TMI Tax Updates - e-Newsletter
July 2, 2020
Case Laws in this Newsletter:
GST
Income Tax
Customs
Securities / SEBI
Insolvency & Bankruptcy
Service Tax
CST, VAT & Sales Tax
Highlights / Catch Notes
GST
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Bogus billing transactions without any physical movement of the goods - Vires of Rule 142(1)(a) of CGST/GGST Rules - validity of SCN - Rule 142(1)(a) of the Rules, 2017 is valid and is no manner conflict with any of the provisions of the Act.
Income Tax
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Additions based on TDS certificate - Difference between gross receipts declared by the assessee and that was shown in form 26AS - the A.O. should have made necessary enquiries from the parties who had deducted TDS and should have taken decision accordingly.
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TDS u/s 194C OR 195 - Shipping Expenses on account of non deduction of TDS u/s 40(a)(ia) - the area of operation of TDS is confined to payments made to any "resident". On the other hand, section 172 operates in the area of computation of profits from shipping business of non-residents. Thus, there is no overlapping in the areas of operation of these sections.
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Disallowance towards travelling expenses - Allowable business expenditure or personal expenditure - Being a PSU and under aegis of GOI, there cannot be an element of personal use of the company and therefore, such ad-hoc disallowance cannot be made and same is directed to be deleted
Service Tax
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Classification of services - works contract services or not - whether the construction of associated facilities like toll plaza, cattle and pedestrian crossing facilities, parking bays for buses/trucks and rest room for staff, etc. and common people, are part of the road (exempt) or are liable to service tax under the head ‘works contract service’? - Benefit of exemption available.
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Reversal of Cenvat Credit - Input Services - the learned Commissioner has erred in holding that banking and financial services, credit rating services are not used for providing output services; such services are required to raise funds, which is essential to carry out the business of the appellant and hence the same is held to be eligible service.
Articles
Notifications
Customs-
54/2020 - dated
30-6-2020
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Cus (NT)
Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Silver
GST-
57/2020 - dated
30-6-2020
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CGST
Seeks to amend Notification No. 76/2018–Central Tax, dated the 31st December, 2018
GST - States-
54/2020-State Tax - dated
30-6-2020
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Gujarat SGST
Extension in due date of FORM GSTR-3B for supply made in the month of August 2020 for taxpayers with annual turnover up to ₹ 5 crore
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56/2020-State Tax - dated
29-6-2020
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Gujarat SGST
Amendment in Notification No.46 2020-ST to further extend period to pass order under Section 54(7) of GGST Act
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55/2020-State Tax - dated
29-6-2020
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Gujarat SGST
Amendment in Notification No 35-2020-ST to extend due date of compliance which falls during the period from 20.03.2020 to 30.08.2020 till 31.08.2020
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53/2020-State Tax - dated
29-6-2020
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Gujarat SGST
Waiver of late fees for FORM GSTR-1 for tax periods for March, 2020 to June, 2020 for monthly filers and for January, 2020 to June, 2020 for quarterly filers
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52/2020-State Tax - dated
29-6-2020
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Gujarat SGST
Lowering waiving of late fees for FORM GSTR-3B from July, 2017 to January, 2020 and conditional waiver of late fees for FORM GSTR-3B for February, 2020 to July, 2020.
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51/2020-State Tax - dated
29-6-2020
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Gujarat SGST
Provides relief by lowering of interest rate for a prescribed time for tax periods from February, 2020 to July, 2020
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50/2020-State Tax - dated
29-6-2020
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Gujarat SGST
Gujarat Goods and Services Tax (Seventh Amendment) Rules, 2020
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53/GST-2 - dated
30-6-2020
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Haryana SGST
Notification to extend due date for furnishing FORM GSTR-3B for supply made in the month of August, 2020 for taxpayers with annual turnover up to ₹ 5 crore under the HGST Act, 2017
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52/GST-2 - dated
30-6-2020
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Haryana SGST
Notification to amend Notification No. 43/GST-2, dated 07.05.2020 in respect of extension of validity of e-way bill generated on or before 24.03.2020 (whose validity has expired on or after 20th day of March 2020) till the 30th day of June under the HGST Act, 2017
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51/GST-2 - dated
30-6-2020
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Haryana SGST
Notification under section 164 to give effect to the provisions of rule 87 (13) and FORM GST PMT-09 of the HGST Rules, 2017 under the HGST Act, 2017
Income Tax-
42/2020 - dated
30-6-2020
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IT
Income-tax (15th Amendment) Rules, 2020
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41/2020 - dated
30-6-2020
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IT
Conditions specified in clauses (e), (f) and (g) of Section 9A(3) shall not apply in case of an investment fund set up by a Category-I foreign portfolio investor registered under the SEBI (Foreign Portfolio Investors) Regulations, 2019, made under the SEBI Act, 1992
Insolvency and Bankruptcy-
IBBI/2020-21/GN/REG061 - dated
30-6-2020
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IBC
Insolvency and Bankruptcy Board of India (Insolvency Professionals) (Second Amendment) Regulations, 2020.
