TMI Tax Updates - e-Newsletter
September 11, 2019

Case Laws in this Newsletter:

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

TMI SMS

• Deemed dividend u/s 2(22)(e) - clubbing of the shares held by the individual and shares held by the HUF through its Karta not allowed - Tri

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• Addition u/s 68 - mere fact that investor is exempt u/s 10(36) the share application money didn’t get the colour of unexplained cash credits

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• Export obligation for supplies made to SEZ can be established by any other documents, if the the bill of export is not available - HC

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Highlights / Catch Notes

• Income Tax:

  Disallowance of deduction claimed u/s. 10AA for 6th and 8th assessment years - non-fulfilment of conditions imposed by the development Commissioner - since the assessee has been allowed a deduction in the preceding five assessment years tax authorities are not justified in denying the claim for deduction u/s. 10AA to the assessee. - AT
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• Income Tax:

  Addition on account of foreign exchange loss u/s 37(1) - Assessee in the subsequent assessment year has offered the amount of trading advance as income including the effect of forex losses and gain. - Addition on account of such loss in the year under consideration will lead to the double addition to the income of the assessee which is contrary to the provisions of law. - AT
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• Income Tax:

  Reopening of assessment u/s 147 - objection regarding no service of notice u/s 148 - assessee has filed an affidavit denying service of notice - unless, the notice is served on the proper person in the manner prescribed u/s 282, the service is insufficient and the AO does not have jurisdiction to re-assess the escaped income - AT
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• Income Tax:

  Carry forward of long term capital loss incurred on sale of listed securities while claiming exemptions u/s 10(38) on profits - AO directed to assess the long term capital loss incurred by the appellant on sale of listed shares and allow its carry forward in accordance with law - AT
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• Income Tax:

  Deemed dividend u/s 2(22)(e) - determination of substantial interest / voting rights in the company - clubbing of the shares held by the individual and shares held by the HUF through its Karta - clubbing of the shares held by the partner in his individual capacity and shares held by the partnership firm - Clubbing is not allowed - additions deleted - AT
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• Income Tax:

  Revision u/s 263 after reopening of assessment u/s 147 - Assessee filed its return in response to section 148 notice - unexplained cash credit u/s. 68 - whether the assessee could challenge validity of re-assessment itself in validity section 263 revision proceedings? - HELD YES - AT
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• Income Tax:

  Addition on account of capital introduction by the partners of the assessee-firm - The source of funds utilized for giving such gifts was explained as the sale proceeds of gold ornaments by the concerned donors.The source of funds utilized for giving such gifts was explained as the sale proceeds of gold ornaments by the concerned donors - as the sources is proved no addition can be made - AT
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• Income Tax:

  Disallowance of guarantee fees - Guarantee fees paid to Govt. of Gujarat was in connection with raising of loans and enduring benefit or advantage could not be said to have resulted by taking such loans - claim to be allowed as revenue expenditure - AT
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• Income Tax:

  Addition u/s 68 - unexplained share capital - mere fact that its investor is an exempt assessee u/s 10(36) does not give the impugned share application money the colour of unexplained cash credits - AT
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• Income Tax:

  Reopening of assessment u/s 147 - excess claim of deduction u/s 35D - formation of belief by the AO is within realm of subjective satisfaction - for the purpose of capital employed, share premium collected on issue of share capital is not part of capital employed. - AT
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• Income Tax:

  Reopening of assessment u/s 147 - assuming the jurisdiction by the AO after transferring the case to the different AO - such a notice is void ab initio, and an assessment order passed in consequence thereof is non est, devoid of any legal force. - AT
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• Income Tax:

  Rectification u/s 254 - period of limitation - ITAT does not have any power to pass an order u/s 254(2) of the Act beyond a period of six months from the end of the month in which the order sought to be rectified, was passed u/s 254(1) - since the order has been pronounced on the open court, the petitioner had the knowledge of the order on the pronouncement of the date - AT
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• Income Tax:

  Addition on account of loss incurred by the assessee on account of forward and option derivative contract - loss arising from 'Marked to Market' valuation is allowable as deduction. Such loss is not considered as notional as per accounting standard-30 (Now, as per Ind AS 109) - AT
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• Income Tax:

  Reopening of assessment beyond the period of six years - directions of the appellate authority to re-open the case - exclusion of certain period u/s 150 - whether the delay of almost eleven months in complying with the directions of the Appellate Authority in issuing the reopening notice was deliberate or not - notice stayed - HC
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• Income Tax:

  Addition u/s 68 - loan amount / advance money - accommodation entries - transactions with an entity who was unregistered firm, the Stock Exchange Board of India, SEBI had barred its director from capital market - Action of SEBI has no bar - AT
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• Income Tax:

  Question of law or facts - on the facts and circumstances of the instant case, as the plea of limitation turns on facts and as it is clearly not a pristine question of law and as it at best qualifies as mixed question of law and facts, it would be appropriate to not to decide facts in a writ petition and leave it to appellate authority to decide on facts - HC
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• Customs:

  Respondent is not justified in waiting till the last date of limitation for filing appeal and then proceed to decide whether the order could be implemented or not. - The approach of respondent that it can wait up to the expiry of 180th day is untenable and, accordingly, the limited objection raised by the respondent is not appreciated. - HC
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• Customs:

  Advance Authorization Scheme - supplies made to SEZ units - non-furnishing of bill of export - export obligation in respect of supplies made to SEZ can be established by the documents others than the bill of export, if the same is not available - DGFT directed to accept a hard copy of the Petitioner’s application for MEIS scrip, if filed by the Petitioner- HC
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• Customs:

  Revocation of CHA License - SCN was not issued within 90 days of receipt of the offence report - imposition of penalty - time limit prescribed is mandatory. Hence, we hold that the time limit prescribed in Regulation 20 (7) is not mandatory but only directory - HC
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• IBC:

  Costs of the interim resolution professional - who shall bear the costs? - no Committee of Creditors was ever appointed - whatever the Adjudicating Authority fixes as expenses will be borne by the creditor who moved the application - SC
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• Service Tax:

  Taxability - Health Services - The requirement in the definition of said service is that the treatment is provided by service provider and payment is made by insurance company directly to the service provider then it satisfies the definition of health services provided u/s 65(105) (zzzzo) of Finance Act, 1994. - AT
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• Central Excise:

  Imposition of penalties - penalties u/r 13 (1) of Cenvat Credit Rules - appellant have acted as mediator in arranging the cenvat credit or fraudulent rebate - since the appellant has not availed the credit himself, hence no penalty can be levied on him under Rules 13(1) - AT
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• VAT:

  Maintainability of petition - alternative remedy of appeal - the appeal is certainly not going to be an appeal from “Caesar to Caesar’s wife”. There is a statutory authority to decide the appeal and all the grounds raised in the present writ petition can very well be raised in the appeal before the appellate authority. - HC
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Articles

• PENALTY U.S. 271.1(c) confirmed for reason that assesse is not an individual but company which is an AOP consisting of other corporate giants – the case should have been prepared and represented with full ground work. The view also need reconsideration.
• BEYOND THE SCOPE OF ADVANCE RULING

Notifications

• GST - States

• F-10-28/2019/CT/V(68) - 34/2019-State Tax - dated 18-7-2019 - Chhattisgarh SGST
  Amendments in the notification of the State Government, in the Commercial Tax Department, Notification No. 21/2019-State Tax, No. F-10-19/2019/CT/V(46), dated the 23rd April, 2019.

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• F-10-28/2019/CT/V(67) - 33/2019-State Tax - dated 18-7-2019 - Chhattisgarh SGST
  The Chhattisgarh Goods and Services Tax (Fifth Amendment) Rules, 2019.

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• 49/2018-State Tax - dated 6-9-2019 - Delhi SGST
  Delhi Goods and Services Tax (Tenth Amendment) Rules, 2018.

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• ORDER No.1/2018–State Tax - dated 3-9-2019 - Delhi SGST
  Delhi Goods and Services Tax (Removal of Difficulties) Order, 2018

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• Order No. 02/2019-State Tax - dated 3-9-2019 - Delhi SGST
  Delhi Goods and Services Tax (Second Removal of Difficulties) Order, 2019

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• F. 3 (39)/Fin. (Rev-I)/2019-20/DS-VI/404 - dated 3-9-2019 - Delhi SGST
  Lt. Governor of National Capital Territory of Delhi appoints the 1st day of February, 2019, as the date on which the provisions of the Delhi Goods and Services Tax (Amendment) Act, 2018 (01 of 2019), except clause (2) of section 8, section 17, section 18 and clause (1) of section 20, shall come into force

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• 76/2018 – State Tax - dated 3-9-2019 - Delhi SGST
  Supersession of the notification No.28/2017 – State Tax, dated the 27th September, 2017

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• 48/2018–State Tax - dated 3-9-2019 - Delhi SGST
  Delhi Goods and Services Tax (Ninth Amendment) Rules, 2018

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• 39/2018 – State Tax - dated 3-9-2019 - Delhi SGST
  Delhi Goods and Services Tax (Eighth Amendment) Rules, 2018

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• 24/2018-State Tax (Rate) - dated 3-9-2019 - Delhi SGST
  Seeks to amend Notification No. 1/2017-State Tax (Rate), dated the 30th June, 2017

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• 41/2018-State Tax - dated 2-9-2019 - Delhi SGST
  Waives the late fee FORM GSTR-3B , FORM GSTR-4 and FORM GSTR-6

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• 31/2018-State Tax - dated 2-9-2019 - Delhi SGST
  Seeks to lay down the special procedure for completing migration of taxpayers who received provisional IDs but could not complete the migration process

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• 17/2018- State Tax (Rate) - dated 2-9-2019 - Delhi SGST
  Seeks to Insert explanation in Notification No. 11/2017- State Tax (Rate), dated the 30th June, 2017

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• 16/2018- State Tax (Rate) - dated 2-9-2019 - Delhi SGST
  Seeks to amend Notification No. 14/2017- State Tax (Rate), dated the 30thJune, 2017

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• 15/2018- State Tax (Rate) - dated 2-9-2019 - Delhi SGST
  Seeks to amend Notification No. 13/2017- State Tax (Rate), dated the 30th June, 2017

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• 14/2018- State Tax (Rate) - dated 2-9-2019 - Delhi SGST
  Seeks to amend Notification No. 12/2017- State Tax (Rate), dated the 30th June, 2017

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• 13/2018- State Tax (Rate) - dated 2-9-2019 - Delhi SGST
  Seeks to amend Notification No. 11/2017- State Tax (Rate), dated the 30thJune, 2017

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• 12/2018– State Tax (Rate) - dated 2-9-2019 - Delhi SGST
  Seeks to amend Notification No. 8/2017 – State Tax (Rate), dated the 30th June, 2017

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• 38/1/2017-Fin(R&C)(109) - dated 27-8-2019 - Goa SGST
  Amendment in the Government Notification No. 38/1/2017-Fin (R&C) (101)/2804, dated 8th May, 2019.

