deposited in the bank account of the assessee - as per CIT-A making cash withdrawals at one point of time cannot be a sole basis for explaining the cash deposit in future - HELD THAT:- When the assessee was asked to explain, she stated that the same was attributable to her opening cash in hand and furnished a copy of cash book for the relevant financial year showing opening balance of ₹ 22,50,000/-. The assessee was asked to justify the opening balance to which it was submitted that the cash in hand to the tune of ₹ 20 lacs was on account of cash withdrawn by her in the preceding year in June 2012 for the purpose of investment which was not made due to lack of investment and thus remained as such with her. The Assessing Officer noticed that the assessee had raised loans and also withdrawn cash numerous times thereafter which was not needed, if she already had so much cash in hand and had deposited cash in three installments after a period of 8-9 months. The Assessing Officer not accepting her explanation made the addition of ₹ 20,79,000/- on account of unexplained deposits, to the returned income of the assessee. The CIT(A) in appeal held that the circumstances showed that the withdrawal attributed by the assessee to the opening cash in hand was not actually available with her so as to justify the cash deposited. The Tribunal upheld the findings recorded by the Assessing Officer and the CIT(A). The concurrent findings of fact recorded by the authorities below have not been shown to be illegal or perverse by the learned counsel for the appellant-assessee warranting interference by this Court. No substantial question of law arises.
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2019 (5) TMI 1555
Application of section 33AB(7) - Tea development account - withdrawn by the assessee from the Deposit Account - HELD THAT:- No steps having been taken by the revenue to get the matter heard on merits and the alleged failure of the revenue to take any steps with regard to the appeal [ 2018 (7) TMI 1981 - CALCUTTA HIGH COURT] are all relevant facts for establishing whether there was acquiescence of the revenue to the existing orders of the tribunal or whether the department accepted those orders. In those circumstances, we admit the appeal and direct that the same be heard on the question of law whether there was proper application of section 33AB(7) of the Income Tax Act, 1961 on the facts and in the circumstances of the case, taking into account the conduct of the revenue referred to hereinabove.
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2019 (5) TMI 1554
Long term v/s short term capital gains/loss - period of holding of land as capital (asset) is less/more than 36 months - the land which was sold converted in capital assets from 06th April 2012 and earlier the land was held as stock in trade - Whether book entries made in the books of account of the assessee showing the impugned land as stock in trade would be relevant ? - HELD THAT:- The assessee rightly contended that findings of the A.O. is incorrect because the capital asset was acquired way back in F.Y. 2006-2007 which is accepted by the A.O, as such, on date of sale period of holding would be beyond 36 months. Therefore, benefit of indexation should be allowed as the asset was acquired way back in F.Y. 2006-2007. Considering the facts and circumstances of the case, it is clear that impugned land remain as capital asset because of the peculiar facts and circumstances of the case noted above as per Notification of the Ministry of Defence (supra). Therefore, on account of transfer of the same to AHCL by way of Settlement of the Dispute in the Hon ble Delhi High Court, the assessee correctly offered the same as long term capital gains/loss as per Law. The Orders of the authorities below thus are not sustainable in law. Assessee, alternatively also submitted that since Ansal obtained an injunction in July, 2009, therefore, the same would also be beyond 36 moths and as such, it would support the explanation of assessee that land in question was capital asset in nature. In that event the book entry made on 06.04.2012 would not be relevant. We agree with the alternate contention of the Assessee that when everything was brought to the notice of the Court and it came to the knowledge of both the parties that no business activity or construction could be carried out in the impugned land and Hon ble Delhi High Court granted injunction in July, 2009, therefore, from that date it would be very clear that impugned land would not be having character of stock in trade. Therefore, alternative contention of assessee is also accepted. In view of the above facts, we set aside the orders of the authorities below and delete the entire addition. - Decided in favour of assessee.
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2019 (5) TMI 1553
Penalty u/s 271 - charitable status of assessee underwent a change pursuant to amendment to Section 2(15) - HELD THAT:- Penalty u/s 271 (1) (c), has not been initiated while passing assessment orders. The same has also been observed by CIT (A) in the impugned order. CIT (A) has also analysed audited accounts of assessee which reflected accumulated balance as on 31/03/08 in the return of income of assessee. It has been observed that charitable status of assessee underwent a change pursuant to amendment to Section 2(15). Because of this change in status, claim of assessee was inadmissible. We are therefore of considerable opinion, in present facts, it cannot be held that inaccurate particulars has been filed by assessee leading to concealment as argued by Ld.CIT(A). - Decided in favour of assessee.
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2019 (5) TMI 1552
Reopening of assessment u/s 148 - notice beyond the period of four years when the original assessment was completed u/s 143(3) - undisclosed income of the assessee which was utilized for obtaining Donation from M/s Society for Welfare of Handicapped Person - HELD THAT:- First proviso to section 147 is applicable the reasons recorded should show in what manner the assessee had failed to make a full and true disclosure of all material facts necessary for the assessment. The failure to do so would not be more irregularity but it would render the reopening of assessment after four year invalid. In the reasons recorded, the AO nowhere mentioned that which material facts assessee failed to disclose. There is no finding by the AO that there is any failure on the part of the assessee to make a full and true disclosure of any material fact and therefore on these fact, in the case of HCL Technologies Limited [ 2017 (7) TMI 962 - DELHI HIGH COURT] as well as Unitech Limited [ 2017 (7) TMI 1010 - DELHI HIGH COURT] would be squarely applicable. Allegation in the reasons recorded is that there was a society at Kolkata named as M/s Society for Welfare of Handicapped Person. The assessee paid the cash of ₹ 50,00,000/- to the said society and got the cheque of donation of ₹ 50,00,000/-. Thus the assessee utilized its undisclosed income to get the accommodation entry in the form of donation of ₹ 50,00,000/-. However, at the time of conclusion of the reasons recorded the Assessing Officer himself has mentioned that the assessee has furnished the list of donation during assessment proceedings but no donor from M/s Society Welfare of Handicapped Person is mentioned. Thus, when the assessee has not claimed to have received any donation from the said society the question of making any cash payment from undisclosed sources by the assessee could not arise. Therefore, we are of the opinion that there was no justifiable reason for arriving at the finding by the Assessing Officer that there was undisclosed income of the assessee which was utilized for obtaining Donation from M/s Society for Welfare of Handicapped Person. Relying upon the decision of Hon ble Jurisdictional High Court in the case of Unitech Limited (supra) and also in HCL Technologies Limited (supra) we quash the notice issued for reopening of assessment u/s 148. Once the notice for reopening of assessment u/s 148 is quashed, the assessment order passed in pursuance to such notice cannot survive the same is also quashed. - Decided in favour of assessee.
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2019 (5) TMI 1551
Levy of penalty u/s. 271 (1) (c) - defective notice - non specification of charge - inappropriate words in the notice issued u/s 274 r.w.s. 271 have not been struck off - printed notice - HELD THAT:- As decided in assessee's own case [ 2018 (10) TMI 132 - ITAT DELHI] when the inappropriate words in the notice issued u/s. 274 r/w 271 (1) (c) have not been struck off and notice does not specify under which limb of the provisions, the penalty u/s. 271 (1) (c) has been initiated, therefore, the penalty so levied by the Assessing Officer and upheld by the CIT(A) is not sustainable. Impugned appeals are identical to the facts of the case decided by the Tribunal in assessee s own case for A. Y. 2009-10, therefore, following similar reasoning we cancel the penalty levied by the Assessing officer and upheld by the CIT(A) since the inappropriate words in the notices issued for all the above three years have not been struck off and these are only printed notices. - Decided in favour of assessee
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2019 (5) TMI 1550
Assessment u/s. 153C - unexplained investment - HELD THAT:- As additional ground with regard to jurisdiction in framing the assessment u/s. 153C which was remitted to CIT-A by the Tribunal for fresh consideration. The CIT(A) observed that there was incriminating information obtained from the Bank statements of the assessee unraveled during the search u/s. 132 of the Act in the relevant assessment years. In view of the above facts, the CIT(A) confirmed the initiation of assessment proceedings u/s. 153C in all the assessment years. However, he has not at all adjudicated the additions made by the Assessing Officer on merits. Hence, we are inclined to remit the issue to the file of the Assessing Officer for fresh consideration in all the three assessment years as the order of the Assessing Officer was passed ex parte u/s 144 . The appeals of the assessee are partly allowed for statistical purposes.
