TMI Tax Updates - e-Newsletter
September 19, 2019
Case Laws in this Newsletter:
GST
Income Tax
Benami Property
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
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GST:
Classification of goods - Agriculture Knapsack Sprayer - Mechanical Sprayers classifiable under Chapter head 8424 shall attract GST @12% w.e.f. 25.01.2018. - AAR
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GST:
Provisional attachment of Bank Account - irregular availment of input tax credit - No hard and fast rule can be laid down as to how and under what circumstances the power u/s 83 can be invoked by the Authority. The discretion conferred on the Authority shall be brought to bear having regard to the facts and circumstances of each case. It is not permissible for the Authority to equate the provisional attachment envisaged u/s 83 with attachment in the course of the recovery proceedings. - HC
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Income Tax:
Income-tax (8th Amendment) Rules, 2019 - Approving Panel - Power of AO to refer the matter to Pr. CIT or CIT where he considers that it is necessary to declare an arrangement as an impermissible avoidance arrangement
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Income Tax:
Deduction u/s 80HHC - supporting manufacturers - Exporter stands on a completely different footing from the supporting manufacturer as the parameters and scheme for claiming deduction relatable to exporters under 80HHC(1) read with (3) is completely different from that of supporting manufacturers under Section 80HHC (1A) read with (3A) thereof. - SC
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Income Tax:
Validity of order of Tribunal staying the Show Cause Notice - Prohibition of Benami Property Transactions - the SCN under challenge has been issued u/s 26(1) and the same does not, prima facie, constitute ‘an order’ passed by the Adjudicating Authority. The jurisdiction of the Appellate Tribunal to entertain the Respondent’s challenge to the show-cause notice is in doubt - HC
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Income Tax:
Special audit u/s 142(2A) - complexity in the books of account - AO has carefully scrutinized the objections raised by the Petitioner and has fairly and objectively arrived at the conclusion that special audit is required - no infirmity in the order directing the special audit - HC
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Income Tax:
Disallowance u/s 40(a)(ia) - Additions for non-deduction of TDS - Decision of Delhi HC that the second proviso to Section 40(a)(ia) of the Act is declaratory and curative in nature and has retrospective effect from 1st April 2005, accepted by the Karnataka HC.
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Income Tax:
Addition u/s 56(2)(vii)(b) and Section 69B - Family Settlement - assessee has acquired the Bungalow due to relinquishment of rights in the said property by three brothers of the assessee for Rs.NIL - no commercial transaction have been entered into between the assessee and his brothers and there is no colourable device. - AT
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Income Tax:
Interest u/s 234B is not chargeable since ECB interest received by the assessee from the borrowers was subject to tax deduction at source u/s 195 - AT
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Income Tax:
Disallowance of excess deduction claimed u/s 10AA r.w.s 80IA(10) - AO observed that the Appellant earned more than 'ordinary profits' to its associated enterprise ('AE') - where net profit was shown by the assessee at 63%, there is no merit in applying the concept of OP/OC, which cannot be the basis for benchmarking the profits of any business - AT
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Income Tax:
MAT credit u/s 115JAA - There is no restriction with regard to allowance of MAT credit of an amalgamating company at the hands of the amalgamated company. - AT
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Income Tax:
Penalty u/s. 271B - Non compliance to provisions of section 44AB - assessee has shown entire receipt as income - We are unable to see any safeguard in the said provisions in a situation when the assessee has shown entire income/receipts without claiming any expenditure or deduction - Penalty confirmed. - AT
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Income Tax:
Valid source of the amount used for repayment of loan amount - assessee claimed the source from the agricultural income, rental income and interest income were assessed to income tax. - CIT(A) ought not have confirmed the action of the AO on the ground that repayment of loan amount was not accounted in the books of accounts - AT
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Income Tax:
Exemption u/s 10(23C)(iiiad) - The income generated from the activity of running the school is substantially going in the hand of the commercial entities under agreements. - Hence assessee is not existed solely for education purpose and consequently the benefit of Section 10(23C)(iiiad) - AT
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Income Tax:
Capital gain arising on account of the succession of the firms - scheme of succession u/s 47(xiii) - there is no requirement that the firms should be converted into the company - It is sufficient if the existing company acquires all the assets and liabilities of the partnership firms in the manner as provided u/s 47(xiii) - AT
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Income Tax:
Capital gain arising on account of the succession of the firms - scheme of succession u/s 47(xiii) - there is no prohibition for the introduction of new partners in the partnership firms before the date of succession. - AT
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Customs:
Refund in cash - unjust enrichment - the prices (both dealer price and RSP) indicate that the burden of enhanced rate of CVD has not been shifted to the buyers - the appellant has fulfilled this responsibility as cast by Section 28C and 28D of Customs Act, 1962 and Department has failed to establish any element of unjust enrichment. - AT
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Corporate Law:
Contempt of Court / Tribunal - Seeking initiation of contempt proceedings against the Respondents - application u/s 425 of the Companies Act, 2013 - for non-exercising of powers for initiation of contempt proceeding by the Tribunal, the appeal u/s 421 is not maintainable before this Appellate Tribunal - AT
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Service Tax:
Recovery of Service Tax - Post GST - We are not inclined to entertain this petition as only show-cause-notice is issued which involves investigation into facts. - HC
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Central Excise:
CENVAT credit - time limit availing credit - credit was taken after six months as on 28.2.2015 - The rule changed with effect from 01/03/2015 and the words ‘six months’ were changed to ‘one year’ - it has prospective application - demand confirmed invoking extended period of limitation - AT
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VAT:
Benefit of exemption - Single Super Phosphate (SSP) - in absence of such exclusionary clause in that notification, it is not permissible for the revenue authorities to break the identity of Gypsum (CaSO4.2H2O) so as to determine the percentage value of Sulphur in Gypsum (CaSO4.2H2O) only with the object of imposing tax on the value of Sulphur. - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2019 (9) TMI 743
Classification of service - Rate of GST - contract given to Shreeji Infrastructure India Pvt Ltd towards construction of residential quarters at 2x660 MW Shree Singaji Thermal Power Project Stage -II Khandwa - N/N. 11/2017 amended vide N/N. 20/2017, 24/2017 and 31/2017. HELD THAT:- The issue raised in the present application has been duly decided by this Authority in the matter of Application filed by IN RE: M/S. SHREEJI INFRASTRUCTURE INDIA (P.) LTD., [ 2018 (11) TMI 58 - AUTHORITY FOR ADVANCE RULING, MADHYA PRADESH] . The applicant in the present application are the service receivers while M/s.Shreeji Infrastructure P.Ltd. are the service providers. This authority had ruled that The works contract service of construction of 599 residential quarters allotted to the applicant (Shreeji Infrastructure P.Ltd.) by MPPGCL will merit classification under SAC 9954 and would attract GST @18%. In the present case, in the absence of any specific mention of construction of residential quarters having been entrusted to the applicant by the Government of Madhya Pradesh, we do not find any reason to deviate from our stand taken in IN RE: M/S. SHREEJI INFRASTRUCTURE INDIA (P.) LTD., [ 2018 (11) TMI 58 - AUTHORITY FOR ADVANCE RULING, MADHYA PRADESH] . Rate of GST applicable on construction contracts of residential quarters at various power stations of the Applicant - HELD THAT:- It is a very generic question which cannot be decided without looking into specific contracts being awarded. We thus refrain ourselves from giving any categorical ruling on the second question posed before us.
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2019 (9) TMI 742
Classification of goods - Agriculture Knapsack Sprayer - whether classified under chapter sub heading No. 84248200 of the Custom/Excise Tariff Act or under entry 325 of Sch III or entry 195B of Sch II of Notification no. 1/2017 as amended? - rate of GST- Applicability of N/N. 01/2017-Central Tax (Rate) dtd. 28.06.2017 as amended vide N/N. 06/2018-CT(R) dtd.25.01.2018 and the corresponding notification issued under MPGST Act, 2017. HELD THAT:- The product in question is essentially a Mechanical Sprayer which can be carried on back and can be operated either by hand or through a battery. We find that there is no dispute to the classification of product, which even as per the own admission of the applicant would be under Chapter Head 8424 of the GST Tariff - even the applicable rate of GST is not disputed prior to 25.01.2018 as the product Mechanical Sprayers were subject to GST @ 18% as these were squarely covered under Sr.No.325 of the Notification no.01 2017-CT(R) dtd.28.06.2017 and the corresponding notification issued under MPGST Act. However, with effect from 25.01.2018. by dint of amending notification no.06/2018-CT9R) dtd.25.01.2018, and the corresponding notification issued under MPGST Act the item Mechanical sprayers has been brought in the ambit of Schedule-II vide Sr.No.195B Thus, the question posed before us has relevance only for the period post 25.01.2018. Sr.No. 195B has been inserted into the Schedule-II vide Notification No.06/2018-CT(R) and the product under question Mechanical Sprayers is categorically mentioned there under. Thus, that hardly leaves any doubt that Mechanical Sprayers classifiable under Chapter head 8424 shall attract GST @12% with effect from 25.01.2018.
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2019 (9) TMI 741
Provisional attachment of Bank Account - irregular availment of input tax credit - invocation of section 83 of CGST Act, 2017 - period between July 2017 and May 2019 - whether the respondent No.1 was justified in invoking Section 83 of the Act for the purpose of passing an order of attachment of the bank accounts? - revenue neutrality. HELD THAT:- Section 83 of the State GST Act empowers the Assessing Authority to make a provisional attachment of any property of the assessee during the pendency of any proceeding for the assessment or reassessment of any turnover, even though there is no demand outstanding against the assessee, if he is of the opinion that it is necessary to do so to protect the interest of the revenue. This provision has been made, in order to protect the interest of the revenue in cases where the raising of demand is likely to take time because of the investigations and there is apprehension that the assessee may default the ultimate collection of the demand. Section 83 gives a power to be exercised during the pendency of any proceeding for assessment or reassessment, so that the assessee may not fritter away or secrete his resources out of the reach of the Commercial Tax department when the assessment or reassessment is completed. The expression for the purpose of protecting the interest of the revenue occurring in Section 83 of the Act is very wide in its meaning. The orders of provisional attachment must be in writing. There must be some material on record to indicate that the Assessing Authority had formed an opinion on the basis thereof that it was necessary to attach the property in order to protect the interest of the revenue. The provisional attachment provided under section 83 is more like an attachment before judgment under the Code of Civil Procedure. It is a liability on the property. However, the power conferred upon the Assessing Authority under Section 83 is very drastic, farreaching power and that power has to be used sparingly and only on substantive weighty grounds and for valid reasons. To ensure that this power is not misused, no safeguards have been provided in the Section 83. The Bombay High Court in GANDHI TRADING VERSUS ASSISTANT COMMISSIONER OF INCOME-TAX AND OTHERS [ 1999 (7) TMI 59 - BOMBAY HIGH COURT] has opined that the attachment should be made, as far as possible, of the immovable properties if that can protect the Revenue. The attachment of bank accounts and trading assets should be resorted to only as a last resort because, the attachment of the bank accounts of the assessee would paralyse the functions and business of the assessee - The Authority, therefore, should exercise the power conferred upon him under Section 83 of the Act with circumspection and fairly and reasonably. No hard and fast rule can be laid down as to how and under what circumstances the power under Section 83 can be invoked by the Authority. The discretion conferred on the Authority shall be brought to bear having regard to the facts and circumstances of each case. It is not permissible for the Authority to equate the provisional attachment envisaged under Section 83 of the Act with attachment in the course of the recovery proceedings. The orders of provisional attachment of the bank accounts of the writ applicants are hereby quashed and set aside - Application allowed.
