TMI Tax Updates - e-Newsletter
August 8, 2020

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. GST: PROFITEERING CHARGES ON SUPPLY OF FOGG DEO UPHELD  

   By: Dr. Sanjiv Agarwal

2. TERM SHEET

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Minister of State for Finance & Corporate Affairs Shri Anurag Thakur participates in CBIC Web interaction on “In Bond Manufacturing & Other Operations” for business friendly environment in India

2. Mutual Agreement Procedure (MAP) Guidance – Regarding

3. Tariff Notification No. 70/2020-Customs (N.T.) in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Silver

Notifications

Customs

1. 69/2020 - dated 6-8-2020 - Cus (NT)

Exchange Rates Notification No.69/2020-Custom (NT) dated 06.08.2020

2. 68/2020 - dated 6-8-2020 - Cus (NT)

Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Silver

3. 30/2020-Customs (N.T./CAA/DRI) - dated 4-8-2020 - Cus (NT)

Amendment in Notification No. 28/2020-Customs (N.T./CAA/DRI) dated 24.06.2020

4. 29/2020-Customs (N.T./CAA/DRI) - dated 4-8-2020 - Cus (NT)

Appointment of CAA by DGRI

5. 31/2020-Customs (N.T./CAA/DRI) - dated 31-7-2020 - Cus (NT)

Appointment of CAA by DGRI

GST - States

6. 38/1/2017-Fin(R&C)(164)/559 - dated 31-7-2020 - Goa SGST

Seeks to amend Notification No. 38/1/2017-Fin(R&C)(100)/ 2805 dated 08-05-2019

7. 22401 -FIN-CTI-TAX- 0001 /2020 - dated 5-8-2020 - Orissa SGST

Seeks to amend Notification no. 10650 dated 31.03.2020 bearing S.R.O. No. 90/2020 in order to amend the class of registered persons for the purpose of e-invoice

8. 20397- FIN-CT1-TAX-0001/2020 - dated 5-8-2020 - Orissa SGST

Odisha Goods and Services Tax (Ninth Amendment) Rules, 2020

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/MRD2/DCAP/CIR/P/2020/149 - dated 7-8-2020

Securities and Exchange Board of India (International Financial Services Centres) Guidelines, 2015 - Amendment

RBI

2. RBI/2020-21/21 DPSS.CO.PD No.116/02.12.004/2020-21 - dated 6-8-2020

Online Dispute Resolution (ODR) System for Digital Payments

3. RBI/2020-21/22 DPSS.CO.PD.No.115/02.14.003/2020-21 - dated 6-8-2020

Offline Retail Payments using Cards / Wallets / Mobile Devices – Pilot

Highlights / Catch Notes

Income Tax

• Dispute Over Income Tax Exemption for Educational Trusts: Revenue's Burden to Prove Non-Educational Activities u/s 10(23C)(vi.

  Case-Laws - HC : Exemption u/s 10 (23C) (vi) - Burden lies upon the Revenue to bring on record the evidence to rebut the claim of the Appellant Trust and to establish that the activities carried out and the expenditure incurred by the Assessee Trust could not be related to the educational activities of the Appellant Trust by any stretch of imagination. - mere reference to the expenditure incurred and the Head of expenditure in question while rejecting the Application u/s 10(23C)(vi) of the Act is not enough to reject the Application under the provisions of the Act. - HC
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• Socio-economic expenses for driver education and community health u/s 37 approved as business deductions for assessee company.

  Case-Laws - AT : Disallowance of socio-economic expense u/s 37 - besides educating the drivers about such disease and the consequent health hazards, what the assessee company is also trying to do is protect the local inhabitants, who are staying in the vicinity of various road highways stretches developed and operated by it, from the floating population of drivers who are prone to such diseases and build a more conducive and healthy environment for smooth functioning of road stretches and has thus established a necessary nexus with its business activities. - Expenses allowed. - AT
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• Penalty Order Valid Despite Initial Uncertainty if Definitive Charge Established in Section 271(1)(c) Cases.

  Case-Laws - AT : Penalty u/s 271(1)(c) - unaccounted purchases - Even if the AO was not certain about the charge at the time of initiation of the penalty proceedings but he has given a definite conclusive finding regarding the default or charge at the time of passing the penalty order then no default cannot be found in the penalty order. - AT
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• Tax Authorities Disallow Interest on Loans: Interest-Free Advances to Father's Business Examined Under Tax Rules.

  Case-Laws - AT : Disallowance of amount of interest on the amount advanced as interest-free advance & loans - Assessee on one hand is advancing interest free loans and advances to his father proprietary concern and on the other hand the assessee is paying interest on the loan obtained from his father. - Additions confirmed (after excluding the own funds) - AT
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• Section 68 Addition: Non-Existent Company Can't Rely on Documentation for Share Premium and Application Money Defense.

  Case-Laws - AT : Addition u/s 68 - share application money & share premium - When it has been categorically proved that there is no physical existence of the said company at the given address the submission of the assessee that his submissions regarding papers submitted in this regard should be given precedence over the actual fact about the non-existence of the said party is absolutely unsustainable - AT
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• Reopening Validity u/s 148: Examining Bogus Purchases and Hawala Operators in Income Tax Assessment.

  Case-Laws - AT : Validity of reopening u/s.148 - Addition of bogus purchases - there was a categorical information wherein the assessee’s name was appearing along with details of the parties from whom the assessee has made purchases which were found to be Hawala operator providing accommodation bogus bills. - Additions to be made at GP rate. - AT
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Customs

• Anti-dumping decision upheld as authority relies on available data due to late disclosure by producer/exporter.

  Case-Laws - AT : Levy of ADD - When the Designated Authority proceeded to determined the margin of dumping in relation to an article on the basis of the facts available on record, it will not be prudent to set aside the final findings of the Designated Authority or the Customs Notification merely for the reason that the producer/ exporter did not apprise the Designated Authority at the initial stages about the method to be adopted for determination of normal value. - AT
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Corporate Law

• Court Criticizes Penalty u/s 383(1A) of Companies Act for Lack of Evidence and Negligence in Proceedings.

  Case-Laws - HC : Penalty u/s 383(1A) of the Companies Act, 1956 - the company did not have a Whole-time secretary - non-application of mind - order passed only on the basis of a bare complaint without any supporting documents - It is not a case of inadvertence but rather sheer continued negligence which has caused serious failure and prejudice to the petitioners - The application of mind at the time of taking cognizance and framing of notice is sine qua non. - HC
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Service Tax

• Court Stresses Need for Detailed Reasoning in Service Tax Cases to Invoke Extended Limitation Period.

  Case-Laws - HC : Extended period of limitation - Mere reference of the citations in the order and then holding that the extended limitation could not be invoked to the Revenue is a serious prejudice caused to the interest of the Revenue, in the absence of discussing the relevant facts, and giving reasons, for arriving at a particular conclusion. - HC
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Central Excise

• Refund Denied: Exporter Fails to Meet Rule 5 Cenvat Credit Requirements for Duty-Free Clearance.