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2019 (5) TMI 1549
Rectification u/s 254 - Maintainability of appeal - monetary limit - scope of amendment as made in para no. 10 of the Circular No. 3/2018 dated 20.08.2018 - HELD THAT:- Appeal of the revenue is dismissed in view of the CBDT Circular No.3/2018 dated 11.07.2018 in which the revenue has been precluded from pursuing its appeal on account of tax effect below 20 lakhs or less. The order was pronounced by Hon ble ITAT [ 2018 (8) TMI 1812 - ITAT MUMBAI] The revenue wanted to recall the matter on the basis of amendment in the CBDT Circular No.3/2018 dated 11.07.2018, which was amendment on dated 20.08.2018. The amendment is not retrospectively, therefore, in the said circumstances, we are of the view that the Hon ble ITAT has decided the appeal of the revenue [ [ 2018 (8) TMI 1812 - ITAT MUMBAI] ] Judiciously and correctly which is not liable to be recalled in any manner. Accordingly, the miscellaneous application of the revenue is hereby dismissed.
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2019 (5) TMI 1548
Disallowance of weighted deduction u/s 35(1)(ii) - ingenuine donation given - sham transactions - whether, the donation given by the assessee was actually reached the donee and having accepted the donation, the donee has issued valid receipt to the assessee so as to enable the assessee to claim weighted deduction under section 35(1)(ii)? - HELD THAT:- From the efforts of the investigation wing of the Department, it reveals that bank A/c in Axis Bank, Kolkata does not belong to the real trust in Durgapur (i.e. Society for Welfare of Handicapped Persons, Durgapur) and the matter regarding the alleged payment of amounts into the said account is being investigated by various agencies including RBI West Bengal State Police Department. Investigations have further revealed that the original trust at Durgapur has taken up the matter with the High Court, regarding mis-use of its Name PAN, by miscreants. Thus, these facts point to the fact that the said Axis Bank account claimed to belong to BHAROSHA (i.e. Society for Welfare of Handicapped Persons, Durgapur), is fictitious. Thus, the entire investigation of the Department reveals that the entire transaction was sham. The matter of fictitious account operated in the Axis bank is subjudicial and not coming under the jurisdiction of the Income Tax Department. The claim of the assessee that the alleged payment of donation is genuine, is not acceptable, because, the assessee has not furnished any detail/evidence to prove that the donation offered by the assessee is genuine transaction since the donation was deposited in Axis Bank, where, society is not maintaining any account and the society also not confirmed having received the said donation. In case, if the assessee deposited the loan amount cheque in her bank account and thereafter, send the donation from her bank account, on receipt of the same by the donee, the amount would have been debited from assessee s account and would be evident that the donee has received the donation. Actually, this was not done in this case. The assessee claims to have deposited the loan cheque into Axis Bank as a donation to the assessee, where, the donee has not maintaining any account, the incomplete transaction cannot be held as genuine and bonafide transaction and the transaction is nothing but bogus. When there is no piece of evidence that the assessee s donation was remitted to donee s bank account, the assessee cannot claim weighted deduction u/s 35(1)(ii) since there is no genuineness in the above transaction. - Decided against assessee.
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2019 (5) TMI 1547
Revision u/s 263 by Pr. CIT - power of AO in limited scrutiny - unexplained cash payment over and above the agreement value of the properties - HELD THAT:- We observe from the notice issued u/s 143(2) for limited scrutiny dated 19.09.2016 and find merits in the contentions of the assessee that the said limited scrutiny can not be expanded unless the AO converted it into complete scrutiny with the approval of Ld. Pr. CIT and if the AO after considering the submissions of the assessee does not come to the conclusion of potential escapement the Ld. Pr. CIT can not hold the order to be erroneous on the ground that AO ought to have reached to such conclusion. As perused the letter dated 09.11.2016 addressed by the DDIT (Inv.), Mumbai to ITO-29(3)(4), Mumbai wherein the details of on money in the case of Runwal Green (shops) were given and we find that on money was determined by taking the rate @ ₹ 26,000/- per sqr. ft. while agreements were for lower amounts. However, in the case of the assessee we observe that the agreement value was executed @ ₹ 26,000/- per sqr. ft. Thus we find merits in the contention of the assessee that there is no question of on money as the agreement value was even higher than the maximum rate which was taken by the DDIT (Inv.), Mumbai to ascertain the amount of on money received by the builder. Moreover, the case of M/s. Runwal Homes Pvt. Ltd. vs. DCIT [ 2017 (12) TMI 1216 - ITAT MUMBAI] A.Y. 2015-16 the issue of on money has been decided in favour of the M/s. Runwal Homes Pvt. Ltd. by deleting the addition on account of on money. In view of the aforesaid facts, we are of the view that the revisionary order passed by the Ld. Pr. CIT(A) is without jurisdiction and has to be quashed on legal issue as well as on merit. - Decided in favour of assessee.
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2019 (5) TMI 1546
Revision u/s 263 - CIT was of the opinion that the order passed by the AO without conducting any enquiry and just taking documents of the assessee and therefore, the order of the Assessing Officer is erroneous so as to prejudicial to the interest of the Revenue - HELD THAT:- On the same issue i.e. with regard to M/s. L.B. India Holding Mauritius-II Limited and its transactions, specific documentary evidences and details have been filed by the assessee before AO along with detailed written submissions. This was done by the assessee since the AO had specifically enquired from the assessee regarding transactions from the company. This is evident from the various documents placed before us and annexed in the paper book. AO had conducted enquiry and after various rounds of hearing and deliberation with the assessee and scrutinizing the documents filed before him as well as submissions of the assessee, the Assessing Officer had passed an order. Such assessment order is neither erroneous nor prejudicial to the interest of the Revenue. The facts demonstrate that necessary enquiry have been conducted by the Assessing Officer and relevant documents regarding the issue was received by the Assessing Officer still the Ld. CIT may be of the opinion that it is erroneous but in no way it can be prejudicial to the interest of the Revenue since there is always a difference between any enquiry conducted or no enquiry conducted. Therefore, section 263 gets triggered only when the order is erroneous and also prejudicial to the interest of the Revenue. On the basis of binding principles as laid down by the Hon'ble Supreme Court of India in CIT Tax Vs. Max India Ltd [ 2007 (11) TMI 12 - SUPREME COURT] and MALABAR INDUSTRIAL CO. LTD. VERSUS CIT [ 2000 (2) TMI 10 - SUPREME COURT] , we set aside the order of the Ld. Pr. CIT passed u/s.263 and allow the appeal of the assessee.
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2019 (5) TMI 1545
Approval u/s 80G(5) denied - alleged that assessee society is not engaged in any charitable activity - registration u/s 12AA(1)(b)(i) - HELD THAT:- The registration so granted to the assessee society u/s 12AA is still continuing shows that the activities being carried out by the assessee society are charitable in nature and once the assessee society is in possession of registration u/s 12AA, granting of approval u/s 80G(5)(vi) of the Act, in our opinion, is consequential. It is well settled position of law that at the time of granting approval u/s 80G, what is to be examined is the object of the trust and so far as the aspect of income is concerned, the same can be very well examined by the AO at the time of framing assessment. We note that at the time of granting approval u/s 80G, only the object of trust is required to be examined and, therefore, assessee's application seeking approval u/s. 80G(5) could not be rejected on ground that the assessee society is not engaged in charitable activities. We set aside the order of the CIT and restore the matter to his file for readjudication of the request of the assessee for approval u/s 80G(5), as per law. - Appeal of assessee allowed for statistical purposes.
