TMI Tax Updates - e-Newsletter
August 16, 2019

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax

Articles

1. RECENT DEVELOPMENTS IN GST

   By: Dr. Sanjiv Agarwal

2. AN INSOLVENCY RESOLUTION PROFESSIONAL IS UNDERGO CONTINUING PROESSIONAL EDUCATION

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. India’s Foreign Trade: July 2019

2. CBDT takes further steps to ensure transparency in Tax Administration by bringing in concept of DIN

3. Change in Tariff Value of Crude Palm Oil, RBD Palm Oil, Others – Palm Oil, Crude Palmolein, RBD Palmolein, Others – Palmolein, Crude Soyabean Oil, Brass Scrap (All Grades), Poppy Seeds, Areca Nuts, Gold and Silver Notified

4. Exchange Rate of conversion of the Foreign Currencies relating to Imported and Export Goods notified

5. Report of The High Level Committee on Corporate Social Responsibility 2018

6. Report of the Competition Law Review Committee submitted to Union Finance and Corporate Affairs Minister

7. Finance Commission to visit Rajasthan

8. Price-Fixing Cartel amongst suppliers of Electric Power Steering Systems to automobile Original Equipment Manufacturers

9. Consumer Price Index Numbers on base 2012=100 for Rural, Urban and Combined for the Month of July 2019

10. Government issues Scheme to provide a one-time partial credit guarantee to PSBs for purchase of pooled assets of financially sound NBFCs

Notifications

Customs

1. 36/2019-Customs (N.T./CAA/DRI) - dated 8-8-2019 - Cus (NT)

Appointment of CAA by Pr. DGRI

Income Tax

2. 57/2019 - dated 9-8-2019 - IT

Central Government notifies Multilateral convention to implement tax treaty related measures to prevent base erosion and profit shifting

Law of Competition

3. CCI/CD/Amend/Comb. Regl./2019 - dated 13-8-2019 - Competition Law

Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Amendment Regulations, 2019.

Circulars / Instructions / Orders

DGFT

1. 25/2015-2020 - dated 14-8-2019

Modification of Para 4.12(vi) of HBP and addition of Appendix 4P to Hand Book of Procedures 2015-20

Highlights / Catch Notes

GST

• Transition of Input Tax Credit to GST: Scaling Down ITC for VAT/CST Liabilities Explained.

  Case-Laws - HC : Transition/migration of ITC - scaling down of ITC which is capable of migration / capable of transition into the GST Regime - Part of ITC given up and sought to be adjusted with VT / CST liability - Revenue directed to verify the facts and details and take decision accordingly.
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Income Tax

• Central Government Implements Multilateral Convention to Combat Base Erosion and Profit Shifting, Enhancing International Tax Compliance.

  Notifications : Central Government notifies Multilateral convention to implement tax treaty related measures to prevent base erosion and profit shifting
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• Tribunal Rules AO Violated CBDT Instruction No.3/2003 by Not Referring Case to Transfer Pricing Officer.

  Case-Laws - SC : Binding effect of instruction of CBDT on AO - In view of the guidelines issued by the CBDT in Instruction No.3/2003 the Tribunal was right in observing that by not making reference to the TPO, the AO had breached the mandatory instructions issued by the CBDT - We do not find the conclusion so arrived at by the Tribunal to be incorrect
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• Section 292BB: Notice u/s 143(2) must be issued; cannot cure absence of notice, only service defects.

  Case-Laws - SC : Service and issuance of notice u/s 143(2) - scope of insertion of Section 292BB - for Section 292BB to apply, the notice must have emanated from the department, it is only the infirmities in the manner of service of notice that the Section seeks to cure - The Section is not intended to cure complete absence of notice itself - issuance of notice u/s 143(2) is mandatory
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• Section 68 Inapplicable: No Cash Credit Recorded for Share Premium Exchange, No Unexplained Cash Credit Found.

  Case-Laws - AT : Addition unexplained cash credit u/s 68 - shares were issued at premium to certain companies in lieu of the shares held by the said companies and there was thus no inflow of cash involved in these transactions - since there was no real credit of cash in the cash book and the question of inclusion of the amount of the entry as unexplained cash credit could not arise - provision of section 68 is not applicable
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• Property Sale Agreement Triggers Capital Gains Tax u/s 47: Transfer Complete with Agreement, Power of Attorney, and Possession.

  Case-Laws - AT : Long term capital gains - as per assessee only the agreement to sale , hence, does not cover for the purpose of capital gains - once the assessee had entered into agreement of sale coupled with power of attorney and handed over the possession of the property to the vendee, the transfer is complete as provided u/s 47 - gain taxable
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• High Court Rules PF Contributions Allowable Despite DRP Dismissal; Section 144C(1) Misapplied in Tax Return Case.

  Case-Laws - AT : Disallowance of Employees’ Contribution to PF - inadvertently disallowed in the revised return despite remitted within the due dates - DRP brushed aside the assessee’s claim holding that in view of section 144C(1) the claim does not relate to any variation made by the AO - whatever may be the fetters placed on the scope of the powers of the DRP, there can be no estoppel against the application/operation of law laid by the Hon’ble jurisdictional High Court - allowable
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• Interest Income from Discontinued Business Advances to be Taxed as Business Income u/s 176(3A) of Income Tax Act.

  Case-Laws - AT : Income from discontinued business - income of interest received on advances - in view of the provision of Sec. 176(3A) it is clear that the interest income on advances is to be assesseed as business income and the lower authority has failed to consider the provision of Sec. 176(3A) which deal with the income from discontinued of business
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• Tribunal's dismissal overturned; case reopened due to revenue audit objection under CBDT Circular No. 3/2018 exception.

  Case-Laws - HC : Maintainability of appeal - low tax effect - the case was reopened on the basis of revenue audit objection and in such circumstances, the same would be covered under the exception mentioned in the Circular No.3/2018 of the CBDT - Tribunal ought to have decided the issue on merits rather than dismissing the appeal on the ground of low tax effect - Tribunal order set aside
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• Finance Act 2012: Section 32 Amendment Allows Power Generators to Claim Extra Depreciation for New Equipment Investments.

  Case-Laws - HC : Additional depreciation - Section 32 as amended vide FA, 2012, the assessee engaged in the generation of power has expressly been included in the ambit thereof - condition to claim additional depreciation, is that the setting up of new machinery or plant should have been acquired and installed by an assessee, who was already engaged in the business of manufacture or production of any article or thing - allowable
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• Court Remands Income Tax Order u/ss 201(1) & 201(1A) Due to Inadequate Opportunity for Assessee to Respond.

  Case-Laws - AT : Order u/s 201(1)/201(1A) - sufficient opportunity - the date of orders passed by the AO reveal that from the date of issuance of SCN to the date of passing of orders u/s. 201(1) and 201(1A) is less than one month - the information sought by the AO from the assessee is about six years old. It takes time to retrieve the old information - sufficient opportunity was not afforded - matter remanded
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• Chairman Admits Raw Material Shortage u/s 132(4); No Evidence of Ferro Alloys Production, No Tax Added.

  Case-Laws - AT : Sale of unaccounted finished goods - Chairman in a disclosure petition u/s 132(4) accepted shortage of raw material on account of cash sale of the raw material itself and offer for tax - neither any evidence of the production of Ferro Alloys nor any evidence of its sales have been brought on record by the A.O. - no addition
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• Slump Sale of Entire Business as Going Concern, Not Depreciable Assets Sale, Under Income Tax Act Section 50.

