TMI Tax Updates - e-Newsletter
June 27, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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GST:
E-way Bill - Rule 138 (14)(k) - Whether the exemption to a ‘defence formation’ for preparation and generation of E- way bills is applicable to Ordnance factories & other Central Government & Public Sector Undertakings (PSU’s) that function under the Ministry of Defence, Government of India? - Held Yes
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GST:
Input Tax Credit / ITC - goods destroyed during testing - once the inputs are used in the manufacture of final products, which are then sent for testing purposes, then in such a case the said inputs cannot be considered to have been destroyed.
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GST:
Input Tax Credit (ITC) - Maintenance and upkeep activities relating to gardens, parks, playground, factory school for children of employees, hall for recreational activities, residential quarter buildings of employees, roads, footpaths, street lightings and other parts of estate area that are located outside the factory premises but within the factory estate - Credit not available.
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GST:
Levy of GST - Community hall (Multipurpose Hall) provided on rental basis to employees - applicant is not entitled for any exemption
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GST:
Levy of GST - Security deposit left unclaimed by the suppliers and recognised as income after 3 years - amount received prior to GST regime - Security Deposits which in normal course are refundable as such, are not liable to tax under the GST regime.
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GST:
Whether the applicant can be considered as “government”? - Liquidated damages - It is not created by the constitution of India as a legislative, executive or judicial authority of the country - hence, the applicant cannot be treated as “Government” as defined u/s 2(53) of the CGST Act, 2017 - Benefit of exemption not available.
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Income Tax:
Depreciation on matured investments securities which were due for redemption in the relevant previous year - NPA - real income theory cannot be so extended so as to negate accrual of an amount which is receivable by the assessee.
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Income Tax:
TDS on payment for web based training fees - in the absence of any transfer of technology, the payment is not covered under the definition of ‘fees for technical services’ (FTS) - No TDS liability on payments made for web based training.
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Income Tax:
TDS on lease line charges - there was no requirement to deduct tax at source out of such lease line charges
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Income Tax:
Interest u/s 244A on self assessment tax payment - AO directed to re-compute the amount of interest u/s. 244A by first adjusting the amount of refund already granted towards the interest component and balance left if any shall be adjusted towards the tax component.
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Income Tax:
Reopening of assessment u/s 147 - There is nothing on record prima facie suggesting that the profit out of sale of shares was taxable under the normal provisions or that it was excluded for the purpose of computing book profit u/s 115JB - Notice issued u/s 148 quashed.
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Income Tax:
Penalty u/s 271(1)(c) - defective show cause notice - the impugned SCN qualifies as a notice u/s 292B - it cannot be held to be invalid merely by mistake or defect of issuing it in a template and not scoring of the relevant ground and leaving out the applicable ground - Department allowed to issue addendum/ corrigendum/ errata.
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Income Tax:
Case selected under CASS - limited scrutiny - in the absence of any permission received from the Pr. CIT or CIT, no merit in the order of AO in making the aforesaid addition on an issue which was not the basis for selection of the case under CASS.
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Income Tax:
Applicability of transfer pricing provisions where income is computed under the Tonnage Tax Scheme (TTS) - the transfer pricing regulations do not apply to the assessee to the extent of operations carried out through operating qualifying ships where the income is taxed under TTS.
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Income Tax:
Addition of income from other sources u/s 56(2)(viib) - allotment of shares at a price which exceeds fair market value (FMV) of the share - Revaluation reserves need not be deducted while calculating the fair market value, as per rule 11UA(2) - No additions.
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Income Tax:
Deduction u/s 10B - Probably the Legislature did not want duplicity in exemption on export profit. - inter-unit sales in the Export Processing Zone are not treated as export within the meaning of section 10A, no matter such transfers are treated as exports for the purpose of Customs and Excise duty exemption.
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Income Tax:
Exemption u/s 10B - consideration received in convertible foreign exchange which was not brought to India within six months (or extended period) to India - Deduction cannot be allowed.
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Income Tax:
Income from house property - determination of ALV - if property not let out then AO cannot determine the ALV by applying the market rate but he can do so only on the basis of ratable value assessed by the Municipal Corporation
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Income Tax:
Disallowance of depreciation on galas as given on rent - the primary condition as envisaged by Section 32 to claim the depreciation is that the assets should be used for the purposes of assessee’s business which has remained unfulfilled for galas given on rent - depreciation claimed over and above the statutory deduction u/s 24 is not allowable
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Income Tax:
Taxability of subsidy received under TUF scheme - revenue or capital receipts or reduction in value of fixed assets - to reduce from the cost of asset, the subsidy should be directly or indirectly used for acquiring an asset - In present case no asset was being acquired by using TUF subsidy therefore it should not be reduced from fixed assets - hence, such TUF subsidy is to be treated capital receipt
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Income Tax:
Penalty u/s 271(1)(c) - inadvertent mistake - assessee, the returned income was ₹ 35.37 crores and an error of ₹ 1,30,869/- and ₹ 1,01,956/-, which the assessee had on its own accepted as inadvertent mistake, cannot be said to be deliberate so as to amount to furnishing of inaccurate particulars - no penalty
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Income Tax:
Deemed income from purchase of shares - purchases at lower price than FMV - addition u/s 69 OR u/s 56 (2)(vii)(C) - asset that has been transferred in this transaction in shares, which is covered under the definition of property as per clause (d) of the second proviso to the u/s 56(2)(vii) and FMV in respect of listed shares are the quoted price on the recognized stock exchange - taxable u/s 56(2)(vii)
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Income Tax:
Capital gain on sale of shares - market price or agreed price - transfer of shares by obtaining interest free loans for a long tenure coupled with call option agreements which is based on the traded price of the shares of the NDTV limited, the actual consideration received by the assessee is not ₹ 4/- per share but the sums realized by RRPR Holdings Ltd, over which the assessee has complete control - price will be market price
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Income Tax:
Capital gain computation - LTCG OR STCG - different demat account - ‘period of holding’ - it is mandatory to follow FIFO method when the profits on sale of shares in different circumstances is taxed at different rates, under different heads - FIFO method apply in case of multiple accounts to each of the demat account separately - gain is STCG
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Income Tax:
Reassessment u/s 147 - reopening based on dictation/instance of the investigation wing - the authority, indicating the information was of the equal rank and not a higher authority - the AO is merely advised to take any remedial actions in accordance with the law - no instance of or at the dictate of higher authorities - reopening upheld
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Income Tax:
Adjustment in book profit u/s 115JB - assessee make adjustment in sale and reduced the profit - Provisions relating to adjustments by way of increase and decrease to the net profit are very explicit in section 115JB and the items which are to be added to the net profit have been listed out in Explanation - AO/CIT(A) should adhere to that list and cannot travel beyond these items - remanded to AO
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Income Tax:
Penalty u/s 271(1)(c) - wrong claim of TDS which not belong to the assessee but appeared in the form No.26AS - there was no addition made to the income of the assessee of any kind whatsoever qua this TDS claim - the provisions of section 271(1)(c) do not apply to the present case as there was neither concealment of income nor furnishing of inaccurate particulars
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Income Tax:
Allowability of deduction for payment EPF, LWF and ESI after due date - to claim the benefit of deduction u/s 36(1)(va) payment has to be made before the due date prescribed under the relevant statute - Tribunal holding to allow payments before the due date prescribed u/s 139(1) for filing return of income to claim the benefit u/s 36(1)(va) is liable to be set aside
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Income Tax:
Condonation of delay u/s 119(2)(b)in filing return of income - ruling from the ARA was sought for taxability of income in India which received after due date of filing of return - delay condoned subject to costs
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Customs:
Imposition of penalties on CHA / CB - Any dereliction/lack of due diligence since has caused the Exchequer loss in terms of evasion of Customs Duty, the original adjudicating authority has rightly imposed the penalty upon the appellant herein.
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Customs:
Classification of imported goods - Computer with CPU, ICB, Mouse & Monitor - Portable automatic data processing machine have weight not more than 10 kgs(CTH 847130) or a complete automatic data processing system(CTH 84715000) - portable computers are only limited to laptops and notebooks - the imported goods are definitely in category of portable computers
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DGFT:
Procedure for availing Transport and Marketing Assistance (TMA) for Specified Agriculture Products - amendments
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DGFT:
Amendment in Para 2.54 of the Handbook of Procedures, 2015-2020
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DGFT:
Amendment in import policy of seeds of Peas
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DGFT:
Amendment to Transport and Market Assistance Scheme for specified Agriculture Products
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PMLA:
Attachment of property under PMLA - scheduled offences - reason to believe is not a formality but it should akin to prima facie findings that the person concerned is positively involved in money laundering - the provisional attachment order can only be passed if such exercise is done within the four corners of settled law - attachment continue but possession of the said property shall not be taken by the respondent
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PMLA:
Offence under PMLA - attachment of property - Since the action taken by the Bank of India was in accordance with law and was prior to the proceedings initiated under PMLA Act, the proceedings initiated by the Bank under the I&B Code is ought to be given precedence over the proceedings initiated under PMLA Act in respect of the aforementioned properties - hence the consequential order of confirmation of PAO is contrary to law
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Service Tax:
Alternative remedy of appeal - writ jurisdiction will be exercised only in cases of certain specific exceptions and particularly (a) lack of jurisdiction, (b) violation of 'natural justice principles' or it should be a case of alternate remedy being ineffectual or not efficacious - It is certainly nobody's case an appeal to the Commissioner (Appeals) is either ineffectual or not efficacious - writ dismissed
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Service Tax:
Erection, Commissioning and Installation Services - composite contract - Commissioner (Appeals) has travelled beyond the Show Cause Notice to confirm the demand under Works Contract Service which is highly erroneous and unsustainable - demand of Service Tax under Erection, Commissioning and Installation Services cannot sustain for composite contracts for the period post 01.06.2007
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Central Excise:
CENVAT Credit - the clean energy cess being actually in the nature of fee and not tax/ excise duty that the appellant is not entitled for availing cenvat credit thereupon
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Central Excise:
Levy of Excise duty - parts used in repair of old cylinders - Inasmuch as the appellant has paid the service tax which is more or less equivalent to the excise duty required to be paid by them, there is no justification for upholding the demand of duty.
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Central Excise:
Failure to fulfill export obligations - If there is no extension having been granted by the Authorities, in terms of the provisions of Notification No.42/2001-CE(NT), condition of the said Notification stands violated - Demand confirmed.
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Central Excise:
CENVAT Credit - input services - Outdoor Catering Services - the service of preparation and supply of food in the factory canteens - after 01.04.2011, Outdoor Catering Services were excluded from the definition of input services - hence credit is ineligible
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VAT:
Principles of natural justice(NJP) - validity of assessment order without notice - it cannot be gainsaid that it is not necessary to give notice and opportunity to the assessee before making an assessment under TNVAT Act particularly when there has only been deemed assessment - impugned orders deserve to be set aside solely on the ground of violation of NJP to redo the assessments after notice
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VAT:
Classification of imported goods - tax rate on Multi-function Printers(MFD) - there is no distinction between old/used products and new products as far as MFDs, which find place in Entry namely Serial No.68 in Part-B of First Schedule read with Item 22(a) in the List of Information Technology Products - impugned order set aside - liable to tax @ 5%
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2019 (6) TMI 1236
Levy of GST - Supply of various services - whether the applicant can be considered as government ? - HELD THAT:- As per clause (23) of section 3 of the General Clauses Act, 1897, the word Government or the Government shall include both the Central Government and any State Government - Section 2(53) of the CGST Act and the corresponding section of the SGST Act defines the word Government as the Central/State Government, The applicant which is engaged in research, development, production, testing, marketing and logistics of a comprehensive product range in the areas of air, land and sea systems is having an industrial status and functions under the Ministry of defence. It is not created by the constitution of India as a legislative, executive or judicial authority of the country - hence, the applicant cannot be treated as Government as defined under section 2(53) of the CGST Act, 2017. Levy of GST - Supply of services - Ministry of Defence, Government of India - Ordnance Factory Bhandara (OFB) - Liquidated damages deducted from the payments to be made to suppliers in case of delayed delivery of goods or services - Amount of Security deposit forfeited of suppliers due to non-fulfilment of certain contract conditions - Security deposit left unclaimed by the suppliers and recognised as income after 3 years - Food and beverages supplied at industrial canteen inside the factory premises - Community hall (Multipurpose Hall) provided on rental basis to employees of our organisation - School bus facility provided to children of the employees - Conducting exams for various vacancies - Rent recovered from residential quarters of employees - HELD THAT:- In case of Liquidated damages deducted from the payments to be made to suppliers in case of delayed delivery of goods or services, Sr. No. 62 (heading 9991 or 9997) of Notification No. 12/2017- Central Tax (Rate) dated 28 th June 2017 provides NIL rate of Tax in respect of services provided by the Central Government, State Government, etc. by way of tolerating non-performance of a contract for which consideration in the form of fines or liquidated damages is payable to the Central Government, State Government, Union Territory or local authority under such contract. Since the applicant is not Government , they are not liable to get exemption under the said Notification in respect of Liquidated damages deducted from the payments to be made to suppliers in case of delayed delivery of goods or services. Amount of Security deposit forfeited of suppliers due to non-fulfilment of certain contract conditions - HELD THAT:- Security deposits which are refundable in nature are not liable to tax as per the GST Laws. However in this case such Security deposits are forfeited which would be considered as additional consideration flowing to the applicant on account of supply of goods by them and this additional consideration will be required to be added in the taxable value and accordingly, tax liability will have to be discharged by the applicant. The jurisdictional office has reported that the applicant has paid the service tax on such amount of Security deposited forfeited before the GST regime. Security deposit left unclaimed by the suppliers and recognised as income after 3 years - HELD THAT:- There appears to be no intention on the part of the applicant to forfeit such deposit. It is just a case of the supplier not claiming the same. Hence we cannot treat the same as a consideration received for the supply of goods or services or both and therefore the applicant is not liable to pay any tax on such amount shown as income under the GST Regime. Security Deposits which in normal course are refundable as such, are not liable to tax under the GST regime. Food and beverages supplied at industrial canteen inside the factory premises - HELD THAT:- No outdoor caterer is involved. We find that the canteen is in providing services related to supply of food and beverages to their employees and also charging consideration for the same. The service code (Tariff Group/Heading) for such services is 9963 and the same is taxable under GST - The applicant s claim that Sr. No. 6 of the exemption list on supply of services as per notification no. 12/2017- Central tax (Rate), is applicable to them is not acceptable in view of the fact that as discussed above they are not Central Government. Community hall (Multipurpose