TMI Tax Updates - e-Newsletter
July 2, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
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Income Tax:
Long term capital gain arising from transaction of sale of rights as per Joint Development Agreement (JDA) - Assessee company is in the healthcare business and not in business related to real estate and as such it cannot be said that assessee, by entering into the Joint Development Agreement, has converted the land into its stock-in-trade. Therefore, we have no hesitation in holding that there is no scope of applicability of section 45(2) of the Act to the facts of the present case. - the assessing officer is directed to allow the benefit of indexation of cost of acquisition till AY 2011-12 i.e. the year of assessment of capital gain - AT
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Income Tax:
Exemption u/s 11 - Denial of exemption disputing the charitable nature of activities carried out by the assessee in terms of section 2(15) - the assessee-authority is carrying out charitable activities with object of general public utility in accordance with section 2(15) of the Act and the same cannot be termed as commercial or of business nature for the purpose of proviso to section 2(15) of the Act. - AT
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Income Tax:
Income from other sources - difference between the fair market value and the issue price of shares at a premium as income of the Assessee - the AO can scrutinize the valuation report and he can determine a fresh valuation either by himself or by calling a determination from an independent valuer to confront the Assessee but the basis has to be DCF method and he cannot change the method of valuation which has been opted by the Assessee. - AT
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Income Tax:
Revision u/s 263 by CIT - no enquiry v/s incomplete enquiry - The valuation was carried at the insistence of the ld. AO to verify the physical existence of the property and overall value of investment. It is not a case of ‘no’ enquiry nor incomplete enquiry rather the Ld. AO to the best of his ability had made detailed enquiry and made proper application of mind and had examined this issue of deduction u/s 54F of the Act. - In the given facts and circumstances invoking provisions of section 263 of the Act on this issue so as to give direction to revise the assessment order was unjustified and uncalled for - AT
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Income Tax:
Substantive protective additions - CIT(A) has already placed reliance on the CBDT circulars that such admissions or confessions; as the case may be, made during the course of a search or survey does not carry any evidentiary value since it has to be only to the evidence collected only. We thus find no reason to interfere with the learned CIT(A)’s impugned conclusion deleting “substantive” and “protective” additions in issue - AT
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Income Tax:
Registration u/s 12AA denied - There is no finding on facts that the activities carried out by the assessee are not genuine - CIT(Exemption) has not mentioned in his finding that the objects of the trust were not in order or that the application made for registration was also not in accordance with law. In absence of these findings, just because, the taxes were not paid on the donations/voluntary contributions received cannot be the ground for rejection of application u/s.12AA of the Act. - AT
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Income Tax:
Disallowance being interest paid on delayed deposit of TDS - Allowable business expenditure or not? -Held No - an assessee could not possibly claim that it was borrowing from the State, the amounts payable to it as Income Tax, and utilizing the same as capital in its business, to contend that the interest paid for the period of delay in payment of tax amounted to a business expenditure. - AT
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Income Tax:
Disallowance of depreciation on car - use of car for personal purposes - it is for the AO to bring on record to suggest use of asset for personal purpose. In this case, nothing has been brought on record to prove the case of the AO that car was used for personal purpose. Therefore, we are of the considered view that the AO was erred in making ad hoc disallowance of depreciation on car - AT
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Customs:
Amendment in shipping bills - denial only on the ground that the system is showing the remark “Data already shared with GSTN - communication to the petitioner vide the impugned communications made - amendment in GSTN ID is Possible now or not? - It is directed that the request of the petitioner to make amendment in GST details in the Bills of Entry in question, may be examined by the concerned respondent Nos. 4, 5, 6 and 7 afresh after giving the petitioner an opportunity of hearing - HC
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Service Tax:
Levy of tax which was claimed under Form SVLDRS-1 - the application under the scheme was rejected on the ground of late filing of returns - In order to impose such levy, the designated committee was duty bound to hear the petitioner by giving him an opportunity of hearing. Considering the benevolent scheme which has been set into motion by the respondents, the petitioner was required to be heard even otherwise under the statutory mandate. - HC
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Central Excise:
Condonation of delay in filing appeal - The delay in preferring legal remedies though is inexcusable without sufficient reasons, yet it is also a settled principle of law that normally a litigant must not be made to suffer for the fault of his counsel - delay in filing the appeal is condoned by imposing cost of ₹ 10,000/- to be deposited with the M.P.State Legal Services Authority and remit the matter back to Customs, Excise & Service Tax Appellate Tribunal for deciding the appeal on merits. - HC
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Central Excise:
Adjudication of SCN after 18 years - transfer of the case to the "call book" - Clandestine removal - In the present case nothing is indicated in the initial SCN issued on 29th March 2000 to justify the Department invoking the proviso to Section 11-A (1) of the CE Act - the Court finds no justification for the Opposite Parties to revive the adjudication proceedings against the Petitioner 18 years after the issuance of the SCN. Accordingly, the impugned SCN and the notices are hereby quashed. - HC
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VAT:
Recovery of Arrears of Commercial Tax - Liability of person who purchased the property - In the present case, the subject property was sold by the defaulter / 3rd respondent to the 2nd respondent on 25.08.1999, who in turn, further sold the property to the petitioner on 13.07.2006 and the petitioner has no knowledge about any such charge created by the Department till the impugned orders are issued on 01.12.2004. The long delay in initiating action would defeat the proceedings itself. Even in the impugned notice, it is stated that the arrears of Commercial Tax due was of the year 1992-93. - Recovery notice quashed - HC
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VAT:
Input tax rebate - rebate not allowed on the stock held by him on 01.04.2006 - Section 73(1) has used the word 'shall' with a further phrase “within such period” meaning thereby time limit has been fixed and Rule 80 of C.G. VAT Act 2006 also used the words in express language that “the registered dealer shall furnish a statement in Form-74 in respect of goods, specified in Schedule II within a stipulated time. Therefore, the legislature has used the word 'shall' and hence it cannot be interpreted by the Court that it would be directory in nature - the time-frame prescribed by the legislature cannot be diluted by the Court order as it being the fiscal in nature and the circumstances of the nature has to be strictly complied. - HC
Articles
Notifications
Customs-
40/2021 - dated
30-6-2021
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ADD
Seeks to amend notification No. 34/2016 - Customs (ADD), dated 14th July 2016 to extend the levy of Anti-Dumping duty on 'Plain Medium Density Fibre Board (MDF) having thickness of 6mm and above' originating in or exported from Vietnam, up to and inclusive of 13th March, 2022 .
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39/2021 - dated
30-6-2021
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ADD
Seeks to amend notification No. 43/2016-Customs(ADD) dated 8th August, 2016, to extend levy of ADD imposed on " Viscose Staple Fibre (VSF) excluding Bamboo Fibre, Dyed Fibre, Modal Fibre & Fire-retardant Fibre " originating in or exported from China PR and Indonesia.
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38/2021 - dated
30-6-2021
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ADD
Seeks to amend notification No. 42/2016-Customs (ADD) dated 8th August, 2016 to extend the levy of Anti-Dumping duty on PVC Flex Film originating in or exported from China PR, up to and inclusive of 31st January, 2022.
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57/2021 - dated
1-7-2021
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Cus (NT)
Exchange rate Notification No.57/2021-Cus (NT) dated 01.07.2021.
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56/2021 - dated
30-6-2021
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Cus (NT)
Sea Cargo Manifest and Transhipment (Fourth Amendment) Regulations, 2021.
