TMI Tax Updates - e-Newsletter
June 14, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
Indian Laws
TMI SMS
Highlights / Catch Notes
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GST:
Classification of services - packing of tea bags - members of the West Bengal AAR differ on the classification of supply regarding packing of tea bags - as per one member making tea bags is manufacturing classified under Tariff item 0902 40 40 and taxable @5% whereas other member treated the same as Packaging Service classifiable under SAC 998541 taxable @ 18%
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Income Tax:
Genuineness of expenditure - Mere entries in the books of accounts does not establish the genuineness of the expenditure.
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Income Tax:
Transfer pricing - Draft assessment order not issued - AO violated the provision of section 144C. Further, in the process of making/correcting the lapses, AO made another mistake of not withdrawing the said demand notice and penalty notices.
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Income Tax:
Registration u/s 12AA - there is no provision for any type of free or concessional education to the poor and needy students rather the clauses in the Agreement makes it binding on the trust not to offer any discounts or concessions, trust cannot even grant credit to the needy students in case of financial crisis and the interest is chrgeble on day to day basis - Such type of activity cannot be considered as charitable activity - no registration
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Income Tax:
TP adjustment - TNMM VS RPM - neither the TPO nor learned DRP has pointed out any other defect in the transfer pricing analysis of the assessee except that the assessee is involved in manufacturing activity - bench marking done by the assessee under RPM has to be accepted more so, when the TPO has accepted the comparables selected by the assessee
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Income Tax:
Penalty u/s 271D - violation of provisions of section 269SS - AO has not at all recorded his satisfaction that the assessee has contravened the provisions of section 269SS warranting levy of penalty u/s 271D - penalty not sustainable
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Income Tax:
Disallowance of pre-operative expenses - assessee has taken sufficient steps by way of raising sufficient funds employing skilled personnel and by entering into lease agreements with the hotels on which improvements have been started, it amounts to setting off of business and as such, previous year expenses incurred in the business are permissible deductions
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Income Tax:
Revision u/s 263 - CIT himself has given a finding that the re-assessment proceedings have not been correctly carried out and the AO has failed to fulfill his obligation and order is void - when the said order is void and did not stand in law, it cannot be held to be erroneous and prejudicial to the interest of revenue - exercise of jurisdiction by the CIT u/s 263 is not justified
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Income Tax:
Reassessment u/s 148 - AO in original assessment has formed an opinion that the bad debts from export receivables can be written off during the pendency of the application for approval from RBI - notice u/s 148 is without jurisdiction and authority of law as reopening merely on the ground that from the material once a view earlier adopted was erroneous one, such facts cannot be a ground for reassessment
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Income Tax:
Reassessment u/s 147 - original order u/s 143(3) - once finding of fact recorded that no new material has surfaced on the basis of which the assessment proceedings could be reopened, the reopening was clearly on account of change of opinion by the AO which is not permissible under the scheme of the Act
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Income Tax:
Rectification u/s 154 - notice u/s 153A - reopening u/s 153A in case of assessee covered u/s 245-I is not provided in the Act - nothing debatable in coming to conclusion that AO’s action in reopening u/s 153A is illegal and not in accordance with law - once when the issue has been decided by the settlement commission, it is not open to the AO to reopen the assessment and consider the issue again
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Income Tax:
TP Adjustment - comparable selection - before relying upon any judicial precedent for exclusion or inclusion one has to cross the threshold of rule 10 B (2) of IT Rules, to ensure that the conditions specified therein are similar as decided by the honourable courts - argument that comparables should be excluded based on judicial precedents without looking at the functional identity of assessee vis a vis comparable is not acceptable
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Income Tax:
Rectification u/s 254 - non discussion of case law relied upon - it is not necessary for Court/Tribunal to discuss the case relied in the order as long the larger ratio rendered by the courts is not in conformity with the facts of the present case - assessee failed to make out a case of mistakes apparent on record - no rectification
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Income Tax:
Exemption u/s. 11 - filing of return of income belatedly - compliance of requirement of the Act will have to be at any time before the completion of assessment proceedings - the sections 11 & 12 nowhere prescribe filing of return by any due date for the assessment years under consideration so as to grant exemption u/s 11 - denial of exemption is not tenable
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Income Tax:
Reassessment u/s 147 - bogus purchases - When the investigation wing has received specific information from another gov. Dept. that assessee has indulged in hawala transaction by availing bogus purchases bills to inflate its purchases, it cannot be said that the AO had no information or that there was no fresh material for reopening of the assessment - reopening sustained
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Income Tax:
Addition u/s 68 - share capital and premium - Making investment through cash in itself raises doubt and the assessee has merely furnished confirmation from said subscriber without any detail of source of the cash in the hands of the subscriber companies - In the independent enquiry made by the AO through Inspector, those companies were neither found at the addresses given nor responded to summons issued - the assessee hasn't discharged its onus u/s 68
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Customs:
Imposition of penalties u/s 112 and section 114AA - illegal import or re-import of Drawings - In the clear absence of record of export, no credence can be given to this assumption, without invoking the consequence of illicit export, and which has then gone on to attribute responsibility for such to the appellants herein. The penalties must fail on that flimsiness too.
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Customs:
Export of Prohibited item - Non-Basmati Rice - export of 110 MT of Non-Basmati rice will not be hit by the prohibition imposed on 24/3/2008 in as much as these goods were entered for export on or before 6/3/2008 and were entitled to be exported in view of the relaxation given on procedural measures - confiscation of the goods as well as the vehicles, are not warranted
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Customs:
Condonation of delay of 485 days - the delay in filing the appeal has been sufficiently explained and it is not a case of negligence on the part of the Revenue in taking steps to file an appeal from the impugned order of the Tribunal - delay condoned
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SEZ:
Provision of facilities/amenities by units under Rule 11(5) of the SEZ Rules
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Corporate Law:
Oppression and Mismanagement - Once franchise agreement is terminated it will be unreasonable restriction on the part that one party will be restrained not to do anything which is similar to the appellant company, especially when no consideration has flown from appellant company - the right of the persons to use the word “Ex-Director” cannot be denied as it would represent their experience as well - it is not oppression
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Corporate Law:
Maintainability of Complaint - there should be specific averments in the complaint that the accused was in charge and was responsible for the conduct of the business of the company - When there is no specific averments as to officer who is in default to satisfy the provision u/s 2(60)(vi) of the Companies Act, 2013, the complaint is not at all sustainable
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Service Tax:
Classification of services - non competition fee - activity of ‘entering into non-compete agreement is nothing but a service covered by ‘support service of business and commerce’
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Service Tax:
CENVAT credit - Repair & Maintenance of vehicles - Vehicle used to provide courier service not owned by the appellant - it has nexus with the output service - credit allowed.
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Service Tax:
CENVAT Credit - input services - Demurrage Charges - Demurrage is part of handling of import and export shipments of the appellant and therefore the Cenvat credit of tax paid on such demurrage charges is available to the appellant
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Service Tax:
Place of Provision of Services - Scientific or Technical Consultancy Services - Making studies - the location of service provider shall be place of provision of service which is in India and hence cannot be treated as export of service.
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Service Tax:
Reverse Charge Mechanism - Scope of Service tax act - period of dispute is the FY 2005-06 - Section 66A ibid has been inserted in the Statute w.e.f. 18.04.2006 providing for levy of service tax on reverse charge basis on the services procured from outside India - hence no service tax can be demanded for the period upto 17.04.2006
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Service Tax:
Refund of service tax paid - limitation - When the appellant received the advance from the buyers along with Service Tax and paid the same and if subsequently, the contract was cancelled between the appellant and his buyers and the appellant filed the refund claim on the ground that no service was provided - provision of Section 11B of Central Excise Act is applicable - no refund
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Service Tax:
Refund of accumulated and unutilized CENVAT credit - export of output services - rejection of the refund on the ground that the appellants have not debited the CENVAT account before filing the refund claim which is in violation of Para 2(h) of the N. No. 27/2012 dated 18.06.2012 is not sustainable in law - appellant had filed NIL TRAN-1 Return under GST and had not carried forward the input credit - refund allowaable
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Central Excise:
Process amounting to manufacture or not - supply and setting up of RO Water Treatment Plant - the Plant has come into existence only at the site in a progressive manner on a civil construction plat form - not liable to duty.
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2019 (6) TMI 620
Classification of services - services provided in packing of tea bags - rate of GST - composite services or not - challenge to AAR decision - HELD THAT:- The activity of M/s. Vedica Exports Tea Pvt Ltd that is stuffing tea in pouches and supplying the said tea bags cannot be said to be an act of manufacturing as it has not changed the nature and character of tea. Manufacturing involves change or changes brought about by application of processes whereby the emerging product is a new and distinct commodity and commercially it can no longer be regarded as the original one, The activity of Respondent of filling tea into tea bags does not change the basic nature of tea but only makes it classifiable under a different heading on the basis of its packaging and not on account of the nature of tea packed therein. Actually. in tea bags blended tea leaves are put into special porous pouches and then stitched so that for making tea the bags need to be dipped in hot only. Tea bags offer a quick and user friendly way of making the beverage. First member opinion - Packing of tea bags in cartons is an ancillary service to the main service of making tea bags. Tea and tea bags are distinct and separate commercial products. Manufacturing of tea leaves and manufacturing of tea bags are completely separate processes. Processes like plucking, withering, wilting, disruption, oxidation, fixation, kill-green, rolling, shaping, drying, aging, curing or tea sorting are processes associated with manufacturing of tea and not tea bags. Tea bags have distinct character and use and rightly classified under Tariff item 0902 40 40. In view of above discussion it is held that the service offered by the Respondent to M/s. Hindusthan Unilever Ltd. is classifiable under Sl. No. 26 (i) (f) of the Notification No. 11/2017-CT(Rate) dated 28.06.2017, as amended vide Notification No. 31/2017-CT (Rate) dated 13.10.2017. and taxable @5% Second member opinion - Para 3 of Schedule II (Section 7) of CGST Act, 2017 sated that Any treatment or process which is applied to another person's goods is a supply of services and SAC sub-heading No. 9985 41 clearly includes that packaging of goods (in this case tea, a food product filled in pouches) for others and should be treated as Packaging Service classifiable under SAC 998541 taxable under Sl. No. 23 (iii) of Notification No. 11/2017 - CT (Rate) as amended. Thus the service offered by the Respondent to M/s. Hindusthan Unilever Ltd. is classifiable under SAC 9985 41 and taxable @ 18% under Sl. No. 23(iii) of the Notification No. 11/2017-CT(Rate) dated 28.06.2017. as amended. As the members of the West Bengal Appellate Authority for Advance ruling differ on the classification of the service supplied by the Respondent to M/s. Hindusthan Unilever Ltd.. it is deemed that no Advance Ruling can be issued in respect of the questions under Appeal as per provisions of section 101 sub-section (3) of the GST Act. Thus The Advance Ruling No. 36/WBAAR/2018-19 dated 28.01.2019 = 2019 (1) TMI 1489 - AUTHORITY FOR ADVANCE RULING, WEST BENGAL is deemed to be not in operation.
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2019 (6) TMI 619
Lack of access to online profile on the Goods and Service Tax Network - petitioner unable to generate e-way bills. HELD THAT:- Issue notice of writ petition as well as stay petition to the respondents.
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2019 (6) TMI 618
Release of detained goods as well as the conveyance - HELD THAT:- For release of the goods and the vehicle/s, the petitioners shall also submit before the concerned authority proof of payment of above referred amounts and also a copy of the solemn undertaking filed in this court as well as documents, namely, PAN card and Aadhar card / Election card for identification of the petitioners and addresses of the petitioners. Stand over to 19th June, 2019.
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Income Tax
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2019 (6) TMI 617
Addition on account of the provision made for settlement with Union - Whether the same was contingent in nature since the labour demand was under negotiation and ultimate settlement was contingent on the conclusion of the negotiation? - HELD THAT:- As decided in assessee's own case [ 2014 (5) TMI 322 - BOMBAY HIGH COURT] even the provision for pending labour demands and its disallowance made by the Assessing Officer is rightly deleted. The Tribunal has found that the demands were pending. There was wage issue raised by the labour unions and, therefore, in the given facts and circumstances and to maintain industrial harmony and peace, the assessee company made a provision. The revenue may term it as contingent in nature. However, we do not find that the reasons assigned by the Tribunal in that regard raise any substantial question of law. Remission of advance liability - treated as capital receipt - whether the remission of a sum obtained by the assessee is taxable receipt u/s 28(iv) and / or u/S. 41(1) - HELD THAT:- Issue covered in favour of the assessee by the judgment of the Supreme Court in case of Commissioner Vs. Mahindra and Mahindra Ltd. [ 2018 (5) TMI 358 - SUPREME COURT] This was a case of this very assessee. Disallowance on account of special pension liability - Whether the expenses has not been incurred during the regular course of business and hence, is of the nature which is for bringing in benefit of enduring nature and hence, the Capital expenses?- HELD THAT:- This one also considered by this Court on multiple occasions and not entertained. Reference in this respect can be made to an order in assessee's own case [ 2014 (5) TMI 322 - BOMBAY HIGH COURT] Treatment to expenses related to setting up of a new foundry as revenue expenditure - whether the expenditure is related to the setting up of a new foundry, activity of which would be different from the activity of the assessee company and hence, cannot be said to be incurred wholly and exclusively for the purpose of business in existence and incidental to it? - HELD THAT:- . As the assessee could not complete the project and abandoned the same, the Revenue s objection to such expenditure was allowed. The Tribunal, however, on facts on the case noted that the assessee was trying to set up a new foundry but the unit was in the nature of expansion of existing business. That being the position, the expenditure was correctly allowed by the Tribunal. Appeal is admitted for consideration of following substantial question of law:- Whether on the facts and circumstances of the case and in law, the ITAT was right in directing to treat the technical services fee amounting to ₹ 4,92,14,495/- as revenue expenditure without appreciating the fact that the employees cost in respect of employees associated with foreign technician for development of new models is capital expenses and not incurred wholly and exclusively for the purpose of business in existence but relates to development of new model?
