TMI Tax Updates - e-Newsletter
July 3, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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GST:
Classification of goods - Prohance–D (Chocolate) - though Prohance-D is a specifically designed sugar free and low GI product but does not contain high amounts of dietary fibre and slow digestion agents, hence cannot be categorized as diabetic food - it is "compound preparations for making non-alcoholic beverages" as it resultant in non-alcoholic beverage after mixing the powder with water or milk - GST @ 18%
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GST:
Amendment of the tax return Tran 1 form - claim of eligible credit towards Central Tax - Revenue directed to complete the exercise within two months from the date of submission of all the documents by the petitioner
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GST:
Rate of GST - services by way of amusement facility - dictionaries say that a park is a large part of land used for a particular purpose - the services/activities supplied by applicant by deploying gaming machines and equipments in an area within the Oberoi mall would not fall within the expression, as an ‘amusement park’, but fall under amusement facilities - operating gaming zone in one of leading malls is taxable @ 28%
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Income Tax:
Levy of interest u/s. 201(1A) - period of interest liability - TDS demand was deleted on ground that deductees/parties have reflected the receipts in their income - absence of liability for tax will not dilute the default and levy of interest u/s. 201(1A) is mandatory - interest shall be calculated from the date on which tax was first deductible by the deductor to the date of filling of return by the recipient deductee
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Income Tax:
Capital Gain in hand of GPA holder - the recitals in the GPA show that the assessee is not the owner of the property but has only been granted authority to convey the property to third party, therefore, he cannot became the owner of the property by virtue of the irrevocable GPA - since the assessee is not the owner of the property, the capital gain cannot be brought to tax in his hands
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Income Tax:
Provision made for future expenses - Allowablity u/s 37(1) - complete details filed by the assessee to show that the expenditure in question was not contingent liability and on reference to these documents shows that projected future expenses as claimed by the assessee was reasonable - it was not proper on the part of the AO to have ignored these documents - allowable expenses
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Income Tax:
Revision u/s 263 - under valuation of closing stock - as a matter of prudence stocks are valued at lower of the cost or the realizable value - increase/decrease in realizable value due to foreign exchange fluctuation has no bearing on valuation of closing stock and will be recover when the stocks are sold - revision order passed by PCIT is without any basis, hence, set aside
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Income Tax:
Income accrued in India - professional legal services provided before a foreign court - it cannot be brought to tax as FIS under Article 12 of the India-USA DTAA, because there is no make available of any particular knowledge or skill to ONGC before the courts which can enable ONGC to represent its case in future - legal services cannot be treated as FTS as it is a professional services which is outside the scope of Section 9(1)(vii)
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Income Tax:
Stay of recovery - appeal pending before CIT(A) - circular lays down 15%/20% of the disputed demand to be deposited for stay, by way of a general condition and does not prohibit or envisage that there can be no deviation from this standard formula - it is inbuilt in the circular itself to either decrease or even increase the percentage of the deposit of disputed tax demand - stay granted at 10% payment
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Income Tax:
Revision u/s 263 - since interest on late deposit of VAT, service tax, TDS etc are allowable expenditure u/s 37(1), the AO has taken a possible view - order passed by the AO u/s 143(3) is neither erroneous nor prejudicial to the interest of Revenue and cannot be held to be unsustainable in law - revision quashed
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Income Tax:
TP Adjustment - adjustment regarding outstanding receivables - company has a margin of 23.3% on Software Development segment as compared to 11.42% of the comparable companies, which shows that the working capital adjusted margin of the assessee have already factored into account the delay in the receivables - therefore no separate adjustment is required to be made
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Income Tax:
Disallowance u/s.36(1)(iii) - borrowed amount was invested in shares of a associate company - all the details of investments and working of interest paid has been provided to the Department - asking evidences that income will be generate to the assessee at this stage is not the requirement of Section 36(1)(iii) fistly and secondly it is just asking for some hypothetical evidences - deduction allowable
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Income Tax:
Revision u/s 263 - scope of Explanation (2) inserted u/s 263 by the FA, 2015 w.e.f. 01-06-2015 - AO has taken a possible view after conducting prudent enquiries and examining the documents on record - the amendment to u/s 263 is effective from 01-06-2015 and does not operate retrospectively i.e. in AY 2010-11 even if order was passed by amendment
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Income Tax:
Addition of undisclosed expenditure based of valuation of property u/s 158BC - cost of construction of the residential building - in the absence of any material found during the course of search regarding the undisclosed investment, the assessee cannot be penalized solely based on the valuation report provided by the Department - no addition
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Income Tax:
Deduction u/s 80IB(10) - Scope of amendment with effect from 01.04.2010 vide Finance Act 2009 - the transactions of registered sale deed and the agreements had been executed and the transaction stood concluded in November 2008 much prior to the amendment coming into force - deduction allowable
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Income Tax:
Correct head of income - shares transactions- Capital gain or business income - there cannot be any straight jacket formula and there should not be a sweeping conclusion but a case to case test or approach should be adopted - regularity in purchase and sale of shares for several years and payment substantial professional fees in its endeavour to corner gains from market fluctuations show clear commercial motive - business income
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Income Tax:
Agricultural income - correctly held that there is no merit in assessing total receipts in the hands of assessee and at best, the AO could have determined the loss/income assessable in the hands of assessee - growing of hybrid seeds can never be held to be non-agricultural activity - entitled to claim deduction u/s 10(1)
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Customs:
Benefit under Served From India Scheme (SFIS) denied - double jeopardy or double whammy - It only results in wastage of public money and public man-hours in case the public bodies are embroiled in litigation, initiated by the pro-revenue approach taken by the Revenue against such public bodies, resulting in wastage of public time in Courts.
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DGFT:
Clarification on Jurisdictional RA/RA concerned for SEIS-Para 3.06 (c) of Handbook of Procedures
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Corporate Law:
Provision relating to Nidhis and its application, etc. - Section 406 of the Companies Act, 2013 shall come into force w.e.f. 15.8.2019
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Corporate Law:
Nidhi (Amendment) Rules, 2019
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Corporate Law:
Companies (Significant Beneficial Owners) second Amendment Rules, 2019
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Indian Laws:
Dishonor of Cheque - Since the pre-condition of filing a complaint under section 138 of the Negotiable Instruments Act of sending a statutory notice has not been satisfied in the present case, no cause of action arose in favour of the complainant to file the subject complaint.
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Indian Laws:
Winding up of petition - dishonor of cheque - inability of pay debts - summary suit and winding up petition share a broadly similar approach. In both, the Respondent or Defendant must be shown to have no tenable or plausible defence. Unless that defence is moonshine, an order could not be passed.
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Indian Laws:
Appointment of a sole arbitrator - The burden is on the applicant to establish that respondent No.2 had an intention to consent to the arbitration agreement and be party thereto, maybe for the limited purpose - That burden has not been discharged by the applicant at all.
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Service Tax:
Construction of Complex Services - when the measure of levy has been prescribed to be based on 25% of the Gross Receipts then the same cannot be questioned on the basis of considerations such quantum of completed work before the agreement to sell.
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Service Tax:
Validity of summons u/s 70 of (CGST) Act, 2017 - the proper officer have power to summon any person whose attendance he considers necessary either to give evidence or to produce a document or any other thing in any inquiry u/s 70(2) - the petitioner has utterly failed to establish that the proceedings u/s 70 can only be taken recourse to, after decision u/s 73 - writ dismissed
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Service Tax:
Determination of value for availing small scale exemption upto ₹ 10 lacs - the value of the services required to be computed for the purpose of small scale exemption benefit is the value arrived at after allowing the abatement
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Central Excise:
Valuation - the buyers’ premises can never be the place of removal - the freight from the factory/depot/consignment agent up to the buyers’ premises cannot be included in the assessable value, even if the goods are sold or delivered at the buyer’s premises.
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2019 (7) TMI 96
Rate of GST - services by way of admission to amusement parks and amusement facility - it is submitted that the GST Notification 1/2018 reduced the rate on services by way of admission to amusement parks from 28% to 18% with effect from 25 January 2018 - what will be the applicable rate of GST on the services/ activities of the Company? - HELD THAT:- From the meaning assigned to Amusement Park , we understand and we agree with the contention of the jurisdictional officer that park includes a large area of land that is used for specific purpose in a big open area containing various amusement facilities which themselves may be under covered premises - In the present case, we find that applicant have stationed various gaming equipment and machine for different age groups consisting of kids, teenagers and adults. The equipments and machine are either coin operated or card operated. Thus through the various equipment and machine stationed in the mall applicant allows interested person such as kids, teenagers and adults facilities to enjoy various games. The word amusement being common in the expressions amusement park and amusement facility it is worthwhile to know the difference between a park and a facility to arrive at a conclusion as to whether the Applicant s premises is an amusement park or an amusement facility . The meaning of a park in various dictionaries say that a park is a large of land used for a particular purpose - In the instant case the applicant has placed equipments in an area within the Oberoi mall. Therefore there is should not be a second thought to call it an amusement facility rather than an amusement park . Applicant are engaged in providing amusement facility services and running family entertainment center in Oberoi Mall. Applicant is also advertising its activities in the public domain as providing amusement facilities - the subject services/activities supplied by applicant by deploying gaming machines and equipments would not fall within the expression, as an amusement park , but fall under amusement facilities. The GST rate on operating gaming zone in one of leading malls in Mumbai is @ 28% w.e.f. 25.1.2018.
