TMI Tax Updates - e-Newsletter dated: July 22, 2019 - with Direct Tax, Indirect Tax and GST Updates and Updates on FTP, FEMA, IBC & Corporate Laws etc. published on TMI with Latest Case Laws

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TMI Tax Updates - e-Newsletter July 22, 2019 Case Laws in this Newsletter: GST Income Tax Benami Property Customs Corporate Laws Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax TMI SMS Attachment of the benami properties - Benami Amendment Act, 2016, amending the Principal Benami Act, 1988, cannot have retrospective effect. Set off - entire business activity stopped - same line of business was never restarted - benefit of set off of business loss not allowed Highlights / Catch Notes GST: Clarification on doubts related to supply of Information Technology enabled Services (ITeS services). Visit to Get Source GST: Clarification in respect of goods sent/taken out of India for exhibition or on consignment basis for export promotion. Visit to Get Source GST: Liability of GST - Profit Sharing Agreement - activities or transactions is in nature of actionable claims other than lottery, betting, gambling which are treated neither as a supply of goods nor a supply of services - do not attract GST as per CGST or SGST Visit to Get Source GST: Jurisdiction on assessee - State Gov. OR Central Gov. - as per the decision of State Level Committee, the administrative control for all purposes over the petitioner has been entrusted to the Center, which is evident from the list of tax payers of Alwar district having turnover of more than 1.5 crore - validity of SCN issued by state official - notice issued Visit to Get Source Income Tax: Benami transaction - retrospective or prospective amendments - the Benami Amendment Act, 2016, amending the Principal Benami Act, 1988, enacted w.e.f. 1st November, 2016, i.e. the date determined by the Central Government in its wisdom for its enforcement; cannot have retrospective effect. Visit to Get Source Income Tax: Disallowance of share issue expenses during amalgamation u/s 35DD - there was need to increase in authorized share capital and therefore, such expenses cannot be segregated from the main amalgamation proceedings and therefore, these expenses are part of amalgamation expenses - duly allowable Visit to Get Source Income Tax: Penalty u/s 271(1)(c) -disallowance on account of loss on sale of investment - assessee has not suppressed any facts or details at any stage of proceedings either before the Assessing Officer or at the Appellate stage - no penalty Visit to Get Source Income Tax: Computation of LTCG - applicability 50C on transfer of Development Rights - the provisions of section 50C can be applied only for transfer of land or building or both and not for “Rights in Development Agreement‟ Visit to Get Source Income Tax: Benefit of set off of business losses - income relates to renting of warehousing - entire business activity have come to a grounding halt and subsequently, the conduct of the assessee also clearly reveals that the same line of business was never restarted - not entitled for the benefit of set off of business loss Visit to Get Source Income Tax: Deduction u/s 54F - denied on premise that the land in question was not transferred within the stipulated period as provided u/s 54F - agreement to sell was within time - it is very clear that an agreement to sell would extinguish the rights and the same would amount to transfer within the meaning of Section 2(47) - deduction is allowable Visit to Get Source Income Tax: Revision u/s 263 - failure of AO to not referring the matter to the DVO for valuation of construction work - when the AO has taken a broad view by accepting the cost of fixed assets as recorded in the books of account and supported by the valuation report, then the order of the AO cannot be held to be erroneous on the ground of lack of enquiry Visit to Get Source Income Tax: Stay of demand - ACIT requiring to deposit 20% of the outstanding demand - only in ‘exceptional circumstances’ the discretion of the AO could be interfered with by the superior authority i.e either the assessment order is unreasonably high-pitched or a genuine hardship is likely to be caused to the Assessee - Petitioner has failed to make out a case of genuine hardship - no stay of the demand Visit to Get Source Income Tax: Bogus purchases - tribunal hold that no addition can be made merely on the basis of the statement recorded by the third party i.e. Sales Tax Department - two Revenue authorities have recorded concurrent finding with regard to the genuineness of the transactions, hence not like to disturb the same in the present appeal - no substantial question of law Visit to Get Source Income Tax: Transfer of case u/s 127 - in the impugned order, the Pr. CIT has relied on various statements of the assessees of the said group, on the basis of which he came to the conclusion that it would be necessary to centralize - none of these aspects were stated in the sCN means no opportunity to meet with such adverse material which the Pr. CIT pressed in service for passing the impugned order - order is quashed Visit to Get Source Income Tax: TP adjustment regarding interest on outstanding receivables - “interest on receivables” is an international transaction during the FY and the decisions rendered prior to the amendment to section 92B are not applicable ipso facto applicable - when the credit period is clearly mentioned in the Agreement then the same only should be allowed and interest on trade receivables after such credit period should be computed for TP adjustment Visit to Get Source Income Tax: Addition u/s 41 - difference between the sales-tax loan amount and the amount paid on Net present value basis under the sales-tax deferral scheme of Maharashtra Government - receipt is not income inasmuch as all the requirements of Section 41(1) could not be fulfilled Visit to Get Source Income Tax: Quashing of prosecution u/s 276C and 277 - Penalty u/s 271(1)(c) deleted by CIT and confirmed by Tribunal - the prosecution cannot be sustained since the penalty after having been deleted by the complainant following the Appellate Tribunal's order, no offence survives under the Income Tax Act and thus “quashing of prosecution is automatic.” Visit to Get Source Customs: Confiscation of goods - Acetonitrile - undervaluation - only those goods which were seized and provisionally released to the appellants could have been held liable for confiscation and confiscated. Visit to Get Source Customs: Imposition of penalties u/s 114 - Misuse of IEC - Appellant have only unknowingly in good faith, allowed the use of their IE code. Thus, there is no case of imposition of penalty u/s 114 of the Customs Act made out. Visit to Get Source Customs: Imposition of penalty u/s 112(a) - employees of CHA - violation of import conditions - Goods diverted with his knowledge - The imposition of penalty on the Appellant, who is an employee of CHA, appears to be harsh, penalty reduced. Visit to Get Source IBC: CIR process - Petitioner and the Debtor entered into Power Purchase Agreement for supply of 20,00,000 units - since no agreement between the parties obligating the Corporate Debtor to consume 60,00,000 units per year - there is no existence of debt - Petition dismissed Visit to Get Source IBC: Voluntary liquidation petition - Section 59 of I&B Code, 2016 - applicant Company is having no creditors either secured or unsecured - nothing adverse is found from the material available on record in respect of opposing the proposed liquidation of the corporate person - the present application deserves to be allowed Visit to Get Source SEBI: Procedure and formats for limited review / audit report of the listed entity and those entities whose accounts are to be consolidated with the listed entity Visit to Get Source Service Tax: The non-payment of service tax has come to light after the investigation conducted by the Department. Accordingly, the appellant has deliberately suppressed the relevant facts from the Department with sole intention to evade the payment of service tax - Demand confirmed invoking extended period of limitation with penalty. Visit to Get Source Service Tax: Cessation of service tax liability - Date of amalgamation/ merger between the service provider and principal - Appointed ate is 1.4.2010 - Registration Certificate was amended only on 05.12.2012 - The ‘appointed date’ is to be taken into consideration. Visit to Get Source Central Excise: Reversal of Cenvat Credit - It is only in the provisions of Rule 6(6)(vii) of the Cenvat Credit Rules, which are to the effect that there would be no requirement of reversal of any amount in case of the goods cleared under the exemption to Mega Power Project, N/N. 6/2006 was not replaced with N/N. 12/2012 - This inadvertent mistake stands clarified by the Board - Demand set aside. Visit to Get Source Central Excise: Job-work - failure on the part of principal to pay the duty - appellant have not availed the benefit of N/N. 10/97-CE, which was availed by the principal manufacturer and, therefore, the demand of duty for violation of the terms of N/N. 10/97-CE cannot be raised against the appellant Visit to Get Source VAT: Rectification of mistakes - Period of limitation - demand notices were issued relating to the assessees engaged in the photographic activity - rectification pursuant to order of supreme Court held taxing provision constitution valid reversing HC order - the orders of rectification being passed beyond the period of limitation envisaged u/s 25A of the KST Act deserves to be set aside Visit to Get Source Articles CASH CREDITS- Deemed Income and Taxability SUPPLEMENTARY NOTICE UNDER CUSTOMS ACT, 1962 Notifications Central Excise 03/2019 - dated 18-7-2019 - CE (NT) Central Board of Indirect Taxes and Customs, appoints the officers GST - States 11/2019-State Tax (Rate) - dated 29-6-2019 - Chhattisgarh SGST Refund mechanism for outgoing international tourist 30/2019 - State Tax - dated 28-6-2019 - Chhattisgarh SGST Seeks to provide exemption from furnishing of Annual Return / Reconciliation Statement for suppliers of Online Information Database Access and Retrieval Services (“OIDAR services”). 29/2019 - State Tax - dated 28-6-2019 - Chhattisgarh SGST Seeks to prescribe the due date for furnishing FORM GSTR-3B for the months of July, 2019 to September,2019 28/2019 - dated 28-6-2019 - Chhattisgarh SGST Seeks to prescribe the due date for furnishing FORM GSTR-1 for registered persons having aggregate turnover of more than 1.5 crore rupees for the months of July, 2019 to September,2019 27/2019 - State Tax - dated 28-6-2019 - Chhattisgarh SGST Seeks to prescribe the due date for furnishing FORM GSTR-1 for registered persons having aggregate turnover of up to 1.5 crore rupees for the months of July, 2019 to September,2019 F-10-20/2019/CT/V (50) - dated 18-6-2019 - Chhattisgarh SGST Corrigendum - Notification No. 3/2019-State Tax (Rate), No. F-10-17/2019/CT/V(36) dated the 29.03.2019 34/2019-State Tax - dated 18-7-2019 - Gujarat SGST Extension in time limit up to 31st July, 2019 for GST CMP-08 for April-2019 to June 2019 33/2019-State Tax - dated 18-7-2019 - Gujarat SGST Gujarat Goods and Services Tax (Fifth Amendment) Rules, 2019. Order No. 06/2019-State Tax - dated 28-6-2019 - Gujarat SGST Gujarat Goods and Services Tax (Sixth Removal of Difficulties) Order, 2019. 70/GST-2 - dated 18-7-2019 - Haryana SGST Seeks to specify retail outlets established in the departure area of an international airport, beyond the immigration counters, making tax free supply of goods to an outgoing international tourist, as class of persons who shall be entitled to claim refund under the HGST Act, 2017. 69/GST-2 - dated 18-7-2019 - Haryana SGST Haryana Goods and Services Tax (Fifth Amendment) Rules, 2019. Order No. 06/2019-State Tax - dated 17-7-2019 - Himachal Pradesh SGST Himachal Pradesh Goods and Services Tax (Sixth Removal of Difficulties) Order, 2019. 30/2019-State Tax - dated 17-7-2019 - Himachal Pradesh SGST Seeks to provide exemption from furnishing of Annual Return / Reconciliation Statement for suppliers of Online Information Database Access and Retrieval Services (“OIDAR services”). 29/2019-State Tax - dated 17-7-2019 - Himachal Pradesh SGST Seeks to prescribe the due date for furnishing FORM GSTR-3B for the months of July, 2019 to September,2019 28/2019-State Tax - dated 17-7-2019 - Himachal Pradesh SGST Prescribe the due date for furnishing FORM GSTR-1 for registered persons having aggregate turnover of more than 1.5 crore rupees for the months of July, 2019 to September, 2019 27/2019-State Tax - dated 17-7-2019 - Himachal Pradesh SGST Prescribe the due date for furnishing FORM GSTR-1 for registered persons having aggregate turnover of more than 1.5 crore rupees for the months of July, 2019 to September, 2019. 11/2019-State Tax (Rate) - dated 17-7-2019 - Himachal Pradesh SGST Specify retail outlets established in the departure area of an international airport, beyond the immigration counters, making tax free supply of goods to an outgoing international tourist, to claim refund of applicable state tax paid on inward supply of such goods. 22/2019 – State Tax - dated 11-6-2019 - Jharkhand SGST Government of Jharkhand appoints the 21st day of June, 2019, as the date which rule 12 shall come into force 20/2019 – State Tax - dated 11-6-2019 - Jharkhand SGST Jharkhand Goods and Services Tax (Third Amendment) Rules, 2019 Order No. 05 State Tax - dated 28-5-2019 - Jharkhand SGST Jharkhand Goods and Services Tax (Fifth Removal of Difficulties) Order, 2019 Order No. 4/2019-State Tax - dated 25-4-2019 - Jharkhand SGST Jharkhand Goods and Services Tax (Fourth Removal of Difficulties) Order, 2019 Order No. 03/2019-State Tax - dated 25-4-2019 - Jharkhand SGST Jharkhand Goods and Services Tax (Third Removal of Difficulties) Order, 2019. 