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2019 (9) TMI 740
Proceedings against the transporter of goods - release of detained goods with vehicle on payment of applicable tax and penalty equal to 50% of the value of the goods, by the transporter - the owner of the goods does not come forward for such tax and penalty - case of writ petitioner is, that the transporter cannot be proceeded against even if the allegations against the owner of the goods i.e., dealer under TNGST Act, are true? HELD THAT:- As the vehicle and the consignment have since been released, this writ petition is disposed of preserving the rights of the writ petitioner to assail the aforesaid proceedings dated 20.08.2019 either by way of an appeal under Section 107 of TNGST Act or by way of a revision under Section 108 of TNGST Act - If the writ petitioner choses to assail the aforesaid proceedings in any one of the aforesaid manners, the Appellate or Revisional Authority, as the case may be, shall consider the matter on its own merits and in accordance with law. Petition closed.
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Income Tax
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2019 (9) TMI 739
Assessment in the hands of representative / agent - Chief Financial officer (CFO) of the non-resident assessee - According to the appellant, the Chief Financial Officer was questioned about transfer of shares of the appellant by Clayton Dewandre to WABCO, Singapore, even though the Chief Financial Officer was not employed with the appellant during the Financial Year 2013-14 and had no knowledge of the transaction. Whether the writ petition ought to have been dismissed on the sole ground that the appellant had a right of reply to the show cause notice. The answer to the aforesaid question has to be in the negative, for the reasons discussed hereinbelow? - Division Bench held that no case was made out by the Department that in respect of transfer of share to a third party, that too outside India, the Indian company could be taxed when the Indian company had no role in the transfer HELD THAT:- Delay condoned. Leave granted.
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2019 (9) TMI 738
Deduction u/s 80HHC - supporting manufacturers - whether the assessee being supporting manufacturers, are to be treated on par with the direct exporter for the purpose of deduction of export incentives under Section 80HHC? - HELD THAT:- So far as supporting manufacturers are concerned, under Section 80HHC(1A), where any Export House or Trading House has issued a certificate that the supporting manufacturer has, in fact, supplied such goods or merchandise for export, they shall also be allowed a deduction to the extent of profits referred to derived by the assessee from the sale of goods or merchandise to the Export House or Trading House. The manner of deduction, insofar as the exporter is concerned, is laid down in subsection (3) which when read together with its provisos make it clear that profits that are derived from such export shall be further increased in the manner provided by the first proviso; and where export turnover does not exceed rupees ten crores, in the manner provided by the second proviso; and where the export turnover exceeds rupees ten crores, in the manner provided by the third proviso. What is conspicuous by their absence is any of the provisos in sub-section (3) insofar as sub-section (3A) is concerned, which makes it clear that the profits derived by a supporting manufacturer shall be strictly in accordance with the provisions contained in Section 80HHC (3A) read with the explanation to the section, which then defines Profits of the business Exporter stands on a completely different footing from the supporting manufacturer as the parameters and scheme for claiming deduction relatable to exporters under 80HHC(1) read with (3) is completely different from that of supporting manufacturers under Section 80HHC (1A) read with (3A) thereof. We, therefore, answer the question referred to us by stating that Baby Marine Exports [ 2007 (3) TMI 206 - SUPREME COURT] deals with an entirely different question and cannot be relied upon to arrive at the conclusion that the supporting manufacturers are to be treated on par with the direct exporter for the purpose of deduction under Section 80HHC of the Act, as has been pointed out by us herein above. Consequently, the decision in SUSHIL KUMAR GUPTA [ 2012 (9) TMI 621 - SC ORDER] is over ruled. We allow these appeals in favour of the Revenue
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2019 (9) TMI 736
Rectification u/s 154 - Assistant Commissioner, observed that rectification application assumes character of a matter being sub-judice, it needs to be dismissed - HELD THAT:- In view of the plain language of section 154, there is no embargo on the power of amendment if an appeal or revision is merely pending. The rejection of the rectification application on this ground was unwarranted. We are informed that the Appeal is still pending. The Assistant Commissioner has failed to exercise the jurisdiction vested in him and thus the impugned order will have to be set aside and the application will have to be decided. Writ Petition succeeds. The impugned order dated 13 June 2019 is quashed and set aside. The rectification application filed by the Petitioner under section 154 of the Income Tax Act, 1961 stands restored to the file of Assistant Commissioner of Income Tax 21(2), Mumbai to be disposed of on its own merits.
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2019 (9) TMI 735
Deduction u/s 80P(2)(a) (i) - Appellant is admittedly a Primary Agricultural Co-operative Credit Society Registered under Tamil Nadu Co-operative Societies Act - HELD THAT:- Issue decided in M/S. S. 1234 UDAYAPTTI PACCS LTD., SALEM VERSUS THE INCOME TAX OFFICER, WARD 1 (4) , SALEM-7. [ 2019 (8) TMI 186 - MADRAS HIGH COURT] wherein as referred case of M/S. AA 713 THE KODUMUDI GROWERS COOPERATIVE BANK LTD., KODUMUDI VERSUS THE INCOME TAX OFFICER, WARD-II (1) , ERODE. [ 2018 (12) TMI 127 - MADRAS HIGH COURT] wherein held activity done by the appellant society cannot be truncated from the activity as a credit society and we are of the considered view that the Authorities below as well as the Tribunal committed an error in rejecting the stand taken by the appellant/ assessee. - Decided in favour of assessee.
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2019 (9) TMI 734
Special audit u/s 142(2A) - as per the AO the questionnaire was remain conclusively unanswered - contention of the Petitioner was that there was no complexity in the books of account which would warrant the Respondent No. 1 to direct special audit - denial of natural justice - HELD THAT:- on the basis of the reasons recorded in the impugned order, it cannot be said that there was no genuine attempt on the part of the Assessing Officer to understand the nature of his business, its method of accounting, or to understand the nuances of the books of accounts or documents. The impugned order clearly reflects the reasons for ordering a special audit. AO initially issued a notice under Section 142(1) on 03.08.2018 along with detailed questionnaire including the reason for selection of case for scrutiny under Section 143 (3). Thereafter, a fresh notice under Section 142 (1) was issued on 30.10.2018 along with pending and fresh queries. Since there was continued non compliance, a show cause notice in respect of specific queries raised therein was issued on 30.05.2019. Another notice dated 03.06.2019 in the form of corrigendum to show cause notice was issued, calling upon the Petitioner to produce the books of accounts. The questionnaire raised by the Assessing Officer was not specifically answered, and if the same had been satisfactorily answered, he would have found the same to be useful for verification of various claims made by the assessing companies in its return of income for the assessment year under consideration [AY 2016-17]. Petitioner was given sufficient opportunity of being heard. Thus, the contention of violation of principles of natural justice is also without merit. . Sections 142 (2A) (2D), 142 (3) and 142 (4) are the relevant provisions dealing with the considerations that are to be weighed while directing special audit. The Supreme Court has also laid down the guiding principles relating to conduct of special audit. In essence, the Supreme Court has underlined that the opinion required to be formed must be based on objective criteria, and not subjective satisfaction. On a reading of the impugned order, it is demonstrated that the Assessing Officer has examined the objections raised by the Petitioner and has exercised his jurisdiction objectively on due consideration of the records, documents and other material before him for ordering a special audit. There is no perversity or arbitrariness in the order of the Assessing Officer. On careful perusal of the afore-noted reasons spelt out in the impugned order, we are of the considered opinion that the Assessing Officer has carefully scrutinized the objections raised by the Petitioner and has fairly and objectively arrived at the conclusion that special audit is required - no infirmity in the order directing the special audit - Decided against assessee.
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2019 (9) TMI 733
Disallowance u/s 40(a)(ia) - Additions for non-deduction of TDS - retrospectively or prospectivity - second proviso to Section 40(a)(ia) of the Act inserted by Finance Act, 2012 whether is clarificatory and retrospective in nature - whether disallowance under Section 40(a)(ia) of the Act by the Tribunal is justifiable where the recipient of the amount has already discharged his tax liability therein? - HELD THAT:- Keeping in mind, the judgment of the Hon ble Apex Court in Vatika Township Private Ltd [ 2014 (9) TMI 576 - SUPREME COURT] the principle of fairness, we find no reason to deviate from the decision of the Hon ble Delhi High Court in the case of Ansal Land Mark Township Pvt. Ltd. [ 2015 (9) TMI 79 - DELHI HIGH COURT] in which it was held that the second proviso to Section 40 (a) (ia) of the Act is declaratory and curative in nature and has retrospective effect from 1st April 2005, merits acceptance. No substantial question of law arises - Decided in favour of the Assessee
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2019 (9) TMI 732
Addition u/s 56(2)(vii)(b) and Section 69B - Family Settlement Deed - on perusal of the Memorandum of Family Settlement (MFS) noted that assessee has acquired the Bungalow due to relinquishment of rights in the said property by three brothers of the assessee for Rs.NIL. - HELD THAT:- In this case, since there was a Family Settlement between the assessee and three brothers and they have acted upon Family Settlement Deed and distributed various properties among themselves and necessary rights and title are transferred in favour of each brother would show that parties have entered into genuine transaction. As per the Family Settlement Deed, it was agreed that property in question with superstructure shall be taken by the assessee and that as per the Settlement Deed, the assessee has to contribute a sum of ₹ 20 crores from his own resources/ capital or through the borrowed funds as part of the Family Settlement to balance the settlement between brothers. Therefore, no commercial transaction have been entered into between the assessee and his brothers and there is no colourable device. We may also note that admittedly settlement was executed for distribution of different properties between the assessee and his brothers which was having no commercial purpose. It may also be noted here that authorities below rejected the claim of assessee because the transaction was not executed out of natural love and affection. The word natural love and affection have not been specified in Section 56(2)(vii)(b) of the I.T. Act. Therefore, this term has no consequence to the above provisions in which the A.O. made the addition. Since the amount of ₹ 12 crores have been taken by assessee as loan from the Bank through the respective agreements referred to above, therefore, it could not be treated as undisclosed income of the assessee. The assessee has explained source of ₹ 12 crores through the loan taken from the Bank. Therefore, provisions of Section 69B would not apply to the case of the assessee. Further, it was not the case of the A.O. that provisions of Section 69B are attracted in the case of assessee. CIT(A), could not have bring to tax the aforesaid amount through new source of income. Considering the above discussion in the light of above decisions, it is clear that provisions of Section 56(2)(vii)(b) and Section 69B of the I.T. Act are not applicable in this case. In this view of the matter, there was no justification for the authorities below to make the addition against the assessee under the above provisions of Law.
