TMI Tax Updates - e-Newsletter
July 10, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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GST:
Time limit for availing Input Tax Credit (ITC) - whether GSTR-3B is a return u/s 39(1) of GST Act - Held No - press release dated 18th October 2018 could be said to be illegal to the extent that its para-3 purports to clarify that the last date for availing input tax credit relating to the invoices issued during the period from July 2017 to March 2018 is the last date for the filing of return in Form GSTR-3B
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Income Tax:
Addition u/s 69A - unexplained money - sum received on sale of land co-owned - sale through conveyance deed - year of assessment - it was factually incorrect on the part of the CIT(A) to conclude that the assessee did not offer any reason for holding the cheque and not deposited the same for a long period of time and such conclusion deserves to be quashed. No merit for the addition u/s.69A
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Income Tax:
Penalty u/s. 271(1)(c) - income disclosed by the assessee u/s 153A - The mere fact that the assessee has filed revised returns disclosing higher income than in the original return, in the absence of any other incriminating evidence, does not show that the assessee has “concealed”his income for the relevant assessment years. - No penalty.
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Income Tax:
Disallowing of loss on shares - method of valuation of shares at cost or market price - Since the assessee has himself treated the same as investment, no trading loss can be allowed.
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Income Tax:
TP Adjustment - share application money remained parked with AE - nothing on record to prove that transaction was sham - TPO could not have treated such transaction as a loan and charged interest thereon on notional basis.
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Customs:
Validity of Demand u/s 28 of the Customs Act, 1962 without challenging bill of entry - After assessment and clearance of goods u/s 47 demand raised by proposing re-classification of the imported goods - a demand can be raised u/s 28 even after clearance of the case u/s 47
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Customs:
DEEC Scheme - violation of post import condition - import in excess of requirement against SION norms - diversion of goods - In view of the clear wordings of the notification, no liberal reading in to the conditions on the basis of substantial compliance is required - demand confirmed with penalty.
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DGFT:
Imports of Maize (feed grade) under the TRQ Scheme for 2019-20
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Indian Laws:
Dishonor of Cheque - right to defend - If the Court finds that the defence is wholly moonshine and sham, then leave to defend is liable to rejected; but if the defence is found plausible, though not very probable, the Court would be justified in putting the defendant on terms while granting leave to defend.
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Service Tax:
Rebate of Swachch Bharat Cess - input services used for providing output services which have been exported -Since the appellants have not claimed any CENVAT credit on the amount for which the rebate has been claimed, refund to be allowed.
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Central Excise:
Extended period of limitation - appellant being a PSU would not have reason to avail wrong credit with intention to evade payment of duty.
TMI Short Notes
Articles
Notifications
GST - States-
F-A-3-32-2017-1-V-(51) - dated
29-6-2019
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Madhya Pradesh SGST
Amendments in this department Notification No. F-A 3-32-2017-1-V-(41) dated the 29th June, 2017.
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F-A-3-27-2019-1-V-(52) - dated
29-6-2019
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Madhya Pradesh SGST
Corrigendum - Notification No. F-A-3-32-2017-1-V-(37) dated 17th May 2019.
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F-A-3-26-2017-1-V-(53) - dated
29-6-2019
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Madhya Pradesh SGST
Benefit of this department notification No. F A-3-16-2019-1-V(31) dated 17th May 2019 class of registered persons who shall follow the special procedure as mentioned below for furnishing of return and payment of tax.
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F-A-3-25-2019-1-V-(49) - dated
29-6-2019
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Madhya Pradesh SGST
Madhya Pradesh Goods and Services Tax (Filth Removal of Difficulties) Order, 2019.
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F-A-3-24-2019-1-V-(54) - dated
29-6-2019
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Madhya Pradesh SGST
The Madhya Pradesh Goods and Services Tax Rules, 2017,
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F-A-3-05-2019-1-V-(50) - dated
29-6-2019
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Madhya Pradesh SGST
State Government hereby appoints the 21st day of June, 2019, as the date from which the provisions of the Madhya Pradesh Goods and Services Tax Amendment Rules, 2018 rule 12 of [this department notification No. F A-3-05-2019-1-V(28), dated the 7th March, 2019], shall come into force.
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F-A-3-02-2017-1-V-(48) - dated
20-6-2019
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Madhya Pradesh SGST
Amends this department's notification No. F A 3-02/2017/1/V (46) dated 16 May, 2018.
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ERTS(T) 30/2018/28 - dated
11-6-2019
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Meghalaya SGST
Governor of Meghalaya is pleased to create the Meghalaya Goods and Services Tax Consumer Welfare Fund.
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FIN/REV-3/GST/1/08 (Pt-1)(Vol.1)/171 - dated
29-6-2019
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Nagaland SGST
Seeks to specify retail outlets established in the departure area of an international airport
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FIN/REV-3/GST/1/08 (Pt-1)(Vol.1)/169 - dated
28-6-2019
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Nagaland SGST
Seeks to provide exemption from furnishing of Annual Return Reconciliation Statement.
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FIN/REV-3/GST/1/08 (Pt-1)(Vol.1)/168 - dated
28-6-2019
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Nagaland SGST
Seeks to prescribe the due date for furnishing FORM GSTR-1 for registered persons having turnover upto 1.5 crore.
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CT/LEG/GST-NT/12/17/22 - 11/2019 - dated
28-6-2019
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Nagaland SGST
Seeks to extend the due date for furnishing the declaration FORM GST_ITC-04
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CT/LEG/GST-NT/12/17/21 - 10/2019 - dated
28-6-2019
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Nagaland SGST
Seeks to prescribe the due date for furnishing_FORM GSTR-3B for the months of July '19 to Sept'19.
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FIN/REV-3/GST/1/08 (Pt-1)(Vol.1)/167 - dated
21-6-2019
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Nagaland SGST
Seeks to extend the date from which the facility of blocking and unblocking on e-waybill.