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2019 (5) TMI 1544
Short Term Capital Gain u/s 50 - sale of premises in Amarnath Tower being part of block of assets - other properties Namah building and Lakhani Centrium never entered the block of depreciable asset - HELD THAT:- In the present case we find that the flats which never entered into the block of depreciable assets as income from the same were being offered under the head income from house property can by no stretch of imagination be said to be entitled for automatic entry into the block of depreciable asset. The reference to section 2(11), 43(6) 50 by CIT(A) is germane and support the case of the Revenue. Section 2(11) defines block of asset as a group of asset falling within the class of asset .. in respect of which the same percentage of depreciation is permissible. The income from Namah building and the premises in Lakhani Centrium was falling under the head income from house property and hence these premises cannot be said to be falling under any asset group on which any rate of depreciation is prescribed as on such asset no depreciation is permissible. The case laws referred by assessee as mentioned by us here in above are not applicable on the facts of the case. We have already noted that the Namah building and property in Lakhani Centrium never entered the block of depreciable asset as income from them was falling under the head income from house property. In this view of the matter in our considered opinion learned CIT(A) has passed well reasoned order which does not need any interference on our part. Depreciation on car - appellant has capitalized the Audi car in the F.Y.2009-10 - car had been registered in the assessee s name on 04-02-2009 and the invoice was also dated 12-01- 2009 - HELD THAT:- Genuineness of the delivery document of Shreyons Automobiles which mentions that the vehicle was delivered on 19/6/2009. The genuineness is doubted solely on surmise and conjecture. The plea is that invoice is dated 12/1/2009 and registration date is 4/2/2009, hence it is claimed that it is hard to believe that it was delivered on 19/6/2009. Why it is so hard to believe that the assessee took delivery after four-month is not specified, the learned CIT-A has even suggested that it may not be the first time that the vehicle was delivered, signifying that the vehicle was delivered earlier used by the assessee, it went back, and it was again delivered on 19/6/09. We find that this is too much for a preposterous presumption dihors any cogent material. The assessee has got the delivery from recognised seller in the city of Mumbai. There is no doubt on the existence or the address of the seller. Nothing prevented the authorities below from making enquiry from the said seller before summarily rejecting the veracity of delivery document on mere surmise. - Decided in favour of assessee
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2019 (5) TMI 1543
TDS u/s 195 - Addition u/s 40(a)(i) - non-deduction of TDS from the payment made for Microsoft licence fees - mere reimbursement of expenditure - India-Netherland DTAA - HELD THAT:- It was held by the Tribunal [ 2018 (8) TMI 1056 - ITAT KOLKATA] that the amount in question paid by the assessee was not in the nature of royalty. It was held that since the said amount was paid towards purchase of software, it would have been assessable as business profits in the hands of Netherland based Associated Enterprise and since the said Associated Enterprise did not have a permanent establishment in India, the business profits could not be taxed in India under Article 7 of the Indo Netherland DTAA. It was held by the Tribunal that there was no element of profit involved in the transactions representing remittance made towards purchase of licence software for use by the assessee, which was taxable in India in the hands of the Associated Enterprise and the assessee, therefore, was not required to deduct tax at source from the said payment u/s 195. It was further held by the Tribunal that the assessee was entitled for relief on this issue even on the basis of non-discrimination clause contained in Article 24(4) of the Indo-Netherland DTAA. We, therefore, respectfully follow the decision of the Tribunal rendered in assessee s own case and delete the disallowance made by the AO u/s 40(a)(i) and confirmed by the ld. CIT(Appeals) - Decided in favour of assessee Disallowance of conversion charges on account of prior period expenses - HELD THAT:- The amount in question payable by the assessee on account of difference between the actual conversion charges and minimum conversion charges for the year under consideration representing contractual liability was in dispute and the same was settled and crystallized only in the F.Y. 2006-07 relevant to A.Y. 2007-08. As rightly contended by the ld. D.R., the assessee, therefore, was not entitled for deduction on account of this contractual liability pertaining to the year under consideration as the same represented disputed liability and since this dispute was settled and the liability was crystallized only in the F.Y. 2006-07, the assessee was entitled for the deduction of the same only in A.Y. 2007-08. We, therefore, find no infirmity in the impugned order of the ld. CIT(Appeals) confirming the disallowance made by the Assessing Officer on this issue and upholding the same, we dismiss Grounds of the assessee s appeal. TP adjustment - comparison of segment involving export of goods to unrelated parties which was substantially higher than the PLI of other segment involving export of goods to Associated Enterprise - HELD THAT:- We find that not only the nature of products manufactured in both these segments compared by the Transfer Pricing Officer as well as the risk undertaken by the assessee in these two segments was different, even the business model or business process adopted by the assessee in these two segments was different and the same cannot be taken as comparables for the purpose of transfer pricing analysis in order to determine the arm s length price. We, therefore, delete the addition made by the Assessing Officer and confirmed by the ld. CIT(Appeals) on account of transfer pricing adjustment and allow Grounds of the assessee s appeal. TP adjustment made in respect of international transactions with its AE involving payment of audit fees - HELD THAT:- Certain specific benefits were derived by the assessee-company from the internal audit services rendered by its Associated Enterprise and the authorities below were not justified in making the impugned addition on account of transfer pricing adjustment by taking the arm s length price of the internal audit services rendered by its Associated Enterprise to the assessee at nil on the ground that no benefit, directly or indirectly, was received by the assessee by availing the said services. In that view of the matter, we delete the addition made by the Assessing Officer and confirmed by the ld. CIT(Appeals) by way of transfer pricing adjustment on this issue and allow Ground of the assessee s appeal.
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2019 (5) TMI 1542
Disallowance u/s 14A r.w.r 8D - suo-moto disallowance by assessee - as per AO investment in shares for the purpose of earning dividend income and long term capital gains which are exempt and not chargeable to tax under the Act - HELD THAT:- Assessee has suo moto disallowed ₹ 25,817/- u/s 14A of the Act for earning tax free dividend income of ₹ 78,037/-. It is also not in dispute that the Assessing Officer has not recorded any satisfaction in so far as correctness or otherwise of the suo moto disallowance of ₹ 25,819/- made by the assessee is concerned. There is also no finding that the assessee has used interest bearing funds for making the investment in shares. The Revenue has failed to establish the nexus between the borrowed funds and the investment in shares. No satisfaction being recorded by the AO and considering the suo moto disallowance qua the dividend income we direct the Assessing Officer to restrict the disallowance to the extent of exempt income of ₹ 78,037/-. Loss on sale of finance receivables/securitization - Debt recovery agent - assessee entered into an assignment agreement with Shriram Transport Finance Company Ltd [STFCL] for outright sale of each of these receivables for an agreed consideration and in terms of the above arrangement, all rights, title and interest with respect to these loan facilities were transferred to STFCL without any recourse to the assessee. The aggregate book value of loans is at ₹ 10,11,71,94,000/- after adjusting the sale consideration of ₹ 9,08,29,87,000/- received from STFCL and resultant loss at ₹ 103,42,07,000/- has been claimed as expenses in the Profit and Loss Account. HELD THAT:- There is no dispute that the assessee has lent money to around 45000 borrowers who gave security of vehicles in the form of hypothecation to the assessee. In this line of trade, the lender takes post dated cheques from the borrowers in advance. Since on the date of sale agreement executed with STFCL the assessee was holding post dated cheques of the borrower, therefore, for the period to which post dated cheques were with the assessee, the assessee collected installments for and on behalf of STFCL and after retaining the commission at 1.75%, the assessee remitted the amount to STFCL. The assessee acted as collection agent of STFCL. In so far as hypothecation of vehicle is concerned, in our understanding, the vehicles are hypothecated only as security against loan given. Hypothecation of around 45000 vehicles to be transferred in the name of STFCL would take a substantial period of time and moreover, it is for STFCL to get hypothecation transferred in its name, the assessee cannot be held liable after sale of receivables to STFCL. After addressing to the objection of the AO/DRP/DR, we are of the considered opinion that if the Revenue is objecting to the appointment of the assessee as Debt Recovery Agent, then, principally the revenue has accepted that the transfer of loan has taken place. Further, when the Revenue is objecting to indemnity of 20%, then also the revenue is accepting that actual transfer has taken place. In the light of the sale agreement and various relevant clauses discussed hereinabove, we are of the considered opinion that transaction has taken place during the year under consideration and loss has crystallized during the year under consideration and the assessee is entitled for claim of loss of ₹ 103.87 crores in the year itself. We, accordingly direct the Assessing Officer to delete the addition of ₹ 104.87 crores. TP Adjustment - international transactions entered into by the assessee revealed that it was making payments for certain Intra Group services [IGS] which had been bench marked under TNMM - HELD THAT:- Dispute has to be given a fresh look by the TPO in the light of several documentary evidences brought in support of the IGS fee paid by the assessee. We, accordingly, remit the matter back to the file of the TPO/Assessing Officer with the direction to consider the issue afresh in light of the decision of the co-ordinate bench. Ground No. 3 is allowed for statistical purposes. No interest charged on credits to its AEs - HELD THAT:- There is no dispute that the TPO has solely based his findings on the retrospective amendment to section 92B. We are of the opinion that when the impugned T P study report was furnished by the assessee as per the then applicable provision, outstanding receivables were not considered as international transaction. In our humble opinion, a party cannot be called upon to perform an impossible act i,e., to comply with a provision not in force at the relevant time but introduced later by retrospective amendment. We draw support from the judgment in the case of NGC Networks [India] Pvt Ltd [ 2018 (5) TMI 1148 - BOMBAY HIGH COURT] wherein followed the view taken by it in CIT Vs. Cello Plast [ 2012 (8) TMI 527 - BOMBAY HIGH COURT] wherein the court has applied the legal maxim Lex non cogit impossibilia [law does not compel a man to do that which he cannot possibly perform. Though the TPO has computed the interest by observing that substantial amount of outstanding receivables from the AEs remained outstanding period for a prolonged period. However, no such substantial amount has been mentioned nor the delay considered as delay for a prolonged period has been mentioned. On the contrary, we find force in the contention of the ld. AR. Exhibit 42 of the paper book under the head Service Income Receivable . Since the facts are not coming out from the orders of the authorities below, we deem it fit to restore this issue to the file of the TPO. The TPO is directed to furnish details of substantial amount which, according to him, has been outstanding for a prolonged period. Application filed u/s 155(4) - improper credit of tax deducted at source - HELD THAT:- We direct the Assessing Officer to examine the matter afresh in light of the TDS details furnished by the assessee in its original return, revised return and application filed u/s 155(4) of the Act. TPO is further directed to verify whether any refund was allowed to the assessee to justify the withdrawal of interest u/s 244A of the Act and levy of interest u/s 234D. The TPO is directed to charge such interest as per provisions of law and after allowing reasonable opportunity of being heard to the assessee. Miscellaneous grounds are treated as allowed for statistical purposes.