  Case-Laws - AT : Refund of duty accumulated on account of export - Export of goods - Rule 5 of Cenvat Credit Rules, 2004 - none of the conditions has been satisfied by the appellant as they have neither cleared the goods under bond without payment of duty or through letter of undertaking. therefore, fundamentally, the appellant has not complied with the condition of Rule 5 of Cenvat Credit Rules, 2004. - AT
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Case Laws:

• Income Tax

• 2020 (8) TMI 133
  Assessment u/s 153C - cogent materials between the documents seized and the assessee satisfaction - Tribunal interpreting the term belongs to as ownership in Section 153C - whether intention of the legislature is always that section 153C is applicable when documents seized in a searched premise belongs to or its content thereof pertains to some other person in view of amendment by Finance Act, 2015 - as per HC in the documents, which were seized during the course of search, there may be some reference of the assessee, but that itself would not be sufficient. It is necessary to show some nexus on the basis of some cogent materials between the documents seized and the assessee - HELD THAT:- SLP is dismissed. However, question of law is kept open.

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• 2020 (8) TMI 132
  Exemption u/s 10 (23C) (vi) - grant of approval for exemption in respect of income of its School - allegation that expenditure in question was not incurred solely for educational purposes - HELD THAT:- Admittedly, the Objects of the Trust included such Medical facilities, Charitable activities, Child Welfare etc., in its Trust Deed. The amendment with effect from 29.7.2015 was only to further emphasize and to bring the case within the four corners of Section 10(23C)(vi) of the Act in its strict sense. Burden lies upon the Revenue to bring on record the evidence to rebut the claim of the Appellant Trust and to establish that the activities carried out and the expenditure incurred by the Assessee Trust could not be related to the educational activities of the Appellant Trust by any stretch of imagination. No such exercise of either bringing the evidence on record or controverting or rebutting the evidence produced by the Assessee before the Chief Commissioner appears to have been undertaken by the learned Chief Commissioner. A mere reference to the expenditure incurred and the Head of expenditure in question while rejecting the Application under Section 10(23C)(vi) of the Act is not enough to reject the Application under the provisions of the Act. The very purpose of educational activities and charitable activities for which the said provision intends to extend the benefit of exemption and for educational activities in particular, Section 10(23C)(vi) of the Act, is likely to be defeated if such pedantic and narrow approach on the part of the revenue Authorities is allowed. We are not inclined to uphold the order passed by the Tribunal which upholds the order dated 10.8.2015 passed by the learned Chief Commissioner. Instead of answering the questions at our own end at this stage, we are inclined to remand the case back to the learned Chief Commissioner of Income Tax, Trichy.

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• 2020 (8) TMI 131
  Restoration of the appeal as dismissed for non-prosecution - Alternate remedy - HELD THAT:- Appellant has the statutory remedy of filing an application for restoration of appeal which was dismissed for non-prosecution and in view of Rule 24 of the Rules, there is no period of limitation prescribed within which the aggrieved party can approach the Tribunal for the purpose of restoration. In view of the aforesaid facts and circumstances, present appeal has been found misconceived and the same is hereby dismissed as such but the appellant is granted liberty to file an application, if so advised, for restoration of the appeal which has been dismissed in default.

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• 2020 (8) TMI 130
  TP Adjustment - existence of international transaction of the AMP - HELD THAT:- In view of the binding precedent, following the decision of the Tribunal, we hereby direct to delete adjustment made on account of AMP transactions. The corresponding grounds raised are accordingly allowed. Disallowance on capital asset treated as a stock-in-trade - HELD THAT:- We allow the ground of the appeal and direct the AO to recompute the depreciation and allow the necessary relief to the assessee. The ground No.6 of the appeal is accordingly allowed for statistical purposes. Credit of the advance fringe benefit tax and TDS - HELD THAT:- Allowing of the credit of the taxes paid by the assessee is matter of the verification by the Assessing Officer and therefore, accordingly we direct the Learned AO for verification of the taxes paid and allow the credit in accordance with the law. This ground of the appeal is also allowed for statistical purposes.

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• 2020 (8) TMI 129
  TP Adjustment - inclusion of TCS e-Serve International Limited and Tech Mahindra Limited only and solely on the ground that both these companies do not pass the filter of 25% of Related Party Transactions [RPT] - HELD THAT:- After going through the computation of RPT as mentioned elsewhere, we are of the considered opinion that the TPO/Ld. CIT(A) should have examined the calculation provided by the assessee. Thereafter, should have rejected the contention of the assessee. Therefore, in the interest of justice and fair play, we deem it fit to restore this issue to the file of the AO/TPO with a direction to examine the arithmetical accuracy of computation of RPT and, if found correct, both these companies should be excluded from the final set of comparables. Otherwise, the Assessing Officer/TPO shall demonstrate how these two companies passed the RPT filter. TP adjustment relates to not accepting Ace BPO Services Pvt Ltd as a valid comparable to the ITES segment of the appellant - HELD THAT:- A perusal of the Annual Report of Ace BPO Services Ltd shows that under Schedule Types of Principal Products or Services , it has been mentioned that this company is engaged in BPO services, though in the health care segment. Nevertheless, in our considered opinion, since this company is engaged in BPO services, the TPO should not have rejected this company merely by stating that this company is in the health care segment and is functionally dissimilar. We restore the inclusion or otherwise of this company to the file of the TPO/Assessing Officer to examine the same in light of the directions of the co-ordinate bench. Accordingly, all the grounds related to TP adjustments in so far as these two comparable companies are concerned are treated as allowed for statistical purposes. Disallowance of rebates/discounts paid to the holding company - HELD THAT:- The assessee provides services as required, from time to time and BV overseas entities computes the global sale of services made to the overseas customers and accordingly computed the volume discount payable to them. Such discount percentage is allocated amongst the affiliates of BV overseas entities which also included the assessee company based upon their proportionate sales vis- -vis global sale and such discounts are recovered from its affiliates which also included the assessee company and finally, rebate is passed upon to third party vendor. Some sample proof of remittances are placed in the paper book. These agreements/MOUs were before the lower authorities and nowhere the Assessing Officer has demonstrated that these are sham transactions. Assessing Officer should have examined the transactions in light of agreements/MOUs and related documentary evidences before coming to any conclusion. We further find that all the documents were not furnished before the Assessing Officer as the same has been placed before us in the form of Additional Evidences to demonstrate that the discounts/rebates have ultimately been passed on to the customers. We deem it fit to restore this issue to the file of the AO. The assessee is directed to demonstrate that discounts/rebates have ultimately been passed on to customers and the Assessing Officer is directed to verify the same in light of Agreements/MOUs. Appeal of the assessee allowed for statistical purposes.