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2019 (7) TMI 95
Classification of goods - Prohance D (Chocolate) - classified under Heading No. 2106 90 91? or not - whether the said food is covered under the definition of Diabetic Food or not? - whether it can be considered as product of cocoa or a compound preparation for making non-alcoholic beverages? - Sl- No. 46A of Schedule II to N/N. 1/2017-CentraI Tax (Rate) dated 30.06.2017 - HELD THAT:- The subject product is an edible substance consisting of nourishing and nutritive components such as carbohydrates, fats, proteins, essential mineral and vitamins and can be ingested and digested and provides nutrients to the human body. Hence there is no doubt that the subject product can be categorized as food. Whether the subject product can be considered as a diabetic food? - HELD THAT:- While Prohance contains sugar, the subject product Prohance-D does not contain sugar - it can be said that the subject product, Prohance-D is different from the parent product in as much as it contains extra ingredients as mentioned in (i) to (vi) above, ingredients which along with the other regular ingredients may assist diabetics in replacing a meal or part of it. However it is also found that the product is also advertised as providing Energy, Immune Health, Heart Health, Vitamins and Minerals and maintains cholesterol levels. On the container there is a mentioned that Prohance-D is a specifically designed sugar free and low GI product. It contains Isomaltutose a low glycemic carbohydrate that helps minimize blood sugar spikes. It provides energy from high quality protein, fat and is rich in dietary fibre and MUFA that heart health. The subject product is also advertised as having various other health benefits and to treat the same only as a diabetic food will not be proper in our view. Secondly, as per information available on the internet, the diabetic foods must contain high amounts of dietary fibre and some slow digestion agents. Though the preparation in question contains gum Arabic, it does not contains high amount of dietary fibre. A little amount of fibre as found in this preparation is found in all kinds of food and Prohance-D has no extra amount of fibre. It is also seen that there are no substances in its composition that help in slowing down of food moving through stomach and sugars moving to blood stream - In view of these deficiencies, the Prohance-D cannot be categorized as diabetic food. Whether the same can be treated as a product classifiable under Chapter 1 8/19 of the Tariff? - HELD THAT:- The basic product is Prohance and Prohance D is a variation of the basic product. We also find that the vanilla and chocolate flavours are just a kind of variation to attract the customers. Further we agree with the submissions made by the applicant that Prohance D will not be covered under Chapter 19 - Chapter heading 2106 of the Tariff specifically covers Food preparations not elsewhere specified or included and in view of the submissions made by the applicant it is clear that Prohance-D (Chocolate) is a food preparation which is meant to be consumed by people by dissolving the same in water or milk. It is thus, a food preparation , squarely covered under Chapter Heading 2106 of the Customs Tariff - We also find that both, the applicant as well as the jurisdictional officer are in agreement that the subject product falls under heading 2106 and we also have no doubt about the same. Prohance-D is a combination of various items as seen from the discussions above and can very clearly be treated as a compound preparation. This compound preparation is in powder form and can be consumed by direct mix with either water or milk. Further, the resultant beverage which is obtained after mixing the powder with water or milk is a non-alcoholic beverage and as such the Prohance-D will be clearly covered under the description Compound preparations for making non-alcoholic beverages therefore fall under Chap. Hdg 2106 90 50, thus attracting GST @ 18% as per Sch-III, Sr. No. 23.
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2019 (7) TMI 93
Amendment of the tax return Tran 1 form - claim of eligible credit towards Central Tax - HELD THAT:- The petitioner is satisfied if the exercise now undertaken by the respondents is concluded within reasonable period. He further submits that the petitioner is prepared to submit the supporting documents as desired in the correspondence. The respondents would complete the exercise within two months from the date of submission of all the documents by the petitioner. Petition disposed off.
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2019 (7) TMI 63
IGST refund - Consideration of writ petitioner's representation dated 23.11.2018 - direction to the respondents to sanction IGST benefits as per provision of IGST Act - HELD THAT:- The second respondent is directed to dispose of the representation of writ petitioner dated 23.11.2018, in a manner known to law, within three weeks from the date of receipt of a copy of this order - petition disposed off.
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Income Tax
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2019 (7) TMI 92
Stay of recovery - appeal pending before CIT(A) - direction to pay 20% of the demand - CBDT instructions no.1914 dated 2nd February 1993 - Office memorandum dated 29th February 2016 - HELD THAT:- This circular thus lays down 15% of the disputed demand to be deposited for stay, by way of a general condition. The circular does not prohibit or envisage that there can be no deviation from this standard formula. In other words, it is inbuilt in the circular itself to either decrease or even increase the percentage of the disputed tax demand to be deposited for an assessee to enjoy stay pending appeal. The circular provides the guidelines to enable the AO and Commissioners to exercise such discretionary powers more uniformly. Ordinarily, the court would be slow in interfering with such discretionary exercise of powers by the authority concerned. However, in the present case, the total tax demand is quite high. The issues are at the first appeal stage. Even 20% of the disputed tax dues would run into few lakhs of rupees. To be precise, approximately 34 lakh. We reduce the requirement of depositing the disputed tax dues to enable the writ-applicant to enjoy stay pending the appeal before the appellate authority to 10%. We are informed that the writ applicant has so far deposited ₹ 5 lakh. We clarify that this would, however, be on a further condition that the writ-applicant shall offer immovable security for the remaining 10% to the satisfaction of the assessing authority. The order passed by the authority concerned stands modified accordingly.
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2019 (7) TMI 91
Deductions u/s 80 IB - profits are independently determinable for all the four units of the appellant - AO aggregated the income of all the units before considering eligible deduction u/s 80 IB - HELD THAT:- The Assessing Officer failed to consider that the gross total income of the assessee before deduction was ₹ 78,90,64,628/-, whereas in the case of Synco Industries Ltd. [ 2008 (3) TMI 13 - Supreme Court ] The factual position was different. In the said case, the Assessing Officer, noticed that the gross total income of assessee therein before deductions under Section 80 IB is nil. Therefore, the appeal filed by the assessee is allowed and the order passed by the Tribunal dated 17.12.2008 is set aside and the order of CIT (Appeals) is restored and the substantial questions of law are answered in favour of the assessee.
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2019 (7) TMI 90
Deduction u/s 80IB(10) rejected - assessee is not a developer but a works contractor - assessee did not satisfy the conditions for allowing the deduction - HELD THAT:- As referred to the decision of the Hon'ble Supreme Court in the case of K.Raheja Development Corporation Vs. State of Karnataka [ 2005 (5) TMI 7 - SUPREME COURT] . However, going through an order passed by the CIT(A), we find that this issue was decided in favour of the assessee and the revenue did not prefer any appeal against the said finding recorded by the CIT(A) in paragraph 5 and 6 of its order dated 30.06.2016. Therefore, the Revenue is not entitled to canvass the said contention before this Court. Accordingly, substantial question of law no.3 is rejected. Scope of amendment with effect from 01.04.2010 vide Finance Act 2009 - transaction entered prior to amendment - applicability of ammendment in A.Y. 2010-11 - HELD THAT:- This issue does not arise in the instant case as on facts, as recorded by the Tribunal, the transactions took place much prior to the amendment coming into force. The registered sale deed and the agreements had been executed and the transaction stood concluded in November 2008 much prior to the amendment. In fact, this issue is subject matter of consideration before the Tribunal in the Elegant Estates [ 2016 (5) TMI 1441 - ITAT CHENNAI] and the stand taken by the assessee was accepted by the Tribunal. This order was carried by the Revenue by way of appeal which was dismissed by judgement dated 19.06.2018 in the case of Commissioner of Income Tax, Chennai Vs. Elegant Estates [ 2018 (6) TMI 1191 - MADRAS HIGH COURT] . Question was considered by the Hon'ble Division Bench and it was held that it was not a question of law much less a substantial question of law.
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2019 (7) TMI 89
Computation of capital gain - genuineness of gift - cost of acquisition of the previous owners u/s 49 - HELD THAT:- Tribunal concluded that the provisions of Section 49 did not apply to the facts of the case, since the said provisions envisages only where the capital asset becomes the property of the assessee, then the cost of acquisition of the asset will have to be reckoned on the basis of cost of acquisition to the previous owner and otherwise, no. Tribunal faulted the assessee in not furnishing any evidence either before the AO, or before the CIT(A), or before the Tribunal that he held the gift by way of registered document and that the donor, his daughter, Mrs. Meera Arun had sufficient source for cash during the assessment year 2009-10 to invest such huge cash in 3,00,000 equity shares and therefore, on facts, the Tribunal approved the finding of the AO that the transaction was entirely bogus. The assessee has not been able to dislodge any of the factual findings which have been re-appreciated by the AO. Furthermore, as observed by us earlier, the assessee did not cooperate in the assessment proceedings for the reasons best known. - No substantial question of law.
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2019 (7) TMI 88
Addition in respect of the cost of construction of the residential building - addition of undisclosed expenditure based of valuation of property u/s 158BC - whether the investment in the house property represents undisclosed income and is liable to be included in the block assessment? - HELD THAT:- We are dealing with a case where it is a block assessment pursuant to a search and we are guided by the legal principles set out in the above mentioned decisions which clearly and consistently held that in the absence of any material found during the course of search regarding the undisclosed investment, the assessee cannot be penalized solely based on the valuation report provided by the Department. Valuation report was prepared much earlier to the search conducted in the assessee's premises and therefore, this valuation report obviously is a material which is very much available with the Department and the same could not have been the basis for holding that there has been an undisclosed investment. In the case of Bimla Singh [ 2008 (10) TMI 62 - PATNA HIGH COURT] the Court found that if the difference between the value given by the assessee and that of the DVO was less than 15%, it can be assumed to be a bonafide difference. In the case before us, the difference is less than 4%. The construction of the house commenced in October, 1997 and even on the day of the inspection by the Department valuer i.e., on 12.08.1999, the construction was in progress. Therefore, we would be well justified in holding that this difference of less than 4% has to be held as a bonafide difference. Assessee is entitled to succeed and the substantial question of law is required to be answered in favour of the assessee.