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2019 (5) TMI 1541
Validity of the assessment order u/s 144C(13) - provisions of sec.144C(13) do not extend the time limit prescribed in sec.153 - HELD THAT:- We notice that various benches of Tribunal are taking the view that the provisions of sec.144C(13) give extension of further period of one month from the end of month in which the direction of DRP was received. In the instant case, there is no dispute that the assessing officer has passed the assessment order within one month from the end of the month in which direction of DRP was received. Accordingly, consistent with the view taken by various benches of Tribunal, we reject the legal ground urged by the assessee. Disallowance made u/s 40(a)(i) - payments made by the assessee for purchase of softwares as Royalty - HELD THAT:- Since the payments have been made for purchase of software, we are of the view that the decision rendered by Hon ble jurisdictional Karnataka High Court in the case of Samsung Electronics Co Ltd [ 2011 (10) TMI 195 - KARNATAKA HIGH COURT] is applicable to the facts of the present case. A.R has raised an alternative contention that the disallowance u/s 40(a)(i) should be restricted to the portion of payment which is chargeable to tax in India. Since this alternative contention was not raised before the AO, the same requires examination at his end. Accordingly we restore this alternative contention to the file of the AO for examining the same in accordance with law. TP adjustment in respect of Advertisement and Market promotion (AMP) expenses - A.R submitted that the TPO has followed Bright Line Test (BLT) in order to determine the alleged excess expenses incurred by the assessee towards AMP expenses - HELD THAT:- The Hon ble Delhi High Court has held in the case of Maruti Suzuki Ltd [ 2015 (12) TMI 634 - DELHI HIGH COURT] that the revenue needs to establish the existence of international transaction before undertaking benchmarking of AMP expenses. In the instant case, we notice that the TPO has entertained the belief on the basis of presumptions that the assessee s AMP expenses have promoted the brand value of its AE, i.e., no material has been brought on record to show the existence of International transaction. Before us, the Ld A.R placed his reliance on various case laws. We notice that the decision rendered in the case of L.G. Electronics India P Ltd vs. ACIT [ 2019 (1) TMI 1567 - ITAT DELHI] is applicable to the facts of the present case, wherein also identical T.P adjustment had been made and held Since the operating margins of the assessee are in excess of the selected comparable companies, no adjustment on account of AMP expenses is warranted AO/TPO was not justified in making T.P adjustment on account of AMP expenses. Accordingly we hold that no adjustment needs to be done in respect of AMP expenses and accordingly delete the addition made by the AO in this regard. - Decided in favour of assessee.
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2019 (5) TMI 1540
Taxability of Carbon credit receipts - nature of receipts - revenue or capital receipts - HELD THAT:- Identical issue came up in assessee s own case for AY 2009-10 [ 2016 (4) TMI 916 - ITAT AHMEDABAD] receipts received by the assessee on sale of carbon credit are to be treated as capital receipts and not liable to tax once both the parties are unanimous on the factual aspect that the sale is not effected in the relevant previous year, there cannot be any good reasons to bring the CER value to tax in this assessment year. In view of the above discussions, in our considered view, the gains on sale of CERs, though taxable in nature, could only have been taxed at the point of time when these CERs were actually transferred to the foreign entity. Accordingly, the value of CERs, even though quantifiable, cannot be brought to tax by the reason of accrual simplictor. That is precisely what has been done in this case. It is for this reason that we confirm the relief granted by the CIT(A) and decline to interfere in the matter. - Decided in favour of assessee. Disallowance u/s 14A read with Rule 8D - quantum of disallowance - HELD THAT:- As held in assessee s own case [ 2016 (4) TMI 916 - ITAT AHMEDABAD] we find that its not even in dispute that a part of expenses attributable to the work in connection with the investment are to be disallowed, as the assessee has on its own offered ₹ 30,000 for disallowance in this regard. The dispute is confined to the quantum of disallowance and the basis on which it is to be quantified. In the absence of any reasonable basis of disallowance offered by the assessee, and in the absence of the assessee even disclosing the basis on which disallowance is made, the Assessing Officer had invoked the rule 8D. We see no infirmity in this action. In view of these discussions, as also bearing in mind entirety of the case, we vacate the relief granted by the CIT(A) and restore the disallowance made by the Assessing Officer. - Decided against assessee. Rejection of claim of additional depreciation u/s 32(l)(iia) - plant machinery were used for less than 182 days, the claim of additional depreciation during AY 2010-11 was restricted to 50% - HELD THAT:- We find that the CIT(A) has appreciated the facts and loan in perspective and has rightfully came to a conclusion that assessee was entitled to remaining part of 50% of the claim of the additional depreciation eligible under s.32(1)(iia) of the Act in the subsequent assessment year adopting purposive approach to the issue. We thus find no infirmity in the view taken by the CIT(A) and therefore decline to interfere. - Decided against revenue
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2019 (5) TMI 1539
Deduction u/s. 10B - AO reduced the expenses from export turnover only and not reduced the same from total turnover - HELD THAT:- By now, this is settled position of law as per these two judgments cited before us being the judgment of Hon'ble Karnataka High Court rendered in the case of CIT Vs. Tata Elxsi Ltd. [ 2011 (8) TMI 782 - KARNATAKA HIGH COURT] and case of CIT vs. HCL Technologies Ltd. [ 2018 (5) TMI 357 - SUPREME COURT] that total turnover is sum total of export turnover and domestic turnover and therefore, if an amount is reduced from export turnover then the total turnover also goes down by the same amount automatically. Respectfully following these two judgments, we direct the AO to decide the issue afresh regarding allowability of deduction to assessee u/s. 10B. Disallowing of purchase of software - Nature of expenses - revenue or capital expenditure - HELD THAT:- This issue is to be decided against assessee relying on decision in the case of WIPRO LTD. [ 2010 (8) TMI 1053 - KARNATAKA HIGH COURT] Disallowance u/s. 37(1) - purchase of bearing - capital expenditure - HELD THAT:- In respect of disallowance out of purchase of ball bearing assembly of ₹ 13,28,603/- this was the submission of assessee before DRP that the expenditure was disallowed without giving assessee an opportunity of being heard. As per the direction of DRP also, it is seen that the direction of DRP is very cryptic without any reasoning. Under these facts, we feel it proper to restore this matter back to the file of DRP for fresh decision by way of a speaking and reasoned order after providing adequate opportunity of being heard to both sides. This ground is allowed for statistical purposes. Expenditure towards Repairs and Maintenance charges - revenue or capital expenditure - HELD THAT:- Repair expenditure were incurred to preserve and maintain an already existing asset, in the course of such repairs, if they have upgraded the facilities to international standards, then that would not constitute a new asset and in the present case, in the absence of bills, we cannot examine the exact nature and hence, we restore this matter back to the file of AO for fresh decision after examining the facts in the light of this judgment of Hon'ble Karnataka High Court in M/S. MAC CHARLES (INDIA) LIMITED [ 2015 (1) TMI 476 - KARNATAKA HIGH COURT] Assessee is withdrawing all the grounds in respect of TP issues because the TP issue has been resolved as per MAP resolution and only the remaining grounds in respect of corporate tax issue should be decided by the Tribunal. TDS u/s 194C/194I/194J - Disallowance in respect of broadband connectivity charges u/s. 40(a)(ia) - no TDS was deducted by assessee - HELD THAT:- AO has invoked the provisions of section 194C of IT Act although not so stated by AO specifically in the assessment order. As per CIT(A) also, TDS was to be deducted by assessee u/s. 194C of IT Act. As per the Tribunal order DESTIMONEY ENTERPRISES LIMITED (FORMERLY KNOWN AS DESTIMONEY ENTERPRISES PVT LTD.) [ 2017 (9) TMI 293 - ITAT MUMBAI] cited by assessee, we find that specific finding has been given by the Tribunal in this case that for the payment for internet connection charges, neither section 194C is applicable nor section 194-I nor 194-J. Learned DR of the revenue could not point out any difference in facts in the present case and in the case of Destimony Enterprises Limited vs. ITO (TDS) (Supra). Hence, respectfully following this Tribunal order, we hold that the disallowance made by the AO in the present case u/s. 40(a)(ia) is not justified - Decided in favour of assessee
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2019 (5) TMI 1538