  Case-Laws - HC : Slump sale - if the sale consideration of the undertaking as a whole has been fixed without specifying any specific value to any asset and its includes tangible as well as intangible asset - further the assessee has also agreed for not carrying on the similar business for 10 years - it is a case of “slump sale” of undertaking as a going concern and not the sale of depreciable assets within the meaning of Section 50
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• Appellate Order Says No TDS Liability, Disallowance u/s 40(a)(i) of Income Tax Act Not Imposed.

  Case-Laws - AT : Disallowance u/s.40(a)(i) - India USA DTAA - based on proceedings u/s.201(1)/(1A) for default in non-deduction of TDS - once in appellate order in respect of proceedings u/s.201(1)/(1A) has held that the assessee is not liable for deduction of tax at source, the sequitur is that there cannot be any disallowance u/s.40(a)(i) as the same can be made
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• Seller Not Required to Verify Buyer Creditworthiness u/s 68; Assessing Officer Must Investigate Cash Deposits.

  Case-Laws - AT : Addition u/s 68 - cash advance received from the customers - it cannot be expected from a seller to examine the creditworthiness of the buyers prior to selling any goods to any persons - the assessee cannot be blamed as the AO possesses all the details of customers and equipped with the full powers under the Act to call respective persons to examine the source of cash deposit by them to the assessee - no addition
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• Funds from Carnival Event for Students Not Anonymous Donations, Used for Prizes and Office Expenses per Tax Rules.

  Case-Laws - AT : Anonymous donation - membership fees and receipt for carnival expenses - carnival was organized for old Xavierians and present Xavierians students only - assessee is showing that impugned amount was received under four heads for specific purposes and has incurred expenses for prize distribution, carnival expenses and other office establishment expenses then the same cannot be treated as anonymous donation
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DGFT

• DGFT Announces Changes to Handbook of Procedures 2015-20: Modifies Paragraph 4.12(vi) and Adds Appendix 4P.

  Circulars : Modification of Para 4.12(vi) of HBP and addition of Appendix 4P to Hand Book of Procedures 2015-20
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Indian Laws

• India Updates Rules for Business Combinations to Boost Transparency and Prevent Anti-Competitive Practices: Key Changes Explained.

  Notifications : Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Amendment Regulations, 2019.
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Service Tax

• Petitioner Denied Service Tax Refund Due to Unjust Enrichment; No Customer Refund Application Filed.

  Case-Laws - HC : Refund of Service Tax - Unjust enrichment - the service tax for the period in question was deposited by the petitioner but after realizing it from its customers and no refund application was filed by these customers - if the burden of the service tax has been shifted on the customers, the petitioner can not be a beneficiary thereof as any refund which would amount to unjust enrichment
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Central Excise

• Revision Application Rejected for Duty Rebate u/r 18; Order Quashed for Ignoring Supreme Court Judgment.

  Case-Laws - HC : Rebate of duty - Rule 18 of the CE Rules, 2002 - Authority rejected revision application on ground of delay stating that same cannot be accepted as a general rule on the basis of relying upon decision - the official could not have summarily distinguished a binding judgment of the Supreme Court - the impugned order has resulted in the lack of remedy which is otherwise statutory guaranteed - quashed and remanded
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VAT

• KVAT Act Section 25 Order Overturned Due to Ignored Request for Evidence; Case Remanded for New Decision.

  Case-Laws - HC : Validity of assessment order - assessee requested to summon books of accounts and invoices from the dealers and suppliers - the illegality committed in this behalf is that no order on the request of the petitioner is made and then the very valuable opportunity is denied to prove the case of the petitioner - order passed u/s 25 of KVAT Act is unsustainable as violative of principles of natural justice - remanded for fresh decision
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Case Laws:

• GST

• 2019 (8) TMI 662
  Transition/migration of ITC - scaling down of ITC which is capable of migration / capable of transition into the GST Regime - Part of ITC given up and sought to be adjusted with VT / CST liability - deemed assessment u/s 22(2) of TNVAT Act - Assessment Year 2015-2016 - HELD THAT:- Revenue submitted that in the facts and circumstances of the instant case, adjustment sought for by the writ petitioner is permissible but subject to quantification / verification as adumbrated in Rule 121 of Tamil Nadu Goods and Services Tax Rules, 2017 If that be the case, the aforesaid verification process has to be completed and the outcome of the verification process will obviously impact the impugned order being given effect to. To be noted, as already mentioned above, writ petitioner accepts tax liability under the impugned order and what is put in issue in the instant writ petition is only the adjustment plea - the respondent shall do the verification exercise under Rule 121 of TNGST Rules as expeditiously as possible and until this exercise is completed, the impugned order will be kept in abeyance. Post verification, outcome of the verification process together with its impact on the impugned order shall be communicated to the writ petitioner within ten (10) working days from date of completion of verification / quantification as above under due acknowledgement - Petition disposed off.

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• 2019 (8) TMI 632
  Release of seized goods with the vehicle - applicability of Sections 129 and 130 of the GST Act, 2017 - HELD THAT:- An amount of Rs. 1,99,176/Plus (+) Rs. 11,812/has been deposited by the writ-applicant towards the tax and penalty - In such circumstances, the respondents are directed to immediately release the truck as well as the goods seized by them under the provisions of the GST Act.

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• Income Tax

• 2019 (8) TMI 661
  Binding effect of instruction of CBDT on AO - Instruction No.3/2003 dated 20.05.2003 regarding reference to TPO - AO made TP adjustment without making reference to TPO - ITAT deleted the addition due to non reference to TPO - whether matter was need to remanded by ITAT before AO to make further reference to TPO - HELD THAT:- In view of the guidelines issued by the CBDT in Instruction No.3/2003 the Tribunal was right in observing that by not making reference to the TPO, the AO had breached the mandatory instructions issued by the CBDT. We do not find the conclusion so arrived at by the Tribunal to be incorrect. However, the Tribunal ought to have accepted the submission made by the Departmental Representative as quoted in para 16.2 of its order and the matter ought to have been restored to the file of the Assessing Officer so that appropriate reference could be made to the TPO. It would therefore be upto the authorities and the Commissioner concerned to consider the matter in terms of Sub-Section (1) of Section 92CA. We, therefore, allow this Appeal to the aforesaid extent and direct that it would now be upto the AO to take appropriate steps in terms of Instruction No.3/2003.

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• 2019 (8) TMI 660
  Service and issuance of notice u/s 143(2) - Scope of insertion of Section 292BB - assessment was completed u/s 143(3) read with Section 153A - HELD THAT:- The law on the point as regards applicability of the requirement of notice u/s 143(2) is quite clear from the decision in Blue Moon s case [ 2010 (2) TMI 1 - SUPREME COURT] . The issue that however needs to be considered is the impact of Section 292BB According to Section 292BB, if the assessee had participated in the proceedings, by way of legal fiction, notice would be deemed to be valid even if there be infractions as detailed in said Section. The scope of the provision is to make service of notice having certain infirmities to be proper and valid if there was requisite participation on part of the assessee. It is, however, to be noted that the Section does not save complete absence of notice. For Section 292BB to apply, the notice must have emanated from the department. It is only the infirmities in the manner of service of notice that the Section seeks to cure. The Section is not intended to cure complete absence of notice itself. Since the facts on record are clear that no notice u/s 143(2) was ever issued by the Department, the findings rendered by the High Court and the Tribunal and the conclusion arrived at were correct. We, therefore, see no reason to take a different view in the matter.

