TMI Tax Updates - e-Newsletter
August 31, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Securities / SEBI
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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GST:
Scope of supply - the ownership of asset remains with the applicant, it is evident that the execution of works requiring deposit works is a facilitation for the access/ use of such transmission system and thus such facilitation is a ‘supply’ of services.
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GST:
Rectification of mistake that has been crept in GSTR-3B - Whether the return in Form GSTR-3B is a return u/s 39 - The petitioner is permitted to rectify GSTR 3B statements for the months of August and December, 2017 and January and February, 2018 manually subject to the outcome of the writ petition
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GST:
Classification of goods - Salwar/Churidhar sets - three pieces consisting of (1) unstitched Salwar(bottom), (2) laced/ hemmed/ knotted duppata and (3) Semi-stitched /Fully stitched Kurta(Top)/Top with defined neckline are ‘garments’ and not mere ‘fabric’ in three pieces - GST @ 5% if the sale Value is less than ₹ 1000/- per piece and value above @ 12%
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GST:
Contempt of court or not - rejection of petitioner's request for belated uploading FORM GST TRAN-1 by the Nodal officer - The authority decide that “the request of petitioner is rejected” - this should be consider as decision on the request of the petitioner, who can challenges the decisions as provided for by law - not a case of contempt
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Income Tax:
Condonation of the delay of 65 days - the pendency of the rectification proceedings before the AO and the assessee’s expectation that the issue could be sorted out at that level has contributed in the delay in filing the appeal - there is sufficient and reasonable cause for condonation of the delay - delay condoned
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Income Tax:
Disallowance u/s 40(a)(ia) - since amendment to section 194A(3)(V) operates prospectively w.e.f. 01.06.2015, the assessee, being a Co-operative Bank, is not required to deduct tax at source from the payment of interest on terms deposits to its Members in the year under consideration i.e., Assessment Year 2012-13 - no disallowance
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Income Tax:
Addition u/s 68 - share application money alongwith premium - in response of the AO notices u/s 131/133(6) all investors having replied and support of the correctness of the share application money - there is no evidence on record which could suggest that any of the assessee’s eleven investor had been having any dubious transactions in their accounts - no addition
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Income Tax:
Validity of notice u/s 148 - escapement of income can not be presumed on the basis of non-compliance or lack of compliance or even no compliance of the Letters of enquiry issued before issuance of notice u/s 148 - the reasons recorded by the AO, are no reasons in the eye of law for assuming jurisdiction
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Income Tax:
Validity of notice u/s 148 - if the reasons recorded, upon being challenged at any stage of proceedings fails to withstand the test of judicial scrutiny, in that eventuality, any assessment framed consequent thereto even taking shelter of ‘No objection’ from the assessee could not save the assessment from being held to be declared void-ab-intio
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Income Tax:
Bogus LTCG - exemption u/s 10(38) - penny stock transactions - when as per the AO’s own observation the source as well as source of source for receipt of sale consideration were found through proper banking channel then the so-called evidences in the form of cash trail of transactions did not conclusively prove that the proceeds realized from sale of shares could be considered as appellant’s undisclosed income - exemption allowable
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Income Tax:
Carry forward and set off of MAT credit - MAT credit available to the assessee prior to demerger, even though, the same is arised on account of SEZ units, the credit for such MAT credit needs to be allowed to the assessee (demerged company), but not to the demerged SEZ units (resulting company) - directed the AO to allow carry forward and set off of MAT credit to the assessee
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Income Tax:
Reopening of assessment u/s 147 - where queries have been raised during the assessment proceedings and the assessee has responded to the same, then the non-discussion of the same or non-rejection of the response of the assessee, would necessarily mean that the AO has formed an opinion accepting the view of the Assessee - thus an opinion is formed during the regular Assessment proceedings, bars the AO to reopen the same
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Income Tax:
TDS u/s 194J - the payment made to resident towards annual license fee paid for the renewal of Microsoft software - Clause (ba) to the Explanation to section 194J provides that "royalty" for the purpose of this section shall have the same meaning as given in section 9(1)(vi), hence the payer is liable to deduct tax at source u/s 194J - Failure to deduct TDS will entails disallowance u/s 40(a)(ia)
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Income Tax:
Revision u/s 263 - turnover mismatch - assessee explained that If, you add back sales turnover and interest income, then there would be no difference in turnover reported in its audit report - this fact has been accepted by the PCIT, but direction to the AO to verify without pointing out, how the order passed by the AO is erroneous, in so far as, it is prejudicial to the interest of the revenue is not sustainable
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Income Tax:
Reassessment u/s. 147 - non availability of file containing reasons to believe - there is no material brought to our notice that reasons were recorded before issue of notice u/s 148 which is a sine quo non for valid initiation of reassessment proceedings u/s 147 - initiation of reassessment proceedings were not valid
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Income Tax:
Reopening of assessment - account transfer of foreign bequest(gift) made in earlier year to Sri Lanka based bank account to India - the assessee is yet to enjoy a clear legal title on the trust property and therefore, the same could not have been treated as its income received under the provision of the Act - no escapement of income
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Income Tax:
Addition on account of default in deducting TDS u/s 194C - the payment made through labour sardars does not warrant deduction of TDS as they are not suppliers of labours as there is no contract between the assessee and the labour Sardars - rightly deleted the impugned addition made u/s. 40(a)(ia)
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Customs:
Project import - Recovery of Interest on delayed payment of duty - The Union of India never challenged the order in original or any of its provisions before any statutory appellate authority and accepted the order. That is one more reason why it ought not to be permitted to now challenge the stipulation of interest.
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Customs:
Principles of Natural Justice - ex-parte decision - sufficient efforts are apparent on the part of the adjudicating authority to serve repeated reminders to the appellant to appear and submit on merits. The appellant wilfully opted to not to avail the said opportunity. The Order under challenge cannot be set aside on the grounds of violation of principles of natural justice.
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Indian Laws:
Deemed extension of time for completion of the arbitration proceedings - beyond four months period from the date of first preliminary meeting - The time fixed for the arbitration and/or schedule of time limit in such arbitration proceedings, as it is recognised by law, there is no reason not to accept the same - There is no deemed extension.
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IBC:
Initiation of CIRP - Financial Creditor or not - Appellant settled the dues in full or part by way of transfer of shares. Now it is for the Appellant to transfer the shares in accordance with law but it cannot be denied that the Appellant is the owner of the shares - Appellant cannot be taken into consideration for the purpose of collating the claim of any claimant (creditor) by the ‘Resolution Professional’ under Section 18 of the I&B Code.
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Service Tax:
C&F Agents Services - activities of receipt of the goods, storage of same, sale from depot, preparation of invoices, maintenance of records collection of the sale proceeds and remitting the sale proceeds to their principals - the activities undertaken by the appellant are covered by the definition of “Clearing and Forwarding Agent” as per Section 65(25) of the Finance Act, 1994
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Service Tax:
Service tax - reimbursement of advertisement expenses and other sales promotion expenses - since expenses reimbursed on actual basis for achieving the Sales target, incentive or advertisement and publicity expenses on actual basis, there is no element of receipt of any found toward service - not chargeable to service tax
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Service Tax:
Supply of Tangible Goods Service - renting of refrigerators to their dealers/ distributors - in view of clarification issued by the Board that supply of tangible goods for use and leviable to VAT/sales tax as deemed sale of goods and the same is not covered under the scope of the proposed service - not liable to pay service tax
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Central Excise:
Circular on Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019
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Central Excise:
CENVAT Credit - input services - the foreign agents were rendering the services not only post-sales or post-export but were engaged in the activities of exploring the market, advising the designs for manufacture and supplies to specific orders procured by them and assisting the clearance of the garments in question and export the same to the foreign countries and earn foreign currency - input duly allowable
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Central Excise:
Principles of Natural Justice - non-speaking order - there are no discussion in the impugned order on merits as to why the development cost incurred by the petitioner has nexus with the final product, it seems to proceed on the basis that as the petitioner has paid the duty without any dispute - there should not be a misconception that when the duty liability was discharged, liability was admitted by the assessee - remanded for fresh decision
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VAT:
Scope of term "or otherwise" within the definition of "dealer" - Writ petitioner is carrying on business as a dealer not directly, but otherwise, even on an extreme demurrer, even if the expression 'or otherwise' is to be given a restricted meaning, it will still cover writ petitioner's vendor. - The writ petitioner's vendor qualifies as a 'dealer' within the meaning of Section 2(n)
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VAT:
Reopening of assessment - once an order, which has been passed and has been confirmed by this Court under the provision of the Act, the case in hand, then in absence of any new material being brought on record, the completed assessment should not have been reopened - subsequent judgement of the Apex Court cannot be used to reopen assessment or disturb past assessment which have been concluded
Articles
Notifications
Customs-
62/2019 - dated
30-8-2019
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Cus (NT)
Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Silver
GST - States-
Order No. 07/2019- State Tax - dated
28-8-2019
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Bihar SGST
Bihar Goods and Services Tax (Seventh Removal of Difficulties) Order, 2019
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Order No. 7/2019-State Tax - dated
27-8-2019
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Gujarat SGST
Gujarat Goods and Services Tax (Seventh Removal of Difficulties) Order, 2019.
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37/2019-State Tax - dated
22-8-2019
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Gujarat SGST
Extension of Due date for FORM GSTR-3B for July, 2019.
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Removal of Difficulty Order No. 06 State Tax - dated
21-8-2019
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Jharkhand SGST
Jharkhand Goods and Services Tax (Sixth Removal of Difficulties) Order, 2019
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37/2019-State Tax - dated
22-8-2019
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Maharashtra SGST
Seeks to extend the due date for furnishing FORM GSTR-3B for the month of July, 2019.
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36/2019-State Tax - dated
21-8-2019
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Maharashtra SGST
Seeks to extend the date from which the facility of blocking and unblocking of e-way bill facility as per the provision of Rule 138E of MGST Rules, 2017 shall be brought into force to 21.11.2019.
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2612/CSTUK/GST-Vidhi Section/2019-20/CT-37 - dated
22-8-2019
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Uttarakhand SGST
Enhancement of time for filing GSTR 3B for district Chamoli and Uttarkashi
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667/2019/3 (120)/XXVII(8)/2019/CT-35 - dated
16-8-2019
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Uttarakhand SGST
Seeks to amend Notification No. 430/2019/03 (120)/XXVII(8)/2019/CT-21, dated the 31st May, 2019
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666/2019/3(120)/XXVII(8)/2019/CTR-13 - dated
16-8-2019
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Uttarakhand SGST
Seeks to amend Notification No. 530/2017/9(120)/XXVII(8)/2017 Dated 29 June, 2017
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665/2019/3 (120)/XXVII(8)/2019/CTR-12 - dated
16-8-2019
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Uttarakhand SGST
Seeks to amend Notification No. 514/2017/9 (120)/XXVII(8)/2017 Dated 29 June, 2017
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Order No. 07/2019-State Tax - dated
27-8-2019
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West Bengal SGST
West Bengal Goods and Services Tax (Seventh Removal of Difficulties) Order, 2019
Circulars / Instructions / Orders
News
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CBDT notifies creation of special cell for startups
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Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019
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Auction for Sale (Re-Issue) of ‘6.17% GS 2021’, Auction for Sale (Re-Issue) of ‘7.27% GS 2026’, Auction for Sale (Re-issue) of ‘7.26% GS 2029’, Auction for Sale (Re-Issue) of ‘7.62% GS 2039’, and Auction for Sale (Re-Issue) of ‘7.63% GS 2059’.
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Union Minister of Finance & Corporate Affairs Smt. Nirmala SItharaman's Presentation on amalgamation of National Banks
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Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Silver
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Monthly Review of Accounts of Union Government of India upto the month of July 2019 for the Financial Year 2019-20
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CCI needs careful oversight on data to prevent amassing of power in one conglomerate in market: NITI Aayog Vice-Chairman
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SABKA VISHWAS (LEGACY DISPUTE RESOLUTION) SCHEME, 2019 - FAQs
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GeM and SIDBI sign MoU to enable growth of MSMEs, Start-ups and Women Entrepreneurs
Case Laws:
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GST
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2019 (8) TMI 1353
Contempt of court - rejection of petitioner's request for uploading FORM GST TRAN-1 by the Nodal officer - Disobedience of directions issued in judgment dated 10/07/2018 [ 2018 (8) TMI 974 - KERALA HIGH COURT ] or not - HELD THAT:- The contention is noted and after perusing the record, this Court is of the view that the decision in terms of the judgment dated 10/07/2018 is taken in the meeting held on 12/02/2019. The outcome of the decision is that “the request of petitioner is rejected”. Therefore, the petitioner is required to treat the decision taken on 12.02.2019 as a decision on the request of the petitioner and it so challenges the decisions as provided for by law. The reply of respondent does not warrant continuation of contempt proceedings.
Contempt case dismissed.
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2019 (8) TMI 1351
Rectification of mistake that has been crept in GSTR-3B - Whether the return in Form GSTR-3B is a return required to be filed under Section 39 of the CGST Act JGGST Act? - HELD THAT:- Prima facie case is made out and that as the issues raised in the writ petition require detailed examination, this IS a fit case to grant the interim order.
The petitioner is permitted to rectify GSTR 3B statements for the months of August and December, 2017 and January and February, 2018 manually subject to the outcome of the writ petition - petition allowed.
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2019 (8) TMI 1350
Vires of Rule 89 (5) of the Central Goods and Services Tax (CGST) Rules, 2017 - whether contrary to the provisions of Section 54 (3) of the Central Goods and Services Tax (CGST) Act, 2017? - Refund of input tax credit - HELD THAT:- Issue notice for final disposal of the matter, to the respondents, returnable on 09.10.2019.