Condonation of delay - sufficient cause - as per revenue assessee, as a matter of strategy thought it fit to seek rectification a separate matter altogether entailing only a mistake/s apparent from record - HELD THAT:- We are inclined to admit the appeal. The reason is two-fold. The explanation, whatever its merits, is bona fide . CIT(A) was appealed both on the legal ground/s, since rejected, as also on merits (of the addition). While, the assessee lost on both, his challenge to the quantification, made separately, was lost sight of by the CIT(A) while deciding the appeal on the merits of the addition. The assessee sought rectification prior to preferring an appeal, which otherwise could be raised during the hearing of the appeal, challenging the quantification of the addition sustained, or in appeal against the section 154 order, i.e., were the assessee to be unsuccessful in obtaining the rectification sought. The charge of mala fides by the Revenue is based on suspicion, perhaps considering that the assessee admits to have adopted, on own violation, a particular course of action. The second reason is that the said course whatever be its merits, is, without doubt, only as per the advice of the assessee s legal counsel. The same should not therefore operate to the detriment of the assessee (refer: Concord of India Insurance Co. Ltd. v. Nirmala Devi and Ors . [ 1979 (4) TMI 29 - SUPREME COURT] . The appeal was accordingly admitted, and the hearing in the matter proceeded with. Reopening of assessment u/s 147 - as urged notice u/s. 133(6), 147/148 and notice u/s. 142(1), 143(2) and Assessment Order were never validly served on the assessee - HELD THAT:- Referring to the issue of service of notice u/s. 148(1), a question of fact, the same assumes relevance as, in its absence, the matter would necessarily have to travel back to the file of the AO to enable him to provide opportunity to the assessee to join the proceedings and state his case, and frame the assessment accordingly per a speaking order. In this regard, the Revenue, on its part, has also not shown that the address at which the said notice was sent was the assessee s current address at the relevant time, the date of its issue, i.e., as per its record. The same is clearly not either the assessee s business or residential address, nor as that stated in the PAN. The service of notice u/s. 148(1) cannot, accordingly, be regarded as proper. Even as no prejudice survives or is even claimed, the notice u/s. 148(1) remains uncomplied with in consequence. Needless to add, the AO shall also take into account the income as already returned by the assessee. The matter, setting aside the assessment, is restored back to the file of the AO for the purpose. That is, to proceed from the stage of the issue of notice u/s. 148(1), which is undisposed.
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2019 (5) TMI 1537
Revision u/s 263 - conclusion of the CIT that rejection of books of account is not a pre-requisite for referring the valuation of asset u/s 142A - HELD THAT:- The law on the date of referring the case to the Valuation Officer u/s 142A has to be applied. In this case, the AO referred for valuation u/s 142A of the I.T. Act on 06.12.2004. The law that is applicable as on 06.12.2004 is a provision prior to its insertion of section 142A with effect from 01.10.2014. Therefore, going by the judgment of the Apex Court in the case of Sargam Cinema [ 2009 (10) TMI 569 - SC ORDER] which was in force at the relevant time states that it is mandatory that the books of account need to be rejected prior to referring the case for valuation u/s 142A . Further, we rely on the decision of the ITAT, Delhi Bench in the case of Jithendra Singh Chaddha [ 2019 (1) TMI 272 - ITAT DELHI] wherein it was held that reference of matter to the DVO by the AO for valuation of property is not mandatory. In our opinion, the provisions of section 142A provides that the AO may refer the matter to the DVO for the purpose of estimation of the value of the asset, property or investment and get a copy of the report from the DVO. The word may makes it discretionary to refer the matter to the DVO. It cannot be said by any stretch of imagination that it is mandatory. Therefore, we are of the view that CIT is not justified in exercising jurisdiction u/s. 263 of the Act. Accordingly, we quash the order passed by CIT u/s. 263 of the Act. Since we have quashed the order of CIT passed u/s. 263 of the Act, we refrain from going into other grounds of appeal of the assessee. The appeal of the assessee allowed. Condonation of delay of 201 days - change of chartered Accountants - HELD THAT:- We have heard the rival submissions and perused the affidavit. Originally the assessee s appeals were handled by the Chartered Accountant, Shri S. Sivaramakrishnan aged 70. Later, the assessee changed the chartered accountant by a new person. Hence, there was a delay of 201 days in filing the appeals before the Tribunal. We find that the reason explained by the assessee is bona fide and there is sufficient cause for filing the appeals belatedly by 201 days. Accordingly, we condone the delay and admit the appeals for adjudication. AY 2012-13 - CIT observed that there was difference in valuation for ascertaining the cost of construction of one of the properties - HELD THAT:- In the present case, the Assessing Officer being satisfied about the value of the construction of the property declared by the assessee in its books of account, cannot refer the matter to the DVO. Therefore, it could be said that the Assessing Officer has taken one possible view in this case. Thus, it cannot be said that the assessment order passed was erroneous and prejudicial to the interests of the Revenue. In view of the ratio laid down by the Supreme Court in the case of CIT vs. Greenworld Corporation [ 2009 (5) TMI 14 - SUPREME COURT] we find that the Assessing Officer has passed the assessment order after application of mind and considered the value of the property declared in the books of account of the assessee as correct, therefore, the CIT was not justified in interfering with the assessment order on the basis of the valuation report received after the assessment order was framed. Accordingly, we quash the order passed by the CIT u/s 263 of the Act for all the assessment years. - Decided in favour of assessee
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2019 (5) TMI 1536
TP Adjustment - selection of comparable - functional dissimilarity - HELD THAT:- Dynalog India Ltd. - the company, which is in the manufacturing, assembling and servicing and software, as is evident from the website of Dynalog India Ltd., cannot be a good comparable to the assessee. We are, therefore, of the considered opinion that there is no infirmity in the finding of the learned DR that the Dynalog is not a good comparable to the assessee and the same is liable to be excluded. We accordingly, confirm the finding of the learned DRP in respect of Dynalog India Ltd. Bose Corporation India P. Ltd. - profit and loss account of Bose Corporation is not available either to the revenue or to the assessee. Further, it is also an admitted fact that the Bose Corporation is engaged in trading of high end audio system direct to the consumer whereas the assessee is dealing in the industrial goods as per trade policy. Not in dispute that the Bose Corporation is in the business of customer sales whereas the assessee is in the business to business sales. Bose Corporation trades in the direct consumer audio systems whereas the assessee has been dealing with the industrial goods business to business, thus exclude the Bose Corporation from the list of comparables for benchmarking the international transactions. Disallowance u/s 14A - suo moto disallowance by assessee - as contended by the assessee that Section 14A is applicable only when the exempt income is actually received or receivable during the assessment year but not on the notional income and that the value of investment which have yielded exempt income has to be separately carved out from other investment which has not yielded any income - HELD THAT:- It is an admitted fact that the assessee themselves disallowed a sum of ₹ 3,03,958/-. There is no dispute on the contention of the assessee that except BSL Dynamic Bond Retail, all other investments are taxable. Further, it also remains to be an admitted fact that similar additions made in earlier years is deleted by the ld. CIT(A) and no further appeal to the ITAT was preferred by the Department. In these circumstances, we find that the directions of the DRP for deletion of this addition is in consonance with the ratio laid down in the case of Radhasoami Satsang, [ 1991 (11) TMI 2 - SUPREME COURT] which is to the effect that when the fundamental facts relating to a particular addition or deletion are permeating through several years, the department is not justified in taking inconsistent stands for different years. Rule 8D - CBDT circular No.5 of 2013 dated 11.2.2014, on which Ld. AO placed reliance in his order - As brought to our notice that in PCIT vs IL FS Energy Development Co. Ltd. [ 2017 (8) TMI 732 - DELHI HIGH COURT] the Hon ble jurisdictional High Court quashed the same. In view of the same, we do not find any merit in Ground which is liable to dismissed and is dismissed as such.