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2019 (7) TMI 87
Validity of the assessment order passed u/s 153C - lack of satisfaction recorded by concerned authorities for issuance of notice u/s 153C - HELD THAT:- As could be seen, the Bench on 20th November 2018 had directed the Revenue to produce the satisfaction recorded for issuance of notice u/s 153C. In compliance to the aforesaid direction of the Bench, learned Departmental Representative has furnished before us certain communications received from the Assessing Officer stating that as per assessment record, satisfaction was recorded for issuance of notice u/s 153C. By allowing itself to go unrepresented at the time of hearing of appeals, the assessee has not controverted the aforesaid facts. No merit in the grounds raised by the assessee. Accordingly, these grounds are dismissed. Addition u/s 41(1) - HELD THAT:- We find that the addition made by the AO is not on the basis of any incriminating material found as a result of search and seizure operation. In fact, the Assessing Officer has simply repeated the addition made in the original assessment order. Thus, not only the addition made is not on the basis of any incriminating material found during the search, but, it was also subject matter of dispute in the original assessment order. That being the case, the AO could not have made the addition in the impugned assessment order. Disallowance of interest expenditure by applying the provisions of section 40A(2)(b) - HELD THAT:- It is a fact, in the impugned assessment order, the AO has repeated the same addition as was made in the original assessment order. If the addition made in the original order does not survive by virtue of the order passed by CIT(A) against the original assessment order, the same cannot survive in the assessment order passed u/s 143(3) r/w section 153C - the addition deserves to be deleted. Notably CIT(A) in the impugned order following the orders of the Tribunal for the preceding assessment years has held that interest rate of 19,5% per annum is reasonable. In any case of the matter, since the disputed addition is not on the basis of any incriminating material, it has to be deleted - decided in favour of assessee
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2019 (7) TMI 86
Revision u/s 263 - Interest amount debited in the Profit and Loss Account under the garb of belated payment of VAT, Service Tax and TDS are penal in nature and as such should not be allowable under section 37(1) - assessment U/s 143(3) by AO - HELD THAT:- As decided in M/s Naaraayani Sons Pvt. Limited [ 2018 (8) TMI 1362 - ITAT KOLKATA] held that interest expense on late deposit of VAT, service tax, TDS etc are allowable expenditure under section 37(1). Interest on late deposit of VAT, service tax, TDS etc are allowable expenditure under section 37(1) of the Act and the assessing officer has taken a possible view therefore order passed by the assessing officer u/s 143(3) dated 11.05.2016, is neither erroneous nor prejudicial to the interest of Revenue and cannot be held to be unsustainable in law. Therefore, we quash the order passed by the ld Pr.CIT U/s 263 of the Act. - Decided in favour of assessee.
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2019 (7) TMI 85
TP Adjustment - adjustment made on account of the outstanding receivables - delay in the receivables - interest for the period of the outstanding dues - HELD THAT:- Assessee is not charging interest on overdue debts from the third parties and also the assessee is a debt free company and not paying any interest on funds utilized is business. We have also noted that the assessee company has a margin of 23.3% on Software Development segment as compared to the margin of 11.42% of the comparable companies. The working capital adjusted margin of the assessee have already factored into account the delay in the receivables and therefore no separate adjustment on this account is required to be made. The credit period of the comparable companies has been found to be 147 days as against the credit period allowed by the assessee of the 30 days. In view of the decision of CIT Vs EKL Appliances Ltd D [ 2012 (4) TMI 346 - DELHI HIGH COURT] we are of the opinion that impact of the delayed receivables has already been factored in the working capital adjustment and, therefore, any further adjustment on the outstanding receivables is not required separately in the instant case. Accordingly, we direct the Assessing Officer to delete the adjustment made on account of the outstanding receivables. - Decided in favour of assessee.
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2019 (7) TMI 84
Slump sale u/s 50B - AO assessed sale of the industrial units with the land, building, plant and equipments as going concerns to another company - assessee claim capital gain as sale of depreciable assets u/s 50 - HELD THAT:- As decided in own case [ 2010 (10) TMI 673 - KERALA HIGH COURT] sale of the undertaking is a slump sale within the meaning of Section 2(42C) assessable under Section 50B and assessee also rightly styled the transaction as such as slump sale in the sale documents and even got the Auditor's report prepared and filed along with return in terms of Section 50B(3). - assessment was rightly made by the Officer u/s 50B treating the transaction as slump sale . Addition u/s.43B being interest accrued on loans from Banks/Financial Institutions - sum not been paid before the due date of filing the return - HELD THAT:- As per the provisions of section 43B(d) and (e) of the Act, the assessee has to pay the interest on any loan or borrowings in accordance with the terms and conditions of agreement governing such loan or borrowings when it was borrowed from the public financial institution or a State financial corporation or a State industrial investment corporation or a scheduled bank. However, in the present case, the Ld. AR has fairly conceded that the assessee has not paid interest on loan or borrowings made from such institutions and shown as income in the subsequent year on its waiver. According to the Ld. AR, it cannot be added in the assessment year under consideration. In our opinion, offering of income on waiver in the subsequent assessment year cannot be a reason to allow non-payment of interest as deduction when it was not paid in accordance with the provisions of section 43B. Hence, we are in full agreement with the finding of the CIT(A) and the same is confirmed. Thus, this ground of appeal of the assessee is dismissed. Disallowance of part of interest claimed - diversion of funds to sister concerns - HELD THAT:- In view of the judgment of the Jurisdictional High Court in the case of V.I. Baby Co. [ 2001 (10) TMI 58 - KERALA HIGH COURT] CIT(A) had confirmed the disallowance of the interest made by the AO. However, we make it clear that AO has to compute interest on diversion of funds to sister concerns on outstanding balances on day to day basis. With this observation, we remit this issue to the file of the AO for re-computation of interest. This ground of appeal of the assessee is partly allowed for statistical purposes. Re-instatement of foreign exchange loans procured for working capital requirements - capital or revenue - HELD THAT:- If the transactions undertaken are on account of revenue items, the gain is clearly taxable and so the loss also is clearly allowable. The assessee except making bald assertion that the transactions were undertaken on account of capital items no evidence was brought on record to establish that the foreign currency transactions were undertaken on capital items. The AO also had failed to undertake this exercise. The Hon'ble Supreme Court in the case of CIT Vs. Woodward Governor India Pvt. Ltd. [ 2009 (4) TMI 4 - SUPREME COURT] had clearly held that the actual payment was not a condition precedent for making adjustment in respect of foreign currency transactions as the end of the closing year. We are therefore, unable to concur or agree with the view of the CIT(A), that liability could arise only when the contract would have matured, as such a stand is totally divorced from the accounting principles and is in variance with the principle upheld by the Apex Court in the case Woodward Governor India (P.) Ltd. (supra) - we restore the matter to the file of AO with the direction that to re-do the assessment keeping in view the principles enunciated above
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2019 (7) TMI 83
Penalty u/s. 271(1)(c) - defective notice u/s 274 - non specification of charge - HELD THAT:- We find that CIT(A) has reproduced the notice issued by the AO u/s. 274 r.w.s. 271(1) and in that notice, the AO has not struck down the irreverent portion and hence, the notice has not specified the charge of the AO as to whether the assessee is guilty of concealment of income or furnishing of inaccurate particulars of income. CIT Vs. Manjunatha Cotton and Ginning Factory [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] it is noted by Hon'ble Karnataka High Court that the assessee should note the grounds which he has to meet specifically because otherwise, principle of natural justice is affected, and therefore, on the basis of such proceedings, no penalty should be imposed on the assessee. In view of this specific finding of Hon'ble Karnataka High Court in this case, merely this fact that in the penalty order, the AO has stated that assessee is guilty of both defaults will not improve the case of revenue because in the absence of clear charge of AO in the penalty notice issued by him u/s. 274 r.w.s. 271 of IT Act, this default of revenue regarding violation of principle of natural justice continues because in such a situation, the assessee does not know at that stage regarding the ground which he has to meet specifically. - decided against revenue.
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2019 (7) TMI 82
Agricultural income - total receipt is taxable or income - treatment of activity of growing of hybrid seeds - exemption claimed u/s 10(1) - HELD THAT: Admittedly, the assessee himself had reported the receipts at ₹ 5.54 crores and claimed the same to be exempt u/s 10(1) but had also enclosed audited Profit and Loss Account, in which it had declared loss of ₹ 1.22 crores. In this regard, the CIT(A) has correctly held that there is no merit in the order of AO in assessing total receipts in the hands of assessee and at best, the AO could have determined the loss / income assessable in the hands of assessee The CIT(A) while deciding the issue in the present case had in turn, relied on the decision of ACIT Vs. Ajeet Seeds Ltd. [ 2013 (11) TMI 894 - ITAT PUNE] which has been confirmed by Bombay High Court [ 2015 (6) TMI 1187 - BOMBAY HIGH COURT] . Consequently, we hold that growing of hybrid seeds in the case of assessee can never be held to be non-agricultural activity. Hence, the assessee is entitled to claim deduction under section 10(1) of the Act. - Decided in favour of assessee.