Hall) provided on rental basis to employees of our organisation - HELD THAT:- The applicant has provided Community hall (Multipurpose Hall) on rental basis to their employees which is covered under the definition of supply of services as mentioned above and they are liable to pay GST on the amount charged by them from their employees for supplying such services. For reasons mentioned in the foregoing the applicant is not entitled for any exemption under Notification No. 12/2017-Central Tax(rate) dated 28-06-2017. School bus facility provided to children of the employees - HELD THAT:- As per Sr. No. 66 (b) (heading 9992) of Notification No. 12/2017-Central Tax (Rate) dated 28 th June 2017, services provided to an educational institution by way of transportation of students does not attract any GST liability. As the applicant is not an educational institution and the school bus facility is extended to the children of employees and not to an educational institution, the provisions of Sr. No. 66 (b) (heading 9992) of Notification No. 12/2017-Central Tax (Rate) dated 28 th June 2017 is not applicable to them. Conducting exams for various vacancies - HELD THAT:- The services by way of conducting exams is available only to educational institutions as per Sr. No. 66 (aa) (heading 9992) of Notification No. 12/2017-CentraI Tax (Rate) dated 28 th June 2017. The applicant is neither an educational institution nor Government as discussed aforesaid and therefore they are liable to pay GST on such services supplied by them. Rent recovered from residential quarters of employees - HELD THAT:- Under the provision of GST Laws, renting of immovable property is included in Schedule II of the CGST Act and is taxable. However Entry No. 12 of Notification No, 12/2017 mentioned above, exempts supply of services by way of renting of residential dwelling for use as residence. Input tax credit - expenditure on the goods and services consumed by our organisation - Maintenance of garden inside the factory premises - Maintenance and upkeep activities relating to gardens, parks, playground, factory school for children of employees, hall for recreational activities, residential quarter buildings of employees, roads, footpaths, street lightings and other parts of estate area that are located outside the factory premises but within the factory estate - Medicine purchased by the hospital maintained by our organisation and used for treatment of factory employees and their dependents. Expenditure on maintenance, upkeep and other activities relating to such hospital - Expenditure related to maintenance and upkeep of guest houses maintained by organisation - Expenditure related to purchase of LPG cylinders used within industrial canteen - HELD THAT:- As regards maintenance of garden inside the factory premises, the applicant, being a registered person is entitled to take credit of input tax charged on any supply of goods and services or both received by them, which are used or intended to be used in the course of furtherance of their business. Supply in relation to maintenance of garden is not a supply that can be considered as a supply used or intended to be used in the course of furtherance of the business of the applicant which is to manufacture Propellants and Commercial Explosives. Hence the applicant are not eligible to avail ITC of the tax paid by them on the same. The services availed in relation to plantation and gardening within the plant area will not qualify for input tax credit. Maintenance and upkeep activities relating to gardens, parks, playground, factory school for children of employees, hall for recreational activities, residential quarter buildings of employees, roads, footpaths, street lightings and other parts of estate area that are located outside the factory premises but within the factory estate - HELD THAT:- The activities listed by the applicant are carried out outside the factory premises. These activities can at best be termed as welfare or social activities and they are not carried out in furtherance of the business and have no nexus to their manufacturing activity. Since these activities are not used or intended to be used by the applicant in furtherance of business ITC on the same are not available to them. Medicine purchased by the hospital maintained by our organisation and used for treatment of factory employees and their dependents - Expenditure on maintenance, upkeep and other activities relating to such hospital - HELD THAT:- The hospital/dispensary maintained by the applicant for its employees and their dependents come within the definition of Clinical Establishment as defined under the said Notification at definition mentioned at Sr. No. 2(s) and such supply of service is exempted under Sr. No. 74, heading 9993 of the Notification no. 12/2017-Central Tax(Rate) dated 28 th June 2017. Thus ITC on such exempted supply of services is not available to applicant under sub section (2) of Section 17 of the CGST Act, 2017 in respect of services and goods procured for maintenance of hospitals and pharmacy outlet as such services, being nil rated, fall under exempt supplies. Expenditure related to maintenance and upkeep of guest houses maintained by organisation - HELD THAT:- Provision of guest houses is a perquisite for their employees and therefore tax paid on maintenance and upkeep of guest houses cannot be allowed as ITC. Guest houses are generally used for temporary accommodation of employees as well as outsiders. Such provision of guest house cannot be treated as an activity in course or furtherance of its business and related to the applicant s business. Further, we find that the goods, or services, or both pertaining to Guest House are used for personal consumption of the employees/guests and are not used or intended to be used in the course or furtherance of business. As such in view of the provisions of Section 17 (5)(g), no ITC is available to the applicant. Hence, we hold that they are not eligible for ITC on taxes paid for maintenance and upkeep of guest houses. Expenditure related to purchase of LPG cylinders used within industrial canteen - HELD THAT:- Their canteen is in providing services related to supply of food and beverages to their employees and also charging consideration for the same and therefore such service is taxable under GST regime. The LPG cylinders are used to provide such services related to supply of food and beverages to their employees and therefore we are of the opinion that they are eligible to avail ITC on the purchase of LPG cylinders. Whether the exemption to a defence formation for preparation and generation of E- way bills is applicable to Ordnance factories other Central Government Public Sector Undertakings(PSU s) that function under the Ministry of Defence, Government of India? - HELD THAT:- As per para 14(k) of Rule No. 138 of the CGST Rules, 2018(Notification No. 12/2018 - Central Tax), e-way bill is not required to be generated when any movement of goods is being caused by defence formation under the Ministry of Defence as a consignor or a consignee - the applicant which functions under the Ordnance Factory Board (OFB) which in turn functions under the Department of Defence Production and Supply, Ministry of Defence, Government of India, is causing movement of goods to units of the Indian Armed Forces, proof establishments, DRDO, etc. and are eligible for the benefit under Rule 138 (14) (k) of the CGST Rules. Whether exemption on payment of GST on transport of military or defence equipments through a goods transport agency applicable to goods transported by our organisation? - HELD THAT:- As per Sr. No. 21, Heading 9965 or 9967, clause (h) of the Notification No. 12/2017- Central Tax (Rate), Services provided by a goods transport agency, by way of transport in a goods carriage of defence or military equipments are exempt from the levy of GST - the applicant is manufacturing and transporting goods like propellant explosives that are used in the manufacture of ammunition and therefore the said exemption is available to them. Whether Input Tax Credit is to be reversed on finished goods that are destroyed during testing? - HELD THAT:- The interpretation as made out by the applicant that reversal of ITC will arise only if the inputs or capital goods are themselves lost, stolen or destroyed etc. and not where the finished goods are lost, stolen or destroyed etc. is not acceptable for the simple reason that Section 16(1) contemplates both the situations i.e. case where the goods are actually used or intended to be used. To arrive at the conclusion that the applicant s submission is not tenable, we find that where inputs are used, they cease to exist and they being destroyed, lost or stolen, etc. will not arise - thus once the inputs are used in the manufacture of final products, which are then sent for testing purposes, then in such a case the said inputs cannot be considered to have been destroyed. Whether proportionate Input Tax Credit has to be reversed in cases where lesser payment is made to the supplier due to deduction on account of liquidated damages from supplier s dues? - HELD THAT:- The applicant deducts liquidated damages (L.D) from the payment to be made suppliers in certain cases where there is a delay in supply of goods or services by such supplier. Such deduction will be construed as amount received as compensation for tolerating non-performance of supplier on account of delay in delivery of goods or services and is an activity to be treated as a supply of service as per clause 5(e) of Schedule II to the CGST Act, 2017 on which the applicant will have to discharge GST - ultimately applicant would be paying a lesser amount to their suppliers against supply of goods received, which would result in lesser payment being made by the supplier towards GST - Hence the applicant will be eligible to take ITC proportionally equal to actual payment made to such suppliers and is therefore required to reverse ITC accordingly. Applicability and effect of the notifications - Being a part of the Ministry of Defence, Government of India - N/N. 2/2018- Central Tax (Rate), in relation to services by an arbitrator or an advocate to our organisation - N/N. 3/2018- Central Tax (Rate), in relation to services supplied by our organisation by way of renting of immovable property to a person registered under the Central Goods and Services Tax Act, 2017 - N/N. 36/2017-Central Tax (Rate), in relation to payment of tax on reverse charge mechanism on sale of used vehicles, seized and confiscated goods, old and used goods, waste and scrap to a GST registered person. N/N. 2/2018- Central Tax (Rate) - HELD THAT:- The applicant has submitted that as per Notification No. 2/2018-Central Tax (Rate), services by an arbitrator or an advocate to the Central Government have been exempted. Accordingly, it means that no tax on reverse charge mechanism has to be calculated and paid by them for payments made to arbitrators and advocates from the date of notifications coming into effect. We have in our discussions above held that the applicant is not Governments and therefore the said exemption is not applicable to them. N/N. 3/2018- Central Tax (Rate) - HELD THAT:- The applicant has submitted that as per Notification No. 3/2018-Central Tax (Rate), services supplied by the Central Government, State Government, Union territory or local authority by way of renting of immovable property to a person registered under the Central Goods and Services Tax Act, 2017 has been covered under reverse charge mechanism. They have submitted that since their organisation is a part of the Central Government, the notification is applicable to them - Renting of immovable property is to be treated as supply of service as per the provisions of Schedule II (Section 7) of CGST Act 2017. The applicant, who is no: Government are giving nonresidential property on rental basis to a registered person under the CGST Act 2017, which is covered under the definition of supply of services as defined in CGST Act 2017 as supply of real estate services other than renting of residential dwellings and will be chargeable to tax under the GST regime. N/N. 36/2017-Central Tax (Rate) - HELD THAT:- The applicant is not Government and therefore they shall discharge GST in respect of supply of any used vehicles, seized and confiscated goods, old and used goods, waste and scrap. Whether Input Tax Credit on services of passenger vehicles hired by our organisation is available? - HELD THAT:- This question has been withdrawn by the applicant.
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2019 (6) TMI 1235
Refund of penalty - movement of the goods from Bengaluru to Mysore was without E-way bill - HELD THAT:- It is not in dispute that the petitioner has paid the penalty determined by the respondents and the goods were released to the petitioner. If that being the position, there is no inhibition for the petitioner to avail the alternative remedy of statutory appeal provided under the Act for redressal of his grievance as the contentions raised by the petitioner revolves around the factual aspects of the case. There is no other option for this Court except to relegate the petitioner to the Appellate Authority to avail the alternative remedy of appeal available under the Act - petition disposed off.
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Income Tax
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2019 (6) TMI 1227
Restoration of appeal - earlier withdrawn appeal on ground that tax effect was below the monetary limit of ₹ 50,00,000/- - human error - HELD THAT:- Now, the applicant has filed the present application bringing to the notice of the court the fact that the tax effect involved in the captioned tax appeal is ₹ 3,08,44,800/-. Evidently therefore, the appeal was withdrawn on account of an error on part of the applicant. The tax appeal, therefore, deserves to be restored. For the foregoing reasons, the application succeeds and is, accordingly, allowed.
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2019 (6) TMI 1226
Addition made on account of unverifiable purchase - Addition made on account of unverified sundry creditors - assessee is in business of trading in waste paper - estimated income based on NP of turnover - HELD THAT:- The finding recorded by the CIT(A) came to be affirmed by the Tribunal stating that no reason to interfere with the findings and conclusion arrived by the CIT(A) in directing the AO to estimate NP @ 2% of total URD purchases as this view has been consistently adopted and followed by the Department from AY 2006-07 to 2008-09 and for AY 2009-10 same view has been uphold and confirmed by the Tribunal in assessee's own case order dated 27.05.2016 (supra). We do not find any error, much less an error of law, said to have been committed by the Tribunal in passing the impugned order. We see no good reason to disturb the same.
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2019 (6) TMI 1225
Allowability of bad debts written off u/s 36(1)(vii) - Exclusion of the amount received as recovery of bad debts written off - taxability u/s 41(4) - in the earlier years deduction had not been allowed in respect of write off of such bad debts u/s 36(1)(vii) - Income earned from a foreign branch - whether could not be assessed in India in view of the tax treaty between India and the respective Country? - HELD THAT:- Perusal of the impugned judgment of the Tribunal would show that the Tribunal had merely sent the issues back to the Assessing Officer for proper examination on the additional grounds raised by the assessee before the Tribunal. We are informed that the Assessing Officer has already given effect to such directions of the Tribunal and passed appropriate order, which of course has given rise to further dispute between the assessee and the department. Be that as it may, in facts of the case, we do not think that the Tribunal s decision gives rise to any substantial question of law. Depreciation on matured investments securities which were due for redemption in the relevant previous year - NPA - real income theory -Tribunal disallowed the Appellant s claim for deduction - HELD THAT:- Tribunal has approved the observations of the CIT(A) that the real income theory cannot be so extended so as to negate accrual of an amount which is receivable by the appellant assessee. In support, reliance is placed upon the decision of this Court in Navin R Kamani Vs. Commissioner of Income Tax [ 1990 (3) TMI 40 - BOMBAY HIGH COURT] . It also held that the concept of real income theory cannot be read so as to defeat the provisions of the Act. Further, the fall in value of security is not an ascertained liability and such adhoc deduction cannot be allowed. The impugned order places reliance upon the decisions of the Apex Court in Indian Molasis Company Pvt.Ltd. Vs. Commissioner of Income Tax, [ 1959 (5) TMI 5 - SUPREME COURT] and of this Court in Standard Mills Company Vs. Commissioner of Income Tax [ 1997 (3) TMI 64 - BOMBAY HIGH COURT] Impugned order of the Tribunal is based on various binding decisions of the Apex Court and this High Court not shown to be inapplicable. Thus, no substantial question of law arises.
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2019 (6) TMI 1224
Condonation of delay u/s 119(2)(b) in filing return of income - ruling from the 'Advance Ruling Authority' ('ARA') was sought for taxability of income in India - ARA gave its ruling on 16.08.2016 - return for AY 2014-15 was filed on 06.03.2017 - HELD THAT:- This Court on subject to costs of ₹ 10,000/- being paid and condition being complied, post 01.07.2019, the delay shall stand condoned and the respondent shall take up the returns filed by the writ petitioner on 06.03.2017 being returns for Assessment Year 2014- 15 and carry the same to its logical end in accordance with law as expeditiously as possible and in any event within four weeks from 01.07.2019 i.e, on or before 29.07.2019,
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2019 (6) TMI 1223
Allowability of deduction for payment EPF, LWF and ESI after due date of respective Act u/s 36(1)(va) - Non remittance of employees' contribution and not employers' contribution - HELD THAT:- In the light of the aforesaid dictum laid down by the Division Bench of this Court in Popular Vehicles and Services [2018 (8) TMI 133 - KERALA HIGH COURT] hold that, in order to claim the benefit of deduction under Section 36(1)(va) of the Act, payment of employees' contribution to Employees' Provident Fund, Labour Welfare Fund and Employees' State Insurance has to be made before the due date prescribed under the relevant statute. The substantial question of law is answered in favour of the revenue and against the assessee. The Tribunal has found that payments have to be made only before the due date prescribed u/s 139(1) for filing return of income to claim the benefit u/s 36(1)(va). The finding of the Tribunal in this regard is liable to be set aside. Moreover, the Tribunal has directed that the issue regarding deduction u/s 36(1) (va) has to be reconsidered by the assessing officer. In the instant case, the assessee has got no plea that the remittance of employees' contribution to Employees' Provident Fund, Labour Welfare Fund, Employees' State Insurance had been made before the due date prescribed in the respective enactments. Therefore, the direction given by the Tribunal remitting this issue for reconsideration by the assessing officer is also liable to be set aside. Sale of old and unyielding rubber trees - whether exigible to tax in the light of Rules 7 and 7A of the Income Tax Rules? - sale proceeds of grevellea trees can be treated as capital gains and brought to tax or not? - Whether the provision for gratuity can be added in computing the income u/s 115JB - HELD THAT:- Questions are covered by the decision of the Division Bench of this Court in Commissioner of Income Tax v. Harrisons Malayalam Limited [ 2019 (1) TMI 1359 - KERALA HIGH COURT] against the revenue.
