TMI Tax Updates - e-Newsletter
August 5, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
FEMA
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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GST:
Central GST Delhi North Commissionerate has busted a racket of issuance of fake invoices without actual supply of goods and services.
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GST:
Confiscation of the goods stored in the warehouse - Affixation of seal in the warehouse - reason to believe that, there is likelihood that the goods or any documents or books or things may be secreted to any place or have been secreted - goods directed to be released on provisional basis upon execution of a bond and furnishing of a security.
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GST:
Grant of regular Bail - wrongly claimed the relief of more than ₹ 80 crore - complaint u/s 132 of the CGST Act, 2017 r.w.s. 10 of the IGST Act - in view the serious nature and gravity of the offence and in view of the fact that the petitioner-accused has been charged with economic offence of huge magnitude - it is not a fit case entitled to the benefit of regular bail
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GST:
Refund - inverted tax structure - No inherent power can be inferred from the provision of Section 54(3) empowering the Central Government to provide for the lapsing of the unutilised ITC accumulated on account of the rate of tax on inputs being higher than the rate of tax on output supplies - Notification No.20/2018-C.T.(Rate) dated 26.07.2018, is ex-facie invalid and liable to be strike down as being without any authority of law
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Income Tax:
Undisclosed professional receipt u/s 69A - Year of assessment - Cash basis of accounting - Assessee has paid advance tax on the amount in question in AY 2020-21 and undertaken to declare the amount for taxation, Revenue is not going to lose anything. It is merely a tax neutral exercise.
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Income Tax:
Deduction u/s. 54F - assessee has not become the owner of the property in question - becoming the owner of the property in question is not required for the purpose of section 54 - Section 54F of the IT Act is parametria with section 54 - Benefit of exemption u/s 54F allowed.
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Income Tax:
Penalty u/s 271AAB - surrender being made allegedly voluntarily on the condition that no penal consequences would be visited upon the assessee - unilateral condition and belief of the assessee that no penalty would be levied has no legal sanction and has to be discarded.
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Income Tax:
Addition of foreign dividend income belonging to two trusts - irrevocable trust created for the benefit of children - before proceeding to club the dividend income accruing or received by the trusts created for the benefit of minor children, it is mandatory to show that the said income accrued or was received by the minor children.
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Income Tax:
Levy of penalty u/s 271(1)(b) - failure to comply with notices u/s 142(1)/143(2) - it is not mentioned in the penalty order as to for which default of notice penalty has been levied. In the absence of any specific charge against the assessee, it is difficult to accept that assessee would default to make any reply before the authorities below - No penalty
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Income Tax:
Penalty u/s 271AAB - undisclosed income - CIT(A) while adjudicating the appeal had failed to deal with the contention of the assessee that no penalty u/s 271AAB was leviable since there was no undisclosed income of the assessee as defined in the section - matter remanded with a direction to to pass a speaking order
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Income Tax:
Assessment u/s 153A - incriminating material - the report of the Special Auditor, having been commissioned subsequent to the search, and during the assessment proceedings against DSL, cannot obviously be treated as incriminating material qua the Assessee, recovered during the course of search, in order to justify the addition made in the assessment u/s 153A
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Income Tax:
Exemption u/s 10(23C)(iiiab) - grant from Government is in excess of 50% of its total receipts - scope of explanation inserted by Finance Act, 2014 defining substantially financed by the Gov. - without holding the Explanation to Section 10(23C)(iiiab), inserted into the Act w.e.f. 1st April, 2015, is retrospective, the same is being used as an aid in construing the ambiguous provision - exemption allowable
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Income Tax:
Reassessment u/s 147 - within four years from the end of the relevant AY - AO resisted the audit objection and defended the completion of assessment - AO merely changing his opinion or having a second thought on the basis of materials on record and that too reluctantly and reeling under the dictation from the superior officer - reopening not valid
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Income Tax:
Penalty u/s 271(1)(c) - assessee claimed depreciation u/s 32 on road constructed on Build-Operate-Transfer basis which was denied - the Revenue had itself accepted that there was a doubt and that is why the clarification of 2014 was issued. Had it been so cut and dried there was no occasion for the Board to have issued the clarification and infact, this is precisely what weighed with CIT(A) and ITAT - no penalty
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Income Tax:
TP Adjustment - RPM - assessee and the comparables have used Indian GAAP - the selling and marketing expenses - TPO/DRP while dislodging the RPM had lost sight of the fact that only the transaction of import of goods by the assessee from its AEs were to be benchmarked and all the other functions carried out by the assessee having no nexus with the said import transactions were, thus, not relevant for the said benchmarking analysis
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Income Tax:
TP Adjustment - most appropriate method(MAM) - In case, there is no value addition and the finished goods which are purchased from the AE are resold in the market in the same form, then the GP margin earned on such transactions becomes the determinative factor for benchmarking the international transaction of the assessee with its AE by taking RPM as the MAM
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Income Tax:
Deduction u/s 10B - deduction after merger of the eligible firm in the assessee firm - limitations specified in sub-sections 9 and 9A of Section 10B do not exist from 1.4.2004 and therefore, assessee is eligible for deduction after the merger of firms
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Income Tax:
Slump sale - assessee claimed as sale of depreciable assets - as per terms of agreement, the assessee sold the entire undertaking with all its assets and liabilities together with all licences, permits, approvals, registration, contracts, employees and other contingent liabilities also for a slump price, this kind of sale falls u/s 50B as slump sale - taxable as capital gain (Not as PGBP)
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Income Tax:
Assessment u/s 153A - addition on account of gain on sale of investment - in the instant case, there is no incriminating material was found during the course of search and the addition was made on the basis of certain inquiries conducted subsequent to the search on the basis of return already filed - on this issue itself addition has to be deleted
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Income Tax:
TP adjustment - Comparable selection - if finances of the three comparables with reference to their respective annual reports, did show that there was a general trend in the industry of either loss-making or declining revenues and there was no dispute on the functional profile of the Assessee being similar with comparable then loss making companies should not be excluded only on that basis
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Income Tax:
TDS u/s 195 - FTS in DTAA with USA - In view of Section 90(2) and clause 4(b) of Article 12 of the Treaty, the provisions of this Act would stand applicable only where fees for included services is make available technical knowledge - since as per ITAT there is no make available of the technical knowledge, it will not be FTS - neither TDS required nor disallowance 40(a)(ia)
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Income Tax:
Deemed application of income u/s 11(1), Explanation 2 - although the Assessee did not give the intimation at the time of filing the original returns, admittedly, the intimation was enclosed with the revised return - no error having been committed by the ITAT in holding this issue in favour of the Assessee
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Customs:
Principles of natural justice - Directors of the company themselves are co-noticees and the imposition of penalty has been proposed against them - the fundamental right as enshrined under Article 20(3) of the Constitution of India which prohibits self incrimination is applicable to both of them.
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Customs:
Benefit of exemption on import of parts agricultural machinery - The parts and components as have been imported by the appellants since do not require any activity which can be called as manufacture, but when cabled at the site they can be used as a laser land levelling, an agricultural machine, the product qualifies for concessional rate of duty @2.5%
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FEMA:
FDI - Automatic route or not - Inward remittances made into India in the year 2008, through normal banking channels - bidding of IPL - The present case cannot be compared with another case of sport event, as the facts and circumstances were materially different - whether it is a bona-fide or not, but violation has occurred - after refusal of approval for two times, the appellants cannot be allowed to take the benefit of automatic route - Penalties are exorbitant, hence reduced.
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IBC:
Validity of transactions - on mere allegation made by the ‘Resolution Professional’, it was not open to the Adjudicating Authority to hold that mortgage deeds, in question, were made by way of transactions which come within the meaning of ‘fraudulent trading’ or ‘wrongful trading’ under Section 66.
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Service Tax:
Condonation of delay - no explanation for delay provided - merely because a non-pedantic approach should be adopted to an application for condonation of delay it is not essential that every delay including those in which the drafting has been done in a haphazard manner and with nary a care to detail or explanation pertaining to the delay with dates thereof be condoned
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Central Excise:
Extended period of limitation - For the omission on the part of the audit officers to find out the mistake in the method of valuation adopted by appellant cannot be a reason to saddle the appellant with intention to evade payment of duty.
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Central Excise:
SSI exemption - Clubbing of clearances - the appellant is a private limited company and the other two firms namely, M/s IEC and RSF are proprietorship concerns, its clearances cannot be clubbed with the clearances of the proprietorship concerns, as per the principles laid down by the CBEC vide Circular No. 6/92 dated 25.09.1992 in terms of Section 37B
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VAT:
Alternate remedy and exercise of writ jurisdiction - There can also be no disputation that alternate remedy rule is not an absolute rule nor it is a rule of compulsion, but it is a rule of discretion - though a self imposed restriction, same has to be applied with utmost rigour when it comes to fiscal laws
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VAT:
Demand of Interest u/s Section 8(1) of the UPTT Act - liability to pay tax on purchase of oil seeds - claim for exemption raised by the assessee was dependent on the issuance of the statutory forms and it is admitted that no such forms ever came to be issued - there was a promise on part of the selling dealers to issue Form III-C(2) would be of no avail, insofar as the revenue authorities are concerned - tax & interest payable
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VAT:
Sale of scooters to dealer against Form III-A - the sale letters in Forms 20-21 issued by the assessee itself, prove that it had sold the goods to the consumers as, otherwise, the consumers would have no occasion to obtain the sale letters from the assessee - forms III-A were issued by M/s Jyoti Automobiles and accepted by the assessee only to avoid the tax liability - A clear case of collusion between both dealers - no benefit of Form
Articles
Notifications
News
Case Laws:
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GST
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2019 (8) TMI 175
Release of seized goods - E-way bill not provided - Sections 129 and 130 of the Act, 2017 - HELD THAT:- It appears that the respondent no.2 straightaway proceeded to issue notice for confiscation under Section 130 of the GST Act, 2007. We are examining a larger issue whether the authority concerned can straightaway invoke Section 130 of the Act, without taking recourse to Section 129 of the Act. However, during the pendency of this writ-application, the writ applicant is entitled to an interim order. The writ-applicant has deposited an amount of ₹ 2,33,154/- towards the tax liability and penalty - the respondent no.2 is directed to forthwith release the vehicle as well as the goods.
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2019 (8) TMI 166
Grant of regular Bail - allegation of falsely showing bogus billing etc., adjusted the amount without any actual transportation of the goods or sale of goods etc. - wrongly claimed the relief of more than ₹ 80 crore - complaint u/s 132 of the CGST Act, 2017 r.w.s. 10 of the IGST Act - HELD THAT:- In State of Bihar and another Vs. Amit Kumar @ Bacha Rai , [ 2017 (4) TMI 1410 - SUPREME COURT] , the Hon'ble Supreme Court has held that the accused charged with economic offence of huge magnitude and is alleged to be the kingpin of crime, is not entitled to the benefit of bail. Keeping in view the serious nature and gravity of the offence and in view of the fact that the petitioner-accused has been charged with economic offence of huge magnitude, I do not find it a fit case where the petitioner is entitled to the benefit of regular bail. Petition dismissed.
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2019 (8) TMI 159
Refund of excess duty - inverted tax (duty) structure - Ultra virus of notification - reduction in GST rate on man-made fiber yarns from 18% to 12% - Central Goods and Service Tax Act, 2017 - Notification dated 26.07.2018 bearing No.20/2018 and Circular dated 24.08.2018 bearing Circular No.56/30/2018-GST - HELD THAT:- In the case of Collector of Central Excise V/s. Dai Ichi Karkaria Ltd. [ 1999 (8) TMI 920 - SUPREME COURT] , the Apex Court in the context of rule 57A to 57J of the Central Excise Rules, 1944 has held that a manufacturer obtains credit for central excise duty on raw material to be used by him in the production of an excisable product immediately it makes the requisite declaration and obtains an acknowledgment thereof. Therefore, it is entitled to use the credit at any time thereafter when making payment of excise duty on the excisable product. The Court held that the credit is indefeasible. In the case of Eicher Motors Ltd. [ 1999 (1) TMI 34 - SUPREME COURT] , the Apex Court has observed that a right accrued to the assessee on the date when they paid the tax on the raw materials or the inputs and that right would continue until the facility available thereto gets worked out or until those goods existed. Therefore, the impugned Notification dated 26.07.2018 bearing No.20/2018 and Circular dated 24.08.2018 bearing Circular No.56/30/2018-GST to the extent it provides that the input tax credit lying unutilized in balance, after payment of tax for and upto the month of July, 2018, on the inward supplies received upto the 31st day of July, 2018, shall lapse, are hereby quashed and set aside and are hereby declared as untra vires and beyond the scope of section 54(3)(ii) of the CGST Act, as section 54(3)(ii) of the CGST Act does not empower to issue such notifications and consequently, it is held that the petitioners and members of the petitioners are entitled for the credit and it be granted to them. Power of central government u/s 54(3) of the CGST Act - available/eligible ITC can be withdrawn using rule making power when separate provision exist in this respect - HELD THAT:- The CGST Act itself provides for the lapsing of the ITC at Sections 17(4) and 18(4) respectively of the CGST Act. Thus, where the legislature wanted the ITC to lapse, it has been expressly provided for in the Act itself. No such express provision has been made in Section 54(3) of the CGST Act - No inherent power can be inferred from the provision of Section 54(3) of the CGST Act empowering the Central Government to provide for the lapsing of the unutilised ITC accumulated on account of the rate of tax on inputs being higher than the rate of tax on output supplies. It is a well settled principle that the delegated legislation has to be in conformity with the provisions of the parent statute. By prescribing for lapsing of ITC, the Notification No.05/2017-C.T. (Rate) dated 28.06.2017, as amended by Notification No.20/2018-C.T. (Rate) dated 26.07.2018, has exceeded the power delegated under Section 54(3)(ii) of the CGST Act - thus, proviso (ii) of the opening paragraph of the Notification No.05/2017-C.T. (Rate) dated 28.06.2017, inserted vide Notification No.20/2018- C.T. (Rate) dated 26.07.2018, is ex-facie invalid and liable to be strike down as being without any authority of law.