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2019 (7) TMI 401
Time limit for availing Input Tax Credit (ITC) - whether GSTR-3B is a return u/s 39(1) of Central GST Act or State GST Act - Legality and validity of the press release dated 18th October 2018 - credit in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return u/s 39 for the month of September following the end of financial year or furnishing of the relevant annual return, whichever is earlier - writ-applicant would submit that Section 39(1) of the CGST Act/GGST Act provides that every registered person except few categories of persons shall furnish a monthly return in such form and manner as may be prescribed. HELD THAT:- The aforesaid press release is valid and in consonance with Section 16(4) of the CGST Act/GGST Act only if Form GSTR-3B is a return required to be filed under Section 39 of the CGST Act/GGST Act - Section 39(1) of the CGST/GGST Act provides that every taxpayer, except a few special categories of persons, shall furnish a monthly return in such form and manner as may be prescribed. Rule 61 of the CGST Rules/GGST Rules prescribes the form and manner of submission of monthly return. Sub-rule 1 of Rule 61 of the CGST Rules/GGST Rules provides that the return required to be filed in terms of Section 39(1) of the CGST/GGST Act is to be furnished in Form GSTR-3. It would be apposite to state that initially it was decided to have three returns in a month, i.e. return for outward supplies i.e. GSTR-1 in terms of Section 37, return for inward supplies in terms of Section 38, i.e. GSTR-2 and a combined return in Form GSTR-3. However, considering technical glitches in the GSTN portal as well as difficulty faced by the tax payers it was decided to keep filing of GSTR-2 and GSTR-3 in abeyance. Therefore, in order to ease the burden of the taxpayer for some time, it was decided in the 18th GST Council meeting to allow filing of a shorter return in Form GSTR-3B for initial period. It was not introduced as a return in lieu of return required to be filed in Form GSTR-3. The return in Form GSTR-3B is only a temporary stop gap arrangement till due date of filing the return in Form GSTR-3 is notified. Notifications are being issued from time to time extending the due date of filing of the return in Form GST- 3, i.e. return required to be filed under Section 39 of the CGST Act/GGST Act. It was notified vide Notification No.44/2018 Central Tax dated 10th September 2018 that the due date of filing the return under Section 39 of the Act, for the months of July 2017 to March 2019 shall be subsequently notified in the Official Gazette. The impugned press release dated 18th October 2018 could be said to be illegal to the extent that its para-3 purports to clarify that the last date for availing input tax credit relating to the invoices issued during the period from July 2017 to March 2018 is the last date for the filing of return in Form GSTR-3B - the said clarification could be said to be contrary to Section 16(4) of the CGST Act/GGST Act read with Section 39(1) of the CGST Act/GGST Act read with Rule 61 of the CGST Rules/GGST Rules. Application disposed off.
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Income Tax
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2019 (7) TMI 391
Stay of demand - insisting upon payment of 20% of the disputed tax amount - HELD THAT:- The learned single Judge while disposing the writ petitions, had reduced the condition by limiting the payment to an amount of 10%, till the disposal of the appeals. It is challenging those judgments, these appeals are filed. Question regarding liability of the appellant banks to pay the income tax assessed, is a matter which was decided by a Full Bench of this Court in the judgment in The Mavilayi Service Co-operative Bank Ltd. v. The Commissioner of Income Tax, Calicut [ 2019 (3) TMI 1580 - KERALA HIGH COURT] . In view of the dictum laid in the said judgment, it is contended that the appellate authority can only remand the matter to the assessing authority for conducting a fresh enquiry with respect to the nature of the activities of the banks in question. Hence it is contended that, the insistence for making payment of any portion of the amount under demand, pending disposal of the appeal, may cause hardships and prejudices to the banks concerned. Taking note of the peculiar aspect involved touching the merits in the appeals based on the Full Bench decision mentioned above, we are of the opinion that the insistence for payment of a portion, as a condition for granting stay, need not be made in the cases at hand. Therefore the impugned judgments need to be modified. Hence, the writ appeals are hereby allowed. The impugned judgment of the single Judge are hereby set aside. The respective writ petitions are allowed to the extent of directing the Commissioner of Income Tax (Appeals) to consider and dispose of the statutory appeals filed by the appellants herein, at the earliest, taking note of the Full Bench decision cited above and to keep in abeyance recovery and collection of the tax assessed, pending disposal of such appeals.
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2019 (7) TMI 390
TP Adjustment - share application money remained parked with AE - re-characterize the transaction - Department holds a belief that for the period during which the share application money remained parked with AE, the same should be brought to tax on notional interest basis - Tribunal made an interim judgment deleting the addition on the ground that the Assessing Officer cannot re-characterize the transaction - HELD THAT:- The facts as noted, are not seriously in dispute. The assessee s share application money remained with its AE for a considerable period of time before the shares were allotted. AO, therefore, treated this transaction as one of loans. It was under similar circumstances that this Court Pr. Commissioner of Income Tax-6 Versus M/s. Aegis Limited - [2019 (4) TMI 858 - BOMBAY HIGH COURT] dismissed Revenue s facts on record would suggest that the assessee had entered into a transaction of purchase and sale of shares of an AE. Nothing is brought on record by the Revenue to suggest that the transaction was sham. In absence of any material on record, the TPO could not have treated such transaction as a loan and charged interest thereon on notional basis. No question of law arises
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2019 (7) TMI 389
