TMI Tax Updates - e-Newsletter
August 12, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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Income Tax:
TDS u/s 194A on Interest accrued on Compensation awarded under the Motor Vehicle Act - Interest for the period from the date of the Claim Petition till passing of the award or the judgment is not taxable and hence no TDS liability - However, interest for delayed deposit of award after the decision, is taxable.
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Income Tax:
Penalty u/s. 271E - period of limitation - There is no dispute that the period of limitation is required to be examined as per Section 275(1)(c) - it is futile to contend that the date of initiation of proceedings is the date on which the JCIT receives intimation from the AO or the date on which the JCIT issues SCN to the Assessee - AO having initiated the penalty proceedings in assessment order dated 24.3.2016 and imposed on 27.1.2017 - bared by limitation
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Income Tax:
Allowability of Interest on mobilization advance - amount was received for the execution of work contract - once the said amount was utilized for the execution of the contract work of the assessee joint venture then the interest paid on the mobilization advance is an allowable expenditure in the hand of the joint venture
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Income Tax:
Waiver of interest u/s 234C - accruing of income of demerged company - demerger scheme was under contemplation does not mean that approval by the High Court was a certainty - hence till the approval was granted, demerged company could not have anticipated or contemplated flowing of the income in its coffers - Commissioner committed a serious error in rejecting the application for waiver of interest
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Income Tax:
Penalty u/s 271(1)(c) - while declining deduction u/s 80IA no defect was pointed out by the A.O. with regard to assessee’s eligibility save and except there was delay in filing return of income - raising a bona fide legal claim, even if it is ultimately found to be legally not acceptable, could not amount to concealing particulars of income or furnishing of inaccurate particulars of income - no penalty
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Income Tax:
Levy of penalty u/s 271E - violation of provision of section 269T - repayment of loan was made in cash - when there is nothing on record suggesting that the loan amount was repaid in cash by the assessee - imposition of penalty would not be justified
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Income Tax:
Reassessment u/s 147 - level of enquiry at stage of re-opening and in reopening proceedings - In the re-assessment proceedings the AO was expected to undertake a full-fledged inquiry into the documents produced before him to come to the conclusion that the addition sought to be made was justified - AO seems to have done is to simply borrow the conclusions drawn by the ED without any independent inquiry - no addition
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Income Tax:
Penalty u/s 271C - non-remittance of TDS deducted to the Government account - assessee has not given any satisfactory explanation either before the AO nor before the CIT(A) and even not before ITAT - penalty provisions u/s 271C are applicable not only failure to deduct tax but also failure to remit the tax deducted to the Government account - penalty upheld
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Income Tax:
Approval u/s 80G(5) - whether registration u/s 12A/12AA is a pre-requisite - since the assessee has not produced any certificate of registration u/s 12A, the Appellate Tribunal could not have straightway come to the conclusion about the charitable activities of the trust and directed the Commissioner to grant the approval u/s 80G - order of ITAT is not sustainable in law
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Customs:
Revocation of CHA License - a bonafide belief for the impugned goods to be assorted birthday candles simplicitor whereas as per CFSL report it is firework - the goods are such that a small part thereof contains such chemical as are required to manufacture fireworks, in view of the principle of common parlance same cannot be hold as fireworks - no reason appears for the cancellation of appellant’s CHA license
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Corporate Law:
Eligibility of wages to dissenting workmen - company under liquidation - Several claims were lodged by the dissenting workmen before the official liquidator for adjudication - The finding recorded by the learned Company Judge that the consent terms do not bind dissenting workmen, in the circumstances, appears to be impeccable.
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Indian Laws:
Professional misconduct on the part of CA - it is submitted that, the complaint had been made beyond the period of seven years and the Chartered Accountants were not required to maintain audit records for more than seven years - This Court finds no infirmity with the said opinion - present petition is a frivolous one - dismissed with cost of ₹ 1,00,000/-
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Indian Laws:
Arbitral Award - Since the rate of interest granted by the Arbitrator is in accordance with Section 31(7)(b) of the Act of 1996, the High Court and the District Judge were not justified in reducing the rate of interest by following the U.P. Amendment Act.
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IBC:
RTI application - The request of the appellant to disclose the list of insolvency professionals against whom disciplinary proceeding is under process cannot be accepted
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Central Excise:
CENVAT Credit - denied on the ground that no duty was payable by supplier - recipient of cenvat invoices along with the goods be expected to understand or anticipate how much duty was actually to be paid by the supplier and take credit accordingly, even CCR 2004 also provides for credit of duty paid and not credit of duty that should have been paid - no scope for the credit to be altered
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Central Excise:
SSI Exemption - clubbing of clearances - in absence of substantial evidences of manufacturing and clearances of the goods brought on record by revenue, it cannot be assumed that since, the facility of manufacture at the premises of M/s JRSE, is inadequate, therefore, the goods must have been manufactured and cleared from the premises at Malad Unit of M/s PEEPL - demand clubbing the clearances is not sustainable
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Central Excise:
Refund of unutilized CENVAT Credit - rejection on the ground that the appellant failed to declare the credit under TRANS-1 - not disclosing the unutilized balance of CENVAT credit in ER1 returns is only a procedural lapse and cannot be a ground to reject the refund claim - the refund claim was u/s 11B r.w. Rule 5 of CCCR which are the only provisions for seeking the refund - directed to grant refund after examination of documents
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VAT:
Non-compliance of pre-deposit - ex-parte order - the material filed by the petitioner was not taken into consideration - the impugned assessment order was an appealable one and petitioner would have been statutorily bound to deposit part of the demanded tax amount as a condition precedent to maintain the appeal - order set aside and remanded with direction to deposit 12.5% of the assessed tax
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VAT:
Demand of bank guarantee as security to stay recovery proceedings - under Rule 37(1) of the U.P. VAT Rules, 2008, the respondents would have demanded the petitioner to deposit security in any of the forms as mentioned in the said rule and that bank guarantee is not provided as one of the measures for demanding the security - directed to follow rules
Articles
Notifications
Indian Laws-
S.O. 2902(E) - dated
9-8-2019
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Indian Law
Central Government appoints the 9th day of August, 2019, as the date on which the provisions of Part VII of Chapter VI of the Finance (No.2) Act, 2019 shall come into force
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S.O. 2901(E) - dated
9-8-2019
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Indian Law
Central Government appoints the 9th day of August, 2019, as the date on which the provisions of Part VI of Chapter VI of the Finance (No.2) Act, 2019 shall come into force
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S.O. 2900 - dated
9-8-2019
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Indian Law
Central Government appoints the 9th day of August, 2019, as the date on which the provisions of Part IV of Chapter VI of the Finance (No.2) Act, 2019 shall come into force
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S.O. 2899(E) - dated
9-8-2019
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Indian Law
Central Government appoints the 9th day of August, 2019, as the date on which the provisions of Part I of Chapter VI of the Finance (No.2) Act, 2019 shall come into force
SEZ-
S.O. 2874(E) - dated
6-8-2019
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SEZ
Central Government rescinds the Notification Number S.O. 919(E) dated 06th June, 2007
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2019 (8) TMI 519
Extension of time period for filing of GST TRAN-1 - transition to GST regime - transitional credit - HELD THAT:- The respondents are directed to reopen the portal within two weeks from today. In the event they do not do so, they will entertain the GST TRAN-1 of the petitioner manually and pass orders on it after due verification of the credits as claimed by the petitioner. List this matter on 09.09.2019.