14/2019 – State Tax - dated 25-4-2019 - Jharkhand SGST Supersession Notification S.O. No. 50, State Tax, dated the 29th June, 2017 13/2019 – State Tax - dated 25-4-2019 - Jharkhand SGST Prescribe the due dates for furnishing of FORM GSTR-3B for the months of April, May and June, 2019 12/2019 – State Tax - dated 25-4-2019 - Jharkhand SGST Seeks to prescribe the due dates for furnishing of FORM GSTR-1 for those taxpayers with aggregate turnover of more than ₹ 1.5 crores for the months of April, May and June, 2019 11/2019 – State Tax - dated 25-4-2019 - Jharkhand SGST Prescribe the due date for furnishing FORM GSTR-1 for registered persons having aggregate turnover of more than 1.5 crore rupees for the months of July, 2019 to September, 2019 10/2019 – State Tax - dated 25-4-2019 - Jharkhand SGST Category of persons exempt from obtaining registration who is engaged in exclusive supply of goods and whose aggregate turnover in the financial year does not exceed forty lakh rupees Circulars / Instructions / Orders GST - States - GSL/GST/B.50 - dated 19-7-2019 Corrigendum to Circular No. 45/19/2018-GST dated 30th May, 2018. GST - States - 108/27/2019-GST - dated 19-7-2019 Clarification in respect of goods sent/taken out of India for exhibition or on consignment basis for export promotion. GST - States - GSL/GST/B.49 - dated 19-7-2019 Corrigendum to Circular No. 102/21/2019-GST dated 28th June, 2018. GST - States - 107/26/2019-GST - dated 19-7-2019 Clarification on doubts related to supply of Information Technology enabled Services (ITeS services). GST - States - 1080/GST-2 - dated 11-7-2019 Corrigendum to Circular issued vide memo No. 927/GST-2, dated 16th April, 2019. GST - States - 106/25/2019-GST - dated 2-7-2019 Refund of taxes paid on inward supply of indigenous goods by retail outlets established at departure area of the international airport beyond immigration counters when supplied to outgoing international tourist against foreign exchange. GST - States - GSL/GST/B.48 - dated 2-7-2019 Corrigendum to Circular No. 97/16/2019-GST dated 8th April, 2019 issued vide No. GSL/GST/S.168/B.37. GST - States - GSL/S.5(1)/S.68/B.23 - dated 15-6-2019 Delegation of Power to Inspector to intercept any conveyance, to inspect documents, device and goods. GST - Corrigendum to Circular No. 45/19/2018-GST - dated 18-7-2019 Corrigendum to Circular No. 45/19/2018-GST dated 30th May, 2018 issued vide F. No. CBEC/20/16/4/2018-GST Customs - PUBLIC NOTICE NO. 65/2019 - dated 18-7-2019 Exemption from charges for late filing of Bill of Entry Customs - PUBLIC NOTICE NO. 64/2019 - dated 11-7-2019 Exemption from charges for late filing of Bill of Entry Customs - PUBLIC NOTICE NO. 62/2019 - dated 3-7-2019 Need for better communication and coordination to avoid delay in assessment or examination and subsequent clearance of consignment from the docks Customs - PUBLIC NOTICE No. 60/2019 - dated 21-6-2019 Procedure to be followed in cases of manufacturing or other operations undertaken in bonded warehouses under section 65 of the Customs Act Customs - PUBLIC NOTICE NO. 58/2019 - dated 20-6-2019 Implementation of UNSC Resolutions on Democratic Peoples’ Republic of Korea (DPRK) Customs - PUBLIC NOTICE NO. 57/2019 - dated 19-6-2019 Discrepancy in the HSN Code Classification of Stone & Marble Handicrafts Customs - PUBLIC NOTICE NO. 56/2019 - dated 17-6-2019 Introduction of "Project Imports module" in ICES at JNCH Customs - PUBLIC NOTICE NO. 54 /2019 - dated 14-6-2019 Introduction of “Project Imports module” in ICES at JNCH Customs - PUBLIC NOTICE NO. 47/2019 - dated 23-5-2019 Practise of assessment of Petroleum products of Chapter 27- review thereof News Corrigendum to Circular No. 45/19/2018-GST dated 30th May, 2018 Clarification in respect of goods taken out of India for exhibition or on consignment basis for export promotion DGGI Headquarters arrests one person for issuing bogus invoices without supply of goods Case Laws: GST 2019 (7) TMI 1000 Liability of GST - Profit Sharing Agreement between the applicant as an employee and the shareholders - actionable claims - scope of supply - HELD THAT:- In this case, the profit sharing agreement gives the applicant a claim to the beneficial interest in the profits on the event of a strategic sale where at least 51% of paid up Equity share capital of the company is sold at a price not less than ₹ 75 or an initial public offering where the mid point of the price band as per red-herring prospeectus is not less than ₹ 75 per equity share and subsequent listing on the stock exchange - either of these events may occur or both may not, in that case, the claim is only contingent. This transaction between the applicant and the shareholders is an 'actionable claim' u/s 2(1) of CGST read with section 3 of the Transfer of Property Act, 1882. The actionable claims other than lottery, betting, gambling are activities or transactions which shall be treated neither as a supply of goods nor a supply of services and hence do not attract GST as per CGST or SGST Act - the profit sharing agreement between the applicant and various shareholders of SHA is an actionable claim and is not relating to lottery, betting and gambling and hence is covered under schedule III to CGST Act and SGST Act as neither a supply of goods nor a supply of services and hence is not taxable to CGST or SGST. 2019 (7) TMI 999 Jurisdiction on assessee - State Gov. OR Central Gov. - as per the decision of State Level Committee, the administrative control for all purposes over the petitioner has been entrusted to the Center, which is evident from the list of tax payers of Alwar district having turnover of more than 1.5 crore - validity of SCN issued by state official - Scope of division of tax payer base dated 20.09.2017 (Annexure-3) contained in Circular No.01/2017 dated 20.09.2017 - HELD THAT:- Issue notice to the respondents. Rule is made returnable by six weeks. 2019 (7) TMI 975 Permission for withdrawal of Advance Ruling Application - Classification of supply - supply of services or not - supply of repairing and replacement service - principal supply or composite supply - requirement of registration u/s 22 and section 25 of CGST Act, 2017 for the use of warehouses of ASP (the sub-contractor) - HELD THAT:- The applicant did not furnish the documents undertook to be submitted. However, the applicant was extended an opportunity to be heard finally on 21-05-2019. The authorised representatives of the applicant appeared and submitted a written letter requesting withdrawal of the application for Advance Ruling before the authority, since the company has opted to drop the proposed business model. The application filed by the applicant for Advance Ruling is dismissed as withdrawn. Income Tax 2019 (7) TMI 998 Disallowance of deduction u/s.36(1)(va) r.w.s. 2(24)(x) - Employees' contribution to PF and ESI - failure to deposit before due date - HELD THAT:- A decided in DECO MICA LIMITED VERSUS DEPUTY COMMISSIONER OF INCOME TAX [ 2018 (10) TMI 1696 - GUJARAT HIGH COURT] assessee did deposit such amount of contribution towards PF ESIC accounts, however, missed the deadline prescribed in the statutes for such purpose. On account of this, the Revenue did not permit deduction of such sum from the income of the assessee. Such disallowance thereupon became the subject matter of appeal before the Tribunal. The Tribunal dismissed the ground, relying upon the judgment of this Court in the case of Commissioner of Income-tax vs. Gujarat State Road Transport Corporation Limited, reported [ 2014 (1) TMI 502 - GUJARAT HIGH COURT] The question of law proposed in the present appeal is squarely covered by the aforesaid order passed by this Court. In such circumstances referred to above, this appeal, at this stage, is dismissed. However, if the Supreme Court reverses the judgement in the case of CIT vs. GSRTC (Supra), it would be open for the appellant to revive this appeal by filing an application for such purpose within three months from the date of the judgement. - Decided against assessee. 2019 (7) TMI 997 Transfer of case u/s 127 - transferred from one Commissionerate to another - requirement of hearing would include personal hearing - the principle of natural justice - SCN not mentioned the issue/adverse material relied for passing transfer order - HELD THAT:- Neither of the decisions nor other decisions placed before us by the Counsel for the Petitioner, however, lays down the proposition in law that such requirement of hearing would include personal hearing. However, in facts of the present case, we are not inclined to test the impugned order on this ground, since admittedly the Department had offered such personal hearing, which the Petitioner did not avail of. We have noted that initially personal hearing was fixed on 16th May, 2017. The Petitioner conveyed his unavailability on said date and sought an adjournment. Hearing was re-fixed on 5th June, 2017, on which date also the Petitioner merely filed his written submissions and did not participate personally or through authorized representative. The Petitioner therefore, cannot complain that personal hearing though asked for, was not granted. Such hearing was granted, but not availed of. Despite such observations, we did not find that in the present case, the procedure adopted by the concerned authority in passing the impugned order passes the test of following the principles of natural justice which would include fair hearing. We have reproduced the entire show cause notice issued to the Petitioner, which merely conveyed to him that search and survey action was carried out in case of Ranka Group of cases and the Petitioner should therefore, submit an objection to his assessments being centralized. This show cause notice no where points out how the Petitioner was connected with the said Ranka Group and what useful purpose would be served in centralizing his assessments with the said group of assessee. Far more importantly, in the impugned order, the Pr. CIT of Mumbai has relied on various statements of the assessees of the said group, on the basis of which he came to the conclusion that it would be necessary to centralize the Petitioner's assessments with the said group of assessees also In this portion thus, the Pr. CIT referred to the statements of one Abhinandan Jain recorded u/s 132(4), suggesting that the Petitioner had inflated the script price of one Risa International Ltd., in connivance with other operators. The statements of other witnesses were referred to suggest that the Petitioner had received commission for such activities. According to him, such statements establish the involvement of the Petitioner in organizing artificial price rise in the shares of the said Company. Admittedly, none of these aspects were stated in the show cause notice, nor the statements or even the gist of the statements to the extent relevant, was provided to the Petitioner. The Petitioner therefore, had no opportunity to meet with such adverse material which the Pr. CIT pressed in service for passing the impugned order. Under the circumstances, the impugned order is quashed. In view of such conclusion, we need not examine the Petitioner's alternative contention that there was no concurrence between the two jurisdictional Commissioners about transfer of the assessments. The Writ Petition is accordingly disposed of. 2019 (7) TMI 996 Rectification u/s 254 - combined period of stay has exceeded 365 days - stay of demand stands vacated after expiry of a period of 365 days, even if delay in disposal of appeal is not attributable to the assessee - HELD THAT:- The issue is covered against the Revenue by a Division Bench judgment of this Court in ' The Principal Commissioner of Income Tax, Gurgaon Vs. M/s Mitsubishi Electric Automotive India Pvt. Ltd., Manesar, Gurgaon' [ 2019 (5) TMI 1656 - PUNJAB AND HARYANA HIGH COURT] 2019 (7) TMI 995 Bogus purchases - genuineness of transactions - HELD THAT:- Whether the transactions were bogus or not, cannot be a pure question of fact having regard to the evidence on record. If the two Revenue authorities have recorded concurrent finding with regard to the genuineness of the transactions, we would not like to disturb the same in the present appeal. It is difficult for us to take the view that the findings are based on no evidence or are on misreading of evidence on the basis of which it can be said that the findings are perverse. No substantial question of law as such involved in this appeal. 2019 (7) TMI 994 Stay of demand - ACIT requiring the Petitioner to deposit 20% of the outstanding demand on or before 22nd February, 2019 as a condition for stay of the demand - HELD THAT:- What would constitute as being unreasonably high-pitched , obviously differs from case to case. In the facts and circumstances of the present case, the Petitioner had to necessarily demonstrate that the Petitioner was suffering genuine hardship in complying with the requirement of depositing 20% of the demand created as a result of the high-pitched assessment. The Petitioner has failed to do so. The question whether the assessment is in fact unreasonably high-pitched, would obviously have to await the decision in the appeal pending before the CIT (A). Since the Petitioner has failed to make out a case of genuine hardship for stay of the demand, the Court finds no reason to interfere with the impugned order. The petition is accordingly dismissed. The pending application is also disposed of. No costs. 2019 (7) TMI 993 Deduction u/s 80JJA denial - manufacturing - baggase / husk is not a waste but is a by-product of agri-produce processing industry which was purchased and not collected and processed or treated by the assessee, which is a prerequisite for claiming deduction under Section 80JJA - HELD THAT:- Issue is covered by the decision of the Division Bench of this Court in case of CIT, Pune Vs. Padma S. Bora [ 2012 (12) TMI 666 - BOMBAY HIGH COURT] . This question is therefore, not considered. Disallowance on account of employee's contribution to Provident Fund (PF), Employee's State Insurance Corporation (ESIC) and Maharashtra Labour Welfare Fund - HELD THAT:- Issue covered by the decision of this Court in the case of CIT-Central Vs. Ghatge Patil Transports Ltd [ 2014 (10) TMI 402 - BOMBAY HIGH COURT] in which it has held that the benefit of deduction of the employees' contribution to the provident fund would also be available as long as the same is made before filing of the return. This question is, therefore, not considered. Depreciation on windmills denied - assessee was not a registered owner of the windmills and it was purchasing electricity from NAV Maharashtra Chakan Oil Mills Ltd (NMCOML) thus having no title / dominion and right to use the assets - HELD THAT:- Commissioner and the Tribunal concurrently came to the conclusion that the assessee had purchased windmill for total consideration of ₹ 1.10 Crores. The payments were made between August 2007 to March 2008 through bank channel. The Sales Tax Entitlement Certificate of the assessee was also accordingly modified w.e.f. 5.12.2007. Memorandum of Understanding dated 1.6.2007 under which the said machinery was acquired by the assessee was also produced on record. It was, after examination of such materials on record, the Commissioner and the Tribunal concurrently held that the assessee had in fact purchased windmill and therefore, was entitled to claim depreciation thereon. No question of law arises 2019 (7) TMI 992 Reopening of assessment post demise of writ petitioner's father - writ petitioner before this Court is 24 years of age and he is pursuing his Master's degree(M.Tech) - liability of a legal representative - recovery proceedings - HELD THAT:- There is no disputation or disagreement that the liability of a legal representative under the IT Act is limited to the extent to which the estate is capable of meeting the liability. To be noted, writ petitioner has not inherited anything from his father and he has/had nothing to do with his father's aforementioned bank account is learned counsel's say. Owing to the peculiar facts and circumstances of this case, with a rider that this case shall not be cited as a precedent, the following order is passed: a) Impugned SCN dated 26.12.2018 bearing reference PAN. ALPPC0202L/2018-19 and the impugned assessment order also dated 26.12.2018 are set aside. b) The statement made on oath i.e ., affidavit filed in support of the writ petition by the writ petitioner that he has not inherited any assets and deposits from his father(assessee) particularly ground (f), which has been extracted and reproduced supra is recorded. c) It is open to the respondent to proceed against the aforesaid Bank Account bearing A/c No:12451930001835, HDFC Bank, 22, 7th East Cross, Gandhi Nagar,Katpadi, Vellore, IFSC : HDFC0001245 and any other assets of the assessee (writ petitioner's father), if unearthed and if it comes to light or surfaces in future. 