Deduction u/s 80P (2) (a) (i) - reopening of assessment u/s 147 - Tribunal held that the assessee is to be treated as primary agricultural society and is carrying on the business of banking or providing credit facilities to its members and is entitled for deduction with respect to the interest received from Class B members who were involved in non-agricultural activity - HELD THAT :- As decided in K. 343, ONDIPUDUR PRIMARY AGRICULTURAL COOPERATIVE CREDIT SOCIETY LTD., K. 2065 KALIKKANAICKENPALAYAM PRIMARY AGRICULTURAL COOPERATIVE CREDIT SOCIETY LTD., K. 1788 NARASEEPURAM PRIMARY AGRICULTURAL COOPERATIVE CREDIT SOCIETY LTD., K. 758, IKKARAI BOLUVAMPATTI PRIMARY AGRICULTURAL COOPERATIVE CREDIT SOCIETY LTD. AND K. 1006 SINGANALLUR PRIMARY AGRICULTURAL COOPERATIVE CREDIT SOCIETY LTD. VERSUS THE INCOME TAX OFFICER, COIMBATORE [ 2019 (6) TMI 1098 - MADRAS HIGH COURT] benefit of Section 80P to Cooperative Societies is being carried further to Hon'ble Supreme Court by way of Special Leave Petitions. It is the specific case and stated position of the learned Revenue counsel that the IT department, has not given legal quietus to the order, but is agitating the matter further by filing Special Leave Petitions in Hon'ble Supreme Court. There is no disputation that the aforesaid order of Hon'ble Division Bench [ 2016 (8) TMI 560 - MADRAS HIGH COURT] has neither been stayed nor reversed. Therefore, it holds the field. Though this could be the end of the matter and this Court would have been inclined to set aside the impugned notices, this Court takes a slightly different view owing to the second submission made by learned counsel, which is a crucial aspect of the trajectory of the hearing today. It may be too late in the day for the Revenue to issue notices under Section 148 afresh, if they are set aside now and ultimately if the Revenue succeeds in the Special Leave Petitions, which are said to have been filed. Impugned notices kept in abeyance subject to the outcome of the the Apex Court in the SLP as referred above
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2019 (7) TMI 388
Disallowing of loss on shares - method of valuation of shares at cost or market price - whether the stocks which were shown in the investment account as investment only could be taken into consideration for claiming a deduction? - Single and isolated transaction - HELD THAT:- It is seen that the assessee had shown the shares as investment in the books of account and there was no trading activities. Consequently, the Assessing Officer held that it cannot be allowed as deduction for the purpose of computing the profit of the assessee. In the case of Kerala Small Industries Development Corporation Ltd. [ 2004 (6) TMI 35 - KERALA HIGH COURT] the Court had elaborately considered more or less an identical issue wherein the assessee, made investment in co-operative societies and the question was whether it can be treated as stock-in-trade or a trading asset. After examining the memorandum and articles of association of the assessee-company, the Court took into consideration as to what the word business connotes and held that it connotes some real, substantial and systematic or organised course of activity or conduct with a set purpose. Single and isolated transaction can be held to be conceivably capable of falling within the definition of business as being an adventure in the nature of trade provided the transaction bears clear indicia of trade. Considering the facts of the said case, it was pointed out that the investment of the assessee in the cooperative societies cannot be treated as a trading activity, there was no purchase or sale involved, no such transaction and that the transaction made by the assessee in the form of shares in co-operative societies are only in the nature of capital investments in furtherance of the objects of the company and not as trading capital or circulating capital of the assessee company. The decision in Kerala Small Industries Development Corporation Ltd. (supra) is a clear answer to the assessee's case to hold that the assessee has not made out any ground to interfere with the order passed by the Tribunal. - Decided against assessee.
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2019 (7) TMI 387
Profit on sale of investments - profits realized from investments are real and hypothetical - whether assessee is not liable to deduct the tax at source made to surveyors outside the country was not taxable in India? - HELD THAT:- Prior to 1st April, 2011, there was no provision which required the Revenue to disallow the deduction of loss on sale of investments. In the respondent/assessee's case, identical view was taken by the CIT (Appeals), Large Taxpayer Unit, Chennai, and the order was confirmed by the Tribunal. The finding in favour of the assessee was on the ground that prior to 1st April, 2011, there was no provision which required the Revenue to disallow the deduction of loss on sale of investments. We respectfully agree with the view taken by the High Court of Delhi in Oriental Insurance Co. Ltd. [ 2017 (9) TMI 172 - DELHI HIGH COURT] . Accordingly, the first substantial question of law is answered against the Revenue. TDS made to surveyors outside the country was not taxable in India - a Division Bench of this Court in the case of Commissioner of Income Tax vs. M/s.Royal Sundaram Alliance Insurance Company Limited [ 2019 (2) TMI 923 - MADRAS HIGH COURT] considered these three substantial questions of law and the substantial questions of law were decided against the Revenue. MAT computation - whether the Tribunal is correct in holding that the provisions of Section 115JB which enables the companies to compute book profit may not be applicable to insurance companies, this Court had an occasion to consider the same question in the case of The Commissioner of Income Tax vs. M/s.Cholamandalam MS General Insurance Company Limited [ 2019 (2) TMI 1075 - MADRAS HIGH COURT] and the same was rejected and held against the Revenue.
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2019 (7) TMI 386
Grant of stay - stay on recovery - HELD THAT:- The reasons given by the 2nd respondent for refusing the prayer for stay and touch the merits of the appeal. Thus, the petition for stay is not given due consideration while disposing of interlocutory applications. The appeals in Exts. P5 and P9 since are pending and to balance the claims of assessee on one hand and the revenue on another hand and also to ensure timely disposal of the appeals the writ petition is disposed of by this order:- (a) there shall be stay of recovery of amount demanded for the Assessment Year 2011-2012 subject to the petitioner depositing 20 % of the tax demanded i. e, ₹ 1,12,81,740/- within four weeks from today. In default of complying with the condition the stay granted by this order ceases to be effective. (b) for the assessment year 2014-2015, the petitioner has paid 20% of the tax demanded therefore by granting stay of further recovery of the tax demanded for the assessment year 2014-2015, the appeal is directed to be disposed of. (c) the appeals in Exts. P5 and P9, hence are disposed of as expeditiously as possible preferably within three months from today.