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• 2019 (8) TMI 659
  Slump sale - whether the alleged agreement of transfer was a genuine one or an eyewash? - Revenue contended that it was not so because the entire undertaking was not sold. Some assets like cash in the bank and the insurance claim had been left out - whether the gain or profit would be computed as a short term capital gain or a long term capital gain or something else? - the Revenue contended that due to excluded assets mentioned in the agreement, it is not a slump sale HELD THAT:- Agreement of transfer was a genuine one or an eyewash - The first issue was purely a question of fact. The tribunal analysed the terms of the transfer agreement in detail and came to the conclusion that it was a bona fide agreement of transfer for a consideration. We are not minded to interfere with that finding. Transaction in question was a slump sale - The second issue was also a pure question of fact. The tribunal came to the finding that the sale consideration of the undertaking as a whole has been fixed at a slump price of Rs. 70.00 Crores without specifying any specific value to any asset. The assets transferred includes tangible as well as intangible asset. Moreover, the seller i.e. the assessee has also agreed for not carrying on the similar business of manufacturing and marketing of urea fertilizer for a period of 10 years. Hence, it is a case of slump sale of undertaking as a going concern and not the sale of depreciable assets within the meaning of Section 50. Taking everything into account, the conclusion reached by the tribunal is a plausible one. It does not call for any interference. The learned tribunal also held that since the collection of assets of the undertaking included intangibles like goodwill, intellectual property etc. their cost of acquisition could not be determined. This was also a finding of fact which is a plausible one. We do not wish to interfere with the same. Gain or profit would be computed as a short term capital gain or a long term capital gain or something else - Section 45 provides that profits or gains from the transfer of a capital asset would be chargeable to income tax as capital gains. This gain is deemed to be the income in the financial year in which the transfer was effected. Undoubtedly, the transfer of the undertaking in question was a transfer of a collection of almost the entire assets of the undertaking and hence transfer of capital. The question is whether this capital gain was to be taken as long term capital gain or short term capital gain and if it was impossible to calculate capital gain, was it to be taken as something else? Mr. Bajoria has relied on a single decision of the Supreme Court in PNB Finance Ltd. Vs. CIT [ 2008 (11) TMI 7 - SUPREME COURT]. We have discussed the ratio of that decision. The facts of this appeal are similar to that case. We are bound by it and have to apply it. We dismiss the appeal. The first and second questions in this appeal are answered in the affirmative for the assessee and against the revenue.

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• 2019 (8) TMI 658
  Additional depreciation claimed on plants and machinery installed in the Captive Power Plant u/s.32(1)(ii) - HELD THAT:- The issue raised by the Revenue is no longer resintegra in view of a decision of the Delhi High Court in the case of Pr. CIT Vs. NTPC Sail Power Co. (P.) Ltd. [ 2019 (3) TMI 207 - DELHI HIGH COURT] . High Court also took note of the fact that with effect from 01.04.2013, the provision i.e. Section 32 of the Act has been amended by the Finance Act, 2012 and the assessee engaged in the generation of power has expressly been included in the ambit thereof. The Delhi High Court by placing reliance on Supreme Court decision State of Andhra Pradesh Vs. NTPC Ltd [ 2002 (4) TMI 694 - SUPREME COURT] ultimately took the view that the electricity has all the necessary trappings of articles or things and the benefit of additional depreciation cannot be denied. This Court in the case of CIT Vs. Diamines Chemicals Ltd. [ 2013 (12) TMI 373 - GUJARAT HIGH COURT] held that what is required to be satisfied in order to claim additional depreciation is that the setting up of new machinery or plant should have been acquired and installed by an assessee, who was already engaged in the business of manufacture or production of any article or thing. In view of the aforesaid, no error not to speak of any error of law could be said to have been committed by the appellate tribunal in passing the impugned order - Decided against revenue.

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• 2019 (8) TMI 657
  Addition u/s 68 - obligation to explain the Source of the source - HELD THAT:- ribunal has held that the alleged gift of Rs. 4,00,000/and alleged borrowings of Rs. 1,53,100/from friends and relatives, they see no reasons to deviate from the well reasoned findings of the CIT(A) which have remained uncontroverted and approve the same. However, as regards the claim of Rs. 14,87,543/as accumulated savings and agricultural income, ITAT was of the view that since the assessee was having some agricultural income, an amount of Rs. 5,00,000/can at best be treated as explained. Having gone through the materials on record, more particularly, the findings of fact recorded by the appellate tribunal, we see no good reason to disturb the impugned order. In our view, none of the questions as proposed can be termed as the substantial questions of law.

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• 2019 (8) TMI 656
  Disallowance of carry forward of unabsorbed depreciation - whether circular NO.14 of 2001 had clarified that the amendment to the Finance Act was prospective? - HELD THAT:- The issue raised by the Revenue is no longer res integra in view of the decision of this Court in the case of General Motors Pvt Ltd vs. Deputy CIT [ 2012 (8) TMI 714 - GUJARAT HIGH COURT] as held that once the Circular No.14 of 2001 clarified that the restriction of 8 years for carry forward and set off of unabsorbed depreciation had been dispensed with, the unabsorbed depreciation from A.Y.1997-98 upto the A.Y.2001-02 got carried forward to the assessment year 2002-03 and became part thereof, it came to be governed by the provisions of section 32(2) as amended by Finance Act, 2001 and were available for carry forward and set off against the profits and gains of subsequent years, without any limit whatsoever - writ petition allowed in favour of assessee.

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• 2019 (8) TMI 655
  Members Welfare Fund - allowable expenditure u/s 37 - HELD THAT:- Questions as proposed by the Revenue are no longer resintegra in view of a decision of this Court in the case of Karjan Cooperative Cotton Sales Ginning Pressing Society [ 1992 (1) TMI 39 - GUJARAT HIGH COURT] as held that expenditure incurred for purchase of articles for presentation only to its members for keeping alive good image among members and for generating goodwill and ensuring continuity of business with member societies was geld to the expenditure incurred wholly and exclusively for the purpose of business. The facts of the appellant s case, in so far as the above decision is concerned, differ only to the extent that in the relied upon case the household stainless steel utensils were distributed to the members of the said Coop. Society, whereas the bank asked the members to take the gift item worth Rs. 400/from the selected stores. - Decided against revenue.

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• 2019 (8) TMI 654
  Maintainability of appeal - low tax effect - HELD THAT:- Tribunal relying upon the Circular No.21/2015 dated 10th December 2015 dismissed the appeal on the ground of low tax effect without going into the merits of the matter. Revenue pointed out that the case was reopened on the basis of revenue audit objection and in such circumstances, the same would be covered under the exception mentioned in the Circular No.3/2018 of the C.B.D.T. The Circular No.3/2018 issued by the Government of India, Ministry of Finance dated 11th July, 2018 is with respect to the revision of monetary limits for filing of the appeals by the department in the Income Tax Appellate Tribunal, High Courts and appeals before the Supreme Court. In such circumstances referred to above, the Appellate Tribunal ought to have decided the issue on merits rather than dismissing the appeal on the ground of low tax effect. This appeal succeeds and is hereby allowed. The impugned order passed by the Appellate Tribunal is quashed and set aside. The question of law is answered in favour of the Revenue and against the assessee.

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• 2019 (8) TMI 653
  Disallowance u/s 14A r.w. Rule 8D - no exempt income earned during the year - HELD THAT:- Tribunal concurred with the findings recorded by the CIT(A) that Section 14A can be invoked only if the assessee seeks to square off the expenditure against the income which does not form the part of the total income under the Act and in such circumstances, Section 14A of the Act could not have been invoked, more particularly, when no exempt income claim was earned in the relevant assessment years. The Tribunal has relied on various decisions including the decision of this court in the case of Corrtech Energy Private Limited, [ 2014 (3) TMI 856 - GUJARAT HIGH COURT] Having regard to the concurrent findings recorded by the two Revenue Authorities, we are not inclined to disturb such findings. In our view, there is no substantial question of law involved in the present Tax Appeal.