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2020 (7) TMI 24
Bogus billing transactions without any physical movement of the goods - Vires of Rule 142(1)(a) of CGST/GGST Rules - validity of SCN issued by the respondent No.1 under Section 122(1) of CGST Act - HELD THAT:- Section 164 of the Act which provides for the power to make rules. It may be noted that Section 164 of the Act confers power on the Central Government to frame the rules. Under Section 164 of the Act, the Central Government has the power to make rules generally to carry out all or any of the purposes of the Act. Rule 142(1)(a) of the Rules, 2017 is valid and is no manner conflict with any of the provisions of the Act. The challenge to the legality and validity of the show cause should fail having regard to the scope of judicial review and the challenge to the validity of Rule 142(1)(a) of the Rules should also fail - Application dismissed.
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2020 (7) TMI 23
Filing of form TRAN-I - availment of credit of excess VAT reflected in Returns - vires of Rule 117(1A) of Central GST Rules, 2017 - HELD THAT:- The Petitioner has challenged vires of Rule 117 (1A) of Rules, however we do not think it appropriate to declare it invalid as we are of the considered opinion that Petitioner is entitled to carry forward Cenvat Credit accrued under Central Excise Act, 1944. The Respondents have repeatedly extended date to file TRAN-I where there was technical glitch as per their understanding. Repeated extensions of last date to file TRAN-I in case of technical glitches as understood by Respondent vindicate claim of the Petitioner that denial of unutilized credit to those dealers who are unable to furnish evidence of attempt to upload TRAN-I would amount to violation of Article 14 as well Article 300A of the Constitution of India. The Respondents are directed to permit Petitioner to upload TRAN-I on or before 30.06.2020 and in case Respondent fails to do so, the Petitioner would be at liberty to avail ITC in question in GSTR-3B of July 2020 - Petition allowed.
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2020 (7) TMI 22
Seizure of goods alongwith vehicle - amendment in the e-way bill could not be immediately done for the lockdown - HELD THAT:- Since we have already issued the notice for examining the challenge as raised by the petitioner, it would be appropriate for fair ends of justice that the respondents shall release the goods and the vehicle, if the petitioner furnished the indemnity bond undertaking clearly that in the event of any adverse order from this court or on issuance of direction to make tax and penalty as imposed by the Superintendent of State Tax (GST), Churaibari Enforcement Wing, the petitioner shall, within seven days, pay the entire amount to the competent authority without raising any further plea. The said indemnity bond be made in favour of the Superintendent of State Tax (GST) Churaibari Enforcement Wing. If the Superintendent of State Tax (GST) Churaibari Enforcement Wing is satisfied that the indemnity bond has been submitted in terms of this order, he shall release the vehicle and goods within three days from the submission of the indemnity bond.
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Income Tax
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2020 (7) TMI 21
Deduction u/s 10A - slump sale - whether purchase of plant and machinery cannot be termed as new in the hands of the purchaser and accordingly, failed to satisfy the condition that not more than 20% of plant and machinery should have been previously used by any other person? - Whether the Tribunal is justified in allowing deduction under Section 10A of I.T. Act ignoring the provisions of sub Section 7A of Section 10A, which provides for continuance of benefit under Section 10A in the hands of a transferee company only in situation of demerger or amalgamation but not in a situation of slump sale? - HELD THAT:- Substantial questions of law No.1 to 3 have already been answered in favour of the assessee and against the Revenue vide judgments dated 14.11.2018 passed by a Division Bench of this Court in [ 2018 (11) TMI 1787 - KARNATAKA HIGH COURT] Computation of deduction u/s 10A - foreign currency expenditure to be excluded from total turnover as well for computation of deduction - Whether the Income Tax Appellate Tribunal is correct in law in holding that the deduction under Section 10A should be computed in the above manner following the judgment of jurisdictional High Court in the case of CIT Vs. Tata Elxsi Ltd. [ 2011 (8) TMI 782 - KARNATAKA HIGH COURT] - HELD THAT:- Substantial questions of law No.4 and 5 have already been answered by the Hon ble Supreme Court in the case of Commissioner of Income Tax, Central III VS. HCL Technologies LIMITED [ 2018 (5) TMI 357 - SUPREME COURT] in favour of the assessee and against the Revenue.
