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TMI Tax Updates - e-Newsletter September 26, 2019 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws TMI SMS Deduction of TDS under GST - Pure services - on making an exempt supply to HMC, provisions of sec. 51 and the TDS Notifications do not apply Recovery of Debt - time limitation - no suit was pending - NCLT cannot extend the period from 3 years to 12 years under IBC. - SC Exemption u/s 11 - there was no bar in granting registration to trust u/s 12AA, even if the trust has both charitable and religious objects Highlights / Catch Notes GST Classification of service - arranging the client’s accommodation in hotels - input tax credit of GST charged by the hotels - The Applicant’s supply is specifically covered and, therefore, classifiable under SAC 998552 - AAR Visit to Get Source Deduction of TDS under GST - conservancy/solid waste management service to the Conservancy Department of the Howrah Municipal Corporation - Pure services - As the Applicant is making an exempt supply to HMC the provisions of section 51 and, for that matter, the TDS Notifications do not apply to his supply. - AAR Visit to Get Source Income Tax Penalty u/s 271(1)(c) - maximum penalty @ 300% - Defective notice - non specification of any specific limb or clause - AO has conclusively held in the penalty order that penalty is being imposed for concealment of particular of same type of income. - penalty confirmed but reduced to 100%. Visit to Get Source Penalty u/s 271D - receiving cash from relatives and family members by the assessee under medical emergency - such transaction cannot be treated as loan or advance and transaction falling under the ambit of section 269SS - No penalty. Visit to Get Source Penalty u/s 271D - assessee has accepted cash amounts from his father - on cancellation of land deal, in the hands of father, the amount was returned to the assessee and such transaction cannot be tagged as loan or advance in contravention of section 69SS - No penalty. Visit to Get Source Issue of low TDS certificate u/s 197(1) - fixing the rate of deduction of TDS at 4% instead of 1% as was fixed for earlier years - prior to issuance of a certificate u/s 197(1), the Assessing Officer is obliged to grant personal hearing to the assessee. - HC Visit to Get Source Block assessment u/s 158BC - Issuance of notice under Section 143(2) of the Income Tax Act, 1961 is a mandatory requirement and not some mere procedural irregularity and the same can be said to be curable. - HC Visit to Get Source Addition on account of giving freebies to the doctors in violation to Medical Counsel of India (MCI) circular as it amounts to inducement by assessee - expenses cannot be disallowed. Visit to Get Source Exemption u/s 11 - entitled for registration u/s 12AA - there was no bar in granting registration to trust, even if the trust has both charitable as well as religious objects - HC Visit to Get Source Penalty u/s 271(1)(c) - whether failure to disclose income by the Assessee when the project is complete would amount to furnishing inaccurate particulars of income thereby resulting in concealment of the income by the Assessee? - HELD NO. Visit to Get Source Customs Benefit of exemption - ventilators are inbuilt in the anesthesia station and can provide artificial ventilation - When the Notification provides exemption to ventilators, the same shall be applicable in spite of the fact that whether or not they have additional features. Visit to Get Source Responsibility of CB/CHA - diversion of goods with the connivance of the G-card holder of the appellant and his associate - the violation of relevant Regulations is so grave that principle of proportionality is not opined to have been compromised as is impressed upon by the appellant. The failure thereof invites the penalty as that of revocation of license. Visit to Get Source Maintainability of appeal before the CESTAT - release of seized goods - an appeal would be maintainable from a communication or order, whatever be the nomenclature in respect of provisional release of goods before the Appellate Tribunal - HC Visit to Get Source Corporate Law Relaxation of additional fees and extension of last date of filing of Form BEN-2 and BEN-1 under the Companies Act, 2013 Visit to Get Source Maintainability of suit - alternative remedy - Prevention of Oppression and Mismanagement - Once it is found that NCLT has jurisdiction, the jurisdiction of the Civil Court to determine the matter which the NCLT is empowered to determine would stand excluded u/s 430 of the Act. - HC Visit to Get Source Indian Laws Recovery of Debt - time limitation - proceedings to recover the NPA under the IBC Act - NCLT applied Article 62 of the limitation act - the NCLT wrongly reached the conclusion that since the limitation period was 12 years from the date on which the money suit has become due, the aforesaid claim was filed within limitation and hence admitted the Section 7 application. - SC Visit to Get Source Smuggling - Charas - secret information that respondent was carrying 'Charas' and can be caught red handed but this secret information was not reduced into writing which is mandatory. - Basic principle of criminal jurisprudence is that prosecution has to prove its case beyond reasonable doubt which has not been done in the present case. - HC Visit to Get Source Jurisdiction - power of Chief Judicial Magistrate (CJM) to process the request of the secured creditor - SARFAESI Act - whether the expression “CMM”, includes CJM for the nonmetropolitan areas - CJM is equally competent to deal with the application moved by the secured creditor - SC Visit to Get Source SEBI ANNUAL REPORT - - SCHEDULE - 11 of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended. Visit to Get Source ACCOUNTING POLICIES AND STANDARDS - - SCHEDULE - 09 of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended. Visit to Get Source INVESTMENT VALUATION NORMS - - SCHEDULE - 08 of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended. Visit to Get Source Restrictions on business activities of the asset management company - Regulation 24 of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended. Visit to Get Source Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2019 Visit to Get Source Eligibility - Regulation 283 of the Securities and Exchange Board of India (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2018 as amended. Visit to Get Source Definitions - Regulation 2 of the Securities and Exchange Board of India (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2018 as amended. Visit to Get Source Agreement with the client - Regulation 14 of the Securities and Exchange Board of India (Credit Rating Agencies) Regulations, 1999 as amended. Visit to Get Source Valuation of money market and debt securities Visit to Get Source Service Tax Rejection of VCES declaration - the SCN is clearly after 30 days - This goes to the very root of the issue whereby the whole proceedings will invariably have to be held to be ab initio void. Therefore, the Show Cause Notice cannot be sustained Visit to Get Source Extended period of limitation - Against the very same appellant, Department has issued various SCNs seeking payment of Service Tax under different Heads. - When the Tax administration itself is in doubt as to the nature of the service allegation of suppression of fact on the appellants is not sustainable. Visit to Get Source Central Excise Valuation - inclusion of Freight charges - factory here is not the place of removal but merely the place of clearance of goods. - the prices as agreed to be paid were not only including the charges of insurance risk but all such other charges and were agreed to be paid only after approval/ certification by engineers of buyer (MPPTC) - demand confirmed. Visit to Get Source Rebate claim - All the Notifications providing multiple choices to an assessee for tax treatment of the same commodity have been issued by one and the same Department and continued to operate simultaneously. - the assessee has to be permitted to elect and choose the Notification of its choice and the Department cannot thrust a Notification of its choice upon the assessee. - HC Visit to Get Source VAT Recovery of sales tax dues - Attachment of mortgaged properties - first charge of the Bank or not - the first priority over the secured assets shall be of the Bank and not of the State Government by virtue of Section 48 of the VAT Act, 2003. - HC Visit to Get Source Articles HIGHLIGHTS OF THE GST COUNCIL’S DECISION ON RATES 20.09.2019 HIGHER DEPRECIATION ON SOME MOTOR VEHICLES - IS JUST TO HELP STOCK CLEARANCE UP TO 31.03.2020 – effective date need to be changed or clarified to avoid disputes. New returns under GST – details requiring continuous tracking Notifications Customs 31/2019 - dated 24-9-2019 - Cus Seeks to amend notification No. 50/2017-Customs dated 30.06.2017, in order to exempt petroleum operations or coal bed methane operations undertaken under HELP and OALP. GST - States Law/Legn-02/2019 - dated 5-9-2019 - Arunachal Pradesh SGST THE ARUNACHAL PRADESH GOODS AND SERVICES TAX (AMENDMENT) ACT, 2019 S.O.097/P.A.5/2017/S.148/Amd./2019 - dated 5-9-2019 - Punjab SGST Amendment in the Government of Punjab, Department of Excise and Taxation, Notification No. S.O.66/P.A.5/2017/S.148/2019, dated the 31st May, 2019. S.O.096/P.A.5/2017/S.11/Amd./2019 - dated 5-9-2019 - Punjab SGST Amendment in the Government of Punjab, Department of Excise and Taxation, Notification No.S.O.37/P.A.5/2017/S.11/2017, dated the 30th June, 2017. S.O.095/P.A.5/2017/Ss.9 and 15/Amd./2019 - dated 5-9-2019 - Punjab SGST Amendment in the Government of Punjab, Department of Excise and Taxation, S.O. 16 / P.A.5/2017/S.9/2017, dated the 30th June, 2017. S.O.101/P.A.5/2017/S.55/2019 - dated 3-9-2019 - Punjab SGST Specify retail outlets established in the departure area of an international airport, beyond the immigration counters, making tax free supply of goods to an outgoing international tourist. S.O.100/P.A.5/2017/S.172/2019 - dated 3-9-2019 - Punjab SGST The Punjab Goods and Services Tax (Removal of Difficulties) Order, 2019. S.O.099/P.A.5/2017/S.148/2019 - dated 3-9-2019 - Punjab SGST Seeks to provide exemption from furnishing of Annual Return / Reconciliation Statement for suppliers of Online Information Database Access and Retrieval Services (“OIDAR services”). S.O.098/P.A.5/2017/S.148/2019 - dated 3-9-2019 - Punjab SGST Prescribe the due dates for furnishing of FORM GSTR-1 for those taxpayers with aggregate turnover upto ₹ 1.5 crores for the months of July to September, 2019. G.O. Ms. No. 136 - dated 10-9-2019 - Tamil Nadu SGST Constitution of State Level Screening Committee on Anti-Profiteering for the State of Tamil Nadu Under the Tamil Nadu Goods and Services Tax Act, 2017. G.O. Ms. No. 130 - dated 4-9-2019 - Tamil Nadu SGST Notifies the registered persons required to furnish the details of challans in FORM ITC-04 in respect of goods dispatched to a job worker. G.O. Ms. No. 129 - dated 30-8-2019 - Tamil Nadu SGST Erratum - Notification No.II(2)/CTR/269(c-1)/2019, dated the 29th March, 2019. F.1-11(91)-TAX/GST/2019 - dated 5-9-2019 - Tripura SGST Notifies the registered persons required to furnish the details of challans in FORM ITC-04 in respect of goods dispatched to a job worker. SEBI SEBI/LAD-NRO/GN/2019/37 - dated 23-9-2019 - SEBI Securities and Exchange Board of India (Mutual Funds) (Second Amendment) Regulations, 2019 SEBI/LAD-NRO/GN/2019/36 - dated 23-9-2019 - SEBI Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2019 SEBI/LAD-NRO/GN/2019/35 - dated 23-9-2019 - SEBI Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Fourth Amendment) Regulations, 2019 SEBI/LAD-NRO/GN/2019/34 - dated 23-9-2019 - SEBI Securities and Exchange Board of India (Credit Rating Agencies) (Amendment) Regulations, 2019 Circulars / Instructions / Orders SEBI - SEBI/HO/IMD/DF4/CIR/P/2019/102 - dated 24-9-2019 Valuation of money market and debt securities GST - States - 85/2019/TNGST - dated 5-9-2019 Issues related to GST on monthly subscription / contribution charged by a Residential Welfare Association from its members. DGFT - 34/2015-2020 - dated 25-9-2019 Amendment in Para 2.54 of the Handbook of Procedures, 2015-2020. Companies Law - 10/2019 - dated 24-9-2019 Relaxation of additional fees and extension of last date of filing of Form BEN-2 and BEN-1 under the Companies Act, 2013 News GST move to cut tourism services tax won't hit revenue: Goa CM Payroll Reporting in India – A Formal Employment Perspective 9th India-China Financial Dialogue held ; Joint Statement issued at the conclusion of Dialogue reflects shared vision of both the countries to further strengthen cooperation in the financial sector Case Laws: GST 2019 (9) TMI 1048 Deduction of TDS under GST - Classification of services - conservancy/solid waste management service to the Conservancy Department of the Howrah Municipal Corporation - Pure services - Whether the above supply is exempted in terms of Sl No. 3 or 3A of Notification No. 12/2017 - Central Tax (Rate) dated 28/06/2017 (corresponding State Notification No. 1136 - FT dated 28/06/2017), as amended from time to time (hereinafter collectively referred to as Exemption Notification), and if so, whether the notifications regarding TDS are applicable in his case? HELD THAT:- The consideration to be paid measures the work only in terms of the quantity of the garbage lifted and removed. Based on the above documents, it may, therefore, be concluded that the Applicant s supply to HMC is a pure service - Furthermore, Article 243W of the Constitution that discusses the powers, authority and responsibilities of a Municipality, refers to the functions listed under the Twelfth Schedule as may be entrusted to the above authority. Sl No. 6 of the Twelfth Schedule refers to public health, sanitation, conservancy and solid waste management. The Applicant s supply to HMC is a function mentioned under Sl No. 6 of the Twelfth Schedule - The Applicant s service to HMC, therefore, is exempt under Sl No. 3 of the Exemption Notification. The TDS Notifications bring into force section 51 of the GST Act, specify the persons under section 51(1)(d) of the Act and have mandated and laid down the mechanism for deduction of TDS. These notifications, therefore, are applicable only if TDS is deductible on the Applicant s supply under section 51 of the GST Act. Section 51 (1) of the Act provides that the Government may mandate inter alia a local authority to deduct TDS while making payment to a supplier of taxable goods or services or both. As the Applicant is making an exempt supply to HMC the provisions of section 51 and, for that matter, the TDS Notifications do not apply to his supply. 