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2019 (8) TMI 144
Confiscation of the goods stored in the warehouse - Affixation of seal in the warehouse - reason to believe that, there is likelihood that the goods or any documents or books or things may be secreted to any place or have been secreted - Gujarat GST Act, 2017 - HELD THAT:- We propose to dispose of this writ application with a liberty to the writ applicant to make appropriate application under section 76(6) of the Act for the release of the goods so seized on the provisional basis upon execution of a bond and furnishing of a security. Application disposed off.
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Income Tax
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2019 (8) TMI 188
Compensation received from transfer of development rights - taxabilty under the provisions of long term capital gains - Transfer of Development Rights (TDR) - computation of the sale of TDR - HELD THAT:- SLP dismissed.
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2019 (8) TMI 187
Deduction u/s 80M - revision u/s 263 - Deduction in respect of certain inter-corporate dividends - case of the Revenue is that the benefit of the dividend declared in respect of AY 2002 to 2003 cannot be taken by the Assessee particularly seeing as the provisions of Section 80M were themselves introduced only with effect from 01.04.2003 - whether dividend distributed would include dividends declared in the earlier year but paid out in the current year? - HELD THAT:- Considering the tax effect in the present matter, we see no reason to interfere in the matter. The special leave petition is, accordingly, dismissed, leaving all questions of law open.
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2019 (8) TMI 186
Deduction u/s 80P(2)(a)(i) - appellant is admittedly a primary agricultural cooperative credit society registered under the Tamil Nadu Cooperative Societies Act - HELD THAT:- Definition of 'credit society' is wider in import to include any activity that the Government may, by Notification, specify. Further, we find from By-law No.12(a) that if the society carries on an activity, which is not authorized under the By-laws or with the approval of the Registrar, the society is liable to strike off the Rules and the members engaged in the same are liable to be removed. Furthermore, in terms of By-law No.51, the society is entitled to purchase, in bulk, articles and materials required for its members and distribute the same. Therefore, viewed from any angle, the activity done by the appellant society cannot be truncated from the activity as a credit society and we are of the considered view that the Authorities below as well as the Tribunal committed an error in rejecting the stand taken by the appellant/ assessee. Appeal decide in favour of the assessee. AO is directed to extend the benefit of deduction under Section 80P(1) read with Section 80P(2)(a)(i) of the IT Act to the appellant/assessee.
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2019 (8) TMI 185
Notice u/s 221(1) seeking recovery of the amount of assessment - HELD THAT:- In identical issue in THE THACHAMPARA SERVICE CO-OPERATIVE BANK LTD. [ 2019 (5) TMI 1662 - KERALA HIGH COURT] this Court has passed orders directing the appellate authority to consider the appeals preferred by the Society first and not to take any coercive steps till the finalisation of the appeal. In judgment in [ 2019 (7) TMI 374 - KERALA HIGH COURT] an identical case, a Division Bench of this Court directed the Commissioner of Income Tax (Appeals) to consider and dispose of statutory appeals filed by the appellant therein at the earliest taking note of the Full Bench decision in The Mavilayi Service Co-operative bank Ltd. v. The Commissioner of Income Tax, Calicut [ 2019 (3) TMI 1580 - KERALA HIGH COURT] These writ petitions are disposed of directing the 1st respondent - Appellate Authority to consider and pass appropriate orders on Ext.P2 appeals, as expeditiously as possible and it is further directed that further steps of coercive nature shall not be resorted to against the petitioner - Society till the appeals are disposed of.
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2019 (8) TMI 184
TPA - Reimbursement of third party marketing expenses - HELD THAT:- Under clause 3.1 of the Marketing Services Agreement, during the term, the assessee shall provide such marketing services to TA-UK as agreed by the parties from time to time and the assessee retains the right to perform itself, or retain third parties to perform, any of the marketing services. It clearly shows that performance of the marketing services is the responsibility of the assessee and whether the assessee does it on their own or through some third parties is not the concern of the TA-UK and it is the convenience of the assessee. This clause makes it amply clear that TA-UK does deal with the third parties through the assessee but the assessee as per their needs and performance of the contractual obligations under the agreement may retain the third parties to perform such functions. As rightly observed by the CIT(A) inasmuch as the assessee has only eight employees at their disposal, discharge of this obligation to perform the marketing services, the assessee has to engage the third parties, not on behalf of the AE but as their own agents to fulfill their own obligations. We, therefore, are of the considered opinion that the assessee is working as an independent marketing agency and the payments made to the third parties for discharging the obligations of the assessee as envisaged in, are the cost of the assessee alone. We reject the contention of the assessee that the assessee is only a conduit and deal with the third parties agencies on behalf of the AE. With this view of this matter, we uphold the findings of the Ld.CIT(A) and dismiss Ground No.4. Comparable selection - inclusion or exclusion of Goldmine Advertising Ltd. and MRUC - HELD THAT:- Functions performed by the assessee include the activities to promote and market TripAdvisor group s Indian website, tripadvisor.in under the direction and management of Trip-UK, identifying new Indian advertisers for the group websites, maintaining relationships with existing advertisers, and marketing and promoting the TripAdvisor websites in India, and are determining the market conditions in India and informing Trip-UK of the local terms and pricing levels. Coming to the comparability of Goldmine Advertising Ltd. on a careful consideration of the functions performed by the assessee and also Goldmine Advertising Ltd, we are of the considered opinion that the lowest common factor of functions of these two entities is market support service, and in that perspective there is functional similarity between these two entities and the rejection of this comparable is not tenable. We, therefore, direct the inclusion of this company in the list of comparables for benchmarking the international transactions of provision of marketingsupport services. Media Research Users Council (MRUC), the inclusion of which the assessee is resisting - undoubtedly MRUC is a not for profit body. On a careful consideration of the functions performed and other attendant factors, we are of the considered opinion that a company registered as a not-for-profit body, lacking profit motive is not a comparable to the assessee and even the area of operation of MRUC is different from the assessee. We, therefore, find this MRUC not a comparable and have to be excluded. We, therefore, direct theAssessing Officer to exclude this company from the list of comparables to benchmark the international transaction.
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2019 (8) TMI 183
Addition on account of capital gain - forfeited amount against the property - earnest money received and forfeited by the assessee due to unsuccessful deal - as submitted amount retained by the assessee is more than the cost / indexed cost of capital asset, the excess amount remains as capital receipt and not taxable anywhere under the provisions of the Income Tax Act - HELD THAT:- We find that the facts of the case are similar as have been considered by the ITAT in the case of co-owner SH. ASHWANI KHURANA [ 2019 (3) TMI 11 - ITAT DELHI] treating the earnest money received and forfeited by the assessee in respect of any negotiation for transfer of capital assets to be deducted from the cost of assets. Since in A.Y. 10-11 there was no provision under the Act for treating the forfeiture of earnest money received during the negotiation of a capital assets as income from other sources, the Ld. CIT(A) has rightly deleted the addition. Ld. CIT(A) following his findings in the case of co-owner Shri Ashwani Khurana (supra), deleted the addition. The Order of the Ld. CIT(A) in the case of co-owner have been confirmed by the Tribunal. - Decided in favour of assessee
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2019 (8) TMI 182
Undisclosed professional receipt u/s 69A - Year of assessment - Assessee denied to have maintained cash system of accounting, therefore, there was no justification to make addition of the impugned amount in assessment year under appeal - HELD THAT:- Assessee has paid advance tax on the amount in question in AY 2020-21 and undertaken to declare the amount for taxation, Revenue is not going to lose anything. It is merely a tax neutral exercise. Therefore, do not find any justification to doubt the explanation of the assessee. In this view of the matter, set aside the orders of the authorities below and delete the addition of ₹ 8,70,000/-.
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2019 (8) TMI 181
Levy of penalty u/s 271(1)(c) - disallowance of loss claimed in the return of income - as alleged satisfaction is not properly recorded in the assessment order for levy of penalty - HELD THAT:- Assessee has declared the transaction in question in the computation of income and return of income. AO examined the issue of long term capital gains and long term capital loss claimed by the assessee. The assessee conducted the entire transaction through banking channel through stock exchange. AO on the basis of the evidences produced by the assessee on record presumed that the transactions are bogus. These facts clearly show that assessee disclosed the entire facts to the Revenue Department and did not conceal anything to the AO. The assessee never claimed profit in the matter but claimed short term capital loss. The issue is, therefore, covered by order of ITAT Delhi Bench in the case of Deepti Agarwal vs. ITO [ 2018 (9) TMI 709 - ITAT DELHI] in which in the similar circumstances penalty was cancelled. It may also be noted that the AO before levy of the penalty has issued show cause notice dated 16.12.2016 (PB-1) which is reproduced above in which AO has not mentioned as to for which the limb of section 271(1)(c) whether for concealment of particulars of income or furnishing inaccurate particulars of income, show cause notice has been issued. AO did not mention anything in the notice as to for which offence penalty is liable to be imposed against the assessee. AO in the assessment order mentioned both the limbs of section 271(1)(c) of the Act for levy of penalty. Therefore, satisfaction is not properly recorded in the assessment order for levy of penalty. The issue is, therefore, covered by order of ITAT Delhi Bench in the case of Ms. Vijay Laxmi Rajput vs. ITO [ 2019 (6) TMI 397 - ITAT DELHI] .The show cause notice issued before levy of the penalty itself is invalid and bad in law and, as such, the resultant proceedings are vitiated. - Decided in favour of assessee
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2019 (8) TMI 180
Deduction u/s. 54F - assessee has not become the owner of the property in question - HELD THAT:- Hon ble Apex Court rendered in the case of CIT Vs. Balbir Singh Maini [ 2017 (10) TMI 323 - SUPREME COURT] that as per the requirement of section 54, the assessee buyer is not required to become absolute owner of the property in question. On this aspect of the matter, this subsequent judgment of Hon ble Apex Court does not make difference because as per this subsequent judgment of Hon ble Apex Court rendered in the case of CIT Vs. Balbir Singh Maini (supra), the assessee has not become the owner of the property in question because there is no registered sale deed executed by the vendor but as per the judgment of Hon ble Delhi High Court, becoming the owner of the property in question is not required for the purpose of section 54 of the IT Act. Section 54F of the IT Act is parametria with section 54. Hence, we respectfully follow this judgment of Hon ble Delhi High Court and decide the issue in favour of the assessee.
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2019 (8) TMI 179
Penalty u/s 271AAB - surrender being made allegedly voluntarily on the condition that no penal consequences would be visited upon the assessee - HELD THAT:- Statutory mandate of sub-section (1) of Section 274 is triggered. The requirement set out therein is that no order imposing penalty under this Chapter shall be made unless the assessee has been heard or has been given a reasonable opportunity of being heard. In the facts of the present case, no doubt the assessee has been heard but there can also be no two opinions on the fact that the assessee instead of arguing on permissible facts has mistakenly relied upon his surrender letter believing that the tax authorities were also bound by the unilateral terms of the surrender made i.e. that on account of the surrender being made allegedly voluntarily on the condition that no penal consequences would be visited upon the assessee, the surrender having been made consequently bound the tax authorities also to honour the unilateral belief. As noted, this belief has no legal sanction and has to be discarded. However, the fact remains that the opportunity so provided has been misutilized by the assessee by making irrelevant arguments. Accordingly, in all fairness, it cannot be said that an effective and reasonable opportunity of being heard has not been availed of by the assessee. We set aside the impugned orders. The parties were, accordingly, required to address as to which authority the remand be made as necessarily the statement recorded at the time of the search and the documents confronted and any other relevant fact would be required to be addressed which led to the surrender being made so as to address undisclosed income . DRs made a request that the matter may be remanded to the AO as he shall be in a better position to confront the material to the assessee. AR agreed that he shall address his arguments within the parameters of the powers vested with the tax authorities. Accordingly, the impugned order is set aside back to the file of the AO with the direction to pass a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard. The assessee in its own interests is advised to participate fully and fairly in the proceedings before the tax authorities. It is made clear that in the eventuality of abuse of the trust reposed the AO would be at liberty to pass an order on the basis of the material available on record. Said order was pronounced in the Open Court at the time of hearing itself.
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2019 (8) TMI 178
Addition of foreign dividend income belonging to two trusts - irrevocable trust created for the benefit of children - AO took the view that the entire dividend income would belong to the assessee only - As per the trust deed, the income shall be accumulated and the minor children are entitled to receive it only after they attain majority. Accordingly, it was submitted that the foreign dividend income belonging to these two trusts are not liable to be included in the hands of the assessee and accordingly it was not offered to tax in India by the assessee. - AO took the view that the entire dividend income would belong to the assessee only. - AO further held that if the dividend income belonging to the trusts is paid to the trusts subsequently by the assessee, the same would amount application of income only HELD THAT:- Since the tax status of the assessee is resident and ordinarily resident in India, he is liable to declare his global income, i.e., all income accruing or arising to the Individual or his minor children (if it is liable to be clubbed in his hands) globally shall be included in the total income of the assessee. Hence, before proceeding to club the dividend income accruing or received by the trusts created for the benefit of minor children, it is mandatory to show that the said income accrued or was received by the minor children. The tax authorities have taken the view that the dividend income relating to shares held by the trusts created for the benefit of children actually belongs to the assessee only and even if it is said to belong to his children, then the same is liable to be clubbed u/s 64(1A). They were constrained to hold so for reasons that the entire dividend income was received in the bank account of the assessee, it has been declared in the tax returns of the assessee, the trusts have not filed returns of income, there is no bank account in the name of trusts at that point of time etc. All these flaws/points have been addressed by the assessee by furnishing explanations before us in the form of additional evidences furnished before us. A.R has clarified the reasons for receiving and declaring entire income by the assessee, copies of amended tax return and copies of tax returns filed by trusts, bank account details of trusts, copies of letter issued by the company, amended dividend certificate etc. The assessee has clarified all the flaws pointed out by the tax authorities. Since these documents are additional evidences and since there was no occasion for the AO to examine them, we are of the view that the issue urged before us require fresh examination at the end of the AO in the light of discussions made supra, by duly considering additional evidences furnished by the assessee. We set aside the order passed by CIT(A) and restore the impugned issue to the file of the AO for examining it afresh in the light of discussions made supra by duly considering the additional evidences furnished by the assessee. - Appeal of the assessee is treated as allowed for statistical purposes.