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• 2020 (8) TMI 128
  Disallowance of depreciation on hawala purchase of machines - Whether should be restricted to the proportionate depreciation by applying reasonable Gross Profit rate on such alleged hawala purchase transactions? - HELD THAT:- GP rate in the extant hawala transactions is 15% and the assessee actually purchased machinery at 85% of the declared value, for which the bills were obtained for 100%. In that view of the matter, purchase value of the machines will get reduced to 85% instead of 100% and the claim of depreciation on such excess of 15% will be disallowed in the year under consideration and all the subsequent years. Addition of Rs. 59,38,955/- as having been made and confirmed u/s 69 of the Act, is unwarranted. The same is accordingly deleted. In so far as the disallowance of depreciation of Rs. 4,45,420/- is concerned, we direct to restrict it by reducing the actual cost of such machines by 15% from Rs. 59,38,955/- to Rs. 50,48,111/- and accordingly disallow the depreciation on the excess amount of Rs. 8,90,844/-. - Decided partly in favour of assessee.

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• 2020 (8) TMI 127
  Delay in deposit of employees contributions towards CPF, GPF and ESI u/s 36(1)(va) - HELD THAT:- As decided in own case [ 2009 (4) TMI 489 - ITAT JAIPUR-A] contribution towards Provident Fund and ESI and the said issues have already been decided against the Revenue as relyig on M/S. STATE BANK OF BIKANER JAIPUR AND JAIPUR VIDYUT VITARAN NIGAM LTD. [ 2014 (5) TMI 222 - RAJASTHAN HIGH COURT ] - Decided against revenue.

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• 2020 (8) TMI 126
  Unexplained jewellery - silver jewellery so found belongs to all the family members as stated by the assessee in his statement recorded u/s 132(4) - HELD THAT:- Once it is accepted that these items belong to all family members and where the assessee has thereafter given specific details regarding such items identified to each of the individual members as per his submissions dated 18.08.2017, the remaining items should therefore be accepted as belonging to respective family members and not just that of the assessee only. Secondly, the assessee and her mother have already declared silver jewellery items in their respective wealth tax returns which need to be considered. In case of assessee, he has declared 0.5 kgs of silver in his wealth tax return for A.Y 92-93 and to that extent, the same stand explained. Therefore, as against 1.480 kgs of silver items belonging to the assessee, he has already declared 0.5 kgs of silver in his wealth tax return for A.Y 92-93. The possession of remaining 0.98 kgs of silver items over the period of 24 years and given the societal customs of accepting/buying such items on occasion of birth and other social functions seems reasonable and the addition sustained by the ld CIT(A) is hereby deleted. - Appeal of the assessee is allowed.

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• 2020 (8) TMI 125
  I nterest receipt from FDRs place with its banks - Income from other sources - CIT(A) in bringing to tax as income under the head income from other sources rather than reducing it from the capital cost of construction of the roads for the period prior to commencement of commercial operations of the roads - claim of the assessee is that this relates to seven road stretches which were under construction during the year and the total expenditure including the interest paid on borrowed funds net of interest income earned on these deposits is inextricable linked to these seven road stretches which are capitalized under the head Project work in progress and the same is the consistent position of the assessee which has been followed and accepted by the Tribunal and the Hon ble High Court in the earlier years - HELD THAT:- Following the principle of consistency and respectfully following the decision of the Hon ble Rajasthan High Court in assessee s own case [ 2017 (7) TMI 1359 - RAJASTHAN HIGH COURT] the matter is decided in favour of the assessee and against the Revenue. In the result, the ground of appeal is allowed. Disallowance u/s 14A - HELD THAT:- Undisputedly, no exempt income has been earned by the assessee during the year under consideration. Further, there is no fresh investment which has been made by the assessee company during the year and the assessee has contended that the investment so made in the earlier year has also been made out of its own funds and not out of the borrowed funds. Given that no borrowed funds have been utilized for making investment and the fact that no income has been earned during the under consideration, the disallowance U/s 14A r.w.r. 8D is not justified and the same is directed to be deleted. - Decided in favour of assessee. Disallowance of share issue expenses - not allowing the alternative contention of allowing the said expenditure U/s 35D - HELD THAT:- Firstly, we are unable to agree to the contention of the assessee company that the aforesaid expenditure incurred in connection with increase in the capital base of the company by way of increase in the authorized capital as well as increase in paid capital be allowed as revenue expenditure as it is a settled proposition that such an expenditure was connected with increase in capital base of the company and thus, a capital expenditure. Expenditure incurred towards increase in the authorized and paid up capital which has resulted in increase in capital base of the assessee company has rightly been treated by the Assessing officer as a capital expenditure and the contention advanced by the assessee company to treat the same as revenue expenditure therefore cannot be accepted. Expenditure should be allowed to be amoritised over the period of time in terms of section 35D - Assessee is held eligible for amortization of the expenses incurred in terms of fees paid to Registrar of companies towards the increase in authorized and paid up capital as per the provisions of section 35D of the Act and the Assessing officer is directed to allow the same. In the result, the ground of appeal is allowed in favour of the assessee and against the Revenue. Disallowance of professional and legal fees incurred to bring IPO which was subsequently abandoned - HELD THAT:- These expenses have been incurred by the assessee company in connection with the IPO which ultimately got aborted due to unfavourable market conditions which is beyond its control. By incurring such expenditure, no new asset has come into existence or any enduring benefit has accrued to the assessee company. As far as red hearing prospectus is concerned, we find that it is a document which is prepared and submitted to SEBI for its approval seeking permission to raise funds through an IPO and is thus a regulatory requirement which would be required to be submitted every time the company wishes to raise the funds in future and requires to contain latest data, statistics and declarations about the company, its promoters, past filings and financials and utilization of the proceeds of the IPO and therefore, it cannot be said that once such a document is prepared, it can be used subsequently for any future IPO. Therefore, the stand of the Assessing officer that such a document will provide an enduring benefit to the assessee company cannot be accepted. In light of aforesaid discussions and respectfully following the decision of the Hon ble Bombay High Court in case of Nimbus Communication (supra) and in absence of any contrary authority, the expenses incurred in connection with aborted IPO are allowed as revenue expenditure. The alternate contention regarding amortization u/s 35D has thus becomes infructious and is not adjudicated upon. The matter is thus decided in favour of the assessee and against the Revenue. Lower grant of interest u/s 244A - HELD THAT:- We deem it appropriate that the claim so made by the assessee company is verified as the same is a matter of record. The matter is accordingly set-aside to the file of the Assessing officer to verify and examine the claim of the assessee regarding short grant of interest u/s 244A and decide as per law. In the result, the ground is allowed for statistical purposes. Depreciation on account of Toll Buildings under the block of Building - HELD THAT:- In light of the fact that such Toll building is part of the building block of the assets and in the earlier years, the depreciation on such building block including Toll building has been allowed by the Revenue, the Assessing officer is hereby directed to allow the depreciation on Toll building after due verification. In the result, the ground of appeal is allowed. Disallowance of socio-economic expense u/s 37 - assessee company has undertaken HIV-AIDS awareness and prevention programme among the drivers and other people living in the vicinity of various road highways stretches developed and operated by it - HELD THAT:- Assessee company has put up sign boards along the highways and has also undertaken various community reach and awareness programmes among the drivers and local people. We find that besides educating the drivers about such disease and the consequent health hazards, what the assessee company is also trying to do is protect the local inhabitants, who are staying in the vicinity of various road highways stretches developed and operated by it, from the floating population of drivers who are prone to such diseases and build a more conducive and healthy environment for smooth functioning of road stretches and has thus established a necessary nexus with its business activities. Such an activity and consequent incurrence of expenditure is also in consonance with the partnership and development agreement signed by the assessee company with the Government of Rajasthan where the assessee company is obliged to carry out such activities. The expenditure so incurred is directed to be allowed in the hands of the assessee company as an allowable expenditure and the matter is allowed in favour of the assessee company - Decided in favour of assessee.