2019 (9) TMI 1047 Classification of goods - rate of tax - manufacture of locomotive spares in accordance with the drawings and specifications of the railway authority - whether classified under heading 8607 of the First Schedule to the Customs Tariff Act, 1975 - HELD THAT:- The Applicant has supplied the goods to the railways. It appears from the scrutiny of the list of the goods manufactured and the relevant purchase orders that they are components of railway locomotives. However, Notes 2 and 3 of Section XVII, which includes Chapters 86 to 89, prohibits classification of a few articles as parts or accessories under these Chapters. Therefore, components of railway locomotives should be classified under heading 8607 subject to the provisions of Notes 2 and 3 of Section XVII. The composite goods manufactured by the Applicant that are used primarily as parts of railway locomotives are to be classified under heading 8607 and taxable @ 5% GST with no refund of the unutilized input tax credit. The same classification will apply to the Applicant s other supplies to the railways if they are used primarily as parts of railway locomotives, provided they are not excluded by Note 2 of Section XVII. Supplies other than the above two categories, if any, shall not be classified under heading 8607. 2019 (9) TMI 1046 Classification of service - arranging the client s accommodation in hotels - input tax credit of GST charged by the hotels - HELD THAT:- The Applicant is admittedly a tour operator. But the question on which the advance ruling is sought is whether it should continue to be classified as a tour operator when it merely arranges the client s accommodation in hotels. It is not unusual for tour operators to bulk book rooms in hotels and release a few of them to clients who either do not book for the tour or prefer to reach by own arrangement and pay only for the accommodation - According to Explanation to Sl No. 23(i) of the Rate Notification, tour operator means any person engaged in the planning, scheduling, organising, and arranging tours by any mode of transport. Arranging accommodation might be provided as add-ons, but that is not the essence of the tour operating service. The Applicant s service under focus in the Application is not, therefore, to be treated as that of a tour operator. The support services covered under Sl No. 23(iii) of the Rate Notification include services classified under SAC 998552. Services covered under SAC 998552 include arranging reservations for accommodation services for domestic accommodation, accommodation abroad etc. The Applicant s supply is specifically covered and, therefore, classifiable under SAC 998552 - It is, therefore, taxable under Sl No. 23(iii) of the Rate Notification, and the Applicant is eligible to claim the input tax credit as admissible under the law. Since the Applicant s supply is specifically covered under SAC 998552, we find no need to discuss on SAC 9997. 2019 (9) TMI 1044 Filing of TRAN-I Form - migration to GST regime - transitional credit - HELD THAT:- We direct the respondent to either open the online portal so as to enable the petitioner to file the rectified TRAN-I Form electronically, or to accept the same manually with correction, on or before 20.09.2019. The petitioner s revised claim be processed in accordance with law once the corrected TRAN I Form is filed - Petition disposed off. 2019 (9) TMI 1041 Rejection of Refund claim - the screenshot of the GST portal annexed with the petition does not properly reflect the position and status refund sanctioned reflected on the website is erroneous. - there is no explanation as to why Respondent No. 4 is not present in Court - HELD THAT:- the competent officer of the Respondent directed to grant personal hearing to the Petitioner for consideration of the Petitioner s claim. - The competent authority shall pass a reasoned order on the refund application of the Petitioner within two weeks positively, failing which Respondent No. 5 shall personally remain present in the Court. Ms. Suhani Mathur, Advocate appearing on behalf of Mr. Harpreet Singh, Counsel for Respondent No. 4 assures that on the next date, Respondent No. 4 shall remain present in Court. List on 18.10.2019. 2019 (9) TMI 1017 Detention of goods - non-payment of the penalty amount under Section 129 of the Act - expired E-Way bill - HELD THAT:- It is deemed appropriate to direct the 2nd respondent to release the consignment and vehicle covered by Ext.P4 detention notice to the petitioner on the petitioner furnishing a bank guarantee for the amount of ₹ 3,56,100/- before the said respondent. The 2nd respondent shall thereafter complete the adjudication in relation to Ext.P4 detention notice after considering the reply, if any, filed by the petitioner to the detention notice, and after hearing the petitioner, within a period of one month from the date of receipt of a copy of this judgment. Income Tax 2019 (9) TMI 1042 Block assessment u/s 158BC - non-service of notice under Section 143(2) - procedure for assessment of such cases under Chapter XIV-B of the Income Tax Act, 1961, which includes, inter alia, Section 158BC - Assessee seeks to urge the ground based upon non-service of notice under Section 143(2) - Whether non-issuance of notice under Section 143(2) of the Income Tax Act, 1961 vitiates that assessment proceedings under Section 158 BC? - substantial question of law - HELD THAT:- There is no dispute from the record that notice under Section 143(2) of the Income Tax Act was never issued to the Assessee before initiating of proceedings under Section 158BC of the Income Tax Act. The Commissioner (Appeals), in his Order dated 13.09.2004 has given several reasons as to why the issuance of such notice was not a prerequisite for initiating of assessment proceedings under Section 158 BC - According to us, such reasoning cannot any longer prevail after the ruling of the Hon'ble Apex Court in the case of Hotel Blue Moon [ 2010 (2) TMI 1 - SUPREME COURT] as held that the requirements of issuance of notice under Section 143(2) within the prescribed period is not some procedural formality or a procedural irregularity to hold that such a requirement is mandatory and non-dispensable. Such defect of non-issuance of notice under Section 143(2) of the Income Tax Act is not even a curable defect. Record also indicate that this issue was precisely raised by the Assessee before the ITAT. The ITAT however, after recording that such issue was raised before it, failed to decide such issue one way or the other because, the ITAT held in favour of the Assessee on some other grounds. Substantial question of law will have to be decided in favour of the Assessee in view of the decision of the Hon'ble Apex Court in Hotel Blue Moon (supra). Issuance of notice under Section 143(2) of the Income Tax Act, 1961 is a mandatory requirement and not some mere procedural irregularity and the same can be said to be curable. Even for the purpose of Chapter XIV-B of the Income Tax Act for determining of undisclosed income for block assessment in proceedings under Section 158BC, provisions of Section 142, 143(2) and 143(3) are applicable and no assessment can be made without issuing notice under Section 142 of the said Act - Decided in favour of the Assessee and against the Revenue. 2019 (9) TMI 1040 Issue of certificate u/s 197(1) - fixing the rate of deduction of TDS at 4% instead of 1% as was fixed for earlier years - HELD THAT:- This Court in Bently Nevada LLC Vs. Income Tax Officer, Ward-1(1)(2), International Taxation Another [ 2019 (7) TMI 1503 - DELHI HIGH COURT] had quashed the certificate issued under Section 197(1) of the Act and directed a fresh order to be passed recording reasons for the same. The said decision, in turn, places reliance on the decision of the Bombay High Court in Tata Teleservices (Maharashtra) Ltd Vs. Deputy Commissioner of Income-Tax (TDS) [ 2018 (2) TMI 192 - BOMBAY HIGH COURT] . A perusal of this decision does not betray the fact that prior to issuance of a certificate under Section 197(1), the Assessing Officer is obliged to grant personal hearing to the assessee. All that is required is that the Assessing Officer should have good reasons to issue the certificate under Section 197(1) of the Act and the said reasons should be communicated to the assessee. We dispose of this petition with a direction to the respondents to provide to the petitioner within one week the reasons recorded for issuance of the impugned certificate fixing the rate of deduction of TDS at 4%. It shall be open to the petitioner to assail the said reasons in case the petitioner is aggrieved thereby. 2019 (9) TMI 1036 Assessment 153C - proof of incriminating material found in search - HELD THAT:- Additions made by the Assessing Officer are not based on any incriminating material found during the course of search from the premises of the search party. The document which was found during the search from the premises of Sh. Krishan Kumar Modi being the copy of the sale deed executed on 18.12.2007 by Sh. Sanjeev Lal in favour of M/s. Beena Fashions N Foods Private Limited is already recorded in the books of the assessee and said document per se is not incriminating in nature. Assessment was completed on the date when the satisfaction note was recorded by the Assessing Officer and the additions are not based on any incriminating material found but on the basis of the books of account regularly maintained or unearthed, during the course of search therefore, the various additions made by the Assessing Officer are not sustainable. We, therefore, uphold the order of the CIT(A) deleting the additions made by the Assessing Officer on this ground itself. The grounds raised by the revenue are accordingly dismissed. 2019 (9) TMI 1035 Penalty u/s 271D - assessee has accepted cash from his father - contravention of the provisions of section 269SS - HELD THAT:- The first transaction pertaining to cash received by the assessee from his father we are satisfied with the explanation of the assessee that the assessee gave this amount to his father after withdrawing the same from his bank account towards purchase of land and due to cancellation of land deal, it was returned to the assessee by his father and same was deposited by the assessee to his bank account. As the land deal was under process and for acquisition of land and the intention of the assessee was to contribute and support his family. Therefore, on cancellation of land deal, the amount was returned to the assessee and such transaction cannot be tagged as loan or advance in contravention of section 69SS of the Act. Hence, penalty u/s.271D cannot be imposed on this count. Four transactions of receiving cash from relatives and family members by the assessee under medical emergency , then we are inclined to hold that this is a simply transaction of transfer of money from one family members to another family members to support him during medical emergency period and such transaction cannot be treated as loan or advance and transaction falling under the ambit of section 269SS of the Act attracting penalty u/s.271D - transaction between the relatives of family members for giving support and help, is not loan or deposit and it is only a financial support. Penalty imposed by the AO and confirmed by the CIT(A) on account of cash amount received from the members of AOP - there are four members of AOP including the assessee Shri Gourang Chandra Nayak and Shri Sasanka Sekhar Sahu alongwith Shri Manoj Kumar Biwal, wherein, it was agreed between the members of AOP that the contributory amount will be kept with the assessee until a bank account is opened in the name of school. Therefore, the said amount cannot be alleged as transaction of loan or deposit in contravention of section 269SS of the Act. In this situation, the assessee is only a trustee of money till bank account in the name of school is opened and thus, such transaction cannot be named as transactions as loan or advance in cash which attracts penalty u/s 271D Amount received by the assessee on seven transactions is genuine and not loan or advance in contravention of section 269SS - Decided in favour of assessee. 2019 (9) TMI 1034 Business expenditure u/s 37(1) - processional fees paid to the Doctors as Medical Advisors/ Sr. Consultant/ Scientific Consultant - HELD THAT:- Professional fees paid to the doctors is not in violation of either MCI Guidelines or CBDT Circular as discussed above and hence the same is allowable business expenditure u/s 37(1) of the Act which has been taken into consideration in its proper prospective by the Learned CIT(A). Thus this Court does not find any infirmity in the order passed by the Learned CIT(A), so as to warrant interference. The question is accordingly answered in the affirmative, i.e. in favour of the assessee and against the Revenue. 2019 (9) TMI 1031 Eligibility of claim of deduction u/s.54 - two new residential properties purchased by the assessee out of sale consideration of old property - HELD THAT:- We find that the issue in dispute is squarely covered in favour of the assessee by the Co-ordinate Bench of this Tribunal in case of Ravishankar vs. ACIT [ 2018 (1) TMI 980 - ITAT MUMBAI] wherein as held as prior to A.Y 201516 no restriction was placed by the legislature in respect of investments in the residential houses that an assessee could make for claiming deduction under Sec. 54 of the Act. We thus are of the view that the claim of deduction raised by the assessee under Sec. 54 in respect of investment made towards purchase of residential house at Mumbai and Pune was well in order. We thus in context of the issue under consideration set aside the order of the CIT and uphold the claim of deduction as was raised by the assessee Section 54 of the Act uses the expression a residential house . This expression has been interpreted by the Courts to include investment being made in residential house / houses in order to be eligible to claim deduction u/s.54 of the Act and it does not restrict the claim of deduction u/s.54 of the Act to one house only. We also find that the amendment which had been brought in the Act is only w.e.f. A.Y.2015-16 and cannot be made applicable to the year under consideration as has been held in the aforesaid decision supra. Assessee is entitled for deduction u/s.54 - Decided in favour of assessee. 