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2019 (6) TMI 1222
Reopening of assessment u/s 147 - Disallowance of claim of depreciation of wind power generation unit - notice issued beyond a period of four years from the end of the relevant assessment year - HELD THAT:- As during the course of scrutiny assessment, the Assessing Officer had examined this issue threadbare and had accepted the assessee s submission and allowed the depreciation on wind mill. Therefore, the Commissioner (Appeals) was wholly justified in holding that the reopening was invalid as it was based upon a mere change of opinion. The notice u/s 148 had been issued beyond a period of four years from the end of the relevant assessment year and the Commissioner (Appeals) has recorded a finding of fact to the effect that there was no failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment for the year under consideration. On behalf of the appellant nothing has been pointed out to dislodge the concurrent findings of fact recorded by the Commissioner (Appeals) and the Tribunal nor has it been pointed out that the Tribunal has placed reliance upon any irrelevant material or that any relevant material has been ignored. Conclusion arrived at by the Tribunal being based on concurrent findings of fact upon appreciation of the material on record, no infirmity can be found in the finding recorded by the Tribunal that the reopening of assessment was invalid. Claim for depreciation - power generation unit having started its production in March, 2006 - HELD THAT:- The Tribunal as well as the Commissioner (Appeals), have found that the relevant evidence was produced by the assessee on record to establish that the operation of the wind mill had commenced prior to 31.3.2006 and consequently, the assessee was entitled to depreciation on windmill. - Decided in favour of assessee.
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2019 (6) TMI 1221
Penalty u/s 271(1)(c) - assessee had made incorrect claims while filing the return assessee has given incorrect details and when it was cornered, it corrected the mistakes - assessee has given incorrect details and when it was cornered, it corrected the mistakes - Tribunal deleted penalty - HELD THAT:- In case of the assessee, the returned income was ₹ 35.37 crores. In these circumstances, the court is in agreement with the view adopted by the Tribunal that in a case of this magnitude, an error of ₹ 1,30,869/- and ₹ 1,01,956/-, which the assessee had on its own accepted as inadvertent mistake, cannot be said to be deliberate so as to amount to furnishing of inaccurate particulars. Insofar as the penalty in respect of addition made on account of exchange rate fluctuation AO has accepted that the income was booked on capital account by mistake as a result of wrong posting of capital field vouchers in the revenue account. There was a mistake on part of the assessee while filing the return of income. In the opinion of this court, having regard to the findings recorded by the Tribunal, whereby the Tribunal has found the explanation submitted by the assessee to be plausible, which in the opinion of this court is a reasonable view, there is no reason to interfere with the findings recorded by the Tribunal. - Decided against revenue
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2019 (6) TMI 1220
TDS u/s 195 - withhold of tax - software license fees and IT support services - as per AO same was taxable under the Income Tax Act as well as under the DTAA as Royalty - provisions of section 9(1)(vi) or Article 12 of DTAA between India and USA - HELD THAT:- Since provisions of DTAA overrides the provisions of Income Tax Act and since they were more beneficial and the definition of royalty having not undergone any change, then the assessee was not liable to deduct tax at source out of aforesaid payments made for purchase of software. Following the same parity of reasoning, we hold that assessee was not in default and hence, there was no merit in the demand created u/s 201(1) and charging of interest u/s 201(1A) The said finding of Tribunal above in JOHN DEERE INDIA PVT. LTD. VERSUS DIT (INTERNATIONAL TAXATION) [ 2019 (3) TMI 458 - ITAT PUNE] would squarely apply to the facts of present case as the CIT(A) also while deciding the appeal has held that the issue raised in present appeal is squarely covered by the orders of CIT(A) in earlier years. Hence, relying on the aforesaid ratio of the Tribunal in assessee s own case for earlier years, we cancel the demand created under section 201(1) and charging of interest under section 201(1A) of the Act in respect of payments made for purchase of software. TDS on provision of IT support charges i.e. internet charges, use of e-mail facility, backup support services, etc., which was also held to be royalty - HELD THAT:- Payments on account of interest charges, line charges, service charges and other charges i.e. VPN charges, online meeting charges, etc. were not payment of royalty and also no technical services were made available, hence there was no requirement for deduction of tax at source. Applying the said ratio to the facts of present case, we accordingly, hold so. TDS on lease line charges - HELD THAT:- The issue arising in the present appeal on account of payment for lease line charges is identical to the issue before the Tribunal (supra) and following the same parity of reasoning, we hold that there was no requirement to deduct tax at source out of such lease line charges and hence, the assessee had not defaulted in not so deducting. TDS on payment for web based training fees - HELD THAT:- The first issue was adjudicated by Tribunal (supra) it was concluded that in the absence of any transfer of technology, the payment is not covered under the definition of fees for technical services and hence, there was no liability upon the assessee to deduct tax at source out of payments made for web based training. Following the same parity of reasoning, we hold that assessee could not be held to be in default u/s 201(1) and 201(1A) in respect of payments made for web based training. TDS on payment against reimbursement of expats salaries - HELD THAT:- The said issue was also decided by Tribunal (Supra) and it was held that where the assessee had deducted tax at source out of salary paid to expat employees deputed in India for providing assistance to the employees of assessee, then assessee could not be held to be in default u/s 201(1) and 201(1A). Applying the same parity of reasoning, we hold that there is no merit in raising the demand u/s 201(1) and charging of interest u/s 201(1A) of the Act on this count. - appeal of assessee is allowed
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2019 (6) TMI 1219
Denial claim of interest expenditure - deduction from the short term capital gain - shares kept for investment purposes as the funds available with M/s. Moti Lal Oswal are mixed funds - HELD THAT:- CIT(A) upheld the action of the AO on the ground that no interest was paid by the assessee for the period prior to purchase of shares. The assessee that the interest expenditure of ₹ 10,76,258/- was incurred on borrowings made for acquisition of investments made in shares and there are no mixed funds and that it is a separate account in which no other transaction has been carried out except of the shares on which short term capital gain has been earned. It is the submission of assessee that in assessment year 2013-14 assessee has also paid interest to Moti Lal Oswal Financial Services amounting to ₹ 4,90,555/- which was accepted by the department and allowed as deduction from short term capital gain. From the various details furnished by the assessee it requires a re-visit to the file of the Assessing Officer to adjudicate the issue afresh in the light of the various submissions made by the assessee before me. Needless to say the AO shall give due opportunity of being heard to the assessee and decide the issue as per fact and law.
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2019 (6) TMI 1218
Income from house property - determination of annual letting value (ALV) - property not let out - HELD THAT:- As regards the property at sl. no.1 when the assessee has not let out the property, in such circumstances the Assessing Officer cannot determine the ALV by applying the market rate but he can do so only on the basis of ratable value assessed by the Municipal Corporation. Assessing Officer is directed to verify whether the ALV shown by the assessee is as per ratable value determined by the Municipal Corporation and if it is not so, the Assessing Officer is directed to determine the ALV on the basis of ratable value of Municipal Corporation. As regards the property at sl. no.2 if the ALV of the property shown by the assessee is more than the ratable value fixed by the Municipal Corporation, then it has to be accepted. AO has determined the ALV purely on estimate basis without being backed by any material - That being the case, the Assessing Officer is directed to verify the ALV shown by the assessee in respect of properties at sr. no.3 and 5 and if it is found that the ALV shown by the assessee is as per the ratable value of Municipal Corporation or more than that, then it has to be accepted. Otherwise, the Assessing Officer is directed to determine the ALV of these properties as per the ratable value of Municipal Corporation. As regards property at sr. no.4 of the Table, the ALV has been shown by the assessee as nil - We direct the Assessing Officer to determine the ALV of this property as per the ratable value fixed by the Municipal Corporation. Before parting, we must observe, the Assessing Officer must afford reasonable opportunity of being heard to the assessee before deciding the issue. Ground no.1 and 2 are allowed for statistical purposes.
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2019 (6) TMI 1217
Penalty u/s. 271(1)(c) - claim of deduction u/s 80IB(10) - whether the claim made by the assessee in the return of income was on bonafide consideration or not? - HELD THAT:- Assessee had shifted its unit from one place to another and that 80% of the cost of plant and machinery on the new factory was by way of acquiring new plant and machinery and only less than 20% of cost was towards transferring plant and machinery of the unit. The assessee was under the impression that it was entitled to benefit under section 80IA and it also obtained professional advise in this regard. The claim of the assessee for deduction under section 80IA came to be rejected in the quantum assessment proceedings. In the penalty proceedings, Tribunal noted that there was no suppression of facts or misrepresentation of facts by the assessee even when the claim was denied in the quantum assessment proceedings. It deleted the penalty imposed u/s 271(1)(c) which was affirmed in the case of Petels Engineers Limited [ 2013 (11) TMI 1374 - BOMBAY HIGH COURT] specifically noted that the claim of the assessee under section 80IA was made under a bonafide belief and therefore, penalty under section 271(1)(c) was not sustainable. In our considered view, the fact situation before us is quite similar to the fact situation before the Hon ble Bombay High Court in the case of Petels Engineers Limited (supra) and, therefore, levy of penalty in the instant case is not justified on this count too. We hold so. - Decided in favour of assessee.
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2019 (6) TMI 1216
Disallowance of expenses u/s 14A read with rule 8D - recording of prima facie satisfaction of the AO - HELD THAT:- As relying on H.T. MEDIA LIMITED VERSUS PRINCIPAL COMMISSIONER OF INCOME TAX-IV, NEW DELHI [ 2017 (8) TMI 962 - DELHI HIGH COURT] AO has simply made observations that there must be some expenses for earning of the exempt income. AO could not pointed out which are expenses relatable to exempt income or there is prima facie satisfaction of the AO which is mandated by the provisions of section 14A(iii) of the Act. Hence, we are of the view that in the absence of any satisfaction, the AO has erred in making addition and CIT(A) erred by confirming the same. We set aside the orders of the lower authorities and allow this appeal of assessee.
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2019 (6) TMI 1215
Penalty u/s 271(1)(c) - wrong claim of TDS which not belong to the assessee but appeared in the form No.26AS - non specific charge - defective notice - HELD THAT:- As during the assessment proceedings the AO rejected the claim of the assessee for the TDS and there was no addition made to the income of the assessee of any kind whatsoever qua this TDS claim. In our view, the penalty under section 271(1)(c) can only be initiated and levied if there is a concealment of income or furnishing of inaccurate particulars of income on the part of the assessee. However, in this particular case it was a wrong claim of TDS and thus the provisions of section 271(1)(c) do not apply to the present case. Even for the purpose of levying of penalty, the mechanism provided in the section itself provides for the calculation of penalty which is 100% to 300% of the tax sought to be evaded. Even on legal issue the assessee has got a very strong case as the penalty has been initiated on both the charges. The penalty notices u/s 271(1)(c) dated 09.03.2016 and 22.08.2016 were issued in a mechanical manner without mentioning or stating the specific charge on which the penalty was proposed to be levied without any application of mind. Similarly the order of imposing penalty was passed by the AO on both the charges As decided in SHRI SAMSON PERINCHERY [ 2017 (1) TMI 1292 - BOMBAY HIGH COURT] penalty can be levied where the specific charge was not mentioned in the notice issued u/s 274 read with section 271(1)(c) as the assessee is not confronted and given an opportunity to respond to the charge on which the penalty was levied and the penalty imposed was held to be invalid. - Decided in favour of assessee.
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2019 (6) TMI 1214
Rectification u/s 154 for recomputing book profit u/s 115JB - book profit computed on the basis of return filed by the assessee voluntarily u/s 153A - for computation of book profits assessee make adjustment in sale and reduced the profit - HELD THAT:- No cogent explanation was given by the assessee in the course of the assessment proceedings as regards as the quantum of purchase - sale figure which was rectified and the decrease in sale from 149% of purchase to 127% of purchase. The order of the CIT(A) is completely silent on this issue. CIT(A) also didn't elucidate as to how the book profit was correctly computed at ₹ 9,29,04,504/- in the order dt.26.12.2012 u/s.251/153A/143(3) of the Act. We note that provision of section 115JB is a code itself and hence whatever mentioned in the section should be followed to compute book profit. We are of the view that the Assessing Officer should examine what is additions or deductions in the book profit as computed by assessee company as per the provisions of Companies Act. Provisions relating to adjustments by way of increase and decrease to the net profit shown by the assessee in profit and loss account are very explicit in section 115JB. The items which are to be added to the net profit have been listed out in Explanation 1 to that section. A.O./CIT(A) should adhere to that list and cannot travel beyond these items. The provisions of section 115JB do not leave any room for adjustment by the AO other than those mentioned in Explanation 1 to Section 115JB to the net profit reflected in the accounts of any assessee. We note that neither AO nor ld. CIT(A) explained the provision of section 115JB in relation to computation of book profit. Under the circumstances, we set aside the order of ld. CIT(A) and remit the issue back to the file of A.O. with the direction to compute the book profit as per the provisions of section 115JB - Appeals of the revenue are allowed for statistical purposes.
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2019 (6) TMI 1213
Interest u/s 244A on self assessment tax payment - AO has not granted interest on self-assessment tax paid in the order passed u/s 154 - HELD THAT:- Tribunal in assessee s own case [ 2018 (9) TMI 1844 - ITAT KOLKATA ] a decision-maker who is authorized to decide ex aequo et bono is not bound by legal rules but may take account of what is just and fair. Thus, if we decide the issue before us ex aequo et bono, then it would be decided by the principles of what is fair and just and not necessarily as per strict rule of law. Thus, since the statute itself has already prescribed a particular method of adjustment in explanation to section 140A(1), then justice, fairness, equity and good conscience demands that same method should be followed while making adjustment for refund of taxes, especially when no contrary provision has been provided. We find that the judicial propriety demands that order of the Tribunal of earlier years must be followed and therefore we direct the AO to re-compute the amount of interest u/s. 244A by first adjusting the amount of refund already granted towards the interest component and balance left if any shall be adjusted towards the tax component. We direct the A.O to allow interest on self assessment tax and also allow interest on such interest.