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2020 (7) TMI 20
Addition u/s 40A - tribunal held that the travel expenses incurred by employees of the assessee computed based on average basis should be upheld and not on trip vise basis - Whether the tribunal was correct in holding that the payments made by the assessee in cash exceeding ₹ 10,000/- cannot be disallowed by applying Section 40(A)(3) of the Act, as the same were paid in exceptional circumstances? - HELD THAT:- As findings on the issues covered by the aforesaid substantial questions of law are based on proper appreciation of evidence on record. The aforesaid findings of fact can neither be termed as either perverse or arbitrary - no substantial questions of law are involved as framed by this court in the aforesaid questions of law and the same are questions of fact. Therefore, it is not necessary to answer the same as issues covered under the aforesaid questions of law are pure finding of fact. Deduction u/s 80HHC - Whether the tribunal was correct in holding that the interest received on bank deposits, interest from employees and customers, commission income, rental income, commission income on technical services cannot be reduced by 90% when computing profits of business as per Explanation (baa) to Section 80HH - HELD THAT:- From close scrutiny of the order passed by the tribunal, it is axiomatic that 4th substantial question of law does not arise for consideration as it is held against the assessee by the tribunal. Deduction under Section 80HHC - Whether the tribunal was correct in holding that net interest income should be reduced by 90% when computing profits of business for the purpose of allowing deduction under Section 80HHC of the Act and not gross interest income ? - Whether the tribunal was correct in holding that order under Section 201(1) is mandatory for levying of compensatory interest under Section 201(1A) of the Act, for delay in remittance of TDS deducted? - HELD THAT:- substantial questions of law have been answered against the revenue by the Supreme Court in ACG ASSOCIATED CAPSULES (P) LTD. VS. CIT [ 2012 (2) TMI 101 - SUPREME COURT] and COMMISSIONER OF INCOME TAX, NEW DELHI VS.ELI LILLY CO. (INDIA) (P.) LTD.[ 2012 (2) TMI 101 - SUPREME COURT] respectively. Accordingly, the same are answered against the revenue and in favour of the assessee. Accrual of income - whether cash compensatory assistance and duty drawback is liable to tax on receipt basis and not on the accrual basis contrary to the view expressed by it in the case of the assessee for the Assessment year 1994- 95 and recorded a perverse finding? - HELD THAT:- From order passed by the Income Tax Appellate Tribunal, it is evident that the tribunal has permitted deduction on accrual basis and has held that an amount would be receivable only when the income accrues to the assessee and income would accrue to the assessee only when the assessee gets such a right to receive the income. It has further been held that assessee would get a right to receive the amount only when it is sanctioned to the assessee by the custom authorities and not when the assessee makes a claim of the same. It was also held that since, the amount of cash compensatory assistance and duty drawback during the relevant year was not sanctioned to the assessee therefore, the income has not accrued to the assessee. Thus, in fact the tribunal has allowed the deduction on accrual basis only. Therefore, the 2nd substantial question of law is answered against the revenue and in favour of the assessee. Deduction u/s 80HHC - Whether income from technical services cannot be reduced by 90% when computing profits of business as per Explanation (baa) to Section 80HHC despite this income having not been earned in the course of export and when the details of the same had not been furnished by the assessee? - HELD THAT:- This court in COMMISSIONER OF INCOME TAX VS. MOTOR INDUSTRIES CO. LTD.,[ 2010 (8) TMI 333 - KARNATAKA HIGH COURT] as well as in COMMISSIONER OF INCOME TAX VS. M/S ROBERT BOSCH (INDIA) LTD. [ 2013 (12) TMI 8 - KARNATAKA HIGH COURT] held that if any income is derived from the export by way of foreign exchange, such income is not deductible and the benefit of that income has to be given to the assessee. The expression any receipt of a similar nature has to be understood in the context of the words preceding such expression viz., brokerage, commission, interest, rent or charges. It has further been held that such receipts have no nexus with the income earned by way of foreign exchange and every receipt is not an income and every income would not necessarily include element of export turnover. Similar view was taken by this bench in decision dated 11.03.2020 rendered in the case of INGERSOLL-RAND (INDIA) LIMITED [ 2020 (4) TMI 550 - KARNATAKA HIGH COURT]. This substantial question of law is also answered against the revenue and in favour of the assessee. Deduction under Section 43B - customs duty paid disallowability as the same was not verified by the assessing officer as it was not claimed in the return of income or in the revised return - HELD THAT:- This ground was taken with regard to deduction under Section 43B of the Act before Commissioner of Income Tax (Appeals) and the same was also taken before the Income Tax Appellate Tribunal. Therefore, it cannot be said that the assessee raised the aforesaid issue for the first time before the Income Tax Appellate Tribunal. The Supreme Court in BERGER PAINTS (INDIA) LTD [ 2004 (2) TMI 4 - SUPREME COURT] has quoted with approval the observation made by the special bench of Income Tax Appellate Tribunal in INDIAN COMMUNICATION P. LTD.[ 1994 (1) TMI 245 - ITAT DELHI] to the effect that whether full deduction was allowed in one year or partly in one year and partly in the next, since, the assessee is a company and the rate of tax is uniform the gain to one and loss to other is illusory, since, what is referred is one year would have to be discharged in the next. It was further held that in that sense, nobody has won and nobody has lost. In other words, no loss has been caused to revenue. - Decided in favour of assessee
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2020 (7) TMI 19
Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT:- We are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by excluding at least the period during which the lockdown was in force. We must factor ground realities in mind while interpreting the time limit for the pronouncement of the order. Law is not brooding omnipotence in the sky. It is a pragmatic tool of the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted. The interpretation so assigned by us is not only in consonance with the letter and spirit of rule 34(5) but is also a pragmatic approach at a time when a disaster, notified under the Disaster Management Act 2005, is causing unprecedented disruption in the functioning of our justice delivery system. See DCIT vs. JSW Limited [ 2020 (5) TMI 359 - ITAT MUMBAI ]DCIT vs. JSW Limited [ 2020 (5) TMI 359 - ITAT MUMBAI ] Even without the words ordinarily , in the light of the above analysis of the legal position, the period during which lockout was in force is to excluded for the purpose of time limits set out in rule 34(5) of the Appellate Tribunal Rules, 1963.