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2019 (8) TMI 177
Disallowance u/s 14A - HELD THAT:- Admittedly, there is a categorical finding by CIT(A) that assessee has not earned any exempt income during the year and therefore we concur with view adopted by Ld.CIT (A) that no disallowance could be made in such circumstances. We draw our support from the decision of Hon ble Delhi High Court in case of Cheminvest Ltd [ 2015 (9) TMI 238 - DELHI HIGH COURT]. Addition u/s 50C - Revenue alleges that as value of land ascertained by Stamp authorities as on date of registration was higher than value in Agreement to sell, and therefore deeming fiction in section 50 C is to be invoked - HELD THAT:- As we analyze law applicable to these peculiar facts, it is observed that, revenue do not have any documents/evidences to establish that assessee received anything over and above the price agreed upon between the parties in agreement to sell dated 21/11/11. Respectfully following decision of Hon ble Supreme Court in case of KP Verghese [ 1981 (9) TMI 1 - SUPREME COURT] and hold that Ld.AO shall verify, whether sale consideration received by assessee received through banking channels in whole or in part, is prior to the date of Sale Deed dated 13/02/2012. In the event it is found that the sale consideration has been received as claimed by assessee by way of account payee cheque, bank draft in part or in whole, on or before the date of Sale Deed dated 13/02/2012, assessee deserves benefit as per law. - decided in favour of assessee for statistical purposes.
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2019 (8) TMI 176
TPA - selection of TNMM by the assessee for benchmarking the transactions - Whether margin of the tested party is at arm s length to the margins of the comparable companies? - HELD THAT:- No infirmity in the selection of TNMM by the assessee for benchmarking the transactions. We have already held that the assessee has rightly selected the AE as tested party. Thus, the international transactions of payment of fees for technical assistance services is to be benchmarked by comparing the margins of the CWT, Singapore (tested party) with the margins of seven entities selected by the assessee as comparables. The Ld. counsel has further pointed out that the comparable companies are engaged in the similar kind of services. Hence, we find substance in the contention of the Ld. counsel for the assessee, however, since the TPO has not verified the margins shown by the assessee vis- -vis the companies selected by the assessee as comparables, we respectfully following the decision of the Pune Bench of the Tribunal in the case of Emerson Climate Technologies (India) Ltd [ 2017 (12) TMI 1568 - ITAT PUNE] restore this issue to the file of AO/TPO for a limited purpose of verification as to whether the margin of the tested party is at arm s length to the margins of the comparable companies. Needless to say, that the authorities shall give a reasonable opportunity of being heard to the assessee while deciding the said issue
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2019 (8) TMI 173
Reopening the assessment u/s 147 - within four years from the end of the relevant assessment year - change of opinion - deduction u/s 80HHC - reopening based on audit objection - assessee contended that AO in reopening the assessment has acted under the dictation of the CIT - since AO rejected the objections raised in the audit report reopening is by changing his opinion - HELD THAT:- In this case, the Assessing Authority was quite alive to this issue. There is not even any allegation that the Assessee had failed to disclose all the material facts in relation to the transaction in question. In such circumstances, permitting the Revenue to reopen the assessment would amount to permitting the Revenue to review its earlier order, which jurisdiction is clearly not vested in the Revenue while exercising powers under u/ss 147 and 148. After the audit raised its objection, the AO submitted reply to the same in which the AO resisted the audit objection and defended the completion of assessment. From the perusal of the reply, it is very apparent that the AO, at the stage of finalisation of assessment, had very clearly addressed the issue as to whether the transaction of sale of shares of an Indian company to a foreign company, in the facts and circumstances of the present case, constituted an export and consequently the proceeds were deductible u/s 80HHC. Both, the Commissioner (Appeals), as well as the ITAT, have recorded concurrent findings of fact that the aforesaid action on the part of the AO amounts to 'acting under dictation'. The material on record does indicate that there was no independent application of mind on the part of the AO and the notice proposing reassessment was issued reeling under the dictation from the CIT who was, admittedly, his superior officer. In such circumstances, there is no good ground to interfere with the impugned Judgment and Order. According to us, is a clear case of the AO merely changing his opinion or having a second thought on the basis of materials on record and that too reluctantly and reeling under the dictation from the superior officer. Accordingly, we are satisfied that there is no case made out to interfere with the impugned Judgment and Order. Whether the AO is precluded from issuing a notice for reassessment where such AO has already replied to the audit objection justifying his earlier position - HELD THAT:- We do not deem it necessary to go into the larger issue as to whether the Assessing Officer is precluded from issuing a notice for reassessment where such Assessing Officer has already replied to the audit objection justifying his earlier position. No doubt, in Rajan N. Aswani [ 2018 (3) TMI 315 - BOMBAY HIGH COURT] there are some observations to this effect as urged by Mr. Naniwadekar. However, Ms. Razaq did make attempts to distinguish the said decision. According to us, it is really not necessary to go into this larger issue, since, based upon the discussion as aforesaid, we are satisfied that there was no case made out for reopening of the assessment. - Appeal is dismissed
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2019 (8) TMI 170
Low tax effect - two addition was given up by the assessee before CIT(A) - ITAT set aside order of AO - reasonable opportunities of hearing given by CIT(A) but assessee chose to not represent - HELD THAT:- It is apparent that the claim with regard to addition u/s 43B as well as the addition of Brought Forward Loss was given up. If that be so, then, the appeal would be covered under the low tax effect. We recorded the statement of Mr. Vora that the assessee has given up the claim with regard to addition un/s 43B as well as the addition of the Brought Forward Loss, as referred to above. - With the above, this Tax Appeal is disposed of.
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2019 (8) TMI 169
Member of AOP - whether Deepali Design and Exhibits Pvt. Ltd. ( Deepali ) is in fact a member of the Association of Persons ( AOP ) under the name of Pico Deepali Overlays Consortium ? - Deepali was taxed separately by AO - HELD THAT:- There were three members of the AOP. One was Deepali, the other was Pico Event Marketing India Pvt. Ltd. and the third was Pico Hong Kong Ltd. A perusal of the assessment order framed against the AOP shows that the value of the contract performed by the AOP was approximately ₹ 159 crores whereas the assessment was framed at ₹ 405 crores. It was the contention of Deepali before the ITAT that the income earned by it on the part of contract performed by it had in fact been offered by it for tax and an assessment had also been completed against it separately on that basis. Deepali accordingly submitted that on the face of it, the original assessment order itself would have to be revisited not only to determine whether in fact Deepali was still a member of the AOP and, therefore, liable to be proceeded against for the tax liability of the AOP and further on merits whether the assessment had to be of the AOP minus Deepali. As far as the impugned order of the ITAT is concerned, the Court is of the view that the remand of the matter by the ITAT to the AO could not be said to be unwarranted in the facts and circumstances of the case. The impugned order does not give rise to any substantial question of law which requires to be determined by this Court. No substantial question of law
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2019 (8) TMI 168
Exemption u/s 11 and 12 - Whether assessee involved in business activities and was conducting no charitable activity ? - HELD THAT:- ITAT noticed that there was no change in the functions of the Assessee from earlier and it s objects were never disputed by the Revenue authorities at any stage. It was held that the Revenue failed to establish that the activities carried out by the Assessee were contrary to its objects and functions. It was unable to be established by the Revenue on facts that the Assessee was carrying on commercial activity. In the earlier AYs, this issue had been decided against the Revenue as noticed by the CIT (A) in his order dated 28th February 2011 for AY 2007-08. Consequently, the Court declines to frame any question on this issue. Deemed application of income u/s 11(1), Explanation 2 - requisite intimation not filed within the time period stipulated - HELD THAT: - The Court finds that in Association of Corporation and Apex Societies of Handlooms v. Assistant DIT , [ 2013 (1) TMI 317 - DELHI HIGH COURT] it was held by this Court that intimation in Form-10 for the purposes of claiming the benefit of the Section 11 could be furnished by the Assessee even during the assessment proceedings. On the facts of the present case, although the Assessee did not give the intimation at the time of filing the original returns, admittedly, the intimation was enclosed with the revised return filed by the Assessee. The Court accordingly does not find any error having been committed by the ITAT in holding this issue in favour of the Assessee. Depreciation to trust - assets, the full cost of which was already allowed as application of income in earlier years, even though allowing the same could lead to a situation where amount of depreciation would exceed the purchase value of the assets - HELD THAT:- As pointed out by Mr. Rahul Chaudhary, learned counsel appearing for the Assessee on advance notice, that this issue is no longer res integra in view of the decision of the Supreme Court in CIT v. Rajasthan Gujarati Charitable Foundation Poona [ 2017 (12) TMI 1067 - SUPREME COURT] The ITAT too followed the said decision and decided the issue against the Revenue. Whether an amount received as advance was in fact utilized by the Assessee for charitable purpose? - HELD THAT:- Here again on facts the ITAT has found in favour of the Assessee, which finding has not been shown to be perverse. The Court accordingly declines to frame such issue as raised by the Revenue.
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2019 (8) TMI 167
TP adjustment - Comparable selection - loss making companies should not be excluded only on that basis - three comparables i.e. ITI Ltd., Punjab Communications and Himachal Futuristic Communications (P) Ltd. were included as comparables for the purposes of computation of the transfer price for international transactions in the Assessee s manufacturing and installation segment - HELD THAT:- ITAT differed from the view expressed by the TPO and accepted the reasoning put forth by counsel for the Assessee that the finances of the three comparables which included ITI Ltd., with reference to their respective annual reports, did show that there was a general trend in the industry of either loss-making or declining revenues. The ITAT was of the view that loss making companies should not be excluded only on that basis. In the present case there was no dispute on the functional profile of the Assessee being similar to that of ITI Ltd. The opinion expressed by the ITAT is a plausible one in the facts and circumstances of the case. The inclusion of ITI Ltd. and the other two comparables is supported by sound reasoning given by the ITAT which, in the considered view of this Court, cannot be said to be perverse. No substantial question of law arises.
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2019 (8) TMI 165
Assessment u/s 153A - incriminating material - HELD THAT:- Clearly the report of the Special Auditor, having been commissioned subsequent to the search, and during the assessment proceedings against DSL, cannot obviously be treated as incriminating material qua the Assessee, recovered during the course of search, in order to justify the addition made in the assessment u/s 153A. This is consistent with the legal position explained in both CIT v. Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] (which still holds the field) and Pr. CIT v. Meeta Gutgutia Proprietor Ferns N Petals [ 2017 (5) TMI 1224 - DELHI HIGH COURT] . Dr. Rakesh Gupta, learned counsel for the Assessee appearing on advance notice produced before this Court copy of an order dated 2nd July 2018 passed by the Supreme Court dismissing the Revenue s Special Leave Petition against the aforementioned judgment in Pr. CIT v. Meeta Gutgutia Proprietor Ferns N Petals (supra) on merits. The said order is reported as Pr CIT v. Meeta Gutgutia [ 2018 (7) TMI 569 - SC ORDER] . This Court, therefore, finds there is no legal infirmity in the impugned order of the ITAT. No substantial question of law arises therefrom.
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2019 (8) TMI 164
Penalty u/s 271(1)(c) - assessee claimed depreciation u/s 32 on road constructed on Build- Operate-Transfer (BOT) basis - AO denied on the basis that the road was not owned by the Assessee - Circular No.9 of 2014 dated 23.04.2014 allow amortization of cost - revenue contended that assessee accepted the assessment order disallowing the depreciation, it is clear that it was attempted to avoid tax and that the claim of depreciation was wrongly made HELD THAT:- Revenue relied upon a judgment of Delhi High Court passed in CIT Vs. Morgan Finvest Pvt. Ltd. [ 2012 (12) TMI 457 - DELHI HIGH COURT] wherein it was held that this is not a case where all the correct particulars relating to the claim were furnished and a claim for relief or allowance was made on that basis, which was not accepted by the assessing officer who did not question the particulars relating to the claim, but merely took a different view on the very same particulars. This is a case where questionable details and particulars relating to the claim were furnished by the assessee and such details were so fundamental to the genuineness and bona fide of the claim that the mere furnishing of those particulars made the claim vulnerable. In the present case, we find that the facts are starkly different. The Revenue had itself accepted that there was a doubt and that is why the clarification of 2014 was issued. Had it been so cut and dried there was no occasion for the Board to have issued the clarification and infact, this is precisely what weighed with the Commissioner, Income Tax, Panchkula and Income Tax Appellate Tribunal, Chandigarh. In the circumstances of the case we are not able to find any fault with the judgment and orders of the Courts below. No other question of law arises.
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2019 (8) TMI 163
Penalty u/s 271(1)(c) - concealment detected in the course of any proceeding under the Act, which cannot be limited to assessment proceeding and should have been held to include survey proceeding u/s 133A(1) - Whether Appellate Tribunal erred in not appreciating that even clause (a) of explanation 4 to section 271(1)(c) does not refer to returned income so as to limit the penalty u/s 271(1)(c) with reference to difference between tax on Assessed Income and Returned Income? - HELD THAT:- We dismiss this Tax Appeal in view of the order dictated today by us in SHREE SAI DEVELOPERS [ 2019 (8) TMI 59 - GUJARAT HIGH COURT] wherein held no error not to speak of any error of law could be said to have been committed by the Tribunal in passing the Impugned order. This Tax Appeal also fails and is hereby dismissed.
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2019 (8) TMI 162
Penalty u/s 271(1)(c) - concealment detected in the course of any proceeding under the Act, which cannot be limited to assessment proceeding and should have been held to include survey proceeding u/s 133A(1) - Whether Appellate Tribunal erred in not appreciating that even clause (a) of explanation 4 to section 271(1)(c) does not refer to returned income so as to limit the penalty u/s 271(1)(c) with reference to difference between tax on Assessed Income and Returned Income? - HELD THAT:- We dismiss this Tax Appeal in view of the order dictated today by us in SHREE SAI DEVELOPERS [ 2019 (8) TMI 59 - GUJARAT HIGH COURT] wherein held no error not to speak of any error of law could be said to have been committed by the Tribunal in passing the Impugned order. This Tax Appeal also fails and is hereby dismissed.