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2019 (6) TMI 1212
Deduction u/s 80P(2)(a)(i) - business income including the interest income earned on the deposits with the other banks and the Treasury - income from business V/S income from other sources - HELD THAT:- Interest income earned by the assessee from other Banks and Treasury on which deduction u/s. 80P(2)(i)(a) is to be granted, there is no dispute that the assessee has made investments in the course of banking activities and such interest income was received on investments made with cooperative banks and other scheduled banks. The coordinate bench of the Tribunal in the case of Kizhathadiyoor Co-operative Bank Limited c [ 2016 (7) TMI 1405 - ITAT COCHIN] had held that such interest income received by the assessee should be assessed as income from business instead of income from other sources . In view of the order of the co-ordinate bench, we hold that the CIT(A) is justified in holding that interest income received by the assessee should be assessed as income from business . Grant of deduction u/s. 80P(2)(i)(a) of the Act, the Assessing Officer shall follow the law laid down by the Larger Bench of the Jurisdictional High Court in the case of Mavilayi Service Co-operative Bank Ltd. vs. CIT [ 2019 (3) TMI 1580 - KERALA HIGH COURT] and examine the actual activities of the assessee so as to grant deduction u/s. 80P(2)(i)(a). Accordingly, we remit this issue to the file of the Assessing Officer for fresh consideration in accordance with the above direction. Thus, this ground of appeal of the Revenue is partly allowed for statistical purposes for both the assessment years. - Appeal filed by the Revenue is partly allowed for statistical purposes.
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2019 (6) TMI 1211
Reopening of assessment u/s 147 - allegations forwarded by a Member Of Parliament and Chairman, standing committee on Finance - addition made on sale of 6,25,000 shares of NDTV limited considered by AO as short term capital gain - whether reopening of the assessment has been carried out at the instance of the investigation wing wherein it has been dictated by them to the AO to initiate reassessment proceedings? - HELD THAT:- In the present case, the AO is merely advised to take any remedial actions in accordance with the law. Therefore, the discretion was with the assessing officer to whether to issue notice u/s 148 of the income tax act or not In the present case the authority, indicating the information was of the equal rank and not a higher authority. Further, the advice was clearly on the facts of the case of the information received. In view of this, we do not find that the reopening has been made at the instance of or at the dictate of higher authorities. There is a clear-cut indication and discretion of the assessing officer that he has verified the information received and after that he found that a sum of ₹ 12,700,000 that should have been shown as a short-term capital gain by the assessee have not been disclosed in her return of income. Therefore, we do not agree with the argument of AR that reopening is at the instance of or at the dictate of the informing authority. No live link between the information received (tangible material) and formation of belief - In the present case the reasons for the reopening were recorded by the learned assessing officer though extracting the information that has been received from the investigation wing in preamble of the letter, and also noting that the assessee has filed return of income declaring income he further noted that that the return of income was perused where neither the long-term capital gain nor short-term capital gain have been disclosed. Such belief was formed after looking at the return of income in schedule CG that is shown as nil. Long-term capital gain shown in the tangible material is ₹ 108,00,00,000, which is far less than the amount that has been shown by the assessee in annexure EI. Therefore, it is not the mere reproduction of the report of the investigation wing but clear-cut finding recorded by the learned assessing officer that he has perused the return of income and on verification of that return has given a live link to the learned assessing officer to form a belief that assessee has understated the short-term capital gain - there is a live link between the tangible material and formation of the belief and it is not merely the reproduction of the report of the investigation wing but the finding of the assessing officer himself also in such reasons - we confirm the finding of the learned CIT A in holding that there is no infirmity in the reassessment proceedings initiated by the learned assessing officer. - Decided against assesse. Capital gain computation - LTCG OR STCG - sale of shares from the joint demat account of the assessee - cost of acquisition of those shares which were considered as sold on the basis of FIFO method of that demat account - applicability of FIFO method in each demat account separately of jointly - what is the cost of acquisition and period of holding of shares in joint demat account - HELD THAT:- After introduction of section 45(2A) of the Income-tax Act, 1961, and Depositories Act, 1996, those participating in the depositories mechanism will have to accept FIFO as a way of maintaining securities. In a depositories mechanism, where individual shares lose their identity and lose themselves in the wilderness of a homogenous mass, it is mandatory to follow FIFO method. When the profits on sale of shares in different circumstances is taxed at different rates, under different heads, non application of standard FIFO method to each account would lead to tax anarchy. Precisely the same is the case of the assessee. Hence we hold that FIFO method will be applied in case of multiple accounts to each of the demat account. Issue before us is not whether the assessee loses any enjoyment of possession of such shares but how if such shares are transferred in the joint account but the issue is whether the sales sold from the joint account have the period of holding for determination of its character as short-term capital asset are long-term capital asset would be considered from the date when the assessee originally purchased shares in her individual demat account or not. The provisions of section 45 (2A) and the circular is issued by the central board of direct taxes provides otherwise. Commissioner of Income Tax (Appeals) has not erred upholding an addition representing alleged short term capital gain on sale of shares of M/s. NDTV Ltd by the appellant in the year under consideration - Decided against assessee. Income from house property - AO assumed that the assessee s share of rent of the above property would be 0.8% of the cost of property being ₹ 6 535315/ - assessee submitted that the annual letting value taken by the cantonment board at Mussoorie was Rs. ₹ 30,000 per annum for the whole house - HELD THAT:- With respect to the Mussoorie property the learned assessing officer in the remand report has submitted that the basis of the fair rental value has not yet been received by AO and therefore could not be submitted before the learned CIT A. Thus, there is no information available with AO of fair rent of the property. Contrary to that assessee has submitted annual let out value of such property that is claimed to not to exceed ₹ 30,000 as mentioned by cantonment board. Therefore, the learned CIT A should not have substituted the same on hypothetical basis. Accordingly, we direct the ld AO to take the let out value of the property as per the determination of same by cantonment board for this year to determine the annual fair rent of the property and then decide the issue afresh. - Decided in favour of assessee. Capital gain calculation on sale of shares to RRPR Holdings Pvt Ltd (RRPR) - Dr Roy and Mrs. Roy are the only shareholders of the above company holding 50% share each - assessee sold share at ₹ 4/- per share to RRPR against rate of share in BSE were within the range of ₹ 134.95 to ₹ 141.50 Per share. - AO determined consideration accruing to the assessee on transfer of 5781842 shares at the rate of INR 135 amounting to INR 78,05,48,670/ for the purpose of calculation of capital gain thereon - CIT (A) deleted the above addition stating that the market value cannot be deemed to be the full value of the consideration of assets in this case and therefore he did not find any force in the argument of the AO that accrual phrase introduced in the provision refers to the market value of the capital asset - applicability of Section 50D - Impact of interest free loan given by company to assessee HELD THAT:- In the present case, fact shows that by transferring shares to RRPR Holdings private limited at ₹ 4/- per share, the assessee has transferred everything which can be said to vested in those shares at price which is equivalent to market price to lender, through RRPR Holdings Pvt Ltd. In fact, the value is also realized by considering the loan and sum, which is free of interest and coupled with call option agreement, at INR 140 per share only. Assessee has got the consideration in transfer of shares of NDTV limited through RRPR Holdings private limited by obtaining interest free loans for a long tenure coupled with call option agreements which is based on the traded price of the shares of the NDTV limited, the actual consideration received by the assessee is not ₹ 4/- per share but the sums realized by RRPR Holdings Ltd , over which the assessee has complete control. Even otherwise, as stated herein above, the full consideration has not been replaced by the market value of the shares transferred but through series of agreements entered into by the assessee along with RRPR Holdings private limited with the lenders clearly showed that the assessee realized the consideration for transferring the shares and further pledge in favour of the lenders. Facts before us shows that assessee entered into complex agreements with the lenders by creating the layer of RRPR Holdings private limited to pledge the shares and realize the sale consideration in guise of loans from lenders. We reverse the finding of the learned CIT(A) and hold that full value of the consideration of accrued to the assessee on sale of the shares of NDTV limited to RRPR Holdings private limited has resulted into understatement of capital gain to the extent of ₹ 55,88,73,564/ . Accordingly, ground of the appeal of the learned Deputy Commissioner Of Income Tax, New Delhi are allowed. Income from house property - as per DR CIT A has deleted the addition without granting any opportunity of hearing to the AO - HELD THAT:- CIT capital has not admitted any additional evidences but has considered the explanation of the assessee against the assessment order passed by the learned assessing officer. Further with respect to the certain properties the assessing officer could not produce the relevant information available with respect to the annual rent of those properties. Therefore, now revenue cannot argue that learned assessing officer was not given proper opportunity of hearing before deleting the above addition. In view of this ground number 5 of the appeal of the learned assessing officer is dismissed. Addition u/s 69 by AO - CIT (A) confirmed the same u/s 56 (2) (vii) ( C ) - purchased of 3478925 shares of NDTV limited at the rate of ₹ 4/- per share from M/S RRPR - whether the learned CIT (A) has a right to confirm the addition under altogether a different section under the provisions of section 251 (1) (a) of the act? - HELD THAT:- In plain reading of the provisions of section 251 of the income tax act the Commissioner of income tax has a wider power however such part by the power cannot serve the powers vested u/s 147, 154 and, 263 of the income tax act. Admittedly, there is no new source of income, which has not been considered by the ld CIT(A). In present case, ld AO has already considered the taxability of sum being difference between the market value of shares and purchase price of the shares. Therefore, it cannot be said that, CIT (A) has discovered a new sources of Income. The impugned asset that has been transferred in this transaction in shares, which is covered under the definition of property as per clause (d) of the second proviso to the above section. Further fair market value of such transaction is also required to be determined under section 11 UA of the income tax rules according to which the fair market value in respect of a court in shares are the quoted price on the recognized stock exchange. Therefore the impugned transaction satisfied all the ingredients of the provisions of section 56 (2) (Vii) of the act. Therefore we do not find any infirmity in the order of the learned CIT (A) in invoking that provision with respect to the about transaction. No infirmity in the order of the learned CIT(A) in enhancing the income of the assessee by invoking the provisions of section 56 (2)(vii) of the act by making an addition of INR 4 38170604/ on account of difference between the purchase price of the shares of NDTV limited and the market price of those shares quoted on recognized stock exchange. Accordingly ground number 1 of the appeal of the assessee is dismissed.
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2019 (6) TMI 1210
Taxability of subsidy received under TUF scheme - revenue or capital receipts - CIT(A) treated it as part of fixed assets - no reduction in value of fixed assets as subsidy is not attached to any specific fixed asset - HELD THAT:- We note that where a portion of the cost of an asset acquired by the assessee has been met directly or indirectly by the Central Government or State Government in the form of subsidy then so much of the cost as is relatable to such subsidy shall not be included in the actual cost of the asset. When such subsidy cannot be directly relatable to the asset acquired, then such subsidy shall not be included in the actual cost of the asset. That is, to reduce from the cost of asset, the subsidy should be directly or indirectly used for acquiring an asset. In the assessee s case under consideration no asset was being acquired by using TUF subsidy therefore it should not be reduced from fixed assets. However, such TUF subsidy is to be treated capital receipt. Respectfully following the judgment M/S. RASOI LIMITED [ 2018 (5) TMI 127 - ITAT KOLKATA] we note that the subsidy received under TUF scheme is capital receipt and therefore we delete the addition made by the Ld. CIT(A).
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2019 (6) TMI 1209
Disallowance u/s 14A - disallowance on investment held stock in trade - AO made at the rate of 2.75% of exempt income as done in past - HELD THAT:- As in assessee s own case for A.Y. 2010-11, 2011-12 2013-14 [ 2018 (4) TMI 1723 - ITAT MUMBAI] several more decisions have come which have upheld the view that disallowance u/s 14A is not required when the investment is held as stock in trade. In our considered opinion we should follow the doctrine of stare decisis. Accordingly following the same directions as above we remit this issue to the file of the AO. Recently in Maxopp Investment Ltd. Vs Commissioner of Income-tax [ 2018 (3) TMI 805 - SUPREME COURT] has held that in cases, where shares are held as stock-in-trade, main purpose is to trade in those shares and earn profits therefrom, in the process, certain dividend is also earned, though incidentally, which is also an income. This triggers applicability of section 14A which is based on theory of apportionment of expenditure between taxable and non-taxable income. Therefore, to that extent, expenditure incurred in acquiring those shares will have to be apportioned - this ground of appeal is restored to the file of Assessing Officer for deciding the issue afresh Income accrued in India - Taxability in India - Exclusion of income of foreign branches situated in countries where there is double tax avoidance agreement based on Article 7 of the respective agreements which provides that business profits is to be taxed in respective countries - HELD THAT:- The issue has been decided against the assessee by the ITAT in assessee s own case for A.Y. 2011-12 income of the foreign branches of the assessee shall also be taxable in India, that is, it would be included in the return income filed by the assessee in India and whatever taxes have been paid by the branches in the other countries credit of such taxes shall be given. Disallowance of broken period interest - HELD THAT:- We find that identical issue has been decided in favour of the assessee by Hon'ble Supreme Court in the case of Citibank [ 2008 (8) TMI 766 - SUPREME COURT] and HDFC Bank Ltd. [2014 (8) TMI 119 - BOMBAY HIGH COURT] following these decisions ITAT in assessee s own case for A.Y. 2011-12 allowed the claim of the assessee and dismissed the Departmental appeal . Disallowance of provisions of wages arrear - HELD THAT:- As in assessee s own case for A.Y. 2010-11 deleted the similar disallowance. Claim of amortization of lease premium - CIT (A) wrongly decided on the issue of amortisation of Investment when there was no such issue in the assessment order - assessee pray for direction of CIT (A) should be directed to decide on allowability of amortization of lease premium paid - HELD THAT:- The respondent presently seeks leave of the Hon'ble ITAT to persue the grounds for amortization of lease premium paid which were a part of appeal before learned CIT(A) to support the claim of the Respondent as per Rule 27 of Income-Tax (Appellate Tribunal) Rules, 1963. CIT(A) ought to have decided on the issue of allowabiltiy of amortisation of lease premium as prayed for in grounds of appeal before Id CIT (A) - remanded to CIT(A)
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2019 (6) TMI 1208
Disallowance of depreciation on galas as given on rent - assessee earned rental income by letting out certain office premises against which statutory deduction allowed u/s 24 - HELD THAT:- The assessee has earned rental income from certain office premises which forms part of the block of assets. The rental income from these premises has been assessed under the head Income from House Property against which statutory deduction u/s 24 has already been allowed to the assessee. The assessee is not disputing the disallowance of office maintenance charges claimed against the premises as business expenditure but disputing the claim of depreciation against office premises. The perusal of block of asset reveal that the assessee is in possession of various Galas, 12 to be precise , out of which few galas have been let out during the year and few galas have been used by the assessee for its own use. The depreciation on galas used for the business purposes is not under dispute. However, depreciation on galas as given on rent amount to ₹ 4.34 Lacs which have been disallowed by Ld. AO. Against the rental income, the assessee has already been allowed statutory deduction u/s 24 and this depreciation is being claimed as business expenditure over and above the statutory deduction which has been allowed u/s 24. The primary condition as envisaged by Section 32 to claim the depreciation is that the assets should be used for the purposes of assessee s business which has remained unfulfilled for galas given on rent. Therefore, we are unable to concur with the stand of Ld. AR, in this regard. - Decided against assessee.