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Circulars / Instructions / Orders

• Insolvency and Bankruptcy - IBBI/IU/025/2019 - dated 7-9-2019
  Statutory Repositories under regulation 21(2)(c)(ii) of the Insolvency and Bankruptcy Board of India (Information Utilities) Regulations, 2017
• GST - States - CCT/26-4/2017-2018/C 989 - 14/2019-20-GST - dated 15-7-2019
  Refund of taxes paid on inward supply of indigenous goods by retail outlets established at departure area of the international airport beyond immigration counters when supplied to outgoing international tourist against foreign exchange.
• GST - States - CCT/26-4/2017-2018/C 988 - 13/2019-20-GST - dated 15-7-2019
  Clarification on various doubts related to treatment of secondary or post-sales discounts under GST.
• GST - States - CCT/26-4/2017-2018/C 987 - 12/2019-20-GST - dated 15-7-2019
  Processing of refund applications in FORM GST RFD-01A submitted by taxpayers wrongly mapped on the common portal.
• GST - States - CCT/26-4/2017-2018/C 986 - 11/2019-20-GST - dated 15-7-2019
  Clarification regarding determination of place of supply in certain cases.
• GST - States - CCT/26-4/2017-2018/C 985 - 10/2019-20-GST - dated 15-7-2019
  Clarification regarding applicability of GST on additional/penal interest.

News

• Joint Statement of 16th AEM-India Consultations

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Case Laws:

• GST

• 2019 (9) TMI 409
  Correction/rectification of inadvertent mistakes/errors having occurred while filing statutory forms GSTR-1 and GSTR-3B - prayer is thus for either permitting the submission of annual return in the manual form or permitting the correction of original mistakes in the statutory forms concerned on the GST portal by granting permission. HELD THAT:- Notice of motion for 27.8.2019.

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• 2019 (9) TMI 408
  Stay on initiation of any coercive action to recover the interest amount - HELD THAT:- As this Court is already considering the issue of whether any notice would have to be given under Section 73 (1) of the Central Goods and Service Tax Act, 2017, in the event interest is not paid under Section 50 thereof, there shall be a direction to respondent Nos. 1 to 3 not to initiate any coercive action against the petioner until further orders. Post on 15.10.2019.

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• Income Tax

• 2019 (9) TMI 407
  Addition on unaccounted investment - block assessment proceedings - Tribunal concluded that the papers merely contained some notings but, in any case, did not involve the assessee confirmed by HC - HELD THAT:- SLP dismissed.

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• 2019 (9) TMI 406
  Disallowance of deduction claimed u/s. 10AA - Development Commissioner had granted licence to the assessee with several conditions and the assessee has not shown that it has fulfilled those conditions - 50% deduction eligibility for the next five consecutive assessment years AO noticed that the assessee has commenced its operation on 31-10-2005 and deduction u/s 10AA is available only if the manufacture/production is commenced on or after 01-04-2006 - AO also held that the assessee has not created any reserve to be called Special Economic Zone Re-investment Reserve Account as mandated u/s. 10AA HELD THAT:- Condition prescribed is that the eligible unit should begin to manufacture or produce articles/things or provide any services during the previous year relevant to any assessment year commencing on or after 01-04-2006. The previous year for the assessment year 2006-07 is the financial year 1-04-2005 to 31-03-2006, meaning thereby, the manufacture/production etc., should be commenced from 01-04-2005 onwards. In the instant case, the assessee has commenced its operation on 31-10-2005. Hence, it fulfills the first condition prescribed u/s. 10AA of the Act. Accordingly, the view taken by the tax authorities that the production should have commenced on or after 01-04-2006 is not in accordance with law and the same is set aside. Deduction u/s. 10AA is allowed @ 100% for the first five consecutive assessment years and then @ 50% for further five assessment years and thereafter. In clause (ii), it is stated that the assessee is also eligible for deduction for the next five consecutive assessment years also and in those years the assessee is required to create/reserve Special Economic Zone Re-investment Reserve Account , meaning thereby such kind of reserve is not required to be created during the first ten years claim for deduction. The word next , in our view, refers to the years after completion of two sets of five years, meaning thereby, from 11th year onwards. Hence the requirement of creating reserve shall commence from 11th year onwards only. Accordingly, the view expressed by the tax authorities on this issue also fails. Since the year of deduction for the A.Ys under consideration being 6th and 8th of the operation and since the assessee has been allowed a deduction in the preceding five assessment years tax authorities are not justified in denying the claim for deduction u/s. 10AA to the assessee. Even otherwise, the very fact that the Development Commissioner has extended approval would signify that the assessee has complied with the conditions. Direct the AO to allow the claim u/s 10AA of the Act @ 50% as claimed by the assessee in the assessment proceedings. - Decided in favour of assessee

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• 2019 (9) TMI 405
  Validity of proceedings u/s 153C - CIT(A) quashed the proceedings u/s 153C on the ground that the satisfaction note in respect of 153C proceedings was not recorded by the Assessing Officer of the searched person - HELD THAT:- As relying on SHEETAL INTERNATIONAL PVT. LTD. [ 2017 (7) TMI 738 - DELHI HIGH COURT] since the Assessing Officer of the searched person and the other person is same, therefore, respectfully following the decision cited (supra), we hold that the ld.CIT(A) was not justified in quashing the 153C proceedings merely on the ground that the satisfaction note in respect of 153C proceedings was not recorded by the Assessing Officer of the searched person. Since the ld.CIT(A) has not decided the issue on merit, therefore, we deem it proper to restore the issue to the file of the CIT(A) with a direction to decide the issue on merit - Grounds raised by the Revenue are accordingly allowed for statistical purposes.

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• 2019 (9) TMI 404
  Deduction u/s 35(2AB) - claim denied as assessee not furnished the approval of expenditure by DSIR in Form no.3CL - CIT-A allowed claim - HELD THAT:- Commissioner (Appeals) makes it clear that, though, taking note of Form no.3CL filed by the assessee he has concluded that the assessee is eligible to claim deduction under section 35(2AB) of the Act in respect of expenditure approved by the DSIR, however, he has made it clear that such deduction is subject to verification of Form no.3CL by the Assessing Officer. Commissioner (Appeals) has given opportunity to AO to verify Form no.3CL before allowing deduction under section 35(2AB). It is relevant to observe, in pursuance to the directions of Commissioner (Appeals), AO has not only verified the approval granted in Form no.3CL by the DSIR but having found the expenditure claimed by the assessee to be genuine has allowed deduction u/s 35(2AB). Commissioner (Appeals) has not violated the provisions of rule 46A. As regards the contention of the Revenue in respect of R D expenditure amounting to ₹ 15.31 lakh, we fully agree with the learned Commissioner (Appeals) that though the assessee may not be eligible to claim deduction under section 35(2AB) of the Act with regard to such expenditure, however, it certainly can claim deduction of such expenditure as business expenditure. This is for the simple reason that the Assessing Officer has never doubted the genuineness of the expenditure claimed by the assessee. - Decided against revenue

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• 2019 (9) TMI 403
  Agricultural income - according to the D.R., the adangal extract was not filed before the AO to establish the cultivation - HELD THAT:- The assessee could not file any material before this Tribunal to substantiate the claim of cultivation of banana and crops as claimed before the AO. State Revenue authorities are maintaining the cultivation account. In fact, the Village Administrative Officer is keeping the adangal, which is otherwise known as Village Account No.2, with respect to cultivation. The adangal extract as received from the Revenue authorities by the Assessing Officer discloses no such cultivation of banana as claimed by the assessee. Inspite of these materials, AO was fair enough to disallow only ₹ 10 lakhs. Moreover, the assessee himself has also admitted before the Assessing Officer that ₹ 10 lakhs was not part of agricultural income. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. - Decided against assessee

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• 2019 (9) TMI 402
  Disallowance of expenditure u/s 14A - no dividend income earned - HELD THAT:- Since, the assessee has not earned any dividend income in the assessment years under consideration, we are of the considered opinion that the ld. CIT(A) has rightly followed the decision of the Hon ble Jurisdictional High Court in the case of Redington (India) Ltd. v. Addl. CIT [ 2017 (1) TMI 318 - MADRAS HIGH COURT] and directed the Assessing Officer to delete the addition. DR could not controvert the above judgement. MAT - disallowance under section 14A for book profit calculation under section 115JB - HELD THAT:- In the case of ACIT v. Vireet Investment (P) Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] the Delhi Special Bench of the Tribunal has given a categorical findings that the computation under clause (f) of Explanation 1 to section 115JB(2) of the Act is to be made without resorting to computation as contemplated under section 14A read with rule 8D. By following the above decisions, the ld. CIT(A) directed the Assessing Officer to exclude the disallowance under section 14A r.w. rule 8D while computing MAT under section 115JB of the Act. The ld. DR could not controvert the above decisions of the Tribunal. Revenue appeal dismissed.

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• 2019 (9) TMI 401
  Addition of cash gift u/s 68 - donors non-appearance before the A.O due to poor health - HELD THAT:- She was mother in law of the assessee having sufficient cash in hand as on 31/03/2011. For this effect, the assessee has also filed statement showing availability of cash on the date of gift. The donor was aged about 71 years at that time. However, due to poor health, she could not appear before the A.O. Mere non-appearance before the A.O. could not be made reason to disbelieve the genuineness of gift when other documentary evidences so filed support the fact of gift. From the record we found that the confirmation from the donor, copy of acknowledgment of return of income and computation of income were submitted to the AO during the course of the assessment proceedings. We restore the matter back to the file of the A.O. for deciding the issue afresh in terms of our above direction. Disallowance of interest on the plea that interest bearing funds have been diverted for non-business purposes - HELD THAT:- From the record, we found that before the A.O. the assessee has submitted statement of interest free fund available with the assessee in the form of his capital to the tune of ₹ 26,08,598/- and also interest free unsecured loan. Thus, the interest free funds available with the assessee was much more than the interest free amount given by him - no disallowance of interest is warranted - decided in favour of assessee

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• 2019 (9) TMI 400
  Addition u/s 41 - proof of liability ceased - recommended for winding up of the company by BIFR - HELD THAT:- Assessee is a sick industrial unit and BIFR has recommended for winding up of the company. It is also noted that at present, the matter is subjudice before the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) which has stayed the order of Hon ble Delhi High Court till further orders. Therefore, it cannot be said that liability has ceased to exist in Assessee s case as neither the liability has been written back by the Assessee in its Profit and Loss Account nor the winding up process has been completed. Hon ble Delhi High Court in the case of CIT vs. Vardhman Overseas Ltd. [ 2011 (12) TMI 77 - DELHI HIGH COURT] has held that there is no cessation of liability when Assessee has not unilaterally the written back the amounts on account of sundry creditors in its P L account. It is also noted that the facts of the judgment of Hon ble Supreme Court in the case of T.V. Sundaram Iyengar [ 1996 (9) TMI 1 - SUPREME COURT] are different as in that case, because the Assessee had written back the amounts as income in its Profit Loss Account. Therefore, CIT-A rightly deleted the additions made by the assessing officer - Decided against revenue

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• 2019 (9) TMI 399
  Addition on account of foreign exchange loss u/s 37(1) - loss claimed on account of reinstatement of advances received from customers - AO was of the view that the amount as claimed as the advance was no longer payable by the assessee to DOW, also no supply of the goods by the assessee to DOW against such advance - HELD THAT:- Authorities below has taken contradictory stand meaning thereby the Revenue on one hand has accepted the liability shown by the assessee as discussed above and on the other hand the forex losses in relation to such trading liability was not allowed as deduction. Once the Revenue has accepted trading liability shown by the assessee, then the Revenue cannot make the disallowance of the corresponding loss in relation to such advance being a trading asset. Assessee has been showing such advance in its accounts since beginning which was accepted till the immediate preceding assessment year. As such we note that there was no change in the facts and circumstances of the case in the year under consideration, therefore in our considered view the assessee is entitled for the deduction of such forex loss on account of principles of consistency. It is because till the immediate preceding assessment year the Revenue has accepted all the losses and gains qua to the impugned advance shown by the assessee. Assessee is entitled for the deduction on the basis of principle of consistency. Assessee in the subsequent assessment year has offered the amount of trading advance as income including the effect of forex losses and gain. This fact has not been doubted and disputed by the authorities below. Addition on account of such loss in the year under consideration will lead to the double addition to the income of the assessee which is contrary to the provisions of law. Assessee is entitled for deduction on account of forex loss in relation to such trade advance. See CIT VERSUS M/S WOODWARD GOVERNOR INDIA P. LTD. M/S HONDA SIEL POWER PRODUCTS LTD. [ 2009 (4) TMI 4 - SUPREME COURT] - assessee is entitled for the forex loss in the given facts and circumstance as it is arising in the course of its business. - Decided in favour of assessee.