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2019 (5) TMI 1535
TDS u/s 195 - Royalties and fees for technical services - Addition u/s 40(a)(ia) - Service Fees Paid to Ouotec Ovi and Consultancy charges paid to International Projects Services OY and Outotec Research OY - duration of stay of such residents of Finland in India - Taxability under the India-Finland DTAA - PE In India - HELD THAT:- As decided in assessee's own case [ 2015 (7) TMI 475 - ITAT DELHI] Once it is held that five individuals from Finland were not representing IPS and, in fact, there was no valid agreement between the assessee and IPS, then, what remains to be examined is such five residents of Finland on individual basis. The amounts payable to each of such five persons satisfying the duration test on individual basis would enable the ultimate triggering of Article 15 of the DTAA. Facts being identical, respectfully following the precedent, we set aside the orders of the lower authorities and remand the matter back to the file of the Assessing Officer for adjudicating the same afresh in the light of the aforesaid decision of the Tribunal in the case of the assessee itself for assessment year 2009-10 - Decided in favour of assessee for statistical purposes.
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2019 (5) TMI 1526
Condonation of delay - period of limitation - HELD THAT:- Besides the delay of 318 days in moving the High Court, there is a further delay of 169 days and 176 days respectively in filing the special leave petitions. We are in agreement with the view of the High Court that sufficient ground was not made out for condoning the delay. Hence the special leave petitions are dismissed. Since we are dismissing the petitions only on the ground of delay, the question of law is kept open.
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2019 (5) TMI 1525
TP adjustment - Comparable selection - functional similarity between the Assessee and Li and Fung - HELD THAT:- The lack of functional similarity between Li Fung India and the Assessee on various parameters. The ITAT upheld the net profit/total cost remuneration model adopted by the Assessee in determining the ALP of its international transactions. The Court notes that the ITAT has consistently followed its orders for AYs 2006-2007 and 2007-2008 which was affirmed by this Court. Accordingly the impugned order calls for no interference. No substantial question of law arises for determination by this Court.
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2019 (5) TMI 1524
Deduction u/s 35(2AB) - expenditure incurred by the Assessee on Scientific Research - HELD THAT:- There is no substance in the present Appeal, since the claim of weighted deduction at 1.5 times of the expenditure incurred by the Assessee on Scientific Research was not even decided against the Revenue by the Appellate Authorities, viz., the CIT(Appeals) and the Tribunal and therefore, there was no occasion for the Revenue to prefer any further appeal, as the expenditure was allowed only under Section 35( l)(i) of the Act which does not require any approval by the Competent Authority. Since the spending of the amount on Scientific Research itself was not even disputed by the Revenue, in our opinion, the Appellate Authorities have rightly allowed the claim u/s 35(1)(i). The Assessee has not preferred any Appeal against that finding and therefore, the question of approval by the Competent Authority for making such claim becomes irrelevant. No substantial question of law to be arising in the present Appeal.
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2019 (5) TMI 1523
Stay of demand - extension of the stay beyond 365 days - Whether the Hon'ble ITAT has acted in contravention of the Second Proviso of Section 254(2A) of the Income Tax Act, 1961, as the combined period of stay has been exceeded 365 days? - delay in disposal of appeal? - HELD THAT:- It is not disputed by revenue that the matter in issue is no longer res integra and stands concluded by the decision of this Court in M/S CARRIER AIR CONDITIONING AND REFRIGERATION LIMITED [ 2016 (5) TMI 396 - PUNJAB AND HARYANA HIGH COURT] as held wherever the appeal could not be decided by the Tribunal due to pressure of pendency of cases and the delay in disposal of the appeal is not attributable to the assessee in any manner, the interim protection can continue beyond 365 days in deserving cases - No substantial question of law.
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2019 (5) TMI 1522
Rectification u/s 254 - disallowing the exemption under section 10(23G) of the Act in respect of interest income earned by bank - HELD THAT:- As decided in assessee's own case [ 2013 (8) TMI 1107 - ITAT MUMBAI] and HDFC BANK LTD. [ 2014 (8) TMI 119 - BOMBAY HIGH COURT] we hold that deduction for the interest cost incurred was to be taken only in relation to earmarked borrowings utilized by the assessee for the purpose of granting loans to the enterprises, interest income whereof is exempt u/s 10(23G) of the Act for the purpose of computing net interest income eligible for deduction u/s 10(23G) of the Act. Quantifying the disallowance of expenditure u/s 14A - HELD THAT:- Mistake pointed out by the assessee that for AY 2007-08, the following ground No. 1(f) and 2(f) have not been adjudicated, which are regarding quantifying the disallowance of expenditure in relation to exempt income under Rule 8D(2)(iii) of the Act in respect to expenditure on account of salaries and allowances, conveyance, communication expenses and printing and stationary. We noted that this ground has not been adjudicated but it was contended by assessee that even in the earlier years the Tribunal has consistently made disallowance of expenses relatable to exempt income at the rate of 1% of the exempt income. She argued that the same decision should be made in AY 2007-08. We direct the AO to compute the disallowance of expenses relatable to exempt income at the rate of 1% of the exempt income because in this year Rule 8D will not apply and Rule 8D(2) will apply only for and from AY 2008-09 only. In term of the above, these Misc. applications are allowed.
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Customs
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2019 (5) TMI 1534
Jurisdiction - power of adjudicating authority to grant conditional redemption - Imposition of penalty on importer u/s 112(a) of Customs Act - HELD THAT:- Tribunal was justified in holding that, in the absence of a specific provision conferring power on the adjudicating authority to direct re-export of the goods as a condition precedent for grant of redemption on payment of fine, no such power was available to be exercised by the authorities concerned. It is only if power is conferred on the authority under the Act or the Rules, can it be exercised in terms thereof; and, in the absence of any specific provision in the Act or the Rules which confer on the adjudicating authority the power to direct the importer to re-export the goods, we find no error in the order of the Tribunal in setting aside the order-in-Original to this limited extent alone, much less a substantial question of law warranting interference u/s 130-A of the Act. The question whether the adjudicating authority has the power to pass an order afresh, rejecting grant of redemption, was neither in issue nor was it examined by the Tribunal. It would be wholly inappropriate for this Court, in proceedings u/s 130-A of the Act - Application dismissed.
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2019 (5) TMI 1521
Forfeiture of security deposit - Authorized Courier or not - principal allegation against the petitioner is that he is not performing functions of a courier but is merely acting as a Custom Clearing Agent - whether the petitioner falls within the definition of an Authorized Courier under the 1998 Regulations and the 2010 Regulations and whether the petitioner has complied with his obligations under those Regulations? HELD THAT:- The petitioner had confined himself to custom clearance of shipments and had no operational responsibility for either interfacing with the customers or international partners. Thus, in view of this Court, there can be no doubt that the petitioner was not engaged in the business of acting as a courier as contemplated under the 1998 Regulations or the 2010 Regulations. The contention that the petitioner had merely outsourced some of its non-core activities as a courier, is unmerited. Admittedly, the agreement between the petitioner and Budget (MoU) was on a principal to principal basis. It is also brought on record that the petitioner used to also raised invoices on Budget for the activities performed by it (Custom clearance). It is, thus, apparent that the petitioner also performed the service of custom clearance for Budget - Budget had outsourced the activities performed by the petitioner to it. If the activities carried on by Budget and the petitioner are examined, it is at once clear that the role of the petitioner was not that of a courier agency but merely of a service provider engaged in the activity of custom clearance. The activity of a courier includes that of delivery of goods / shipments to customers, and clearance of customs is only an incidental part of the said business. In the present case, the principal business of the petitioner is assistance in custom clearance and not of collection and delivery of goods on a door to door basis. The purpose of framing the 2008 Regulations and 2009 Regulations is to extend expeditious clearance facilities to couriers on the premise that couriers have an elaborate infrastructure for knowledge and information management and such courier companies used their inhouse mechanism to guard against use of supply chain by unscrupulous elements. Plainly, if the petitioner was not in touch with the customers and was merely acting in a custom clearance agent, the question of extending expeditious clearance facilities on reliance of the petitioner s infrastructure and knowledge of its customers, does not arise. This Court finds no infirmity with the order dated 27.01.2017 passed by respondent no.2 and the impugned order passed by respondent no.3. It is, at once, clear that the import of the said Circular is to exempt courier agencies from seeking permission to outsource certain non-core activities; is not to enable a person carrying on the activity of custom clearance to masquerade as a courier. Outsourcing of activities, essentially means, that a person carrying on a business is not required to perform all activities himself. However, it is essential that the person outsourcing the activities maintains the integrity of the business - In the present case, it is difficult to accept that the petitioner was carrying on the business of a courier and had outsourced certain components of his business. The petitioner was merely involved in custom clearance; he had no interface with customers using courier services and was also not involved with other business activities. Petition dismissed.