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2020 (7) TMI 18
TP Adjustment - addition on account of the ALP on purchase of goods - MAM selection - Assessee had applied RPM method to benchmark the international transactions of the goods purchased for resale - HELD THAT:- We are aware of the fact that Res Judicta principles are not applicable to the income tax proceedings but at the same time we find that the Honorable Supreme Court in the case of Radhasoami Satsang vs. CIT [ 1991 (11) TMI 2 - SUPREME COURT] has held that where a fundamental aspect permeating through the different assessment years is accepted one way or the other, a different value in the matter is not warranted unless there are any material change of facts. Before us, no distinguishing feature in the facts for the year under consideration and that of earlier and subsequent years, wherein the RPM method which been followed by the assessee, has been brought by the Revenue. Considering the totality of the aforesaid facts, we are of the view that DRP was not justified in rejecting the RPM method followed by assessee. We, therefore set aside the order and direct the AO to compute the ALP by following the RPM method. Thus, the grounds of appeal of the assessee are allowed.
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2020 (7) TMI 17
Computation of capital gain by adopting sale consideration as per provisions of section 50C - Assessee objected to the adoption of stamp duty valuation before the AO by stating that the property sold by him did not have any approach road and is away from main road - HELD THAT:- Reply furnished by the assessee would amount to objection to the adoption of stamp duty value. In that case, in terms of section 50C(2) of the Act, the A.O. should have referred the matter of valuation to the DVO. Since the provisions of section 50C(2) of the Act have not been complied with, we are of the view that this issue requires fresh examination at the end of the A.O. Accordingly, we set aside the order passed by CIT(A) on this issue and restore the same to the file of the A.O. for examining the same afresh in terms of section 50C(2) - After affording adequate opportunity of being heard to the assessee, the A.O. may take appropriate decision in accordance with law. Difference between gross receipts declared by the assessee and that was shown in form 26AS - HELD THAT:- Assessee is following cash system of accounting. The submission of the data before tax authorities was that his clients, who are following mercantile system of accounting, might have deducted TDS on the amount payable by them and hence those amounts have been reflected in form no.26AS. However, since the assessee is following cash system of accounting, the amount actually received by him was declared in the income tax return filed by him. It was also submitted that the assessee did not receive the difference amount, shown in form 26AS till the date of completion of the assessment. However, the above said explanation was rejected by the tax authorities without making further enquiries in this regard. In our view, the A.O. should have made necessary enquiries from the parties who had deducted TDS and should have taken decision accordingly. In this view of the matter, this issue also requires fresh examination of the addition at the end of the A.O. Accordingly, we set aside the order passed by the Ld. CIT(A) on this issue also. Decided in favour of assessee for statistical purposes.
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2020 (7) TMI 16
Rectification u/s 154 - assessee had claimed depreciation at the higher rate of 60%, as applicable to computers, on certain items of plant and machinery -HELD THAT:- We are of the view that this issue requires fresh examination at the end of the A.O. for the reason that:- a) The assessee was not provided with adequate opportunity to present its case before the A.O. b) The assessee also pleads for one opportunity to furnish breakup details of items included under the heads Plant and Machinery - General and Plant and Machinery - Office . Accordingly, we set aside the order passed by Ld. CIT(A) on this issue and restore the same to the file of the A.O. for examining it afresh. Disallowance u/s 14A - Provisions of Rule 8D were omitted to be applied for computing disallowance u/s 14A - HELD THAT:- A.R. submitted that the A.O. has applied provisions of rule 8D(2)(iii) without affording adequate opportunity to the assessee. He submitted that assessee should be in a position to explain its case before the A.O., if an opportunity is given to the assessee.D.R. also agreed to the same. Accordingly, we set aside the order passed by Ld. CIT(A) on this issue also and restore the same to the file of the A.O. for examining it afresh.
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2020 (7) TMI 15
Penalty u/s 271(1)(c) - Quantum addition deleted - HELD THAT:- Additions, on which the penalties were levied, have since been deleted by the ITAT. We notice that the Ld. CIT(A) has placed reliance on the decision rendered by Hon ble Gujarat High Court in the case of Babul Harivadan Parikh [ 2013 (10) TMI 105 - GUJARAT HIGH COURT ] and in the case of Smt. Bharto Devi [ 2011 (2) TMI 951 - PUNJAB AND HARYANA HIGH COURT ] in support of his decision. Though the Ld D.R contended that the Ld CIT(A) should not have deleted the penalty, yet he could not furnish any decisions contrary to the decisions relied upon by Ld CIT(A). Hence, we do not find any infirmity in the decision rendered by Ld. CIT(A) in deleting the penalty levied u/s 271(1)(c) - Decided in favour of assessee.