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• 2019 (9) TMI 390
  Question of law or facts - Jurisdiction of writ - Invoking Section 144C - rate of tax payable by writ petitioner assessee is 20% and not 10% - whether Tribunal was right in holding that the provisions of section 144B of the IT Act, 1961 are attracted and the reference to the IAC was in accordance with the provisions of section 144B? - alternate remedy - HELD THAT:- This court after a careful analyse of rival submissions and the case law is convinced that the submission of learned Revenue counsel that Southern Petrochemical [ 2008 (11) TMI 233 - MADRAS HIGH COURT] case is distinguishable deserves to be accepted for more than one reason, as Southern Petrochemical case turns on section 144B which is different from section 144C which we are now concerned with, more importantly the facts scenario is completely different and the substantial question of law itself makes it clear that answer to substantial question of law is on the facts and circumstances of the case. As far as argument predicated on jurisdictional fact is concerned, jurisdictional fact should be such that, absent a particular fact, the authority should be completely denuded of its powers to make impugned proceedings. This court reminds itself that unlike Southern Petrochemical case which is a regular tax case appeal, this is a case under writ jurisdiction wherein there is no disputation that writ petitioner has an alternate remedy. Therefore, jurisdictional fact should be so striking that it strikes at the very root of the exercise of the power by the authority making the impugned order. There is further discussion regarding alternate remedy in the latter part of this order infra. Be that as it may, suffice to say that this court is unable to convince itself that (from a reading of the language in which section 144C of IT Act is couched) respondent is completely denuded of powers to make draft and final assessment orders in cases where the rate at which tax is to be paid by the assessee is put in issue Period of limitation - A perusal of the manner in which limitation plea has been projected or in other words, challenge to the impugned draft and final assessment orders insofar as it is predicated on limitation plea is concerned, it comes out clearly that it is a mixed question of fact and law. It is not a pristine question of law. The aforesaid manner in which limitation plea has been articulated by writ petitioner in the affidavit filed in support of the writ petition is clearly subjected to disputation and disagreement by revenue. Therefore, this court has no hesitation in holding that on the facts and circumstances of the instant case, as the plea of limitation turns on facts and as it is clearly not a pristine question of law and as it at best qualifies as mixed question of law and facts, it would be appropriate to not to decide facts in a writ petition and leave it to appellate authority to decide on facts Alternate remedy rule is not an absolute rule. Though alternate remedy rule is not an absolute rule, in a long line of authorities, Hon ble Supreme Court has repeatedly held that alternate remedy shall be exercised in cases of (a) absence of jurisdiction, (b) violation of principles of natural justice, and (c) order being passed disregarding well settled laws of land, etc., To be noted, this is not a comprehensive list, but only an illustrative list which is set out only for the limited purpose of appreciating this instant order. Owing to all that have been set out thus far, this court does not find any ground to interfere with the impugned orders in writ jurisdiction.

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• 2019 (9) TMI 389
  Reopening of assessment beyond the period of six years - directions of the appellate authority to re-open the case - exclusion of certain period u/s 150 - non furnishing of reasons in support of the reopening notice - HELD THAT:- It is a settled position in law that before commencing the reassessment proceedings under Section 147/148 of the Act, the recorded reasons have to be given to the parties and its objections to it is considered and disposed of by an order. This is in accord what the directions of the Apex Court in GKN Driveshaft [ 2002 (11) TMI 7 - SUPREME COURT] . Therefore, in the normal course an reassessment order without furnishing of reasons in support of the reopening notice would be set aside following the decision of this Court in CIT v/s. VSNL [ 2011 (7) TMI 715 - BOMBAY HIGH COURT] . Revenue s stand before us is that in the present facts where the reopening notice is issued as per the specific directions of the Appellate Authority, the requirement of giving the recorded reasons and considering the objections to it may not arise as the reasons for reopening in the present facts are known to the parties by virtue of the Appellate order. Further the Assessing Officer is only carrying out the directions of the Appellate Authority and the contentions of the Revenue would be considered during the course of reassessment proceedings. Therefore, the contention of the Revenue that the decision of the Apex Court in GKN Driveshaft (supra) will not apply in the present facts as also the alleged conduct of the Petitioner would merit dismissal of the Petition.

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• 2019 (9) TMI 388
  Disallowance u/s 14A read with Rule 8D - average value of investments for the purpose of Rule 8D(2)(ii) (iii) - HELD THAT:- As in the case of REI Agro Ltd. Vs. DCIT [ 2013 (9) TMI 156 - ITAT KOLKATA] has held that it is only the investments which yields dividend during the previous year that has to be considered while adopting the average value of investments for the purpose of Rule 8D(2)(ii) (iii) of the Rules. The aforesaid view of the Tribunal has since been affirmed as correct by HC [ 2014 (4) TMI 713 - CALCUTTA HIGH COURT] We note that assessee has suomoto disallowed direct expenses of ₹ 3,940/- under Rule 8D(2)(i), the said disallowance is hereby confirmed. So far Rule 8D(2) (iii) is concerned, we direct the AO to compute the disallowance taking into account dividend bearing securities as held by the Coordinate Bench in the case of REI Agro(supra). Hence, we allow the ground No. 1 raised by the assessee for statistical purposes. Addition on account of loss incurred by the assessee on account of forward and option derivative contract - HELD THAT:- A liability is said to have accrued when a pending obligation on the balance sheet date was determinable with reasonable certainty. Hence, the loss on account of unexpired future contracts should be allowed by the A.O. We note that the assessee company follows method of valuation of stock in trade as 'lower of cost or market price'. This method is consistently followed by the company. Futures and options in the share trading business are derivatives in the nature of stock-in-trade which are required to be valued at the method of valuation adopted by the Company by using accounting standards and therefore accordingly loss arising from 'Marked to Market' valuation is allowable as deduction. Such loss is not considered as notional as per accounting standard-30 (Now, as per Ind AS 109 which is applicable to big companies in India). DR has primarily reiterated the stand taken by the Assessing Officer which we have already noted in our earlier para and the same is not being repeated for the sake of brevity. As relying on M/S. NAGREEKA EXPORTS LTD. [ 2016 (9) TMI 638 - ITAT KOLKATA] we allow the ground raised by the assessee. Disallowance of STT - AO noticed that as per Form No. 10DB there is difference between STT paid and amount debited by assessee - AO treated the balance sum as income of the assessee from undisclosed sources and hence he disallowed the same - HELD THAT:- Assessing Officer did not understand the factual position as it was given in certificate 10DB submitted by the assessee. The amount of ₹ 7,94,107/- considered by the Assessing Officer includes three forms for F.Y. 2008-09. We note that copies of Form No. 10DB reflecting aggregate amount of ₹ 4,50,677/- with respect to STT paid for F.Y. 2007-08 has not been considered by AO. Therefore, we direct the Assessing Officer to examine form No. 10DB and allow the claim of the assessee to the tune of ₹ 4,50,677/- in accordance to law. Therefore, we allow this ground raised by the assessee for statistical purposes.

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• 2019 (9) TMI 387
  Rectification u/s 254 - period of limitation of 6 months - relevant date - date of service of order or date of pronouncement of the order in the open court - HELD THAT:- Appellate Tribunal has to pass an order u/s 254(2) of the Act within a period of six months, from the end of the month in which the impugned order sought to be rectified was passed. This sub-Section does not talk about the rights of the parties. Income Tax Appellate Tribunal is a creature of the statute and hence its powers are circumscribed by the statute. Hence, we cannot treat beyond the powers given by the statute. Thus, in our view the ITAT does not have any power to pass an order u/s 254(2) of the Act beyond a period of six months from the end of the month in which the order sought to be rectified, was passed u/s 254(1) of the Act. Coming to the argument of the assessee that the term from the date of order means the date of communication or knowledge of the order, comes to the petitioner, we find that the order has been pronounced on the open court on 19.09.2018 and hence we have to conclude that the petitioner had the knowledge of the order on the pronouncement of the date. MA filed by the assessee is beyond limitation, hence the same is dismissed.

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• 2019 (9) TMI 386
  TP Addition - HELD THAT:- As perused all decisions passed by this Tribunal in assessee s own case for assessment years 2005-06 to 2013-14 and found that issues in present appeal are common with earlier years and have been set aside to TPO on the ground that TPO as well as DRP failed to consider objections raised by assessee. Transfer pricing addition made by Ld.AO. It is observed that DRP/TPO for year under consideration did not consider objections raised by assessee against comparables selected by Ld.TPO and simply followed DRP directions issued for AY 2013-14. As AY: 2013-14 has been set aside by this Tribunal, we deem it fit and proper to remit the issues to file of AO/TPO for taking necessary action of passing a speaking order by granting fair opportunity to assessee of being heard. It is also observed that all these issues are pending before lower authorities and we find no reason to adjudicate these issues at this stage. Accordingly, following earlier orders passed by this Tribunal in assessee s own case, we set aside all issues to Ld.AO for re-adjudication of issues in the light of the findings given in earlier years - Appeal filed by assessee stands allowed for statistical purposes.