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• 2019 (8) TMI 652
  Reopening of assessment u/s 147 - benefit under Section 80-IC - reopening on one reason and assessment on different reasons - HELD THAT:- No reassessment order has been passed on any of the ground and therefore we do not have a situation on which the above law can be made applicable. All which is presently done is notice u/s 147/148 and thereafter the reasons have been fully assigned by the Revenue as to why reassessment is being done. It is not a case of change of opinion but discovery of new material which is the basis of reassessment proceedings. Moreover, in any case it is not a case where the Revenue has assigned A reason and then again reason B as well. The reason for the reassessment is that correct books of account have not been shown to the Revenue and that manufacturing activity was not being done at Haridwar as claimed. This appears to be the only reason. This reason has still to be tested. Even for the assessment year 2005-06 a separate notice has been sent after the survey. Whether firm to whom notice was issued is same or different entity - As regarding the first argument of the petitioner that the reassessment in fact is of a different entity, this too is not liable to be accepted, inter alia, for the reasons that it still remains a family firm. Initially the father, mother and two sons were the partners and now all what has happened by the reconstitution of the firm is that it remains a firm of father and two sons. Practically it is the same firm, and in any case the present partners cannot escape the liability. From the records presently before this Court also, it is very clear that the dominant partners of the firm continue to be the same. To that extent, there has been no change in the firm, particularly as to the control of the affairs of the firm. The father i.e. Jitendra Kumar Gupta had 10% share of the firm, whereas the remaining 90% share was divided equally between the two sons i.e. Aditya Kumar Gupta and Ashish Kumar Gupta having 45% share each. Thereafter when in the year 2005, the mother was also included as a partner, the sons continued to retain their share and only the share of Jitendra Kumar Gupta was now divided between him and his wife. In the newly constructed firm in the year 2009, although the share of the partners is not stated in the writ petition, but the fact is clear that all the earlier three partners i.e. Jitendra Kumar Gupta, Aditya Kumar Gupta and Ashish Kumar Gupta continue to be dominant partners of the firm. In any case, this argument is always available for the petitioner, which can be taken before the assessing authority, which shall not be prejudiced by any remarks in this regard. Petitioner has also submitted that the assessment is being carried out for the new firm for assessment year 2010-11 onwards, in accordance with law. However, this is the matter to be decided again by the assessment authority and nothing can be said on this aspect.

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• 2019 (8) TMI 651
  Deemed dividend u/s 2(22)(e) - HELD THAT:- Assessee company M/s Corporate Ispat Alloys Ltd. (CIAL) has taken loan from M/s Abhijeet Infrastructure Ltd. (AIL). The AIL-lender company charges interest from CIAL, that is, it is not an interest free loan therefore provisions of section 2(22)(e) does not attract. Moreover, the CIAL is not a shareholder in AIL, therefore question of deemed dividend does not arise; as has been held by the Special Bench Mumbai ITAT, in the case of Bhaumik Colour(P) Ltd. [ 2008 (11) TMI 273 - ITAT BOMBAY-E] . We note that Hon ble Calcutta High Court in the case of Pradip Kumar Malhotra [ 2011 (8) TMI 16 - CALCUTTA HIGH COURT] held that where loan and advance is given in return to an advantage (interest) then provisions of section 2(22)(e) does not apply. Therefore, respectfully following the judgment of Hon ble Calcutta High Court (supra) Sale of unaccounted finished goods - Chairman of Abhijeet Group, in a disclosure petition u/s 132(4) accepted shortage of raw material on account of cash sale of the raw material itself and offer for tax - HELD THAT:- The Hon ble Supreme court in the case of Uma Charan Shaw [ 1959 (5) TMI 11 - SUPREME COURT] has clearly held that suspicion howsoever strong anything on record to prove the production of finished goods i.e. Ferro Alloys and sale thereof. We have also considered the ratio decided by the Hon ble Delhi High Court in the case of Bhagirath Agarwal [ 2013 (2) TMI 48 - DELHI HIGH COURT] wherein it has been held that an addition in assessee s income relying on statements recorded during search operation cannot be deleted without proving statements to be incorrect. We find that here in this case the statement was wrong/ incorrect. Neither any evidence of the production of Ferro Alloys nor any evidence of its sales have been brought on record by the A.O. Therefore, respectfully following the decision of the Hon ble Supreme Court in the case of Uma Charan Shaw (supra), we note that the ld. CIT(A) has rightly deleted the addition made by Assessing Officer. That being so , we decline to interfere in the order passed by the ld. CIT(A), his order on this issue, is hereby upheld and the grounds of appeal raised by the revenue is dismissed.

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• 2019 (8) TMI 650
  Disallowance of royalty payment - treat 25% of the royalty payment as capital expenditure and the balance 75% as revenue expenditure - HELD THAT:- Issue as to apportionment of the royalty paid by the assessee to M/s. Nippon Piston Ring Co. Ltd., has already been adjudicated by the Co-ordinate Bench of this Tribunal, in the assessee s own case [ 2017 (7) TMI 1318 - ITAT CHENNAI] for the earlier assessment years and the Ld.CIT(A) has followed judicial discipline in following the decision of this Tribunal in assessee s own case for the earlier assessment years, we find no reason to interfere in the order of the Ld.CIT(A). Additional depreciation carried forward from the earlier assessment year - action of the Ld.CIT(A) in allowing the balance of the additional depreciation carried forward from the earlier assessment year - HELD THAT:- CIT(A) has followed the judicial discipline in following the decision of the Hon ble Jurisdictional High Court in the case of Brakes India Ltd [ 2017 (4) TMI 511 - MADRAS HIGH COURT] and it is also noticed that the issue is now squarely covered by the decision of the Co-ordinate Bench of this Tribunal in the assessee s own case. In this circumstances, we find no reason to interfere in the order of the Ld.CIT(A) and the same stands upheld. Consequently, Ground Nos. 3.1 to 3.2 of Revenue s appeal for the assessment years 2013-14 2014-15 stands dismissed. In the result the appeals of the Revenue stands dismissed. Disallowance of the deduction U/s.35(2AB) - R D facilities in the case of the assessee have been applied by the DSIR for the purpose of the Section 35(2AB) - HELD THAT:- Considering the fact that the AO has not considered the applicability of the provisions of Section 35(1)(iv), in respect of disallowance made by denying the benefit of the exemption U/s.35(2AB), the issue is restored to the file of the AO for re-adjudication in line with the decision of the Hon ble Jurisdictional High Court in the case of M/s. Tube Investments of India [ 2002 (9) TMI 45 - MADRAS HIGH COURT] Consequently Ground No.3 for both of the assessee s appeal for the assessment years 2013-14 and 2014-15 stands partly allowed for statistical purposes.