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2019 (8) TMI 161
Disallowance of deduction u/s 10B - AO alleged that assessee had not fulfilled the conditions as specified in Section 10B(ii) and (iii) - AO has not disputed the EOU status of the unit of M/s. KMMI Exports and there eligibility for deduction u/s 10B, now issue relates that after the merger of the firm M/s. KMMI Exports with the assessee firm, whether the assessee firm is entitled for deduction u/s 10B or not - HELD THAT:- The coordinate Bench of this court in assessee own case [ 2018 (12) TMI 640 - KARNATAKA HIGH COURT] has held that the limitations specified in sub-sections 9 and 9A of Section 10B of the Act do not exist from 1.4.2004 and therefore, the conclusion of the AO that deduction u/s 10B cannot be granted on the merger of firms is not correct. In the light of the above finding in respect of the very same assessee by co-ordinate bench, we are of the considered view that present appeal is to be necessarily dismissed by answering the substantial question of law against the revenue and in favour of the assessee
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2019 (8) TMI 157
TDS u/s 195 - alleged that amount paid to its parent company attracted provisions of Section 40(a)(ia) r.w.s. 9(1)(vii) - FTS in DTAA with USA - HELD THAT:- In view of Section 90(2) of the Act and clause 4(b) of Article 12 of the Treaty, the provisions of this Act would stand applicable only where fees for included services taxable only if there is a make available technical knowledge. In the case in hand finding of fact that has been returned by the ITAT, there is no make available of the technical knowledge, therefore, the provisions of the Income Tax Act would not stand attracted in the transactions in question. The issue stands squarely covered by the decision of the Hon'ble Apex Court in the case of Union of India Vs. Azadi Bachao Andolan [ 2003 (10) TMI 5 - SUPREME COURT] It is also undisputed that a notification under Section 90 towards implementation of the terms of the DTAs has been issued by the Central Government, in the case in hand. In view of the above, the question as raised for adjudication is answered in negative and the appeal accordingly fails and stands dismissed. - Decided in favour of assessee.
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2019 (8) TMI 156
Levy of penalty u/s 271(1)(b) - failure to comply with notices u/s 142(1)/143(2) - notices to the assessee at the old address - HELD THAT:- Prior to completion of the assessment for assessment year under appeal, assessee had already reported new address to the Revenue Department. However, the AO for the reasons best known to him have sent the notices to the assessee at the old address. No attempt has been made to serve assessee at the new address. Therefore, there could not be any reason to believe that assessee had defaulted in making compliance to the notices. CIT(A) noted that on 05.09.2007 Counsel for assessee appeared before AO but no new address has been intimated. However, in the Income tax return filed for subsequent AY 2006-07, assessee had already reported new address to the Department. There is thus, no default on the part of the assessee to comply with the notices u/s 142(1)/143(2) of the Act. Further, AO has recorded several dates on which notices have been issued to the assessee, but it is not mentioned in the penalty order as to for which default of notice penalty has been levied. In the absence of any specific charge against the assessee, it is difficult to accept that assessee would default to make any reply before the authorities below. The quantum matter is pending before the CIT(A) as per directions of the Tribunal. Considering all assessee had a reasonable cause for failure to comply with the notices. Therefore, penalty is not leviable in the matter. - Decided in favour of assessee.
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2019 (8) TMI 155
Penalty u/s 271AAB - proof of undisclosed income of the assessee - HELD THAT:- CIT(A) while adjudicating the appeal had failed to deal with the contention of the assessee that no penalty u/s 271AAB of the Act was leviable since there was no undisclosed income of the assessee as defined in the section. CIT(A) we find ,despite specific arguments/contention made by the assessee that no penalty was leviable, has restricted his decision to that the assessee has been unable to make out a case of levy of penalty @ 10%/20% as per clause (a)/(b) of section 271AAB(1) of the Act. Assessee has also drawn our attention to various decisions of the ITAT holding that penalty u/s 271AAB is not automatic and there has to be undisclosed income as defined under the section for the levy of penalty. We therefore consider it fit to restore the issue back to the Ld.CIT(A) to adjudicate the matter afresh in accordance with law ,after considering all the submissions of the assessee. CIT(A) is directed to pass a speaking order, after considering all necessary facts relevant to the issue, i.e. the surrender letter of the assessee ,the statement recorded during search u/s 132(4) making the surrender and any other relevant material/facts, for deciding the issue. Needless to add the assessee be granted proper opportunity of hearing. Appeal of the assessee is therefore allowed for statistical purposes. - Assessee's appeal allowed for statistical purposes.
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2019 (8) TMI 154
Assessment u/s 153A - Addition on account of gain on sale of investment - HELD THAT:- There is no unaccounted transaction found during the course of search. The capital gain that arose from the sale of shares are already recorded in the books of accounts and no incriminating material whatsoever was found during the course of search. Since the Hon'ble Jurisdictional High Court MEETA GUTGUTIA PROP. M/S. FERNS N PETALS [ 2017 (5) TMI 1224 - DELHI HIGH COURT] has clearly held that addition in order passed u/s 143(3)/153A cannot be made In absence of any incriminating material and since in the instant case, there is no evidence whatsoever on record that any incriminating material was found during the course of search and since the addition was made on the basis of certain inquiries conducted subsequent to the search on the basis of return already filed, therefore, on this issue itself addition has to be deleted. The issue in the present case is identical with that of the decision given by the Tribunal as the same is son of the assessee herein. In fact, now the son only representing the assessee after her death. Therefore, the CIT(A) rightly allowed the appeal of the assessee. Thus, appeal of the revenue is dismissed.
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2019 (8) TMI 153
Registration u/s 12AA denied - no charitable activity u/s 2(15) - HELD THAT:- It is pertinent to note that from the perusal of the by-laws of the society, all the clauses are general clauses which do not point out any charitable activity. In fact, from the objectives the society will purchase and sell immovable property as per society s needs. CIT(Exemptions) rightly observed that the society purchased the property out of surplus funds and earned rental income from the shops which have been constructed out of these funds. Thus, from these observations it can be seen that the society is having commercial activities. CIT(Exemptions) observed that the society has no investment clause, amendment clause, irrevocability clause, utilization clause, or beneficiary clause in the by-laws of the society. AR could not point out that the society is dealing exclusively in imparting education which is charitable purpose from the bye-laws. In fact main object of the society is to direct, supervise and look after Sanatan Dharam High School, as well as to construct the building of the school, along with purchase movable and immovable property for the Samiti and sale it from time to time. One of the object is to collect money for the proper conduct of Samiti and to impart and sustain Indian Cultural values amongst students. All these are not coming under the purview of imparting education among the society. The applicant society did not file audit report prescribed in the balance sheet as per the requirement for filling application u/s 12AA registration. Thus, the Applicant society also failed to submit the proper documents before the CIT(Exemptions). Thus, the CIT(Exemptions) rightly rejected the application of the applicant society u/s 12A - Decided against assessee. -
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2019 (8) TMI 152
Disallowance u/s 14A r/w Rule 8D - no exempt income receipt - HELD THAT:- In the present case, it is undisputed that the assessee had not received any exempt income during the year under consideration and, therefore, the ratio of judgment of Cheminvest Ltd. vs C.I.T. [ 2015 (9) TMI 238 - DELHI HIGH COURT] would come to the aid of the assessee wherein the Hon ble High Court had held that in the absence of any exempt income, disallowance u/s 14A of the Act of any amount was not permissible. - Decided against revenue
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2019 (8) TMI 151
Disallowance of expenses u/s 14 A read with Rule 8D - HELD THAT:- Disallowance under section 14 A to be computed read with Rule 8D(iii) having regard to annual accounts for years under consideration. There is categorical observation by Ld.CIT (A) that assessee had sufficient funds to make investments during years under consideration and there has been no interest-bearing fund that has been utilized for the same. Further any disallowance under Rule 8D2(iii) could be made only in respect of such investment that yielded exempt income. Carbon Credit income - characterization of income - revenue or capital receipt - HELD THAT:- Assessee submitted that the issue relating to carbon credit income has been decided by Hon ble Karnataka High Court in case of Subash Kabini Power Corporation Ltd [ 2016 (5) TMI 793 - KARNATAKA HIGH COURT] in favour of assessee. Disallowance u/s 14A read with Rule 8D (iii) - CIT (A) held disallowance to be justified for assessment year 2009-10 and 2011-12, whereas he deleted disallowance computed under rule 8D(iii), as there was no exempt income following decision of Hon ble Delhi High Court in case of M/s Cheminvest Ltd [ 2015 (9) TMI 238 - DELHI HIGH COURT] . No infirmity in the aforestated observations of Ld. CIT (A) and accordingly the same is upheld.
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2019 (8) TMI 150
Disallowance u/s. 14A r.w. Rule 8D(2)(iii) - no exempt income had been earned or received by the assessee - HELD THAT:- In the case on hand admittedly, the factual position was that the assessee had not earned or received any exempt income in the previous year relevant to assessment year 2013-14. In these circumstances, in our considered view, the ratio of the decision of Cheminvest Ltd. [ 2015 (9) TMI 238 - DELHI HIGH COURT] would apply squarely in the case on hand. The Hon ble High Court in the aforesaid judgement held that no disallowance under section 14A of the Act could be made in a year in which no exempt income had been earned or received by the assessee. It was held that the expression does not form part of the total income in section 14A envisages that there should be an actual receipt of income which is not includible in the total income during the relevant previous years for the purpose of disallowing any expenditure incurred in relation to the said exempt income. - Decided in favour of assessee.
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2019 (8) TMI 149
Disallowance u/s 14A - recording of satisfaction by the AO before making disallowance u/s 14A - CIT(A) confirmed the disallowance to the extent after excluding investment in the nature of mutual fund etc. - A.Y. 2013-14 - HELD THAT:- AO has also cited instances of administrative expenditure such as the review of investment,monitoring of the activities of the company in which the assessee company has made substantial investment by the director of the assessee company and the employees of the assessee company etc.Therefore, the salary paid by the assessee company to those employee and the director who have devoted their time towards investment activities have not been utilised exclusively for the purpose of the business of the company. In the light of the above facts and circumstances we do not find any merit in the ground of appeal of the assessee that no satisfaction has been recorded by the AO before making disallowance u/s 14A - after perusal of the information on record filed by the assessee we observe that assessee has made investment in equity share of listed company s debentures, bond units of mutual fund etc. and all these have been made through portfolio management consultant who has provided full fledge services in that respect. The assessee had suo-motu disallowed an amount of ₹ 73,034/- u/s 14A. However, looking to the quantum of exempt income and investment made by the assessee it will be appropriate to restrict the disallowance out of administrative expenditure to the amount of ₹ 3,00,000/-. Therefore, appeal of the assessee is partly allowed. Disallowance u/s 14A for calculating book profit u/s 115JB - HELD THAT:- In view of the decision of Special Bench of ITAT Delhi CIT vs. Vireet Investment Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] wherein it is held that disallowance u/s 14A cannot be added to book profit u/s 115JB, the decision of the Ld. CIT(A) s is not justified. Accordingly, appeal of the assessee is allowed. Disallowance of expenses in computation of short term capital gain u/s 48 - HELD THAT:- We allow the claim of the assessee for deduction under Sec. 48 to the extent of expenses incurred toward portfolio manual fees. See JOY BEAUTY CARE (P) LTD. VERSUS DCIT CIRCLE -10, KOLKATA [ 2018 (9) TMI 422 - ITAT KOLKATA] Charging of interest u/s 234 A/B/C - HELD THAT:- Since charging of interest under the aforesaid provisions of the Act are mandatory.Therefore, this ground of appeal of the assessee is dismissed. Disallowance u/s 36(1)(va) r.w.s. 2(24)(x) - late payment of employees contribution towards Provident Fund and ESI - HELD THAT:- As decided in GUJARAT STATE ROAD TRANSPORT CORPORATION [ 2014 (1) TMI 502 - GUJARAT HIGH COURT] held that the deduction towards employees contribution to Provident Fund and ESI is available if such sum is credited by the assessee to the employees account in the relevant fund on or before the due date as per respective Acts. Therefore, considering the decision of Hon ble Gujarat High Court we do not find any error in the decision of the Ld. CIT(A). Accordingly, this ground of appeal of the assessee is dismissed.
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2019 (8) TMI 148
Disallowance of travelling expenses - CIT(A) has restricted to 10% of such expenditure on the basis that the assessee could not produce supporting vouchers, however the case of the assessee is that he had produced all the vouchers - HELD THAT:- Set of vouchers with supporting bills were submitted before the lower authorities - the entire payment was made through banking channels and the details of Director s travelling expenses and others were separately furnished before the A.O. It is also stated that sample vouchers referred by the A.O. is not verifiable, in fact, it was the travel advance, which was refunded and hence, the entry was reversed. Considering all we direct the A.O. to restrict disallowance to the extent of 5% to plug the leakage of revenue, if any. This ground of the assessee is partly allowed. Disallowance of building repairs and maintenance expenditure - addition made purely on estimation basis - HELD THAT:- It is stated that complete set of vouchers with supporting bills were submitted before the lower authorities. TDS was also deducted on the contract payments and duly deposited. In respect of disallowance of repairs and maintenance expenditure also, it is stated that the A.O. made disallowance on adhoc basis. In respect of both the disallowances, the revenue authorities have made purely on estimation basis. It is not a case where the assessee has inflated the expenses. Therefore, considering the totality of the fact, we restrict the disallowance to the extent of 5% of the total disallowance made in this regard. Disallowance of gift and presents - it is stated by the assessee that the addition has been made purely on adhoc basis. It is stated that the A.O s allegation that vouchers were self-made and not reliable is not correct. It is stated that the vouchers specifying the nature and purpose were mentioned in the narration and bills/documentary evidences also. The allegation that expenses incurred for the first time without specifying purpose is not a basis for the purpose of disallowance. After considering rival submissions, looking to the totality of the facts, the disallowance out of the gift and present expenses is restricted to ₹ 50,000/-. Rest of the disallowance is directed to be deleted. Addition in respect of the interest - HELD THAT:- It is stated that under the mistaken belief that the balance as on 31.3.2011 was misunderstood as accrual during the year was only ₹ 94,522/-. Therefore, we direct the A.O. to verify this fact and if found correct delete the addition. This ground of the assessee s appeal is allowed for statistical purposes.
