TMI Tax Updates - e-Newsletter
July 5, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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GST:
Detention of goods u/s 129(1) of CGST Act, 2017 - goods to be released release within twelve hours from the date and time of receipt of bank guarantee - revenue directed to complete the enquiry and pass and communicate his order within four weeks from today.
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Income Tax:
TP adjustment - effect of non issue of SCN by AO - Though the AO records reasons and even gets those reasons approved by CIT and clearly mentions the reasons for reference in the referral letter but fails to show cause the same to assessee. The said act of Assessing Officer is in contradiction to the provisions of section 92CA(1)
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Income Tax:
Collection of Outgoing charges/ facility service charges from the tenants - business income or Income from House Property - since facility service charges were being received by assessee in return of providing specific services like housekeeping, security, etc., same was liable to be assessed as business income.
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Income Tax:
Revision u/s 263 - STCG on alleged Penny Stock - sale and purchase of shares listed on the BSE through registered share broker at rates of stock exchange - AO had discharged his duties as an investigator as well as that of an adjudicator and applied his mind on the issue before him and taking into consideration the explanation rendered, had taken a reasonable and plausible decision to allow STCG - no revision
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Income Tax:
Disallowance u/s 14A - no exempt income - When there is no exempt income earned by the assessee during the relevant assessment year, no disallowance can be made by invoking the provisions contained u/s 14A
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Income Tax:
Offence u/s 276C(2) - non payment of self-assessment tax along with the return of income - even though tax payment delayed and made after coercive steps were taken, it do not lead to the inference that it is an attempt to evade tax declared - it may call for imposition of penalty or interest, but by no stretch of imagination, it could be construed as an attempt to evade tax so as to entail prosecution u/s 276C(2)
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Income Tax:
Gain on Assignment of Loan Obligation - whether constitutes ''income" chargeable to lax - assessee has assigned the loan by paying the present value of future liability and the surplus is not taxable as it is not cessation or extinguishment of liability u/s 41(1) - capital receipt, not chargeable to tax
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Income Tax:
Interest u/s 201(1A) - delay in deposit of TDS - month is a period of 30 days OR British Calendar Month - for purpose of computation of interest payable u/s 201(1A)(ii) r.w. Rule 119A(b), month is to be interpreted as period of 30 days and not British Calendar Month
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Income Tax:
Bogus capital gain - exemption u/s 10(38) - share was purchased in IPO and sold at market Price of stock exchange with payment of STT and assessee submit copies of contract notes, Demat statement, Bank Statement, broker’s ledger etc. - no material to show that the documents placed were sham, bogus or there was any factual infirmity therein - exemption allowable
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Income Tax:
Payment made to retiring partner and legal heirs of the deceased - as per terms of the agreement the payment were to be set-aside at the threshold from the receipts of the firm and will not reach the hands of the other partners of the firm and, therefore, cannot be treated as income of the firm who has merely acted as a pass through entity for this payment.
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Income Tax:
Revision u/s 263 - deduction u/s 54B - transfer of agricultural land by Scheduled Caste person was prohibited under Land Reforms Act - when the transfer itself is prohibited then the alleged notarized agreement would not bring the case in the category of transfer of ownership without any formal deed of title even if consideration was paid and the possession was handed over - deduction not allowable - revision valid
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Income Tax:
Amortization of lease premium(advance rent) over lease period - once the nature of payment is found to be for the purpose of carrying on business and not to acquire capital asset then such expenditure has to be considered to be in the revenue field and therefore allowable as per the method of accounting followed by the assessee.
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Income Tax:
MAT credit computation u/s 115JAA - Inclusion of surcharge and cess - term "income tax" as employed in Section 2 of the Finance Act, which includes surcharge as also the special and the additional surcharge whenever provided - even CBDT Circular No.3 of 2018 dated 11.7.2018 also show understanding of the Board was that tax includes applicable surcharge and cess
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Income Tax:
Set off of Depreciation allowances - even after eight subsequent assessment years - any unabsorbed depreciation available to an Assessee on 01.04.2002 will be dealt with in accordance with amended provision of Section 32(2) by the Finance Act, 2001 and not by the provisions of Section 32(2), as it stood before the said amendment - set off will be allowed
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Customs:
Refund of R and D Cess paid by the petitioners - The claim of refund of the petitioners cannot be denied for the reason that there is no legal provision to refund R & D Cess paid by the petitioners. No amount can be withheld by the respondents without authority of law under the said pretext.
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State GST:
Clarification regarding determination of place of supply - Various services in relation to cargo handling on the Port - services of cutting and polishing activity which have been temporarily imported into India and are not put to any use in India.
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Service Tax:
Rate of service tax - There is no provision in the service tax law referring to the applicability of rates of service tax depending upon the period of the services - the appellant is required to pay the service tax at the rate which is effective as on date of payment of the same.
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Central Excise:
CENVAT Credit - input services - the AMC service of visi coolers, which are owned by the appellants, is an input service and accordingly, the Cenvat credit is admissible.
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Central Excise:
100% EOU - Clandestine removal - it is not the responsibility of the appellant to get the physical verification conducted - The failure to check physical receipt of goods cannot be used against the appellant who has received duly signed re-warehousing certificates.
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Central Excise:
Extended period of limitation - related party transaction - in two audits conducted earlier audit party did not raise any objections with regard to valuation and clearances made to the sister concern - no evidence of suppression of facts with intent to evade payment of duty - extended period of limitation not applicable
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Central Excise:
CENVAT Credit - input services - outdoor catering services - The exclusion part (C) of the definition of ‘input service‟ w.e.f. 01.04.2011 categorically states that when outdoor catering services are availed for personal use and consumption of an employee, the same does not qualify/eligible for input credit - not eligible for credit after service received after 01.04.2011
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Central Excise:
Exemption from excise duty - kerosene(SKO) used as interface for pumping diesel/petrol(HSD/MS) - SKO meant for distribution in PDS - the goods are to be assessed in the form they are cleared from the factory and as the appellants have satisfied the conditions of Notification at the time of removal, duty cannot be demanded from them for subsequent activities, if any, by the purchasers - no extra duty
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VAT:
Maintainability of petition - Revision by JCIT - Adjustment of tax paid by the main contractor towards the tax liability of the petitioner (sub-contractor) as per the TDS Certificate - Section 63-A(1) of the KVAT Act - the issue involved herein is a mixed question of fact and law - writ petition stands dismissed with liberty to avail the alternative and efficacious remedy of appeal available under the KVAT Act
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VAT:
Works Contract - Composition Scheme - applicability of Sections 3, 4 and 5 of the CST Act - the concept of subsequent sale was not relevant in the present case inasmuch as it was the assessee's clear and consistent case that it had imported the disputed goods for execution of the civil works contract and clearly fell under Rule 9(1) (b) of the UP VAT Rules - Composition allowed
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VAT:
Reversal of ITC u/s 11(7) and (8) of the KVAT Act - the term 'subsidized price' used in the 2nd proviso to Section 11(3) will carry within it any sale made by the dealer at a subsidized price below the purchase value of such goods - not entitled to claim ITC over and above the output tax returned with respect to the goods sold at the reduced price
Articles
Notifications
Customs-
48/2019 - dated
4-7-2019
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Cus (NT)
Exchange Rates Notification No.48/2019-Custom (NT) dated 04.07.2019.
DGFT-
S.O. 2322(E) - dated
3-7-2019
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FTP
Central Government notifies the Import Policy of items of Chapter 7 of the Indian Trade Classification (Harmonized System), 2017, Schedule-1 (Import Policy)
GST - States-
S.O. 320 - dated
3-7-2019
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Bihar SGST
Seeks to provide exemption from furnishing of Annual Return / Reconciliation Statement for suppliers of Online Information Database Access and Retrieval Services (“OIDAR services”).
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S.O. 319 - dated
3-7-2019
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Bihar SGST
Seeks to extend the due date for furnishing FORM GSTR-1 for registered persons having aggregate turnover of more than 1.5 crore rupees for the months of July, 2019 to September, 2019
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S.O. 318 - dated
3-7-2019
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Bihar SGST
Seeks to prescribe the due date for furnishing FORM GSTR-3B for the months of July, 2019 to September, 2019.
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S.O. 317 - dated
3-7-2019
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Bihar SGST
Seeks to prescribe the due date for furnishing FORM GSTR-1 for registered persons having aggregate turnover of up to 1.5 crore rupees for the months of July, 2019 to September, 2019
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11/2019-State Tax (Rate) - dated
1-7-2019
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Gujarat SGST
Specifies Duty free shops as class of person entitled for refund.
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31/2019-State Tax - dated
28-6-2019
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Gujarat SGST
The Gujarat Goods and Services Tax (Fourth Amendment) Rules, 2019.
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30/2019-State Tax - dated
28-6-2019
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Gujarat SGST
Exemption for Annual Return / Reconciliation Statement for suppliers of Online Information Database Access and Retrieval Services.
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29/2019-State Tax - dated
28-6-2019
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Gujarat SGST
Due date for FORM GSTR-3B for July, 2019 to September, 2019
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27/2019-State Tax - dated
28-6-2019
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Gujarat SGST
Due date for FORM GSTR-1 for turnover up to 1 point five crore rupees for July 2019 to September 2019.
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GSL/S.168/B.28 - dated
25-6-2019
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Gujarat SGST
Corrigendum to Notification No 47-2018 State Tax and 70-2018 State Tax
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25/2019-State Tax - dated
24-6-2019
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Gujarat SGST
Extension for blocking and unblocking e-way bill facility under Rule 138E to 21.08.2019.
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1095-F.T. - 11/2019-State Tax (Rate) - dated
1-7-2019
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West Bengal SGST
Seeks to specifies retail outlets established in the departure area of an international airport, beyond the immigration counters, making tax free supply of goods to an outgoing international tourist, as class of persons who shall be entitled to claim refund.
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32/2019 – State Tax - dated
28-6-2019
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West Bengal SGST
Seeks to extend the due date for furnishing the declaration FORM GST ITC-04
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29/2019 – State Tax - dated
28-6-2019
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West Bengal SGST
Seeks to prescribe the due date for furnishing FORM GSTR-3B for the months of July, 2019 to September, 2019
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28/2019 – State Tax - dated
28-6-2019
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West Bengal SGST
Seeks to prescribe the due date for furnishing FORM GSTR-1 for registered persons having aggregate turnover of more than 1.5 crore rupees for the months of July, 2019 to September, 2019.
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26/2019 – State Tax - dated
28-6-2019
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West Bengal SGST
Seeks to extend the due date of filing returns in FORM GSTR-7
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1090-F.T. - 31/2019-State Tax - dated
28-6-2019
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West Bengal SGST
West Bengal Goods and Services Tax (Fourth Amendment) Rules, 2019.