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2019 (7) TMI 81
Disallowance of depreciation on building - no completion certificate from Local Authority or Concerned Authority was provided by the assessee to the Department - HELD THAT:- As decided in M/S. NIRAMAYA MEDICAL FOUNDATION RESEARCH CENTRE, [ 2013 (7) TMI 1132 - ITAT PUNE] that merely because completion certificate has not been obtained, it cannot be the ground to disallow the claim of depreciation especially when the building has been utilized for the purpose of business. Assessee has the completion certificate from the architect of the building dated 02.03.2010, that further the building has also been utilized for the purpose of business. Revenue on suspicion has doubted the genuineness and authenticity of the certificate of the Architect placed on record without any corroborative or supportive evidences which is not legally justifiable. In such circumstances, respectfully following the decision of Co-ordinate Bench of the Tribunal, Pune as referred herein above, we allow ground No.1 raised in appeal by the assessee. Disallowance of depreciation on furniture and fixtures - addition on furniture and fixtures in the case of assessee during the assessment year under appeal - Revenue denied the depreciation on the ground that these furnitures and fixtures were not utilized within 31.03.2010, since as per the Revenue the date of procurement of these furnitures was itself 31.03.2010 - HELD THAT:- Assessee has placed on record complete information in tabulation form which has been made part of this order wherein it is evident that the date of invoice was much prior to 31.03.2010 whereas only the date of accounting of invoice was 31.03.2010 and also the materials were received prior to 31.03.2010. DR could not controvert these facts by placing any other submissions or material on record. Even, CIT (Appeals) has not brought any specific or cogent reasons for disallowing depreciation claimed for furnitures and fixtures. The order of CIT(Appeals) surrounds on surmises, suspicion and guess work and therefore, is not legally acceptable.- Ground No.2 raised in appeal by the assessee is allowed.
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2019 (7) TMI 80
Disallowance u/s.36(1)(iii) - borrowed amount was invested in shares of a associate company - evidences from where it can be found out that Investments out of borrowed funds has or will generate this much of income - HELD THAT:- When all the details of investments of shares and working of interest paid has been provided to the Department, asking for any other evidences relating to what income will generate to the assessee, at this stage, first of all, it is not the requirement of Section 36(1)(iii) and secondly, at this stage, it is just asking for some hypothetical evidences. The very fact that funds borrowed were invested in shares of an associate company itself demonstrates the business strategy of the assessee company. As find in the case of Hero Cycles P. Ltd. Vs. CIT [ 2015 (11) TMI 1314 - SUPREME COURT] has held that where loans were advanced by the assessee to its various associate concerns as a part of business strategy, interest on such loans was allowable deduction u/s.36(1)(iii). Extending this proposition to the facts of the present case, investments in shares of the associate concerns by the assessee is part of business strategy and therefore, interest on such loans are allowable deduction u/s.36(1)(iii) In view of the above examination of facts and legal propositions, we hold that the investments made by the assessee in M/s. Kimplas Piping Systems Ltd. were wholly and exclusively for the purpose of business and therefore, no disallowance u/s.36(1)(iii) of the Act could be made in the present case. Hence, we set aside the order of the Ld. CIT(A) on this issue and direct the AO to delete the addition - Decided in favour of assessee. Disallowance u/s 14A - non recording of satisfaction by AO on judicious and objective application of mind. HELD THAT:- We find that in the case of Godrej Boyce Manufacturing Co. Ltd. [ 2010 (8) TMI 77 - BOMBAY HIGH COURT] , it has been held that it is a mandatory requirement of the law u/s.14A that the AO has to scrutinize the claim of the assessee before making any disallowance. However, in the instant case, without looking into these facts, the disallowance was made. The Assessing Officer has not recorded satisfaction on judicious and objective application of mind. Also in the case of CIT Vs. Delite Industries Ltd. [ 2009 (2) TMI 498 - BOMBAY HIGH COURT] has held that if the investments from whom no exempt income is received then there is no question of making any disallowance u/s.14A of the Act on these investments. Referring to facts of the present case before us, wherein no exempt income has been earned by the assessee, in such case, no disallowance can be called for u/s.14A - Decided in favour of assessee.
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2019 (7) TMI 79
Revision u/s 263 - scope of Explanation (2) inserted u/s 263 by the Finance Act, 2015 w.e.f. 01-06-2015 - proper enquiries / verifications - unexplained in investment in land - AO accepted investment after enquiry and even issuing summons u/s. 131 and obtaining confirmations and affidavits - HELD THAT:- It is also a well settled law that where the enquiries have been made by the Assessing Officer even though they are inadequate, the provisions of section 263 cannot be invoked. Lack of enquiry and inadequate enquiries are on different pedestal. All the lenders are closely related to the assessee and have supported the assessee by filing confirmations and affidavits. The AO after conducting enquiries came to the conclusion that the source of investment in land has been duly explained by the assessee and hence, no addition was made. The order of AO may be prejudicial to the interest of revenue but the same is not erroneous as the AO has taken a possible view after conducting prudent enquiries and examining the documents on record. In so far as the contention of the Department that since the impugned order has been passed after the amendment, therefore, amended provisions of section 263 would apply, we do not find favour with this contention. The amendment to section 263 by the Finance Act, 2015 is effective from 01-06-2015 and does not operate retrospectively. Thus, the amended provisions of section 263 would have no bearing on the assessment year under appeal i.e. assessment year 2010-11. Merely for the reason that the order u/s. 263 has been passed after the amendment would not bring the assessment year 2010-11 within the ambit of amended provisions of section 263. The Mumbai Bench of Tribunal in the case of Reliance Money Infrastructure Ltd. Vs. Pr. CIT [ 2017 (10) TMI 630 - ITAT MUMBAI] while dealing with the issue on retrospective applicability of section 263 in turn has relied on the Tribunal decision in the case of Narayan Tatu Rane V/s. ITO [ 2016 (5) TMI 1162 - ITAT MUMBAI] and has held the provisions of section 263 amended by Finance Act, 2015 does not operate retrospectively. Similar view has been taken by the Delhi Bench of Tribunal in the case of M/s. Arun Kumar Garg HUF Vs. Pr. Commissioner of Income Tax [ 2019 (4) TMI 400 - ITAT DELHI] Thus, in view of the facts of the case and decisions discussed above, we hold that the Pr. CIT exceeded his jurisdiction in invoking revisional powers. - Decided in favour of assessee.
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2019 (7) TMI 78
Contribution paid to the LIC of India towards group gratuity - AO held that no deduction is allowable for contribution made to an unapproved fund - payment made to LIC of India is not a provision but it is actual expenditure claimed under the gratuity contribution - HELD THAT:- The very same issue came up before the Tribunal for the Assessment Years 2007-08 2008-09 in assessee s own case [ 2018 (4) TMI 553 - ITAT VISAKHAPATNAM] wherein the Tribunal has held that the group gratuity premium paid to the LIC of India is allowable and accordingly allowed the assessee s appeals.
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2019 (7) TMI 77
Deduction u/s 80IB(10) on profit from sale of car parking space - HELD THAT:- CIT(A) following the judgment of Hon'ble Bombay High Court the case of Purvankara Projects Limited [ 2011 (7) TMI 1352 - BOMBAY HIGH COURT] and of ITAT in case of Vaman Estate [ 2012 (10) TMI 1208 - ITAT MUMBAI] has held that the AO was not right in law-deduction u/s 80IB(I0) on income from sale of car Parking. It was also held that car parking space forms part and parcel of the housing project, without which even approval for housing project could not have been obtained from competent authority. Therefore, the decision of the Tribunal in holding that assessee is entitled to deduction u/s.80IB in respect of housing project inclusive of the amount received on account of car parking cannot be faulted. We do not deem it necessary to interfere in the said findings of the ld. CIT(A) and the issue is also decided in favour of the assessee - ground of revenue is dismissed Allowing deduction u/s.80IB(10) on the basis of inaccurate measurement of built up area of four flats - HELD THAT:- We direct the AO to verify the workings to be given by the assessee in terms of sq.ft to ensure whether the aforesaid four flats after excluding the terrace garden area fall within the limits of 1500 sq.ft. Respectfully following the aforesaid judgement and in view of the aforesaid directions, we deem it fit to remand this issue to the file of the AO to decide the same in the light of the aforesaid decision and in light of the aforesaid directions. Accordingly, the ground raised by the assessee is allowed for statistical purposes for A.Y.2010-11. Not allowing claim of write off of sundry balances - HELD THAT:- AR merely made an oral submission that these advances were made in the course of business and the same had become irrecoverable which eventually lead to write off of the same by the assessee during the year. Apart from this oral submission, he could not substantiate his arguments by way of any evidences. Hence, we do not deem it fit to interfere in the order of the CIT(A) in this regard, accordingly, the ground No.2 raised by the assessee for the A.Y.2010-11 is dismissed.