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Income Tax
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2019 (8) TMI 518
TDS u/s 194A on Interest accrued on Compensation awarded under the Motor Vehicle Act - deduction of tax at source - Whether income tax department was justified in taking away 30% of the interest on the compensation which was determined nearly 36 years after the accident? - Taxability of interest income u/s 56 - Method of accounting u/s 145 r.w.s 145A HELD THAT:- The interest for the period between the filing of the claim petition and passing of the award is for the period when the claimant for the first time approached the Claims Tribunal asking the Tribunal to assess and award compensation and the time consumed in disposing of the Claim Petition. We may also recall, the interest can be awarded even though part of the compensation would comprise of future loss of income. This is so because, the multiplier method factors this aspect also. At the same time, as noted, the Courts do not award interest on future expenditure since the amount is being paid to the claimant for an expenditure which may be incurred at a later point of time. This dichotomy, thus, between awarding interest on future income while not awarding interest for future expenditure brings out the true character of the interest being awarded. The interest awarded in the motor accident claim cases from the date of the Claim Petition till the passing of the award or in case of Appeal, till the judgment of the High Court in such Appeal, would not be exigible to tax, not being an income. This position would not change on account of clause (b) of section 145A of the Act as it stood at the relevant time amended by Finance Act, 2009 which provision now finds place in sub-section (1) of section 145B of the Act. Neither clause (b) of section 145A, as it stood at the relevant time, nor clause (viii) of sub-section (2) of section 56 of the Act make the interest chargeable to tax whether such interest is income of the recipient or not. Section 194A of the Act is only a provision for deduction of tax at source. Any provision for deduction of tax at source in the said section would not govern the taxability of the receipt. The question of deduction of tax at source would arise only if the payment is in the nature of income of the payee. Section 194A(1) read with erstwhile clause (ix) and substituted clauses (ix) and (ixa) of subsection (3) - HELD THAT:- There can be no doubt or dispute. However, the fundamental question is does section 194A make the interest income chargeable to tax if it otherwise is not. The answer has to be in the negative. The provision for deduction of tax at source is not a charging provision. It only makes deduction of tax at source on payment of same, which, in the hands of payee, is income. If the payee has no liability to pay such income, the liability to deduct tax at source in the hands of payer cannot be fastened. In other words, the provision of deducting tax at source cannot govern the taxability of the amount which is being paid. These observations and conclusions would apply to interest on compensation or enhanced compensation awarded by the Motor Accident Claims Tribunal or High Court from the date of the Claim Petition till passing of the award or the judgment. Further interest which may be paid for delay in depositing the awarded amount, would not form part of the compensation and, therefore, would fall in the bracket of interest income and would be exigible to tax under the normal provisions. The impugned order of assessment is set aside and the assessment of the petitioner placed back to the Assessing Officer for passing fresh order in line with this judgment - petition allowed by way of remand.
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2019 (8) TMI 517
Validity of reopening of assessment u/s 147 - notice issued by the department u/s 148 to a dead person - HELD THAT:- As decided in CHANDRESHBHAI JAYANTIBHAI PATEL VERSUS THE INCOME TAX OFFICER [ 2019 (1) TMI 353 - GUJARAT HIGH COURT] in view of the provisions of section 159(2)(b) of the Act, it is permissible for the Assessing Officer to issue a fresh notice u/s 148 against the legal representative, provided that the same is not barred by limitation; he, however, cannot continue the proceedings on the basis of an invalid notice issued under section 148 of the Act to the dead assessee. As noticed notice under section 148 which is a jurisdictional notice, has been issued to a dead person. Upon receipt of such notice, the legal representative has raised an objection to the validity of such notice and has not complied with the same. The legal representative not having waived the requirement of notice under section 148 of the Act and not having submitted to the jurisdiction of the AO pursuant to the impugned notice, the provisions of section 292B of the Act would not be attracted and hence, the notice under section 148 of the Act has to be treated as invalid. In the absence of a valid notice, the Assessing Officer has no authority to assume the jurisdiction under section 147 of the Act and, hence, continuation of the proceeding under section 147 of the Act pursuant to such invalid notice, is without authority of law. The impugned notice as well as the proceedings taken pursuant thereto, therefore, cannot be sustained - Decided in favour of assessee.
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2019 (8) TMI 516
Disallowance made on account of payment of Royalty on sales made to AEs - HELD THAT:- Disallowance on account of payment of Royalty on sales made to AEs, reference is made to the orders of this Court in Honda Siel Power Products Limited vs. DCIT [ 2015 (12) TMI 1333 - DELHI HIGH COURT] and CIT vs. Honda Siel Power Products Limited [ 2016 (1) TMI 1283 - DELHI HIGH COURT] whereby the issue stands answered in favour of the Assessee. Accordingly, this Court declines to frame a question on this issue. AMP expenditure - it stands covered in favour of the Assessee and against the Revenue by order Principal Commissioner of Income Tax-4 v. Honda Siel Power Products Limited [ 2017 (3) TMI 1535 - DELHI HIGH COURT] Provision for service coupon is covered against the Revenue and in favour of the Assessee by Principal Commissioner of Income Tax v. Honda Siel Power Products Limited [ 2017 (3) TMI 1535 - DELHI HIGH COURT] Provision for warranty as an allowable expense is answered in favour of the Assessee and against the Revenue by the order in CIT v. Honda Siel Cars India Limited [ 2013 (5) TMI 1011 - DELHI HIGH COURT]
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2019 (8) TMI 515
Re-opening of the assessment u/s 147 - level of enquiry at stage of re-opening of assessment and in reopening proceedings - alleged that bribe was paid to the Iraqi officials which required to be added to the income of the Assessee - HELD THAT:- The crucial element of explaining how, on the basis of such record, the AO formed the reason to believe that income had escaped assessment is missing. As pointed out by the ITAT in para 17 the entire case is based upon borrowed investigation stated to have been conducted by Enforcement Directorate and no evidence has been brought on record to connect assessee with the amount of US $ 62,000, rather it is a case of zero investigation. It is one thing to state that the above documents were available but an entirely different thing to state that on examining those documents the AO found the live link for forming the reason to believe that the sum added had escaped assessment. It must be recalled that these were re-assessment proceedings and not at the stage where it was enough to form a prima facie view for re-opening the assessment. In the re-assessment proceedings the AO was expected to undertake a full-fledged inquiry into the documents produced before him to come to the conclusion that the addition sought to be made was justified. As pointed out by the ITAT or that the AO seems to have done is to simply borrow the conclusions drawn by the ED without making any independent inquiry himself into the matter. Even before the ITAT, the Revenue was unable to show the precise documents or material on the basis of which the AO formed the reason to believe that 60,000 US$ had been paid as bribe to the Iraqi officials and therefore was required to be added to the income of the Assessee. - Decided in favour of assessee.
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2019 (8) TMI 514
Deferred revenue expenditure - Revenue expenditure corresponding to the distributors commission, distributors incentives and outward freight cartage in the year under consideration - according to the Revenue it was required to be spread over on the basis of the matching principle - HELD THAT:- Revenue has placed reliance on the observations of the Supreme Court in J. K. Industries Limited v. Union of India [ 2007 (11) TMI 401 - SUPREME COURT] where it is stated that matching principle today forms an important component of accrual basis of accounting. While as a general proposition this may be acceptable, the fact remains that the Assessee claimed the entire expense as revenue expenditure in his accounts for AY 2006-07 and if sought to be altered on the basis of the above principle it would indisputably affect the accounts of the subsequent year. This is significant because in the AY in question, the AO has not rejected the accounts on the basis that it does not present the true and correct picture of the business of the Assessee. Court finds that that view taken by the ITAT is a plausible one and does not give rise to any substantial question of law. The appeal is dismissed in the above terms.
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2019 (8) TMI 513
Waiver of interest u/s 234C - scheme of demerger - whether accruing of income of demerged company cannot be stated to be either anticipated or under contemplation - discharge of tax liability on the profit by predecessor company and successor in return of income, claimed credit thereof, Commissioner rejecting the application for waiver of interest - HELD THAT:- Obviously, since it was Grasim Industries and Samruddhi Cement Ltd. who had applied to the High Court for approval of the demerger scheme, the scheme was under contemplation and, therefore, approval anticipated. This does not mean that approval by the High Court was a certainty. Till the approval was granted, Samruddhi Cement Ltd. could not have anticipated or contemplated flowing of the income in its coffers. We may recall, Grasim Industries continued to discharge the tax liability on the profit of the cement business even after 1.10.2009. Consequently, Grasim had paid advance tax of ₹ 184 crores. On account of demerger, Grasim never claimed benefit of such advance tax, instead, Samruddhi Cement Ltd. in return of income, claimed credit thereof, which was also recognised by the Assessing Officer. Second ground pressed in service by the Commissioner is wholly untenable. The relevant parties, namely, Grasim Industries and Samruddhi Cement Ltd. as well as the Assessing Officer treated the advance tax installments paid by Grasim Industries as deemed to have been paid by Samruddhi Cement Ltd. The Commissioner, therefore, was in error in pressing in service this clause of the Circular. Under the circumstances, we find that the Commissioner committed a serious error in rejecting the application for waiver of interest. The impugned order dated 30.11.2018 is, therefore, quashed. It is directed that the respondents shall waive interest payable u/s 234C of the Act in terms of CBDT Circular dated 26.6.2006 for the period in question. Consequently, if such interest is already recovered, the same would become refundable.