2019 (7) TMI 991 Deduction u/s 54F denied - premise that the land in question was not transferred within the stipulated period as provided u/s 54F - the agreement to sell would extinguish the rights in the property and fall under definition of the term 'transfer' u/s 2(47)(ii) - HELD THAT:- The Income Tax Act gives a precise definition to the term 'transfer'. Section 2(47)(ii) talks about extinguishment of rights. The Supreme Court, in Sanjeev Lal's case [ 2014 (7) TMI 99 - SUPREME COURT] , is very clear that an agreement to sell would extinguish the rights and the same would amount to transfer within the meaning of Section 2(47). We are of the opinion that the Appellate Tribunal was not right in law in confirming the order of the CIT(A) denying the deduction u/s 54F on the premise that the land in question was not transferred within the stipulated period as provided u/s 54F Section 54F is a beneficial provision and is applicable to an assessee when the old capital asset is replaced by a new capital asset in the form of a residential house. Once an assessee falls within the ambit of a beneficial provision, then the said provision should be liberally interpreted. Deduction u/s 54B - land in question was non-agricultural and the exemption u/s 54B is available only to an agricultural land - HELD THAT:- Agreement to sell was invalid on account of breach of Section 63 of the Bombay Tenancy Act, but it is a settled position of law that an invalid transaction would remain valid unless it is declared to be invalid by the competent authority under the provisions of the Bombay Tenancy Act. It is axiomatic under the Bombay Tenancy and Agricultural Lands Act that when permission is granted by the authorities concerned for sale of agricultural land to a non-agriculturist, the land does not cease to be an agricultural land merely because of such permission being granted. If the conditions of the permission are not complied with, the land in respect of which permission was granted u/s 63 would revert to its original character of agricultural land. On one hand, the Revenue authorities say that the agreement to sell was invalid as it was between an agriculturist and a non-agriculturist and such agreement could not have been executed in favour of the purchaser, being a non-agriculturist, without the permission of the competent authority. However, ultimately when the permission came to be granted by the authority despite such agreement to sell and when the assessee herein transferred the land, the Revenue authorities now say that the said land was non-agricultural and, therefore, the assessee is not entitled to claim exemption u/s 54B. As emphasized in the case of Manilal Somnath [ 1976 (3) TMI 41 - GUJARAT HIGH COURT] mere granting of the permission u/s 63 does not alter the agricultural character of the land, and on that aspect of the matter, we are of the opinion that the Tribunal has obviously erred in law. We are of the view that the second question with respect to Section 54B should be re-looked by the Tribunal in light of what has been observed by us, more particularly, the decisions referred to by us of this Court. - Tax Appeal is partly allowed. 2019 (7) TMI 990 TDS u/s 194A - validity of the orders passed u/s 201(1) and 201(1A) - territorial jurisdiction of AO - Regional Rural Bank having more than 451 branches spread over 9 districts of Karnataka - HELD THAT:- Tribunal held that on this issue of restricting the order u/s 201(1) to only 118 branches (out of 451 branches) was in consonance with the directions issued by the co-ordinate bench of Tribunal in the order passed relating to same assessee whereunder the Tribunal had categorically held or opined that AO, TDS ward-1, Hubballi would not have jurisdiction other than Head office and branches office if any situated at Hubballi and as such to the extent of orders of AO determining TDS by treating bank as assessee in default in respect of branches other than 118 branches were held to be not in consonance with Section 194A of the Act. This finding of the Tribunal having not been challenged by the Revenue which related to same assessee and as such it cannot be re-agitated. Tribunal has rightly dismissed the appeals insofar as ground No.1 is concerned. Impact of acceptance of decision of Tribunal on similar fact by Revenue - HELD THAT:- Reasoning adopted for rejecting ground No.2 is on account of judgment of Delhi High Court of MEGA CORPORATION LTD. [ 2017 (2) TMI 1253 - DELHI HIGH COURT] having not been either cited or urged before the AO or CIT(A). In these circumstances, the Tribunal has rightly rejected the second ground also. Though Mr. Y.V. Raviraj, learned counsel appearing for the appellant would contend that issue relating to restricting to 118 branches instead of 451 branches was still at large before the Tribunal is erroneous and requires to be considered for purpose of rejection, inasmuch as when Revenue was conscious of finding of fact having been recorded had not been challenged and same had reached finality, it would not be apt and appropriate for the Revenue to re-agitate same issue. As such, we find there is no Substantial Question of Law involved in these appeals to be framed, adjudicated and answered by us. 2019 (7) TMI 989 Revision u/s 263 - failure of AO to not referring the matter to the DVO for valuation of construction work - HELD THAT:- It was not a case of complete lack of enquiry on the part of the AO rather the AO has conducted a detailed enquiry on this issue and called for all the relevant records from the bank for the purpose of examining the cost of construction of the hotel building. It could be a case of inadequate enquiry so far as not referring the matter to the DVO, however, it was not mandatory for the assessing officer to refer the valuation to the DVO once the AO was satisfied with the cost of construction and cost of fixed assets as recorded in the books of account. Tribunal further held that even if the Pr. CIT found that the decision of the AO accepting the cost of construction/cost of fixed assets is contrary to the facts or otherwise not permissible as per the provisions of the IT Act, then the order of the AO could have been reversed by giving a concluding finding on the issue. Pr. CIT has set aside the impugned order only for the purpose of referring the same to the DVO. It is thus evident that the Pr. CIT was not sure about the correctness of the cost of construction or cost of fixed assets either shown in the project report or recorded in the books of account. When the AO has taken a broad view by accepting the cost of fixed assets as recorded in the books of account which were also supported by the valuation report, then the order of the AO cannot be held to be erroneous on the ground of lack of enquiry. It is settled position of law that when the AO has taken one of the possible views then the Pr. CIT cannot be permitted to invoke the provisions of Section 263 simply because he does not agree with the view taken by the AO. On examination of the reasoning given by the Tribunal, we do not find that there was any justification for the Pr. CIT to invoke the provisions of Section 263 on the specific plea that the order of the AO was prejudicial to the interest of the revenue. Every loss of the revenue as a consequence of the order of the AO cannot be treated prejudicial to the interest of the revenue. Where two views are possible and the AO has taken one view with which the Pr. CIT did not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken by the AO was not at all possible in law. - Decided in favour of assessee. 2019 (7) TMI 988 Benefit of set off of business losses against its other income - income from renting of warehousing - in Assessment Years 1999-00, 2000-01 and 2002-03 the assessee company's assets such as machinery, vehicles, trucks, furniture and fittings, factory sheds were maintained with the hope of getting orders - HELD THAT:- In the decision in the case of L.VE.Vairavan Chettiar [ 1965 (4) TMI 6 - MADRAS HIGH COURT] the Court found that there was nothing to show that the business had been abandoned and the assessee was continued to incur expenditure and it would come up and the business would be successful. In the said factual background, the Court held that the resultant loss being business loss is deductible. The three fact finding authorities have held that the entire business activity have come to a grounding halt. Subsequently, the conduct of the assessee also clearly reveals that the same line of business was never restarted. Therefore, we agree with the view expressed by the Tribunal that the assessee is not entitled for the benefit of set off of business loss which is in fact, business expenditure against the other income for all the three assessment years under consideration. In Kisan Sahkari Chini Mills. Ltd. [ 2004 (11) TMI 77 - ALLAHABAD HIGH COURT] it has been held that Section 57 provides for deductions which are admissible from the income taxable under the head income from other sources . If a particular expenditure falls strictly under the sub-clause of Section 57 only then it is liable to be allowed as expenses otherwise not. It was further held that expenditure incurred on maintenance of the office and for planning of construction does not fall under any of the sub-clauses of Section 57 and therefore, the assessee could not have allowed the expenses as deduction from the interest income. Sub-Clause (ii) of Section 56(1) speaks of income from machinery, plant or furniture belonging to the assessee. Admittedly, no such income was generated and therefore, the claim of expenditure to be a business loss and to be set off against the income from house property is a plea which has to be necessarily rejected. Appeal stands dismissed and the substantial question of law is answered against the assessee. 2019 (7) TMI 987 Quashing of prosecution u/s 276C and 277 - Penalty u/s 271(1)(c) deleted by CIT and confirmed by Tribunal - HELD THAT:- Since the act of concealment of income is the main constituent for charge under Section 276C and 277 of the Act, once the CIT (Appeals) concluded that there was no concealment of income on the part of the assessee, the very foundation of the charge would not survive. It is also to be noted that against the order passed by the CIT (Appeals) deleting the penalty, the Revenue preferred second appeal before the Tribunal, Nagpur. However, the appeal filed by the Revenue was dismissed. The Revenue did not take up the matter further and thus the order passed by the Tribunal affirming the order passed by the CIT (Appeals) has attained finality. In the matter of K.C. Builders [ 2004 (1) TMI 7 - SUPREME COURT] the Supreme Court further observed that if the trial is allowed to proceed further after the order of the Tribunal and the consequent cancellation of penalty, it will be an idle and empty formality to require the appellants to have the order of the Tribunal exhibited as a defence document inasmuch as the passing of the order as aforementioned is unsustainable and unquestionable. Supreme Court observe in para23 that the High Court is not justified in dismissing the criminal revision ignoring the settled law as laid down by the Supreme Court that the finding of the Appellate Tribunal was conclusive and the prosecution cannot be sustained since the penalty after having been deleted by the complainant following the Appellate Tribunal's order, no offence survives under the Income Tax Act and thus quashing of prosecution is automatic . In the circumstances, this Court deems it appropriate to exercise its inherent power for quashing the proceeding of criminal case No.29362/1996 (Income Tax Officer, Rajnandgaon Vs. M/s System India Castings, Bhilai Others) pending before CJM, Durg and it is accordingly quashed. 2019 (7) TMI 986 Addition u/s 41 - remission of liability - difference between the sales-tax loan amount and the amount paid on Net present value basis under the sales-tax deferral scheme of Maharashtra Government - HELD THAT:- While affirming the order passed by the High Court of Bombay in Sulzer India Ltd. [ 2014 (12) TMI 267 - BOMBAY HIGH COURT] the Hon'ble Supreme Court in Balkrishna Industries Ltd. [ 2017 (11) TMI 1626 - SUPREME COURT] held that the approach of the High Court of Bombay is without any blemish, inasmuch as all the requirements of Section 41(1) of the Act could not be fulfilled in the case on hand. Appeal filed by the Revenue fails and the same is dismissed and the substantial questions of law are answered against the Revenue. 2019 (7) TMI 985 Stay of demand - appellate authority directed the petitioner to pay 15% of the aggregate demand as reduced by demand already paid in three equal instalments so that the balance demand will stand stayed until the adjudication of the appeal - discretionary domain of the appellate authority - HELD THAT:- The petitioner's counsel has fairly submitted that the appellate authority does have the discretion to grant a conditional order; nevertheless, he asserts that once the appellant demonstrates more than a prima facie case, passing a conditional order cannot be a ritual. Attractive as the learned counsel's submissions is, there cannot be any proposition of law, nor can I readily find one, that if the appellant could demonstrate as he presumes for a fruitful case in appeal. Still, he does not deprive of the appellate authority's discretion. The courts, in judicial review, are not to interfere with the discretionary orders and passed by statutory authorities unless the authority has acted ultra vires, are the very exercise of judiciary, bogus and pervasive. I there find neither of the grounds. I express my inability to interfere with the Ext.P5. 2019 (7) TMI 984 Legality of notice u/s 153C - satisfaction of AO - HELD THAT:- The revenue has not rebutted the contention of the assessee that there is no valid satisfaction as contemplated u/s 153C. The revenue has not brought on record the satisfaction recorded by the assessing officer of the searched person as well as the assessing officer of the assessee. Therefore, respectfully following in the case of CIT Vs. Mechmen [ 2015 (7) TMI 1291 - MADHYA PRADESH HIGH COURT] hold that the proceedings u/s 153C are not validly initiated. No correlation document sized wise with the relevant assessment year - HELD THAT:- In the present case, search was carried out at the third party s premises where from the document related to sale by the assessee were recovered but the A.O. has made addition in respect of the land purchased by the assessee. Admittedly, the document related to purchase of land made by the assessee was not recovered. Therefore, the document of sale cannot be related to the year of purchase. As relied by the assessee in the case of Pr. CIT (Central)-2 Vs. Index Securities (P) Ltd. [ 2017 (9) TMI 585 - DELHI HIGH COURT] the proceedings u/s 153C are not in accordance with law. Income offered in the income tax return - Another objection of the assess is that the income from capital gain from sale of 3 acres of land to Fortune Soumya Housing was already offered in the income tax return for the assessment year 2012-13, hence, the document cannot even be treated as incriminating. This fact is not controverted by the revenue, hence we find force in to the contention of the assessee. Thus, this document seized at the premises of the third party cannot be treated as incriminating. Hence, looking to the totality of the facts, hold that the proceedings initiated u/s 153C and assessment order passed are not in conformity of law and the same is hereby quashed. Unexplained investment - HELD THAT:- We find from the reply furnished to the A.O. enclosed at paper book pages 16 to 19 that assessee had purchased properties in the years 2002 2006 even prior to the purchase of the properties in question at a higher consideration. A.O. has not disbelieved this investments and source of investment by the assessee. It is also fact that the assessee also purchased properties subsequent to purchase of the agricultural land in question. Therefore, the cash book as submitted by the assessee could not have been disbelieved and it can be inferred from the same that the assessee was having sufficient source of income to make investment. Hence, the assessee succeeds on this ground as well. 2019 (7) TMI 983 Penalty u/s. 271(1)(c) - expenses incurred for increase in share capital after amalgamation process, not covered u/s.35DD - HELD THAT:- No justification in sustaining the penalty. Further, we find the Hon'ble Rajasthan High Court in the case of CIT Vs. cosmopolitan Trading Corporation [ 2003 (7) TMI 14 - RAJASTHAN HIGH COURT] and in the case of CIT Vs. Prakash Industries Ltd [ 2009 (10) TMI 291 - PUNJAB AND HARYANA HIGH COURT] has held that when the entire additions had been deleted in the quantum appeal, no reason survives for sustaining the penalty. Thus, we sustain the deletion of penalty from the hands