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2019 (7) TMI 385
Penalty u/s 271(1)(c) - Defective notice - non specification of charge - disallowance of the deduction claimed u/s 80IB(10) - HELD THAT:- Addition made by the A.O. by disallowing the deduction claimed U/s 80IB(10) was allowed by the CIT(A) and further confirmed by the ITAT as well as the Hon ble Rajasthan High Court by dismissing the appeal filed by the department. From the record we found that the penalty order was passed by the A.O. on 31.03.2016, wherein penalty u/s 271(1)(c) is imposed on addition of income of ₹ 3,75,000/- on account of alleged cash amounting to ₹ 3,75,000/- received from one Sh Bimal Kumar Jain by holding that the assessee had furnished inaccurate particulars of income and concealed his income. Penalty proceedings have been initiated for concealment of particulars of income or for furnishing inaccurate particulars of income. Thereafter the penalty levied by holding that the assessee has furnished inaccurate particulars of income and concealed the income. As there is a variation in the reasons given for initiation of penalty is the show cause notice issued U/s 274 vis a vis reason given in the penalty order passed U/s 271(1)(c). For the reasons that now there is a settled legal position on the issue that the notice u/s 274 should be specific on imposing of penalty u/s 271(1) (c) i.e. concealed particulars of income or furnishing inaccurate particulars of income. See M/S SSA'S EMERALD MEADOWS [ 2016 (8) TMI 1145 - SC ORDER] - Decided in favour of assessee.
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2019 (7) TMI 384
Validity of reopening of assessment u/s 147 - claim of deduction u/s 80 HHC - whether the reassessment is validly initiated or not ? - HELD THAT:- Original assessment u/s 143 (3) of the act was passed on 29/3/2006 and notice u/s 148 of the income tax act has been issued on 18/11/2008. In the reasons recorded for the reopening of the assessment the learned assessing officer has no where stated that what is the failure on the part of the assessee to fully and truly disclose the material facts for the computation of the total income. In the reasons recorded itself, the learned assessing officer has stated that there is a mistake in calculation, which has resulted in over statement of export the purpose of calculation of deduction u/s 80 HHC of the income tax act.Therefore, it is apparent that the learned assessing officer himself in stating that it is a mistake and there is no escapement of income because of failure on the part of the assessee. Further, in the reasons recorded for reopening we did not find anything which shows that there is a tangible material coming into the possession of the learned assessing officer to reopen the assessment - in the original assessment proceedings it has been stated that the profit u/s 80 HHC of the income tax act was computed in the original assessment proceedings, which is also the subject matter of appeal before the 1st appellate authority. Therefore, it is apparent that it is merely a change of opinion on a particular aspect of the computation of deduction u/s 80 HHC - Reopening of the assessment proceedings initiated by the learned assessing officer is not sustainable in law. Assessment u/s 153A - scope of section 153A - Delhi High Court in case of CIT vs Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] has held that in such assessment u/s 153A in concluded assessment, the addition can be made only on the basis of incriminating material found during the course of search. The learned departmental representative could not show us any material found during the course of search based on which the additions/disallowances other than the computation of the claim of deduction u/s 80 HHC of the income tax act was made. In view of this, as the additions have been made without having any incriminating material found during the course of search, we reverse the order of the ld CIT (A) and direct the learned assessing officer to delete those additions/disallowances. - Decided in favour of assessee.
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2019 (7) TMI 383
Penalty u/s. 271(1)(c) - income disclosed by the assessee under Section 153A - assessee has filed revised returns disclosing higher income than in the original return - HELD THAT :- AO has not brought anything on record to assess any income over and above the returned income filed by the assessee. AO in the assessment order could not bring into fore as to how the seized material has been analyzed and to prove as to how the concealment or furnishing of inaccurate particulars of income has arisen. Though the assessing officer has mentioned the word Addition it does not represent any adding up of the income but narration of the income returned by the assessee in response to notice u/s 153A of the Act There was no addition made by the AO. There is no deeming fiction for the levy of penalty the provisions applicable whether it is an assessment u/s 153A or assessment u/s 143(3) or u/s 148 the provision essentially remain the same. In the instant case, the assessee has filed return of income declaring additional income which was accepted by the AO. Hence, they cannot be treated as the assessee has concealed income as concealment as to be dealt by the Revenue by way of unearthing sum of the income which has been kept away from the eye of the Revenue. Furnishing of inaccurate of particulars refers to filing of material which is not in conformity with the facts or truths The mere fact that the assessee has filed revised returns disclosing higher income than in the original return, in the absence of any other incriminating evidence, does not show that the assessee has concealed his income for the relevant assessment years. Considering that the non-obstante clause under Section 153A excludes the application of, inter alia, Section 139, it is clear that the revised return filed under Section 153A takes the place of the original return under Section 139, for the purposes of all other provisions of the Ac No difference between returned income and the assessed income, keeping in view the fact that the Revenue has not brought any material for levy of penalty - return filed in response to notice 153A of the Act needs to be treated as returned filed u/s 139 of the Act for the purpose of assessment, we hereby delete the penalty levy u/s 271(1)(c) of the Act. Penalty levied u/s 271AAB - Assessee has given a statement u/s 132(4) of the Act during the search and substantiated as to how the undisclosed income was derived (para 4.1 of AO), paid the taxes and filed the return. Hence, the assessee had made all the required conditions. At this juncture, it is to be adjudicated whether the levy of penalty is automatic or not under the present circumstances, we find that the rationale given in the case of 271(1)(c) so as to the requisite conditions for levy of penalty under the Income Tax law are equally applicable to the instant year also. Hence, the penalty levied is directed to be deleted. - Assessee appeal allowed.
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2019 (7) TMI 382
Disallowance u/s 80P(2)(a)(i) - assessee is an AOP - whether assessee who is a co-operative credit society is entitled for deduction u/s 80P(2)(a)(i) or the assessee is a co-operative bank which is hit by provisions of Section 80P(4) ? - HELD THAT :- Assessee is co-operative credit society and is only dealing with its members in providing credit facilities on which interest is charged and the assessee is also accepting deposits from its members on which interest is paid by the assessee. We have observed that the assessee is not dealing with outside public and had confined its dealings with members only as per the facts emerging from records and as stated by learned counsel for the assessee before the Bench. We have observed that in assesse s own case for AY 2012-13 and 2013-14, the tribunal has taken a consistent view that the assessee is entitled for deduction u/s. 80P(2)(a)(i) - As decided in assessee's own case [ 2016 (11) TMI 1630 - ITAT MUMBAI] relying on decision of Hon ble jurisdictional High Court in Quepem Urban Co-operative Credit Society Ltd [ 2015 (6) TMI 573 - BOMBAY HIGH COURT] and further the decision of Kalpadi Cooperative Township Ltd [ 2016 (9) TMI 952 - MADRAS HIGH COURT] is squarely applicable upon the facts of the present case and the assessee was entitled for the deductions claimed u/s 80P(2)((a) (i). Also see assessee's own case for AY 2013-14 [ 2018 (10) TMI 1690 - ITAT MUMBAI] - Decided in favour of assessee.