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2019 (8) TMI 512
TP Adjustment - Arm s Length Price (ALP) determination u/s 92CA(3) - absence of interest, claimed from an Associated Enterprises, (A.E.) notional amounts could be attributed in the income - HELD THAT:- In B.C. Management Services (P) Ltd [ 2017 (12) TMI 255 - DELHI HIGH COURT] the Court had held following Principal CIT vs. Bechtel India (P) Ltd. [ 2016 (9) TMI 196 - DELHI HIGH COURT] that such notional income on account of delayed payment by the A.E. cannot be treated as part of the income and made the subject matter of the adjustments. This Court is of the opinion that since no amounts were advanced in the instant case, rather the adjustments made on account of TPO that ought to have been recovered from the notional interest, on a subjective assessment of the manner in which the businesses run, no question of law arises for consideration.
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2019 (8) TMI 511
Approval u/s 80G(5) - charitable activity u/s 2(15) - whether registration u/s 12A/12AA is a pre-requisite for grant of approval u/s.80G ? - HELD THAT:- The inquiry for the purpose of grant of approval u/s 80G relates to, whether the trust is registered u/s 12A, whether it is a trust wholly for charitable purpose or religious purpose and whether the income received by it is liable to be considered u/s 11. In the case on hand, indisputably, the assessee has not produced any certificate of registration u/s 12A . In the absence of such a certificate, whether the Appellate Tribunal could have straightway come to the conclusion about the charitable activities of the trust and directed the Commissioner to grant the approval u/s 80G ? - In our opinion, the answer has to be in the negative. Even for the purpose of registration of charitable or religious trust, the application has to be accompanied by self-certified copy of the order granting registration u/s 12A or Section 12AA, as the case may be. At the same time, even if there is an order rejecting the application for grant of registration u/s 12A or Section 12AA, the same has to be annexed along with the application under Rule 17A. The Appellate Tribunal, instead of addressing itself on the aforesaid issue, straightway looked into Section 2(15). Section 2(15) of the Act merely defines the term 'charitable purpose'. The issue in the present case is with regard to the grant of approval u/s 80G in the absence of any valid registration certificate u/s 12A. Once a charitable trust is registered u/s 12A, the question whether the assessee Trust is for charitable purpose need not be gone into. Indisputably, in the case on hand, the charitable trust is not registered u/s 12A. The order passed by the Appellate Tribunal is not sustainable in law. This Tax Appeal succeeds and is hereby allowed. The impugned order passed by the Income Tax Appellate Tribunal is hereby quashed and set-aside. The two substantial questions of law formulated in the present Tax Appeal are answered in favour of the Revenue and against the assessee.
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2019 (8) TMI 510
Entitled to deduction u/s 80P - AO for denying the claim of deduction u/s 80P treated the assessee as co-operative bank and not co-operative society - HELD THAT:- The Larger Bench of the Hon ble jurisdictional High Court in the case of The Mavilayi Service Cooperative Bank Ltd. [ 2019 (3) TMI 1580 - KERALA HIGH COURT] held that the AO has to conduct an inquiry into the factual situation as to the activities of the assessee society to determine the eligibility of deduction u/s 80P of the I.T.Act. It was held by the Hon ble High Court that the Assessing Officer is not bound by the registration certificate issued by the Registrar of Kerala Co-operative Society classifying the assessee-society as a cooperative society. The Hon ble High Court held that each assessment year is separate and eligibility shall be verified by the Assessing Officer for each of the assessment years. Issue of deduction u/s 80P(2)(a)(i) is restored to the Assessing Officer. The Assessing Officer shall examine the activities of the assessee and determine whether the activities are in compliance with the activities of a cooperative society functioning under the Kerala Co-operative Societies Act, 1969 and grant deduction u/s 80P(2) in accordance with law. It is ordered accordingly- Appeal filed by the Revenue is allowed for statistical purposes.
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2019 (8) TMI 509
Penalty u/s 271(1)(c) - addition u/s 68 regarding outstanding balance of sundry creditor - Addition u/s 40A(2)(b) - CIT(A) rejected the additional evidence filed by the assessee being confirmation letter from the creditor under Rule 46A of the I.T. Rules - HELD THAT:- Prime facie, the contention of the ld. AR that the penalty u/s 271(1)(c) is not sustainable as the assessee has not contested the quantum i.e. Assessment Order u/s 143(3) to buy peace with the Department whereas the CIT(A) has overlooked the evidence produced before in the appellate proceedings and confirmed the penalty order of AO. On this issue, we find the CIT(A) has rejected the additional evidence under Rule 46A of the IT Rules. We are of the opinion that the assessee shall not gain any benefit by delaying the litigation and support our view on the principle of natural justice, and admit the additional evidence filed by the assessee. In respect to addition made in due to unreasonable salary paid to the assessee's wife u/s 40A(2)(b), we are of the opinion that in the penalty proceedings, the assessing authority shall deal the issues independently and any addition in the quantum proceedings cannot be a gateway for levying the penalty. Therefore considering the overall facts and circumstances of the case, we restore the disputed issues to the file of CIT (A) to adjudicate afresh considering the additional evidence filed by the assessee and allow the grounds of the assessee for statistical purposes. Appeal of assessee is treated as allowed for statistical purposes.
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2019 (8) TMI 508
Revision u/s 263 - interest derived on the deposits of surplus funds with the bank is not entitled for deduction u/sec. 80P(2)(a)(i) and the same is wrongly allowed by the AO - HELD THAT:- In the present case, the assessee while carrying its activities i.e. extending credit facilities to its members, collected the deposits which are not immediately necessary to extend the credit facilities to its members, deposit in the bank and interest received. We find that there is proximity between the business carried by the assessee and the interest received. The above decision of the Hon'ble Andhra Pradesh High Court is squarely applies to the facts of the present case. Therefore respectfully following the decision in the case of Andhra Pradesh State Co-op Bank Ltd. [ 2011 (6) TMI 215 - ANDHRA PRADESH HIGH COURT] and also by following the decision of the coordinate bench of the tribunal in the case of M/s. Kakinada Co-op Building Society Ltd. [ 2016 (3) TMI 14 - ITAT VISAKHAPATNAM] we hold that the interest income received by the assessee by depositing the surplus funds collected from the members is eligible for deduction under section 80P(2)(a)(i). Insofar as the judgment of the Hon'ble Supreme Court in the case of Totgars Co-operative Credit Society Ltd. [ 2010 (2) TMI 3 - SUPREME COURT] is concerned, the Hon'ble Andhra Pradesh High Court has considered and discussed elaborately. In view of the above, the order passed by the ld. CIT(A) is to be reversed, accordingly we reverse the order passed by the ld. CIT(A). Thus, this appeal filed by the assessee is allowed. We find that the order passed by the AO is neither erroneous nor prejudicial to the interests of the Revenue. Therefore, the order passed by the ld. Pr. CIT is hereby quashed and the appeal filed by the assessee is allowed.
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2019 (8) TMI 507
Revision u/s 263 - Unexplained investments u/sec.69 - entire amount of deposits appearing in the bank account with Corporation Bank, Tanuku as unexplained investment - HELD THAT:- CIT directed the AO to treat the deposits made by the assessee with the Corporation Bank, Tanuku as unexplained investments u/sec.69 of the Act. AO issued a notice to the assessee. The assessee neither appeared before the Assessing Officer nor filed any written submissions. AO by following the directions of the ld. CIT, assessment was completed u/sec. 143(3) r.w.s. 263 of the Act, dated 25/03/2015. We find that the assessee has not challenged the order passed by the ld. CIT, therefore order passed by him is attained finality. It is the duty of the Assessing Officer to pass the assessment order as directed by the ld. CIT u/sec. 263. Accordingly, the Assessing Officer has completed the assessment, the same is confirmed by the ld. CIT(A). We find no reason to interfere with the order passed by the ld. CIT(A). Thus, this appeal filed by the assessee is dismissed.