of assessee on this issue, Thus, ground No.1 of Revenue s appeal is dismissed. Penalty on the issue of disallowance of warranty provision - HELD THAT:- This issue had been allowed for statistical purposes and the issue has been remitted back to the file of Assessing Officer. The issue of penalty is also therefore remitted back to the file of Assessing Officer in the interest of justice. The Assessing Officer shall adjudicate the issue as per law in conformity with the principles of natural justice. Thus, ground No.2 raised in appeal by the Revenue is allowed for statistical purposes. Penalty for disallowance on account of excess claim of VRS expenses disregarding the provisions of section 35DDA - HELD THAT:- Since this issue has been remitted back to the file of AO, similarly the issue of penalty is also remitted back to his file in the interest of justice and he shall adjudicate the issue as per law after complying with the principles of natural justice. Thus, ground No.3 raised in appeal by the Revenue is allowed for statistical purposes. Penalty for disallowance on account of inventory written off - HELD THAT:- As decided in own case [ 2013 (2) TMI 883 - BOMBAY HIGH COURT] Since in quantum appeal, the addition has been deleted, there is no justification in sustaining the penalty. We further find in the case of CIT Vs. cosmopolitan Trading Corporation [ 2003 (7) TMI 14 - RAJASTHAN HIGH COURT] and CIT Vs. Prakash Industries Ltd [ 2009 (10) TMI 291 - PUNJAB AND HARYANA HIGH COURT] has held that when the entire additions had been deleted in the quantum appeal, no reason survives for sustaining the penalty. Thus, we sustain the deletion of penalty from the hands of assessee on this issue, Thus, ground No.4 of Revenue s appeal is dismissed. Penalty for disallowance on account of sale of scrap - HELD THAT:- Since this issue in quantum appeal has been restored to the file of AO for verification of the contentions of the assessee, thus in the interest of justice, the issue of penalty is also restored to the file of the Assessing Officer for proper adjudication as per law in compliance with the principles of natural justice. Penalty for disallowance on account of loss on sale of investment - HELD THAT:- CIT(Appeals) has categorically stated that the assessee has not suppressed any facts or details at any stage of proceedings either before the Assessing Officer or at the Appellate stage. The facts on records demonstrates specially from the findings of the CIT(Appeals) on the issue that there is no concealment of income or furnishing of inaccurate particulars of income by the assessee either before the Assessing Officer or before the CIT(Appeals). Relying on the decisions of the Hon ble Supreme Court of India in the case of Price Waterhouse Coopers Pvt. Ltd [ 2012 (9) TMI 775 - SUPREME COURT] and in the case of Reliance Petro Products (P) Ltd. [ 2010 (3) TMI 80 - SUPREME COURT] CIT(Appeals) deleted the penalty from the hands of the assessee. Penalty for disallowance on account of advance to custom account and bad debts written off - Tribunal has dismissed this ground of the assessee on merits - HELD THAT:- We observe that proceedings on penalty stand on two parameters i.e. concealment of income or furnishing of inaccurate particulars of income . In the findings of the Ld. CIT(Appeals) itself has been stated that the assessee has neither concealed his income nor furnished inaccurate particulars of income. Thus, with regard to the deletion of penalty on the disallowance on account of advance to customs account , this issue is restored to the file of AO for proper adjudication as per law. Hence, this part of ground of Revenue s appeal is allowed for statistical purposes. With regard to the deletion of penalty on account of bad debts written off , as per our aforesaid findings, we sustain the relief provided to the assessee by the Ld. CIT(Appeal). Thus, this part of ground of Revenue s appeal is hereby dismissed. 2019 (7) TMI 982 Penalty u/s 271(1)(c) - defective notice - HELD THAT:- We find that the notice dt. 26.03.2013 issued u/s. 274 r.w.s 271 does not specify the charge of offence committed by the assessee viz whether had concealed the particulars of income or had furnished inaccurate particulars of income. Hence the said notice is to be held as defective. See JEETMAL CHORARIA VERSUS A.C.I.T., CIRCLE-43, [ 2017 (12) TMI 883 - ITAT, KOLKATA] - Decided in favour of assessee. 2019 (7) TMI 981 TP Adjustment - comparable selection - determination of ALP under TNMM - HELD THAT:- E Clerx Ltd to be a KPO company and not comparable to a BPO Co. The Special Bench of the Tribunal in the case of Maersk Global Centers (India) Pvt Ltd [ 2014 (3) TMI 891 - ITAT MUMBAI] has also brought out the distinction between the KPO and the BPO particularly in accordance with the term knowledge process outsourcing services as defined in Cl.(g) of Rule 10TA of the I.T. Rules. Respectfully following the same, we direct the AO to exclude EClerx Services Ltd from the final list of comparables. Hartron Communications Ltd - DRP has directed the TPO to consider only the operating margin of office back up operation segment of Hartron Communications to the assessee to determine the ALP, but the TPO has not followed the directions of DRP and have retained Hartron Communications at the entity level in the final assessment order. We find that the DRP directions are binding on the AO and therefore, we direct the AO to follow and implement the directions of the DRP on this issue. Inclusion of ACE BPO Services and APE Technologies (P) Ltd - The learned DR was also heard and on consideration of the relevant material, we deem it fit and proper to remand this issue to the file of the AO/TPO to reconsider the same and only if it is found that these companies do not fail the relevant filters adopted by the TPO, then these companies should be included in the final list of comparables Risk adjustment - Provision for bad and doubtful debts and provision for loans and advances as operating in nature and allowing risk adjustment, since the assessee has sought exclusion of only Eclerx and we have held it to be not comparable to the assessee, the adjudication of these grounds would only result in an academic exercise at this stage. Therefore, we are not inclined to adjudicate the same at this stage. Similarly, adjudication of Ground No.1 also is not required as by exclusion of E Clerx Services Ltd from the final list of comparables, the margin of the assessee falls with the + or 3% of the margin of the comparables and the adjudication of this issue also is academic in nature. TP adjustment regarding interest on outstanding receivables as on 31st March, 2014 - Agreement between the assessee and its AE wherein 35 days period is fixed for realization of the consideration - HELD THAT:- We find that interest on receivables is an international transaction during the relevant financial year. The decisions relied upon by the learned Counsel for the assessee are in relation to the A.Ys prior to the amendment to section 92B of the Act and therefore, are not applicable ipso facto to the case of the assessee. When the credit period is clearly mentioned in the Agreement between the parties, then the same only should be allowed and interest on trade receivables after such credit period should be computed. Therefore, the computation of interest on trade receivables is remitted to the file of the AO with these directions. Ground of appeal treated as allowed for statistical purposes. Disallowance of expenses on ESOP and ESPP - HELD THAT:- We find that this issue is covered in favour of the assessee and therefore, we direct the AO to grant relief to the assessee by following the directions of the Special Bench in the case of Biocon Ltd. [ 2014 (12) TMI 838 - ITAT BANGALORE] This ground is accordingly allowed. Disallowance of forex loss on forward contracts - allowable revenue expenses - HELD THAT:- Hon'ble Supreme Court in the case of Woodwand Governor India (P) Ltd [ 2009 (4) TMI 4 - SUPREME COURT] has held that the loss suffered by an assessee on account of foreign exchange difference as on date of Balance Sheet is an item of expenditure u/s 37(1) of the Act. Respectfully following the same, this ground of the assessee is allowed. 2019 (7) TMI 980 Disallowance of bogus purchases - allegation that purchases are from group of concerns operating at Mumbai providing Tax paid bills and collecting payment through cheque and banking channels after payment of commission of its services charges and there is no actual delivery of goods - HELD THAT:- We find that the books of accounts regularly maintained by the assessee including quantitative details have not been rejected by the A.O u/s 145 except the alleged purchases. No other major discrepancy have been noticed in the books. Books of accounts are duly audited. Sales made by the assessee are not in dispute. The assessee is into the business since many years and is consistently showing the gross profit and net profit. Alleged supplier of goods are duly registered under Value Added Tax Act. Payment made through banking channel. Quantity maintained in the alleged bills are part of quantitative records maintained by the assessee. There is no drastic change in the gross profit and net profit rate. Since the sales have not been doubted there ought to be corresponding purchases. However some of the ingredients for testing the genuineness of purchases are missing but for this reason itself total purchase cannot be disallowed else abnormal and distorted profits will appear in the profit and loss account. We find that similar issue has came up before the Co-ordinate Bench in the case of V.R. Enterprises V/s ITO [ 2019 (6) TMI 1080 - ITAT MUMBAI] and PCIT V/s Mohommad Haji Adam Co [ 2019 (2) TMI 1632 - BOMBAY HIGH COURT] also estimated the addition for alleged various purchases @12.5% being the profit element. No inconsistency in the well reasoned finding of CIT(A) confirming the disallowance of purchases at 12.5% of the alleged bogus purchases. No interference is therefore called for in the finding of CIT(A). Sole ground raised by the revenue stands dismissed. In the result appeal of the Revenue stands dismissed. 2019 (7) TMI 979 TP Adjustment - comparable selection - HELD THAT:- Assessee basically provides services to its AEs across the globe under three segments viz. software development service (SDS), ITES, consultancy Services under IPSA thus companies functionally dissimilar with that of assessee need to be deselected from final list. GENESYS INTERNATIONAL CORPORATION LTD - this company being a KPO service provider is not comparable to a BPO service provider. Therefore, in our considered view, due to functional difference alone, the company cannot be a comparable to the assessee. As regards the reasoning of the Department that the company was selected by the assessee as a comparable in the transfer pricing study report, we must observe, the comparables selected by the assessee in the transfer pricing study report are not sacrosanct. Had it been the case, all companies selected by the assessee have to be accepted by the Transfer Pricing Officer. After all, the purpose of comparative analysis is to find out suitability of a company as a comparable. In view of the aforesaid, we direct the Assessing Officer to exclude this company from the list of comparables. CROSSDOMAIN SOLUTIONS LTD. - This company has been held to be incomparable to a BPO service provider. In view of the aforesaid, we direct the Assessing Officer to exclude this company from the list of comparables. R. Systems International Ltd. - in assessee s own case in assessment years 2007 08 and 2008 09 the Transfer Pricing Officer himself has accepted this company as a comparable in spite of the fact that its financial year was not matching with that of the assessee. The reason for which the Transfer Pricing Officer accepted the company as comparable in those years is, the financial results of the company corresponding to the financial year followed by the assessee were available with him. Factual position is no different in the impugned assessment year. In view of the aforesaid, we do not find any infirmity in the decision of learned DRP in accepting this company as a comparable. Therefore, Revenue s ground on the issue is dismissed. Whether service provided to the AE under intellectual property service agreement (IPSA) is akin to ITES? - HELD THAT:- As decided in own case assessment year 2008 09. While deciding the issue in [ 2018 (7) TMI 1877 - ITAT MUMBAI] content development or animation and website services are coming within the ambit of I.T. enabled products or services. Thus, keeping in view the aforesaid fact, it has to be concluded that the services rendered under IPSA are to be treated as ITES. As could be seen from the order of the Transfer Pricing Officer, though, he has treated the revenue earned of ₹ 8.47 crore as ITES, however, he has benchmarked it separately without aggregating it with all services rendered ITES segment. The DRP has also failed to rectify the error committed by the Transfer Pricing Officer by benchmarking it separately. Since, the Transfer Pricing Officer has not benchmarked this particular transaction by aggregating it with other ITES, we are inclined to restore the issue to the Assessing Officer for undertaking the necessary exercise of benchmarking the transaction by aggregating with other ITES and determine the arm's length price by applying the average margin of the comparables selected under the ITES segment, subject to our direction contained in this order with regard to the comparables under ITES segment. Working capital adjustment - HELD THAT:- As decided in assessee's own case TPO himself has allowed working capital adjustment to the assessee. That being the case, we direct the Assessing Officer/Transfer Pricing Officer to consider assessee s claim of working capital adjustment while computing the margins of the comparables. Claim of deduction u/s 10A and 10AA on consolidated basis after set off of losses - HELD THAT:- As could be seen, while deciding identical issue arising in assessee s own case for the assessment year 2008 09 [ 2018 (7) TMI 1877 - ITAT MUMBAI] the Tribunal following the decision of the Hon'ble Supreme Court in Yokogawa India Ltd [ 2016 (12) TMI 881 - SUPREME COURT] has allowed assessee s claim of deduction u/s 10A unit wise. Disallowance of deduction claimed u/s 10A /10AA on income derived under the IPSA - HELD THAT:- As noticed that learned DRP in assessee s own case for assessment year 2013 14 and 2014 15, has directed the Assessing Officer to allow assessee s claim of deduction under section 10AA in respect of revenue earned under IPSA. In view of the aforesaid, we direct the AO to compute deduction u/s 10A / 10AA in respect of IPSA income following the direction of the Tribunal and DRP as referred to above TP Adjustment to be restricted only to the international transaction - HELD THAT:- No infirmity in the decision of learned DRP on the issue as the arm's length price of the transaction which requires adjustment is the international transaction with the AE. Therefore, any adjustment on account of arm's length price has to be restricted to the international transaction with AE. This view has also been approved by the Hon'ble Jurisdictional High Court in CIT v/s Hindustan Unilever Ltd. [ 2016 (7) TMI 1245 - BOMBAY HIGH COURT] In view of the above, ground raised is dismissed. TP adjustment on IT segments - selection / rejection of certain comparables - TNMM - HELD THAT:- In course of hearing learned Sr. Counsel has submitted, on exclusion of Thirdware Solutions Ltd., Persistent Systems Ltd. and FSC Solutions Ltd. and inclusion of CAT Technologies Ltd., assessee s margin would fall within 5% range of the arithmetic mean of the rest of the comparables in software development (IT) service segment. In view of the aforesaid, we do not intend to dwell upon the issues relating to the other comparables in IT service segment and leave the issue open relating to these comparables for adjudication. TP adjustment on ITES segments - ACCENTIA TECHNOLOGIES LTD - On a perusal of the annual report placed in the paper book it is noticed that the company has different segments, whereas, the segmental information relating to all the segments are not available. Moreover, during the year under consideration there is an extra ordinary event by way of amalgamation of another company. Thus, by virtue of such amalgamation, there could have been impact on the profitability of the company. Considering the aforesaid aspect, the Tribunal in assessee s own case for the assessment year 2008 09 has rejected this company as a comparable. Following the same we direct the Assessing Officer to exclude this company as a comparable. Considering the submissions of the learned Sr. Counsel for the assessee that with exclusion of this company, operating margin of the assessee would fall within 5% of the arithmetic mean of the rest of the comparables selected by the Transfer Pricing Officer, we do not intend to deal with the acceptability or otherwise of the rest of the comparables. 