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2019 (7) TMI 381
Addition u/s 69A - unexplained money - sum received on sale of land co-owned - sale through conveyance deed - year of assessment - reason for holding the cheque and not deposited the same for a long period of time - Subsequent to the execution of the conveyance deed, the buyer asked the assessee not to deposit the cheque till he gives the clearance - HELD THAT :- No positive material was brought on record by the AO to decline the explanation of the assessee with regard to receipt of cash during the year in respect of the cheque which could not be deposited in the bank account in the A.Y.2011-12. Therefore, the action of the AO to bring the amount of ₹ 60,00,000/- to tax which was already offered by the assessee in the A.Y.2011-12 is bad in law. The observation of CIT(A) to the effect that the amount received by the assessee in the A.Y. 2013-14 and the sale of the said land in the A.Y. 2011-12 are separate transactions is incorrect since the amount recoverable from the Purchaser is not only shown in the audited accounts of the assessee but also can be clearly seen from the bank statements of the assessee which corroborate the fact that the said amount of ₹ 60,00,000/- was never received by the assessee in the A.Y. 2011-12. Therefore, the amount received by the assessee during the A.Y. 2013-14 is nothing but the consideration received as part of the said transaction of sale of land and the stand taken by the A.O. and upheld by the CIT(A) is erroneous on the facts and in the circumstances of the case. CIT(A) has also erred in observing that the assessee did not advance any reason as to why the cheque of ₹ 60,00,000/-received from the Purchaser was not deposited in the bank. In fact the assessee has offered the explanation that the assessee along with other co-owner, Mr. Pratapsinh Shoorji Vallabhdas, were restrained by the Purchaser from depositing the cheques and were warned of the consequences such as cheques being dishonoured due to insufficiency of the balance in the bank account of purchaser M/s. Kanchi Concept Builders and Developers Pvt. Ltd. As a result, the assessee and Mr. Pratapsinh Shoorji Vallabhdas did not deposit the cheques in the bank account. At this backdrop it was factually incorrect on the part of the CIT(A) to conclude that the assessee did not offer any reason for holding the cheque and not deposited the same for a long period of time and such conclusion deserves to be quashed. No merit for the addition u/s.69A - Decided in favour of assessee.
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2019 (7) TMI 380
Penalty u/s 271(1) (c) - disallowances of claim of exemption u/s.10(13A) and disallowance of bank charges and repairs - penalty was levied for filing inaccurate particulars of income - HELD THAT:- But the fact remain that perusal of the assessment order would suggest that assessee had not filed any details whatsoever in support of claim of HRA. As regards to other addition order, it is clearly stated that assessee himself had agreed for the addition and therefore it cannot be said that the appellant had filed inaccurate particulars of income resulting an addition to the returned income. Therefore the very basis of levy of penalty has no legs to stand. Further, it is settled law that mere disallowance of claim does not entitle levy of penalty as held in the case of CIT vs. Reliance Petro Products Ltd, [ 2010 (3) TMI 80 - SUPREME COURT] . Furthermore the employer had not disputed the claim for exemption of HRA. Therefore in the light of the above findings, it is not a fit case for levy of penalty. Accordingly, we direct the AO to delete the penalty made u/s.271(1) (c) - Appeal of the assessee is allowed.
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2019 (7) TMI 379
TP adjustment - determining arm's length price of Head Office General Administrative expenses eligible to be claimed u/s 44C - HELD THAT:- Though TPO has determined the arm's length price of the Head Office expenditure allocated to the assessee at nil, however, ultimately there is no financial implication on the issue as the assessee had not claimed such expenditure as deduction either in the Profit Loss account or the computation of income. AO has also not made any addition in the assessment order. In aforesaid view of the matter, the issue raised in this ground is of mere academic importance, hence, we do not consider it necessary to delve any further into the issue. However the merits of the issue i.e., whether the Transfer Pricing Officer is competent to determine the arm's length price of the Head Office, General and Administrative expenditure at Rs. Nil, is an important legal issue which has to be decided keeping in view the provisions of the Act as well as relevant case laws. Therefore, while making it clear that we have not expressed any opinion on the merits of the issue as raised in this ground, we leave it open for adjudication if the issue arises in assessee s case for any other assessment year in future. With the aforesaid observations, the ground raised is dismissed as infructuous. Levy of interest under section 234C - HELD THAT:- Transaction could not be completed due to a technical glitch at RBI s payment gateway. This fact was communicated to the assessee by its banker. In fact, the banker also issued a certificate to this effect. Thus, from the facts on record it is evident, insofar as the assessee is concerned, it had made the payment of advance tax on the due date i.e., 15th June 2009. The transaction relating to the aforesaid payment could not be completed on 15th June 2009, for reasons beyond the control of the assessee. Therefore, the delay of one day in making payment of advance tax is not attributable to the assessee. That being the case, levy of interest under section 234C is unjustified. Since all the factual details relating to the payment were available before Commissioner (Appeals), she should have adjudicated the issue on merit instead of directing the AO to verify. Accordingly, we direct the Assessing Officer to delete the interest charged under section 234C of the Act. Ground is allowed.