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2019 (7) TMI 76
TP Adjustment - interest on deemed loan - AO/TPO treated difference between the market price of equity shares and the face value as deemed loan to the AE - HELD THAT:- TPO determined the market value of shares of face value of ₹ 10 issued to the holding company at ₹ 28.02 per share. The difference between the market value and the face value of shares was treated as deemed loan advanced to the AE. On the deemed loan, TPO computed arm's length interest @ 14.39% per annum and treated it as adjustment to the arm's length price. Identical adjustment was made by the TPO in the impugned assessment year as well. As could be seen from the material on record, while deciding the disputed addition in the appeal preferred by the assessee in the assessment year 2008 09 [ 2015 (3) TMI 1359 - ITAT MUMBAI] the Tribunal following the decision of the Hon'ble Jurisdictional High Court in Vodafone India Service Pvt. Ltd. [ 2014 (10) TMI 278 - BOMBAY HIGH COURT] held that the difference between the market price of equity shares and the face value cannot be treated as deemed loan to the AE. Accordingly, the Tribunal deleted the addition made on account of notional interest on such deemed loan Addition on account of adjustment to the arm's length price of investment advisory services - TNMM - selection/rejection of comparables - HELD THAT:- Companies functionally dissimilar with that of assessee need to be deselected from final list.
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2019 (7) TMI 75
Income accrued in India - professional legal services provided before a foreign court- FIS under Article 12 of the India-USA DTAA - assessee claimed to be taxable u/s 44BB - AO brought the receipts of the non-resident to tax as FTS u/s 115A - HELD THAT:- Assessee provided of professional legal services before a foreign court, which cannot be brought to tax as FIS under Article 12 of the India-USA DTAA, because there is no make available of any particular knowledge or skill to ONGC before the courts which can enable ONGC to represent its case in future. Under Section 9(1)(vii) legal services cannot be treated as FTS as it is a professional services which is outside the scope of Section 9(1)(vii) of the Act. In A.Y. 2009-10, the Tribunal held that the said legal services is not taxable as FTS u/s 9(1)(vii) of the Act. Therefore, appeal of the assessee is allowed. Payments received by University of New South Wales, Australia - payment for a contract with ONGC for construction, installation and maintenance of High Resolution CT Scanner at ONGC premises - HELD THAT:- In this year also the payments received by University of New South Wales, Australia during the relevant previous year were that annual maintenance charges for maintenances of the High Resolution CT Scanner. Since High Resolution CT Scanner is directly associate and inextricably connected with the extraction and production of mineral oil, the receipts would fall within the ambit of consideration for any mining or like project which is excluded from the definition of term FTS as defined in Explanation 2 to Section 9(1)(vii) of the Act and same would be taxable u/s 44BB . Thus the receipts by the said non-resident would fall within the ambit of Section 44BB as held in the earlier Assessment Years as well. - Decided in favour of assessee.
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2019 (7) TMI 74
Revision u/s 263 - under valuation of closing stock - non consideration of foreign exchange fluctuation cost in the valuation of the cost of closing stock - HELD THAT:- Accounting standard 11 clearly states that a foreign currency transaction should be recorded on initial recognition in the reporting currency by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction. Each Balance Sheet date, foreign currency monetary items should be reported using the closing rate and non-monetary items which are carried in terms of historical cost denominated in a foreign currency should be reported using the exchange rate at the date of transaction. The revaluation of creditors or debtors or the loss incurred on the actual of payment is not to be considered for the purpose of reporting the non-monetary items, like closing stock. Secondly, the foreign exchange loss incurred is not an item of cost, and rather it is a revenue outflow or an expenditure provided by prudence depending on the date of payment or the Balance Sheet Date and therefore, it cannot be added to the cost of the inventory even under the AS-2. Even for a moment it is accepted that the increase in foreign exchange rate would yield a higher value of the unsold stocks, still it would amount that it would go to add the realizable value and not the cost of the said stocks. Thus, considering the principle that as a matter of prudence stocks are valued at lower of the cost or the realizable value, such increase in realizable value has no bearing on the profits computed. Normally, the expenditure/ loss incurred due to foreign exchange fluctuation on account of actual payments would be a parameter kept in mind for deciding the sale piece of the stock that a prudent businessman would like to recover the said expenditure/ loss when the stocks are sold and would not increase the value of the closing stock and thereby increase the profits before actual realization of the same. Therefore, the foreign exchange fluctuation loss cannot be added to the cost of inventories. In view of the above, we are of the view that the Revision order carried out by PCIT is without any basis and on merits also the assessee has a case, hence, we set aside the revision order passed by PCIT and allow the appeal of the assessee.
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2019 (7) TMI 73
Levy of interest u/s. 201(1A) - delayed payment of TDS into Government account - TDS demand was deleted on ground that assessee is not in default within the provisions of section 201(1) as deductees/parties have reflected the receipts in their income - absence of liability for tax - HELD THAT:- Levy of interest u/s. 201(1A) is compensatory measure for withholding the tax which ought to have gone to the exchequer and therefore levy of interest is mandatory and the absence of liability for tax will not dilute the default. As far as the levy of interest u/s. 201(1A) is concerned it is mandatory. What is the period for which the interest is to be calculated? - A proviso has been inserted to the provisions of section 201(1A) by the Finance Act, 2012 w.e.f 01.07.2012 wherein it has been clarified that the interest u/s. 201(1A) shall be payable from the date on which such tax was deductible to the date of the furnishing of return of income by the deductee. This proviso to section 201(1A) of the Act is only clarificatory in nature and would apply retrospectively. In the circumstances, we do not find any infirmity in the order passed by the Ld.CIT(A) in holding that the interest shall be calculated from the date on which tax was first deductible by the deductor to the date of filling of return by the recipient deductee. Thus, we uphold the orders of the Ld.CIT(A) and reject the grounds of the assessee.
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2019 (7) TMI 72
Capital Gain in hand of GPA holder - the assessee was given an irrevocable GPA by the owners of the land - alleged that assessee had paid the sale consideration of ₹ 8,40,000/- in the year 1994 and obtained the irrevocable GPA - in the year under assessment assessee has executed the sale deed in favour of his daughter and in the sale deed - no consideration received from daughter - HELD THAT:- The recitals in the GPA show that the assessee is not the owner of the property but has only been granted authority to convey the property to third party. Therefore, it cannot be considered that the assessee became the owner of the property by virtue of the irrevocable GPA. In the relevant previous year, the assessee has executed the sale deed in favour of his daughter and in the sale deed it has been mentioned that the total of the sale consideration of ₹ 8,40,000/- was paid in the year 1994. This fact also cannot be accepted, because if the entire sale consideration was paid in the year 1994, then the vendors/parties or even the GPA holder could have executed the sale deed in favour of the vendee in that year itself. Therefore, the sale is only in the year 2007 but capital gain would arise in the hands of the owners of the property and not the GPA holder. Hon'ble Karnataka High Court in the case of Wipro Ltd. Vs. DCIT [ 2015 (10) TMI 826 - KARNATAKA HIGH COURT] has held that a deed of power of attorney is executed by the principal in favour of the agent. The agent derives a right to use his name and all acts, deeds and things done by him and subject to the limitations contained in the said deed, the same shall be read as if done by the principal. A power of attorney is a document of convenience. A power of attorney is not an instrument of transfer in regard to any right, title or interest in an immovable property. It is revocable or terminable at any time unless it is made irrevocable in a manner known to law. Respectfully following the above judgment and since the assessee is not the owner of the property, the capital gain cannot be brought to tax in his hands. - the assessee s appeal is allowed.
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2019 (7) TMI 71
Provision made for future expenses - Allowable revenue expenditure u/s 37(1) - whether contingent in nature and cannot be allowed as a deduction? - HELD THAT:- As we have already noticed the projected future expenses was ₹ 58.62 crores and this comprises of a sum of ₹ 29.69 crores which has to be spent for laying roads after completion of the tunnelling work at various points. The other component of the project of future expenses is the cost of providing design to the entire project. As far as the estimation of expenses for laying of roads after completion of the tunnelling work is concerned, the basis of estimate has been given by the assessee to the Assessing Officer in the letter dated November 14, 2013 filed before the Assessing Officer along with all supporting and technical documents. A perusal of the aforesaid documents show that complete technical details was provided by the assessee. Similarly for design work the workings are at page 216 of the paper book . The amounts received from Bangalore Metro Rail Corporation Ltd. of ₹ 17,91,36,000 has also been noticed in this chart. It has been claimed by the assessee before us that the amount received has been included in the total contract receipts and this may be verified by the AO and to the extent the receipt is not offered as income to treat the same as income because the deduction of expenses on account of provision is to be allowed as per order of the CIT (A), with which we are agreement for the reasons to be given in subsequent paragraphs. The agreement with Mott Macdonald Pvt. Ltd., for providing design work and the related cost. The variation contract with Mott Macdonald Pvt. Ltd is at page 251. The CECI Design Consultant and details of their design work are at page 253. The details of design charges payable to Spar Geo infra Pvt. Ltd., at a page 256. In the light of the complete details filed by the assessee to show that the expenditure in question was not contingent liability at a certain liability, it was not proper on the part of the Assessing Officer to have ignored these documents. Though CIT (Appeals) has not made a reference to these documents but has taken note of the fact that the basis of projected future expenses as claimed by the assessee was reasonable and cannot be regarded as contingent expenditure. In our view both the conditions laid down by BHARAT EARTH MOVERS VERSUS COMMISSIONER OF INCOME-TAX [ 2000 (8) TMI 4 - SUPREME COURT] have been satisfied in the present case and therefore the expenditure in question should be allowed as a deduction and was rightly allowed as deduction by the CIT(A). We find no grounds to interfere with the orders of the CIT(A) and accordingly appeal of the Revenue is dismissed.