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55/2021 - dated
30-6-2021
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Cus (NT)
Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver
DGFT-
11/2015-2020 - dated
1-7-2021
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FTP
Extension in period of modification of IEC till 31.07.2021 and waiver of fees for IEC updation during July, 2021
GST-
28/2021 - dated
30-6-2021
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CGST
Seeks to waive penalty payable for non-compliance of provisions of Notification No. 14/2020 dated 21st March 2020
GST - States-
40/GST-2 - dated
1-7-2021
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Haryana SGST
Amendment of Notification No.57/GST-2, dated 26.04.2019 to extend the due date for filing FORM GSTR-4 for financial year 2020-21 to 31.07.2021 under the HGST Act, 2017
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39/GST-2 - dated
1-7-2021
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Haryana SGST
Amendment of notification no. 19/GST-2, dated 21.05.2021 in order to extend due date of compliances which fall during the period from "15.04.2021 to 29.06.2021" till 30.06.2021, with some exceptions under the HGST Act, 2017
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38/GST-2 - dated
1-7-2021
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Haryana SGST
Amendment of notification no.17/GST-2, dated 31.03.2020 to exclude government departments and local authorities from the requirement of issuance of e-invoice under the HGST Act, 2017
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37/GST-2 - dated
1-7-2021
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Haryana SGST
Amendment of notification no.03/ST-2, dated 09.01.2018 to rationalize late fee imposed under section 47 of the HGST Act, 2017 for late filing of return in FORM GSTR-7 from tax period of June, 2021 onward under the HGST Act, 2017
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36/GST-2 - dated
1-7-2021
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Haryana SGST
Amendment of notification no.03/ST-2, dated 09.01.2018 to rationalize late fee imposed under section 47 of the HGST Act, 2017 for late filing of return in FORM GSTR-4 from FY 2021-22 onwards under the HGST Act, 2017
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35/GST-2 - dated
1-7-2021
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Haryana SGST
Amendment of notification no.16/ST-2, dated 25.01.2018 to rationalize late fee imposed under section 47 of the HGST Act, 2017 for late furnishing of the statement of outward supplies in FORM GSTR-1, from tax period of June, 2021 onward under the HGST Act, 2017
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34/GST-2 - dated
1-7-2021
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Haryana SGST
Amendment of notification No.12/GST-2, dated 01.01.2019 to rationalize late fee imposed under section 47 of the HGST Act, 2017 for late filing of return in FORM GSTR-3B from June, 2021 onwards; and to provide one time relief by conditional waiver of late fee for delay in filing FORM GSTR-3B from July, 2017 to April, 2021; and to provide waiver of late fees for late filing of return in FORM GSTR-3B for specified taxpayers and specified tax periods under the HGST Act, 2017
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33/GST-2 - dated
1-7-2021
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Haryana SGST
Amendment of notification no.45/ST-2, dated 30.06.2017 to provide relief by lowering of interest rate for a specified time for tax periods March, 2021, April, 2021 and May, 2021 under the HGST Act, 2017
Indian Laws-
G.S.R. 458(E) - dated
30-6-2021
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Indian Law
Tribunal, Appellate Tribunal and other Authorities (Qualifications, Experience and other Conditions of Service of Members) (Amendment) Rules, 2021
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2021 (7) TMI 1
Carry Forward of credit of Education Cess, SHE Cess and KKC - carry forward through TRAN-1 is permissible under GST law or not? - Circular No. 87/06/2019-GST - HELD THAT:- It does not mean that the Appellant became so entitled to carry forward even a dead claim of unutilised Education Cess and Secondary and Higher Education Cess against the Output GST Liability after 01.07.2017. The set off and such adjustments could be allowed only if it clearly fell within the definition of “Eligible Duties” or “Eligible Taxes and Duties” as defined in Explanations 1 and 2. On the contrary, Explanation 3 clearly excluded Cess to be so eligible for carry forward and set off. Therefore, there is no iota of doubt that Cess of any kind except National Calamity Contingent Duty (NCCD), which was so specified in Explanations 1 and 2 specifically could be allowed to be carried forward and adjusted against Output GST Liability. It may be noted here that this NCCD is allowed to be transitioned not as CENVAT credit, but because it is specifically included as “Eligible Duties” in Explanations 1 and 2 of Section 140 of the Act.
The credit of such Education Cess and Secondary and Higher Education Cess which could not be utilised against the Output Education Cess and Secondary and Higher Education Cess Liability, while the said impost was in force prior to Finance Act, 2015, became a dead claim in the year 2015 itself and therefore, there was no question of allowing a carry forward and set off after a gap of two years against the Output GST Liability with effect from 01.07.2017.
The unutilised Education Cess and Secondary and Higher Education Cess in the hands of the appellant had become dead CENVAT Credit claim in the year 2015 itself with these levies dropped by the Finance Act 2015 and therefore, there is no question of it being claimed as a right to be carried forward and set off after 01.07.2017 against Output GST Liability - it can be stated that while Cess is collected from the person on whom such liability is fixed to meet a particular kind of expenditure incurred by the Government and its collection and expenditure is dedicated to that particular object or purpose of imposition of Cess such as Krishi Kalyan Cess imposed for the purpose of agriculture advancement or Education Cess imposed for the purpose of education enhancement. While Tax is a General Revenue, which can be spent by the Government for general public purposes.
The three types of Cess involved, namely Education Cess, Secondary and Higher Education Cess and Krishi Kalyan Cess were not subsumed in the new GST Laws, either by the Parliament or by the States. Therefore, the question of transitioning them into the GST Regime and giving them credit under against Output GST Liability cannot arise. The plain scheme and object of GST Law cannot be defeated or interjected by allowing such Input Credits in respect of Cess, whether collected as Tax or Duty under the then existing laws and therefore, such set off cannot be allowed.
The appellant was not entitled to carry forward and set off of unutilised Education Cess, Secondary and Higher Education Cess and Krishi Kalyan Cess against the GST Output Liability with reference to Section 140 of the CGST Act, 2017 - it is clear that carry forward of cesses as ITC through TRAN-1 by the appellant is not proper and in the instant case ample statutory provisions are available to restrict admissibility of cesses as ITC in GST to appellant - Appeal dismissed - decided against appellant.
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Income Tax
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2021 (7) TMI 21
Order u/s 201(1) read with section 201(1A) - time limit for the passing of the order - time limit for passing of an order u/s 201(1) - Period of limitation - HELD THAT:- It emerges from a perusal of the proviso that an order for the financial year 2007-08 or an earlier year is obligated to be passed on or before 31.3.2011. The deadline for passing of an order has been linked with the relevant financial year and not when the AO takes up the proceedings. It is trite law that a proviso ordinarily makes exception to and takes something away from the main provision. When the proviso to section 201(3) is stipulating for passing of an order before 31.3.2011, which is a period of more than two years as per the sub-section (3), it naturally follows that the ordinary time limit for the passing of the order within the main provision is a period of two years from the end of the relevant financial year in which the TDS statement is filed and it has no relation with the time when the AO takes up the proceedings for passing of an order.
Thus we hold that the order u/s 201(1) of the Act was passed beyond the period of two years from the end of financial year in which the last TDS statement was filed. The same is hereby quashed as time barred. In view of our decision on the legal ground setting aside the order of the AO passed u/s 201(1), there is no point in considering the issue on merits as well.
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2021 (7) TMI 20
Long term capital gain arising from transaction of sale of rights as per Joint Development Agreement (JDA) - claim of cost of acquisition - Adoption of indexation cost of acquisition - HELD THAT:- Computation of gain arising from Joint Development Agreement is to be made after taking into account cost of land transferred to the builder under the agreement whereon the building is constructed. To put it simply, in the present case, the assessee has received consideration of ₹ 33 crores by assigning rights over 5 acres land in favour of the builder M/s. SAS Infoetech P. Ltd. and as such we find no justification in the action of the assessing officer in disallowing the claim of cost of acquisition. In any case, merely because the land is continued to be reflected in the Balance Sheet of the assessee would not have any adverse implication on the computation of long term capital gain as the accounting treatment in the books of account cannot override the determination of real income under the provisions of Income Tax Act, 1961. In view of the above, we find no merit in the ground raised in the revenue’s appeal and same is dismissed.
A plain reading of section 45(2) makes it amply clear that it is the prerogative of the assessee to covert the capital asset to stock. Further, the term ‘Business carried on by him’ necessarily means that the capital asset so converted must form part of stockin- trade of the business carried on by the assessee.