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2019 (6) TMI 616
Interest payable u/s 244A - proceedings resulting in the refund which are delayed for the reasons attributable to the assessee - HELD THAT:- There is no allegation or material on record to suggest that any of the proceedings hit the assessee s appeal before the Tribunal or remanded the proceedings before the CIT(A) whether in any manner delayed on accounts of the reasons attributable to the assessee. The Tribunal, was, therefore correct in allowing the interest to the assessee. We may notice that in the case of Ajanta Manufacturing Ltd Vs. Deputy CIT (Guj) 2016 (8) TMI 165 - GUJARAT HIGH COURT] had occasion to consider a similar issue. The assessee had made a belated claim during assessment of filing revised return. According to the Revenue, this would entitle the assessee for claim of interest to the extent of delay. Provisions of sub-rule (2) of Section 244A of the Act were sought to be pressed in service. No question of law arises
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2019 (6) TMI 615
Reopening of assessment u/s 147 - original order u/s 143(3) - change of opinion - disallowance made of loss on sale of stores treating them to be revenue in nature - HELD THAT:- The finding of fact recorded by the Appellate Tribunal is that no new material has surfaced on the basis of which the assessment proceedings could be reopened. It appears that the reopening was clearly on account of change of opinion by the AO and this is something which is not permissible under the scheme of the Act. This principle has been well explained by this court in the above referred decision in the case of Gujarat Power Corporation [ 2012 (9) TMI 69 - GUJARAT HIGH COURT] . - appeal of revenue is dismissed
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2019 (6) TMI 614
Deduction u/s 80P (2) - scope of introduction of sub-section (4) - provisions of this Section shall not apply in relation to any Co-operative Bank other than a Primary Agricultural Credit Society or a Primary Co-operative Agricultural and Rural Development Bank - Primary Agricultural Credit Society or a Co-operative Bank - if the assessee is having a valid registration u/s 8 of the KCS Act, the authorities under the IT Act have to extend the benefit of deduction provided u/s 80P by reason of sub-section (4) thereof, to such societies - HELD THAT:- Issue involved in this appeal stands covered through a Full Bench decision of this court in Mavilayi Service Co-operative Bank Ltd. V. Commissioner of Income Tax [ 2019 (3) TMI 1580 - KERALA HIGH COURT] The above appeal is hereby allowed and the impugned order passed by the Income Tax Appellate Tribunal in M/S. KIZHUVILLAM SERVICE CO-OPERATIVE BANK LIMITED, [ 2018 (9) TMI 1300 - ITAT COCHIN] is hereby set aside.
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2019 (6) TMI 613
Deduction u/s 80P(2)(a)(i) - income derived by the assessee by way of interest from loans and advances made by it as not eligible for deduction - as per AO assessee is not a society as envisaged u/s 80P(4) - HELD THAT:- In Chirakkal Service Co-operative Bank v. Commissioner of Income Tax [ 2016 (4) TMI 826 - KERALA HIGH COURT] held that societies having been classified as Primary Agricultural Credit Societies by the competent authority under the Kerala Co-operative Societies Act, it has necessarily to be held that the principal object of such societies is to undertake agricultural credit activities and to provide loans and advances for agricultural purposes, the rate of interest on such loans and advances to be at the rate to be fixed by the Registrar of Co-operative Societies and having its area of operation confined to a village, panchayat or a municipality and as such, they are entitled for the benefit of sub-section (4) of Section 80P of the Act to ease themselves out from the coverage of Section 80P and that the authorities under the Act cannot probe into any issues or such matters relating to such societies and that the Primary Agricultural Credit Societies registered as such under the Kerala Cooperative Societies Act and classified so under that statute, are entitled to such exemption. Chirakkal (supra) now stands overruled by the decision of the Full Bench of this Court in Mavilayi Service Cooperative Bank Limited v. Commissioner of Income Tax [ 2019 (3) TMI 1580 - KERALA HIGH COURT] on a claim for deduction u/s 80P, by reason of sub-section (4) thereof, the Assessing Officer has to conduct an enquiry into the factual situation as to the activities of the assessee society and arrive at a conclusion whether benefits can be extended or not in the light of the provisions under sub-section (4) of Section 80P Thus matter has to be remitted to the Income Tax Appellate Tribunal for fresh consideration by it in the light of the aforesaid decision. Substantial question of law is answered in favour of the revenue.
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2019 (6) TMI 612
Reopening of assessment u/s 148 - allowability of write off of bad debts from export receivables during the pendency of the application for approval from RBI - HELD THAT:- The petitioner submitted all the required details called upon by the AO in respect of the claim of bad debts written off including the bad debts written off pertaining to export receivables. With respect to foreign debts, the petitioner was called upon to furnish RBI permission. The petitioner replied vide communication dated 21.10.2015 pointing out that the application for permission to write off the bad debts is already made to the Reserve Bank of India. The AO accepted the contention of the petitioner that upon application of RBI pending final approval, debts could be written off and the amount of bad debts written off was allowed and the AO did not make any addition on this ground in the original assessment. In view of the aforesaid undisputed facts emerging from the record, the respondent could not have formed a belief that the income chargeable to tax has been under assessed. With regard to writing off of bad debts from export receivables resulting into income escaping assessment within the meaning of section 147 the reassessment proceedings have been initiated merely on reviewing the same subject matter of original assessment proceedings amounting to assessing the same set of facts already available with the department which is mere change of opinion on part of the respondent. AO during the course of original assessment has formed an opinion that the bad debts from export receivables can be written off during the pendency of the application for approval from Reserve Bank of India and as such, the respondent could not have formed a different opinion that income has escaped assessment as the petitioner did not have permission from the Reserve Bank of India to write off the bad debts from the export receivables. Therefore, in facts of the present case, impugned notice u/s 148 is without jurisdiction and authority of law as the respondent has reopened the proceedings merely on the ground that from the material once a view earlier adopted was erroneous one, such facts cannot be a ground for reassessment. - Decided in favour of assessee.
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2019 (6) TMI 611
Allowability of expenditure - HELD THAT:- It appears that this sum of ₹ 55,27,558/- was paid by the assessee from its account. But for whatever reasons, they had produced only the ledger before the tribunal in proof of such payment, which was not accepted by it. We give a chance to the appellant to prove its case. But we make it clear that they have to establish this case before the tribunal in a summary manner from the disclosed documents. There is no scope of any long drawn procedure of producing further documents adducing oral and documentary documents etc. If on the basis of the available evidence, the tribunal is able to convince itself that the above expense was actually incurred by the assessee and allowable, it will pass an appropriate order.
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2019 (6) TMI 610
Stay of demand - directing petitioner to pay 80% of the demand for each financial year without considering the Office Memorandum issued by the Government of India, Ministry of Finance dated 31st July, 2017 which categorically states that when the matters are before the Commissioner (Appeals) if the assessee pays 20% of the disputed demand, the rest will be stayed - HELD THAT:- We direct the petitioner to pay 20% of the disputed demand for all the financial years within seven days and in the event, the petitioner deposits such amount, the CIT (Appeals) XXIV is requested to conclude the hearing within two months from the date of communication of this order to the Commissioner (Appeals). If 20% of the disputed amount is deposited by the petitioner company within seven days, the Assistant Commissioner of Income Tax being the respondent no.1 will not take any coercive measure till the disposal of the appeals by the Commissioner of Income Tax (Appeals) XXIV.
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2019 (6) TMI 609
Revision u/s 263 - AO passed the order u/s 147 without passing speaking order on objections filed by assessee - as per CIT assessment order is void - can CIT exercise power u/s 263 against such order - HELD THAT:- In the present set of facts where the Commissioner himself has given a finding that the re-assessment proceedings have not been correctly carried out against the assessee and the AO has failed to fulfill his obligation, then under such circumstances where, he has also held that since, the copy of reasons recorded for re-opening of the assessment were not furnished to assessee till date of completion of assessment, the order of the AO is void , then revisionary jurisdiction cannot be exercised against such order. When the said order is void and did not stand in law, it cannot be held to be erroneous and prejudicial to the interest of revenue by the Commissioner. Consequently, the exercise of jurisdiction under section 263 of the Act in the present case, is not justified and is bad in law. We cancel the same. - Appeal of the assessee is allowed.
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2019 (6) TMI 608
Disallowance of pre-operative stage expenses - distinction between setting off of business or commencement of business - HELD THAT:- Perusal of the balance sheet and P L account, apparently shows that the assessee has raised substantial funds through equity capital, employee personnel, entered into lease agreements to take hotel properties on lease and started improvements on the properties and all these facts have been brought on record by the AO, but he has failed to make distinction between setting off of business or commencement of business. When the assessee has taken sufficient steps by way of raising sufficient funds employing skilled personnel and by entering into lease agreements with the hotels on which improvements have been started, it amounts to setting off of business and as such, previous year expenses incurred in the business are permissible deductions. We are of the considered view that the CIT (A) has rightly allowed the expenses having been incurred by the assessee after setting off of the business though before commencement of the business. Moreover, the assessee itself has capitalized many of its expenditure and only claimed the expenses which are of revenue in nature. Interest income to be set off u/s 71 being inextricably linked with the business of the assessee - HELD THAT:- When it is proved that the assessee has set up the business, earned the income from interest during the construction period and has set off of the same against the loss under the head PGBP as per section 71 of the Act, CIT (A) has rightly deleted the addition as the funds parked in the bank on which interest has been earned were inextricably linked with the setting up of the hospitality business. So, following the decision rendered in Indian Oil Panipat Power Consortium [ 2009 (2) TMI 32 - DELHI HIGH COURT] income earned by the assessee from interest during the period prior to the commencement of business and at the stage of setting up of business, the same is of the nature of capital receipt and as such loss incurred by the assessee under the head PBGP is eligible to be set off against the interest income earned during the year under assessment. So, we are of the considered view that the ld. CIT (A) has rightly directed the AO that interest income be set off u/s 71 being inextricably linked with the business of the assessee. Contentions raised by the ld. DR for the Revenue and the decision rendered by the coordinate Bench of the Tribunal in case of Orient Cosmetics Ltd. vs. DCIT [ 1999 (8) TMI 126 - ITAT MADRAS-A] is not applicable to the facts and circumstances of the case. Consequently, appeal filed by the Revenue is hereby dismissed.
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2019 (6) TMI 607
Penalty levied u/s 271AAA - assessee has not paid taxes and penalty in respect of undisclosed income in due time - HELD THAT:- In Form 26AS annexed with the Income-tax return of the assessee, detail of tax paid has been duly shown, which has not been controverted by the Senior DR. Perusal of the impugned order passed by the CIT (A) shows that somehow CIT (A) has omitted to account for the deposit of ₹ 27,70,110/- made by the assessee in the bank being tax paid on the declared income and reached the conclusion to confirm the penalty levied by the AO, whereas computation of income and Form 26AS duly shows that the said amount has been paid in the bank on 04.01.2010 which is well within time. We are of the considered view that penalty imposed in this case is not sustainable, hence ordered to be deleted. However, in case, Revenue finds that the assessee has not deposited the taxes along with interest due well within time then Revenue has liberty to file the application as per law to recall the order. Consequently, appeal filed by the assessee is allowed.
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2019 (6) TMI 606
Depreciation claim to assessee trust - double deduction - HELD THAT:- The factual finding given by the CIT(A) that assessee has not claimed any double deduction could not be controverted by the Ld. DR. CIT(A) has given a direction to the AO to verify the facts and allow the depreciation, therefore, the Revenue should not have any grievance. In view of the finding given by the CIT(A) and in absence of any contrary material brought to our notice by the CIT(A) that assessee has claimed double deduction, we find no infirmity in the order of the CIT(A) directing the AO to delete the disallowance. Accordingly, the same is upheld and the ground raised by the Revenue is dismissed.
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2019 (6) TMI 605
Disallowance u/s 14A - CIT-A justification in restricting the amount of disallowance u/s.14A to the extent of exempt income - HELD THAT:- This issue stands concluded by the decision of Principal Commissioner of Income Tax vs. State Bank of Patiala [ 2017 (5) TMI 843 - PUNJAB AND HARYANA HIGH COURT] wherein it was held that the amount of disallowance u/s. 14A cannot exceed exempt income and this decision was confirmed by Hon ble Supreme Court [ 2018 (11) TMI 1565 - SC ORDER] In the light of the above legal positions, we uphold the order of the ld. CIT(A). Accordingly, the appeal filed by the Revenue is dismissed.