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1089-F.T. - 30/2019-State Tax - dated
28-6-2019
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West Bengal SGST
Seeks to provide exemption from furnishing of Annual Return / Reconciliation Statement for suppliers of Online Information Database Access and Retrieval Services(“OIDAR services”).
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1088-F.T. - 27/2019-State Tax - dated
28-6-2019
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West Bengal SGST
Seeks to prescribe the due date for furnishing FORM GSTR-1 for registered persons having aggregate turnover of up to 1.5 crore rupees for the months of July, 2019 to September, 2019.
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1064-F.T. - 25/2019-State Tax - dated
26-6-2019
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West Bengal SGST
Seeks to extend the date from which the facility of blocking and unblocking on e-way bill facility as per the provision of Rule 138E of WBGST Rules, 2017 shall be brought into force to 21/08/2019.
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2019 (7) TMI 190
Detention of goods u/s 129 (1) of CGST Act, 2017 - Part B of the E-Way Bill - omission or illegality in transportation of goods - HELD THAT:- To confirm to the scheme under the Act, the writ petition is disposed of by this order. The petitioner submits bank guarantee for the tax and penalty as shown in Ext.P4(d) and applies for release of goods by enclosing a copy of this order within two days from today. The 1st respondent shall release the goods detained under Ext.P4(c) and subjected to enquiry in Ext.P4(d) within twelve hours from the date and time of receipt of bank guarantee. The bank guarantee shall be kept valid for one month from today. Petition disposed off.
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2019 (7) TMI 159
Grant of regular bail - offence punishable under Sections 132(1)(b), 132(1)(c), 132(1)(k), 132(1)(i) and Section 16 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- In the facts of the case, the allegations made against the Applicant, the evidence collected by the prosecution, the submissions put-forth on behalf of the parties and further considering the seriousness of the offence and involvement of the money in the offence, I am not inclined to release the Applicant on bail. Bail application dismissed.
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2019 (7) TMI 189
Validity of Section 174 of the KSGST Act - Non-consideration of other grounds raised before the single member bench of the HC - Time limitation for completion of proceedings - HELD THAT:- The issue is already decided in the case of M/S. SHEEN GOLDEN JEWELS (INDIA) PVT. LTD. VERSUS THE STATE TAX OFFICER (IB) -1, AND OTHERS [ 2019 (2) TMI 300 - KERALA HIGH COURT] where it was held that the petitioner's plea is rejected that the State lacks the vires to graft Section 174 into KSGST Act, 2017. A remittance of the writ petition for a fresh consideration and disposal on the grounds raised other than validity of Section 174, would suffice to meet the ends of justice - writ petition is restored on to the files of this Court.
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2019 (7) TMI 188
Validity of Section 174 of the KSGST Act - Non-consideration of other grounds raised before the single member bench of the HC - Time limitation for completion of proceedings - HELD THAT:- The issue is already decided in the case of M/S. SHEEN GOLDEN JEWELS (INDIA) PVT. LTD. VERSUS THE STATE TAX OFFICER (IB) -1, AND OTHERS [ 2019 (2) TMI 300 - KERALA HIGH COURT] where it was held that the petitioner's plea is rejected that the State lacks the vires to graft Section 174 into KSGST Act, 2017. A remittance of the writ petition for a fresh consideration and disposal on the grounds raised other than validity of Section 174, would suffice to meet the ends of justice - writ petition is restored on to the files of this Court.
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Income Tax
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2019 (7) TMI 183
Disallowing employees contribution towards provident fund (PF) and employees contribution towards ESI as per provisions of section 2(24)(x) and 36(i)(va) - HELD THAT:- Assessee has been decided by the Hon'ble Supreme Court in case of CIT vs. Vinay Cement Ltd. [ 2007 (3) TMI 346 - SC ORDER] . It is pertinent to note that if the employees' contribution is not deposited by the due date prescribed under the relevant statutes and is deposited late, the employer not only pays interest on delayed payment but can incur penalties also, for which specific provisions are made in the Provident Fund Act as well as the Employees State Insurance Act. Therefore, these Acts permit the employer to make the deposit with some delays, subject to the aforesaid consequences. Insofar as the Income Tax Act is concerned, the assessee can get the benefit if the actual payment is made before the return is filed, as per the principle laid down by the Supreme Court in case of Vinay Cement (supra). We find that on the issue in dispute the CIT(A) has followed the finding of the Hon'ble jurisdictional High Court, which is binding on the Tribunal or the CIT(A) functioning under the jurisdiction of the Hon'ble Delhi High Court. In view of the above, we do not find any error in the order of the CIT(A) and accordingly, we uphold the same. Ground No. 1 of the appeal of the Revenue is dismissed.
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2019 (7) TMI 182
Disallowance u/s 14A - no exempt income - HELD THAT:- When there is no exempt income earned by the assessee during the relevant assessment year, no disallowance can be made by invoking the provisions contained u/s 14A. So, finding no illegality or perversity in the impugned order passed by the CIT (A), present appeal filed by the Revenue is hereby dismissed. See M/S CHETTINAD LOGISTICS PVT. LTD. [ 2018 (7) TMI 567 - SC ORDER] - Decided against revenue.
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2019 (7) TMI 181
Levy of penalty u/s 271(1)(c) - disallowance u/s 40(a) (ia) - whether no specific charges as relates to concealment of income or furnishing of inaccurate particulars of income? - HELD THAT:- There was no concealment on the part of the assessee. This was a simple case of disallowance u/s 40(a) (ia) as the assessee was under the belief that TDS is not liable to be deducted on payment of NBFCs. Thus, the authorities cited by the AR are applicable in the present case. In respect of interest expenses, the same was not concealed by the assessee before the AO. Thus, there is no concealment. Section 271(1)(c) was not correctly invoked by the AO. CIT(A) also overlooked the actual intention of the penalty proceedings which clearly set out that when there is inaccurate particulars or concealment on part of the assessee, then the same should be proceeded. But in the present case, the assessee has disclosed all the factual aspects before the AO which cannot be stated that there was concealment of particulars of income or the assessee furnished inaccurate particulars of income. Assessee has also filed all the details during the regular assessment proceedings. It can be seen that the AO was not sure under which provisions of Section 271 the assessee is liable for penalty - merely because the assessee company did not challenge the addition before the CIT(A), is no ground to levy penalty against the assessee company. See M/S. NETAMBIT VALUE FIRST SERVICES PVT. LTD. VERSUS THE DCIT, CIRCLE-13 (1) , NEW DELHI [ 2018 (3) TMI 36 - ITAT DELHI] - Decided in favour of assessee.
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2019 (7) TMI 180
Revision u/s 263 - 'Penny Stock' addition - as per CIT AO did not enquire into the claim of short term capital loss or that the assessment order suffered from lack of enquiry - non consideration of CBDT Instruction No.287/30/2014-IT(Inv II)Vol. III - HELD THAT:- On perusal of the above Instruction, it is noted that the CBDT had only informed the field officers that a button 'Penny Stock' has been added on their Individual Transaction Screen to display information related to penny stock, including the investigation report of the Kolkata Investigation Directorate. Upon being enquired as to whether the CBDT has laid down any specific guidelines for the field officers, pursuant to the above Instruction for investigation into the suspicious transactions in shares, the Ld. CIT, DR was unable to bring to our notice the so-called specific line of enquiry which the CBDT had mandated the AOs to abide by. We therefore find that very premise viz., violation of the directions contained in CBDT Instruction No.287/30/2014-IT(Inv II)Vol. III, based on which the Pr.CIT initiated the proceedings u/s 263 for alleged lack of enquiry by the AO into the appellant s claim of short term capital loss, is found to be factually untenable. On examination of the material placed before him by the appellant, the AO was satisfied that the short term capital loss was incurred by the appellant on sale of shares listed on the Bombay Stock Exchange. The appellant had filed before the AO the relevant details and also produced the time stamped contract notes issued by its broker. All the transactions were made through registered share broker at rates prevailing on the stock exchange on the relevant dates. The payment for acquisition of shares and the subsequent sale proceeds were also transacted through the appellant s regular bank account. It is noted that the listed shares were sold within a period of one year from the date of acquisition and therefore the gain/loss was short term in nature. We find that the AO had discharged his duties as an investigator as well as that of an adjudicator and applied his mind on the issue before him and taking into consideration the explanation rendered by the appellant, had taken a reasonable and plausible decision to allow the claim of short term capital loss as made by the appellant in the return of income. While passing the assessment order the AO did not follow a view which can be said to be unsustainable in law . In the circumstances therefore, the jurisdictional facts for usurping the jurisdiction, being absent, we hold that the action of Ld. Pr. CIT was without jurisdiction and all subsequent actions are 'null' in the eyes of law. We therefore quash the order impugned before us. - Decided in favour of assessee.
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2019 (7) TMI 179
Bogus capital gain - Claim for exemption u/s 10(38) in respect of sale of shares denied - HELD THAT:- The appellant had furnished the copies of contract notes, Demat statement, Bank Statement, broker s ledger. The transactions in listed shares took place through a registered share broker, namely M/s. Sosha Credit Pvt. Ltd. The purchase of shares was acquired through public offer by way of direct subscription in Initial Public offering. The sale of shares took place on screen based trading platform of Bombay Stock Exchange. The transaction was settled by making / receiving payment by account payee cheques through proper banking channel. The assessee had paid securities transaction tax (STT) on sale of shares. The transaction took place at the price prevailing on stock exchange on respective transaction dates and there is no adverse finding by the lower authorities in respect to the documents produced by the assessee to substantiate the sale of M/s GCM Securities Limited. D.R. except relying heavily on the orders of the lower authorities could not bring to our attention any material to show that the documents placed before us were sham, bogus or there was any factual infirmity therein. D.R. also could not controvert the ld. A.R s submissions that the disallowance was made solely on the basis of the report of the Investigation Wing in the shares of M/s KAFL. D.R. could not bring to our attention any material or evidence from which one could infer that the transactions in shares of M/s GCM Securities Limited were either manipulated or sham or that any enquiry was conducted either by the Investigation Wing or by the AO in respect of assessee s transactions in shares of M/s GCM Securities Limited. Both the lower authorities were not justified in not allowing the appellant s claim for exemption u/s 10(38) in respect of the profit derived by the appellant on sale of 6400 shares of M/s GCM Securities Limited. Appeal of the assessee is allowed.
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2019 (7) TMI 178
Interest u/s 201(1A) - delay in deposit of TDS to the credit of Central Government ranging for the period from 15 days to 35 days - whether month is to be interpreted as period of 30 days and not British Calendar Month? - month and part of month - HELD THAT:- Month is to be interpreted as period of 30 days and not British calendar. There are other judgments also relied upon by assessee wherein similar view has been taken. See ARVIND MILLS LIMITED [ 2011 (9) TMI 244 - GUJARAT HIGH COURT] We allow the appeal of the assessee, by holding that for purpose of computation of interest payable u/s. 201(1A)(ii) of the 1961 Act read with Rule 119A(b) of the 1962 Rules, month is to be interpreted as period of 30 days and not British Calendar Month. However, now for the purpose of computation of interest payable by the assessee in accordance with our decision in this order, we are restoring the mater back to the file of AO for limited purpose of computing the interest payable by assessee u/s 201(1A)(ii). AO is directed to compute interest payable by the assessee u/s 201(1A) of the 1961 Act in accordance with our decision in this order.