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2019 (8) TMI 506
Penalty u/s 271C - non-remittance of TDS deducted to the Government account - HELD THAT:- In the present case, the assessee has deducted the TDS, but not remitted to the Government account, for that he has not given any satisfactory explanation either before the Assessing Officer nor before the CIT(A). Even before us, the assessee has not given any satisfactory explanation. We find that similar issue came up before this Tribunal in the case of M/s. Esskay Shipping Pvt. Ltd. Vs. JCIT [ 2017 (10) TMI 1210 - ITAT VISAKHAPATNAM] and the Tribunal by considering the judgment of the Hon'ble Kerala High Court in the case of US Technologies P. Ltd. [ 2009 (6) TMI 966 - KERLA HIGH COURT] has held that the provisions of section 271C are applicable not only failure to deduct tax but also failure to remit the tax deducted to the Government account. We find no infirmity in the order passed by the ld. CIT(A) - Decided against assessee.
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2019 (8) TMI 505
Income arising on sale of land at Village Dhamane - agricultural land - HELD THAT:- The land at Village Dhamane is clearly established to be an agricultural land. It had been specifically analyzed in detail by the Tribunal in SHRI KRISHNA KUMAR K. GOYAL VERSUS ACIT [ 2014 (11) TMI 258 - ITAT PUNE] and the Revenue has not brought in any evidence or materials on record to negate the assertions made by the assessee neither they have controverted any facts on record. Evidently, the assessee has shown in the Balance Sheet the land in question as a Personal Asset as distinct from Business Assets . The agricultural lands held by the assessee are for a substantial period of time and assessee has been showing such assets as a part of his Personal Assets , being investments and not as Business Assets in the Balance Sheet filed along with the respective returns of income. We hold that the Sub-ordinate Authorities had erred in treating the income arising on the sale of such land at Village Dhamane as sale of stock in trade and in our view, income arising on sale of land at Village Dhamane was on account of sale of investment. Since, there is no dispute that the land in question carried the features prescribed in section 2(14)(iii) and moreover, being analyzed by the Tribunal in the earlier orders, it qualifies to be an agricultural land excludable from the expression capital asset . We therefore, set aside the order of the Ld. CIT(A) and direct the AO to delete the addition on this count from the hands of the assessee. Thus, this ground of appeal raised by the assessee is allowed. Deemed dividend u/s. 2(22)(e) - treating business advance received from Kohinoor Shelter Private Limited - assessee filed additional evidences vide letter containing MOU between the assessee and M/s. Kohinoor Shelters Pvt. Ltd. which was subsequently cancelled along with confirmation of accounts - HELD THAT:- The view of the Ld. CIT(Appeals) is that since the affidavit of Mr. L.R Agarwal dated 14.03.2012 was filed at delayed time and therefore, the AO is correct that the story of MOU and its cancellation is nothing but an afterthought without any specific findings or reasons given on his part, is therefore, not correct. That within the ambit of Rule 46A, the Ld. CIT(A) should have admitted the additional evidences and should have followed the procedure laid down therein. The grievance of the assessee in the additional ground along with this ground in the appeal Memo is with regard to non admission of additional evidences by the CIT(A). We further observe that these additional evidences were not accepted by the AO since the assessment order was already passed. In the interest of justice, we set aside the order of the CIT(A) on this issue and restore the matter to the file of Assessing officer and direct the assessee to produce all the additional evidences before the AO and present their case on merits. - Ground of the assessee are allowed for statistical purposes.
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2019 (8) TMI 504
TP Adjustment - disallowance of consultancy charges paid by the assessee to its Associated Enterprises (AEs) - HELD THAT:- During the appeal hearing the Ld.DR did not dispute the facts and no new facts were brought on record. The order of the tribunal was not reversed by the Hon ble jurisdictional High court. Since the facts are identical and the Ld. CIT(A) allowed the appeal of the assessee following the order of this Tribunal in assessee s own case for the A.Y 2009-10 and 2010-11 [ 2016 (11) TMI 1635 - ITAT VISAKHAPATNAM] we find no reason to interfere with the order of CIT(A) and accordingly, Ground Nos.2 to 4 are dismissed Employees contribution to PF u/s 36(1)(va) r.w.s. 2(24)(x) - delay in making payment - HELD THAT:- Assessee has remitted the Employees contribution to P.F beyond the due date specified under P.F Act, but before the due date for filing the return of income. This tribunal has consistently taken the view that the deduction is to be allowed even in case of employees contribution, if the same is paid before the due date of filing the return of income. The Tribunal has followed the decision of ESSAE Teraoka Pvt Ltd. Vs. DCIT [ 2014 (3) TMI 386 - KARNATAKA HIGH COURT ] and Tetra Soft India Pvt. Td. Vs. ACIT [ 2015 (10) TMI 1601 - ITAT HYDERABAD] while delivering the above ruling. - Decided against revenue
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2019 (8) TMI 503
Levy of penalty u/s 271D - violation of provision of section 269SS - receipt of cash loan - HELD THAT:- During the course of hearing assessee fairly conceded that the assessee has not challenged the addition of this amount. Therefore, the factum of obtaining loan is proved. Considering all the assessee could not controvert the finding of the authorities below in respect of the evidences gathered during the search which proves receipt of loan in cash, therefore, we do not see any reason to interfere in the finding of the authorities below. The grounds raised in this appeal are dismissed. Levy of penalty u/s 271E - violation of provision of section 269T - repayment of loan was made in cash - HELD THAT:- There is nothing on record suggesting that the loan amount was repaid in cash by the assessee. The revenue has considered the terms of loan as if the same has been repaid in cash. There is no receipt by the person who has given loan to the assessee accepting or acknowledging the repayment of the loan in cash by the assessee. Even in the statement recorded by the revenue authorities, nothing of this sort is stated by Shri L.N. Gupta, father of Shri Anil Gupta. Therefore, under the facts of the present case and in the absence of the proof that assessee had made repayment of loan in cash, in our considered view, imposition of penalty u/s 271E would not be justified. A.O. ought to have brought some material suggesting that the assessee has made repayment of loan in cash, therefore, we hereby direct the A.O. to delete the penalty.
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2019 (8) TMI 502
Long term capital gains - invoking Section 50C - assessee filed an affidavit stating therein that he had gifted to his relatives the above property - HELD THAT:- In the instant case, there is no gift deed as it has not been filed before the AO or CIT(A) or the Tribunal. In absence of a gift deed, the affidavit dated 12.05.2017 filed by the assessee loses significance. The contentions of the assessee are that provision of section 50C is not applicable because (i) he has transferred the above immovable property to one of his relative and (ii) the difference between the transaction value and stamp duty value is the gift made by the assessee to the relative are far fetched because the assessee has not filed any gift deed either before the AO or CIT(A) or the ITAT. The attempt to rope in section 56(2)(vi) by the assessee fails because there is no gift deed. All the more, as mentioned earlier, the assessee had not disclosed any capital gains from the sale of the above property. Only after the AO noticed that the assessee had sold an immovable property as per ITS details for ₹ 28,00,000/- under Registration No. 2982/2012 and issued a notice u/s 142(1) dated 11.09.2015 and thereafter followed it on 16.11.2015, the assessee filed a revised computation of income working out the capital gains i.e. LTCG at ₹ 13,11,224/- and claimed that provisions of section 50C is not applicable as it was sold to his brother-in-law and brother-in-law s wife. The fact remains that the computation of LTCG filed by the assessee is not voluntary. It has been furnished only after the issue of notice u/s 142(1) dated 11.09.2015 issued by the AO and followed thereafter by order sheet notings dated 16.11.2015. As decided in VIMAL CHAND GHEVARCHAND JAIN ORS. VERSUS RAMAKANT EKNATH JAJOO [ 2009 (3) TMI 997 - SUPREME COURT] Section 50C makes it obligatory on the part of the AO to treat the value adopted by the stamp valuation authority as the deemed sale consideration received or accrued as a result of transfer. - Decided against assessee.