2019 (7) TMI 974 Liability to pay tax on surcharge levied for delayed payment - Whether surcharge for delayed payment reflected in the bills raised by the assessee and its accounts, would invite payment of a tax dehors recovery/payment/receipt of surcharge - HELD THAT:- No reason to interfere with the order of the High Court. The Special Leave Petitions are accordingly dismissed. 2019 (7) TMI 973 Charging section for discrepancy between book value and physical value of capital work in progress - ITAT observed that the same cannot be taxed u/s 69C but it can be taxed u/s 69 to 69B only - ITAT observed that Section 69C would not be applicable to the facts of the present case as there is no evidence of any unaccounted expenditure. The difference was only on account of estimation of the value of Work in Progress by the site engineers in November, 2008 and actually arriving at the value on physical verification which is reflected in the return of income as on 31.3.2009 thus no occasion to apply Section 69C would arise - as per HC even if assume that the closing stock i.e. work-in-progress is in excess of that recorded/disclosed by the Respondent, the same has to be added to the income only under Section 69A of the Act - HELD THAT:- SLP dismissed. 2019 (7) TMI 972 Penalty u/s 271(1)(c) - characterization of income - assessee is an H.U.F. and who is partner in the partnership business - Income relates to valuation of trademark and goodwill - Tribunal held that the proportionate income falling at the hands of the assessee would be taxed as capital gain and not business income - HELD THAT:- SLP dismissed. 2019 (7) TMI 971 Disallowance u/s 36(1)(va) read with Section 2(24)(x) - disallowance of late deposited employees contributions of PF and ESIC - HELD THAT:- Both the questions proposed by the assessee are no longer res integra. So far as the question no.(i) proposed by the assessee is concerned, the same is squarely covered by a Division Bench decision of this Court in the case of Commissioner of Income Tax vs. Gujarat State Road Transport Corporation [ 2014 (1) TMI 502 - GUJARAT HIGH COURT] So far as the second question which has been proposed is concerned, is also squarely covered by the decision of this Court in the case of M/s Checkmate Facility And Electronic Solutions Pvt. Ltd. vs. Deputy Commissioner of Income Tax [ 2018 (10) TMI 994 - GUJARAT HIGH COURT] wherein this Court held Provision thus requires an employer before paying the employee his wages to deduct the employee's contribution along with the employer's own contribution as fixed by the Government. It is further required that he shall within fifteen days of the close of every month pay the same to the fund such contribution and administrative charges. In terms of this provision thus, after deducting the employee's contribution towards the funds, the same has to be deposited with the Government within fifteen days of the close of every month. Reference to fifteen days of the close of the month must be in relation to the month during which the payment of wages is to be made and corresponding liability to deduct employee's contribution to the fund arises. The expression within fifteen days of the close of every month therefore must be interpreted as having reference to the close of the month, for which, the wages are required to be paid with corresponding duty to deduct employee's contribution and to deposit the same in the fund. Appellant is therefore not correct in contending that if such wages are paid in the following month, the liability to deposit the employee's contribution to the fund gets differed by another month. - Decided against assessee 2019 (7) TMI 949 Disallowance u/s.14A - HELD THAT:- As already analyzed that the assessee was having sufficient own funds and therefore, whatever investment was made, the legal presumption is they were from the said own funds of the assessee. Therefore, no disallowance u/s.14A is called for. With regard to the disallowance on administrative expenses, considering the entirety of facts and circumstances in the case of the assessee, we direct the AO to sustain % of the disallowance on administrative expenses attributable to exempt income. In view of our above findings on this issue, we set aside the order of the CIT(Appeals) and partly allow this ground. Hence, ground No.1 raised in appeal by the assessee is partly allowed. Disallowance of warranty provision by the assessee in its books of account - HELD THAT:- In case, it is a case of reversal of some provision, then it needs to be seen if any deduction was allowed at the time of creation of such a provision. If yes, then such reversal should be added now at the time of its reversal. There is another sum of ₹ 27,95,163/- in the Table, which has been shown as `Claims recovered . AR stated that the assessee recovered claims from some parties. This amount is directed to be credited to Provision for warranty, thereby reducing the amount of expenses incurred during the year. There is another sum of ₹ 55,03,000/-, which is `Reversal during the year . As the assessee is getting deduction on creation of provision, such reversal, being excessive provision created in the past, needs to be recognized as income for the year. In so far as CP division is concerned, the assessee made provision during the year at ₹ 3,10,33,820/-. As against that, the amount of actual expenditure is ₹ 3,11,63,197/-. In view of the fact that actual expenditure incurred by the assessee in CP division is more than the amount of provision, we hold that deduction should be allowed for the amount of provision created. In the absence of such a position, we would have directed to follow the same rule of allowing provision at the rate of 0.40% of the sales of CP division. Once deduction is allowed on creation of provision, there can be no question of allowing deduction for actual expenses incurred in this division. AO is directed to give effect to our above directions/observations after allowing opportunity of hearing to the assessee. Thus, ground No.2 of the assessee s appeal is allowed for statistical purposes. Disallowance out of Voluntary Retirement Scheme expenses (VRS expenses) - AO allowed 1/5 th of actual payment - HELD THAT:- We have to read Section 35DDA along with Section 43(2) and in view of the binding judicial pronouncements hereinabove referred, we hold that within the system of accounting followed by the assessee, they may have paid certain amount but the assessee has kept the provision as the expenses were also incurred. Therefore, as per the style of accounting, the term paid shall include actually paid or incurred. In the instant case, the Revenue Authorities have only tried to interprete the provision of section 35DDA without considering the entire spirit and intent of the Act. We therefore, set aside the order of the CIT(Appeals) on this issue and the amount of VRS expenditure claimed by the assessee i.e. 1/5th of VRS expenses incurred of ₹ 6,47,90,700/- is therefore allowed. However, it is made clear that once the assessee is allowed deduction on incurring expenses towards VRS, no deduction u/s.35DDA should be allowed at the time of actual payment thereof. AO is directed to verify if any deduction on this score is not claimed/allowed in the subsequent years at the time of actual payment. In case he finds that the assessee was allowed deduction at the time of payment, then such an amount should be added back. It goes without saying that once deduction has been allowed on the basis of incurring of liability, there cannot be any deduction on the basis of payment. Thus, ground No.3 raised in appeal by the assessee is allowed for statistical purposes. Disallowance of amalgamation expenses - CIT(A) allowed stamp duty on immovable property and but disallowed fees paid for increase in authorized share capital for deduction u/s 35DD - HELD THAT:- We are also inclined to agree with the submission of the Ld. AR after perusing facts of the case in HINDUSTAN INSECTICIDES LIMITED [ 2001 (2) TMI 75 - DELHI HIGH COURT] that it relates to fees for registration of company and essentially dealing with provision of section 35D(2)(c)(iii). There is substantial difference between registration of a company and action taken for increase in authorized share capital. In the case of the assessee because of amalgamation proceedings, there was need to increase in authorized share capital and therefore, such expenses cannot be segregated from the main amalgamation proceedings and therefore, these expenses are part of amalgamation expenses. We set aside the order of the Ld. CIT(Appeals) on this issue and direct the AO to delete the addition from the hands of the assessee. Thus, ground No.4 raised in appeal by the assessee is allowed and ground No.3 of the Revenue s appeal is dismissed. Disallowance of provision on stock obsolescence - HELD THAT:- Respectfully, following the decision of the Hon ble Jurisdictional High Court in assessee own case [ 2013 (2) TMI 883 - BOMBAY HIGH COURT] , we direct the AO to provide provision for stock obsolescence to the assessee and delete the addition therein. Thus, ground No.5 raised in appeal by the assessee is allowed. Addition being income from scrap sale - the assessee stated that the amount was already offered to tax in assessment year 2001-02 - HELD THAT:- In order to meet the ends of justice, we find it deem and appropriate to restore this issue to the file of the AO to verify the contentions of the assessee whether the amount reflected in the scrap sales account was actual income from sale of some cars in the financial year 2000-01 relevant to assessment year 2001-02 i.e. just preceding assessment year and whether same was offered to tax in that year. If the amount was offered to tax in that year then in this relevant year same amount again cannot be brought to tax and should be deleted. Disallowance of provision for miscellaneous expenses treated as excess claim - HELD THAT:- This issue requires detailed factual verification and it is to be verified whether such provision made consistently followed by the assessee and out of balance provision of ₹ 5,16,957/-, whether the sum of ₹ 501,463/- have been actually incurred out in subsequent financial year i.e. 2002-03. In view of the matter, we set aside the order of the Ld. CIT(Appeals) and restore the issue to the file of Assessing Officer for verification in compliance with the principles of natural justice. Thus, ground No.7 raised in appeal by the assessee is allowed for statistical purposes. Disallowance of amount written off out of advance to Customs - HELD THAT:- Revenue Authorities have made addition since the assessee was unable to explain the modus of working of such provision in its books of account and was also not able to justify with supporting evidences that why this amount should be allowed as deduction. However, prayer of the Ld. AR is that they are ready with entire working of the said amount and relevant supporting documents and they want one opportunity to present this issue on merits once again before the Assessing Officer. In view of the matter and in the spirit of welfare legislation which is within the ambit of the taxing statutes, we set aside the order of the Ld. CIT(Appeals) on this issue and restore it to the file of the AO for necessary verification as per law following principles of natural justice. Disallowance of expenses on the basis that the assessee had not produced the vouchers/ supporting documents - HELD THAT:- Assessee claims due to incorrect voucher numbers mentioned in the SAR they were unable to provide evidences/ explanations with regard to the remaining disallowed amount of ₹ 9,22,696/-. The assessee further claims that they are ready with relevant supporting documents and evidences pertaining to this amount and has prayed that an opportunity be provided so that on merits before the First Appellate Authority, the assessee can demonstrate its case. In the case before us, most of the issues relating to factual verification are being restored to the file of Assessing Officer and this issue also qualifies in that category. In view of the matter, we set aside the order of the Ld. CIT(Appeals) on this issue and restore the issue to the file of the AO for adjudication after following the principles of natural justice. Thus, ground No.9 raised in appeal by the assessee is allowed for statistical purposes. Disallowance of excess provisions - HELD THAT:- We have perused the case records and given thoughtful consideration to the findings of the First Appellate Authority. There is a clear cut verification on facts which is on record that the assessee has given no basis whatsoever for making such ad-hoc provisions and actually there were no expenses incurred at all from this provisions during the year. Therefore, we do not find any infirmity with the findings of the Ld. CIT(Appeals) and the same is thereby upheld. Thus, ground No.10 raised in appeal by the assessee is dismissed. Disallowance of bad debts written off - HELD THAT:- AO noted that condition u/s.36(2) was not satisfied for the bad debt claimed of CP division. The Ld. CIT(Appeals) has observed that for the amount of ₹ 64,70,030/- claimed as bad debt in the Atlas Copco Pune Division, for which details regarding the same having been included as sales in the earlier period was given that was considered to have satisfied the condition given u/s 36(2)(i). For the remaining amount of ₹ 9,86,019/- of the ACP division and the entire amount of ₹ 64,38,102/- of the CP division, the assessee cannot be considered to have satisfied the condition u/s 36(2)(i). Therefore, we do not find any infirmity with the findings of the Ld. CIT(Appeals) and the same is thereby upheld. Disallowance of Inter-Corporate Deposit (ICD) written off - HELD THAT:- Issue decided in favour of assessee in own case [ 2013 (3) TMI 532 - ITAT PUNE], therefore, the claim of the assessee should be allowed. Addition to the total income being sundry liability considering the same as income from sale of scrap - HELD THAT:- The company has credited the said sale of scrap to the sundry liability account as the same amount was payable to the Atlas Copco Secocrac/Interock. As per details provided to us the said amount was written back as income in the subsequent financial year ended 31st March, 2003.The entry for the write back of the amount has been passed on 28.11.2002. Being the said amount is not be refunded, then income on account of sale of scrap should have been booked in the financial year ended 31.03.2002 and not in subsequent year. CIT(Appeals) on the issue observed that the income of ₹ 20,10,925/- was generated by way of sale of scrap during the year and only because it was thought to be refundable to the party from whom imports were made, it was kept as outstanding liability in this year and transferred to miscellaneous income and offered to tax in A.Y. 2003-04. This method of accounting was not accepted by the Ld. CIT(Appeals) since income has arisen in this year on account of sale of scrap and he had therefore, upheld the findings of the Assessing Officer. We do not find any infirmity with the findings of the Ld. CIT(Appeals) and the same is thereby upheld. Thus, ground No.13 raised in appeal by the assessee is dismissed. Exclusion of 90% of following receipts from profit of business for the purpose of deduction u/s.80HHC - HELD THAT:- As appreciate that this issue has been restored to the file of the Ld. CIT(Appeals) in assessee s own case. However, in the present scenario where most of the issues, we have restored to the file of AO for verification, this issue, therefore is restored to the file of Assessing Officer for re-examination and adjudicating the matter after providing reasonable opportunity of hearing to the assessee. TPA - royalty payment at arm s length price - royalty payments - HELD THAT:- We find that even in assessment yea₹ 2004-05 and 2005-06 on this issue, relief was provided to the assessee. Following the decision for assessment year 2004-05 and 2005-06, the Ld. CIT(Appeals) has deleted the addition made on account of disallowance of royalty payments on export to AEs. For this year also, factual matrix being same, it was perfect decision rendered by the CIT(Appeals). Moreover, we observe that payment of royalty to AEs is not disputed which has been done as per RBI norms and as per relevant agreement entered into. The entire transactions have also been accepted by the Revenue. The ld. DR could not controvert these facts. 