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• 2019 (9) TMI 385
  Reopening of assessment u/s 147 - assuming the jurisdiction by the AO after transferring the case to the different AO - HELD THAT:- Original return was field by the assessee on 30.10.2007 with the aforesaid ITO, Ward-33(4), New Delhi. It is further not in dispute that on 30.10.2007 the return was also processed in the jurisdiction of ITO, Ward-33(4), New Delhi, u/s 143(1) - no valid order by any Competent Authority was in existence on 31.03.2014 transferring the jurisdiction of the assessee from ITO, Ward-33(4), New Delhi to ITO, Ward-24(3), New Delhi. In any case, by transferring the assessment records of the assessee to Circle-33(1), New Delhi on 19.08.2014 the aforesaid ITO, Ward-24(3), New Delhi has already, by necessary implication, admitted in effect that the jurisdiction over the assessee did not vest in Ward-24(3), New Delhi. ITO, Ward-24(3), New Delhi lacked jurisdiction to issue aforesaid notice u/s 148 dated 31.03.2014 for initiation of proceedings u/s 147 of the Act. If an Assessing Officer issued a notice to an assessee u/s 148 of the Act for initiating proceedings u/s 147 of the Act, without having jurisdiction over the assessee; such a notice is void ab initio, and an assessment order passed in consequence thereof is non est, devoid of any legal force. - Decided in favour of assessee

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• 2019 (9) TMI 384
  Revision u/s 263 - erroneous order - Capital Research development allocated expenditure - Disallowance of R D expenditure allocated to Sun Pharmaceuticals Industries (Partnership Firm) - HELD THAT:- As relying on own case [ 2019 (6) TMI 1252 - ITAT AHMEDABAD] no reason to disallow the R D expenditure allocated to Sun Pharmaceuticals Industries (Partnership Firm) - Decided in favour of assessee.

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• 2019 (9) TMI 383
  Addition u/s 68 - loan amount / advance money - accommodation entries - transactions with an entity who was unregistered firm, the Stock Exchange Board of India, SEBI had barred its director from capital market - HELD THAT:- Action of SEBI has no bar on the issue before us as all these are subsequent developments than the relevant accounting period and more so when we are adjudicating identity, genuineness and creditworthiness of the assessee s advance payments received from the said entity. - further, the mere fact of the said entity not having filed its return does not prove not fatal to the assessee s explanation proving identity, genuineness and creditworthiness of the advance receipts. Additions towards alleged bogus loan - HELD THAT:- Assessee; holder of RNI licence on behalf of M/s Disha Productions Media Pvt. Ltd as an individual, had received the impugned sum from M/s Darpan Publication. One of the said entity director (supra) also appeared and confirmed the assessee s case before the AO to this effect. We conclude in this fact that the lower authorities have erred in treating the impugned sum in assessee s hands as unexplained cash credits. The same is directed to be deleted. Disallowance u/s 40A - cash payments - HELD THAT:- AO remand report itself is very very clear that none of the assessee s cash payments has exceeded the threshold limit of ₹20,000/- during the course of a day so as to trigger the impugned disallowance. We therefore delete the same for this precise reason alone. Disallowance of business expenditure treated as bogus - it was submitted that, assessee has shown gross profit @ 35% on the impugned cost of disallowance which has gone up to 67% giving rise to an absurd result in case both the lower authorities action is upheld. - HELD THAT:- The fact also remains that the assessee himself has not been able to prove one to one matching of impugned material purchases and the respective payee s books. We therefore deem hold in this peculiar factual backdrop that a lump sum addition of ₹7 lac would meet the ends of justice with a rider that the same shall not be taken as a precedent any other case or assessment year; as the case may be

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• 2019 (9) TMI 382
  Reopening of assessment u/s 147 - disallowance of expenditure claimed u/s 35D - HELD THAT:- AO has recorded reasons for reopening of the assessment on the basis of tangible material, as per which, income chargeable to tax had been escaped assessment within the meaning of section 147 on account of excessive claim of deduction u/s 35D in respect of share issue expenses. We, further noted that it is not a statutory requirement that the reasons to belief should be proved to the hilt before reopening of assessment. The requisite condition is that the AO should have reason to believe that income chargeable to tax has escaped assessment. In this case, the AO had reasons to believe that deduction claimed u/s 35D was excessive and formation of belief by the AO is within realm of subjective satisfaction as held by the Hon ble Supreme Court in the case of ACIT vs Rajesh Jaweri Stock Brokers Pvt Ltd. [ 2007 (5) TMI 197 - SUPREME COURT] On perusal of facts available on record, we find that the AO has formed reasonable belief of escapement of income, on the basis of tangible materials in his possession, which suggest escapement of income within the meaning of section 147. Therefore, we are of the considered view that there is no merit in the argument taken by the assessee. Reopening after expiry of four years from the end of the relevant assessment year - HELD THAT:- We find that the assessee, neither provided any note in its financial statements explaining, the computation of deduction, nor the AO has examined the issue, at the time of original assessment proceedings u/s 143(3). Therefore, we are of the considered view that there is no merit in arguments taken by the assessee, in light of proviso to section 147 of the I.T.Act, 1961. Insofar as various case laws relied upon by the assessee, we find that although assessee has relied upon various case laws, but none of case laws are directly applicable to facts of assessee case and hence, all case laws relied upon by the assessee have been rejected. CIT(A) was right in upholding reopening of the assessment in the given facts and circumstances of this case. Hence, we are inclined to uphold order of the Ld.CIT(A) and reject ground taken by the assessee challenging reopening of assessment. Disallowances of excess claim of deduction u/s 35D - consequent enhancement u/s 251 - HELD THAT:- The issue on merit because, the Hon ble Supreme Court in the case of Berger Paints India Ltd.vs CIT [ 2017 (3) TMI 1531 - SUPREME COURT] held that premium collected by assessee company on its subscribed share capital is not capital employed in business of company within the meaning of section 35D of the Act, so as to enable assessee to claim deduction of said amount. We find that the Hon ble Supreme Court has settled the issue and held that for the purpose of capital employed, share premium collected on issue of share capital is not part of capital employed. Therefore, we are of the considered view that the AO, as well as the CIT(A) were right in re-computation of eligible deduction u/s 35D by excluding share premium from capital employed and accordingly, we are inclined to uphold order of the Ld. CIT(A) and reject ground taken by the assessee.

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• 2019 (9) TMI 381
  Reopening of assessment u/s 147 - addition made by the AO on account of product warranty - change of opinion - HELD THAT:- Assessment has been reopened on change of opinion without there being any tangible material, in the possession of the AO, which suggest escapement of income. The Ld.CIT(A) had also recorded categorical findings, in light of proviso to section 147 and held that unless, there is an allegation from the AO in the reasons recorded for reopening of assessment that any income chargeable to tax had escaped assessment by reasons of the failure, on the part of assessee to disclose fully and truly all material facts necessary for reassessment, for that assessment year, the assessment cannot be reopened after four years from the end of relevant assessment year, if such assessment has been completed u/s 143(3). In this case, on perusal of facts, we find that the original assessment has been completed u/s 143(3) of the I.T.Act, 1961 on 29/12/2018 and the assessment has been reopened after four years from the end of relevant assessment years without making any allegation as to failure on the part of assessee to disclose fully and truly all material facts necessary for assessment. Therefore, we are of the considered view that reopening of assessment, in this case was made on change of opinion without there being any tangible material in the position of the AO, which suggest escapement of income and also without making any allegation as to failure on the part of assesee to disclose fully and truly all the material facts necessary for assessment - CIT(A) has rightly quashed reassessment proceedings - Decided in favour of assessee.

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• 2019 (9) TMI 380
  Addition u/s 68 - unexplained share capital - assessee s investors / subscribers, Mr. C.N.Lyngdoh is an exempt assessee u/s 10(36) - whether assessee has not filed any documentary evidence as per the Assessing Officer as well. - HELD THAT:- No merit in Revenue s instant arguments. It has come on record that this assessee before us had filed all the details of the exempt share applicant during the course of assessment. The Assessing Officer had not issued any process either sec. 131 or sec. 133(6) of the Act to assessee s investor(s). We therefore quote hon ble apex court s landmark decision in CIT vs. Orissa Corporation Pvt. Ltd . [ 1986 (3) TMI 3 - SUPREME COURT] that an assessee can only file all of its supportive documents in favour of its claim proving genuineness and creditworthiness of the investor parties. We further reiterate that there is also no denial to the CIT(A) s clinching finding that the department has itself accepted all other transactions in Mr. Lyngdoh s case. Since the assessee before us has already discharged its onus before the Assessing Officer. The mere fact that its investor is an exempt assessee u/s 10(36) does not give the impugned share application money the colour of unexplained cash credits - confirm the CIT(A) s action deleting the impugned unexplained share application money - Decided in favour of assessee Assessment u/s 153A - Share capitals share premium and share application money addition - HELD THAT:- Purpose of the impugned sec. 153A proceedings is to assess total income of the searched taxpayer rather than that based on incriminating material only. Hon ble jurisdictional high court has admittedly not adjudicated upon the instant legal issue as informed by the learned senior counsel as well as the department. We therefore quote hon ble apex court s decision in CIT vs. M/s Vegetable Products Ltd. [ 1973 (1) TMI 1 - SUPREME COURT] that the view favouring the assessee / taxpayer has to be adopted in such a backdrop involving conflicting judicial opinions of various hon'ble high courts and accordingly hold that the CIT(A) has rightly quashed the impugned assessment since not based on any incriminating material found or seized during the curse of search. - Decided against revenue Denial of telescoping benefit to the assessee - HELD THAT:- No substance in Revenue s instant grievance as the purpose of telescoping is to avoid double addition qua the very income in the hands of taxpayer as held by the hon ble apex court s landmark decision in Anantharam Veerasinghaiah and Co. vs. CIT [ 1980 (4) TMI 2 - SUPREME COURT] ). Coupled with this, the assessee s disclosure of its twin undisclosed income(s) stands accepted by the department itself. We conclude in these facts denied of the impugned telescoping benefit to the assessee would amount to a double addition. More so when its book treatment thereof under business income head has attained finality. - Decided against revenue

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• 2019 (9) TMI 379
  No notice u/s.143(2) issued within the stipulated period of six months before completing the assessment u/s.153A r.w.s. 143(3 ) - HELD THAT:- As the first notice u/s 143(2) of the Act was, in fact, issued within the stipulated period and further that the ld. AR also evinced interest in keeping the issue alive to be taken up before the higher forums rather than extensively arguing before the Tribunal, we decide this issue against the assessee without going further deep into it. Denial of natural justice - no proper opportunity by the CIT(A) - whether assessee was prevented by reasonable cause from appearing before the ld. CIT(A) - HELD THAT:- Assessee was prevented by reasonable cause from appearing before the ld. CIT(A) as his father was not well and the fact that the AO could not properly appreciate the evidence because of limitation period setting in, both the sides fairly agreed that it would be in the interest of justice if the impugned orders are setaside and the matter is restored to the file of AO - assessee deserves to be given one more chance to present his case before the AO. We order accordingly. Setting aside the impugned orders, we direct the AO to frame the assessments for the years under consideration afresh as per law after allowing reasonable opportunity of hearing to the assessee. Addition on account of cash deposited in the bank account - HELD THAT:- AO made the addition simply by considering the amounts of cash deposits on different dates in the bank account. Addition on account of cash deposits can be made only if the source of the deposits remains unexplained. If, on the other hand, the cash deposits in the bank are from the regular books of account maintained by the assessee, then such transactions cannot be said to be unexplained. AR has taken the argument that the said bank account is part of the assessee s regular books of account which was reflected in the balance sheet prior to the date of search. Remit the matter to the file of AO for examining if all the transactions, for which the addition has been made, were reflected in the assessee s regular books of account maintained prior to the date of search. In case such entries find their place in the regular books of account maintained prior to the date of search, then obviously no addition can be made. In the otherwise scenario, the AO will consider the issue afresh as per law. Penalty u/s.271B - HELD THAT:- Quantum of penalty in these appeals is dependent upon the gross receipts in the quantum assessment, which issue we have restored above for fresh adjudication. Consequently, the impugned orders are set aside and the penalty matters are also sent back to the AO for considering the amount of gross receipts to be finally includible in the fresh determination of income of the assessee and then ascertaining the correct amount of penalty leviable, if any.