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2019 (9) TMI 731
Addition on account of interest received on External Commercial Borrowings [ECB], extended to Indian borrowers - levy of Interest u/s 234B - HELD THAT:- The issue stands covered in favour of the assessee and against the Revenue held Assessing Officer himself had admitted by grossing up the ECB interest by the amount of tax borne by the borrowers that tax at source has been deducted. We are thus of the view that no interest under section 234B of the Act can be levied for the tax demand on account of ECB interest and interest under section 234B is also not chargeable since ECB interest received by the assessee from the borrowers was subject to tax deduction at source under section 195 of the Act. The Assessing Officer is thus directed to delete the addition made on account of interest received from ECB given to Indian borrowers Levy of interest u/s 234D - HELD THAT:- We have carefully considered the intimation u/s 143(1) of the Act dated 31.10.2012 and the Income tax computation form dated 28.07.2016. We find force in the contention of the ld. counsel for the assessee that refund was adjusted against the outstanding demand vide order dated 31.10.2012. Therefore, in our considered opinion, the Revenue erred in levying interest u/s 234D of the Act for the period July 2009 to July 2016. We, accordingly, direct the Assessing Officer to delete the interest so levied. Claim of set off of brought forward business losses and unabsorbed depreciation - HELD THAT:- We direct the Assessing Officer to allow set off of brought forward business losses and unabsorbed depreciation as per provisions of law.
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2019 (9) TMI 730
Disallowance on account of excess cane price paid to sugarcane suppliers - deduction u/s 37 - HELD THAT:- As referred to TASGAON TALUKA S.S.K. LTD. [ 2019 (3) TMI 321 - SUPREME COURT] we set-aside the impugned order on this score and remit the matter to the file of A.O for deciding it afresh as per law in consonance with the articulation of law by the Hon ble Supreme Court in the aforenoted judgment. AO would allow deduction for the price paid under clause 3 of the Sugar Cane (Control) Order, 1966 and then determine the component of distribution of profit embedded in the price paid under clause 5A, by considering the statement of accounts, balance sheet and other relevant material supplied to the State Government for the purpose of deciding/fixing the final price/additional purchase price/SAP under this clause. The amount relatable to the profit component or sharing of profit/distribution of profit paid by the assessee, which would be appropriation of income, will not be allowed as deduction, while the remaining amount, being a charge against the income, will be considered as deductible expenditure. The distribution of profits can only be qua the payments made to the members. In so far as the non-members are concerned, the case will be considered afresh by the AO by applying the provisions of section 40A(2). Disallowance on account of sugar sold to members at concessional price - HELD THAT:- It would be just and fair if the impugned order on this score is set aside and the matter is restored to the file of AO, instead of to the CIT(A), for fresh consideration as to whether the difference between the average price of sugar sold in the market and that sold to members at concessional rate is appropriation of profit or not, in the light of the directions given by the Hon ble Supreme Court in the case of Krishna Sahakari Sakhar Karkhana Limited [ 2012 (11) TMI 669 - SUPREME COURT] . Restoration to the AO is necessitated because, following the judgment of Tasgaon Taluka S.S.K. Ltd. [ 2019 (3) TMI 321 - SUPREME COURT] we have remitted the issue of payment of excessive price to the file of AO, and as such, the instant issue cannot be sent to CIT(A) as it would amount to simultaneously sending one part of the same assessment order to the AO and other to the CIT(A), which is not appropriate. TDS u/s 194C - Disallowance on account of disallowance u/s.40(a)(ia) - HELD THAT:- In the case of CIT Vs. Dwarkadheesh Sakhar Karkhana Ltd. [ 2018 (1) TMI 751 - BOMBAY HIGH COURT] has held that the provisions of section 194C are not attracted in respect of payments made by the assessee, a sakhar karkhana as is the assessee also under consideration, to Mukadams and Transporters. As the assessee made payment to group labourers and such annual payments did not exceed ₹ 50,000/- per individual, which at the material time was the threshold for invocation of section 194C, respectfully following the judgment in the case of CIT Vs. Dwarkadheesh Sakhar Karkhana Ltd. (supra), we hold that the disallowance u/s. 40(a)(ia) has been wrongly sustained. We, therefore, order to delete the disallowance.
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2019 (9) TMI 729
Assessment u/s 153C - proof of incriminating material found in search - HELD THAT:- Conditions of Section 153C are not satisfied in this case. The A.O, therefore, rightly framed regular assessment u/s 143(3) after considering the incriminating material available on record. A.O. in para-2 with regard to addition of the interest on PDCs has mentioned that on perusal of the bills of payments of purchase consideration it was noticed that only part payments have been made while executing the sale deed and balance consideration was paid through PDCs. Therefore, the addition is made by the A.O. on the basis of the documentary evidences produced by the assessee with regard to the payments mentioned in the sale deed. A.O, therefore, correctly made assessment under section 143(3). A.O. has examined the evidences available on record and rightly came to the conclusion that assessee paid interest in cash on PDCS. CIT(A) on examination of the material on record in the light of seized material and others rightly directed the A.O. to compute interest from PDCs after six months from the date of issue of PDCs. D.R. relied upon the above decisions of the ITAT, Delhi Bench in which similar directions of the CIT(A) have been confirmed by the Tribunal. In this view of the matter and in the absence of any representation from the side of the assessee, we do not find any merit in the appeal of assessee and the same is accordingly dismissed. Appeal of Assessee dismissed.
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2019 (9) TMI 728
Deduction u/s 80IB - commercial production of its original undertaking in the previous year relevant to Assessment Year 2001-02 - company is engaged in the business of a refinery and as it fulfills the required conditions u/s 80-IB(9)(iii) - HELD THAT:- Meaning of mineral oil deserved to be considered in a wider manner. Moreover, the meaning of refining should be construed in the context of a refinery and it should not be restricted to simple purification process as opined by the Id AO and upheld by the Id CIT(A). The Id AO and the Id CIT(A) has held that Naphtha , the raw material used by the M S Plant is a Petroleum Product . The Mineral oil would include petroleum and petroleum products. Moreover, the MS Plant of the assessee company is engaged in processes which fall within the meaning of refining , if the intention of the Legislature is considered. Thus, the MS Plant of the assessee company is an undertaking engaged in refining of mineral oil and fulfills all the conditions of section 80-IB(9)(iii) of the Act, as a result of which the assessee company is entitled to benefit of section 80-IB(9)(iii) consecutively for seven assessment years starting from assessment year 2007-08. Based on these facts and circumstances, we direct the assessing officer to allow deduction under section 80-IB(9) of the Act, for the Seven Assessment Years 2007-08 to 2013-14 . Deduction u/s 80IC - special benefit to be given to new undertaking - HELD THAT:- Under section 80-IC(2)(iii), a 100% deduction from the profit of an assessee is allowed if the gross total income of the assessee includes profit of an undertaking producing article specified in Fourteenth Schedule subject to certain conditions. Section 80-IC is a special provision in respect of certain undertakings or enterprises in certain special categories states. The intention of the legislation is clear that certain underdeveloped states should be developed to the extent of national level for which special benefit is given to new undertaking in those states under the provisions of the Act. We note that assessee company has satisfied the conditions of section 80IC(2)(b)(iii) of the Act, therefore, entitled to claim deduction under section 80IC(2)(b)(iii) of the Act. It is well settled that that the beneficial provisions should be liberally construed while interpreting taxing statute. Since, section 80-IC is a beneficial provision giving incentives to specified industries in specific states, it has to be interpreted liberally to achieve the objectives for the purpose for which it was enacted. We have relied on a number of decisions, while adjudicating the issue relating to 80IB(9) of the Act that beneficial provisions should be liberally interpreted and such decisions will also be applicable to section 80-IC of the Act. From the facts and issue of law, it is clear that the Id CIT(A) is not justified in upholding the decision of the Id AO is disallowing the benefit of section 80IC of the Act to the assessee company for the assessment years 2008-09, 2009-10 and 2010-11. We direct the AO to allow the deduction under section 80IC(2)(b)(iii) of the Act, for the assessment years 2008-09, 2009-10 and 2010-11. Disallowance of claim of expenses under the head 'Prior Period Exp' - mercantile system of accounting - HELD THAT:- We note that in mercantile system of accounting, an assessee had not earlier debited his account with the expenditure which accrued in law in an earlier year, would not, in the absence of a barring provisions under the law, disentitle to debit his account later when an enforceable demand is made by the appropriate authority. There is no express bar in law which disallows expenditure relating to a period other than the previous year In CIT V Khaitan Chemicals Fertilizers Limited [ 2008 (9) TMI 89 - DELHI HIGH COURT] has observed that Accounting Standard (AS-5) stipulates that prior period items are income or expenses which arise in the current period as a result of errors or omissions in the preparation of the financial statements of one or more prior periods. Therefore, incomes or expenses relatable to prior period items are those which arise in the current period i.e. the period relevant for the purposes of computing the net profit or loss. Prior period items are to be included in the determination of the net profit or loss. Disallowance of claim of expenses under the head 'Retirement Benefit of Employees' - HELD THAT:- in case of Hindustan Petroleum Corporation Ltd. [ 2014 (7) TMI 290 - ITAT MUMBAI] held that provisions of post retirement benefits based on actuarial valuation is an allowable expenses u/s 37(1) of the Act. Therefore, respectfully following the judgment Supra we direct the assessing officer to allow provisions of post- retirement benefits based on actuarial valuation as expense u/s 37(1) of the Act, after due verification and in accordance to law. Deduction of expenditure on account of corporate social responsibility - HELD THAT:- ACIT Vs. Jindal Power Limited [ 2016 (7) TMI 203 - ITAT RAIPUR] for the Assessment Year 2008-09, where it has been held that expenditure on Corporate Social Responsibility though voluntary, is allowable as business expenditure. It is also held that Explanation 2 to section 37(1) inserted w.e.f. 01-04-2015 is not retrospective. It applies only to Corporate Social Responsibility expenditure referred to in section 135 of the Companies Act,2013 and not to voluntary Corporate Social Responsibility expenditure. The Tribunal has observed that the amendment in the scheme of section 37(1) which has been introduced with effect from 1st April,2015 cannot be construed as to disadvantage to the assessee in the period prior to the amendment. This disabling provisions, as set out in Explanation 2 to section 37(1), refer only to such corporate social responsibility expenses as under section 135 of the Companies Act,2013 and, as such, it cannot have any application for the period not covered by this statutory provisions which itself come to existence in 2013. Explanation 2 to section 37(1), is therefore, inherently incapable of retrospective operation and prospective in nature. Assessee company is entitled to claim of deduction of its Corporate Social Responsibility expenses u/s 37(1) D isallowance of claim of deduction under the head 'Provisions for Stores and Consumables' and Disallowance of claims of deduction of 'Prior period Depreciation' - HELD THAT:- We note that in case of Ahmedabad Electricity Co. Ltd [ 1992 (4) TMI 29 - BOMBAY HIGH COURT] it is held that the basic purpose of an appeal procedure in an income tax matter is to ascertain the correct tax liability of the assessee in accordance with law. Therefore, the appellate authority can consider the proceedings before it and the material on record before it for the purpose of determining the correct tax liability of the assessee. There is nothing in section 254 or section 251 which would indicate that the appellate authorities are confined to consider only the objections raised before it or allowed to be raised before it either by the assessee or by the Department, as the case may be. They can consider the entire proceedings to determine the tax liability of an assessee. In case of CWT V Smt. Vimlaben Vadilal Mehta [ 1983 (10) TMI 3 - SUPREME COURT] it is held that when an appeal is filed against an assessment order before the AAC, the assessment case is thrown open and appellate proceedings constitute a continuation of the assessment proceedings. Considering the facts and circumstances narrated above, we direct the assessing officer to allow the prior period depreciation. TDS u/s 194A - Interest payable - addition u/s 40(a)(ia) - HELD THAT:- Unilateral action is taken by the assessee company to recognize its liability and a sum of money is kept separately as provisions in its books of account for the liability. The liability is recognized and provided for in the books of account, but the claim of the party is not accepted and communicated to the party is not credited to the account of the party or the amount is not credited to any account whether called interest payable account or suspense account or by any other name in the books of account. Only a liability has been created in the books of account and no income by way of interest is credited to any account. Hence, provisions of explanation to section 194A are not applicable. Since there is a view that interest from part of judgement debt, following the well settled trite of law that if two views are possible, the favourable view to the assessee should be taken, the assessee company deserves benefit of doubt for non-deduction of tax at source under section 194A Addition u/s 14A - HELD THAT:- There is no disallowance under Rule 8D(2)(i). Besides under rule 8D(2)(ii) no disallowance can be made as the assessee has own funds which is more than investments made by assessee. However, for disallowance under Rule 8D(2)(iii) only the dividend bearing securities should be considered; for that we rely on the judgment of the Co-ordinate Bench of Kolkata in the case of REI Agro Ltd [ 2013 (9) TMI 156 - ITAT KOLKATA] . Therefore, we direct the AO to compute the disallowance under rule 8D(2)(iii) r.w. section 14A, of the Act, taking into account dividend bearing securities. Therefore, we allow these grounds raised by Revenue for statistical purposes.