2019 (9) TMI 1029 Penalty u/s 271(1)(c) - maximum penalty @ 300% - Defective notice - non specification of any specific limb or clause whether penalty initiated for Concealment of income or for providing inaccurate particulars of income - HELD THAT:- While passing the penalty order u/s. 271(1)(c) of the act, the assessing officer has categorically stated that this being second default of concealment of particulars of same type of income therefore he was satisfied to impose maximum penalty @ 300% of the tax sought to be evaded. Regarding contention of the assessee that assessing officer has failed to specify charge whether penalty is being imposed for furnishing inaccurate particulars or concealment of income. We find that this aspect has been considered by the Hon'ble Gujarat High Court in the case of Snita Transport P. Ld. Vs. ACIT [2012 (12) TMI 981 - HIGH COURT OF GUJARAT] as observed that for the purpose of issuing show cause, the Id.AO can use expression and/or in between whether explanation of the assessee is being sought for concealment of income or furnishing of inaccurate particulars of income. However, while passing the final order, the AO has to specify his conclusion whether he visited the assessee with penalty for concealment of income or furnishing of inaccurate particulars. In the present case as AO has conclusively held in the penalty order that penalty is being imposed for concealment of particular of same type of income. On merit, we do not find any infirmity in the decision of ld. CIT(A). However, considering the totality of the facts that assessee was working as plant operator, we consider it will be justified to restrict the impugned penalty at 100% of tax sought to be evaded. The assessing officer is directed to levy penalty as directed above, therefore, the appeal of the assessee is partly allowed. 2019 (9) TMI 1027 TP Adjustment - availing of Marketing Services and Global Infrastructure Support Services - rule of consistency- HELD THAT:- AR has submitted that no such adjustment has been proposed in the subsequent years also. In the said factual matrix, it is difficult to accept the allegations of the revenue that no such services were rendered and the assessee derived no benefits by availing the said services. These services were being availed pursuant to common agreement entered into by the assessee in Financial Year 2008-09 and therefore, disputing the same only in one year while accepting the same in other years, would only reflect contradictory approach adopted by the revenue. TPO, rejected the assessee s methodology by stressing upon benefit test by observing that the assessee could not establish the factum of receipt of services and also could not demonstrate the corresponding benefits received by the assessee by availing these services. The said services, in the opinion of TPO, could be obtained from an independent consultant in India at lower cost and further, the assessee already had requisite expertise which is further evidenced by the fact that the assessee was acquired by its AE owing to its domain expertise. However, as noted earlier, the said services have been received by the assessee pursuant to agreements entered in Financial Year 2008-09, which has been found to be at Arm s Length Price in the earlier two assessment years. Secondly, it was not the jurisdiction of Ld. TPO to question the assessee s commercial wisdom to avail services in a particular manner. The assessee had placed on record plethora of documentary evidences, as enumerated by us in para 5.4, in support of the fact that the services were actually received and benefits were derived. However, the same has been disregarded and brushed aside in a very light manner which could not be held to be justified. Another aspect to be noted is that Ld. TPO has determined ALP of the transactions as Nil without applying any of the methods prescribed u/s 92C of the Act to determine the ALP. It is evident that no transfer pricing exercise was done by Ld. TPO to determine the value of the services, whatever, received by the assessee. No comment has been made on correctness or appropriateness of assessee s TP methodology. Therefore, the approach of Ld. TPO could not be said to be in accordance with the spirit of law. We are unable to pursued ourselves to sustain the action of revenue in sustaining impugned additions in the hands of assessee. Hence, by deleting the additions of ₹ 448.47 Lacs as made in the final assessment order, we allow Ground Nos. 1 to 7 of the appeal. The suo-moto disallowance of ₹ 534.49 Lacs as made by the assessee u/s 40(a)(ia) shall be allowable in accordance with law. 2019 (9) TMI 1025 Assessment of trust u/s 11 - Carry forward excess expenditure for future years against its future income in absence of any express provision in the Act regarding the same - whether the trust has incurred deficit due to excess spending on the object of the trust during the particular year and whether excess expenditure incurred in earlier years by the trust could be allowed to be set off against the income of subsequent year by invoking Section 11 - HELD THAT:- The issue is no longer res integra. The Hon ble Gujarat High Court in CIT vs. Shri Plot Shwetamber Murti Pujak Jain Mandal [ 1993 (11) TMI 17 - GUJARAT HIGH COURT] has rendered decision favourable to the assessee on the very issue. The Hon ble Gujarat High Court has held that there is nothing in the language of Section 11(1)(a) of the Act to indicate that the income from trust property should have been applied for charitable or religious trusts only in the year in which such income has arisen. The expenditure incurred in the earlier year can be met out of the income of the subsequent year and utilization of such income for meeting the expenditure of the earlier year would amount to such income being applied for charitable or religious trusts. Income derived from Trust property has to be computed on commercial principles and consequently deficit arising out of expenditure over income for the previous year should, therefore, be set off against surplus of income over expenditure relating to the subsequent year. Similar view has been expressed in CIT vs. Maharana of Mewar Charitable Foundation [ 1986 (7) TMI 56 - RAJASTHAN HIGH COURT] and CIT vs. Matriseva Trust [ 1999 (3) TMI 34 - MADRAS HIGH COURT] . Whatever little controversy might be existing has been put to rest by the recent decision of the Hon ble Supreme Court in the case of CIT(Exemption) vs. Subros Education Society [ 2018 (4) TMI 1622 - SC ORDER] . Hence, the CIT(A) in our view has correctly applied the law as evolved by the judicial precedents. In the absence of any infirmity in the order of the CIT(A), we decline to interfere therewith. - Decided against revenue. 2019 (9) TMI 1021 Reopening of assessment u/s 147 - reopening of tantamount to fishing or roving inquiry - reopening of assessment beyond four years - Merely because in the later year, the AO takes a different view on the basis of similar material, which may have been collected during such process, would not permit him to reopen the assessment - HELD THAT:- SLP dismissed. 2019 (9) TMI 1014 Penalty u/s 271(1)(c) - whether failure to disclose income by the Assessee when the project is complete would not amount to furnishing inaccurate particulars of income thereby resulting in concealment of the income by the Assessee ? - case of Assessee throughout that it was under a bonafide belief that the method adopted by it was recognized method for computing income for construction business i.e. project completion method - HELD THAT:- It appears that the project was a subject matter of litigation before this Court. There was a dispute between the Respondent and Chandivali Residents Association and also between the Respondent and Maharashtra Housing and Area Development Authority. There were claims and counter-claims made against the Respondent and the Respondent took a stand that it would be appropriate to defer the decision of revenue recognition till the issue is settled. In fact, in quantum proceedings, when the dispute had come before the Tribunal, there was difference of opinion between the members and third member had to resolve the dispute as to when the project is said to be completed for revenue recognition. This itself would support the case of the Respondent that it was under a bonafide belief that the project would be completed only after the dispute is resolved. Thus, it is not a case of furnishing inaccurate particulars of income to justify invocation of Section 271(1)(c) - no substantial question of law 2019 (9) TMI 1013 Addition u/s 41 or 28 - Disallowance of principal amount of loan waived off by the lender - one time settlement of loan with Mafatlal Finance Company Ltd., holding that the loan was acquired for acquisition/investment of capital assets as such its waiver cannot be termed as revenue receipt - HELD THAT:- Loan was taken from acquisition of capital assets. Thus, the waiver of loan being waived off could not be termed as a revenue receipt. Thus, there is a concurrent finding of fact recorded on this count by the Authorities. During the assessment proceedings the AO had asked the Respondent to explain why the principal amount should not be offered to tax. Respondent had made submissions that for chargeability under Section 41(1) of the Act, there should have been actual allowance made in the assessment of the assessee in the earlier year. The Commissioner of Income Tax (Appeals) and the Tribunal followed the decisions of this Court in the case of Mahindra and Mahindra Ltd. vs. CIT [ 2003 (1) TMI 71 - BOMBAY HIGH COURT] upheld by the Apex Court [ 2018 (5) TMI 358 - SUPREME COURT] . The Court, on similar facts had held that on such waiver of loan taken on capital account, neither the Section 41(1) of the Act nor Section 28(iv) of the Act, are applicable. Thus, the question is no longer res-integra. No substantial question of law. 2019 (9) TMI 1012 Grant the registration u/s 12AA - whether activities of the trust is not entirely charitable for public at large? - HELD THAT:- As not disputed that the said questions of law have been answered against the Revenue by this court in the case of Commissioner of Income Tax Vs. D.P.R. Charitable Trust [ 2011 (8) TMI 1136 - MADHYA PRADESH HIGH COURT] . It is informed that though the Revenue has filed an S.L.P. [ 2012 (8) TMI 1165 - SC ORDER] before the Supreme Court, there is no interim order or stay of the order passed by this court by the Supreme Court and the matter is pending before the Supreme Court. In such circumstances, ithe present appeal is dismissed in terms of the order passed by this court in the case of D.P.R. Charitable Trust (supra) with liberty to the appellant to approach the Supreme Court. 2019 (9) TMI 1010 Exemption u/s 11 - entitled for registration u/s 12AA - whether trust deed clearly mentions only about benefiting one religion? - Tribunal took note of the factual position and held that even if the assessee Trust is only religious in nature, it would still be entitled for registration under Section 12AA - HELD THAT:- In Director of Income Tax Exemptions vs. Seervi Samaj Tambaram Trust, [ 2014 (2) TMI 32 - MADRAS HIGH COURT] it was held that there was no bar in granting registration to trust, even if the trust has both charitable as well as religious objects - no error in the order passed by the Tribunal. - Decided against revenue 2019 (9) TMI 1006 Penalty u/s 271(1)(c) - defective notice - non-striking of the irrelevant portion in the show-cause notice - HELD THAT:- Show cause notice, which has not specified the charge and limb under which the penalty is proposed to be levied, is void ab initio and the consequent penalty imposed on the basis of such notice is, therefore, illegal and bad in law and liable to be deleted. We, therefore, direct deletion of the penalty. See SRI CHANDRA PRAKASH BUBNA [ 2015 (5) TMI 1096 - ITAT KOLKATA] and M/S MANJUNATHA COTTON AND GINNING FACTORY OTHS., M/S. V.S. LAD SONS, [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] - Decided in favour of assessee. 2019 (9) TMI 1005 Revision u/s 263 - violation of provisions of section 40A(3) - HELD THAT:- AO has made enquiries on the cash payments made by the assessee and after eliciting the explanation of the assessee and after going through the records had partly accepted the assessee s contention, therefore, the AO s action cannot be termed as erroneous for want of enquiry. On this issue since we have made a finding that this was not a case of lack of enquiry on the part of the AO, the Ld. Pr. CIT if he wanted to interfere ought to have himself enquired on the facts of this issue and should have recorded a factual finding to upset the decision of the AO to allow as allowable expenditure and thereby not hit by sec. 40A(3) of the Act. Since in this case, the Ld. Pr. CIT has not been able to upset the finding of the AO who has made enquiry, the action of the AO cannot be termed on this issue as a case of no enquiry . Thus the action of the AO on this issue cannot be termed as erroneous for lack of enquiry. The AO s action is based on a plausible view in the light of the judicial precedents cited before us. Therefore, the action of AO does not satisfy the twin conditions for invoking revisional jurisdiction u/s. 263 in the light of the ratio of the decision of Hon ble Supreme Court in Malabar Industrial Co. Ltd [ 2000 (2) TMI 10 - SUPREME COURT] . The view of the AO in the light of the facts discussed at any rate cannot be termed as unsustainable in law and, therefore, on this issue the AO s action cannot be faulted with for invocation of sec. 263 jurisdiction by Pr. CIT. Excess claim under the head purchase of paddy - HELD THAT:- Assessment order framed by the AO is neither erroneous nor prejudicial to the interest of the revenue and therefore, the Ld. Pr. CIT s impugned action of interfering with the order of AO invoking the revisional jurisdiction under section 263 of the Act is without jurisdiction and, therefore, null in the eyes of law and so it is quashed. Appeal of assessee is allowed. 