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2019 (7) TMI 378
Disallowance of expenses - CIT-A restricted the disallowance from 20% to 10% - HELD THAT:- A.O. has not rejected the books of account of the assessee but the trading results of the assessee were verified by the A.O. only for the purpose of examining the claim of expenditure. The A.O. has made the disallowance on the ground that the assessee has not produced the supporting vouchers but the vouchers filed by the assessee are self-made vouchers. CIT(A) has given the finding that the A.O. has disallowed 20% of the expenditure which is unreasonable, excessive and without any basis. Once this finding is given by the ld. CIT(A) then there is no justification for sustaining the disallowance at 10% of the expenses. Therefore, after holding the addition as unreasonable, excessive and without any basis, the restriction of the addition/disallowance at 10% is also without any basis. Hence, the addition/disallowance sustained by the ld. CIT(A) is not sustainable in law and the same is deleted. Addition u/s 68 - creditworthiness of the loan creditor is not proved - CIT(A) has confirmed the addition made by the A.O. on the ground that the assessee has failed to explain the source of cash deposited by the loan creditor - HELD THAT:- Though, the assessee has proved the identity of the loan creditor, however, a cash of ₹ 2.95 lacs was deposited in the bank account of the loan creditor prior to the said amount of ₹ 3.00 lacs given to the assessee. Further the source of deposit was explained by the assessee as salary income of the loan creditor who was employed with the assessee itself. Thus, the loan taken by the assessee from its own employee and prior deposit of cash clearly established that the creditworthiness of the loan creditor is not proved beyond doubt. Since the loan creditor was employee of the assessee, therefore, the preponderance of probability is against the assessee that the said cash deposited in the bank account of the employee is assessee s own unexplained cash. Assessee has claimed loan of ₹ 3.00 lacs from his own employee and a cash of almost equal amount was deposited in the bank account of the said loan creditor prior to the alleged loan given to the assessee clearly an evidence against the assessee against which the assessee has not produced any evidence and hence the assessee has not discharged his burden to prove the transaction as genuine as well as the creditworthiness of the loan creditor. Therefore, we uphold the order of the ld. CIT(A) on this ground.
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2019 (7) TMI 377
Unexplained cash deposit in his bank account - Reopening of assessment u/s 147 - HELD THAT:- In light of the settled legal proposition of law as laid down by the various Courts including the decision of Hon ble Bombay High Court in case of CIT vs. Jet Airways . [ 2010 (4) TMI 431 - HIGH COURT OF BOMBAY] wherein it was held that in terms of Section 147 of the Act, the Assessing Officer has to assess or reassess the income which has escaped assessment and which was the basis for the formation to belief and it he does so he can also assessed or reassess any other income which has escaped assessment which come to his notice during the course of assessment proceedings. Issuing notice U/s 148 of the Act, he accepted the contention of the assessee and holds that the income which he has initially formed a reason to believe had escaped assessment, has as a matter of fact not escaped assessment, it is not open to him to independently assess some other income and if he intends to do so, a fresh notice U/s 148 would be necessary, we are of the considered view that the addition made by the Assessing Officer towards unexplained cash deposit in the assessee s bank account cannot be sustained as the very reasons for reopening the assessment has not been made the subject matter of assessment in the hands of the assessee. - Decided in favour of assessee.
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2019 (7) TMI 376
Rectification u/s 254 - additional evidence was not to be admitted by CIT(A), then there was no point in seeking the remand report of the AO on assessee s submissions whether any mistake is apparent from the record or not? - HELD THAT :- As relying on KUSHALBHAI RATANBHAI ROHIT OTHERS VERSUS THE STATE OF GUJARAT [ 2014 (5) TMI 488 - SUPREME COURT] it is clear that until and unless the order is signed and sealed cannot be treated as final and as per wisdom of the Court, in certain circumstances the order can be recalled and altered to a certain extent, even if it was dictated in the Open Court. Hence, the contention of the assessee to the effect that the Bench had shown their mind to remand the case to the file of the Ld. CIT(A) and therefore the rectification of the order is necessary, is not sustainable. Asseeee except to reiterating the issues already raised in written submission, could not raise any new/additional issue specifically which remained un-adjudicated. From the peculiar facts and circumstances, the question arises as to where the Court has passed the elaborate order while disposing of the contentions of the assessee on the basis of written submission and/or oral submissions, the order can be rectified. In our view the decision of the Tribunal has not to be scrutinized sentence by sentence merely to find out whether all facts have been set out in detail by the co-ordinate Bench or whether some incidental fact which appears on record has not been noticed by the Tribunal in its judgment. If on a fair reading of the judgment of the Co-ordinate Bench, it appears that it has taken into account all relevant material and has not taken into account any irrelevant material in basing its conclusions, then the decision of the Co-ordinate Bench, is not liable to be interfered with, unless, of course, the conclusions arrived at by the Bench are perverse. As it is also well settled that only glaring and mistake apparent on the face of the record alone can be rectified but not otherwise permissible under Sec.254(2) of the Act. A mistake must exist and the same must be apparent from the record, which is not apparent in this case, hence we do not have any hesitation to dismiss the application of the Assessee. Miscellaneous Application filed by the Assessee stand dismissed.
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Customs
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2019 (7) TMI 400
Validity of Demand u/s 28 of the Customs Act, 1962 without challenging bill of entry - Import of Computer Radiography System - classification of goods - classified under 90189099 or under 90229099? - case of appellant is that the assessment order in the subject bill of entry was not challenged by the department before the appropriate forum and therefore no demand under Section 28 of the Customs Act, 1962 is maintainable - applicability of decision in the case of Priya Blue [ 2004 (9) TMI 105 - SUPREME COURT ] and COLLECTOR OF CENTRAL EXCISE, KANPUR VERSUS FLOCK (INDIA) PVT. LTD. [ 2000 (8) TMI 88 - SUPREME COURT] ? HELD THAT:- The judgment of Priya Blue and Flock India of the Hon ble Apex Court are on the point of refund claim by the assessee without challenging the assessment order in the bill of entry. The present case is different. It is a case where after assessment and clearance of the goods is completed by issue of order under Section 47 of the Customs Act, 1962, within the normal period of limitation, the Deputy Commissioner has raised a demand under Section 28. While raising the demand he issued a show cause notice proposing re-classification of the imported goods and gave an opportunity to the respondent to present their case and considered their submissions - This is not the ratio laid down by the Hon ble Apex Court in the case of Priya Blue or Flock India. Cases pertaining to issue of demand under Section 28 after clearance of the case under Section 47 are covered by the judgment of the Hon ble Apex Court in the case of Jain Shudh Vanaspati Ltd., [ 1996 (8) TMI 108 - SUPREME COURT ] which clearly held that a demand can be raised under Section 28 even after clearance of the case under Section 47. Appeal allowed - decided in favor of appellant.