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• 2019 (8) TMI 649
  Addition of share capital and share premium as unexplained cash credit u/s 68 - no cash was interchanged - The shares were allotted against the acquisition of investments under the agreements - in response to summon u/s. 131 no one appeared but submitted their response by registered post to AO - HELD THAT:- We have considered the rival submissions and also perused the relevant material available on record. It is observed that its shares were issued by the assessee company during the year under consideration at premium to certain companies in lieu of the shares held by the said companies and there was thus no inflow of cash involved in these transactions. The said transactions were entered into in the books of account of the assessee company by way of journal entries and it did not involve any credit to the cash amount. Hon ble Calcutta High Court in JATIA INVESTMENT CO. VERSUS COMMISSIONER OF INCOME-TAX [ 1992 (8) TMI 16 - CALCUTTA HIGH COURT] has held that when the cash did not pass at any stage and since the respective parties did not receive cash nor did pay any cash, there was no real credit of cash in the cash book and the question of inclusion of the amount of the entry as unexplained cash credit could not arise. In our opinion, the ratio of this decision of the Hon ble Jurisdictional High Court in the case of Jatia Investment Co. (supra) is squarely applicable in the facts of the present case and the Ld. CIT(A) was fully justified in deleting the addition made by the AO u/s 68 by holding that the said provision was not applicable. - the appeal of the Revenue is dismissed

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• 2019 (8) TMI 648
  Income from discontinued business - Correct head of income - income of interest received on advances - Income from other sources or business income - HELD THAT:- In view of the provision of Sec. 176(3A) it is clear that the interest income on advances is to be assesseed as business income and the lower authority has failed to consider the provision of Sec. 176(3A) which deal with the income from discontinued of business. Accordingly, the aforesaid income is to be assesseed as income from business and profession considering the provisions of Sec. 176(3A) of the Act. - decided in favour of assessee. Disallowing the claim of bad debts u/s 36(2) - fixed deposit made with Sarvoday Co-operative Bank who was now under liquidation - HELD THAT:- CIT(A) has given specific finding that assessee has not demonstrated with relevant details that aforesaid deposit was made in the ordinary course of the business and the income earned from such deposit was shown in the preceding year in its total income. With the assistance of the Ld. Representative we have gone through the material on record and observed that assessee has not demonstrated with any supporting evidences that it had shown any income earned from such deposit in the preceding years. In order to facilitate to adjudicate the impugned issue on merit we consider it appropriate to restore this issue to the file of the Ld. CIT(A) for adjudicating afresh after examination and verification of the relevant supporting detail to be furnished by the assessee. - Decided in favour of assessee for statistical purpose.

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• 2019 (8) TMI 647
  TP adjustment - international transaction of provision of investment/economic/business research services provided - comparable selection - HELD THAT:- Perusal of order of Ld. TPO for AY 2012- 13, would reveal that revised margins of USA UK AEs have been accepted to be 1.05% 1.71% respectively and the assessee has agreed for TP adjustment of Rs. 81 Lacs after considering 1% profit retention by its AEs being bare minimum that could be allowed to be retained by AEs as a risk free distributor. Similar methodology has been accepted by Ld. TPO for AY 2015-16 vide its order dated 31/10/2018 although with slight modification of minimum margin that could be retained by its AE. In AY 2015-16 the Ld. TPO, has restricted the margins of assessee s AE to 0.5% of sales of the AEs. Therefore, keeping in view the rule of consistency and in view of the fact that this methodology has been accepted by the assessee as well as revenue, we direct TPO to adopt the same methodology for the year under consideration and work out TP adjustment by accepting AE s margin to be 0.5%, as adopted in the latest order. The assessee is directed to provide the working of the same.

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• 2019 (8) TMI 646
  TP Adjustment - Comparable selection - comparable selection - HELD THAT:- Asit C.Mehta Financial Services Ltd. (earlier known as Nucleus Netsoft GIS India Ltd. - This entity was functionally not comparable to the assessee since it was engaged in providing software development services as evident from its Annual Report. Segmental results of the entity are not available and therefore, it could not be treated as a comparable entity - Cases followed TNS INDIA (P.) LTD. [ 2014 (10) TMI 504 - ITAT HYDERABAD and HSBC ELECTRONIC DATA PROCESSING (I) (P.) LTD. [ 2013 (9) TMI 444 - ITAT HYDERABAD]. Goldstone Infratech Ltd. (earlier Goldstone Teleservices Ltd.) - on similar factual matrix, in HSBC Electronic Data Processing India Ltd. V/s CIT [ 2013 (9) TMI 444 - ITAT HYDERABAD] directed for exclusion of this entity on the ground that foreign exchange revenue were less than 1% of total turnover of the entity and the revenue from BPO was falling over a period of three years. The other decisions as placed on record, also support the exclusion of this entity. Respectfully following the same, we direct for exclusion of this company Maple eSolutions Ltd. - Reliance has been placed on the decision of HSBC Electronic Data Processing India Ltd. V/s CIT [supra] for the submissions that this entity was engaged in providing call center services for which FAR analysis would be quite different in contrast to the entities engaged in providing BPO services. It has further been submitted that this entity has significant intangible assets of more than 21% of total fixed assets which would make this entity non-comparable. Vishal Information Technologies Ltd. - We find that Hon ble Bombay High Court in the case of Pr.CIT V/s PTC Software India Pvt. Ltd. [ 2018 (4) TMI 1002 - BOMBAY HIGH COURT] has confirmed the stand of the Tribunal in excluding this entity on the ground of non-comparable business model. The other decisions as placed on record also supports the exclusion of this entity. Respectfully following the same, we direct for exclusion of this entity. Adhoc disallowance of 20% of communication expenses - HELD THAT:- Assessee debited an amount of Rs. 18.68 Lacs on account of communication expenses reimbursed to its employees. The Ld. AO proposed disallowance of 40% against the same to account for personal element. The Ld. DRP reduced the same to 20%. It has been admitted position before us that the issue stood squarely covered in assessee s favor by the decision of this Tribunal in assessee s own case for AY 2004-05 [ 2013 (4) TMI 935 - ITAT MUMBAI] . Factual matrix being similar, respectfully following the earlier decision of this Tribunal in assessee s own case, we delete the adhoc disallowance of 20% as sustained by Ld. DRP and allow this ground of appeal.

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• 2019 (8) TMI 645
  Anonymous donation - membership fees and receipt for carnival expenses - carnival was organized for old Xavierians and present Xavierians students only - assessment of trust - assessee trust has been provided registration u/s.12A and 80G - HELD THAT:- Audit report, balance sheet, income and expenditure account and receipt and payment account clearly reveal the bifurcation of impugned amount of Rs. 12,74,744/-. From these account statement, as clearly observe that in the receipt and payment account, the assessee has shown receipt of Rs. 2,46,540/- as membership fees, receipt of inter-school cocurricular of Rs. 50,300/-, carnival expenses of Rs. 9,72,934/- and donation of Rs. 5,000/-. From the above payments, it is revealed that the assessee has incurred expenditure towards fooding expenses, printing and stationery, xerox courier, prize distribution, bank charges, even expenses, security expenses, promotional expenses, books and periodicals, carnival expenses and misc. expenses and remaining part of utilized funds/receipts has been deposited with the bank as fixed deposit. From receipt and payment account, we are not in agreement with the allegation of the AO that the impugned amounts are anonymous donation. As the assessee has received these amounts for specific purposes and out of these receipts, the assessee has incurred expenses for prize distribution, carnival expenses and other office establishment expenses, which are necessary for maintaining the office trust. When the assessee is showing that impugned amount was received under said four heads for specific purposes then the same cannot be treated as anonymous donation. The major receipt are carnival receipts and the assessee also incurred expenses for organizing the carnival, and, therefore, we are in agreement with the contention of ld A.R. that carnival was organized for old Xavierians and present Xavierians students only and no other person was allowed to participate thereon. The gathering of old and new students of an educational institution is a necessary event to strengthen relationship among them and for proper utilization of their knowledge for achieving the charitable objects of the trust and this carnival cannot be held as an event beyond the objectives of the trust. The membership fees are also from members and it cannot be treated as anonymous donation. Finally, hold that the authorities below are not correct in treating the amount as anonymous donation and taxing the same in the hands of the assessee. However, as clarify that Rs. 5000/- has been shown as donation but unable to understand that who gave this donation to the assessee trust and on being asked by the Bench, ld A.R. was unable to explain the name of the donor of this amount Therefore, this amount deserves to be treated as anonymous donation and the findings of the authorities below to this extent are confirmed. Accordingly, the AO is directed to delete the addition of Rs. 12,69,744/- and balance addition of Rs. 5000/- is upheld.