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2019 (8) TMI 501
Penalty u/s 271(1)(c) - disallowance of deduction u/s 80IA - HELD THAT:- Not only tax audit report but also audited financial statements were filed well within the time and only due to the shortage of fund, the assessee could not pay self-assessment tax, therefore, return could not be filed before due date. While declining claim of deduction u/s 80IA no defect was pointed out by the A.O. with regard to assessee s eligibility save and except there was delay in filing return of income. Eligible amount of deduction U/s 80IA was mentioned in the tax audit report and clause (26) of Form 3CD. Thus, there was a substantial compliance of the provisions of Section 80IA read with Section 80AC of the Act by filing tax audit report with audited financial statement well in time. Under these facts and circumstances when there was full disclosure by the assessee and there was no failure on the part of the assessee to fully disclosed all the material facts with regard to claim of deduction U/s 80IA Penalty is not an automatic consequence for every addition to returned income. Merely because an addition is made to the income declared by the assessee, penalty u/s.271(1)(c) could not be imposed. Raising a bona fide legal claim in the return of income, even if it is ultimately found to be legally not acceptable, could not amount to concealing particulars of income or furnishing of inaccurate particulars of income. The assessee could not be saddled with penal consequences merely because a bona fide legal claim was made in the return of income and the same has not been accepted by the tax authorities or appellate authorities so far. Thus, the case of assessee could not be said to be a case of 'concealing particulars of income' or 'furnishing of inaccurate particulars of income' as contemplated under section 271(1)(c) In this case, all the material facts relevant to the computation of total income was duly furnished by the assessee and no deficiency in furnishing of such facts was pointed out either by the A.O. or by the ld. CIT(A). Deeming fiction of Explanation 1 to Section 271(1)(c) was not applicable to the assessee's case and merely on account of disallowance of certain claim, penalty cannot be imposed u/s 271(1)(c) of the Act - Decided in favour of assessee.
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2019 (8) TMI 500
Rectification u/ 154 - Interest on mobilization advance by upholding the same as Mistake apparent from record - eligibility u/s 80IA - HELD THAT:- When the issue of allowability of the claim of interest paid to RVNL is a debatable issue on which a decision is required on the basis of the relevant facts of the case then it is not an apparent mistake on record which is obvious and patent that can be rectified without the process of long drawn reasoning. Accordingly, we hold that the order passed by the AO U/s 154 of the Act dated 29.12.2015 is beyond the scope and jurisdiction of the AO and consequently the same is liable to be quashed. Allowability of Interest on mobilization advance - HELD THAT:- AO has not disputed the fact that the said amount was received as mobilization advance only for the execution of work contract in question and M/s KIEL the lead partner responsible for the execution of the work and incurring all the expenditure on behalf of the joint venture has actually incurred the expenditure and utilized the said amount only for execution of the work under the joint venture. Once the said amount was not utilized by M/s KIEL otherwise than the execution of the contract work of the assessee joint venture then the interest paid on the mobilization advance is an allowable expenditure in the hand of the joint venture. It is also not disputed that KIEL is also paying tax @ 30% though the AO pointed out that the said interest was not claimed by the KIEL to maximize the claim of deduction U/s 80IA. We find that the contract work received by the KIEL are not eligible for deduction U/s 80IA and only the wind mill power generation was eligible U/s 80IA. Thus, the said reasoning of the AO is contrary to the facts while disallowing the claim of interest. Hence, in view of the above facts and circumstances of the case we hold that even on merits the claim of the interest on paid to RVNL on mobilization advance is allowable expenditure of the assessee joint venture.
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2019 (8) TMI 499
Penalty u/s. 271E - repayment of loan given in cash in violation of provision of Sec.269-T - period of limitation - HELD THAT:- There is no dispute that the period of limitation is required to be examined in the light of the provisions of Section 275(1)(c). The issue in the present case is as to, what is the starting point of time u/s.275(1)(c) in the present case. As far as applicability of the first part of sec.275(1)(c) is concerned, the same is with regard to after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed . In the present case, at the level of the AO, the quantum proceedings was completed on 24.3.2016. Going by this date, the penalty order could not have been passed later than 30.9.2016. Considering that the subject matter of the quantum proceedings was the non-compliance with Section 269T, there was no need for the appeal against the said order in the quantum proceedings to be disposed of before the penalty proceedings could be initiated. In other words, the initiation of penalty proceedings did not hinge on the completion of the appellate quantum proceedings. Therefore, it is futile to contend that the date of initiation of proceedings is the date on which the JCIT receives intimation from the AO or the date on which the JCIT issues show cause notice to the Assessee u/s.271-E . In that view of the matter, we hold that the AO having initiated the penalty proceedings on 24.3.2016, the last date by which the penalty order could have been passed is 30th September 2016. Thus, later of the two dates is 30th September, 2016 in the present case. With the AO having initiated the penalty proceedings in his order of assessment dated 24.3.2016, the last date by which the penalty order could have been passed is 30th September, 2016. The penalty order was passed only on 27.1.2017. Therefore the same is barred by time. The order imposing penalty is therefore held to be bad in law and is hereby cancelled. Since the order is held to be bad and cancelled on the ground of limitation, we are not going into the existence of reasonable cause which will exonerate the Assessee from imposition of penalty u/s.273B
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Customs
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2019 (8) TMI 498
Violation of import conditions - failure to produce the Export Obligation Discharge Certificate (EODC) - Advance Authorization scheme - duty free import of 20,000 kgs of Light Black Pepper - HELD THAT:- The impugned order was passed only on account of non-submission of the EODC certificate. The said EODC certificate has now been produced before me by the appellant which certifies that the appellant has fulfilled the export obligation as required under the Advance Authorization dated 25.09.2009 issued by the JDGFT. In view of the EODC certificate produced by the appellant certifying the fulfillment of export obligation, the impugned order is not sustainable in law - appeal allowed - decided in favor of appellant.
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2019 (8) TMI 497
Revocation of CHA License - forfeiture of security deposit - Import of restricted item or not - import of assorted birthday candles - on examination, the goods appeared to be classifiable under Chapter heading 3604 fireworks, signalling flares, rain rockets, fog signals and other pyro-technic articles - violation of Regulation 11(d) and (e) of CBLR, 2013. Whether the imported goods i.e. assorted birthday candles can actually be classified as fireworks/pyrotechnics? - HELD THAT:- The impugned goods are assorted candles makes it clear that the impugned goods neither can be called as firework nor are the pyrotechnic substance. The reports have admission that goods in question are candles. However, the Central wig of the candles contains such chemicals as are the contents of fireworks. Thus, the goods are such that a small part thereof contains such chemical as are required to manufacture fireworks. If similarity of contents is the criteria to classify than even match stick should be classified as firework, in the given circumstances and in view of the principle of common parlance/ in terms of trade we hold that goods are not fireworks - Admittedly the essential use of impugned goods is as that of birthday candles. The introduction of Nitrogen, Potassium, Calcium, etc. is intended to just add on the sparkle to that candle and to add on a musical feature to the candles. The object is neither fireworks show for entertainment nor to have the explosions/bursts nor even to use the sparkle as fog lamp or signalling apparatus as are the characteristics of fireworks as per Head note of CTH 3604. This further corroborates our opinion that the impugned good cannot be classified under Chapter 36 CTH 3604 i.e. fireworks, signalling, flares, rain rockets, fog signals and other pyrotechnic articles. Rather these fall under Chapter 34 CTH 3406 candles, tapers and the like. Thus, G-Card Holder, Shri Kuber Nath Rai had a bonafide belief for the impugned goods to be assorted birthday candles simplicitor as the earlier two consignments had also been cleared rather on the basis of the reports of the Customs officers acknowledging the goods to be assorted birthday candles only. Above all, the present appellant admittedly has no concern with the interecepted consignment - No doubt, CHA is a link between the Customs Authorities and the importers and the CBLR Regulations imposes obligation upon them which have to be taken as mandatory but law is also settled that not any and every infraction of the CHA Regulations either Regulation 13 or elsewhere leads to the revocation of license rather in line with a proportionality analysis and only grave and serious violation justify revocation. Here no reason appears for the cancellation of appellant s CHA license - The penalty is also opined to be far beyond the proportion. Hence, same is also held liable to be set aside - appeal allowed - decided in favor of appellant.