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2019 (9) TMI 727
Disallowance of excess deduction claimed u/s 10AA r.w.s 80IA(10) - AO observed that the Appellant earned more than 'ordinary profits' to its associated enterprise ('AE') - HELD THAT:- AO was of the view that the assessee by showing such high OP/OC had earned super normal profits when compared with the margins of comparable companies. We find no merit in the observations of AO in this regard as the concept of PLI i.e. OP/OC which has been adopted by AO was relevant for comparability for transfer pricing analysis. The same cannot be used for holding the assessee to have earned super normal profits in carrying on its business for that. He has to look at net profits shown by assessee, which in the present year is 63% only. The learned Authorized Representative for the assessee pointed out that similar net profit range has been shown both in preceding and succeeding years. Coming to the issue at hand as to whether any disallowance is merited under section 10AA of the Act. The basic condition for application of the said provisions of the Act are an arrangement between the parties, which is so arranged as to enable the assessee to earn super normal profits. The TPO/Assessing Officer/DRP has not pointed out any such arrangement whatsoever between the assessee and the comparable companies selected. In the absence of the same, provisions of section 10AA(9) r.w.s. 80IA(10) of the Act are not attracted. This issue has been elaborated upon by us in various decisions, as also in the case of sister concern i.e. Eaton Industries Pvt. Ltd [ 2017 (10) TMI 1384 - ITAT PUNE] There is no merit in invoking provisions of section 10AA(9) r.w.s. 80IA(10)of the Act in the case of assessee. The TPO having accepted the transactions to be at arm's length and where the assessee was raising invoices on man hour basis, in line with the third party agreement and where net profit was shown by the assessee at 63%, there is no merit in applying the concept of OP/OC, which cannot be the basis for benchmarking the profits of any business. Hence, we direct the Assessing Officer to allow the deduction claimed under section 10AA of the Act in entirety Disallowance u/s 40(a)(i) - payment of software on the ground that the assessee had purchased copyright in the said software - HELD THAT:- We hold that the payment made by assessee for purchase of off-the-shelf software is not in the realm of royalty and in any case as the definition of royalty has not been amended under DTAA, provisions of DTAA being beneficial are to be applied and there was no requirement to deduct tax at source out of such payment. See JOHN DEERE INDIA PVT. LTD., (JOHN DEERE EQUIPMENT MERGED WITH JOHN DEERE INDIA PVT. LTD.) [ 2019 (3) TMI 458 - ITAT PUNE] TP Adjustment - benchmarking of ITES segment - comparable selection - HELD THAT:- The assessee before us has filed tabulated details in respect of preceding and succeeding years. In all the years under consideration, the OP/OC on segmental level is positive and it is not loss making concern. The Assessing Officer / TPO in such circumstances, directed to include the segmental results of Microgenetics Systems Ltd. for benchmarking the transactions of assessee in ITES segment. Universal Print Systems Ltd., wherein the plea of assessee before us is that it is functionally not comparable. The learned Authorized Representative for the assessee has pointed out that the segment which was held to be comparable to the assessee s ITES segment was pre-pressed services. So, he explained that pre-pressed services include procedure between creation of content and final printing, whereas the assessee under ITES segment undertakes back office accounting in HR services, which in no manner can be equated with pre-pressed services. Just because, it was an outsourced business source, we find merit in the plea of assessee in this regard and accordingly, hold that the said concern Universal Print Systems Ltd. was not functionally comparable to the assessee and hence, could not be included in the final set of comparables. AO/TPO is thus, directed to exclude the same. Incorrect computation of margins of comparables - HELD THAT:- DRP had given certain directions to the Assessing Officer/TPO, but have failed to carry out the same. The assessee has also moved rectification application which is pending adjudication. Assessing Officer/TPO is directed to correctly compute the margins of comparables after verifying stand of assessee in this regard and after allowing reasonable opportunity of hearing to the assessee. The ground of appeal allowed.
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2019 (9) TMI 726
Revision u/s 263 - MAT credit under section 115JAA - entitled to claim carried forward MAT credit of the amalgamating company - assessee challenged the reduction of MAT credit in an appeal filed before the first appellate authority - HELD THAT:- Commissioner (Appeals) the assessee had raised a ground claiming MAT credit pertaining to the assessment year 2006 07. While deciding the said ground, he has clearly observed that in the original assessment order, the Assessing Officer has not made any discussion on the issue. Accordingly, he directed AO to allow credit as per law. It is further seen, as against the MAT credit of more than ₹ 58 crore claimed by the assessee before the Commissioner (Appeals), the AO allowed credit for ₹ 20,12,95,237. In these circumstances, it cannot be said that the order giving effect to is nothing but an implementation of direction of Commissioner (Appeals). Exercise of jurisdiction under section 263 of the Act does not suffer on account of either limitation or merger with learned Commissioner (Appeals) s order. Undisputedly, learned CIT has exercised the power under section 263 of the Act on the issue of allowance of MAT credit relating to Ambuja Cement Eastern Ltd. which amalgamated with the assessee company. It is the reasoning of learned CIT that the provisions of section 115JAA of the Act allows set off of MAT credit only in respect of company in whose case such MAT credit has arisen. According to her, carry forward of MAT credit of amalgamating company cannot be allowed in case of amalgamated company. On a reading of the provisions of section 115JAA of the Act, we do not find any such restriction with regard to allowance of MAT credit of an amalgamating company at the hands of the amalgamated company. Rather, a plain reading of the aforesaid provision reveals that MAT credit is allowed to be carried forward for a specific period. In case of Skol Breweries Ltd. [ 2011 (3) TMI 578 - ITAT, MUMBAI] while deciding identical issue has held that carried forward MAT credit of the amalgamating company can be claimed by the amalgamated company. In view the assessment order passed in case of amalgamating company the principle which emerges is, the carried forward MAT credit of amalgamating company can be taken credit of by amalgamated company. Viewed in the aforesaid perspective, the decision of the Assessing Officer in allowing set off of carried forward MAT credit of ₹ 6,99,46,873, at the hands of the assessee cannot be considered to be erroneous. Therefore, one of the conditions of section 263 of the Act is not satisfied. That being the case, the exercise of power under section 263 of the Act to revise such an order is invalid.
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2019 (9) TMI 725
Penalty u/s. 271B - Non compliance to provisions of section 44AB - assessee has shown entire receipt as income - assessee has received commission for which has neither got his books of account audited nor furnished report on such audit as required u/s 44AB - HELD THAT:- On a conjecture reading of provisions of section 44AB and Section 271B of the Act, we noted that it is a mandatory provision that the assessee should get his books of account audited having turnover of more than ₹ 60 lakhs. In the present case, undisputedly, the admitted facts are that the gross receipts of ₹ 64,16,667/- and ₹ 67,51,712/- for the assessment years 2010-11 2011-12 and the assessee did not audit his books of account during the relevant financial period. We are unable to see any safeguard in the said provisions in a situation when the assessee has shown entire income/receipts without claiming any expenditure or deduction. Therefore, the contention of the assessee is devoid of any merits and same is dismissed. - Decided against assessee.