2019 (9) TMI 1004 Seeking grant of approval u/s 80G(5)(vi) - registration u/s 12AA/10(23C) granted - HELD THAT:- Registration u/s 12AA(1)(b)(i) of the Act was granted to the appellant Institution vide order dated 9/2/2017. It is not disputed that this registration has hitherto not been revoked or cancelled. CIT(E) has observed, inter alia, that approval u/s 80G(5) of the Act is not a mechanical process, wherein the according of registration u/s 12AA/10(23C) of the Act and filing of documents at one end would result in the issuance of approval u/s 80G(5) at the other. Consistent judicial opinion in this regard, is, however, otherwise, as we shall presently discuss. The issue is, as such, res integra. Hiralal Bhagwati vs. CIT [ 2000 (4) TMI 14 - GUJARAT HIGH COURT] while holding that once registration u/s 12AA of the Act was granted, the order rejecting the application u/s 80G(5) of the Act was liable to be quashed, CIT(E) was not justified in rejecting the appellant's application seeking grant of approval u/s 80G(5)(vi) of the Act, despite the undisputed fact that the applicant was granted registration u/s 12AA and that too, on examining the Institution's objects and the genuineness of its activities, and such registration continues uninterrupted hitherto, and inspite of the fact that it remains undisputed that the appellant duly fulfills all the conditions prescribed u/s 80G(5)(i) to (v) - Decided in favour of assessee. 2019 (9) TMI 1003 Assessment u/s 154 - AO rejected the appellant s rectification application against the intimation u/s 143(1) denying exemption claimed by the assessee u/s. 11 - whether the AO could have denied the benefit of exemption claimed u/s 11 by the appellant while processing the return of income u/s. 143(1) which otherwise permits the AO to only make the following adjustments to the income returned? - HELD THAT:- Since the facts of the appellant s case are admittedly analogous to the facts involved in the case of Indian Chamber of Commerce [ 2014 (12) TMI 256 - ITAT KOLKATA] we hold that no material change took place in the legal position even after the amendment was brought in Section 2(15) by the Finance Act, 2008. We therefore do not find merit in the findings of the CIT(A) that the assessee would not be eligible for exemption u/s 11 because it is primarily set up with the object of promoting trade commerce. Since we find that the objects and the activities of the appellant were for charitable purpose, then there should be no reason for the Revenue to reject the appellant s application for registration u/s 12A of the Act and therby deny the benefit of Section 11 which was admittedly granted till AY 2009/10. As regards the AO s case that the appellant was not eligible for exemption u/s 11 in absence of grant of registration certificate u/s 12A by the Ld. CIT, we find that this issue is dealt by the Hon ble Allahabad High Court in its judgment in the case of Society for the Promotion of Education, Adventure Sport Conservation of Environment Vs CIT [ 2008 (4) TMI 700 - ALLAHABAD HIGH COURT] as held that if the application for registration u/s 12A is not disposed by the Commissioner within six months then the registration will be deemed to have been granted. Also confirmed by SC [2016 (2) TMI 672 - SC] ORDER] We find merit in the ld. AR s claim that the application dated 28.06.1973 ought to have been disposed by the Commissioner with six months i.e. on or before 28.12.1973 and in its absence the registration was deemed to be granted to the appellant on expiry of the said period of six months. We therefore hold that the order u/s 143(1) denying the benefit of exemption u/s 11 of the Act was contrary to the legal principle laid down by the Hon ble Supreme Court (supra). Consequently therefore we do not find merit in the orders of the lower authorities upholding the intimation u/s 143(1) and rejecting the appellant s application for rectification u/s 154 of the Act. For the reasons set out in the foregoing therefore the orders of the lower authorities as well as the adjustments carried out by the AO in the intimation u/s 143(1) are set aside. - Decided in favour of assessee 2019 (9) TMI 1002 Rectification u/s 254 - taxability of retention money - HELD THAT:- After considering the application for rectification and arguments of both sides, we agree that a mistake apparent on record crept into the order of the ITAT which requires rectification on the issue of taxability of retention money for the AY 2008-09 and for AY 2009-10. The mistake was that the ITAT was under the wrong impression that this ground on taxability of retention money did not come in both these years. In view of the above the relief granted for AY 2007-08, on the issue of retention money being brought to tax has also to be granted for the AY 2008-09 and AY 2009-10. Retention money cannot be brought to tax in any of the years. Ordered accordingly. 2019 (9) TMI 1001 Penalty u/s. 271(1)(c) - Defective notice - non specification of charge against the assessee - whether it is for concealment of particulars of income or furnishing of inaccurate particulars of income? - HELD THAT:- Show cause notice issued in the present case u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income. The show cause notice u/s 274 of the Act does not strike out the inappropriate words. We are of the view that imposition of penalty cannot be sustained. The plea of the assessee which is based on the decisions referred to in the earlier part of this order has to be accepted. See M/S MANJUNATHA COTTON AND GINNING FACTORY OTHS., M/S. V.S. LAD SONS, [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT]. We therefore hold that imposition of penalty in the present cases cannot be sustained and the same is directed to be cancelled. In view of the above conclusion, we refrain ourselves from dealing with the other arguments on merits put forth by the Assessee. - Decided in favour of assessee. 2019 (9) TMI 1000 Addition on account of giving freebies to the doctors in violation to Medical Counsel of India (MCI) circular as it amounts to inducement by assessee - Allowable revenue expenditure u/s 37(1) - HELD THAT:- Physicians samples are necessary to ascertain the efficacy of medicine and introduce it in the market for circulation and it is only by this method the purpose is achieved. In such cases giving a physician samples for reasonable period is essential to the business of manufacture and sale of medicine. It is only if a particular medicine has been introduced by the market and its uses are established then giving of free samples could only be the measure of sale/ promotion and development would thus be hit by subsection (3A). Said decision no way prohibits the nature of expenditure which has been incurred in the case of the assessee. Therefore, such a reference to a Hon ble Apex Court decision is not germane to the issue involved. Thus, in our opinion, the aforesaid decision of this Tribunal PHL PHARMA P LTD. [ 2017 (1) TMI 771 - ITAT MUMBAI] is clearly distinguishable and cannot be held to be applicable and also we have already given our independent finding as to allowability of expenses in the hands of the assessee as business expenditure. 2019 (9) TMI 998 Maintainability of appeal - Monetary limit - low tax effect - CBDT Circular No.17/2019 dated 8th August, 2019 effect - HELD THAT:- In view of the CBDT Circular No.17/2019 dated 8th August, 2019 having retrospective effect as coordinate Bench of the Tribunal in case of Dinesh Madhavlal Patel [ 2019 (8) TMI 752 - ITAT AHMEDABAD] has already decided the issue as to the applicability of the captioned circular to the pending appeals in affirmative and what has been discussed above, we are of the considered view that the aforesaid appeal is not maintainable because of low tax effect i.e. less than ₹ 50,00,000/- hence, the aforesaid appeal filed by the Revenue is hereby dismissed having been become infructuous. However, in case, the present appeal is found to be maintainable at any stage for any technical reasons, the Department shall be at liberty to seek recall of this order under relevant provisions of law. 2019 (9) TMI 997 Disallowance of claim u/s 54 - non-submission of registered purchase deed for the reasons - CIT(A) confirmed the view of the AO by observing that the assessee could not furnish the break-up of each unit and there was no possession ensured within the prescribed limit - HELD THAT:- There was a letter dated 01.11.2017 issued by builder/developer to the assessee stating that the residential flats are being handed over for internal decoration, colouring etc. to the respective flat owners sometime in May, 2017 onwards. The assessee must have got title deed registered in his favour by now, besides other evidences i.e. mutation in municipal records, property assessment, water assessment and electricity assessment etc. and we find no such documents before us showing his title on the said flat even till the year 2019. Therefore we agree with the objections raised by the AO in respect of non-submission of the title deed, even before all the authorities below including this Tribunal. In order to claim allowance u/s 54 of the Act, the proof of payment of consideration is complete when it is coupled with the above mentioned evidences to prove the title on property and consequently possession thereon. We deem it proper to remand the matter to the file of AO with a liberty to the assessee to file such documents showing transfer of right over such flat in respect of his claim u/s 54 by holding the assessee is entitled to get deduction u/s 54 subject to showing proof of sale deed etc. in favour of him relating to the said flat as reflected in the MOU dated 16.07.2012. AO shall examine the same and pass order in accordance with law. Thus Ground No.1 raised by the assessee is allowed for statistical purposes. 2019 (9) TMI 996 Penalty u/s 271(1)(c) - additions towards claim of various business expenses, such as, car loan interest, petrol expenses, salary expenses, telephone bill etc. - HELD THAT:- The quantum order shows that the assessee could not substantiate the claim of expenses claimed by him by any documentary evidence in the quantum proceedings. Even in the penalty proceedings, the assessee has failed to substantiate the expenses except for making generalized observations towards existence of car in the balance sheet and incurring other expenses. The entry shown in an unaudited balance sheet does not inspire confidence in the absence of any tangible documentary evidence adduced. The claim of the expenditure allegedly incurred in relation to earning of income by way of interest and remuneration from partnership firm is also totally unproved in the quantum proceedings. The explanation offered by the assessee, thus, cannot be assumed to be bonafide. In the absence of relevant facts relating to expenses claimed, the observations of the co-ordinate bench in quantum proceedings would squarely apply. We also note that the CIT(A) has categorically observed the claim of the assessee to be false and without any evidence. The plea of the assessee sounds hollow on the face of such reasonings. We thus find no infirmity in the conclusion drawn by the CIT(A) and thus decline to interfere therewith. - Decided against assessee 2019 (9) TMI 994 Disallowance of bad debt under proviso to section 36(1)(vii) - HELD THAT:- Explanation to Section 36(1)(vii), introduced by the Finance Act, 2001, has to be examined in conjunction with the principal section. The explanation specifically excluded any provision for bad and doubtful debts made in the account of the assessee from the ambit and scope of 'any bad debt, or part thereof, written off as irrecoverable in the accounts of the assessee'. The concept of making a provision for bad and doubtful debts will fall outside the scope of Section 36(1)(vii) simplicitor. The proviso, as already noticed, will have to be read with the provisions of Section 36(1)(viia) of the Act. Once the bad debt is actually written off as irrecoverable and the requirements of Section 36(2) satisfied, then, it will not be permissible to deny such deduction on the apprehension of double deduction under the provisions of Section 36(1)(viia) and proviso to Section 36(1)(vii). This does not appear to be the intention of the framers of law. The scheduled and non-scheduled commercial banks would continue to get the full benefit of write off of the irrecoverable debts u/s 36(1)(vii) in addition to the benefit of deduction of bad and doubtful debts under Section 36(1)(viia). There is no double deduction claimed by assessee in the computation of total income. Proviso to section 36(1)(vii) ensure that double deduction will not be allowed, the said proviso provides that in cases where clause (viia) applies, the amount of deduction relating to bad-debt under section 36(1)vii) shall be limited to the amount by which debt or part thereof exceed the credit balance in the provision of bad and doubtful debts. CIT(A) has correctly allowed the deduction under section 36(1)(vii), which we affirmed. Hence, this ground of appeal is dismissed. Disallowance of gratuity payment after close of previous year - HELD THAT:- Section 43B also makes it clear that such gratuity payment are allowable as deduction on the basis of actual payment made prior to date of filing of return of income. In Taparia Tools Ltd. vs. JCIT [ 2015 (3) TMI 853 - SUPREME COURT] held that as a general rule, revenue expenditure to be allowed in the year in which incurred. We have noted that the AO instead of examining the liability and the actual payment of gratuity disallowed it holding that it pertains to earlier years. As we have noted that revenue expenditure to be allowed in the year in which incurred. CIT(A) allowed it by following the same principle.We have noted that the CIT(A) has given categorical finding that actual payment was made during May 2011 i.e. prior to date of filing of return. Therefore, we do not find any infirmity or illegality in the order passed by ld. CIT(A). - Decided against revenue 2019 (9) TMI 992 Disallowance u/s 14A read with rule 8D - expenditure incurred in relation to' the exempt income - HELD THAT:- We note that assessee company has its own funds which is more than investments made by it, therefore disallowance under Rule 8D (2) (ii) can not be made. Disallowance under rule 8D (2) (iii) can be made only in respect to dividend bearing securities. We find that the ratio decided by in the case of REI Agro [ 2013 (9) TMI 156 - ITAT KOLKATA] is very