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Corporate Laws
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2019 (8) TMI 496
Eligibility of wages to dissenting workmen - company under liquidation - Several claims were lodged by the dissenting workmen before the official liquidator for adjudication - Whether the consent terms are binding upon the dissenting workmen? - HELD THAT:- The submission that the dissenting workmen were well aware of the then impending consent terms or they allowed the consent terms to be taken on record, or, for that matter, the consent terms were accepted in the presence of the learned counsels representing the dissenting workmen are of no avail. In the face of the provisions contained in section 529 and 529 A of the Companies Act, 1956, the dissenting workmen cannot be deprived of their statutory and legitimate right to participate in the product of their labour and effort, which becomes disbursible, in the wake of winding up, on the basis of such submissions of tacit consent or waiver. The finding recorded by the learned Company Judge that the consent terms do not bind dissenting workmen, in the circumstances, appears to be impeccable. Thus, we are not impelled to take a different view of the matter. Whether the dissenting workmen are entitled to wages up to the date of the winding up order, i.e., 24th October 2008? - HELD THAT:- The date of the appointment of the Provisional Liquidator, i.e., 30th September 2005, after admission of the company petition, pursuant to an opinion rendered by BIFR under section 20(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 would be the appropriate date for calculating the claims of the dissenting workmen. The Provisional Liquidator came to be appointed much after the confirmation of the sale of the assets of the company and realization of the proceeds thereof. We make it clear that we have not prescribed the date of appointment of the Provisional Liquidator as the cut off date as the mandate flowing from the provisions of the Companies Act, 1956, but having regard to the fact that, by the said date, the company was rendered a shell and its assets were converted into corpus, for the purpose of liquidation - answered partly in the affirmative. Whether the determination of the entitlement of the dissenting workmen under various items, i.e., notice pay, leave wages, bonus, gratuity and interest by the learned Company Judge is justifiable? - HELD THAT:- As regards the closure compensation, we find that the issue has not been dealt with by the learned Company Judge, apparently, for the reason that it was not agitated before the learned Judge. We do not find it appropriate to deal with the said issue of entitlement of the appellant, Mrs. Triveni Kulkarni for closure compensation, for the first time, in exercise of appellate jurisdiction, especially when the appellant did not care to canvas the issue across the bar and the rival union has chosen not to question the disposition made by the learned Judge by the impugned order. As the amount is lying un disbursed on account of non adjudication of the claims, in view of pendency of the proceedings before this Court, we are of the view that said issue raised by an individual workman should not detain the Official Liquidator from adjudicating the claims and disbursing the due amounts to the workmen any more. We are thus not persuaded to interfere with the impugned order as regards the entitlement of the workmen under the specific items. Appeal allowed in part.
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Insolvency & Bankruptcy
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2019 (8) TMI 495
Maintainability of petition - Initiation of Corporate Insolvency Resolution Process - Section 7 of the Insolvency and Bankruptcy Code, 2016 read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - HELD THAT:- A perusal of the present application filed by the Applicant-Financial Creditor shows that the same appears to be complete and in conformity with the provisions of Section 7 of the I B Code and Rules Applicable. It is evident that the default has occurred, which meets the requirement of Section 3(11) and (12) of the I B Code to trigger the CIRP in respect of the Corporate Debtor company - it is established there is default of debts which comes to ₹ 9,90,00,000/- plus interest of ₹ 3,55,47,855.02ps. including penal interest of ₹ 44,80,911/-as on 30.11.2017 aggregating to ₹ 13,45,47,855.02ps. Hence, the present application can be considered for its Admission. Petition admitted - moratorium declared.
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2019 (8) TMI 494
Disclosure of list of insolvency professionals against whom disciplinary proceeding is under process - Right to Information Act, 2005 - HELD THAT:- Disciplinary proceedings before the Board are quasi-judicial in nature and any disclosure of the names of IPs against whom such proceedings are ongoing would impede the investigation process due to unwarranted public attention. Moreover, such processes can be at various stages. Mere issuance of a show cause notice to an IP does not imply that such person is guilty of any misconduct. It is merely seeking an explanation from the IP of any aberration in the established process. If, there is any gap in the explanation provided by the IP, then further action is taken by the Board. Revealing the names of such IPs, is likely to harm their practice as most of the IPs are established professionals like Chartered Accountants, Company Secretaries, Cost Accountants, Advocates and managerial experts. The request of the appellant to disclose the list of insolvency professionals against whom disciplinary proceeding is under process cannot be accepted - Appeal dismissed.
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Service Tax
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2019 (8) TMI 493
Appealable Order or not - recovery of service tax - Sharing of revenue - double levy of tax on freight - Section 129A of the Act - alternative remedy - HELD THAT:- The exercise of this writ jurisdiction is discretionary and it is not exercised only because it can be exercised. Therefore, the Courts have refused to exercise discretion under Article 226 of the Constitution of India, where an efficacious alternative remedy to obtain the same relief is available, as a self imposed limitation - Therefore, we now examine the submission on behalf of the Petitioner to decide whether this is a fit case to exercise our discretion, even though an efficacious alternative remedy of appeal under the Act from the impugned order dated 21 December 2016 to the Tribunal is available. The first submission is that in view of the status of the Petitioner, the Writ Court should exercise its discretion and entertain this petition - HELD THAT:- The status of a party can never be the basis of exercising discretion to entertain a writ. In fact, the discretion is exercised on the basis of the action of the authority being without jurisdiction and not on the basis of the status of the party moving the Court. To decide on the basis of the status of the party would be the very antithesis of the rule of law, viz. equality before the law, in the absence of any statutory distinction. The fact that the Petitioner is a Limited Company, has shares distributed in their entirety between the Central and State Governments does not warrant a different treatment under the Act. There is no reason, at this stage, to set aside the order of the Commissioner and restore the show cause notice to Commissioner so as to only compel the Revenue to follow the Master Circular and keep the show cause notice in abeyance. Question of tax on the entire freight having been collected - HELD THAT:- It is not open to the Revenue to collect again a part of the consideration as service tax. This is an issue, which is best left to the appellate authority to deal with. It is an issue on merits. Therefore, no occasion to entertain this petition can arise. In these circumstances, we are not exercising our extraordinary jurisdiction to entertain this petition. Thus, petition dismissed. However, we make it clear that as stated on instructions by Mr. Nankani for the Petitioner, in case the Petitioner does file an appeal within a period of four weeks from today, then the Tribunal would consider the appeal on merits, without taking up the issue of limitation - petition disposed off.
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2019 (8) TMI 492
Maintainability of appeal - non-compliance with the pre-deposit - Section 35F of the Central Excise Act, 1944 - HELD THAT:- The only relief we can give to the appellant is that provided they deposit 50% of the amount representing 7.5% of the total tax effect in cash with the authority and provided they secure the balance amount by furnishing a bank guarantee to the satisfaction of the tribunal, the tribunal will proceed to hear out the appeal in accordance with law. Compliance of this order should be made by the appellant within eight weeks from date - Appeal disposed off.
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2019 (8) TMI 491
CENVAT Credit - common input services used for taxable as well as exempt goods - Rule 6(3)(c) of the CENVAT Credit Rules, 2004 - non-maintenance of separate records - utilisation of CENVAT credit in excess of the percentage envisaged in Rule 6(3)(c) - suppression of facts - HELD THAT:- The appellant is disputing the quantification from the very beginning while filing the reply to the show-cause notice itself. Further, the appellant has reversed the amount of ₹ 11,37,010/- along with interest of ₹ 2,18,128/- and informed the department. The previous authority after observing the reversal along with interest still held that the appellant was liable to reverse ₹ 14,21,259/-. This finding recorded by the previous authority as well as on remand by the adjudicating authority is factually incorrect and as per the detailed quantification, the appellant was required to reverse ₹ 11,37,010/-, which was reversed by them along with interest. Appeal allowed - decided in favor of appellant.
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2019 (8) TMI 490
Refund of service tax paid - time limitation - N/N. 12/2013-ST dated 01.07.2013 - Section 11B of the Central Excise Act, 1944 - part refund rejected also on the ground that the input services are commonly used for both SEZ and DTA operations - HELD THAT:- The appellant has submitted that in their own case for the period January to March 2015, Deputy Commissioner, Mangalore has allowed the refund claim on identical facts and the same has not been challenged by the Revenue and has attained finality. The appellant does not have any DTA unit, they are only making supply to a DTA unit whereas the conditions of Para 3(III)(a) would be applicable only when the assessee has units in both SEZ and DTA whereas in the present case, the appellant has unit only in SEZ and make supply from SEZ to DTA unit and therefore the said condition of Para 3(III)(a) is not applicable in the present case - the denial of refund to the appellant is not sustainable in law. Rejection of refund on the ground of time limitation - HELD THAT:- The combined reading of Para 3(III)(e) and 3(III)(f) of the Notification clearly shows that the refund claim were within time limit - the denial of refund on time barred is also not sustainable. Appeal allowed - decided in favor of appellant.
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2019 (8) TMI 489
Management Maintenance Repairs Services - tripartite agreement - HELD THAT:- It emerges through proceedings that the amount on which service tax is confirmed is such amount which has not been received by the appellant and the said amount is shown in the books of account as receivable. The receivable amount till not received cannot be treated as consideration particularly when such amount is not receivable on account of issue of any invoice - Appeal allowed - decided in favor of appellant.