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• 2019 (9) TMI 378
  Addition u/s 69A - Undisclosed cash balances in HSBC account - search and seizure action u/s 132 - HELD THAT:- Identical issue had been considered by the co-ordinate bench of ITAT, Mumbai A Bench in assessee own case for AY 2006-07 following the decision of Hon ble Bombay High Court, in the case of CIT vs Murali Agro Product.Ltd [ 2010 (10) TMI 1052 - BOMBAY HIGH COURT] deleted additions made by the AO wherein held assessee is neither owner of bank account nor had any beneficial interest in those bank accounts and hence, the same cannot be added in the hands of the assessee as unexplained money u/s 69A - Decided in favour of assessee.

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• 2019 (9) TMI 377
  Low tax effect - maintainability of appeal - Application of the circular to the pending appeals before the tribunal - HELD THAT:- Revised / enhanced minimum threshold limit of tax effect of ₹ 50,00,000/- vide aforesaid recent CBDT Circular No. 17/2019 dated 08.08.2019 is applicable not only for appeals to be filed by Revenue in future; but also for appeals already filed by Revenue in ITAT. In view of the aforesaid recent CBDT Circular No. 17/2019 dated 08/08/2019; the direction in aforesaid earlier Circular dated 11.07.2018 to withdraw /not press Revenue s appeal with tax effect below ₹ 20,00,000/-; is now to be read as direction to withdraw / not press Revenue s appeal with tax effect below revised / enhanced limit of ₹ 50,00,000/-. By necessary implication, therefore, all existing appeals in ITAT, having tax effect below the revised / enhanced limit of ₹ 50,00,000/-, are to be treated as withdrawn / not pressed; and are, not maintainable. Relaxation in monetary limits for filing of appeals by Revenue in ITAT, vide aforesaid CBDT Circular dated 08.08.2019 shall be applicable also to the pending appeals in ITAT already filed by Revenue.CBDT Circulars and Instructions, which are beneficial for assessee, are binding on the authorities below. Accordingly, these appeals filed by Revenue are treated as withdrawn / not pressed by Revenue.

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• 2019 (9) TMI 376
  Disallowance of guarantee fees - revenue or capital expenditure - HELD THAT:- As decided in own case [ 2015 (6) TMI 1096 - ITAT AHMEDABAD] observed that guarantee fee was an annual recurring expenditure incurred by the assessee. Guarantee fee was payable to Govt. of Gujarat every year in respect of loans taken by the assessee and guaranteed by the Govt. of Gujarat. Loan cannot be treated as asset or advantage resulting in enduring benefits. Guarantee fees paid to Govt. of Gujarat was in connection with raising of loans and enduring benefit or advantage could not be said to have resulted by taking such loans - claim to be allowed as revenue expenditure, subject to verification by the AO of the certificate filed during the appellate proceedings i.e. there was no capital work-in-progress in respect of loans on which guarantee fees was paid. Disallowance of loss of material through pilferage, shortage - HELD THAT:- As decided in own case [ 2015 (6) TMI 1096 - ITAT AHMEDABAD] CIT(A) deleted the addition and held that similar issue was decided by the CIT(A) in favour of the assessee in assessee s own case for the Asst.Year 2006-07 and 2007-08 Addition of the expenditure being the Provision made for Employees cost of arrears payable upto 31st March, 2009 - HELD THAT:- We grant relief to the assessee by allowing the expenditure of ₹ 45,81,84,000/- being the Provision made for employees cost of arrears payable upto 31st March, 2009. The addition made by the authorities below to that effect is, thus, deleted. Hence this ground of appeal is allowed. Addition on account of Capital Grants Subsidies and Consumers Contribution - appellant should transfer 15% of the total Grants/subsidies/consumer contribution received during the year as against 10% offered by the appellant - HELD THAT:- As decided in own case [ 2015 (6) TMI 1096 - ITAT AHMEDABAD] as per provisions of section 43(1) the capital grant should be reduced from the cost/WDV of the relevant asset, and thereafter the depreciation is to be calculated. Thus, the capital grant receipt in respect of asset, on which depreciation is allowable at the rate different from 15% should be worked out as per the applicable rate. DR could not point out any mistake in the above submission of the assessee, which we find is in accordance with law. We, therefore, set aside the orders of the lower authorities on this issue, and restore the matter back to the file of the AO for adjudication afresh after verifying the proportionate amount of grant relating to different asset, and applying the actual rate of depreciation which relate to these assets. Thus, this ground of appeal of the assessee is allowed for statistical purpose. MAT computation - addition made on provision for employees cost - HELD THAT:- Ultimately, the impugned addition therein was deleted. In fact, the Learned AO observed that the addition in respect of expenditure of 6th Pay Commission under normal provision of the Income Tax Act was made and the same was also disallowable from the book profit u/s 115JB since it was the provision made for meeting liabilities other than ascertain liabilities. Enhancement of book profit u/s 115JB to the impugned amount and hence the addition is hereby deleted. In the result, assessee s ground of appeal is allowed for statistical purposes. Interest income from staff loans advances and others - income from other sources as against the business income - disallowing the claim of set off of business losses of earlier years against the said income - HELD THAT:- It appears from the records that the interest income earned from loan to staff and from other loans has been treated to be the income from other sources since the appellant is not in the business of advancing loans to staff. The nature of business carried out by the assessee and the activities of granting loans to the staff is not in accretably linked with each other thus in the absence of direct nexus between the two, We find no reason to treat the income in question as business income and, therefore, we find no justification in interfering with the order passed by the Learned CIT(A) in holding that the interest income arising out of loans advances to staff and others is income from other sources and not business income. Assessee s appeal, thus is found to be devoid of merit and hence dismissed.

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• 2019 (9) TMI 375
  Allowability of claim u/s.80IA - works contractor or a developer - assessee highlighted the facts that they are developing, operating and maintaining infrastructure facility and is having ownership of the enterprise by a company registered in India. - simultaneously following three conditions embodied in S.80-IA(4)(i) - assessee is a contractor/developer and claimed deduction under section 80-IA(4) - HELD THAT:- CIT(Appeals) out of the thirteen projects allowed deduction u/s.80IA(4) of the Act to the assessee for eleven projects undertaken during the year except for projects in Sl. No.8 and 9 i.e. Sarjapur and Benwad. We have perused the case records and have given considerable thought to the findings of the Ld. CIT(Appeals). The Ld. CIT(Appeals) has analyzed the scope and activities of the assessee in view of the judgment of the Hon ble Bombay High Court in the case of CIT Vs.ABG Heavy Industries Ltd Ors. [ 2010 (2) TMI 108 - BOMBAY HIGH COURT] followed by the decision of M/s. Laxmi Civil Engg. Services (P) Ltd. Vs. Addl. CIT, Range-2 [ 2012 (6) TMI 316 - ITAT, PUNE] Therefore, we are of considered view that the order of the Ld. CIT(Appeals) is well reasoned and therefore does not call for any interference.- Decided against revenue

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• 2019 (9) TMI 374
  Excess stock of paddy allegedly found during the course of survey - survey u/s 133A - CIT-A deleted the addition - HELD THAT:- appreciated the same in the right perspective and keeping in view that the case of the assessee was duly supported by a certificate given by the Chartered Engineer to establish the maximum storage capacity of the godown of the assessee, he rightly held that the procedure adopted by the Survey Team for physical verification of stock was unreliable. Moreover, the ld. CIT(Appeals) also analysed the quantitative details of paddy furnished by the assessee and found on such analysis that the position of stock as on the date of survey was correctly reflected in the books of account of the assessee. He also noted that no material defect was pointed out by the Assessing Officer either in the books of account of the assessee or the stock register regularly maintained by the assessee and held that in the absence of any such defect and without rejecting the book result of the assessee, the addition made by the Assessing Officer on account of the alleged excess stock found during the course of survey was not sustainable. - Decided against revenue Addition on account of excess stock of gunny bags - CIT-A restricted the addition - HELD THAT:- After taking into consideration the opening stock, the purchases made by the assessee and the quantity of gunny bags used during the year under consideration, the stock of gunny bags available with the assessee was found to be 15,481 by the ld. CIT(Appeals). On the basis of this working, the difference in gunny bags found during the course of survey was determined at 3,479 by the ld. CIT(Appeals) and the addition made by the Assessing Officer on this issue was restricted by the ld. CIT(Appeals) to ₹ 97,412/- calculated at the rate of ₹ 28/- per gunny bag. Keeping in view all these facts and figures given by the ld. CIT(Appeals), which have remained undisputed by the ld. D.R., we find no infirmity in the impugned order of the ld. CIT(Appeals) on this issue - Decided against revenue. Addition on account of capital introduction by the partners of the assessee-firm - gifts in question given to the partners - HELD THAT:- It is observed that the gifts in question given to the partners were confirmed by the respective donors and affidavits to that effect were also filed by them. The source of funds utilized for giving such gifts was explained as the sale proceeds of gold ornaments by the concerned donors. Keeping in view the relationship between the donors and the donees CIT(Appeals) held that the gifts could be accepted as genuine if the source explained by the donors as sale of gold ornaments was established. As required the AO to make necessary enquiries with the concerned parties, who had claimed to have purchased the gold ornaments from the donors. CIT(Appeals) found that the only transaction that did not stand prove was that of the sale of gold ornaments to Hiralal Sons. He accordingly restricted the addition of ₹ 23,89,500/- made by the Assessing Officer on this issue to ₹ 2,21,756/-. No infirmity in the impugned order of the ld. CIT(Appeals) allowing a relief of ₹ 21,67,744/- to the assessee on this issue since the source of funds for giving the gifts in the hands of the donors to that extent was duly established. - Decided against revenue.