clear. The assessee had submitted a calculation sheet during the appellate proceedings, in which disallowance in accordance with the ratio decided in the case of REI Agro (supra) had been made at ₹ 4,832/-. CIT(A) has rightly restricted the disallowance to the tune of ₹ 4,832/-. That being so, we decline to interfere in the order passed by the ld. CIT(A). His order on this issue is hereby upheld and grounds nos. 1, 2 and 3 raised by the Revenue are dismissed. Delayed payment of employees contribution to provident fund (PF) - HELD THAT:- We find that though deposits were made slightly late but all the PF and ESI amounts were deposited before the due date of the filing of the return of income under section 139 of the Act. The Hon'ble Calcutta High Court in the case of M/s Vijay Shree Ltd [ 2011 (9) TMI 30 - CALCUTTA HIGH COURT] has held that any sum deposited in the government account for PF and ESI before the due date of the filing of the return is to be allowed as expenditure u/s 36(1)(va) read with section 2(24)(x) - we are of the view that there is no infirmity in the order passed by the ld CIT(A). The conclusions arrived at by the CIT(A) are, therefore, correct and admit no interference by us. We, approve and confirm the order of the CIT(A). Addition u/s. 36(1)(iii) on account of interest expenses as the borrowed fund was utilized for share application money - HELD THAT:- Investments were made from interest free funds and no part of the loan funds were diverted for making investments and as such disallowance of interest expense is unjustified in law. We also note that the company being a NBFC company is engaged in the business of taking and granting loans and advances, trading and investment in shares and securities. Further, merely because no revenue was generated from deploying funds for investment in shares and advancing of interest free funds does not imply that borrowed funds were not utilized for the purpose of business. Section 36(1)(iii) uses the expression ' for the purpose of business' which is wider in its meaning than the expression 'for the purpose of earning profits'. A businessman may deploy funds for the purpose of business which may not generate any revenue. This fact alone will not make the interest incurred for the purpose of business to be disallowed u/s 36(1) (iii) of the Act as held by the Apex Court in the case of Madhav Prasad Jatta vs CIT [ 1979 (4) TMI 2 - SUPREME COURT] - We note that section 10(2)(iii) of the old Income Tax Act, 1922 is similar to section 36(1)(iii) of the Income Tax Act, 1961. In view of the above we confirm the order of ld CIT(A) in deleting the addition Addition on account of sale promotion expenses - HELD THAT:- AO has nowhere denied that expenditure under the head sales promotion is not to be accepted. AO's only objection is that expenditure under this head could not be verified u/s 133(6) of the Act. We note that Assessing Officer has not pointed out any specific defects in the books of accounts of the assessee. Moreover, the books of accounts have been duly audited, the details were submitted before the Assessing Officer. The Assessing Officer has not invoked section 145(3) of the Act and he has not rejected the books of account of the assessee. Under the circumstances, adhoc disallowance is without any basis. We note that the AO has brought on record anything to disprove the claim of the assessee. The only reason that the claim expenditure could not be verified by issuing notice U/s 133(6) should not be the only basis for rejecting the entire claim of the assessee - Order of Id. C.I T.(A) in deleting the aforesaid additions confirmed. Addition on account of salary expenses - HELD THAT:- We note that the income of the assessee from the insurance business has also gone up and increased during the assessment year and this fact has been accepted by the AO - AO has also accepted increased income of the assessee. But when the expenditure increases the AO has his doubts. We note that assessing officer has not pointed out any specific defects in the books of accounts of the assessee. Moreover, the books of accounts have been duly audited, the details were submitted before the AO. The Assessing Officer has not invoked section 145(3) and he has not rejected the books of account. The Assessing Officer has made a guess work and disallowed 50% salary which we do not accept. We note that assessing officer can not make an assessment based of pure guess, surmise and conjecture, for that we rely on the judgment of the Hon`ble Supreme Court in the case of Dhakeswari Cotton Mills Ltd. Vs. Commissioner of Income Tax [ 1954 (10) TMI 12 - SUPREME COURT] - adhoc disallowance is without any basis. - Decided against revenue Customs 2019 (9) TMI 1043 Maintainability of appeal the CESTAT - release of seized goods - Whether the Appellate Tribunal was right in holding that no appeal under section 129A(1) of the Customs Act, 1962 is maintainable against the order passed by the Commissioner of Customs dated 28 June 2019 against the order /communication rejecting the request of original release of seized goods? HELD THAT:- The Division Bench in the case of THE COMMISSIONER OF CUSTOMS (IMPORT -I) MUMBAI VERSUS S.S. OFFSHORE PVT. LTD. [ 2017 (12) TMI 1460 - BOMBAY HIGH COURT] has considered the provisions of section 129A(1) of the Act of 1962 and has held that an appeal from communication / order in respect of provisional release of goods is maintainable before the Tribunal. The position is settled that an appeal would be maintainable from a communication or order, whatever be the nomenclature in respect of provisional release of goods before the Appellate Tribunal. Presumably this position of law was not brought to the notice of the Tribunal when it passed the impugned order. In these circumstances, the question of law as framed will have to be answered in favour of the Appellant. Appeal allowed. 2019 (9) TMI 1039 Provisional release of seized goods - Section 110-A of Customs Act, 1962 - HELD THAT:- Revenue Counsel for respondents 1 and 2 undertakes to ensure that respondent No.2 forwards said representation to respondent No.1 forthwith - Respondent No.1 shall consider and pass orders/dispose of the said representation i.e., representation dated 07.08.2019 on its own merits and in accordance with law as expeditiously as possible and in any event, within a fortnight from today. 2019 (9) TMI 1038 Compounding of Offence - section 137(3) of the Customs Act, 1962 - HELD THAT:- The offence is punishable under section 135 of the Customs Act, 1962 and the allegations are that the exotic birds have been smuggled/imported in India. Whatever may be the situation, the fact remains that the offence is compoundable. The offence was registered on 16th June 2019 and thus enough time was available for the respondent No.1 to carry out investigation. The respondent No.1 can still continue with the investigation. Under the provisions of section 137 of the Customs Act, 1962, the offence can be compounded either before or after filing the proceedings and, therefore, the prayer of the petitioner seeking directions regarding adjudication of the amount of customs duty for compounding the offences is reasonable. The Petitioner shall cooperate in the investigation and shall remain present as and when called by the investigating agency - The Petitioner is, however, permitted to have advocate accompanying him at visible but not audible distance during his interrogation by the officers of Respondent No.1 (investigating agency) and recording of his statement shall be videographed. 2019 (9) TMI 1032 Responsibility of CB/CHA - diversion of goods with the connivance of the G-card holder of the appellant and his associate - Whether the Custom Broker can be held responsible for the alleged mis-delcaration and under valuation of goods, for infringement of Intellectual Property Rights due to the mobile accessories of Samsun brand to also be present in the consignment and also for the alleged diversion of the goods? HELD THAT:- Perusal of Regulation 14 of Customs Broker License Regulation 2013/2018 makes it clear that the CHA is created as a link between Customs Authorities and the importers with an object of facilitating the clearances at Customs as the Custom procedures are complicated. The CHA is thus supposed to safeguard the interests of both the Customs as well as the importers. CHA is not supposed to be a formal agent either of Custom House or of the importer. But the utmost due diligence in ascertaining the correctness of the information related to clearance of cargo is the CHA s duty. He not only is supposed to advise the importer/exporter about the relevant provisions of law and the mandate of true compliance thereof but is also responsible to inform the Department if any violation of the provisions of the Customs Act appears to or have been committed by his client at the time of the clearances - There is no dispute about the settled law that CHA is not an inspector to weigh the genuineness of the transaction. It is merely a processing agent of documents with respect to clearance of goods through the Custom House either himself or through his authorized personnel. Penalty as that of revocation of license cannot be imposed upon the CHA in absence of any active or passive facilitation by the appellant. There is sufficient oral evidence in the form of statements of all concerned, that too in corroboration, about the consignment received vide the impugned Bill of Entry to contain mis-declared and under-valued mobile accessories and to also have the mobile accessories of Samsung brand infringing the Intellectual Property Rights which despite seizure and the permission of being warehoused under Section 49 of Customs Act, 1962 were diverted to the premises of the actual purchaser of the consignment, Mr. Ramu Chettry with the connivance of the G-card holder of the appellant and his associate - Nexus between Shri Chaman Kumar Verma, Shri Aakash Sharma, Shri Ramu Chhetry and Shri Raman Kumar Jha stands well established upon the record. Admittedly, Shri Chaman Kumar Verma is the G-Card holder of the appellant who was physically and actually involved in the entire series of acts. Apparently and admittedly his activities had never been objected by the appellant nor ever had been questioned nor even been informed to the competent authorities. The appellant is otherwise bound by the act of his G-Card holder. Otherwise also, without the knowledge of the Custom Broker, the goods could not have been diverted. He is equally bound by the act of his authorised representative/agent - the violation of relevant Regulations is so grave that principle of proportionality is not opined to have been compromised as is impressed upon by the appellant. The failure thereof invites the penalty as that of revocation of license. Appeal dismissed. 2019 (9) TMI 1030 Maintainability of appeal - non-Prosecution of the case - HELD THAT:- It becomes clear that more than a dozen adjournments have been sought by the appellant in the present case. The said conduct of the appellant is sufficient for us to form an opinion that the appellant is not interested in pursuing the impugned matter. Perusal of Order of adjudicating authority below reveals that the Department observed mis-declaration as far as the number of cartons/packages imported and the weight thereof is concerned, as were imported by the appellant vide Bill of Entry No. 8472911 dated 03.03.2015. Department also observed the under-valuation of the consignments - seeing from the merits as well we do not find any justification in the impugned Appeal. Te Appeal in hand is dismissed not only for want of the compliance and non-prosecution on part of the appellant but also for his absence as on date and for no merits in this Appeal to his favour. 2019 (9) TMI 1028 Benefit of exemption - ventilators used with anesthesia equipment - Department contended that the impugned goods were anesthesia workstation and not ventilators as claimed by the appellants and hence the benefit of the Notification was not available - HELD THAT:- The exemption is applicable to standalone ventilators and ventilators used with anesthesia apparatus. We find that the technical opinion given by the experts in the field indicated that the impugned machines that the ventilators are inbuilt in the anesthesia station and can provide artificial ventilation - When the Notification provides exemption to ventilators, the same shall be applicable in spite of the fact that whether or not they have additional features. It is not mentioned in the Notification that exemption is available to only ventilators. Such a constrictive interpretation would defeat the purpose of the exemption given in the Notification. Appeal allowed. 2019 (9) TMI 991 Provisional release of seized goods - Section 110 of the Customs Act, 1962 - HELD THAT:- We are not inclined to grant any further time as the prayer sought in the petition has been worked out - If the petitioners are aggrieved with the order dated 26 th August, 2019 they have an alternative remedy of an appeal under the Act. Petition dismissed. Corporate Laws 2019 (9) TMI 1008 Maintainability of suit - alternative remedy - Prevention of Oppression and Mismanagement - Jurisdiction of NCLT - right of dependent, individually or collectively to sell, transfer, dispose of or create third party interest in the undertaking - HELD THAT:- Section 242(2)(m), being the residuary power and which is equivalent to Section 402(g) of the Companies Act, 1956, is very widely worded and would confer such a power on the NCLT - The NCLT, per Section 242(4), is also empowered to grant interim relief as sought by the plaintiff along with the plaint in this suit also, of restraining the defendants from dealing with the immovable property of the defendant no.1. NCLT and its predecessor Company Law Board (CLB), in such situation as pleaded by the plaintiff, if finds merit in the claim of the plaintiff, have much wider powers than the powers of this Court as the Civil Court. NCLT, in exercise of its powers under Section 442 of the Act, is empowered to bring about a settlement between the plaintiff and the defendants no.2 to 6 and other shareholders of the defendant no.1 company, relating to the affairs of the defendant no.1 and which power cannot be exercised by the Civil Court. NCLT / CLB are known to often make orders providing for sale / transfer of shareholdings inter se shareholders and / or of transfer of immovable properties of the company in favor of a shareholder in lieu of his shareholding in the company and which, this Court as the Civil Court, will be able to do. Once it is found that NCLT has jurisdiction, the jurisdiction of the Civil Court to determine the matter which the NCLT is empowered to determine would stand excluded under Section 430 of the Act. The question of bar of jurisdiction of the Civil Court would depend upon the nature of the averments in the plaint. If the averments in the plaint, though not using the words mismanagement, prejudicial to interest and oppression, are found to be amounting thereto and the relief sought are also which fall in the domain of Section 442(2) of the Act, the jurisdiction of the Civil Court would be barred. This Court lacks jurisdiction to entertain this suit - suit dismissed. 