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2019 (8) TMI 1352
Scope of supply - execution of works requiring modification/ augmentation/ shifting/ additions to the transmission system of RVPN at the specific request of the consumer/intending agency under Deposit Work - whether ‘Supply’ in terms of Section 7 of the CGST Act, 2017? - HELD THAT:- The term ‘supply’ has been defined in Section 7 of GST Act, 2017 and it includes all forms of supply (goods or services) and includes agreeing to supply when they are for a consideration and in the course or furtherance of business. It specifically includes sale, transfer, barter, exchange, license, rental, lease or disposal. For a transaction to qualify as ‘supply’, it is essential that the same is ‘in the course or furtherance of business’.
In the instant case, the transaction of facilitating the execution of deposit works to the applicant’s transmission system at the specific request of the consumer/ intending agency is included under the ‘scope of supply’ in terms of section 7 of GST Act, 2017 as the same fulfills all the essential ingredients of ‘supply’ as it is a supply of service in the form of facilitation, further there is a consideration as the construction activities carried out by the customer / intending agency will ultimately be the property of the applicant - Thus all the ingredients of section 7(1)(a) are present to be categorized the transaction as supply of services.
Considering the fact that the ownership of asset remains with the applicant, it is evident that the execution of works requiring deposit works is a facilitation for the access/ use of such transmission system and thus such facilitation is a ‘supply’ of services.
Valuation of supply - Work executed by RVPN itself - Section 15 of the GST Act, 2017 - HELD THAT:- When the applicant incurred such cost, then GST would automatically be leviable on total transaction value without any recourse to section 15(2)(b) of GST Act, 2017 - Accordingly, even when the cost of deposit work to the applicant’s transmission system is incurred by the consumer/ intending agency itself, such cost is also required to be included in the transaction value and to be considered as value of supply for the purpose of levy of GST in terms of section 15(2)(b).
Valuation of supply - Work executed by the consumer/ intending agency under supervision of RVPN - Section 15 of the GST Act, 2017 - HELD THAT:- In the present case where the deposit work is undertaken by the consumer/ intending agency under supervision of the applicant, the cost is directly incurred by the consumer/ intending agency, still the applicant is exclusively liable and responsible for modification/ alteration of the transmission infrastructure as per Electricity Act, 2003 so as to comply with the grid standards and that’s why the work is mandatorily to be executed under the supervision of applicant - Thus, since the applicant is liable and responsible for such work, therefore, according to section 15(2)(b) of GST Act, 2017, the cost of such asset/ infrastructure incurred by the consumer/ intending agency is to be included in the value of supply - in addition to supervision/ shutdown charges, by virtue of section 15(2) (b) of GST Act, 2017 the cost incurred by the consumer/ intending agency, for creating the infrastructure is also required to be included in the transaction value and to be considered as value of supply for the purpose of levy of GST.
Applicable rate of GST - HELD THAT:- Services provided by the applicant to the consumer/ intending agency falls under HSN/SAC 998631 and will attract GST @ 18%, as per Annexure to N/N. 11/2017 Central Tax (Rate) dated 28th June 2017 (as amended).
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2019 (8) TMI 1355
Permission for withdrawal of Advance Ruling application - Classification of goods - fruit beverages or drinks - scope of FSSAI Act in section 2.3.3.A - Is there any persevered percentage of fruit or pulp in the beverages to call them as carbonated fruit beverages or drinks under the GST Act? - HELD THAT:- The applicant is allowed to withdraw their application and ordered accordingly
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2019 (8) TMI 1354
Permission for withdrawal of Advance Ruling Application - Rate of GST - mixture of flour, pulses, grams, and cereals requested - HELD THAT:- The application filed by the Applicant for Advance Ruling is dismissed as withdrawn.
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2019 (8) TMI 1356
Classification of goods - Salwar / Churidhar sets, comprising of three pieces of cloths viz., tops, Bottom and Dupatta, whether partially stitched/ neck work done, or not - whether they are to be classified as “Fabrics” under Chapters 50 to 55 depending on the constituent material or as “articles of apparel and made up textile articles” under Chapter 61,62 and 63? - rate of GST - challenge to AAR decision.
HELD THAT:- It is agreed that in the sets under consideration, the Salwar (bottom) requires stitching and the Kurta(Top) is to be stitched to size but mere Stitching / Stitching to size do not take away the characteristics of the garments being Salwar/ Churidar sets. It will not be out of context to mention that in the Model 2 and 3 displayed during the hearing, it was observed that the duppatta which is one of the pieces in the Set is hemmed/ knotted and in a ready to wear condition. The sets can be used only as ‘Churidars’ and cannot be used as any other garments or termed as ‘fabrics’ - Therefore the sets which are in approximate shape/outline of the finished goods, more so with one piece in ready to wear condition, have the essential character of ‘finished goods’ and in view of interpretative Rule 2(a) are classified as ‘Kurta and Salwar with or without dupatta’ under CTH 6211.
The second contention of the appellant is that once the trade raised the doubt, that, in trade parlance, these goods are supplied as “fabric”, which is subject to stitching according to the size/ shape and designs of the end user and therefore it cannot be termed as ready-made garments and only called as “Churidar materials” - HELD THAT:- The clarifications were issued that “unstitched salwar suits’ are classifiable as “fabrics” and attract 5% GST.
It is seen that CBIC vide Circular No. 13/2017 dated 27.10.2017 has clarified that ‘Mere cutting and packing of fabrics into pieces of different lengths from bundles or thans, will not change the nature of these goods and such pieces of fabrics would continue to be classifiable under the respective heading as the fabric and attract the 5% GST.
Thus, to be a garment/ made up, the product has to be more than mere fabric - In the case at hand it is already established that the products are incomplete or unfinished ‘Salwar/Churidar Sets’, which requires further stitching to size/design. The products are not simply fabrics with certain embellishments but containing Top which are Semi-stitched, Stitched and neck-line formed/ dupatta hemmed/ knotted, which are without ambiguity cannot be considered as mere ‘Fabrics’ but more appropriately termed as ‘garments’ or ‘Part of garments’ - Thus the Model 2, 3 and 4 under consideration, being Sets of three pieces consisting of (1) unstitched Salwar(bottom), (2) laced/ hemmed/ knotted duppata and (3) Semi-stitched / Fully stitched Kurta(Top)/ Top with defined neckline are ‘garments’ and not mere ‘fabric’ in three pieces. These are covered under specific entry in the Customs Tariff- CTH 6211, as the heading includes ‘Salwars’ of various materials.
Rate of tax - HELD THAT:- As per Notification No. 01/2017-C.T.(Rate) dated 28.06.2017 as amended and Schedule I of Notification No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017 of Tamil Nadu Government as amended, the subject goods are liable to GST @ 5%[CGST-25% and SGST-2.5%], if the sale Value is less than ₹ 1000/- per piece and @ 12% [CGST 6% and SGST-6%], if the sale value is more than ₹ 1000/- per piece.
The decision of Advance ruling Authority upheld.
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Income Tax
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2019 (8) TMI 1333
Addition u/s 68 - share application money alongwith premium - HELD THAT:- There is hardly any dispute between the parties inter alia about the basic admitted fact of the assessee to have raised the impugned share application money from eleven related parties, the AO having taken recourse to sec. 131/133(6) process in all of their cases, these investors having replied from the other end in support of the correctness of the share application money. The assessee’s eleven share applicants confirmed the assessee’s case by fling all necessary documentary evidence as well.
There is further no issue between the assessee and the department about their identity, at least with satisfies first of the three relevant parameters identity genuineness and creditworthiness involving unexplained cash credits sec. 68 - We wish to emphasise here that all eleven parties happen to be assessee’s associate concerns / individuals i.e. eight of them are its directors’ relatives and the remaining three turn out to group entities.
Assessee has produced oral or documentary evidence. Learned departmental representative at this stage submits that there is no justification for assessee’s extra-ordinary exorbitant premium in case of investor parties having meagre source of income. We find no merit in Revenue’s stand since there is no evidence on record which could suggest that any of the assessee’s eleven investor had been having any dubious transactions in their accounts.
Assessing Officer erred in treating the assessee’s share application / premium amount as unexplained cash credits in entirety. The CIT(A)’s findings restricting the same to ₹75 lac only stand reversed therefore. - Decided in favour of assessee
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2019 (8) TMI 1332
Interest under section 234B and 234C - HELD THAT:- The charging of interest is consequential and mandatory and the AO has no discretion in the matter. This proposition has been upheld by the Hon’ble Apex Court in the case of Anjum H. Ghaswala [2001 (10) TMI 4 - Supreme Court] and we, therefore, uphold the action of the AO in charging the assessee the aforesaid interest u/s 234B and 234C of the Act. The AO is, however, directed to re-compute the interest chargeable u/s 234B and 234C of the Act, if any, while giving effect of this order.
Disallowance u/s 40(a)(ia) - payment of interest on term deposits to Members of Co-operative Bank - HELD THAT:- Amendment to section 194A(3)(V) operates prospectively w.e.f. 01.06.2015; we hold that the assessee, being a Co-operative Bank, is not required to deduct tax at source from the payment of interest on terms deposits to its Members in the year under consideration i.e., Assessment Year 2012-13. We consequently delete the disallowance under section 40(a)(ia) of the Act made by the AO and accordingly allow the ground No.2 and 2.1 raised by the assessee.
Transfer of Reserve Fund - HELD THAT:- Respectfully following the decision of the Hon’ble Apex Court in the case of Vellore Electric Corporation Ltd., [1997 (7) TMI 13 - SUPREME COURT], we hold that the assessee is not entitled to claim deduction in respect of transfer to reserve fund.
Transfer to Co-operative Education Fund - HELD THAT:- Decision of the Hon’ble Karnataka High Court in the case of Pandavapura Sahakara Sakkare Kharkane Ltd.[1988 (6) TMI 39 - KARNATAKA HIGH COURT], while deciding on the allowability of contributions to the Co-operative Education Fund, the Hon’ble Court considered them akin to consumer rebate reserve and, following the decision of the Hon’ble Apex Court in the case of Poona Electric Supply Company Ltd. [1965 (4) TMI 20 - SUPREME COURT], upheld its allowability. The ratio of the decision in the case of Poona Electricity Supply Company Ltd., [1965 (4) TMI 20 - SUPREME COURT] was upheld by the Hon’ble Apex Court in the case of Vellore Electric Corporation Ltd., [1997 (7) TMI 13 - SUPREME COURT], relied on by the Co-ordinate Bench of this Tribunal. We are, therefore, of the view that the decision of the Hon’ble Karnataka High Court in the case of Pandavapura Sahakara Sakkare Karkhane Ltd., (supra) would continue to hold the ground and is to be followed and respectfully following the same, allow the grounds 5 and 5.1 raised by the assessee.
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2019 (8) TMI 1331
Carry forward and set off of MAT credit - in the hand of demerged company OR resulting company after sanctioning the scheme of demerger - HELD THAT:- Whatever, MAT credit available to the assessee prior to that date even though, the same is arised on account of SEZ units, the credit for such MAT credit needs to be allowed to the assessee, but not to the demerged SEZ units. We further noted that TCS Ltd has not claimed credit for MAT credit in their return of income, which is evident from the fact that the AO of TCS Ltd in their assessment has categorically stated that MAT credit of TCS e-serve International Ltd will be available to the TCS e-serve International Ltd. Only. We, further stated that MAT credit should go into entity, but not with resulting company. Therefore, we are of the considered view that the Ld.CIT(A) has rightly considered the issue in light of provision of Act and also, the scheme of demerger approved by the Hon’ble Bombay High Court, while directing the AO to allow carry forward and set off of MAT credit.
We are of the considered view that the Ld.CIT(A) has rightly directed the AO to allow carry forward and set off of MAT credit to the assessee and hence, we are inclined to uphold the findings of the Ld.CIT(A) and dismissed appeal filed by the revenue.
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2019 (8) TMI 1330
Revision u/s 263 - interest income and turnover mismatch - application of provision of section 14A r.w. Rule 8D - HELD THAT:- If, you go through the points taken up by the PCIT for verification regarding interest income and turnover mismatch, the figure taken up by the PCIT is exactly one and the same. The assessee has reported interest income under the head sales turnover in its audit reports, whereas in ITR sales turnover and interest income has been shown separately. If, you add back sales turnover and interest income, then there would be no difference in turnover reported by the assessee in its audit report.
This fact has been accepted by the PCIT, but he went on to direct the AO to verify the facts, in light of reconciliation filed by the assessee without pointing out, how the order passed by the AO is erroneous, in so far as, it is prejudicial to the interest of the revenue.
Similarly, in respect of disallowances of interest expenditure u/s 14A, the assessee has made out a case of availability of own funds in form of capital, which is over and above, the amount of investments in shares and securities, which could yield exempt income. The assessee has also made out a case of no exempt income for the year under consideration. It is settled position of law that in case there is no exempt income earned for the year under consideration, then there would be no disallowances of expenditure incurred in relation to exempt income u/s 14A. This legal proposition is supported by number judicial precedents, including decision of Hon’ble Supreme Court in the case of CIT vs Chettinad Logistics Pvt.Ltd. [2018 (7) TMI 567 - SC ORDER] where, the Hon’ble Supreme Court has dismissed SLP filed by the revenue and upheld the findings of Hon’ble Madras High Court regarding no exempt income, no disallowances of expenditure u/s 14A of the I.T.Act, 1961.
This legal proposition was further supported by the decision of Hon’ble Bombay High Court, in the case of Pr.CIT vs Ballarpur Industries Limited [2016 (10) TMI 1039 - BOMBAY HIGH COURT] where, similar view has been expressed by the High Court. Therefore, we are of the considered view that the Ld.PCIT has set aside assessment order passed by the AO without pointing out, how the assessment order passed by the AO is erroneous, in so far as, it is prejudicial to the interest of the revenue.