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2019 (7) TMI 177
Nature of expenditure - amortization of lease premium over lease period - payment of advance rent to the lessors in respect of different lands taken on lease for the purpose of business - capital or revenue expenditure - HELD THAT:- In principle the AO did not dispute the assessee s contention that the amount paid by the assessee at the time of obtaining lease was in the nature of lease rent paid in advance and by making such payment the assessee had obtained right to use such land for carrying on its business. In the circumstances once the nature of payment is found to be for the purpose of carrying on business and not to acquire capital asset then such expenditure has to be considered to be in the revenue field and therefore allowable as per the method of accounting followed by the assessee. Claim for amortization of lease premium - Principle of matching concept - It is evident that in the opinion of the Hon ble Supreme Court in MADRAS INDUSTRIAL INVESTMENT CORPORATION LIMITED VERSUS CIT [ 1997 (4) TMI 5 - SUPREME COURT] and TAPARIA TOOLS LIMITED VERSUS JCIT[ 2015 (3) TMI 853 - SUPREME COURT] certain cases where the assessees themselves opt to spread the expenditure over a period of ensuing years then such a claim of the assessee can be allowed only if the principle of matching concept is satisfied. In the present admittedly the assessee has obtained leases from Governmental autonomous bodies such as CIDCO, KPT etc. for the purpose of carrying on assessee s business and used these lease hold lands for setting up industrial undertakings/infrastructure facilities thereon. As such the benefit of the lease is being enjoyed by the assessee over the lease period. The assessee therefore is assured of deriving revenue from the business carried from these leased premises over the tenure of lease and therefore the corresponding cost in the form of pro-rata lease premium is required to be netted off against revenues generated from the business, applying the principle of matching of cost with revenue so as to disclose true fair amount of operating profits of each year. We therefore find that since in the present case the assessee has satisfied the matching concept test assessee s claim for amortization of lease premium is allowable. Even CBDT issued the Circular on 23.04.2014 wherein expenditure of such nature was permitted to be spread over the lease period after the commencement of business - by applying the CBDT Circular No. 9/2014 dated 23.04.2014 granted the assessee s claim for amortization of lease premium over the effective life of lease. For the reasons discussed in the foregoing therefore we do not find any infirmity in the order of the Ld. CIT(A) granting amortization of lease premium in computing business income of the assessee Deduction u/s. 80IA being the profit derived from CFS undertaking - notional interest income charge on intra-unit fund transfers - HELD THAT:- Assessee had both credited and debited notional interest in respect of intra-unit fund transfers and in reality no interest was either paid or received by any of parties. In any case we find that ultimately in the P L A/c of CFS undertaking there was net debit of ₹ 2,90,26,398/- on account of interest on intra-unit fund transfers. In other words the net profit of the CFS undertaking was arrived at after the net charge of interest of ₹ 2,90,26,398/-. On these facts therefore we find merit as basis adopted by the AO for making the impugned disallowance being factually incorrect, the disallowance made by the AO was unwarranted. We also note that during the relevant year the gross interest cost of the assessee was ₹ 4.18 crores whereas interest income credited in the P L A/c was ₹ 35.44 crores. We therefore find that during the relevant year the assessee company made net interest earning of ₹ 31.26 crores. Viewed from any angle therefore we find that the assessee company did not incur any interest expenditure in relation to its CFS undertaking requiring any adjustment to the profits eligible for deduction u/s 80IA. The disallowance made by the AO in granting deduction u/s 80IA is therefore deleted. - Decided in favour of assessee.
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2019 (7) TMI 176
Penalty u/s. 271(1)(c) - non striking down the irrelevant fault stated in the SCN - HELD THAT:- As perusing the show cause notice issued by AO before penalty was initiated as to which specific fault of assessee he is being proceeded against i.e. for furnishing inaccurate particulars of income or concealment of income has not been spelt out specifically by striking down the irrelevant fault stated in the SCN. Finding of CIT(A) has not been challenged by the Revenue, therefore, this finding of the CIT(A) crystallizes. And moreover we have gone through the notices issued by the AO before imposing the penalty and we concur with the finding rendered by the CIT(A) that the notice does not specify the specific charge on which the assessee is being called upon to answer during the penalty proceedings which omission vitiates the notice issued before penalty and subsequent proceedings thereafter. CIT(A) rightly cancelled the penalties imposed by the AO for both the years before us. Therefore we, therefore, hold that deletion of penalty by the CIT(A) in the present case cannot be disturbed and, therefore, we confirm the order of CIT(A) and dismiss both the appeals of the Revenue.
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2019 (7) TMI 175
Revision u/s 263 - allowability of deduction u/s 54B - claim allowed by the A.O. based on the agreement to purchase of agricultural land - transfer of agricultural land by Scheduled Caste person was prohibited under Land Reforms Act of State of Rajasthan - HELD THAT:- The assessee has accepted the fact that after the said agreement, sale deed could not be executed due to the reason that the agricultural land could not be transferred by the seller in favour of the assessee as prohibited by the law. The assessee has claimed that once the assessee has paid the consideration and the possession was handed over to the assessee then it amounts to transfer in terms of Section 2(47)(v) (vi). No merit in the contention of the ld AR because of the simple fact that the agricultural land belonging to the Scheduled Caste cannot be transferred to non- Scheduled Caste person until and unless the same is converted to non-agricultural land. Even if the said agricultural land can be transferred in future after converting the same from agricultural to non-agricultural land, it would not be a case of purchase of agricultural land but it must be purchase of non-agricultural land. The moment, the agricultural land is converted to non-agricultural land, it loses the character of agricultural land and consequently the said investment would not be eligible for deduction U/s 54B. In the case in hand when the transfer itself is prohibited then the alleged agreement would not bring the case in the category of transfer of ownership without any formal deed of title. Further we find that the order of the A.O. is erroneous so far as the crucial aspect and the very basis of allowability of deduction U/s 54B of the Act was not considered by the A.O. and hence we find that the PCIT has rightly invoked the provisions of Section 263 when the claim of the assessee is absolutely impermissible under law. Accordingly, no error or illegality in the impugned revision order of the ld. PCIT, Alwar passed U/s 263 - Decided against assessee.
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2019 (7) TMI 174
Unexplained share capital - assessment u/s 153C - share capital received from Y2K Systems International Ltd. (Y2K SIL), holding company - HELD THAT:- As during the course of arguments, learned DR did not dispute that the issues have already been considered in detail in the aforesaid decision considering the other related decisions in the case of Shri Suresh Nanda [ 2013 (3) TMI 77 - DELHI HIGH COURT] and Russian Technology Centre Pvt.Ltd [ 2017 (5) TMI 1107 - DELHI HIGH COURT] . It is also a fact that during the course of search, no material pertaining to the assessee was found and seized. It is a routine addition on which assessee has already declared share capital while filing the return of income. The assessee has produced sufficient documentary evidence as are referred to above which completely prove the case of the assessee that assessee proved the identity of the investors, their creditworthiness and genuineness of the transaction. During the course of hearing, learned DR was not able to point out any infirmity in the order of the learned CIT(A) in deleting the addition. Considering the issue in its entirety in the light of the order of the Tribunal in the case of River Valley Meadows Township Pvt.Ltd. [ 2019 (4) TMI 198 - ITAT DELHI] we find that the issue is covered by the order of the Tribunal in this case. In the absence of any infirmity pointed out in the order of the learned CIT(A), we dismiss the department s appeal on this ground. Addition on account of pre-operative expenses - expenses claimed as deduction u/s 35D - HELD THAT:- Assessee has incurred this expenditure before commencement of business which was in the nature of travelling, telephone and printing expenses etc. These were revenue in nature. Therefore, learned CIT(A) rightly amortized these expenses under Section 35D. Further, no document was seized during the course of search with reference to this addition. Since assessment in this year was originally completed u/s 143(3), therefore, no addition can be made as per law laid down by Hon'ble Delhi High Court in the case of Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] . This ground is accordingly dismissed. Addition on account of unaccounted credit u/s 68 - HELD THAT:- Addition could not be made in the hands of the assessee. It is also clear that during the course of search, no incriminating material was found so as to make this addition. In this case, originally, assessment was completed u/s 143(3) and no seized material has been referred to so as to make this addition against the assessee. In this case, protective addition was made in the hands of Shri Suresh Nanda of the same amount. Since in the case of Shri Suresh Nanda, he was held to be non-resident , therefore, no addition can be made in his hands. On the basis of documentary evidences on record and considering various litigation in the case of group in which similar additions have been deleted, therefore, learned CIT(A), on proper appreciating of facts and material on record, correctly deleted the addition. This ground is accordingly dismissed. Unexplained investment - HELD THAT:- Issue is covered by the judgment of Hon'ble Delhi High Court in the case of the assessee dated 25th February, 2013 [ 2013 (3) TMI 77 - DELHI HIGH COURT] in which it was held that the assessee is a non-resident . The order of the Tribunal is thus affirmed and hence, no addition can be made. Learned DR also did not dispute the above fact. In this view of the matter, it is clear that since similar additions have been deleted in the case of M/s C 1 India Pvt.Ltd. in assessment year 2001-02 to 2003-04 (supra), in which substantive addition is made, therefore, no protective addition can be made in the hands of the assessee. Further, assessee is held to be non-resident, therefore, no income had accrued or received by the assessee in India and, as such, no addition can be made in hands of the assessee. The issue is covered by the aforesaid decision in the case of the assessee. We, therefore, do not find any merit in this ground of the Revenue s appeal. Accrual of income outside India - non resident - Disallowance on account of commission earned on the defense deal related to documents found from M.V. Rao - HELD THAT:- In the case of the assessee for assessment year 2004-05 to 2006-07 [ 2014 (11) TMI 14 - ITAT DELHI] in which it was held that the addition of commission made on the basis of documents seized from the premises of Dr. M.V. Rao and Shri Mohan Jagthap is completely baseless. The order is reproduced in the impugned order. CIT(A) noted that since the assessee has been held to be non-resident, therefore, even if the same represents unaccounted income of the assessee from undisclosed sources, it cannot be brought to tax as income in his hands unless it is proved that the income accrued to him in India.