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• 2019 (8) TMI 644
  Addition u/s 68 - advance received from the customers and corresponding deposits in the bank account - assessee started new dealership of Ford car and received amount in cash from the prospective buyers/customers which was adjusted at the time of sales - HELD THAT:- We are in agreement with the contention of assessee that at the time of inauguration of new business, some customers shows their intention to buy products, which was car in the present case and prospective buyers give advance to the new entrepreneurs not only for the purpose of purchasing car but also to support in the new venture. The amount so received as advance against sale of car cannot be treated as cash credit in the hands of the assessee and the AO is not empowered and entitled to trigger any action against the assessee with the support of section 68 Assessee has submitted all details regarding advance received from the buyers/customers in the form of receipts, invoices, PAN and other identity proof establishing identity, existence of the advance providers. So far as creditworthiness is concerned, it cannot be accepted from a seller to examine the creditworthiness of the buyers prior to selling any goods to any persons. AO is equipped with the full powers under his command as per provisions of the Act to call respective persons to examine the source of cash deposit by them to the assessee but in such a situation when the advance providers does not turn up and come forward to appear before the AO, then also the assessee cannot be blamed as the AO possesses all the details of customers, who had advanced the month in the form of identity, PAN and other ID proof. Thus the amount treated by the AO as cash credit is nothing but the advance amount given by the customers for purchase of vehicles from the assessee, which has been finally adjusted at the time of delivery of the vehicles. Therefore, this amount cannot be treated as unexplained cash credit in the hands of the assessee u/s 68 - Decided in favour of assessee.

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• 2019 (8) TMI 643
  TP adjustment - royalty payment for the use of tangibles - application of CUP method as a comparable uncontrolled transaction in comparable circumstances - HELD THAT:- We find it difficult to ignore the contention of the assessee has been that the assessee had a compounded annual growth rate of 31.31% from FY 2006-07 to FY 2012-13 and the sale had been rapidly growing over the past few years, whereas, the growth in royalty payment to Bain USA has been negligible in comparison at 1% on domestic Revenue and 2% on foreign Revenue (affecting royalty of 1.18%) paid to Bain USA, for there is no evidence to disprove the same. On a perusal of the result of the search carried out by the taxpayer from the SIA database summarised by the Ld. CIT(A) in his order at page No. 14 we are satisfied that the payment made by the assessee to Bain USA is far less than the list percentage paid by E.Merck (India) Ltd at 2%. Further as is evident from the order of the Ld. TPO at page No. 5, the Bain USA said to have provided the specialised expert eyes and vide spectrum of consulting capability which are running into dozens. On a careful consideration of all these services are enumerated by the Ld. TPO himself in his order and in the light of the decisions of Sony Ericsson [ 2015 (3) TMI 580 - DELHI HIGH COURT] , AWB India private limited [ 2014 (11) TMI 284 - ITAT DELHI] and EKL appliances [ 2012 (4) TMI 346 - DELHI HIGH COURT] we are of the considered opinion that the Ld. TPO erred in applying the benefit test, in the absence of any dispute as to the actual payment or the provision of services by Bain USA at the disposal of the assessee by way of models at their website which the assessee accesses and applies as and when necessary. With this view of the matter where unable to agree with the Ld. DR that the Ld. CIT(A) committed any error in upholding the contention of the assessee and in deleting the addition made on the suggestion of the Ld. TPO. Uphold the reasoning given and conclusions reached by the Ld. CIT(A) in the impugned order. We accordingly conclude that these appeals are devoid of merits and are liable to be dismissed.

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• 2019 (8) TMI 642
  Order u/s 201(1) and 201(1A) - default in deduction of TDS - sufficient opportunity - ground of limitation - HELD THAT:- The chart giving the details of date of show cause notice, the date of hearing before AO and the date of orders passed by the AO reveal that from the date of issuance of show cause to the date of passing of orders u/s. 201(1) and 201(1A) is less than one month and in some of the cases it is barely two weeks. Undisputedly, the information sought by the AO from the assessee is about six years old. It takes time to retrieve the old information. We find merit in the contentions of the AR of assessee. The CIT(Appeals) has failed to appreciate the fact that to retrieve old information from voluminous physical data is a herculean task. We are of considered view that sufficient opportunity to produce relevant information/data was not afforded to the assessee. Taking into consideration entirety of facts, we deem it appropriate to restore all these appeals back to the file of CIT (Appeals) for de-novo adjudication, after affording reasonable opportunity of hearing to the assessee, in accordance with law. AR during the course of submissions has raised a legal ground challenging the validity of orders passed u/s. 201(1) and 201(1A) on the ground of limitation. This ground was neither raised by assessee before the First Appellate Authority nor was raised before the Tribunal as additional ground of appeal. The assessee is at liberty to raise all legal issues before the First Appellate Authority, if so advised.

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• 2019 (8) TMI 641
  Disallowance u/s.40(a)(i) - India USA DTAA - based on proceedings u/s.201(1)/(1A) for default in non-deduction of tax at source - HELD THAT:- It is a matter of record that the assessee preferred an appeal against the order passed by the ld. CIT(A) in relation to section 201(1)/(1A) before the Tribunal, which has since been decided by Tribunal [ 2019 (3) TMI 458 - ITAT PUNE] in favour of assessee. Payments made for leased line charges - Tribunal (supra) held that assessee did not default in non-deduction of tax at source out of the payments made for leased line charges and further the said leased line charges were in the nature of reimbursement of expenses. Purchase of software license is concerned, the Tribunal (supra) has discussed by holding that it was a case of purchase of copyrighted article which could not be considered as Royalty. Payment of I.T. Support service charges , the Tribunal (supra) held that the payment of I.T. Support charges, i.e. Internet charges, use of e-mail charges and backup support services etc. could not be considered as Royalty as no technology was made available to the assessee and it was only a service provided to the assessee by its USA Associated Enterprise. Enhancement made by the ld. CIT(A) on Reimbursement of salary paid to expatriates - Tribunal (supra) came to the conclusion that such an amount was not in the nature of `fees for technical services as the assessee had deducted tax at source from such salary payments u/s.192. Enhancement on Payment made on account of web based training , the Tribunal (supra) discussed that no technical knowledge was imparted by the service provider and hence, there was no liability upon the assessee to deduct tax at source on the aforesaid payments. Crux of the matter is that all the items of disallowance u/s.40(a)(i) in the instant proceedings, including the enhancement made by the ld. CIT(A) on two scores, have emanated from the order passed by the authorities u/s.201(1)/201(1A) . Since the Tribunal(supra) in its aforenoted order has held that the assessee is not liable for deduction of tax at source, the sequitur is that there cannot be any disallowance u/s.40(a)(i) as the same can be made only when a person responsible for paying any sum including royalty and fees for technical services etc., outside India or in India to a non-resident, not being a company or a foreign company, fails to deduct tax at source, on which tax is deductible. As the disallowance u/s.40(a)(i) is a corollary of liability of the assessee to deduct tax at source, no disallowance under this section can stand once the assessee has been held to be not responsible for deduction of tax at source on such amounts. In view of the foregoing discussion, we are satisfied that the disallowance made by the AO and as further enhanced by the ld. CIT(A), has no legal legs to stand on. The same is, therefore, deleted.