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Central Excise
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2019 (8) TMI 488
Maintainability of petition - availability of alternative remedy - Section 35(B) of the Customs Act - HELD THAT:- The grounds raised in the present writ petition may not be an exemption for not availing an appeal remedy, the writ petition is liable to be rejected. Reliance placed in the case of AUTHORIZED OFFICER, STATE BANK OF TRAVANCORE AND ANOTHER VERSUS MATHEW K.C. [2018 (2) TMI 25 - SUPREME COURT] where it was held that The opinion of the Division Bench that the counter affidavit having subsequently been filed, stay/modification could be sought of the interim order cannot be considered sufficient justification to have declined interference. This Court is of the view that the petitioner could be granted liberty to file an appeal against the order, within a stipulated time - appeal disposed off.
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2019 (8) TMI 487
CENVAT Credit - input services - GTA Services up to the place of removal i.e., the customer s place - - C.B.I.C. Circular No. 1065/4/2018-CX in F. No 116/23/2018-CX-3 dated 08.06.2018 - HELD THAT:- It is undisputed that the decision of the Hon ble Apex Court in the case of COMMISSIONER OF CENTRAL EXCISE SERVICE TAX VERSUS ULTRA TECH CEMENT LTD. [ 2018 (2) TMI 117 - SUPREME COURT] covers even the post-amendment period, which is binding on all lower authorities. However, as the issue in the case on hand involves delivery on FOR destination basis, which is the trump card of the assessee s pleading and which clearly has not at all been discussed by the Adjudicating Authority or even by the First Appellate Authority, the matter is required to be remitted to the file of the First Appellate Authority for the very limited purpose of considering the explanations of the appellant filed in response to the Show Cause Notice and in the light of subsequent Board Circular No. 1065/4/2018-CX. Appeal allowed by way of remand.
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2019 (8) TMI 486
CENVAT Credit - input services - GTA Services - Invoices addressed to Corporate Office - Hotel stay - Auction Services - revenue neutrality. GTA Services - HELD THAT:- This Bench has been consistently remanding the matter back to the file of the Adjudicating Authority in the light of the subsequent Board Circular No. 1065/4/2018-CX (supra) and also the binding decisions of the Hon ble Supreme Court in the cases of COMMISSIONER OF CENTRAL EXCISE SERVICE TAX VERSUS ULTRA TECH CEMENT LTD. [ 2018 (2) TMI 117 - SUPREME COURT] and COMMISSIONER, CUSTOMS AND CENTRAL EXCISE, AURANGABAD VERSUS M/S ROOFIT INDUSTRIES LTD. [ 2015 (4) TMI 857 - SUPREME COURT] to consider the plea of the appellant that the sale was on FOR destination basis - Matter on remand. Invoices addressed to Corporate Office - HELD THAT:- The registration as ISD is not mandatory, which is evident from the C.B.E.C. Circular No. 1063/2/2018-CX dated 16.02.2018 wherein the Board has accepted the decision of the Hon ble High Court of Gujarat in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS DASHION LTD [ 2016 (2) TMI 183 - GUJARAT HIGH COURT] wherein it has been held that non-registration of ISD is only a procedural irregularity, for which reason the benefit of CENVAT Credit cannot be denied to the assessee - Credit cannot be denied on this ground and is allowed. Hotel Stay - HELD THAT:- This, according to me, deserves credit. The First Appellate Authority has not referred to or relied on any piece of evidence as to his observation that when the services are used primarily for personal consumption of any employee, then such input credit on such services is not an eligible credit and nor is it the case of Adjudicating Authority that the same were used for the personal consumption of any employee. - the denial is not proper and is only on assumptions - credit allowed. Auction services - denial on the ground of post manufacturing activity - HELD THAT:- The definition of Rule 2(l) of the CENVAT Credit Rules, 2004 (amended) covers commission paid on sales promotion as well, which is in relation to the manufacturing activity. Hence, the CENVAT Credit availed on Auctioneer Services in the case on hand also deserves credit, more so because the sale by auction has suffered Central Excise Duty as well as VAT. It is also an admitted position that even the registered auctioneer has remitted Service Tax on the commission it received from the appellant - credit allowed. Revenue neutrality - HELD THAT:- Ld. AR contended that the assessee has to establish the same in the first place, which is to be tested and not merely accepted. Appeal allowed in part and part matter on remand.
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2019 (8) TMI 485
Refund of unutilized CENVAT Credit - rejection on the ground that the appellant failed to declare the credit held by them under TRANS-1 - validity of SCN - HELD THAT:- The SCN for denial of the refund claim is vague and does not state reasons on which the Department proposed to reject the refund claim. Further I find that appellant has attached the documents in support of his refund claim application and no defect memo was issued by the Department, if some documents were missing in the application seeking refund, the Department could have sought those documents from the appellant - Not disclosing the unutilized balance of CENVAT credit in ER1 returns is only a procedural lapse and cannot be a ground to reject the refund claim. The impugned order is not sustainable in law and the same is set aside and the matter is remanded back to the original authority to examine all the documents which have been filed by the appellant in support of his refund claim application - appeal allowed by way of remand.
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2019 (8) TMI 484
Interest on delayed refund - refund of pre-deposit - CBEC no. 670/61/2002-CX dated 01/10/2002 - section 11(B) of the Central Excise Act, 1944 - HELD THAT:- Hon ble High Court in UNION OF INDIA VERSUS SLOVAK INDIA TRADING CO. PVT. LTD. [ 2006 (7) TMI 9 - KARNATAKA HIGH COURT] has held that there is no provision for grant of refund in rule 5 under the present circumstance. The Hon ble High Court, however, allows the refund - The lower authorities have followed the ratio of this decision. Thus the present proceeding which follow the decision of Hon ble High Court also conclude with the same ratio as laid down by the Hon ble High Court of Karnataka. The refund is, therefore, not sanctioned under any express provision of law. In these circumstances, when the refund is not under any provisions of Central Excise Act, the provisions of the act relating to interest do not apply to the facts of the case. Appeal dismissed - decided against appellant.
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2019 (8) TMI 483
SSI Exemption - Crossing of threshold exemption limit - clubbing of clearances - cas of Revenue is that clubbing of clearances made by the Appellant under the invoice of M/s JRSE have to be clubbed with the clearance of the Appellant M/s Prints Electronics Equipments Pvt. Ltd. HELD THAT:- We find substance in the argument of the Appellant inasmuch as the entire case has been built up by the Revenue mainly on the ground that since M/s JRSE alleged to have no adequate manufacturing facility on the date of visit of the officers to the premises at Bangalore, one of the employee of M/s PEEPL stationed at Bangalore and statements of employees/Director that all the goods must have been manufactured at the premises of M/s PEEPL at Malad, Mumbai and cleared without payment of duty, under the invoice of M/s JRSE. There is no evidence to the effect that M/s PEEPL Ltd had procured raw material assembled at their premises at Malad and cleared/sold in the market without payment of duty. No evidence has been brought on record of those buyers who purchased the said goods and to whom the manufactured goods were sold and mode of delivery of alleged goods clandestinely from the manufacturing premises at Malad to the buyer s premises - In absence of substantial evidences of manufacturing and clearances of the goods, it cannot be assumed that since, the facility of manufacture at the premises of M/s JRSE, is inadequate, therefore, the goods must have been manufactured and cleared from the premises at Malad Unit of M/s PEEPL in the local market against the invoices of M/s JRSE. The kind of electronic goods manufactured by the Appellants, do not require a huge premises and machineries; it could be assembled with simple tools/machineries. The demand confirmed clubbing the clearances of M/s PEEPL with that of M/s JRSE, is not sustainable - penalties also set aside - appeal allowed - decided in favor of appellant.