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2019 (8) TMI 145
Slump sale - section 50B applicability - assessee sold sea food business undertaking for a lumpsum consideration as a going concern - assessee claimed that it was sale of depreciable assets and should be reduced from block of assets - HELD THAT:- Clauses of the sale deed that the assets of the assessee including goodwill, intellectual property rights, trademark were sold for a lumpsum consideration. The terms of agreement are very specific and clear and there is no need for importing any other meaning. Since the assets and liabilities of the sea food business undertaking were sold by the agreement cited supra, the sale will consequently fall in line with the idea of slump sale as per the provisions of section 2(42C). Since the assessee sold the entire undertaking with all its assets and liabilities together with all licences, permits, approvals, registration, contracts, employees and other contingent liabilities also for a slump price, this kind of sale falls under the purview of section 50B. In our opinion, the provisions of section 50B are applicable so as to ascertain computation of capital gain in this case. No infirmity in the order of the CIT(A) and the same is confirmed. This ground of appeal of the assessee is dismissed.
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Customs
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2019 (8) TMI 143
Smuggling - 5 kgs of gold concealed in ballot box - gold smuggled under the guise of importing 200 numbers of Sony brand LED TV sets - alternative remedy - HELD THAT:- It could be seen from the affidavit filed in support of the Writ Petition that challenging the order in original, the appellant has approached the writ jurisdiction without exhausting the alternative remedy available under the statute. It could be further seen that the appellant had not raised any special circumstances before the learned Single Judge to invoke Article 226 of the Constitution of India when there being an efficacious alternative remedy available under the statute. This Court is of the opinion that the appellant ought to have filed an appeal invoking Section 128 of the Customs Act, 1962, rather than invoking Article 226 of the Constitution of India, despite there being an alternative and efficacious remedy available under the statute - It is made clear that when the statute prescribes certain mode of approaching the authorities by way of an appeal, the same shall not be dispensed with by invoking Article 226 of the Constitution of India, unless and otherwise, the person approaching proves prima faciely the special circumstances that warrants invoking jurisdiction under Article 226 of the Constitution of India. Appeal dismissed.
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2019 (8) TMI 142
Principles of natural justice - denial of cross examination of the impugned witnesses - import of goods - valuation - inclusion of royalty - collusion with the overseas suppliers and fabrication of documents - violation of Section 9D of Central Excise Act, 1944/138 of Customs Act, 1962 - HELD THAT:- Section 9D of CEA deals expressly with the circumstances in which a statement recorded before a Gazette Officers can be treated as relevant for the purposes of proving the truth of contents thereof. What is categorically required by the Section is that the person whose statement was earlier recorded before Gazette Officer has to be examined as witness before the adjudicating authority who thereafter has to arrive at an opinion that having regard to the circumstances of the case the statement should be admitted in evidence in the interest of justice - It is only after both these steps are complied with that the statement would be eligible for being treated as relevant in the proceedings so that the assessee can if it so chooses exercise the option to test the evidence by way of cross examination. The said right is otherwise permitted under Section 138 of the Indian Evidence Act, 1932. Whether the statements of the persons as are prayed to be cross examined qualify to be called as statement simplicitor? - HELD THAT:- The statements even if retracted can form the basis of conviction without examination of the persons making confessions in the manner as mentioned under Section 9D of Excise Act/138 of the Indian Evidence Act. When the confession of co-accused/ co-noticee can be used as evidence under Section 3 of the Evidence Act? - HELD THAT:- Since the statement of the Directors of the Company are opined to be in the form of confessions, the Directors are none but those who have stepped into the shoes of the accused Company. Otherwise also, they themselves are co-noticees and the imposition of penalty has been proposed against them - the fundamental right as enshrined under Article 20(3) of the Constitution of India which prohibits self incrimination is applicable to both of them. The confessional statements are out of the ambit of Section 9D as relied upon by the appellant and as has been considered in the various case laws relied upon by the appellant. The co-noticee, if his statement amounts to confession, cannot be compelled to be cross examined and there would be no violation of principles of natural justice in that case. Though ample opportunity with the proceede/assessee has to be granted to put forth his defence, however, the assessee cannot be compelled to self-incriminate himself - the permission for cross examining Shri Vineet Saluja and Shri Pradeep Sharma has rightly been denied. Appeal allowed by way of remand directing adjudicating authority below to seek the consent of Ms. N. Rashmi and Shri Amit Mallik qua their willingness to be cross examined and to accordingly re-decide the issue of cross examination of said two witnesses, afresh.
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2019 (8) TMI 141
Benefit of confessional rate of duty - Import of parts / components of Agricultural Machinery - N/N. serial No. 399(A) of the Notification No. 12 dated 17.03.2012 - Whether the appellant Company/ importer is entitled for the benefit of the Notification No. 12/2012 for the products imported by him being agricultural machinery as named in Serial No. 399(A) of the said Notification? HELD THAT:- Apparently and admittedly, the appellant is importing the parts and the components. However, the case of appellant is that the parts and components i.e. laser level transmitter, laser receivers, control boxes connecting cables and rechargeable battery packs constitute a complete kit of the machine to be called as laser land leveller and it is only that cable connections between these parts as are required for them to be used as agricultural machine. The cabling is impressed upon to not to be a manufacturing activity. Apparently and admittedly, the appellant is importing different parts in a kit form/disassembled condition for which mere cable connection is required for said kit to constitute one single machine called as laser levelling machines. Those parts need simple cabling at the site, to be levelled, to function as a complete machine of laser land leveller. The said activity of cabling is already held to not to be called as manufacture. Those observations take the impugned imported products out of the ambit of serial No. 399(B) of Notification No. 12/2012. The allegation that these parts are not always in the term of kit are also not opined to be sustainable as is apparent from the invoices. The extra parts imported are for previously so imported machines, in addition to complete kit. There seems no reason to repeat the contention of the appellant that along with the kit the extra parts were imported for the other machines which were already in use. The parts and components as have been imported by the appellants since do not require any activity which can be called as manufacture, but when cabled at the site they can be used as a laser land levelling, an agricultural machine, the product qualifies to fall under serial No. 399(A) of the Notification No. 12/2012 dated 17.03.2012 to which a concessional/exceptional duty @ 2.5% is applicable - the Department has failed to discharge its onus to prove the activity of the appellant as manufacture while putting the imported parts/components into the agricultural machine called laser land leveller. Penalty upon the Director of the importer - HELD THAT:- It is very much apparent from the statement of the Director recorded on 10.07.2015 that since they were using the parts and components hence were under bonafide impression to classify them under Chapter 90153 but after the Notification and exemption thereof came to their notice, and that they are not registered with Central Excise for manufacture, that they rightly classified their product under CTH 8432. Appeal allowed - decided in favor of appellant.
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Insolvency & Bankruptcy
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2019 (8) TMI 140
Validity of transactions - transactions entered into by the promoters and Directors of the Corporate Debtor creating mortgage of 858 acres of immovable property owned by it and in possession of the Corporate Debtor , to secure debt of related party - whether fraudulent and wrongful transactions within the meaning of Section 66 of the I B Code ? - HELD THAT:- From bare perusal of Section 66, it is clear that if during the Corporate Insolvency Resolution Process or Liquidation Process , it is found that any business of the Corporate Debtor has been carried on with intent to defraud creditors of the Corporate Debtor or for any fraudulent purpose, the Adjudicating Authority is empowered to pass appropriate order under Section 67. In the present case, we have noticed that the transactions in question i.e. mortgage(s) were made in favour of the Banks and Financial Institutions by the Corporate Debtor ( Jaypee Infratech Limited ) in the ordinary course of business of the Corporate Debtor . The Appellants- Banks and Financial Institutions have given loans to the holding Company namely- Jaiprakash Associates Limited . The Corporate Debtor being one of the group company, like a guarantor, executed mortgage deed(s) in favour of the Appellants- Banks and Financial Institutions . We have seen that none of the transactions were preferential transaction or undervalued transaction - Further, as we have held that the transactions were made in the ordinary course of business in absence of any contrary evidence to show that they were made to defraud the creditors of the Corporate Debtor or for any fraudulent purpose, on mere allegation made by the Resolution Professional , it was not open to the Adjudicating Authority to hold that mortgage deeds, in question, were made by way of transactions which come within the meaning of fraudulent trading or wrongful trading under Section 66. It is not in dispute that all the Appellants had granted loan to Jaiprakash Associates Limited . Majority of Banks (Appellants) functioned as joint venture. For the said reason, the Corporate Debtor executed mortgaged deeds in favour of the Appellants. Such transactions having made in ordinary course of business, the allegation against the Banks and Financial Institutions (Appellants) are not justified. The Adjudicating Authority having failed to notice the aforesaid relevant facts and as it misread the provisions of Sections 43, 45 66 of the I B Code and on the basis of wrong presumption and error of fact held that transactions in question amount to preferential transactions (Section 43); undervalued transactions (Section 45) and for fraudulent purpose to defraud the creditors of the Corporate Debtor (Section 66), the impugned order cannot be upheld - appeal allowed.
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FEMA
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2019 (8) TMI 139
Hawala transactions - Detention order - smuggling of foreign origin gold by a syndicate of persons from UAE to India - the sale proceeds of the smuggled gold were siphoned off to Dubai through hawala. - Offences punishable under Section 135 of the Customs Act, 1962. Whether the orders of detention were vitiated on the ground that relied upon documents were not served along with the orders of detention and grounds of detention? - Whether there was sufficient compliance of the provisions of Article 22(5) of the Constitution of India and Section 3(3) of the COFEPOSA Act? Whether the High Court was right in quashing the detention orders merely on the ground that the detaining authority has not expressly satisfied itself about the imminent possibility of the detenues being released on bail? HELD THAT:- It is well settled that the order of detention can be validly passed against a person in custody and for that purpose, it is necessary that the grounds of detention must show that the detaining authority was aware of the fact that the detenu was already in custody. The detaining authority must be further satisfied that the detenu is likely to be released from custody and the nature of activities of the detenu indicate that if he is released, he is likely to indulge in such prejudicial activities and therefore, it is necessary to detain him in order to prevent him from engaging in such activities. Whether a person in jail can be detained under the detention law has been the subject matter for consideration before this Court time and again. In HUIDROM KONUNGJAO SINGH VERSUS STATE OF MANIPUR ORS. [ 2012 (5) TMI 732 - SUPREME COURT] , the Supreme Court referred to earlier decisions including Dharmendra Suganchand Chelawat v. Union of India DHARMENDRA SUGANCHAND CHELAWAT VERSUS UNION OF INDIA [ 1990 (2) TMI 154 - SUPREME COURT] and reiterated that if the detaining authority is satisfied that taking into account the nature of the antecedent activities of the detenu, it is likely that after his release from custody he would indulge in prejudicial activities and it is necessary to detain him in order to prevent him from engaging in such activities. Whether there was awareness in the mind of the detaining authority that detenu is in custody and he had reason to believe that detenu is likely to be released on bail and if so released, he would continue to indulge in prejudicial activities - HELD THAT:- In the present case, the detention orders dated 17.05.2019 record the awareness of the detaining authority:- (i) that the detenu is in custody; (ii) that the bail application filed by the detenues have been rejected by the Court. Of course, in the detention orders, the detaining authority has not specifically recorded that the detenu is likely to be released . It cannot be said that the detaining authority has not applied its mind merely on the ground that in the detention orders, it is not expressly stated as to the detenue s likelihood of being released on bail and if so released, he is likely to indulge in the same prejudicial activities . But the detaining authority has clearly recorded the antecedent of the detenues and its satisfaction that detenues Happy Dhakad and Nisar Aliyar have the high propensity to commit such offences in future - The satisfaction of the detaining authority that the detenu is already in custody and he is likely to be released on bail and on being released, he is likely to indulge in the same prejudicial activities is the subjective satisfaction of the detaining authority. The satisfaction of the detaining authority that the detenu may be released on bail cannot be ipse dixit of the detaining authority. On the facts and circumstances of the present case, the subjective satisfaction of the detaining authority that the detenu is likely to be released on bail is based on the materials. A reading of the grounds of detention clearly indicates that detenu Nisar Aliyar has been indulging in smuggling gold and operating syndicate in coordination with others and habitually committing the same unmindful of the revenue loss and the impact on the economy of the nation. Likewise, the detention order qua detenu Happy Dhakad refers to the role played by him in receiving the gold and disposing of the foreign origin smuggled gold through his multiple jewellery outlets and his relatives - The High Court erred in quashing the detention orders merely on the ground that the detaining authority has not expressly recorded the finding that there was real possibility of the detenues being released on bail. The court must be conscious that the satisfaction of the detaining authority is subjective in nature and the court cannot substitute its opinion for the subjective satisfaction of the detaining authority and interfere with the order of detention. It does not mean that the subjective satisfaction of the detaining authority is immune from judicial reviewability - By various decisions, the Supreme Court has carved out areas within which the validity of subjective satisfaction can be tested. In the present case, huge volume of gold had been smuggled into the country unabatedly for the last three years and about 3396 kgs of the gold has been brought into India during the period from July 2018 to March, 2019 camouflaging it with brass metal scrap. The detaining authority recorded finding that this has serious impact on the economy of the nation. Detaining authority also satisfied that the detenues have propensity to indulge in the same act of smuggling and passed the order of preventive detention, which is a preventive measure. Based on the documents and the materials placed before the detaining authority and considering the individual role of the detenues, the detaining authority satisfied itself as to the detenues continued propensity and their inclination to indulge in acts of smuggling in a planned manner to the detriment of the economic security of the country that there is a need to prevent the detenues from smuggling goods - The High Court erred in interfering with the satisfaction of the detaining authority and the impugned judgment cannot be sustained and is liable to be set aside. The appeals preferred by the detenues shall stand dismissed.