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2019 (6) TMI 1185
Reopening of assessment u/s 147 - gain on sale of shares - profit out of sale of shares was taxable under the normal provisions or that it was excluded for the purpose of computing book profit u/s 115JB - HELD THAT:- The same is a minor difference of ₹ 41.16 Lacs between the transaction amount of sale of shares and one contained in the statement filed by the assessee with objections. As correctly pointed out by the learned counsel for the petitioner, this represents the brokerage component and has nothing to do with the taxability of the income. In so far as objection No. (ii) is concerned, the Assessing Officer is plainly incorrect in law. Mere nondisclosure of receipt would not automatically imply escapement of income chargeable to tax from assessment. There has to be something beyond an unintentional oversight or error on the part of the assessee in not disclosing such receipt in the return of income. Even after non-disclosure, if the documents on record conclusively establish that the receipt did not give rise to any taxable income, it would not be open for the AO to reopen the assessment referring only to the non disclosure of the receipt in the return of income. AO virtually conceded to the assessee's contention that the shares of M/s. Piramal Healthcare were held by M/s. Savoy Finance and Investments Pvt Ltd for a period more than 12 months immediately preceding the date of the transfer. Having done so, he thereafter, resorts to further inquiries that may be needed during the course of assessment. As held repeatedly by this Court and other Courts, reopening of assessment cannot be based on fishing or rowing inquiries or for carrying out further investigation. If there was any prima facie material suggesting that income chargeable to tax had escaped assessment, surely, the Assessing Officer was entitled to carry out further inquiries. The documents on record would show that the assessee had submitted its computation of book profit for the purpose of Section 115JB of the Act in which under caption other income sum of ₹ 13.41 Crores (rounded off) was included for computation of such profit. Same was elaborated in Schedule 7 and pertained to profit on sale of shares. Thus, the assessee had for the purpose of computation of its book profit in terms of Section 115JB of the Act, accounted the profit arising out of the sale of share which was in any case in tune with the first proviso to Section 10(38) of the Act and corresponding provisions of Section 115JB. Department submitted that this requires examination which can be done only during the course of reassessment. We are afraid such a contention will not be valid in view of the decision of the Supreme Court in case of Apollo Tyres Ltd Vs. CIT [ 2002 (5) TMI 5 - SUPREME COURT] in which it was held that while determining the book profit under Section 115J (which is a predecessor provision to Section 115JB), the Assessing Officer cannot recompute the profit in the Profit Loss Account. It was held that the Assessing Officer cannot tinker with the audited accounts of the assessee while computing book profit under Section 115JB. Even prima facie, AO was unable to demonstrate before us on the grounds stated and the reasons recorded that income chargeable to tax had escaped assessment. His i.e. Assessing Officer's attempt of further verification would amount to rowing inquiry. There is nothing on record prima facie suggesting that the profit out of sale of shares was taxable under the normal provisions or that it was excluded for the purpose of computing book profit under Section 115JB of the Act. Under these circumstances, the impugned notice for reassessment is quashed - Decided in favour of assessee.
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2019 (6) TMI 1184
Reopening of assessment against the amalgamating company - recovery of the taxes arising out of the order of assessment - HELD THAT:- We cannot uphold the action of the Department. In plain terms, the entire assessment concerns the amalgamating company. When the notice of reopening of assessment was issued, the said company had already merged with the petitioner company. The petitioner company neither had been served with the notice of reopening of assessment, nor had any occasion to participate in such re-assessment proceedings. Obviously, therefore, the order of assessment that came to be passed pursuant to such notice, was not against the petitioner. That being the position, the Department cannot seek recovery of the taxes arising out of the order of assessment. Learned counsel for the Department however submitted that as per the scheme of amalgamation the petitioner had undertaken to discharge the liability of the amalgamating company. Had the order of assessment been passed prior to amalgamation, this clause under the scheme of amalgamation could have been activated. This is not the position in the present case. Under the circumstances, impugned notice of recovery dated 12th March, 2018 is set aside. Attachment of the petitioner's bank accounts is lifted
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2019 (6) TMI 1183
Claim of interest credited to Interest Suspense Account taxed in earlier years now written off during the year - HELD THAT:- The record would suggest that the assessee, in view of its success before the Tribunal on the issue of disallowance of interest credited to Interest Suspense Account, had not pressed the ground of appeal in the earlier year, however, clarifying that if at all such decision of the Tribunal is reversed by the High Court the assessee would be at liberty to revise the claim. This offer of the assessee was accepted by the Tribunal. On the same ground in the present year the Tribunal followed the formula of the earlier year and for such limited purpose placed the matter before the Assessing Officer. We do not find any error. No question of law therefore arises. Deduction of expenditure incurred by the assessee towards contribution to retired employees benefit scheme - whether provision of section 40A(9) of the Act which provide for deduction only for payment to approved/recognized funds as referred to section 36(1)(iv) (v)? - HELD THAT:- In case of Commissioner of Income-tax-LTU Vs. Indian Petrochemicals Corporation Limited [ 2019 (1) TMI 1364 - BOMBAY HIGH COURT] considered the case where the assessee-employer had contributed to various clubs meant for staff and family members and claimed such expenditure as deduction. Once again the revenue had resisted in the expenditure by citing section 40A(9) of the Act. This Court confirmed the view of the Tribunal and dismissed the revenue s appeal, in which the Tribunal had allowed the expenditure claimed by the assessee. Once again in case of The Principal Commissioner of Income-Tax-14 Vs. Indian Oil Corporation [ 2019 (2) TMI 1652 - BOMBAY HIGH COURT] revenue had raised such an issue when the assessee had spent certain amounts in either setting up or providing grant-in-aid made to Kendriya Vidyalaya Schools where the students of the assessee-Indian Oil Corporation would receive education. This Court referred to a judgment of Kerala High Court in case of P. Balakrishnan, Commissioner of Income-Tax Vs. Travancore Cochin Chemicals Ltd. [ 1999 (10) TMI 33 - KERALA HIGH COURT] and of the decision of this Court in case of Bharat Petroleum Corporation Limited [ 2001 (3) TMI 20 - BOMBAY HIGH COURT] held that the Tribunal had correctly allowed the assessee s claim of expenditure. In view of this discussion, this question is not entertained. Loss on revaluation of permanent category investments - HELD THAT:- As decided in assessee's own case [ 2016 (8) TMI 963 - BOMBAY HIGH COURT] the issue raised herein stands concluded against revenue and in favour of the respondent assessee by the order of this Court in CIT vs. Union Bank of India [ 2016 (2) TMI 606 - BOMBAY HIGH COURT] Disallowance u/s 80M - claim on the net of the income or gross income - HELD THAT:- This issue is squarely covered in favour of the assessee by virtue of decision of this Court in case of Commissioner of Income-tax-6 Vs. Modern Terry Towers Ltd. [ 2012 (8) TMI 776 - BOMBAY HIGH COURT] held that the principles applicable for computing deduction under Section 80HHC of the Act cannot be imported into Section 80M of the Act. As observed - The provisions of section 80HHC are entirely different from those of sections 80M and 80AA. There is no basis for importing the provisions of section 80HHC with section 80M. The same does not lead to a satisfactory computation of the net dividend under section 80M. Appeal dismissed.
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2019 (6) TMI 1182
Penalty u/s 271(1)(c) - defective show cause notice - notice issued in printed form without specifically mentioning whether the ground is 'concealment of income' or 'furnishing of inaccurate particulars' - impugned SCN is in a template and therefore, it is not clear as to whether the impugned SCN has been issued on the basis that the writ petitioner has 'concealed particulars of income' or 'furnished inaccurate particulars' of such income - HELD THAT:- Whether the impugned SCN is predicated on 'concealment of income' or 'furnishing of inaccurate particulars' and then proceed, it was submitted that the Revenue cannot be now permitted to rectify the error. In this regard, Section 292B of IT Act, which has been adverted to and which has been relied on by the Revenue counsel comes to the aid of the Revenue . There is no dispute that the impugned SCN qualifies as a notice within the meaning of Section 292B. If that be so, it cannot be held to be invalid merely by reason of mistake or defect i.e., mistake or defect of issuing it in a template and not scoring of the relevant ground and leaving out the applicable ground. If it is not a defect of scoring of the inapplicable ground it is a case of using the conjunction 'and' by scoring of 'or', if it is predicated on both grounds. If aforesaid position is clarified and thereafter the impugned SCN is carried to its logical end, it will satisfy all parameters and ingredients of NJP. This Court is reminded of the observation in Mumbai International Airport Private Limited Vs. Golden Chariot Airport and another [ 2010 (9) TMI 1153 - SUPREME COURT] where Hon'ble Supreme Court held that 'action of law is not a game of chess'' . Merely because the Revenue has made a move and there is an error in the move, there is nothing to show that no opportunity should be given to the Revenue to correct the error by issuing a corrigendum or addendum and then proceeding with the matter. After all it is not an irreversible move in a game of chess. This Court passes the following order: a) the impugned SCN being SCN dated 23.12.2016 bearing reference No.PAN:AAFCA0638J shall be kept in abeyance for a period of three weeks from the date of receipt of a copy of this order. b) within the aforesaid three weeks, second respondent shall issue a corrigendum/addendum/errata to the impugned SCN clearly setting out the ground/s on which impugned SCN w as issued i.e., as to whether it has been issued on the ground that particulars have been concealed or on the ground that inaccurate particulars of income have been furnished or both. c) aforesaid addendum/corrigendum/errata to impugned SCN shall be duly served on the writ petitioner with due acknowledgement within the aforesaid three weeks period and from the date of service, writ petitioner shall be given another three weeks time to respond to the impugned SCN read with addendum/corrigendum/errata. d) It is open to the writ petitioner to ask for the basis on which the impugned SCN is predicated and the basis on which the same has been issued and the same will be dealt with in a manner known to law. e) after receipt of response from the writ petitioner and in the event of writ petitioner choosing to opt for availing the opportunity of being heard in person, i.e., personal hearing, the same shall also be granted and the impugned SCN along with addendum/ corrigendum/ errata shall be carried to its logical end in accordance with law after adhering to all natural justice principles.
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2019 (6) TMI 1181
Existence of an alternative remedy - bar for this Court to exercise its writ jurisdiction under Article 226 of the Constitution - power of the judicial review, conferred upon the High Court under Article 226 of the Constitution of India - HELD THAT:- The High Court, while exercising jurisdiction under Article 226 of the Constitution of India, adheres to certain self-imposed limitations, and would, ordinarily, refrain from exercising its discretionary jurisdiction in cases where the aggrieved party has an efficacious alternative appellate remedy under a statute. While the jurisdiction of this Court can, undoubtedly, be invoked even against the order passed by the Assessing Authority, this Court, while exercising its discretionary jurisdiction under Article 226 of the Constitution, would ordinarily exercises self-restraint and refrain from interference where the contention urged in the Writ Petition can also be urged before the Appellate Authority under the Income Tax Act. It has not been disputed before us that the contentions urged in the Writ Petition can be urged before the Commissioner of Income Tax (Appeals) i.e. the Appellate Authority under Section 246 of the Income Tax Act. Yet another reason why we must refrain from interference is because the scope of interference in an intra-court appeal is extremely limited. Interference by a Division Bench, in an intra-court appeal, would be justified only if the order under appeal suffers from a patent illegality. The learned Single Judge is not a court subordinate. The Division Bench exercises the very same jurisdiction which the learned Single Judge exercises under Article 226 of the Constitution of India. Even in cases where two views are possible, and one of the possible views has found acceptance with the learned Single Judge, the Division Bench would refrain from interfering with the order under appeal, even if it is satisfied that a view, other than the view which found favour with the learned Single Judge, is more attractive. In the present case, the learned Single Judge has relegated the appellant-writ petitioner to avail his statutory remedy of an appeal under Section 246. It has not been contended before us that exercise of discretion by the learned Single Judge, to relegate the appellant writ petitioner to avail the appellate statutory remedy, is an order which could not have been passed, or that the Appellate Authority cannot examine the contentions now urged before us in these writ proceedings. The order under appeal does not necessitate interference. Suffice it to make it clear that neither has the learned Single Judge, nor this Division Bench, expressed any opinion on the merits of the rival contentions; and, in case the appellant-writ petitioner avails the appellate remedy under Section 246 of the Income Tax Act, the Appellate Authority [i.e. the Commissioner of Income Tax (Appeals)] shall examine the rival contentions on its merits uninfluenced by any observations made either in the order under appeal or in this order.
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2019 (6) TMI 1180
TP Adjustment - comparable selection - functional similarity - HELD THAT:- The assessee is engaged in research and development relating to software solutions. The assessee-company is a captive service provider to its US parent company. The assessee is having three units in India registered under Software Technology Park Scheme thus companies functionally dissimilar with that of assessee need to be deselected from final list. Selecting comparables turnover is an important filter. The company with exceptionally higher turnover cannot be compared with a company operating at smaller range.
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2019 (6) TMI 1179
Case selected under CASS - limited scrutiny - no permission from the superior authorities - selection of the case was made under CASS for limited scrutiny but enlarged for complete scrutiny in the absence of any permission taken from the Principal Commissioner or the Commissioner - HELD THAT:- As relying on SHASHI BHUSHAN MAJOOR, RADHE RADHE LABOUR CO. OP. SOCIETY LTD. VERSUS THE INCOME TAX OFFICER, WAD 1, JALNA [ 2019 (4) TMI 416 - ITAT PUNE] in the absence of any permission received from the Principal Commissioner or the Commissioner, find no merit in the order of Assessing Officer in making the aforesaid addition on an issue which was not the basis for selection of the case under CASS. The additional grounds of appeal raised by the assessee are thus allowed.
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2019 (6) TMI 1178
Condonation of delay - delay of 171 days - appeal has been disposed off by the CIT(A) on 08.01.2016 and assessee expired on 16.05.2016 - legal heir who filed this appeal before this Tribunal was looking after his father s health during his hospitalization caused delay in filing the present appeal - HELD THAT:- On hearing both the parties and having verified above said affidavit, we find the reasons stated in the said affidavit are bonafide which really prevented the assessee in filing the present appeal in time. Therefore, the delay of 171 days are condoned. Addition on account of undisclosed cash deposit - search and seizure operation conducted at office premises of the assessee wherein documents, books of accounts, computers, cash, jewelleries, bank accounts etc. were found and some of the documents were seized - HELD THAT:- The assessee has declared undisclosed income for AY 2009-10 is ₹ 7,91,88,956/- which is inclusive of the other receivables as discussed above to an extent of ₹ 2,89,01,000/-. Therefore, it is clear that the AO considered the other receivable as discussed above in the AY 2009-10 and it is very much part of total income of the assessee under the head undisclosed income . There is no dispute in respect of this aspect and also the payment of tax by the assessee. Further, an amount of ₹ 1,86,49,244/- as considered as income of the assessee vide revised return for ay 2010-11. In our opinion, the impugned amount is much less than the undisclosed income assessed during the two assessment years i.e. 2009-10 2-10-11 in the hands of the assessee and no separate additions on account of unexplained cash deposits requires to be made in the year under consideration. Therefore, we find force in the arguments of the Ld.AR that telescoping of the impugned amount should be telescoped with the total income computed for AYs 2009-10 2010-11. Thus, in view of the above observations, no separate addition is maintainable and the addition made by the AO and confirmed by the CIT(A) is deleted - Decided in favour of assessee.