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2020 (7) TMI 14
TDS u/s 194C OR 195 - Shipping Expenses on account of non deduction of TDS u/s 40(a)(ia) - payment of ocean freight, made to non-resident shipping companies - HELD THAT:- The provisions of section 172 are to apply, notwithstanding anything contained in other ' provisions of the Act. Therefore, in such cases, the provisions of sections 194C and 195 relating to tax deduction at source are not applicable. The recovery of tax is to be regulated, for a voyage undertaken from any port in India by a ship under the provisions of section 172. Section 194C deals with work contracts including carriage of goods and passengers by any mode of transport other than railways. This section applies to payments made by a person referred to in clauses (a) to (j) of sub-section (1) to any resident (termed as contractor). It is clear from the section that the area of operation of TDS is confined to payments made to any resident . On the other hand, section 172 operates in the area of computation of profits from shipping business of non-residents. Thus, there is no overlapping in the areas of operation of these sections. There would, however, be cases where payments are made to shipping agents of non-resident ship-owners or charterers for carriage of passengers etc., shipped at a port in India. Since, the agent acts on behalf of the non-resident ship-owner or charterer, he steps into the shoes of the principal. Accordingly, provisions of section 172 shall apply and those of sections 194C and 195 will not apply. Addition on difference between the opening balance in the account of M/s Eskay Sales Corporation and in the accounts of the assessee - HELD THAT:- We find that Assessing Officer has made the disallowance simply by holding that the assessee produced ledger account of these expenses which are not open to full verification and hence has disallowed 10% out of various expenses. The Assessing Officer has nowhere pointed out any specific discrepancy in the books of account nor he has rejected the same. In our opinion, the Assessing Officer cannot make ad hoc disallowance. See ASHOK SURANA VERSUS COMMISSIONER OF INCOME-TAX [ 2016 (6) TMI 696 - CALCUTTA HIGH COURT] - Decided in favour of assessee. Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT vs. JSW Limited [ 2020 (5) TMI 359 - ITAT MUMBAI ]
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2020 (7) TMI 13
Penalty u/s 271(1)(c) - allegation of defective notice - charge is not specific for which penalty is levied - HELD THAT:- From a perusal of this notice, it is crystal clear that the charge is not specific for which penalty is levied under section 271(1)(c) of the Act, whether for concealment of income or for furnishing of inaccurate particulars of income. The notice has specified both charges, i.e., concealment of income and furnishing of inaccurate particulars of income and has not specified the charge for which action has been taken against assessee. The non specific nature of the notice indicates non application of mind by Assessing Officer. It is a settled position of law that if notice under section 274 read with 271(1)(c) is not specific about the charge or limb under which penalty is being levied under section 271(1)(c) of the Act, then any penalty levied on the basis of such notice is bad in law and liable to be deleted. Law mandates that the authority, who is proposing to impose penalty, shall be certain as to what basis penalty is being levied and notice must reflect that specific reason so that assessee, to whom such notice is given, can well prepare himself regarding defence, which he likes to take to support his case. This is even enshrined in the principles of natural justice and as has been upheld by Hon'ble Apex Court and other High Courts. Thus notice under section 274 read with 271(1)(c) of the Act, which has not specified the charge and limb under which penalty should be levied, it is void ab initio. Decided in favour of assessee. Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT vs. JSW Limited [ 2020 (5) TMI 359 - ITAT MUMBAI ]
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2020 (7) TMI 12
Seeking recalling of an order - Reasonable cause for the assessee to seek adjournment - violation of the principle of Natural Justice - Tribunal was of the opinion that since no Vakalatnama had been filed in the name of Shri Somnath Ghosh (Advocate appeared and sought for adjournment) the adjournment application was rejected and the Bench proceeded to dispose of the appeals after hearing the Ld. DR - HELD THAT:- We note from a perusal of the Misc. Application which has been verified by Shri Varun More, Director of the assessee company that though the assessee had infact authorized Shri Somnath Ghosh to appear on behalf of the assessee. However, since the copy of the appeal could be given only a day before the case was listed for hearing, the Advocate could not be briefed by the Director of the assessee company because he was recovering from viral fever and also was infected with Pharyngitis. Prescription of the doctor has also been enclosed along with the adjournment application. So, according to us, there was reasonable cause for the assessee to seek adjournment. However, in the impugned order the Tribunal taking note that no Vakalatnama in the name of Shri Somnath Ghosh was filed before it, the Tribunal took a view that Shri Somnath Ghosh, Advocate is not the AR of the assessee and, therefore, it proceeded ex parte qua the assessee. Assessee company had authenticated that Shri Somnath Ghosh, Advocate is their AR and, therefore, we are of the opinion that due to confusion created because of non-filing of Vakalatnama had led to the impugned order being passed by the Tribunal. There has been a violation of the principle of Natural Justice and, according to us, since assessee had not been effectively heard/not-heard before the disposal of the appeal, we recall the impugned order of the Tribunal and the Registry is directed to fix all the aforementioned appeals that are restored in due course. Misc. applications of assessee are allowed.