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2019 (7) TMI 70
Correct head of income - characterization of receipts - Gains/losses arising on purchase and sale of shares - Capital gain or business income - not engaged in any business activities other than purchase and sale of shares/mutual fund units - fund utilized for acquisition of shares are both borrowed as well as accruals of the business - CIT (A) treating long-term/Short-term capital gain/loss as business income - HELD THAT:- A similar pattern year after year may compel one to think the behaviour of an investor in a logical and rational manner, while the transactions might have been accepted as investment in the preceding year in a summary manner. There could be no res judicata in such cases in the light of continuity of the same behaviour in the subsequent assessment year. The continuity in the purchase and sale of shares being an important test to determine the character of transaction, the peculiar facts do not permit us to accept the plea of doctrine of consistency in the present case. CIT (A) in our view has seen facts of regularity in purchase and sale of shares for several years in a light-hearted manner and has ignored the clear commercial motive subsisting in the facts of the case. The assessee has paid substantial professional fees in its endeavour to corner gains from market fluctuations which fact also has not been envisioned in perspective while reversing the action of the AO. The CIT (A) while making reference to the circular of the CBDT has shunned the caution administered by the circular i.e. there cannot be any straightjacket formula and there should not be a sweeping conclusion but a case to case test or approach should be adopted. The issue is essentially factual and is governed by facts of each case. Judicial utterances made in the setting of the facts of a case would not thus apply unless it is shown that the facts are identical. We are thus not required to delineate the nicety of law de hors the facts in such a case. CIT (A) in our view has applied the legal principles in an abstract manner de hors the peculiar facts of the case and therefore, cannot be approved. We accordingly set aside the order of the CIT (A) and restore the action of the AO. - Decided in favour of revenue. Addition u/s 14A - HELD THAT:- We find that the CIT (A) has sweepingly dismissed the case of the assessee without dealing with the point objectively. In the absence of any allocable expenses remotely connected to the investment activity, no disallowance is called for in excess of actual expenditure. We thus find merit in the plea of the assessee.
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2019 (7) TMI 69
Assessment u/s 153A - Addition u/s 68 - search u/s 132 - no incriminating material found - unsecured loans obtained by the assessee - assessee failed to discharge his onus to prove the identity, creditworthy of creditor and genuineness of transaction - HELD THAT:- We find that the assessment for the assessment year 2010-11 was already completed when search action u/s 132 was carried out at the premises of the assessee on August 26, 2015. No incriminating material found during the search in respect of the addition made by the AO, therefore, the addition made by the AO in the impugned assessment year is without jurisdiction. Thus, the legal ground raised by the assessee is allowed and the assessment order is held as invalid, consequent upon the entire addition made therein are directed to be deleted. The learned CIT(A) deleted the addition on his observation that neither report of investigation was provided nor any opportunity was given to the assessee to rebut the report of investigation, therefore, no cognizance on such report could be taken in view of the decision of the hon'ble Supreme Court in Kishinchand Chellaram v. CIT [ 1980 (9) TMI 3 - SUPREME COURT] . Addition u/s 68 - all documentary evidences furnished by the assessee, remand reports including the first, second and supplementary remand report of the Assessing Officer and passed detailed order. The learned Commissioner of Income-tax (Appeals) given his clear finding that, in the absence of any independent inquiry and any adverse findings to rebut the evidences filed by the assessee the addition of ₹ 3,60,00,000 is unjustified; firstly, on the ground that no notice was issued/no inquiries made to rebut the evidences filed by the appellant and secondly on the ground that the assessee duly discharged its burden casted upon under section 68 to explain nature and source of the transactions by proving the identity, creditworthiness of creditor and genuineness of the transaction. No contrary facts or law is brought to our notice to take a different. Therefore, we affirm the order of learned CIT(A). Appeal of the Revenue is dismissed.
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Customs
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2019 (7) TMI 62
Interest on delayed refund - whether the interest on delayed refund under Section 27A of the said Act is payable on expiry of period of three months from the date of receipt of refund application or whether interest is payable from the date on which the order for refund is actually made or confirmed? - HELD THAT:- From the perusal of the provisions under Section 11BB of the Central Excise Act and Section 27A of the said Act, with which we are concerned, it is apparent that the provisions are pari materia. Therefore, interpretation put on the provisions of Section 11BB of the Central Excise Act will equally apply to the interpretation of provisions of Section 27A of the said Act - In the facts of the present case, we find no justification whatsoever on the part of the respondents for denying the petitioners interest on delayed refund amount for the period between 11th January 2008, i.e., three months after the expiry of receipt of refund applications dated 10th October 2007 till the date of actual refund, i.e., 16th August 2017. Accordingly, writ of mandamus as prayed for by the petitioners is liable to issue. In the present case, the petitioners made deposits in pursuance of express directions issued by the DGFT simply because there was some delay on the part of the petitioners in complying with the export obligation. Thereafter, such amounts were appropriated by the respondents on basis of orders that the petitioners had breached the terms and conditions of the Advance Licenses under Notification No. 204 of 1992. Such orders were ultimately set aside after it was found that the petitioners had committed no breaches. Accordingly, the respondents were duty bound to refund the amounts deposited by the petitioners and sanction for such refund has already been granted. Petition allowed.
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2019 (7) TMI 61
Benefit under Served From India Scheme (SFIS) denied - denial of credit with demand of duty in cash - double jeopardy or double whammy - import of Radar equipments- restricted item - HELD THAT:- The Scheme SFIS only envisaged the submission of the Scrips in question as a mode of payment in lieu of cash payment of the custom duty in question payable by the Assessee on the import of Radar equipments and other items in question. They were always in the list of ' Restricted Items ' for import. They were never freely importable items. It is against the foreign earnings of the Assessee which provides services to the domestic as well as international airlines that the Airports Authority of India earned foreign exchange for the country from the international airlines, to which it provides services in question and a part thereof was given to them as an incentive in the form of Scrips in question to be availed as payment of custom duty, which may be payable on the future imports made by them. The amendment in SFIS w.e.f. 01.04.2006 by insertion of the words 'otherwise freely importable under ITC (HS) EXIM Code' did not really affect the Assessee's case at all, because, the items in question were always in the Restricted List. The mode of payment of custom duty against the future imports thus were still available to the Assessee in the present case either in the form of cash or by the Scrips in question. The authority in question seems to have not only used these Scrips by debiting or cancelling the same against the custom duty obligation of the Assessee, but took further cash payment from it for the discharge of the custom duty obligation of the Assessee on such imports - there has been a double jeopardy or double whammy on a public statutory authority like Airports Authority of India by another wing of the Central Government Department, namely, Customs Department. The learned Tribunal and also the Original Adjudicating Authority have erred in denying the said benefit to the Assessee - Appeal allowed - decided in favor of appellant.
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Insolvency & Bankruptcy
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2019 (7) TMI 60
Initiation of Corporate Insolvency process - section 9 of Insolvency and Bankruptcy Code, 2016 read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - Whether the debt and default are challenged by corporate debtor? - Whether the dispute as raised by the corporate debtor is genuine or can be categorised as moonshine dispute? HELD THAT:- The corporate debtor has admitted the goods supplied, invoices raised and same being received by it. The corporate debtor has nowhere stated or objected/disputed the invoices or its contents prior to section 8 notice received. Post receiving the notice under section 8 from applicant the corporate debtor has made part payment without raising notice of dispute to the Operational Creditor. There is no correspondence placed on record by corporate debtor prior to issuance of demand notice to establish pre-existing dispute, on the contrary there is one settlement referred to between the parties of which again no document is on record. The objections are all after receiving demand notice and no concrete proof shown of debit notes as raised by Corporate Debtor being sent and received by applicant. The defence raised of dispute is lame and without any supporting evidence can be categorised as moonshine dispute. The default occurred from 22.03.2017, from the date of issue of loan recalling notice and demanding payment of debt hence the debt is not time barred and the application is filed within the period of limitation - the present application is complete and the Applicant is entitled to claim its dues, establishing the default in payment of the operational debt beyond doubt. In the light of above facts and records the present application deserves to be admitted. Application admitted in terms of Section 9(5) of IBC, 2016 and moratorium as envisaged under the provisions of Section 14(1) shall follow in relation to the Corporate Debtor prohibiting all of the actions mentioned under section 14(1)(a) to (d).
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Service Tax
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2019 (7) TMI 94
Validity of Summons issued u/s 70 of (CGST) Act, 2017 - allegation of evasion of service tax - quashing of the notice for personal hearing - request of assessee to decide his representation before initiating any proceedings - HELD THAT:- Under Section 70 of the (CGST) Act, 2017, the proper officer under this Act shall have power to summon any person whose attendance he considers necessary either to give evidence or to produce a document or any other thing in any inquiry in the same manner, as provided in the case of civil court under the provisions of the Code of Civil Procedure, 1908 and Subsection (2) of Section 70 of the Act of 2017 envisages that every such inquiry referred to in Sub-section (1) shall be deemed to be a judicial proceedings within the meaning of section 193 and section 228 of the Indian Penal Code, and the fact as borne out from the record that, prima facie , opinion has been formulated that the petitioner has evaded the tax, we are not inclined to cause any indulgence. The petitioner has utterly failed to establish that the proceedings u/s 70 of the (CGST) Act, 2017 can only be taken recourse to, after decision u/s 73 of the Act. Petition dismissed.