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• 2020 (8) TMI 124
  Penalty u/s 271(1)(c) - unaccounted purchases - Validity of notice u/s 274 - Non-specification of charge - AO is not ascertained that for which finding the penalty u/s 271(1)(c) is initiated . - HELD THAT:- It is not a case claim of deduction by the assessee which was not allowed by the AO but it is a case of concealment of certain transactions thereby the assessee has suppressed the purchases recorded in the books of accounts. This fact was detected by the AO when he has examined the details given in form 26AS. The decision relied upon by the assessee that mere disallowance or addition made by the AO would not amount to concealment of particulars of income or furnishing inaccurate particulars of income are not applicable. Those decisions are applicable when the assessee made a claim of deduction which is a bonafide claim but the same was disallowance by the AO as the claim is not allowable as per provisions of the Act. Thus the decisions relied by the assessee including judgment in case of CIT vs. Reliance Petroproducts Pvt. Ltd. [ 2010 (3) TMI 80 - SUPREME COURT] are not applicable in the facts of the present case. Therefore, the assessee has no case on the merits of levy of penalty u/s 271(1)(c) of the IT Act. Satisfaction recorded in the assessment order does not require any specific charge but the statement of the AO that penalty proceedings u/s 271(1)(c) of the Act are separately initiated is sufficient. Therefore, the satisfaction recorded by the AO in the assessment order shall have no legal implementation as regard the charge for which the penalty is initiated and finally levied. The notice issued by the AO U/s 274 of the Act though states that the penalty proceedings U/s 271(1)(c) of the Act are initiated for furnishing inaccurate particulars of income or concealment of particulars of income. Even if the AO was not certain about the charge at the time of initiation of the penalty proceedings but he has given a definite conclusive finding regarding the default or charge at the time of passing the penalty order then no default cannot be found in the penalty order. When the AO has given a certain and definite finding at the time of passing the penalty order then there is no illegality in the penalty order passed U/s 271(1)(c) - Appeal of the assessee is dismissed.

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• 2020 (8) TMI 123
  Disallowance u/s 14A read with Rule 8D - D.R. referred to Board Circular on the proposition that even under such circumstances when no dividend income has earned, addition could be made under section 14A because the A.O. is bound by the mandatory provisions of Rule 14A read with Rule 8D(2) - CIT- A deleted the addition - HELD THAT:- Since it is an admitted fact that no dividend income is earned by assessee in assessment year under appeal which fact is clearly mentioned in the Orders of the authorities below, therefore, it is an undisputed fact that assessee company has not received any dividend income in assessment year under appeal. This issue has also been decided in case of Cheminvest Ltd.[2015 (9) TMI 238 - DELHI HIGH COURT] that Section 14A will not apply if no exempt income is received or receivable during the relevant previous year. The Ld. CIT(A) correctly followed the decision of Hon ble Delhi High Court in the case of Cheminvest Ltd., (supra) and hence, no interference is required into the matter. The Departmental Appeals fails and is accordingly dismissed. - Decided against revenue.

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• 2020 (8) TMI 122
  Disallowing overseas sampling cost - Bogus expenditure - HELD THAT:- Revenue has not disputed the assessee s sampling cost per se by doubting genuineness thereof. As it is rightly pointed out by the CIT(A) in his above extracted lower appellate discussion, there is also no material even as per the AO that the impugned samples have been in anyway sold outside books or the same has been included in the closing stock. We wish to make it clear that the assessee is engaged in highly competitive designer clothes market wherein the market samples may not always fetch any income in a segment having ever involving fashion trends. DR also fails to dispute that the assessee has been adopting the very criteria of claiming the sampling cost/samples then not including it in the closing stock since no more relevant in the export market. We thus affirm the CIT(A) s foregoing conclusion and decline Revenue s first substantive ground. Disallowance of Puja expenses as restricted to 50% in the lower appellate proceedings - HELD THAT:- Both parties fail to dispute that such Puja expenses in business premises are a routine expenditure item nor the assessee has been able to provide all the corresponding details in the case records. Under these circumstances, we deem it appropriate that a lumpsum disallowance of Rs.10,000/- only shall meet the ends of justice with a rider that the same shall not be treated as a precedent in any other assessment year. The Revenue s instant second substantive ground fails and the assessee s first substantive ground in its cross objection stands partly accepted. Director s remuneration u/s 80IA(7) - Revenue s case before us is that the Assessing Officer had rightly allocated the assessee s director s remuneration qua eligible and non eligible units u/s 80IA(7) of the Act going by the corresponding profit ratio - HELD THAT:- Revenue fails to dispute that it is not the profit but turnover criteria which is more suitable involving such a factual backdrop of eligible and non eligible units since the former may or may not involve deduction in earlier years under the provisions of the Act whereas the turnover benchmark is always applicable even it involves losses as well. We also note that the assessee has been constantly following past practice throughout in allocating its expenses on turnover basis only. We therefore uphold the CIT(A) s impugned action directing the Assessing Officer to adopt the very benchmark for allocating the assessee s director s remuneration between eligible and non eligible units. The Revenue s instant third substantive ground fails. Section 14A r.w.s. Rule 8D(2)(ii) disallowance of proportionate interest expenditure - HELD THAT:- We find that the CIT(A) s lower appellate discussion has directed the Assessing Officer to take into action only those investments which have yielded exempt income going by hon ble jurisdiction high court s decision in DCIT vs. REI Agro Industries Ltd .[ 2014 (4) TMI 713 - CALCUTTA HIGH COURT] . Revenue fails in its fourth substantive ground as well. Provident fund/ESI payments disallowance u/s 36(1)(va) r.w.s. 2(24)(x) - HELD THAT:- We notice herein as well that the assessee has paid the impugned sum well before the due date of filing return as per hon ble jurisdiction high court s decision in CIT vs. Vijay Shree Ltd. [ 2011 (9) TMI 30 - CALCUTTA HIGH COURT]. CIT(A) s findings to this effect are affirmed therefore