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2019 (6) TMI 604
Addition u/s 68 - unproved credits in the grab of share application money/share capital and share premium - AO concluded that the assessee failed to explain creditworthiness of the share subscriber companies and genuineness of the transactions - HELD THAT:- Entire share capital/share premium money of ₹ 1.80 crore has been shown to be received by the assessee in cash from the share subscriber companies. This amount of share capital/share premium money shown to have been received by the assessee company has been further shown to have been invested in purchase of the shares of the other companies that too in cash. The investment by cash is not a normal phenomena because both the assessee company and the share subscriber companies in normal course are expected to transact through banking channel. Making investment through cash in itself raises doubt and therefore it was the onus of the assessee to explain the source of cash invested by way of share capital/share premium into its cashbook. The assessee has merely furnished confirmation from said subscriber of the share capital without any detail of source of the cash in the hands of the subscriber companies. Assessee even failed to produce books of accounts and vouchers etc. of the assessee company before the AO. In the independent enquiry made by the AO through Inspector, those companies were not found at the addresses given and in response to summons issued, none appeared on behalf of those companies before the AO to explain the source of cash in their hands. It cannot be said that the assessee has discharged its onus of explaining nature and source of the credit as required u/s 68. In the instant case, the AO has not relied only on the report of the Inspector or on the statement of Sri. K.K. Bansal, who was engaged in providing accommodation entries and the AO has taken into consideration the failure of the assessee in explaining the creditworthiness of the share subscriber companies as well as genuineness of the transaction. In view of the recent decision of the Hon ble Supreme Court in the case of NRA Iron Steel Pvt. Ltd. [ 2019 (3) TMI 323 - SUPREME COURT] wherein the decision of Lovely export P Ltd [ 2008 (1) TMI 575 - SC ORDER] has also been considered, we find that the assessee failed to establish the creditworthiness of the share subscriber parties and genuineness of the transaction and accordingly, we set aside the finding of the CIT(A) on the issue in dispute and restore the finding of the Assessing Officer of making addition u/s 68. - the appeal of the Revenue is allowed. Income from Other Sources - no books of accounts or vouchers in support of purchase and sales were produced - CIT(A) has admitted the additional evidence in the form of books of account or bills and vouchers etc., and deleted the addition however, no opportunity was provided to the AO as required under Rule 46A - HELD THAT:- There is no doubt that the AO made addition in absence of bills of purchase and sales produced by the assessee. The Ld. CIT(A) himself has admitted this fact while adjudicating the issue, however, he failed to follow the procedure provided in Rule 46A of the Income Tax Rules - In view of the clear violation of the Rule 46A(3) of the Income Tax Rules, we feel it appropriate to restore this issue to the file of the CIT(A) for deciding afresh after following the due process of law. - Appeal of revenue allowed for statistical purposes.
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2019 (6) TMI 603
Penalty u/s 271D - violation of provisions of section 269SS - sum received by the assessee as loan by way of cash and not by way of account payee cheques - non-recording of satisfaction regarding penalty proceedings u/s 271D - HELD THAT:- As perused the materials available on record and gone through the orders of authorities below. In this case, the assessment was completed u/s 143(3) by assessing total income after making various additions. Moreover, while framing the assessment order, AO has not given any findings/observations that the assessee has contravened the provisions of section 269SS. Against the additions/disallowances, it is an admitted fact that the Assessing Officer proposed for initiating penalty proceedings u/s 271(1)(c). Thus, it is a clear cut case that on perusal of the assessment order, the AO has not recorded any satisfaction recorded regarding penalty proceedings u/s 271D. In the present case in hand, the AO has not at all recorded his satisfaction that the assessee has contravened the provisions of section 269SS warranting levy of penalty u/s 271D whereas, against various additions including disallowance under section 40(a)(ia), the Assessing Officer proposed for initiating penalty proceedings u/s 271(1)(c), which is an identical provisions, where the income escaped assessment or furnishing of inaccurate particulars of income, attracts penalty. We are of the considered opinion that the preposition laid down by the Hon ble Supreme Court in the case of CIT v. Jai Laxmi Rice Mills [ 2015 (11) TMI 1453 - SUPREME COURT] squarely applies to the case of the assessee. Respectfully following the above decision of the Hon ble Supreme Court, the penalty levied u/s 271D stands deleted - decided in favour of assessee.
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2019 (6) TMI 602
Bogus LTCG - exemption under Section 10(38) denied - investment in penny stock companies - HELD THAT:- It is not brought on record how the assessees are involved in promoting the penny stock companies and how the assessees involved in inflating the shares of the companies. Moreover, the copy of the investigation report said to be received from Investigation Wing of the Department at Kolkata was not furnished to the assessee. On identical circumstances, this Tribunal in the case of Kanhaiyalal Sons (HUF) v. ITO [ 2019 (2) TMI 1640 - ITAT CHENNAI] has remitted back the matter to the file of the Assessing Officer for reconsideration. This Tribunal is of the considered opinion that the matter needs to be re-examined by the AO. Accordingly, orders of both the authorities below are set aside and the issue raised by the assessee with regard to deduction under Section 10(38) of the Act is remitted back to the file of the Assessing Officer - Decided in favour of assessee for statistical purposes.
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2019 (6) TMI 601
TP adjustment - applying TNMM after rejecting assessee s bench marking under Resale Price Method (RPM) - whether the international transaction relating to purchase of reagents, spares, consumables from the AE is a simple trading activity, hence, can be benchmarked under RPM ? - HELD THAT:- It is revealed that the assessee has selected RPM as the most appropriate method and has also explained why TNMM is not applicable to the subject transaction. RPM is the most appropriate method to benchmark the subject international taxation relating to purchase of reagents analyzers, etc. Since, neither the Transfer Pricing Officer nor learned DRP has pointed out any other defect in the transfer pricing analysis of the assessee except that the assessee is involved in manufacturing activity, we are of the view that the benchmarking done by the assessee under RPM has to be accepted. More so, when the Transfer Pricing Officer has accepted the comparables selected by the assessee. That being the case, only thing which requires verification is the gross margin of the assessee with that of the comparables. We direct AO/TPO to examine this aspect and decide the issue accordingly after due opportunity of being heard to the assessee. With the aforesaid observations, grounds are allowed. Disallowance of expenditure by treating them as capital in nature - HELD THAT:- From the nature of expenditure incurred by the assessee, it is very much clear that they are for day to day running of the business and have not brought into existence any asset of enduring benefit to the assessee. Merely because the assessee has capitalized the expenditure in its accounts it will not change the nature and character of the expenditure. It is well settled principle of law that accounting entries are not conclusive and one has to look to the actual nature of expenditure. In this context, we rely upon the decision of Kedarnath Jute Mfg. Co. Ltd. [ 1971 (8) TMI 10 - SUPREME COURT] . Moreover, the AO himself has allowed 25% of the expenditure as revenue in nature. In view of the aforesaid, we uphold the decision of learned DRP on the issue. However, it is made clear, depreciation, if any, has been allowed to the assessee on the aforesaid expenditure has to be withdrawn. Grounds are dismissed.
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2019 (6) TMI 600
Addition u/s. 68 - creditworthiness of the shareholders and genuineness of the transaction could not be explained - HELD THAT:- In this case on hand, the assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants, thereafter the onus shifted to AO to disprove the documents furnished by assessee cannot be brushed aside by the AO to draw adverse view cannot be countenanced. In the absence of any investigation, much less gathering of evidence by the AO, we hold that addition cannot be sustained merely based on inferences drawn by circumstance. Section 68 of the Act provides that if any sum found credited in the year in respect of which the assessee fails to explain the nature and source shall be assessed as its undisclosed income. In the facts of the present case, both the nature source of the share application received was fully explained by the assessee. The assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants. The PAN details, bank account statements, audited financial statements and Income Tax assessments u/s 143(3) were placed on record. Accordingly all the three conditions as required u/s. 68 of the Act i.e. the identity, creditworthiness and genuineness of the transaction was placed before the AO and the onus shifted to AO to disprove the materials placed before him. Without doing so, the addition made by the AO is based on conjectures and surmises cannot be justified. In the facts and circumstances of the case as discussed above, no addition was warranted under Section 68 - Decided in favour of assessee.
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2019 (6) TMI 599
Disallowance u/s 14A r.w.r. 8D - expenditure incurred for earning of tax exempt income - HELD THAT:- It is an undisputed fact that the assessee has not earned tax exempt income during the year. We find that the issue is now squarely covered by the various decisions of the Hon'ble High Courts. Even the different Hon'ble High Courts of the country have been unanimous to hold that no disallowance is attracted u/s 14A in case the assessee has not earned any income not forming part of the total income See WINSOME TEXTILE INDUSTRIES LTD. [ 2009 (8) TMI 220 - PUNJAB AND HARYANA HIGH COURT], M/S LAKHANI MARKETING INCL [ 2014 (7) TMI 44 - PUNJAB AND HARYANA HIGH COURT] and CHEMINVEST LIMITED [ 2015 (9) TMI 238 - DELHI HIGH COURT] - decided in favour of assessee
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2019 (6) TMI 598
Addition u/s 68 - source of funds available with lender companies from which the loan lended by the lender companies - HELD THAT:- The income may be a criteria for deciding the issue. But the income is not to be all and end all of everything. For example, a person having a salary of ₹ 12 lakhs per annum purchases a flat for ₹ 50 lakhs. Merely on the basis of his level of income, the addition of ₹ 50 lakhs cannot be made as unexplained investment without understanding the facts. It may be possible that the person might have taken a housing loan of ₹ 45 lakhs and that source would justify his investment. Similarly, income of the lender company cannot be the sole basis for making addition without going into the facts and without understanding the financial statements of the lender companies As discussed the source of funds available with lender companies from which the loan of ₹ 1.50 crores each would have been lended by the lender companies, as explained elsewhere. Bank statements are available at pages 120 of the paper book in respect of Glorious Holding Pvt Ltd, is the bank statement of Kalol Kutir Pvt Ltd and page 156 is the bank statement of New KMS Finance Pvt. Ltd. These bank statement clearly show that the transactions have been done through banking channel and no cash was found to be deposited prior to issue of cheques. Therefore, it cannot be said that the appellant company has purchased cheques by paying cash. The factual matrix with respect to documentary evidences clearly establish that not only the assessee has discharged the onus cast upon it, but has also demonstrated the source of source. Moreover, as mentioned elsewhere, the entire loan amount has been repaid by the appellant company alongwith interest. It would not be out of place to mention here that interest paid on loan for the year under consideration has been allowed as expenditure by the AO. Further, in so far as the addition in respect of loan from Kalol Kutir Pvt Ltd and New KMS Finance Ltd are concerned, the Assessing Officer has made additions simply on the basis of report of the DDIT, INV read with the statement of Shri Binod Agarwal. The appellant company has successfully discharged the onus cast upon it by virtue of provisions of section 68 alongwith the demonstrative evidences and hence, the additions sustained by the CIT(A) have to be deleted. - Decided in favour of assessee.
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2019 (6) TMI 597
Additions in respect of sale of property, discount, development expenditure, commission paid and deleted the addition made u/s.14A - HELD THAT:- The contention that profit arising on account of sale of property cannot be brought to tax as the land was sold in the capacity of holding power of attorney cannot be accepted, since the profits were assessed under the head profit and gain of business . As regards to the allowances of discount, commission and development expenditure, no evidence were filed before us establishing the genuineness of the expenditure. Mere entries in the books of accounts does not establish the genuineness of the expenditure. Hence, we do not find any reason to interfere with the order of the CIT(Appeals). The grounds of appeal are dismissed against the appellant.
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2019 (6) TMI 596
Reopening of assessment u/s 147 - bogus purchases - HELD THAT:- After obtaining the information AO perused the assessment record and also has also gone through the various details filed by the Assessee during the course of original assessment proceedings. When the investigation wing has received specific information from another government department that assessee has indulged in hawala transaction by availing bogus purchases bills to inflate its purchases, therefore, it cannot be said that the AO had no information or that there was no fresh material before the Assessing Officer for reopening of the assessment. So far as the observation of the CIT(A) that the AO in the original assessment has considered these parties as genuine is concerned, the same is incorrect, in view of the extensive enquiries conducted by the MVAT and passing of the information to DGIT (Investigation) who in turn has passed the information to the AO. Therefore, these things came to light only after such enquiries were conducted after the completion of the original assessment. Therefore, the reassessment proceeding in the instant case in our opinion is valid. Therefore, the order of the CIT(A) treating the reopening of the assessment u/s 147 as ab-nitio void is not correct. We accordingly set aside the order of the CIT(A) on this issue and allow the ground No.1 filed by the revenue. Bogus purchases - We find during the course of assessment proceedings the AO had specifically asked the assessee to produce the above parties for his examination. Assessee stated that it is not possible for it to produce the suppliers since they are not the regular suppliers of the assessee company and further the project at Mumbai had already been completed. Further the assessee could not furnish evidence of supply of these materials i.e. transportation bilty or any evidence to prove the movement of goods. Therefore deletion of the entire amount of the bogus purchases so made by the AO is not proper. Since in the instant case the AO has not disturbed the sales and has not rejected the books of accounts, therefore, the entire amount of bogus purchases as alleged cannot be added to the total income of the assessee and the addition has to be restricted to the extent of the G. P. Rate on purchases at the same rate of other genuine purchases. The assessee in the paper book has given the calculations of such GP rate at 9.96%. We, therefore, set aside the order of the CIT(A) and direct the AO to restrict the addition to the extent the G. P. rate on purchases at the same rate of other genuine purchases. AO is accordingly directed to restrict the addition to 9.96% of alleged bogus purchases as against ₹ 1,58,47,973 added by him subject to verification of the GP so computed by the assessee in the paper book. The appeal filed by the revenue is accordingly partly allowed.