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2019 (7) TMI 173
TP adjustment in assessment u/s 153A - jurisdiction by the AO/TPO and the powers of DRP - effect of non issue of SCN by AO regarding reference of an independent to / and non existing international transactions - HELD THAT:- There is no merit in arguments of Ld. DR that the Assessing Officer has only made reference in respect of transactions which are already reported in Form No.3CEB. The facts clearly show that what the Assessing Officer has referred is not only the transactions declared in Form No.3CEB but the transactions which as per the Revenue authorities starting from Investigation Team and other Officers needs to be benchmarked in the hands of assessee i.e. on account of sale of medicines by Sava group and other AEs, which are independent entities duly registered in the respective countries as per the laws of said countries. where the Assessing Officer came to a finding that second transaction needs to be benchmarked by the TPO, then before making reference to TPO, it was incumbent upon the Assessing Officer to show cause the assessee, whether it was necessary and expedient to refer the matter to TPO, which the Assessing Officer has failed to do so. Though the Assessing Officer records reasons and even gets those reasons approved by CIT and clearly mentions the reasons for reference in the referral letter but fails to show cause the same to assessee. The said act of Assessing Officer is in contradiction to the provisions of section 92CA(1). The copy of said reference letter was never given to the assessee either during the course of assessment proceedings / TP proceedings or DRP proceedings. The assessee has time and again objected to the exercise of powers by TPO alleging that no international transaction arises on the premise of benchmarking transaction of control and management of AE parties from India and that too, through assessee s hands, but the said objection has not been dealt with by TPO or DRP and an order under section 92CA(3) of the Act passed by TPO, which has been partially modified by DRP. After such an order has been passed, the Assessing Officer, as per amended provisions of section 92CA(4) is bound to act in conformity with the said adjustment made. This is the mandate of section 92CA(4). Hence, the jurisdictional issue raised by assessee i.e. whether it is an international transaction or not has not been answered by any of the authorities and the TP proceedings have been completed against assessee in violation of mandate of section 92CA(1). We hold that where the Assessing Officer while making reference of an independent to / and non existing international transactions (as alleged by Ld. AR) had to come to a finding that income arising from the said international transactions needs to be benchmarked, in order to determine its arm's length price and before such reference to the TPO, show cause notice should have been given to the assessee. In the absence of any such show cause notice being given to assessee, the same is irregularity (as held by the Hon ble Bombay High Court) and the said irregularity cannot be made good by restoring back the same to the file of Assessing Officer as none of the authorities i.e. Assessing Officer or DRP thought it fit to address the issue raised by assessee and disregarded the same in limine. It is the case of violation of principles of natural justice and such an order passed in the hands of assessee cannot stand and the same is invalid and bad in law. Exercise of powers by TPO - The TPO in the present facts has first, carried out exercise to conclusively prove that entire control and management of the affairs of assessee group, was wholly situated in India and then in the end, he applies Profit Split Method, which also had not been applied as per rules, as no comparables had been picked up to benchmark the said international transactions. The exercise carried out by TPO in fact is the exercise which had to be undertaken by Assessing Officer in the first instance and after he had come to a finding of control and management of business being wholly situated in India during the previous years in question, then he had to proceed further. The Assessing Officer having failed to do so, action of TPO being beyond jurisdiction cast under section 92CA(1) of the Act cannot stand and hence, the entire exercise carried out by TPO in this regard is both invalid and bad in law. where under the provisions of the Act it is prescribed that a particular Officer is to exercise a power, then it has to be so exercised by him and no other person, unless the Statute so prescribes. In the present set of facts, the said exercise has not been carried out by the Assessing Officer, but if we go through the order of TPO, then such a finding has been given by TPO in various paras of TPO s order. The Assessing Officer was aware of whole background, which is clear from reference made by him to TPO and in such circumstances, he should have exercised his jurisdiction. He has failed to do so and on this ground also, the non exercise of jurisdiction by Assessing Officer makes the assessment order bad in law. Taxability on the basis of status of residence of an entity - It was his duty first, to come to a finding whether such transactions undertaken by assessee and other concerns were inter-linked and first, he should have determined whether the conditions of section 6(3) of the Act were fulfilled or not and then make reference, if needed. Hence, there is no merit in the whole exercise carried out by TPO and also in non exercise of jurisdiction by Assessing Officer, which affects the jurisdiction of Assessing Officer to make assessment. Even the DRP did not address this issue. In the present case, since the Assessing Officer has failed to apply the law correctly, we find no merit in the consequent orders passed against assessee and the same do not stand and are held to be bad in law. Thus, first issue raised by assessee is allowed. Powers of DRP - Panel may confirm, reduce or enhance the variation proposed in draft order and it has no power to set aside any proposed variation or issue any direction under sub-section (5) for further enquiry and passing of assessment order - sub-sections (5) to (8) of section 144C - powers which have to be exercised by DRP are not as wide as the powers which can be exercised by CIT(A) - HELD THAT:- It first challenges the order of TPO on the ground that no such international transaction exists and cannot be benchmarked. The DRP does not deal with the same. The next challenge was to the finding of TPO vis- -vis control and management from India. The DRP while deciding the issue first, decides the issue of international transaction of supply of goods, which is reported in Form No.3CEB. It may again be pointed out that the TPO does not give any finding on this issue though the said transaction is reported in Form No.3CEB. But where the TPO has not exercised his jurisdiction, the DRP in exercise of his powers cannot benchmark new transaction though reported by assessee, in the hands of assessee. The DRP benchmarks the second transaction in the hands of assessee and overturns the order of TPO and holds that AE's are not sham, but are legal entities and attributes part of global profits, first to the assessee and then another part to AE s and the residuary profits are divided amongst the assessee and AE s. In the result, 70% of world profits are added in the hands of assessee under guise of Profit Split Method. The rules in this regard are completely overlooked and no comparables are selected and on its own, allocation of profits is made by the DRP. The said exercise carried out by DRP is beyond its scope and is new line of adjustment, which is outside its jurisdiction. The DRP has also failed to consider the aspect that no such transaction was reported in Form No.3CEB by the assessee and has failed to address the issue raised by assessee. In this regard, we find no merit in the exercise of jurisdiction by the DRP. The Ld. DR has placed reliance on several case laws in this regard, explaining the powers of DRP, but those are distinguishable on facts. Accordingly, we quash the findings of DRP and consequent order passed under section 143(3). Both the jurisdictional issues are thus, decided in favour of assessee and assessment order passed in the case is held to be invalid and bad in law.
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2019 (7) TMI 172
Penalty order u/s 271(1)(c) - non striking off either of two charges i.e concealment of particulars of income or furnishing of inaccurate particulars of income and thereby rendering the penalty proceeding bad in law - HELD THAT:- The penalty is not liable to be sustainable on account of defective notice. Since, the assessee has succeeded on the basis of legal issue, therefore, we are not inclined to decide the matter of controversy on merits being academic in nature. In view of the said circumstances, we are of the view that the finding of the CIT(A) is wrong against law and facts and is not liable to be sustainable in the eyes of law, therefore, we set aside the finding of the CIT(A) on this issue and delete the penalty. - Decided in favour of assessee.
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2019 (7) TMI 171
Deduction u/s 43B - employees contribution to PF beyond the due date prescribed under the provisions of Employees Provident Fund Miscellaneous Act but such payment has been remitted on or before due date of filing return of income u/s 139(1) - HELD THAT:- CIT(A), after considering the fact that the payments have been made before filing return of income u/s 139(1) by following the decision of CIT vs Alom Extrusions Ltd [ 2009 (11) TMI 27 - SUPREME COURT] and also the decision of Hon ble Bombay High Court in the case of CIT vs Ghatgepatil Transport Ltd [ 2014 (10) TMI 402 - BOMBAY HIGH COURT] and held that if employees contribution to PF is remitted on or before due date of filing return of income u/s 139(1), then such payment needs to be considered on par with employer s contribution to PF; consequently, section 43B is applicable and hence, any payment is made on or before due date of filing return of income, then the same is allowable u/s 43B. Facts remain unchanged. The revenue fails to bring on record any contrary decision to controvert the findings of fact recorded by CIT(A) in the light of decision of Hon ble Bombay High Court in the case of CIT vs Ghatgepatil Transport Ltd (supra). Therefore, we are inclined to uphold the findings of CIT(A) and dismiss appeal filed by the revenue.
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2019 (7) TMI 187
Validity of assessment u/s 153C - whether the notice u/s. 153C was barred by limitation - scope of amended provisions of Section 153C effect from 01.06.2015 - HELD THAT:- In case any notices u/s 153C which have been issued for assessment years beyond the six assessment years referred to hereinabove, such notices would be beyond jurisdiction as the same do not fall within the six assessment years as contemplated u/s 153A The impugned notices issued u/s 153C in each of the petitions are hereby quashed and set aside. In cases where the assessment orders are subject matter of challenge, the impugned assessment orders are hereby quashed and set aside on the ground that the very initiation of proceedings u/s 153C was without jurisdiction. See ANILKUMAR GOPIKISHAN AGRAWAL VERSUS ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 3 (2) AHMEDABAD [ 2019 (6) TMI 746 - GUJARAT HIGH COURT] . In the light of the above discussion, the petitions succeed, and are accordingly, allowed. The impugned notices issued u/s 153C in each of the petitions are hereby quashed and set aside.