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• 2019 (9) TMI 373
  Penalty u/s 271(1)(c) - defective notice - as alleged show cause notice does not strike out the irrelevant portion viz., furnished inaccurate particulars of income or concealed particulars of such income - HELD THAT:- Show cause notice u/s. 271(1)(c) dated 31.12.2008 is defective as it does not spell out the grounds on which the penalty is sought to be imposed. The Hon ble Karnataka High Court in the case of CIT vs. SSA's Emerald Meadows [ 2015 (11) TMI 1620 - KARNATAKA HIGH COURT] wherein the Hon'ble Karnataka High Court following its own decision in the case of CIT vs Manjunatha Cotton and Ginning factory [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] took a view that imposing of penalty u/s 271(1)(c) is bad in law and invalid for the reason that the show cause notice u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealment of particulars of income or furnishing of inaccurate particulars of income. - Decided in favour of assessee

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• 2019 (9) TMI 372
  TP adjustment - payment of Regional Service Charges (RSC) - comparable operating margins - arithmetic mean of margins - Proof of the services rendered by the associated companies - assessee had aggregated most of the international transactions and applied TNMM method AND transactions relating to sale of machinery and payment of technical and license fees were benchmarked using CUP method - TPO expressly held the transaction to be at arm's length price - whether the TPO while ascertaining whether the price paid for availment of services was at arm's length price or not ? HELD THAT:- Issue squarely covered by the order of Pune Bench of Tribunal in Emerson Climate Technologies (India) Limited Vs. DCIT [ 2017 (12) TMI 1568 - ITAT PUNE] and following the same parity of reasoning, we hold that there is no merit in adjustment made by the Assessing Officer / TPO in taking arm's length price of transaction of payment of RSC at Nil. The said payments being accepted in the hands of assessee to be at arm's length price in earlier years, we delete the adjustment made on this count. As refer to the order of DCIT, Circle-Gurgaon International Taxation, who has completed the assessment in the case of associated enterprise Goodyear Tire Rubber Co. for assessment year 2011-12 under section 143(3) r.w.s. 144C(1) of the Act and has held that service charges received by it were taxable as fees for technical services or alternatively as royalty, both under the provisions of Income Tax Act as well as under the provisions of Indo-USA DTAA. Without going into merits of the facts whether the same is taxable or not in the hands of associated enterprises, we hold that fall out is that the payment made by assessee on account of RSC was for services availed from associated enterprise and there is no merit in the order of Assessing Officer in holding that no services have been availed by assessee in this regard. Duplication of services i.e. payments - held that:- these payments were towards reimbursement of cost incurred by regional entities in providing assistance to the assessee with regard to engineering, quality assurance, safety, etc. and the same was not towards technology, know-how being made available to the assessee by associated enterprise. The assessee had also submitted the list of personnel at the Region engaged in providing the aforesaid services in different countries of Asia Pacific Region, where the group did not have any R D / Innovation center. On the other hand, the technical assistance and license fees were for know-how developed by R D Center located in Akron, USA and Luxemburg, Europe. In other words, there was no similarity in the nature of payments made under technical assistance and license agreement and under the service agreement for Production and Tire Performance / Product Resolution. Hence, there is no merit in the observations of TPO in this regard and we reverse the same. Under Rule 10B(4) of the Income Tax Rules, 1962, it is provided that international transactions which are inter-linked need to be benchmarked on aggregate basis and since the payment has been made, which is linked to other transactions undertaken by assessee i.e. import of raw materials and spare parts, import of machineries, sale of raw materials and sale of machineries including the payment of technical assistance and license fees and that aggregation has not been disturbed by TPO. On the other hand, he further observed that the payment of RSC can be independently benchmarked. We have already in the paras above reversed the finding of TPO and hold that payment of royalty also needs to be aggregated. In any case even if benchmarked separately, the same is at arm's length price and no adjustment at Nil, merits to be made. Accordingly, we hold that no adjustment on account of payment of RSC merited in the hands of assessee. - Decided in favour of assessee

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• 2019 (9) TMI 371
  Revision u/s 263 after reopening of assessment u/s 147 - Assessee filed its return in response to section 148 notice - unexplained cash credit u/s. 68 - whether the assessee could challenge validity of re-assessment itself in validity section 263 revision proceedings? - HELD THAT:- As relying on M/S. CLASSIC FLOUR FOOD PROCESSING PVT. LTD. VERSUS C.I.T., KOL-IV, KOLKATA [ 2017 (5) TMI 631 - ITAT KOLKATA] the assessee is very much entitled to challenge validity of the above said re-assessment in collateral proceedings. Facts of re-opening reasons that the AO has nowhere formed his belief of assessee s taxable income having escaped assessment of ploughing back of the undisclosed income. We wish to reempahsise on the above extracted reasons of re-opening are merely an inference than a belief to this effect. AO had alleged that three of the entity operator s entities had made investments in assessee s stake. The same goes adjudicator facts on record since this taxpayer had received share application/share premium from one of the said entity M/s. Urch Traders P.Ltd only to the tune of ₹ 55 lakhs, which stood added as unexplained cash credit u/s. 68. Assessing Officer s re-opening reasons have to be read on standalone basis and no substitution or deletion is permissible. Hon ble jurisdictional high court s decision in Equitable Investment [ 1988 (2) TMI 25 - CALCUTTA HIGH COURT] also holds that when section 148 notice is issued after the CIT s approval is challenged only the reasons recorded for obtaining such an approval. It transpires during the course of hearing that Shri Pransukha was neither promoter nor director of the said entity. We also find that Assessing Officer s reopening reasons formed do not satisfy the settled law as per hon ble Delhi high court s decision on the very issue in PCIT V/s. RMG Polyvinyl (I) Ltd. [ 2017 (7) TMI 371 - DELHI HIGH COURT] upholding the tribunal s order quashing similar re-opeing based on investments, wherein the Assessing Officer had nowhere undertaken any independent enquiry. Thus lordships hold that mere such an information could not be treated as tangible material for the purpose of initiation of 148/147 proceedings. Assessing Officer has erred in initiating the impugned re-opening, which is aggrieved the assessee. We therefore quash the same as non est. That being the case the PCIT s assumption of revision jurisdiction u/s. 263 of the Act must also follow the suit since it has no legs to stand. The assessee succeeds on the foregoing legal issue. All of its arguments on merits that PCIT has wrongly exercised sec 263 revision jurisdiction on various facts in the instant appeal are rendered infructuous. We make it clear that we have quashed the above stated re-opening/re-assessment to the extent of validity of PCIT revision jurisdiction exercise in the instant case only. Necessary consequences in pursuance to Assessing Officer s re-assessment dated 30-11-2017 shall continue to follow.

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• 2019 (9) TMI 370
  Deemed dividend as per Section 2(22)(e) - determination of substantial interest / voting rights in the company - clubbing of the shares held by the individual and shares held by the HUF through its Karta - clubbing of the shares held by the partner in his individual capacity and shares held by the partnership firm - CIT(A) deleted the addition, holding that the intention behind enacting the provisions of Section 2(22) (e) of the Act is that closely held companies (i.e. companies in which public are not substantially interested), which are controlled by a group of members, even though the company has accumulated profits, would not distribute such profit as dividend - HELD THAT:- As decided in NATIONAL TRAVEL SERVICES [ 2011 (7) TMI 288 - DELHI HIGH COURT] Assessing Officer s contention that for purposes of applicability of section 2(22)(e) shareholding of individual HUF can be clubbed is not valid and therefore this stand cannot be upheld. The primary condition of 10% beneficial shareholding of Mr. K.M Aggarwal is not established the remaining amount/ part of the addition becomes an exercise in futility because nothing can be added under section 2(22)(e). Person both as registered and beneficial owner, he is not covered by the provisions of section 2(22)(e). Addition made is deleted on this ground as not sustainable. - Decided against revenue Unaccounted sales - unaccounted purchase by the assessee-company; and that similarly, the same amount of difference was found as unexplained sales - HELD THAT:- As observed by the CIT(A), it is a settled accounting practice that in a customer's account, the amount of sale is debited inclusive of the amount of VAT Excise. However, for purchase, the customer s account is the net of excise VAT, as the aforesaid taxes are available to the customer as Cenvat/ Input Vat against Excise duty payable/output Vat payable. Through the reconciled account statements filed befoe the ld. CIT(A), both in the books of SCPL and M/s Synthetic Silica Products M/s Chhavi Microfine together with Tax Audit report of SCPL, the assessee established that there were no difference in the books of the two accounts. Therefore, we find that the ld. CIT(A) has decided the issue in correct perspective and no interference is called for in his order on this issue. Accordingly, ground of the Revenue is rejected. Addition on account of interest expenses on unsecured loans - HELD THAT:- CIT(A) has decided the issue, placing reliance on various case laws and partly sustained the addition made by the Assessing Officer. No cogent material or case law was brought to our notice by the D.R., contrary to that brought on record by the ld. CIT(A). We, therefore, confirm the order of the CIT(A) on this issue and reject ground taken by the Revenue.

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• 2019 (9) TMI 369
  Exparte order by CIT-A - AR submitted that the CIT(A) has not granted adequate and reasonable opportunity to remove the defects in the appeal memo - HELD THAT:- CIT(A) has dismissed the appeal of the assessee on the ground that the defect was not removed in the memorandum of appeal. From the records, it can be seen that the notice was also not properly served to the assessee at the address mentioned in Form-35. Therefore, in the interest of justice, it will be appropriate to remand back this matter to the file of the CIT(A) and the matter may be decided on merit. Needless to say that the assessee will remove the defect in appeal, i.e., rectify Form 35 before the CIT(A) within a period of 30 days from the receipt of this order. The assessee be given opportunity of hearing by following the principles of natural justice. Accordingly, the appeal of the assessee is partly allowed for statistical purposes.

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• 2019 (9) TMI 368
  Taxability of Excess Sugarcane Price - excess price paid by the assessee to sugarcane suppliers, i.e. the price over and above the Statutory Minimum Price (SMP) fixed by State Government for purchase of cane - HELD THAT:- As considered the order of Co-ordinate Bench in the case of DCIT vs. Vasant Rao Dada Patil SSK Ltd. ( 2019 (3) TMI 1637 - ITAT PUNE ) after considering the binding judgment of Hon ble Supreme Court of India in the case of CIT Vs. Tasgaon Taluka S.S.K. Ltd. [ 2019 (3) TMI 321 - SUPREME COURT] indentical to the issue relating to excess sugarcane price paid by the assessee the issue is restored to the file of AO and also consider the contentions of assessee with respect to SMP vis-a-vis FRP regime, where ever raised. AO shall decide the issue, after affording reasonable opportunity of hearing to the respective assessees, in accordance with law. AO shall also give due consideration to the issues raised by the assessee with effect to applicability/non-applicability of judgment of Hon ble Apex Court as the case may be and decide the issue accordingly. Thus, the issue of excess cane price paid to sugarcane suppliers is allowed for statistical purposes in the aforesaid terms. Provision for Vasantdada Sugar Institute (VSI) Contribution - HELD THAT:- It is found that the ld. CIT(A) has determined this issue in favour of the assessee by following the order passed by the Pune Benches of the Tribunal in the case of Bhima S.S.K. Ltd. ( 2019 (3) TMI 906 - ITAT PUNE ) . No material has been placed on record to show that this order of the Tribunal has been reversed or modified in any manner by the Hon ble High Court. Respectfully following the precedent, we decide this issue in favour of the assessee Disallowance of contribution towards Area Development Fund - HELD THAT:- Both sides are unanimous in stating that the issue of disallowance of Area Development Fund in present set of appeals is identical to the one already decided by the Co-ordinate Bench. In the light of directions of Co-ordinate Bench on the issue in hand, the same is restored back to the file of Assessing Officer. Deduction u/s 80P on interest income earned on deposits with Co-operative Bank - HELD THAT:- Hon ble Bombay High Court in the case of Commissioner of Income Tax Vs. Reliance Utilities and Power Ltd. ( 2009 (1) TMI 4 - BOMBAY HIGH COURT ) in the context of section 36(1)(iii) held that where both interest free funds and interest bearing funds are available, and interest free funds are sufficient to cover the investments made, it shall be presumed that investments are made out of interest free funds available with the assessee. Same analogy was applied by Hon ble Bombay High Court in the case of HDFC Bank Ltd. ( 2014 (8) TMI 119 - BOMBAY HIGH COURT ) in respect of disallowance u/s. 14A r.w. Rule 8D(2)(ii). Extending the same principle here, we find merit in the submissions of the assessee. No material is brought on record by the assessee to show availability of funds for making investment in deposits during the relevant period. Restore this issue back to the file of Assessing Officer for the limited purpose of ascertaining fund position when the deposits were made by the assessee. AO shall decide the issue de-novo in line with our above observations. Ground relating to disallowance u/s. 80P(2)(d) is allowed for statistical purpose.