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2019 (6) TMI 595
Exemption u/s. 11 - filing of return of income belatedly - returns of income were filed consequent to the notice u/s. 153A - the assessee has not filed the regular return of income u/s. 139(4A) but filed the return of income u/s. 153A(a) consequent to search u/s. 132 - HELD THAT:- Compliance of requirement of the Act will have to be at any time before the completion of assessment proceedings. However, for claiming the benefit of exemption u/s. 11 on the basis of information supplied consequent to the completion of the assessment proceedings would mean that the assessment order will have to be re-opened. The Act does not contemplate such reopening of the assessment. However, in the present case, it was filed consequent to the notice issued u/s. 153A(a). Further, in the present case, exemption u/s. 11 was denied because of non filing of return of income on time and also due to the discrepancies mentioned above. In our opinion, the returns of income were filed consequent to the notice u/s. 153A. The sections 11 12 of the Act nowhere prescribe filing of return by any due date for the assessment years under consideration so as to grant exemption u/s. 11. Therefore, the findings of the CIT(A) that the assessee having not filed its returns of income within the prescribed time had failed to comply with the requirement prescribed under the Act, is not tenable. - Decided in favour of assessee Addition on account of collection of capitation fee - during search, there was no incriminating material found regarding collection of additional fees for the assessment years - HELD THAT:- In the present case, there is no evidence collected by the Department for the assessment year 2006-07 to 2011-12 and there was evidence only in the assessment year 2012-13. As said in earlier paras of this order, there was no admission by any of the Trustees of the assessee-Trust. In the present case, addition towards additional fees collected by the assessee was solely based on the statement of one of the employees of the Trust, Shri Shibu and later details were furnished by the assessee at the time of assessment. Hence, there was no incriminating evidence regarding the receipt of additional fees either found or seized during the search. What was found was the seized material CHN/21/VJ-1-A showing the details of students admitted to MBBS, BDS. BAMS and the money collected from each student recorded in the laptop of the administrative officer, Shri Shibu and printouts of the same for financial year 2011-12 relevant to assessment year 2012-13. Later, the assessee furnished details of fees collected in the year 2010-11 in the tabular form. From this, the Assessing Officer arrived at the additional fees collected by the assessee. However, the assessee vide letter dated 10/12/2013 stated that the assessee had not collected any additional fees and only collected advance fees. Being so, whatever was found was the break up of number of students who were admitted under different quotas in various courses. Therefore, there cannot be any addition in the hands of the assessee towards additional fees collected in the absence of any material seized or found during the search for the assessment years 2006-07 to 2011-12. However, we direct the Assessing Officer to confine the addition to the extent of seized material found during the search for the assessment year 2012-13. Central Board of Direct Taxes had issued instructions by Circular No. 286/2/2003-IT, wherein it had been directed that the search party should not obtain confessions. So the admission made u/s 132(4) by the Administrative Officer cannot be treated as a valid piece of evidence. Moreover, there was no proof that the assessee had collected additional fees in the guise of donation and there was no violation of Prohibition of Collection of Capitation fees act, 1992. The donation voluntary given by anybody to a Trust towards its corpus was a permissible and legal activity, and not an illegal activity resulting in denial of exemption u/s. 11. There was no evidence on record to show any link between the investment made in the hands of various trustees with the Trust s activities under the provisions of section 164(1) r.w.s. 13(1)(c) and 13(1)(d). In our opinion, for the assessment year 2011-12, the additional fees or advance fees which was offered for taxation by the assessee by accounting the same, cannot be brought to tax once again which amounts to double taxation. Similarly for the assessment year 2012-13, it was admitted by the assessee that it had collected additional fees from MBBS and BAMS students which have been accounted by the assessee, hence, for this assessment year also, the Assessing Officer cannot bring to tax once again. For this assessment year, the Assessing Officer has to verify whether it is duly accounted for the assessment year 2012-13 only. Hence, we are not in a position to uphold the order of the CIT(A) on the issue of collection of additional fees for the assessment years 2009-10 to 2011-12. Assessing Officer is to restrict the addition towards collection of additional fees for the assessment year 2012-13 to the extent of the seized material found during the course of search. This ground of appeal in relating to the addition towards collection of additional fees is partly allowed for statistical purposes. Further, the provisions of section 11 was considered by the Tribunal while restoring the registration granted to the assessee u/s. 12AA in assessee s own case for the assessment years 2009-10 to 2011-12.
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2019 (6) TMI 594
Disallowance u/s.80-IA - AO found that there was no profit of such eligible unit in the year under consideration - Whether the assessee was required to carry forward the loss of the eligible unit incurred by it before the initial assessment year for the set off against the profit of the subsequent year of such eligible unit if any? - HELD THAT:- A plain reading of the above provisions reveals that the assessee can claim the set off of the loss incurred by it in respect of eligible unit before the initial assessment year against the income of non-eligible units as per the provisions of law. Thus there remains no ambiguity that the assessee was not required to carry forward losses of the eligible unit before the initial assessment year to claim the set off such losses against the income of the subsequent assessment years. See VELAYUDHASWAMY SPINNING MILLS P. LTD. [ 2010 (3) TMI 860 - MADRAS HIGH COURT] loss in the year earlier to initial assessment year already absorbed against the profit of other business cannot be notionally brought forward and set off against the profits of the eligible business, as no such mandate is provided in section 80-IA(5) Allocate the interest expense incurred by it to the unit eligible for deduction u/s 80-IA - HELD THAT:- We note that the assessee s own fund exceeds the amount invested in the eligible unit. This fact can be verified from the financial statement of the assessee, which is available. Therefore it can be presumed that the assessee has invested own fund in the eligible unit. Accordingly, there cannot be any question of allocation of the interest cost incurred by the assessee in respect of other non-eligible units to eligible unit. No interest expense claimed by the assessee can be allocated to the unit eligible for deduction u/s 80-IA. Accordingly, we are of the view that the order passed by the learned CIT (A) does not require any interference. Accordingly, we uphold the same. Hence the ground of appeal of the Revenue is dismissed. Disallowance u/s 14A - HELD THAT:- We hold that the disallowances in the present case u/s14-A read with rule 8D cannot exceed the amount of dividend income for ₹ 1,28,529.00 only. Hence we do not find any infirmity in the order of the learned CIT (A). Thus the ground of appeal of the Revenue is dismissed. Addition u/s 36(1)(iii) - interest expenses attributable to capital working progress - HELD THAT:- Identical issue was decided by this tribunal in favor of the assessee in its own case in [ 2018 (12) TMI 1654 - ITAT AHMEDABAD] no disallowance of interest expense claimed by the assessee can be made on account of fund invested in the capital work in progress as discussed above. Hence, we reverse the order of the authorities below. The AO is directed to delete the addition made
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2019 (6) TMI 593
Disallowance of provision of bad and doubtful debt u/s 36(1)(vii) - HELD THAT:- We note that this tribunal in the own case of the assessee involving identical issue has confirmed the order of the learned CIT (A) for the assessment year 2011-12 in [ 2018 (7) TMI 1989 - ITAT AHMEDABAD] The question is also squarely covered by the decision of Vijaya Bank v. CIT [ 2010 (4) TMI 46 - SUPREME COURT] where it was held that where assessee bank had written off impugned bad debt in its books by way of a debit to profit and loss account, simultaneously reducing corresponding amount from loans and advances to debtors depicted on assets side in balance sheet at close of year, the assessee - bank was entitled to deduction under section 36(1)(vii) and for that purpose, it was not necessary for it to close individual account of each of its debtors in its books. The learned DR at the time of the hearing has not pointed out any material fact suggesting that there is a change in the facts and circumstances for the year under consideration viz a viz the immediate preceding assessment year. Therefore, respectfully following the order above of this tribunal, we find no reason to interfere in the order of the learned CIT-A. Hence the ground of appeal of the Revenue is dismissed. Disallowance u/s 14A - whether the disallowance u/s 14A read with rule 8D can exceed the amount of dividend income? - HELD THAT:- As decided in SAGAR YESWANTRAI MEHTA VERSUS THE ACIT, CIRCLE-2 (1) (2) , AHMEDABAD [ 2019 (2) TMI 1642 - ITAT AHMEDABAD] ends of justice would meet if we restrict the disallowance equivalent to the tax-free income shown by the assessee - Decided against revenue
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2019 (6) TMI 592
Penalty levied u/s 271(1)(c) - excess claim of deduction u/ s. 35(2AB) - revising the claim of deduction in the revised computation of Income, thereby indicating deliberate filing of inaccurate particulars of income - HELD THAT:- Case do not justify the imposition of penalty as the AO has neither recorded its satisfaction about the deliberate and intentional act of the assessee, nor recorded satisfaction about the concealment of particular of income or furnishing inaccurate particular of income nor specified the specific charge while issuing notice u/s 274 r.w.s. 271(1)(c). The notice issued by the AO is itself invalid. AO has not filed even single documentary evidences to substantiate its grounds of appeal. The ld CIT(A) deleted the penalty holding that the notice under section 274 rws 271(1) was not valid, the assessing officer not bothered to bring on record the copy of the said notice. The assessing officer invoked the provision of Explaination-1 of section 271(1) and recorded that the assessee despite giving the opportunity has failed to offer any explanation. On the contrary the AO himself in para 2 of the penalty order dated 29.08.2016 duly recorded that the assessee filed its reply dated 09.08.2016 received in his office on 24.08.2016. The contents of the reply is also refereed by him in the order itself. Therefore, no infirmity or illegality in the order passed by ld CIT(A), which we affirm. Assessee has not filed cross objection to support the order of ld CIT(A) on merit, yet argued that the assessee has good case on merit and relied on the decision of CIT Vs Amoli Organics P. Ltd [ 2014 (4) TMI 1245 - GUJARAT HIGH COURT] that mere denial of claim under section 35(2AB) would not lead to levy of penalty u/s 271(1)(c). Therefore, in view of the facts that the submissions of the ld AR for the assessee are purely legal in nature, thus, needs consideration. The Hon ble High Court held that in the scrutiny assessment u/s 143(3) the assessee withdrew such claim since it failed in such challenged before CIT(A) by them. If the expenses incurred genuinely had been claimed in the return of income, rejecting the claim may not result in to penalty proceedings nor would the withdrawal of claim is scrutiny proceedings in the said circumstances can be said to be concealment. - Appeal of the revenue is dismissed.
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2019 (6) TMI 591
Charging of Interest u/s 234B and 234C - HELD THAT:- The charging of interest is consequential and mandatory and the AO has no discretion in the matter. This proposition has been upheld by the Hon ble Apex Court in the case of Anjum H. Ghaswala [ 2001 (10) TMI 4 - SUPREME COURT] therefore, uphold the action of the AO in charging the assessee the aforesaid interest u/s 234B and 234C Recategorization of Agricultural income as Non-Agricultural income under the head Income from Other Sources - JDA was entered into and the agricultural lands were converted for non-agricultural purposes - assessee is a HUF comprising of 13 members from agricultural backgrounds owning agricultural lands of approx. 28 acres; with 17 acres being ancestral lands and approx. 11 acres of agricultural lands purchased by the HUF over a period of time - HELD THAT:- It is not in dispute that the assessee HUF owned agricultural lands in the year under consideration. AO was of the view that the assessee had entered into a joint development agreement (JDA) and converted for non-agricultural purposes, the CIT(A) was of the view that the entire analysis of the AO is based on the evidence produced by the assessee regarding the carrying out of agricultural activities and sale of agricultural produce. CIT(A) was also of the view that the AO has not based his / her conclusions on the fact that any agricultural operations carried out on such land, could not be considered agricultural activity. This finding of the CIT(A) has not been disputed by Revenue. Therefore, the fact that the JDA was entered into and the agricultural lands were converted for non-agricultural purposes has no relevance in the case on hand Whether the assessee HUF carried out agricultural operations during the year ? - The notice issued by the AO, copy of reports given by the Village Accountant, Revenue Inspector and translated copies thereof on appraisal thereof, in the period relevant to Assessment Year 2014-15, the assessee HUF was growing various crops and fruits like ragi, mangoes, bananas, vegetables, coconut, etc., and thereby derived agricultural income. In these factual circumstances, the very basis of the AO to hold that the assessee HUF did not carry on agricultural operations during the year is factually incorrect; being contrary to the facts on record. In respect of agricultural income from cultivation / sale of bananas and sericulture, the AO has estimated the income, expenditure, etc., on the basis of enquiries made with Senior Assistant Director, Horticulture Department and Sericulture Extension Officer. However, it is an undisputed fact, as per the material on record, that the assessee was carrying on agricultural operations during the year under consideration as per the reports of the Village Accountant and Revenue Inspector submitted in response to information called for by the AO under section 133(6) of the Act. AO was not correct in estimating the agricultural income and expenditure incurred to earn the same; to make the impugned additions. As fairly conceded by the learned AR, income from sale of cocoons cannot be regarded as agricultural income in view of the decision in the case of K. Lakshmanan Co. Vs. CIT ( [ 1998 (2) TMI 10 - SUPREME COURT] wherein it was held that income derived by the assessee from sale of cocoons raised by it by feeding mulberry leaves to silkworms is not agricultural income. As already been held in this order that the AO was not correct in estimating, both the agricultural income as well as the expenditure thereon, when the facts on record establish that the assessee HUF had carried on agricultural operations; including the growing of Mulberry plants and sericulture; during the year under consideration. As the income from sericulture as declared by the assessee amounting to ₹ 15,42,199/- is to be accepted and 50% thereof, amounting to ₹ 7,71,100/- is held to be attributable to the sale of cocoons, which is chargeable to tax. - Decided partly in favour of assessee.