2019 (7) TMI 948 Computation of LTCG - Transfer u/s 2(47) - possession of property not yet handed over - applicability 50C on transfer of Development Rights - HELD THAT:- We find that the ld AO had addressed a letter to ld CIT DR, ITAT , Mumbai submitting the report on the factual position on handing over possession of 57 bungalows by the assessee society to the Developer, enclosing the Inspector‟s Report who personally visited the site. In the said report, the Ex-Secretary of the assessee society had categorically stated that the possession of land and 57 Bungalows were not handed over to the Developer. Hence it is categorically clear that possession is not handed over to the Developer by the assessee society. Hence there cannot be any transfer within the meaning of section 2(47)(v) read with section 53A of Transfer of Property Act, 1882, even based on part performance of the contract. We find that the ld CITA had also observed that possession was not handed over to the Developer by the assessee society. This fact was not controverted by the revenue before us. Accordingly, there cannot be any incidence of capital gains. Hence the answer to question no. a) raised hereinabove, is decided in favour of the assessee. Even if the property is not transferred, then there is a right created by the Land Development Control Rules, 1991 attached with the land embedded in it. No detriment is created to cost of land by granting transfer of such rights. There is no element of cost in acquiring such right which had been transferred. Hence if there is no cost, there cannot be any element of capital gains. Since both the questions raised hereinabove are decided in favour of the assessee, the question of applicability of provisions of section 50C of the Act to the same does not arise at all. In any case, the provisions of section 50C of the Act can be applied only for transfer of land or building or both and not for Rights in Development Agreement‟. Reliance in this regard has been rightly placed on the co-ordinate bench of this tribunal in the case of Voltas Ltd vs ITO [ 2016 (10) TMI 936 - ITAT MUMBAI]. We find that the AO had placed reliance on the decision of Chaturbhujdas Dwarikadas Kapadia [ 2003 (2) TMI 62 - BOMBAY HIGH COURT] . We find that in that case, the issue was the year in which the capital gains was taxable and the effect of insertion of clause (v) and (vi) of section 2(47) of the Act with effect from 1.4.2008. This is not the issue in dispute before us. Hence the same is factually distinguishable with the assessee‟s case We find no no infirmity in the order of the ld CITA. Accordingly, the grounds raised by the revenue are dismissed. Benami Property 2019 (7) TMI 1001 Benami transaction - Proceedings u/s 24 of the Prohibition of Benami Property Transactions Act, 1988 - retrospective applicability of the Benami Amendment Act, 2016 - provisional attachment of the benami properties - scope of amendment to act - Whether substitution of the term acquisition by another term i.e. confiscation, cannot be termed as penal, in the backdrop of the object sought to be achieved through the Benami Amendment Act of 2016 - Whether the provisions of Benami Amendment Act, 2016, shall be applicable retrospectively or not? - Power of High Court to exercise writ jurisdiction - HELD THAT:- High Court could interfere in exercise of writ jurisdiction, if, the conditions precedent to the exercise of jurisdiction under the statutory provisions did not exist even at the stage of notice issued. Thus, the High Courts have power in appropriate cases to prohibit executive authority from acting without jurisdiction. Moreover, if executive authority exercised the power without jurisdiction that would subject an individual to lengthy proceedings and unnecessary harassment. Hence, to prevent such lengthy proceedings and unnecessary harassment, recourse to jurisdiction under Article 226 and/or227 of the Constitution is not prohibited. Further, the legislative drafting is more than an ordinary prose which differs in provenance, features and its import as to the meaning attached thereto and presumptions as to intendment of the legislation. By now, it is well settled law that unless a contrary intention is reflected, a legislation is presumed and intended to be prospective. For in the normal course of human behavior, one is entitled to arrange his affairs keeping in view the laws for the time being in force and such arrangement of affairs should not be dislodged by retrospective application of law. The principle of law known as lex prospicit non prospicit (law looks forward not backward), is a well known and accepted principle. The retrospective legislation is contrary to general principle for legislation by which the conduct of mankind is to be regulated when introduced for the first time to deal with future acts ought not to change the character of past transactions carried out in the faith of the then existing law (vide Phillips Vs. Eyre (1870)LR 6 QB 1). Thus, the principle against retrospectivity is the principle of fairplay and unless there is a clear and unambiguous intendment for retrospective effect to the legislation which affects accrued rights or imposes obligations or castes new duties or attaches a new disability is to be treated as prospective. It is trite law that an explanatory or declaratory Act is intended to supply an obvious omission or is enacted to clear doubts as to the meaning of the previous Act. While retrospective operation is generally intended as to declaratory or curative provisions, which is supplied with the language shall be deemed always to have meant . Therefore, in absence of clarity amendment being declaratory or curative in the face of unambiguous or confusion in the pre-amended provisions; the same is not required to be treated as curative or declaratory amendment. Viewed in the light of the settled legal proposition, as aforesaid, Benami Amendment Act, 2016, neither appears to be clarificatory nor curative. Moreover, by way of amendment penal consequences have been introduced providing for confiscation of the benami property and enhanced punishment. By now, it is well settled law that a substantive provision unless specifically made retrospective or otherwise intended by the Parliament should always be held to be prospective. The power to confiscate and consequent forfeiture of rights or interests are drastic being penal in nature, and therefore, such statutes are to be read very strictly. However, there can be no exercise of powers under such statutes by way of extension or implication (vide O.Konavalov [ 2006 (3) TMI 145 - SUPREME COURT] In view of the settled legal proposition that no authority, much less, a quasi judicial authority, can confer jurisdiction on itself by deciding a jurisdictional fact wrongly; is a question that is always open for scrutiny by the High Court in an application under Article 226/227 of the Constitution of India. The very question of correctness and legality of the issuance of notice can be examined in exercise of writ jurisdiction. Article 20 of the Constitution of India is fundamental right guaranteed under Part-III of the Constitution and the penal consequences emanating from the Benami Amendment Act, 2016, in infraction to the mandate of fundamental rights guaranteed under Article 20 of the Constitution; cannot be given retrospective effect in absence of a clear stipulation by the Parliament on retrospectivity. This Court has no hesitation to hold that the Benami Amendment Act, 2016, amending the Principal Benami Act, 1988, enacted w.e.f. 1st November, 2016, i.e. the date determined by the Central Government in its wisdom for its enforcement; cannot have retrospective effect. This Court has neither examined nor commented upon merits of the writ applications but has considered only the larger question of retrospective applicability of the Benami Amendment Act, 2016 amending the original Benami Act of 1988. Thus, the authority concerned would examine each case on its own merits keeping in view the fact that amended provisions introduced and the amendments enacted and made enforceable w.e.f. 1st November, 2016; would be prospective and not retrospective. The batch of writ applications stands disposed off, as indicated above. Customs 2019 (7) TMI 970 Valuation of imported goods - Acetonitrile - undervaluation - rejection of declared value - provisional release of goods - Appellants have raised the issue in respect of two bill of entries i.e. B/E No 702642 dated 1.10.2009 and 704506 dated 3.10.2009 the assessments are provisional and hence the proceedings for seizure, confiscation and demand of duty premature - HELD THAT:- We are not able to appreciate the argument advanced by the appellant. The Bond executed by the appellant on 20.11.2009 is titled Bond With Security to be executed by the person seeking release of goods seized pending investigation. - the case in hand is of provisional release of seized goods and not the case of provisional assessment as claimed by the appellants. Release of goods which is not at all seized - Appellants have contended that goods covered by the B/E s other than B/E No 702642 and B/E No 704506 were never seized and there is no question for the release of the same against Bond or Bank Guarantee - HELD THAT:- only those goods which were seized and provisionally released to the appellants could have been held liable for confiscation and confiscated. - Since these goods are not available for seizure or confiscation, the order of Commissioner the goods imported against these Bill of Entries is bad in law. Misdeclaration of value - admissibility of exemption under notification No 94/96-Cus - HELD THAT:- There is no merits in the submissions of the Appellant s in respect of admissibility of exemption under Notification No 94/96-Cus. Also there are no merits in the submissions of the Appellant in respect of the value of the goods, which has been determined on the basis of value of contemporaneous imports of the same goods. Demand made on the basis of facts admitted during the statement - HELD THAT:- The fact about undervaluation of the goods need not be again established as the same has been admitted by the Appellant themselves in their statements recorded under Section 108. However the fact of undervaluation is further corroborated by the value of contemporaneous imports made by the other importers at or about the same time. The appellants have misdeclared the value of the imported goods with intention to evade payment of duty - the extended period of limitation as provided by proviso to sub section (1) section 28 of Customs Act, 1962 is applicable for making the demands. Since the demand of duty as determined by the Commissioner is upheld, the demand of interest under Section 28AB is also upheld. Penalty - HELD THAT:- The order of Commissioner, is modified to hold that penalty imposed under Section 114A, to be equivalent to the duty demanded. It is settled law that in case where duty demand has been determined by invoking the proviso to Section 28(1) of Customs Act, 1962 penalty under Section 114A will get attracted - Penalties imposed on Appellant 2, 3 and 4 are dropped. Appeal allowed in part. 2019 (7) TMI 969 Refund application - provisional release of machinery - HELD THAT:- The proceedings regarding clearance of machinery were perused and the same culminated in an order made by CESTAT, South Zonal Bench, Chennai - There is no disputation before this Court that the aforesaid order of CESTAT has become final and it has been given legal quietus. The learned counsel made a simple and innocuous prayer requesting to mandamus the second respondent to consider the refund application dated 05.10.2018 made by the writ petitioner and take a decision on the same within a time frame - the second respondent is directed to consider the refund application of the writ petitioner being refund application dated 05.10.2018 and pass an order on the same within four weeks from the date of receipt of a copy of this order. Petition disposed off. 2019 (7) TMI 968 Imposition of penalties u/s 114 of the Customs Act - Smuggling - Red Sanders - request for cross-examination - HELD THAT:- From the facts on record and the statements of the responsible officers of the customs Department it appears that the appellant have not done any deliberate action or misdeed in the alleged smuggling of red sanders. Appellant have only unknowingly in good faith, allowed the use of their IE code. Thus, there is no case of imposition of penalty under Section 114 of the Customs Act made out. Penalty set aside - appeal allowed - decided in favor of appellant. 