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• 2020 (8) TMI 121
  Disallowance u/s. 14A r.w.r. 8D - HELD THAT:- As no break-up of investment or schedules of the balance sheet were submitted to substantiate that no expenses were incurred towards earning exempt income. Therefore, we do not find any substance in the contention of the assessee of computing disallowance to the extent of Rs. 43,634/- towards expenditure incurred for earning exempt income, however, we restrict the disallowance to the extent of exempt income to the amount of Rs. 2,48,183/- as held in the various decisions of ITAT Ahmedabad i.e. Jivraj Tea Ltd. [ 2014 (9) TMI 131 - ITAT AHMEDABAD ] . Depreciation of Motor Car expenses - HELD THAT:- The assessee has suo motto made disallowance of Rs. 20,000/- out of motor car expenses indicating proportionately personal elements in use of motor car. During the course of assessment proceedings, the assesssee has failed to controvert the personal use of the motor car by the partners therefore the assessing officer has proportionately made disallowance @ 20% of motor car expenses as prescribed in the provisions of section 38(2) of the I. T. Act. During the course of appellate proceedings before us the ld. counsel has failed to refer any specific material to demonstrate any infirmity in the decision of the lower authority. Therefore, we do not find any merit in this ground of appeal of the assessee and the same stands dismissed. TDS u/s 194A - Disallowance u/s. 40(a)(ia) - disallowance of interest on car loan and amount paid to M/s. Naveen Trade Link Pvt. Ltd. as handling charges on which no TDS was deducted - HELD THAT:- Ld. counsel has neither demonstrated how the financial charges paid for car loan are not covered u/s. 194A nor pointed out any specific exception prescribed in section 194(3) of the Act under which the payer of the interest on car loan was covered. Alternative contention of the ld. counsel that no TDS to be made if the payee has paid tax as per proviso to section 40(a)(ia) and the judicial pronouncements referred in his submission and the claim that payment made to Navin Tradelink Pvt. Ltd. was towards reimbursement of expenses are required to be considered after examination and verification of the relevant material. Therefore, we restore both the issues as supra to the file of the assessing officer for deciding afresh after examination/verification of the relevant material to be furnished by the assessee at the time of set aside proceedings. Accordingly, this ground of appeal of the assessee is allowed for statistical purposes. Disallowance u/s. 36(1)(vii) - advances made for non-business purposes - HELD THAT:- We do not find any reference or examination of such materials in the findings of the lower authorities. It is also observed that the issue of interest paid in respect of acquiring capital assets has not been examined as prescribed in the proviso to section 36(1)(iii) in respect of period of acquisition of the asset and the date on which such asset was first put to use to determine the deduction. The assessing officer is required to examine/verify the above referred material placed in the paper book to determine the claim of the assessee that loan/advances were extended for the business purposes and in case it is found that the loan/advances used for acquiring capital asset then the assessing officer has to examine the same as elaborated above after taking into consideration the proviso to section 36(1)(iii). Accordingly, this ground of appeal of the assessee is allowed for statistical purposes.

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• 2020 (8) TMI 120
  TDS u/s 195 - payment made outside as fees for technical services - disallowing expense on the ground of non-deduction of withholding tax on such expenses - HELD THAT:- In the case of Pinstorm Technologies (P.) Ltd. [ 2012 (12) TMI 601 - ITAT MUMBAI] it is held that payment made to non-resident for uploading and display of banner advertisement on its portal, in absence of any PE of non-resident in India would not be chargeable to tax in India. In the case of ITO vs. Right Florist [ 2013 (4) TMI 338 - ITAT KOLKATA] it is held that fees for online advertisement could not be considered as fees for technical services in view of provision of tax treaties with U.S.A. We consider that there was no sharing of knowledge or know-how or any technology to the assessee as prescribed in the Article 12 of the DTAA between India and U.SA., therefore, we find substance in the assertion of the assessee that tax was not deducted u/s. 195 of the Act since the payment made was not taxable in India. Accordingly, the appeal of the assessee is allowed.

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• 2020 (8) TMI 119
  TDS u/s 194C - Disallowance u/s. 40(a)(ia) - freight charges paid without deduction of tax - HELD THAT:- A plain reading of the provisions of subsection 6 of section 194C of the Act reveals that the assessee shall not deduct any TDS on the payment made to the contractor engaged in the business of plying, hiring or leasing goods carriages, on furnishing of his PAN to the assessee. There is no ambiguity about the fact that contractor has furnished its PAN to the assessee as evident from the page number 13 of the paper book where the copy of the PAN is placed. As such the contractor has discharged its liability by furnishing PAN to the assessee for non-deduction of TDS under section 194C (6) of the Act. Accordingly the assessee did not deduct the TDS. We also note that the requirement under sub-section 7 of section 194C of the Act for furnishing PAN to the prescribed authority within the prescribed time and form is procedural in nature as held in the case of Vali bhai Khan bhai Mankad [ 2011 (4) TMI 887 - ITAT, AHMEDABAD]. If the assessee failed to furnish the requisite form to the prescribed authority within the time, he cannot be made subject to the disallowance of transport expenses on account of non-deduction of TDS. Accordingly, we hold that there cannot be any disallowance of the transport expenses incurred by the assessee after 30th September 2009. TDS u/s 194C - HELD THAT:- We hold that the expenses claimed by the assessee on account of transport charges cannot be disallowed on account of non-deduction of TDS under section 194C of the Act. Hence the ground of appeal of the assessee is allowed. Disallowance of amount of interest on the amount advanced as interest-free advance loans - addition u/s 40A - whether the assessee has given loans and advances without interest to the specified persons for the commercial purposes? - HELD THAT:- Assessee on one hand is advancing interest free loans and advances to his father proprietary concern and on the other hand the assessee is paying interest on the loan obtained from his father. In the case on hand it is a transaction between the individual assessee and the Proprietary concerns of the father of the assessee. Accordingly we are of the view that the facts are different from the present case with the facts of the case referred by the assessee. We find force in the argument of the assessee that there cannot be any disallowance of any interest expenses for the amount advanced to the aforesaid firms without any interest to the extent of the amount available with the assessee in the form of capital. Accordingly we direct the AO to work out the amount of loans and advances given without interest after reducing the own fund in the form of capital of the assessee from the said amount. Thus the ground of appeal of the assessee is partly allowed.