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2019 (9) TMI 724
Reopening of assessment u/s 147 - valid source of the amount used for repayment of loan amount - assessee claimed the source from the agricultural income, rental income and interest income were assessed to income tax. - HELD THAT:- From the perusal of the assessment order, it is clear that the AO assessed agricultural income, rental income and interest income and the same should be treated as amount available for repayment of loan in the absence of any evidence to the contrary. AO had not brought any material on record to demonstrate that the amounts were utilized for some other purpose. AO was not justified in making the addition without giving any valid reason. CIT(A) ought not have confirmed the action of the AO on the ground that repayment of loan amount was not accounted in the books of accounts, as this cannot be reason for making the impugned addition. We delete the addition made by the Assessing Officer. The appeal filed by the assessee is allowed. Assessment u/s 153C - unexplained investments made in purchase of land - HELD THAT:- Admittedly, the property was bought by registered sale deed, whether the assessee had source of income for the purpose of purchase of property is an issue which requires thorough examination in the respective assessments of the assessee. The assessment order is silent as to contents of the seized materials. Therefore it cannot be said that material seized suggest any unaccounted investments in the said land. However during the course of present assessment proceedings, the assessee had offered an explanation in support of the source of investments made in purchase of property. The seized material does not contain anything to show that the explanation offered by the assessee cannot be believed or false. In the circumstances, the impugned additions cannot be sustained in the eyes of law as the addition was not made based on the incriminating material found as a result of searched material. Accordingly, the assessment order of the lower authorities are set aside and appeal of the assessee is allowed.
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2019 (9) TMI 723
Addition made in the order u/s 143(3)/153A - proof of incriminating material unearthed during search - HELD THAT:- AO has not found any incriminating material during search on 30.08.2012 qua this assessment year against the assessee of ₹ 4,54,44,692/-. Therefore, since no assessment was pending on the date of search for AY 2009-10 on 30.08.2012 (date of search), the AO could not have made any addition without the aid of incriminating material unearthed during search qua the assessment year. Therefore, we do not find any infirmity in the order of the Ld. CIT(A) who has deleted the addition. See KABUL CHAWLA [ 2015 (9) TMI 80 - DELHI HIGH COURT] - Decided in favour of assessee.
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2019 (9) TMI 722
Exemption u/s 10(23C)(iiiad) denied - admitted gross receipts for the year under consideration breaches the limit provided U/s 10(23C)(iiiad) - exemption u/s 11 - charitable activity - arrangement made by the assessee with THEAL under which the assessee agree to receive the services from THEAL for providing facility in running the schools - HELD THAT:- Even as per the admitted gross receipts for the year under consideration breaches the limit provided U/s 10(23C)(iiiad) of the act and therefore, the said benefit of provisions of Section 10(23C)(iiiad) would not available to the assessee. Accordingly to that extent we set aside the order of the ld. CIT(A) and restore the order of the Assessing Officer for denying the claim of exemption U/s 10(23C)(iiiad) of the Act. Receipt from THEAL - Entire arrangement between the assessee society and THEAL is in the nature of joint venture for 30 years. The agreement in question is irrevocable as the parties to the agreement have no right to terminate the agreement accept fulfillment of terms and conditions. Arrangement between the parties and the activity carried out by the assessee are to earn the profit from the activity and then transfer the same in the ratio as per the agreement to the other parties. The other entities are undisputed existed solely for the commercial activity and for earning the profit and not invested in the assessee for any charitable purpose. Thus the sharing of the profit or income under the agreement and 80% of the income is going to the commercial entities clearly established the intention of the parties in this arrangements being for profit are not solely for providing education - there is no intention of generating any income to be applied for education purposes and to meet the requirement of future expenses, modernization or to provide latest facility or infrastructure to the student. The income generated from the activity of running the school is substantially going in the hand of the commercial entities under these agreements. Hence assessee is not existed solely for education purpose and consequently the benefit of Section 10(23C)(iiiad) of the Act is otherwise not available to the assessee - Decided in favour of revenue
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2019 (9) TMI 721
Addition u/s 40A(3) - excess cash payments - Business urgency to make cash expenditure exceeding permissible limits - HELD THAT:- Considerable cogency in the contention of the assessee that before the lower authorities the assessee has submitted that the factum of genuineness of payment where payee to whom payment made by assessee in prohibited made u/s. 40A(3), is also assessed with ACIT, Circle-2, Meerut where assessee is also assessed at Meerut itself, where there is no doubt on payment being received by identified seller which stands thoroughly uncontroverted. The sale deed are registered which evidences and confirms beyond pale of doubt the genuineness of payment aspect. Once the genuineness of payment is not in dispute and payee is identifiable from where payment is duly confirmed, rigors of section 40A(3) stands discharged. The authorities below have not doubted the identity of the payee and the genuineness of the transaction in the matter. Therefore, the decision of ITAT, Delhi Bench in the case of ACIT, Central Circle-2, Faridabad vs. M/s. Marigold Merchandise (P) Ltd. [ 2017 (9) TMI 1633 - ITAT DELHI] is squarely applicable to the facts of the case, wherein the Tribunal has dismissed the Departmental Appeal - Decided in favour of assessee.
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2019 (9) TMI 720
Capital gain arising on account of the succession of the firms - scheme of succession under section 47(xiii) - whether the assessee is entitled to the depreciation on the intangible assets acquired by it in the given facts and circumstances? - HELD THAT:- there is no requirement under the provisions of section 47(xiii) of the Act that the firms should be converted into the company. It is sufficient if the existing company acquires all the assets and liabilities of the partnership firms in the manner as provided under section 47(xiii) of the Act to claim the exemption from the capital gain. Similarly, even if the valuation of the technical know-how and the trademark is determined at nil value, then also there would not be any violation of holding the shares in the proportion of the capital in the firm as stood immediately before succession as specified under section 47(xiii) of the Act. Further, there is no prohibition for the introduction of new partners in the partnership firms before the date of succession. As such, the introductions of the partners in the firm before the date of succession does not act as an estoppel on the operation of the exemption provided under section 47(xiii) of the Act. There was no violation of the provisions of section 47(xiii) - Benefit of scheme allowed. Claim of Depreciation - technical know-how and trademark - Held that:- ITAT Mumbai Bench in the case of the DCIT versus Suyash Laboratories Ltd [ 2016 (1) TMI 977 - ITAT MUMBAI] held that the depreciation on the revalued assets could not be disallowed in the hands of the assessee if acquired in the manner specified under section 47(xiii) of the Act. In the case on hand there was a valuation report furnished by the assessee certifying that all the assets and liabilities which were acquired at the book value in the manner provided under section 47(xiii) of the Act. All the conditions as specified under the provisions of section 47(xiii) of the Act has duly complied. - the assessee cannot be denied for the amount of depreciation claimed by it. Hence, we do not find any reason to interfere in the finding of the Ld. CIT-A. - Decided against revenue Addition on account of payment made to the persons specified under section 40A(2) - CIT-A deleted the addition - HELD THAT:- AO has made the disallowance after treating the payment made by the assessee to the specified persons under section 40A(2) of the Act as excessive and unreasonable without bringing any comparative cases. In such cases, we are of the view that the expenses incurred by the assessee cannot be held excessive and unreasonable until and unless these are backed by some documentary evidence. Accordingly, we are of the view that the order of the Ld. CIT-A does not suffer from any infirmity. - Decided against revenue
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2019 (9) TMI 719
Bogus LTCG - AO has received information about suspicious share transactions and on the basis of the same; he has disbelieved the claim of long term capital gains - HELD THAT:- Assessee has purchased shares through a broker named M/s Eden Financial Services and sold shares through Intime Equities Ltd. Thus, the purchase and sale of shares have been carried out through two different brokers. It is not the case of the AO that both the share brokers referred above have been identified as tainted brokers involved in fraudulent transactions. The assessee has earned speculation profit in the immediately preceding year through M/s Eden Financial Services also and the said profit has been used to purchase the shares of M/s Sunrise Asian Ltd. The assessee has offered the speculation profit for income tax purposes in the immediately preceding year and it has been accepted. The assessee has shown the purchase of impugned shares as investment in the Balance Sheet. Hence the purchase of shares has been accepted. Further the shares have been received in the D-mat account of the assessee and they have been sold through the D-mat account only. Hence the delivery of shares also stand proved. AO has not brought any material on record to show that the assessee was part of fraudulent price rigging. Accordingly, in the absence of any evidence to implicate the assessee or to prove that the transactions are bogus, the capital gains declared by the assessee cannot be doubted with. In that view of the matter, the addition made towards expenses is not also sustainable. - Decided in favour of assessee.
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2019 (9) TMI 718
Unexplained investment - loose paper was found from the premises of the assessee exhibiting the purchase of a property - HELD THAT:- As per the loose paper, the assessee has agreed for payment of 30% at the time of booking; 15% at the time of possession, and balance 55% in eight instalments from February, 2008 to September, 2008. Search was conducted on 11.2.2010, meaning thereby, all these instalments have been adhered to because first time assessee has disclosed cancellation of deal in the statement recorded on 3.5.2010. We could appreciate the case of the assessee had he produced refund of booking amount before the search, that is, if the assessee has demonstrated that payment of ₹ 1.70 lakhs paid through DD was received back by him before 11.2.2010. To some extent it could be appreciated that this paper was pertaining to negotiation of certain deal. It is also important to note that we have to evaluate the position of the payment on the time mentioned in the loose paper. If the assessee has paid money in cash in accordance with the schedule, then it is to be construed that unexplained expenditure was incurred; on cancellation of the deal, even after the search, the assessee has got cash component in cash. He will not disclose it anywhere that circumstances would not absolve him from explaining position of availability of cash from explained sources also at the time of payment reflected in the schedule. It CIT(A) has made a detailed analysis of this schedule in the light of payment through DD and observed that probability of incurrence of expenditure according to the schedule is much more. Only circumstance highlighted by the assessee before us is that deal was cancelled, and therefore, there was no motive or objective to make unexplained investment. The fact that the deal was cancelled has not been brought on record. It is a declaration after the search, which is not relevant factor. Therefore, we do not have any hesitation in concurring with the Revenue authorities on this issue. - Decided against assessee.
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2019 (9) TMI 717
Deduction u/s 54B - deduction neither been claimed by the assessee in the return of income nor has filed the revised return - case of assessee was picked up for scrutiny - CIT-A allowed the claim - HELD THAT:- No merit in the appeal filed by Revenue, wherein the matter has been decided by the CIT(A) observing that the assessee would be entitled to the aforesaid deduction under section 54B of the Act, in view of the dictate of the Hon ble Bombay High Court in CIT Vs. Pruthvi Brokers Shareholders [2012 (7) TMI 158 - BOMBAY HIGH COURT ] . We find no error in the order of CIT(A) in this regard. CIT(A) was duty bound to allow the claim of assessee though not made in the return of income. It may be pointed herein itself that even the income from sale of agricultural land as either Long Term Capital Gains or Short Term Capital Gains, was never offered by assessee in its return of income. Assessing Officer computing income from capital gains in the hands of any assessee, then it is his duty not only to compute income under the respective heads but also to allow exemptions which are duly allowable to the assessee. CIT(A) had in all fairness directed the Assessing Officer to verify whether the assessee has fulfilled the conditions laid down in section 54B and had further observed that in case they are not so fulfilled, then no deduction under section 54B is to be allowed to the assessee. We find no error in the order of CIT(A) in this regard. - Decided against revenue.