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2019 (7) TMI 170
Method of valuation of stock prescribed u/s 145A - difference sales as per print out taken from computer and sales declared in the audited books of accounts - VAT/MVAT netted sales figure - HELD THAT:- Assessee through this working u/s 145A brought to the notice of CIT(A) that there will be no impact on income chargeable to tax vide exclusive method followed by it for accounting for sales, MVAT/CST and stocks , which stood already disclosed/reported to Revenue vide tax-audit report as well while filing computation of income in return of income filed with Revenue. The income tax return along with computation of income filed with Revenue as well tax-audit report were all before the AO during the course of assessment proceedings. Under these factual matrix of the case before us, we do not find any justification and merits in the contention of the revenue and we are of the considered view that proper explanations were given by the assessee during the course of the assessment as well appellate proceedings before the CIT(A) CIT(A) rightly deleted the additions as were made by the AO. - Revenue vide ground no.1 is dismissed. Additions on account of mismatch of closing stock - survey proceedings conducted by Revenue u/s 133A - HELD THAT:- Assessee on its part has duly submitted complete details and in our considered view CIT(A) has rightly deleted the addition as were made by the AO on estimated basis. However , the DR has pointed out that the closing stock for AY 2006-07 was 90,928 Kg of different types of chemicals dealt in by the assessee as on 31.03.2006, while for AY 2007-08 , the opening stock as on 01.04.2006 was taken as 92,788 Kg. of chemicals instead of taking closing stock of preceding year as opening stock and to this extent owing to specific defect being pointed out by learned DR , we are remitting the matter back to the file of AO for limited verification of this differential in closing stock of AY 2006-07 and opening stock of AY 2007-08 and for make additions to income accordingly, if any as per mandate of the applicable provisions of the 1961 Act. Addition on account of low GP ratio declared by the assessee - HELD THAT:- AO has brought on record comparative analysis of GP ratio of competitor from the same locality. AO has also noted abnormal increase in certain expenses as well several discrepancies and inconsistencies in accounts maintained by the assessee. The economies of scale ought to have increased GP ratio and profitability owing to increased turnover but instead GP ratio and profitability fell. These are special circumstances which are against the normal business patterns and are especially within the knowledge of the assessee which assessee ought to have duly explained. The onus was on the assessee to demolish the findings of the AO and its own results against normal business patterns with the cogent evidences but the assessee has given general replies and hence the assessee failed to discharge the onus as was on the assessee. Hence we are inclined to set aside appellate order passed by Ld.CIT(A) and confirm additions as were made by the AO in its assessment order. Addition u/s 69C - HELD THAT:- Additions owing to fall in GP ratio in preceding para‟s of this order. We have observed that learned CIT(A) held that there is no differential in books of accounts vis-a-vis statement furnished by the assessee. CIT(A) had observed that the assessee had furnished statement in which commission exceeding ₹ 50000/- was shown and hence there is no differential if the commission upto ₹ 50000/- is also taken into account. We have observed that the Ld. CIT(A) has rightly made additions by disallowing commission expenses of ₹ 1,07,762/- on which no income-tax was deducted at source by invoking provisions of Section 40(a)(ia). The powers of learned CIT(A) are co-terminus with powers of the AO. The assessee also could not controvert this position even before us and only bald aversions are made and no serious averments are made. Thus we affirm appellate order passed by Ld. CIT(A). The grounds raised by both the parties stand dismissed Addition of differential in transportation charges - HELD THAT:- Assessee has not made any serious contentions to support its case and only bald averments are made . In the absence thereto of any serious challenge to the well reasoned appellate order passed by CIT(A) and as per material on record, we confirm the additions as sustained by CIT(A) . The differential in transportation charges as were observed by authorities below could not be explained by the assessee even before us. We also note that Revenue has not raised any challenge to part relief granted by learned CIT(A) to the assessee. Addition of expenses by disallowing 25% of the certain expenses - HELD THAT:- DR supported the orders of authorities below. After hearing both the parties and after carefully going through orders of authorities below and material on record, we are of the view that the assessee could not bring on record cogent material to prove/substantiate its contention that these expenses were incurred wholly and exclusively for the purposes of the business of the assessee. Thus, proper supporting/explanation and justification of incurring these expenses wholly and exclusively for the purposes of business of the assessee is not forthcoming. The onus was on the assessee which it failed to discharge. The personal usage of these expenses for the benefit of partners/family members of the partners cannot be ruled out. We donot find any merit in the appeal of the assessee which stand dismissed. Disallowance of depreciation on car - additions to the income of the assessee by disallowance of 25% on depreciation on car - HELD THAT:- No serious contentions were raised by the assessee even before tribunal to substantiate /justify that car was wholly and exclusively used for the purposes of the business of the assessee . It is also observed that car is registered in the individual name of partners and personal usage of the car for benefit of partners/family members cannot be ruled out and hence this addition is sustained. Disallowance of expenses towards warehousing charges and Hamali Charges - HELD THAT:- The assessee has now filed an second appeal before tribunal and we find that no serious contentions were raised before us by learned counsel for the assessee before the tribunal to substantiate and justify allowing the entire warehousing expenses. DR supported the orders of authorities below. After hearing both the parties and carefully going through the material on record, we find no reason to deviate from the decision taken by the CIT(A) and we affirm the order of learned CIT(A) and sustain the disallowance as proper and satisfactory explanation of incurring of these expenses are not submitted by the assessee. Hamali Charges - CIT(A) held the said disallowance to be reasonable. The assessee has filed second appeal and no serious contentions were raised by assessee before us to prove/substantiate that these expenses are duly supported by documentary evidences and were genuine/bonafide expenses incurred wholly and exclusively for the purposes of business. We have no reason to deviate from the decision taken by the Ld. CIT(A) which we affirm Addition u/s 41 - cessation of liability - HELD THAT:- The entire purchases were added by the AO u/s 41(1) towards cessation of liability despite the fact that substantial amount towards purchases made was paid within the previous year through banking channel. The said confirmation from M/s Anil Enterprises reflecting purchases made during the year and payments made during the year by the assessee duly certified by said M/s Anil Enterprises for relevant period . In any case, we have confirmed the additions vide this order towards low GP ratio as the assessee is consistently showing abysmally low GP for which no satisfactory explanation is offered by assessee. Thus, we decide this issue in favour of the assessee and dismiss the ground raised by the Revenue. The assessee succeeds on this ground and additions as was sustained by learned CIT(A) stood deleted., while part relief granted by learned CIT(A) stood affirmed.
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2019 (7) TMI 186
Set off of Depreciation allowances - even after eight subsequent assessment years - scope of amendment to Section 32(2) by the Finance Act, 2001 - HELD THAT:- In case of Principal Commissioner of Income Tax Vs. Accura Polytech (P.) Ltd.V [ 2017 (12) TMI 866 - GUJARAT HIGH COURT] the very issue was before the Gujarat High Court. In the said case it was held that the amendment in Section 32(2) of the Act is applicable from Assessment Year 2002-2003 and subsequent years. It further observed that any unabsorbed depreciation available to an Assessee on 01.04.2002 will be dealt with in accordance with provision of Section 32(2) of the Act, as amended by the Finance Act, 2001 and not by the provisions of Section 32(2) of the Act, as it stood before the said amendment. Also confirmed by SC [ 2018 (9) TMI 1100 - SC ORDER] - Decided in favour of assessee.
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2019 (7) TMI 185
MAT credit computation u/s 115JAA - Inclusion of surcharge and cess in MAT credit by tribunal - Case of K. SRINIVASAN [ 1971 (11) TMI 2 - SUPREME COURT] applicability to issue - HELD THAT:- Explanation (2)(iii) and (iv) to Section 115JB of the Act states that for the purposes of Clause (a) of Explanation 1 to Section 115JB of the Act, the amount of income tax shall include surcharge as levied by the Central Acts from time to time and education cess on income-tax, if any, as levied by the Central Acts from time to time. The Hon'ble Supreme Court, in the case of K.Srinivasan, took note of the legislative history of the Finance Act as also the practice to indicate that the term income tax as employed in Section 2 of the Finance Act, which includes surcharge as also the special and the additional surcharge whenever provided which are also surcharges within the meaning of Article 271 of The Constitution. The Hon'ble Supreme Court took note of the distinction made by the High Court in the case and held that the distinction made by the High Court that the surcharges are levied only under the Finance Act and income tax under the Act may not hold good. The Hon'ble Supreme Court explained the term 'surcharge' to mean as the charge in addition to or subject to an additional or extra charge. The decision of the Hon'ble Supreme Court in the case of K.Srinivasan will apply with full force to the assessee's case. Furthermore, if we refer to the circular of the Central Board of Direct Taxes in Circular No.3 of 2018 dated 11.7.2018, which fixed the monetary limit for filing appeals by the Department before the Tribunals, High Courts and Supreme Court, one gets a fair idea as to what was the understanding of the term 'tax' by the Board. If we have a look at paragraph 4 of the said circular, the Board states that for the purposes of the said Circular, tax effect shall be tax including applicable surcharge and cess. Though the case on hand is not hit by the monetary limit according to Mr.T.R.Senthilkumar, learned Senior Standing Counsel, yet, on a perusal of the said circular, it is evidently clear that consistently, the understanding of the Board was that tax includes applicable surcharge and cess. For the above reasons, we are of the view that the Revenue has not made out any case to interfere with the order passed by the Tribunal. - Decided against the Revenue.
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2019 (7) TMI 169
Payment made to retiring partner and legal heirs of the deceased - diversion of income or not? - whether the payment made by the assessee-firm to retiring partners and legal heirs of the deceased partners in terms of the Partnership Deed amounts to diversion of income by over riding title and thus, excludible from total income in the hands of the firm or not? - change in agreement clause - HELD THAT:- From a perusal of clause No.16 of the old agreement and clause nos. 13 and 14 of the new agreement, it is amply clear that in sum and substance the only difference is that in old agreement amounts payable to the retiring partners and legal heirs were not quantified and it only prescribed a method for quantification of amount, whereas in the new agreement the amount to be paid to the partners on retirement and otherwise is duly quantified. Apart from the aforesaid, we do not find difference in the terms and conditions prescribed in the two agreements. The terms of the Partnership Deed dated 01.04.2001 are also in line with the old agreement except that the amount to be paid to the retiring partners and legal heirs have been quantified in the new agreement. Thus, when the fact situation remains the same, we do not find any reason for not following the decision of the Hon ble Bombay High Court in assessee s own case [ 1990 (9) TMI 32 - BOMBAY HIGH COURT] . Since the Hon ble High Court has already considered the decision of CIT v. Sitaldas Tirathdas [ 1960 (11) TMI 17 - SUPREME COURT] , we are not discussing the applicability of the said case to the facts of the present case; and, it would suffice to note that the Assessing Officer has erred in placing reliance on the aforesaid decision. New agreement clearly spells out that the liability to pay income tax on amount received by the retiring partners or beneficiary will be on them and not on the assessee-firm. Thus, liability to pay tax, if at all, in terms of the agreement also, is upon the partner or the beneficiary receiving such payment. As such, it is the partners or beneficiaries receiving such payment who should be taxed and not the assessee. Further, it is also observed from the terms of the agreement that the above payment were to be set-aside at the threshold from the receipts of the firm and will, thus, not reach the hands of the other partners of the firm and, therefore, cannot be treated as income of the assessee-firm who has merely acted as a pass through entity for this payment. We, accordingly, set-aside the order of CIT(A) and direct the Assessing Officer to allow the exclusion on account of payment made to retiring partners and legal heirs of the deceased partners. - Decided in favour of assessee.
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2019 (7) TMI 184
Offence u/s 276C(2) - non payment of self-assessment tax along with the return of income - willful attempt to evade any tax, penalty or interest chargeable or imposable under the Act - HELD THAT:- In the instant case, the only circumstance relied on by the respondent in support of the charge levelled against the petitioners is that, even though accused filed the returns, yet, it failed to pay the self-assessment tax along with the returns. This circumstance even if accepted as true, the same does not constitute the offence u/s 276C (2). The act of filing the returns by itself cannot be construed as an attempt to evade tax, rather the submission of the returns would suggest that petitioner No.1 had voluntarily declared his intention to pay tax. The act of submitting returns is not connected with the evasion of tax. It is only an act which is closely connected with the intended crime, that can be construed as an act in attempt of the intended offence. In the backdrop of this legal principle in the case of Prem Dass vs Income Tax Officer [ 1999 (2) TMI 6 - SUPREME COURT] has held that a positive act on the part of the accused is required to be established to bring home the charge against the accused for the offence u/s 276C(2). In the case on hand, conduct of petitioner No.1 making payments in terms of the returns filed by him, though delayed and made after coercive steps were taken by the Department do not lead to the inference that the said payments were made in an attempt to evade tax declared in the returns filed by him. Delayed payments, under the provisions of the Act, may call for imposition of penalty or interest, but by no stretch of imagination, the delay in payment could be construed as an attempt to evade tax so as to entail prosecution of the petitioners for the alleged offence u/s 276C(2). The prosecution initiated against the petitioners is illegal and tantamount to abuse of process of Court and is liable to be quashed.