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• 2020 (8) TMI 118
  Estimation of income - CIT(A) estimation at 3% as against estimated by AO as 5% of the credit entries in the bank account of the assessee, the assessee estimated the income at 1% - HELD THAT:- Assessee might have carried out the business of providing credit entries to various parties and by entering into dubious transactions, he earns commission. There is no record kept by him, how much commission he has earned and he offered only 1% of the total cash deposits whereas ,AO applied the profit rate of commission at the rate of 5% and CIT(A) estimated at 3%. In all probabilities there has to be an estimate as the assessee is unable to give list of beneficiaries, so that, correction commission can be estimated. Profit rate estimated by CIT(A) seems reasonable but still a more reasonable value can be taken and hence, restrict the disallowance at 2%, direct the Assessing Officer to compute the income after taking into consideration the profit rate at 2% of the cash credit entries as deposited in the bank account, I direct the Assessing Officer accordingly. Both the appeals of this issue are partly allowed. Addition of unexplained cash credits u/s 68 - HELD THAT:- Main plea of the assessee that there are cash withdrawals from the bank of Rs. 6,68,550/- as against which cash deposit made is Rs. 6,60,250/-. This needs verification. As now assessee is not present, let this issue be restored back to the file of the Assessing Officer for re-examination of the issue. Needless to say, that the assessee will file the details of bank withdrawals and will co-relate with the cash deposit made in the bank account. In term of this, this issue is restored back to the file of the Assessing Officer. Unexplained cash credit - CIT(A) allowed the benefit of the income determined of commission added at 3% and thereby restricted the addition at Rs. 2,53,290/- - HELD THAT:- Departmental Representative supported the order of CIT(A) but from the orders of the lower authorities it is clear that only the pending balance and cash explained are not in the chart giving the details of cash withdrawals along with date wise cash deposit in corporation bank. That this needs verification at the level of the Assessing Officer. Hence, the matter is remitted back to his file for fresh verification. Needless to say that the assessee will provide all the details before the Assessing Officer. Addition u/s 68 - HELD THAT:- None of the details are emerging in the order of CIT(A) as regards to name, source of the creditor, creditworthiness of the creditor. Unless and until these details are available, it is very difficult for me to adjudicate this issue at this level. Hence, this issue is also remitted back to the file of the Assessing Officer for fresh adjudication after considering the provisions of section 68. Appeals of the assessee are partly allowed for statistical purposes.

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• 2020 (8) TMI 117
  Addition u/s 68 - share application money share premium received from Bharosemand Commodities Pvt Ltd u/s 68, treating the same as not genuine from undisclosed source - HELD THAT:- Share application money has been received from 16 parties. In case of one party in this case there is no proof at all about the existence of the said party which had contributed the said share premium and share application amount. We note that assessing officer has made the necessary enquiry through income tax office Kolkata. The said party was found to be not at all existing at the said address. The enquiry from the nearby persons also indicated that no such company operated from the said address. CIT(A) is quite correct in observing that in case of a private limited company if a person is contributing so much money in share application and share premium the assessee company was obliged to give the correct whereabouts of the said company. We find ourselves fully in agreement with the above findings. When it has been categorically proved that there is no physical existence of the said company at the given address the submission of the assessee that his submissions regarding papers submitted in this regard should be given precedence over the actual fact about the non-existence of the said party is absolutely unsustainable. It is settled law that revenue authorities are not supposed to put on blinkers. See SUMATI DAYAL VERSUS COMMISSIONER OF INCOME-TAX [ 1995 (3) TMI 3 - SUPREME COURT] - Decided against assessee.

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• 2020 (8) TMI 116
  Rectification of mistake u/s 254 - Credit of DDT [Dividend Distribution Tax] against its tax liability on the total income - short/deficit credit of DDT u/s 115-O and interest u/s 115-P - declining on the part of the Tribunal to address the grievance of the assessee, for the reason, that the same did not emanate from the impugned order - HELD THAT:- Hon ble Apex Court in the case of Genpact India (P). Ltd. Vs. Dy. CIT [ 2019 (11) TMI 1118 - SUPREME COURT] it can safely be concluded that an assessee remains well within his right to assail by way of an appeal the quantification of tax and interest liability raised by the revenue against it u/ss. 115-O and 115-P of the Act. In the backdrop of our aforesaid observations, we are of the considered view that the declining on the part of the Tribunal to address the grievance of the assessee as regards the raising of the demand u/ss. 115-O (tax) and 115-P (interest) by observing that the issue as regards quantification of DDT did not arise from the order passed by the CIT(A), is not found to be in conformity with the settled position of law laid down by the Hon ble Apex court in the afore mentioned judgments. Hon ble Apex Court in the case of ACIT Vs. Saurashtra Kuth Stock Exchange Ltd. [ 2008 (9) TMI 11 - SUPREME COURT] wherein it was observed that a non-consideration by the Tribunal of a judgment of the jurisdictional High Court or the Hon ble Supreme Court, though not brought to the notice of the Tribunal at the time of hearing of the appeal would constitute a mistake apparent from record which could be rectified under Sec. 254(2). Accordingly, on the basis of our aforesaid observations, the order passed by the Tribunal while disposing off the appeal of the assessee is rectified. We herein restore the matter to the file of the A.O, who is herein directed to verify the claim of the assessee that though it had deposited DDT of Rs. 33,21,750/- u/s 115-O of the Act, vide a challan dated 17.05.2010 (as per Form 26AS ), however, credit has been allowed only to the extent of Rs. 32,44,500/-. Resultantly, the impugned demand towards such short/deficit credit of DDT of Rs. 77,250/- u/s 115-O and interest u/s 115-P of Rs. 4,69,975/- had been raised by the revenue. Miscellaneous application filed by the assessee is allowed.

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• 2020 (8) TMI 115
  Validity of reopening u/s.148 - Addition of bogus purchases - HELD THAT:- On the basis of information received from the Investigation Wing which was based on information forwarded by Maharashtra VAT Department that the assessee has availed Hawala entry of bogus bill purchases in the financial year 2010-11.Based on this information, reopening has been done u/s.148. From the perusal of the record, it is seen that, nowhere AO has disputed that the source of purchase is outside the books of account. In fact the purchase of same amount and invoice has been recorded in the books of account and duly disclosed and the amount has been paid through banking channels. The corresponding sales have also not been disputed including the directed expenses and the gross profit. This could be a case where assessee has made purchases in cash and has taken an accommodation bill for same quantity for which cheque amount has been issued. In such a case also, the source of purchase are from the books, therefore, the entire purchases cannot be treated as income of the assessee especially when books of account have not been rejected and sales and GP stands accepted in the trading account. It could be at best, a case of suppression of GP on the purchase. Profit element of such amount should be added as income. Accordingly, Assessing Officer is directed to apply the GP declared by the assessee on purchase of Rs. 1,93,066/- and balance amount should be deleted. Validity of reopening u/s.148 - No merits in the contention of the ld. counsel for the reason that, firstly, there was a categorical information wherein the assessee s name was appearing along with details of the parties from whom the assessee has made purchases which were found to be Hawala operator providing accommodation bogus bills. The Assessing Officer after receiving the information has independently applied his mind and recorded his reason to believe as to why such a purchase is not genuine. Thus, do not find any infirmity in the jurisdiction accorded u/s.147 and the same is dismissed. Appeal of the assessee is partly allowed.