2019 (9) TMI 995 Conversion of the Company from Public Limited to Private Limited Company - Change of name from Sri Narasimha Cotton Press Company Limited to Sri Narasimha Cotton Press Company Private Limited by addition of the word Private before the word Limited - HELD THAT:- Since all the requisite statutory compliance having been fulfilled, the conversion of the status of the Company from Public Limited to Private Limited as per Special Resolution passed at the AGM on 30.09.2017 is hereby approved in the interest of the Company and such change of status of the Company shall not cause any prejudice either to the members of the creditors of the Petitioner Company. The Petitioner is hereby directed to file with the Registrar of Companies, Andhra Pradesh, a certified copy of the order of this Bench in the prescribed e-Form together with a printed copy of the altered MoA and AoA with requisite fee within a period of 15 days in terms of the provisions of Section (2) of Section 14 of the Companies Act, 2013, read with Rule 161, of NCLT, 2016. Petition allowed. Insolvency & Bankruptcy 2019 (9) TMI 1026 Maintainability of appeal - initiation of CIRP - pre-existing dispute - Section 9 of Insolvency and Bankruptcy Code, 2016 - HELD THAT:- Under Section 18, the IRP is required to receive and collate all the claims submitted by the Creditors. This is not a process of sitting and deciding disputed claims. For collating, the IRP has to receive the claim and examine the same. While examining, the IRP did not find that the claim was made out with support of appropriate documents. As such, the IRP may not have considered the claim and the Adjudicating Authority has looked into it and did not find anything wrong with the act of collating done by IRP. CIRP process cannot be converted into adjudication Forum to settle claims already in disputes in Court. In the circumstances, we do not find any reason to interfere with the Order which has been passed. The Suit of the Appellant is already pending. Once the Moratorium period is over, the Appellant would be free to pursue its suit. Appeal not admitted and is dismissed. 2019 (9) TMI 1023 Maintainability of application - Initiation of CIRP - Corporate Debtor failed to pay an outstanding amount - Existence of dispute or not - section 9 of the Insolvency and Bankruptcy Code, 2016, R/w Rule 6 of the Insolvency and Bankruptcy Rules, 2016 - HELD THAT:- We are satisfied that the default in question has occurred, there is no existence of dispute, and the petition filed under Section 9 of I B Code, 2016 is complete and there are no disciplinary proceedings pending against the proposed resolution professional, Mr. Addanki Haresh. Petition admitted - moratorium declared. 2019 (9) TMI 993 Maintainability of application - Basis of proceedings - Initiation of CIRP - Corporate Debtor allegedly committed default in paying the financial debt - whether SBI initiated this proceeding on the basis of RBI circular dated 12.02.2018 or it is independent proceeding? - HELD THAT:- SBI, at their own, did not state anywhere in the application that proceeding is initiated on the basis of and as per the guidelines issued by the RBI in its circular dated 12.02.2018. But the corporate debtor produced on record SBI letter dated 23.08.2018 giving reference of corporate debtor s proposal of resolution of bad debt dated 16.08.2018 - It is clear from the bank s letter dated 23.08.2018 that this proceeding under section 7 of I B Code is initiated against the corporate debtor because there were clear guidelines from the RBI and those contained in its circular dated 12.02.2018. The Hon ble Supreme Court in DHARANI SUGARS AND CHEMICALS LTD. VERSUS UNION OF INDIA ORS. [ 2019 (4) TMI 230 - SUPREME COURT] held RBI circular dated 12.02.2018 to be bad in law and ultra vires. The Apex Court also declared that all proceedings initiated on the basis of that circular are bad in law and non est. As per the case at hand is concerned, it is seen from the evidence on record that this proceeding is also initiated by the bank against the corporate debtor on the basis of RBI Circular dated 12.02.2018 - It is held to be not maintainable. Application rejected. PMLA 2019 (9) TMI 1033 Money Laundering - proceeds of crime - the appellant submits that no prosecution complaint has been filed against the appellant under PMLA, 2002 within the statutory period as prescribed in u/s 8(3)(a) of the PMLA-2002 than existed - HELD THAT:- In the present case, the impugned order was passed on 13.09.2018, the prosecution complaint has been filed on 03.05.2019 - The 90 days period for filing prosecution complaint from the date of impugned order has expired in the month of December, 2018 which is before the amendment of extending the period for filing the prosecution complaint to 365 days. A legal right has accrued to the appellant in view of the section 8(3)(a) of PMLA-2002 when the prosecution complaint was not filed within 90 days. The provision of Section 8(3) read with 8(3)(a) of the PMLA clearly provides that the attachment order of Adjudicating Authority shall continue during investigation for a period not exceeding of 90 days or pendency of proceedings relating to any offence under this act before a court. Admittedly, in the present case, there was no pendency of any proceedings relating to any offence under this act before a court within 90 days from the date impugned order. Appeal allowed. 2019 (9) TMI 999 Money Laundering - Attachment of property - proceeds of crime - separate legal entity - FTIL is charged with the offence of money laundering and also NSEL is fully and wholly owned by FTIL - validity of attachment of properties of FTIL - HELD THAT:- It is difficult to hold that the attachment of assets of 63 Moons Technologies Ltd. (erstwhile Financial Technologies (India) Ltd.) is illegal and ultra vires the statutory definition of Proceeds of crime . Proceeds of Crime in the hands of NSEL if dissipated can only be substituted by other properties of National Spot Exchange ltd. (NSEL) itself - There is no concept of equivalent attachment in the hands of another legal entity. The said legal entity (63 Moons Technologies Ltd.) conducts its own independent business and earns therefrom. Admittedly, the properties attached are not proceed of crime as defined under Section 2(1)(u) of PMLA. It is submitted on behalf of 63 MTL that the Directorate of Enforcement/ED attempts to make out a case for attachment of properties of 63 MTL purely based on a mis-interpretation of the concept of value of such property‟ as employed in Sec. 2(1)(u). The principles of equivalent value, could apply only to a person who came into possession of the proceeds of crime. It cannot be applied to attach assets of 3rd party who is not the recipients of any proceed of crime. In the eyes of law, every public-sector company is a distinct/independent company. Doctrine of Tracing - HELD THAT:- Admittedly, no money (except a sum of ₹ 84 Crores ) has travelled from NSEL to 63 Moons Technologies Ltd.‟ from the time NSEL was incorporated in 2005 till it became defunct in 2013 when its trading stopped and its operations were suspended as a result of action by the Department of Consumer Affairs. ₹ 84 Crores deposited in Bombay High Court represents rent, software, other shared services etc. The same is an admitted position by the Respondent No.1. The Hon‟ble Bombay High Court by order dated 12.06.2015 directed the deposit of this amount. Therefore, there would be no issue of doctrine of tracing. Counsel for 63 MTL and NSEL alleged that the case of Enforcement Directorate is flawed and it is not that NSEL is a defaulter. The Hon‟ble Bombay High Court where the suits are pending has not given any adverse finding against NSEL or 63 Moons Technologies Ltd. It is submitted by both sets of appellants that the conditions of Section 5 of the Prevention of Money Laundering Act, 2002 (PMLA) for attachment, whether provisional or final to the assets of 63 Moons Technologies Ltd. is not possible. It is argued that the attachment is completely outside the preview of Section 5 of PMLA, 2002 and, therefore, the attachment must be released so that 63 Moons Technologies Ltd., who has 63,000 shareholders with an independent board of directors must not suffer - Admittedly, as of today, two interim orders passed by the CLB as well as EOW which are continuing and have not been vacated. In the present case, as per the investigation, the amount of ₹ 84 crores which is the license fee, has been deposited by the 63 MTL , as per the direction of the Court. The former MD CEO of NSEL and his managing staff were responsible for the crisis as well as the borrowers who have benefitted by the prosecution and the money of the investment has gone to them. In view of the above, at the same time, we do not wish to give the clean chit to Shri Jignesh Shah who was the major shareholder of NSEL as we feel that it is a matter of trial. Since the matter is under investigation, whatever money has been transferred to 63 MTL , has already been deposited as per the directions of High Court. In case, during the investigation, it is found that more money has been parked or transferred, the same may also be attached at the end of 63 MTL . Thus, the balance has to be strike at this stage in order to secure the amount - There is also no finding by the adjudicating authority that on the basis of investigation, any other amount has been transferred by NSEL to 63 MTL or any evidence is available in this regard. Once the two authorities i.e. CLB as well as EOW have already restrained the 63 MTL , 63 MTL not to sell or alienate or to create any third party right in assets and interest, the attaching of huge money with the said knowledge by the ED amounts to civil death of the company as well as the 63 MTL 58,000 shareholders with an independent Board of Directors who will suffer without their fault. Appeal allowed in part. Service Tax 2019 (9) TMI 1045 Renting of Immovable Property Services or not - assignment of entire business of the hotel to IHCL - scope of definition. HELD THAT:- Issue Notice. 2019 (9) TMI 1037 Classification of services - activities of drilling, blasting, excavation and raising (extraction) of iron ores from mines and crushing, screening, sorting, grading, processing etc. of iron ore in the processing unit - Business Auxiliary Service or not period 10.09.2004 to 30.09.2006 - Site Formation and Clearance, Excavation, Earth Moving Demolition Service or not for the period 01.06.2007 to 30.09.2007. HELD THAT:- On perusal of the contract, it is seen that the contract is termed a raising contract wherein the principals (first party) desirous of utilizing the knowledge and expertise of the second party i.e. appellants who possess the necessary expertise, labour, machinery and equipment, technical know-how to carry on scientific and systematic mining operations such as excavation, extraction, grading, sorting etc. permits the appellants to act as rising contractor . In terms of Article 3 of the Contract, the second party shall during the continuation of this Agreement, systematically extract, excavate, raise, grade, sort, etc. minerals from the mines. In terms of Article 8, the first party shall pay a sum of ₹ 110 per metric tonne of iron ore and ₹ 125 per metric tonne for iron ore fines. Ongoing through bills available on records, it is seen that the appellants are paid for the quantity of iron ore lumps and C‟ Ore extraction, iron ore extraction charges and iron ore fines extraction for various periods. The main contention of the appellants in this case is that they are manufacturing iron ore and in view of the Hon‟ble Supreme Court‟ decision in the case of EMPIRE INDUSTRIES LTD. VERSUS UNION OF INDIA [ 1985 (5) TMI 215 - SUPREME COURT] and Others the activity undertaken by them amounts to manufacture and therefore, it is beyond the scope of the levy of Service Tax - HELD THAT:- We find that as the appellants are engaged in mining of iron ore. The activity involved includes transfer of goods and show-cause notice does not specify as to the value of the goods involved and has not excluded the same from the taxable value. Service Tax, if at all, can be levied on them for the mining activity, they are undertaking in terms of the raising contract, and not under Business Auxiliary Services before 1.6.2007. Therefore, the demand of Service Tax on the appellants under the category of Business Auxiliary Service , the impugned order does not survive on merits. Extended period of limitation - HELD THAT:- Understandably, the levy of Service Tax on the activities undertaken by the appellants is a question of interpretation. The issue is certainly debatable. Against the very same appellant, Department has issued various SCNs seeking payment of Service Tax under different Heads. When the Tax administration itself is in doubt as to the nature of the service allegation of suppression of fact on the appellants is not sustainable. Scope of SCN - The appellants contended that the demand of Service Tax was made under three different categories of services and the same was confirmed under the Head Mining Service which is beyond the scope of the SCN - Penalties - HELD THAT:- In the instant case, there is a non-vivisectable contract for Mining. There is no doubt that the activity the appellant comes under Mining which is the essential character of the contract. Therefore, the conclusion drawn by the Original Authority and upheld by the Appellate Authority cannot be faulted - appeal is dismissed as far as the demand of