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2019 (7) TMI 68
Valuation for the purpose of SSI Exemption - whether benefit in terms of N/N. 6/2005 dated 7.6.2005 has to be calculated by taking into consideration the full value of the services or the abated value of the service in terms of N/N. 1/2006? - HELD THAT:- It stand held in the case of ALOK PRATAP SINGH, ANUJ PRATAP SINGH, KALIM AHMAD, ALAUDDIN MOHOD MUSTAQ VERSUS COMMISSIONER OF CENTRAL EXCISE, ALLAHABAD [ 2018 (11) TMI 620 - CESTAT ALLAHABAD ] that the value of the services required to be computed for the purpose of small scale exemption benefit is the value arrived at after allowing the abatement. Appeal allowed - decided in favor of appellant.
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2019 (7) TMI 59
Construction of Complex Services - levy of service tax on the part of the construction of complex constructed prior to entering into the agreement to sale with the flat buyers/ customers - works contract - levy of VAT - CBEC Circular No 108/02/2009-ST dated 29.01.2009 - Levy of penalty - extended period of limitation. HELD THAT:- Appellants are providing taxable service under the category of Construction of Complex Services as defined by Section 65(105) (zzzh). The services provided by them in respect of residential complexes have been brought in the taxable category with effect from 01.07.2010 by insertion of explanation to Clause (zzzh) of sub section 105 to Section 65 - Appellants do not dispute the classification of the services provided by them under this taxable category. However in their appeal memo and during the course of argument they have contended that, the service provided by them is one of work contract, and have relied upon series of case laws to argue that in case of work contracts the VAT was leviable. The issue under consideration is not of classification of services, whether as work contract or under the category of construction of complex services. At the material time both work contract services and construction of complex services were leviable to service tax. Since the services provided by the appellants are more specific to construction of complex services they get classified under that category which is more specific - The dispute in the present case is in relation to valuation of taxable services. Appellants have contended that in view of the above referred decisions the service tax cannot be levied in respect of activities undertaken by them prior to entering into agreement of sale with the buyer of flats. There seem to be no iota of doubt with regards to the value to be taken for determination of the tax payable in respect of the services rendered by the appellants. Appellants have contended that certain portion of the works have been completed by them prior to entering into contract/ agreement of sale of the flats with the buyer. Hence no service tax can be demanded in respect of the works undertaken prior to entering into such agreement of sale - We are not in agreement with the contentions raised because the value of taxable service is not vis a vis the activity done prior to entering into contract/ agreement for sale, but is on the basis of gross amount (Consideration) received for providing the such construction of complex services. The gross consideration received cannot be vivisected into the on the basis of work done prior to and after entering into agreement for sale. If the argument advanced by the appellant was to be accepted then the taxable value for every flat sold in the same complex constructed by the appellant will vary depending on the date of agreement, though the gross amount charged for the same flat from the customer remains the same. In the present case when the measure of levy has been prescribed to be based on 25% of the Gross Receipts then the same cannot be questioned on the basis of considerations such quantum of completed work before the agreement to sell. Extended period of limitation - HELD THAT:- The SCN have been issued within a period of one year from the date of filing the returns, hence even without invoking the extended period of limitation the demand would not be hit by limitation. There is no hesitation in upholding the demands of service tax made - However in respect of the Appellant 2, the demand needs to be reworked - interest is also upheld - penalty under Section 78 will also follow - By not furnishing the correct information as required on ST-3, appellant have made themselves liable to penalty under Section 77(2) read with Section 70 of the Act. Hence the penalties under Section 77(2) read with Section 70 of the Act upheld. Appeal dismissed - decided against appellant.
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2019 (7) TMI 58
Utilization of CENVAT Credit for payment of service under reverse charge mechanism (RCM) - section 66A of the Finance Act 1994 - Rule 3(4) of the Cenvat Credit Rules, 2004 - HELD THAT:- The only distinction which Mr. Dwivedi, for the Revenue seeks to make in respect of the above decisions is that the above cases were concerned with discharge of service tax liability on reverse charge basis in respect of GTA service. In this case, it is discharge of tax liability on services received from foreign bank. In this case also, the respondent discharge the tax liability on reverse charge basis under section 66A of the Finance Act, 1994. Thus, this distinction sought to be made out is not a distinction to hold otherwise in the present facts. Appeal not entertained and is dismissed.
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Central Excise
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2019 (7) TMI 67
CENVAT credit - common inputs used in manufacture of exempted final products - non-maintenance of separate records - extended period of limitation - income earned on account of sale of Steam , Fly Ash and Electricity and availment utilization inputs - HELD THAT:- The appeal admitted on substantial questions of law.
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2019 (7) TMI 57
Settlement under the Kar Vivad Samadhan Scheme, 1998 - Section 90(2) of the Finance Act, 1998 - It is the petitioners' contention that payment to be made within 30 days from the date of the passing of the order passed by the designated authority, should be read as within 30 days from the date of the receipt of the order passed by the designated authority - HELD THAT:- Section 90(2) of the Finance Act, 1998 as it stood at the relevant time required the act of depositing the amount determined by the designated authority within 30 days of the passing of the order. In the present facts, section 90(2) of the Finance Act, 1998 was amended on 12/05/2000 by the Finance Act, 2000 with retrospective effect from 01/09/1998. The amendment was to substitute the words within 30 days from passing of an order with the words within 30 days from the receipt of the order passed by the designated authority . The amended Act provided that the substituted provision of section 90(2) shall be deemed to have been substituted with effect from 01/09/1998. In view of the above retrospective amendment, the petitioners challenge to the constitutional validity of section 90(2) of the Finance Act, 1998 does not survive - the period of 30 days has to be computed not from the date of the passing of the order by the designated authority on 15/02/1999, but the period of 30 days has to be computed from the date of the receipt of the order/certificate dtd.15/02/1999. The respondent No. 2 designated authority is directed to issue a final certificate under section 90(2) read with section 91 of the Samadhan Scheme - petition allowed.
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2019 (7) TMI 56
Clandestine removal - failure of principles of natural justice - HELD THAT:- The court came to a conclusion that issuance of a notice would be an empty formality. The court was of the view that even where it found an infraction of principles of natural justice, the court had to address a further question as to whether any purpose would be served in remitting the case to the authority. The Court held that natural justice cannot be applied in a straight jacket formula. The jurisprudential basis of principles of natural justice was procedural fairness, accuracy of outcome leading to general social goals, etc. Nevertheless, there may be situations where a fair hearing would make no difference, meaning that a hearing would not change the ultimate conclusion reached by the decision maker. In such case, no legal duty to supply a hearing arises. These observations have no bearing on the facts of our case. The authority relied on materials without supplying copies to the assessees, that is to say, without enabling the latter to show effective cause against the materials or submit explanation. The remission of the matter in such a case is no empty formality, but a legal imperative.
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2019 (7) TMI 55
Valuation - inclusion of freight incurred for transporting the goods to the buyers premises by the assessee when the goods are sold for delivery at the buyers premises - section 4 of Central Excise Act, 1944 - place of removal - HELD THAT:- The place of removal is before the goods are sold, not when the goods have been sold. Further, there is no removal of the goods at the buyer s premises because the place of removal requires the goods to be removed from that place. Thirdly, the description of the place of removal are the depot, consignment agent etc. which can only be referred to the seller and not to the buyer. Hon ble Apex Court in the case of COMMISSIONER, CUSTOMS AND CENTRAL EXCISE, AURANGABAD VERSUS M/S ROOFIT INDUSTRIES LTD. [ 2015 (4) TMI 857 - SUPREME COURT] has categorically held that under no circumstances can the buyer s premises be the place of removal. It also made it clear that this fact was not brought to the attention of the Court when the earlier orders were passed - it is now well settled that the buyers premises can never be the place of removal, therefore the freight from the factory/depot/consignment agent up to the buyers premises cannot be included in the assessable value, even if the goods are sold or delivered at the buyer s premises. The settled legal position is in favor of the appellants and against Revenue and the demands are unsustainable on merits and need to be set aside - appeal allowed - decided in favor of appellant.
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2019 (7) TMI 54
Valuation - inclusion of cost of the software in the cost of the hardware - extended period of limitation - HELD THAT:- Learned advocate submits that though all the above issues were raised before Original Adjudicating Authority, he has sidelined the same by observing simplicitor that no evidence to that effect has been produced by the assessee, whereas the fact is that all these documentary evidence were placed on record - In view of the foregoing it is the prayer of the learned advocate to set aside the impugned order and remand the matter to Original Adjudicating Authority for fresh consideration. It is deemed fit to remand the matter to Commissioner - appeal allowed by way of remand.
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2019 (7) TMI 53
Valuation - liability of duty on the transaction value of waste and scrap of capital goods on which Cenvat credit was availed - Rule 3(5A) of Cenvat Credit Rules, 2004 - HELD THAT:- There is no dispute that after inserting Rule 3(5A) in Cenvat Credit Rules, the assessee is required to pay duty on waste and scraps of capital goods on which Cenvat credit is availed. Time limitation - HELD THAT:- After insertion of the provision, there is no doubt and there is no scope for the assessee to entertain any bonafide belief that whether duty is payable or not on the waste and scrap of capital goods - Appeal is not time barred. Applicability of decision in the case of SHRIRAM ALKALI CHEMICALS VERSUS COMMISSIONER OF C. EX., SURAT [ 2010 (8) TMI 274 - CESTAT, AHMEDABAD] - HELD THAT:- The issue in that case was of classification of waste and scrap and on the substantial portion of the goods, the assessee had not taken Cenvat credit. Whereas in the present case, there is no dispute that the appellant had availed Cenvat credit on the capital goods. Therefore, the decision cited by the appellant is not applicable. Appeal dismissed - decided against appellant.