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2019 (7) TMI 168
Deemed dividend u/s 2(22)(e) - HELD THAT:- As per Section 2(22)(e) as it stands today, if a shareholder having substantial interest in the company, received money or the company paid money to a concern in which the shareholder is interested or the money was paid for the benefit of shareholder, then it has to be deemed to be dividend. In this case, the Ld.counsel could not clarify who are the shareholders in the assessee-company and in the lender company. In view of the above, this Tribunal is of the considered opinion that the matter needs to be reconsidered by the AO. Accordingly, orders of both the authorities below are set aside and the entire issue is remitted back to the file of the AO. AO shall bring on record the entire shareholding pattern of the assessee-company as well as the lender company and thereafter decide the issue after taking into consideration the language employed by the Parliament in Section 2(22)(e). - Appeal filed by the assessee stands allowed for statistical purposes.
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2019 (7) TMI 167
Gain on Assignment of Loan Obligation - whether constitutes ''income chargeable to lax in the hands of appellant? - u/s 28(iv) or u/s 41(1) - HELD THAT:- Surplus arising from assignment of loan is not covered by the provisions of section 41(1) and consequently can not be brought to tax either u/s 28(iv) or u/s 41(1) - the surplus has resulted from the assignment of liability as the assessee has entered into tripartite agreement under which the loan was to be repaid by the third party in consideration of payment of net present value (NPV) of future liability. Thus surplus resulting from assignment of loan at present value of future liability is not cessation or extinguishment of liability as the loan is to be repaid by the third party and therefore can not be brought to tax in the hands of the assessee. Similar issue has been decided by the special bench, Mumbai in the case Sulzer India Ltd Vs JCIT [ 2010 (11) TMI 728 - ITAT, MUMBAI] which has upheld by Bombay High Court in the case of CIT Vs Sulzer India Ltd [ 2014 (12) TMI 267 - BOMBAY HIGH COURT] The view taken by the Bombay High Court has been affirmed by CIT Vs Balkrishan Industries Ltd [ 2017 (11) TMI 1626 - SUPREME COURT] wherein it has been surplus resulting from the payment of net present value of future liability is cessation/extinguishment of liability and therefore can not be taxed as trading receipt. The said decision was rendered in the context of surplus made by the assessee when it chose to pay the net present value of the liability which was to be discharged after seven years is paid at present value of future liability under a scheme floated by the State Govt. Under the scheme the sales tax collected under deferred scheme to incentivize the industry was to be paid after certain years but the Govt came with another scheme offering the industry to pay the present value of that sales tax liability to be discharged in future. Applying the same analogy to the assessee case, we hold that the assessee has assigned the loan by paying the present value of future liability and the surplus is not taxable as it is not cessation or extinguishment of liability. The decisions relied by the ld DR are also perused and found to be not applicable to the present case. We direct the AO to delete the addition. - Decided in favour of assessee.
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2019 (7) TMI 166
Nature of income - Collection of Outgoing charges/ facility service charges from tenants - business income or Income from House Property - outgoing charges are in respect of maintenance of common area, garden, building premises, 24 hour security, parking, attendant, infrastructure maintenance, water and common area, power, annual maintenance in generating power back up. - HELD THAT:- Where the assessee had given on rent a property, on which it was receiving rent and facility service charges, since facility service charges were being received by assessee in return of providing specific services like housekeeping, security, etc., same was liable to be assessed as business income. Similar view was taken by Jaipur Tribunal in Vikram Golecha [ 2008 (3) TMI 369 - ITAT JAIPUR-A] Even in AY 2005-06, 2006-07, 2007-08, 2009-10, 2011-12 the revenue has allowed the said outgoing charges as business income of the assessee, therefore, the assessing officer should have allowed the outgoing charges as business income on the concept of consistency. Thus, in view of above discussions, we respectfully following the decisions of coordinate bench direct the assessing officer to treat the outgoing charges as business income.
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Customs
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2019 (7) TMI 158
Refund of R and D Cess paid by the petitioners - period April 2017 to June 2017 - respondent No.1 has rejected the claim of the petitioners on the ground that there is no provision in the Act for refund of Cess paid inadvertently on account of repealment of the Act. Whether the respondents can retain the R D Cess which has been collected without authority under the provisions of Research and Development Cess Act, 1986 as the said Act itself has been repealed w.e.f., 1st April 2017 and hence the rejection of refund claim of R D Cess is violative of statutory provisions as also Article 265/300A of the Constitution? HELD THAT:- It is well settled law that any amount paid by mistake or through ignorance of the repealed Act deserves to be refunded on the claim of refund made by the petitioners, retention of such amount would be hit by Article 265 of the Constitution of India - The claim of refund of the petitioners cannot be denied for the reason that there is no legal provision to refund R D Cess paid by the petitioners. No amount can be withheld by the respondents without authority of law under the said pretext. Any money collected, retained without authority of law requires to be refunded to which a citizen is entitled. Hence, the petitioners are entitled to the said Cess amount deposited subsequent to repeal of the Act without any interest by the respondent Nos.2 to 4. The respondent Nos.2 to 4 shall refund the R D Cess paid by the petitioners respectively in an expedite manner in any event not later than four weeks from the date of receipt of the certified copy of the order - petition allowed - decided in favor of petitioner.
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Service Tax
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2019 (7) TMI 157
Works Contract Service - Construction of Residential Complex Service - appellant were paying service tax under Construction of Residential Complex Service from 16.06.2005, however stopped doing so from 01.08.2006 considering the activities to be Works Contract based on CBEC circular dt. 1.8.2006. HELD THAT:- Issue notice on the application for condonation of delay as well as on the Civil Appeal, returnable within six weeks.
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2019 (7) TMI 156
Business Auxiliary services - commission received from the RBI by the banks - appellant carried out various Government transactions on behalf of the Central and the State Governments and have received commission - taxability - N/N. 22/2006-ST dated 31.05.2006 - HELD THAT:- Issue notice.
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2019 (7) TMI 154
Refund of accumulated CENVAT credit - time limitation - refund application filed on 30.01.2017 under Rule 5 of CENVAT Credit Rules, 2004 for an amount of ₹ 35,68,834/- for the period from January 2016 to March 2016 - HELD THAT:- This issue is no more res integra and the Larger Bench of this Tribunal in the case of CCE CST, BENGALURU SERVICE TAX-I VERSUS M/S. SPAN INFOTECH (INDIA) PVT. LTD. [ 2018 (2) TMI 946 - CESTAT BANGALORE] has held that one year is to be counted from the last day of the quarter in which FIRC is received - In the present case, it is clear from the table given in the appeal memorandum and also the invoices that the appellant received the proceeds for the last export invoice on 31.03.2016 and therefore, the last date to file the refund claim should be one year from 31.03.2016 whereas the appellant filed the refund claim on 30.01.2017 as the last day to file the claim was on 31.03.2017 but the appellant filed the claim on 30.01.2017 - Therefore, in terms of the decision of Span Infotech India Pvt. Ltd., the refund claim is filed within the due date. The rejection of refund on time bar is not sustainable in law - appeal allowed - decided in favor of appellant.
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2019 (7) TMI 155
Short payment of service tax - validity of summons - the sole ground that is raised by Mr. Shahi to question the summons is that it is premeditated because it is preceded by a letter dated 08.04.2015 of the same authority imputing short deposit of service tax payable by the petitioner - HELD THAT:- The submissions present at paragraphs 24 to 28 of the counter affidavit initially filed as well as in the pleadings present in the rejoinder to the supplementary affidavit, subsequently filed, in no manner indicates a pre-judgment to the issue in contest rather paragraph 27 of the counter affidavit very clearly explains that notice has been issued to the two contesting parties i.e. the petitioner and BSNL for producing their documents in support of their respective claims but the petitioner instead of responding to the summons and producing documents for vindicating its stand, has rushed to this Court. We are certainly not persuaded to interfere with the matter at this stage and would direct both the petitioner as well as BSNL to register their appearance before the Superintendent, Central Excise and Service Tax Division, Muaffarpur on or before 25th of June, 2019, whereafter he shall proceed to dispose of the matter in accordance with law after giving opportunity of hearing to the contesting parties. Petition disposed off.
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2019 (7) TMI 153
CENVAT Credit - inputs/capital goods/input services - SCN was served upon the appellant proposing the recovery of ₹ 2,26,185/- of cenvat credit as was alleged to have been availed wrongly by the appellant - It is submitted by the appellant that prior the impugned show cause notice, another show cause notice being an outcome of the same enquiry about the same amount of Cenvat credit was issued to the appellant bearing No.2165-67 dated 18.10.2012. HELD THAT:- The record of the impugned appeal is perused and it is observed that the copy of the order dated 09.05.2016 is with respect to another show cause notice, however, being served to the same assessee, who is appellant herein. The controversy is also same as in the present show cause notice. It is observed that para 18.1 and 18.2 of the said order/ decision dated 09.05.2016 talks about the issue involved in the impugned show cause notice. This acknowledgement makes it clear that the same/identical issue has already been decided in favour of the appellant. Therefore the interest of justice will better be served for this show cause notice to again be adjudicated after considering the order No.2-16-17 dated 09.05.2016. Appeal allowed by way of remand.
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2019 (7) TMI 152
Rate of service tax - services to Global Energy Ltd. as liaisoning for power purchases - appellant provided the said services during the period 2008-2009 and raised the bill for the said services on 31.03.2009 - N/N. 8/2009-ST dated 24.02.2009 - HELD THAT:- Admittedly, the appellant raised a consolidated one time bill on 31.03.2009, when the rate of service tax was 10%. The adjudicating authority has also accepted the fact that there is no dispute about the date of payment of tax. As such, it is seen that the appellants were to pay the service tax only after raising the bill on 31.03.2009, when the rate of duty was admittedly 10% - Any reference to the period when the services were provided, by the lower authorities, is without any authority of law. There is no provision in the service tax law referring to the applicability of rates of service tax depending upon the period of the services - the appellant is required to pay the service tax at the rate which is effective as on date of payment of the same. Inasmuch as the effective rate on the date for payment of the same was 10%, the appellant has rightly discharged their liability at 10%. Appeal allowed - decided in favor of appellant.