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Benami Property
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2019 (9) TMI 737
Validity of order of Tribunal staying the Show Cause Notice - Prohibition of Benami Property Transactions Act - HELD THAT:- The show-cause notice issued on 21st June 2019, is under Section 26(1) of the Benami Act and not under Section 26 (3). The reasons for this are not far to seek. The scheme of the Benami Act, under Section 5, provides for confiscation of any property which is subject matter of a benami transaction, by the Central Government. An Adjudicating Authority is appointed under Section 7. The proceedings for confiscation are initiated by the Initiating Officer under Section 24 of the Benami Act. If the Initiating Officer passes a provisional order of attachment of the property, he draws up a statement of case and refers it to the Adjudicating Authority under Section 24(5) of the Benami Act. The second level of adjudication then begins by the Adjudicating Authority issuing a show cause notice u/s 26(1) of the Benami Act. The said show-cause has to be issued within a period of thirty days upon the reference being received. At least 30 days period has to be given for filing of the reply and furnishing the information. After affording an opportunity of being heard, the Adjudicating Authority has to pass appropriate orders as per Section 26. However, the statute provides a specific time period for the said process to be concluded i.e., a period of one year. The questions raised by the respective parties shall be finally adjudicated after completion of pleadings. Clearly, the show-cause notice under challenge has been issued under Section 26(1) and the same does not, prima facie, constitute an order passed by the Adjudicating Authority. The jurisdiction of the Appellate Tribunal to entertain the Respondent s challenge to the show-cause notice is in doubt. Issue notice to the Respondents returnable on 30th January, 2020. Till the next date of hearing, the interim order passed by the Appellate Tribunal staying the operation of the notice dated 21st June, 2019, shall remain suspended. Replies to the show cause notice, shall be filed within 30 days from today. The Adjudicating Authority shall thereafter proceed in accordance with law and in accordance with the timelines prescribed under Section 26 of the Act.
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Customs
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2019 (9) TMI 716
Refund in cash - unjust enrichment - refund claim amounts in cash which have been ordered to be credited to the Consumer Welfare Fund on the ground that the appellants were not able to discharge the burden of unjust enrichment - HELD THAT:- The comparative analysis of prices, in a situation of change in the tax rates, is absolutely important to decide whether the additional tax burden in situation of increase in tax rates is being shifted to the buyer or not. This also has to be the important parameter to determine whether in a given situation whether there is a presence of unjust enrichment or not. We find that in the case at hand, the prices (both dealer price and RSP) indicate that the burden of enhanced rate of CVD has not been shifted to the buyers and, therefore, there cannot be any element of unjust enrichment. Hon ble Supreme Court in the case of Commissioner of Customs New Delhi vs. Organan (India) Ltd. [ 2008 (9) TMI 62 - SUPREME COURT ], wherein the Hon ble Apex Court has held that if there is no change in the price post levy of duty and the Auditors certifies that the incidence of duty has not been passed to the customers, in that case, it can safely be presumed that since the duty burden has not been passed on to the customers and therefore, the question of unjust enrichment does not arise. Thus, the element of unjust enrichment are not present in the matter at hand. Fulfillment of requirement as prescribed u/s Section 28C and 28D of Customs Act, 1962 - HELD THAT:- The provision of Section 28C and 28D of Customs Act are presumptive provisions and once the importer assesse submits his claim that he has submitted the required sales invoices etc. it is on the part of the Department to establish that assessee has not passed the burden of enhanced duty on the customers. In this case we find that all the invoices, purchase and sales invoices have been submitted to the Department and Deputy Commissioner in his report dated 19 February 2018 has reported that burden of enhanced duty has been borne by the appellant and there is no element of unjust enrichment. Thus, the appellant has fulfilled this responsibility as cast by Section 28C and 28D of Customs Act, 1962 and Department has failed to establish any element of unjust enrichment. Thus, the appellants have been able to establish beyond doubt that burden of enhanced CVD has not been passed down to the buyers and therefore, the element of unjust enrichment is not present in this case, thus, the subject refunds are admissible to the appellants - the impugned order in appeal under challenge is devoid of any merit and deserves to be set aside - appeal allowed - decided in favor of appellant.
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2019 (9) TMI 715
Valuation of imported goods - marble slabs - rejection of declared value - enhancement of value based on contemporaneous imports - HELD THAT:- The findings of the original authority, which was upheld in the impugned order, have based the enhancement of assessable value on imports that were contemporaneous as well as others that were not contemporaneous. Moreover, despite the enhanced value being in excess of the threshold prescribed in the Foreign Trade Policy for free importability, the first appellate authority has confirmed the actions of the original authority in confiscating the goods for violation of the import policy prescription. The confiscation of 21.71 sq meter of marble slabs that were in excess of the declaration is sustainable in law. The enhancement of the assessable value appears to have relied upon four bills of entry of which only two pertains to the period prior to the import effected against bill of entry no. 466132/16.09.2011. However, it is not ascertainable from the records if those two bills of entry can be accepted as benchmarks or had been subject to re-assessment in like manner and, thereby, not appropriate for subjecting the impugned goods to revised valuation. The enhancement of value does not appear to be sustainable in law. As the goods are, admittedly, imported at a value below the threshold prescribed for free importability and the policy had come into force on 4th August, 2011 with shipment occurring thereafter, the plea of the appellant that the quotation received in June 2011 as proforma invoice would entitle them to relief in accord with the transitional provision in the Foreign Trade Policy is not acceptable. While setting aside the valuation, the confiscation of the goods under section 111(d) of Customs Act, 1962 is upheld - the redemption reduced to ₹ 2,00,000/- and the penalty to ₹ 1,00,000/- - appeal allowed in part.
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Corporate Laws
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2019 (9) TMI 714
Resale of old properties - HELD THAT:- The office is directed to resell this property on fresh sale notice. The notice be published in one English and one vernacular daily having wide publication in Pune. Date of sale will be 13th December, 2019. It goes without saying, information regarding sales should be uploaded by the office on its website. Offer documents are returned to Mrs. Sikdar. The offerers want return of respective earnest money tender instruments. The office is directed to return them. List on 13th December, 2019 for disposal.
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2019 (9) TMI 713
Contempt of Court / Tribunal - Seeking initiation of contempt proceedings against the Respondents - application u/s 425 of the Companies Act, 2013 - alleged wilful violation of the order dated 23rd October, 2008 passed by the erstwhile Company Law Board, Additional Principal Bench, Chennai - no wilful disobedience of order. Whether an appeal under Section 421 of the Companies Act, 2013 is maintainable against an order passed by the Tribunal in exercise of powers conferred under Section 425 of the Companies Act, 2013 which empowers the Tribunal to initiate contempt proceeding for committing contempt of its own order? HELD THAT:- The Tribunal has been empowered to exercise and discharge such powers and functions as have been conferred on it or under this Act or any other law ( Insolvency and Bankruptcy Code, 2016 ) for the time being in force - From Section 421 of the Companies Act, 2013, it is clear that if the Tribunal passes order under Section 420 of the Companies Act, 2013, an appeal under Section 421 of the Companies Act, 2013 is maintainable before the Appellate Tribunal. From Section 425 of the Companies Act, 2013, it will be evident that the Tribunal as also the Appellate Tribunal have been empowered with the same jurisdiction, powers and authority in respect of contempt of themselves as the High Court has and may exercise, for this purpose, the powers under the provisions of the Contempt of Courts Act, 1971 , which shall have the effect subject to modifications that in place of High Court, it should be read as Tribunal or the Appellate Tribunal; and in place of Advocate-General, it is to be read as Law Officers as may be specified by the Central Government. The Tribunal and the Appellate Tribunal are empowered to punish a person for violation of its own order under the Contempt of Courts Act, 1971 and are required to follow procedure prescribed under Section 14 of the Contempt of Courts Act, 1971 before holding a person guilty of having committed contempt of the Tribunal or the Appellate Tribunal - No appeal is maintainable under Section 421 of the Companies Act, 2013 once the Tribunal exercises its power under Contempt of Courts Act, 1971 read with Section 425 of the Companies Act, 2013. Thus, for non-exercising of powers for initiation of contempt proceeding by the Tribunal in exercise of powers conferred by the Contempt of Courts Act, 1971 read with Section 425 of the Companies Act, 2013, the appeal under Section 421 of the Companies Act, 2013 is not maintainable before this Appellate Tribunal - This apart, the petition for initiation of Contempt proceeding was also barred by limitation as prescribed under Section 20 of the Contempt of Courts Act, 1971 . Appeal dismissed.
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2019 (9) TMI 712
Oppression and mis-management - various acts of fraud and fabrication of documents in an effort to remove the appellant from the Membership and Board of the 1st respondent divesting him of his entire investment - Section 397, 398 and 111(4) of the Companies Act, 1956 - whether the appellant has paid the amount and is not a defaulter? HELD THAT:- In case the person is a defaulter in payment of subscription to capital or any sum due against him, he will be denied the benefit of this Section. It is also not disputed that the appellant and 2nd respondent are promoter and director of 1st respondent. We note that the appellant is a retired Officer of Income Tax Department, he is very well aware of the law of the land in financial matters - The stand taken by the appellant is that 1st respondent was not having any bank account, therefore, he paid the amount in cash to 1st respondent towards shares application money to the tune of ₹ 25,00,000/-. The stand has no legs to stand on. Nothing stops opening of Account in the name Company with Proposed added in bracket. Nothing stops showing a trail from Account to Account. The appellant has not produced any evidence before the NCLT or before this Appellate Tribunal to substantiate his claim that the appellant paid the said amount in cash. Once the person is asserting that he has made payment in cash to 1st respondent, he has also to show how this payment to 1st respondent could be recorded unless it is asserted that he has made this payment to 2nd Respondent or to any other authorised person who has failed to keep the record or he has retained this money on behalf of 1st respondent with himself. He has not asserted nor has produced any record nor he has made payment to 2nd respondent on behalf of 1st respondent especially when there is no bank account in the name of 1st respondent. Interestingly even if we presume that there could be any authorised person to receive the cash on behalf of 1st respondent, that person is also required to be authorised by the appellant or 2nd respondent or by both. As such no record has been placed by appellant to substantiate his claim. We noted that the notice was served on the Respondent regarding non compliance of filing of statutory returns under the Companies Act, 2013. We noted that the returns have been filed as reflected at Page 175 of the Appeal. We further note that during the said period the appellant was equally responsible for not filing the return. However, it will be an exercise to justify the abandonment of his duties by the appellant. However, when the notice was received by the respondent, they immediately filed the returns and the appellant has not been able to prove whether these are false and fabricated returns. Thus, the appellant, being an ex-Civil Officer, who is very well aware of law of the land, has argued that he has paid a huge amount in cash to become shareholder of that such company which has no Bank Account but is not able to prove the same before the NCLT and before this Appellate Tribunal that such amount has been paid in cash. Further no share certificate is with him. He has not produced his Bank Statement to establish that he had such a huge cash on a particular date. He has not shown his Asset and Liabilities Statement which he used to file when he was in Government employment. The appellant and 2nd respondent have been the promotors of the company. Hence the directors of the company after incorporation it is their duty that all legal compliances with respect to the company are made by them and one cannot say that while one side does not know anything about the operation of the company but the other side is only responsible to make legal compliances. Appeal dismissed.