Assessee company is in the healthcare business and not in business related to real estate and as such it cannot be said that assessee, by entering into the Joint Development Agreement, has converted the land into its stock-in-trade. Therefore, we have no hesitation in holding that there is no scope of applicability of section 45(2) of the Act to the facts of the present case. Therefore, we are unable to find any justification in the action of the Ld. CIT (A) in invoking provisions of section 45(2).
Once we have denounced the application of Section 45(2), there remains no basis for restricting the indexation to AY 2008-09 particularly when the taxable event arose in AY 2011-12 when the construction got complete and the assessee opted to part with 5 acres of land for a consideration of ₹ 33 crores. Accordingly, in view of our reaching this considered opinion, the assessing officer is directed to allow the benefit of indexation of cost of acquisition till AY 2011-12 i.e. the year of assessment of capital gain. - Decided in favour of assessee.
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2021 (7) TMI 19
Exemption u/s 11 - Denial of exemption disputing the charitable nature of activities carried out by the assessee in terms of section 2(15) - AO was of the opinion that assessee is primarily engaged in the activity of development and sale of property and same is in the nature of business and hit by proviso to section 2(15) - CIT-A allowed deduction - HELD THAT:- CIT (A), after taking note of decision of the Coordinate Bench of this Tribunal, in assessee’s own case [2014 (8) TMI 305 - ITAT DELHI] and other orders passed in the case of other development authorities with similar objects allowed the claim of exemption u/s 11 by holding that assessee-authority is a charitable organization and not hit by proviso to section 2(15).
We are of the considered view the assessee-authority is carrying out charitable activities with object of general public utility in accordance with section 2(15) of the Act and the same cannot be termed as commercial or of business nature for the purpose of proviso to section 2(15) of the Act. Accordingly, we find no reason to interfere with the order of the Ld. CIT (A) allowing benefit of application and exemption u/s 11 of the Act. - Decided against revenue.
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2021 (7) TMI 18
Income from other sources - DCF method applicability for shares - bringing to tax the difference between the fair market value and the issue price of shares at a premium as income of the Assessee - plea of the Assessee was that the valuation of shares at a premium was based on a valuation report in which Discounted Cash Flow (DCF) method of valuation of shares was adopted - According to the Assessee the DCF method was a permitted method of valuation in terms of Rule 11UA(2)(b) of the Income Tax Rules, 1962 (Rules) read with Sec.56(2)(viib) - whether the DCF method was applicable for shares issued on 4.8.2012? - HELD THAT:- Law contemplates invoking provisions of section 56(2)(viib) of the Act only in situations where the shares are issued at a premium and at a value higher than the fair market value.
The law provides that, the fair market value may be determined with such method as may be prescribed or the fair market value can be determined to the satisfaction of the Assessing Officer. The provision provides an Assessee two choices of adopting either NAV method or DCF method. If the Assessee determines the fair market value in a method as prescribed the Assessing Officer does not have a choice to dispute the justification. The methods of valuation are prescribed in Rule 11UA(2) of the Rules. The provisions of Rule 11UA(2)(b) of the Rules provides that, the Assessee can adopt the fair market value as per the above two methods i.e., either DCF method or fair market value of the unquoted equity shares determined by a merchant banker. The choice of method is that of the Assessee.
The Tribunal has followed the judgment of Hon'ble Bombay High Court rendered in the case of Vodafone M-Pesa Ltd. [2018 (3) TMI 530 - BOMBAY HIGH COURT] and has taken the view that the AO can scrutinize the valuation report and he can determine a fresh valuation either by himself or by calling a determination from an independent valuer to confront the Assessee but the basis has to be DCF method and he cannot change the method of valuation which has been opted by the Assessee.
We are of view that the issue with regard to valuation has to be decided afresh by the AO on the lines indicated in the decision of ITAT, Bangalore in the case of VBHC Value Homes Pvt. Ltd. [2020 (6) TMI 318 - ITAT BANGALORE] i.e., (i) the AO can scrutinize the valuation report and he can determine a fresh valuation either by himself or by calling a determination from an independent valuer to confront the assessee but the basis has to be DCF method and he cannot change the method of valuation which has been opted by the assessee. (ii) For scrutinizing the valuation report, the facts and data available on the date of valuation only has to be considered and actual result of future cannot be a basis to decide about reliability of the projections.
Primary onus to prove the correctness of the valuation Report is on the assessee as he has special knowledge and he is privy to the facts of the company and only he has opted for this method. Hence, he has to satisfy about the correctness of the projections, Discounting factor and Terminal value etc. with the help of Empirical data or industry norm if any and/or Scientific Data, Scientific Method, scientific study and applicable Guidelines regarding DCF Method of Valuation. The order of ld.CIT(A) is accordingly set aside and this issue is remanded to the AO for decision afresh, after due opportunity of hearing to the Assessee. Assessee's appeal is allowed for statistical purposes.
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2021 (7) TMI 17
Income from other sources - difference between the fair market value and the issue price of shares at a premium as income of the Assessee - correctness of the valuation Report - adoption of the fair market value as per the above two methods i.e., either DCF method or fair market value of the unquoted equity shares determined by a merchant banker - CIT(A) held that the Assessing Officer is well within his powers to disturb the valuation of the chartered accountant furnished by the Assessee substantiating the fair market value - HELD THAT:- Law contemplates invoking provisions of section 56(2)(viib) of the Act only in situations where the shares are issued at a premium and at a value higher than the fair market value.
The law provides that, the fair market value may be determined with such method as may be prescribed or the fair market value can be determined to the satisfaction of the Assessing Officer. The provision provides an Assessee two choices of adopting either NAV method or DCF method. If the Assessee determines the fair market value in a method as prescribed the Assessing Officer does not have a choice to dispute the justification. The methods of valuation are prescribed in Rule 11UA(2) of the Rules. The provisions of Rule 11UA(2)(b) of the Rules provides that, the Assessee can adopt the fair market value as per the above two methods i.e., either DCF method or fair market value of the unquoted equity shares determined by a merchant banker. The choice of method is that of the Assessee.
The Tribunal has followed the judgment of Hon'ble Bombay High Court rendered in the case of Vodafone M-Pesa Ltd. [2018 (3) TMI 530 - BOMBAY HIGH COURT] and has taken the view that the AO can scrutinize the valuation report and he can determine a fresh valuation either by himself or by calling a determination from an independent valuer to confront the Assessee but the basis has to be DCF method and he cannot change the method of valuation which has been opted by the Assessee.
We are of view that the issue with regard to valuation has to be decided afresh by the AO on the lines indicated in the decision of ITAT, Bangalore in the case of VBHC Value Homes Pvt. Ltd. [2020 (6) TMI 318 - ITAT BANGALORE] i.e., (i) the AO can scrutinize the valuation report and he can determine a fresh valuation either by himself or by calling a determination from an independent valuer to confront the assessee but the basis has to be DCF method and he cannot change the method of valuation which has been opted by the assessee. (ii) For scrutinizing the valuation report, the facts and data available on the date of valuation only has to be considered and actual result of future cannot be a basis to decide about reliability of the projections.
Primary onus to prove the correctness of the valuation Report is on the assessee as he has special knowledge and he is privy to the facts of the company and only he has opted for this method. Hence, he has to satisfy about the correctness of the projections, Discounting factor and Terminal value etc. with the help of Empirical data or industry norm if any and/or Scientific Data, Scientific Method, scientific study and applicable Guidelines regarding DCF Method of Valuation. The order of ld.CIT(A) is accordingly set aside and this issue is remanded to the AO for decision afresh, after due opportunity of hearing to the Assessee. Assessee's appeal is allowed for statistical purposes.