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2019 (8) TMI 1329
Rectification u/s 254 - bogus purchases - HELD THAT:- We find that the Tribunal has deliberated at length on the issue involved in these appeals, in respect of additions made by the AO towards alleged bogus purchases from certain hawala dealers/suspicious dealers, in light of facts brought out by the AO, during assessment proceedings and also arguments advanced by the assessee.
Tribunal had given categorical finding, in respect of purchases claims to have made from certain parties, in light of admission of the assessee counsel before the AO and came to the conclusion that when, the assessee has surrendered the income before the AO on being confronted with the result of enquiries conducted, during the course of assessment proceedings, which clearly established the fact that the purchases from the above parties are bogus and this fact was further, supported by the report of investigation wing, which is once again based on information received from sales tax department. In the light of above observations of the Tribunal, if we examine the contents of miscellaneous application filed by the assessee, we find that the assessee has failed to make out a case of prima-facie mistake apparent on record from the order of the Tribunal, which could be rectified u/s 254(2) - miscellaneous application filed by the assessee for AY 2009-10, 2010-11 and 2011-12 are dismissed.
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2019 (8) TMI 1328
Rectification u/s 254 - Profit estimation on alleged bogus purchase from Hawala/Suspicious dealers - HELD THAT:- Tribunal had recorded its finding, in respect of issue involved in appeal regarding profit estimation on alleged bogus purchase from Hawala/Suspicious dealers and after considering relevant facts and also by following the decision of ITAT, Mumbai Bench in assessee’s own case for earlier assessment year has directed the AO to estimate 12.5% net profit on alleged bogus purchases.
We, further noted that if, you go through contents of miscellaneous application filed by the assessee in light of findings recorded by the Tribunal in its order dated 27/02/2019, we are of the considered view that the assessee has failed to make out a case of prima-facie mistake apparent on record, which could be rectified u/s 254(2). Further, what the assessee seeking is to review the decision rendered by the Tribunal in the given facts and circumstances of the case and also by following the decision of co-ordinate bench in assessee’s own case for earlier assessment years, which is not permissible u/s 254(2) of the I.T.Act, 1961.
Therefore, we are of the considered view that there is no merit in miscellaneous application filed by the assessee and accordingly, the same is dismissed.
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2019 (8) TMI 1327
Condonation of the delay of 65 days - pendency of the rectification proceedings before the AO - HELD THAT:- After receipt of the impugned order of assessment dated 03.03.2016, assessee had filed a rectification application before the AO seeking correction of the mistake therein; of non-allowing of set off; which was followed up by reminder to the AO in this regard. Therefore, in our view, it stands to reason that the pendency of the rectification proceedings before the AO and the assessee’s expectation that the issue could be sorted out at that level has contributed in no small measure to the delay in filing the appeal for Assessment Year 2013-14 before the CIT(A).
We are inclined to accept the contentions of the assessee that there is sufficient and reasonable cause for condonation of the delay of 65 days in filing the appeal for Assessment year 2013-14 before the CIT(A).
The Hon’ble Apex Court in the case of MST Katiji [1987 (2) TMI 61 - SUPREME COURT] has laid down the principles that need to be kept in mind while considering an application for condonation of delay; emphasizing that substantial justice should prevail over technical considerations. The Hon’ble Court observed that a litigant does not stand to benefit by lodging the appeal late. The Hon’ble Court has also explained that ‘every day’s delay must be explained’ does not mean that pedantic approach should be adopted; the doctrine must be applied in a rational, common sense and pragmatic manner.
We are of the considered opinion that it would be travesty of justice if the delay of 65 days in filing the appeal before the CIT(A) is not condoned. We condone the delay of 65 days in filing the appeal before the CIT(A); consequently set aside the impugned order dated 25.01.2019 for Assessment Year 2013-14 in the case on hand and restore the matter to the file of the CIT(A) for consideration and disposal of the issues raised in grounds of appeal on merits before him.
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2019 (8) TMI 1340
Assessment u/s 153C - period of limitation - HELD THAT:- Legislature has specifically made the amended provisions of Section 153C of the Act applicable with prospective effect from 01.06.2015. The Court held that if such amended provisions are not made applicable to the searches carried out prior to 01.06.2015, they would affect the substantive rights of the persons who are brought within the ambit of Section 153C by virtue of such amendment. So far as the third question is concerned with regard to the limitation, the Court in ANILKUMAR GOPIKISHAN AGRAWAL VERSUS ACIT [2019 (6) TMI 746 - GUJARAT HIGH COURT] took the view that when the statute itself provides for an alternative period of limitation, merely because the period of limitation is provided under the first part has elapsed; it cannot be said that the notices were barred by the limitation on such ground
In case any notices u/s 153C which have been issued for assessment years beyond the six assessment years referred to herein above, such notices would be beyond jurisdiction as the same do not fall within the six assessment years as contemplated u/s 153A - Decided in favour of assessee.
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2019 (8) TMI 1339
Assessment u/s 153C - period of limitation - HELD THAT:- Legislature has specifically made the amended provisions of Section 153C of the Act applicable with prospective effect from 01.06.2015. The Court held that if such amended provisions are not made applicable to the searches carried out prior to 01.06.2015, they would affect the substantive rights of the persons who are brought within the ambit of Section 153C by virtue of such amendment. So far as the third question is concerned with regard to the limitation, the Court in ANILKUMAR GOPIKISHAN AGRAWAL VERSUS ACIT [2019 (6) TMI 746 - GUJARAT HIGH COURT] took the view that when the statute itself provides for an alternative period of limitation, merely because the period of limitation is provided under the first part has elapsed; it cannot be said that the notices were barred by the limitation on such ground
In case any notices u/s 153C which have been issued for assessment years beyond the six assessment years referred to herein above, such notices would be beyond jurisdiction as the same do not fall within the six assessment years as contemplated u/s 153A. The impugned assessment orders are hereby quashed and set aside on the ground that the very initiation of proceedings u/s 153C was without jurisdiction.
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2019 (8) TMI 1338
Interest on delayed refund in terms of subsection [1] of Section 244A - Undue delay in granting the refund - Credit to the refund due to the petitioner and the interest u/s 244A (1) and 244 (1A) - HELD THAT:- As relying on NIMA SPECIFIC FAMILY TRUST [ 2018 (10) TMI 441 - GUJARAT HIGH COURT] we dispose of this writ application with a direction to the respondent to release the refund for the Assessment Year 2004-05 in accordance with the provisions of Section 244A(1) within a period of six weeks from the date of the receipt of this order. We hope and trust that the writ applicant may not have to comeback to this Court redressing any further grievance.
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2019 (8) TMI 1349
Reopening of assessment u/s 147 - benefit of the DTAA between India and UAE disclosure - HELD THAT:- As petitioners submits that he has been instructed to seek permission to withdraw the present Petition as the same impugned order has been challenged by the petitioners in another special leave petition which has already been decided.
Permission is granted. Accordingly, the Special Leave Petition is dismissed as withdrawn.
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2019 (8) TMI 1347
Nature of expenses - expenses on consumption and replacement of stores and spares - revenue or capital expenditure - disallowance u/s. 40(a)(ia) in respect of commission payment to dealers - HELD THAT:- questions Nos.1 and 3 as proposed by the Revenue are concerned, the same are no longer res integra in view of the decision of this Court in the case of Principal Commissioner of Income Tax vs. M/s. Gujarat Narmada Valley Fertilizer and Chemicals Ltd. [2019 (4) TMI 1723 - GUJARAT HIGH COURT]
Disallowance u/s 37(1) in respect of expenses being contribution / donation to educational institutions, trust, local bodies - HELD THAT:- This issue is also no longer res integra in view of the decision of this Court in the case of the Principal Commissioner of Income Tax vs. M/s. Gujarat Narmada Valley Fertilizer and Chemicals Ltd. [2019 (8) TMI 1288 - GUJARAT HIGH COURT]
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2019 (8) TMI 1326
Additional payment on account of cane price under Clause 5A of the Sugar Control Order - HELD THAT:- Issue relating to excess sugarcane price paid by the assessee is restored to the file of Assessing Officer with similar directions as above in the case of Majalgaon Sahakari Sakhar Karkhana Ltd. Vs. ACIT [2019 (3) TMI 906 - ITAT PUNE] . The Assessing Officer shall decide the issue after affording reasonable opportunity of hearing to the respective assessees, in accordance with law.
Addition made in the assessment on account of sale of sugar to members and non members - HELD THAT:- It would be just and fair if the impugned orders on this score are set aside and the matter is restored to the file of AOs, instead of to the CITs(A), for fresh consideration as to whether the difference between the average price of sugar sold in the market and that sold to members at concessional rate is appropriation of profit or not, in the light of the directions given by the Hon’ble Supreme Court in the case of Krishna Sahakari Sakhar Karkhana Limited [2012 (11) TMI 669 - SUPREME COURT]
Addition made on account of Khodki charges - HELD THAT:- As decided in [2019 (3) TMI 906 - ITAT PUNE] Khodki charges have been held as deductible by the Hon’ble jurisdictional High Court and the recent judgment of Hon’ble Supreme Court in Tasgaon Taluka Sahakari Sakhar Karkhana Ltd. [2019 (3) TMI 321 - SUPREME COURT] does not cover Khodki charges, we hold that this issue needs to be decided in favour of the assessee.
Addition made on account of VSI contribution - HELD THAT:- As in respect of the other SSK matters in [2019 (3) TMI 906 - ITAT PUNE] CIT(A) has determined this issue in favour of the assessee. No material has been placed on record to show that this order of the Tribunal has been reversed or modified in any manner by the Hon’ble High Court. Respectfully following the precedent, we decide this issue in favour of the assessee.
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2019 (8) TMI 1325
TDS u/s 195/ 194J - disallowance u/s.40(a)(ia) - whether the payment made to resident towards annual license fee paid for the renewal of Microsoft software is in the nature of royalty? - HELD THAT:- Having regard to the fact that the assessee is subject to the jurisdiction of the Hon’ble Karnataka High Court, it will be governed by the law laid down by its jurisdictional High Court as per Article 226 of the Constitution of India notwithstanding a contrary favourable view of the Hon’ble Delhi High Court, which even this Bench of the Pune Tribunal has followed in some cases not falling within the jurisdiction of the Hon’ble Karnataka High Court. Ex consequenti, the assessee will have to be subjected to the view canvassed by the Hon’ble Karnataka jurisdictional High Court, as per which consideration for the purchase of off-the-shelf software under software licence agreement results in only a transfer of right to use copy of the software, constituting royalty under the provisions of section 9(1)(vi). As the instant case is that of a resident paying royalty to another resident, there is no need to examine any DTAA from the angle of taxability or otherwise of royalty in the hands of the recipient as the same stands established under the Act.
Section 194J(1) deals with deduction of tax at source, inter alia, from royalty as per clause (c) and provides that the payer of royalty, not being an individual or a Hindu undivided family, shall, deduct tax at source at the rate of 10%.
Clause (ba) to the Explanation to section 194J further provides that "royalty" for the purpose of this section shall have the same meaning as given in section 9(1)(vi). Thus, it is clear that where income in the nature of royalty is payable to a resident-payee, then the payer is liable to deduct tax at source u/s 194J. Failure to deduct and pay such tax in the Government exchequer entails, inter alia, disallowance u/s 40(a)(ia), as has been made by the authorities below in the instant case. - Decided against assessee.
Disallowance of foreign tax credit - taxes paid by foreign branches as claimed in the return of income filed - assessee’s foreign branches in five countries constituted its PEs, who suffered income tax in such jurisdictions - AO allowed foreign tax credit only to the extent of the basic MAT rate of 10% of profits of the foreign branches without adding surcharge and cess of 1.33% - HELD THAT:- We find that even if the assessee is chargeable to tax under the Act on its global income, it may still be possible that some income is chargeable in the foreign tax jurisdictions but not chargeable under the Act due to exemption available (which is different from income chargeable but deductible under the relevant provisions). If a particular income is included only in the total income under the Act but not under the total income of other country, or vice-versa, the same cannot qualify for the benefit under the provision. It is thus evident that only the doubly taxed income qualifies for relief u/s 90(1)(a)(i) which fairly indicates that where a resident of India derives income which may be taxed in the United States also, then India shall allow a deduction from the tax on the income of that resident of an amount equal to the income tax paid in the United States.
Where a resident of India derives income which may be taxed in the United States also, then India shall allow a deduction from the tax on the income of that resident of an amount equal to the income tax paid in the United States.
If the doubly taxed income was subjected to tax in the other country at the rate of 10%, then tax credit should be restricted to 10% and in case it was subjected to foreign tax in the other country at a rate higher than 11.33% (say, 15% or 20% or 40%), then the amount of foreign tax credit should be restricted to 11.33% of the concerned doubly taxed income. The AO is directed to verify the respective tax rates in Netherland, France, US, UK and Belgium for the year under consideration on which the assessee paid taxes and then allow the benefit accordingly after granting reasonable opportunity of hearing to the assessee.
Disallowance u/s.14A r.w. Rule 8D - HELD THAT:- This issue is now no more res integra in view of the judgment delivered by the Hon'ble Supreme Court in Godrej & Boyce Manufacturing Company Ltd. vs. DCIT [2017 (5) TMI 403 - SUPREME COURT] upholding the view of the lower authorities that when interest free funds in the form of share capital and reserves etc. are more than the amount of investment, then no disallowance of interest can be made u/s 14A. Respectfully following the precedents, we order to delete the disallowance under Rule 8D(2)(ii) to the tune of ₹ 5,49,818/-.