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Insolvency & Bankruptcy
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2019 (9) TMI 711
Admissibility of application - initiation of CIRP - Repayment of loan granted - cause of limitation continuing - applicability of time limitation - Section 23 of the Limitation Act. HELD THAT:- It is clear that when the Recovery Certificate dated 24.12.2001 was issued, this Certificate injured effectively and completely the appellant s rights as a result of which limitation would have begun ticking - his being the case, and the claim in the present suit being time barred, there is no doubt that is due and payable in law. Appeal allowed.
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2019 (9) TMI 710
Admissibility of petition - Initiation of Corporate Insolvency Resolution Process - Corporate Debtor in accordance with Section 22 of the Code by the Committee of Creditors - approval of Resolution plan - HELD THAT:- Section 53 of the Code lists the priorities to be given to the beneficiaries, of liquidation value of the assets of the Corporate Debtor. The provisions of Section 53 make it amply clear that Operational Creditors are at the end of the list of beneficiaries as the Secured Financial Creditors have edge over the others - It would also be pertinent to mention here that Operational Creditors have no locus standi as far as approval of the Resolution Plan by the CoC is concerned. As per Section 24(3)(C), they are not eligible to attend and vote at the meetings of CoC if they are holding less than 10% of the total debt. It is found that the Resolution Plan confirms to the criteria as provided under clauses (a) to (f) in section 30(2) of the Code and the CoC approved the Resolution Plan by 69.08 per cent majority of voting share. The Resolution Plan also confirms to such other requirements as may be specified by the Board - On perusal of the Resolution Plan, it is found that it meets the requirement of Section 31 r/w Section 30(2) of the Code as well as Section 29A of the Code. Therefore, the present application IA 236 of 2019 is allowed with following observations. The Resolution Applicant has sought certain reliefs and waivers. However, the Resolution Applicant under Section 6, Part V of the Resolution Plan has stated that any relief(s) requested to be granted by the NCLT to the Resolution Applicant shall not be construed as condition for the implementation of this Resolution Plan. This Adjudicating Authority is of the considered view that these are the matters related with the concerned competent authorities, hence the Resolution Applicant may approach those competent authorities for relief(s) and waivers sought by them, for their consideration - The Resolution Applicant has liberty to approach this Adjudicating Authority for appropriate directions/clarifications, as the case may be, in case there is any hindrance in the effective implementation of the Resolution Plan, in accordance with law. The Adjudicating Authority, are of the considered opinion and also being satisfied that the Resolution Plan as approved by the Committee of Creditors (CoC) meets the requirements as referred to under section 30(2) of the Code - application allowed
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2019 (9) TMI 709
Liquidation Order - section 33(2) of the Insolvency Code - HELD THAT:- An Order u/s.33(2) ought to be passed by NCLT approving the commencement of 'Liquidation' as resolved by members of Committee of Creditors as well as by the members of Joint Lending Forum. This Section prescribes that where the Adjudicating Authority is informed about the rejection of the Resolution Plan u/s.31 of The Code, it shall pass an Order requiring the Corporate Debtor to be liquidated. Further, Sub-section (2) says that, anytime during the Insolvency Process if Resolution Professional intimates the Adjudicating Authority the decision of the Committee of Creditors to liquidate the Corporate Debtor, the Adjudicating Authority shall pass a Liquidation Order under this Section. The mandate of this Section is unambiguous to the extent that the decision of the Committee of Creditors is simply to be approved by the Adjudicating Authority. The provisions of Section 33(2), the proposal of Liquidation, as voted in favour by the members of Committee of Creditors, is hereby approved.
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Service Tax
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2019 (9) TMI 708
Rectification of mistake - impugned order rejects the rectification application merely on the ground that the order was dictated in the open Court and the objection now raised was not urged by the Petitioner at the time of hearing of the appeal leading to the order dated 5 July 2018 - HELD THAT:- The Respondents have not appeared despite service. However, it would be appropriate that we should give one more opportunity to the Respondents to present their case. In that view of the matter, we direct the Petitioner to serve the Respondents once again along with copy of this order. It is made clear that on the next occasion, if the Respondents do not appear, we are likely to consider the petition on merits for final disposal. The petition is adjourned to 19 September 2019.
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2019 (9) TMI 707
Recovery of Service Tax - Post GST - proviso to section 73(1) of the Finance Act, 1994 (Finance Act) read with sections 142 and 174 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- We are not inclined to entertain this petition as only show-cause-notice is issued which involves investigation into facts. It is appropriate that the Petitioner responds to the same on merits and also bring to the notice of the Adjudicating Authority the decisions which, according to the Petitioner would conclude the issue in its favour. It would be open for the Adjudicating Authority to consider the issue of limitation, merits and all other submissions made by the parties - petition dismissed.
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2019 (9) TMI 706
Classification of services - services of facilitating disposal of hazardous solid waste generated by various industrial units - whether classified under Support Services of Business or Commerce or otherwise? - Benefit of N/N. 42/2011-ST, dt.25.07.2011 - HELD THAT:- The learned Advocate has fairly submitted that this ground has been raised for the first time before this Tribunal, hence, all aspects of the said plea could not be examined by the Adjudicating authority. We find that the eligibility of Notification which was given retrospective effect, need to be examined to consider its applicability to the facts of the present case. It is prudent to remand the matter to the Adjudicating authority to examine the issue afresh by taking into consideration the eligibility of said exemption N/N. 42/2011-ST, dt.25.07.2011 to the services provided by the Appellant to various industrial units - appeal allowed by way of remand.
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Central Excise
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2019 (9) TMI 705
Permission for withdrawal of appeal - Process amounting to manufacture - activity of galvanization - HELD THAT:- The statement is placed on record. The appeal is, accordingly, dismissed as withdrawn.
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2019 (9) TMI 704
Classification of goods - Light Diesel Oil (LDO) - the entire case is based on the opinion of the chemical examiner based on the internal test report of the appellants - Revenue neutrality - HELD THAT:- For the purpose of classification of the goods under the heading 2910 1940 as LDO, the product needs to answer to the definition of LDO appearing in para (f) of the supplementary notes to Chapter 27 Central Excise Tariff Act, 1985. While the IS parameters for LDO were changed in 2008, the said definition was not amended by Revenue. Post 2008 IS 1460:2000 apply solely to HDO and for the purpose of LDO, a different IS was introduced, namely IS-15770:2008. It is seen that the Revenue has not drawn any samples and has relied on the internal reports of the appellants to arrive at the conclusion that the product SRGO answers to the parameters prescribed under IS: 1460:2000. While it is wrong to test the product LDO against the parameters prescribed in IS 1460:2000 which applies solely to HDO after 2008, it is seen that the test reports of the appellant do not cover a large number of parameters prescribed in IS 1460:2000. The same also applies to the parameters available in IS 15770:2008. The argument of the appellants that the Revenue has failed to substantiate its claim that the SRGO cleared by them is LDO, is unsubstantiated. Unless all parameters mentioned in IS 1460:2000 or IS 15770:2008 are tested and conformed to specifications. Revenue neutrality - HELD THAT:- The appellant have contended that after clearance of SRGO, the same is levied Central Excise duty as LDO in their other plants after the same is processed. In these circumstances, the situation is Revenue neutral. Appeal allowed - decided in favor of appellant.
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2019 (9) TMI 703
SSI Exemption - clubbing of clearances - request for cross-examination denied - section 9D of the Central Excise Act - HELD THAT:- A perusal of the SCN shows that reliance have been placed on the statements of these persons. These statements were recorded in the year 1988/1989. In absence of examination/cross examination no reliance can be placed on these statements. It is seen that case of the Revenue on account of clandestine clearance on the basis of documents which show difference between bank statements and RG-I register is also subject to interpretation given by Shri H.R. Patel in his statements. Shri H.R. Patel was also not examined/ cross examined. In the above facts and circumstances, the assertion of the appellant that long delay of 13-14 years and failure to conduct cross examination of various persons on whose statements Revenue has relied, has severely compromised their defense. In the instant case, we find that no evidence from the buyer of transport of alleged clandestine clearance have been produced. In these circumstances, we find that no case of clandestine clearance can be made against the appellant. Extended period of limitation - HELD THAT:- Regarding clubbing of two out of 3 units namely M/s. Bakul Chemicals Pvt. Ltd. and M/s. Pocono Chemicals was examined by Revenue in different set of proceedings and it was held that the two are distinct and different separate units - thus, it is apparent that the Revenue was fairly aware of the status of the two units and in these circumstances invocation of extended period of limitation is totally out of place and without merit. Appeal allowed - decided in favor of appellant.
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2019 (9) TMI 702
Condonation of delay of 218 days in filing appeal - power of Commissioner (Appeals) to condone delay - Section 35 of CEA - HELD THAT:- The Commissioner (Appeals) has no power to condone the delay beyond the period of one month then the period of 60 days from the date of the order appeal against. The delay herein was much more than the said period of 30 days. The application in hand is not sustainable for the said reason and also for the reason that in filing the appeal before this Tribunal, there has been a delay of more than a month and the reason mentioned in the application for the said delay not appears to be sufficient cause specifically in the absence of any medical records for the purpose - Application dismissed.
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2019 (9) TMI 701
CENVAT credit - time limit availing credit - sub-rule (7) of Rule 4 of Cenvat Credit Rules - HELD THAT:- It is not in dispute that when the credit was taken i.e. on 28.02.2015, proviso to sub rule (7) of Rule 4 of CCR provided that such credit could not have been availed. - proviso restricting the credit within 6 months will apply from the date 1.9.2014 for the availment of cenvat credit after that date. The rule was clear and there was no ambiguity in the Rule. The rule changed with effect from 01/03/2015 and the words six months were changed to one year . - The amendment so made to the said proviso would have prospective effect. Consequently, the credit would not be admissible to the appellant since the duty was paid during the period 02.04.2014-31.08.2014 and credit was availed on 28.02.2015. Time limitation - HELD THAT:- There is absolutely no ambiguity in the law and thus, the availment of credit after six months clearly amounts to misdeclaration, suppression and fraud - the extended period has been rightly invoked. Appeal dismissed - Decided against appellant.