Service Tax is concerned - As the issue relates to interpretation of tax liability, penalties are set aside. Business Auxiliary Service - Excavation/Extraction and Raising of Iron Ore - demand of duty for the period 01.10.2006 to 31.05.2011 - HELD THAT:- The service rendered by the appellants is clearly a Mining Service. The Department has issued a SCN dated 21.10.2008 to the appellants seeking to demand duty under three categories which includes the category of Mining of Mineral, Oil or Gas. The Adjudicating Authority has confirmed the demand under only one heading of Mining of Mineral, Oil or Gas - there is no reason to interfere with the same - the appeal filed by the Department is rejected. Classification of services - contract is for raising of iron ore by the appellants for the persons with whom they have contracted with - period from 1st April 2006 to 31st March 2007 - HELD THAT:- In the instant case also, the contract is for raising of iron ore by the appellants for the persons with whom they have contracted with. Apparently, the activity undertaken by the appellants is essentially that of mining. It cannot be vivisected into different elements and cannot be charged to duty under any other service during relevant period - Therefore, prior to 1.6.2007, no service tax can be collected under the heads Site Formation and Clearance, excavation and earth moving and demolition service or Business Auxiliary Services - Appeal allowed. Business Auxiliary Service - HELD THAT:- The facts of this appeal are invariance with the facts discussed above in the case of Appeal No.ST/3568/2012. In ST/3568/2012, though the show-cause notice has discussed different types of services, the adjudicating authority and the appellate authority have come to a conclusion that the services fall under one category i.e., Mining of Ores, Minerals or Gas - there was no confusion in the mind of the adjudicating authority as to under which, the service of the appellant‟s falls in. Appeal disposed off. 2019 (9) TMI 1024 Rejection of VCES declaration - power to reject the said claim - It is the primary contention of the Ld. Consultant for the assessee that in terms of Section 106 ibid, the designated authority has no power to reject the declaration since according to him, it is the Commissioner of Central Excise alone who can do so. HELD THAT:- On a plain reading of the clarification issued by the CBEC Board vide Circular No. 174/9/2013-ST dated 25.11.2013, it is clear that any Show Cause Notice proposing to reject the VCES declaration has to be invariably issued within 30 days of filing the application/declaration. In the case on hand, the Show Cause Notice refers to the declaration in form VCES-1 of the appellant filed on 31.12.2013 and the Show Cause Notice is dated 31.01.2014. When the Board has clarified that such Show Cause Notice should be issued within 30 days, it may perhaps be even that a Show Cause Notice, if issued on the 30th day, could be bad. But anyway, the Notice is clearly after 30 days in the case on hand. This, in my humble opinion, goes to the very root of the issue whereby the whole proceedings will invariably have to be held to be ab initio void. Therefore, the Show Cause Notice cannot be sustained. The rejection by the designated authority as upheld by the Commissioner (Appeals) cannot be sustained - appeal allowed. 2019 (9) TMI 1022 Permission for withdrawal of petition - HELD THAT:- What gets revealed from the perusal of the office report is that the Ld. Counsel for the petitioner has filed document/application for the withdrawal of this Petition which is an unregistered one. Since the petition has not been registered as yet, therefore, the same is permitted to be withdrawn. Central Excise 2019 (9) TMI 1009 Rebate claim - multiple notifications - assessing officer was of the view that since, in the period in question, ie., 07.12.2008 to 06.09.2009, Notification No.58/2008-CE, dated 07.12.2008 prescribed 'nil' rate of duty, such Notification, read with provisions of Section 5A(1A) of the Central Excise Act, 1944, would be applicable and the petitioner is not eligible to the claim of rebate - validity of Circular No.937/27/2010-CX dated 26.11.2010 and Circular No.99/2008, dated 11.12.2008. HELD THAT:- The aforesaid two Circulars are in direct contradiction with each other. Circular No.99/2008, dated 11.12.2008 makes it clear that where there are multiple Notifications operating simultaneously in respect of the same commodity and extending different benefits, an option must be given to the assessee to elect and choose the Notification that would be most beneficial to it. Circular No.937/2010, dated 26.11.2010 on the other hand, limits the choice to only the Notification granting unconditional exemption. This does not stand to reason. All the Notifications providing multiple choices to an assessee for tax treatment of the same commodity have been issued by one and the same Department and continued to operate simultaneously. The rationale behind this cannot be fathomed and it was incumbent upon the authorities to withdraw the Notifications that would be unavailable such that the remaining Notifications would prevail - the assessee has to be permitted to elect and choose the Notification of its choice and the Department cannot thrust a Notification of its choice upon the assessee. Petition allowed. 2019 (9) TMI 1007 Valuation - place of removal different from factory gate - inclusion of Freight charges pertaining to transportation of goods to the said stores in the assessable value - period 2012-13 to 2016-17 - HELD THAT:- The factory gate or any other place as mentioned in Section 4 of CEA, 1944 from where the manufacturer sells its goods is the place of removal. Any transportation charges if paid for delivery of goods till the place of removal other than factory i.e. warehouse, depot or any other such place from where the excisable goods are actually sold, are to be included in the transaction value for the purposes of assessing the excise duty because till the property in goods is not passed on to the buyer any payment made by him shall be the payment made on behalf of the assessee and as per the definition of transaction value the said payment shall be includible. However, the delivery charges when paid by the buyer after the sale is completed and the property in the purchased goods has already vested in him, since the same is no more the payment by the buyer on behalf of assessee, the same cannot form the part of transaction value for the purposes of assessing excise duty. Since, in the present case the transportation charges have been paid for delivery of goods from the factory gate to a store at site but prior the sale of towers to MPPTP Ltd. which was subject to verification and approval of the buyer s engineer and the payment/consideration was to be passed on thereafter only. The site store, in this place, is the case of removal and the value of transportation charges to the store at site has to be included in the transaction value. The Commissioner (Appeals) has committed an error while ignoring that the goods were not sold at the factory gate but at the ex-factory store at the buyer s site. Thus factory here is not the place of removal but merely the place of clearance of goods. It was also ignored that the prices as agreed to be paid were not only including the charges of insurance risk but all such other charges and were agreed to be paid only after approval/ certification by engineers of buyer (MPPTC) - These facts are sufficient to hold that present is not the case of payment of sale consideration in future but is the case of sale in future subject to approval. Appeal allowed. CST, VAT & Sales Tax 2019 (9) TMI 1018 Attachment of mortgaged properties - first charge of the Bank over the properties mortgaged with the Petitioners - recovery of sales tax dues from the assets of the defaulter by State Government - SARFAESI Act - case of the writ applicants is that the Bank has the first charge over the properties mortgaged by M/s. M.M. Traders by virtue of Section 26E of the SARFAESI Act - charge of the State Government under Section 48 of the Act overridden by Section 26E of the SARFAESI Act. Whether the Central Legislation would prevail over Section 48 of the Gujarat Value Added Tax Act, 2003? HELD THAT:- The plain reading of Section 48 of the VAT Act indicates that it starts with a non-obstante clause 'notwithstanding anything to the contrary contained in any law for the time being in force. Section 48 of the VAT Act creates first charge on the property - The issue as regards the claim of priority of the secured creditor vis-a-vis the first charge of the property under the State Legislation was considered by the Supreme Court in the case of Central Bank of India vs. State of Kerala ors, [ 2009 (2) TMI 451 - SUPREME COURT ]. The Supreme Court, in the said decision took the view that if the State Act creates first charge on the property, then the secured creditors cannot have the claim against the statutory provision. The Supreme Court also took into consideration Section 100 of the Transfer of Property Act, 1882. Indisputably, the judgment of the Apex Court in the case of Central Bank of India was prior to the amendment in the Act, 2002 and 1993 respectively. However, what is important are the observations of the Supreme Court as contained in para-126 of this decision. The Supreme Court observed that while enacting the DRT Act, the Parliament was aware of the law laid down by the Supreme Court, wherein priority of the State dues was recognized. If the Parliament intended to create the first charge in favour of the Banks, Financial Institutions or other secured creditors on the property of the borrower, then it would have incorporated a provision like Section 529A of the Companies Act or Section 11(2) of the EPF Act and ensured that notwithstanding the series of judicial pronouncements, the dues of Banks, Financial Institutions and other secured creditors should have priority over the State's statutory first charge in the matter of recovery of the dues of sales tax etc. - In our prima facie opinion, such observations probably might have weighed with the Parliament which ultimately might have led to the introduction of Section 31B in the RDB Act, 1993 and 26E in the SARFAESI Act, 2002. When two or more laws or provisions operate in the same field and each contains a non-obstante clause stating that its provision will override those of any other provisions or law, stimulating and intricate problems of interpretation arise. In resolving such problems of interpretation, no settled principles can be applied except to refer to the object and purpose of each of the two provisions, containing a non-obstante clause. Two provisions in same Act each containing a non-obstante clause, requires a harmonious interpretation of the two seemingly conflicting provisions in the same Act. We are conscious of the fact that in the case on hand there is no conflict between two special statutes enacted by the Parliament. The conflict is with the State Act and the Central Act. We are trying to understand the true purport and effect of Section 26E of the SARFAESI Act which came to be enacted later in point of time and also the effect of Section 31B of the RDB Act which came to be enacted later in point of time. In other words, what necessitated the introduction of the two provisions in the two enactments and what object the two provisions would subserve. Section 31B has been inserted in the Recovery of Debts and Bankruptcy Act, 1993 by the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016, w.e.f. 1.9.2016, which contains a non-obsante clause and which expressly provides that the secured debts shall be paid in priority over all other debts and Government dues including the State taxes - Apart from the fact that Section 31B of the RDB Act is a later enactment, the language of the said provision also clearly indicates the intention of the Parliament to give precedence even over the Government dues notwithstanding anything to the contrary in any other law. While it is true that the Bank has taken over the possession of the assets of the defaulter under the SARFAESI Act and not under the RDB Act, Section 31B of the RDB Act, being a substantive provision giving priority to the secured creditors , the same will be applicable irrespective of the procedure through which the recovery is sought to be made. This is particularly because Section 2(la) of the RDB Act defines the phrase secured creditors to have the same meaning as assigned to it under the SARFAESI Act. Moreover, Section 37 of the SARFAESI Act clearly provides that the provisions of the SARFAESI Act shall be in addition to, and not in derogation of inter-alia the RDB Act. Thus, an interpretation that, while the secured creditors will have priority in case they proceed under the RDB Act they will not have such priority if they proceed under the SARFAESI Act, will lead to an absurd situation and, in fact, would frustrate the object of the SARFAESI Act which is to enable fast recovery to the secured creditors. The insertion of Section 31B of the RDB Act will give priority to the secured creditors even over the subsisting charges under other laws on the date of the implementation of the new provision, i.e. 1.9.2016. Section 48 of the VAT Act would come into play only when the liability is finally assessed and the amount becomes due and payable. It is only thereafter if there is any charge, the same would operate. The authority under the VAT Act passed the assessment order later in point of time - The language of Section 48 of the VAT Act is plain and simple and the phrase 'any amount payable by a dealer or any other person on account of tax, interest or penalty' therein assumes significance. The amount could be said to be payable by a dealer on account of tax, interest or penalty once the same is assessed in the assessment proceedings and the amount is determined accordingly by the authority concerned. Without any assessment proceedings, the amount cannot be determined, and if the amount is yet to be determined, then prior to such determination there cannot be any application of Section 48 of the VAT Act. We have no hesitation in coming to the conclusion that the first priority over the secured assets shall be of the Bank and not of the State Government by virtue of Section 48 of the VAT Act, 2003. The impugned attachment notice dated 22.01.2018 and the impugned communication dated 19.04.2018 issued by the respondent No.2 is hereby quashed and set aside - Application allowed. 