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2019 (7) TMI 399
DEEC Scheme - violation of post import condition - import in excess of requirement against SION norms - diversion of goods to sister concerns in the name of Job-Work - imports of Hexachloroethane under DEEC Licenses - Department alleges that the Appellants have misrepresented the facts of input out ratio to the authorities of DGFT; thus they have imported HCE in excess of their requirements and also they have violated the condition of Customs Notification 30/97 dated 01.04.1997 - time limitation - penalty. HELD THAT:- Learned Adjudicating Authority has given a clear finding that there was no records maintained at the factory premises of M/s. SCI for receipt of imported PCE. From the RG 23A Part I maintained by the importer, it is seen that no entry of PCE as raw material has been made through 3 consignment of PCE purchased locally were entered. Therefore, the claim of the Appellants that they have merely sent the goods for Job Work to M/s. SCF do not stand scrutiny - the investigation has successfully established that goods cleared to M/s. SCF by the Appellants have not returned back. The Appellants have taken the plea that M/s. SCF have themselves imported / locally procured PCE and sold to others and therefore the allegation that the sale of PCE, imported by the Appellants, by M/s. SCF is not proved. The investigation has successfully demonstrated that the goods even if they were supposed to have been sent to M/s. SCF on job work basis have never back to the Appellants for further use and export in their factory. In the result one has to hold that such goods have been diverted in to the local market in contravention of the Exim Policy and the Customs Notification. Violation of conditions of the notification or not? - HELD THAT:- The conditions of Notification have to be read very strictly. It is found that in spite of the claim of fulfilling the export obligation and discharge of bond by DGFT and Customs authorities, the liability of the appellants to pay duty in the event of violation of Customs Notification lies with him as held by the commissioner and the case law cited by him supports this contention - Condition No (vii) to the Notification No 30/97 dated 01-04-1997 stipulates that Exempt materials shall not be disposed of or utilized in any manner except for utilization in discharge of export obligation or for replenishment of such materials and the materials so replenished shall not be sold or transferred to any other person. The condition of the Notification is violated. In view of the clear wordings of the notification, no liberal reading in to the conditions on the basis of substantial compliance is required - Having violated the conditions of the notification the importer has rendered himself liable to pay applicable duty in terms of the Notification. Time Limitation - HELD THAT:- It is not the case of the appellants that the fact of diversion, of goods imported duty free under Advance License, was in the knowledge of the department. Revenue was not made aware of the acts of omission and commission of the Appellants - Learned Commissioner has correctly found that the SCN is not hit by limitation and that duty has been correctly demanded and penalty under Section 114A was rightly imposed. Penalty - HELD THAT:- The goods were imported by the appellants and the appellants are liable to pay duty in case of any violation - partner of the appellants is also the authorised signatory of M/s SCF. Equal Penalty under Section 114A has been imposed on the appellants and we have upheld the same - the penalty imposed on M/s SCF appears to be higher side. The penalty on M/s SCF reduced to Rupees one Lakh only from Rs Six Lakhs. Interest on penalty under Section 114A - HELD THAT:- The interest payable on the duty demanded does not require to be taken into consideration for arriving at the amount of penalty payable under Section 114A. Appeal allowed in part.
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Service Tax
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2019 (7) TMI 398
Rebate of Swachch Bharat Cess - input services used for providing output services which have been exported - rebate denied on the ground that the appellant has not complied with the condition 2(e) of the Notification No.39/2012 read with Notification No.03/2016 - HELD THAT:- It is an admitted fact that the appellant has not claimed any CENVAT credit on input and input services on which rebate has been claimed and the original authority while sanctioning the rebate has examined this issue and has categorically held that the appellants have not availed any CENVAT credit on input and input services on which rebate has been claimed - the Commissioner(Appeals) has wrongly interpreted the condition contained in para 2(e) in isolation without reading the whole sentence and has wrongly allowed the Departmental appeals. Since the appellants have not claimed any CENVAT credit on the amount for which the rebate has been claimed, the impugned orders are not sustainable in law - appeal allowed - decided in favor of appellant.
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Central Excise
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2019 (7) TMI 397
Principles of natural justice - non-speaking order - stay of order sanctioning refund - HELD THAT:- The order is self evidently a nonspeaking order. It even does not record the basic dispute between the parties leading to the refund. Nor does it record the submission of the parties. Consequently no examination of the submissions made by the Petitioner in support and/or to oppose the application, is found in the impugned order. It merely rejects the application by stating that it finds 'no cogent and valid reasons' to stay the refund. Thus, the impugned order is clearly in breach of principles of natural justice. An order disposing of stay application, may not be a detailed order. Nevertheless, the order must indicate the dispute before it, the submissions of the parties in brief and due consideration of the issue before it on the basis of the submissions made by the parties on the touchstone of the principles for grant of stay - In the absence of the impugned order meeting the above test, it becomes a nonspeaking order. Petitioner's stay application restored to the file of the Tribunal for fresh consideration and disposal in accordance with law - petition allowed.
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2019 (7) TMI 396
Rebate of duty - goods exported under the Central Excise Rules, 2002 - Section 35EE of the Central Excise Act, 1944 - HELD THAT:- The entire basis/ foundation of the orders passed against Petitioner, denying the benefit of rebate under Rule 18 of the said Rules, was the order dated 31st July, 2009 passed by the Additional Commissioner of Central Excise in the case of M/s. Rachana. The aforesaid order dated 31st July, 2009 in the case of M/s. Rachana, has now been set aside by the Tribunal and a fresh order dated 31st May, 2019 was passed by the Adjudicating Authority holding that the demand on M/s. Rachana for reversal of CENVAT Credit is not maintainable. The impugned order dated 31st January, 2018 of the Government of India in Revision, be set aside - Respondent-Revenue's Revision Application is restored to the Government of India in Revision, for fresh consideration, taking into account the subsequent developments.