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2019 (6) TMI 590
Rectification u/s 254 - deduction of finance charges u/s 36(1)(iii) - non discussion of case law relied upon - HELD THAT:- Activity of investment in group company for acquiring controlling interest when such investment has been treated as long term investment in the financial statement cannot be considered as main business activity of the assessee, consequently, the assessee is not liable for deduction towards finance charges u/s 36(1)(iii). Tribunal has recorded its finding on the basis of facts brought out by the parties during the course of hearing. No doubt, the decision relied upon the assessee in the case of Pistabai Rikhabchand Kothari [ 2013 (1) TMI 852 - ITAT MUMBAI] has not been discussed in the order of the Tribunal, but fact remains that whether it is necessary to discuss the case laws referred to by the parties is depend upon the facts of each case. If the Court /Tribunal finds that the facts of the present cases is different from the case laws relied upon by the parties, then it is not necessary for Court/Tribunal to discuss the said case in the order as long the larger ratio rendered by the courts is not in conformity with the facts of the present case. The ratio rendered by any Courts/Tribunal is not universal and such ration is solely depends upon facts of each case. The ratio or observations of the Court cannot be picked to suit the particular facts of the present case, unless the facts brought out in those cases are identical to the facts brought out by the lower authorities in the case on hand. We find that the case relied upon by the the assessee is all together different which cannot be applied to the facts of the present case and hence, the Tribunal has taken conscious decision not to discuss the case laws referred by the assessee in its order. We are of the considered view that there is no merit in the miscellaneous application filed by the assessee in light of decision in Honda Siel Power Products Ltd. vs CIT [ 2007 (11) TMI 8 - SUPREME COURT] hence, we are of the considered view that assessee has failed to make out a case of mistakes apparent on record in the order of the Tribunal which can be rectified u/s 254(2) - Miscellaneous application filed by the assessee is dismissed.
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2019 (6) TMI 589
Rectification u/s 254 - evidences to prove corpus donations - allow benefit of carry forward of loss u/s 72 - mistake apparent on record - HELD THAT:- We find that the Tribunal has recorded its categorical finding in light of facts brought out by the lower authorities and also evidences filed by the assessee during the course of hearing to come to the conclusion that the assessee has failed to file necessary evidences to prove that donations are in fact corpus donations which shall not form the income of the trust u/s 11. For the earlier years, the Tribunal has set-aside the issue to the file of the AO to ascertain correct facts on respect of donations received by the assessee but for the years under consideration, the lower authorities have given categorical facts in light of list of donors and evidences filed by the assessee to prove corpus donations and held that the assessee has not filed any evidences to prove that those donations are corpus donations. Even before us, no further evidences have been filed to controvert the findings of fact recorded by the lower authorities. Under those facts, the Tribunal has concurred with the finding of the CIT(A) in so far as the issue of corpus donations are concerned. The facts involved in these years when compare to previous financial year are different, therefore, the Tribunal has decided not to follow the findings recorded by the Tribunal while set-aside the issue to the file of the AO. The facts and errors brought by the assessee in its miscellaneous application in respect of corpus donations is not a mistake apparent on record, which could be rectify u/s 254(2) Carry forward and set off of loss u/s 72 - HELD THAT:- This issue has been set-aside to ascertain correct facts in light of provisions of section 72 and 70 of the Act and if conditions prescribed u/s 72 and 70, then the AO is directed to allow the benefit of set off of losses as claimed by the assessee. Therefore, we are of the considered view that there is no error in the order of the Tribunal as pointed out by the assessee which could be rectified u/s 254(2) and hence the argument advanced by the ld. Counsel for the assessee are rejected. Accordingly, miscellaneous applications filed by the assessee for AYs 2005-06 to 2009-10 are dismissed. Denial of exemption u/s 11 - HELD THAT:- Tribunal has recorded its findings in light of facts brought out by the lower authorities and evidences filed by the assessee and discussed the issue. We further noted that in para-12, the Tribunal has recorded categorical finding that the assessee could not file any evidences to controvert the findings and facts recorded by the lower authorities and this was confronted to the Ld. AR for the assessee and the Ld. AR has fairly accepted that the violation referred to in section 13(1)(c) were continued in subsequent years. Under those facts, the Tribunal came to the conclusion that assessee is not entitled for exemption u/s 11. Therefore, we are of the considered view that there is no error in the findings of the Tribunal in so far as the issue of denial of exemption u/s 11. Hence, we are of the considered view that there is no merit in the miscellaneous application filed by the assessee for AYs 2012-13 to 2014-15 and hence, the same are dismissed.
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2019 (6) TMI 588
TP Adjustment - comparable selection - functional similarity - HELD THAT:- For the purpose of the comparability all factors are of paramount importance. Hence, before relying upon any judicial precedent for exclusion or inclusion one has to cross the threshold of rule 10 B (2) of IT Rules, to ensure that the conditions specified therein are similar as decided by the honourable court. In view of this, the argument of the learned authorised representative cannot be accepted at the threshold itself that the comparables challenged by the assessee before us should be excluded based on judicial precedents without looking at the functional identity of assessee vis a vis comparable E Clerxs Services Limited - Therefore, On careful analysis of all these arguments, and respectfully following the decision of the coordinate bench in BC MANAGEMENT SERVICES PVT. LTD., VERSUS DY. CIT [ 2017 (5) TMI 1501 - ITAT DELHI] , wherein a ratio has been laid down stating that a comparable company carrying on its services through outsourcing model substantially is not comparable with a company providing services on its own, we set aside the comparability suitability of this comparable company back to the file of the learned assessing officer/transfer pricing officer with a direction to examine the above fact by issue of notice u/s 133 (6) to the comparable company and ascertain whether the sum of INR 437,150,000/- spent on contract for services debited under the General And Administration Expenses are relating to Outsourcing Services or not. If, it is found that these are outsourcing expenditure, then TPO is directed to delete/exclude the above comparable company from the comparability analysis. Even otherwise, it is found that these expenditure are not for the outsourcing services, the learned transfer pricing officer is directed to decide the issue after giving assessee a opportunity of contesting this comparable on this issue of outsourcing model as well as any other issue, and then decide it on merits. Accordingly, we decide the issue of exclusion of each clerk services as above. Infosys BPO Ltd. - Coupled with the fact that the comparable company belongs to an Infosys group, has incurred the expenditure on the brand building and on the annual report itself shows the imprint of being part of the large IT segment group, it is apparent that the functional profile, the assets utilized by the comparable company are not comparable with the assessee company. Therefore, for this reason only, we direct the learned transfer pricing officer, AO to exclude the above comparable. TCS E serve limited - For this reason that it belongs to Tata group and has also contributed to Tata brand which is one of the largest brand in the information technology segment, there is a definite impact on the pricing capacity of the comparable which the assessee lacks. Hence, we find that TCS E serve Ltd deserves to be excluded. Accordingly we direct the learned TPO - AO to exclude the above comparable. CG Vak software and exports Ltd - The learned DRP vide para number 5.3 of his order has rejected the objection of the assessee with respect to inclusion of the comparables stating that all these comparable selected by the assessee and rejected by the learned TPO have been rejected because the file filter used by the learned transfer pricing officer. These filters have been discussed by the learned DRP and therefore the exclusion of the companies which fill these filters was justified and the appellant. We find it is not the reason for rejection of any of the comparable selected by the assessee without finding the functional dissimilarity is between them. R system International Ltd - Further the functional analysis of this comparable is also not made by TPO. However, it has been pointed out before us that R system International Ltd as a listed company which has the quarterly results available. Therefore if such a quarterly results can be constructed with reliable information then, if it is found to be functionally comparable, crosses all other filters , then it should be included in the comparability analysis. Coral hub Ltd - Further there is also a fact that this comparable is found to be functionally dissimilar to assessee by assessee itself as per argument of the ld DR. Therefore The learned TPO is directed to include the above company in the comparability analysis if it is functionally similar and crosses all other filters. In view of above facts we also direct the ld TPO to examine this comparable. Accordingly all 3 comparables which have been included by the assessee but rejected by the learned transfer pricing officer for comparability analysis are set aside to the file of the learned transfer pricing officer to consider them for the comparability analysis if they are found functionally comparable, passes all the filters applied by the TPO, and reliable information has furnished by the assessee in the form of quarterly results and annual reports - appeal of the assessee are allowed.
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2019 (6) TMI 587
Disallowance u/s 14A - HELD THAT:- No disallowance is to be done under 14A if no exempt income is earned . See CHEMINVEST LIMITED VERSUS COMMISSIONER OF INCOME TAX-VI [ 2015 (9) TMI 238 - DELHI HIGH COURT] and BALLARPUR INDUSTRIES LIMITED [ 2016 (10) TMI 1039 - BOMBAY HIGH COURT]. Disallowance on purchase of tenancy right - revenue or capital expenditure - HELD THAT:- We find that assessee has paid the aforesaid sum as compensation for obtaining the premises on lease for a period of five years. Assessee had paid the sum in AY 2011-12. Assessee has amortized the aforesaid sum at the rate of 20% for the period of five years of the lease. Revenue allowed the aforesaid amortisation in the earlier two years. AO has disallowed the expenses for the current year. On the facts and circumstances, it is clear that assessee has not spent the amount for purchase of any capital asset. On the touchstone of decision from in the case of Madras Auto Service [ 1998 (8) TMI 1 - SUPREME COURT] the entire amount was allowable as revenue expenditure. However, the assessee has been claiming the sum proportionately over the period of lease. This has been allowed in earlier two years. In absence of any change in facts and circumstances in our considered opinion there was no reason for the AO to take a different stand. - Decided against revenue.
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2019 (6) TMI 586
Rectification u/s 154 - AO s action in reopening u/s 153A - on issues settled by IT Settlement Commission order - HELD THAT:- Reopening u/s 153A in case of assessee covered u/s 245-I is not provided in the Act. In these circumstances, we fail to understand as to what it debatable in coming to conclusion that AO s action in reopening u/s 153A is illegal and not in accordance law. AO initiates a palpable illegal action and if the assessee doesn t dispute it by way of an appeal the same can by no stretch of imagination be said to be taking the order of AO out of the ambit of a mistake apparent from record being an ex-facie illegal order. Hence, as per the mandate of the Act, once when the issue has been decided by the settlement commission, it is not open to the AO to reopen the assessment and consider the issue again. AO s action is not even justified by the exception in the non-obstante clause as mentioned in section 153A. Hence, the mistake in the order of the AO is apparent and palpable which leads to a conclusion that the AO s order is exfacie legal. Hence in our considered opinion, CIT(A) has clearly erred in dismissing the assessee s appeal by holding that it is upon a debatable issue. Accordingly, since, the AO was not fortified to make an addition, qua section 14A as the matter stood already concluded by IT Settlement Commission order, this assessment order deserved to be cancelled/quashed. Accordingly, we set-aside the order of CIT(A) decide the issue in favour of the assessee.
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2019 (6) TMI 585
Rectification of mistake u/s 254 - Tribunal proceeded to delete the penalty on the ground that the First Appellate Authority had deleted all the additions and the Tribunal sustained this order of the First Appellate Authority - HELD THAT:- It is a fact that the First Appellate Authority had sustained the addition/disallowance in respect of the addition made on account of coal cost freight amounting to ₹.1631.85 lakhs and the assessee had not filed any appeal against confirming such addition/disallowance by the First Appellate Authority. We notice that the Tribunal by oversight omitted to consider this factual position and therefore a mistake is crept in the order passed by the Tribunal which is apparent on the record and needs rectification. In the circumstances, we recall the order passed by the Tribunal to hear the parties in respect of the penalty levied u/s. 271(1)(c) of the Act on the addition sustained by the Ld. First Appellate Authority regarding coal cost freight as the penalty survived only in respect of this addition. In respect of other additions, no penalty is survived as the quantum additions were deleted by the First Appellate Authority and was confirmed by the ITAT.