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2019 (8) TMI 138
Permission for withdrawal of petition - Time limitation of Adjudication proceedings under section 13 of FEMA Act - HELD THAT:- It is the Petitioner's contention that the proceedings which are being contemplated against the Petitioner relate to issues which are over 10 to 12 years prior to the issue of the notice. Thus, causing it prejudice. We trust that the submissions made by the Petitioner would be duly considered by the Adjudicating Authority while taking a decision thereon. Petition disposed of as withdrawn with liberty to file a further representation/reply to the impugned notice dated 15th April, 2019 within two weeks from today.
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2019 (8) TMI 137
Non-realisation of exports proceeds - guilty of contravention of Section 18(2) and 18(3) of FERA, 1973 - It was the case of the respondent that the appellants have failed to take reasonable steps to realize the export proceeds the RBI had not granted any permission to the appellants for extension of time or for writing off the same - HELD THAT:- It is noticed by the Hon ble High Court in para-5 of the order that on perusal of the impugned orders passed by the Appellate Tribunal, it is seen that the Tribunal has not considered the Bank Certificates furnished by the petitioner, which prime facie suggest that the export proceeds have been realized by the appellants. Since the Tribunal has not considered the said Bank Certificates, in our opinion, it is just and proper to set aside the impugned orders of the Appellate Tribunal and direct the Tribunal to pass fresh order on the waiver applications filed by the appellants. It has come on record that the export proceeds have been realized by the appellants. The documents have been filed. No contrary submissions have been made, nor evidence is produced. Impugned order set aside - appeal allowed.
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2019 (8) TMI 136
Jurisdiction - power of Single Member Bench to decide appeals under the provisions of FERA and FEMA - appellants contention is that Section 52 of the FERA does not allow any Single Member to hear and decide the appeals where the order imposing a penalty exceeds ₹ 2,50,000 was a provision under the FERA, 1973 - HELD THAT:- As per Section 12 (6A) of SAFEMA, the Chairman of the Appellate Tribunal may constitute a Bench with one or two Members and a Bench so constituted may exercise and discharge the powers and functions of the Appellate Tribunal. Even the erstwhile Section 20 of FEMA (rescinded vide Finance Act 2017) had provisions to constitute Bench with one or more Members - while the Appellate Board of FERA has been dissolved with the coming into effect of FEMA on 01.06.2000, the Appellate Tribunal set up under SAFEMA will be the Appellate Tribunal for the purposes of FEMA also. The provisions under SAFEMA provide for both a Single Member Bench and a Division Bench to be constituted by the Chairman. It is a fact that the Chairman has notified in July 2018 distribution of cases/appeals to all the existing Benches including both the Single Benches of the undersigned and the Chairman functioning as a Member. As per section 2(s) of FEMA, Member means a Member of the Appellate Tribunal and includes the Chairperson thereof . There is no merit in the miscellaneous petitions on the question of limitation of jurisdiction of the Single Member Bench as per the legal provisions - petition dismissed.
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2019 (8) TMI 135
Hawala transactions - Receiving payments under the instructions of persons resident outside India - contravention of Section 3(c) of FEMA, 1999 - distribution of payments under the instructions of persons resident outside India - contravention of Section 3(b) of FEMA, 1999 - imposition of penalties - relaibility on retracted statements - opportunity of cross-examination - principles of natural justice. HELD THAT:- The appellants contention that they had retracted the statement is a little difficult to accept. The retraction was purportedly done by sending a letter to the Directorate of Enforcement on 15.09.2011 by Shri Shamsher Singh and 04.08.2011by Shri Dimple Thakur. In the case of Shamsher Singh it was done after 43 days from his first statement and after recording eight statements on different dates. Moreover, the appellant has given no proof that the retraction letter was actually sent since the adjudicating authority has clearly mentioned in the order that no such letters had been received - he statements of number of people taken during various points of time that they have been receiving money from Shamsher Singh various points of time on instructions from abroad cannot be brushed aside especially when the appellant has given no evidence to prove that those statements were wrong. Both the appellants statements as well as the appellants of at least 26 others and the CFSL report conclusively proves that there were illicit transactions. Opportunity to cross-examine - HELD THAT:- Cross-examination is not a part of natural justice. The underlying principle of natural justice is of hearing the appellant and providing adequate opportunity to place their case before the adjudicating authority which has been fulfilled in this case - there is no reason to interfere in the impugned order on this ground. The appellant has accepted in his statement that this money was kept as a part of hawala proceedings gets proven by their own statements, by the statements of independent 26 others, by the CFSL report, and by the contradictory affidavit all of which are on record - in a case like the present one, it is not possible or necessary to prove the culpability to the last penny. Appeal dismissed.
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2019 (8) TMI 134
Receipt of payments under the instructions of a person resident outside India - delay in issuance of SCN - Validity of confession - HELD THAT:- The statement recorded from the appellant does not contain any admission/confession and instead contains clear denial of any involvement in the case. The issuance of the show cause notice and the findings of guilt solely basing on the discrepancy in the travel details of the appellant is unsustainable. The appellant was in India as per pass-port details produced by the respondent. The appellant has also failed to produce his pass-port when his counsel was asked who only stated now that the same is not traceable. Therefore, presumption is that he may be the same person as alleged by the respondent - It is stated that he is a poor old man and suffering from Parkinson Diseases and showing symptoms of Alzheimer‟s Diseases. He has also loss memory. The delay in issuing the show cause notice running into ten years without any valid reason for modification of order. The said long delay is unexplained in issuing the show cause notice. No explaination is given during the course of hearing - The customs authorities did not initiate any proceedings against the appellant after the receipt of a reply submitted by the appellant. It is also a matter of fact that the Customs as well as the Enforcement had searched his residential premises, nothing was seized therefrom. The appeal is disposed of with the direction that the 25% of the penalty amount already deposited by order dated 31.07.2017 i.e. a sum of ₹ 5 Lakhs shall appropriated by the respondent and a full and final penalty amount in view critical condition and bad health of the appellant - appeal disposed off.
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2019 (8) TMI 133
FDI - Automatic route or not - Inward remittances made into India in the year 2008, through normal banking channels (with relevant foreign inward remittance certificates) - bidding of IPL - It is case of appellants that the appellants bid in respect of the Rajasthan Royals franchise as legitimate and successful, after due scrutiny of all the information and proposed investment structure as furnished along with the bid - contravention of the provisions of Section 3(b), Section 6(2), 6(3)b Section 42(1) of FEMA, 1999 read with Regulation 5(1) of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000, Paragraph 8 of schedule of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulation, 2000, Regulation 5 of the Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000 and Para 9 (1)(A) of schedule 1 to the foreign Exchange Management (Transfer or issue of Security by a person Resident outside India) Regulation, 2000 - imposition of penalties. HELD THAT:- It is not open to the Respondent to invoke Section 42 (1) of FEMA and impose penalty on individuals on the sole basis that such individuals held the position of directors in the respective companies. It has been consistently held by the Hon ble Supreme Court and various High Courts that specific findings are required to be recorded against any individual sought to be penalized under the deemed liability provisions such as Section 42 (1) of FEMA, particularly as to their specific role and function in the company. The mere fact that individuals are directors in a company cannot be the sole basis for imposition of penalty upon such individuals under Section 42 (1) of FEMA. Test for determination. The present case is not a case where it can be concluded or any benefit of doubt is given to the appellants for automatic route. The present case cannot be compared with another case of sport event, as the facts and circumstances were materially different. The real thing is how the appellants as per facts have dealt with the matter at the appropriate time and how many times. From the entire facts and circumstances, it appears to this Tribunal whether it is a bona-fide or not, but violation has occurred. The appellants were trying to obtain the post-facto approval, but were not successful - Therefore, after refusal of approval for two times, the appellants cannot be allowed to take the benefit of automatic route. In the present case, exorbitant penalty has been imposed upon the individuals arrayed herein without recording any findings on the specific roles of the said individuals. It is also important to highlight that judicial precedents clearly establish that the onus of proving the role of an individual and specifically proving that the said person was in day to day management of the affairs of the company is that of the Respondent Department. It is evident from a perusal of the Impugned Order that the Respondent has completely failed to discharge the said burden of proof. Provisions of Section 42(1) of FEMA have been simply reproduced in the Impugned Order to justify the imposition of penalty - The Supreme Court and various High Courts have consistently held that merely repeating the golden words of the section is not sufficient to create liabilities under the section. It is something more has to be brought on record to show that the person was in-charge and responsible to the functioning of the company and noticee officers have some motive and involved in the abetment for the purpose of benefit from the transaction, in question, by themselves or for the benefit of the company directly or indirectly while imposing the penalties. Similarly, the conduct of good faith, honesty and mens rea cannot be excluded from consideration while quantum of imposing penalties. In light of the parameters clearly laid down by the Hon ble Supreme Court and various High Courts regarding the standard and burden of proof required to be discharged for invocation of deemed liability under Section 42 (1) of FEMA, the imposition of penalty on all the individuals arrayed herein is liable to be set aside on account of non-compliance with the said established parameters. It is evident that the parameters for imposition of penalty in the present quasi criminal proceedings initiated against the Appellants under FEMA have not been complied with by the Respondent while imposing the exorbitant penalty of INR 98.35 Crores vide the Impugned Order - there are contraventions happened due to bona fide or not by the appellants and it is also settled law that the plea of mens rea cannot be accepted if contraventions have happened as it is not a valid ground to ignore the offence of committed. Still there are cases where one can conclude the said contraventions are ex facie technical and venial in nature. As far as the imposition of penalty is concerned, the appellants have already deposited a sum of ₹ 15 crores with the respondent as consolidated amount on behalf of all the appellants as a pre-deposit - Considering the overall facts and circumstances, the appeals are partly allowed by modifying the order by holding that penalties already deposited by the appellants is reasonable and the same be treated as penalties imposed in the present set of appeals. Appeal disposed off.
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2019 (8) TMI 132
Imposition of penalties - alleged violation of Section 8(1) of FERA - main case of the Appellants is that the respondent has planted the unsigned plain paper purported fax message being Page 31 of File marked D out of 2425 seized documents from the Delhi office of the Appellant No. 1 on March 13, 1995, which was inadmissible in evidence under the law - HELD THAT:- In the impugned judgement dated 20.05.2005 passed by the Special Director of Enforcement, the Special Director erroneously shifted the initial burden of proof from the Directorate to the Appellants under Section 71 of the FERA, 1973 - Further records reveal that the statements of Mr. Rajesh Verma has also been not relied upon in the SCN. As such, the provisions of Sections 71 and 72 of FERA 1973 are not attracted and cannot be invoked. The Special Director had also erroneously presumed the facts without proper authentication and corroboration from independent witnesses under Section 72 of the FERA, 1973, the charges against the Appellant No. 1 have not been proved as the respondent has failed to discharge its burden. The Appellant Nos. 2 to 4, the Directors herein as such are not liable under Section 68 of FERA 1973. The orders and/or directions for production of the said file and inspection of the said original Fax message and the arrest memo of Mr. Rajneesh Verma by the Respondent became final and absolute and non-production thereof by the Respondent led to Adverse Inference being drawn under the Illustration (g) of Section 114 of the Indian Evidence Act, 1872 against the respondent even as per settled law - the impugned order dated 20th May, 2005 passed by the Special Director, Enforcement Directorate, New Delhi is not sustainable - appeal allowed.
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PMLA
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2019 (8) TMI 131
Money Laundering - Provisional Attachment Order - tripartite agreement - acceptance of Bribe - validity of statements recorded under Section-50 - ex-parte proceedings - HELD THAT:- It is matter of fact that statements recorded under Section-50 before passing the provisional attachment order are ex-parte proceedings. No opportunity is granted to the party concerned for cross-examination or granting any opportunity for hearing. There is nothing on record to show that any ill-gotten money in the acquisition of the above 11 flats was inverted/used by the Appellants and their son in the year 2007. The acquisition was done as per the mandate of law. It is also a settled law that the authority cannot travel beyond the statutory provisions. In the present case, admittedly, officer concerned has not recorded the reason to believe separately prior to passing of attachment. There are twin conditions in Section 5(1) is the sine qua non or the condition precedent for the assumption or acquisition of the jurisdiction to pass the attachment order - The law is a settled law that where a power is given to do a certain thing in a certain way, the thing must be done in that way, or not at all and other methods of performance are necessarily forbidden. Reason to believe - HELD THAT:- In the present case, admittedly, no separate reason to believe are recorded. From the provisional attachment order, it is evident that in the said order, the reason to believe are not recorded as per law laid down by the Supreme Court and High Courts. The authorized officer has mainly recorded the contents of charge-sheet, statement of the witnesses recorded under section-50 of the Act, then reproduced the language of section 5(1). The officer was not sure as to whether proposed attachment of movable and immovable properties were acquired from proceed of crime or not. Whether, the aggrieved party is entitled to receive the copy of reason to believe, if those are recorded before issuance of notice under section 8(1) of the Act? - HELD THAT:- In terms of Section 8(1) of the PMLA, the Adjudicating Authority is required to examine the complaint filed under Section 5(5) of the PMLA or an application made under Section 17(4) of the PMLA. If on receipt of such complaint or application, the adjudicating authority has reason to believe that a person has committed an offence of money laundering or is in possession of the proceeds of crime, he is required to serve a notice of not less than thirty days on such person calling upon him to indicate the sources of his income, earning or assets or the means with which he has acquired the property which is provisionally attached under Section 5(1) of the Act or seized or frozen under Section 17 of the PMLA. The appeal allowed in part.