Disallowance made u/s 8D(2)(iii) - as seen that the same has been worked out by the AO at 0.50% of average amount of investments - HELD THAT:- We set aside the impugned order to this extent and remit the matter to the file of Assessing Officer for re-computing the disallowance under Rule 8D(2)(iii) by considering only such investments in calculating the average value of investments, which have yielded exempt income during the year. The assessee will be allowed hearing opportunity in the fresh proceedings.
AR further contended that a suo motu disallowance was offered by the assessee u/s 14A. The AO is directed to verify this claim and then accordingly compute the amount disallowable u/s.14A r.w. Rule 8D(2)(iii).
Addition being, the value of lapsed ESPOs in the income computed under the normal provisions of the Act as well as the profits computed u/s 115JB - HELD THAT:- As decided in own case the amount of ESOPs was rightly credited by the assessee to the General reserve on lapse of option and hence cannot be included in the computation of book profits u/s.115JB. It has further been directed that such an amount of lapsed ESOPs should be considered as income chargeable to tax u/s.41(1) for the year in which cessation or remission took place and not the years in which deduction was claimed. We hold accordingly.
Deduction u/s 10A - Reducing from ‘Export turnover’ as well as ‘Total turnover’ - telecommunication charges and internet - Foreign currency expenses - HELD THAT:- Considering earlier decisions any amount reduced from ‘Export turnover’ should also be reduced from the amount of ‘Total turnover’ in the computation of deduction u/s.10A.
Deduction u/s 10A - Considering earlier decisions amount relatable to DTM and onsite software services should be considered as eligible for deduction u/s.10A
Set off of brought forward losses and unabsorbed depreciation - against the business income, short term capital gain and income from other sources in computing total income in accordance with the provisions of Chapter VI - HELD THAT:- The Tribunal in its order for the A.Y. 2007-08 has discussed this issue threadbare and following the judgment of Hon’ble Supreme Court in the case of CIT Vs. Yokogawa India Ltd. [2016 (12) TMI 881 - SUPREME COURT] has held that the deduction should be allowed qua the eligible undertaking standing on its own without reference to the other eligible or non-eligible unit or undertakings.
To put it simply, the profits of the eligible units should be considered on standalone basis. Following the view, we determine the issue accordingly.
Interest u/s.234B and 234C - Default in payment of advance tax where tax was paid u/s 115JB - amendment to section 115JB - HELD THAT:- The amendment to section 115JB through clause (i) has been brought out by the Finance (No.2) Act, 2009 with retrospective effect from 01-04-2001. The Finance (No.2) Bill 2009 was introduced in the Lok Sabha on 06-07-2009, whereas the financial year of the assessee closed on 31-03-2009. It is pursuant to the retrospective amendment coming into force after the close of the financial year but before the filing of the return that the assessee computed its income u/s.115JB accordingly. In so far as the question of charging interest u/s.234B and 234C is concerned, it is found in CIT Vs. Kirloskar Systems Ltd. [2013 (12) TMI 9 - KARNATAKA HIGH COURT] has held that interest u/s.234B and 234C cannot be levied for default in payment of advance tax in case wherein section 115JB is invoked pursuant to such amendment. We, therefore, hold that interest u/ss.234B and 234C should not be charged to the extent of retrospective amendment to section 115JB affecting the computation of book profits accordingly.
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2019 (8) TMI 1324
Bogus LTCG - exemption u/s 10(38) - penny stock transactions - successive layers of transactions - the AO found some cash deposits in the accounts of unrelated parties - HELD THAT:- No cogent material was brought on record which in any manner showed that either the survey team or the AO had identified the persons to whom the entities/concerns belonged and in whose accounts the cash was allegedly deposited - neither any of the proprietors of bank accounts where cash was deposited were personally examined by the AO nor any independent enquiries were made from them to verify the true & correct facts of the case. Merely because while tracing the successive layers of transactions, the AO found some cash deposits in the accounts of unrelated parties; in our considered view, on such fact alone the AO could not record a conclusive finding that the cash so deposited represented appellant’s undisclosed income which was routed through several accounts.
Therefore, the so-called evidences in the form of cash trail of transactions did not conclusively prove the AO’s alleged findings that the proceeds realized by the appellant from sale of shares could be considered as appellant’s undisclosed income. This finding is further fortified from the fact that even through the aggregate of the additions made u/s 68 in these group of cases is ₹ 6,46,63,639/-, the alleged cash deposits as per the trail found was only ₹ 3,58,90,000/- which in itself shows that the said deposits were not sufficient to lead to conclusion that sale proceeds represented appellant’s undisclosed income introduced in the form of sale proceeds.
We find the entire assessment substantially proceeded on the AO’s suspicion that the appellant had indulged in laundering her unaccounted income during the month of February 2014.
All the payments received during the month of February 2014 against the sale of shares was received through banking channel from registered stock broker and even as per the AO’s own observation the source as well as source of source for receipt of sale consideration were found through proper banking channel. In fact the appellant’s transactions in the same shares conducted through the same broker, in months other than February 2014, has been accepted to be genuine by the AO and no adverse inference has been drawn. It is relevant to reiterate at this juncture that the AO has recorded a finding of fact accepting the explanation furnished by the appellant substantiating the genuineness of the appellant’s transactions involving purchase & sale of various listed shares and that the appellant was not involved in the alleged racket of penny stock transactions.
We therefore do not find that the conclusions drawn by the AO making the impugned addition to be factually as well as legally sustainable.- Decided in favour of assessee
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2019 (8) TMI 1323
Bogus LTCG - Addition u/s 68 - HELD THAT:- Since the purchase and sale transactions are supported and evidenced by Bills, Contract Notes, Demat statements and bank statements etc., and when the transactions of purchase of shares were accepted by the ld AO in earlier years, the same could not be treated as bogus simply on the basis of some reports of the Investigation Wing and/or the orders of SEBI and/or the statements of third parties.
Direct the AO not to treat the long term capital gain and short term capital loss as bogus and to allow the same and so, delete the consequential addition. - Decided in favour of assessee.
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2019 (8) TMI 1322
Bogus LTCG - Addition u/s 68 - long term capital on sale of shares of M/s JIL and also the commission expenses as bogus - HELD THAT:- Contract notes in connection with sale of shares along with bank statement reflecting the receipt of sale consideration and demat statement were produced before the lower authorities and are available in the paper book page nos. 14 to 22. A.O. has nowhere in the assessment order referred to any material which can prove the complicity of assessee either in the price rigging or in the alleged accommodation entry operation. Nothing on record/assessment order could show that assessee was connected with M/s. Jackson Investments Ltd. or their promoters, directors and any other person who exercises any control over M/s. Jackson Investments Ltd. or any so called entry operator.
Other than adverse assumptions there is no evidence on record to disbelieve that the assessee sold shares through registered share and stock broker. The assessee had produced all evidences to explain the source of the amounts received by the assessee from the brokers and to corroborate the transaction in question. Thus I am of the opinion in the facts discussed supra, the AO was not justified in assessing the sale proceeds of shares as undisclosed income. Therefore, respectfully following the order of coordinate bench in Om Prakash Mundhra 2019 (3) TMI 559 - ITAT KOLKATA] and the finding of facts as stated in (supra) am inclined to set aside the order of Ld. CIT(A) and direct the AO not to treat the long term capital on sale of shares of M/s JIL and also the commission expenses as bogus and delete the consequential additions. Therefore, the appeal of assessee is allowed.
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2019 (8) TMI 1321
Bogus LTCG - Addition u/s 68 - HELD THAT:- Sale of shares of M/s. KAFL which was dematerlized in Demat account has taken place through recognised stock exchange and assessee received money through banking channel. So, assessee has explained the nature and source of the money with supporting documents and thus has discharged the onus casted upon him by producing the relevant documents
Question of treating the said gain as unexplained cash credit under section 68 of the Act cannot arise unless the AO is able to find fault/infirmity with the same. I note that the source of the receipt of the amount has been explained and the transaction in respect of which the said amount has been received by assessee has not been cancelled by the stock exchange/SEBI. So, it is difficult to countenance the action of AO/Ld. CIT(A) in the aforesaid facts and circumstances explained above.
Even assuming that the brokers may have done some manipulation then also the assessee cannot be held liable for the illegal action of the brokers when the entire transactions have been carried out through banking channels duly recorded in the Demat accounts with a Government depository and traded on the stock exchange unless specific evidence emerges that the assessee was in hand in gloves with the broker for committing the unscrupulous activity to launder his own money in the guise of LTCG.
There is also nothing on record which could suggest that the assessee gave his own cash and got cheque from the alleged brokers/buyers. The assessment refers also to some third party statement of Shri Sunil Dokania which was admittedly recorded behind the back of the assessee and the assessee has neither been allowed to cross examine this person by the assessee nor the statement of Shri Sunil Dokania furnished to assessee, so the statements even if adverse against the assessee cannot be relied upon by the AO to draw adverse inference against the assessee (Reliance on Hon’ble Supreme Court decision in Andaman Timber [2015 (10) TMI 442 - SUPREME COURT] and in the light of the documents to substantiate the claim of LTCG, which has not been found fault with by the AO. - Decided in favour of assessee
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2019 (8) TMI 1320
Bogus LTCG - addition u/s 68 - HELD THAT:- Purchase and sale consideration have passed through the banking channel and the shares were in demat account and sale took place electronically through the platform of stock exchange and assessee has remitted STT. Thus, the assessee had discharged the onus casted upon him to make the claim. AO without finding any fault with the documents as discussed [supra] has relied on the third party statements which were taken behind the back of assessee; and neither the copy of which was given to the assessee nor an opportunity to cross examine the makers of the statement make the reliance of the statement by AO bad in law as held by the Hon’ble Supreme Court in case of CCE vs. Andaman Timber Industries [2015 (10) TMI 442 - SUPREME COURT] and cannot be the basis to disallow the claim and without finding fault with the evidences furnished by the assessee.
It is noted that the facts of the case of the assessee are identical with the facts in the above case wherein the co-ordinate bench of the Tribunal has deleted the addition in the case of Acchyalal Shaw [2009 (1) TMI 303 - ITAT CALCUTTA-B] in respect of sale of shares of M/s QFSL. As inclined to set aside the order of Ld. CIT(A) and direct the AO not to treat the long term capital on sale of shares of M/s QFSL and also the commission expenses as bogus and delete the consequential additions. Therefore, the appeal of assessee is allowed.
Addition on account of commission payment for earning the LTCG u/s. 69C - HELD THAT:- Since, we have allowed the assessee’s claim of LTCG, the consequential expenses incurred by the assessee in this regard is also allowed.
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2019 (8) TMI 1319
Reopening of assessment - denial of exemption u/s 11 - account transfer of foreign bequest(gift) made in earlier year to Sri Lanka based bank account to India - taxable on the basis of receipt - HELD THAT:- The impugned sum is lying in the treasury of bank of Ceylon since 09.02.2007. The assessee’s request seeking transfer thereof to India is pending till date as per the Appellate Authority’s order / direction(s).
Whether the said sum can be held to be the assessee’s income accrued or receive u/s 5 in these facts and circumstances so as to be held as having escaped assessment giving rise to the re-opening / re-assessment in question - We find no force either in Revenue’s arguments or in lower authorities’ action treating the above bequest as assessee’s taxable income. We wish to emphasise here that the assessee is yet to enjoy a clear legal title on the trust property and therefore, the same could not have been treated as its income received under the provision of the Act.
Hon'ble apex court’s landmark decision in Chainrup Sampatram vs. CIT [1953 (10) TMI 2 - SUPREME COURT] settled the law long back that the principle of conservative and prudence in accounting treatment require that no anticipated profits are treated as income till realization. And that the converse is not true regarding anticipated losses which can be deducted from commercial profits at the first sign its reasonable probability.
Hon'ble Bombay high court’s decision Mrs.Meherbai N. Sethna [1993 (9) TMI 46 - BOMBAY HIGH COURT] holds that it is the accrual of income and not actual receipt which forms the only relevant factor for assessment of an overseas income de hors any restriction or prohibition on its remittance to India. We apply the very legal principle herein as well to conclude that the learned lower authorities have erred in treating the impugned piquet fund to be assessee’s taxable income having escaped assessment after lapse of twelve years from assessment year 1995-96 when M/s Bouete (supra) had bequested her last.
We lastly wish to observe that the Revenue’s stand under challenge also does not satisfy sec. 160(1)(iv) r.w.s. 161 applicable in case of a representative assessee. There can be no dispute about the foregoing facts that Mrs Bousle had expired on 26.06.1994. The assessee is admittedly the ultimate beneficiary of the trust.
Hon'ble Madhya Pradesh high court’s judgment in Karelal Kundalal Trust [1983 (7) TMI 39 - MADHYA PRADESH HIGH COURT] holds that these two statutory provision stipulated assessment of a representative assessee to be having same duties, responsibilities and liabilities. We conclude in this factual and legal backdrop that it was the trustee bank who ought to have been assessed u/s 160 r.w.s 161 with regard to the impugned sum way back in assessment year 1995-96. We therefore accept the assessee’s instant last plea as well. The assessee’s twin grounds challenging validity of the impugned reopening / re-assessment as well as correct of the bequest amount addition in question succeed. - Decided in favour of assessee.
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2019 (8) TMI 1318
Disallowance of proportionate write off of lease premium - payment made to the lessors in respect of different lands taken on lease for the purpose of business - HELD THAT:- As decided in own case [2019 (8) TMI 569 - CALCUTTA HIGH COURT] it is clear from our perusal of terms of leases between assessee and its lessors, such terms are not there between them. We are unable to appreciate that fact of rent being depressed rent can only be appreciated as such if there is recital about it in the lease rent. That substantial amount of money was paid as premium, claimed and shown by assessee to be advance rents and where rents reserved are as above, it follows there was no contention raised before the Tribunal regarding the rents reserved corresponding to market rate of rent.