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2019 (6) TMI 1177
Determination of value of fringe benefit - addition u/s 115WB(2)(E) of the Act denying the claim of uniform allowance - HELD THAT:- Assessee itself admitted in its fringe benefit return, the value of expenses liable to fringe benefit tax. Before the CIT(A) vide its submissions dated 09.11.2015 stated that the assessee inadvertently considered the value of expenses relating to uniform was considered as chargeable expenditure under the broad head Workmen Staff Welfare Expenses . The wearing of uniform is out of compulsion arising from employment of the assessee and it is not an option and claimed the expenses incurred for staff uniform shall be excluded from chargeable expenditure under the head Employees Welfare . CIT(A) opined that the said clothes were not protective ones and they are not uniforms and not compulsory uniform under the statute. We find that the employees uniforms have traditionally been used as a functional necessity. It is noted from the record that the assessee assumed the financial responsibility for supplying and maintaining the freshly cleaned clothing to the employees for wearing to work each day. Though they are personalized uniforms provided they are not available for employees personal use. The uniforms that are put on by the employees when they arrive at work and were taken off at the end of work. The said uniforms, it appears laundered and maintained by the assessee. It is clear that the said clothing (uniforms) are not available for general or personal wear of the employees and when the clothing is not actually used for general or personal wear, in our opinion, are not taxable under fringe benefits. There was no welfare appended to the employees of the assessee by providing uniforms. CBDT passed Circular No.8/2005 wherein it clarified to a frequently asked question. At question no.74, it was asked whether MBT is payable on expenditure incurred on providing shoes or uniform or equipments to the employees or for the purposes of reimbursement of washing charges. It was clarified to the question above that any expenditure incurred for meeting the employers statutory obligation under the Employment Standing Orders Act 1946 fall within the scope of the exclusion in the Explanation to Clause E of sub-Section 2 of Section 115WB. Therefore it is clear from above answer that the expenditure incurred on providing safety shoes or uniforms or equipments to the employees or incurred for the purposes of reimbursement of washing charges are exempted from FBT to the extent of such expenditure is incurred to meet such statutory obligation. In the present case, we find that there was no discussion by the Assessing Officer in detail in respect of the claim of the assessee under fringe benefit tax - we deem it proper to remand the matter to the file of Assessing Officer to examine the standing orders relating to assessee and assessee shall provide every detail in respect of its claim before the AO. AO considering the relevant evidence and pass order in accordance with law. Ground raised by the assessee is allowed for statistical purposes.
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2019 (6) TMI 1176
Applicability of transfer pricing provisions contained under chapter X - assessee who has opted for computation of its income under the Tonnage Tax Scheme (TTS) as provided under chapter XII G of the Act - HELD THAT:- Undisputedly, the assessee has opted for computation of its profit derived from the shipping business under TTS as provided under chapter XII G of the Act. As per section 115VE of the Act TTS will apply only if an option to that effect is made in terms of section 115VP of the Act. In the facts of the present appeal, there is no dispute that assessee has exercised its option for computation of income under TTS in terms of section 115VP of the Act and the department has also approved it. Section 115VF of the Act provides that tonnage income shall be computed in the manner provided under section 115VG of the Act. Section 115VG lays down the mode and manner of computing tonnage income. Reading of section 115VG of the Act would make it clear that the mode and manner of computing tonnage income does not depend upon the income and expenditure stated in the profit and loss account but is on the basis of net tonnage of the qualifying ship multiplied by the number of days such ship was operated during the previous year. No doubt, the Assessing Officer has computed the income of the assessee under section 115VG - Conclusion drawn by Ld. Commissioner (Appeals) with regard to applicability of TP provisions to the present assessee needs to be tested. Notably, identical dispute came up for consideration before the Tribunal in assessee s own case in assessment year 2007 08 held that the provisions of chapter X have been invoked to alter an expenditure, namely the mobilisation and demobilisation charges paid for a qualifying ship, an item which has no bearing on the income as computed under Chapter XIIG and accordingly the provisions of Chapter X have no application in computing the income of the assessee chargeable to tax as per Chapter XII-G of the Act. In our considered view, the transfer pricing regulations do not apply to the assessee to the extent of operations carried out through operating qualifying ships where the income is taxed under TTS.
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2019 (6) TMI 1175
Computation of capital gain by applying provision of section 50C(1) - non reference to the DVO to determine the value of the property sold - HELD THAT:- When the legislature has taken care to provide adequate machinery to give a fair treatment to the tax payer, there is no reason why the machinery provided by the legislature should not be used and the benefit thereof should be refused. SUNIL KUMAR AGARWAL VERSUS COMMISSIONER OF INCOME TAX, SILIGURI [ 2014 (6) TMI 13 - CALCUTTA HIGH COURT] has observed that even in a case where no request is made by the assessee to make a reference to the DVO, the AO while discharging a quasi judicial function is duty bound to act fairly by giving the assessee an option to follow the course provided by law to have the valuation made by the DVO. The assessee s case stands in a much better footing as in the course of assessment proceedings, the assessee had objected to adoption of stamp duty value as the deemed sale consideration. AO should have followed the mandate of sub section (2) of section 50C of the Act by making a reference to the DVO to determine the value of the property sold. The Assessing Officer having not done so and the learned Commissioner (Appeals) also failing to rectify the error committed by the Assessing Officer, we have no hesitation in restoring the issue to the Assessing Officer with a direction to make a reference to the DVO to determine the value of the property sold in terms of section 50C(2) of the Act and thereafter proceed to compute capital gain in accordance with law. - set aside the impugned order of learned Commissioner (Appeals) and restore the issue to the Assessing Officer for fresh adjudication in terms of our direction herein above. Grounds are allowed for statistical purposes.
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2019 (6) TMI 1174
Addition u/s 14A read with Rule 8D(2)(ii) and under rule 8D(2)(iii) - no exempt income is received or receivable during the relevant previous year - CIT(A) deleted the addition - HELD THAT:- It is an admitted fact that the assessee company has not earned any dividend income during the year in respect of investments made as per the audited accounts. Since no exempt income earned by the assessee, therefore, there should not be any disallowance on account of section 14A. The said issue of the assessee is squarely covered in the case of CIT vs. Holcim India Pvt. Ltd. [ 2014 (9) TMI 434 - DELHI HIGH COURT] wherein it was held that in the absence of any tax free income, the corresponding expenditure could not be worked out for making disallowance u/s. 14A of the Income Tax Act, 1961 In the case of Chemnivest vs. Commissioner of Income Tax-Vl, [ 2015 (9) TMI 238 - DELHI HIGH COURT] held that section 14A will not apply if no exempt income is received during the relevant previous year. Since the assessee does not have any exempt income therefore no disallowance is warranted. That being so, we decline to interfere in the order passed by the Ld. CIT(A), his order on this issue, is hereby upheld and grounds raised by the revenue is dismissed. Addition of income from other sources u/s 56(2)(viib) - allotment of shares at a price which exceeds fair market value of the share and thus violated the provisions of section 56(2)(viib) - HELD THAT:- AO has observed that the assessee company has made allotment of 6,19,000 Equity Shares @ ₹ 42/- per share during the instant year at a price which exceeds fair market value of the share and thus the provisions of section 56(2)(viib) of the Act was violated. The fair market value on the basis of book value of company as on 31.03.2013 was calculated by ld. Assessing Officer at ₹ 25.55/- per share. Revaluation reserves need not be deducted while calculating the fair market value, as per rule 11UA(2) of the I.T. Rules. Considering all no infirmity in the order passed by the CIT(A) hence we dismiss the ground raised by the revenue.
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2019 (6) TMI 1173
Deduction u/s 10B - consideration received in convertible foreign exchange which was not brought to India within six months to India - whether to be excluded from export turnover for computing the eligible deduction under section 10B - CIT(A) held that as per the provisions of section 10B(3) of the Act, assessee is eligible to claim deduction under section 10B only if the sale proceeds of the exports are received within six months from the end of the previous year or any further time granted by competent authority - HELD THAT:- As rightly pointed out by the CIT(A), the sale proceeds of exports in convertible foreign exchange were not brought to India within six months from the end of the previous year or any further time granted by competent authority in terms of section 10B - No infirmity in the order of the CIT(A) in rejecting the above ground taken by the assessee and the same is confirmed. Accordingly, this ground of appeal of the assessee is dismissed. Exclusion of exports made through sister concern from export turn over - HELD THAT:- We are inclined to dismiss this ground of appeal of the assessee by following the judgment of the Jurisdictional High Court in the case of Electronic Controls . Discharge Systems (P) Ltd [ 2011 (7) TMI 541 - KERALA HIGH COURT] if the provisions of the Special Economic Zones Act, 2005, are brought into extend the exemption on profits derived on inter-unit sale made by industries within the Export Processing Zone, the court will be re-writing the legislation which is exactly what the Tribunal has done. In fact, the unit which purchased components from the assessee must be manufacturing final products and being a unit in the Special Economic Zone will be exporting the final product, on which that unit will get exemption on the entire profits which include the value of the components supplied by the assessee. Probably the Legislature did not want duplicity in exemption on export profit. That is why inter-unit sales in the Export Processing Zone are not treated as export within the meaning of section 10A of the Income-Tax Act, no matter such transfers are treated as exports for the purpose of Customs and Excise duty exemption. When the exemption is only on actual profits derived on exports made against receipt in convertible foreign exchange, the Tribunal, in our view, has no justification to extend it to profits received on local sales within India against payment received in Indian rupees - Decided against assessee.
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Customs
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2019 (6) TMI 1234
Expiry of notification extending ADD - the matter was to put up on 21st June 2019 - Today, there is a joint request by counsel for the petitioner as well as the respondent for granting them time to place on record the gist of written submissions by Monday i.e. 24.6.2019 - HELD THAT:- At their request, matter is kept on 24.6.2019.
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2019 (6) TMI 1233
Advance License Scheme - import of copper concentrate - violation of conditions of the advance licenses - the Central Excise authorities were still of the view that a show-cause notice was required to be issued to the Company - HELD THAT:- It is seen that the appellants are issued with the show cause notice by the first respondent. Their challenge against the said show cause notice was not successful before this Court. However, they approached the Apex Court and filed Special Leave Petition challenging the order passed by this Court in refusing to interfere with the show cause notice. Though the appellants, by way of an interim relief before the Apex Court, sought for stay of further proceedings, it is seen that the Apex Court, by order dated 21.04.2017, permitted the Commissioner of Customs, Tuticorin, namely, the first respondent herein, to pass final order and keep it in a sealed cover - Thus, from the perusal of the said interim order of the Apex Court, it is evident that the first respondent can go ahead with the adjudication process and also pass the final orders and however, he has to keep such order in a sealed cover. Whether the rejection of the request made by the appellants for furnishing certain documents needs to be interfered with in these appeals? - HELD THAT:- It is not in dispute that the appellants already filed an RTI application and obtained copies of the letters, dated 13.09.2014 and 09.01.2015 sent by the Customs Department to the Central Exercise Department. They want reply filed by the Central Excise Department in response those two letters and also another letter, dated 29.04.2011 issued by the Customs Department. When it is the specific case of the first respondent that those documents sought by the appellants are not relied upon documents in the show cause notice, we failed to understand as to how the appellants are justified in making the demand in the enquiry to furnish such of those documents which are not relied upon documents by the revenue. The department cannot rely upon certain documents to proceed against the other person without furnishing copies of such documents to him, so as to enable such person to defend the enquiry effectively. At the same time, if the department has not relied on certain documents, which are sought to be furnished by the other side, certainly, there is no vested right on the person to seek such documents in the domestic enquiry/adjudicatory proceedings - The right to seek a document under the Right to Information Act cannot be equated with a right to seek a document in the domestic enquiry/adjudicatory proceedings, since both the rights are not on the same footing and on the other hand, they are on different context. Under the Right to Information Act, a person seeking certain documents need not give any reason for his requirement. However, if the documents sought under RTI application is either prohibited or exempted document as contemplated under Section 8 of the said Act, the same need not be furnished. It is stated that the appellants submitted that an RTI application for furnishing documents and that the same is pending. If that be the case, it is for the appellants to work out their remedy under the said application in a manner known to law, as this Court at this stage, is not expressing any view on that application, at it would go beyond the scope and jurisdiction of the present appeals. There is no question of law much less substantial one as raised in these appeals arises for consideration to entertain these appeals - appeal dismissed.
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2019 (6) TMI 1232
Expiry of Notification extending Anti-dumping Duty - HELD THAT:- We find substance in this matter as the arguments have been continuously going on and concluded only today. Besides, there is a request from respondent side to permit respondent no.1 to place on record the written submission. We have granted permission to respondent no.2 also to place written submission on record by 21st June 2019. In that view of the matter, casting an order and judgment may take some time therefore, it is observed that the respondent nos.1, 3 4 shall extend the anti dumping duty notification in respect of product in question at least till 9th July 2019 before the existing notification comes to an end. Put up on 21 st June 2019.
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2019 (6) TMI 1231
Imposition of penalty u/s 114 AA of Customs Act - Seizure of contraband item - HELD THAT:- As far as Revenue implication is concerned, if the penalty imposed under Section 114 AA of said Act is paid within one week from the date of receipt of a copy of this order, there will be no impediment in the order of the Appellate Authority being given effect to. In other words, there will be no impediment in redemption i.e., implementation of the order made by the third respondent viz., Appellate Authority. Penalty imposed by the Original Authority under Section 114 AA and deleted by the Appellate Authority (third respondent) which is the sole issue in the revisions shall be paid by the writ petitioner to the Customs Department within one week from the date of receipt of a copy of this order - Thereafter, i.e., on payment of penalty imposed by Original Authority under Section 114 AA of said Act, respondents 1 and 2, more particularly, respondent No.2 shall implement (notwithstanding pendency of Revision) the order of the third respondent made in appeals i.e., by permitting redemption on payment of redemption fine as reduced by the Appellate Authority within a fortnight there from. Petition disposed off.