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2019 (6) TMI 584
Addition u/s 68 - unsecured loans - HELD THAT:- Assessee has discharged initial burden by filing various documents to prove identity, genuineness of transactions and creditworthiness of the parties. Therefore, we are of the considered view that the AO was erred in making additions towards unsecured loan u/s 68. The Ld. CIT(A) without appreciating these facts simply confirmed the addition made by the AO. Hence, we reverse the findings of the CIT(A) and direct the AO to delete the additions made towards unsecured loans u/s 68. Disallowance of interest and estimation of commission on unsecured loans obtained from companies controlled and operated by Shri Bhanwarlal Jain - AO has disallowed interest paid the ground unsecured loans are bogus - AO has also estimated 0.2% commission on total unsecured loans - HELD THAT:- As the issue of unsecured loans has been decided in preceding paragraphs, where we held that the transactions between the parties are genuine which cannot be considered as unexplained cash credit u/s 68 of the Act, consequently, additions made towards disallowance of interest and estimation of commission on such unsecured loans is also needs to be considered in the light of discussions in the preceding paragraphs. Therefore, we are of the considered view that the AO as well as the Ld. CIT(A) was erred in making additions towards interest on unsecured loans and commission on such unsecured loans. Accordingly, we direct the AO to delete the additions made towards disallowance of interest and estimation of commission. Bogus purchases - assessee has filed basic evidences including confirmations from the parties - notice u/s 133(6) were issued, such notices were returned unserved with a remark address not known - HELD THAT:- When the AO has not pointed out any discrepancies in the books of accounts or stock details filed by the assessee merely for the reason that notices issued u/s 133(6) were returned unserved, no adverse inference could not be drawn against the assessee, when assessee has filed sufficient material in order to prove the purchases from the above parties, no doubt, it is an admitted fact that the parties were never responded to notice u/s 133(6), but that by itself would not be a ground for holding the purchases as bogus in nature, that too when materials furnished by the assessee proves otherwise. The assessee has done its at best and filed whatever information available with it. The appearance of the parties is not within the control of the assessee. Further, when the parties are not appeared before the AO in response to notices, then separate procedure is provided under the Act to deal with those parties. For this purpose, the assessee cannot be blamed or made responsible for non-appearance of parties and also purchase from the parties cannot be considered as bogus when the assessee has filed all other evidences to prove the purchases from the parties. In this case, the assessee filed complete details including confirmations from the parties. The AO never disputed this fact. The AO also accepted sale declared by the assessee. Therefore, we are of the considered view that it is difficult to accept the arguments of the AO that purchases from above parties are bogus in nature. What is the amount of additions required to be made when both parties failed to conclusively prove the purchases in their favour? - Hon ble Gujarat High Court in the case of Ld. Vijay Proteins vs CIT [ 2015 (1) TMI 828 - GUJARAT HIGH COURT] had taken similar view and held that where purchases are considered to be bogus, then only profit element embedded need to be taxed. In these cases, the assessee is in the business of real estate development. The profit element of real estate business is in the range of 8 to 15% depending upon the type of projects and places where project is executed by the parties. Therefore, considering all we deem it appropriate to direct the AO to estimate 12.5% profit on alleged bogus purchases. Accordingly, we direct the AO to estimate 12.5% profit on total alleged bogus purchases.
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2019 (6) TMI 583
Registration u/s 12AA - activity the assessee involved is obtaining a franchisee of Zee Learn Ltd for education - activity are in commercial nature OR Charitable - HELD THAT:- The trust is operating on a commercial basis in conducting of its affairs which consists mainly running of Kid Zee . There is no provision for any type of free or concessional education to the poor and needy students. Rather the clauses in the franchisee Agreement makes it binding on the trust not to offer any discounts or concessions as otherwise provided in the Agreement. As per the Clause C D of the Agreement above the trust cannot even grant credit to the needy students in case of financial crisis and the interest is liable to be charged on day to day basis. Such type of activity cannot be considered as charitable activity. After going to the Trust Deeds, Franchisee Agreement as well as the provisions of Section 12A and Section 12AA as well as the impugned order passed by the Ld. CIT(E), we are of the considered opinion that according to Section 12AA, the Commissioner, on receipt of application for registration of trust or institution shall have to examine the documentary evidence filed by the assessee along with the application for granting registration. Commissioner can call for any type of documentary evidence or information from the trust or institution as he thinks necessary in order to satisfy himself about the genuineness of the activities of the trust or institution. If he has any doubt in his mind then he may also make such inquiries as he may deem necessary. Before granting the registration to any trust or institution, Commissioner should be satisfied about the genuineness of activities of the trust or institution, as the case may be. The trust in the instant case has not produced any evidence to the satisfaction of the CIT (E) about its real charitable character. On the other hand the CIT (E) could prove cogently the non charitable and commercial nature of the work undertaken by the assessee trust. In view of the foregoing discussion no interference is required in the impugned order. Accordingly we uphold the order of the CIT(E). - Decided against assessee.
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2019 (6) TMI 582
Bogus purchases - CIT-A estimating 22.83% as profit embedded in total purchases of ₹ 14,86,922/- made from three parties - AO received information from Sales Tax department wherein it was mentioned that the assessee had obtained bogus purchase bills - HELD THAT:- In the light of various factual evidences, supporting documents, confirmation and affidavit confirming the transactions filed by M/s. Chemi Age Enterprises, which remain uncontroverted by the revenue and on which no adverse findings were recorded by AO or by the CIT(A), the claim of the assessee deserves to be accepted as assessee had given complete evidences for movement of goods from M/s. Chemi Age Enterprises to the assessee. The assessee has also gone a step ahead in providing evidences in respect of source of source of purchases made by M/s. Chemi Age Enterprises from two other outside parties. Without disputing these facts, drawing adverse inference on the assessee merely on the ground that the said party was not produced by the assessee before the ld. AO for examination, in our considered opinion, could not be sustained in the eyes of law. We hold that the purchases made by the assessee from M/s. Chemi Age Enterprises deserves to be accepted as genuine purchases and accordingly, we direct the ld. AO to delete 22.83% of ₹ 61,30,150/- straightaway. With regard to purchases made from other two parties, we hold that this Tribunal in a series of decisions have been constantly holding that adoption of profit at 12.5% on the value of such purchase would meet the ends of justice. Respectfully following the various decisions of this Tribunal, we direct the ld. AO to adopt 12.5% of value and purchases of ₹ 32,723/- and ₹ 3,50,147/- from M/s. Sumukh Corporation and M/s. International Trade Agency respectively. Accordingly, the original grounds raised by the assessee are partly allowed.
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2019 (6) TMI 581
Revision u/s 263 - original assessment order passed u/s 153A r.w.s. 143(3) - HELD THAT:- AO was also directed to examine the sale agreements, work in progress, sundry creditors and advanced from customers as disclosed by the assessee in the books of accounts. From the above directions it is clear that whatever issue the Pr. CIT directed the AO to examine is part of entries in the regular books of accounts and other regular vouchers and documents. None of these are connected with any incriminating material found during the course of search. Hence it is beyond the jurisdiction of the AO to make any disallowance/addition on these issues in the assessment in question. It is also not the case of the ld. Pr. CIT at the AO has failed to examine the material found during the course of search and that these issues that were set aside by him for fresh adjudication are connected with any of the incriminating material found during the course of search. Exercise of jurisdiction u/s 263 of the Act, was wrong, when the assessment for the AY 2011-12 had abated. Hence the assessment for AY 2011-12 has not abated. We have also stated that there is no incriminating paper/documents found during the course of search, based on which the ld. Pr. CIT has proposed revision of the assessment order. The case law on this issue as to whether an addition/disallowance can be made in an assessment framed u/s 143 (3) r.w.s. 153A, where the assessment has not abated and when no incriminating material is found during the course of search is well settled We quash the order passed u/s 263, for the Assessment Year 2011-12 as the issues which the ld. Pr. CIT has raised and directed the Assessing Officer to examine, are beyond the ken of an assessment made u/s 143(3) r.w.s. 153A of the Act. CIT revised the assessment for non-deduction of TDS - HELD THAT:- We are of the considered opinion that the CIT should have made at least a preliminary enquiry with regard to the claim of the assessee that the payment in question is reimbursement of expenditure to its joint-venture partner, and hence no TDS needs to be made. According to the judgement in the case of G.E. India Technology Centre vs. CIT [ 2010 (9) TMI 7 - SUPREME COURT] held that when there is no element of income in the remittance, no deduction of ta at source need be made. In the case on hand when both the parties are assessed by the same assessing officer under the Pr. CIT s jurisdiction, come enquiry had to be made. By not doing so, the Pr. CIT has, in our opinion, not come to a conclusion as to how the assessment order in question is erroneous in so far as it is prejudicial to the interests of the revenue. Hence we have to necessarily hold that the revision of the assessment u/s 263 , by the Pr. CIT, is bad in law in this Assessment Year 2012-13. - Decided in favour of assessee.
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Customs
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2019 (6) TMI 580
Recovery of Customs Duty not paid - petitioner had no opportunity to present its case - principles of natural justice - HELD THAT:- We set aside the recovery notice dated 18.03.2019 as well as Order-in-Original dated 28.10.2016 passed by the Additional Commissioner of Customs, we direct the respondents in terms of the statement made by the Counsel on instructions to issue a copy of the Show Cause Notice leading to the order dated 28.10.2016 to the petitioner and pass the order thereon after hearing the petitioner. The respondents are also directed to delete the petitioner's name from the Alert List . It is only if the adjudication order is passed on the Show Cause Notice is adverse to the petitioner, that proceedings for recovery and consequent alert notice will be commenced by the department after the period available to the petitioner to challenge the same under the Act expires. Petition disposed off.
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2019 (6) TMI 579
Condonation of 582 days delay in filing an appeal - Suspension of CHA License - HELD THAT:- The applications for condonation of delay have to be considered in the light of the material placed by the applicant explaining the delay in filing an appeal. Each case would be decided on the facts put forth by the applicant before the Court to explain the delay. Merely because a long delay has been condoned in one case would not by itself lead to the conclusion that long delays have been condoned in earlier cases and, therefore, notwithstanding the absence of appropriate explanation for the delay, the same has to be condoned. In the present case, there is complete negligence on the part of the Officers of the Department to challenge the impugned order of the Tribunal dated 11th January, 2017. Thus, there is no sufficient cause has been made out for condonation of delay. Notice of Motion is dismissed.
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2019 (6) TMI 578
Condonation of delay of 485 days in filing the accompanying appeal - HELD THAT:- The delay in filing the appeal has been sufficiently explained. It is not a case of negligence on the part of the Revenue in taking steps to file an appeal from the impugned order of the Tribunal dated 18th April, 2017. The notice of motion allowed.
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2019 (6) TMI 577
Release of goods pending finalization of investigation - HELD THAT:- It is undertaken that if the appellant is prepared to furnish the bank guarantee as well as to execute the bond immediately after completion of the valuation, the goods can be released pending finalisation of the investigation, at the most within a period of two weeks from today. The above undertaking is hereby recorded. With respect to the other contentions regarding recording of the statement, it is undertaken on behalf of the appellant that the appellant will appear for the purpose of investigation at any point of time before the Investigating Officer, if notice/summons in that respect is issued in his address in Kerala, in advance, atleast granting time of two weeks. The said undertaking is also recorded. Appeal disposed off.
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2019 (6) TMI 576
Imposition of penalties u/s 112 and section 114AA of Customs Act, 1962 - fraudulent import of drawings ostensibly for modernization and expansion of their shipyard and also for construction of vessels - Allegation that the ploy was hatched solely to enable the illegal transaction in money. - HELD THAT:- There can be no doubt that arguments have been advanced on behalf of the appellants that were not before the adjudicating authority or did find a place in the grounds as preferred at the time of filing of the appeal. The submissions that are now put forth arise from questions of law that have been settled subsequently and which was not available when the impugned order was issued. Moreover, there is a substantial difference between raising fresh grounds of law and fresh grounds of fact at the appellate stage; as the latter must needs be verified before being accepted and such verification is not normally feasible for an appellate authority to undertake, fresh factual grounds are not admitted for settlement of disputes at the appellate stage. In the present dispute, we find that the discharge of onus to establish mis-declaration is only peripheral as a presumed relationship between the exporter and the importer was held to suffice for indulging in re-valuation. Though such has not been argued before us, we are of the opinion that even this relationship between the two has not been tested against the touchstone of rule 2(2) of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 and has, instead, relied upon certain presumptions derived from the enunciation in the report of the investigation agency. The argument of Revenue in defence of the order herein was that detrimental consequence of overvaluation and creation of a purported cross-border transaction could be visited upon importers with the penal provisions in section 112 of Customs Act, 1962 and section 114AA of Customs Act, 1962. It was posited that section 111(m) of Customs Act, 1962 was specifically endowed with the provision pertaining to value in order to check overvaluation. We have no doubt that this was so. However, the Tribunal did not find it justifiable for that provision to be invoked when the allegation of overvaluation flows from a fictional assumption of incorrect declaration incorporated in the valuation mechanism for the limited purpose of levy of duty. Undoubtedly, overvaluation, when established with sufficient evidence of money flow to beneficiaries, other than the seller, would justify the invoking of section 111 (m) of Customs Act, 1962 as enacted by the sovereign legislature of the Union. Any other circumstantial evidence which may justify the invoking of the Rules flowing from section 14 of Customs Act, 1962 will not suffice for the purpose. The allegation that the drawings were manufactured in India and exported is based on certain premises and inferences; while we forbear from venturing into the legality and propriety of such conclusion in the absence of an appeal with appropriate locus, the legal consequences of such an assumption cannot go unnoticed. Under section 20 of Customs Act, 1962, goods that have originated in India are, on subsequent import, to be given the same treatment as any other imported goods. There is a privilege that flows from such origin and that privilege is the abatement of certain duties to be claimed by the importer with reference to the exemption notification issued under section 25 of Customs Act, 1962. There is no doubt that this privilege has not been sought for and the declining of this privilege cannot be construed as an offence or be held against any person. In the absence of a claim for such privilege, the appropriate rule in Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 must needs to be invoked for ascertaining the assessable value. That has not been carried out in the impugned order - There can be no offence in re-import of validly exported goods. Though facts have been collated to consider the impugned goods as re-imported, there is no evidence on record of exports having taken place. It would be reasonable to presume that re-import must be evidenced by the factum of export or, in the absence of such, by allegation of wrongful export. In the clear absence of record of export, no credence can be given to this assumption, without invoking the consequence of illicit export, and which has then gone on to attribute responsibility for such to the appellants herein. The penalties must fail on that flimsiness too. Whether on a claim for exemption under notification no. 12/2012-Cus dated 17 March 2012 (or the predecessor exemption) or the exemption governing goods of Indian origin, there is no duty implication. The declaration, acceptable or otherwise, in the bill of entry is, therefore, of no consequence. In these circumstances, the scope for imposition of penalty under section 112 of Customs Act, 1962 does not arise. Penalties set aside - appeal allowed - decided in favor of appellant.