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2021 (7) TMI 16
Penalty levied under section 271(1)(c) - Addition of additional ground - HELD THAT:- Additional ground raised are already available on record and no investigation of the fresh facts is required for adjudication of these grounds. Accordingly, in view of the settled principal in the case of National Thermal Power Co. Ltd. v. CIT [1996 (12) TMI 7 - SUPREME COURT] the additional grounds raised by the assessee are admitted.
Initiating the penalty proceeding relevant charges either of concealment of income or furnishing of inaccurate particulars of income - The assessee was not clear under which limb of section 271C of the Act, the penalty was initiated. The Hon’ble Karnataka High Court in the case of Manjunatha Cotton and Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT] has held that while issuing the notice the Assessing Officer has to come to conclusion that whether it is a case of concealment of income or furnishing of inaccurate particulars of income and sending printed forms where all grounds mentioned in section 271 are mentioned, would not satisfy requirement of law. The Hon’ble Supreme Court in the case of SSA’S Emerald Meadows [2016 (8) TMI 1145 - SC ORDER], has also upheld the finding in the case of Manjunatha Cotton and Ginning Factory (supra)
Respectfully, following the decision of the Hon’ble Karnataka High Court and Hon’ble Supreme Court, we are of the opinion that penalty levied is bad in law and accordingly we cancel the same. Additional ground of the appeal is allowed.
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2021 (7) TMI 32
Disallowance of depreciation of project assets being road and bridge - Addition on the ground that the assessee is not the owner of the project assets and hence is not eligible for claiming depreciation of such assets - HELD THAT:- As relying on M/S GVK JAIPUR EXPRESSWAY LTD. [2018 (10) TMI 591 - SC ORDER] assessee is entitled to claim depreciation of public roads, treating the same as building. - Decided against the Revenue.
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2021 (7) TMI 15
Bogus LTCG on share application money received - Addition u/s 68 - correct assessment year - HELD THAT:- A perusal of the facts of the case reveals that the amount was received during the AY 2011-12. During the year under consideration, the share application money received in the previous year was transferred to the share capital a/c and share premium a/c. Therefore, the amount cannot be added in the 2012- 13. Moreover, it is also supported by the documents on record. In the circumstances, the addition cannot be made during this assessment year but should have been examined in the previous year. It is also pertinent to note that all details relating to the source of funds have been submitted by the assessee. In view of the above, delete the said addition. This ground of appeal is allowed.
Expenditure of staff salary, payment of rental, professional expenses etc - Disallowance on the ground that these expenses are liable to be capitalized u/s 57(iii) - HELD THAT:- No doubt, there was no order received by the assessee from customer creating lull in the business but assessee remained into manufacturing activities during the year under assessment. In these circumstances necessary expenditure of staff salary, payment of rental, professional expenses etc. are required to be incurred to keep the business alive. Their machines remained in operative posture.
CIT(A) has rightly and legally deleted the addition by following the decision rendered in the case of CIT vs. Nahar Exports Ltd. [2007 (5) TMI 171 - PUNJAB AND HARYANA HIGH COURT] has allowed and in the case of CIT vs. Chennai Petroleum Corporation [2013 (8) TMI 525 - MADRAS HIGH COURT] wherein it has been held that “machinery could not be put to use due to raw material paucity, assessee’s claim for depreciation could not be rejected. Consequently Ground No. 2 is also determined against revenue.
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2021 (7) TMI 14
Assessment u/s 153A - incriminating material found during the course of search or not? - HELD THAT:- Revenue could not controvert the fact that the additions as made by the Assessing Officer are not on the basis of material gathered during the course of search. Admittedly, the additions are not linked with incriminating material found during the course of search. Moreover, it is not disputed that the assessment was not abated in the year under consideration, the assessment had been completed. As relying on KABUL CHAWLA [2015 (9) TMI 80 - DELHI HIGH COURT] we hereby quash the impugned assessment order being not in the conformity with law laid - Decided in favour of assessee.
Deemed dividend addition u/s 2(22)(e) - HELD THAT:- No effort was made to ascertain the veracity of the confirmation made by the assessee. there is no evidence suggesting that the amount of ₹ 20 Lakhs from M/s. ATS infrastructure Ltd. was loan on advance to the assessee. In the absence of evidences, we are not inclined to affirm the view of Ld.CIT(A) when undisputedly during the original appellate proceedings.
CIT(A had categorically stated that the impugned amount represents repayment of pre-existing liability. Ld.CIT(A) has not brought any material to take a contrary view. Even during the appellate proceedings, Ld.CIT(A) has recorded the factum of confirmation furnished by the assessee. Hence, we hereby delete the addition. Ground raised by the assessee in this appeal are allowed.
Addition on account of benefit derived on purchases of flat for lower consideration - Assessee contended that the Assessing Officer erred in adopting market price at ₹ 3.5 crore in utter disregard to the fact that the value adopted by Stamp Valuation Authority is much lower than the value as disclosed by the assessee - HELD THAT:- Mr. Geetambar Anand, Co-director of the company are identical and in the case of Mr. Geetambar Anand, Co-director of the company, the addition has been deleted [2017 (6) TMI 1347 - ITAT DELHI]
CIT(A) was not justified in making the addition in the case of the assessee when in the similarly situated Co-director, addition was deleted. Moreover, in the original proceedings, Ld.CIT(A), Meerut considered the facts in depth and relying on the judgement of Hon’ble Supreme Court rendered in the case of M/s. Dhakeshwari Cotton Mills [1954 (10) TMI 12 - SUPREME COURT] observed that the additionwas liable to be deleted. He had categorically given a finding that the assessee had filed an Agreement for allotment dated 02.09.2006 between M/s ATS Infrastructure Ltd. and Mr. Prabodh Nath Aggarwal for consideration of ₹ 1.5 crore. It was further observed that the Assessing Officer neither conducted any inquiry from Mr. Prabodh Nath Aggarwal nor the Assessing Officer tried to find out the market price of K-Villa at the time of allotment in Financial Year 2006-07 - As considering these facts for the purpose of stamp duty, the value of K-Villa was only ₹ 81,04,355/- and the HDFC Bank also granted a loan of ₹ 1.35 crore against the market price of ₹ 1.5 crore. Therefore, he held that market price of ₹ 1.5 crore at the time of allotment was fair and reasonable. It is further observed that Ld.CIT(A) has not brought any new material to rebut the finding of Ld.CIT(A) in the original proceedings, therefore, the addition cannot be sustained. - Decided in favour of assessee.
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2021 (7) TMI 31
TDS u/s 195 - payments made by the assessee to M/s.Impact Fashion International when the service rendered by the non-resident is classified under Technical/managerial/professional services, which is deemed to accrue or arise in India under Section 9(i)(vii) of the Act - Tribunal deleted levy of TDS - HELD THAT:- Having regard to the submissions made by the learned Senior Standing Counsel for the appellant-Revenue and following the ratio laid down by the Hon'ble Division Bench of this Court in the judgment reported in Evolv Clothing Co. (P) Ltd. Vs. Assistant Commissioner of Income-tax, Company Circleii( 1), Chennai [2018 (6) TMI 1324 - MADRAS HIGH COURT] the question of law is decided against the Revenue and in favour of the assessee.
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2021 (7) TMI 13
Revision u/s 263 by CIT - no enquiry v/s incomplete enquiry - assessment orders framed u/s 147 r.w. 143(3) of the Act and various documentary evidences filed during the course of reassessment proceedings - Value of sale consideration to be adopted for computing the capital gain, Allowability of deduction u/s 54B of the Act and Allowability of deduction u/s 54F - HELD THAT:- In the instant case where the payment for sale consideration mentioned in the agreement to sale has been duly received through banking channels prior to entering registered sale deed, the value of sale consideration to be adopted in these cases has to be valued as per the Stamp Valuation Authority provided u/s 50C of the Act as on the date of entering the agreement of sale or consideration mentioned in the agreement to sale whichever amount is higher.