Identical facts the coordinate Bench of this Tribunal [2019 (7) TMI 177 - ITAT KOLKATA] by applying the CBDT Circular No. 9/2014 dated 23.04.2014 granted the assessee's claim for amortization of lease premium over the effective life of lease. For the reasons discussed in the foregoing therefore we do not find any infirmity in the order of the CIT(A) granting amortization of lease premium in computing business income of the assessee. - Decided against revenue
Deduction u/s 80IA - other income - HELD THAT:- We note that for allowing the deduction u/s80IA as well as Section 80IB the income must be derived from the operation of the eligible undertaking/facility. In the assessee’s case the nature of ‘other income’ in respect of CFS facility as well as industrial undertakings eligible u/s 80IB was same. In the context of Section 80IB deduction, the Revenue has accepted that such ‘other income’ had first degree nexus with the operations of the industrial undertakings and therefore no second appeal was filed in this year. We therefore see no reason to take a different view in the context of allowing deduction u/s 80IA. We also find before us no material was brought by the Revenue to controvert the CIT(A)’s findings that such ‘other income’ was derived from the CFS facility of the assessee. We therefore see no reason to interfere with the order of ld. CIT(A). Ground No. 2 is accordingly dismissed.
Disallowance u/s 14A - retrospectively of rule 8D - HELD THAT:- The issue whether Rule 8D can be applied retrospectively or not, is no longer res integra. The Hon’ble Bombay Court in the case of Godrej & Boyce Mfg Co Ltd [2010 (8) TMI 77 - BOMBAY HIGH COURT] has held that Rule 8D can be applied only from AY 2008-09 and onwards and therefore it cannot be applied in the relevant year in consideration. Respectfully following the judgment of the Hon’ble Bombay Court, we therefore reject the Revenue’s ground against the ld. CIT(A)’s action of deleting the disallowance computed by the AO in accordance with Rule 8D.
CIT(A)’s action of attributing administrative expenses towards earning of dividend income, we find that this Tribunal is consistently holding that prior to AY 2008-09 i.e. introduction of Rule 8D, some disallowance u/s 14A was warranted. Coordinate benches of this Tribunal have consistently held that such disallowance should be restricted to 1% of the dividend income. We therefore see no reason to interfere with the order of the CIT(A) which is in conformity with the view consistently adopted by this Tribunal in several cases. Accordingly we dismiss the cross objection of the assessee.
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2019 (8) TMI 1337
Reopening of assessment u/s 147 - within four year - original assessment u/s 143(3) - non discussion of issue in assessment order though the query was raised - HELD THAT:- Where the Revenue accepts the view propounded by the assessee in response to the Revenue’s query, the AO has certainly to form an opinion whether or not the stand taken by the assessee is acceptable. Therefore, it must follow that where queries have been raised during the assessment proceedings and the assessee has responded to the same, then the non-discussion of the same or non-rejection of the response of the assessee, would necessarily mean that the AO has formed an opinion accepting the view of the Assessee. Thus an opinion is formed during the regular Assessment proceedings, bars the AO to reopen the same only on account of a different view.
Thus we find that the reasons in support of the impugned notice is the very issue in respect of which the AO has raised the query dated 25 September 2017 during the assessment proceedings and the Petitioner had responded to the same by its letters dated 10 December 2017 and 21 December 2017 justifying its stand. The non-rejection of the explanation in the AO would amount to the AO accepting the view of the assessee, thus taking a view/forming an opinion. Therefore, in these circumstances, the reasons in support of the impugned notice proceed on a mere change of opinion and therefore would be completely without jurisdiction in the present facts. Accordingly, the impugned notice dated 27 March 2019 is quashed and set aside.
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2019 (8) TMI 1336
Reopening of assessment u/s 147 - original assessment u/s 143(3) - change of opinion - HELD THAT:- There was no failure by the Petitioner to fully and disclose all the material facts for assessment as regards the reasons supplied under notice for reassessment. The power to reopen the assessment is not a power to review, and this power cannot be used to review because there is a change of opinion by the AO.
On both counts, there is no application of mind by the AO to the jurisdictional requirements. First, to the existence of failure of the assessee to disclose all material facts for assessment since the assessment was sought to be reopened after four years as it is not so mentioned in the reasons supporting the notice for reassessment. Second, factually, there has been no failure by the Petitioner to fully and truly disclose the material facts. The reasons in support of the notice of reassessment mention the areas in which reassessment needs to be carried out, and the record shows that material regarding these topics was called for over two occasions from the Petitioner and was supplied.
Although the Petitioner had a remedy of statutory appeal since the order is without jurisdiction and contrary to the settled position of law, it requires to be quashed and set aside. We hold and declare that the Respondents had no jurisdiction to issue the impugned notice, consequently, the impugned order rejecting the objections is also without jurisdiction.
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2019 (8) TMI 1317
TDS u/s 194J or 192 - Addition on account of accounting charges - HELD THAT:- We note that the assessee made a payment of accounting charges to the part time Accountant, who was not a Chartered Accountant. Therefore, section 194J does not apply to the issue under consideration. This accounting charges has been paid by the assessee to the part time Accountant for a particular period and it does not relate to a lump sum payment. And, it is below the threshold limit, which does not require to deduct TDS. Therefore, we note that the CIT(A) has rightly deleted the impugned addition made by the AO. That being so, we decline to interfere in the impugned order of the CIT(A) on this issue and uphold the same, hence, ground no. 1 raised by the revenue is dismissed.
Disallowance of alleged commission payment - HELD THAT:- We note that the said payment of ₹ 80,000/- was not in the nature of commission but it was made on account of petty works. The Ld.CIT(A) also stated that the said expenditure is an allowable expenditure as per provision of Section 37. Therefore, the provisions to deduct tax u/s 194H is not applicable in this case. That being so, we decline to interfere in the order passed by CIT(A), his order on this issue is hereby upheld and grounds of appeal raised by the Revenue is dismissed.
Addition on account of default in deducting TDS - the payment made through labour sardars, who is suppliers of labours and he himself is also a labourer - HELD THAT:- Respectfully following the judgment of the Co-ordinate Bench in the case of Kwality Construction [2016 (11) TMI 667 - ITAT KOLKATA] we are of the opinion that the CIT-A was justified in accepting the plea of assessee being the labour sardars are not suppliers of labours and as such he rightly deleted the impugned addition made u/s. 40(a)(ia). We uphold the impugned order of the CIT-A. Therefore, the grounds raised by the revenue are dismissed.
Addition on account of capital introduction - unexplained Cash Credit u/s. 68 - HELD THAT:- We note that Assessee has introduced the following assets as capital contribution to the business firm such as, Building, Car , Computer Furniture , Security deposit etc., we adjudicate the asset-wise issue as follows:
Building - The asssessee produced an executed will, on the basis of which the building under question was received by the assessee from one Shri Ashok Kumar Singh and the same was brought into the business in F.Y. 2012-13. It was clearly mentioned in the will that it will become effective only after the death of Shri Singh. In the meantime, a copy of Property Tax Bill was submitted which clearly depicts that the owner of the same building at that time was Shri Ashok Kumar Singh. So, the assessee was not in a position to be the absolute and beneficial owner of the said property.
While deleting the addition CIT (A) has directed to AO to add back the depreciation claimed in respect of the above building. Therefore, the addition made by AO to the tune of ₹ 70,00,000/- has been deleted by ld. CIT(A). We do not find any infirmity in the order of ld. CIT(A), hence, we uphold the order of ld. CIT(A).
Car - Car A was purchased in the year 2009-10 for ₹ 5,14,500/- for personal use. Later on, it was brought into the business invoking provision of Section 43C(1) and was recorded at its F.M.V. at ₹ 3,68,000/-. While going through the Explanation 5 to Section 43(1), CIT (A) held that it is clearly mentioned how to record a property in the books of accounts clearly mentioned that it should at cost less depreciation.
However, for other asset Explanation 5 to Section 43(1) is silent. Since, in the remand report the AO. has mentioned that the assessee has submitted the evidence in respect of car purchased by the necessary journal entry hence, it is clear that no financial transaction is involved. Therefore, the addition made by AO to the tune of₹ 3,68,000/- was deleted by ld.CIT(A). We do not find any infirmity in the order of ld. CIT(A), hence, we uphold the order of ld. CIT(A).
Car B was purchased in the F.Y. 2012-13. However, assessee admitted that due to an accounting error committed by the earlier accountant, the assessee has wrongly entered the car in the books of account. Wrong accounting treatment done by the assessee clearly shows that addition in capital is purely on account of an asset which was not owned by the assessee in F.Y. 2012-13. Hence, the AO.'s action to treat the same as unexplained cash credit is not valid and hence deleted by ld.CIT(A). Therefore, the addition made by AO to the tune of Rs.l6,31,986/- was rightly deleted by ld. CIT(A). We do not find any infirmity in the order of ld. CIT(A), therefore, we uphold the same.
Computer - We note that on examining the balance sheet and relevant evidences produced by the assessee, CIT (A) observed that the assessee has wrongly credited capital account instead of respective party account. Moreover, the Counsel of the assessee submitted a declaration from the creditors which clearly shows that the said amount is still outstanding. Therefore, the addition made by AO to the tune of ₹ 2,00,000/- has been deleted by ld. CIT(A). We do not find any infirmity in the order of CIT(A), therefore, we uphold the same.
Furniture - Due to passing of wrong journal entries viz. instead of crediting the respective party ledgers, the assessee wrongly credited the Capital A/c. Moreover, the Counsel of the assessee submitted invoices in respect of the purchases. The assessee also admitted that since all the documents were under the custody of DGCEI, the same could not be submitted by the assessee earlier. Therefore, the addition made by AO to the tune of ₹ 9,73,000/- has been deleted by CIT(A). The assessee produced before the Bench, Bill for purchase of Furniture on credit basis - DR for the Revenue prayed the Bench that purchase bill of furniture should be verified by AO, hence this issue should be remitted back to the file of the AO. Assessee has fairly agreed that issue may be remitted back to the file of AO for necessary verification of purchase bill of furniture. Therefore, we remit this issue back to the file of the AO with the direction to examine the purchase bill of furniture and adjudicate the issue in accordance to law. Statistical purposes, this issue is treated to be allowed.
Investment/Security Deposits - We note that assessee deposited with VGR Cooperative Housing Society Ltd. and Roudrachaya Co-operative Housing Society Ltd. as Security Money/EMD money in order to obtain construction work contract. However, due to some reason the said work could not get started. In the next year the assessee got order from the above parties. Subsequently, both the societies acknowledged that the amount deposited will be adjusted as Security Deposit against the work order issued in the year 2011-12. Therefore, the addition made by AO to the tune of ₹ 20,00,000/- has been deleted by ld. CIT(A).
DR for the Revenue prayed the Bench that letter for adjustment of security deposit against the work order issued in the year 2011- 12 should be examined by AO, therefore, he requested the Bench to remit this issue back to the file of A.O. Assessee has fairly agreed with Ld. DR, therefore, we remit this issue back to the file of the AO for verification of “ letter for adjustment” of security deposit and adjudicate the issue in accordance to law. Assessee is directed to file before the AO “Letter for adjustment of security deposit” and explanation, if any, to prove his bona fide. Statistical purposes, this issue is treated to be allowed.
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2019 (8) TMI 1348
Condition imposed by the Tribunal for grant of stay - HELD THAT:- Special leave petitions are dismissed as withdrawn.
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2019 (8) TMI 1335
Monetary limit - low tax effect - HELD THAT:- Above appeal is not pursued by the Revenue on account of the low tax effect in terms of Circular No.17/2019 dated 08.8.2019 issued by the Central Board of Direct Taxes. By the said Circular, the monetary limit for filing or pursuing an appeal before the High Court has been increased to ₹ 1 Crore.
The above tax case appeal is dismissed on account of the low tax effect. The substantial questions of law raised are left open. In the event the tax effect is above the threshold limit fixed in the said circular, liberty is granted to the Revenue to make a mention to this Court to restore the appeal to be heard and decided on merits.
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2019 (8) TMI 1334
Reopening of assessment u/s 147 - deduction under Section 10A(1) denied - as per assessee he filed the statutory form in Form 56FS - HELD THAT:- We were of the opinion that a genuine mistake had occurred when the assessee submitted Form 56FS. However, on a closer reading of the factual aspects, we find that the month and year of commencement furnished by the assessee are correct except for the date, as instead of 06.10.1997, it has been mentioned as 03.10.1997. Therefore, the theory of mistake committed while submitting Form 56FS deserves to be outrightly rejected.
We have perused the scrutiny assessment under Section 143(3) of the Act, from which, we find that there is absolutely no discussion nor there is anything to indicate that the Assessing Officer, while completing the scrutiny assessment on 04.10.2011, had taken into consideration these facts and more particularly the date, from which, the assessee is entitled to claim the benefit under Section 10A.
Re-assessment is within four years and under Section 147 AO has got powers to assess and re-assess. This aspect was elaborately gone into by the Assessing Officer while completing the re-assessment and subsequently by the CIT(A) by re-appreciating the factual position and once again by the Tribunal by further re-appreciating the factual position and noting the provisions of Section 10A of the Act as they stood during the period 1997-98 to 1999-2000 and the amendment made to Section 10A of the Act vide the Finance Act, 2000. Thus, we find that the entire issue revolves around the factual matrix and that there is no substantial question of law arising for consideration in this appeal.