2019 (9) TMI 1016 Action of the Deputy Commissioner of Sales Tax (Respondent No.4) and the Assistant Commissioner of Sales Tax (Respondent No.5) in insisting on adjudicating upon SCN - HELD THAT:- In response to the impugned notices the Petitioner requested the Respondent to keep these impugned notices in abeyance till the Apex Court has taken a final view on the Petitioner s pending appeal, but to no avail. The Petitioner apprehend that the Respondent Nos.4 and 5 will adjudicate upon the impugned notices. Therefore, this Petition. However after the matter was argued for some time, Mr. Dada, learned Senior Advocate on instructions states that without prejudice to the Petitioner s right and contentions, they would file the audit report in Form E-704 for the subject Financial Years 2012- 13, 2013-14, 2016-17 and 2017-18 within a period of four weeks from today. It is important to bear in mind that for the subject Financial Years, the Petitioners have on their own, admittedly discharged the VAT payable under the Act. In view of the above consensus arrived at between the parties, no specific directions are required to be passed - petition disposed off. 2019 (9) TMI 1015 Validity of assessment notice - violation of principles of natural justice - AO relied on certain third party documents to pass the impugned order without furnishing the same to the petitioner - HELD THAT:- It is evident that the order of assessment was passed in the absence of any reply filed by the petitioner - There is no dispute to the fact that the petitioner sought for third party documents, which are relied on by the Assessing Officer. It is also not in dispute that those documents were not furnished to the petitioner so far. Needless to say that the petitioner will be in a position to furnish an effective reply, when those documents are furnished to them. Therefore, this Court is inclined to remit the matter back to the Assessing Officer to redo the assessment once again after furnishing those documents to the petitioner. Petition allowed by way of remand. Indian Laws 2019 (9) TMI 1049 Attachment of mortgaged properties - first charge of the Bank over the properties mortgaged with the Petitioners - recovery of sales tax dues from the assets of the defaulter by State Government - SARFAESI Act - Whether the Bank will have the first priority to recover its dues being a secured creditor in view of Section 26E of the SARFAESI Act or the State will have the first priority by virtue of Section 48 of the VAT Act? HELD THAT:- While it is true that the Bank has taken over the possession of the assets of the defaulter under the SARFAESI Act and not under the RDB Act, Section 31B of the RDB Act, being a substantive provision giving priority to the secured creditors , the same will be applicable irrespective of the procedure through which the recovery is sought to be made. This is particularly because Section 2(la) of the RDB Act defines the phrase secured creditors to have the same meaning as assigned to it under the SARFAESI Act. Moreover, Section 37 of the SARFAESI Act clearly provides that the provisions of the SARFAESI Act shall be in addition to, and not in derogation of inter-alia the RDB Act. As such, the SARFAESI Act was enacted only with the intention of allowing faster recovery of debts to the secured creditors without intervention of the court. This is apparent from the Statement of Objects and Reasons of the SARFAESI Act. An interpretation that, while the secured creditors will have priority in case they proceed under the RDB Act they will not have such priority if they proceed under the SARFAESI Act, will lead to an absurd situation and, in fact, would frustrate the object of the SARFAESI Act which is to enable fast recovery to the secured creditors. It is preposterous to suggest in the case on hand that as the assessment year was 2012-13, Section 48 could be said to apply from 2012-13 itself. Even in the absence of Section 26E of the SARFAESI Act or Section 31B of the RDB Act, Section 48 of the VAT Act would come into play only after the determination of the tax, interest or penalty liable to be paid to the Government. Only thereafter it could be said that the Government shall have the first charge on the property of the dealer. Thus, the first priority over the secured assets shall be of the Bank and not of the State Government by virtue of Section 48 of the VAT Act, 2003. Application allowed. 2019 (9) TMI 1020 Jurisdiction - power of Chief Judicial Magistrate (CJM) to process the request of the secured creditor - SARFAESI Act - whether the CJM is competent to process the request of the secured creditor to take possession of the secured asset under Section 14 of the SARFAESI Act, 2002? - conflicting views of various Courts. HELD THAT:- Going by the literal interpretation of Section 14 of the 2002 Act, it does appear that CMM or the DM within whose jurisdiction the secured asset is situated in, is bestowed with the authority to entertain the request of the secured creditor for possession of such secured asset. It also appears that remedy is provided before the designated authority, persona designata. That is the view taken by the High Courts of Bombay, Calcutta, Madras, Madhya Pradesh and Uttarakhand - At the same time, the High Courts of Kerala, Karnataka, Allahabad and Andhra Pradesh have taken a liberal approach and were persuaded to invoke purposive interpretation and give expansive meaning to the expression CMM , to include CJM for the nonmetropolitan areas. For instance, the High Court of Bombay (Aurangabad Bench) in INDUSIND BANK LTD., (FORMERLY KNOWN AS ASHOK LEYLAND FINANCE LTD.) THROUGH ITS LEGAL EXECUTIVE, RAVINDRAKUMAR PRAKASH BHARGODEV VERSUS THE STATE OF MAHARASHTRA THROUGH POLICE STATION [ 2008 (4) TMI 791 - BOMBAY HIGH COURT] , had taken a diametrically opposite view. It had held that it is not open to substitute the word, CMM for CJM . For, there is no indication in the 2002 Act that the legislature had intended to empower the CJM outside the metropolitan areas, although the judicial officer (CMM) was entrusted with the power to deal with such request in the metropolitan areas - however, the High Court of Karnataka in M/S KAVERI MARKETING VERSUS THE SARASWAT CO OPERATIVE BANK LTD [ 2013 (1) TMI 993 - KARNATAKA HIGH COURT] took the same view as taken by the High Court of Kerala that the CJM can also exercise powers under Section 14 of the 2002 Act. Section 14 of the 2002 Act is not a provision dealing with the jurisdiction of the Court as such. It is a remedial measure available to the secured creditor, who intends to take assistance of the authorised officer for taking possession of the secured asset in furtherance of enforcement of security furnished by the borrower. The authorised officer essentially exercises administrative or executive functions, to provide assistance to the secured creditor in terms of State s coercive power to effectuate the underlying legislative intent of speeding the recovery of the outstanding dues receivable by the secured creditor. At best, the exercise of power by the authorised officer may partake the colour of quasi-judicial function, which can be discharged even by the Executive Magistrate - It is well established that no Civil Court can interdict the action initiated in respect of any matter, which a Debt Recovery Tribunal or Debt Recovery Appellate Tribunal is empowered by or under the 2002 Act, to determine and in particular, in respect of any action taken or to be taken in pursuance of any power conferred by or under the 2002 Act or under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. That has been ordained by Section 34 of the 2002 Act. Section 14, even if read literally, in no manner denotes that allocation of jurisdictions and powers to CMM and CJM under the Code of Criminal Procedure are modified by the 2002 Act. Thus understood, Section 14 of the 2002 Act, stricto sensu, cannot be construed as being inconsistent with the provisions of the Code of Criminal Procedure or vice-versa in that regard. If so, the stipulation in Section 35 of the 2002 Act will have no impact on the expansive construction of Section 14 of the 2002 Act - keeping in mind the subject and object of the 2002 Act and the legislative intent and purpose underlying Section 14 of the 2002 Act, contextual and purposive construction of the said provision would further the legislative intent. In that, the power conferred on the authorised officer in Section 14 of the 2002 Act is circumscribed and is only in the nature of exercise of State s coercive power to facilitate taking over possession of the secured assets. This Court in JANARDHAN VERSUS STATE OF MAHARASHTRA [ 1978 (4) TMI 242 - SUPREME COURT] was called upon to examine somewhat similar challenge. In that case, the challenge was to the search warrant issued by the Assistant Commissioner of Police in respect of offences punishable under Section 6 of the Bombay Prevention of Gambling Act, 1887. The Court repelled that challenge by relying on Section 17 of the Bombay General Clauses Act, 1886, which is pari materia to Section 17 of the General Clauses Act, 1897. The Court opined that though Section 6 of the Gambling Act specified the office of Commissioner of Police as the authorised officer, however, considering the sweep of Section 2(6) of the Bombay Police Act, 1951, which mentions that the term Commissioner of Police would include an Assistant Commissioner, went on to hold that the search warrant issued by the Assistant Commissioner was valid - A perusal of Section 11 of the Police Act leads to the inescapable conclusion that an Assistant Commissioner appointed under subsection (1) is to perform such duties and functions as can be exercised under the Act or any other law for the time being in force, which undoubtedly includes the Gambling Act which was a law in force at the time when the Police Act was passed. Apart from this the Assistant Commissioner could also perform those functions which could be assigned to him by the Commissioner under the general or special orders of the State Government. The substitution of functionaries (CMM as CJM) qua the administrative and executive or so to say nonjudicial functions discharged by them in light of the provisions of Cr.P.C., would not be inconsistent with Section 14 of the 2002 Act; nay, it would be a permissible approach in the matter of interpretation thereof and would further the legislative intent having regard to the subject and object of the enactment. That would be a meaningful, purposive and contextual construction of Section 14 of the 2002 Act, to include CJM as being competent to assist the secured creditor to take possession of the secured asset. It can be finally held and concluded that the CJM is equally competent to deal with the application moved by the secured creditor under Section 14 of the 2002 Act - We accordingly, uphold and approve the view taken by the High Courts of Kerala, Karnataka, Allahabad and Andhra Pradesh and reverse the decisions of the High Courts of Bombay, Calcutta, Madras, Madhya Pradesh and Uttarakhand in that regard. Appeal disposed off. 2019 (9) TMI 1019 Recovery of Debt - time limitation - proceedings to recover the NPA under the IBC Act - NCLT applied Article 62 of the limitation act - the NCLT reached the conclusion that since the limitation period was 12 years from the date on which the money suit has become due, the aforesaid claim was filed within limitation and hence admitted the Section 7 application. - HELD THAT:- What is apparent is that Article 62 is out of the way on the ground that it would only apply to suits. The present case being an application which is filed under Section 7, would fall only within the residuary article 137 - As rightly pointed out by learned counsel appearing on behalf of the appellant, time, therefore, begins to run on 21.07.2011, as a result of which the application filed under Section 7 would clearly be time-barred. This being the case, we fail to see how this para could possibly help the case of the respondents. Further, it is not for us to interpret, commercially or otherwise, articles of the Limitation Act when it is clear that a particular article gets attracted. It is well settled that there is no equity about limitation - judgments have stated that often time periods provided by the Limitation Act can be arbitrary in nature. Appeal allowed. 2019 (9) TMI 1011 Smuggling - Charas - Grant of leave to appeal - charge under Sections 20 of NDPS Act, 1985 - HELD THAT:- The prosecution had miserably failed to prove the strict compliance of mandatory provisions of Section 42 of the NDPS Act. It was incumbent upon the Investigating Officer to reduce the secret information into writing and to send the same to his higher officers, but in the present case the said provision had not been complied with and the Investigating Officer, while stepping into the witness box as PW-3, had admitted that neither the secret information was reduced into writing nor the same was sent to the higher authorities or the concerned Police Station. In the present case, the mandatory provisions of Section 50 of the NDPS Act had also not been complied. Once the strict compliance was not made and defective offer was given to the respondent, the factum of the search of the respondent being carried out on the basis of search consent becomes inconsequential. In the present case, the link evidence was missing and there was failure of the prosecution to prove safe custody, transportation of case property and sanctity of the seals on the case property. The Investigating Officer had secret information that respondent was carrying 'Charas' and can be caught red handed but this secret information was not reduced into writing which is mandatory. From the facts of the present case, it is clear that provisions of Section 42 and Section 50 of the NDPS Act had not been complied with. Basic principle of criminal jurisprudence is that prosecution has to prove its case beyond reasonable doubt which has not been done in the present case. Learned State counsel has failed to point out any material illegality or perversity in the impugned judgment of acquittal - the application seeking leave to appeal is dismissed.
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