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2019 (6) TMI 575
Export of Prohibited item - Non-Basmati Rice - Non Basmati rice was prohibited for export w.e.f. 24.03.2008 - filing the bills of export on 3/3/2008 - HELD THAT:- If we consider the facts of the case with reference to the exportability of the goods, we find that 110 MT of Non-Basmati rice will not be hit by the prohibition imposed on 24/3/2008 in as much as these goods were entered for export on or before 6/3/2008 and were entitled to be exported in view of the relaxation given on procedural measures. Once we hold that 110MT of Non Basmati rice is not hit by the prohibition, the order of confiscation of the goods as well as the vehicles, are not warranted and are required to be set aside - appeal allowed - decided in favor of appellant.
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Corporate Laws
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2019 (6) TMI 574
Maintainability of Complaint - no specific averments in the complaint that the accused was in charge and was responsible for conduct of the business of the company - HELD THAT:- It is seen from the entire complaint there is no specific averments and allegations as against the company as well as other directors. The allegations are also very vague and not clear whether the petitioners are responsible for non compliance as the directors of the company. Further it is also seen that there is no specific averments as that the officer who is in default to attract within the meaning of Section (2) (60) (vi) of the Companies Act, 2013. The complainant failed to state specific averments. As such, complaint cannot be sustained as against the petitioners. Though the dictum laid down under the Negotiable Instruments Act, the legal position is clear that there should be specific averments in the complaint that the accused was in charge and was responsible for the conduct of the business of the company. Therefore, the complaint cannot be sustained as against the petitioners - When there is no specific averments as to officer who is in default to satisfy the provision under Section 2 (60) (vi) of the Companies Act, 2013, no specific averments in the complaint. Therefore, the complaint is not at all sustainable as against the petitioners. Petition allowed.
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2019 (6) TMI 573
Oppression and Mismanagement - termination of the Franchise Agreement - non-competing agreements - Appellant stated that the 2nd and 3rd respondent have attempted to ride on the goodwill and reputation of the Appellants by representing themselves as Ex-Director TIME and 2nd and 3rd respondent issued various advertisement for promotion of 4th respondent. HELD THAT:- Once it has been accepted by the appellant and the respondent that when this franchise agreement is terminated it will be unreasonable restriction on the part that one party will be restrained not to do anything which is similar to the appellant company, especially when no consideration has flown from appellant company and the respondent nor even there has been any agreement to either purchase or sell shares in the 1st respondent by both group of shareholders. We have also noted non-competing Clause at Para 43 Page 98, that the appellant has reserves its rights to directly or indirectly engage, invest or participate in or provide assistance to any person or entity which competes with the company in India or abroad. After the termination of the franchisees agreement, 1st respondent company being reduced to virtually defunct company, restrictions on 2nd and 3rd respondent would not be justifiable. At the time of these advertisements it has been noted already termination of the franchise agreement has taken place and it has also been accepted w.e.f. 25.4.2012 by the appellant company. After this position has been accepted, the right of the persons to use the word Ex-Director cannot be denied as it would represent their experience as well. Therefore, we do not see that there is enough ground to object to use of the word Ex-Director . We see no irregularity in this matter. In any case, it can not be matter for consideration for consideration of question of oppression. In the absence of any supporting documents for a huge amount of ₹ 10 crores, the demand of the appellant is illogical. It could only be a wild guess for a loss. Having noted that few of the courses were withdrawn by the appellant and also having a right directly or indirectly engage, invest or participate in or provide assistance to any person or entity which competes with the company in India or abroad which does not restrict that the appellant to organise his own business especially as it has been contended that the TIME is a great name in the market. There would hardly be any hindrance in its organising its operation even when this franchisees agreement has been terminated. A well established name had come through being successful in the competition. It would not be desirable that others are denied the same opportunity. After the agreement has been terminated there is no basis for this demand. Appeal dismissed.
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Service Tax
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2019 (6) TMI 572
Export of Services or not - Place of Provision of Services - Scientific or Technical Consultancy Services - demand of interest and penalties - HELD THAT:- For the services to be treated as export of service post 2012, the service provided needs to be tested in terms of rule 6A of the Service Tax Rules, 1994 read with POPS Rules. As per (d) of Rule 6A(1), for service to be export of service, the place of provision of service should be outside India. Appellants have argued relying on the provisions of the POPS Rules and para 5.4.1 of the Education Guide that place of provision of the service in their case is outside India. We are not in agreement with the submissions made by the appellant that in case of DMPK Standalone Studies, where NCE has been made available to them by the overseas client for undertaking the said studies, the services will be covered by Rule 3 of POPS and hence Export of Services under Rule 6A of Service Tax Rules, 1994. Appellants have relied upon the decisions in their own case to argue that the services provided by them should be considered as export of services. From the facts of the present case we find that appellant have conducted DMPK Studies in respect of the NCE s provided to them by the overseas client. Rule 4 do not put any conditions in respect of alteration or alternation of the goods provided by the service recipient. Reading anything beyond what has been provided in the rules/ statue cannot be proper interpretation put to rules - In the present case we find that the activities under taken by the appellants in terms of DMPK studies squarely fall within the scheme of Rule 4 of POPS Rules, and hence the location of service provider shall be place of provision of service which is in India and hence cannot be treated as export of service in terms of Rule 6A of Service Tax Rules, 1994. Demand of interest and penalties upheld. Appeal dismissed - decided against appellant.
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2019 (6) TMI 571
Refund of service tax paid - construction of residential complex services - time limitation - refund was rejected on the ground of time limitation - it appeared that the claim for refund has been filed beyond the period of one year as required under Section 11B and therefore the entire claim was hit by limitation of time - HELD THAT:- When the appellant received the advance from the buyers along with Service Tax and paid the same to the Government as Service Tax and if subsequently, the contract was cancelled between the appellant and his buyers and the appellant filed the refund claim on the ground that no service was provided and hence the provision of Section 11B of Central Excise Act is not applicable is devoid of force. The Larger Bench in M/S VEER OVERSEAS LTD. VERSUS CCE, PANCHKULA [ 2018 (4) TMI 910 - CESTAT CHANDIGARH] after examining the various decided cases has come to the conclusion that the claim of refund of Service Tax is subject to the provision of Section 11B for period of limitation. Appeal dismissed - decided against appellant.
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2019 (6) TMI 570
Refund of CENVAT Credit - excess utilization of Cenvat credit - principles of natural justice - HELD THAT:- Commissioner (Appeals) has afforded opportunity to the appellant to appear on 31.01.2018, 15.02.2018, 05.03.2018 and 19.03.2018 but the appellant did not appear on any of the dates and also did not seek adjournment. Since the appellant has proved that he has made request for adjournment and the Commissioner (Appeals) has wrongly observed that the appellant did not seek any adjournment. Further the impugned order passed in the absence of the appellant is violative of the principles of natural justice as the said order has been passed in the absence of the appellant. This case needs to be remanded to the Commissioner (Appeals) to decide the same on merit after affording an opportunity of hearing to the appellant - appeal allowed by way of remand.
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2019 (6) TMI 569
CENVAT Credit - input services - Rent-a-Cab service - period December 2013 to September 2014 - HELD THAT:- Tribunal in the case of M/S. MARVEL VINYLS LTD. VERSUS C.C.E. INDORE [ 2016 (11) TMI 1126 - CESTAT NEW DELHI] has considered the issue after the amendment in the definition of input service after 1.4.2011 where it was held that the interpretation of the lower authorities that motor vehicle are not capital goods for the services recipient cannot be appreciated in as much as motor vehicles are admittedly capital goods in terms of the Rule 2 (A) of Cenvat Credit Rules - credit allowed - appeal allowed - decided in favor of appellant.
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2019 (6) TMI 568
CENVAT Credit - input services - Demurrage Charges - HELD THAT:- These demurrage charges were charged during the course of providing services to the Appellant by the service provider. During the course of providing services to the appellant, sometimes the goods are retained at the airport beyond the free period and in such cases the airport would charge the service recipient i.e. the appellant, demurrage for the period for which the goods were stored in excess of the free period. It is not the case of revenue that no demurrage charges have been paid. Demurrage is part of handling of import and export shipments of the appellant and therefore the Cenvat credit of tax paid on such demurrage charges is available to the appellant. - credit allowed. CENVAT credit - Repair Maintenance - rejection on the ground that Vehicle not owned by the appellant - HELD THAT:- Admittedly the appellant are not owner of those vehicles. It is rejected on the ground that no evidence has been produced to show that the onus to repair the hired vehicles is on the appellant. To keep the vehicle in good condition is very essential for providing the courier service by the Appellant because if the vehicles are in good conditions only then the appellant can provide the satisfactory and efficient services to its clients and therefore it has nexus with the output service. The Appellant has also paid the service tax charged on the invoice to the vendor and this has not been disputed - credit allowed. CENVAT credit - Reimbursement of expenses Such as mobile bills, telephone bills - rejection on the ground that Telephone not installed at appellant s premises but of PAFEX and used by them - HELD THAT:- It can be said that the aforesaid services has been used for business activity of the appellant. These services are input service used for output service, in particular, when the Revenue could not establish with any evidence that the octroi/telephone/mobile has been used by the said M/s. Pafex for its personal use - credit allowed. CENVAT Credit - Reimbursement charges paid to M/s Jeena Co. - denial on account of nexus - HELD THAT:- The customs clearance services provided by FedEx Express is directly connected with the courier services of import and export shipments provided by the Appellant, without which the Appellant cannot provide services to its customers, therefore undoubtedly the same is input service . Merely because the invoice of FedEx Express recorded that the charges are recovered as reimbursement charges of Jeena Co., it does not take away the fact that it is essentially the consideration for the customs clearance services provided by FedEx Express through Jeena Co. to the Appellant - credit allowed. Demand of Interest and penalty - HELD THAT:- Since the Cenvat Credit on the aforesaid services is allowed therefore there is no question of any interest or penalty. Appeal allowed - decided in favor of appellant.
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2019 (6) TMI 567
CENVAT credit - time limitation - credit was denied on the ground that the same was availed after six months from the date of the document - proper verification not done by authorities below - principles of natural justice - HELD THAT:- The amendment in Rule 4(7) of CCR, 2004 by Notification No. 21/2014-CE dated 11.07.2014 is applicable prospectively and not retrospectively - in view of the decision in the case of mportal Wireless Solutions [ 2011 (9) TMI 450 - KARNATAKA HIGH COURT] , it is not necessary to get registration in order to avail CENVAT credit - The appellant is entitled to CENVAT credit if he fulfills the conditions for availing the credit as provided in Rule 3(1). Rule 3(1) provides no condition regarding registration or regarding filing Returns to avail credit. Principles of natural justice - HELD THAT:- The assessee has enclosed with the Appeal Memorandum copy of their ledger account (Service Tax input account) for the period from April 2012 up to March 2016 in which he has given all the details regarding the availment of CENVAT credit and has also maintained proper books of accounts which have not been considered by both the authorities below - Further, in the Ground of Appeal, the appellant has stated that the detailed computation regarding the payment of Service Tax for both the years were given before both the authorities below but both the authorities did not consider the same. This case needs to be remanded back to the original authority to pass a de novo order after examining the books of accounts of the appellant and after verifying the fact of payment of tax for both the years as alleged by the appellant to have been paid - appeal allowed by way of remand.
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2019 (6) TMI 566
Classification of services - non competition fee - Support Service of Business or Commerce or not - appellant had arrangement with some dealers to market the product on their behalf and collect the sale proceeds for them - HELD THAT:- The defense put up by the appellant before us in their grounds of appeal is that the amount collected by the appellant from M/s Rajendra Trading Company as well as from other dealers of Badshah Khaini are in the nature of fees relating to discourage of competition in promoting the sales of the said dealers/retailers. It is the contention of the appellant that such fees cannot be considered as consideration towards rendering Support Service of Business or Commerce. This Tribunal in M/S JAMNA AUTO INDUSTRIES LTD. VERSUS CCE, INDORE [2017 (9) TMI 228 - CESTAT NEW DELHI] has considered the issue in similar circumstance and observed that there cannot be any doubt that the appellant s action and activity of entering into non-compete agreement with JSSL is nothing but a service covered by support service of business and commerce as defined under Section 65(104c) read with Section 65(105) of Finance Act, 1994 and therefore, the consideration received for the said services is accordingly taxable. There are no reason to deviate from the aforesaid findings of the Tribunal. Besides, the Commissioner while recording the opinion that the services rendered by the appellant who are having necessary infrastructure facilities is also in the nature of Support Service of Business or Commerce has confirmed the demand - In their grounds of Appeal the Appellant has not rebutted the said finding of the Commissioner. There are no merits in the appeal - appeal dismissed.
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2019 (6) TMI 565
Refund of accumulated and unutilized CENVAT credit - export of output services - denial of refund on the ground that the appellant had not submitted documents towards Proof of Reversal of Refund Claimed amount and Declaration of non-carry forward of CENVAT credit to Tran-1 etc. - HELD THAT:- As far as refund of ₹ 5,13,086/- is concerned, the appellant is entitled to the same as per the CENVAT credit balance at the time of filing the refund claim which both the authorities have also fairly conceded that the refund should be restricted to ₹ 5,13,086/-. The rejection of the refund by both the authorities on the ground that the appellants have not debited the CENVAT account before filing the refund claim which is in violation of Para 2(h) of the Notification No. 27/2012 dated 18.06.2012 is not sustainable in law in view of the judgment of the Mumbai Bench in the case of SANDOZ PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, BELAPUR [ 2015 (10) TMI 882 - CESTAT MUMBAI] the CENVAT credit was debited in the present case on 31.03.2018 vide Voucher No. 26 which is also placed on record but the same was not considered by both the authorities. The appellant is entitled to the refund claim to the extent of ₹ 5,13,086/- but remand the matter to the original authority with a direction to verify the documents pertaining to reversal of credit in terms of Para 2(h) of Notification No. 27/2012 dated 18.06.2012 - appeal allowed by way of remand.