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2019 (5) TMI 1520
Review petition - denial of the cross-examination of concerned witness - HELD THAT:- Having perused the order dated 20th July, 2018, the Court is of the view that the points urged by the Appellants/Review Petitioners would require a detailed consideration of the Court. On that short ground, the common order dated 20th July, 2018 is recalled and the two appeals along with pending applications are restored to the file of the Court. Review petition allowed.
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2019 (5) TMI 1519
Advance License Scheme - ratification of norms in respect of Advance license for Annual Requirement - HELD THAT:- In view of the ratification by the Norms Committee that copper in unrefined copper blister and copper in copper anode also falls within one of the listed goods in the advance license issued by the petitioner, it is evidently clear that no customs duty is payable by the petitioner for the aforesaid goods and therefore the respondent No.5 cannot levy customs duty for the said goods on the petitioner. Recording the submissions of the learned Counsel for the respondents 1 to 4 that the Norms Committee has ratified that copper in unrefined copper blister and copper in copper anode which was imported by the petitioner is exempted from the payment of customs, the show cause notice issued by the fifth respondent may have to necessarily go. Petition disposed off.
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2019 (5) TMI 1518
Waiver of penalty imposed u/s 112 of Customs Act, 1962 - smuggling of prohibited goods - R-22 gas - Revenue has preferred this appeal, on the ground that audio files extracted from I-phone 5 of Shri Rupender Singh Chadha, the main conspirator, clearly demonstrate that he had conspired to smuggle the prohibited good, namely, R-22 gas - HELD THAT:- We are not in agreement with Revenue s contention that the conversation proved respondent s involvement in clearance of impugned consignment on the ground that When DRI intercepted the consignment, those had already been examined and passed out of Customs charge was already given by the inspector and the Superintendent. Thus, there is no allegation/ evidence of influencing any of the officer in clearing the container by the respondent. There is no evidence to suggest that the respondent was in contact with any of the other co-noticees. The DRI had resumed the mobile phones of Manish Jalhotra, Rupender Singh, Dinesh Kumar Badopalia, Shri Prahlad Singh, Shri Gulshan Singh and examined them during the course of investigation but in the entire Show Cause Notice there is no allegation about the respondent having ever been received or made any call to any of them. Also, No one, who has been indicted in the Show Cause Notice as conspirators, have ever insinuated the respondent in any manner. There are no discrepancy in the finding of Ld. Commissioner regarding that respondent was neither involved in assessment nor examination of the consignment, and hence had no direct or indirect role in the clearance of consignment and thus case of imposition of penalty under Section 112 had not been made out against him. There are no infirmity in the impugned order as far as it relates to respondent - appeal dismissed - decided against Revenue.
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Corporate Laws
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2019 (5) TMI 1533
Restoration of the name of the Company in the Register of Companies - Section 252(3) of the Companies Act, 2013 - whether the Company was, at the time of its name being struck off, carrying on business or in operation or otherwise it is just that the name of the Company be restored to the register of companies? HELD THAT:- The statement of account from 01.01.2011 to 25.02.2019 of the Company with Canara Bank, has been filed at Annexure A-7 of the petition to show that the Company was carrying on business at the time when its name was struck off from the Register of Companies - the Company has been able to show that it was carrying on business or in operation at the time of its name being struck off from the register of companies - In the submissions made on behalf of the ROC, no objection to the restoration of the name of the Company, has been raised. The ingredients provided for in Section 252(3) of the Act, are satisfied. The name of the company to be restored in the Register of Companies, subject to deposit of ₹60,000/- as costs with the Pay and Accounts Officer, Ministry of Corporate Affairs within a period of three weeks from the receipt of certified copy of this order - petition allowed.
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2019 (5) TMI 1517
Winding up of Company - case of the OL/petitioner is that the Central Government received number of complaints from some investors of JVG Group of Companies regarding part payment of deposited amount - HELD THAT:- It is not clear as to how this document absolves the liabilities stated in the Statement of Account of the respondent company. Merely because the shares of the respondent company were sold by some of the promoters to the present Management does not wash away liability of the respondent company on account of inter corporate loan received from the petitioner company - the balance-sheets of the respondent company, clearly and unequivocally demonstrate the dues payable to the petitioner company. It is clear from the SFIO report that the respondent company continues to occupy the said land purchased for ₹ 19,42,500/-. The respondent company continues to be liable to return the said land or the consideration received. This is a continuing cause of action. Hence, the question of limitation in this regard would not arise - It is clear that respondent continues to remain liable to return the land or to pay to the petitioner a sum of ₹ 19,42,500/-. In my opinion, there is no bona fide defence raised by the respondent company. Under Section 433(f) of the Companies Act, where a court is of the opinion that it is just and equitable, a company may also be wound up - In the present case clear allegations have been made by the petitioners that the petitioners own 22,99,400 shares in the respondent Company. That apart, a total of 59,81,900 shares are owned by the JVG Group of Companies in the respondent company which companies are also in liquidation. Despite having such a large shareholding, no notices are being sent to the Official Liquidator, who is now the Liquidator of the aforenoted various companies, about holding any meetings or sending copies of any balance sheets, annual accounts etc. It is clear that the respondent Company is acting in a manner which is prejudicial to its shareholders and to the affairs of the company. The full facts and circumstances of the case would justify the passing of a winding up order. The Official Liquidator attached to this Court is appointed as the Provisional Liquidator - petition admitted.
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Insolvency & Bankruptcy
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2019 (5) TMI 1516
Distribution of assets - Workmen dues - whether part of liquidation estate assets or not? - Section 53 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- There is a basic flaw in the reasoning adopted by the liquidator Under Section 36(4) (a) (111), the expression 'liquidation estate' has been defined and it is clarified that all sums due to any workman or employee from the provident fund, pension fund and gratuity fund, were not to constitute and included in the expression liquidation estate assets - Once the sum due to any workman or employee from the provident fund, pension fund and gratuity fund are not constitute a part of the liquidation estate, we fail to understand as to how Section 53 could be invoked along with its explanation. According to Section 53, the proceeds from the sale of the liquidation assets are to be distributed in the manner specified therein. Therefore, the aforesaid amount of the workmen dues cannot be a part of liquidation estate assets. The provident fund dues, pension funds dues and gratuity fund dues are not treated as a part of the liquidation estate and would not, therefore, be recovered by Section 53 of the Code which provides for waterfall mechanism - The liquidator has taken a perverse view by unnecessarily referring to explanation Il of Section 53 and Section 326 of the Companies Act, 2013. - Application allowed.
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2019 (5) TMI 1515
Admission of Application - expression of interest - whether the proviso to Section 31(4) of the Code, is applicable in the present case or not? - HELD THAT:- In the present case, the amendment with respect to getting approval of CCI imposes an additional procedural obligation on the resolution applicants to furnish the approval from CCI before furnishing the resolution plan. Therefore, the amendment does not apply on the present CIRP proceedings. Hence, non-furnishing of the approval from CCI is no bar for the CoC or the RP to consider a resolution plan. Hence this objection raised by the Applicant that RPIF did not have a CCI approval as on the date of meeting i.e. 10.01.2019 stands rejected. Even otherwise, assuming that the aforesaid amendment was applicable in the present case, as on 10.01.2019 the Applicant itself did not have CCI's approval. CCI's approval was furnished on 11.01.2019, a day after the resolution plan of RPIF was approved. In that scenario, even if we assume that RPIF was ineligible to place a resolution plan before the CoC due to not having CCI's approval, but so was the case of the Applicant. The current position is that the RPIF has also furnished the necessary approval from CCI post the resolution plan was approved by the CoC. It is understood that the plain reading of the proviso to section 31(4) of the Code mandates the approval of CCI prior to approval of resolution plan by CoC as the word used in the statute is 'shall'. However, the intent of the legislature for introducing such mandatory requirement which poses an additional obligation on the resolution applicants is that post the approval of resolution plan, it should not be the case that the implementation of resolution becomes difficult due to absence of necessary approvals - Furthermore, it is not the case of the Applicant that the Resolution plan presented by it was approved on merits and merely due to this technical difficulty, rejected. Instead, as per the reasoning given by the RP and the CoC for rejection of the Resolution Plan of the Applicant, the Resolution plan of the Applicant did not even stood on merits due to the conditions and restrictions imposed in the plan. Commercial wisdom of CoC cannot be interfered with by the Adjudicating Authority. Definitely, it does not mean that Carte Blanche powers are given to RP the CoC but to apply 'commercial mind' is the forte of the CoC and to apply the 'judicial mind' is forte of the Adjudicating authority. All this Tribunal is entitled to see is whether law as prescribed by the legislature has been complied with or not. The decision taken by the CoC in approving RPIF's resolution plan is not required to be interfered - As far as the legal and procedural requirements are concerned, prima facie, they are complete in all aspects and the same will be looked into further at the stage of approval of Resolution Plan by this Bench/Adjudicating Authority. Application dismissed.