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2020 (7) TMI 11
Rectification of mistake - Penalty u/s 271(1)(c) - as per notice assessee had faulted on both the charges i.e. having concealed particulars of income as well as furnished inaccurate particulars of such income - HELD THAT:- According to us, sometimes in some cases, it may attract both the offences and in some cases there may be overlapping of the two charges, then in such event in the penalty proceedings also notice should clearly specify the same by adding the adjunctive and and not the disjunctive or . The omission of the AO to strike of or between the two charges and write/add and in between both the charges makes the notice vague. So, even if the AO is of the opinion that action/omission of assessee attracts both the charges, then it was incumbent upon him, to put the assessee on notice by expressing his intention to proceed against the assessee for both charges by striking out or and substituting it with and which AO has failed to do in this case. AO by not bothering even to do the exercise as suggested by us reveals the mechanical approach of issuing penalty notice which action exposes the non-application of the mind on the part of the AO to put the assessee on clear notice for which he intends to levy penalty. Moreover, it has to be kept in mind that the assessment proceeding is distinct from the penalty proceedings and it is a settled law that imposition of penalty is discretionary and not mandatory. Any observation or finding made in the assessment order cannot come to the rescue of the AO s action of issuing defective/vague penalty notice. So, in the facts and circumstances discussed supra, the Misc. Application filed by the Revenue fails since we find no error leave alone error apparent on the face of the impugned order of the Tribunal.
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2020 (7) TMI 10
Non admission of additional evidence - CIT(A) has not admitted the copy of ledger account of the sundry creditors and copy of the their confirmation filed by assessee as additional evidence under Rule 46A of the Income Tax Rules, 1962 - HELD THAT:- On perusal of the Rule 46A(1) of the Rules, it is evident that the assessee has been prohibited from producing the additional evidence except the four circumstances. The first circumstances is where the Assessing Officer has refused to admit additional evidence, which ought to have been admitted. In the instant case before us the assessee has pleaded that the assessee had filed such copy of confirmation of the some of the sundry creditors before the AO, however, there was some delay in collecting the confirmed copy of the ledger account from the 13 parties, which he could collect in last week of the December 2017 only. When the assessee approached with those copies of the ledger accounts, the Assessing Officer refused to accept in view of the limitation of completing assessment was approaching. In our opinion, in view of the refusal by the AO for admission of those evidences, there was no option with the assessee except producing the same before the Ld. CIT(A). CIT(A) has rejected admission of those evidences on the ground that the assessee did not file the said documents in the DAK of the said Assessing Officer. In our opinion, merely not filing those documents in the DAK counter of the Assessing Officer, the assessee cannot be denied substantial justice and examination of the said documents, which had been filed before learned CIT(A) immediately after filing of the appeal, following the rules provided in the Income-tax Rules. We set aside the finding of the Ld. CIT(A) on the merit of the appeal and restore the matter to him with the direction to the admit the additional evidences filed by the assessee and thereafter decide the issue in dispute on merit after providing sufficient opportunity of being heard to both the parties i.e the assessee and the Assessing Officer. The relevant grounds of the appeal of the assessee are accordingly allowed for statistical purposes.
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2020 (7) TMI 9
Disallowance towards travelling expenses - Allowable business expenditure or personal expenditure - HELD THAT:- On a perusal of the details filed before the AO, it is seen that the assessee has given details of foreign visit expenses, which includes name and designations, country visited, TA-DA claimed, miscellaneous expenses, air fare, etc. These foreign travels have been for the trading purpose, conferences, training etc. Once the assessee has given very specific details of each and every employee, then without pointing out any specific discrepancy, no disallowance can be made. Apart from that, the reasoning given by the Ld. CIT (A), whether the presence of officials was required or not and how much that official has over stayed after completion of the official work is only based on presumption and surmise which cannot be upheld when the employees and directors were going official purpose. Being a PSU and under aegis of GOI, there cannot be an element of personal use of the company and therefore, such ad-hoc disallowance cannot be made and same is directed to be deleted. - Decided against revenue. Disallowance u/s. 14A of the Act read with rule 8D - CIT - A deleted the addition - HELD THAT:- Both the parties agreed that there is no exempt income earned by the assessee. The Ld. Counsel submitted that whence there is no exempt income, then there is no question of disallowance of u/s. 14A. Now, it is a well settled proposition under the jurisdiction of Hon ble jurisdictional Delhi High Court in view of CIT vs Cheminvest Ltd. [ 2015 (9) TMI 238 - DELHI HIGH COURT] and CIT vs Holcim India Pvt, Ltd. [ 2014 (9) TMI 434 - DELHI HIGH COURT] that when assessee has not earned any exempt income then no disallowance u/s 14A can be triggered. Therefore, the disallowance u/s 14A made by the AO sans any exempt income is deleted. - Decided against revenue.
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Customs
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2020 (7) TMI 8
Levy of Anti-Dumping Duty - Import of the Nylon Multi Filament Yarn originating in or exported from China PR, Korea RP, Taiwan and Thailand on provisional assessment basis - It is the case of the writ applicants that the failure on the part of the respondent No.1 is causing injury to the domestic industry - Principles of Natural Justice - opportunity of hearing sought - HELD THAT:- We may only say that the respondent No.1, Union of India, shall look into the recommendations made by the designated authority and take an appropriate decision in accordance with law within a period of eight weeks from the date of the receipt of the writ of this order. Application disposed off.