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2019 (6) TMI 564
Reverse Charge Mechanism - Scope of Service tax act - non-resident parties - case of appellant is that non-resident parties are manufacturers and are not professionally qualified engineers/engineering firm and therefore, services received from them cannot be brought under the ambit of the Act - period of dispute is during the Financial Year 2005-06 - HELD THAT:- In the present case, the period is of 2005-06. The demand has been made on the reverse charge basis on the services procured by the appellants from the persons located outside India, against payments made in foreign currencies. Section 66A ibid has been inserted in the Statute w.e.f. 18.04.2006 providing for levy of service tax on reverse charge basis on the services procured from outside India. In the terms of the settled law on the subject, no service tax can be demanded for the period upto 17.04.2006. The demand for service tax along with interest and penalties set aside - appeal allowed - decided in favor of appellant.
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Central Excise
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2019 (6) TMI 563
100% EOU - Refund claim - time limitation - rejection of refund on the ground that the date of issue of invoice is more than one year prior to refund claim - HELD THAT:- The appellant had taken the cenvat credit in the month of March 2014 though the invoices were issued during the year 2012 because during the relevant period the restriction of one year was not there under the Cenvat Credit Rules and the said restriction of one year to avail the cenvat credit came from September 2014 whereas in the present case, the credit was availed in March 2014 and refund was also filed in March 2014 itself which is falling within the one year time limit. As per the provisions of Rule 5, it is clear that the time limit, if any has to be counted from the relevant period in which the credit was availed and in the period in which services were received. Therefore, the basis on which the refund is rejected is not correct and not in accordance with law. The refund is not time-barred - refund allowed - appeal allowed - decided in favor of appellant.
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2019 (6) TMI 562
CENVAT credit - duty paying documents - non-submission of the relevant documents to be eligible for availment of credit under Rule 9(2) of the CENVAT Credit Rules - credit denied to the appellant on the ground that the invoices are addressed to their Yeshwanthpur unit whereas the services were availed at Doddaballapur unit - credit also denied on the ground that the appellant have not produced the documentary evidence to show that the services were actually availed at Doddaballapur unit - Time Limitation. HELD THAT:- Perusal of various invoices produced by the appellant clearly shows that in some invoices the name of both the units i.e. Yeshwanthpur as well as Doddaballapur are mentioned but in some invoices only the name of Yeshwanthpur unit is mentioned. As per the appellant s case, these services have been used at Doddaballapur unit because the said unit came into operation in 2008 and these input services were used for the said unit after it came into operation. Further as per RG-1 register of Yeshwanthpur factory, the operation was stopped from January 2010 onwards and there was no production and clearance of the goods from the said factory. Further, the invoices produced on record pertain to the services which were availed after the closure of Yeshwanthpur factory which clearly shows that those services were availed by Doddaballapur unit. Further, it is not the case of the Department that appellant have availed the CENVAT credit at both the places and the mentioning of the address of Yeshwanthpur factory on some of the invoices is only procedural lapse for which the CENVAT credit cannot be denied to the appellant. Time Limitation - HELD THAT:- The entire demand is barred by limitation because the extended period has been invoked merely on the ground that irregular credit was detected during audit otherwise it would have gone unnoticed. Whereas the appellant has been filing the returns regularly for Doddaballapur unit and has been showing the credit availed. Appellant has also produced the copies of the returns filed by him from Doddaballapur factory under the Service Tax Rules which clearly indicate the availment of credit on the disputed invoices. In view of this, it cannot be said that the appellant has suppressed the material fact with intent to evade payment of tax - Extended period cannot be invoked. Appeal allowed on merits as well as on limitation - decided in favor of appellant.
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2019 (6) TMI 561
Withdrawal of the Warehousing provisions - benefit of N/N. 6/2002-CE dated 01.03.2002 (Sl. No. 22) - HELD THAT:- The conditions specified in the Sl. No. 22 of the Notification No. 6/2002-CE are meant to ensure that Naphtha cleared from Refinery and received in the other factory is used in the manufacture of fertilizers. Towards this purpose various conditions as prescribed in the Rules for required to be satisfied. Though the lower authorities, in the initial period have held that the conditions as per Rules have not been satisfied, there is no dispute to the fact that Naphtha received by OCFL have been utilised for the manufacture of fertilizers. The receipt of Naphtha from NRL through the depots of BPCL is evidenced by the Registers maintained at the end of OCFL. The use of naphtha received in the manufacture of fertilizers is evidenced from such registers. This also stands certified by the Jurisdictional Superintendent after verification of such records. The correlation of the supplies made by the NRL, which was accompanied by invoices of BPCL, also stands established on the basis of stock statement prepared by BPCL. Since the receipt of Naphtha in OCFL and use thereof for manufacture of fertilizer are established, we are of the view that the benefit of Notification No. 6/2002-CE dated 01.03.2002 (Sl. No. 22) cannot be denied to NRL. Appeal allowed - decided in favor of appellant.
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2019 (6) TMI 560
Process amounting to manufacture or not - supply and setting up of RO Water Treatment Plant - whether the activity of assembly and erection of the bought out items to form RO Water Treatment Plant, can be construed as manufacture under Section 2 (f) of the Act? - HELD THAT:- After considering both the Certificates issued by the Executive Engineers, Zilla Parishad as well as processes of setting up of Water Treatment Plant, we are of the view that Water Treatment Plant erected at the site, cannot be considered as goods . The Plant has come into existence only at the site in a progressive manner on a civil construction plat form. After conclusion of such erection, it is clearly in the form of immovable structure. The fact that about 60% of the Plant can be dismantled without damage thereof, cannot be a reason to reject the conclusion as above. The excisability of such Water Treatment Plants, has come up before the Tribunal in several cases. The appellant places reliance on the Three Member Bench decision of the Chennai Bench of the Tribunal in the case of ION EXCHANGE (INDIA) LTD. VERSUS COMMISSIONER OF C. EX., COIMBATORE [ 2002 (7) TMI 801 - CESTAT CHENNAI] . The Tribunal has taken the view that the process of erection at site, does not bring into existence goods and hence not liable to duty. The process of assembly does not bring into existence any excisable goods - there is no justification to charge excise duty on the Water Treatment Plant - appeal allowed - decided in favor of appellant.
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2019 (6) TMI 559
CENVAT credit - capital goods - availment of second installment of 50% of the cenvat credit on the capital goods - Department was of the view that the second installment of 50% of the cenvat credit on the capital goods availed by the appellant in April, 2002, was irregular inasmuch as at the time of availing the second 50% credit, the capital goods were not yet installed for use of the manufacturer - HELD THAT:- The capital goods lying in the factory of the appellant pending installation and erection, may be considered as capital goods in possession and use for the manufacture - there is no reason to deny the second instalment of the capital goods. Appeal allowed - decided in favor of appellant.
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2019 (6) TMI 558
Remission of duty - demand of duty on the goods lost in fire - HELD THAT:- In the last round of litigation before Commissioner (Appeals), the issue was remanded by him to the Original Authority for denovo decision, after the disposal of the remission application by the Jurisdictional Collector. Even though the original authority in his order dated 19.01.2007, has referred to a communication from the Commissioner dated 07.12.2006, rejecting the application for remission, the appellant has claimed that they have received no such order from the Commissioner. There is no option but to set aside the impugned order and remand the matter to the Jurisdictional Commissioner once again to decide the question of demand of duty on goods destroyed in fire, after disposing of the application for remission of duty filed by the appellant - appeal allowed by way of remand.
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2019 (6) TMI 557
Process amounting to manufacture or not - blending of MS and HSD with small quantity of multi-functional additives to make branded MS and HSD respectively - HELD THAT:- Just because blending improves their quality and after blending they are sold under different brand names, the MS and HSD received from IOCL do not become products different from unblended MS/HSD, with different characteristics and usages. Their characteristics remain the same, as they both have to conform to ISI specifications for unblended MS/HSD and their usage also remain the same. As such, there being no manufacture within the meaning of the Act, no excise duty is payable on the said blended MS/HSD. Appeal allowed - decided in favor of appellant.
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2019 (6) TMI 556
SSI Exemption - use of brad name - Exemption to Jute Bags - N/N. 30/2004-CE dated 09.07.2004 - period of dispute is from 01.03.2007 to 20.02.2013 - HELD THAT:- Hon ble Supreme Court in the case of RDB Textiles Ltd. Vs. CCEx. S.Tax, Kol.IV [ 2018 (2) TMI 825 - SUPREME COURT ] had examined the wordings of the Notification as it stood during the disputed period and decided that the printing of the name, logo and other particulars of buyer, like, FCI and State Governments, were made by the manufacturers to comply with the requirements of Jute Control Order. The Hon ble Supreme Court further held that the markings on jute bags were under compulsion of law and meant for identification, monitoring and control by Government Agencies and such markings cannot be considered as brand name. Exemption cannot be denied - appeal allowed - decided in favor of appellant.
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2019 (6) TMI 555
CEVAT credit - inputs - shortages of certain inputs on which Credit had been availed - demand was for four years, i.e., from 2002-03 to 2005-2006 and the total Credit availed by the Appellant, is more than ₹ 2000/- crores - HELD THAT:- During this period, the appellant was engaged in the manufacture of motor vehicles and in vehicle, approximately 50,000 inputs were used. The contention is that if the total shortage is taken into consideration, the same will come to 0.224%. It is also contended that some of the inputs were issued for the manufacture of final products and on the assembly line or at the shop floor, some were found defective or became defective during manufacturing process, and these are not taken into consideration. These parts/inputs were again issued from the Stores. In view of this, the demand is not sustainable and there is no evidence on record that the inputs on which the Credit was taken, were not received in the factory or removed as such from the factory. Hence, the demand is not sustainable. The demand is for four years and the total Credit availed by the Appellant, is more than ₹ 2000/- crores. Therefore, the shortage is negligible - appeal allowed - decided in favor of appellant.
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2019 (6) TMI 554
Clandestine manufacture and removal - removal of cement under the brand names ASANSOL CEMENT and RANA PREMIUM - SSI Exemption - no evidence with regard to consumption of raw materials, the transportation of raw materials procurement, transport of finished goods or the details of the buyers - HELD THAT:- No enquiry has been made into the consumption of Electricity which was required for excess production, no enquiry at the buyers end to find out the finished product receipt detail and no investigation was made with the transporters to ascertain the alleged removal of cement. There was also no investigation to observe whether there was inwards transportation of principal raw materials required for the manufacture of cement. No discrepancy was found in the stock of finished goods as well as in the stock of raw materials. Under the Excise Act, the Excise Duty is leviable on manufacture or production of excisable goods, therefore for levying the Excise Duty, it is necessary to establish that the excisable goods were produced/manufactured by the assessee concern and for asking Section 11A, it is necessary to establish that the excisable goods are removed clandestinely without payment of duty which the Revenue in the case has failed to establish. The Excise Duty cannot be levied merely on the basis of assumptions or presumptions. When there is no extra consumption of electricity, purchase of raw materials and transportation payment, then manufacturing of extra goods is not possible. No purchase of raw materials outside the books has been found - the impugned order has failed to establish the clandestine removal of the finished product - appeal allowed - decided in favor of appellant.
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2019 (6) TMI 553
SSI Exemption - ball bearings - Process amounting to manufacture or not - deemed manufacture - Department has been of the view that the appellant has sold the entire quantity of UBL branded packed, re-packed ball bearing to M/s Vikas Automobiles Pvt. Ltd. and who in turn has sold such procured ball bearings from the appellant either to the actual industrial users or in the retail market - HELD THAT:- The issue is before us for consideration is whether the ball bearings which have been cleared by the appellant through M/s Vikas Automobiles Pvt. Ltd. and who has further sold the same to the retailers can be assessed as per the provisions of the Section 4A by taking into account the MRP value of the ball bearings by considering the same as parts of automobiles which are mentioned under Notification No. 11/2006-CE (NT) dated 25/05/2006. The matter is no longer res-integra as this Tribunal in the case of AKS Bearing Ltd. and others vs. CCE, Jaipur [ 2018 (10) TMI 387 - CESTAT NEW DELHI ] has decided the issue where it was held that the ball bearings are not included under relevant notifications issued under section 4A of the Central Excise Act, 1944 and therefore, same cannot be considered for assessment on the basis of MRP value. Appeal allowed - decided in favor of appellant.
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Indian Laws
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2019 (6) TMI 552
Benefit of the first higher payscale to the petitioner - benefit with effect from 15.02.1991 instead of 17.09.1992 - time limitation - HELD THAT:- Since the petitioner did not choose to challenge the higher pay-scale at the relevant time, and the petitioner slept for all these years since 1987 till the communication of the order dated 07.03.2003 fixing her higher pay-scale with effect from 17.09.1992, it is not open for her to claim the higher pay scale ignoring the adverse remarks. Significantly, the petitioner in the present petition has also not challenged the communication dated 06.07.1987. Petition dismissed.
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