2019 (7) TMI 967 100% EOU - Imposition of penalty u/s 112(a) of Customs Act, 1962 - violation of import conditions - diversion of goods to local market instead of being used for the purpose for which it was imported - HELD THAT:- The evidences brought on record i.e. statements of various transporters, who had been approached by the CHA, in their statements before the authorities had categorically stated that the Appellant was fully aware of the fact that the goods were to be delivered at Surat instead of Mathura. The Commissioner in his findings has analyzed all the evidences and concluded that the Appellant was fully aware of diversion of the goods at Surat even though the goods on paper were consigned to Mathura - The learned Advocate for the Appellant made a feeble attempt to establish the fact that the goods were received at Mathura and in support a sample re-ware housing certificate issued by the departmental officer enclosed with the submissions. There is no merit in the argument of the learned Advocate for the Appellant that the goods were received at Mathura. The inescapable conclusion is that the imported goods were diverted to Surat and the Appellant was in the knowledge of the same as none of the statements were challenged by way of cross examination nor retracted. The imposition of penalty on the Appellant, who is an employee of CHA, appears to be harsh - the ends of justice will be met if the penalty is reduced to ₹ 50,000/- - appeal allowed in part. Corporate Laws 2019 (7) TMI 966 Recall of order - sufficient reason for recall of order present or not - delay in filing the application - HELD THAT:- The reasons are heart and soul of any judicial determination, in absence of which the order cannot survive. A Judge, who decides an issue in one or the other way, is required to disclose his mind and give the reasons to enable not only the superior court but also the litigating parties as what weighed with him in deciding the matter the way he did, otherwise they would remain unaware of the premise on which decision of the Court is founded. Therefore, it is always necessary for the learned Presiding Judge to disclose his mind, even if not in details, at least briefly. Application revived - appeal allowed - The Registry to list the application before the learned Company Judge on 19.07.2019. Insolvency & Bankruptcy 2019 (7) TMI 978 Admissibility of petition - Voluntary liquidation - Section 59 of Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The Board of Directors of the Company has taken a conscious decision to close down the company due to non-availability of business prospects and non-availability of long-term financial resources, thus, as per them, it would not be a wise decision to carry on the business activities of the company from the economic point of view. Therefore, Company s Board of Directors proposed to liquidate the company voluntarily by invoking the provisions of Section 59 of the IBC. It is also made clear through the present petition that the Applicant Company is having no creditors, i.e. either secured creditors or unsecured creditors. Thus the company was having its own resources and net worth, which are already distributed/apportioned of among its shareholders. The company has duly passed necessary Special Resolution in its Extra Ordinary General Meeting (EOGM) on 7.04.2018 by confirming the decision of its Board of Directors by proposing its Voluntary Liquidation - the Liquidator, after his appointment duly performed his duties and completed necessary formalities so as to complete process of liquidation, which are well narrated in the present petition and thereafter he sought an order from this Tribunal for dissolution of the applicant company. Since nothing adverse is found from the material available on record in respect of opposing the proposed liquidation of the corporate person, the present application deserves to be allowed - petition allowed. 2019 (7) TMI 977 Initiation of Corporate Insolvency Resolution Process - story line in this case is the Petitioner has come before this Bench stating that since the Corporate Debtor (the debtor) has not utilized the power as stated in the letter dated 23.02.2015 - HELD THAT:- Since there is no definite agreement or at least any indication reflecting the Debtor agreeing to avail 60,00,000 units per year, this Bench, merely by seeing a letter dated 23.02.2015 and the payment advice dated 19.10.2017 with payment back dated bill i.e., dated 04.09.2017,cannot assume that that this debtor is liable to pay to the power that has not been consumed by it. As long as agreement is not entered into between the parties for consuming 60,00,000 units, this clause will not have any relevance to adjudicate this case, thereby we hereby hold that this clause will not have any bearing on the claim raised by the Petitioner as there is no agreement between the parties obligating the Corporate Debtor to consume 60,00,000 units per year. Petition dismissed as misconceived. 2019 (7) TMI 965 Admissibility of petition - Initiation of Corporate Insolvency Resolution Process (CIRP) - Corporate Debtor - default in repayment of outstanding amount - HELD THAT:- There are several questions of facts and law are involved in the instant case. Even the amount claimed itself is not terms of Settlement Agreement in question, in which interest issue did not mention and part payment of ₹ 5 Lakhs was received, after issue of demand notice. Therefore, there is a serious disputes exists with reference to the claim made by the Petitioner. The application is not only defective as rightly claimed by the Respondent, but it is instituted with an intention to recover the alleged outstanding amount by initiating CIRP proceedings, and it is not a fit case for admission and the same is liable to be rejected. Application dismissed. 2019 (7) TMI 964 Admissibility of petition - initiation of Corporate Insolvency Resolution Process (CIRP) - Corporate Debtor - HELD THAT:- The Resolution Professional has not received any viable and feasible Resolution Plan from the Resolution Applicants in respect of the Corporate Debtor and therefore, the CoC has decided to recommend for liquidation of the Corporate Debtor - the CoC vide electronic voting conducted between 22.02.2019 10.30 A.M and 23.02.2019 10.30 A.M., decided to liquidate the business of the Corporate Debtor with a vote of 95.90%. The Resolution Professional has filed the instant MA/232/2019 in CP/472/IB/2017 for seeking order for liquidation of the Corporate Debtor viz., M/s. BKR Hotels Resorts Private Limited, Since, no Resolution Plan has been received by this Authority under Sub-section (6) of Section 30 of the I B Code, 2016, before the expiry of the maximum period of CIR Process, the Corporate Debtor has to be ordered for Liquidation. Application disposed off. 2019 (7) TMI 963 Admissibility of petition - initiation of Corporate Insolvency Resolution Process - Section 9 of the Insolvency and Bankruptcy Code, 2016 read with Rule 6 of the Insolvency Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - corporate debtor - scope of dispute under Section 5(6) of IB Code - existence of dispute or not - HELD THAT:- On perusal of the records and correspondences of both the sides (as annexed) it is revealed that not only there was/were disputes prior to filing of the instant petition/application but also there was a dispute prior to issuance of demand notice under Section 8 of IB Code. After referring to Section 8 and the judgment in Mobilox Innovations (P.) Ltd. v. Kirusa Software (P.) Ltd. [ 2017 (9) TMI 1270 - SUPREME COURT ] went on to hold that, what is important is that the existence of dispute and/or a suit or arbitration proceeding must be pre-existing i.e. it must exist before the receipt of demand notice or invoice as the case may be. This adjudicating authority is of the considered view that there exists a pre-existing dispute regarding failure on the part of the applicant to supply coal as per condition and the which procured from outside there is/are difference in price of the material which is a matter of dispute raised by the corporate debtor time and again - the application filed by the applicant under Section 9 of the Insolvency and Bankruptcy Code for initiation of corporate insolvency resolution process is not maintainable and deserves to be dismissed. Application dismissed. 2019 (7) TMI 962 Admissibility of petition - Initiation of Corporate Insolvency Resolution Process - Section 10 of the Insolvency Bankruptcy Code, 2016 read with Rule 7 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - failure in repayment of loan - applicant suffered a loss and as such loan could not be repaid as per terms conditions of repayment schedule - HELD THAT:- The requirement to be meted out under section 10 (3) of the I B Code has been complied with by the applicant herein. The applicant has also succeeded in establishing its inability to discharge the debt due to the FCs and thereby defaulted in repayment of the amount found due to the FCs. The application filed under section 10 of the I B Code is complete and that the corporate applicant has committed default in repayment of the loan amount sanctioned by the FCs. The FCs admitted the default and not contested this application - the application is complete, the present application filed under section 10 of the I B Code is liable to be allowed under section 10(4) of I B Code. Application admitted - moratorium declared - List the matter on 05.04.2017, for the filing of the progress report. PMLA 2019 (7) TMI 961 Money Laundering - retention of documents and jewellery recovered during the search - Section 17(4) of the Prevention Money Laundering Act, 2002 - HELD THAT:- Sub-section (1) of Section 17 provides that the authorised officer has to record the reason to believe in writing. In the such reason to believe, he has also to record the basis of information which is in his possession before conducting the search and seizure. It stipulates that if person concerned has committed any act which constitutes money-laundering, or is in possession of any proceeds of crime involved in money-laundering, or is in possession of any records relating to money-laundering, then any authorised officer can enter and search any building, place, vessel, vehicle or aircraft where that such records or proceeds of crime are kept, who is also empowered to break open the lock of any door, box, locker, safe, almirah or other receptacle where the keys thereof are not available and seize any record or property found as a result of such search, place marks of identification on such record or make or cause to be made extracts or copies therefrom; make a note of an inventory or such record or property and to examine on oath any person who is found to be in possession or control of any record or property, in respect of all matters relevant for the purposes of any investigation. In the present case, no report against the appellant has been forwarded to the Magistrate. No complaint against the appellant was filed before a Magistrate. No cognizance of schedule offence was taken by any authority or Additional Secretary to the Government of India. ' It was admitted in the impugned order that the gold jewellery may not be in any way related to the manipulation in share price or may not have any linkage but Adjudicating Authority wishes to retain the same for the purposes of investigation as there would not be any harm cause to the appellant. As a matter of fact, the Adjudicating Authority is duty bound on the basis of material to give the reasons that the party is involved in money laundering and property is acquired from proceed of crime - There is no specifically reference about the investigation about the jewellery and gold as to whether those are acquired from proceeds of crime or not despite of ninety days period provided under section 8(3)(a) of the Act. It is therefore evident that the gold and jewellery is not the part of alleged proceeds of crime or any linkage. It is a matter of shocking when we read the findings of Adjudicated Authority that no harm will cause if retention may continue. The impugned order is set aside as far as gold and jewellery is concerned - With regards to documents, the Appellant is entitled to take the copies under sub section (2)of Section 21 of the Act. Appeal allowed in part. 2019 (7) TMI 960 Prevention of money laundering - Section 35(2)(f) of the Prevention of Money Laundering Act, 2002 - valid reasons to believe present or not - HELD THAT:- The main reason for filing the present review petition is that in the present case, the ED s ECIR was registered solely on the basis of registration of FIR by the CBI. However, the CBI having now filed a Closure Report, the direction to the Petitioner herein to secure the amount of ₹ 115 crores, alleged to be the proceeds of crime by the ED, is clearly an error apparent on the face of the record. It is submitted that closure report having been filed, the same would constitute a sufficient reason within the meaning of Order 47 Rule 1 CPC for this Tribunal to review its earlier decision. This Tribunal is empowered to confirm, modify or set-aside the order appealed under Section 26(4) of the Act. Service Tax 2019 (7) TMI 959 Classification of services - GTA Service or not - transporters have not issued any consignment note to the effect of providing all the transportation service to their clients - reverse charge mechanism - HELD THAT:- The appellant is not issuing any consignment note for providing all the transport service and only raising bills for the transportation charges for various trucks hired by them from the independent owners and use them for providing the services to their clients. Hence, they would not be covered under the GTA service. From perusal of the above definition regarding GTA as contained in the Act, it is apparent that the issue of consignment note, by whatever name is pre-requisite for the transaction to be covered under Goods Transport Agency - In the present case service provider has not issued the consignment note to the appellant and hence the appellant is not liable to pay service tax under the reverse charge mechanism and also do not fall under the category of GTA as under Section 65 (5b) of the Finance Act. Appeal allowed - decided in favor of appellant. 2019 (7) TMI 958 Non-payment of service tax - Manpower Recruitment Service and Commercial and Industrial Construction Service - service tax collected but had not deposited to Department which is also accepted by the proprietor of the appellant - suppression of facts nor not - demand of interest and penalty - waiver to penalty in terms of Section 80 of the Act - HELD THAT:- This is the case where the service tax amount has been collected by the appellant but had not deposited to Department which is also accepted by the proprietor of the appellant. The appellant has paid substantial amount of service tax during the investigation and agreed to pay the balance amount to the Department. It was submitted by the appellant that the service tax registration was not taken by them initially under the bona fide belief that they are not required collect and pay the service tax from the recipient of the service provided, that is Manpower Recruitment Service and Commercial and Industrial Construction Service . Having realised the mistake the appellant obtained the service tax registration from the Department on 07/01/2010 and started paying the service tax partially as indicated in the Show Cause Notice and in the impugned order. We also find that even after obtaining the service tax registration the appellant has not duly discharged the applicable service tax on the services provided by them and also failed to file ST-3 returns in time. The non-payment of service tax has come to light after the investigation conducted by the Department. Accordingly, the appellant has deliberately suppressed the relevant facts from the Department with sole intention to evade the payment of service tax and, therefore, the impugned order has correctly invoked. The provisions of 73 (1) of the Act. Appeal dismissed - decided against appellant. 2019 (7) TMI 957 Classification of services - works contract service or not - the works undertaken by the appellant was for fabrication, supply of material, installation and commissioning of various items as per the contract entered between the parties - HELD THAT:- In the present case, there is no dispute that the works undertaken by the appellant was for fabrication, supply of material, installation and commissioning of various items as per the contract entered between the parties. Further, in the impugned order Commissioner has given a finding that there was a supply of material and provision of labour and therefore there is no dispute that the works contract involving transfer of goods as well as rendering of service. Further, the appellants are also paying sales tax/VAT under the Kerala Sales Tax/Kerala VAT on the activities in dispute. Once the appellant is rendering the Works Contract Service, then in view of the settled law in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] , no service tax is leviable on Works Contract Service for the period prior to 01.06.2007 and in the present case the entire period is prior to 01.06.2007 and therefore by following the ratio of the decision of the Apex Court in the case of Larsen Toubro, appellant is not liable to pay any service tax. Appeal allowed - decided in favor of appellant. 