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2019 (8) TMI 482
CENVAT Credit - Jurisdiction - when duty has been paid by the supplier at a particular rate availing a particular exemption notification and also invoices have been issued accordingly, whether the jurisdictional officers of the recipient assessees can dispute the assessment of duty and say that less duty was payable or no duty was payable and on that ground deny cenvat credit to the recipient? - HELD THAT:- With respect to jurisdiction, the officers at the recipient end have no jurisdiction of the assessment done by the supplier-manufacturer. In case they did have the jurisdiction over the supplier-manufacturer, a notice should have been issued to such supplier-manufacturer who is alleged to have wrongly assessed and paid excise duty. By no stretch of imagination can the recipient of cenvat invoices along with the goods be expected to understand or anticipate how much duty was actually to be paid by the supplier and take credit accordingly. A plain reading of the CCR 2004 also provides for credit of duty paid and not credit of duty that should have been paid. Therefore, there is no scope for the credit to be altered from the amount of excise duty which has been paid as shown in the input invoices. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2019 (8) TMI 481
Demand of bank guarantee as security - stay on recovery proceedings - HELD THAT:- It is clear that under Rule 37(1) of the U.P. Value Added Tax Rules, 2008, the respondents would have demanded the petitioner to deposit security in any of the forms as mentioned in the said rule and that bank guarantee is not provided as one of the measures for demanding the security. A coordinate Bench of this Court after considering the entire legal aspects of the matter in the case of EMAMI LIMITED VERSUS STATE OF U.P. AND ORS. [ 2007 (12) TMI 526 - ALLAHABAD HIGH COURT] has held that in the circumstances, as existing in the present case also, the demand of bank guarantee by the Assessing Authority cannot be justified. This court bears in mind that security which is to be given should be such that it protects the interest of the Revenue, in case of any default by the assessee - the statutory provision as contained in Rule 37(1) of the U.P. Value Added Tax Rules, 2008 is to be followed. Petition disposed off.
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2019 (8) TMI 480
Permission for withdrawal of appeal - Best judgement assessment - imposition of interest as well as penalty - non-production of books - HELD THAT:- During the pendency of the present appeal, respondent department started recovery proceedings and initiated coercive steps due to which one of the partners of the firm (Rakesh Mohindra) deposited amount of ₹ 92 lacs with the department. It is further averred that the appellant does not want to pursue the present appeal and hence the same may be dismissed as withdrawn. Appeal dismissed as withdrawn.
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2019 (8) TMI 479
Non-compliance with the requirement of pre-deposit - ex-parte order - the material filed by the petitioner company was not taken into consideration - period 2009-10 to 2012-13 - A.P. VAT Act, 2005 - HELD THAT:- It may be noted that the impugned assessment order was an appealable one and in the event such an appeal had been preferred, the petitioner company would have been statutorily bound to deposit part of the demanded tax amount as a condition precedent to maintain the appeal. As the petitioner company is now seeking relief on similar lines, it cannot be granted the benefit of a second round of hearing at its mere asking. It may however be noted that the impugned assessment order was passed as long back as in March, 2014, but it has not been given effect to despite the conditional interim order passed in this writ petition not being complied with. Therefore, giving an opportunity to the petitioner company to establish its case at this stage would not adversely affect the interest of the revenue. The writ petition is accordingly allowed setting aside the impugned assessment order dated 28.03.2014 passed by the Commercial Tax Officer, Malkajgiri Circle, Hyderabad, subject to the petitioner company depositing 12.5% of the assessed tax amount of ₹ 8,53,02,597/- with the Commercial Tax Officer, Malkajgiri Circle, Hyderabad, within six weeks from the date of receipt of a copy of this order. Petition allowed.
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2019 (8) TMI 478
Validity of reassessment order - challenge on the ground that the incriminating materials used against the petitioner while concluding the assessment by the prescribed authority were not made available to the petitioner despite the specific request made by the petitioner - principles of natural justice - HELD THAT:- The documents pertaining to the inspection report sought by the petitioner being assured to be provided to the petitioner within 7 days and the petitioner being provided an opportunity to file reply after submitting the documents, the writ petition does not survive for consideration. However, considering the voluminous documents to be examined by the petitioner, it would be appropriate to provide an opportunity of four weeks to the petitioner to file objections/reply. Petition allowed by way of remand.
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Indian Laws
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2019 (8) TMI 477
Arbitral Award - dispute between the parties with respect to the rate of payment for additional work under the agreement - HELD THAT:- The Act of 1996 has come into force with effect from 22.08.1996. Section 85 of the Act of 1996 expressly repeals the provisions of the Arbitration Act, 1940. Thus, the Act of 1996 would be applicable to all arbitral proceedings which have commenced on or after the said Act came into force. Para 7A of Section 24 of the U.P. Amendment Act was an amendment to the First Schedule of Arbitration Act, 1940. This amendment was introduced by the U.P. Act No. 57 of 1976. The provisions of the Arbitration Act, 1940 including the State amendment will have no application to the proceedings commenced after coming into force of the Act of 1996. Section 31(7)(b) of the Act of 1996, before its amendment by Act 3 of 2016, which has come into force with effect from 23.10.2015, is relevant for the purpose of this case, empowers the Arbitrator to award pre-award and post-award interest. In the instant case, though the agreement was earlier to the date of coming into force of the Act of 1996, the proceedings admittedly commenced on 27.10.1999 and were conducted in accordance with the Act of 1996. If that be so, para 7A of Section 24 of the U.P. Amendment Act has no application to the case at hand. Since the rate of interest granted by the Arbitrator is in accordance with Section 31(7)(b) of the Act of 1996, the High Court and the District Judge were not justified in reducing the rate of interest by following the U.P. Amendment Act. Appeal allowed.
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2019 (8) TMI 476
Dishonor of Cheque - legally enforceable debts - Rejection of application of the Petitioners for recall of process issued under Sections 138 of the Negotiable Instruments Act, 1881 - Section 204 of Cr.P.C. - HELD THAT:- The Supreme Court in the case of ADALAT PRASAD VERSUS ROOPLAL JINDAL OTHERS [ 2004 (8) TMI 647 - SUPREME COURT] held that, the Court, who has issued process, has no power of review its order of issuance of process, and hence order of issuing process cannot be recalled. In the present case, petitioner preferred an application for recalling the order of issuance of process passed by the learned Magistrate, which was not tenable in view of law laid down in the case of Adalat Prasad. Hence, the application preferred by the petitioner was not maintainable. The issue of maintainability of the application filed by the petitioner under Section 204 of the Cr.P.C. goes to the root of the matter, in as much as, the application filed by the petitioners itself was not maintainable in law and therefore, adjudication of such application by the Courts below was not called for being not maintainable - petition dismissed.
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2019 (8) TMI 475
Professional misconduct on the part of CA - Clause 7 of Part-I of Second Schedule to the Chartered Accountants Act, 1949 - It is alleged that the accounts and audit report in respect of seven separate companies mentioned in the complaint had not been prepared in compliance with the provisions of the Companies Act, 1956 and directions issued by the Reserve Bank of India (RBI) in respect of a non-banking financial company - HELD THAT:- Since, the petitioner is a company, this Court had called upon the learned counsel appearing for the petitioner to respond as to whether the Memorandum of Association of the petitioner company permitted the petitioner to pursue such complaints against various Chartered Accountants wholly unconnected with its business. The learned counsel had answered in the affirmative. He has also produced the Memorandum of Association of the petitioner company, in compliance with the orders passed by this Court on 26th July, 2019. The issue whether the petitioner company is permitted to carry on the activity of filing complaints against various Chartered Accountants was considered by this Court in the decision rendered today in WHOLESALE TRADING SERVICES P LTD. VERSUS THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA AND ORS. [ 2019 (8) TMI 413 - DELHI HIGH COURT] . This Court rejected the contention that the activity of the petitioner in pursuing complaints against various Chartered Accountants was otherwise permitted under its Memorandum of Association. This Court also observed that the use of a corporate fa ade of the petitioner by its directors/promoters for pursuing complaints against various Chartered Accountants, unconnected with its business, cannot be countenanced. In the present case, JMG had clearly stated in his response that he had retired from the firm of Chartered Accountants that was appointed to conduct the audit in view of disputes inter se the partners of the firm. He had also pointed out that the complaint had been made beyond the period of seven years and the Chartered Accountants were not required to maintain audit records for more than seven years - This Court finds no infirmity with the said opinion. Plainly, no interference with the opinion of the Board of Discipline is called for in proceedings under Article 226 of the Constitution of India, unless the same is perverse or so unreasonable that no sensible person could possibly arrive at such a view. The contention that since JMG had responded to the allegations after securing the audit papers, the same would preclude recourse to Rule 12 of the Rules, is unmerited. This Court is of the view that the present petition is a frivolous one and the filing of such petitions ought to be discouraged, as it takes up considerable judicial time at the cost of bona fide litigants who are in urgent need of relief - the present petition is dismissed with costs quantified at ₹1,00,000/-.
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