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Securities / SEBI
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2020 (7) TMI 7
Insider trading - circumstantial evidence as to whether a person is guilty of insider trading - HELD THAT:- Appellant had passed on the price sensitive information regarding the open offer to the Tippees. Such inference taken from the immediate and proximate facts and circumstances surrounding the events is reasonable and logical which any prudent man would arrive at such a conclusion. The Supreme Court in Kanhaiyalal Patel 2017 (9) TMI 1269 - SUPREME COURT held that an inferential conclusion from proved and admitted facts would be permissible and legally justified so long as the same is reasonable. In the light of the aforesaid, the decisions cited by the learned counsel for the appellant on the issue that a person cannot be held guilty only on the strength of proximity of relationship with the Tippee are distinguishable on facts and are not applicable in the instant case. We find from the record that there is ample evidence to draw a reasonable inference that the appellant had passed on the price sensitive information to the Tippees and, consequently, we are of the opinion that the order of the AO does not suffer from an error of law.
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Insolvency & Bankruptcy
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2020 (7) TMI 6
Approval of Resolution Plan - relevant time for submission of resolution plan - HELD THAT:- Admittedly, the A-1 filed its resolution plan before the Adjudicating Authority on 13-2-2019 whereas, the last date for submission of Resolution Plan before RP was 15-10-2018. Resolution plan of successful Resolution Applicant i.e. Dera Finvest (P.) Ltd. (R-2) was approved by 98.72 % of the Committee of Creditor in e-voting conducted on 1-11-2018 and 2-11-2018. When the Resolution Plan is filed before the Adjudicating Authority then the Authority has to satisfy that the Resolution Plan approved by the Committee of Creditor fulfills the requirements as specified in Sub-Section 2 of Section 30. However the Adjudicating Authority cannot direct the CoC to consider the second Resolution plan submitted before the Authority although the second Resolution Applicant is ready to invest more amount in comparison to first Resolution Applicant. The view that the second Resolution Applicant, A-1 has failed to satisfy that the Appeal is maintainable on any of the grounds provided in Section 61(3) of the I B Code - there are no such provision that during the pendency of approval of plan the limitation for CIRP process will stop. Application dismissed.
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2020 (7) TMI 5
Voluntary Liquidation - applicability of provisions of Section 59 of the Insolvency and Bankruptcy Code, 2016 - whether the appeal under Section 42 of the 'I B Code' is maintainable before the Adjudicating Authority (National Company Law Tribunal)? HELD THAT:- It is beyond controversy that 'M/s. TEIL Projects Limited' is undergoing Voluntary Liquidation Process contemplated under Chapter V of Part II of the 'I B Code'. It is indisputable that Section 59 of the 'I B Code' incorporated in Chapter V of Part II of the 'I B Code' providing for 'Voluntary Liquidation of Corporate Persons' stands duly notified vide S.O. 1005 (E) dated 30thMarch, 2017 and has been enforced w.e.f. 1st April, 2017 - The conditions necessary for initiating a Voluntary Liquidation Process, as enumerated in the aforesaid provision and coming to the fore on a plain reading thereof, are that such Voluntary Liquidation can be initiated by a Corporate Person which has not committed any default and the conditions and procedural requirements as may be specified by the Insolvency and Bankruptcy Board of India are to be complied with. The provision further envisages a declaration from majority of the Directors of the Company regarding formation of an opinion that either the Company has no debt or that it would be able to liquidate its liability from sale proceeds of its assets with further requirements that the company is not being liquidated to defraud any person. The initiation of process of voluntary liquidation of 'M/s. TEIL Projects Limited' has not been called, in question, in this appeal. The letter of rejection referred to hereinabove dated 14th May, 2019 has admittedly been passed after notifying of Section 59 of the 'I B Code'. It is nobody's case that the winding up proceedings were pending before the Hon'ble High Court. Therefore, it would be absurd to hold that the Voluntary Liquidation Process initiated by 'M/s. TEIL Projects Limited' is not governed by Section 59 - there being specific provision in the 'I B Code' dealing with admission or rejection of claim by the Liquidator with mechanism provided for questioning the same in appeal before the Adjudicating Authority and such provision being made applicable to voluntary liquidation proceedings explicitly in terms of the provisions embodied in Section 59(6) of the 'I B Code', issue raised with regard to maintainability of the appeal and jurisdiction of the Adjudicating Authority are without substance and arguments raised on this score are repelled. The jurisdiction exercised by the Adjudicating Authority is vested in it and cannot be termed improper. Despite being of the view that the claim initially left out by the Respondent No. 1 was payable, the Liquidator proceeded to reject the same without any justifiable reason which cannot be supported - Appeal dismissed.
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Service Tax
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2020 (7) TMI 4
Legality of issuance of recovery notices - petitioner had applied under the SVLDRS Scheme - HELD THAT:- In the present petition, the petitioner has claimed that in fact its application could not have been rejected because the respondents wrote a letter dated 24.09.2019 (Annexure P-10) to one of the supplier of the petitioner calling upon it to stop payment to the petitioner and the amount due may be paid directly to the credit of the Central Goods and Service Tax Department - the said letter does not show final quantification determination and is at best a preliminary figure. No fault can be found with the action of the respondents in refusing to accept the application of the petitioner to be covered under the aforementioned scheme - Petition dismissed.