AO after making necessary enquiry has adopted one of the permissible view by accepting the claim of the assessee of computing the capital gain by taking sale consideration as on the date of agreement to sale which thus leaves no room for Ld. Pr. CIT to assume jurisdiction on this particular issue. This common issue covers appeals in the case of Shankarlal Mukati, Babulal Mukati, Kailash chandra Mukati, Tulsi Bai Mukati, Radheyshyam Mukati, Motilal Mukati & Motilal Mukati (L/H Ramchandra Mukati) wherein Ld. Pr. CIT assumed the jurisdiction only on this particular issue.
AO has conducted necessary enquiry on this particular issue and have also taken one of the permissible view judicially accepted, there was no justification on the part of the Ld. Pr. CIT to invoke the provision of section u/s 263 of the Act. We, therefore, quash the proceedings carried out u/s 263 of the Act and restore the assessment order originally framed u/s 143(3) r.w.s. 147 of the Act in the case of all these seven assessees and allow their respective appeals.
Deduction u/s 54B - In the instant case the agreement to sale was not cancelled and the same was acted upon on at the same sale consideration and finally executed the registered sale deed with the same person though acting on behalf of the company as its director and since the assessee has utilized the same sale consideration for purchasing new agricultural land he should be allowed the benefit of section 54F of the Act, so as to fulfill the very object of section 54B of the Act for which it has been created in the act. This view was adopted by the Ld. AO to allow the deduction u/s 54B of the Act which is legally permissible view and thus, cannot be taken as a basis to assume jurisdiction u/s 263 of the Act and holding the orders of Ld. AO as erronous.Grounds of appeal raised deserves to be allowed and proceedings u/s 263 of the Act are directed to be quashed.
Allowability of deduction u/s 54F as deduction was claimed by the assessee towards amount utilized for construction of residential house from the sale proceeds of impugned immovable property - HELD THAT:- Records shows that the assessee(s) have filed necessary documentary evidences such an affidavit in support of construction of new house, withdrawal of amount from bank for construction purpose, physical existence of new residential house which were also confirmed by the valuation report of Chartered Engineer.
As required by the Ld. AO the valuation of residential house was also obtained and submitted to the Ld. AO which was found to be much higher than the deduction claimed. Based on all such evidences and enquiry Ld. AO was satisfied about the investment in construction of new residential house and the claim of deduction u/s 54 F of the Act. It shows that there was a detailed enquiry of the Ld. AO to verify deduction u/s 54 F of the Act. However, Ld. Pr. CIT in the preceding u/s 263 of the Act alleged that the valuation report is dated 22.03.2016 but the construction was done in 2008.
This valuation was carried at the insistence of the ld. AO to verify the physical existence of the property and overall value of investment. It is not a case of ‘no’ enquiry nor incomplete enquiry rather the Ld. AO to the best of his ability had made detailed enquiry and made proper application of mind and had examined this issue of deduction u/s 54F of the Act.
In the given facts and circumstances invoking provisions of section 263 of the Act on this issue so as to give direction to revise the assessment order was unjustified and uncalled for.Therefore, since the assessment orders in question are neither erroneous nor prejudicial to the interest of revenue, Ld. Pr. CIT erred in assuming jurisdiction u/s 263 of the Act and was thus not justified in setting aside the order passed by the Ld. AO u/s 143(3) r.w.s. 147.
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2021 (7) TMI 12
Revision u/s 263 - royalty to the State Government which is not allowable deduction as per section 40(1)(iib) and the claim towards corporate social responsibility, which is also not an allowable deduction as per explanation 2 of section 37(1) - HELD THAT:- In the instant case there is no dispute that as per the return of income filed, the assessee made the claim under royalty payment to others. Similarly, expenditure was also claimed under Corporate Social Responsibility. Royalty payment to others was stated to be in respect of industrial water purchased by the assessee from the state government and corporate responsibility was stated to be related to the specific scheme formulated by the state government for NTR Sujala Pathakam providing 20 ltrs of water to surrounding areas, thus, claimed the same as business expenditure.
Claim of the assessee in respect of purchase of water from the state government needs to be verified in the light of the claim made in the return of income and the actual expenditure incurred. Similarly, in the explanation, the assessee stated that Andhra Pradesh Water Resources Development Corporation was authorized to pass resolution authorizing the Andhra Pradesh Industrial Infrastructure Corporation to levy and collect the industrial water rates as fixed by the government from time to time. Whether the supply of water by the AP Industrial Infrastructure Corporation is on contract basis or outright sale basis also needs verification to ascertain the TDS if any. Only after proper verification of the complete details, the nature of expenditure and it's allowability is to be decided whether it is for purchase of water or royalty payment or supply of water on contract basis.
Payment made on account of corporate social responsibility - There is no dispute that the assessee made the claim under Corporate Social Responsibility and the AO has neither collected any information nor verified the genuineness of the expenditure as observed by the Ld. Pr. CIT. Whether the expenditure incurred was related to Corporate Social Responsibility or the business expenditure and the genuineness and correctness of the expenditure also required to be verified. Since the AO failed to verify the above issues, the assessment order passed by the AO is erroneous and prejudicial to the interest of the revenue and we hold that the Ld. Pr. CIT rightly taken up the case for revision u/s. 263 and the same is upheld. The appeal of the assessee is dismissed.
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2021 (7) TMI 11
Substantive protective additions - “substantive” and “protective” additions - Additional income - admissions or confessions made during the course of a search or survey - HELD THAT:- Since there is no even an iota of evidence; except the assessee’s survey statement forming basis of the impugned additions. Mr.Naik vehemently reiterated Revenue’s stand once again that the same are very much based on the documentary evidence found during the course of the survey.
We, however, notice from a perusal of the survey statement(s) duly extracted in the corresponding assessment order(s) that the assessee(s) had made it clear that their admission was only based on rough estimation in order to avoid litigation and to purchase peace than in view of any material found/seized by the departmental authorities.
CIT(A) has already placed reliance on the CBDT circulars that such admissions or confessions; as the case may be, made during the course of a search or survey does not carry any evidentiary value since it has to be only to the evidence collected only. We thus find no reason to interfere with the learned CIT(A)’s impugned conclusion deleting “substantive” and “protective” additions in issue after appreciation all the facts considered in law of the CBDT circular(s) as well as various judicial precedents quoted at the assessee’s behest. Its identical sole substantive ground in all these six cases fail therefore.
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2021 (7) TMI 10
Registration u/s 12AA denied - CIT(E) rejected the application on the ground that, assessee had received voluntary contributions which ultimately have become part of the corpus fund and hence, being the income of the assessee trust / institution, the assessee was liable to pay tax and without the payment of the tax, registration u/s 12AA of the Act cannot be granted - HELD THAT:- We were faced with identical issue on similar facts and circumstances while deciding the case of Shree Lakdipool Vitthal Mandir [2021 (5) TMI 801 - ITAT PUNE] wherein held the objects of the trust are not doubted by the Department and they have also not disputed the charitable nature of the activities conducted by the assessee trust. Meaning thereby, all the relevant records were submitted before the Ld. CIT(Exemption) and he had verified the same and was satisfied on this aspect fulfilling the requirement of Section 12AA of the Act.
There is no finding on facts that the activities carried out by the assessee are not genuine - CIT(Exemption) has not mentioned in his finding that the objects of the trust were not in order or that the application made for registration was also not in accordance with law. In absence of these findings, just because, the taxes were not paid on the donations/voluntary contributions received cannot be the ground for rejection of application u/s.12AA of the Act. These things can be examined by the Department and scrutinized at the assessment stage. When all the requirements of registration u/s.12AA of the Act have been satisfied by the assessee trust, registration therein should be granted. In view thereof, we set aside the order of the Ld. CIT(Exemption) and direct the Department to grant registration u/s. 12AA - Decided in favour of assessee.