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2019 (6) TMI 1230
Imposition of penalties on CHA under the provisions of Regulations 22 of CBLR, 2013 - misdeclaration, misclassification and under valuation of imported goods - wireless Point of Sale Devices (POS) - Mobile Point of Sale Device (MPOS) - Department is of the opinion that the product (MPOS) has been imported by M/s.Pax Technology India Pvt. Ltd. and cleared through the Customs broker, M/s. Rubal Logistics Pvt. Ltd. - HELD THAT:- From the Order-in-Original, it is observed that the adjudicating authority has gone into the details of the statements of all concerned recorded at the stage of investigation. Not only this, the authority has perused the Master Distribution Agreement of M/s. Pax Technology India Pvt. Ltd. and has observed that the soft-ware license was an integral part of the devices without which the impugned devices could not be operated and that the value of soft ware license fee has to be included in the total value of the devices. Based on these observations that the impugned goods were held to be misclassified and misvalued/ misdeclared. However, as far as the role of the appellant is concerned, it is observed by the adjudicating authority that he bonafidely believed about the changed invoice to be the correct one. The CHA is rather observed to have complied with the formalities as that of KYC documentation. It is in view whereof that his license has not been revoked. However, the penalty has been imposed under 11 (d), (e) (m) of CBLR, 2013. The provisions under 11 (d), (e) (m) of CBLR, 2013 require the Customs Broker to exercise due diligence to ascertain the correctness of any information and to advice the client accordingly. Though the CHA was accepted as having no mensrea of the noticed mis-declaration /under- valuation or mis-quantification but from his own statement acknowledging the negligence on his part to properly ensure the same, we are of the opinion that CH definitely has committed violation of the above mentioned Regulations. These Regulations caused a mandatory duty upon the CHA, who is an important link between the Customs Authorities and the importer/exporter. Any dereliction/lack of due diligence since has caused the Exchequer loss in terms of evasion of Customs Duty, the original adjudicating authority has rightly imposed the penalty upon the appellant herein. Appeal dismissed - decided against appellant.
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2019 (6) TMI 1229
Principles of natural justice - cross-examination of the persons denied whose statements were relied upon for issuance of said show cause notice - recording of voluntary statements - reliability on the statements - Misdeclaration of value of imported goods - 14 inch colour picture tube - HELD THAT:- Revenue did not have any evidence to corroborate with the voluntary statements. It is settled principal of law that the assessment of Bill of Entry is an adjudication order and if within the period provided under customs act appeal before Jurisdictional Commissioner (Appeals) is not filed then the assessment becomes final and such final assessment cannot be reopened - In the present case the assessment were made during the period from May 2010 to January 2011 and after the appeal period of around three months were over the said assessment became final and therefore through the said show cause notice dated 29 May, 2015 the said assessments were not open for reassessment. Time Limitation - HELD THAT:- The assessment were finalized during May 2010 to January 2011 and all the information required for assessment was provided by the appellant and therefore the allegation of suppression of fact made on 29 May, 2015 are not sustainable. Therefore, the proceedings are hit by limitation. Appeal allowed - decided in favor of appellant.
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2019 (6) TMI 1207
Classification of imported goods - Computer with CPU, ICB, Mouse Monitor - whether classified under CTH 84713010 or otherwise? - HELD THAT:- The imported goods are definitely in category of portable computers. We do not find any support to the contentions raised by the appellant from the technical literature put forth by them. Neither in the entire literature referred to by the appellants it is brought out that the portable computers are only limited to laptops and notebooks. Appellants have in their appeal memo agreed with the order of the Commissioner (Appeal) to the extent of rejecting the classification claimed by them in Bill of Entry under CTH 8471 50 00. Appellants have in their appeal memo claimed alternate classification under CTH 8471 49 00 - As per the above referred sub heading note, for the item to classified as a system, the items should be segregated as at least a central processing unit, one input unit and one output unit. It is admitted position by the appellants that in their case CPU and Output Unit (Visual Display Unit) are integrated into one - there are no merits in the said submission of the appellants. Since the imported goods satisfy all the terms and conditions for classification under heading 847130, there are no fault/ error in the classification as determined by the adjudicating authority and the appellate authority. Appeal dismissed - decided against appellant.
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Corporate Laws
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2019 (6) TMI 1197
Jurisdiction to entertain an application from a creditor of the company - scope of Insolvency and Bankruptcy Code - HELD THAT:- Mr. Sakya Sen, learned Advocate appearing in support of the application being CA 103 of 2019, which is essentially an application for leave under Section 446 of the Companies Act, 1956, intends to move the said application. The final orders in the application being CA 92 of 2019, which relates to the jurisdiction of this Court to proceed with the CP 1 of 2016 is not yet passed. C.A. No. 103 of 2019 is adjourned till CA 92 of 2019 is heard and finally disposed of - Let all these applications along with CP 1 of 2016 appear on 21st June, 2019.
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Insolvency & Bankruptcy
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2019 (6) TMI 1196
Initiation of Corporate Insolvency resolution process - section 7 of Insolvency Bankruptcy Code, 2016 - default in payment of outstanding dues - HELD THAT:- In the absence of any representation from the Corporate Debtor even after providing sufficient opportunity for the same, it is not incorrect to say that the Corporate Debtor does not have anything in its defence, therefore, admits its liability. The Application under sub-section (2) of Section 7 of I B Code, 2016 is complete. The existing financial debt of more than rupees one lakh against the corporate debtor and its default is also proved. Accordingly, the petition filed under section 7 of the I B Code for initiation of corporate insolvency resolution process against the corporate debtor deserves to be admitted. Petition admitted - moratorium declared.
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2019 (6) TMI 1195
Initiation of Corporate Insolvency Resolution Process - Existence of disputes regarding payments - section 9 of the Insolvency and Bankruptcy Code 2016 - It is the contention of the Operational Creditor that they have delivered the goods of the Corporate Debtor to the specified destination as per the instructions and after the delivery it has raised invoices. However, the Corporate Debtor failed to rnake the payments - The Corporate Debtor contended that they have cleared all the bills in respect of the Operational Creditor and they have not utilized the services of the Operational Creditor to supply as claimed by them. HELD THAT:- It is well settled principle of Law that, as long as there exist a real dispute as to payment between the parties and such existence of a dispute is a ground for rejecting the Petition under Section 9 of the 1B Code. In the present case the Adjudicating Authority having satisfied with the submissions put forth by the Corporate Debtor, that there is a pre- existing dispute, held that the Petition filed under section 9 of the 1B Code is not maintainable and the same is not admitted, consequently the Petition is dismissed.
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PMLA
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2019 (6) TMI 1228
Attachment of property under PMLA - scheduled offences - main allegation against the appellant is that alienation of the land to the extent of 231.09 acres was done in favour of the appellant and the M/s Pioneer Infrastructure Holding Ltd, in lieu of the aforesaid alienation, made quid pro quo investment ₹ 53,00,00,000/- in M/s Caramel Asia Holding Pvt. Ltd. and M/s Jagati Publication Pvt. Ltd., which are the companies of Sh. Y.S. Jagan Mohan Reddy - HELD THAT:- In view of the amendment inserted by Act of 13/2018, which is applicable w.e.f. 19.4.2018 where in the 2nd proviso, it is allowed to party to claim the restoration of the said property during the trial by moving the said application, if so required, if the appellant has acted in good faith, would be able to satisfy the Special Court that the appellant is suffering irreparable loss if the claim of the appellant is not allowed. Being an independent Statute as claim by the respondent, an independent and impartial evidence is to be traced against the person concerned who is stated to be involved in money laundering. Merely on the basis of allegations the respondent with evidence can not attach any property by passing provisional attachment order unless there are reason to believe that the impugned property is definitely involved in money laundering within the meaning of Section 2(1)(u) read with Section 3 of the Act - Reason to believe is not a formality but it should akin to prima facie findings that the person concerned is positively involved in money laundering. The provisional attachment order can only be passed if such exercise is done within the four corners of settled law. The meaning of proceeds of crime is any property derived or obtained directly or indirectly as a result of criminal activities relating to a schedule offense. The provisions of Section 5 and 8 of PMLA are not exactly similar but principles and intend to incorporate the said provision to some are the guiding factors. The manner in which the provisional attachment order was passed and confirmation thereof in the impugned order, the same cannot continue by attaching commercial properties where the future and career of hundred of employees are involved with regard to commercial properties, the value of the property can be secured by depositing the same with the respondent till the final order is passed by the Special Court. Appeal allowed in part.
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2019 (6) TMI 1206
Offence under PMLA - attachment of property involved in money laundering - connection with the allegation of crime committed by the borrowers and other persons concerned involved for the offences of money-laundering - commission of offence under Section 420, 467, 468, 471 r/w 120-B of IPC and Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988 - HELD THAT:- Since the action taken by the Bank of India was in accordance with law and was prior to the proceedings initiated under PMLA Act, the proceedings initiated by the Bank of India under the Code is ought to be given precedence over the proceedings initiated under PMLA Act in respect of the aforementioned properties - The said position has been clarified by the Hon ble High Court of Delhi in the matter of THE DEPUTY DIRECTOR DIRECTORATE OF ENFORCEMENT DELHI, UNION OF INDIA VERSUS AXIS BANK ORS., STATE BANK OF INDIA ORS. IDBI BANK LTD., PUNJAB NATIONAL BANK [ 2019 (4) TMI 250 - DELHI HIGH COURT] wherein it was held that the directions of such attachment under PMLA shall be valid and operative subject to satisfaction of the charge or encumbrance of such third party and restricted to such part of the value of the property as is in excess of the claim of the said third party. The rights of Appellant Bank being the secured creditor would survive in spite of the order of the attachment under PMLA remains operative. Therefore, the Appellant being the lawful mortgagee/transferee of the interest in the Subject Properties are entitled to recover its dues with the sale of the Subject Properties. The acquisition of such interest cannot be presumed to have been created with mala fide intent to defeat and/ or frustrate the proceeding under the PMLA Act and hence the said properties can be held to be tainted property . Since in the present case, the bona fide third party claimant, secured creditor, had initiated action in accordance with law for enforcement of interest prior to the order of attachment under PMLA, the PMLA attachment takes a back seat allowing the secured creditor to enforce its claim and only the remainder to be made available for purposes of PMLA. The properties in the present case are thus not liable to be attached even as alternative attachable property . In the present case once it has been showed by the Bank of India that proper due diligence was conducted before the properties/ assets were mortgaged to them, the properties thus cannot be attached, neither as a tainted property nor as alternative attachable property since it is nobody`s case that the secured creditor had not done the due diligence and/or the transactions were not legitimate. This Tribunal is of the considered opinion that the proceeding u/s 8 of PMLA,2002 before the Adjudicating Authority is a civil proceeding and the Adjudicating Authority should have stayed the proceedings on passing of the moratorium order by the NCLT. The continuation of the proceedings from the date of commencement of the moratorium order is contrary to the intention of the legislature hence the consequential order of confirmation of PAO is contrary to law - In the facts of the present case, it appears that hurdle has been created in the process after passing the order of NCLT which ought not to have been done. The question of registering ECIR does not arise. The passing of provisional attachment order was not application of mind and without consulting the facts and law. The period of continuation of proceedings before the Adjudicating Authority, PMLA, and before this Tribunal till the passing of the present judgment and order, from the date of commencement of the moratorium order, be treated as excluded while calculating limitation of the period of completion of the Corporate Insolvency Resolution Process. Appeal allowed - decided in favor of appellant.
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Service Tax
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2019 (6) TMI 1205
Alternative remedy of appeal - Jurisdiction - principles of natural justice - Refund of service tax paid - 39/2012-S.T. dated 20.12.2018 being a notification issued by the Central Government in exercise of powers under Rule 6A of Service Tax Rules, 1994 - denial of refund on the ground that the writ petitioner has not complied with the conditions mentioned in the notification - penalty - HELD THAT:- In the instant case, it is nobody's case that impugned orders have been passed without jurisdiction. It is also not anybody's case that impugned orders have been passed in violation of NJP - It is certainly nobody's case that the aforesaid alternate remedy by way of an appeal to the Commissioner (Appeals-II) available to the writ petitioner is either ineffectual or not efficacious. This Court is of the considered view that writ petitioner has not made out a case for interfering with the impugned orders in writ jurisdiction on the teeth of an available alternate remedy more so when alternate remedy is in the form of an appeal - the grounds that are being canvassed turn on facts i.e., factual disputes and therefore, this Court is of the considered view that it would be appropriate to relegate the writ petitioner to the aforementioned alternate remedy. This being a case of fiscal law and the question turning on factual disputes, this Court considers it appropriate to dispose of the writ petition holding that it is open to the writ petitioner to file an appeal before the aforesaid appellate authority assailing the impugned orders - Petition disposed off.
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2019 (6) TMI 1204
Erection, Commissioning and Installation Services - it is alleged that the appellants have intentionally vivisected the contract into material and labour portions in order to evade payment of Service tax - demand of service tax - HELD THAT:- For the period prior to 01.06.2007, the demand of Service Tax for such composite contracts cannot sustain as per the decision of the Hon ble Supreme Court in the case of M/s. Larsen Toubro Ltd. [ 2015 (8) TMI 749 - SUPREME COURT ]. For the period post 01.06.2007, it is seen that though the demand is made in the Show Cause Notice under Erection, Commissioning and Installation Service and the adjudicating authority has also confirmed the demand under Erection, Commissioning and Installation Service. However, the Commissioner (Appeals) has travelled beyond the Show Cause Notice to confirm the demand under Works Contract Service - Furthermore, in the decision of M/s. Real Value Promoters Ltd. [ 2018 (9) TMI 1149 - CESTAT CHENNAI ], the Tribunal has held that the demand of Service Tax under Erection, Commissioning and Installation Services cannot sustain for composite contracts for the period post 01.06.2007 - Thus the demand of Service Tax under Erection, Commissioning and Installation Services/Works Contract Services cannot sustain and requires to be set aside. Co-consultancy Services - it is alleged that the appellant has not paid the Service Tax for the services rendered as Co-Consultant to the Principal Consultant viz., M/s. Jayaram Consultancy - Extended period of limitation - HELD THAT:- The issue being an interpretational one as also being mired in litigations during the relevant period, the allegation that the appellant has suppressed facts with intention to evade payment of Service Tax cannot sustain and requires to be set aside - the demand under Co-consultancy Services is barred by limitation and is set aside. Appeal allowed - decided in favor of appellant.
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2019 (6) TMI 1194
Permission to withdraw appeal - monetary amount involved in the appeal - HELD THAT:- The refund amounts involved in the three sets of appeal are less than ₹ 20 lacs, at the time of filing of the appeals - appeal dismissed as withdrawn with liberty as prayed.
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2019 (6) TMI 1193
CENVAT Credit - input services - service tax paid on Commercial or Industrial Construction Services by the sub-contractors - denial of credit on the ground that with the amendment of the definition of Input Service with effect from 01/04/2011, the Commercial or Industrial Construction Services stand excluded - extended period of limitation - HELD THAT:- The input services stand defined with inclusion clause as also exclusion clause. Admittedly the appellant is covered by the main blanket definition of input service in so far as he is utilizing the services of the sub-contractor for providing output services. Revenue‟s reliance is on the exclusion clause. As per the said exclusion clause, certain services stand specified in clause (A) of the said exclusion, which would not be available for availing Cenvat credit, if the same are used for certain specified output services. However, the said exclusion clause does not stop there. There is further exception to the effect that such exclusion would not apply if the specified services are used for providing one or more of the specified services - This leads to a clear interpretation that if any of the specified excluded services stand utilized for providing one or more of the specified services, the exclusion would not apply. A s per the settled principle of law, no word in the legislation has to be ignored. We cannot shut our eyes to the expression except for the provisions of one or more of the specified services appearing in the said exclusion clause. The second exception carved out in the first exception leads to make two negatives as positive and it has to be interpreted as the construction services used for further construction services have to be treated as an eligible input services - thus the services of the sub-contractors utilized for their output services of construction of power plant would be an admissible Cenvatable services. Extended period of limitation - HELD THAT:- The appellant being a Public Sector Undertakings cannot be saddled with any mala fide so as to justifiably invoke the longer period of limitation - the demand being barred by limitation is also liable to be set aside. Appeal allowed - decided in favor of appellant.