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2019 (7) TMI 395
Refund of CENVAT Credit - input - Granulated Blast Furnace Slag (GBFS) - Process amounting to manufacture - grinding Granulated Blast Furnace Slag (GBFS) into Ground Granulated Blast Furnace Slag (GGBS) - Reliance placed in the case of REPRO INDIA LTD. VERSUS UNION OF INDIA [ 2007 (12) TMI 209 - BOMBAY HIGH COURT] where it was held that appellant was entitled to refund of CENVAT Credit under Rule 5 of CCR 2004 in respect of the inputs which have gone into the manufacture of exempted GGBS which was exported. There is no reason to deviate from the decision already taken in this regard. It is undisputed that to the extent the GGBS is sold in the domestic market, the appellant has been reversing proportionate amount of CENVAT Credit. Appeal allowed - decided in favor of appellant.
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2019 (7) TMI 394
CENVAT Credit - capital goods - the capital goods received prior to the imposition of central excise levy on final product (i.e. Coal) - time limitation - HELD THAT:- The levy of central excise was new in 2011 during which period the appellant has availed the credit on capital goods which is in dispute. The appellant, right from the adjudication stage to the stage of first appeal, has all along submitted that the subject goods, excavators, have been received in knocked down condition on 17.02.2011 which got ready for use only on 17.06.2011 on which date the GRN was prepared and goods were recorded in the Books and credited. In view of the decisions of this Tribunal in M/S. NEPA LTD. VERSUS CCE, INDORE [ 2013 (11) TMI 776 - CESTAT NEW DELHI] and the Apex Court decision in COMMISSIONER OF C. EX., CHENNAI-I VERSUS CHENNAI PETROLEUM CORPN. LTD. [ 2007 (4) TMI 4 - SUPREME COURT] , it is held that the appellant being a PSU would not have reason to avail wrong credit with intention to evade payment of duty. Moreover, since the central excise levy was made applicable for the first time, the issue of availing credit on capital goods during the cut off date would arise as a one-time affair for which there may be inadvertent error not attributable to wilful suppression or deceit to avail irregular credit. The issue of availment of credit involves a legal interpretation and therefore, it cannot be said that there would have been deliberate attempt on the part of the appellant to avail irregular credit. Appeal allowed on the ground of limitation.
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CST, VAT & Sales Tax
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2019 (7) TMI 393
Validity of deemed assessment - section 22(2) of TNVAT Act - It is the pointed submission of learned counsel for writ petitioner that invoice wise break up ought to have been given - applicability of the case of M/S. JKM GRAPHICS SOLUTIONS PRIVATE LIMITED VERSUS THE COMMERCIAL TAX OFFICER [ 2017 (3) TMI 536 - MADRAS HIGH COURT] - alternate remedy of statutory appeal - maintainability of petition. HELD THAT:- It cannot be gainsaid that JKM Graphics principle has not been adhered to. This is more so, as the writ petitioner who had sought time to give documents with regard to the return of goods, has not done so. In JKM Graphics principle, there have been objections, but the Assessing Authority proceeded solely based on annexure II of the selling dealers. Therefore this Court accepts the contention of learned Revenue counsel that JKM Graphics principle is distinguishable on facts and therefore, it does not come to the aid or advance the case of the writ petitioner. There is no disputation before this Court that alternate remedy of statutory appeal is available to the writ petitioner against the impugned order and that a statutory appeal shall lie before the jurisdictional Appellate Deputy Commissioner. There is no disputation that such a statutory appeal is under Section 51 of TNVAT Act. This Court is of the considered opinion that this is a fit case to relegate the writ petitioner to the alternate remedy of statutory appeal to the jurisdictional Appellate Deputy Commissioner - this is a fit case to relegate the writ petitioner to the alternate remedy of appeal before jurisdictional Appellate Deputy Commissioner under Section 51 of TNVAT Act - Petition disposed off.
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Indian Laws
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2019 (7) TMI 392
Dishonor of Cheque - Rejection of leave to defend the summary suit preferred by the respondent/plaintiff - Order XXXVII Rule 3 (5) CPC - loan was gib=ven without receipt of the same - HELD THAT:- The fact remains that the appellant s application and supporting affidavit filed under Order XXXVII Rule 3 (5) CPC for leave to defend neither refers to any so-called chit fund committee run by the respondent s father, nor does it refer to the fact that the name of UTI Bank Ltd. had undergone a change in the year 2007 itself - which pleas have been raised for the first time before this Court. Nevertheless, the said affidavit states, in no uncertain terms, that the transaction of loan set up by the respondent was concocted and fabricated, and that nothing had been pointed out as to why the appellant would take such a huge amount of loan from the respondent or as to why the respondent had advanced such loan to him, that too, without any receipt/acknowledgment of the same. When I consider the defence raised by the appellant viz. the respondent s claim that the entire purported loan amount was given by him to the appellant in cash without taking any receipt/acknowledgement from him, as also the fact that the respondent s criminal complaint filed under Section 138 of the NI Act, 1881 stands rejected in respect of the same cheque, I am unable to agree with the learned Trial Court that the appellant does not have any defence whatsoever or that his defence is wholly vexatious. It cannot be said that merely because the appellant failed to take the specific pleas, as urged before this Court, in his application/ affidavit for leave to defend, that such omission should disentitle him altogether from being granted leave to defend when the said affidavit clearly shows that he had, in no uncertain terms, stated that the whole transaction as set out by the respondent was concocted, fabricated and that no money had been exchanged between the parties. It is a settled legal position that the discretion to be exercised, while considering a prayer for grant of leave to defend the suit, would depend on the peculiar facts of each case and that the same cannot be put in any straitjacket formula. If the Court finds that the defence is wholly moonshine and sham, then leave to defend is liable to rejected; but if the defence is found plausible, though not very probable, the Court would be justified in putting the defendant on terms while granting leave to defend. Thus, even though the appellant s defence may not be very probable, yet the same cannot be said to be wholly vexatious - the decision of the learned Trial Court declining to grant leave to defend to the appellant cannot be sustained - The appellant is granted leave to defend, subject to his depositing 50% of the principal amount with the learned Trial Court within eight weeks from today. The matter is remitted to the learned Trial Court for consideration of the matter afresh, in accordance with law - appeal allowed.
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