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2021 (7) TMI 9
Unexplained money u/s 69A - unexplained bank deposits - as argued cash deposited in the bank account represented the money collected from the customers and withdrawal is the payment to the vendors and to the shopkeepers - applicability of section 44AD - HELD THAT:- Assessee is engaged in the business of hardware and tools, therefore, considering the totality of facts of the case, it is of the considered opinion that business activities carried out by the assessee cannot be simply rejected and the entire cash deposits cannot be brought to tax as unexplained income.
The assessee in the instant case has filed purchase and sale bills before the learned CIT(A), therefore, the business activity is established. Further, there is no query either by the AO or by the learned CIT(A) regarding the utilization of the substantial withdrawals from the said bank account.
CIT(A) was not justified in sustaining the addition made by the AO on account of cash deposits in the bank account. Since, the same AO in the subsequent assessment year has accepted the profit rate of 10.59% u/s 44AD of the Act, therefore, considering the totality of the facts of the case, I am of the considered opinion that adoption of net profit @ 11% on the total bank deposits will meet the ends of the justice. I hold and direct accordingly. Grounds raised by the assessee are accordingly partly allowed.
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2021 (7) TMI 8
Unexplained investment in purchase of the property - co-ownership - double addition - CIT-A deleted the addition - HELD THAT:- CIT(A) has accepted the assessee's contentions inter alia that the impugned sum involved an amount had been invested by her husband than herself and therefore, the same ought not have been taxed in his hands only. It further transpires regarding the balance sum of ₹ 22,00,000/- that the assessee has sufficiently explained sources thereof by filing return for A.Y. 2015-16 along with balance sheet and other supportive evidences. Thus, lower appellate findings deciding the issue in assessee's favour has nowhere been rebutted from the department side. We thus see no merit in Revenue's instant sole substantive ground. The same stands rejected accordingly. Revenue's appeal is dismissed.
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2021 (7) TMI 7
Penalty levied u/s. 271(1)(c) - Estimation of income on bogus purchases - .CIT(A) deleted the penalty since the disallowance was made by making estimation of Gross Profit on the purchases - HELD THAT:- It is a settled position of law that penalty cannot be levied when an adhoc estimation is made. Inboth these cases an adhoc estimation was made by the Assessing Officer restricting the profit element in the purchases @10% and the Ld.CIT(A) scaled down the percentage of profit element in such purchases to 5%. See SHRI DEEPAK POPATLAL GALA & OTHERS [2015 (6) TMI 944 - ITAT MUMBAI].
Assessing Officer has only estimated the Gross Profit on the alleged non-genuine purchases without there being any conclusive proof of concealment of income or furnishing inaccurate particulars of such income. Thus, we do not observe any infirmity in the orders passed by the Ld.CIT(A) in deleting the penalty u/s.271(1)(c) of the Act levied by the Assessing Officer for the Assessment Years under consideration - Decided in favour of assessee.
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2021 (7) TMI 6
Assessment of trust - Carry forward of the excess of expenditure/deficit - assessee carried the matter before the ld. CIT(A) and assailed the assessment claiming that income derived from the trust should be computed from sound commercial principles and therefore, carry forward and set off of deficit should be allowed - CIT(A) directed the Assessing Officer to allow carry forward of net deficit of the current year - HELD THAT:- The Hon'ble High Court of Gujarat in the case of Shri Plot Swetamber Murti Pujak Jain Mandal 1 [1993 (11) TMI 17 - GUJARAT HIGH COURT] had the occasion to consider the CBDT No. 100 dated 24.01.1973 which allowed repayment of loan taken in earlier years for fulfilment of charitable objects as application - It is of the view that the same principle should apply if instead of taking the loan the organization spent more out of its corpus and it is reimbursed in subsequent years.
Similarly, the Hon'ble High Court of Delhi in the case of Raghuvanshi Charitable Trust [2010 (7) TMI 158 - DELHI HIGH COURT] has held that the assessee trust can be allowed to carry forward deficit of current year and to set off the same against the income of subsequent years.
We do not find any error or infirmity in the findings of the ld. CIT(A). - Decided against revenue.
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2021 (7) TMI 5
Disallowance being interest paid on delayed deposit of TDS - Allowable business expenditure or not? - whether it is compensatory in nature and is, therefore, allowable as deduction? - HELD THAT:- Interest is payable as consequence of failure to pay tax and the expenditure incurred for the purpose of payment of interest does not relate to the business of the assessee. Therefore, it is apparent that the payment of interest has nothing to do with the business of the assessee and, accordingly, payment of interest cannot be allowed as deduction under the provisions of the Act. While coming to this conclusion, we are guided by the ratio laid in the case of CIT vs. Chennai Properties and Investments Ltd. [1998 (4) TMI 89 - MADRAS HIGH COURT] wherein as clarified that Income Tax is not allowable as business expenditure and the amount deducted as tax is not an item of expenditure.
Hon’ble Madras High Court also referred to the judgment of Bharat Commerce Industries Ltd. v[1998 (3) TMI 2 - SUPREME COURT] wherein has rejected the arguments advanced by the assessee that retention of money payable to the State as tax or Income Tax would augment the capital of the assessee and the expenditure incurred towards the normal interest paid for the period of such retention would assume character of business expenditure and hold that an assessee could not possibly claim that it was borrowing from the State, the amounts payable to it as Income Tax, and utilizing the same as capital in its business, to contend that the interest paid for the period of delay in payment of tax amounted to a business expenditure. Decided against the assessee.
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2021 (7) TMI 4
Disallowance u/s. 14A r.w.r. 8D - contention of the assessee is that since the assessee has surplus reserves, it may be presumed that the investments were made out of interest-free funds - HELD THAT:- The assessee was unable to show whether sufficient reserves and surplus are available on the date of investment made. Merely showing statistical data at the year end is not sufficient and she should have proved before the authorities below that the assessee has surplus funds which have been invested - on perusal of the financial statements, there was hardly investment of only ₹ 4,30,164/- made during the year.
The assessee has invested in the earlier years - we observe that there was increase in the reserves and surplus during the impugned AY is ₹ 95,71,47,370/-. The details of investments are appearing in Note No. 8 where the increase in the investments in mutual funds only by ₹ 4,30,164/-. The assessee also tried to explain that investments were made on 31st March, 2007 in mutual funds of ₹ 1,95,58,373/-, which has been carried forward till the impugned AY, but, it is not clear that exact scrips were in existence during the impugned AY and the quantum of mutual fund investments has also been reduced from 2007 to 2013 which only ₹ 45,43,087/-. The total investments at the year end as per Schedule No. 8 is ₹ 2,75,95,387/-, but, the assessee has not explained the rest of the amount of investment from where it has been invested either from own funds or from interest bearing funds.
As during the impugned AY, the assessee has also paid interest. While perusing the order of the AO, we notice that the AO has wrongly taken the figures of investments while disallowing u/s. 14A whereas, the actual investments are much lower than quoted by the AO. Therefore, the issue in dispute is restored back to the file of the AO for recalculation of disallowance made u/s. 14A
Assessee drew our attention to the disallowance made under Rule 8D(2)(iii) and submitted that the AO has taken wrong figures while calculating the disallowance under the said section. Therefore, we remit this issue is also to the file of the AO with a direction recompute the disallowance under the said section with correct figures. Ground No. 2 & 4 raised on these issues is allowed for statistical purposes.
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2021 (7) TMI 3
Disallowance of depreciation on car - AO has made ad hoc disallowance of 25% of depreciation on car, on the ground that use of car for personal purposes cannot be ruled out - HELD THAT:- AO has disallowed ad hoc depreciation on car without bringing on record any evidence to prove that the assessee has used car for personal purpose. No doubt, if an asset is used for personal purpose, expenses relatable to such personal use can be disallowed. However, before doing so, it is for the AO to bring on record to suggest use of asset for personal purpose. In this case, nothing has been brought on record to prove the case of the AO that car was used for personal purpose. Therefore, we are of the considered view that the AO was erred in making ad hoc disallowance of depreciation on car and hence, we direct the AO to delete addition made towards ad hoc disallowance of depreciation on car.