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• 2019 (9) TMI 367
  Bogus purchases - estimation of profit - addition @ 12.5% of alleged bogus purchases - HELD THAT:- AO was not able to produce these parties before the authorities below and moreover these parties admitted before Sales Tax authorities that they were indulging in providing bogus bills without supplying material . The assessee could not discharge onus as cast by the provisions of the 1961 Act. Assessee has duly accepted the additions as were sustained by CIT(A) to the tune of 12.5% of alleged bogus purchases to end litigation as no appeal/Co was filed by the assessee challenging the additions as were confirmed/sustained by CIT(A). In such cases, profits embedded in these purchases are to be computed and such estimate has to be honest, fairs and reasonable because purchases are made from some other suppliers operating in grey market without bills while to complete books of accounts, the bills are obtained from the accommodation entry providers without taking physical delivery of material from these entry providers. No infirmity in the appellate order passed by Ld. CIT(A) estimating profits @12.5% of the alleged bogus purchases being profits embedded in these purchases, as additional income to be brought to tax in the hands of the assessee, as some guess work is required in estimating profits embedded in these alleged bogus purchases but the said guess work has to be reasonable , fair and honest guess work . There is not perversity in estimation made by learned CIT(A) nor it is unconscionable estimation and we are not inclined to interfere with appellate order passed by learned CIT(A), more-so the assessee has duly reconciled quantitative stocks reflected by these alleged purchases with sales made. The sales are not doubted by Revenue. The ratio of decision in the case of Kachwala Gems v. JCIT [ 2006 (12) TMI 83 - SUPREME COURT ] supports our decision. Revenue fails in its appeal.

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• 2019 (9) TMI 366
  TDS u/s 194C - Addition u/s 40(a)(ia) - assessee company had incurred horse expenses - HELD THAT:- Primary argument of the Ld AR is that the payee i.e. M/s Royal Calcutta Turf Club has duly included the subject mentioned receipts in their return of income and had paid taxes thereon which may be verified by the AO. DR also fairly agreed for the same. In view of the amendment to second proviso to section 40(a)(ia) read with section 201(1) if the payees have included the subject mentioned receipts in their returns and paid taxes thereon, if any, then the disallowance u/s 40(a)(ia) would not operate in the hands of the payer. Hence in the interest of justice and fairplay, we deem it fit and appropriate, to remand this issue to the file of the AO for denovo adjudication of the issue in the light of second proviso to section 40(a)(ia). The assessee is also given liberty to adduce fresh evidences in support of its claim before the AO. Accordingly, Ground No.1 raised by the assessee is allowed for statistical purposes. Carry forward of long term capital loss incurred on sale of listed securities - HELD THAT:- As decided in case of Raptakos Brett Co. Ltd 2015 (6) TMI 529 - ITAT MUMBAI assessee had incurred loss on sale of shares after paying STT these shares were held on investment a/c for period more than 12 months. The assessee claimed that the loss incurred was to be assessed under the head capital gains and its set off was permissible against capital gain earned on transfer of other capital assets. The AO however disallowed the assessee s claim for assessment of long term capital loss on the ground that income earned in similar transactions was not chargeable to tax in view of exemption granted by S. 10(38) of the I.T. Act. In the AO s opinion Sec. 10(38) was applicable equally to all transactions of sale of investment shares involving STT payment irrespective whether the resultant effect was profit/income or loss. On further appeal this Tribunal relying on the judgment of the Hon ble Calcutta High Court (supra) held that same considerations did not apply to the income exempt u/s 10 and the loss incurred in similar transactions. The ITAT therefore held that assessee was entitled to get its loss assessed was also entitled to get such loss set off. We direct the AO to assess the long term capital loss incurred by the appellant on sale of listed shares and allow its carry forward in accordance with law. Ground No. 2 is therefore allowed.

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• 2019 (9) TMI 365
  Reopening of assessment u/s 147 - objection regarding no service of notice u/s 148 - assessee has filed an affidavit denying service of notice - information received from the ADIT(Inv.), Unit-2, Agra that there were huge cash deposits in the bank accounts maintained by assessee - HELD THAT:- A valid service of a valid notice under section 148 of the Act, is not a mere procedural requirement, but is a condition precedent to the validity of any assessment, reassessment or re-computation to be made under section 147 of the Act and it is so because of the use of words shall serve on the assessee and also the requirement to the effect before making the assessment, reassessment or re-computation under section 147 in the section itself- meaning thereby that if no notice under section 148 is issued or if the notice so issued is shown to be invalid, or the service of notice so issued, is shown to be invalid, AO cannot proceed with the subsequent proceedings for making assessment, reassessment or re-computation under section 147 of the Act. In other words, if the learned Assessing officer, in such circumstances, proceeds with the subsequent proceedings, the same will be illegal and void. Under the aforesaid provisions of section 148 of the Act, unless, the notice is served on the proper person in the manner prescribed under section 282, the service is insufficient and the Assessing officer does not have jurisdiction to re-assess the escaped income - Decided in favour of assessee.

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• Customs

• 2019 (9) TMI 410
  Validity of the approach of the the revenue officers to wait till the last day of the period of limitation and to decide whether to file an appeal or not at the last moment - Non-implementation or non-compliance of Ext.P11 final order - direction to respondent to issue detention certificate as per Regulation 6(1) of Handling of Cargo in Customs Area Regulation 2009 - waiver of demurrage charges from the Warehouse Corporation - suitable compensation for the alleged loss and damage suffered by the petitioner on account of depreciation value of subject goods and detaining the goods for unreasonable long period - defence of respondent is that there cannot be a direction to release or comply Ext.P11 final order before the period available for statutory remedy of appeal expires. HELD THAT:- This Court is constrained to observe that the respondent is not justified in waiting till the last date of limitation for filing appeal and then proceed to decide whether Ext.P11 could be implemented or not. The respondent is dealing with goods imported by petitioner. For the petitioner and its customers the goods imported is a simple commercial transaction. The law enables petitioner to lawfully sell the imported goods only upon obtaining customs clearance and payment of applicable duties to respondents. The approach of respondent that it can wait up to the expiry of 180th day is untenable and, accordingly, the limited objection raised by the respondent is not appreciated. It shall not be understood that by implication the Court is preventing the respondent from working out the statutory remedies available to respondent. The respondent is directed to implement Ext.P11 judgment within four weeks from today, unless and until the judgment in Ext.P11 is stayed or suspended by Court of competent jurisdiction - The respondent while ordering release of goods in terms of Ext.P11 final order, along with the release order issues a certificate of detention in favour of petitioner - application disposed off.

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• 2019 (9) TMI 398
  Advance Authorization Scheme - non-fulfilment of export obligation - supplies made to SEZ units - non-furnishing of bill of export - acceptance of Merchandise Export from India Scheme (MEIS) for issuance of MEIS scrip for the exports - exports made in 2015-16 and 2016-17 - It is the grievance of the Petitioner that after having held that the Petitioner has fulfilled the export obligation, the Additional Director General of Foreign Trade should have allowed the Petitioner s appeal - HELD THAT:- In the present case, there is no dispute that Respondent No.3- Additional Director General of Foreign Trade who passed the impugned order was satisfied that the Petitioner has fulfilled the export obligation but he denied the benefit of export obligation to the Petitioner only on the ground of non-furnishing of bill of export. This view taken by the impugned order is contrary to the binding decision of this Court upheld by the Supreme Court. The distinction made in the impugned order is that the decision of the Supreme Court in UNION OF INDIA ORS. ETC. VERSUS LARSEN AND TOURBO LIMITED ETC. [ 2019 (4) TMI 1717 - SC ORDER] is based on the facts of that particular case, ignoring the ratio of the decision of this Court in the case of Larsen Toubro Limited v. Union of India upheld by the Supreme Court that fulfillment of export obligation in respect of supplies made to SEZ can be established by the documents others than the bill of export, if the same is not available. The Petitioner is now entitled to make an application to the Respondent- Director General of Foreign Trade for issuance of MEIS scrip which the Petitioner could not do as it was put on Denied Entity List on 8 June 2018, in respect of exports made during the period 2015-16 and 2016-17. The Petitioner has stated that on-line applications can be made within a period of three year for issuance of MEIS scrip on the basis of exports made. However, as the Petitioner was put on Denied Entity List on 8 June 2018 and continued to be so till 19 August 2019 when the Petitioner s name was deleted. The Petitioner would not now be in a position to file an application for MEIS scrip on-line. This as the system would not accept it. Therefore, Respondent Nos.1 to 4 would accept a hard copy of the Petitioner s application for MEIS scrip, if filed by the Petitioner - petition allowed.

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• 2019 (9) TMI 397
  Imposition of penalty u/s 112(a) of the Customs Act, 1962 - redemption fine - classification of imported goods - import of Non Alloy material - Alleged mis- declaration of imported goods - whether the goods imported fell within Alloy Steel as per IS 7598:1900? - maintainability of appeal - appropriate forum - HELD THAT:- No question of law arises under Section 130 of the Act for consideration by this court - the Assessee ought to have approached the Departmental Authorities for waiver of the penalty and in such circumstances, in view of a very low and marginal difference of the chemical material (Boron) content in the goods imported and that too is one of several components and that other parameters as given in the Laboratory Report being within limit is not disputed by the learned counsel for the parties, would bring the commodity in question under Non Alloy Steel and the Authority concerned should have taken a liberal view of the matter regarding the imposition of penalty and redemption fine in question imposable on the goods. Therefore, with the liberty to the Assessee to approach the competent Authority concerned for waiver of fine and penalty, we dispose of the present Appeal.

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• 2019 (9) TMI 364
  Non-speaking order - order set aside on the ground of laches, since it was belatedly disposed without adhering to the time limit stipulated in the Circular of the Department - Circular No.732/48/2003-CX., dated 05.08.2003 - Classification of imported goods - pepper - case of the petitioner is that as per the four Bills of Entry, the importer has classified natural pepper under Tariff item 33021010 in two Bills of Entry and Tariff item 33021090 in the other two Bills of Entry - HELD THAT:- Since the respondent had not given the reasoning as to why these tariff items will not be applicable to the description of their product has not been specified in the impugned order, it would amount to a non-speaking order - It is no doubt true that the respondent had chosen to rely on Rule 2B of the General Rules by interpretation of the first schedule of Customs Tariff Act, 1975 and applied the tariff item for the most specific description of pepper. Such a reasoning cannot be usually found fault with. In the instant case, the impugned order came to be passed after more than two years from the date when the personal hearing had concluded. Though, the Circulars of the Department may not be mandatory to be complied with, the respondent atleast should have justified the reason for such belated disposal of the case after the personal hearing. On this score also, the order is liable to be set aside. The matter is remanded back to the respondent herein, for reconsideration, after giving due opportunity of personal hearing to the petitioner - petition allowed by way of remand.