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Service Tax
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2019 (5) TMI 1532
CENVAT Credit - inputs, capital goods and input services consumed for the construction of the mall - rejection on the ground that the construction activity has not discharged any service tax liability and as such the credit cannot be held to be available to the assessee - HELD THAT:- It stands held in the case of COMMR. OF C. EX., VISAKHAPATNAM-II VERSUS SAI SAHMITA STORAGES (P) LTD. [ 2011 (2) TMI 400 - ANDHRA PRADESH HIGH COURT] that services used for constructing mall which were meant for renting which were discharging service tax liability, the duty paid on the inputs or capital goods or services used for construction of the mall is available as credit. As such, the credit stand rightly availed by the appellant and utilized for discharge of their service tax liability under the category of Renting of Immovable Property . Inasmuch as, the appeal has been allowed on merits, we are not going to the alternative plea of demand being barred by limitation. Credit allowed - appeal allowed - decided in favor of appellant.
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2019 (5) TMI 1531
Small scale exemption - benefit of N/N. 6/2005-ST dated 01.03.2005 - aggregate value - service tax on Commission income for the period ending 31.03.2006 - HELD THAT:- It is clear from the definition that the aggregate value only includes the amounts charged by the appellant. The aggregate value, however, does not include the amounts paid by the appellant. In so far as service tax paid by the appellant for reverse charge basis as concern, the consideration would have been paid by the appellant to the foreign service provider. The term aggregate value does not include the amounts paid by the appellant. Appellant are entitled to small scale exemption - appeal allowed - decided in favor of appellant.
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2019 (5) TMI 1514
Imposition of penalty u/s 78 - appellant had paid the entire tax with applicable interest after issuance of SCN but within a period of one month - dispute relates to 2013-14 - HELD THAT:- As per Section 73 (3) payment of service tax voluntarily on the assessee s own ascertainment and intimating the same to the proper officer of such payment in writing, shall not serve any notice under sub-section (1) in respect of the amount so paid. No disputes that even though the adjudicating authority did not appropriate, yet, the remittance of tax with interest vide challan placed on record into the Government account. This only show the bonafides of the appellant, which was unfortunately not considered by the Revenue. CENVAT credit - input services - vehicle insurance - HELD THAT:- The liability was fastened only with the introduction of negative list, from 01.04.2011 and hence, the entire demand was raised considering even the period prior to 01.04.2011, which cannot sustain - it is proper to remand the matter to the file of the adjudicating authority, to pass a denovo Adjudication Order after giving an opportunity to the assessee to put forth its defence in support and to place the relevant supporting documents, who shall thereafter pass a speaking order on merits. Appeal allowed in part and part matter on remand.
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Central Excise
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2019 (5) TMI 1530
Area based exemption - benefit of N/N. 50/2003-CE dated 10.06.2003 - Revenue s contention is that the said amendment carried out in Notification No.50/2003 made the Roorkee units unavailable to the exemption Notification inasmuch as the process undertaken by them, do not amount to manufacture - HELD THAT:- The Revenue s entire case is based upon the fact that Mumbai unit of the appellant had manufactured head units and body unit of the torch which was assembled in Mumbai and it is only thereafter the same were again disassembled and transported to Roorkee. Roorkee units have only assembled the fully manufactured parts and have cleared the torches after claiming the benefit of the notification. The two units located at Roorkee were only manufacturing switches in question and were not in a position to manufacture the full torch. The assembling of various parts amounts to manufacture in terms of the provisions of Section 2(f) of Central Excise Act inasmuch as the same encompasses any incidental or ancillary activity. Even as per Note 6 of Section XVI the conversion of an incomplete article into a complete article would amounts to deemed manufacture. The Amending Notification No.01/2008-CE is applicable only in those cases where the processes undertaken does not amount to manufacture. Inasmuch as we have held that the activity at Roorkee was of manufacturing nature, the benefit of the Notification stands correctly availed by them. Appeal allowed - decided in favor of appellant.
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2019 (5) TMI 1513
Rejection of ROM application - time limitation - Section 35C(2) in the Central Excise Act, 1944 - HELD THAT:- After a period of more than 17 years the appellant filed a second fresh application for rectification of mistake in the order passed on 04.01.2000. The plea taken by the assessee is that the order was received on a certain date. However, the provisions of Section 35C(2) of the Act, which provides for rectification of mistake is very clear. The assessee had participated in the matter and had moved a second application virtually seeking a review of the earlier order. The assessee sought to extend the limitation under the provisions, which is a period of six months by saying that he was not in receipt of the said order - Upon a reading of the application itself it seems that the mistake, which he was seeking to correct was not in the nature of a mistake apparent on the face of record but virtually he sought a review in the original order passed by the Tribunal. The application was bound to be rejected for reasons that limitation could not have been extended and there was no mistake, which was sought to be corrected, which was apparent from the face of the record - appeal dismissed - decided against Revenue.
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2019 (5) TMI 1512
CENVAT Credit - duty paying documents - fake invoices - case of the Revenue is that as Shri Amit Gupta has admitted that he has created fictitious firms to issue Cenvatable invoices without accompanying goods - HELD THAT:- On the same investigation, several cases have been adjudicated by this Tribunal and in this case also facts emerges that the supplier of goods as well as the appellants have admitted that they received the goods against the invoices in question which were used in manufacture of final goods which were cleared on payment of duty, now burden cast on the Revenue that if the appellants have not received the goods against the invoices in question that from where the appellants have procured those inputs. In terms of Rule 9(2) of Cenvat Credit Rules, 2004, the appellant has taken proper care to examine the invoice against which they have received the goods. It is not the duty of the appellant to know about the manufacturer of the goods when invoice contains all the details in terms of Rule 9(2) of CENVAT Credit Rules, 2004 - without investigating the allegation non receipt of input by the appellant is not sustainable and benefit of doubt goes in favor of the appellants. Credit allowed - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2019 (5) TMI 1529
Compliance with the pre-deposit - whether the first appellate authority and the Tribunal were justified in directing the petitioners to make predeposit in terms of the orders passed by them? - HELD THAT:- In the assessment order, the Assessing Officer has, after examining the transaction tree, observed that in case of certain dealers the sales appear to be of Cancelled Tin/Abinitio Cancelled Tin. He has observed that in case of certain dealers who have sold goods to this dealer, there is absence of Tin movement of goods and as they are involved in only billing activities, their registrations have been cancelled abinitio. Input tax credit cannot be taken in respect of purchases made from such dealers. Keeping in view the provisions of section 11(7A) of the GVAT Act, the Assessing Officer has held that as tax had not been paid earlier, the dealer is not entitled to input tax credit on such purchases. The Assessing Officer has worked out the percentage of purchases made by the petitioners from the three parties and has proportionately disallowed the input tax credit on such purchases. Having regard to the fact that at the time when the assessment order was made, the petitioners did not have the copies of the assessment orders made in the case of the vendors, the petitioners did not have any opportunity to prove the genuineness of such transactions. Subsection (7A) of section 11 of the GVAT Act envisages disallowance of tax credit in excess of the amount of tax paid in respect of the same goods. Therefore, to disallow tax credit on any purchase, it has to be established that it is in respect of the very goods purchased by a dealer that the tax has not been paid. Input tax credit cannot be disallowed by working out the percentage of purchases made from a dealer whose registration is cancelled, without first establishing that in respect of the goods purchased by the dealer, the vendor had not paid tax. The court is of the view that the petitioners have made out a strong primafacie case in their favour - the Tribunal and the first appellate authority were not justified in directing payment of huge amount of predeposit for the purpose of admitting the appeal and staying recovery. Petition allowed.
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Indian Laws
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2019 (5) TMI 1511
Amicable settlement between the parties - validity of notice issued u/s 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - dishonor of cheque - HELD THAT:- Learned counsel for the petitioners has not disputed that the said cheque issued for ₹ 30 lakhs by the petitioner was dishonoured due to the default of petitioner No.1. The bonafides of the petitioners are totally lacking in this writ petition - no ground for exercising the extra ordinary writ jurisdiction of this Court under Articles 226/227 of the Constitution of India is made out - petition dismissed.
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