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2019 (7) TMI 151
Classification services - site formation and clearance service or otherwise? - appellant had supplied tractors excavator including operator and the charges were based on hourly basis - HELD THAT:- It is an admitted fact that the appellant has supplied machinery tractors and JCB, etc., to their principal for which they have been paid on hourly rate including operator cost, excluding fuel. We find that such services are squarely covered under the scope of supply of tangible goods service as defined under Section (65)(105) (zzzzj), we also find from the copy of work order issued by the principal/ Enercon to the appellant, dated 12th May 2006, wherein for construction or for erection of WEG for wind power project, in the price category it is provided that the appellant shall paid at hourly rate for various machinery like JCB, tractor, tanker, etc. Thus, evidently the service category involved is SOTG, and not site formation and clearance service. We are aware that SOTG service came into effect from 16th March, 2008, that is after the period of dispute. Appeal allowed - decided in favor of appellant.
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Central Excise
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2019 (7) TMI 150
CENVAT Credit - input services - product liability insurance - post-sales/post-manufacturing service or not? - HELD THAT:- The product liability insurance is availed by the appellant for covering the risk of any manufacturing defect arising out of the finished products cleared by them. When the defects are found and put forward only after use of the vehicle by the purchaser of the vehicle, in such cases, the automobile manufacturer has to compensate / satisfy the claim of the customer which is thereafter reimbursed by the appellant. In such cases to cover the risk of such payment, appellant has to avail product liability insurance. Indeed, this insurance is directly connected with the manufacturing activity of the appellant and is also an input service used in relation to the manufacture of the finished products. The denial of credit is unjustified - appeal allowed - decided in favor of appellant.
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2019 (7) TMI 165
Exemption from excise duty - kerosene(SKO) used as interface for pumping diesel/petrol(HSD/MS) - superior kerosene oil (SKO) meant for distribution in PDS - time limitation - Department relies on the circular of 2002 and seeks duty on that part of the SKO, which is used as interface for pumping HSD/MS SKO, as applicable to MS/HSD as the case may be in terms of the CBEC Circular of 2002 - HELD THAT:- The issue is squarely settled by the coordinate bench at Ahmedabad in the case of M/S. INDIAN OIL CORPORATION LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE ST, VADODARA [ 2018 (9) TMI 24 - CESTAT AHMEDABAD] . The ratio was followed by Kolkata Bench in the case of M/S. NUMALIGARH REFINERY LTD. VERSUS COMMR. OF CENTRAL EXCISE, SHILLONG [ 2019 (6) TMI 496 - CESTAT KOLKATA] . The goods are to be assessed in the form they are cleared from the factory and as the appellants have satisfied the conditions of Notification at the time of removal of goods from factory, duty cannot be demanded from them for subsequent activities, if any, by the purchasers. At best, the department could have a case that certain quantity of SKO is not being used for intended purposes, subsequent to the clearance and that applicable duty on the same has escaped payment, at least as applicable to SKO, if not as applicable to MS/HSD - However, the issue not being the subject matter of the appeals, we refrain from coming to a conclusion on this issue. What has been cleared by the appellants at the factory is undisputedly, SKO for use in PDS system. If some quantity of the SKO is not used for the intended purposes, after clearance, duty cannot be demanded from the appellants. Time Limitation - HELD THAT:- There are sufficient reasons to believe that there could be bona fide belief on the part of the appellants. Therefore, extended period cannot be invoked - The SCN is based on a Circular issued in 2002. SCN is issued in 2014, a clear 12 years later. We find that nothing prevented the department from making suitable enquiries and to issue notice in even time. Moreover, no evidence of suppression of facts etc with intent to evade payment of duty has been placed on record. Therefore, the extended period is not invokable. The appeals survive on merits and limitation - appeal allowed - decided in favor of appellant.
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2019 (7) TMI 164
CENVAT Credit - input services - outdoor catering services - services availed after 01.04.2011 - whether the appellants are eligible for credit of the service tax paid on outdoor catering services w.e.f. 01.04.2011? - penalties - HELD THAT:- The exclusion part (C) of the definition categorically states that when outdoor catering services are availed for personal use and consumption of an employee, the same does not qualify as input service‟ and therefore not eligible for credit. The Larger Bench of the Tribunal in the case of M/S. WIPRO LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE BANGALORE-III. [ 2018 (4) TMI 149 - CESTAT BANGALORE] had analyzed the point as to whether credit is eligible on outdoor catering services, if availed by the manufacturer in compliance of the Factories Act, 1946. The Larger Bench of the Tribunal answered the reference in favour of Revenue. The decision of Larger Bench of the Tribunal in Wipro Ltd. has answered the specific issue as to whether credit is eligible on outdoor catering services for post-01.04.2011 and held that it is not eligible even if availed in compliance with statutory requirement - By judicial discipline, respectfully following the Tribunal‟s Larger Bench in Wipro Ltd., which is on the specific point, the credit is not eligible - demand along with interest in respect of outdoor catering services post-01.04.2011 is therefore upheld. Penalties - HELD THAT:- Being an interpretational issue, the penalty imposed prior to 01.04.2011 as well as post-01.04.2011 is unwarranted and requires to be set aside. The impugned orders are set aside to the extent of setting aside the penalties imposed entirely without disturbing the demand along with interest for the period after-01.04.2011 - appeal allowed in part.
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2019 (7) TMI 163
Valuation - Extended period of limitation - related party transaction - inter-connected undertakings - it was alleged that M/s. Khoday India Ltd. and M/s. Khoday RCA Industries are related to the appellant - valuation to be done in terms of Section 4 of Central Excise Act, 1944 or in accordance with the provisions of proviso to Rule 9 read with Rule 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000? - HELD THAT:- The appellant has been clearing the goods to its sister concerns as well as to 3rd party buyers. Further the stand of the appellant is that he has rightly followed the valuation rules. Further there were sales to other buyers in substantial proportions. Further the appellants have given detailed information regarding the clearances to the sister concerns as well as to 3rd party independent buyers but the Department did not examine those sales to the independent buyers and has only taken the clearances to their sister concern and confirmed the demand. We further note that the appellant has attached the audit report of two audits conducted in June 2006 and November 2006 wherein the audit party did not raise any objections with regard to this issue of valuation and clearances made to the sister concern. Further we find that the Department has not brought any evidence on record to show that there was suppression of facts with intent to evade payment of duty. Extended period of limitation - HELD THAT:- In the present case, invocation of extended period of limitation is not sustainable because the Department was aware about the clearances made by the appellant in June 2002 itself but they issued show-cause notice only in 2010 after 8 years which according to us is completely barred by limitation of time. Since the entire demand is barred by limitation, we do not think it appropriate to give findings on merit. Appeal allowed - decided in favor of appellant.
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2019 (7) TMI 149
CENVAT Credit - input services - services of Annual Maintenance Charges (AMC) of visi coolers located at their Dealer/Retailer s premises - HELD THAT:- Even though the visi coolers are installed at the Retailer/Dealer s premises but the same are owned by the appellant therefore the service of AMC of visi coolers were received by the appellant which is in relation to their business activity as sales promotion and advertisement. The sales promotion and advertisement is specifically mentioned in the inclusive clause of the definition in terms of Rule 2(l) of Cenvat Credit Rules, 2004. Therefore, the AMC service of visi coolers, which are owned by the appellants, is an input service and accordingly, the Cenvat credit is admissible. Credit allowed - appeal allowed - decided in favor of appellant.
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2019 (7) TMI 148
100% EOU - Clandestine removal - case of the Revenue is based on the fact that the EOU to which the appellants were supplying the goods were not having manufacturing capacity and electricity connnection and was not in a position to use the goods supplied by the appellant - HELD THAT:- The appellants are manufacturer of polyester yarn and they were clearing the said yarn under valid CT-3 certificates to a 100% EOU located in Maharashtra. The appellants were also receiving AR-3s duly verified by Jurisdictional Superintendent. It is also noticed that CT-3 and AR-3 has not been challenged by Revenue as being false or fabricated. From the above set of facts, it is apparent that so far as appellants are concerned, they have discharged their responsibility cast upon them by the law. In this entire course of events, there is hardly any evidence to link the appellants with any activity after the goods were cleared. The law requires the appellant to clear the goods against the valid CT-3 and obtain the duly verified rewarehousing certificate. The appellant have done both and the same has not been challenged. In these circumstances unless specific involvement or knowledge of the appellant is established, no liability can be fixed on the appellants. The impugned order seeks to rely on circular no. 88/98 dated 02.12.1998 to hold that no physical verification of the goods were done at the recipient s end and therefore, AR-3 certificates evidencing re-wareshousing of the goods can be discarded. It is not the responsibility of the appellant to get the physical verification conducted. Even if no physical verification was done, it cannot be alleged that appellants were wrong in their belief that their goods were re-warehoused at the EOU at Maharashtra. Whether to check physically or otherwise is entirely a 4 E/201-202/2011 prerogative of Revenue. The failure to check physical receipt of goods cannot be used against the appellant who has received duly signed re-warehousing certificates. Demand and penalty are set aside - Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2019 (7) TMI 147
Restoration of penalty u/s 15A(1)(q) of U.P. Trade Tax Act, 1948 - allegation that transit declaration form was never discharged at the exit check post i.e. Naubatpur check post, therefore, it be presumed under Section 28(B) of the Act that the goods had been sold inside the State of U.P. - Whether on the facts and circumstances of the case, the Tribunal was correct to restore the penalty of ₹ 3,00,000/- under Section 15A(1)(q) of the Act when the Department has failed to prove that the transit pass no. 1085 dated 10.06.2007 was issued by the entry check post Dramomnedganj? HELD THAT:- While it is an admitted position of law that the presumption raised under Section 28(B) of the Act is rebuttable, however, that principle is of less relevance in the facts of the present case. It would apply if issuance of the transit declaration form to the applicant was either admitted or established on record. In the instant case, from bare perusal of the reply furnished by the applicant being dated 05.06.2009 and 04.03.2010, it is clear that the applicant wholly disputed the issuance of such transit declaration form. In fact, he confronted the revenue authorities to make available a copy of such form so that he may establish the truth. Strangely, the revenue authority did not accept the request made by the applicant. It neither made available to him any copy of the transit declaration form nor it produced the same before the first appel authority - the finding of the Tribunal that the applicant had admitted the issuance of transit declaration form is patently perverse. The revenue has been unable to establish existence of any material on the basis of which such a conclusion could have been drawn. The finding of the Tribunal that the applicant had admitted the issuance of transit declaration form is patently perverse. The revenue has been unable to establish existence of any material on the basis of which such a conclusion could have been drawn - the mandatory pre-requisite for the presumption to arise was never fulfilled. Once the revenue authorities did not produce the disputed issuance of the transit declaration form and the revenue authorities did not establish from their own record that such transit declaration form had been obtained by the applicant there never arose a situation where the presumption could arise or the applicant could be burdened to rebut it. The allegation that there was no material available to establish that the goods actually passed from the State of U.P. through (exit) Naubatpur check post would remain a fact of no consequence, insofar as the present applicant is concerned - the question of law, framed above, is answered in the negative, i.e. in favor of the applicant and against the revenue. Revision allowed.