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• 2020 (8) TMI 106
  Deduction u/s 80IC - reallocating office expenditure qua its three units - HELD THAT:- We no merit in Revenue s foregoing stand. Case records indicate that both the lower authorities had made a similar estimation of allocation of expenses leading to disallowance qua the very eligible unit at Rudrapur in AY 2010-11 without rejecting the assessee s books of account. This tribunal s order in assessee s appeal [ 2019 (5) TMI 101 - ITAT KOLKATA] in the said earlier assessment year holds that such a record is not open to the department in absence of rejection of books of account. The very factual position continues in the impugned assessment year as well wherein the lower authorities, have not rejected the assessee s books. We thus adopt judicial constituency and direct the Assessing Officer to delete the impugned disallowance arising from re-allocation of assessee s head of expenditure. - Decided in favour of assessee.

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• Customs

• 2020 (8) TMI 114
  Levy of ADD - initiation of New Shipper Review - Notification dated January 01, 2018 - determination of individual margins of dumping for them - litigant himself fails to avail opportunity to bring the correct facts to the notice of the authority - violation of principles of natural justice or not - HELD THAT:- In the present case, it was the producer/exporter who had filed an application for determination of individual margins of dumping for them since anti-dumping duty on the subject goods from the subject country had already been levied earlier in the original investigation and the two sunset reviews. The producer/exporter came out with a case that they had not exported the product to India during the original period of investigation or the sunset reviews and, therefore, instead of imposing the anti-dumping duty as was contained in the Customs Notification dated January 28, 2016 issued on the basis of the second sunset review, individual margins of dumping should be determined for them. It was for the producer / exporter, as noticed above, to have at the initial stage itself not only informed the Designated Authority whether the normal value should be determined on the basis of a non- market economy country or market economy country and which of the three options available under paragraph 7 of Annexure-I to the 1995 Rules should be adopted by the Designated Authority, but for reasons best known to the producer/ exporters, such information was not divulged to the Designated Authority. In such circumstances it does not lie in the mouth of the producer/ exporter to contend that hearing should have been granted to the producer / exporter by the Designated Authority before the issue of the disclosure for taking Qatar as a surrogate country. Determination of the normal value under the second option provided for in paragraph 7 of Annexure-I to the 1995 Rules - HELD THAT:- The contention of the producer and the exporter is that the third country should have been selected by the Designated Authority at the stage of initiation itself. This submission cannot be accepted because as noticed above, the producer or the exporter did not even indicate which of the three criteria stipulated in the paragraph 7 of the Annexure-I of the 1995 Rules should have been adopted for determination of the normal value. There is also no error in the determination of the normal value by the Designated Authority by resorting to the second method mentioned in paragraph 7 of Annexure-I to the 1995 Rules as none of the parties had suggested applying the first criteria set out in paragraph 7 - The producer / exporter is also not justified in asserting that Qatar could not have been taken as a surrogate country as the level of development is not similar to that of China. The level of development would be relevant only if the domestic sale price or cost of production of a market economy third country is adopted since the level of development affects the price and cost. The price in international trade is a function of demand and supply in the international market and it is not affected by the level of development of the supplier country. It is apparent that normal value for non market economy is dealt with on a case to case basis and the producer/ exporter is not justified in asserting that in the present case the Designated Authority should have also determined the normal value under the third condition contained in paragraph 7 - There is, therefore, no substance in any of the submissions advanced on behalf of the producer/ exporter and the appeals filed by the producer and the exporter deserve to be dismissed. When the Designated Authority proceeded to determined the margin of dumping in relation to an article on the basis of the facts available on record, it will not be prudent to set aside the final findings of the Designated Authority or the Customs Notification merely for the reason that the producer/ exporter did not apprise the Designated Authority at the initial stages about the method to be adopted for determination of normal value. The export price that has been calculated by the Designated Authority is not the price of the exporter, was increased substantially in order to lower the anti-dumping duty, but on the basis of the ex-factory price of the producer. There is, therefore, no merit in this appeal - appeal dismissed.

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• Corporate Laws

• 2020 (8) TMI 113
  Penalty u/s 383(1A) of the Companies Act, 1956 - non-application of mind - the company did not have a Whole-time secretary - order passed only on the basis of a bare complaint without any supporting documents - allegation is that despite having share capital of more than Rs. 50 lacs as on 31.03.1996, the company did not have a Whole-time secretary from 18.09.1997 - HELD THAT:- The respondent in this case as well, chose to file the criminal complaint without any supporting documents despite referring to them in the body of the complaint - A perusal of the complaint would show that in Para 4, it was stated that the criminal complaint had been filed only on the basis of an Inspection Report, conducted at the behest of the respondent which revealed the alleged contravention. However, neither the contents of any Inspection Report were reproduced in the complaint nor the same was filed along with the complaint. Learned ACMM, while passing the order on summoning had completely overlooked this aspect that not only the Inspection Report, which was stated to be the very basis of filing the complaint, was not filed, but the other supporting documents mentioned in the complaint were also not placed on record. This non application of mind continued when, again in absence of the above referred documents, ld. ACMM framing the notice under S. 251 Cr.P.C. against the petitioners. The respondent was well aware of the objections raised in the earlier petition but still remained in a state of inertia and did not bring on record the requisite documents for 9 years despite being in possession of those document for all these years. It is not a case of inadvertence but rather sheer continued negligence which has caused serious failure and prejudice to the petitioners - The application of mind at the time of taking cognizance and framing of notice is sine qua non. In the opinion of this Court, the impugned order of framing of notice and the earlier order of summoning were passed mechanically in a perfunctory manner without any application of judicial mind either to the facts or to the records of the case. Accordingly, in the facts and circumstances of the case, the petition deserves to be allowed on this ground only and the other grounds raised need not be gone into. Petition allowed.