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• 2019 (8) TMI 640
  Disallowance of Employees Contribution to PF - the assessee had inadvertently disallowed employees contribution to PF in the revised return despite the fact that the amounts were remitted within the due dates and ought to have allowed the same as a deduction - HELD THAT:- We find that this issue was raised by the assessee before the DRP seeking the allowance of such deduction under section 43B. DRP brushed aside the assessee s claim holding that in view of sub section 1 of section 144C since the claim does not relate to any variation made by the AO in the income / loss returned by the assessee for Assessment Year 2012-13, the objection is beyond the scope of the powers of the DRP. Whatever may be the fetters placed on the scope of the powers of the DRP, with due respect, there can be no estoppel against the application / operation of law as laid down by the Hon ble jurisdictional High Court in the case of CIT Vs. Sabari Enterprises [ 2007 (7) TMI 169 - KARNATAKA HIGH COURT] . Even if the assessee has voluntarily disallowed this amount, since the same is contrary to the binding decision of the Hon ble jurisdictional High Court (supra), assessee is well within its rights to make a fresh claim in accordance therewith. In this view of the matter, we hereby remand this issue of the assessee s claim for being allowed deduction in respect of employees contribution to PF to the file of the AO for factual examination, verification and adjudication thereon and to allow the assessee s claim if the same is found to be in accordance with the binding decision of Sabari Enterprises [supra ] . Assessee shall be afforded adequate opportunity of being heard and to file details / submissions required in this regard, which shall be duly considered before deciding the issue. We hold and direct accordingly. - Assessee s appeal is allowed for statistical purposes. TP Adjustment - Mutual Agreement Procedure (MAP) of the India Japan DTAA - HELD THAT:- The assessee by way of this letter dated 21.03.2019 informs the Tribunal that the assessee has accepted the MAP resolution arrived at by the Competent Authorities of India and Japan and wishes to withdraw the grounds raised on Transfer Pricing issues in the present appeal. - In these circumstances, as narrated above, ground Nos. 1 to 8 and 9(b) raised by the assessee are rendered infructuous and are dismissed as withdrawn.

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• 2019 (8) TMI 639
  Stay on recovery of outstanding demand - HELD THAT:- So far the assessee has made good / paid Rs. 18,80,14,448/- out of the total tax demand of Rs. 30,94,03,636/- (excluding interest charged under section 234B and 234D amounting to Rs. 14,08,94,838/-) which constitutes payment of tax of approx. 61%. Taking into account the facts and circumstances of the case, the fact that the assessee has paid approx. 61% of the tax demand raised and the balance of convenience, we are of the view that this is a fit case for grant of stay on recovery of outstanding demand and do so. The assessee is granted stay on recovery of outstanding demand for a period of 6 months commencing today or disposal of appeal whichever is earlier. The hearing of this appeal has been fixed for 16.09.2019. The assessee is directed to file all returns / submissions and other documents which it relies on in support of the grounds raised in this appeal well before the date of hearing i.e., on 16.09.2019 and also that no adjournment of hearings should be sought for by the assessee other than for genuine reasons. Failure to comply with the above said directions would result in the stay being vacated automatically and all other legal consequences shall follow. Since the date of hearing has been pronounced in open court, no separate notices will be issued for the hearing to the parties.

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• 2019 (8) TMI 638
  Denial of natural justice - addition of capital gain - deciding the appeal by the CIT(A) ex-parte without giving sufficient opportunity - HELD THAT:- CIT(A) had posted the case for hearing by issue of notices on 04.10.2017, 17.10.2017, 30.10.2018 and the request of the assessee to post the case for hearing in April / May 2016 was also considered and accordingly fixed the case for hearing on 03.07.2016. Even then, the assessee did not appear before the CIT(A). Therefore, we find no merit in the contention of the assessee that the Ld.CIT(A) has not given sufficient opportunity. As observed from the order of the CIT(A) that the Ld.CIT (A) has given sufficient opportunity, but the assessee did not avail the same.Therefore, this ground lacks merit, hence dismissed. Reopening of assessment u/s 147 - nature of Gain on property sold - HELD THAT:- Assessee has sold the property consisting of a residential house located at Madhavadhara for a consideration of Rs. 10,00,000/- which was registered at SRO, Dwarakanagar, Visakhapatnam on 20.02.2008. Similarly, the assessee has also sold another property of vacant site admeasuring 495 sq.yds of site out of site of 826 sq.yds situated at Kurmannapalem, Visakhapatnam to M/s Vanadurga Constructions vide document No.5647/2007 dated 18.12.2007 at SRO, Gajuwaka, Visakhapatnam. AO found that though the assessee has not filed the return of income and the sale of property attracts capital gains tax. Having not filed the return of income, the AO rightly held that the income had escaped assessment, accordingly issued notice u/s 148. Hence, we do not find any merit in the ground raised by the assessee regarding validity of issue of notice u/s 148, hence, this ground is dismissed. Addition under the head short term capital gains and long term capital gains - HELD THAT:- We have gone through the copy of the sale deed placed before us. The assessee also did not place any material with regard to the sale of the flat located at Madhavadhara and there is no dispute that the assessee has sold the flat situated at Madhavadhara on 20.02.2008. Since the assessee failed to furnish any information before the AO / CIT(A) or before this Tribunal, we hold that the AO has rightly brought the sale consideration received on sale of flat for taxation under the head short term capital gains . Accordingly, the appeal of the assessee is dismissed on this ground. Long term capital gains - sale of 495 sq.yds located at Kurmannapalem - as per assessee only the agreement to sale , hence, does not cover for the purpose of capital gains - HELD THAT:- As gone through the sale agreement placed before us by the assessee in page No.10-21 of the paper book. The assessee had entered into agreement to sale coupled with power of attorney for a sum of Rs. 57,33,000/- on 12.03.2007. As per the recitals of the agreement, the assessee has given complete possession to the builder along with original sale deed or copies thereof and other papers relating to title. Further, once the assessee had entered into agreement of sale coupled with power of attorney and handed over the possession of the property to the vendee, the transfer is complete as provided u/s 47 - we hold that the sale of property attracts capital gains tax.

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• 2019 (8) TMI 637
  Addition on account of variation in purchase of cloth not shown in the audit report - bona fide mistake - mistake furnishing bills and vouchers in support of the claim that there was a mistake transferring the quantity from purchase to consumption without giving a matching effect n monetary and has revenue neutral effect - HELD THAT:- As during the current year the appellant had transferred the stock of 271968 mtr of grey cloth from trading account to manufacturing account of raw materials for consumption. The mistake that has occurred is that while transferring the grey cloth from trading purchase account to raw materials consumption account, the value in monetary terms was not transferred. In effect the raw materials for real consumption account was understated in monetary terms by a figure of Rs. 73,77,7007-whereas the purchase of finished goods, while correct quantitatively, was overstated in monetary terms by an amount of Rs. 73,77,700/-. The raw material consumption purchases have been grouped under schedule K and the purchase of finished goods under trading purchases have been grouped under schedule L. Both these schedules find place on the debit side of the profit and loss account. Therefore, overstating one schedule by certain amount and understating another schedule by the matching amount will not alter the figure of total expenses claimed or debited in the profit and loss account. It is not the case of the assessing officer that the purchases booked by the appellant under trading purchase are bogus or that the raw material consumption for manufacturing is excessive when considered quantitatively. The mistake of transferring the quantity from purchase to consumption without giving a matching effect in monetary terms is a bona fide mistake. Since increase in trading purchases and the reduction in amount of raw materials consumption is occurring on the debit side of the profit and loss account therefore it does not have any cascading effect on the overall expenses claimed or debited in profit and loss account and therefore this mistake, in our considered opinion, is a bona fide and there is no loss to the revenue. In a case, if any bona fide mistake is being committed by an assessee and there is no loss to the revenue . In that case, in our considered opinion, addition cannot be made. Therefore, we hold that ld. CIT(A) has passed reasoned and detailed order and it does not require any kind of interference at our end. - Decided against revenue.