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CST, VAT & Sales Tax
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2019 (9) TMI 700
Benefit of exemption on Single Super Phosphate (SSP) - Bifurcation of components of the Single Super Phosphate (SSP) to deny exemptions - whether any exception was created by law so as to exclude from exemption and thus subject to tax any part of the value of such Single Super Phosphate (SSP)? HELD THAT:- On fact, there is no dispute that Calcium Sulphate is present in Single Super Phosphate (SSP). At the same time, it has not been resisted by the revenue that the presence of Sulphur in Single Super Phosphate (SSP) is only in the shape of Gypsum (CaSO4.2H2O) and not in it's elementary form. Exemption N/N. 440 dated 12.2.2001 - HELD THAT:- It is clear that amongst others, Phosphatic component of Single Super Phosphate (SSP) and not Single Super Phosphate (SSP) as a commodity was exempt. As to the percentage of Phosphatic component in Single Super Phosphate (SSP), the legislature clearly provided that the guidelines issued by the Department of Agriculture, Uttar Pradesh, would be binding. Admittedly, no guidelines were ever issued by the Department of Agriculture, Uttar Pradesh to specify the percentage of Phosphatic contents in Single Super Phosphate (SSP). The clear legal position that emerges is, de hors notification No. 784 dated 31.3.1995, it may have been permissible to the revenue authorities to tax the value of Gypsum (CaSO4.2H2O) [as Gypsum is a non-Phosphatic component of Single Super Phosphate (SSP)] if such guidelines had been found existing. However, in absence of such exclusionary clause in that notification, it is not permissible for the revenue authorities to break the identity of Gypsum (CaSO4.2H2O) so as to determine the percentage value of Sulphur in Gypsum (CaSO4.2H2O) only with the object of imposing tax on the value of Sulphur. The questions of law are answered in the negative i.e. in favor of the applicant-assessee and against the revenue.
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2019 (9) TMI 699
Validity of revised assessment orders - TNVAT Act - grant of reasonable opportunity of being heard - principles of natural justice - HELD THAT:- This Court has already held that the two provisos under Section 22 (4) and proviso to Section 27(1) (2) of TNVAT Act, are different as one makes a reasonable opportunity of being heard statutorily imperative, whereas the other merely makes reasonable opportunity to show cause against the impugned orders statutorily imperative. However, considering the nature of this matter, it may not be necessary to delve further into this aspect. In the instant cases on hand, the respondent Assessing Officer in his wisdom and at his discretion has chosen to offer personal hearing or otherwise given an opportunity of personal hearing to the writ petitioner. There is no disputation on this aspect of the matter. In this regard, it will suffice to say that with regard to proviso to Sub Sections (1) (2) of Section 27, this Court has held that the expression used therein will not impede or denude the discretion of the Assessing Officer to grant personal hearing in a given case depending on the factual matrix in that case. It is clear that though the writ petitioner was given an opportunity of personal hearing not once but on two occasions, the writ petitioner did not go over to the office of the respondent. On the contrary, writ petitioner now avers in the affidavits filed in support of the writ petitions that the writ petitioner was awaiting a notice for appearance on a particular date and time for filing evidence along with under cover of reply letter dated 09.01.2019. In this regard also, what is of utmost significance in the considered view and opinion of this Court is, the clincher is that the writ petitioner has not articulated in the reply dated 09.01.2019 (second revisional notice) that they are expecting the respondent Assessing Officer to specify a date and time for personal hearing. In the instant case, this Court notices that there is no explanation, as to why the writ petitioner did not mention in the reply to the second revisional notice (at least) for a specific date and time for personal hearing. Even if that not be so, it has not even been mentioned in both replies i.e., replies to first revisional and second revisional notices that the writ petitioner is expecting a communication from the respondent Assessing Officer regarding personal hearing. The instant writ petitions are dismissed albeit without expressing any opinion or view on the merits of the matter so as to ensure that an effective appeal remedy is available to the writ petitioner.
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2019 (9) TMI 698
Principles of Natural Justice - grant of reasonable opportunity - TNVAT Act - detailed reply sent by the writ petitioner being reply to SCN/revisional notice not considered - errors in the computations that have been made by the Assessing Officer in the impugned order - Section 27(1) of TNVAT Act - scope of 'reasonable opportunity to show cause' and 'a reasonable opportunity of being heard' - Assessment of tax. HELD THAT:- Both these expressions have been underlined in the extracts and reproduction of same supra for the sake of convenience, clarity and ease of reference. No elucidation or elaboration is required to say that these two expressions are clearly different and distinct. It is also to be noticed that these two expressions are deployed in the same statute. Most importantly, both these expressions have been deployed with regard to revised assessment proceedings. In the considered view of this Court, both Section 22(4) and Section 27(1) deal with assessment other than deemed assessment - While Section 22(4) which is referred to in fiscal law parlance as 'best judgment' deals with situation where no return or incomplete returns filed, Section 27(1) and (2) deal with situation where returns have been filed. It may not be necessary to delve into those aspect of the matter any further as the plain reading and plain language in which these two expressions are couched is unambiguous and it is not even ambivalent. While section 22(4) makes no return being furnished for any 'period of the year', it does not talk about whole of the year, whereas section 27 provides for whole of the turnover of business of a dealer escaping assessment. In the instant case, even according to writ petitioner, no return is submitted, but that is not for any period of the year, but for the entire year/years. Therefore, it is clearly a case where whole of the turnover of a dealer has escaped assessment to tax. While section 22(4) deals with assessment qua dealer, section 27(1)(a) deals with determination of turnover, section 27(1)(b) deals with reassessment of tax due and section 27(2) deals with determination of tax after reversal of ITC. In this view of the matter, owing to the facts and circumstances of the instant case, this court finds no infirmity in respondent Assessing Officer resorting to assessment under section 27(1) of TNVAT Act. Narasus principle is to the effect that Assessing Officer should apply his/her mind independent of the proposal made by the Enforcement Wing and should arrive at a conclusion. In the instant case, after referring to the proposal of the Enforcement Wing, the Assessing Officer has certainly applied her mind to the SCN / revisional notice as well as the objections to the same and given some finding, however correct or however erroneous the same may be, but not preposterous - No ground warranting interference in writ jurisdiction has been made out and it does not qualify as case of violation of NJP also in the light of dispositive reasoning alluded to supra. Alternate remedy - HELD THAT:- This Court is informed without disputation or disagreement by both sides that an alternate remedy is available to the writ petitioner qua the impugned order by way of an appeal to the jurisdictional Appellate Deputy Commissioner under Section 51 of TNVAT Act. Therefore, with regard to the grounds canvassed on merits, which are more in the nature of errors in computation, it is well open to the writ petitioner to avail alternate remedy of a statutory appeal to the jurisdictional Appellate Deputy Commissioner under Section 51 of TNVAT Act. Time Limitation - HELD THAT:- A perusal of Section 51 of TNVAT Act it reveals that the time limit available for preferring a statutory appeal is 30 days from the date on which the order is served on the dealer - Within 30 days in the instant case is on or before 11.07.2019. As already mentioned supra, instant writ petition has been presented in this Court on 26.07.2019. Therefore, 15 days have elapsed between the expiry of 30 days and presentation of the instant writ petition in this Court. This takes us to the question as to whether this 15 days delay can be condoned, if the period spent by the writ petitioner in the instant writ petition is excluded under Section 14 of the Limitation Act. If the time spent by the writ petitioner in the instant writ petition is excluded while computing the period of limitation, the delay which is sought to be condoned by the Appellate Authority will only be 15 days, which is well within 30 days cap. Therefore, this Court deems it appropriate to hold that in computing limitation for the statutory appeal under Section 51 before the Appellate Authority, if the writ petitioner chooses to avail the alternate remedy, the time spent in the instant proceedings i.e., proceedings in the instant writ petition being W.P.No.22634 of 2019 shall be excluded. For the purpose of absolute clarity and specificity, it is made clear that the time period from 26.07.2019 to the date on which a certified copy of this order is made available by this Registry will stand excluded while computing limitation - Now that such exclusion has been made by this Court, the period of delay which needs to be condoned by the Appellate Authority will be only 15 days if the writ petitioner chooses to avail the alternate remedy and if the writ petitioner files the appeal forthwith on copy of this order being made available by Registry. In any event, there is a leeway and width of 15 more days as the cap is 30 days. This Court holds that there is no ground for interfering with the impugned order in writ jurisdiction and therefore, this writ petition is dismissed but preserving the right of the writ petitioner to avail alternate remedy if the writ petitioner chooses to do so by filing an appeal to the jurisdictional Appellate Deputy Commissioner under Section 51 of TNVAT Act assailing the impugned order.
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2019 (9) TMI 697
Purchase of High Speed Diesel Oil - inter-state purchases - concessional rate of tax - unable to download C-Forms - HELD THAT:- The issue is covered in favor of the assessee by a decision of this Court in M/S. THE RAMCO CEMENTS LTD. VERSUS THE COMMISSIONER OF COMMERCIAL TAXES, THE ADDITIONAL COMMISSIONER (CT) [ 2018 (10) TMI 1529 - MADRAS HIGH COURT] where it was held that The respondents are directed to permit these petitioners to download 'C ' forms, as has been done in the past for the purpose of purchasing petroleum products against the issuance of 'C' declaration forms. Petition allowed.
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2019 (9) TMI 696
Imposition of penalty u/s 15-A(1)(o) of the U.P. Trade Tax Act, 1948 - alleged discrepancy of issuance of the import declaration form by the assessee against the goods, actually imported by the subsidiary ITC - Whether the use of Form 31 in the name of the revisionist in case of consignment to its job worker amounts to a violation of Section 15A(1)(o) of the U.P. Trade Tax Act, 1948? HELD THAT:- It is a settled position in law that for sustaining the imposition of penalty, under Section 15-A(1)(o) of the Act, the finding as to the intention to evade tax is a sine qua non . In the present case, that finding has not been recorded by the assessing authority. The penalty has been imposed and it appears that the same has been sustained by the appeal authorities, solely on account of the technical breach noted by the assessing authority, of the import declaration form having not been issued by the ITC but by the assessee. Such finding would not satisfy the test or requirement to sustain the penalty being that there must be shown to exist the intention to evade tax. The import of the goods, thus being disclosed, though by the holding company, all other matters would remain to be considered in the assessment proceedings wherein it may have been open to the authorities to draw appropriate conclusions, as to the hands at which such goods may be taxed. Thus, in absence of any finding as to intention to evade tax and the undisputed fact that the assessee was the holding company that had issued valid Form-XXXI to cover the import of goods by it's subsidiary, no penalty could have been imposed under Section 15-A(1)(o) of the Act - revision allowed.
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