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CST, VAT & Sales Tax
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2019 (7) TMI 66
Early hearing of appeal before Tribunal - covered by decisions of High Court Supreme Court - proportionate Disallowance of tax credit - HELD THAT:- Having regard to the limited relief prayed for, we request the VAT Tribunal to take up Second Appeal Nos. 637 to 641 of 2016 and Second Appeal No. 975/2016 for the Assessment Period 2006-07 to 2011-12 for hearing, preferably within a period of four weeks from the date of receipt of the writ of this order. Application disposed off.
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2019 (7) TMI 52
Offence punishable under Section 53(a) of the Bihar Excise (Amendment) Act, 2016 - appellants were subjected to breath analyser test in which test as per the prosecution case certain quantity of alcohol was found - prohibition on foreign liquor - case of appellant is that the vehicle in which they were travelling cannot be said to be public place within the meaning of Section 2(17A) of Bihar Excise (Amendment) Act, 2016 - HELD THAT:- The ommission of public conveyance in the definition of Section 2(17A) brought by the Bihar Excise (Amendment)Act, 2016 also indicates that the difference between public conveyance and private conveyance was done away in the statutory amendment. We, thus, cannot accept the submission of the learned counsel for the appellant that private conveyance will be excluded from the definition of 'public place' as contained in Section 2(17A). When the word 'consumes' is followed by liquor, the action denoted by verb passes over from the doer to object i.e. liquor to constitute the offences within the meaning of Section 53(a). The action of consumption of liquor has to happen within the State of Bihar. A person who consumes liquor in a different State cannot be fastened with a penalty under Section 53(a) unless there is some evidence to prove that consumption of liquor by the accused has taken place in the State of Bihar - Whether charge that consumption of liquor has taken place within the State of Bihar is made out in the facts of the present case are questions which need to be decided by the learned Magistrate after looking into the materials brought on record by means of the chargesheet. In the facts of the present case, we are of the view that the ends of justice be served in providing that appellants shall be at liberty to file an application to discharge before the learned Magistrate who after considering the materials on record shall decide the said application of discharge in accordance with law.
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2019 (7) TMI 51
Rectification of error - error apparent on the face of record - Valuation - includibility - works contract sales - composition amount - whether the amount of service tax charged separately in the invoice will not be included in total contract value? - HELD THAT:- There is an error apparent on the face of the record, as this admittedly is a case of composition scheme and not of works contract. This issue of application of Rule 58 of MVAT Rules to the composition scheme would require our consideration in this appeal. Review petition allowed.
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2019 (7) TMI 50
Revision of assessments - Section 27 of TNVAT Act - reversal of input tax credit - Section 19(5)(c) of TNVAT Act - HELD THAT:- Though, writ petitioner, fairly conceded that more than one revision is permissible, under normal circumstances, revision of the same issue which has already been decided would become a vexed exercise. However, problem presents itself differently for writ petitioner in the instant case - this Court is of the considered view that this is a fit case for remitting the matter back to the respondent, as the impugned order does not mention anything about notice and reply in 2017 or the earlier revised assessment order dated 4.8.2017. This Court is of the considered view that this issue can be sorted out if personal hearing is granted to the writ petitioner. Petition allowed by way of remand.
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2019 (7) TMI 49
Validity of assessment order - deemed assessment - TNVAT Act - HELD THAT:- The impugned assessment order is set aside solely on the ground that while seven enclosures being sale details from assessee's sellers have been furnished only one has been considered. Also to be noted, this pertains to mismatch aspect of the impugned revised assessment order. Petition disposed off.
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Indian Laws
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2019 (7) TMI 65
Appointment of a sole arbitrator - whether respondent No.2 a company established under the laws of Belgium, having its principal place of business at Nijverheldsstraat 3, 2530 Boechout, Belgium, could be impleaded in the proposed arbitration proceedings despite the fact that it is a non-signatory party to the agreement dated 1st May, 2014, executed between the applicant and respondent No.1 a company established under the Companies Act, 2013 merely because it (respondent No.2) is one of the group companies of which respondent No.1 also is a constituent? HELD THAT:- In the backdrop of the averments in the application and the correspondence exchanged between the parties adverted to by the applicant, it is obvious that the thrust of the claim of the applicant is that Mr. Frederik Reynders was acting for and on behalf of respondent No.2, as a result of which the respondent No.2 has assented to the arbitration agreement. This basis has been completely demolished by respondent No.2 by stating, on affidavit, that Mr. Frederik Reynders was in no way associated with respondent No.2 and was only an employee of respondent No.1, who acted in that capacity during the negotiations preceding the execution of agreement. Thus, respondent No.2 was neither the signatory to the arbitration agreement nor did have any causal connection with the process of negotiations preceding the agreement or the execution thereof, whatsoever. If the main plank of the applicant, that Mr. Frederik Reynders was acting for and on behalf of respondent No.2 and had the authority of respondent No.2, collapses, then it must necessarily follow that respondent No.2 was not a party to the stated agreement nor had it given assent to the arbitration agreement and, in absence thereof, even if respondent No.2 happens to be a constituent of the group of companies of which respondent No.1 is also a constituent, that will be of no avail. The burden is on the applicant to establish that respondent No.2 had an intention to consent to the arbitration agreement and be party thereto, maybe for the limited purpose of enforcing the indemnity clause 9 in the agreement, which refers to respondent No.1 and the supplier group against any claim of loss, damages and expenses, howsoever incurred or suffered by the applicant and arising out of or in connection with matters specified therein. That burden has not been discharged by the applicant at all. Suffice it to observe that the application must fail against respondent No.2 and on that conclusion, no relief can be granted to the applicant who has invoked the jurisdiction of this Court on the assumption that it is a case of international commercial arbitration. Despite that, respondent No.1 through counsel has urged that as the subject agreement between the applicant and respondent No.1 contains an arbitration clause (clause 13) and since disputes have arisen between them, the respondent No.1 would agree to the appointment of a sole arbitrator by this Court for conducting arbitration proceedings between the applicant and respondent No.1, as domestic commercial arbitration. The arbitration application is dismissed as against respondent No.2 - However, we appoint Mr. Justice Badar Durrez Ahmed (Former Chief Justice, Jammu Kashmir High Court) as the sole arbitrator to conduct domestic commercial arbitration at New Delhi, between the applicant and respondent No.1 on the terms and conditions as specified in the Act of 1996.
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2019 (7) TMI 64
Winding up of petition - dishonor of cheque - insufficiency of funds - Section 138 of the Negotiable Instruments Act - HELD THAT:- What is argued before the learned Single Judge and what Mr. Sawant in substance attempts to argue before us, though with no success, is that in winding up Petition it matters not that there are disputed questions of facts or that the Court will have to engage in a complex enquiry requiring evidence. This is not even a stateable principle in this branch of law. As the learned Single Judge correctly observed, summary suit and winding up petition share a broadly similar approach. In both, the Respondent or Defendant must be shown to have no tenable or plausible defence. Unless that defence is moonshine, an order could not be passed. A conditional order may be possible, but it is not inevitable. In the present case no conditional order was possible either. There is no manner of doubt that there is indeed an invocation of a pledge. Whether or not there is a realization pursuant to that pledge invocation is entirely immaterial. The Petitioner cannot possibly attempt to realize security, and then claim the whole of the amount and not just the shortfall is the debt due. If there was indeed a shortfall, then it will have to be examined whether Wazir Financial ever called upon Birla Cotsyn to furnish additional security. All these are disputed questions of fact arising from a bona fide defence. We cannot conclude that the Petitioner has shown unequivocally or unambiguously that there is an ascertained liquidated debt due to it from the Respondent - Appeal is entirely without substance - Appeal dismissed.
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2019 (7) TMI 48
Dishonor of Cheque - insufficiency of funds - case of petitioner is that the statutory notice under Section 138 of the Negotiable Instruments Act was neither addressed to the correct address nor served to the petitioner - existence of statutory presumption - HELD THAT:- Perusal of the record clearly shows that the complainant even in the complaint had stated that the statutory notice was not delivered and had accordingly annexed with the complaint the returned envelope containing the statutory notice - Legal presumption of service of notice can only arise in case the notice is correctly addressed. If the notice is incorrectly addressed no legal presumption can arise. In the present case, the complainant had annexed the letterhead of the petitioner containing the address mentioned in the statutory notice but specifically mentioning there in the correspondence address as that of New Friends Colony. It is not the case of the complainant that the petitioner was having an office or was ever found at Barakhamba Road, the address mentioned in the statutory notice. Section 138 of the Negotiable Instruments Act mandates the issuance of the statutory notice as a pre-condition to filing of a complaint. The cause of action to file a complaint under section 138 of the Negotiable Instruments Act arises only on issuance and service of statutory notice and failure of the accused to comply with the statutory notice. In the absence of service of statutory notice the cause of action would not accrue. Service of statutory notice would also include legal presumption of service if circumstances so warrant - in the present case there was admittedly no service of statutory notice and the presumption of service of the statutory notice also does not arise in the facts of the present case as the notice was not correctly addressed. Since the pre-condition of filing a complaint under section 138 of the Negotiable Instruments Act of sending a statutory notice has not been satisfied in the present case, no cause of action arose in favour of the complainant to file the subject complaint. Since no cause of action arose, the petitioner could not have instituted the complaint nor could the trial court as well as the appellate court by the impugned order have convicted the petitioner. Petition allowed - decided in favor of petitioner.
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