Disallowance u/s 14A - AO has determined disallowance of ₹ 2,19,054/- u/s. 14A by invoking Rule 8D of the IT Rules, as against total exempt income being dividend income earned for the year at ₹ 1,990/- - HELD THAT:- It is a well settled principle of law that disallowance contemplated u/s. 14A of the Act, cannot exceed exempt income earned for the year. In this case, although the assessee has earned exempt income of ₹ 1,990/-, the AO has determined disallowance of ₹ 2,19,054/- which is over and above exempt income earned for the year, contrary to the legal position. CIT(A) after considering relevant facts has rightly restricted disallowance to the extent of exempt income. Therefore, we are of the considered view that there is no error in findings recorded by the ld. CIT(A) to restrict disallowance to the extent of exempt income and hence, we are inclined to uphold the findings of ld. CIT(A) and reject ground taken by the assessee.
Appeal filed by the assessee is partly allowed.
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2021 (7) TMI 2
Reopening of assessment u/s 148 - issue of share premium at more than intrinsic value - HELD THAT:- We note that the provisions of issue of share of share market value has been introduced on the statute books under section 56(2)(viib) of the Act in the Finance Act, 2012 w.e.f. 01.04.2013 and is applicable from A.Y. 2013-14. We, therefore, find merit in the contention of the Ld. A.R. that the reopening of the assessment of the assessee on this basis is not valid. See M/S. MALCHAND DINDAYAL SALTS PVT. LTD. AND (VICE-VERSA) [2020 (12) TMI 1033 - ITAT MUMBAI] and BALBIR ISPAT PVT. LTD. VERSUS THE INCOME TAX OFFICER, WARD 6 (1) (2) , MUMBAI [2019 (1) TMI 1840 - ITAT MUMBAI]
Even on merits the assessee has a very strong case. We note that the assessee filed all the documents before the authorities below i.e. AO as well as CIT (A) to prove the identity, creditworthiness of the shareholders and genuineness of the transactions. We also note that the shares issued at a premium were repurchased by family members/relatives at a price less than face value of shares. The money received by the assessee/appellant had been invested in the shares of associate concern M/s. Premium Paper and Board Industries Ltd. business whereof had failed miserably to the extent that said associate concern went into liquidation and thus the whole investment was jeopardized. It is only because of this, the shares were bought back by the investors at a distress price determined by both the investors and assessee appellant. Therefore, we are inclined to hold that the order of Ld. CIT (A) is not correct and is reversed. Even the issue in third ground of appeal has wrongly been decided by Ld. CIT (A) despite the facts having raised before the Ld. CIT (A) that expenses were incurred to maintain the office of the company such as accounts, writing charges, audit fee, bank charges and to give a corporate office intact and therefore this has to be allowed to the assessee.
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Customs
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2021 (7) TMI 27
Amendment in shipping bills - denial only on the ground that the system is showing the remark “Data already shared with GSTN - communication to the petitioner vide the impugned communications made - amendment in GSTN ID is Possible now or not? - HELD THAT:- The learned advocates Mr. Priyank Lodha and Mr. Dhaval Vyas appearing for the respondent Nos. 4, 5, 6 and 7 respectively, after relying upon their respective affidavits-in-reply, have submitted that they have no objection if the request of the petitioner to amend the GST details in the Bills of Entry is directed to be considered afresh after giving the petitioner opportunity to prove his documents in respect of which the amendment is sought in light of Section 149 of the Customs Act.
It is directed that the request of the petitioner to make amendment in GST details in the Bills of Entry in question, may be examined by the concerned respondent Nos. 4, 5, 6 and 7 afresh after giving the petitioner an opportunity of hearing and permitting the petitioner to produce the relevant documents - petition disposed off.
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Service Tax
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2021 (7) TMI 23
Refund of Cenvat credit - Denial on the ground of want of nexus - HELD THAT:- Refund denied by relying on various decisions including an order of this bench of the Tribunal in the case of M/S. TEMENOS INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF SERVICE TAX, CHENNAI [2020 (2) TMI 354 - CESTAT CHENNAI] wherein the denial of refund on the very same issue has been held to be incorrect.
The denial of refund cannot be sustained - Appeal allowed - decided in favor of appellant.
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2021 (7) TMI 22
Refund of service tax and cesses paid - failure to distribute credit to their SEZ and DTA units in the manner prescribed under Rule 7 of Cenvat Credit Rules, 2004 - failure to pay the vendors for the invoices on which refund is claimed - failure to prove claim of cenvat credit - violation of condition at para 3(III)(a), 3(III)(d) and Rule 5 of SEZ Notification No.12/2013-ST dt. 01/07/2013 - HELD THAT:- The appellant has SEZ units as well as DTA units and had centralized Service Tax registration at Bangalore. The present refund application pertains to only SEZ units and is not connected with DTA units whereas the Commissioner(Appeals) in the impugned order has wrongly come to the finding that the appellant has filed refund claim application for input services which have also been used in DTA units. Further it is found that the impugned services involved in the present case for which refund has been denied, fall in the approved list of input services issued by the Development Commissioner and the appellant has produced on record the instruction issued by the Government of India, Ministry of Commerce and Industries, SEZ unit, where it is found that these services have been specifically covered as input services. For each violation alleged by the Revenue, appellant have produced documentary proof in the form of invoices, bank statements and other records but the same has not been considered by the authorities below. Appellant has produced all those documentary proof along with the appeal paper book and some of the documents have also been produced along with written submissions at the time of hearing of these appeals. Since those documents and statements have not been considered in the impugned order by the learned Commissioner(Appeals) and the Commissioner(Appeals) has come to the finding which is not based on verification of the documents.
The matter needs to be remanded to the original authority with a direction to consider the statements, invoices and documents produced by the appellant in support of his claim and thereafter decide the refund application by passing a reasoned order - Appeal allowed by way of remand.
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2021 (7) TMI 24
Levy of tax which was claimed under Form SVLDRS-1 - the application under the scheme was rejected on the ground of late filing of returns - penalty and interest for late payment of tax for late filing of returns, liable to be imposed but was not imposed - opportunity of hearing not provided to the petitioner - HELD THAT:- According to the Scheme, once an assessee avails the Scheme and files the return by declaration, the verification of declaration by the designated Committee was prescribed under Section 126 of the SVLDRS Scheme and the issue of statement by the designated committee is covered under Section 127 of the SVLDRS Scheme - As per Section 127 of the SVLDRS Scheme, when the declaration made by the petitioner was rejected, meaning thereby he would be liable to pay further interest and penalty on late payment and return. However, to levy any such liability under Section 127 of the SVLDRS Scheme, under Section 127(3), it mandates that after the issue of estimate under Section 127(2), the designated committee shall give opportunity of being heard to the declarant, if he so desires, before issuing the statement indicating the amount payable by the declarant.
The order which is on record whereby the declaration of the petitioner was rejected, meaning thereby he would be liable to pay the additional amount, which would be a levy imposed. In order to impose such levy, the designated committee was duty bound to hear the petitioner by giving him an opportunity of hearing. Considering the benevolent scheme which has been set into motion by the respondents, the petitioner was required to be heard even otherwise under the statutory mandate.
The case is remitted back to the designated committee with a direction to give an opportunity of hearing to the petitioner by adhering to the rules of natural justice - Petition allowed by way of remand.
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Central Excise
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2021 (7) TMI 30
Condonation of delay in filing appeal - sufficient explanation for delay not provided - fault due to counsel of appellant - HELD THAT:- It is apparent from a reading of the delay condonation application that only casual statements have been made without any details or supporting documents. According to the Appellant, an accountant had been entrusted to file the appeal but since he had suddenly gone on leave, a new counsel was consulted. The Appellant has not stated as to how the Appellant acquired knowledge that the accountant had not filed an appeal. The Appellant has also not stated on which date the Appellant acquired knowledge that the appeal had not been filed by the accountant.