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Central Excise
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2019 (6) TMI 1203
CENVAT Credit - input services - Outdoor Catering Services - period post 01.04.2011, when amendment in the definition of input services was carried out - situation post introduction of negative list regime after 01.07.2012 - authorities below have disallowed the credit availed on Outdoor Catering Services stating the reason that these services are for personal consumption and excluded as per the definition of input service . HELD THAT:- In the present case, the disputed period is entirely after 01.07.2012. The definition of input service underwent an amendment with effect from 01.04.2011, which has already been reproduced in the contentions of the appellant as above. In Clause (A) of the said exclusions, it does not mention Sub-Clause (zzt) which is for taxable services provided under Outdoor Catering Services. The Ld. Counsels are correct in their assertion that the specific exclusion contained in Clause (A) does not take within its ambit the Outdoor Catering Services - However, the exclusion is brought forth in Clause (C) wherein it is stated that services provided in relation to outdoor catering are excluded when such services are used primarily for personal use or consumption of any employee. In the case of M/s. Wipro Ltd. [2018 (4) TMI 149 - CESTAT BANGALORE] , the Larger Bench took the view that after 01.04.2011, Outdoor Catering Services were excluded from the definition of input services - Though I am persuaded by the arguments that food supply services to a factory under the Factories Act cannot be considered as services for personal consumption of employees, I am bound by the decision of the Larger Bench of the Tribunal in the case of M/s. Wipro Ltd. - credit is ineligible Penalties - HELD THAT:- The situation being interpretational one, the penalties imposed are unwarranted - penalties set aside. The impugned orders are modified to the extent of setting aside the penalties imposed without disturbing the demand or interest thereon - appeal allowed in part.
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2019 (6) TMI 1192
CENVAT Credit - clean energy cess levied on coal, peat and lignite vide Finance Act, 2010 - Department was of the opinion that this is not the amount permissible under Rule 3 of Cenvat Credit Rules, 2004 - HELD THAT:- The cess was collected, irrespective of being nomenclated as excise duty, but for the specific purpose of funding the clean energy initiatives and for any other purpose in relation thereto. Thus, it becomes clear that the cess was not for the use of general public as such irrespective it was deposited into the Consolidated Fund of India. Also, it was not to be distributed to the States but was to be utilised by the Union Government for a particular section and a particular purpose. Thus, it becomes clear that the impugned cess, irrespective of its nomenclature, was not at all the duty of excise or tax but was a fee. Rule 3 of CCR, 2004 is applicable only when it is established that what is paid is excise duty or in other words a tax and it is in that case only that the assessee is entitled to cenvat credit. Clean Energy Cess in the present case is not actually a duty, it is an additional amount as that of a fee for a specific purpose that Section 3, CCR,2004 will not be applicable. Otherwise also, Section 3 applies only to the duty of excise specified either in First Schedule to Excise Tariff Act or the Second Schedule thereto. In addition to other additional duties, as mentioned in Clause (iii) to (vii) as discussed. CEC does not fall in any of those sub-Clauses. Thus, the clean energy cess being actually in the nature of fee and not tax/ excise duty that the appellant is not entitled for availing cenvat credit thereupon - appeal dismissed - decided against appellant.
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2019 (6) TMI 1191
Clandestine removal - MS Ingots - shortage of stock and finished goods - demand based on third party evidences - HELD THAT:- Since the sole challenge to the order is its reliance upon third party evidence, it is necessary to check the evidentiary value of the third party evidence. There is no other evidence or document in the form of stock verification of the raw-material of the appellant and the material supplied to M/s. PIL nor any evidence about usage of any transportation by the appellants for transporting the alleged quantity of raw-material to M/s.PIL. In absence thereof the documents recovered from M/s.PIL cannot be held against the appellant. The order confirming the recovery has no legal basis to sustain - appeal allowed - decided in favor of appellant.
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2019 (6) TMI 1190
Clandestine removal - confiscated goods - whether sale took place or not - HELD THAT:- There were no evidences to establish that the confiscated goods were cleared by the appellant without payment of duty and therefore the duty liability cannot be fastened on the appellant - demand set aside - penalties also set aside - appeal allowed - decided in favor of appellant.
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2019 (6) TMI 1189
Levy of Excise duty - parts used in repair of old cylinders - appellant were paying the service tax on the same while Revenue entertained a view that the appellant should have paid the excise duty on various parts which were being consumed by them captively in the repair of the Cylinders - Revenue neutrality - HELD THAT:- The excise duty payable by the appellant was available as credit to them, thus again leading to a Revenue neutral situation. Inasmuch as the appellant in the present case also has paid the service tax which is more or less equivalent to the excise duty required to be paid by them, there is no justification for upholding the duty of excise and observe that the service tax paid by them is required to be adjusting towards the excise duty now confirmed against them. Extended period of limitation - HELD THAT:- The appellant was paying service tax and was filing ST-3 returns which were not being objected by the Revenue. No case of suppression or misstatement can be made out against the assessee so as to invoke the longer period of limitation. Appeal allowed - decided in favor of appellant.
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2019 (6) TMI 1188
Benefit of N/N. 42/2001-CE(NT) - Duty free procurement of capital goods for erection of a Thermal Power Plant in Syria - exemption is allowed subject to fulfillment of condition that such duty free procured material would be exported by the assessee within a period of six months from the date of procurement of the goods or within such extended period as the appellant s jurisdictional Central Excise Authorities may allow - the ultimate request to extend the period stands rejected by the Assistant Commissioner and the benefit stands denied to them - HELD THAT:- The ultimate request to extend the period stands rejected by the Assistant Commissioner vide his letter dated 23/02/2015 which has admittedly not been challenged by the appellant. As such the same has attained finality. Result and consequence of the same is as if there is no such extension order available on record as on date. If there is no extension having been granted by the Authorities, in terms of the provisions of Notification No.42/2001-CE(NT), condition of the said Notification stands violated - the confirmation of the demand is only as a consequence of the earlier proceedings of rejection of extension, which issue cannot be agitated before the Tribunal at this stage. Demand alongwith interest upheld - penalty is waived on the ground that export could not take place due to bona fide reasons -- appeal allowed in part.
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CST, VAT & Sales Tax
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2019 (6) TMI 1202
Classification of imported goods - Multifunction Printers having the additional functions of Photo copying, Scanning, Fax etc. - HELD THAT:- The classification of MFDs is settled for good. There is no disputation before this Court that the aforesaid clarification / order of the Advance Ruling Authority dated 02.09.2014 is now governing the field. If that be the case, in the absence of any disputation that the relevant list i.e., the list of Information Technology products as notified by the Government vide Notification No.II(1) / CTR / (a-6) / 2007 in G.O.Ms.No.3, CT R(B1) Department dated 1st January 2007, does not make any distinction between old / used and new products as far as MFDs are concerned, it follows as an inevitable and indisputable sequitur that the impugned order deserves to be set aside and therefore, the impugned order is set aside insofar as it is misread the clarification, Ruling of the Advance Ruling Authority dated 02.09.2014. The respondent is directed to redo the assessment obviously in the light of the clarification / order of the Advance Ruling Authority dated 02.09.2014 bearing in mind that there is no distinction between old / used products and new products as far as MFDs, which find place in Entry namely Serial No.68 in Part-B of First Schedule read with Item 22(a) in the List of Information Technology Products are concerned - Petition disposed off.
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2019 (6) TMI 1201
Principles of natural justice - validity of assessment order - TNVAT Act - assessment without notice - HELD THAT:- Without expressing any opinion on whether the impugned orders are consequent upon the assessment orders made under CST Act, this Court is of the considered view that it cannot be gainsaid that it is not necessary to give notice and opportunity to the writ petitioner assessee before making an assessment under TNVAT Act particularly when there has only been deemed assessment thus far under Section 22(2) of TNVAT Act. It therefore follows as an inevitable sequitur that the impugned orders deserve to be set aside solely on the ground of violation of NJP. The respondent shall redo the assessments by issuing a fresh notices to the writ petitioner assessee - petition allowed by way 0f remand.
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2019 (6) TMI 1187
Alternative remedy of appeal - Jurisdiction - principles of natural justice - cancellation of registration certificate - HELD THAT:- In the instant case, in the considered view of this Court, in the light of the submissions of the writ petitioner, which have been set out and alluded to supra, the writ petitioner has not been able to make out a case to show that his case falls under any of the exceptions which would compell this Court to interfere under writ jurisdiction notwithstanding the alternate remedy. There is no ground to persuade this Court to believe that there is violation of NJP. The writ petitioner, not being able to demonstrate that alternate remedy is neither ineffectual or not efficacious, in the considered opinion of this Court need not have embarked upon the exercise of making repeated submissions which assail impugned order on merits. To be noted, submissions assailing impugned order on merits are left open, as already mentioned supra elsewhere in this order, as this Court is relegating the writ petitioner to the alternate remedy of appeal. Petition dismissed.
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2019 (6) TMI 1186
Recovery of the demand made pursuant to the assessment orders - demand in respect of years 2014-15, 2015-16 and 2016-17 - petitioner contends that the aforesaid assessment orders are under challenge in statutory first appeals before the second respondent and if coercive steps are taken to realise the tax in the meanwhile, the petitioner will be put to untold hardship - HELD THAT:- In the facts of the case, the writ petition is disposed of directing the third respondent to consider Exts.P3, P3A and P3B stay petitions in accordance with law, within a period of one month. Till the third respondent takes decisions on Exts.P3, P3A and P3B, coercive proceedings, if any, initiated against the petitioner will be kept in abeyance.
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Wealth tax
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2019 (6) TMI 1200
Reopening of assessment - escapement of wealth - reopening the assessment are based on DVO s report - HELD THAT:- DVO s report is not for the year under consideration and secondly, order of Commissioner under section 25(2) of the Act was in exercise of power for assessment year 2002-03. We find merit in the plea of assessee that the report of DVO is not for the relevant years which have been reopened under section 17(1) of the Act. In any case, in the reasons recorded reference is made to valuation as on 31.03.2001, whereas the DVO had valued the property upto 31.03.2003. AO has not applied the last valuation completed in the case of assessee i.e. on 31.03.2003 at ₹ 26.35 crores, but has referred to DVO s value as on 31.03.2001 at ₹ 16.33 crores, being the basis for reopening the assessment. We find no merit in the exercise of jurisdiction by AO in this regard. It cannot be said that reopening of assessment in the hands of assessee is not based on DVO s report. Though reference is made to order of Commissioner under section 25(2) of the Act, but the basis for passing aforesaid order was also DVO s report, wherein the Assessing Officer had made reference to valuation of asset during the course of assessment proceedings, but no such valuation report was received and on a later date, order of revision was passed by Commissioner. Applying the ratio laid down in ACIT Vs. Dhariya Construction Company [ 2010 (2) TMI 612 - SC ORDER] we hold that reasons recorded for reopening the assessment cannot stand as the Assessing Officer had failed to apply his mind to the information collected, if any, and has failed to form a belief vis- -vis reasons recorded for the relevant assessment years. re-assessment proceedings initiated in the case of assessee are without any basis and the consequent order passed under section 16(3) r.w.s. 17(1) of the Act do not stand - Decided in favour of assessee.
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2019 (6) TMI 1199
Wealth-tax assessment - certain assets can be excluded from the net wealth of the assessee - HELD THAT:- When a non-taxable income by mistake is disclosed in the return of income, the same cannot be assessed to tax. The asset not belonging to the assessee or asset which are to be excluded from the net wealth of the assessee cannot be brought to the net wealth for the purpose of Wealth-tax Act though the same has been disclosed by the assessee in the return of wealth by mistake. When the assessee realizes his mistake, certainly the assessee can retract his mistake and raise the contention before the appellate authority that the assets disclosed in the return of net wealth cannot be included in the net wealth for the purpose of wealth-tax assessment. Similar view was held in the case of Raghavan Nair v. ACIT Anr. [ 2018 (1) TMI 863 - KERALA HIGH COURT] We are of the view that the matter needs to be considered by the Wealth-tax Officer. WTO shall examine the documents and come to a conclusion whether the claim of the assessee that certain assets should be excluded from the net wealth of the assessee for the Wealth-tax assessment. For the above said exercise, the entire issues raised in these appeals are restored to the Wealth-tax Officer. The assessee shall co-operative with the Wealth-tax Officer and prove his case whether assets needs to be excluded from the net asset of the assessee for the wealth-tax assessment - Appeals filed by the assessee are allowed for statistical purposes.
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Indian Laws
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2019 (6) TMI 1198
Jurisdiction - Appeal to Appellate Tribunal - SARFAESI Act - default in making repayment of loan - whether the order dated 13th January, 2014 passed by the Debts Recovery Appellate Tribunal on merits of the appeal in violation of second and third provisos below Sub-section (1) of Section 18 of the Securitisation Reconstruction of Financial Assets Enforcement of Security Interest Act, 2002, becomes non-est for lack in inherent jurisdiction? HELD THAT:- In the present case, there is already an adjudication by this Court rendered in Writ Petition No. 5005 of 2012 on 9th March, 2015 to which the petitioner and the respondents in the present case were parties. The question involved was whether the Debts Recovery Appellate Tribunal had jurisdiction to grant a complete waiver of pre-deposit. After taking into consideration the decision of the Apex Court in Narayan Chandra Ghose v. UCO Bank [ 2011 (3) TMI 1478 - SUPREME COURT ], this Court has held that though a discretionary power has been conferred on the Debts Recovery Appellate Tribunal under third proviso to Sub-section (1) of Section 18 to determine the amount of deposit as a pre-condition for entertaining the appeal, the discretion is not an absolute one, but a limited one, and the Tribunal is not competent to reduce the amount of deposit below twenty-five per cent of the debt. The Court held that Debts Recovery Appellate Tribunal has misguided itself on the clear mandate of law and wrongly granted complete waiver of pre-deposit of the amount. Thus the second proviso below sub-section (1) of Section 18 of the Securitisation Reconstruction of Financial Assets Enforcement of Security Interest Act, 2002, is of a mandatory nature. The Debts Recovery Appellate Tribunal does not get its jurisdiction to decide the appeal on merits unless there is a compliance of requirement of at least third proviso below Sub-section (1) of Section 18. If there is a failure to comply with such requirement, the appeal itself becomes incompetent, leaving no jurisdiction with the Debts Recovery Appellate Tribunal to consider and decide it on merits. It is not an error in exercise of the jurisdiction but the Debts Recovery Appellate Tribunal was suffering from inherent lack of jurisdiction to decide the appeal on merits. The decision of the Debts Recovery Appellate Tribunal rendered on 13th January, 2014 in Appeal No. 135 of 2011 on merits of the matter cannot be sustained and the same is required to be quashed and set aside - petition allowed - decided in favor of petitioner.
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