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• 2019 (8) TMI 631
  Commission paid to foreign agents - allowable business expenses - evidence on record to show that such foreign agent had worked on behalf of the Assessee in procuring sales - Loss claimed by the Assessee upon sale of shares - AO noticed that Assessee had purchased the shares at Rs. 30 Crores but sold the same for an amount as low as Rs. 30 lakhs - HELD THAT:- SLP dismissed.

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• 2019 (8) TMI 630
  Revision u/s 263 - Penalty u/s 271(1)(c) - period of limitation u/s 275 - why the order passed by the AO dropping the penalty proceedings should not be revised? - HELD THAT:- Tribunal, after examining the factual position and taking note of the legal submissions made on behalf of the assessee as well as the Revenue, allowed the appeal. The appeal was allowed by the Tribunal considering the fact situation to examine as to whether the penalty could have been imposed beyond the period of limitation. The action for initiation of the penalty under Section 271(1)(c) of the Act had been initiated in the course of assessment proceedings itself under Section 143(3) read with Section 153A of the Act on 31.3.2016. Time limit for levy of penalty under Section 271(1)(c) of the Act would expire in the present case on 31.9.2016, being six months from the end of the month, in which, the penalty proceedings have been initiated. Now, after the expiry of the said limitation, the learned Principal Commissioner of Income Tax has issued the show cause notice on 09.3.2018 for reviving the penalty proceedings, which had already expired and was barred by limitation. True, the order passed by the learned Assessing Officer dropping the penalty proceedings is an unspeaking order, but still, that would not make it valid reason for extending the limitation provided under Section 275 of the Act for the purpose of levying the penalty or for considering the levy of penalty under Section 271(1)(c) of the Act by invoking the powers of revision under Section 263 of the Act. In the circumstances, the order passed under Section 263 of the Act, being unsustainable in law, stands quashed - Decided in favour of assessee.

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• Customs

• 2019 (8) TMI 628
  Refund claim - Provisional release of some machinery - printing machine and standard accessories - HELD THAT:- The writ petitioner has filed a refund application dated 05.10.2018. Learned counsel for writ petitioner submits that the second respondent who has to process the refund application has not done so and there has been inaction on the part of the second respondent. Saying so, learned counsel made a simple and innocuous prayer requesting to mandamus the second respondent to consider the refund application dated 05.10.2018 made by the writ petitioner and take a decision on the same within a time frame. The second respondent is directed to consider the refund application of the writ petitioner being refund application dated 05.10.2018 and pass an order on the same within four weeks from the date of receipt of a copy of this order - petition disposed off.

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• Insolvency & Bankruptcy

• 2019 (8) TMI 629
  Disciplinary proceedings initiated by IBBI - Jurisdiction - power of Adjudicating Authority/ National Company Law Tribunal has jurisdiction to quash the disciplinary proceedings once initiated by the IBBI - HELD THAT:- Once a disciplinary proceeding is initiated by the IBBI on the basis of evidence on record, it is for the Disciplinary Authority, i.e., IBBI to close the proceeding or pass appropriate orders in accordance with law. Such power having been vested with IBBI and in absence of any power with the Adjudicating Authority/ (National Company Law Tribunal), the Adjudicating Authority cannot quash the proceeding, even if proceeding is initiated at the instance and recommendation made by the Adjudicating Authority/ National Company Law Tribunal. We set aside the last portion of the impugned order dated 5th February, 2019 relating to quashing of all disciplinary proceedings - The matter is remitted to the IBBI to pass appropriate order taking into consideration the reference of initiation of proceeding by the Adjudicating Authority as made on 26th April, 2018 and later acceptance of explanation - appeal disposed off.

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• Service Tax

• 2019 (8) TMI 636
  Applicability of Section 35H of CEA 1944 - Invocation of of Section 83 of the Finance Act, 1994 - whether Section 35H is in existence or stands deleted - HELD THAT:- What Mr. Pathy, canvasses is that once the division bench judgment of the Tribunal whereby the claim of the petitioner had been negated, was overruled by the larger bench, the petitioner became entitled to his reliefs. We would not express ourselves on this submission because before us, the petitioner seeks a direction to the Tribunal to refer the substantial question of law which is raised in the case. Now besides the fact that Section 35H providing for such reference stands deleted, the other prayer also cannot be entertained because the very judgment rendered by the Tribunal in the case of the petitioner has been overruled by a larger bench. In other words, the issue before us is prima facie rendered academic. The submission of Mr. Pathy is that the issue is not actually rendered infructuous rather has been answered in favour of the petitioner by the larger bench - Mr. Pathy prays for disposal of the matter to enable the petitioner to take recourse to such remedy that may be available to him in law for espousing the grievance in the light of the position settled by the larger bench Tax case disposed off.

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• 2019 (8) TMI 635
  Refund of Service Tax - service tax deposited by the petitioner for the period 2007-16 - time limitation - Unjust enrichment - burden has been shifted by the petitioner on the customers i.e the service recipient or not - HELD THAT:- The fact remains that the service tax for the period in question was deposited by the petitioner but after realizing it from its customers. This fact is not disputed. It is also not in dispute that no refund application was filed by these customers. There is no infirmity in the opinion recorded by the statutory authority to hold that if the burden of the service tax has been shifted on the customers - petition disposed off.

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• Central Excise

• 2019 (8) TMI 634
  Maintainability of appeal - Rebate of duty - Rule 18 of the Central Excise Rules, 2002 - HELD THAT:- The Central Government which stated that such explanation cannot be accepted as a general rule on the basis of relying upon decision. The petitioner approached the Additional Secretary to the Central Government. The Additional Secretary rejected it in a cavalier fashion we cannot but help deprecate such an approach - The official could not have summarily distinguished a binding judgment of the Supreme Court. The impugned order has resulted in the lack of remedy which is otherwise statutory guaranteed. The revision applications were also dismissed on another trivial ground to present the review petition with requisite fee. The revisional authority is directed to hear and decide the revision applications before it, purely on the merits after satisfying itself with respect to payment of requisite fee in accordance with law - petition allowed.

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• CST, VAT & Sales Tax

• 2019 (8) TMI 633
  Validity of assessment order - Section 25(1) of Kerala Value Added Tax Act, 2003 - main allegation against the petitioner in the notice dated 12.02.2019 is that the petitioner transported goods without proper and/or genuine documents - petitioner requested for calling for the books of accounts and invoices from the list of dealers and suppliers to verify whether goods had been transported except in the manner known to law - HELD THAT:- The second respondent without a request from the petitioner ought to have given opportunity of hearing before passing Ext.P3. The petitioner, to prove the bona fides in the movement of goods undertaken by the petitioner, volunteered through an application filed on 22.03.2019 to summon books of accounts and invoices from the dealers and suppliers of the petitioner. The illegality committed in this behalf is that no order on the request of the petitioner is made and then the very valuable opportunity is denied to prove the case of the petitioner. Further the second respondent assumes ipse dixit, what he sates in the show cause notice dated 12.02.2019. This Court is of the view that the second respondent, while exercising his power under Section 25 and concluding the reassessment resulting in fixation of tax liability, is expected to act fairly, reasonably and in accordance with the requirement of the Act. The fairness of procedure is not an abstract application by Courts to interfere with orders passed by the statutory authorities by merely stating that principles of natural justice are denied or deviated, but is tested subtly on case to case basis by taking note of undisputed facts. Matter remitted to the second respondent - petitioner is directed to appear before the second respondent on 07.08.2019 with all documents on which the petitioner intends to support its case.

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