The delay in preferring legal remedies though is inexcusable without sufficient reasons, yet it is also a settled principle of law that normally a litigant must not be made to suffer for the fault of his counsel - delay in filing the appeal is condoned by imposing cost of ₹ 10,000/- to be deposited with the M.P.State Legal Services Authority and remit the matter back to Customs, Excise & Service Tax Appellate Tribunal for deciding the appeal on merits.
Application disposed off.
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2021 (7) TMI 28
Adjudication of SCN after 18 years - transfer of the case to the "call book" - Clandestine removal - Recovery of taxes and duties - Department has gone in appeal to the appropriate authority - injunction issued by Supreme Court/High Court/CEGAT, etc. - audit objections are contested - HELD THAT:- In the present case, there is no indication as to which of the categories stands attracted. From the facts narrated neither clauses (i), nor (ii) nor (iii) stands attracted. The present case has certainly not reached the stage of appeal and there is no order of the Supreme Court or the High Court or the CEGAT. This is not a case where the audit objections are contested by any one. Further, nothing is indicated in the counter affidavit about the Board specifically ordering this case kept pending by entry in the 'call book'.
In effect, the attempt to revive the proceeding after 18 years appears to contrary to the circulars issued generally by the Department for expeditious disposal of the SCNs. No convincing explanation is offered as to why the Department sat over the matter for 18 years. Except saying that they decided on 13th June, 2016 to revive the case in terms of the Board’s Circular dated 8th April 2016, there is no convincing answer for the inordinate delay in seeking to revive the proceedings - Also, the Petitioner cannot be expected to preserve its records for these many years and to be able to answer a SCN after 18 years. No effective opportunity of defence can be afforded to the Petitioner in such proceedings.
In the present case nothing is indicated in the initial SCN issued on 29th March 2000 to justify the Department invoking the proviso to Section 11-A (1) of the CE Act - the Court finds no justification for the Opposite Parties to revive the adjudication proceedings against the Petitioner 18 years after the issuance of the SCN. Accordingly, the impugned SCN and the notices are hereby quashed.
Petition allowed.
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CST, VAT & Sales Tax
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2021 (7) TMI 29
Recovery of Arrears of Commercial Tax - Liability of person who purchased the property - charge created by the Department not intimated either to the vendor of the petitioner or to the petitioner - HELD THAT:- This Court is of the considered opinion that the contentions of the first respondent that the action was initiated under the Revenue Recovery Act, attaching the immovable property in the year 1999, they have failed to continue all further actions in order to auction the property attached and recover the arrears of tax to be collected. Contrarily, the authorities allowed the defaulter to sell the property in the year 1999 in favour of the second respondent. The petitioner is the subsequent purchaser, purchased the property on 13.07.2006. Till such time, no action was taken by the authorities nor further notice was issued to the petitioner, informing about the charge created. In the absence of any such action during the relevant point of time, the impugned notice issued after a lapse of 8 years from the date of purchase by the petitioner, cannot be sustained.
In the present case, the subject property was sold by the defaulter / 3rd respondent to the 2nd respondent on 25.08.1999, who in turn, further sold the property to the petitioner on 13.07.2006 and the petitioner has no knowledge about any such charge created by the Department till the impugned orders are issued on 01.12.2004. The long delay in initiating action would defeat the proceedings itself. Even in the impugned notice, it is stated that the arrears of Commercial Tax due was of the year 1992-93. This being the factum, the writ petition is to be considered.
Petition allowed.
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2021 (7) TMI 26
Input tax rebate - rebate not allowed on the stock held by him on 01.04.2006 on the ground that Form-74 Stock Statement was not submitted on time - levy of double taxation during transition period - petitioner claims that return was not filed for transition period, as per the C.G. VAT Act, 2005 due to certain unavoidable reasons - HELD THAT:- The assessment in this case was in respect of the period from 01.04.2006 to 31.03.2007. The C.G. Commercial Tax Act 1994 was being replaced by the Chhattisgarh VAT Act, 2005 and thereafter the Act, 2005 came into force on 01.06.2006. Section 72 of the Act, 2005 made the provision of repeal and savings - A reading of section 72 of the VAT Act of 2005 would show that The Chhattisgarh Commercial Tax Act, 1994 shall stand repealed provided certain acts done in the Act of 1994 would be saved meaning thereby the petitioner claimed that he had filed the return under the Act of 1994. Therefore, his right, privilege and obligation or the liability acquired under the Repeal Act would be saved under the provision of Clause (i) (b) of section 72 or not is required to be examined.
It is not disputed that the earlier time period was further extended for another 60 days. Admittedly the petitioner had filed the stock statement on 07.11.2006 with a delay of 161 days. The petitioner claims that on the earlier Act of 1994, since the goods were purchased on which the tax were paid, he was entitled to get the benefit and the delay of filing being directory in nature cannot .be strictly interpreted.
The Supreme Court in ALD AUTOMOTIVE PVT. LTD. VERSUS THE COMMERCIAL TAX OFFICER NOW UPGRADED AS THE ASSISTANT COMMISSIONER (CT) & ORS. [2018 (10) TMI 814 - SUPREME COURT] while dealing with the input tax credit held that the condition under which the concession and benefit is given is always to be strictly construed. It further held that in the event it is accepted that there is no time period for claiming input tax credit, the provision becomes too flexible and gives rise to large number of difficulties including difficulty in verification of claim of input credit. It also held that taxing statutes contain self-contained scheme of levy, computation and collection of tax. The time under which a return is to be filled for the purpose of assessment of the tax cannot be dependent on the will of a dealer.
On reference of transitory provisions of section 73 sub-section (2) of the VAT Act, 2005 it mandates that where any goods specified in Schedule-II held in stock by registered dealer on the date of commencement of the Act, which have been purchased not earlier than 12 months from such date and are tax paid goods within the meaning of the Act repealed by the Act of 2005 and are for sale by him on or after the date within the State of Chhattisgarh or in the course of inter-State trade or commerce, he shall claim or to be allowed in respect of such goods within such period as may be prescribed an input tax rebate. Section 73(1) has used the word 'shall' with a further phrase “within such period” meaning thereby time limit has been fixed and Rule 80 of C.G. VAT Act 2006 also used the words in express language that “the registered dealer shall furnish a statement in Form-74 in respect of goods, specified in Schedule II within a stipulated time. Therefore, the legislature has used the word 'shall' and hence it cannot be interpreted by the Court that it would be directory in nature - While the entire tax structure was being replaced by a new frame work, it was necessary for the Legislature to make a transitional provision. The transitional provision essentially preserves all taxes paid or suffered by the dealer earlier and credit thereof. Therefore, in order to put and end to finality of the claim while switching over from one tax regime to another, the time-frame prescribed by the legislature cannot be diluted by the Court order as it being the fiscal in nature and the circumstances of the nature has to be strictly complied.
Petition dismissed.
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2021 (7) TMI 25
Input tax credit - transactions occurred prior to the issue of amendment in the Tamil Nadu Act - petitioners mainly contended that the amendment was effected by way of rectification of an anomaly and therefore, cannot be construed as a new policy - HELD THAT:- The issue involved in these Writ Petitions were already dealt with elaborately by the Madurai Bench of the Madras High Court in TVL. BHARATH TRADERS VERSUS THE COMMISSIONER OF COMMERCIAL TAXES, THE COMMERCIAL TAX OFFICER, SOUTH AVANI MOOLA STREET CIRCLE, MADURAI [2019 (8) TMI 1699 - MADRAS HIGH COURT]. Further, the respondent department has also not preferred any further appeal challenging the said judgment and therefore, the judgment became final and the said benefit is to be extended to all these petitioners - It was held in the said case that Since the substitution in the present case only seeks to set right an anomaly it necessarily has to be effective from the date of inception of the Act itself, retrospectively.
Petition allowed - decided in favor of petitioner.
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