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• Insolvency & Bankruptcy

• 2020 (8) TMI 112
  Appointment of RP/IRP - whether an ex-employee of the Financial Creditor having rendered services in the past, should not be permitted to act as Interim Resolution Professional at the instance of such Financial Creditor , regard being had to the nature of duties to be performed by the Interim Resolution Professional and the Resolution Professional ? HELD THAT:- It is not in controversy that Mr. Shailesh Verma proposed as Interim Resolution Professional by the State Bank of India is an exemployee of the Financial Creditor having served the organisation for 39 years in the past and retired as the Chief General Manager in 2016. Merely, because Mr. Shailesh Verma continues to draw pension for services rendered in past does not clothe him with the status of an interested person . The fact that Mr. Shailesh Verma is drawing pension from Financial Creditor s organisation does not clothe him with the status of an employee on the payroll of Financial Creditor . Pension is paid for the services rendered to the employer in the past and it is a benefit earned for such past services under the relevant Service Rules. The pensioner is entitled to such benefit as a privilege under the Service Rules and not as a boon from the ex-employer - The Regulation clearly provides that an Insolvency Professional shall be eligible for appointment as a Resolution Professional for the Corporate Insolvency Resolution Process of a Corporate Debtor if he or his partners and directors of the Insolvency Professional Entity are independent of the Corporate Debtor . Admittedly, Mr. Shailesh Verma is a qualified Insolvency Professional and neither he nor any of his associates is alleged to be connected with the Corporate Debtor in a manner rendering him ineligible to act as a Resolution Professional . Observations of the Adjudicating Authority in the impugned order with regard to Interim Resolution Professional to act as an Independent Umpire must be understood in the context of the Interim Resolution Professional acting fairly qua the discharge of his statutory duties irrespective of the fact that he is not competent to admit or reject a claim. The apprehension of bias expressed by the Corporate Debtor qua the appointment of Mr. Shailesh Verma as proposed Interim Resolution Professional at the instance of the Appellant- Financial Creditor cannot be dismissed offhand and the Adjudicating Authority was perfectly justified in seeking substitution of Mr. Shailesh Verma to ensure that the Corporate Insolvency Resolution Process was conducted in a fair and unbiased manner - Appeal dismissed.

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• Service Tax

• 2020 (8) TMI 111
  Extended period of limitation - - Manpower Recruitment or Supply Agency Services - two views of the Tribunal itself in two different orders - HELD THAT:- The Tribunal has not at all assigned proper reasons for its order on the said issue no. 4, regarding taxability of the manpower services provided by the Assessee, and whether in those facts and circumstances of the case, the extended limitation could be invoked by the Department or not. Without discussing the relevant facts and ratio of its two judgments, referred to and relied on by the learned Tribunal, and the facts of the case of the respondent/Assessee, merely writing these citations in the said order itself is not enough. The order of the final fact finding body at the level of Tribunal has to be self contained and should discuss the relevant facts and reasons for arriving at a particular conclusion. The higher Constitutional Courts hearing the appeals against such orders cannot be expected to delve deeper into the study of facts and ratios of the orders of the learned Tribunal, in the manner in which the learned Tribunal perhaps thought. Mere reference of the citations in the order and then holding that the extended limitation could not be invoked to the Revenue is a serious prejudice caused to the interest of the Revenue, in the absence of discussing the relevant facts, and giving reasons, for arriving at a particular conclusion. We are restraining ourselves from expressing anything further on the tenor of the order passed by the learned Members of the Tribunal in the present case. The appeal restored back to the learned Tribunal, with a request to hear the appeal de novo on the said issue and decide the same as expeditiously as possible.

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• Central Excise

• 2020 (8) TMI 110
  Maintainability of appeal - non-compliance of pre-deposit under section 35F of Central Excise Act, 1944 - HELD THAT:- The petitioners have not been able to make out any exceptional grounds of undue hardship for waiver of mandatory pre-deposit under section 35-F of C.E.A, 1944, as amended with effect from 06th August 2014 in exercise of writ jurisdiction. Petition dismissed.

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• 2020 (8) TMI 109
  Refund of duty accumulated on account of export - Export of goods - Rule 5 of Cenvat Credit Rules, 2004 - Rebate of duty u/r 18 of CER claimed - HELD THAT:- As per Rule 5 of the Cenvat credit Rules, 2004, a manufacturer who has cleared his final product for export without payment of duty under bond or letter of undertaking can file refund claim under Rule 5 of Cenvat Credit Rules, 2004 - Admittedly, none of these conditions has been satisfied by the appellant as they have neither cleared the goods under bond without payment of duty or through letter of undertaking. therefore, fundamentally, the appellant has not complied with the condition of Rule 5 of Cenvat Credit Rules, 2004. Further, as per the proviso of the said rule, no refund of Cenvat credit shall be allowed if manufacturer avails drawbacks allowed under customs duty or Central Excise and service tax drawbacks Rules 1995 or claim rebate of duty under Sections of Central Excise Rules, 2002 which means that the assessee shall not claim rebate of duty under Central Excise Rules, 2002 - Admittedly, in this case, the appellant has claimed rebate of duty under Rule 18 of Central Excise Rules, 2002. Under the provision of Rule 5 of Cenvat Credit Rules, 2004, the refund claims are not maintainable - Appeal dismissed - decided against appellant.

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• CST, VAT & Sales Tax

• 2020 (8) TMI 108
  Constitutional validity of Section 3(1A) of the Kerala Surcharge on Taxes Act, 1957 - Levy of surcharge on sales and purchase taxes - additional levies on the big chains coming into the retail sector - HELD THAT:- It is by now a settled law that the surcharge is in the nature of tax and that being so, levy of surcharge is not only violative of Article 301, but unconstitutional, unless similar levy of surcharge is also imposed on goods manufactured or produced in the State of Kerala. Section 3(1A) does not satisfy the first limitation prescribed under Article 304(a), i.e., similar levy on dealers engaged in sale of local goods and the second limitation permitting the State to levy a tax under Article 304(a) to be not discriminatory - The levy should not create any discrimination between the goods so imported or manufactured and produced. State Government in the matter of levy of taxes cannot discriminate between the goods imported from other States and manufactured or produced within the State levying such tax. The whole doctrine of classification is based upon the distinction and on a well known fact that the circumstances which govern one set of the persons and objects may not necessarily be the same governing the other set of persons - there is no illegality or perversity in the order of the learned single Judge to form a different opinion than the one held. Appeal dismissed.

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• Indian Laws

• 2020 (8) TMI 107
  Smuggling - cannabis (ganja) - contraband item - rebuttal of presumption - presumption against the accused of culpability under Section 35 - fabricated and fictitious document - HELD THAT:- In view of the nature of evidence available it is not possible to hold that the prosecution had established conscious possession of the house with the appellant so as to attribute the presumption under the NDPS Act against him with regard to recovery of the contraband. Conviction could not be based on a foundation of conjectures and surmises to conclude on a preponderance of probabilities, the guilt of the appellant without establishing the same beyond reasonable doubt - The police investigation was very extremely casual, perfunctory and shoddy in nature. The appellant has been denied the right to a fair investigation, which is but a facet of a fair trial guaranteed to every accused under Article 21 of the Constitution. The consideration of evidence by the Trial Court, affirmed by the High Court, borders on perversity to arrive at conclusions for which there was no evidence. Gross misappreciation of evidence by two courts, let alone poor investigation by the police, has resulted in the appellant having to suffer incarceration for an offence he had never committed. The conviction of the appellant is held to be unsustainable and is set aside - appellant is acquitted - Appeal allowed.

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