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2019 (8) TMI 1316
Reassessment u/s. 147- allowability of assessee to exemption u/s. 54B denied - non availability of file containing reasons to believe - HELD THAT:- The assessee had pleaded for copy of reasons recorded under the RTI Act, 2005 and in response to the said application, the AO has given a copy of the assessment order to the assessee, but has informed the assessee that assessment records for AY 2010-11 was not readily traceable and reasons recorded would be furnished as soon as records are available. Even in the proceedings before the Tribunal, the department has informed that appeals may be decided on merits, rather than on validity of initiation of proceedings u/s. 147.
Initiation of reassessment proceedings have not been established to have been in accordance with the requirements of section 147. There is no material brought to our notice that reasons were recorded before issue of notice u/s.148 which is a sine quo non for valid initiation of reassessment proceedings u/s.147 - no tangible material coming into the possession of AO after expiry of period of limitation for framing assessment order u/s. 143(3) based on which, he came to the conclusion that there has been escapement of income chargeable to tax.
The department has also not been able to show before the Tribunal the reasons recorded to justify the validity of initiation of reassessment proceedings u/s. 147. In these circumstances, drawing an adverse inference, we hold that initiation of reassessment proceedings u/s. 147 were not valid.
Deduction u/s 54B - As far as merits of the addition is concerned, it is seen that the assessee has invested a sum of ₹ 4.68 crores by paying advance for purchase of agricultural lands. It is not disputed that had the sale been completed pursuant to those agreements, the assessee would be entitled to benefits of deduction u/s. 54B. It is also not disputed that due to pending litigation, the sale could not be completed between these parties. However, in respect of agreement between assessee and Narayanappa & Others., the litigation has ended and assessee had got title of property on 03.07.2019, copy of the sale deed was filed before us. We are of the view that even otherwise, the assessee has complied with the conditions for grant of deduction u/s. 54B inasmuch as he has utilised, within a period of two years from the date of transfer of capital asset, the capital gain in purchasing another land for being used for agricultural purposes. The fact that the assessee did not get legal title to the lands is no ground to deny the benefit of deduction u/s. 54B.- Decided in favour of assessee
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2019 (8) TMI 1346
Denial of natural justice - no proper opportunity was given to the assessee to effectively plead its case before the First Appellate Authority - HELD THAT:- When the assessee received notice for hearing of AY 2011-12, the Ld. AR while appearing before the Ld. CIT(A) was of the bona fide belief that AY 2009-10 would be adjudicated first and thereafter only AY 2011-12 would be adjudicated. Therefore, at that time he was not prepared to argue the brief entrusted to him so, we are of the opinion that no proper opportunity was given to the Ld. AR of the assessee to effectively plead its case before the First Appellate Authority, therefore, we are inclined to set aside the order of the Ld. CIT(A) and remand the matter back to the file of the Ld. CIT(A) to decide the appeals afresh. Therefore, both the appeals of assessee are allowed for statistical purposes.
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2019 (8) TMI 1315
Validity of notice u/s 148 - Addition u/s 68 - effect of not raising objection in respect of reopening before AO - non compliance of letter issued prior to issuance of notice u/s 148 - HELD THAT:- The proprietary of notice under section 148, based upon reasons recorded is not dependent upon the objection or no objection by the assessee at the stage of assessment. If the reasons recorded, independently can withstand the test of judicial scrutiny, only such reasons will confer jurisdiction to issue notice and frame assessment in pursuance thereto.
However, if the reasons recorded, upon being challenged at any stage of proceedings fails to withstand the test of judicial scrutiny, in that eventuality, upon such recorded reason no valid notice can be issued and any assessment framed consequent thereto even taking shelter of ‘No objection’ from the assessee could save the assessment from being held to be declared void-ab-intio. The objection raised by the learned Sr. D.R is rejected being devoid of substance and based on incorrect reading of the law.
The objection of the A.R that Letters dated 26.04.2011 and 03.09.2015 were not authorized under any provision of the Act remained undisputed. It also remained undisputed that no query, of the nature alleged in the reasons recorded was given to the assessee after he furnished replies on two occasions before two different AO, dated 20.05.2011 and dated 02.02.2016 in compliance to above Letters explaining that source of cash deposits was sourced from sale of agriculture produce held and possessed by his Father and in evidence thereof proof of ownership of agriculture land was also filed.
It is an undisputed position that escapement is assumed for the alleged failure to prove the source of cash deposit as called upon vide Letters dated 26.04.2011 & 03.09.2015. Now, the question that arises for our determination is that whether escapement of income can be presumed on the basis of non-compliance or lack of compliance or even no compliance of the above Letters.
We are of the considered opinion that the reasons recorded by the Assessing officer, are no reasons in the eye of law for assuming jurisdiction in this case.
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2019 (8) TMI 1314
Unexplained cash credit - net profit @5% be applied by AO - HELD THAT:- Finding our self in agreement with the view adopted by the co-ordinate Bench in assessee’s own case we allow the appeal filed by the assessee and directs the Assessing officer to apply net profit rate of 5% on bank deposits of ₹ 8,70,000/- which works out to ₹ 43,500/- giving credit to the income of ₹ 70,050/- already shown under section 44AD of the Act, credit of which was rightly allowed by the AO. In effect no addition over and above the returned income would be warranted.
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Customs
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2019 (8) TMI 1343
Principles of Natural Justice - no opportunity was afforded to the appellant to either present the case or to be heard in the matter and the decision is as good as an ex-parte decision - application in the Settlement Commission with the prayer to keep in abeyance the adjudication proceedings - HELD THAT:- Till date the appellant has not produced anything to show that they ever approached the Settlement Commission nor there is any other effort post 07.10.2016, the date of personal hearing when father of the appellant attended the same that any reminder for continued abeyance for calculation of interest was ever given to the Department. There is nothing on record to show as to why the interest could not have been calculated and deposited in full by the appellant. Also, there is nothing on record to show that the notices as issued post 07.10.2016 were given to the appellant at the wrong addresses - In the given circumstances, especially when the appellant had knowledge of pendency of proceedings before the adjudicating authority and had appeared once through his father but instead of submitting on merits had prayed abeyance of adjudication in view of the desire to appear before the Settlement Commission it was utmost required on the part of appellant to be diligent about the impugned adjudication.
Absence of requisite due diligence on the part of the appellant cannot be a ground to extend any benefit in his favour. The ground of medical sickness of the Proprietor of appellant is already opined not relevant as the appellant had already marked his presence through the father of the Proprietor thereof. With these observations, we are of the firm opinion that neither the Order under challenge is an ex-parte Order as alleged nor there is violation of principles of natural justice as alleged. Rather sufficient efforts are apparent on the part of the adjudicating authority to serve repeated reminders to the appellant to appear and submit on merits. The appellant wilfully opted to not to avail the said opportunity. The Order under challenge cannot be set aside on the grounds of violation of principles of natural justice.
Valuation - HELD THAT:- The fraud in the form of forgery is very much apparent in the present case not only from the non retracted confession of the Proprietor of appellant but stands corroborated from the various documents recovered during investigation pointing towards the alleged under valuation - the under valuation of goods has rightly been held by the adjudicating authority below - demand of differential customs duty is upheld.
Mis-declaration of goods - HELD THAT:- Apparently, there is the difference in description of the imported goods as mentioned in the invoices issued by the exporter to the one annexed with the Bill of Entry. Even the Bill of Entry mentions the import of one set only. There is no evidence to support that five sets is actually equal to one set - the adjudicating authority has committed no error while confirming the proposed mis-declaration of the goods imported by the appellant.
Penalty u/s 114A and 114AA of Customs Act, 1944 - HELD THAT:- Section 114A prescribes penalty in case of short levy or non levy of duty, i.e. in a case where the duty or interest as determined under Sub-section 8 of Section 28 of the Act and the interest payable thereon under Section 28AA of the Act has not been paid by the importer. Whereas, Section 114AA prescribes penalty for the use of false and incorrect material - No doubt, in case of use of false and incorrect material there would also be the short paid duty or interest but all cases of short paid duty or interest may not be the cases of use of false and incorrect material. Hence, the scope of both the Sections is out rightly distinct.
Quantum of interest - HELD THAT:- The non calculation of interest (as alleged), if any, on the part of the adjudicating authority is also not relevant for extending any benefit to the appellant, in view of the fact that appellant out of his own volition has deposited the entire differential customs duty and even the part interest thereof that too beyond the period of 30 days from the date of the show cause notice.
Appeal dismissed - decided against appellant.
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2019 (8) TMI 1345
Fraudulent availment of incentive drawbacks - Release of drawback incentives - de-freezing of Bank Account - HELD THAT:- It is not in dispute that the export proceeds qua the aforesaid consignment stood released on 30.11.2018 under intimation through on line communication to Directorate General of False Trade (DGFT) - the Department of Customs can no longer maintain the previous objections with regard to the non release of incentive amount due.
The petition petition is disposed of as infructuous.
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2019 (8) TMI 1344
Project import - Recovery of Interest on delayed payment of duty - section 28AA of Customs Duty - HELD THAT:- The assessee's liability to pay interest arises under section 28AA on account of nonpayment of duty determined by the authorities within three months of such determination. The order in original determining such duty in our case was passed after the introduction of Section 28AA in the Act. The assessee was, in the premises, bound to pay the duty within three months of such determination and in the absence of such payment, liable to pay interest immediately after expiry of three months and till payment of such duty.
It is also pertinent to note that the order in original, assessing the customs duty payable, itself provided for payment of interest under Section 28AA of the Customs Act if the duty assessed was not paid within three months. The Union of India never challenged the order in original or any of its provisions before any statutory appellate authority and accepted the order. That is one more reason why it ought not to be permitted to now challenge the stipulation of interest.
Petition dismissed.
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2019 (8) TMI 1342
Permission for withdrawal of appeal - HELD THAT:- The prayer of the Revenue is allowed and the appeal is dismissed as withdrawn.
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2019 (8) TMI 1341
Valuation of imported goods - enhancement of declared value - confiscation - quantum of redemption fine and penalty - HELD THAT:- The enhancement of value has been ordered by the First Appellate Authority on the basis of concurrence given by the importer for such enhancement. There is no challenge to the order of confiscation, but Revenue is challenging the quantum of redemption fine and penalty, which stand reduced by the Ld. Commissioner (Appeals).
The Ld. Commissioner (Appeals) has ordered reduction of redemption fine and personal penalty on the basis of ratio laid down by the Three Member Bench of CESTAT, Delhi in the case of Omex International Vs. commissioner of Cusoms, New Delhi [2015 (4) TMI 112 - CESTAT NEW DELHI (LB)]. The Three Member Bench has taken the view that redemption fine of 10% and penalty of 5% of the value of the imported goods, would be appropriate in case of import violating Exim Policy Provisions - We find no reason to interfere with the findings of the Ld. Commissioner (Appeals) on the basis of such decision.
Appeal dismissed - decided against Revenue.
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Securities / SEBI
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2019 (8) TMI 1307
Conversion/sale/ encashment of the mutual funds - Interim protection with regard to payment under the option contract may be granted till the first hearing by the Appellate Authority - HELD THAT:- The National Security Clearing Corporation Limited will honour F & O Segment contract which had matured on 27th June, 2019 and has not been paid in view of the interim order passed by this Court [2019 (6) TMI 1388 - SUPREME COURT] The interim order is vacated, clarifying that the payments would be without prejudice to the rights and contentions of all the parties and subject to the final outcome and directions that this Court would pass.
Option is given to Novjoy Emporium Private Limited, OCL India Limited and Dalmia Cement East Limited to ask for conversion/sale/ encashment of the mutual funds which were purportedly furnished as a security by Allied Financial Services Private Limited. Similar option is also given to 44 parties who had preferred Appeal [2019 (6) TMI 1386 - SECURITIES APPELLATE ] before the Securities Appellate Tribunal, Mumbai.
On the option being exercised, IL & FS Securities Services Limited shall convert/encash the mutual funds, and the amount realised would be deposited in a fixed deposit in a Nationalised Bank for a period of six months to earn maximum interest. The deposit would be in the name of IL & FS Securities Services Limited and abide by further orders/directions of this Court.
The question of jurisdiction of Securities and Exchange Board of India, Securities Appellate Tribunal and the plea of IL & FS Securities Services Limited relying upon clause(5) of Chapter VII of the Bye-Laws framed by the National Security Clearing Corporation Limited are left open and would be decided at the time of final hearing.
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Insolvency & Bankruptcy
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2019 (8) TMI 1306
CIRP against VIL - to whom the amount belongs - an Award dated 29th April, 2013 was passed in favour of the Appellant and against the Respondent/ Videocon Industries Limited (VIL). That Award was challenged by VIL - as per the direction of the court to keep the amount with the Registrar General (RG) of the Court in a fixed deposit so that it could earn interest - amendment to Section 14 (3) of the Insolvency of Bankruptcy Code 2016 - HELD THAT:- The BG in question was encashed on 16th August, 2018 and the amount as a result of such encashment was kept as Fixed Deposit in the name of the Registrar General of this Court, so that it could earn interest. After that day and definitely on the date of passing of the impugned order dated 7th February, 2019, there was no BG in existence. The question therefore of the applicability of Section 14 (3) (b) of the IBC to any such BG on the date of the impugned order i.e. 7th February, 2019 would not arise.