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2020 (7) TMI 3
Classification of services - works contract services or not - appellants are concessionaire, who have been granted on Build, Operate and Transfer(BOT) basis, construction, maintenance on cost recovery basis - whether the construction of associated facilities like toll plaza, cattle and pedestrian crossing facilities, parking bays for buses/trucks and rest room for staff, etc. and common people, are part of the road (exempt) or are liable to service tax under the head works contract service ? HELD THAT:- The construction like toll plaza, cattle/pedestrian crossing facilities, parking bay for buses/trucks, rest room for staff and common public at large, etc. are also part of the road, as these are meant for exclusive use by the highway staff and the people using these roads. Further we take notice of several judgments of the Tribunal wherein even greenery done in the middle of the road, by way of divider or on the side of the roads, as well as crash barriers erected on the side of the roads all form part of the road and not exigible to service tax - the appellant is entitled for the exemption under Section 65(105) (zzzza). Extended period of limitation - HELD THAT:- The show-cause notice is bad for invocation of extended period of limitation as the same is issued merely on change of opinion on the part of the Revenue. Appeal allowed - decided in favor of appellant.
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2020 (7) TMI 2
Reversal of Cenvat Credit - Input Services - Providing taxable and exempted services - Double credit - Receipt of credit for the benefit of subsidiaries - activity of construction services of roads, power plant, airport, etc. being commercial or industrial buildings or civil works - BAS - consulting engineering services - management or business consulting services - commercial training or coaching Centre services - Activity of construction of toll plaza, administrative building etc. - Rule 6(3) of Cenvat Credit Rules - allegation of double credit taken by the appellant - CENVAT Credit - absence of valid documents - Board s Circular No. 80/10/2004-ST dated 17.9.2004 - Extended period of limitation - penalty. HELD THAT:- All the services have been used by the appellant in providing output service and thus eligible under the definition of input service under Rule 2(l) of CCR; from the facts on record, it is found that the appellant have already reversed an amount of ₹ 59,43,283/- out of disputed credit for the period October 2007 to December, 2012; the learned Commissioner has erred in holding that banking and financial services, credit rating services are not used for providing output services; such services are required to raise funds, which is essential to carry out the business of the appellant and hence the same is held to be eligible service; as regards the allegation that certain processing charges/banking service was related to GMR Infrastructure Limited (subsidiary company) as reflected in additional credit arrangement letter of the bank, whereas the invoice is in the name of the appellant towards loan processing fee; as the appellant company benefits from profitability and working of subsidiary company, thus the banking and financial charges are eligible input service in respect of the appellant - there is no specific reason assigned for disallowance of Cenvat credit for other input services by the learned Commissioner. Penalty - HELD THAT:- There are no case of suppression, fraud, etc. is made out against the appellant; further, admittedly appellant have maintained proper books of accounts and registers of the transactions and also regularly filed the ST-3 returns and paid the admitted taxes; further, appellant deposited substantial amounts by way of reversal or deposit at the time of audit which have been appropriated in the impugned order; Amount reversed/paid matches the disallowed amount; under such circumstances, we hold that penalty under Section 78 is not attracted - the penalty under Section 77(2) of the Finance Act is also not attracted, hence set aside. Classification of service for the period from 1.6.2007 - HELD THAT:- Revenue holds that the services to be classifiable as construction service under Section 65(105)(zzq), where as per the appellant holds the same to be classifiable under the works contract service defined under Section 65 (105)(zza) of the Act; considering the rival contentions, it is found that admittedly the appellant have executed works contract along with materials, thus, under the facts and circumstances, the construction services are classifiable under works contract service and not as construction service. Thus, under the facts and circumstances, penalty imposed under Rule 15(3) of CCR is also set aside. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2020 (7) TMI 1
Bidding of attached Property - priority of charge over the secured assets - Section 26E of the SARFAESI Act - HELD THAT:- The writ application bringing it to the notice of the respondent No.1 i.e. the Commercial Tax Officer (4) Ahmedabad that the subject property was a secured asset of the respondent No.2 Bank of India under the SARFAESI Act. Being a secured asset under the provisions of the SARFAESI Act, the respondent No.2 cannot claim preference over the subject property for the purpose of recovery of the dues towards tax. It is not in dispute that the first charge was created in favour of the bank and the bank, in exercise of its powers under the SARFAESI Act, put the subject property to auction. All these developments took place way back in the year 2015. The disputed entry No.16521 came to be mutated on 24th January 2017 for showing the attachment over the subject property. The respondents Nos.3 and 4 are directed to delete the entry No.16521 mutated and certified in the village form No.6 of village : Vejalpur. The respondents Nos.3 and 4 shall act accordingly on the certified copy of this order being produced before them by the writ applicants. For the purpose of recovery of the dues from the erstwhile owner towards VAT, it shall be open for the concerned authority to take appropriate legal steps as available in law. Application allowed.
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