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2019 (8) TMI 130
Money Laundering - financial misdeeds involving huge magnitude of government largesse, corporate dealings including huge investments as part of Quid Pro Quo arrangements for the largesse - maintenance of buffer zone - proceeds of crime - offences under Section 120-B and 420 of IPC - main issues raised by the appellants have not been dealt by the respondent, and CBI in its charge-sheet has ignored the vital facts of the case - HELD THAT:- As per the Concession Agreement, the Appellant was not required to maintain any buffer zone around the Pharma City. The appellant was only required to maintain green belt in accordance with the Guidelines for Development of Greenbelts published by CPCB in March 2000 (Please refer Clause H8 of Schedule H of the Concession Agreement), which did not prescribe maintenance of any buffer zone around the Pharma City - It is stated that since there was a possibility of residential areas coming up along the boundary of the Pharma City, the APPCB suggested that a control area be provided outside the Pharma City prohibiting residential areas and polluting industries upto a distance of 1kilometre. The same is evidenced by the letter dated 12.02.2004 written by APIIC to the Vice Chairman VUDA requesting him not to give permissions for any residential layouts around the pharma City. Ramky shall maintain 50 mts. inward as buffer zone inside the pharma till the disputes is finally decided by the Special Court. The attachment in this regard shall continue unless it is vacated by the Special Court. The remaining all attached properties are released forthwith. Burden of proof - HELD THAT:- Unless the charges are framed with the offence of money laundering under Section-3 of the Act, the burden of proof shall remain lies with the respondent to prove that the concerned parties are involved with the offence of money laundering in order to invoke Section-3 of the Act if the properties were acquired from the proceed of crime. This Tribunal is of the opinion that there are many issues raised by the appellants either to have been ignored or not decided as per law. Thus, appeals are partly allowed by modifying both impugned orders until the final decision is given by the Special Court on merit or the charge-sheet is quashed by the court prior to start of trial or otherwise - appeal allowed in part.
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Service Tax
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2019 (8) TMI 160
Condonation of delay in filing appeal - no explanation for delay provided - HELD THAT:- The Petition for condonation of delay reflects a lackadaisical approach on the part of the Petitioner herein and as already pointed out no efforts were made to explain the delay from 15.08.2015 to 07.10.2016 - We are conscious and aware that the law of limitation is sufficiently elastic to allow and enable the concerned Authorities to apply it for substantial justice, but at the same time it may be mentioned that merely because a non-pedantic approach should be adopted to an application for condonation of delay it is not essential that every delay including those in which the drafting has been done in a haphazard manner and with nary a care to detail or explanation pertaining to the delay with dates thereof be condoned. Since the Petitioner has not explained the delay after 14.08.2015 which extended to more than one year, we are in agreement with the findings of the Learned Commissioner and that no error arises in the consequent order of rejection of the said Authority. Petition dismissed.
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2019 (8) TMI 129
CENVAT credit - common inputs and input services used in trading of goods and provision of taxable service - Rule 6(3) of the Cenvat credit Rules, 2004 - whether appellant is required to pay 6% of total sale value of the goods traded by them in terms of Rule 6(3)(i) when the appellant paid the actual credit attributed to the quantum trading sale in terms of Rule 6(3A) along with interest following the option available under Rule 6(3)(ii)? HELD THAT:- In the present case, it is an admitted fact that the appellant did not maintain separate accounts for the input services used in or in relation to the provision of taxable service as well as exempt service i.e. trading of goods. Therefore, two options were available to them, i.e., either to pay 6% of value of the exempted service or pay an amount equal to the credit attributable to the input services used in or in relation to exempt services subject to the provisions of Sub-rule (3A). When the mistake was pointed out, the appellant reversed the proportionate common credit taken on input services used in the provision of exempt services (trading of goods) along with interest thereon - Therefore, Rule 6(3) (i) will not have any application, when a credit is taken wrongly and the same is reversed along with interest as it tantamounts to not taking of the credit at all. The demand confirmed by the lower appellate authority has no legs and therefore the same cannot be sustained - appeal allowed - decided in favor of appellant.
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Central Excise
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2019 (8) TMI 147
SSI exemption - Clubbing of clearances - dummy units - Department contended that both IEC and RSF belonged to the appellant M/s SESPL - Clubbing of clearances of private limited company with the clearances of proprietorship concerns. HELD THAT:- In the present case, the adjudged demands confirmed against the appellants pertain to the period from 1989-90 to 1992-93 and thus, the relevant statutory provision for consideration of the issue is Notification No. 175/86 dated 01.03.1986. The said notification grants exemption from payment of Central Excise duty on the excisable goods cleared from the factory of the manufacturer up to certain aggregate value prescribed therein. The issue of clubbing of clearances of various firms for the purpose of determination of the aggregate value has also been discussed in the said notification. In the case in hand, it is an admitted fact on record that the appellant is a private limited company, incorporated under the Companies Act, 1956 and the other two firms namely, M/s IEC and RSF are proprietorship concerns, belonging to Shri Sandeep Ghosh and Shri Sudeep Ghosh respectively - Since, the appellant is a private limited company; its clearances cannot be clubbed with the clearances of the proprietorship concerns, as per the above principles laid down by the CBEC in terms of Section 37B of the Act ibid. Benefit of N/N. 214/86-C.E. dated 03.04.1986 read with circular dated 04.09.1986 issued by CBEC - HELD THAT:- While computing the proposed demand for the earlier show cause notice dated 16.12.1993, the value of chassis was excluded by the department, which is evident from the annexure to such show cause notice. Thus, in this case since, there is no change in the method of valuation adopted by the appellant and without proper substantiation of the allegation, it cannot be asserted that the appellant should not be entitled for the benefit provided under the said notification - Hence, there is no merit in the impugned order, so far as it relates to denial of the benefit of such notification to the appellant. Invocation of provisions of erstwhile Rule 173Q ibid read with Section 11AC ibid for imposition of penalty - HELD THAT:- Section 11AC ibid was inserted in the statute book w.e.f. 28.09.1996 by Section 76 of the Finance (No.2) Act, 1996 (33 of 1996) - The period in dispute involved in the present case is prior to the date of such statutory enactment and thus, the provisions of Section 11AC ibid are inapplicable to the facts and circumstances of the case inasmuch as such enactment will have prospective effect and cannot be applied retrospectively. Appeal allowed - decided in favor of appellant.
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2019 (8) TMI 146
CENVAT Credit - Ethanol (Ethyl alcohol) - denial of credit on the ground that the product contained alcohol and was not classifiable under Chapter 29 - HELD THAT:- Following the decision in the respondent s own case [ 2016 (10) TMI 507 - CESTAT HYDERABAD] , the appeal filed by the department is without merits. On the very same issue, in the case of CCE VERSUS NEULAND LABORATORIES LTD. [ 2015 (10) TMI 669 - ANDHRA PRADESH HIGH COURT] where Tribunal on fact found that in this case duty levied on the raw material has actually been paid. Once it is found on fact and it is not challenged on the ground of any perversity, the exemption is applicable automatically. Appeal dismissed - decided against Revenue.
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2019 (8) TMI 128
Maintainability of appeal - restoration of appeal - delay of disposal of appeal - HELD THAT:- The appellants have been delaying the disposal of the appeals with a conscious mind. The appeals are almost 11 years old whereas this Bench of the Tribunal is disposing of appeals filed in the year 2018. The appearance of the Proxy Counsel today, without a Vakalatnama in her hands, clearly reflects upon the intention of the appellants not to proceed ahead with the matters. Having not done that, the appellants are guilty of delaying the disposals of the appeals. All the above facts compel us to dismiss the appeals again for non-prosecution. Appeal dismissed.
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2019 (8) TMI 127
Clandestine manufacture and removal - Zarda - entire case of the Revenue is based upon the third party records and the statements of their representatives recorded by the officers during the course of investigations - denial of cross-examination of various deponents - HELD THAT:- It is well settled that the findings of clandestine removal are required to be upheld on the basis of positive, tangible and affirmative evidences and the same cannot be made on the basis of flimsy grounds leading to doubts - The Hon ble Allahabad High Court in the case of M/S. CONTINENTAL CEMENT COMPANY VERSUS UNION OF INDIA OTHERS [ 2014 (9) TMI 243 - ALLAHABAD HIGH COURT] observed that clinching evidence of purchase of raw materials, consumption of electricity, sale of final products, clandestine removal and transportation, realization of sale proceeds, mode and flow back of funds are required to be established before the findings of clandestine removal can be upheld. It is a serious charge and required to be proved beyond doubt by the Revenue and cannot be upheld merely on the basis of statements which are based on memories. In the present case, as already observed the Revenue s entire case is based upon statements which in turn are as regards explanation of various entries in the records maintained by such deponent. In case of clandestine removal, the goods are first required to be manufactured for which purpose a manufacturer needs lot of raw materials - There is no evidence of procurement of excess raw materials. Admittedly the manufacture of Zarda requires a number of raw materials, the main being raw Zarda. Apart from that Glycerin and other chemicals like Benzyl Burate, Methyl Phenyl Acetate compounds, fragrances and packing materials in dibbies. Apart from alleging the procurement of excess raw tobacco, M/s.Niranjan Tobacco Company, which is also based upon the records maintained by the said raw material saler, Revenue has not made out any efforts to identify the supply of the other materials required for manufacture of such a huge quantity of Zarda. There is neither any allegation to the effect of unaccounted procurement of other raw materials. We really fail to understand as to how the appellant could have manufactured such huge quantity of Zarda without procurement of the said raw material. Further, no investigations stand made from the persons associated with the actual manufacture or the labourers appointed by the appellant so as to establish that such excess Zarda was manufactured by them. Further no incriminating documents stand recovered from the appellants factory or possession - Revenue having failed to discharge its onus as regards the manufacture of such a huge quantity of Zarda by the appellant, cannot allege clearance of the same. As such we find no merits in the Revenue s stand. Appeal dismissed - decided against appellant.
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2019 (8) TMI 126
Extended period of limitation - Valuation - stock transfer - related party transaction - Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - non-inclusion of certain cost components to arrive at the cost of production, as specified in the Cost Accounting Standard - 4 (CAS-4) - Department took the view that appellants are indulged in a deliberate attempt to evade payment of excise duty by undervaluing the said goods; that duty is required to be levied at relevant rate on the assessable value to be arrived at after including all cost components under CAS-4 - area based exemption availed - Difference of opinion - reference to Third Member. HELD THAT:- The appellants have been asked to produce all documents with regard to manufacture of goods as well as discharge of excise duty. There is no allegation that appellants did not produce the documents as required by the department. So also, CERA Audit has been conducted which is by Office of the Accountant General (C RA) and the officers of AG takes part in such conduct of audit. In spite of these repeated audits, the department did not raise any objection or query to the appellant as to why they have adopted cost of production on the basis of cost details given by their Senior Manager. Only in 2010, the department has raised this query. Immediately on being pointed out, appellants appointed a Cost Accountant and the costing details of accountant was furnished to the department. The demand in these cases have been raised on the basis of such costing details furnished by Cost Accountant appointed by appellant. It is very clear that the department was fully aware that appellant was discharging duty on the basis of cost of production as per the details of the Senior Manager (Costing). When all the documents were put forward before the department, it cannot be said that the costing certificate issued by the Senior Manager (Costing) of the appellant was an act of suppression or misstatement on the part of appellant with an intention to evade payment of duty. Further when the department made enquiries in 2010, the appellant has sufficiently cooperated and appointed a Cost Accountant on their side and obtained a cost certificate which was furnished to the department. It is well settled law that when the facts were within the knowledge of the department, the allegation that appellants suppressed facts cannot sustain. For the omission on the part of the audit officers to find out the mistake in the method of valuation adopted by appellant cannot be a reason to saddle the appellant with intention to evade payment of duty. The demand is held to be barred by limitation - Third Member, Hon'ble Smt. Sulekha Beevi C.S., Member (Judicial), agreeing with the view taken by the Hon'ble Member (Technical) - demand set aside.
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2019 (8) TMI 125
Clandestine removal - main case of revenue is based on decoding of the information from 31 small spiral pads and nine files containing loose papers recovered from the residential premises of Shri Subodh Gupta - HELD THAT:- Applying the ruling of Hon ble Allahabad High Court in the case of Commissioner of Central Excise, Meerut-I Vs Parmarth Iron Pvt. Ltd. [ 2010 (11) TMI 109 - ALLAHABAD HIGH COURT ] the evidence recovered from Shri Subodh Gupta is not admissible in the present case. For that reason also the clandestine manufacture and clearance by M/s Mayank Metals, M/s Shivam Metals and M/s Vasudev Udyog is not establish. The case of revenue is that SMS received raw material clandestinely cleared by M/s Mayank Metals, M/s Shivam Metals and M/s Vasudev Udyog and manufactured Copper Wires and Copper Strips and cleared the same without payment of duty. Since it is establish that M/s Mayank Metals, M/s Shivam Metals and M/s Vasudev Udyog did not clear Copper Ingots in clandestine manner to SMS, therefore, receipt of raw materials by SMS is not established. Further, revenue has not brought on record any other source of receipt of non duty paid raw material by SMS - Further, the only evidence against SMS was said 31 small spiral pads and 9 files containing loose papers recovered from the residential premises of Shri Subodh Gupta. Shri Subodh Gupta appeared before the Original Adjudicating Authority on 01.02.2018 and was not offered for cross examination. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2019 (8) TMI 174
Restoration of registration - cancellation of registration ab-initio from 09.05.2011 - HELD THAT:- All that has been done by the Tribunal is to remit the matter to the Registering Authority for the purpose of verification whether the appellant had submitted all the returns and paid tax dues. It appears that the order came to be passed by the Tribunal in wake of the fact that the registration certificates came to be cancelled with effect from 31.03.2014. For the purpose of necessary verification, the matters came to be remitted to the Registering Authority. There is no good reason to interfere with the order passed by the Tribunal - appeal dismissed.
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2019 (8) TMI 172
Demand of Interest u/s Section 8(1) of the U.P. Trade Tax Act, 1948 - liability to pay tax on purchase of oil seeds - want of form 3-C(2) - applicant has not admitted any tax liability on such purchases at any stage either in the return or in his accounts - HELD THAT:- The liability that has been fixed against the assessee, was an admitted tax liability, as it is undisputed that the claim for exemption raised by the assessee was dependent on the issuance of the statutory forms and it is also admitted that no such statutory forms ever came to be issued. Therefore, the fact that the assessee may have actually made purchases of oil seeds from registered dealers or the fact that there was a promise on part of the selling dealers to issue Form III-C(2) would be of no avail, insofar as the revenue authorities are concerned. If the applicantassessee claims such rights, as have been canvassed in the present revision application, it would have been for it to have approached a civil court for a proper remedy only against the selling dealer. Revision dismissed.