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• 2019 (9) TMI 363
  Principles of Natural Justice - Revocation of CHA License - imposition of penalty - objection of the petitioner to the impugned proceedings is that the show cause notice was not issued within 90 days of receipt of the offence report and that therefore the limitation prescribed in sub-regulation (1) of Regulation 20 was not adhered to - condition precedent under Regulation 20 (4) for considering the request of the Customs Broker for cross-examination - cross-examination of witnesses - violation of the principles of natural justice. HELD THAT:- There are conflicting views of different High Courts, with Madras and Delhi being on one side and Bombay and Calcutta being on another side, on the question whether the Regulation is mandatory or directory. Therefore, it is now necessary to go into the root of the matter. The vexed question as to whether a particular provision in a statute is mandatory or directory has come up time and again before Courts under different circumstances. One of the earliest cases to draw the attention of the Constitution Bench of the Supreme Court was DATTATRAYA MORESHWAR VERSUS STATE OF BOMBAY [ 1952 (3) TMI 32 - SUPREME COURT] . The Court in that case created a dichotomy between (i) the provisions of statutes creating public duties and (ii) those conferring private rights. The provisions of statutes creating public duties were held to be directory and those conferring private rights were considered mandatory - In RAZA BULAND SUGAR CO. LTD. VERSUS MUNICLPAL BOARD, RAMPUR [ 1964 (10) TMI 82 - SUPREME COURT] , another Constitution Bench of the Supreme Court, without referring to the dichotomy created in Dattatreya Moreshwar laid down certain independent tests. The petitioner contended that if the time prescribed by Regulation 20 (7) is not held to be mandatory, there can be no check on the power of the authority and they can pass orders at any time they like. In fact, he went to the extent of contending that the time limit prescribed in Regulation 20 (7) should be construed to mean the availability of the power only up to a period of time, beyond which the authority vested with the power cannot invoke his jurisdiction - We are unable to agree with the second part of the contention. It is only in cases where authorities or quasi-judicial bodies would become functus officio that the second part of the argument of Mr. P. Balaji Varma, learned counsel for the petitioner will hold good. To hold that the 1st respondent would loose his authority to pass an order of revocation of licence, upon the expiry of the period of licence, would be to say that he would become functus officio . That is an extreme proposition. If the tests laid down in Dattatreya Moreshwar , which have so far held the field, are applied, it would be clear (i) that the time limit prescribed in Regulation 20 (7) is for the performance of a public duty and not for the exercise of a private right; (ii) that the consequences of failure to comply with the requirement are not spelt out in Regulation 20(7) (iii) that no prejudicial consequences flow to the aggrieved parties due to the non-adherence to the time limit; and (iii) that the object of the Regulations, the nature of the power and the language employed do not give scope to conclude that the time limit prescribed is mandatory - Hence, we hold that the time limit prescribed in Regulation 20 (7) is not mandatory but only directory. It is curious that the 1st respondent took refuge under the obligation cast upon him to follow the principles of natural justice, for not adhering to the time schedule. But, at the same time, he rejected the request for cross-examination on the ground that the Regulation prescribes a time limit for passing orders. It was a contradiction in terms. The impugned order is vitiated for non-compliance with the principles of natural justice - petition allowed.

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• Insolvency & Bankruptcy

• 2019 (9) TMI 362
  Costs of the interim resolution professional - who shall bear the costs? - HELD THAT:- Regulation 33(3) indicates that the applicant is to bear expenses incurred by the RP, which shall then be reimbursed by the Committee of Creditors to the extent such expenses are ratified. In the present case, no Committee of Creditors was ever appointed as the interim resolution process did not reach that stage. In these circumstances, it is clear that whatever the Adjudicating Authority fixes as expenses will be borne by the creditor who moved the application. The impugned judgment dated 02.08.2017 is set aside only to the extent that these expenses are to be paid by the Corporate debtor - appeal allowed.

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• 2019 (9) TMI 361
  Maintainability of application - Initiation of Corporate Insolvency Resolution Process - Existence of debt due from Corporate Debtor or not - section 7 of Insolvency Bankruptcy Code, 2016 - HELD THAT:- This Adjudicating Authority does not have the requisite power to determine the disputed question of fact that could establish the existence of the debt in this case. Therefore, in the facts and circumstances and as per the judgement of Hon ble Supreme Court in Innoventive Industries Ltd. vs ICICI Bank and Ors., [ 2017 (9) TMI 58 - SUPREME COURT ], as the Petitioner could not prove the existence of debt due from the Corporate Debtor, this Petition cannot be admitted. Petition rejected.

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• Service Tax

• 2019 (9) TMI 395
  Taxability - Health Services - appellants M/s Vivek Sewa Samiti received amount of approximately ₹ 1.5 crores M/s Gayatri Hospital received amount of approximately ₹ 82 lakhs from M/s ICICI Lombard General Insurance Company for providing health services to members of society who were below the poverty line under Rastriya Swastha Bima Yojana - period from 01.07.2010 to 30.04.2011 - HELD THAT:- The requirement in the definition of said service is that the treatment is provided by service provider and payment is made by insurance company directly to the service provider then it satisfies the definition of health services provided under Section 65(105) (zzzzo) of Finance Act, 1994. The appellants during the relevant period had provided said services - demand of service tax upheld - appeal dismissed - decided against appellant.

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• Central Excise

• 2019 (9) TMI 396
  Imposition of penalties - penalties u/r 13 (1) of Cenvat Credit Rules - appellant have acted as mediator in arranging the cenvat credit or fraudulent rebate - HELD THAT:- The penalties on appellant Sh. Mahesh Harlalka and Sh. Deepak Nathmal Kedia were imposed under Rule 13 (1) of Cenvat Credit Rules, 2002 which can be imposed only on the person who availed the cenvat credit whereas in the present case, it is admitted fact that the appellant have only acted as mediator in arranging the cenvat credit or fraudulent rebate, therefore, penalties under Rules 13(1) is not relevant - the penalties imposed under Rule 13 (1) of Cenvat Credit Rules are set aside. Penalties u/r 27 - HELD THAT:- Since the appellant are neither manufacturer nor exporter, no contravention of the provision can be alleged against them, therefore, the penalty under Rule 27 is also set aside. Penalty under Section 117 of the Customs Act - HELD THAT:- Since the appellants were not involved either in the import or export of any goods, he cannot be alleged with the contravention of any provision of Customs Act, 1962, therefore, this penalty is also not maintainable, hence the same is set aside. Recovery of fraudulent availed rebate, interest and consequential penalty against proprietor of Sh. Sairam International - HELD THAT:- No proposal was made against Sh. Sairam International in the show cause notice, therefore, by way of review, the show cause notice cannot be amended or developed. Accordingly, the appeal of Revenue proposing something which is not arising out of the show cause notice cannot be maintained. Appeal allowed - decided in favor of appellant.

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• 2019 (9) TMI 394
  Reversal of proportionate CENVAT Credit - clearance of liquid oxygen for medical purposes as well as for general purposes - common input services utilized for manufacture of dutiable liquid oxygen as well as exempted goods - Rule 6 of the CENVAT Credit Rules, 2004 - It is the claim of the appellant that they have availed credit on common input services only from January, 2005 whereas the Commissioner s finding is that they have availed credit from September, 2004 onwards. HELD THAT:- The learned C.A. in support of their claim that the proportionate CENVAT Credit attributable to exempted products during the relevant period with interest have been paid, placed the certificate issued by the C.A. - It is found from the records that the said C.A. certificate was not placed earlier, hence, we agree with the contention of the learned AR that the correctness of the C.A certificate to be ascertained by the adjudicating authority. The matter remanded to the adjudicating authority to decide the issue afresh taking into account the C.A. certificate vis- -vis the claim of the appellant that proportionate credit attributable to exempted products had been reversed - appeal allowed by way of remand.

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• 2019 (9) TMI 393
  Stay on recovery - Mandatory provisions of pre-deposit - section 35F of Central Excise Act, 1944 - HELD THAT:- The notice issued to the present applicant is in direct contravention of section 35F of Central Excise Act, 1994 which supplanted the provision for waiver of pre-deposit in section 35C of Central Excise Act, 1944 with effect from 6th August 2014 - In the decision of the Tribunal, though it was the stay arising from the pre-amended provision of section 35C of Central Excise Act, 1944 with attendant limitation on the extent of stay order and not the extant statutorily mandated bar on recovery impugned in section 35F of Central Excise Act, 1944 that was sought to be derailed, the continuance of stay was ordered therein; here it is the statutory bar that is sought to be overruled by the impugned notice. This was no call on the part of the jurisdictional Central Excise authority to substitute his interpretation of a judicial order to nullify the statutory restriction on recovery beyond the amount prescribed therein. This illegal act on the part of a creation of the very same statute is a veritable harassment of the appellant. As the Tribunal, beset by large number of pending litigation, has been led to waste valuable time by this needless, and illegal, initiative on the part of the official, we impose costs of ₹ 5000/- which shall be deposited with the Fund of the National Legal Services Authority within 30 days of receipt of this order - Application disposed off by setting aside the notice of recovery.

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• CST, VAT & Sales Tax

• 2019 (9) TMI 392
  Maintainability of petition - alternative remedy of appeal - Section 46 (1) of the Madhya Pradesh Value Added Tax Act, 2002 - petitioner has challenged the reassessment proceedings in respect of the year 2014-15 and the order is certainly appealable - principles of natural justice - HELD THAT:- In the case of COMMISSIONER OF INCOME TAX OTHERS VERSUS CHHABIL DASS AGARWAL [ 2013 (8) TMI 458 - SUPREME COURT] , the Hon'ble Supreme Court has dealt with a issue of alternative remedy and it was held that If an appeal is from Caesar to Caesar s wife the existence of alternative remedy would be a mirage and an exercise in futility. In the present case, the appeal is certainly not going to be an appeal from Caesar to Caesar s wife . There is a statutory authority to decide the appeal and all the grounds raised in the present writ petition can very well be raised in the appeal before the appellate authority. This Court does not find any reason to interfere with the order passed by the Assistant Commissioner, Commercial Tax - petition dismissed.

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• Indian Laws

• 2019 (9) TMI 391
  Dishonor of Cheque - insufficient funds - section 138 of NI Act - acquittal of accused in respect of charges framed - Statutory presumption in favor of holder - HELD THAT:- Cheque embodied in Ext. CW1/B,upon its presentation before the Bank concerned, hence for want of sufficient funds, thereat occurring, in, the accounts, of, the respondent, stood declined, to be honoured. The memos, issued by the Bank concerned, making, the requisite echoing(s), vis- -vis, Ext. CW1/B, upon its presentation therebefore, it being declined to be honoured, for, wants thereat, of, sufficient funds, being borne, in the accounts, of, the respondent/accused, are respectively borne in Ext. CW1/C, and, in Ext.CW1/D. This Court holds, that the learned trial Court, has not appraised, the entire evidence, on record in a wholesome, and, harmonious manner apart therefrom, the analysis of the material, on record by the learned appellate Court, suffers, from a gross perversity or absurdity of mis-appreciation, and, non-appreciation, of, evidence on record. Appeal allowed - The accused/respondent be produced before this Court, for his being heard on quantum of sentence, on 26.8.2019.

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