2019 (7) TMI 956 Business Auxiliary Services - business of brewing and bottling of beer at its plant in Aurangabad - non-payment of service tax - manufacture and sale of alcoholic beverages to the customers/indenters of UBL as per the instruction of UBL - demand alongwith interest and penalty - Date of amalgamation/transfer of Appellant s brewery unit with M/s Skol Breweries Ltd. In the scheme of arrangement - Time Limitation - HELD THAT:- The arrangement/agreement for manufacture and sale of branded alcoholic beverages between the appellant and M/s Skol is a complex one; even though the appellant is authorised to sale the manufactured branded beer in the local market, but the customers/indenters are as per the instruction of M/s Skol; the sale price is fixed by M/s Skol after mutual consultation. Thus it is not a simple provision of service agreement, where under, the service is flown from appellant to M/s Skol and the consideration is received against the service rendered. Determination of value - Production or processing of goods for, or on behalf of, the client - Held that:- in determining the taxable value, in the present circumstances, Notification 39/2009 dt. 23.9.2009 has been issued, allowing deductions on the value of inputs used in the manufacture/processing of alcoholic beverages, subject to the conditions laid down there under. Cessation of service tax liability - Date of amalgamation/ merger between the service provider and principal - Held that:- Date of amalgamation/ transfer of the Appellant s brewery unit with M/s Skol Breweries Ltd. In the scheme of arrangement as per Section 391 to 394 of the Companies Act, 1956 for amalgamation of the Appellant s brewery division with M/s Skol Breweries Ltd. - HELD THAT:- The appointed date i.e. as on 31.3.2009 be taken as the date of amalgamation/merger of the Brewery Division with M/s SKOL as sanctioned by the Hon ble Bombay High Court. Time Limitation - HELD THAT:- The fact that the Appellant had manufactured beer, affixed the brand name of SKOL and supplied it to them or sold to the customers of M/s SKOL is known to the department. Therefore, there was no suppression of fact, hence, extended period of limitation cannot be invoked - demand is barred by limitation. Appeal allowed - decided in favor of appellant. 2019 (7) TMI 955 Classification of services - Business Auxiliary services or not - manufacture and sale of alcoholic beverages to the customers/indenters of UBL as per the instruction of UBL - demand alongwith interest and penalty - Date of amalgamation/ merger of the Appellant s unit with M/s United Breweries Ltd. - Time Limitation - HELD THAT:- After the amendment to the definition of Business Auxiliary Service with effect from 1/9/2009, the activity of manufacture of non-excisable goods, that is alcoholic beverages, would fall within the scope of Business Auxiliary Service - the activity of manufacture of alcoholic beverages, being not an excisable goods, accordingly, does not fall within the exclusion clause of the amended definition of Business Auxiliary Services. The CBEC Circular No. 249/1/2006-CX-4 dt. 27.10.2008 issued clarifying the applicability of un-amended definition of Business Auxiliary Service, hence is not relevant to the facts of the present case. - Decided in favor of revenue. Determination of value - Production or processing of goods for, or on behalf of, the client - Held that:- The arrangement/agreement for manufacture and sale of branded alcoholic beverages between the appellant and M/s UBL is a complex one; even though the appellant is authorised to sale the manufactured branded beer in the local market, but the customers/indenters are as per the instruction of M/s UBL; the sale price is fixed by M/s UBL after mutual consultation. Thus it is not a simple provision of service agreement, where under, the service is flown from appellant to M/s UBL and the consideration is received against the service rendered. It is the argument advanced on behalf of the revenue that the service charges are adjusted against the sale price, and the balance amount returned to the service receiver out of the sale proceeds of manufactured branded beer for and on behalf M/s UBL. The value of the services needs to be determined keeping in mind the N/N. 39/2009 ST dt. 23.9.2009 and the principles of valuation prescribed under Section 67 of the Finance Act and the Valuation Rules, 2006. The Adjudicating authority has erred in adopting the sale price of the Appellant. - Decided in favor of assessee. Cessation of service tax liability - Date of amalgamation/ merger between the service provider and principal - Appointed ate is 1.4.2010 - Appellant had not brought to the notice of the Department about the fact of amalgamation scheme presented to BIFR. The Registration Certificate was amended only on 05.12.2012. - HELD THAT:- The appointed date i.e. as on 01.4.2010 be taken as the date of amalgamation/merger of the Appellant Unit with M/s UBL as sanctioned by the BIFR. - Decided in favor of assessee. Time Limitation - HELD THAT:- The arrangement between the Appellant and M/s UBL for manufacture of branded beer on behalf of M/s UBL has been disclosed and within the knowledge of the Department. In these circumstances, the allegation of suppression cannot be sustained against the Appellant. Therefore, the demand is barred by limitation. Appeal allowed - decided in favor of assessee. Central Excise 2019 (7) TMI 954 Levy of interest and penalty - penalty and interest has been levied/upheld in the present matter by reference to the Rule 96ZO(3) of the Central Excise Rules,1944 - Valuation - annual capacity of production - main contentions raised by the Petitioner was that the annual capacity of production ought to have been determined on the basis of actual power supply position and not merely the sanctioned power supply position - HELD THAT:- In M/S. SHREE BHAGWATI STEEL ROLLING MILLS VERSUS COMMISSIONER OF CENTRAL EXCISE ANOTHER [ 2015 (11) TMI 1172 - SUPREME COURT] , the Hon'ble Apex Court has declared the interest and penalty provisions under Rules 96ZO, 96ZP and 96ZQ of the Central Excise Rules, 1944 to be invalid for detailed reasons set out in the said judgment. The Additional Commissioner was obviously not justified in levying interest or in imposing any penalty in excess of ₹ 10,000/- relying upon the provisions of Rule 96ZO as well as other rules which have now declared as ultra vires by the Hon'ble Apex Court in Shree Bhagwati Steel Rolling Mills - the levy or upholding of interest under Rule 96ZO of the Central Excise Act is an exercise in excess of jurisdiction. Similarly, we are also satisfied that the levy or upholding of penalty in excess of ₹ 10,000/- is also an exercise in excess of jurisdiction. To that extent, there is no necessity for relegating the Petitioner to avail an alternate remedy of appeal to the CESTAT. The impugned order to the extent it levies interest and penalty (in excess of ₹ 10,000/-) is therefore set aside. The impugned orders are modified to the aforesaid extent only - In so far as the rest of the issues are concerned, the impugned order is not interfered with but liberty is granted to the Petitioner to avail the alternate remedy by way of an appeal to the CESTAT - Appeal allowed in part. 2019 (7) TMI 953 Reversal of CENVAT Credit - common inputs - Appellant was clearing their final product to Mega Power Project under the claim of exemption in terms of Notification Number 6/2006-CE dated 01/03/2006 - Revenue entertained a view that they are required to pay 6% of the value of the said goods in terms of Rule 6(3) of the Cenvat Credit Rules, 2004, as they were availing Cenvat Credit on common inputs - HELD THAT:- Admittedly, the N/N. 6/2006 continued to cause appearance in Sub-Rule 6(6)(vii) even though the same was not in force during the relevant period and it seems that the said mistake was realized by the legislature only on 08/05/2012 and vide N/N. 25/2012, the subsequent exemption N/N. 12/2012 was introduced in the said rule. In the present case, it is not even a case of re-introduction of exemption notification. Exemption continued in as much as with the rescinding of Notification No. 6/2005, the subsequent Notification 12/2012 was immediately introduced. It is only in the provisions of Rule 6(6)(vii) of the Cenvat Credit Rules, which are to the effect that there would be no requirement of reversal of any amount in case of the goods cleared under the exemption to Mega Power Project, N/N. 6/2006 was not replaced with N/N. 12/2012 - This inadvertent mistake stands clarified by the Board vide their clarification letter F. No. 267/49/2013-CX.8 dated 30th June, 2015. Thus, it is N/N. 12/2012, which was to be read in the provisions Rule 6(6)(vii) of the Cenvat Credit Rules. In as such a scenario there would not be any requirement of reversal of any amount, in terms of the provisions Rule 6(3). Appeal allowed - decided in favor of appellant. 2019 (7) TMI 952 Clandestine manufacture and removal - shortage of goods - shortage of 5.060 MTs of Sodium Bichromate Mother Liquor (SBML) - period March, 1997 to June, 1998 - demand based on statements, private records etc - HELD THAT:- The demand was raised based on the Panchanama, statements and the private records seized from the premises of the appellant as well as statements of the alleged buyers of the clandestinely removed products. All these have been summarized into Annexures-A to E enclosed to the SCN giving cross reference to Pg.Nos., File Nos. and Note book Nos., etc. As far as Annexure-A, B C are concerned, learned counsel for the appellants fairly submits that these have been agreed to by the officers of the company in their statements and which have not been retracted so far. This is a case of alleged clandestine removal of goods. Therefore, it is unthinkable that there will be official records of the clandestine manufacture and clandestine clearance. If these were recorded, they will no longer be clandestine. By their very nature, unrecorded production and clearance of goods can only be found based on evidence gathered during investigation such as stock taking, private records, private notebooks, statements of persons concerned, their examination and cross-examination which will lead to conclusion whether there was a clandestine removal of goods and if so, to what extent. Private note books seized from the factory under panchanama during the course of investigation and their analysis, as supported by the statements of various persons in the factory, form a fairly sound basis for demanding duty on such clearance. These statements can be supported by the statements of alleged recipients of the clandestinely removed goods. Such statements were recorded in this case. After a gap of eight years, during cross-examination, four of them have retracted their statements. However, this can, at best, be said to be an afterthought. Any person who makes statement under duress or coercion will, at the earliest opportunity, retract the statement so made. The conduct of these persons does not instil confidence that they have not voluntarily given the statements. Alleged clandestine production of goods - HELD THAT:- Even if the assessee is clandestinely manufacturing and removing the goods without accounting for the same in their Central Excise returns and registers, duty cannot be demanded first alleging that they have clandestinely manufactured the goods and again alleging that they have clandestinely removed the same. In fact, I find in the initial order of the adjudicating authority in 2002 that this set off was allowed and accordingly, the demand was confirmed for a much lower amount than was indicated in the SCN. There is no quantification of the demand in this annexure. For these reasons, the demand in Annexure- E is not sustainable and needs to be set aside. In conclusion, the demands raised under Annexure-A, B C to the SCN are upheld; demand under Annexure-D is upheld but the same needs to be set off against any demand on the ground of clandestine clearance in Annexure-A, B C for the same period; demand based on the alleged clandestine production based on labour contractor reports in Annexure-E are not sustainable and are set aside. The appeals are remanded to original authority for the limited purpose - appeal allowed by way of remand. 2019 (7) TMI 951 Job-work - failure on the part of principal to pay the duty - manufacture of railway wagons classifiable under Central Excise Tariff Heading 8606 - Benefit of N/N. 10/97-CE dated 1 March 1997 - HTC wagons were cleared by the principal manufacture for Research and Development Establishment of Indian Defence, availing the exemption Notification No. 10/97-CE dated 1 March 1997 - HELD THAT:- The appellant have manufactured HTC wagons for M/s Titagarh wagons Ltd. on job work basis availing the exemption benefit under N/N. 214/86-CE dated 25 March 1986. It is also a fact that the appellants have cleared two HTC wagons to M/s TWL under their invoice No. 267060 dated 29 March 2011. These clearances have also been affected at the nil rate of duty availing the benefit of N/N. 214/86-CE. As per the scheme things under the N/N. 214/86-CE, the job worker is entitled to clear the goods without payment of duty to the principal manufacturer and it is the responsibilities of the principal manufacturer to pay duty on such goods, and, therefore, no wrong has been done by the appellant upto this particular point. It is a matter of record that appellant have not availed the benefit of N/N. 10/97-CE, which was availed by the principal manufacturer and, therefore, the demand of duty for violation of the terms of N/N. 10/97-CE cannot be raised against the appellant - the demand of Central Excise Duty is without any merit. Appeal allowed - decided in favor of appellant. CST, VAT & Sales Tax 2019 (7) TMI 976 Period of limitation in passing the orders - Rectification of mistakes - Section 25A of the Karnataka Sales Tax Act, 1957 - assessment years 1989-90 and 1991-92 to 2002-2003 - HELD THAT:- This provision makes it clear that the Assessing Authority [for the purpose of the present cases], is empowered to rectify any mistake apparent from the record, at any time, within a period of five years from the date of the order passed by the said authority. Indisputably, all the impugned orders herein are passed beyond the period of five years from the date of the original assessment order/original rectification order. Section 25-A of the Act which provides only five years limitation has been invoked. Even on this ground, the concerned officers have to be fixed with, for the loss of revenue caused to the State Exchequer. The orders of rectification impugned herein cannot be approved, being passed beyond the period of limitation envisaged under Section 25A of the Act and deserves to be set aside on the ground of limitation alone. As already observed, the jurisdiction/competency of the assessing authority to exercise the powers under Section 25-A of the Act is not pressed. The orders impugned passed by respondent No.1 under Section 25A of the Act are quashed - petition allowed. 2019 (7) TMI 950 Maintainability of application - issue already attained finality - Refusal to issue Form-C - natural gas purchased by petiitoner in the course of inter- state trade or commerce and used by it for the generation of electricity - HELD THAT:- The writ application merits acceptance, keeping in view the fact that adjudication in the case of Carpo Power Limited [ 2018 (4) TMI 146 - PUNJAB AND HARYANA HIGH COURT ], which has already attained finality for the Special Leave to Appeal (supra), already declined on 13th August, 2018. The respondents are directed to issue C form to the petitioner - Application allowed.
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