It is then contended by Mr. Datta that in any event, the amount obtained as a result of encashment of the bank guarantee was not the ‘asset’ of VIL. According to him, at best it was the asset of the bank, which was now being held by the Registrar General of this Court pursuant to the order dated 16th August, 2018. It is contended that under Section 18 (f) of the IBC, it is only those assets which are under the ownership of the corporate debtor i.e. in this case VIL ‘as recorded in the balance sheet’ of VIL that would form the subject matter of the insolvency proceedings, since it is only the said asset that the Interim Resolution Professional (IRP) is allowed to take control of under the IBC - The Court finds that the above submission overlooks the fact that the amount of ₹ 20 crores which was obtained as a result of encashing the bank guarantee was kept with the Registrar General not as the asset of the bank but as an asset of VIL itself. As on the date of such encashment i.e. 16th August, 2018 it remained as an asset of VIL, for only then it could be offered as a security to protect the interests of the present Appellant in the arbitration proceedings. It was not yet the asset of the Appellant as well. This is because the outcome of the petition i.e. OMP 665/2013 filed by VIL was not yet known on 16th August, 2018.
Appeal dismissed.
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2019 (8) TMI 1305
Initiation of CIRP - Owner of shares or not - whether the Appellant can be held to be a ‘Financial Creditor’, who claimed to be a ‘Financial Creditor’ for accepting its claim? - HELD THAT:- It is accepted that the Appellant invoked Clause 6.1 and after service of notice on occurrence of default issued by the ‘Bridge Loan Lender’ (Appellant herein), the ‘Bridge Loan Lender’ transferred the shares in its name. By letter dated 23rd January, 2018 written to the ‘Corporate Debtor’, Appellant have already intimated the ‘Corporate Debtor’ that the Appellant has transferred 31,80,678 shares of ‘NEVPL’ and thereby the Appellant have become the 100% owner of the shares. By the said letter dated 23rd January, 2018, the Appellant (PFS) having already intimated that the rights applicable to the shareholder of NEVPL has been transferred in its favour, we hold that the Appellant settled the dues in full or part by way of transfer of shares. Now it is for the Appellant to transfer the shares in accordance with law but it cannot be denied that the Appellant is the owner of the shares.
The Appellant became the shareholder in terms of Clause 6 of the ‘Pledge Deed’ dated 10th March, 2014, the Appellant cannot take the advantage of Section 176 of the Contract Act. Section 176 of the Contract Act also cannot be taken into consideration for the purpose of collating the claim of any claimant (creditor) by the ‘Resolution Professional’ under Section 18 of the I&B Code. It is settled law that the ‘Resolution Professional’ can collate the claim and may accept full or part of the claim but has no power to determine the claim or reject, which power is only vested with the ‘Liquidator’.
Appeal dismissed.
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2019 (8) TMI 1304
Initiation of CIRP - Corporate Debtor committed default in making payment - Section 9 of Insolvency and Bankruptcy Code (hereinafter called “Code”) read with Rule 6 of Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - HELD THAT:- The Corporate Debtor filed reply to the petition stating that the Petitioner is misusing the Code and further stated that charging an interest @18% p.a. is not in terms of the agreement entered into between the Petitioner and the Corporate Debtor. However, the invoices annexed by the Petitioner clearly reveals that the Petitioner is entitled to charge interest @18% p.a. on the delayed payments - This Bench on going through the Petition and after hearing the submissions of the Counsel for both sides came to the conclusion that there is debt and default.
This Bench having been satisfied with the Petition filed by the Operational Creditor which is in compliance of provisions of section 9 of the Insolvency and Bankruptcy Code admits this Petition declaring moratorium - petition admitted.
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Service Tax
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2019 (8) TMI 1303
Penalty - Failure to make payment of service tax - security services - period January, 2012 to June, 2012 - Appellant submitted that the Appellants have already paid the amount of service tax alongwith interest and penalty - HELD THAT:- The receipts of the Appellants were well within the exempted limits as per the notification aforesaid and therefore in view of the peculiar facts of the case, a lenient view can be taken - Since the learned Counsel has confined her arguments only limited to imposition of penalty under Section 70 ibid r/w Rule 7C ibid, therefore I am not going into other aspects of the matter.
Penalty set aside - demand with interest upheld - appeal allowed in part.
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2019 (8) TMI 1302
Clearing and Forwarding Agents Services - activities of receipt of the goods, storage of same, sale from depot, preparation of invoices, maintenance of records collection of the sale proceeds and remitting the sale proceeds to their principals - service provided without obtaining registration and payment of service tax - demand of service tax on consideration/ commission/ remuneration amounting to ₹ 2,82,57,464/- received during the period Sept 99 to Sept 2003 - demand alongwith interest and penalty - time limitation.
HELD THAT:- Finance Act, 1994 was amended by Finance Act, 1997 to levy Service tax on various services including the “Clearing and Forwarding Agent Services”. The scope of the service Clearing & Forwarding Agents was explained by the Board in its Circular F.No. B.43/7/ 97-TRU dated 11.7.1997.
From the agreement it is quite evident that the appellant undertakes all activities right from the receipt of the goods, storage of same, sale from depot, preparation of invoices, maintenance of records collection of the sale proceeds and remitting the sale proceeds to their principals. It is also evident from clause 2, 7 8, 12 & 20 that the substantial ownership of the goods is with the Mills (principal) - Thus in terms of the Circular/ Trade Notices issued, appellants undertake all the activities that a Clearing and Forwarding Agent undertakes. Also the agreement provides for the remuneration for the services rendered by the appellants as percentage of the sale effected by them - Hence there are no doubt that the activities undertaken by the appellant are covered by the definition of “Clearing and Forwarding Agent” as per Section 65(25) of the Finance Act, 1994 - demand of service tax upheld.
Extended period of limitation - HELD THAT:- Tribunal has in case of Telera Logistics Pvt Ltd [2013 (12) TMI 1021 - CESTAT MUMBAI] while upholding the demand made under taxable category of Clearing and Forwarding Agent Services have also upheld the invocation of extended period of limitation as per proviso to section 73(1) of Finance Act, 1994.
Thus, the appeal filed should fail both on merits and limitation.
Demand of Interest - HELD THAT:- Since the demand of tax has been upheld the demand for interest will follow - It is now settled law that interest under Section 75, is for delay in the payment of tax from the date when it was due. Since appellants have failed to pay the said Service Tax by the due date interest demanded cannot be faulted - the demand of interest made under Section 75 of the Finance Act, 1994 is upheld.
Penalty u/s 78 of FA - HELD THAT:- It is now settled position in law that penalty under section 78 can be imposed only if the ingredients specified in the said section are present. The ingredients specified for invoking the Section 78 are identical to those specified for invoking the extended period of limitation as provided by Section 73 ibid - Since in respect of show cause notice, the demand could have been made by invoking the extended period of limitation as provided by Section 73, the penalties imposed under Section 78 of The Finance Act, 1994. is upheld.
Penalties u/s 75A, 76 and 77 of Finance Act, 1994 - HELD THAT:- Penalties under Section 75A, 76 and 77 of Finance Act, 1994 are in nature of civil penalties and are imposed in cases where the person who by his act of omission or commission has failed to fulfill the obligations cast on him under the statue - penalty upheld.
Penalty u/s 76 - HELD THAT:- Penalty under Section 76 of the Act is imposed for failure to pay Service Tax by the due date - penalty upheld.
Appeal dismissed - decided against appellant.
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2019 (8) TMI 1301
Abatement of appeal - Appointment of Official Liquidator has been appointed for the winding up proceedings - HELD THAT:- Even though the liquidation proceedings commenced by order dt.04.12.2017, however, no steps have been taken by the Appellant in accordance with Rule 22 of CESTAT (Procedure) Rules, 1982. Therefore, the appeal is abated.
Appeal is abated.
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2019 (8) TMI 1300
Valuation - stock broker services - NSE/BSE charges and SEBI turnover fees collected being a stock broker from their clients which is reimbursement of their payment made to NSE/BSE - inclusion in assessable value or not - HELD THAT:- The issue that whether the BSE/NSE charges and SEBI turnover fees needs to be included in the assessable value of services of stock broker has been settled by various judgments including the judgment of this bench in the case of INDSES SECURITIES AND FINANCE LTD, SPAN CAPLEASE PVT LTD AND OTHERS VERSUS C.S.T. -SERVICE TAX - AHMEDABAD [2018 (2) TMI 569 - CESTAT AHMEDABAD] according to which the statutory payment made by the stock broker and taking reimbursement from their client is not subject to levy of Service Tax.
Appeal allowed - decided in favor of appellant.
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2019 (8) TMI 1299
Refund claim - Jurisdiction - whether the refund claims filed by the appellant with the Assistant Commissioner was wrongly filed or the same were required to be filed with the Assistant Commissioner having jurisdiction over NBCC? - HELD THAT:- The appellant having filed the refund claims with their jurisdictional Service Tax Authorities under a bona-fide belief that the claims have to be dealt with by him, and if the concerned office was not having jurisdiction, the reasonable course of action on the part of the officer was to transfer the claim to the relevant office having jurisdiction to decide the same, under intimation to the assessee. Examining from another angle also, if the appellant is now required to file a fresh refund claim, the same would not be hit by the bar of limitation, inasmuch as, the period during which the same were pending before wrong forum and were under litigation has to be excluded.
The Assistant Commissioner, Service Tax is directed to transfer the appellant’s application for refund to the proper concerned office having jurisdiction to deal with the same - appeal disposed off.
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2019 (8) TMI 1298
Application for withdrawal of appeal - monetary amount involved in the appeal - HELD THAT:- The amount involved in this case is below the monetary limit of ₹ 20 lakhs which has been notified vide instruction being F. No. 390/Misc./116/2017-JC dated 11/07/2018.
Appeal dismissed as withdrawn.
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Central Excise
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2019 (8) TMI 1296
Clandestine removal - Oxygen - appellant prepared Annual Statistics Report. On the basis of Annual Statistics Report for the year, 2001-2002, it was seen that they have consumed oxygen of 80660.124 Cu. Mtr. ; whereas in their RT-12 Returns, they have shown consumption of 1,38,780.948 Cu. Mtr. - HELD THAT:- We find that the appellants submitted that at Page 429 of the Annual Report, it cannot be seen in isolation and at other pages i. e 369 & 197 also show the consumption of oxygen gas internally. The Learned Commissioner has not given any reasoning for not considering the statistics reflected in other pages and has concluded that the appellants have not shown any reasons as to why such figures were shown in Page 429 of the Annual Statistics Reports.
We find that no other effort has been made by the Department to find as to what has happened to the balance quantity, if at all, there was a discrepancy. No statements were recorded and no proof of any clandestine removal, transportation of the same and financial transaction in that regard are put forth. Understandably, clandestine removal is a serious charge. Without prima-facie, establishing the fact that there has been a clandestine removal (if not with an arithmetical precision), such an allegation, will not survive. It is seen that not even a statement of the person, who managed the production/consumption of oxygen or the person who has maintained the statistical report, has been recorded by the Revenue. Without such bare a minimum enquiry, the charge of clandestine removal, cannot be sustained.
Extended period of limitation - HELD THAT:- The appellant, being a Public Sector Undertaking, no mens rea can be attributed as no particular independent officer of the appellant is going to be benefited by such act of suppression and concealment of figures - It is the not the case of the Department that Annual Book of Statistics has been recovered during any search or investigation. The Book has been routinely given by the appellant to the Department over the years - Department can not allege suppression of facts etc to invoke extended period of limitation.
The demand is not sustained either on merits or on limitation - penalty also not sustainable - appeal allowed - decided in favor of appellant.
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2019 (8) TMI 1295
Clandestine manufacture and removal - unaccounted purchase and clandestine packing/re-packing/labelling of excisable goods - retraction of statements - extended period of limitation - Jurisdiction - HELD THAT:- An apparent admission about packing, labelling and re-packing of the two wheeler automobile parts which amount to manufacture for the other brands. There is apparent admission that the brand names of the Companies like Hero Honda, TVS, Yamaha, etc. were without any permission/ agreement and the same was known to the appellant to be an illegal activity. This admission of the proprietor of appellant stands duly corroborated from the statement of the appellant’s accountant cum computer operator. Hence, the subsequent contention of the appellant about not manufacturing the goods of other brand is not acceptable. The seizure of such goods at the time of searches is, over and above, corroboration to the aforesaid admission.
Retraction of statements - HELD THAT:- The question as to whether the admissions can be confirmed on the strength of confessional statements stands settled by the Hon’ble Apex Court in the case of KI. PAVUNNY VERSUS ASSTT. COLLR. (HQ.) , C. EX. COLLECTORATE, COCHIN [1997 (2) TMI 97 - SUPREME COURT] wherein it was held that confessional statement of accuse if found to be voluntarily can form the sole basis of conviction. Only if it is retracted, the Court is required to examine whether it was obtained by threat, duress or promise and whether the confession is trivial. In the present case, we find that there is no retraction of the aforementioned admission/confession on the part of the proprietor of the appellant Shri Sanjay Jain - Thus, the same has rightly been considered by the adjudicating authority as the basis of confirming the demand for manufacture of goods of other brands and also for denying the entitlement to SSI exemption Notification to the appellant.
Extended period of limitation - HELD THAT:- The fact of non registration coupled with the non retracted statement of the proprietor of the appellant and also coupled with the seizure of goods of other brands from the premises of the appellant is sufficient to hold that the appellant had intentionally not got the registration with the sole objective to evade the payment of excise duty. In the given circumstances, the Department was justified while invoking the extended period of limitation.
Jurisdiction - HELD THAT:- The impugned show cause notice specifically recites that the search warrants for the premises of Dwarka were issued by Assistant Commissioner, Central Excise, Delhi–II. In fact, the officers from both the Commissionerate conducted the search at Dwarka. We also observe that a separate show cause notice was issued to Dwarka unit of the appellant by the Deputy Commissioner, Central Excise, Delhi–II which was adjudicated by Assistant Commissioner, Central Excise, Division–V vide Order dated 06.11.2012. Hence, the Commissionerate having appropriate jurisdiction over Dwarka had already taken an appropriate action against the Dwarka factory of the noticee - the impugned show cause notice has no fault lying as far as the jurisdiction is concerned.