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2019 (8) TMI 171
Sale of scooters - privity contract or not - non-issuance of Form III-A - taxability at the point of sale - HELD THAT:- The fact that the assessee itself issued sale letters on Forms 20-21 under the Act completely disproves the case set up by the assessee that it had sold the goods to M/s Jyoti Automobiles at Meerut - In fact, the sale letters which are issued by the assessee itself, prove that it had sold the goods to the consumers as, otherwise, the consumers would have no occasion to obtain the sale letters from the assessee. A clear case of collusion necessarily existed between the assessee and M/s Jyoti Automobiles as otherwise there could have been no circumstances in which Form III-A would have been issued by M/s Jyoti Automobiles. Clearly those forms were issued by M/s Jyoti Automobiles and accepted by the assessee only to avoid the tax liability which would have otherwise arisen against the assessee. Inasmuch as, in the present case, it is clear that there was collusion between the two dealers, the Tribunal has not erred in rejecting the appeal filed by the assessee. Revision dismissed.
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2019 (8) TMI 158
Principles of natural justice - grant of one more opportunity to go before the Assessing Officer - limitation period prescribed for availing appeal remedy was over - HELD THAT:- The campaign against the impugned order comes to an end, but it was contended that there are certain factual disputes qua impugned order which turn on merits of the matter. If that be the case, it is open to the writ petitioner to avail appeal remedy by filing an appeal to the jurisdictional Appellate Deputy Commissioner inter alia under Section 51 of TNVAT Act. Alternate remedy - HELD THAT:- It is no doubt a self imposed restriction by this Court. There can also be no disputation that alternate remedy rule is not an absolute rule. In other words, it is not a rule of compulsion, but it is a rule of discretion - What follows as an inevitable and indisputable sequitur is that alternate remedy, which though a rule of discretion and though a self imposed restriction, has to be applied with utmost rigour when it comes to fiscal laws. This Court is of the considered view that this is a fit case to relegate the writ petitioner to the alternate remedy of an appeal to the jurisdictional Appellate Deputy Commissioner under Section 51 of TNVAT Act - petition dismissed.
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2019 (8) TMI 124
Classification of goods - metal brake shoe casting - classified under notification entry no. 4 Schedule-II Part-A of the U.P. VAT Act, 2008 or covered by notification no. 67 dated 1.1.2008? - HELD THAT:- In the first place, the aluminium castings manufactured and sold by the assessee have been identified even by the revenue authorities as metal castings. It is an admitted case between the parties that those items were not identified as brake shoe or another item. The fact that the assessee may have done some processing on raw brake shoe castings, would be inconsequential in view of the clear language of entry no. 4 Schedule-II Part-A of the U.P. Act. That legislative entry takes within its ambit all types of metal castings whether processed or raw - So long as the commodity continued to be identified as a metal casting, the level of processing offered on those goods would be an irrelevant factor. Revision dismissed.
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2019 (8) TMI 123
Whether upon the facts and circumstances of the case, the imposition of tax on purchases made from unregistered dealers can be subjected to tax within the meaning of Section 3 AAAA of the Uttar Pradesh Trade Tax Act, despite the disclosed production has been accepted by the assessing authority? - HELD THAT:- There appears to be no error, insofar as the asseessee has been subjected to tax on purchase worth ₹ 40,161/- made from the unregistered dealer. The question of law is answered in the affirmative i.e. against the assessee and in favour of the revenue. Whether upon the facts and circumstances of the case, the Tribunal was justified in confirming the orders of lower authorities in imposing tax @ 8% on the sale of old and useless machineries without affording proper opportunity to produce evidence for the same? - HELD THAT:- There is no allegation of the assessee having dealt with in new machinery. There is absolutely no evidence to establish that the machineries sold by the assessee were in any way new. The fact that those machineries may be usable cannot be a decisive or relevant factor. The fact that certain machineries though old may be in working order would not be relevant for the purpose of subjecting the same to tax - In the facts of the present case, the revenue has not only failed to adduce any evidence to establish that the machineries sold by the assessee were new, rather it is admitted to the assesssing officer, that the machineries were old. Therefore there appears no basis on which the same could have been subjected to higher rate of tax @ 8%, treating the same to be new - answered in the negative i.e. in favour of the asseesee and against the revenue. Whether upon the facts and circumstances of the case, the amount received for providing tender forms to customers be termed as sale within the meaning of Section 3 F of the U.P. Trade Tax Act? - HELD THAT:- Considering the fact that the present revision is for A.Y. 2000-01 (UP) and 19 years have passed since then, the question is purely academic. Therefore, question of law as framed in the memo of revision, is being returned and answered, leaving it open to the assessee to raise that issue in any year when that issue is an alive issue i.e. where the assessee may have been saddled with the liability by means of the assessment order but it may not have charged or deposited the tax amount. Whether upon the facts and circumstances of the case, the Tribunal was justified in confirming the tax on machineries given to other chini mills and returned to revisionist after use, treating the same as sale? - HELD THAT:- Insofar as it is not disputed that the plant and machinery had been leased out by the assessee and it received lease rent, the fact that the activity of leasing may have been performed upon a direction issued by the federation, would be of no consequence insofar as the tax assessment of the assessee is concerned. For that purpose, all that is relevant to be examined whether the assessee had leased out the equipment against which it received lease rental. Insofar as it is not disputed that the assessee had leased out the equipment against payment towards lease rent as a part of its business operations, there appears no substance in the contention that the assessee was not liable to tax on that amount - As to the refund of ₹ 14,21,642/-, admittedly, the same was made by the assessee after six months from the date of delivery of the goods. That finding has been recorded by the Tribunal, which has not been assailed as perverse or otherwise illegal - answered in the affirmative i.e. against the assessee and in favour of the revenue. Whether upon the facts and circumstances of the case, the supply of cement and iron to contractors for construction of building and adjusted at the time of payment to them be termed as sale? - HELD THAT:- There is involved passing of the property in such supplies by virtue of adjustment in bills. Therefore, it satisfies the definition of sale under the Act - answered in the affirmative i.e. against the assessee and in favour of the revenue. Revision allowed in part.
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2019 (8) TMI 122
Best Judgement assessment - imposition of penalty u/s 27(3) of TNVAT Act - certain discrepancies between the audited report in the prescribed Form viz., Form WW regarding Tax Deduction at Source payment details and the returns filed by writ petitioner - Section 27 of TNVAT Act - opportunity has not been granted to writ petitioner - principles of natural justice - HELD THAT:- The revisional notice clearly mentions about the proposal to impose penalty i.e., revisional notice dated 16.02.2018 and writ petitioner dealer also in the reply dated 15.03.2018 has put forth their stand with regard to proposal in the revisional notice - Furthermore, this is a case where respondent has noticed discrepancies between two returns both filed by writ petitioner dealer. While one is the usual monthly returns, the other is audited report in the prescribed Form viz., Form WW, both of which have been filed by writ petitioner. In the light of the revisional notice dated 16.02.2018 and reply to the same dated 15.03.20118, it cannot be gainsaid that writ petitioner has not been given an opportunity, as the revisional notice specifically mentions about proposal to impose penalty under Section 27(3) of TNVAT Act. Alternate remedy - HELD THAT:- It is open to the writ petitioner to prefer a statutory appeal subject of course to the conditions for pre-deposit as well as the time frame for the appeal prescribed therein. Power to condone delay is vested in statutory appellate authority by the statute and therefore, if writ petitioner seeks condonation of delay, the same shall be dealt with by the statutory authority on its own merits and subject to the provisions of law including cap qua limitation under Section 51 of TNVAT Act. Petition dismissed.
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2019 (8) TMI 121
Validity of assessment order - imposition of penalty u/s 27(4) - reversal of ITC - TNVAT Act - Section 27 of TNVAT Act - principles of natural justice - HELD THAT:- This Court also notices entire sub-section (4) of Section 27 of TNVAT Act i.e., this provision together with the proviso whicih was inserted in the statute book on and with effect from 29.01.2016, but it is also noticed that the proviso makes it statutorily imperative to give reasonable opportunity of showing cause being given before imposition of penalty was there even prior to 29.01.2016 - In the instant case, though a provisional notice was issued, there is nothing to show that the writ petitioner dealer was given a reasonable opportunity of showing cause against imposition of penalty under Section 27(4). This Court is of the considered view that in the instant case it will be appropriate to direct the respondent to give an opportunity of personal hearing to the writ petitioner - Petition disposed off.
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2019 (8) TMI 120
Concessional rate of duty - downloading of C-Form pending - inter-state purchase of High Speed Diesel - Held that:- The issue covered by the decision in the case of M/S. SHIR VARALAKSHMI COMPANY VERSUS THE STATE OF TAMIL NADU, THE PRINCIPAL COMMISSIONER COMMISSIONER OF COMMERCIAL TAXES, THE ASSISTANT COMMISSIONER (ST) , THE JOINT COMMISSIONER (ST) , THE JOINT COMMISSIONER COMPUTER CELL [2019 (6) TMI 495 - MADRAS HIGH COURT] where it was held that this Court allowed the writ petitions filed by the assessees and directed the Revenue to permit the petitioners assessees to download 'C' forms. Instant writ petition is allowed in respect of mandamus limb of the prayers alone. Consequently, necessary action has to be taken by the Revenue/Department/Respondents forthwith which in any case shall not be more than 5 working days from the date of receipt of copy of this order - petition allowed in part.
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Indian Laws
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2019 (8) TMI 119
Maintainability of suit - possession of property - cancellation of sale deed - Whether the suit filed by the first respondent-plaintiff for cancellation of the sale deed dated 15.06.2006 against the appellant-second defendant and second respondent-first defendant, and for injunction restraining them from interfering with its possession of the property was maintainable? HELD THAT:- In the instant case, the plaintiff has pleaded that it had purchased the disputed property under five sale deeds all dated 17.10.1998 from the first defendant. The suit was filed for cancellation of the sale deed dated 15.06.2006 on the ground of fraud and misrepresentation. The plaintiff had not sought any relief with respect to its own right and title as a tenure holder or declaration of its title or status - the only relief sought in the suit filed was for cancellation of the alleged sale deed dated 15.06.2006. We are of the view that Section 331 of the Act does not deprive a party of his right to approach competent court of law for getting a document cancelled, especially when, prima facie, the title of the recorded tenure holder is not under cloud - Revenue Court does not have jurisdiction of granting relief of cancellation of a deed on the ground of fraud and misrepresentation. In the instant case, since the plaintiff claims title under sale deeds of 1998 executed by the first defendant, it need not be forced to seek a declaration of its title. Therefore, the plaintiff had filed a suit for cancellation of the subsequent sale deed executed by the first defendant in favour of the second defendant. Hence, there is no bar under Section 331 of the Act for the plaintiff to approach the civil court and the suit filed by it was maintainable. Appeal dismissed.
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2019 (8) TMI 118
Maintainability of petition - recall of order of issuance of process - Dishonor of Cheque - insufficiency of funds - Section 138 of the N.I.Act - HELD THAT:- It appears that the learned Magistrate passed the order of issuance of process against the petitioner on 28.04.1993. Admittedly, the said order was never challenged by the petitioner. However, the petitioner challenged the order of recording the plea passed by the learned Magistrate. However, an application preferred by the petitioner challenging the order of recording the plea was rejected by the learned Magistrate. It appears that being aggrieved, the petitioner filed revision before the Sessions Court, Pune. However, it has been rightly observed by the Sessions Court that revision was not maintainable, and accordingly the said revision was rejected. It appears that in the year 2002, the petitioner filed an application for recalling the order of issuance of process passed by the learned Magistrate on 28.04.1993. Therefore, there was delay of more than 9 years for filing application for recalling the order of issuance of process. The said delay has not been explained by the petitioner - Thus, the application filed by the petitioner for recalling the order of issuance of process was not maintainable and, therefore, further proceedings, arising out of the said order, initiated by the petitioner are rightly held to be not maintainable by the Sessions Court. The learned Magistrate has rightly concluded that the order of issuance of process cannot be recalled. Secondly, the Sessions Court has rightly concluded that even in absence of firm/company as a party to the complaint, keeping in averments made in the complaint, the petitioner can be prosecuted. Admittedly, there was delay of more than 9 years in filing the application for recalling the order of issuance of process. Petition dismissed.
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2019 (8) TMI 117
Professional misconduct against CA - conducting both internal audit as well as statutory audit - accepting the assignment without communicating with the previous auditor - Clauses 7 and 9 of Part I of the Second Schedule to ICAI Act - ICAI found some merit in allegation and awarded punishment of being reprimanded - Writ petitioner being aggrieved person was the trustee of the trust and was expelled - HELD THAT:- This Court is of the view that there is no flaw in the conclusion of the Disciplinary Committee in rejecting the said allegation. The Disciplinary Committee had noticed that the resolution dated 03.03.2003 was passed at a meeting which was attended by only four trustees. It had noticed that this number was short of the 3/4th majority required as per Rules and Regulations. Mr Jayant Mehta did not produce any material to show that this decision was perverse or unreasonable. Undeniably, a statutory auditor of an entity cannot be its internal auditor. The rationale being that he cannot be called upon to give an independent and objective opinion on the accounts if he has not been a part of the internal audit system. There was no material in the present case to substantiate that respondent no.3 had given any report or was placed in a position where he was called upon to comment on his own work. Respondent no. 3 was simply appointed as an auditor to audit the accounts of the Trust although, the same was termed as a statutory auditor. Mr Mehta was pointedly asked whether there was any material to indicate the scope of audit to be performed by respondent no.3. However, he was unable to show any document to indicate the same. This Court is unable to accept that the decision of the Disciplinary Committee of ICAI is erroneous or warrants any interference by this Court - present petition is dismissed with costs quantified at ₹25,000/- to be deposited with Delhi High Court Legal Services Committee within a period of two weeks from today.
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