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2019 (7) TMI 146
Levy of purchase tax u/s 28(2) of the Value Added Tax Act - purchases and sales made from unregistered dealers - exparte assessment order - HELD THAT:- The assessee is not an dealer under Section 2(h) of the Act as it is an educational institution and it is another thing to say that certain transactions are not liable to tax because they are ancillary to the main activity of education. Insofar as the Tribunal has only reasoned that the activity of construction of the medical college was ancillary, the same appears to have been reached pre-maturely, without allowing adequate opportunity to consider that claim in the proceedings for assessment. In this regard, it is noted that in view of the fact that the assessment order was wholly ex-parte, the said plea could not considered by the assessing authority. In that view of the matter without making any observation as to the merits of the case, it appears that the Tribunal has erred in allowing the claim made by the assessee on merits. Matter remitted to the Assessing Authority such that the Assessing Authority may complete the assessment within the timelines indicated under the Act - revision disposed off by way of remand.
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2019 (7) TMI 145
Imposition of penalty - requirement of mens rea - levy of Luxury tax - Section 4E of the Kerala Tax on Luxuries Act, 1976 - bonafide belief or not - HELD THAT:- In examining whether mens rea is an essential element to impose penalty under a taxing statute, regard must be had to the following factors: (i) the object and scheme of the statute; (ii) the language of the section and; (iii) the nature of penalty - Penalty is attracted simpliciter on violation of statutory provisions of civil law. When it is provided in the statute that the act which attracts levy of penalty shall be committed 'knowingly', 'falsely', 'intentionally', 'fraudulently', 'wilfully' etc, then it can be found that it requires mens rea for imposing penalty. The use of such expressions indicates the intention of the legislature in clear terms that mens rea is an essential element. On a close scrutiny of the provisions contained in Section 17A of the Act, we are of the considered opinion that mens rea on the part of the assessee is not an essential element to be proved for imposing penalty under that provision. The scheme of the Act in imposing penalty is very clear. The defaults and failures which attract penalty are nothing but violations or failures or defaults of statutory civil obligations provided under the Act. The proceedings for imposing penalty under the Act are neither criminal nor quasi-criminal - The penalty is leviable in cases of default or failure of obligations under the Act which are civil in nature. There is nothing in the provisions contained in Section 17A of the Act which indicates that guilty intention of the assessee is required to be established before imposing penalty. Thus there is no question of proof of guilty intention or mens rea by the assessee and it is not an essential element for imposing penalty under Section 17A of the Act. However, we take note of the fact that, for evasion of payment of luxury tax, penalty cannot be imposed under Section 17A of the Act. This is for the reason that the provision contained in Section 17(2)(b)of the Act takes care of that situation by providing punishment for such act. Evasion of luxury tax is not an act specifically mentioned under Section 17A of the Act - Since punishment is provided under Section 17(2)(b) for evasion of payment of luxury tax, in view of the provision contained in Section 17A(d) of the Act, penalty cannot be levied under Section 17A for committing such act. The failure to get registration under the Act and failure to file monthly returns under the Act attract levy of penalty. But, we take note of the fact that the assessee has not collected luxury tax from the patients - We also take note of the fact that the assessee immediately paid the luxury tax due pursuant to the order passed by the assessing authority. Considering these circumstances, we find that the amount of penalty payable by the petitioner can be reduced to ₹ 1,00,000/-. Revision petition allowed in part.
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2019 (7) TMI 162
Works Contract - Composition Scheme - benefit of section 3F(2) (b) of the U.P. Trade Tax Act - AO exclude excess of 5% of imported goods from value of the contract invoking Clause 3 of the scheme of compounding and tax under the normal mode of assessment - HELD THAT:- The issue raised by learned Standing Counsel on Sections 3, 4 and 5 of the Central Act being not applicable in view of the different language of Rule 9 of the UP VAT Rules, had been considered and decided against the revenue in the case of M/S COMFORT SYSTEMS VERSUS COMMISSIONER COMMERCIAL TAX, U.P. [ 2019 (2) TMI 924 - ALLAHABAD HIGH COURT] . Second submission advanced by learned Standing Counsel is concerned, clearly both appellate authorities have considered the material that was brought before them, and have thereafter concluded that there is no dispute to the fact that the assessee imported the goods against express and implied contracts and applied the same to the works contract pursuant to which it had made the import of goods. No material has been brought before this Court to doubt the correctness of that finding. Therefore, that submission advanced by learned Standing Counsel also cannot be accepted. The concept of subsequent sale was not relevant in the present case inasmuch as it was the assessee's clear and consistent case before the authorities that it had imported the disputed goods for execution of the civil works contract and as such assessee's case clearly fell under Rule 9(1) (b) of the UP VAT Rules. Revision dismissed - decided in favour of the assessee and against the revenue.
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2019 (7) TMI 161
Maintainability of petition - Adjustment of tax paid by the main contractor towards the tax liability of the petitioner (sub-contractor) - Section 63-A(1) of the Karnataka Value Added Tax Act, 2003 - benefit of Composition scheme under Section 15(1) of the KVAT Act was opted by petitioner - HELD THAT:- The issue involved herein is a mixed question of fact and law. It is not appropriate to examine the issues involved on the factual aspects when an effective mechanism is provided by the legislature for adjudicating such issues. In the circumstances, this Court is not inclined to entertain the writ petition. The writ petition stands dismissed with liberty to the petitioner to avail the alternative and efficacious remedy of appeal available under the KVAT Act.
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2019 (7) TMI 160
Reversal of input credit u/s 11(7) and (8) of the KVAT Act - sales at discounted price/subsidized price - suppression of purchase made was denied by assessee holding that these occured on the day of death of his father as the business remained unattended - case of assessee is that all these were truly accounted and was reflected in the returns filed - Section 11(3) of the KVAT Act - interpretation of the term 'subsidized price' used in the 2nd proviso to Section 11(3). HELD THAT:- Section 11(3) of the KVAT Act provides that, input tax credit shall be allowed to a registered dealer in respect of a returned period against the output tax payable by him for such period and the dealer shall pay to the Government the balance of output tax in excess of the input tax credited in the manner prescribed. On the facts of the case, the assessee closed down the business after selling the stock of goods at a reduced price. The intend and purport of the 2nd proviso introduced to Section 11(3) is to restrain the assessee from claiming input tax credit over and above the output tax collected. That is why it is insisted that the claim of input tax credit shall not exceed the output tax payable, in case the goods are sold at subsidized price. The interpretation given by the Tribunal that the word 'subsidized price' contained in the second proviso to Section 11(3) can only be construed as a sale in which the Government have provided subsidy to support the price, cannot be accepted as a correct interpretation. The term 'subsidized price' used in the 2nd proviso to Section 11(3) will carry within it any sale made by the dealer at a subsidized price below the purchase value of such goods - we are of the opinion that the assessee in the case is not entitled to claim input tax credit over and above the output tax returned with respect to the goods sold at the reduced price. The question raised in this regard is answered in favour of the revenue and against the assessee. The impugned order passed by the Tribunal to the extent it held that the assessee is entitled for input tax credit demanded beyond the limit of output tax conceded is hereby set aside - revision petition allowed.
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2019 (7) TMI 144
Validity of assessment order - TNVAT Act - it is the case of the Department that the writ petitioner had not filed monthly returns for the Assessment Year 2014-15 as required under TNVAT Act, more particularly under Section 21 of TNVAT Act - impugned order not served on petitioner - principles of natural justice - HELD THAT:- With regard to Rule 19(1)(d) of TNVAT Rules, there is an endorsement from the Inspector of Department who has served by affixing - However, with regard to two independent witnesses, as provided in Rule 19(1)(d) of aforesaid Rules, the question is left open owing to the order which this Court proposes to pass in this case in the light of M/S. JKM GRAPHICS SOLUTIONS PRIVATE LIMITED VERSUS THE COMMERCIAL TAX OFFICER [ 2017 (3) TMI 536 - MADRAS HIGH COURT] . In the light of the specific case of the writ petitioner that the impugned order has not been served on the writ petitioner and as perusal of the impugned order brings to light that JKM Graphics Solutions principle has not been applied, this Court is of the view that it would be appropriate to give one more opportunity to the writ petitioner subject to the condition that the writ petitioner pays 15% of the tax assessed i.e., excluding the penalty vide impugned order. Petition allowed by way of remand.
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2019 (7) TMI 143
Principles of natural justice - main argument of the appellant was that, he was not given an opportunity to raise any objections and to produce the documents - Imposition of penalty u/s 67(1) of the Kerala Value Added Tax Act - HELD THAT:- On a perusal of the orders imposing penalty it is clearly mentioned that, after conducting the shop inspection, an opportunity was afforded to the appellant by calling upon him to produce the books of accounts and also afforded an opportunity of personal hearing on 15.06.2015. But the dealer had failed to produce any documents despite two adjournments granted in that respect. It is mentioned in the said order that, after receipt of the proposal notice issued under Section 67(1) of the KVAT Act, the appellant had requested to issue copies of all the recoveries and also requested two weeks time. It is also mentioned that the appellant had obtained all the necessary copies of the recoveries, during May 2018 itself. We do not think that there occurred any denial of opportunity from the side of the authority concerned. Prima facie we are not satisfied that there occurred any violation of the principles of natural justice - However, we make it clear that the appellant has got an effective remedy to challenge the impugned order in statutory appeal. Appeal dismissed - decided against appellant.
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Indian Laws
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2019 (7) TMI 142
Whether the BGL Degree of Annamalai University held by respondent no. 3 at the time of his promotion was correctly held to be a qualifying degree? HELD THAT:- The natural consequence of the above discussion is that the Tribunal's conclusion regarding the validity of the degree possessed by respondent no.3 at the time of his promotion was erroneous and is required to be set aside. However, the subsequent developments referred to in paragraph 7 hereinabove led Mr. Sunil to make an alternative prayer that, instead of setting aside the promotion of respondent no. 3 after such a long period of service, his appointment to the post may be reckoned, for the purposes of further promotion, from the year 2015 when he obtained the LL.B. degree, and the petitioner s service in that post be considered, to have commenced from 22.06.2006 when respondent no. 3 was promoted on regular basis. Keeping in mind the peculiar facts of this case, we accept the suggestion made, and direct that the petitioner herein - who was the most senior eligible candidate at the time of the 2004 DPC, be treated as having been promoted to the post of Assistant Registrar on the date on which respondent no. 3 was in fact promoted. Respondent no. 3 having obtained the LL.B. degree in 2015 will in turn be treated as having been promoted from the date he acquired the said qualification. Petition disposed off.
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