Appeal dismissed.
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2019 (8) TMI 1310
Excisability/marketibility - aluminium dross/skimming - by-product/residual product - HELD THAT:- The issue is no longer re-integra as decided by the larger Bench of the Tribunal in their own case HINDALCO INDUSTRIES LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, BELAPUR, MUMBAI – III & NAGPUR [ 2014 (11) TMI 385 - CESTAT MUMBAI (LB) ] decided the issue holding that aluminium dross and skimming arising during the process of manufacture of aluminium/non-ferrous metal are manufactured goods and are deemed to be marketable.
Appeal allowed - decided in favor of appellant.
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2019 (8) TMI 1312
Principles of Natural Justice - non-speaking order - it is also claimed by the petitioner that the impugned order has given contradictory findings, as on one hand it holds that the petitioner disputes the due liability on merits while on the other it states that the petitioner is not contesting the duty liability - HELD THAT:- In case, according to the party / parties the facts are not properly recorded in the impugned order, then challenge to it cannot be before us that the impugned order has incorrectly recorded the petitioner’s submissions on facts. The remedy, if any, against the order of the Tribunal would be rectification application. However, in this case, we note that it is not a case of incorrect recording of submissions but recording of contradictory submissions and then dealing with appeal on the basis of only one submission. In fact, the Tribunal records the appellant's submission that the appellant denies its liability to duty on merits and immediately thereafter it records that as the duty has been paid, it does not dispute it - the order itself is unclear as to what exactly is the finding of the Tribunal on this fact. It is only thereafter that the issues can be framed and determined.
There are no discussion in the impugned order on merits as to why the development cost incurred by the petitioner has nexus with the final product. In fact, the impugned order seems to proceed on the basis that as the petitioner has paid the duty without any dispute, it follows that duty liability is admitted - it could not have taken a contrary view on a principle without explaining the context which would justify a different view in the present facts.
The impugned order dated 16th May, 2017 to the extent it relates to the petitioner is set aside and restored to the Tribunal for fresh disposal in accordance with law - petition allowed.
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2019 (8) TMI 1311
CENVAT Credit - input services - Commission paid to foreign agents, who procured customers and orders and advised the Assessee, a 100% EOU to manufacture and export those garments the foreign country - HELD THAT:- The learned Tribunal has taken a correct view of the matter and has rightly found that the foreign agents of the Assessee in question were rendering the services not only post-sales or post-export by the Assessee but, were engaged in the activities of exploring the market, advising the designs for manufacture and supplies to specific orders procured by them and assisting the clearance of the garments in question and export the same to the foreign countries and earn foreign currency in terms of their obligations as 100% EOU and therefore, the service tax paid on commission to foreign agents could not denied the benefit of Cenvat Credit under Cenvat Credit Rules 2004.
Credit allowed - Appeal dismissed - decided against Revenue.
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2019 (8) TMI 1297
Recall of order - Valuation - correctness of ex-factory price - Rule 9(2) of the Central Excise Rules 1944 - HELD THAT:- The basis on which the CESTAT has taken a decision, namely, the earlier order of the CESTAT dated 3 December 2009 is flawed since the order relied on has been recalled.
The proceedings are remanded back to the CESTAT in view of the inadvertent error which has cropped up in the impugned judgment and order - appeal allowed by way of remand.
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2019 (8) TMI 1294
Validity of proceedings which were initiated prior to the repeal of the Gold (Control) Act, in matters pertaining to the period prior to 1990 - HELD THAT:- Hon’ble Apex Court in the case of SUSHILA N. RUNGTA (D) VERSUS TAX RECOVERY OFFICER [2019 (1) TMI 829 - SUPREME COURT] has held that consequent upon the repeal of the Gold (Control) Act, 1968 by the Gold (Control) Repeal Act, 1990, any proceedings which were initiated under the repealed Act do not survive post 1990 in the absence of any savings clause. The Hon’ble Apex Court also held that considering the Statement of Objects and Reasons of the Gold (Control) Repeal Act, 1990, Section 6A of the General Clauses Act will not apply to these cases to continue any proceedings that may have been initiated prior to such repeal.
Accordingly, the current proceedings which were initiated prior to the repeal of the Gold (Control) Act, in matters pertaining to the period prior to 1990, no longer survive.
Appeal allowed - decided in favor of appellant.
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2019 (8) TMI 1293
CENVAT Credit - input services - Air Travel Agent Service - Modernisation, Repair and Renovation of factory premises - Event Management - Hotel bills - denial of credit on the ground of lack of documentary evidences - HELD THAT:- Appeal memo from page 78 to 90 contains the written submissions of the appellant made before the Commissioner (Appeals) wherein this appellant had placed detail of all documents including the invoice details of M/s Advent Engineering Pvt. Ltd. at entry No. 822 page 89 and the nature of work is also stated that there to be documentation and drawing charges and those were not considered by the lower authorities. This being the facts on record, with the consent and concurrence of learned AR for the respondent-department this appeal is remanded back for re-adjudication on the basis of documents produced/to be produced before the adjudicating authority where appellant has to establish the nexus between the input and output services.
Appeal allowed by way of remand.
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2019 (8) TMI 1292
CENVAT Credit - various input services which stands captively utilized by the respondent - Revenue’s objection is that such services were utilized by the assessee not in their factory but in Renusagar Power Division of their factory, which was located far away from the factory premises.
Whether Renusagar Power Division is required to be considered as captive power plant of the manufacturer or not?
HELD THAT:- Revenue in their memo of appeal is not disputing the fact that all the decision relied upon and referred to by the Adjudicating Authority have dealt with the issue in the same assessee’s case. However, their only reason is that, all the said decision are in context of earlier cenvat credit rules, whereas the dispute in the present appeal is covered by subsequent cenvat credit rules - They have also made certain references to other decisions which are not exactly on the said issue for setting aside the impugned order.
Further, Revenue has not refereed to any particular provisions of law in the subsequent cenvat credit Rules to establish that input services used for captive consumption stand excluded from the availability and admissibility of credit - All the earlier decisions discussed in the present impugned order of Commissioner, have held that M/s Renusagar Power Plant and M/s Hindalco Industries Ltd. are one integrated unit and the energy received from Renusagar power plant has to be treated as having been received from captive power plant.
Appeal dismissed - decided against Revenue.
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2019 (8) TMI 1291
Clandestine removal - shortages of final materials as well as raw materials - revenue’s case is based upon the consumption of electricity read with the said loose documents and computer printouts - detailed references to the statements produced is not made - HELD THAT:- It is seen that the identical proceedings initiated in respect of the same appellants resulting in confirmation of demands of more than ₹ 10 crores were considered by the Tribunal in KAMAL SPONGE STEEL & POWER LTD., PAWAN JEET SINGH DIRECTOR OF, ANIL SHARMA GM OF, KAMAL JEET SINGH DIRECTOR OF, KARAN PAL SINGH CHAIRMAN OF, RAKESH BHATNAGAR EX MANAGER OF VERSUS CCE & ST, INDORE [2019 (1) TMI 1165 - CESTAT NEW DELHI] , the entire evidence produced by the Revenue was considered and appreciated and the Tribunal came to the conclusion that allegations of clandestine removal, primarily based upon the consumption of electricity read with the statements and the computer printouts, are not proved and accordingly the order was set aside.
Inasmuch as the present impugned order is also a part of the same set of investigations, same evidences and identical proceedings, present appeal order also set aside - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2019 (8) TMI 1309
Reopening of assessment - validity of reassessment proceeding under section 29 of the Act - the reassessment proceedings have been initiated against the petitioner to reopen the completed assessment in view of the subsequent judgement of the Apex Court in Larsen and Toubro Limited [2013 (9) TMI 853 - SUPREME COURT].
HELD THAT:- It is admitted fact that at the time of passing of the original assessment order, the Assessing Authority has taken note of survey report dated 22.09.2009 and thereafter, passed the original assessment order holding that the petitioner is not liable for payment of tax on the material used in the execution of works contract.
Once an order, which has been passed and has been confirmed by this Court under the provision of the Act, the case in hand, then in absence of any new material being brought on record, the completed assessment should not have been reopened - The proceeding of reassessment has been initiated on the basis of a subsequent judgement passed in the case of Larsen and Toubro Limited. The Honb'le Apex Court, time and again, has held that completed assessment should not be reopened on the basis of subsequent judgement being given.
The present reassessment proceedings have been initiated on the basis of subsequent judgement of the Apex Court, which cannot be used to reopen assessment or disturb past assessment which have been concluded. The Department cannot be authorized to reopen the assessment, which stood closed on the basis of the law as it stood at the relevant time.
Petition allowed.
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2019 (8) TMI 1290
Attachment of property - scope of term "or otherwise" within the definition of "dealer" - carrying business through Vendor - directly or indirectly - whether the writ petitioner's vendor is a 'dealer' within the meaning of Section 2(n) of PVAT Act?
HELD THAT:- As 'registered dealer' has been separately defined under Section 2(zc), it is clear that 'or otherwise' should be read with wide amplitude and should be understood as words used as extension include all possible ways of carrying on business activities. However, on an extreme demurrer, now that this Court has clearly come to the conclusion that the generic words 'or otherwise' will only qualify 'directly', even if ejusdem generis principle is applied, it would at best read directly or indirectly. Even if 'directly or otherwise' is read as 'directly or indirectly', it would only mean 'any person' who carries on any or some of the kinds of business activities enumerated in Section 2(n) directly or indirectly. In the instant case, it is the case of writ petitioner's vendor's mother carrying on three of the business activities, namely buying, selling and distributing petroleum products indirectly through her son.
This Court having come to the conclusion that writ petitioner is carrying on business as a dealer not directly, but otherwise, even on an extreme demurrer, even if the expression 'or otherwise' is to be given a restricted meaning, it will still cover writ petitioner's vendor.
The writ petitioner's vendor qualifies as a 'dealer' within the meaning of Section 2(n) and that writ petitioner's vendor's property i.e., said property will clearly be covered under Section 37(1) of PVAT Act. With regard to proviso to Section 37(2) which deals with bonafide transfer, there is copious and undisputed material before this Court to show that writ petitioner was carrying on day-today affairs of the business and in any event, learned senior counsel for writ petitioner made it clear that writ petitioner does not want to tread into that arena. Therefore this Court deems it appropriate to not to delve into the same any further.
In the instant case, this Court expresses no opinion as to whether writ petitioner is a bonafide third party purchaser or not in the light of trajectory of the hearing.
Petition dismissed - decided against petitioner.
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Indian Laws
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2019 (8) TMI 1308
Extension of time for completion of the arbitration proceedings - beyond four months period from the date of first preliminary meeting - deemed Waiver of right to the extension of time - appellants have participated in the arbitral proceedings - HELD THAT:- It is clear from the bare reading of subsection 1(a) of Section 14 that mandate of an arbitrator shall terminate if it fails to act without undue delay. In the present case, the first preliminary meeting was held on 4th May, 2007 and the Arbitrator in terms of the agreement was supposed to conclude and pass the award within a period of four months which indisputedly stood expired on 4th September, 2007 and in the meantime the appellants recorded their objection of not consenting for extension of time beyond 4th September, 2007 and thus, it can be construed that parties were not in agreement for extension to the mandate of the Arbitrator failing which the arbitral proceedings automatically stood terminated.
The essential element of waiver is that there must be a voluntary and intentional relinquishment of a right. The voluntary choice is the essence of waiver. There should exist an opportunity for choice between the relinquishment and an enforcement of the right in question. It cannot be held that there has been a waiver of valuable rights where the circumstances show that what was done was involuntary. That apart, the doctrine of “waiver” or “deemed waiver” or “estoppel” is always based on facts and circumstances of each case, conduct of the parties in each case and as per the agreement entered into between the parties and this exposition has been affirmed by this Court in NBCC Ltd.(2010 (1) TMI 1140 - SUPREME COURT) regarding adherence to the imposition of time limit for the conclusion of the arbitral proceedings. The parties have to stand by the terms of contract including the Arbitrator.
There is no provision under the arbitration agreement to condone the delay when agreement between the parties binds them to see that the arbitration proceedings should be concluded within the time prescribed. This time restriction is well within the scope and purport of the Act, 1996 at national and international arbitrations.
The time fixed for the arbitration and/or schedule of time limit in such arbitration proceedings, as it is recognised by law, there is no reason not to accept the same, basically in the present facts and circumstances where the parties themselves agreed to bind themselves by the time limit. Section 14 read with Section 15 of the Act, 1996 also recognise this mechanism and after the expiry of four months period from the date of first preliminary meeting held on 4th May, 2007, the Arbitrator indeed became de jure unable to perform his functions and the mandate to act as an Arbitrator in the arbitral proceedings between the parties as prayed for stood terminated.
Appeal allowed.
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2019 (8) TMI 1289
Dishonor of cheque - legally enforceable debt or not - offence punishable under Section 138 of the Act - HELD THAT:- There is no illegality, impropriety or error in the finding that the revision petitioner committed an offence punishable under Section 138 of the Act. There is nothing to interfere with the conviction of the revision petitioner in exercise of the revisional jurisdiction of this Court.
The conviction entered against the revision petitioner by the courts below under Section 138 of the N. I. Act is confirmed. The sentence imposed on the revision petitioner/accused by the courts below is modified and the revision petitioner is sentenced to imprisonment till the rising of the court. Since the first respondent/complainant has received the entire amount due to him, no sentence of fine is imposed on the revision petitioner.
Revision allowed in part.
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